UPDATE 1-Severn Bancorp halts Q4 dividend

* Says move to conserve capital

* Says bank still "well capitalized"

Dec 18 (Reuters) - Severn Bancorp Inc (SVBI.O), the parent of Severn Savings Bank, said its board suspended common stock dividends for the fourth quarter to preserve cash.

The company had paid a dividend of 3 cents per share for the third quarter.

"While we may be through the worst part of this recession, and our capital remains well above regulatory requirements to be considered well capitalized, we have taken this further action to conserve our capital," Severn Chief Executive Alan Hyatt said in a statement.

In November, the bank signed supervisory agreements with the Office of Thrift Supervision, after the regulator raised concerns about its operating results. [ID:nBNG507800]

Shares of the Annapolis, Maryland-based company closed at $2.50 Friday on Nasdaq. (Reporting by Jochelle Mendonca in Bangalore; Editing by Gopakumar Warrier)