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Savannah Bancorp Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 16, 2011 03:20PM
Savannah Bancorp Inc. (SAVB) filed Quarterly Report for the period ended 2011-03-31. Savannah Bancorp Inc. has a market cap of $55.66 million; its shares were traded at around $7.73 with and P/S ratio of 1.01.
Highlight of Business Operations:
The allowance for loan losses totaled $22,363,000, or 2.73 percent of total loans, at March 31, 2011. This is compared to an allowance of $20,350,000, or 2.46 percent of total loans, at December 31, 2010. For the three months ended March 31, 2011, the Company reported net charge-offs of $2,347,000 compared to net charge-offs of $3,387,000 for the same period in 2010. During the first three months of 2011 and 2010, a provision for loan losses of $4,360,000 and $5,320,000, respectively, was added to the allowance for loan losses. The lower level of provision for loans losses and charge-offs during the first quarter of 2011 compared to the same period in 2010 was primarily due to the $49 million smaller loan portfolio and stabilizing credit quality trends.
The Company's nonperforming assets consist of loans on nonaccrual status, loans which are contractually past due 90 days or more on which interest is still being accrued, and other real estate owned. Nonaccrual loans of $33,921,000 and loans past due 90 days or more of $817,000 totaled $34,738,000, or 4.24 percent of gross loans, at March 31, 2011. Nonaccrual loans of $32,836,000 and loans past due 90 days or more of $3,064,000 totaled $35,900,000, or 4.34 percent of gross loans, at December 31, 2010. Generally, loans are placed on nonaccrual status when the collection of the principal or interest in full becomes doubtful. Management typically writes down loans through a charge to the allowance when it determines they are impaired. Nonperforming assets also included $14,014,000 and $13,199,000 of other real estate owned at March 31, 2011 and December 31, 2010, respectively. Management is aggressively pricing and marketing the other real estate owned.
Impaired loans, which include loans modified in troubled debt restructurings, totaled $52,001,000 and $53,869,000 at March 31, 2011 and December 31, 2010, respectively.
At March 31, 2011 nonperforming loans consisted primarily of $16.6 million of land, lot and construction and development related loans and $14.3 million of improved residential real estate-secured loans. Less than one percent of the nonperforming loans were unsecured. The largest nonperforming relationship consists of four loans for $7.7 million to a residential developer in the Bluffton/Hilton Head Island, South Carolina (“Bluffton/HHI”) market. The loans are secured by residential land and lots. Approximately $2,246,000 of the allowance was allocated to this relationship as a specific reserve. The next largest nonperforming relationship consists of two loans for $3.4 million which is secured by a 1-4 family rental property and a residential improved lot located on Hilton Head Island, South Carolina. The Company has approximately $650,000 of the allowance allocated as a specific reserve on this loan relationship. The next largest nonperforming relationship consists of four loans for $3.0 million secured by 1-4 family residential rental properties on Tybee Island, Georgia. The Company is in process of foreclosing on the properties and does not have any amount reserved in the allowance based on appraisals of the properties and the Company s testing for impairment. The last significant nonperforming relationship consists of four loans for $2.7 million to a residential developer in the Effingham County, Georgia market. The loans are secured by residential land and lots and completed 1-4 family properties. The Company charged-off $1,500,000 on this relationship in 2010 and still has approximately $300,000 of the allowance allocated as a specific reserve and $53,000 allocated as a general reserve.
The Company reported net income for the first quarter 2011 of $126,000, compared to a net loss of $488,000 in the first quarter 2010. Net income per diluted share was 2 cents in the first quarter 2011 compared to a net loss of 8 cents per diluted share in the first quarter 2010. The increase in first quarter earnings results primarily from a lower provision for loan losses, higher net interest income and slightly lower noninterest expense. Return on average equity was 0.59 percent, return on average assets was 0.05 percent and the efficiency ratio was 58.39 percent in the first quarter 2011. 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 of 2011 versus $4,343,000 in the first quarter of 2010. The schedule below reconciles the loss before income taxes to the pre-tax core earnings.
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