2007 Releases

November 16, 2007
Annapolis Bancorp Announces the Resignation of Director Nancy Lowell
Family and business obligations cited as reason for departure from Board <read more>

November 2, 2007
Annapolis Bancorp Reports Strong Third Quarter Loan Growth
Continued Margin Compression Causes Moderate Decline in Earnings <read more> 

August 9, 2007
BankAnnapolis Names Kathryn Coursey As Vice President of the Private Business Banking Group
Ms. Coursey will focus on helping small business owners and entrepreneurs manage and grow their companies <read more> 

August 6, 2007
Launch of New Savings Product Boosts Core Deposits By 17% in Second Quarter
Introduction of new high-yield bank account generates $27 million in new deposits <read more>

July 16, 2007
BankAnnapolis Names Ron Voigt Senior Vice President And Chief Business Development Officer

June 6, 2007
BankAnnapolis Names New Manager For Edgewater Branch

May24, 2007
BankAnnapolis And Casa Raise $25,000 To Help Abused And Neglected Children

May 2, 2007
Margin Compression Leads to Lower First Quarter Earnings at Annapolis Bancorp

4/24/07
BankAnnapolis Is Presenting Sponsor For Hospice Of Queen Anne's Golf Outing

4/11/07  
BankAnnapolis Names New Mortgage Loan Officer

2/21/07  
Annapolis Bancorp Announces Stock Repurchase Program

2/7/07  
Annapolis Bankcorp Reports Stable Earnings For 2006

1/22/07  
BankAnnapolis Names Maryland's former First Lady, Kendel Ehrlich, to Board Of Directors.

Annapolis Bancorp Announces the Resignation of Director Nancy Lowell
Family and business obligations cited as reason for departure from Board

Annapolis, MD – November 16, 2007 – Annapolis Bancorp, Inc. (NASDAQ: ANNB) and its subsidiary BankAnnapolis today announced the resignation of Director Nancy Lowell, who is stepping down to concentrate fully on her custom stationery business, Lallie, Inc., and to spend more time with her family.

“I am honored to have served on the Board of Directors for almost four years,” Lowell said.  “During that time, BankAnnapolis has become a leading local bank, distinguishing itself from its big bank competitors by providing superior service to its customers, and through its involvement in the community.  I feel proud to have been able to contribute to what the bank has accomplished.  Serving on the board has been a wonderful experience, and I will always be an advocate for BankAnnapolis in the Greater Annapolis community.”

“While we are saddened that Nancy is leaving the board, we recognize the demands that come with being both a parent and the owner of a growing business,” said Chairman and CEO Richard M. Lerner.  “Nancy is not only creative and talented; she is an exceptional businesswoman and a special person with whom it has been a pleasure to be associated.  We appreciate her service and the invaluable contribution she has made to the growth and success of BankAnnapolis and Annapolis Bancorp.”

Founded in 1990, BankAnnapolis serves small businesses, professional concerns and individuals through its seven community banking offices in Anne Arundel and Queen Anne’s Counties.  Total assets at September 30, 2007 were $357 million.  In 2008, the Bank will open its eighth office in the Annapolis Towne Centre at Parole.

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Annapolis Bancorp Reports Strong Third Quarter Loan Growth
Continued Margin Compression Causes Moderate Decline in Earnings 

Annapolis, MD, November 2, 2007 - Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced net income of $662,000 ($0.16 per basic and diluted share) for the third quarter of 2007, a 10.5% decrease from third quarter 2006 net income of $740,000 ($0.18 per basic and diluted share).

Compared to the first nine months of 2006, year-to-date net income declined by 10.9% to $1,893,000 ($0.46 per basic and $0.45 per diluted share) from $2,124,000 ($0.52 per basic and $0.50 per diluted share).

"Despite the fact that earnings are down from last year's levels, we enjoyed considerable success in the third quarter growing our loan portfolio and shifting our asset mix away from overnight investments toward higher-yielding loan products," said Chairman and CEO Richard M. Lerner. "We believe this progress should stand us in good stead as the interest rate environment normalizes and margins begin to recover."

Total gross loans increased by $11.4 million in the third quarter, an annualized growth rate of 19.8%. At September 30, 2007, gross loans totaled $240.4 million, up $18.6 million or 8.4% from year-end 2006. Year-to-date, commercial loans grew by $4.8 million or 11.9%, and real estate loans by $11.9 million or 8.5%. Construction and installment loans were also up slightly in the first nine months of 2007. Year-to-date loan growth was funded by an $18.4 million reduction in federal funds sold balances.

As reported in August, significant deposit growth was generated in the second quarter when the Bank introduced its new, high-yield Superior Savings Account. By September 30, 2007, Superior Savings Account balances had climbed to $31.6 million. Since the product's introduction in early April, over 1,800 new accounts have been opened with the average balance per account exceeding $17,000.

Since year-end 2006, total deposits have increased by $28.5 million or 10.4%. These newly generated deposits enabled the Bank to pay off $25.0 million in Federal Home Loan Bank debt that either was called or matured in the second quarter. The blended cost of the repaid Federal Home Loan Bank advances was 4.44%.

At the end of the third quarter, total assets amounted to $357.5 million, an increase of $5.6 million or 1.6% since year-end 2006. Total stockholders' equity stood at $26.1 million, up 8.0% from $24.1 million at December 31, 2006. Book value per share at September 30, 2007 was $6.49.

Since the Board of Directors authorized the repurchase of up to 5% or 200,000 shares of Annapolis Bancorp's outstanding common stock in February of 2007, the Company has successfully repurchased 90,256 shares on the open market. "We believe that our stock repurchase program will prove to be accretive to earnings per share and return on average equity, and is therefore in the best interests of our shareholders," said Lerner. "We fully intend to continue the program and hope to complete the repurchase of all authorized shares."

Annapolis Bancorp's annualized return on average equity for the third quarter of 2007 was 10.37% compared to 12.94% for the same period in the prior year. The third quarter annualized return on average assets was 0.73% compared to 0.90% for the third quarter of 2006.

For the nine months ended September 30, 2007, Annapolis Bancorp's annualized return on average equity was 10.16% compared to 13.00% for the same period of 2006. The 2007 nine-month annualized return on average assets was 0.73% compared to 0.91% in 2006.

When compared to the third quarter of 2006, the Company's net interest margin continued an eighteen month trend of significant contraction, declining from 3.85% to 3.51%. However, on a sequential quarter basis, net interest margin compression eased, as the key metric dropped only 3 basis points from 3.54% to 3.51%.

In the three months just ended, average interest-earning assets rose to $338.9 million from $307.9 million in the same period last year. The yields on loans and investment securities improved, offsetting a slight decline in the yield on overnight investments. Overall, the yield on interest-earning assets increased to 6.78% from 6.68% in the third quarter of last year. As a result, total interest income rose by $607,000 or 11.7%.

Total interest expense increased by $592,000 or 26.9% as growth in savings and money market account balances caused average interest-bearing liabilities to increase to $290.8 million from $260.7 million in the third quarter of 2006. The cost of interest-bearing liabilities jumped to 3.81% from 3.35% in the same timeframe, due in large part to a rising rate environment and the success of the Superior Savings campaign.

Despite further contraction in the net interest margin, net interest income improved by $15,000 or 0.5% in the quarter ended September 30, 2007 compared to the same period last year.

To reflect growth in the loan portfolio, the Company recorded a $133,000 provision for credit losses in the third quarter compared to no provision in the same quarter of 2006. With recoveries offsetting charge-offs in the period just ended, the allowance for credit losses amounted to $2,128,000 at September 30, 2007, representing 0.89% of total gross loans outstanding, compared to $1,976,000 at December 31, 2006, which at the time also represented 0.89% of total gross loans outstanding.

Nonperforming assets of $0.3 million were unchanged from their level at the end of the second quarter, and at September 30, 2007 represented 0.11% of total gross loans. This compares to nonperforming assets of $1.1 million (0.49% of total gross loans) at December 31, 2006.

"We are extremely pleased to have maintained our asset quality despite the recent upheaval in the credit and residential real estate markets," said Lerner. "While the prospect of a general economic downturn may have some future impact on our credit metrics, we have never engaged in any subprime mortgage lending and have no direct exposure in that arena."

Although mortgage brokerage activity remained sluggish in the third quarter, noninterest income improved by $35,000 or 7.8% due primarily to increased transaction-based service charges. Noninterest expense was held to an increase of just $87,000 or 3.8% in the period just ended.

On a year-to-date basis, net interest income improved by $52,000 or 0.6%, with the net interest margin dropping to 3.59% from 4.03% in the first nine months of 2006. After a $141,000 increase in the provision for credit losses compared to the same period last year, net interest income after provision decreased by $89,000 or 1.0% in the first nine months of 2007. Year-to-date noninterest income improved by $44,000 or 3.3%, and noninterest expense increased by $443,000 or 6.6%.

BankAnnapolis serves the banking needs of small businesses, professional concerns, and individuals through seven community banking offices located in Anne Arundel and Queen Anne's Counties in Maryland. In 2008, the Bank will open its eighth office in the Annapolis Towne Centre at Parole, a new 2-million square foot mixed-use development now under construction. 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.

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BankAnnapolis Names Kathryn Coursey As Vice President In Private Business Banking Group

Annapolis, MD, Aug. 9, 2007 - BankAnnapolis has named Kathryn Coursey as a Vice President in its Private Business Banking Group. In this post, Ms. Coursey will focus on helping small business owners and entrepreneurs manage and grow their companies by providing personalized access to all the resources available at BankAnnapolis. She will be based in the bank’s branch on Kent Island.

Ms. Coursey brings more than 26 years of banking experience to her new post and a strong track record of developing and maintaining business relationships. She comes to BankAnnapolis from 1st Mariner Bank, where she was Assistance Vice President, Business and Executive Banking. Prior to this, she spent 25 years with the Centreville National Bank of Maryland, most recently serving as Vice President of Marketing.

“BankAnnapolis has so much to offer its customers. While it has the feel of a small community bank in terms of its personal approach, it’s also very progressive and its products and services are quite competitive,” said Ms. Coursey. “I have been especially impressed by the enthusiasm of the people I’ve met. Having lived and worked in Queen Anne’s County for more than 25 years, I’m confident that I can be a real asset to the bank. BankAnnapolis has a great team on board and I am proud to be joining them.”

“Kathy’s extensive banking experience combined with her strong ties to the community makes her a perfect fit for this position,” said Ron Voigt, Senior Vice President and Chief Business Development Officer at BankAnnapolis. “We welcome her to our team.”

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BankAnnapolis Names Ron Voigt Senior Vice President And Chief Business Development Officer

Annapolis, MD, July 16, 2007 - Richard M. Lerner, Chairman and CEO of BankAnnapolis, announced today that Ronald M. Voigt has joined the Bank as Senior Vice President and Chief Business Development Officer. In this position, Voigt will manage the Bank’s sales efforts, supervising the people and processes responsible for developing, maintaining and expanding loan and deposit relationships with commercial customers.

For the past 18 years, Voigt has worked at Bank of America or its predecessors, most recently as Business Banking Market Credit Officer for the Baltimore/Bay region, based out of the Church Circle office in Annapolis. In this position, Voigt managed nine business development officers with a credit portfolio of over $300 million. Last year, his team produced over $100 million in new credit and ranked 4th out of 16 markets in the Northeast region for Bank of America.

Voigt started his career at Bank of America as a management associate after graduating from Virginia Polytechnic Institute and State University with a bachelor’s degree in marketing and finance. He moved into business banking in 1993 and steadily advanced up the corporate ladder into positions of increasing managerial responsibility Born in Annapolis, Voigt, his wife and two daughters now reside in Bowie, Maryland.

“In addition to his sales and sales management experience, Ron has an extensive credit background which makes him ideally suited for this important job,” said Lerner. “He is a consummate professional with extremely impressive credentials. He knows and understands the market in which we operate, and most importantly, he is a strategic thinker who will undoubtedly play a pivotal role in helping to chart the future course of BankAnnapolis. We are delighted to welcome him to the senior management team and I personally look forward to working with him.”

“Joining BankAnnapolis is a great opportunity for me to take the experience that I have and really make a difference. It’s a chance to get involved in a lot of areas and contribute in a way that generates tangible results,” said Voigt. “It also provides me with the opportunity to get more involved in the community where I live and work. I look forward to contributing to the ongoing success of BankAnnapolis and to playing a major role in its continued growth.”

BankAnnapolis serves the banking needs of small businesses, professional concerns, and individuals through seven community banking offices in Anne Arundel and Queen Anne's Counties in Maryland. The Bank’s parent company, Annapolis Bancorp, Inc. (NASDAQ: ANNB), trades on the NASDAQ Capital Market under the ticker symbol “ANNB,” and reported total assets of $347 million at March 31, 2007.


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BankAnnapolis Names New Manager For Edgewater Branch

Annapolis, MD, June 6, 2007 - BankAnnapolis announced today the addition of Vadus Traylor to its staff as Vice President Branch Manager of its Edgewater branch.

In this position, Ms. Traylor will be responsible for the daily operations of the branch, developing new business relationships and community involvement activities.

Ms. Traylor joins BankAnnapolis with extensive financial experience having worked for Severn Savings Bank for more than 20 years, the last five as a Branch Manager. She was named a Vice President of the bank in 2006.

“I am very excited about joining BankAnnapolis and feel privileged to have been selected for this position. BankAnnapolis is well known for its commitment to providing exceptional customer service, which I have always admired. They truly care about the customer and that is important to me. They also have a great tradition of reaching out to the local community,” said Ms. Traylor. “Having lived in Edgewater all my life, I am looking forward to working in the South County community and developing new relationships.”

“Vadus’ banking experience, combined with her strong ties to the community, makes her a perfect fit to manage our Edgewater branch.” said Richard M. Lerner, Chairman and CEO of BankAnnapolis. “We’re delighted to have her on board.”

BankAnnapolis serves the banking needs of small businesses, professional concerns, and individuals through seven community banking offices 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 Annapolis Mall. Total assets at December 31, 2006 were $352 million.

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BankAnnapolis And Casa Raise $25,000 To Help Abused And Neglected Children

Annapolis, MD, May 24, 2007 - The seventh annual golf tournament fundraiser for Anne Arundel County CASA (Court-Appointed Special Advocates) held on May 16 at Bay Hills Golf Club in Arnold, Md. raised approximately $25,000 – money that will be used to help abused and neglected children in the court system. A total of 100 golfers participated in “Tee up for a Child,” an event made possible in large part through the support of BankAnnapolis, the primary sponsor for the fifth straight year.

"BankAnnapolis’ ongoing support of Anne Arundel County CASA, Inc. (AACCASA) has been remarkable. As the primary sponsor of the tournament for the past five years, they have played a key role in insuring its success,” said Rebecca Julian, executive director of the non-profit organization. All of the money raised goes directly to advocate for abused and neglected children in Anne Arundel County.

In addition to financial support, BankAnnapolis contributes planning, coordination and more than 40 volunteers to run the tournament. Robert Kendrick, senior vice president and chief credit officer at BankAnnapolis, has chaired the tournament planning committee for the past five years.

“The support we receive from BankAnnapolis, its employees and other businesses in the community is essential to this event,” Julian added. “It’s a true testament to the importance of the work that is done on behalf of CASA volunteers."

More than 550 children are abused, neglected or abandoned in Anne Arundel County every year, according to CASA. Because the child welfare and juvenile court systems that are designed to protect and care for these children are overburdened and understaffed, the critical needs of these children are often overlooked, so they continue to languish in foster care. It is estimated that at least 250 children are currently living in temporary foster care situations.

“By supporting CASA we are making a difference in the lives of local children as well as increasing public awareness of the plight of these children,” Kendrick said. “We also know that there are many more children who need CASA’s help and raising funds will help meet those needs.”

BankAnnapolis also supports AACCASA by selling CASA bracelets in its branch offices in Severna Park, Edgewater, Annapolis (Bestgate Road), Cape St. Claire and on Kent Island. Additional information on Anne Arundel CASA is available at www.aacsa.org.

BankAnnapolis contributes financial, in-kind and volunteer assistance to numerous non-profit institutions and organizations that assist people in need and enhance the quality of life in the Greater Annapolis and Stevensville communities. Through its seven community banking offices in Anne Arundel and Queen Anne's Counties, the Bank serves the financial needs of small businesses, professional concerns and individuals. Total assets at December 31, 2006 were $352 million.

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Margin Compression Leads to Lower First Quarter Earnings at Annapolis Bancorp

Annapolis, MD, May 2, 2007 - Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced net income of $603,000 ($0.15 per basic and $0.14 per diluted share) for the first quarter of 2007, a 12.6% decline from first quarter 2006 net income of $690,000 ($0.17 per basic and $0.16 per diluted share).

According to Chairman and CEO Richard M. Lerner, reduced earnings in the quarter just ended are the result of a significant hike in the Company’s cost of funds over the past twelve months, combined with a drop-off in noninterest income and an increase in operating expenses.

Despite improved yields on interest-earning assets, the Company’s net interest margin fell to 3.75% in the first quarter from 4.20% in the same period last year, as the cost of money market accounts and certificates of deposit escalated.

Margin contraction, which had been continuous throughout 2006, actually eased in the first quarter as the net interest margin expanded from 3.66% in the prior period. This improvement is attributable to a shift in the Company’s asset mix away from overnight investments toward higher yielding loans, and to the recognition of interest on several nonaccrual loans which were fully repaid in the first quarter.

Although total gross loans increased by $7.2 million or 3.2% in the first quarter of 2007, total assets dipped by $5.0 million or 1.4% as repurchase agreement balances fell by $6.4 million or 36.2% due primarily to curtailed activity in title company accounts, consistent with a slowdown in the real estate market.

NOW account balances dropped by $9.2 million or 21.0% due principally to anticipated withdrawals from one large-balance estate account upon distribution of its assets. Demand deposit accounts also decreased at quarter-end by $2.2 million or 5.2%. Partially offsetting these declines were increases of $5.6 million or 7.9% in money market accounts and $5.3 million or 5.6% in certificates of deposit.

Federal funds sold balances were lowered in the first quarter by $10.2 million or 33.6% in order to fund growth in the loan portfolio and a reduction in repurchase agreement levels. Real estate lending accounted for the lion’s share of loan growth in the period, increasing by $7.6 million or 5.4%. Commercial and installment loans also rose modestly, while construction lending continued its decline as the market for new homes remained sluggish.

In the three months ended March 31, 2007, average interest-earning assets grew to $317.0 million from $277.0 million in the first quarter of 2006, with total interest income improving by $857,000 or 19.0%. The yield on average earning assets increased to 6.86% in the quarter just ended compared to 6.59% in the same period last year.

Average interest-bearing liabilities increased to $272.3 million in the first quarter from $229.6 million in the same period last year due to higher levels of Federal Home Loan Bank debt and increased money market account and certificate of deposit balances. Total interest expense increased by $800,000 or 49.1% as the Company’s cost of average interest-bearing liabilities rose to 3.62% from 2.88% in the first quarter of 2006.

The bank recorded a provision for credit losses of $10,000 and net charge-offs of $8,000 in the first quarter of 2007, bringing the allowance for credit losses to $1,978,000 or 0.86% of total gross loans at March 31, 2007 compared to 0.89% at December 31, 2006.

Nonperforming assets fell to $417,000 from $1.1 million at year-end 2006 as several nonperforming loans were repaid in full during the first quarter. At March 31, 2007, nonperforming assets accounted for 0.18% of total gross loans and the allowance for credit losses provided 474.6% coverage of nonperforming assets.

At March 31, 2007, total stockholders’ equity amounted to $25.0 million, up 3.6% from $24.1 million at year-end 2006. Book value per share at the end of the first quarter was $6.10.

Noninterest income declined by $30,000 or 6.9% in the first quarter as mortgage production slowed and DDA service charge income diminished due to management’s decision to close out several habitually overdrawn accounts that generated significant fee income but exposed the bank to undue risk. VISA check card fees improved compared to the first quarter of 2006 as transaction volume increased, and ATM surcharge fees rose with the opening of a new branch in a highly trafficked location in downtown Annapolis.

Compared to the first three months of 2006, noninterest expense increased by $224,000 or 10.4% in the quarter just ended. Much of this growth in operating expense is attributable to year-over-year average salary increases of approximately 4.1%, depreciation of the new branch facility on Kent Island, staffing and occupancy costs for the new Market House branch, and increased legal costs compared to the same period last year when previously expensed attorneys’ fees were recovered upon the collection of nonperforming loans.

BankAnnapolis serves the banking needs of small businesses, professional concerns, and individuals through seven 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 Annapolis Mall. Total assets at December 31, 2006 were $352 million.

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.

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BankAnnapolis Is Presenting Sponsor For Hospice Of Queen Anne's Golf Outing
Annual golf fundraising event set for June 19

Kent Island, MD, April 24, 2007 - For the third time in as many years, BankAnnapolis’ Kent Island branch will be the Presenting Sponsor for the 10th Annual Hospice of Queen Anne’s Golf Outing. The event will tee off with 144 golfers on Tuesday, June 19, at the Queenstown Harbor Atlantic Golf Links.

Last year’s event raised more than $25,000 for the not-for-profit organization, which provides comprehensive end-of-life care and bereavement support for county residents. The annual event is one of Hospice of Queen Anne’s major fundraisers.

“We are thrilled to again have the support of BankAnnapolis. Their participation in this event makes a real difference in our ability to fulfill our mission to the citizens of Queen Anne’s County. We are grateful for their involvement,” said Deborah Davis, Hospice Coordinator of Development and Community Outreach.

“BankAnnapolis employees love participating in this event. They know it is a great cause and it is a lot of fun,” stated Carllene Hurd, Branch Manager. “We all look forward to it.”

The event includes a continental breakfast provided by BankAnnapolis, lunch catered by Susie’s Kitchen and a raffle of prizes donated by local businesses. For more information, please contact Carllene Hurd at 410-643-4191.

BankAnnapolis contributes financial, in-kind and volunteer assistance to numerous non-profit institutions and organizations that assist people in need and enhance the quality of life in the Greater Annapolis and Stevensville communities.  Through its seven community banking offices in Anne Arundel and Queen Anne’s Counties, the Bank serves the financial needs of small businesses, professional concerns and individuals.  Total assets at December 31, 2006 were $352 million.

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BankAnnapolis Names New Mortgage Loan Officer

Annapolis, April 11, 2007 - BankAnnapolis recently announced the appointment of Severna Park resident Betsy Hein as mortgage loan officer for BankAnnapolis. With more than 16 years of experience in the industry, Ms. Hein’s broad knowledge of the mortgage process is an asset in her role as a mortgage originator. This experience allows her to ask the right questions of the borrower in order to advise them of the mortgage product that best suits their needs.

In her former position at Ryland Mortgage Company in Columbia, MD, Ms. Hein managed the national organization’s Quality Assurance and Compliance department.

BankAnnapolis serves the banking needs of small businesses, professional concerns, and individuals through seven 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 Annapolis Mall. Total assets at December 31, 2006 were $352 million.

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Annapolis Bancorp Announces Stock Repurchase Program

Annapolis, February 21, 2007 - Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced a stock repurchase program under which the Corporation will acquire up to 5% of its outstanding common stock, or approximately 200,000 shares.

Annapolis Bancorp Chairman and CEO Richard M. Lerner said that the repurchase program, authorized by the Corporation's Board of Directors, could be completed within six months. "The Board considers the Corporation’s common stock to be an attractive investment, given the price range in which it has traded recently,” Lerner said.

Annapolis Bancorp's common stock trades on the NASDAQ Capital Market under the ticker symbol “ANNB.” The Corporation's share price closed at $9.40 on February 20, 2007. Book value per share as of December 31, 2006 was $5.88, and the Corporation reported earnings per share of $0.72 in 2006.

According to Lerner, the repurchases generally will be effected through open market purchases, although he did not rule out the possibility of unsolicited negotiated transactions or other types of repurchases. The extent of the repurchase program will depend on market conditions, Lerner said, and the exact number of shares the Corporation will repurchase is not guaranteed.

Lerner characterized the stock repurchase program as "part of Annapolis Bancorp’s ongoing efforts to enhance shareholder value and invest our resources in the most efficient manner possible.”

BankAnnapolis serves the banking needs of small businesses, professional concerns, and individuals through seven 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 Annapolis Mall. Total assets at December 31, 2006 were $352 million.

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.

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Annapolis Bankcorp Reports Stable Earnings For 2006

ANNAPOLIS, MD, February 7, 2007 - Despite contraction in its net interest margin and a sharp reduction in mortgage banking fee income, Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today reported a modest earnings decline of only 1% for the year ended December 31, 2006.

Net income for 2006 totaled $2.95 million ($0.72 per basic and $0.70 per diluted share), down from $2.98 million ($0.73 per basic and $0.71 per diluted share) in 2005. "A flattened yield curve and a slowdown in the local real estate market posed significant challenges in 2006," said Chairman and CEO Richard M. Lerner. "Under these difficult operating conditions, we are pleased that the Company managed to post earnings commensurate with last year."

For the three months ended December 31, 2006, the Company recorded net income of $827,000 ($0.20 per basic and diluted share), an 18.2% decrease from net income of $1.01 million ($0.25 per basic and $0.24 per diluted share) in the fourth quarter of 2005. Results for the comparable quarter in 2005 included a $201,000 one-time gain associated with the prepayment of a $10 million Federal Home Loan Bank advance. Excluding that non-recurring event and a similar one-time gain of $23,000 in the quarter just ended, net income would have declined by only 7.8% in the fourth quarter of 2006 compared to the same period in 2005.

In May of 2006, the Company completed construction and opened its new state-of-the-art branch facility on Kent Island in Queen Anne's County. Depreciation and other costs related to operation of the new building added approximately $58,000 to the Company's noninterest expense for 2006.

Deposits at the branch, which had been flat for a number of years prior to the opening of the new facility, grew by $9.1 million or 35% in 2006. "Kent Island is a market that is poised for expansion," said Lerner, "and the deposit growth we experienced in 2006 confirms our decision to reinvest in that community."

In August, BankAnnapolis opened a branch in the historic Market House at City Dock, the Company's first foray into downtown Annapolis and its first new branch since 2003. By year-end, deposits in the Market House branch had grown to $2.1 million. Total operating expenses for the branch amounted to $141,000 in 2006.

The combination of stable earnings and continued growth in the Company's asset and equity bases caused Annapolis Bancorp's return on average assets for 2006 to dip to 0.93% from 0.97% in 2005, while its return on average equity declined to 13.21% from 15.04%. The efficiency ratio rose to 65.58% in 2006 from 63.02% in 2005.

Total assets grew to $351.9 million at year-end 2006, a 15.4% increase over total assets of $304.9 million at December 31, 2005. Total gross loans ended the year up $17.2 million or 8.4% from year-end 2005 levels. Real estate loans accounted for practically all of the growth, with commercial mortgage balances rising by $5.5 million or 9.9% and residential mortgages increasing by $14.7 million or 22.6%. "Higher conventional mortgage rates generated more demand for the Bank's ARM and other niche portfolio products," Lerner explained.

Asset growth was funded by increases in money market accounts (up $13.9 million or 24.3%), certificates of deposit (up $9.6 million or 11.2%), NOW accounts (up $5.6 million or 14.7%), and repurchase agreement balances (up $4.7 million or 36.2%), as well as $15.0 million in net new advances from the Federal Home Loan Bank. In all, total deposits rose by $24.3 million or 9.7% and total borrowings increased by $19.7 million or 59.7%.

At year-end 2006, total stockholders' equity amounted to $24.1 million, up 14.7% from $21.0 million at December 31, 2005. Book value per share at December 31, 2006 was $5.88.

The Bank's credit quality metrics remained strong in 2006. After net charge-offs of $48,000 and a $12,000 provision for credit losses, the allowance for credit losses at year-end stood at $1,976,000 (0.89% of total gross loans) compared to $2,012,000 (0.98% of total gross loans) at December 31, 2005. "Based on our analysis, which is consistent with recent regulatory guidance, we believe that our reserves adequately and appropriately reflect the inherent risk of loss in our loan portfolio," said Lerner.

At year-end 2006, nonperforming assets dropped to $1,077,000 (0.49% of total gross loans) from $2,007,000 (0.98% of total gross loans) at December 31, 2005, a 46.3% decline. The allowance for credit losses provided 183% coverage of nonperforming assets at December 31, 2006.

Average interest-earning assets increased in 2006 by 4.1% to $298.6 million from $286.7 million in 2005, and the overall yield on those assets improved to 6.65% from 5.97%. As a result, total interest income improved by $2.7 million or 16.0% compared to 2005.

Total interest expense in 2006 increased by $2.4 million or 42.6% as average interest-bearing liabilities grew by $9.6 million or 4.0% and the cost of deposits and other borrowed funds rose to 3.18% from 2.32% in 2005. The Company's overall cost of funds increased to 2.72% in 2006 from 1.97% in 2005.

The net interest margin contracted steadily throughout 2006 from 4.20% in the first quarter to 3.66% in the fourth. Overall, the net interest margin for the year dipped to 3.96% from 4.00% in 2005. "As long as the yield curve remains flat, our net interest margin will be subject to immense pressure which is only compounded by softened loan demand and intense competition for local deposits," Lerner said.

Noninterest income declined by $360,000 or 16.3% in 2006. Excluding non-recurring gains realized on the prepayment of Federal Home Loan Bank debt in each of the past two years, noninterest income in 2006 would have decreased by $182,000 or 9.1% when compared to the prior year. Fees earned on brokered mortgage loans fell by $163,000 or 49.5% as mortgage rates remained high relative to recent years and the local real estate market performed sluggishly throughout most of 2006.

Noninterest expense in 2006 rose by $337,000 or 3.9% compared to 2005. Compensation expense increased by $323,000 or 6.7%, and occupancy costs mounted as the Company opened a new branch in downtown Annapolis and began to depreciate the newly completed building on Kent Island. Data processing costs fell by $91,000 or 10.1% as the Bank negotiated improved pricing with its principal data processing service provider.

BankAnnapolis serves the banking needs of small businesses, professional concerns, and individuals through seven 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 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.

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BankAnnapolis Names Kendel Ehrlich To Board Of Directors
Maryland's former First Lady joins community bank's leadership

Annapolis, MD.-January 22, 2007 - BankAnnapolis today announced the election of Maryland's former First Lady Kendel S. Ehrlich to its Board of Directors.

"It is with a tremendous amount of pride and excitement that we welcome Ms. Ehrlich to the board of BankAnnapolis," said Chairman and CEO Richard M. Lerner. "We share a strong connection to the Greater Annapolis community, a fervent belief in the community banking concept, and an enduring commitment to strengthening the community through public service and giving back. In so many ways, this is an ideal fit for both of us."

"We look forward to working with someone of her keen intellect and exemplary record of community service," said Lerner. "I am certain that Ms. Ehrlich has any number of opportunities in the corporate, legal and non-profit communities; the fact that she chose to associate with BankAnnapolis is truly a great honor."

"People today crave strong community relationships. They want a bank where they can interact with a real person. They want to be comfortable and secure in their financial affairs," explained Ms. Ehrlich. "At BankAnnapolis the community philosophy begins with CEO Rick Lerner. He exemplifies knowledge, integrity and a deep commitment to community service. I share those values."

As a BankAnnapolis director, Ms. Ehrlich will provide oversight and direction to Bank management. "She will also act as an ambassador-at-large in the community by promoting the Bank and developing important business opportunities for us," said Lerner.

BankAnnapolis contributes financial, in-kind and volunteer assistance to numerous non-profit institutions and organizations that assist people in need and enhance the quality of life in the Greater Annapolis community. Through its seven community banking offices in Anne Arundel and Queen Anne's Counties, the Bank serves the financial needs of small businesses, professional concerns and individuals. The Bank's parent company, Annapolis Bancorp, Inc. (NASDAQ: ANNB) trades on the NASDAQ Capital Market under the ticker symbol "ANNB," and reported total assets of $332.5 million at September 30, 2006.

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