SAVANNAH, Ga., July 18, 2006 (PRIMEZONE) -- The Savannah Bancorp, Inc. (Nasdaq:SAVB) reported net income for the second quarter 2006 of $2,538,000, up 16 percent from $2,184,000 in the second quarter 2005. Net income per diluted share was $0.54 compared to $0.51 per diluted share in the second quarter of 2005, an increase of 5.9 percent. Earnings growth moderated in the second quarter due to higher than anticipated startup costs in Harbourside Community Bank and a slight net interest margin decline from the first quarter 2006. The margin decline resulted from faster deposit repricing in a very competitive market and slower loan growth than anticipated.
Average outstanding diluted shares increased 440,000, or 10 percent, in the second quarter 2006 compared with the second quarter 2005. The increase in average shares outstanding resulted from the private placement sale of 397,000 shares in August, 2005 and additional shares being issued upon exercise of stock options. For the second quarter 2006, return on average equity was 16.91 percent, return on average assets was 1.33 percent, net interest margin was 4.51 percent and the efficiency ratio was 53.84 percent.
For the first six months of 2006, net income was $4,889,000, a 23 percent increase over $3,965,000 in the first six months of 2005. Earnings per diluted share was $1.04, an increase of 12 percent over earnings per diluted share of $0.93 in the first six months of 2005. Return on average equity was 16.53 percent, return on average assets was 1.31 percent, net interest margin was 4.55 percent and the efficiency ratio was 54.16 percent.
Net interest income increased $1,485,000, or 22 percent, in the second quarter 2006 over the same period in 2005. Earning assets growth of 11 percent and 17 consecutive prime rate increases of 25 basis points each over the prior 24 months resulted in significantly higher net interest income for the second quarter and the first six months of 2006 compared with the same periods in 2005. The net interest margin has been increasing during the two year period of rising rates but has recently begun to decrease as funding costs have increased faster than asset yields. Noninterest income was up 4 percent in the second quarter and 6 percent in the first six months of 2006 compared with the same periods in 2005. Higher mortgage interest rates are negatively impacting mortgage origination volume and mortgage related income.
Noninterest expenses increased 23 percent in the second quarter and 24 percent in the first six months of 2006 compared with 2005. Approximately half of the increase in costs is related to additional costs of the recently chartered Harbourside Community Bank on Hilton Head Island, SC.
Loans, excluding loans held for sale, totaled $657 million at June 30, compared with $572 million one year earlier, an increase of 15 percent. Deposits totaled $642 million at June 30, 2006 and $588 million at June 30, 2005, an increase of 9 percent. As of June 30, 2006, demand, savings and money market accounts had increased 13 percent over the prior year as a result of continued focus on core deposit growth. Total assets increased 12 percent to $772 million at June 30, 2006, up from $689 million a year earlier.
Nonperforming assets increased to $2,559,000, or 0.39 percent of total loans, at June 30, 2006 from $2,093,000, or 0.33 percent of loans, at March 31, 2006 and $733,000, or 0.13 percent of total loans, at June 30, 2005. Net loan recoveries for the first half of 2006 were $3,000. Provision for credit losses for the first six months of 2006 was $775,000 and $820,000 for the first six months of 2005.
Harbourside Community Bank, a new subsidiary bank of the Savannah Bancorp, Inc., opened on March 1, 2006 in a new main office facility on Hilton Head Island, SC. At June 30, 2006, Harbourside had total assets of $38 million, total loans of $27 million and total deposits of $28 million. As previously reported in a regulatory filing with the SEC, the employment of Harbourside's CEO terminated during the second quarter and Mike Odom, CEO of The Savannah Bancorp, Inc. is currently serving as interim President and CEO until a suitable replacement is hired.
Today, the Board of Directors approved a regular quarterly cash dividend of 14 cents per share payable on August 14, 2006 to shareholders of record on July 28, 2006.
The Savannah Bancorp, Inc. (SAVB), a bank holding company for The Savannah Bank, N.A. and Bryan Bank & Trust (Richmond Hill, Georgia) and Harbourside Community Bank (Hilton Head Island, SC), is headquartered in Savannah, Georgia. SAVB began operations in 1990. Its primary businesses include deposit, credit, trust and mortgage origination services provided to local customers.
This press release may contain forward-looking statements as defined by federal securities law which involve significant risks and uncertainties. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in the economic scenario: significant changes in regulatory requirements; and significant changes in securities markets. The Savannah Bancorp, Inc. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Any such statements are made in reliance on the safe harbor protections provided under the Private Securities Act of 1995.
The Savannah Bancorp, Inc. and Subsidiaries Second Quarter Financial Highlights June 30, 2006 and 2005 (Unaudited) (thousands, except share data) % Balance Sheet Data at June 30 2006 2005 Change ---------------------------------------------------------------- Total assets $772,026 $689,271 12 Interest-earning assets 734,420 659,759 11 Loans 657,128 572,317 15 Deposits 642,393 588,249 9.2 Interest-bearing liabilities 659,759 545,340 21 Shareholders' equity 61,018 43,619 40 Allowance for credit losses 8,591 7,202 19 Non-accruing loans 2,049 184 1014 Loans past due 90 day - accruing 510 549 (7.1) Allowance for credit losses to total loans 1.31% 1.26% 4.0 Nonperforming assets to total loans and other real estate owned 0.39% 0.13% 204 Loan to deposit ratio 102.29% 97.29% 5.1 Equity to assets 7.90% 6.33% 25 Tier 1 capital to risk- weighted assets 11.47% 9.39% 22 Total capital to risk- weighted assets 12.72% 10.64% 20 Book value per share $ 13.24 $ 10.40 27 Outstanding shares 4,608 4,194 9.9 Market value per share $ 37.82 $ 30.95 22 Performance Ratios ---------------------------------------------------------------- % For the Second Quarter 2006 2005 Change ---------------------------------------------------------------- Net income $ 2,538 $ 2,184 16 Return on average assets 1.33% 1.29% 2.8 Return on average equity 16.91% 20.51% (18) Net interest margin 4.51% 4.16% 8.4 Efficiency ratio 53.84% 52.20% 3.1 Per share data: Net income - basic $ 0.55 $ 0.52 5.8 Net income - diluted $ 0.54 $ 0.51 5.9 Dividends $ 0.140 $ 0.135 3.7 Average shares: Basic 4,607 4,177 10 Diluted 4,715 4,275 10 ---------------------------------------------------------------- % For the First Six Months 2006 2005 Change ---------------------------------------------------------------- Net income $ 4,889 $ 3,965 23 Return on average assets 1.31% 1.21% 8.5 Return on average equity 16.53% 19.10% (13) Net interest margin 4.55% 4.12% 10 Efficiency ratio 54.16% 53.70% 0.9 Per share data: Net income - basic $ 1.06 $ 0.95 11 Net income - diluted $ 1.04 $ 0.93 12 Dividends $ 0.28 $ 0.27 3.7 Average shares: Basic 4,607 4,163 11 Diluted 4,712 4,266 10 The Savannah Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets June 30, 2006 and 2005 (Unaudited) (thousands, except share data) June 30 ------------------------ 2006 2005 ---------- ---------- ASSETS Cash and due from banks $ 19,413 $ 16,380 Interest-bearing deposits 4,400 14,944 Federal funds sold 18,266 4,673 --------------------------------------------------------------------- Cash and cash equivalents 42,079 35,997 Securities available for sale, at fair value (amortized cost of $52,268 in 2006 and $39,880 in 2005 51,220 39,856 Loans held for sale 4,407 28,120 Loans, net of allowance for credit losses of $8,591 in 2006 and $7,202 in 2005 648,537 565,115 Premises and equipment, net 5,714 4,762 Other real estate owned - - Bank-owned life insurance 5,655 5,449 Other assets 14,414 9,972 --------------------------------------------------------------------- Total assets $772,026 $689,271 ===================================================================== LIABILITIES Deposits: Noninterest-bearing $ 97,909 $ 95,890 Interest-bearing demand 94,081 87,376 Savings 18,540 20,670 Money market 137,721 105,529 Time deposits 294,142 278,784 --------------------------------------------------------------------- Total deposits 642,393 588,249 Short-term borrowings 36,560 21,983 FHLB advances - long-term 15,474 20,688 Subordinated debt 10,310 10,310 Other liabilities 6,271 4,422 --------------------------------------------------------------------- Total liabilities 711,008 645,652 --------------------------------------------------------------------- SHAREHOLDERS' EQUITY Common stock, par value $1 per share: authorized 20,000,000 shares; issued 4,607,647 and 4,194,066 in 2006 and 2005 4,608 4,194 Preferred stock, par value $1: authorized 10,000,000 shares - - Additional paid-in capital 36,480 25,066 Retained earnings 21,870 14,383 Treasury stock, at cost, 267 in 2006 and 2005 (4) (4) Accumulated other comprehensive (loss), net (1,936) (20) --------------------------------------------------------------------- Total shareholders' equity 61,018 43,619 --------------------------------------------------------------------- Total liabilities and shareholders' equity $772,026 $689,271 ===================================================================== The Savannah Bancorp, Inc. and Subsidiaries Consolidated Statements of Income Second Quarter and First Six Months, 2006 and 2005 (Unaudited) (thousands, except per share data) For the For the Quarter Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2006 2005 2006 2005 -------------------------------------------------------------------- INTEREST AND DIVIDEND INCOME Loans, including fees $12,548 $9,244 $24,269 $17,458 Loans held for sale 233 369 441 804 Investment securities: Taxable 471 320 894 620 Tax-exempt 32 60 70 128 Dividends 56 35 104 72 Deposits with banks 54 100 102 179 Federal funds sold 148 69 275 114 -------------------------------------------------------------------- Total interest and dividend income 13,542 10,197 26,155 19,375 -------------------------------------------------------------------- INTEREST EXPENSE Deposits 4,443 3,010 8,336 5,428 Short-term borrowings 546 114 911 349 Federal Home Loan Bank advances 197 253 444 503 Subordinated debt 200 149 389 283 -------------------------------------------------------------------- Total interest expense 5,386 3,526 10,080 6,563 -------------------------------------------------------------------- NET INTEREST INCOME 8,156 6,671 16,075 12,812 Provision for credit losses 360 315 775 820 -------------------------------------------------------------------- Net interest income after provision for credit losses 7,796 6,356 15,300 11,992 -------------------------------------------------------------------- NONINTEREST INCOME Service charges on deposit accounts 377 427 753 814 Mortgage related income, net 252 305 482 580 Trust fees 166 117 325 233 Other operating income 291 223 599 439 Loss on sale other real estate owned, net - (24) - (24) -------------------------------------------------------------------- Total noninterest income 1,086 1,048 2,159 2,042 -------------------------------------------------------------------- NONINTEREST EXPENSE Salaries and employee benefits 2,785 2,291 5,476 4,634 Occupancy and equipment 746 551 1,397 1,063 Information technology 374 298 736 599 Other operating expenses 1,071 892 2,266 1,679 -------------------------------------------------------------------- Total noninterest expense 4,976 4,032 9,875 7,975 -------------------------------------------------------------------- Income before income taxes 3,906 3,372 7,584 6,059 Income tax expense 1,368 1,188 2,695 2,094 -------------------------------------------------------------------- NET INCOME $ 2,538 $ 2,184 $ 4,889 $ 3,965 ==================================================================== Net income per share: Basic $ 0.55 $ 0.52 $ 1.06 $ 0.95 ==================================================================== Diluted $ 0.54 $ 0.51 $ 1.04 $ 0.93 ==================================================================== The Savannah Bancorp, Inc. and Subsidiaries Historical Trend Data - Five Years and Five Quarters The following tables show per share information for the most recent five years and five quarters. Share and per share information have been restated to reflect the effect of a 5-for-4 stock split in December 2004. (amounts in thousands except per share data) For the Most Recent Five Years ------------------------------ 2005 2004 2003 2002 2001 ---- ---- ---- ---- ---- Net income $9,040 $5,736 $4,644 $4,508 $4,358 Average shares Basic 4,317 4,109 4,103 4,100 4,068 Diluted 4,425 4,209 4,181 4,160 4,140 Net income per share ($) Basic 2.09 1.40 1.13 1.10 1.07 Diluted 2.04 1.36 1.11 1.08 1.05 Dividends per share 0.54 0.52 0.51 0.49 0.45 Market price per common share ($) High close 37.50 27.60 23.20 17.68 18.18 Low close 26.50 20.14 15.18 14.18 12.40 Year-end close 35.48 27.05 23.20 15.25 14.84 At December 31 ($) Assets 717,901 617,341 476,865 437,598 376,183 Shareholders' equity 58,543 40,071 36,771 34,756 32,071 Book value per share 12.75 9.74 8.96 8.48 7.86 Outstanding shares 4,591 4,112 4,103 4,101 4,079 Performance ratios (%) Return on equity 19.06 15.04 12.99 13.50 14.27 Return on assets 1.32 1.03 1.05 1.14 1.20 Net interest margin 4.25 3.86 3.91 4.10 4.13 Efficiency ratio 51.91 58.47 59.40 59.17 57.11 For the Most Recent Five Quarters (Unaudited) --------------------------------------------- (amounts in thousands except per share data) 2006 2005 ------------------- ----------------------------- Second First Fourth Third Second Quarter Quarter Quarter Quarter Quarter Net income $2,538 $2,351 $2,721 $2,354 $2,184 Average shares Basic 4,607 4,607 4,591 4,346 4,177 Diluted 4,715 4,709 4,709 4,467 4,275 Net income per share ($) Basic 0.551 0.510 0.590 0.542 0.523 Diluted 0.538 0.500 0.580 0.527 0.511 Dividends per share 0.140 0.140 0.135 0.135 0.135 Market price per common share ($) High close 38.00 36.97 37.50 34.54 33.46 Low close 34.08 33.90 34.25 30.27 27.80 Quarter-end close 37.82 35.08 35.48 34.50 30.95 At quarter-end ($) Assets 772,026 764,087 717,901 713,082 689,271 Shareholders' equity 61,018 59,646 58,543 56,696 43,619 Book value per share 13.24 12.95 12.75 12.35 10.40 Outstanding shares 4,607 4,607 4,591 4,591 4,194 Performance ratios (%) Return on equity 16.91 16.14 18.75 19.16 20.51 Return on assets 1.33 1.29 1.50 1.34 1.29 Net interest margin 4.51 4.59 4.48 4.28 4.16 Efficiency ratio 53.84 54.50 49.40 51.43 52.20 Additional financial highlights are available at www.savb.com