EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1

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

Severn Bancorp, Inc. Announces Year End Earnings

Annapolis, MD (January 29, 2019) – Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Bank, today announced net income of $2.6 million for the three months ending December 31, 2018 versus a net loss of $349 thousand for the same quarter in 2017. On a diluted per share basis, earnings were $0.20 versus $(0.03) for the quarters ended December 31, 2018 and 2017, respectively. Net income for the year ended December 31, 2018 was $8.6 million, a 204% increase over net income of $2.8 million for the year ended December 31, 2017. For the years ended December 31, 2018 and 2017, diluted earnings per share were $0.67 and $0.21, respectively.

“Earnings for the quarter showed significant year over year improvement,” stated Alan J. Hyatt, President and Chief Executive Officer.  Mr. Hyatt continued, “We are seeing results from planning and activities we have put in place to grow the company and build new relationships. We are working on many exciting projects for 2019 in order to continue the positive trend.  Every action we are taking is dedicated to making Severn Bank the best it can be and increasing shareholder value. ”

Net interest income increased 17% during the fourth quarter of 2018. Net interest income was $7.8 million during the fourth quarter of 2018 versus $6.7 million during the fourth quarter of 2017. For the years ended December 31, 2018 and 2017, net interest income was $29.1 million and $24.6 million, respectively.

Noninterest income increased 61% during the quarter ended December 31, 2018. Noninterest income was $2.4 million for the three months ended December 31, 2018, up from $1.5 million as of December 31, 2017. For the year ended December 31, 2018, noninterest income was $8.8 million. This represents a 68% increase over the $5.2 million reported for the fourth quarter of 2017. Growth in mortgage banking revenue, title services, and deposit fees contributed to the increase.

Noninterest expenses were $6.9 million for the three months ended December 31, 2018 versus $5.6 million for the same period in 2017. For the year ended December 31, 2018, noninterest expenses were $26.6 million, which is an increase of 17% 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 $974 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 December 31, 2018
              
 
  
2018
    
2017
    
$ Change
    
% Change
  
 
                        
Interest Income
                        
 
                        
Interest on loans
  
$
9,146
    
$
8,026
    
$
1,120
      
13.95
%
Interest on securities
    
276
      
305
      
(29
)
    
-9.51
%
Other interest income
    
800
      
199
      
601
      
302.01
%
 
                                
Total interest income
    
10,222
      
8,530
      
1,692
      
19.84
%
 
                                
Interest Expense
                                
 
                                
Interest on deposits
    
1,750
      
1,113
      
637
      
57.23
%
Interest on long term borrowings
    
671
      
749
      
(78
)
    
-10.41
%
 
                                
Total interest expense
    
2,421
      
1,862
      
559
      
30.02
%
 
    
.
      
.
      
.
          
Net interest income
    
7,801
      
6,668
      
1,133
      
16.99
%
 
                                
Provision for (reversal of) loan losses
    
0
      
0
      
-
      
0.00
%
 
                                
Net interest income after provision for (reversal of) loan losses
    
7,801
      
6,668
      
1,133
      
16.99
%
 
                                
Noninterest Income
                                
 
                                
Mortgage-banking revenue
    
591
      
357
      
234
      
65.55
%
Real Estate Commissions
    
554
      
400
      
154
      
38.50
%
Real Estate Management Income
    
147
      
162
      
(15
)
    
-9.26
%
Other noninterest income
    
1,083
      
558
      
525
      
94.09
%
 
                                
Net noninterest income
    
2,375
      
1,477
      
898
      
60.80
%
 
                                
Net interest income plus noninterest income after provision for (reversal of) loan losses
    
10,176
      
8,145
      
2,031
      
24.94
%
 
                                
Noninterest expenses
                                
 
                                
Compensation and related expenses
    
4,460
      
4,016
      
444
      
11.06
%
Net Occupancy & Depreciation
    
404
      
344
      
60
      
17.44
%
Net Costs of Foreclosed Real Estate
    
62
      
(33
)
    
95
      
287.88
%
Other
    
1,925
      
1,295
      
630
      
48.65
%
 
                                
Total noninterest expenses
    
6,851
      
5,622
      
1,229
      
21.86
%
 
                                
Income before income tax provision
    
3,325
      
2,523
      
802
      
31.79
%
 
                                
Income tax provision
    
724
      
2,872
      
(2,148
)
    
-74.79
%
 
                                
Net income
  
$
2,601
    
$
(349
)
  
$
2,950
      
845.27
%
Net income available to common shareholders
  
$
2,601
    
$
(419
)
  
$
3,020
      
720.76
%

Severn Bancorp, Inc.
Consolidated Income Statement
(dollars in thousands, except per share data)
(Unaudited)

Year-to-Date income statement results:
  
Year Ended December 31, 2018
              
   
2018
    
2017
    
$ Change
    
% Change
  
                         
Interest Income
                        
                         
Interest on loans
  
$
34,877
    
$
30,294
    
$
4,583
      
15.13
%
Interest on securities
    
1,196
      
1,233
      
(37
)
    
-3.00
%
Other interest income
    
1,587
      
697
      
890
      
127.69
%
 
                                
Total interest income
    
37,660
      
32,224
      
5,436
      
16.87
%
                                 
Interest Expense
                                
                                 
Interest on deposits
    
5,688
      
4,037
      
1,651
      
40.90
%
Interest on long term borrowings
    
2,915
      
3,593
      
(678
)
    
-18.87
%
 
                                
Total interest expense
    
8,603
      
7,630
      
973
      
12.75
%
 
    
.
      
.
      
.
          
Net interest income
    
29,057
      
24,594
      
4,463
      
18.15
%
 
                                
Provision for (reversal of) loan losses
    
(300
)
    
(650
)
    
350
      
-53.85
%
 
                                
Net interest income after provision for (reversal of) loan losses
    
29,357
      
25,244
      
4,113
      
16.29
%
                                 
Noninterest Income
                                
                                 
Mortgage-banking revenue
    
2,561
      
1,507
      
1,054
      
69.94
%
Real Estate Commissions
    
1,707
      
1,358
      
349
      
25.70
%
Real Estate Management Income
    
674
      
675
      
(1
)
    
-0.15
%
Other noninterest income
    
3,838
      
1,698
      
2,140
      
126.03
%
 
                                
Net noninterest income
    
8,780
      
5,238
      
3,542
      
67.62
%
 
                                
Net interest income plus noninterest income after provision for (reversal of) loan losses
    
38,137
      
30,482
      
7,655
      
25.11
%
                                 
Noninterest expenses
                                
                                 
Compensation and related expenses
    
17,819
      
14,734
      
3,085
      
20.94
%
Net Occupancy & Depreciation
    
1,555
      
1,358
      
197
      
14.51
%
Net Costs of Foreclosed Real Estate
    
83
      
132
      
(49
)
    
-37.12
%
Other
    
7,134
      
6,418
      
716
      
11.16
%
 
                                
Total noninterest expenses
    
26,591
      
22,642
      
3,949
      
17.44
%
 
                                
Income before income tax provision
    
11,546
      
7,840
      
3,706
      
47.27
%
 
                                
Income tax provision
    
2,977
      
5,022
      
(2,045
)
    
-40.72
%
 
                                
Net income
  
$
8,569
    
$
2,818
    
$
5,751
      
204.08
%
Net income available to common shareholders
  
$
8,499
    
$
2,538
    
$
5,961
      
234.87
%

Severn Bancorp, Inc.
Consolidated Balance Sheet
(dollars in thousands, except per share data)
(Unaudited)

 
  
December 31, 2018
    
December 31, 2017
    
$ Change
    
% Change
  
Balance Sheet Data:
                        
 
                        
ASSETS
                        
Cash
  
$
2,880
    
$
2,382
    
$
498
      
20.91
%
Federal funds and interest bearing deposits in other banks
    
185,460
      
19,471
      
165,989
      
852.49
%
Certificates of deposit held as investment
    
8,780
      
8,780
      
0
      
0.00
%
Investment securities available for sale, at fair value
    
11,978
      
10,119
      
1,859
      
18.37
%
Investment securities held to maturity
    
38,912
      
54,303
      
(15,391
)
    
-28.34
%
Loans held for sale, at fair value
    
10,561
      
4,530
      
6,031
      
133.13
%
Loans receivable
    
681,474
      
668,151
      
13,323
      
1.99
%
Allowance for loan losses
    
(8,044
)
    
(8,055
)
    
11
      
-0.14
%
Accrued interest receivable
    
2,848
      
2,640
      
208
      
7.88
%
Foreclosed real estate, net
    
1,537
      
403
      
1,134
      
281.39
%
Premises and equipment, net
    
22,745
      
23,139
      
(394
)
    
-1.70
%
Restricted stock investments
    
3,766
      
4,489
      
(723
)
    
-16.11
%
Bank owned life insurance
    
5,225
      
5,064
      
161
      
3.18
%
Deferred income taxes, net
    
2,363
      
5,302
      
(2,939
)
    
-55.43
%
Prepaid expenses and other assets
    
3,748
      
4,069
      
(321
)
    
-7.89
%
 
                                
 
  
$
974,233
    
$
804,787
    
$
169,446
      
21.05
%
 
                                
LIABILITIES AND STOCKHOLDERS' EQUITY
                                
Deposits
  
$
779,506
    
$
602,228
    
$
177,278
      
29.44
%
Borrowings
    
73,500
      
88,500
      
(15,000
)
    
-16.95
%
Subordinated debentures
    
20,619
      
20,619
      
-
      
0.00
%
Accounts payable and accrued expenses
    
2,155
      
2,340
      
(185
)
    
-7.91
%
 
                                
 Total Liabilities
    
875,780
      
713,687
      
162,093
      
22.71
%
 
                                
Preferred stock
    
-
      
4
      
(4
)
    
-100.00
%
Common stock
    
128
      
122
      
6
      
4.92
%
Additional paid-in capital
    
65,538
      
65,137
      
401
      
0.62
%
Retained earnings
    
32,860
      
25,872
      
6,988
      
27.01
%
Accumulated comprehensive income (loss)
    
(73
)
    
(35
)
    
(38
)
    
108.57
%
 
                                
 Total Stockholders' Equity
    
98,453
      
91,100
      
7,353
      
8.07
%
 
                                
 
  
$
974,233
    
$
804,787
    
$
169,446
      
21.05
%

Severn Bancorp, Inc.
Selected Financial Data
(dollars in thousands, except per share data)
(Unaudited)

 
  
Year Ended December 31, 2018
    
Three Months Ended December 31, 2018
  
 
  
2018
    
2017
    
2018
    
2017
  
Per Share Data:
                      
.
  
Basic earnings per share
  
$
0.68
    
$
0.21
    
$
0.21
    
$
(0.03
)
Diluted earnings per share
  
$
0.67
    
$
0.21
    
$
0.20
    
$
(0.03
)
Average basic shares outstanding
    
12,585,961
      
12,160,983
      
12,719,772
      
12,425,245
  
Average diluted shares outstanding
    
12,697,620
      
12,277,736
      
12,835,186
      
12,425,245
  
 
                                
Performance Ratios:
                                
Return on average assets
    
1.03
%
    
0.36
%
    
1.20
%
    
-0.17
%
Return on average equity
    
9.48
%
    
3.21
%
    
10.70
%
    
-1.59
%
Net interest margin
    
3.66
%
    
3.32
%
    
3.75
%
    
3.53
%
Efficiency ratio*
    
70.06
%
    
75.45
%
    
66.72
%
    
69.42
%

 
  
December 31, 2018
    
December 31, 2017
                  
Asset Quality Data:
                                
Non-accrual loans
  
$
4,657
    
$
5,710
                  
Foreclosed real estate
    
1,537
      
403
                  
Total non-performing assets
    
6,194
      
6,113
                  
Total non-accrual loans to total loans
    
0.7
%
    
0.9
%
                
Total non-accrual loans to total assets
    
0.5
%
    
0.7
%
                
Allowance for loan losses
    
8,044
      
8,055
                  
Allowance for loan losses to total loans
    
1.2
%
    
1.2
%
                
Allowance for loan losses to total
                                
non-accrual loans
    
172.7
%
    
141.1
%
                
Total non-performing assets to total assets
    
0.6
%
    
0.8
%
                
Non-accrual troubled debt restructurings (included above)
    
446
      
820
                  
Performing troubled debt restructurings
    
10,698
      
13,714
                  
Loan to deposit ratio
    
87.4
%
    
110.9
%
                

*
This non-GAAP financial measure is calculated as noninterest expenses less OREO expenses divided by net interest income plus noninterest income