Shares of Severn Bancorp Inc. fell Tuesday after the Annapolis, Md., company announced that it has come under more regulatory scrutiny.

The $996 million-asset Severn, which is well capitalized, said the Office of Thrift Supervision entered into supervisory agreements with the company and its thrift unit because of findings in a March exam.

The agreements require the thrift unit to revise its policies regarding problem assets, the use of interest reserves, loan modifications and its allowance for loan and lease losses. The thrift unit also must develop and adopt a program for managing risks associated with concentrations of credit.

Severn has been under more stress lately. It swung to a $4.36 million loss in the third quarter, from a $587,000 profit the year earlier, as its provision for loan losses surged 211%, to $8.9 million.

The company's stock plunged more than 25% in morning trading but regained some ground later in the day. It closed at $2.32 a share, down 17%.

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