The Savannah Bancorp Reports Fourth Quarter Earnings of $762,000, 2009 Earnings of $929,000 and Declares Quarterly Dividend

SAVANNAH, Ga., Jan. 26, 2010 (GLOBE NEWSWIRE) -- The Savannah Bancorp, Inc. (Nasdaq:SAVB) reported net income for the fourth quarter 2009 of $762,000 compared to $778,000 for the same period in 2008, a decrease of 2.1 percent. Fourth quarter net income per diluted share was $0.13 in 2009 and 2008. Net income for 2009 was $929,000 compared with net income of $6,006,000 in 2008, a decrease of 85 percent. Net income per diluted share was $0.16 for 2009 and $1.01 in 2008, a decrease of 84 percent. The decline in 2009 earnings results primarily from a higher provision for loan losses, higher FDIC insurance premiums and a higher loss on sale of foreclosed assets when compared to 2008 partially offset by a higher gain on sale of securities. Other growth and performance ratios are included in the attached financial highlights and information.

Total assets increased 4.0 percent to $1.05 billion at December 31, 2009, up $43 million from $1.01 billion a year earlier. Loans totaled $884 million compared with $865 million one year earlier, an increase of 2.2 percent. Deposits totaled $885 million at December 31, 2009 and $832 million at December 31, 2008, an increase of 6.4 percent. Average total assets increased 6.3 percent to $1.02 billion in 2009 from $960 million in 2008.  Average portfolio loans were $841 million in 2009 compared with $822 million in 2008, an increase of 2.3 percent. Average deposits were $860 million in 2009 and $785 million in 2008, an increase of 9.6 percent. Shareholders' equity decreased to $79 million at December 31, 2009 from $81 million at December 31, 2008 due solely to a decrease in accumulated other comprehensive income. The Company's total capital to risk-weighted assets ratio was 11.49 percent, which exceeds the 10 percent required by the regulatory agencies to maintain well-capitalized status.

President and CEO John C. Helmken II said, "Though not at the profitability levels of prior years, we are especially pleased to record a fourth quarter and annual profit given the level of credit quality issues that we have aggressively addressed through charge-offs, impairments and loan loss provisioning."

The allowance for loan losses was $17,678,000, or 2.00 percent of loans at December 31, 2009 compared to $13,300,000 or 1.54 percent of total loans a year earlier. Nonperforming assets were $42,476,000 or 4.04 percent of total assets at December 31, 2009 compared to $35,703,000 or 3.54 percent at December 31, 2008. For 2009, net charge-offs were $8,687,000 compared to $5,564,000 for 2008. The provision for loan losses was $13,065,000 in 2009 compared to $6,000,000 in 2008. The higher provision for loan losses was primarily due to real estate-related charge-offs and continued weakness in the Company's local real estate markets. Fourth quarter 2009 net charge-offs were $1,762,000 compared to net charge-offs of $1,360,000 in the same period in 2008. The provision for loan losses for the fourth quarter of 2009 was $2,560,000 compared to $2,270,000 for the fourth quarter of 2008.

Helmken added, "While it is not ‘business as usual' in times like these, our growing customer base can continue to expect our high touch, relationship-focused banking that serves our banks, customers and communities well in good times as well as bad.  As I have said before, our 12.5 percent local market share translates to 87.5 percent opportunity.  With regard to our loan portfolio, management remains focused on working problem credits and closely monitoring our loans and relationships. Our portfolio is regularly reviewed internally as well as by a third party firm.

"Our profitability, well-capitalized status, liquidity and strong balance sheet are the foundations we have laid to manage our Company in the current environment as well as to take advantage of the opportunities that lie ahead.  We have also added some great people to our team in anticipation of these opportunities."

Net interest income increased $62,000, or 0.2 percent, in 2009 over 2008. In 2009, the net interest margin declined to 3.46 percent from 3.58 percent in 2008, primarily due to higher levels of noninterest-earning assets. Noninterest income increased $1,147,000 or 15 percent, including $2,119,000 in gain on sale of securities, partially offset by a lower gain on hedges and lower trust and asset management fees. Noninterest expense increased $2,236,000, or 9.0 percent, during 2009 as compared to 2008.  Noninterest expense included a $2,396,000 higher loss on the sale of foreclosed assets, $1,233,000 of higher FDIC insurance premiums partially offset by $1,438,000 in lower salaries and employee benefits.

In the fourth quarter the Company elected to withdraw its application for participation in the United States Treasury Department's TARP Capital Purchase Program.

The Board of Directors approved a regular quarterly cash dividend of 2 cents per share for the first quarter. The dividend is payable on February 22, 2010 to shareholders of record on February 5, 2010.

The Savannah Bancorp, Inc. ("SAVB" or "Company"), a bank holding company for The Savannah Bank, N.A., Bryan Bank & Trust (Richmond Hill, GA) and Minis & Co., Inc., is headquartered in Savannah, Georgia and began operations in 1990. SAVB has ten branches in Coastal Georgia and South Carolina.  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.

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.

                            The Savannah Bancorp, Inc. and Subsidiaries
                  Selected Operating Highlights – Five-Year Comparison
                                  ($ in thousands, except per share data)
                                                       (Unaudited)

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 2009 and 2008 are listed below. There were approximately 640 holders of record of Company Common Stock and, according to information available to the Company, approximately 1,150 additional shareholders in street name through brokerage accounts at December 31, 2009.

The Savannah Bancorp, Inc. and Subsidiaries
Regulatory Capital Ratios

The banking regulatory agencies 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 table shows the capital ratios for the Company and the Subsidiary Banks at December 31, 2009 and 2008:

Following are the regulatory capital ratios minimum ratio and the minimum ratios to be classified as a well-capitalized holding company or bank:

Loan Concentration Schedule

The Savannah Bancorp, Inc. and Subsidiaries
Average Balance Sheet and Rate/Volume Analysis - 2009 and 2008 

The Savannah Bancorp, Inc. and Subsidiaries
Average Balance Sheet and Rate/Volume Analysis – Fourth Quarter, 2009 and 2008

(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 in the fourth quarter 2009 and 2008, respectively.
(c) Average nonaccruing loans have been excluded from total average loans and categorized in noninterest-earning assets.