ANNAPOLIS, Md., Jan. 27, 2020 /PRNewswire/ -- Severn
Bancorp, Inc., (NASDAQ: SVBI), the parent company of Severn Bank,
reported net income available to common shareholders for the 2019
year of $8.4 million vs. $8.5 million for the 2018 year. Net Income
available to common shareholders for fourth quarter was
$1.2 million vs. $2.6 million for the fourth quarter of 2018.
Total assets were up slightly in the fourth quarter 2019 from the
prior quarter to $827 million, but
down $147 million from the prior
year-end of $974 million at
December 31, 2018. Earnings per
share on a fully diluted basis were $0.09 for the fourth quarter and $0.65 per share for the year ended December 31, 2019 vs. $0.20 and $0.67 per
share, respectively, for the same periods in 2018.
"At first glance some of the year-end financial results may seem
concerning," stated Alan J. Hyatt,
President and Chief Executive Officer. Mr. Hyatt continued,
"The Bank experienced significant payoffs in outstanding loans. We
also saw a large reduction in short term investor deposits that
affected earnings. However, the balance sheet reflects significant
strength and will allow the Bank to grow assets. Additional
top-notch team members have been added to the lending team to help
us achieve this loan growth."
Net interest income in the fourth quarter 2019 decreased
$873 thousand to $6.9 million from the fourth quarter of 2018 with
a $1.5 million increase or 5% to
$30.5 million for the 2019 year vs.
$29.1 million earned for the 2018
fiscal year. Less fourth quarter interest income was generated from
lower volumes of earning assets, particularly from significantly
lower medical-use cannabis related deposits that earned overnight
interest income during the first half of 2019. Also, loan interest
income decreased from lower loan volumes, which was slightly offset
by a reduction in interest expense from less reliance on
borrowings.
Noninterest income in the fourth quarter 2019 increased
$202 thousand to $2.6 million from the fourth quarter of 2018 with
a $1.8 million increase or 22% to
$10.3 million for the 2019 year vs.
$8.4 million in 2018. Growth in
mortgage banking production and deposit fees from medical-use
cannabis related accounts contributed significantly to the
increases in noninterest income.
Noninterest expenses in the fourth quarter 2019 increased
$877 thousand to $7.7 million from the fourth quarter of 2018 with
a $3.4 million increase or 13% to
$29.7 million for the 2019 year vs.
$26.2 million in 2018. Non-interest
expenses increased for both periods due to several factors,
including: accounting and professional fees, severance payments 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 was
higher occupancy costs and additional staffing as a result of
opening a new branch in Crofton in
the third quarter of 2019.
Total assets decreased $147
million to $827 million at
December 31, 2019 from $974 million at December
31, 2018. The decrease in assets was primarily in
federal funds and interest bearing deposits in other banks as well
as loans due to unexpected payoffs. Deposits and borrowed
funds decreased $118 million and
$39 million, respectively from
December 31, 2018 to December 31, 2019. The decrease in deposits
was primarily the result of short term, medical-use cannabis
related funds that account holders maintained at Severn Bank prior
to pursuing other longer term 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 offers
seven branches located in Annapolis, Edgewater, Severna
Park, Lothian/Wayson's
Corner, Crofton, 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
Income Statement
|
(dollars in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Quarterly income
statement results:
|
Three Months Ended
December 31,
|
|
|
|
|
|
|
2019
|
2018
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
Interest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
loans
|
$
8,662
|
$
9,146
|
$
(484)
|
-5%
|
|
Interest on
securities
|
206
|
276
|
(70)
|
-25%
|
|
Other interest
income
|
321
|
800
|
(479)
|
-60%
|
|
|
|
|
|
|
|
|
|
Total interest
income
|
9,189
|
10,222
|
(1,033)
|
-10%
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
deposits
|
1,851
|
1,750
|
101
|
6%
|
|
Interest on long term
borrowings
|
410
|
671
|
(261)
|
-39%
|
|
|
|
|
|
|
|
|
|
Total interest
expense
|
2,261
|
2,421
|
(160)
|
-7%
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
6,928
|
7,801
|
(873)
|
-11%
|
|
|
|
|
|
|
|
|
|
Provision for
(reversal of) loan losses
|
0
|
0
|
-
|
0%
|
|
|
|
|
|
|
|
|
|
Net interest income
after provision for (reversal of) loan losses
|
6,928
|
7,801
|
(873)
|
-11%
|
|
|
|
|
|
|
|
|
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-banking
revenue
|
833
|
591
|
242
|
41%
|
|
Real Estate
Commissions
|
544
|
554
|
(10)
|
-2%
|
|
Real Estate
Management Income
|
157
|
147
|
10
|
7%
|
|
Other noninterest
income
|
1,043
|
1,083
|
(40)
|
-4%
|
|
|
|
|
|
|
|
|
|
Total noninterest
income
|
2,577
|
2,375
|
202
|
9%
|
|
|
|
|
|
|
|
|
|
Net interest income
plus noninterest income after provision for (reversal of) loan
losses
|
9,505
|
10,176
|
(671)
|
-7%
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
5,239
|
4,460
|
779
|
17%
|
|
Net Occupancy &
Depreciation
|
520
|
404
|
116
|
29%
|
|
Net Costs of
Foreclosed Real Estate
|
(82)
|
62
|
(144)
|
-232%
|
|
Other
|
|
2,051
|
1,925
|
126
|
7%
|
|
|
|
|
|
|
|
|
|
Total noninterest
expense
|
7,728
|
6,851
|
877
|
13%
|
|
|
|
|
|
|
|
|
|
Income before income
tax provision
|
1,777
|
3,325
|
(1,548)
|
-47%
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
569
|
724
|
(155)
|
-21%
|
|
|
|
|
|
|
|
|
|
Net income
|
$
1,208
|
$
2,601
|
$
(1,393)
|
-54%
|
|
Net income available
to common shareholders
|
$
1,208
|
$
2,601
|
$
(1,393)
|
-54%
|
Severn Bancorp,
Inc.
|
Consolidated
Income Statement
|
(dollars in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Year-to-Date
income statement results:
|
Year Ended
December 31,
|
|
|
|
|
|
|
2019
|
2018
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
Interest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
loans
|
$
36,201
|
$
34,877
|
$
1,324
|
4%
|
|
Interest on
securities
|
930
|
1,196
|
(266)
|
-22%
|
|
Other interest
income
|
2,679
|
1,587
|
1,092
|
69%
|
|
|
|
|
|
|
|
|
|
Total interest
income
|
39,810
|
37,660
|
2,150
|
6%
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
deposits
|
7,350
|
5,688
|
1,662
|
29%
|
|
Interest on long term
borrowings
|
1,953
|
2,915
|
(962)
|
-33%
|
|
|
|
|
|
|
|
|
|
Total interest
expense
|
9,303
|
8,603
|
700
|
8%
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
30,507
|
29,057
|
1,450
|
5%
|
|
|
|
|
|
|
|
|
|
Provision for
(reversal of) loan losses
|
(500)
|
(300)
|
(200)
|
67%
|
|
|
|
|
|
|
|
|
|
Net interest income
after provision for (reversal of) loan losses
|
31,007
|
29,357
|
1,650
|
6%
|
|
|
|
|
|
|
|
|
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-banking
revenue
|
3,748
|
2,561
|
1,187
|
46%
|
|
Real Estate
Commissions
|
1,834
|
1,707
|
127
|
7%
|
|
Real Estate
Management Income
|
627
|
674
|
(47)
|
-7%
|
|
Other noninterest
income
|
4,056
|
3,487
|
569
|
16%
|
|
|
|
|
|
|
|
|
|
Total noninterest
income
|
10,265
|
8,429
|
1,836
|
22%
|
|
|
|
|
|
|
|
|
|
Net interest income
plus noninterest income after provision for (reversal of) loan
losses
|
41,272
|
37,786
|
3,486
|
9%
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
19,738
|
17,819
|
1,919
|
11%
|
|
Net Occupancy &
Depreciation
|
1,703
|
1,555
|
148
|
10%
|
|
Net Costs of
Foreclosed Real Estate
|
172
|
83
|
89
|
107%
|
|
Other
|
|
8,048
|
6,783
|
1,265
|
19%
|
|
|
|
|
|
|
|
|
|
Total noninterest
expense
|
29,661
|
26,240
|
3,421
|
13%
|
|
|
|
|
|
|
|
|
|
Income before income
tax provision
|
11,611
|
11,546
|
65
|
1%
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
3,237
|
2,977
|
260
|
9%
|
|
|
|
|
|
|
|
|
|
Net income
|
$
8,374
|
$
8,569
|
$
(195)
|
-2%
|
|
Net income available
to common shareholders
|
$
8,374
|
$
8,499
|
$
(125)
|
-1%
|
Severn Bancorp,
Inc.
|
Consolidated
Balance Sheet
|
(dollars in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2019
|
December 31,
2018
|
$
Change
|
%
Change
|
Balance Sheet
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
2,892
|
$
2,880
|
$
12
|
0%
|
|
Federal funds and
interest bearing deposits in other banks
|
85,301
|
185,460
|
(100,159)
|
-54%
|
|
Certificates of
deposit held as investment
|
7,540
|
8,780
|
(1,240)
|
-14%
|
|
Investment securities
available for sale, at fair value
|
12,906
|
11,978
|
928
|
8%
|
|
Investment securities
held to maturity
|
25,960
|
38,912
|
(12,952)
|
-33%
|
|
Loans held for sale,
at fair value
|
10,910
|
9,686
|
1,224
|
13%
|
|
Loans
receivable
|
645,685
|
682,349
|
(36,664)
|
-5%
|
|
Allowance for loan
losses
|
(7,138)
|
(8,044)
|
906
|
-11%
|
|
Accrued interest
receivable
|
2,458
|
2,848
|
(390)
|
-14%
|
|
Foreclosed real
estate, net
|
2,387
|
1,537
|
850
|
55%
|
|
Premises and
equipment, net
|
22,144
|
22,745
|
(601)
|
-3%
|
|
Restricted stock
investments
|
2,431
|
3,766
|
(1,335)
|
-35%
|
|
Bank owned life
insurance
|
5,377
|
5,225
|
152
|
3%
|
|
Deferred income
taxes, net
|
1,747
|
2,363
|
(616)
|
-26%
|
|
Prepaid expenses and
other assets
|
6,319
|
3,748
|
2,571
|
69%
|
|
|
|
|
|
|
|
|
|
|
|
|
$
826,919
|
$
974,233
|
$
(147,314)
|
-15%
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS EQUITY
|
|
|
|
|
|
Deposits
|
$
661,049
|
$
779,506
|
$
(118,457)
|
-15%
|
|
Borrowings
|
35,000
|
73,500
|
(38,500)
|
-52%
|
|
Subordinated
debentures
|
20,619
|
20,619
|
-
|
0%
|
|
Accounts payable and
accrued expenses
|
4,779
|
2,155
|
2,624
|
122%
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
721,447
|
875,780
|
(154,333)
|
-18%
|
|
|
|
|
|
|
|
|
|
Common
stock
|
128
|
128
|
0
|
0%
|
|
Additional paid-in
capital
|
65,944
|
65,538
|
406
|
1%
|
|
Retained
earnings
|
39,445
|
32,860
|
6,585
|
20%
|
|
Accumulated
comprehensive income (loss)
|
(45)
|
(73)
|
28
|
-38%
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity
|
105,472
|
98,453
|
7,019
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
$
826,919
|
$
974,233
|
$
(147,314)
|
-15%
|
Severn Bancorp,
Inc.
|
Selected Financial
Data
|
(dollars in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
Three Months Ended
December 31,
|
|
|
|
|
2019
|
2018
|
|
2019
|
2018
|
Per Share
Data:
|
|
|
|
|
|
|
Basic earnings per
share
|
$
0.66
|
$
0.68
|
|
$
0.09
|
$
0.21
|
|
Diluted earnings per
share
|
$
0.65
|
$
0.67
|
|
$
0.09
|
$
0.20
|
|
Average basic shares
outstanding
|
12,780,980
|
12,585,961
|
|
12,798,480
|
12,719,772
|
|
Average diluted
shares outstanding
|
12,855,351
|
12,697,620
|
|
12,859,916
|
12,835,186
|
|
|
|
|
|
|
|
|
|
Performance
Ratios:
|
|
|
|
|
|
|
Return on average
assets
|
0.92%
|
1.03%
|
|
0.54%
|
1.20%
|
|
Return on average
equity
|
8.16%
|
9.00%
|
|
4.60%
|
10.70%
|
|
Net interest
margin
|
3.50%
|
3.66%
|
|
3.26%
|
3.75%
|
|
Efficiency
ratio*
|
72.33%
|
69.78%
|
|
82.17%
|
66.72%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2019
|
December 31,
2018
|
|
|
|
Asset Quality
Data:
|
|
|
|
|
|
|
Non-accrual
loans
|
$
4,241
|
$
4,657
|
|
|
|
|
Foreclosed real
estate
|
2,387
|
1,537
|
|
|
|
|
|
Total non-performing
assets
|
6,628
|
6,194
|
|
|
|
|
Total non-accrual
loans to total loans
|
0.66%
|
0.68%
|
|
|
|
|
Total non-accrual
loans to total assets
|
0.51%
|
0.48%
|
|
|
|
|
Allowance for loan
losses
|
7,138
|
8,044
|
|
|
|
|
Allowance for loan
losses to total loans
|
1.11%
|
1.18%
|
|
|
|
|
Allowance for loan
losses to total
|
|
|
|
|
|
|
|
non-accrual
loans
|
168.3%
|
172.7%
|
|
|
|
|
Total non-performing
assets to total assets
|
0.80%
|
0.64%
|
|
|
|
|
Non-accrual troubled
debt restructurings (included above)
|
85
|
446
|
|
|
|
|
Performing troubled
debt restructurings
|
8,858
|
10,698
|
|
|
|
|
Loan to deposit
ratio
|
97.7%
|
87.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
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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SOURCE Severn Bancorp, Inc.