Surrey Bancorp (the "Company") (PINKSHEETS: SRYB), the holding
company for Surrey Bank & Trust, today reported earnings for
the third quarter of 2012.
For the quarter ended September 30, 2012, net income totaled
$774,843 or $0.19 per fully diluted share, compared with $561,713
or $0.13 per fully diluted common share earned during the third
quarter of 2011.
Earnings for the three months ended September 30, 2012, are 37.9
percent higher compared to the same period in 2011. The increase
results from a reduction in the provision for loan losses. The
provision for loan losses decreased from $188,118 in the third
quarter of 2011 to a provision of $41,384 in 2012. This decrease is
due to a reduction in specific reserves associated with impaired
loans during the third quarter of 2012 compared to the same quarter
of 2011. Specific reserves on impaired loans decreased from
$1,881,314 at September 30, 2011, to $528,682 at September 30,
2012. Much of the decrease is a result of charging off these
impaired loans. The charge off of these problem assets resulted in
an overall increase in the credit quality of the loan portfolio.
The reserve was further impacted by an increase in loans carrying
government guarantees. At September 30, 2012, the guaranteed
portion of loans equaled 22.3 percent of total loans compared to
20.7 percent at September 30, 2011. Net interest income increased
from $2,263,325 in the third quarter of 2011 to $2,347,448 in 2012.
A reduction in the cost of deposits from the third quarter of 2011
to 2012 contributed to the margin improvement. Asset yields
increased from 5.09 percent to 5.32 percent from 2011 to 2012 due
to the change in earning asset mix from lower yielding deposits in
other banks to higher yielding loans. The cost of funds continued
to decrease from 1.05 percent in the third quarter of 2011 to 0.85
percent in the third quarter of 2012. Noninterest income decreased
2.6 percent in 2012, primarily due to a reduction in service
charges on deposit accounts. Noninterest expenses decreased 6.7
percent from $1,773,472 in the third quarter of 2011, to $1,654,467
in 2012. This decrease is primarily attributable to a $130,000
litigation settlement the Company paid in the third quarter of 2011
compared to no expense in 2012.
Loan loss reserves were $3,733,177 or 2.0 percent of total loans
as of September 30, 2012. Non-performing assets were 1.95 percent
of total assets at September 30, 2012, compared to 3.17 percent on
that date in 2011. At September 30, 2012, the allowance for loan
loss reserves equals 90 percent of impaired and non-performing
assets, net of government guarantees.
Total assets were $226,231,381 as of September 30, 2012, a
decrease of 1.21 percent from $229,007,209 reported as of September
30, 2011. Total deposits were $183,465,913 at quarter-end 2012, a
2.57 percent decrease from the $188,299,291 reported at the end of
the third quarter of 2011. Net loans increased 4.04 percent to
$183,238,489, compared to $176,116,287 at September 30, 2011.
Net income for the nine months ended September 30, 2012, was
$1,806,481or $0.43 per diluted share, compared to $1,825,081, or
$0.48 per diluted share, for the same period in 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.
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)
September 30, December 31, September 30,
2012 2011 2011
------------- ------------ -------------
(unaudited) (unaudited)
Total assets $ 226,231 $ 224,728 $ 229,007
Total loans 186,972 179,345 180,745
Investments 23,059 34,784 37,866
Deposits 183,466 183,938 188,299
Borrowed funds 7,750 8,100 8,100
Stockholders' equity 31,950 30,227 30,382
Non-performing assets to total
assets 1.95% 2.20% 2.06%
Loans past due more than 90 days
to total loans 0.00% 0.03% 1.42%
Allowance for loan losses to
total loans 2.00% 2.16% 2.56%
Book value per common share $ 7.93 $ 7.45 $ 8.24
SURREY BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Interest income $ 2,750 $ 2,780 $ 8,237 $ 8,192
Interest expense 403 517 1,275 1,633
Net interest income 2,347 2,263 6,962 6,559
Provision for loan losses 41 188 780 67
Net interest income after
provision for loan losses 2,306 2,075 6,182 6,492
Noninterest income 583 598 1,815 1,768
Noninterest expense 1,6543 1,773 5,131 5,306
Net income before taxes 1,235 900 2,866 2,954
Provision for income taxes 460 338 1,060 1,129
Net income 775 562 1,8066 1,825
Preferred stock dividend
declared 46 46 137 137
Net income available to common
shareholders $ 729 $ 516 $ 1,669 $ 1,688
Basic net income per share(1) $ 0.21 $ 0.16 $ 0.47 $ 0.48
Diluted net income per share(1) $ 0.19 $ 0.15 $ 0.43 $ 0.44
Return on average total
assets(2) 1.40% 0.99% 1.08% 1.09%
Return on average total
equity(2) 9.78% 7.43% 7.75% 8.22%
Yield on average interest
earning assets 5.32% 5.09% 5.30% 5.14%
Cost of funds 0.85% 1.05% 0.90% 1.14%
Net yield on average interest
earning assets 4.54% 4.15% 4.48% 4.12%
Overhead efficiency ratio 56.45% 61.97% 58.46% 63.72%
Net charge-offs
(recoveries)/average loans 0.06% 0.02% 0.52% 1.18%
(1) The 2011 figures are adjusted for a common stock split distributed in
the form of a 10% common stock dividend declared in November 2011.
(2) Annualized for all periods presented.
For additional information, please contact Ted Ashby CEO or Mark
Towe CFO (336) 783-3900
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