Severn Bancorp Announces $3.3 Million Increase in Fourth Quarter Earnings

ANNAPOLIS, MD (January 20, 2011) — Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Savings Bank, FSB (“Severn”), today announced net income of $607,000 for the fourth quarter, an increase of $3.3 million compared to a net loss of $2.7 million for the fourth quarter of 2009. Net income was $1.2 million, or ($.06) per share for the year ended December 31, 2010, compared to a net loss of $15.2 million, or ($1.68) per share for the year ended December 31, 2009. Earnings per share is calculated using net income available for common shareholders, which is net income less preferred stock dividends. At December 31, 2010, Severn also continued its trend of regulatory capital ratios exceeding the levels required to be considered “well capitalized” under applicable federal banking regulations, including its core (leverage) ratio of approximately 12.3% compared to the regulatory requirement of 5% for “well capitalized” status.

“We are happy to report a year over year increase in earnings, and while we remain cautious about the slow economic recovery, we are encouraged by positive economic signs, and are pleased with the results we are seeing with our continued shift toward being a full-service relationship bank. Going forward we see particular opportunity in our ability to assist local businesses on their road to recovery with our increased emphasis on commercial lending,” said Alan J. Hyatt, president and chief executive officer. Mr. Hyatt continued “We will continue our hard work and our commitment to our vision of being recognized as the premier community bank by Anne Arundel County residents and businesses”