Attached files
| file | filename |
|---|---|
| EX-99.2 - CAROLINA FINANCIAL CORP | e17017_ex99-2.htm |
| 8-K - CAROLINA FINANCIAL CORP | e17017_caro-8k.htm |
Exhibit 99.1
Carolina Financial Corporation Reports Results for Fourth Quarter of 2016
NEWS RELEASE – For Release January 18, 2017, 4:00PM
For More Information, Contact:
William A. Gehman III, EVP and CFO, 843.723.7700
Charleston, S.C., January 18, 2017 - Carolina Financial Corporation (NASDAQ: CARO) today announced financial results for the fourth quarter of 2016. Highlights at and for the three months ended December 31, 2016, include:
| · | Net income for the fourth quarter 2016 increased 42.7% to $5.2 million, or $0.41 per diluted share from $3.6 million, or $0.36 per diluted share for the fourth quarter of 2015. |
| · | Operating earnings for the fourth quarter of 2016, which excludes certain non-operating income and expenses, increased 63.9% to $5.8 million, or $0.46 per diluted share, from $3.5 million, or $0.35 per diluted share, from the fourth quarter of 2015. Non-operating income and expenses for the quarter ended December 31, 2016 include: |
| - | $1.7 million loss on extinguishment of debt related to the prepayment of a $20.0 million advance with a 4% fixed interest rate and a remaining term of 4.1 years |
| - | $1.0 million fair value adjustment gain on interest rate swaps marked to market |
| - | $260,000 in merger related costs |
| - | $65,000 gain on sale of securities |
| · | Loans receivable, excluding acquired loans, grew at an annualized rate of 20.2% or $185.9 million since December 31, 2015 and 15.9% or $45.0 million since September 30, 2016. |
| · | Nonperforming assets to total assets of 0.40% as of December 31, 2016 compared to 0.47% at December 31, 2015. |
| · | Total deposits, excluding acquired deposits, increased $143.5 million since December 31, 2015. Core deposits, excluding acquired deposits, increased $114.0 million since December 31, 2015. |
| · | In November 2016, Carolina Financial Corporation announced the acquisition of Greer Bancshares Incorporated, a $381 million bank holding company that operates four banking locations in the Greenville-Anderson-Mauldin, South Carolina MSA. |
| · | In December 2016, the Company opened its second branch in the Wilmington Market. |
“We are pleased to report increases in net income of 42.7% and operating earnings of 63.9% for the fourth quarter of 2016 over the comparable prior year quarter. These strong results are attributable to excellent earnings of CresCom Bank with improved performance of Crescent Mortgage Company. During 2016, we continued to experience exceptional organic loan and deposit growth, completed our Congaree Bancshares, Inc. merger, announced our Greer Bancshares, Inc. merger, and opened our second branch in Wilmington, NC.” stated Jerry Rexroad, Chief Executive Officer.
Financial Results
Carolina Financial Corporation
| n | The Company reported net income for the three months ended December 31, 2016 of $5.2 million, or $0.41 per diluted share, as compared to $3.6 million, or $0.36 per diluted share, for the three months ended December 31, 2015. Net income for the year ended December 31, 2016 totaled $17.6 million, or $1.42 per diluted share, compared to net income of $14.4 million, or $1.48 per diluted share for year ended December 31, 2015. Included in net income for the year ended December 31, 2016 were pretax merger related expense of $3.2 million. |
| n | Operating earnings for the fourth quarter of 2016 increased 63.9% to $5.8 million, or $0.46 per diluted share, from $3.5 million, or $0.35 per diluted share, from the fourth quarter of 2015. Operating earnings for the year ended December 31, 2016 increased 34.7% to $20.2 million, or $1.64 per diluted share, from $15.0 million, or $1.54 per diluted share, for the year ended December 31, 2015. |
| n | During the fourth quarter of 2016, the Company paid off a $20.0 million borrowing with a 4.0% fixed interest rate and a remaining term of approximately 4.1 years, incurring a $1.7 million loss on extinguishment of debt. In addition, the Company recognized a $1.0 million gain on fair value adjustments related to interest rate swaps that are marked to market. |
| n | The Company’s net interest margin-tax equivalent increased to 3.87% for the fourth quarter of 2016 compared to 3.59% for the fourth quarter of 2015. |
| n | The Company reported book value per common share of $13.23 and $11.92 as of December 31, 2016 and December 31, 2015, respectively. Tangible book value per common share was $12.59 and $11.66 as of December 31, 2016 and December 31, 2015, respectively. |
| n | At December 31, 2016, the Company’s regulatory capital ratios exceeded the minimum levels currently required. Stockholders’ equity totaled $163.2 million as of December 31, 2016 compared to $139.9 million at December 31, 2015. |
CresCom Bank
| n | The Bank’s net income (excluding Crescent Mortgage Company) increased 40.1% to $4.6 million for the three months ended December 31, 2016 compared to $3.3 million for the three months ended December 31, 2015. Net income for the year ended December 31, 2016 increased 30.5% to $14.9 million compared to net income of $11.4 million for the year ended December 31, 2015. Included in net income for the year ended December 31, 2016 were pretax merger related expense of $3.1 million. |
| n | No provision for loan loss was recorded during the three and twelve month periods ended December 31, 2016 or 2015. This was primarily due to continued excellent asset quality as well as net recoveries of $547,000 and $1.1 million for the year ended December 31, 2016 and 2015, respectively. |
| n | The Bank’s non-performing assets were 0.40% and 0.47% of total assets at December 31, 2016 and December 31, 2015, respectively. |
| n | Loans receivable increased to $1.2 billion at December 31, 2016 compared to $922.7 million at December 31, 2015. The increase in loans receivable primarily relates to the completed acquisition of Congaree State Bank (“Congaree”) as well as the Bank’s continuing focus on commercial lending and residential mortgage lending. |
| n | The number of checking accounts increased at an annualized rate of 9.2%, excluding Congaree checking accounts acquired, since December 31, 2015. Total deposits, excluding acquired deposits from the Congaree acquisition, increased $143.5 million since December 31, 2015. As of December 31, 2016 and December 31, 2015, core deposits, defined as checking, savings and money market, comprised approximately 60.6% and 56.7%, respectively, of total deposits. |
| n | The Bank’s retail mortgage conforming loan originations increased to $29.1 million for the three months ended December 31, 2016 compared to $23.2 million for the three months ended December 31, 2015. For the year ended December 31, 2016, retail mortgage conforming loan originations increased to $97.1 million compared to $73.6 million for the year ended December 31, 2015. As a result of the increased originations, retail mortgage banking noninterest income increased to $476,000 and $2.1 million for the three months and year ended December 31, 2016, respectively, compared to $424,000 and $1.7 million for the three months and year ended December 31, 2015, respectively. 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
| n | Net income for Crescent Mortgage Company, a wholly-owned subsidiary of the Bank, was $806,000 for the three months ended December 31, 2016 compared to $525,000 for the three months ended December 31, 2015. Net income for the year ended December 31, 2016 was $3.5 million compared to $3.8 million for the year ended December 31, 2015. |
| n | The increase in net income of Crescent Mortgage Company during fourth quarter of 2016 is primarily attributable to an increase in margin during the period. Originations for the three months ended December 31, 2016 and 2015 were $234.9 million and $217.0 million, respectively. Originations for the year ended December 31, 2016 and 2015 were $875.4 million and $986.7 million, respectively. The percentage of originations attributable to refinances were 37.5% for 2016 compared to 34.3% for 2015. |
Conference Call
A conference call will be held at 2:00 p.m., Eastern Time on January 19, 2017. 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 42947387. 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 42947387.
About Carolina Financial Corporation
Carolina Financial Corporation (“Carolina Financial” or the “Company”) 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 December 31, 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 June 2016, Carolina Financial completed its previously announced acquisition of Congaree Bancshares, Inc. and its wholly-owned subsidiary, Congaree State Bank. In November 2016, Carolina Financial announced its entry into an agreement to acquire Greer Bancshares Incorporated, a $381 million bank holding company that operates four banking locations in the Greenville-Anderson-Mauldin, South Carolina MSA.
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
| December 31, 2016 | December 31, 2015 | |||||||
| (Unaudited) | (Audited) | |||||||
| (Dollars in thousands) | ||||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 9,761 | 10,206 | |||||
| Interest-bearing cash | 14,591 | 16,421 | ||||||
| Cash and cash equivalents | 24,352 | 26,627 | ||||||
| Securities available-for-sale | 335,352 | 306,474 | ||||||
| Securities held-to-maturity | — | 17,053 | ||||||
| Federal Home Loan Bank stock, at cost | 11,072 | 9,919 | ||||||
| Other investments | 1,768 | 1,760 | ||||||
| Derivative assets | 2,219 | 1,945 | ||||||
| Loans held for sale | 31,569 | 41,774 | ||||||
| Loans receivable, gross | 1,178,266 | 922,723 | ||||||
| Allowance for loan losses | (10,688 | ) | (10,141 | ) | ||||
| Loans receivable, net | 1,167,578 | 912,582 | ||||||
| Premises and equipment, net | 37,054 | 32,562 | ||||||
| Accrued interest receivable | 5,373 | 4,333 | ||||||
| Real estate acquired through foreclosure, net | 1,179 | 2,374 | ||||||
| Deferred tax assets, net | 8,782 | 5,273 | ||||||
| Mortgage servicing rights | 15,032 | 11,433 | ||||||
| Cash value life insurance | 28,984 | 28,082 | ||||||
| Core deposit intangible | 3,658 | 2,961 | ||||||
| Goodwill | 4,266 | — | ||||||
| Other assets | 5,939 | 4,517 | ||||||
| Total assets | $ | 1,684,177 | 1,409,669 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Noninterest-bearing deposits | $ | 229,905 | 163,054 | |||||
| Interest-bearing deposits | 1,028,355 | 868,474 | ||||||
| Total deposits | 1,258,260 | 1,031,528 | ||||||
| Short-term borrowed funds | 203,000 | 120,000 | ||||||
| Long-term debt | 38,465 | 103,465 | ||||||
| Derivative liabilities | 342 | 306 | ||||||
| Drafts outstanding | 6,223 | 2,154 | ||||||
| Advances from borrowers for insurance and taxes | 1,058 | 641 | ||||||
| Accrued interest payable | 327 | 333 | ||||||
| Reserve for mortgage repurchase losses | 2,880 | 3,876 | ||||||
| Dividends payable to stockholders | 502 | 361 | ||||||
| Accrued expenses and other liabilities | 9,930 | 7,146 | ||||||
| Total liabilities | 1,520,987 | 1,269,810 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 125 | 120 | ||||||
| Additional paid-in capital | 66,156 | 56,418 | ||||||
| Retained earnings | 98,451 | 82,859 | ||||||
| Accumulated other comprehensive (loss) income, net of tax | (1,542 | ) | 462 | |||||
| Total stockholders’ equity | 163,190 | 139,859 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,684,177 | 1,409,669 | |||||
CAROLINA FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months | For the Twelve Months | |||||||||||||||
| Ended December 31, | Ended December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015* | |||||||||||||
| (In thousands, except share data) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Loans | $ | 14,346 | 10,747 | 51,137 | 41,020 | |||||||||||
| Investment securities | 2,439 | 2,145 | 9,274 | 8,176 | ||||||||||||
| Dividends from Federal Home Loan Bank stock | 86 | 90 | 374 | 328 | ||||||||||||
| Federal funds sold | — | — | 5 | — | ||||||||||||
| Other interest income | 32 | 20 | 124 | 80 | ||||||||||||
| Total interest income | 16,903 | 13,002 | 60,914 | 49,604 | ||||||||||||
| Interest expense | ||||||||||||||||
| Deposits | 1,523 | 1,273 | 5,972 | 4,367 | ||||||||||||
| Short-term borrowed funds | 189 | 114 | 509 | 331 | ||||||||||||
| Long-term debt | 529 | 515 | 2,272 | 1,906 | ||||||||||||
| Total interest expense | 2,241 | 1,902 | 8,753 | 6,604 | ||||||||||||
| Net interest income | 14,662 | 11,100 | 52,161 | 43,000 | ||||||||||||
| Provision for loan losses | — | — | — | — | ||||||||||||
| Net interest income after provision for loan losses | 14,662 | 11,100 | 52,161 | 43,000 | ||||||||||||
| Noninterest income | ||||||||||||||||
| Mortgage banking income | 4,259 | 3,543 | 17,226 | 17,417 | ||||||||||||
| Deposit service charges | 976 | 858 | 3,688 | 3,496 | ||||||||||||
| Net loss on extinguishment of debt | (1,694 | ) | (36 | ) | (1,868 | ) | (1,251 | ) | ||||||||
| Net gain on sale of securities | 65 | 34 | 706 | 1,493 | ||||||||||||
| Fair value adjustments on interest rate swaps | 998 | 142 | 590 | (1,111 | ) | |||||||||||
| Net increase in cash value life insurance | 219 | 196 | 903 | 726 | ||||||||||||
| Mortgage loan servicing income | 1,510 | 1,357 | 5,748 | 5,313 | ||||||||||||
| Other | 576 | 409 | 2,304 | 1,596 | ||||||||||||
| Total noninterest income | 6,909 | 6,503 | 29,297 | 27,679 | ||||||||||||
| Noninterest expense | ||||||||||||||||
| Salaries and employee benefits | 8,169 | 7,176 | 31,475 | 28,629 | ||||||||||||
| Occupancy and equipment | 2,106 | 1,896 | 7,942 | 7,228 | ||||||||||||
| Marketing and public relations | 284 | 287 | 1,428 | 1,434 | ||||||||||||
| FDIC insurance | 175 | 158 | 702 | 698 | ||||||||||||
| Provision for mortgage loan repurchase losses | (250 | ) | (250 | ) | (1,000 | ) | (1,000 | ) | ||||||||
| Legal expense | 121 | 60 | 306 | 407 | ||||||||||||
| Other real estate expense, net | 17 | 24 | (20 | ) | 138 | |||||||||||
| Mortgage subservicing expense | 504 | 398 | 1,857 | 1,634 | ||||||||||||
| Amortization of mortgage servicing rights | 653 | 526 | 2,312 | 1,986 | ||||||||||||
| Merger related expenses | 260 | — | 3,245 | — | ||||||||||||
| Other | 2,034 | 1,961 | 7,793 | 8,045 | ||||||||||||
| Total noninterest expense | 14,073 | 12,236 | 56,040 | 49,199 | ||||||||||||
| Income before income taxes | 7,498 | 5,367 | 25,418 | 21,480 | ||||||||||||
| Income tax expense | 2,348 | 1,758 | 7,848 | 7,060 | ||||||||||||
| Net income | $ | 5,150 | 3,609 | 17,570 | 14,420 | |||||||||||
| Earnings per common share: | ||||||||||||||||
| Basic | $ | 0.42 | 0.37 | 1.45 | 1.51 | |||||||||||
| Diluted | $ | 0.41 | 0.36 | 1.42 | 1.48 | |||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 12,336,420 | 9,888,030 | 12,080,128 | 9,537,358 | ||||||||||||
| Diluted | 12,585,518 | 10,103,966 | 12,352,246 | 9,718,356 | ||||||||||||
* Derived from audited financial statements.
CAROLINA FINANCIAL CORPORATION
(Unaudited)
(Dollars in thousands)
| At or for the Three Months Ended | ||||||||||||||||||||
| Selected Financial Data: | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | |||||||||||||||
| Selected Average Balances: | ||||||||||||||||||||
| Total assets | $ | 1,651,653 | 1,626,717 | 1,482,963 | 1,412,778 | 1,364,772 | ||||||||||||||
| Investment securities | 326,485 | 345,385 | 335,105 | 335,929 | 330,364 | |||||||||||||||
| Loans receivable, net | 1,138,120 | 1,093,669 | 978,337 | 935,438 | 876,445 | |||||||||||||||
| Loans held for sale | 32,951 | 32,196 | 24,467 | 25,454 | 31,212 | |||||||||||||||
| Deposits | 1,288,665 | 1,291,567 | 1,170,860 | 1,069,451 | 1,052,192 | |||||||||||||||
| Stockholders’ equity | 160,991 | 157,311 | 145,656 | 141,311 | 111,189 | |||||||||||||||
| Performance Ratios (annualized): | ||||||||||||||||||||
| Return on average stockholders’ equity | 12.80 | % | 15.11 | % | 7.79 | % | 10.31 | % | 12.98 | % | ||||||||||
| Return on average assets | 1.25 | % | 1.46 | % | 0.76 | % | 1.03 | % | 1.06 | % | ||||||||||
| Average earning assets to average total assets | 93.21 | % | 92.94 | % | 93.44 | % | 93.08 | % | 92.23 | % | ||||||||||
| Average loans receivable to average deposits | 88.32 | % | 84.68 | % | 83.56 | % | 87.47 | % | 83.30 | % | ||||||||||
| Average stockholders’ equity to average assets | 9.75 | % | 9.67 | % | 9.82 | % | 10.00 | % | 8.15 | % | ||||||||||
| Net interest margin-tax equivalent (1) | 3.87 | % | 3.75 | % | 3.64 | % | 3.53 | % | 3.59 | % | ||||||||||
| Net charge-offs (recovery) to average loans receivable | (0.12 | )% | (0.02 | )% | (0.03 | )% | (0.04 | )% | (0.11 | )% | ||||||||||
| Nonperforming assets to period end loans receivable | 0.58 | % | 0.62 | % | 0.67 | % | 0.59 | % | 0.72 | % | ||||||||||
| Nonperforming assets to total assets | 0.40 | % | 0.42 | % | 0.45 | % | 0.39 | % | 0.47 | % | ||||||||||
| Nonperforming loans to total loans | 0.48 | % | 0.37 | % | 0.37 | % | 0.48 | % | 0.47 | % | ||||||||||
| Allowance for loan losses as a percentage of gross loans receivable (end of period) (2) | 0.91 | % | 0.91 | % | 0.96 | % | 1.06 | % | 1.10 | % | ||||||||||
| Allowance for loan losses as a percentage of nonperforming loans (2) | 190.01 | % | 247.72 | % | 262.68 | % | 223.38 | % | 235.67 | % | ||||||||||
| Nonperforming Assets: | ||||||||||||||||||||
| Loans 90 days or more past due and still accruing | $ | — | — | — | — | — | ||||||||||||||
| Nonaccrual loans | 5,625 | 4,174 | 3,920 | 4,581 | 4,303 | |||||||||||||||
| Total nonperforming loans | 5,625 | 4,174 | 3,920 | 4,581 | 4,303 | |||||||||||||||
| Real estate acquired through foreclosure, net (3) | 1,179 | 2,843 | 3,272 | 1,091 | 2,374 | |||||||||||||||
| Total nonperforming assets | $ | 6,804 | 7,017 | 7,192 | 5,672 | 6,677 | ||||||||||||||
(1) Net interest margin-tax equivalent reflects tax-exempt income on a tax-equivalent basis.
(2) Acquired loans represent 10.5%, 11.4%, 12.2%, 6.4%, and 7.0% of gross loans receivable at December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively.
(3) Real estate acquired through foreclosure, net at December 31, 2016 includes $941,000 related to the Congaree merger.
Segment Information
(Unaudited)
(Dollars in thousands)
| For the Three Months | For the Twelve Months | Increase (Decrease) | ||||||||||||||||||||||
| Ended December 31, | Ended December 31, | Three | Twelve | |||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | Months | Months | |||||||||||||||||||
| Segment net income: | ||||||||||||||||||||||||
| Community banking | $ | 4,565 | 3,258 | 14,874 | 11,402 | 1,307 | 3,472 | |||||||||||||||||
| Wholesale mortgage banking | 806 | 525 | 3,529 | 3,832 | 281 | (303 | ) | |||||||||||||||||
| Other | (232 | ) | (207 | ) | (902 | ) | (867 | ) | (25 | ) | (35 | ) | ||||||||||||
| Eliminations | 11 | 33 | 69 | 53 | (22 | ) | 16 | |||||||||||||||||
| Total net income | $ | 5,150 | 3,609 | 17,570 | 14,420 | 1,541 | 3,150 | |||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||
| Segment net income: | ||||||||||||||||||||
| Community banking | $ | 4,565 | 4,734 | 2,162 | 3,413 | 3,258 | ||||||||||||||
| Wholesale mortgage banking | 806 | 1,402 | 919 | 401 | 525 | |||||||||||||||
| Other | (232 | ) | (228 | ) | (253 | ) | (188 | ) | (207 | ) | ||||||||||
| Eliminations | 11 | 33 | 8 | 17 | 33 | |||||||||||||||
| Total net income | $ | 5,150 | 5,941 | 2,836 | 3,643 | 3,609 | ||||||||||||||
| For the Three Months Ended December 31, | ||||||||||||||||||||||||
| Loan Originations | Mortgage Banking Income | Margin | ||||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
| Additional segment information: | ||||||||||||||||||||||||
| Community banking | $ | 29,121 | 23,161 | 476 | 424 | 1.63 | % | 1.83 | % | |||||||||||||||
| Wholesale mortgage banking | 234,915 | 216,971 | 3,783 | 3,119 | 1.61 | % | 1.44 | % | ||||||||||||||||
| Total mortgage banking income | $ | 264,036 | 240,132 | 4,259 | 3,543 | 1.61 | % | 1.48 | % | |||||||||||||||
| For the Twelve Months Ended December 31, | ||||||||||||||||||||||||
| Loan Originations | Mortgage Banking Income | Margin | ||||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
| Additional segment information: | ||||||||||||||||||||||||
| Community banking | $ | 97,062 | 73,591 | 2,063 | 1,656 | 2.13 | % | 2.25 | % | |||||||||||||||
| Wholesale mortgage banking | 875,360 | 986,650 | 15,163 | 15,761 | 1.73 | % | 1.60 | % | ||||||||||||||||
| Total mortgage banking income | $ | 972,422 | 1,060,241 | 17,226 | 17,417 | 1.77 | % | 1.64 | % | |||||||||||||||
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share data)
| At December 31, | At December 31, | |||||||
| 2016 | 2015 | |||||||
| Core deposits: | ||||||||
| Noninterest-bearing demand accounts | $ | 229,905 | 163,054 | |||||
| Interest-bearing demand accounts | 191,851 | 158,581 | ||||||
| Savings accounts | 48,648 | 39,147 | ||||||
| Money market accounts | 292,639 | 223,906 | ||||||
| Total core deposits (Non-GAAP) | 763,043 | 584,688 | ||||||
| Certificates of deposit: | ||||||||
| Less than $250,000 | 467,937 | 428,067 | ||||||
| $250,000 or more | 27,280 | 18,773 | ||||||
| Total certificates of deposit | 495,217 | 446,840 | ||||||
| Total deposits | $ | 1,258,260 | 1,031,528 | |||||
| At December 31, | At December 31, | |||||||
| 2016 | 2015 | |||||||
| Tangible book value per share: | ||||||||
| Total stockholders’ equity | $ | 163,190 | 139,859 | |||||
| Less intangible assets | (7,924 | ) | (2,961 | ) | ||||
| Tangible common equity (Non-GAAP) | $ | 155,266 | 136,898 | |||||
| Issued and outstanding shares | 12,548,328 | 12,023,557 | ||||||
| Less nonvested restricted stock awards | (211,908 | ) | (285,805 | ) | ||||
| Period end dilutive shares | 12,336,420 | 11,737,752 | ||||||
| Total stockholders equity | $ | 163,190 | 139,859 | |||||
| Divided by period end dilutive shares | 12,336,420 | 11,737,752 | ||||||
| Common book value per share | $ | 13.23 | 11.92 | |||||
| Tangible common equity (Non-GAAP) | $ | 155,266 | 136,898 | |||||
| Divided by period end dilutive shares | 12,336,420 | 11,737,752 | ||||||
| Tangible common book value per share (Non-GAAP) | $ | 12.59 | 11.66 | |||||
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share data)
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||||||||||||||
| Operating Earnings: | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||||||||||
| Income before income taxes | $ | 7,498 | 8,939 | 3,700 | 5,281 | 5,367 | 25,418 | 21,480 | ||||||||||||||||||||
| Gain on sale of securities | (65 | ) | (111 | ) | (113 | ) | (417 | ) | (34 | ) | (706 | ) | (1,493 | ) | ||||||||||||||
| Net loss on extinguishment of debt | 1,694 | 118 | 47 | 9 | 36 | 1,868 | 1,251 | |||||||||||||||||||||
| Fair value adjustments on interest rate swaps | (998 | ) | (99 | ) | 226 | 281 | (142 | ) | (590 | ) | 1,111 | |||||||||||||||||
| Merger related costs | 260 | — | 2,799 | 186 | — | 3,245 | — | |||||||||||||||||||||
| Operating earnings before income taxes | 8,389 | 8,847 | 6,659 | 5,340 | 5,227 | 29,235 | 22,349 | |||||||||||||||||||||
| Tax expense (1) | 2,627 | 2,967 | 1,555 | 1,656 | 1,712 | 9,027 | 7,346 | |||||||||||||||||||||
| Operating earnings (Non-GAAP) | $ | 5,762 | 5,880 | 5,104 | 3,684 | 3,515 | 20,208 | 15,003 | ||||||||||||||||||||
| Average equity | 160,991 | 157,311 | 145,656 | 141,311 | 111,189 | 151,346 | 101,896 | |||||||||||||||||||||
| Average assets | 1,651,653 | 1,626,717 | 1,482,963 | 1,412,778 | 1,364,772 | 1,537,654 | 1,303,402 | |||||||||||||||||||||
| Operating return on average assets (Non-GAAP) | 1.40 | % | 1.45 | % | 1.38 | % | 1.04 | % | 1.03 | % | 1.31 | % | 1.15 | % | ||||||||||||||
| Operating return on average equity (Non-GAAP) | 14.32 | % | 14.95 | % | 14.02 | % | 10.43 | % | 12.64 | % | 13.35 | % | 14.72 | % | ||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||||||
| Basic | 12,336,420 | 12,327,921 | 11,908,282 | 11,746,574 | 9,888,030 | 12,080,128 | 9,537,358 | |||||||||||||||||||||
| Diluted | 12,585,518 | 12,535,551 | 12,076,878 | 11,978,801 | 10,103,966 | 12,352,246 | 9,718,356 | |||||||||||||||||||||
| Operating earnings per common share: | ||||||||||||||||||||||||||||
| Basic (Non-GAAP) | $ | 0.47 | 0.48 | 0.43 | 0.31 | 0.36 | 1.67 | 1.57 | ||||||||||||||||||||
| Diluted (Non-GAAP) | $ | 0.46 | 0.47 | 0.42 | 0.31 | 0.35 | 1.64 | 1.54 | ||||||||||||||||||||
| As Reported: | ||||||||||||||||||||||||||||
| Income before income taxes | $ | 7,498 | 8,939 | 3,700 | 5,281 | 5,367 | 25,418 | 21,480 | ||||||||||||||||||||
| Tax expense | 2,348 | 2,998 | 864 | 1,638 | 1,758 | 7,848 | 7,060 | |||||||||||||||||||||
| Net Income | $ | 5,150 | 5,941 | 2,836 | 3,643 | 3,609 | 17,570 | 14,420 | ||||||||||||||||||||
| Average equity | 160,991 | 157,311 | 145,656 | 141,311 | 111,189 | 151,346 | 101,896 | |||||||||||||||||||||
| Average assets | 1,651,653 | 1,626,717 | 1,482,963 | 1,412,778 | 1,364,772 | 1,537,654 | 1,303,402 | |||||||||||||||||||||
| Return on average assets | 1.25 | % | 1.46 | % | 0.76 | % | 1.03 | % | 1.06 | % | 1.14 | % | 1.11 | % | ||||||||||||||
| Return on average equity | 12.80 | % | 15.11 | % | 7.79 | % | 10.31 | % | 12.98 | % | 11.61 | % | 14.15 | % | ||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||||||
| Basic | 12,336,420 | 12,327,921 | 11,908,282 | 11,746,574 | 9,888,030 | 12,080,128 | 9,537,358 | |||||||||||||||||||||
| Diluted | 12,585,518 | 12,535,551 | 12,076,878 | 11,978,801 | 10,103,966 | 12,352,246 | 9,718,356 | |||||||||||||||||||||
| Earnings per common share: | ||||||||||||||||||||||||||||
| Basic | $ | 0.42 | 0.48 | 0.24 | 0.31 | 0.37 | 1.45 | 1.51 | ||||||||||||||||||||
| Diluted | $ | 0.41 | 0.47 | 0.23 | 0.30 | 0.36 | 1.42 | 1.48 | ||||||||||||||||||||
(1) Tax expense is determined using the effective tax rate reflected in the accompanying income statement for the applicable reporting period.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share data)
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||||||||||||||
| December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||||||||||
| Segment net income: | ||||||||||||||||||||||||||||
| Community banking | $ | 4,565 | 4,734 | 2,162 | 3,413 | 3,258 | $ | 14,874 | 11,402 | |||||||||||||||||||
| Wholesale mortgage banking | 806 | 1,402 | 919 | 401 | 525 | 3,529 | 3,832 | |||||||||||||||||||||
| Other | (232 | ) | (228 | ) | (253 | ) | (188 | ) | (207 | ) | (902 | ) | (867 | ) | ||||||||||||||
| Eliminations | 11 | 33 | 8 | 17 | 33 | 69 | 53 | |||||||||||||||||||||
| Total net income | $ | 5,150 | 5,941 | 2,836 | 3,643 | 3,609 | $ | 17,570 | 14,420 | |||||||||||||||||||
| Community banking segment operating earnings: | ||||||||||||||||||||||||||||
| Income before income taxes | $ | 6,545 | 6,975 | 2,785 | 4,953 | 4,842 | $ | 21,258 | 16,744 | |||||||||||||||||||
| Tax expense (1) | 1,980 | 2,241 | 623 | 1,540 | 1,584 | 6,384 | 5,342 | |||||||||||||||||||||
| Bank segment net income | $ | 4,565 | 4,734 | 2,162 | 3,413 | 3,258 | $ | 14,874 | 11,402 | |||||||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||||||
| Basic | 12,336,420 | 12,327,921 | 11,908,282 | 11,746,574 | 9,888,030 | 12,080,128 | 9,537,358 | |||||||||||||||||||||
| Diluted | 12,585,518 | 12,535,551 | 12,076,878 | 11,978,801 | 10,103,966 | 12,352,246 | 9,718,356 | |||||||||||||||||||||
| Earnings per common share: | ||||||||||||||||||||||||||||
| Basic | $ | 0.37 | $ | 0.38 | $ | 0.18 | $ | 0.29 | $ | 0.33 | $ | 1.23 | $ | 1.20 | ||||||||||||||
| Diluted | $ | 0.36 | $ | 0.38 | $ | 0.18 | $ | 0.28 | $ | 0.32 | $ | 1.20 | $ | 1.17 | ||||||||||||||
| Bank segment income before taxes | $ | 6,545 | 6,975 | 2,785 | 4,953 | 4,842 | $ | 21,258 | $ | 16,744 | ||||||||||||||||||
| Gain on sale of securities | (65 | ) | (111 | ) | (113 | ) | (417 | ) | (34 | ) | (706 | ) | (1,493 | ) | ||||||||||||||
| Net loss on extinguishment of debt | 1,693 | 118 | 47 | 9 | 36 | 1,868 | 1,251 | |||||||||||||||||||||
| Fair value adjustments on interest rate swaps | (998 | ) | (99 | ) | 226 | 281 | (142 | ) | (590 | ) | 1,111 | |||||||||||||||||
| Merger related costs (2) | 254 | — | 2,697 | 186 | — | 3,137 | — | |||||||||||||||||||||
| Operating earnings before income taxes | 7,429 | 6,883 | 5,642 | 5,012 | 4,702 | 24,967 | 17,613 | |||||||||||||||||||||
| Tax expense (1) | 2,247 | 2,211 | 1,262 | 1,558 | 1,538 | 7,498 | 5,619 | |||||||||||||||||||||
| Operating bank segment earnings (Non-GAAP) | $ | 5,182 | 4,672 | 4,380 | 3,454 | 3,164 | $ | 17,469 | $ | 11,994 | ||||||||||||||||||
| Operating bank segment earnings per common share: | ||||||||||||||||||||||||||||
| Basic (Non-GAAP) | $ | 0.42 | $ | 0.38 | $ | 0.37 | $ | 0.29 | $ | 0.32 | $ | 1.45 | $ | 1.26 | ||||||||||||||
| Diluted (Non-GAAP) | $ | 0.41 | $ | 0.37 | $ | 0.36 | $ | 0.29 | $ | 0.31 | $ | 1.41 | $ | 1.23 | ||||||||||||||
(1) Tax expense is determined using the effective tax rate computed for the applicable business segment.
(2) Remaining merger related costs were incurred within the category “Other” segment earnings.