EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1


FOR IMMEDIATE RELEASE
Contact:
 
Paul Susie
 
Chief Financial Officer &
 
Executive Vice President
 
Email: psusie@severnbank.com
 
Phone: 410.260.2000

Severn Bancorp, Inc. Announces Double Digit Percentage Increase in Earnings
 
Annapolis, MD (October 27, 2017) – 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 pleased 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 plus other income
    
22,336
      
21,922
      
414
      
1.89
%
                                 
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, 2017
    
December 31, 2016
    
$ 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 September 30,
    
Three Months Ended September 30,
  
 
  
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, 2017
    
December 31, 2016
  
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