10KSB40 1 d10ksb40.txt FORM 10-KSB405 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-KSB Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended DECEMBER 31, 2001 Commission File No.: 0-22961 ANNAPOLIS BANCORP, INC. (Name of small business issuer in its charter) MARYLAND 52-1595772 (State or other jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) 1000 Bestgate Road, Suite 400 21401 ANNAPOLIS, MARYLAND (Zip Code) (Address of principal executive offices) Issuer's telephone number: (410) 224-4455 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK PAR VALUE $0.01 PER SHARE (Title of class) THE NASDAQ SMALLCAP MARKET (Name of exchange on which registered) ---------------------------------------- Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 past 90 days. Yes: X No: Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B contained in this form and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB Yes: X No: Issuer's revenues for its fiscal year ended December 31, 2001 were $12,086,353. The aggregate market value of the voting stock held by non-affiliates of the registrant, i.e., persons other than directors and executive officers of the registrant is $10,013,575 and is based upon the last sales price as quoted on The NASDAQ Stock Market for March 22, 2002. The Registrant had 2,996,629 shares of Common Stock outstanding as of March 22, 2002. Transitional Small Business Disclosure Format. YES: ( ) NO: (X) DOCUMENTS INCORPORATED BY REFERENCE PORTIONS OF THE ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2001, ARE INCORPORATED BY REFERENCE INTO PART I AND PART II OF THIS FORM 10-KSB. PORTIONS OF THE PROXY STATEMENT FOR THE 2002 ANNUAL MEETING OF SHAREHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-KSB. INDEX
PART I PAGE Item 1. Description of Business ............................................... 3 Item 2. Properties ............................................................ 3 Item 3. Legal Proceedings ..................................................... 3 Item 4. Submission of Matters to a Vote of Security Holders ................... 3 Additional Items. Executive Officers of the Registrant .................................. 3-4 PART II Item 5. Market for Common Equity and Related Stockholder Matters ........................................... 4 Item 6. Management's Discussion and Analysis .................................. 4 Item 7. Financial Statements .................................................. 4 Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure ................................... 4 PART III Item 9. Directors, Officers, Promoters and Control Persons; Compliance with Section 16 of the Exchange Act ........................ 4 Item 10 Executive Compensation ................................................ 4 Item 11 Security Ownership of Certain Beneficial Owners and Management ........................................................ 4 Item 12 Certain Relationships and Related Transactions ........................ 4 Item 13. Exhibits and Reports on Form 8-K ...................................... 5 SIGNATURES ....................................................................... 6
This Report contains statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the securities exchange Act of 1934. These statements appear in a number of places in this Report and include all statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company's financing plans; (ii) trends affecting the Company's financial condition or results of operations; (iii) the Company's growth strategy; and (iv) the declaration and payment of dividends. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors discussed herein and those factors discussed in the Company's filings with the Securities and Exchange Commission. PART I ITEM 1. DESCRIPTION OF BUSINESS The information relating to the description of business of the Registrant is incorporated herein by reference on page 28 as part of the Registrant's Annual Report to Shareholders. ITEM 2. PROPERTIES The executive offices of the Company and the Bank are located at 1000 Bestgate Drive, Suite 400, Annapolis, Maryland 21401. The following table sets forth the location of and certain additional information regarding the offices of the Company and the Bank at December 31, 2001.
NET BOOK VALUE OF PROPERTY OR LEASEHOLD ORIGINAL YEAR IMPROVEMENTS AT LEASED/ LEASED OR LOCATION YEAR OF LEASE DECEMBER 31, 2001 OWNED ACQUIRED EXPIRATION ($000) Headquarters Owned 2001 N/A $5,008 Bestgate Owned 2001 N/A 1,002 Edgewater Land Leased 1996 2006 (1) 363 Cape St. Claire Leased 1995 2003 (1) 51 Kent Island Leased 1990 2002 (1) -- Severna Park Leased 1996 2006 (1) 24
(1) These leases may be extended at the option of the Company for periods ranging from one to twenty years. Commencing July 1, 2001, the Bank entered into a three year lease for the second floor space of the Bank's headquarters building with Heim and Associates, P.A., an accounting firm whose President is a Company and Bank Director. The lease rate of $165 thousand per annum is based on current market rates as determined by an independent commercial real estate services firm not affiliated with the Company or Bank. The lease has an initial term of 3 years expiring June 30, 2004 with 2 renewal options of 2 years each and one final option of 1 year. ITEM 3. LEGAL PROCEEDINGS The Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to the Company's financial condition or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ADDITIONAL ITEMS. Executive Officers of the Registrant The information relating to directors and named executive officers of the Registrant is incorporated herein by reference to the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on May 16, 2002 at pages 4 through 7. In addition, information concerning Executive Officers who are not directors is set forth below:
AGE AT POSITION WITH THE COMPANY AND BANK AND NAME 12/31/01 PAST FIVE YEARS EXPERIENCE ---- -------- -------------------------- Richard P. Brown 51 Senior Vice President and Customer Development Group Manager. Mr. Brown joined the Bank in 2000. Prior to joining the Bank in 2000, Mr. Brown was a partner with Wallingford Capital Corporation. Mr. Brown was previously a Vice President with National Bank of Canada's Asset Based Lending Division. Rita D. Demma 54 Secretary of the Company. Ms. Demma has been an officer of the Bank since 2000. Ms. Demma held similar positions in the health care industry prior to joining the Company. AGE AT POSITION WITH THE COMPANY AND BANK AND NAME 12/31/01 PAST FIVE YEARS EXPERIENCE ---- -------- --------------------------
Margaret Theiss Faison 43 Chief Financial Officer and Treasurer of the Company and Senior Vice President, Chief Financial Officer and Treasurer of the Bank. Prior to joining the Company in 1999, Ms. Faison was Senior Vice President and Chief Financial Officer of Sterling Bank & Trust Co. of Baltimore. Ms. Faison was previously Vice President and Chief Financial Officer with Mellon Bank (MD). Robert E. Kendrick, III 56 Senior Vice President and Chief Credit Officer. Prior to joining the Company in 1999, Mr. Kendrick held similar positions with Citizens National Bank of Laurel, Bank of Maryland, Sterling Bank & Trust Co. of Baltimore and NationsBank. Loretta J. Mueller 38 Senior Vice President, Director of Customer Service and Marketing. Ms. Mueller joined the Bank in 1990 and has held various positions within the Bank since that time.
PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Information relating to the market for Registrant's common equity and related stockholder matters appears on page 22, part of the Registrant's 2001 Annual Report to Stockholders and is incorporated herein by reference. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS The above-captioned information appears under Management's Discussion and Analysis of Results of Operations and Financial Condition in the Registrant's 2001 Annual Report to Stockholders on pages 7 through 22 and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS The Consolidated Financial Statements of Annapolis Bancorp, Inc. and its subsidiary, together with the report thereon by Stegman & Company for the year ended December 31, 2001 appears in the Registrant's 2001 Annual Report to Stockholders on pages 23 through 39 and are incorporated herein by reference. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 9. DIRECTORS, OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT The information relating to directors, officers, promoters and control persons is incorporated herein by reference to the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on May 16, 2002. ITEM 10. EXECUTIVE COMPENSATION The information relating to directors' and executive compensation is incorporated herein by reference to the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on May 16, 2002. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information relating to security ownership of certain beneficial owners and management is incorporated herein by reference to the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on May 16, 2002. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information relating to certain relationships and related transactions is incorporated herein by reference to the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on May 16, 2002. ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this report: (1) Financial Statements Consolidated Financial Statements of the Company are incorporated by reference to the following indicated pages of the 2001 Annual Report to Stockholders:
PAGE Independent Auditors' Report .................................. 23 Consolidated Balance Sheets as of December 31, 2001, 2000 and 1999 .............................. 24 Consolidated Statements of Income for the Years ended December 31, 2001, 2000 and 1999 .................. 25 Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2001, 2000 and 1999 .......... 26 Consolidated Statements of Cash Flows for the Years ended December 31, 2001, 2000 and 1999 .................. 27 Notes to Consolidated Financial Statements .................... 28 - 39 The remaining information appearing in the Annual Report to Stockholders is not deemed to be filed as part of this report, except as expressly provided herein
(2) Exhibits The following exhibits are filed as part of this report. 3.1 Articles of Incorporation of Annapolis Bancorp, Inc.* 3.2 Bylaws of Annapolis Bancorp, Inc.* 3.3 Articles of Incorporation of BankAnnapolis*** 3.4 Bylaws of BankAnnapolis*** 4.0 Stock Certificate of Annapolis Bancorp, Inc.* 10.1 Employment Agreement between BankAnnapolis and Mark H. Anders** Option Plan* 10.2 Annapolis National Bancorp, Inc. Employee Stock 11.0 Computation of earnings per share (filed herewith) 13.0 Portions of 2001 Annual Report to Stockholders(filed herewith) 21.0 Subsidiary information is incorporated herein by reference to Part I - "Subsidiaries" 23.0 Consent of Independent Auditors 23.1 Consent of Independent Auditors 99.0 2002 Proxy Statement** * Incorporated herein by reference to the Exhibits to Form SB-2, Registration Statement, filed on June 23, 1997 and any Amendments thereto, Registration No. 333-29841. ** Incorporated herein by reference to the Company's Proxy Statement for its Annual Meeting of Stockholders, which will be filed with the Commission Within 120 days of the end of the Company's fiscal year. *** Incorporated herein by reference to the Exhibits to Form 10-KSB Annual Report for the fiscal year ended December 31, 2000, Commission File Number 0-22961, filed with the Securities and Exchange Commission on March 28, 2001. (b) Reports on Form 8-K: None CONFORMED SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. ANNAPOLIS BANCORP, INC. By: /s/ Richard M. Lerner --------------------- Richard M. Lerner Chairman Date: March 21, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates stated.
NAME Title Date ---- ----- ---- /s/ Richard M. Lerner President, Chief Executive Officer and March 21, 2002 --------------------- Richard M. Lerner Director (principal executive officer) /s/ Margaret Theiss Faison Treasurer and Chief Financial Officer March 21, 2002 -------------------------- Margaret Theiss Faison (principal accounting and financial officer) /s/ Mark H. Anders Vice President, Director March 21, 2002 ------------------ Mark H. Anders /s/ F. Carter Heim Director March 21, 2002 ------------------ F. Carter Heim /s/ Stanley J. Klos, Jr. Director March 21, 2002 ------------------------ Stanley J. Klos, Jr. /s/ Lawrence E. Lerner Director March 21, 2002 ---------------------- Lawrence E. Lerner /s/ Lawrence W. Schwartz Director March 21, 2002 ------------------------ Lawrence W. Schwartz /s/ Maria C. Scott Director March 21, 2002 ------------------ Maria C. Scott /s/ Ermis Sfakiyanudis Director March 21, 2002 ---------------------- Ermis Sfakiyanudis