Record Quarterly Earnings at Annapolis Bancorp

Record Quarterly Earnings at Annapolis Bancorp

ANNAPOLIS, Md.--(BUSINESS WIRE)-- Annapolis Bancorp, Inc. (NAS: ANNB) , parent company of BankAnnapolis, today announced net income of $1,111,000 for the third quarter of 2012, an increase of $443,000 or 66.3% compared to net income of $668,000 in the third quarter of 2011. These results make the third quarter of 2012 the most profitable in the Company's 22+ year history.

Third quarter net income available to common shareholders after accruing for preferred stock dividends was $1,060,000 ($0.27 per basic and $0.26 per diluted common share), an increase of $515,000 or 94.5% compared to net income available to common shareholders of $545,000 ($0.14 per basic and diluted common share) in the third quarter of 2011.


Return on average assets and return on average common equity for the quarter improved to 1.00% and 13.31%, respectively, compared to 0.61% and 7.61% in the same period of 2011.

Net income for the first nine months of 2012 grew to $2,856,000, an increase of $1,354,000 or 90.1% from $1,502,000 in the same period of 2011. Year-to-date net income available to common shareholders totaled $2,636,000 ($0.66 per basic and $0.65 per diluted common share) compared to $1,135,000 ($0.29 per basic and diluted common share) in the same nine month period of 2011.

Book value per common share at September 30, 2012 was $8.05 compared to $7.38 at December 31, 2011.

Total assets of $436.4 million at September 30, 2012 decreased 1.2% or $5.2 million from $441.6 million at December 31, 2011. Gross loans totaled $284.7 million compared to $290.5 million at year-end 2011.

As of September 30, 2012, the Company's allowance for credit losses was $6.6 million or 2.33% of total loans. Quarter-end nonperforming assets amounted to 1.88% of total assets.

Deposits of $338.8 million at September 30, 2012 decreased by $11.6 million or 3.3% from $350.4 million reported at year-end 2011.

Common stockholders' equity increased to $32.0 million at September 30, 2012 from $29.2 million at December 31, 2011. Preferred stock was reduced to $4.1 million at September 30, 2012 from $8.1 million at year-end 2011 as one-half of the Company's $8.2 million TARP obligation to the U.S. Treasury was repaid in the second quarter of 2012.

At September 30, 2012, Annapolis Bancorp, Inc. exceeded all federal regulatory requirements for a well-capitalized institution, with a Tier 1 capital ratio of 12.6%, a total capital ratio of 13.8%, and a Tier 1 leverage ratio of 9.0%.

In the quarter just ended, net interest income increased by $42,000 to $4,159,000 from $4,117,000 in the third quarter of 2011. The net interest margin improved to 3.95% in the third quarter of 2012 from 3.93% in the same period of 2011.

The Company lowered its provision for credit losses to $29,000 in the third quarter of 2012 from $338,000 in the third quarter of 2011.

Noninterest income totaled $509,000 for the three months ended September 30, 2012, a decrease of $150,000 or 22.8% compared to $659,000 in the third quarter of 2011.

Noninterest expense improved by $547,000 or 16.1% to $2,848,000 in the quarter just ended compared to $3,395,000 in the third quarter of 2011. The Company's efficiency ratio improved to 60.99% in the third quarter of the year compared to 71.08% in the linked quarter of 2011.

Year-to-date net interest income totaled $12,249,000 resulting in a net interest margin of 3.90% for the first nine months of 2012. A $306,000 provision for credit losses was recorded in the first nine months of 2012 compared to $1,574,000 in the same period of 2011. Noninterest income increased by $28,000 compared to the first nine months of 2011 and noninterest expense was reduced by $875,000. The year-to-date efficiency ratio improved to 64.26% from 71.45% in the same period of 2011.

BankAnnapolis 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. In October, the Bank opened its newest branch in the Waugh Chapel Towne Centre adjacent to Wegmans in Gambrills, Maryland.

On October 22, 2012, Annapolis Bancorp, Inc. announced that it had entered into a definitive merger agreement with F.N.B Corporation (NYS: FNB) pursuant to which F.N.B. Corporation will acquire Annapolis Bancorp, Inc. in an all stock transaction valued at approximately $12.09 per share, or $51 million in the aggregate.

Under the terms of the merger agreement, which has been approved by the boards of directors of both companies, shareholders of Annapolis Bancorp, Inc. will be entitled to receive 1.143 shares of F.N.B. Corporation common stock for each share of Annapolis Bancorp, Inc. stock. The exchange ratio is fixed and the transaction is expected to qualify as a tax-free exchange for shareholders of Annapolis Bancorp, Inc. A cash credit-related adjustment provides that shareholders of Annapolis Bancorp, Inc. may receive up to an additional $0.36 per share in cash for each share of Annapolis Bancorp, Inc. stock they own, dependent on Annapolis Bancorp, Inc.'s ability to resolve an agreed-upon credit matter.

F.N.B. Corporation and Annapolis Bancorp, Inc. expect to complete the transaction in April 2013, after satisfaction of customary closing conditions, including regulatory approvals and the approval of the shareholders of Annapolis Bancorp, Inc. Subject to the receipt of requisite approvals, it is expected that Annapolis Bancorp, Inc. will redeem all of its preferred stock held by the U.S. Treasury under the TARP Capital Purchase Program prior to closing or it will be extinguished upon closing of the merger.

F.N.B. Corporation will file a registration statement on Form S-4 with the SEC. The registration statement will include a proxy statement/prospectus and other documents relevant to the merger.

SHAREHOLDERS OF ANNAPOLIS BANCORP, INC. ARE ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

The proxy statement/prospectus and other relevant materials (when they become available), and any other documents F.N.B. Corporation has filed with the SEC, may be obtained free of charge at the SEC's website at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents F.N.B. Corporation has filed with the SEC by contacting James Orie, Chief Legal Officer, F.N.B. Corporation, One F.N.B. Boulevard, Hermitage, PA 16148, telephone (724) 983-3317, or by contacting Edward J. Schneider, Chief Financial Officer, Annapolis Bancorp, Inc., 1000 Bestgate Road, Suite 400, Annapolis, MD 21401, telephone (410) 224-4455.

Annapolis Bancorp, Inc. and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from its shareholders in connection with the proposed merger. Information concerning such participants' ownership of Annapolis Bancorp, Inc. common stock will be set forth in the proxy statement/prospectus relating to the merger when it becomes available. This communication does not constitute an offer of any securities for sale.

This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current expectations and involve certain risks and uncertainties which could cause actual results to differ materially from those expressed in forward-looking statements.Factors that might cause such a difference include, but are not limited to: (i) the rate of declining growth in the economy and employment levels, as well as general business and economic conditions; (ii) changes in interest rates, as well as the magnitude of such changes; (iii) the fiscal and monetary policies of the federal government and its agencies; (iv) changes in federal bank regulatory and supervisory policies, including required levels of capital; (v) the relative strength or weakness of the consumer and commercial credit sectors and of the real estate market; (vi) the performance of the stock and bond markets; (vii) competition in the financial services industry; (viii) possible legislative, tax or regulatory changes, and; (ix) such other risks and uncertainties as set forth in the Company's filings with the Securities and Exchange Commission. Other than to the extent required by applicable law, including the requirements of applicable securities laws, the Company does not undertake, and specifically disclaims any obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

The Company is not responsible for changes made to this press release by wire services, Internet service providers or other media.

Annapolis Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

as of September 30, 2012 and December 31, 2011

($000)

(Unaudited)

(Audited)

September 30,

December 31,

2012

2011

Assets

Cash and due from banks

$

1,951

$

2,026

Interest bearing balances with banks

39,996

18,288

Federal funds sold

11

26,583

Investment securities, available for sale

91,777

87,549

Federal Reserve and Federal Home Loan Bank stock

2,864

2,992

Loans, net of allowance of $6,647 and $7,182

278,102

283,284

Premises and equipment

9,797

8,418

Accrued interest receivable

1,350

1,279

Deferred income taxes

2,390

2,617

Investment in bank owned life insurance

5,783

5,624

Real estate owned

697

1,222

Prepaid FDIC Insurance

954

1,198

Other assets

683

490

Total Assets

$

436,355

$

441,570

Liabilities and Stockholders' Equity

Deposits

Noninterest bearing

$

57,314

$

56,664

Interest bearing

281,501

293,717

Total deposits

338,815

350,381

Securities sold under agreement to repurchase

18,895

11,344

Long term borrowed funds

35,000

35,000

Junior subordinated debentures

5,000

5,000

Accrued interest and dividends payable

188

219

Accrued expense and other liabilities

2,381

2,258

Total Liabilities

400,279

404,202

Stockholders' Equity

Preferred stock

4,076

8,146

Common stock

40

39

Warrants to purchase common stock

234

234

Paid in capital

11,847

11,779

Retained earnings

18,815

16,179

Accumulated other comprehensive income

1,064

991

Total Equity

36,076

37,368

Total Liabilities and Equity

$

436,355

$

441,570

Annapolis Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

for the Three and Nine Month Periods Ended September 30, 2012 and 2011

(Unaudited)

(In thousands, except per share data)

For the Three Months

For the Nine Months

Ended September 30,

Ended September 30,

2012

2011

2012

2011

Interest Income

Loans

$

4,338

$

4,348

$

12,817

$

12,807

Investments

513

640

1,601

2,044

Interest bearing balances with banks

9

4

24

13

Federal funds sold

9

12

31

27

Total interest income

4,869

5,004

14,473

14,891

Interest expense

Deposits

367

541

1,203

1,729

Securities sold under agreements to repurchase

13

18

36

59

Interest on long-term borrowings

330

328

985

974

Total interest expense

710

887

2,224

2,762

Net interest income

4,159

4,117

12,249

12,129

Provision

29

338

306

1,574

Net interest income after provision

4,130

3,779

11,943

10,555

NonInterest Income

Service charges

309

322

903

938

Mortgage banking

111

59

207

76

Other fee income

130

229

313

227

Gain on sale of loans

-

18

-

165

(Loss) Gain on sale of REO and other assets

(41

)

31

(12

)

8

Loss on sale or disposal of fixed assets

-

-

-

(31

)

Total noninterest income

509

659

1,411

1,383

NonInterest Expense

Personnel expense

1,620

1,826

4,927

5,301

Occupancy and equipment expense

361

360

1,108

1,204

Data processing expense

209

214

629

635

Professional fees

117

138

385

363

Marketing expense

50

63

267

295

FDIC expense

88

57

256

338

Other operating expense

403

737

1,207

1,518

Total noninterest expense

2,848

3,395

8,779

9,654

Income before taxes

1,791

1,043

4,575

2,284

Income tax expense

680

375

1,719

782

Net income

1,111

668

2,856

1,502

Preferred stock dividend and discount accretion

51

123

220

367

Net income available to common shareholders

$

1,060

$

545

$

2,636

$

1,135

Basic earnings per common share

$

0.27

$

0.14

$

0.66

$

0.29

Diluted earnings per common share

$

0.26

$

0.14

$

0.65

$

0.29

Book value per common share

$

8.05

$

7.26

$

8.05

$

7.26

Annapolis Bancorp, Inc. and Subsidiaries

Financial Ratios and Average Balance Highlights

(In thousands)

For the Three Months

For the Nine Months

Ended September 30,

Ended September 30,

2012

2011

2012

2011

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)