Surrey Bancorp (Pink Sheets: SRYB), the holding company for Surrey Bank & Trust (the Bank ), has reported earnings for the first quarter of 2016.\r\nFor the quarter ended March 31, net income totaled $776,954 or $0.19 per fully diluted common share, compared with $728,434 or $0.17 per fully diluted common share earned during the first quarter of 2015.\r\nThe increase in earnings results from an increase in net interest income. Net interest income increased from $2,422,776 in the first quarter of 2015 to $2,695,401 in 2016. This increase is due to loan growth. Average loans outstanding increased 7.9 percent or approximately $15,037,000 from the first quarter of 2015 to 2016.\r\nThe net interest margin increased from 4.17 percent to 4.50 percent from 2015 to 2016 due to a combination of higher asset yields and lower deposit costs. Asset yields increased from 4.69 percent in 2015 to 4.90 percent in 2016 primarily from a change in asset mix and a slight uptick in interest rates. Higher yielding loans made up 87.6 percent of average interest earning assets in the first quarter of 2016 as opposed to 81.3 percent in the first quarter of 2015.\r\nThe cost of funds decreased from 0.57 percent in the first quarter of 2015 to 0.44 percent in the first quarter of 2016 as non-interest bearing deposits made up a higher percentage of average deposits. The provision for loan losses increased from a recapture of $113,794 in the first quarter of 2015 to a provision of $75,814 in 2016, an $189,608 increase.\r\nThe provision increase is due to an increase in gross loans since the beginning of the year compared to the same period in 2015. Gross loans increased approximately $9,307,000 from December 31, 2015 to March 31, compared to a reduction of $596,000 during the first quarter of 2015.\r\nThe percentage of loans carrying government guarantees decreased from $49,729,247, or 24.7 percent of gross loans at the end of 2015 to $48,862,969, or 23.2 percent of gross loans at March 31. The increased credit exposure also contributed to the increased provision for loan losses.\r\nThe allowance for loan loss reserves was $3,800,316 or 1.80 percent of total loans as of March 31. Nonperforming assets were 0.57 percent of total assets at March 31, compared to 1.11 percent on that date in 2015. At March 31, the allowance equals 75 percent of impaired and non-performing assets, net of government guarantees.\r\nNoninterest income decreased from $625,234 in the first quarter 2015 to $538,557 in 2016. The decrease primarily results from a decrease in service charges on deposit accounts and a decrease in brokerage commissions from the bank\u2019 s brokerage subsidiary.\r\nNoninterest expenses decreased 3.8 percent from $2,032,668 in the first quarter of 2015, to $1,955,589 in 2016. This decrease was primarily due to the reimbursement of legal expenses associated with the collection of government guaranteed loans.\r\nTotal assets as of March 31 were $260,545,029, an increase of 1.1 percent from $256,244,969 reported as of March 31, 2015. Total deposits were $216,280,991 at quarter-end 2016, a 1.7 percent increase from the $209,906,549 reported at the end of the first quarter of 2015. Net loans increased to $207,097,033 at the end of the first quarter of 2016, compared to $188,813,973, as of March 31, 2015, a 9.7 percent increase.\r\nSurrey Bancorp is the bank holding company for Surrey Bank & Trust and is located at 145 North Renfro St., Mount Airy, N.C. The bank operates three full service branch offices in Mount Airy. Full-service branch offices are also located in Pilot Mountain; N.C.,. Elkin, N.C., and at 940 Woodland Drive in Stuart.\r\nThe bank has opened a loan production office in North Wilkesboro, N.C.\r\nSurrey Bank & Trust is engaged in the sale of insurance and provides full-service brokerage and investment services through its wholly owned subsidiary Surrey Investment Services, Inc. The insurance division, dba SB&T Insurance, is located at 199 North Renfro Street in Mount Airy.\r\nSurrey Bank & Trust can be found online at www.surreybank.com.