Surrey Bancorp (the "Company") (PINKSHEETS: SRYB), the holding
company for Surrey Bank & Trust, today reported earnings for
the fourth quarter of 2012 and the full year.
For the quarter ended December 31, 2012, net income totaled
$976,399 or $0.23 per fully diluted share, compared with $422,530
or $0.10 per fully diluted common share earned during the fourth
quarter of 2011.
The increase in earnings results from a reduction in the
provision for loan losses.
The provision for loan losses decreased from $676,527 in the
fourth quarter of 2011 to a recapture of $309,080 for the same
period in 2012. The decrease to the reserves in 2012 is primarily
due to the improved credit quality of the loan portfolio and a
reduction in loans outstanding, primarily in the fourth quarter of
2012. Overall loans outstanding decreased 1.48 percent from
$179,344,963 at December 31, 2011 to $176,687,329 at December 31,
2012. Additionally, a higher concentration of government guaranteed
loans, as a percentage of total loans, had an impact on the loan
loss provision. Approximately $55,100,000 of the total loans
outstanding at December 31, 2012, carry government guarantees which
reduce the Bank's credit exposure. The guaranteed portion of these
loans amounts to approximately $43,118,000, or 24.4 percent of
total loans outstanding. This compares to guarantees of
$38,918,000, or 21.7 percent of loans outstanding at December 31,
2011.
Net interest income increased 2.7 percent from $2,261,242 in the
fourth quarter of 2011 to $2,321,194 for the same period in 2012,
as deposit costs continue to fall. Noninterest income decreased
slightly to $798,359, compared to $803,301 reported for the quarter
ended December 31, 2011.
Noninterest expenses increased 3.8 percent, from $1,725,065 in
the fourth quarter of 2011, to $1,790,262 in the fourth quarter of
2012. This increase is attributable to higher payroll and
professional fee costs.
For the year ended December 31, 2012, the Company reported net
income of $2,782,880, or $0.67 per fully diluted common share. This
represents a 23.8 percent increase in profitability from year-end
2011, when the Company reported earnings of $2,247,611, or $0.54
per fully diluted common share. The increase in net income was
attributable to an increase in net interest income and to a
reduction in the loan loss provision. Net interest income increased
5.3 percent from $8,819,997 in 2011 to $9,283,410 for the 2012
year-end as asset yields increased and the cost of deposits
decreased. The provision for loan losses decreased from $743,717 in
2011 to $471,292 in 2012 due to a reduction in loans and increased
loan guarantee enhancements. Noninterest income increased 1.6
percent to $2,613,627 compared to $2,571,479 reported for the year
ended December 31, 2011, as subsidiary insurance commission revenue
increased. Noninterest expenses decreased 1.6 percent, from
$7,031,362 in 2011, to $6,921,581 in 2012 absent the litigation
settlement paid in 2011.
Loan loss reserves were $3,403,098 or 1.93 percent of total
loans as of December 31, 2012. Non-performing assets were 1.84
percent of total assets at December 31, 2012, compared to 2.20
percent on that date in 2011. At December 31, 2012, the allowance
for loan loss reserves equals 77 percent of impaired and
non-performing assets, net of government guarantees compared to 71%
at the end of 2011.
Total assets were $229,912,432 as of December 31, 2012, an
increase of 2.3 percent from $224,727,764 reported as of December
31, 2011. Total deposits were $187,823,037 at year-end 2012, an
increase of 2.1 percent from the $183,938,376 reported at the end
of year of 2011. Net loans decreased 1.07 percent to $173,577,565,
compared to $175,446,206 as of December 31, 2011.
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, North Carolina, and 940
Woodland Drive in Stuart, Virginia. The Bank has opened a Loan
Production Office at 1328 North Bridge Street in Elkin, North
Carolina.
Surrey Bank & Trust is engaged in the sale of insurance
through its wholly owned subsidiary, SB&T Insurance, located at
199 North Renfro Street in Mount Airy. The Bank also owns Surrey
Investment Services, Inc., which provides full-service brokerage
and investment advice through an association with LPL Financial,
and Freedom Finance, LLC, a sales finance company located at 165
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 involve risks and uncertainties that could cause actual
results to differ materially, including without limitation, the
effects of future economic conditions, governmental fiscal and
monetary policies, legislative and regulatory changes, the risks of
changes in interest rates and the effects of competition.
Additional factors that could cause actual results to differ
materially are discussed in Surrey Bancorp's recent filings with
the Securities and Exchange Commission, included but not limited to
its Annual Report on Form 10-K and its other periodic reports.
SURREY BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)
December 31, December 31,
2012 2011
------------ ------------
(unaudited)
Total assets $ 229,912 $ 224,728
Total loans 176,981 179,327
Investments 37,318 34,784
Deposits 187,823 183,938
Borrowed funds 7,750 8,100
Stockholders' equity 32,237 30,227
Non-performing assets to total assets 1.84% 2.20%
Loans past due more than 90 days to total loans 0.39% 0.03%
Allowance for loan losses to total loans 1.93% 2.16%
Book value per common share $ 8.01 $ 7.45
SURREY BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
-------------------- ----------------------
2012 2011 2012 2011
--------- --------- ---------- ----------
Interest income $ 2,717 $ 2,744 $ 10,954 $ 10,936
Interest expense 396 483 1,671 2,116
Net interest income 2,321 2,261 9,283 8,820
Provision for loan losses (309) 676 471 744
Net interest income after
provision for loan losses 2,630 1,585 8,812 8,076
Noninterest income 798 803 2,614 2,571
Noninterest expense 1,790 1,725 6,922 7,031
Net income before taxes 1,638 663 4,504 3,616
Provision for income taxes 662 241 1,721 1,369
Net income 976 422 2,783 2,247
Preferred stock dividend
declared 46 46 183 183
Net income available to common
shareholders $ 930 $ 376 $ 2,600 $ 2,064
Basic net income per share $ 0.26 $ 0.11 $ 0.73 $ 0.58
Diluted net income per share $ 0.23 $ 0.10 $ 0.67 $ 0.54
Return on average total assets
(1) 1.69% 0.74% 1.23% 1.00%
Return on average total equity
(1) 12.04% 5.54% 8.86% 7.53%
Yield on average interest
earning assets 5.06% 5.02% 5.24% 5.11%
Cost of funds 0.81% 0.99% 0.87% 1.10%
Net yield on average interest
earning assets 4.32% 4.13% 4.44% 4.12%
Overhead efficiency ratio 57.39% 56.29% 58.18% 61.72%
Net charge-offs/average loans 0.01% 0.78% 0.53% 1.97%
(1) Annualized for all periods presented.
For additional information, please contact Ted Ashby CEO or Mark
Towe CFO (336) 783-3900
Surrey Bancorp (PK) (USOTC:SRYB)
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