Severn Bancorp, Inc. Announces Significant Year-Over-Year Earnings Growth

April 23, 2018

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ANNAPOLIS, Md., April 23, 2018 /PRNewswire/ — Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Savings Bank, FSB, today announced an increase in net income of over 100% for the first quarter of 2018 versus the first quarter of 2017. Net income was $1.9 million versus $925 thousand for the quarters ended March 31, 2018 and 2017, respectively. On a diluted per share basis, earnings were $0.15 versus $0.06 for the quarters ended March 31, 2018 and 2017, respectively.

Net interest income increased 19% during the first quarter of 2018. Net interest income was $7.0 million during the first quarter of 2018 versus $5.9 million during the first quarter of 2017. The increase is due to higher interest income resulting from loan growth and lower interest expense on borrowings. Interest expense on borrowing has decreased due to maturing FHLB advances being refinanced at lower rates.

Non-interest income increased to $1.9 million in the first quarter of 2018 versus $1.4 million in the first quarter of 2017.  The increase was due to higher volume of fees on a growing deposit portfolio and higher sales of mortgages into the secondary market. Non-interest expenses increased modestly to $6.2 million in the first quarter of 2018 versus $5.7 million in the first quarter of 2017. The increase is due to added staffing which was needed to support the growth in our lending and deposit programs.

“We are pleased to report earnings for the quarter that show substantial progress year over year,” stated Alan J. Hyatt, President and Chief Executive Officer.  Mr. Hyatt continued, “The Company has seen notable improvement in asset quality, and recently also announced payment of a dividend to shareholders. We continue to execute our strategy of generating core deposits and growing our commercial and mortgage lending units.  While our results for the quarter are trending in the right direction, we remain focused on continued improvement in our operations and enhancing long term shareholder value.”

About Severn Savings 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 $801 million and five branches located in Annapolis, Edgewater, Severna Park 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)

Year-to-Date income statement results:

Year Ended March 31,

2018

2017

$ Change

% Change

Interest Income

Interest on loans

$    8,371

$    7,131

$    1,240

17.38%

Interest on securities 

320

269

51

18.99%

Other interest income

186

157

29

18.45%

Total interest income

8,877

7,557

1,320

17.46%

Interest Expense

Interest on deposits

1,133

975

158

16.18%

Interest on long term borrowings

760

996

(236)

-23.67%

Total interest expense

1,893

1,971

(78)

-3.96%

Net interest income

6,984

5,586

1,398

25.02%

Provision for (reversal of) loan losses

0

(275)

275

-100.00%

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

6,984

5,861

1,123

19.15%

Non-interest income

Mortgage-banking revenue

595

535

60

11.20%

Real Estate Commissions

385

380

5

1.40%

Real Estate Management Income

183

194

(11)

-5.53%

All other income

706

249

457

183.58%

Net non-interest income

1,870

1,358

512

37.68%

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

8,853

7,219

1,634

22.64%

Non-Interest Expenses

Compensation and related expenses

4,278

3,757

521

13.86%

Net Occupancy & Depreciation

344

336

8

2.44%

Net Costs of Foreclosed Real Estate

32

33

(1)

-2.81%

Other

1,569

1,549

20

1.27%

Total non-interest expenses

6,223

5,675

548

9.65%

Income before income tax provision 

2,631

1,544

1,087

70.37%

Income tax provision 

745

619

126

20.43%

Net income

$    1,885

$     925

$    960

103.80%

Net income available to common shareholders

$    1,815

$    855

$    960

112.28%

Severn Bancorp, Inc.

Consolidated Balance Sheet

(dollars in thousands, except per share data)

(Unaudited)

March 31, 2018

December 31, 2017

$ Change

% Change

Balance Sheet Data:

ASSETS

Cash

$       2,291

$     2,382

$       (90)

-3.79%

Federal funds and Interest bearing deposits in other banks

16,016

19,471

(3,455)

-17.74%

Certificates of deposit held for investment

8,780

8,780

0

0.00%

Investment securities available for sale

12,011

10,119

1,892

18.70%

Investment securities held to maturity

49,911

54,303

(4,392)

-8.09%

Loans held for sale

5,803

4,530

1,272

28.08%

Loans receivable

669,912

668,151

1,760

0.26%

Loan valuation allowance

(8,169)

(8,055)

(114)

1.41%

Accrued interest receivable 

2,454

2,640

(186)

-7.03%

Foreclosed real estate, net

237

403

(166)

-41.19%

Premises and equipment, net

23,121

23,139

(18)

-0.08%

Restricted stock investments

4,844

4,489

355

7.91%

Bank owned life insurance

5,104

5,064

41

0.81%

Deferred income taxes

4,565

5,302

(737)

-13.90%

Prepaid expenses and other assets

4,205

4,070

135

3.31%

$   801,085

$   804,788

$   (3,703)

-0.46%

LIABILITIES AND STOCKHOLDERS EQUITY

Deposits

$   589,916

$   602,228

$ (12,312)

-2.04%

Borrowings

96,500

88,500

8,000

9.04%

Subordinated debentures

20,619

20,619

0.00%

Accounts payable and accrued expenses

1,632

2,340

(709)

-30.27%

 Total Liabilities

708,667

713,688

(5,021)

-3.79%

Preferred stock

4

4

-3.79%

Common stock

122

122

(0)

-3.79%

Additional paid-in capital

65,060

65,137

(77)

-3.79%

Retained earnings

27,320

25,873

1,448

-3.79%

Accumulated comprehensive income (loss)

(89)

(36)

(52)

-3.79%

 Total Stockholders’ Equity

92,419

91,100

1,319

1.45%

$   801,085

$   804,788

$   (3,702)

-0.46%

Severn Bancorp, Inc.

Selected Financial Data

(dollars in thousands, except per share data)

(Unaudited)

Three Months Ended March 31,

2018

2017

Per Share Data:

Basic earnings per share

$              0.15

$              0.07

Diluted earnings per share

$              0.15

$              0.07

Average basic shares outstanding

12,241,554

12,125,553

Average diluted shares outstanding

12,334,637

12,210,580

Performance Ratios:

Return on average assets

0.94%

0.48%

Return on average equity

8.22%

4.24%

Net interest margin

3.66%

3.09%

Efficiency ratio*

69.92%

81.25%

March 31, 2018

December 31, 2017

Asset Quality Data:

Non-accrual loans

$          5,702

$           5,710

Foreclosed real estate

237

403

     Total non-performing assets

5,939

6,113

Total non-accrual loans to total loans

0.9%

0.9%

Total non-accrual loans to total assets

0.7%

0.7%

Allowance for loan losses

8,169

8,055

Allowance for loan losses to total loans

1.2%

1.2%

Allowance for loan losses to total non-accrual loans

143.3%

141.1%

Total non-performing assets to total assets

0.7%

0.8%

Non-accrual troubled debt restructurings (included above)

811

819

Performing troubled debt restructurings

12,758

13,713

Loan to deposit ratio

113.6%

110.9%

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

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SOURCE Severn Bancorp, Inc.

Related Links

http://www.severnbank.com

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