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UNITED STATES
SECURITES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x                         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004

OR

o                               TRANSITION REPORT PURUSANT TO SECTION 13 OR 15(d) OF
     THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to               
Commission file number           0-49731                                              

SEVERN BANCORP, INC.
(Exact name of registrant as specified in its charter)

Maryland
52-1726127
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

1919 A West Street, Annapolis, Maryland
21401
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code
 
410-268-4554

Indicate 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   X     No                         

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes o 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, 4,159,092 shares outstanding at October 27, 2004



     


SEVERN BANCORP, INC. AND SUBSIDIARIES
Table of Contents


PART I - FINANCIAL INFORMATION
1
Item 1.
Financial Statements
1
     
 
Consolidated Statements of Financial Condition as of September 30, 2004 (Unaudited) and December 31, 2003
1
 
Consolidated Statements of Operations (Unaudited) for the Three Months and Nine Months Ended
September 30, 2004 and 2003
 
2
 
Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2004 and 2003
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
16
     
Item 4.
Controls and Procedures
17
     
PART II - OTHER INFORMATION
17
     
Item 1.
Legal Proceedings
17
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
17
     
Item 3.
Defaults Upon Senior Securities
17
     
Item 4.
Submission of Matters to a Vote of Security Holders
17
     
Item 5.
Other Information
17
     
Item 6.
Exhibits
17
     
SIGNATURES 
18
     
Exhibit 10.0
Construction Management Agreement Between HS West, LLC and Gardiner & Gardiner General Contractors
  
   
Exhibit 31.1
Certification of Chairman and Chief Executive Officer
  
     
Exhibit 31.2
Certification of Chief Financial Officer
  
     
Exhibit 32
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  


i
     


PART I- FINANCIAL INFORMATION

Item 1.    Financial Statements
SEVERN BANCORP, INC. AND SUBSIDIARIES
Annapolis, Maryland
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)

 
September 30,
  
December 31,
  
   
2004
  
2003
  
   
(Unaudited)
 
      
ASSETS              
Cash and due from banks
  
$
8,716
  
$
4,055
  
Interest bearing deposits in other banks
    
695
    
457
  
Federal funds sold
    
4,227
    
3,914
  
Investment securities held to maturity
    
5,000
    
6,000
  
Mortgage backed securities held to maturity
    
5,217
    
6,721
  
Loans held for sale
    
5,173
    
3,175
  
Loans receivable, net of allowance for loan losses of $5,547 and $4,832, respectively
    
642,092
    
502,851
  
Premises and equipment, net
    
5,961
    
5,327
  
Federal Home Loan Bank stock at cost
    
6,500
    
3,250
  
Accrued interest receivable and other assets
    
5,337
    
4,721
  
               
Total assets
  
$
688,918
  
$
540,471
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Liabilities
              
Deposits
  
$
494,136
  
$
419,726
  
Short-term borrowings
    
41,000
    
6,000
  
Long-term borrowings
    
89,000
    
59,000
  
Advance payments by borrowers for expenses
    
862
    
902
  
Accounts payable, accrued interest and other liabilities
    
2,704
    
1,873
  
               
Total liabilities
    
627,702
    
487,501
  
               
Minority interest - preferred securities of subsidiary
    
4,000
    
4,000
  
               
Stockholders’ Equity
              
Common stock, $0.01 par value, 20,000,000 shares authorized;
             
4,159,092 issued and outstanding
   
42
    
42
  
Additional paid-in capital
    
11,516
    
11,516
  
Retained earnings
   
45,658
    
37,412
  
               
Total stockholders' equity
    
57,216
    
48,970
  
               
Total liabilities and stockholders' equity
  
$
688,918
  
$
540,471
  

The accompanying notes to consolidated financial statements are an integral part of these statements.

  1

     
 

SEVERN BANCORP, INC. AND SUBSIDIARIES
Annapolis, Maryland
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars in thousands, except per share data)

   
For Three Months Ended
September 30,
  
For Nine Months Ended
September 30,
  
   
2004
  
2003
  
2004
  
2003
  
Interest Income
                          
Interest on loans
  
$
11,221
  
$
9,349
  
$
31,623
  
$
26,967
  
Interest on securities, taxable
    
39
    
64
    
127
    
192
  
Interest on mortgage backed securities
    
57
    
2
    
198
    
144
  
Other interest income
    
94
    
45
    
197
    
193
  
Total interest income
    
11,411
    
9,460
    
32,145
    
27,496
  
                           
Interest Expense
                          
Interest on deposits
    
2,871
    
2,677
    
7,982
    
8,393
  
Interest on short term borrowings
    
104
    
--
    
168
    
--
  
Interest on long term borrowings
    
829
    
388
    
2,223
    
915
  
Total interest expense
    
3,804
    
3,065
    
10,373
    
9,308
  
                           
Net interest income
    
7,607
    
6,395
    
21,772
    
18,188
  
Provision for loan losses
    
350
    
225
    
900
    
675
  
Net interest income after provision for loan losses
    
7,257
    
6,170
    
20,872
    
17,513
  
                           
Other Income
                          
Gain on sale of foreclosed real estate
    
--
    
--
    
--
    
169
  
Real estate commissions
    
247
    
252
    
975
    
906
  
Real estate management fees