Carolina Financial Corporation Reports Results for Second Quarter of 2018

 

 

NEWS RELEASE – For Release July 23, 2018, 4:00PM

 

For More Information, Contact:

William A. Gehman III, EVP and CFO, 843.723.7700

 

Charleston, S.C. July 23, 2018 - Carolina Financial Corporation (the ”Company”) (NASDAQ: CARO) today announced financial results for the second quarter of 2018.

 

Financial highlights at and for the three months ended June 30, 2018, include:

 

·Net income for the second quarter 2018 increased 60.2% to $15.0 million, or $0.70 per diluted share, from $9.3 million, or $0.58 per diluted share for the second quarter of 2017. Included in net income are pretax merger-related expenses of $0.5 million and $0.3 million for the second quarter of 2018 and 2017, respectively.
·Operating earnings for the second quarter of 2018, which exclude certain non-operating income and expenses, increased 70.9% to $15.6 million, or $0.73 or per diluted share, from $9.1 million, or $0.56 per diluted share, for the second quarter of 2017.
·Operating earnings for Q2 2018 have been adjusted to eliminate the following significant items:
oPretax merger-related expenses of $506,000
oThe fair value gain on interest rate swaps of $451,000.
oThe loss on sale of securities of $746,000.
·Performance ratios for Q2 2018 compared to Q2 2017:
oReturn on average assets was 1.65% compared to 1.72%.
oOperating return on average assets was 1.72% compared to 1.69%.
oReturn on average tangible equity was 17.02% compared to 16.02%.
oOperating return on average tangible equity was 17.74% compared to 15.65%.
·Loans receivable, gross grew $107.7 million, or at an annualized rate of 9.3% since December 31, 2017.
·Nonperforming assets to total assets were 0.28% at June 30, 2018 compared to 0.20% at December 31, 2017.
·Total deposits increased $103.9 million since December 31, 2017. Core deposits increased $76.6 million since December 31, 2017.
·On June 11, Carolina Financial Corporation completed the sale of 1.5 million shares of its common stock. The net proceeds of the offering to the Company, after estimated expenses, were approximately $63.1 million.

 

“We continue to see the impact of solid organic growth and prior acquisitions on earnings. Overall, results for the second quarter of 2018 continued to improve with an increase in net income to $15.0 million compared to the second quarter of 2017.” stated Jerry Rexroad, Chief Executive Officer.

 

   

 

Financial Results

 

Carolina Financial Corporation

 

nThe Company reported net income for the three months ended June 30, 2018 of $15.0 million, or $0.70 per diluted share, as compared to $9.3 million, or $0.58 per diluted share, for the three months ended June 30, 2017. Included in net income for the three months ended June 30, 2018 and 2017 were pretax merger-related expenses of $0.5 million and $0.3 million, respectively. The Company reported net income for the six months ended June 30, 2018 of $19.0 million or $0.90 per diluted share, as compared to $14.2 million, or $0.94 per diluted share, for the six months ended June 30, 2017. Included in net income for the six months ended June 30, 2018 and 2017 were pretax merger-related expenses of $15.2 million and $1.6 million, respectively.
nOperating earnings for the second quarter of 2018, which excludes certain non-operating income and expenses, increased 70.9% to $15.6 million, or $0.73 per diluted share, from $9.1 million, or $0.56 per diluted share, for the second quarter of 2017. Operating earnings for the six months ended June 30, 2018, which excludes certain non-operating income and expenses, increased 106.4% to $30.8 million, or $1.45 per diluted share, from $14.9 million, or $0.99 per diluted share, for the same period of 2017.
nThe Company’s net interest margin-tax equivalent increased to 4.11% for the second quarter of 2018 compared to 4.03% for the second quarter of 2017.
nThe Company reported common book value per share of $24.60 and $22.76 as of June 30, 2018 and December 31, 2017, respectively. Tangible common book value per share was $18.11 and $15.71 as of June 30, 2018 and December 31, 2017, respectively.
nAt June 30, 2018, the Company’s regulatory capital ratios exceeded the minimum levels currently required. Stockholders’ equity totaled $551.8 million as of June 30, 2018 compared to $475.4 million at December 31, 2017. Tangible equity to tangible assets at June 30, 2018 was 11.5% compared to 9.7% at December 31, 2017.

 

Community Banking

 

nCommunity banking segment net income increased 76.8% to $14.9 million for the three months ended June 30, 2018 compared to $8.4 million for the three months ended June 30, 2017. Included in net income for the three months ended June 30, 2018 and 2017 were pretax merger-related expenses of $0.5 million and $0.3 million, respectively. The community banking segment net income increased 46.0% to $18.9 million for the six months ended June 30, 2018 compared to $13.0 million for the six months ended June 30, 2017. Included in net income for the six months ended June 30, 2018 and 2017 were pretax merger-related expenses of $15.2 million and $1.6 million, respectively.
nCommunity banking segment operating earnings increased 89.0% to $15.6 million for the three months ended June 30, 2018 compared to $8.2 million for the three months ended June 30, 2017. The community banking segment operating earnings increased 126.4% to $30.8 million for the six months ended June 30, 2018 compared to $13.6 million for the six months ended June 30, 2017.
nProvision for loan loss during the three months ended June 30, 2018 was $534,000. There was no provision for loan loss during the three months ended June 30, 2017. Asset quality and historical loss experience continue to remain favorable. The provision for loan loss was primarily driven by the organic loan growth.
nNon-performing assets were 0.28% and 0.20% of total assets at June 30, 2018 and December 31, 2017, respectively.
nLoans receivable, gross increased to $2.4 billion at June 30, 2018 compared to $2.3 billion at December 31, 2017. Loans increased $107.7 million, or at an annualized rate of 9.3% over December 31, 2017.
nTotal deposits increased $103.9 million since December 31, 2017. As of June 30, 2018 and December 31, 2017, core deposits, defined as demand deposits, savings accounts and money market accounts, comprised approximately 67.2% and 66.9% respectively, of total deposits.

  

   

 

Wholesale Mortgage Banking

 

nNet income for the wholesale mortgage banking segment was $598,000 for the three months ended June 30, 2018 compared to $1.2 million for the three months ended June 30, 2017. Net income was $1.2 million for the six months ended June 30, 2018 compared to $1.9 million for the six months ended June 30, 2017. The decrease in the three months ended June 30, 2018 was primarily due to a loss on sale of other real estate owned of approximately $92,000 and the cost to terminate an equipment lease in the amount of $206,000. Income taxes in 2017 were significantly lower due to tax benefits related to the vesting of employee stock-based compensation.
nNet interest margin was 1.74% for the three months ended June 30, 2018 compared to 1.73% for the three months ended June 30, 2017. Originations for the three months ended June 30, 2018 and 2017 were $205.6 and $213.9 million, respectively. Net margin was 1.74% for the six months ended June 30, 2018 compared to 1.76% for the six months ended June 30, 2017. Originations for the six months ended June 30, 2018 and 2017 were $386.1 million and $394.7 million, respectively.

  

Conference Call

 

A conference call will be held at 10:00 a.m., Eastern Time on July 24, 2018. The conference call can be accessed by dialing (866) 464-9448 or (213) 660-0874 and requesting the Carolina Financial Corporation earnings call. The conference ID number is 1880558. Listeners should dial in 10 minutes prior to the start of the call.  The live webcast and presentation slides will be available on www.haveanicebank.com under Investor Relations, “Investor Presentations.”

 

A replay of the webcast will be available on www.haveanicebank.com under Investor Relations, “Investor Presentations” approximately three hours after the call and can be accessed by dialing (855) 859-2056 or (404) 537-3406 and requesting conference number 1880558.

 

About Carolina Financial Corporation

 

Carolina Financial Corporation (NASDAQ: CARO) is the holding company of CresCom Bank, which also owns and operates Atlanta-based Crescent Mortgage Company.  As of June 30, 2018, Carolina Financial Corporation had approximately $3.7 billion in total assets and Crescent Mortgage Company was approved to originate loans in 48 states partnering with community banks, credit unions and mortgage brokers.

 

Addendum to News Release – Use of Certain Non-GAAP Financial Measures and Forward-Looking Statements

 

This news release contains financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). Such statements should be read along with the accompanying tables, which provide a reconciliation of non-GAAP measures to GAAP measures. This news release and the accompanying tables discuss financial measures, including but not limited to, core deposits, tangible book value, operating earnings and net income related to segments of the Company, which are non-GAAP measures. We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Company’s operating results from period to period in a meaningful manner. Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP. Investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.

 

Please refer to the Non-GAAP reconciliation tables later in this release for additional information.

 

   

 

Forward-Looking Statements

 

Certain statements in this news release contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective.  Such forward-looking statements include but are not limited to statements with respect to our plans, objectives, expectations and intentions and other statements that are not historical facts, and other statements identified by words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” and “projects,” as well as similar expressions.  Such statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate.  Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized.  The inclusion of this forward-looking information should not be construed as a representation by the Company or any person that the future events, plans, or expectations contemplated by the Company will be achieved.

 

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the Company’s loan portfolio and allowance for loan losses; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (5) changes in the U.S. legal and regulatory framework including, but not limited to, the Dodd-Frank Act and regulations adopted thereunder; (6) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on the Company; (7) the business related to acquisitions may not be integrated successfully or such integration may take longer to accomplish than expected; (8) the expected cost savings and any revenue synergies from acquisitions may not be fully realized within expected timeframes; and (9) disruption from acquisitions may make it more difficult to maintain relationships with clients, associates, or suppliers.  Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).  All subsequent written and oral forward-looking statements concerning the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. We do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

 

###

 

   

 

CAROLINA FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30, 2018  December 31, 2017
   (Unaudited)  (Audited)
   (Dollars in thousands)
ASSETS          
Cash and due from banks  $27,327    25,254 
Interest-bearing cash   54,751    55,998 
Cash and cash equivalents   82,078    81,252 
Securities available-for-sale   804,968    743,239 
Federal Home Loan Bank stock, at cost   19,019    19,065 
Other investments   3,429    3,446 
Derivative assets   6,001    2,803 
Loans held for sale   39,473    35,292 
Loans receivable, gross   2,427,221    2,319,528 
Allowance for loan losses   (12,987)   (11,478)
Loans receivable, net   2,414,234    2,308,050 
Premises and equipment, net   62,530    61,407 
Accrued interest receivable   12,664    11,992 
Real estate acquired through foreclosure, net   1,726    3,106 
Deferred tax assets, net   6,073    2,436 
Mortgage servicing rights   23,626    21,003 
Cash value life insurance   57,982    57,195 
Core deposit intangible   18,003    19,601 
Goodwill   127,592    127,592 
Other assets   13,693    21,538 
Total assets  $3,693,091    3,519,017 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Liabilities:          
Noninterest-bearing deposits  $577,568    525,615 
Interest-bearing deposits   2,131,230    2,079,314 
Total deposits   2,708,798    2,604,929 
Short-term borrowed funds   354,500    340,500 
Long-term debt   46,347    72,259 
Derivative liabilities   129    156 
Drafts outstanding   10,454    7,324 
Advances from borrowers for insurance and taxes   4,558    3,005 
Accrued interest payable   1,560    1,126 
Reserve for mortgage repurchase losses   1,592    1,892 
Dividends payable to stockholders   1,354    1,051 
Accrued expenses and other liabilities   12,015    11,394 
Total liabilities   3,141,307    3,043,636 
Stockholders' equity:          
Preferred stock   —      —   
Common stock   226    210 
Additional paid-in capital   412,300    348,037 
Retained earnings   139,799    123,537 
Accumulated other comprehensive (loss) income, net of tax   (541)   3,597 
Total stockholders' equity   551,784    475,381 
Total liabilities and stockholders' equity  $3,693,091    3,519,017 

 

   

 

CAROLINA FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   For the Three Months    For the Six Months
    Ended June 30,    Ended June 30,
   2018  2017  2018  2017
   (In thousands, except share data)
Interest income                    
Loans  $32,753    18,280    64,416    33,247 
Investment securities   6,359    3,661    12,066    6,214 
Dividends from Federal Home Loan Bank stock   263    115    438    216 
Other interest income   102    67    234    115 
Total interest income   39,477    22,123    77,154    39,792 
Interest expense                    
Deposits   4,248    2,098    7,891    3,790 
Short-term borrowed funds   1,705    429    2,958    784 
Long-term debt   619    498    1,269    850 
Total interest expense   6,572    3,025    12,118    5,424 
Net interest income   32,905    19,098    65,036    34,368 
Provision for loan losses   559    —      559    —   
Net interest income after provision for loan losses   32,346    19,098    64,477    34,368 
Noninterest income                    
Mortgage banking income   4,215    4,289    8,017    7,897 
Deposit service charges   1,988    998    4,012    1,856 
Net (loss) gain on sale of securities   (746)   621    (1,443)   806 
Fair value adjustments on interest rate swaps   451    (69)   1,255    (127)
Net increase in cash value life insurance   385    281    775    492 
Mortgage loan servicing income   2,090    1,604    4,114    3,170 
Other   2,644    1,081    4,346    1,941 
Total noninterest income   11,027    8,805    21,076    16,035 
Noninterest expense                    
Salaries and employee benefits   13,541    9,255    27,210    17,864 
Occupancy and equipment   4,094    2,439    7,747    4,621 
Marketing and public relations   322    416    698    797 
FDIC insurance   265    75    520    175 
Recovery of mortgage loan repurchase losses   (150)   (225)   (300)   (450)
Legal expense   157    151    233    216 
Other real estate expense, net   105    26    11    45 
Mortgage subservicing expense   568    505    1,132    991 
Amortization of mortgage servicing rights   889    665    1,868    1,335 
Merger-related expenses   506    279    15,216    1,599 
Other   4,074    2,304    7,635    4,283 
Total noninterest expense   24,371    15,890    61,970    31,476 
Income before income taxes   19,002    12,013    23,583    18,927 
Income tax expense   4,036    2,673    4,561    4,684 
Net income  $14,966    9,340    19,022    14,243 
Earnings per common share:                    
Basic  $0.70    0.58    0.91    0.95 
Diluted  $0.70    0.58    0.90    0.94 
Dividends Per Common Share  $0.06    0.04    0.11    0.08 
Weighted average common shares outstanding:                    
Basic   21,243,094    16,029,332    20,961,182    14,980,349 
Diluted   21,495,014    16,180,171    21,216,872    15,144,796 

 

   

 

CAROLINA FINANCIAL CORPORATION

(Unaudited)

(Dollars in thousands)

 

   At or for the Three Months Ended
Selected Financial Data:  June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
                
Selected Average Balances:                         
Total assets  $3,627,401    3,522,407    3,048,214    2,230,586    2,166,803 
Investment securities and FHLB stock   809,625    770,161    647,276    521,569    510,706 
Loans receivable, net   2,401,075    2,322,203    2,003,429    1,463,771    1,412,940 
Loans held for sale   23,137    21,645    25,001    27,282    22,412 
Deposits   2,677,401    2,616,640    2,352,303    1,710,263    1,633,285 
Stockholders' equity   497,694    477,830    380,529    286,524    277,708 
                          
Performance Ratios (annualized):                         
Return on average stockholders' equity   12.03%   3.40%   6.65%   11.16%   13.45%
Return on average tangible equity (Non-GAAP)   17.02%   4.90%   8.78%   13.24%   16.02%
Return on average assets   1.65%   0.46%   0.83%   1.43%   1.72%
Operating return on average stockholders' equity (Non-GAAP)   12.54%   12.51%   11.69%   11.02%   13.15%
Operating return on average tangible equity (Non-GAAP)   17.74%   18.06%   15.44%   13.08%   15.65%
Operating return on average assets (Non-GAAP)   1.72%   1.70%   1.46%   1.42%   1.69%
Average earning assets to average total assets   89.82%   89.28%   89.25%   91.09%   90.68%
Average loans receivable to average deposits   89.68%   88.75%   85.17%   85.59%   86.51%
Average stockholders' equity to average assets   13.72%   13.57%   12.48%   12.85%   12.82%
Net interest margin-tax equivalent (1)   4.11%   4.20%   4.19%   3.94%   4.03%
Net charge-offs  (recovery) to average loans receivable   0.04%   (0.21)%   0.02%   0.02%   (0.01)%
Nonperforming assets to period end loans receivable   0.42%   0.45%   0.30%   0.44%   0.48%
Nonperforming assets to total assets   0.28%   0.30%   0.20%   0.29%   0.31%
Nonperforming loans to total loans   0.35%   0.36%   0.17%   0.33%   0.38%
Allowance for loan losses as a percentage of gross loans receivable (end of period) (2)   0.54%   0.53%   0.49%   0.72%   0.75%
Allowance for loan losses as a percentage of gross nonacquired loans receivable (Non-GAAP)   0.80%   0.85%   0.84%   0.87%   0.93%
Allowance for loan losses as a percentage of nonperforming loans (2)   153.84%   146.93%   291.81%   216.53%   196.85%
                          
Nonperforming Assets:                         
Nonacquired loans 90 days or more past due and still accruing  $19    —      —      —      —   
Nonacquired nonaccrual loans   8,423    8,649    3,934    4,924    5,461 
Total nonperforming loans   8,442    8,649    3,934    4,924    5,461 
Real estate acquired through foreclosure, net   1,726    1,963    3,106    1,640    1,417 
Total nonperforming assets  $10,168    10,612    7,040    6,564    6,878 

 

(1) Net interest margin-tax equivalent reflects tax-exempt income on a tax-equivalent basis.

(2) Acquired loans represent 33.5%, 36.8%, 41.1%, 17.3%, and 19.4% of gross loans receivable at June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017, and June 30, 2017, respectively.

 

   

 

Carolina Financial Corporation
Segment Information
(Unaudited)

(Dollars in thousands)

   For the Three Months  For the Six Months    Increase (Decrease)
   June 30,  Ended June 30,  Three  Six
   2018  2017  2018  2017  Months  Months
Segment net income:                              
Community banking  $14,928    8,443    18,912    12,951    6,485    5,961 
Wholesale mortgage banking   598    1,238    1,160    1,884    (640)   (724)
Other   (568)   (346)   (1,065)   (591)   (222)   (474)
Eliminations   8    5    15    (1)   3    16 
Total net income  $14,966    9,340    19,022    14,243    5,626    4,779 

 

   For the Three Months Ended
   June 30,
2018
  March 31,
2018
  December 31,
 2017
  September 30,
 2017
  June 30,
 2017
Segment net income:                         
Community banking  $14,928    3,984    6,050    7,837    8,443 
Wholesale mortgage banking   598    562    118    449    1,238 
Other   (568)   (497)   124    (320)   (346)
Eliminations   8    7    36    27    5 
Total net income  $14,966    4,056    6,328    7,993    9,340 

 

   For the Three Months Ended June 30, 2018
   Community  Mortgage         
   Banking  Banking  Other  Eliminations  Total
Interest income  $39,060    458    14    (55)   39,477 
Interest expense   6,066    77    506    (77)   6,572 
Net interest income (expense)   32,994    381    (492)   22    32,905 
Provision for loan losses   534    25    —      —      559 
Noninterest income from external customers   5,570    5,434    23    —      11,027 
Intersegment noninterest income   242    9    —      (251)   —   
Noninterest expense   19,348    4,748    275         24,371 
Intersegment noninterest expense   —      240    2    (242)   —   
Income (loss) before income taxes   18,924    811    (746)   13    19,002 
Income tax expense (benefit)   3,996    213    (178)   5    4,036 
Net income (loss)  $14,928    598    (568)   8    14,966 

 

   For the Three Months Ended June 30, 2017
   Community  Mortgage         
   Banking  Banking  Other  Eliminations  Total
Interest income  $21,691    427    8    (3)   22,123 
Interest expense   2,747    42    278    (42)   3,025 
Net interest income (expense)   18,944    385    (270)   39    19,098 
Provision for loan losses   —      —      —      —      —   
Noninterest income from external customers   3,494    5,311    —      —      8,805 
Intersegment noninterest income   242    31    —      (273)   —   
Noninterest expense   11,448    4,164    278    —      15,890 
Intersegment noninterest expense   —      240    2    (242)   —   
Income (loss) before income taxes   11,232    1,323    (550)   8    12,013 
Income tax expense (benefit)   2,789    85    (204)   3    2,673 
Net income (loss)  $8,443    1,238    (346)   5    9,340 

 

   

 

Carolina Financial Corporation
Segment Information, Continued
(Unaudited)
(Dollars in thousands)

   For the Six Months Ended June 30, 2018
   Community  Mortgage         
   Banking  Banking  Other  Eliminations  Total
Interest income  $76,317    889    27    (79)   77,154 
Interest expense   11,150    130    968    (130)   12,118 
Net interest income (expense)   65,167    759    (941)   51    65,036 
Provision for loan losses   534    25    —      —      559 
Noninterest income from external customers   10,630    10,358    88    —      21,076 
Intersegment noninterest income   483    26    —      (509)   —   
Noninterest expense   52,278    9,137    554    1    61,970 
Intersegment noninterest expense   —      480    3    (483)   —   
Income (loss) before income taxes   23,468    1,501    (1,410)   24    23,583 
Income tax expense (benefit)   4,556    341    (345)   9    4,561 
Net income (loss)  $18,912    1,160    (1,065)   15    19,022 

 

   For the Six Months Ended June 30, 2017
   Community  Mortgage         
   Banking  Banking  Other  Eliminations  Total
Interest income  $38,949    822    13    8    39,792 
Interest expense   4,965    54    459    (54)   5,424 
Net interest income (expense)   33,984    768    (446)   62    34,368 
Provision for loan losses   —      —      —      —      —   
Noninterest income from external customers   5,912    10,123    —      —      16,035 
Intersegment noninterest income   483    64    —      (547)   —   
Noninterest expense   22,772    8,216    488    —      31,476 
Intersegment noninterest expense   —      480    3    (483)   —   
Income (loss) before income taxes   17,607    2,259    (937)   (2)   18,927 
Income tax expense (benefit)   4,656    375    (346)   (1)   4,684 
Net income (loss)  $12,951    1,884    (591)   (1)   14,243 

 

   For the Three Months Ended June 30,
   Loan Originations  Mortgage Banking Income  Margin
   2018  2017  2018  2017  2018  2017
Additional segment information:                              
Community banking  $32,796    24,416    648    582    1.98%   2.38%
Wholesale mortgage banking   205,569    213,853    3,567    3,707    1.74%   1.73%
Total  $238,365    238,269    4,215    4,289    1.77%   1.80%

 

   For the Six Months Ended June 30,
   Loan Originations  Mortgage Banking Income  Margin
   2018  2017  2018  2017  2018  2017
Additional segment information:                              
Community banking  $64,223    39,169    1,302    941    2.03%   2.40%
Wholesale mortgage banking   386,063    394,683    6,715    6,956    1.74%   1.76%
Total  $450,286    433,852    8,017    7,897    1.78%   1.82%

  

   

 

Carolina Financial Corporation
Reconciliation of Non-GAAP Financial Measures - Consolidated
(Unaudited)
(In thousands, except share data)

   At the Month Ended
   June 30,  March 31,  December 31,  September 30,  June 30,
   2018  2018  2017  2017  2017
Core deposits:                         
Noninterest-bearing demand accounts  $577,568    547,744    525,615    333,267    330,641 
Interest-bearing demand accounts   584,719    558,942    551,308    309,241    298,123 
Savings accounts   198,571    212,249    213,142    69,552    70,336 
Money market accounts   458,558    463,676    452,734    377,754    380,108 
Total core deposits (Non-GAAP)   1,819,416    1,782,611    1,742,799    1,089,814    1,079,208 
Certificates of deposit:                         
Less than $250,000   788,693    791,789    755,887    567,483    539,177 
$250,000 or more   100,689    102,569    106,243    50,357    45,344 
Total certificates of deposit   889,382    894,358    862,130    617,840    584,521 
Total deposits  $2,708,798    2,676,969    2,604,929    1,707,654    1,663,729 

 

   At the Month Ended
   June 30,  March 31,  December 31,  September 30,  June 30,
   2018  2018  2017  2017  2017
Tangible book value per share:                         
Total stockholders' equity  $551,784    475,046    475,381    290,224    281,818 
Less intangible assets   (145,595)   (146,387)   (147,193)   (44,953)   (45,123)
Tangible common equity (Non-GAAP)  $406,189    328,659    328,188    245,271    236,695 
Issued and outstanding shares   22,570,182    21,057,539    21,022,202    16,159,309    16,156,943 
Less nonvested restricted stock awards   (137,345)   (136,395)   (134,302)   (99,639)   (101,489)
Period end dilutive shares   22,432,837    20,921,144    20,887,900    16,059,670    16,055,454 
Total stockholders' equity  $551,784    475,046    475,381    290,224    281,818 
Divided by period end dilutive shares   22,432,837    20,921,144    20,887,900    16,059,670    16,055,454 
Common book value per share  $24.60    22.71    22.76    18.07    17.55 
Tangible common equity (Non-GAAP)  $406,189    328,659    328,188    245,271    236,695 
Divided by period end dilutive shares   22,432,837    20,921,144    20,887,900    16,059,670    16,055,454 
Tangible common book value per share (Non-GAAP)  $18.11    15.71    15.71    15.27    14.74 

 

   At the Month Ended
   June 30,  March 31,  December 31,  September 30,  June 30,
   2018  2018  2017  2017  2017
Acquired and non-acquired loans:                         
Acquired loans receivable  $813,688    877,012    952,220    257,461    278,275 
Non-acquired loans receivable   1,613,533    1,503,006    1,367,308    1,227,000    1,157,145 
Total loans receivable  $2,427,221    2,380,018    2,319,528    1,484,461    1,435,420 
% Acquired   33.52%   36.85%   41.05%   17.34%   19.39%
Non-acquired loans  $1,613,533    1,503,006    1,367,308    1,227,000    1,157,145 
Allowance for loan losses   12,987    12,708    11,478    10,662    10,750 
Allowance for loan losses to non-acquired loans (Non-GAAP)   0.80%   0.85%   0.84%   0.87%   0.93%
Total loans receivable  $2,427,221    2,380,018    2,319,528    1,484,461    1,435,420 
Allowance for loan losses   12,987    12,708    11,478    10,662    10,750 
Allowance for loan losses to total loans receivable   0.54%   0.53%   0.49%   0.72%   0.75%

 

   

 

Carolina Financial Corporation
Reconciliation of Non-GAAP Financial Measures - Consolidated
(Unaudited)
(In thousands, except share data)

   For the Three Months Ended  For the Six Months Ended
   June 30,
 2018
  March 31,
 2018
  December 31,
 2017
  September 30,
 2017
  June 30,
 2017
  June 30,
2018
  June 30,
2017
As Reported:                     
Income before income taxes  $19,002    4,581    10,630    11,968    12,013    23,583    18,927 
Tax expense   4,036    525    4,302    3,975    2,673    4,561    4,684 
Net Income  $14,966    4,056    6,328    7,993    9,340    19,022    14,243 
                                    
Average equity  $497,694    477,830    380,529    286,524    277,708    487,532    243,890 
Average tangible equity (Non-GAAP)  $351,703    331,047    288,156    241,489    233,256    360,148    214,727 
Average assets  $3,627,401    3,522,407    3,048,214    2,230,586    2,166,803    3,575,708    1,967,563 
                                    
Return on average assets   1.65%   0.46%   0.83%   1.43%   1.72%   1.06%   1.45%
Return on average equity   12.03%   3.40%   6.65%   11.16%   13.45%   7.80%   11.68%
Return on average tangible equity (Non-GAAP)   17.02%   4.90%   8.78%   13.24%   16.02%   10.56%   13.27%
Tangible equity to tangible assets   11.45%   9.65%   9.73%   11.09%   11.03%   11.45%   11.03%
                                    
Weighted average common shares outstanding:                                   
Basic   21,243,094    20,908,225    19,207,307    16,029,332    16,029,332    20,961,182    14,980,349 
Diluted   21,495,014    21,119,316    19,443,353    16,187,869    16,180,171    21,216,872    15,144,796 
Earnings per common share:                                   
Basic  $0.70    0.19    0.33    0.50    0.58    0.91    0.95 
Diluted  $0.70    0.19    0.33    0.49    0.58    0.90    0.94 
                                    
Operating Earnings and Performance Ratios:                                   
Income before income taxes  $19,002    4,581    10,630    11,968    12,013    23,583    18,927 
(Gain)/Loss on sale of securities   746    697    242    (368)   (621)   1,443    (806)
Fair Value Adjustments on interest rate swaps   (451)   (803)   (419)   (90)   69    (1,255)   127 
Merger related expenses   506    14,710    6,391    311    279    15,216    1,599 
Operating earnings before income taxes   19,803    19,185    16,844    11,821    11,740    38,987    19,847 
Tax expense (1)   4,205    4,242    5,721    3,926    2,612    8,168    4,912 
Operating earnings (Non-GAAP)  $15,598    14,943    11,123    7,895    9,128    30,819    14,935 
                                    
Average equity  $497,694    477,830    380,529    286,524    277,708    487,532    243,890 
Less average intangible assets   (145,991)   (146,783)   (92,373)   (45,035)   (44,452)   (127,384)   (29,163)
Average tangible common equity (Non-GAAP)  $351,703    331,047    288,156    241,489    233,256    360,148    214,727 
                                    
Average assets  $3,627,401    3,522,407    3,048,214    2,230,586    2,166,803    3,575,708    1,967,563 
Less average intangible assets   (145,991)   (146,783)   (92,373)   (45,035)   (44,452)   (146,384)   (29,163)
Average tangible assets (Non-GAAP)  $3,481,410    3,375,624    2,955,841    2,185,551    2,122,351    3,429,324    1,938,400 
                                    
Operating return on average assets (Non-GAAP)   1.72%   1.70%   1.46%   1.42%   1.69%   1.72%   1.52%
Operating return on average equity (Non-GAAP)   12.54%   12.51%   11.69%   11.02%   13.15%   12.64%   12.25%
Operating return on average tangible assets (Non-GAAP)   1.79%   1.77%   1.51%   1.44%   1.72%   1.80%   1.54%
Operating return on average tangible equity (Non-GAAP)   17.74%   18.06%   15.44%   13.08%   15.65%   17.11%   13.91%
                                    
Weighted average common shares outstanding:                                   
Basic   21,243,094    20,908,225    19,207,307    16,029,332    16,029,332    20,961,182    14,980,349 
Diluted   21,495,014    21,119,316    19,443,353    16,187,869    16,180,171    21,216,872    15,144,796 
Operating earnings per common share:                                   
Basic (Non-GAAP)  $0.73    0.71    0.58    0.49    0.57    1.47    1.00 
Diluted (Non-GAAP)  $0.73    0.71    0.57    0.49    0.56    1.45    0.99 

 

(1) Tax expense is determined using the effective tax rate adjusted to eliminate the impact of the non-operating items.

 

   

 

Carolina Financial Corporation
Reconciliation of Non-GAAP Financial Measures - Community Banking Segment
(Unaudited)
(In thousands, except share data)

   For the Three Months Ended  For the Six Months Ended
   June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
  June 30,
2018
  June 30,
2017
Segment net income:                                   
Community banking  $14,928    3,984    6,052    7,837    8,443    18,912    12,951 
Wholesale mortgage banking   598    562    117    449    1,238    1,160    1,884 
Other   (568)   (497)   124    (320)   (346)   (1,065)   (591)
Eliminations   8    7    35    27    5    15    (1)
Total net income  $14,966    4,056    6,328    7,993    9,340    19,022    14,243 
                                    
Community banking segment operating earnings:                                   
Income before income taxes  $18,924    4,545    10,447    11,714    11,232    23,468    17,607 
Tax expense (1)   3,996    561    4,397    3,877    2,789    4,556    4,656 
Bank segment net income  $14,928    3,984    6,050    7,837    8,443    18,912    12,951 
                                    
Weighted average common shares outstanding:                                   
Basic   21,243,094    20,908,225    19,207,307    16,029,332    16,029,332    20,961,182    14,980,349 
Diluted   21,495,014    21,119,316    19,443,353    16,187,869    16,180,171    21,216,872    15,144,796 
                                    
Bank segment earnings per common share:                                   
Basic  $0.70    0.19    0.31    0.49    0.53    0.90    0.86 
Diluted  $0.69    0.19    0.31    0.48    0.52    0.89    0.86 
                                    
Bank segment income before taxes  $18,924    4,545    10,447    11,714    11,232    23,468    17,607 
(Gain) loss on sale of securities   746    692    242    (368)   (621)   1,438    (806)
Fair value adjustments on interest rate swaps   (451)   (755)   (419)   (90)   69    (1,207)   127 
Merger related expenses   506    14,710    6,391    311    279    15,216    1,590 
Operating earnings before income taxes   19,725    19,192    16,661    11,567    10,959    38,915    18,518 
Tax expense (1)   4,152    4,288    5,778    3,828    2,721    8,159    4,934 
Operating bank segment earnings (Non-GAAP)  $15,573    14,904    10,883    7,739    8,238    30,756    13,584 
                                    
Operating bank segment earnings per common share:                                   
Basic (Non-GAAP)  $0.73    0.71    0.57    0.48    0.51    1.47    0.91 
Diluted (Non-GAAP)  $0.72    0.71    0.56    0.48    0.51    1.45    0.90 

 

(1) Tax expense is determined using the effective tax rate adjusted to eliminate the impact of the non-operating items.

 

   

 

 

 

 

 


The following information was filed by Carolina Financial Corp (CARO) on Monday, July 23, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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