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Section 1: 8-K (8-K)

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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): October 29, 2020

 

 

 

 

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 October 29, 2020, Select Bancorp, Inc. issued a press release announcing financial results for the three months ended September 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 (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 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 October 29, 2020, regarding financial results for the three months ended September 30, 2020.
     
104   Cover page interactive data file (embedded within the Inline XBRL document)

 

 

 

 

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: November 3, 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:

October 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

THIRD 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 September 30, 2020 of $2.5 million with basic and diluted earnings per share of $0.14, compared to net income of $3.2 million with basic and diluted earnings per share of $0.17 for the comparative quarter ended September 30, 2019. The decrease in net income in the third quarter of 2020 compared to the third quarter of 2019 was primarily attributable to a provision for loan losses of $1.6 million compared to a provision for loan losses of $231,000 for the same period in 2019. The increase in the provision for loan losses was primarily due to a specific reserve, loan growth and factors associated with the economic impact of the COVID-19 pandemic.

 

Total assets, deposits, and gross loans for the Company as of September 30, 2020 were $1.8 billion, $1.5 billion, and $1.3 billion, respectively, compared to total assets of $1.3 billion, total deposits of $987.7 million, and total loans of $1 billion 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 3rd quarter of 2020, “We had a solid third quarter in spite of the impact of the COVID-19 pandemic upon our company and earnings. In the last three quarters, we have been preparing for a ‘worst-case scenario’ should the pandemic linger and have a lasting impact on the economy that stretches beyond months or years. Although the bank, our customers and employees have learned to navigate the current state of affairs, there is still much uncertainty that lies ahead. We believe we are well-positioned and prepared to assist our customers further should that be required, with measures such as additional loan deferrals and the waiving of certain fees. Our capital, liquidity and asset quality are all strong and should enable us to overcome many challenges we may face until we emerge from this pandemic. We continue to realize efficiencies and improve our processes as we move forward. Our three newest branches in the western part of North Carolina (Franklin, Highlands, and Sylva) are integrating well and have become a great part of our branch network. We are so proud of the western North Carolina branch team members’ efforts over the past few months. Albeit challenging in this environment, they have done a fantastic job maintaining customer relationships and growing those markets.”

 

Other matters of interest to shareholders are:

 

·The Company announced on October 2, 2020 a stock repurchase plan authorizing the repurchase of up to 875,000 outstanding shares of common stock.
·Organic deposit growth was approximately $134.0 million in the third quarter of 2020.
·Loans increased by approximately $34.5 million in the third quarter of 2020 in organic growth.

 

 

 

 

Net Interest Income and Net Interest Margin

 

Net interest income was $13.1 million for the third quarter of 2020 and $11.9 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 average 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 third quarter of 2020 and $1.2 billion for the same period in 2019. The yield on those assets decreased 48 basis points, from 4.98% in the third quarter of 2019 to 4.50% for the same period in 2020. This was primarily due to lower rates on recently originated loans and 1,249 Paycheck Protection Program, or PPP, loans along with deferral modifications on loans due to COVID-19 on a comparative-quarter basis. When compared to the third quarter of 2020, average total interest-earning assets were $1.3 billion in the second quarter of 2020 and $1.4 billion for the third quarter of 2020. The yield on those assets increased 28 basis points, from 4.22% in the second quarter of 2020 to 4.50% for the third quarter of 2020.

 

The Company’s average interest-bearing liabilities increased by $234.2 million, to $1.1 billion for the quarter ended September 30, 2020, from $818.6 million for the third quarter of 2019. Low-cost savings, NOW and money market deposits increased $275.2 million, while the cost of transactional deposits increased from 0.52% to 0.59%, or 7 basis points, year over year. The cost of total deposits decreased from 1.40% in the third quarter of 2019 to 0.92% in the third quarter of 2020 due to the decrease in the cost of time deposits. During the third quarter of 2020, the Company’s net interest margin was 3.73% and net interest spread was 3.47%. In the third quarter of 2019, net interest margin was 3.94% and net interest spread was 3.46%.

 

Provision for Loan Losses and Asset Quality

 

During the third quarter of 2020, the Company recorded a provision for loan losses of $1.6 million, based primarily on loan growth and adjustments to qualitative allowance factors. There was a 0.10% allowance applied to all loan pools for factors related to the potential economic impact of the COVID-19 pandemic. As a result, $129,000 of the $1.6 million provision was attributable to the impact COVID-19 on the reserve’s increase. When the pandemic began, we granted payment deferrals related to the impact of COVID-19 on approximately 497 commercial and consumer loans totaling approximately $240.2 million. As of the date of this release, there are approximately 129 loans totaling $85.7 million remaining on deferral. On a comparative-quarter basis, the Company recorded a provision for loan losses of $231,000 for the third quarter of 2019. In the third quarter of 2020, the Company recorded net charge-offs of $131,000 compared to net charge-offs of $478,000 in the third quarter of 2019. These charge-offs resulted in a net charge-off rate of 0.04% of average loans for the current quarter, compared to a net charge-off rate of 0.19% in the third quarter of 2019.

 

Non-interest Income

 

Non-interest income for the quarter ended September 30, 2020 was $1.7 million, an increase of $276,000 from $1.4 million in the third quarter of 2019. Service charges on deposit accounts decreased $51,000, to $257,000 for the quarter ended September 30, 2020, from $308,000 for the third quarter in 2019. Other non-deposit fees and income increased $76,000 from the third quarter of 2019 to the third quarter of 2020. Fees of $255,000 from presold mortgages and $262,000 from non-PPP SBA loans totaled $517,000 in the third quarter of 2020, which represented an increase of $299,000 from the $218,000 of fees in the third quarter of 2019. The Company did not sell any investment securities in the third quarter of 2020 but did have gains of $48,000 in the third quarter of 2019.

 

Non-interest Expense

 

Non-interest expenses increased by $1.1 million to $10.1 million for the quarter ended September 30, 2020, from $8.9 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 third quarter of 2020 versus the same period in 2019:

 

 

 

 

·Personnel expenses increased $618,000 to $5.7 million, due to additional personnel primarily from branch acquisitions and the establishment of new branches.
·Occupancy expenses decreased $65,000 to $1.0 million, primarily due to additional branches, repairs and maintenance.
·Foreclosure-related expenses increased $237,000 to $228,000, due to write-down to fair value.
·Core Deposit Intangible (“CDI”) expense decreased $29,000 to $195,000 due to amortization.
·Information systems expense increased by $191,000 to $1.0 million due to increased expenses related to a new mobile banking platform, increased number of customer accounts and security cost for the core processing system.
·Professional fees decreased by $119,000 to $399,000.
·Deposit insurance expenses increased by $400,000 to $370,000 due to premium increases related to asset growth.

 

Income Taxes

 

The Company’s effective tax rate was 21.5% and 22.0% for the quarters ended September 30, 2020 and 2019, respectively.

 

Balance Sheet

 

Total assets at September 30, 2020 were $1.8 billion, an increase of $502.3 million or 39.6% from a year earlier. Gross loans at September 30, 2020 were $1.3 billion, up $268.5 million or 26.4% from a year earlier, and total deposits were $1.5 billion, an increase of $485.1 million or 49.1% from a year earlier.

 

Retail deposits (excluding brokered deposits and internet time deposits) grew at a rate of 87.5% or $499.5 million as of September 30, 2020 compared to the same period in 2019. Deposits increased $97.2 million due to the PPP loan program in 2020. Wholesale deposits decreased from $13.5 million at September 30, 2019 to $4.6 million at September 30, 2020 as we continue emphasizing core deposit growth to replace wholesale deposits.

 

 

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

 

   September 30, 2020   June 30, 2020   March 31, 2020   December 31, 2019   September 30, 2019 
   (Unaudited)   (Unaudited)   (Unaudited)   (Audited)   (Unaudited) 
       (Dollars in thousands) 
ASSETS                         
                          
Cash and due from banks  $25,068   $24,037   $20,030   $19,110   $20,052 
Interest-earning deposits in other banks   249,541    157,521    35,544    50,920    53,093 
Certificates of deposit   -    -    -    -    500 
Federal funds sold   8,046    9,726    11,673    9,047    10,728 
Investment securities available for sale, at Fair Value   87,434    62,958    64,738    72,367    76,941 
Loans held for sale   2,945    3,455    1,606    928    1,714 
Loans   1,283,457    1,249,999    1,039,514    1,029,975    1,014,928 
Allowance for loan losses   (13,561)   (12,054)   (10,586)   (8,324)   (8,056)
NET LOANS   1,269,896    1,237,945    1,028,928    1,021,651    1,006,872 
                          
Accrued interest receivable   4,486    4,400    3,839    4,189    3,902 
Stock in Federal Home Loan Bank of Atlanta, at cost   3,059    3,059    3,059    3,045    3,045 
Other non-marketable securities   718    718    718    719    719 
Foreclosed real estate   3,237    3,561    3,737    3,533    1,442 
Premises and equipment, net   20,883    20,893    17,868    17,791    18,150 
Right of use lease asset   8,756    8,953    8,414    8,596    8,776 
Bank owned life insurance   30,271    30,110    29,950    29,789    29,621 
Goodwill   41,914    41,914    24,579    24,579    24,579 
Core deposit intangible ("CDI")   1,677    1,856    1,431    1,610    1,803 
Other assets   14,015    7,854    7,380    7,202    7,697 
TOTAL ASSETS  $1,771,946   $1,618,960   $1,263,494   $1,275,076   $1,269,634 
                          
LIABILITIES AND SHAREHOLDERS' EQUITY                         
Deposits:                         
Demand  $408,209   $400,098   $250,031   $240,305   $243,889 
Savings   51,629    52,597    41,815    43,128    43,355 
Money market and NOW   610,275    495,609    306,051    280,145    283,414 
Time   402,667    390,449    384,754    429,260    417,015 
TOTAL DEPOSITS   1,472,780    1,338,753    982,651    992,838    987,673 
                          
Short-Term Debt   20,000    20,000    20,000    -    - 
Long-Term Debt   37,372    37,372    37,372    57,372    57,372 
Lease Liability   9,089    9,243    8,669    8,813    8,951 
Accrued interest payable   449    457    536    578    596 
Accrued expenses and other liabilities   18,889    1,597    2,181    2,700    2,993 
TOTAL LIABILITIES   1,558,579    1,407,422    1,051,409    1,062,301    1,057,585 
                          
Shareholders' Equity                         
Common stock   17,787    17,863    18,056    18,330    18,513 
Additional paid-in-capital   137,130    137,559    138,788    140,870    142,878 
Retained Earnings   56,917    54,460    53,779    52,675    49,634 
Common stock issued to deferred compensation trust   (2,352)   (2,553)   (2,791)   (2,815)   (2,730)
Directors' Deferred Compensation Plan Rabbi Trust   2,352    2,553    2,791    2,815    2,730 
Accumulated other comprehensive income   1,533    1,656    1,462    900    1,024 
TOTAL SHAREHOLDERS' EQUITY   213,367    211,538    212,085    212,775    212,049 
                          
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY  $1,771,946   $1,618,960   $1,263,494   $1,275,076   $1,269,634 

 

 

 

 

SELECT BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   For the Three Months Ended   For the Twelve Months Ended 
  

September 3,

2020

  

June 30,

2020

  

March 31,

2020

  

December 3,

2019

  

September 3,

2019

  

December 3,

2019

  

December 3,

2018

 
       (Dollars in thousands, except for share amounts)     
INTEREST INCOME                                   
Loans  $15,404   $14,086   $13,589   $14,124   $13,924   $54,605   $53,796 
Federal funds sold and interest-earning                                   
deposits in other banks   54    33    168    258    581    1,838    1,618 
Investments   367    381    421    434    503    2,003    1,421 
TOTAL INTEREST INCOME   15,825    14,500    14,178    14,816    15,008    58,446    56,835 
                                    
INTEREST EXPENSE                                   
Money market, NOW and savings deposits   891    648    348    420    433    1,616    1,339 
Time deposits   1,415    1,576    1,931    2,075    2,248    8,061    6,293 
Short-term debt   145    141    87    6    4    62    328 
Long-term debt   263    281    352    447    455    1,817    1,490 
TOTAL INTEREST EXPENSE   2,714    2,646    2,718    2,948    3,140    11,556    9,450 
                                    
NET INTEREST INCOME   13,111    11,854    11,460    11,868    11,868    46,890    47,385 
                                    
PROVISION FOR (RECOVERY OF) LOAN LOSSES   1,638    1,933    2,273    302    231    438    (156)
                                    
NET INTEREST INCOME AFTER PROVISION                                   
FOR (RECOVERY OF) LOAN LOSSES   11,473    9,921    9,187    11,566    11,637    46,452    47,541 
                                    
NON-INTEREST INCOME                                   
Fees on the sale of mortgages   517    355    293    148    218    753    497 
Gain on securities   -    -    -    -    48    48    - 
Service charges on deposit accounts   257    206    338    303    308    1,161    1,124 
Other fees and income   950    850    813    995    874    3,457    3,080 
TOTAL NON-INTEREST INCOME   1,724    1,411    1,444    1,446    1,448    5,419    4,701 
                                    
NON-INTEREST EXPENSE                                   
Personnel   5,742    5,786    5,632    5,152    5,124    20,278    18,304 
Occupancy and equipment   1,008    986    931    973    1,073    3,695    3,666 
Deposit insurance   370    76    (12)   19    (30)   184    628 
Professional Fees   399    451    372    503    518    1,886    1,394 
CDI amortization   179    195    179    193    208    825    1,016 
Merger/acquisition related expenses   7    709    39    171    128    406    1,826 
Information systems   1,043    972    1,038    974    852    3,492    3,372 
Foreclosed-related expenses   228    187    5    109    (9)   140    115 
Other   1,091    1,140    1,063    1,000    1,067    4,234    4,229 
TOTAL NON-INTEREST EXPENSE   10,067    10,502    9,247    9,094    8,931    35,140    34,550 
                                    
INCOME BEFORE INCOME TAXES   3,130    830    1,384    3,918    4,154    16,731    17,692 
                                    
INCOME TAXES   673    149    280    877    915    3,696    3,910 
NET INCOME  $2,457   $681   $1,104   $3,041   $3,239   $13,035   $13,782 
NET INCOME PER COMMON SHARE OUTSTANDING                                   
Basic  $0.14   $0.04   $0.06   $0.17   $0.17   $0.69   $0.87 
Diluted  $0.14   $0.04   $0.06   $0.16   $0.17   $0.68   $0.87 
                                    
WEIGHTED AVERAGE COMMON                                   
Basic Outstanding Shares   17,847,913    18,013,863    18,255,351    18,414,393    19,028,572    19,016,808    15,812,585 
Diluted Outstanding Shares   17,866,822    18,030,136    18,287,064    18,460,118    19,073,235    19,063,237    15,877,633 

 

 

 

Select Bancorp, Inc.

Asset quality

 

   September 30, 2020   June 30, 2020  

March 31,

2020

  

December 31,

2019

   September 30, 2019  

December 31,

2019

  

December 31,

2018

 
   (Dollars in thousands, except for share amounts, unaudited) 
Non-accrual loans  $7,695   $7,979   $7,201   $5,941   $9,083   $5,941   $7,257 
Accruing TDRs   6,044    6,420    5,619    6,207    6,477    6,207    4,378 
Total non-performing loans   13,739    14,399    12,820    12,148    15,560    12,148    11,635 
Foreclosed real estate   3,237    3,561    3,737    3,533    1,442    3,533    1,088 
Total non-performing assets  $16,976   $17,960   $16,557   $15,681   $17,002   $15,681   $12,723 
                                    
Accruing loans past due 90 days or more  $1,548   $1,326   $1,182   $1,231   $2,296   $1,231   $3,167 
Allowance for loan losses  $13,561   $12,054   $10,586   $8,324   $8,056   $8,324   $8,669 
                                    
Non-performing loans to period ending loans   1.07%   1.15%   1.23%   1.18%   1.53%   1.18%   1.18%
Non-performing loans ? accruing loans past                                   
due 90 days or more to period ending loans   1.19%   1.26%   1.35%   1.30%   1.76%   1.30%   1.50%
Allowance for loans to period end loans   1.06%   0.96%   1.02%   0.81%   0.79%   0.81%   0.88%
Allowance for loans to non-performing loans   99%   84%   83%   69%   52%   69%   75%
Allowance for loans to non-performing Assets   80%   67%   64%   53%   47%   53%   68%
Allowance for loans to non-performing Assets                                   
and accruing loans past due 90 days or more   73%   63%   60%   49%   42%   49%   55%
Non-performing assets to total assets   0.96%   1.11%   1.31%   1.23%   1.34%   1.23%   1.01%
Non-performing assets to accruing loans                                   
past due 90 days or more to total assets   1.05%   1.19%   1.40%   1.33%   1.52%   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 
   September 30, 2020  

June 30,

2020

  

March 31,

2020

   December 31, 2019   September 30, 2019   December 31, 2019   December 31, 2018 
Net interest margin:                                   
Net Interest Margin-tax equivalent(1)  $13,141   $11,883   $11,489   $11,901   $11,903   $47,037   $47,535 
Purchased loan accretion and early payoff charges   (455)   (620)   (105)   (226)   (210)   (904)   (3,051)
Net Interest Margin(2) (Non-GAAP)  $12,686   $11,263   $11,384   $11,675   $11,693   $46,133   $44,484 
                                    
Loans receivable interest income:                                   
Loans receivable interest income  $15,404   $14,086   $13,589   $14,124   $13,924   $54,645   $53,822 
Purchased loan accretion and early payoff charges   (455)   (620)   (105)   (226)   (210)   (904)   (3,051)
Loans receivable interest income (Non-GAAP)  $14,949   $13,466   $13,484   $13,898   $13,714   $53,741   $50,771 
                                    
Acquired and non-acquired loans:                                   
Acquired loans recievable  $199,794   $213,466   $122,363   $129,595   $141,765   $129,595   $186,243 
Non-acquired loans receivable   1,083,663    1,036,533    917,151    900,380    873,163    900,380    799,797 
Total gross loans receivable  $1,283,457   $1,249,999   $1,039,514   $1,029,975   $1,014,928   $1,029,975   $986,040 
% Acquired   15.6%   17.1%   11.8%   12.6%   14.0%   12.6%   18.9%
                                    
Non-acquired loans   1,083,663    1,036,533    917,151    900,380    873,163    900,380    799,797 
Allowance for loan losses   13,561    12,054    10,586    8,324    8,056    8,324    8,669 
Allowance for loan losses to non-acquired loans (Non-GAAP)   1.25%   1.16%   1.15%   0.92%   0.92%   0.92%   1.08%
                                    
Total gross loan receivable   1,283,457    1,249,999    1,039,514    1,029,975    1,014,928    1,029,975    986,040 
Allowance for loan losses   13,561    12,054    10,586    8,324    8,056    8,324    8,669 
Allowance for loan losses to total gross loans receivable   1.06%   0.96%   1.02%   0.81%   0.79%   0.81%   0.88%

 

For Periods Ended

   September 30, 2020   June 30,
2020
  

March 31,

2020

   December 31, 2019   September 30, 2019   December 31, 2019   December 31, 2018 
Tangible common equity                                   
Total shareholders' equity  $213,367   $211,538   $212,085   $212,775   $212,049   $212,775   $209,611 
Adjustment:                                   
Goodwill   41,914    41,914    24,579    24,579    24,579    24,579    24,579 
Core deposit intangibles   1,677    1,856    1,431    1,610    1,803    1,610    2,085 
Tangible common equity  $169,776   $167,768   $186,075   $186,586   $185,667   $186,586   $182,947 
Common shares outstanding(3)   17,786,552    17,862,554    18,055,692    18,330,058    18,513,078    18,330,058    19,311,505 
Book value per common share(4)  $12.00   $11.84   $11.75   $11.61   $11.45   $11.61   $10.85 
Tangible book value per common share(5)  $9.55   $9.39   $10.31   $10.18   $10.03   $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 
                                 
   September 30,   June 30,   March 31,   December 31,   September 30,   December 31,   December 31,   December 31, 
   2020   2020   2020   2019   2019   2019   2018   2017 
                                 
Summary of Operations:                                        
Total interest income  $15,825   $14,500   $14,178   $14,816   $15,008   $58,446   $56,835   $39,617 
Total interest expense   2,714    2,646    2,718    2,948    3,140    11,556    9,450    5,106 
Net interest income   13,111    11,854    11,460    11,868    11,868    46,890    47,385    34,511 
Provision for loan losses   1,638    1,933    2,273    302    231    438    (156)   1,367 
Net interest income after provision   11,473    9,921    9,187    11,566    11,637    46,452    47,541    33,144 
Noninterest income   1,724    1,411    1,444    1,446    1,448    5,419    4,701    3,072 
Merger/acquisition related expenses   7    709    39    171    128    406    1,826    2,166 
Noninterest expense   10,060    9,793    9,208    8,923    8,803    34,734    32,724    25,153 
Income before income taxes   3,130    830    1,384    3,918    4,154    16,731    17,692    8,897 
Provision for income taxes   673    149    280    877    915    3,696    3,910    5,712 
Net Income   2,457    681    1,104    3,041    3,239    13,035    13,782    3,185 
Dividends on Preferred Stock   -    -    -    -    -    -    -    - 
Net income available to common shareholders  $2,457   $681   $1,104   $3,041   $3,239   $13,035   $13,782   $3,185 
                                         
Share and Per Share Data:                                        
Earnings per share - basic  $0.14   $0.04   $0.06   $0.17   $0.17   $0.69   $0.87   $0.27 
Earnings per share - diluted  $0.14   $0.04   $0.06   $0.16   $0.17   $0.68   $0.87   $0.27 
Book value per share  $12.00   $11.84   $11.75   $11.61   $11.45   $11.61   $10.85   $9.72 
Tangible book value per share(1)  $9.55   $9.39   $10.31   $10.18   $10.03   $10.18   $9.47   $7.72 
Ending shares outstanding   17,786,552    17,862,554    18,055,692    18,330,058    18,513,078    18,330,058    19,311,505    14,009,137 
Weighted average shares outstanding:                                        
Basic   17,847,913    18,134,607    18,255,351    18,414,393    19,028,572    19,016,808    15,812,585    11,763,050 
Diluted   17,866,822    18,157,992    18,287,064    18,460,118    19,073,235    19,063,237    15,877,633    11,826,977 
                                         
Selected Performance Ratios:                                        
Return on average assets(2)   0.58%   0.18%   0.35%   0.95%   0.99%   1.03%   1.12%   0.35%
Return on average equity(2)   4.56%   1.28%   2.07%   5.67%   5.93%   6.08%   8.51%   2.93%
Net interest margin   3.73%   3.45%   4.03%   4.05%   3.94%   4.04%   4.19%   4.09%
Efficiency ratio(3)   67.82%   73.83%   71.36%   67.02%   66.11%   66.40%   62.83%   66.93%
                                         
Period End Balance Sheet Data:                                        
Gross loans  $1,283,457   $1,249,999   $1,039,514   $1,029,975   $1,014,928   $1,029,975   $986,040   $982,626 
Total interest-earning assets   1,429,614    1,222,416    1,137,010    1,167,857    1,153,612    1,167,857    1,119,344    1,063,322 
Goodwill   41,914    41,914    24,579    24,579    24,579    24,579    24,579    24,904 
Core deposit intangible   1,677    1,856    1,431    1,610    1,803    1,610    2,085    3,101 
Total assets   1,771,946    1,618,960    1,263,494    1,275,076    1,269,634    1,275,076    1,258,525    1,194,135 
Deposits   1,472,780    1,338,753    982,651    992,838    987,673    992,838    980,427    995,044 
Short-term debt   20,000    20,000    20,000    -    -    -    7,000    28,279 
Long-term debt   37,372    37,372    37,372    57,372    57,372    57,372    57,372    19,372 
Shareholders' equity   213,367    211,538    212,085    212,775    212,049    212,775    209,611    136,115 
                                         
Selected Average Balances:                                        
Gross Loans  $1,255,027   $1,193,985   $1,020,630   $1,017,750   $1,013,331   $1,004,051   $987,634   $732,089 
Total interest-earning assets   1,403,106    1,321,172    1,147,631    1,166,758    1,197,266    1,164,149    1,119,344    813,773 
Core Deposit Intangible   1,743    1,529    1,507    1,680    1,878    1,812    2,547    640 
Total Assets   1,683,174    1,520,278    1,255,943    1,272,475    1,300,137    1,268,728    1,228,576    898,943 
Deposits   1,399,840    1,237,343    972,162    989,721    1,013,504    981,132    989,838    738,310 
Short-term debt   20,000    20,000    12,747    -    -    3,414    21,393    34,523 
Long-term debt   37,438    37,438    44,625    57,372    57,372    57,372    49,357    14,239 
Shareholders' equity   214,277    213,796    214,502    212,849    216,556    214,324    161,953    108,709 
                                         
Asset Quality Ratios:                                        
Nonperforming loans(4)  $13,739   $14,399   $12,820   $12,148   $15,560   $12,148   $11,635   $6,978 
Other real estate owned   3,237    3,561    3,737    3,533    1,442    3,533    1,088    1,258 
Allowance for loan losses   13,561    12,054    10,586    8,324    8,056    8,324    8,669    8,835 
Nonperforming loans(4) to period-end loans   1.07%   1.15%   1.23%   1.18%   1.53%   1.18%   1.18%   0.71%
Allowance for loan losses to period-end loans   1.06%   0.96%   1.02%   0.81%   0.79%   0.81%   0.88%   0.90%
Delinquency ratio(5)   0.17%   0.22%   0.43%   0.34%   0.09%   0.34%   0.19%   0.48%
Net loan charge-offs (recoveries) to average loans(2)   0.04%   0.16%   0.00%   0.01%   0.19%   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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