ANNAPOLIS, Md., July 27, 2021 /PRNewswire/ -- Severn Bancorp,
Inc. (the Company) (NASDAQ: SVBI), the parent company of Severn
Bank (the Bank), reported net income of $1.7
million for the second quarter ended June 30, 2021 and $5.6
million for the six months ended June
30, 2021 compared to $1.7
million and $2.3 million for
the same periods in 2020. Earnings per share on a fully diluted
basis were $0.13 for the second
quarter and $0.44 for the first six
months of 2021 compared to $0.14 and
$0.18, respectively, from the second
quarter and first six months of 2020.
Reaction to COVID-19
The Company continues to be
vigilant regarding COVID-19. While branches and offices
remain fully open at this time, remote working arrangements and
social distancing remain in place. The Company is aware of
the recent surge in COVID-19 infections arising out of the
so-called Delta variant and is prepared to restore other protocols,
as may prove to be necessary.
"The Company has experienced a significant amount of loan
payoffs and maintains an extraordinarily high degree of liquidity,"
said Alan J. Hyatt, President and
Chief Executive Officer. "Despite substantial loan
originations, loan payoffs have resulted in negative loan
growth. In this low interest rate environment very little can
be earned on liquidity, so as a result, earnings were less than
desired in the second quarter. The Bank's loan pipeline remains
robust, and if there is a slowing of loan payoffs positive loan
growth should take place going forward."
"Residential mortgage originations remain steady, with low rates
continuing to fuel that activity, resulting in fee income to the
Bank," said Mr. Hyatt.
"The pending merger between the Company and Shore Bancshares,
Inc. continues to move forward with closing anticipated later this
year," Mr. Hyatt stated.
Income Statement
Net interest income was $7.0 million for the second quarter ended
June 30, 2021 and $14.7 million for the six months ended
June 30, 2021 compared to
$6.6 million and $13.4 million for the same periods in 2020. The
increases in interest income was driven by higher volumes of
earning assets, including a significantly higher volume of
medical-use cannabis related deposits that were invested in the
securities portfolio as well as held in fed funds and interest
bearing deposits with other banks. Also, a reduction in interest
expense from lower deposit rates and less reliance on borrowings
contributed to the increased net interest income. These benefits
were slightly offset by lower loan interest income from lower
average loan volumes as well as lower yielding SBA Paycheck
Protection Program ("PPP") loans.
The Company recorded a reversal of provision of $(325) thousand for the second quarter ended
June 30, 2021 and $(1.1) million for the six months ended
June 30, 2021. The ratio of the
allowance for loan losses to gross loans was 1.28% at June 30, 2021 compared to 1.35% at December 31, 2020 and 1.24% at June 30, 2020. Excluding PPP loans, the ratio of
the allowance for loan losses to gross loans was 1.37% at
June 30, 2021 compared to 1.42% at
December 31, 2020 and 1.33% at
June 30, 2020. The reversal of
provisions in the first and second quarters of 2021 and the decline
in the balance of the allowance for loan losses as compared to year
end 2020 was attributable to a decline in total loans, net of PPP
loans, which are excluded from the allowance due to their
underlying guarantees.
Noninterest income was $3.8
million for the second quarter ended June 30, 2021 and $9.5
million for the six months ended June
30, 2021 compared to $3.2
million and $6.3 million for
the same periods in 2020. Growth in mortgage banking production
continued to contribute significantly to the increases in
noninterest income.
Noninterest expense was $8.7
million for the second quarter ended June 30, 2021 and $17.5
million for the six months ended June
30, 2021 compared to $7.5
million and $15.7 million for
the same periods in 2020. The largest increase was attributable to
higher commissions paid to mortgage loan officers from increased
production as well as $330 thousand
of merger related expenses through the first six months of the
year.
Balance Sheet
Total assets increased $193 million to $1.1
billion at June 30, 2021 from
$953 million at December 31, 2020. The increase in assets was
primarily in federal funds and interest bearing deposits in other
banks as well as an increased bond portfolio. Deposits also
increased by $189 million from
December 31, 2020. The increase in
deposits was primarily the result of short term, medical-use
cannabis related funds that account holders maintain at the Bank
prior to pursuing other longer term investment opportunities.
Management is aware of the short term nature of certain medical-use
cannabis related deposits and offsets those funds by maintaining
short term liquidity to meet any deposit outflows.
About Severn Bank
Founded in 1946, Severn Bank 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 offers seven branches located in Annapolis, Edgewater, Severna
Park, Lothian/Wayson's
Corner, Crofton, 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 Bank 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. The
Company'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 the Company's general market area,
federal and state regulation, competition, the rapidly changing
uncertainties related to the Covid-19 pandemic including, but not
limited to, the potential adverse effect of the pandemic on the
economy, our employees and customers, and our financial
performance, and other factors detailed from time to time in the
Company's filings with the Securities and Exchange Commission (the
"SEC"), including "Item 1A. Risk Factors" contained in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2020.
Severn Bancorp,
Inc.
|
Consolidated
Balance Sheets
|
(dollars in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2021
|
December 31,
2020
|
$
Change
|
%
Change
|
Balance Sheet
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
4,057
|
$
4,819
|
$
(762)
|
-16%
|
|
Federal funds and
interest bearing deposits in other banks
|
305,746
|
151,790
|
153,956
|
101%
|
|
Certificates of
deposit held as investment
|
844
|
3,580
|
(2,736)
|
-76%
|
|
Investment securities
available for sale, at fair value
|
21,278
|
65,098
|
(43,820)
|
-67%
|
|
Investment securities
held to maturity
|
135,765
|
15,943
|
119,822
|
752%
|
|
Loans held for sale,
at fair value
|
32,869
|
36,299
|
(3,430)
|
-9%
|
|
Loans
receivable
|
613,329
|
642,882
|
(29,553)
|
-5%
|
|
Allowance for loan
losses
|
(7,878)
|
(8,670)
|
792
|
-9%
|
|
Accrued interest
receivable
|
2,336
|
2,576
|
(240)
|
-9%
|
|
Foreclosed real
estate, net
|
1,010
|
1,010
|
0
|
0%
|
|
Premises and
equipment, net
|
20,278
|
20,940
|
(662)
|
-3%
|
|
Restricted stock
investments
|
970
|
1,236
|
(266)
|
-22%
|
|
Bank owned life
insurance
|
5,583
|
5,517
|
66
|
1%
|
|
Deferred income
taxes, net
|
112
|
1,145
|
(1,033)
|
-90%
|
|
Prepaid expenses and
other assets
|
8,930
|
8,388
|
542
|
6%
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
$
1,145,229
|
$
952,553
|
$ 192,676
|
20%
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS EQUITY
|
|
|
|
|
|
Deposits
|
$
995,722
|
$
806,456
|
$ 189,266
|
23%
|
|
Borrowings
|
10,000
|
10,000
|
-
|
0%
|
|
Subordinated
debentures
|
20,619
|
20,619
|
-
|
0%
|
|
Accounts payable and
accrued expenses
|
4,725
|
5,831
|
(1,106)
|
-19%
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
1,031,066
|
842,906
|
188,160
|
22%
|
|
|
|
|
|
|
|
|
|
Common
stock
|
129
|
128
|
1
|
0%
|
|
Additional paid-in
capital
|
66,392
|
66,251
|
141
|
0%
|
|
Retained
earnings
|
47,561
|
43,216
|
4,345
|
10%
|
|
Accumulated
comprehensive income
|
81
|
52
|
29
|
56%
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity
|
114,163
|
109,647
|
4,516
|
4%
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
$
1,145,229
|
$
952,553
|
$ 192,676
|
20%
|
Severn Bancorp,
Inc.
|
|
Consolidated
Income Statements
|
(dollars in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Quarterly income
statement results:
|
Three Months Ended
June 30,
|
|
|
|
|
|
|
2021
|
2020
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
Interest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
loans
|
$
7,378
|
$
8,078
|
$
(700)
|
-9%
|
|
Interest on
securities
|
426
|
216
|
210
|
97%
|
|
Other interest
income
|
79
|
67
|
12
|
18%
|
|
|
|
|
|
|
|
|
|
Total interest
income
|
7,883
|
8,361
|
(478)
|
-6%
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
deposits
|
707
|
1,383
|
(676)
|
-49%
|
|
Interest on long term
borrowings
|
166
|
333
|
(167)
|
-50%
|
|
|
|
|
|
|
|
|
|
Total interest
expense
|
873
|
1,716
|
(843)
|
-49%
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
7,010
|
6,645
|
365
|
5%
|
|
|
|
|
|
|
|
|
|
Provision for
(reversal of) loan losses
|
(325)
|
-
|
(325)
|
-100%
|
|
|
|
|
|
|
|
|
|
Net interest income
after provision for (reversal of) loan losses
|
7,335
|
6,645
|
690
|
10%
|
|
|
|
|
|
|
|
|
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-banking
revenue
|
2,300
|
1,990
|
310
|
16%
|
|
Real Estate
Commissions
|
7
|
130
|
(123)
|
-95%
|
|
Real Estate
Management Income
|
-
|
155
|
(155)
|
-100%
|
|
Other noninterest
income
|
1,449
|
962
|
487
|
51%
|
|
|
|
|
|
|
|
|
|
Total noninterest
income
|
3,756
|
3,237
|
519
|
16%
|
|
|
|
|
|
|
|
|
|
Net interest income
plus noninterest income after provision for (reversal of) loan
losses
|
11,091
|
9,882
|
1,209
|
12%
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
5,829
|
5,171
|
658
|
13%
|
|
Net Occupancy &
Depreciation
|
486
|
445
|
41
|
9%
|
|
Net Costs of
Foreclosed Real Estate
|
44
|
16
|
28
|
175%
|
|
Other
|
|
2,313
|
1,855
|
458
|
25%
|
|
|
|
|
|
|
|
|
|
Total noninterest
expense
|
8,672
|
7,487
|
1,185
|
16%
|
|
|
|
|
|
|
|
|
|
Income before income
tax provision
|
2,419
|
2,395
|
24
|
1%
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
699
|
658
|
41
|
6%
|
|
|
|
|
|
|
|
|
|
Net income
|
$
1,719
|
$
1,737
|
$
(18)
|
-1%
|
Severn Bancorp,
Inc.
|
Consolidated
Income Statements
|
(dollars in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Year-to-Date
income statement results:
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
2021
|
2020
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
Interest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
loans
|
$
15,622
|
$
16,416
|
$
(794)
|
-5%
|
|
Interest on
securities
|
718
|
435
|
283
|
65%
|
|
Other interest
income
|
152
|
426
|
(274)
|
-64%
|
|
|
|
|
|
|
|
|
|
Total interest
income
|
16,492
|
17,277
|
(785)
|
-5%
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
deposits
|
1,491
|
3,180
|
(1,689)
|
-53%
|
|
Interest on long term
borrowings
|
333
|
697
|
(364)
|
-52%
|
|
|
|
|
|
|
|
|
|
Total interest
expense
|
1,824
|
3,877
|
(2,053)
|
-53%
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
14,668
|
13,400
|
1,268
|
9%
|
|
|
|
|
|
|
|
|
|
Provision for
(reversal of) loan losses
|
(1,075)
|
750
|
(1,825)
|
-243%
|
|
|
|
|
|
|
|
|
|
Net interest income
after provision for (reversal of) loan losses
|
15,743
|
12,650
|
3,093
|
24%
|
|
|
|
|
|
|
|
|
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-banking
revenue
|
6,696
|
3,624
|
3,072
|
85%
|
|
Real Estate
Commissions
|
168
|
440
|
(272)
|
-62%
|
|
Real Estate
Management Income
|
-
|
320
|
(320)
|
-100%
|
|
Other noninterest
income
|
2,651
|
1,878
|
773
|
41%
|
|
|
|
|
|
|
|
|
|
Total noninterest
income
|
9,515
|
6,262
|
3,253
|
52%
|
|
|
|
|
|
|
|
|
|
Net interest income
plus noninterest income after provision for (reversal of) loan
losses
|
25,258
|
18,912
|
6,346
|
34%
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
12,051
|
10,632
|
1,419
|
13%
|
|
Net Occupancy &
Depreciation
|
957
|
963
|
(6)
|
-1%
|
|
Net Costs of
Foreclosed Real Estate
|
46
|
90
|
(44)
|
-49%
|
|
Other
|
|
4,424
|
4,054
|
370
|
9%
|
|
|
|
|
|
|
|
|
|
Total noninterest
expense
|
17,478
|
15,739
|
1,739
|
11%
|
|
|
|
|
|
|
|
|
|
Income before income
tax provision
|
7,780
|
3,173
|
4,607
|
145%
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
2,149
|
871
|
1,278
|
147%
|
|
|
|
|
|
|
|
|
|
Net income
|
$
5,631
|
$
2,302
|
$
3,329
|
145%
|
Severn Bancorp,
Inc.
|
Selected Financial
Data
|
(dollars in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
Three Months Ended
June 30,
|
|
|
|
|
2021
|
2020
|
|
2021
|
2020
|
Per Share
Data:
|
|
|
|
|
.
|
|
Basic earnings per
share
|
$
0.44
|
$
0.18
|
|
$
0.13
|
$
0.14
|
|
Diluted earnings per
share
|
$
0.44
|
$
0.18
|
|
$
0.13
|
$
0.14
|
|
Average basic shares
outstanding
|
12,852,741
|
12,812,808
|
|
12,858,076
|
12,812,976
|
|
Average diluted
shares outstanding
|
12,923,184
|
12,834,348
|
|
12,944,644
|
12,818,556
|
|
|
|
|
|
|
|
|
|
Performance
Ratios:
|
|
|
|
|
|
|
Return on average
assets
|
1.07%
|
0.54%
|
|
0.64%
|
0.81%
|
|
Return on average
equity
|
10.23%
|
4.30%
|
|
6.16%
|
6.51%
|
|
Net interest
margin
|
2.89%
|
3.30%
|
|
3.06%
|
3.22%
|
|
Efficiency
ratio*
|
72.09%
|
79.59%
|
|
80.14%
|
75.60%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2021
|
December 31,
2020
|
|
|
|
Asset Quality
Data:
|
|
|
|
|
|
|
Non-accrual
loans
|
$
1,234
|
$
4,380
|
|
|
|
|
Foreclosed real
estate
|
$
1,010
|
$
1,010
|
|
|
|
|
|
Total non-performing
assets
|
$
2,244
|
$
5,390
|
|
|
|
|
Total non-accrual
loans to total loans
|
0.20%
|
0.68%
|
|
|
|
|
Total non-accrual
loans to total assets
|
0.11%
|
0.46%
|
|
|
|
|
Allowance for loan
losses
|
$
7,878
|
$
8,670
|
|
|
|
|
Allowance for loan
losses to total loans
|
1.28%
|
1.35%
|
|
|
|
|
Allowance for loan
losses to loans, net of PPP loans
|
1.37%
|
1.42%
|
|
|
|
|
Allowance for loan
losses to total
|
|
|
|
|
|
|
|
non-accrual
loans
|
638.4%
|
197.9%
|
|
|
|
|
Total non-performing
assets to total assets
|
0.20%
|
0.57%
|
|
|
|
|
Non-accrual troubled
debt restructurings (included above)
|
$
155
|
$
163
|
|
|
|
|
Performing troubled
debt restructurings
|
$
5,839
|
$
6,589
|
|
|
|
|
Loan to deposit
ratio
|
61.6%
|
79.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
This non-GAAP
financial measure is calculated as noninterest expenses less OREO
expenses divided by net interest income plus noninterest
income
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/severn-bancorp-inc-announces-second-quarter-earnings-301342494.html
SOURCE Severn Bancorp, Inc.