Record Annual Earnings at Annapolis Bancorp in 2012

Record Annual Earnings at Annapolis Bancorp in 2012

ANNAPOLIS, Md.--(BUSINESS WIRE)-- Annapolis Bancorp, Inc. (NAS: ANNB) , parent company of BankAnnapolis, today announced net income of $3,092,000 for 2012, an increase of $921,000 or 42.4% compared to net income of $2,171,000 in 2011. These results make 2012 the most profitable year in the Company's 23 year history despite incurring $546,000 in expenses related to its pending merger with F.N.B. Corporation.

Net income available to common shareholders after accruing for preferred stock dividends was $2,821,000 ($0.71 per basic and $0.68 per diluted common share), an increase of $1,140,000 or 67.8% compared to net income available to common shareholders of $1,681,000 ($0.43 per basic and $0.39 per diluted common share) in 2011. Merger-related expenses reduced 2012 net income available to common shareholders by $342,000 ($0.09 per basic and diluted common share).

Return on average assets and return on average common equity for the year improved to 0.70% and 9.09%, respectively, compared to 0.50% and 6.01% in 2011.

"As we continue to plan for the upcoming merger with F.N.B. Corporation in the second quarter of this year, it is with great pride and a sense of fulfillment that we announce record earnings for the year just completed," said Richard M. Lerner, Chairman and CEO of Annapolis Bancorp, Inc. and BankAnnapolis. "Our heartfelt thanks go out to our customers for their loyalty and support over the years, and to our employees, whose dedication and commitment to the highest standards of customer service helped to produce consistent outstanding results and a very favorable outcome for our shareholders."

Net income for the fourth quarter of 2012 totaled $236,000, a decrease of $432,000 or 64.7 % from $668,000 in the same period of 2011. Fourth quarter net income available to common shareholders totaled $185,000 ($0.05 per basic and $0.04 per diluted common share) compared to $546,000 ($0.14 per basic and diluted common share) in the same three month period of 2011. Fourth quarter 2012 results included $526,000 of merger-related expenses.

Total assets of $446.4 million at December 31, 2012 increased 1.1% or $4.8 million from $441.6 million at December 31, 2011. Gross loans totaled $280.9 million at December 31, 2012 compared to $290.5 million at the end of the prior year, and deposits of $352.9 million at December 31, 2012 increased by $2.5 million or 0.7% from $350.4 million at year-end 2011.

As of December 31, 2012, the Company's allowance for credit losses was $6.3 million or 2.25% of total loans. Year-end nonperforming assets amounted to 2.71% of total assets.

Common stockholders' equity increased to $32.1 million at December 31, 2012 from $29.2 million at December 31, 2011. Preferred stock was reduced to $4.1 million at December 31, 2012 from $8.1 million at year-end 2011 as one-half of the Company's $8.1 million TARP obligation to the U.S. Treasury was repaid in the second quarter of 2012. Tangible book value per common share at December 31, 2012 was $8.02 compared to $7.38 at December 31, 2011.

At December 31, 2012, Annapolis Bancorp, Inc. exceeded all federal regulatory requirements for a well-capitalized institution, with a Tier 1 capital ratio of 12.7%, a total capital ratio of 13.9%, and a Tier 1 leverage ratio of 9.0%.

In the year just ended, net interest income decreased by $258,000 to $16,002,000 from $16,260,000 in 2011. The net interest margin narrowed to 3.80% in 2012 from 3.93% in 2011.

The Company lowered its provision for credit losses to $684,000 for the twelve months of 2012 from $2,190,000 in the same period of 2011.

Noninterest income totaled $1,916,000 for the full year of 2012, an increase of $74,000 or 4.0% compared to $1,842,000 in 2011.

Noninterest expense improved by $255,000 or 2.0% to $12,308,000 in 2012 compared to $12,563,000 in 2011. Excluding merger-related expenses of $546,000 in 2012, noninterest expense decreased by $800,000 or 6.4%.

Fourth Quarter 2012 net interest income totaled $3,753,000 resulting in a net interest margin of 3.52% for the period. A $378,000 provision for credit losses was recorded in the fourth quarter compared to $616,000 in the same period of 2011. Noninterest income increased by $45,000 or 9.8% compared to the three months ended December 31, 2011. Fourth quarter 2012 noninterest expense totaled $3,528,000 including $526,000 of merger-related expense compared to $2,909,000 for 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. Last 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.

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 they own. Based on F.N.B. Corporation's closing stock price on January 29, 2013, the merger transaction would be valued at approximately $13.25 per share, or $56 million in the aggregate. 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 filed a preliminary registration statement on Form S-4 with the SEC on January 24, 2013. The preliminary registration statement included a proxy statement/prospectus and other documents relevant to the merger.

SHAREHOLDERS OF ANNAPOLIS BANCORP, INC. ARE ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS 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, 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 in connection with the proposed merger 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 is set forth in the proxy statement/prospectus. 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.