SAVANNAH, Ga., Jan. 31, 2008 (PRIME NEWSWIRE) -- The Savannah Bancorp, Inc. (Nasdaq:SAVB) reported net income of $7,636,000 in 2007 compared with net income of $10,002,000 in 2006, a decrease of 24 percent. Net income per diluted share was $1.29 for 2007 and $1.70 in 2006, a decrease of 24 percent. Net income for the fourth quarter 2007 was $353,000 compared to $2,523,000 for the same period in 2006. Fourth quarter net income per diluted share was $0.06 in 2007 and $0.43 in 2006, a decrease of 86 percent. Other growth and performance ratios are included in the attached financial highlights and information.
Fourth quarter pretax earnings included an additional provision for loan losses of $2.6 million and a reversal of approximately $330,000 of accrued interest for loans placed on nonaccrual status. These two charges to earnings reduced fourth quarter after-tax earnings by $1.8 million, or $0.30 per share. Details regarding these charges were provided in a press release and Form 8-K filing on January 10, 2008 and are available at our corporate website at www.savb.com.
Nonperforming loans at December 31, 2007 were $17.4 million, up from $6.8 million at September 30, 2007 and $2.2 million at December 31, 2006. The increase in nonperforming loans in the fourth quarter was primarily related to loans made in the Bluffton / Hilton Head Island, South Carolina ("Bluffton/HHI") market. Net charge-offs were $765,000 in 2007 compared to $444,000 in 2006.
President and CEO John C. Helmken II said, "Although I am less than pleased by our fourth quarter results and the loan quality issues, I am pleased with the progress we have made in addressing the situation. We continue to provide the resources and attention that are needed to manage these issues. Prompt and decisive action is allowing us to readily address the situation and minimize our potential losses. Equally important, we remain focused on our opportunities as well as our challenges. 2007 included several significant highlights for our Company, including several key hires, the successful integration of Minis & Co, Inc., one new branch in Bluffton, South Carolina and continued loan, deposit and fee income growth. While real estate activity slowed in our markets, our strong capital position, our enhanced products and services, and, most importantly, our people, position us well for 2008. As we approach a billion dollars in assets, we remain excited about the future of our Company."
Total assets increased 11 percent to $932 million at December 31, 2007, up from $844 million a year earlier. Loans totaled $809 million compared with $721 million one year earlier, an increase of 12 percent. Deposits totaled $764 million at December 31, 2007 and $707 million at December 31, 2006, an increase of 8.1 percent. Average total assets increased 13 percent to $869 million in 2007 from $770 million in 2006. Average portfolio loans were $754 million in 2007 compared with $659 million in 2006, an increase of 14 percent. Average deposits were $720 million in 2007 and $638 million in 2006, an increase of 13 percent.
Net interest income increased $524,000, or 1.6 percent, in 2007 over 2006, including the impact of approximately $400,000 of accrued interest reversed on loans placed on nonaccrual status during 2007. The net interest margin declined to 3.99 percent from 4.44 percent in 2006, primarily due to higher deposit and borrowing costs. Noninterest income increased $406,000 or 9.4 percent including $855,000 in higher trust and asset management fees, offset by lower service charges on deposit accounts and lower mortgage related income. The fourth quarter was the first full quarter of operations for Minis & Co. as a subsidiary of the Company. Noninterest expense increased $1,186,000, or 5.9 percent during 2007 as compared to 2006. Of the increase, $994,000 was in salaries and benefits and $465,000 in occupancy, equipment and technology expenses. Other operating expense declined by $273,000 or 5.9 percent due primarily to lower non-recurring de novo startup expenses and lower professional fees offset by higher FDIC assessment costs.
The Board of Directors approved a 4.2 percent increase in the regular quarterly cash dividend to 12.5 cents per share from 12 cents per share. The first quarter dividend is payable on February 25, 2008 to shareholders of record on February 8, 2008.
The Savannah Bancorp, Inc. ("SAVB"), a bank holding company for The Savannah Bank, N.A., Bryan Bank & Trust (Richmond Hill, GA), Harbourside Community Bank (Hilton Head Island, SC) and Minis & Co., Inc. (a registered investment advisory firm), is headquartered in Savannah, Georgia and began operations in 1990. Its primary businesses include loan, deposit, trust, asset management and mortgage origination services provided to local customers.
Forward-Looking Statements
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.
Attachments - 10 pages of financial information
A printable PDF format of this entire Annual Earnings Release may be obtained from the Corporate Website at www.savb.com under the "SEC Filings and More" link and the "Latest Earnings Release" selection and at the following web link: http://www.snl.com/irweblinkx/news.aspx?iid=100844.
The Savannah Bancorp, Inc. and Subsidiaries Fourth Quarter Financial Highlights December 31, 2007 and 2006 ($ in thousands, except per share data) (Unaudited) --------------------------------------------------------------------- Balance Sheet % Data at December 31 2007 2006 Change --------------------------------------------------------------------- Total assets $932,459 $843,514 11 Interest-earning assets 878,992 803,927 9.3 Loans 808,651 720,918 12 Allowance for loan losses 12,864 8,954 44 Non-accruing loans 14,663 825 NM Loans past due 90 days - accruing 2,761 1,406 96 Net charge-offs 765 444 72 Deposits 764,218 706,824 8.1 Interest-bearing liabilities 759,597 669,974 13 Shareholders' equity 76,272 66,574 15 Allowance for loan losses to total loans 1.59% 1.24% 28 Nonperforming assets to total loans and OREO 2.41% 0.38% 534 Loan to deposit ratio 106% 102% 3.9 Equity to assets 8.18% 7.89% 3.7 Tier 1 capital to risk-weighted assets 10.49% 11.09% (5.4) Total capital to risk-weighted assets 11.74% 12.34% (4.9) Outstanding shares (000s)(a) 5,924 5,781 2.5 Book value per share(a) $ 12.88 $ 11.52 12 Tangible book value per share(a) $ 12.50 $ 11.52 8.5 Market value per share(a) $ 17.14 $ 27.25 (37) Performance Data for the Year ----------------------------- Net income $ 7,636 $ 10,002 (24) Return on average assets 0.88% 1.30% (32) Return on average equity 10.68% 16.19% (34) Net interest margin 3.99% 4.44% (10) Efficiency ratio 56.09% 54.29% 3.3 Per share data:(a) Net income - basic $ 1.31 $ 1.73 (24) Net income - diluted $ 1.29 $ 1.70 (24) Dividends $ .480 $ .448 7.1 Average shares (000s):(a) Basic 5,850 5,765 1.5 Diluted 5,922 5,876 0.8 Performance Data for the Fourth Quarter --------------------------------------- Net income $ 353 $ 2,523 (86) Return on average assets 0.15% 1.24% (88) Return on average equity 1.83% 15.33% (88) Net interest margin 3.72% 4.26% (13) Efficiency ratio 60.48% 54.94% 10 Per share data:(a) Net income - basic $ 0.06 $ 0.44 (86) Net income - diluted $ 0.06 $ 0.43 (86) Dividends $ 0.120 $ 0.112 7.1 Average shares (000s):(a) Basic 5,923 5,779 2.5 Diluted 5,968 5,884 1.4 (a) Share and per share amounts have been restated to reflect the effect of a 5-for-4 stock split in December 2006. The Savannah Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2007 and 2006 ($ in thousands, except share data) --------------------------------------------------------------------- December 31, 2007 2006 --------------------------------------------------------------------- Assets Cash and due from banks $ 12,721 $ 18,540 Federal funds sold 4,435 18,363 Interest-bearing deposits in banks 20,148 10,394 --------------------------------------------------------------------- Cash and cash equivalents 37,304 47,297 Securities available for sale, at fair value (amortized cost of $60,241 in 2007 and $54,163 in 2006) 61,057 53,917 Loans held for sale 180 914 Loans, net of allowance for loan losses of $12,864 in 2007 and $8,954 in 2006 795,787 711,964 Premises and equipment, net 6,830 6,365 Other real estate owned 2,112 545 Bank-owned life insurance 5,985 5,760 Goodwill and other intangibles, net 3,662 -- Other assets 19,542 16,752 --------------------------------------------------------------------- Total assets $ 932,459 $ 843,514 ===================================================================== Liabilities Deposits: Noninterest-bearing $ 88,503 $ 101,156 Interest-bearing demand 127,902 116,493 Savings 16,168 18,615 Money market 176,615 147,279 Time deposits 355,030 323,281 --------------------------------------------------------------------- Total deposits 764,218 706,824 Short-term borrowings 70,599 40,687 Federal Home Loan Bank advances -long-term 2,973 13,309 Subordinated debt to nonconsolidated subsidiaries 10,310 10,310 Other liabilities 8,087 5,810 --------------------------------------------------------------------- Total liabilities 856,187 776,940 --------------------------------------------------------------------- Shareholders' equity Common stock, par value $1 per share: authorized 20,000,000 shares; issued 5,923,797 and 5,781,381 shares in 2007 and 2006, respectively 5,924 5,781 Preferred stock, par value $1 per share: authorized 10,000,000 shares, none issued -- -- Additional paid-in capital 38,278 35,747 Retained earnings 30,513 25,681 Treasury stock, 318 shares in 2007 and 2006 (4) (4) Accumulated other comprehensive income (loss), net 1,561 (631) --------------------------------------------------------------------- Total shareholders' equity 76,272 66,574 --------------------------------------------------------------------- Total liabilities and shareholders' equity $ 932,459 $ 843,514 ===================================================================== The Savannah Bancorp, Inc. and Subsidiaries Consolidated Statements of Income for the Two Years and Five Quarters Ending December 31, 2007 ($ in thousands, except per share data) --------------------------------------------------------------------- For the Years Ended --------------------------------------------------------------------- December 31, % 2007 2006 Chg --------------------------------------------------------------------- Interest and dividend income Loans, including fees $ 59,435 $ 51,541 15 Loans held for sale 98 558 (82) Investment securities 2,907 2,240 30 Deposits in banks 346 293 18 Federal funds sold 472 557 (15) ------------------------------------------------------------ Total interest and dividend income 63,258 55,189 15 ------------------------------------------------------------ Interest expense Deposits 26,415 19,342 37 Short-term borrowings 3,454 2,617 32 FHLB advances 413 778 (47) ------------------------------------------------------------ Total interest expense 30,282 22,737 33 ------------------------------------------------------------ Net interest income 32,976 32,452 1.6 Provision for loan losses 4,675 1,585 195 ------------------------------------------------------------ Net interest income after the provision for loan losses 28,301 30,867 (8.3) ------------------------------------------------------------ Noninterest income Service charges on deposits 1,383 1,526 (9.4) Mortgage related income, net 615 886 (31) Trust and asset management fees 1,513 658 130 Other operating income 1,242 1,233 0.7 Gain (loss) on sale of OREO (44) -- (100) ------------------------------------------------------------ Total noninterest income 4,709 4,303 9.4 ------------------------------------------------------------ Noninterest expense Salaries and employee benefits 11,846 10,852 9.2 Occupancy and equipment 3,294 2,920 13 Information technology 1,616 1,525 6.0 Other operating expense 4,383 4,656 (5.9) ------------------------------------------------------------ Total noninterest expense 21,139 19,953 5.9 ------------------------------------------------------------ Income before income taxes 11,871 15,217 (22) Income tax expense 4,235 5,215 (19) ------------------------------------------------------------ Net income $ 7,636 $ 10,002 (24) ============================================================ Net income per share: Basic $ 1.31 $ 1.73 (24) ============================================================ Diluted $ 1.29 $ 1.70 (24) ============================================================ Average basic shares (000s) 5,850 5,765 1.5 Average diluted shares (000s) 5,922 5,876 0.8 Performance Ratios Return on average equity 10.68% 16.19% (34) Return on average assets 0.88% 1.30% (32) Net interest margin 3.99% 4.44% (10) Efficiency ratio 56.1% 54.3% 3.3 Average equity 71,516 61,766 16 Average assets 869,026 769,917 13 Average interest-earning assets 830,900 734,470 13 --------------------------------------------------------------------- (Unaudited) --------------------------------------------------------------------- 2007 2006 -------------------------------------------------------------- Q4-07/ Fourth Third Second First Fourth Q4-06 Quarter Quarter Quarter Quarter Quarter % Chg --------------------------------------------------------------------- Interest and dividend income Loans, including fees $15,016 $15,196 $14,872 $14,351 $14,063 6.8 Loans held for sale 14 15 35 34 52 (73) Investment securities 767 794 726 620 599 28 Deposits in banks 100 44 119 83 127 (21) Federal funds sold 45 130 125 172 116 (61) ------------------------------------------------------------- Total interest and dividend income 15,942 16,179 15,877 15,260 14,957 6.6 ------------------------------------------------------------- Interest expense Deposits 6,881 6,963 6,479 6,092 5,754 20 Short-term borrowings 935 860 831 828 775 21 FHLB advances 46 48 155 164 168 (73) ------------------------------------------------------------- Total interest expense 7,862 7,871 7,465 7,084 6,697 17 ------------------------------------------------------------- Net interest income 8,080 8,308 8,412 8,176 8,260 (2.2) Provision for loan losses 3,145 635 395 500 450 599 ------------------------------------------------------------- Net interest income after the provision for loan losses 4,935 7,673 8,017 7,676 7,810 (37) ------------------------------------------------------------- Noninterest income Service charges on deposits 349 339 348 347 389 (10) Mortgage related income, net 98 141 166 210 200 (51) Trust and asset management fees 769 379 189 176 170 352 Other operating income 315 305 297 325 331 (4.8) Gain (loss) on sale of OREO (38) -- -- (6) -- -- ------------------------------------------------------------- Total noninterest income 1,493 1,164 1,000 1,052 1,090 37 ------------------------------------------------------------- Noninterest expense Salaries and employee benefits 3,125 2,919 2,838 2,964 2,659 18 Occupancy and equipment 958 796 782 758 768 25 Information technology 422 388 381 425 417 1.2 Other operating expense 1,285 1,073 1,025 1,000 1,293 (0.6) ------------------------------------------------------------- Total noninterest expense 5,790 5,176 5,026 5,147 5,137 13 ------------------------------------------------------------- Income before income taxes 638 3,661 3,991 3,581 3,763 (83) Income tax expense 285 1,280 1,400 1,270 1,240 (77) ------------------------------------------------------------- Net income $ 353 $ 2,381 $ 2,591 $ 2,311 $ 2,523 (86) ============================================================= Net income per share: Basic $ .06 $ .41 $ .44 $ .40 $ .44 (86) ============================================================= Diluted $ .06 $ .40 $ .44 $ .39 $ .43 (86) ============================================================= Average basic shares (000s) 5,923 5,862 5,824 5,782 5,779 2.5 Average diluted shares (000s) 5,968 5,928 5,899 5,890 5,884 1.4 Performance Ratios Return on average equity 1.83% 13.04% 14.94% 13.90% 15.33% (88) Return on average assets 0.15% 1.08% 1.23% 1.12% 1.24% (88) Net interest margin 3.72% 3.95% 4.13% 4.17% 4.26% (13) Efficiency ratio 60.5% 54.7% 53.4% 55.8% 54.9% 10 Average equity 74,447 72,436 69,583 67,434 65,297 14 Average assets 910,785 875,532 855,989 834,033 809,491 13 Average interest -earning assets 865,430 837,586 821,253 799,678 772,192 12 (a) Share and per share amounts have been restated to reflect the effect of a 5-for-4 stock split in December 2006. The Savannah Bancorp, Inc. and Subsidiaries Selected Financial Condition Highlights - Five-Year Comparison ($ in thousands, except per share data) (Unaudited) --------------------------------------------------------------------- 2007 2006 2005 2004 2003 --------------------------------------------------------------------- Selected Average Balances ---------------- Assets $869,026 $769,917 $685,163 $557,474 $443,502 Loans held for sale 1,299 7,842 23,033 27,209 939 Loans, net of unearned income 754,490 658,750 565,131 441,421 356,006 Securities 58,910 50,600 41,300 40,703 44,015 Other interest -earning assets 16,201 17,278 26,168 22,383 21,198 Total interest -earning assets 830,900 734,470 655,632 531,716 422,158 Interest-bearing deposits 628,310 542,375 487,493 371,877 300,045 Borrowed funds 70,939 62,255 55,255 67,353 40,158 Total interest -bearing liabilities 699,249 604,630 542,748 439,230 340,203 Noninterest -bearing deposits 91,367 96,113 89,386 76,593 65,403 Total deposits 719,677 638,488 576,879 448,470 365,448 Shareholders' equity 71,516 61,766 47,428 38,126 35,740 Loan to deposit ratio - average 105% 103% 98% 98% 97% Selected Financial Data at Year-End ------------------ Assets $932,459 $843,514 $717,901 $617,341 $476,865 Interest- earning assets 878,992 803,927 685,531 593,035 449,025 Loans held for sale 180 914 10,473 26,471 10,393 Loans, net of unearned income 808,651 720,918 613,667 499,868 386,731 Deposits 764,218 706,824 600,510 506,120 389,146 Loan to deposit ratio 106% 102% 102% 99% 99% Interest-bearing liabilities 759,597 669,974 558,116 488,546 360,817 Shareholders' equity 76,272 66,574 58,543 40,071 36,771 Shareholders' equity to total assets 8.18% 7.89% 8.15% 6.49% 7.71% Dividend payout ratio 36.73% 25.92% 25.53% 37.69% 45.00% Risk-based capital ratios: Tier 1 capital to risk-based assets 10.49% 11.09% 11.52% 9.95% 10.60% Total capital to risk-based assets 11.74% 12.34% 12.77% 11.20% 11.85% Loan Quality Data ----------------- Nonperforming assets $ 19,535 $ 2,776 $ 1,357 $ 998 $ 1,525 Nonperforming loans 17,424 2,231 1,357 538 598 Net loan losses 765 444 76 128 306 Allowance for loan losses 12,864 8,954 7,813 6,389 5,067 Nonperforming loans to loans 2.15% 0.31% 0.22% 0.11% 0.15% Nonperforming assets to loans and other real estate owned 2.41% 0.39% 0.22% 0.20% 0.39% Net loan losses to average loans 0.01% 0.07% 0.01% 0.03% 0.09% Allowance for loan losses to total loans 1.59% 1.24% 1.27% 1.28% 1.31% Per Share Data at Year-End(a) --------------- Book value $ 12.88 $ 11.52 $ 10.20 $ 7.80 $ 7.17 Common stock closing price (Nasdaq) $ 17.14 $ 27.25 $ 28.38 $ 21.64 $ 18.56 Common shares outstanding (000s) 5,924 5,781 5,739 5,140 5,129 (a) Share and per share amounts have been restated to reflect the effect of a 5-for-4 stock split in December 2006 and December 2004. The Savannah Bancorp, Inc. and Subsidiaries Selected Operating Highlights - Five-Year Comparison ($ in thousands, except per share data) (Unaudited) --------------------------------------------------------------------- 2007 2006 2005 2004 2003 --------------------------------------------------------------------- Summary of operations Interest income - taxable equivalent $ 63,414 $ 55,347 $ 42,544 $ 28,947 $ 23,221 Interest expense 30,282 22,737 14,679 8,427 6,695 --------------------------------------------------------------------- Net interest income - taxable equivalent 33,132 32,610 27,865 20,520 16,526 Taxable equivalent adjustment (156) (158) (186) (240) (284) --------------------------------------------------------------------- Net interest income 32,976 32,452 27,679 20,280 16,242 Provision for loan losses 4,675 1,585 1,500 1,450 1,000 --------------------------------------------------------------------- Net interest income after provision for loan losses 28,301 30,867 26,179 18,830 15,242 --------------------------------------------------------------------- Noninterest income Service charges on deposit accounts 1,383 1,526 1,622 1,598 1,572 Mortgage related income, net 615 886 1,292 1,079 776 Trust and asset management fees 1,513 658 501 442 398 Other operating income 1,242 1,233 972 981 635 Gain (loss) on sale of OREO (44) -- -- -- -- --------------------------------------------------------------------- Total noninterest income 4,709 4,303 4,387 4,100 3,381 --------------------------------------------------------------------- Noninterest expense Salaries and employee benefits 11,846 10,852 9,530 8,362 6,693 Occupancy and equipment 3,294 2,920 2,199 1,963 1,767 Information technology 1,616 1,525 1,244 1,049 908 Other operating expense 4,383 4,656 3,673 2,880 2,287 --------------------------------------------------------------------- Total noninterest expense 21,139 19,953 16,646 14,254 11,655 --------------------------------------------------------------------- Income before income taxes 11,871 15,217 13,920 8,676 6,968 Income tax expense 4,235 5,215 4,880 2,940 2,324 --------------------------------------------------------------------- Net income $ 7,636 $ 10,002 $ 9,040 $ 5,736 $ 4,644 ===================================================================== Net income per share:(a) Basic $ 1.31 $ 1.73 $ 1.68 $ 1.12 $ 0.91 Diluted $ 1.29 $ 1.70 $ 1.63 $ 1.09 $ 0.89 Cash dividends paid per share $ 0.48 $ 0.45 $ 0.43 $ 0.42 $ 0.41 Average basic shares outstand- ing (000s) 5,850 5,765 5,396 5,136 5,129 Average diluted shares outstand- ing (000s) 5,922 5,876 5,531 5,261 5,226 Performance ratios Net interest margin 3.99% 4.44% 4.25% 3.86% 3.91% Return on average assets 0.88% 1.30% 1.32% 1.03% 1.05% Return on average equity 10.68% 16.19% 19.06% 15.04% 12.99% Efficiency ratio 56.09% 54.29% 51.91% 58.47% 59.40% (a) Share and per share amounts have been restated to reflect the effect of a 5-for-4 stock split in December 2006 and December 2004. The Savannah Bancorp, Inc. and Subsidiaries Selected Quarterly Data - 2007 and 2006 ($ in thousands, except per share data) (Unaudited) Condensed Quarterly Income Statements The following is a summary of unaudited quarterly results for 2007 and 2006: 2007 -------------------------------------------------------------------- Fourth Third Second First -------------------------------------------------------------------- Net interest income $8,080 $8,308 $8,412 $8,176 Provision for loan losses 3,145 635 395 500 -------------------------------------------------------------------- Net interest income after provision for loan losses 4,935 7,673 8,017 7,676 Noninterest income 1,493 1,164 1,000 1,052 Noninterest expense 5,790 5,176 5,026 5,147 -------------------------------------------------------------------- Income before income taxes 638 3,661 3,991 3,581 Income tax expense 285 1,280 1,400 1,270 -------------------------------------------------------------------- Net income $ 353 $2,381 $2,591 $2,311 ==================================================================== Per share:(a) Net income - basic $ .060 $ .406 $ .445 $ .400 Net income - diluted $ .059 $ .402 $ .439 $ .392 Dividends $ .120 $ .120 $ .120 $ .120 Average shares (000s) Basic 5,923 5,862 5,824 5,782 Diluted 5,968 5,928 5,899 5,890 2006 -------------------------------------------------------------------- Fourth Third Second First -------------------------------------------------------------------- Net interest income $8,260 $8,119 $8,156 $7,917 Provision for loan losses 450 360 360 415 -------------------------------------------------------------------- Net interest income after provision for loan losses 7,810 7,759 7,796 7,502 Noninterest income 1,090 1,056 1,086 1,071 Noninterest expense 5,137 4,945 4,976 4,895 -------------------------------------------------------------------- Income before income taxes 3,763 3,870 3,906 3,678 Income tax expense 1,240 1,280 1,368 1,327 -------------------------------------------------------------------- Net income $2,523 $2,590 $2,538 $2,351 ==================================================================== Per share:(a) Net income - basic $ .437 $ .450 $ .441 $ .408 Net income - diluted $ .429 $ .441 $ .432 $ .401 Dividends $ .112 $ .112 $ .112 $ .112 Average shares (000s) Basic 5,779 5,761 5,759 5,759 Diluted 5,884 5,886 5,894 5,886 (a) Share and per share amounts have been adjusted to reflect the effect of a 5-for-4 stock split in December 2006. The summation of quarterly earnings per share may not agree with annual earnings per share. Quarterly Market Values of Common Shares The Company's common stock was sold in an initial public offering on April 10, 1990. It is traded on the NASDAQ Global Market under the symbol SAVB. The quarterly high, low and closing stock trading prices for 2007 and 2006 are listed below. There were approximately 700 holders of record of Company Common Stock and, according to information available to the Company, approximately 720 additional shareholders in street name through brokerage accounts at December 31, 2007. The per share amounts have been restated to reflect the effect of a 5-for-4 stock split in December 2006. 2007 ------------------------------------------------------------------- Closing Market Prices Fourth Third Second First ------------------------------------------------------------------- High $24.69 $25.97 $27.20 $28.07 Low 17.10 23.00 24.71 27.00 Close 17.14 24.69 25.10 27.00 2006 ------------------------------------------------------------------- Closing Market Prices Fourth Third Second First ------------------------------------------------------------------- High $28.14 $30.31 $30.40 $29.58 Low 26.60 26.58 27.26 27.12 Close 27.25 26.64 30.26 28.06 The Savannah Bancorp, Inc. and Subsidiaries Average Balance Sheet and Rate/Volume Analysis - 2007 and 2006 Average Balance Average Rate ------------------- -------------- 2007 2006 2007 2006 --------------------------------------------------------------------- ($ in thousands) (%) Assets $ 6,958 $ 5,969 4.97 4.91 Interest-bearing deposits 56,851 48,190 5.01 4.47 Investments - taxable 2,059 2,410 7.33 7.47 Investments - non-taxable 9,243 11,309 5.11 4.93 Federal funds sold 1,299 7,842 7.54 7.12 Loans held for sale 754,490 658,750 7.89 7.83 Loans(c) --------------------- 830,900 734,470 7.63 7.54 Total interest-earning assets ------------- 38,126 35,447 Noninterest-earning assets --------------------- $869,026 $ 769,917 Total assets ===================== Liabilities and equity Deposits $114,053 $ 95,138 2.00 1.32 NOW accounts 17,831 19,104 0.99 0.99 Savings accounts 167,887 135,736 4.27 3.75 Money market accounts 131,553 105,220 5.35 4.68 CDs, $100M or more 74,234 81,084 4.83 3.98 CDs, broker 122,752 106,093 5.03 4.39 Other time deposits --------------------- Total interest-bearing 628,310 542,375 4.20 3.57 deposits 7,833 15,770 5.27 4.93 FHLB advances - long term 52,796 36,175 4.95 4.98 Short-term borrowings 10,310 10,310 8.17 7.90 Subordinated debt --------------------- Total interest-bearing 699,249 604,630 4.33 3.76 liabilities ------------- 91,367 96,113 Noninterest-bearing deposits 6,894 7,408 Other liabilities 71,516 61,766 Shareholders' equity --------------------- $869,026 $ 769,917 Liabilities and equity ===================== 3.30 3.78 Interest rate spread ============= 3.99 4.44 Net interest margin ============= Net interest income $131,651 $ 129,840 Net earning assets ===================== $719,677 $ 638,488 Average deposits ===================== 3.67 3.03 Average cost of deposits ============= 105% 103% Average loan to deposit ratio ===================== Taxable-Equivalent (a)Variance Interest(b) Attributable to ------------------ Vari- ---------------- 2007 2006 ance Rate Volume ---------------------------------------------------------------------- ($ in thousands) ($ in thousands) Assets Interest-bearing deposits $ 346 $ 293 $ 53 $ 4 $ 49 Investments - taxable 2,848 2,153 695 260 435 Investments - non- taxable 151 180 (29) (3) (26) Federal funds sold 472 557 (85) 20 (105) Loans held for sale 98 558 (460) 33 (493) Loans(c) 59,499 51,606 7,893 395 7,498 ------------------------- Total interest-earning assets 63,414 55,347 8,067 661 7,406 ------------------------------------------- Noninterest-earning assets Total assets Liabilities and equity Deposits NOW accounts 2,279 1,254 1,025 647 378 Savings accounts 176 190 (14) 0 (14) Money market accounts 7,164 5,093 2,071 706 1,365 CDs, $100M or more 7,020 4,927 2,093 694 1,399 CDs, broker 3,605 3,225 380 714 (334) Other time deposits 6,171 4,653 1,518 679 839 ------------------------- Total interest-bearing deposits 26,415 19,342 7,073 3,417 3,656 FHLB advances - long term 413 778 (365) 54 (419) Short-term borrowings 2,612 1,802 810 (11) 821 Subordinated debt 842 815 27 28 (1) ------------------------- Total interest-bearing liabilities 30,282 22,737 7,545 3,446 4,099 ------------------------------------------- Noninterest-bearing deposits Other liabilities Shareholders' equity Liabilities and equity Interest rate spread Net interest margin Net interest income $33,132 $32,610 $ 522 $(2,785) $3,307 =========================================== (a) This table shows the changes in interest income and interest expense for the comparative periods based on either changes in average volume or changes in average rates for interest-earning assets and interest-bearing liabilities. Changes which are not solely due to rate changes or solely due to volume changes are attributed to volume. (b) The taxable equivalent adjustment results from tax exempt income less non-deductible TEFRA interest expense and was $156 in 2007 and $158 in 2006. (c) Average nonaccruing loans have been excluded from total average loans and categorized as a noninterest-earning asset. The Savannah Bancorp, Inc. and Subsidiaries Average Balance Sheet and Rate/Volume Analysis - Fourth Quarter, 2007 and 2006 Average Balance Average Rate ------------------------------------- Q4 Q4 Q4 Q4 2007 2006 2007 2006 --------------------------------------------------------------------- ($ in thousands) (%) Assets $ 9,067 $ 9,869 4.38 5.11 Interest-bearing deposits 58,946 50,116 5.07 4.61 Investments - taxable 1,917 2,104 7.45 7.54 Investments - non-taxable 5,368 10,119 3.33 4.55 Federal funds sold 669 2,204 8.30 9.36 Loans held for sale 789,463 697,780 7.55 8.00 Loans (c) -------------------- 865,430 772,192 7.33 7.70 Total interest-earning assets ------------- 45,355 37,299 Noninterest-earning assets -------------------- $910,785 $809,491 Total assets ==================== Liabilities and equity Deposits $112,785 $ 104,879 1.85 1.63 NOW accounts 16,437 18,350 0.94 0.99 Savings accounts 183,122 143,984 3.99 4.20 Money market accounts 148,231 114,364 5.36 5.09 CDs, $100M or more 72,360 78,574 4.82 4.60 CDs, broker 126,018 114,312 5.02 4.77 Other time deposits -------------------- 658,953 574,463 4.14 3.97 Total interest-bearing deposits 3,021 13,356 6.04 4.99 FHLB advances - long term 63,952 43,036 4.48 5.17 Other borrowings 10,310 10,310 8.20 8.23 Subordinated debt -------------------- Total interest-bearing 736,236 641,165 4.24 4.14 liabilities ------------- 90,895 95,849 Noninterest-bearing deposits 7,207 7,180 Other liabilities 76,447 65,297 Shareholders' equity -------------------- $910,785 $809,491 Liabilities and equity ==================== 3.09 3.56 Interest rate spread ============= 3.72 4.26 Net interest margin ============= Net interest income $129,194 $131,027 Net earning assets ==================== $749,848 $670,312 Average deposits ==================== 3.64 3.41 Average cost of deposits ============= 105% 104% Average loan to deposit ratio ==================== Taxable-Equivalent (a) Variance Interest (b) Attributable to -------------------- -------------- Q4 Q4 Vari- 2007 2006 ance Rate Volume --------------------------------------------------------------------- ($ in thousands) ($ in thousands) Assets Interest-bearing deposits $ 100 $ 127 ($27) $ (18) $ (9) Investments - taxable 754 582 172 58 114 Investments - non-taxable 36 40 (4) 0 (4) Federal funds sold 45 116 (71) (31) (40) Loans held for sale 14 52 (38) (6) (32) Loans (c) 15,032 14,079 953 (791) 1,744 ------------------------ Total interest-earning assets 15,981 14,996 985 (720) 1,705 ----------------------------------------- Noninterest-earning assets Total assets Liabilities and equity Deposits NOW accounts 527 431 96 58 38 Savings accounts 39 46 (7) (2) (5) Money market accounts 1,841 1,523 318 (76) 394 CDs, $100M or more 2,001 1,467 534 78 456 CDs, broker 880 912 (32) 44 (76) Other time deposits 1,593 1,375 218 72 146 ------------------------ Total interest-bearing 6,881 5,754 1,127 246 881 deposits FHLB advances - long term 46 168 (122) 35 (157) Other borrowings 722 561 161 (75) 236 Subordinated debt 213 214 (1) (1) 0 ------------------------ Total interest-bearing liabilities 7,862 6,697 1,165 162 1,003 ---------------------------------------- Noninterest-bearing deposits Other liabilities Shareholders' equity Liabilities and equity Interest rate spread Net interest margin Net interest income $8,119 $8,299 $(180) $(882) $ 702 ======================================== Net earning assets (a) This table shows the changes in interest income and interest expense for the comparative periods based on either changes in average volume or changes in average rates for interest-earning assets and interest-bearing liabilities. Changes which are not solely due to rate changes or solely due to volume changes are attributed to volume. (b) The taxable equivalent adjustment results from tax exempt income less non-deductible TEFRA interest expense and was $39 in the fourth quarter 2007 and 2006, respectively. (c) Average nonaccruing loans have been excluded from total average loans and categorized as a noninterest-earning asset. The Savannah Bancorp, Inc. and Subsidiaries Regulatory Capital Ratios The primary banking regulators of The Savannah Bancorp, Inc. and Subsidiary Banks have adopted capital requirements that specify the minimum level for which no prompt corrective action is required. In addition, the Federal Deposit Insurance Corporation ("FDIC") has adopted FDIC insurance assessment rates based on certain "well- capitalized" risk-based and equity capital ratios. Failure to meet minimum capital requirements can result in the initiation of certain actions by the regulators that, if undertaken, could have a material effect on the Company's and the Subsidiary Banks' financial statements. The following tables show the capital ratios for the Company and the Subsidiary Banks at December 31, 2007 and 2006: ($ in thousands) Company Savannah -------------------------------------------------------------------- 2007 2006 2007 2006 -------------------------------------------------------------------- Qualifying Capital ------------------ Tier 1 capital $81,049 $77,205 $50,433 $48,718 Total capital 90,747 85,910 56,864 54,712 Leverage Ratios --------------- Tier 1 capital to average assets 8.90% 9.57% 8.29% 8.58% Risk-based Ratios ----------------- Tier 1 capital to risk-weighted assets 10.49% 11.09% 9.84% 10.17% Total capital to risk-weighted assets 11.74% 12.34% 11.09% 11.42% ($ in thousands) Bryan Harbourside -------------------------------------------------------------------- 2007 2006 2007 2006 -------------------------------------------------------------------- Qualifying Capital ------------------ Tier 1 capital $18,045 $16,833 $ 8,681 $ 8,687 Total capital 20,328 18,874 9,611 9,207 Leverage Ratios --------------- Tier 1 capital to average assets 8.62% 9.23% 10.11% 15.55% Risk-based Ratios ----------------- Tier 1 capital to risk-weighted assets 9.88% 10.31% 11.86% 16.98% Total capital to risk-weighted assets 11.13% 11.56% 13.13% 18.00% Following are the regulatory capital ratios minimum ratio and the minimum ratios to be classified as a well-capitalized holding company or bank: -------------------------------------------------------------------- Well- Regulatory Capital Guidelines: Capitalized Minimum -------------------------------------------------------------------- Tier 1 capital to average assets 5.00% 4.00% Tier 1 capital to risk-weighted 6.00% 4.00% assets Total capital to risk-weighted assets 10.00% 8.00% The Savannah Bancorp, Inc. and Subsidiaries Loan Concentration Schedule % of % of % Dollar ($ in thousands) 12/31/07 Total 12/31/06 Total Change --------------------------------------------------------------------- Non-residential real estate Owner- occupied $118,714 15 $ 90,848 13 31 Non owner -occupied 118,904 15 98,032 14 21 Construction 33,923 4 22,128 3 53 Commercial land and lot development 38,127 5 35,610 5 7.1 --------------------------------------------------------------------- Total non- residential real estate 309,668 39 246,618 35 26 --------------------------------------------------------------------- Residential real estate Owner- occupied - 1-4 family 83,828 10 87,965 12 (4.7) Non owner- occupied - 1-4 family 114,992 14 68,397 10 68 Construction 57,541 7 110,412 15 (48) Residential land and lot development 109,718 14 93,060 12 18 Home equity lines 43,322 5 40,794 6 6.2 --------------------------------------------------------------------- Total residential real estate 409,401 50 400,628 55 2.2 --------------------------------------------------------------------- Total real estate loans 719,069 89 647,246 90 11 Commercial 71,370 9 57,737 8 24 Consumer 18,692 2 16,628 2 12 Unearned fees, net (480) -- (693) -- (31) --------------------------------------------------------------------- Total loans, net of unearned fees $ 808,651 100 $ 720,918 100 12 ===================================================================== The Savannah Bancorp, Inc. and Subsidiaries Consolidated Statement of Shareholders' Equity For the Three Years Ended December 31, 2007 ($ in thousands, except share data) December 31, --------------------------------------------------------------------- 2007 2006 2005 --------------------------------------------------------------------- Common shares issued Shares, beginning of year 5,781,381 4,591,339 4,112,448 Common stock issued 78,000 -- 397,273 Stock split / dividend -- 1,155,564 -- Stock options exercised 64,416 34,478 81,618 --------------------------------------------------------------------- Shares, end of year 5,923,797 5,781,381 4,591,339 ===================================================================== Treasury shares owned Shares, beginning of year 318 267 282 Stock split / dividend -- 63 (15) Stock options exercised -- (12) -- --------------------------------------------------------------------- Shares, end of year 318 318 267 ===================================================================== Common stock Balance, beginning of year $ 5,781 $ 4,591 $ 4,112 Common stock issued 78 -- 397 Stock split / dividend -- 1,156 -- Stock options exercised 65 34 82 --------------------------------------------------------------------- Balance, end of year 5,924 5,781 4,591 --------------------------------------------------------------------- Additional paid-in capital Balance, beginning of year 35,747 36,257 24,232 Common stock issued, net of issuance costs 1,702 -- 11,191 Stock split / dividend -- (1,156) -- Stock-based compensation expense 147 299 -- Stock options exercised 683 272 494 Stock options tax benefit -- 75 340 --------------------------------------------------------------------- Balance, end of year 38,279 35,747 36,257 --------------------------------------------------------------------- Retained earnings Balance, beginning of year 25,681 18,272 11,539 Net income 7,636 10,002 9,040 Cash dividends paid (2,805) (2,593) (2,307) --------------------------------------------------------------------- Balance, end of year 30,512 25,681 18,272 --------------------------------------------------------------------- Treasury stock Balance, beginning of year (4) (4) (4) Stock options exercised -- -- -- --------------------------------------------------------------------- Balance, end of year (4) (4) (4) --------------------------------------------------------------------- Accumulated other comprehensive income (loss), net Balance, beginning of year (631) (573) 192 Change in unrealized losses on securities available for sale, net of tax 662 178 (522) Net change in fair value of derivative instruments, net of tax 1,530 (236) (243) --------------------------------------------------------------------- Balance, end of year 1,561 (631) (573) --------------------------------------------------------------------- Total shareholders' equity $ 76,272 $ 66,574 $ 58,543 =====================================================================