Severn Bancorp, Inc. Announces Third Quarter Earnings
ANNAPOLIS, Md., Oct. 29, 2018 /PRNewswire/ -- Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Bank, today announced net income of $2.2 million for the three months ending September 30, 2018 versus $1.3 million for the same quarter in 2017. This is an increase of 72% year over year for the period. On a diluted per share basis, earnings were $0.17 versus $0.10 for the quarters ended September 30, 2018 and 2017, respectively. Net income for the nine months ended September 30, 2018 was $6.0 million, an 89% increase over net income of $3.2 million for the same nine month period in 2017.
"We are pleased to report continued growth in earnings," stated Alan J. Hyatt, President and Chief Executive Officer. Mr. Hyatt continued, "We have seen growth in our net interest income as well as our fee based income streams. We paid dividends the past three quarters and hope to continue that trend. We remain focused on continuous improvement in our operations, exploring new products and markets, and enhancing long term shareholder value."
Net interest income increased 16% during the third quarter of 2018. Net interest income was $7.3 million during the third quarter of 2018 versus $6.3 million during the third quarter of 2017. Net interest margin improved to 3.65% for the three months ending September 30, 2018 from 3.38% for the same period in 2017. Net interest income increased to $21.3 million for the first nine months of 2018 from $17.9 million for the same time frame in 2017.
Non-interest income increased 68% during the quarter ended September 30, 2018. Non-interest income was $2.3 million for the three months ended September 30, 2018, up from $1.4 million as of September 30, 2017. For the nine months ended September 30, 2018, non-interest income was $6.4 million. This represents a 70% increase over the $3.8 million reported for the third quarter of 2017. Severn Bank experienced a significant increase in mortgage banking revenue of 122% in the third quarter of 2018 versus the third quarter of 2017. Year to date mortgage banking revenue saw an increase of 71% for the first nine months of 2018 versus 2017. The company also saw significant increases in fees on deposit accounts, which is included in other non-interest income.
Non-interest expenses were $7.0 million for the three months ended September 30, 2018 versus $5.5 million for the same period in 2017. For the nine months ended September 30, 2018, non-interest expenses were $19.7 million, which is an increase of 16% over the same period in 2017. The increase is primarily due to higher commissions paid to mortgage loan officers as a result of increased production.
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 $889 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, 2017.
Severn Bancorp, Inc. |
||||||||
Consolidated Income Statement |
||||||||
(dollars in thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
Quarterly income statement results: |
Three Months Ended September 30, |
|||||||
2018 |
2017 |
$ Change |
% Change |
|||||
Interest Income |
||||||||
Interest on loans |
$ 8,844 |
$ 7,742 |
$ 1,102 |
14.23% |
||||
Interest on securities |
293 |
330 |
(37) |
-11.21% |
||||
Other interest income |
423 |
167 |
256 |
153.29% |
||||
Total interest income |
9,560 |
8,239 |
1,321 |
16.03% |
||||
Interest Expense |
||||||||
Interest on deposits |
1,531 |
1,011 |
520 |
51.43% |
||||
Interest on long term borrowings |
684 |
897 |
(213) |
-23.75% |
||||
Total interest expense |
2,215 |
1,908 |
307 |
16.09% |
||||
Net interest income |
7,345 |
6,331 |
1,014 |
16.02% |
||||
Provision for (reversal of) loan losses |
(300) |
0 |
(300) |
100% |
||||
Net interest income after provision for (reversal of) loan losses |
7,645 |
6,331 |
1,314 |
20.76% |
||||
Non-interest income |
||||||||
Mortgage-banking revenue |
740 |
334 |
406 |
121.56% |
||||
Real Estate Commissions |
408 |
311 |
97 |
31.19% |
||||
Real Estate Management Income |
157 |
197 |
(40) |
-20.30% |
||||
Other non-interest income |
1,039 |
557 |
482 |
86.54% |
||||
Net non-interest income |
2,344 |
1,399 |
945 |
67.55% |
||||
Net interest income plus non-interest income after |
9,989 |
7,730 |
2,259 |
29.22% |
||||
provision for (reversal of) loan losses |
||||||||
Non-Interest Expenses |
||||||||
Compensation and related expenses |
4,661 |
3,288 |
1,373 |
41.76% |
||||
Net Occupancy & Depreciation |
416 |
354 |
62 |
17.51% |
||||
Net Costs of Foreclosed Real Estate |
7 |
126 |
(119) |
-94.44% |
||||
Other non-interest expense |
1,956 |
1,753 |
203 |
11.58% |
||||
Total non-interest expenses |
7,040 |
5,521 |
1,519 |
27.51% |
||||
Income before income tax provision |
2,949 |
2,209 |
740 |
33.50% |
||||
Income tax provision |
784 |
950 |
(166) |
-17.47% |
||||
Net income |
$ 2,165 |
$ 1,259 |
$ 906 |
71.96% |
||||
Net income available to common shareholders |
$ 2,165 |
$ 1,189 |
$ 976 |
82.09% |
||||
Severn Bancorp, Inc. |
||||||||
Consolidated Income Statement |
||||||||
(dollars in thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
Year-to-Date income statement results: |
Nine Months Ended September 30, |
|||||||
2018 |
2017 |
$ Change |
% Change |
|||||
Interest Income |
||||||||
Interest on loans |
$ 25,731 |
$ 22,267 |
$ 3,464 |
15.56% |
||||
Interest on securities |
920 |
927 |
(7) |
-0.76% |
||||
Other interest income |
787 |
498 |
289 |
58.03% |
||||
Total interest income |
27,438 |
23,692 |
3,746 |
15.81% |
||||
Interest Expense |
||||||||
Interest on deposits |
3,938 |
2,924 |
1,014 |
34.66% |
||||
Interest on long term borrowings |
2,244 |
2,844 |
(600) |
-21.10% |
||||
Total interest expense |
6,182 |
5,768 |
414 |
7.17% |
||||
Net interest income |
21,256 |
17,924 |
3,332 |
18.59% |
||||
Provision for (reversal of) loan losses |
(300) |
(650) |
350 |
-53.85% |
||||
Net interest income after provision for (reversal of) loan losses |
21,556 |
18,574 |
2,982 |
16.06% |
||||
Non-interest income |
||||||||
Mortgage-banking revenue |
1,970 |
1,150 |
820 |
71.30% |
||||
Real Estate Commissions |
1,153 |
959 |
194 |
20.23% |
||||
Real Estate Management Income |
527 |
513 |
14 |
2.73% |
||||
Other non-interest income |
2,755 |
1,140 |
1,615 |
141.67% |
||||
Net non-interest income |
6,405 |
3,762 |
2,643 |
70.26% |
||||
Net interest income plus non-interest income after |
27,961 |
22,336 |
5,625 |
25.19% |
||||
provision for (reversal of) loan losses |
||||||||
Non-Interest Expenses |
||||||||
Compensation and related expenses |
13,359 |
10,719 |
2,640 |
24.63% |
||||
Net Occupancy & Depreciation |
1,151 |
1,015 |
136 |
13.40% |
||||
Net Costs of Foreclosed Real Estate |
21 |
166 |
(145) |
-87.35% |
||||
Other non-interest expense |
5,209 |
5,120 |
89 |
1.74% |
||||
Total non-interest expenses |
19,740 |
17,020 |
2,720 |
15.98% |
||||
Income before income tax provision |
8,221 |
5,316 |
2,905 |
54.66% |
||||
Income tax provision |
2,252 |
2,150 |
102 |
4.75% |
||||
Net income |
$ 5,969 |
$ 3,166 |
$ 2,803 |
88.55% |
||||
Net income available to common shareholders |
$ 5,899 |
$ 2,956 |
$ 2,943 |
99.56% |
||||
Severn Bancorp, Inc. |
|||||||
Consolidated Balance Sheet |
|||||||
(dollars in thousands, except per share data) |
|||||||
(Unaudited) |
|||||||
September 30, 2018 |
December 31, 2017 |
$ Change |
% Change |
||||
Balance Sheet Data: |
|||||||
ASSETS |
|||||||
Cash |
$ 2,160 |
$ 2,382 |
$ (222) |
-9.30% |
|||
Federal funds and Interest bearing deposits in other banks |
89,156 |
19,471 |
69,685 |
357.89% |
|||
Certificates of deposit held as investment |
8,780 |
8,780 |
0 |
0.00% |
|||
Investment securities available for sale, at fair value |
11,950 |
10,119 |
1,831 |
18.09% |
|||
Investment securities held to maturity |
43,108 |
54,303 |
(11,195) |
-20.62% |
|||
Loans held for sale, at fair value |
9,023 |
4,530 |
4,493 |
99.17% |
|||
Loans receivable |
689,712 |
668,151 |
21,561 |
3.23% |
|||
Allowance for loan losses |
(8,056) |
(8,055) |
(1) |
0.01% |
|||
Accrued interest receivable |
2,689 |
2,640 |
49 |
1.87% |
|||
Foreclosed real estate, net |
285 |
403 |
(118) |
-29.20% |
|||
Premises and equipment, net |
22,931 |
23,139 |
(208) |
-0.90% |
|||
Restricted stock investments |
3,866 |
4,489 |
(623) |
-13.87% |
|||
Bank owned life insurance |
5,186 |
5,064 |
122 |
2.42% |
|||
Deferred income taxes, net |
3,248 |
5,302 |
(2,054) |
-38.74% |
|||
Prepaid expenses and other assets |
5,287 |
4,069 |
1,218 |
29.93% |
|||
$ 889,325 |
$ 804,787 |
$ 84,538 |
10.50% |
||||
LIABILITIES AND STOCKHOLDERS EQUITY |
|||||||
Deposits |
$ 694,177 |
$ 602,228 |
$ 91,949 |
15.27% |
|||
Borrowings |
73,500 |
88,500 |
(15,000) |
-16.95% |
|||
Subordinated debentures |
20,619 |
20,619 |
- |
0.00% |
|||
Accounts payable and accrued expenses |
5,149 |
2,340 |
2,809 |
120.04% |
|||
Total Liabilities |
793,445 |
713,687 |
79,758 |
11.18% |
|||
Preferred stock |
- |
4 |
(4) |
-100.00% |
|||
Common stock |
127 |
122 |
5 |
4.10% |
|||
Additional paid-in capital |
65,216 |
65,137 |
79 |
0.12% |
|||
Retained earnings |
30,643 |
25,872 |
4,770 |
18.44% |
|||
Accumulated comprehensive income (loss) |
(106) |
(35) |
(71) |
202.86% |
|||
Total Stockholders' Equity |
95,880 |
91,100 |
4,780 |
5.25% |
|||
$ 889,325 |
$ 804,787 |
$ 84,538 |
10.50% |
||||
Severn Bancorp, Inc. |
||||||||
Selected Financial Data |
||||||||
(dollars in thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
Nine Months Ended September 30, |
Three Months Ended September 30, |
|||||||
2018 |
2017 |
2018 |
2017 |
|||||
Per Share Data: |
. |
|||||||
Basic earnings per share |
$ 0.47 |
$ 0.24 |
$ 0.17 |
$ 0.10 |
||||
Diluted earnings per share |
$ 0.47 |
$ 0.24 |
$ 0.17 |
$ 0.10 |
||||
Average basic shares outstanding |
12,541,032 |
12,140,689 |
12,695,136 |
12,172,586 |
||||
Average diluted shares outstanding |
12,651,260 |
12,248,214 |
12,832,633 |
12,323,572 |
||||
Performance Ratios: |
||||||||
Return on average assets |
0.98% |
0.53% |
1.03% |
0.63% |
||||
Return on average equity |
9.03% |
4.80% |
8.98% |
5.69% |
||||
Net interest margin |
3.63% |
3.25% |
3.65% |
3.38% |
||||
Efficiency ratio* |
71.29% |
77.89% |
72.59% |
69.78% |
||||
September 30, 2018 |
December 31, 2017 |
|||||||
Asset Quality Data: |
||||||||
Non-accrual loans |
$ 5,731 |
$ 5,710 |
||||||
Foreclosed real estate |
285 |
403 |
||||||
Total non-performing assets |
6,016 |
6,113 |
||||||
Total non-accrual loans to total loans |
0.8% |
0.9% |
||||||
Total non-accrual loans to total assets |
0.6% |
0.7% |
||||||
Allowance for loan losses |
8,056 |
8,055 |
||||||
Allowance for loan losses to total loans |
1.2% |
1.2% |
||||||
Allowance for loan losses to total |
||||||||
non-accrual loans |
140.6% |
141.1% |
||||||
Total non-performing assets to total assets |
0.7% |
0.8% |
||||||
Non-accrual troubled debt restructurings (included above) |
997 |
820 |
||||||
Performing troubled debt restructurings |
11,271 |
13,714 |
||||||
Loan to deposit ratio |
99.4% |
110.9% |
||||||
* |
This non-GAAP financial measure is calculated as noninterest expenses less OREO expenses divided by net interest income plus noninterest income |
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SOURCE Severn Bancorp, Inc.
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