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 (Unaudited) as of June 30, 2007
and
December 31, 2006
|
1
|
|
Consolidated
Statements of Income (Unaudited) for the Three Months and Six Months
Ended
June 30, 2007 and 2006
|
2
|
|
Consolidated
Statements of Cash Flows (Unaudited) for the Six Months Ended June
30,
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
|
19
|
Item
6.
|
Exhibits
|
19
|
SIGNATURES
|
20
|
June
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
ASSETS
|
||||||||
Cash
and due from banks
|
$ |
9,186
|
$ |
16,982
|
||||
Interest
bearing deposits in other banks
|
621
|
709
|
||||||
Federal
funds sold
|
7,850
|
1,024
|
||||||
Cash
and cash equivalents
|
17,657
|
18,715
|
||||||
Investment
securities held to maturity
|
5,105
|
7,271
|
||||||
Loans
held for sale
|
519
|
2,970
|
||||||
Loans
receivable, net of allowance for loan losses of
|
||||||||
$9,948
and $9,026, respectively
|
851,246
|
832,507
|
||||||
Premises
and equipment, net
|
31,112
|
30,411
|
||||||
Federal
Home Loan Bank of Atlanta stock at cost
|
9,047
|
9,468
|
||||||
Accrued
interest receivable and other assets
|
11,143
|
10,574
|
||||||
Total
assets
|
$ |
925,829
|
$ |
911,916
|
||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Liabilities
|
||||||||
Deposits
|
$ |
642,587
|
$ |
626,524
|
||||
Short-term
borrowings
|
15,000
|
18,000
|
||||||
Long-term
borrowings
|
150,000
|
155,000
|
||||||
Subordinated
debentures
|
20,619
|
20,619
|
||||||
Accrued
interest payable and other liabilities
|
5,933
|
5,331
|
||||||
Total
liabilities
|
834,139
|
825,474
|
||||||
Stockholders’
Equity
|
||||||||
Common
stock, $0.01 par value, 20,000,000 shares authorized;
|
||||||||
10,066,679
and 9,150,850 issued and outstanding, respectively
|
101
|
92
|
||||||
Additional
paid-in capital
|
46,704
|
28,270
|
||||||
Retained
earnings
|
44,885
|
58,080
|
||||||
Total
stockholders' equity
|
91,690
|
86,442
|
||||||
Total
liabilities and stockholders' equity
|
$ |
925,829
|
$ |
911,916
|
For
Three Months Ended
|
For
Six Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Interest
Income
|
||||||||||||||||
Loans
|
$ |
17,619
|
$ |
17,148
|
$ |
35,195
|
$ |
33,005
|
||||||||
Securities,
taxable
|
55
|
68
|
119
|
139
|
||||||||||||
Other
|
313
|
329
|
686
|
656
|
||||||||||||
Total
interest income
|
17,987
|
17,545
|
36,000
|
33,800
|
||||||||||||
Interest
Expense
|
||||||||||||||||
Deposits
|
7,372
|
5,788
|
14,241
|
10,614
|
||||||||||||
Short-term
borrowings
|
115
|
159
|
224
|
245
|
||||||||||||
Long-term
borrowings
|
1,962
|
1,818
|
3,940
|
3,750
|
||||||||||||
Total
interest expense
|
9,449
|
7,765
|
18,405
|
14,609
|
||||||||||||
Net
interest income
|
8,538
|
9,780
|
17,595
|
19,191
|
||||||||||||
Provision
for loan losses
|
537
|
375
|
962
|
757
|
||||||||||||
Net
interest income after provision for loan losses
|
8,001
|
9,405
|
16,633
|
18,434
|
||||||||||||
Other
Income
|
||||||||||||||||
Real
estate commissions
|
697
|
1,003
|
1,604
|
1,069
|
||||||||||||
Real
estate management fees
|
158
|
138
|
320
|
247
|
||||||||||||
Mortgage
banking activities
|
181
|
245
|
368
|
444
|
||||||||||||
Other
|
256
|
5
|
689
|
231
|
||||||||||||
Total
other income
|
1,292
|
1,391
|
2,981
|
1,991
|
||||||||||||
Non-Interest
Expenses
|
||||||||||||||||
Compensation
and related expenses
|
2,981
|
3,066
|
5,999
|
5,333
|
||||||||||||
Occupancy,
net
|
425
|
182
|
857
|
371
|
||||||||||||
Other
|
943
|
757
|
1,879
|
1,340
|
||||||||||||
Total
non-interest expenses
|
4,349
|
4,005
|
8,735
|
7,044
|
||||||||||||
Income
before income tax provision
|
4,944
|
6,791
|
10,879
|
13,381
|
||||||||||||
Income
tax provision
|
2,053
|
2,704
|
4,498
|
5,312
|
||||||||||||
Net
income
|
$ |
2,891
|
$ |
4,087
|
$ |
6,381
|
$ |
8,069
|
||||||||
Basic
earnings per share
|
$ |
.29
|
$ |
.41
|
$ |
.63
|
$ |
.80
|
||||||||
Diluted
earnings per share
|
$ |
.29
|
$ |
.41
|
$ |
.63
|
$ |
.80
|
||||||||
Common
stock dividends declared per share
|
$ |
.06
|
$ |
.05
|
$ |
.12
|
$ |
.11
|
For
The Six Months Ended June 30,
|
||||||||
2007
|
2006
|
|||||||
Cash
Flows from Operating Activities
|
||||||||
Net
income
|
$ |
6,381
|
$ |
8,069
|
||||
Adjustments
to reconcile net income to net
|
||||||||
cash
provided by operating activities:
|
||||||||
Amortization
of deferred loan fees
|
(1,822 | ) | (2,128 | ) | ||||
Net
amortization of premiums and
|
||||||||
discounts
|
3
|
15
|
||||||
Provision
for loan losses
|
962
|
757
|
||||||
Provision
for depreciation
|
624
|
200
|
||||||
Gain
on sale of loans
|
(136 | ) | (189 | ) | ||||
Proceeds
from loans sold to others
|
15,644
|
16,477
|
||||||
Loans
originated for sale
|
(13,058 | ) | (13,672 | ) | ||||
Stock-based
compensation expense
|
64
|
99
|
||||||
Increase
in accrued interest receivable and
|
||||||||
other
assets
|
(967 | ) | (21 | ) | ||||
Increase
in accrued interest payable and other
liabilities
|
602
|
2,300
|
||||||
Net
cash provided by operating activities
|
8,297
|
11,907
|
||||||
Cash
Flows from Investing Activities
|
||||||||
Proceeds
from maturing investment securities
|
2,000
|
-
|
||||||
Principal
collected on mortgage backed securities
|
163
|
364
|
||||||
Net
increase in loans
|
(17,879 | ) | (56,121 | ) | ||||
Net
proceeds from sale of foreclosed real estate
|
399
|
-
|
||||||
Investment
in premises and equipment
|
(3,110 | ) | (4,797 | ) | ||||
Proceeds
from sale of premises and equipment
|
1,785
|
-
|
||||||
(Purchase)
redemption of Federal Home Loan Bank
|
||||||||
of
Atlanta stock
|
421
|
(595 | ) | |||||
Net
cash used in investing activities
|
(16,221 | ) | (61,149 | ) |
For
The Six Months Ended June 30,
|
||||||||
2007
|
2006
|
|||||||
Cash
Flows from Financing Activities
|
||||||||
Net
increase in deposits
|
16,063
|
38,563
|
||||||
Net
decrease in short-term borrowings
|
(3,000 | ) | (26,000 | ) | ||||
Additional
borrowed funds, long-term
|
-
|
40,000
|
||||||
Repayment
of borrowed funds, long-term
|
(5,000 | ) | (7,000 | ) | ||||
Cash
dividends and cash paid in lieu of fractional shares
|
(1,210 | ) | (1,099 | ) | ||||
Proceeds
from exercise of options
|
13
|
-
|
||||||
Net
cash provided by financing activities
|
6,866
|
44,464
|
Decrease
in cash and cash equivalents
|
(1,058 | ) | (4,778 | ) | ||||
Cash
and cash equivalents at beginning of year
|
18,715
|
24,995
|
||||||
Cash
and cash equivalents at end of period
|
$ |
17,657
|
$ |
20,217
|
||||
Supplemental
disclosure of cash flows information:
|
||||||||
Cash
paid during period for:
|
||||||||
Interest
paid
|
$ |
18,213
|
$ |
14,577
|
||||
Income
taxes paid
|
$ |
5,539
|
$ |
5,645
|
||||
Three
Months Ended
|
Six
Months Ended
|
|||
June
30,
|
June
30,
|
|||
2007
|
2006
|
2007
|
2006
|
|
Common
shares – weighted average (basic)
|
10,065,908
|
10,064,945
|
10,065,881
|
10,064,945
|
Common
share equivalents – weighted average
|
14,500
|
11,106
|
18,612
|
3,312
|
Common
shares – diluted
|
10,080,418
|
10,076,051
|
10,084,493
|
10,068,257
|
Actual
|
Actual
|
To
Be Well Capitalized Under
|
||||||||||
at
June 30, 2007
|
at
December 31, 2006
|
Prompt
Corrective Provisions
|
||||||||||
Tangible
(1)
|
11.4 | % | 11.0 | % |
N/A
|
|||||||
Tier
I Capital (2)
|
13.5 | % | 13.1 | % | 6.0 | % | ||||||
Core
(1)
|
11.4 | % | 11.0 | % | 5.0 | % | ||||||
Total
Capital (2)
|
14.7 | % | 14.3 | % | 10.0 | % |
Six
Months Ended June 30, 2007
|
Six
Months Ended June 30, 2006
|
|||||||||||
Average
Balance
|
Interest
|
Rate
Annualized
|
Average
Balance
|
Interest
|
Rate
Annualized
|
|||||||
(dollars
in thousands)
|
||||||||||||
ASSETS
|
||||||||||||
Loans
(1)
|
$838,125
|
$35,195
|
8.40%
|
$804,120
|
$33,005
|
8.21%
|
||||||
Investments
(2)
|
4,000
|
67
|
3.35%
|
5,000
|
76
|
3.04%
|
||||||
Mortgage-backed
securities
|
2,179
|
52
|
4.77%
|
3,116
|
63
|
4.04%
|
||||||
Other
interest-earning assets (3)
|
19,310
|
686
|
7.11%
|
20,728
|
656
|
6.33%
|
||||||
Total
interest-earning assets
|
863,614
|
36,000
|
8.34%
|
832,964
|
33,800
|
8.12%
|
||||||
Non-interest
earning assets
|
53,139
|
40,011
|
||||||||||
Total
assets
|
$916,753
|
$872,975
|
||||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||||||
Savings
and checking deposits
|
$136,893
|
1,534
|
2.24%
|
$141,177
|
1,192
|
1.69%
|
||||||
Certificates
of deposit
|
506,347
|
12,707
|
5.02%
|
473,942
|
9,422
|
3.98%
|
||||||
Short-term
borrowings
|
8,333
|
224
|
5.38%
|
8,500
|
245
|
5.76%
|
||||||
Long-term
borrowings
|
150,000
|
3,940
|
5.25%
|
145,833
|
3,750
|
5.14%
|
||||||
Total
interest-bearing liabilities
|
801,573
|
18,405
|
4.59%
|
769,452
|
14,609
|
3.80%
|
||||||
Non-interest
bearing liabilities
|
25,413
|
26,621
|
||||||||||
Stockholders'
equity
|
89,767
|
76,902
|
||||||||||
Total
liabilities and stockholders’ equity
|
$916,753
|
$872,975
|
||||||||||
Net
interest income and interest rate spread
|
$17,595
|
3.75%
|
$19,191
|
4.32%
|
||||||||
Net
interest margin
|
4.07%
|
4.61%
|
||||||||||
Average
interest-earning assets to average interest-bearing
liabilities
|
107.74%
|
108.25%
|
(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
|
June
30, 2007
|
|
(dollars
in thousands)
|
||
Standby
letters of credit
|
$6,938
|
|
Home
equity lines of credit
|
$23,897
|
|
Unadvanced
construction commitments
|
$112,228
|
|
Loan
commitments
|
$8,678
|
|
Lines
of credit
|
$36,693
|
|
Loans
sold with limited repurchase provisions
|
$4,150
|
Votes
For
|
Votes
Against
|
Votes
Withheld
|
|
Melvin
Hyatt
|
7,542,833
|
0
|
4,620
|
S.
Scott Kirkley
|
7,540,393
|
0
|
7,060
|
Albert
W. Shields
|
7,543,533
|
0
|
3,920
|
Votes
For
|
Votes
Against
|
Votes
Abstain
|
|
Appointment
of Beard Miller Company LLP as independent auditors
|
7,421,108
|
126,345
|
0
|
SEVERN
BANCORP, INC.
|
|
August
8, 2007
|
_Alan
J. Hyatt___________________________
|
Alan
J. Hyatt, Chairman of the Board, President and Chief Executive
Officer
|
|
(Principal
Executive Officer)
|
|
August
8, 2007
|
_Thomas
G. Bevivino______________________
|
Thomas
G. Bevivino, Executive Vice President and Chief Financial
Officer
|
|
(Principal
Financial and Accounting Officer)
|