SAVB The Savannah Bancorp, Inc. (MM)

The Savannah Bancorp (NasdaqNM: SAVB) reported net income for the second quarter 2005 of $2,184,000, up 71 percent from $1,277,000 in the second quarter 2004. Net income per diluted share was 51 cents compared to 30 cents per diluted share in the second quarter of 2004, an increase of 70 percent. For the second quarter 2005, return on average equity was 20.51 percent, return on average assets was 1.29 percent and the efficiency ratio was 52.20 percent. For the first six months of 2005, net income was $3,965,000, a 64 percent increase over $2,417,000 in the first six months of 2004. Earnings per diluted share for the first six months of 2005 were 93 cents, an increase of 63 percent over earnings per diluted share of 57 cents over the same period in 2004. For the first six months of 2005, return on average equity was 19.10 percent, return on average assets was 1.21 percent and the efficiency ratio was 53.70 percent. Prior year per share amounts have been restated to reflect the effect of a 5-for-4 stock split distributed in the form of a 25 percent stock dividend in December 2004. Net interest income increased $1,927,000, or 41 percent, in the second quarter 2005 over the same period in 2004. Earning assets growth of 22 percent and nine consecutive prime rate increases of 25 basis points each over the prior 12 months resulted in significantly higher net interest margins for the second quarter and the first six months of 2005. The Company's efficiency ratio improved because more revenues are being realized from investments made in previous years in markets, personnel and technology. Loans, excluding loans held for sale, totaled $572 million at June 30, 2005, compared with $444 million one year earlier, an increase of 29 percent. Deposits totaled $588 million at June 30, 2005 and $449 million at June 30, 2004, an increase of 31 percent. As of June 30, 2005, demand, savings and money market accounts had increased 20 percent over the prior year as a result of continued focus on core deposit growth. Total assets increased 21 percent to $689 million at June 30, 2005, up from $568 million a year earlier. Nonperforming assets increased to $733,000, or 0.13 percent of total loans, at June 30, 2005 from $644,000, or 0.12 percent of loans, at March 31, 2005 and $510,000, or 0.11 percent of total loans, at June 30, 2004. Net loan losses for the first half of 2005 were $7,000. Provision for credit losses for the first six months of 2005 was $820,000 and $875,000 for the first six months of 2004. At June 30, 2005, Harbourside Mortgage Company, a division of The Savannah Bank, N.A., had total loans and loans held for sale of $116 million, up from $49 million a year earlier. Harbourside earnings for the second quarter of 2005 were $341,000 and $478,000 for the first six months of 2005. This compares with second quarter 2004 earnings of $11,000 and a loss of $80,000 for the first six months of 2004. In a quarterly letter to shareholders, G. Mike Odom, Jr., Chief Executive Officer, and John C. Helmken II, President, stated, "Excellent loan and deposit growth, net interest margin improvement and enhanced efficiency in both of our banks continued in the second quarter resulting in another record level of earnings and growth. We enjoy strong economic conditions in each of our markets and our expansion plans are on schedule. The commitment and vision of our directors, the focus of our management team and the efforts of our staff continue to yield excellent returns to shareholders and positive banking experiences for our customers." On July 7th, the Company announced that it intends to organize Harbourside Community Bank, a new federal stock thrift institution, in partnership with a group of directors from Hilton Head Island and Bluffton, South Carolina as the Company's third banking subsidiary. Subject to regulatory approval, this new bank, which is an expansion of the Company's Harbourside Mortgage division, is scheduled to open in the fall of 2005. Today, the Board of Directors approved a regular quarterly cash dividend of 13.5 cents per share payable on August 15, 2005 to shareholders of record on July 29, 2005. The Savannah Bancorp, Inc. (SAVB), a bank holding company for The Savannah Bank, N.A. and Bryan Bank & Trust (Richmond Hill, Georgia), is headquartered in Savannah, Georgia. Harbourside Mortgage Company, a division of The Savannah Bank, N.A., is a loan production office on Hilton Head Island, SC that began business on October 1, 2003. SAVB began operations in 1990. Its primary businesses include deposit, credit, trust 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. -0- *T The Savannah Bancorp, Inc. and Subsidiaries Second Quarter Financial Highlights June 30, 2005 and 2004 (Unaudited) (thousands, except per share data) Balance Sheet Data at June 30 2005 2004 % Change ---------------------------------------------------------------------- Total assets $ 689,271 $ 568,225 21 Interest-earning assets 659,759 541,420 22 Loans 572,317 444,372 29 Allowance for credit losses 7,202 5,843 23 Nonperforming assets 733 510 44 Deposits 588,249 449,368 31 Interest-bearing liabilities 545,340 449,870 21 Shareholders' equity 43,619 37,726 16 Allowance for credit losses to total loans 1.26% 1.31% (4.2) Nonperforming assets to total loans and other real estate owned 0.13% 0.11% 16 Loan to deposit ratio 97.29% 98.89% (1.6) Equity to assets 6.33% 6.64% (4.7) Tier 1 capital to risk-weighted assets 9.39% 9.63% (2.5) Total capital to risk-weighted assets 10.64% 10.89% (2.3) Book value per share $ 10.40 $ 9.17 13 Outstanding shares 4,194 4,112 2.0 Market value per share $ 30.95 $ 22.60 37 Performance Ratios ---------------------------------------------------------------------- For the Second Quarter 2005 2004 % Change ---------------------------------------------------------------------- Net income $ 2,184 $ 1,277 71 Return on average assets 1.29% .94% 38 Return on average equity 20.51% 13.65% 50 Net interest margin 4.16% 3.71% 12 Efficiency ratio 52.20% 59.94% (13) Per share data: Net income - basic $ 0.52 $ 0.31 69 Net income - diluted $ 0.51 $ 0.30 70 Dividends $ 0.135 $ 0.132 2.3 Average shares: Basic 4,177 4,109 1.7 Diluted 4,275 4,214 1.4 ---------------------------------------------------------------------- For the First Six Months 2005 2004 % Change ---------------------------------------------------------------------- Net income $ 3,965 $ 2,417 64 Return on average assets 1.21% 0.93% 30 Return on average equity 19.10% 13.00% 47 Net interest margin 4.12% 3.78% 9.0 Efficiency ratio 53.70% 59.98% (10) Per share data: Net income - basic $ 0.95 $ 0.59 61 Net income - diluted $ 0.93 $ 0.57 63 Dividends $ 0.27 $ 0.26 3.8 Average shares: Basic 4,163 4,105 1.4 Diluted 4,266 4,205 1.5 *T -0- *T The Savannah Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets June 30, 2005 and 2004 (Unaudited) ---------------------------------------------------------------------- (Amounts in thousands, except share data) June 30 ------------------------ 2005 2004 ---------- --------- Assets Cash and due from banks $ 16,380 $ 14,813 Interest-bearing deposits 14,944 6,275 Federal funds sold 4,673 18,896 Investment securities, available for sale 39,856 45,868 Loans held for sale 28,120 26,277 Loans, net of allowance for credit losses of $7,202 in 2005 and $5,843 in 2004 565,115 438,529 Premises and equipment, net 4,762 4,713 Other real estate owned - 500 Bank-owned life insurance 5,449 5,246 Other assets 9,972 7,108 ---------------------------------------------------------------------- Total assets $ 689,271 $ 568,225 ====================================================================== Liabilities Deposits: Noninterest-bearing $ 95,890 $ 77,270 Interest-bearing 492,359 372,098 ---------------------------------------------------------------------- Total deposits 588,249 449,368 Securities sold under repurchase agreements 15,974 25,019 Other short-term borrowings 6,009 25,551 FHLB long-term advances 20,688 21,016 Subordinated debt 10,310 6,186 Other liabilities 4,422 3,359 ---------------------------------------------------------------------- Total liabilities 645,652 530,499 ---------------------------------------------------------------------- Shareholders' Equity Common stock, par value $1 per share: authorized 79,860,000 shares; issued 4,194,036 and 3,290,223 in 2005 and 2004 4,194 3,290 Preferred stock, par value $1: authorized 10,000,000 shares - - Capital surplus 25,066 25,054 Retained earnings 14,383 9,315 Treasury stock, at cost, 267 and 226 shares in 2005 and 2004 (4) (4) Net unrealized (losses) gains on available for sale securities (20) 71 ---------------------------------------------------------------------- Total shareholders' equity 43,619 37,726 ---------------------------------------------------------------------- Total liabilities and shareholders' equity $ 689,271 $ 568,225 ====================================================================== *T -0- *T The Savannah Bancorp, Inc. and Subsidiaries Consolidated Statements of Income Second Quarter and First Six Months, 2005 and 2004 (Unaudited) ---------------------------------------------------------------------- (thousands, except per share data) For the Quarter For the Six Months Ended Ended June 30, June 30, ------------------ ------------------ 2005 2004 2005 2004 ---------------------------------------------------------------------- Interest income $10,197 $ 6,687 $19,375 $12,911 Interest expense 3,526 1,943 6,563 3,676 ---------------------------------------------------------------------- Net Interest Income 6,671 4,744 12,812 9,235 Provision for credit losses 315 415 820 875 ---------------------------------------------------------------------- Net interest income after provision for credit losses 6,356 4,329 11,992 8,360 ---------------------------------------------------------------------- Noninterest Income Trust fees 117 106 233 214 Service charges on deposit accounts 427 399 814 791 Gain on sale of mortgage loans, net 276 333 530 475 Gain on sale other real estate owned, net (24) 0 (24) 91 Other income 252 204 489 409 ---------------------------------------------------------------------- Total noninterest income 1,048 1,042 2,042 1,980 ---------------------------------------------------------------------- Noninterest Expenses Salaries and employee benefits 2,291 2,052 4,634 3,961 Occupancy and equipment expense 551 459 1,063 906 Data processing expense 298 266 599 525 Other operating expenses 892 691 1,679 1,335 ---------------------------------------------------------------------- Total noninterest expenses 4,032 3,468 7,975 6,727 ---------------------------------------------------------------------- Income before provision for income taxes 3,372 1,903 6,059 3,613 Provision for income taxes 1,188 626 2,094 1,196 ---------------------------------------------------------------------- Net Income $ 2,184 $ 1,277 $ 3,965 $ 2,417 ====================================================================== Per Share: Net income - basic $ 0.52 $ 0.31 $ 0.95 $ 0.59 ====================================================================== Net income - diluted $ 0.51 $ 0.30 $ 0.93 $ 0.57 ====================================================================== *T -0- *T The Savannah Bancorp, Inc. and Subsidiaries Historical Trend Data - Five Years and Five Quarters --------------------------------------------------------------------- The following tables show per share information for the most recent five years and five quarters. Share and per share information have been restated to reflect the effect of a 5-for-4 stock split with a record date of November 26, 2004, and a distribution date of December 20, 2004. (thousands, except per share data) For the Most Recent Five Years ------------------------------ 2004 2003 2002 2001 2000 -------- -------- -------- -------- -------- Net income $ 5,736 $ 4,644 $ 4,508 $ 4,358 $ 4,292 Average shares Basic 4,109 4,103 4,100 4,068 4,090 Diluted 4,209 4,181 4,160 4,140 4,156 Net income per share ($) Basic 1.40 1.13 1.10 1.07 1.05 Diluted 1.36 1.11 1.08 1.05 1.03 Dividends per share 0.52 0.51 0.49 0.45 0.38 Market price per common share ($) High $ 27.60 $ 23.20 $ 17.68 $ 18.18 $ 14.38 Low 20.14 15.18 14.18 12.40 11.24 Close 27.05 23.20 15.25 14.84 12.73 At December 31 ($) Assets 617,341 476,865 437,598 376,183 344,096 Shareholders' equity 40,071 36,771 34,756 32,071 28,656 Book value per share 9.74 8.96 8.48 7.86 7.03 Outstanding shares 4,112 4,103 4,101 4,079 4,076 Key Ratios (%) Return on equity 15.04 12.99 13.50 14.27 16.23 Return on assets 1.03 1.05 1.14 1.20 1.36 Net interest margin 3.86 3.91 4.10 4.13 4.77 Efficiency ratio 58.47 59.40 59.17 57.11 56.04 For the Most Recent Five Quarters (Unaudited) --------------------------------------------- 2005 2004 ----------------- ------------------------- Second First Fourth Third Second Quarter Quarter Quarter Quarter Quarter -------- -------- -------- -------- --------- Net income $ 2,184 $ 1,781 $ 1,775 $ 1,544 $ 1,277 Average shares Basic 4,177 4,153 4,112 4,113 4,109 Diluted 4,275 4,259 4,225 4,204 4,214 Net income per share ($) Basic 0.523 0.429 0.432 0.375 0.311 Diluted 0.511 0.418 0.420 0.367 0.303 Dividends per share 0.135 0.135 0.132 0.132 0.132 Market price per common share ($) High 33.46 28.85 27.60 22.60 23.28 Low 27.00 24.01 21.99 20.14 20.21 Close 30.95 28.85 27.05 22.16 22.60 At quarter-end ($) Assets 689,271 673,252 617,341 580,016 568,225 Shareholders' equity 43,619 41,369 40,071 39,016 37,726 Book value per share 10.40 9.96 9.74 9.49 9.17 Outstanding shares 4,194 4,153 4,112 4,113 4,113 Performance ratios (%) Return on equity 20.51 17.71 17.84 15.96 13.65 Return on assets 1.29 1.12 1.16 1.06 0.94 Net interest margin 4.16 4.08 4.00 3.82 3.71 Efficiency ratio 52.20 55.30 55.94 58.51 59.94 Additional financial highlights are available at www.savb.com *T