Severn Bancorp, Inc. Announces Fourth Quarter Earnings and Year End Results

FOR IMMEDIATE RELEASE

Annapolis, MD (January 26, 2017) – Severn Bancorp, Inc., (“the Company”),(Nasdaq: SVBI) parent company of Severn Bank (“Severn”), today announced net income of $1,103,000 or $.08 per diluted share for the fourth quarter of 2016, a slight increase compared to net income of $1,078,000 or $.05 per diluted share for the fourth quarter of 2015. Net income was $15,539,000 or $1.19 per diluted share for the year ended December 31, 2016, compared to net income of $4,535,000 or $.21 per diluted share for the year ended December 31, 2015. The 2016 earnings included a non-recurring income tax benefit of approximately $11,837,000, resulting from a reversal of a net deferred tax asset valuation allowance which was recorded in the second quarter of 2016.  Diluted earnings per share is calculated using net income available for common shareholders, which is net income less preferred stock dividends and discount amortization. The Company did see a 4.8% decrease in interest expense during the year ended December 31, 2016 as compared to the year ended December 31, 2015. This reduction stems from a focused effort to replace high cost borrowings with core deposits resulting in a lower cost of funds and ultimately an improvement in net interest margin.

“The fourth quarter results remain steady,” stated Alan J. Hyatt, President and Chief Executive Officer. Mr. Hyatt continued, “Our real work has been on reducing our cost of funds and growing our community banking presence. We have been focused on relationships and pulling in deposits along with those relationships. We want to show the residents and businesses of Anne Arundel County what we have to offer and how Severn can work for them.  With retail branches in Edgewater, Annapolis, Severna Park, and Glen Burnie we continue to expand our commitment to the businesses and residents of this County.”

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About Severn 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 $790 million and five branches located in Annapolis, Edgewater and Glen Burnie, and Severna Park, Maryland. The bank specializes in exceptional customer service and holds itself and its employees to a high standard of community contribution. Severn Bank is a trade name used by Severn Savings Bank, FSB. 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, 2015.