Surrey Bancorp, the holding company for Surrey Bank & Trust, has reported earnings for the fourth quarter of 2015 and the full year.
For the quarter ended December 31, 2015, net income totaled $794,153 or $0.19 per fully diluted share, compared with $1,284,702 or $0.31 per fully diluted common share earned during the fourth quarter of 2014.
The decrease in quarterly earnings results from a decrease in noninterest income and an increase in the provision for loan losses and noninterest expense.
Net interest income increased by 5.3 percent from $2,464,213 in the fourth quarter of 2014 to $2,595,079 for the same period in 2015 due to loan growth. The net yield on average interest-earning assets remained relatively stable decreasing from 4.16 percent in the fourth quarter of 2014 to 4.09 percent in the fourth quarter of 2015.
Noninterest income decreased 39.0 percent to $800,542, compared to $1,312,764 reported for the quarter ended December 31, 2014. Tax exempt life insurance proceeds of approximately $419,000 recorded in December of 2014 was the reason for the significant decrease.
The provision for loan losses increased from $78,911 in the fourth quarter of 2014 to a provision of $156,728 for the same period in 2015. This is the result of higher loan growth in the fourth quarter of 2015 than in the fourth quarter of 2014. Total loans increased $2,808,324 in the fourth quarter of 2015 compared to $618,996 in 2014.
Noninterest expenses increased from $1,897,067 in the fourth quarter of 2014 to $1,988,960 in the fourth quarter of 2015. This increase is attributable to the opening of the Bank’s full service branch in Elkin, North Carolina in the fourth quarter of 2015 and the associated expense of personnel, occupancy expense, equipment expense and data processing expense.
For the year ended December 31, 2015, the company reported net income of $3,061,110, or $0.73 per fully diluted common share. This represents an 11.1 percent decrease in profitability from year-end 2014, when the Company reported earnings of $3,443,569, or $0.82 per fully diluted common share. This decrease was attributable to a reduction noninterest income.
Net interest income increased 5.3 percent from $9,466,418 for the 2014 year-end to $9,968,598 at year-end 2015, due to loan growth and relatively stable net asset yields. Noninterest income decreased 16.5 percent to $2,718,155 in 2015, compared to $3,255,349 reported for the year ended December 31, 2014. This decrease was due to the aforementioned fourth quarter life insurance proceeds and a reduction in gains on the sale of government guaranteed loans.
Combined, the reduction from these two sources was $546,512. The provision for loan losses increased from $211,863 in 2014 to $242,445 in 2015 primarily due to loan growth.
Noninterest expenses increased 4.7 percent, from $7,315,221 in 2014, to $7,658,670 in 2015. The majority of the increase results from cost associated with the opening of a new full service branch and an increase in expenses associated with foreclosed assets.
Loan loss reserves were $3,626,908 or 1.80 percent of total loans as of December 31, 2015. Non-performing assets were 0.61 percent of total assets at December 31, 2015, compared to 1.29 percent on that date in 2014. At December 31, 2015, the allowance for loan loss reserves equals 103.2 percent of impaired and non-performing assets, net of government guarantees compared to 114.6 percent at the end of 2014.
Total assets were $257,776,555 as of December 31, 2015, an increase of 1.8 percent from $253,201,323 reported as of December 31, 2014. Total deposits were $212,687,961 at year-end 2015, an increase of 2.9 percent from the $206,666,581 reported at the end of year of 2014. Net loans increased 4.4 percent to $197,904,895, compared to $189,549,072 as of December 31, 2014.
Surrey Bancorp is the bank holding company for Surrey Bank & Trust (the “Bank”) and is located at 145 North Renfro Street, Mount Airy, N.C. The bank operates three full service branch offices in Mount Airy along with one branch each in Pilot Mountain, N.C., and in Elkin, N.C., and at Woodland Drive in Stuart, Virginia. The bank has opened a loan production office in North Wilkesboro, N.C.