SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
|X| ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended December 31, 1999
|_| 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
ABIGAIL ADAMS NATIONAL BANCORP. INC.
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(Name of small business issuer as specified in its charter)
Delaware 52-1508198
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
Identification Number)
1627 K Street, N.W., Washington, D C. 20006
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(Address of principal executive offices) (Zip Code)
(202) 466-4090
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(Issuer's telephone number, including area code)
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 $.01 per share
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period as 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__ -
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year $12,187,000.
The aggregate market value of the voting stock held by non-affiliates of
the registrant, computed by reference to the average of the bid and asked prices
of such stock on the NASDAQ Market as of March 9, 2000, was $14.4 million. (The
exclusion from such amount of the market value of the shares owned by any person
shall not be deemed an admission by the registrant that such person is an
affiliate of the registrant.)
As of March 10, 2000, the Company had issued and outstanding 2,086,753
shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
<PAGE>
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
wholly-owned bank subsidiary, The Adams National Bank (the "Bank"). The Bank
serves the nation's capital through five full-service offices located in
Washington, D.C. The Company is subject to regulation by the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board"). The Company's
assets consist primarily of shares of the Bank's common stock and cash it
receives from the Bank in the form of dividends or other capital distributions.
At December 31, 1999, the Company had consolidated assets of $141,770,000,
deposits of $122,570,000 and stockholders' equity of $14,459,000. The Bank
exceeds all applicable regulatory capital requirements. See "Supervision and
Regulation."
The Bank was founded in 1977 as a national bank. Its deposits are federally
insured to the maximum amount permitted by law.
The executive office of both the Company and the Bank is located at 1627 K
Street, N.W., Washington, D.C. 20006. The telephone number is (202) 466-4090.
Market Area
The Bank draws most of its customer deposits and conducts most of its
lending activities from and within the Washington, D.C. metropolitan region,
including suburban Virginia and Maryland. The nation's capital attracts a
significant number of businesses of all sizes, professional corporations and
national nonprofit organizations. The Bank actively solicits 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 the region.
Services of the Bank
The Bank is a community oriented financial institution offering a full
range of banking services to its customers. The Bank attracts deposits from the
general public and historically has used such deposits, together with other
funds to provide a broad level of commercial and retail banking services in
Washington, D.C. and the surrounding communities.
The services offered by the Bank can be broadly characterized as being
commercial or retail in nature. Commercial services offered by the Bank 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 Bank offers
consumer loans to its retail customers. The Bank's retail banking services also
include offering a variety of deposit account products including transaction
accounts, money market accounts, certificates of deposit and Individual
Retirement Accounts. The Bank uses funds it has on hand as well as borrowings in
order to fund its lending and investment activities.
The Bank has automated teller machine access to the MOST and CIRRUS
systems. The Bank also offers its customers computer banking and 24 hour
telephone banking services, VISA credit card services and custodial services.
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Lending Activities
The Bank provides 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, loan participations, consumer loans, revolving
lines of credit and letters of credit, with an emphasis on commercial real
estate lending. Consumer lending primarily consists of automobile, home equity
and personal loans made on a direct, secured basis. Real estate loans are
originated for both commercial and consumer purposes. To a lesser extent, the
Bank originates one-to-four family mortgage or residential loans and
construction loans. The Bank offers loans which have fixed rates as well as
loans with rates which adjust periodically. At December 31, 1999, approximately
61% of the Bank's total loan portfolio was comprised of loans with adjustable
rates.
The Bank provides financing to nonprofit organizations for construction and
renovation of local headquarters, working capital lines of credit and equipment
financing. Current nonprofit customers of the Bank include organizations which
focus on issues relating to children's rights, community housing, education and
health care. At December 31, 1999, commercial and real estate loans to these
customers totaled $1,175,000.
Commercial and real estate lending is performed by the Bank's Lending
Division, which is comprised of five loan officers and a credit analyst. The
Treasury Division includes the Loan Operations' staff of five, 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 Division, 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 either individual loan officers or the
credit analyst, 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 Bank to promote safe
and sound lending. 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 of
the Bank. While a maximum of three loan officers may pool their loan authorities
to approve a loan, most loans over $100,000 are brought to the OLC. The OLC has
authority to approve unsecured loans up to $250,000 and secured loans up to
$500,000. Loans over $250,000 on an unsecured basis and over $500,000 on a
secured basis are brought to the Executive Loan Committee ("ELC"), which meets
approximately twice per month. The ELC is comprised of two outside directors and
the President of the Bank. In addition to approving new loans, this Committee
approves the restructuring of existing loans, reviews past due loans and
approves the charge-off of loans.
3
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Loan Portfolio Composition. The following information concerning the
composition of the Bank's loan portfolio in dollar amounts is presented (before
deductions for allowances for losses) as of the dates indicated.
<TABLE>
<CAPTION>
At
December 31,
------------------------------------------
1999 1998
---------------------- ------------------
<S> <C> <C>
Commercial....................................... $ 28,646,000 $ 23,094,000
Real Estate:
Commercial mortgage........................... 50,752,000 43,924,000
Residential mortgage.......................... 20,991,000 20,190,000
Construction and development..................... 6,540,000 5,154,000
Installment to individuals....................... 2,135,000 2,069,000
--------------- -------------
Total Loans: 109,064,000 94,431,000
Less: Deferred income and unearned discounts..... (241,000) (211,000)
--------------- -------------
Total, net..................................... $ 108,823,000 $ 94,220,000
=============== =============
</TABLE>
Commercial Business Lending
The Bank provides 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 Bank has 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 three years. These loans often require that borrowers maintain
certain levels of deposits with the Bank 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, 1999, commercial loans totaled $28,646,000.
The Bank also offers SBA-guaranteed loans which provide better terms and
more flexible repayment schedules than conventional financing. As lending
requirements of small businesses grow to exceed the Bank's lending limit, the
Bank has the ability to sell participations in these larger loans to other
financial institutions. The Bank believes that such participations will help to
preserve lending relationships while providing a high level of customer service.
At December 31, 1999, SBA-guaranteed loans totaled $4,745,000.
Real Estate Lending
At December 31, 1999, the Bank's real estate loan portfolio consisted of
commercial real estate mortgages totaling $50,752,000, and residential real
estate mortgages totaling $20,991,000. The majority of these loans have
adjustable rates. 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 75% loan to value of the underlying
collateral.
The majority of the $6,540,000 in loans classified as construction and land
development loans at December 31, 1999 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
4
<PAGE>
commercial real estate lending involves significant additional risks as
com- pared 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 Bank limits the
aggregate amount of outstanding construction loans, and generally makes such
loans only in its market area and to borrowers with which it has substantial
experience or who are otherwise well known to the Bank. It is the Bank's current
practice to obtain personal guarantees and current financial statements from all
principals obtaining commercial real estate loans. The Bank also obtains
appraisals on each property in accordance with applicable regulations.
Consumer Lending
The Bank's consumer lending includes loans for motor vehicles, home
improvement, home equity, small personal credit lines and credit card
borrowings. Consumer loans generally involve more risk than first mortgage
residential 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 Bank considers 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, 1999, consumer loans totaled $2,135,000.
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 Bank. With respect to consumer loans, the Bank will commence
efforts to repossess the collateral after the loan becomes 30 days delinquent.
Generally, after 90 days the Bank 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, 1999, the Bank had
nonperforming loans of $78,000 and a ratio of nonperforming loans to total
assets of 0.06%.
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, considers 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 Bank's 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, 1999, the total allowance was
$1,137,000, which amounted to 1.04% of total loans and 14.55% of nonperforming
loans. 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 potential loan losses.
5
<PAGE>
For the year ended December 31, 1999, gross interest income which would
have been recorded had the non-accruing loans of $70,000 been current in
accordance with their original terms amounted to $18,000. The amounts that were
included in interest income on such loans was $23,000 for the year ended
December 31, 1999. For further information regarding the Bank's 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 and Note 4 to the Notes to the Consolidated Financial
Statements.
Investment Activities
The Bank's investment portfolio consists of obligations of U.S. Government
agencies and corporations, mortgage-backed securities, equity securities, and
obligations of states and political subdivisions. At December 31, 1999,
investments in obligations of U.S. Government agencies and corporations totaled
$15,833,000 of which $12,834,000 were classified as available for sale. Total
investment securities were $16,761,000 at December 31, 1999. For further
information regarding the Bank's investments see "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Analysis of
Investments" in the Annual Report to Shareholders.
Deposits
The Bank offers 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 Bank relies 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 Bank's ability to attract and retain deposits.
The following table sets forth the dollar amount of deposits in the various
types of deposit programs offered by the Bank as of the dates indicated.
<TABLE>
<CAPTION>
December 31,
--------------------------------------------
1999 1998
-------------------- --------------------
Amount Percent Amount Percent
--------- --------- --------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Demand deposits............................. $ 36,817 30.0% $ 31,058 28.6%
Savings accounts............................ 2,947 2.4 2,798 2.6
NOW accounts................................ 11,988 9.8 9,499 8.7
Money market accounts....................... 27,951 22.8 26,207 24.1
-------- -------- -------- --------
Total non-certificates...................... 79,703 65.0 69,562 64.0
-------- -------- -------- --------
Total certificates.......................... 42,867 35.0 39,103 36.0
-------- -------- -------- --------
Total deposits.............................. $122,570 100.0% $108,665 100.0%
======== ======== ======== =======
</TABLE>
The following table shows weighted average rate and maturity information
for the Bank's certificates of deposit as of December 31, 1999.
<TABLE>
<CAPTION>
Certificate accounts maturing in quarter ending: Total Weighted Percent of
- ------------------------------------------------
Balance Average Rate Total
------------- ------------- ---------
(Dollars in Thousands)
<S> <C> <C> <C>
Less than 3 months................................. $ 9,868 4.80% 23.0%
More than 3 months................................. 10,954 4.98 25.6
More than 6 months................................. 18,080 5.34 42.1
More than 1 year................................... 3,444 5.33 7.5
More than 3 years.................................. 711 6.13 1.7
More than 5 years.................................. 50 5.98 0.1
--------- ------ -------
Total.............................................. $ 42,867 5.14% 100.0%
========= ====== =======
</TABLE>
6
<PAGE>
The following table indicates the amount of the Bank's certificates of
deposit and other deposits by time remaining until maturity as of December 31,
1999.
<TABLE>
<CAPTION>
Maturity
Over Over
3 Months 3 to 6 6 to 12 Over
or Less Months Months 12 Months Total
--------- --------- --------- ----------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Certificates of deposit less than $100,000......... $ 5,753 $ 6,606 $ 10,406 $ 2,035 $ 24,800
Certificates of deposit of $100,000 or more........ 4,115 4,348 7,674 1,930 18,067
-------- -------- -------- -------- --------
Total certificates of deposit...................... $ 9,868 $ 10,954 $ 18,080 $ 3,965 $ 42,867
======== ======== ======== ======== ========
</TABLE>
(1)Deposits from governmental and other public entities.
Borrowed Funds
The Company's short-term borrowings consist of federal funds purchased,
FHLB advances of one year or less, and securities sold under repurchase
agreements. Long-term debt consists of a term advance from the FHLB entered into
on October 1, 1996, maturing on December 1, 2008, at a fixed rate of 7.95%.
The following table sets forth the maximum month-end balance and average
balance of long-term debt and short-term borrowings for the periods indicated.
<TABLE>
<CAPTION>
At December 31,
1999 1998
--------- ------
(In Thousands)
<S> <C> <C>
Maximum Balance:
- ---------------
Long-term debt.......................................... $ 1,023 $1,086
Short-term borrowings................................... 5,413 4,899
Average Balance:
- ---------------
Long-term debt.......................................... $ 993 $1,052
Short-term borrowings................................... 4,127 3,920
</TABLE>
The following table sets forth certain information as to the Bank's
borrowings at the dates indicated. The Bank had no other borrowings outstanding
at the date indicated.
<TABLE>
<CAPTION>
At December 31,
1999 1998
------- ------
(Dollars in Thousands)
<S> <C> <C>
FHLB advances............................................. $ 958 $1,023
Securities sold under agreements to repurchase............ 3,193 4,648
------- ------
Total borrowings........................................ $ 4,151 $5,671
======= ======
Weighted average interest rate of FHLB advances........... 6.95% 6.99%
Weighted average interest rate of securities sold under agreements
to repurchase .......................................... 4.25% 4.70%
</TABLE>
Competition
The Bank faces strong competition among financial institutions in
Washington, D.C., Northern Virginia and suburban Maryland for both deposits and
loans. Principal competitors include other community commercial
7
<PAGE>
banks and larger financial institutions with branches in the Bank's service
area. Intense competition is expected to continue as bank mergers and
acquisitions of smaller banks by larger institutions in the Washington, D.C.
metropolitan region 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 Bank faces
competition for deposits and loans throughout its 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 Bank's market areas
offer certain services, such as trust, investment and international banking
services, which the Bank does 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.
In order to compete with other financial services providers, the Bank
principally relies upon local promotional activities, personal relationships
established by officers, directors and employees with its customers, and
specialized services tailored to meet its customers' needs. In those instances
where the Bank is unable to accommodate a customer's needs, the Bank will
arrange for those services to be provided by its correspondents.
Employees
At December 31, 1999, the Company employed 52 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.
8
<PAGE>
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.
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 closer, related to banking or managing or controlling banks as to
be a proper incident thereto.
Under Federal Reserve Board regulations, 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 Bank
The Bank, 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 the Bank, the OCC
should determine that the financial condition, capital resources, asset quality,
earnings prospects, management, liquidity or other aspects of the Bank's
operations are unsatisfactory or that the Bank 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 the Bank, 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
9
<PAGE>
poses a risk to the deposit insurance fund or may prejudice the interest of its
depositors. The Bank is not subject to any such actions by the OCC or the FDIC.
The deposits of the Bank are insured by the FDIC in the manner and to the
extent provided by law. For this protection, the Bank pays a semiannual
statutory assessment. Various other requirements and restrictions under the laws
of the United States affect the operations of the Bank. Federal statutes and
regulations relate to many aspects of the Bank's 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 Bank is required to maintain certain levels of capital.
Restrictions on Transfers of Funds to the Company by the Bank
The Company is a legal entity separate and distinct from the Bank. The
Company's ability to pay cash dividends is limited by Delaware corporate law. In
addition, the prior approval of the OCC is required if the total of all
dividends declared by the Bank in any calendar year exceeds the Bank's net
profits (as defined) for that year combined with its retained net profits (as
defined) for the preceding two years, less any transfers to surplus.
The OCC also has authority to prohibit the Bank from engaging in activities
that, in the OCC's 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 OCC 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 Bank or the Company may pay.
The Bank is 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 Bank unless the loans are secured by marketable obligations of designated
amounts. Further, such secured loans and investments by the Bank to or in the
Company or to or in any other affiliate is limited to 10% of the 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 Bank under the prompt
corrective action provisions of federal law.
Capital Standards
The Federal Reserve Board and the OCC have adopted risk-based minimum
capital guidelines 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, which are
recorded as off balance sheet items. Under these guidelines, 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 secures, to 100%
for assets with relatively high credit risk, such as business loans.
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
10
<PAGE>
(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.
Only a well-capitalized depository institution may accept brokered deposits
without prior regulatory approval. Under FDIC 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.
Federally supervised banks and savings associations are currently required
to report deferred tax assets in accordance with SFAS No. 109. See Note 8 of the
Notes to Consolidated Financial Statements. The federal banking agencies issued
final rules, effective April 1, 1995, which limit the amount of deferred tax
assets that are allowable in computing an institution's regulatory capital.
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, beginning on or before January 1,
1998, include in its risk-based capital ratio analysis charges for, and hold
capital against, general market risk of all positions held in its trading
account and of foreign exchange and commodity positions wherever located, as
well as against specific risk of debt and equity positions located in its
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 Bank 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. In September 1992, the federal
banking agencies issued uniform final regulations implementing the prompt
corrective action provisions of federal law.
11
<PAGE>
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.
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.
Safety and Soundness Standards
In July 1995, the federal banking agencies adopted final guidelines
establishing standards for safety and soundness. The guidelines set forth
operational and managerial standards relating to internal controls, information
systems and internal audit systems, loan documentation, credit underwriting,
interest rate exposure, asset growth and compensation, fees and benefits.
Guidelines for asset quality and earnings standards will be adopted in the
future. The guidelines establish the safety and soundness standards that the
agencies will use to identify and address problems at insured depository
institutions before capital becomes impaired. If an institution fails to comply
with a safety and soundness standard, the appropriate federal banking agency may
require the institution to submit a compliance plan. Failure to submit a
compliance plan or to implement an accepted plan may result in enforcement
action.
Premiums for Deposit Insurance
Federal law has established several mechanisms to increase funds to protect
deposits insured by the Bank Insurance Fund ("BIF") administered by the FDIC.
The FDIC is authorized to borrow up to $30 billion from the United States
Treasury; up to 90% of the fair market value of assets of institutions acquired
by the FDIC as receiver from the Federal Financing Bank; and from depository
institutions that are members of the BIF. Any borrowings not repaid by asset
sales are to be repaid through insurance premiums assessed to member
institutions. The result of these provisions is that the assessment rate on
deposits of BIF members could increase in the future. The FDIC also has
authority to impose special assessments against insured deposits.
The FDIC implemented a final risk-based assessment system, effective
January 1, 1994, under which an institution's premium assessment is based on the
probability that the deposit insurance fund will incur a loss with respect to
the institution, the likely amount of any such loss, and the revenue needs of
the deposit insurance fund. On August 8, 1995, the FDIC issued final regulations
adopting an assessment rate schedule for BIF members of 4 to 31 basis points
effective on June 1, 1995. On November 14, 1995, the FDIC further reduced
deposit insurance premiums to a range of 0 to 2 basis points effective for the
semi-annual period beginning January 1, 1996.
Under the risk-based assessment system, a BIF member institution such as
the Bank is categorized into one of three capital categories (well capitalized,
adequately capitalized, and undercapitalized) and one of three categories based
on supervisory evaluations by its primary federal regulator (in the Bank's case,
the FDIC). The three supervisory categories are: financially sound with only a
few minor weaknesses (Group A), demonstrates weaknesses that could result in
significant deterioration (Group B), and poses a substantial probability of loss
12
<PAGE>
(Group C). The capital ratios used by the FDIC to define well-capitalized,
adequately capitalized and undercapitalized are the same in the FDIC's prompt
corrective action regulations. The Bank was not required to pay a deposit
insurance premium for 1998.
In addition to the payment of deposit insurance assessments, depository
institutions are required to make quarterly assessment payments to the FDIC on
their BIF assessable deposits, which will be paid FICO to enable it to pay
interest and certain other expenses on bonds which it issued pursuant to the
Financing Institutions Reform, Recovery and Enforcement Act of 1989, as amended,
to facilitate the resolution of failed savings associations. Pursuant to the
Federal Home Loan Bank Act, FICO, with the approval of the FDIC, establishes
assessment rates based upon estimates of (i) expected operating expenses, case
resolution expenditures and income of FICO; (ii) the effect of assessments upon
members' earnings and capital; and (iii) any other factors deemed appropriate by
it. Assessment rates for 1998 were set at 1.2 basis points annually for
BIF-assessable deposits, subject to quarterly review and adjustment.
Community Reinvestment Act
The Bank is 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. The OCC and the Federal Reserve Board are required
to consider the level of CRA compliance when regulatory applications are
reviewed.
Interstate Banking and Branching
Under the Riegel-Neal Interstate Banking and Branching Efficiency Act of
1994, as amended (the "Interstate Act"), beginning one year after the date of
enactment, 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.
Factors Affecting Future Results
In addition to historical information, this Form 10-KSB 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 Bank's 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
13
<PAGE>
principles, policies or guidelines, and other economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices.
Item 2. Properties.
The principal executive office of the Company and the main office of the
Bank are located in leased space at 1627 K Street, N.W., Washington, D.C. 20006.
The Bank leases four other offices, located at 2905 M Street, N.W., Washington,
D.C. 20007; Union Station, 50 Massachusetts Avenue, N.E., Washington, D.C.
20002; 1604 17th Street, N.W., Washington, D.C. 20009 and 802 7th Street,:N.W.,
Washington, D.C. 20001. An additional ATM was opened in Union Station in 1989
and a third ATM was opened in Union Station in May 1994. Leases for these
facilities expire as follows:
Location Expiration of Lease
-------------------------------------------------------------------------
1627 K Street, N.W. 2002
2905 M Street, N.W. 2008
50 Massachusetts Avenue, N.E. 2009
Union Station ATM 2009
Union Station ATM 2009
802 7th Street, N.W. 2007
1604 17th Street, N.W. 2016
In 1999, the Company and the Bank incurred rental expense on leased real
estate of approximately $622,000. The Company considers all of the properties
leased by the Bank to be suitable and adequate for their intended purposes.
Item 3. Legal Proceedings
Although the Bank, from time to time, is involved in various legal
proceedings in the normal course of business, there are no material legal
proceedings to which the Company or the Bank is a party or to which any of their
property is subject, except for the matter discussed below.
On May 29,1998 a suit was filed in the Court of Chancery of the State of
Delaware by Rose Z. Thorman and Martha Burke as custodian for Holly McMackin,
Jake McMackin, Ashtyn Talley and Casey Talley against Marshall T. Reynolds,
Jeanne D. Hubbard, Robert H. Shell, Jr. and Ferris Baker Watts, Inc.,
defendants, and Abigail Adams National Bancorp, Inc., nominal defendant
asserting claims for individual, derivative and class action for: (1) breach of
fiduciary duties of loyalty and disclosure; (2) aiding and abetting breach of
fiduciary duties; and (3) tortious interference with economic and contractual
relations. The Company has hired Delaware counsel and is vigorously defending
this suit. A motion to dismiss this suit was filed on or before July 31, 1998 by
the Company and the stockholders/directors. The Court of Chancery has granted
the plaintiffs leave to file an amended compliant. The plaintiffs have agreed to
dismiss Ferris Baker Watts, Inc. from the state action. The Company is awaiting
the judge's ruling on the Motion to Dismiss.
On June 8, 1998 a second suit was filed in United States District Court,
District Court of Delaware by Rose Z. Thorman and Martha Burke, individually and
as custodian for Holly McMackin, Jake McMackin, Ashtyn Talley and Casey Talley
Plaintiffs against the Company, Nominal Defendant and Marshall T. Reynolds,
Jeanne D. Hubbard, Robert H. Shell, Jr. and Ferris Baker Watts, Inc. The federal
action is based on the same facts underlying the State action, and asserts both
derivative claims on behalf of the bank and individual claims on behalf of the
stockholders of the Bank. The complaint in the federal action alleges that
certain stockholders/directors of the Bank, and Marshall T. Reynolds, Jeanne D.
Hubbard, Robert H. Shell, Jr., as well as the investment banking firm, Ferris
Baker Watts, Inc. violated the Securities Exchange Act of 1934 (the "Exchange
Act") in soliciting proxies against the proposed merger between the Bank and
Ballston Bancorp, which was not approved by the shareholders at a special
14
<PAGE>
meeting held December 31, 1997, and also alleges that the individualstockholders
/directors violated the Exchange Act in soliciting proxies to remove four
directors of the Bank. The Company has hired Delaware counsel and is vigorously
defending this suit. The District Court has stayed the Federal action pending a
decision in the state action.
Management and the Board of Directors of the Company have reviewed the
above-described litigation and believe that it will prevail on the merits.
Consequently, the Company has not accrued for a potential adverse.
Item 4. Submission of Matters to a Vote of Security-Holders.
None
PART II
Item 5. Market for Registrant's Equity and Related Stockholder Matters.
(a) The Company's Common Stock is quoted on the Nasdaq Market under the
symbol AANB.
The following table sets forth the range of the high and low bid prices of
the Company's Common Stock for the prior eight calendar quarters and is based
upon information provided by Nasdaq.
<TABLE>
<CAPTION>
Prices of Common Stock
Dividends
High Low Paid
Calendar Quarter Ended(1)
<S> <C> <C> <C>
March 31, 1998 $11.50 $11.20 $.08
June 30, 1998 11.80 11.60 --
September 30, 1998 12.20 12.00 .08
December 31, 1998 14.20 13.60 .08
March 31, 1999 11.13 10.81 .10
June 30, 1999 13.63 12.88 .10
September 30, 1999 13.13 12.75 .10
December 31, 1999 10.75 10.13 .10
</TABLE>
(1) Common Stock market data gives effect to a five-for-four stock spilt in
the form of a stock dividend which took place on December 31, 1998.
(b) As of December 31, 1999, the Company had 632 stockholders of record.
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The Management's Discussion and Analysis is incorporated by reference to
the Company's Annual Report to Shareholders, which is filed as Exhibit 13
hereto.
Item 7. Financial Statements and Supplementary Data.
See Annual Report to Shareholders which is filed at Exhibit 14 hereto.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
On September 30, 1999, the Board of Directors of the Company determined to
change their outside accounting firm to Keller Bruner & Company, LLP from Arthur
Andersen LLP. During each of the past two years the opinion of Arthur Andersen
LLP did not contain any adverse opinion or a disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope, or accounting principles.
During the preceding two years,
15
<PAGE>
the Company did not have any disagreements with Arthur Andersen LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which, if not resolved to Arthur Andersen's
satisfaction would have caused it to make reference to the subject matter of the
disagreements in connection with its report. On September 30, 1999, the Board of
Directors retained Keller Bruner & Company, LLP.
PART III
The information called for by Items 9, 10, 11 and 12 is incorporated herein
by reference to the Registrant's definitive Proxy Statement for the 2000 Annual
Meeting of Stockholders to be filed within 120 days after the end of the fiscal
year covered by the Form 10-KSB.
Item 9. Directors and Executive Officers of the Registrant.
The table below sets forth certain information regarding the
composition of the Company's Board of Directors.
<TABLE>
<CAPTION>
Name Age Positions Held Since
-------------------------- ------------- -------------------------- ----------
<S> <C> <C> <C>
Kathleen Walsh Carr 53 President & Chief Executive Officer 1998
The Adams National Bank
George Cook 66 Director 1998
Jeanne D. Hubbard 51 Chairwoman, President 1995
& Chief Executive Officer
Abigail Adams National
Bancorp, Inc.
Marshall T. Reynolds 63 Director 1995
Robert L. Shell, Jr. 56 Director 1995
Marianne Steiner 45 Director 1998
Joseph L. Williams 55 Director 1998
Bonita A. Wilson 56 Director 1998
</TABLE>
The principal occupation during the past five years of each director of the
Company is set forth below. All directors and executive officers have held their
present positions for five years unless otherwise stated.
Kathleen Walsh Carr has been the President, Chief Executive Officer,
Director of The Adams National Bank and Director of the Company since 1998.
Previously she served as Senior Vice President and Chief Lending Officer of the
Bank from 1997. Ms. Carr has over 25 years of commercial banking experience with
most of her professional career spent in the areas of commercial lending. Prior
to joining The Adams National Bank in 1997, Ms. Carr was Senior Vice President
of NationsBank. Ms. Carr is a Member of the Board of Directors of Royco, Inc.
She is also a member of the Board of Washington Trustees of the Federal City
Council, the Greater Washington Board of Trade, the Board of Managers, and the
Board of Governors for the Washington Home and Hospice, and the Advisory Board
of So Others Might Eat, Inc.
A. George Cook is the Principal of George Cook & Co., Distinguished Fellow
of the Institute of Public Policy at George Mason University, and Chairman
Emeritus and retired Chief Executive Officer of Colonial Parking, Inc. Mr. Cook
is a member of the Urban Land Institute, Director and past Executive Committee
member of the Greater Washington Research Council and member and past Chairman
of the Board of the National Parking Association. He is a former Chair of the
National Policy Council, Past Board Member of the Girl Scouts of the USA, former
member of the City Council of the City of Alexandria and a former Chairman of
the Commission of Local Government for the Commonwealth of Virginia, former
member of the Board of Visitors of George Mason University and a former Vice
Chairman of the Virginia State Electoral Board.
16
<PAGE>
Jeanne Delaney Hubbard has been a Director of the Company and the Bank
since 1995, Chairwoman, President and Chief Executive Officer of the Company
since 1998 and Chairwoman of the Bank since 1998. Ms. Hubbard is the Director of
Risk Management for Premier Financial Bancorp, Inc., Georgetown, Kentucky and a
member of its Board of Directors. She is also a Director of Summit State Bank,
Ronhert Park, California and First Sentry Bank, Huntington, West Virginia. She
has held executive officer positions at First Sentry Bank, First Guaranty Bank,
Hammond, Louisiana and First Bank of Ceredo, West Virginia. She is active with
the River Cities United Way, most recently serving on the Citizens Review Panel,
a past president of the C-K Rotary Club and former volunteer with Junior
Achievement at C-K High School. She is a graduate of Purdue University and holds
a Masters Degree from Marshall University.
Marshall T. Reynolds is the Chairman of the Board, President and Chief
Executive Officer of Champion Industries, Inc., a holding company for commercial
printing and office products companies, a position he has held since 1992. Mr.
Reynolds became Chairman of the Board of Premier Financial Bancorp in 1996. In
addition, Mr. Reynolds became Chairman of the Board of First Guaranty Bank
during 1996. From 1964 to 1993, Mr. Reynolds was President and Manager of The
Harrah and Reynolds Corporation (predecessor to Champion Industries, Inc.). From
1983 to 1993, he was Chairman of the Board of Banc One, West Virginia
Corporation (formerly Key Centurion Bancshares, Inc.). Mr. Reynolds has served
as Chairman of The United Way of the River Cities, Inc. and Boys and Girls Clubs
of Huntington. Mr. Reynolds has been a Director of the Company and the Bank
since November 1995.
Robert L. Shell, Jr. is the Chairman and Chief Executive Officer of Guyan
International, a privately held holding company for manufacturing and service
companies, a position he has held since 1985. Mr. Shell has been a Director of
First Guaranty Bank, Hammond, Louisiana since 1993; of First State Bancorp, Inc.
since February 1994; and of First Sentry Bank, Huntington, West Virginia since
1996. Mr. Shell is a Board Member of the Huntington Boys and Girls Club, the
Cabell Huntington Hospital Foundation and the West Virginia Foundation for
Independent Colleges. Mr. Shell was formerly the Chairman of the Marshall
Artists Series. Mr. Shell has been a Director of the Company and the Bank since
October 1995.
Marianne Steiner is the Principal of Larkspur Marketing, which she founded
in 1991 after serving MCI Communications Corporation as Director of Marketing.
Ms. Steiner holds a joint M.E. and M.S. degree from the Harvard Business School
and Graduate School of Arts and Sciences in Information Sciences and Applied
Mathematics, and a Bachelor of Science degree in Computer Science from the
University of Miami. Ms. Steiner serves as a Trustee and Member of the Governing
Board of Beauvoir School.
Joseph L. Williams is the Chairman and Chief Executive Officer of Basic
Supply Company, Inc., which he founded in 1977. Mr. Williams was one of the
organizers and is a Director of First Sentry Bank, Huntington, West Virginia.
Mr. Williams is a Director of the Huntington Industrial Corporation, unlimited
Futures, Inc. (A small business incubator), and the West Virginia Capital
Corporation. Mr. Williams is a Member of the National Advisory Council of the
United States Small Business Administration, the Huntington Municipal
Development Authority and is Treasurer of the Huntington Museum of Art. Mr.
Williams is a former Mayor and City Councilman of the City of Huntington. Mr.
Williams is a graduate of Marshall University and a Member of the Executive
Committee of its College of Business Advisory Board.
Bonita A. Wilson owns and operates her own retail business and is a
consultant to other businesses. Ms. Wilson was a Retail Management Executive for
over 25 years with Garfinkles, Bloomingdales and the Hecht Company. Ms. Wilson
has served as a Director of Dart Group Corporation, Trak Auto Corporation,
Shoppers Food Warehouse Corp. and Crown Books Corporation from 1991 through
1997. Ms. Wilson attended the State University of New York at New Paltz. Ms.
Wilson also served on the Advisory Board of Wedgewood Capital Management and is
President of the Lower Eastern Shore Heritage Committee.
17
<PAGE>
Item 10. Executive Compensation.
The following table sets forth the cash compensation paid by the Bank for
services during the year ended December 31, 1999 to each of the Company's and
Bank's Chief Executive Officer. Ms. Hubbard and Ms. Carr became the Chief
Executive Officer of the Company and Bank, respectively, in 1999 and
consequently no compensation information is provided for the prior two fiscal
years. Other than Ms. Carr, no person made in excess of $100,000 during the year
ended December 31, 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
------------------- ------------
Securities All Other(1)(2)
Year Salary Bonus/Other Underlying Option Compensation
------ ------ ------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Jeanne D. Hubbard 1999 $ 37,937 $ -- $1,279 (1) $ --
Chairwoman of the Board, President 1998 $ 60,603 $ -- $1,279 (1) $ --
and Chief Executive Officer of the
Company
Kathleen W. Carr 1999 $145,589 $ -- $1,250 (2 $ --
President and Chief Executive Officer1998 $125,399 $ -- $1,250 (2) $ --
of the Bank
- ------------------------------
</TABLE>
(1) Represents options to purchase shares granted under the Directors Stock
Option Plan. (2) Represents options to purchase shares granted under the 1996
Employee Incentive Stock Option Plan.
Non-Qualified Stock Option Plan
No options have been granted to date under the Company's Non-Qualified
Stock Option Plan (the "Plan"). A total of 112,500 shares of the Company's
Common Stock are authorized for issuance under the Plan, in which officers of
the Company and the Bank who have been employed for a least one year are
eligible to participate. The option exercise price of any options granted under
the Plan will equal 100% of the book value of the shares as of the date of
grant. Any options granted under the Plan will become exercisable on a
cumulative basis at a rate of 25% per year during the period of four years after
the grant; provided, however that the first 25% will not become exercisable
until the expiration of six months after the date of the grant.
Employee Incentive Stock Option Plan
On January 23, 1996, the Board of Directors of the Company approved a
qualified Employee Incentive Stock Option Plan (the "Employee Plan"). A total of
12,483 shares of the Company's Common Stock are authorized for issuance under
the Employee Plan, in which key employees of the company and the Bank are
eligible to participate. On January 23, 1996, all such options were granted at
an exercise price of 100% of fair market value at the date of grant, or $6.34.
Options granted under the Employee Plan are immediately exercisable and expire
not later than ten years following the date of grant.
1996 Employee Incentive Stock Option Plan
On November 19, 1996, the Board of Directors of the Company approved a
qualified 1996 Employee Incentive Stock Option Plan covering key employees (the
"1996 Employee Plan"). A total of 17,740 shares of the Company's Common Stock
are authorized for issuance under the 1996 Employee Plan, in which key employees
of the Company and the Bank are eligible to participate. On November 19, 1996,
15,859 options were granted at an exercise price of 100% of fair market value,
or $8.59. On January 21, 1997, 1,250 options were granted at an exercise price
of 100% of fair market value, or $9.37. On February 18, 1997, 631 options were
granted at an exercise price of 100% of fair market value, or $9.46. Options
granted under the 1996 Employee Plan are fully vested. Options under the 1996
Employee Plan expire not later than ten years after the date of grant.
18
<PAGE>
Directors Stock Option Plan
On January 23, 1996, the Board of Directors of the Company approved a
nonqualified Directors Stock Option Plan (the "Directors Plan"). A total of
8,036 shares of the Company's Common Stock are authorized for issuance under the
Directors Plan. On January 23, 1996, all such options were granted at an
exercise price of 85% of fair market value at the date of grant, or $5.39.
However, in the event of death or disability, options expire after one year.
1996 Directors Stock Option Plan
On November 19, 1996, the Board of Directors of the Company approved a
nonqualified Directors Stock Option Plan (the "1996 Directors Plan"). A total of
9,900 shares of the Company's Common Stock are authorized for issuance under the
1996 Directors Plan. On November 19, 1996, all such options were granted at an
exercise price of 85% of fair market value, or $7.30. Options expire after ten
years from the date of grant, or immediately upon leaving the Board. However, in
the event of death or disability, options expire after two years.
2000 Stock Option Plan
On February 15, 2000, the Board of Directors of the Company approved a
non-statutory stock option plan (the "Stock Option Plan") to non-employee
directors and key employees. A total of 20,000 shares of the Company's Common
Stock are authorized for issuance under the Stock Option Plan. All such options
were granted at 90% of fair market value at the date of grant, or $7.88. The
options vest in three equal installments, with the first installment becoming
exercisable on February 15, 2000, and succeeding installments on each February
15 thereafter. Options expire after ten years from the date of grant or after
two years upon leaving the Company or Board.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
========================================================================================================================
Number of Securities
Underlying Value of Unexercised
Name Shares Acquired Value Realized(1) Unexercised In-The-Money Options
Upon Exercise Options at Fiscal atFiscal Year-End(2)
Year-End
------------------------------------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
------------------------------------------
<S> <C> <C> <C> <C>
Jeanne D. Hubbard N/A N/A 1,279/-- $2,353/--
Kathleen W. Carr N/A N/A 1,250/-- $831/--
</TABLE>
(1) Equals the difference between the aggregate exercise price of the
options exercised and the aggregate fair market value of the shares of Common
Stock received upon exercise computed using the price of the Common Stock as
quoted on the Nasdaq Small Cap Market at the time of the exercise. (2)Equals the
difference between the aggregate exercise price of such options and the
aggregate fair market value of the shares of Common Stock that would be received
upon exercise, assuming such exercise occurred on December 31, 1999, at which
date the closing price of the Common Stock as quoted on the Nasdaq SmallCap
Market was $10.125.
19
<PAGE>
Employee Stock Ownership Plan with 401(k) Provisions
On April 6, 1996, the Company's and the Bank's Board of Directors adopted
an employee stock ownership plan with 401(k) provisions ("ESOP"). The ESOP was
amended effective as of January 1, 1999 to modify certain vesting provisions.
The ESOP replaced the Bank's former 401(k) Plan. Employees of the Bank who are
at least 21 years of age and who have completed one year of service are eligible
to participate. The Company submitted an application to the Internal Revenue
Service for a letter of determination as to the tax-qualified status of the
ESOP, and received a favorable letter of determination. The ESOP may be amended
or terminated at any time by the Bank. The ESOP is to be funded by contributions
made by the Bank in cash or shares of the Company's Common Stock. On July 17,
1996, the ESOP borrowed $218,750 in funds from the Company which was an amount
sufficient to purchase 31,250 shares of Common Stock. This loan is secured by
the shares of Common Stock purchased and earnings thereon. Shares purchased with
such loan proceeds will be held in a suspense account for allocation, as the
loan is repaid, among participants who are eligible to share in the Bank's
contribution for the year. Dividends paid on allocated shares may be paid to
participants or used to repay the ESOP loan. Dividends on unallocated shares are
expected to be used to repay the ESOP loan.
Participants may elect to contribute a percentage of their salary, which
amount may not be less than 1% nor more than 15% of the participant's annual
salary up to $10,000 for 1997. In addition, the Bank may make a discretionary
matching contribution equal to one-half of the percentage of the 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. Contributions by
the Bank and shares released from the suspense account will be allocated among
participants on the basis of their annual wages subject to federal income tax
withholding, plus amounts withheld under certain qualified plans. Each
participant is immediately vested in his or her contributions, the Bank's
matching contributions and the Bank's initial discretionary contribution made
during 1996. Each participant will begin to vest in his or her interest in the
Bank's future discretionary contributions to the ESOP after one year of service
and will be fully vested upon three years or service. Benefits are payable upon
a participant's retirement, death, disability or separation from service, in a
single lump-sum payment or in installments. Distributions at retirement will be
in the form of cash or shares of Common Stock or both. In addition, the
participant or beneficiary has certain put rights in the event that the Common
Stock distributed cannot be readily sold.
The Trustee of the ESOP will vote all shares of Common Stock held by it as
part of the ESOP assets, provided that a participant or beneficiary will be
entitled to direct the Trustee as to the manner in which voting rights are to be
exercised, with respect to shares of Common Stock allocated to the participant,
in connection with certain corporate transactions as described in the ESOP.
During 1999, the Company made matching cash contributions to the ESOP of
$36,600. No discretionary contributions were made during 1999.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
Holders of record of the Company's common stock, par value $.01 per share
(the "Common Stock"), as of the close of business on April 25,2000 (the "Record
Date") are entitled to one vote for each share then held. As of the Record Date,
the Company had 2,086,753 shares of Common Stock issued and outstanding.
Persons and groups who beneficially own in excess of five percent of the
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC") regarding such ownership pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"). The following table sets forth, as of
April 25, 2000, the shares of Common Stock beneficially owned by named executive
officers individually, by executive officers and directors as a group and by
each person who was the beneficial owner of more than five percent of the
Company's outstanding shares of Common Stock.
20
<PAGE>
<TABLE>
<CAPTION>
Amount of Shares
Owned and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owner Ownership Outstanding
-------------------- ------------------ --------------------
<S> <C> <C>
Shirley A. Reynolds 431,868 (1)(2) 20.9%
1130 13th Avenue
Huntington, WV 25701
Barbara W. Beymer 48,750 (1) 2.4%
214 North Boulevard West
Huntington, WV 25701
Deborah P. Wright 101,250 (3) 4.9%
1517 North Boulevard West
Flatwoods, KY 41139
Thomas W. Wright 26,250 (1), (3) 1.3%
1517 North Boulevard West
Flatwoods, KY 41139
Kathleen Walsh Carr 3,542 (4)(10) *
George Cook 2,067 (11) *
Jeanne D. Hubbard 10,071 (1)(5)(9)(10) *
Marshall T. Reynolds 283,216 (1)(2)(6)(9)(11) 13.7%
Robert L. Shell, Jr. 83,946 (1)(5)(7)(8)(9)(11) 4.0%
Marianne Steiner 917 (11) *
Joseph L. Williams 1,317 (11) *
Bonita A. Wilson 417 (11) *
</TABLE>
All directors and executive officers as a group (8) persons 385,493 18.2%
- ---------------------- *Less than 1% (1) Based upon Amendment No. 4 to Schedule
13D dated March 11, 1998, Marshall T. Reynolds, Shirley A. Reynolds, Robert L.
Shell, Jr., Robert H. Breymer, Thomas W. Wright, Deborah P. Wright and Jeanne D.
Hubbard (2) Marshall T. Reynolds and Shirley A. Reynolds share voting and
dispositive power with respect to 244,368 shares owned jointly. An additional
37,500 shares are held by a dependent child. (3) Thomas W. Wright and Deborah P.
Wright share voting and dispositive power with respect to 26,250 shares owned
jointly. (4) Includes options to acquire 1,250 shares of Common Stock. (5)
Includes options to purchase 289 shares granted to Ms. Hubbard and Mr. Shell
under the Directors Stock Option Plan. See "Executive Compensation--Directors
Stock Option Plan." (6) Includes options to purchase 191 shares granted to Mr.
Reynolds under the Directors Stock Option Plan. See "Executive
Compensation--Directors Stock Option Plan." (7) Mr. Shell's shares include 7,500
shares transferred by gift to his wife. (8) Robert L. Shell, Jr. shares voting
and dispositive power with respect to 25,000 shares owned jointly with his wife,
Lena Ji Shell.
21
<PAGE>
(9) Includes options to purchase 990 shares granted to each director under the
1996 Directors Stock Option Plan. (10) Includes vested options to purchase 1,167
shares granted under the 2000 Stock Option Plan. (11) Includes vested options to
purchase 167 shares granted under the 2000 Stock Option Plan.
Item 12. Certain Relationships and Related Transactions.
The Bank intends that all transactions between the Bank and its executive
officers, directors, holders of 10% or more of the shares of any class of its
common stock and affiliates thereof, will contain terms no less favorable to the
Bank than could have been obtained by it in arm's-length negotiations with
unaffiliated persons and will be approved by a majority of independent outside
directors of the Bank not having any interest in the transaction. During the
year ended December 31, 1999, the Bank had no loans outstanding to directors or
executive officers which were made on preferential terms.
Item 13.Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 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)
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) (4)
4.1.2 First Amendment dated April 20, 1995 between the Company
and The First National Bank of Maryland, as Rights Agent (5)
10.1 Non-qualified Stock Option Plan, as amended (6)
10.2 Employee Incentive Stock Option Plan and Agreement (7)
10.3 Directors Stock Option Plan and Agreement (8)
10.4 Non-Qualified Stock Option Agreement (9)
10.5 1996 Employee Incentive Stock Option Plan and Agreement (10)
10.6 1996 Directors Stock Option Plan and Agreement (11)
10.7 Amendment to The Adams National Bank Employee Stock Ownershi
Plan with 401(k) provisions, dated February 18, 1997 (12)
10.7.1 Second Amendment to The Adams National Bank Employee Stock
Ownership Plan with 401(k)Provisions
10.8 Lease Agreement dated November 1, 1992 between Chase Manhattan
Bank, N.A. as Trustee and The Adams National Bank (14)
22
<PAGE>
10.9 Lease Agreement dated November I, 1992 between Chase Manhattan
Bank, N.A. as Trustee and The Adams National Bank (15)
10.10 Lease Agreement dated April 21, 1988 between Union Station
Joint Venture, Ltd. and The Adams National Bank (16)
10.11 Lease Agreement dated April 21, 1989, as amended on August 1,
1989 between Union Station Joint Venture, Ltd. and The Adams
National Bank (17)
10.12 Amendment dated December 20, 1993 to Lease Agreement dated
April 21, 1989, as amended on August 1, 1989 between Union
Station Joint Venture, Ltd. and The Adams National Bank (18)
10.13 Lease Agreement dated December 20, 1993 between Union Station
Joint Venture,~Ltd., and The Adams National Bank (19)
10.14 Sublease Agreement dated September 1, 1981, as amended
September 1, 1984, between 2909 M Associates and The Adams
National Bank (20)
10.15 Lease Agreement dated March 6, 1996 between 1604 17th Street
Limited Partners and The Adams National Bank (21)
10.16 Lease Agreement dated January 8, 1997 between Riverdale
International, Inc. and The Adams National Bank (22)
10.17 Agreement for Information Technology Services between
Electronic Data Systems Corporation and The Adams National
Bank (23)
10.17.1 Amendment to Agreement for Information Technology Services
between Electronic Data Systems Corporation and The Adams
National Bank
10.18 Special Program Financial Services Agreement dated December
30, 1993 between IBAA Bancard,Inc. and The Adams National Bank
(24)
10.19 Deposit Insurance Transfer and Asset Purchase Agreement dated
as of May 1, 1992 by and among the Federal Deposit Insurance
Corporation as Receiver of Metropolitan Bank, N.A.,the Federal
Deposit Insurance Corporation and The Adams National Bank (25)
10.20 Asset Pool Proposal Form and the Asset Pool Sale Agreement
dated as of July 6, 1993 by and among the Federal Deposit
Insurance Corporation as Receiver of City National Bank,
the Federal Deposit Insurance Corporation and The Adams
National Bank (26)
10.21 Agreement, dated April 20, 1995 between the Company and
Marshall T. Reynolds (27)
10.22 Employment Agreement between the Bank and Kate Walsh Carr
10.23 Grantor Trust of Abigail Adams National Bancorp, Inc. dated
March 4, 1998
10.24 Grantor Trust of The Adams National Bank dated March 4, 1998
13 Annual Report to Shareholders
21 Subsidiaries of the Registrant (28)
27 Financial Data Schedule for Bank Holding Companies
23
<PAGE>
- ----------------------------
(1) Incorporated by reference to Exhibit 3 of 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 of Amendment No. 2 to
Form SB-2 filed July 9, 1996.
(3) Incorporated by reference to Exhibit 3 of the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1987.
(4) Incorporated by reference to Exhibits 1-3 of the Company's
Registration Statement on Form 8-A dated April 12, 1994.
(5) Incorporated by reference to Exhibit 4 to the Company's
Registration Statement on Form 8-K/A
dated April 21, 1995.
(6) Incorporated by reference to Exhibit l0(b) of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1987 and Exhibit l0(i) of the Company's Annual Report on
Form 10K for fiscal year ended December 31, 1989.
(7) Incorporated by reference to Exhibit 10.2.2 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
(8) Incorporated by reference to Exhibit 10.2.3 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
(9) Incorporated by reference to Exhibit 10.2.4 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
(10) Incorporated by reference to Exhibit 10.5 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
(11) Incorporated by reference to Exhibit 10.6 of the Company's
Annual Report on Form10-K for the fiscal year ended
December 31, 1996.
(12) Incorporated by reference to Exhibit 10.7 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
(14) Incorporated by reference to Exhibit l0(d) of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992.
(15) Incorporated by reference to Exhibit l0(e) of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992.
(16) Incorporated by reference to Exhibit l0(f) of the Company's
Quarterly Report on Form10-Q for the quarter ended
September 30, 1988.
(17) Incorporated by reference to Exhibit l0(g) of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1989.
(18) Incorporated by reference to Exhibit 10.7.2 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.
(19) Incorporated by reference to Exhibit 10.8 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.
24
<PAGE>
(20) Incorporated by reference to Exhibit 10.9 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994.
(21) Incorporated by reference to Exhibit 10.10 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
(22) Incorporated by reference to Exhibit 10.17 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
(23) Incorporated by reference to Exhibit 10 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992.
(24) Incorporated by reference to Exhibit 10.1 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994.
(25) Incorporated by reference to Exhibit 10 of the Company's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992.
(26) Incorporated by reference to Exhibit 10 of the Company s
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992.
(27) Incorporated by reference to Exhibit 5 of the Company's
Registration Statement on Form 8-K/A, dated April 21, 1995.
(28) Incorporated by reference to Exhibit 22 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1987.
(b) One report on Form 8-K were filed during the last
quarter of the fiscal year ended December 31, 1999
On October 1, 1999 the Company filed a current report
on Form 8-K to report its change of accountants from
Arthur Andersen, LLP to Keller Bruner & Company, LLP.
25
<PAGE>
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 undersized, "hereunto duly
authorized.
ABIGAIL ADAMS NATIONAL BANCORP, INC.
Date: May 5, 2000 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 Schafke
-------------------- ---------------------
Jeanne D. Hubbard, Chairwoman Karen Schafke, Principal Financial
of the Board and Chief and Accounting Officer
Executive Officer
Date: May 5, 2000 Date: May 5, 2000
By: /s/A. George Cook By: /s/Marshall T. Reynolds
------------------ -----------------------
A.George Cook, Director Marshall T. Reynolds, Director
Date: May 5, 2000 Date: May 5, 2000
By: /s/Robert L. Shell, Jr. By: /s/Marianne Steiner
------------------------- -------------------
Robert L. Shell, Jr., Director Marianne Steiner, Director
Date: May 5, 2000 Date: May 5, 2000
By: /s/Joseph L. Williams By: /s/Bonita A. Wilson
-------------------------- -------------------
Joseph L. Williams, Director Bonita A. Wilson, Director
Date: May 5, 2000 Date: May 5, 2000
By: /s/Kathleen W. Carr
Kathleen W. Carr, Director
Date: May 5, 2000
26
<PAGE>
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)
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) (4)
4.1.2 First Amendment dated April 20, 1995 between the Company and The
First National Bank of Maryland, as Rights Agent (5)
10.1 Non-qualified Stock Option Plan, as amended (6)
10.2 Employee Incentive Stock Option Plan and Agreement (7)
10.3 Directors Stock Option Plan and Agreement (8)
10.4 Non-Qualified Stock Option Agreement (9)
10.5 1996 Employee Incentive Stock Option Plan and Agreement (10)
10.6 1996 Directors Stock Option Plan and Agreement (11)
10.7 Amendment to The Adams National Bank Employee Stock Ownership
Plan with 401(k) provisions, dated February 18, 1997 (12)
10.7.1 Second Amendment to The Adams National Bank Employee Stock
Ownership Plan with 401(k) Provisions
10.8 Lease Agreement dated November 1, 1992 between Chase Manhattan
Bank, N.A. as Trustee and The Adams National Bank (14)
10.9 Lease Agreement dated November I, 1992 between Chase Manhattan
Bank, N.A. as Trustee and The Adams National Bank (15)
10.10 Lease Agreement dated April 21, 1988 between Union Station Joint
Venture, Ltd. and The Adams National Bank (16)
10.11 Lease Agreement dated April 21, 1989, as amended on August 1,
1989 between Union Station Joint Venture, Ltd. and The Adams
National Bank (17)
10.12 Amendment dated December 20, 1993 to Lease Agreement dated April
21, 1989, as amended on August 1, 1989 between Union Station
Joint Venture, Ltd. and The Adams National Bank (18)
10.13 Lease Agreement dated December 20, 1993 between Union Station
Joint Venture,Ltd., and The Adams National Bank (19)
27
<PAGE>
10.14 Sublease Agreement dated September 1, 1981, as amended September
1, 1984, between 2909 M Associates and The Adams National Bank
(20)
10.15 Lease Agreement dated March 6, 1996 between 1604 17th Street
Limited Partners and The Adams National Bank (21)
10.16 Lease Agreement dated January 8, 1997 between Riverdale
International, Inc. and The Adams National Bank (22)
10.17 Agreement for Information Technology Services between Electronic
Data Systems Corporation and The Adams National Bank (23)
10.17.1 Amendment to Agreement for Information Technology Services
between Electronic Data Systems Corporation and The Adams
National Bank
10.18 Special Program Financial Services Agreement dated December 30,
1993 between IBAA Bancard, Inc. and The Adams National Bank (24)
10.19 Deposit Insurance Transfer and Asset Purchase Agreement dated as
of May 1, 1992 by and among the Federal Deposit Insurance
Corporation as Receiver of Metropolitan Bank, N.A., the Federal
Deposit Insurance Corporation and The Adams National Bank (25)
10.20 Asset Pool Proposal Form and the Asset Pool Sale Agreement dated
as of July 6, 1993 by and among the Federal Deposit Insurance
Corporation as Receiver of City National Bank, the Federal
Deposit Insurance Corporation and The Adams National Bank (26)
10.21 Agreement, dated April 20, 1995 between the Company and Marshall
T. Reynolds (27)
10.22 Employment Agreement between the Bank and Kate Walsh Carr
10.23 Grantor Trust of Abigail Adams National Bancorp, Inc. dated
March 4, 1998
10.24 Grantor Trust of The Adams National Bank dated March 4, 1998
21 Subsidiaries of the Registrant (28)
27 Financial Data Schedule for Bank Holding Companies
- ----------------------------
(1) Incorporated by reference to Exhibit 3 of 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 of Amendment No. 2 to
Form SB-2 filed July 9, 1996.
(3) Incorporated by reference to Exhibit 3 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987.
(4) Incorporated by reference to Exhibits 1-3 of the Company's
Registration Statement on Form 8-A dated April 12, 1994.
(5) Incorporated by reference to Exhibit 4 to the Company's
Registration Statement on Form 8-K/A dated April 21, 1995.
28
<PAGE>
(6) Incorporated by reference to Exhibit l0(b) of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1987 and Exhibit l0(i) of the Company's Annual Report on
Form 10K for fiscal year ended December 31, 1989.
(7) Incorporated by reference to Exhibit 10.2.2 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1995.
(8) Incorporated by reference to Exhibit 10.2.3 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1995.
(9) Incorporated by reference to Exhibit 10.2.4 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1995.
(10) Incorporated by reference to Exhibit 10.5 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
(11) Incorporated by reference to Exhibit 10.6 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
(12) Incorporated by reference to Exhibit 10.7 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
(13) Reserved
(14) Incorporated by reference to Exhibit l0(d) of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1992.
(15) Incorporated by reference to Exhibit l0(e) of the Company's
Annual Report on Form 10-K for the fiscal year ended. December
31, 1992.
(16) Incorporated by reference to Exhibit l0(f) of the Company's
Quarterly Report on Form10-Q for the quarter ended September
30, 1988.
(17) Incorporated by reference to Exhibit l0(g) of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1989.
(18) Incorporated by reference to Exhibit 10.7.2 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993.
(19) Incorporated by reference to Exhibit 10.8 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993.
(20) Incorporated by reference to Exhibit 10.9 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1994.
(21) Incorporated by reference to Exhibit 10.10 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1995.
(22) Incorporated by reference to Exhibit 10.17 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
(23) Incorporated by reference to Exhibit 10 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992.
29
<PAGE>
(24) Incorporated by reference to Exhibit 10.1 of the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1994.
(25) Incorporated by reference to Exhibit 10 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June
30, 1992.
(26) Incorporated by reference to Exhibit 10 of the Company' s
Quarterly Report on Form 10-Q for the quarter ended June
30, 1992.
(27) Incorporated by reference to Exhibit 5 of the Company's
Registration Statement on Form 8-KA, dated April 21, 1995.
(28) Incorporated by reference to Exhibit 22 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1988.
(b) One report on Form 8-K were filed during the last
quarter of the fiscal year ended
December 31, 1999
On October 1, 1999 the Company filed a current report
on Form 8-K to report its change of accountants from
Arthur Andersen LLP to Keller Bruner & Company, LLP.
30
<PAGE>
