Severn Bancorp (SVBI) 8-K Severn Bancorp Announces 76% Increase in Fourth Quarter Earnings

EXHIBIT 99.1

SEVERN BANCORP, INC.

FOR IMMEDIATE RELEASE                                                Contact:

 Thomas G. Bevivino

 Chief Operating Officer &

 Executive Vice President

 Email: tbevivino@severnbank.com

 Phone: 410.260.2000

Severn Bancorp Announces 76% Increase in Fourth Quarter Earnings

Annapolis, MD – Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Savings Bank, FSB (“Severn”), today announced net income of $1,067,000 or $.06 per share for the fourth quarter, an increase of  $460,000, or 76%  compared to net income of  $607,000, or $.02 per 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.  Severn is pleased to provide full service banking right here in their backyard.”

About Severn Savings Bank:

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 $900 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.

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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	%