Surrey Bancorp Reports First Quarter Net Income of $1,987,375

4/26, 2:00 PM (Source: GlobeNewswire)

MOUNT AIRY, N.C., April 26, 2021 (GLOBE NEWSWIRE) -- Surrey Bancorp (the “Company”) (Pink Sheets: SRYB), the holding company for Surrey Bank & Trust (the “Bank”), today reported earnings for the first quarter of 2021.

For the quarter ended March 31, 2021, net income totaled $1,987,375 or $0.48 per fully diluted common share, compared with $1,056,012 or $0.25 per fully diluted common share earned during the first quarter of 2020.

The increase in earnings primarily results from the sale of the Bank’s wholly owned insurance agency, SB&T Insurance. The sale of assets resulted in a noninterest income gain of $858,778.

Net interest income increased 6.2 percent from $3,192,503 in the first quarter of 2020 to $3,392,180 in 2021 even though net interest income yields declined. The increase is due to the recognition of loan origination fees from the Small Business Administration’s Paycheck Protection Program (“PPP”). PPP origination fees totaling $302,694 were recognized in the first quarter of 2021. The PPP did not begin until the second quarter of 2020. The fee recognition was due to the amortization, forgiveness, and payoff of the PPP loans in the first quarter of 2021. PPP loans totaling $6,751,267 were paid off in the first quarter of 2021.The net interest margin decreased from 4.19 percent in the first quarter of 2020 to 3.24 percent in the first quarter of 2021 due to a general decrease in interest rates and a change in earning asset mix. Higher yielding loans made up 77.8 percent of average interest earning assets in the first quarter of 2020 as opposed to 60.5 percent in the first quarter of 2021. Loan yields, supported by the PPP income recognition also increased slightly from 5.49 percent in 2020 to 5.50 percent in 2021. Income from investments decreased due to the general decrease in interest rates. Investment interest income decreased from $263,637 in the first quarter of 2020 to $59,880 in 2021, a 77.3 percent decrease. The cost of funds decreased from 0.48 percent in the first quarter of 2020 to 0.16 in the first quarter of 2021. The decrease in deposit cost was due to rate decreases and noninterest-bearing deposits making up a higher percentage of average deposits in 2021. Average noninterest bearing deposits increased from 31.3 percent of total average deposits in the first quarter of 2020 to 36.5 percent of total average deposits in 2021.

The provision for loan losses decreased from $108,063 in the first quarter of 2020 to a provision recapture of $70,830 in 2021. This change is due to an increase in loan guarantees due to the PPP program. Total guaranteed loans at March 31, 2021 increased $27,204,873 compared to total guaranteed loans at March 31, 2020. The guaranteed portion amounted to 30.0 percent of total loans at March 31, 2021 compared to 20.4 percent of total loans at March 31, 2020.

Noninterest income increased from $700,832 in the first quarter of 2020 to $1,420,337 during the same period in 2021. The increase is due to the aforementioned gain on the sale of SB&T Insurance. Noninterest expenses decreased 4.1 percent from $2,429,160 in the first quarter of 2020, to $2,329,009 in 2021 This decrease was primarily due to the general expense reduction from the sale of the insurance agency.

The allowance for loan loss reserves was $4,846,331 or 1.89 percent of total loans as of March 31, 2021. Non-performing assets were 0.09 percent of total assets at March 31, 2021, compared to 0.13 percent on that date in 2020. At March 31, 2021 the allowance equals 342 percent of impaired and non-performing assets, net of government guarantees.

Total assets as of March 31, 2021 were $469,698,272, an increase of 37.4 percent from $341,786,270 reported as of March 31, 2020. Total deposits were $413,254,998 at quarter-end 2021, a 43.4 percent increase from the $288,142,832 reported at the end of the first quarter of 2020. Net loans increased to $251,443,715 at the end of the first quarter of 2021, compared to $239,531,513, as of March 31, 2020, a 5.0 percent increase.

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, 393 CC Camp Road in Elkin and 1096 Main Street in North Wilkesboro, North Carolina and 940 Woodland Drive in Stuart, Virginia.

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 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)
             
 March 31
2021 
 December 31
2020 
 March 31
2020 
 (unaudited)     (unaudited) 
Total assets$469,698  $431,064  $341,786 
Total loans   256,217     258,812   243,813 
Investments   194,265     152,986   77,794 
Deposits   413,255     374,443   288,143 
Stockholders’ equity   51,839     50,329   48,580 
Non-performing assets to total assets   0.09%    0.09%  0.13%
Loans past due more than 90 days to total loans   0.00%    0.03%  0.00%
Allowance for loan losses to total loans   1.89%    1.90%  1.76%
Tangible book value per common share$12.07  $11.68  $11.34 


CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts) 
           
  For the Three Months
Ended March 31,
  2021  2020
Interest income$3,541  $3,519 
Interest expense 149   327 
Net interest income 3,3922   3,192 
Provision for loan losses (71)  108 
Net interest income after provision for loan losses 3,463629   3,084 
Noninterest income 1,420   701 
Noninterest expense 2,329   2,429 
Net income before taxes 2,554   1,356 
Provision for income taxes 567   300 
Net income 1,987   1,056 
Basic net income per share0.48  $0.25 
Diluted net income per share0.48  $0.25 
Return on average total assets1 1.80%  1.27%
Return on average total equity1 15.49%  8.74%
Yield on average interest earning assets 3.39%  4.62%
Cost of funds 0.16%  0.48%
Net yield on average interest earning assets 3.24%  4.19%
Overhead efficiency ratio 48.39%  62.39%
Net charge-offs/average loans 0.00%  -0.02%

1 Annualized for all periods presented.

For additional information, please contact.
Ted Ashby, CEO, or Mark Towe, CFO        
(336) 783-3900 


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