Record Annual Earnings at Annapolis Bancorp in 2012

  Record Annual Earnings at Annapolis Bancorp in 2012

Business Wire

ANNAPOLIS, Md. -- January 31, 2013

Annapolis Bancorp, Inc. (NASDAQ: 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 (NYSE: 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.

                                                                
Annapolis Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
as of December 31, 2012 and December 31, 2011
($000)
                                                 
                                                   (Unaudited)    (Audited)
                                                   December 31,   December 31,
                                                   2012           2011
Assets
Cash and due from banks                            $   1,920      $   2,026
Interest bearing balances with banks                   38,175         18,288
Federal funds sold                                     -              26,583
Investment securities, available for sale              106,246        87,549
Federal Reserve and Federal Home Loan Bank stock       2,864          2,992
Loans, net of allowance of $6,317 and $7,182           274,560        283,284
Premises and equipment                                 10,113         8,418
Accrued interest receivable                            1,284          1,279
Deferred income taxes                                  2,167          2,617
Investment in bank owned life insurance                5,829          5,624
Prepaid FDIC insurance                                 873            1,198
Real estate owned                                      769            1,222
Other assets                                          1,586         490
Total Assets                                       $   446,386    $   441,570
                                                                      
Liabilities and Stockholders' Equity
Deposits
Noninterest bearing                                $   58,507     $   56,664
Interest bearing                                      294,410       293,717
Total deposits                                        352,917       350,381
Securities sold under agreement to repurchase          14,584         11,344
Long term borrowed funds                               35,000         35,000
Junior subordinated debentures                         5,000          5,000
Accrued interest and dividends payable                                219
Accrued expense and other liabilities                 2,670         2,258
Total Liabilities                                     410,171       404,202
                                                                      
Stockholders' Equity
Preferred stock                                        4,076          8,146
Common stock                                           40             39
Warrants to purchase common stock                      234            234
Paid in capital                                        12,010         11,779
Retained earnings                                      19,001         16,179
Accumulated other comprehensive income                854           991
Total Equity                                           36,215         37,368
Total Liabilities and                                              
Equity                                             $   446,386    $   441,570
                                                                      

                                                                
Annapolis Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
for the Three and Twelve Month Periods Ended December 31, 2012 and 2011
(Unaudited)
(In thousands, except per share data)
                              
                                For the Three Months   For the Twelve Months
                                Ended December 31,     Ended December 31,    
                                2012         2011      2012         2011     
                                                                             
Interest Income
Loans                           $  3,936     $ 4,350   $ 16,753     $ 17,157
Investments                        482         595       2,083        2,639
Interest bearing balances          15          8         39           21
with banks
Federal funds sold                10         13       41         40     
Total interest income             4,443      4,966    18,916     19,857 
                                                                             
Interest expense
Deposits                           348         492       1,551        2,221
Securities sold under              13          15        49           74
agreements to repurchase
Interest on long-term             329        328      1,314      1,302  
borrowings
Total interest expense            690        835      2,914      3,597  
Net interest income                3,753       4,131     16,002       16,260
                                                                             
Provision                         378        616      684        2,190  
                                                                             
Net interest income after         3,375      3,515    15,318     14,070 
provision
                                                                             
NonInterest Income
Service charges                    324         312       1,227        1,250
Mortgage banking                   55          63        262          139
Other fee income                   119         84        432          311
Gain on sale of loans              -           -         -            166
Gain (loss) on sale of REO         6           -         (5     )     8
and other assets
Loss on sale or disposal of       -          -        -          (32    )
fixed assets
Total noninterest income          504        459      1,916      1,842  
                                                                             
NonInterest Expense
Personnel expense                  1,592       1,748     6,519        7,049
Occupancy and equipment            487         355       1,595        1,560
expense
Data processing expense            211         212       840          847
Professional fees                  169         76        540          439
Merger related expenses            526         -         546        -
Marketing expense                  66          53        333          348
FDIC expense                       87          102       343          440
Other operating expense           390        363      1,592      1,880  
Total noninterest expense         3,528      2,909    12,308     12,563 
                                                                             
Income before taxes                351         1,065     4,926        3,349
Income tax expense                115        397      1,834      1,178  
Net income                         236         668       3,092        2,171
Preferred stock dividend and      51        122      271        490    
discount accretion
Net income available to         $  185      $ 546     $ 2,821     $ 1,681  
common shareholders
                                                                             
                                                                             
Basic earnings per common       $  0.05      $ 0.14    $ 0.71      $ 0.43   
share
Diluted earnings per common     $  0.04      $ 0.14    $ 0.68      $ 0.39   
share
Book value per common share     $  8.02      $ 7.38    $ 8.02      $ 7.38   
                                                                             

                                                               
Annapolis Bancorp, Inc. and Subsidiaries
Financial Ratios and Average Balance Highlights
(In thousands)
                       
                         For the Three Months        For the Twelve Months
                         Ended December 31,          Ended December 31,
                         2012          2011          2012          2011
                         (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                                                                   
Performance Ratios
(annualized)
Return on average        0.21     %    0.60     %    0.70     %    0.50     %
assets
Return on average        2.28     %    7.46     %    9.09     %    6.01     %
common equity
Average equity to        8.16     %    8.36     %    8.17     %    8.23     %
average assets
Net interest margin      3.52     %    3.89     %    3.80     %    3.93     %
Efficiency ratio         82.90    %    63.38    %    68.69    %    69.40    %
                                                                   
Other Ratios
Allowance for credit     2.25     %    2.47     %    2.25     %    2.47     %
losses to loans
Nonperforming assets     2.71     %    1.88     %    2.71     %    1.88     %
to total assets
Net charge-offs to       0.25     %    0.32     %    0.53     %    0.64     %
average loans
Tier 1 capital ratio     12.7     %    12.8     %    12.7     %    12.8     %
Total capital ratio      13.9     %    14.0     %    13.9     %    14.0     %
                                                                   
Average Balances
Assets                   446,304       441,938       442,731       436,010
Earning assets           423,528       421,110       420,866       413,662
Loans, gross             281,618       293,036       292,468       289,502
Interest-bearing         346,474       346,108       345,758       347,369
liabilities
Stockholders' equity     36,397        36,950        36,188        35,872
                                                                   

Contact:

Annapolis Bancorp, Inc.
Edward J. Schneider, 410-224-4455
 
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