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CST: 20/10/2019 18:53:34   

Select Bancorp Reports Second Quarter 2019 Earnings

79 Days ago

DUNN, N.C., Aug. 02, 2019 (GLOBE NEWSWIRE) -- Select Bancorp, Inc. (the “Company” NASDAQ: SLCT), the holding company for Select Bank & Trust Company, today reported net income for the quarter ended June 30, 2019 of $3.4 million with basic and diluted earnings per share of $0.18, compared to net income of $3.1 million and basic and diluted earnings per share of $0.22 for the comparative quarter ended June 30, 2018.

Total assets, deposits, and gross loans for the Company as of June 30, 2019 were $1.3 billion, $1.0 billion, and $997.1 million, respectively, compared to total assets of $1.2 billion, total deposits of $993.5 million, and gross loans of $992.9 million as of the same date in 2018.    

William L. Hedgepeth II, President and Chief Executive Officer, stated, “The Company has seen steady growth and achievements over the first half of 2019. With the opening of our full-service branch in Virginia Beach, Virginia, we continue to expand our footprint into major markets.  We also are actively searching for a second branch location in the Charlotte area.  The growth of our non-interest earning divisions continues to be a focus. In fact, our SBA group has been transitioning to an in-house servicing model which enables a more streamlined process.  We believe this will result in a better customer experience and expect it to positively impact SBA-related income in future periods.  Volume production from our mortgage department has increased this year, and we are expecting this trend to carry on in future quarters.”  Mr. Hedgepeth added, “Realizing efficiencies is always at the forefront of our mission, and, as such, it was announced in June that we entered into an agreement to sell our Six Mile, South Carolina office to Pickens Savings and Loan. Then in July, we announced a consolidating closure of our Washington, North Carolina branch into our nearby Greenville branch, continuing our pursuit for efficiencies at the branch level and company-wide. We have seen an increase in non-performing loans but expect the associated losses to be minimal related to this increase in the coming months.”

The results for the three months ended June 30, 2019, included $83,000 in after-tax integration-related expenses incurred in connection with the addition of the Virginia Beach branch.  For the three months ended June 30, 2019, return on average assets was 1.10% and return on average equity was 6.41%, compared to 1.08% and 6.32%, respectively, for the three months ended March 31, 2019.  Non-performing loans were $16.6 million at June 30, 2019 and $11.6 million at December 31, 2018, respectively. Non-performing loans equaled 1.66% of total loans at June 30, 2019, increasing from 1.18% of total loans at December 31, 2018. Other real estate owned equaled $1.5 million at June 30, 2019, compared to $1.1 million at December 31, 2018.  For the second quarter of 2019, net charge-offs were $0, or 0.00% of average loans, compared to net charge offs of $271,000, or 0.11% of average loans for the quarter ended March 31, 2019. At June 30, 2019, the allowance for loan losses was $8.3 million, or 0.83% of total loans, as compared to $8.7 million, or 0.88% of total loans, at December 31, 2018.

Net interest margin was 4.06% for the quarter ended June 30, 2019, as compared to 4.09% for the quarter ended March 31, 2019.

Mr. Hedgepeth further commented, “In the second quarter we repurchased $725,000 of our stock and expect this to continue in the future, when and as conditions allow under our stock repurchase plan.  We are pleased that the Company’s historical financial performance and well-capitalized status enable us to return value to our shareholders through the repurchase plan. We are focused on creating shareholder value over the long term, and our Board of Directors and management team believe that the Company's share repurchases are an effective part of the Company’s overall capital management strategies.”

“We are eager to continue our growth in the communities we serve,” Hedgepeth noted. “With our geographic footprint expanded and a strong desire to grow, the team is very enthusiastic to continue to realize that growth through a relentless focus on process improvement and serving our customers the best way we know, with common sense.”

Select Bank & Trust has 20 branch offices in these North Carolina communities: Dunn, Burlington, Charlotte, Clinton, Elizabeth City, Fayetteville, Goldsboro, Greenville, Holly Springs (Raleigh area), Leland, Lillington, Lumberton, Morehead City, Raleigh, Washington and Wilmington, North Carolina; in the following South Carolina communities: Blacksburg, Rock Hill and Six Mile; and in Virginia Beach, Virginia.

About Select Bancorp, Inc.

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

Non-GAAP Financial Measures

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

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

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

We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per 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: our ability to manage growth; 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; 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; 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.                                              
Selected Financial Information and Other Data  
($ in thousands, except share and per share data)  
   
  At or for the three months ended (unaudited)   At or for the twelve months ended  
                                 
           December   September       December   December    December   
June 30,
2019 
March 31,
2019 
 31,
2018
 30,
2018 
June 30,
2018 
31,
2018 
31,
2017 
31,
2016 
Summary of Operations:                            
Total interest income $ 14,572     $ 14,050     $ 14,544     $ 14,382     $ 14,187     $ 56,835     $ 39,617     $ 34,709    
Total interest expense   2,875       2,593       2,644       2,530       2,258       9,450       5,106       3,733    
Net interest income   11,697       11,457       11,900       11,852       11,929       47,385       34,511       30,976    
Provision for loan losses   (207)       112       (395)       (459)       557       (156)       1,367       1,516    
Net interest income after provision   11,904       11,345       12,295       12,311       11,372       47,541       33,144       29,460    
Noninterest income   1,328       1,197       1,244       1,066       1,226       4,701       3,072       3,222    
Merger/acquisition related expenses   107       -       -       -       -       1,826       2,166       -    
Noninterest expense   8,704       8,304       7,864       7,800       8,602       32,724       25,153       22,281    
Income before income taxes   4,421       4,238       5,675       5,577       3,996       17,692       8,897       10,401    
Provision for income taxes   973       931       1,221       1,256       886       3,910       5,712       3,647    
Net Income    3,448       3,307       4,454       4,321       3,110       13,782       3,185       6,654    
Dividends on Preferred Stock   -       -       -       -       -       -       -       4    
Net income available to common  shareholders  $ 3,448     $ 3,307     $ 4,454     $ 4,321     $ 3,110     $ 13,782     $ 3,185     $ 6,750    
                                                 
Share and Per Share Data:                                                
Earnings per share - basic $ 0.18     $ 0.17     $ 0.23     $ 0.27     $ 0.22     $ 0.87     $ 0.27     $ 0.58    
Earnings per share - diluted $ 0.18     $ 0.17     $ 0.23     $ 0.27     $ 0.22     $ 0.87     $ 0.27     $ 0.58    
Book value per share $ 11.26     $ 11.04     $ 10.85     $ 10.61     $ 10.03     $ 10.85     $ 9.72     $ 8.95    
Tangible book value per share(1) $ 9.88     $ 9.68     $ 9.47     $ 9.21     $ 8.10     $ 9.47     $ 7.72     $ 8.29    
Ending shares outstanding   19,261,989       19,326,485       19,311,505       19,296,121       14,024,887       19,311,505       14,009,137       11,645,413    
Weighted average shares outstanding:                                                
Basic   19,318,358       19,315,686       19,302,263       15,858,455       14,019,273       15,812,585       11,763,050       11,610,705    
Diluted   19,359,492       19,365,354       19,360,050       15,916,734       14,086,671       15,877,633       11,826,977       11,655,111    
                                                 
Selected Performance Ratios:                                                
Return on average assets(2)   1.10 %     1.08 %     1.39 %     1.40 %     1.02 %     1.12 %     0.35 %     0.81 %  
Return on average equity(2)   6.41 %     6.32 %     8.52 %     10.53 %     8.92 %     8.51 %     2.93 %     6.61 %  
Net interest margin   4.06 %     4.09 %     4.03 %     4.20 %     4.41 %     4.19 %     4.09 %     4.06 %  
Efficiency ratio (3)   66.83 %     65.62 %     59.83 %     60.38 %     65.39 %     62.83 %     66.93 %     65.15 %  
                                                 
Period End Balance Sheet Data:                                                
Gross loans $ 997,062     $ 991,801     $ 986,040     $ 992,805     $ 992,885     $ 986,040     $ 982,626     $ 677,195    
Total interest-earning assets   1,148,417       1,103,691       1,119,344       1,078,871       1,107,695       1,119,344       1,063,322       770,288    
Goodwill   24,579       24,579       24,579       24,579       24,579       24,579       24,904       6,931    
Core deposit intangible   2,011       1,866       2,085       2,318       2,564       2,085       3,101       810    
Total assets   1,316,797       1,242,077       1,258,525       1,252,156       1,216,731       1,258,525       1,194,135       846,640    
Deposits   1,030,250       950,966       980,427       974,161       993,484       980,427       995,044       679,661    
Short-term debt   -       7,000       7,000       11,002       21,071       7,000       28,279       37,090    
Long-term debt   57,372       57,372       57,372       57,372       57,372       57,372       19,372       23,039    
Shareholders' equity   216,845       213,451       209,611       204,705       140,702       209,611       136,115       104,273    
                                                 
Selected Average Balances:                                                
Gross Loans $ 982,876     $ 985,059     $ 990,504     $ 988,479     $ 990,036     $ 987,634     $ 732,089     $ 639,412    
Total interest-earning assets   1,160,387       1,086,958       1,141,604       1,073,285       1,087,683       1,119,344       813,773       744,024    
Core Deposit Intangible   1,741       1,951       2,171       2,411       2,661       2,547       640       1,020    
Total Assets   1,261,972       1,238,847       1,267,479       1,228,259       1,219,225       1,228,576       898,943       829,315    
Deposits   970,011       949,771       987,180       986,174       1,004,571       989,838       738,310       665,764    
Short-term debt   6,824       7,000       10,348       17,542       21,289       21,393       34,523       32,111    
Long-term debt   57,372       57,372       57,372       57,372       37,520       49,357       14,239       25,739    
Shareholders' equity   215,722       212,130       207,331       162,799       139,810       161,953       108,709       102,110    
                                                 
Asset Quality Ratios:                                                
Nonperforming loans (4) $ 16,582     $ 11,583     $ 11,635     $ 11,162     $ 10,118     $ 11,635     $ 6,978     $ 9,430    
Other real estate owned   1,468       1,046       1,088       1,020       1,497       1,088       1,258       599    
Allowance for loan losses   8,303       8,510       8,669       9,089       9,528       8,669       8,835       8,411    
Nonperforming loans (4) to period-end loans    1.66 %     1.17 %     1.18 %     1.12 %     1.02 %     1.18 %     0.71 %     1.02 %  
Allowance for loan losses to period-end loans    0.83 %     0.86 %     0.88 %     0.92 %     0.96 %     0.88 %     0.90 %     1.24 %  
Delinquency ratio (5)   0.37 %     0.73 %     0.51 %     0.53 %     0.51 %     0.51 %     0.63 %     0.44 %  
Net loan charge-offs (recoveries) to average loans (2)   0.00 %     0.11 %     0.01 %     (0.01) %     (0.01) %     0.00 %     0.13 %     0.02 %  


(1)

 
Tangible book value per share (a non-GAAP measure) is equal to total shareholders’ equity less goodwill and core deposit intangibles, divided by the number of outstanding shares of our common stock at the end of the relevant period. Please refer to the table below for a reconciliation of this non-GAAP measure.
(2)

Annualized.
(3)
 
Efficiency ratio is calculated as non-interest expenses divided by the sum of net interest income and non-interest income.
(4)

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

 


    June
30,
2019
  March
31,
2019
  December
31,
2018
  September
30,
2018
  June
 30,
2018
  December
31,
2018
  December
31,
2017
  December
31,
2016
Tangible common equity                                
Total shareholders’ equity   $ 216,845   $ 213,451   $ 209,611   $ 204,705   $ 140,702   $ 209,611   $ 136,115   $ 104,273
Adjustments:                                
Goodwill       24,579       24,579       24,579       24,579       24,579       24,579       24,904       6,931
Core deposit intangibles       2,011       1,866       2,085       2,318       2,564       2,085       3,101        810
Tangible common equity   $ 190,255   $ 187,006   $ 182,947   $ 177,808   $ 113,559   $ 182,947   $ 108,110   $   96,532
Common shares outstanding(1)     19,261,989     19,326,485     19,311,505     19,296,121     14,024,887     19,311,505     14,009,137     11,645,413
Book value per common share(2)   $   11.26   $   11.04   $   10.85   $    10.61   $   10.03   $    10.85   $   9.72   $   8.95
Tangible book value per
    common share(3)
  $   9.88   $   9.68   $    9.47   $    9.21   $    8.10   $   9.47   $   7.72   $   8.29

_________________________

  1. Excludes the dilutive effect of common stock issuable upon exercise of outstanding stock options. The number of exercisable options outstanding was 41,134 as of June 30, 2019; 49,668 as of March 31, 2019; 57,787 as of December 31, 2018; 58,279 as of September 30, 2018; 67,398 as of June 30, 2018 and 63,927 as of December 31, 2017.
  2. We calculate book value per common share as shareholders’ equity less preferred stock at the end of the relevant period divided by the outstanding number of shares of our common stock at the end of the relevant period.
  3. We calculate tangible book value per common share as total shareholders’ equity less goodwill, preferred stock and core deposit intangibles, divided by the number of outstanding shares of our common stock at the end of the relevant period.

Mark A. Jeffries
Executive Vice President
Chief Financial Officer
Office: 910-892-7080 and Direct: 910-897-3603
markj@SelectBank.com
SelectBank.com 

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