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Carolina Financial Corporation Reports Results for Third Quarter of 2016

Mittwoch, 19.10.2016 22:05 von

PR Newswire

CHARLESTON, S.C., Oct. 19, 2016 /PRNewswire/ -- Carolina Financial Corporation (NASDAQ: CARO) today announced financial results for the third quarter of 2016.  Highlights at and for the three months ended September 30, 2016, include:

  • Net income for the third quarter 2016 increased 53.1% to $5.9 million, or $0.47 per diluted share from $3.9 million, or $0.40 per diluted share for the third quarter of 2015.
  • Operating earnings for the third quarter of 2016, which excludes certain non-operating income and expenses, increased 45.8% to $5.9 million, or $0.47 per diluted share, from $4.0 million, or $0.42 per diluted share, from the third quarter of 2015.
  • Loans receivable, excluding acquired loans, grew at an annualized rate of 19.3% or $133.7 million since December 31, 2015 and 24.7% or $66.0 million since June 30, 2016.
  • Nonperforming assets to total assets of 0.42% as of September 30, 2016.
  • Core deposits, excluding acquired deposits, increased $150.0 million since December 31, 2015 and $45.3 million since June 30, 2016.

"We are pleased to report an increase in operating earnings of 45.8% for the third quarter of 2016 over the comparable prior quarter. These strong operating earnings are the result of excellent earnings of CresCom Bank combined with improved results of Crescent Mortgage Company. The Company continued to experience exceptional growth in the third quarter with loans receivable growing at an annualized rate of 24.7% and core deposit growth of $45.3 million while maintaining superior asset quality. Finally, we are excited to announce plans to open a second branch in the Wilmington market by year end," stated Jerry Rexroad, Chief Executive Officer.             

Financial Results

Carolina Financial Corporation

  • The Company reported net income for the three months ended September 30, 2016 of $5.9 million, or $0.47 per diluted share, as compared to $3.9 million, or $0.40 per diluted share, for the three months ended September 30, 2015.  Net income for the nine months ended September 30, 2016 totaled $12.4 million, or $1.02 per diluted share, compared to net income of $10.8 million, or $1.13 per diluted share.  Included in net income for the nine months ended September 30, 2016 were pretax merger related expense of $3.0 million
  • Operating earnings for the third quarter of 2016 increased 45.8% to $5.9 million, or $0.47 per diluted share, from $4.0 million, or $0.42 per diluted share, from the third quarter of 2015.  Operating earnings for the nine months ended September 30, 2016 increased 25.8% to $14.5 million, or $1.18 per diluted share, from $11.5 million, or $1.20 per diluted share, for the nine months ended September 30, 2015.
  • The Company's net interest margin-tax equivalent increased to 3.75% for the third quarter of 2016 compared to 3.66% for the third quarter of 2015.
  • The Company reported book value per common share of $13.00 and $11.92 as of September 30, 2016 and December 31, 2015, respectively.  Tangible book value per common share was $12.35 and $11.66 as of September 30, 2016 and December 31, 2015, respectively.
  • At September 30, 2016, the Company's regulatory capital ratios exceeded the minimum levels currently required.  Stockholders' equity totaled $160.3 million as of September 30, 2016 compared to $139.9 million at December 31, 2015.

CresCom Bank

  • The Bank's net income (excluding Crescent Mortgage Company) increased 65.9% to $4.7 million for the three months ended September 30, 2016 compared to $2.9 million for the three months ended September 30, 2015. Net income for the nine months ended September 30, 2016 totaled $10.3 million compared to net income of $8.1 million for the nine months ended September 30, 2015. Included in net income for the nine months ended September 30, 2016 were pretax merger related expense of $ $2.9 million
  • No provision for loan loss was recorded during the three and nine month periods ended September 30, 2016 or 2015.   This was primarily due to continued excellent asset quality as well as net recoveries of $199,000 and $854,000 for the nine months ended September 30, 2016 and 2015, respectively.
  • The Bank's non-performing assets were 0.42% and 0.47% of total assets at September 30, 2016 and December 31, 2015, respectively.  The Bank added $1.5 million in real estate acquired through foreclosure, net as a result of the merger with Congaree Bancshares, Inc. during the second quarter of 2016.
  • Loans receivable increased to $1.1 billion at September 30, 2016 compared to $922.7 million at December 31, 2015. The increase in loans receivable primarily relates to the completed acquisition of Congaree as well as the Bank's focus on commercial lending and residential mortgage lending.
  • The number of checking accounts increased at an annualized rate of 10.6%, excluding Congaree checking accounts acquired, since December 31, 2015.  As of September 30, 2016 and December 31, 2015, core deposits, defined as checking, savings and money market, comprised approximately 61.8% and 56.7%, respectively, of total deposits.  Total deposits, excluding acquired deposits, increased $189.5 million since December 31, 2015.
  • The Bank's retail mortgage conforming loan originations increased to $25.6 million for the three months ended September 30, 2016 compared to $17.6 million for the three months ended September 30, 2015.  For the nine months ended September 30, 2016, retail mortgage conforming loan originations increased to $68.3 million compared to $50.4 million for the nine months ended September 30, 2015. As a result of the increased originations, retail mortgage banking noninterest income increased to $680,000 and $1.6 million for the three and nine months ended September 30, 2016 compared to $431,000 and $1.2 million for the three and nine months ended September 30, 2015. Mortgage banking income consists primarily of gain on sale of loans and related fees as well as fair value changes in mortgage banking derivatives.

Crescent Mortgage Company

  • Net income for Crescent Mortgage Company, a wholly owned subsidiary of the Bank, was $1.4 million for the three months ended September 30, 2016 compared to $1.3 million for the three months ended September 30, 2015. Net income for the nine months ended September 30, 2016 was $2.7 million compared to $3.3 million for the nine months ended September 30, 2015.
  • The increase in net income of Crescent Mortgage Company during third quarter of 2016 is primarily attributable to an increase in margin during the period. Originations for the three months ended September 30, 2016 and 2015 were $253.5 million and $261.9 million, respectively.  Originations for the nine months ended September 30, 2016 and 2015 were $645.4 million and $769.7 million, respectively. The percentage of originations attributable to refinances were 35.9% for the third quarter of 2016 compared to 30.3% for the third quarter of 2015.

Conference Call

A conference call will be held at 10:00 a.m., Eastern Time on October 20, 2016. The conference call can be accessed by dialing (855) 218-6998 or (615) 247-5963 and requesting the Carolina Financial Corporation earnings call. The conference ID number is 93428847. 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 93428847.

About Carolina Financial Corporation

Carolina Financial is the holding company of CresCom Bank, which also owns and operates Atlanta-based Crescent Mortgage Company.  Carolina Financial trades on NASDAQ under the symbol CARO. As of September 30, 2016, Carolina Financial had approximately $1.7 billion in total assets and Crescent Mortgage Company originated loans in 45 states and partners with community banks, credit unions and mortgage brokers.  In 2016, Carolina Financial was ranked #8 on American Banker's 2015 list of "Top 200 Community Banks and Thrifts as Ranked by Three-Year Average ROE", and was added to the Russell 2000 as part of the 2016 Russell indexes reconstitution. In June 2016, Carolina Financial Corporation completed its previously announced merger with Congaree Bancshares, Inc.

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, operating earnings and net income related to segments of the Company, which are non-GAAP measures.  We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Company's operating results from period to period in a meaningful manner.  Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP.  Investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company.  Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.

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

Forward-Looking Statements

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

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

CAROLINA FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS






















September 30, 2016


December 31, 2015










(Unaudited)


(Audited)










(Dollars in thousands)

ASSETS










Cash and due from banks





$                      9,110


10,206


Interest-bearing cash





29,211


16,421



Cash and cash equivalents




38,321


26,627


Securities available-for-sale





336,918


306,474


Securities held-to-maturity





-


17,053


Federal Home Loan Bank stock, at cost



7,438


9,919


Other investments





1,801


1,760


Derivative assets






3,168


1,945


Loans held for sale





36,686


41,774


Loans receivable, gross





1,133,229


922,723


Allowance for loan losses





(10,340)


(10,141)



Loans receivable, net





1,122,889


912,582














Premises and equipment, net





35,086


32,562


Accrued interest receivable





4,813


4,333


Real estate acquired through foreclosure, net

2,843


2,374


Deferred tax assets, net





8,285


5,273


Mortgage servicing rights





13,556


11,433


Cash value life insurance





28,772


28,082


Core deposit intangible





3,771


2,961


Goodwill






4,266


-


Other assets






5,236


4,517



Total assets






$               1,653,849


1,409,669













LIABILITIES AND STOCKHOLDERS' EQUITY






Liabilities:










Noninterest-bearing deposits





$                  267,892


163,054


Interest-bearing deposits





1,044,384


868,474



Total deposits






1,312,276


1,031,528


Short-term borrowed funds





87,500


120,000


Long-term debt






68,465


103,465


Derivative liabilities





2,708


306


Drafts outstanding





3,965


2,154


Advances from borrowers for insurance and taxes

2,614


641


Accrued interest payable





346


333


Reserve for mortgage repurchase losses


3,130


3,876


Dividends payable to stockholders




376


361


Accrued expenses and other liabilities


12,138


7,146



Total liabilities





1,493,518


1,269,810

Commitments and contingencies








Stockholders' equity:









Preferred stock





-


-


Common stock





125


120


Additional paid-in capital





65,862


56,418


Retained earnings





93,819


82,859


Accumulated other comprehensive income, net of tax

525


462



Total stockholders' equity




160,331


139,859


Total liabilities and stockholders' equity




$               1,653,849


1,409,669













 

 

CAROLINA FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)




















For the Three Months


For the Nine Months







Ended September 30,


Ended September 30,







2016


2015


2016


2015







(In thousands, except share data)

Interest income











Loans




$          13,826


10,345


36,791


30,273


Investment securities


2,264


2,058


6,835


6,031


Dividends from Federal Home Loan Bank stock

83


93


288


238


Federal funds sold



3


-


5


-


Other interest income


32


16


92


60



Total interest income


16,208


12,512


44,011


36,602

Interest expense











Deposits



1,570


1,122


4,449


3,094


Short-term borrowed funds


124


75


320


217


Long-term debt



558


426


1,743


1,391



Total interest expense


2,252


1,623


6,512


4,702

Net interest income



13,956


10,889


37,499


31,900

Provision for loan losses


-


-


-


-


Net interest income after provision for loan losses

13,956


10,889


37,499


31,900

Noninterest income











Mortgage banking income


5,605


4,753


12,967


13,874


Deposit service charges


953


915


2,712


2,638


Net loss on extinguishment of debt

(118)


-


(174)


(1,215)


Net gain on sale of securities


111


1,017


641


1,459


Fair value adjustments on interest rate swaps

99


(1,246)


(408)


(1,253)


Net increase in cash value life insurance

226


172


684


530


Mortgage loan servicing income


1,437


1,330


4,238


3,956


Other




560


381


1,728


1,187



Total noninterest income


8,873


7,322


22,388


21,176

Noninterest expense











Salaries and employee benefits


8,481


7,204


23,306


21,453


Occupancy and equipment


2,067


1,821


5,836


5,332


Marketing and public relations


374


378


1,144


1,147


FDIC insurance



180


190


527


540


Provision for mortgage loan repurchase losses

(250)


(250)


(750)


(750)


Legal expense



80


97


185


347


Other real estate expense, net


(96)


4


(37)


114


Mortgage subservicing expense


462


418


1,353


1,236


Amortization of mortgage servicing rights

586


515


1,659


1,460


Merger related expenses


-


-


2,985


-


Other




2,006


2,004


5,759


6,084



Total noninterest expense


13,890


12,381


41,967


36,963

Income before income taxes


8,939


5,830


17,920


16,113

Income tax expense



2,998


1,949


5,500


5,302


Net income



$            5,941


3,881


12,420


10,811














Earnings per common share:










Basic




$              0.48


0.41


1.04


1.15


Diluted



$              0.47


0.40


1.02


1.13

Weighted average common shares outstanding:









Basic




12,327,921


9,463,722


11,995,477


9,421,042


Diluted



12,535,551


9,674,994


12,201,721


9,595,991



























 

 


CAROLINA FINANCIAL CORPORATION

(Unaudited)

(Dollars in thousands)























At or for the Three Months Ended

Selected Financial Data:



September 30,
2016


June 30, 
2016


March 31,
2016


December 31,
2015


September 30,
2015
















Selected Average Balances:












Total assets




$   1,626,717


1,482,963


1,412,778


1,364,772


1,322,382

Investment securities




345,385


335,105


335,929


330,364


312,707

Loans receivable, net




1,093,669


978,337


935,438


876,445


840,414

Loans held for sale




32,196


24,467


25,454


31,212


43,193

Deposits





1,291,567


1,170,860


1,069,451


1,052,192


1,027,771

Stockholders' equity




157,311


145,656


141,311


111,189


102,326
















Performance Ratios (annualized):












Return on average stockholders' equity (1)


15.11%


7.79%


10.31%


12.98%


15.17%

Return on average assets (1)



1.46%


0.76%


1.03%


1.06%


1.18%

Average earning assets to average total assets

92.94%


93.44%


93.08%


92.23%


91.82%

Average loans receivable to average deposits


84.68%


83.56%


87.47%


83.30%


81.77%

Average stockholders' equity to average assets

9.67%


9.82%


10.00%


8.15%


7.75%

Net interest margin-tax equivalent (2)


3.75%


3.64%


3.53%


3.59%


3.66%

Net charge-offs  (recovery) to average loans












receivable




(0.02)%


(0.03)%


(0.04)%


(0.11)%


0.06%

Nonperforming assets to period end loans











receivable




0.62%


0.67%


0.59%


0.72%


0.89%

Nonperforming assets to total assets


0.42%


0.45%


0.39%


0.47%


0.57%

Nonperforming loans to total loans



0.37%


0.37%


0.48%


0.47%


0.57%

Allowance for loan losses as a percentage of












gross loans receivable (end of period) (3)

0.91%


0.96%


1.06%


1.10%


1.15%

Allowance for loan losses as a percentage












of nonperforming loans



247.72%


262.68%


223.38%


235.67%


201.98%
















Nonperforming Assets:













Loans 90 days or more past due and still












accruing




$               -


-


-


-


-

Nonaccrual loans




4,174


3,920


4,581


4,303


4,896


Total nonperforming loans



4,174


3,920


4,581


4,303


4,896

Real estate acquired through foreclosure, net (4)

2,843


3,272


1,091


2,374


2,744


Total nonperforming assets



$       7,017


7,192


5,672


6,677


7,640































(1)  Included in net income are pretax merger related expenses of approximately $2.8 million for the three months ended June 30, 2016 and $186,000 for the three months ended March 31, 2016.
















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
















(3) Acquired loans represent 11.4%, 12.2%, 6.4%, 7.0%, and 8.0%, of gross loans receivable at September 30, 2016, June 30, 2016, March 31, 2016, December 31, 2015, and September 30, 2015, respectively. 
















(4)  Real estate acquired through foreclosure, net at September 30, 2016 includes $1.5 million related to the Congaree merger.


















 


Segment Information













(Unaudited)













(Dollars in thousands)































For the Three Months


For the Nine Months


Increase (Decrease)





Ended September 30,


Ended September 30,


Three


Nine





2016


2015


2016


2015


Months


Months

Segment net income:













Community banking (1)

$        4,734


2,854


10,309


8,144


1,880


2,165

Wholesale mortgage banking

1,402


1,273


2,722


3,307


129


(585)

Other (2)



(228)


(256)


(669)


(660)


28


(9)

Eliminations


33


10


58


20


23


38

Total net income


$        5,941


3,881


12,420


10,811


2,060


1,609




















For the Three Months Ended







September 30, 
  2016


June 30, 
  2016


March 31, 
  2016


December 31, 
  2015


September 30, 
  2015



Segment net income:













Community banking (1)

$        4,734


2,162


3,413


3,258


2,854



Wholesale mortgage banking

1,402


919


401


525


1,273



Other (2)



(228)


(253)


(188)


(207)


(256)



Eliminations


33


8


17


33


10



Total net income


$        5,941


2,836


3,643


3,609


3,881


















































































For the Three Months Ended September 30,





Loan Originations


Mortgage Banking Income


Margin





2016


2015


2016


2015


2016


2015

Additional segment information:












Community banking


$      25,633


17,642


680


431


2.65%


2.44%

Wholesale mortgage banking

253,485


261,948


4,925


4,322


1.94%


1.65%

Total mortgage banking income

$    279,118


279,590


5,605


4,753


2.01%


1.70%




















For the Nine Months Ended September 30,





Loan Originations


Mortgage Banking Income


Margin





2016


2015


2016


2015


2016


2015

Additional segment information:












Community banking


$      68,263


50,430


1,586


1,231


2.32%


2.44%

Wholesale mortgage banking

645,412


769,679


11,381


12,643


1.76%


1.64%

Total mortgage banking income

$    713,675


820,109


12,967


13,874


1.82%


1.69%































(1)  Included in net income are pretax merger related expenses of approximately $2.7 million for the three months ending June 30, 2016 and $186,000 for the three months ending March 31, 2016, for a total of $2.9 million.


















(2)  Included in net income are pretax merger related expenses of approximately $102,000 for the three months ending June 30, 2016.


















 

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

(In thousands, except share data)
















At September 30,


At December 31,







2016


2015










Core deposits:







Noninterest-bearing demand accounts


$              267,892


163,054

Interest-bearing demand accounts



195,792


158,581

Savings accounts




47,035


39,147

Money market accounts



299,960


223,906


Total core deposits (Non-GAAP)

810,679


584,688










Certificates of deposit:







Less than $250,000




476,744


428,067

$250,000 or more




24,853


18,773


Total certificates of deposit



501,597


446,840

Total deposits




$           1,312,276


1,031,528

























At September 30,


At December 31,







2016


2015










Tangible book value per share:





Total stockholders' equity



$              160,331


139,859

Less intangible assets




(8,037)


(2,961)

Tangible common equity (Non-GAAP)


$              152,294


136,898










Issued and outstanding shares


12,546,220


12,023,557

Less nonvested restricted stock awards


(216,828)


(285,805)

Period end dilutive shares



12,329,392


11,737,752










Total stockholders equity


$              160,331


139,859

Divided by period end dilutive shares


12,329,392


11,737,752

Common book value per share


$                  13.00


11.92










Tangible common equity (Non-GAAP)

$              152,294


136,898

Divided by period end dilutive shares

12,329,392


11,737,752

Tangible common book value per share (Non-GAAP)

$                  12.35


11.66










 

 


Reconciliation of Non-GAAP Financial Measures













(Unaudited)

















(In thousands, except share data)
































For the Three Months Ended


For the Nine Months Ended

Operating Earnings:




September 30,
  2016


June 30,
 2016


March 31,
 2016


December 31,
  2015


September 30,
  2015


September 30,
2016


September 30,
  2015

Income before income taxes



$                  8,939


3,700


5,281


5,367


5,830


17,920


16,113

Gain on sale of securities



(111)


(113)


(417)


(34)


(1,017)


(641)


(1,459)

Net loss on extinguishment of debt


118


47


9


36


-


174


1,215

Fair value adjustments on interest rate swaps

(99)


226


281


(142)


1,246


408


1,253

Merger related costs



-


2,799


186


-


-


2,985


-

Operating earnings before income taxes


8,847


6,659


5,340


5,227


6,059


20,846


17,122

Tax expense (1) (2)




2,967


1,555


1,656


1,712


2,026


6,398


5,634

Operating earnings (Non-GAAP)


$                  5,880


5,104


3,684


3,515


4,033


14,448


11,488




















Average equity




157,311


145,656


141,311


111,189


102,326


148,134


98,805

Average assets




1,626,717


1,482,963


1,412,778


1,364,772


1,322,382


1,500,819


1,283,183

Operating return on average assets (Non-GAAP)

1.45%


1.38%


1.04%


1.03%


1.22%


1.28%


1.19%

Operating return on average equity (Non-GAAP)

14.95%


14.02%


10.43%


12.64%


15.77%


13.00%


15.50%




















Weighted average common shares outstanding:















Basic





12,327,921


11,908,282


11,746,574


9,888,030


9,463,772


11,995,477


9,421,042


Diluted




12,535,551


12,076,878


11,978,801


10,103,966


9,674,994


12,201,721


9,595,991

Operating earnings per common share:
















Basic (Non-GAAP)



$                    0.48


0.43


0.31


0.36


0.43


1.20


1.22


Diluted (Non-GAAP)



$                    0.47


0.42


0.31


0.35


0.42


1.18


1.20







































As Reported:

















Income before income taxes



$                  8,939


3,700


5,281


5,367


5,830


17,920


16,113

Tax expense




2,998


864


1,638


1,758


1,949


5,500


5,302

Net Income




$                  5,941


2,836


3,643


3,609


3,881


12,420


10,811




















Average equity




157,311


145,656


141,311


111,189


102,326


148,134


98,805

Average assets




1,626,717


1,482,963


1,412,778


1,364,772


1,322,382


1,500,819


1,283,183

Return on average assets



1.46%


0.76%


1.03%


1.06%


1.17%


1.10%


1.12%

Return on average equity



15.11%


7.79%


10.31%


12.98%


15.17%


11.18%


14.59%




















Weighted average common shares outstanding:















Basic




12,327,921


11,908,282


11,746,574


9,888,030


9,463,772


11,995,477


9,421,042


Diluted




12,535,551


12,076,878


11,978,801


10,103,966


9,674,994


12,201,721


9,595,991

Earnings per common share:

















Basic




$                    0.48


0.24


0.31


0.37


0.41


1.04


1.15


Diluted




$                    0.47


0.23


0.30


0.36


0.40


1.02


1.13




















(1)  Tax expense is determined using the effective tax rate reflected in the accompanying income statement for the applicable reporting period.

(2)  In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions, including income tax consequences.  In addition to other changes, the guidance changes the accounting for excess tax benefits and tax deficiencies from generally being recognized in additional paid-in capital to recognition as income tax expense or benefit in the period they occur.  The Company early adopted the new guidance in the second quarter of 2016.  As a result, the Company's income tax expense was reduced by approximately $399,000, or $0.03 per diluted share, in the second quarter of 2016.




















 


Reconciliation of Non-GAAP Financial Measures









(Unaudited)













(In thousands, except share data)
























For the Three Months Ended







September 30, 
  2016


June 30, 
  2016


March 31, 
  2016


December 31, 
  2015


September 30, 
  2015

Segment net income:













Community banking




$                  4,734


2,162


3,413


3,258


2,854

Wholesale mortgage banking



1,402


919


401


525


1,273

Other





(228)


(253)


(188)


(207)


(256)

Eliminations




33


8


17


33


10

Total net income




$                  5,941


2,836


3,643


3,609


3,881
















Community banking segment operating earnings:










Income before income taxes



$                  6,975


2,785


4,953


4,842


4,199

Tax expense (1) (3)




2,241


623


1,540


1,584


1,345

Bank segment net income



$                  4,734


2,162


3,413


3,258


2,854
















Weighted average common shares outstanding:











Basic





12,327,921


11,908,282


11,746,574


9,888,030


9,463,772


Diluted




12,535,551


12,076,878


11,978,801


10,103,966


9,674,994
















Earnings per common share:













Basic





$                    0.38


$              0.18


$              0.28


$              0.32


$              0.29


Diluted




$                    0.38


$              0.18


$              0.28


$              0.32


$              0.29
















Bank segment income before taxes



$                  6,975


2,785


4,953


4,842


4,199

Gain on sale of securities



(111)


(113)


(417)


(34)


(1,017)

Net loss on extinguishment of debt



118


47


9


36


-

Fair value adjustments on interest rate swaps


(99)


226


281


(142)


1,246

Merger related costs (2)



-


2,697


186


-


-

Operating earnings before income taxes


6,883


5,642


5,012


4,702


4,428

Tax expense (1) (3)




2,211


1,262


1,558


1,538


1,418

Operating bank segment earnings (Non-GAAP)


$                  4,672


4,380


3,454


3,164


3,010
















Operating bank segment earnings per common share:











Basic (Non-GAAP)



$                    0.38


$              0.37


$              0.29


$              0.32


$              0.32


Diluted (Non-GAAP)



$                    0.37


$              0.36


$              0.29


$              0.31


$              0.31
















(1)  Tax expense is determined using the effective tax rate computed for the applicable business segment.
















(2)  Remaining merger related costs of $102,000 were incurred within the category "Other" segment earnings for three months ended June 30, 2016.
















(3)  In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions, including income tax consequences.  In addition to other changes, the guidance changes the accounting for excess tax benefits and tax deficiencies from generally being recognized in additional paid-in capital to recognition as income tax expense or benefit in the period they occur.  The Company early adopted the new guidance in the second quarter of 2016.  As a result, the Banking segment income tax expense was reduced by approximately $343,000, or $0.03 per diluted share, in the second quarter of 2016.














































To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/carolina-financial-corporation-reports-results-for-third-quarter-of-2016-300347737.html

SOURCE Carolina Financial Corporation