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Section 1: 8-K (FORM 8-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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): April 30, 2019

 

Image result for select bancorp

 

 

 

SELECT BANCORP, INC.

 
 

(Exact Name of Registrant as Specified in Charter)

 

 

 

North Carolina 000-50400 20-0218264

(State or Other Jurisdiction

of Incorporation)

 

(Commission File Number)

(IRS Employer

Identification No.)

     
700 W. Cumberland Street, Dunn, North Carolina 28334
(Address of Principal Executive Offices) (Zip Code)

  

Registrant’s Telephone Number, Including Area Code: (910) 892-7080  

 

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:

 

¨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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:   Trading Symbol(s)   Name of each exchange on which registered:

Common Stock, par value $1.00 per share

  SLCT   The Nasdaq Stock Market LLC

 

 

 

 

 

Item 2.02.Results of Operations and Financial Condition.

 

On April 30, 2019, Select Bancorp, Inc. issued a press release announcing financial results for the three months ended March 31, 2019. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated by reference herein.

 

Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information contained in, or incorporated into, Item 2.02, including the press release attached as Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference to such filing.

 

Item 9.01.Financial Statements and Exhibits.

 

(d)Exhibits

 

Exhibit No.   Description  
99.1   Press release dated April 30, 2019, regarding financial results for the three months ended March 31, 2019.

 

 

 

 

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.

 

 

  SELECT BANCORP, INC.
   
   
Date: May 2, 2019 By:  /s/ Mark A. Jeffries
    Mark A. Jeffries
Executive Vice President and Chief Financial Officer

 

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

 

 

 

 

 

 

 

FOR RELEASE:

April 30, 2019

Mark A. Jeffries

Executive Vice President

Chief Financial Officer

Office: 910-892-7080 and Direct: 910-897-3603

[email protected]

SelectBank.com

 

SELECT BANCORP REPORTS

FIRST QUARTER 2019 EARNINGS

 

DUNN, NC . . . Select Bancorp, Inc. (the “Company” NASDAQ: SLCT), the holding company for Select Bank & Trust Company, today reported net income for the quarter ended March 31, 2019 of $3.3 million with basic and diluted earnings per share of $0.17, compared to net income of $1.9 million and basic earnings per share of $0.14 and diluted earnings per share of $0.13 for the comparative quarter ended March 31, 2018.

 

Total assets, deposits, and total gross loans for the Company as of March 31, 2019 were $1.2 billion, $951.0 million, and $991.8 million, respectively, compared to total assets of $1.2 billion, total deposits of $1.0 billion, and total loans of $978.3 million as of the same date in 2018. The decrease in deposits was primarily due to the reduction in wholesale deposits.

 

Results for the three months ended March 31, 2019 continued to show the impact of the acquisition of Carolina Premier Bank and the expanded market opportunity in Charlotte and upstate South Carolina. The acquisition of Carolina Premier was completed on December 15, 2017. The results for the three months ended March 31, 2018, included $1.4 million in after-tax merger-related expenses. For the three months ended March 31, 2019, return on average assets was 1.08% and return on average equity was 6.32%, compared to 0.64% and 5.61%, respectively, for the three months ended March 31, 2018. Non-performing loans were $11.6 million at March 31, 2019 and December 31, 2018, respectively. Non-performing loans equaled 1.17% of total loans at March 31, 2019, decreasing from 1.18% of total loans at December 31, 2018. Foreclosed real estate equaled $1.0 million at March 31, 2019, compared to $1.1 million at December 31, 2018. For the first quarter of 2019, net charge-offs were $217,000, or 0.11% of average loans, compared to net charge offs of $25,000, or 0.01% of average loans for the quarter ended December 31, 2018. At March 31, 2019, the allowance for loan losses was $8.5 million, or 0.86% of total loans, as compared to $8.7 million, or 0.88% of total loans, at December 31, 2018.

 

Net interest margin was 4.09% for the quarter ended March 31, 2019, as compared to 4.03% for the quarter ended December 31, 2018.

 

Select Bank & Trust remains future-focused and continues to build its franchise based on common sense banking by opening a 19th branch office in Holly Springs, NC, to serve the greater Raleigh market and announcing the proposed acquisition of the Virginia Beach, VA location of City National Bank of West Virginia. The Holly Springs branch opened on February 19, 2019 and Virginia Beach is expected to begin operating as Select Bank & Trust Company in the second quarter of 2019. Management will continue its forward-thinking continuous review of locations and their performance with the goal of overall franchise profit potential.

 

 

 

 

“Our franchise is based on exciting market opportunities and continued expansion of our existing markets and customer relationships. Our solid market position in our North Carolina markets, our expansion in growth areas of the state, our South Carolina market extension and the anticipated move into Virginia Beach support our focus. We will continue to round out our nice footprint in the southeast,” stated William L. Hedgepeth, II, President and CEO of the Company. “Our new branch location in Holly Springs will support customers in the Raleigh area, where we intend to be very active. It is a good start to 2019 for Select Bank & Trust and we will work hard to achieve our goals.”

 

Select Bank & Trust has 19 branch offices in these North Carolina communities: Dunn, Burlington, Charlotte, Clinton, Elizabeth City, Fayetteville, Goldsboro, Greenville, Holly Springs (Raleigh area), Leland, Lillington, Lumberton, Morehead City, Raleigh, Washington and Wilmington; and in the following South Carolina communities: Blacksburg, Rock Hill and Six Mile.

 

 

About Select Bancorp, Inc.

 

Select Bancorp, Inc. is a bank holding company headquartered in Dunn, North Carolina. The Company primarily conducts operations through its wholly owned subsidiary, Select Bank & Trust Company, a North Carolina-chartered commercial bank that provides a full suite of banking services through its offices in North Carolina and South Carolina. The Company’s common stock is listed on the Nasdaq Global Market under the symbol “SLCT”.

 

Non-GAAP Financial Measures

 

Certain financial measures we use to evaluate our performance and discuss in this release and the accompanying tables are identified as being “non-GAAP financial measures.” In accordance with the rules of the Securities and Exchange Commission, or the SEC, we classify a financial measure as being a non-GAAP (generally accepted accounting principles) financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of operations, balance sheet or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both.

 

The non-GAAP financial measures that we discuss in this release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we discuss in this release may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures we have discussed in this release when comparing such non-GAAP financial measures.

 

Tangible book value per share is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as shareholders’ equity less goodwill and core deposit intangibles; and (b) tangible book value per share as tangible common equity (as described in clause (a)) divided by shares of common stock outstanding. For tangible book value per share, the most directly comparable financial measure calculated in accordance with GAAP is our book value per common share. A reconciliation of tangible book value per share to book value per share is included following the “Selected Financial Information and Other Data” table below.

 

We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

 

 

 

 

Important Note Regarding Forward-Looking Statements

 

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements regarding certain of our goals and expectations with respect to earnings, revenue, expenses and the growth rate in such items, as well as other measures of economic performance, including statements relating to anticipated market share growth, and (ii) statements preceded by, followed by or that include the words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “projects,” “outlook” or similar expressions. The actual results might differ materially from those projected in the forward-looking statements for various reasons, including, but not limited to: our ability to manage growth; substantial changes in financial markets; our ability to obtain the synergies and expense efficiencies anticipated from mergers and acquisitions; regulatory changes; changes in interest rates; loss of deposits and loan demand to other savings and financial institutions; and changes in real estate values and the real estate market. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company’s SEC filings, including its periodic reports under the Securities Exchange Act of 1934, as amended, copies of which are available upon request from the Company. Except as required by law, the Company assumes no obligation to update the forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.

 

 

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Select Bancorp, Inc.
Selected Financial Information and Other Data
($ in thousands, except share and per share data)

 

   At or for the three months ended (unaudited)   At or for the twelve months ended 
                                 
   March 31,
2019
   December 31,
2018
   September 30,
2018
   June 30,
2018
   March 31,
2018
   December
31,
2018
   December 31,
2017
   December 31,
2016
 
Summary of Operations:                            
Total interest income  $14,050   $14,544   $14,382   $14,187   $13,722   $56,835   $39,617   $34,709 
Total interest expense   2,593    2,644    2,530    2,258    2,018    9,450    5,106    3,733 
Net interest income   11,457    11,900    11,852    11,929    11,704    47,385    34,511    30,976 
Provision for loan losses   112    (395)   (459)   557    141    (156)   1,367    1,516 

Net interest income after provision

   11,345    12,295    12,311    11,372    11,563    47,541    33,144    29,460 
Noninterest income   1,197    1,244    1,066    1,226    1,165    4,701    3,072    3,222 
Merger/acquisition related expenses   -    -    -    -    1,826    1,826    2,166    - 
Noninterest expense   8,304    7,864    7,800    8,602    8,458    32,724    25,153    22,281 
Income before income taxes   4,238    5,675    5,577    3,996    2,444    17,692    8,897    10,401 
Provision for income taxes   931    1,221    1,256    886    547    3,910    5,712    3,647 
Net Income   3,307    4,454    4,321    3,110    1,897    13,782    3,185    6,654 
Dividends on Preferred Stock   -    -    -    -    -    -    -    4 
Net income available to common shareholders  $3,307   $4,454   $4,321   $3,110   $1,897   $13,782   $3,185   $6,750 
                                         
Share and Per Share Data:                                        
Earnings per share - basic  $0.17   $0.23   $0.27   $0.22   $0.14   $0.87   $0.27   $0.58 
Earnings per share - diluted  $0.17   $0.23   $0.27   $0.22   $0.13   $0.87   $0.27   $0.58 
Book value per share  $11.04   $10.85   $10.61   $10.03   $9.82   $10.85   $9.72   $8.95 
Tangible book value per share(1)  $9.68   $9.47   $9.21   $8.10   $7.87   $9.47   $7.72   $8.29 
Ending shares outstanding   19,326,485    19,311,505    19,296,121    14,024,887    14,013,917    19,311,505    14,009,137    11,645,413 
Weighted average shares outstanding:                                        
Basic   19,315,686    19,302,263    15,858,455    14,019,273    14,011,707    15,812,585    11,763,050    11,610,705 
Diluted   19,365,354    19,360,050    15,916,734    14,086,671    14,081,776    15,877,633    11,826,977    11,655,111 
                                         
Selected Performance Ratios:                                        
Return on average assets(2)   1.08%   1.39%   1.40%   1.02%   0.64%   1.12%   0.35%   0.81%
Return on average equity(2)   6.32%   8.52%   10.53%   8.92%   5.61%   8.51%   2.93%   6.61%
Net interest margin   4.09%   4.03%   4.20%   4.41%   4.45%   4.19%   4.09%   4.06%
Efficiency ratio (3)   65.62%   59.83%   60.38%   65.39%   65.72%   62.83%   66.93%   65.15%
                                         
Period End Balance Sheet Data:                                        
Gross loans  $991,801   $986,040   $992,805   $992,885   $978,275   $986,040   $982,626   $677,195 
Total interest-earning assets   1,103,691    1,119,344    1,078,871    1,107,695    1,094,694    1,119,344    1,063,322    770,288 
Goodwill   24,579    24,579    24,579    24,579    24,579    24,579    24,904    6,931 
Core deposit intangible   1,866    2,085    2,318    2,564    2,826    2,085    3,101    810 
Total assets   1,241,048    1,258,525    1,252,156    1,216,731    1,222,551    1,258,525    1,194,135    846,640 
Deposits   950,966    980,427    974,161    993,484    1,009,481    980,427    995,044    679,661 
Short-term debt   7,000    7,000    11,002    21,071    32,173    7,000    28,279    37,090 
Long-term debt   57,372    57,372    57,372    57,372    39,372    57,372    19,372    23,039 
Shareholders' equity   213,451    209,611    204,705    140,702    137,673    209,611    136,115    104,273 
                                         
Selected Average Balances:                                        
Gross Loans  $985,059   $990,504   $988,479   $990,036   $979,420   $987,634   $732,089   $639,412 
Total interest-earning assets   1,086,958    1,141,604    1,073,285    1,087,683    1,073,890    1,119,344    813,773    744,024 
Core Deposit Intangible   1,951    2,171    2,411    2,661    2,955    2,547    640    1,020 
Total Assets   1,238,847    1,267,479    1,228,259    1,219,225    1,198,588    1,228,576    898,943    829,315 
Deposits   949,771    987,180    986,174    1,004,571    981,403    989,838    738,310    665,764 
Short-term debt   7,000    10,348    17,542    21,289    36,726    21,393    34,523    32,111 
Long-term debt   57,372    57,372    57,372    37,520    19,880    49,357    14,239    25,739 
Shareholders' equity   212,130    207,331    162,799    139,810    137,092    161,953    108,709    102,110 
                                         
Asset Quality Ratios:                                        
Nonperforming loans (4)  $11,583   $11,635   $11,162   $10,118   $8,338   $11,635   $6,978   $9,430 
Other real estate owned   1,046    1,088    1,020    1,497    1,525    1,088    1,258    599 
Allowance for loan losses   8,510    8,669    9,089    9,528    8,957    8,669    8,835    8,411 
Nonperforming loans (4) to period-end loans    1.17%   1.18%   1.12%   1.02%   0.85%   1.18%   0.71%   1.02%
Allowance for loan losses to period-end loans   0.86%   0.88%   0.92%   0.96%   0.92%   0.88%   0.90%   1.24%
Delinquency ratio (5)   0.73%   0.51%   0.53%   0.51%   0.25%   0.51%   0.63%   0.44%
Net loan charge-offs (recoveries) to average loans (2)   0.11%   0.01%   (0.01)%   (0.01)%   0.01%   0.00%   0.13%   0.02%

 

(1)Tangible book value per share (a non-GAAP measure) is equal to total shareholders’ equity less goodwill, preferred stock and core deposit intangibles, divided by the number of outstanding shares of our common stock at the end of the relevant period. Please refer to the table below for a reconciliation of this non-GAAP measure.

(2)Annualized.

(3)Efficiency ratio is calculated as non-interest expenses divided by the sum of net interest income and non-interest income.

(4)Nonperforming loans consist of non-accrual loans and restructured loans.

(5)Delinquency Ratio includes loans 30–89 days past due and excludes non-accrual loans.

 

 

 

Reconciliation of GAAP to Non-GAAP Measures

($ in thousands, except per share data)

(Unaudited)

  

   March
31,
2018
   December
31,
2018
   September
30,
2018
   June
30,
2018
   March
31,
2018
   December 31,
2018
   December 31,
2017
   December 31,
2016
 
Tangible common equity                                        
Total shareholders’ equity  $213,451   $209,611   $204,705   $140,702   $137,673   $209,611   $136,115   $104,273 
Adjustments:                                        
Goodwill   24,579    24,579    24,579    24,579    24,579    24,579    24,904    6,931 
Core deposit intangibles   1,866    2,085    2,318    2,564    2,826    2,085    3,101    810 
Tangible common equity  $187,006   $182,947   $177,808   $113,559   $110,268   $182,947   $108,110   $96,532 
Common shares outstanding(1)   19,326,485    19,311,505    19,296,121    14,024,887    14,013,917    19,311,505    14,009,137    11,645,413 
Book value per common share(2)  $11.04   $10.85   $10.61   $10.03   $9.82   $10.85   $9.72   $8.95 
Tangible book value per common share(3)  $9.68   $9.47   $9.21   $8.10   $7.87   $9.47   $7.72   $8.29 

 

___________________________

 

(1)Excludes the dilutive effect of common stock issuable upon exercise of outstanding stock options. The number of exercisable options outstanding was 49,668 as of March 31, 2019; 57,787 as of December 31, 2018; 58,279 as of September 30, 2018; 67,398 as of June 30, 2018; 70,069 as of March 31, 2018; and 63,927 as of December 31, 2017.

 

(2)We calculate book value per common share as shareholders’ equity less preferred stock at the end of the relevant period divided by the outstanding number of shares of our common stock at the end of the relevant period.

 

(3)We calculate tangible book value per common share as total shareholders’ equity less goodwill, preferred stock and core deposit intangibles, divided by the number of outstanding shares of our common stock at the end of the relevant period.

 

 

 

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