During the fourth quarter, the Bank completed the sale of underperforming loans with a book value of nearly $15 million for a sale price of approximately $11 million. Due to this sale, the Bank will experience a pre-tax charge to income for the fourth quarter of about $4 million.
The sale consisted of approximately $12 million of nonperforming loans, with the majority being residential loans.
Meanwhile, in the third quarter, the Annapolis-based financial institution sold a book value of $33 million in loans. Also, Severn management wrote down and sold certain foreclosed properties.
As a result of these transactions, the balance of foreclosed property was projected to be below $10 million at the end of 2013.
Both sales significantly reduce the resources that have been necessary to manage nonperforming loans, says Alan J. Hyatt, president and chief executive officer. It was time for a quicker resolution to the issues that were impeding progress for the Bank.
The sales enhance our efforts to focus on improving earnings and increasing profitability, Hyatt continued. Management and the Board made the decision to do what needed to be done to clean up the Banks balance sheet and position the company for growth in 2014 and beyond.
Severn Savings Bank, which offers personal and commercial banking as well as residential and commercial mortgage lending, has assets of approximately $820 million with four branches located in Annapolis (2), Edgewater and Glen Burnie, Md.