Severn Bancorp Announces 76% Increase in Fourth Quarter Earnings

ANNAPOLIS, Md., Jan. 23, 2012Severn"), today announced net income of $1,067,000or $.06per share for the fourth quarter, an increase of $460,000, or 76%  compared to net income of $607,000, or $.02per share for the fourth quarter of 2010.  Net income was $1,219,000, or $(.05)per share for the year ended December 31, 2011, compared to net income of $1,157,000, or $(.06)per share for the year ended December 31, 2010.  Earnings per share is calculated using net income available for common shareholders, which is net income less preferred stock dividends.

"We are pleased to report both a quarterly and annual increase in earnings, and are pleased with the success we are experiencing in building our community mortgage and commercial lending departments to accommodate customers who are seeking a bank that offers the breadth of products and services needed in today's economy.  We see tremendous opportunity ahead of us by providing top notch personal service to the residents and businesses of Anne Arundel County," said Alan J. Hyatt, president and chief executive officer.  Mr. Hyatt continued, "We continue to share our message of our commitment to the community and to our many customers who place value in a banking relationship with an organization they can trust.  Severnis pleased to provide full service banking right here in their backyard."

About Severn Savings Bank:

Founded in 1946, Severnis 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 $900 millionand four branches located in Annapolis, Edgewaterand Glen Burnie, Maryland. The bank specializes in exceptional customer service and holds itself and its employees to a high standard of community contribution. Severn.

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.  Severn'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 in Severn's general market area, federal and state regulation, competition and other factors detailed from time to time in Severn's filings with the Securities and Exchange Commission (the "SEC"), including "Item 1A. Risk Factors" contained in Severn's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

Severn Bancorp, Inc.
Selected Financial Data
(dollars in thousands, except per share data)
(Unaudited)
				For the Three Months Ended
				December 31,	September 30,	June 30,	March 31,	December 31,
				2011	2011	2011	2011	2010
Summary Operating Results:
	Interest income			$             10,558	$             10,991	$             11,254	$             11,698	$             11,809
	Interest expense			3,659	3,856	3,946	4,126	4,448
		Net interest income		6,899	7,135	7,308	7,572	7,361
	Provision for loan losses			141	850	2,987	634	1,200
		Net interest income after provision
			for loan losses	6,758	6,285	4,321	6,938	6,161
	Non-interest income			873	628	447	562	921
	Non-interest expense			5,772	5,959	6,171	6,709	5,980
	Income (loss) before income taxes			1,859	954	(1,403)	791	1,102
	Income tax expense (benefit)			792	403	(557)	344	495
	Net income (loss)			$              1,067	$                 551	$               (846)	$                 447	$                 607
Per Share Data:
	Basic earnings (loss) per share			$                0.06	$                0.01	$               -0.13	$                0.00	$                0.02
	Diluted earnings (loss) per share			$                0.06	$                0.01	$               -0.13	$                0.00	$                0.02
	Common stock dividends per share			$                      -	$                      -	$                      -	$                      -	$                      -
	Average basic shares outstanding			10,066,679	10,066,679	10,066,679	10,066,679	10,066,679
	Average diluted shares outstanding			10,066,679	10,066,679	10,066,679	10,066,679	10,066,679
Performance Ratios:
	Return on average assets			0.12%	0.06%	-0.09%	0.05%	0.06%
	Return on average equity			1.01%	0.52%	-0.80%	0.44%	0.61%
	Net interest margin			3.27%	3.32%	3.39%	3.48%	3.37%
	Efficiency ratio*			64.84%	60.76%	60.37%	58.57%	57.84%
		*	The efficiency ratio is general and administrative expenses as a percentage of net interest income plus non-interest income
				As of
				December 31,	September 30,	June 30,	March 31,	December 31,
				2011	2011	2011	2011	2010
Balance Sheet Data:
	Total assets			$           900,628	$           926,013	$           937,372	$           967,736	$           962,543
	Total loans receivable			719,241	741,528	766,443	780,412	808,808
	Allowance for loan losses			(25,938)	(30,358)	(31,103)	(29,252)	(29,871)
		Net loans		693,303	711,170	735,340	751,160	778,937
	Deposits			652,757	678,717	687,842	718,298	714,776
	Stockholders' equity			105,930	105,215	105,005	106,213	106,100
	Bank's Tier 1 core capital to total assets			13.0%	12.4%	12.3%	12.1%	12.3%
	Book value per share			$                7.88	$                7.80	$                7.78	$                7.90	$                7.89
Asset Quality Data:
	Non-accrual loans			$             31,432	$             35,624	$             42,088	$             44,984	$             46,164
	Foreclosed real estate			19,932	19,158	17,291	18,898	20,955
		Total non-performing assets		51,364	54,782	59,379	63,882	67,119
	Total non-accrual loans to net loans			4.5%	5.0%	5.7%	6.0%	5.9%
	Allowance for loan losses			25,938	30,358	31,103	29,252	29,871
	Allowance for loan losses to total loans			3.6%	4.1%	4.1%	3.7%	3.7%
	Allowance for loan losses to total
		non-performing loans		82.5%	85.2%	73.9%	65.0%	64.7%
	Total non-accrual loans to total assets			3.5%	3.8%	4.5%	4.6%	4.8%
	Total non-performing assets to total assets			5.7%	5.9%	6.3%	6.6%	7.0%

SOURCE Severn Bancorp, Inc.