Severn Bancorp, Inc. Announces a 38% Increase in First Quarter Earnings

News provided by

Severn Bancorp, Inc.

May 13, 2019, 15:01 ET

ANNAPOLIS, Md., May 13, 2019 /PRNewswire/ -- Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Bank, today announced net income of $2.6 million for the three months ending March 31, 2019 versus $1.9 million for the same quarter in 2018, which is a 38% increase in earnings. On a diluted per share basis, earnings were $0.20 versus $0.15 for the quarters ended March 31, 2019 and 2018, respectively.

"Earnings look great for this quarter again," stated Alan J. Hyatt, President and Chief Executive Officer.  Mr. Hyatt continued, "We are pleased with the upward trend in earnings. We have launched an exciting new retail deposit product offering, Kasasa rewards checking and are having success building on relationships with local businesses and business owners. Our community continues to see us as a partner in their success and calls on us for all of their banking needs."

Net interest income increased 16% during the first quarter of 2019. Net interest income was $8.1 million during the first quarter of 2019 versus $7.0 million during the first quarter of 2018.

Noninterest income increased 26% during the quarter ended March 31, 2019. Noninterest income was $2.3 million for the three months ended March 31, 2019, up from $1.8 million as of March 31, 2018. Growth in mortgage banking revenue, real estate commissions, and deposit fees contributed to the increase.

Noninterest expenses were $6.8 million for the three months ended March 31, 2019 versus $6.1 million for the same period in 2018. The increase is due to several factors, including: higher occupancy costs as a result of the addition of a Wayson's Corner Branch in the second quarter of 2018; additional staffing due to the added Wayson's Corner Branch and the addition of a Frederick mortgage production office in the second quarter of 2018; along with higher commissions paid to mortgage loan officers and real estate brokers as a result of increased production in 2019.

Asset quality remains strong with total non-accrual loans to total loans at 0.6% compared to 0.7% as of December 31, 2018. Total non-performing assets to total assets held steady at 0.6% as of March 31, 2019 compared to 0.6% as of December 31, 2018.

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 $885 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 Income Statement

(dollars in thousands, except per share data)

(Unaudited)








Quarter-to-Date income statement results:

Three Months Ended March 31, 2019





2019

2018

$ Change

% Change








Interest Income












Interest on loans

$                         9,167

$                     8,371

$                 796

10%

Interest on securities 

259

320

(61)

-19%

Other interest income

1,117

186

931

501%









Total interest income

10,543

8,877

1,666

19%








Interest Expense












Interest on deposits

1,869

1,133

736

65%

Interest on long term borrowings

589

760

(171)

-23%









Total interest expense

2,458

1,893

565

30%









Net interest income

8,085

6,984

1,101

16%









Provision for (reversal of) loan losses

0

0

-

0%









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

8,085

6,984

1,101

16%








Noninterest Income












Mortgage-banking revenue

720

595

125

21%

Real Estate Commissions

482

385

97

25%

Real Estate Management Income

164

183

(19)

-11%

Other noninterest income

894

630

264

42%









Total noninterest income

2,260

1,793

467

26%









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

10,345

8,777

1,568

18%








Noninterest Expense












Compensation and related expenses

4,525

4,278

247

6%

Net Occupancy & Depreciation

415

344

71

21%

Net Costs of Foreclosed Real Estate

125

32

93

291%

Other

1,685

1,493

192

13%









Total noninterest expense

6,750

6,147

603

10%









Income before income tax provision 

3,595

2,630

965

37%









Income tax provision 

986

745

241

32%









Net income

$                         2,609

$                     1,885

$                 724

38%

Net income available to common shareholders

$                         2,609

$                     1,815

$                 794

44%








Severn Bancorp, Inc.

Consolidated Balance Sheet

(dollars in thousands, except per share data)

(Unaudited)




















March 31, 2019

December 31, 2018

$ Change

% Change

Balance Sheet Data:











ASSETS





Cash

$                         3,276

$                     2,880

$                       396

14%

Federal funds and interest bearing deposits in other banks

109,825

185,460

(75,635)

-41%

Certificates of deposit held as investment

8,780

8,780

0

0%

Investment securities available for sale, at fair value

10,992

11,978

(986)

-8%

Investment securities held to maturity

35,793

38,912

(3,119)

-8%

Loans held for sale, at fair value

6,660

9,686

(3,026)

-31%

Loans receivable

674,220

682,349

(8,129)

-1%

Allowance for loan losses

(8,085)

(8,044)

(41)

1%

Accrued interest receivable 

2,632

2,848

(216)

-8%

Foreclosed real estate, net

1,601

1,537

64

4%

Premises and equipment, net

22,483

22,745

(262)

-1%

Restricted stock investments

2,856

3,766

(910)

-24%

Bank owned life insurance

5,264

5,225

39

1%

Deferred income taxes, net

2,159

2,363

(204)

-9%

Prepaid expenses and other assets

6,587

3,748

2,839

76%












$                     885,043

$                  974,233

$                 (89,190)

-9%








LIABILITIES AND STOCKHOLDERS EQUITY




Deposits

$                     709,873

$                  779,506

$                 (69,633)

-9%

Borrowings

48,500

73,500

(25,000)

-34%

Subordinated debentures

20,619

20,619

-

0%

Accounts payable and accrued expenses

5,223

2,155

3,068

142%









 Total Liabilities

784,215

875,780

(91,565)

-10%









Common stock

128

128

-

0%

Additional paid-in capital

65,662

65,538

124

0%

Retained earnings

35,087

32,860

2,227

7%

Accumulated comprehensive income (loss)

(49)

(73)

24

-33%









 Total Stockholders' Equity

100,828

98,453

2,375

2%












$                     885,043

$                  974,233

$                 (89,190)

-9%








Severn Bancorp, Inc.


Selected Financial Data


(dollars in thousands, except per share data)


(Unaudited)
















Three Months Ended March 31, 2019







2019

2018



Per Share Data:






Basic earnings per share

$                          0.20

$                       0.15




Diluted earnings per share

$                          0.20

$                       0.15




Average basic shares outstanding

12,773,259

12,241,554




Average diluted shares outstanding

12,857,643

12,334,637




Tangible Book Value Per Share

$                          7.81

$                       7.46













Performance Ratios:






Return on average assets

1.14%

0.94%




Return on average equity

10.47%

8.11%




Net interest margin

3.65%

3.66%




Efficiency ratio*

64.04%

69.67%



























March 31, 2019

December 31, 2018



Asset Quality Data:






Non-accrual loans

$                         3,795

$                     4,656




Foreclosed real estate

1,601

1,537





Total non-performing assets

5,396

6,193




Total non-accrual loans to total loans

0.6%

0.7%




Total non-accrual loans to total assets

0.4%

0.5%




Allowance for loan losses

8,085

8,044




Allowance for loan losses to total loans

1.2%

1.2%




Allowance for loan losses to total







non-accrual loans

213.0%

172.8%




Total non-performing assets to total assets

0.6%

0.6%




Non-accrual troubled debt restructurings (included above)

443

446




Performing troubled debt restructurings

10,618

10,698




Loan to deposit ratio

95.0%

87.5%













*

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










SOURCE Severn Bancorp, Inc.

Related Links

http://www.severnbank.com

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