Surrey Bancorp Reports 2016 Earnings of $3,596,628

MOUNT AIRY, NC--(Marketwired - February 22, 2017) - Surrey Bancorp (the "Company") (OTC PINK: SRYB), the holding company for Surrey Bank & Trust, today reported earnings for the fourth quarter of 2016 and the full year.

For the quarter ended December 31, 2016, net income totaled $895,499 or $0.21 per fully diluted share, compared with $794,153 or $0.19 per fully diluted common share earned during the fourth quarter of 2015.

The increase in quarterly earnings results from an increase in net interest income and a decrease in the provision for loan losses.

Net interest income increased by 10.5 percent from $2,595,079 in the fourth quarter of 2015 to $2,866,692 for the same period in 2016 due to loan growth. The net yield on average interest-earning assets improved increasing from 4.09 percent in the fourth quarter of 2015 to 4.54 percent in the fourth quarter of 2016. Noninterest income decreased 7.3 percent to $742,463, compared to $800,542 reported for the quarter ended December 31, 2015. The decrease results from a reduction in service charges on deposit accounts and other service charges and fees.

The provision for loan losses decreased from $156,728 in the fourth quarter of 2015 to a provision of $64,752 for the same period in 2016. This in part results from loan reductions in the fourth quarter of 2016. Total loans decreased $2,490,747 in the fourth quarter of 2016 compared to an increase of $2,808,324 in the fourth quarter of 2015. Additionally, the Bank closed its finance subsidiary, Freedom Finance, LLC, in July of 2016. In the fourth quarter of 2015, Freedom Finance, LLC had a provision for loan losses of $35,686.

Noninterest expenses increased from $1,988,960 in the fourth quarter of 2015 to $2,092,025 in the fourth quarter of 2016. This increase is attributable to the abandonment of the undepreciated cost of buildings removed during renovations undertaken in the fourth quarter of 2016.

For the year ended December 31, 2016, the Company reported net income of $3,596,628, or $0.86 per fully diluted common share. This represents a 17.6 percent increase in profitability from year-end 2015, when the Company reported earnings of $3,061,110, or $0.73 per fully diluted common share. This increase was attributable to increases in net interest income and noninterest income. Net interest income increased 10.5 percent from $9,968,598 for the year ended 2015 to $11,018,850 at year-end 2016. This increase was due to loan growth and stable net asset yields. Noninterest income increased 4.6 percent to $2,843,811 in 2016, compared to $2,718,155 reported for the year ended December 31, 2015. This increase was due to life insurance proceeds in excess of the cash surrender value of $315,754. Increases from these two sources amounted to $1,175,908. The provision for loan losses increased from $242,445 in 2015 to $401,403 in 2016 primarily due to loan growth. Noninterest expenses increased 4.5 percent, from $7,658,670 in 2015, to $8,002,821 in 2016. The majority of the increase results from cost associated with the opening of a full service branch in December of 2015 and renovation cost.

Loan loss reserves were $3,687,500 or 1.74 percent of total loans as of December 31, 2016. Non-performing assets were 0.54 percent of total assets at December 31, 2016, compared to 0.61 percent on that date in 2015. At December 31, 2016, the allowance for loan loss reserves equals 105.4 percent of impaired and non-performing assets, net of government guarantees compared to 103.2 percent at the end of 2015.

Total assets were $277,102,385 as of December 31, 2016, an increase of 7.5 percent from $257,776,555 reported as of December 31, 2015. Total deposits were $230,261,545 at year-end 2016, an increase of 8.3 percent from the $212,687,961 reported at the end of year of 2015. Net loans increased 5.5 percent to $208,690,443, compared to $197,904,895 as of December 31, 2015.

About Surrey Bancorp
Surrey Bancorp is the bank holding company for Surrey Bank & Trust (the "Bank") and is located at 145 North Renfro Street, Mount Airy, North Carolina. 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 and 393 CC Camp Road, Elkin, North Carolina, and 940 Woodland Drive in Stuart, Virginia. The Bank has opened a Loan Production Office at 717 Main Street in North Wilkesboro, North Carolina.

Surrey Bank & Trust is engaged in the sale of insurance and provides full-service brokerage and investment services through its wholly owned subsidiary Surrey Investment Services, Inc. The insurance division, dba SB&T Insurance, is located at 199 North Renfro Street in Mount Airy. The brokerage division which operates through an association with LPL Financial, is located at 145 North Renfro Street in Mount Airy.

Surrey Bank & Trust can be found online at www.surreybank.com.

Non-GAAP Financial Measures
This report refers to the overhead efficiency ratio, which is computed by dividing non-interest expense by the sum of net interest income and non-interest income. This is a non-GAAP financial measure that we believe provides investors with important information regarding our operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible, because other companies may calculate the efficiency ratio differently. Such information is not in accordance with generally accepted accounting principles in the United States (GAAP) and should not be construed as such. Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions that such information not be viewed as a substitute for GAAP. Surrey Bancorp, in referring to its net income, is referring to income under GAAP.

Forward Looking Statements
Information in this press release contains "forward-looking statements." These statements reflect management's current beliefs as to the expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. As such, actual results and outcomes may materially differ from what may be expressed or forecast in such forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit levels, loan demand and asset quality, including real estate and other collateral values; changes in banking regulations and accounting principles, policies or guidelines; and the impact of competition from traditional or new sources. These and other factors that may emerge could cause decisions and actual results to differ materially from current expectations. Surrey Bancorp takes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this press release.

(1) Annualized for all periods presented.