Carolina Financial Corporation Reports Results for Second Quarter of 2014

 

CHARLESTON, SC – Carolina Financial Corporation (NASDAQ: CARO) today announced that net income for the second quarter of 2014 was $2.2 million, or $.57 per share diluted, and $4.2 million, or $1.07 per share diluted, for the first half of 2014.

“One of our primary goals for 2014 is to return the earnings of CresCom Bank to the level of earnings exhibited by a superior community bank, without the help of Crescent Mortgage Company.  We are proud to report that we exceeded the Bank’s core earnings goal for the first half of 2014 with net income of $3.5 million.  We remain focused on increasing Bank profitability, growing core deposits, increasing cross-sale opportunities, improving asset quality and growing our loan portfolio.  Management and the Board of Directors believe that with our sustained focus, commitment, and action, we will grow and thrive in the current economic environment,” said Carolina Financial Corporation President and CEO Jerry Rexroad.

Financial Highlights for the Three and Six Months Ended June 30, 2014

— Carolina Financial Corp. reported net income of $2.2 million, or $.57 per share diluted, for the second quarter of 2014 and $4.2 million, or $1.07 per share diluted, during the first half of 2014 as compared to net income of $5.5 million, or $1.40 per share diluted, during second quarter of 2013 and $10.0 million, or $2.53 per share diluted, for the first half of 2013.

— The Bank’s net income (excluding Crescent Mortgage Company) was $1.8 million and $3.5 million for the second quarter and first half of 2014, respectively, as compared to net income of $2.0 million and $2.4 million for the second quarter and first half 2013, respectively.  The second quarter of 2013 included a negative provision for loan losses of $700,000.

— Net income for the Bank’s wholly-owned subsidiary, Crescent Mortgage Company, for the second quarter of 2014 was $611,000 and $1.1 million for the first half of 2014 compared to $3.7 million for the second quarter of 2013 and $7.8 million for the first half of 2013.  The decline in net income derived from Crescent Mortgage Company can be attributed to the significant decline in mortgage applications, which are at almost twenty year lows.

— The Company reported its book value per common share of $22.95 as of June 30, 2014 as compared to $21.38 as of December 31, 2013 and $19.51 as of June 30, 2013.

— The Bank continues to experience significant growth in core deposits (checking, savings and money market), which increased $26.6 million during the second quarter of 2014 and $23.3 million during the first quarter of 2014.  The growth in first quarter 2014 core deposits included $11.3 million of core deposits acquired in the St. George branch acquisition.

— The number of Bank checking accounts, excluding accounts acquired related to the St. George branch acquisition, increased by an annualized 17.7 percent for the first half of 2014.  As of June 30, 2014, core deposits comprised approximately 60 percent of total deposits as compared to 59 percent of total deposits at December 31, 2013.

— Loans receivable (before allowance for loan losses) grew to $614.0 million at June 30, 2014 compared to $543.3 million at December 31, 2013 and $512.3 million at June 30, 2013. This loan growth includes approximately $11.2 million in loans acquired related to the St. George branch acquisition, which was completed on February 21, 2014.

— The Bank’s non-performing assets were 1.53 percent of total assets at June 30, 2014, compared to 1.97 percent at December 31, 2013 and 2.47 percent at June 30, 2013.

— At June 30, 2014, the Company’s regulatory ratios exceed the well-capitalized minimum levels currently required by regulatory statute.  Shareholders’ equity totaled $89.3 million as of June 30, 2014, compared to $82.2 million at December 31, 2013, and $74.8 million at June 30, 2013.  The Company continues to work on appropriately leveraging its capital in an accretive earnings manner.  In addition, at June 30, 2014, the Bank’s Tier 1 capital ratio was 10.8 percent compared to 11.0 percent at December 31, 2013.  At June 30, 2014, the Bank’s total risk-based capital ratio was 15.8 percent compared to 16.7 percent at December 31, 2013. The Bank substantially exceeds the Tier 1 well capitalized and risk-based well capitalized levels of 5 percent and 10 percent, respectively.

Recent Developments

During the 2014-second quarter, the Company announced that its registration statement with the SEC became effective on April 28, 2014.  Consequently, the Company commenced filing periodic reports, such as those on Forms 10-Q, 10-K, and 8-K, with the SEC.  In addition, on July 1, 2014, the Company announced that its common stock is now listed for trading on the NASDAQ Capital Market.  “Becoming a NASDAQ-listed company is a significant accomplishment for Carolina Financial Corporation,” said Jerry L. Rexroad. “Moving to the NASDAQ was part of our strategic plan to provide our shareholders liquidity in their stock.”

Quarterly Cash Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $.05 per share payable on its common stock. The dividend will be payable on October 8, 2014 to shareholders of record as of September 17, 2014.

Growth Initiatives

In August 2014, the Bank plans to open a branch at Cane Bay, one of the fastest growing communities in Berkeley and Charleston counties.  Cane Bay Plantation was recently highlighted as being one of the nation’s top selling master planned communities.  Also in August, the Bank also plans to open a branch in Socastee, S.C.  On July 1, 2014, CresCom Bank announced that Scott Frierson had joined the Bank as EVP Commercial Lending, Upstate Region.  The Bank plans to open a Loan Production Office in the Greenville market in the third quarter.

 

 

About Carolina Financial Corporation

Carolina Financial Corporation (NASDAQ: CARO) is the holding company of CresCom Bank, which also owns and operates Atlanta-based Crescent Mortgage Company. As of June 30, 2014, Carolina Financial Corporation had approximately $988 million in total assets.  CresCom Bank operated 12 branch locations in the Charleston and Myrtle Beach areas of South Carolina with two additional offices opening in August 2014, and Crescent Mortgage Company originated loans in 45 states and partnered with approximately 2,000 community banks, credit unions and mortgage brokers, offering access to various loan programs. CresCom Bank offers a strong core of banking products and services. To learn more about CresCom Bank, visit www.facebook.com/CresComBank and www.twitter.com/CresComBank or call 1-855-CRESCOM.

In 2014, Carolina Financial Corporation ranked #6 on American Banker’s list of “Top 200 Community Banks and Thrifts as Ranked by Three-Year Average ROE.” It represented the #1 South Carolina community bank on this list. In 2013, Carolina Financial Corporation ranked #9 on ABA Banking Journal’s national list of top performing non-S banks and thrifts with total assets of $100 million to $1 billion.