Severn Bancorp Announces Improved Fourth Quarter Results

Jan 22, 2010, 12:47 ET from Severn Bancorp, Inc.

ANNAPOLIS, Md., Jan. 22 /PRNewswire-FirstCall/ -- Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Savings Bank, FSB ("Severn"), today announced results for the quarter and year ended December 31, 2009.  Net loss for the fourth quarter of 2009 was $2.7 million (unaudited), or ($.31) per share, compared to a net loss of $4.4 million (unaudited) or ($.48) per share for the third quarter of 2009 and net loss of $6.9 million (unaudited), or $(.73) per share for the second quarter of 2009.  Net loss for the year ended December 31, 2009 was $15.2 million, or ($1.68) per share, compared to net income of $4.1 million, or $.39 per share for the year ended December 31, 2008.  The net loss of $2.7 million for the quarter was due to an increase in the loan loss reserve of approximately $5.5 million during the quarter ended December 31, 2009.  This increase is a non-cash charge against earnings.  At December 31, 2009, Severn's regulatory capital ratios continued to exceed the levels required to be considered "well capitalized" under applicable federal banking regulations, including its core (leverage) ratio of approximately 12% compared to the regulatory requirement of 5% for "well capitalized" status.

"We are cautiously optimistic that the worst of the economic recession is behind us," said Alan J. Hyatt, president and chief executive officer.  "Asset quality appears to be showing improvement, and our core business continues to be profitable. While we still set aside approximately $5.5 million in the loan loss reserve for potential credit problems in our loan portfolio, that amount is significantly less than the $8.9 million and $12.5 million set aside for the third and second quarters, respectively. We remain focused on our asset quality as we move forward through the next several months.   Our commitment remains to return to profitability and to continue to be the leading community bank in our market."

About Severn

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 $1 billion 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.  The Company'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 Company's general market area, federal and state regulation, competition and other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission (the "SEC"), including "Item 1A. Risk Factors" contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Severn Bancorp, Inc.

Selected Financial Data

(dollars in thousands, except per share data)

(Unaudited)

For the Three Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2009

2009

2009

2009

2008

Summary Operating Results:

Interest income

$12,822   

$13,347   

$12,873   

$13,616   

$14,532   

Interest expense

5,667   

6,296   

6,877   

7,211   

7,982   

Net interest income

7,155   

7,051   

5,996   

6,405   

6,550   

Provision for loan losses

5,458   

8,909   

12,501   

4,534   

3,116   

Net interest income (loss) after

provision for loan losses

1,697   

(1,858)  

(6,505)  

1,871   

3,434   

Non-interest income

586   

570   

729   

616   

682   

Non-interest expense

6,628   

5,980   

5,708   

4,546   

4,485   

Loss before income tax benefit

(4,345)  

(7,268)  

(11,484)  

(2,059)  

(369)  

Income tax benefit

(1,694)  

(2,909)  

(4,611)  

(714)  

(139)  

Net loss

$(2,651)  

$(4,359)  

$(6,873)  

$(1,345)  

$(230)  

Per Share Data:

Basic earnings (loss) per share

$(0.31)  

$(0.48)  

$(0.73)  

$(0.18)  

$(0.04)  

Diluted earnings (loss) per share

$(0.31)  

$(0.48)  

$(0.73)  

$(0.18)  

$(0.04)  

Common stock dividends per share

$   -   

$0.03   

$0.03   

$0.03   

$0.06   

Average basic shares outstanding

10,066,679   

10,066,679   

10,066,679   

10,066,679   

10,066,679   

Average diluted shares outstanding

10,066,679   

10,066,679   

10,066,679   

10,066,679   

10,066,679   

Performance Ratios:

Return on average assets

-0.27%

-0.44%

-0.69%

-0.14%

-0.02%

Return on average equity

-2.46%

-3.90%

-5.78%

-1.09%

-0.20%

Net interest margin

3.17%

3.06%

2.60%

2.79%

2.41%

Efficiency ratio*

61.36%

60.90%

69.41%

55.83%

55.50%

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

As of

December 31,

September 30,

June 30,

March 31,

December 31,

2009

2009

2009

2009

2008

Balance Sheet Data:

Total assets

$967,936   

$995,904   

$1,001,993   

$972,817   

$987,651   

Total loans receivable

853,772   

871,183   

896,396   

911,236   

911,272   

Allowance for loan losses

(34,693)  

(34,009)  

(28,931)  

(18,885)  

(14,813)  

Net loans

819,079   

837,174   

867,465   

892,351   

896,459   

Deposits

710,330   

725,040   

712,384   

677,048   

683,866   

Stockholders' equity

106,231   

109,212   

114,203   

121,709   

123,667   

Bank's Tier 1 core capital to total assets

12.3%

12.2%

12.4%

13.6%

13.5%

Book value per share

$7.91   

$8.21   

$8.70   

$9.45   

$9.64   

Asset Quality Data:

Non-accrual loans

$62,685   

$68,801   

$77,507   

$62,623   

$54,795   

Foreclosed real estate

21,574   

17,877   

8,116   

6,895   

6,317   

Total non-performing assets

84,259   

86,678   

85,623   

69,518   

61,112   

Total non-accrual loans to net loans

7.7%

8.2%

8.9%

7.0%

6.1%

Allowance for loan losses

34,693   

34,009   

28,931   

18,885   

14,813   

Allowance for loan losses to total loans

4.1%

3.9%

3.2%

2.1%

1.6%

Allowance for loan losses to total

non-performing loans

55.3%

49.4%

37.3%

30.2%

27.0%

Total non-accrual loans to total assets

6.5%

6.9%

7.7%

6.4%

5.5%

Total non-performing assets to total assets

8.7%

8.7%

8.5%

7.1%

6.2%

SOURCE Severn Bancorp, Inc.



RELATED LINKS

http://www.severnbank.com