2nd Quarter Earnings Increase by $1.9 Million at Severn Bancorp

Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Savings Bank, FSB (“Severn”), today announced net income of $1,097,000 or $.07 per share for the second quarter of 2012 compared to a net loss of $846,000 or $(.13) per share for the second quarter of 2011 and compared to net income of $472,000 or $.00 per share, for the quarter ended March 31, 2012.  Earnings per share is calculated using net income available for common shareholders, which is net income less preferred stock dividends.

“We are encouraged by the results from this quarter. We have continued to be persistent and work hard, and it is beginning to show,” stated Alan J. Hyatt, president and chief executive officer.  Mr. Hyatt continued “We certainly owe this improvement in earnings to our customers who have continued to support a community bank like Severn for years as well as to our committed employees who have made it their mission to strengthen their company during challenging economic conditions. We know we still face challenges, but I feel confident we have the plan, tools, and staff to continue the upward trend and improve returns to shareholders.  We continue to monitor our problem loans closely and take a conservative accounting approach to them. While impaired loans have decreased from March 31, 2012, we decided to move over $10 million of loans previously classified as impaired to non-accrual status at June 30, 2012 in an effort to reflect the loans’ interest income in a more conservative manner.”

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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.

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, 2011.