Surrey Bancorp Reports 2021 Earnings of $5,103,575

Rhea-AI Summary

Surrey Bancorp (SRYB) reported Q4 2021 net income of $1,179,807 ($0.28 per share), down from $1,498,414 ($0.36 per share) in Q4 2020. This decline is attributed to an 11% drop in net interest income, primarily due to reduced loan origination fees from the PPP. The year-end net income increased to $5,103,575 ($1.22 per share), a rise of 11.5% compared to 2020, supported by a decreased provision for loan losses and lower noninterest expenses. Total assets rose to $480,535,388, with total deposits up 12.7% to $422,053,497, while net loans declined 3.1%.

Positive

• Net income for 2021 increased by 11.5% year-over-year.
• Total assets grew 11.5% to $480,535,388.
• Total deposits rose 12.7% to $422,053,497.
• Provision for loan losses decreased from $689,853 in 2020 to $387,359 in 2021.
• Noninterest income slightly increased by 1.2% to $2,950,954.

Negative

• Q4 2021 net income decreased by 21.3% compared to Q4 2020.
• Net interest income fell by 11% due to decreased PPP fees.
• Net interest margin declined from 3.62% to 2.88% year-over-year.
• Noninterest income decreased significantly without one-time gains.

MOUNT AIRY, N.C., Feb. 28, 2022 (GLOBE NEWSWIRE) -- Surrey Bancorp (the “Company”, Pink Sheets: SRYB), the holding company for Surrey Bank & Trust, today reported earnings for the fourth quarter of 2021 and the full year.

For the quarter ended December 31, 2021, net income totaled $1,179,807 or $0.28 per fully diluted share, compared with $1,498,414 or $0.36 per fully diluted common share earned during the fourth quarter of 2020.
The decrease in earnings results from a decrease in net interest income.

Net interest income decreased by 11.0 percent from $3,638,909 in the fourth quarter of 2020 to $3,237,515 for the same period in 2021 as net interest income yields declined. The decrease is due to the reduction of loan origination fees from the Small Business Administration’s Paycheck Protection Program (“PPP”). PPP origination fees totaling $184,751 were recognized in the fourth quarter of 2021 compared to $773,100 recognized in the fourth quarter of 2020. The large decrease in fee recognition was due to the winding down of PPP loans in the fourth quarter of 2021. PPP loans totaling $24,775,780 were paid off in the fourth quarter of 2020 while only $3,331,485 in PPP loans were paid off in the fourth quarter of 2021. The net interest margin decreased from 3.62 percent in the fourth quarter of 2020 to 2.88 percent for the same period in 2021. The cost of funds decreased from 0.21 percent in the fourth quarter of 2020 to 0.09 percent in the fourth quarter of 2021. The provision for loan losses decreased from $125,666 in the fourth quarter of 2020 to $61,428 in 2021. Noninterest income decreased from $804,890 in the fourth quarter of 2020 to $488,331in 2021. This decrease was primarily attributable to the reduction in insurance commission due to the sale of SB&T Insurance in the first quarter of 2021. Insurance commissions in the fourth quarter of 2020 amounted to $238,179. Noninterest expenses decreased from $2,441,728 in the fourth quarter of 2020 to $2,142,849 in the fourth quarter of 2021. This decrease is attributable to salaries and employee benefits associated with SB&T Insurance.

Net income for the year ended December 31, 2021, was $5,103,575 or $1.22 per diluted share outstanding, compared to a $4,578,161 or $1.10 per diluted share outstanding, for the year ended December 31, 2020. Earnings for the year ended December 31, 2021, are approximately 11.5 percent higher than for the same period in 2020. The increase in earnings results from a decrease in the provision for loan losses and a decrease in noninterest expenses. The provision for loan losses decreased from a provision of $689,853 in 2020 to a provision of $387,359 in 2021. This decrease is due to the estimated economic impact of the pandemic lessening in 2021 as the federal government added stimulus to the economy. Noninterest expenses decreased 4.7 percent, from $9,196,654 in 2020, to $8,763,536 in 2021. Most of the decrease results from a reduction in salaries and benefits associated with SB&T Insurance. Noninterest income increased 1.2 percent to $2,950,954 in 2021, compared to $2,914,901 reported for the year ended December 31, 2020. However, noninterest income does include a one-time gain of $844,397 from the sale of the Bank’s insurance agency, SB&T Insurance. Without this gain, other noninterest income items decreased by $808,344 or 27.7 percent. The gain offsets the reduction in insurance commissions since the agency was sold in January of 2021.

Net interest income decreased 0.16 percent from $12,793,558 for the year ended 2020 to $12,772,925 at year-end 2021. The decrease in net interest income is the result of the sudden decrease in interest rates due to the COVID 19 pandemic. The yield on interest earning assets decreased from 3.79 percent to 3.01 percent from 2020 to 2021. While there was a small increase in the yield on loans from 5.12 percent in 2020 to 5.16 percent in 2021, average loans outstanding decreased during 2021 to $250,457,032 compared to $262,873,842 during 2020. The yield on deposits in other banks decreased from 0.33 percent in 2020 to 0.12 percent in 2021. The cost of funds also decreased in 2021 from 0.38 percent in 2020 to 0.12 percent due to general rate decreases.

Total assets were $480,535,388 as of December 31, 2021, an increase of 11.5 percent from $431,064,407 reported as of December 31, 2020. Total deposits were $422,053,497 at year-end 2021, an increase of 12.7 percent from the $374,442,946 reported at the end of year of 2020. Net loans decreased 3.1 percent to $246,148,457 on December 31, 2021, compared to $253,906,500 as of December 31, 2020.

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, and 2050 Rockford Street in Mount Airy and a limited-service branch at 1280 West Pine 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 regarding 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.

SURREY BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)

		December 31, 2021					December 31, 2020
		(unaudited)
Total assets		$	480,535				$	431,064
Total loans			251,191					258,812
Investments			209,296					152,986
Deposits			422,053					374,443
Stockholders’ equity			52,959					50,329
Non-performing assets to total assets			0.58		%			0.09		%
Loans past due more than 90 days to total loans			0.00		%			0.03		%
Allowance for loan losses to total loans			2.11		%			1.90		%
Tangible book value per common share		$	12.28				$	11.68

SURREY BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)

		For the Three Months Ended December 31,									For the Twelve Months Ended December 31,
		2021				2020					2021				2020
Interest income		$	3,333			$	3,834				$	13,246				$	13,888
Interest expense			96				195					473					1,094
Net interest income			3,237				3,639					12,773					12,794
Provision for loan losses			61				126					387					690
Net interest income after provision for loan losses			3,176				3,513					12,386					12,104
Noninterest income			488				805					2,951					2,915
Noninterest expense			2,143				2,442					8,764					9,197
Net income before taxes			1,521				1,876					6,573					5,822
Provision for income taxes			341				378					1,469					1,244
Net income			1,180				1,499					5,104					4,578
Basic net income per share		$	0.28			$	0.36				$	1.22				$	1.10
Diluted net income per share		$	0.28			$	0.36				$	1.22				$	1.10
Return on average total assets			1.00	%			1.40		%			1.11	%				1.18		%
Return on average total equity			8.92	%			11.87		%			9.75	%				9.28		%
Yield on average interest earning assets			2.99	%			3.82		%			3.01	%				3.79		%
Cost of funds			0.09	%			0.21		%			0.12	%				0.33		%
Net yield on average interest earning assets			2.88	%			3.62		%			2.90	%				3.49		%
Overhead efficiency ratio			57.51	%			54.95		%			55.73	%				58.55		%
Net charge-offs/average loans			0.00	%			(0.02	)	%			0.00	%				(0.04	)	%

  ¹        Annualized for all periods presented.

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

FAQ

What were Surrey Bancorp's earnings for Q4 2021?

Surrey Bancorp reported Q4 2021 earnings of $1,179,807, or $0.28 per share.

How did Surrey Bancorp's total assets change in 2021?

Total assets increased by 11.5% to $480,535,388 as of December 31, 2021.

What was the reason for the decrease in net interest income for SRYB?

Net interest income decreased primarily due to reduced loan origination fees from the PPP.

What was Surrey Bancorp's annual net income for 2021?

The annual net income for Surrey Bancorp in 2021 was $5,103,575, or $1.22 per share.

Did Surrey Bancorp experience an increase in total deposits in 2021?

Yes, total deposits rose by 12.7% to $422,053,497 in 2021.