Maryland
|
52-1726127
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
employer identification no.)
|
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, 2008 (Unaudited) and
December 31, 2007
|
1
|
|
Consolidated
Statements of Income (Unaudited) for the Three Months Ended March 31, 2008
and 2007
|
2
|
|
Consolidated
Statements of Cash Flows (Unaudited) for the Three Months Ended March 31,
2008 and 2007
|
3
|
|
Notes
to Consolidated Financial Statements (Unaudited)
|
5
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
10
|
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
|
18
|
SIGNATURES
|
19
|
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Cash
and due from banks
|
$ | 14,379 | $ | 6,415 | ||||
Interest
bearing deposits in other banks
|
566 | 814 | ||||||
Federal
funds sold
|
4,997 | 4,037 | ||||||
Cash
and cash equivalents
|
19,942 | 11,266 | ||||||
Investment
securities held to maturity
|
1,374 | 2,383 | ||||||
Loans
held for sale
|
2,060 | 1,101 | ||||||
Loans
receivable, net of allowance for loan losses of
|
||||||||
$11,191
and $10,781, respectively
|
884,323 | 891,913 | ||||||
Premises
and equipment, net
|
31,069 | 31,289 | ||||||
Federal
Home Loan Bank of Atlanta stock at cost
|
9,594 | 10,172 | ||||||
Accrued
interest receivable and other assets
|
14,068 | 14,110 | ||||||
Total
assets
|
$ | 962,430 | $ | 962,234 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Liabilities
|
||||||||
Deposits
|
$ | 664,806 | $ | 652,773 | ||||
Short-term
borrowings
|
- | 15,000 | ||||||
Long-term
borrowings
|
175,000 | 175,000 | ||||||
Subordinated
debentures
|
20,619 | 20,619 | ||||||
Accrued
interest payable and other liabilities
|
5,166 | 3,566 | ||||||
Total
liabilities
|
865,591 | 866,958 | ||||||
Stockholders’
Equity
|
||||||||
Common
stock, $0.01 par value, 20,000,000 shares authorized;
|
||||||||
10,066,679
issued and outstanding
|
101 | 101 | ||||||
Additional
paid-in capital
|
46,800 | 46,768 | ||||||
Retained
earnings
|
49,938 | 48,407 | ||||||
Total
stockholders' equity
|
96,839 | 95,276 | ||||||
Total
liabilities and stockholders' equity
|
$ | 962,430 | $ | 962,234 |
For
Three Months Ended March 31,
|
||||||||
2008
|
2007
|
|||||||
Interest
Income
|
||||||||
Loans
|
$ | 16,875 | $ | 17,576 | ||||
Securities,
taxable
|
22 | 64 | ||||||
Other
|
254 | 373 | ||||||
Total
interest income
|
17,151 | 18,013 | ||||||
Interest
Expense
|
||||||||
Deposits
|
7,171 | 6,869 | ||||||
Short-term
borrowings
|
37 | 109 | ||||||
Long-term
borrowings and subordinated debentures
|
2,026 | 1,978 | ||||||
Total
interest expense
|
9,234 | 8,956 | ||||||
Net
interest income
|
7,917 | 9,057 | ||||||
Provision
for loan losses
|
750 | 425 | ||||||
Net
interest income after provision for loan losses
|
7,167 | 8,632 | ||||||
Other
Income
|
||||||||
Real
estate commissions
|
76 | 907 | ||||||
Real
estate management fees
|
153 | 162 | ||||||
Mortgage
banking activities
|
176 | 187 | ||||||
Other
|
115 | 438 | ||||||
Total
other income
|
520 | 1,694 | ||||||
Non-Interest
Expenses
|
||||||||
Compensation
and related expenses
|
2,266 | 3,018 | ||||||
Occupancy,
net
|
409 | 432 | ||||||
Other
|
1,411 | 941 | ||||||
Total
non-interest expenses
|
4,086 | 4,391 | ||||||
Income
before income tax provision
|
3,601 | 5,935 | ||||||
Income
tax provision
|
1,466 | 2,445 | ||||||
Net
income
|
$ | 2,135 | $ | 3,490 | ||||
Basic
earnings per share
|
$ | .21 | $ | .35 | ||||
Diluted
earnings per share
|
$ | .21 | $ | .35 | ||||
Cash
dividends declared per share
|
$ | .06 | $ | .06 |
For
The Three Months Ended March 31,
|
||||||||
2008
|
2007
|
|||||||
Cash Flows from
Operating Activities
|
||||||||
Net
income
|
$ | 2,135 | $ | 3,490 | ||||
Adjustments
to reconcile net income to net
|
||||||||
cash
provided by operating activities:
|
||||||||
Amortization
of deferred loan fees
|
(757 | ) | (955 | ) | ||||
Net
amortization of premiums and
|
||||||||
discounts
|
1 | 2 | ||||||
Provision
for loan losses
|
750 | 425 | ||||||
Provision
for depreciation
|
344 | 284 | ||||||
Gain
on sale of loans
|
(107 | ) | (72 | ) | ||||
Proceeds
from loans sold to others
|
7,233 | 8,322 | ||||||
Loans
originated for sale
|
(8,085 | ) | (8,031 | ) | ||||
Stock-based
compensation expense
|
32 | 32 | ||||||
Decrease
in accrued interest receivable
|
||||||||
and
other assets
|
961 | 662 | ||||||
Increase
in accrued interest payable and other
liabilities
|
1,600 | 1,648 | ||||||
Net
cash provided by operating activities
|
4,107 | 5,807 | ||||||
Cash Flows from
Investing Activities
|
||||||||
Proceeds
from maturing investment securities
|
1,000 | - | ||||||
Principal
collected on mortgage backed securities
|
8 | 68 | ||||||
Net
decrease in loans
|
6,383 | 14,433 | ||||||
Net
proceeds from sale of foreclosed property
|
295 | - | ||||||
Investment
in premises and equipment
|
(124 | ) | (2,936 | ) | ||||
Proceeds
from disposal of premises and equipment
|
- | 1,785 | ||||||
Redemption
of Federal Home Loan Bank
|
||||||||
of
Atlanta stock
|
578 | 1,096 | ||||||
Net
cash provided by investing activities
|
8,140 | 14,446 |
For
The Three Months Ended March 31,
|
||||||||
2008
|
2007
|
|||||||
Cash Flows from
Financing Activities
|
||||||||
Net
increase in deposits
|
12,033 | 18,869 | ||||||
Net
decrease in short-term borrowings
|
(15,000 | ) | (18,000 | ) | ||||
Repayment
of borrowed funds, long-term
|
- | (5,000 | ) | |||||
Cash
dividends and cash paid in lieu of fractional shares
|
(604 | ) | (606 | ) | ||||
Net
cash used in financing activities
|
(3,571 | ) | (4,737 | ) |
Increase
in cash and cash equivalents
|
8,676 | 15,516 | ||||||
Cash
and cash equivalents at beginning of year
|
11,266 | 18,715 | ||||||
Cash
and cash equivalents at end of period
|
$ | 19,942 | $ | 34,231 | ||||
Supplemental
disclosure of cash flows information:
|
||||||||
Cash
paid during period for:
|
||||||||
Interest
paid
|
$ | 9,411 | $ | 8,839 | ||||
Income
taxes paid
|
$ | 369 | $ | 92 | ||||
Transfer
of loans to foreclosed real estate
|
$ | 1,214 | $ | 391 |
Three
Months Ended
|
||
March
31,
|
||
2008
|
2007
|
|
Common
shares – weighted average (basic)
|
10,066,679
|
10,065,854
|
Common
share equivalents – weighted average
|
-
|
15,119
|
Common
shares – diluted
|
10,066,679
|
10,080,973
|
Actual
|
Actual
|
To
Be Well Capitalized Under
|
|
at March 31, 2008
|
at December 31, 2007
|
Prompt Corrective
Provisions
|
|
Tangible
(1)
|
11.5%
|
11.3%
|
N/A
|
Tier
I Capital (2)
|
14.0%
|
13.7%
|
6.0%
|
Core
(1)
|
11.5%
|
11.3%
|
5.0%
|
Total
Capital (2)
|
15.1%
|
14.9%
|
10.0%
|
Fair
Value Measurement at Reporting Date Using
|
||||
(dollars
in thousands)
|
||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|
Loans
accounted for under SFAS 114
|
$7,200
|
$7,200
|
||
Foreclosed
real estate
|
3,813
|
3,813
|
Impaired
Loans
|
Foreclosed Real
Estate
|
|||||||
(dollars
in thousands)
|
(dollars
in thousands)
|
|||||||
Balance
at December 31, 2007
|
$ | 6,599 | $ | 2,762 | ||||
Transfer
to foreclosed real estate
|
(1,507 | ) | 1,507 | |||||
Additions
|
3,875 | 67 | ||||||
Additional
reserves
|
(976 | ) | (390 | ) | ||||
Paid
off/sold
|
(791 | ) | (133 | ) | ||||
Balance
at March 31, 2008
|
$ | 7,200 | $ | 3,813 |
Impaired
loans at December 31, 2007
|
$ | 17,960 | ||
Added
in the quarter
|
17,433 | |||
Transferred
to foreclosed real estate
|
(1,936 | ) | ||
Paid
off prior to foreclosure
|
(791 | ) | ||
Impaired
loans at March 31, 2008
|
$ | 32,666 |
Foreclosed
real estate at December 31, 2007
|
$ | 2,993 | ||
Transferred
from impaired loans
|
1,936 | |||
Property
improvements
|
67 | |||
Property
sold
|
(694 | ) | ||
Additional
write downs
|
(390 | ) | ||
Foreclosed
real estate at March 31, 2008
|
$ | 3,912 |
Three
Months Ended March 31, 2008
|
Three
Months Ended March 31, 2007
|
|||||||||||
Average
Balance
|
Interest
|
Rate
Annualized
|
Average
Balance
|
Interest
|
Rate
Annualized
|
|||||||
(dollars
in thousands)
|
||||||||||||
ASSETS
|
||||||||||||
Loans
(1)
|
$896,189
|
$16,875
|
7.53%
|
$830,729
|
$17,576
|
8.46%
|
||||||
Investment
securities(2)
|
1,377
|
18
|
5.23%
|
7,219
|
64
|
3.55%
|
||||||
Other
interest-earning assets (3)
|
16,851
|
258
|
6.12%
|
24,288
|
373
|
6.14%
|
||||||
Total
interest-earning assets
|
914,417
|
17,151
|
7.50%
|
862,236
|
18,013
|
8.36%
|
||||||
Non-interest
earning assets
|
50,590
|
54,088
|
||||||||||
Total
assets
|
$965,007
|
$916,324
|
||||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||||||
Savings
and checking deposits
|
$124,190
|
558
|
1.80%
|
$138,444
|
605
|
1.75%
|
||||||
Certificates
of deposit
|
542,561
|
6,613
|
4.88%
|
506,407
|
6,264
|
4.95%
|
||||||
Short-term
borrowings
|
1,667
|
37
|
8.88%
|
8,334
|
109
|
5.23%
|
||||||
Long-term
borrowings
|
175,000
|
2,026
|
4.63%
|
150,000
|
1,978
|
5.27%
|
||||||
Total
interest-bearing liabilities
|
843,418
|
9,234
|
4.38%
|
803,185
|
8,956
|
4.46%
|
||||||
Non-interest
bearing liabilities
|
25,017
|
24,744
|
||||||||||
Stockholders'
equity
|
96,572
|
88,395
|
||||||||||
Total
liabilities and stockholders’ equity
|
$965,007
|
$916,324
|
||||||||||
Net
interest income and interest rate spread
|
$7,917
|
3.12%
|
$9,057
|
3.90%
|
||||||||
Net
interest margin
|
3.46%
|
4.20%
|
||||||||||
Average
interest-earning assets to average interest-bearing
liabilities
|
108.42%
|
107.35%
|
(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, 2008
|
|||
(dollars
in thousands)
|
||||
Standby
letters of credit
|
$ | 10,078 | ||
Home
equity lines of credit
|
$ | 21,773 | ||
Unadvanced
construction commitments
|
$ | 67,747 | ||
Loan
commitments
|
$ | 2,078 | ||
Lines
of credit
|
$ | 42,296 | ||
Loans
sold with limited repurchase provisions
|
$ | 5,494 |
SEVERN
BANCORP, INC.
|
||
May 8,
2008
|
Alan J.
Hyatt
|
|
Alan
J. Hyatt, Chairman of the Board, President and Chief Executive
Officer
|
||
(Principal
Executive Officer)
|
||
May 8,
2008
|
Thomas G.
Bevivino
|
|
Thomas
G. Bevivino, Executive Vice President and Chief Financial
Officer
|
||
(Principal
Financial and Accounting Officer)
|