MOUNT AIRY, N.C., March 01, 2019 (GLOBE NEWSWIRE) -- Surrey Bancorp (the “Company”, Pink Sheets: SRYB), the holding company for Surrey Bank & Trust, today reported earnings for the fourth quarter of 2018 and the full year.
For the quarter ended December 31, 2018, net income totaled $1,579,148 or $0.38 per fully diluted share, compared with $315,321 or $0.08 per fully diluted common share earned during the fourth quarter of 2017. The increase in earnings results from an increase in net interest income and a reduction in the provision for income taxes due to the rate reductions in the Tax Cuts and Jobs Act.
Net interest income increased by 6.5 percent from $2,938,607 in the fourth quarter of 2017 to $3,129,027 for the same period in 2018. This increase is due to loan growth. Overall the net interest margin decreased from 4.40 percent in the fourth quarter of 2017 to 4.33 percent for the same period in 2018 due to a change in the earning asset mix. Asset yields decreased from 4.73 percent in 2017 to 4.71 percent in 2018. Loan yields fell from 5.52 percent in the fourth quarter of 2017 to 5.33 percent during same quarter in 2018. This decrease was offset by loan growth as average loans outstanding increased 6.2 percent from $219,285,285 in 2017 to $232,913,357 in 2018. Yields on interest bearing bank balances increased from 1.16 percent in the fourth quarter of 2017 to 2.03 percent in 2018. Average interest-bearing bank balances increased from $42,148,188 in the fourth quarter of 2017 to $44,413,421 in 2018. The cost of funds increased slightly from 0.37 percent in the fourth quarter of 2017 to 0.42 percent in the fourth quarter of 2018 despite a general increase in interest rates during 2018. These rate increases were offset by an increase in noninterest-bearing demand deposits. Average demand deposits increased from $71,865,655 in the fourth quarter of 2017 to $85,170,915 in the fourth quarter of 2018. Average demand deposits amounted to 32.8 percent of total deposits in the fourth quarter of 2018 compared to 29.6 percent in the fourth quarter of 2017. The provision for loan losses increased from $48,679 in the fourth quarter of 2017 to $161,407 in 2018. Noninterest income increased from $822,353 in the fourth quarter of 2017 to $890,133 in 2018. This increase was attributable to the sale of the brokerage business of the Bank’s subsidiary, Surrey Investment Services, Inc. in the fourth quarter of 2018. Noninterest expenses decreased from $2,300,711 in the fourth quarter of 2017 to $2,058,820 in the fourth quarter of 2018. This decrease is attributable to a general decrease in operating expenses in 2018.
For the year ended December 31, 2018, the Company reported net income of $5,101,935 or $1.22 per fully diluted common share. This represents a 68.5 percent increase in profitability from year-end 2017, when the Company reported earnings of $3,026,907, or $0.73 per fully diluted common share. The increase in earnings results from an increase in net interest income and a reduction in the provision for income taxes due to the rate reductions in the Tax Cuts and Jobs Act. Net interest income increased 12.9 percent from $11,198,022 for the year ended 2017 to $12,648,070 at year-end 2018. This increase was due to the general increase in interest rates and loan growth. Noninterest income increased 0.7 percent to $2,705,441 in 2018, compared to $2,686,128 reported for the year ended December 31, 2017. The provision for loan losses increased from a recapture of $44,866 in 2017 to a provision of $370,032 in 2018. The increase is due to specific reserves associated with impaired loans. Noninterest expenses increased 6.3 percent, from $8,351,960 in 2017, to $8,874,074 in 2018. Most of the increase results from cost associated with the opening of a full-service branch in North Wilkesboro, North Carolina in December of 2017.
Loan loss reserves were $4,194,608 or 1.81 percent of total loans as of December 31, 2018. Non-performing assets were 1.43 percent of total assets at December 31, 2018, compared to 0.16 percent on that date in 2017. At December 31, 2018, the allowance for loan loss reserves equals 146.2 percent of impaired and non-performing assets, net of government guarantees compared to 147.9 percent at the end of 2017.
Total assets were $309,150,095 as of December 31, 2018, an increase of 2.9 percent from $300,509,941 reported as of December 31, 2017. Total deposits were $259,378,103 at year-end 2018, an increase of 2.3 percent from the $253,655,262 reported at the end of year of 2017. Net loans increased 3.6 percent to $228,422,181 at December 31, 2018, compared to $220,395,992 as of December 31, 2017.
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 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, 2018 | December 31, 2017 | ||||||||||
| (unaudited) | |||||||||||
| Total assets | $ | 309,150 | $ | 300,510 | |||||||
| Total loans | 232,617 | 224,244 | |||||||||
| Investments | 55,428 | 55,816 | |||||||||
| Deposits | 259,378 | 253,655 | |||||||||
| Stockholders’ equity | 45,150 | 42,046 | |||||||||
| Non-performing assets to total assets | 1.43 | % | 0.16 | % | |||||||
| Loans past due more than 90 days to total loans | 0.01 | % | 0.04 | % | |||||||
| Allowance for loan losses to total loans | 1.81 | % | 1.72 | % | |||||||
| Tangible book value per common share | $ | 10.59 | $ | 10.38 | |||||||
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, | |||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Interest income | $ | 3,405 | $ | 3,162 | $ | 13,646 | $ | 12,096 | ||||||||||
| Interest expense | 276 | 223 | 998 | 898 | ||||||||||||||
| Net interest income | 3,129 | 2,939 | 12,648 | 11,198 | ||||||||||||||
| Provision for loan losses | 161 | 49 | 370 | (45 | ) | |||||||||||||
| Net interest income after provision for loan losses | 2,968 | 2,890 | 12,278 | 11,243 | ||||||||||||||
| Noninterest income | 890 | 822 | 2,705 | 2,686 | ||||||||||||||
| Noninterest expense | 2,059 | 2,301 | 8,874 | 8,352 | ||||||||||||||
| Net income before taxes | 1,799 | 1,411 | 6,109 | 5,577 | ||||||||||||||
| Provision for income taxes | 220 | 1,096 | 1,007 | 2,550 | ||||||||||||||
| Net income | 1,579 | 315 | 5,102 | 3,027 | ||||||||||||||
| Preferred stock dividend declared | - | 46 | 6 | 183 | ||||||||||||||
| Net income available to common shareholders | $ | 1,579 | $ | 269 | $ | 5,096 | $ | 2,844 | ||||||||||
| Basic net income per share | $ | 0.38 | $ | 0.08 | $ | 1.27 | $ | 0.80 | ||||||||||
| Diluted net income per share | $ | 0.38 | $ | 0.08 | $ | 1.22 | $ | 0.73 | ||||||||||
| Return on average total assets (1) | 2.04 | % | 0.43 | % | 1.69 | % | 1.07 | % | ||||||||||
| Return on average total equity (1) | 14.10 | % | 2.92 | % | 11.69 | % | 7.15 | % | ||||||||||
| Yield on average interest earning assets | 4.71 | % | 4.73 | % | 4.89 | % | 4.62 | % | ||||||||||
| Cost of funds | 0.42 | % | 0.37 | % | 0.39 | % | 0.38 | % | ||||||||||
| Net yield on average interest earning assets | 4.33 | % | 4.40 | % | 4.53 | % | 4.28 | % | ||||||||||
| Overhead efficiency ratio | 51.23 | % | 55.62 | % | 57.80 | % | 60.15 | % | ||||||||||
| Net charge-offs/average loans | 0.00 | % | 0.00 | % | 0.01 | % | -0.10 | % | ||||||||||
(1) Annualized for all periods presented.
For additional information, please contact
Ted Ashby, CEO, or Mark Towe, CFO
(336) 783-3900