Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced a return to profitability in the third quarter as net income increased to $223,000 from a net loss of $1,861,000 in the second quarter of 2009.
Third quarter net income available to common shareholders after accruing for preferred stock dividends was $103,000 ($0.03 per basic and diluted common share) compared to $299,000 ($0.08 per basic and diluted common share) in the third quarter of 2008.
Results for the quarter ended September 30, 2009 included a provision for credit losses of $1.1 million compared to provisions for credit losses of $0.9 million in the third quarter of last year and $3.8 million in the second quarter of 2009. The Company increased its allowance for credit losses to $9,092,000 (3.26% of total gross loans) at September 30, 2009, compared to $4,123,000 (1.54% of total gross loans) at December 31, 2008.
“At a time of distress in the banking industry, we are pleased to report that Annapolis Bancorp earned a profit in the third quarter while continuing to fortify its reserves for credit losses,” said Richard M. Lerner, Chairman and CEO of Annapolis Bancorp, Inc. and BankAnnapolis.
Nonperforming assets at September 30, 2009 amounted to $16.2 million or 5.80% of total gross loans compared to $11.5 million or 4.20% of total gross at June 30, 2009 and $6.5 million or 2.42% of total gross loans at December 31, 2008. The third quarter increase in nonperforming assets is principally attributable to the transfer of one $4.6 million commercial loan to nonaccrual status. Payments on the loan continue to be made under the terms of a forbearance agreement, and will be recognized by the Bank on a cash basis pending further developments.
The allowance for credit losses at September 30, 2009 provided 56.2% coverage of nonperforming assets compared to 63.6% at year-end 2008. The Company recorded net charge-offs of $1.1 million for the nine months ended September 30, 2009.
The Company’s total assets grew to $445.5 million at September 30, 2009 from $394.9 million at December 31, 2008, bolstered by a $45.7 million or 49.4% increase in total savings account balances since year-end 2008.
Total gross loans increased by $6.7 million or 2.5% in the third quarter and through the first nine months of 2009 the Bank’s loan portfolio grew by $10.9 million or 4.1%. “Despite challenging economic conditions, BankAnnapolis is delivering on its commitment to extend credit in the communities it serves,” said Lerner. “We are encouraged by the recent uptick in loan demand and are actively seeking new lending opportunities.”
At September 30, 2009, Annapolis Bancorp, Inc. exceeded all federal regulatory requirements for a well-capitalized institution, with a Tier 1 capital ratio of 12.6%, a total capital ratio of 13.9%, and a Tier 1 leverage ratio of 8.5%. Stockholders’ equity totaled $32.7 million at September 30, 2009 compared to $26.8 million at December 30, 2008. Book value per common share at September 30, 2009 was $6.41.
In the quarter just ended, net interest income increased by $400,000 or 11.8% compared to the same period in 2008. The net interest margin decreased to 3.52% from 3.79% in the third quarter of last year, but showed a 46 basis point improvement from 3.06% in the second quarter of 2009.
Interest income decreased by $69,000 or 1.3% in the three months just ended compared to the same period last year. A 109 basis point drop in the Company’s yield on earning assets was substantially offset by a $70.9 million or 19.9% increase in average earning assets compared to the third quarter of 2008.
Interest expense for the quarter ended September 30, 2009 decreased by $469,000 or 22.6%, as the overall cost of interest-bearing liabilities fell by 95 basis points to 1.71% from 2.66% in the same three month period last year.
Noninterest income increased 10.3% to $482,000 in the third quarter of 2009 from $437,000 in last year’s comparable period due to the Company’s expanded mortgage banking activity and gains on the sale of repossessed assets.
Noninterest expense increased by $351,000 or 14.3% in the quarter just ended compared to the same period in 2008, reflecting strategic investments in personnel and higher legal, consulting and other costs associated with the collection of delinquent loans and the management of nonperforming assets, as well as higher operating expenses related to a new branch opened in the fourth quarter of 2008.
Through the first three quarters of 2009, the Company’s net loss totaled $2,088,000. The year-to-date net loss available to common shareholders after accruing for preferred stock dividends was $2,410,000 ($0.63 per basic and diluted common share) compared to net income available to common shareholders of $1,282,000 ($0.33 per basic and $0.32 per diluted common share) for the same period in 2008. The Bank recorded provisions for credit losses of $6.1 million and $1.4 million for the respective nine month periods ended September 30, 2009 and 2008.
BankAnnapolis serves the banking needs of small businesses, professional concerns, and individuals through eight community banking offices located in Anne Arundel and Queen Anne’s Counties in Maryland. The Bank’s headquarters building and main branch are located at 1000 Bestgate Road, directly across from the Westfield Annapolis Mall.
Certain statements contained in this release, including without limitation, statements containing the words "believes," "plans," "expects," "anticipates," and words of similar import, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company undertakes no obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
| Annapolis Bancorp, Inc. and Subsidiaries | ||||||||
| Consolidated Balance Sheets | ||||||||
| as of September 30, 2009 and December 31, 2008 | ||||||||
| ($000) | ||||||||
| (Unaudited) | (Audited) | |||||||
| September 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
| Assets | ||||||||
| Cash and due from banks | $ | 7,205 | $ | 4,346 | ||||
| Interest bearing deposits with banks | 7,000 | 1,000 | ||||||
| Federal funds sold | 15,631 | 23,768 | ||||||
| Investment securities, available for sale | 125,335 | 83,685 | ||||||
| Loans, net of allowance of $9,092 and $4,123 | 269,482 | 263,749 | ||||||
| Loans held for sale | 570 | 344 | ||||||
| Accrued interest receivable | 1,827 | 1,768 | ||||||
| Deferred income taxes | 3,845 | 1,747 | ||||||
| Premises and equipment | 9,383 | 9,651 | ||||||
| Investment in bank owned life insurance | 4,192 | 4,085 | ||||||
| Other assets | 1,062 | 773 | ||||||
Total Assets | $ | 445,532 | $ | 394,916 | ||||
| Liabilities and | ||||||||
| Stockholders' Equity | ||||||||
| Deposits | ||||||||
| Noninterest bearing | $ | 42,069 | $ | 39,065 | ||||
| Interest bearing | 307,488 | 261,562 | ||||||
| Total deposits | 349,557 | 300,627 | ||||||
Securities under agreements to repurchase | 16,556 | 12,639 | ||||||
| Long term borrowings | 40,000 | 40,000 | ||||||
| Junior subordinated debentures | 5,000 | 5,000 | ||||||
| Accrued interest and accrued expense | 1,763 | 9,836 | ||||||
| Total Liabilities | 412,876 | 368,102 | ||||||
| Stockholders' Equity | ||||||||
| Preferred stock, net | 7,967 | - | ||||||
| Common stock | 39 | 38 | ||||||
| Warrants to purchase common stock | 234 | - | ||||||
| Paid in capital | 11,443 | 11,299 | ||||||
| Retained Earnings | 13,107 | 15,517 | ||||||
| Comprehensive loss | (134 | ) | (40 | ) | ||||
| Total Equity | 32,656 | 26,814 | ||||||
| Total Liabilities and Equity | $ | 445,532 | $ | 394,916 | ||||
| Annapolis Bancorp, Inc. and Subsidiaries | |||||||||||||
| Consolidated Statements of Income | |||||||||||||
| for the Three and Nine Month Periods Ended September 30, 2009 and 2008 | |||||||||||||
| (Unaudited) | |||||||||||||
| (In thousands, except per share data) | |||||||||||||
| For the Three Months | For the Nine Months | ||||||||||||
| Ended September 30, | Ended September 30, | ||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||
| Interest Income | |||||||||||||
| Loans | $ | 3,962 | $ | 4,305 | $ | 11,844 | $ | 12,932 | |||||
| Investments | 1,419 | 1,080 | 3,795 | 3,095 | |||||||||
| Interest bearing balances with banks | 17 | 62 | 48 | 252 | |||||||||
| Federal funds sold | 6 | 26 | 46 | 255 | |||||||||
| Total interest income | 5,404 | 5,473 | 15,733 | 16,534 | |||||||||
| Interest expense | |||||||||||||
| Deposits | 1,214 | 1,619 | 4,444 | 5,346 | |||||||||
Securities sold under agreements to repurchase | 31 | 63 | 91 | 221 | |||||||||
| Borrowed funds | 312 | 315 | 927 | 916 | |||||||||
| Junior debentures | 48 | 77 | 160 | 249 | |||||||||
| Total interest expense | 1,605 | 2,074 | 5,622 | 6,732 | |||||||||
| Net interest income | 3,799 | 3,399 | 10,111 | 9,802 | |||||||||
| Provision | 1,102 | 931 | 6,113 | 1,419 | |||||||||
| Net interest income after provision | 2,697 | 2,468 | 3,998 | 8,383 | |||||||||
| Noninterest Income | |||||||||||||
| Service charges | 316 | 307 | 903 | 912 | |||||||||
| Mortgage banking | 27 | 9 | 73 | 43 | |||||||||
| Other fee income | 84 | 121 | 344 | 367 | |||||||||
| Gain on sale of loans | 47 | - | 112 | - | |||||||||
| Gain on sale of repossessed assets | 8 | - | 8 | - | |||||||||
| Total noninterest income | 482 | 437 | 1,440 | 1,322 | |||||||||
| Noninterest Expense | |||||||||||||
| Personnel | 1,543 | 1,375 | 4,785 | 4,467 | |||||||||
| Occupancy and Equipment | 377 | 336 | 1,138 | 962 | |||||||||
| Data processing expense | 208 | 208 | 640 | 595 | |||||||||
| Professional Fees | 197 | 78 | 548 | 296 | |||||||||
| Marketing expense | 9 | 97 | 216 | 300 | |||||||||
| FDIC Insurance | 139 | 45 | 464 | 89 | |||||||||
| Other operating expense | 341 | 324 | 1,108 | 1,020 | |||||||||
| Total noninterest expense | 2,814 | 2,463 | 8,899 | 7,729 | |||||||||
| Income (loss) before taxes | 365 | 442 | (3,461 | ) | 1,976 | ||||||||
| Income tax expense (benefit) | 142 | 143 | (1,373 | ) | 694 | ||||||||
| Net income (loss) | 223 | 299 | (2,088 | ) | 1,282 | ||||||||
| Preferred stock dividend and discount accretion | 120 | - | 322 | - | |||||||||
| Net income (loss) available to common shareholders | $ | 103 | $ | 299 | $ | (2,410 | ) | $ | 1,282 | ||||
| Basic earnings (loss) per common share | $ | 0.03 | $ | 0.08 | $ | (0.63 | ) | $ | 0.33 | ||||
| Diluted earnings (loss) per common share | $ | 0.03 | $ | 0.08 | $ | (0.63 | ) | $ | 0.32 | ||||
| Book value per common share | $ | 6.41 | $ | 6.77 | $ | 6.41 | $ | 6.77 | |||||
Average common shares outstanding with the effect of grants, options and warrants | 3,962,322 | 3,975,023 | 3,855,076 | 4,043,981 | |||||||||
| Annapolis Bancorp, Inc. and Subsidiaries | |||||||||||||
| Financial Ratios and Average Balance Highlights | |||||||||||||
| (In thousands) | |||||||||||||
| For the Three Months | For the Nine Months | ||||||||||||
| Ended September 30, | Ended September 30, | ||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Performance Ratios (annualized) | |||||||||||||
| Return on average assets | 0.20 | % | 0.32 | % | (0.63 | %) | 0.46 | % | |||||
| Return on average common equity | 3.65 | % | 4.59 | % | (11.16 | %) | 6.48 | % | |||||
| Average equity to average assets | 7.19 | % | 6.88 | % | 7.23 | % | 7.04 | % | |||||
| Net interest margin | 3.52 | % | 3.79 | % | 3.18 | % | 3.67 | % | |||||
| Efficiency ratio | 65.73 | % | 64.21 | % | 77.04 | % | 69.48 | % | |||||
| Other Ratios | |||||||||||||
| Allowance for credit losses to loans | 3.26 | % | 1.35 | % | 3.26 | % | 1.35 | % | |||||
| Nonperforming to gross loans | 5.80 | % | 2.13 | % | 5.80 | % | 2.13 | % | |||||
| Net charge-offs to average loans | 0.19 | % | 0.00 | % | 0.42 | % | 0.07 | % | |||||
| Tier 1 capital ratio | 12.6 | % | 11.6 | % | 12.6 | % | 11.6 | % | |||||
| Total capital ratio | 13.9 | % | 12.9 | % | 13.9 | % | 12.9 | % | |||||
| Average Balances | |||||||||||||
| Assets | 446,672 | 376,234 | 444,608 | 375,797 | |||||||||
| Earning assets | 427,692 | 356,774 | 424,549 | 356,430 | |||||||||
| Loans, gross | 274,852 | 258,399 | 271,843 | 249,962 | |||||||||
| Interest-bearing liabilities | 373,013 | 309,942 | 371,978 | 309,784 | |||||||||
| Stockholders' equity | 32,133 | 25,871 | 32,148 | 26,447 | |||||||||
Contacts:
Richard M. Lerner
410-224-4455
