ANNAPOLIS, Md., Oct. 28,
2019 /PRNewswire/ -- Severn Bancorp, Inc., (NASDAQ: SVBI), the
parent company of Severn Bank, reported net income available to
common shareholders of $2.4 million
for the third quarter ended September 30,
2019 and $7.2 million for the
nine months ended September 30, 2019
versus $2.2 million and $5.9 million for the same periods in 2018.
Total assets were down slightly in the third quarter 2019 from the
prior quarter to $826 million and
also down $148 million from the prior
year-end of $974 million at
December 31, 2018. Earnings per
share on a fully diluted basis were $0.19 for the third quarter and $0.56 per share for the first nine months of
2019, up nicely from $0.17 and
$0.46 per share, respectively, from
the third quarter and first nine months of 2018.
"Earnings look good again for this quarter," stated Alan J. Hyatt, President and Chief Executive
Officer. Mr. Hyatt continued, "We are seeing progress in
certain areas such as mortgage lending and commercial banking that
are resulting in improved net income figures. We did see an uptick
in some non-recurring expenses this quarter, but we always keep
efficiency and cost control at the forefront. Those efforts along
with the continued focus on developing banking relationships should
keep us on the path to continued sustainable profits."
Net interest income increased $304,000, an increase of 4% during the third
quarter of 2019. Net interest income was $7.6 million for the three months ending
September 30, 2019 versus
$7.3 million during the third quarter
of 2018. For the nine months ending September 30, 2019, net interest income was
$23.6 million versus $21.3 million for September 30, 2018, an increase of $2.3 million or 11%.
Provision for loan losses was negative $500,000 for the three and nine month periods
ending September 30, 2019, compared
to negative $300,000 for the same
periods in 2018. The negative provision is a reversal of previous
expense associated with the allowance for loan losses. As a result
of a decrease in loan balances from unexpected payoffs, minimal
charge-off activity, and stable asset quality, a portion of the
unallocated allowance for loan losses was reversed into income.
Non-interest income increased to $2.8
million from $2.3 million
during the three months ending September 30,
2019. For the nine months ending September 30, 2019 non-interest income increased
by $1.6 million to $7.7 million from $6.1
million at September 30, 2018,
or an increase of 26%. Growth in mortgage banking production
and deposit fees from medical-use cannabis related accounts
contributed significantly to the increase in non-interest
income.
Non-interest expenses were $7.7
million for the three months ending September 30, 2019 versus $7.0 million for the same period in 2018.
For the nine months ending September 30,
2019, non-interest expenses were $21.9 million versus $19.5
million for the same period in 2018. Non-interest expenses
increased for both the three and nine month 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 the
opening of a new branch in Crofton
in the third quarter of 2019.
Total assets decreased $148
million to $826 million at
September 30, 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 $122.4 million and
$35.0 million, respectively from
December 31, 2018 to September 30, 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
Balance Sheet
|
(dollars in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019
|
December 31,
2018
|
$
Change
|
%
Change
|
Balance Sheet
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
2,478
|
$
2,880
|
$
(402)
|
-14%
|
|
Federal funds and
interest bearing deposits in other banks
|
62,775
|
185,460
|
(122,685)
|
-66%
|
|
Certificates of
deposit held as investment
|
7,540
|
8,780
|
(1,240)
|
-14%
|
|
Investment securities
available for sale, at fair value
|
9,029
|
11,978
|
(2,949)
|
-25%
|
|
Investment securities
held to maturity
|
30,302
|
38,912
|
(8,610)
|
-22%
|
|
Loans held for sale,
at fair value
|
17,587
|
9,686
|
7,901
|
82%
|
|
Loans
receivable
|
660,879
|
682,349
|
(21,470)
|
-3%
|
|
Allowance for loan
losses
|
(7,431)
|
(8,044)
|
613
|
-8%
|
|
Accrued interest
receivable
|
2,514
|
2,848
|
(334)
|
-12%
|
|
Foreclosed real
estate, net
|
1,873
|
1,537
|
336
|
22%
|
|
Premises and
equipment, net
|
22,384
|
22,745
|
(361)
|
-2%
|
|
Restricted stock
investments
|
2,431
|
3,766
|
(1,335)
|
-35%
|
|
Bank owned life
insurance
|
5,341
|
5,225
|
116
|
2%
|
|
Deferred income
taxes, net
|
1,902
|
2,363
|
(461)
|
-20%
|
|
Prepaid expenses and
other assets
|
6,315
|
3,748
|
2,567
|
69%
|
|
|
|
|
|
|
|
|
|
|
|
|
$
825,919
|
$
974,233
|
$
(148,314)
|
-15%
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS EQUITY
|
|
|
|
|
|
Deposits
|
$
657,154
|
$
779,506
|
$
(122,352)
|
-16%
|
|
Borrowings
|
38,498
|
73,500
|
(35,002)
|
-48%
|
|
Subordinated
debentures
|
20,619
|
20,619
|
-
|
0%
|
|
Accounts payable and
accrued expenses
|
5,029
|
2,155
|
2,874
|
133%
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
721,300
|
875,780
|
(154,480)
|
-18%
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
-
|
-
|
-
|
0%
|
|
Common
stock
|
128
|
128
|
-
|
0%
|
|
Additional paid-in
capital
|
65,744
|
65,538
|
206
|
0%
|
|
Retained
earnings
|
38,750
|
32,860
|
5,890
|
18%
|
|
Accumulated
comprehensive income (loss)
|
(3)
|
(73)
|
70
|
-96%
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity
|
104,619
|
98,453
|
6,166
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
$
825,919
|
$
974,233
|
$
(148,314)
|
-15%
|
Severn Bancorp,
Inc.
|
Consolidated
Income Statement
|
(dollars in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Quarterly income
statement results:
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
2019
|
2018
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
Interest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
loans
|
$
9,146
|
$
8,844
|
$
302
|
3%
|
|
Interest on
securities
|
224
|
293
|
(69)
|
-24%
|
|
Other interest
income
|
484
|
423
|
61
|
14%
|
|
|
|
|
|
|
|
|
|
Total interest
income
|
9,854
|
9,560
|
294
|
3%
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
deposits
|
1,732
|
1,531
|
201
|
13%
|
|
Interest on long term
borrowings
|
473
|
684
|
(211)
|
-31%
|
|
|
|
|
|
|
|
|
|
Total interest
expense
|
2,205
|
2,215
|
(10)
|
0%
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
7,649
|
7,345
|
304
|
4%
|
|
|
|
|
|
|
|
|
|
Provision for
(reversal of) loan losses
|
(500)
|
(300)
|
(200)
|
67%
|
|
|
|
|
|
|
|
|
|
Net interest income
after provision for (reversal of) loan losses
|
8,149
|
7,645
|
504
|
7%
|
|
|
|
|
|
|
|
|
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-banking
revenue
|
1,108
|
740
|
368
|
50%
|
|
Real Estate
Commissions
|
430
|
408
|
22
|
5%
|
|
Real Estate
Management Income
|
144
|
157
|
(13)
|
-8%
|
|
Other noninterest
income
|
1,131
|
1,039
|
92
|
9%
|
|
|
|
|
|
|
|
|
|
Total noninterest
income
|
2,813
|
2,344
|
469
|
20%
|
|
|
|
|
|
|
|
|
|
Net interest income
plus noninterest income after provision for (reversal of) loan
losses
|
10,962
|
9,989
|
973
|
10%
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
5,065
|
4,661
|
404
|
9%
|
|
Net Occupancy &
Depreciation
|
379
|
416
|
(37)
|
-9%
|
|
Net Costs of
Foreclosed Real Estate
|
105
|
7
|
98
|
1400%
|
|
Other
|
|
2,121
|
1,956
|
165
|
8%
|
|
|
|
|
|
|
|
|
|
Total noninterest
expense
|
7,670
|
7,040
|
630
|
9%
|
|
|
|
|
|
|
|
|
|
Income before income
tax provision
|
3,292
|
2,949
|
343
|
12%
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
911
|
784
|
127
|
16%
|
|
|
|
|
|
|
|
|
|
Net income
|
$
2,381
|
$
2,165
|
$
216
|
10%
|
|
Net income available
to common shareholders
|
$
2,381
|
$
2,165
|
$
216
|
10%
|
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,
|
|
|
|
|
|
|
2019
|
2018
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
Interest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
loans
|
$
27,539
|
$
25,731
|
$
1,808
|
7%
|
|
Interest on
securities
|
724
|
920
|
(196)
|
-21%
|
|
Other interest
income
|
2,358
|
787
|
1,571
|
200%
|
|
|
|
|
|
|
|
|
|
Total interest
income
|
30,621
|
27,438
|
3,183
|
12%
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
deposits
|
5,499
|
3,938
|
1,561
|
40%
|
|
Interest on long term
borrowings
|
1,543
|
2,244
|
(701)
|
-31%
|
|
|
|
|
|
|
|
|
|
Total interest
expense
|
7,042
|
6,182
|
860
|
14%
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
23,579
|
21,256
|
2,323
|
11%
|
|
|
|
|
|
|
|
|
|
Provision for
(reversal of) loan losses
|
(500)
|
(300)
|
(200)
|
67%
|
|
|
|
|
|
|
|
|
|
Net interest income
after provision for (reversal of) loan losses
|
24,079
|
21,556
|
2,523
|
12%
|
|
|
|
|
|
|
|
|
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-banking
revenue
|
2,915
|
1,970
|
945
|
48%
|
|
Real Estate
Commissions
|
1,290
|
1,153
|
137
|
12%
|
|
Real Estate
Management Income
|
470
|
527
|
(57)
|
-11%
|
|
Other noninterest
income
|
3,013
|
2,472
|
541
|
22%
|
|
|
|
|
|
|
|
|
|
Total noninterest
income
|
7,688
|
6,122
|
1,566
|
26%
|
|
|
|
|
|
|
|
|
|
Net interest income
plus noninterest income after provision for (reversal of) loan
losses
|
31,767
|
27,678
|
4,089
|
15%
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
14,499
|
13,359
|
1,140
|
9%
|
|
Net Occupancy &
Depreciation
|
1,183
|
1,151
|
32
|
3%
|
|
Net Costs of
Foreclosed Real Estate
|
254
|
21
|
233
|
1110%
|
|
Other
|
|
5,997
|
4,926
|
1,071
|
22%
|
|
|
|
|
|
|
|
|
|
Total noninterest
expense
|
21,933
|
19,457
|
2,476
|
13%
|
|
|
|
|
|
|
|
|
|
Income before income
tax provision
|
9,834
|
8,221
|
1,613
|
20%
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
2,668
|
2,253
|
415
|
18%
|
|
|
|
|
|
|
|
|
|
Net income
|
$
7,166
|
$
5,968
|
$
1,198
|
20%
|
|
Net income available
to common shareholders
|
$
7,166
|
$
5,898
|
$
1,268
|
21%
|
Severn Bancorp,
Inc.
|
Selected Financial
Data
|
(dollars in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
Three Months Ended
September 30,
|
|
|
|
|
2019
|
2018
|
|
2019
|
2018
|
Per Share
Data:
|
|
|
|
|
.
|
|
Basic earnings per
share
|
$
0.56
|
$
0.47
|
|
$
0.19
|
$
0.17
|
|
Diluted earnings per
share
|
$
0.56
|
$
0.46
|
|
$
0.19
|
$
0.17
|
|
Average basic shares
outstanding
|
12,775,104
|
12,541,032
|
|
12,776,911
|
12,695,136
|
|
Average diluted
shares outstanding
|
12,853,812
|
12,651,260
|
|
12,841,679
|
12,832,633
|
|
|
|
|
|
|
|
|
|
Performance
Ratios:
|
|
|
|
|
|
|
Return on average
assets
|
1.04%
|
0.98%
|
|
1.05%
|
1.03%
|
|
Return on average
equity
|
9.38%
|
9.03%
|
|
9.15%
|
8.98%
|
|
Net interest
margin
|
3.58%
|
3.63%
|
|
3.53%
|
3.65%
|
|
Efficiency
ratio*
|
69.33%
|
70.99%
|
|
72.31%
|
72.59%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019
|
December 31,
2018
|
|
|
|
Asset Quality
Data:
|
|
|
|
|
|
|
Non-accrual
loans
|
$
4,333
|
$
4,656
|
|
|
|
|
Foreclosed real
estate
|
1,873
|
1,537
|
|
|
|
|
|
Total non-performing
assets
|
6,206
|
6,193
|
|
|
|
|
Total non-accrual
loans to total loans
|
0.66%
|
0.68%
|
|
|
|
|
Total non-accrual
loans to total assets
|
0.52%
|
0.48%
|
|
|
|
|
Allowance for loan
losses
|
7,431
|
8,044
|
|
|
|
|
Allowance for loan
losses to total loans
|
1.12%
|
1.18%
|
|
|
|
|
Allowance for loan
losses to total
|
|
|
|
|
|
|
|
non-accrual
loans
|
171.5%
|
172.8%
|
|
|
|
|
Total non-performing
assets to total assets
|
0.75%
|
0.64%
|
|
|
|
|
Non-accrual troubled
debt restructurings (included above)
|
292
|
446
|
|
|
|
|
Performing troubled
debt restructurings
|
9,023
|
10,698
|
|
|
|
|
Loan to deposit
ratio
|
100.6%
|
87.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
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.