Surrey Bancorp Reports First Quarter Net Income of $1,487,503

Rhea-AI Summary

Surrey Bancorp (SRYB) reported its first quarter 2022 earnings with a net income of $1,487,503, or $0.36 per share, down from $1,987,375, or $0.48 per share, in Q1 2021. The decline is attributed to the previous year's sale of SB&T Insurance, which added $858,778 in noninterest income. Net interest income fell 3.6% to $3,271,453, and the net interest margin decreased to 2.86%. However, the company saw a provision recapture for loan losses of $662,572, a significant increase from $70,830 in 2021. Total assets increased by 5.2% to $494 million.

Positive

• Provision recapture for loan losses rose to $662,572 from $70,830 in Q1 2021.
• Total assets increased 5.2% to $494 million from $469.7 million year-over-year.
• Average investments increased significantly from $167.6 million in Q1 2021 to $216.4 million in Q1 2022.

Negative

• Net income decreased to $1,487,503 from $1,987,375 year-over-year.
• Net interest income fell 3.6% to $3,271,453 compared to Q1 2021.
• Net interest margin dropped to 2.86% from 3.24% in the previous year.

MOUNT AIRY, N.C., April 26, 2022 (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 2022.

For the quarter ended March 31, 2022, net income totaled $1,487,503 or $0.36 per fully diluted common share, compared with $1,987,375 or $0.48 per fully diluted common share earned during the first quarter of 2021.

The decrease in earnings primarily results from the 2021 first quarter 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 in 2021.

Net interest income decreased 3.6 percent from $3,392,180 in the first quarter of 2021 to $3,271,453 in 2022. The net interest margin decreased from 3.24 percent in the first quarter of 2021 to 2.86 percent in the first quarter of 2022 due to a general decrease in interest rates and a change in earning asset mix. Higher yielding loans made up 60.5 percent of average interest earning assets in the first quarter of 2021 as opposed to 53.3 percent in the first quarter of 2022. Loan yields decreased from 5.50 percent in 2021 to 5.35 percent in 2022. Income from investments increased due to an increase in average investments during the first quarter of 2022. Average investments increased from $167,580,924 during the first quarter of 2021 to $216,384,820 during the first quarter of 2022. Investment interest income increased from $59,880 in the first quarter of 2021 to $99,749 in 2022, a 66.6 percent increase. The cost of funds decreased from 0.16 percent in the first quarter of 2021 to 0.08 in the first quarter of 2022.

The provision recapture for loan losses increased from $70,830 in the first quarter of 2021 to a provision recapture of $662,572 in 2022. The 2022 recapture results from loan charge-off recoveries and a reduction in environmental factors related to the COVID 19 pandemic. Net recoveries in the first quarter of 2022 were $322,155, compared to $11,730 during the first quarter of 2021. The pandemic factors decreased due to reduced cases of the virus and the reduced impact the pandemic is having on the economy.

Noninterest income decreased from $1,420,337 in the first quarter of 2021 to $375,109 during the same period in 2022. The decrease is due to the aforementioned 2021 gain on the sale of SB&T Insurance. Noninterest expenses increased 2.5 percent from $2,329,009 in the first quarter of 2021, to $2,386,031 in 2022. This increase was primarily due to general price increases.

The allowance for loan loss reserves was $4,950,881 or 2.00 percent of total loans as of March 31, 2022. Non-performing assets were 0.55 percent of total assets at March 31, 2022, compared to 0.09 percent on that date in 2021. At March 31, 2022 the allowance equals 355 percent of impaired and non-performing assets, net of government guarantees.

Total assets as of March 31, 2022 were $494,022,235, an increase of 5.2 percent from $469,698,272 reported as of March 31, 2022. Total deposits were $434,188,899 at quarter-end 2022, a 5.1 percent increase from the $413,254,998 reported at the end of the first quarter of 2021. Net loans decreased to $242,854,867 at the end of the first quarter of 2022, compared to $251,443,715, as of March 31, 2021, a 3.4 percent decrease.

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 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 2022				December 31 2021				March 31 2021
		(unaudited)								(unaudited)
Total assets		$	494,022			$	480,535			$	469,698
Total loans			247,279				251,191				256,217
Investments			226,283				209,296				194,265
Deposits			434,189				422,053				413,255
Stockholders’ equity			54,102				52,959				51,839
Non-performing assets to total assets			0.55	%			0.58	%			0.09	%
Loans past due more than 90 days to total loans			0.00	%			0.00	%			0.00	%
Allowance for loan losses to total loans			2.00	%			2.11	%			1.89	%
Tangible book value per common share		$	12.56			$	12.28			$	12.07

CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share amounts)
				For the Three Months Ended March 31,
				2022			2021
Interest income			$	3,360			$	3,541
Interest expense				89				149
Net interest income				3,2712				3,392
Provision for loan losses				(663	)			(71	)
Net interest income after provision for loan losses				3,93466294				3,463
Noninterest income				375				1,420
Noninterest expense				2,386				2,329
Net income before taxes				1,923				2,554
Provision for income taxes				436				567
Net income				1,487				1,987
Basic net income per share			$	0.36			$	0.48
Diluted net income per share			$	0.36			$	0.48
Return on average total assets				1.20	%			1.80	%
Return on average total equity				11.02	%			15.49	%
Yield on average interest earning assets				2.94	%			3.39	%
Cost of funds				0.08	%			0.16	%
Net yield on average interest earning assets				2.86	%			3.24	%
Overhead efficiency ratio				65.43	%			48.39	%
Net charge-offs/average loans				-0.13	%			0.00	%

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 in Q1 2022?

Surrey Bancorp reported net earnings of $1,487,503 or $0.36 per share for Q1 2022.

How does the Q1 2022 net income compare to Q1 2021 for SRYB?

The net income decreased from $1,987,375 or $0.48 per share in Q1 2021 to $1,487,503 or $0.36 per share in Q1 2022.

What caused the decline in net interest income for SRYB?

The decline in net interest income was primarily due to a decrease in interest rates and a change in the mix of earning assets.

What was the total asset value reported by Surrey Bancorp in Q1 2022?

Surrey Bancorp reported total assets of $494,022,235 as of March 31, 2022.

Did Surrey Bancorp experience any loan loss recoveries in Q1 2022?

Yes, Surrey Bancorp had a provision recapture for loan losses of $662,572 due to loan charge-off recoveries.