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Annapolis Bancorp Inc. Reports Operating Results (10-Q)

May 13, 2010 | About:
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10qk

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Annapolis Bancorp Inc. (ANNB) filed Quarterly Report for the period ended 2010-03-31.

Annapolis Bancorp Inc. has a market cap of $16.3 million; its shares were traded at around $4.15 with and P/S ratio of 0.7. Annapolis Bancorp Inc. had an annual average earning growth of 18.6% over the past 10 years.
This is the annual revenues and earnings per share of ANNB over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of ANNB.


Highlight of Business Operations:

Management believes this approach effectively measures the risk associated with any particular loan or group of loans. The Bank’s Board of Directors engages an independent loan review consultant to evaluate the adequacy of the Bank’s allowance for credit losses. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for credit losses. Such agencies may require the Bank to make additional provisions for estimated credit losses based upon judgments different from those of management. The Bank recorded a total provision for credit losses of $236,000 for the three month period ended March 31, 2010 and $1.2 million for the same period in 2009. The aggregate provision was based upon the results of quarterly evaluations using a combination of factors including the level of nonperforming loans, the Bank’s growth in total gross loans and the Bank’s net credit loss experience. Total gross loans, including loans held for sale, decreased by $4.2 million for the three months ended March 31, 2010. The Bank recorded charge-offs of $421,000 on loans deemed uncollectible and recovered $5,000 on previously charged-off loans. As of March 31, 2010, the Bank’s allowance for credit losses was $7.7 million or 2.79% of total loans and 63.4% of nonperforming loans as compared to $7.9 million, or 2.81% of total loans and 47.2% of nonperforming loans as of December 31, 2009.

The $14.1 million in nonperforming assets at March 31, 2010 included $11.7 million in nonaccrual loans, $471,000 in loans delinquent 90 days or more and $1.9 million in other assets. Of the $11.7 million in nonaccrual and loans delinquent 90 days or more at March 31, 2010, $8.7 million were secured by real estate, $2.3 million were commercial loans and $747,000 were consumer and other loans. At December 31, 2009 assets classified as nonperforming totaled $19.3 million and consisted of $16.8 million in nonaccrual loans and loans delinquent 90 days or more and $2.5 million in other assets. Included in the $16.8 million of nonaccrual and loans delinquent 90 days or more was $9.5 million of loans secured by real estate, $6.7 million of commercial and $517,000 of consumer and other loans.

down $4.2 million from $282.0 million at December 31, 2009. The decrease resulted from the sale of $1.9 million (net of new loans originated) of mortgage loans held for sale and the payoff of $1.2 million in commercial loans. Additionally, the Company deleveraged by paying down $5.0 million in Federal Home Loan Bank convertible debt, and lowered the average maturity of its investment portfolio by selling a number of longer term government agency securities and several private issued mortgage-backed securities. The balance of investment securities decreased $13.0 million or 11.0% compared to December 31, 2009. The proceeds from the sale of securities were temporarily placed in federal funds sold. Balances placed in federal funds sold as of March 31, 2010 increased $12.3 million or 138.9% since December 31, 2009. 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.

General. The Company recorded net income for the three months ended March 31, 2010 of $617,000, an increase of $1.1 million from a net loss of $450,000 in the first quarter of 2009. Net income available to common shareholders was $497,000 or $0.13 per basic and diluted common share, compared to a net loss available to common shareholders of $532,000, or ($0.14) per basic and diluted common share, for the three months ended March 31, 2009. Net interest income improved by $1.1 million or 37.4% for the three months ended March 31, 2010 compared to the same in period in 2009. The Bank recorded $236,000 in provision for credit losses during the three months ended March 31, 2010, compared to $1.2 million in provision for credit losses during the same period in 2009.

Interest Expense. Interest expense decreased by $731,000 or 35.5% for the three months ended March 31, 2010 compared to the three months ended March 31, 2009 while average interest-bearing deposit balances increased $13.8 million. Interest expense on interest-bearing deposits for the quarter ending March 31, 2010 was $964,000 compared to $1.7 million for the same period in 2009, a 42.4% decrease. The decrease in interest expense was due to the lower cost of all interest-bearing deposit types with the yield dropping to 1.27% for the three months ended March 31, 2010 compared to 2.30% for the three months ended March 31, 2009. The cost of certificates of deposit decreased to 2.06% from 3.20% for the quarter ended March 31, 2010 compared to the same period in 2009. The yield on the Bank’s savings account that in 2009 included the impact of a special promotion of the Bank’s “Superior Savings” decreased to 1.13% from 2.53% while the yield on money market accounts decreased to 0.76% from 1.03% for the quarter ended March 31, 2009. The total cost of interest-bearing liabilities decreased for the quarter ended March 31, 2010 to 1.48% from 2.37% for the quarter ended March 31, 2009. The Company’s overall cost of funds decreased to 1.33% from 2.15% for the same periods. Interest expense on long-term borrowings and junior subordinated debentures was $345,000 for the three months ended March 31, 2010 compared to $363,000 for the three months ended March 31, 2009, a decrease of $18,000 as average long-term borrowings decreased slightly to $39.3 million from $40.0 million and the cost of the junior subordinated debt decreased to 3.49% for the current quarter from 4.62% for the quarter ended March 31, 2009.

Provision for Credit Losses. The Company recorded a provision for credit losses of $236,000 for the three months ended March 31, 2010 compared to $1.2 million for the same period in 2009. The Bank recorded net charge-offs of $416,000 for the quarter ended March 31, 2010 compared to net charge-offs of $171,600 for the three months ended March 31, 2009. Nonperforming assets at quarter-end of $14.1 million were comprised of $11.7 million in nonaccrual loans, $471,000 of loans past due greater than ninety days and $1.9 million in other assets.

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