SAVANNAH, Ga., April 19, 2011 (GLOBE NEWSWIRE) -- The Savannah Bancorp, Inc. (Nasdaq:SAVB) reported net income for the first quarter 2011 of $126,000 compared to a net loss of $488,000 for the first quarter 2010. Net income per diluted share was 2 cents in the first quarter of 2011 compared to net loss per diluted share of 8 cents in 2010. The quarter over quarter increase in earnings resulted primarily from an increase in net interest income and a decrease in the provision for loan losses. Pretax earnings before the provision for loan losses and gain/loss on sale of securities and foreclosed assets were $4,371,000 in the first quarter 2011 compared to $4,343,000 in 2010. Other growth and performance ratios are included in the attached financial highlights.
Total assets decreased 0.8 percent to $1.04 billion at March 31, 2011, down $8 million from $1.05 billion a year earlier. Loans totaled $819 million compared to $869 million one year earlier, a decrease of 5.7 percent. Deposits totaled $898 million and $902 million at March 31, 2011 and 2010, respectively, a decrease of 0.4 percent. Shareholders' equity was $85.9 million at March 31, 2011 compared to $77.9 million at March 31, 2010. The Company's total capital to risk-weighted assets ratio was 12.56 percent at March 31, 2011, which exceeds the 10 percent required by the regulatory agencies to maintain well-capitalized status.
John C. Helmken II, President and CEO, said, "Our bankers continue to exhibit the pricing discipline that is always very important, even more so in today's environment with so many unprecedented challenges. Our first quarter net interest margin was 3.73 percent, a 9 basis point increase over last year and up 16 basis points over year end. We continue to do an excellent job of controlling and maximizing the variables that we can. In addition, our noninterest expense was down 4.9 percent versus the first quarter of 2010. We continue to play offense but identifying solid, credit worthy borrowers at an acceptable margin is a challenge. We are soliciting relationships from our competitors but have seen defensive loan pricing creep back into the market."
The allowance for loan losses was $22,363,000, or 2.73 percent of total loans at March 31, 2011 compared to $19,611,000 or 2.26 percent of total loans a year earlier. Nonperforming assets were $48,752,000 or 4.69 percent of total assets at March 31, 2011 compared to $44,099,000 or 4.21 percent at March 31, 2010. First quarter net charge-offs were $2,347,000 compared to net charge-offs of $3,387,000 for the same period in 2010. The provision for loan losses for the first quarter of 2011 was $4,360,000 compared to $5,320,000 for the first quarter of 2010. The lower provision for loan losses was primarily due to the $49 million smaller loan portfolio, lower net charge-offs and stabilizing credit quality trends.
Helmken added, "We continue to build our allowance for loan losses, which exceeds $22 million and is now 2.73 percent of loans. We believe that our reserve methodology is sound and that we must continue elevated provision levels until real estate values and sales activity have improved. We are encouraged by what we are seeing in that regard but are not yet comfortable with allowing the provision to return to more historical levels."
Helmken continued, "Our pre-tax, pre-provision core earnings continue to be very strong and we remain confident in our strategic and operational direction. With strong capital levels and core earnings, we will aggressively address any asset quality issues."
Net interest income increased $415,000, or 4.9 percent, in the first quarter 2011 versus the first quarter 2010. First quarter net interest margin increased to 3.73 percent in 2011 as compared to 3.64 percent in 2010, primarily due to a lower cost on interest-bearing deposits. This was partially offset by a decrease in the yield on interest-earning assets. The cost of interest-bearing deposits decreased from 1.66 percent for the first three months of 2010 to 1.18 percent for the same period in 2011, primarily due to the repricing of time deposits in the current low interest rate environment. The yield on earning assets decreased from 5.27 percent for the first three months of 2010 to 4.89 percent for the first three months of 2011 which was primarily a result of the Company holding, on average, $77.5 million more in lower yielding interest-bearing deposits and investments during the first quarter of 2011 than the same period in 2010. The Company received $174 million in cash when it acquired the deposits and certain assets of First National Bank, Savannah in an FDIC-assisted transaction in June, 2010 and much of this liquidity was invested in interest-bearing deposits and investments. Since this transaction, the Company has allowed much of its brokered and higher priced time deposits to run-off in order to reduce this excess liquidity and improve the net interest margin. The Company on average held $25.7 million less in interest-bearing deposits and investments during the first quarter of 2011 compared to the fourth quarter of 2010 and the yield on earning assets increased from 4.83 percent in the fourth quarter of 2010 to 4.89 percent during the first quarter of 2011. The Company continues to aggressively manage the pricing on deposits and the use of wholesale funds to mitigate the amount of margin compression.
Noninterest income decreased $655,000, or 29 percent, in the first quarter of 2011 versus the same period in 2010 due to a $249,000 lower gain on the sale of securities, a $85,000 decline in service charges on deposits and a $275,000 decrease in other operating income. The decrease in other operating income was due to the Company recording a $308,000 gain on a bank-owned life insurance policy payout in which the Company was the beneficiary during the first quarter of 2010.
Noninterest expense decreased $314,000, or 4.9 percent, to $6,113,000 in the first quarter 2011 compared to the same period in 2010. Information technology expense declined $93,000, or 19 percent, and losses from write-downs and sales of foreclosed assets decreased $295,000, or 56 percent. This was partially offset by $92,000, or 24 percent, higher FDIC deposit insurance premiums. The Company renegotiated and renewed its contract with its core processor resulting in the decline in its information technology expense. The increase in the FDIC premiums was due in part to scheduled rate increases effective after the first quarter of 2010. The recent changes to the FDIC assessment process are not effective until the second quarter 2011.
The Savannah Bancorp, Inc. ("SAVB" or "Company"), a bank holding company for The Savannah Bank, N.A., Bryan Bank & Trust (Richmond Hill, Georgia), and Minis & Co., Inc., is headquartered in Savannah, Georgia and began operations in 1990. SAVB has eleven branches in Coastal Georgia and South Carolina. Its primary businesses include loan, deposit, trust, asset management, and mortgage origination services provided to local customers.
This press release contains statements that constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements identified by words or phrases such as "potential," "opportunity," "believe," "expect," "anticipate," "current," "intention," "estimate," "assume," "outlook," "continue," "seek," "plans," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" or similar expressions. These statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. There can be no assurance that these transactions will occur or that the expected benefits associated therewith will be achieved. A number of important factors could cause actual results to differ materially from those contemplated by our forward-looking statements in this press release. Many of these factors are beyond our ability to control or predict. These factors include, but are not limited to, those found in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.
The banking regulatory agencies have adopted capital requirements that specify the minimum level for which no prompt corrective action is required. In addition, the FDIC assesses FDIC insurance premiums based on certain "well-capitalized" risk-based and equity capital ratios. As of March 31, 2011, the Company and the Subsidiary Banks exceeded the minimum requirements necessary to be classified as "well-capitalized."
Total tangible equity capital for the Company was $82.1 million, or 7.90 percent of total assets at March 31, 2011. The table below includes the regulatory capital ratios for the Company and each Subsidiary Bank along with the minimum capital ratio and the ratio required to maintain a well-capitalized regulatory status.
Tier 1 and total capital at the Company level includes $10 million of subordinated debt issued to the Company's nonconsolidated subsidiaries. Total capital also includes the allowance for loan losses up to 1.25 percent of risk-weighted assets.
CONTACT: John C. Helmken II, President and CEO 912-629-6486 Michael W. Harden, Jr., Chief Financial Officer 912-629-6496