(LOGO)

 

Carolina Financial Corporation Reports Results for the Third Quarter of 2019

NEWS RELEASE – For Release October 24, 2019, 4:00PM

 

For More Information, Contact:

 

William A. Gehman III, EVP and CFO, 843.723.7700

 

Charleston, S.C. October 24, 2019 - Carolina Financial Corporation (the “Company”) (NASDAQ: CARO) today announced financial results for the third quarter of 2019.

 

Financial highlights at and for the three months ended September 30, 2019, include:

 

  · Net income for Q3 2019 increased 9.3% to $16.6 million, or $0.74 per diluted share, from $15.2 million, or $0.66 per diluted share for Q3 2018.

  · Operating earnings for Q3 2019, which exclude certain non-operating income and expenses, increased 20.8% to $18.6 million, or $0.83 per diluted share, from $15.4 million, or $0.67 per diluted share, for Q3 2018.

  · Operating earnings for Q3 2019 have been adjusted to eliminate the following significant items:

  o The fair value loss on interest rate swaps of $1.0 million due to the continued impact of falling long-term interest rates during the quarter on the valuation of longer-duration derivatives that do not meet hedge accounting requirements. The balance sheet fair value of securities increased $3.5 million at the end of Q3 2019 compared to Q2 2019.

 

o

o

The gain on sale of securities of approximately $756,000.

Merger-related expenses of approximately $484,000.

  o The loss on early extinguishment of debt of approximately $70,000.

  o The temporary impairment of our mortgage servicing rights (MSR) of $1.8 million due to increased prepayment speed assumptions in the portfolio driven by the continued impact of falling interest rates.

  · Performance ratios for Q3 2019 compared to Q3 2018:

  o Return on average assets was 1.71% compared to 1.66%.

o Operating return on average assets was 1.91% compared to 1.68%.

  o Return on average tangible equity was 14.08% compared to 14.68%.

  o Operating return on average tangible equity was 15.72% compared to 14.85%.

  · Loans receivable, gross grew $70.9 million from June 30, 2019, or at an annualized rate of 10.7%, and grew $197.8 million, or at an annualized rate of 10.5% since December 31, 2018.

  · Total deposits increased $37.1 million from June 30, 2019 and increased $125.0 million since December 31, 2018.

  · On December 3, 2018, the Company announced that the Board of Directors had approved a plan to repurchase up to $25 million in shares of the Company’s common stock through open market and privately negotiated transactions over the next three years. The Company began stock repurchases on December 4, 2018. During the third quarter of 2019, the Company repurchased approximately 47,000 shares at an average price of $34.23. Cumulatively since December 4, 2018, the Company repurchased approximately 381,000 shares at an average price of $31.94.

 
 

Financial Results

 

Carolina Financial Corporation

 

  · The Company reported net income for Q3 2019 of $16.6 million, or $0.74 per diluted share, as compared to $15.2 million, or $0.66 per diluted share, for Q3 2018.

  o Included in net income for Q3 2019 was a recovery of interest income of approximately $1.2 million related to a payoff of a purchased credit impaired loan. Excluding the recovery, accretion income from acquired loans was $1.7 million for Q3 2019, as compared to $2.2 million for Q3 2018.
  o      In August 2019, some of our coastal markets were impacted by storm conditions from Hurricane Dorian. While our businesses experienced impacts due to business interruptions, we did not experience any significant damage from the storm and are not expecting material customer impacts.

  · Operating earnings for Q3 2019, which excludes certain non-operating income and expenses, increased 20.8% to $18.6 million, or $0.83 per diluted share, from $15.4 million, or $0.67 per diluted share, for Q3 2018.

  o Included in net income for Q3 2019 was a fair value loss on interest rate swaps of $1.0 million due to the continued impact of falling long-term interest rates on the valuation of longer-duration derivatives that do not meet hedge accounting requirements. The Company uses standalone interest rate swaps to more closely match the interest rate characteristics of assets and liabilities and to mitigate the risks arising from timing mismatches between assets and liabilities including duration mismatches, which includes securities. The balance sheet fair value of securities increased $3.5 million at the end of Q3 2019 compared to Q2 2019. Q3 2019 also reflects a $1.8 million temporary impairment of mortgage servicing rights, a gain on sale of securities of approximately $756,000, an approximate $70,000 loss on early extinguishment of debt and merger-related expenses of approximately $484,000.  

  o Included in net income for Q3 2018 was a fair value gain on interest rate swaps of approximately $628,000, and a loss on sale of securities of approximately $849,000.

  · The Company reported net income for the nine months ended September 30, 2019 of $46.2 million or $2.07 per diluted share, as compared to $34.2 million, or $1.57 per diluted share, for the nine months ended September 30, 2018.

  o Accretion income from acquired loans was $5.9 million for the nine months ended September 30, 2019 compared to $7.0 million for the nine months ended September 30, 2018. Provision for loan losses during the nine months ended September 30, 2019 and 2018 was $2.0 million and $1.3 million, respectively.

  · Operating earnings for the nine months ended September 30, 2019, which exclude certain non-operating income and expenses, increased to $49.5 million, or $2.21 per diluted share compared to $45.9 million, or $2.10 per diluted share, for the same period of 2018.

  o Included in net income for the nine months ended September 30, 2019 was a fair value loss on interest rate swaps of $4.5 million, a temporary impairment of mortgage servicing rights of $3.1 million, a gain on sale of securities of $3.9 million, a loss on early extinguishment of debt of approximately $101,000 and merger-related expenses of approximately $484,000.
  o Included in net income for the nine months ended September 30, 2018 was a fair value gain on interest rate swaps of $1.9 million, a loss on sale of securities of $2.3 million and merger-related expenses of $15.2 million.

  · The Company’s net interest margin-tax equivalent (NIM) decreased to 4.13% for Q3 2019 (including recovery of interest income of approximately $1.2 million, or 13 bps to NIM) compared to 4.15% for Q3 2018. In addition, Q3 2019 net interest income included accretion income from acquired loans of $1.7 million (20 bps to NIM) and early payoff fees of approximately $276,000 (3bps to NIM) compared to Q3 2018 accretion income from acquired loans of $2.2 million (27 bps to NIM) and early payoff fees of $620,000 (8 bps to NIM).

  o Excluding accretion income from acquired loans and early payoff fees, Q3 2019 net interest margin was 3.77% compared to 3.80% in Q3 2018.
 
 
  · The Company reported book value per common share of $28.08 and $25.83 as of September 30, 2019 and December 31, 2018, respectively. Tangible book value per common share was $21.68 and $19.36 as of September 30, 2019 and December 31, 2018, respectively.

  · At September 30, 2019, the Company’s regulatory capital ratios exceeded the minimum levels currently required. Stockholders’ equity totaled $621.6 million as of September 30, 2019 compared to $575.3 million at December 31, 2018. Tangible equity to tangible assets at September 30, 2019 was 12.50% compared to 11.83% at December 31, 2018.

  · During Q3 2019, the Company repurchased approximately 47,000 shares at an average price of $34.23.

 

Banking Segment

 

  · Banking segment net income increased 10.5% to $16.9 million for Q3 2019 compared to $15.3 million for Q3 2018. Included in net income for Q3 2019 was a recovery of interest income of approximately $1.2 million related to a payoff of a purchased credit impaired loan. Including the $1.2 million recovery, Q3 2019 net income included accretion income from acquired loans of $2.9 million for Q3 2019, as compared to $2.2 million for Q3 2018.

  · Banking segment net income increased 38.8% to $47.5 million for the nine months ended September 30, 2019 compared to $34.2 million for the nine months ended September 30, 2018. Accretion income from acquired loans was $5.9 million for the nine months ended September 30, 2019 compared to $7.0 million for the nine months ended September 30, 2018. Provision for loan losses during the nine months ended September 30, 2019 and 2018 was $2.1 million and $1.3 million, respectively.

  · Banking segment operating earnings increased 13.2% to $17.5 million for Q3 2019 compared to $15.4 million for Q3 2018.

  · Banking segment operating earnings increased 5.3% to $48.4 million for the nine months ended September 30, 2019 compared to $45.9 million for the nine months ended September 30, 2018.

  · Provision for loan losses during Q3 2019 was $720,000. Provision for loan losses during Q3 2018 was $750,000. The provision for loan losses was primarily driven by the organic loan growth.

  · Non-performing assets were 0.52% and 0.35% of total assets at September 30, 2019 and December 31, 2018, respectively. The increase in the NPA ratio was primarily due to one fully collateralized lending relationship.

  · Loans receivable, gross increased at an annualized rate of 10.5% to $2.7 billion at September 30, 2019 compared to $2.5 billion at December 31, 2018.

  · Total deposits increased $125.0 million since December 31, 2018.

 

Wholesale Mortgage Banking

 

  · Net income for the wholesale mortgage banking segment was $325,000 for Q3 2019 compared to net income of $555,000 for Q3 2018. Net income was $0.6 million for the nine months ended September 30, 2019 compared to $1.7 million for the nine months ended September 30, 2018.

  o Included in net income for the three and nine months ended September 30, 2019 was a temporary impairment of mortgage servicing rights of $1.8 million and $3.1 million, respectively. The Company does not hedge the mortgage servicing rights positions and the impact of falling long-term interest rates increased prepayment speed assumptions driving down the value of the MSR asset. Excluding the impact of the temporary impairment of mortgage servicing rights, operating earnings were $1.7 million for Q3 2019 and $3.0 million for the nine months ended September 30, 2019.

  o Included in net income for the three and nine months ended September 30, 2018 was 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. Additionally, included in net income for the three and nine months ended September 30, 2018 was the impact of Hurricane Florence on origination activity and closings.

  · Net margin was 2.19% for the three months ended September 30, 2019 compared to 1.65% for the three months ended September 30, 2018. Originations for Q3 2019 and Q3 2018 were $232.9 million and $190.1 million, respectively.

  · Net margin was 2.05% for the nine months ended September 30, 2019 compared to 1.71% for the nine months ended September 30, 2018. Originations for the nine months ended September 30, 2019 and 2018 were $562.4 million and $576.2 million, respectively.

 
 

Dividend Declared

 

On October 23, 2019, the Company declared a $0.10 dividend per common share, payable on January 3, 2020 to stockholders of record on December 13, 2019. 

 

Conference Call

 

A conference call will be held at 11:00 a.m., Eastern Time on October 25, 2019. 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 6565867. 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.

A replay of the webcast will be available on www.haveanicebank.com under Investor Relations, News & Market Information and Presentations approximately three hours after the call and can be accessed by dialing (855) 859-2056 or (404) 537-3406 and requesting conference number 6565867.

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 September 30, 2019, Carolina Financial Corporation had approximately $4.0 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 occur or 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; (9) disruption from acquisitions may make it more difficult to maintain relationships with clients, associates, or suppliers; and (10) the impact of hurricanes and other natural disasters on our loan portfolio and the economic prospects of our coastal markets.  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
         
   September 30,
2019
   December 31,
2018
 
   (Unaudited)   (Audited) 
   (In thousands) 
ASSETS          
Cash and due from banks  $25,519    28,857 
Interest-bearing cash   51,358    33,276 
Cash and cash equivalents   76,877    62,133 
Securities available-for-sale   796,097    842,801 
Federal Home Loan Bank stock, at cost   21,707    21,696 
Other investments   3,520    3,450 
Derivative assets   2,303    4,032 
Loans held for sale   36,882    16,972 
Loans receivable   2,722,181    2,524,336 
Allowance for loan losses   (16,125)   (14,463)
Loans receivable, net   2,706,056    2,509,873 
           
Premises and equipment, net   59,841    60,866 
Right of use operating lease asset   17,551     
Accrued interest receivable   13,029    13,494 
Real estate acquired through foreclosure, net   1,832    1,534 
Deferred tax assets, net   1,174    5,786 
Mortgage servicing rights   26,528    32,933 
Cash value life insurance   59,699    58,728 
Core deposit intangible   14,257    16,462 
Goodwill   127,592    127,592 
Other assets   14,943    12,396 
Total assets  $3,979,888    3,790,748 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Liabilities:          
Noninterest-bearing deposits  $611,959    547,022 
Interest-bearing deposits   2,231,255    2,171,171 
Total deposits   2,843,214    2,718,193 
Short-term borrowed funds   417,000    405,500 
Long-term debt   42,570    59,436 
Right of use operating lease liability   17,905     
Derivative liabilities   4,952    1,232 
Drafts outstanding   6,518    8,129 
Advances from borrowers for insurance and taxes   6,923    4,100 
Accrued interest payable   2,009    1,591 
Reserve for mortgage repurchase losses   992    1,292 
Dividends payable to stockholders   2,003    1,576 
Accrued expenses and other liabilities   14,207    14,414 
Total liabilities   3,358,293    3,215,463 
Stockholders’ equity:          
Preferred stock        
Common stock   222    224 
Additional paid-in capital   403,700    408,224 
Retained earnings   207,535    167,173 
Accumulated other comprehensive income (loss), net of tax   10,138    (336)
Total stockholders’ equity   621,595    575,285 
Total liabilities and stockholders’ equity  $3,979,888    3,790,748 

 
 

CAROLINA FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                 
   For the Three Months   For the Nine Months 
   Ended September 30,   Ended September 30, 
   2019   2018   2019   2018 
   (In thousands, except share data) 
Interest income                    
Loans  $38,604    33,623    110,152    98,037 
Investment securities   6,745    6,912    21,209    18,979 
Dividends from Federal Home Loan Bank stock   331    313    923    751 
Other interest income   134    137    446    371 
Total interest income   45,814    40,985    132,730    118,138 
Interest expense                    
Deposits   7,125    5,029    20,224    12,919 
Short-term borrowed funds   1,931    1,529    6,676    4,488 
Long-term debt   575    544    1,893    1,813 
Total interest expense   9,631    7,102    28,793    19,220 
Net interest income   36,183    33,883    103,937    98,918 
Provision for loan losses   620    750    2,000    1,309 
Net interest income after provision for loan losses   35,563    33,133    101,937    97,609 
Noninterest income                    
Mortgage banking income   6,063    3,685    13,799    11,701 
Deposit service charges   1,742    2,084    5,088    6,096 
Net loss on extinguishment of debt   (70)       (101)    
Net gain (loss) on sale of securities   756    (849)   3,891    (2,292)
Fair value adjustments on interest rate swaps   (996)   628    (4,531)   1,883 
Net increase in cash value life insurance   400    378    1,196    1,153 
Mortgage loan servicing income   2,490    2,313    7,694    6,428 
Debit card income, net   1,148    1,086    3,339    3,562 
Other   1,183    975    3,444    2,846 
Total noninterest income   12,716    10,300    33,819    31,377 
Noninterest expense                    
Salaries and employee benefits   13,634    13,451    40,264    40,660 
Occupancy and equipment   4,286    4,113    12,523    11,860 
Marketing and public relations   432    312    1,306    1,011 
FDIC insurance       285    502    805 
Recovery of mortgage loan repurchase losses   (100)   (150)   (300)   (450)
Legal expense   159    94    372    327 
Other real estate expense (income), net   36    (13)   330    (2)
Mortgage subservicing expense   702    640    2,176    1,772 
Amortization of mortgage servicing rights   1,572    1,099    4,151    2,967 
Impairment of mortgage servicing rights   1,800        3,100     
Amortization of core deposit intangible   720    778    2,204    2,375 
Merger-related expenses   484        484    15,216 
Other   3,182    3,393    9,421    9,431 
Total noninterest expense   26,907    24,002    76,533    85,972 
Income before income taxes   21,372    19,431    59,223    43,014 
Income tax expense   4,744    4,227    12,976    8,788 
Net income  $16,628    15,204    46,247    34,226 
                     
Earnings per common share:                    
Basic  $0.75    0.67    2.09    1.58 
Diluted  $0.74    0.66    2.07    1.57 
Dividends declared per common share  $0.09    0.07    0.26    0.18 
Weighted average common shares outstanding:                    
Basic   22,149,567    22,678,681    22,177,483    21,616,485 
Diluted   22,336,383    22,898,983    22,365,193    21,842,769 

 
 

CAROLINA FINANCIAL CORPORATION
(Unaudited)
                     
   At or for the Three Months Ended 
Selected Financial Data:  September 30,
2019
   June 30,
2019
   March 31,
2019
   December 31,
2018
   September 30,
2018
 
   (Dollars in thousands) 
Selected Average Balances:                         
Total assets  $3,891,019    3,878,269    3,826,116    3,700,795    3,663,915 
Investment securities and FHLB stock   815,207    832,224    833,720    838,834    831,793 
Loans receivable, net   2,639,921    2,610,394    2,535,192    2,428,603    2,402,075 
Loans held for sale   29,733    21,905    13,754    20,120    23,692 
Deposits   2,837,353    2,782,576    2,751,913    2,760,156    2,735,346 
Stockholders’ equity   614,550    598,196    580,300    569,528    559,401 
                          
Performance Ratios (annualized):                         
Return on average stockholders’ equity   10.82%   10.08%   10.03%   10.85%   10.87%
Return on average tangible equity (Non-GAAP)   14.08%   13.24%   13.32%   14.53%   14.68%
Return on average assets   1.71%   1.55%   1.52%   1.67%   1.66%
Operating return on average stockholders’ equity (Non-GAAP)   12.08%   10.87%   10.11%   11.88%   10.99%
Operating return on average tangible equity (Non-GAAP)   15.72%   14.28%   13.44%   15.92%   14.85%
Operating return on average assets (Non-GAAP)   1.91%   1.68%   1.53%   1.83%   1.68%
Average earning assets to average total assets   90.13%   89.83%   89.72%   89.64%   89.59%
Average loans receivable to average deposits   93.04%   93.81%   92.12%   87.99%   87.82%
Average stockholders’ equity to average assets   15.79   15.42%   15.17%   15.39%   15.27%
Net interest margin-tax equivalent (1)   4.13%   3.99%   4.00%   4.23%   4.15%
Net charge-offs (recoveries) to average loans receivable   0.05%   (0.03)%   0.02%   (0.02)%   0.02%
Nonperforming assets to period end loans receivable   0.77%   0.54%   0.50%   0.53%   0.49%
Nonperforming assets to total assets   0.52%   0.37%   0.34%   0.35%   0.32%
Nonperforming loans to total loans   0.70%   0.50%   0.45%   0.47%   0.43%
Allowance for loan losses as a percentage of gross loans receivable (end of period) (2)   0.59%   0.60%   0.58%   0.57%   0.55%
Allowance for loan losses as a percentage of gross non-acquired loans receivable (Non-GAAP)   0.74%   0.77%   0.77%   0.79%   0.80%
Allowance for loan losses as a percentage of nonperforming loans (2)   84.73%   120.51%   129.74%   123.13%   129.26%
                          
Nonperforming Assets, excluding purchased credit impaired:                         
Loans 90 days or more past due and still accruing  $            20    32 
Nonaccrual loans   19,032    13,167    11,578    11,721    10,501 
Total nonperforming loans   19,032    13,167    11,578    11,741    10,533 
Real estate acquired through foreclosure, net   1,832    1,218    1,335    1,534    1,601 
Total nonperforming assets  $20,864    14,385    12,913    13,275    12,134 

                             

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

(2) Acquired loans represent 20.2%, 22.7%, 24.9%, 27.2%, and 30.5%, of gross loans receivable at September 30, 2019,  June 30, 2019, March 31, 2019, December 31, 2018, and September 30, 2018, respectively.   

 
 

Carolina Financial Corporation
Segment Information
(Unaudited)
(Dollars in thousands)
                         
   For the Three Months   For the Nine Months   Increase (Decrease) 
   Ended September 30,   Ended September 30,   Three   Nine 
   2019   2018   2019   2018   Months   Months 
Segment net income:                              
Community banking  $16,864    15,263    47,450    34,175    1,601    13,275 
Wholesale mortgage banking   325    555    623    1,716    (230)   (1,093)
Other   (582)   (606)   (1,876)   (1,672)   24    (204)
Eliminations   21    (8)   50    7    29    43 
Total net income  $16,628    15,204    46,247    34,226    1,424    12,021 

                     
   For the Three Months Ended 
   September 30,
2019
   June 30,
2019
   March 31,
2019
   December 31,
2018
   September 30,
2018
 
Segment net income:                         
Community banking  $16,864    15,804    14,781    15,449    15,263 
Wholesale mortgage banking   325    (92)   390    599    555 
Other   (582)   (657)   (636)   (594)   (606)
Eliminations   21    19    10    (10)   (8)
Total net income  $16,628    15,074    14,545    15,444    15,204 

 

                     
   For the Three Months Ended September 30, 2019 
   Community   Mortgage             
   Banking   Banking   Other   Eliminations   Total 
Interest income  $45,478    438    14    (116)   45,814 
Interest expense   9,103    142    530    (144)   9,631 
Net interest income (expense)   36,375    296    (516)   28    36,183 
Provision for loan losses   720    (100)           620 
Noninterest income from external customers   5,306    7,389    21        12,716 
Intersegment noninterest income   242            (242)    
Noninterest expense   19,487    7,107    313        26,907 
Intersegment noninterest expense       240    2    (242)    
Income (loss) before income taxes   21,716    438    (810)   28    21,372 
Income tax expense (benefit)   4,852    113    (228)   7    4,744 
Net income (loss)  $16,864    325    (582)   21    16,628 

                     
   For the Three Months Ended September 30, 2018 
   Community   Mortgage             
   Banking   Banking   Other   Eliminations   Total 
Interest income  $40,588    472    14    (89)   40,985 
Interest expense   6,582    113    520    (113)   7,102 
Net interest income (expense)   34,006    359    (506)   24    33,883 
Provision for loan losses   750                750 
Noninterest income from external customers   5,060    5,240            10,300 
Intersegment noninterest income   242    36        (278)    
Noninterest expense   19,041    4,674    287        24,002 
Intersegment noninterest expense       242        (242)    
Income (loss) before income taxes   19,517    719    (793)   (12)   19,431 
Income tax expense (benefit)   4,254    164    (187)   (4)   4,227 
Net income (loss)  $15,263    555    (606)   (8)   15,204 

 
 

Carolina Financial Corporation
Segment Information, Continued
(Unaudited)
(Dollars in thousands)
                     
   For the Nine Months Ended September 30, 2019 
   Community   Mortgage             
   Banking   Banking   Other   Eliminations   Total 
Interest income  $131,735    1,296    45    (346)   132,730 
Interest expense   27,162    422    1,638    (429)   28,793 
Net interest income (expense)   104,573    874    (1,593)   83    103,937 
Provision for loan losses   2,120    (120)           2,000 
Noninterest income from external customers   15,162    18,606    51        33,819 
Intersegment noninterest income   724    18        (742)    
Noninterest expense   57,498    18,079    956        76,533 
Intersegment noninterest expense       720    4    (724)    
Income (loss) before income taxes   60,841    819    (2,502)   65    59,223 
Income tax expense (benefit)   13,391    196    (626)   15    12,976 
Net income (loss)  $47,450    623    (1,876)   50    46,247 

                     
   For the Nine Months Ended September 30, 2018 
   Community   Mortgage             
   Banking   Banking   Other   Eliminations   Total 
Interest income  $116,905    1,361    41    (169)   118,138 
Interest expense   17,732    244    1,488    (244)   19,220 
Net interest income (expense)   99,173    1,117    (1,447)   75    98,918 
Provision for loan losses   1,284    25            1,309 
Noninterest income from external customers   15,690    15,599    88        31,377 
Intersegment noninterest income   724    64        (788)    
Noninterest expense   71,318    13,809    845        85,972 
Intersegment noninterest expense       725        (725)    
Income (loss) before income taxes   42,985    2,221    (2,204)   12    43,014 
Income tax expense (benefit)   8,810    505    (532)   5    8,788 
Net income (loss)  $34,175    1,716    (1,672)   7    34,226 

 

                         
   Loan Originations   Mortgage Banking Income   Margin 
   For the Three Months Ended September 30, 
   2019   2018   2019   2018   2019   2018 
Additional segment information:    
Community banking  $33,233    27,563    968    541    2.91%   1.96%
Wholesale mortgage banking   232,874    190,142    5,095    3,144    2.19%   1.65%
Total  $266,107    217,705    6,063    3,685    2.28   1.69%

                         
   Loan Originations   Mortgage Banking Income   Margin 
   For the Nine Months Ended September 30, 
   2019   2018   2019   2018   2019   2018 
Additional segment information:    
Community banking  $82,979    91,786    2,292    1,843    2.76%   2.01%
Wholesale mortgage banking   562,371    576,205    11,507    9,858    2.05%   1.71%
Total  $645,350    667,991    13,799    11,701    2.14   1.75%

 
 

Carolina Financial Corporation
Reconciliation of Non-GAAP Financial Measures - Consolidated
(Unaudited)
(In thousands, except share data)
 
   At the Month Ended 
   September 30,   June 30,   March 31,   December 31,   September 30, 
   2019   2019   2019   2018   2018 
Core deposits:                         
Noninterest-bearing demand accounts  $611,959    616,823    575,990    547,022    567,394 
Interest-bearing demand accounts   587,963    561,094    581,424    566,527    579,522 
Savings accounts   180,827    184,764    188,725    192,322    190,946 
Money market accounts   428,867    437,716    458,575    431,246    453,957 
Total core deposits (Non-GAAP)   1,809,616    1,800,397    1,804,714    1,737,117    1,791,819 
                          
Certificates of deposit:                         
Less than $250,000   948,218    921,309    923,709    875,749    863,290 
$250,000 or more   85,380    84,403    88,647    105,327    104,514 
Total certificates of deposit   1,033,598    1,005,712    1,012,356    981,076    967,804 
Total deposits  $2,843,214    2,806,109    2,817,070    2,718,193    2,759,623 
                          
Tangible book value per share:                         
Total stockholders’ equity  $621,595    605,579    589,150    575,285    564,027 
Less intangible assets   (141,849)   (142,570)   (143,305)   (144,054)   (144,817)
Tangible common equity (Non-GAAP)  $479,746    463,009    445,845    431,231    419,210 
                          
Issued and outstanding shares   22,249,424    22,284,981    22,296,372    22,387,009    22,570,445 
Less nonvested restricted stock awards   (115,933)   (109,728)   (111,578)   (117,966)   (135,045)
Period end dilutive shares   22,133,491    22,175,253    22,184,794    22,269,043    22,435,400 
                          
Total stockholders’ equity  $621,595    605,579    589,150    575,285    564,027 
Divided by period end dilutive shares   22,133,491    22,175,253    22,184,794    22,269,043    22,435,400 
Common book value per share  $28.08    27.31    26.56    25.83    25.14 
                          
Tangible common equity (Non-GAAP)  $479,746    463,009    445,845    431,231    419,210 
Divided by period end dilutive shares   22,133,491    22,175,253    22,184,794    22,269,043    22,435,400 
Tangible common book value per share (Non-GAAP)  $21.68    20.88    20.10    19.36    18.69 

 
 

                     
Carolina Financial Corporation
Reconciliation of Non-GAAP Financial Measures - Consolidated
(Unaudited)
(In thousands, except share data)
 
   At the Month Ended 
   September 30,   June 30,   March 31,   December 31,   September 30, 
   2019   2019   2019   2018   2018 
Acquired and non-acquired loans:                         
Acquired loans receivable  $548,754    601,193    644,461    686,401    749,442 
Non-acquired gross loans receivable   2,173,427    2,050,043    1,946,149    1,837,935    1,708,022 
Total gross loans receivable  $2,722,181    2,651,236    2,590,610    2,524,336    2,457,464 
% Acquired   20.16%   22.68%   24.88%   27.19%   30.50%
                          
Non-acquired loans  $2,173,427    2,050,043    1,946,149    1,837,935    1,708,022 
Allowance for loan losses   16,125    15,867    15,021    14,463    13,615 
Allowance for loan losses to non-acquired loans (Non-GAAP)   0.74   0.77%   0.77%   0.79%   0.80%
                          
Total gross loans receivable  $2,722,181    2,651,236    2,590,610    2,524,336    2,457,464 
Allowance for loan losses   16,125    15,867    15,021    14,463    13,615 
Allowance for loan losses to total gross loans receivable   0.59%   0.60%   0.58%   0.57%   0.55%

                             
   For the Three Months Ended   For the Nine Months Ended 
   September 30,
2019
   June 30,
2019
   March 31,
2019
   December 31,
2018
   September 30,
2018
   September 30,
2019
   September 30,
2018
 
Net interest margin - core:                                   
Net interest margin-tax equivalent (1)  $36,539    34,661    33,899    35,349    34,298    105,093    100,189 
Purchased loan accretion and early payoff charges and deferred fees   (3,209)   (1,521)   (1,617)   (3,283)   (2,831)   (6,347)   (8,208)
Net interest margin - core (2) (Non-GAAP)  $33,330    33,140    32,282    32,066    31,467    98,746    91,981 
                                    
Loans receivable interest income - core:                                   
Loans receivable interest income  $38,291    36,325    34,813    34,969    33,357    109,430    97,311 
Purchased loan accretion and early payoff charges and deferred fees   (3,209)   (1,521)   (1,617)   (3,283)   (2,831)   (6,347)   (8,208)
Loans receivable interest income - core (2) (Non-GAAP)  $35,082    34,804    33,196    31,686    30,526    103,083    89,103 

 

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

(2) Net interest margin-core and yield on loans - core excludes the impact of purchase accounting accretion, loan payoff charges and related deferred fees recognized related to early loan repayments.

 
 

Carolina Financial Corporation
Reconciliation of Non-GAAP Financial Measures - Consolidated
(Unaudited)
(In thousands, except share data)
 
   For the Three Months Ended   For the Nine
Months Ended
 
   September 30,
2019
   June 30,
2019
   March 31,
2019
   December 31,
2018
   September 30,
2018
   September 30,
2019
   September 30,
2018
 
As Reported:    
Income before income taxes  $21,372    19,356    18,495    19,425    19,431    59,223    43,014 
Tax expense   4,744    4,282    3,950    3,981    4,227    12,976    8,788 
Net Income  $16,628    15,074    14,545    15,444    15,204    46,247    34,226 
                                    
Average equity  $614,550    598,196    580,300    569,528    559,401    597,804    512,268 
Average tangible equity (Non-GAAP)   472,349    455,270    436,630    425,105    414,205    454,877    366,284 
Average assets   3,891,019    3,878,269    3,826,116    3,700,795    3,663,915    3,865,350    3,605,432 
Average loans receivable   2,639,921    2,610,394    2,535,192    2,428,603    2,402,075    2,595,553    2,375,461 
Average interest earning assets   3,507,155    3,483,713    3,432,818    3,322,894    3,282,426    3,474,864    3,229,234 
                                    
Return on average assets   1.71   1.55%   1.52%   1.67%   1.66%   1.60   1.27%
Return on average equity   10.82%   10.08%   10.03%   10.85%   10.87%   10.31%   8.91%
Return on average tangible equity (Non-GAAP)   14.08%   13.24%   13.32%   14.53%   14.68%   13.56%   12.46%
Tangible equity to tangible assets (Non-GAAP)   12.50%   12.36%   12.05%   11.83%   11.72%   12.50%   11.72%
Net interest margin-tax equivalent (1)   4.13%   3.99%   4.00%   4.23%   4.15%   4.04%   4.15%
Net interest margin-core (2) (Non-GAAP)   3.77%   3.82%   3.81%   3.84%   3.80%   3.80%   3.81%
Yield on loans receivable-core (2) (Non-GAAP)   5.27%   5.35%   5.31%   5.18%   5.04%   5.31%   5.02%
                                    
Weighted average common shares outstanding:                                   
Basic   22,149,567    22,189,508    22,193,861    22,416,190    22,678,681    22,177,483    21,616,485 
Diluted   22,336,383    22,372,273    22,381,809    22,587,466    22,898,983    22,365,193    21,842,769 
Earnings per common share:                                   
Basic  $0.75    0.68    0.66    0.69    0.67    2.09    1.58 
Diluted  $0.74    0.67    0.65    0.68    0.66    2.07    1.57 
                                    
Operating Earnings and Performance Ratios:                                   
Income before income taxes  $21,372    19,356    18,495    19,425    19,431    59,223    43,014 
(Gain)/loss on sale of securities   (756)   (1,941)   (1,194)   (346)   849    (3,891)   2,292 
Fair value adjustments on interest rate swaps   996    2,164    1,371    2,222    (628)   4,531    (1,883)
Merger related expenses   484                    484    15,216 
Loss on extinguishment of debt   70    31                101     
Impairment of mortgage servicing rights   1,800    1,300                3,100     
Operating earnings before income taxes   23,966    20,910    18,672    21,301    19,652    63,548    58,639 
Tax expense (3)   5,400    4,653    4,001    4,379    4,279    14,047    12,726 
Operating earnings (Non-GAAP)  $18,566    16,257    14,671    16,922    15,373    49,501    45,913 
                                    
Average equity  $614,550    598,196    580,300    569,528    559,401    597,804    512,268 
Less average intangible assets   (142,201)   (142,926)   (143,670)   (144,423)   (145,196)   (142,927)   (145,984)
Average tangible common equity (Non-GAAP)  $472,349    455,270    436,630    425,105    414,205    454,877    366,284 
                                    
Average assets  $3,891,019    3,878,269    3,826,116    3,700,795    3,663,915    3,865,350    3,605,432 
Less average intangible assets   (142,201)   (142,926)   (143,670)   (144,423)   (145,196)   (142,927)   (145,984)
Average tangible assets (Non-GAAP)  $3,748,818    3,735,343    3,682,446    3,556,372    3,518,719    3,722,423    3,459,448 
                                    
Operating return on average assets (Non-GAAP)   1.91%   1.68%   1.53%   1.83%   1.68%   1.71%   1.70%
Operating return on average stockholders’ equity (Non-GAAP)   12.08%   10.87%   10.11%   11.88%   10.99%   11.04%   11.95%
Operating return on average tangible assets (Non-GAAP)   1.98%   1.74%   1.59%   1.90%   1.75%   1.77%   1.77%
Operating return on average tangible equity (Non-GAAP)   15.72%   14.28%   13.44%   15.92%   14.85%   14.51%   16.71%
                                    
Weighted average common shares outstanding:                                   
Basic   22,149,567    22,189,508    22,193,861    22,416,190    22,678,681    22,177,483    21,616,485 
Diluted   22,336,383    22,372,273    22,381,809    22,587,466    22,898,983    22,365,193    21,842,769 
Operating earnings per common share:                                   
Basic (Non-GAAP)  $0.84    0.73    0.66    0.75    0.68    2.23    2.12 
Diluted (Non-GAAP)  $0.83    0.73    0.66    0.75    0.67    2.21    2.10 

 

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

(2) Net interest margin-core and yield on loans - core excludes the impact of purchase accounting accretion, loan payoff charges and related deferred fees recognized related to early loan repayments.

(3) 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 Nine Months Ended 
   September 30,
2019
   June 30,
2019
   March 31,
2019
   December 31,
2018
   September 30,
2018
   September 30,
2019
   September 30,
2018
 
Segment net income:                                   
Community banking  $16,864    15,804    14,781    15,449    15,263    47,450    34,175 
Wholesale mortgage banking   325    (92)   390    599    555    623    1,716 
Other   (582)   (657)   (636)   (594)   (606)   (1,876)   (1,672)
Eliminations   21    19    10    (10)   (8)   50    7 
Total net income  $16,628    15,074    14,545    15,444    15,204    46,247    34,226 
                                    
Community banking segment operating earnings:                                   
Income before income taxes  $21,716    20,299    18,827    19,424    19,517    60,841    42,985 
Tax expense (1)   4,852    4,495    4,046    3,975    4,254    13,391    8,810 
Bank segment net income  $16,864    15,804    14,781    15,449    15,263    47,450    34,175 
                                    
Weighted average common shares outstanding:                                   
Basic   22,149,567    22,189,508    22,193,861    22,416,190    22,678,681    22,177,483    21,616,485 
Diluted   22,336,383    22,372,273    22,381,809    22,587,466    22,898,983    22,365,193    21,842,769 
                                    
Bank segment earnings per common share:                                   
Basic  $0.76    0.71    0.67    0.69    0.67    2.14    1.58 
Diluted  $0.76    0.71    0.66    0.68    0.67    2.12    1.56 
                                    
Bank segment income before taxes  $21,716    20,299    18,827    19,424    19,517    60,841    42,985 
(Gain) loss on sale of securities   (756)   (1,941)   (1,194)   (346)   849    (3,891)   2,287 
Fair value adjustments on interest rate swaps   996    2,164    1,371    2,222    (628)   4,531    (1,835)
Loss on extinguishment of debt   70    31                101     
Merger related expenses   484                    484    15,216 
Operating earnings before income taxes   22,510    20,553    19,004    21,300    19,738    62,066    58,653 
Tax expense (1)   5,043    4,566    4,096    4,371    4,306    13,706    12,746 
Operating bank segment earnings (Non-GAAP)  $17,467    15,987    14,908    16,929    15,432    48,360    45,907 
                                    
Operating bank segment earnings per common share:                                   
Basic (Non-GAAP)  $0.79    0.72    0.67    0.76    0.68    2.18    2.12 
Diluted (Non-GAAP)  $0.78    0.71    0.67    0.75    0.67    2.16    2.10 

 

(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 Thursday, October 24, 2019 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.

View differences made from one quarter to another to evaluate Carolina Financial Corp's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 10-Q Quarterly Report to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Carolina Financial Corp.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account