Severn Bancorp, Inc. Announces Third Quarter Earnings

Annapolis, MD (October 29, 2018) – Severn Bancorp, Inc., (Nasdaq: SVBI) parent company of Severn Bank, today announced net income of $2.2 million for the three months ending September 30, 2018 versus $1.3 million for the same quarter in 2017. This is an increase of 72% year over year for the period. On a diluted per share basis, earnings were $0.17 versus $0.10 for the quarters ended September 30, 2018 and 2017, respectively. Net income for the nine months ended September 30, 2018 was $6.0 million, an 89% increase over net income of $3.2 million for the same nine month period in 2017.

“We are pleased to report continued growth in earnings,” stated Alan J. Hyatt, President and Chief Executive Officer. Mr. Hyatt continued, “We have seen growth in our net interest income as well as our fee based income streams. We paid dividends the past three quarters and hope to continue that trend. We remain focused on continuous improvement in our operations, exploring new products and markets, and enhancing long term shareholder value.”

Net interest income increased 16% during the third quarter of 2018. Net interest income was $7.3 million during the third quarter of 2018 versus $6.3 million during the third quarter of 2017. Net interest margin improved to 3.65% for the three months ending September 30, 2018 from 3.38% for the same period in 2017. Net interest income increased to $21.3 million for the first nine months of 2018 from $17.9 million for the same time frame in 2017.

Non-interest income increased 68% during the quarter ended September 30, 2018. Non-interest income was $2.3 million for the three months ended September 30, 2018, up from $1.4 million as of September 30, 2017. For the nine months ended September 30, 2018, non-interest income was $6.4 million. This represents a 70% increase over the $3.8 million reported for the third quarter of 2017. Severn Bank experienced a significant increase in mortgage banking revenue of 122% in the third quarter of 2018 versus the third quarter of 2017. Year to date mortgage banking revenue saw an increase of 71% for the first nine months of 2018 versus 2017. The company also saw significant increases in fees on deposit accounts, which is included in other non-interest income.

Non-interest expenses were $7.0 million for the three months ended September 30, 2018 versus $5.5 million for the same period in 2017. For the nine months ended September 30, 2018, non-interest expenses were $19.7 million, which is an increase of 16% over the same period in 2017. The increase is primarily due to higher commissions paid to mortgage loan officers as a result of increased production.

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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 $889 million and six branches located in Annapolis, Edgewater, Severna Park, Lothian/Wayson’s Corner 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, 2017.