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CST: 05/12/2020 16:59:17   

Surrey Bancorp Reports Third Quarter Net Income of $1,676,806

409 Days ago

MOUNT AIRY, N.C., Oct. 23, 2019 (GLOBE NEWSWIRE) -- Surrey Bancorp (the “Company”), (Pink Sheets: SRYB), the holding company for Surrey Bank & Trust, today reported earnings for the third quarter of 2019.

For the quarter ended September 30, 2019, net income totaled $1,676,806 or $0.40 per fully diluted share, compared to $1,276,940 or $0.31 per fully diluted common share earned during the third quarter of 2018. 

The increase in earnings results from an increase in net interest income and a reduction in the provision for loan losses. Net interest income increased from $3,274,454 in the third quarter of 2018 to $3,658,136 in the third quarter of 2019. The provision for loan losses decreased from a provision of $122,398 in the third quarter of 2018 to a provision recapture of $131,847 in the third quarter of 2019.

The increase in net interest income is due to loan growth and an improved net interest margin. Average loans outstanding in the third quarter of 2019 amounted to $243,071,559 compared to $235,525,596 in the third quarter of 2018. Loan yields increased from 5.53 percent in the third quarter of 2018 to 6.10 percent in the same quarter of 2019 due to the recapture of interest income and late fees on a government guaranteed nonaccrual loan that was paid off during the quarter. The additional interest income was also increased by the recognition of discounts and prepayment penalties upon the early payoff of another government guaranteed loan. The net effect of these transactions added approximately $225,000 to interest income from loans. Overall interest earning asset yields increased from 4.92 percent to 5.42 percent from the third quarter of 2018 to the third quarter of 2019. The cost of funds was 0.51 percent and 0.39 percent in the third quarter of 2019 and 2018, respectively. Interest costs have remained low due to the increase in non-interest-bearing demand deposit accounts. Average deposits increased from $258,125,747 in the third quarter of 2018 to $266,097,621 in the third quarter of 2019. Non-interest-bearing accounts accounted for $7,198,180, or 90.3 percent of the increase.

The provision for loan losses decreased from a provision of $122,398 in the third quarter of 2018 to a provision recapture of $131,847 in 2019, a $254,245 decrease. This decrease is due to a reduction in outstanding loans during the quarter. Loans decreased by $6,871,051 from June 30, 2019 to September 30, 2019. Additionally charge-off recoveries amounted to $127,930 during the quarter.  

Noninterest income decreased from $694,200 in the third quarter of 2018 to $619,031 in 2019. The charge-off of a servicing asset of $68,628 against servicing income accounts for most of the decrease. Noninterest expenses increased 1.4 percent from $2,192,316 in the third quarter of 2018, to $2,222,108 in 2019. This increase was primarily due to the increases in salaries and benefits expense.

Loan loss reserves were $4,101,017 or 1.72 percent of total loans as of September 30, 2019. Non-performing assets were 0.38 percent of total assets at September 30, 2019, compared to 0.13 percent on that date in 2018. At September 30, 2019, the allowance for loan loss reserves equals 386 percent of impaired and non-performing assets, net of government guarantees.    

Total assets were $331,633,605 as of September 30, 2019, an increase of 7.0 percent from $309,977,731 reported as of September 30, 2018. Total deposits were $278,110,833 at quarter-end 2019, a 6.9 percent increase from the $260,223,290 reported at the end of the third quarter of 2018. Net loans decreased to $235,290,731, or 0.7 percent, compared to $236,982,420, at September 30, 2018.

Net income for the nine months ended September 30, 2019, was $3,784,221 or $0.91 per diluted share, compared to $3,522,787 or $0.85 per diluted share, for the same period in 2018.

About Surrey Bancorp

Surrey Bancorp is the bank holding company for Surrey Bank & Trust (the “Bank”) and is located at 145 North Renfro Street, Mount Airy, North Carolina. The Bank operates full-service branch offices at 145 North Renfro Street, 1280 West Pine Street and 2050 Rockford Street in Mount Airy. Full-service branch offices are also located at 653 South Key Street in Pilot Mountain, 393 CC Camp Road in Elkin and 1096 Main Street in North Wilkesboro, North Carolina and 940 Woodland Drive in Stuart, Virginia. 

Surrey Bank & Trust is engaged in the sale of insurance through its wholly owned subsidiary Surrey Investment Services, Inc. The insurance agency, dba SB&T Insurance, is located at 199 North Renfro Street in Mount Airy.

Non-GAAP Financial Measures

This report refers to the overhead efficiency ratio, which is computed by dividing non-interest expense by the sum of net interest income and non-interest income. This is a non-GAAP financial measure that we believe provides investors with important information regarding our operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible, because other companies may calculate the efficiency ratio differently. Such information is not in accordance with generally accepted accounting principles in the United States (GAAP) and should not be construed as such. Management believes such financial information is meaningful to the reader in understanding operating performance but cautions that such information not be viewed as a substitute for GAAP. Surrey Bancorp, in referring to its net income, is referring to income under GAAP.

Forward Looking Statements

Information in this press release contains “forward-looking statements.” These statements reflect management's current beliefs as to the expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. As such, actual results and outcomes may materially differ from what may be expressed or forecast in such forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit levels, loan demand and asset quality, including real estate and other collateral values; changes in banking regulations and accounting principles, policies or guidelines; and the impact of competition from traditional or new sources. These and other factors that may emerge could cause decisions and actual results to differ materially from current expectations. Surrey Bancorp takes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this press release.

 
CONSOLIDATED FINANCIAL HIGHLIGHTS
 (Dollars in thousands, except per share amounts) 
 
    September 30,
2019
    December 31,
2018
    September 30,
2018
 
    (unaudited)       (audited)     (unaudited)  
                         
Total assets   $ 331,634     $ 309,150     $ 309,978  
Total loans     239,392       232,617       241,009  
Investments     66,457       55,428       48,809  
Deposits     278,111       259,378       260,223  
Borrowed funds     -        -        -  
Stockholders’ equity     47,727       45,150       44,360  
Non-performing assets to total assets     0.38 %     1.43 %     0.13 %
Loans past due more than 90 days to total loans     0.02 %     0.01 %     0.02 %
Allowance for loan losses to total loans     1.72 %     1.81 %     1.67 %
Tangible book value per common share   $ 11.15     $ 10.49     $ 10.29  
Common shares outstanding     4,167,933       4,167,633       4,167,633  


 
CONSOLIDATED FINANCIAL HIGHLIGHTS
 (Dollars in thousands, except per share amounts) 
 
    For the Three Months
Ended September 30,
    For the Nine Months
Ended September 30,
 
    2019     2018     2019     2018  
Interest income   $ 3,994     $ 3,531     $ 11,199     $ 10,240  
Interest expense     336       257       956       721  
Net interest income     3,658       3,274       10,243       9,519  
Provision for loan losses     (132 )     122       78       209  
Net interest income after provision for loan losses     3,790       3,152       10,165       9,310  
Noninterest income     619       694       1,872       1,815  
Noninterest expense     2,222       2,192       6,901       6,565  
Net income before taxes     2,187       1,654       5,136       4,560  
Provision for income taxes     510       377       1,352       1,037  
Net income     1,677       1,277       3,784         3,523  
Preferred stock dividend declared     -       -       -       6  
Net income available to common shareholders   $ 1,677     $ 1,277     $ 3,784     $   3,517  
Basic net income per share   $ 0.40     $ 0.31     $ 0.91     $ 0.89  
Diluted net income per share   $ 0.40     $ 0.31     $ 0.91     $ 0.85  
Return on average total assets (1)     2.10 %     1.66 %     1.61 %     1.57 %
Return on average total equity (1)     14.17 %     11.58 %     10.86 %      10.85 %
Yield on average interest earning assets     5.42 %     4.92 %     5.16 %     4.95 %
Cost of funds     0.51 %     0.39 %     0.49 %     0.38 %
Net yield on average interest earning assets     4.96 %     4.56 %     4.72 %     4.61 %
Overhead efficiency ratio     51.95 %     55.24 %     56.96 %     57.93 %
Net charge-offs (recoveries)/average loans     0.10 %     (0.01 %     0.07 %       0.01 %
                                 
(1)  Annualized for all periods presented.                                
                                 

For additional information, please contact
Ted Ashby, CEO, or Mark Towe, CFO           
(336) 783-3900

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