Select Bancorp Reports First Quarter 2018 Earnings
DUNN, N.C., May 10, 2018 (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 March 31, 2018 of $1.9 million and basic earnings per share of $0.14 and diluted earnings per share of $0.13, compared to net income of $2.1 million and basic and diluted earnings per share of $0.18 for the comparative quarter ended March 31, 2017.
Select Bancorp, Inc. had a solid quarter of earnings comparing quarter-over-quarter and year-over-year results, which reflect the acquisition of Premara Financial, Inc. (“Premara”), by the Company in December 2017. The acquisition of Premara and its subsidiary, Carolina Premier Bank, significantly expanded the Company’s market penetration into the Charlotte/Rock Hill area and upstate South Carolina. Included in the Company’s net income for the quarter ended March 31, 2018, are net, after-tax merger/acquisition related expenses of $1.4 million associated with the acquisition of Premara. In addition, due to reduced tax rates under the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017, the Company experienced a decrease of approximately $280,000 of income tax expense for the first quarter of 2018, which is reflected in the Company’s reported results for the three months ended March 31, 2018.
Total assets, deposits, and total gross loans for the Company as of March 31, 2018 were $1.2 billion, $1.0 billion, and $978.3 million, respectively, compared to total assets of $879.6 million, total deposits of $713.1 million, and total loans of $706.8 million as of the same date in 2017. The acquisition of Premara in December 2017 resulted in increases of $278.8 million in total assets, $198.4 million in gross loans and $226.3 million in deposits.
For the three months ended March 31, 2018, return on average assets was 0.64% and return on average equity was 5.61%, compared to 1.00% and 8.10%, respectively, for the three months ended March 31, 2017. Non-performing loans increased to $8.3 million at March 31, 2018 from $7.0 million at December 31, 2017. Non-performing loans equaled 0.85% of loans at March 31, 2018, increasing from 0.71% of loans at December 31, 2017. Foreclosed real estate equaled $1.5 million at March 31, 2018, compared to $1.3 million at December 31, 2017. For the first quarter of 2018, net charge-offs were $18,000, or 0.01% of average loans, compared to net charge offs of $94,000, or 0.05% of average loans for the quarter ended December 31, 2017. At December 31, 2017, the allowance for loan losses was $8.8 million, or 0.90% of total loans, as compared to $9.0 million, or 0.92% of total loans, at March 31, 2018.
Net interest margin was 4.45% for the quarter ended March 31, 2018, as compared to 4.14% for the quarter ended December 31, 2017.
“Our emphasis during the first quarter of 2018 was the integration of Carolina Premier Bank, including the Charlotte/Rock Hill and upstate South Carolina markets, integration of Carolina Premier’s operations, and conversion of their loan and deposit accounts in our core processing system. We also focused on the organic growth of our new mortgage operations headquartered in Wilmington, North Carolina. We incurred acquisition/integration expenses primarily related to the termination of Carolina Premier’s core processing system that accounted for approximately $1.7 million of our expected pre-tax acquisition costs, which reduced our earnings in the first quarter,” stated William L. Hedgepeth II, president and CEO of the Company. “We believe most of the expenses of the acquisition are behind us. In addition, the reduction in the corporate tax rate positively impacted our operating performance for the first quarter of 2018 and is expected to benefit the bottom line in the quarters to come.”
“In the second quarter of 2018, we intend to increase our focus on leveraging our resources, gleaning efficiencies, and utilizing the seasoned staff in our new footprint. Our aim is to increase our market share in the communities we serve through a diversification of products and services and our involvement in the regions we serve. As we have stated, it has been our goal for some time to expand,” Hedgepeth continued. “We believe 2018 is a year for continued growth and expansion. We are continuing to leverage our resources in our established communities, which is reflected in the growth from our new Wilmington office plus the increase in mortgage originations. The growth complements the portfolio of products and services our customers demand from their local community bank.”
Select Bank & Trust has 18 branch offices in these North Carolina communities: Dunn, Burlington, Charlotte, Clinton, Elizabeth City, Fayetteville, Goldsboro, Greenville, Leland, Lillington, Lumberton, Morehead City, Raleigh, Washington, and Wilmington; and in the following South Carolina communities: Blacksburg, Rock Hill and Six Mile.
Important Note Regarding Forward-Looking Statements
The information as of and for the quarter ended March 31, 2018, as presented is unaudited. 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, 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 recent merger with Carolina Premier Bank; regulatory changes; the impact of the Tax Cuts and Jobs Act on our earnings, including any subsequent adjustments to the valuation of our deferred tax assets and liabilities; changes in interest rates; loss of deposits and loan demand to other savings and financial institutions; 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 per share data) | |||||||||||||||||||||||||||||||
| At or for the three months ended (unaudited) | At or for the twelve months ended | ||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||
| Summary of Operations: | |||||||||||||||||||||||||||||||
| Total interest income | $ | 13,722 | $ | 10,981 | $ | 10,042 | $ | 9,469 | $ | 9,125 | $ | 39,617 | $ | 34,709 | $ | 33,341 | |||||||||||||||
| Total interest expense | 2,018 | 1,505 | 1,357 | 1,197 | 1,047 | 5,106 | 3,733 | 3,542 | |||||||||||||||||||||||
| Net interest income | 11,704 | 9,476 | 8,685 | 8,272 | 8,078 | 34,511 | 30,976 | 29,799 | |||||||||||||||||||||||
| Provision for (recovery of) loan losses | 141 | 276 | 202 | 1,083 | (194 | ) | 1,367 | 1,516 | 890 | ||||||||||||||||||||||
| Net interest income after provision | 11,563 | 9,200 | 8,483 | 7,189 | 8,272 | 33,144 | 29,460 | 28,909 | |||||||||||||||||||||||
| Noninterest income | 1,165 | 786 | 778 | 778 | 730 | 3,072 | 3,222 | 3,292 | |||||||||||||||||||||||
| Merger/Acquisition related expenses | 1,826 | 1,888 | 278 | - | - | 2,166 | - | 378 | |||||||||||||||||||||||
| Noninterest expense | 8,458 | 7,207 | 6,161 | 5,980 | 5,805 | 25,153 | 22,281 | 21,852 | |||||||||||||||||||||||
| Income before income taxes | 10,284 | 891 | 2,822 | 1,987 | 3,197 | 8,897 | 10,401 | 9,971 | |||||||||||||||||||||||
| Provision for income taxes | 547 | 2,936 | 1,043 | 651 | 1,082 | 5,712 | 3,647 | 3,418 | |||||||||||||||||||||||
| Net Income (loss) | 1,897 | (2,045 | ) | 1,779 | 1,336 | 2,115 | 3,185 | 6,654 | 6,553 | ||||||||||||||||||||||
| Dividends on Preferred Stock | - | - | - | - | - | - | 4 | 77 | |||||||||||||||||||||||
| Net income available to common shareholders (loss) | $ | 1,897 | $ | (2,045 | ) | $ | 1,779 | $ | 1,336 | $ | 2,115 | $ | 3,185 | $ | 6,750 | $ | 6,476 | ||||||||||||||
| Share and Per Share Data: | |||||||||||||||||||||||||||||||
| Earnings (loss) per share - basic | $ | 0.14 | $ | (0.17 | ) | $ | 0.15 | $ | 0.11 | $ | 0.18 | $ | 0.27 | $ | 0.58 | $ | 0.56 | ||||||||||||||
| Earnings (loss) per share - diluted | $ | 0.13 | $ | (0.17 | ) | $ | 0.15 | $ | 0.11 | $ | 0.18 | $ | 0.27 | $ | 0.58 | $ | 0.56 | ||||||||||||||
| Book value per share | $ | 9.82 | $ | 9.72 | $ | 9.42 | $ | 9.26 | $ | 9.14 | $ | 9.72 | $ | 8.95 | $ | 8.38 | |||||||||||||||
| Tangible book value per share | $ | 7.87 | $ | 7.72 | $ | 8.78 | $ | 8.61 | $ | 8.48 | $ | 7.72 | $ | 8.29 | $ | 7.67 | |||||||||||||||
| Ending shares outstanding | 14,013,917 | 14,009,137 | 11,662,621 | 11,662,471 | 11,661,571 | 14,009,137 | 11,645,413 | 11,583,011 | |||||||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||||||||
| Basic | 14,011,707 | 12,071,392 | 11,662,580 | 11,662,117 | 11,652,612 | 11,763,050 | 11,610,705 | 11,502,800 | |||||||||||||||||||||||
| Diluted | 14,081,776 | 12,071,392 | 11,717,533 | 11,727,110 | 11,714,336 | 11,826,977 | 11,655,111 | 11,567,811 | |||||||||||||||||||||||
| Selected Performance Ratios: | |||||||||||||||||||||||||||||||
| Return on average assets(2) | 0.64 | % | (0.81 | )% | 0.77 | % | 0.60 | % | 1.00 | % | 0.35 | % | 0.81 | % | 0.86 | % | |||||||||||||||
| Return on average equity(2) | 5.61 | % | (7.00 | )% | 6.44 | % | 4.96 | % | 8.10 | % | 2.93 | % | 6.61 | % | 6.42 | % | |||||||||||||||
| Net interest margin | 4.45 | % | 4.14 | % | 4.19 | % | 4.18 | % | 4.14 | % | 4.09 | % | 4.06 | % | 4.38 | % | |||||||||||||||
| Efficiency ratio (1) | 65.72 | % | 70.23 | % | 65.11 | % | 66.08 | % | 65.91 | % | 66.93 | % | 65.15 | % | 66.04 | % | |||||||||||||||
| Period End Balance Sheet Data: | |||||||||||||||||||||||||||||||
| Gross Loans | $ | 978,275 | $ | 982,626 | $ | 763,432 | $ | 738,021 | $ | 706,758 | $ | 982,626 | $ | 677,195 | $ | 617,398 | |||||||||||||||
| Total interest earning assets | 1,094,694 | 1,063,322 | 833,766 | 816,008 | 809,164 | 1,063,322 | 770,288 | 726,408 | |||||||||||||||||||||||
| Goodwill | 24,579 | 24,904 | 6,931 | 6,931 | 6,931 | 24,904 | 6,931 | 6,931 | |||||||||||||||||||||||
| Core Deposit Intangible | 2,826 | 3,101 | 547 | 629 | 716 | 3,101 | 810 | 1,241 | |||||||||||||||||||||||
| Total Assets | 1,222,551 | 1,194,135 | 922,749 | 906,524 | 879,624 | 1,194,135 | 846,640 | 817,015 | |||||||||||||||||||||||
| Deposits | 1,009,481 | 995,044 | 775,022 | 739,653 | 713,138 | 995,044 | 679,661 | 651,161 | |||||||||||||||||||||||
| Short-term debt | 32,173 | 28,279 | 22,366 | 33,559 | 33,306 | 28,279 | 37,090 | 29,673 | |||||||||||||||||||||||
| Long-term debt | 39,372 | 19,372 | 12,372 | 22,839 | 22,939 | 19,372 | 23,039 | 28,703 | |||||||||||||||||||||||
| Shareholders' equity | 137,673 | 136,115 | 109,819 | 108,017 | 106,562 | 136,115 | 104,273 | 104,702 | |||||||||||||||||||||||
| Selected Average Balances: | |||||||||||||||||||||||||||||||
| Gross Loans | $ | 979,420 | $ | 809,608 | $ | 748,699 | $ | 715,366 | $ | 686,800 | $ | 732,089 | $ | 639,412 | $ | 578,759 | |||||||||||||||
| Total interest earning assets | 1,073,890 | 901,324 | 826,595 | 799,240 | 776,496 | 813,773 | 744,024 | 686,663 | |||||||||||||||||||||||
| Core Deposit Intangible | 2,955 | 1,007 | 589 | 673 | 764 | 640 | 1,020 | 1,330 | |||||||||||||||||||||||
| Total Assets | 1,198,588 | 997,450 | 914,986 | 887,412 | 856,712 | 898,943 | 829,315 | 765,284 | |||||||||||||||||||||||
| Deposits | 981,403 | 827,408 | 754,169 | 719,976 | 689,795 | 738,310 | 665,764 | 607,214 | |||||||||||||||||||||||
| Short-term debt | 36,726 | 23,476 | 32,703 | 33,413 | 35,048 | 34,523 | 32,111 | 32,316 | |||||||||||||||||||||||
| Long-term debt | 19,880 | 13,676 | 15,633 | 22,871 | 22,989 | 14,239 | 25,739 | 20,147 | |||||||||||||||||||||||
| Shareholders' equity | 137,092 | 115,874 | 109,537 | 108,071 | 105,860 | 108,709 | 102,110 | 102,068 | |||||||||||||||||||||||
| Asset Quality Ratios: | |||||||||||||||||||||||||||||||
| Nonperforming loans | $ | 8,338 | $ | 6,978 | $ | 6,153 | $ | 6,159 | $ | 7,956 | $ | 6,978 | $ | 9,430 | $ | 8,712 | |||||||||||||||
| Other real estate owned | 1,525 | 1,258 | 2,093 | 2,702 | 883 | 1,258 | 599 | 1,401 | |||||||||||||||||||||||
| Allowance for loan losses | 8,957 | 8,835 | 8,647 | 8,488 | 8,022 | 8,835 | 8,411 | 7,021 | |||||||||||||||||||||||
| Nonperforming loans (3) to period-end loans | 0.85 | % | 0.71 | % | 0.81 | % | 0.83 | % | 1.13 | % | 0.71 | % | 1.02 | % | 1.41 | % | |||||||||||||||
| Allowance for loan losses to period-end loans | 0.92 | % | 0.90 | % | 1.13 | % | 1.15 | % | 1.14 | % | 0.90 | % | 1.24 | % | 1.14 | % | |||||||||||||||
| Delinquency Ratio (4) | 0.25 | % | 0.63 | % | 0.38 | % | 0.07 | % | 0.21 | % | 0.63 | % | 0.44 | % | 0.40 | % | |||||||||||||||
| Net loan charge-offs (recoveries) to average loans (2) | 0.01 | % | 0.05 | % | 0.02 | % | 0.35 | % | 0.12 | % | 0.13 | % | 0.02 | % | 0.12 | % | |||||||||||||||
| (1 | ) | Efficiency ratio is calculated as non-interest expenses divided by the sum of net interest income and non-interest income. |
| (2 | ) | Annualized. |
| (3 | ) | Nonperforming loans consist of non-accrual loans and restructured loans. |
| (4 | ) | 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
markj@SelectBank.com
SelectBank.com
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