Maryland
|
52-1726127
|
(State
of incorporation)
|
(IRS
employer identification number)
|
200
Westgate Circle, Suite 200, Annapolis, Maryland
|
21401
|
(Address
of principal executive offices)
|
(Zip
Code)
|
PART
I – FINANCIAL INFORMATION
|
Page
|
|
Item
1.
|
Financial
Statements
|
|
Consolidated
Statements of Financial Condition as of March 31, 2007 (Unaudited)
and
December 31, 2006
|
1
|
|
Consolidated
Statements of Income (Unaudited) for the Three Months Ended March
31, 2007
and 2006
|
2
|
|
Consolidated
Statements of Cash Flows (Unaudited) for the Three Months Ended March
31,
2007 and 2006
|
3
|
|
Notes
to Consolidated Financial Statements (Unaudited)
|
5
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
9
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
17
|
Item
4.
|
Controls
and Procedures
|
17
|
Item
4T.
|
Controls
and Procedures
|
17
|
PART
II – OTHER INFORMATION
|
||
Item
1.
|
Legal
Proceedings
|
18
|
Item
1A.
|
Risk
Factors
|
18
|
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
18
|
Item
3.
|
Defaults
Upon Senior Securities
|
18
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
18
|
Item
5.
|
Other
Information
|
18
|
Item
6.
|
Exhibits
|
19
|
SIGNATURES
|
20
|
March
31,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Cash
and due from banks
|
$ |
16,977
|
$ |
16,982
|
||||
Interest
bearing deposits in other banks
|
584
|
709
|
||||||
Federal
funds sold
|
16,670
|
1,024
|
||||||
Cash
and cash equivalents
|
34,231
|
18,715
|
||||||
Investment
securities held to maturity
|
7,201
|
7,271
|
||||||
Loans
held for sale
|
2,751
|
2,970
|
||||||
Loans
receivable, net of allowance for loan losses of
|
||||||||
$9,428
and $9,026, respectively
|
818,213
|
832,507
|
||||||
Premises
and equipment, net
|
31,278
|
30,411
|
||||||
Federal
Home Loan Bank of Atlanta stock at cost
|
8,372
|
9,468
|
||||||
Accrued
interest receivable and other assets
|
10,298
|
10,574
|
||||||
Total
assets
|
$ |
912,344
|
$ |
911,916
|
||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Liabilities
|
||||||||
Deposits
|
$ |
645,393
|
$ |
626,524
|
||||
Short-term
borrowings
|
-
|
18,000
|
||||||
Long-term
borrowings
|
150,000
|
155,000
|
||||||
Subordinated
debentures
|
20,619
|
20,619
|
||||||
Accrued
interest payable and other liabilities
|
6,974
|
5,331
|
||||||
Total
liabilities
|
822,986
|
825,474
|
||||||
Stockholders’
Equity
|
||||||||
Common
stock, $0.01 par value, 20,000,000 shares authorized;
|
||||||||
10,065,854
and 9,150,850 issued and outstanding, respectively
|
101
|
92
|
||||||
Additional
paid-in capital
|
46,659
|
28,270
|
||||||
Retained
earnings
|
42,598
|
58,080
|
||||||
Total
stockholders' equity
|
89,358
|
86,442
|
||||||
Total
liabilities and stockholders' equity
|
$ |
912,344
|
$ |
911,916
|
For
Three Months Ended March 31,
|
||||||||
2007
|
2006
|
|||||||
Interest
Income
|
||||||||
Loans
|
$ |
17,576
|
$ |
15,952
|
||||
Securities,
taxable
|
64
|
71
|
||||||
Other
|
373
|
327
|
||||||
Total
interest income
|
18,013
|
16,350
|
||||||
Interest
Expense
|
||||||||
Deposits
|
6,869
|
4,826
|
||||||
Short-term
borrowings
|
109
|
86
|
||||||
Long-term
borrowings and subordinated debentures
|
1,978
|
1,932
|
||||||
Total
interest expense
|
8,956
|
6,844
|
||||||
Net
interest income
|
9,057
|
9,506
|
||||||
Provision
for loan losses
|
425
|
382
|
||||||
Net
interest income after provision for loan losses
|
8,632
|
9,124
|
||||||
Other
Income
|
||||||||
Real
estate commissions
|
907
|
66
|
||||||
Real
estate management fees
|
162
|
109
|
||||||
Mortgage
banking activities
|
187
|
199
|
||||||
Other
|
433
|
131
|
||||||
Total
other income
|
1,689
|
505
|
||||||
Non-Interest
Expenses
|
||||||||
Compensation
and related expenses
|
3,018
|
2,267
|
||||||
Occupancy,
net
|
432
|
189
|
||||||
Other
|
936
|
583
|
||||||
Total
non-interest expenses
|
4,386
|
3,039
|
||||||
Income
before income tax provision
|
5,935
|
6,590
|
||||||
Income
tax provision
|
2,445
|
2,608
|
||||||
Net
income
|
$ |
3,490
|
$ |
3,982
|
||||
Basic
earnings per share
|
$ |
.35
|
$ |
.39
|
||||
Diluted
earnings per share
|
$ |
.35
|
$ |
.39
|
||||
Cash
dividends declared per share
|
$ |
.06
|
$ |
.05
|
For
The Three Months Ended March 31,
|
||||||||
2007
|
2006
|
|||||||
Cash
Flows from Operating Activities
|
||||||||
Net
income
|
$ |
3,490
|
$ |
3,982
|
||||
Adjustments
to reconcile net income to net
|
||||||||
cash
provided by operating activities:
|
||||||||
Amortization
of deferred loan fees
|
(955 | ) | (1,063 | ) | ||||
Net
amortization of premiums and
|
||||||||
discounts
|
2
|
8
|
||||||
Provision
for loan losses
|
425
|
382
|
||||||
Provision
for depreciation
|
284
|
99
|
||||||
Gain
on sale of loans
|
(72 | ) | (100 | ) | ||||
Proceeds
from loans sold to others
|
8,322
|
8,935
|
||||||
Loans
originated for sale
|
(8,031 | ) | (7,373 | ) | ||||
Stock-based
compensation expense
|
32
|
-
|
||||||
Decrease
in accrued interest receivable
|
||||||||
and
other assets
|
667
|
543
|
||||||
Increase
in accrued interest payable and other
liabilities
|
1,643
|
2,998
|
||||||
Net
cash provided by operating activities
|
5,807
|
8,411
|
||||||
Cash
Flows from Investing Activities
|
||||||||
Principal
collected on investment securities
|
68
|
85
|
||||||
Net
(increase) decrease in loans
|
14,433
|
(17,602 | ) | |||||
Investment
in premises and equipment
|
(2,936 | ) | (2,432 | ) | ||||
Proceeds
from disposal of premises and equipment
|
1,785
|
-
|
||||||
Redemption
of Federal Home Loan Bank
|
||||||||
of
Atlanta stock
|
1,096
|
215
|
||||||
Net
cash provided by (used in) investing activities
|
14,446
|
(19,734 | ) |
For
The Three Months Ended March 31,
|
||||||||
2007
|
2006
|
|||||||
Cash
Flows from Financing Activities
|
||||||||
Net
increase in deposits
|
18,869
|
24,504
|
||||||
Net
decrease in short-term borrowings
|
(18,000 | ) | (26,000 | ) | ||||
Additional
borrowed funds, long-term
|
-
|
15,000
|
||||||
Repayment
of borrowed funds, long-term
|
(5,000 | ) |
-
|
|||||
Cash
dividends and cash paid in lieu of fractional shares
|
(606 | ) | (550 | ) | ||||
Net
cash provided by (used in) financing activities
|
(4,737 | ) |
12,954
|
Increase
in cash and cash equivalents
|
15,516
|
1,631
|
||||||
Cash
and cash equivalents at beginning of year
|
18,715
|
24,995
|
||||||
Cash
and cash equivalents at end of period
|
$ |
34,231
|
$ |
26,626
|
||||
Supplemental
disclosure of cash flows information:
|
||||||||
Cash
paid during period for:
|
||||||||
Interest
paid
|
$ |
8,839
|
$ |
6,787
|
||||
Income
taxes paid
|
$ |
92
|
$ |
1,195
|
||||
Transfer
of loans to foreclosed real estate
|
$ |
391
|
$ |
-
|
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2007
|
2006
|
|||||||
Common
shares – weighted average (basic)
|
10,065,854
|
10,064,945
|
||||||
Common
share equivalents – weighted average
|
15,119
|
410
|
||||||
Common
shares – diluted
|
10,080,973
|
10,065,355
|
Actual
|
Actual
|
To
Be Well Capitalized Under
|
||||||||||
at
March 31, 2007
|
at
December 31, 2006
|
Prompt
Corrective Provisions
|
||||||||||
Tangible
(1)
|
11.3 | % | 11.0 | % |
N/A
|
|||||||
Tier
I Capital (2)
|
13.7 | % | 13.1 | % | 6.0 | % | ||||||
Core
(1)
|
11.3 | % | 11.0 | % | 5.0 | % | ||||||
Total
Capital (2)
|
14.9 | % | 14.3 | % | 10.0 | % |
Three
Months Ended March 31, 2007
|
Three
Months Ended March 31, 2006
|
|||||||||||
Average
Balance
|
Interest
|
Rate
Annualized
|
Average
Balance
|
Interest
|
Rate
Annualized
|
|||||||
(dollars
in thousands)
|
||||||||||||
ASSETS
|
||||||||||||
Loans
(1)
|
$830,729
|
$17,576
|
8.46%
|
$784,256
|
$15,952
|
8.14%
|
||||||
Investments
(2)
|
5,000
|
38
|
3.04%
|
5,000
|
38
|
3.04%
|
||||||
Mortgage-backed
securities
|
2,219
|
26
|
4.69%
|
3,226
|
33
|
4.09%
|
||||||
Other
interest-earning assets (3)
|
24,288
|
373
|
6.14%
|
27,629
|
327
|
4.73%
|
||||||
Total
interest-earning assets
|
862,236
|
18,013
|
8.36%
|
820,111
|
16,350
|
7.97%
|
||||||
Non-interest
earning assets
|
54,088
|
36,393
|
||||||||||
Total
assets
|
$916,324
|
$856,504
|
||||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||||||
Savings
and checking deposits
|
$138,444
|
605
|
1.75%
|
$140,571
|
438
|
1.25%
|
||||||
Certificates
of deposit
|
506,407
|
6,264
|
4.95%
|
463,489
|
4,388
|
3.79%
|
||||||
Short-term
borrowings
|
8,334
|
109
|
5.23%
|
8,667
|
86
|
3.97%
|
||||||
Long-term
borrowings
|
150,000
|
1,978
|
5.27%
|
142,000
|
1,932
|
5.44%
|
||||||
Total
interest-bearing liabilities
|
803,185
|
8,956
|
4.46%
|
754,727
|
6,844
|
3.63%
|
||||||
Non-interest
bearing liabilities
|
24,744
|
26,562
|
||||||||||
Stockholders'
equity
|
88,395
|
75,215
|
||||||||||
Total
liabilities and stockholders’ equity
|
$916,324
|
$856,504
|
||||||||||
Net
interest income and interest rate spread
|
$9,057
|
3.90%
|
$9,506
|
4.34%
|
||||||||
Net
interest margin
|
4.20%
|
4.64%
|
||||||||||
Average
interest-earning assets to average interest-bearing
liabilities
|
107.35%
|
108.66%
|
(1)
|
Non-accrual
loans are included in the average balances and in the computation
of
yields.
|
(2)
|
The
Company does not have any tax-exempt
securities.
|
(3)
|
Other
interest-earning assets includes interest-bearing deposits in other
banks,
federal funds sold and FHLB stock
investments.
|
Financial
Instruments Whose Contract
|
Contract
Amount At
|
|
Amounts
Represent Credit Risk
|
March
31, 2007
|
|
(dollars
in thousands)
|
||
Standby
letters of credit
|
$5,598
|
|
Home
equity lines of credit
|
$25,015
|
|
Unadvanced
construction commitments
|
$103,157
|
|
Loan
commitments
|
$9,940
|
|
Lines
of credit
|
$41,397
|
|
Loans
sold with limited repurchase
|
||
provisions
|
$5,458
|
SEVERN
BANCORP, INC.
|
||
May
8, 2007
|
_Alan
J. Hyatt
|
|
Alan
J. Hyatt, Chairman of the Board, President and Chief Executive
Officer
|
||
(Principal
Executive Officer)
|
||
May
8, 2007
|
_Thomas
G. Bevivino
|
|
Thomas
G. Bevivino, Executive Vice President and Chief Financial
Officer
|
||
(Principal
Financial and Accounting Officer)
|