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Severn Bancorp, Inc. Announces Substantial Increase in Second Quarter Earnings

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Severn Bancorp, Inc. Announces Substantial Increase in Second Quarter Earnings

PR Newswire

ANNAPOLIS, Md., July 27, 2018 /PRNewswire/ -- Severn Bancorp, Inc., (NASDAQ:SVBI) parent company of Severn Bank, today announced net income of $1.9 million for the three months ending June 30, 2018 versus $982 thousand for the same quarter in 2017. This is an increase of 95% year over year for the period. On a diluted per share basis, earnings were $0.15 versus $0.08 for the quarters ended June 30, 2018 and 2017, respectively. Net income for the six months ended June 30, 2018 is $3.8 million, a 99% increase over net income of $1.9 million for the same six month period in 2017.

Net interest income increased 15.3% during the second quarter of 2018. Net interest income was $6.9 million during the second quarter of 2018 versus $6.0 million during the second quarter of 2017. Net interest margin improved to 3.57% for the three months ending June 30, 2018 from 3.26% for the same period in 2017. Net interest income increased to $13.9 million for the first six months of 2018 from $11.6 million for the same time frame in 2017. Non-interest expenses increased modestly by 11% from $5.8 million for the second quarter of 2017 to $6.5 million for 2018. The additional expense was mostly related to new lending staff being added.

Severn Bank experienced a significant increase in mortgage banking revenue of 126% in the second quarter of 2018 versus the second quarter of 2017. Year to date mortgage banking revenue saw an increase of 51% for the first six months of 2018 versus 2017. The company's efficiency ratio improved to 71.23% for the three months ending June 30, 2018 versus 82.96% for that same three months in 2017. Year over year the efficiency ratio improved to 70.59% from 82.11% for the first six months of 2018 and 2017 respectively.

 "Earnings for the company are the best they have been in some time", stated Alan J. Hyatt, President and Chief Executive Officer.  Mr. Hyatt continued, "In June we opened a new branch in Lothian/Wayson's Corner so we now have excellent coverage of the county from north to south. We are making tremendous progress in picking up some strong local business relationships and bringing key staff on board. We were pleased to be able to pay a dividend the past couple of quarters, and management and the Board of Directors are focused on continued improvement in our operations and enhancing long term shareholder value."

About Severn Bank: Founded in 1946, Severn is a full-service community bank offering a wide array of personal and commercial banking products as well as residential and commercial mortgage lending. It has assets of $821 million and six branches located in Annapolis, Edgewater, Severna Park, Lothian/Wayson's Corner and Glen Burnie, Maryland. The bank specializes in exceptional customer service and holds itself and its employees to a high standard of community contribution. Severn is on the Web at www.severnbank.com.

Forward Looking Statements
In addition to the historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties that may be affected by various factors that may cause actual results to differ materially from those in the forward-looking statements. The forward-looking statements contained herein include, but are not limited to, those with respect to management's determination of the amount of loan loss reserve and statements about the economy. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "will," "would," "could," "should," "guidance," "potential," "continue," "project," "forecast," "confident," and similar expressions are typically used to identify forward-looking statements. Severn's operations and actual results could differ significantly from those discussed in the forward-looking statements. Some of the factors that could cause or contribute to such differences include, but are not limited to, changes in the economy and interest rates both in the nation and in Severn's general market area, federal and state regulation, competition and other factors detailed from time to time in Severn's filings with the Securities and Exchange Commission (the "SEC"), including "Item 1A. Risk Factors" contained in Severn's Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

 

Severn Bancorp, Inc.

Consolidated Income Statement

(dollars in thousands, except per share data)

(Unaudited)










Quarterly income statement results:

Three Months Ended June 30,








2018

2017

$ Change

% Change











Interest Income
















Interest on loans

$                         8,516

$                     7,394

$              1,122

15.17%



Interest on securities 

307

328

(21)

-6.40%



Other interest income

178

174

4

2.30%












Total interest income

9,001

7,896

1,105

13.99%











Interest Expense
















Interest on deposits

1,274

938

336

35.82%



Interest on long term borrowings

800

951

(151)

-15.88%












Total interest expense

2,074

1,889

185

9.79%












Net interest income

6,927

6,007

920

15.32%












Provision for (reversal of) loan losses

0

(375)

375

-100.00%












Net interest income after provision for (reversal of) loan losses

6,927

6,382

545

8.54%











Non-Interest Income
















Mortgage-banking revenue

635

281

354

125.98%



Real Estate Commissions

360

268

92

34.33%



Real Estate Management Income

187

122

65

53.28%



All other income

1,010

334

676

202.40%












Net Non-Interest Income

2,192

1,005

1,187

118.11%












Net interest income plus non-interest income

9,119

7,387

1,732

23.45%



    after provision for (reversal of) loan losses















Non-Interest Expenses
















Compensation and related expenses

4,420

3,674

746

20.30%



Net Occupancy & Depreciation

391

325

66

20.31%



Net Costs of Foreclosed Real Estate

(18)

7

(25)

-357.14%



Other


1,684

1,818

(134)

-7.37%












Total non-interest expenses

6,477

5,824

653

11.21%












Income before income tax provision 

2,642

1,563

1,079

69.03%












Income tax provision 

724

581

143

24.61%












Net income

$                         1,918

$                        982

$                 936

95.32%



Net income available to common shareholders

$                         1,918

$                        912

$              1,006

110.31%











 

Severn Bancorp, Inc.

Consolidated Income Statement

(dollars in thousands, except per share data)

(Unaudited)









Year-to-Date income statement results:

Six Months Ended June 30,







2018

2017

$ Change

% Change









Interest Income














Interest on loans

$                       16,887

$                   14,525

$              2,362

16.26%


Interest on securities 

627

597

30

5.03%


Other interest income

364

331

33

9.97%










Total interest income

17,878

15,453

2,425

15.69%









Interest Expense














Interest on deposits

2,407

1,913

494

25.82%


Interest on long term borrowings

1,560

1,947

(387)

-19.88%










Total interest expense

3,967

3,860

107

2.77%










Net interest income

13,911

11,593

2,318

19.99%










Provision for (reversal of) loan losses

0

(650)

650

-100.00%










Net interest income after provision for (reversal of) loan losses

13,911

12,243

1,668

13.62%









Non-Interest Income














Mortgage-banking revenue

1,230

816

414

50.74%


Real Estate Commissions

745

648

97

14.97%


Real Estate Management Income

370

316

54

17.09%


All other income

1,716

583

1,133

194.34%










Net Non-Interest Inccome

4,061

2,363

1,698

71.86%










Net interest income plus non-interest income

17,972

14,606

3,366

23.05%


    after provision for (reversal of) loan losses













Non-Interest Expenses














Compensation and related expenses

8,698

7,431

1,267

17.05%


Net Occupancy & Depreciation

735

661

74

11.20%


Net Costs of Foreclosed Real Estate

14

40

(26)

-65.00%


Other


3,253

3,367

(114)

-3.39%










Total non-interest expenses

12,700

11,499

1,201

10.44%










Income before income tax provision 

5,272

3,107

2,165

69.68%










Income tax provision 

1,469

1,200

269

22.42%










Net income

$                         3,803

$                     1,907

$              1,896

99.42%


Net income available to common shareholders

$                         3,733

$                     1,767

$              1,966

111.26%









 

Severn Bancorp, Inc.

Consolidated Balance Sheet

(dollars in thousands, except per share data)

(Unaudited)





















June 30, 2018

December 31, 2017

$ Change

% Change

Balance Sheet Data:













ASSETS







Cash


$                         2,239

$                     2,382

$               (143)

-6.00%


Federal funds and Interest bearing deposits in other banks

19,926

19,471

455

2.34%


Certificates of deposit held as investment

8,780

8,780

0

0.00%


Investment securities available for sale

11,975

10,119

1,856

18.34%


Investment securities held to maturity

46,487

54,303

(7,816)

-14.39%


Loans held for sale

9,444

4,530

4,914

108.48%


Loans receivable

686,912

668,151

18,761

2.81%


Loan valuation allowance

(8,257)

(8,055)

(202)

2.51%


Accrued interest receivable 

2,604

2,640

(36)

-1.36%


Foreclosed real estate, net

295

403

(108)

-26.80%


Premises and equipment, net

23,059

23,139

(80)

-0.35%


Restricted stock investments

4,227

4,489

(262)

-5.84%


Bank owned life insurance

5,146

5,064

82

1.62%


Deferred income taxes

3,993

5,302

(1,309)

-24.69%


Prepaid expenses and other assets

3,858

4,069

(211)

-5.19%













$                     820,688

$                  804,787

$             15,901

1.98%









LIABILITIES AND STOCKHOLDERS EQUITY






Deposits

$                     621,615

$                  602,228

$             19,387

3.22%


Borrowings

82,000

88,500

(6,500)

-7.34%


Subordinated debentures

20,619

20,619

-

0.00%


Accounts payable and accrued expenses

2,413

2,340

73

3.12%










 Total Liabilities

726,647

713,687

12,960

1.82%










Preferred stock

-

4

(4)

-100.00%


Common stock

127

122

5

4.10%


Additional paid-in capital

65,157

65,137

20

0.03%


Retained earnings

28,858

25,872

2,986

11.54%


Accumulated comprehensive income (loss)

(101)

(35)

(66)

188.57%










 Total Stockholders' Equity

94,041

91,100

2,941

3.23%













$                     820,688

$                  804,787

$             15,901

1.98%

 

Severn Bancorp, Inc.



Selected Financial Data



(dollars in thousands, except per share data)



(Unaudited)


















Six Months Ended June 30,


Three Months Ended June 30,







2018

2017


2018

2017



Per Share Data:





.




Basic earnings per share

$                          0.30

$                       0.15


$                          0.15

$                       0.08




Diluted earnings per share

$                          0.30

$                       0.14


$                          0.15

$                       0.07




Average basic shares outstanding

12,463,132

12,125,324


12,684,711

12,125,324




Average diluted shares outstanding

12,559,069

12,209,250


12,781,037

12,209,250














Performance Ratios:









Return on average assets

0.95%

0.45%


0.95%

0.46%




Return on average equity

9.04%

4.03%


8.12%

4.14%




Net interest margin

3.62%

3.18%


3.57%

3.26%




Efficiency ratio*

70.59%

82.11%


71.23%

82.96%





























June 30, 2018

December 31, 2017






Asset Quality Data:









Non-accrual loans

$                         7,610

$                     5,710







Foreclosed real estate

295

403








Total non-performing assets

7,905

6,113







Total non-accrual loans to total loans

1.1%

0.9%







Total non-accrual loans to total assets

0.9%

0.7%







Allowance for loan losses

8,257

8,055







Allowance for loan losses to total loans

1.2%

1.2%







Allowance for loan losses to total










non-accrual loans

108.5%

141.1%







Total non-performing assets to total assets

1.0%

0.8%







Non-accrual troubled debt restructurings (included above)

803

820







Performing troubled debt restructurings

11,868

13,714







Loan to deposit ratio

110.5%

110.9%

















*

This non-GAAP financial measure is calculated as noninterest expenses less OREO expenses divided by net interest income plus noninterest income



 

                                         

Severn Savings Bank logo (PRNewsFoto/Severn Bancorp, Inc.) (PRNewsFoto/Severn Bancorp, Inc.)

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SOURCE Severn Bancorp, Inc.

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