- The Washington Times - Monday, October 30, 2006

Adams National Bank recorded a standout performance for a community bank last week when it reported more than $1 million in profits for only the second time in its 29 years of business.

While the fortunes of many of the nation’s community banks slow with a drop in the housing market, Washington-based Adams National Bank profited by focusing its loans primarily on commercial real estate in the region.

“We are pleased with our third-quarter results but realize that the current marketplace … has no room for complacency,” said Jeanne Hubbard, chief executive officer of holding company Abigail Adams National Bancorp.

She mentioned rising interest rates and stiff competition among banks for loan customers as factors in the “relatively flat yield curve” for bank income.

The company was organized in 1977 as a bank owned by women and grew to include six branches in Washington and suburban Maryland. Last year, it acquired Consolidated Bank & Trust Co., which operates with three branches in Richmond and Hampton in Virginia.

Adams National Bank concentrates its loans in commercial real estate and small business.

In the three-month period ending Sept. 30, the bank’s loans increased $54.3 million, or 23 percent, compared with the same period one year earlier. Deposits in the company’s banks totaled $317.7 million.

The company’s growth “comes from one thing: serving the banking needs of women, minorities, small- to mid-sized businesses and not-for-profit organizations,” Mrs. Hubbard said.

Unlike some community banks that seek business growth wherever they can find it, Adams National Bank seeks “to make sure we stay focused on our mission and values and approach to banking in the face of fast- growth opportunities,” Mrs. Hubbard said.

The bank plans to grow its business by continuing to serve its niche customers, “not by mergers or acquisitions that might take us in different directions,” she said.

Its net income in the third quarter reached $1,004,000, or 29 cents per diluted share, which was a 40.4 percent increase over net income of $715,000, or 21 cents per diluted share, one year earlier.

Abigail Adams National Bancorp’s stock price fell 10 cents, or less than 1 percent, from Friday’s close to $13.65 per share yesterday on the Nasdaq Stock Market.

Stock analysts say despite strong profits in the most recent quarter, Adams National Bank will face the same struggles as any other community bank in the future.

Community banks refer to banks that operate only regionally with assets of less than $1 billion.

Among their challenges is competing with larger banks with enough assets to withstand short-term downturns in the loan market.

“I think the greatest obstacle to growth for a company their size is that they do not have an extremely diversified portfolio,” said Matt Schultheis, research analyst for the Washington-based financial firm Ferris, Baker Watts Inc.

“They’re not any different than any other banking company but because of their size they will feel a slowdown in loan origination more than most,” he said. He does not own any of Abigail Adams National Bancorp stock.

Mr. Schultheis gave the company’s stock a “neutral rating” in his latest research report last week. He also said that market conditions would create “margin compression” on the bank’s loan business in the fourth quarter of this year, possibly hurting its earnings.

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