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.
