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Financials : Banks | Small Cap Blend
Company profile

Select Bancorp, Inc. is the bank holding company for Select Bank & Trust Company (the Bank). The Bank is a commercial bank. The Bank provides commercial and retail financial services to customers located in its market areas. The Bank offers a range of banking services, including checking and savings accounts, commercial, consumer, mortgage and personal loans, and other associated financial services. The Bank's lending activities are oriented to the consumer/retail customer, as well as to the small-to-medium sized businesses located in central and eastern North Carolina. The Bank offers commercial, consumer and mortgage lending products. It originates construction loans for the purpose of acquisition, development and construction of both residential and commercial properties (ADC loans). The Bank's deposits include savings, negotiable order of withdrawal (NOW) account and money market deposits, time deposits and non-interest-bearing deposits.

Closing Price
$9.91
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UPDATE: Big U.S. banks' day of reckoning is delayed

9:28 am ET October 24, 2020 (MarketWatch)
Print

By Philip van Doorn, MarketWatch

Stimulus from the federal government and Federal Reserve help banks put off big losses

Heading into third-quarter earnings season, analysts were expecting relatively upbeat results for the largest U.S. banks.

Credit costs were expected to decline from the previous quarter, and they did, to a greater extent than expected. Among the 10 largest U.S. banks, eight reported better-than-expected earnings, with some beating estimates by a wide margin.

But most of the stocks have declined since earnings season began. Below are tables comparing actual results to analysts' estimates and to previous quarters.

Loan losses rise only slightly

The largest banks made outsized provisions for credit losses (the amount added to loan loss reserves, which directly lowers pre-tax earnings) during the first and second quarters, to prepare for an expected wave of loan defaults. This is normal activity in any recession.

So two quarters of earnings were depressed or wiped out for many banks that focus on lending, as opposed to trust and custody or investment banks. That changed during the third quarter, with much lower provisions.

Capital One Financial Corp. (COF)released $742 million in loan loss reserves (https://www.sec.gov/Archives/edgar/data/927628/000092762820000275/ex991q32020earningsrel.htm) during the third quarter -- that is, the bank's net loan charge-offs exceeded its provisions for reserves by that much, boosting earnings. Its loan losses during the third quarter were down tremendously from the second quarter of 2020 and even from the year-earlier quarter.

During a recession and recovery cycle, sequential comparisons of banks' results can be more important than the usual year-over-year comparisons, not only because of loan defaults and losses but because of the rapid decline in interest rates. For the largest banks, third-quarter provisions were down significantly from the second quarter.

Here are the 10 largest U.S. banks by total assets, with third-quarter provisions for loan losses compared with consensus estimates among analysts polled by FactSet from our Oct. 8 earnings preview (http://www.marketwatch.com/story/get-ready-for-a-good-earnings-season-for-big-us-banks-2020-10-08), along with actual figures for the previous quarter and the third quarter of 2019.

All dollar figures in the following tables are in millions, except for total assets, which are in billions. Scroll the table to see all the data.

Bank Ticker Provision for loan loss reserves - Q3 2020 Estimated provision for loan losses - Q3 2020 - Oct. 7 Actual Q3 provision, less estimate Provision for loan loss reserves - Q2 2020 Provision for loan loss reserves - Q3 2019 Total assets ($ billions)

J.P. Morgan Chase & Co. US:JPM $611 $2,885 -$2,274 $10,473 $1,514 $3,246

Bank of America Corp US:BAC $1,389 $2,236 -$847 $5,117 $779 $2,738

Citigroup Inc. US:C $1,809 $4,004 -$2,195 $7,903 $2,071 $2,234

Wells Fargo & Co. US:WFC $769 $1,921 -$1,152 $9,534 $695 $1,922

Goldman Sachs Group Inc. US:GS $278 $550 -$272 $1,590 $291 $1,132

Morgan Stanley US:MS $0 N/A N/A $246 $0 $956

U.S. Bancorp US:USB $635 $806 -$171 $1,737 $367 $540

Truist Financial Corp. US:TFC $421 $603 -$182 $844 $117 $499

PNC Financial Services Group Inc. US:PNC $52 $394 -$342 $2,463 $183 $462

Bank of New York Mellon Corp. US:BK $9 $40 -$31 $143 -$16 $428

Capital One Financial Corp. US:COF 331 $2,160 -$1,829 $4,246 $1,383 $422

State Street Corp. US:STT $0 $18 -$18 $52 $2 $272

Source: FactSet

Click on the tickers for more about each bank holding company, including news coverage, analysts' ratings and price targets.

"The jury is still out" on how severely the pandemic credit crisis will be for loan portfolios, according to Pri de Silva, a senior corporate bond analyst at Aware Asset Management in New York. During an interview, de Silva said credit losses tend to peak at the end of a recession.

"That trend should hold steady this time. If you look at the COVID-19 recession, three quarters in, losses are still in line with 2019."

Net charge-offs are loan balances written off and charged against reserves, less any recoveries. Here are those totals from the third quarter, compared with the second quarter of 2020 and the third quarter of 2019:

Bank Ticker Net charge-offs - Q3 2020 Net charge-offs - Q2 2020 Net charge-offs - Q3 2019

J.P. Morgan Chase & Co. US:JPM $1,200 $1,560 $1,371

Bank of America Corp US:BAC $972 $1,146 $811

Citigroup Inc. US:C $1,919 $2,206 $1,913

Wells Fargo & Co. US:WFC $683 $1,113 $645

Goldman Sachs Group Inc. US:GS $340 N/A N/A

Morgan Stanley US:MS N/A N/A N/A

U.S. Bancorp US:USB $515 $437 $352

Truist Financial Corp. US:TFC $326 $390 $153

PNC Financial Services Group Inc. US:PNC $155 $236 $155

Bank of New York Mellon Corp. US:BK -$2 -$3 $1

Capital One Financial Corp. US:COF $1,073 $1,505 $1,462

State Street Corp. US:STT $0 $0 $0

Source: FactSet

For most of the big banks listed here, net charge-offs declined sequentially during the third quarter. Here's another look at charge-off activity relative to average loans:

Bank Ticker Net charge-offs/ avg. loans - Q3 2020 Net charge-offs/ avg. loans - Q2, 2020 Net charge-offs/ avg. loans - Q3, 2019

J.P. Morgan Chase & Co. US:JPM 0.63% 0.59% 0.59%

Bank of America Corp US:BAC 0.47% 0.44% 0.37%

Citigroup Inc. US:C N/A 1.21% 1.15%

Wells Fargo & Co. US:WFC 0.48% 0.37% 0.28%

(MORE TO FOLLOW) Dow Jones Newswires

October 24, 2020 09:28 ET (13:28 GMT)

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