Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced net income of $617,000 for the first quarter of 2010, an increase of $1,067,000 from a net loss of $450,000 in the first quarter of 2009. On a sequential quarter basis, net income increased $236,000 or 62% from $381,000 reported for the three months ended December 31, 2009.
First quarter net income available to common shareholders after accruing for preferred stock dividends was $497,000 ($0.13 per basic and diluted common share), compared to a loss of $532,000 ($0.14 per basic and diluted common share) available to common shareholders in the first quarter of 2009. The first quarter 2010 results generated a return on average common equity of 7.79%.
Nonperforming assets at March 31, 2010 amounted to $14.1 million or 3.26% of total assets, a reduction of $5.2 million compared to $19.3 million or 4.35% at December 31, 2009. The 27% sequential quarter improvement resulted primarily from a commercial loan payoff of $4.6 million and the restoration of a $1.6 million real estate development loan to performing status.
“We are pleased to begin the year with a significant increase in earnings and a measurable reduction in nonperforming assets, and are committed to building on this momentum throughout 2010,” said Chairman and CEO Richard M. Lerner. “We remain focused on proactively managing our troubled assets, driving improved operating results, and strengthening our core banking business.”
In response to the sluggish economic recovery, the Company strategically lowered total assets to $434.4 million at March 31, 2010, down 2.2% or $9.9 million compared to $444.3 million at December 31, 2009. Loan demand continued to be soft in the first quarter, with gross loans totaling $277.8 million as of March 31, 2010, down $4.2 million from $282.0 million at December 31, 2009. Additionally, the Company deleveraged by paying down $5.0 million in borrowings, and lowered the average maturity of its investment portfolio. These actions reduced the balance sheet exposure to potentially higher future interest rates while maintaining sufficient liquidity to capitalize on lending opportunities as the economy rebounds.
The allowance for credit losses totaled $7.7 million (2.79% of total gross loans) at March 31, 2010 compared to $7.9 million (2.81% of total gross loans) at year-end 2009. In the first quarter of 2010, the Company recognized net charge-offs of $416,000 and added $236,000 to the allowance via provisions for credit losses.
At March 31, 2010, Annapolis Bancorp, Inc. exceeded all federal regulatory requirements for a well-capitalized institution, with a Tier 1 capital ratio of 12.8%, a total capital ratio of 14.1%, and a Tier 1 leverage ratio of 8.8%. Stockholders’ equity totaled $34.0 million at March 31, 2010 compared to $32.6 million at December 31, 2009. Book value per common share at March 31, 2010 was $6.71.
“Executing an active, but conservative balance sheet management strategy enabled us to tactically navigate many of the challenges of the recent economic downturn,” said Lerner. “Our resulting strong capital and liquidity positions bolster Annapolis Bancorp’s commitment to building a local bank that both consumers and businesses can turn to for their savings and borrowing needs.”
In the quarter just ended, net interest income increased by $1.1 million or 37.4% compared to the first quarter of 2009, and the Company’s net interest margin expanded to 3.90% from 2.95%. Interest income improved by $363,000 or 7.3% compared to the same period last year, as average earning assets increased by $16.4 million or 4.1%. Interest expense decreased by $731,000 or 35.5% due to a drop in the overall cost of interest-bearing liabilities from 2.37% in the first quarter of 2009 to 1.48% in the quarter just ended. A provision for credit losses of $236,000 was recorded for the three months ended March 31, 2010 compared to $1.2 million in the same period of last year.
Noninterest income decreased 8.4% to $412,000 in the first quarter of 2010 from $450,000 in last year’s comparable period reflecting the recognition of $55,000 in net losses on the sale of investment securities in 2010, and lower other fee income and service charges. Partially offsetting these decreases, gains on the sale of foreclosed assets increased by $37,000 and mortgage banking revenue was $29,000 higher in the three months ended March 31, 2010 compared to the first quarter of 2009.
Noninterest expense increased 11.4% in the quarter just ended compared to the same period last year, reflecting $159,000 in additional personnel expense resulting from increased benefit charges, costs associated with the management of nonperforming assets, and additional staffing in the residential mortgage and commercial real estate lending divisions. For the three months ended March 31, 2010, FDIC expense increased to $150,000 from $53,000 in the first quarter of 2009.
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 March 31, 2010 and December 31, 2009 | ||||||||||
($000) | ||||||||||
| (Unaudited) | (Audited) | |||||||||
| March 31, | December 31, | |||||||||
| 2010 | 2009 | |||||||||
| Assets | ||||||||||
| Cash and due from banks | $ | 4,021 | $ | 5,936 | ||||||
| Interest bearing deposits with banks | 8,178 | 10,000 | ||||||||
| Federal funds sold | 21,090 | 8,828 | ||||||||
| Investment securities, available for sale | 104,892 | 117,883 | ||||||||
| Federal Reserve and Federal | ||||||||||
| Home Loan Bank stock | 3,260 | 3,260 | ||||||||
| Loans held for sale | 1,401 | 3,296 | ||||||||
| Loans, net of allowance of $7,746 and $7,926 | 268,618 | 270,736 | ||||||||
| Premises and equipment | 9,143 | 9,274 | ||||||||
| Accrued interest receivable | 1,640 | 1,934 | ||||||||
| Deferred income taxes | 3,352 | 3,902 | ||||||||
| Investment in bank owned life insurance | 4,264 | 4,226 | ||||||||
| Real estate owned | 1,766 | 2,398 | ||||||||
| Other assets | 2,748 | 2,659 | ||||||||
| Total Assets | $ | 434,373 | $ | 444,332 | ||||||
| Liabilities and | ||||||||||
| Stockholders' Equity | ||||||||||
| Deposits | ||||||||||
| Noninterest bearing | $ | 40,319 | $ | 40,834 | ||||||
| Interest bearing | 304,716 | 309,629 | ||||||||
| Total deposits | 345,035 | 350,463 | ||||||||
Securities under agreements to repurchase | 13,146 | 14,642 | ||||||||
| Long term borrowings | 35,000 | 40,000 | ||||||||
| Junior subordinated debentures | 5,000 | 5,000 | ||||||||
| Accrued interest and accrued expense | 2,181 | 1,595 | ||||||||
| Total Liabilities | 400,362 | 411,700 | ||||||||
| Stockholders' Equity | ||||||||||
| Preferred stock | 8,004 | 7,985 | ||||||||
| Common stock | 39 | 39 | ||||||||
| Warrants to purchase common stock | 234 | 234 | ||||||||
| Paid in capital | 11,592 | 11,501 | ||||||||
| Retained Earnings | 13,864 | 13,367 | ||||||||
| Comprehensive income (loss) | 278 | (494 | ) | |||||||
| Total Equity | 34,011 | 32,632 | ||||||||
Total Liabilities and Equity | $ | 434,373 | $ | 444,332 | ||||||
| Annapolis Bancorp, Inc. and Subsidiaries | |||||||||||
| Consolidated Statements of Income | |||||||||||
| for the Three Month Periods Ended March 31, 2010 and 2009 | |||||||||||
| (Unaudited) | |||||||||||
| (In thousands, except per share data) | |||||||||||
| For the Three Months | |||||||||||
| Ended March 31, | |||||||||||
| 2010 | 2009 | ||||||||||
| Interest Income | |||||||||||
| Loans | $ | 4,120 | $ | 3,927 | |||||||
| Investments | 1,217 | 1,030 | |||||||||
| Interest bearing balances with banks | 5 | 7 | |||||||||
| Federal funds sold | 7 | 22 | |||||||||
| Total interest income | 5,349 | 4,986 | |||||||||
| Interest expense | |||||||||||
| Deposits | 964 | 1,674 | |||||||||
Securities sold under agreements to repurchase | 21 | 24 | |||||||||
| Borrowed funds | 302 | 306 | |||||||||
| Junior debentures | 43 | 57 | |||||||||
| Total interest expense | 1,330 | 2,061 | |||||||||
| Net interest income | 4,019 | 2,925 | |||||||||
| Provision | 236 | 1,208 | |||||||||
| Net interest income after provision | 3,783 | 1,717 | |||||||||
| Noninterest Income | |||||||||||
| Service charges | 267 | 280 | |||||||||
| Mortgage banking | 22 | 19 | |||||||||
| Other fee income | 104 | 140 | |||||||||
| Gain on sale of loans | 42 | 16 | |||||||||
| Loss on sale of securities | (55 | ) | - | ||||||||
| Gain (loss) on sale of REO and repossessed assets | 32 | (5 | ) | ||||||||
| Total noninterest income | 412 | 450 | |||||||||
| Noninterest Expense | |||||||||||
| Personnel | 1,784 | 1,625 | |||||||||
| Occupancy and Equipment | 417 | 388 | |||||||||
| Data processing expense | 208 | 216 | |||||||||
| Professional Fees | 146 | 123 | |||||||||
| Marketing expense | 101 | 108 | |||||||||
| FDIC expense | 150 | 53 | |||||||||
| Other operating expense | 407 | 372 | |||||||||
| Total noninterest expense | 3,213 | 2,885 | |||||||||
| Income (loss) before taxes | 982 | (718 | ) | ||||||||
| Income tax expense (benefit) | 365 | (268 | ) | ||||||||
| Net income (loss) | 617 | (450 | ) | ||||||||
| Preferred stock dividend and discount accretion | 120 | 82 | |||||||||
| Net income (loss) available to common shareholders | $ | 497 | $ | (532 | ) | ||||||
| Basic earnings (loss) per common share | $ | 0.13 | $ | (0.14 | ) | ||||||
| Diluted earnings (loss) per common share | $ | 0.13 | $ | (0.14 | ) | ||||||
| Book value per common share | $ | 6.71 | $ | 6.80 | |||||||
Average common shares outstanding with the effect of | 3,963,139 | 3,849,449 | |||||||||
| Annapolis Bancorp, Inc. and Subsidiaries | |||||||
| Financial Ratios and Average Balance Highlights | |||||||
| (Unaudited) | |||||||
| (In thousands) | |||||||
| For the Three Months | |||||||
| Ended March 31, | |||||||
| 2010 | 2009 | ||||||
| Performance Ratios (annualized) | |||||||
| Return on average assets | 0.57% | (0.43%) | |||||
| Return on average equity | 7.41% | (5.78%) | |||||
| Return on average common equity | 7.79% | (6.96%) | |||||
| Average equity to average assets | 7.67% | 7.49% | |||||
| Net interest margin | 3.90% | 2.95% | |||||
| Efficiency ratio | 72.51% | 85.48% | |||||
| Other Ratios | |||||||
| Allowance for credit losses to loans | 2.79% | 1.91% | |||||
| Nonperforming assets to total assets | 3.26% | 2.49% | |||||
| Net charge-offs to average loans | 0.15% | 0.06% | |||||
| Tier 1 capital ratio | 12.8% | 13.4% | |||||
| Total capital ratio | 14.1% | 14.7% | |||||
| Average Balances | |||||||
| Assets | 439,911 | 422,140 | |||||
| Earning assets | 418,170 | 401,796 | |||||
| Loans, gross | 277,266 | 269,308 | |||||
| Interest-bearing liabilities | 365,059 | 352,351 | |||||
| Stockholders' equity | 33,760 | 31,624 | |||||
| Common stockholder's equity | 25,843 | 26,258 | |||||
Contacts:
Edward J. Schneider, 410-224-4455
