Surrey Bancorp Reports Third Quarter Net Income of $2,118,976

Rhea-AI Summary

Surrey Bancorp (SRYB) announced its Q3 2022 earnings, reporting a net income of $2,118,976 ($0.51 per share), up from $842,609 ($0.20 per share) in Q3 2021. Key factors included a rise in net interest income to $4,396,963, driven by increased interest rates. The provision for loan losses saw a significant recapture of $37,348, marking a $245,493 decrease from the previous year. Total assets grew 5.5% year-over-year to $499,788,812, while total deposits increased by 4.9%. However, net loans fell by 1.6% to $244,508,782.

Positive

• Net income increased by 151% year-over-year.
• Net interest income rose to $4,396,963 from $2,872,567.
• Total assets increased 5.5% to $499,788,812.
• Total deposits grew by 4.9% to $435,882,407.
• Provision for loan losses saw significant recapture, improving capital reserves.

Negative

• Net loans decreased by 1.6% year-over-year.
• Noninterest expenses increased by 6.9%, primarily due to higher salaries and benefits.

MOUNT AIRY, N.C., Oct. 27, 2022 (GLOBE NEWSWIRE) -- Surrey Bancorp (the “Company”), (Pink Sheets: SRYB), the holding company for Surrey Bank & Trust (the “Bank”), today reported earnings for the third quarter of 2022.

For the quarter ended September 30, 2022, net income totaled $2,118,976 or $0.51 per fully diluted share, compared to $842,609 or $0.20 per fully diluted common share earned during the third quarter of 2021.

The increase in earnings results from an increase in the net interest income and the recapture of the provision for loan losses.

Net interest income increased from $2,872,567 in the third quarter of 2021 to $4,396,963 in the third quarter of 2022. Interest income increased from $2,978,081 in the third quarter of 2021 to $4,510,525 in the third quarter of 2022. The increase is primarily due to the general increase in interest rates. As a result, the overall yield on interest earning assets increased from 2.72 percent to 3.84 percent between the third quarter of 2021 and the third quarter of 2022. The cost of funds increased from 0.10 percent in the third quarter of 2021 to 0.11 percent in 2022. Interest expense increased from $105,514 in the third quarter of 2021 to $113,562 in the third quarter of 2022.

The provision for loan losses decreased from $208,145 in the third quarter of 2021 to a provision recapture of $37,348 in 2022, a $245,493 decrease. This decrease is due to a decrease in loan balances, net of government guarantees, from the third quarter of 2021 compared to the end of third quarter of 2022 and a decrease in the estimated economic impact of the COVID 19 pandemic. Loan loss reserves were $4,350,722 or 1.75 percent of total loans as of September 30, 2022. Non-performing assets were 0.08 percent of total assets at September 30, 2022, compared to 0.60 percent on that date in 2021. At September 30, 2022, the allowance for loan loss reserves equals 436 percent of impaired and non-performing assets, net of government guarantees.

Noninterest income increased from $541,222 in the third quarter of 2021 to $574,902 in 2022, a 6.2 percent increase. The increase is due to increase in service charges on deposit accounts. Noninterest expenses increased 6.9 percent from $2,122,151 in the third quarter of 2021, to $2,267,537 in 2022. This increase was primarily due to increases in salaries and employee benefits.

Total assets were $499,788,812 as of September 30, 2022, an increase of 5.5 percent from $473,754,080 reported as of September 30, 2021. Total deposits were $435,882,407 at quarter-end 2022, a 4.9 percent increase from the $415,241,266 reported at the end of the third quarter of 2021. Net loans decreased to $244,508,782, or 1.6 percent, compared to $248,542,066, at September 30, 2021.

Net income for the nine months ended September 30, 2022, was $5,164,161 or $1.24 per diluted share, compared to $3,923,768 or $0.94 per diluted share, for the same period in 2021. The increase is primarily due an increase in net interest income and the recapture of loan loss reserves. Net interest income increased from $9,535,410 in 2022 2021 to $11,053,950 in 2022. The provision for loan losses decreased from $325,931 in 2021 to a provision recapture of $1,114,885 in 2022, a $1,440,816 decrease. The recapture of loan loss reserves results from a combination of a decrease in loans, a reduction in the estimated economic effects of COVID 19, and loan charge off recoveries during 2022.

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.

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)

		September 30, 2022				December 31, 2021				September 30, 2021
		(unaudited)				(audited)				(unaudited)
Total assets		$	499,789			$	480,535			$	473,754
Total loans			248,767				251,191				253,786
Investments			229,899				209,296				199,377
Deposits			435,882				422,053				415,241
Stockholders’ equity			57,006				52,959				52,903
Non-performing assets to total assets			0.08	%			0.58	%			0.60	%
Loans past due more than 90 days to total loans			0.04	%			0.00	%			0.00	%
Allowance for loan losses to total loans			1.75	%			2.11	%			2.06	%
Tangible book value per common share		$	13.32			$	12.28			$	12.28

        

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

        

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2022				2021				2022					2021
Interest income		$	4,511			$	2,978			$	11,341				$	9.913
Interest expense			114				106				287					378
Net interest income			4,397				2,872				11,054					9,535
Provision for loan losses			(37	)			208				(1,115	)				326
Net interest income after provision for loan losses			4,434				2,664				12,169					9,209
Noninterest income			575				541				1,544					2,463
Noninterest expense			2,268				2,122				7,035					6,621
Net income before taxes			2,741				1,083				6,678					5,051
Provision for income taxes			622				241				1,514					1,127
Net income			2,119				842				5,164					3,924
Basic net income per share		$	0.51			$	0.20			$	1.24				$	0.94
Diluted net income per share		$	0.51			$	0.20			$	1.24				$	0.94
Return on average total assets			1.71	%			0.73	%			1.40	%				1.15	%
Return on average total equity			15.02	%			6.46	%			12.54	%				10.02	%
Yield on average interest earning assets			3.84	%			2.72	%			3.22	%				3.04	%
Cost of funds			0.11	%			0.10	%			0.09	%				0.13	%
Net yield on average interest earning assets			3.74	%			2.60	%			3.14	%				2.92	%
Overhead efficiency ratio			45.61	%			62.16	%			55.84	%				55.18	%
Net charge-offs (recoveries)/average loans			0.07	%			0.00	%			(0.00	)%				0.00	%

¹ Annualized for all periods presented.

 

FAQ

What is Surrey Bancorp's net income for Q3 2022?

Surrey Bancorp reported a net income of $2,118,976 for Q3 2022.

How much did net interest income increase in Q3 2022?

Net interest income increased to $4,396,963 in Q3 2022.

What led to the increase in Surrey Bancorp's earnings?

The increase in earnings was driven by higher net interest income and a recapture of loan loss provision.

What was the change in total assets for Surrey Bancorp?

Total assets grew by 5.5% to $499,788,812 as of September 30, 2022.

What is the status of non-performing assets for SRYB?

Non-performing assets were 0.08% of total assets at September 30, 2022, down from 0.60% in 2021.