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Severn Bancorp, Inc. Announces Second Quarter Earnings

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ANNAPOLIS, Md., July 26, 2019 /PRNewswire/ -- Severn Bancorp, Inc., (NASDAQ:SVBI) parent company of Severn Bank, today announced net income of $2.2 million for the three months ending June 30, 2019 versus $1.9 million for the same quarter in 2018.  On a diluted per share basis, earnings were $0.17 versus $0.15 for the quarters ending June 30, 2019 and 2018, respectively.

Net income for the six months ending June 30, 2019 was $4.8 million versus $3.8 million for June 30, 2018, an increase of 26%.  On a diluted per share basis, earnings were $0.37 versus $0.30 for the six months ending June 30, 2019 and 2018 respectively, an increase of 23%.

"Earnings are respectable again for the second quarter of this year," stated Alan J. Hyatt, President and Chief Executive Officer.  Mr. Hyatt continued, "We are pleased with the continued upward trajectory of the company's earnings. Our quarterly results were boosted by increased residential mortgage production and a continued push on the commercial banking front. We have our sights set on building even deeper ties in the community and serving the residents and businesses with unrivaled personal local banking and service."

Net interest income increased $918,000, an increase of 13% during the second quarter of 2019.  Net interest income was $7.8 million for the three months ending June 30, 2019 versus $6.9 million during the second quarter of 2018.  For the six months ending June 30, 2019, net interest income was $15.9 million versus $13.9 million for June 30, 2018, an increase of $2.0 million or 15%.

Non-interest income increased to $2.6 million from $2.1 million during the three months ending June 30, 2019.  For the six months ending June 30, 2019 non-interest income increased by $1.0 million to $4.9 million from $3.9 million at June 30, 2018, or an increase of 26%.  Growth in mortgage banking production and deposit fees for medical-use cannabis related accounts contributed to the increase non-interest income.

Non-interest expenses were $7.5 million for the three months ending June 30, 2019 versus $6.4 million for the same period in 2018.  The increase is due to several factors, including: higher expenses for accounting and professional fees related to SOX Section 404 compliance, severance payment to the former CFO and higher commissions paid to mortgage loan officers and real estate brokers as a result of increased production in 2019.

For the six months ending June 30, 2019, non-interest expenses were $14.3 million versus $12.5 million for the same period in 2018.  Several factors contributed to higher expenses, including accounting and professional fees related to SOX Section 404 compliance, severance payment to the former CFO and higher commissions paid to mortgage loan officers and real estate brokers as a result of increased production in 2019.  In addition, contributing to the increase for the first six months of 2019 was higher occupancy costs and additional staffing as a result of the opening of the Lothian Branch in the second quarter of 2018 and the addition of the Frederick mortgage production office in the second quarter of 2018.

Total assets deceased $112 million to $862.1 million at June 30, 2019 from $974.2 million to December 31, 2018.  The decrease in assets was primarily in federal funds and interest bearing deposits in other banks.  Deposits and borrowed funds decreased $94.1 million and $25.0 million, respectively from December 31, 2018 to June 30, 2019.  The decrease in deposits was the result of short term, medical-use cannabis related funds that account holders maintained at Severn Bank prior to pursuing to investment opportunities.  Management was aware of the short term nature of certain medical-use cannabis related deposits and offset those funds by maintaining short term liquidly to meet any deposit outflows.

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 $862 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, 2018.

 

 

Severn Bancorp, Inc.

Consolidated Balance Sheet

(dollars in thousands, except per share data)

(Unaudited)





















June 30, 2019

December 31, 2018

$ Change

% Change

Balance Sheet Data:













ASSETS







Cash


$                         3,644

$                     2,880

$                 764

27%


Federal funds and interest bearing deposits in other banks

73,693

185,460

(111,767)

-60%


Certificates of deposit held as investment

7,540

8,780

(1,240)

-14%


Investment securities available for sale, at fair value

11,031

11,978

(947)

-8%


Investment securities held to maturity

33,562

38,912

(5,350)

-14%


Loans held for sale, at fair value

17,987

9,686

8,301

86%


Loans receivable

679,573

682,349

(2,776)

0%


Allowance for loan losses

(8,093)

(8,044)

(49)

1%


Accrued interest receivable 

2,605

2,848

(243)

-9%


Foreclosed real estate, net

1,430

1,537

(107)

-7%


Premises and equipment, net

22,452

22,745

(293)

-1%


Restricted stock investments

2,857

3,766

(909)

-24%


Bank owned life insurance

5,303

5,225

78

1%


Deferred income taxes, net

2,167

2,363

(196)

-8%


Prepaid expenses and other assets

6,361

3,748

2,613

70%













$                     862,112

$                  974,233

$         (112,121)

-12%









LIABILITIES AND STOCKHOLDERS EQUITY






Deposits

$                     685,416

$                  779,506

$           (94,090)

-12%


Borrowings

48,500

73,500

(25,000)

-34%


Subordinated debentures

20,619

20,619

-

0%


Accounts payable and accrued expenses

4,886

2,155

2,731

127%










 Total Liabilities

$759,421

$875,780

(116,359)

-13%










Preferred stock

-

-

-

-


Common stock

128

128

-

0%


Additional paid-in capital

65,696

65,538

158

0%


Retained earnings

36,878

32,860

4,018

12%


Accumulated comprehensive income (loss)

(11)

(73)

62

-85%










 Total Stockholders' Equity

102,691

98,453

4,238

4%













$                     862,112

$                  974,233

$         (112,121)

-12%









 

 

 

Severn Bancorp, Inc.

Consolidated Income Statement

(dollars in thousands, except per share data)

(Unaudited)









Quarterly income statement results:

Three Months Ended June 30,







2019

2018

$ Change

% Change









Interest Income














Interest on loans

$                         9,226

$                     8,516

$                 710

8%


Interest on securities 

241

307

(66)

-21%


Other interest income

757

178

579

325%










Total interest income

10,224

9,001

1,223

14%









Interest Expense














Interest on deposits

1,898

1,274

624

49%


Interest on long term borrowings

481

800

(319)

-40%










Total interest expense

2,379

2,074

305

15%










Net interest income

7,845

6,927

918

13%










Provision for (reversal of) loan losses

-

-

-

-










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

7,845

6,927

918

13%









Noninterest Income














Mortgage-banking revenue

1,087

635

452

71%


Real Estate Commissions

378

360

18

5%


Real Estate Management Fees

162

187

(25)

-13%


Other noninterest income

988

886

102

12%










Total noninterest income

2,615

2,068

547

26%










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

10,460

8,995

1,465

16%









Noninterest Expense














Compensation and related expenses

4,909

4,420

489

11%


Net Occupancy & Depreciation

389

391

(2)

-1%


Net Costs of Foreclosed Real Estate

24

(18)

42

-233%


Other


2,191

1,560

631

40%










Total noninterest expense

7,513

6,353

1,160

18%










Income before income tax provision 

2,947

2,642

305

12%










Income tax provision 

771

724

47

6%










Net income

$                         2,176

$                     1,918

$                 258

13%


Net income available to common shareholders

$                         2,176

$                     1,918

$                 258

13%

 

 

 

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,







2019

2018

$ Change

% Change









Interest Income














Interest on loans

$                       18,393

$                   16,887

$              1,506

9%


Interest on securities 

500

627

(127)

-20%


Other interest income

1,874

364

1,510

415%










Total interest income

20,767

17,878

2,889

16%









Interest Expense














Interest on deposits

3,767

2,407

1,360

57%


Interest on long term borrowings

1,070

1,560

(490)

-31%










Total interest expense

4,837

3,967

870

22%










Net interest income

15,930

13,911

2,019

15%










Provision for (reversal of) loan losses

-

-

-

-










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

15,930

13,911

2,019

15%









Noninterest Income














Mortgage-banking revenue

1,807

1,230

577

47%


Real Estate Commissions

860

745

115

15%


Real Estate Management Fees

326

370

(44)

-12%


Other noninterest income

1,882

1,516

366

24%










Total noninterest income

4,875

3,861

1,014

26%










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

20,805

17,772

3,033

17%









Noninterest Expense














Compensation and related expenses

9,434

8,698

736

8%


Net Occupancy & Depreciation

804

735

69

9%


Net Costs of Foreclosed Real Estate

149

14

135

964%


Other


3,876

3,053

823

27%










Total noninterest expense

14,263

12,500

1,763

14%










Income before income tax provision 

6,542

5,272

1,270

24%










Income tax provision 

1,757

1,469

288

20%










Net income

$                         4,785

$                     3,803

$                 982

26%


Net income available to common shareholders

$                         4,785

$                     3,733

$              1,052

28%

 

 

Severn Bancorp, Inc.

Selected Financial Data

(dollars in thousands, except per share data)

(Unaudited)














Six Months Ended June 30, 2019


Three Months Ended June 30, 2019





2019

2018


2019

2018

Per Share Data:





.


Basic earnings per share

$                          0.37

$                       0.30


$                          0.17

$                       0.15


Diluted earnings per share

$                          0.37

$                       0.30


$                          0.17

$                       0.15


Average basic shares outstanding

12,774,191

12,463,132


12,775,123

12,684,711


Average diluted shares outstanding

12,859,980

12,559,069


12,862,291

12,781,037










Performance Ratios:







Return on average assets

1.04%

0.95%


0.95%

0.95%


Return on average equity

9.50%

9.04%


8.56%

8.12%


Net interest margin

3.60%

3.62%


3.55%

3.57%


Efficiency ratio*

67.83%

70.26%


71.59%

71.23%























June 30, 2019

December 31, 2018




Asset Quality Data:







Non-accrual loans

$                         4,887

$                     4,656





Foreclosed real estate

1,430

1,537






Total non-performing assets

6,317

6,193





Total non-accrual loans to total loans

0.7%

0.7%





Total non-accrual loans to total assets

0.6%

0.5%





Allowance for loan losses

8,093

8,044





Allowance for loan losses to total loans

1.2%

1.2%





Allowance for loan losses to total








non-accrual loans

165.6%

172.8%





Total non-performing assets to total assets

0.7%

0.6%





Non-accrual troubled debt restructurings (included above)

422

446





Performing troubled debt restructurings

10,537

10,698





Loan to deposit ratio

99.1%

87.5%













*

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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