Severn Bancorp Announces Second Quarter Earnings

ANNAPOLIS, Md., July 16, 2013 /PRNewswire/ -- Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Savings Bank, FSB ("Severn"), today announced net income of $232,000 or $(.01) per share for the second quarter of 2013 compared to net income of $1,203,000 or $.08 per share for the second quarter of 2012 and compared to net income of $621,000 or $.03 per share, for the quarter ended March 31, 2013.  Earnings per share is calculated using net income available for common shareholders, which is net income less preferred stock dividends.

"Although we had what amounts to a break even quarter, Severn continues to make great strides in resolving problem assets. Severn is aggressively liquidating foreclosed real estate, and is rapidly and decisively taking steps to rid itself of the remaining 'legacy assets' that were originated some years ago," stated Alan J. Hyatt, president and chief executive officer.  Mr. Hyatt continued, "We expect to see earnings improve shortly after we rid ourselves of the last remnants of these assets. Despite absorbing over $2 million in expenses related to relieving the balance sheet of these problems during the first half of this year, Severn was able to generate a profit. We have a strong company emerging, and we should continue to increase our market share as one of the remaining community banks in the Anne Arundel County marketplace." 

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 approximately $840 million and four branches located in Annapolis, Edgewater 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, 2012.

Severn Bancorp, Inc.

Selected Financial Data

(dollars in thousands, except per share data)

(Unaudited)























For the Three Months Ended





June 30,

March 31,

December 31,

September 30,

June 30,





2013

2013

2012

2012

2012










Summary Operating Results:







Interest income

$              8,574

$              8,913

$              9,412

$              9,104

$             10,276


Interest expense

2,364

2,315

2,587

3,027

3,336



Net interest income

6,210

6,598

6,825

6,077

6,940


Provision for loan losses

300

320

300

-

-



Net interest income after provision









for loan losses

5,910

6,278

6,525

6,077

6,940


Non-interest income

1,881

1,572

1,478

1,039

835


Non-interest expense

7,470

6,785

5,815

5,961

5,732


Income before income tax provision

321

1,065

2,188

1,155

2,043


Income tax provision

89

444

914

481

840



Net income

$                 232

$                 621

$              1,274

$                 674

$              1,203










Per Share Data:







Basic earnings per share

($                0.01)

$                0.03

$                0.09

$                0.03

$                0.08


Diluted earnings per share

($                0.01)

$                0.03

$                0.09

$                0.03

$                0.08


Common stock dividends per share

$                      -

$                      -

$                      -

$                      -

$                      -


Average basic shares outstanding

10,066,679

10,066,679

10,066,679

10,066,679

10,066,679


Average diluted shares outstanding

10,108,470

10,100,454

10,066,679

10,066,679

10,066,679










Performance Ratios:







Return on average assets

0.03%

0.07%

0.14%

0.08%

0.13%


Return on average equity

0.21%

0.57%

1.19%

0.63%

1.13%


Net interest margin

3.29%

3.47%

3.33%

3.09%

3.41%


Efficiency ratio*

76.42%

72.01%

63.70%

71.19%

64.96%












*

The efficiency ratio is general and administrative expenses as a percentage of net interest income plus non-interest income














As of





June 30,

March 31,

December 31,

September 30,

June 30,





2013

2013

2012

2012

2012










Balance Sheet Data:







Total assets

$           839,053

$           849,598

$           852,118

$           862,628

$           897,390


Total loans receivable

642,801

653,595

669,187

688,405

687,796


Allowance for loan losses

(12,765)

(15,465)

(17,478)

(23,180)

(24,097)



Net loans

630,036

638,130

651,709

665,225

663,699


Deposits

583,271

593,900

599,394

609,772

643,653


Borrowings

115,000

115,000

115,000

115,000

115,000


Stockholders' equity

109,313

109,349

108,996

108,004

107,612


Bank's Tier 1 core capital to total assets

14.9%

14.8%

14.6%

14.1%

13.4%


Book value per share

$                8.21

$                8.22

$                8.18

$                8.08

$                8.04










Asset Quality Data:







Non-accrual loans

$             37,537

$             35,064

$             37,495

$             42,596

$             38,965


Foreclosed real estate

13,297

14,895

11,441

13,801

16,329



Total non-performing assets

50,834

49,959

48,936

56,397

55,294


Total non-accrual loans to net loans

6.0%

5.5%

5.8%

6.4%

5.9%


Total non-accrual loans to total assets

4.5%

4.1%

4.4%

4.9%

4.3%


Allowance for loan losses

12,765

15,465

17,478

23,180

24,097


Allowance for loan losses to total loans

2.0%

2.4%

2.6%

3.4%

3.5%


Allowance for loan losses to total








non-accrual loans

34.0%

44.1%

46.6%

54.4%

61.8%


Total non-performing assets to total assets

6.1%

5.9%

5.7%

6.5%

6.2%


Non-accrual troubled debt restructurings (included above)

6,771

6,774

5,635

12,574

9,515


Performing troubled debt restructurings

41,544

46,607

56,448

51,230

51,034


 

SOURCE Severn Bancorp, Inc.



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