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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 29, 2020

 

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))

 

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

 

Title of class   Trading Symbol   Name of exchange on which registered
Common Stock, par value $1.00 per share   SLCT   The Nasdaq Stock Market LLC

 

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. ¨

 

 

 

 

 

Item 2.02Results of Operations and Financial Condition.

 

On April 29, 2020, Select Bancorp, Inc. issued a press release announcing financial results for the three months ended March 31, 2020. 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 29, 2020, regarding financial results for the three months ended March 31, 2020.

  

 

 

 

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 5, 2020 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 29, 2020

 

Mark A. Jeffries

Executive Vice President

Chief Financial Officer

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

markj@SelectBank.com

SelectBank.com

 

SELECT BANCORP REPORTS

FIRST QUARTER 2020 EARNINGS

 

DUNN, NC . . . Select Bancorp, Inc. (NASDAQ: SLCT) (the “Company”), the holding company for Select Bank & Trust Company, today reported net income for the quarter ended March 31, 2020 of $1.1 million with basic and diluted earnings per share of $0.06, compared to net income of $3.3 million with basic and diluted earnings per share of $0.17 for the comparative quarter ended March 31, 2019. The decrease in net income in the first quarter of 2020 compared to 2019 was primarily attributable to $389,000 of expenses associated with new branches in Cornelius, North Carolina (the Charlotte area), Holly Springs, North Carolina (the Raleigh area) and Virginia Beach, Virginia and an increase of the provision for credit losses of $2.3 million due to unprecedented changes in certain economic indicators as a result of the COVID-19 pandemic.

 

Total assets, deposits, and gross loans for the Company as of March 31, 2020 were $1.3 billion, $982.7 million, and $1.0 billion, respectively, compared to total assets of $1.2 billion, total deposits of $951.0 million, and total loans of $991.8 million as of the same date in 2019.

 

Comments of the Chief Executive Officer and Other Matters

 

William Hedgepeth, President and Chief Executive Officer stated, “Overall, we were pleased with our first-quarter earnings and the continued franchise growth from the implementation of our strategic initiatives. However, the end of the quarter was punctuated by arrival of the COVID-19 pandemic. As the implications of this event rapidly evolved and its significance was understood, we knew the nation was in uncharted territory. We are extremely concerned for those who are suffering, for the well-being of our health care workers, and for our customers, friends, neighbors and employees as they continue to provide services to their community. Our goal over the past few weeks, and into the future, is to continue providing crucial financial services in a safe and timely manner, which will hopefully help to contribute to a faster recovery in the markets we serve. We have taken prudent steps to secure our financial position so that we will have the capacity and ability to meet the needs of our customers and communities as the impact of COVID-19 continues to affect them and our economy more generally.”

 

Hedgepeth continued, “We are participating in the Paycheck Protection Program, or PPP, providing loans to assist our customers with funds to work through this pandemic. Within the last couple of weeks, we have assisted more than 990 customers with over $88 million dollars in PPP loans. These loans, which are eligible for forgiveness, provide funds to be used by small businesses to continue paying their employees, rent, mortgages and utilities, all of which assist small businesses with keeping employees on the payroll. This program is designed to enhance the economic infrastructure of the communities we serve by providing the resources needed for small businesses to reopen in the near future. We have provided additional staff resources, together with an “all hands on deck” philosophy to facilitate as many customer requests as possible by assisting them in applying for and participating in this stimulus program in a very limited period of time. We also continue to work with our customers in other ways, such as offering loan payment deferral options in certain circumstances.”

 

 

 

 

“We are dealing with unprecedented times and it is paramount that we remain flexible and accommodate the needs of the communities in which we operate. All of our branches are open for drive-thru activity while keeping the health and safety of our customers and employees as our primary objective. We will strive to provide as many solutions as possible, in a timely manner that strengthen the business partnerships we have developed as we all proceed through the recovery process.”

 

Other matters of interest to shareholders are:

 

·The Company repurchased 275,366 shares of Company common stock during the first quarter of 2020 under the repurchase plan authorized by the Board of Directors in 2019. The Company may repurchase up to an additional 235,140 shares of its common stock under the repurchase plan.
·Loan growth was over $9.5 million in the first quarter of 2020.
·With the closing of the acquisition of three branches on April 17, 2020 in western North Carolina, our total assets are in excess of $1.5 billion.

 

Net Interest Income and Net Interest Margin

 

Net interest income was $11.5 million for the first quarter of 2020 and 2019. On a comparative quarter basis, the Company’s total interest income was positively affected by increased loan balances due to growth which was offset by a decreasing yield, a decrease in securities balances and a lower yield plus the reduction in other earning assets at a lower yield. Average total interest-earning assets were $1.1 billion in the first quarter of 2020 and 2019. The yield on those assets decreased 4 basis points, from 5.02% in the first quarter of 2019 to 4.98% for the same period in 2020. This was primarily due to lower rates on recently originated loans and a reduction of accretion from acquired loans on a comparative quarter basis.

 

The Company’s average interest-bearing liabilities increased by $16.8 million, to $788.4 million for the quarter ended March 31, 2020, from $771.6 million for the first quarter of 2019. Low-cost savings, NOW and money market deposits increased $19.3 million while the cost of transactional deposits decreased from 0.48% to 0.43%, or 5 basis points year over year. The cost of total deposits increased from 0.90% in the first quarter of 2019 to 0.94% in the first quarter of 2020 due to the increase in the cost of time deposits. During the first quarter of 2020, the Company’s net interest margin was 4.03% and net interest spread was 3.59%. In the first quarter of 2019, net interest margin was 4.09% and net interest spread was 3.65%.

 

Provision for Loan Losses and Asset Quality

 

During the first quarter of 2020, the Company recorded a provision for loan losses of $2.3 million, based primarily on loan growth and adjustments to qualitative allowance factors and preliminary estimates related to the economic impact of the COVID-19 pandemic. There was a 0.15% allowance applied to all loan pools for factors related to the economic impact of COVID-19. Additionally, due to the COVID-19 pandemic, we increased our reserve an additional five basis points (.05%) in response to qualitative factors for gross domestic product, peer group delinquency, and North Carolina unemployment in all loan pools. As a result, $1.4 million of the $2.3 million provision was attributable to the impact COVID -19 on the reserve’s increase. We granted payment extensions on approximately 285 commercial and consumer loans related to the impact of COVID – 19. On a comparative quarter basis, the Company recorded a provision for loan losses of $112,000, based primarily on loan growth and adjustments to qualitative loan factors related to trends in the loan portfolio for the first quarter of 2019. In the first quarter of 2020, the Company recorded net charge-offs of $12,000 compared to net charge-offs of $271,000 in the first quarter of 2019. These charge-offs resulted in a net charge-off rate of 0.00% of average loans for the current quarter, compared to a net charge-off rate of 0.11% in the first quarter of 2019.

 

Non-interest Income

 

Non-interest income for the quarter ended March 31, 2020 was $1.4 million, an increase of $247,000 from $1.2 million in the first quarter of 2019. Service charges on deposit accounts increased $72,000, to $338,000 for the quarter ended March 31, 2020, from $266,000 for the first quarter in 2019. Other non-deposit fees and income increased $39,000 from the first quarter of 2019 to the first quarter of 2020. Fees of $185,000 from presold mortgages and $108,000 from SBA loans totaled $293,000 in the first quarter of 2020, which represented an increase of $136,000 from the $157,000 of fees in the first quarter of 2019. The Company did not sell any investment securities in the first quarter of 2020 or 2019.

 

 

 

 

Non-interest Expense

 

Non-interest expenses increased by $943,000 to $9.2 million for the quarter ended March 31, 2020, from $8.3 million for the same period in 2019. In general, most categories of non-interest expenses increased, primarily due to an increase in the number of branches. The following are highlights of the significant categories of non-interest expenses during the first quarter of 2020 versus the same period in 2019:

 

·Personnel expenses increased $661,000 to $5.6 million, due to additional personnel and cost-of-living increases.
·Occupancy expenses increased $204,000, primarily due to additional branches, repairs and maintenance and increased rent expense due to normal rent escalation.
·Integration-related expenses increased $39,000.
·CDI expense decreased $40,000 due to amortization.
·Information systems expense increased by $249,000 due to increased expenses related to a new mobile banking platform and security cost for the core processing system.
·Professional fees decreased by $10,000 to $372,000.
·Deposit insurance expenses decreased by $117,000 due to increased premium credit earned.

 

Income Taxes

 

The Company’s effective tax rate was 20.2% and 21.0% for the quarters ended March 31, 2020 and 2019, respectively.

 

Balance Sheet

 

Total assets at March 31, 2020 were $1.3 billion, an increase of $21.4 million from a year earlier. Gross loans at March 31, 2020 were $1.0 billion, up $47.7 million or 4.8% from a year earlier, and total deposits were $982.7 million, an increase of $31.7 million or 3.3% from a year earlier.

 

Retail deposits (excluding brokered deposits and internet time deposits) grew at a rate of 6.1% or $34.3 million as of March 31, 2020 compared to the same period in 2019. Wholesale deposits decreased from $26.3 million at March 31, 2019 to $19.5 million at March 31, 2020 as we continue emphasizing core deposit growth to replace wholesale deposits.

 

Completion of Acquisition of Three Branches in Western North Carolina

 

As previously announced, on April 17, 2020, the Company’s subsidiary, Select Bank & Trust completed its purchase of three branches from Entegra Bank, a division of First Citizens Bank.

 

The branches are located at 473 Carolina Way, Highlands, NC; 498 East Main Street, Sylva, NC; and 30 Hyatt Road, Franklin, NC. As part of the purchase, Select Bank & Trust Company assumed approximately $185 million in deposits and purchased approximately $107 million in loans.

 

About Select Bank & Trust Company

 

Select Bank & Trust has 22 full-service offices in these North Carolina communities: Dunn, Burlington, Charlotte, Clinton, Cornelius (Charlotte area), Elizabeth City, Fayetteville, Franklin, Goldsboro, Greenville, Highlands, Holly Springs (Raleigh area), Leland, Lillington, Lumberton, Morehead City, Raleigh, Sylva, and Wilmington, North Carolina; in the following South Carolina communities: Blacksburg and Rock Hill; and in Virginia Beach, Virginia.

 

 

 

 

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, South Carolina, and Virginia. 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 share. A reconciliation of tangible book value per share to book value per share is included in the tables that accompany this release.

 

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 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, and 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: the ongoing COVID-19 pandemic and measures intended to prevent its spread, which include wide disruptions to business activity that may impact the financial strength of our borrowers; our ability to manage growth or achieve it at all; substantial changes in financial markets; our ability to obtain the synergies and expense efficiencies anticipated from our acquisition activity and branch divestures and consolidations; regulatory changes; changes in interest rates, including the impact of such changes on our net interest margin; loss of deposits and loan demand to other savings and financial institutions; adverse economic conditions that impact our borrowers’ ability to pay their debts when due, including the rapid rise in unemployment associated with the COVID-19 pandemic; 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.

 

###

 

 

 

 

SELECT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

 

   March 31, 2020   December 31, 2019   September 30, 2019   June 30, 2019   March 31, 2019 
   (Unaudited)   (Audited)   (Unaudited)   (Unaudited)   (Unaudited) 
       (Dollars in thousands)     
ASSETS                         
                          
Cash and due from banks  $20,030   $19,110   $20,052   $20,397   $15,586 
Interest-earning deposits in other banks   35,544    50,920    53,093    100,584    44,894 
Certificates of deposit   -    -    500    500    1,000 
Federal funds sold   11,673    9,047    10,728    21,961    9,809 
Investment securities available for sale, at Fair Value   64,738    72,367    76,941    83,102    86,727 
Loans held for sale   1,606    928    1,714    826    354 
Loans   1,039,514    1,029,975    1,014,928    997,062    991,801 
Allowance for loan losses   (10,586)   (8,324)   (8,056)   (8,303)   (8,510)
NET LOANS   1,028,928    1,021,651    1,006,872    988,759    983,291 
                          
Accrued interest receivable   3,839    4,189    3,902    4,028    4,120 
Stock in Federal Home Loan Bank of Atlanta, at cost   3,059    3,045    3,045    3,045    3,342 
Other non-marketable securities   718    719    719    718    738 
Foreclosed real estate   3,737    3,533    1,442    1,468    1,046 
Premises and equipment, net   17,868    17,791    18,150    18,274    17,715 
Right of use lease asset   8,414    8,596    8,776    8,953    8,750 
Bank owned life insurance   29,950    29,789    29,621    29,451    29,282 
Goodwill   24,579    24,579    24,579    24,579    24,579 
Core deposit intangible ("CDI")   1,431    1,610    1,803    2,011    1,866 
Assets held for sale   -    -    -    -    668 
Other assets   7,380    7,202    7,697    8,141    8,310 
TOTAL ASSETS  $1,263,494   $1,275,076   $1,269,634   $1,316,797   $1,242,077 
                          
LIABILITIES AND SHAREHOLDERS' EQUITY                         
Deposits:                         
   Demand  $250,031   $240,305   $243,889   $252,666   $240,262 
   Savings   41,815    43,128    43,355    46,037    48,080 
   Money market and NOW   306,051    280,145    283,414    292,629    262,169 
   Time   384,754    429,260    417,015    438,918    400,455 
TOTAL DEPOSITS   982,651    992,838    987,673    1,030,250    950,966 
                          
Short-Term Debt   20,000    -    -    -    7,000 
Long-Term Debt   37,372    57,372    57,372    57,372    57,372 
Lease Liability   8,669    8,813    8,951    9,086    8,842 
Accrued interest payable   536    578    596    637    519 
Accrued expenses and other liabilities   2,181    2,700    2,993    2,607    3,927 
TOTAL LIABILITIES   1,051,409    1,062,301    1,057,585    1,099,952    1,028,626 
                          
Shareholders' Equity                         
Common stock   18,056    18,330    18,513    19,262    19,326 
Additional paid-in-capital   138,788    140,870    142,878    150,275    150,877 
Retained Earnings   53,779    52,675    49,634    46,395    42,947 
Common stock issued to deferred compensation trust   (2,791)   (2,815)   (2,730)   (2,652)   (2,652)
Directors' Deferred Compensation Plan Rabbi Trust   2,791    2,815    2,730    2,652    2,652 
Accumulated other comprehesive income   1,462    900    1,024    913    301 
TOTAL SHAREHOLDERS' EQUITY   212,085    212,775    212,049    216,845    213,451 
                          
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY  $1,263,494   $1,275,076   $1,269,634   $1,316,797   $1,242,077 

 

 

 

 

SELECT BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   For the Three Months Ended   For the Twelve Months Ended 
   March 31,
2020
   December 31,
2019
   September 30,
2019
   June 30,
2019
   March 31,
2019
   December 31,
2019
   December 31,
2018
 
INTEREST INCOME                                   
Loans  $13,589   $14,124   $13,924   $13,515   $13,042   $54,605   $53,796 
Federal funds sold and interest-earning                                   
deposits in other banks   168    258    581    456    543    1,838    1,618 
Investments   421    434    503    601    465    2,003    1,421 
TOTAL INTEREST INCOME   14,178    14,816    15,008    14,572    14,050    58,446    56,835 
                                    
INTEREST EXPENSE                                   
Money market, NOW and savings deposits   348    420    433    407    356    1,616    1,339 
Time deposits   1,931    2,075    2,248    1,985    1,753    8,061    6,293 
Short-term debt   87    6    4    26    26    62    328 
Long-term debt   352    447    455    457    458    1,817    1,490 
TOTAL INTEREST EXPENSE   2,718    2,948    3,140    2,875    2,593    11,556    9,450 
                                    
NET INTEREST INCOME   11,460    11,868    11,868    11,697    11,457    46,890    47,385 
                                    
PROVISION FOR (RECOVERY OF) LOAN LOSSES   2,273    302    231    (207)   112    438    (156)
                                    
NET INTEREST INCOME AFTER                                   
PROVISION FOR LOAN LOSSES   9,187    11,566    11,637    11,904    11,345    46,452    47,541 
                                    
NON-INTEREST INCOME                                   
Fees on the sale of mortgages   293    148    218    230    157    753    497 
Gain on securities   0    0    48    0    0    48    0 
Service charges on deposit accounts   338    303    308    284    266    1,161    1,124 
Other fees and income   813    995    874    814    774    3,457    3,080 
TOTAL NON-INTEREST INCOME   1,444    1,446    1,448    1,328    1,197    5,419    4,701 
                                    
NON-INTEREST EXPENSE                                   
Personnel   5,632    5,152    5,124    5,031    4,971    20,278    18,304 
Occupancy and equipment   931    973    1,073    922    727    3,695    3,666 
Deposit insurance   (12)   19    (30)   90    105    184    628 
Professional Fees   372    503    518    483    382    1,886    1,394 
CDI amortization   179    193    208    205    219    825    1,016 
Merger/acquisition related expenses   39    171    128    107    0    406    1,826 
Information systems   1,038    974    852    877    789    3,492    3,372 
Foreclosed-related expenses   5    109    (9)   10    30    140    115 
Other   1,063    1,000    1,067    1,086    1,081    4,234    4,229 
TOTAL NON-INTEREST EXPENSE   9,247    9,094    8,931    8,811    8,304    35,140    34,550 
                                    
INCOME BEFORE INCOME TAXES   1,384    3,918    4,154    4,421    4,238    16,731    17,692 
                                    
INCOME TAXES   280    877    915    973    931    3,696    3,910 
NET INCOME  $1,104   $3,041   $3,239   $3,448   $3,307   $13,035   $13,782 
NET INCOME PER COMMON SHARE OUTSTANDING                                   
Basic  $0.06   $0.17   $0.17   $0.18   $0.17   $0.69   $0.87 
Diluted  $0.06   $0.16   $0.17   $0.18   $0.17   $0.68   $0.87 
                                    
WEIGHTED AVERAGE COMMON                                   
Basic Outstanding Shares   18,255,351    18,414,393    19,028,572    19,318,358    19,315,686    19,016,808    15,812,585 
Diluted Outstanding Shares   18,287,064    18,460,118    19,073,235    19,359,492    19,365,354    19,063,237    15,877,633 

 

 

 

 

Select Bancorp, Inc.

Asset quality  

 

   For Periods Ended 
   March 31, 2020   December 31, 2019   September 30, 2019   June 30, 2019   March 31, 2019   December 31, 2019   December 31, 2018 
                             
Non-accrual loans   7,201    5,941    9,083    10,521    6,337    5,941    7,257 
Accruing TDRs   5,619    6,207    6,477    6,061    5,246    6,207    4,378 
Total non-performing loans   12,820    12,148    15,560    16,582    11,583    12,148    11,635 
Foreclosed real estate   3,737    3,533    1,442    1,468    1,046    3,533    1,088 
Total non-performing assets   16,557    15,681    17,002    18,050    12,629    15,681    12,723 
                                    
Accruing loans past due 90 days or more   1,182    1,231    2,296    2,447    3,146    1,231    3,167 
Allowance for loan losses   10,586    8,324    8,056    8,303    8,510    8,324    8,669 
                                    
Non-performing loans to period ending loans   1.23%   1.18%   1.53%   1.66%   1.17%   1.18%   1.18%
Non-performing loans & accruing loans past                                   
due 90 days or more to period ending loans   1.35%   1.30%   1.76%   1.91%   1.49%   1.30%   1.50%
Allowance for loans to period end loans   1.02%   0.81%   0.79%   0.83%   0.86%   0.81%   0.88%
Allowance for loans to non-performing loans   83%   69%   52%   50%   73%   69%   75%
Allowance for loans to non-performing Assets   64%   53%   47%   46%   67%   53%   68%
Allowance for loans to non-performing Assets                                   
and accruing loans past due 90 days or more   60%   49%   42%   41%   54%   49%   55%
Non-performing assets to total assets   1.31%   1.23%   1.34%   1.37%   1.02%   1.23%   1.01%
Non-performing assets to accruing loans                                   
past due 90 days or more to total assets   1.40%   1.33%   1.52%   1.56%   1.27%   1.33%   1.26%

 

SELECT BANCORP, INC.

Reconciliation of GAAP to Non-GAAP Measures

($ in thousands, except per share data, unaudited)

 

   For the Three Months Ended   For the Twelve Months Ended 
   March 31, 2020   December 31, 2019   September 30, 2019   June 30, 2019   March 31, 2019   December 31, 2019   December 31, 2018 
Net interest margin:                                   
Net Interest Margin-tax equivalent (1)   11,489    11,901    11,903    11,740    11,496    47,037    47,535 
Purchased loan accretion and early payoff charges   (105)   (226)   (210)   (268)   (200)   (904)   (3,051)
Net Interest Margin(2) (Non-GAAP)   11,384    11,675    11,693    11,472    11,296    46,133    44,484 
                                    
Loans receivable interest income:                                   
Loans receivable interest income   13,589    14,124    13,924    13,515    13,042    54,645    53,822 
Purchased loan accretion and early payoff charges   (105)   (226)   (210)   (268)   (200)   (904)   (3,051)
Loans receivable interest income (Non-GAAP)   13,484    13,898    13,714    13,247    12,842    53,741    50,771 
                                    
Acquired and non-acquired loans:                                   
Acquired loans recievable   122,363    129,595    141,765    152,090    173,771    129,595    186,243 
Non-acquired loans recievable   917,151    900,380    873,163    844,972    818,030    900,380    799,797 
Total gross loans recievable   1,039,514    1,029,975    1,014,928    997,062    991,801    1,029,975    986,040 
% Acquired   11.8%   12.6%   14.0%   15.3%   17.5%   12.6%   18.9%
                                    
Non-acquired loans   917,151    900,380    873,163    844,972    818,030    900,380    799,797 
Allowance for loan losses   10,586    8,324    8,056    8,303    8,510    8,324    8,669 
Allowance for loan losses to non-acquired loans (Non-GAAP)   1.15%   0.92%   0.92%   0.98%   1.04%   0.92%   1.08%
                                    
Total gross loan receivable   1,039,514    1,029,975    1,014,928    997,062    991,801    1,029,975    986,040 
Allowance for loan losses   10,586    8,324    8,056    8,303    8,510    8,324    8,669 
Allowance for loan losses to total gross loans receivable   1.02%   0.81%   0.79%   0.83%   0.86%   0.81%   0.88%

 

   For Periods Ended 
   March 31, 2019   December 31, 2019   September 30, 2019   June 30, 2019   March 31, 2019   December 31, 2019   December 31, 2018 
Tangible common equity                                   
Total shareholders' equity  $212,085   $212,775   $212,049   $216,845   $213,451   $212,775   $209,611 
Adjustment:                                   
Goodwill   24,579    24,579    24,579    24,579    24,579    24,579    24,579 
Core deposit intangibles   1,431    1,610    1,803    2,011    1,866    1,610    2,085 
Tangible common equity  $186,075   $186,586   $185,667   $190,255   $187,006   $186,586   $182,947 
Common shares outstanding(3)   18,055,692    18,330,058    18,513,078    19,261,989    19,326,485    18,330,058    19,311,505 
Book value per common share(4)  $11.75   $11.61   $11.45   $11.26   $11.04   $11.61   $10.85 
Tangible book value per common share(5)  $10.31   $10.18   $10.03   $9.88   $9.68   $10.18   $9.47 

 

(1)Net interest margin-tax equivalent reflects tax-exempt income on a tax-equivalent basis.
(2)Net interest margin-core and yield on loans - core excludes the impact of purchase accounting accretion, loan payoff charges and related deferred fees recognized related to early loan repayments.
(3)Excludes the dilutive effect of common stock issuable upon exercise of stock options.
(4)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.
(5)We calculate the 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.

 

 

 

 

Select Bancorp, Inc.

Selected Financial Information and Other Data

($ in thousands, except share and per share data)                        

 

   For the Quarter Ended   For the Year Ended 
   March 31,   December 31,   September 30,   June 30,   March 31,   December 31,   December 31,   December 31, 
   2020   2019   2019   2019   2019   2019   2018   2017 
                                 
Summary of Operations:                                        
Total interest income  $14,178   $14,816   $15,008   $14,572   $14,050   $58,446   $56,835   $39,617 
Total interest expense   2,718    2,948    3,140    2,875    2,593    11,556    9,450    5,106 
Net interest income   11,460    11,868    11,868    11,697    11,457    46,890    47,385    34,511 
Provision for loan losses   2,273    302    231    (207)   112    438    (156)   1,367 
Net interest income after provision   9,187    11,566    11,637    11,904    11,345    46,452    47,541    33,144 
Noninterest income   1,444    1,446    1,448    1,328    1,197    5,419    4,701    3,072 
Merger/acquisition related expenses   39    171    128    107    -    406    1,826    2,166 
Noninterest expense   9,208    8,923    8,803    8,704    8,304    34,734    32,724    25,153 
Income before income taxes   1,384    3,918    4,154    4,421    4,238    16,731    17,692    8,897 
Provision for income taxes   280    877    915    973    931    3,696    3,910    5,712 
Net Income   1,104    3,041    3,239    3,448    3,307    13,035    13,782    3,185 
Dividends on Preferred Stock   -    -    -    -    -    -    -    - 
Net income available to common shareholders  $1,104   $3,041   $3,239   $3,448   $3,307   $13,035   $13,782   $3,185 
                                         
Share and Per Share Data:                                        
Earnings per share - basic  $0.06   $0.17   $0.17   $0.18   $0.17   $0.69   $0.87   $0.27 
Earnings per share - diluted  $0.06   $0.16   $0.17   $0.18   $0.17   $0.68   $0.87   $0.27 
Book value per share  $11.75   $11.61   $11.45   $11.26   $11.04   $11.61   $10.85   $9.72 
Tangible book value per share(1)  $10.31   $10.18   $10.03   $9.88   $9.68   $10.18   $9.47   $7.72 
Ending shares outstanding   18,055,692    18,330,058    18,513,078    19,261,989    19,326,485    18,330,058    19,311,505    14,009,137 
Weighted average shares outstanding:                                        
Basic   18,255,351    18,414,393    19,028,572    19,318,358    19,315,686    19,016,808    15,812,585    11,763,050 
Diluted   18,287,064    18,460,118    19,073,235    19,359,492    19,365,354    19,063,237    15,877,633    11,826,977 
                                         
Selected Performance Ratios:                                        
Return on average assets(2)   0.35%   0.95%   0.99%   1.10%   1.08%   1.03%   1.12%   0.35%
Return on average equity(2)   2.07%   5.67%   5.93%   6.41%   6.32%   6.08%   8.51%   2.93%
Net interest margin   4.03%   4.05%   3.94%   4.06%   4.09%   4.04%   4.19%   4.09%
Efficiency ratio (3)   71.36%   67.02%   66.11%   66.83%   65.62%   66.40%   62.83%   66.93%
                                         
Period End Balance Sheet Data:                                        
Gross loans  $1,039,514   $1,029,975   $1,014,928   $997,062   $991,801   $1,029,975   $986,040   $982,626 
Total interest-earning assets   1,137,010    1,167,857    1,153,612    1,148,417    1,103,691    1,167,857    1,119,344    1,063,322 
Goodwill   24,579    24,579    24,579    24,579    24,579    24,579    24,579    24,904 
Core deposit intangible   1,431    1,610    1,803    2,011    1,866    1,610    2,085    3,101 
Total assets   1,263,494    1,275,076    1,269,634    1,316,797    1,242,077    1,275,076    1,258,525    1,194,135 
Deposits   982,651    992,838    987,673    1,030,250    950,966    992,838    980,427    995,044 
Short-term debt   20,000    -    -    -    7,000    -    7,000    28,279 
Long-term debt   37,372    57,372    57,372    57,372    57,372    57,372    57,372    19,372 
Shareholders' equity   212,085    212,775    212,049    216,845    213,451    212,775    209,611    136,115 
                                         
Selected Average Balances:                                        
Gross Loans  $1,020,630   $1,017,750   $1,013,331   $982,876   $985,059   $1,004,051   $987,634   $732,089 
Total interest-earning assets   1,147,631    1,166,758    1,197,266    1,160,387    1,086,958    1,164,149    1,119,344    813,773 
Core Deposit Intangible   1,507    1,680    1,878    1,741    1,951    1,812    2,547    640 
Total Assets   1,255,943    1,272,475    1,300,137    1,261,972    1,238,847    1,268,728    1,228,576    898,943 
Deposits   972,162    989,721    1,013,504    970,011    949,771    981,132    989,838    738,310 
Short-term debt   12,747    -    -    6,824    7,000    3,414    21,393    34,523 
Long-term debt   44,625    57,372    57,372    57,372    57,372    57,372    49,357    14,239 
Shareholders' equity   214,502    212,849    216,556    215,722    212,130    214,324    161,953    108,709 
                                         
Asset Quality Ratios:                                        
Nonperforming loans (4)  $12,820   $12,148   $15,560   $16,582   $11,583   $12,148   $11,635   $6,978 
Other real estate owned   3,737    3,533    1,442    1,468    1,046    3,533    1,088    1,258 
Allowance for loan losses   10,586    8,324    8,056    8,303    8,510    8,324    8,669    8,835 
Nonperforming loans (4) to period-end loans    1.23%   1.18%   1.53%   1.66%   1.17%   1.18%   1.18%   0.71%
Allowance for loan losses to period-end loans   1.02%   0.81%   0.79%   0.83%   0.86%   0.81%   0.88%   0.90%
Delinquency ratio (5)   0.43%   0.34%   0.09%   0.12%   0.41%   0.34%   0.19%   0.48%
Net loan charge-offs (recoveries) to average loans (2)   0.00%   0.01%   0.19%   0.00%   0.11%   0.08%   0.00%   0.13%

  

(1)Tangible book value per share (a non GAAP measure) is equal to total shareholders’ equity less goodwill 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 above for a reconciliation of this non-GAAP measure.
(2)Annualized.
(3)Efficiency ratio is calculated as a non-interest expenses divided by the sum of net interest income and non-interest income.
(4)Nonperforming loans consist of non-accrural loans and accruing TDR loans.
(5)Delinquency Ratio includes loans 30-89 days past due and excludes non-accrual loans.

 

 

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