10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal ended December 31, 2007.

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to                     .

Commission file number: 000-10971

ABIGAIL ADAMS NATIONAL BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware	52-1508198
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1130 Connecticut Avenue, NW Washington, DC	20036
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (202) 772-3600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $0.01 par value	The NASDAQ Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o   NO þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o   NO þ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ   NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o   NO þ

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, computed by reference to the last sale price on June 30, 2007, as reported by the Nasdaq Global Market, was approximately $33.8 million.

As of March 28, 2008, there were outstanding 3,462,569 shares of the Registrant’s Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE:

     (1) Proxy Statement for the 2008 Annual Meeting of Stockholders of the Registrant (Part III).

     (2) Annual Report to Stockholder (Part II and IV).

PART I

Item 1. Business.

General

     Abigail Adams National Bancorp, Inc. (the “Company”) is a Delaware-chartered bank holding company which conducts business through its two wholly-owned bank subsidiaries, The Adams National Bank (“ANB”) and Consolidated Bank & Trust Company (“CBT”) (collectively, the “Banks”). ANB serves the nation’s capital through six full-service offices located in Washington, D.C. and Maryland. CBT serves the Richmond and Hampton, Virginia market areas through three full service offices. The Company is subject to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and ANB is regulated by the Office of the Comptroller of the Currency. CBT is regulated by the Federal Reserve Board and the Bureau of Financial Institutions of the Commonwealth of Virginia (“Bureau of Financial Institutions”). The Company’s assets consist primarily of its ownership in the shares of the Banks’ common stock and cash it receives from the Banks in the form of dividends or other capital distributions. At December 31, 2007, the Company had consolidated assets of $445.9 million, deposits of $386.9 million and shareholders’ equity of $31.4 million. Each of the Banks exceed all applicable regulatory capital requirements. See “Supervision and Regulation.”

     ANB was founded in 1977 as a national bank. CBT was founded in 1903 as a Virginia chartered commercial bank that is a member of the Federal Reserve System. Both Banks’ deposits are federally insured to the maximum amount permitted by law.

     On July 29, 2005, the Company acquired CBT as a wholly-owned subsidiary by an Agreement and Plan of Merger, dated February 10, 2005 for approximately $3.0 million. Pursuant to the agreement, CBT shareholders received 0.534 shares of Company common stock for each of their CBT shares.

     The executive office of the Company is located at 1130 Connecticut Avenue, N.W., Washington, D.C. 20036. The telephone number is (202) 772-3600.

Market Area

     The Banks draw most of their customer deposits and conduct most of their lending activities from and within the Washington, D.C. metropolitan region, including suburban Virginia and Maryland along with Richmond and Hampton, Virginia. The Washington, D.C. and Richmond metropolitan markets attract a significant number of businesses of all sizes, professional corporations and national nonprofit organizations. The Banks actively solicit banking relationships with these firms and organizations, as well as their professional staff, and with the significant population of high net worth individuals who live and work in these regions.

Services of the Bank

     The Banks are community-oriented financial institutions offering a full range of banking services to their customers. The Banks attract deposits from the general public and historically have used such deposits, together with other funds to provide a broad level of commercial and retail banking services in Washington, D.C., Richmond, Hampton and the surrounding communities.

     The services offered by the Banks can be broadly characterized as being commercial or retail in nature. Commercial services offered by the Banks include offering a variety of commercial real estate and commercial business loans, cash management services, letters of credit and collateralized repurchase agreements. Commercial business loans are typically made on a secured basis to corporations, partnerships and individual businesses. To a lesser extent, the Banks offer consumer loans to their retail customers. The Banks’ retail banking services also include a variety of deposit account products including transaction accounts, money market accounts, certificates of deposit and Individual Retirement Accounts. The Banks use funds they have on hand, as well as borrowings, in order to fund their lending and investment activities.

2

     The Banks have automated teller machine access to the STAR, AMEX, PLUS and CIRRUS systems. The Banks offer their customers traditional on-line banking services and 24 hour telephone banking.

Lending Activities

     The Banks provide a range of commercial and retail lending services to individuals, small to medium-sized businesses, professional corporations, nonprofit organizations and other organizations. These services include, but are not limited to, commercial business loans, commercial real estate loans, renovation and mortgage loans, SBA loans, loan participations, consumer loans, revolving lines of credit and letters of credit. Consumer lending primarily consists of personal loans made on a direct, secured basis. Real estate loans are originated primarily for commercial purposes. To a lesser extent, the Banks originate construction loans. The Banks offer loans which have fixed rates, as well as loans with rates which adjust periodically. At December 31, 2007, approximately $98.9 million or 32.1% of the Banks’ total loan portfolio consisted of loans with adjustable rates.

     The Banks provide financing to nonprofit organizations for construction and renovation of local headquarters, working capital lines of credit and equipment financing. Current nonprofit customers of the Banks include organizations which focus on issues relating to children’s rights, community housing, religion, education and health care.

     Commercial and real estate lending is performed by the ANB and CBT Lending Divisions, which are comprised of 15 loan officers, 11 of which are ANB loan officers. The loan support staff includes the Loan Operations and Administration staff of 17, who are responsible for preparing loan documents, recording and processing new loans and loan payments, ensuring compliance with regulatory requirements, and working with the Lending Divisions, in order to ensure the timely receipt of all initial and ongoing loan documentation and the prompt reporting of any exceptions. Credit analysis on loans is performed by the individual loan officers, using a credit analysis computer program, which provides not only the flexibility necessary to analyze loans but also the structure to ensure that all documentation requirements are appropriately met.

     Policies and procedures have been established by the Banks to promote safe and sound lending. ANB’s loan officers have individual lending authorities based on the individual’s seniority and experience. Loans in excess of individual officers’ lending limits are presented to the Officers’ Loan Committee (“OLC”), which meets weekly, and is comprised of all loan officers and the President. The President of ANB has authority to approve unsecured loans up to $1.0 million and secured loans up to $2.0 million. The OLC of ANB has authority to approve unsecured loans up to $1.0 million and secured loans up to $2.0 million. Loans over $1.0 million on an unsecured basis and over $2.0 million on a secured basis are brought to the Directors’ Loan Committee (“DLC”) of ANB, which meets approximately twice per month. The DLC of ANB is comprised of six outside directors. In addition to approving new loans, these Committees approve renewals, modifications and extensions of existing loans and reviews past due problem loans.

     The DLC of CBT is comprised of four out of seven outside directors and has authority to approve unsecured and secured loans greater than $500,000, up to the legal lending limit. The OLC has the authority to approve unsecured and secured loans up to $500,000. Additionally, the Vice President of Credit Administration has authority to approve unsecured and secured loans up to $100,000. The DLC of CBT meets approximately twice per month.

     Loan Portfolio Composition. The following information concerning the composition of the Banks’ loan portfolio on a consolidated basis in dollar amounts is presented (before deductions for allowances for losses) as of the dates indicated.

3

	At December 31,
	2007			2006			2005			2004			2003
	(In thousands)
Commercial business	$	38,606		$	39,323		$	39,876		$	28,756		$	31,979
Real estate:
Commercial mortgage		128,320			136,540			124,578			90,477			81,001
Residential mortgage		67,375			55,860			48,489			49,737			34,184
Construction and land development		70,798			73,986			33,844			10,676			8,529
Installment to individuals		2,716			2,714			2,057			958			659
Total loans		307,815			308,423			248,844			180,604			156,352
Less: net deferred loan fees		(332	)		(466	)		(557	)		(332	)		(318	)
Total, net	$	307,483		$	307,957		$	248,287		$	180,272		$	156,034

     For further information regarding the Banks’ loan portfolio composition, See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition” in the Annual Report to Shareholders filed as Exhibit 13 to the Annual Report on Form 10-K and Note 5 to the Notes to the Consolidated Financial Statements.

Commercial Business Lending

     The Banks provide a wide range of commercial business loans, including lines of credit for working capital purposes and term loans for the acquisition of equipment and other purposes. In most cases, the Banks have collateralized these loans and/or taken personal guarantees to help assure repayment. Collateral for these loans generally includes accounts receivable, inventory, equipment and real estate. Terms of commercial business loans generally range from one year to five years. These loans often require that borrowers maintain deposits with the Banks as compensating balances. Commercial business lending generally involves greater risk than residential mortgage lending and involves risks that are different from those associated with residential, commercial and multi-family real estate lending. Although commercial business loans are often collateralized by real estate, equipment, inventory, accounts receivable or other business assets, the liquidation of collateral in the event of a borrower default is often not a sufficient source of repayment, because accounts receivable may be uncollectible and inventories and equipment may be obsolete or of limited use. The primary repayment risk for commercial loans is the failure of the business due to economic or financial factors. As of December 31, 2007, commercial loans totaled $38.6 million, the largest of which had a principal balance of $4.0 million, and at December 31, 2007 was performing in accordance with its terms.

     The Banks also offer Small Business Administration (“SBA”) guaranteed loans, which provide better terms and more flexible repayment schedules than conventional financing. SBA loans are guaranteed up to a maximum of 85% of the loan’s balance. As lending requirements of small businesses grow to exceed either Bank’s lending limit, the Banks have the ability to sell participations in these larger loans to other financial institutions on a servicing retained basis. The Banks believe that such participations will help to preserve lending relationships while providing a high level of customer service. At December 31, 2007, SBA-guaranteed loans totaled $4.6 million.

Real Estate Lending

     At December 31, 2007, the Banks’ real estate loan portfolio consisted of commercial real estate mortgages totaling $128.3 million, and residential real estate mortgages totaling $67.4 million. Commercial real estate loans are generally for terms of five years and amortize over a 15- and 25-year period. Commercial real estate loans are generally originated in amounts up to 80% loan to value of the underlying collateral. In underwriting commercial real estate loans, the Banks consider the borrower’s overall creditworthiness and capacity to service debt, secondary sources or repayment and any additional collateral or credit enhancements. Our largest commercial real estate loan had a principal balance of $3.7 million at December 31, 2007 and was secured by a first deed of trust. At December 31, 2007 this loan was performing in accordance with its terms.

     Residential real estate loans are generally originated for terms of five years, amortize over a 25 year period, with a balloon payment at the term end. Residential real estate loans are generally originated in amounts up to 80% loan to value of the underlying collateral. Our largest residential real estate loan had a principal balance of $4.3 million at December 31, 2007. At December 31, 2007 this loan was performing in accordance with its terms. The underwriting for a residential real estate loan is the same as for a commercial real estate loan.

4

     The majority of the $70.8 million in construction and land development loans at December 31, 2007 are primarily for construction and renovation of commercial real estate properties. Construction financing generally is considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Multi-family and commercial real estate lending involves significant additional risks, as compared to one- to four-family residential lending. For example, such loans typically involve large loans to single borrowers or related borrowers. The payment experience on such loans is typically dependent on the successful operation of the project, and these risks can be significantly affected by the supply and demand conditions in the market for commercial property and multi-family residential units. To minimize these risks, the Banks limit the aggregate amount of outstanding construction loans to one borrower, and generally make such loans only in their market area and to borrowers with which the Banks have substantial experience or who are otherwise well known to the Banks. It is the Banks’ current practice to obtain personal guarantees and current financial statements from all principals obtaining commercial real estate loans. The Banks also obtain appraisals on each property in accordance with applicable regulations.

Consumer Lending

     The Banks’ consumer lending includes loans for motor vehicles, and small personal credit lines. Consumer loans generally involve more risk than residential real estate mortgage and commercial real estate loans. Repossessed collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance as a result of damage, loss or depreciation, and the remaining deficiency often does not warrant further substantial collection efforts against the borrower. In addition, loan collections are dependent on the borrower’s continuing financial stability. Further, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered. In underwriting consumer loans, the Banks consider the borrower’s credit history, an analysis of the borrower’s income, expenses and ability to repay the loan and the value of the collateral. At December 31, 2007, consumer loans totaled $2.7 million.

Delinquencies and Classified Assets

     Collection Procedures. Outstanding loans are reviewed on a weekly basis. When a loan becomes 10 days past due, loan officers attempt to contact the borrower. Generally, loans that are 30 days delinquent will receive a default notice from the Banks. With respect to consumer loans, the Banks will commence efforts to repossess the collateral after the loan becomes 30 days delinquent. Generally, after 90 days the Banks will commence legal action.

     Loans Past Due and Nonperforming Assets. Loans are reviewed on a regular basis and are placed on nonaccrual status when, in the opinion of management, the collection of additional interest is doubtful. Loans are placed on nonaccrual status when either principal or interest is 90 days or more past due. Interest accrued and unpaid at the time a loan is placed on a nonaccrual status is reversed from interest income. At December 31, 2007, the Banks had nonperforming assets of $12.3 million and a ratio of nonperforming assets to total assets of 2.76%.

     Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan portfolio and current economic conditions. Such evaluation also includes a review of all loans on which full collectibility may not be reasonably assured, including among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience, geographic concentrations and other factors that warrant recognition in providing for an adequate loan loss allowance. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Banks’ allowance for loan losses and valuation of other real estate owned. Such agencies may require us to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. At December 31, 2007, the total allowance was $4.2 million, which amounted to 1.37% of total loans and 34.17% of nonperforming assets. Management considers whether the allowance should be adjusted to protect against risks in the loan portfolio. Management will continue to monitor and modify the level of the allowance for loan losses in order to maintain it at a level which management considers adequate to provide for probable loan losses.

5

     Allocation of Allowance for Loan Losses. The following table sets forth the allocation of allowance for loan losses by loan category for the periods indicated. Management believes that the allowance can be allocated by category only on an approximate basis. The allocation of the allowance by category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any category.

	At December 31,
	2007					2006					2005					2004					2003
			% of					% of					% of					% of					% of
			Loans in					Loans in					Loans in					Loans in					Loans in
			Each					Each					Each					Each					Each
			Category					Category					Category					Category					Category
			to total					to total					to total					to total					to total
	Amount		Loans			Amount		Loans			Amount		Loans			Amount		Loans			Amount		Loans
	(Dollars in thousands)
Balance at end of period applicable to:
Commercial business	$	952		12.5	%	$	1,078		12.7	%	$	1,799		16.0	%	$	720		15.9	%	$	740		20.5	%
Real estate-mortgages		3,235		86.6			3,334		86.4			2,418		83.2			1,826		83.6			1,372		79.1
Installment		15		0.9			20		0.9			60		0.8			12		0.5			7		0.4
Unallocated		—		—			—		—			68		—			—		—			—		—
Total allowance for loan losses	$	4,202		100.0	%	$	4,432		100.0	%	$	4,345		100.0	%	$	2,558		100.0	%	$	2,119		100.0	%

     For the year ended December 31, 2007, gross interest income which would have been recorded had the nonaccruing loans of $8.8 million been current in accordance with their original terms amounted to $649,000. We did not include any interest income on such loans for the year ended December 31, 2007. For further information regarding the Banks’ allowance for loan losses and asset quality see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Asset Quality” in the Annual Report to Shareholders filed as Exhibit 13 to the Annual Report on Form 10-K and Note 5 to the Notes to the Consolidated Financial Statements.

Investment Activities

     The Banks’ investment portfolio consists of obligations of U.S. Government sponsored agencies and corporations, U.S. Treasuries, mortgage-backed securities, corporate debt securities, and marketable equity securities. At December 31, 2007, investment securities totaled $79.7 million of which $66.4 million were classified as available for sale. Total investment securities classified as held to maturity were $13.3 million at December 31, 2007. For further information regarding the Banks’ investments see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Analysis of Investments” in the Annual Report to Shareholders filed as Exhibit 13 to the Annual Report on Form 10-K and Note 4 to the Notes to the Consolidated Financial Statements.

     Investment Portfolio. At December 31, 2007, the market value of our investment securities and interest earning deposits was approximately $100.0 million. The following tables set forth the carrying value of our investments at the dates indicated.

	At December 31,
	2007		2006		2005
			(In thousands)
U.S. Government and agency obligations	$	64,481	$	48,911	$	54,464
U.S. treasuries		—		—		998
Mortgage-backed securities		8,902		6,517		6,118
Corporate debt securities		5,600		6,634		7,529
Marketable equity securities		718		1,007		1,007
Interest-earning deposits		20,380		5,823		441
Total investments	$	100,081	$	68,892	$	70,557

6

Deposits

     The Banks offer a variety of deposit accounts with a range of interest rates and terms. The flow of deposits is influenced by a variety of factors including general economic conditions, changes in market rates, prevailing interest rates and competition. The Banks rely on competitive pricing of its deposit products and customer service to attract and retain deposits, however market interest rates and rates offered by competing financial institutions significantly affect the Banks’ ability to attract and retain deposits.

     The Banks’ deposits totaled $386.9 million at December 31, 2007. Demand deposits totaled $74.8 million and comprised 19.3% of total deposits. Savings, NOW, and money market accounts totaled $142.8 million and comprised 36.9% of total deposits. Certificates of deposit were 43.8% of the total deposits for a balance of $169.3 million. For further information regarding the Banks’ deposits see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Deposits” in the Annual Report to Shareholders filed as Exhibit 13 to the Annual Report on Form 10-K and Note 8 to the Notes to the Consolidated Financial Statements.

     As of December 31, 2007, the aggregate amount of outstanding certificates of deposit in amounts greater than or equal to $100,000 was approximately $69.9 million. The following table indicates the amount of our certificates of deposit of $100,000 or more by time remaining until maturity as of December 31, 2007. These deposits represented 18.1% of our total deposits at December 31, 2007.

Remaining Maturity	Amount
	(In thousands)
Three months or less	$	16,771
Three through six months		22,134
Six through twelve months		15,690
Over twelve months		15,332
Total	$	69,927

Borrowed Funds

     The Company’s short-term borrowings consist of securities sold under repurchase agreements totaling $8.5 million at December 31, 2007. Long-term debt consists of a term note and term advances from the FHLB at an average rate of 5.62% at December 31, 2007. Long-term debt totaled $15.1 million at December 31, 2007. For further information regarding the Banks’ borrowed funds see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Borrowed Funds” in the Annual Report to Shareholders filed as Exhibit 13 to the Annual Report on Form 10-K and Notes 11 and 12 to the Notes to the Consolidated Financial Statements.

Competition

     The Banks face strong competition among financial institutions in Washington, D.C., Northern Virginia, Richmond and Hampton, Virginia and suburban Maryland for both deposits and loans. Principal competitors include other community commercial banks and larger financial institutions with branches in the Banks’ service area. Intense competition is expected to continue as bank mergers and acquisitions of smaller banks by larger institutions in the Washington, D.C., Richmond and Hampton, Virginia metropolitan regions may be expected to continue for the foreseeable future.

     The primary factors in competing for deposits are interest rates, personalized services, the quality and range of financial services, convenience of office locations and office hours. Competition for deposits comes primarily from other commercial banks, savings associations, credit unions, money market funds and other investment alternatives. The primary factors in competing for loans are interest rates, loan origination fees, the quality and range of lending services and personalized services. Competition for loans comes primarily from other commercial banks, savings associations, mortgage banking firms, credit unions and other financial intermediaries. The Banks face competition for deposits and loans throughout their market areas not only from local institutions but also from out-of-state financial intermediaries which have opened loan production offices or which solicit deposits in its market areas. Many of the financial intermediaries operating in the Banks’ market areas offer certain services, such as trust, investment and international banking services, which the Banks do not offer. Additionally, banks with larger capitalization and financial intermediaries not subject to bank regulatory restrictions have larger lending limits and are thereby able to serve the needs of larger customers.

7

     In order to compete with other financial services providers, the Banks principally rely upon local promotional activities, personal relationships established by officers, directors and employees with its customers, and specialized services tailored to meet its customers’ needs.

Employees

     At December 31, 2007, the Company employed 107 people on a full time basis. The employees are not represented by a union and management believes that its relations with its employees are good.

SUPERVISION AND REGULATION

     The commercial banking business is not only affected by general economic conditions but is also influenced by the monetary and fiscal policies of the federal government and the policies of regulatory agencies, particularly the Federal Reserve Board. The Federal Reserve Board implements national monetary policies by its open-market operations in U.S. Government securities, by adjusting the required level of reserves for financial institutions subject to its reserve requirements and by varying the discount rates applicable to borrowings by depository institutions. The actions of the Federal Reserve Board in these areas influence the growth of bank loans, investments and deposits and also affect interest rates charged on loans and paid on deposits. The nature and impact of any future changes in monetary policies cannot be predicted.

     Bank holding companies and banks are extensively regulated under both federal and state law. Set forth below is a summary description of certain provisions of certain laws which relate to the regulation of the Company and the Bank. The description does not purport to be complete and is qualified in its entirety by reference to the applicable laws and regulations.

The Company

     The Company, as a registered bank holding company, is subject to regulation under the Bank Holding Company Act of 1956, as amended (the “BHCA”). Such regulations include prior approval of Company affiliates and subsidiaries. The Company is required to file quarterly reports and annual reports with the Federal Reserve Board and such additional information as the Federal Reserve Board may require pursuant to the BHCA. The Federal Reserve Board may conduct examinations of the Company and its subsidiaries.

     The Federal Reserve Board may require that the Company terminate an activity or terminate control of or liquidate or divest certain subsidiaries or affiliates when the Federal Reserve Board believes the activity or the control of the subsidiary or affiliate constitutes a significant risk to the financial safety, soundness or stability of any of its banking subsidiaries. The Federal Reserve Board also has the authority to regulate provisions of certain bank holding company debt, including authority to impose interest ceilings and reserve requirements on such debt. Under certain circumstances, the Company must file written notice and obtain approval from the Federal Reserve Board prior to purchasing or redeeming its equity securities.

     Under the BHCA and regulations adopted by the Federal Reserve Board, a bank holding company and its nonbanking subsidiaries are prohibited from requiring certain tie-in arrangements in connection with any extension of credit, lease or sale of property or furnishing of services. Further, the Company is required by the Federal Reserve Board to maintain certain levels of capital.

     The Company is required to obtain the prior approval of the Federal Reserve Board for the acquisition of more than 5% of the outstanding shares of any class of voting securities, or substantially all of the assets, of any bank or bank holding company. Prior approval of the Federal Reserve Board is also required for the merger or consolidation of the Company and another bank holding company.

8

     The Company is prohibited by the BHCA, except in certain statutorily prescribed instances, from acquiring direct or indirect ownership or control of more than 5% of the outstanding voting shares of any company that is not a bank or bank holding company and from engaging directly or indirectly in activities other than those of banking, managing or controlling banks or furnishing services to its subsidiaries. However, the Company, subject to the prior approval of the Federal Reserve Board, may engage in any activities, or acquire shares of companies engaged in activities, that are deemed by the Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Additionally, bank holding companies that elect to be treated as financial holding companies may engage in insurance, securities and, under certain circumstances, merchant banking activities. The Company has not made the financial holding company election with the Federal Reserve Board.

     Under Federal Reserve Board policy, a bank holding company is required to serve as a source of financial and managerial strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner. In addition, it is the Federal Reserve Board’s policy that in serving as a source of strength to its subsidiary banks, a bank holding company should stand ready to use available resources to provide adequate capital funds to its subsidiary banks during periods of financial stress or adversity and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks. A bank holding company’s failure to meet its obligations to serve as a source of strength to its subsidiary banks will generally be considered by the Federal Reserve Board to be an unsafe and unsound banking practice or a violation of the Federal Reserve Board’s regulations or both. This doctrine has become known as the “source of strength” doctrine. The validity of the source of strength doctrine has been and is likely to continue to be the subject of litigation-until definitively resolved by the courts or by Congress.

The Banks

     ANB, as a national banking association, is subject to primary supervision, examination and regulation by the Office of the Comptroller of the Currency (the “OCC”). If, as a result of an examination of ANB, the OCC should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of the ANB’s operations are unsatisfactory or that ANB or its management is violating or has violated any law or regulation, various remedies are available to the OCC. Such remedies include the power to enjoin “unsafe or unsound practices,” to require affirmative action to correct any conditions resulting from any violation of law or unsafe or unsound practice, to issue an administrative order that can be judicially enforced, to direct an increase in capital, to restrict the growth of ANB, to assess civil monetary penalties, and to remove officers and directors. The FDIC has similar enforcement authority, in addition to its authority to terminate a bank’s deposit insurance, in the absence of action by the OCC and upon a finding that a bank is in an unsafe or unsound condition, is engaging in unsafe or unsound activities, or that its conduct poses a risk to the deposit insurance fund or may prejudice the interest of its depositors. ANB is not subject to any such actions by the OCC or the FDIC.

     CBT is a Virginia chartered bank and a member of the Federal Reserve System, and its depositors are insured by the FDIC. The Federal Reserve and the Virginia State Corporation Commission and its Bureau of Financial Institutions regulate and monitor CBT’s operations. CBT is required to file with the Federal Reserve quarterly financial reports on the financial condition and performance of the organization. The Federal Reserve and State conduct periodic onsite and offsite examinations of CBT. CBT must comply with a wide variety of reporting requirements and banking regulations. The laws and regulations governing CBT generally have been promulgated to protect depositors and the deposit insurance funds and not to protect various shareholders.

     Deposit accounts in the Banks are insured by the Federal Deposit Insurance Corporation generally up to a maximum of $100,000 per separately insured depositor and up to a maximum of $250,000 for self- directed retirement accounts. The Banks’ deposits, therefore, are subject to Federal Deposit Insurance Corporation deposit insurance assessments.

     The Federal Deposit Insurance Corporation regulations assess insurance premiums based on an institution’s risk. Under this assessment system, the Federal Deposit Insurance Corporation evaluates the risk of each financial institution based on its supervisory rating, financial ratios, and long-term debt issuer rating. The rates for nearly all of the financial institutions industry vary between five and seven cents for every $100 of domestic deposits. The assessment to be paid during the year ending December 31, 2007 will be offset by a credit from the Federal Deposit Insurance Corporation to the Banks of $43,000. Federal law requires the Federal Deposit Insurance Corporation to establish a deposit reserve ratio for the deposit insurance fund of between 1.15% and 1.50% of estimated deposits. The Federal Deposit Insurance Corporation has designated the reserve ratio for the deposit insurance fund through the first quarter of 2008 at 1.25% of estimated insured deposits.

9

     Effective March 31, 2006, the Federal Deposit Insurance Corporation merged the Bank Insurance Fund and the Savings Association Insurance Fund into a single fund called the Deposit Insurance Fund. In addition to the Federal Deposit Insurance Corporation assessments, the Financing Corporation (“FICO”) is authorized to impose and collect, with the approval of the Federal Deposit Insurance Corporation, assessments for anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. For the quarter ended December 31, 2007, the annualized FICO assessment was equal to 1.14 basis points for all domestic deposits maintained at an institution.

     Various other requirements and restrictions under the laws of the United States affect the operations of the Banks. Federal statutes and regulations relate to many aspects of the Banks’ operations, including reserves against deposits, interest rates payable on deposits, loans, investments, mergers and acquisitions, borrowings, dividends, locations of branch offices, capital requirements and disclosure obligations to depositors and borrowers. Further, the Banks are required to maintain certain levels of capital.

Restrictions on Transfers of Funds to the Company by the Banks

     The Company is a legal entity separate and distinct from the Banks. The Company’s ability to pay cash dividends is limited by Delaware corporate law. In addition, the prior approval of the Banks’ primary regulator is required if the total of all dividends declared by the individual Banks in any calendar year exceeds that bank’s net income for the year combined with its retained net profits for the preceding two years, less any transfers to surplus, that is still available for dividends.

     The Banks’ regulators have authority to prohibit the Banks from engaging in activities that, in the regulators opinion, constitute unsafe or unsound practices in conducting its business. It is possible, depending upon the financial condition of the bank in question and other factors, that the regulator could assert that the payment of dividends or other payments might, under some circumstances, be such an unsafe or unsound practice. Further, the OCC and the Federal Reserve Board have established guidelines with respect to the maintenance of appropriate levels of capital by banks or bank holding companies under their jurisdiction. Compliance with the standards set forth in such guidelines and the restrictions that are or may be imposed under the prompt corrective action provisions of federal law could limit the amount of dividends which the Banks or the Company may pay.

     The Banks are subject to certain restrictions imposed by federal law on any extensions of credit to, or the issuance of a guarantee or letter of credit on behalf of, the Company or other affiliates, the purchase of or investments in stock or other securities thereof, the taking of such securities as collateral for loans and the purchase of assets of the Company or other affiliates. Such restrictions prevent the Company and such other affiliates from borrowing from the Banks, unless the loans are secured by marketable obligations of designated amounts. Further, such secured loans and investments by the Banks to or in the Company or to or in any other affiliate is limited to 10% of the individual Bank’s capital and surplus (as defined by federal regulations) and such secured loans and investments are limited, in the aggregate, to 20% of the Bank’s capital and surplus (as defined by federal regulations). Additional restrictions on transactions with affiliates may be imposed on the Banks under the prompt corrective action provisions of federal law.

Capital Standards

     The Federal Reserve Board and the OCC have adopted risk-based minimum capital rules intended to provide a measure of capital that reflects the degree of risk associated with a banking organization’s operations for both transactions reported on the balance sheet as assets and transactions, and those which are recorded as off balance sheet items. Under these rules, nominal dollar amounts of assets and credit equivalent amounts of off balance sheet items are multiplied by one of several risk adjustment percentages, which range from 0% for assets with low credit risk, such as certain U.S. Treasury securities, to 100% for assets with relatively high credit risk, such as business loans.

10

     A banking organization’s risk-based capital ratios are obtained by dividing its qualifying capital by its total risk adjusted assets. The regulators measure risk-adjusted assets, which include off balance sheet items, against both total qualifying capital (the sum of Tier 1 capital and limited amounts of Tier 2 capital) and Tier 1 capital. Tier 1 capital consists primarily of common stock, retained earnings, noncumulative perpetual preferred stock (cumulative perpetual preferred stock for bank holding companies) and minority interests in certain subsidiaries, less most intangible assets. Tier 2 capital may consist of a limited amount of the allowance for possible loan and lease losses, cumulative preferred stock, long-term preferred stock, eligible term subordinated debt and certain other instruments with some characteristics of equity. The inclusion of elements of Tier 2 capital is subject to certain other requirements and limitations of the federal banking agencies. The federal banking agencies require a minimum ratio of qualifying total capital to risk-adjusted assets of 8% and a minimum ratio of Tier 1 capital to risk-adjusted assets of 4%. In addition to the risk-based guidelines, federal banking regulators require banking organizations to maintain a minimum amount of Tier 1 capital to total assets, referred to as the leverage ratio.

     Under federal regulations, an institution is generally considered “well capitalized” if it has a total risk-based capital ratio of at least 10%, a Tier I risk-based capital ratio of at least 6%, and a Tier I capital (leverage) ratio of at least 5%. Federal law generally requires full-scope on-site annual examinations of all insured depository institutions by the appropriate federal bank regulatory agency, although the examination may occur at longer intervals for small well-capitalized or state chartered banks.

     The current risk-based capital ratio analysis establishes minimum supervisory guidelines and standards. It does not evaluate all factors affecting an organization’s financial condition. Factors which are not evaluated include (i) overall interest rate exposure; (ii) quality and level of earnings; (iii) investment or loan portfolio concentrations; (iv) quality of loans and investments; (v) the effectiveness of loan and investment policies; (vi) certain risks arising from nontraditional activities and (vii) management’s overall ability to monitor and control other financial and operating risks, including the risks presented by concentrations of credit and nontraditional activities. The capital adequacy assessment of federal bank regulators will, however, continue to include analyses of the foregoing considerations and in particular, the level and severity of problem and classified assets. Market risk of a banking organization—risk of loss stemming from movements in market prices—is not evaluated under the current risk-based capital ratio analysis (and is therefore analyzed by the bank regulators through a general assessment of an organization’s capital adequacy) unless trading activities constitute 10% of $1 billion or more of the assets of such organization. Such an organization (unless exempted by the banking regulators) and certain other banking organization designated by the banking regulators must include in their risk-based capital ratio analysis charges for, and hold capital against, general market risk of all positions held in their trading account and of foreign exchange and commodity positions wherever located, as well as against specific risk of debt and equity positions located in their trading account. Currently, the Company does not calculate a risk-based capital charge for its market risk.

     Future changes in regulations or practices could further reduce the amount of capital recognized for purposes of capital adequacy. Such a change could affect the ability of the Banks to grow and could restrict the amount of profits, if any, available for the payment of dividends.

Prompt Corrective Action and Other Enforcement Mechanisms

     Federal law requires each federal banking agency to take prompt corrective action to resolve the problems of insured depository institutions, including but not limited to those that fall below one or more prescribed minimum capital ratios. The law requires each federal banking agency to promulgate regulations defining the following five categories in which an insured depository institution will be placed, based on the level of its capital ratios: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.

     An institution that, based upon its capital levels, is classified as “well capitalized,” “adequately capitalized” or “undercapitalized” may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition or an unsafe or unsound practice warrants such treatment. At each successive lower capital category, an insured depository institution is subject to more restrictions. The federal banking agencies, however, may not treat an institution as “critically undercapitalized” unless its capital ratio actually warrants such treatment.

11

     In addition to restrictions and sanctions imposed under the prompt corrective action provisions, commercial banking organizations may be subject to potential enforcement actions by the federal regulators for unsafe or unsound practices in conducting their businesses or for violations of any law, rule, regulation or any condition imposed in writing by the agency or any written agreement with the agency. Enforcement actions may include the imposition of a conservator or receiver, the issuance of a cease and desist order that can be judicially enforced, the termination of insurance of deposits (in the case of a depository institution), the imposition of civil money penalties, the issuance of directives to increase capital, the issuance of formal and informal agreements, the issuance of removal and prohibition orders against institution-affiliated parties and the enforcement of such actions through injunctions or restraining orders based upon a judicial determination that the agency would be harmed if such equitable relief was not granted.

Community Reinvestment Act

     The Banks are subject to the provisions of the Community Reinvestment Act (“CRA”) which requires banks to assess and help meet the credit needs of the community in which the bank operates. The OCC examines the Bank to determine its level of compliance with CRA and the Federal Reserve Board examines CBT to determine its level of compliance with CRA. The OCC and the Federal Reserve Board are required to consider the level of CRA compliance when their regulatory applications are reviewed. The Banks each received a satisfactory Community Reinvestment Act rating in its most recent federal examination.

Interstate Banking and Branching

     Under the Riegel-Neal Interstate Banking and Branching Efficiency Act of 1994, as amended (the “Interstate Act”), a bank holding company that is adequately capitalized and managed may obtain approval under the BHCA to acquire an existing bank located in another state generally without regard to state law prohibitions on such acquisitions. A bank holding company, however, can not be permitted to make such an acquisition if, upon consummation, it would control (a) more than 10% of the total amount of deposits of insured depository institutions in the United States or (b) 30% or more of the deposits in the state in which the bank is located. A state may limit the percentage of total deposits that may be held in that state by any one bank or bank holding company if application of such limitation does not discriminate against out of state banks. An out of state bank holding company may not acquire a state bank in existence for less than a minimum length of time that may be prescribed by state law except that a state may not impose more than a five year existence requirement. Since June 1, 1997 (and prior to that date in some instances), banks have been able to expand across state lines where qualifying legislation adopted by certain states prior to that date prohibits such interstate expansion. Banks may also expand across state lines through the acquisition of an individual branch of a bank located in another state or through the establishment of a de novo branch in another state where the law of the state in which the branch is to be acquired or established specifically authorizes such acquisition or de novo branch establishment.

The USA PATRIOT Act

     The USA PATRIOT Act, which was signed into law on October 26, 2001, gave the federal government new powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. Financial institutions, such as the Bank, have been subject to a federal anti-money laundering obligation for years. The USA PATRIOT Act has no material adverse impact on the Banks’ operations.

Sarbanes-Oxley Act of 2002

     The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), which implemented legislative reforms intended to address corporate and accounting fraud. In addition to the establishment of a new accounting oversight board that will enforce auditing, quality control and independence standards and will be funded by fees from all publicly traded companies, Sarbanes-Oxley places certain restrictions on the scope of services that may be provided by accounting firms to their public company audit clients. Any non-audit service being provided to a public company audit client will require preapproval by the company’s audit committee. In addition, Sarbanes-Oxley makes certain changes to the requirements for audit partner rotation after a period of time. Sarbanes-Oxley requires chief executive officers and chief financial officers, or their equivalent, to certify to the accuracy of periodic reports filed with the Securities and Exchange Commission (“SEC”), subject to civil and criminal penalties if they knowingly or willingly violate this certification requirement.

12

     Sarbanes-Oxley also increases the oversight of, and codifies certain requirements relating to audit committees of public companies and how they interact with the company’s “registered public accounting firm.” Audit Committee members must be independent and are absolutely barred from accepting consulting, advisory or other compensatory fees from the issuer. In addition, companies must disclose whether at least one member of the committee is a “financial expert” (as such term is defined by the Securities and Exchange Commission) and if not, why not. Under Sarbanes-Oxley, a company’s registered public accounting firm is prohibited from performing statutorily mandated audit services for a company if such company’s chief executive officer, chief financial officer, comptroller, chief accounting officer or any person serving in equivalent positions had been employed by such firm and participated in the audit of such company during the one-year period preceding the audit initiation date. Sarbanes-Oxley also prohibits any officer or director of a company or any other person acting under their direction from taking any action to fraudulently influence, coerce, manipulate or mislead any independent accountant engaged in the audit of the company’s financial statements for the purpose of rendering the financial statements materially misleading.

     Although we have incurred additional expense in complying with the provisions of the Sarbanes-Oxley Act and the resulting regulations, such compliance has not had a material impact on our results of operations or financial condition to date. However, the Company expects audit costs will increase in the future as it complies with the SEC’s requirement that auditors must provide an attestation of management’s report on internal control over financial reporting. On January 31, 2008, the SEC proposed a one-year extension of the auditor attestation requirement for smaller public companies. Under the extension, the Company would be required to have the auditor attestation beginning with the year ending December 31, 2009.

Factors Affecting Future Results

     In addition to historical information, this Form 10-K includes certain forward looking statements that involve risks and uncertainties such as statements of the Company’s plans, expectations and unknown outcomes. The Company’s actual results could differ materially from management expectations. Factors that could contribute to those differences include, but are not limited to, general economic conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal and local tax authorities, changes in interest rates, deposit flows, the cost of funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of the Banks’ loan and investment portfolios, changes in ownership status resulting in, among other things, the loss of eligibility for participation in government and corporate programs for minority and women-owned banks, change in accounting principles, policies or guidelines, and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and prices.

Item 1A. Risk Factors.

     Abigail Adams National Bancorp, Inc.’s Commercial Real Estate and Commercial Business Loans Expose it to Increased Lending Risks.

     At December 31, 2007, the Company’s portfolio of commercial real estate loans totaled $128.3 million, and commercial business loans totaled $38.6 million. These two categories of loans represent 54.2% of the Company’s loan portfolio. The Company plans to continue its emphasis on the origination of these types of loans. These types of loans generally expose a lender to greater risk of non-payment and loss than one- to four-family residential mortgage loans because repayment of the loans often depends on the successful operations and the income stream of the borrowers. Such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential mortgage loans. Also, many of the Company’s borrowers have more than one commercial real estate or commercial business loan outstanding with the Company. Consequently, an adverse development with respect to one loan or one credit relationship can expose the Company to a significantly greater risk of loss compared to an adverse development with respect to a one- to four-family residential mortgage loan.

13

     Abigail Adams National Bancorp, Inc.’s Current Concentration of Loans in its Primary Market Area May Increase its Risk.

     The Company’s success depends primarily on the general economic conditions in Washington, D.C. and to a lesser extent the Richmond and Hampton, Virginia market areas. Unlike larger banks that are more geographically diversified, the Company provides banking and financial services to customers primarily in Washington, D.C. The local economic conditions in the Washington, D.C. metropolitan area have a significant impact on its loans, the ability of the borrowers to repay these loans and the value of the collateral securing these loans. A significant decline in general economic conditions caused by inflation, recession, unemployment or other factors beyond the Company’s control would impact these local economic conditions and could negatively affect the financial results of its banking operations.

     The Company targets its business lending and marketing strategy for loans to serve primarily the banking and financial services needs of small to medium size businesses. These small to medium size businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities. If general economic conditions negatively impact these businesses, the Company’s results of operations and financial condition may be adversely affected.

     If Abigail Adams National Bancorp, Inc.’s Allowance for Credit Losses is Not Sufficient to Cover Actual Loan Losses, its Earnings Could Decrease.

     The Company’s loan customers may not repay their loans according to the terms of the loans, and the collateral securing the payment of these loans may be insufficient to pay any remaining loan balance. The Company may experience significant loan losses, which could have a material adverse effect on its operating results. The Company makes various assumptions and judgments about the collectibility of its loan portfolio, including the creditworthiness of its borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of its loans. In determining the amount of the allowance for credit losses, the Company relies on its loan quality reviews, its experience and its evaluation of economic conditions, among other factors. If the Company’s assumptions and judgments prove to be incorrect, its allowance for credit losses may not be sufficient to cover losses in its loan portfolio, resulting in additions to its allowance. Material additions to its allowance would materially decrease its net income.

     The Company’s emphasis on continued diversification of its loan portfolio through the origination of commercial real estate and commercial business loans is one of the more significant factors it takes into account in evaluating its allowance for credit losses and provision for credit losses. As the Company further increases the amount of such types of loans in its portfolio, the Company may determine to make additional or increased provisions for credit losses, which could adversely affect its earnings.

     In addition, bank regulators periodically review the Company’s loan portfolio and credit underwriting procedures as well as its allowance for credit losses and may require the Company to increase its provision for credit losses or recognize further loan charge-offs. Any increase in its allowance for credit losses or loan charge-offs as required by these regulatory authorities could have a material adverse effect on the Company’s results of operations and financial condition.

     Changes in Interest Rates Could Adversely Affect Abigail Adams National Bancorp, Inc.’s Results of Operations and Financial Condition.

     The Company’s results of operations and financial condition are significantly affected by changes in interest rates. The Company’s results of operations depend substantially on its net interest income, which is the difference between the interest income earned on its interest-earning assets and the interest expense paid on its interest-bearing liabilities. At December 31, 2007, the Company’s interest rate risk profile indicated that net interest income would increase in a rising interest rate environment, but would decrease in a declining interest rate environment.

14

     Changes in interest rates also affect the value of the Company’s interest-earning assets, and in particular the Company’s securities portfolio. Generally, the value of securities fluctuates inversely with changes in interest rates. At December 31, 2007, the Company’s available for sale securities totaled $66.4 million. Decreases in the fair value of securities available for sale could have an adverse effect on shareholders’ equity or earnings.

     The Company also is subject to reinvestment risk associated with changes in interest rates. Changes in interest rates may affect the average life of loans and mortgage-related securities. Decreases in interest rates can result in increased prepayments of loans and mortgage-related securities, as borrowers refinance to reduce borrowing costs. Under these circumstances, the Company is subject to reinvestment risk to the extent that it is unable to reinvest the cash received from such prepayments at rates that are comparable to the rates on existing loans and securities. Additionally, increases in interest rates may decrease loan demand and make it more difficult for borrowers to repay adjustable rate loans.

     Strong Competition Within Abigail Adams National Bancorp, Inc.’s Market Area May Limit its Growth and Profitability.

     Competition in the banking and financial services industry is intense. In the Company’s market area, the Company competes with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere. Many of these competitors (whether regional or national institutions) have substantially greater resources and lending limits than the Company does and may offer certain services that the Company does not or cannot provide. The Company’s profitability depends upon its continued ability to successfully compete in its market area.

     Abigail Adams National Bancorp, Inc. Operates in a Highly Regulated Environment and May Be Adversely Affected By Changes in Laws and Regulations.

     The Company is subject to regulation, supervision and examination by the Federal Reserve Board. ANB is subject to regulation by the OCC and by the FDIC, as insurer of its deposits. CBT is subject to regulation by the Federal Reserve Board, the Bureau of Financial Institutions and by the FDIC, as insurer of its deposits. Such regulation and supervision govern the activities in which a bank and its holding company may engage and are intended primarily for the protection of the deposit insurance funds and depositors. These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of a bank, the classification of assets by a bank and the evaluation of the adequacy of a bank’s allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, or legislation, could have a material impact on the Company and its operations.

     The Company’s operations are also subject to extensive regulation by other federal, state and local governmental authorities and are subject to various laws and judicial and administrative decisions imposing requirements and restrictions on part or all of its operations. The Company believes that it is in substantial compliance in all material respects with applicable federal, state and local laws, rules and regulations. Because its business is highly regulated, the laws, rules and regulations applicable to the Company are subject to regular modification and change. There are currently proposed various laws, rules and regulations that, if adopted, would impact its operations, including, among other things, matters pertaining to corporate governance, requirements for listing and maintenance on national securities exchanges and over the counter markets, and Securities and Exchange Commission rules pertaining to public reporting disclosures. There can be no assurance that these proposed laws, rules and regulations, or any other laws, rules or regulations, will not be adopted in the future, which could make compliance more difficult or expensive or otherwise adversely affect the Company’s business, financial condition or prospects.

15

Item 1B. Unresolved Staff Comments.

     None.

Item 2. Properties.

     The principal executive office of the Company is located in leased space at 1130 Connecticut Avenue, N.W., Washington, D.C. 20036. The Banks lease seven branch offices, located at: 1) 1501 K Street, N.W., Washington, D.C. 20006; 2) 1729 Wisconsin Avenue, N.W., Washington, D.C. 20007; 3) Union Station, 50 Massachusetts Avenue, N.E., Washington, D.C. 20002; 4) 1604 17^th Street, N.W., Washington, D.C. 20009; 5) 8121 Georgia Avenue, Silver Spring, Maryland, 20910; 6) 802 7th Street, N.W., Washington, D.C. 20001, and 7) 5214 Chamberlayne Avenue, Richmond, Virginia, 23227. The Bank owns two branch office buildings at 320 North First Street, Richmond, Virginia, 23227 and at 101 North Armistead Avenue, Hampton, Virginia, 23669. The Company leases space for Deposit Operations at 1627 K Street, N.W., Washington, D.C.. The Union Station branch has two additional ATM’s located in Union Station. Leases for these facilities expire as follows:

Location	Expiration of Lease
1501 K Street, N.W.		2012
50 Massachusetts Avenue, N.E.		2008
Union Station ATM		2009
Union Station ATM		2009
802 7th Street, N.W.		2012
1729 Wisconsin Avenue, N.W.		2008
1604 17th Street, N.W.		2016
1130 Connecticut Avenue, N.W.		2012
8121 Georgia Avenue		2008
1627 K Street, N. W.		2012
5214 Chamberlayne Avenue		2008

     In 2007, the Company and the Banks incurred rental expense on leased real estate of approximately $1.1 million. The Company considers all of the properties leased by the ANB and CBT to be suitable and adequate for their intended purposes. At December 31, 2007, the book value of the Banks’ premises and equipment was $5.0 million.

Item 3. Legal Proceedings.

     Although the Banks, from time to time, are involved in various legal proceedings in the normal course of business, there are no material legal proceedings to which the Company, ANB and CBT are a party or to which any of their property is subject.

Item 4. Submission of Matters to a Vote of Security Holders.

     None.

16

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

     The Company’s Common Stock is currently listed on the Nasdaq Global Market under the symbol “AANB,” and there is an established market for such common stock.

     The following table sets forth the range of the high and low sales prices of the Company’s Common Stock for the prior eight calendar quarters and is based upon information provided by the Nasdaq Global Market.

	Prices of Common Stock
Calendar Quarter Ended	High		Low		Dividends Paid
March 31, 2007	$	14.39	$	13.31	$	0.125
June 30, 2007		14.34		13.50		0.125
September 30, 2007		14.00		13.42		0.125
December 31, 2007		13.91		10.37		0.125
March 31, 2006		14.40		12.85		0.125
June 30, 2006		14.45		12.87		0.125
September 30, 2006		14.45		13.50		0.125
December 31, 2006		13.90		13.20		0.125

     As of December 31, 2007, the Company had 845 shareholders of record, and there were 3,462,569 shares outstanding. Please see “Item 1. Business—Supervision and Regulation—Restrictions on Transfers of Funds to the Company by the Banks” for a discussion of restrictions on the ability of the Banks to pay the Company dividends.

     The Company did not have any common stock repurchase activity during the fourth quarter of 2007.

Equity Compensation Plan Information

					Number of securities
					remaining available for
	Number of securities to be		Weighted-average exercise		future issuance under
	issued upon exercise of		price of outstanding		equity compensation plans
	outstanding options,		options, warrants and		(excluding securities
	warrants and rights.		rights.		reflected in column (a)).
Plan Category	(a)		(b)		(c)
Equity compensation plans approved by security holders		—	$	—		170,156
Equity compensation plans not approved by security holders		9,818	$	5.21		—
Total		9,818	$	5.21		170,156

     The Company adopted a non-statutory stock option plan (2000 Stock Option Plan) on February 15, 2000 that was not submitted for approval to the shareholders. A total of 30,250 shares of common stock were authorized for issuance to key employees and non-employee directors. All options were granted at an exercise price of $5.21 per share, representing 90% of the fair market value of the Company’s common stock at the date of the grant. The options vested over three years and expire after ten years from the date of grant. As of December 31, 2007, 19,676 options have been exercised and 756 options have been forfeited in the 2000 Stock Option Plan.

     Please see the Annual Report to Shareholders, which is filed as Exhibit 13 hereto for the stock performance graph.

Item 6. Selected Financial Data.

     See the Annual Report to Shareholders which is filed at Exhibit 13 hereto.

17

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

     The Management’s Discussion and Analysis of Financial Condition and Results of Operations is incorporated by reference to the Company’s Annual Report to Shareholders, which is filed as Exhibit 13 hereto.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk.

     For information regarding market risk, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations which is incorporated by reference to the Company’s Annual Report to Shareholders at Exhibit 13 hereto.

Item 8. Financial Statements and Supplementary Data.

     The Financial Statements identified in Item 15(a)(1) hereof are included with the Annual Report to Shareholders at Exhibit 13 hereto.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

     None.

Item 9A. Controls and Procedures.

     (a) Evaluation of disclosure controls and procedures.

     Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the fiscal year (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective in timely alerting them to the material information relating to us (or our consolidated subsidiaries) required to be included in our periodic SEC filings.

Item 9A (T) Controls and Procedures

     (a) Management’s Report on Internal Control Over Financial Reporting

     Management’s Annual Report on Internal Control over Financial Reporting is included in Exhibit 13 and is incorporated by reference herein. This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

     (b) Changes in internal controls over financial reporting.

     There were no significant changes made in our internal controls during the fourth quarter of 2007 or, to our knowledge, in other factors that has materially affected or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

     See the Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Item 9B. Other Information.

     None

18

PART III

     Except as set forth below, the information called for by Items 10, 11, 12, 13 and 14 is incorporated herein by reference to the Company’s definitive Proxy Statement for the 2008 Annual Meeting of Shareholders to be filed within 120 days after the end of the fiscal year covered by the Form 10-K.

Item 10. Directors, Executive Officers and Corporate Governance.

     The Company has adopted a Code of Ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Code of Ethics may be accessed on the Company’s website at www.adamsbank.com.

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Item 14. Principal Accountant Fees and Services.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

     (a)(1) Financial Statements

• Report of Independent Registered Public Accounting Firm

• Consolidated Balance Sheets, December 31, 2007 and 2006

• Consolidated Statements of Income Years Ended December 31, 2007, 2006 and 2005

• Consolidated Statements of Changes in Shareholders’ Equity Years Ended December 31, 2007, 2006 and 2005

• Consolidated Statements of Cash Flows Years Ended December 31, 2007, 2006 and 2005

• Notes to Consolidated Financial Statements

     (a)(2) Financial Statement Schedule

     No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes.

     (a)(3) Exhibits

Exhibit
Number	Description of Exhibit
3.1	Certificate of Incorporation of the Company, as amended (1)
3.1.1	Amendment to the Certificate of Incorporation of the Company (2)
3.2	By-laws of the Company, as amended (3)
3.3	Amendment to the By-laws of the Company (4)

19

Exhibit
Number	Description of Exhibit
4.1.1	Rights Agreement dated as of April 12, 1994, between the Company and The First National Bank of Maryland, as Rights Agent (Right Certificate attached as Exhibit A to Rights Agreement and Summary of Rights to Purchase Common Shares attached as Exhibit B to Rights Agreement) (5)
4.1.2	First Amendment dated April 20, 1995 between the Company and The First National Bank of Maryland, as Rights Agent (6)
4.2	Form of Common Stock Certificate of the Company (7)
10.1	Agreement, dated April 20, 1995 between the Company and Marshall T. Reynolds (8)
13	Annual Report to Shareholders
14	Code of Ethics (9)
21	Subsidiaries of the Registrant (10)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1)	Incorporated by reference to Exhibit 3 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1987.
(2)	Incorporated by reference to Exhibit 3.2 to Amendment No. 2 to Form SB-2 filed July 9, 1996.
(3)	Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1987.
(4)	Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed October 18, 2007.
(5)	Incorporated by reference to Exhibits 1-3 to the Company’s Registration Statement on Form 8-A dated April 12, 1994.
(6)	Incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form 8-K/A dated April 21, 1995.
(7)	Incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-4 dated April 22, 2005.
(8)	Incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
(9)	Incorporated by reference to Exhibit 10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.
(10)	Incorporated by reference to Exhibit 21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

     (b) See the exhibits filed under Item 15(a)(3)

20

SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	ABIGAIL ADAMS NATIONAL BANCORP, INC.
Date: March 28, 2008	By:	/s/ Jeanne D. Hubbard
		Jeanne D. Hubbard, Chairwoman of the Board,
		President and Chief Executive Officer

     In accordance with the Exchange Act, this report has been signed below by the following Behalf of the Registrant and in the capacities and on the dates indicated.

By:	/s/ Jeanne D. Hubbard	By:	/s/ Karen E. Troutman
	Jeanne D. Hubbard, Chairwoman of the Board, President and Chief Executive Officer		Karen E. Troutman, Principal Financial and Accounting Officer
Date: March 28, 2008		Date: March 28, 2008
By:	/s/ A George Cook.	By:	/s/ Patricia G. Shannon
	A. George Cook, Director		Patricia G. Shannon, Director
Date: March 28, 2008		Date: March 28, 2008
By:	/s/ Marianne Steiner	By:	/s/ Douglas V. Reynolds
	Marianne Steiner, Director		Douglas V. Reynolds, Director
Date: March 28, 2008		Date: March 28, 2008
By:	/s/ Joseph L. Williams	By:	/s/ Marshall T. Reynolds
	Joseph L. Williams, Director		Marshall T. Reynolds, Director
Date: March 28, 2008		Date: March 28, 2008
By:	/s/ Bonita A. Wilson	By:	/s/ Sandra C, Ramsey
	Bonita A. Wilson, Director		Sandra C. Ramsey, Director
Date: March 28, 2008		Date: March 28, 2008

EXHIBIT INDEX

Exhibit
Number	Description of Exhibit
3.1	Certificate of Incorporation of the Company, as amended (1)
3.1.1	Amendment to the Certificate of Incorporation of the Company (2)
3.2	By-laws of the Company, as amended (3)
3.3	Amendment to the By-laws of the Company (4)
4.1.1	Rights Agreement dated as of April 12, 1994, between the Company and The First National Bank of Maryland, as Rights Agent (Right Certificate attached as Exhibit A to Rights Agreement and Summary of Rights to Purchase Common Shares attached as Exhibit B to Rights Agreement) (5)
4.1.2	First Amendment dated April 20, 1995 between the Company and The First National Bank of Maryland, as Rights Agent (6)
4.2	Form of Common Stock Certificate of the Company (7)
10.1	Agreement, dated April 20, 1995 between the Company and Marshall T. Reynolds (8)
13	Annual Report to Shareholders
14	Code of Ethics (9)
21	Subsidiaries of the Registrant (10)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1)	Incorporated by reference to Exhibit 3 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1987.
(2)	Incorporated by reference to Exhibit 3.2 to Amendment No. 2 to Form SB-2 filed July 9, 1996.
(3)	Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1987.
(4)	Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed October 18, 2007.
(5)	Incorporated by reference to Exhibits 1-3 to the Company’s Registration Statement on Form 8-A dated April 12, 1994.
(6)	Incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form 8-K/A dated April 21, 1995.
(7)	Incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-4 dated April 22, 2005.
(8)	Incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
(9)	Incorporated by reference to Exhibit 10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.
(10)	Incorporated by reference to Exhibit 21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

     (b) See the exhibits filed under Item 15(a)(3)

EX-13

EXHIBIT 13

ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARIES
2007 ANNUAL REPORT TO STOCKHOLDERS

CONTENTS

Financial Highlights	1
Selected Financial Data for Five-Year Period	2
Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Management’s Report on Internal Control over Financial Reporting	16
Summary of Operations by Quarter and Summary of Market Data	17
Report of Independent Registered Public Accounting Firm	18
Consolidated Balance Sheets	19
Consolidated Statements of Income	20
Consolidated Statements of Changes in Stockholders’ Equity	21
Consolidated Statements of Cash Flows	22
Notes to Consolidated Financial Statements	24
Stock Performance Graph	48
Stockholder Information	49

ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)

	2007		2006
Averages
Assets	$	443,581	$	372,327
Loans		314,430		273,803
Allowance for loan losses		4,573		4,609
Deposits		388,626		313,902
Stockholders’ equity		30,837		28,918
At Year End
Assets	$	445,875	$	405,502
Loans		307,483		307,957
Allowance for loan losses		4,202		4,432
Deposits		386,942		363,590
Stockholders’ equity		31,439		30,182
Book value per share	$	9.08	$	8.72
For The Year
Net income	$	3,059	$	3,696
Cash dividends		1,731		1,731
Per Common Share
Basic earnings	$	0.88	$	1.07
Diluted earnings	$	0.88	$	1.07
Cash dividends	$	0.50	$	0.50

⁽¹⁾ 2005 includes CB&T results from July 30, 2005

-1-

ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)

	December 31,
	2007			2006			2005(1)			2004(1)			2003(1)
Income Statement Data
Total interest income	$	30,251		$	26,145		$	18,461		$	13,829		$	12,556
Total interest expense		13,599			9,408			4,307			1,986			2,094
Net interest income		16,652			16,737			14,154			11,843			10,461
Provision (credit) for loan losses		260			(232	)		310			420			591
Total noninterest income		1,625			2,130			1,911			1,975			2,035
Total noninterest expense		13,862			13,107			10,240			7,415			6,646
Provision for income taxes		1,096			2,296			2,195			2,381			2,098
Net income		3,059			3,696			3,320			3,602			3,161
Per Common Share Data
Basic net income per share	$	0.88		$	1.07		$	0.98		$	1.09		$	0.95
Diluted net income per share	$	0.88		$	1.07		$	0.98		$	1.08		$	0.95
Cash dividends	$	0.50		$	0.50		$	0.50		$	0.45		$	0.45
Selected Balance Sheet Data
Total assets	$	445,875		$	405,502		$	343,030		$	251,192		$	231,906
Investment securities		79,701			63,069			70,116			50,835			44,418
Loans		307,483			307,957			248,287			180,272			156,034
Allowance for loan losses		4,202			4,432			4,345			2,558			2,119
Deposits		386,942			363,590			292,032			215,367			192,756
Long-term debt		15,120			6,288			11,213			7,127			10,030
Stockholders’ equity		31,439			30,182			28,053			24,760			22,875
Selected Ratios
Return on average assets		0.69	%		0.99	%		1.15	%		1.55	%		1.49	%
Return on average stockholders’ equity		9.92	%		12.78	%		12.49	%		15.21	%		14.32	%
Average equity to average assets		6.95	%		7.77	%		9.17	%		10.18	%		10.43	%
Dividend payout ratio		56.82	%		46.89	%		51.02	%		41.28	%		47.37	%
Net charge-offs (recoveries) to average loans		0.16	%		(0.12	%)		(0.02	%)		(0.01	%)		0.51	%
Nonperforming assets to total loans		3.98	%		1.16	%		0.23	%		1.04	%		1.84	%
Allowance for loan losses to loans		1.37	%		1.44	%		1.75	%		1.42	%		1.36	%

⁽¹⁾ 2005 includes CB&T results from July 30, 2005. Prior historical periods do not reflect CB&T results.

-2-

ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Abigail Adams National Bancorp, Inc. (the “Company”) is the parent of The Adams National Bank (“ANB”), a national bank with six full-service branches located in the greater metropolitan Washington, D.C. area and, Consolidated Bank and Trust (CB&T), a Virginia chartered commercial bank, with two branches in Richmond and one in Hampton, Virginia. The Company reports its financial results on a consolidated basis with ANB and CB&T.

When used in this Annual Report the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including among other things, changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s market area and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company does not undertake, and specifically declines any obligation, to publicly release the results of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

The following analysis of financial condition and results of operations should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto. For a discussion of risk factors that could affect the Company’s performance, see pages 14 through 15.

Consolidated Bank and Trust Company Merger

On July 29, 2005, the Company completed its acquisition of Consolidated Bank and Trust Company (CB&T), a Virginia chartered commercial bank. CB&T was founded in 1903 and has been the oldest continuously operated African-American owned bank in the U.S. and one of the first U.S. banks originally headed by a woman, Maggie Lena Walker. This legacy combined with the Company’s focus on serving minorities, small businesses and not-for-profit organizations has resulted in a strategic acquisition for our shareholders by expanding the Company’s market area while maintaining the heritage and expanding the focus of CB&T. See Note 3 of the Notes to the Consolidated Financial Statements for a complete discussion of the shares issued, purchase price, and other information.

Results of Operations

Overview

The Company recorded net income of $3.1 million in 2007, as compared to $3.7 million in 2006 and $3.3 million in 2005. The 17.2% decrease in net income compared to 2006 was significantly attributable to a $492,000 increase in the provision for loan losses and a $505,000 decrease in noninterest income. The 11.3% increase in 2006 net income compared to 2005 was attributable to a $2.6 million or 18.2% increase in net interest income combined with an 11.5% increase in noninterest income and a reversal of loan loss provision totaling $232,000, offset by a 28.0% increase in noninterest expense. Book value per share was $9.08 at December 31, 2007, an increase of $0.36 from the book value per share of $8.72 at December 31, 2006. Diluted earnings per share were $0.88 for 2007, compared to $1.07 for 2006 and $0.98 for 2005. Dividends paid per common share were $0.50 in 2007, 2006 and 2005.

-3-

Analysis of Net Interest Income

Net interest income, which is the sum of interest and certain fees generated by earning assets minus interest paid on deposits and other funding sources, is the principal source of the Company’s earnings. Net interest income remained relatively flat at $16.7 million in 2007 and 2006. In 2007, the cost of funds increased to 4.08% from 3.57% in 2006 reflecting the competition for raising deposits and changes in the composition of our deposits while the effective return on average loans declined to 7.96% from 8.24% reflecting the increase in average impaired loans as well as competitive pricing pressures for loans in our market area. Net interest income in 2006 increased $2.6 million compared to 2005 reflecting the increases in the Prime rate and growth in average earning assets, particularly loans. Average earning assets increased $68.6 million or 19.4% in 2007 compared to an increase of $77.6 million or 28.1% in 2006.

The average yield on interest-earning assets was 7.16% in 2007 compared to 7.39% in 2006 and 6.68% in 2005. Loans, the highest yielding component of earning assets, represented 74.4% of average earning assets for 2007, 77.3% in 2006 and 73.7% in 2005. In 2007, average loans increased 14.8% to $314.0 million from $273.8 million in 2006 compared to increasing 34.4% in 2006 from $203.6 million in 2005. The average yield on loans decreased 28 basis points to 7.96% in 2007 from 8.24% in 2006 compared to an increase of 57 basis points in 2006 from 2005. A significant factor contributing to the decrease in the average loan yield was the increase in average impaired loans from $1.1 million in 2006 to $4.4 million in 2007. A less significant contributing factor to the decrease in the average yield on loans was the Prime rate, a key index to which a substantial portion of our loans is tied. The Prime rate peaked at the end of 2006 and remained stable at 8.25% during the first eight months of 2007 and then declined 100 basis points over the remaining four months compared to increasing 100 basis points during 2006 and 200 basis points in 2005.

Average investments, consisting of investment securities, Federal funds and other short-term investments, increased 34.9% in 2007 to $108.2 million from $80.2 million in 2006, compared to increasing 10.3% in 2006 from 2005. The increase in average investments reflects the increase in liquidity. The average yield on investments increased 34 basis points in 2007 to 4.81% from 4.47% in 2006, and was 91 basis points above the average yield of 3.90% in 2005, reflecting higher market rates generally.

Funding for earning assets comes from interest-bearing liabilities, non-interest-bearing liabilities and stockholders’ equity. The percentage of average earning assets funded by average interest-bearing liabilities increased to 79.0% in 2007, compared to 74.4% in 2006 and 69.6% in 2005. Average interest bearing liabilities increased 26.7% to $333.7 million from $263.3 million in 2006, after increasing 36.9% from 2005. The cost of interest-bearing funds increased 51 basis points to 4.08% in 2007 from 3.57% in 2006, compared to a 133 basis points increase in 2006 from a cost of 2.24% in 2005. The increases in the cost of deposits in 2007 and 2006 reflect the increase in short-term interest rates, which are used to price our deposits, and the competitive pricing pressure for deposits in the local markets. Average non-interest bearing deposits decreased to $74.1 million from $76.4 million in 2006 and increased $7.8 million in 2006 from $68.6 million in 2005.

The net interest margin, which is net interest income as a percentage of average interest-earning assets, declined to 3.94% for 2007, a decrease of 79 basis points from 4.73% for 2006. The net interest spread, which is the difference between the average interest rate earned on interest-earning assets and interest paid on interest-bearing liabilities, was 3.08% for 2007, reflecting a decrease of 74 basis points from the 3.82% reported in 2006. The compression in the net interest margin and spread reflects the higher cost of raising deposits and more competitive pricing of loan products.

-4-

The following tables present the average balances, net interest income and interest yields/rates for 2007, 2006 and 2005 and an analysis of the dollar changes in interest income and interest expense.

Distribution of Assets, Liabilities and Stockholders’ Equity Yields and Rates
For the Years Ended December 31, 2007, 2006, and 2005 ⁽¹⁾
(Dollars in thousands)

	2007								2006								2005
				Interest								Interest								Interest
	Average			Income/		Average			Average			Income/		Average			Average			Income/		Average
	Balances			Expense		Rates			Balances			Expense		Rates			Balances			Expense		Rates
Assets
Loans (2)	$	314,430		$	25,044		7.96	%	$	273,803		$	22,558		8.24	%	$	203,645		$	15,625		7.67	%
Investment securities		72,835			3,408		4.68	%		68,431			3,012		4.40	%		59,203			2,400		4.05	%
Federal funds sold		18,260			916		5.02	%		9,506			464		4.88	%		5,911			195		3.30	%
Interest-earning bank balances		17,091			883		5.17	%		2,275			111		4.88	%		7,640			241		3.15	%
Total earning assets		422,616			30,251		7.16	%		354,015			26,145		7.39	%		276,399			18,461		6.68	%
Allowance for loan losses		(4,573	)							(4,609	)							(3,391	)
Cash and due from banks		14,177								12,424								10,672
Other assets		11,361								10,497								5,986
Total assets	$	443,581							$	372,327							$	289,666
Liabilities and Stockholders’ Equity
Savings, NOW and money market accounts	$	146,287			4,314		2.95	%	$	136,251			3,623		2.66	%	$	111,963			1,857		1.66	%
Certificates of deposit		168,252			8,358		4.97	%		101,236			4,387		4.33	%		69,269			2,038		2.94	%
Short-term borrowings		5,175			144		2.78	%		16,216			765		4.72	%		2,286			31		1.36	%
Long-term debt		13,942			783		5.62	%		9,638			633		6.57	%		8,816			381		4.32	%
Total interest-bearing liabilities		333,656			13,599		4.08	%		263,341			9,408		3.57	%		192,334			4,307		2.24	%
Noninterest-bearing deposits		74,087								76,415								68,631
Other liabilities		5,001								3,653								2,126
Stockholders’ equity		30,837								28,918								26,575
Total liabilities and stockholders’ equity	$	443,581							$	372,327							$	289,666
Net interest income				$	16,652							$	16,737							$	14,154
Net interest spread							3.08	%							3.82	%							4.44	%
Net interest margin							3.94	%							4.73	%							5.12	%

(1)	2005 includes CB&T results from July 30, 2005.
(2)	The loan averages are stated net of unearned income, and the averages include loans on which the accrual of interest has been discontinued. Net loan fees included in interest income were $630,000, $1.3 million, and $1.1 million for 2007, 2006 and 2005, respectively.

-5-

Interest Rates and Interest Differential
Analysis of Changes in fully Taxable Equivalent Net Interest Income
(In thousands)

	For the years ended December 31,									For the years ended December 31,
	2007 versus 2006									2006 versus 2005(1)
	Net									Net
	Increase			Change per (2)						Increase			Change per (2)
	(Decrease)			Rate			Volume			(Decrease)			Rate			Volume
Interest income from:
Loans	$	2,486		$	(862	)	$	3,348		$	6,933		$	1,552		$	5,381
Investment securities		396			202			194			612			238			374
Federal funds sold		452			25			427			269			150			119
Interest-earning bank balances		772			49			723			(130	)		39			(169	)
Total interest income		4,106			(586	)		4,692			7,684			1,979			5,705
Interest expense on:
Savings, NOW and money market		(691	)		(488	)		(203	)		(1,766	)		(1,498	)		(268	)
Certificates of deposit		(3,971	)		(1,150	)		(2,821	)		(2,349	)		(1,452	)		(897	)
Short-term borrowings		621			100			521			(734	)		(545	)		(189	)
Long-term debt		(150	)		133			(283	)		(252	)		(216	)		(36	)
Total interest expense		(4,191	)		(1,405	)		(2,786	)		(5,101	)		(3,711	)		(1,390	)
Net interest income	$	(85	)	$	(1,991	)	$	1,906		$	2,583		$	(1,732	)	$	4,315

(1)	2005 includes CB&T results from July 30, 2005.
(2)	The change in interest due to both rate and volume has been allocated to change due to rate.

Noninterest Income

Noninterest income decreased $505,000 or 23.7% in 2007 compared to an increase of $219,000 in 2006. Noninterest income consists primarily of service charges on deposits and other fee-based services, as well as gains on the sales of investment securities and loans. In 2007, service charges on deposit accounts were up $20,000 primarily due to increases in overdraft fees while other income decreased $525,000 reflecting fewer loan sales and nonrecurring miscellaneous other income related to the acquisition of Consolidated Bank and Trust. In 2006, other income was up $196,000 due in part to a full year of income from the acquisition of Consolidated Bank and Trust which occurred in July, 2005 and a $90,000 increase in the gain on sale of loans. The gain on sale of the guaranteed portion of SBA loans was $43,000 in 2007, $386,000 in 2006, and $296,000 in 2005. There were no sales of investment securities in 2007, 2006, or 2005.

Noninterest Expense

Noninterest expense totaled $13.9 million in 2007, an increase of $755,000 compared to an increase of $2.9 million in 2006. Professional fees increased $141,000 in 2007 reflecting increases in legal, audit and consulting fees. Other operating expense increased $493,000 primarily due to increases in advertising, employee recruitment, and loan expense. The increase in noninterest expense in combination with the decrease in noninterest income resulted in a higher efficiency ratio in 2007; our efficiency ratio increased to 75.8% from 69.5% in 2006 and 63.7% in 2005. An increasing efficiency ratio means we have to spend more money in order to make $1.00 of net income. The overall increase in noninterest expense in 2006, compared to 2005, was due to a full year of expense from the ownership of Consolidated Bank and Trust. Our operations of Consolidated Bank and Trust contributed $2.1 million or 73.2 % of the increase in noninterest expense in 2006. Salaries and benefits expense increased $1.3 million or 25.0% in 2006, reflecting a full year of expense from the subsidiary. The $604,000 increase in occupancy expense and the $277,000 increase in data processing expense in 2006 was predominately due to a full year of expense related to the acquisition of Consolidated Bank and Trust and the expansion of the loan department into new leased office space.

-6-

Income Tax Expense

For the years ended December 31, 2007, 2006, and 2005, the Company incurred income tax expense of $1.1 million, $2.3 million, and $2.2 million, respectively. Income tax expense decreased $1.2 million in 2007, reflecting the $1.8 million decrease in net income before taxes and the $525,000 tax effect of a reversal in a deferred tax asset valuation allowance related to a net operating loss carryforward. In 2007, the Company’s effective tax rate was 26.4% compared to 38.3% in 2006 and 39.8% in 2005. The reduction in the 2007 effective tax rate reflects a reversal of the aforementioned valuation allowance related to the Consolidated Bank and Trust acquisition. The reversal occurred because management determined that it was more likely than not that CB&T will have sustainable future taxable earnings. In accordance with the Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”, this resulted in a reduction of the remaining goodwill and core deposit intangible from the acquisition, with the excess credit of $525,000 to income tax expense.

Financial Condition

Overview

Total assets were $445.9 million at December 31, 2007, an increase of $40.4 million or 10.0%, compared to $405.5 million at December 31, 2006. The increase in our assets primarily reflects growth in short-term investments and investment securities held for sale. Total liabilities were $414.4 million at December 31, 2007, an increase of $39.1 million or 10.4%, compared to $375.3 million at December 31, 2006, primarily due to growth in deposits of $23.4 million and $14.9 million in borrowings. Total stockholders’ equity was $31.4 million at December 31, 2007, an increase of $1.3 million or 4.2%, compared to December 31, 2006. The book value per share of common stock issued and outstanding at December 31, 2007 increased to $9.08 per share from $8.72 per share at December 31, 2006.

Analysis of Loans

Total loans at December 31, 2007 decreased $474,000 to a balance of $307.5 million, compared to $308.0 million at December 31, 2006. Our residential real estate loans increased $11.5 million or 20.6%, due to an increased demand in the Washington, DC market. Construction loans decreased $3.2 million or 4.3%, compared to 2006, primarily due to completion and sales in excess of new loan originations. Commercial real estate loans decreased $8.2 million or 6.08% from the prior year, as a result of repayments at year-end. Commercial loan balances decreased slightly by $717,000 or 1.8%, and installment loans remained relatively unchanged compared to 2006. Average loans increased 14.8% in 2007, compared to 2006. The following table presents the percentage composition of the loan portfolio.

	December 31,
Composition of loan portfolio:	2007			2006			2005			2004			2003
Commercial		12.5	%		12.7	%		16.0	%		15.9	%		20.5	%
Real Estate- commercial		41.7	%		44.3	%		50.1	%		50.1	%		51.8	%
Real Estate- residential		21.9	%		18.1	%		19.5	%		27.6	%		21.9	%
Real Estate- construction		23.0	%		24.0	%		13.6	%		5.9	%		5.4	%
Installment		0.9	%		0.9	%		0.8	%		0.5	%		0.4	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

The Company’s loan portfolio does not include concentrations of credit risk in loan products that permit the deferral of principal payments or payments that are smaller than normal interest accruals (negative amortization); loans with high loan-to-value ratios; and loans, such as option adjustable-rate mortgages, that may expose the borrower to future increases in repayments that are in excess of increases that would result solely from increases in market interest rates.

-7-

The following table summarizes the maturity distribution and interest sensitivity of the Company’s loan portfolio at December 31, 2007. The balances exclude any adjustments for net deferred fees and unearned income. Included in the “Within 1 year” category are overdrafts, demand loans, loans having no stated maturity, and loans with no stated schedule of repayment.

Analysis of Loan Maturity and Interest Sensitivity
At December 31, 2007

(In thousands)	Within 1 Year		1 to 5 Years		After 5 Years		Total
Maturity of Loan
Commercial	$	22,519	$	12,211	$	3,876	$	38,606
Real estate — commercial		26,572		70,795		30,953		128,320
Real estate — residential		15,306		41,813		10,256		67,375
Real estate — construction		60,806		6,056		3,936		70,798
Installment		934		1,546		236		2,716
Total loans	$	126,137	$	132,421	$	49,257	$	307,815
Interest-Rate Sensitivity of Loans
Predetermined rates	$	32,070	$	127,677	$	49,197	$	208,944
Variable rates		94,067		4,744		60		98,871
Total loans	$	126,137	$	132,421	$	49,257	$	307,815

For additional information about loans, see Note 5 of the consolidated financial statements.

Analysis of Investment Securities

The investment securities portfolio was $79.7 million at December 31, 2007, an increase of $16.6 million or 26.3% compared to the prior year end total of $63.1 million. The weighted average maturity of the portfolio at December 31, 2007 was 4.99 years.

Investment securities classified as available for sale are used to maintain adequate liquidity and to provide a base for executing management’s asset/liability strategy. These securities are carried at estimated fair value and totaled $66.4 million at December 31, 2007, an increase of $21.0 million or 46.4% from the balance at December 31, 2006. The increase in the available for sale portfolio was due to the increase in the Company’s liquidity. Investment securities classified as available for sale consisted of U.S. government sponsored agencies, mortgage-backed securities, corporate securities, and marketable equity securities.

Investment securities classified as held to maturity decreased $4.4 million or 24.9% at December 31, 2007 from $17.7 million at December 31, 2006. The decrease reflects maturities in US government sponsored agencies and repayments of mortgage-backed securities.

-8-

The table entitled “Analysis of Investment Securities Portfolio,” sets forth by major categories, the amortized cost basis, approximate market values and the weighted-average yields of investment securities held to maturity and available for sale at December 31, 2007. Expected maturities may differ from contractual maturities in mortgage-backed securities; therefore, these securities are not included in maturity categories in the following table.

Analysis of Investment Securities Portfolio
At December 31, 2007
(Dollars in thousands)

	Held to Maturity							Available for Sale
	Amortized		Market		Average			Amortized		Market		Average
	Cost Basis		Value		Yield			Cost Basis		Value		Yield
U.S. government sponsored agencies:
One year or less	$	9,498	$	9,458		3.54	%	$	5,498	$	5,487		4.12	%
After one, but within five years		2,000		1,983		3.13	%		37,214		37,403		4.65	%
After five, but within ten years		—		—		—	%		8,000		8,082		5.31	%
After ten years		—		—		—	%		1,997		2,011		5.83	%
Total Federal agency securities		11,498		11,441		3.47	%		52,709		52,983		4.74	%
Mortgage-backed securities		1,811		1,828		5.53	%		7,105		7,091		4.87	%
Corporate securities:
After five, but within ten years		—		—		—			1,062		851		5.76	%
After ten years		—		—		—			5,688		4,749		6.11	%
Marketable equity securities		—		—		—			1,005		718		5.45	%
Total investment securities	$	13,309	$	13,269		3.75	%	$	67,569	$	66,392		4.75	%

For additional information about investment securities, see Note 1 (c) and Note 4 of the Notes to Consolidated Financial Statements.

Short-term investments

Short-term investments, consisting of Federal funds and interest earning deposits in banks, totaled $33.2 million, an increase of 140.6% from the total of $13.8 million at December 31, 2006. Interest-earning deposits in other banks totaled $20.4 million at December 31, 2007, a $14.6 million increase from the balance of $5.8 million at December 31, 2006. The increase in short-term investments reflects the Company’s increase in liquidity.

Premises and equipment

At December 31, 2007, net premises and equipment increased to $5.0 million from $4.9 million at December 31, 2006. Net equipment purchases totaled $670,000 in 2007 primarily due to upgrades in computer and security systems at CB&T.

Other Assets

Other assets increased $2.7 million to $9.1 million or 42.0% from $6.4 million at December 31, 2006. The increase in other assets primarily reflected a $1.4 million increase in foreclosed assets at ANB, a $1.1 million increase in net deferred tax assets, and a $633,000 increase in FHLB stock. Offsetting decreases in other assets included the sale of foreclosed and other real estate owned at CBT with a book value of $311,000 and a $282,000 reduction in goodwill and core deposit intangible balances due to a valuation reversal in the deferred tax asset related to a net operating loss carryforward.

Deposits

Deposits are the Company’s primary source of funds, providing funding for 92.0% of average earning assets in 2007 and 88.7% in 2006. Average interest-bearing deposits increased 32.4% to $314.5 million in 2007. Total deposits increased $23.3 million or 6.4% to $386.9 million at December 31, 2007 from $363.6 million at December 31, 2006. Certificates led the growth by increasing $18.4 million of which $13.6 million is attributed to CDARS, the Certificate of Deposit Account Registry Service, which provides depositors registered in the program, FDIC insurance on deposits larger than $100,000. NOW accounts increased by $14.4 million reflecting seasonal growth in large institutional accounts. Offsetting the certificate and NOW growth were decreases of $6.2 million in money markets, $1.2 million in savings, and $2.1 million in noninterest bearing demand accounts.

-9-

The following table sets forth the dollar amounts in the various types of deposit programs.

	December 31,
	2007					2006					2005
(Dollars in thousands)	Amount		Percent			Amount		Percent			Amount		Percent
Demand deposits	$	74,833		19.3	%	$	76,887		21.1	%	$	78,809		27.0	%
Savings accounts		15,090		3.9	%		16,311		4.5	%		19,893		6.8	%
NOW accounts		78,829		20.4	%		64,391		17.7	%		44,547		15.3	%
Money market accounts		48,845		12.6	%		55,031		15.1	%		69,895		23.9	%
Total non-certificates		217,597		56.2	%		212,620		58.4	%		213,144		73.0	%
Total certificates		169,345		43.8	%		150,970		41.6	%		78,888		27.0	%
Total deposits	$	386,942		100.0	%	$	363,590		100.0	%	$	292,032		100.0	%

The following table summarizes certificates of deposit at December 31, 2007 by time remaining until maturity.

	Maturity
	3 Months		Over 3 to 6		Over 6 to		Over 12
(In thousands)	or Less		Months		12 Months		Months		Total
Certificates of deposit less than $100,000	$	30,283	$	21,108	$	27,427	$	20,600	$	99,418
Certificates of deposit of $100,000 or more		16,771		22,134		15,690		15,332		69,927
Total certificates of deposit	$	47,054	$	43,242	$	43,117	$	35,932	$	169,345

Borrowed Funds

Short-term borrowings, consisting of repurchase agreements, totaled $8.5 million at December 31, 2007, compared to $2.4 million at December 31, 2006. Average short-term borrowings for 2007 were $5.2 million, compared to $16.2 million for 2006. For additional information on short-term borrowings, see Note 11 of the Notes to Consolidated Financial Statements.

Long-term debt was $15.1 million at December 31, 2007, an increase of $8.8 million from $6.3 million at December 31, 2006. The increase reflects a FLHB convertible advance for $10.0 million obtained in March of 2007, offset by $1.2 million in scheduled payments on other long-term debt. For additional information on long-term debt, see Note 12 of the Notes to Consolidated Financial Statements.

Borrowed funds average balances and interest rates are presented in the following schedule:

	Years Ended December 31,
										Average
	Maximum									Interest
	Outstanding at		Average		Average			Ending		Rate at
(Dollars in thousands)	Any Month End		Balance		Interest Rate			Balance		Year End
2007:
Long-term debt	$	16,055	$	13,942		5.62	%	$	15,120		5.07	%
Short-term borrowings	$	12,578	$	5,175		2.78	%	$	8,494		3.32	%
2006:
Long-term debt	$	11,136	$	9,638		6.57	%	$	6,288		7.71	%
Short-term borrowings	$	30,026	$	16,216		4.72	%	$	2,378		1.32	%
2005:
Long-term debt	$	11,595	$	8,816		4.32	%	$	11,213		4.97	%
Short-term borrowings	$	8,256	$	2,286		1.34	%	$	8,256		3.38	%

-10-

Contractual Commitments

In the normal course of business, the Company enters into certain contractual obligations. Such obligations include obligations to make future payments on debt and lease arrangements. See Notes 8, 9, 11 and 12 of the Notes to Consolidated Financial Statements. The following table summarizes the Company’s significant contractual obligations at December 31, 2007.

	Payments due by period
			Less than 1						More than 5
(In thousands)	Total		year		1-3 years		3-5 years		years
Time deposit maturities	$	169,345	$	133,413	$	28,805	$	7,127	$	—
Short-term borrowings		8,494		8,494		—		—		—
Long-term debt		15,120		971		1,377		11,577		1,195
Operating lease obligation		5,220		1,163		1,942		1,813		302
Purchase obligations (1)		1,661		378		773		510		—
Total	$	199,840	$	144,419	$	32,897	$	21,027	$	1,497

⁽¹⁾ Purchase obligations consist primarily of a data processing service center contract in the amount of $1.5 million

See Note 13 of the Notes to the Consolidated Financial Statements for a summary of off balance sheet commitments.

Stockholders’ Equity

Stockholders’ equity at December 31, 2007 was $31.4 million, an increase of $1.3 million or 4.2% from December 31, 2006. Cash dividends of $1.7 million were declared on the common stock in 2007, 2006 and 2005 at an annual rate of $0.50 per common share. The dividend payout ratios were 56.8%, 46.7% and 51.0% for 2007, 2006 and 2005, respectively. The ratio of average stockholders’ equity to average assets for 2007 was 7.0%, as compared to 7.8% for 2006. The return on average equity was 9.9% for 2007 and 12.8% for 2006.

Asset Quality

Adequacy of the Allowance for Loan Losses

The Company continuously monitors the quality of its loan portfolio and maintains an allowance for loan and lease losses (“ALLL”) sufficient to absorb probable losses inherent in its total loan portfolio. The ALLL policy is critical to the portrayal and understanding of our financial condition and results of operations. As such, selection and application of this “critical accounting policy” involves judgments, estimates, and uncertainties that are susceptible to change. In the event that different assumptions or conditions were to prevail, and depending upon the severity of such changes, the possibility of materially different financial condition or results of operations is a reasonable likelihood. Although credit policies are designed to minimize risk, management recognizes that loan losses will occur and that the amount of these losses will fluctuate depending on the risk characteristics of the loan portfolio.

The Company’s ALLL framework has three basic components: a formula-based component for pools of homogeneous loans; a specific allowance for loans reviewed for individual impairment; and a pool specific allowance based upon other inherent risk factors and imprecision associated with the modeling and estimation process. The first component, the general allocation to homogenous loans, is determined by applying allowance factors to pools of loans that have similar characteristics in terms of business and product type. The general factors are determined by using an analysis of historical charge-off experience by loan pools. The second component of the ALLL analysis involves the estimation of allowances specific to impaired loans. The third component of the ALLL addresses inherent losses that are not otherwise captured in the other components and is applied to homogenous pools of loans. The qualitative factors are subjective and require a high degree of management judgment. These factors consider changes in nonperforming and past-due loans, concentrations of loans to specific borrowers and industries, and general and regional economic conditions, as well as other factors existing at the determination date.

The allowance for loan losses is established through provisions for loan losses as a charge to earnings based upon management’s ongoing evaluation. Loans deemed uncollectible are charged against the allowance for loan losses and any subsequent recoveries are credited to the allowance. The provision for loan losses increased in 2007 due to a provision expense totaling $260,000, compared the net reduction in provision expense totaling $232,000 in 2006 as of the result of improved conditions in the loan portfolio in 2006, related to the acquisition of Consolidated Bank

-11-

and Trust in 2005. The 2005 provision expense was $310,000. The balance of the allowance for loan losses was $4.2 million or 1.37% of loans at December 31, 2007, $4.4 million or 1.44% of loans at December 31, 2006, and $4.3 million or 1.75% of loans at December 31, 2005. Net loan charge-offs were $490,000 or 0.16% of average loans, compared to net recoveries totaling $319,000 or 0.12% of average loans for 2006 and $47,000 or 0.02% of average loans in 2005. The current level of the ALLL is intended to address known and inherent losses that are both probable and estimable at December 31, 2007. For additional information on the analysis of loan losses, see Note 5 of the Notes to Consolidated Financial Statements.

The following table presents the allocation of the allowance for loan losses by categories.

	December 31,
(In thousands)	2007		2006		2005		2004		2003
Allowance amount allocated to:
Commercial	$	952	$	1,078	$	1,799	$	720	$	740
Real Estate		3,235		3,334		2,418		1,826		1,372
Installment		15		20		60		12		7
Unallocated		—		—		68		—		—
Total	$	4,202	$	4,432	$	4,345	$	2,558	$	2,119

Nonperforming Assets

Nonperforming assets include nonaccrual loans, restructured loans, past-due loans and other real estate owned (i.e. real estate acquired in foreclosure or in lieu of foreclosure). Past-due loans are loans that are 90 days or more delinquent and still accruing interest. There were $2.1 million past-due loans at December 31, 2007 that were still accruing interest, compared to $1.9 million at December 31, 2006. Nonperforming loans at December 31, 2007 represented 2.76% of total assets and totaled $12.3 million, with balances of $1.2 million guaranteed by the Small Business Association. In comparison, nonperforming loans at December 31, 2006 were 0.88% of total assets and totaled $3.6 million with balances of $1.0 million guaranteed by the SBA. Other real estate owned (“OREO”) increased this year due to one property totaling $1.4 million, compared to $137,000 in 2006. The significant increase in nonperforming loans since last year was due to one large past due loan that is in the processes of collection totaling $2.1 million, two large construction loans totaling $7.3 million and one OREO property totaling $1.4 million. See Note 5 of the Notes to Consolidated Financial Statements.

The following table presents nonperforming assets by category for the last five years.

	December 31,
(Dollars in thousands)	2007			2006			2005			2004			2003
Nonaccrual loans:
Commercial	$	1,379		$	1,508		$	432		$	1,353		$	2,133
Real Estate		7,384			—			11			524			740
Installment — individuals		—			—			—			—			—
Total nonaccrual loans		8,763			1,508			443			1,877			2,873
Past-due loans		2,123			1,919			—			—			—
Other real estate owned		1,410			137			137			—			—
Total nonperforming assets	$	12,296		$	3,564		$	580		$	1,877		$	2,873
Nonperforming assets exclusive of SBA guarantee	$	11,080		$	2,544		$	263		$	871		$	1,208
Ratio of nonperforming assets to gross loans & OREO		3.98	%		1.16	%		0.23	%		1.04	%		1.84	%
Ratio of nonperforming assets to total assets		2.76	%		0.88	%		0.17	%		0.75	%		1.24	%
Allowance for loan losses to nonperforming assets		34.17	%		124	%		759	%		136	%		74	%

Loans totaling $7.2 million and $16.4 million at December 31, 2007 and 2006, respectively, were classified as monitored credits subject to management’s attention and are not reported in the preceding table. The decrease in monitored credits, compared to 2006, was due to several factors including, a move into nonaccrual status, an upgrade in risk ratings, and paid off loan balances. The classification of monitored credits is reviewed on at least a quarterly basis. The balances of the monitored credits guaranteed by the SBA totaled $386,000 and $1.0 million as of December 31, 2007 and 2006, respectively.

-12-

The following table sets forth an analysis of the allowance for loan losses for the periods indicated.

(Dollars in thousands)	2007			2006			2005			2004			2003
Balance at beginning of period	$	4,432		$	4,345		$	2,558		$	2,119		$	2,297
Allowance of acquired bank		—			—			1,430			—			—
Loans charged off:
Commercial		192			345			338			80			829
Real estate — commercial		481			—			47			—			—
Installment — individuals		15			12			14			22			4
Total charge-offs		688			357			399			102			833
Recoveries:
Commercial		133			594			415			120			23
Real estate — commercial		11			36			15			—			—
Installment — individuals		54			46			16			1			41
Total recoveries		198			676			446			121			64
Net charge-offs (recoveries)		490			(319	)		(47	)		(19	)		769
Provision for loan losses		260			(232	)		310			420			591
Balance at end of period	$	4,202		$	4,432		$	4,345		$	2,558		$	2,119
Ratio of net charge-offs (recoveries) to average loans		0.16	%		(0.12	%)		(0.02	%)		(0.01	%)		0.51	%

Liquidity and Capital Resources

Liquidity

Liquidity is a product of the Company’s operating, investing, and financing activities and is represented by cash and cash equivalents. Principal sources of funds are from deposits, short and long-term debt, principal and interest payments on outstanding loans, maturity of investment securities, and funds provided from operations. As shown in the Consolidated Statement of Cash Flows, operating activities provided significant levels of funds in 2007, 2006 and 2005 primarily from net income. Cash from investing activities was used to purchase investment securities in 2007 and to fund loan growth and investment security purchases in 2006 and 2005. The majority of cash from financing activities in 2007, 2006 and 2005 resulted from deposit growth. Borrowings provided $16.1 million in 2007, which was used to replace higher costing CDARS funding, and $10.6 million in 2005 of which $5.0 million was used to fund a capital infusion in the acquired subsidiary, CB&T. Cash from financing activities was used to paydown long-term debt and to provide funding for loans during 2006 and 2005. Cash dividends increased by $35,000 in 2006, compared to 2005, reflecting the increased number of shares issued as a result of the acquisition of Consolidated Bank and Trust on July 29, 2005. Overall, net cash and cash equivalents increased $21.2 million, $9.0 million, and $646,000 in 2007, 2006, and 2005, respectively. Liquid assets increased to 10.9% of total assets at December 31, 2007 from 6.8% of total assets at December 31, 2006.

The Company has additional sources of liquidity available through unpledged investment securities with a market value totaling $18.0 million and unsecured lines of credit available from correspondent banks, which can provide up to $31.0 million, as well as a credit facility through its membership in the FHLB. See Note 11 and Note 12 of the Notes to the Consolidated Financial Statements.

The Company uses projections and ratios to monitor liquidity. A commonly-used measure of liquidity is the loan-to-deposit ratio. The average loan-to-deposit ratio was 79.5% in 2007 and 84.7% in 2006.

-13-

Capital Resources

Capital levels are monitored by management on a quarterly basis in relation to financial forecasts for the year and regulatory requirements. The Company and its Banks, continue to maintain a strong capital position. The Company on a consolidated basis and each of the Banks are considered “well-capitalized” under regulatory guidelines. For additional information, see Note 15 of the Notes to the Consolidated Financial Statements.

Risk Factors

The Company has established control processes and uses various methods to manage risk throughout its organization. Although various controls, policies, personnel and committees establish limits for and monitor various aspects of the Banks’ risk profile, it remains exposed to risks, many of which are beyond its control and that could adversely impact its performance.

Market Risk

The Company is exposed to various market risks in the normal course of conducting business. Market risk is the potential loss arising from adverse changes in interest rates, prices, and liquidity. The Company has established the Asset/Liability Committee (ALCO) to monitor and manage those risks. ALCO meets periodically and is responsible for approving asset/liability policies, formulating and implementing strategies to improve balance sheet and income statement positioning, and monitoring interest rate sensitivity. The Company manages its interest-rate risk sensitivity through the use of a simulation model that projects the impact of rate shocks, rate cycles, and rate forecast estimates on the net interest income and economic value of equity (the net present value of expected cash flows from assets and liabilities). These simulations provide a test for embedded interest-rate risk and take into consideration factors such as maturities, reinvestment rates, prepayment speeds, repricing limits, decay rates and other factors. The results are compared to risk tolerance limits set by ALCO policy. The rate-shock risk simulation projects the impact of instantaneous parallel shifts in the yield curve. At December 31, 2007, an instantaneous rate increase of 100 basis points indicates a 0.92 % increase in net interest income and a decrease of 4.70% in the economic value of equity. Likewise, an instantaneous decrease in rates of 100 basis points indicates a decrease of 1.44% in net interest income and an increase of 3.95% in the economic value of equity.

The table below sets forth, as of December 31, 2007 and 2006, the estimated changes in the Company’s net interest income and economic value of equity, which would result from the designated instantaneous changes in the yield curve over the next twelve months. These results are not necessarily indicative of future actual results, nor do they take into account certain actions that management may undertake in response to future changes in interest rates.

As of December 31,	2007						2006
Change in interest rates	Net interest			Economic value of			Net interest			Economic value of
(basis points)	income			equity			income			equity
+100		0.92	%		(4.70	)%		(0.41	)%		(4.67	)%
-100		(1.44	)%		3.95	%		1.91	%		6.70	%

Interest Rate Fluctuation

The Company’s earnings are affected by the fiscal and monetary policies of the Federal government and its agencies. The Board of Governors of the Federal Reserve System regulates the supply of money and credit in the United States. Their policies significantly impact the Banks’ cost of funds for deposits and borrowings and the return earned on loans and investments. Changes in the Federal Reserve Board policies are difficult to predict or anticipate. During 2007, the Federal Reserve board lowered interest rates 100 basis points. The yield curve environment shifted from a predominately inverted yield curve environment at December 31, 2006 to a flat/inverted yield curve throughout 2007. Management evaluated rate changes that included the inversion of the yield curve throughout 2007. See discussion of Market Risk above.

Regulations

Extensive regulation by Federal banking authorities and various legislative bodies imposes requirements and restrictions which can impact the Company’s operations, as well as change its competitive environment. Periodic examinations conducted by regulatory authorities could result in various requirements or sanctions.

-14-

Economic Downturn

A significant majority of the Banks’ assets, deposits and fee income is generated in the Washington, D.C. metropolitan area and Richmond Virginia. As a result, deterioration of local economic conditions in these areas could expose the Company to losses associated with higher loan default rates and lower asset collateral values, deposit withdrawals and other factors that could adversely impact its financial condition and results of operations.

Business Disruption

Operations could be disrupted by various circumstances including damage or interruption from natural disasters, fire, terrorist attack, power loss, network failure, security breaches, computer viruses or intentional sabotage. The Company has controls and procedures in place to minimize its vulnerability and has developed a business recovery plan; however, any disruption in operations could affect its ability to conduct business and adversely impact its results from operations.

Competition

Banking is a highly competitive industry. Although the Banks compete on the basis of interest rates, convenient locations, quality of customer service, customized products and community involvement, they face strong competition from institutions that are larger and have greater financial resources. In addition, customers could bypass banks and other traditional financial institutions in favor of other financial intermediaries and thus cause a decrease in revenue.

Stock Price Volatility

The Company’s stock price can be volatile due to a variety of factors including: actual or anticipated variations in its quarterly operating results; recommendations by security analysts; acquisitions and mergers involving the Company or its competitors; news reports of trends, concerns, and other issues in the financial services industry; and changes in regulations. General market conditions, industry factors and economic trends, interest rate changes, or credit loss trends, could cause the Company’s stock price to decrease regardless of its operating results.

Dividend Payment Limitations

The Company receives substantially all of its revenue from dividends paid by its bank subsidiaries, Adams National Bank and Consolidated Bank and Trust. These dividends are the principal source of funds used to pay dividends on the Company’s common stock. Federal regulations limit the dividend amounts that subsidiary banks can pay to their holding company. See Note 14 of the Notes to Consolidated Financial Statements for further details of this limitation.

Credit Risk

The Company is exposed to credit risk on its loan portfolio. Even though the portfolio is closely monitored and evaluation of this risk is performed, unexpected credit losses may subsequently be identified as a result of additional analysis performed by the Company or comments received from regulatory examiners. Loss exposure could develop if collateral values were to deteriorate after the loan has been made. See asset quality discussion on pages 11 through 13 of this report.

Liquidity Risk

Changes in the stability of the economic environment or deterioration of the public’s confidence in the banking system could cause significant withdrawals by the Banks’ depositors and adversely impact the Company’s liquidity position. In addition, liquidating securities available for sale could result in the recognition of a loss. The Company closely monitors its liquidity position including its sources of funding and commitments to fund assets or deposit withdrawals and believes it has sufficient liquidity to fund its commitments. See the discussion on liquidity on page 13 of this report.

Reputation

The Company could suffer damage to its reputation if employees act unprofessionally or illegally. To mitigate this risk, the Company has instituted an employee code of conduct and implemented various personnel policies and procedures to ensure integrity and adherence to policies and procedures within its operations.

-15-

Management’s Report on Internal Control over Financial Reporting

Management of Abigail Adams National Bancorp (“the Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The internal control process over financial reporting was designed by the Company’s principal executive and principal financial officer with the objective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

The Company’s internal control process over financial reporting includes policies and procedures that: (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that corporate receipts and expenditures are being made only in accordance with authorizations of management and directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of corporate assets that could have a material effect on the financial statements. Due to inherent limitations, all internal control systems, no matter how well designed, may not prevent or detect misstatements. There is the risk that controls may become inadequate over time because of changes in conditions and the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of the internal control over financial reporting based on the Committee of Sponsoring Organizations (COSO”) framework. The framework is intended to: include widely-accepted criteria designed to facilitate the establishment of internal control; define the role and responsibility of management; and provide for consistent and recognized means to monitor, evaluate and report on the effectiveness of the control structure. Based on the evaluation, management determined that there were no material weaknesses within the internal control structure and concluded that internal control over financial reporting for the Company as of December 31, 2007 was effective.

This annual report does not include an attestation report by the Company’s registered public accounting firm, McGladrey & Pullen, LLP, regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Jeanne Delaney Hubbard
Chairwoman, President and CEO
Abigail Adams National Bancorp, Inc.

Karen E. Troutman
Senior Vice President
Chief Financial Officer

-16-

SUMMARY OF QUARTERLY FINANCIAL INFORMATION
(Unaudited)
(In thousands, except per share data)

	Three Months Ended
	12/31			9/30		6/30		3/31
Summary of Operations by Quarter:
2007:
Interest income	$	7,445		$	7,840	$	7,659	$	7,307
Net interest income		4,136			4,094		4,239		4,183
Provision for loan losses		25			75		75		85
Net income		1,013			653		711		682
Per common share:
Basic earnings	$	0.29		$	0.19	$	0.21	$	0.20
Diluted earnings	$	0.29		$	0.19	$	0.21	$	0.20
Dividends declared	$	0.125		$	0.125	$	0.125	$	0.125
Average shares outstanding for:
Basic earnings per share		3,463			3,463		3,462		3,462
Diluted earnings per share		3,467			3,467		3,466		3,466
2006:
Interest income	$	7,330		$	7,000	$	6,166	$	5,649
Net interest income		4,438			4,494		3,954		3,851
Provision (credit) for loan losses		(432	)		75		75		50
Net income		1,251			1,004		788		653
Per common share:
Basic earning	$	0.36		$	0.29	$	0.23	$	0.19
Diluted earnings	$	0.36		$	0.29	$	0.23	$	0.19
Dividends declared	$	0.125		$	0.125	$	0.125	$	0.125
Average shares outstanding for:
Basic earnings per share		3,462			3,462		3,462		3,462
Diluted earnings per share		3,466			3,466		3,466		3,469
Closing price per common share: (a)
2007 High	$	13.91		$	14.00	$	14.34	$	14.39
2007 Low	$	10.37		$	13.42	$	13.50	$	13.31
2006 High	$	13.90		$	14.55	$	14.45	$	14.40
2006 Low	$	13.20		$	13.50	$	12.87	$	12.85

(a) The above market data presents the high and low closing prices for the respective periods as reported by NASDAQ.

At December 31, 2007 the Company had 845 shareholders of record.

-17-

McGladrey & Pullen, LLP

Report of Independent Registered Public Accounting Firm

To the Board of Directors
Abigail Adams National Bancorp, Inc.

We have audited the consolidated balance sheets of Abigail Adams National Bancorp, Inc. and subsidiaries (the “Company”) as of December 31, 2007 and 2006, and the related consolidated statements of income, changes in stockholders’equity and cash flows for each of the three years in the period ended December 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Abigail Adams National Bancorp, Inc. and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

We were not engaged to examine management’s assertion about the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007 included in the accompanying Management’s Report on Internal Control over Financial Reporting and, accordingly, we do not express an opinion thereon.

McGladrey & Pullen, LLP
Frederick, Maryland
March 28, 2008

-18-

ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2007 and 2006
(Dollars in thousands)

	2007			2006
Assets
Cash and due from banks	$	15,567		$	13,729
Federal funds sold		12,816			8,011
Interest-earning deposits in other banks		20,380			5,823
Total cash and cash equivalents		48,763			27,563
Investment securities available for sale, at fair value		66,392			45,347
Investment securities held to maturity, at amortized cost (market values of $13,269 and $17,418 for 2007 and 2006, respectively)		13,309			17,722
Loans		307,483			307,957
Less: allowance for loan losses		(4,202	)		(4,432	)
Loans, net		303,281			303,525
Premises and equipment, net		4,985			4,904
Other assets		9,145			6,441
Total assets	$	445,875		$	405,502
Liabilities and Stockholders’ Equity
Liabilities:
Deposits
Noninterest-bearing deposits	$	74,833		$	76,887
Interest-bearing deposits		312,109			286,703
Total deposits		386,942			363,590
Short-term borrowings		8,494			2,378
Long-term debt		15,120			6,288
Other liabilities		3,880			3,064
Total liabilities		414,436			375,320
Commitments and contingencies (Notes 9, 11 and 13)
Stockholders’ equity:
Common stock, $0.01 par value, authorized 5,000,000 shares; issued 3,491,633 shares in 2007 and 3,487,678 shares in 2006; outstanding 3,462,569 shares in 2007 and 3,461,799 shares in 2006		35			35
Additional paid-in capital		25,127			25,123
Retained earnings		7,196			5,868
Treasury stock, 29,064 shares in 2007 and 25,879 in 2006, at cost		(255	)		(210	)
Accumulated other comprehensive loss		(664	)		(634	)
Total stockholders’ equity		31,439			30,182
Total liabilities and stockholders’ equity	$	445,875		$	405,502

See Notes to Consolidated Financial Statements

-19-

ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Years Ended December 31, 2007, 2006 and 2005
(Dollars in thousands except per share data)

	2007		2006			2005
Interest Income
Interest and fees on loans	$	25,044	$	22,558		$	15,625
Interest and dividends on investment securities — taxable		3,408		3,012			2,400
Other interest income		1,799		575			436
Total interest income		30,251		26,145			18,461
Interest Expense
Interest on deposits		12,672		8,010			3,895
Interest on short-term borrowings		144		765			31
Interest on long-term debt		783		633			381
Total interest expense		13,599		9,408			4,307
Net interest income		16,652		16,737			14,154
Provision (credit) for loan losses		260		(232	)		310
Net interest income after provision (credit) for loan losses		16,392		16,969			13,844
Noninterest income
Service charges on deposit accounts		1,387		1,367			1,344
Other income		238		763			567
Total noninterest income		1,625		2,130			1,911
Noninterest expense
Salaries and employee benefits		6,692		6,650			5,319
Occupancy and equipment expense		2,289		2,235			1,631
Professional fees		696		555			604
Data processing fees		971		946			669
Other operating expense		3,214		2,721			2,017
Total noninterest expense		13,862		13,107			10,240
Income before provision for income taxes		4,155		5,992			5,515
Provision for income taxes		1,096		2,296			2,195
Net Income	$	3,059	$	3,696		$	3,320
Earnings per share:
Basic	$	0.88	$	1.07		$	0.98
Diluted	$	0.88	$	1.07		$	0.98

See Notes to Consolidated Financial Statements

-20-

ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
Years Ended December 31, 2007, 2006 and 2005

												Accumulated
			Additional									Other
	Common		Paid-in			Retained			Treasury			Comprehensive
(Dollars in thousands except per share data)	Stock		Capital			Earnings			Stock			Income (Loss)			Total
Balance at December 31, 2004	$	33	$	22,628		$	2,279			($98	)		($82	)	$	24,760
Comprehensive income:
Net income		—		—			3,320			—			—			3,320
Unrealized losses during the period of ($855) on investment securities available for sale, net of tax benefit of ($350)		—		—			—			—			(505	)		(505	)
Unrealized net actuarial losses during the period of ($99) on pension plan, net of tax benefit of ($34)		—		—			—			—			(65	)		(65	)
Total comprehensive income																2,750
Fractional shares 10% stock dividend		—		(3	)		—			—			—			(3	)
Dividends declared ($0.50 per share)		—		—			(1,696	)		—			—			(1,696	)
Issuance of shares in Consolidated Bank and Trust acquisition		2		2,237			—			—			—			2,239
Issuance of shares under Stock Option Programs		—		3			—			—			—			3
Balance at December 31, 2005	$	35	$	24,865		$	3,903			($98	)		($652	)	$	28,053
Comprehensive income:
Net income		—		—			3,696			—			—			3,696
Unrealized gains during the period of $152 on investment securities available for sale, net of tax expense of $69		—		—			—			—			83			83
Unrealized net actuarial losses during the period of ($99) on pension plan, net of tax benefit of ($34)		—		—			—			—			(65	)		(65	)
Total comprehensive income																3,714
Acquisition and issuance of shares for ESOP		—		—			—			(112	)		—			(112	)
Retired shares		—		(12	)		—			—			—			(12	)
Dividends declared ($0.50 per share)		—		—			(1,731	)		—			—			(1,731	)
Final purchase price adjustments related to Consolidated Bank and Trust acquisition		—		270			—			—			—			270
Balance at December 31, 2006	$	35	$	25,123		$	5,868			($210	)		($634	)	$	30,182
Comprehensive income:
Net income		—		—			3,059			—			—			3,059
Unrealized losses during the period of ($336) on investment securities available for sale, net of tax benefit of ($147)		—		—			—			—			(189	)		(189	)
Unrealized net actuarial gain during the period of $241 on pension plan, net of tax expense of $82.		—		—			—			—			159			159
Total comprehensive income																3,029
Issuance of shares under stock option program		—		4			—			—			—			4
Acquisition and issuance of shares for ESOP		—		—			—			(45	)		—			(45	)
Dividends declared ($0.50 per share)		—		—			(1,731	)		—			—			(1,731	)
Balance at December 31, 2007	$	35	$	25,127		$	7,196			($255	)		($664	)	$	31,439

See Notes to Consolidated Financial Statements

-21-

ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 2007, 2006 and 2005
(In thousands)

	2007			2006			2005
Cash flows from operating activities:
Net income	$	3,059		$	3,696		$	3,320
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for loan losses		260			(232	)		310
Depreciation		589			541			428
Accretion of deferred loan fees		(21	)		(560	)		(349	)
Net (accretion) amortization of purchase accounting adjustments		(102	)		(34	)		5
Gain on sale of guaranteed portion of SBA loans		(43	)		(386	)		(296	)
Net premium amortization (discount accretion) on investment securities		2			(185	)		44
Loss on the sale of foreclosed and other assets		29			—			—
Deferred income tax benefits		(732	)		(91	)		(235	)
(Increase) decrease in other assets		(144	)		(301	)		22
Contribution to pension plan		—			(700	)		—
Increase in other liabilities		1,056			190			447
Net cash provided by operating activities		3,953			1,938			3,696
Cash flows from investing activities:
Proceeds from maturities of investment securities held to maturity		4,000			1,000			—
Proceeds from maturities of investment securities available for sale		16,500			11,780			2,750
Proceeds from repayment of mortgage-backed securities held to maturity		418			227			—
Proceeds from repayment of mortgage-backed securities available for sale		1,062			822			1,586
Proceeds from the sale of foreclosed and other assets		282			—			—
Purchase of investment securities held to maturity		(3,734	)		(1,455	)		—
Purchase of investment securities available for sale		(35,218	)		(4,995	)		(6,984	)
Purchase of FHLB and FRB stock		(1,534	)		(2,532	)		(171	)
Redemption of FHLB stock		892			2,760			—
Net increase in loans		(1,279	)		(58,667	)		(28,550	)
Purchase of premises and equipment, net		(670	)		(700	)		(680	)
Net cash received in acquisition		—			—			11,975
Net cash used in investing activities		(19,281	)		(51,760	)		(20,074	)
Cash flows from financing activities:
Net increase (decrease) in transaction and savings deposits		4,977			(524	)		2,207
Net increase in time deposits		18,375			72,018			6,839
Net increase (decrease) in short-term borrowings		6,116			(5,878	)		5,588
Proceeds from long-term debt		10,000			—			5,000
Repayment of long-term debt		(1,168	)		(4,925	)		(914	)
Proceeds from issuance of common stock for stock option programs		4			—			3
Retired common stock		—			(12	)		—
Purchased treasury stock		(45	)		(112	)		—
Cash paid in lieu of fractional shares from 10% stock dividend		—			—			(3	)
Cash dividends paid to common stockholders		(1,731	)		(1,731	)		(1,696	)
Net cash provided by financing activities		36,528			58,836			17,024
Net increase in cash and cash equivalents		21,200			9,014			646
Cash and cash equivalents at beginning of year		27,563			18,549			17,903
Cash and cash equivalents at end of year	$	48,763		$	27,563		$	18,549

-22-

ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
Years Ended December 31, 2007, 2006 and 2005
(In thousands)

	2007		2006		2005
Supplemental disclosures:
Interest paid on deposits and borrowings	$	13,279	$	8,727	$	3,596
Income taxes paid		1,662		2,203		2,351
Non-cash transfer of loans to foreclosed assets		1,410		—		—
Supplemental schedule of noncash investing activity
Assets acquired:
Cash and cash equivalents	$	—	$	—	$	12,423
Investment securities		—		—		17,529
Loans, net		—		—		37,586
Premises and equipment, net		—		—		3,357
Deferred tax asset		—		—		37
Other assets		—		—		886
Core deposit intangibles		—		—		237
Excess of cost over fair value of net assets acquired		—		—		78
		—		—		72,133
Liabilities assumed:
Deposits		—		—		67,567
Other liabilities		—		—		1,595
		—		—		69,162
Net assets acquired	$	—	$	—	$	2,971
Cash paid	$	—	$	—	$	448
Stock issued		—		—		2,523
Total price paid	$	—	$	—	$	2,971

See Notes to Consolidated Financial Statements

-23-

ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Note 1 Summary of Significant Accounting Policies

Abigail Adams National Bancorp, Inc. (the “Company”) is a two-bank holding company that provides its customers with banking and non-banking financial services through its principal wholly-owned subsidiaries, The Adams National Bank (“ANB”) and Consolidated Bank and Trust (“CB&T”) and together the “Banks”. The Banks offer various loan, deposit, and other financial service products to their customers. The Banks’ customers include individuals, not-for-profit, and commercial enterprises. Their principal market areas encompass the cities of Washington, D.C., Richmond and Hampton, Virginia, and their surrounding metropolitan areas.

The Company prepares its consolidated financial statements on the accrual basis and in conformity with accounting principles generally accepted in the United States of America. The more significant accounting policies are explained below. As used herein, the term the Company includes the Banks, unless the context otherwise requires.

(a)	Principles of Consolidation
	The consolidated financial statements include the accounts of the Company and the Banks. All significant intercompany accounts and transactions have been eliminated in consolidation.
(b)	Cash and Cash Equivalents
	The Company has defined cash and cash equivalents as those amounts included in “Cash and due from banks,” “Federal funds sold,” and “Interest-earning deposits in other banks.” Federal funds sold generally mature in one day. Cash flows from loans and deposits are reported net. The Company maintains amounts due from banks and Federal funds sold which, at times, may exceed Federally insured limits. The Company has not experienced any losses from such concentrations.
(c)	Securities
	Management determines the appropriate classification of securities at the time of purchase. Securities which the Company has the ability and the intent to hold until maturity are classified as investment securities held to maturity and are reported at amortized cost. Investment securities which are not classified as held to maturity or trading account assets are classified as available for sale and are reported at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss). Unrealized gains and losses reflect the difference between fair market value and amortized cost of the individual securities as of the reporting date. The market value of securities is generally based on quoted market prices or dealer quotes. The Company does not maintain a trading account. Declines in the fair value of held to maturity and available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. Premiums and discounts are amortized using a method which approximates the effective interest method over the term of the security.
(d)	Loans
	The Company originates commercial, commercial real estate and consumer loans in the Washington D.C. and Richmond and Hampton, Virginia metropolitan areas. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are stated at the amount of unpaid principal, adjusted for deferred loan fees and origination costs, and reduced by an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.
	The accrual of interest is discontinued at the time a loan becomes 90 days delinquent, unless the credit is well-secured and in the process of collection. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans placed on nonaccrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for the return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

-24-

(e)	Allowance for Loan Losses
	The allowance for loan losses, a material estimate susceptible to significant change in the near-term, is maintained at a level that management determines is adequate to absorb inherent losses in the loan portfolio. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Banks’ allowance for loan losses and may require the Banks to make changes to the allowance based on their judgments about information available to them at the time of their examinations.
	The allowance for loan losses is established through a provision for loan losses charged to operating expense. Loans are charged against the allowance for loan losses, when management believes that collectibility of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.
	A loan is impaired when it is probable, based upon current information and events, the Company will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. Impaired loans are valued based on the fair value of the related collateral, if the loans are collateral dependent. For all other impaired loans, the specific reserves approximate the present values of expected future cash flows discounted at the loan’s effective interest rate. The amount of the impairment, if any, and any subsequent changes are included in the allowance for loan losses
	The allowance consists of specific, general and unallocated components. The specific component relates to loans identified for impairment testing and generally meeting the Company’s internal criteria for classification such as doubtful, substandard or special mention. For such loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and those loans classified as not impaired and is based on historical loss experience adjusted for qualitative factors. These factors consider changes in nonperforming and past-due loans, concentrations of loans to specific borrowers and industries, general and regional economic conditions, as well as other factors existing at the determination date. The qualitative factors are subjective and require a high degree of management judgment. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.
(f)	Loan Origination Fees and Costs
	Loan origination fees, net of costs directly attributable to loan originations, are deferred and recognized over the estimated lives of the loans using the interest method as an adjustment to the related loan’s yield. Deferred fees and costs are not amortized during periods in which interest income is not being recognized because of concerns about the realization of loan principal or interest.
(g)	Foreclosed Assets
	Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets. Foreclosed assets totaled $1.4 million at December 31, 2007 and $137,000 at December 31, 2006.

-25-

(h)	Transfers of Financial Assets
	Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right to pledge or exchange the transferred assets and no condition both constrains the transferee from taking advantage of that right and provides more than a trivial benefit for the transferor, and (3) the transferor does not maintain effective control over the transferred assets through either (a) an agreement that both entitles and obligates the transferor to repurchase or redeem the assets before maturity or (b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.
(i)	Premises and Equipment
	Premises and equipment are carried at cost less accumulated depreciation and include additions that materially extend the useful lives of existing premises and equipment. All other maintenance and repair expenditures are expensed as incurred. Depreciation of equipment is computed using the estimated useful lives of the respective assets on the straight-line basis. Amortization of leasehold improvements is amortized on a straight-line basis over the estimated useful lives of the respective assets or the terms of the respective leases, whichever is shorter.
(j)	Intangible Assets
	The Company’s intangible assets include the value of ongoing customer relationships (core deposits) and the excess of cost over the fair value of net assets or liabilities (goodwill) arising from the purchase of certain assets and the assumption of certain liabilities from unrelated entities. Core deposit intangibles are amortized over a 10-year period and goodwill is evaluated on an annual basis to determine impairment, if any. Any impairment of goodwill would be recorded against income in the period of impairment.
(k)	Impairment of Assets
	Long-lived assets, which are held and used by the Company, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment is indicated by that review, the asset is written down to its estimated fair value through a charge to noninterest expense.
(l)	Federal Home Loan Bank Stock
	The Banks, as members of the Federal Home Loan Bank (FHLB) system, are required to maintain an investment in capital stock of the FHLB in an amount equal to the greater of 1% of its outstanding home loans or 5% of advances from the FHLB. The FHLB stock is included in other assets and is carried at cost which equals the redemption value. No ready market exists for the FHLB stock, and it has no quoted market value.
(m)	Earnings Per Share
	Basic earnings per share computations are based upon the weighted average number of shares outstanding during the periods. Diluted earnings per share computations are determined using the treasury stock method and based upon the weighted average number of shares outstanding during the period plus the dilutive effect of outstanding stock options. Per share amounts are based on the weighted average number of shares outstanding during each period as follows:

	2007		2006		2005
Weighted average shares		3,462,274		3,462,126		3,382,555
Effect of dilutive stock options		3,684		3,950		7,818
Dilutive potential average common shares		3,465,958		3,466,076		3,390,373

(n)

Stock-Based Compensation Plans

The Company has two stock-based compensation plans. Through December 31, 2005, the Company accounted for the plans under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations. As of December 31, 2004, all outstanding stock options were fully vested and no stock options were granted in 2007, 2006, or 2005. Accordingly, net income and earnings per share would not have been affected if compensation cost for stock-based compensation plans had been determined based on the grant date fair values of awards (the method described in Statement of Financial Accounting Standards (“SFAS”) No. 123 “Accounting for Stock-Based Compensation”). In December 2004, SFAS No. 123(R), “Share-Based Payment”, which is a revision of SFAS No. 123, was issued. As of January 1, 2006, the Company adopted SFAS No 123(R) and any stock-based employee compensation for future grants will be determined at that time using the Black-Scholes or another appropriate option-pricing model.

-26-

(o)	Comprehensive Income
	Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in income. Certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities or pension plan unfunded liabilities, are reported as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income.
(p)	Risks and Uncertainties
	The Company is subject to competition from other financial institutions, and is also subject to the regulations of certain Federal agencies and undergoes periodic examination by those regulatory authorities.
	Most of the Company’s activities are with customers located within Washington, DC, Richmond, Virginia and their surrounding metropolitan areas. Note 4 discusses the types of securities in which the Company invests. Note 5 discusses the types of lending in which the Company engages. The Company does not have any significant concentrations to any one industry or customer.
	In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, as of the date of the balance sheet and revenues and expenses for the reporting period. Actual results could differ significantly from these estimates.
	Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses, the valuation of deferred tax assets, and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowances for loan losses and other real estate, management periodically obtains independent appraisals for significant properties owned or serving as collateral for loans.
(q)	Income Taxes
	The Company records a provision for income taxes based upon the amounts of current taxes payable (or refundable) and the change in net deferred tax assets or liabilities during the year. Deferred tax assets and liabilities are recognized for the tax effects of differing carrying values of assets and liabilities for tax and financial statement reporting purposes that will reverse in future periods. Deferred tax assets and liabilities are included in the consolidated financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. It is the Company’s policy to recognize interest and penalties related to unrecognized tax liabilities within noninterest expense in the statements of income.
(r)	Recent Accounting Pronouncements
	In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140.” The Statement amends SFAS No. 140 by (1) requiring the separate accounting for servicing assets and servicing liabilities, which arise from the sale of financial assets; (2) requiring all separately recognized serving assets and servicing liabilities to be initially measured at fair value, if practicable; and (3) permitting an entity to choose between an amortization method or a fair value method for subsequent measurement for each class of separately recognized servicing assets and servicing liabilities. The adoption of this Statement on January 1, 2007, did not have a material impact on the Company’s financial position, results of operation and cash flows.
	In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). The Company adopted the provisions of FIN 48 on January 1, 2007. Interpretation No. 48 requires the Company to review outstanding tax positions and establish a liability in its balance sheet for those positions that more likely than not, based on technical merits, would not be sustained upon examination by taxing authorities. The Company files U.S. federal income tax returns and state income tax returns in Maryland and the District of Columbia. Based on the statute of limitations, the Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2004. Based on the review of the tax returns filed for the years 2004 through 2006 and the tax benefits accrued in the 2007 annual financial statements, management determined that 100% of the benefits accrued were expected to be realized and has a high confidence level in the technical merits of the positions. It believes that the deductions taken and benefits accrued are based on widely understood administrative practices and procedures and are based on clear and unambiguous tax law. As a result of this evaluation, management did not record a liability for unrecognized tax benefits.

-27-

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements” (“SFAS 157”). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements and is effective for fiscal years beginning after November 15, 2007, and interim periods within those periods. In February 2008, the FASB issued FASB Staff Position FAS 157-2 (FSP FAS 157-2) that delays, by one year, the effective date of SFAS 157 for the majority of non-financial assets and non-financial liabilities. The Company is currently evaluating the effects of SFAS 157 and FSP FAS 157-2 on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.” This Statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize the changes in that funded status in the year in which the changes occur through comprehensive income. The Company adopted the funded status recognition and disclosure provisions in its December 31, 2006 financial statements which did not have a material impact on its financial position, results of operation and cash flows. SFAS No. 158 is also requiring the employer to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position for fiscal years ending after December 15, 2008. The Company is currently using September 30 as the measurement date for its pension plan, which is undergoing termination and settlement. Thus, the impact of this requirement will not be consequential.

In February 2007, FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company is currently evaluating the effects of this statement on its financial position, results of operations and cash flows.

In December 2007, FASB issued SFAS No.141 revised 2007, “Business Combinations” (“SFAS 141R”). This statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. This replaces SFAS 141’s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. SFAS 141(R) requires the value of consideration paid including any future contingent consideration to be measured at fair value at the closing date of the transaction. Also, restructuring costs and acquisition costs are to be expensed rather than included in the cost of the acquisition. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

In December 2007, FASB issued SFAS No.160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (SFAS 160). SFAS 160 improves the relevance, comparability, and transparency of financial information provided to investors by requiring all entities to report noncontrolling (minority) interests in subsidiaries in the same way as equity in the consolidated financial statements. This statement eliminates the diversity that currently exists in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. SFAS 160 requires expanded disclosures that clearly identify and distinguish between the interests of the parent and the interest of the nononcontolling owners. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company owns 100% of its two subsidiaries and therefore adoption of this statement will have no impact on its consolidated financial statements.

-28-

(s)	Reclassifications
	Certain reclassifications have been made to amounts previously reported to conform with the 2007 presentation with no effect on net income, earnings per share, or stockholders equity.

Note 2 Restrictions on Cash Balances

Included in cash and due from banks are balances maintained within the Company to satisfy legally required reserves and to compensate for services provided from correspondent banks. Restricted balances maintained totaled $7.6 million and $6.2 million at December 31, 2007 and 2006, respectively. There were no other withdrawal usage restrictions or legally required compensating balances at December 31, 2007 or 2006.

Note 3 Acquisition of Consolidated Bank and Trust Company

On July 29, 2005, the Company completed the acquisition of 100% of the outstanding stock of CB&T. CB&T is headquartered in Richmond, Virginia and operates two additional branch locations, one in the Richmond metropolitan area and one in Hampton, Virginia. The acquisition expanded the Company’s presence into central Virginia.

In the acquisition, shareholders of CB&T received 138,553 shares of the Company’s common stock valued at $2.5 million and cash of $9,000, in payment of fractional shares. In addition, the Company paid $439,000 in direct acquisition costs. The transaction was accounted for under the purchase method of accounting. Under this method of accounting, the purchase price is allocated to the respective assets acquired and liabilities assumed based on their estimated fair values, net of applicable income tax effects. During the quarter ended September 30, 2006, the Company finalized the purchase price allocation, which resulted in certain adjustments to previously reported amounts. As compared to the amounts reported at December 31, 2005, the net effect of these adjustments was to decrease goodwill $322,000 to a balance of $78,000 (recorded in other assets), decrease deferred income taxes and other liabilities $592,000 and increase additional paid in capital $270,000. The cash and cash equivalents of $12.4 million, net of cash and expenses paid of $9,000 and $439,000, respectively, have been included in the statement of cash flows.

-29-

Note 4 Securities

The amortized cost and estimated fair value of investment securities held to maturity and investment securities available for sale at December 31, 2007, and 2006 are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated Fair
(In thousands)	Cost Basis		Gains		Losses		Value
December 31, 2007:
Investment Securities — available for sale:
US government sponsored agencies and corporations	$	52,709	$	308	$	34	$	52,983
Mortgage-backed securities		7,105		50		64		7,091
Corporate debt securities		6,750		29		1,179		5,600
Marketable equity securities		1,005		—		287		718
Total	$	67,569	$	387	$	1,564	$	66,392
Investment Securities — held to maturity:
U.S. government sponsored agencies and corporations	$	11,498	$	—	$	57	$	11,441
Mortgage-backed securities		1,811		20		3		1,828
Total	$	13,309	$	20	$	60	$	13,269
December 31, 2006:
Investment Securities — available for sale:
U.S. government sponsored agencies and corporations	$	33,967	$	—	$	546	$	33,421
Mortgage-backed securities		4,444		—		159		4,285
Corporate debt securities		6,770		32		168		6,634
Marketable equity securities		1,007		—		—		1,007
Total	$	46,188	$	32	$	873	$	45,347
Investment Securities — held to maturity:
U.S. government sponsored agencies and corporations	$	15,490	$	—	$	304	$	15,186
Mortgage-backed securities		2,232		12		12		2,232
Total	$	17,722	$	12	$	316	$	17,418

For years ended December 31, 2007, 2006, and 2005, the Company had no gains or losses on sales of securities.

The fair value of securities with unrealized losses by length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2007 and 2006, are as follows:

	Continuous unrealized losses				Continuous unrealized losses
	existing for less than 12 months				existing 12 months or more				Total
			Unrealized				Unrealized				Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
December 31, 2007:
U.S. government sponsored agencies and corporations	$	999	$	1	$	19,407	$	90	$	20,406	$	91
Mortgage-backed securities		—		—		4,046		67		4,046		67
Corporate debt securities		2,981		697		1,580		482		4,561		1,179
Marketable equity securities		718		287		—		—		718		287
Total	$	4,698	$	985	$	25,033	$	639	$	29,731	$	1,624
December 31, 2006:
U.S. government sponsored agencies and corporations	$	2,990	$	6	$	44,617	$	844	$	47,607	$	850
Mortgage-backed securities		—		—		5,050		171		5,050		171
Corporate debt securities		954		46		949		122		1,903		168
Marketable equity securities		—		—		—		—		—		—
Total	$	3,944	$	52	$	50,616	$	1,137	$	54,560	$	1,189

-30-

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Banks to retain their investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At December 31, 2007 there were numerous investment securities with unrealized losses. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the Federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports.

The Company holds three bonds, two corporate and one trust preferred, classified as corporate debt securities, at fair value totaling $1.6 million with an aggregate unrealized loss of $482,000 at December 31, 2007, that have unrealized losses existing for greater than 12 months. The two corporate bonds were downgraded in 2005 to below investment grade and the trust preferred security, which was investment grade was further upgraded in 2007. Interest payments continue to be received as scheduled, and the Company has the intent and ability to hold the securities until their maturity or recovery. Based on an evaluation of the creditworthiness of the issuers, the Company believes the issuers will not default and that it will receive all contractual interest payments and the entire principal at maturity; therefore, management did not record any other-than-temporary impairment charge at December 31, 2007 or 2006.

The other unrealized losses that existed as of December 31, 2007 and 2006, are a result of market changes in interest rates since the securities’ purchase. This factor, coupled with the fact the Company has both the intent and the ability to hold these securities for a period of time sufficient to allow for any anticipated recovery in fair value, substantiates that the unrealized losses in the held to maturity and available for sale portfolios are temporary.

Securities with market values of $61.7 million and $46.1 million at December 31, 2007 and 2006, respectively, were pledged to collateralize public deposits and repurchase agreements.

The cost and estimated fair value of investment securities held to maturity and investment securities available for sale at December 31, 2007, by contractual maturity are shown on the following table. Expected maturities may differ from contractual maturities in mortgage-backed securities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties; therefore, these securities are not included in maturity categories in the following table.

	December 31, 2007
	Amortized		Estimated
(In thousands)	Cost		Fair Value
Investment Securities — available for sale:
Due in one year or less	$	5,498	$	5,487
Due after one year through five years		37,214		37,403
Due after five years through ten years		9,062		8,933
Due after ten years		7,685		6,760
Mortgage-backed securities		7,105		7,091
Marketable equity securities		1,005		718
Total		67,569		66,392
Investment Securities — held to maturity:
Due in one year or less		9,498		9,458
Due after one year through five years		2,000		1,983
Mortgage-backed securities		1,811		1,828
Total	$	13,309	$	13,269

-31-

Note 5 Loans

Loans at December 31, 2007 and 2006 were as follows:

(In thousands)	2007			2006
Commercial and industrial	$	38,606		$	39,323
Real estate:
Commercial mortgage		128,320			136,540
Residential mortgage		67,375			55,860
Construction and development		70,798			73,986
Installment to individuals		2,716			2,714
Subtotal		307,815			308,423
Less: net deferred loan fees		(332	)		(466	)
Total	$	307,483		$	307,957

At December 31, 2007, 2006 and 2005, $8.8 million, $1.5 million and $443,000, respectively, were considered nonaccrual loans (loans for which the accrual of interest has been discontinued). Interest income on nonaccrual loans that would have been recorded if accruing was $649,000, $180,000 and $103,000 in 2007, 2006 and 2005, respectively. Interest income recognized on a cash basis on nonaccrual loans totaled $0, $21,000 and $95,000 for 2007, 2006 and 2005, respectively. At December 31, 2007, the Company had one loan with a contract for sale totaling $2.1 million that was greater than 90 days delinquent and was still accruing interest, compared to two loans totaling $1.9 million at December 31, 2006, and no loans at December 31, 2005 that were 90 days delinquent and accruing interest.

The change in the allowance for loan losses follows:

(In thousands)	2007			2006			2005
Balance at beginning of the year	$	4,432		$	4,345		$	2,558
Allowance of acquired bank		—			—			1,430
Provision (credit) for loan losses		260			(232	)		310
Recoveries		198			676			446
Charge-offs		(688	)		(357	)		(399	)
Balance at end of year	$	4,202		$	4,432		$	4,345

The following is a summary of information pertaining to impaired loans:

(In thousands)	2007		2006		2005
Impaired loans without a valuation allowance	$	454	$	1,508	$	447
Impaired loans with a valuation allowance		8,309		—		—
Total impaired loans	$	8,763	$	1,508	$	447
Valuation allowance related to impaired loans	$	1,518	$	—	$	—
Average investment in impaired loans	$	4,351	$	1,109	$	932
Interest income recognized on impaired loans	$	0	$	21	$	95

The Company has engaged in banking transactions in the ordinary course of business with some of its directors, officers, principal shareholders and their associates. Such loans are at normal credit terms, including interest rates and collateral, and do not represent more than the normal risk of collection. At December 31, 2007 and 2006, none of these loans were reported as nonaccrual, restructured or classified. The aggregate amount of loans to related parties for the years ended December 31, 2007 and 2006 were $79,000 and $33,000, respectively.

-32-

Note 6 Bank Premises and Equipment

Bank premises and equipment at December 31, 2007 and 2006 are summarized as follows:

(Dollars in thousands)	2007			2006			Useful Life
Land	$	854		$	854
Building and leasehold improvements		4,237			4,202		3-20 years
Furniture and equipment		2,959			2,332		3-10 years
Subtotal, at cost		8,050			7,388
Accumulated depreciation and amortization		(3,065	)		(2,484	)
Total, net	$	4,985		$	4,904

Amounts charged to operating expenses for depreciation expense aggregated $589,000, $541,000 and $428,000 in 2007, 2006 and 2005, respectively.

Note 7 Goodwill and Core Deposit Intangible

The Company’s purchase of CB&T in 2005 resulted in the recording of goodwill and a core deposit intangible in accordance with the Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests. Other intangible assets continue to be amortized over their estimated useful lives.

Goodwill, acquired as a result of the CB&T purchase in 2005, totaled $78,000 and was assigned to the CB&T reporting unit. The goodwill amount was tested for impairment in December of 2006, and it was determined that the fair value of the reporting unit was not below its carrying amount. As a result, no impairment charge was recorded at December 31, 2006.

In 2007, the Company reversed a valuation allowance related to a deferred tax asset for a net operating loss carryforward which was recorded as a result of the same Consolidated Bank and Trust acquisition. In accordance with the SFAS No. 109, the reversal resulted in a reduction of the goodwill and core deposit intangible balances to zero at December 31, 2007. See Note 10 to the Consolidated Financial Statements for additional details.

The core deposit intangible, recorded as a result of the CB&T purchase in 2005, had a gross carrying balance of $237,000 and an estimated life of 10.1 years. The accumulated amortization balance prior to the valuation allowance reversal in 2007 was $57,000 and $33,000 at December 31, 2006.

Note 8 Deposits

At December 31, 2007, the scheduled maturities on all time deposits are as follows:

Year	< $100,000		> $100,000		Total
	(In thousands)
2008	$	78,818	$	54,595	$	133,413
2009		11,728		9,112		20,840
2010		3,118		4,847		7,965
2011		3,921		1,106		5,027
2012		1,833		267		2,100
	$	99,418	$	69,927	$	169,345

Related party deposits totaled approximately $1.3 million and $794,000 at December 31, 2007 and 2006, respectively. In management’s opinion, interest rates paid on these deposits, where applicable, are available to others at the same terms.

-33-

Note 9 Leasing Arrangements

The Company and banking subsidiaries have entered into various noncancelable operating leases for office and branch locations. These noncancelable operating leases are subject to renewal options under various terms. Some leases provide for periodic rate adjustments based on cost-of-living index changes. Rental expense in 2007, 2006 and 2005 was approximately $1.1 million, $1.1 million and $795,000, respectively. Future minimum payments under noncancelable operating leases that have initial or remaining lease terms in excess of one year are as follows:

Years ending December 31,
(In thousands)	Amount
2008	$	1,163
2009		998
2010		944
2011		958
2012		855
2013 and thereafter		302
Total	$	5,220

Note 10 Income Taxes

Income tax expense for 2007, 2006 and 2005 consists of:

(In thousands)	2007			2006			2005
Current:
Federal	$	1,415		$	1,925		$	1,892
District of Columbia		413			462			538
		1,828			2,387			2,430
Deferred tax benefit:
Federal		(653	)		(76	)		(177	)
District of Columbia		(79	)		(15	)		(58	)
		(732	)		(91	)		(235	)
Total:
Federal		762			1,849			1,715
District of Columbia		334			447			480
	$	1,096		$	2,296		$	2,195

Income tax expense differed from the amounts computed by applying the statutory Federal income tax rate of 34 % to pretax income, as a result of the following:

	2007						2006						2005
(Dollars in thousands)	Amount			%			Amount			%			Amount		%
Tax expense at statutory rate	$	1,413			34.0	%	$	2,037			34.0	%	$	1,875		34.0	%
State and local taxes based on income, net of Federal tax effect		220			5.3	%		295			4.9	%		317		5.7	%
Reversal of NOL valuation allowance		(525	)		-12.6	%		—			—			—		—
Other, net		(12	)		-0.3	%		(36	)		-0.6	%		3		0.1	%
Total	$	1,096			26.4	%	$	2,296			38.3	%	$	2,195		39.8	%

-34-

The following is a summary of the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2007 and 2006:

(In thousands)	2007			2006
Deferred tax assets:
Allowance for loan losses	$	1,548		$	1,493
Purchase fair market value adjustments on loans		104			147
Unrealized loss on investment securities		485			337
Unrealized net actuarial (gains) losses — pension plan		(14	)		68
Compensated absences		27			23
Deferred rent		156			116
Interest on nonaccrual loans		262			39
Net operating loss carryforward		632			722
Other		49			66
Total gross deferred tax assets	$	3,249		$	3,011
Valuation allowance		—			(722	)
Total deferred tax assets	$	3,249		$	2,289
Deferred tax liabilities:
Fixed assets	$	807		$	834
Core deposit intangible		—			69
Total gross deferred tax liabilities	$	807		$	903
Net deferred tax assets	$	2,442		$	1,386

In 2006, the Company recorded a valuation allowance which eliminated the net deferred tax asset for the net operating loss (NOL) carryover related to CB&T. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are calculated to be available to reduce taxable income. Realization of the deferred tax asset related to the net operating loss carryforward of CB&T is further limited under IRC Section 382 to approximately $109,000 per year. In 2006, CB&T had a taxable loss of $244,000 and taxable income before the NOL deduction of $349,000 in 2007. In the fourth quarter of 2007, the Company’s management estimated that it was more likely than not CB&T will continue to earn sufficient taxable income in the future and expects to be able to use the balance of the NOL carryforward available under IRC Section 382 limitation. As a result, the company’s management decided that it would be appropriate to reverse the CB&T NOL valuation in the fourth quarter of 2007.

Note 11 Short-term Borrowings

Short-term borrowings consist of securities sold under repurchase agreements, Federal funds purchased, and FHLB advances. Federal funds purchased represent funds borrowed overnight, and FHLB advances include overnight borrowings or advances with terms of three months or less. Unused Federal fund lines of credit at December 31, 2007 were $31.0 million. There were no outstanding Federal funds purchased or daily FHLB advances at December 31, 2007 or December 31, 2006. Outstanding repurchase agreements at December 31, 2007 were $8.5 million, compared to $2.4 million at December 31, 2006. Securities sold under repurchase agreements generally involve the receipt of immediately available funds which mature in one business day or roll over under a continuing contract. In accordance with these contracts, the underlying securities sold are segregated from the Company’s other investment securities.

-35-

Short-term borrowings for 2007 and 2006 are summarized below:

(Dollars in thousands)	2007			2006
Year end balance	$	8,494		$	2,378
Average balance		5,175			16,216
Maximum month-end outstanding		12,578			30,026
Average interest rate for the year		2.78	%		4.72	%
Average interest rate at year end		3.32	%		1.32	%

Note 12 Long-term Debt

ANB maintains a line of credit with the Federal Home Loan Bank of Atlanta (FHLB) for advances collateralized with a blanket floating lien on first mortgages and commercial real estate. Additional FHLB advances are available up to 20% of assets and would require the pledging of additional qualifying assets. Unused borrowing capacity at December 31, 2007 is approximately $58.2 million.

In March of 2007, the Company obtained a convertible advance from the FHLB in the amount of $10.0 million at a fixed rate of 4.286% with a maturity date of March 9, 2012. Interest only payments are due quarterly. The FHLB has the option on March 9, 2008 or on any interest payment date thereafter to convert the interest rate on this advance from a fixed rate to a variable rate based on the three month Libor rate.

On July 27, 2007, the Company converted a term note for a $5.0 million loan from interest only payments due monthly at variable Prime rate to a variable Prime rate less 50 basis points with principal and interest payments due monthly and maturing on July 27, 2014. The loan is secured by 80,000 shares or 50% of the issued and outstanding capital stock of ANB. The note interest rate at December 31, 2007 and 2006 was 6.75% and 8.25%, respectively. The proceeds of the loan were used to fund a capital infusion to CB&T at acquisition on July 29, 2005 as required by its regulators.

Long-term debt at December 31, 2007 and 2006 consisted of the following:

(Dollars in thousands)	Rate			2007		2006
FHLB borrowings due on March 21, 2008		2.990	%	$	200	$	1,000
FHLB borrowings due on December 1, 2008		6.950	%		151		288
FHLB borrowings due on March 9, 2012		4.286	%		10,000		—
Term note due July 27, 2014	Variable- equal to Prime rate less 1/2%				4,769		5,000
Total				$	15,120	$	6,288

Annual principal payments for the advances and loan as of December 31, 2006 are as follows:

	Amount
Year ending December 31,	(In thousands)
2008	$	971
2009		665
2010		712
2011		762
2012		10,815
After 2012		1,195
Total	$	15,120

Note 13 Commitments and Contingent Liabilities

The Company is party to credit related financial instruments with off-balance-sheet risk in the ordinary course of business to meet the financing needs of its customers. These commitments include revolving credit agreements, term loan commitments, short-term borrowing agreements, and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The Company’s exposure to credit loss is represented by the contractual amount of these commitments. Both loan commitments and standby letters of credit have credit risk essentially the same as that involved in extending loans to customers and are subject to the normal credit approval procedures and policies.

-36-

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being funded, the total commitment amounts do not necessarily represent future liquidity requirements. Collateral is obtained based on management’s assessment of the customer’s credit. Unfunded commitments under commercial lines of credit, revolving credit lines, and overdraft protection agreements are commitments for possible future extension of credit to existing customers. These lines of credit are uncollateralized and usually do not contain a specific maturity date and may ultimately be drawn upon to the total extent to which the Company is committed.

Letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party and are primarily issued to support public and private borrowing arrangements. The majority of letters of credit issued have expiration dates of one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company generally holds collateral supporting those commitments, and at December 31, 2007 and 2006, such collateral amounted to $3.6 million and $5.4 million, respectively. The fair value of the standby letter of credit guarantees was nominal and the liability recorded at December 31, 2007 was $42,000, compared to $0 in 2006.

At December 31, 2007 and 2006, the following financial instruments were outstanding whose contracts represent credit risk:

(Dollars in thousands)	2007			2006
Commitment to originate loans	$	10,187		$	23,240
Unfunded commitments under lines of credit		104,134			112,350
Commercial and standby letters of credit		3,754			5,652
Portion of letters of credit collateralized		95	%		95	%

The Company and the Banks are defendants in litigation and claims arising from the normal course of business. Based upon consultation with legal counsel, management is of the opinion that the outcome of any claims and pending or threatened litigation will not have a material adverse impact on the Company’s financial position, results of operations or liquidity.

Note 14 Restrictions on Dividend Payments and Loans by Affiliated Banks

The primary source of dividends paid by the Company to its shareholders is dividends received from the Banks. Federal regulations restrict the total dividend payments that a banking association may make during any calendar year to the total net income of the banks for the current year plus retained net income for the preceding two years, without prior regulatory approval. At December 31, 2007, approximately $3.8 million of retained earnings of the Banks was available for dividend declarations. Restrictions are also imposed upon the ability of the Banks to make loans to the Company, purchase stock in the Company or use the Company’s securities as collateral for indebtedness of the Banks. At December 31, 2007, the Company and the Banks were in compliance with regulatory requirements.

Note 15 Regulatory Capital Requirements

The Company (on a consolidated basis) and the Banks are subject to various regulatory capital requirements administered by the Federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Banks must meet specific capital guidelines that involve quantitative measures of the Company’s and the Banks’ assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and the Banks’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

-37-

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Banks to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2007, that the Company and the Banks meet all capital adequacy requirements to which they are subject. The most recent notification from the primary regulators for each of the Company’s affiliated banking institutions categorized them as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Banks must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since then that management believes have changed the Banks’ category. The following table presents the capital position of the Company and the Banks relative to their various minimum statutory and regulatory capital requirements at December 31, 2007 and 2006.

											Minimum To Be Well
											Capitalized Under
						Minimum Capital					Prompt Corrective Action
	Actual					Requirements					Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2007:
Total capital to risk weighted assets:
Consolidated	$	36,305		10.42	%	$	27,875		8.00	%		(1)
ANB		30,648		10.75	%		22,799		8.00	%		28,498		10.00	%
CB&T		9,724		15.49	%		5,023		8.00	%		6,279		10.00	%
Tier 1 capital to risk weighted assets:
Consolidated		32,103		9.21	%		13,937		4.00	%		(1)
ANB		27,481		9.64	%		11,399		4.00	%		17,099		6.00	%
CB&T		8,936		14.23	%		2,512		4.00	%		3,767		6.00	%
Tier I capital to average assets:
Consolidated		32,103		7.21	%		17,807		4.00	%		(1)
ANB		27,481		7.77	%		14,150		4.00	%		17,688		5.00	%
CB&T		8,936		9.81	%		3,643		4.00	%		4,554		5.00	%

⁽¹⁾  The Company is not subject to this requirement.

											Minimum To Be Well
											Capitalized Under
						Minimum Capital					Prompt Corrective Action
	Actual					Requirements					Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2006
Total capital to risk weighted assets:
Consolidated	$	34,965		9.77	%	$	28,630		8.00	%		(1)
ANB		30,609		10.29	%		23,796		8.00	%		29,744		10.00	%
CB&T		8,682		14.52	%		4,782		8.00	%		5,978		10.00	%
Tier 1 capital to risk weighted assets:
Consolidated		30,534		8.53	%		14,315		4.00	%		(1)
ANB		26,883		9.04	%		11,898		4.00	%		17,847		6.00	%
CB&T		7,932		13.27	%		2,391		4.00	%		3,587		6.00	%
Tier I capital to average assets:
Consolidated		30,534		7.62	%		16,020		4.00	%		(1)
ANB		26,883		8.49	%		12,662		4.00	%		15,828		5.00	%
CB&T		7,932		9.48	%		3,346		4.00	%		4,182		5.00	%

⁽¹⁾ The Company is not subject to this requirement.

-38-

Note 16 Benefit Plans

The Company has various stock option plans for directors and certain key employees. At December 31, 2007, there were 179,974 shares of common stock reserved for future issuance under the stock option plans of which there were 9,818 shares under option outstanding. The terms of the options are determined by the Board of Directors. Options vest over three years, and no options may be exercised beyond ten years from the grant date. The option price for the 2000 Stock Option Plan was 90% of the fair market value at the date of the grant.

The fair value of each option grant is estimated on the date of the grant using a Black-Scholes option pricing model. At December 31, 2007, the options outstanding have a weighted remaining average contractual life of 2.1 years. Compensation expense for stock options was recorded in salary expense over the vesting period. There were no options granted and no compensation expense for stock option plans was recorded for the years 2007, 2006, and 2005. The aggregate intrinsic value, the amount that the market value of the underlying stock exceeds the exercise price of the option, for the 9,818 options outstanding at December 31, 2007 was $51,000. The aggregate intrinsic value of the options exercised in 2007 and 2005 was $7,000 and $9,000, respectively.

The following is a summary of activity of the Company’s stock option plans for 2007, 2006 and 2005:

	December 31,
	2007					2006				2005
				Weighted				Weighted					Weighted
	Shares			Average		Shares		Average		Shares			Average
	Under			Exercise		Under		Exercise		Under			Exercise
	Option			Price		Option		Price		Option			Price
Outstanding at beginning of year		10,588		$	5.21		10,588	$	5.21		12,100		$	5.21
Granted		—			—		—		—		—			—
Exercised		(770	)	$	5.21		—		—		(756	)	$	5.21
Forfeited/expired		—			—		—		—		(756	)	$	5.21
Outstanding at end of year		9,818		$	5.21		10,588	$	5.21		10,588		$	5.21
Exercisable at end of year		9,818		$	5.21		10,588	$	5.21		10,588		$	5.21
Weighted average fair value of options granted		—			—		—		—		—			—

The Company offers an Employee Stock Ownership Plan (“ESOP”) with 401(k) provisions. Participants may make pre-tax and after-tax contributions to the 401(k) up to the maximum allowable under Federal regulations. The Company matches the pre-tax employee participant’s contributions at a rate of 100% of the first 3% of the employee’s qualifying salary and 50% up to the next 2% of salary. The Company’s 401(k) contribution expense was $156,000, $136,000 and $103,000 for the years ended December 31, 2007, 2006 and 2005, respectively, which is included in “Salaries and Benefits” in the accompanying consolidated statements of income. Employees participate in a nonleveraged ESOP through which common stock of the Company is purchased at its market price for the benefit of the employees. The Board of Directors may elect to pay a discretionary contribution on an annual basis, which vests at the end of the third year. There was no ESOP expense in 2007, and approximately $25,000 and $20,000 for 2006 and 2005, respectively. At December 31, 2007, the ESOP held 53,760 shares of the Company’s common stock. The ESOP is accounted for in accordance with Statement of Position 93-6, “Employers’ Accounting for Employee Stock Ownership Plans.” Shares held by the ESOP are treated as outstanding in computing earnings per share.

-39-

Note 17 Pension Plan

CB&T maintains a noncontributory defined benefit pension plan. Pension benefits vest after five years of service, and were based on years of service and average final salary. During 1997, CB&T froze the accrual of future service benefits; however, benefits continued to accrue for future compensation adjustments. In 2003, the compensation levels were frozen at current rates for benefit calculation purposes. On January 10, 2007, the CB&T Board of Directors adopted a resolution to terminate the pension plan effective March 31, 2007. All participants became 100% vested on that date. The plan is in the process of distributing all benefit liabilities. The Company recognized a settlement expense of $79,000 in 2007 which was accounted for under SFAS No. 88. The plan maintains a September 30 year-end for computing plan assets and benefit obligations.

Obligations and funded status of pension plan at measurement date:

	Years Ended September 30,
(In thousands)	2007			2006
Change in benefit obligation:
Benefit obligation, beginning	$	4,859		$	4,795
Interest cost		270			267
Actuarial (gain) loss		(71	)		65
Benefits paid		(4,328	)		(268	)
Benefit obligation, ending	$	730		$	4,859
Change in plan assets:
Fair value of plan assets, beginning	$	4,755		$	4,074
Actual return on plan assets		423			249
Employer contribution		0			700
Benefits paid		(4,328	)		(268	)
Fair value of plan assets, ending	$	850		$	4,755
Funded status, ending	$	120			($104	)

Assumed discount rates of 6.25% and 5.75% were used to determine the benefit obligation at September 30, 2007 and 2006, respectively.

The amount recognized in accumulated other comprehensive income were a net gain of $43,000 at September 30, 2007 and a net loss of $198,000 at September 30, 2006. The net gain was recorded net of a deferred tax expense of $14,000 in 2007 and the net loss was recorded net of a deferred tax benefit of $68,000 in 2006. Amounts recognized in the balance sheet consist of:

	Years ended December 31,
(In thousands)	2007			2006
Noncurrent assets	$	120			—
Noncurrent liabilities		—			($104	)
Accumulated other comprehensive (gain) loss-net of deferred tax (expense) benefit		(29	)		130

The accumulated benefit obligation for the pension plan was $730,000 as of September 30, 2007 and $4.9 million as of September 30, 2006. Information for plans with an accumulated benefit in excess of the plan assets is as follows:

	Years ended September 30,
(In thousands)	2007		2006
Projected benefit obligation		N/A	$	4,859
Accumulated benefit obligation		N/A	$	4,859
Fair value of plan assets		N/A	$	4,755

-40-

Components of net periodic costs were as follows:

	Years ended December 31,
(In thousands)	2007			2006
Interest cost	$	270		$	267
Expected return on plan assets		(331	)		(284	)
Recognized net actuarial loss		—			—
Net periodic benefit cost		($61	)		($17	)

Assumptions used to determine net periodic pension cost were as follows:

	Years ended December 31,
Weighted-average assumptions	2007			2006
Discount rate		5.75	%		5.75	%
Expected long-term return on plan assets		7.00	%		7.00	%

The expected long-term rate of return on plan assets reflects the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected benefit obligation. In estimating that rate, consideration was given to both historical returns and returns expected to be available for reinvestment.

The percentages of fair value of total plan assets held at September 30, 2007 and 2006 by asset category were as follows:

	Years ended September 30,
Asset Allocation	2007			2006
Equity securities		0.0	%		55.2	%
Debt securities		0.0	%		29.8	%
Cash and equivalents		100.0	%		15.0	%
		100.0	%		100.0	%

Estimated future benefit payments, which reflect expected future service, as appropriate, are as follows:

(In thousands)	Pension Benefit
9/1/07 — 8/31/08	$	861
9/1/08 — 8/31/09	—
9/1/09 — 8/31/10	—
9/1/10 — 8/31/11	—
9/1/11 — 8/31/12	—
9/1/12 — 8/31/17	—

-41-

Note 18 Other Operating Expense

The following is a summary of the significant components of noninterest expense “other operating expense.”

(In thousands)	2007		2006		2005
Advertising	$	717	$	642	$	235
Bank security		186		194		136
Director and committee fees		241		228		233
Insurance		193		172		191
Loan expense		214		76		106
Stationery and office supplies		188		183		170
Taxes, other		123		134		73
Telephone		168		149		106
Travel		190		158		147
Other		994		785		620
Total other operating expense	$	3,214	$	2,721	$	2,017

Note 19 Fair Value of Financial Instruments

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Statement of Financial Accounting Standards No. 107 “Disclosures about Fair Value of Financial Instruments” excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The following table presents the estimated fair values of the Company’s financial instruments at December 31, 2007 and 2006 and is followed by a general description of the methods and assumptions used to estimate such fair values.

	December 31, 2007				December 31, 2006
(In thousands)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Cash and due from banks	$	15,567	$	15,567	$	13,729	$	13,729
Federal funds sold and interest-earning deposits in other banks		33,196		33,196		13,834		13,834
Investment securities available for sale		66,392		66,392		45,347		45,347
Investment securities held to maturity		13,309		13,269		17,722		17,418
Loans, net		303,281		318,408		303,525		312,591
Accrued interest receivable		2,231		2,231		2,287		2,287
Financial Liabilities:
Deposits		386,942		378,717		363,590		347,436
Short-term borrowings		8,494		8,494		2,378		2,378
Long-term debt		15,120		16,952		6,288		6,272
Accrued interest payable		1,960		1,960		1,640		1,640

-42-

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments.

Cash and due from banks. The carrying amounts reported in the balance sheet approximate fair value due to the short-term nature of these assets.

Federal funds sold and interest-bearing deposits in other banks. The carrying amounts of short-term investments on the balance sheet approximate fair value.

Investments securities available for sale and investment securities held to maturity. The estimated fair values of securities by type are based on quoted market prices, when available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans. Estimated fair values for variable rate loans, which reprice frequently and have no significant credit risk, are based on carrying value. Estimated fair value for all other loans are estimated using discounted cash flow analyses, based on interest rates currently offered on loans with similar terms to borrowers of similar credit quality.

Deposits. The fair value of deposits with no stated maturity, such as noninterest-bearing deposits, NOW accounts, savings and money market deposit accounts, is the amount payable on demand as of year end. Fair values for time deposits are estimated using discounted cash flow analyses, based on the current interest rates offered for deposits of similar maturities.

Short-term borrowings. The carrying values of Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings approximate fair values.

Long-term debt. The fair value of the long-term debt is estimated by using discounted cash flow analyses, based on the current rates offered for similar borrowing arrangements.

Accrued interest receivable and accrued interest payable. The carrying value of accrued interest receivable and payable is deemed to approximate fair value.

Off-balance sheet credit-related instruments. Loan commitments on which the committed interest rate is less than the current market rate were insignificant at December 31, 2007 and 2006. The estimated fair value of fee income on letters of credit at December 31, 2007 and 2006 was insignificant.

-43-

Note 20 Parent Company Only Financial Statements

The Parent Company’s condensed balance sheets at December 31, 2007 and 2006, and related condensed statements of income and cash flows for years ended 2007, 2006, and 2005 are as follows:

Condensed Balance Sheets
(In thousands)

	December 31,
	2007		2006
Assets:
Cash in bank	$	78	$	285
Investment in subsidiary banks		35,753		34,462
Other assets		414		456
Total assets	$	36,245	$	35,203
Liabilities and Stockholders’ Equity
Long-term debt	$	4,769	$	5,000
Other liabilities		37		21
Stockholders’ equity		31,439		30,182
Total liabilities and stockholders’ equity	$	36,245	$	35,203

Condensed Statements of Income
(In thousands)

	Years Ended December 31,
	2007			2006			2005
Income
Dividends from subsidiary banks	$	2,325		$	3,000		$	2,525
Total income		2,325			3,000			2,525
Expenses
Professional fees		79			47			53
Interest expense		394			435			170
Other		512			619			458
Total expenses		985			1,101			681
Income before taxes and equity in undistributed net income of subsidiaries		1,340			1,899			1,844
Income tax benefit		(400	)		(447	)		(276	)
Income before equity in undistributed earnings of subsidiaries		1,740			2,346			2,120
Equity in undistributed net income of subsidiaries		1,319			1,350			1,200
Net Income	$	3,059		$	3,696		$	3,320

-44-

Condensed Statement of Cash Flows
(In thousands)

	Years Ended December 31,
	2007			2006			2005
Operating Activities:
Net income	$	3,059		$	3,696		$	3,320
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of subsidiaries		(1,319	)		(1,350	)		(1,200	)
Other, net		56			(215	)		(103	)
Net cash provided by operating activities		1,796			2,131			2,017
Investing Activities:
Capital infusion in subsidiary		—			—			(5,000	)
Net cash used by investing activities		—			—			(5,000	)
Financing Activities:
Proceeds from issuance of common stock, net		4			—			3
Cash in lieu of 10% stock dividend on fractional shares		—			—			(3	)
Retired shares of common stock		—			(12	)		—
Purchased treasury stock		(45	)		(112	)		—
Cash paid in acquisition		—			—			(448	)
Stock issuance costs		—			—			(14	)
Proceeds from long-term debt		—			—			5,000
Repayment of long-term debt		(231	)		—			—
Cash dividends paid to stockholders		(1,731	)		(1,731	)		(1,696	)
Net cash (used) provided in financing activities		(2,003	)		(1,855	)		2,842
Net (decrease) increase in cash and cash equivalents		(207	)		276			(141	)
Cash and cash equivalents at beginning of year		285			9			150
Cash and cash equivalents at end of year	$	78		$	285		$	9

-45-

Note 21 Segment Reporting

Management regularly reviews the performance of the Company’s operations on a reporting basis by legal entity. The Company has two operating segments comprised of its subsidiaries, ANB and CB&T, for which there is discrete financial information available. Both segments are engaged in providing financial services in their respective market areas and are similar in each of the following: the nature of their products, services; and processes; type or class of customer for their products and services; methods used to distribute their products or provide their services; and the nature of the banking regulatory environment. The parent company is deemed to represent an overhead function rather than an operating segment and its financial information is presented as the Other category in the schedule below. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 of the Notes to the Consolidated Financial Statements. The Company does not have a single external customer from which it derives 10 percent or more of its revenues.

Information about the reportable segments and reconciliation of such information to the consolidated financial statements as of and for the years ended December 31, follows:

	Segment Results and Reconciliation for Years Ended December 31,
	The Adams			Consolidated						Intercompany
(Dollars in thousands)	National Bank			Bank & Trust(1)			Other (2)			Eliminations			Consolidated Totals
2007:
Interest income	$	24,483		$	5,768		$	—		$	—		$	30,251
Interest expense		11,531			1,674			394			—			13,599
Net interest income (expense)		12,952			4,094			(394	)		—			16,652
Provision (credit) for loan losses		300			(40	)		—			—			260
Noninterest income		1,311			414			3,644			(3,744	)		1,625
Noninterest expense		9,254			4,117			591			(100	)		13,862
Net income		2,823			821			3,059			(3,644	)		3,059
Assets		356,879			88,582			36,245			(35,831	)		445,875
Return on average assets (annualized)		0.80	%		0.91	%	NM		(3)		—			0.69	%
Return on average equity (annualized)		10.39	%		10.01	%	NM		(3)		—			9.92	%
2006:
Interest income	$	21,225			4,920		$	—			—		$	26,145
Interest expense		7,935			1,038			435			—			9,408
Net interest income (expense)		13,290			3,882			(435	)		—			16,737
Provision (credit)for loan losses		250			(482	)		—			—			(232	)
Noninterest income		1,694			536			4,350			(4,450	)		2,130
Noninterest expense		8,774			3,767			666			(100	)		13,107
Net income		3,565			785			3,696			(4,350	)		3,696
Assets		322,828			82,218			35,203			(34,747	)		405,502
Return on average assets (annualized)		1.22	%		0.99	%	NM		(3)		—			0.99	%
Return on average equity (annualized)		13.68	%		9.96	%	NM		(3)		—			12.78	%
2005:
Interest income	$	16,762		$	1,701		$	—			($2	)	$	18,461
Interest expense		3,826			313			170			(2	)		4,307
Net interest income (expense)		12,936			1,388			(170	)		—			14,154
Provision for loan losses		310			—			—			—			310
Noninterest income		1,793			218			3,725			(3,825	)		1,911
Noninterest expense		8,160			1,669			511			(100	)		10,240
Net income		3,767			(42	)		3,320			(3,725	)		3,320
Assets		270,117			72,659			33,127			(32,873	)		343,030
Return on average assets (annualized)		1.46	%		(0.14	%)	NM		(3)		—			1.15	%
Return on average equity (annualized)		14.70	%		(1.31	%)	NM		(3)		—			12.49	%

(1)	CB&T results are included from date of acquisition, July 29, 2005.
(2)	Amounts represent parent company before intercompany eliminations. See Note 20 of the Notes to Consolidated Financial Statements.
(3)	Not considered a meaningful performance ratio for parent company.

-46-

Description of significant amounts included in the intercompany eliminations column in the segment report schedule are as follows:

(In thousands)	2007			2006			2005
Noninterest income- elimination of parent company’s undistributed earnings from subsidiaries		($3,644	)		($4,350	)		($3,725	)
Net income-elimination of parent company’s earnings from subsidiaries		($3,644	)		($4,350	)		($3,725	)
Assets- elimination of parent company’s investment in subsidiaries		($35,831	)		($34,462	)		($32,824	)

Note 22 Comprehensive Income

Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale and unrealized gains and losses on pension plan assets and benefit obligations. There were no reclassification adjustments, for gains or losses from components of other comprehensive income, realized in income in either 2007 or 2006.

The components of accumulated other comprehensive income, included in stockholders’equity, are as follows:

	December 31,			December 31
(In thousands)	2007			2006
Net unrealized losses on securities available for sale		($1,177	)		($841	)
Tax effect		484			337
Net-of-tax amount		(693	)		(504	)
Net unrealized gains (losses) on pension plan assets and benefit obligations		43			(198	)
Tax effect		(14	)		68
Net-of-tax amount		29			(130	)
Total accumulated other comprehensive income		($664	)		($634	)

Note 23 Release from Written Agreement

On September 5, 2000, CB&T entered into a Written Agreement with the Federal Reserve Bank of Richmond and the Bureau of Financial Institutions of the Virginia State Corporation Commission, which imposed certain requirements on CBT to ensure the correction of certain deficiencies found in the supervisory process and to return CB&T to satisfactory condition. In a letter dated July 26, 2006 from the Federal Reserve Bank of Richmond and countersigned by the Commissioner of Financial Institutions for the Commonwealth of Virginia, CB&T was informed that a subsequent examination has determined that CB&T has returned to satisfactory condition and is in compliance with regulatory requirements. As a result, the Written Agreement and its amendments dated July 25, 2003 have been terminated.

-47-

Abigail Adams National Bancorp
Stock Performance Graph

     Set forth hereunder is a performance graph comparing (a) the total return on the common stock of the Company for the period beginning on December 31, 2002, through December 31, 2007, (b) the cumulative total return on stocks included in the NASDAQ Composite over such period, and (c) the cumulative total return on stocks included in the SNL NASDAQ Bank Index over such period. The cumulative total return on the Company’s common stock was computed assuming the reinvestment of cash dividends.

     Assuming an initial investment in the common stock of Abigail Adams National Bancorp, Inc. of $100.00 on December 31, 2002 with dividends reinvested, the cumulative total value of the investment on December 31, 2007 would be $89.95. There can be no assurance that the Company’s stock performance will continue in the future with the same or similar trend depicted in the graph. The Company will not make or endorse any predictions as to future stock performance.

	Period Ending
Index	12/31/02		12/31/03		12/31/04		12/31/05		12/31/06		12/31/07
Abigail Adams National Bancorp, Inc.		100.00		130.59		150.26		112.41		111.11		89.95
NASDAQ Composite		100.00		150.01		162.89		165.13		180.85		198.60
SNL NASDAQ Bank Index		100.00		129.08		147.94		143.43		161.02		126.42

-48-

STOCKHOLDER INFORMATION

CORPORATE HEADQUARTERS:

Abigail Adams National Bancorp, Inc.
1130 Connecticut Avenue, NW
Suite 200
Washington, D.C. 20036
(202) 772-3600

FINANCIAL INFORMATION:

Copies of printed financial information including the Annual Report as filed with the Securities and Exchange Commission on Form 10-K are available without charge, upon written request to Karen E. Troutman, Senior Vice President and Chief Financial Officer, at the address listed above.

ANNUAL MEETING:

The annual meeting of shareholders of Abigail Adams National Bancorp will be held at 3:00 p.m. on Tuesday, May 20, 2008 at the Corporate Headquarters at the address listed above.

SHAREHOLDER ASSISTANCE:

Questions concerning your shareholder account, including change of address forms, records or information about lost certificates or dividend checks, should be directed to our transfer agent at the address listed below or access your shareholder information online at www.amstock.com.

American Stock Transfer & Trust Company
59 Maiden Lane
New York, N.Y. 10038
800-937-5449

INTERNET:

Information on bank products and services, as well as, our Code of Ethics, Nominating Committee Charter, and the Annual Report on Form-10K are available on our Web site at www.adamsbank.com.

STOCK LISTING:

Abigail Adams National Bancorp, Inc. Common Stock is listed on the NASDAQ Global Market under the symbol AANB.

INDEPENDENT AUDITORS:

McGladrey & Pullen, LLP
5291 Corporate Drive, Suite 100
Frederick, Md. 21703

SPECIAL COUNSEL:

Luse Gorman Pomerenk & Schick, P.C.
5335 Wisconsin Avenue. NW, Suite 400
Washington, D.C. 20015

-49-

DIRECTORS OF THE ABIGAIL ADAMS NATIONAL BANCORP and AFFILIATES

Jeanne D. Hubbard ^{(1) (2)}
Chairwoman, President &
Chief Executive Officer
Abigail Adams National Bancorp, Inc &
The Adams National Bank

David A. Bradley ⁽²⁾
Executive Director
The National Community Action Foundation

A. George Cook, III ^{(1) (2) (3)}
Principal
George Cook & Company

Sidney H. Credle ⁽³⁾
Dean
School of Business
Hampton University

Doretha P. Fowlkes ⁽³⁾
President
Fowlkes & Company

Michele V. Hagans ^{(2) (3)}
Principal
Fort Lincoln Realty

Benjamin J. Lambert, III ⁽³⁾
Optometrist

Lynne M. Miller ⁽²⁾
President
Environmental Claims Consulting

Sandra C. Ramsey ^{(1) (2)}
Senior Vice President &
Treasurer
Acosta, Inc.

Douglas Reynolds ^{(1) (2) (3)}
Attorney
Reynolds & Brown, PLLC

Marshall T. Reynolds ^{(1) (2)}
Chairman & Chief Executive Officer
Champion Industries, Inc.

Patricia G. Shannon ^{(1) (2)}
Retired

Todd Shell ^{(2) (3)}
Vice President
Guyan International & Caspian Holdings

Marianne Steiner ^{(1) (2)}
Principal
Larkspur Marketing

Joseph L. Williams ^{(1) (2) (3)}
President & Chief Executive Officer
Consolidated Bank & Trust
Chairman & Chief Executive Officer
Basic Supply Company, Inc.

Bonnie A. Wilson ⁽¹⁾
Principal
Bonnie Wilson & Company

EXECUTIVE OFFICERS

Jeanne D. Hubbard
Chairwoman, President &
Chief Executive Officer
Abigail Adams National Bancorp, Inc. &
The Adams National Bank

Karen E. Troutman
Chief Financial Officer & Senior Vice President
Abigail Adams National Bancorp, Inc. &
The Adams National Bank

Joseph L. Williams
Chairman, President &
Chief Executive Officer
Consolidated Bank & Trust Company

(1)	Director on Abigail Adams National Bancorp, Inc. board
(2)	Director on The Adams National Bank board
(3)	Director on Consolidated Bank & Trust board

THE ADAMS NATIONAL BANK OFFICE LOCATIONS

Administrative Office
1130 Connecticut Ave., NW
Washington, D.C. 20036-3945
(202) 772-3600
(202) 659-4980 fax

Deposit Operations
1627 K Street, NW
Washington, D.C. 20006-1782
(202) 772-3600
(202) 293-4017 fax

Dupont Circle East
1604 17^th Street, NW
Washington, D.C. 20009-2441
(202) 772-3600
(202) 387-4110 fax

Georgetown
1729 Wisconsin Avenue, NW
Washington, D.C. 20007-2379
(202) 772-3600
(202) 338-1889 fax

K Street Office
1501 K Street, NW
Washington, D.C. 20005-1782
(202) 772-3600
(202) 628-8380 fax

Silver Spring
8121 Georgia Ave.
Silver Spring, MD 20910-4933
(301) 565-0776
(301) 565-8380 fax

Union Station
50 Massachusetts Avenue, NE
Washington, D.C. 20002-4214
(202) 772-3600
(202) 371-6590 fax

Verizon Center/Chinatown
802 7^th Street, NW
Washington, D.C. 20001-3718
(202) 772-3600
(202) 842-0076 fax

CONSOLIDATED BANK AND TRUST OFFICE LOCATIONS

Main Branch
320 North First Street
Richmond, Virginia 23219
(804) 771-5200
(804) 771-5226 fax

Brookhill-Azalea
5214 Chamberlayne Avenue
Richmond, Virginia 23227
(804) 771-5290
(804) 262-1510 fax

Downtown Hampton
101 North Armistead Avenue
Hampton, Virginia 23669
(757) 722-2575
(757) 722-3486 fax

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     I, Jeanne D. Hubbard, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Abigail Adams National Bancorp, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 28, 2008	/s/ Jeanne D. Hubbard
Date	Jeanne D. Hubbard, Chairwoman of the Board,
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     I, Karen E. Troutman, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Abigail Adams National Bancorp, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 28, 2008	/s/ Karen E. Troutman
Date	Karen E. Troutman
	Principal Financial and Accounting Officer

EX-32

Exhibit 32

Certification pursuant to
18 U.S.C. Section 1350,
as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

Jeanne D. Hubbard, Chairwoman of the Board, President and Chief Executive Officer and Karen E. Troutman, Principal Financial and Accounting Officer of Abigail Adams National Bancorp, Inc. (the “Company”) each certify in her capacity as an officer of the Company that she has reviewed the annual report of the Company on Form 10-K for the year ended December 31, 2007 and that to the best of her knowledge:

(1)	the report fully complies with the requirements of Sections 13(a) of the Securities Exchange Act of 1934; and
(2)	the information contained in the report fairly presents, in all material respects, the financial condition and results of operations.

The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002.

March 28, 2008	/s/ Jeanne D. Hubbard
Date	Jeanne D. Hubbard, Chairwoman of the Board,
	President and Chief Executive Officer
March 28, 2008	/s/ Karen E. Troutman
Date	Karen E. Troutman
	Principal Financial and Accounting Officer