ANNAPOLIS BANCORP

Annapolis Bancorp is a commercial bank organized under the laws of the United States. The Bank is a community oriented bank and the only commercial bank headquartered in Annapolis, Maryland. As the Company's only subsidiary, the Bank currently operates as a full service commercial bank through its five branches located in Anne Arundel County, Maryland, and one branch located on Kent Island in Queen Anne's County, Maryland. The Bank's principal business consists of originating loans and attractin... g deposits. The Bank originates commercial loans (including Small Business Administration ("SBA") loans), commercial real estate loans, construction loans, one- to four-family residential mortgage loans and, to a lesser extent home equity and consumer loans. The Bank also invests in U.S. Treasury and U.S. Government agency securities and other securities issued by or guaranteed by the federal government. At March 31, 1997, the Bank's loan portfolio totalled $69.6 million. Of this amount, $31.3 million or 44.98% were commercial loans, $18.5 million or 26.59% were commercial real estate loans, $8.2 million or 11.77% were construction loans, $7.2 million or 10.33% were one- to four-family residential mortgage loans, $2.1 million or 3.01% were home equity loans and $2.3 million or 3.32% were consumer and other loans.More