REGULATORY MATTERS

12 Months Ended

Dec. 31, 2014

Regulatory Capital Requirements [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE L - REGULATORY MATTERS

The Company is subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a material adverse effect on the Company’s consolidated financial statements. Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios, as set forth in the table below. Management believes, as of December 31, 2014, that the Company meets all capital adequacy requirements to which it is subject. The Company’s significant assets are its investments in Select Bank & Trust Company and New Century Statutory Trust I.

Regulatory authorities may limit payment of dividends by any bank when it is determined that such a limitation is in the public interest and is necessary to ensure financial soundness of the bank. The North Carolina Commissioner of Banks and the FDIC are also authorized to prohibit the payment of dividends under certain other circumstances.

A significant measure of the strength of a financial institution is its capital base. Federal regulations have classified and defined capital into the following components: (1) Tier 1 capital, which includes common shareholders’ equity and qualifying preferred equity, and (2) Tier 2 capital, which includes a portion of the allowance for loan losses, certain qualifying long-term debt and preferred stock which does not qualify as Tier 1 capital. Minimum capital levels are regulated by risk-based capital adequacy guidelines, which require a financial institution to maintain capital as a percentage of its assets, and certain off-balance sheet items adjusted for predefined credit risk factors (risk-adjusted assets).

As the following tables indicate, at December 31, 2014 and 2013, the Company and its Bank subsidiary both exceeded minimum regulatory capital requirements as specified in the tables below.

						Minimum for capital
	Actual					adequacy purposes
The Company:	Amount		Ratio			Amount		Ratio
December 31, 2014:	(dollars in thousands)
Total Capital (to Risk-Weighted Assets)	$	107,018		17.70	%	$	48,302		8.00	%
Tier 1 Capital (to Risk-Weighted Assets)		100,174		16.56	%		24,191		4.00	%
Tier 1 Capital (to Average Assets)		100,174		13.10	%		30,659		4.00	%

						Minimum for capital
	Actual					adequacy purposes
	Amount		Ratio			Amount		Ratio
December 31, 2013:	(dollars in thousands)
Total Capital (to Risk-Weighted Assets)	$	72,676		19.26	%	$	30,187		8.00	%
Tier 1 Capital (to Risk-Weighted Assets)		67,930		18.00	%		15,093		4.00	%
Tier 1 Capital (to Average Assets)		67,930		12.62	%		21,523		4.00	%

Select Bank & Trust Company’s actual capital amounts and ratios are presented in the table below as of December 31, 2014 and 2013:

											Minimum to be well
						Minimum for capital					capitalized under prompt
	Actual					adequacy purposes					corrective action provisions
The Bank:	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2014:	(dollars in thousands)
Total Capital (to Risk-Weighted Assets)	$	103,495		17.13	%	$	48,340		8.00	%		60,425		10.00	%
Tier 1 Capital (to Risk-Weighted Assets)		96,651		16.00	%		24,170		4.00	%		36,255		6.00	%
Tier 1 Capital (to Average Assets)		96,651		12.64	%		30,659		4.00	%		38,324		5.00	%

											Minimum to be well
						Minimum for capital					capitalized under prompt
	Actual					adequacy purposes					corrective action provisions
The Bank:	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2013:	(dollars in thousands)
Total Capital (to Risk-Weighted Assets)	$	71,121		18.89	%	$	30,122		8.00	%	$	37,652		10.00	%
Tier 1 Capital (to Risk-Weighted Assets)		66,385		17.63	%		15,061		4.00	%		22,591		6.00	%
Tier 1 Capital (to Average Assets)		66,385		12.34	%		21,523		4.00	%		26,904		5.00	%

During 2004, the Company issued $12.4 million of junior subordinated debentures to a newly formed subsidiary, New Century Statutory Trust I, which in turn issued $12.0 million of trust preferred securities. The proceeds from the sale of the trust preferred securities provided additional capital for the growth and expansion of the Bank. Under the current applicable regulatory guidelines, all of the proceeds from the issuance of these trust preferred securities qualify as Tier 1 capital as of December 31, 2014.

Management expects that the Bank will remain “well-capitalized” for regulatory purposes, although there can be no assurance that additional capital will not be required in the future.