Surrey Bancorp (the "Company") (PINKSHEETS: SRYB), the holding
company for Surrey Bank & Trust, today reported earnings for
the fourth quarter of 2011 and the full year.
For the quarter ended December 31, 2011, net income totaled
$422,530 or $0.10 per fully diluted share, compared with $151,670
or $0.02 per fully diluted common share earned during the fourth
quarter of 2010.
The increase in earnings results from a reduction in the
provision for loan losses.
The provision for loan losses decreased from $1,163,170 in the
fourth quarter of 2010 to $676,527 for the same period in 2011.
Over the past two years, weaknesses in the economy had necessitated
an increase in reserves associated with impaired loans. During
2011, the level of impaired loans stabilized. Several loans with
reserves were written-off during the fourth quarter of 2011. The
reserve was further impacted by an increase in loans carrying
government guarantees. At December 31, 2011, the guaranteed portion
of loans equaled 21.9 percent of total loans, compared to 18.1
percent at December 31, 2010.
Net interest income increased 2.1 percent from $2,215,689 in the
fourth quarter of 2010 to $2,261,242 for the same period in 2011.
The continued reduction of deposit costs during the fourth quarter
was largely responsible for the improvement in the margin.
Noninterest income increased by 8.9 percent to $803,301, compared
to $737,470 reported for the quarter ended December 31, 2010. This
increase was primarily due to increased revenue from the Company's
insurance and investment subsidiaries. Noninterest expenses
increased 9.8 percent, from $1,571,162 in the fourth quarter of
2010, to $1,725,065 in the fourth quarter of 2011. This increase is
due to the expenses relating to salaries, employee benefits and
professional fees.
For the year ended December 31, 2011, the Company reported net
income of $2,247,611, or $0.54 per fully diluted common share. This
represents an 81.5 percent increase in profitability from year-end
2010, when the Company reported earnings of $1,238,018, or $0.27
per fully diluted common share. The increase in net income was
again attributable to a reduction in the provision for loan losses.
Net interest income increased 1.6 percent from $8,678,096 in 2010
to $8,819,997 for the 2011 year-end. The reduction of deposit costs
during the year was largely responsible for the improvement in the
margin. The provision for loan losses decreased from $3,003,748 in
2010 to $743,717 in 2011. The change in the loan loss provision
results from a stabilization of impaired loans during 2011.
Noninterest income decreased 6.1 percent to $2,571,479 compared to
$2,739,125 reported for the year ended December 31, 2010. This
decrease was due to a reduction in revenues from the sale of
government guaranteed loans. No loans were sold in 2011, while 2010
included gains on sales of $244,924. Noninterest expenses increased
8.5 percent, from $6,481,542 in 2010, to $7,031,362 in 2011. This
increase was primarily due to increases in salaries, employee
benefits, costs associated with foreclosed assets and from damages
paid in the settlement of a lawsuit arising from the ordinary
operations of the Company. The Company has no other liability under
the settlement agreement.
Loan loss reserves were $3,880,581 or 2.16 percent of total
loans as of December 31, 2011. Non-performing assets were 2.20
percent of total assets at December 31, 2011, compared to 3.19
percent on that date in 2010. At December 31, 2011, the allowance
for loan loss reserves equals 82 percent of impaired and
non-performing assets, net of government guarantees.
Total assets were $224,727,764 as of December 31, 2011, an
increase of 5.2 percent from $213,652,484 reported as of December
31, 2010. Total deposits were $183,938,376 at year-end 2011, an
increase of 5.7 percent from the $173,960,073 reported at the end
of year of 2010. Net loans increased 2.1 percent to $175,446,206,
compared to $171,794,247 as of December 31, 2010.
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.
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,
2011 2010
------------ ------------
(unaudited)
Total assets $ 224,728 $ 213,652
Total loans 179,327 178,478
Investments 34,784 26,448
Deposits 183,938 173,960
Borrowed funds 8,100 9,450
Stockholders' equity 30,227 28,644
Non-performing assets to total assets 2.20% 3.19%
Loans past due more than 90 days to total loans 0.03% 0.00%
Allowance for loan losses to total loans 2.16% 3.74%
Book value per common share (1) $ 7.45 $ 7.01
SURREY BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)
For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
------------------ ------------------
2011 2010 2011 2010
-------- -------- -------- --------
Interest income $ 2,744 $ 2,814 $ 10,936 $ 11,150
Interest expense 483 598 2,116 2,472
Net interest income 2,261 2,216 8,820 8,678
Provision for loan losses 676 1,163 744 3,004
Net interest income after provision
for loan losses 1,585 1,053 8,076 5,674
Noninterest income 803 737 2,571 2,739
Noninterest expense 1,725 1,571 7,031 6,481
Net income before taxes 663 219 3,616 1,932
Provision for income taxes 241 67 1,369 694
Net income 422 152 2,247 1,238
Preferred stock dividend declared 46 107 183 301
Net income available to common
shareholders $ 376 $ 45 $ 2,064 $ 937
Basic net income per share (1) $ 0.11 $ 0.01 $ 0.58 $ 0.27
Diluted net income per share (1) $ 0.10 $ 0.02 $ 0.54 $ 0.27
Return on average total assets (2) 0.74% 0.27% 1.00% 0.59%
Return on average total equity (2) 5.54% 2.07% 7.53% 4.48%
Yield on average interest earning
assets 5.02% 5.33% 5.11% 5.34%
Cost of funds 0.99% 1.26% 1.10% 1.32%
Net yield on average interest
earning assets 4.13% 4.19% 4.12% 4.15%
Overhead efficiency ratio 56.29% 53.20% 61.72% 56.77%
Net charge-offs/average loans 0.78% 0.15% 1.97% 0.55%
(1) The 2010 figures are adjusted for a common stock split distributed in
the form of a 10% common stock dividend declared on November 28, 2011.
(2) Annualized for all periods presented.
For additional information, please contact Ted Ashby CEO Mark
Towe CFO (336) 783-3900
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