Select Bancorp (SLCT) 8-K Results of Operations and Financial Condition

Exhibit 99.1

 

FOR RELEASE: May 3, 2016

Mark A. Jeffries

Executive Vice President

Chief Financial Officer

Office: 910-892-7080 and Direct: 910-897-3603

markj@SelectBank.com

SelectBank.com

SELECT BANCORP REPORTS

FIRST QUARTER 2016 EARNINGS

DUNN, NC . . . Select Bancorp, Inc. (the “Company”NASDAQ: SLCT), the holding company for Select Bank & Trust, today reported net income for the quarter ended March 31, 2016 of $1.5 million and basic and diluted earnings per share of $0.13, compared to $1.7 million and basic and diluted earnings per share of $0.15 for the quarter ended March 31, 2015.

Total assets, deposits, and total net loans for the Company as of March 31, 2016 were $830.4 million, $667.7 million, and $622.1 million.

Year to date return on average assets through March 31, 2016 is 0.73% and year to date return on average equity is 6.03%.

Non-performing loans were $8.7 million equaling 1.39% of loans at March 31, 2016. Foreclosed real estate equaled $1.9 million at March 31, 2016 and net recoveries for the quarter were ($154,000), or (0.10%), of average loans. At March 31, 2016, the allowance for loan losses was $7.5 million, or 1.20% of total loans.

Included in the results for the first quarter of 2016 was completion of the Company’s exit of the Small Business Lending Fund (SBLF) program. The Company redeemed all $7.6 million of SBLF preferred stock in January 2016 which impacted shareholders’ equity. Total shareholders’ equity stands at $99.2 million at March 31, 2016.

Commenting on the first quarter results, President and Chief Executive Officer William L. Hedgepeth II stated, “We continue to believe that Select is well positioned for the remainder of 2016 and beyond.”

Later this year the company will relocate its Raleigh branch from the current location to a full service branch at 4505 Falls of Neuse Road, Suite 100. The new branch is conveniently located just north of the beltline off Wake Forest Road.

Hedgepeth added, "Our asset quality remains strong and this is a top priority at Select. Our loan portfolio performance trends reflect our commitment to a strong credit culture. As I have said many times:We will compete for loans based on interest rate, but we will not sacrifice credit quality. Our historical asset quality numbers reflect the prudence of this strategy. In addition to operating in markets with healthy economies, we will continue to seek prime locations for expansion and identify and hire outstanding bankers and lenders in those markets. These people, like many of our current staff, are known in their markets and are astute, highly-skilled business people with exceptionally loyal client bases.”

Select Bank & Trust has branch offices in these North Carolina communities: Dunn, Burlington, Clinton, Elizabeth City, Fayetteville, Goldsboro, Greenville, Leland, Lillington, Lumberton, Morehead City, Raleigh and Washington.

The information as of and for the quarter ended March 31, 2016, 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, earnings per share, revenue, expenses and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, 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, regulatory changes, 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.

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Select Bancorp, Inc.

Selected Financial Information and Other Data

($ in thousands, except per share data)

	At or for the three months ended															At or for the twelve months ended
	March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2015			December 31, 2014			December 31, 2013
Summary of Operations:
Total interest income	$	8,432		$	8,425		$	8,412		$	8,262		$	8,242		$	33,341		$	26,104		$	22,903
Total interest expense		927			890			878			835			939			3,542			4,519			5,258
Net interest income		7,505			7,535			7,534			7,427			7,303			29,799			21,585			17,645
Provision for (recovery of) loan losses		352			506			393			(139	)		130			890			(194	)		(325	)
Net interest income after provision		7,153			7,029			7,141			7,566			7,173			28,909			21,779			17,970
Noninterest income		866			916			572			941			863			3,292			2,675			2,629
Merger/Acquisition related expenses		-			240			103			35			-			378			1,941			-
Noninterest expense		5,620			5,497			5,467			5,518			5,370			21,852			18,719			15,855
Income before income taxes		2,399			2,208			2,143			2,954			2,666			9,971			3,794			4,744
Provision for income taxes		896			570			792			1,133			923			3,418			1,437			1,803
Net Income		1,503			1,638			1,351			1,821			1,743			6,553			2,357			2,941
Dividends on Preferred Stock		4			20			19			19			19			77			38			-
Net income available to common shareholders	$	1,499		$	1,618		$	1,332		$	1,802		$	1,724		$	6,476		$	2,319		$	2,941
Share and Per Share Data:
Earnings per share - basic	$	0.13		$	0.14		$	0.12		$	0.16		$	0.15		$	0.56		$	0.26		$	0.43
Earnings per share - diluted	$	0.13		$	0.14		$	0.12		$	0.16		$	0.15		$	0.56		$	0.26		$	0.43
Book value per share	$	8.56		$	8.38		$	8.28		$	8.17		$	8.07		$	8.38		$	8.59		$	8.09
Tangible book value per share	$	7.87		$	7.67		$	7.58		$	7.45		$	7.33		$	7.67		$	7.83		$	8.07
Ending shares outstanding		11,584,011			11,583,011			11,577,111			11,499,398			11,458,561			11,583,011			11,377,980			6,921,352
Weighted average shares outstanding:
Basic		11,583,440			11,580,745			11,521,043			11,481,137			11,426,378			11,502,800			8,870,114			6,918,814
Diluted		11,626,609			11,627,974			11,582,724			11,548,878			11,510,147			11,567,811			8,974,384			6,919,760
Selected Performance Ratios:
Return on average assets(2)		0.73	%		0.82	%		0.69	%		0.98	%		0.94	%		0.86	%		0.37	%		0.53	%
Return on average equity(2)		6.03	%		6.20	%		5.21	%		7.22	%		7.11	%		6.42	%		3.12	%		5.28	%
Net interest margin		4.14	%		4.18	%		4.34	%		4.46	%		4.30	%		4.38	%		3.88	%		3.46	%
Efficiency ratio(1)		67.14	%		65.05	%		67.44	%		65.94	%		65.76	%		66.04	%		77.16	%		78.20	%
Period End Balance Sheet Data:
Loans, net of unearned income	$	622,092		$	617,398		$	597,969		$	573,729		$	558,923		$	617,398		$	552,038		$	346,500
Total Earning Assets		753,726			726,408			711,622			665,028			663,017			726,408			698,266			483,054
Goodwill		6,931			6,931			6,931			6,931			6,931			6,931			6,931			-
Core Deposit Intangible		1,125			1,241			1,196			1,320			1,470			1,241			1,625			182
Total Assets		830,395			817,015			786,495			742,443			748,371			817,015			766,121			525,646
Deposits		667,654			651,161			619,935			579,609			600,520			651,161			618,902			448,458
Short term debt		31,218			24,594			30,722			32,884			18,943			24,594			20,733			6,305
Long term debt		28,559			33,782			28,846			24,914			25,282			33,782			25,591			12,372
Shareholders' equity		99,210			104,702			103,545			101,552			100,076			104,702			97,685			56,004
Selected Average Balances:
Gross Loans	$	623,286		$	601,966		$	585,541		$	569,785		$	557,177		$	578,759		$	430,571		$	354,871
Total Earning Assets		734,859			714,755			689,166			669,586			672,655			686,663			565,264			511,597
Core Deposit Intangible		1,186			1,139			1,251			1,389			1,546			1,330			884			237
Total Assets		832,738			796,414			771,913			744,118			748,047			765,284			631,905			555,354
Deposits		672,151			631,855			607,722			588,328			600,601			607,214			523,954			470,526
Short term debt		36,039			35,303			35,012			28,212			19,298			32,316			9,957			13,879
Long term debt		20,822			20,872			22,631			22,895			25,444			20,147			20,494			12,372
Shareholders' equity		100,312			104,732			102,879			101,216			99,376			102,068			74,365			55,701
Asset Quality Ratios:
Nonperforming loans	$	8,750		$	8,280		$	10,899		$	11,702		$	13,473		$	8,280		$	11,876		$	15,856
Other real estate owned		1,888			1,401			1,007			1,030			1,187			1,401			1,585			2,008
Allowance for loan losses		7,527			7,021			7,032			6,842			6,919			7,021			6,844			7,054
Nonperforming loans(3) to period-end loans		1.39	%		1.41	%		1.82	%		2.04	%		2.41	%		1.34	%		2.15	%		4.58	%
Allowance for loan losses to period-end loans		1.20	%		1.14	%		1.18	%		1.19	%		1.24	%		1.14	%		1.24	%		2.04	%
Delinquency Ratio(4)		0.45	%		0.41	%		0.36	%		0.32	%		0.23	%		0.41	%		0.91	%		0.25	%
Net loan charge-offs (recoveries) to average loans		-0.10	%		0.34	%		0.14	%		-0.01	%		0.04	%		0.12	%		-0.03	%		0.15	%

(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.