Annapolis Bancorp Inc. formerly known as Annapolis National Bancorp Inc. is a registered Bank Holding Company for Annapolis National Bank. The Bank currently operates as a full service commercial bank. Annapolis Bancorp Inc. has a market cap of $11 million; its shares were traded at around $2.85 with and P/S ratio of 0.5. Annapolis Bancorp Inc. had an annual average earning growth of 13.7% over the past 5 years.
Highlight of Business Operations:Total assets at June 30, 2009 were $459.1 million, an increase of $64.2 million or 16.3% from total assets at December 31, 2008 of $394.9 million. The increase in total assets was due to the success of the Companys Superior Savings deposit campaign that raised $56 million in net new deposits through the first six months of 2009. The excess liquidity derived from the campaign resulted in the increase in interest bearing deposits with banks and investment securities available for sale. Investment securities available for sale increased $47.4 million or 56.6% increasing to $131.1 million from $83.7 million on December 31, 2008, while interest bearing deposit with banks increased to $22.0 million from $1.0 million at December 31, 2008.
Gross loans at June 30, 2009 were $272.4 million, an increase of $4.2 million or 1.6% from gross loans of $268.2 million at December 31, 2008. The increase resulted from net additions to construction loans of $5.3 million, commercial loans of $1.9 million and loans held for sale of $1.1 million offset by decreases in real estate loans of $3.4 million and consumer loans of $0.7 million. The decrease in real estate loans was the result of adjustable rate mortgages refinanced outside of the Bank.
The allowance for credit losses increased $4.4 million rising to $8.5 million at June 30, 2009 compared to $4.1 million at December 31, 2008. The increase in the allowance is attributed to the addition of a provision for credit losses of $5.0 million and the impact on the allowance of net charge-offs of $613,000. The Company recorded the significant increase in the allowance for credit losses to provide for the deterioration of the Companys loan portfolio primarily related to the reclassification and downgrades for several loans in the commercial term, commercial real estate and builder loan categories as nonaccrual. The Company recorded charge-offs of $719,000 for the six months ended June 30, 2009 and received recoveries of $106,000 for same period. Management makes periodic provisions to the allowance for credit losses to maintain the allowance at an acceptable level commensurate with managements assessment of the credit risk inherent in the loan portfolio as of the balance sheet date. At June 30, 2009 and December 31, 2008, the allowance for credit losses to total loans was 3.13% and 1.54%, respectively. Nonperforming assets as of June 30, 2009 and December 31, 2008 were $11.5 million and $6.5 million, respectively. At June 30, 2009 Nonperforming assets included $11.2 million in nonaccrual loans and $302,000 in other assets. At December 31, 2008 nonperforming assets included $6.3 million in nonaccrual loans and $182,000 in other assets.
Deposits of $362.2 million at June 30, 2009 represent an increase of $61.6 million or 20.5% from December 31, 2008 deposits of $300.6 million. The increase was due to the success of the Companys Superior Savings campaign with savings balances increasing $56.1 million to $148.5 million at June 30, 2009 from $92.4 million at December 31, 2008, an increase of 60.7%. Money market account balances decreased $4.3 million or 8.5% as balances shifted to the Companys Superior Savings product. Certificates of deposit which include deposits placed with the Certificate of Deposit Account Registry Service (CDARS) increased $4.4 million or 5.15% to $88.9 million at June 30, 2009 from $84.5 million at December 31, 2008.
General. The Company recorded a loss of $2.3 million for the six months ended June 30, 2009, or $0.65 per basic and diluted common share, compared to net income of $1.0 million, or $0.25 per basic and $0.24 per diluted common share, for the six months ended June 30, 2008. The net loss available to common shareholders for the six months ended June 30, 2009 was $2.5 million compared to net income of $1.0 million available to common shareholders for the six months ended June 30, 2008. Net interest income decreased by $90,000 or 1.4% for the six months ended June 30, 2009 compared to the same period in 2008. The provision for credit losses increased $4.5 million for the six months ended June 30, 2009 compared to the same period in 2008.
Noninterest Expense. Total noninterest expense increased by $819,000 or 15.6% for the six months ended June 30, 2009 compared to the same period in 2008. The increase in total noninterest expense during the first six months of 2009 compared with the same period in 2008 resulted from increased FDIC expense of $281,000 related to increased deposit insurance premiums and a Special Assessment of $212,000 that was accrued in the second quarter of 2009. Costs associated with a new branch totaling $216,000, which was not open in the first six months of 2008, contributed to the increase in noninterest expense as did increased personnel expense of $150,000 with $84,000 related to the new branch and $66,000 related to additions to staff. Legal expense, a component of professional fees, increased by $111,000 over the same six month period in 2008 due to cost associated with participating in the TARP, to loan collection efforts and to costs associated with ongoing tenant issues at the Banks Market House branch. Data processing expense increased by $45,000 due to the addition of new products. and services and to increases in account volume. Included in professional fees are consulting fees.
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