Bancorp is a savings and loan holding company chartered as a corporation in
the state of Maryland in 1990. It conducts business primarily through two subsidiaries,
Severn Savings Bank, FSB (“Bank”) and SBI Mortgage Company (“SBI”).
The Bank’s principal subsidiary Louis Hyatt, Inc. (“Hyatt Commercial”),
conducts business as Hyatt Commercial, a commercial real estate brokerage and
property management company. SBI holds mortgages that do not meet the underwriting
criteria of the Bank, and is the parent company of Crownsville Development Corporation
(“Crownsville”), which is doing business as Annapolis Equity Group,
which acquires real estate for syndication and investment purposes.
The Bank was organized in 1946 in Baltimore, Maryland as Pompei Permanent Building
and Loan Association. It relocated to Annapolis, Maryland in 1980 and its name
was changed to Severn Savings Association. Subsequently, the Bank obtained a
federal charter and changed its name to Severn Savings Bank, FSB. The Bank operates
four full-service branch offices and one administrative office. The Bank operates
as a federally chartered savings bank whose principal business is attracting
deposits from the general public and investing those funds in mortgage and commercial
loans. The Bank also uses advances, or loans, from the Federal Home Loan Bank
of Atlanta, (“FHLB-Atlanta”) to fund its lending activities. The
Bank provides a wide range of personal and commercial banking services. Personal
services include mortgage lending and various other lending services as well
as checking, savings, money market, time deposit and individual retirement accounts.
Commercial services include commercial secured and unsecured lending services
as well as business internet banking, corporate cash management services and
deposit services. The Bank also provides safe deposit boxes, ATMs, debit cards,
and personal internet banking including on-line bill pay, mortgage lending,
and telephone banking, among other products and services.
Thrift institutions are financial intermediaries which historically have accepted
savings deposits from the general public and, to a lesser extent, borrowed funds
from outside sources and invested those deposits and funds primarily in loans
secured by first mortgage liens on residential and other types of real estate.
Such institutions may also invest their funds in various types of short- and
long-term securities. The deposits of bank and thrift institutions are insured
by the Deposit Insurance Fund (“DIF”) as administered by the Federal
Deposit Insurance Corporation (“FDIC”), and these institutions are
subject to extensive regulations. These regulations govern, among other things,
the lending and other investment powers of thrift institutions, including the
terms of mortgage instruments these institutions are permitted to utilize, the
types of deposits they are permitted to accept, and reserve requirements.
The operations of thrift institutions, including those of the Bank, are significantly
affected by general economic conditions and by related monetary and fiscal policies
of the federal government and regulations and policies of financial institution
regulatory authorities, including the Federal Reserve and the OCC into which
the former OTS was merged. Lending activities are influenced by a number of
factors including the demand for housing, conditions in the construction industry,
and availability of funds. Sources of funds for lending activities include savings
deposits, loan principal payments, proceeds from sales of loans, borrowings
from the FHLB-Atlanta and other sources. Savings flows at thrift institutions
such as the Bank are influenced by a number of factors including interest rates
on competing investments and levels of personal income.
The Bank originates mortgage loans of all types, including residential, residential-construction,
commercial-construction, commercial, land and residential lot loans. The Bank
also originates non-mortgage loans, which include consumer, business and commercial
loans. These loans constitute a small part of the Bank’s portfolio.
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