Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced net income of $299,000 for the third quarter of 2010, an increase of $76,000 or 34% from net income of $223,000 in the third quarter of 2009.
After accruing for preferred stock dividends, third quarter 2010 net income available to common shareholders increased $73,000 or 71% to $176,000 ($0.04 per basic and diluted common share) from $103,000 ($0.03 per basic and diluted common share) available to common shareholders in the year-ago period.
For the nine months ended September 30, 2010, net income of $1,354,000 increased by $3,442,000 from a loss of $2,088,000 in the same period of 2009. Net income available to common shareholders totaled $990,000 ($0.25 per basic and diluted common share) compared to a loss of $2,410,000 ($0.63 per basic and diluted common share) in the first nine months of 2009.
Results for the quarter ended September 30, 2010 included a provision for credit losses of $622,000 compared to a provision for credit losses of $1.1 million in the third quarter of last year. The allowance for credit losses totaled $7.4 million (2.64% of total gross loans) at September 30, 2010 compared to $7.9 million (2.81% of total gross loans) at year-end 2009.
Nonperforming assets at September 30, 2010 amounted to $13.2 million or 3.06% of total assets, a reduction of $6.1 million or 32% compared to $19.3 million or 4.35% of total assets at December 31, 2009.
?We are pleased to report year-over-year improvement in earnings as we continue to take proactive steps to address near-term challenges and navigate the slow path to economic recovery,? said Chairman and CEO Richard M. Lerner. ?Results for the three and nine months ended September 30, 2010 reflect improved asset quality and, as a result, lower provisions for credit losses relative to the comparable periods in 2009.?
Total assets were $432.5 million at September 30, 2010, down $11.8 million or 2.65% compared to $444.3 million at December 31, 2009. Gross loans totaled $279.7 million at the end of the third quarter, down $2.3 million from $282.0 million at December 31, 2009. Lending opportunities remained limited, as low consumer confidence and continued economic uncertainty have muted the demand for credit.
The Company's investment portfolio declined by $22.0 million or 18.7% in the first nine months of 2010 as $46.4 million in U.S. agency securities were called and the Company executed $13.1 million in securities sales. During the same period, the Company elected to strategically deploy funds earmarked for future lending in short maturity investments such as federal funds sold and placements at banks.
Total deposits decreased by $18.2 million or 5.2% to $332.2 million at September 30, 2010 compared to $350.5 million at year-end 2009. Total long term debt decreased by $5.0 million since December 31, 2009, reflecting a reduction in Federal Home Loan Bank borrowings. Short term securities under agreements to repurchase increased $8.2 million to $22.8 million at September 30, 2010 compared to $14.6 million as of December 31, 2009.
Stockholders' equity increased to $35.3 million at September 30, 2010 compared to $32.6 million at December 31, 2009. At September 30, 2010, Annapolis Bancorp, Inc. exceeded all federal regulatory requirements for a well-capitalized institution, with a Tier 1 capital ratio of 13.0%, a total capital ratio of 14.3%, and a Tier 1 leverage ratio of 9.0%. Book value per common share at September 30, 2010 increased to $6.97 compared to $6.41 at September 30, 2009 and $6.39 at December 31, 2009.
?Our strong capital ratios have left us well-positioned to meet increased demand for credit as the economy slowly improves,? said Lerner. ?With interest rates at historic lows, we believe this is a great time to borrow, and BankAnnapolis remains committed to delivering effective financing solutions to both consumers and businesses in the communities we serve.?
Third quarter 2010 interest income decreased by $633,000 or 11.7% compared to the same period last year, as average earning assets contracted $18.2 million and investment yields continued to decline. A high level of short-term liquidity and soft loan demand also exerted downward pressure on the Company's third quarter interest income.
Interest expense decreased by $512,000 or 31.9% due to average interest-bearing liabilities falling by $23.1 million coupled with a drop in the overall cost of funds from 1.54% in the third quarter of 2009 to 1.10% in the quarter just ended.
Although net interest income for the quarter ended September 30, 2010 decreased by $121,000 compared to the same period last year, the net interest margin improved by 4 basis points to 3.56%. The year-over-year margin expansion was due to the cost of interest-bearing liabilities declining more rapidly than the yield on interest earning assets.
Noninterest income decreased 2.7% to $469,000 in the third quarter of 2010 from $482,000 in the same period last year. Improvement in income earned on bank-owned life insurance and fees on loans held for sale was offset by a reduction in rental income and losses on the disposition of repossessed assets.
Noninterest expense increased by $258,000 or 9.2% for the quarter just ended compared to the same period last year, with increases in staffing and marketing expense partially counteracted by lower professional fees.
For the first nine months of 2010, the net interest margin increased 50 basis points to 3.68% from 3.18% in the comparable period of 2009. As a result of lower overall funding costs, net interest income rose by 12.8% to $11.4 million from $10.1 million in the same nine-month period of last year. Year-to-date noninterest income declined by $78,000 or 5.4% in 2010, and noninterest expense increased by $537,000 or 6.0% as personnel expense grew by $443,000 or 9.3% due to higher benefit charges, costs associated with the management of nonperforming assets, and additional staffing in the residential mortgage and commercial real estate lending divisions.
As of September 30, 2010, Annapolis Bancorp incurred year-to-date net charge-offs of $1,753,000. The Company recorded provisions for credit losses of $1.2 million and $6.1 million for the respective nine month periods ended September 30, 2010 and 2009.
BankAnnapolis serves the banking needs of small businesses, professional concerns, and individuals in central Maryland through eight community banking offices located in Anne Arundel and Queen Anne's Counties. The Bank's headquarters building and main branch are located at 1000 Bestgate Road in Annapolis.
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, 2010 and December 31, 2009 | |||||||
($000) | |||||||
(Unaudited) | (Audited) | ||||||
September 30, | December 31, | ||||||
2010 | 2009 | ||||||
Assets | |||||||
Cash and due from banks | $ | 17,018 | $ | 5,936 | |||
Interest bearing deposits with banks | 7,396 | 10,000 | |||||
Federal funds sold | 14,112 | 8,828 | |||||
Investment securities, available for sale | 95,868 | 117,883 | |||||
Federal Reserve and Federal Home Loan Bank stock | 3,080 | 3,260 | |||||
Loans held for sale | 2,066 | 3,296 | |||||
Loans, net of allowance of $7,394 and $7,926 | 270,283 | 270,736 | |||||
Premises and equipment | 8,895 | 9,274 | |||||
Accrued interest receivable | 1,429 | 1,934 | |||||
Deferred income taxes | 2,755 | 3,902 | |||||
Investment in bank owned life insurance | 5,392 | 4,226 | |||||
Real estate owned | 1,739 | 2,398 | |||||
Other assets | 2,506 | 2,659 | |||||
Total Assets | $ | 432,539 | $ | 444,332 | |||
Liabilities and Stockholders' Equity | |||||||
Deposits | |||||||
Noninterest bearing | $ | 43,874 | $ | 40,834 | |||
Interest bearing | 288,352 | 309,629 | |||||
Total deposits | 332,226 | 350,463 | |||||
Securities under agreements to repurchase | 22,792 | 14,642 | |||||
Long term borrowings | 35,000 | 40,000 | |||||
Junior subordinated debentures | 5,000 | 5,000 | |||||
Accrued interest and accrued expense | 2,177 | 1,595 | |||||
Total Liabilities | 397,195 | 411,700 | |||||
Stockholders' Equity | |||||||
Preferred stock | 8,043 | 7,985 | |||||
Common stock | 39 | 39 | |||||
Warrants to purchase common stock | 234 | 234 | |||||
Paid in capital | 11,604 | 11,501 | |||||
Retained Earnings | 14,358 | 13,367 | |||||
Accumulated other comprehensive income/(loss) | 1,066 | (494 | ) | ||||
Total Equity | 35,344 | 32,632 | |||||
Total Liabilities and | |||||||
Equity | $ | 432,539 | $ | 444,332 |
Annapolis Bancorp, Inc. and Subsidiaries | |||||||||||||||
Consolidated Statements of Income | |||||||||||||||
for the Three and Nine Month Periods Ended September 30, 2010 and 2009 | |||||||||||||||
(Unaudited) | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
For the Three Months | For the Nine Months | ||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||
Interest Income | |||||||||||||||
Loans | $ | 3,928 | $ | 3,962 | $ | 11,934 | $ | 11,844 | |||||||
Investments | 825 | 1,419 | 3,056 | 3,795 | |||||||||||
Interest bearing balances with banks | 7 | 17 | 18 | 48 | |||||||||||
Federal funds sold | 11 | 6 | 29 | 46 | |||||||||||
Total interest income | 4,771 | 5,404 | 15,037 | 15,733 | |||||||||||
Interest expense | |||||||||||||||
Deposits | 734 | 1,214 | 2,556 | 4,444 | |||||||||||
Securities sold under agreements to repurchase | 27 | 31 | 77 | 91 | |||||||||||
Borrowed funds | 285 | 312 | 868 | 927 | |||||||||||
Junior debentures | 47 | 48 | 133 | 160 | |||||||||||
Total interest expense | 1,093 | 1,605 | 3,634 | 5,622 | |||||||||||
Net interest income | 3,678 | 3,799 | 11,403 | 10,111 | |||||||||||
Provision | 622 | 1,102 | 1,221 | 6,113 | |||||||||||
Net interest income after provision | 3,056 | 2,697 | 10,182 | 3,998 | |||||||||||
Noninterest Income | |||||||||||||||
Service charges | 309 | 316 | 882 | 903 | |||||||||||
Mortgage banking | 23 | 27 | 55 | 73 | |||||||||||
Other fee income | 146 | 84 | 358 | 344 | |||||||||||
Gain on sale of loans | 21 | 47 | 104 | 112 | |||||||||||
Loss on sale of securities | - | - | (55 | ) | - | ||||||||||
(Loss)/gain on sale of REO and repossessed assets | (30 | ) | 8 | 18 | 8 | ||||||||||
Total noninterest income | 469 | 482 | 1,362 | 1,440 | |||||||||||
Noninterest Expense | |||||||||||||||
Personnel | 1,721 | 1,543 | 5,228 | 4,785 | |||||||||||
Occupancy and equipment | 414 | 377 | 1,205 | 1,138 | |||||||||||
Data processing expense | 212 | 208 | 629 | 640 | |||||||||||
Professional Fees | 95 | 197 | 420 | 548 | |||||||||||
Marketing expense | 69 | 9 | 249 | 216 | |||||||||||
FDIC expense | 140 | 139 | 427 | 464 | |||||||||||
Other operating expense | 421 | 341 | 1,278 | 1,108 | |||||||||||
Total noninterest expense | 3,072 | 2,814 | 9,436 | 8,899 | |||||||||||
Income (loss) before taxes | 453 | 365 | 2,108 | (3,461 | ) | ||||||||||
Income tax expense (benefit) | 154 | 142 | 754 | (1,373 | ) | ||||||||||
Net income (loss) | 299 | 223 | 1,354 | (2,088 | ) | ||||||||||
Preferred stock dividend and discount accretion | 123 | 120 | 364 | 322 | |||||||||||
Net income (loss) available to common shareholders | $ | 176 | $ | 103 | $ | 990 | $ | (2,410 | ) | ||||||
Basic earnings (loss) per common share | $ | 0.04 | $ | 0.03 | $ | 0.25 | $ | (0.63 | ) | ||||||
Diluted earnings (loss) per common share | $ | 0.04 | $ | 0.03 | $ | 0.25 | $ | (0.63 | ) | ||||||
Book value per common share | $ | 6.97 | $ | 6.41 | $ | 6.97 | $ | 6.41 |
Annapolis Bancorp, Inc. and Subsidiaries | ||||||||||||
Financial Ratios and Average Balance Highlights | ||||||||||||
for the Three and Nine Month Periods Ended September 30, 2010 and 2009 | ||||||||||||
(Unaudited) | ||||||||||||
(In thousands) | ||||||||||||
For the Three Months | For the Nine Months | |||||||||||
Ended September 30, | Ended September 30, | |||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||
Performance Ratios (annualized) | ||||||||||||
Return on average assets | 0.28 | % | 0.20 | % | 0.42 | % | (0.63 | %) | ||||
Return on average equity | 3.36 | % | 2.75 | % | 5.24 | % | (8.68 | %) | ||||
Average equity to average assets | 8.20 | % | 7.19 | % | 7.93 | % | 7.23 | % | ||||
Net interest margin | 3.56 | % | 3.52 | % | 3.68 | % | 3.18 | % | ||||
Efficiency ratio | 74.08 | % | 65.73 | % | 73.92 | % | 77.04 | % | ||||
Other Ratios | ||||||||||||
Allowance for credit losses to loans | 2.64 | % | 3.26 | % | 2.64 | % | 3.26 | % | ||||
Nonperforming assets to total assets | 3.06 | % | 3.63 | % | 3.06 | % | 3.63 | % | ||||
Net charge-offs to average loans | 0.00 | % | 0.19 | % | 0.63 | % | 0.42 | % | ||||
Tier 1 capital ratio | 13.0 | % | 12.6 | % | 13.0 | % | 12.6 | % | ||||
Total capital ratio | 14.3 | % | 13.9 | % | 14.3 | % | 13.9 | % | ||||
Average Balances | ||||||||||||
Assets | 431,407 | 446,672 | 435,614 | 444,608 | ||||||||
Earning assets | 409,459 | 427,692 | 414,405 | 424,549 | ||||||||
Loans, gross | 277,337 | 274,852 | 276,931 | 271,843 | ||||||||
Interest-bearing liabilities | 349,904 | 373,013 | 357,154 | 371,978 | ||||||||
Stockholders' equity | 35,354 | 32,133 | 34,542 | 32,148 |
Annapolis Bancorp, Inc.
Edward J. Schneider, CFO
410-224-4455