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Select Bancorp Reports Second Quarter 2020 Earnings

Select Bancorp Inc.
·31 mins read

DUNN, N.C., Aug. 05, 2020 (GLOBE NEWSWIRE) -- 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.

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, 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 receivable

$

213,466

$

122,363

$

129,595

$

141,765

$

152,090

$

129,595

$

186,243

Non-acquired loans receivable

1,036,533

917,151

900,380

873,163

844,972

900,380

799,797

Total gross loans receivable

$

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.