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27.10.2017 22:02:00
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Severn Bancorp, Inc. Announces Double Digit Percentage Increase in Earnings
ANNAPOLIS, Md., Oct. 27, 2017 /PRNewswire/ -- Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Savings Bank, FSB, today announced net income of $1.26 million, or $0.09 per diluted share for the third quarter of 2017. This is an increase of 19% over the third quarter of 2016 results of $1.06 million, or $0.04 per diluted share. Additionally, net income increased 28% when comparing to the prior period where net income was $982 thousand, or $0.07 per diluted share, for the quarter ended June 30, 2017.
For the nine months ended September 30, 2017 net income was $3.17 million compared to $14.4 million for the same period in 2016. Included in the results for the nine months ended September 30, 2016 was the effect of the reversal of the valuation allowance on the net deferred tax asset which occurred in the second quarter of 2016. This resulted in a negative income tax provision of $10.8 million. Excluding the effect of this one-time tax benefit, income before taxes was $5.3 million and $3.6 million for the nine months ended September 30, 2017 and 2016, respectively, representing a 47% increase.
Total assets were $801.3 million as of September 30, 2017, which was a $13.8 million increase from $787.5 million as of December 31, 2016. Deposits increased by $21.5 million as of September 30, 2017 compared to December 31, 2016.
Asset quality has improved during the nine months ended September 30, 2017. Total non-performing assets were $7.5 million as of September 30, 2017 versus $10.8 million as of December 31, 2016, which represents a 31% decrease. Total non-accrual loans to total loans decreased from 1.6% as of December 31, 2016 to 1.0% as of September 30, 2017.
"We are pleasd with the growth in our earnings," stated Alan J. Hyatt, President and Chief Executive Officer. Mr. Hyatt continued, "Our cost of funds continues to decrease as we repay or refinance long outstanding Federal Home Loan Bank borrowings. Replacing these borrowings with lower cost funding has allowed us to significantly improve our net interest margin. Commercial lending and deposit activity has been robust for the first three quarters of this year. We are building strong banking relationships that are beneficial to the company and our customers. We are definitely in growth mode and very optimistic about our outlook."
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 $797.7 million and five branches located in Annapolis, Edgewater, Glen Burnie, and Severna Park, 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, 2016.
Severn Bancorp, Inc. | |||||||
Consolidated Income Statement | |||||||
(dollars in thousands, except per share data) | |||||||
(Unaudited) | |||||||
Quarterly income statement results: | Three Months Ended September 30, | ||||||
2017 | 2016 | $ Change | % Change | ||||
Interest Income | |||||||
Interest on loans | $ 7,742 | $ 7,479 | $ 263 | 3.52% | |||
Interest on securities | 330 | 280 | 50 | 17.97% | |||
Other interest income | 167 | 83 | 84 | 101.29% | |||
Total interest income | 8,239 | 7,842 | 397 | 5.07% | |||
Interest Expense | |||||||
Interest on deposits | 1,011 | 1,019 | (8) | -0.72% | |||
Interest on long term borrowings | 897 | 1,106 | (209) | -18.89% | |||
Total interest expense | 1,908 | 2,125 | 217 | -10.18% | |||
Net interest income | 6,331 | 5,717 | 614 | 10.74% | |||
Provision for (reversal of) loan losses | - | 50 | (50) | -100.00% | |||
Net interest income after provision for loan losses | 6,331 | 5,667 | 664 | 11.72% | |||
Other Income | |||||||
Mortgage-banking revenue | 334 | 1,042 | (708) | -68.01% | |||
Real Estate Commissions | 311 | 455 | (144) | -31.67% | |||
Real Estate Management Income | 197 | 214 | (17) | -7.95% | |||
All other income | 557 | 185 | 372 | 200.87% | |||
Net other income | 1,399 | 1,896 | (497) | -26.27% | |||
Net interest income after provision for loan losses plus other income | 7,730 | 7,563 | 167 | 2.19% | |||
Non-Interest Expenses | |||||||
Compensation and related expenses | 3,288 | 4,028 | (740) | -18.38% | |||
Net Occupancy & Depreciation | 354 | 486 | (132) | -27.12% | |||
Net Costs of Foreclosed Real Estate | 126 | 41 | 85 | 206.69% | |||
Other | 1,753 | 1,575 | 178 | 11.27% | |||
Total non-interest expenses | 5,521 | 6,130 | (609) | -9.95% | |||
Income before income tax provision | 2,209 | 1,433 | 776 | 54.13% | |||
Income tax provision | 950 | 378 | 572 | 151.36% | |||
Net income | $ 1,259 | $ 1,055 | $ 204 | 19.29% | |||
Net income available to common shareholders | $ 1,121 | $ 539 | $ 582 | 107.98% | |||
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, | ||||||
2017 | 2016 | $ Change | % Change | ||||
Interest Income | |||||||
Interest on loans | $ 22,267 | $ 21,847 | $ 420 | 1.92% | |||
Interest on securities | 927 | 890 | 37 | 4.21% | |||
Other interest income | 498 | 251 | 247 | 98.23% | |||
Total interest income | 23,692 | 22,988 | 704 | 3.06% | |||
Interest Expense | |||||||
Interest on deposits | 2,924 | 3,002 | (78) | -2.59% | |||
Interest on long term borrowings | 2,844 | 3,493 | (649) | -18.58% | |||
Total interest expense | 5,768 | 6,495 | (727) | -11.19% | |||
Net interest income | 17,924 | 16,493 | 1,431 | 8.68% | |||
Provision for (reversal of) loan losses | (650) | 150 | (800) | -533.33% | |||
Net interest income after provision for loan losses | 18,574 | 16,343 | 2,231 | 13.65% | |||
Other Income | |||||||
Mortgage-banking revenue | 1,150 | 2,693 | (1,543) | -57.31% | |||
Real Estate Commissions | 959 | 1,246 | (287) | -23.07% | |||
Real Estate Management Income | 513 | 564 | (51) | -8.97% | |||
All other income | 1,140 | 1,076 | 64 | 5.92% | |||
Net other income | 3,762 | 5,579 | (1,817) | -32.58% | |||
Net interest income after provision for loan losses | 22,336 | 21,922 | 414 | 1.89% | |||
plus other income | |||||||
Non-Interest Expenses | |||||||
Compensation and related expenses | 10,719 | 11,478 | (759) | -6.61% | |||
Net Occupancy & Depreciation | 1,015 | 1,387 | (372) | -26.84% | |||
Net Costs of Foreclosed Real Estate | 166 | 184 | (18) | -10.01% | |||
Other | 5,120 | 5,252 | (132) | -2.51% | |||
Total non-interest expenses | 17,020 | 18,301 | (1,281) | -7.00% | |||
Income before income tax provision | 5,316 | 3,621 | 1,695 | 46.80% | |||
Income tax provision | 2,150 | (10,816) | 12,966 | -119.88% | |||
Net income | $ 3,166 | $ 14,437 | $ (11,271) | -78.07% | |||
Net income available to common shareholders | $ 2,753 | $ 12,864 | $ (10,111) | -78.60% | |||
Severn Bancorp, Inc. | |||||||||
Consolidated Balance Sheet | |||||||||
(dollars in thousands, except per share data) | |||||||||
(Unaudited) | |||||||||
September 30, | December 31, | $ Change | % Change | ||||||
Balance Sheet Data: | |||||||||
ASSETS | |||||||||
Cash | $ 1,654 | $ 39,396 | $ (37,742) | -95.80% | |||||
Federal funds and Interest bearing deposits in other banks | 39,981 | 27,718 | 12,263 | 44.24% | |||||
Investment securities available for sale | 3,129 | - | 3,129 | 100.00% | |||||
Investment securities held to maturity | 58,764 | 62,757 | (3,993) | -6.36% | |||||
Loans held for sale | 4,871 | 10,307 | (5,436) | -52.74% | |||||
Loans receivable | 650,964 | 610,278 | 40,686 | 6.67% | |||||
Loan valuation allowance | (7,936) | (8,969) | 1,033 | -11.52% | |||||
Accrued interest receivable | 2,503 | 2,249 | 254 | 11.30% | |||||
Foreclosed real estate, net | 1,104 | 973 | 131 | 13.47% | |||||
Premises and equipment, net | 23,398 | 24,030 | (632) | -2.63% | |||||
Restricted stock investments | 4,699 | 5,103 | (404) | -7.92% | |||||
Bank owned life insurance | 5,023 | - | 5,023 | 100.00% | |||||
Deferred income taxes | 8,002 | 10,081 | (2,079) | -20.62% | |||||
Prepaid expenses and other assets | 5,174 | 3,562 | 1,612 | 45.26% | |||||
$ 801,330 | $ 787,485 | $ 13,845 | 1.76% | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Deposits | $ 593,492 | $ 571,946 | $ 21,546 | 3.77% | |||||
Borrowings | 93,450 | 103,500 | (10,050) | -9.71% | |||||
Subordinated Debentures | 20,619 | 20,619 | - | 0.00% | |||||
Accounts payable and accrued expenses | 1,759 | 3,490 | (1,731) | -49.59% | |||||
Total Liabilities | 709,320 | 699,555 | 9,765 | 1.40% | |||||
Preferred stock | 4 | 4 | 0 | 9.38% | |||||
Common stock | 122 | 121 | 1 | 1.23% | |||||
Additional paid-in capital | 65,290 | 63,960 | 1,330 | 2.08% | |||||
Retained earnings | 26,598 | 23,845 | 2,753 | 11.54% | |||||
Accumulated comprehensive income (loss) | (4) | - | (4) | 100.00% | |||||
Total Stockholders' Equity | 92,010 | 87,930 | 4,080 | 4.64% | |||||
$ 801,330 | $ 787,485 | $ 13,845 | 1.76% | ||||||
Severn Bancorp, Inc. | |||||||||
Selected Financial Data | |||||||||
(dollars in thousands, except per share data) | |||||||||
(Unaudited) | |||||||||
Nine Months Ended | Three Months Ended | ||||||||
2017 | 2016 | 2017 | 2016 | ||||||
Per Share Data: | . | ||||||||
Basic earnings per share | $ 0.23 | $ 1.14 | $ 0.09 | $ 0.04 | |||||
Diluted earnings per share | $ 0.22 | $ 1.13 | $ 0.09 | $ 0.04 | |||||
Average basic shares outstanding | 12,140,689 | 11,324,660 | 12,172,586 | 12,104,379 | |||||
Average diluted shares outstanding | 12,248,214 | 11,375,853 | 12,323,572 | 12,183,739 | |||||
Performance Ratios: | |||||||||
Return on average assets | 0.53% | 2.48% | 0.63% | 0.54% | |||||
Return on average equity | 4.80% | 21.05% | 5.69% | 4.29% | |||||
Net interest margin | 3.25% | 3.07% | 3.38% | 3.19% | |||||
Efficiency Ratio | 77.72% | 82.08% | 69.80% | 79.98% | |||||
September 30, | December 31, | ||||||||
Asset Quality Data: | |||||||||
Non-accrual loans | $ 6,377 | $ 9,852 | |||||||
Foreclosed real estate | 1,104 | 973 | |||||||
Total non-performing assets | 7,481 | 10,825 | |||||||
Total non-accrual loans to total loans | 1.0% | 1.6% | |||||||
Total non-accrual loans to total assets | 0.8% | 1.3% | |||||||
Allowance for loan losses | 7,936 | 8,969 | |||||||
Allowance for loan losses to total loans | 1.2% | 1.5% | |||||||
Allowance for loan losses to total | |||||||||
non-accrual loans | 124.4% | 91.0% | |||||||
Total non-performing assets to total assets | 0.9% | 1.4% | |||||||
Non-accrual troubled debt restructurings (included above) | 2,375 | 2,392 | |||||||
Performing troubled debt restructurings | 15,416 | 18,066 | |||||||
Loan to deposit ratio | 109.7% | 106.7% | |||||||
* | The efficiency ratio is general and administrative expenses as a percentage of net interest income plus non-interest income | ||||||||
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SOURCE Severn Bancorp, Inc.
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