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Severn Bancorp, Inc. Announces Adjustment to Reported Results for Second Quarter 2014

ANNAPOLIS, Md., Aug. 1, 2014 /PRNewswire/ -- Severn Bancorp, Inc., (Nasdaq: SVBI) ("Company") parent company of Severn Savings Bank, FSB ("Severn"), today announced an adjustment to the earnings reported in a July 15, 2014 earnings release. The adjustment is for a $1.4 million reserve being placed on certain standby letters of credit held by Severn, not previously reflected in the earnings statement.

The adjustment results in a change from net income of $824,000 or $.02 per share for the second quarter 2014, to a net loss of $576,000 or ($.12) per share.  This reserve is due to management's decision, based on consultation with its regulators, to place a reserve on certain unsecured standby letters of credit on the books as of June 30, 2014.  Standby letters of credit are conditional commitments issued by Severn guaranteeing performance by a customer to various municipalities.

Severn determined that a reserve against certain standby letters of credit was prudent due to insufficient collateral supporting these letters of credit as of June 30, 2014.  Severn is working on a resolution of this matter and it is anticipated that adequate collateral will be obtained to warrant the reversal of a majority of the reserve in the near future.

The revised Selected Financial Data table is attached to this press release.

About Severn Savings 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 approximately $790 million and four branches located in Annapolis, Edgewater 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.

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, 2013.

 

Severn Bancorp, Inc.

Selected Financial Data

(dollars in thousands, except per share data)

(Unaudited)














For the Three Months Ended





June 30,

March 31,

December 31,

September 30,

June 30,





2014

2014

2013

2013

2013










Summary Operating Results:







Interest income

$              7,808

$              7,922

$              7,983

$              8,321

$              8,575


Interest expense

2,130

2,115

2,204

2,301

2,364



Net interest income

5,678

5,807

5,779

6,020

6,211


Provision for loan losses

(19)

200

3,700

12,200

300



Net interest income (loss) after provision









for loan losses

5,697

5,607

2,079

(6,180)

5,911


Non-interest income

962

976

1,011

1,229

1,754


Non-interest expense

7,235

5,706

8,562

7,421

7,343


Income (loss) before income tax provision

(576)

877

(5,472)

(12,372)

322


Income tax provision

-

10

-

8,176

90



Net income (loss)

$               (576)

$                 867

$             (5,472)

$           (20,548)

$                 232










Per Share Data:







Basic earnings (loss) per share

$                (0.12)

$                 0.03

$                (0.58)

$                (2.08)

$                (0.01)


Diluted earnings (loss) per share

$                (0.12)

$                 0.03

$                (0.58)

$                (2.08)

$                (0.01)


Common stock dividends per share

$                        -

$                       -

$                        -

$                        -

$                        -


Average basic shares outstanding

10,067,379

10,066,679

10,066,679

10,066,679

10,066,679


Average diluted shares outstanding

10,067,379

10,103,153

10,066,679

10,066,679

10,108,470










Performance Ratios:







Return on average assets

-0.07%

0.11%

-0.66%

-2.45%

0.03%


Return on average equity

-0.71%

1.06%

-6.31%

-19.07%

0.21%


Net interest margin

3.19%

3.23%

3.15%

3.21%

3.29%


Efficiency ratio*

109.32%

84.90%

88.16%

83.51%

76.03%












*

The efficiency ratio is general and administrative expenses as a percentage of net interest income plus non-interest income















As of





June 30,

March 31,

December 31,

September 30,

June 30,





2014

2014

2013

2013

2013










Balance Sheet Data:







Total assets

$           788,653

$           793,433

$           799,603

$           815,198

$           839,053


Total loans receivable

616,956

614,986

614,552

608,769

642,801


Allowance for loan losses

(10,828)

(11,225)

(11,739)

(12,270)

(12,765)



Net loans

606,128

603,761

602,813

596,499

630,036


Deposits

555,780

562,964

571,249

580,915

583,271


Borrowings

115,000

115,000

115,000

115,000

115,000


Stockholders' equity

82,150

83,202

82,769

88,496

109,313


Bank's Tier 1 core capital to total assets

13.2%

13.2%

12.9%

13.3%

14.9%


Book value per share

$                 5.51

$                5.62

$                5.57

$                6.14

$                8.21










Asset Quality Data:







Non-accrual loans

$             13,401

$             12,567

$             11,035

$             22,771

$             37,537


Foreclosed real estate

5,689

5,561

8,972

13,877

13,297



Total non-performing assets

19,090

18,128

20,007

36,648

50,834


Total non-accrual loans to net loans

2.2%

2.1%

1.8%

3.8%

6.0%


Total non-accrual loans to total assets

1.7%

1.6%

1.4%

2.8%

4.5%


Allowance for loan losses

10,828

11,225

11,739

12,270

12,765


Allowance for loan losses to total loans

1.8%

1.8%

1.9%

2.0%

2.0%


Allowance for loan losses to total








non-accrual loans

80.8%

89.3%

106.4%

53.9%

34.0%


Total non-performing assets to total assets

2.4%

2.3%

2.5%

4.5%

6.1%


Non-accrual troubled debt restructurings (included above)

1,868

2,390

2,091

4,750

5,908


Performing troubled debt restructurings

30,147

33,149

34,827

39,548

45,851

 

SOURCE Severn Bancorp, Inc.

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