Surrey Bancorp Reports 2020 Earnings of $4,578,161

Mount Airy, North Carolina, UNITED STATES


MOUNT AIRY, N.C., Feb. 24, 2021 (GLOBE NEWSWIRE) -- Surrey Bancorp (the “Company”, Pink Sheets: SRYB), the holding company for Surrey Bank & Trust, today reported earnings for the fourth quarter of 2020 and the full year.

For the quarter ended December 31, 2020, net income totaled $1,498,414 or $0.36 per fully diluted share, compared with $1,129,170 or $0.27 per fully diluted common share earned during the fourth quarter of 2019.

The increase in earnings results from an increase in net interest income.

Net interest income increased by 13.0 percent from $3,219,853 in the fourth quarter of 2019 to $3,638,909 for the same period in 2020 even though net interest income yields declined. The increase is due to the recognition of loan origination fees from the Small Business Administration’s Paycheck Protection Program (“PPP”). PPP origination fees totaling $773,100 were recognized in the fourth quarter of 2020. The large increase in fee recognition was due to the forgiveness and payoff of the PPP loans in the fourth quarter. PPP loans totaling $24,775,780 were paid off in the fourth quarter of 2020. The net interest margin decreased from 4.19 percent in the fourth quarter of 2019 to 3.62 percent for the same period in 2020 due to sudden decrease in interest rates due to the COVID 19 pandemic. The cost of funds decreased from 0.50 percent in the fourth quarter of 2019 to 0.21 percent in the fourth quarter of 2020. The provision for loan losses increased from $45,826 in the fourth quarter of 2019 to $125,666 in 2020. Noninterest income increased from $774,350 in the fourth quarter of 2019 to $804,890 in 2020. This increase was attributable to exchange fees caused by increased activity in debit and credit card transactions. Noninterest expenses increased from $2,417,217 in the fourth quarter of 2019 to $2,441,728 in the fourth quarter of 2020. This increase is attributable to salaries and employee benefits.

Net income for the year ended December 31, 2020, was $4,578,161 or $1.10 per diluted share outstanding, compared to a $4,913,391 or $1.18 per diluted share outstanding, for the year ended December 31, 2019. Earnings for the year ended December 31, 2020, are approximately 6.8% lower than for the same period in 2019. The decrease in earnings results from a decrease in net interest income and an increase in the provision for loan losses. Net interest income decreased 4.9% from $13,462,474 for the year ended 2019 to $12,793,558 at year-end 2020. The decrease in net interest income is the result of the sudden decrease in interest rates due to the COVID 19 pandemic. Loan yields decreased from 5.51 percent in 2019 to 5.12 percent in 2020. The yield on interest earning assets decreased from 4.89 percent to 3.79 percent from 2019 to 2020. In addition to the overall decrease in interest rates, lower yields were affected by the bank’s participation in the PPP. The Bank originated $47,330,425 of PPP loans in 2020. These loans carry an interest rate of 1.00 percent and carry a 100 percent government guarantee. On December 31, 2020, PPP loans remaining in the portfolio amounted to $22,554,645. The cost of funds also decreased in 2020 from 0.39 percent in 2019 to 0.33 percent due to general rate decreases. Noninterest income increased 10.2 percent to $2,914,901 in 2020, compared to $2,646,339 reported for the year ended December 31, 2019. The provision for loan losses increased from a provision of $123,652 in 2019 to a provision of $689,853 in 2020. This increase is due to the estimated economic impact of the current pandemic. Noninterest expenses decreased 1.3 percent, from $9,317,807 in 2019, to $9,196,654 in 2020. Most of the decrease results from a reduction in professional fees.

Total assets were $431,064,407 as of December 31, 2020, an increase of 30.8 percent from $329,520,292 reported as of December 31, 2019. Total deposits were $374,442,946 at year-end 2020, an increase of 35.5 percent from the $276,359,576 reported at the end of year of 2019. Net loans increased 8.8 percent to $253,906,500 on December 31, 2020, compared to $233,271,790 as of December 31, 2019.

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 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 regarding 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.


SURREY BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)

          
  December 31,
2020
  December 31,
2019
  
  (unaudited)     
Total assets $431,064  $329,520  
Total loans  258,812   237,393  
Investments  152,986   72,777  
Deposits  374,443   276,360  
Stockholders’ equity  50,329   47,927  
Non-performing assets to total assets  0.09%  0.38% 
Loans past due more than 90 days to total loans  0.03%  0.02% 
Allowance for loan losses to total loans  1.90%  1.74% 
Tangible book value per common share $11.68  $11.20  



SURREY BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)

  For the Three Months
Ended December 31,
  For the Twelve Months
Ended December 31,
 
  2020    2019  2020   2019 
Interest income $3,834   $3,564  $13,888   $14,762 
Interest expense  195    344   1,094    1,300 
Net interest income  3,639    3,220   12,794    13,462 
Provision for loan losses  126    46   690    123 
Net interest income after provision for loan losses  3,513    3,174   12,104    13,339 
Noninterest income  805    774   2,915    2,646 
Noninterest expense  2,442    2,417   9,197    9,318 
Net income before taxes  1,876    1,531   5,822    6,667 
Provision for income taxes  378    402   1,244    1,754 
Net income  1,499    1,129   4,578    4,913 
Basic net income per share $0.36   $0.27  $1.10   $1.18 
Diluted net income per share $0.36   $0.27  $1.10   $1.18 
Return on average total assets1  1.40 %  1.36%  1.18 %  1.55%
Return on average total equity1  11.87 %  9.41%  9.28 %  10.49%
Yield on average interest earning assets   3.82 %  4.64%  3.79 %  5.01%
Cost of funds   0.21 %  0.50%  0.33 %  0.49%
Net yield on average interest earning assets   3.62 %  4.19%  3.49 %  4.57%
Overhead efficiency ratio  54.95 %  60.52%  58.55 %  57.84%
Net charge-offs/average loans  (0.02)%  0.01%  (0.04
)
%  0.08%

1Annualized for all periods presented.

 

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