Surrey Bancorp reports profit of $5,103,575 in 2021

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MOUNT AIRY, NC, Feb. 28 12, 2022 (GLOBE NEWSWIRE) — Surrey Bancorp (the “Company”, Pink Sheets: SRYB), the holding company of Surrey Bank & Trust, today announced its results for the fourth quarter of 2021 and the full year.

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

Net interest income decreased 11.0% from $3,638,909 in the fourth quarter of 2020 to $3,237,515 for the same period in 2021 as net interest returns declined. The decrease is due to the reduction in 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 is due to the liquidation of PPP loans in the fourth quarter of 2021. PPP Loans totaling $24,775,780 was repaid in Q4 2020, while only $3,331,485 of PPP loans were repaid in Q4 2021. Net interest margin decreased from 3.62% in Q4 2020 to 2 .88% for the same period in 2021. the cost of funds decreased from 0.21% in the fourth quarter of 2020 to 0.09% in the fourth quarter of 2021. The provision for loan losses increased from $125,666 in the fourth quarter 2020 to $61,428 in 2021. Non-interest income decreased from $804,890 in the fourth quarter of 2020 to $488,331 in 2021. This decrease is mainly attributable to the reduction of the insurance commission due to the wind e from SB&T Insurance in the first quarter of 2021. Insurance commissions in the fourth quarter of 2020 were $238,179. Non-interest expense decreased from $2,441,728 in the fourth quarter of 2020 to $2,142,849 in the fourth quarter of 2021. The decrease is attributable to salaries and 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 $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% higher than the same period in 2020. The increase in earnings results from a decrease in the provision for losses on loans and a decrease in non-interest expenses. The allowance 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 easing of the estimated economic impact of the pandemic in 2021, as the federal government added stimulus to the economy. Non-interest expense decreased 4.7% from $9,196,654 in 2020 to $8,763,536 in 2021. Most of the decrease is due to a reduction in salaries and benefits associated with SB&T insurance. Non-interest income increased 1.2% to $2,950,954 in 2021 from $2,914,901 reported for the year ended December 31, 2020. However, non-interest income includes a one-time gain of $844,397 from the sale of the Bank’s insurance agency, SB&T Insurance. Without this gain, other non-interest income decreased by $808,344 or 27.7%. The gain offsets the reduction in insurance commissions since the sale of the agency in January 2021.

Net interest income decreased by 0.16% from $12,793,558 for the year ended 2020 to $12,772,925 at the end of fiscal 2021. The decrease in net interest income is the result of the sudden drop in interest rates due to the COVID 19 pandemic. The return on interest earning assets decreased from 3.79% to 3.01% from 2020 to 2021. Although there is had a slight increase in loan yield from 5.12% in 2020 to 5.16% in 2021, average outstanding loans decreased in 2021 to $250,457,032 from $262,873,842 in 2020. return on deposits in other banks decreased from 0.33% in 2020 to 0.12% in 2021. Cost of funds also decreased in 2021 from 0.38% in 2020 to 0.12% due the general decline in interest rates.

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

About Surrey Bancorp

Surrey Bancorp is the banking holding company of Surrey Bank & Trust (the “Bank”) and is located at 145 North Renfro Street, Mount Airy, North Carolina. The Bank operates full service branches 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 branches 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 is available online at www.surreybank.com.

Non-GAAP Financial Measures

This ratio refers to the overhead efficiency ratio, which is calculated 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 operating efficiency. Comparison of our efficiency ratio with those of other companies may not be possible as other companies may calculate the efficiency ratio differently. This information does not comply with generally accepted accounting principles in the United States (GAAP) and should not be interpreted as such. Management believes this financial information is useful to the reader in understanding operating performance, but cautions that this information should not be considered a substitute for GAAP. Surrey Bancorp, when referring to its net profit, refers to profit under GAAP.

Forward-looking statements
The information in this press release contains “forward-looking statements”. These statements reflect management’s current beliefs regarding expected results of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict regarding the timing, extent, likelihood and degree of occurrence. As such, actual results and results may differ materially from what may be expressed or anticipated in such forward-looking statements. Factors that could cause a difference include, but are not limited to: changes in 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 arise could cause actual decisions and results to differ materially from current expectations. Surrey Bancorp undertakes no obligation to revise, update or clarify any forward-looking statements to reflect events or conditions after the date of this press release.

SURREY BANCORP

CONSOLIDATED FINANCIAL INFORMATION
(in thousands of dollars, except per share amounts)

The 31st of December,
2021
The 31st of December,
2020
(unaudited)
Total assets $ 480 535 $ 431,064
Total loans 251 191 258,812
Investments 209 296 152,986
Deposits 422,053 374 443
Equity 52,959 50,329
Non-performing assets/total assets 0.58 % 0.09 %
Loans overdue for more than 90 days compared 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 INFORMATION
(in thousands of dollars, 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
Allowance for loan losses 61 126 387 690
Net interest income after provision for loan losses 3,176 3,513 12,386 12 104
Non-interest income 488 805 2,951 2,915
Non-interest expenses 2,143 2,442 8,764 9,197
Net profit before tax 1,521 1,876 6,573 5,822
Provision for income taxes 341 378 1,469 1,244
Net revenue 1,180 1,499 5,104 4,578
Basic net earnings per share $ 0.28 $ 0.36 $ 1.22 $ 1.10
Diluted earnings 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 %
Average return on interest-earning assets 2.99 % 3.82 % 3.01 % 3.79 %
Cost of funds 0.09 % 0.21 % 0.12 % 0.33 %
Net return on average interest-earning assets 2.88 % 3.62 % 2.90 % 3.49 %
Overhead efficiency rate 57.51 % 54.95 % 55.73 % 58.55 %
Net write-offs/average loans 0.00 % (0.02 ) % 0.00 % (0.04 ) %

¹ Annualized for all periods presented.

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

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