NEWS - Banking & Finance

By Lou Phelps

Feb 13, 2012 – The Savannah Bancorp. Inc. reported a net loss for the fourth quarter 2011 of $2,034,000 compared to a net loss of $1,876,000 for the fourth quarter 2010.  The net loss for the year 2011 was $2,172,000 compared to a net loss of $3,989,000 in 2010. 

The decline in the net loss for 2011 was primarily due to an increase in the net interest margin and a decrease in the Company’s provision for loan losses. 

Pretax earnings before the provision for loan losses and gain/loss on sale of securities and foreclosed assets increased 13 percent to $17,884,000 in 2011 compared to $15,765,000 in 2010. 

Core earnings in the fourth quarter of 2011 declined slightly to $4,320,000 compared to $4,448,000 in the fourth quarter of 2010. 

The banking company’s total assets decreased 7.9 percent to $985 million at December 31, 2011, down approximately $82 million from $1.07 billion a year earlier.  Loans totaled $760 million compared to $827 million one year earlier, a decrease of approximately $67 million or 8.1 percent.  Deposits totaled $847 and $924 million at December 31, 2011 and 2010, respectively, a decrease of 8.3 percent. 

On June 25, 2010, The Savannah Bank, N.A. purchasee approximately $201 million in deposits and certain other liabilities and assets of First National Bank in Savannah, when that bank was closed by the FDIC.  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 its net interest margin.

The Company’s total capital to risk-weighted assets ratio was 12.63 percent at December 31, 2011, which exceeds the 10 percent required by the regulatory agencies to maintain well-capitalized status, a strong capital position.

According to John C. Helmken II, president and CEO, said, “In reviewing 2011, there are several notable positives.  Our net interest margin increased from 3.43 percent in 2010 to 3.88 percent in 2011, resulting in a 6.0 percent increase in our net interest income year over year.  Most of the improvemnet in our margin is a result of our lower cost of deposits. This is our highest net interest margin since 2007.  We reduced salaries and benefits $666,000 and information technology expense $393,000 saving us more than $1 million annually.  All of this, and more, contributed to our 62 percent efficiency ratio in 2011, an improvement over 66 percent in 2010 but well short of our goal of less than 60 percent.  There is more work to do.”

The Company’s allowance for loan losses was $21,917,000, or 2.89 percent of total loans at December 31, 2011 compared to $20,350,000 or 2.46 percent of total loans a year earlier.  Nonperforming assets were $55,213,000 or 5.60 percent of total assets at December 31, 2011 compared to $49,099,000 or 4.60 percent at December 31, 2010.

According to Helmken, “We anticipated a reduction in charge-offs in 2011 compared to 2010 but several year-end appraisals resulted in significant impairments and resulted in this year’s charge-offs again surpassing $18 million.  We will continue to aggressively review and address our loan and OREO portfolios. Our disappointing fourth quarter and annual loss, led by the previously mentioned charge-offs, highlight the negatives of this quarter and year.”