UNITED STATES
SECURITES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
--------------
SEVERN BANCORP, INC.
- ----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-1726127
- ------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1919 A West Street, Annapolis, Maryland 21401
- ------------------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 410-268-4554
--------------------------
Indicted by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
-------------- --------------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, par value $0.01 per share, 4,090,092 shares outstanding
at June 2, 2002.
SEVERN BANCORP, INC.
Table of Contents
PART I - Financial Information.............................................1
Item 1. Financial Statements .............................................1
Consolidated Statements of Financial Condition....................1
Consolidated Statements of Operations ............................3
Consolidated Statements of Other Comprehensive Income ............4
Consolidated Statements of Cash Flows ............................5
Notes to Consolidated Financial Statements (Unaudited) ...........8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operation .......................................................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk ......15
PART II - OTHER INFORMATION ..............................................15
Item 1. Legal Proceedings ...............................................15
Item 2. Changes in Securities and Use of Proceeds .......................15
Item 3. Defaults upon Senior Securities .................................15
Item 4. Submission of Matters to a Vote of Security Holders .............15
Item 5. Other Information ...............................................15
Item 6. Exhibits and Reports on Form 8-K ................................15
SIGNATURES................................................................15
PART I- FINANCIAL INFORMATION
Item 1. Financial Statements
SEVERN BANCORP, INC.
AND SUBSIDIARIES
Annapolis, Maryland
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, December 31,
2002 2001
---- ----
Unaudited
ASSETS
Cash $ 1,512,767 $ 1,030,867
Interest bearing deposits in other banks 595,455 1,058,692
Federal funds 5,583,163 3,948,900
Investment securities, held to maturity 9,000,506 7,000,958
Mortgage backed securities held to maturity 183,417 212,021
Loans held for sale, net of unrealized loss of
$-0- March 31, 2002 and December 31, 2001 10,726,065 7,498,934
Loans receivable, net 349,655,957 335,142,276
Accrued interest receivable - loans 2,236,854 2,094,588
- mortgage backed
securities 1,121 1,330
- investments 94,066 100,895
Foreclosed real estate, net 312,118 312,118
Premises and equipment, at cost, less
accumulated depreciation 4,703,141 4,642,481
Mortgage servicing rights 24,290 25,940
Federal Home Loan Bank of Atlanta stock
at cost 2,500,000 2,500,000
Deferred income taxes 813,486 813,486
Income taxes receivable -- 950
Prepaid expenses and other assets 187,364 172,082
Goodwill 333,569 333,569
-------------- ---------------
Total assets $388,463,339 $366,890,087
========== ==========
The accompanying notes to consolidated financial statements are an integral part
of these statements.
1
March 31, December 31,
2002 2001
---- ----
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $302,390,607 $286,917,568
Outstanding checks in excess of bank balance 1,788,016 798,088
Federal Home Loan Bank advances 44,000,000 42,000,000
Advance payments by borrowers for expenses 1,265,701 1,007,068
Income taxes payable 1,054,449 174,529
Accounts payable and accrued expenses 1,346,935 1,161,952
------------- ----------------
Total liabilities 351,845,708 332,059,205
Stockholders' Equity
Non-cumulative preferred stock $1.00 par value, Series A 500,000 shares
authorized; 200,002 issued
and outstanding in 2001 and 2000 200,002 200,002
Additional paid-in capital 3,800,038 3,800,038
Common stock, $.01 par value, 20,000,000 shares
authorized; issued and outstanding 4,090,092 March 31, 2002
and 1,352,364 December 31, 2001 40,901 13,524
Additional paid-in capital 11,007,957 10,816,887
Retained earnings (substantially restricted) 21,568,733 20,000,431
------------ -------------
Total stockholders' equity 36,617,631 34,830,882
------------ ------------
Total liabilities and stockholders' equity $388,463,339 $366,890,087
========== ==========
2
SEVERN BANCORP, INC. AND SUBSIDIARIES
Annapolis, Maryland
CONSOLIDATED STATEMENTS OF OPERATIONS
For Three Months Ended March 31,
2002 2001
---- ----
Interest Income
Interest on loans $7,616,363 $6,711,953
Interest on securities available for sale -- 11,840
Interest on securities held to maturity 106,319 123,443
Interest on mortgage backed securities 3,372 4,908
Other interest income 72,946 158,923
------------ ------------
Total interest income 7,799,000 7,011,067
Interest Expense
Interest on deposits 3,090,333 3,365,841
Interest on short term borrowings 94,896 322,313
Interest on long term borrowings 400,268 359,788
--------- ---------
Total interest expense 3,585,497 4,047,942
--------- ---------
Net interest income 4,213,503 2,963,125
Provision for loan losses 105,000 185,000
------------ ------------
Net interest income after provision
for loan losses 4,108,503 2,778,125
Other Income
Gain on sale of loans 305,817 142,766
Real estate commissions 212,133 --
Real estate management fees 81,465 --
Gain on Disposal of Premises & Equip -- 5,656
Mortgage processing and servicing fees 156,347 109,925
All other income 111,544 93,331
------------ -----------
Net other income 867,306 351,678
Non-Interest Expenses
Compensation and related expenses 1,325,410 978,420
Occupancy 122,181 110,727
Net expense of foreclosed real estate (63) 1,222
Other 434,785 332,452
--------- ----------
Total non-interest expenses 1,882,313 1,422,821
----------- ------------
Income before income tax provision 3,093,496 1,706,982
Income tax provision 1,197,497 659,756
----------- ----------
Net income $ 1,895,999 $ 1,047,226
========= =========
Basic earnings per common share $ .45 $ .31
========= =========
Diluted earnings per common share $ .45 $ .29
========= =========
The accompanying notes to consolidated financial statements are an integral part
of these statements.
3
SEVERN BANCORP, INC. AND SUBSIDIARIES
Annapolis, Maryland
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
For Three Months Ended March 31,
2002 2001
---- ----
Net income $ 1,865,910 $1,047,226
Unrealized holding gain on
available for sale securities,
net of tax of $6,910 -- 12,827
------------- -----------
Other Comprehensive Income $ 1,865,910 $ 1,060,053
============ ===========
The accompanying notes to consolidated financial statements are an integral part
of these statements.
4
SEVERN BANCORP, INC. AND SUBSIDIARIES
Annapolis, Maryland
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Three Months Ended March 31,
--------------------------------------
2002 2001
---- ----
Operating Activities
Net income $ 1,895,999 $1,047,226
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities _
Amortization of deferred loan fees (508,938) (301,654)
Loan fees deferred 560,647 337,887
Accretion of discount on mortgages (2,067) (3,124)
Amortization of premium on investment
securities 546 547
Accretion of discount on investment securities (94) (2,635)
Accretion of discount on mortgage backed
securities (41) (41)
Provision for loan losses 105,000 185,000
Provision for losses on foreclosed real estate -- 20,000
Provision for depreciation 66,840 52,247
Gain on sale of loans (305,817) (142,766)
Gain on disposal of premises and equipment -- (5,676)
Proceeds from loans sold to others 20,028,148 7,015,951
Loans originated for sale (22,957,631) (8,375,945)
Principal collected on loans originated
for sale 8,169 8,610
Tax effect of preferred stock dividends 34,758 34,758
(Increase) decrease in accrued interest on loans (142,266) 40,513
Decrease in accrued interest on
investments 6,829 93,585
Decrease in accrued interest on mortgage
backed securities 209 42
Decrease in mortgage servicing rights 1,650 1,650
Decrease in income taxes
receivable 950 22,427
Increase in prepaid expenses
and other assets (15,282) (863,366)
Decrease in accrued interest payable (15,875) (76)
Increase in accounts payable
and accrued expenses 184,983 327,455
Increase in income taxes payable 879,920 327,472
---------------- ---------------------
Net cash used by operating activities (173,363) (179,913)
5
SEVERN BANCORP, INC. AND SUBSIDIARIES
Annapolis, Maryland
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Three Months Ended March 31,
2002 2001
---- ----
Cash Flows from Investing Activities
Purchase of investment securities $(4,000,000) $(2,000,000)
Proceeds from maturing investment securities 2,000,000 4,892,858
Principal collected on mortgage backed
securities 28,645 7,375
Longer term loans originated (43,111,563) (36,405,325)
Principal collected on longer term loans 28,400,920 23,641,013
Net decrease in short-term loans 239,318 106,426
Loans purchased (197,000) (405,000)
Proceeds from sale of foreclosed real estate - 68,808
Investment in premises and equipment (127,500) (29,184)
Proceeds from disposal of premises
and equipment -- 15,049
Purchase of Federal Home Loan Bank of
Atlanta stock -- (700,000)
------------------ ---------
Net cash used by investing activities (16,767,180) (10,807,980)
Cash Flows from Financing Activities
- ------------------------------------
Net increase in demand deposits, money
market, passbook accounts and advances
by borrowers for taxes and insurance 18,829,200 8,975,441
Net (decrease) increase in certificates of
deposit (3,081,653) 7,798,773
Increase (decrease) in checks outstanding
in excess of bank balance 989,928 (3,298,358)
Additional borrowed funds 17,000,000 19,000,000
Repayment of borrowed funds (15,000,000) (11,000,000)
Cash dividends (335,406) (244,078)
Proceeds from exercise of options 191,400 --
Proceeds from exercise of warrants -- 461,630
-------------------- ------------------
Net cash provided by financing activities 18,593,469 21,693,408
------------ -------------
6
SEVERN BANCORP, INC.
AND SUBSIDIARIES
Annapolis, Maryland
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31,
2002 2001
---- ----
Increase in cash and cash
equivalents $ 1,652,926 $ 10,705,515
Cash and cash equivalents at beginning of year 6,038,459 1,007,087
------------- ---------------
Cash and cash equivalents at end of period $ 7,691,385 $ 11,712,602
========== ==========
The Following is a Summary of Cash and
Cash Equivalents
Cash $ 1,512,767 $ 1,416,897
Interest bearing deposits in other banks 595,455 1,567,356
Federal funds 5,583,163 8,728,349
------------- -------------------
Cash and cash equivalents reflected on the
statement of cash flows $ 7,691,385 $ 11,712,602
========== ==========
Supplemental Disclosure of Cash Flows Information:
Cash Paid During Period For:
Interest $ 3,588,213 $ 4,042,716
========== ==========
Income taxes $ 285,940 $ 286,500
========== ==========
Transfer from loans to foreclosed real estate $ -- $ 133,076
========== ==========
Transfer from retained earnings to additional paid in capital for 3 for 1
stock split declared
in the form of a dividend $ 27,047 $ --
========== ==========
7
The accompanying notes to consolidated financial statements are an integral
part of these statements.
SEVERN BANCORP, INC. AND SUBSIDIARIES
Annapolis, Maryland
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial information and
in accordance with the instructions to Form 10-Q. Accordingly, they
do not include all of the disclosures required by accounting
principles generally accepted in the United States of America for
complete financial statements. In the opinion of management, all
adjustments necessary for a fair presentation of the results of
operations for the interim periods presented have been made. Such
adjustments were of a normal recurring nature. The results of
operations for the three months ended March 31, 2002 are not
necessarily indicative of the results that may be expected for the
fiscal year December 31, 2002 or any other interim period. The
consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes which are
incorporated by reference in the Company's Annual Report on Form 10
for the year ended December 31, 2001.
On February 19, 2002, the Company's Board of Directors
declared a 3-for-1 stock split in the form of a 200% stock dividend,
which was effective for shares outstanding as of March 1, 2002 and
paid on March 15, 2002. All per share data in the accompanying
financial statements and all share and per share data in the
footnotes have been adjusted to give retroactive effect to this
transaction.
Note 2 - Cash Flow Presentation
For purposes of the statements of cash flows, cash and cash
equivalents include cash and amounts due from depository
institutions, investments in federal funds, and certificates of
deposit with original maturities of 90 days or less.
8
SEVERN BANCORP, INC. AND SUBSIDIARIES
Annapolis, Maryland
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 3 - Earnings Per Share
Basic EPS is computed based upon income available to common
shareholders and the weighted average number of common shares
outstanding for the period. Diluted EPS is to reflect the potential
dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the
earnings of the Company. Information relating to the calculations of
net income per share of common stock is summarized for the three
month periods ended March 31, as follows:
Three Months Ended Three Months Ended
March 31, 2002 March 31, 2001
------------------------------ ---------------------------
Net income $ 1,895,999 $ 1,047,226
Less - preferred stock dividends,
net of tax (55,242) (55,242)
------------ ------------
Net income available to shareholders $ 1,840,757 991,984
============ ============
Weighted average shares outstanding
Basic EPS 4,057,092 3,239,316
Effect of Dilutive Shares
Stock warrants -- 178,595
Stock options 30,224 49,659
------------ ------------
Adjusted weighted average shares
Used for dilutive EPS 4,087,316 3,467,570
============ ============
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Company
Severn Bancorp, Inc. ("Bancorp") is a savings and loan holding company
charted in the state of Maryland in 1990. It conducts business through three
subsidiaries: Severn Savings Bank, FSB (the "Bank"), its principal subsidiary;
Louis Hyatt, Inc. t/a Hyatt Real Estate, a real estate brokerage and property
management company, which Bancorp acquired in June 2001; and SBI Mortgage
Company, which engages in the origination of mortgages not suitable to the Bank.
The Bank has two branches in Anne Arundel County, Maryland which offer a full
range of deposit products, and the Bank originates mortgages in its primary
market of Anne Arundel County, Maryland and, to a lesser extent, in other parts
of Maryland, Delaware and Northern Virginia.
Forward Looking Statements
In addition to the historical information contained herein, the
following discussion contains forward-looking statements that involve risks and
uncertainties. Bancorp 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 in the nation and Bancorp's general
market area. 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 allowance; the effect of changes in interest rates; and changes in
deposit insurance premiums.
Results of Operations
Net income for the first quarter of 2002 was $1,895,999, or diluted
earnings per share of $.45, as compared to net income of $1,047,226 in the first
quarter of 2001, or diluted earnings per share of $.29. This represents an
increase of $848,773 or 81% compared with the first quarter of 2001. Earnings
per diluted share increased $.16 per diluted share or 55.1% compared with the
first quarter of 2001. Net income for the first quarter of 2002 increased
significantly above that for the first quarter of 2001 as a result of increases
in interest on loans received, an increase in mortgage loans originated and a
decrease in interest expense due to the reduction in the interest paid to the
depositors of the Bank. The reduction in interest rates resulted in part from
the Federal Reserve Board making a total of eleven interest rate cuts throughout
2001.
Net interest income (interest earned net of interest charges) totaled
$4,213,503 for the first quarter of 2002, compared to $2,963,125 for the first
quarter of 2001, representing an increase of $1,250,378 or 42.2%. This increase
is a result of both an increase in interest earned on mortgage loans and a
reduction in the cost of deposits and borrowings, resulting in an improving net
interest margin.
Bancorp recorded a loan loss provision of $105,000 in the first quarter
of 2002 compared to $185,000 in the first quarter of 2001. This was a reduction
of $80,000 or 43.2%, as management determined that the decrease in the
contribution to the loan loss provision as compared to the first quarter of 2001
was appropriate after analysis of the general economy, economic trends, inherent
risks contained in the portfolio and other factors that Bancorp's management
deemed appropriate. For information concerning how Bancorp establishes its
provision for loan losses, please refer to Management's Discussion and Analysis
of Financial Condition and Results of Operations in our registration statement
on Form 10 filed with the Securities and Exchange Commission.
10
Other income totaled $867,306 for the first quarter of 2002, as
compared to $351,678 during the first quarter of 2001, an increase of $515,628
or 146.6%. Of this increase, $293,598 was a result of real estate commissions
and real estate management fees received from Bancorp's subsidiary, Louis Hyatt,
Inc. t/a Hyatt Real Estate, during the first quarter of 2002. That company was
acquired by Bancorp in June of 2001. Also, gain on the sale of loans increased
by $163,051, or 114.2% over the first quarter of 2001. This increase reflects a
large increase in loans originated and sold by the Bank in the secondary market.
As a result of increases in mortgage loan originations, mortgage processing and
servicing fees increased to $156,347 in the first quarter of 2002 compared to
$109,925 in the first quarter of 2001, being a $46,422 or 42.2% increase. All
other income increased from $93,331 in the first quarter of 2001 to $111,544 in
the first quarter of 2002, which is an increase of 19.5%.
Total non-interest expense for the first quarter of 2002 was
$1,882,313, which is an increase of $459,492 from the first quarter of 2001 or
32.3%. This increase was primarily in compensation and related expenses, which
increased $346,990, or 35.5%, which was the result of the increase in mortgage
loan originations between the first quarter of 2001 and the first quarter of
2002. Other expenses also increased from the first quarter of 2001 to the first
quarter of 2002 by $102,333 or 30.8%, from $332,452 to $434,785 as a result of
increased mortgage origination activity and operating expenses of Hyatt Real
Estate.
Income Taxes
Income tax expense was $1,197,497 for the first quarter of 2002, as
compared to $659,756 for the first quarter of 2001, which is an increase of 81%.
The effective tax rate for the three months ended March 31, 2002 and 2001 was
38.71% and 38.65%, respectively.
Analysis of Financial Condition
Total assets at March 31, 2002 increased to $388,463,339 from
$366,890,087 at December 31, 2001, representing an increase of $21,573,252 or
5.9%. Loan demand continued to be strong during the first quarter of 2002, as
net loans receivable increased to $349,655,957 as of March 31, 2002 from
$335,142,276 as of December 31, 2001, which is an increase of $14,513,681 or
4.3%. Loans held for sale as of March 31, 2002 was $10,726,065 which is an
increase of $3,227,131 or 43%, above loans for sale in the amount of $7,498,934
as of December 31, 2001. Total deposits as of March 31, 2002 increased to
$302,390,607 from $286,917,568 as of December 31, 2001 which represents an
increase of $15,473,039 or 5.4%. This increase is attributable to growth in the
Bank's money market deposit accounts as the Bank had been promoting such deposit
accounts through various advertisements. Federal Home Loan Bank advances
increased $2,000,000, or 4.8%, to $44,000,000 as of March 31, 2002 as compared
to $42,000,000 as of December 31, 2001.
11
Stockholders Equity
Total stockholders equity was $36,617,631 as of March 31, 2002 compared
to $34,830,882 as of December 31, 2001, or an increase of $1,786,749 or 5.1%.
This increase resulted from an increase in net earnings and, to a lesser extent,
certain options were exercised by directors and officers of Bancorp during the
first quarter of 2002 resulting in an infusion of capital to Bancorp, offset
slightly by dividends paid.
Asset Quality
Non-accrual loans (those loans 90 or more days in arrears) were
$1,203,622 as of March 31, 2002 compared to $2,101,072 as of December 31, 2001.
At March 31, 2002 the total allowance for loan losses was $3,458,375, which is
...98% of total loans, compared with $3,353,375, which was .99% of total loans as
of December 31, 2001. The adequacy of the allowance is monitored monthly.
Bancorp's management believes the allowance is adequate as of March 31, 2002.
Liquidity
Bancorp's liquidity is determined by its ability to raise funds through
loan payments, maturing investments, deposits, borrowed funds, capital, or the
sale of loans. Based on the internal and external sources available, Bancorp's
liquidity position exceeded anticipated short-term and long-term needs at March
31, 2002. Additionally, loan payments, maturities, deposit growth and earnings
contribute a flow of funds available to meet liquidity requirements.
In assessing its liquidity the management of Bancorp considers
operating requirements, anticipated deposit flows, expected funding of loans,
deposit maturities and borrowing availability, so that sufficient funds may be
available on short notice to meet obligations as they arise so that Bancorp may
take advantage of business opportunities.
Management believes it has ample cash flow and liquidity to meet its
current commitments. Certificates of deposit, which are scheduled to mature in
less than one year at March 31, 2002 totaled $126,400,385. Based on past
experience, management believes that a significant portion of such deposits will
remain with the Bank. At March 31, 2002, the Company had commitments to
originate loans of $787,738 , unused lines of credit of $20,798,544, and
commitments under standby letters of credit of $4,485,235. The Bank has the
ability to reduce its commitments for new loan originations, adjust other cash
outflows, and borrow from the FHLB of Atlanta should the need arise. As of March
31, 2002, outstanding FHLB borrowings totaled $44,000,000, and the Bank had
available to it up to an additional $53,000,000 in borrowing availability from
the FHLB of Atlanta.
Net cash used by operating activities remained relatively unchanged at
$173,673 and $179,913 for the three month periods ended March 31, 2002 and March
31, 2001, respectively. Net cash used by investing activities for the quarter
ended March 31, 2002 was $16,767,180, an increase of $5,959,200 from $10,807,980
for the quarter ended March 31, 2001. Net cash provided by financing activities
was $18,593,469 and $21,693,408 for the current and prior year's quarters,
respectively. As a result cash and cash equivalents increased $1,652,926 and
$10,705,515 during the respective quarters. Cash provided by increased deposits
and borrowed funds was partially offset by net cash used for strong loan
origination activity that outpaced principal repayments.
12
Effects of Inflation
The Consolidated Financial Statements and related consolidated
financial data presented herein have been prepared in accordance with accounting
principles generally accepted in the United States of America and practices
within the banking industry which require the measurement of financial condition
and operating results in terms of historical dollars, without considering the
changes in the relative purchasing power of money over time due to inflation.
Unlike most industrial companies, virtually all of the assets and liabilities of
a financial institution are monetary in nature. As a result, interest rates have
a more significant impact on a financial institution's performance than the
effects of general levels of inflation.
Average Balance Sheet
The following table presents the distribution of the average
consolidated balance sheets, interest income/expense, and annualized yields
earned and rates paid through the first three months of the year.
[see table on the following page]
13
Severn Bancorp and Subsidiaries
Average Balance Sheet
Quarter Ended March 31, 2002 Quarter Ended March 31, 2001
Average Rate Average Rate
ASSETS Volume Interest Annualized Volume Interest Annualized
------ -------- ---------- ---------------------------- ------------
Loans $352,817,982 $ 7,616,363 8.63% $286,610,177 $ 6,711,953 9.37%
Investments 8,998,148 106,319 4.73% 8,257,848 135,283 6.55%
Mortgage-backed securities 191,578 3,372 7.04% 278,096 4,908 7.06%
Other interest earning 7,763,043 72,946 3.76% 12,706,815 158,923 5.00%
---------------------------- ------------ ---------------------------- ------------
Total interest-earning 369,770,751 7,799,000 8.44% 307,852,937 7,011,067 9.11%
Non-interest earning assets 13,796,320 7,461,733
--------------- ---------------
Total Assets 383,567,071 315,314,670
=============== ===============
LIABILITIES & STOCKHOLDERS' EQUITY
Savings & checking 108,726,377 740,062 2.72% 57,563,016 475,083 3.30%
Certificates of Deposit 191,959,352 2,350,271 4.90% 183,184,208 2,890,758 6.31%
Short-term borrowings 12,000,000 94,896 3.16% 23,000,000 322,313 5.61%
Long-term borrowings 31,333,333 400,268 5.11% 23,666,667 359,788 6.08%
-------------- ------------ ------------ ---------------------------- ------------
Total interest-bearing liabilities 344,019,062 3,585,497 4.17% 287,413,891 4,047,942 5.63%
=============== ===============
Non-interest bearing liabilities 3,561,480 2,020,380
Stockholders' equity 35,986,529 25,880,400
Total liabilities &
--------------- ---------------
stockholders' equity $383,567,071 $315,314,670
=============== ===============
Net Interest Income $ 4,213,503 $ 2,963,125
Interest Rate Spread 4.27% 3.48%
Net Yield on Interest-Earning Assets 4.56% 3.85%
Average interest-earning assets to average interest-bearing liabilities
107.49% 107.11%
Legal Proceedings
There are various claims pending involving the Bank, arising in the
normal course of business. Management believes, based upon consultation with
legal counsel, that liabilities arising from these proceedings, if any, are not
material to Bancorp's financial condition.
14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There has been no material change in market risk since December 31,
2001, as reported in Bancorp's Form 10 Registration Statement filed with the
United States Securities and Exchange Commission on or about April 15, 2002.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities and Use of Proceeds. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K. None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEVERN BANCORP, INC.
Registrant
/s/ ALAN J. HYATT
Date: June 7, 2002 Alan J. Hyatt, President, Chief Executive Officer
and Chairman of the Board
(Principal Executive Officer)
/s/ CECELIA LOWMAN
Date: June 7, 2002 Cecelia Lowman, Chief Financial Officer
(Principal Financial and Accounting Officer)