Severn Bancorp Announces Second Quarter Results

ANNAPOLIS, Md., July 15, 2011 /PRNewswire/ -- Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Savings Bank, FSB ("Severn"), today announced results for the quarter and six months ended June 30, 2011.  Net loss for the second quarter was $846,000 (unaudited), or ($.13) per share, compared to net income of $593,000 (unaudited), or $.02 per share for the second quarter of 2010.  Net loss was $399,000 or ($.13) per share for the six months ended June 30, 2011, compared to net income of $65,000, or ($.08) per share for the six months ended June 30, 2010.  Earnings per share is calculated using net income (loss) available for common shareholders, which is net income (loss) less preferred stock dividends.

The net loss for the quarter is a result of management's decision to add approximately $3 million to the loan loss reserves during the quarter for potential losses on primarily acquisition and development loans.  While non-performing assets continue to decrease, and loan delinquencies improve, management elected to add to the reserves as it continues to assess its portfolio.  

"While we are not pleased with its impact, management is comfortable with the decision to act in a prudent and cautious manner with respect to the allowance for loan losses.  Were it not for this added reserve, the bank would have had another profitable quarter," said Alan J. Hyatt, president and chief executive officer.  Mr. Hyatt continued "With the continued sluggish economy nonperforming loans remain one of our toughest challenges. However, due to our diligence in this area our overall delinquencies have decreased.  This judicious reserve decision, along with our persistent efforts to be the premier community bank for the residents and businesses of Anne Arundel County, continue to put the Bank in an excellent position for a strong future."

About Severn

Founded in 1946, Severn is a full-service community bank offering a wide array of personal and commercial banking products as well as residential and commercial mortgage lending.  It has assets of approximately $940 million and four branches located in Annapolis, Edgewater and Glen Burnie, Maryland.  The bank specializes in exceptional customer service and holds itself and its employees to a high standard of community contribution.  Severn is on the Web at www.severnbank.com.

Forward Looking Statements

In addition to the historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties that may be affected by various factors that may cause actual results to differ materially from those in the forward-looking statements.  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 reserve and statements about the economy.  The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "will," "would," "could," "should," "guidance," "potential," "continue," "project," "forecast," "confident," and similar expressions are typically used to identify forward-looking statements.  The Company's 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 both in the nation and Company's general market area, federal and state regulation, competition and other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission (the "SEC"), including "Item 1A. Risk Factors" contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

SOURCE Severn Bancorp, Inc.