Savannah Bancorp Reports Fourth Quarter and Annual Results

SAVANNAH, Ga., Jan. 28, 2011 (GLOBE NEWSWIRE) -- The Savannah Bancorp, Inc. (Nasdaq:SAVB) reported a net loss for the fourth quarter 2010 of $1,876,000 compared to net income of $762,000 in the fourth quarter 2009. Net loss per diluted share was 26 cents in the fourth quarter of 2010 compared to net income per diluted share of 13 cents in 2009. Net loss for 2010 was $3,989,000 compared to net income of $929,000 in 2009. Net loss per diluted share was 60 cents in 2010 compared to net income per diluted share of 16 cents in 2009. The decline in 2010 earnings results primarily from a higher provision for loan losses, lower gain on sale of securities and gain on hedges, partially offset by higher net interest income. Pretax earnings before the provision for loan losses and gain/loss on sale of securities and foreclosed assets were $15,765,000 in 2010 versus $14,596,000 in 2009. Core earnings were $4,448,000 in the fourth quarter 2010 compared to $3,835,000 in 2009.

Total assets increased 1.6 percent to $1.07 billion at December 31, 2010, up $16 million from $1.05 billion a year earlier. Loans totaled $827 million compared to $884 million one year earlier, a decrease of 6.5 percent. Deposits totaled $924 million and $885 million at December 31, 2010 and 2009, respectively, an increase of 4.4 percent. Shareholders' equity was $85.8 million at December 31, 2010 compared to $79.0 million at December 31, 2009. The Company's total capital to risk-weighted assets ratio was 12.29 percent at December 31, 2010, which exceeds the 10 percent required by the regulatory agencies to maintain well-capitalized status.

John C. Helmken II, President and CEO, said, "In the fourth quarter, we had an opportunity to exit several nonperforming relationships and though the short term impact of those actions resulted in our quarterly loss, the actions allowed us to resolve several significant problem assets. While there seems to be a growing sentiment, both regionally and locally, that the economy has turned the corner, it is only appropriate that we move some of these nonperforming assets in the event the bottom that we are sensing is false. Additionally, as we have done throughout the year, our discipline of reappraising collateral and OREO again contributed to some of our changes to earnings."

The allowance for loan losses was $20,350,000, or 2.46 percent of total loans at December 31, 2010 compared to $17,678,000 or 2.00 percent of total loans a year earlier. Nonperforming assets were $49,099,000 or 4.60 percent of total assets at December 31, 2010 compared to $42,444,000 or 4.04 percent at December 31, 2009. For 2010, net charge-offs were $18,348,000 compared to $8,687,000 for 2009. The provision for loan losses was $21,020,000 in 2010 compared to $13,065,000 in 2009. The higher provision for loan losses was primarily due to real estate-related charge-offs and continued weakness in the Company's local real estate markets. Fourth quarter 2010 net charge-offs were $5,894,000 compared to net charge-offs of $1,762,000 for the same period in 2009. The provision for loan losses for the fourth quarter of 2010 was $6,725,000 compared to $2,560,000 for 2009.

Helmken continued, "Our strategic and operational direction remains sound. As stated above, our pre-tax, pre-provision earnings allow us to continue to aggressively deal with asset quality and real estate values with only a nominal impact on capital. Our capital ratios remain very strong with a leverage ratio of 8.44 percent and total capital to risk-weighted assets of 12.29 percent. Net interest income for 2010 was the highest in our Company's 20 year history. Our fourth quarter net interest income of $8.8 million is the highest recorded in the last eight quarters. Noninterest expense, which was elevated in the third quarter in part due to our acquisition of the deposits of First National Bank, is down to a more acceptable level of $6.7 million. However, there is more work to be done there and we are well into that process.

We continue to do many things well but they are overshadowed by our portfolio losses. Our branches continue to do an outstanding job of gathering low cost deposits as is evidenced by an improved deposit mix and a net interest margin that was up to 3.57 percent in the fourth quarter. Our commercial group is bringing in new loan relationships even as we reduce our concentrations of construction and development loans. Wealth management continues to shine with the strong performance of Minis & Co. and growth in the customers served by The Savannah Bank's Trust division. We continue to be in a 'do business' mode at The Savannah Bancorp."

Net interest income increased $1,262,000, or 3.9 percent, in 2010 versus 2009. The net interest margin decreased 3 basis points to 3.43 percent in 2010, while average interest-earning assets increased $44 million. Net interest income increased $518,000, or 6.2 percent, to $8,833,000 in the fourth quarter 2010 versus the fourth quarter 2009. Fourth quarter net interest margin increased to 3.57 percent in 2010 as compared to 3.47 percent in 2009, primarily because the Company continued to reduce its cost of funds in 2010. The net interest margin increased 55 basis points on a linked quarter basis from the 3.02 percent margin for the third quarter 2010. The Company received $174 million in cash when it acquired the deposits and certain assets of First National Bank, Savannah ("First National") in an FDIC-assisted transaction in June, 2010. This excess liquidity decreased the net interest margin significantly in the third quarter 2010.

Noninterest income declined $1,511,000, or 17 percent, in 2010 versus 2009. The decline was primarily due to $871,000 lower gain on hedges and $1,511,000 lower gain on sale of securities partially offset by $248,000 higher trust and asset management fees and $678,000 higher other operating income. Noninterest income decreased $913,000, or 34 percent, in the fourth quarter of 2010 versus the same period in 2009 due to a $1,123,000 lower gain on the sale of securities, partially offset by $249,000, or 77 percent, higher other operating income. In the fourth quarter 2010, the Company sold its 50 percent interest in a parking lot that resulted in a $255,000 gain included in other operating income.

Noninterest expense for 2010 was flat compared to 2009. In 2010, noninterest expense included approximately $600,000 of expenses related to the purchase of First National. Noninterest expense decreased $587,000, or 8.1 percent, to $6,701,000 in the fourth quarter 2010 compared to the same period in 2009. FDIC deposit insurance increased $72,000, or 19 percent, while loss on sale of foreclosed assets decreased $702,000, or 55 percent, to $567,000. In addition, fourth quarter 2010 noninterest expense included approximately $250,000 of expenses related to the purchase of First National. The Company closed three branches of the former First National in the fourth quarter.

The Savannah Bancorp, Inc. ("SAVB" or "Company"), a bank holding company for The Savannah Bank, N.A., Bryan Bank & Trust (Richmond Hill, Georgia), and Minis & Co., Inc., is headquartered in Savannah, Georgia and began operations in 1990. SAVB has eleven branches in Coastal Georgia and South Carolina. Its primary businesses include loan, deposit, trust, asset management, and mortgage origination services provided to local customers.

Forward-Looking Statements

This press release contains statements that constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements identified by words or phrases such as "potential," "opportunity," "believe," "expect," "anticipate," "current," "intention," "estimate," "assume," "outlook," "continue," "seek," "plans," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" or similar expressions. These statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. There can be no assurance that these transactions will occur or that the expected benefits associated therewith will be achieved. A number of important factors could cause actual results to differ materially from those contemplated by our forward-looking statements in this press release.  Many of these factors are beyond our ability to control or predict. These factors include, but are not limited to, those found in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.

A printable PDF format of this entire Annual Earnings Release may be obtained from the Corporate Website at www.savb.com under the "SEC Filings and More" link and then "Latest Earnings Release". 

Quarterly Market Values of Common Shares

The Company's common stock was sold in an initial public offering on April 10, 1990. It is traded on the NASDAQ Global Market under the symbol SAVB. The quarterly high, low and closing stock trading prices for 2010 and 2009 are listed below. There were approximately 630 holders of record of Company Common Stock and, according to information available to the Company, approximately 1,150 additional shareholders in street name through brokerage accounts at December 31, 2010.