Select Bancorp Reports Third Quarter 2020 Earnings

DUNN, N.C., Oct. 29, 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 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 3^rd 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 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)
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 receivable	$	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-accrual loans and accruing TDR loans.
(5) Delinquency Ratio includes loans 30-89 days past due and excludes non-accrual loans.

Mark A. Jeffries
Executive Vice President
Chief Financial Officer
Office: 910-892-7080 and Direct: 910-897-3603
[e-mail]
SelectBank.com