SAVANNAH, Ga., July 22, 2008 (PRIME NEWSWIRE) -- The Savannah Bancorp, Inc. (Nasdaq:SAVB) reported net income for the second quarter 2008 of $1,886,000 compared to $2,591,000 in the second quarter 2007. Net income per diluted share was 32 cents compared to 44 cents per diluted share in the second quarter of 2007, a decrease of 27 percent. The decline in second quarter earnings results primarily from a higher provision for loan losses and a lower net interest margin in 2008 as compared to 2007. Second quarter 2008 earnings include the net income derived from the previously announced acquisition of Minis & Co., Inc. ("Minis") on August 31, 2007.
Total assets increased 10 percent to $964 million at June 30, 2008, up $91 million from $873 million a year earlier. Loans, excluding loans held for sale, were $838 million compared to $752 million one year earlier, an increase of 11 percent. Deposits totaled $808 million and $726 million at June 30, 2008 and 2007, respectively, an increase of 11 percent. Shareholders' equity increased 12 percent to $78 million at June 30, 2008 from $70 million at June 30, 2007. We continue to maintain a strong capital position with a total capital to risk-weighted assets ratio of 11.75 percent, well in excess of the 10 percent required by the regulators to maintain well-capitalized status.
John Helmken, President and CEO, said, "In any environment mid-year net income of $3.6 million is very solid for our Company, but especially given the $1.3 million in additional loan loss provisions recorded in the first six months of 2008 versus the same period in 2007. On a linked quarter basis, second quarter 2008 net income increased 11 percent over the first quarter. Through the hard work of our team of experienced bankers, our net interest margin improved by seven basis points in the second quarter. Additionally, our quarter over quarter growth in loans and deposits, a better deposit mix and stabilization of noninterest expenses have all been achieved through the efforts of our team and indicate a concentration on improving our performance."
The allowance for loan losses was $12,445,000, or 1.48 percent of loans at June 30, 2008 compared to $9,517,000 or 1.27 percent of total loans a year earlier. Nonperforming assets were $21,030,000 or 2.50 percent of total loans and other real estate owned at June 30, 2008 compared to $2,595,000 or 0.34 percent at June 30, 2007. Second quarter net charge-offs were $838,000 compared to net charge-offs of $98,000 in the same period in 2007. The provision for loan losses for the second quarter of 2008 was $1,155,000 compared to $395,000 for the second quarter of 2007.
Helmken added, "As our numbers indicate, we continue to focus on growing and serving our customers and prospects. Senior management is equally focused on our loan portfolio. The process of early identification and acknowledgement of problem assets that we started last year is serving us well through these trying times. We remain aggressive, decisive and direct in identifying and acting on problem relationships. While we did successfully work out approximately $3.3 million in problem loans in the second quarter, nonperforming loans were up slightly compared to the first quarter 2008. In particular the Hilton Head Island/Bluffton market, which accounts for 74% of our nonperforming loans, remains a distressed market. Management continues to focus on addressing the loan quality and other issues in the Hilton Head Island/Bluffton market and at our Harbourside Community Bank subsidiary specifically."
Net interest income was flat in the second quarter 2008 versus the second quarter 2007. Second quarter net interest margin declined to 3.77 percent in 2008 from 4.13 percent in 2007 primarily due to lower loan market rates, competitive deposit pricing and growth in higher cost deposits. The second quarter 2008 net interest margin was a slight improvement over the 3.70 percent margin for the first quarter 2008.
Noninterest income increased $791,000, or 79 percent in the second quarter of 2008 versus the same period in 2007 due to higher trust and investment management fees of $531,000 and the gain on the sale of securities of $134,000 partially offset by $80,000 in lower mortgage related income.
Noninterest expense increased to $6,151,000, up $1,125,000 or 22 percent, in the second quarter 2008 compared to the second quarter 2007. Second quarter 2008 noninterest expense included $353,000 of expenses related to Minis. Noninterest expense also included $135,000 of higher FDIC insurance premiums and approximately $75,000 of costs related to other real estate owned and loan costs. The remainder of the increase was due to higher personnel, occupancy and equipment and other expense.
Today, the Board of Directors approved a regular quarterly cash dividend of 12.5 cents per share payable on August 18, 2008 to shareholders of record on August 1, 2008.
The Savannah Bancorp, Inc. ("SAVB"), a bank holding company for The Savannah Bank, N.A. ("Savannah"), Bryan Bank & Trust (Richmond Hill, Georgia) ("Bryan"), Harbourside Community Bank (Hilton Head Island, SC) ("Harbourside") and Minis & Co., Inc., 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 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.
The Savannah Bancorp, Inc. and Subsidiaries Second Quarter Financial Highlights June 30, 2008 and 2007 ($ in thousands, except share data) (Unaudited) % Balance Sheet Data at June 30 2008 2007 Change --------------------------------------------------------------------- Total assets $963,600 $872,664 10 Interest-earning assets 901,643 829,589 8.7 Loans 838,426 752,328 11 Allowance for loan losses 12,445 9,517 31 Non-accruing loans 16,991 1,895 NM Loans past due 90 days - accruing 1,693 44 NM Other real estate owned 2,346 656 NM Net charge-offs 2,644 332 NM Deposits 808,148 726,013 11 Interest-bearing liabilities 793,509 706,804 12 Shareholders' equity 78,463 70,025 12 Allowance for loan losses to total loans 1.48% 1.27% 17 Nonperforming assets to total loans and other real estate owned 2.50% 0.34% NM Loan to deposit ratio 103.75% 103.62% 0.1 Equity to assets 8.14% 8.02% 1.5 Tier 1 capital to risk-weighted assets 10.50% 11.32% (7.2) Total capital to risk-weighted assets 11.75% 12.57% (6.5) Outstanding shares 5,931 5,834 1.7 Book value per share $ 13.23 $ 12.00 10 Tangible book value per share $ 12.77 $ 12.00 6.4 Market value per share $ 13.00 $ 25.10 (48) Performance Data for the Second Quarter --------------------------------------------------------------------- Net income $ 1,886 $ 2,591 (27) Return on average assets 0.80% 1.23% (35) Return on average equity 9.65% 14.94% (35) Net interest margin 3.77% 4.13% (8.7) Efficiency ratio 60.44% 53.40% 13 Per share data: Net income - basic $ 0.32 $ 0.44 (27) Net income - diluted $ 0.32 $ 0.44 (27) Dividends $ 0.125 $ 0.120 4.2 Average shares (000s): Basic 5,931 5,824 1.8 Diluted 5,952 5,899 0.9 Performance Data for the First Six Months --------------------------------------------------------------------- Net income $ 3,590 $ 4,902 (27) Return on average assets 0.76% 1.17% (35) Return on average equity 9.18% 14.42% (36) Net interest margin 3.74% 4.15% (9.9) Efficiency ratio 61.47% 54.58% 13 Per share data: Net income - basic $ 0.61 $ 0.84 (27) Net income - diluted $ 0.60 $ 0.83 (28) Dividends $ 0.250 $ 0.240 4.2 Average shares (000s): Basic 5,929 5,803 2.2 Diluted 5,952 5,895 1.0 The Savannah Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets June 30, 2008 and 2007 ($ in thousands, except share data) (Unaudited) June 30, --------------------------------------------------------------------- 2008 2007 --------------------------------------------------------------------- Assets Cash and due from banks $ 18,237 $ 23,093 Federal funds sold 12,707 8,777 Interest-bearing deposits 9,763 4,874 --------------------------------------------------------------------- Cash and cash equivalents 40,707 36,744 Securities available for sale, at fair value (amortized cost of $56,475 in 2008 and $64,379 in 2007) 56,678 63,489 Loans held for sale 1,263 1,126 Loans, net of allowance for loan losses of $12,445 in 2008 and $9,517 in 2007 825,981 742,811 Premises and equipment, net 9,519 6,198 Other real estate owned 2,346 656 Bank-owned life insurance 6,100 5,870 Goodwill and other intangible assets, net 2,714 -- Other assets 18,292 15,770 --------------------------------------------------------------------- Total assets $963,600 $872,664 ===================================================================== Liabilities Deposits: Noninterest-bearing $ 83,736 $ 89,098 Interest-bearing demand 127,699 122,209 Savings 16,005 18,627 Money market 221,958 168,411 Time deposits 358,750 327,668 --------------------------------------------------------------------- Total deposits 808,148 726,013 Short-term borrowings 46,961 56,437 FHLB advances - long-term 11,826 3,142 Subordinated debt 10,310 10,310 Other liabilities 7,892 6,737 --------------------------------------------------------------------- Total liabilities 885,137 802,639 --------------------------------------------------------------------- Shareholders' equity Preferred stock, par value $1 per share: authorized 10,000,000 shares, none issued -- -- Common stock, par value $1 per share: authorized 20,000,000 shares; issued 5,931,008 and 5,833,860 shares in 2008 and 2007, respectively 5,931 5,834 Additional paid-in capital 38,419 36,347 Retained earnings 32,618 29,189 Treasury stock, 318 in 2008 and 2007 (4) (4) Accumulated other comprehensive income (loss), net 1,499 (1,341) --------------------------------------------------------------------- Total shareholders' equity 78,463 70,025 --------------------------------------------------------------------- Total liabilities and shareholders' equity $963,600 $872,664 ===================================================================== The Savannah Bancorp, Inc. and Subsidiaries Consolidated Statements of Income For the Six Months and Five Quarters Ending June 30, 2008 and 2007 ($ in thousands, except per share data) --------------------------------------------------------------------- (Unaudited) --------------------------------------------------------------------- For the Six Months Ended --------------------------------------------------------------------- June 30, ----------------- % 2008 2007 Chg --------------------------------------------------------------------- Interest and dividend income Loans, including fees $27,658 $29,224 (5.4) Loans held for sale 32 69 (54) Investment securities 1,542 1,346 15 Deposits with banks 101 201 (50) Federal funds sold 86 296 (71) ------------------------------------------------------------- Total interest and dividend income 29,419 31,136 (5.5) ------------------------------------------------------------- Interest expense Deposits 11,482 12,571 (8.7) Short-term borrowings 1,348 1,658 (19) FHLB advances 132 319 (59) ------------------------------------------------------------- Total interest expense 12,962 14,548 (11) ------------------------------------------------------------- Net interest income 16,457 16,588 (0.8) Provision for loan losses 2,225 895 149 ------------------------------------------------------------- Net interest income after the provision for loan losses 14,232 15,693 (9.3) ------------------------------------------------------------- Noninterest income Trust and asset management fees 1,444 365 296 Service charges on deposits 921 695 33 Mortgage related income, net 149 376 (60) Other operating income 890 623 42 Gain (loss) on sale of OREO 16 (6) NM Gain on sale of securities 134 -- NM ------------------------------------------------------------- Total noninterest income 3,554 2,053 73 ------------------------------------------------------------- Noninterest expense Salaries and employee benefits 6,962 5,802 20 Occupancy and equipment 1,799 1,540 17 Information technology 788 806 (2.2) Other operating expense 2,752 2,026 36 ------------------------------------------------------------- Total noninterest expense 12,301 10,174 21 ------------------------------------------------------------- Income before income taxes 5,485 7,572 (28) Income tax expense 1,895 2,670 (29) ------------------------------------------------------------- Net income $ 3,590 $ 4,902 (27) ============================================================= Net income per share: Basic $ 0.61 $ 0.84 (27) ============================================================= Diluted $ 0.60 $ 0.83 (28) ============================================================= Average basic shares (000s) 5,929 5,803 2.2 Average diluted shares (000s) 5,952 5,895 1.0 Performance Ratios Return on average equity 9.18% 14.42% (36) Return on average assets 0.76% 1.17% (35) Net interest margin 3.74% 4.15% (9.9) Efficiency ratio 61.47% 54.58% 13 Average equity 78,404 68,544 14 Average assets 942,258 845,071 12 Average interest-earning assets 884,125 810,525 9.1 ----------------------------------------------------------------------- (Unaudited) ----------------------------------------------------------------------- 2008 2007 Q2-08/ Second First Fourth Third Second Q2-07 Quarter Quarter Quarter Quarter Quarter % Chg ------------------------------------------------------ Interest and dividend income Loans, including fees $13,447 $14,211 $15,016 $15,196 $14,872 (9.6) Loans held for sale 20 12 14 15 35 (43) Investment securities 760 782 767 794 726 4.7 Deposits with banks 34 67 100 44 119 (71) Federal funds sold 33 53 45 130 125 (74) ----------------------------------------------- Total interest and dividend income 14,294 15,125 15,942 16,179 15,877 (10) ----------------------------------------------- Interest expense Deposits 5,358 6,124 6,881 6,963 6,479 (17) Short-term borrowings 467 881 935 860 831 (44) FHLB advances 83 49 46 48 155 (46) ----------------------------------------------- Total interest expense 5,908 7,054 7,862 7,871 7,465 (21) ----------------------------------------------- Net interest income 8,386 8,071 8,080 8,308 8,412 (0.3) Provision for loan losses 1,155 1,070 3,145 635 395 192 ----------------------------------------------- Net interest income after the provision for loan losses 7,231 7,001 4,935 7,673 8,017 (9.8) ----------------------------------------------- Noninterest income Trust and asset management fees 720 724 769 379 189 281 Service charges on deposits 534 387 349 339 348 53 Mortgage related income, net 86 63 98 141 166 (48) Other operating income 300 590 315 305 303 (1.0) Gain (loss) on sale of OREO 17 (1) (38) -- (6) NM Gain on sale of securities 134 -- -- -- -- NM ----------------------------------------------- Total noninterest income 1,791 1,763 1,493 1,164 1,000 79 ----------------------------------------------- Noninterest expense Salaries and employee benefits 3,489 3,473 3,125 2,919 2,838 23 Occupancy and equipment 910 889 958 796 782 16 Information technology 395 393 422 388 381 3.7 Other operating expense 1,357 1,395 1,285 1,073 1,025 32 ----------------------------------------------- Total noninterest expense 6,151 6,150 5,790 5,176 5,026 22 ----------------------------------------------- Income before income taxes 2,871 2,614 638 3,661 3,991 (28) Income tax expense 985 910 285 1,280 1,400 (30) ----------------------------------------------- Net income $ 1,886 $ 1,704 $ 353 $ 2,381 $ 2,591 (27) =============================================== Net income per share: Basic $ 0.32 $ 0.29 $ 0.06 $ 0.41 $ 0.44 (27) =============================================== Diluted $ 0.32 $ 0.29 $ 0.06 $ 0.40 $ 0.44 (27) =============================================== Average basic shares (000s) 5,931 5,928 5,923 5,862 5,824 1.8 Average diluted shares (000s) 5,952 5,951 5,968 5,928 5,899 0.9 Performance Ratios Return on average equity 9.65% 8.76% 1.83% 13.04% 14.94% (35) Return on average assets 0.80% 0.73% 0.15% 1.08% 1.23% (35) Net interest margin 3.77% 3.70% 3.72% 3.95% 4.13% (8.7) Efficiency ratio 60.44% 62.54% 60.48% 54.65% 53.40% 13 Average equity 78,596 78,210 74,447 72,436 69,583 13 Average assets 949,937 934,756 910,785 875,532 855,989 11 Average interest- earning assets 892,397 876,022 865,430 837,586 821,253 8.7
Capital Resources
The banking regulatory agencies have adopted capital requirements that specify the minimum level for which no prompt corrective action is required. In addition, the FDIC assesses FDIC insurance premiums based on certain "well-capitalized" risk-based and equity capital ratios. As of June 30, 2008, the Company and the Subsidiary Banks exceeded the minimum requirements necessary to be classified as "well-capitalized."
Total tangible equity capital for the Company was $75.7 million, or 7.86 percent of total assets at June 30, 2008. The table below includes the regulatory capital ratios for the Company and each Subsidiary Bank along with the minimum capital ratio and the ratio required to maintain a well-capitalized regulatory status.
($ in Well- thousands) Company Savannah Bryan Harbourside Minimum Capitalized ----------------------------------------------------------------------- Qualifying Capital Tier 1 capital $84,250 $52,580 $19,146 $7,666 -- -- Total capital 94,311 59,185 21,569 8,630 -- -- Leverage Ratios Tier 1 capital to average assets 8.87% 8.33% 8.85% 8.15% 4.00% 5.00% Risk-based Ratios Tier 1 capital to risk- weighted assets 10.50% 9.99% 9.88% 9.99% 4.00% 6.00% Total capital to risk-weighted assets 11.75% 11.24% 11.14% 11.24% 8.00% 10.00%
Tier 1 and total capital at the Company level includes $10 million of subordinated debt issued to the Company's nonconsolidated subsidiaries. Total capital also includes the allowance for loan losses up to 1.25 percent of risk-weighted assets.
The capital ratios are significantly above the well-capitalized threshold. The Company currently has access to approximately $12 million of trust preferred borrowings and to the capital markets, if needed, to maintain the well-capitalized status of the Subsidiary Banks.
The Savannah Bancorp, Inc. and Subsidiaries Allowance for Loan Losses and Nonperforming Loans (Unaudited) 2008 2007 ------------------------------------------- Second First Fourth Third Second ($ in thousands) Quarter Quarter Quarter Quarter Quarter ------------------------------------------- Allowance for loan losses Balance at beginning of period $12,128 $12,864 $ 9,842 $ 9,517 $ 9,220 Provision for loan losses 1,155 1,070 3,145 635 395 Net charge-offs (838) (1,806) (123) (310) (98) ------------------------------------------- Balance at end of period $12,445 $12,128 $12,864 $ 9,842 $ 9,517 =========================================== As a % of loans 1.48% 1.45% 1.59% 1.26% 1.27% As a % of nonperforming loans 66.61% 69.26% 73.83% 145.68% 490.82% As a % of nonperforming assets 59.18% 62.08% 65.85% 124.46% 366.74% Net charge-offs as a % of average loans (a) 0.40% 0.90% 0.07% 0.17% 0.05% Risk element assets Nonaccruing loans $16,991 $16,915 $14,663 $ 5,028 $ 1,895 Loans past due 90 days - accruing 1,693 596 2,761 1,728 44 ------------------------------------------- Total nonperforming loans 18,684 17,511 17,424 6,756 1,939 Other real estate owned 2,346 2,025 2,112 1,152 656 ------------------------------------------- Total nonperforming assets $21,030 $19,536 $19,536 $ 7,908 $ 2,595 =========================================== Loans past due 30-89 days $ 6,528 $11,014 $ 4,723 $ 5,302 $ 5,127 Nonperforming loans as a % of loans 2.22% 2.10% 2.24% 0.87% 0.26% Nonperforming assets as a % of loans and other real estate owned 2.50% 2.33% 2.51% 1.01% 0.34% Nonperforming assets as a % of capital (b) 23.13% 21.47% 21.92% 9.30% 3.26% (a) Annualized (b) Capital includes the allowance for loan losses The Savannah Bancorp, Inc. & Subsidiaries Loan Concentration Schedule June 30, 2008 and December 31, 2007 % of % of % Dollar ($ in thousands) 6/30/08 Total 12/31/07 Total Change ---------------------------------------------------------------------- Non-residential real estate Owner-occupied $136,838 16 $118,714 15 15 Non owner-occupied 116,475 14 118,904 15 (2) Construction 25,567 3 33,923 4 (25) Commercial land and lot development 38,943 5 38,127 5 2 ------------------------------------------------------------ Total non-residential real estate 317,823 38 309,668 39 3 ------------------------------------------------------------ Residential real estate Owner-occupied -- 1-4 family 84,526 10 83,828 10 1 Non owner-occupied -- 1-4 family 126,816 15 114,992 14 10 Construction 55,151 7 57,541 7 (4) Residential land and lot development 108,082 13 109,718 14 (1) Home equity lines 47,178 5 43,322 5 9 ------------------------------------------------------------ Total residential real estate 421,753 50 409,401 50 3 ------------------------------------------------------------ Total real estate loans 739,576 88 719,069 89 3 Commercial 80,217 10 71,370 9 12 Consumer 18,882 2 18,692 2 1 Unearned fees, net (249) -- (480) -- (48) ------------------------------------------------------------ Total loans, net of unearned fees $838,426 100 $808,651 100 4 ====================================================================== The Savannah Bancorp, Inc. and Subsidiaries Average Balance Sheet and Rate/Volume Analysis - Second Quarter, 2008 and 2007 Average Balance Average Rate ------------------------------------- QTD QTD QTD QTD 6/30/08 6/30/07 6/30/08 6/30/07 ---------------------------------------------------------------------- ($ in thousands) (%) Assets $ 5,675 $9,207 2.40 5.18 Interest-bearing deposits 57,466 56,757 5.17 5.01 Investments - taxable 1,915 2,060 5.24 7.79 Investments - non-taxable 7,080 9,408 1.87 5.33 Federal funds sold 980 2,063 8.19 6.80 Loans held for sale 819,281 741,758 6.58 8.05 Loans (c) ------------------- 892,397 821,253 6.43 7.77 Total interest-earning assets --------------- 57,540 34,736 Noninterest-earning assets ------------------- $949,937 $855,989 Total assets =================== Liabilities and equity Deposits $121,168 $120,092 1.16 2.09 NOW accounts 15,882 18,799 0.88 1.02 Savings accounts 138,915 128,106 2.25 4.11 Money market accounts Money market accounts - 68,601 34,291 2.50 5.51 institutional 149,010 125,404 4.64 5.36 CDs, $100M or more 69,404 68,149 3.44 4.78 CDs, broker 131,358 121,831 4.42 5.05 Other time deposits ------------------- 694,338 616,672 3.10 4.21 Total interest-bearing deposits 11,876 12,095 2.80 5.14 FHLB advances - long-term 62,738 48,122 2.10 5.14 Short-term borrowings 10,310 10,310 5.37 8.33 Subordinated debt ------------------- Total interest-bearing 779,262 687,199 3.04 4.36 Liabilities --------------- 84,130 92,844 Noninterest-bearing deposits 7,949 6,363 Other liabilities 78,596 69,583 Shareholders' equity ------------------- $949,937 $855,989 Liabilities and equity =================== 3.39 3.41 Interest rate spread =============== 3.77 4.13 Net interest margin =============== Net interest income $113,135 $134,054 Net earning assets =================== $778,468 $709,516 Average deposits =================== 2.76 3.66 Average cost of deposits =============== 105% 105% Average loan to deposit ratio ==================== Taxable-Equivalent (a) Variance Interest (b) Attributable to ------------------ --------------- QTD QTD Vari- 6/30/08 6/30/07 ance Rate Volume ----------------------------------------------------------------------- ($ in thousands) ($ in thousands) Assets Interest-bearing deposits $ 34 $ 119 $(85) $ (64) $ (21) Investments - taxable 741 709 32 23 9 Investments - non-taxable 25 40 (15) (13) (2) Federal funds sold 33 125 (92) (81) (11) Loans held for sale 20 35 (15) 7 (22) Loans (c) 13,449 14,888 (1,439) (2,718) 1,279 --------------------------- Total interest-earning assets 14,302 15,916 (1,614) (2,744) 1,130 -------------------------------------------- Noninterest-earning assets Total assets Liabilities and equity Deposits NOW accounts 351 625 (274) (278) 4 Savings accounts 35 48 (13) (7) (6) Money market accounts 778 1,313 (535) (594) 59 Money market accounts - institutional 427 471 (44) (257) 213 CDs, $100M or more 1,724 1,677 47 (225) 272 CDs, broker 595 812 (217) (228) 11 Other time deposits 1,448 1,533 (85) (191) 106 --------------------------- Total interest-bearing deposits 5,358 6,479 (1,121) (1,707) 586 FHLB advances - long-term 83 155 (72) (71) (1) Short-term borrowings 329 617 (288) (365) 77 Subordinated debt 138 214 (76) (76) -- --------------------------- Total interest-bearing Liabilities 5,908 7,465 (1,557) (2,262) 705 -------------------------------------------- Noninterest-bearing deposits Other liabilities Shareholders' equity Liabilities and equity Interest rate spread Net interest margin Net interest income $ 8,394 $ 8,451 $ (57) $ (482) $ 425 ============================================ Net earning assets Average deposits Average cost of deposits Average loan to deposit ratio (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 $8 and $39 in the second quarter 2008 and 2007, respectively. (c) Average nonaccruing loans have been excluded from total average loans and categorized in noninterest-earning assets. The Savannah Bancorp, Inc. and Subsidiaries Average Balance Sheet and Rate/Volume Analysis - First Six Months, 2008 and 2007 Average Balance Average Rate ------------------------------------ YTD YTD YTD YTD 6/30/08 6/30/07 6/30/08 6/30/07 ------------------------------------ ($ in thousands) (%) Assets $ 6,294 $7,710 3.22 5.26 Interest-bearing deposits 57,945 53,986 5.20 4.91 Investments - taxable 1,915 2,000 5.45 7.86 Investments - non-taxable 6,750 11,309 2.56 5.28 Federal funds sold 857 1,859 7.49 7.48 Loans held for sale 810,364 733,661 6.85 8.04 Loans (c) ------------------ 884,125 810,525 6.68 7.77 Total interest-earning assets ---------------- 58,133 34,546 Noninterest-earning assets ------------------ $942,258 $845,071 Total assets ================== Liabilities and equity Deposits $118,326 $114,642 1.35 2.05 NOW accounts 15,935 18,596 0.91 1.01 Savings accounts 137,228 121,890 2.49 4.37 Money market accounts Money market accounts - 60,134 34,291 3.09 4.21 institutional 147,962 121,312 4.87 5.30 CDs, $100M or more 69,637 74,090 3.93 4.81 CDs, broker 130,675 120,588 4.63 5.01 Other time deposits ------------------ 679,897 605,409 3.39 4.19 Total interest-bearing deposits 8,804 12,680 3.01 5.07 FHLB advances - long-term 72,956 48,734 2.80 5.14 Short-term borrowings 10,310 10,310 6.38 8.14 Subordinated debt ------------------ Total interest-bearing 771,967 677,133 3.37 4.33 Liabilities ---------------- 83,827 92,988 Noninterest-bearing deposits 8,060 6,406 Other liabilities 78,404 68,544 Shareholders' equity ------------------ $942,258 $845,071 Liabilities and equity ================== 3.31 3.44 Interest rate spread ================ 3.74 4.15 Net interest margin ================ Net interest income $112,158 $133,392 Net earning assets ================== $763,724 $698,397 Average deposits ================== 3.02 3.63 Average cost of deposits ================ 106% 105% Average loan to deposit ratio =================== Taxable-Equivalent (a) Variance Interest (b) Attributable to ------------------ --------------- YTD YTD Vari- 6/30/08 6/30/07 ance Rate Volume ----------------------------------------------------------------------- ($ in thousands) ($ in thousands) Assets Interest-bearing deposits $ 101 $ 201 $ (100) $ (78) $ (22) Investments - taxable 1,502 1,314 188 78 110 Investments - non-taxable 52 78 (26) (24) (2) Federal funds sold 86 296 (210) (153) (57) Loans held for sale 32 69 (37) -- (37) Loans (c) 27,662 29,256 (1,594) (4,353) 2,759 --------------------------- Total interest-earning assets 29,435 31,214 (1,779) (4,405) 2,626 -------------------------------------------- Noninterest-earning assets Total assets Liabilities and equity Deposits NOW accounts 799 1,167 (368) (400) 32 Savings accounts 72 93 (21) (9) (12) Money market accounts 1,706 2,643 (937) (1,143) 206 Money market accounts - institutional 928 716 212 (192) 404 CDs, $100M or more 3,593 3,189 404 (260) 664 CDs, broker 1,364 1,768 (404) (325) (79) Other time deposits 3,020 2,995 25 (228) 253 --------------------------- Total interest-bearing deposits 11,482 12,571 (1,089) (2,415) 1,326 FHLB advances - long-term 132 319 (187) (130) (57) Short-term borrowings 1,020 1,242 (222) (569) 347 Subordinated debt 328 416 (88) (90) 2 --------------------------- Total interest-bearing Liabilities 12,962 14,548 (1,586) (3,241) 1,655 -------------------------------------------- Noninterest-bearing deposits Other liabilities Shareholders' equity Liabilities and equity Interest rate spread Net interest margin Net interest income $16,473 $16,666 $(193) $(1,164) $971 ============================================ Net earning assets Average deposits Average cost of deposits Average loan to deposit ratio (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 $16 and $78 in 2008 and 2007, respectively. (c) Average nonaccruing loans have been excluded from total average loans and categorized in noninterest-earning assets.