February 24, 2014, Charleston, South Carolina – Carolina Financial Corporation (OTCQB: CARO), the parent company of CresCom Bank, released today financial results for the fourth quarter and 2013 calendar year.

Financial Highlights
• Net income of $4.1 million during the fourth quarter of 2013
• Net income of $16.8 million (or $4.25 per diluted EPS) in 2013; compared to 2012 net income of $16.9 million (or $4.40 per diluted EPS)
• Bank-only income (excludes Crescent Mortgage Company’s earnings) was $5 million in 2013; compared to a 2012 loss of $3.4 million; 2013 results also include $2.5 million of pre-tax expenses related to the settlement of employment contracts with retired executives and net losses on strategic sales of securities of pre-tax $1.1 million
• CresCom Bank continues to experience significant growth in core (checking, savings and money market) deposits which increased $62.6 million in 2013, or approximately 18 percent compared to 2012
• CresCom Bank’s core deposits comprised approximately 60 percent of total deposits in 2013
• Loans receivable (before allowance for loan losses) grew from $511.0 million at December 31, 2012 to $540.7 million at December 31, 2013 (or 5.8 percent); from June 30, 2013 through the end of the year, annualized growth rate was 11.6 percent
• During 2013, CresCom Bank’s wholly owned subsidiary Crescent Mortgage Company originated approximately $1.6 billion in loans held for sale, compared to $2.2 billion in 2012
• Net income for 2013 from Crescent Mortgage Company was $12.4 million; compared to $21.0 million in 2012

Quarterly Cash Dividend
The Board of Directors declared a quarterly cash dividend of $.05 per share payable on its common stock. The dividend will be payable on April 11, 2014 to shareholders of record as of March 26, 2014.

Stock Split
On January 15, 2014, the board approved a two-for-one stock split to shareholders of record effective February 10, 2014 and payable February 28, 2014.  On January 15, 2014, the Board of Directors of the Company declared a two-for-one stock split to stockholders of record dated February 10, 2014, payable on February 28, 2014.  All share, earnings per share, and per share data have been retroactively adjusted to reflect the stock split for all periods presented in accordance with generally accepted accounting principles.

Branch Openings and Acquisitions
During the fourth quarter of 2013, the bank opened an office in Litchfield/Pawleys Island at 13021 Ocean Highway, Pawleys Island.

During the third quarter of 2013, CresCom Bank announced the signing of a definitive agreement to purchase the First Federal of South Carolina’s branch office in St. George, South Carolina.  The purchase was completed on February 21, 2014.  CresCom Bank added approximately $24.2 million in deposits and $11.6 million in loans receivable as a result of this branch acquisition.

In the second quarter of 2014, CresCom Bank plans to open a branch at Cane Bay, one of the fastest growing communities within the Charleston, South Carolina market.

Balance Sheet and Capital
At year-end for 2013, Carolina Financial Corporation’s total assets were $881,322, down from $888,724 on December 31, 2012, primarily due to the decrease in loans held for sale.  Mortgage originations have declined approximately 50 percent with the rise in interest rates in the second half of 2013.  CresCom Bank’s risk-based capital was 16.7 percent and its Tier 1 capital level was 11.0 percent at December 31, 2013.  Carolina Financial Corporation’s book value per share increased to $21.38 per share as of December 31, 2013.

Stock Listed on OTCQB
Beginning on October 9, 2013, Carolina Financial Corporation’s common stock began trading on the over-the-counter bulletin board (OTCQB) under the stock symbol “CARO.”

Jerry Rexroad, President and CEO of Carolina Financial Corporation, commented, “Our focus for CresCom Bank in 2014 is to increase core banking operating earnings, which will likely include a provision for loan losses, continued significant growth in checking accounts, and significant loan growth in both mortgage and commercial lending.”

About Carolina Financial Corporation
Carolina Financial Corporation (OTCQB: CARO) is the holding company of CresCom Bank, which also owns and operates Atlanta-based Crescent Mortgage Company.  As of December 31, 2013, Carolina Financial Corporation had $881 million in total assets, CresCom Bank operated 12 branch locations in the Charleston and Myrtle Beach areas of South Carolina, and Crescent Mortgage Company originates in 43 states and partners with 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.  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.

The mission of CresCom Bank is to be recognized as the leader in community banking by creating optimum value for customers and shareholders. CresCom Bank offers a strong core of banking products and services. It remains committed to warm, exceptional service and possesses a strong knowledge of local businesses and economic trends. CresCom Bank’s dedication to providing superior quality service exemplifies the bank’s “Have a nice bank” slogan.

To learn more about CresCom Bank, visit, and or call 1-855-CRESCOM.

Founded in 1993, Crescent Mortgage Company, a wholesale and correspondent mortgage lender, is committed to exceeding the expectations of customers and delivering the highest quality mortgage products and services in 43 states.  Its primary customers include community banks, credit unions and quality mortgage brokers throughout the United States.  Based in Atlanta, Georgia, Crescent Mortgage Company was acquired by Carolina Financial Corporation in 2003 and is a wholly owned subsidiary of CresCom Bank.  For more information about Crescent Mortgage Company, visit or call 1-800-851-0263.

Non-GAAP Measures
Statements included in this press release include non-GAAP measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP measures to GAAP measures. Management believes that these non-GAAP measures provide additional useful information. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and 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.

Cautionary Statement Regarding Forward Looking Statements
Statements included in this report which are not historical in nature are intended to be, and are hereby identified as, forward looking statements for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934. Forward looking statements generally include words such as “expects,” “projects,” “anticipates,” “believes,” “intends,” “estimates,” “strategy,” “plan,” “potential,” “possible” and other similar expressions. The Company cautions readers that forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from anticipated results. Such risks and uncertainties, include, among others, the following possibilities:  our ability to maintain appropriate levels of capital and to comply with our capital ratio requirements; examinations by our regulatory authorities, including the possibility that the regulatory authorities may, among other things, require us to increase our allowance for loan losses or write-down assets or otherwise impose restrictions or conditions on our operations, including, but not limited to, our ability to acquire or be acquired; changes in economic conditions, either nationally or regionally and especially in our primary service areas,  resulting in, among other things, a deterioration in credit quality;
an increase in interest rates, resulting in a decline in our mortgage production and a decrease in the profitability of our mortgage banking operations; greater than expected losses due to higher credit losses generally and specifically because losses in the sectors of our loan portfolio secured by real estate are greater than expected due to economic factors, including, but not limited to, declining real estate values, increasing interest rates, increasing unemployment, or changes in payment behavior or other factors; greater than expected losses due to higher credit losses because our loans are concentrated by loan type, industry segment, borrower type, or location of the borrower or collateral; changes in the amount of our loan portfolio collateralized by real estate and weaknesses in the South Carolina and national real estate markets; the rate of delinquencies and amount of loans charged-off; the adequacy of the level of our allowance for loan losses and the amount of loan loss provisions required in future periods; the rate of loan growth in recent or future years; our ability to attract and retain key personnel; our ability to retain our existing customers, including our deposit relationships; significant increases in competitive pressure in the banking and financial services industries; adverse changes in asset quality and resulting credit risk-related losses and expenses; changes in the interest rate environment which could reduce anticipated or actual margins; changes in political conditions or the legislative or regulatory environment, including, but not limited to, the Dodd-Frank Act and regulations adopted thereunder, changes in federal or state tax laws or interpretations thereof by taxing authorities and other governmental initiatives affecting the banking and financial service industries; changes occurring in business conditions and inflation; increased funding costs due to market illiquidity, increased competition for funding, or increased regulatory requirements with regard to funding; our business continuity plans or data security systems could prove to be inadequate, resulting in a material interruption in, or disruption to, business and a negative impact on results of operations; changes in deposit flows; changes in technology;
changes in monetary and tax policies; changes in accounting policies, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board and the Financial Accounting Standards Board; loss of consumer confidence and economic disruptions resulting from terrorist activities or other military actions; our expectations regarding our operating revenues, expenses, effective tax rates and other results of operations; the general decline in the real estate and lending markets; our anticipated capital expenditures and our estimates regarding our capital requirements; our liquidity and working capital requirements; competitive pressures among depository and other financial institutions; the adequacy of the level of our allowance for loan losses and the amount of loan loss provisions required in future periods; the growth rates of the markets in which we compete; our anticipated strategies for growth and sources of new operating revenues; our current and future products, services, applications and functionality and plans to promote them; anticipated trends and challenges in our business and in the markets in which we operate; the evolution of technology affecting our products, services and markets; our ability to retain and hire necessary employees and to staff our operations appropriately; management compensation and the methodology for its determination; our ability to compete in our industry and innovation by our competitors; our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business; and estimates and estimate methodologies used in preparing our consolidated financial statements and determining option exercise prices.

The Company undertakes no obligation to update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise.



CresCom Bank

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