x       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

 

r       TRANSITION REPORT PURUSANT TO SECTION 13 OR 15(d) OF

For the transition period from             to                

Commission file number        0-49731           

Maryland	52-1726127
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1919 A West Street, Annapolis, Maryland	21401
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code	410-268-4554

Yes   x    No   o     

PART I – FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Consolidated Statements of Financial Condition as of March 31, 2004
	(Unaudited) and December 31, 2003	1
	Consolidated Statements of Operations (Unaudited)	2
	Consolidated Statements of Cash Flows (Unaudited)	3
	Notes to Consolidated Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14
PART II – OTHER INFORMATION		14
Item 1.	Legal Proceedings	14
Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Submission of Matters to a Vote of Security Holders	14
Item 5.	Other Information	14
Item 6.	Exhibits and Reports on Form 8-K	14
SIGNATURES		15
EXHIBIT 31.1 CERTIFICATION OF ALAN J. HYATT		16
EXHIBIT 31.2 CERTIFICATION OF CECELIA LOWMAN		17
EXHIBIT 32 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER		18
EXHIBIT 32 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER		18

i

			March 31,			December 31,
			2004			2003
			(Unaudited)
ASSETS
Cash and due from banks		$	4,481		$	4,055
Interest bearing deposits in other banks			1,036			457
Federal funds			7,900			3,914
Investment securities held to maturity			6,000			6,000
Mortgage backed securities held to maturity			6,379			6,721
Loans held for sale, net of unrealized loss of $-0- in 2004 and 2003			5,137			3,175
Loans receivable, net of allowance for loan losses of
$5,082 and $4,832 respectively			553,486			502,851
Premises and equipment, at cost, less
accumulated depreciation			5,330			5,327
Federal Home Loan Bank of Atlanta stock at cost			4,100			3,250
Accrued interest receivable and other assets			4,943			4,721
Total assets		$	598,792		$	540,471
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits		$	451,460		$	419,726
Outstanding checks in excess of bank balance			7,028			--
Federal Home Loan Bank of Atlanta advances			80,000			65,000
Advance payments by borrowers for expenses			1,616			902
Accounts payable and accrued expenses			3,105			1,873
Total liabilities			543,209			487,501
Minority interest – preferred securities of subsidiary			4,000			4,000
Stockholders’ Equity
Common stock, $.01 par value, 20,000,000 shares authorized;
4,159,092 issued and outstanding			42			42
Additional paid-in capital			11,516			11,516
Retained earnings			40,025			37,412
Total stockholders' equity			51,583			48,970
Total liabilities and stockholders' equity		$	598,792		$	540,471

 

 

	1

 

		For Three Months Ended March 31,
			2004			2003
		(dollars in thousands, except per share data)
Interest Income
Interest on loans		$	9,866		$	8,682
Interest on securities, tax exempt			50			46
Interest on mortgage backed securities			76			57
Other interest income			40			78
Total interest income			10,032			8,863
Interest Expense
Interest on deposits			2,505			2,926
Interest on short term borrowings			35			--
Interest on long term borrowings			627			211
Total interest expense			3,167			3,137
Net interest income			6,865			5,726
Provision for loan losses			250			225
Net interest income after provision for loan losses			6,615			5,501
Other Income
Gain on sale of foreclosed real estate			--			169
Real estate commissions			343			104
Real estate management fees			93			81
Mortgage banking activities			206			676
All other income			112			135
Net other income			754			1,165
Non-Interest Expenses
Compensation and related expenses			1,749			1,550
Occupancy			151			129
Other			592			442
Total non-interest expenses			2,492			2,121
Income before income tax provision			4,877			4,545
Income tax provision			1,848			1,838
Net income		$	3,029		$	2,707
Basic earnings per common share		$	.73		$	.64
Diluted earnings per common share		$	.73		$	.64
Common stock dividends declared per share		$	.10		$	.08

 

	2

		For The Three Months Ended March 31,
			2004			2003
		(dollars in thousands)
Cash Flows from Operating Activities
Net income		$	3,029		$	2,707
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
Amortization of deferred loan fees			(617	)		(572	)
Net amortization (accretion) of premiums and discounts			8			5
Provision for loan losses			250			225
Provision for depreciation			78			70
Gain on sale of loans			(79	)		(458	)
Gain on sale of foreclosed real estate			--			(169	)
Proceeds from loans sold to others			8,808			40,022
Loans originated for sale			(10,692	)		(30,436	)
Principal collected on loans originated for sale			--			20
Increase in accrued interest receivable and other assets			(223	)		(100	)
Increase in other liabilities			1,226			1,116
Net cash provided by operating activities			1,788			12,430
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