ANNAPOLIS, Md., Oct. 29, 2018 /PRNewswire/ -- Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Bank, today announced net income of $2.2 million for the three months ending September 30, 2018 versus $1.3 million for the same quarter in 2017. This is an increase of 72% year over year for the period. On a diluted per share basis, earnings were $0.17 versus $0.10 for the quarters ended September 30, 2018 and 2017, respectively. Net income for the nine months ended September 30, 2018 was $6.0 million, an 89% increase over net income of $3.2 million for the same nine month period in 2017.

 

"We are pleased to report continued growth in earnings," stated Alan J. Hyatt, President and Chief Executive Officer.  Mr. Hyatt continued, "We have seen growth in our net interest income as well as our fee based income streams. We paid dividends the past three quarters and hope to continue that trend. We remain focused on continuous improvement in our operations, exploring new products and markets, and enhancing long term shareholder value."

Net interest income increased 16% during the third quarter of 2018. Net interest income was $7.3 million during the third quarter of 2018 versus $6.3 million during the third quarter of 2017. Net interest margin improved to 3.65% for the three months ending September 30, 2018 from 3.38% for the same period in 2017. Net interest income increased to $21.3 million for the first nine months of 2018 from $17.9 million for the same time frame in 2017.

Non-interest income increased 68% during the quarter ended September 30, 2018. Non-interest income was $2.3 million for the three months ended September 30, 2018, up from $1.4 million as of September 30, 2017. For the nine months ended September 30, 2018, non-interest income was $6.4 million. This represents a 70% increase over the $3.8 million reported for the third quarter of 2017. Severn Bank experienced a significant increase in mortgage banking revenue of 122% in the third quarter of 2018 versus the third quarter of 2017. Year to date mortgage banking revenue saw an increase of 71% for the first nine months of 2018 versus 2017. The company also saw significant increases in fees on deposit accounts, which is included in other non-interest income.

Non-interest expenses were $7.0 million for the three months ended September 30, 2018 versus $5.5 million for the same period in 2017. For the nine months ended September 30, 2018, non-interest expenses were $19.7 million, which is an increase of 16% over the same period in 2017. The increase is primarily due to higher commissions paid to mortgage loan officers as a result of increased production.

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 $889 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 September 30,








2018

2017

$ Change

% Change











Interest Income
















Interest on loans

$                         8,844

$                     7,742

$              1,102

14.23%



Interest on securities 

293

330

(37)

-11.21%



Other interest income

423

167

256

153.29%












Total interest income

9,560

8,239

1,321

16.03%











Interest Expense
















Interest on deposits

1,531

1,011

520

51.43%



Interest on long term borrowings

684

897

(213)

-23.75%












Total interest expense

2,215

1,908

307

16.09%












Net interest income

7,345

6,331

1,014

16.02%












Provision for (reversal of) loan losses

(300)

0

(300)

100%












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

7,645

6,331

1,314

20.76%











Non-interest income
















Mortgage-banking revenue

740

334

406

121.56%



Real Estate Commissions

408

311

97

31.19%



Real Estate Management Income

157

197

(40)

-20.30%



Other non-interest income

1,039

557

482

86.54%












Net non-interest income

2,344

1,399

945

67.55%












Net interest income plus non-interest income after

9,989

7,730

2,259

29.22%




provision for (reversal of) loan losses















Non-Interest Expenses
















Compensation and related expenses

4,661

3,288

1,373

41.76%



Net Occupancy & Depreciation

416

354

62

17.51%



Net Costs of Foreclosed Real Estate

7

126

(119)

-94.44%



Other non-interest expense

1,956

1,753

203

11.58%












Total non-interest expenses

7,040

5,521

1,519

27.51%












Income before income tax provision 

2,949

2,209

740

33.50%












Income tax provision 

784

950

(166)

-17.47%












Net income

$                         2,165

$                     1,259

$                 906

71.96%



Net income available to common shareholders

$                         2,165

$                     1,189

$                 976

82.09%











 

Severn Bancorp, Inc.

Consolidated Income Statement

(dollars in thousands, except per share data)

(Unaudited)










Year-to-Date income statement results:

Nine Months Ended September 30,








2018

2017

$ Change

% Change











Interest Income
















Interest on loans

$                       25,731

$                   22,267

$              3,464

15.56%



Interest on securities 

920

927

(7)

-0.76%



Other interest income

787

498

289

58.03%












Total interest income

27,438

23,692

3,746

15.81%











Interest Expense
















Interest on deposits

3,938

2,924

1,014

34.66%



Interest on long term borrowings

2,244

2,844

(600)

-21.10%












Total interest expense

6,182

5,768

414

7.17%












Net interest income

21,256

17,924

3,332

18.59%












Provision for (reversal of) loan losses

(300)

(650)

350

-53.85%












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

21,556

18,574

2,982

16.06%











Non-interest income
















Mortgage-banking revenue

1,970

1,150

820

71.30%



Real Estate Commissions

1,153

959

194

20.23%



Real Estate Management Income

527

513

14

2.73%



Other non-interest income

2,755

1,140

1,615

141.67%












Net non-interest income

6,405

3,762

2,643

70.26%












Net interest income plus non-interest income after

27,961

22,336

5,625

25.19%




provision for (reversal of) loan losses















Non-Interest Expenses
















Compensation and related expenses

13,359

10,719

2,640

24.63%



Net Occupancy & Depreciation

1,151

1,015

136

13.40%



Net Costs of Foreclosed Real Estate

21

166

(145)

-87.35%



Other non-interest expense

5,209

5,120

89

1.74%












Total non-interest expenses

19,740

17,020

2,720

15.98%












Income before income tax provision 

8,221

5,316

2,905

54.66%












Income tax provision 

2,252

2,150

102

4.75%












Net income

$                         5,969

$                     3,166

$              2,803

88.55%



Net income available to common shareholders

$                         5,899

$                     2,956

$              2,943

99.56%











 

Severn Bancorp, Inc.

Consolidated Balance Sheet

(dollars in thousands, except per share data)

(Unaudited)





















September 30, 2018

December 31, 2017

$ Change

% Change

Balance Sheet Data:













ASSETS







Cash


$                         2,160

$                     2,382

$               (222)

-9.30%


Federal funds and Interest bearing deposits in other banks

89,156

19,471

69,685

357.89%


Certificates of deposit held as investment

8,780

8,780

0

0.00%


Investment securities available for sale, at fair value

11,950

10,119

1,831

18.09%


Investment securities held to maturity

43,108

54,303

(11,195)

-20.62%


Loans held for sale, at fair value

9,023

4,530

4,493

99.17%


Loans receivable

689,712

668,151

21,561

3.23%


Allowance for loan losses

(8,056)

(8,055)

(1)

0.01%


Accrued interest receivable 

2,689

2,640

49

1.87%


Foreclosed real estate, net

285

403

(118)

-29.20%


Premises and equipment, net

22,931

23,139

(208)

-0.90%


Restricted stock investments

3,866

4,489

(623)

-13.87%


Bank owned life insurance

5,186

5,064

122

2.42%


Deferred income taxes, net

3,248

5,302

(2,054)

-38.74%


Prepaid expenses and other assets

5,287

4,069

1,218

29.93%













$                     889,325

$                  804,787

$             84,538

10.50%









LIABILITIES AND STOCKHOLDERS EQUITY






Deposits

$                     694,177

$                  602,228

$             91,949

15.27%


Borrowings

73,500

88,500

(15,000)

-16.95%


Subordinated debentures

20,619

20,619

-

0.00%


Accounts payable and accrued expenses

5,149

2,340

2,809

120.04%










 Total Liabilities

793,445

713,687

79,758

11.18%










Preferred stock

-

4

(4)

-100.00%


Common stock

127

122

5

4.10%


Additional paid-in capital

65,216

65,137

79

0.12%


Retained earnings

30,643

25,872

4,770

18.44%


Accumulated comprehensive income (loss)

(106)

(35)

(71)

202.86%










 Total Stockholders' Equity

95,880

91,100

4,780

5.25%













$                     889,325

$                  804,787

$             84,538

10.50%

 

 

Severn Bancorp, Inc.

Selected Financial Data

(dollars in thousands, except per share data)

(Unaudited)














Nine Months Ended September 30,


Three Months Ended September 30,





2018

2017


2018

2017

Per Share Data:





.


Basic earnings per share

$                          0.47

$                       0.24


$                          0.17

$                       0.10


Diluted earnings per share

$                          0.47

$                       0.24


$                          0.17

$                       0.10


Average basic shares outstanding

12,541,032

12,140,689


12,695,136

12,172,586


Average diluted shares outstanding

12,651,260

12,248,214


12,832,633

12,323,572










Performance Ratios:







Return on average assets

0.98%

0.53%


1.03%

0.63%


Return on average equity

9.03%

4.80%


8.98%

5.69%


Net interest margin

3.63%

3.25%


3.65%

3.38%


Efficiency ratio*

71.29%

77.89%


72.59%

69.78%























September 30, 2018

December 31, 2017




Asset Quality Data:







Non-accrual loans

$                         5,731

$                     5,710





Foreclosed real estate

285

403






Total non-performing assets

6,016

6,113





Total non-accrual loans to total loans

0.8%

0.9%





Total non-accrual loans to total assets

0.6%

0.7%





Allowance for loan losses

8,056

8,055





Allowance for loan losses to total loans

1.2%

1.2%





Allowance for loan losses to total








non-accrual loans

140.6%

141.1%





Total non-performing assets to total assets

0.7%

0.8%





Non-accrual troubled debt restructurings (included above)

997

820





Performing troubled debt restructurings

11,271

13,714





Loan to deposit ratio

99.4%

110.9%













*

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

 

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