Select Bancorp Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2020

☐ Transition Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the transition period ended from to

Commission File Number 000-50400

Select Bancorp, Inc.

(Exact name of Registrant as specified in its charter)


North Carolina		20-0218264
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

700 W. Cumberland Street
Dunn, North Carolina		28334
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (910) 892-7080

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $1.00 per share	SLCT	The NASDAQ Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 30, 2020, the registrant had outstanding 17,786,552 shares of Common Stock, $1.00 par value per share.

Table of Contents

		Page No.

Part I.	FINANCIAL INFORMATION

Item 1 -	Financial Statements (Unaudited)

	Consolidated Balance Sheets September 30, 2020 and December 31, 2019	3

	Consolidated Statements of Operations Three Months and Nine Months Ended September 30, 2020 and 2019	4

	Consolidated Statements of Comprehensive Income Three Months and Nine Months Ended September 30, 2020 and 2019	5

	Consolidated Statements of Changes in Shareholders’ Equity Three Months Ended March 31, 2020 and 2019, Three Months Ended June 30, 2020 and 2019 and Three Months Ended September 30, 2020 and 2019	6

	Consolidated Statements of Cash Flows Nine Months Ended September 30, 2020 and 2019	7

	Notes to Consolidated Financial Statements	9

Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3 -	Quantitative and Qualitative Disclosures about Market Risk	50

Item 4 -	Controls and Procedures	52

Part II.	OTHER INFORMATION

Item 1 -	Legal Proceedings	52

Item 1A -	Risk Factors	52

Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	55

Item 3 -	Defaults Upon Senior Securities	55

Item 4 -	Mine Safety Disclosures	55

Item 5 -	Other Information	55

Item 6 -	Exhibits	56

	Signatures	57

Table of Contents

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SELECT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS


	September 30, 2020		December 31,
	(unaudited)		2019*

	(In thousands, except share
	and per share data)
ASSETS
Cash and due from banks	$	25,068	$	19,110
Interest-earning deposits in other banks		249,541		50,920
Federal funds sold		8,046		9,047
Investment securities available for sale, at fair value		87,434		72,367
Loans held for sale		2,945		928
Loans		1,283,457		1,029,975
Allowance for loan losses		(13,561)		(8,324)
NET LOANS		1,269,896		1,021,651
Accrued interest receivable		4,486		4,189
Stock in Federal Home Loan Bank of Atlanta (“FHLB”), at cost		3,059		3,045
Other non-marketable securities		718		719
Foreclosed real estate		3,237		3,533
Premises and equipment, net		20,883		17,791
Right of use lease asset		8,756		8,596
Bank owned life insurance		30,271		29,789
Goodwill		41,914		24,579
Core deposit intangible (“CDI”)		1,677		1,610
Other assets		14,015		7,202
TOTAL ASSETS	$	1,771,946	$	1,275,076
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand	$	408,209	$	240,305
Savings		51,629		43,128
Money market and NOW		610,275		280,145
Time		402,667		429,260
TOTAL DEPOSITS		1,472,780		992,838
Short-term debt		20,000		—
Long-term debt		37,372		57,372
Lease liability		9,089		8,813
Accrued interest payable		449		578
Accrued expenses and other liabilities		18,889		2,700
TOTAL LIABILITIES		1,558,579		1,062,301
Shareholders’ Equity
Preferred stock, no par value, 5,000,000 shares authorized; no preferred shares were issued and outstanding at September 30, 2020 and December 31, 2019		—		—
Common stock, $1 par value, 50,000,000 shares authorized; 17,786,552 and 18,330,058 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		17,787		18,330
Additional paid-in capital		137,130		140,870
Retained earnings		56,917		52,675
Common stock issued to deferred compensation trust, at cost; 263,377 and 319,753 shares outstanding at September 30, 2020 and December 31, 2019, respectively		(2,352)		(2,815)
Directors’ Deferred Compensation Plan Rabbi Trust		2,352		2,815
Accumulated other comprehensive income		1,533		900
TOTAL SHAREHOLDERS’ EQUITY		213,367		212,775
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,771,946	$	1,275,076

* Derived from audited consolidated financial statements.

See accompanying notes.

Table of Contents

SELECT BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended				Nine Months Ended
		September 30,			September 30,
	2020		2019		2020		2019

	(In thousands, except share and per share data)				(In thousands, except share and per share data)
INTEREST INCOME
Loans	$	15,404	$	13,924	$	43,079	$	40,481
Federal funds sold and interest-earning deposits in other banks		54		581		255		1,580
Investments		367		503		1,169		1,569
TOTAL INTEREST INCOME		15,825		15,008		44,503		43,630

INTEREST EXPENSE
Money market, NOW and savings deposits		891		433		1,887		1,196
Time deposits		1,415		2,248		4,922		5,986
Short-term debt		145		4		373		56
Long-term debt		263		455		896		1,370
TOTAL INTEREST EXPENSE		2,714		3,140		8,078		8,608
NET INTEREST INCOME		13,111		11,868		36,425		35,022
PROVISION FOR LOAN LOSSES		1,638		231		5,844		136
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		11,473		11,637		30,581		34,886

NON-INTEREST INCOME
Gain on the sale of securities		—		48		—		48
Service charges on deposit accounts		257		308		801		858
Fees from the sale of mortgages		517		218		1,165		605
Other fees and income		950		874		2,613		2,462
TOTAL NON-INTEREST INCOME		1,724		1,448		4,579		3,973
NON-INTEREST EXPENSE
Personnel		5,742		5,124		17,160		15,126
Occupancy and equipment		1,008		1,073		2,925		2,722
Deposit insurance		370		(30)		434		165
Professional fees		399		518		1,222		1,383
Core deposit intangible amortization		179		208		553		632
Merger/acquisition related expenses		7		128		755		235
Information systems		1,043		852		3,053		2,518
Foreclosure-related expenses		228		(9)		420		31
Other		1,091		1,067		3,294		3,234
TOTAL NON-INTEREST EXPENSE		10,067		8,931		29,816		26,046
INCOME BEFORE INCOME TAX		3,130		4,154		5,344		12,813
INCOME TAX		673		915		1,102		2,819
NET INCOME		2,457		3,239		4,242		9,994
Basic	$	0.14	$	0.17	$	0.24	$	0.52
Diluted	$	0.14	$	0.17	$	0.23	$	0.52
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		17,847,913		19,028,572		18,038,345		19,219,820
Diluted		17,866,822		19,073,235		18,062,170		19,266,480

See accompanying notes.

Table of Contents

SELECT BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

Price	11.06	EPS	1
Shares	19	P/E	21
MCap	213	P/FCF	25
Net Debt	-27	EBIT	22
TEV	186	TEV/EBIT	8
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-11-06
10-Q	2020-06-30	Filed 2020-08-10
10-Q	2020-03-31	Filed 2020-05-11
10-K	2019-12-31	Filed 2020-03-11
10-Q	2019-09-30	Filed 2019-11-06
10-Q	2019-06-30	Filed 2019-08-09
10-Q	2019-03-31	Filed 2019-05-10
10-K	2018-12-31	Filed 2019-03-15
10-Q	2018-09-30	Filed 2018-11-08
10-Q	2018-06-30	Filed 2018-08-08
10-Q	2018-03-31	Filed 2018-05-10
10-K	2017-12-31	Filed 2018-03-16
10-Q	2017-09-30	Filed 2017-11-09
10-Q	2017-06-30	Filed 2017-08-09
10-Q	2017-03-31	Filed 2017-05-10
10-K	2016-12-31	Filed 2017-03-14
10-Q	2016-09-30	Filed 2016-11-14
10-Q	2016-06-30	Filed 2016-08-10
10-Q	2016-03-31	Filed 2016-05-13
10-K	2015-12-31	Filed 2016-03-24
10-Q	2015-09-30	Filed 2015-11-12
10-Q	2015-06-30	Filed 2015-08-13
10-Q	2015-03-31	Filed 2015-05-13
10-K	2014-12-31	Filed 2015-03-31
10-Q	2014-09-30	Filed 2014-11-28
10-Q	2014-06-30	Filed 2014-08-11
10-Q	2014-03-31	Filed 2014-05-15
10-K	2013-12-31	Filed 2014-03-20
10-Q	2013-09-30	Filed 2013-11-14
10-Q	2013-06-30	Filed 2013-08-14
10-Q	2013-03-31	Filed 2013-05-15
10-K	2012-12-31	Filed 2013-03-28
10-Q	2012-09-30	Filed 2012-11-14
10-Q	2012-06-30	Filed 2012-08-13
10-Q	2012-03-31	Filed 2012-05-14
10-K	2011-12-31	Filed 2012-03-28
10-Q	2011-09-30	Filed 2011-11-14
10-Q	2011-06-30	Filed 2011-08-12
10-Q	2011-03-31	Filed 2011-05-13
10-K	2010-12-31	Filed 2011-04-01
10-Q	2010-09-30	Filed 2010-11-15
10-Q	2010-06-30	Filed 2010-08-13
10-Q	2010-03-31	Filed 2010-05-14
10-K	2009-12-31	Filed 2010-03-29

8-K	2020-11-18
8-K	2020-11-12
8-K	2020-10-29
8-K	2020-10-02
8-K	2020-09-21
8-K	2020-08-05
8-K	2020-05-19
8-K	2020-05-19
8-K	2020-05-01
8-K	2020-04-29
8-K	2020-04-17
8-K	2020-04-01
8-K	2020-01-28
8-K	2020-01-24
8-K	2020-01-02
8-K	2019-12-20
8-K	2019-10-31
8-K	2019-09-23
8-K	2019-09-18
8-K	2019-09-17
8-K	2019-08-28
8-K	2019-08-02
8-K	2019-06-05
8-K	2019-06-04
8-K	2019-05-21
8-K	2019-05-21
8-K	2019-05-06
8-K	2019-04-30
8-K	2019-01-30
8-K	2019-01-29
8-K	2019-01-25
8-K	2019-01-22
8-K	2018-10-22
8-K	2018-08-27
8-K	2018-08-27
8-K	2018-07-25
8-K	2018-05-22
8-K	2018-05-22
8-K	2018-05-10
8-K	2018-03-02
8-K	2018-02-23

EX-31.1	slct-20200930xex31d1.htm
EX-31.2	slct-20200930xex31d2.htm
EX-32.1	slct-20200930xex32d1.htm
EX-32.2	slct-20200930xex32d2.htm

SLCT 10Q Quarterly Report

Select Bancorp Earnings 2020-09-30