MOUNT AIRY, N.C., April 23, 2019 (GLOBE NEWSWIRE) -- Surrey Bancorp (the “Company”) (Pink Sheets: SRYB), the holding company for Surrey Bank & Trust (the “Bank”), today reported earnings for the first quarter of 2019.
For the quarter ended March 31, 2019, net income totaled $941,764 or $0.23 per fully diluted common share, compared with $1,063,275 or $0.26 per fully diluted common share earned during the first quarter of 2018.
The decrease in earnings primarily results from an increase in the provision for income taxes resulting from reductions in deferred income tax assets. Deferred income tax assets decreased $146,065 in the first quarter of 2019.
Net interest income increased from $3,157,691 in the first quarter of 2018 to $3,246,223 in 2019 due to an increase in loans outstanding. The net interest margin decreased from 4.71 percent in the first quarter of 2018 to 4.62 percent in the first quarter of 2019 due to a change in earning asset mix. Higher yielding loans made up 83.7 percent of average interest earning assets in the first quarter of 2018 as opposed to 81.8 percent in the first quarter of 2019. Loan yields decreased from 5.70 percent in 2018 to 5.60 percent in 2019 due to increased competition and the recognition of discounts on certain loans in 2018. Discounts totaling $162,692 were recorded as additional interest income in the first quarter of 2018 supporting the higher 2018 yields. Income from investments increased due to a general increase in interest rates. Investment interest income increased from $182,462 in the first quarter of 2018 to $324,516 in 2019, a 78 percent increase. The cost of funds increased from 0.37 percent in the first quarter of 2018 to 0.47 percent in the first quarter of 2019 as general interest rates increased. The increase in deposit cost was negated somewhat due to noninterest-bearing deposits making up a higher percentage of average deposits in 2019.
The provision for loan losses increased from $50,006 in the first quarter of 2018 to $62,988 in 2019. This change is due to an increase credit exposure resulting from a reduction in guaranteed loans. Total guaranteed loans at March 31, 2019 decreased $947,933 compared to total guaranteed loans at March 31, 2018. The increase in net credit exposure amounted to $4,762,421 in the first quarter of 2019 compared to $4,064,278 in the first quarter of 2018.
Noninterest income increased from $513,106 in the first quarter of 2018 to $629,447 during the same period in 2019. This increase was due to the 2018 write off of loan servicing rights associated with a loan previously sold with servicing retained. The loan was repurchased during the quarter resulting in the write off. The amount of the servicing rights charged against noninterest income in 2018 amounted to $179,501. Excluding the servicing rights charged off in 2018 noninterest income decreased by $63,160 due to decreases in deposit services charges and insurance commissions. Noninterest expenses increased 6.4 percent from $2,245,116 in the first quarter of 2018, to $2,387,645 in 2019. This increase was primarily due to the cost of enhanced cyber security, data processing, professional fees and salaries and benefits.
The allowance for loan loss reserves was $4,319,865 or 1.83 percent of total loans as of March 31, 2019. Non-performing assets were 1.41 percent of total assets at March 31, 2019, compared to 0.20 percent on that date in 2018. At March 31, 2019, the allowance equals 152 percent of impaired and non-performing assets, net of government guarantees.
Total assets as of March 31, 2019 were $311,983,430, an increase of 5.9 percent from $294,590,985 reported as of March 31, 2018. Total deposits were $261,667,363 at quarter-end 2019, a 5.6 percent increase from the $247,917,486 reported at the end of the first quarter of 2018. Net loans increased to $232,091,275 at the end of the first quarter of 2019, compared to $227,331,402, as of March 31, 2018, a 2.1 percent increase.
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.
Surrey Bank & Trust can be found online at www.surreybank.com.
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) |
| March 31 2019 | December 31 2018 | March 31 2018 | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Total assets | $ | 311,983 | $ | 309,150 | $ | 294,591 | ||||||
| Total loans | 236,478 | 232,617 | 231,186 | |||||||||
| Investments | 54,612 | 55,428 | 42,199 | |||||||||
| Deposits | 261,667 | 259,378 | 247,917 | |||||||||
| Stockholders’ equity | 45,702 | 45,150 | 42,701 | |||||||||
| Non-performing assets to total assets | 1.41 | % | 1.43 | % | 0.20 | % | ||||||
| Loans past due more than 90 days to total loans | 0.00 | % | 0.01 | % | 0.03 | % | ||||||
| Allowance for loan losses to total loans | 1.83 | % | 1.81 | % | 1.67 | % | ||||||
| Tangible book value per common share | $ | 10.66 | $ | 10.49 | $ | 10.00 | ||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share amounts) |
| For the Three Months Ended March 31, | |||||||||
| 2019 | 2018 | ||||||||
| Interest income | $ | 3,543 | $ | 3,384 | |||||
| Interest expense | 297 | 226 | |||||||
| Net interest income | 3,246 | 3,158 | |||||||
| Provision for loan losses | 63 | 50 | |||||||
| Net interest income after provision for loan losses | 3,183 | 3,108 | |||||||
| Noninterest income | 629 | 513 | |||||||
| Noninterest expense | 2,387 | 2,245 | |||||||
| Net income before taxes | 1,425 | 1,376 | |||||||
| Provision for income taxes | 483 | 313 | |||||||
| Net income | 942 | 1,063 | |||||||
| Preferred stock dividend declared | - | 6 | |||||||
| Net income available to common shareholders | $ | 942 | $ | 1,057 | |||||
| Basic net income per share | $ | 0.23 | $ | 0.29 | |||||
| Diluted net income per share | $ | 0.23 | $ | 0.26 | |||||
| Return on average total assets (1) | 1.23 | % | 1.45 | % | |||||
| Return on average total equity (1) | 8.24 | % | 10.01 | % | |||||
| Yield on average interest earning assets | 5.04 | % | 5.05 | % | |||||
| Cost of funds | 0.47 | % | 0.37 | % | |||||
| Net yield on average interest earning assets | 4.62 | % | 4.71 | % | |||||
| Overhead efficiency ratio | 61.61 | % | 61.16 | % | |||||
| Net charge-offs/average loans | -0.03 | % | 0.02 | % | |||||
(1) Annualized for all periods presented.
For additional information, please contact
Ted Ashby, CEO, or Mark Towe, CFO
(336) 783-3900