Surrey Bancorp Reports Third Quarter Net Income of $842,609
MOUNT AIRY, N.C., Nov. 02, 2021 (GLOBE NEWSWIRE) -- Surrey Bancorp (the “Company”), (Pink Sheets: SRYB), the holding company for Surrey Bank & Trust (the “Bank”), today reported earnings for the third quarter of 2021.
For the quarter ended September 30, 2021, net income totaled $842,609 or $0.20 per fully diluted share, compared to $1,052,172 or $0.25 per fully diluted common share earned during the third quarter of 2020.
Net interest income decreased from $3,084,814 in the third quarter of 2020 to $2,872,567 in the third quarter of 2021. Interest income decreased from $3,360,362 in the third quarter of 2020 to $2,978,081 in the third quarter of 2021. The decrease is primarily due to a reduction in loan fees recognized by the Bank related to the Bank’s participation in the Small Business Administration’s Paycheck Protection Program (PPP). As a result, the overall yield on interest earning assets decreased from 3.51 percent to 2.72 percent from the third quarter of 2020 to the third quarter of 2021. In addition, a change in the earning asset mix reduced interest income. Higher yielding loans made up 72.3 percent of average interest earning assets in the third quarter of 2020 as opposed to 55.7 percent in the third quarter of 2021. Conversely, lower yielding interest-bearing deposits in other banks made up 37.6 percent of average interest earning assets in the third quarter of 2021 compared to 24.8 percent in the third quarter of 2020. The cost of funds decreased from 0.32 percent in the third quarter of 2020 to 0.10 percent in 2021. Interest expense decreased from $275,548 in the third quarter of 2020 to $105,514 in the third quarter of 2021 due to general rate decreases.
The provision for loan losses increased slightly from $196,073 in the third quarter of 2020 to $208,145 in 2021, a $12,072 increase. This is due to an increase in loan balances, net of government guarantees, from the end of the third quarter of 2020 compared to the end of third quarter of 2021. Loan loss reserves were $5,222,616 or 2.06 percent of total loans as of September 30, 2021. Non-performing assets were 0.60 percent of total assets at September 30, 2021, compared to 0.11 percent on that date in 2020. At September 30, 2021, the allowance for loan loss reserves equals 332 percent of impaired and non-performing assets, net of government guarantees.
Noninterest income decreased from $619,965 in the third quarter of 2020 to $541,222 in 2021, a 12.7 percent decrease. The decrease is due to the reduction of insurance commissions due to the sale of the Bank’s insurance subsidiary, SB&T Insurance, in the first quarter of 2021. Insurance commissions amounted to $216,490 in the third quarter of 2020 with no commission income in the third quarter of 2021. An increase in debit and credit card interchange fees helped offset the reduction in insurance commission income. Noninterest expenses decreased 1.9 percent from $2,163,334 in the third quarter of 2020, to $2,122,151 in 2021. This decrease was primarily due to decreases in salaries and benefits related to SB&T insurance.
Total assets were $473,754,080 as of September 30, 2021, an increase of 11.4 percent from $425,396,540 reported as of September 30, 2020. Total deposits were $415,241,266 at quarter-end 2021, a 12.8 percent increase from the $368,066,800 reported at the end of the third quarter of 2020. Net loans decreased to $248,542,066, or 10.5 percent, compared to $277,613,456, at September 30, 2020.
Net income for the nine months ended September 30, 2021, was $3,923,768 or $0.94 per diluted share, compared to $3,079,747 or $0.74 per diluted share, for the same period in 2020. The increase is primarily due to the gain on the sale of SB&T Insurance in the first quarter of 2021.
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, and 2050 Rockford Street in Mount Airy and a limited-service branch at 1280 West Pine 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.
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 with regard to 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.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)
September 30, | December 31, | September 30, | |||||||||
(unaudited) | (audited) | (unaudited) | |||||||||
Total assets | $ | 473,754 | $ | 431,064 | $ | 425,397 | |||||
Total loans | 253,786 | 258,812 | 282,328 | ||||||||
Investments | 199,377 | 152,986 | 124,282 | ||||||||
Deposits | 415,241 | 374,443 | 368,067 | ||||||||
Stockholders’ equity | 52,903 | 50,329 | 49,698 | ||||||||
Non-performing assets to total assets | 0.60 | % | 0.09 | % | 0.11 | % | |||||
Loans past due more than 90 days to total loans | 0.00 | % | 0.03 | % | 0.02 | % | |||||
Allowance for loan losses to total loans | 2.06 | % | 1.90 | % | 1.67 | % | |||||
Tangible book value per common share | $ | 12.28 | $ | 11. | 68 | $ | 11.50 | ||||
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)
For the Three Months | For the Nine Months | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Interest income | $ | 2,978 | $ | 3,360 | $ | 9,913 | $ | 10,054 | |||||||
Interest expense | 106 | 275 | 378 | 900 | |||||||||||
Net interest income | 2,872 | 3,085 | 9,535 | 9,154 | |||||||||||
Provision for loan losses | 208 | 196 | 326 | 564 | |||||||||||
Net interest income after provision for loan losses | 2,664 | 2,889 | 9,209 | 8,590 | |||||||||||
Noninterest income | 541 | 619 | 2,463 | 1,989 | |||||||||||
Noninterest expense | 2,122 | 2,163 | 6,621 | 6,633 | |||||||||||
Net income before taxes | 1,083 | 1,345 | 5,051 | 3,946 | |||||||||||
Provision for income taxes | 241 | 293 | 1,127 | 866 | |||||||||||
Net income | 842 | 1,052 | 3,924 | 3,080 | |||||||||||
Basic net income per share | $ | 0.20 | $ | 0.25 | $ | 0.94 | $ | 0.74 | |||||||
Diluted net income per share | $ | 0.20 | $ | 0.25 | $ | 0.94 | $ | 0.74 | |||||||
Return on average total assets 1 | 0.73 | % | 1.03 | % | 1.72 | % | 1.10 | % | |||||||
Return on average total equity 1 | 6.46 | % | 8.49 | % | 10.02 | % | 8.40 | % | |||||||
Yield on average interest earning assets | 2.72 | % | 3.51 | % | 3.04 | % | 3.81 | % | |||||||
Cost of funds | 0.10 | % | 0.32 | % | 0.13 | % | 0.38 | % | |||||||
Net yield on average interest earning assets | 2.60 | % | 3.23 | % | 2.92 | % | 3.47 | % | |||||||
Overhead efficiency ratio | 62.16 | % | 58.39 | % | 55.18 | % | 59.53 | % | |||||||
Net charge-offs (recoveries)/average loans | 0.00 | % | 0.01 | % | 0.00 | % | (0.01) | % | |||||||
1 Annualized for all periods presented.
For additional information, please contact
Ted Ashby, CEO, or Mark Towe, CFO
(336) 783-3900
