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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-KSB



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Annual report under Section 13 or 15(d) of the

Securities Exchange Act of
1934



For the year ended DECEMBER 31, 2004



Commission File No.: 0-22961



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ANNAPOLIS BANCORP, INC.

(Name of small business issuer in its charter)



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|                                                               |  |                           
|-------------------------------------------------------------- |  | --------------------------
|MARYLAND                                                       |  | 52-1595772                
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer I.D. No.)



|                                                  |  |           
|------------------------------------------------- |  | ----------
|1000 Bestgate Road, Suite 400 ANNAPOLIS, MARYLAND |  | 21401     
|(Address of principal executive offices)          |  | (Zip Code)



Issuers
telephone number: (410) 224-4455



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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 $0.01 PER SHARE

(Title of class)



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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90
days.    Yes:  x    No: ̈



Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
contained in this form and no disclosure will be contained, to the best of the 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    Yes:  x    No: ̈



Issuers revenues for its fiscal year ended December 31, 2004 were $15,284,420.



The aggregate market value of the common stock held by non-affiliates of the
registrant, i.e., persons other than directors and executive officers of the registrant is $20,678,801 and is based upon the last sales price as quoted on The NASDAQ Stock Market for March 1, 2005.



The Registrant had 4,055,590 shares of Common Stock outstanding as of March 1, 2005.



DOCUMENTS INCORPORATED BY REFERENCE



PORTIONS OF THE ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2004, ARE
INCORPORATED BY REFERENCE INTO PART I AND PART II OF THIS FORM 10-KSB.



PORTIONS OF THE PROXY STATEMENT FOR THE 2004 ANNUAL MEETING OF SHAREHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-KSB.



Transitional Small Business Disclosure Format.    YES: ̈NO:  x



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##### Table of Contents

INDEX



|                 |  |                                      |  |                                                                                                               |  |      
|---------------- |  | ------------------------------------ |  | ------------------------------------------------------------------------------------------------------------- |  | -----
|                 |  |                                      |  |                                                                                                               |  | PAGE 
|PART I           |  |                                      |  |                                                                                                              
|                 |  | Item 1.                              |  | Description of Business                                                                                       |  | 3    
|                 |  |                                      | 
|                 |  | Item 2.                              |  | Description of Property                                                                                       |  | 3    
|                 |  |                                      | 
|                 |  | Item 3.                              |  | Legal Proceedings                                                                                             |  | 3    
|                 |  |                                      | 
|                 |  | Item 4.                              |  | Submission of Matters to a Vote of Security Holders                                                           |  | 3    
|                 |  |                                     
|Additional Items |  | Executive Officers of the Registrant |  | 3 - 4                                                                                                        
|                 |  |                                     
|PART II          |  |                                      |  |                                                                                                              
|                 |  |                                      | 
|                 |  | Item 5.                              |  | Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities               |  | 4    
|                 |  |                                      | 
|                 |  | Item 6.                              |  | Managements Discussion and Analysis                                                                          |  | 4    
|                 |  |                                      | 
|                 |  | Item 7.                              |  | Financial Statements                                                                                          |  | 4    
|                 |  |                                      | 
|                 |  | Item 8.                              |  | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure                          |  | 4    
|                 |  |                                      | 
|                 |  | Item 8A.                             |  | Controls and Procedures                                                                                       |  | 4    
|                 |  |                                      | 
|                 |  | Item 8B.                             |  | Other Information                                                                                             |  | 4    
|                 |  |                                     
|PART III         |  |                                      |  |                                                                                                              
|                 |  |                                      | 
|                 |  | Item 9.                              |  | Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16 of the Exchange Act. |  | 4 - 5
|                 |  |                                      | 
|                 |  | Item 10.                             |  | Executive Compensation.                                                                                       |  | 5    
|                 |  |                                      | 
|                 |  | Item 11.                             |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.               |  | 5    
|                 |  |                                      | 
|                 |  | Item 12.                             |  | Certain Relationships and Related Transactions.                                                               |  | 5    
|                 |  |                                      | 
|                 |  | Item 13.                             |  | Exhibits.                                                                                                     |  | 5 - 6
|                 |  |                                      | 
|                 |  | Item 14.                             |  | Principal Accountant Fees and Services                                                                        |  | 6    
|                 | 
|SIGNATURES       |  | 7                                   



This Report contains statements
which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements appear in a number of places in this Report and include all
statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Companys financing plans; (ii) trends affecting the Companys financial condition
or results of operations; (iii) the Companys growth strategy; and (iv) the declaration and payment of dividends. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors discussed herein and those factors discussed in the Companys filings with the Securities and
Exchange Commission.



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PART I



ITEM 1. DESCRIPTION OF BUSINESS



The information
relating to the description of business of the Registrant is incorporated herein by reference on page 31 as part of the Registrants Annual Report to Shareholders.



ITEM 2. DESCRIPTION OF PROPERTY



The executive
offices of the Company and the Bank are located at 1000 Bestgate Road, Suite 400, Annapolis, Maryland 21401.



The following table sets forth the location of and certain additional information regarding the offices of the Company and the Bank at December 31, 2004:



|                |  |               |  |                                           |  |                          |     |  |                                                                                 |      
|--------------- |  | ------------- |  | ----------------------------------------- |  | ------------------------ | --- |  | ------------------------------------------------------------------------------- | -----
|                |  | Leased/ Owned |  | Original Year Leased or Location Acquired |  | Year of Lease Expiration |     |  | Net Book Value of Propertyor Leasehold Improvements at December 31,
2004 ($000)
|Administration  |  | Owned         |  | 2001                                      |  | N/A                      |     |  | $                                                                               | 4,186
|Bestgate        |  | Owned         |  | 2001                                      |  | N/A                      |     |  |                                                                                 | 1,437
|Edgewater       |  | Land Leased   |  | 1996                                      |  | 2006                     | (1) |  |                                                                                 | 325  
|Cape St. Claire |  | Leased        |  | 1995                                      |  | 2005                     | (1) |  |                                                                                 | 51   
|Kent Island     |  | Leased        |  | 1990                                      |  | 2023                     | (1) |  |                                                                                 | 132  
|Severna Park    |  | Leased        |  | 1996                                      |  | 2006                     | (1) |  |                                                                                 | 20   
|BayWoods        |  | Leased        |  | 2003                                      |  | 2008                     | (1) |  |                                                                                 | 11   

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|(1) | These leases may be extended at the option of the Company for periods ranging from one to twenty years.
|--- | -------------------------------------------------------------------------------------------------------



Commencing July 1, 2001, the Bank entered into a three year lease for the second floor space of the Banks headquarters building with
Heim and Associates, P.A., now HeimLantz Business and Tax Services, Inc., an accounting firm whos President is a Company and Bank Director. The lease rate of $176 thousand per annum is based on current market rates as determined by an
independent commercial real estate services firm not affiliated with the Company or Bank. The initial lease term of 3 years expired June 30, 2004. The lease is now in the initial year of the first renewal option of 2 years. There is one 2 year and
one 1 year renewal option remaining.



ITEM 3. LEGAL PROCEEDINGS



The Company is not
involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to the Companys
financial condition or results of operations.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



None.



ADDITIONAL ITEMS



Executive Officers of the
Registrant



The information relating to directors and named executive
officers of the Registrant is incorporated herein by reference to the Registrants Proxy Statement for the Annual Meeting of Shareholders to be held on May 19, 2005 at pages 4 through 7. In addition, information concerning Executive Officers
who are not directors is set forth below:



|                       |  |                 |  |                                                                                                                                                                                                                                                                                                                                                                                                      
|---------------------- |  | --------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                   |  | Age at 12/31/04 |  | Position with the Company and Bank and Past Five Years Experience                                                                                                                                                                                                                                                                                                                                    
|Rita D. Demma          |  | 57              |  | Secretary of the Company and the Bank. Ms. Demma has been an officer of the Bank since 2000. Ms. Demma held a similar position from 1996 through 2000 with the University of Maryland Medical
Center prior to joining the Company.                                                                                                                                                                   
|Margaret Theiss Faison |  | 46              |  | Chief Financial Officer and Treasurer of the Company and Senior Vice President, Chief Financial Officer and Treasurer of the Bank. Prior to joining the Company in 1999, Ms. Faison was Senior
Vice President and Chief Financial Officer of Sterling Bank & Trust Co. of Baltimore from 1997 until 1999. Ms. Faison was previously Vice President and Chief Financial Officer with Mellon Bank (MD).



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|                        |  |                 |  |                                                                                                                                                                                                                                                                           
|----------------------- |  | --------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                    |  | Age at 12/31/04 |  | Position with the Company and Bank and Past Five Years Experience                                                                                                                                                                                                         
|Robert E. Kendrick, III |  | 59              |  | Senior Vice President and Chief Credit Officer of the Bank. Prior to joining the Bank in 1999, Mr. Kendrick held similar positions from 1967 through 1999 with Citizens National Bank of
Laurel, Bank of Maryland, Sterling Bank & Trust Co. of Baltimore and NationsBank.



PART II



ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES



Information relating to the market for Registrants common equity and related stockholder matters appears on page 25, part of the Registrants 2004 Annual
Report to Stockholders and is incorporated herein by reference.



ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS



The above-captioned information appears under Managements Discussion and Analysis of Results of Operations and Financial Condition in the Registrants 2004 Annual Report to Stockholders on pages 9 through 25 and is incorporated
herein by reference.



ITEM 7. FINANCIAL STATEMENTS



The Consolidated
Financial Statements of Annapolis Bancorp, Inc. and its subsidiaries, together with the report thereon by Stegman & Company for the year ended December 31, 2004 appear in the Registrants 2004 Annual Report to Stockholders on pages 26
through 44 and are incorporated herein by reference.



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



None.



ITEM 8A. CONTROLS AND PROCEDURES



As of the end
of the period covered by this annual report on Form 10-KSB, the Companys Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Companys disclosure controls and procedures. Based upon that evaluation, the
Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective. Disclosure controls and procedures are controls and other procedures that are designed to ensure
that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and forms.



In addition, there
were no changes in the Companys internal controls over financial reporting (as defined in Rule 13a-15 or Rule 15d-15 under the Securities Act of 1934, as amended) during the quarter ended December 31, 2004, that have materially affected, or
are reasonably likely to materially affect, the Companys internal control over financial reporting.



ITEM 8B. OTHER INFORMATION



None.



PART III



ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT



The information relating to directors, officers, promoters and control persons is incorporated herein by reference to the Registrants Proxy Statement for the Annual
Meeting of Shareholders to be held on May 19, 2005, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the Registrants fiscal year (Proxy Statement).



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Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934 (the Exchange Act) requires
the Companys officers (as defined in regulations promulgated by the SEC thereunder) and directors, and persons who own more than ten percent (10%) of a registered class of the Companys equity securities, to file reports of ownership and
changes in ownership with the SEC. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.



Based solely on a review of copies of reports of ownership furnished to the Company, or
written representations that no forms were necessary, the Company believes that during the past fiscal year all of its officers, directors and greater than ten percent beneficial owners complied with applicable filing requirements.



Code of Ethics



On June 20, 2003, the Companys Board of Directors adopted a code of ethics that applies to its principal executive officer, principal
accounting officer or controller, or persons performing similar functions. On October 15, 2004 the Companys Board of Directors reaffirmed the code of ethics. That Code of Ethics for the Principal Executive Officer and the Senior
Financial Officer has been posted on the Companys internet website at www.bankannapolis.com. A copy of the Code of Ethics for the Principal Executive Officer and Senior Financial Officer is also included as an exhibit to this annual report.



ITEM 10. EXECUTIVE COMPENSATION



The information
relating to directors and executives compensation is incorporated herein by reference to the Registrants Proxy Statement for the Annual Meeting of Shareholders to be held on May 19, 2005.



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The information relating to security ownership of certain beneficial owners and management is incorporated herein by reference to the Registrants Proxy Statement
for the Annual Meeting of Shareholders to be held on May 19, 2005.



The Equity
Compensation Plan Information appears under Managements Discussion and Analysis of Results of Operations and Financial Condition in the Registrants 2004 Annual Report to Stockholders on pages 9 through 25 and is incorporated herein by
reference.



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



The information relating to certain relationships and related transactions is incorporated herein by reference to the Registrants Proxy Statement for the Annual Meeting of Shareholders to be held on May 19, 2005.



ITEM 13. EXHIBITS



Exhibits



The following exhibits are filed as part of this report.



|     |  |                                                                                      
|---- |  | -------------------------------------------------------------------------------------
|3.1  |  | Articles of Incorporation of Annapolis Bancorp, Inc.*                                
|     | 
|3.2  |  | Bylaws of Annapolis Bancorp, Inc.*                                                   
|     | 
|3.3  |  | Articles of Incorporation of BankAnnapolis**                                         
|     | 
|3.4  |  | Bylaws of BankAnnapolis**                                                            
|     | 
|4.0  |  | Stock Certificate of Annapolis National Bancorp, Inc.*                               
|     | 
|10.2 |  | Annapolis National Bancorp, Inc. Employee Stock Option Plan*                         
|     | 
|11.0 |  | Computation of earnings per share (filed herewith)                                   
|     | 
|13.0 |  | Portions of 2004 Annual Report to Stockholders (filed herewith)                      
|     | 
|14.0 |  | Code of Ethics***                                                                    
|     | 
|21.0 |  | Subsidiary information is incorporated herein by reference to Part I  Subsidiaries
|     | 
|23.0 |  | Consent of Independent Auditors                                                      
|     | 
|31.1 |  | Certification Pursuant to Sarbanes-Oxley Section 302                                 
|     | 
|31.2 |  | Certification Pursuant to Sarbanes-Oxley Section 302                                 
|     | 
|32.1 |  | Certification Pursuant to 18 U.S.C. Section 1350                                     
|     | 
|32.2 |  | Certification Pursuant to 18 U.S.C. Section 1350                                     



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|* | Incorporated herein by reference to the Exhibits to Form SB-2, Registration Statement, filed on June 23, 1997 and any Amendments thereto, Registration No. 333-29841.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|** | Incorporated herein by reference to the Exhibits to Form 10-KSB Annual Report for the fiscal year ended December 31, 2000, Commission File Number 0-22961, filed with the Securities
and Exchange Commission on March 28, 2001.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|*** | Incorporated herein by reference to the Annual Report on Form 10-KSB for fiscal year ended December 31, 2003, filed with the SEC on March 25, 2004.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



Audit and Non-Audit Fees



All audit related services, tax
services and other services were pre-approved by the Audit Committee, which concluded that the provision of such services by Stegman & Company was compatible with the maintenance of that firms independence in the conduct of its auditing
functions.



The Audit Committee charter requires that the Audit Committee
pre-approve all audit and non-audit engagement fees, and terms and services. On an ongoing basis, management communicates specific projects and categories of services for which advance approval of the Audit Committee is required. The Audit Committee
reviews these requests and advises management and the independent auditors if the Audit Committee pre-approves the engagement of the independent auditors for such projects and services. On a periodic basis, the independent auditors report to the
Audit Committee the actual spending for such projects and services compared to the approved amounts. The Audit Committee may delegate the authority to grant any pre-approvals to one or more members of the Audit Committee, provided that such member
reports any pre-approvals to the Audit Committee at its next scheduled meeting. The Audit Committee has delegated pre-approval authority to the Chairman of the Audit Committee.



The following table presents fees for professional audit services rendered by Stegman & Company for the audit of Annapolis
Bancorps annual consolidated financial statements for the years ended December 31, 2004 and December 31, 2003 and fees billed for other services rendered by Stegman & Company during those periods.



|                   |  |                         |        |      |   |       
|------------------ |  | ----------------------- | ------ | ---- | - | ------
|                   |  | Year ended December 31,
|                   |  | 2004                    |        | 2003
|Audit fees (1)     |  | $                       | 43,641 |      | $ | 40,489
|Tax fees (2)       |  |                         | 4,675  |      |   | 4,250 
|All other fees (3) |  |                         |       |      |   |      
|                   |  |                         |        |      |   |       
|Total fees         |  | $                       | 48,316 |      | $ | 44,739
|                   |  |                         |        |      |   |       

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|(1) | Audit Fees consist of fees billed for professional services rendered for the audit of the Companys consolidated annual financial statements and review of the interim
consolidated financial statements included in quarterly reports, and services that are normally provided by Stegman & Company in connection with statutory and regulatory filings or engagements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Tax Fees consist of fees billed for professional services rendered for federal and state tax compliance, tax advice and tax planning.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

|(3) | All Other Fees consist of fees for services other than the services reported above.
|--- | -----------------------------------------------------------------------------------



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SIGNATURES



Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.



ANNAPOLIS BANCORP, INC.



By:

/s/ Richard M. LernerRichard M. LernerChairman and CEODate:

March 25, 2005By:

/s/ Margaret Theiss FaisonMargaret Theiss FaisonChief Financial OfficerDate:

March 25, 2005




Pursuant to the requirements of
the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates stated.



|                                                 |  |                                                                                    |  |               
|------------------------------------------------ |  | ---------------------------------------------------------------------------------- |  | --------------
|NAME                                             |  | Title                                                                              |  | Date          
|/s/ Richard M. LernerRichard M. Lerner           |  | Chairman, Chief Executive Officer and Director
(principal executive officer)       |  | March 25, 2005
|                                                 |  |                                                                                   
|/s/ Margaret Theiss FaisonMargaret Theiss Faison |  | Treasurer and Chief Financial Officer (principal
accounting and financial officer) |  | March 25, 2005
|                                                 |  |                                                                                   
|/s/ Clyde E. Culp, IIIClyde E. Culp, III         |  | Director                                                                           |  | March 25, 2005
|                                                 |  |                                                                                   
|/s/ F. Carter HeimF. Carter Heim                 |  | Director                                                                           |  | March 25, 2005
|                                                 |  |                                                                                   
|/s/ Stanley J. Klos, Jr.Stanley J. Klos, Jr.     |  | Director                                                                           |  | March 25, 2005
|                                                 |  |                                                                                   
|/s/ Lawrence E. LernerLawrence E. Lerner         |  | Director                                                                           |  | March 25, 2005
|                                                 |  |                                                                                   
|/s/ Nancy LowellNancy Lowell                     |  | Director                                                                           |  | March 25, 2005
|                                                 |  |                                                                                   
|/s/ Lawrence W. SchwartzLawrence W. Schwartz     |  | Director                                                                           |  | March 25, 2005
|                                                 |  |                                                                                   
|/s/ Ermis SfakiyanudisErmis Sfakiyanudis         |  | Director                                                                           |  | March 25, 2005
|                                                 |  |                                                                                   
|/s/ Clifford T. SolomonClifford T. Solomon       |  | Director                                                                           |  | March 25, 2005



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