Annapolis, MD (July 26, 2019) – Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Bank, today announced net income of $2.2 million for the three months ending June 30, 2019 versus $1.9 million for the same quarter in 2018. On a diluted per share basis, earnings were $0.17 versus $0.15 for the quarters ending June 30, 2019 and 2018, respectively.
Net income for the six months ending June 30, 2019 was $4.8 million versus $3.8 million for June 30, 2018, an increase of 26%. On a diluted per share basis, earnings were $0.37 versus $0.30 for the six months ending June 30, 2019 and 2018 respectively, an increase of 23%.
“Earnings are respectable again for the second quarter of this year,” stated Alan J. Hyatt, President and Chief Executive Officer. Mr. Hyatt continued, “We are pleased with the continued upward trajectory of the company’s earnings. Our quarterly results were boosted by increased residential mortgage production and a continued push on the commercial banking front. We have our sights set on building even deeper ties in the community and serving the residents and businesses with unrivaled personal local banking and service.”
Net interest income increased $918,000, an increase of 13% during the second quarter of 2019. Net interest income was $7.8 million for the three months ending June 30, 2019 versus $6.9 million during the second quarter of 2018. For the six months ending June 30, 2019, net interest income was $15.9 million versus $13.9 million for June 30, 2018, an increase of $2.0 million or 15%.
Non-interest income increased to $2.6 million from $2.1 million during the three months ending June 30, 2019. For the six months ending June 30, 2019 non-interest income increased by $1.0 million to $4.9 million from $3.9 million at June 30, 2018, or an increase of 26%. Growth in mortgage banking production and deposit fees for medical-use cannabis related accounts contributed to the increase non-interest income.
Non-interest expenses were $7.5 million for the three months ending June 30, 2019 versus $6.4 million for the same period in 2018. The increase is due to several factors, including: higher expenses for accounting and professional fees related to SOX Section 404 compliance, severance payment to the former CFO and higher commissions paid to mortgage loan officers and real estate brokers as a result of increased production in 2019.
For the six months ending June 30, 2019, non-interest expenses were $14.3 million versus $12.5 million for the same period in 2018. Several factors contributed to higher expenses, including accounting and professional fees related to SOX Section 404 compliance, severance payment to the former CFO and higher commissions paid to mortgage loan officers and real estate brokers as a result of increased production in 2019. In addition, contributing to the increase for the first six months of 2019 was higher occupancy costs and additional staffing as a result of the opening of the Lothian Branch in the second quarter of 2018 and the addition of the Frederick mortgage production office in the second quarter of 2018.
Total assets decreased $112 million to $862.1 million at June 30, 2019 from $974.2 million to December 31, 2018. The decrease in assets was primarily in federal funds and interest bearing deposits in other banks. Deposits and borrowed funds decreased $94.1 million and $25.0 million, respectively from December 31, 2018 to June 30, 2019. The decrease in deposits was the result of short term, medical-use cannabis related funds that account holders maintained at Severn Bank prior to pursuing to investment opportunities. Management was aware of the short term nature of certain medical-use cannabis related deposits and offset those funds by maintaining short term liquidly to meet any deposit outflows.
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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 $862 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.
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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, 2018.