SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
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| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from_____________________to_______________
Commission file number 0-10971
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ABIGAIL ADAMS NATIONAL BANCORP, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 52-1508198
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(State or other jurisdiction of (I.R.S. Employer ID No.)
Incorporation or organization)
1627 K Street, N.W. Washington, D.C. 20006
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(Address of principal executive offices)
202-466-4090
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Issuer's telephone number including area code
N / A
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Former name, address, and fiscal year, if changes since last report
Indicate by check whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the 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 the past 90
days. Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity as of November 9, 1996: 1,650,032 shares of Common Stock, Par
Value $0.01/share.
Transitional Small Business Disclosure Format (check one): Yes No X
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<PAGE>
PART I.
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Item 1 - Financial Statements
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1
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<TABLE>
<CAPTION>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 1996 and 1995 and December 31, 1995
Sept 30 Sept 30 December 31
1996 1995 1995
---- ---- ----
Assets (unaudited) (unaudited)
- ------------------------------------------------------
<S> <C> <C> <C>
Cash and due from banks $6,570,628 $4,004,500 $4,953,200
Short-term investments:
Federal funds sold and securities purchased under agreements to resell 24,800,000 425,000 9,475,000
Interest bearing deposits in other banks 1,476,715 391,715 486,715
-------------------------------------------------
Total short-term investments 26,276,715 816,715 9,961,715
Securities available for sale 3,496,562 4,497,999 5,508,406
Investments securities (market value of $9,874,241, $9,794,674 and $8,309,265
at September 30, 1996, September 30, 1995 and December 31, 1995, respectively) 9,854,361 9,707,042 8,192,647
Loans 63,342,910 59,652,497 63,592,395
Less: Allowance for loan losses (1,278,531) (1,271,591) (1,273,965)
-------------------------------------------------
62,064,379 58,380,906 62,318,430
Bank premises and equipment 763,268 281,327 277,517
Other real estate owned 104,800 -- --
Other assets 1,452,993 1,197,765 1,152,761
-------------------------------------------------
Total assets $110,583,706 $78,886,254 $92,364,676
=================================================
Liabilities
- ------------------------------------------------------
Demand deposits $28,205,478 $20,441,476 $23,443,937
NOW accounts 8,702,104 7,887,076 7,343,282
Money market deposit accounts 25,709,472 14,805,708 21,391,814
Savings deposits 1,249,828 1,201,320 1,317,226
CD's $100,000 and over 12,902,087 10,428,744 13,590,946
CD's under $100,000 18,108,949 15,201,064 15,975,990
-------------------------------------------------
Total deposits 94,877,918 69,965,388 83,063,195
Federal funds purchased and securities sold under agreements to repurchase 2,074,705 1,761,208 1,785,402
Long-term debt -- capital note 204,875 186,250
Other liabilities 725,711 539,553 710,963
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Total liabilities 97,678,334 72,471,024 85,745,810
Stockholders' Equity
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Common stock, par value, $.01 per share, authorized 5,000,000 shares;
issued 1,654,712; outstanding 1,650,032 16,547 8,592 8,592
Surplus 12,158,394 6,147,421 6,147,421
Retained earnings 1,007,284 339,171 531,830
-------------------------------------------------
13,182,225 6,495,184 6,687,843
Less: Treasury Stock, 4,680 shares at cost (28,710) (28,710) (28,710)
ESOP Stock, 25,000 shares at cost (218,750) -- --
Unrealized loss on securities, net of taxes (29,393) (51,244) (40,267)
-------------------------------------------------
Total stockholders' equity 12,905,372 6,415,230 6,618,866
-------------------------------------------------
Total liabilities and stockholders' equity $110,583,706 $78,886,254 $92,364,676
=================================================
</TABLE>
2
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<TABLE>
<CAPTION>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Period Ended September 30, 1996 and 1995
(Unaudited)
For three months For six months
Ended Sept 30, Ended Sept 30,
1996 1995 1996 1995
---- ---- ---- ----
Interest income:
- ------------------------------------------------------
<S> <C> <C> <C> <C>
Interest and fees on loans $1,514,188 $1,518,689 $4,493,833 $4,416,395
Interest and dividends on investment securities:
U.S. Treasury 15,237 17,217 34,385 53,344
Obligations of U.S. government agencies 107,722 131,098 285,153 327,292
Mortgage-backed securities 6,507 8,886 21,774 30,186
Other 7,628 6,940 21,605 25,423
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Total interest and dividends on investment securities 137,094 164,141 362,917 436,245
Interest on securities available for sale:
U.S. Treasury 7,270 46,345 48,098 138,540
Obligations of U.S. government agencies 36,060 5,005 121,299 83,575
------------------------------------------------------
Total interest on securities available for sale 43,330 51,350 169,397 222,115
Interest on federal funds sold 227,991 23,865 442,272 88,940
Interest on deposits with other banks 15,302 5,718 31,148 16,530
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Total interest income 1,937,905 1,763,763 5,499,567 5,180,225
Interest expense
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Interest on deposits:
NOW 50,422 61,446 142,040 204,644
Money market deposit accounts 273,618 196,247 744,404 603,246
Savings deposits 8,479 7,630 25,657 22,578
CD's $100,000 and over 110,945 160,935 398,486 537,997
CD's under $100,000 267,523 235,214 734,288 618,285
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710,987 661,472 2,044,875 1,986,750
Interest on Federal funds purchased and securities
sold under agreements to repurchase 28,173 21,570 79,583 64,400
Interest on other borrowings 0 0 0 6,559
Interest on subordinated note 0 3,353 4,219 10,896
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Total interest expense 739,160 686,395 2,128,677 2,068,605
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Net interest income 1,198,745 1,077,368 3,370,890 3,111,620
Provision for loan losses (50,000) 0 (50,000) 0
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Net interest income after provision for loan losses 1,248,745 1,077,368 3,420,890 3,111,620
</TABLE>
3
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<TABLE>
<CAPTION>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Period Ended September 30, 1996 and 1995
(Unaudited)
For three months For six months
Ended Sept 30, Ended Sept 30,
1996 1995 1996 1995
---- ---- ---- ----
Other income:
- ------------------------------------------------------
<S> <C> <C> <C> <C>
Service charges on deposit accounts 189,706 192,907 537,739 562,759
Other fees and commissions 82,553 31,730 141,988 80,161
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Total other income 272,259 224,637 679,727 642,920
Other expense:
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Salaries and employee benefits 461,150 409,537 1,345,597 1,238,551
Net occupancy expense 196,613 182,010 551,938 558,575
Professional fees 71,972 124,028 87,199 302,488
Data processing fees 85,233 70,737 258,566 205,250
Other operating expense 235,764 180,330 615,978 589,239
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Total other expense 1,050,732 966,642 2,859,278 2,894,103
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Income before taxes 470,272 335,363 1,241,339 860,437
Income tax expense 172,873 93,620 458,460 236,620
------------------------------------------------------
Net income $297,399 $241,743 $782,879 $623,817
======================================================
Earnings per share:
- ------------------------------------------------------
Net income per share $0.20 $0.28 $0.73 $0.73
======================================================
Average shares outstanding used to compute EPS 1,502,192 854,532 1,077,659 854,532
======================================================
</TABLE>
4
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<TABLE>
<CAPTION>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Additional Retained Treasury/
Common Paid-in Earnings ESOP Unrealized Loss
Stock Capital (Deficit) Stock on Securities Total
----- ------- --------- ----- ------------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 $2,864,040 $3,291,973 ($284,646) ($28,710) ($80,387) $5,762,270
Change in par value of common stock (2,861,176) 2,861,176 --- --- --- --
Shares issued in three-for-one
stock split in the form of a stock dividend 5,728 (5,728) --- --- --- --
Net income --- --- 623,817 --- --- 623,817
Unrealized gain on securities, net of taxes --- --- --- --- 29,143 29,143
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Balance, September 30, 1995 $8,592 $6,147,421 $339,171 ($28,710) ($51,244) $6,415,230
==============================================================================
Balance, January 1, 1996 $8,592 $6,147,421 $531,830 ($28,710) ($40,267) $6,618,866
Issuance of 795,500 shares of Common Stock 7,955 6,010,973 --- --- --- 6,018,928
Loan to ESOP to finance purchase of
25,000 shares of Common Stock --- --- --- (218,750) --- (218,750)
Net income --- --- 782,879 --- --- 782,879
Dividends declared --- --- (307,425) --- --- (307,425)
Unrealized gain on securities,
net of taxes --- --- --- --- 10,874 10,874
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Balance, September 30, 1996 $16,547 $12,158,394 $1,007,284 ($247,460) ($29,393) $12,905,372
==============================================================================
</TABLE>
5
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<TABLE>
<CAPTION>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
---- ----
Operating Activities
- ------------------------------------------------------
<S> <C> <C>
Net income $782,879 $623,817
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses (50,000) --
Depreciation and amortization on bank premises & equipment 102,108 117,156
Accretion of loan discounts 26,466 (53,784)
Amortization and accretion of discounts and premiums on investment securities 2,258 18,225
Gain on sale of other real estate (16,789) --
Increase in other assets (370,744) (94,709)
Benefit for deferred income taxes 70,514 118,524
Decrease in other liabilities (86,623) (86,083)
----------------------------------
Net cash provided by operating activities 460,069 643,146
Investing Activities
- ------------------------------------------------------
Proceeds from repayment and maturity of investment securities 4,300,000 300,000
Proceeds from repayment of mortgage-backed securities 87,037 103,710
Proceeds from repayment and maturity of securities available for sale 6,500,000 7,588,400
Proceeds from repayment and maturity of time deposits -- 99,000
Purchase of investment securities (6,020,712) (1,003,825)
Purchase of securities available for sale (4,500,000) (6,072,462)
Increase in short-term investments (990,000) --
Principal collected on loans 8,581,976 10,533,176
Loans originated (9,988,427) (10,738,535)
Net increase in short-term loans (12,463) (67,160)
Net decrease in lines of credit 1,696,498 1,407,552
Purchase of bank premises and equipment (587,859) (29,263)
Purchase of other real estate (317,381) --
Proceeds from disposition of other real estate 229,370 --
----------------------------------
Net cash provided (used) by investing activities (1,021,961) 2,120,593
Financing Activities
- ------------------------------------------------------
Net increase (decrease) in transaction and savings deposits 10,370,623 (4,799,417)
Proceeds from issuance of time deposits 16,010,647 33,259,593
Payments for maturing time deposits (14,566,547) (33,788,290)
Net increase in Federal funds purchased and repurchase agreements 289,302 1,400,500
Payments on long-term debt (186,250) (55,875)
Proceeds from issuance of common stock (net) 6,018,928 --
Loan to KSOP (218,750) --
Payment of dividends (213,633) --
----------------------------------
Net cash provided (used) by financing activities 17,504,320 (3,983,489)
----------------------------------
Increase (decrease) in cash and cash equivalents 16,942,428 (1,219,750)
Cash and cash equivalents at beginning of period 14,428,200 5,649,250
----------------------------------
Cash and cash equivalents at end of period $31,370,628 $4,429,500
==================================
Supplementary disclosures:
Interest paid on deposits and borrowings $2,104,774 $2,065,399
==================================
Income taxes paid $458,500 $175,593
==================================
</TABLE>
6
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Abigail Adams National Bancorp, Inc.
Notes to Consolidated Financial Statements
September 30, 1996 and 1995
1. General
The unaudited information at and for the nine months ended September 30,
1996 and l995 furnished herein reflects all adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim periods presented. All adjustments are of a normal and recurring nature.
All financial information presented gives retroactive effect to (i) an increase
in the number of shares of authorized Common Stock from 800,000 to 5,000,000 and
a reduction of par value to $0.01 per share as of July 8, 1996, and (ii) the
issuance by the Company on July 9, 1996 of a three-for-one stock split in the
form of a stock dividend of two shares of Common Stock for each share of Common
Stock issued and outstanding.
2. Contingent Liabilities
In the normal course of business, there are various outstanding commitments
and contingent liabilities such as commitments to extend credit and standby
letters of credit that are not reflected in the accompanying consolidated
financial statements. No material losses are anticipated as a result of these
transactions on either a completed or uncompleted basis.
Under the terms of an employment agreement with the President and Chief
Executive Officer of the Company and the Bank, the Company is obligated to make
payments to her under certain conditions, totaling approximately $499,000, in
the event her employment is terminated.
Under the terms of severance agreements with seven key management officials
of the Bank, the Bank is obligated to make payments totaling $539,000 under
certain conditions in the event of a change in control of the Company or the
Bank.
The Company maintains directors' and officers' liability insurance in the
amount of $2,000,000, subject to certain exclusions. In addition, according to
the by-laws, the Company is obligated to indemnify any director or officer for
losses incurred to the full extent authorized or permitted by Delaware general
corporation law.
3. Shareholder Rights Plan
On April 12, 1994, the Board of Directors of the Company adopted a Rights
Agreement ("Rights Agreement"), which was amended April 20, 1995. Pursuant to
the Rights Agreement, the Board of Directors of the Company declared a dividend
of one share purchase right for each share of the Company's common stock
outstanding on April 25, 1994 ("Right"). Among other things, each Right entitles
the holder to purchase one share of the Company's common stock at an exercise
price of $20.11.
7
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Subject to certain exceptions, the Rights will be exercisable if a person
or group of persons acquires 25% or more of the Company's common stock
("Acquiring Person"), or announces a tender offer, the consummation of which
would result in ownership by a person or group of persons of 25% or more of the
common stock, or if the Board determines that a person or group of persons
holding 15% or more of the Company's common stock is an Adverse Person, as
defined in the Rights Agreement.
Upon the occurrence of one of the triggering events, all holders of Rights,
except the Acquiring Person or Adverse Person, would be entitled to purchase the
Company's common stock at 50% of the market price. If the Company is acquired in
a merger or business combination, each holder of a Right would be entitled to
purchase common stock of the Acquiring Person at a similar discount.
The Board of Directors may redeem the Rights for $0.01 per share or amend
the Plan at any time before a person becomes an Acquiring Person. The Rights
expire on December 31, 2003.
4. Employee Benefits
The Company has adopted a Nonqualified Stock Option Plan for certain
officers and key employees and has reserved 90,000 shares of common stock for
options to be granted under the plan. No options have been granted to date.
On January 23, 1996, the Company adopted a nonqualified Directors Stock
Option Plan (the "Directors Plan") and a qualified Employee Incentive Stock
Option Plan covering key employees (the "Employee Plan"), which were approved by
the shareholders on October 15, 1996. Shares subject to options under these
plans may be authorized but unissued shares or treasury shares. Options under
the Directors Plan are granted at a price not less than 85% of the fair market
value of the Company's common stock on the date of grant. The options vest
beginning in 1996 at an annual rate of 20% at the end of each year and become
fully vested in the event of a Change in Control, as defined in the Directors
Plan, or in the event that the Director leaves the Board. Options under the
Employee Plan are granted at a price of 100% of the fair market value of the
Company's common stock on the date of grant and are immediately exercisable.
Options under both plans expire not later than ten years after the date of
grant. Options for a total of 16,416 shares of common stock available for grant
under the above Plans were granted at a price of $6.74 for directors and $7.93
for employees. No options have been exercised under these plans.
On March 29, 1996, the Company granted the President and Chief Executive
Officer a nonquali fied stock option to purchase 75,000 shares at a price equal
to 85% of the fair market value of the Company's common stock on the date of
grant ($6.74). The option vests beginning in 1996 at an annual rate of 20% at
the end of each year and becomes fully vested in the event of a Change in
Control as defined in the Agreement, or in the event that she leaves the Company
or the Bank.
Compensation expense is recognized on the Directors Plan and the options
granted to the President and Chief Executive Officer in an amount equal to the
difference between the quoted market price of the stock at the date of grant and
the amount the employee/director is required to pay,
8
<PAGE>
ratably over the five year vesting periods.
On April 16, 1996, the Company and the Bank adopted an employee stock
ownership plan ("ESOP") with 401(k) provisions, replacing the Bank's former
401(k) Plan. Participants may elect to contribute to the ESOP a portion of their
salary, which may not be less than 1% nor more than 15%, of their annual salary
(up to $9,500 for 1996). In addition, the Bank may make a discretionary matching
contribution equal to one-half of the percentage amount of the salary reduction
elected by each participant (up to a maximum of 3%), which percentage will be
determined each year by the Bank, and an additional discretionary contribution
determined each year by the Bank. Employee contributions and the employer's
matching contributions immediately vest. Employer's discretionary contributions
are vested as follows: 0% for less than three years of service; 20% for three
years of service; 40% for four years of service; 60% for five years of service;
80% for six years of service; and 100% for seven or more years of service.
5. Net Income Per Share
Net income per common share is calculated by dividing net income by the
weighted average number of common shares and common share equivalents
outstanding during the period, 1,077,659 and 854,532 for the nine months ended
September 30, 1996 and 1995, respectively, and 1,502,192 and 854,532 for the
three months ended September 30, 1996 and 1995, respectively. Common share
equivalents include stock options.
6. Change in Accounting Principles
(a) Accounting for the Impairment of Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long- Lived Assets to Be Disposed Of" (SFAS No. 121).
SFAS No. 121 requires that assets to be held and used be evaluated for
impairment whenever events or circumstances indicate that the carrying value may
not be recoverable. SFAS No. 121 also requires that assets to be disposed of be
reported at the lower of cost or fair value less selling costs. SFAS No. 121 is
effective for the Company as of January 1, 1996. Implementation of SFAS No. 121
does not have a material impact on the results of operations or financial
position at or for the nine months ended September 30, 1996.
(b) Accounting for Mortgage Servicing Rights
In May 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights" (SFAS No. 122). SFAS No. 122 provides accounting for mortgage servicers
that sell or securitize loans and retain servicing rights. SFAS No. 122 is
effective as of January 1, 1996. The Company does not sell or securitize
mortgage loans and retain servicing rights and therefore the implementation of
SFAS No. 122 will not have a material impact.
(c) Accounting for Stock Based Compensation
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial
9
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Accounting Standards No. 123, "Accounting for Stock Based Compensation" (SFAS
No. 123). SFAS No. 123 allows companies either to continue to account for
stock-based employee compensation plans under existing accounting standards or
to adopt a fair-value-based method of accounting as defined in the new standard.
The Company follows the existing accounting standards for these plans, but will
provide annual pro-forma disclosure of net income and earnings per share as if
the expense provisions of SFAS No. 123 had been adopted.
10
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PART I. FINANCIAL INFORMATION (Continued)
- --------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
Overview
Total assets of Abigail Adams National Bancorp, Inc. and subsidiary (the
"Company") were $110,584,000 at September 30, 1996 as compared to $92,365,000 at
December 31, 1995. Total assets at September 30, 1996 increased by $18,219,000
from December 31, 1995 predominantly due to increases in short-term investments
of $16,315,000. Total deposits increased by $11,815,000 during the same period
to $94,878,000 at September 30, 1996 due primarily to an increased level of
Treasury Tax and Loan deposits as well as normal fluctuations in commercial
money market accounts.
The Company reported net income for the first nine months of 1996 of
$783,000, or $0.73 per share, for an annualized return on average assets of
1.15% and an annualized return on average equity of 12.41%. This compares with
return on assets of 1.01% and return on equity of 13.74% for the first nine
months of 1995. Net income for the first nine months of 1996 reflects a 25%
increase over the $624,000 net income (or $0.73 per share) recorded for the
first nine months of 1995. Increases in net interest income and other income,
reductions in operating expenses and a negative loan loss provision, partially
offset by increases in the Company's effective tax rate, accounted for the
growth in net income.
Analysis of Net Interest Income
Net interest income, the most significant component of the Company's
earnings, increased by $259,000, or 8%, to $3,371,000 for the first nine months
of 1996 as compared to $3,112,000 for the comparable 1995 period. Average
earning assets for the first nine months of 1996 of $91,325,000 increased by
$8,839,000, or 11%, over the comparable 1995 period. Increased net interest
income resulting from increased earning assets and a six basis point decrease in
the cost of funds coupled with a 21% increase in demand deposit accounts for the
first nine months of 1996 as compared to 1995 more than offset the effects of a
decline in the average loan to deposit ratio of 77% for the first nine months of
1996 from 82% for the comparable prior year period. These factors combined to
produce a net interest spread of 3.96% and a net interest margin of 5.32% for
the first half of 1996, reflecting decrease of 20 basis points and 5 basis
points, respectively, from the prior year.
Other Income
Total other income increased by approximately $37,000, or 6%, to $680,000
for the first nine months of 1996. Decreases in service charges on deposits were
partially offset by the $12,000 increase in income recognized on ATM
transactions, primarily from the implementation in early September 1996 of the
$1.00 surcharge on noncustomer ATM transactions. Rental income received from
other real estate coupled with gains recognized on the sale of other real estate
and one loan, more than offset the decrease in service charges on deposits.
11
<PAGE>
Other Expense
Salaries and benefits of $1,346,000 for the first nine months of 1996
increased by $107,000, or 9%, over the first nine months of 1995, due primarily
to an increase in the number of employees attributable to the new branch, normal
merit increases, increases in employee benefits and training and recruitment
expenses. Net occupancy expense of $552,000 for the first nine months of 1996
reflects a decrease of $7,000, or 1%, from one year earlier despite the
additional rental expense beginning in the first quarter of 1996 on a new branch
and the additional depreciation expense of a local area network installed in the
later part of the second quarter of 1996. Depreciation on the local area network
hardware and software, coupled with the October 21, 1996 opening of the new
branch, referred to above, is expected to continue to impact the Company's
occupancy expense in the future. Professional fees of $87,000 for the first nine
months of 1996 declined by $215,000 from one year earlier due primarily to lower
legal fees associated with loan workouts and other corporate matters, as well as
prior legal expenses which the Small Business Administration ("SBA") has agreed
to reimburse the Company for the workout of two troubled SBA guaranteed loans.
Data processing expense of $259,000 for the first nine months of 1996 increased
by $54,000, or 26%, over the prior year as a result of increased activity levels
and item charges as well as the introduction of new electronic services. Other
operating expense of $616,000 for the first nine months of 1996 reflects a
decrease of $27,000, or 5%, over the prior year due primarily to decreased FDIC
deposit insurance premiums, partially offset by increases in administrative and
overhead expenses.
Income Tax Expense
Income tax expense of $458,000 for the first nine months of 1996 reflects
an increase of $221,000 over the $237,000 tax expense recorded one year earlier
due to an increase in the Company's effective tax rate to 37% from 28% one year
earlier. During 1995, the Company reduced its deferred tax valuation allowance
to zero which reduced the effective tax rate.
Analysis of Loans
The loan portfolio at September 30, 1996 of $63,343,000 decreased by
$249,000, or less than 1%, as compared to the December 31, 1995 balance of
$63,592,000 primarily due to fluctuations in the outstanding balance of
commercial loans issued under lines of credit. Loans outstanding on commercial
lines of credit were approximately 40% of the total committed line amount at
September 30, 1996 as compared to 52% at December 31, 1995. New loans, exclusive
of short-term loans and lines of credit, of $9,988,000 were originated in the
first nine months of 1996, however, loan principal payments of $8,582,000 offset
a portion of this increase. The loan to deposit ratio at September 30, 1996 was
67% as compared to 77% at December 31, 1995. On average, the loan to deposit
ratio for the first nine months of 1996 was 77%.
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<PAGE>
Loan concentrations at September 30, 1996 and December 31, 1995 are summarized
as follows:
<TABLE>
<CAPTION>
Loan Concentrations
At September 30, 1996 and December 31, 1995
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Service industry 40% 38%
Real estate development/finance 31 32
Wholesale/retail 21 21
Other 8 9
--- ---
Total 100% 100%
=== ===
</TABLE>
Analysis of Investments
Securities available for sale totaling $6,500,000 matured during the first
nine months of 1996 as compared to purchases of $4,500,000 during the same
period. These securities transactions coupled with scheduled amortization and
accretion for the first nine months accounted for the $2,012,000 decrease in the
available for sale portfolio to $3,497,000 at September 30, 1996 as compared to
$5,508,000 at December 31, 1995. Long-term investment purchases of $6,021,000
partially offset by maturities totaling $4,300,000 and normal pay downs on
mortgage-backed and other amortizing securities, account for the $1,662,000
increase in long-term investments to $9,854,000 at September 30, 1996 as
compared to $8,193,000 at December 31, 1995.
Short-term investments increased by $16,315,000 to $26,277,000 at September
30, 1996 due to the temporary investment of proceeds from the Company's stock
offering completed in the third quarter as well as normal fluctuations in the
Company's liquidity.
Noninterest-Earning Assets
Cash and due from banks of $6,571,000 at September 30, 1996 increased by
$1,618,000 from the December 31, 1995 balance of $4,953,000. This increase is
due primarily to the receipt of funds in the Company's account at the Federal
Reserve Bank subsequent to the deadline for investing those funds with other
financial institutions as well as a correspondent bank's failure to execute a
security transaction on the required day, thus leaving excess cash in the
Company's account at the Federal Reserve Bank. The Company was compensated by
the correspondent bank for the interest lost on the excess funds left at the
Federal Reserve Bank.
Deposits
Total deposits of $94,878,000 at September 30, 1996 increased by
$11,815,000, or 14%, from the December 31, 1995 balance of $83,063,000. Demand
deposits of $28,205,000 at September 30, 1996 reflect a $4,761,000, or 20%,
increase from the $23,444,000 balance at December 31, 1995 due principally to a
$4,800,000 Treasury Tax and Loan deposit received on September 30, 1996. Normal
fluctuations in the deposits of nonprofit accounts make up the majority of the
$1,359,000 increase in NOW accounts to $8,702,000 at September 30, 1996 as
compared to $7,343,000 at December 31, 1995. Money market accounts of
$25,709,000 at September 30, 1996 increased by $4,317,000 from the $21,392,000
balance reported at December 31, 1995 due primarily to normal fluctuations in
the balances of commercial customers. Certificates of deposit at September 30,
1996 of $31,011,000 increased by $1,444,000 from the $29,567,000 balance at
December 31, 1995, with certificates of deposit $100,000 and over decreasing by
$689,000 and certificates of deposit under $100,000 increasing by $2,133,000.
The increase in certificates of deposit under $100,000 is primarily due to the
issuance of brokered deposits during the second quarter of 1996.
13
<PAGE>
Average noninterest-bearing demand deposits for the first nine months of
1996 of $21,839,000 increased by $3,819,000, or 21%, from the comparable 1995
period, while average interest-bearing deposits increased by $2,046,000 during
the same period to $57,996,000. Average NOW accounts for the first nine months
of 1996 of $7,858,000 decreased by $3,217,000 due in large part to the
withdrawal of deposits of one large national organization as part of the
organization's deposit consolidation program. Average money market deposits for
the first nine months of 1996 of $21,960,000 increased by $5,814,000 over the
prior year's average balance. Average certificates of deposit $100,000 and over
decreased by $3,393,000 to $9,967,000 for the first nine months of 1996 as
compared to the first nine months of 1995 due principally to the withdrawal of
District of Columbia collateralized deposits. Average certificates of deposit
under $100,000 for the first nine months of 1996 of $16,928,000 increased by
$2,685,000 over the comparable period of the prior year primarily due to the
issuance of brokered certificates of deposit during 1995 and 1996 as well as
increases in deposits attributable to affiliated companies of the Company's
Board of Directors. Average noninterest-bearing deposits to average total
deposits during the first nine months of 1996 represent 27% as compared to 24%
one year earlier.
Asset Quality
Loan Portfolio and Adequacy of Allowance for Loan Losses
As a result of improvement in the quality of the loan portfolio over the
last few years as well as relatively low levels of net charge-offs, the Company
has taken no provision for loan losses since the third quarter of 1994. Despite
this, the unallocated portion of the Company's Allowance for Loan Losses has
continued to grow since that time. During the third quarter of 1996, the Company
received a recovery of approximately $87,000 on a previously charged off loan,
further increasing the level of the unallocated allowance. During the third
quarter of 1996, the Company evaluated the level of the Allowance for Loan
Losses, specifically the unallocated portion, to determine the level which would
be prudent given the Company's nonperforming asset and charge-off trends while
at the same time allowing for loan portfolio growth through the end of 1996 and
allowing for an appropriate level of cushion for any future problems which may
be unidentified at this time. Pending the fourth quarter 1996 outcome of recent
actions taken on a few loans, the final resolution of which would have a
significant impact on the level of the specifically allocated Allowance for Loan
Losses, only a portion of the total excess Allowance for Loan Losses was
reversed during the third quarter. Any remaining excess following the final
resolutions referred to above is expected be reversed during the fourth quarter
of 1996. Throughout this process, the Company continues to recognize the risk
characteristics of the loan portfolio, including specific reserves for problem
credits and general reserves for the overall loan portfolio, and deems the
allowance for loan losses of $1,279,000 at September 30, 1996 to be adequate.
The allowance for loan losses as a percentage of outstanding loans at September
30, 1996 was 2.02%, up from the 2.00% reported at December 31, 1995. Both the
total dollar amount of the allowance for loan losses, as well as the portion of
the allowance for loan losses which is not allocated to any particular component
of the loan portfolio at September 30, 1996 have increased from the December 31,
1995. The unallocated portion of the allowance for loan losses has increased by
47% to $373,000 from the December 31, 1995 level of $253,000, despite the
reversal of $50,000 of loan loss provision, referred to above, during the third
quarter of 1996.
14
<PAGE>
<TABLE>
<CAPTION>
Allocation of Allowance for Loan Losses
At September 30, 1996 and December 31, 1995
(In thousands)
September 30, December 31,
1996 1995
---- ----
Reserve % of loans Reserve % of loans
Amount to total loans Amount to total loans
------ -------------- ------ --------------
<S> <C> <C> <C> <C>
Commercial $ 600 63.32% $ 658 68.08%
Real estate - mortgage 261 30.04 291 22.12
Real estate - construction 7 1.95 27 4.09
Installment 38 4.69 45 5.71
Unallocated 373 -- 253 --
--- --- --- ---
Total $1,279 100.00% $1,274 100.00%
====== ====== ====== ======
</TABLE>
Transactions in the allowance for loan losses for the nine months ended
September 30, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
Transactions in the Allowance for Loans Losses for the
Nine Months Ended September 30, 1996 and 1995
(In thousands)
1996 1995
---- ----
<S> <C> <C>
Balance at January 1 $ 1,274 $ 1,290
Provision for loan losses (50) --
Recoveries:
Commercial 130 45
Real estate - mortgage 1 9
Installment 21 24
-- --
Total recoveries 152 78
Loans charged off:
Commercial (72) (72)
Installment (25) (24)
--- ---
Total charge-offs (97) (96)
--- ---
Net recoveries (charge-offs) 55 (18)
-- ---
Balance at June 30 $ 1,279 $ 1,272
======= =======
Ratio of net recoveries (charge-offs)
to average loans (1) 0.12% (0.04)%
==== =====
- ----------
<FN>
(1) Ratio of net charge-offs to average loans is computed on an annualized
basis for the nine months ended September 30, 1996 and 1995.
</FN>
</TABLE>
15
<PAGE>
Nonperforming Assets
Nonaccrual loans at September 30, 1996 of $1,109,000 are down by $452,000
from the $1,561,000 reported at December 31, 1995. During the second quarter of
1996, the Company foreclosed on two properties which were previously reported as
nonaccrual loans resulting in an investment in other real estate of $317,000.
One of these two properties was subsequently sold during the third quarter
leaving a remaining balance in other real estate of $105,000. The second
property was sold in October 1996. Nonaccrual loans at September 30, 1996
include $740,000 in loans guaranteed by the U.S. Small Business Administration
("SBA") for a total of $625,000. Banking regulations require that the full
balance of these loans be placed on nonaccrual status, despite the SBA guarantee
on approximately 80% of the total. Restructured loans at September 30, 1996 of
$1,231,000 remain virtually unchanged from the $1,245,000 reported at December
31, 1995. Loans past due 90 days or more increased to $42,000 at September 30,
1996 from $6,000 at December 31, 1995 due principally to one small commercial
loan which was awaiting renewal.
<TABLE>
<CAPTION>
Analysis of Nonperforming Assets
At September 30, 1996 and December 31, 1995
(In thousands)
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Nonaccrual loans:
Commercial $1,004 $1,244
Real estate - mortgage 105 317
--- ---
Total nonaccrual loans (1) 1,109 1,561
----- -----
Past due loans:
Installment - individuals 42 6
-- -
Total past due loans 42 6
-- -
Restructured loans:
Commercial 1,231 1,245
----- -----
Total restructured loans 1,231 1,245
----- -----
Other real estate 105 --
--- ---
Total nonperforming assets $2,487 $2,812
====== ======
Total nonperforming assets exclusive of
SBA guaranteed balances $1,862 $2,070
====== ======
Ratio of nonperforming assets
to gross loans plus foreclosed properties (2) 3.92% 4.42%
Ratio of nonperforming assets to total
assets (2) 2.25% 3.04%
Percentage of allowance for loan losses to
nonperforming assets (2) 51.42% 45.30%
- ----------
<FN>
(1) Nonaccrual loans include $740,000 and $875,000 in loans guaranteed by the
SBA at September 30, 1996 and December 31, 1995, respectively. The
outstanding balance of these loans are insured for 84.5, or $625,000 and
84.9%, or $743,000, respectively.
(2) Ratios include SBA guaranteed loan balances.
</FN>
</TABLE>
16
<PAGE>
Potential Problem Loans
At September 30, 1996 and December 31, 1995, respectively, loans totaling
$784,000 and $618,000 were classified as potential problem loans which are not
reported in the table entitled "Analysis of Nonperforming Assets." The loans are
subject to management attention as a result of financial difficulties of the
borrowers and their classification is reviewed on a quarterly basis. Of the
potential problem loans at September 30, 1996, 91% of the balance represents two
loans which are partially to fully secured, with the remaining 9%, or $73,000,
guaranteed by the SBA for a total of $66,000. This compares with potential
problem loans at December 31, 1995, of $618,000, 98% of which are partially to
fully secured, with the remaining 2%, or $15,000, guaranteed by the SBA for a
total of $13,000. The $166,000 increase in potential problem loans from December
31, 1995 to September 30, 1996 is primarily attributable the addition in 1996 of
two potential problem loans offset by the sale of one loan reported as a
potential problem at December 31, 1995.
Impaired Loans
At September 30, 1996 and December 31, 1995, respectively, loans totaling
$2,759,000 and $2,790,000 were classified as impaired loans, all of which are
reported above as nonaccrual, restructured or potential problem loans.
Interest Sensitivity
Through the Bank's Asset/Liability Investment Committee, sensitivity of net
interest income to fluctuations in interest rates is considered through analysis
of the interest sensitivity positions of major asset and liability categories.
As a result of inherent limitations in this type of analysis, the Company does
not necessarily attempt to maintain a matched position for each time frame. To
augment this analysis, the Company also prepares an analysis of the effect on
net interest income of 1%, 2% and 3% interest rate movements in either
direction. Based on the Company's interest sensitivity position and the analyses
performed on the effect of interest rate movements, at September 30, 1996 a
rising interest rate environment will generally tend to increase net interest
income while a declining interest rate environment will generally tend to
decrease net interest income.
Liquidity and Capital Resources
Liquidity
Principal sources of liquidity are cash and unpledged assets that can be
readily converted into cash, including investment securities maturing within one
year, the available for sale security portfolio and short-term loans. In
addition to $32,847,000 in cash and short-term investments at September 30,
1996, the Company has a securities portfolio which can be pledged to raise
additional deposits and borrowings, if necessary. At September 30, 1996, the
Company had $407,000 in unpledged securities which were available for such use.
As a percentage of total assets, the amount of these cash equivalent assets at
September 30, 1996 and December 31, 1995 was 30% and 21%, respectively. Funds
received from the Company's public offering which have not yet been put to the
longer term use of corporate expansion as well as normal fluctuations in the
deposit levels of some of the Company's large corporate customers resulted in
corresponding fluctuations in the Company's liquidity position (short-term
investments). The Bank's liquidity needs are mitigated by the sizeable
17
<PAGE>
base of relatively stable funds which includes demand deposits, NOW and money
market accounts, savings deposits and nonbrokered certificates of deposit under
$100,000 (excluding financial institutions and custodial funds raised under
deposit acquisition programs) representing 80% of average total deposits for the
nine months ended September 30, 1996 and 76% of average total deposits for the
year ended December 31, 1995. In addition, the Bank has unsecured lines of
credit from correspondent financial institutions which can provide up to an
additional $1,000,000 in liquidity as well as access to other collateralized
borrowing programs. Through its membership in the Federal Home Loan Bank of
Atlanta (the "FHLB"), which serves as a reserve or central bank for member
institutions within its region, the Bank is eligible to borrow up to
approximately $1,857,000 in funds from the FHLB collateralized by loans secured
by first liens on one to four family, multifamily and commercial mortgages as
well as investment securities. The Bank is eligible to increase the maximum
amount to be borrowed by $7,143,000 with the purchase of up to $1,696,000 in
additional stock in the FHLB. The Company has adequate resources to meet its
liquidity needs.
Net proceeds of $6,019,000, received from the Company's stock offering
completed during the third quarter of 1996 coupled with increases in deposit
levels comprise the majority of the Company's net cash inflows from financing
activities for the first nine months of 1996. Loan originations, net of
repayments, and increases in short-term investments during the first nine months
of 1996 constitute the majority of the Company's cash outflows from investing
activities.
Stockholders' Equity
On July 8, 1996, the Company increased the number of shares of authorized
Common Stock from 800,000 to 5,000,000 and reduced the par value to $0.01 per
share. On July 9, 1996, the Company issued a three-for-one stock split in the
form of a stock dividend of two shares of Common Stock for each share of Common
Stock issued and outstanding. On July 12, 1996, the Company's Common Stock was
approved for listing on the Nasdaq National Market. On July 17, the Company
completed a stock offering issuing 670,000 shares at a price of $8.75 per share,
resulting in proceeds to the Company of $6,081,000, before underwriting
discounts, commissions and expenses. Of these proceeds, $219,000 was used to
fund a loan to The Adams National Bank Employee Stock Ownership Plan with 401(k)
Provisions ("ESOP") to purchase stock in that public offering. On August 13,
1996, the underwriters of the stock offering exercised their option to purchase
an additional 100,500 shares resulting in additional proceeds to the Company of
$879,000, before underwriting discounts and commissions and expenses.
Underwriting discounts and commissions and expenses on the stock offering
totaled $942,000, bringing the total net proceeds from the offering before the
ESOP loan to $6,019,000. Stockholders' equity at September 30, 1996 of
$12,905,000 is nearly double the balance at December 31, 1995 of $6,619,000
principally as a result of the $6,019,000 net proceeds raised in the Company's
public offering. The Company's $783,000 net income for the nine months ended
September 30, 1996 and an $11,000 decrease in unrealized loss on securities, net
of taxes, partially offset by dividends declared in the first nine months of
1996 of $307,000 also contributed to this increase. Average stockholders' equity
as a percentage of average total assets for the first nine months of 1996 was
9.23% as compared to 7.36% for the comparable prior year period.
Under the risk based capital guidelines issued by the Federal Reserve Board
and the Comptroller of the Currency, total capital consists of core capital
(Tier 1) and supplementary capital (Tier 2). For the Company and the Bank, Tier
1 capital consists of stockholders' equity, excluding
18
<PAGE>
unrealized gains and losses on securities, and Tier 2 capital consists of
long-term debt and a portion of the allowance for loan losses. Assets include
items both on and off the balance sheet, with each item being assigned a
"risk-weight" for the determination of the ratio of capital to risk-adjusted
assets. These guidelines require a minimum of 8% total capital to risk-adjusted
assets, with at least 4% being in Tier 1 capital. At September 30, 1996, the
Company's total risk-based capital ratio and Tier 1 capital ratio of 18.43% and
17.18%, respectively, met the regulatory definition of "well- capitalized."
Under regulatory guidelines, an institution is generally considered
"well-capitalized" if it has a total risk-based capital ratio of 10% or greater,
a Tier 1 capital ratio of 6% or greater and a leverage ratio of 5% or greater
(discussed below). The September 30, 1996 ratios are based on total capital of
$13,876,000, Tier 1 capital of $12,935,000 and risk adjusted assets of
$75,295,000. At September 30, 1996, the Bank's total risk-based capital ratio
and Tier 1 capital ratio of 10.55% and 9.30%, respectively, also met the
definition of "well-capitalized." The September 30, 1996 ratios for the Bank are
based on total capital of $7,833,000, Tier 1 capital of $6,905,000 and
risk-adjusted assets of $74,222,000.
The Federal Reserve Board and the Comptroller of the Currency have also
adopted a minimum leverage ratio of Tier 1 capital to total assets which is
intended to supplement the risk-based capital guidelines. The minimum Tier 1
leverage ratio is 3% for the most highly rated institutions which meet certain
standards. For other banks and bank holding companies, the guidelines provide
that the Tier 1 leverage ratio should be at least 1% to 2% higher. At September
30, 1996, the Company's and the Bank's Tier 1 leverage ratios based on annual
average assets of $91,325,000 and $91,180,000 were 14.16% and 7.57%,
respectively, meeting the regulatory definition of "well- capitalized."
19
<PAGE>
PART II.
- --------------------------------------------------------------------------------
Item 6 - Exhibits and Reports on Form 8-K
- --------------------------------------------------------------------------------
(a) Exhibits
Exhibit No. Description of Exhibit
- ----------- ----------------------
13 Abigail Adams National Bancorp, Inc. Financial Summary for
September 30, 1996
27 Financial Data Schedule
(b) On September 4, 1996, the Company filed a report on Form 8-K (earliest
event reported August 27, 1996) reporting a change in the Company's in
Certifying Accountants.
20
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
ABIGAIL ADAMS NATIONAL BANCORP, INC.
------------------------------------
Registrant
Date: November 12, 1996 /s/ Barbara Davis Blum
- ----------------------- ----------------------
Barbara Davis Blum
Chairwoman of the Board,
President and Director
(Principal Executive Officer)
Date: November 12, 1996 /s/ Kimberly J. Levine
- ----------------------- ----------------------
Kimberly J. Levine
Senior Vice President & Treasurer
(Principal Financial and
Accounting Officer)
21
[The following quarterly financial report was printed in a 11 x 8 1/2 landscrape
presentation. While five (5) pages are presented here, the actual report
produced was a one page 3-fold format.]
TO OUR SHAREHOLDERS
October 28, 1996
Dear Shareholder:
We are pleased to inform you that the
Board of Directors has increased your
quarterly dividend for the quarter
ending September 30, 1996 to $0.10 per
share. Enclosed is your dividend check
for the third quarter.
Abigail Adams National Bancorp, Inc.
reported net income of $783,000, or
$0.73 per share, for the first nine
months of 1996, for an annualized return
on average assets of 1.15%. This
reflects a 25% increase in net income
over the same period of 1995. Total
assets have also increased over the
prior year, growing over 40% to
$111,000,000. As always, we continue to
maintain our well-capitalized status
(the top capital rating).
In addition to our internal growth, we
remain committed in our efforts to
expand. On October 21, 1996, we opened
our new full service branch at 1604 17th
Street, Dupont Circle East, in the
District of Columbia. We are also
currently negotiating locations for new
branches, and several stand-alone ATM's.
We take great satisfaction in these
accomplishments as well as in our
eighteen years of outstanding service to
our customers. Over the years, we have
faithfully served the needs of our
non-profit, small business and
commercial real estate customers,
offering a high level of personalized
service without the bureaucracy of a
large bank environment. We appreciate
our customers' business and value each
as important. If you are not already
banking at the Adams National Bank,
please support the growth of your stock
by doing so. We believe you will find it
a rewarding experience.
Sincerely,
/s/ Barbara Davis Blum
- ----------------------
Barbara Davis Blum
Chairwoman, President & CEO
[Page: Folded inside right page or
unfolded outside left page.]
<PAGE>
BOARD OF DIRECTORS
- ---------------------------------------
Barbara Davis Blum
Chairwoman, President and
Chief Executive Officer
The Adams National Bank
Shireen L. Dodson
Assistant Director
Center for African American
Histroy and Culture
Smithsonian Institution
Susan Hager
Chairwoman and Chief Executive Officer
Hager Sharp, Inc.
Jeanne D. Hubbard
Executive Vice President
First Sentry Bank
Clarence L. James, Jr., Esquire
Executive Director
Executive Leadership Council
Steve Protulis
Executive Director
National Council of Senior Citizens
Marshall T. Reynolds
Chairman & President
Champion Industries, Inc.
Robert L. Shell, Jr.
Chief Executive Officer
Guyan International
Dana B. Stebbins, Esquire
Partner
Wilkes, Artis, Hedrick & Lane
Susan J. Williams
President
Bracy Williams & Company
FDIC Equal Housing [union logo here]
Lender
[Page: Outside back middle page]
<PAGE>
ABIGAIL ADAMS
NATIONAL BANCORP, INC.
- -----------------------
September 30, 1996
[Mural Artwork appears here]
3
Third Quarter Report
[Page: Left folded front cover.]
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Abigail Adams National Bancorp, Inc.
- ----------------------------------------------------------
($ IN THOUSANDS)
(UNAUDITED)
September 30,
1996 1995
---- ----
<S> <C> <C>
Assets:
Cash and due from banks $ 6,571 $ 4,004
Short-term investments 26,277 817
Securities (market value of
$13,371 and $14,293 in 1996
and 1995, respectively) 13,351 14,205
Loans 63,343 59,652
Less: Allowance for loan losses (1,279) (1,271)
------ ------
Loans, net 62,064 58,381
Other real estate 105 --
Other assets 2,216 1,479
----- -----
Total assets $ 110,584 $ 78,886
========= =========
Liabilities and
Stockholders' Equity:
Deposits $ 94,878 $ 69,965
Short-term borrowings 2,075 1,761
Long-term debt -- 205
Other liabilities 726 540
--- ---
Total liabilities 97,679 72,471
Stockholders' equity 12,905 6,415
------ -----
Total liabilities and
stockholders' equity $ 110,584 $ 78,886
========= =========
</TABLE>
<TABLE>
<CAPTION>
Selected Data Abigail Adams National Bancorp,Inc.
- ----------------------------------------------------------
September 30, 1996 and 1995
(UNAUDITED)
1996 1995
---- ----
<S> <C> <C>
Allowance for loan losses as a
percentage of loans 2.02% 2.13%
Average equity to average assets 9.23% 7.36%
Return on average assets 1.15% 1.01%
Net interest margin 5.32% 5.37%
</TABLE>
[Page: Inside left page.]
<PAGE>
<TABLE>
<CAPTION>
Statement of Income Abigail Adams National Bancorp, Inc.
- --------------------------------------------------------------------------------
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three months ended: Nine months ended:
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 1,514 $ 1,519 $ 4,494 $ 4,416
Interest on securities 180 215 532 658
Interest on short-term investments 244 30 474 106
--- -- --- ---
Total interest income 1,938 1,764 5,500 5,180
Interest expense:
Interest on deposits 711 662 2,045 1,986
Interest on short-term borrowings 28 22 80 71
Interest on long-term debt -- 3 4 11
-- -- -- --
Total interest expense 739 687 2,129 2,068
--- --- ----- -----
Net interest income 1,199 1,077 3,371 3,112
Provision for loan losses (50) -- (50) --
--- ---
Net interest income after
provision for loan losses 1,249 1,077 3,421 3,112
Other income:
Service charges on deposits 189 193 537 563
Other income 83 32 142 80
-- -- --- --
Total other income 272 225 679 643
Other expense:
Salaries and employee benefits 461 410 1,346 1,239
Net occupancy expense 197 182 552 559
Professional fees 72 124 87 302
Data processing expense 85 71 258 205
Other operating expense 236 180 616 589
--- --- --- ---
Total other expense 1,051 967 2,859 2,894
----- --- ----- -----
Income before taxes 470 335 1,241 861
Income tax expense 172 93 458 237
--- -- --- ---
Net income $ 298 $ 242 $ 783 $ 624
====== ======== ======== =========
Net income per share $ 0.20 $ 0.28 $ 0.73 $ 0.73
====== ======== ======== =========
Weighted average number
of shares used to compute EPS 1,502,192 854,532 1,077,659 854,532
</TABLE>
[Page: Inside middle page] [Page: Inside right page]
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000356809
<NAME> Abigail Adams National Bancorp, Inc.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 6,570,628
<INT-BEARING-DEPOSITS> 1,476,715
<FED-FUNDS-SOLD> 24,800,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,496,562
<INVESTMENTS-CARRYING> 9,854,361
<INVESTMENTS-MARKET> 9,874,241
<LOANS> 63,342,910
<ALLOWANCE> (1,278,531)
<TOTAL-ASSETS> 110,583,706
<DEPOSITS> 94,877,918
<SHORT-TERM> 2,074,705
<LIABILITIES-OTHER> 725,711
<LONG-TERM> 0
0
0
<COMMON> 16,547
<OTHER-SE> 12,888,825
<TOTAL-LIABILITIES-AND-EQUITY> 110,583,706
<INTEREST-LOAN> 4,493,833
<INTEREST-INVEST> 532,314
<INTEREST-OTHER> 473,420
<INTEREST-TOTAL> 5,499,567
<INTEREST-DEPOSIT> 2,044,875
<INTEREST-EXPENSE> 2,128,677
<INTEREST-INCOME-NET> 3,370,890
<LOAN-LOSSES> (50,000)
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,859,278
<INCOME-PRETAX> 1,241,339
<INCOME-PRE-EXTRAORDINARY> 1,241,339
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 782,879
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.32
<LOANS-NON> 1,109,197
<LOANS-PAST> 41,687
<LOANS-TROUBLED> 1,230,976
<LOANS-PROBLEM> 783,932
<ALLOWANCE-OPEN> (1,273,965)
<CHARGE-OFFS> 97,095
<RECOVERIES> (151,661)
<ALLOWANCE-CLOSE> (1,278,531)
<ALLOWANCE-DOMESTIC> (1,278,531)
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 373,378
</TABLE>
