Welcome!

News Feed Item

Severn Bancorp Announces Restatement of Financial Statements To Reflect Additional Net Income

ANNAPOLIS, Md., Feb. 14, 2013 /PRNewswire/ -- Severn Bancorp, Inc. ("the Company"), (Nasdaq: SVBI) parent company of Severn Savings Bank, FSB ("Severn"), today announced that it will restate its previously issued annual consolidated financial statements for the fiscal years 2010, and 2011 and quarterly consolidated financial statements for fiscal years 2010, 2011 and 2012 (including its selected financial data for the relevant periods) due to errors identified in these financial statements.  These restatements are expected to be reflected in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 that will be filed with the Securities and Exchange Commission in March 2013.  The decision was made by the Company's Board of Directors, upon the recommendation of the Audit Committee and in consultation with management.   As a result of this decision, investors should no longer rely upon the Company's previously released financial statements for these periods and any earnings releases or other communications relating to these periods.

The Company estimates that it understated pre-tax income by an aggregate of approximately $1,627,000, over the restated periods, due to the Company overstating its FDIC insurance expense for those periods.  This resulted from the method the Company used to amortize a prepayment of its risk-based insurance assessment paid to the FDIC in 2009.  At that time, the Company paid an estimated assessment in advance for fiscal years 2010, 2011 and 2012 based on the level of net assets as of June 30, 2009, and began expensing the prepayment evenly over the three year period covered by the prepayment.  Management has now determined that this method of amortization was incorrect and that it should have amortized the prepayment based on the actual level of net assets over that period.  This error was discovered by management during the course of its preparation of the 2012 year-end financial statements and audit.

The amounts disclosed below are the estimated net cumulative effect of this error on income through December 31, 2012.  The effect on income in certain periods is quantitatively significant. The adjustments necessary have no effect on reported cash flow from operations, and do not have a material impact on the consolidated balance sheet.  The impact of this correction for the restatement periods increases cumulative net income by approximately $980,000 and cumulative earnings per share by approximately $0.09.

Impact of the restatement

The estimated adjustments to the Company's consolidated statements of operations are summarized in the tables below (in thousands, except per share amounts).

 

















Fiscal Year Ended






December 31, 2012

December 31, 2011

December 31, 2010






As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated


















Increase in:



























Pre-tax income

$        5,654

$           732

$        6,386

$        2,201

$           561

$        2,762

$        2,197

$           334

$        2,531




Net income

3,283

445

3,728

1,219

333

1,552

1,157

202

1,359




Basic and diluted














earnings(loss) per share

0.18

0.04

0.22

(0.05)

0.03

(0.02)

(0.06)

0.02

(0.04)


































Quarter Ended



March 31, 2012

June 30, 2012

September 30, 2012

December 31, 2012



As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated















Increase in:



























Pre-tax income

$           828

$           172

$        1,000

$        1,869

$           174

$        2,043

$           964

$           191

$        1,155

$        1,993

195

$        2,188

Net income

472

105

577

1,097

106

1,203

558

116

674

1,156

118

1,274

Basic and diluted














earnings per share

0.01

0.01

0.02

0.07

0.01

0.08

0.02

0.01

0.03

0.08

0.01

0.09































Quarter Ended



March 31, 2011

June 30, 2011

September 30, 2011

December 31, 2011



As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated















Increase in:



























Pre-tax income(loss)

$           791

83

$           874

$      (1,403)

$           152

$      (1,251)

$           954

$           159

$        1,113

$        1,859

$           167

$        2,026

Net income(loss)

447

49

496

(846)

90

(756)

551

95

646

1,067

99

1,166

Basic and diluted














earnings(loss) per share

0.00

0.01

0.01

(0.13)

0.01

(0.12)

0.01

0.01

0.02

0.06

0.01

0.07































Quarter Ended



March 31, 2010

June 30, 2010

September 30, 2010

December 31, 2010



As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated















Increase in:



























Pre-tax income(loss)

$         (829)

$             96

$         (733)

$        1,054

$             67

$        1,121

$           870

$             84

$           954

$        1,102

87

$        1,189

Net income(loss)

(528)

58

(470)

593

40

633

485

51

536

607

53

660

Basic and diluted














earnings(loss) per share

(0.10)

0.01

(0.09)

0.02

0.00

0.02

0.01

0.00

0.01

0.02

0.00

0.02

 

The Board of Directors, Audit Committee and management have discussed the matters disclosed in this press release with the Company's independent registered public accounting firm, ParenteBeard LLC.  The Company is working diligently to complete the restatement of its financial statements and expects to file its Annual Report on Form 10-K, including the restated financial statements, by no later than March 31, 2013.

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, statements with respect to the estimated effects of the revisions to its financial statements.  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, additional information arising from the review of the revisions to the financial statements by Severn and by its independent accountants, the Company's ability to maintain an effective system of internal controls 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, 2011.

SOURCE Severn Bancorp, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...
Much of the value of DevOps comes from a (renewed) focus on measurement, sharing, and continuous feedback loops. In increasingly complex DevOps workflows and environments, and especially in larger, regulated, or more crystallized organizations, these core concepts become even more critical. In his session at @DevOpsSummit at 18th Cloud Expo, Andi Mann, Chief Technology Advocate at Splunk, will show how, by focusing on 'metrics that matter,' you can provide objective, transparent, and meaningfu...
Struggling to keep up with increasing application demand? Learn how Platform as a Service (PaaS) can streamline application development processes and make resource management easy.
If there is anything we have learned by now, is that every business paves their own unique path for releasing software- every pipeline, implementation and practices are a bit different, and DevOps comes in all shapes and sizes. Software delivery practices are often comprised of set of several complementing (or even competing) methodologies – such as leveraging Agile, DevOps and even a mix of ITIL, to create the combination that’s most suitable for your organization and that maximize your busines...
In his session at @ThingsExpo, Chris Klein, CEO and Co-founder of Rachio, will discuss next generation communities that are using IoT to create more sustainable, intelligent communities. One example is Sterling Ranch, a 10,000 home development that – with the help of Siemens – will integrate IoT technology into the community to provide residents with energy and water savings as well as intelligent security. Everything from stop lights to sprinkler systems to building infrastructures will run ef...
SYS-CON Events announced today that Peak 10, Inc., a national IT infrastructure and cloud services provider, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Peak 10 provides reliable, tailored data center and network services, cloud and managed services. Its solutions are designed to scale and adapt to customers’ changing business needs, enabling them to lower costs, improve performance and focus inter...
In the world of DevOps there are ‘known good practices’ – aka ‘patterns’ – and ‘known bad practices’ – aka ‘anti-patterns.' Many of these patterns and anti-patterns have been developed from real world experience, especially by the early adopters of DevOps theory; but many are more feasible in theory than in practice, especially for more recent entrants to the DevOps scene. In this power panel at @DevOpsSummit at 18th Cloud Expo, moderated by DevOps Conference Chair Andi Mann, panelists will dis...
Up until last year, enterprises that were looking into cloud services usually undertook a long-term pilot with one of the large cloud providers, running test and dev workloads in the cloud. With cloud’s transition to mainstream adoption in 2015, and with enterprises migrating more and more workloads into the cloud and in between public and private environments, the single-provider approach must be revisited. In his session at 18th Cloud Expo, Yoav Mor, multi-cloud solution evangelist at Cloudy...
Artificial Intelligence has the potential to massively disrupt IoT. In his session at 18th Cloud Expo, AJ Abdallat, CEO of Beyond AI, will discuss what the five main drivers are in Artificial Intelligence that could shape the future of the Internet of Things. AJ Abdallat is CEO of Beyond AI. He has over 20 years of management experience in the fields of artificial intelligence, sensors, instruments, devices and software for telecommunications, life sciences, environmental monitoring, process...
Increasing IoT connectivity is forcing enterprises to find elegant solutions to organize and visualize all incoming data from these connected devices with re-configurable dashboard widgets to effectively allow rapid decision-making for everything from immediate actions in tactical situations to strategic analysis and reporting. In his session at 18th Cloud Expo, Shikhir Singh, Senior Developer Relations Manager at Sencha, will discuss how to create HTML5 dashboards that interact with IoT devic...
See storage differently! Storage performance problems have only gotten worse and harder to solve as applications have become largely virtualized and moved to a cloud-based infrastructure. Storage performance in a virtualized environment is not just about IOPS, it is about how well that potential performance is guaranteed to individual VMs for these apps as the number of VMs keep going up real time. In his session at 18th Cloud Expo, Dhiraj Sehgal, in product and marketing at Tintri, will discu...
So, you bought into the current machine learning craze and went on to collect millions/billions of records from this promising new data source. Now, what do you do with them? Too often, the abundance of data quickly turns into an abundance of problems. How do you extract that "magic essence" from your data without falling into the common pitfalls? In her session at @ThingsExpo, Natalia Ponomareva, Software Engineer at Google, will provide tips on how to be successful in large scale machine lear...
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
SYS-CON Events announced today that Ericsson has been named “Gold Sponsor” of SYS-CON's @ThingsExpo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. Ericsson is a world leader in the rapidly changing environment of communications technology – providing equipment, software and services to enable transformation through mobility. Some 40 percent of global mobile traffic runs through networks we have supplied. More than 1 billion subscribers around the world re...