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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): August 5, 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 August 5, 2020, Select Bancorp, Inc. issued a press release announcing financial results for the three months ended June 30, 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 August 5, 2020, regarding financial results for the three months ended June 30, 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: August 6, 2020 By: /s/ Mark A. Jeffries
    Mark A. Jeffries
    Executive Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

 

 

 

 

 

FOR RELEASE:

 

August 5, 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

SECOND 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 June 30, 2020 of $681,000 with basic and diluted earnings per share of $0.04, compared to net income of $3.4 million with basic and diluted earnings per share of $0.18 for the comparative quarter ended June 30, 2019. The decrease in net income in the second quarter of 2020 compared to the second quarter of 2019 was primarily attributable to a provision for loan losses of $1.9 million compared to a recovery of loan losses of $207,000 for the same period in 2019. The increase in the provision for loan losses was primarily due to factors associated with the economic impact of the COVID-19 pandemic. In addition, we incurred $709,000 of expenses related to the acquisition of three branches from First Citizens Bank during the quarter. We also incurred expenses of $265,000 associated with new branches in Cornelius, North Carolina (Charlotte area) and Holly Springs, North Carolina (Raleigh area).

 

Total assets, deposits, and gross loans for the Company as of June 30, 2020 were $1.6 billion, $1.3 billion, and $1.2 billion, respectively, compared to total assets of $1.3 billion, total deposits of $1.0 billion, and total loans of $997.1 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 regarding the 2nd quarter of 2020, “We continue to navigate the challenges that we are facing during this unprecedented crisis caused by the COVID-19 pandemic. Our customers, employees, shareholders, families and friends have been deeply affected by the pandemic and the future is uncertain. However, Select Bank & Trust is positioned and prepared to assist our customers and employees. Our capital position, liquidity and asset quality are sound at this time and we believe sufficient to navigate the COVID-19 pandemic in the coming weeks and months. We have assisted our customers with Paycheck Protection Program, or PPP, small business loans and COVID-19 loan modifications where necessary. We originated over 1,200 PPP loans totaling approximately $97.0 million. Over 65% or 831 of these loans were at or below $50,000. We granted over 475 COVID-19 loan modifications totaling approximately $240.0 million. Our employees and board of directors are committed to assisting our customers, employees and communities through this crisis. Our employees have worked extremely hard this year, and for many years preceding this crisis, to place Select Bank & Trust in a position to support our customers, employees and communities as we move forward in this unusual time.”

 

Hedgepeth continued, “We also acquired three branches from Entegra Bank, a division of First Citizens Bank, in the western part of North Carolina in mid-April. The pandemic challenged us to get creative with how we would normally convert systems, train team members and successfully open three new branches, but we effectively converted all three branch facilities, the systems and the employees, and we are very proud of the teams’ efforts. We are pleased to have the branches officially in our network now, located in Franklin, Highlands, and Sylva, North Carolina.”

 

 

 

 

Other matters of interest to shareholders are:

 

·The Company repurchased 193,138 shares of its common stock during the second quarter of 2020 under a repurchase plan authorized by the Board of Directors in 2019. The Company may repurchase up to an additional 42,002 shares of its common stock under the repurchase plan.
·Loan growth was approximately $210.5 million in the second quarter of 2020, which consisted of $103.3 million in loans acquired from First Citizens in connection with the acquisition of three western North Carolina branches, plus $95.1 million in PPP loans and $12.1 million in net organic loan growth.
·Deposit growth was approximately $356.1 million in the second quarter of 2020, which consisted of $185.5 million in deposits acquired from First Citizens in connection with the branch acquisition and $170.6 million in net organic growth.
·With the closing of the acquisition of three western North Carolina branches on April 17, 2020, our total assets are in excess of $1.6 billion.

 

Net Interest Income and Net Interest Margin

 

Net interest income was $11.9 million for the second quarter of 2020 and $11.7 million for the same period in 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 lower yielding loans plus the reduction in other earning assets at a lower yield. Average total interest-earning assets were $1.4 billion in the second quarter of 2020 and $1.2 billion for the same period in 2019. The yield on those assets decreased 83 basis points, from 5.05% in the second quarter of 2019 to 4.22% for the same period in 2020. This was primarily due to lower rates on recently originated loans and PPP loans along with deferral modifications on loans due to COVID-19 on a comparative quarter basis. When compared to the first quarter of 2020, average total interest-earning assets were $1.4 billion in the second quarter of 2020 and $1.1 billion for the first quarter of 2020. The yield on those assets decreased 76 basis points, from 4.98% in the second quarter of 2019 to 4.22% for the same period in 2020.

 

The Company’s average interest-bearing liabilities increased by $147.7 million, to $935.8 million for the quarter ended June 30, 2020, from $788.1 million for the second quarter of 2019. Low-cost savings, NOW and money market deposits increased $164.3 million while the cost of transactional deposits increased from 0.52% to 0.54%, or 2 basis points year over year. The cost of total deposits decreased from 1.33% in the second quarter of 2019 to 1.02% in the second quarter of 2020 due to the decrease in the cost of time deposits. During the second quarter of 2020, the Company’s net interest margin was 3.45% and net interest spread was 3.08%. In the second quarter of 2019, net interest margin was 4.06% and net interest spread was 3.59%.

 

Provision for Loan Losses and Asset Quality

 

During the second quarter of 2020, the Company recorded a provision for loan losses of $1.9 million, based primarily on loan growth and adjustments to qualitative allowance factors. There was a 0.12% allowance applied to all loan pools for factors related to the potential economic impact of the COVID-19 pandemic. Additionally, due to the COVID-19 pandemic, we increased our reserve an additional 5 basis points in response to qualitative factors for gross domestic product, peer group delinquency, and North Carolina unemployment in all loan pools. As a result, $1.1 million of the $1.9 million provision was attributable to the impact COVID-19 on the reserve’s increase. We granted payment extensions on approximately 491 commercial and consumer loans totaling approximately $240.2 million related to the impact of COVID-19. As of the date of this filing, there are approximately 137 loans totaling $83.1 million remaining on modification. On a comparative-quarter basis, the Company recorded a recovery of loan losses of $207,000 for the second quarter of 2019. In the second quarter of 2020, the Company recorded net charge-offs of $515,000 compared to net charge-offs of $0 in the second quarter of 2019. These charge-offs resulted in a net charge-off rate of 0.16% of average loans for the current quarter, compared to a net charge-off rate of 0.00% in the second quarter of 2019.

 

 

 

 

Non-interest Income

 

Non-interest income for the quarter ended June 30, 2020 was $1.4 million, an increase of $83,000 from $1.3 million in the second quarter of 2019. Service charges on deposit accounts decreased $78,000, to $206,000 for the quarter ended June 30, 2020, from $284,000 for the second quarter in 2019. Other non-deposit fees and income increased $36,000 from the second quarter of 2019 to the second quarter of 2020. Fees of $235,000 from presold mortgages and $120,000 from SBA loans totaled $355,000 in the year-over-year comparison, which represented an increase of $124,000 from the $230,000 of fees in the second quarter of 2019. The Company did not sell any investment securities in the second quarter of 2020 or 2019.

 

Non-interest Expense

 

Non-interest expenses increased by $1.7 million to $10.5 million for the quarter ended June 30, 2020, from $8.8 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 second quarter of 2020 versus the same period in 2019:

 

·Personnel expenses increased $755,000 to $5.8 million, due to additional personnel and cost-of-living increases.
·Occupancy expenses increased $64,000 to $986,000, primarily due to additional branches, repairs and maintenance and increased rent expense due to normal rent escalation.
·Integration-related expenses increased $602,000 to $709,000, due to the acquisition of three branches in western North Carolina.
·Core Deposit Intangible (“CDI”) expense decreased $10,000 to $195,000 due to amortization.
·Information systems expense increased by $95,000 to $972,000 due to increased expenses related to a new mobile banking platform, increased number of users and security cost for the core processing system.
·Professional fees decreased by $32,000 to $451,000.
·Deposit insurance expenses decreased by $14,000 to $76,000 due to premium credit.

 

Income Taxes

 

The Company’s effective tax rate was 18.0% and 22.0% for the quarters ended June 30, 2020 and 2019, respectively.

 

Balance Sheet

 

Total assets at June 30, 2020 were $1.6 billion, an increase of $302.2 million or 22.9% from a year earlier. Gross loans at June 30, 2020 were $1.2 billion, up $252.9 million or 25.4% from a year earlier, and total deposits were $1.3 billion, an increase of $308.5 million or 29.9% from a year earlier.

 

Retail deposits (excluding brokered deposits and internet time deposits) grew at a rate of 60.4% or $357.0 million as of June 30, 2020 compared to the same period in 2019. Deposits increased $97.2 million due to the PPP loan program. Wholesale deposits decreased from $16.9 million at June 30, 2019 to $7.2 million at June 30, 2020 as we continue emphasizing core deposit growth to replace wholesale deposits.

 

Completion of Acquisition of Three Branches in Western North Carolina

 

On April 17, 2020, the Company’s subsidiary, Select Bank & Trust, completed its acquisition 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 acquisition, Select Bank & Trust Company acquired approximately $185 million in deposits, goodwill of $17.3 million and purchased approximately $103 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; in the following South Carolina communities: Blacksburg and Rock Hill; and in Virginia Beach, Virginia. Select Bank & Trust also operates three loan production offices in Wilson, Durham and Winston-Salem, North Carolina.

 

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

 

    June 30,
2020
    March 31,
2020
    December 31,
2019
    September 30,
2019
    June 30,
2019
 
    (Unaudited)     (Unaudited)     (Audited)     (Unaudited)     (Unaudited)  
          (Dollars in thousands)          
ASSETS                              
                               
Cash and due from banks   $ 24,037     $ 20,030     $ 19,110     $ 20,052     $ 20,397  
Interest-earning deposits in other banks     157,521       35,544       50,920       53,093       100,584  
Certificates of deposit     -       -       -       500       500  
Federal funds sold     9,726       11,673       9,047       10,728       21,961  
Investment securities available for sale, at Fair Value     62,958       64,738       72,367       76,941       83,102  
Loans held for sale     3,455       1,606       928       1,714       826  
Loans     1,249,999       1,039,514       1,029,975       1,014,928       997,062  
Allowance for loan losses     (12,054 )     (10,586 )     (8,324 )     (8,056 )     (8,303 )
NET LOANS     1,237,945       1,028,928       1,021,651       1,006,872       988,759  
                                         
Accrued interest receivable     4,400       3,839       4,189       3,902       4,028  
Stock in Federal Home Loan Bank of Atlanta, at cost     3,059       3,059       3,045       3,045       3,045  
Other non-marketable securities     718       718       719       719       718  
Foreclosed real estate     3,561       3,737       3,533       1,442       1,468  
Premises and equipment, net     20,893       17,868       17,791       18,150       18,274  
Right of use lease asset     8,953       8,414       8,596       8,776       8,953  
Bank owned life insurance     30,110       29,950       29,789       29,621       29,451  
Goodwill     41,914       24,579       24,579       24,579       24,579  
Core deposit intangible ("CDI")     1,856       1,431       1,610       1,803       2,011  
Other assets     7,854       7,380       7,202       7,697       8,141  
TOTAL ASSETS   $ 1,618,960     $ 1,263,494     $ 1,275,076     $ 1,269,634     $ 1,316,797  
                                         
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Deposits:                                        
   Demand   $ 400,098     $ 250,031     $ 240,305     $ 243,889     $ 252,666  
   Savings     52,597       41,815       43,128       43,355       46,037  
   Money market and NOW     495,609       306,051       280,145       283,414       292,629  
   Time     390,449       384,754       429,260       417,015       438,918  
TOTAL DEPOSITS     1,338,753       982,651       992,838       987,673       1,030,250  
                                         
Short-Term Debt     20,000       20,000       -       -       -  
Long-Term Debt     37,372       37,372       57,372       57,372       57,372  
Lease Liability     9,243       8,669       8,813       8,951       9,086  
Accrued interest payable     457       536       578       596       637  
Accrued expenses and other liabilities     1,597       2,181       2,700       2,993       2,607  
TOTAL LIABILITIES     1,407,422       1,051,409       1,062,301       1,057,585       1,099,952  
                                         
Shareholders' Equity                                        
Common stock     17,863       18,056       18,330       18,513       19,262  
Additional paid-in-capital     137,559       138,788       140,870       142,878       150,275  
Retained Earnings     54,460       53,779       52,675       49,634       46,395  
Common stock issued to deferred compensation trust     (2,553 )     (2,791 )     (2,815 )     (2,730 )     (2,652 )
Directors' Deferred Compensation Plan Rabbi Trust     2,553       2,791       2,815       2,730       2,652  
Accumulated other comprehesive income     1,656       1,462       900       1,024       913  
TOTAL SHAREHOLDERS' EQUITY     211,538       212,085       212,775       212,049       216,845  
                                         
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY   $ 1,618,960     $ 1,263,494     $ 1,275,076     $ 1,269,634     $ 1,316,797  

 

 

 

SELECT BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 

   For the Three Months Ended   For the Twelve Months Ended 
   June 30,
2020
   March 31,
2020
   December 31,
2019
   September 30,
2019
   June 30,
2019
   December 31,
2019
   December 31,
2018
 
           (Dollars in thousands, except for share amounts)     
INTEREST INCOME                                   
   Loans  $14,086   $13,589   $14,124   $13,924   $13,515   $54,605   $53,796 
   Federal funds sold and interest-earning deposits in other banks   33    168    258    581    456    1,838    1,618 
   Investments   381    421    434    503    601    2,003    1,421 
TOTAL INTEREST INCOME   14,500    14,178    14,816    15,008    14,572    58,446    56,835 
                                    
INTEREST EXPENSE                                   
Money market, NOW and savings deposits   648    348    420    433    407    1,616    1,339 
Time deposits   1,576    1,931    2,075    2,248    1,985    8,061    6,293 
Short-term debt   141    87    6    4    26    62    328 
Long-term debt   281    352    447    455    457    1,817    1,490 
TOTAL INTEREST EXPENSE   2,646    2,718    2,948    3,140    2,875    11,556    9,450 
                                    
NET INTEREST INCOME   11,854    11,460    11,868    11,868    11,697    46,890    47,385 
                                    
PROVISION FOR (RECOVERY OF) LOAN LOSSES   1,933    2,273    302    231    (207)   438    (156)
                                    
NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) LOAN LOSSES   9,921    9,187    11,566    11,637    11,904    46,452    47,541 
                                    
NON-INTEREST INCOME                                   
  Fees on the sale of mortgages   355    293    148    218    230    753    497 
  Gain on securities   0    0    0    48    0    48    0 
  Service charges on deposit accounts   206    338    303    308    284    1,161    1,124 
  Other fees and income   850    813    995    874    814    3,457    3,080 
TOTAL NON-INTEREST INCOME   1,411    1,444    1,446    1,448    1,328    5,419    4,701 
                                    
NON-INTEREST EXPENSE                                   
   Personnel   5,786    5,632    5,152    5,124    5,031    20,278    18,304 
   Occupancy and equipment   986    931    973    1,073    922    3,695    3,666 
   Deposit insurance   76    (12)   19    (30)   90    184    628 
   Professional Fees   451    372    503    518    483    1,886    1,394 
   CDI amortization   195    179    193    208    205    825    1,016 
   Merger/acquisition related expenses   709    39    171    128    107    406    1,826 
   Information systems   972    1,038    974    852    877    3,492    3,372 
   Foreclosed-related expenses   187    5    109    (9)   10    140    115 
   Other   1,140    1,063    1,000    1,067    1,086    4,234    4,229 
TOTAL NON-INTEREST EXPENSE   10,502    9,247    9,094    8,931    8,811    35,140    34,550 
                                    
INCOME BEFORE INCOME TAXES   830    1,384    3,918    4,154    4,421    16,731    17,692 
                                    
INCOME TAXES   149    280    877    915    973    3,696    3,910 
NET INCOME  $681   $1,104   $3,041   $3,239   $3,448   $13,035   $13,782 
NET INCOME PER COMMON SHARE OUTSTANDING                                   
  Basic  $0.04   $0.06   $0.17   $0.17   $0.18   $0.69   $0.87 
  Diluted  $0.04   $0.06   $0.16   $0.17   $0.18   $0.68   $0.87 
                                    
WEIGHTED AVERAGE COMMON                                   
Basic Outstanding Shares   18,013,863    18,255,351    18,414,393    19,028,572    19,318,358    19,016,808    15,812,585 
Diluted Outstanding Shares   18,030,136    18,287,064    18,460,118    19,073,235    19,359,492    19,063,237    15,877,633 

 

 

 

 Select Bancorp, Inc.

Asset quality

 

   For Periods Ended 
   June 30,
2020
   March 31,
2020
   December 31,
2019
   September 30,
2019
   June 30,
2019
   December 31,
2019
   December 31,
2018
 
      (Dollars in thousands, except for share amounts, unaudited)      
Non-accrual loans  $7,979   $7,201   $5,941   $9,083   $10,521   $5,941   $7,257 
Accruing TDRs   6,420    5,619    6,207    6,477    6,061    6,207    4,378 
Total non-performing loans   14,399    12,820    12,148    15,560    16,582    12,148    11,635 
Foreclosed real estate   3,561    3,737    3,533    1,442    1,468    3,533    1,088 
Total non-performing assets  $17,960   $16,557   $15,681   $17,002   $18,050   $15,681   $12,723 
                                    
Accruing loans past due 90 days or more  $1,326   $1,182   $1,231   $2,296   $2,447   $1,231   $3,167 
Allowance for loan losses  $12,054   $10,586   $8,324   $8,056   $8,303   $8,324   $8,669 
                                    
Non-performing loans to period ending loans   1.15%   1.23%   1.18%   1.53%   1.66%   1.18%   1.18%
Non-performing loans & accruing loans past due 90 days or more to period ending loans   1.26%   1.35%   1.30%   1.76%   1.91%   1.30%   1.50%
Allowance for loans to period end loans   0.96%   1.02%   0.81%   0.79%   0.83%   0.81%   0.88%
Allowance for loans to non-performing loans   84%   83%   69%   52%   50%   69%   75%
Allowance for loans to non-performing Assets   67%   64%   53%   47%   46%   53%   68%
Allowance for loans to non-performing Assets and accruing loans past due 90 days or more   63%   60%   49%   42%   41%   49%   55%
Non-performing assets to total assets   1.11%   1.31%   1.23%   1.34%   1.37%   1.23%   1.01%
Non-performing assets to accruing loans past due 90 days or more to total assets   1.19%   1.40%   1.33%   1.52%   1.56%   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 
   June 30,
2020
   March 31,
2020
   December 31,
2019
   September 30,
2019
   June 30,
2019
   December 31,
2019
   December 31,
2018
 
Net interest margin:                                   
Net Interest Margin-tax equivalent (1)  $11,883   $11,489   $11,901   $11,903   $11,740   $47,037   $47,535 
Purchased loan accretion and early payoff charges   (620)   (105)   (226)   (210)   (268)   (904)   (3,051)
Net Interest Margin(2) (Non-GAAP)  $11,263   $11,384   $11,675   $11,693   $11,472   $46,133   $44,484 
                                    
Loans receivable interest income:                                   
Loans receivable interest income  $14,086   $13,589   $14,124   $13,924   $13,515   $54,645   $53,822 
Purchased loan accretion and early payoff charges   (620)   (105)   (226)   (210)   (268)   (904)   (3,051)
Loans receivable interest income (Non-GAAP)  $13,466   $13,484   $13,898   $13,714   $13,247   $53,741   $50,771 
                                    
Acquired and non-acquired loans:                                   
Acquired loans recievable  $213,466   $122,363   $129,595   $141,765   $152,090   $129,595   $186,243 
Non-acquired loans recievable   1,036,533    917,151    900,380    873,163    844,972    900,380    799,797 
Total gross loans recievable  $1,249,999   $1,039,514   $1,029,975   $1,014,928   $997,062   $1,029,975   $986,040 
% Acquired   17.1%   11.8%   12.6%   14.0%   15.3%   12.6%   18.9%
                                    
Non-acquired loans   1,036,533    917,151    900,380    873,163    844,972    900,380    799,797 
Allowance for loan losses   12,054    10,586    8,324    8,056    8,303    8,324    8,669 
Allowance for loan losses to non-acquired loans (Non-GAAP)   1.16%   1.15%   0.92%   0.92%   0.98%   0.92%   1.08%
                                    
Total gross loan receivable   1,249,999    1,039,514    1,029,975    1,014,928    997,062    1,029,975    986,040 
Allowance for loan losses   12,054    10,586    8,324    8,056    8,303    8,324    8,669 
Allowance for loan losses to total gross loans receivable   0.96%   1.02%   0.81%   0.79%   0.83%   0.81%   0.88%

 

   For Periods Ended
   June 30,
2019
   March 31,
2019
   December 31,
2019
   September 30,
2019
   June 30,
2019
   December 31,
2019
   December 31,
2018
 
Tangible common equity                                   
Total shareholders' equity  $211,538   $212,085   $212,775   $212,049   $216,845   $212,775   $209,611 
Adjustment:                                   
Goodwill   41,914    24,579    24,579    24,579    24,579    24,579    24,579 
Core deposit intangibles   1,856    1,431    1,610    1,803    2,011    1,610    2,085 
Tangible common equity  $167,768   $186,075   $186,586   $185,667   $190,255   $186,586   $182,947 
Common shares outstanding(3)   17,862,554    18,055,692    18,330,058    18,513,078    19,261,989    18,330,058    19,311,505 
Book value per common share(4)  $11.84   $11.75   $11.61   $11.45   $11.26   $11.61   $10.85 
Tangible book value per common share(5)  $9.39   $10.31   $10.18   $10.03   $9.88   $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 per share data)

 

   For the Quarter Ended   For the Year Ended 
   June 30,   March 31,   December 31,   September 30,   June 30,   December 31,   December 31,   December 31, 
   2020   2020   2019   2019   2019   2019   2018   2017 
Summary of Operations:                                        
Total interest income  $14,500   $14,178   $14,816   $15,008   $14,572   $58,446   $56,835   $39,617 
Total interest expense   2,646    2,718    2,948    3,140    2,875    11,556    9,450    5,106 
Net interest income   11,854    11,460    11,868    11,868    11,697    46,890    47,385    34,511 
Provision for loan losses   1,933    2,273    302    231    (207)   438    (156)   1,367 
Net interest income after provision   9,921    9,187    11,566    11,637    11,904    46,452    47,541    33,144 
Noninterest income   1,411    1,444    1,446    1,448    1,328    5,419    4,701    3,072 
Merger/acquisition related expenses   709    39    171    128    107    406    1,826    2,166 
Noninterest expense   9,793    9,208    8,923    8,803    8,704    34,734    32,724    25,153 
Income before income taxes   830    1,384    3,918    4,154    4,421    16,731    17,692    8,897 
Provision for income taxes   149    280    877    915    973    3,696    3,910    5,712 
Net Income   681    1,104    3,041    3,239    3,448    13,035    13,782    3,185 
Dividends on Preferred Stock   -    -    -    -    -    -    -    - 
Net income available to common shareholders  $681   $1,104   $3,041   $3,239   $3,448   $13,035   $13,782   $3,185 
                                         
Share and Per Share Data:                                        
Earnings per share - basic  $0.04   $0.06   $0.17   $0.17   $0.18   $0.69   $0.87   $0.27 
Earnings per share - diluted  $0.04   $0.06   $0.16   $0.17   $0.18   $0.68   $0.87   $0.27 
Book value per share  $11.84   $11.75   $11.61   $11.45   $11.26   $11.61   $10.85   $9.72 
Tangible book value per share(1)  $9.39   $10.31   $10.18   $10.03   $9.88   $10.18   $9.47   $7.72 
Ending shares outstanding   17,862,554    18,055,692    18,330,058    18,513,078    19,261,989    18,330,058    19,311,505    14,009,137 
Weighted average shares outstanding:                                        
Basic   18,134,607    18,255,351    18,414,393    19,028,572    19,318,358    19,016,808    15,812,585    11,763,050 
Diluted   18,157,992    18,287,064    18,460,118    19,073,235    19,359,492    19,063,237    15,877,633    11,826,977 
                                         
Selected Performance Ratios:                                        
Return on average assets(2)   0.18%   0.35%   0.95%   0.99%   1.10%   1.03%   1.12%   0.35%
Return on average equity(2)   1.28%   2.07%   5.67%   5.93%   6.41%   6.08%   8.51%   2.93%
Net interest margin   3.45%   4.03%   4.05%   3.94%   4.06%   4.04%   4.19%   4.09%
Efficiency ratio (3)   73.83%   71.36%   67.02%   66.11%   66.83%   66.40%   62.83%   66.93%
                                         
Period End Balance Sheet Data:                                        
Gross loans  $1,249,999   $1,039,514   $1,029,975   $1,014,928   $997,062   $1,029,975   $986,040   $982,626 
Total interest-earning assets   1,222,416    1,137,010    1,167,857    1,153,612    1,148,417    1,167,857    1,119,344    1,063,322 
Goodwill   41,914    24,579    24,579    24,579    24,579    24,579    24,579    24,904 
Core deposit intangible   1,856    1,431    1,610    1,803    2,011    1,610    2,085    3,101 
Total assets   1,618,960    1,263,494    1,275,076    1,269,634    1,316,797    1,275,076    1,258,525    1,194,135 
Deposits   1,338,753    982,651    992,838    987,673    1,030,250    992,838    980,427    995,044 
Short-term debt   20,000    20,000    -    -    -    -    7,000    28,279 
Long-term debt   37,372    37,372    57,372    57,372    57,372    57,372    57,372    19,372 
Shareholders' equity   211,538    212,085    212,775    212,049    216,845    212,775    209,611    136,115 
                                         
Selected Average Balances:                                        
Gross Loans  $1,193,985   $1,020,630   $1,017,750   $1,013,331   $982,876   $1,004,051   $987,634   $732,089 
Total interest-earning assets   1,321,172    1,147,631    1,166,758    1,197,266    1,160,387    1,164,149    1,119,344    813,773 
Core Deposit Intangible   1,529    1,507    1,680    1,878    1,741    1,812    2,547    640 
Total Assets   1,520,278    1,255,943    1,272,475    1,300,137    1,261,972    1,268,728    1,228,576    898,943 
Deposits   1,237,343    972,162    989,721    1,013,504    970,011    981,132    989,838    738,310 
Short-term debt   20,000    12,747    -    -    6,824    3,414    21,393    34,523 
Long-term debt   37,438    44,625    57,372    57,372    57,372    57,372    49,357    14,239 
Shareholders' equity   213,796    214,502    212,849    216,556    215,722    214,324    161,953    108,709 
                                         
Asset Quality Ratios:                                        
Nonperforming loans (4)  $14,399   $12,820   $12,148   $15,560   $16,582   $12,148   $11,635   $6,978 
Other real estate owned   3,561    3,737    3,533    1,442    1,468    3,533    1,088    1,258 
Allowance for loan losses   12,054    10,586    8,324    8,056    8,303    8,324    8,669    8,835 
Nonperforming loans (4) to period-end loans    1.15%   1.23%   1.18%   1.53%   1.66%   1.18%   1.18%   0.71%
Allowance for loan losses to period-end loans   0.96%   1.02%   0.81%   0.79%   0.83%   0.81%   0.88%   0.90%
Delinquency ratio (5)   0.22%   0.43%   0.34%   0.09%   0.12%   0.34%   0.19%   0.48%
Net loan charge-offs (recoveries) to average loans (2)   0.16%   0.00%   0.01%   0.19%   0.00%   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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