Severn Bancorp, Inc. Announces Second Quarter Earnings
ANNAPOLIS, Md., July 26, 2019 /PRNewswire/ -- Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Bank, today announced net income of $2.2 million for the three months ending June 30, 2019 versus $1.9 million for the same quarter in 2018. On a diluted per share basis, earnings were $0.17 versus $0.15 for the quarters ending June 30, 2019 and 2018, respectively.
Net income for the six months ending June 30, 2019 was $4.8 million versus $3.8 million for June 30, 2018, an increase of 26%. On a diluted per share basis, earnings were $0.37 versus $0.30 for the six months ending June 30, 2019 and 2018 respectively, an increase of 23%.
"Earnings are respectable again for the second quarter of this year," stated Alan J. Hyatt, President and Chief Executive Officer. Mr. Hyatt continued, "We are pleased with the continued upward trajectory of the company's earnings. Our quarterly results were boosted by increased residential mortgage production and a continued push on the commercial banking front. We have our sights set on building even deeper ties in the community and serving the residents and businesses with unrivaled personal local banking and service."
Net interest income increased $918,000, an increase of 13% during the second quarter of 2019. Net interest income was $7.8 million for the three months ending June 30, 2019 versus $6.9 million during the second quarter of 2018. For the six months ending June 30, 2019, net interest income was $15.9 million versus $13.9 million for June 30, 2018, an increase of $2.0 million or 15%.
Non-interest income increased to $2.6 million from $2.1 million during the three months ending June 30, 2019. For the six months ending June 30, 2019 non-interest income increased by $1.0 million to $4.9 million from $3.9 million at June 30, 2018, or an increase of 26%. Growth in mortgage banking production and deposit fees for medical-use cannabis related accounts contributed to the increase non-interest income.
Non-interest expenses were $7.5 million for the three months ending June 30, 2019 versus $6.4 million for the same period in 2018. The increase is due to several factors, including: higher expenses for accounting and professional fees related to SOX Section 404 compliance, severance payment to the former CFO and higher commissions paid to mortgage loan officers and real estate brokers as a result of increased production in 2019.
For the six months ending June 30, 2019, non-interest expenses were $14.3 million versus $12.5 million for the same period in 2018. Several factors contributed to higher expenses, including accounting and professional fees related to SOX Section 404 compliance, severance payment 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 for the first six months of 2019 was higher occupancy costs and additional staffing as a result of the opening of the Lothian Branch in the second quarter of 2018 and the addition of the Frederick mortgage production office in the second quarter of 2018.
Total assets deceased $112 million to $862.1 million at June 30, 2019 from $974.2 million to December 31, 2018. The decrease in assets was primarily in federal funds and interest bearing deposits in other banks. Deposits and borrowed funds decreased $94.1 million and $25.0 million, respectively from December 31, 2018 to June 30, 2019. The decrease in deposits was the result of short term, medical-use cannabis related funds that account holders maintained at Severn Bank prior to pursuing to 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 has assets of $862 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 Balance Sheet | |||||||
(dollars in thousands, except per share data) | |||||||
(Unaudited) | |||||||
June 30, 2019 | December 31, 2018 | $ Change | % Change | ||||
Balance Sheet Data: | |||||||
ASSETS | |||||||
Cash | $ 3,644 | $ 2,880 | $ 764 | 27% | |||
Federal funds and interest bearing deposits in other banks | 73,693 | 185,460 | (111,767) | -60% | |||
Certificates of deposit held as investment | 7,540 | 8,780 | (1,240) | -14% | |||
Investment securities available for sale, at fair value | 11,031 | 11,978 | (947) | -8% | |||
Investment securities held to maturity | 33,562 | 38,912 | (5,350) | -14% | |||
Loans held for sale, at fair value | 17,987 | 9,686 | 8,301 | 86% | |||
Loans receivable | 679,573 | 682,349 | (2,776) | 0% | |||
Allowance for loan losses | (8,093) | (8,044) | (49) | 1% | |||
Accrued interest receivable | 2,605 | 2,848 | (243) | -9% | |||
Foreclosed real estate, net | 1,430 | 1,537 | (107) | -7% | |||
Premises and equipment, net | 22,452 | 22,745 | (293) | -1% | |||
Restricted stock investments | 2,857 | 3,766 | (909) | -24% | |||
Bank owned life insurance | 5,303 | 5,225 | 78 | 1% | |||
Deferred income taxes, net | 2,167 | 2,363 | (196) | -8% | |||
Prepaid expenses and other assets | 6,361 | 3,748 | 2,613 | 70% | |||
$ 862,112 | $ 974,233 | $ (112,121) | -12% | ||||
LIABILITIES AND STOCKHOLDERS EQUITY | |||||||
Deposits | $ 685,416 | $ 779,506 | $ (94,090) | -12% | |||
Borrowings | 48,500 | 73,500 | (25,000) | -34% | |||
Subordinated debentures | 20,619 | 20,619 | - | 0% | |||
Accounts payable and accrued expenses | 4,886 | 2,155 | 2,731 | 127% | |||
Total Liabilities | $759,421 | $875,780 | (116,359) | -13% | |||
Preferred stock | - | - | - | - | |||
Common stock | 128 | 128 | - | 0% | |||
Additional paid-in capital | 65,696 | 65,538 | 158 | 0% | |||
Retained earnings | 36,878 | 32,860 | 4,018 | 12% | |||
Accumulated comprehensive income (loss) | (11) | (73) | 62 | -85% | |||
Total Stockholders' Equity | 102,691 | 98,453 | 4,238 | 4% | |||
$ 862,112 | $ 974,233 | $ (112,121) | -12% | ||||
Severn Bancorp, Inc. | |||||||
Consolidated Income Statement | |||||||
(dollars in thousands, except per share data) | |||||||
(Unaudited) | |||||||
Quarterly income statement results: | Three Months Ended June 30, | ||||||
2019 | 2018 | $ Change | % Change | ||||
Interest Income | |||||||
Interest on loans | $ 9,226 | $ 8,516 | $ 710 | 8% | |||
Interest on securities | 241 | 307 | (66) | -21% | |||
Other interest income | 757 | 178 | 579 | 325% | |||
Total interest income | 10,224 | 9,001 | 1,223 | 14% | |||
Interest Expense | |||||||
Interest on deposits | 1,898 | 1,274 | 624 | 49% | |||
Interest on long term borrowings | 481 | 800 | (319) | -40% | |||
Total interest expense | 2,379 | 2,074 | 305 | 15% | |||
Net interest income | 7,845 | 6,927 | 918 | 13% | |||
Provision for (reversal of) loan losses | - | - | - | - | |||
Net interest income after provision for (reversal of) loan losses | 7,845 | 6,927 | 918 | 13% | |||
Noninterest Income | |||||||
Mortgage-banking revenue | 1,087 | 635 | 452 | 71% | |||
Real Estate Commissions | 378 | 360 | 18 | 5% | |||
Real Estate Management Fees | 162 | 187 | (25) | -13% | |||
Other noninterest income | 988 | 886 | 102 | 12% | |||
Total noninterest income | 2,615 | 2,068 | 547 | 26% | |||
Net interest income plus noninterest income after provision for (reversal of) loan losses | 10,460 | 8,995 | 1,465 | 16% | |||
Noninterest Expense | |||||||
Compensation and related expenses | 4,909 | 4,420 | 489 | 11% | |||
Net Occupancy & Depreciation | 389 | 391 | (2) | -1% | |||
Net Costs of Foreclosed Real Estate | 24 | (18) | 42 | -233% | |||
Other | 2,191 | 1,560 | 631 | 40% | |||
Total noninterest expense | 7,513 | 6,353 | 1,160 | 18% | |||
Income before income tax provision | 2,947 | 2,642 | 305 | 12% | |||
Income tax provision | 771 | 724 | 47 | 6% | |||
Net income | $ 2,176 | $ 1,918 | $ 258 | 13% | |||
Net income available to common shareholders | $ 2,176 | $ 1,918 | $ 258 | 13% | |||
Severn Bancorp, Inc. | |||||||
Consolidated Income Statement | |||||||
(dollars in thousands, except per share data) | |||||||
(Unaudited) | |||||||
Year-to-Date income statement results: | Six Months Ended June 30, | ||||||
2019 | 2018 | $ Change | % Change | ||||
Interest Income | |||||||
Interest on loans | $ 18,393 | $ 16,887 | $ 1,506 | 9% | |||
Interest on securities | 500 | 627 | (127) | -20% | |||
Other interest income | 1,874 | 364 | 1,510 | 415% | |||
Total interest income | 20,767 | 17,878 | 2,889 | 16% | |||
Interest Expense | |||||||
Interest on deposits | 3,767 | 2,407 | 1,360 | 57% | |||
Interest on long term borrowings | 1,070 | 1,560 | (490) | -31% | |||
Total interest expense | 4,837 | 3,967 | 870 | 22% | |||
Net interest income | 15,930 | 13,911 | 2,019 | 15% | |||
Provision for (reversal of) loan losses | - | - | - | - | |||
Net interest income after provision for (reversal of) loan losses | 15,930 | 13,911 | 2,019 | 15% | |||
Noninterest Income | |||||||
Mortgage-banking revenue | 1,807 | 1,230 | 577 | 47% | |||
Real Estate Commissions | 860 | 745 | 115 | 15% | |||
Real Estate Management Fees | 326 | 370 | (44) | -12% | |||
Other noninterest income | 1,882 | 1,516 | 366 | 24% | |||
Total noninterest income | 4,875 | 3,861 | 1,014 | 26% | |||
Net interest income plus noninterest income after provision for (reversal of) loan losses | 20,805 | 17,772 | 3,033 | 17% | |||
Noninterest Expense | |||||||
Compensation and related expenses | 9,434 | 8,698 | 736 | 8% | |||
Net Occupancy & Depreciation | 804 | 735 | 69 | 9% | |||
Net Costs of Foreclosed Real Estate | 149 | 14 | 135 | 964% | |||
Other | 3,876 | 3,053 | 823 | 27% | |||
Total noninterest expense | 14,263 | 12,500 | 1,763 | 14% | |||
Income before income tax provision | 6,542 | 5,272 | 1,270 | 24% | |||
Income tax provision | 1,757 | 1,469 | 288 | 20% | |||
Net income | $ 4,785 | $ 3,803 | $ 982 | 26% | |||
Net income available to common shareholders | $ 4,785 | $ 3,733 | $ 1,052 | 28% | |||
Severn Bancorp, Inc. | ||||||||
Selected Financial Data | ||||||||
(dollars in thousands, except per share data) | ||||||||
(Unaudited) | ||||||||
Six Months Ended June 30, 2019 | Three Months Ended June 30, 2019 | |||||||
2019 | 2018 | 2019 | 2018 | |||||
Per Share Data: | . | |||||||
Basic earnings per share | $ 0.37 | $ 0.30 | $ 0.17 | $ 0.15 | ||||
Diluted earnings per share | $ 0.37 | $ 0.30 | $ 0.17 | $ 0.15 | ||||
Average basic shares outstanding | 12,774,191 | 12,463,132 | 12,775,123 | 12,684,711 | ||||
Average diluted shares outstanding | 12,859,980 | 12,559,069 | 12,862,291 | 12,781,037 | ||||
Performance Ratios: | ||||||||
Return on average assets | 1.04% | 0.95% | 0.95% | 0.95% | ||||
Return on average equity | 9.50% | 9.04% | 8.56% | 8.12% | ||||
Net interest margin | 3.60% | 3.62% | 3.55% | 3.57% | ||||
Efficiency ratio* | 67.83% | 70.26% | 71.59% | 71.23% | ||||
June 30, 2019 | December 31, 2018 | |||||||
Asset Quality Data: | ||||||||
Non-accrual loans | $ 4,887 | $ 4,656 | ||||||
Foreclosed real estate | 1,430 | 1,537 | ||||||
Total non-performing assets | 6,317 | 6,193 | ||||||
Total non-accrual loans to total loans | 0.7% | 0.7% | ||||||
Total non-accrual loans to total assets | 0.6% | 0.5% | ||||||
Allowance for loan losses | 8,093 | 8,044 | ||||||
Allowance for loan losses to total loans | 1.2% | 1.2% | ||||||
Allowance for loan losses to total | ||||||||
non-accrual loans | 165.6% | 172.8% | ||||||
Total non-performing assets to total assets | 0.7% | 0.6% | ||||||
Non-accrual troubled debt restructurings (included above) | 422 | 446 | ||||||
Performing troubled debt restructurings | 10,537 | 10,698 | ||||||
Loan to deposit ratio | 99.1% | 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.
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