ANNAPOLIS, MD (July 15, 2011) — 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.”
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