MOUNT AIRY – Surrey Bancorp (Pink Sheets: SRYB), the holding company for Surrey Bank & Trust, reported earnings for the third quarter were down from the same period a year earlier largely as a result of the pandemic.
For the quarter ended Sept. 30, net income totaled $1,052,172, or 25 cents per share, compared to $1,676,806 or 40 cents per share earned during the third quarter of 2019.
“The decrease in earnings results from a decrease in net interest income and an increase in the provision for loan losse,” the bank said in announcing the results. “Net interest income decreased from $3,658,136 in the third quarter of 2019 to $3,084,814 in the third quarter of 2020. The provision for loan losses increased from a provision recapture of $131,847 in the third quarter of 2019 to a provision of $196,073 in the third quarter of 2020.”
The bank’s holding comapny said the decrease in net interest income is the result of “the sudden decrease in interest rates due to the COVID-19 pandemic.” Loan yields decreased from 6.10% in the third quarter of 2019 to 4.78% in the same quarter of 2020. The yield on interest earning assets decreased from 5.42% to 3.51% from the third quarter of 2019 to the third quarter of 2020.
In addition to the overall decrease in interest rates, lower yields were affected by the bank’s participation in the Small Business Administration’s Paycheck Protection Plan (PPP). The bank carried approximately $47,330,000 of PPP loans in its loan portfolio at the end of the third quarter of 2020. These loans carry an interest rate of 1% and carry a 100% government guarantee. The cost of funds decreased from 0.51% in the third quarter of 2019 to 0.32% in 2020 due to general rate decreases.
The provision for loan losses increased $327,920 in the third quarter of 2020 compared to the third quarter of 2019. This increase is due to the estimated economic impact of the pandemic.
Net income for the nine months ending Sept. 30 was also down, at $3,079,747 or 74 cents per share, compared to $3,784,221 or 91 cents per share, for the same period in 2019.
Total assets were $425,396,540 as of Sept. 30, an increase of 28.3% from $331,633,605 reported for the same period in 2019. Total deposits were $368,066,800 at quarter-end 2020, a 32.3% increase from the $278,110,833 reported at the end of the third quarter of 2019. Net loans increased to $277,613,456, or 18% percent, compared to $235,290,731, on September 30.
The bank operates full-service branch offices at 145 North Renfro Street, 1280 West Pine Street, and 2050 Rockford 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 is engaged in the sale of insurance through its wholly owned subsidiary Surrey Investment Services, Inc. The insurance agency, dba SB&T Insurance, is located at 199 North Renfro Street in Mount Airy.