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Surrey Bancorp Reports First Quarter Net Income of $947,725

MOUNT AIRY, NC--(Marketwired - April 21, 2017) - Surrey Bancorp (the "Company") (OTC PINK: SRYB), the holding company for Surrey Bank & Trust (the "Bank"), today reported earnings for the first quarter of 2017.

For the quarter ended March 31, 2017, net income totaled $947,725 or $0.23 per fully diluted common share, compared with $776,954 or $0.19 per fully diluted common share earned during the first quarter of 2016.

The increase in earnings results from a reduction in the provision for loan losses and an increase in noninterest income. The provision for loan losses decreased from $75,814 in the first quarter of 2016 to a recapture of loan losses of $186,663 in 2017. This decrease is due to recoveries net of charge offs of $125,360, combined with a reduction in outstanding loans at the end of the first quarter. Loans outstanding decreased from $210,674,340 at March 31, 2016, to $209,381,047 at March 31, 2017. Noninterest income increased from $538,557 in the first quarter of 2016 to $621,987 during the same period in 2017. The improvement was due to increases of $27,939 in insurance commissions from the Bank's insurance subsidiary; $30,429 in increased fees on mortgage loans delivered to correspondence; and a reduction in losses on the sale of investments of $33,127 related to the sale of equity securities and mutual funds in 2016.

Net interest income decreased slightly from $2,695,401 in the first quarter of 2016 to $2,691,248 in 2017. The net interest margin decreased from 4.50 percent to 4.22 percent from 2016 to 2017, due to a combination of lower loan yields and a change in asset mix. Loan yields decreased from 5.49 percent in 2016 to 5.40 percent in 2017, partially due to the sale of the Bank's sales finance company in the second quarter of 2016. Loan yields made up 87.6 percent of average interest earning assets in the first quarter of 2016 as opposed to 81.5 percent in the first quarter of 2017. The cost of funds decreased from 0.44 percent in the first quarter of 2016 to 0.39 percent in the first quarter of 2017 as non-interest bearing deposits made up a higher percentage of average deposits.

The allowance for loan loss reserves was $3,626,197 or 1.73 percent of total loans as of March 31, 2017. Non-performing assets were 0.47 percent of total assets at March 31, 2017, compared to 0.57 percent on that date in 2016. At March 31, 2017, the allowance equals 119 percent of impaired and non-performing assets, net of government guarantees.

Noninterest expenses increased 4.5 percent from $1,955,589 in the first quarter of 2016, to $2,043,173 in 2017. This increase was primarily due to professional fees paid in 2017 as compared to 2016. Professional fees increased from $17,703 in the first quarter of 2016 to $111,764 in 2017. The total for 2016 was reduced significantly by the recapture of legal expenses related to collection of government guaranteed loans.

Total assets as of March 31, 2017, were $282,215,303, an increase of 8.3 percent from $260,545,029 reported as of March 31, 2016. Total deposits were $236,425,858 at quarter-end 2017, a 9.3 percent increase from the $216,280,991 reported at the end of the first quarter of 2016. Net loans decreased by 0.5 percent from $207,097,033, as of March 31, 2016, to $206,044,608 at the end of the first quarter of 2017.

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; 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.

                                                                            
  CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share 
                                  amounts)                                  
                                                                            
                                                                            
                                     March 31     December 31    March 31   
                                       2017          2016          2016     
                                   ------------  ------------  ------------ 
                                    (unaudited)                 (unaudited) 
Total assets                       $    282,215  $    277,102  $    260,545 
Total loans                             209,671       212,378       210,897 
Investments                              53,663        46,680        30,402 
Deposits                                236,426       230,262       216,281 
Borrowed funds                              750         1,750         1,750 
Stockholders' equity                     41,450        40,537        39,429 
Non-performing assets to total                                              
 assets                                    0.47%         0.54%         0.56%
Loans past due more than 90 days                                            
 to total loans                            0.01%         0.00%         0.01%
Allowance for loan losses to total                                          
 loans                                     1.73%         1.74%         1.80%
Book value per common share        $      10.64  $      10.38  $      10.02 
                                                                            
                                                                            
  CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share 
                                  amounts)                                  
                                                                            
                                                                            
                                                       For the Three Months 
                                                          Ended March 31,   
                                                       -------------------- 
                                                          2017       2016   
                                                       ---------  --------- 
Interest income                                        $   2,915  $   2,928 
Interest expense                                             224        233 
Net interest income                                        2,691      2,695 
Provision for loan losses                                   (187)        76 
Net interest income after provision for loan losses        2,878      2,619 
Noninterest income                                           622        539 
Noninterest expense                                        2,043      1,955 
Net income before taxes                                    1,457      1,203 
Provision for income taxes                                   509        426 
Net income                                                   948        777 
Preferred stock dividend declared                             45         45 
Net income available to common shareholders            $     903  $     732 
Basic net income per share                             $    0.26  $    0.21 
Diluted net income per share                           $    0.23  $    0.19 
Return on average total assets (1)                         1.36%      1.21%
Return on average total equity (1)                         9.19%      7.96%
Yield on average interest earning assets                    4.57%      4.90%
Cost of funds                                               0.39%      0.44%
Net yield on average interest earning assets                4.22%      4.50%
Overhead efficiency ratio                                  61.67%     60.47%
Net charge-offs/average loans                              -0.06%     -0.05%

(1) Annualized for all periods presented.

For additional information, please contact
Ted Ashby
CEO
Mark Towe
CFO
(336) 783-3900

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