Select Bancorp Reports Fourth Quarter and Year-End 2017 Earnings

DUNN, N.C., March 02, 2018 (GLOBE NEWSWIRE) -- Select Bancorp, Inc. (the “Company”) (NASDAQ:SLCT), the holding company for Select Bank & Trust, today reported net income for the year ended December 31, 2017 of $3.2 million and basic and diluted earnings per share of $0.27, compared to net income of $6.8 million and basic and diluted earnings per share of $0.58 for the year ended December 31, 2016.

For the fourth quarter of 2017, the Company reported net loss of $2.0 million, and basic and diluted loss per share of $(0.17), compared to net income of $1.6 million and basic and diluted earnings per share of $0.14 for the fourth quarter of 2016.

Embedded in the Company’s net income numbers for the year and quarter ended December 31, 2017, are net after tax merger expenses of $1.5 million and $1.3 million, respectively, related to the acquisition of Premara Financial, Inc. and its subsidiary bank, Carolina Premier Bank, which closed in December 2017. In addition, due to the new tax legislation signed into law on December 22, 2017, the Company was required to calculate a “tax re-measurement” for the associated rate change for its deferred taxes. This tax re-calculation resulted in an increase of approximately $2.5 million of income tax expense for the year and fourth quarter of 2017, which directly impacted the Company’s reported results for those periods.

Total assets, deposits, and total loans for the Company as of December 31, 2017 were $1.2 billion, $995.0 million, and $982.6 million, respectively, compared to total assets of $846.6 million, total deposits of $679.7 million, and total loans of $677.2 million as of the same date in 2016. The merger represented increases of $278.8 million in total assets, $198.4 million in gross loans, $18.0 million in goodwill and $226.3 million in deposits. Organic growth accounted for $68.7 million in total assets, $107.0 million in gross loans and $89.1 million in deposits.

For the twelve months ended December 31, 2017, return on average assets was 0.35% and return on average equity was 2.93%, compared to 0.81% and 6.61%, respectively, for the twelve months ended December 31, 2016.

Non-performing loans decreased to $7.0 million at December 31, 2017 from $9.4 million at December 31, 2016. Non-performing loans equaled 0.71% of loans at December 31, 2017, decreasing from 1.02% of loans at December 31, 2016. Foreclosed real estate equaled $1.3 million at December 31, 2017, compared to $599,000 at December 31, 2016. For the year ended December 31, 2017, net charge-offs were $944,000, or 0.13% of average loans, compared to net charge offs of $126,000, or 0.02% of average loans in 2016. At December 31, 2017, the allowance for loan losses was $8.8 million, or 0.90% of total loans, as compared to $8.4 million, or 1.24% of total loans, at December 31, 2016.

Net interest margin was 4.09% and 4.14% for the year and quarter ending December 31, 2017, as compared to 4.06% and 3.98% for the year and quarter ending December 31, 2016.

“Our strategy has been growth-oriented and efficiency driven, while delivering value to our shareholders,” President and CEO William L. Hedgepeth II said. “We continued that mission in 2017. While our 2017 results were impacted by the change in tax law during the 2017 fourth quarter, the required tax re-measurement is a non-cash flow expense. Ultimately, we expect the reduction in the corporate tax rate will have long-term benefits for our net income and should positively impact our operating performance in the quarters to come.”

Among the major highlights of 2017 were the acquisition of Premara Financial, Inc. and the accompanying entry into the Charlotte market and into South Carolina, the opening of a new branch in Wilmington in the Mayfaire district, and the opening of Select Mortgage, a division of Select Bank & Trust.

“It has been our goal for some time to expand,” Hedgepeth continued, “2017 was a year for growth and expansion. The merger closed on December 15, 2017, and Select has added four banking offices, one in Charlotte and three in the South Carolina communities of Rock Hill, Blacksburg and Six Mile. We expect that the recent merger will allow us to leverage our resources in ways neither bank could achieve on its own. We are also excited about the growth we have already experienced from our new Wilmington office, and we believe adding mortgages to our portfolio of products and services allows us to offer a customer all the financial services they need at 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 and year ended December 31, 2017, 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 new the tax law 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
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
December 31,
2017
December 31,
2016
December 31,
2015
Summary of Operations:
Total interest income$10,981 $10,042 $9,469 $9,125 $8,877 $39,617 $34,709 $33,341
Total interest expense 1,505 1,357 1,197 1,047 985 5,106 3,733 3,542
Net interest income 9,476 8,685 8,272 8,078 7,892 34,511 30,976 29,799
Provision for (recovery of) loan losses 276 202 1,083 (194) 669 1,367 1,516 890
Net interest income after provision 9,200 8,483 7,189 8,272 7,223 33,144 29,460 28,909
Noninterest income 786 778 778 730 740 3,072 3,222 3,292
Merger/Acquisition related expenses 1,888 278 - - - 2,166 - 378
Noninterest expense 7,207 6,161 5,980 5,805 5,511 25,153 22,281 21,852
Income before income taxes 891 2,822 1,987 3,197 2,452 8,897 10,401 9,971
Provision for income taxes 2,936 1,043 651 1,082 847 5,712 3,647 3,418
Net Income (loss) (2,045) 1,779 1,336 2,115 1,605 3,185 6,654 6,553
Dividends on Preferred Stock - - - - - - 4 77
Net income available to common
shareholders (loss)
$(2,045) $1,779 $1,336 $2,115 $1,605 $3,185 $6,750 $6,476
Share and Per Share Data:
Earnings (loss) per share - basic$(0.17) $0.15 $0.11 $0.18 $0.14 $0.27 $0.58 $0.56
Earnings (loss) per share - diluted$(0.17) $0.15 $0.11 $0.18 $0.14 $0.27 $0.58 $0.56
Book value per share$9.72 $9.42 $9.26 $9.14 $8.95 $9.72 $8.95 $8.38
Tangible book value per share$7.72 $8.78 $8.61 $8.48 $8.29 $7.72 $8.29 $7.67
Ending shares outstanding 14,009,137 11,662,621 11,662,471 11,661,571 11,645,413 14,009,137 11,645,413 11,583,011
Weighted average shares outstanding:
Basic 12,071,392 11,662,580 11,662,117 11,652,612 11,636,647 11,763,050 11,610,705 11,502,800
Diluted 12,071,392 11,717,533 11,727,110 11,714,336 11,677,958 11,826,977 11,655,111 11,567,811
Selected Performance Ratios:
Return on average assets(2) (0.81)% 0.77% 0.60% 1.00% 0.76% 0.35% 0.81% 0.86%
Return on average equity(2) (7.00)% 6.44% 4.96% 8.10% 6.12% 2.93% 6.61% 6.42%
Net interest margin 4.14% 4.19% 4.18% 4.14% 3.98% 4.09% 4.06% 4.38%
Efficiency ratio (1) 70.23% 65.11% 66.08% 65.91% 63.84% 66.93% 65.15% 66.04%
Period End Balance Sheet Data:
Gross Loans$982,626 $763,432 $738,021 $706,758 $677,195 $982,626 $677,195 $617,398
Total interest earning assets 1,063,322 833,766 816,008 809,164 770,288 1,063,322 770,288 726,408
Goodwill 24,904 6,931 6,931 6,931 6,931 24,904 6,931 6,931
Core Deposit Intangible 3,101 547 629 716 810 3,101 810 1,241
Total Assets 1,194,135 922,749 906,524 879,624 846,640 1,194,135 846,640 817,015
Deposits 995,044 775,022 739,653 713,138 679,661 995,044 679,661 651,161
Short-term debt 28,279 22,366 33,559 33,306 37,090 28,279 37,090 29,673
Long-term debt 19,372 12,372 22,839 22,939 22,039 19,372 23,039 28,703
Shareholders' equity 136,115 109,819 108,017 106,562 104,273 136,115 104,273 104,702
Selected Average Balances:
Gross Loans$809,608 $748,699 $715,366 $686,800 $663,213 $732,089 $639,412 $578,759
Total interest earning assets 901,324 826,595 799,240 776,496 778,477 813,773 744,024 686,663
Core Deposit Intangible 1,007 589 673 764 862 640 1,020 1,330
Total Assets 997,450 914,986 887,412 856,712 844,162 898,943 829,315 765,284
Deposits 827,408 754,169 719,976 689,795 679,404 738,310 665,764 607,214
Short-term debt 23,476 32,703 33,413 35,048 33,032 34,523 32,111 32,316
Long-term debt 13,676 15,633 22,871 22,989 23,089 14,239 25,739 20,147
Shareholders' equity 115,874 109,537 108,071 105,860 104,404 108,709 102,110 102,068
Asset Quality Ratios:
Nonperforming loans$6,978 $6,153 $6,159 $7,956 $9,430 $6,978 $9,430 $8,712
Other real estate owned 1,258 2,093 2,702 883 599 1,258 599 1,401
Allowance for loan losses 8,835 8,647 8,488 8,022 8,411 8,835 8,411 7,021
Nonperforming loans (3) to period-end
loans
0.71% 0.81% 0.83% 1.13% 1.39% 0.71% 1.02% 1.41%
Allowance for loan losses to period-end
loans
0.90% 1.13% 1.15% 1.14% 1.24% 0.90% 1.24% 1.14%
Delinquency Ratio (4) 0.63% 0.38% 0.07% 0.21% 0.44% 0.63% 0.44% 0.40%
Net loan charge-offs (recoveries) to
average loans (2)
0.05% 0.02% 0.35% 0.12% 0.08% 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

Source:Select Bancorp Inc.