SAVANNAH, Ga., Oct. 16, 2007 (PRIME NEWSWIRE) -- The Savannah Bancorp, Inc. (Nasdaq:SAVB) reported net income for the third quarter 2007 of $2,381,000, a decrease of 8.1 percent from $2,590,000 in the third quarter 2006. Net income per diluted share was 40 cents compared to 44 cents per diluted share in the third quarter of 2006, a decrease of 9.1 percent. Prior period per share amounts have been restated to reflect the 5-for-4 stock split in December 2006. The decline in third quarter earnings results primarily from a higher provision for credit losses and a lower net interest margin due in part to higher deposit costs and higher nonaccrual loan balances.
The Company completed the previously announced acquisition of Minis & Co., Inc. ("Minis") on August 31, 2007. Minis is a registered investment advisory firm based in Savannah, Georgia with approximately $500 million in assets under management. Minis provides fee-only investment services and will operate as a separate subsidiary of the Company.
Return on average equity was 13.04 percent, return on average assets was 1.08 percent and the efficiency ratio was 54.65 percent in the third quarter 2007.
Total assets increased 12 percent to $889 million at September 30, 2007, up $95 million from $794 million a year earlier. Loans, excluding loans held for sale, were $778 million compared to $684 million one year earlier, an increase of 14 percent. Deposits totaled $746 million and $662 million at September 30, 2007 and 2006, respectively, an increase of 13 percent.
The allowance for credit losses was 1.26% at September 30, 2007 and 2006. Nonperforming assets were $7,908,000 or 1.02 percent of total loans and other real estate at September 30, 2007 compared to $3,637,000 or 0.53 percent at September 30, 2006. Third quarter net charge-offs were $321,000 for 2007 compared to net charge-offs of $340,000 in the same period in 2006. The provision for credit losses for the third quarter of 2007 was $635,000 compared to $360,000 for the third quarter of 2006. Net charge-offs were $686,000 for the first nine months of 2007 compared to net charge-offs of $337,000 in the first nine months of 2006. The provision for credit losses for the first nine months of 2007 was $1,530,000 compared to $1,135,000 for the first nine months of 2006.
John Helmken, President and CEO, said, "The current slowdown in the real estate markets has affected several of our individual borrowers who are dependent on the sale of residential real estate to liquidate their loans, particularly a few older loans in the Hilton Head/Bluffton market. While we are experiencing an increase in nonperforming assets and in net charge-offs in 2007, our conservative underwriting history is serving us well. Credit problems to date are relatively small and isolated and are primarily related to the slower real estate market. We began decreasing our exposure to construction loans 18 months ago and that has proved to be a prudent decision. "
Helmken added, "While our nonperforming loans and charge-offs are below peer and industry levels, they are unacceptable for us. We have addressed those issues head on and do not expect them to distract us as we close out 2007 and step cautiously but optimistically into 2008."
For the first nine months of 2007, net income was $7,283,000 versus $7,479,000 in the first nine months of 2006. Earnings per diluted share were $1.23 and $1.27 in the first nine months of 2007 and 2006, respectively. Return on average equity was 13.94 percent, return on average assets was 1.14 percent, net interest margin was 4.08 percent and the efficiency ratio was 54.60 percent in the first nine months of 2007.
Net interest income increased 2.3 percent in the third quarter 2007 over the third quarter 2006. Third quarter net interest margin declined to 3.95 percent in 2007 from 4.42 percent in 2006 primarily due to higher funding costs and changes in the deposit mix. Noninterest income increased $108,000, or 10 percent in the third quarter of 2007 versus the same period in 2006 due to higher trust and investment management fees of $215,000 partially offset by lower mortgage related income and lower service charges on deposit accounts. Noninterest expense increased $231,000 or 4.7 percent in the third quarter 2007 compared to the third quarter 2006. Higher personnel, occupancy, equipment and information technology costs were partially offset by lower other operating expenses.
Today, the Board of Directors approved a regular quarterly cash dividend of 12 cents per share payable on November 19, 2007 to shareholders of record on October 26, 2007.
The Savannah Bancorp, Inc. (SAVB), a bank holding company for The Savannah Bank, N.A., Bryan Bank & Trust (Richmond Hill, Georgia), Harbourside Community Bank (Hilton Head Island, SC) and Minis & Co., Inc., is headquartered in Savannah, Georgia. SAVB began operations in 1990. Its primary businesses include deposit, credit, trust, investment and mortgage origination services provided to local customers.
This press release may contain forward-looking statements as defined by federal securities law which involve significant risks and uncertainties. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in the economic scenario: significant changes in regulatory requirements; and significant changes in securities markets. The Savannah Bancorp, Inc. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Any such statements are made in reliance on the safe harbor protections provided under the Private Securities Act of 1995.
The Savannah Bancorp, Inc. and Subsidiaries
Third Quarter Financial Highlights
September 30, 2007 and 2006
($ in thousands, except share data)
(Unaudited)
%
Balance Sheet Data at September 30 2007 2006 Change
---------------------------------------------------------------------
Total assets $889,196 $793,746 12
Interest-earning assets 844,287 756,095 12
Loans 778,262 683,926 14
Allowance for credit losses 9,842 8,611 14
Non-accruing loans 5,028 1,371 267
Loans past due 90 days - accruing 1,728 466 271
Other real estate owned 1,152 1,800 (36)
Deposits 745,878 662,381 13
Interest-bearing liabilities 717,357 618,228 16
Shareholders' equity 75,164 64,369 17
Allowance for credit losses to total loans 1.26% 1.26% --
Nonperforming assets to total loans and
OREO 1.02% 0.53% 93
Loan to deposit ratio 104.34% 103.25% 1.1
Equity to assets 8.45% 8.11% 4.2
Tier 1 capital to risk-weighted assets 11.04% 11.30% (0.6)
Total capital to risk-weighted assets 12.29% 12.55% (0.6)
Book value per share (a) $ 12.70 $ 11.15 14
Outstanding shares (a) 5,917 5,771 2.5
Market value per share (a) $ 24.69 $ 26.64 (7.3)
---------------------------------------------------------------------
Performance Ratios for the Third Quarter
---------------------------------------------------------------------
Net income $ 2,381 $ 2,590 (8.1)
Return on average assets 1.08% 1.34% (19)
Return on average equity 13.04% 16.46% (21)
Net interest margin 3.95% 4.42% (11)
Efficiency ratio 54.65% 53.90% 1.4
Per share data: (a)
Net income - basic $ 0.41 $ 0.45 (8.9)
Net income - diluted $ 0.40 $ 0.44 (9.1)
Dividends $ 0.120 $ 0.112 7.1
Average shares: (a)
Basic 5,862 5,761 1.8
Diluted 5,928 5,886 0.7
---------------------------------------------------------------------
Performance Ratios for the First Nine Months
---------------------------------------------------------------------
Net income $ 7,283 $ 7,479 (2.6)
Return on average assets 1.14% 1.32% (14)
Return on average equity 13.94% 16.51% (16)
Net interest margin 4.08% 4.50% (9.3)
Efficiency ratio 54.60% 54.06% 1.0
Per share data: (a)
Net income - basic $ 1.25 $ 1.30 (3.8)
Net income - diluted $ 1.23 $ 1.27 (3.1)
Dividends $ 0.360 $ 0.336 7.1
Average shares: (a)
Basic 5,823 5,760 1.1
Diluted 5,905 5,889 0.3
(a) Share and per share amounts have been restated to reflect the
effect of a 5-for-4 stock split in December 2006
The Savannah Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2007 and 2006
(Unaudited)
($ in thousands, except share data)
September 30,
---------------------------------------------------------------------
2007 2006
---------------------------------------------------------------------
Assets
Cash and due from banks $ 16,211 $ 17,036
Interest-bearing deposits 2,073 3,916
Federal funds sold 6,747 17,098
---------------------------------------------------------------------
Cash and cash equivalents 25,031 38,050
Securities available for sale, at fair value
(amortized cost of $62,192 in 2007 and
$51,684 in 2006) 62,171 51,276
Loans held for sale 41 832
Loans, net of allowance for credit losses
of $9,842 in 2007 and $8,611 in 2006 768,420 675,315
Premises and equipment, net 6,525 6,135
Other real estate owned 1,152 1,800
Bank-owned life insurance 5,926 5,710
Goodwill and other intangible assets 3,644 --
Other assets 16,286 14,628
---------------------------------------------------------------------
Total assets $ 889,196 $ 793,746
=====================================================================
Liabilities
Deposits:
Noninterest-bearing $ 90,342 $ 105,084
Interest-bearing demand 107,879 100,972
Savings 17,043 18,272
Money market 188,947 144,771
Time deposits 341,667 293,282
---------------------------------------------------------------------
Total deposits 745,878 662,381
Short-term borrowings 48,453 37,229
FHLB advances - long-term 3,058 13,392
Subordinated debt 10,310 10,310
Other liabilities 6,333 6,065
---------------------------------------------------------------------
Total liabilities 814,032 729,377
---------------------------------------------------------------------
Shareholders' equity
Common stock, par value $1 per share:
authorized 20,000,000 shares; issued
5,916,797 and 4,617,022 shares in 2007 and
2006, respectively 5,917 4,617
Preferred stock, par value $1 per share:
authorized 10,000,000 shares, none issued -- --
Additional paid-in capital 38,260 36,659
Retained earnings 30,870 23,815
Treasury stock, 318 and 255 shares
in 2007 and 2006, respectively (4) (4)
Accumulated other comprehensive income
(loss), net 121 (718)
---------------------------------------------------------------------
Total shareholders' equity 75,164 64,369
---------------------------------------------------------------------
Total liabilities and shareholders' equity $ 889,196 $ 793,746
=====================================================================
The Savannah Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
For the Nine Months and Five Quarters Ending
September 30, 2007 and 2006
($ in thousands, except per share data)
-----------------------------------------------------------------
(Unaudited)
-----------------------------------------------------------------
For the Nine Months Ended
-----------------------------------------------------------------
September 30,
--------------------- %
2007 2006 Chg
-----------------------------------------------------------------
Interest and dividend income
Loans, including fees $ 44,420 $ 37,478 19
Loans held for sale 84 506 (83)
Investment securities 2,140 1,641 30
Deposits with banks 245 166 48
Federal funds sold 426 441 (3.4)
--------------------------------------------------------
Total interest and dividend
income 47,315 40,232 18
--------------------------------------------------------
Interest expense
Deposits 19,534 13,588 44
Short-term borrowings 1,889 1,240 52
FHLB advances 367 610 (40)
Subordinated debt 629 602 4.5
--------------------------------------------------------
Total interest expense 22,419 16,040 40
--------------------------------------------------------
Net interest income 24,896 24,192 2.9
Provision for credit losses 1,530 1,135 35
--------------------------------------------------------
Net interest income after the
provision for credit losses 23,366 23,057 1.3
--------------------------------------------------------
Noninterest income
Service charges on deposits 1,034 1,137 (9.1)
Mortgage related income, net 517 686 (25)
Trust and investment
management fees 744 488 53
Other operating income 922 902 2.2
--------------------------------------------------------
Total noninterest income 3,217 3,213 0.1
--------------------------------------------------------
Noninterest expense
Salaries and employee benefits 8,721 8,193 6.4
Occupancy and equipment 2,336 2,152 8.6
Information technology 1,194 1,108 7.8
Other operating expense 3,099 3,363 (7.9)
--------------------------------------------------------
Total noninterest expense 15,350 14,816 3.6
--------------------------------------------------------
Income before income taxes 11,233 11,454 (1.9)
Income tax expense 3,950 3,975 (0.6)
--------------------------------------------------------
Net income $ 7,283 $ 7,479 (2.6)
========================================================
Net income per share: (a)
Basic $ 1.25 $ 1.30 (3.8)
========================================================
Diluted $ 1.23 $ 1.27 (3.1)
========================================================
Average basic shares (000s) (a) 5,823 5,760 1.1
Average diluted shares (000s) (a) 5,905 5,889 0.3
Performance Ratios
Return on average equity 13.94% 16.51% (16)
Return on average assets 1.14% 1.32% (14)
Net interest margin 4.08% 4.50% (9.3)
Efficiency ratio 54.60% 54.06% 1.0
Average equity 69,856 60,575 15
Average assets 855,336 756,582 13
Average interest-earning assets 819,640 721,755 14
---------------------------------------------------
(Unaudited)
---------------------------------------------------
2007 2006
------------------------- ---------------- Q3-07/
Third Second First Fourth Third Q3-06
Quarter Quarter Quarter Quarter Quarter % Chg
---------------- ---------------------------------------------------
Interest and
dividend income
Loans, including
fees $15,196 $14,872 $14,351 $14,063 $13,209 15
Loans held for
sale 15 35 34 52 64 (77)
Investment
securities 794 726 620 599 572 39
Deposits with
banks 44 119 83 127 65 (32)
Federal funds
sold 130 125 172 116 166 (22)
---------------- -------------------------------------------
Total interest
and dividend
income 16,179 15,877 15,260 14,957 14,076 15
---------------- -------------------------------------------
Interest expense
Deposits 6,963 6,479 6,092 5,754 5,251 33
Short-term
borrowings 647 618 625 561 326 99
FHLB advances 48 155 164 168 166 (71)
Subordinated debt 213 213 203 214 214 (0.5)
---------------- -------------------------------------------
Total interest
expense 7,871 7,465 7,084 6,697 5,957 32
---------------- -------------------------------------------
Net interest
income 8,308 8,412 8,176 8,260 8,119 2.3
Provision for
credit losses 635 395 500 450 360 76
---------------- -------------------------------------------
Net interest
income after the
provision for
credit losses 7,673 8,017 7,676 7,810 7,759 1.1
---------------- -------------------------------------------
Noninterest
income
Service charges
on deposits 339 348 347 389 384 (12)
Mortgage related
income, net 141 166 210 200 203 (31)
Trust and
investment
management fees 379 189 176 170 164 131
Other operating
income 305 297 319 331 305 --
---------------- -------------------------------------------
Total
noninterest
income 1,164 1,000 1,052 1,090 1,056 10.2
---------------- -------------------------------------------
Noninterest
expense
Salaries and
employee
benefits 2,919 2,838 2,964 2,659 2,717 7.4
Occupancy and
equipment 796 782 758 768 755 5.4
Information
technology 388 381 425 417 372 4.3
Other operating
expense 1,073 1,025 1,000 1,293 1,101 (2.5)
---------------- -------------------------------------------
Total
noninterest
expense 5,176 5,026 5,147 5,137 4,945 4.7
---------------- -------------------------------------------
Income before
income taxes 3,661 3,991 3,581 3,763 3,870 1.3
Income tax
expense 1,280 1,400 1,270 1,240 1,280 7.8
---------------- -------------------------------------------
Net income $ 2,381 $ 2,591 $ 2,311 $ 2,523 $ 2,590 (8.1)
================ ===========================================
Net income per
share: (a)
Basic $ .41 $ .44 $ .40 $ .44 $ .45 (8.9)
================ ===========================================
Diluted $ .40 $ .44 $ .39 $ .43 $ .44 (9.1)
================ ===========================================
Average basic
shares (000s)
(a) 5,862 5,824 5,783 5,779 5,761 1.8
Average diluted
shares (000s)
(a) 5,928 5,899 5,890 5,884 5,886 0.7
Performance
Ratios
Return on
average equity 13.04% 14.94% 13.90% 15.33% 16.46% (21)
Return on average
assets 1.08% 1.23% 1.12% 1.24% 1.34% (19)
Net interest
margin 3.95% 4.13% 4.17% 4.26% 4.42% (11)
Efficiency ratio 54.65% 53.40% 55.78% 54.94% 53.90% 1.4
Average equity 72,436 69,583 67,434 65,297 62,435 16
Average assets 875,532 855,989 834,033 809,491 767,649 14
Average interest-
earning assets 837,596 821,253 799,678 772,192 732,405 27
(a) Share and per share amounts have been restated to reflect the
effect of a 5-for-4 stock split in December 2006.
The Savannah Bancorp, Inc. & Subsidiaries
Loan Concentration Schedule
September 30, 2007 and December 31, 2006
% of % of % Dollar
($ in thousands) 9/30/07 Total 12/31/06 Total Change
---------------------------------------------------------------------
Non-residential real
estate
Owner-occupied $ 114,533 15 $ 90,848 13 26
Non owner-occupied 100,437 13 98,032 13 2
Construction 29,052 4 22,128 3 31
Commercial land and lot
development 36,202 5 35,610 5 2
------------------------------------------------------------
Total non-residential real
estate 280,224 37 246,618 34 14
------------------------------------------------------------
Residential real estate
Owner-occupied - 1-4
family 81,784 10 87,965 12 (7)
Non owner-occupied - 1-4
family 114,208 15 (a) 101,397 14 13
Construction 61,320 8 (a) 77,417 11 (21)
Residential land and lot
development 111,745 14 93,060 13 20
Home equity lines 40,881 5 40,794 6 --
------------------------------------------------------------
Total residential real
estate 409,938 52 400,633 56 2
------------------------------------------------------------
Total real estate loans 690,162 89 647,251 90 7
Commercial 70,167 9 57,740 8 22
Consumer 18,450 2 16,624 2 11
Unearned fees, net (517) -- (693) -- (25)
------------------------------------------------------------
Total loans, net of
unearned fees $ 778,262 100 $ 720,922 100 8
============================================================
(a) Includes a reclassification of $33 million of completed construction loans from the construction category to the non-owner occupied 1-4 family category to conform to the September 30, 2007 presentation as required by regulatory guidelines.
During the first nine months of 2007, residential real estate loans grew two percent and non-residential real estate loans increased 14 percent. During 2006, decisions were made to de-emphasize residential construction loan growth as evidenced by the decline in the construction loan portfolio during 2007.
Commercial and residential land and lot development portfolios generally represent loans to experienced real estate developers and financially strong, long-term real estate investors who have the financial strength to service the debt during the slower real estate markets. The residential lot loans include some high value lots in the Hilton Head/Bluffton, SC market where values have declined in certain developments. There does not appear to be any significant loss exposure to any one borrower or development in this market.
The Savannah Bancorp, Inc. and Subsidiaries
Average Balance Sheet and Rate/Volume Analysis -
Third Quarter, 2007 and 2006
Taxable-Equivalent
Average Balance Average Rate Interest (a)
-------------------------------- ---------------
QTD QTD QTD QTD QTD QTD Vari-
9/30/07 9/30/06 9/30/07 9/30/06 9/30/07 9/30/06 Ance
---------------------------------------------------------------------
($ in thousands) (%) ($ in thousands)
Assets
Interest-bearing
$ 3,370 $ 5,035 5.18 5.12 deposits $ 44 $ 65 ($21)
Investments -
60,393 49,344 5.13 4.45 taxable 781 554 227
Investments -
2,320 2,110 6.16 7.71 non-taxable 36 41 (5)
Federal funds
10,183 11,584 5.06 5.69 sold 130 166 (36)
Loans held for
825 3,267 7.21 7.77 sale 15 64 (49)
760,495 661,065 7.94 7.94 Loans (b) 15,212 13,225 1,987
----------------- --------------------
Total interest-
837,586 732,405 7.68 7.65 earning assets 16,218 14,115 2,103
------------ --------------------
Noninterest-
37,946 35,244 earning assets
-----------------
$875,532 $767,649 Total assets
=================
Liabilities
and equity
Deposits
$114,157 $ 95,279 2.04 1.42 NOW accounts $ 586 $ 341 $ 245
Savings
17,722 18,309 0.99 1.00 accounts 44 46 (2)
Money market
175,681 140,731 4.44 4.08 accounts 1,964 1,446 518
CDs, $100M
135,026 110,104 5.38 4.86 or more 1,831 1,350 481
76,391 76,269 4.97 4.16 CDs, broker 956 799 157
Other time
123,740 110,752 5.07 4.55 deposits 1,582 1,269 313
----------------- --------------------
Total interest-
bearing
642,717 551,444 4.30 3.78 deposits 6,963 5,251 1,712
FHLB advances -
3,108 13,482 6.13 4.88 long-term 48 166 (118)
Short-term
50,760 26,123 5.06 4.95 borrowings 647 326 321
Subordinated
10,310 10,310 8.20 8.23 debt 213 214 (1)
----------------- --------------------
Total interest-
bearing
706,895 601,359 4.42 3.93 liabilities 7,871 5,957 1,914
------------ --------------------
Noninterest-
88,654 96,497 bearing deposits
7,547 7,358 Other liabilities
Shareholders'
72,436 62,435 equity
-----------------
Liabilities and
$875,532 $767,649 equity
=================
Interest rate
3.26 3.72 spread
============
Net interest
3.95 4.42 margin
============
Net interest
income $8,347 $8,158 $ 189
====================
Net earning
$130,691 $131,046 assets
=================
$731,371 $647,941 Average deposits
=================
Average cost of
3.78 3.22 deposits
============
Average loan to
104% 102% deposit ratio
=================
(a) The taxable equivalent adjustment results from tax exempt
income less non-deductible TEFRA interest expense and was $39
in the third quarter 2007 and 2006.
(b) Average nonaccruing loans have been excluded from total average
loans and categorized in noninterest-earning assets.
The Savannah Bancorp, Inc. and Subsidiaries
Average Balance Sheet and Rate/Volume Analysis -
First Nine Months 2007 and 2006
Taxable-Equivalent
Average Balance Average Rate Interest (a)
-------------------------------- ---------------
YTD YTD YTD YTD YTD YTD Vari-
9/30/07 9/30/06 9/30/07 9/30/06 9/30/07 9/30/06 Ance
---------------------------------------------------------------------
($ in thousands) (%) ($ in thousands)
Assets
Interest-bearing
$ 6,246 $ 4,652 5.24 4.77 deposits $ 245 $ 166 $ 79
Investments -
56,146 47,540 4.99 4.42 taxable 2,095 1,571 524
Investments -
2,107 2,513 7.23 7.45 non-taxable 114 140 (26)
Federal funds
10,928 11,710 5.21 5.02 sold 426 440 (14)
Loans held for
1,510 9,742 7.44 6.94 sale 84 506 (422)
742,703 645,598 8.01 7.77 Loans (b) 44,468 37,527 6,941
----------------- ---------------------
Total interest
819,640 721,755 7.74 7.47 earning assets 47,432 40,350 7,082
------------ ---------------------
Noninterest-
35,696 34,827 earning assets
-----------------
$855,336 $756,582 Total assets
=================
Liabilities and equity
Deposits
$114,477 $ 91,856 2.05 1.20 NOW accounts $ 1,752 $ 824 $928
Savings
18,301 19,356 1.00 0.99 accounts 137 144 (7)
Money market
162,753 132,957 4.37 3.59 accounts 5,324 3,568 1,756
CDs, $100M or
125,933 102,138 5.35 4.53 more 5,038 3,464 1,574
74,866 81,930 4.83 3.77 CDs, broker 2,706 2,311 395
Other time
121,651 103,322 5.03 4.24 deposits 4,577 3,277 1,300
----------------- ---------------------
Total interest-
bearing
617,981 531,559 4.23 3.42 deposits 19,534 13,588 5,946
FHLB advances -
9,454 16,584 5.19 4.92 long-term 367 610 (243)
Short-term
49,416 33,863 5.11 4.89 borrowings 1,889 1,239 650
Subordinated
10,310 10,310 8.16 7.81 debt 629 602 27
----------------- ---------------------
Total interest-
bearing
687,161 592,316 4.36 3.62 liabilities 22,419 16,039 6,380
------------ ---------------------
Noninterest-
91,527 96,201 bearing deposits
6,792 7,490 Other liabilities
Shareholders'
69,856 60,575 equity
-----------------
Liabilities and
$855,336 $756,582 equity
=================
Interest rate
3.38 3.85 spread
============
Net interest
4.08 4.50 margin
============
Net interest
income $25,013 $24,311 $ 702
=====================
Net earning
$132,479 $129,439 assets
=================
Average
$709,508 $627,760 deposits
=================
Average cost
3.68 2.89 of deposits
============
Average loan to
105% 103% deposit ratio
=================
(a) The taxable equivalent adjustment results from tax exempt income
less non-deductible TEFRA interest expense and was $117 $119 in
the first nine months 2007 and 2006, respectively.
(b) Average nonaccruing loans have been excluded from total average
loans and categorized in noninterest-earning assets.