2008 Releases

December 19, 2008
Annapolis Bancorp, Inc. Receives Approval for $8 Million From the U.S. Treasury Department Capital Purchase Program

 November 13, 2008
Bankannapolis Branch at Annapolis Towne Centre To Open Dec. 16

November 11, 2008
Annapolis Bancorp Announces Third Quarter Profit

August 5, 2008
Annapolis Bancorp Announces Second Quarter Results

June 27, 2008
Foundation For Community Partnerships Names Richard M. Lerner As Board Chair

June 26, 2008
BankAnnapolis Joins Surcharge-Free Atm Network
New Service Gives Bank Customers Access to Cash with No Service Charge at 12,000 ATMs across the Country <read more>

June 23, 2008
Hospice Of The Chesapeake Foundation Names Richard M. Lerner As Vice Chairman

June 16, 2008
Annapolis Bancorp Announces Successful Completion of Stock Repurchase Program

May 8, 2008
BankAnnapolis Launches “Private Business Banking”
New Personalized Service Gives Every Business Access  to the Most Advanced Financial Tools and Resources <read more>

May 8, 2008
Annapolis Bancorp Reports Stable Asset Quality, Net Interest Margin
Higher Operating Expense Leads to 12.9% Decline in First Quarter Earnings <read more>

February 15, 2008
Annapolis Bancorp Expands Stock Repurchase Program
Board of Directors authorizes repurchase of additional 100,000 shares<read more>

February 12, 2008
Annapolis Bancorp Reports Fourth Quarter, Year-End Earnings

February 1, 2008
BankAnnapolis Pledges $20,000 To Providence Center
Contribution will support capital campaign <read more>

Annapolis Bancorp, Inc. Receives Approval for $8 Million From the U.S. Treasury Department Capital Purchase Program

Annapolis, MD—December 19, 2008—Annapolis Bancorp, Inc. (NASDAQ:ANNB), parent company of BankAnnapolis, today announced that it has received preliminary approval to participate in the U.S. Department of the Treasury (“Treasury Department”) Capital Purchase Program.  As a participant in the Capital Purchase Program, Annapolis Bancorp plans to sell $8,152,000 in preferred stock, and a warrant to purchase shares of common stock, to the Treasury Department.  The anticipated sale of the preferred stock and warrant is expected to close within 30 days and is subject to the execution of definitive agreements and standard closing conditions.

“We are pleased to have been selected to participate in the Treasury Department’s Capital Purchase Program,” said Richard M. Lerner, Chairman and Chief Executive Officer of Annapolis Bancorp.  “We believe that this voluntary program provides a great opportunity for well-capitalized financial institutions, such as BankAnnapolis, to support the recovery of the U.S. economy and to help restore confidence in the U.S banking system.  The capital investment from the government will further strengthen our core capital reserves and facilitate additional lending opportunities in the communities we serve.”

Annapolis Bancorp, Inc. is the holding company for BankAnnapolis, which 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.  A new office in the Annapolis Towne Centre at Parole opened earlier this week.  The Bank’s headquarters building and main branch are located at 1000 Bestgate Road, directly across from the Westfield Annapolis Mall.

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Bankannapolis Branch At Annapolis Towne Centre To Open Dec. 16

Annapolis, MD, November 13, 2008 – BankAnnapolis announced today that it will open its eighth branch on December 16th at the new Annapolis Towne Centre at Parole.  A full service branch with a convenient walk-up window, BankAnnapolis at Annapolis Towne Centre will be located at 1905 Towne Centre Blvd., one of the main retail thoroughfares in the mixed-use development.
BankAnnapolis will be the first bank to move into the new Annapolis Towne Centre, which will ultimately feature more than 40 upscale shops, restaurants and other retailers, as well as luxury condominiums, apartments and commercial offices. 

"Annapolis Towne Centre has transformed the Parole area into a true destination spot," said BankAnnapolis Chairman and CEO Richard M. Lerner.  “We see it as a premier location for BankAnnapolis and are excited to be a part of it."

The branch will be open Monday through Thursday from 8:30 a.m. – 3:00 p.m. with the walk-up window offering extended hours until 7:00 p.m. On Friday, the branch will be open from 8:30 a.m. – 7:00 p.m. and on Saturday, it will be open from 8:30 a.m. – 3:00 p.m.  (Amenities will include a storefront ATM machine and a night drop that is accessible 24 hours a day.)

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Annapolis Bancorp Announces Third Quarter Profit

Annapolis, MD, November 11, 2008 – Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced net income of $299,000 ($0.08 per basic and diluted share) for the third quarter of 2008, down from $662,000 ($0.16 per basic and diluted share) for the same period last year.“Once again, despite the most challenging of circumstances, Annapolis Bancorp is pleased to report a profit for the quarter just ended,” said Chairman and CEO Richard M. Lerner.  “In fact, since going public in 1997, this is the Company’s 44th consecutive profitable quarter.”

With the real estate market at a standstill and economic conditions worsening, the Company continued to build its reserves in the third quarter by recording a $931,000 provision for credit losses, up from $133,000 in the same period of 2007.  After net charge-offs of only $4,000 in the quarter, the allowance for credit losses amounted to $3,521,000 (1.35% of total gross loans) at September 30, 2008 compared to $2,283,000 (0.93% of total gross loans) at December 31, 2007.

Approximately 50% of the third quarter provision for credit losses is attributable to risk rating downgrades as the Company continues to carefully monitor the quality and performance of its $260.4 million loan portfolio.  The balance of the third quarter provision expense represents increases to specific reserves for five classified loans totaling $3.8 million in the aggregate.

Total gross loans increased by $5.4 million or 2.1% in the third quarter, and through the first nine months of 2008 the Company’s loan portfolio grew by $14.2 million or 5.8% (7.7% annualized).  “We remain actively committed to lending in the communities we serve,” said Lerner.  “We are able to do so because our primary funding sources are local deposits, which continued to flow into the Bank in the third quarter.”

Although largely unchanged from their level at June 30, 2008, total assets rose to $375.9 million at September 30, 2008 from $361.9 million December 31, 2007, a 3.9% increase.  Year-to-date balance sheet growth was funded by $20.0 million in new Federal Home Loan Bank advances, as well as by higher repurchase agreement and demand deposit account balances, offset by a $6.2 million or 2.4% decline in interest-bearing deposits and the repayment of $4.2 million in short-term borrowings.

The Company’s mix of interest-bearing deposits continued its transformation since year-end 2007, with savings account balances increasing by $42.1 million or 94.3%, while money market account balances fell by $38.1 million or 44.6%.  Certificate of deposit balances declined by $7.0 million or 8.0% due in large part to the deliberate runoff of $8.0 million in brokered deposits earlier in the year.  The Superior Savings Account introduced in April of last year has proven invaluable in attracting and retaining significant core deposit relationships at a time when prevailing rates on money market accounts and certificates of deposit have been on the decline.

Stockholders’ equity totaled $26.0 million at the end of the third quarter, a decrease of $0.9 million or 3.2% from year-end 2007.  Approximately $1.5 million of capital surplus was utilized to complete the Company’s stock repurchase program in the first half of 2008.  Book value per share at quarter-end was $6.77.

At September 30, 2008, Annapolis Bancorp met all federal regulatory requirements for a well-capitalized institution, with a Tier 1 capital ratio of 11.6%, a total capital ratio of 12.9%, and a leverage ratio of 8.4%.  To be considered “well-capitalized” under federal definitions, a bank holding company must have a Tier 1 capital ratio of at least 6%, a total capital ratio of at least 10%, and a leverage ratio of at least 5%.

As of the date of this release, the Company has not yet made a determination as to whether it will participate in the U.S. Treasury’s TARP Capital Purchase Program.  “As a profitable and well-capitalized institution, we have every reason to believe that we would qualify for participation in this program,” Lerner said.  “We are evaluating the matter carefully and will proceed based on our assessment of how effectively the capital can be deployed.”

In the quarter ended September 30, 2008, average interest-earning assets rose to $356.8 million from $338.9 million in the same period last year.  The yields on loans and overnight investments declined significantly, offsetting a modest improvement in the yield on investment securities.  Overall, the yield on interest-earning assets dropped to 6.10% from 6.78% in the third quarter of last year, and as a result, total interest income fell by $321,000 or 5.5%.

Average interest-bearing liabilities grew to $309.9 million from $290.8 million in the third quarter of 2007, but total interest expense plummeted by $718,000 or 25.7% compared to the same period last year as the deposit mix shifted and interest rates on deposits fell sharply in every category.  The overall cost of interest-bearing liabilities dropped by 115 basis points to 2.66% in the three months just ended from 3.81% in the comparable period last year.

Due primarily to the substantial reduction in third quarter interest expense, net interest income improved by $397,000 or 13.2% compared to the same period in 2007, and the Company’s net interest margin expanded from 3.51% in the third quarter of 2007 to 3.79% in the three months just ended.  On a sequential quarter basis, the Company’s net interest margin improved by 15 basis points, continuing a trend of stabilization or improvement in this key metric over the past four quarters.

As previously mentioned, the Company’s third quarter provision for credit losses increased to $931,000 from $133,000 in the same period last year.  Nonperforming assets at September 30, 2008 amounted to $5.5 million or 2.13% of total gross loans compared to $1.1 million or 0.44% of total gross loans at December 31, 2007.  Increases of $3.3 million in nonaccrual loans and $1.2 million in loans over 90 days past due but still accruing accounted for the higher level of nonperforming assets.

Noninterest income decreased by $48,000 or 9.9% in the third quarter compared to the same period last year, due primarily to lower transaction-based service charges.  Noninterest expense increased by $62,000 or 2.6%, with higher operating costs offset by the reversal of all accrued discretionary bonuses for 2008.

Annapolis Bancorp’s annualized return on average equity for the third quarter of 2008 was 4.59% compared to 10.37% for the same period in the prior year.  The third quarter annualized return on average assets was 0.32% compared to 0.73% for the three months ended September 30, 2007.

Year-to-date net income for 2008 declined by 32.3% to $1,282,000 ($0.33 per basic and $0.32 per diluted share) from $1,893,000 ($0.46 per basic and $0.45 per diluted share) in the first nine months of last year.  Net interest income improved by $954,000 or 10.8%, with the year-to-date net interest margin expanding to 3.67% from 3.59% in the comparable period of 2007.  After a $1,266,000 increase in the provision for credit losses compared to the same period last year, net interest income after provision declined by $312,000 or 3.6%.  Year-to-date noninterest income fell by $55,000 or 4.0%, and noninterest expense increased by $565,000 or 7.9%.

For the nine months ended September 30, 2008, Annapolis Bancorp’s annualized return on average equity was 6.48% compared to 10.16% for the same period of 2007.  The 2008 nine-month annualized return on average assets was 0.46% compared to 0.73% in 2007.

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Annapolis Bancorp Announces Second Quarter Results

Annapolis, MD, August 5, 2008 – Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced net income of $458,000 ($0.12 per basic and diluted share) for the second quarter of 2008, down from $628,000 ($0.15 per basic and diluted share) for the same period last year.

“At a time of deteriorating economic conditions and considerable distress in the banking industry, we are pleased to report that Annapolis Bancorp earned a very respectable profit in the quarter just ended,” said Chairman and CEO Richard M. Lerner.  “Although not at last year’s levels, we believe that our earnings reflect continued solid performance by BankAnnapolis under the most challenging of circumstances.”

Amidst growing economic uncertainty, falling real estate collateral values and rapidly changing market conditions, the Company prudently elected to fortify its reserves in the second quarter by recording a $367,000 provision for credit losses, up $357,000 from the same period in 2007.  After net charge-offs of $178,000 in the second quarter, the allowance for credit losses amounted to $2,593,000 (1.02% of total gross loans) at June 30, 2008 compared to $2,283,000 (0.93% of total gross loans) at December 31, 2007.

The increase in second quarter provision for credit losses also reflected substantial growth in the Company’s loan portfolio, as total gross loans increased to $255.0 million from $244.5 million at March 31, 2008, an annualized growth rate of 17.2%.  Through the first six months of 2008, the Company’s loan portfolio has grown by $8.8 million or 3.6% (7.2% annualized).

“The growth in our loan portfolio is a clear indication that BankAnnapolis is actively developing business and pursuing opportunities to extend credit to deserving local businesses,” said Lerner.  “Because we maintained rigorous lending standards in the past, we have no need to tighten them now.”

Total assets dropped by $7.8 million or 2.0% from their level at March 31, 2008, primarily because of a $5.0 million Federal Home Loan Bank advance that was called and repaid by the Company.  Since December 31, 2007, total assets have risen by 3.6% from $361.9 million to $374.9 million at June 30, 2008.

Year-to-date balance sheet growth was funded by $20.0 million in new Federal Home Loan Bank advances, as well as by higher repurchase agreement and demand deposit account balances, offset by a $7.6 million or 3.0% decline in interest-bearing deposits.

The Company’s mix of interest-bearing deposits continued its dramatic transformation since year-end 2007, with savings account balances increasing by $29.5 million or 66.2%, while money market account balances fell by $25.9 million or 30.4%.  Certificate of deposit balances declined by $8.2 million or 9.4% due in large part to the deliberate runoff of $8.0 million in brokered deposits in the first quarter.

“The Company continues to be extremely pleased with the success of its Superior Savings Account which was introduced in April of 2007,” said Lerner.  “Since then, almost 3,000 new accounts have been opened, with the average balance per account exceeding $20,000.  This product has proven invaluable in attracting and retaining significant core deposit relationships at a time when prevailing rates on money market accounts and certificates of deposit were on the decline.”  The Annual Percentage Yield on the Superior Savings Account was 3.00% at June 30, 2008.

Stockholders’ equity totaled $25.9 million at the end of the second quarter, a decrease of $1.0 million or 3.7% from year-end 2007.  Approximately $1.5 million of capital surplus was utilized to complete the Company’s stock repurchase program in the first half of 2008.  In total, 300,000 shares (approximately 7.3% of the outstanding common stock) were repurchased between May 2007 and June 2008 at an average price per share of $7.79.  Book value per share at quarter-end was $6.78.

At June 30, 2008, Annapolis Bancorp met all federal regulatory requirements for a well-capitalized institution, with a Tier 1 capital ratio of 11.8%, a total capital ratio of 12.8%, and a leverage ratio of 9.0%.  To be considered “well-capitalized” under federal definitions, a bank holding company must have a Tier 1 capital ratio of at least 6%, a total capital ratio of at least 10%, and a leverage ratio of at least 5%.

Based on March 31, 2008 financial data, BankAnnapolis was assigned a 5-Star “Superior” rating by BauerFinancial, an independent research firm that analyzes and reports on the financial condition of the nation’s banking industry.  According to information published on its web site (www.bauerfinancial.com), “5-Stars” is BauerFinancial’s top rating, signifying superior safety and soundness based on such factors as capital ratios, liquidity, loan delinquency rates and profitability trends.

In the quarter ended June 30, 2008, average interest-earning assets rose to $362.2 million from $330.9 million in the same period last year.  The yields on loans and overnight investments declined significantly, offsetting a modest improvement in the yield on investment securities.  Overall, the yield on interest-earning assets dropped to 6.01% from 6.83% in the second quarter of last year, and as a result, total interest income fell by $206,000 or 3.7%.

Average interest-bearing liabilities grew to $315.4 million from $283.6 million in the second quarter of 2007, but total interest expense plummeted by $566,000 or 20.8% compared to the same period last year as the deposit mix shifted and interest rates on deposits and borrowings fell sharply in every category.  The overall cost of interest-bearing liabilities dropped by 110 basis points to 2.74% in the three months just ended from 3.84% in the comparable period last year.

Due primarily to the substantial reduction in second quarter interest expense, net interest income improved by $360,000 or 12.3% compared to the same period in 2007, and for the first time in two years, the Company’s net interest margin expanded, from 3.54% in the second quarter of 2007 to 3.64% in the three months just ended.  On a sequential quarter basis, the Company’s net interest margin improved by 5 basis points, continuing a trend of stabilization or improvement in this key metric over the past three quarters.

As previously mentioned, the Company’s second quarter provision for credit losses increased to $367,000 from $10,000 in the same period last year.  Nonperforming assets at June 30, 2008 amounted to $2.2 million or 0.86% of total gross loans compared to $1.1 million or 0.44% of total gross loans at December 31, 2007.  An increase in loans greater than 90 days past due but still accruing accounted for the higher level of nonperforming assets.

“We are constantly reviewing our loan portfolio, adjusting internal risk ratings as warranted, and modifying the qualitative factors in our methodology to reflect changing economic and market conditions,” said Lerner.  “These practices help us manage credit quality and deal proactively with potential problem loans.”

Noninterest income decreased by $36,000 or 7.4% in the second quarter compared to the same period last year, due primarily to lower transaction-based service charges.  Noninterest expense increased by $268,000 or 11.3%, reflecting the cost of recent strategic investments in personnel, and higher legal, audit, and consulting fees compared to the second quarter of 2007.

Annapolis Bancorp’s annualized return on average equity for the second quarter of 2008 was 7.08% compared to 9.94% for the same period in the prior year.  The second quarter annualized return on average assets was 0.48% compared to 0.72% for the three months ended June 30, 2007.

Year-to-date net income for 2008 declined by 20.1% to $983,000 ($0.25 per basic and $0.24 per diluted share) from $1,231,000 ($0.30 per basic and $0.29 per diluted share) in the first six months of last year.  Net interest income improved by $557,000 or 9.5%, with the net interest margin contracting slightly to 3.61% from 3.64% in the first half of 2007.  After a $468,000 increase in the provision for credit losses compared to the same period last year, net interest income after provision increased by $89,000 or 1.5%.  Year-to-date noninterest income declined by $7,000 or 0.8%, and noninterest expense increased by $503,000 or 10.6%.

For the six months ended June 30, 2008, Annapolis Bancorp’s annualized return on average equity was 7.40% compared to 9.97% for the same period of 2007.  The 2008 six-month annualized return on average assets was 0.53% compared to 0.72% in 2007.

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 the fourth quarter of 2008, the Bank will open its eighth office in the Annapolis Towne Centre at Parole.  The Bank’s headquarters building and main branch are located at 1000 Bestgate Road, directly across from the Westfield Annapolis Mall.

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Foundation For Community Partnerships Names Richard M. Lerner As Board Chair

Centreville, MD, June 27, 2008 – The Foundation for Community Partnerships has named Richard M. Lerner, Chairman and CEO of BankAnnapolis as Chairman of its Board of Directors.  Lerner joined the Foundation’s Board in 2006 when BankAnnapolis agreed to become the organization’s principal partner. 

 “With his strong leadership skills and extensive business expertise, Rick has been a real asset to the Foundation during the past two years,” said Wayne Humphries, President of the Foundation for Community Partnerships.  “He truly understands the communities that we serve and shares our commitment to strengthening the community through public service and giving back.  We are delighted that Rick has agreed to take on this important role.” 

The Foundation for Community Partnerships is a public charity that works with individuals, families, businesses and other groups to create permanent charitable funds, then uses the proceeds from these funds to award grants to a wide variety of humanitarian, educational and cultural organizations in the Chesapeake Bay region and beyond.

“Rick’s belief in the work of the Foundation is very real and we grateful that he has agreed to take on this important leadership role,” added Mike Clark, executive director of the Foundation.  “We look forward to working even more closely with him in the years ahead so we can make an even bigger impact on the community.” 
“It is an honor and privilege to Chair the Foundation’s board,” Lerner said.  “The Foundation for Community Partnerships is a very special organization with a dedicated board and a vision that clearly puts people and their needs first.  It actually changes lives with the assistance it provides.”

Committed to sustaining organizations that make a difference in the community, Foundation fund recipients have included a homeless shelter, the Partnering for Youth after school program, the Eastern Shore Police Canine fund, the Character Counts program, the Corsica River Conservancy, Healthy Families, the Kent County High School Stadium Improvement Project, Adopt-A-Bear and many others. Last year the Foundation disbursed more than $305,000 for charitable activities.

“We have been able to leverage local funds in a new way in which everyone benefits,” explained Linda Kohler, chief financial officer of the Foundation. “Local service organizations, other foundations and donor advisors, unable to fund worthwhile community groups without their own 501(c)(3) designation, can support these groups through the Foundation. The recipients provide valuable services and donors are delighted that they can give back to their community easily and effectively.  The resulting partnership has yielded just under $1,000,000 of charitable investment since 2005.”

Lerner has served as CEO of Annapolis Bancorp, Inc. (NASDAQ:ANNB) since 1999 and became Chairman in 2001.  He was appointed head of BankAnnapolis, Annapolis Bancorp’s principal subsidiary in 2002.  Prior to this, he spent 16 years as President of White Flint Builders, Inc., an upscale residential development and construction company.  In addition to his work with the Foundation, he also serves on the Board of the Hospice of the Chesapeake Foundation, where he is Vice Chair.  Lerner, who holds an MBA from the A.B. Freeman School of Business at Tulane University, resides in Annapolis.

BankAnnapolis contributes financial, in-kind and volunteer assistance to numerous nonprofit institutions and organizations that assist people 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, BankAnnapolis serves the financial needs of small businesses, professional concerns and individuals. 

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BankAnnapolis Joins Surcharge-Free Atm Network
New Service Gives Bank Customers Access to Cash with No Service Charge at 12,000 ATMs across the Country

Annapolis, MD, June 26, 2008 – BankAnnapolis today announced that it has partnered with MoneyPass, one of the nation’s fastest growing surcharge-free ATM networks, to provide the Bank’s customers with access to their cash without having to pay service fees at more than 12,000 ATMs across the country. 
The new service gives BankAnnapolis customers holding ATM cards the option of withdrawing funds from thousands of ATMs located where they live, work or travel.  MoneyPass ATMs can be found at financial institutions as well as retail locations such as gas stations, supermarkets, convenience stores, restaurants and a variety of other locations. 

The MoneyPass service is available immediately.  Bank customers can locate ATM’s in the network by logging into the BankAnnapolis web site at www.bankannapolis.com and clicking on the MoneyPass link.

“We have found that convenient access to a service charge-free ATM network is important to a lot of our customers, especially those who commute to the Baltimore and Washington, D.C. areas,” said Richard M. Lerner, Chairman and CEO of BankAnnapolis.  “We pride ourselves on providing hassle free banking to our customers, and MoneyPass is a natural complement to the other services we already provide.”

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Hospice Of The Chesapeake Foundation Names Richard M. Lerner As Vice Chairman

Annapolis, MD, June 23, 2008 – Hospice of the Chesapeake’s Foundation recently named Richard M. Lerner, Chairman and CEO of BankAnnapolis, as Vice Chair of its Board of Directors.

“Since joining the Board of the Hospice of the Chesapeake Foundation two years ago, Rick has demonstrated an unbelievable commitment to our mission through his contributions," said Hospice of the Chesapeake President and CEO Erwin Abrams. “With his strong leadership skills and business expertise, he has helped us immensely and we are very pleased that he has agreed to accept this important role.”

“The work that Hospice of the Chesapeake does is truly inspirational,” Lerner said. “Coping with a life-limiting illness is extremely difficult, not only for the patient, but for their family and friends as well. Hospice provides care to the patient so they can live out their lives in comfort, with dignity and on their own terms…and it embraces those who love and care for them. It is a privilege to work with them.”

Lerner has served as CEO of Annapolis Bancorp, Inc. (NASDAQ:ANNB) since 1999 and became Chairman in 2001. He was appointed head of BankAnnapolis, Annapolis Bancorp’s principal subsidiary in 2002. Prior to this, he spent 16 years as President of White Flint Builders, Inc., an upscale residential development and construction company. In addition to his work with Hospice of the Chesapeake Foundation, he also serves as Chairman of the Board of the Foundation for Community Partnerships. Lerner, who holds an MBA from the A.B. Freeman School of Business at Tulane University, resides in Annapolis.

“It is through the efforts of Hospice of the Chesapeake’s Foundation that unreimbursed expenses are covered and this allows our staff to provide exceptional hospice care and grief support,” explained Deborah Caldwell, Vice President of Philanthropy for Hospice of the Chesapeake. “Rick has been a great asset to us during his tenure on the Board and we look forward to working more closely with him in the future.”

For more information about Hospice of the Chesapeake’s Foundation, please contact Deborah Caldwell at 443-837-1527 or dcaldwell@hospicechesapeake.org

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Annapolis Bancorp Announces Successful Completion of Stock Repurchase Program

Annapolis, MD, June 16, 2008 – Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced that it has completed the repurchase of 300,000 shares of its outstanding common stock at an average price per share of $7.79.
 
The Company’s stock repurchase program was initiated on February 21, 2007, at which time the Board of Directors authorized the acquisition of up to 5% of the outstanding common stock, or approximately 200,000 shares.
 
On February 15, 2008, the program was expanded to include an additional 100,000 shares.  At that time, a stock repurchase plan under Rule 10b5-1 of the Securities and Exchange Act of 1934 was also adopted.  Since then, all repurchases under the stock repurchase program have been made pursuant to the terms and conditions of this plan.
 
“We believe that the stock repurchase program has been an effective use of the Company’s capital,” said Annapolis Bancorp Chairman and CEO Richard M. Lerner, “and will ultimately prove to be accretive to return on equity for Annapolis Bancorp shareholders.”
 
The stock repurchase program has now been terminated.  All shares repurchased under the program were cancelled and retired by the Company.
 
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 the fall of 2008, the Bank will open its eighth office in the Annapolis Towne Centre at Parole.  The Bank’s headquarters building and main branch are located at 1000 Bestgate Road, directly across from the Westfield Annapolis Mall.  Total assets at March 31, 2008 were $382 million; book value per share was $6.88.

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 LAUNCHES “PRIVATE BUSINESS BANKING”
New Personalized Service Gives Every Business Access to the Most Advanced Financial Tools and Resources

Annapolis, MD, May 8, 2008 – BankAnnapolis recently announced the launch of “Private Business Banking,” a revolutionary new concept in business banking that will provide local businesses with easy access to an exclusive set of financial products and services as well as the professional guidance and support to take advantage of them. 

“Over the past few years, we have witnessed a growing demand among our business customers for a higher level of service and attention—the kind of service that most banks only offer to larger businesses,” said Richard M. Lerner, Chairman and CEO of BankAnnapolis.  “We have responded to that demand by creating Private Business Banking.”

“Private Business Banking also grew out of our recognition that small businesses and their owners need better access to credit and more sophisticated cash management tools,” Lerner added.  “They’re not getting it from other banks, and BankAnnapolis is determined to fill that void.”

As a result, BankAnnapolis has established a new Private Business Banking Division managed by Senior Vice President and Chief Business Development Officer Ronald Voigt and inspired by Senior Vice President Carol Kasper.  Ms. Kasper is a seasoned business banking professional whose relationship with her customers is the model on which Private Business Banking is based.  This new division of BankAnnapolis will help owners and entrepreneurs manage and grow their businesses by giving them the tools and resources they need to thrive. 

At the heart of Private Business Banking is the Private Business Banker, a financial professional who will take the time to understand the unique needs of each business and business owner, recommend how BankAnnapolis can help, and then work proactively to make it happen.  The Private Business Banker will coordinate all the bank’s resources on behalf of the customer, placing banking experts, decision makers, cash management tools and credit within easy reach when needed.

BankAnnapolis’ customers who experienced Private Business Banking before it became a formal Division, say it has been instrumental to their success. 

“We switched to BankAnnapolis six or seven years ago because we wanted a bank that would give us a hands-on, personal approach…not cookie cutter solutions,” explains Stuart Holbrook, controller of Theriaults, an Annapolis-based antique doll auctioneer that is now known worldwide.  “Because our business is so unusual, we need to have a relationship with a bank that intimately understands what we do.  BankAnnapolis knows our company…we can just sit down and talk to them anytime we want.  They think out of the box…there are no set formulas.  There is no company that would not benefit from a relationship with BankAnnapolis.  It’s eye-opening!”

According to statistics from the Anne Arundel Economic Development Corporation, the number of small businesses in Anne Arundel County grew by approximately 18% between 2000 and 2005. At the same time, many local banks merged with regional or national financial institutions.  In fact, of the 31 banks with operations in Anne Arundel County, only four are now locally owned, and BankAnnapolis is the second largest in terms of assets.

In addition to having a dedicated Private Business Banker, Private Business Banking customers will be offered a variety of products and services that are rarely available to smaller companies.  This includes CashSuite™, a custom set of cash management products that make the most efficient use of a business’s available cash, including:

·      Cash Flow Maximizer – an automatic system that manages the timing and transfer of funds between deposit and loan accounts to minimize interest costs and maximize earnings.
·      Remote Deposit Express – for depositing checks without ever leaving the office.
·      Lock Box Express – lock box service for the direct collection and deposit of incoming payments.
·      Lion’s Share Money Market Account – an indexed business money market account that offers one of the highest market interest rates in the area. 

Private Business Banking customers can also take advantage of CreditSuite™, a variety of credit products and services that include:
·      Business Loan Express – an online loan application for term loans and lines of credit up to $100,000 that offers the convenience of applying online without submitting detailed financial information.
·      Cash Flow Maximizer - which automatically manages the timing and transfer of funds between loan and deposit accounts to minimize interest costs, cover overdrafts and maximize interest earnings.
·      Government Guaranteed Loan Programs – to help the business owner wade through the multitude of government loan programs and select the loan product that best suits the business’s needs.

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.  In 2008, the Bank will open its eighth office in the Annapolis Towne Centre at Parole, a new two-million-square-foot mixed-use development now under construction.  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 $382.7 million at March 31, 2008.

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Annapolis Bancorp Reports Stable Asset Quality, Net Interest Margin
Higher Operating Expense Leads to 12.9% Decline in First Quarter Earnings

Annapolis, MD, May 8, 2008 – Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced net income of $525,000 ($0.13 per basic and diluted share) for the first quarter of 2008, down 12.9% from $603,000 ($0.15 per basic and $0.14 per diluted share) for the same period last year.

The Company’s total assets grew to $382.7 million from $361.9 million at December 31, 2007. $8.0 million of high-cost brokered certificates of deposit were replaced in the first quarter with lower priced Federal Home Loan Bank callable advances, as the level of FHLB borrowings increased from $20.0 million at December 31, 2007 to $45.0 million at March 31, 2008.  The excess funding was invested at a positive spread in interest bearing deposits of other banks.

The Bank’s loan portfolio contracted during the quarter as new loan production was overshadowed by payoffs of several large loans that had been classified as criticized or watch assets.  Total gross loans declined to $244.5 million at March 31, 2008 from $246.2 million at December 31, 2007, a drop of $1.6 million or 0.67%.

The Bank reported continued success with its Superior Savings Account as balances increased by $9.7 million or 28.8% in the first quarter.  Since the inception of this product in April 2007, the Bank has generated $43.2 million in core balances.  Deposits, exclusive of the $8.0 million runoff in brokered certificates of deposit, increased by $4.2 million or 1.43% in the quarter ended March 31, 2008.

Total stockholders’ equity at period-end rose to $27.4 million, up 2.2% from $26.9 million at December 31, 2007.  Book value per share at March 31, 2008 was $6.88.  In February of this year, the Company supplemented its ongoing stock repurchase program and instituted a 10b5-1 Stock Repurchase Plan.  28,500 shares were subsequently acquired, bringing the total number of shares repurchased as of March 31, 2008 to 127,672.

Net interest income for the quarter ended March 31, 2008 rose by $197,000 or 6.7% over the same period in 2007.  Although the net interest margin contracted to 3.59% from 3.75% in the first quarter of last year, on a sequential quarter basis it remained unchanged, offering further indication that the Company’s net interest margin has stabilized after an extended period of contraction.

Average interest earning assets in the period just ended improved by $33.3 million or 10.5% compared to the first quarter of 2007, but due to aggressive rate cutting by the Federal Reserve, the yield on interest earning assets fell to 6.47% from 6.86% in the comparable period.  Total interest income grew by $276,000 or 5.2% in the first quarter, with interest from the loan portfolio increasing by $182,000 and interest income on the securities portfolio, overnight investments, and deposits in other institutions improving by $94,000.

Total interest expense for the quarter rose by $79,000 or 3.3%.  The Company’s overall cost of funds fell, however, to 2.96% from 3.17% in the first three months of 2007, due to lower market rates, the success of the Superior Savings Account and other favorable changes in the Company’s deposit and borrowing mix.

During the first quarter the Company proactively adjusted the qualitative factors it uses to determine an appropriate allowance for credit losses.  This was done to reflect deteriorating local economic and market conditions, and resulted in provision for credit losses expense for the quarter of $121,000 compared to $10,000 in the same period last year.

The allowance for credit losses at March 31, 2008 stood at $2,404,000 or 0.98% of total gross loans compared to $2,283,000 or 0.93% of total gross loans at December 31, 2007.  Nonperforming assets of $1,731,000 accounted for 0.71% of total gross loans at quarter-end, and the allowance for credit losses provided 139% coverage of nonperforming assets.

The Company continued to maintain sound asset quality, despite reported increases in delinquencies and nonperforming assets industry-wide.  While nonperforming assets increased from December 31, 2007 levels, the amount reported at quarter-end includes a $595,000 participation in a loan administered by another bank.  This loan matured on December 30, 2007, and at the end of the first quarter was technically over 90 days past due.  Payments on the loan were current through March 31, 2008, however, delays in obtaining executed renewal documents from the lead bank resulted in the loan being classified as nonperforming.  Fully executed renewal documents were received on April 1, 2008, and the loan was restored to performing status.  Excluding the past due participation loan, the Company’s nonperforming assets would have amounted to $1.1 million or 0.46% of total gross loans at March 31, 2008 compared to $1.1 million or 0.44% of total gross loans at December 31, 2007. The Company recorded no charge-offs in the first quarter.

Noninterest income rose in the first quarter to $434,000 from $405,000 in the comparable period, as transaction-based fee income improved by $29,000 or 7.2%.

Noninterest expense increased by $235,000 or 9.9% in the first three months of 2008 compared to the same period last year, as the Company hired several highly experienced business development officers and related support staff.  “We seized the opportunity to improve the quality and expertise of our sales staff, and brought these talented individuals on knowing that in the short term we would incur additional expense,” said Chairman and CEO Richard M. Lerner.  “These additions are fundamental to the success of our newly introduced Private Business Banking program, which interested parties can learn more about at www.bankannapolis.com/pbb <http://www.bankannapolis.com/pbb> .”
Annapolis Bancorp’s annualized return on average assets was 0.57% for the first quarter of 2008 compared to 0.72% for the same period in the prior year.  The first quarter annualized return on average equity was 7.70% compared to 9.94% for the first quarter of 2007.

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.  This fall, the Bank will open its eighth office in the Annapolis Towne Centre at Parole.  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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Annapolis Bancorp Expands Stock Repurchase Program

Annapolis, MD, February 15, 2008 – Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced that its Board of Directors has authorized the repurchase of an additional 100,000 shares of the Company’s issued and outstanding common stock. This authorization is in addition to the repurchase of up to 200,000 shares, or approximately 5% of the Company’s outstanding stock, authorized by the Board of Directors in February of 2007.

According to Annapolis Bancorp Chairman and CEO Richard M. Lerner, 99,172 shares have been repurchased to date under the repurchase program announced early last year.

“The Board considers the Company’s common stock to be an attractive investment, given the price range in which it has traded recently,” said Lerner.  “Expanding the repurchase program is consistent with Annapolis Bancorp’s ongoing efforts to enhance shareholder value and invest the Company’s resources in the most efficient manner possible.”

Annapolis Bancorp's common stock trades on the NASDAQ Capital Market under the ticker symbol "ANNB."  The Company's share price closed at $7.08 on February 14, 2008; book value per share as of December 31, 2007 was $6.69.  The Company reported earnings per share of $0.69 in 2007 and total assets of $361.9 million at year-end.

The Board of Directors today also adopted a stock repurchase plan under Rule 10b5-1 of the Securities and Exchange Act of 1934, as amended, and all future repurchases under the stock repurchase program will be made pursuant to the terms and conditions of this plan.

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.  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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Annapolis Bancorp Reports Fourth Quarter, Year-End Earnings

Annapolis, MD, February 12, 2008 – Annapolis Bancorp, Inc. (NASDAQ: ANNB), parent company of BankAnnapolis, today announced net income of $531,000 ($0.13 per basic and diluted share) for the fourth quarter of 2007, a 35.8% decrease from fourth quarter 2006 net income of $827,000 ($0.20 per basic and diluted share).

Higher provision expense in the fourth quarter led to the decline in earnings, as the Company increased its allowance for credit losses to reflect growth in the loan portfolio and to further reserve against a small number of specifically identified deteriorating credits whose principal balances total less than $1 million.

The Company recorded a $295,000 provision for credit losses in the fourth quarter, which also helped to replenish same period net charge-offs of $141,000 in the consumer loan portfolio.  By comparison, the Company made no provision for credit losses in the fourth quarter of 2006.

Most of the fourth quarter charge-offs resulted from the repossession of collateral securing five consumer boat loans with aggregate balances of $225,000 (1.3% of the Bank’s $16.8 million boat loan portfolio at December 31, 2007).  The repossessed boats were written down by $89,000 to reflect the Bank’s estimate of net realizable value and then transferred to Other Assets on the Company’s balance sheet pending final disposition.

“We don’t believe that these isolated credit quality issues are indicative of a broader or burgeoning problem in our loan portfolio,” said Chairman and CEO Richard M. Lerner.  “In all likelihood, what we are seeing is a return to historically normal credit metrics. The outstanding asset quality that we have maintained in recent years will be increasingly hard to sustain in an economic downturn.”

Aside from the increased allowance for credit losses, the Company’s asset quality metrics at December 31, 2007 remained largely unchanged from year-end 2006.  Nonperforming assets held steady at $1.1 million, accounting for 0.44% of total gross loans compared to 0.49% at December 31, 2006. The allowance for credit losses at year-end stood at $2,283,000 (0.93% of total gross loans) and provided 208% coverage of nonperforming assets, compared to $1,976,000 (0.89% of total gross loans) and 183% coverage at December 31, 2006.

While total assets increased by only $10.0 million or 2.8% in 2007, total gross loans grew by $24.4 million or 11.0%, as the Bank successfully shifted its asset mix away from overnight investments toward higher-yielding commercial and real estate loans.

To fund loan growth, the Company reduced cash and investment balances by $14.1 million or 12.2% from their levels at December 31, 2006.  Additional funding came from an increase of $21.5 million or 9.3% in interest-bearing deposits, offset by reductions of $10.2 million or 19.4% in repurchase agreement balances and other borrowed funds and $4.1 million or 9.7% in demand deposit accounts.

Total stockholders’ equity at year-end 2007 amounted to $26.9 million, up 11.6% from $24.1 million at December 31, 2006.  Book value per share at December 31, 2007 was $6.69.  At year-end, the Company had successfully repurchased 99,172 shares of its common stock on the open market.  Annapolis Bancorp’s Board of Directors authorized the repurchase of up to 5% or 200,000 shares in February of 2007.

In the quarter just ended, average interest-earning assets expanded to $331.8 million from $327.4 million in the fourth quarter of 2006.  Average loan balances rose to $240.7 million from $218.1 million, resulting in a more effective deployment of interest-earning assets.  Consequently, the overall yield on loans and investments improved to 6.79% in the fourth quarter compared to 6.50% in the same period last year, and total interest income increased by $319,000 or 6.0%.

Total interest expense increased by $333,000 or 14.2% as average interest-bearing liabilities grew to $287.7 million from $280.6 million in the quarter ended December 31, 2006.  The mix of interest-bearing liabilities also changed significantly between the fourth quarters of 2006 and 2007, as higher average balances in savings and money market accounts countered reductions in average NOW account balances and Federal Home Loan Bank debt.  Overall, the cost of interest-bearing liabilities increased to 3.69% in the fourth quarter from 3.32% in the final three months of 2006.

As previously reported, the Bank generated significant core deposit growth after introducing its new, high-yield Superior Savings Account in the second quarter of 2007.  By year-end, total Superior Savings Account balances had climbed to $33.6 million, with 2,100 new accounts opened.  The average balance per account was over $15,000.

The initial influx of new savings account deposits enabled the Bank to pay off $25.0 million of 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%.  Late in the fourth quarter of 2007, the Bank borrowed again from the Federal Home Loan Bank, securing $15.0 million in laddered-maturity convertible advances at a blended cost of 3.22%.

Net interest income in the fourth quarter declined by $14,000 or 0.5%, as the net interest margin contracted to 3.59% from 3.66% in the same period of 2006.  “On a sequential quarter basis, the net interest margin actually improved by 8 basis points,” noted Lerner, “offering further indication that margins have begun to stabilize after an extended period of contraction that began two years ago when the yield curve first flattened and then inverted.”

Comparing the final three months of 2007 to the same quarter a year ago, noninterest income fell by $40,000 or 8.1% and noninterest expense increased by $111,000 or 5.0%.

Net income for fiscal year 2007 totaled $2.42 million ($0.60 per basic and $0.58 per diluted share), down 17.9% from $2.95 million ($0.72 per basic and $0.70 per diluted share) in 2006.  Net interest income improved by $38,000 or 0.3% despite a drop in the net interest margin to 3.59% from 3.96% in the previous year.  After a $436,000 year-over-year increase in the provision for credit losses, net interest income after provision fell by $398,000 or 3.4%. Noninterest income declined by $19,000 or 1.0% and noninterest expense rose by $531,000 or 5.9%.

Due to lower annual earnings, Annapolis Bancorp’s return on average assets for 2007 dropped to 0.69% from 0.93% in 2006, and its return on average equity fell to 9.51% from 13.21%.  The Company’s efficiency ratio rose to 69.37% in 2007 from 65.58% in 2006.

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.  This year, the Bank will open its eighth office in the Annapolis Towne Centre at Parole.  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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