8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 18, 2017

CAROLINA FINANCIAL CORPORATION

(Exact Name of Registrant As Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

000-19029	57-1039637
(Commission File Number)	(I.R.S. Employer Identification No.)

288 Meeting Street, Charleston, South Carolina	29401
(Address of Principal Executive Offices)	(Zip Code)

(843) 723-7700

(Registrant's Telephone Number, Including Area Code)

Not Applicable

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

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

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.       Results of Operations and Financial Condition

On January 18, 2017, Carolina Financial Corporation (the “Company”) issued a news release announcing its results of operations for the three and twelve month periods ended December 31, 2016. A copy of the news release is attached hereto as Exhibit 99.1. The information included herein, as well as in Exhibit 99.1 referenced herein, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in filings under the Securities Act of 1933, as amended (the “Securities Act”).

The Company will hold an investor conference call to disclose its financial results for the three and twelve month periods ended December 31, 2016 on January 19, 2017 at 2:00 pm Eastern Time. 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.

A copy of the investor presentation prepared for use by executive management during the investor conference call is furnished as Exhibit 99.2. All of the information in the presentation is presented as of January 19, 2017, and the Company does not assume any obligation to update such information in the future.

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

Item 8.01.      Other Events.

Dividend Announcement

The Company’s Board of Directors declared a quarterly cash dividend of $0.04 per share payable on its common stock. The cash dividend will be payable on April 7, 2017 to stockholders of record as of March 17, 2017. 

Item 9.01.       Financial Statements and Exhibits.

(d)       Exhibits

Exhibit Number	Description
99.1	News Release dated January 18, 2017.
99.2	Investor Presentation dated January 19, 2017

SIGNATURES

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

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

Dated: January 18, 2017

EX-99.1

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.

EX-99.2

Fourth Quarter 2016 Earnings Release Investor Presentation NASDAQ: CARO January 19, 2017

2 Disclaimer Certain statements in this presentation contain “forward - looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 , such as statements relating to future plans and expectations, and are thus prospective . Such forward - looking statements include but are not limited to statements with respect to plans, objectives, expectations, and intentions and other statements that are not historical facts, and other statements identified by words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” and “projects,” as well as similar expressions . Such statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward - looking statements . Although we believe that the assumptions underlying the forward - looking statements are reasonable, any of the assumptions could prove to be inaccurate . Therefore, we can give no assurance that the results contemplated in the forward - looking statements will be realized . The inclusion of this forward - looking information should not be construed as a representation by Carolina Financial Corporation (“Carolina Financial” or the “Company”) or any person that such future events, plans, or expectations will occur or be achieved . In addition to factors previously disclosed in the reports filed by Carolina Financial with the Securities and Exchange Commission (the “SEC”), additional risks and uncertainties may include, but are not limited to : ( 1 ) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third - party relationships and revenues ; ( 2 ) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the Company’s loan portfolio and allowance for loan losses ; ( 3 ) the rate of delinquencies and amounts of charge - offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk - related losses and expenses ; ( 4 ) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized ; ( 5 ) changes in the U . S . legal and regulatory framework including, but not limited to, the Dodd - Frank Act and regulations adopted thereunder ; ( 6 ) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on the Company ; 7 ) the 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 the reports (such as our Annual Report on Form 10 - K, Quarterly Reports on Form 10 - Q and Current Reports on Form 8 - K) filed with the SEC and available at the SEC’s Internet site (http : //www . sec . gov) . All subsequent written and oral forward - looking statements concerning the Company or any person acting on its behalf is expressly qualified in its entirety by the cautionary statements above . We do not undertake any obligation to update any forward - looking statement to reflect circumstances or events that occur after the date the forward - looking statements are made . This presentation and the accompanying news release contain financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”) . Such statements should be read along with the tables in the accompanying news release, which provide a reconciliation of non - GAAP measures to GAAP measures . This presentation and the accompanying news release 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 .

3 Fourth Quarter Highlights • 2016Q4 net income 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. ( 1 ) • 2016Q4 operating earnings (Non - GAAP) 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. (2) • 2016Q4 operating ROAA (Non - GAAP) and o perating ROAE (Non - GAAP) was 1.40% and 14.32%, respectively. • Tangible book value (Non - GAAP) per share of $12.59 at 12/31/2016 compared to $11.66 at 12/31/2015. • Loans receivable, excluding acquired loans, grew at an annualized rate of 20.2% or $ 185.9 million since December 31, 2015. Fourth quarter annualized loan growth was 15.9%. • Growth in total deposits of $143.5 million since 12/31/2015, excluding acquired deposits. • Core Deposits (Non - GAAP), excluding acquired deposits, increased $114.0 million since 12/31/2015. • Nonperforming assets to total assets of 0.40% as of 12/31/2016 as compared to 0.47% as of 12/31/2015. (1) All information at and for the period ended. 12/31/2016 is preliminary and based on Company data available at the time of the presentation. (2) Operating earnings exclude loss on extinguishment of debt, net gain or loss on sale of securities, fair value adjustments on int erest rate swaps, and merger expenses, all net of income taxes at the applicable period effective rate. (3) Core deposits are defined as checking, savings and money market accounts.

4 Community Banking Segment Results

5 Strong, Improving Community Banking Segment Results Bank Segment Earnings (1) • Banking segment earnings 2016Q4 net income of $4.6 million, or $0.36 per diluted share, versus $3.3 million for 2015Q4, or $0.32 per diluted share. • Operating Bank segment earnings (Non - GAAP) 2016Q4 of $5.2 million, or $0.41 per diluted share, versus $3.2 million for 2015Q4, or $0.31 per diluted share. (2) 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 4.0% fixed interest rate and a remaining term of 4.1 years. • $1.0 million fair value adjustment gain on interest rate swaps that are marked to market • $ 260,000 in merger related costs • $65,000 gain on sale of securities • Bank Return on Average Assets increased to 1.11% for 2016Q4 from 0.99% for 2015Q4. • Operating Bank Return on Average Assets (Non - GAAP) increased to 1.25% for 2016Q4 from 0.96% for 2015Q4 . ( 2) 2011Y 2012Y ($18.7) (1) Community banking segment earnings as reported in public filings (includes intersegment revenues and expenses and excludes ho ldi ng company expenses). The 12/31/2016 information is preliminary and based on Company data available at the time of the presentation. (2) Operating earnings exclude loss on extinguishment of debt, net gain or loss on sale of securities, fair value adjustments on interest rate swaps, and merger expenses, all net of effective income tax rate for the applicable business segment. Operating bank segment EPS equals operating bank segment earni ngs divided by weighted average diluted shares.

6 Net Interest Margin (1) The 12/31/2016 information is preliminary and based on Company data available at the time of the presentation. (2) Net interest margin – tax - equivalent. • Net interest margin expanded 28bps for the fourth quarter of 2016 due to the following: • Average earnings assets comprised of 76.1% in loans held for investment and loans held for sale in 2016Q4 compared to 72.1% in 2015Q4. • Accretion income from acquired loans was approximately $ 341,000, or 9bps of change for 2016 Q4 and $390,000, or 10bps of change, for 2016Q3. • Cost of funds decreased slightly to 61bps for 2016Q4. Net Interest Margin (2) Yield on Loans (1) Cost of Funds (1)

7 Consistent Core Fee Income Stream • The Bank segment’s core noninterest income is primarily derived from deposit service charges, retail mortgage income and BOLI earnings. Banking Segment Core Noninterest Income ($MM) (1) The 12/31/2016 information is preliminary and based on Company data available at the time of the presentation. (1)

8 Bank Segment Operating Efficiencies • Operating bank s egment n oninterest expenses as a percentage of average consolidated assets of 2.29% in 2016Q4 compared to 2.35% in 2015Q4. • Operating bank segment efficiency ratio improved to 56.1% in 2016Q4 from 63.1% in 2015Q4. Operating Bank Segment Noninterest Expenses/Avg. Assets (%) (1)(2)(3) (1) Bank segment operating figures include intersegment revenues and expense and exclude holding company expenses. (2) The 12/31/2016 information is preliminary and based on Company data available at the time of the presentation. (3) Operating bank segment ratios exclude loss on extinguishment of debt, net gain or loss on sale of securities, fair value adjustments on interest rate swaps, and merger expenses. ( 2 ) Operating Bank Segment Efficiency Ratio (1)(2)(3)

9 Strong Balance Sheet Growth • Loans held for investment, excluding acquired loans, grew at an annualized rate of 20.2% during 2016. • Total Deposits, excluding acquired deposits, increased $143.5 million since 12/31/2015. Total Deposits ($MM) ( 1 )(2) Total Loans ($MM) (1)(2) Total Assets($MM) ( 1 )(2) (1) Includes assets acquired and liabilities assumed in acquisitions, net of fair value adjustments. (2) The 12/31/2016 information is preliminary and based on Company data available at the time of the presentation.

10 Diversified Loan Mix and Solid Asset Quality NPAs/ Assets (%) (1)(2) • We have a diversified loan mix, with a focus on lower risk assets. • Our asset quality remains favorable, with NPA’s / assets of 0.40% at 12/31/2016. • Included in 12/31/2016 NPAs was $941,000 in real estate acquired through foreclosure, net as a result of the Congaree merger. • We experienced net recoveries for fiscal years 2014 and 2015 and continue to experience net recoveries through 2016. Total net recoveries were $547,000 and $1.1 million for 2016 and 2015, respectively. (1) Excludes performing troubled debt restructurings (TDRs ). (2) The 12/31/2016 information is preliminary and based on Company data available at the time of the presentation. NCOs / Average Loans (%) ( 2) Loan Composition (12/31/2016) (2) 2016Q4 Yield on Loans: 4.92%

11 Improving Deposit Mix Deposit Composition (12/31/16) (1) Checking Accounts (2) • Focus on increasing checking accounts as evidenced by an annualized checking account growth rate of 9.2% since 12/31/2015, excluding acquired checking accounts. 2016 Q4 Cost of Deposits: 0.48% (1) The 12/31/2016 information is preliminary and based on Company data available at the time of the presentation. (2) Includes checking accounts from deposits acquired during 2016Q2 acquisition. (1)

12 Attractive Wholesale Mortgage Platform

13 Wholesale Mortgage Platform Strong, Scalable Mortgage Platform (2 ) • Wholesale Mortgage segment earnings of $806,000, or $0.06 per diluted share, for 2016Q4 compared to $525,000, or $0.05 per diluted share, for 2015Q4. (1) • Increase in originations and margin has resulted in an increase in wholesale mortgage segment earnings reported 2016Q4 from 2015Q4. Mortgage Banking Earnings Contribution (1)(2) (1) Wholesale Mortgage segment earnings include intersegment revenues and expenses and exclude holding company expenses. Wholesale mortgage EPS equals segment earnings divided by weighted average diluted shares. (2) The 12/31/2016 information is preliminary and based on Company data available at the time of the presentation.

14 Focus on Shareholder Results • ROAA and ROAE of 1.25% and 12.80%, respectively, for 2016Q4. • Operating ROAA (Non - GAAP) and Operating ROAE (Non - GAAP) of 1.40% and 14.32%, respectively, for 2016Q4. • Diluted Earnings Per Share of $ 0.41 for 2016Q4 compared to $ 0.36 for 2015Q4 • Diluted Operating Earnings Per Share (Non - GAAP) of $0.46 for 2016Q4 compared to $0.35 for 2015Q4 Consolidated Operating ROAA & Operating ROAE (1 )(2) Tangible Book Value per Share & Operating Earnings per Share (1)(2) (1) The 12/31/2016 information is preliminary and based on Company data available at the time of the presentation. (2) Operating earnings exclude extinguishment of debt, net gain or loss on sale of securities, fair value adjustments on interest rate swaps, and merger expenses, all net of income taxes at the applicable period effective rate.