UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2004
-----------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ---------------------- to ----------------------
Commission File Number: 0-10971
-------------
ABIGAIL ADAMS NATIONAL BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 52-1508198
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1130 Connecticut Ave., NW, Washington, DC 20036
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(Address of principal executive offices) (Zip Code)
202.772.3600
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(Registrant's telephone number, including area code)
n/a
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. X Yes No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of August 12, 2004, registrant had outstanding 3,020,913 shares of
common stock.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
- -------------------------------- ----
Item 1- Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Income 2
Condensed Consolidated Statements of Changes in Stockholders' Equity 3
Condensed Consolidated Statements of Cash Flows 4
Notes to Condensed Consolidated Financial Statements 5
Item 2 - Management's Discussion and Analysis 6
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 14
Item 4 - Controls and Procedures 14
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 14
Item 2 - Changes in Securities, Use of Proceeds and Issuer Purchases
of Equity Securities 14
Item 3 - Defaults Upon Senior Securities 14
Item 4 - Submission of Matters to Vote of Security Holders 14
Item 5 - Other Information 15
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 15
Exhibit 31.1 16
Exhibit 31.2 17
Exhibit 32 18
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
June 30, 2004 (unaudited) and December 31, 2003
June 30, 2004 December 31, 2003
----------------- -----------------
Assets
Cash and due from banks $ 9,498,256 $ 9,746,854
Federal funds sold 9,136,000 8,690,315
Interest-bearing deposits in other banks 10,407,030 10,130,699
Investment securities available for sale at fair value 32,180,254 30,456,229
Investment securities held to maturity (market values of $11,073,455
and $13,901,669 for 2004 and 2003, respectively) 11,338,766 13,961,384
Loans 163,278,157 156,034,227
Less: allowance for loan losses (2,307,051) (2,119,448)
------------- -------------
Loans, net 160,971,106 153,914,779
------------- -------------
Premises and equipment, net 1,376,876 1,475,535
Other assets 3,756,112 3,530,000
------------- -------------
Total assets $ 238,664,400 $ 231,905,795
============= =============
Liabilities and Stockholders' Equity
Liabilities:
Deposits
Noninterest-bearing deposits $ 65,426,941 $ 56,828,660
Interest-bearing deposits 136,179,207 135,927,747
------------- -------------
Total deposits 201,606,148 192,756,407
Short-term borrowings 3,505,222 5,390,326
Long-term debt 9,579,657 10,030,117
Other liabilities 924,804 853,863
------------- -------------
Total liabilities 215,615,831 209,030,713
------------- -------------
Commitments and contingencies (Note 2)
Stockholders' equity:
Common stock, $0.01 par value, authorized 5,000,000 shares; issued
3,030,783 shares in 2004 and 3,030,783 shares in 2003; outstanding
3,014,343 shares in 2004 and 3,014,343 shares in 2003 30,308 30,308
Additional paid-in capital 17,241,143 17,241,143
Retained earnings 6,474,222 5,578,431
Less: Treasury stock, 16,440 shares in 2004 and 2003, at cost (98,349) (98,349)
Accumulated other comprehensive income (loss) (598,755) 123,549
------------- -------------
Total stockholders' equity 23,048,569 22,875,082
------------- -------------
Total liabilities and stockholders' equity $ 238,664,400 $ 231,905,795
============= =============
See Notes to Condensed Consolidated Financial Statements
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
For the Periods Ended June 30, 2004 and 2003
(Unaudited)
For the three months ended For the six months ended
June 30, June 30,
------------------------- -------------------------
2004 2003 2004 2003
------------- ----------- ------------ -----------
Interest Income
Interest and fees on loans $2,807,110 $2,685,729 $5,556,738 $5,467,721
Interest and dividends on investment securities 504,755 336,766 1,018,094 664,159
Other interest income 19,209 49,982 42,011 75,947
---------- ---------- ---------- ----------
Total interest income 3,331,074 3,072,477 6,616,843 6,207,827
---------- ---------- ---------- ----------
Interest Expense
Interest on deposits 388,499 460,039 767,771 942,849
Interest on short-term borrowings 4,975 12,411 11,314 28,532
Interest on long-term debt 71,245 79,082 144,328 99,547
---------- ---------- ---------- ----------
Total interest expense 464,719 551,532 923,413 1,070,928
---------- ---------- ---------- ----------
Net interest income 2,866,355 2,520,945 5,693,430 5,136,899
Provision for loan losses 105,000 311,065 210,000 381,065
---------- ---------- ---------- ----------
Net interest income after provision for loan 2,761,355 2,209,880 5,483,430 4,755,834
losses
---------- ---------- ---------- ----------
Noninterest income
Service charges on deposit accounts 408,951 425,066 815,670 844,256
Gain on sale of investment securities 13,210 -- 40,265 29,252
Other income 34,406 52,795 55,863 124,280
---------- ---------- ---------- ----------
Total noninterest income 456,567 477,861 911,798 997,788
---------- ---------- ---------- ----------
Noninterest expense
Salaries and employee benefits 893,595 795,395 1,792,303 1,604,592
Occupancy and equipment expense 340,034 326,364 673,571 602,878
Professional fees 86,913 68,968 197,322 118,604
Data processing fees 132,799 112,114 264,324 222,328
Other operating expense 383,233 340,712 727,333 651,747
---------- ---------- ---------- ----------
Total noninterest expense 1,836,574 1,643,553 3,654,853 3,200,149
---------- ---------- ---------- ----------
Income before provision for income taxes 1,381,348 1,044,188 2,740,375 2,553,473
Provision for income taxes 550,261 413,542 1,090,997 1,020,324
---------- ---------- ---------- ----------
Net Income $ 831,087 $ 630,646 $1,649,378 $1,533,149
========== ========== ========== ==========
Earnings per share:
Basic $ 0.28 $ 0.21 $ 0.55 $ 0.51
Diluted $ 0.28 $ 0.21 $ 0.55 $ 0.51
Average common shares outstanding:
Basic 3,014,343 3,007,811 3,014,343 3,006,570
Diluted 3,025,901 3,023,380 3,026,188 3,022,533
Dividends per share: $ 0.125 $ 0.125 $ 0.25 $ 0.245
See Notes to Condensed Consolidated Financial Statements
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
Six Months Ended June 30, 2004 and 2003
(Unaudited)
Accumulated
Additional Other
Common Paid-in Retained Treasury Comprehensive
Stock Capital Earnings Stock Income (loss) Total
---------- ----------- ------------- ---------- ----------- ------------
Balance at December 31, 2002 $ 30,211 $ 17,185,310 $ 3,886,313 ($ 98,349) $ 188,356 $ 21,191,841
Comprehensive income:
Net income -- -- 1,533,149 -- -- 1,533,149
Change in net unrealized gain on investment
securitiesavailable for sale, net of taxes of -- -- -- -- 59,811 59,811
40,853 ------------
Total comprehensive income -- -- -- -- -- 1,592,960
-----------
Dividends declared ($0.245 per share) -- -- (726,512) -- -- (726,512)
Issuance of shares under Stock Option Programs 32 16,626 -- -- -- 16,658
-------- ------------ ------------ --------- --------- -----------
Balance at June 30, 2003 $ 30,243 $ 17,201,936 $ 4,692,950 ($ 98,349) $ 248,167 $ 22,074,947
======== ============ ============ ========= ========= ============
Balance at December 31, 2003 $ 30,308 $ 17,241,143 $ 5,578,431 ($ 98,349) $ 123,549 $ 22,875,082
Comprehensive income:
Net income -- -- 1,649,378 -- -- 1,649,378
Change in net unrealized loss on investment
services available for sale, net of taxes of -- -- -- -- (722,304) (722,304)
$(408,970) ------------
Total comprehensive income -- -- -- -- -- 927,074
------------
------------
Dividends declared ($0.25 per share) -- -- (753,587) -- -- (753,587)
-------- ------------ ------------ --------- --------- ------------
Balance at June 30, 2004 $ 30,308 $ 17,241,143 $ 6,474,222 ($ 98,349) ($598,755) $ 23,048,569
======== ============ ============ ========= ========= ============
See Notes to Condensed Consolidated Financial Statements
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2004 and 2003
(Unaudited)
2004 2003
------------- ---------------
Cash flows from operating activities:
Net income $1,649,378 $1,533,149
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses 210,000 381,065
Depreciation and amortization 150,462 145,526
Accretion of loan discounts and fees (121,535) (119,097)
Gain on sale of investment securities (40,265) (29,252)
Net discount (accretion)/premium amortization on investment securities 95,405 33,042
Decrease in other assets 267,244 311,318
Increase in other liabilities 70,942 201,017
------------- ---------------
Net cash provided by operating activities 2,281,631 2,456,768
------------- ---------------
Cash flows from investing activities:
Proceeds from maturities of investment securities held to maturity 2,000,000 11,000,000
Proceeds from maturities of investment securities available for sale -- 14,500,000
Proceeds from repayment of mortgage-backed securities held to maturity 606,568 680,560
Proceeds from repayment of mortgage-backed securities available for sale 798,571 1,288,951
Proceeds from the sale of investment securities available for sale 1,089,497 500,000
Purchase of investment securities held to maturity -- (10,499,375)
Purchase of investment securities available for sale (4,866,845) (23,000,805)
Net increase in interest-bearing deposits in other banks (276,331) (9,343,398)
Net (increase) decrease in loans (7,144,791) 5,699,212
Purchase of premises and equipment (51,803) (350,638)
------------- ---------------
Net cash used in investing activities (7,845,134) (9,525,493)
------------- ---------------
Cash flows from financing activities:
Net increase in transaction and savings deposits 6,960,817 7,201,067
Net increase (decrease) in time deposits 1,888,924 (4,676,225)
Net decrease in short-term borrowings (1,885,104) (1,595,715)
Repayment of Federal Home Loan Bank borrowings (450,460) (245,905)
Proceeds from Federal Home Loan Bank borrowings -- 10,000,000
Proceeds from issuance of common stock, net of expenses -- 16,658
Cash dividends paid to common stockholders (753,587) (726,512)
------------- ---------------
Net cash provided by financing activities 5,760,590 9,973,368
------------- ---------------
Cash and cash equivalents at beginning of year 18,437,169 15,976,161
------------- ---------------
Cash and cash equivalents at end of year $18,634,256 $18,880,804
============= ===============
Supplementary disclosures:
Interest paid on deposits and borrowings $949,244 $1,022,466
============= ===============
Income taxes paid $1,135,000 $1,020,000
============= ===============
See Notes to Condensed Consolidated Financial Statements
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
1. Basis of presentation
Abigail Adams National Bancorp, Inc. (the "Company") is the parent company of
The Adams National Bank (the "Bank"). As used herein, the term Company includes
the Bank, unless the context otherwise requires.
The Company prepares its consolidated financial statements on the accrual basis
and in conformity with accounting principles generally accepted in the United
States, the instructions for Form 10-Q, and regulation S-X. The accompanying
financial statements are unaudited except for the balance sheet at December 31,
2003, which was derived from the audited consolidated financial statements as
of that date. The unaudited information furnished herein reflects all
adjustments (consisting of normal recurring accruals) which are, in the opinion
of management, necessary to a fair statement of the results for the interim
periods presented. These statements should be read in conjunction with the
consolidated financial statements and accompanying notes included with the
Company's 2003 Annual Report to Stockholders, since they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States of America. Operating results for the six months
ended June 30, 2004 (unaudited) are not necessarily indicative of the results
that may be expected for the year ending December 31, 2004. Certain
reclassifications may have been made to amounts previously reported for 2003 to
conform with the 2004 presentation.
2. Contingent Liabilities
In the normal course of business, there are various outstanding commitments and
contingent liabilities, such as commitments to extend credit and standby
letters of credit that are not reflected in the accompanying consolidated
financial statements. No material losses are anticipated as a result of these
transactions. There were no material changes, since December 31, 2003.
3. Earnings per share
Basic earnings per share computations are based upon the weighted average
number of shares outstanding during the periods. Diluted earnings per share
computations are based upon the weighted average number of shares outstanding
during the period plus the dilutive effect of outstanding stock options and
stock performance awards. The following table provides a reconciliation between
the computation of basic EPS and diluted EPS:
For the 3 months For the 6 months
ended June 30 ended June 30
--------------------- ----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Weighted Average Shares 3,014,343 3,007,811 3,014,343 3,006,570
Effect of dilutive stock options 11,558 15,569 11,845 15,963
--------- --------- --------- ---------
Dilutive potential average common shares 3,025,901 3,023,380 3,026,188 3,022,533
========= ========= ========= =========
4. Stock-based compensation plans
At June 30, 2004, the Company has five stock-based compensation plans. The
Company continues to account for grants under its stock option plans based on
the recognition and measurement principals of APB Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations. There were no new
stock-based compensation plans issued during the periods presented.
5. Securities
The amortized cost and estimated fair value of investment securities to be held
to maturity and investment securities available for sale at June 30, 2004 and
December 31, 2003 are as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Basis Gains Losses Value
------------- ------------ -------------- -------------
June 30, 2004:
Investment Securities - available for
sale:
U.S. government agencies and
corporations $14,000,000 -- $ 387,910 $13,612,090
Mortgage-backed securities 7,078,447 9,005 228,503 6,858,949
Marketable equity securities 12,109,532 266,798 667,115 11,709,215
----------- ----------- ----------- -----------
Total $33,187,979 $ 275,803 $ 1,283,528 $32,180,254
=========== =========== =========== ===========
Investment Securities - held to
maturity:
U.S. government agencies and
corporations $ 9,500,000 -- 247,045 $ 9,252,955
Mortgage-backed securities 1,838,766 -- 18,266 1,820,500
----------- ----------- ----------- -----------
Total $11,338,766 -- $ 265,311 $11,073,455
=========== =========== =========== ===========
December 31, 2003:
Investment Securities - available for sale:
U.S. government agencies and corporations $12,000,000 $ 13,900 $ 123,760 $11,890,140
Mortgage-backed securities 7,897,502 17,049 94,937 7,819,614
Marketable equity securities 10,350,790 460,929 65,244 10,746,475
----------- ----------- ----------- -----------
Total $30,248,292 $ 491,878 $ 283,941 $30,456,229
=========== =========== =========== ===========
Investment Securities-held to maturity:
U.S. government agencies and corporations $11,499,462 $ 21,343 $ 76,860 $11,443,945
Mortgage-backed securities 2,461,922 331 4,529 2,457,724
----------- ----------- ----------- -----------
Total $13,961,384 $ 21,674 $ 81,389 $13,901,669
=========== =========== =========== ===========
The fair value of investment securities with unrealized losses by length of
time that the individual securities have been in a continuous loss position at
June 30, 2004, is presented in the following table:
Continuous unrealized losses existing for:
(Dollars in thousands) less than 12 months greater than 12 months Total
------------------------------------------------------------------------------------
Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized
Losses Losses Losses
------------------------------------------------------------------------------------
U.S. government agencies $22,865 $ 635 $ -- $ -- $22,865 $ 635
Mortgage-backed securities 5,074 90 2,893 157 7,967 247
Equity securities 7,429 667 -- -- 7,429 667
------- ------- ----------- ----------- ------- -------
Total $35,368 $ 1,392 $ 2,893 $ 157 $38,261 $ 1,549
======= ======= =========== =========== ======= =======
The unrealized losses that existed at June 30, 2004, are the result of market
changes in interest rates, since the securities' purchase. The unrealized
losses associated with these investments are considered temporary as the
Company has both the intent and ability to hold these investment securities for
a period of time sufficient to allow for any anticipated recovery in fair
value.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Abigail Adams National Bancorp, Inc. (the "Company") is the parent of The
Adams National Bank (the "Bank"), a national bank with six full-service
branches located in the greater metropolitan Washington, D.C. area. The
Company reports its financial results on a consolidated basis with the Bank.
The following analysis of financial condition and results of operations should
be read in conjunction with the Company's Consolidated Financial Statements and
Notes thereto for the year ended December 31, 2003.
Results of Operations
Overview
The Company recorded net income of $831,000 for the three months ended June 30,
2004, as compared to $631,000 for the second quarter of 2003. Diluted earnings
per share were $0.28 and $0.21 for the second quarter of 2004 and 2003,
respectively. The 31.8% increase in net income compared to the same
quarter last year was predominantly due to a 13.7% increase in net interest
income and a 66.2% decrease in provision for loan losses. The return on average
assets was 1.49% and the return on average equity was 14.38% for the second
quarter of 2004, compared to a return on average assets of 1.21% and a return
on average equity of 11.46% for the same period last year.
The Company recorded net income for the first six months of 2004 of $1,649,000,
or $0.55 per share diluted, for an annualized return on average assets of 1.49%
and an annualized return on average equity of 14.29%. Net income for the
current year increased 7.6%, as compared to the same period in 2003. In
comparison, net income for the six months ended June 30, 2003 was $1,533,000 or
$0.51 per share diluted, with a return on average assets of 1.52% and a return
on average equity of 14.18%. The increase in net income in 2004 compared to
2003 was predominately due to a 10.8% increase in net interest income combined
with a 44.9% decrease in the provision for loan losses and was offset by a
14.2% increase in nonoperating expenses. Book value per share was $7.65 at
June 30, 2004, an increase of $0.30 from the book value per share of $7.35 at
June 30, 2003. The key components of net income are discussed in the following
paragraphs.
Analysis of Net Interest Income
Net interest income, which is the sum of interest and certain fees generated by
earning assets minus interest paid on deposits and other funding sources, is
the principal source of the Company's earnings. Net interest income for the
quarter ended June 30, 2004 increased 13.7% to $2,866,000 from $2,521,000 for
the second quarter of 2003. The growth in net interest income was attributable
to the growth in average earning assets. Average loans increased 4.9% to
$159,491,000, compared to $152,097,000 for the second quarter of 2003. Average
investment securities increased 52.8% to $45,157,000 compared to $29,561,000
in the prior year. The yield on average assets was 6.28%, an increase of 10
basis points from the second quarter of 2003.
Average interest bearing liabilities increased 1.8% to $140,594,000 in the
second quarter of 2004 compared to the second quarter of 2003. The cost of
interest-bearing funds decreased 27 basis points to 1.33%, as compared to 1.60%
for the second quarter of 2003. The decrease in the cost of interest-bearing
funds was due to the repricing of existing deposits at lower interest rates.
Our net interest margin, which is net interest income as a percentage of
average interest-earning assets, was 5.40% for the second quarter of 2004, an
increase of 33 basis points from 5.07% for the second quarter of 2003. The net
interest spread, which is the difference between the average interest rate
earned on interest-earning assets and interest paid on interest-bearing
liabilities, was 4.95% for the second quarter of 2004, reflecting an increase
of 37 basis points from the 4.58% reported in the second quarter of 2003.
The net interest income for the first six months of 2004 totaled $5,693,000, an
increase of $556,000 or 10.8%, as compared to $5,137,000 for the same period in
2003. Average earning assets increased 9.1% to $211,957,000, as compared to
$194,214,000 reported last year. Earning assets were funded with a 4.7%
increase in the Company's average interest-bearing liabilities and a 24.0%
increase in noninterest-bearing deposits. The improvement in the net interest
income was a result of the increase in average earning assets combined with a
decrease in the cost of interest-bearing liabilities. The net interest spread
was 4.96% and the net interest margin was 5.40% for the first six months of
2004, reflecting an increase of 12 basis points in net interest spread and an
increase of 7 basis points in net interest margin, compared to the same period
in 2003.
The following table presents the average balances, net interest income and
interest yields/rates for the second quarter and the year-to-date periods of
2004 and 2003.
Distribution of Assets, Liabilities and Stockholders' Equity Yields and Rates
For the Three Months Ended June 30, 2004 and 2003
(Dollars in thousands)
2004 2003
------------------------------------- -----------------------------------
Interest Interest
Average Income/ Average Average Income Average
Balances Expense Rates Balances Expense Rates
---------- ---------- --------- ---------- ---------- ----------
Assets
Loans (1) $ 159,491 $ 2,807 7.06% $ 152,097 $ 2,686 7.08%
Investment securities 45,157 505 4.49% 29,561 337 4.57%
Federal funds sold 1,485 4 1.08% 10,375 28 1.08%
Interest-earning bank balances 6,677 15 .90% 7,377 21 1.14%
---------- -------- --------- --------
Total earnings assets 212,810 3,331 6.28% 199,410 3,072 6.18%
------- --------- --------- ------
Allowance for loan losses (2,232) (2,390)
Cash and due from banks 8,073 7,560
Other assets 4,920 4,626
--------- ---------
Total assets $ 223,571 $ 209,206
========= =========
Liabilities and Stockholders' Equity
Savings, NOW and money market
accounts $ 78,656 168 0.86% $ 73,687 199 1.08%
Certificates of deposit 48,765 221 1.82% 47,720 261 2.19%
Short term borrowings 3,458 5 0.58% 6,071 12 0.79%
Long-term debt 9,715 71 2.93% 10,597 79 2.99%
-------- --------- --------- -------
Total interest-bearing 140,594 465 1.33% 138,075 551 1.60%
liabilities -------- --------- --------- -------
Noninterest-bearing deposits 58,391 47,348
Other liabilities 1,409 1,719
Stockholders' equity 23,177 22,064
---------
Total liabilities and $ 223,571 $ 209,206
stockholders' equity =========
Net interest income $ 2,866 $ 2,521
========= =========
Net interest spread 4.95% 4.58%
Net interest margin 5.40% 5.07%
(1) The loan averages are stated net of unearned income and include loans on
which the accrual of interest has been discontinued.
Distribution of Assets, Liabilities and Stockholders' Equity Yields and Rates
For the Six Months Ended June 30, 2004 and 2003
(Dollars in thousands)
2004 2003
------------------------------- ----------------------------------
Interest Interest
Average Income/ Average Average Income Average
Balances Expense Rates Balances Expense Rates
------------------------------- ----------------------------------
Assets
Loans (1) $ 157,484 $ 5,557 7.10% $ 152,597 $ 5,468 7.23%
Investment securities 45,735 1,018 4.48% 28,011 664 4.78%
Federal funds sold 2,503 11 .88% 7,434 41 1.11%
Interest-earning bank balances 6,235 31 1.00% 6,172 35 1.14%
--------- -------- ---------- --------
Total earnings assets 211,957 6,617 6.28% 194,214 6,208 6.45%
--------- -------- ---------- --------
Allowance for loan losses (2,201) (2,363)
Cash and due from banks 7,829 7,593
Other assets 4,900 4,563
--------- ---------
Total assets $ 222,485 $ 204,007
========= =========
Liabilities and Stockholders' Equity
Savings, NOW and money market
accounts $ 79,266 341 0.87% $ 72,333 400 1.12%
Certificates of deposit 47,548 428 1.81% 49,035 543 2.23%
Short term borrowings 4,070 11 0.54% 6,741 28 0.84%
Long-term debt 9,829 144 2.95% 6,347 100 3.18%
--------- -------- --------- --------
Total interest-bearing 140,713 924 1.32% 134,456 1,071 1.61%
liabilities --------- -------- --------- --------
Noninterest-bearing deposits 57,307 46,229
Other liabilities 1,251 1,511
Stockholders' equity 23,214 21,811
--------- ---------
Total liabilities and $ 222,485 $ 204,007
stockholders' equity ========= =========
Net interest income $ 5,693 $ 5,137
========= =========
Net interest spread 4.96% 4.84%
Net interest margin 5.40% 5.33%
(1) The loan averages are stated net of unearned income and include loans on
which the accrual of interest has been discontinued. Noninterest Income Total
noninterest income consists primarily of service charges on deposits and other
fee-based services, as well as gains on the sales of investment securities and
loans. Noninterest income decreased 4.4% in the second quarter of 2004 to
$457,000 from $478,000 reported in the second quarter of 2003. Service charges
on deposit accounts totaled $409,000, a decrease of 3.8% from the prior year
total of $425,000. The decrease in service charge income was predominantly due
to a lower level of overdraft fees. Other income, consisting of other fee-based
services and the gain on the sale of loans, decreased in the second quarter of
2004 by 35.9% to $34,000, compared to $53,000 reported for the second quarter
of 2003. The gain on sale of the guaranteed portion of SBA loans was $8,000
greater in the second quarter of 2003 than 2004. The gain on the sale of
investment securities for the second quarter of 2004 was $13,000.
Total noninterest income for the six months ended June 30, 2004 was $912,000, a
decrease of $86,000 or 8.6%, compared to $998,000 for the same period in 2003.
Service charges on deposits decreased to a total of $816,000, compared to
$844,000 for the same period last year, and was predominantly due to a decrease
in the level of overdraft fees. Other income totaled $56,000, which was a
decrease of $68,000, compared $124,000 reported for the first six months of
2003. The gain on the sale of the guaranteed portion of SBA loans was $ 41,000
less than the
prior year period. The gain on the sale of investment securities was $40,000
for the first six months of 2004, as compared to $29,000 for the same period in
2003.
Noninterest Expense
Total noninterest expense for the second quarter of 2004 totaled $1,837,000, an
increase of 11.7% or $193,000, as compared to $1,644,000 reported for second
quarter of 2003. Salaries and benefits expense increased 12.5% to $894,000, due
to increased staffing and benefit cost. Occupancy and equipment expense
increased 4.3% to $340,000, primarily due to the opening of a branch office in
Maryland in September 2003. Professional fees increased 26.0% to a total of
$87,000, as a result of an increase in legal fees. Data processing fees
increased 18.8% to $133,000, compared to $112,000, as a result of increases in
software and maintenance costs. Other operating expense totaling $383,000
increased 12.3% or $42,000 in the second quarter of 2004 compared to 2003. The
efficiency ratio declined slightly in the second quarter of 2004 to 55.3%,
compared to 54.8% for the same period in 2003.
Total noninterest expense for the six months ended June 30, 2004 increased
$455,000 or 14.2% to $3,655,000, as compared to $3,200,000 for the same period
in 2003. The Company's efficiency ratio was 55.3%, up from the 52.2% reported
in 2003, as a result of the decrease in noninterest income combined with the
increase in noninterest expense. Salaries and benefit expense increased
$187,000 or 11.7% to a total of $1,792,000, due to additional staff and the
related benefit expense. Professional fees increased 65.6% to $197,000, as a
result of an increase in legal fees. Occupancy and equipment increased 11.8% to
$674,000, due to the addition of a new branch office in the third quarter of
2003 and an increase in service maintenance charges. Data processing expense
increased 18.9% to $264,000, as a result of increases in software and
maintenance costs. All other operating expenses increased 11.5% to $727,000, as
compared to $652,000 reported for the same period in 2003.
Income Tax Expense
Income tax expense totaled $550,000 for the second quarter ended June 30, 2004,
an increase of 32.9% from the income tax expense reported for the second
quarter of 2003. The increase in income tax expense was a result of the 32.3%
increase in the Company's pretax income, as compared to the second quarter of
2003. The effective tax rate for the second quarter of 2004 was 39.8%, compared
to 39.6% for the second quarter of 2003.
Income tax expense for the first six months ended June 30, 2004 increased
$71,000 or 7.0% to a total of $1,091,000, compared to the same period in 2003,
as a result of an increase in pretax net income. The Company's effective tax
rate was 39.8%, as compared to 40.0% for the same period in 2003.
Financial Condition
Overview
Total assets were $238,664,000 at June 30, 2004, compared to $231,906,000 at
December 31, 2003, an increase of $6,758,000 or 2.9%. The increase in total
assets was primarily attributable to a 4.6% increase in loans. Total
liabilities increased 3.2% or $6,585,000 to $215,616,000, primarily due to an
increase in deposits. Total stockholders' equity increased 0.8% to $23,049,000,
as compared to December 31, 2003. The book value per share of common stock
issued andoutstanding at June 30, 2004 was $7.65, compared to $7.59 at December
31, 2003.
Loans
Total loans outstanding at June 30, 2004 increased 4.6% or $7,244,000 from
December 31, 2003 to a balance of $163,278,000. Commercial real estate loans
grew 12.7% from the previous year-end, while commercial loan balances declined
by 11.7%. Loan growth for the first half of 2004 showed signs of improvement as
compared to 2003; however, the Company faces increased competition from the
large regional banks for the small to medium size commercial loan business.
..
Investments securities
Investment securities available-for-sale are carried at estimated fair value
and totaled $32,180,000 at June 30, 2004, an increase of 1,724,000 or 5.7% from
the balance at December 31, 2003. Investment securities classified as
held-to-maturity
were $11,339,000 at June 30, 2004, a decrease of $2,622,000 or 18.8% from the
December 31, 2003 balance totaling $13,961,000.
Short-term investments
Short-term investments consisting of federal funds and interest bearing
deposits in banks totaled $19,543,000, an increase of 3.8%, as compared to
December 31, 2003.
Deposits
Deposits are the Company's primary source of funds. Total deposits increased
4.6% or $8,850,000 to $201,606,000 at June 30, 2004, as compared to December
31, 2003. Noninterest-bearing deposits totaled $65,427,000, an increase of
$8,598,000 or 15.1% from the previous year-end. Interest-bearing deposits were
$136,179,000, a slight increase from the balance of $135,928,000 at December
31, 2003. Money market accounts displayed the largest decrease, 9.6%, compared
to December 31, 2003, due to the seasonal withdrawals of some of the Company's
large corporate customers. All other deposit categories increased, compared to
the previous year end.
Short-term borrowings
Short-term borrowings consisting of repurchase agreements decreased $1,885,000
or 35.0% to a balance of $3,505,000 at June 30, 2004, compared to December 31,
2003.
Long-term debt
Long-term debt consisted of term loans from the Federal Home Loan Bank of
Atlanta ("FHLB") and totaled $9,580,000 at June 30, 2004, a decrease of
$450,000 from the previous year-end, as a result of scheduled payments.
Stockholders' Equity
Stockholders' equity at June 30, 2004 was $23,049,000, an increase of $174,000
or 0.8% from December 31, 2003. The increase was primarily due to earnings of
$1,649,000, less the dividends paid on the Company's common stock totaling
754,000, combined with the change in the unrealized loss on available-for-sale
investment securities totaling $722,000.
Asset Quality
Loan Portfolio and Adequacy of the Allowance for Loan Losses
Management believes the allowance for loan losses accounting policy is critical
to the portrayal and understanding of our financial condition and results of
operations. As such, selection and application of this "critical accounting
policy" involves judgments, estimates, and uncertainties that are susceptible
to change. In the event that different assumptions or conditions were to
prevail, and depending upon the severity of such changes, the possibility of
materially different financial condition or results of operations is a
reasonable likelihood.
The Company manages the risk characteristics of its entire loan portfolio in an
effort to maintain an adequate allowance for loans losses and identify problem
loans so that the risks in the portfolio can be identified on a timely basis.
Management performs a periodic analysis of risk factors that includes the
primary sources of repayment on individual loans, liquidity and financial
condition of borrowers and guarantors, and the adequacy of collateral. Loans
subject to individual reviews are analyzed and segregated by risk according to
the Company's internal risk rating scale. Management also considers the
character of the loan portfolio, changes in nonperforming and past-due loans,
historical loss experience, concentrations of loans to specific borrowers and
industries, and general and regional economic conditions, as well as other
factors existing at the determination date. This review takes into account the
judgment of the individual loan officers, the credit risk manager, senior
management and the Board of Directors. The Company also has an independent loan
review performed by an outside consultant periodically throughout the year.
Although credit policies are designed to minimize risk, management recognizes
that loan losses will occur and that the amount of these losses will fluctuate
depending on the risk characteristics of the loan portfolio.
The allowance for loan losses is established through provisions for loan losses
as a charge to earnings based upon management's ongoing evaluation. The
provision for loan losses decreased for the first half of 2004 to a total of
$210,000, compared to $381,000 for the same period in 2003. The balance of the
allowance for loan losses was $2,307,000 or 1.41% of total loans at June 30,
2004, compared to $2,119,000 or 1.36% of loans at December 31, 2003.
Net loan charge-offs were $22,000 in 2004. During 2003, the weaken economic
environment had adversely impacted the cash flows of some of our small
commercial and commercial real estate borrowers, and as a result the Company
experienced an increase in nonperforming loans that carried over into the first
half of 2004. The increase in the provision is intended to address known and
inherent losses that are both probable and estimable at June 30, 2004. While
historical losses have been modest in years prior to 2003, the current economic
conditions of the market area and the concentration of loans in the higher risk
classifications (e.g. commercial and industrial, and commercial real estate
mortgages) warrant maintenance of the allowance for loan losses at its current
level. Management believes that the allowance for loan losses at June 30, 2004
is adequate given past experience and the underlying assessment of the
Company's loan portfolio.
The following table presents an analysis of the allowance for loan losses at
June 30, 2004 and December 31, 2003.
2004 2003
---------- ----------
(Dollars in thousands)
-------------------------
Balance at beginning of period $2,119 $2,297
Loans charged off:
Commercial 46 829
Real estate - commercial -- --
Real estate - residential -- --
Construction and development -- --
Installment - individuals 28 4
------ ------
Total charge-offs 74 833
------ ------
Recoveries:
Commercial 51 23
Real estate - commercial -- --
Real estate - residential -- --
Construction and development -- --
Installment - individuals 1 41
------ ------
Total recoveries 52 64
------ ------
Net charge-offs 22 769
------ ------
Provision for loan losses 210 591
------ ------
Balance at end of period $2,307 $2,119
====== ======
Ratio of net charge-offs to average loans 0.01% 0.51%
Nonperforming Assets
Nonperforming assets include nonaccrual loans, restructured loans, past-due
loans and other real estate owned. Past due loans are loans that are 90 days or
more delinquent and still accruing interest. There were no loans past-due and
still accruing interest at June 30, 2004 or December 31, 2003. Total
nonperforming loans increased slightly at June 30, 2004 to $3,170,000, with
balances of $1,776,000 guaranteed by the SBA. Nonperforming loans represented
1.33% of total assets. In comparison, nonperforming loans at December 31, 2003
were 1.24% of total assets and totaled $2,873,000, with balances of $1,665,000
guaranteed by the SBA. The largest nonperforming loans are a commercial SBA
loan with a balance of $678,000 and a commercial real estate loan with a
balance of $360,000.
The following table presents nonperforming assets by category at June 30, 2004
and December 31, 2003.
2004 2003
---------- ----------
(Dollars in thousands)
-------------------------
Nonaccrual loans:
Commercial $2,096 $2,133
Real Estate 1,074 740
Installment - individuals -- --
------ ------
------ ------
Total nonaccrual loans 3,170 2,873
------ ------
------ ------
Past-due loans:
Commercial -- --
------ ------
------ ------
Total nonperforming assets $3,170 $2,873
====== ======
Nonperforming assets exclusive of SBA guarantee $1,394 $1,208
Ratio of nonperforming assets to gross loans 1.94% 1.84%
Ratio of nonperforming assets to total assets 1.33% 1.24%
Allowance for loan losses to nonperforming assets 73% 74%
Loans totaling $5,838,000 and $7,290,000 at June 30, 2004 and December 31,
2003, respectively, were classified as monitored credits subject to
management's attention and are not reported in the preceding table. The
classifications of the monitored credits are reviewed on a quarterly basis. The
balances of the monitored credits guaranteed by the SBA totaled $1,990,000 and
$1,552,000 as of June 30, 2003 and December 31, 2003, respectively.
Liquidity and Capital Resources
Liquidity
Liquidity is a product of the Company's operating, investing, and financing
activities and is represented by cash and cash equivalents. Principal sources
of funds are from deposits, short and long term debt, principal and interest
payments on outstanding loans, maturity of investment securities, and funds
provided from operations. Overall, net cash and cash equivalents increased
slightly for the period ended June 30, 2004 to a balance of $18,634,000, as
compared to the balance of $18,437,000 at December 31, 2003. Liquid assets
represented 7.81% of total assets at June 30, 2004, as compared to 7.95% of
total assets at December 31, 2003.
The Company has additional sources of liquidity available through unpledged
investment securities available-for-sale totaling $20,895,000, and unsecured
lines of credit available from correspondent banks, which can provide up to
$16,000,000, as well as a credit facility through its membership in the FHLB of
Atlanta.
Capital Resources
Capital levels are monitored by management on a quarterly basis in relation to
financial forecasts for the year and regulatory requirements. The Company and
the Bank continue to maintain a strong capital position. The following table
presents the Company's and the Bank's capital position relative to their
various minimum statutory and regulatory capital requirements at June 30, 2004.
The Company and the Bank are considered "well-capitalized" under regulatory
guidelines.
Company Bank Minimal Capital
------------------------- -------------------------
Amount Ratio Amount Ratio Requirements
---------- ----------- ----------- ---------- ---------------------
(Dollars in thousands)
Leverage ratio $23,647 10.58% $23,307 10.43% 4.00%
Tier 1 risk-based ratio 23,647 12.30% 23,307 12.14% 4.00%
Total risk-based ratio 26,048 13.50% 25,864 13.47% 8.00%
Forward Looking Statements
When used in this Form 10-Q, the words or phrases "will likely result," "are
expected to", "will continue", "is anticipated," "estimate," "project" or
similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks and uncertainties, including,
among other things, changes in economic conditions in the Company's market
area, changes in policies by regulatory agencies, fluctuations in interest
rates, demand for loans in the Company's market areas and competition, that
could cause actual results to differ materially from historical earnings and
those presently anticipated or projected. The Company wishes to caution readers
not to place undue reliance on any such forward-looking statements, which speak
only as of the date made. The Company wishes to advise readers that the factors
listed above could affect the Company's financial performance and could cause
the Company's actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in any current
statements.
The Company does not undertake and specifically declines any obligation to
publicly release the results of any revisions, which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to various market risks in the normal course of
conducting its' business. Market risk is the potential loss arising from
adverse changes in interest rates, prices, and liquidity. The Company has
established the Asset/Liability Committee (ALCO) to monitor and manage those
risks. ALCO meets periodically and is responsible for approving asset/liability
policies, formulating and implementing strategies to improve balance sheet and
income statement positioning, and monitoring the interest rate sensitivity.
The Company manages its interest rate risk sensitivity through the use of a
simulation model that projects the impact of rate shocks, rate cycles, and rate
forecast estimates on the net interest income and economic value of equity (the
net present value of expected cash flows from assets and liabilities). These
simulations provide a test for embedded interest rate risk and takes into
consideration factors such as maturities, reinvestment rates, prepayment
speeds, repricing limits, decay rates and other factors. The results are
compared to risk tolerance limits set by ALCO policy. Based on the Company's
most recent interest rate sensitivity analysis, the impact to the net interest
income and economic value of equity are well within the tolerance limits for
both a rising or declining interest rate environment and sensitivity to market
risk is moderate.
Item 4 - Controls and Procedures
As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this
evaluation, the principal executive officer and principal financial officer
concluded that the Company's disclosure controls and procedures are effective
to ensure that information required to be disclosed by the Company in reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. There was no change in the Company's
internal control over financial reporting during the Company's most recently
completed fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the Company's internal control over financial reporting.
PART II.
Item 1 - Legal Proceedings
None
Item 2- Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity
Securities
None
Item 3- Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to Vote of Security Holders
On May 18, 2004, Abigail Adams National Bancorp, Inc. (the Company) held its
Annual Meeting of Shareholders. At the meeting, the following persons were
elected to the Board of Directors to hold office until the next Annual Meeting
of Shareholders or until their respective successors have been elected and
qualified. The votes cast and withheld for each such director was as follows:
FOR WITHHELD
-------------------- -------------------
-------------------- -------------------
Kathleen Walsh Carr 2,595,589 3,298
A. George Cook 2,595,583 3,304
Jeanne D. Hubbard 2,595,589 3,298
Marshall T. Reynolds 2,595,633 3,254
Robert L. Shell 2,595,633 3,254
Marianne Steiner 2,595,589 3,298
Joseph L. Williams 2,595,633 3,254
Bonita A. Wilson 2,595,614 3,273
Douglas V. Reynolds 2,595,583 3,304
Patricia G. Shannon 2,595,589 3,298
In addition, the Company's stockholders approved the ratification of the
appointment of McGladrey & Pullen, LLP as the Company's independent certified
public accountants for the year ending December 31, 2004, as follows:
FOR 2,583,447 AGAINST 3,417 ABSTAIN 12,023
--------- ----- ------
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 31.1 Certification of the Chief Executive Officer
Exhibit 31.2 Certification of the Chief Financial Officer
Exhibit 32 Certification of Chief Executive Officer and
Chief Financial Officer
(b) Reports on Form 8-K
The Company filed a Form 8-K on July 23, 2004 to report
that the Company had issued a press release announcing
earnings for the three month period ending June 30,
2004.
The Company filed a Form 8-K on May 3, 2004 to report
that the Company had issued a press release announcing
earnings for the three month period ending March 31,
2004.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
ABIGAIL ADAMS NATIONAL BANCORP, INC.
Registrant
Date: August 13, 2004 /s/ Jeanne D. Hubbard
------------------------- ---------------------
Jeanne D. Hubbard
Chairwoman of the Board,
President and Director
(Principal Executive Officer)
Exhibit 31.1
I, Jeanne D. Hubbard, President and Chief Executive Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Abigail
Adams National Bancorp;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) for the
registrant and we have:
a) designed such disclosure controls and procedures, or
caused such disclosures and procedures to be designed
under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made know to us by others
within those entities, particularly during the period in
which this report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation;
and
c) disclosed in this report any changes in the registrant's
internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred
during the registrant's most recent fiscal quarter (the
registrant's fourth quarter in the case of an annual
report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal
control over financial reporting.
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal control over financial
reporting.
Date: August 13, 2004 /s/ Jeanne D. Hubbard
------------------------- ----------------------
Jeanne D. Hubbard
President and Chief Executive Officer
Exhibit 31.2
I, Karen E. Troutman, Sr. Vice President and Chief Financial Officer, certify
that:
1. I have reviewed this quarterly report on Form 10-Q of The
Abigail Adams National Bancorp;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in
light of the circumstances under which such statements
were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15 (e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or
caused such disclosures and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made know to us by others within those
entities, particularly during the period in which this
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
c) disclosed in this report any changes in the registrant's
internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred
during the registrant's most recent fiscal quarter (the
registrant's fourth quarter in the case of an annual
report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal
control over financial reporting.
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent
functions):
a) all significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
the registrant's ability to record, process, summarize and
report financial information; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal control over financial
reporting.
Date: August 13, 2004 /s/ Karen E. Troutman
------------------------- -----------------------
Karen E. Troutman
Sr. Vice President and Chief
Financial Officer
Exhibit 32
Certification of Chief Executive Officer and Chief Financial Officer
Jeanne D. Hubbard, President and Chief Executive Officer, and Karen E.
Troutman, Senior Vice President and Chief Financial Officer of Abigail Adams
National Bancorp, Inc. (the "Company") each certify in her capacity as an
officer of the Company that she has reviewed the quarterly report on Form 10-Q
for the quarter ended June 30, 2004 and that to the best of her knowledge:
(1) the report fully complies with the requirements of Section 13(a)
of the Securities Exchange Act of 1934; and
(2) the information contained in the report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
The purpose of this statement is solely to comply with Title 18, Chapter 63,
Section 1350 of the United States Code, as amended by Section 906 of the
Sarbanes-Oxley Act of 2002.
Date: August 13, 2004 /s/ Jeanne D. Hubbard
------------------------- ----------------------
Jeanne D. Hubbard
Chief Executive Officer
Date: August 13, 2004 /s/ Karen E. Troutman
------------------------- ---------------------
Karen E. Troutman
Chief Financial Officer