425

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 22, 2016

CAROLINA FINANCIAL CORPORATION

(Exact Name of Registrant As Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

000-19029	57-1039637
(Commission File Number)	(I.R.S. Employer Identification No.)
288 Meeting Street, Charleston, South Carolina	29401
(Address of Principal Executive Offices)	(Zip Code)

(843) 723-7700

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On January 22, 2016, Carolina Financial Corporation (the “Company”) issued a news release announcing its results of operations for the three and twelve month periods ended December 31, 2015. A copy of the news release is attached hereto as Exhibit 99.1. The information included herein, as well as in Exhibit 99.1 referenced herein, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in filings under the Securities Act of 1933, as amended (the “Securities Act”).

Item 7.01. Regulation FD Disclosure.

The Company will hold an investor conference call to disclose its financial results for the three and twelve month periods ended December 31, 2015 on January 26, 2016 at 2:00 p.m. Eastern Time.  The call may be accessed by dialing (855) 218-6998 or (615) 247-5963 and requesting the Carolina Financial Corporation earnings call.  Listeners should dial in 10 minutes prior to the start of the call.  A webcast of the conference call will be available online at www.haveanicebank.com and following the links to About Us, Investor Relations. A replay of the webcast will be available on www.haveanicebank.com under Investor Relations, “Investor Presentations” shortly following the call. A replay of the conference call can be accessed approximately three hour after the call by dialing (855) 859-2056 or (404) 537-3406 and requesting conference number 35480877.

The information included in the preceding paragraph, as well as in Exhibit 99.2 referenced herein, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act nor shall it be deemed incorporated by reference in filings under the Securities Act.

Item 8.01      Other Events

Dividend Announcement

The news release issued by the Company on January 22, 2016 also announced that the Company’s Board of Directors had declared a quarterly cash dividend of $0.03 per share payable on its common stock. The cash dividend will be payable on April 8, 2016 to stockholders of record as of March 18, 2016.

Rule 425

For the purposes of Rule 425 of the Securities Act only, the information contained in the news release and the investor presentation furnished herewith as Exhibit 99.1 and Exhibit 99.2, respectively, relating solely to the Company’s proposed acquisition of Congaree Bancshares, Inc. (“Congaree”) is being filed under this Item 8.01.

Additional Information About the Congaree Acquisition and Where to Find It

The Company intends to file relevant documents concerning the Congaree acquisition with the SEC, including a registration statement on Form S-4 which will include a proxy statement/prospectus. Shareholders of Congaree will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings by the Company, at the SEC’s internet site (http://www.sec.gov). Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/ prospectus can also be obtained, without charge, by directing a request to Carolina Financial Corporation, 288 Meeting Street, Charleston, SC 29401, Attention: William A. Gehman, III, Executive Vice President and Chief Financial Officer.

SHAREHOLDERS OF CONGAREE ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS WHEN THEY ARE FILED WITH THE SEC REGARDING THE PROPOSED TRANSACTION WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

The directors and executive officers of Congaree and other persons may be deemed to be participants in the solicitation of proxies from Congaree’s shareholders in connection with the proposed acquisition. Information regarding Congaree’s directors and executive officers is available in its definitive proxy statement (DEF 14A) and additional definitive proxy soliciting materials filed with the SEC for Congaree’s 2015 annual shareholder meeting. Other information regarding the participants in the Congaree proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.

This report shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

Item 9.01.      Financial Statements and Exhibits

(d)      Exhibits

Exhibit Number	Description
99.1	News Release dated January 22, 2016.
99.2	Investor Presentation dated January 22, 2016

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CAROLINA FINANCIAL CORPORATION,
Registrant
By:	/s/ William A. Gehman, III
Name:	William A. Gehman, III
Title:	Chief Financial Officer

Dated: January 22, 2016

EX-99.1

Exhibit 99.1

Carolina Financial Corporation Reports Results for Fourth Quarter of 2015 

and Announces First Quarter Dividend

NEWS RELEASE – For Release January 22, 2016, 9:00AM

For More Information, Contact: William A. Gehman III, EVP and CFO, 843.723.7700

Charleston, South Carolina, January 22, 2016 - Carolina Financial Corporation (NASDAQ: CARO) today announced net income for the three and twelve months ended December 31, 2015. Net income for the three months ended December 31, 2015 increased approximately 110% to $3.6 million, or $0.36 per diluted share, compared to $1.7 million, or $0.18 per diluted share, for the three months ended December 31, 2014. Net income for the twelve months ended December 31, 2015 increased approximately 74% to $14.4 million, or $1.48 per diluted share, compared to net income of $8.3 million, or $0.87 per diluted share, for the twelve months ended December 31, 2014.

“We are pleased to report an increase in net income of 74% for the year ended 2015 as compared to the prior year. This year was an eventful year for Carolina Financial Corporation. During 2015, we successfully integrated our branch acquisition completed in the 4^th quarter of 2014 while remaining focused on our business development efforts resulting in strong loan and deposit growth. In addition, we opened our first branch in the Greenville market and became the second largest bank headquartered in South Carolina, with total assets of $1.4 billion as of December 31, 2015. In the fourth quarter, we completed a successful capital raise of approximately $32.1 million, net of offering costs, which positions the Company well to support future organic growth and acquisition opportunities as they arise. These excellent operational and financial results would not have been possible without the efforts of our team members as well as the continued support of our stockholders and customers. On January 6, 2016, we announced the acquisition of Congaree Bancshares, Inc., a $116 million bank holding company headquartered in the Columbia, SC market. We remain are focused on executing our strategic plan to profitably grow stockholder value,” stated Jerry Rexroad, Chief Executive Officer.

Financial Highlights

Carolina Financial Corporation

n The Company reported net income for the three months ended December 31, 2015 of $3.6 million, or $0.36 per diluted share, as compared to $1.7 million, or $0.18 per diluted share, for the three months ended December 31, 2014. Net income for the twelve months ended December 31, 2015 totaled $14.4 million, or $1.48 per diluted share, compared to net income of $8.3 million, or $0.87 per diluted share, for the twelve months ended December 31, 2014. The 2014 results include pretax acquisition related expenses associated with the completion of branch acquisitions of $1.4 million.

n The increase in net income from period to period is attributable to the significant growth in loans and securities, increased checking fees, and improved results from the Company’s retail mortgage team, as well as significantly improved results from Crescent Mortgage Company.

n The Company reported book value per common share of $11.92 and $10.02 as of December 31, 2015 and December 31, 2014, respectively. Tangible book value per common share was $11.66 and $9.67 as of December 31, 2015 and December 31, 2014, respectively.

n At December 31, 2015, the Company’s regulatory capital ratios exceeded the minimum levels currently required. Stockholders’ equity totaled $139.9 million as of December 31, 2015 compared to $93.7 million at December 31, 2014. On December 14, 2015, the Company closed a public offering of 2,262,296 shares of its common stock with net proceeds of approximately $32.1 million after deducting underwriting discounts, commissions and estimated offering expenses incurred by the Company.

CresCom Bank

n The Bank’s net income (excluding Crescent Mortgage Company) was $3.3 million and $11.4 million for the three and twelve months ended December 31, 2015, respectively, compared to net income of $1.8 million and $7.3 million for the three and twelve months ended December 31, 2014, respectively.

n No provision for loan loss was recorded during the three and twelve months ended December 31, 2015 or 2014. This was primarily due to net recoveries of $1.1 million and $944,000 for the twelve months ended December 31, 2015 and 2014, respectively.

n The Bank’s non-performing assets were 0.47% of total assets at December 31, 2015 and 2014.

n Loans receivable (before allowance for loan losses) grew to $922.7 million at December 31, 2015 compared to $777.2 million at December 31, 2014. The increase in loans receivable primarily relates to the Bank’s focus on increasing commercial lending, residential mortgage lending, and syndicated loans. In addition, the Company purchased a pool of residential mortgages during the fourth quarter totaling $37.3 million at December 31, 2015.

n The number of checking accounts increased at an annualized rate of 11.1% since December 31, 2014. As of December 31, 2015 and December 31, 2014, core deposits, defined as checking, savings and money market, comprised approximately 56.7% and 63.2%, respectively, of total deposits.

n The Bank’s retail mortgage originations held for sale increased to $23.2 million compared to $13.1 million for the three months ended December 31, 2015 and 2014, respectively. Originations for the twelve months ended December 31, 2015 and 2014 were $73.6 million and $33.7 million, respectively. As a result of the increased originations, retail mortgage banking income within noninterest income increased to $424,000 and $1.7 million for the three and twelve months ended December 31, 2015 compared to $278,000 and $761,000 for the three and twelve months ended December 31, 2014. Mortgage banking income consists primarily of gain on sale of loans and related fees.

Crescent Mortgage Company

n Net income for Crescent Mortgage Company, a wholly-owned subsidiary of the Bank, was $525,000 and $3.8 million for the three and twelve months ended December 31, 2015, respectively, as compared to net income of $225,000 and $1.9 million for the three and twelve months ended December 31, 2014, respectively.

n The increase in net income of Crescent Mortgage Company is attributable to margin expansion resulting in increased mortgage banking income. Originations for the three months ended December 31, 2015 and 2014 were $217.0 million and $233.0 million, respectively. However, margin increased to 1.44% for the three months ended December 31, 2015 compared to 1.05% for three months ended December 31, 2014. Originations for the twelve months ended December 31, 2015 and 2014 were $986.7 million and $948.6 million, an increase of 40%. Margin for the twelve months ended December 31, 2015 increased to 1.60% compared to 1.18% for the twelve months ended December 31, 2014. As expected, originations for the fourth quarter of 2015 were down from originations from the third quarter of 2015. Seasonal influences significantly impact our wholesale mortgage business in the fourth and first quarters.

Quarterly Cash Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $0.03 per share payable on its common stock. The cash dividend will be payable on April 8, 2016 to stockholders of record as of March 18, 2016.

Conference Call

A conference call will be held at 2:00 p.m., Eastern Time on January 26, 2016. The conference call can be accessed by dialing (855) 218-6998 or (615) 247-5963 and requesting the Carolina Financial Corporation earnings call. 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” shortly following the call. A replay of the conference call can be accessed approximately three hours after the call by dialing (855) 859-2056 or (404) 537-3406 and requesting conference number 35480877.

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 December 31, 2015, Carolina Financial Corporation had approximately $1.4 billion in total assets and Crescent Mortgage Company originated loans in 45 states and partnered with approximately 2,000 community banks, credit unions and mortgage brokers. In 2014, Carolina Financial Corporation was added to the Nasdaq Community Bank Index (ABAQ) by the American Bankers Association. It also ranked #1 on American Banker’s 2015 list of “Top 200 Community Banks and Thrifts as Ranked by Three-Year Average ROE.” During 2014, CresCom Bank completed two branch acquisitions and grew from 11 to 26 branch locations. In addition, in 2014 the Company added loan production offices in Greenville, SC, and Wilmington, NC. In August 2015, the Company opened its first full-service branch in Greenville, SC. On December 14, 2015, the Company closed a public offering of 2,262,296 shares of its common stock with net proceeds of approximately $32.1 million after deducting underwriting discounts, commissions and estimated offering expenses incurred by the Company. In January 2016, the Company announced the acquisition of Congaree Bancshares, Inc., a bank holding company headquartered in the Columbia, SC market.

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, such as core deposits, tangible book value, 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 table 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 businesses of the Company and Congaree Bancshares, Inc. (“Congaree”) 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 the acquisition may not be fully realized within the expected timeframes; (9) disruption from the acquisition may make it more difficult to maintain relationships with clients, associates, or suppliers; (10) the required governmental approvals of the acquisition may not be obtained on the proposed terms and schedule; and (ii) the shareholders of Congaree may not approve the acquisition.  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.

ADDITIONAL INFORMATION ABOUT THE CONGAREE ACQUISITION AND WHERE TO FIND IT

The Company intends to file relevant documents concerning the Congaree acquisition with the SEC, including a registration statement on Form S-4 which will include a proxy statement/prospectus. Shareholders of Congaree will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings by the Company, at the SEC’s internet site (http://www.sec.gov). Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/ prospectus can also be obtained, without charge, by directing a request to Carolina Financial Corporation, 288 Meeting Street, Charleston, SC 29401, Attention: William A. Gehman, III, Executive Vice President and Chief Financial Officer.

SHAREHOLDERS OF CONGAREE ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS WHEN THEY ARE FILED WITH THE SEC REGARDING THE PROPOSED TRANSACTION WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

The directors and executive officers of Congaree and other persons may be deemed to be participants in the solicitation of proxies from Congaree’s shareholders in connection with the proposed acquisition. Information regarding Congaree’s directors and executive officers is available in its definitive proxy statement (DEF 14A) and additional definitive proxy soliciting materials filed with the SEC for Congaree’s 2015 annual shareholder meeting. Other information regarding the participants in the Congaree proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.

###

CAROLINA FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2015			December 31, 2014
	(Unaudited)			(Audited)
	(Dollars in thousands)
ASSETS
Cash and due from banks	$	10,206			10,453
Interest-bearing cash		16,421			10,694
Cash and cash equivalents		26,627			21,147
Securities available-for-sale		306,474			251,717
Securities held-to-maturity		17,053			25,544
Federal Home Loan Bank stock, at cost		9,919			5,405
Other investments		3,273			2,309
Derivative assets		1,945			1,689
Loans held for sale		41,774			40,912
Loans receivable, gross		922,723			777,157
Allowance for loan losses		(10,141	)		(9,035	)
Loans receivable, net		912,582			768,122
Premises and equipment, net		32,562			31,075
Accrued interest receivable		4,333			3,628
Real estate acquired through foreclosure, net		2,374			3,239
Deferred tax assets, net		4,924			4,715
Mortgage servicing rights		11,433			10,181
Cash value life insurance		28,082			21,532
Core deposit intangible		2,961			3,303
Other assets		3,004			4,499
Total assets	$	1,409,320			1,199,017
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Noninterest-bearing deposits	$	163,054			142,900
Interest-bearing deposits		868,474			821,290
Total deposits		1,031,528			964,190
Short-term borrowed funds		120,000			57,800
Long-term debt		103,465			61,740
Derivative liabilities		306			1,036
Drafts outstanding		2,154			3,320
Advances from borrowers for insurance and taxes		641			613
Accrued interest payable		333			312
Reserve for mortgage repurchase losses		3,876			4,999
Dividends payable to stockholders		361			243
Accrued expenses and other liabilities		6,797			11,064
Total liabilities		1,269,461			1,105,317
Commitments and contingencies
Stockholders’ equity:
Preferred stock		—			—
Common stock		120			97
Additional paid-in capital		56,418			23,194
Retained earnings		82,859			69,625
Accumulated other comprehensive income, net of tax		462			784
Total stockholders’ equity		139,859			93,700
Total liabilities and stockholders’ equity	$	1,409,320			1,199,017

CAROLINA FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months						For the Twelve Months
	Ended December 31,						Ended December 31,
	2015			2014			2015			2014*
	(In thousands, except share data)
Interest income
Loans	$	10,747			9,352			41,020			31,317
Investment securities		2,145			1,571			8,176			6,083
Dividends from FHLB		90			55			328			158
Other interest income		20			27			80			98
Total interest income		13,002			11,005			49,604			37,656
Interest expense
Deposits		1,273			876			4,367			3,483
Short-term borrowed funds		114			60			331			106
Long-term debt		515			475			1,906			2,013
Total interest expense		1,902			1,411			6,604			5,602
Net interest income		11,100			9,594			43,000			32,054
Provision for loan losses		—			—			—			—
Net interest income after provision for loan losses		11,100			9,594			43,000			32,054
Noninterest income
Mortgage banking income		3,543			2,734			17,417			11,908
Deposit service charges		858			597			3,496			2,065
Net (loss) gain on extinguishment of debt		(36	)		11			(1,251	)		(58	)
Net gain on sale of securities		34			391			1,493			1,084
Fair value adjustments on interest rate swaps		142			(596	)		(1,111	)		(1,170	)
Net gain on sale of servicing assets		—			—			—			775
Net increase in cash value life insurance		196			180			726			731
Mortgage loan servicing income		1,357			1,284			5,313			5,077
Other		409			222			1,596			736
Total noninterest income		6,503			4,823			27,679			21,148
Noninterest expense
Salaries and employee benefits		7,176			6,584			28,629			23,308
Occupancy and equipment		1,896			1,584			7,228			4,858
Marketing and public relations		287			390			1,434			1,251
FDIC insurance		158			156			698			581
Provision for mortgage loan repurchase losses		(250	)		(250	)		(1,000	)		(750	)
Legal expense		60			(171	)		407			438
Other real estate expense, net		24			256			138			638
Mortgage subservicing expense		398			343			1,634			1,392
Amortization of mortgage servicing rights		526			451			1,986			1,795
Other		1,961			2,769			8,045			7,932
Total noninterest expense		12,236			12,112			49,199			41,443
Income before income taxes		5,367			2,305			21,480			11,759
Income tax expense		1,758			587			7,060			3,448
Net income	$	3,609			1,718			14,420			8,311
Earnings per common share:
Basic	$	0.37			0.18			1.51			0.89
Diluted	$	0.36			0.18			1.48			0.87
Weighted average common shares outstanding:
Basic		9,888,030			9,351,883			9,537,358			9,314,048
Diluted		10,103,966			9,572,323			9,718,356			9,507,425

* Derived from audited financial statements.

CAROLINA FINANCIAL CORPORATION

(Unaudited)

(Dollars in thousands)

	Three Months Ended
Selected Financial Data:	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
Selected Average Balances:
Total assets	$	1,364,772			1,320,219			1,297,053			1,230,944			1,108,212
Investment securities		330,364			312,707			307,450			286,055			264,157
Loans receivable, net		876,445			840,414			813,293			779,661			684,203
Loans held for sale		31,212			43,193			49,087			30,733			35,530
Deposits		882,729			1,027,771			999,489			971,181			833,010
Stockholders’ equity		111,189			102,327			97,647			95,354			92,794
Performance Ratios:
Return on average equity (1)		12.98	%		15.17	%		16.05	%		12.83	%		7.41	%
Return on average assets (1)		1.06	%		1.18	%		1.21	%		0.99	%		0.62	%
Average earning assets to average total assets		92.23	%		91.82	%		92.18	%		91.26	%		91.81	%
Average loans receivable to average deposits		99.29	%		81.77	%		81.37	%		80.28	%		82.14	%
Average equity to average assets		8.15	%		7.75	%		7.53	%		7.75	%		8.37	%
Net interest margin-tax equivalent (2)		3.59	%		3.66	%		3.80	%		3.68	%		3.82	%
Net charge-offs  (recovery) to average loans receivable (annualized)		(0.11	)%		0.06	%		(0.31	)%		(0.18	)%		(0.02	)%
Nonperforming assets to period end loans receivable		0.72	%		0.89	%		0.86	%		0.74	%		0.73	%
Nonperforming assets to total assets		0.47	%		0.57	%		0.55	%		0.46	%		0.47	%
Nonperforming loans to total loans		0.47	%		0.57	%		0.47	%		0.34	%		0.31	%
Allowance for loan losses as a percentage of gross loans receivable (end of period) (3)		1.10	%		1.15	%		1.19	%		1.17	%		1.16	%
Allowance for loan losses as a percentage of nonperforming loans		235.67	%		201.98	%		252.13	%		341.68	%		371.20	%
Nonperforming Assets:
Loans 90 days or more past due and still accruing	$	—			—			—			—			—
Nonaccrual loans		4,303			4,896			3,973			2,745			2,434
Total nonperforming loans		4,303			4,896			3,973			2,745			2,434
Real estate acquired through foreclosure, net		2,374			2,744			3,271			3,166			3,239
Total nonperforming assets	$	6,677		$	7,640		$	7,244		$	5,911		$	5,673

(1) Included in the net income of December 31, 2014 were pretax acquisition related expenses of approximately $1.4 million.

(2) The tax equivalent net interest margin reflects tax-exempt income on a tax-equivalent basis.

(3) Acquired loans represent 7.0%, 8.0%, 8.8%, 9.9%, and 10.3%, of gross loans receivable at December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014, respectively.

Segment Information

(Unaudited)

(Dollars in thousands)

	For the Three Months						For the Twelve Months						Increase (Decrease)
	Ended December 31,						Ended December 31,						Three		Twelve
	2015			2014			2015			2014*			Months		Months
Segment net income:
Community banking	$	3,258			1,779			11,402			7,268			1,479		4,134
Wholesale mortgage banking		525			225			3,832			1,851			300		1,981
Other		(207	)		(302	)		(867	)		(809	)		95		(58	)
Eliminations		33			16			53			1			17		52
Total net income	$	3,609			1,718			14,420			8,311			1,891		6,109

	For the Three Months Ended
	December 31,   2015			September 30,   2015			June 30,   2015			March 31, 2015			December 31, 2014 (Note 1)
Segment net income:
Community banking	$	3,258			2,854			2,817			2,473			1,779
Wholesale mortgage banking		525			1,273			1,323			711			225
Other		(207	)		(256	)		(224	)		(180	)		(302	)
Eliminations		33			10			1			9			16
Total net income	$	3,609			3,881			3,917			3,013			1,718

* Derived from audited financial statements.

Note 1 - Included in Community banking were pretax acquisition related expenses of approximately $1.4 million.

	For the Three Months Ended December 31,
	Loan Originations				Mortgage Banking Income				Margin
	2015		2014		2015		2014		2015			2014
Additional segment information:
Community banking	$	23,161		13,097		424		278		1.83	%		2.12	%
Wholesale mortgage banking		216,971		233,042		3,119		2,456		1.44	%		1.05	%
Total mortgage banking income	$	240,132		246,139		3,543		2,734		1.48	%		1.11	%

	For the Twelve Months Ended December 31,
	Loan Originations				Mortgage Banking Income				Margin
	2015		2014		2015		2014		2015			2014
Additional segment information:
Community banking	$	73,591		33,654		1,656	$	761		2.25	%		2.26	%
Wholesale mortgage banking		986,650		948,550		15,761		11,147		1.60	%		1.18	%
Total mortgage banking income	$	1,060,241		982,204		17,417	$	11,908		1.64	%		1.21	%

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

(In thousands, except share data)

	At December 31,
	2015		2014
Core deposits:
Noninterest-bearing demand accounts	$	163,054		142,900
Interest-bearing demand accounts		158,581		183,550
Savings accounts		39,147		36,630
Money market accounts		223,906		246,116
Total core deposits		584,688		609,196
Certificates of deposit:
Less than $250,000		428,067		335,740
$250,000 or more		18,773		19,254
Total certificates of deposit		446,840		354,994
Total deposits	$	1,031,528		964,190

	At December 31,
	2015			2014
Tangible book value per share:
Total common equity	$	139,859			93,700
Less intangible assets		(2,961	)		(3,303	)
Tangible common equity	$	136,898			90,397
Issued and outstanding shares		12,023,557			9,717,043
Less nonvested restricted stock awards		(285,805	)		(365,160	)
Period end dilutive shares		11,737,752			9,351,883
Total common equity	$	139,859			93,700
Divided by period end dilutive shares		11,737,752			9,351,883
Common book value per share	$	11.92			10.02
Tangible common equity		136,898			90,397
Divided by period end dilutive shares		11,737,752			9,351,883
Tangible common book value per share	$	11.66			9.67

EX-99.2

Fourth Quarter 2015 Earnings Release Investor Presentation NASDAQ: CARO January 26, 2016

2 Disclaimer Certain statements in this presentation 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 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 Carolina Financial Corporation or any person that such future events, plans, or expectations will occur or be achieved . In addition to factors previously disclosed in the reports filed by Carolina Financial Corporation with the Securities and Exchange Commission (the “SEC”), additional risks and uncertainties may include, but are not limited to : ( 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 businesses of the Company and Congaree Bancshares, Inc . (“Congaree”) 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 the acquisition may not be fully realized within the expected timeframes ; ( 9 ) disruption from the acquisition may make it more difficult to maintain relationships with clients, associates, or suppliers ; ( 10 ) the required governmental approvals of the acquisition may not be obtained on the proposed terms and schedule ; and ( 11 ) the shareholders of Congaree may not approve the acquisition . Additional factors that could cause our results to differ materially from those described in the forward - looking statements can be found in the 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 is expressly qualified in its 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 .

3 Disclaimer (continued) Additional Information About the Congaree Acquisition and Where to Find It The Company intends to file relevant documents concerning the Congaree acquisition with the SEC, including a registration statement on Form S - 4 which will include a proxy statement/prospectus . Shareholders of Congaree will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings by the Company, at the SEC’s internet site (http : //www . sec . gov) . Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/ prospectus can also be obtained, without charge, by directing a request to Carolina Financial Corporation, 288 Meeting Street, Charleston, SC 29401 , Attention : William A . Gehman, III, Executive Vice President and Chief Financial Officer . SHAREHOLDERS OF CONGAREE ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS WHEN THEY ARE FILED WITH THE SEC REGARDING THE PROPOSED TRANSACTION WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION . The directors and executive officers of Congaree and other persons may be deemed to be participants in the solicitation of proxies from Congaree’s shareholders in connection with the proposed acquisition . Information regarding Congaree’s directors and executive officers is available in its definitive proxy statement (DEF 14 A) and additional definitive proxy soliciting materials filed with the SEC for Congaree’s 2015 annual shareholder meeting . Other information regarding the participants in the Congaree proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available .

4 0 60,000 120,000 180,000 240,000 300,000 360,000 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 CARO Volume CARO Price Nasdaq Bank Indexed to CARO Fourth Quarter Highlights • 2015Q4 net income of $3.6 million, or $0.36 per diluted share (1) – Increase of approximately 110% compared to $1.7 million, or $0.22 per diluted share, for 2014Q4 • 2015 net income of $14.4 million, or $1.48 per diluted share (1) – Increased approximately 74% compared to $8.3 million, or $0.87 per diluted share, for FY 2014 (prior year results include pre - tax expenses of $1.4 million related to branch acquisitions completed in 2014) • Tangible book value per share of $11.66 at 12/31/15 compared to $9.67 at 12/31/14 (1) • Completed $32.1 million (net) follow - on offering to fund organic and strategic growth initiatives • Announced acquisition of Columbia, S.C. - headquartered Congaree Bancshares, Inc. (Assets: $117MM), which provides entry to the attractive Columbia MSA Stock Price Performance Since January 1, 2015 $16.56 12/9/15: Completed $32.1 million common stock offering (2) $11.87 (1) This information is preliminary and based on Company data available at the time of the presentation (2) Full underwriters’ overallotment subsequently exercised for total net proceeds from the offering of $32.1 million Note: Market data as of January 19, 2016 Source: SNL Financial LC

5 North Carolina South Carolina Greenville Charlotte Raleigh Greensboro Myrtle Beach Wilmington Charleston Columbia Augusta Savannah Florence Winston Salem Asheville Congaree Acquisition Overview Branch (27) Loan Production Office (2) CNRB Branch (2) • Important step in Carolina Financial’s mission to be “The Trusted Community Bank of Choice” and the leading community banking franchise in the Carolinas – Market expansion to demographically attractive and contiguous Columbia, SC MSA • Financially compelling acquisition – Immediate and meaningful EPS accretion – Tangible book value dilution earned back in less than three years (2) – Internal rate of return greater than 20% – Pro forma regulatory ratios above “well - capitalized” guidelines • Attractive target with strong core deposit base • Cultural fit – similar customers and familiar management team • Opportunity for substantial upside – Ability to introduce Carolina Financial’s products and services to the Columbia market and existing Congaree customers Financially & Strategically Compelling Transaction Attractive Market Expansion (1) Includes the assumption of $1.6 million of preferred stock (2) Uses the “cross - over” methodology Source: SNL Financial LC Congaree Acquisition • Carolina Financial executed a definitive agreement to acquire Congaree Bancshares, Inc. – $117 million asset bank headquartered in Cayce, South Carolina – Deal price of $8.10 per share (~$16.3 million aggregate (1) ) equal to 119% of tangible book value per share – Consideration comprised of 60% stock and 40% cash Deal Overview (Announced on January 6, 2016)

6 Commercial Banking Results

7 $1.8 $3.3 ($4.9) ($3.4) $5.0 $7.3 $11.4 (0.58%) (0.41%) 0.56% 0.73% 0.87% (0.90%) (0.60%) (0.30%) 0.00% 0.30% 0.60% 0.90% ($6.0) ($3.0) $0.0 $3.0 $6.0 $9.0 $12.0 Total Bank Segment Earnings ($MMs) Q4 Bank Segment Earnings ($MMs) Bank Segment Earnings / Avg. Consolidated Assets (%) Strong, Improving Bank Segment Results Bank Segment Earnings (1) • Bank segment earnings continued to increase with 2015Q4 net income of $3.3 million versus $1.8 million for 2014Q4 and 2015 net income of $11.4 million versus $7.3 million for 2014 • The 2014 results include pre - tax acquisition - related expenses associated with the completion of branch acquisitions of $1.4 million • The improvement in bank segment earnings was a result of continued high - quality asset growth, expanding fee income and leveraging of expenses • Bank segment earnings as a percentage of consolidated assets improved from 0.73% for 2014 to 0.87% for 2015 2011Y 2012Y 2013Y 2014Y 2015Y ($20.0) ($18.7) (2.00%) (1.84%) (1) Bank segment earnings as reported in public filings (includes intersegment revenues and expenses and excludes holding company expenses). The 2015 information is preliminary and based on Company data available at the time of the presentation.

8 Expanding Net Interest Margin 5.43% 5.28% 4.91% 4.90% 4.78% 3.45% 3.61% 3.41% 3.62% 3.68% 1.39% 0.98% 0.72% 0.63% 0.56% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 2011Y 2012Y 2013Y 2014Y 2015Y Yield on Loans Net Interest Margin (1) Cost of Funds (1) Tax - equivalent net interest margin (2) The 2015 information is preliminary and based on Company data available at the time of the presentation ( 2 )

9 Strong Core Fee Income Stream • The bank segment’s core fee income is primarily derived from deposit service charges, retail mortgage income and BOLI earnings • These core fee income categories increased from $3.6 million for 2014 to $5.9 million for 2015 • Deposit service charges increased from $2.1 million in 2014 to $3.5 million in 2015, which was supported by the acquisition of the First Community branches • Retail mortgage banking income also accelerated from $0.8 million in 2014 to $1.7 million in 2015 $1.6 $1.6 $1.6 $2.1 $3.5 $0.5 $0.6 $0.6 $0.8 $1.7 $0.4 $0.7 $0.7 $2.1 $2.2 $2.5 $3.6 $5.9 $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 2011Y 2012Y 2013Y 2014Y 2015Y Deposit Service Charges Retail Mortgage Income BOLI Banking Segment Core Noninterest Income ($MMs) (1) (1) The 2015 information is preliminary and based on Company data available at the time of the presentation

10 Efficient Operations • Bank segment non - interest expense as a percentage of consolidated assets has fallen from 2.50% in 2014 to 2.42% in 2015 • The bank segment’s efficiency ratio has also improved from 70.5% in 2014 to 65.4% in 2015 Banking Segment Operating Expenses / Avg. Assets (%) (1) (1) Bank segment figures as reported in public filings (includes intersegment revenues and expenses and excludes holding company expenses) (2) The 2015 information is preliminary and based on Company data available at the time of the presentation 2.79% 3.23% 2.54% 2.50% 2.42% 1.50% 2.00% 2.50% 3.00% 3.50% 2011Y 2012Y 2013Y 2014Y 2015Y ( 2 )

11 Strong Balance Sheet Growth • We have grown loans held for investment by 8 % Q/Q and by 19% since 12/31/14 • We have grown non - interest bearing deposits by 4 4% since 12/31/12, excluding $45 million of acquired non - interest bearing deposits Total Deposits ($MMs) Total Gross Loans ($MMs) Total Assets ($MMs) $525 $511 $543 $777 $923 $80 $145 $37 $41 $42 $605 $656 $580 $818 $964 $- $200 $400 $600 $800 $1,000 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Loans Held for Investment Loans Held for Sale $63 $82 $84 $143 $163 $559 $571 $614 $821 $868 $622 $653 $698 $964 $1,032 $- $200 $400 $600 $800 $1,000 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Total Non-Interest Bearing Deposits Total Interest Bearing Deposits $826 $889 $882 $1,199 $1,409 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 (1) (1) (1) (1) The 2015 information is preliminary and based on Company data available at the time of the presentation

12 Diversified Loan Mix and Solid Asset Quality NPAs (Excl. TDRs) / Assets (%) (1) • We have a diversified loan mix, with a focus on lower risk assets • Our asset quality has improved significantly over the past few years, with NPA’s / assets of 0.47% at 12/31/15 • We have experienced net recoveries in the past two years (1) Excludes performing troubled debt restructurings (TDRs ) (2) The 2015 information is preliminary and based on Company data available at the time of the presentation NCOs / Average Loans (%) Loan Composition (12/31/15) (2) 2.38% 1.05% 0.11% (0.15%) (0.13%) (1.00%) 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2011Y 2012Y 2013Y 2014Y 2015Y Net Recoveries 4.87% 2.42% 1.97% 0.47% 0.47% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 1 - 4 Family 37% Home Equity 2% CRE 37% C&D 10% Consumer 1% C&I 13% FY 2015 Yield on Loans: 4.78% ( 2 ) ( 2 )

13 Noninterest - bearing Demand 16% Interest - bearing Demand 15% Money Market & Savings 26% Time Deposits 43% Improving Deposit Mix Deposit Composition (12/31/15 ) (1) Checking Accounts • Focus on increasing checking accounts as evidenced by the growth of non - interest bearing accounts from $37.5 million at 12/31/09 to $163.1 million at 12/31/15 (including $45.2 million acquired) • Improved deposit mix has resulted in a lower cost of funds FY 2015 Cost of Funds: 0.56% 11,597 13,339 14,814 29,322 32,564 - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 (1) The 2015 information is preliminary and based on Company data available at the time of the presentation ( 1 )

14 Attractive Wholesale Mortgage Platform

15 Wholesale Mortgage Platform $1,319 $2,196 $1,618 $949 $987 $1,436 $2,044 $1,755 $1,122 $1,450 146 240 184 118 160 0 50 100 150 200 250 $ - $500 $1,000 $1,500 $2,000 $2,500 2011Y 2012Y 2013Y 2014Y 2015Y bps CMC Originations ($MMs) National Originations ($B) Gain on Sale & Fees (bps) Strong, Scalable Mortgage Platform • Despite a challenging operating environment, Crescent Mortgage Company (“CMC”) produced significantly higher earnings in 2015 versus 2014 • CMC earned $3.8 million in 2015 versus $1.9 million for 2014 • National volumes increased in 2015, and CMC also reported an increase in volumes despite the implementation of new regulations in the mortgage industry • CMC’s gross yield expanded significantly in 2015 when compared to 2014 increasing from 118bps to 160bps Mortgage Banking Earnings Contribution (1) (2) (1) Mortgage segment earnings as reported in public filings (includes intersegment revenues and expenses and excludes holding company expenses); (2) Mortgage EPS equals segment earnings divided by weighted average diluted shares; (3) The 2015 information is preliminary and based on Company data available at the time of the presentation // Source: Mortgage Bankers Association $4.2 $21.0 $12.4 $1.9 $3.8 $0.46 $2.28 $1.31 $0.19 $0.39 $- $0.50 $1.00 $1.50 $2.00 $2.50 $ - $5.0 $10.0 $15.0 $20.0 $25.0 2011Y 2012Y 2013Y 2014Y 2015Y Mortgage Earnings ($MMs) Mortgage Segment EPS ($) ( 3 ) ( 3 )

16 Strategic Opportunity

17 Focus on Shareholder Results • We focus on being high performing financial institution • Our ROAA increased from 0.84% in 2014 to 1.11% in 2015, and our ROAE increased from 9.4% in 2014 to 14.2% in 2015 • Earnings per share for 2015 increased to $1.48 from $0.88 for 2014 • We have grown our tangible book value by a 23.9% CAGR since December 31, 2011 • We began paying a quarterly cash dividend to common shareholders in July 2013 • We paid $0.11 of dividends in 2015, representing a 7.4% payout of earnings Consolidated ROAA & ROAE Tangible Book Value per Share & Earnings per Share (0.11%) 2.02% 1.89% 0.84% 1.11% (2.1%) 31.3% 22.0% 9.4% 14.2% (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% (0.50%) 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% ROAA (%) ROAE (%) $4.96 $7.33 $8.91 $9.67 $11.66 $(0.11) $1.83 $1.77 $0.88 $1.48 $(0.50) $ - $0.50 $1.00 $1.50 $2.00 $(3.00) $ - $3.00 $6.00 $9.00 $12.00 2011Y 2012Y 2013Y 2014Y 2015Y Tangible Book Value per Share ($) Earnings per Share ($) 2011Y 2012Y 2013Y 2014Y 2015Y (1) (1) (1) The 2015 information is preliminary and based on Company data available at the time of the presentation

18 Investment Considerations x Focus on increasing shareholder value as evidenced by 24% compound annual growth in TBV per share from 12/31/11 to 12/31/15 x Scarcity value – large foothold in the high growth Charleston and Myrtle Beach markets x Strong markets to support continued growth x Experienced, accomplished management team driving results x Profitability increasing in community banking segment x Track - record of improving deposit mix x Demonstrated acquisition experience, success and focus x Scalable mortgage platform provides an opportunity to generate earnings in changing markets