SAVB The Savannah Bancorp, Inc. (MM)

The Savannah Bancorp, Inc. (Nasdaq: SAVB) reported net income of $2,351,000 in the first quarter 2006, up 32 percent from $1,781,000 in the first quarter 2005. Net income per diluted share was 50 cents in the first quarter 2006 compared to 42 cents per share in the first quarter 2005, an increase of 19 percent. The earnings increase is primarily attributable to growth in interest-earning assets and higher net interest margin. Average outstanding diluted shares increased 455,000, or 11 percent, in the first quarter 2006 compared with the first quarter 2005. The increase in average shares outstanding resulted from the private placement sale of 397,000 shares in August, 2005 and additional shares being issued upon exercise of stock options. Return on average equity was 16.14 percent, return on average assets was 1.29 percent and the efficiency ratio was 54.5 percent in the first quarter 2006. Total assets increased 13 percent to $764 million at March 31, 2006, up from $673 million a year earlier. Loans, excluding loans held for sale, were $641 million compared to $553 million one year earlier, an increase of 16 percent. Deposits totaled $630 million at March 31, 2006 and $570 million at March 31, 2005, an increase of 11 percent. Core deposits increased 17 percent in the first quarter of 2006 versus 2005. Brokered deposits decreased to $91 million at March 31, 2006 from $134 million at March 31, 2005. Net interest income increased 29 percent in the first quarter due to an increase in average interest-earning assets of $86 million or 14 percent and continued increases in short-term interest rates. First quarter net interest margin improved to 4.59 percent in 2006 from 4.07 percent in 2005. Noninterest income increased 7.8 percent as a result of higher trust income and other operating income. Growth in noninterest income was moderated by rising short-term interest rates which negatively impacted service charges on commercial deposit accounts and mortgage loan originations. Noninterest expense increased $954,000 or 24 percent in the first quarter 2006 compared to the first quarter 2005. First quarter 2006 noninterest expense includes approximately $198,000 of pre-opening expenses related to the opening of Harbourside Community Bank, the company's new federal stock savings bank which opened on Hilton Head Island on March 1, 2006. Other cost increases included additional staffing and occupancy costs related to Harbourside, Sarbanes-Oxley 404 compliance costs and expansion of staffing in the credit administration, accounting and internal audit areas. Nonperforming assets were $2,093,000 or 0.33 percent of total loans at March 31, 2006 compared to $644,000 or 0.12 percent of total loans at March 31, 2005. First quarter net loan losses for 2006 were $0 compared to $1,000 in the first quarter 2005. Today, the Board of Directors declared a regular quarterly cash dividend of 14 cents per share, payable on May 22, 2006 to shareholders of record on April 28, 2006. The Savannah Bancorp, Inc. is a bank holding company with three banking subsidiaries, The Savannah Bank, N.A., Bryan Bank & Trust and Harbourside Community Bank. The company has five banking locations in Savannah, GA, one in Richmond Hill, GA and one on Hilton Head Island, SC. Comprehensive historical and current financial information on the Company is available on its corporate website at www.savb.com. -0- *T The Savannah Bancorp, Inc. and Subsidiaries First Quarter Financial Highlights March 31, 2006 and 2005 (thousands, except per share data) (Unaudited) ---------------------------------------------------------------------- Balance Sheet Data at March 31 2006 2005 % Change ---------------------------------------------------------------------- Total assets $764,087 $673,252 13 Interest-earning assets 729,403 646,411 13 Loans 641,376 552,879 16 Allowance for credit losses 8,228 6,895 19 Non-accruing loans 1,945 201 868 Loans past due 90 days - accruing 148 163 (9.2) Other real estate owned - 280 0.0 Deposits 629,981 569,789 11 Interest-bearing liabilities 601,630 542,648 11 Shareholders' equity 59,646 41,369 44 Allowance for credit losses to total loans 1.28% 1.25% 3.0 Nonperforming assets to total loans and OREO 0.33% 0.12% 180 Loan to deposit ratio 101.81% 97.03% 4.9 Equity to assets 7.81% 6.14% 27 Tier 1 capital to risk-weighted assets 11.26% 9.29% 21 Total capital to risk-weighted assets 12.51% 10.53% 19 Outstanding shares 4,607 4,153 11 Book value per share $ 12.95 $ 9.96 30 Market value per share $ 35.08 $ 28.85 22 Performance Data For the First Quarter -------------------------------------- Net income $ 2,351 $ 1,781 32 Return on average assets 1.29% 1.12% 16 Return on average equity 16.14% 17.71% (8.8) Net interest margin 4.59% 4.07% 13 Efficiency ratio 54.50% 55.30% (1.4) Per share data: Net income - basic $ .51 $ .43 19 Net income - diluted $ .50 $ .42 19 Dividends $ .140 $ .135 3.7 Average shares: Basic 4,607 4,153 11 Diluted 4,709 4,259 11 *T -0- *T The Savannah Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets March 31, 2006 and 2005 (Unaudited) (thousands, except share data) ---------------------------------------------------------------------- March 31, 2006 2005 ---------------------------------------------------------------------- Assets Cash and due from banks $ 15,343 $ 13,976 Federal funds sold 20,245 16,931 Interest-bearing deposits in banks 3,539 11,381 ---------------------------------------------------------------------- Cash and cash equivalents 39,127 42,288 Securities available for sale, at fair value (amortized cost of $50,121 in 2006 and $40,380 in 2005) 49,442 40,227 Loans held for sale 16,067 25,041 Loans, net of allowance for credit losses of $8,228 in 2006 and $6,895 in 2005 633,148 545,984 Premises and equipment, net 5,750 4,708 Other real estate owned - 280 Bank-owned life insurance 5,603 5,402 Other assets 14,950 9,322 ---------------------------------------------------------------------- Total assets $764,087 $673,252 ====================================================================== Liabilities Deposits Noninterest-bearing $ 96,645 $ 84,905 Interest-bearing demand 90,293 90,345 Savings 19,794 20,540 Money market accounts 130,132 91,415 Time deposits 293,117 282,584 ---------------------------------------------------------------------- Total deposits 629,981 569,789 Short-term borrowings 37,589 26,697 Federal Home Loan Bank advances - long-term 20,395 20,757 Subordinated debt to nonconsolidated subsidiaries 10,310 10,310 Other liabilities 6,166 4,330 ---------------------------------------------------------------------- Total liabilities 704,441 631,883 ---------------------------------------------------------------------- Shareholders' equity Common stock, par value $1 per share: authorized 20,000,000 shares; issued 4,607,475 and 4,153,632 shares in 2006 and 2005, respectively 4,607 4,154 Preferred stock, par value $1 per share: authorized 10,000,000 shares, none issued - - Additional paid-in capital 36,341 24,553 Retained earnings 19,977 12,760 Treasury stock, 267 in 2006 and 2005 (4) (4) Accumulated other comprehensive loss, net (1,275) (94) ---------------------------------------------------------------------- Total shareholders' equity 59,646 41,369 ---------------------------------------------------------------------- Total liabilities and shareholders' equity $764,087 $673,252 ====================================================================== *T -0- *T The Savannah Bancorp, Inc. and Subsidiaries Consolidated Statements of Income For The Quarters Ending March 31, 2006 and 2005 (Unaudited) (thousands, except per share data) Quarters Ended March 31, ---------------------------------------------------------------------- 2006 2005 ---------------------------------------------------------------------- Interest and fee income Interest and fees on loans $ 11,721 $ 8,214 Interest on loans held for sale 209 435 Interest on investment securities 508 405 Interest on deposits with banks 49 79 Interest on federal funds sold 124 45 ---------------------------------------------------------------------- Total interest and fee income 12,611 9,178 ---------------------------------------------------------------------- Interest expense Interest on deposits 3,892 2,418 Interest on other borrowings 555 369 Interest on FHLB advances 246 250 ---------------------------------------------------------------------- Total interest expense 4,693 3,037 ---------------------------------------------------------------------- Net interest income 7,918 6,141 Provision for credit losses 415 505 ---------------------------------------------------------------------- Net interest income after the provision for credit losses 7,503 5,636 ---------------------------------------------------------------------- Noninterest income Service charges on deposit accounts 376 387 Mortgage related income, net 248 254 Trust fees 159 116 Other operating income 289 237 ---------------------------------------------------------------------- Total noninterest income 1,072 994 ---------------------------------------------------------------------- Noninterest expense Salaries and employee benefits 2,692 2,343 Occupancy and equipment 652 512 Information technology 362 301 Other operating expense 1,191 787 ---------------------------------------------------------------------- Total noninterest expense 4,897 3,943 ---------------------------------------------------------------------- Income before income taxes 3,678 2,687 Income tax expense 1,327 906 ---------------------------------------------------------------------- Net income $ 2,351 $ 1,781 ====================================================================== Net income per share: Basic $ .51 $ .43 ====================================================================== Fully diluted $ .50 $ .42 ====================================================================== Average Shares Basic 4,607 4,153 Fully-diluted 4,709 4,259 Performance ratios Return on average equity 16.14% 17.71% Return on average assets 1.29% 1.12% Net interest margin 4.59% 4.07% Efficiency ratio 54.5% 55.3% Average equity 59,058 40,792 Average assets 736,674 645,326 Average interest-earning assets 703,438 617,226 *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 distribution date of December 20, 2004. (amounts in thousands) For the Most Recent Five Years ------------------------------ 2005 2004 2003 2002 2001 -------- -------- -------- -------- -------- Net income $ 9,040 $ 5,736 $ 4,644 $ 4,508 $ 4,358 Average shares Basic 4,317 4,109 4,103 4,100 4,068 Diluted 4,425 4,209 4,181 4,160 4,140 Net income per share ($) Basic 2.09 1.40 1.13 1.10 1.07 Diluted 2.04 1.36 1.11 1.08 1.05 Dividends per share 0.54 0.52 0.51 0.49 0.45 Market price per common share ($) High $ 37.50 $ 27.60 $ 23.20 $ 17.68 $ 18.18 Low 26.50 20.14 15.18 14.18 12.40 Close 35.48 27.05 23.20 15.25 14.84 At December 31 ($) Assets 717,901 617,341 476,865 437,598 376,183 Shareholders' equity 58,543 40,071 36,771 34,756 32,071 Book value per share 12.75 9.74 8.96 8.48 7.86 Outstanding shares 4,591 4,112 4,103 4,101 4,079 Performance Ratios (%) Return on equity 19.06 15.04 12.99 13.50 14.27 Return on assets 1.32 1.03 1.05 1.14 1.20 Net interest margin 4.25 3.86 3.91 4.10 4.13 Efficiency ratio 51.91 58.47 59.40 59.17 57.11 For the Most Recent Five Quarters (Unaudited) --------------------------------------------- 2006 2005 --------- --------------------------------------- First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter --------- --------- --------- --------- --------- Net income $ 2,351 $ 2,721 $ 2,354 $ 2,184 $ 1,781 Average shares Basic 4,607 4,591 4,346 4,177 4,153 Diluted 4,709 4,709 4,467 4,275 4,259 Net income per share ($) Basic 0.510 0.590 0.542 0.523 0.429 Diluted 0.500 0.580 0.527 0.511 0.418 Dividends per share 0.140 0.135 0.135 0.135 0.135 Market price per common share ($) High 36.97 37.50 34.54 33.46 28.85 Low 33.90 34.25 30.27 27.80 26.50 Close 35.08 35.48 34.50 30.95 28.85 At quarter-end ($) Assets 764,087 717,901 713,082 689,271 673,252 Shareholders' equity 59,646 58,543 56,696 43,619 41,369 Book value per share 12.95 12.75 12.35 10.40 9.96 Outstanding shares 4,607 4,591 4,591 4,194 4,153 Performance ratios (%) Return on equity 16.14 18.75 19.16 20.51 17.71 Return on assets 1.29 1.50 1.34 1.29 1.12 Net interest margin 4.59 4.48 4.28 4.16 4.08 Efficiency ratio 54.50 49.40 51.43 52.20 55.30 Additional financial highlights are available at www.savb.com *T