##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Year Ended December 31, 2007
 Commission File Number 0-24926
 CECIL BANCORP, INC.
  Maryland
    
    52-1883546(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)127 North Street, Elkton, Maryland
    
    21921-5547(Address of principal executive office)
    
    (Zip Code)
    Common Stock, par value $0.01 per share
  o þ
  o þ
  þ o
  o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ
   
 *
    
    The issuer is required to file such reports.




---



##### 



2




---



##### 



CAUTION ABOUT FORWARD-LOOKING STATEMENTS
  
    
    Statements of goals, intentions, and expectations;
    
    Estimates of risks and of future costs and benefits;
    
    Assessments of loan quality, probable loan losses, liquidity, off-balance sheet
arrangements, and interest rate risks; and
    
    Statements of Cecil Bancorps ability to achieve financial and other goals.
  
    
    Managements estimates and projections of future interest rates and other economic
conditions;
    
    Future laws and regulations; and
    
    A variety of other matters.
             3




---



##### 



4




---



##### 



5




---



##### 



6




---



##### 



Bank Secrecy Act and USA Patriot Act.
       7




---



##### 



8




---



##### 



9




---



##### 



10




---



##### 



Popular Name
    
    LocationMain Office
    
    127 North Street, Elkton, MD  21921*Cecil Financial Center
    
    135 North Street, Elkton, MD  21921Loan Center
    
    200 North Street, Elkton, MD  21921Corporate Center
    
    114 North Street, Elkton, MD  21921*North East
    
    108 North East Plaza, North East, MD 21901Fair Hill
    
    4434 Telegraph Road, Elkton, MD 21921*Rising Sun
    
    56 Rising Sun Towne Centre, Rising Sun, MD  21911Turkey Point
    
    1223 Turkey Point Road, North East, MD 21901Cecilton
    
    122 West Main Street, Cecilton, MD 21913*Crossroads
    
    114 E. Pulaski Hwy, Elkton, MD  21921Aberdeen
    
    3 W. Bel Air Avenue, Aberdeen, MD  21001Conowingo
    
    390 Conowingo Road, Conowingo, MD  21918
 11




---



##### 



Popular Name
    
    LocationDowntown Havre de Grace
    
    303-307 St John Street, Havre de Grace, MD 21078Route 40 Havre de Grace
    
    1609 Pulaski Highway, Havre de Grace, MD 21078
 
 *
    
    Leased.          2007
    
    
    2006Stock Price Range
    
    
    Per Share
    
    
    Stock Price Range
    
    
    Per ShareQuarter
    
    Low
    
    
    High
    
    
    Dividend
    
    
    Low
    
    
    High
    
    
    Dividend1st
    
    $
    8.75
    
    
    $
    9.75
    
    
    $
    .025
    
    
    $
    7.68
    
    
    $
    9.16
    
    
    $
    .0252nd
    
    
    9.00
    
    
    
    10.43
    
    
    
    .025
    
    
    
    7.88
    
    
    
    8.38
    
    
    
    .0253rd
    
    
    9.00
    
    
    
    9.50
    
    
    
    .025
    
    
    
    7.92
    
    
    
    9.16
    
    
    
    .0254th
    
    
    8.65
    
    
    
    9.60
    
    
    
    .025
    
    
    
    8.99
    
    
    
    10.25
    
    
    
    .025Total
    
    
    
    
    
    
    
    
    
    $
    0.10
    
    
    
    
    
    
    
    
    
    
    $
    0.10
 
 (1)
    
    Quotations reflect inter-dealer price, without retail mark-up, mark-down or
commissions, and may not represent actual transactions. 12




---



##### 



Number of securitiesremaining available forNumber of securities to be
    
    Weighted average exercise
    
    future issuance underissued upon exercise of
    
    price of outstanding
    
    equity compensation plansoutstanding options,
    
    options, warrants and
    
    excluding securitieswarrants and rights
    
    rights
    
    reflected in column (a)Plan category
    
    (a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    16,032
    
    $6.00
    
    0Equity compensation
plans not approved
by security holders
    

0
    
    0
    
    0Total
    
    16,032
    
    $6.00
    
    0
    13




---



##### 



Five Year Summary of Selected Financial Data(Dollars in thousands, except per share data)
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003RESULTS OF OPERATIONS:Interest Income
    
    $
    28,244
    
    
    $
    21,646
    
    
    $
    14,987
    
    
    $
    10,427
    
    
    $
    8,369Interest Expense
    
    
    14,346
    
    
    
    10,167
    
    
    
    5,679
    
    
    
    3,116
    
    
    
    2,649Net Interest Income
    
    
    13,898
    
    
    
    11,479
    
    
    
    9,308
    
    
    
    7,311
    
    
    
    5,720Provision for Loan Losses
    
    
    935
    
    
    
    665
    
    
    
    625
    
    
    
    370
    
    
    
    220Net Interest Income after Provision
for Loan Losses
    
    
    12,963
    
    
    
    10,814
    
    
    
    8,683
    
    
    
    6,941
    
    
    
    5,500Noninterest Income
    
    
    1,500
    
    
    
    1,261
    
    
    
    1,115
    
    
    
    1,005
    
    
    
    805Noninterest Expenses
    
    
    9,004
    
    
    
    7,847
    
    
    
    6,543
    
    
    
    5,466
    
    
    
    4,321Income before Income Taxes
    
    
    5,459
    
    
    
    4,228
    
    
    
    3,255
    
    
    
    2,480
    
    
    
    1,984Income Tax Expense
    
    
    2,059
    
    
    
    1,520
    
    
    
    1,193
    
    
    
    948
    
    
    
    749Net Income
    
    
    3,400
    
    
    
    2,708
    
    
    
    2,062
    
    
    
    1,532
    
    
    
    1,235PER SHARE DATA: (1)Basic Net Income Per Share
    
    $
    .92
    
    
    $
    .74
    
    
    $
    .60
    
    
    $
    .46
    
    
    $
    .39Diluted Net Income Per Share
    
    
    .92
    
    
    
    .74
    
    
    
    .60
    
    
    
    .45
    
    
    
    .39Dividends Declared
    
    
    .10
    
    
    
    .10
    
    
    
    .10
    
    
    
    .10
    
    
    
    .10Book Value (at year end)
    
    
    7.41
    
    
    
    6.60
    
    
    
    6.21
    
    
    
    5.61
    
    
    
    5.21Tangible Book Value (at year end) (2)
    
    
    6.75
    
    
    
    5.95
    
    
    
    5.55
    
    
    
    4.90
    
    
    
    4.49FINANCIAL CONDITION (at year end):Assets
    
    $
    401,432
    
    
    $
    347,451
    
    
    $
    267,125
    
    
    $
    200,380
    
    
    $
    149,600Loans, net
    
    
    355,595
    
    
    
    310,083
    
    
    
    233,307
    
    
    
    173,790
    
    
    
    126,887Investment Securities
    
    
    5,219
    
    
    
    6,271
    
    
    
    5,922
    
    
    
    5,674
    
    
    
    5,770Deposits
    
    
    267,032
    
    
    
    270,604
    
    
    
    198,207
    
    
    
    140,841
    
    
    
    118,164Stockholders Equity
    
    
    27,242
    
    
    
    24,273
    
    
    
    21,942
    
    
    
    18,316
    
    
    
    16,714PERFORMANCE RATIOS (for the year):Return on Average Assets
    
    
    .92
    %
    
    
    .91
    %
    
    
    .89
    %
    
    
    .89
    %
    
    
    .91
    %Return on Average Equity
    
    
    13.28
    
    
    
    11.70
    
    
    
    10.54
    
    
    
    8.70
    
    
    
    7.79Net Interest Margin
    
    
    4.05
    
    
    
    4.18
    
    
    
    4.36
    
    
    
    4.61
    
    
    
    4.51Efficiency Ratio (3)
    
    
    58.48
    
    
    
    61.59
    
    
    
    62.77
    
    
    
    65.73
    
    
    
    66.22Dividends Declared Per Share
to Diluted Net Income Per Share
    
    
    10.87
    
    
    
    13.51
    
    
    
    16.67
    
    
    
    22.22
    
    
    
    25.64CAPITAL AND CREDIT QUALITY RATIOS:Average Equity to Average Assets
    
    
    6.92
    %
    
    
    7.81
    %
    
    
    8.45
    %
    
    
    10.23
    %
    
    
    11.72
    %Allowance for Loan Losses to Loans
    
    
    .87
    
    
    
    .71
    
    
    
    .74
    
    
    
    .68
    
    
    
    .61Nonperforming Assets to Total Assets
    
    
    1.42
    
    
    
    .46
    
    
    
    1.21
    
    
    
    1.06
    
    
    
    .84Net Recoveries (Charge-offs) to Average Loans
    
    
    (.01
    )
    
    
    (.07
    )
    
    
    (.04
    )
    
    
    .02
    
    
    
    (.04
    )
 
 (1)
    
    All per share amounts have been adjusted to give retroactive effect for the two-for-one stock
split approved by the Board of Directors on February 24, 2004, the 1% stock dividends approved by
the Board of Directors in December 2005, March 2006, May 2006, and August 2006, and the two-for-one
stock split approved by the Board of Directors in March 2007.(2)
    
    Total stockholders equity, net of goodwill and other intangible assets, divided by the number
of shares of common stock outstanding at year end.(3)
    
    The Efficiency Ratio equals noninterest expenses as a percentage of net interest income plus
noninterest income. 14




---



##### 



(1)
  2007
    
    
    
    
    
    
    
    
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    2005Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateAssetsLoans
    
    $
    331,021
    
    
    $
    27,677
    
    
    
    8.36
    %
    
    $
    263,185
    
    
    $
    21,174
    
    
    
    8.05
    %
    
    $
    202,318
    
    
    $
    14,663
    
    
    
    7.25
    %Investment securities
    
    
    5,674
    
    
    
    284
    
    
    
    5.01
    
    
    
    5,914
    
    
    
    276
    
    
    
    4.67
    
    
    
    5,768
    
    
    
    187
    
    
    
    3.25Other earning assets
    
    
    6,845
    
    
    
    283
    
    
    
    4.12
    
    
    
    5,551
    
    
    
    196
    
    
    
    3.53
    
    
    
    5,599
    
    
    
    137
    
    
    
    2.44Total earning assets
    
    
    343,540
    
    
    
    28,244
    
    
    
    8.22
    
    
    
    274,650
    
    
    
    21,646
    
    
    
    7.88
    
    
    
    213,682
    
    
    
    14,987
    
    
    
    7.01Other assets
    
    
    26,442
    
    
    
    
    
    
    
    
    
    
    
    21,795
    
    
    
    
    
    
    
    
    
    
    
    17,821Total assets
    
    $
    369,982
    
    
    
    
    
    
    
    
    
    
    $
    296,445
    
    
    
    
    
    
    
    
    
    
    $
    231,503Liabilities and
Stockholders
Equity:Deposits
    
    
    280,899
    
    
    
    11,213
    
    
    
    3.99
    
    
    
    224,156
    
    
    
    7,546
    
    
    
    3.37
    
    
    
    169,801
    
    
    
    4,132
    
    
    
    2.43FHLB advances
    
    
    42,043
    
    
    
    2,012
    
    
    
    4.79
    
    
    
    39,740
    
    
    
    2,071
    
    
    
    5.21
    
    
    
    40,664
    
    
    
    1,547
    
    
    
    3.80Guaranteed preferred
beneficial interest
in junior
subordinated
debentures
    
    
    17,000
    
    
    
    1,121
    
    
    
    6.59
    
    
    
    8,789
    
    
    
    550
    
    
    
    6.25
    
    
    
    0
    
    
    
    0
    
    
    
    0Total
interest-bearing
liabilities
    
    
    339,942
    
    
    
    14,346
    
    
    
    4.22
    
    
    
    272,685
    
    
    
    10,167
    
    
    
    3.73
    
    
    
    210,465
    
    
    
    5,679
    
    
    
    2.70Net interest
income and spread
    
    
    
    
    
    $
    13,898
    
    
    
    4.00
    %
    
    
    
    
    
    $
    11,479
    
    
    
    4.15
    %
    
    
    
    
    
    $
    9,308
    
    
    
    4.31
    %Noninterest-bearing
liabilities
    
    
    4,436
    
    
    
    
    
    
    
    
    
    
    
    616
    
    
    
    
    
    
    
    
    
    
    
    1,465Total liabilities
    
    
    344,378
    
    
    
    
    
    
    
    
    
    
    
    273,301
    
    
    
    
    
    
    
    
    
    
    
    211,930Stockholders equity
    
    
    25,604
    
    
    
    
    
    
    
    
    
    
    
    23,144
    
    
    
    
    
    
    
    
    
    
    
    19,573Total
liabilities
and
stockholders
equity
    
    $
    369,982
    
    
    
    
    
    
    
    
    
    
    $
    296,445
    
    
    
    
    
    
    
    
    
    
    $
    231,503Net Interest Margin
    
    
    
    
    
    
    
    
    
    
    4.05
    %
    
    
    
    
    
    
    
    
    
    
    4.18
    %
    
    
    
    
    
    
    
    
    
    
    4.36
    %Average interest earning assets tointerest bearing liabilities
    
    
    
    
    
    
    
    
    101.06
    
    
    
    
    
    
    
    
    
    
    
    100.72
    
    
    
    
    
    
    
    
    
    
    
    101.53
 
 (1)
    
    No tax equivalent adjustments were made.(2)
    
    Non-accrual loans are included in the average balances. 15




---



##### 



16




---



##### 



2007 vs. 2006
    
    
    2006 vs. 2005Increase
    
    
    Due to Change
    
    
    Increase
    
    
    Due to ChangeOr
    
    
    in Average:*
    
    
    or
    
    
    in Average:*(Dollars in thousands)
    
    (Decrease)
    
    
    Volume
    
    
    Rate
    
    
    (Decrease)
    
    
    Volume
    
    
    RateInterest income from earning assets:Loans
    
    $
    6,503
    
    
    $
    5,644
    
    
    $
    859
    
    
    $
    6,511
    
    
    $
    4,767
    
    
    $
    1,744Investment securities
    
    
    8
    
    
    
    (11
    )
    
    
    19
    
    
    
    89
    
    
    
    5
    
    
    
    84Other interest-earning assets
    
    
    87
    
    
    
    50
    
    
    
    37
    
    
    
    59
    
    
    
    (1
    )
    
    
    60Total Interest Income
    
    
    6,598
    
    
    
    5,629
    
    
    
    969
    
    
    
    6,659
    
    
    
    4,645
    
    
    
    2,014Interest expense:Interest-bearing deposits
    
    
    3,667
    
    
    
    2,115
    
    
    
    1,552
    
    
    
    3,414
    
    
    
    1,553
    
    
    
    1,861FHLB advances
    
    
    (59
    )
    
    
    116
    
    
    
    (175
    )
    
    
    524
    
    
    
    (36
    )
    
    
    560Guaranteed preferred beneficial interest
in junior subordinated debentures
    
    
    571
    
    
    
    540
    
    
    
    31
    
    
    
    550
    
    
    
    550
    
    
    
    0Total Interest Expense
    
    
    4,179
    
    
    
    2,723
    
    
    
    1,456
    
    
    
    4,488
    
    
    
    1,959
    
    
    
    2,529Net Interest Income
    
    $
    2,419
    
    
    $
    2,906
    
    
    $
    (487
    )
    
    $
    2,171
    
    
    $
    2,686
    
    
    $
    (515
    )
 
 *
    
    Variances are computed line-by-line and do not add to the totals shown. Changes in rate-volume
(changes in rate multiplied by the changes in volume) are allocated between changes in rate and
changes in volume in proportion to the relative contribution of each.    17




---



##### 



18




---



##### 



19




---



##### 



20




---



##### 



2007
    
    
    2006Percentage
    
    
    
    
    
    
    Percentage(Dollars in thousands)
    
    Amount
    
    
    of Total
    
    
    Amount
    
    
    of TotalReal estate loans:Construction loans
    
    $
    79,150
    
    
    
    22.07
    %
    
    $
    73,782
    
    
    
    23.63
    %One- to four-family residential and home equity
    
    
    125,723
    
    
    
    35.05
    
    
    
    109,151
    
    
    
    34.95Multi-family residential
    
    
    7,149
    
    
    
    1.99
    
    
    
    6,679
    
    
    
    2.14Land
    
    
    3,262
    
    
    
    0.91
    
    
    
    2,805
    
    
    
    0.90Commercial
    
    
    126,850
    
    
    
    35.36
    
    
    
    102,348
    
    
    
    32.77Total real estate loans
    
    
    342,134
    
    
    
    95.38
    
    
    
    294,765
    
    
    
    94.39Commercial business loans
    
    
    10,206
    
    
    
    2.84
    
    
    
    10,755
    
    
    
    3.44Consumer loans
    
    
    6,364
    
    
    
    1.78
    
    
    
    6,780
    
    
    
    2.17Gross loans
    
    
    358,704
    
    
    
    100.00
    %
    
    
    312,300
    
    
    
    100.00
    %Less: Allowance for Loan Losses
    
    
    (3,109
    )
    
    
    
    
    
    
    (2,217
    )Net loans
    
    $
    355,595
    
    
    
    
    
    
    $
    310,083
 21




---



##### 



(In thousands)
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Real estate loans:Construction
    
    $
    79,150
    
    
    $
    73,782
    
    
    $
    16,414
    
    
    $
    14,556
    
    
    $
    10,1771-4 family residential and home equity
    
    
    125,723
    
    
    
    109,151
    
    
    
    86,334
    
    
    
    69,012
    
    
    
    59,272Multi-family residential
    
    
    7,149
    
    
    
    6,679
    
    
    
    4,523
    
    
    
    4,422
    
    
    
    1,481Land
    
    
    3,262
    
    
    
    2,805
    
    
    
    3,477
    
    
    
    2,182
    
    
    
    4,021Commercial
    
    
    126,850
    
    
    
    102,348
    
    
    
    45,338
    
    
    
    26,174
    
    
    
    21,760Total real estate loans
    
    
    342,134
    
    
    
    294,765
    
    
    
    156,086
    
    
    
    116,346
    
    
    
    96,711Commercial business loans
    
    
    10,206
    
    
    
    10,755
    
    
    
    67,277
    
    
    
    49,474
    
    
    
    23,858Consumer loans
    
    
    6,364
    
    
    
    6,780
    
    
    
    11,682
    
    
    
    9,159
    
    
    
    7,103Gross loans
    
    
    358,704
    
    
    
    312,300
    
    
    
    235,045
    
    
    
    174,979
    
    
    
    127,672Less allowance for loan losses
    
    
    (3,109
    )
    
    
    (2,217
    )
    
    
    (1,738
    )
    
    
    (1,189
    )
    
    
    (786
    )Net loans
    
    $
    355,595
    
    
    $
    310,083
    
    
    $
    233,307
    
    
    $
    173,790
    
    
    $
    126,886
   At December 31, 2007Remaining Maturities of Selected Credits in Years(Dollars in thousands)
    
    1 or Less
    
    
    Over 1-5
    
    
    Over 5
    
    
    TotalReal estate:Mortgage
    
    $
    255,656
    
    
    $
    52,654
    
    
    $
    10,086
    
    
    $
    318,396Home equity and second
mortgages
    
    
    17,871
    
    
    
    1,138
    
    
    
    4,729
    
    
    
    23,738Commercial
    
    
    7,571
    
    
    
    2,256
    
    
    
    379
    
    
    
    10,206Consumer
    
    
    2,972
    
    
    
    2,501
    
    
    
    891
    
    
    
    6,364Total
    
    $
    284,070
    
    
    $
    58,549
    
    
    $
    16,085
    
    
    $
    358,704Rate Terms:Fixed
    
    $
    3,796
    
    
    $
    7,087
    
    
    $
    16,085
    
    
    $
    26,968Variable or adjustable
    
    
    280,274
    
    
    
    51,462
    
    
    
    0
    
    
    
    331,736Total
    
    $
    284,070
    
    
    $
    58,549
    
    
    $
    16,085
    
    
    $
    358,704
     22




---



##### 



23




---



##### 



Years Ended December 31,(Dollars in thousands)
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Balance of allowance, January 1
    
    $
    2,217
    
    
    $
    1,738
    
    
    $
    1,189
    
    
    $
    786
    
    
    $
    613Loan and lease charge-offs:Residential real estate
    
    
    0
    
    
    
    (35
    )
    
    
    (5
    )
    
    
    0
    
    
    
    0Commercial loans
    
    
    (30
    )
    
    
    (121
    )
    
    
    (29
    )
    
    
    (9
    )
    
    
    0Consumer
    
    
    (40
    )
    
    
    (92
    )
    
    
    (86
    )
    
    
    (63
    )
    
    
    (147
    )Total charge-offs
    
    
    (70
    )
    
    
    (248
    )
    
    
    (120
    )
    
    
    (72
    )
    
    
    (147
    )Loan and lease recoveries:Residential real estate
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Commercial loans
    
    
    0
    
    
    
    14
    
    
    
    0
    
    
    
    0
    
    
    
    0Consumer
    
    
    27
    
    
    
    48
    
    
    
    44
    
    
    
    105
    
    
    
    100Total recoveries
    
    
    27
    
    
    
    62
    
    
    
    44
    
    
    
    105
    
    
    
    100Net (charge-offs) recoveries
    
    
    (43
    )
    
    
    (186
    )
    
    
    (76
    )
    
    
    33
    
    
    
    (47
    )Provision for loan losses
    
    
    935
    
    
    
    665
    
    
    
    625
    
    
    
    370
    
    
    
    220Balance of allowance, December 31
    
    $
    3,109
    
    
    $
    2,217
    
    
    $
    1,738
    
    
    $
    1,189
    
    
    $
    786Net (charge-offs) recoveries to average loans and leases
    
    
    (0.01
    )%
    
    
    (0.07
    )%
    
    
    (0.04
    )%
    
    
    0.02
    %
    
    
    (0.04
    )%Allowance to total loans and leases
    
    
    0.87
    %
    
    
    0.71
    %
    
    
    0.74
    %
    
    
    0.68
    %
    
    
    0.61
    %
  December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003Credit
    
    
    
    
    
    Credit
    
    
    
    
    
    Credit
    
    
    
    
    
    Credit
    
    
    
    
    
    Credit(Dollars in thousands)
    
    Amount
    
    Mix
    
    Amount
    
    Mix
    
    Amount
    
    Mix
    
    Amount
    
    Mix
    
    Amount
    
    MixAmount applicable to:Real estate loans:Construction
    
    $
    1,744
    
    
    
    22
    %
    
    $
    661
    
    
    
    9
    %
    
    $
    469
    
    
    
    7
    %
    
    $
    216
    
    
    
    8
    %
    
    $
    0
    
    
    
    8
    %1-4 family residential
and home equity
    
    
    194
    
    
    
    35
    
    
    
    123
    
    
    
    29
    
    
    
    118
    
    
    
    37
    
    
    
    170
    
    
    
    39
    
    
    
    39
    
    
    
    46Multi-family residential
    
    
    0
    
    
    
    2
    
    
    
    0
    
    
    
    2
    
    
    
    0
    
    
    
    2
    
    
    
    0
    
    
    
    3
    
    
    
    0
    
    
    
    1Land
    
    
    52
    
    
    
    1
    
    
    
    33
    
    
    
    1
    
    
    
    98
    
    
    
    1
    
    
    
    78
    
    
    
    1
    
    
    
    0
    
    
    
    3Commercial
    
    
    931
    
    
    
    35
    
    
    
    589
    
    
    
    28
    
    
    
    410
    
    
    
    19
    
    
    
    94
    
    
    
    15
    
    
    
    34
    
    
    
    17Total Real Estate Loans
    
    
    2,921
    
    
    
    95
    
    
    
    1,406
    
    
    
    69
    
    
    
    1,095
    
    
    
    66
    
    
    
    558
    
    
    
    66
    
    
    
    73
    
    
    
    75Commercial business loans
    
    
    64
    
    
    
    3
    
    
    
    659
    
    
    
    26
    
    
    
    446
    
    
    
    29
    
    
    
    424
    
    
    
    28
    
    
    
    162
    
    
    
    19Consumer Loans
    
    
    124
    
    
    
    2
    
    
    
    152
    
    
    
    5
    
    
    
    197
    
    
    
    5
    
    
    
    207
    
    
    
    6
    
    
    
    551
    
    
    
    6Total allowance
    
    $
    3,109
    
    
    
    100
    %
    
    $
    2,217
    
    
    
    100
    %
    
    $
    1,738
    
    
    
    100
    %
    
    $
    1,189
    
    
    
    100
    %
    
    $
    786
    
    
    
    100
    %
   December 31,(Dollars in thousands)
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Non-accrual loans and leases (1)
    
    $
    5,065
    
    
    $
    1,382
    
    
    $
    2,818
    
    
    $
    2,092
    
    
    $
    806Loans and leases 90 days past due
    
    
    0
    
    
    
    211
    
    
    
    18
    
    
    
    28
    
    
    
    446Restructured loans and leases
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total non-performing loans and leases (2)
    
    
    5,065
    
    
    
    1,593
    
    
    
    2,836
    
    
    
    2,120
    
    
    
    1,252Other real estate owned, net
    
    
    655
    
    
    
    0
    
    
    
    385
    
    
    
    0
    
    
    
    0Total non-performing assets
    
    $
    5,720
    
    
    $
    1,593
    
    
    $
    3,221
    
    
    $
    2,120
    
    
    $
    1,252Non-performing loans and leases to total loans
    
    
    1.41
    %
    
    
    0.51
    %
    
    
    1.21
    %
    
    
    1.22
    %
    
    
    0.99
    %Non-performing assets to total assets
    
    
    1.42
    %
    
    
    0.46
    %
    
    
    1.21
    %
    
    
    1.06
    %
    
    
    0.84
    %Allowance for loan and lease losses to non-performing
loans and leases
    
    
    61.38
    %
    
    
    139.17
    %
    
    
    61.28
    %
    
    
    56.08
    %
    
    
    62.78
    %
 24




---



##### 



(1)
    
    Gross interest income that would have been recorded in 2007 if non-accrual loans and
leases had been current and in accordance with their original terms was $580,000, while interest
actually recorded on such loans was $200,000.(2)
    
    Performing loans considered potential problem loans, as defined and identified by
management, amounted to $95,000 at December 31, 2007. Although these are loans where known
information about the borrowers possible credit problems causes management to have doubts as to
the borrowers ability to comply with the present loan repayment terms, most are well
collateralized and are not believed to present significant risk of loss. Loans classified for
regulatory purposes not included in nonperforming loans consist only of other loans especially
mentioned and do not, in managements opinion, represent or result from trends or uncertainties
reasonably expected to materially affect future operating results, liquidity or capital resources
or represent material credits where known information about the borrowers possible credit problems
causes management to have doubts as to the borrowers ability to comply with the loan repayment
terms.   (Dollars in thousands)
    
    2007
    
    
    2006
    
    
    2005Available-for-Sale:(1)Mutual Funds-Mortgage Securities
    
    $
    1,383
    
    
    $
    1,375
    
    
    $
    1,315Mutual Funds-U.S. Government Securities
    
    
    758
    
    
    
    741
    
    
    
    710Equity Securities
    
    
    213
    
    
    
    277
    
    
    
    74Mortgage-backed Securities
    
    
    116
    
    
    
    141
    
    
    
    162Total
    
    
    2,470
    
    
    
    2,534
    
    
    
    2,261Held-to-Maturity:U.S. Government and Agency (2)
    
    
    2,749
    
    
    
    3,737
    
    
    
    3,735Total Investment Securities (3)
    
    $
    5,219
    
    
    $
    6,271
    
    
    $
    5,996
 
 (1)
    
    At estimated fair value.(2)
    
    Issued by a U. S. Government Agency or secured by U.S. Government Agency collateral.(3)
    
    The outstanding balance of no single issuer, except for U.S. Government and U.S. Government
Agency securities, exceeded ten percent of stockholders equity at December 31, 2007, 2006 or 2005.  WeightedAverage(Dollars in thousands)
    
    Amount
    
    
    YieldAvailable-for-Sale:Mortgage Backed Securities
    
    $
    116
    
    
    
    5.33
    %Held-to-Maturity:U.S. Government and Agency
    
    
    2,749
    
    
    
    4.93
    %Total Debt Securities
    
        $
    2,865
    
    
    
    4.95
    %
 25




---



##### 



2007
    
    
    2006Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    % of
    
    
    
    
    
    
    Average
    
    
    % of(Dollars in thousands)
    
    Balance
    
    
    Rate
    
    
    Total
    
    
    Balance
    
    
    Rate
    
    
    TotalNOW and Money Market Accounts
    
    $
    28,675
    
    
    
    1.68
    %
    
    
    10.74
    %
    
    $
    22,331
    
    
    
    1.77
    %
    
    
    8.25
    %Savings accounts
    
    
    20,095
    
    
    
    0.75
    
    
    
    7.53
    
    
    
    20,742
    
    
    
    0.75
    
    
    
    7.67Term Certificates
    
    
    200,498
    
    
    
    4.95
    
    
    
    75.08
    
    
    
    209,716
    
    
    
    4.65
    
    
    
    77.50Checking Accounts
    
    
    17,764
    
    
    
    0.00
    
    
    
    6.65
    
    
    
    17,815
    
    
    
    0.00
    
    
    
    6.58Total Deposits
    
    $
    267,032
    
    
    
    
    
    
    
    100.00
    %
    
    $
    270,604
    
    
    
    
    
    
    
    100.00
    %
 2005WeightedAverage
    
    
    % of(Dollars in thousands)
    
    Balance
    
    
    Rate
    
    
    TotalNOW and Money Market Accounts
    
    $
    27,065
    
    
    
    0.89
    %
    
    
    13.66
    %Savings accounts
    
    
    19,184
    
    
    
    0.76
    
    
    
    9.68Term Certificates
    
    
    134,825
    
    
    
    4.04
    
    
    
    68.02Checking Accounts
    
    
    17,133
    
    
    
    0.00
    
    
    
    8.64Total Deposits
    
    $
    198,207
    
    
    
    
    
    
    
    100.00
    %
   2007
    
    2006Maturity
    
    
    
    
    
    
    
    
    
    
    
    
    MaturityAmount
    
    
    Date
    
    
    Rate
    
    
    Type
    
    Amount
    
    
    Date
    
    
    Rate
    
    
    Type$
    20,570
    
    
    Demand
    
    Variable
    
    Overnight
    
    $
    6,060
    
    
    Demand
    
    Variable
    
    Overnight429
    
    
    
    2010
    
    
    
    3.930
    
    
    Fixed
    
    
    571
    
    
    
    2010
    
    
    
    3.93
    
    
    Fixed10,000
    
    
    
    2012
    
    
    
    5.060
    
    
    Fixed
    
    
    14,000
    
    
    
    2007
    
    
    
    5.32
    
    
    30 Day7,500
    
    
    
    2017
    
    
    
    3.776
    
    
    Fixed
    
    
    10,000
    
    
    
    2007
    
    
    
    5.36
    
    
    30 Day7,500
    
    
    
    2017
    
    
    
    3.690
    
    
    Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,000
    
    
    
    2017
    
    
    
    3.588
    
    
    Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,500
    
    
    
    2017
    
    
    
    3.875
    
    
    Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    2017
    
    
    
    3.448
    
    
    Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    2017
    
    
    
    2.955
    
    
    Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    84,499
    
    
    
    
    
    
    
    
    
    
    
    
    $
    30,631
 2005MaturityAmount
    
    Date
    Rate
    
    Type$
    18,200
    
    
    Demand
    
    Variable
    
    
    Overnight20,000
    
    
    2006
    
    Variable
    
    
    Adjustable6,000
    
    
    2006
    
    
    4.97
    
    
    Fixed714
    
    
    2010
    
    
    3.93
    
    
    Fixed$
    44,914
   26




---



##### 



27




---



##### 



Months to Maturity3 or
    
    Over 3
    
    Over 6
    
    Over(Dollars in thousands)
    
    less
    
    to 6
    
    to 12
    
    12
    
    TOTALTime deposits$100 thousand or more
    
    $
    14,612
    
    
    $
    13,861
    
    
    $
    23,100
    
    
    $
    6,050
    
    
    $
    57,623
         28




---



##### 



29




---



##### 



30




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    32CONSOLIDATED FINANCIAL STATEMENTSBalance Sheets
    
    
    33Statements of Income
    
    
    35Statements of Changes in Stockholders Equity
    
    
    36Statements of Cash Flows
    
    
    37NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    39
  31




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 32




---



##### 



CECIL BANCORP, INC. AND SUBSIDIARIES
  2007
    
    
    2006Cash and due from banks
    
    $
    1,205
    
    
    $
    1,316Interest bearing deposits with banks
    
    
    4,306
    
    
    
    5,259Investment securities:Securities available-for-sale at fair value
    
    
    2,470
    
    
    
    2,534Securities held-to-maturity (fair value of $2,753
in 2007 and $3,738 in 2006)
    
    
    2,749
    
    
    
    3,737Restricted investment securities  at cost
    
    
    4,750
    
    
    
    2,382Loans receivable
    
    
    358,704
    
    
    
    312,300Less: Allowance for loan losses
    
    
    (3,109
    )
    
    
    (2,217
    )Net loans receivable
    
    
    355,595
    
    
    
    310,083Other real estate owned
    
    
    655
    
    
    
    Premises and equipment, net
    
    
    11,997
    
    
    
    9,208Accrued interest receivable
    
    
    2,122
    
    
    
    1,695Goodwill
    
    
    2,182
    
    
    
    2,182Other intangible assets
    
    
    240
    
    
    
    193Bank owned life insurance
    
    
    7,532
    
    
    
    5,914Other assets
    
    
    5,629
    
    
    
    2,948TOTAL ASSETS
    
    $
    401,432
    
    
    $
    347,451
  33




---



##### 



2007
    
    
    2006LIABILITIES:Deposits
    
    $
    267,032
    
    
    $
    270,604Other liabilities
    
    
    5,659
    
    
    
    4,943Guaranteed preferred beneficial interest in
junior subordinated debentures
    
    
    17,000
    
    
    
    17,000Advances from Federal Home Loan Bank of Atlanta
    
    
    84,499
    
    
    
    30,631Total liabilities
    
    
    374,190
    
    
    
    323,178STOCKHOLDERS EQUITY:Common stock, $.01 par value; authorized 10,000,000
shares in 2007 and 4,000,000 shares in 2006, issued
and outstanding 3,678,286 shares in 2007 and
1,839,143 shares in 2006
    
    
    37
    
    
    
    18Additional paid in capital
    
    
    11,441
    
    
    
    11,460Retained earnings
    
    
    15,856
    
    
    
    12,824Accumulated other comprehensive loss
    
    
    (92
    )
    
    
    (29
    )Total stockholders equity
    
    
    27,242
    
    
    
    24,273TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY
    
    $
    401,432
    
    
    $
    347,451
  34




---



##### 



CECIL BANCORP, INC. AND SUBSIDIARIES
 2007
    
    
    2006INTEREST INCOME:Interest and fees on loans
    
    $
    27,677
    
    
    $
    21,174Interest on investment securities
    
    
    284
    
    
    
    276Dividends on FHLB and FRB stock
    
    
    173
    
    
    
    147Other interest-earning assets
    
    
    110
    
    
    
    49Total interest income
    
    
    28,244
    
    
    
    21,646INTEREST EXPENSE:Interest expense on deposits
    
    
    11,213
    
    
    
    7,546Guaranteed preferred beneficial interest in junior subordinated debentures
    
    
    1,121
    
    
    
    550Interest expense on advances from FHLB
    
    
    2,012
    
    
    
    2,071Total interest expense
    
    
    14,346
    
    
    
    10,167NET INTEREST INCOME
    
    
    13,898
    
    
    
    11,479PROVISION FOR LOAN LOSSES
    
    
    935
    
    
    
    665NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    
    
    12,963
    
    
    
    10,814NONINTEREST INCOME:Checking account fees
    
    
    554
    
    
    
    540ATM fees
    
    
    302
    
    
    
    108Commission income
    
    
    30
    
    
    
    75Loss on sale of other real estate owned
    
    
    
    
    
    
    (43
    )Gain on sale of loans
    
    
    114
    
    
    
    101Income from bank owned life insurance
    
    
    318
    
    
    
    234Other
    
    
    182
    
    
    
    246Total noninterest income
    
    
    1,500
    
    
    
    1,261NONINTEREST EXPENSE:Salaries and employee benefits
    
    
    5,714
    
    
    
    5,051Occupancy expense
    
    
    630
    
    
    
    589Equipment and data processing expense
    
    
    1,231
    
    
    
    896Checking account expense
    
    
    10
    
    
    
    92Professional fees
    
    
    269
    
    
    
    202Stationery, printing and supplies
    
    
    65
    
    
    
    51Advertising
    
    
    96
    
    
    
    97Other
    
    
    989
    
    
    
    869Total noninterest expense
    
    
    9,004
    
    
    
    7,847INCOME BEFORE INCOME TAXES
    
    
    5,459
    
    
    
    4,228INCOME TAX EXPENSE
    
    
    2,059
    
    
    
    1,520NET INCOME
    
    $
    3,400
    
    
    $
    2,708Earnings per common share  basic
    
    $
    0.92
    
    
    $
    0.74Earnings per common share  diluted
    
    $
    0.92
    
    
    $
    0.74Dividends declared per common share
    
    $
    0.10
    
    
    $
    0.10
  35




---



##### 



CECIL BANCORP, INC. AND SUBSIDIARIES
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    EquityBALANCES AT JANUARY 1, 2006
    
    $
    18
    
    
    $
    10,578
    
    
    $
    11,372
    
    
    $
    (26
    )
    
    $
    21,942Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    2,708
    
    
    
    
    
    
    
    2,708Other comprehensive loss, net of
related income tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,705Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    (374
    )
    
    
    
    
    
    
    (374
    )Stock dividends
    
    
    
    
    
    
    882
    
    
    
    (882
    )
    
    
    
    
    
    
    BALANCES AT DECEMBER 31, 2006
    
    
    18
    
    
    
    11,460
    
    
    
    12,824
    
    
    
    (29
    )
    
    
    24,273Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    3,400
    
    
    
    
    
    
    
    3,400Other comprehensive loss, net of
related income tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63
    )
    
    
    (63
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,337Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    (368
    )
    
    
    
    
    
    
    (368
    )2-for-1 stock split
    
    
    19
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    BALANCES AT DECEMBER 31, 2007
    
    $
    37
    
    
    $
    11,441
    
    
    $
    15,856
    
    
    $
    (92
    )
    
    $
    27,242
  36




---



##### 



CECIL BANCORP, INC. AND SUBSIDIARIES
 2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    3,400
    
    
    $
    2,708Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    490
    
    
    
    333Provision for loan losses
    
    
    935
    
    
    
    665Gain on sale of loans
    
    
    (114
    )
    
    
    (101
    )Loss on sale of real estate owned
    
    
    
    
    
    
    43Loss on disposal of premises and equipment
    
    
    
    
    
    
    1Increase in cash surrender value of bank owned life insurance
    
    
    (318
    )
    
    
    (234
    )Deferred income taxes
    
    
    (977
    )
    
    
    (507
    )Excess servicing rights
    
    
    (87
    )
    
    
    (73
    )Reinvested dividends on investments
    
    
    (65
    )
    
    
    (96
    )Originations of loans held for sale
    
    
    (6,337
    )
    
    
    (5,441
    )Proceeds from sales of loans held for sale
    
    
    6,376
    
    
    
    5,485Net change in:Accrued interest receivable and other assets
    
    
    (2,091
    )
    
    
    (1,820
    )Other liabilities
    
    
    716
    
    
    
    2,881Net cash provided by operating activities
    
    
    1,928
    
    
    
    3,844CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of investment securities held-to-maturity
    
    
    (3,719
    )
    
    
    (7,328
    )Proceeds from sales, maturities, calls and principal payments
of investment securities available-for-sale
    
    
    26
    
    
    
    21Proceeds from maturities, calls and principal payments
of investment securities held-to-maturity
    
    
    4,750
    
    
    
    7,500Net (purchase) redemption of stock in Federal Home Loan Bank
    
    
    (2,368
    )
    
    
    224Net increase in loans
    
    
    (47,026
    )
    
    
    (77,384
    )Proceeds from sale of real estate owned
    
    
    
    
    
    
    342Purchase of bank owned life insurance
    
    
    (3,163
    )
    
    
    (650
    )Surrender of bank owned life insurance
    
    
    1,863
    
    
    
    Purchases of premises and equipment  net
    
    
    (3,283
    )
    
    
    (428
    )Net cash used by investing activities
    
    
    (52,920
    )
    
    
    (77,703
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net (decrease) increase in deposits
    
    
    (3,572
    )
    
    
    72,397Net increase (decrease) in advances from Federal Home Loan Bank:Short-term
    
    
    14,510
    
    
    
    (8,140
    )Long-term
    
    
    39,358
    
    
    
    (6,144
    )Net increase in guaranteed preferred beneficial
interest in junior subordinated debentures
    
    
    
    
    
    
    17,000Payments of cash dividends
    
    
    (368
    )
    
    
    (374
    )Net cash provided by financing activities
    
    
    49,928
    
    
    
    74,739
 37




---



##### 



Cecil Bancorp, Inc. and Subsidiaries
 2007
    
    
    2006(Decrease) increase in cash and cash equivalents
    
    $
    (1,064
    )
    
    $
    880Cash and cash equivalents at beginning of year
    
    
    6,575
    
    
    
    5,695Cash and cash equivalents at end of year
    
    $
    5,511
    
    
    $
    6,575Supplemental disclosure of cash flows information:Cash paid for income taxes
    
    $
    3,208
    
    
    $
    2,120Cash paid for interest
    
    $
    14,117
    
    
    $
    10,081Supplemental disclosure of noncash investing
and financing activities:Transfer of loans receivable to real estate owned
    
    $
    655
    
    
    $
    Sale of real estate owned:Carrying value
    
    $
    
    
    
    $
    385Loss on sale
    
    
    
    
    
    
    (43
    )Cash received from sale
    
    $
    
    
    
    $
    342
  38




---



##### 



CECIL BANCORP, INC. AND SUBSIDIARIES
    Nature of Operations
  Policy for Consolidation
  Use of Estimates
  Cash and Cash Equivalents
  39




---



##### 



Investment Securities
   Restricted Investment Securities
  Loans Receivable
   40




---



##### 



Loans Held for Sale
  Allowance for Loan Losses
    Premises and Equipment
  41




---



##### 



Other Real Estate Owned
  Goodwill
  Mortgage Servicing Rights
    Bank Owned Life Insurance
  Income Taxes
  42




---



##### 



Advertising
  Earnings Per Share
  Stock-Based Compensation
 Share-Based Payment
 Accounting for Stock Issued to
Employees
  Comprehensive Income
   Accounting for Certain Hybrid Financial Instruments,
 43




---



##### 



Accounting for Servicing of Financial Assets Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities
 Fair Value Measurements.
 Accounting for Uncertainty in
Income Taxes
 Fair Value Option for Financial Assets and
Liabilities
 Business Combinations.
 44




---



##### 



Noncontrolling Interests in Consolidated
Financial Statements.
    2007Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueAvailable-for-Sale:Mutual funds  mortgage securities
    
    $
    1,435
    
    
    $
    
    
    
    $
    52
    
    
    $
    1,383Mutual funds  U.S. Government securities
    
    
    760
    
    
    
    
    
    
    
    2
    
    
    
    758Equity securities
    
    
    306
    
    
    
    
    
    
    
    93
    
    
    
    213Mortgage-backed securities
    
    
    120
    
    
    
    
    
    
    
    4
    
    
    
    116$
    2,621
    
    
    $
    
    
    
    $
    151
    
    
    $
    2,470Held-to-Maturity:U. S. Treasury securities and obligations
of U. S. Government and Federal agencies
    
    $
    2,749
    
    
    $
    4
    
    
    $
    
    
    
    $
    2,753
 2006Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueAvailable-for-Sale:Mutual funds  mortgage securities
    
    $
    1,411
    
    
    $
    
    
    
    $
    36
    
    
    $
    1,375Mutual funds  U.S. Government securities
    
    
    747
    
    
    
    
    
    
    
    6
    
    
    
    741Equity securities
    
    
    277
    
    
    
    
    
    
    
    
    
    
    
    277Mortgage-backed securities
    
    
    146
    
    
    
    
    
    
    
    5
    
    
    
    141$
    2,581
    
    
    $
    
    
    
    $
    47
    
    
    $
    2,534Held-to-Maturity:U. S. Treasury securities and obligations
of U. S. Government and Federal agencies
    
    $
    3,737
    
    
    $
    1
    
    
    $
    
    
    
    $
    3,738
  45




---



##### 



Less than
    
    
    More than12 months
    
    
    12 months
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    LossAvailable-for-Sale:Mutual funds 
mortgage securities
    
    $
    
    
    
    $
    
    
    
    $
    1,383
    
    
    $
    52
    
    
    $
    1,383
    
    
    $
    52Mutual funds 
US Government securities
    
    
    
    
    
    
    
    
    
    
    758
    
    
    
    2
    
    
    
    758
    
    
    
    2Equity securities
    
    
    213
    
    
    
    93
    
    
    
    
    
    
    
    
    
    
    
    213
    
    
    
    93Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    116
    
    
    
    4
    
    
    
    116
    
    
    
    4$
    213
    
    
    $
    93
    
    
    $
    2,257
    
    
    $
    58
    
    
    $
    2,470
    
    
    $
    151
    46




---



##### 



2007
    
    
    2006Real estate loans:1  4 dwelling units and home equity
    
    $
    126,725
    
    
    $
    110,0865 or more
    
    
    7,149
    
    
    
    6,679Nonresidential
    
    
    126,850
    
    
    
    102,348Land
    
    
    3,262
    
    
    
    2,805Construction
    
    
    95,954
    
    
    
    101,465359,940
    
    
    
    323,383Commercial loans
    
    
    10,206
    
    
    
    10,755Consumer loans
    
    
    6,364
    
    
    
    6,780Gross loans
    
    
    376,510
    
    
    
    340,918Less:Undisbursed proceeds on loans in process
    
    
    (16,804
    )
    
    
    (27,683
    )Deferred loan fees and costs
    
    
    (1,002
    )
    
    
    (935
    )Loans receivable
    
    $
    358,704
    
    
    $
    312,300
  2007
    
    
    2006Balance at beginning of year
    
    $
    10,687
    
    
    $
    3,637Change in related party classification
    
    
    
    
    
    
    4,148New loans and additional borrowings
    
    
    5,450
    
    
    
    5,217Participations purchased
    
    
    
    
    
    
    1,035Participations sold
    
    
    
    
    
    
    (575
    )Repayments
    
    
    (706
    )
    
    
    (2,775
    )Balance at end of year
    
    $
    15,431
    
    
    $
    10,687
  2007
    
    
    2006Balance at beginning of period
    
    $
    2,217
    
    
    $
    1,738Provision charged to operations
    
    
    935
    
    
    
    665Charge-offs
    
    
    (70
    )
    
    
    (248
    )Recoveries
    
    
    27
    
    
    
    62Balance at end of period
    
    $
    3,109
    
    
    $
    2,217
  47




---



##### 



2007
    
    
    2006Non-accrual loans
    
    $
    5,065
    
    
    $
    1,382Loans 90 days or more past due and still accruing
    
    
    
    
    
    
    211Total nonperforming loans
    
    
    5,065
    
    
    
    1,593Other real estate owned, net
    
    
    655
    
    
    
    Total nonperforming assets
    
    $
    5,720
    
    
    $
    1,593
   2007
    
    
    2006Impaired loans with a valuation allowance
    
    $
    956
    
    
    $
    237Impaired loans without a valuation allowance
    
    
    4,109
    
    
    
    1,356Total impaired loans
    
    $
    5,065
    
    
    $
    1,593Allowance for loan losses related to impaired loans
    
    $
    145
    
    
    $
    236Allowance for loan losses related to other than
impaired loans
    
    
    2,964
    
    
    
    1,981Total allowance for loan losses
    
    $
    3,109
    
    
    $
    2,217Average impaired loans for the year
    
    $
    3,882
    
    
    $
    2,044Interest income on impaired loans
recognized on the cash basis
    
    $
    200
    
    
    $
    53
   48




---



##### 



2007
    
    
    2006Balance at beginning of period
    
    $
    193
    
    
    $
    154Mortgage servicing rights capitalized
    
    
    87
    
    
    
    73Mortgage servicing rights amortized
    
    
    (40
    )
    
    
    (34
    )Balance at end of period
    
    $
    240
    
    
    $
    193
 6.
    
    PREMISES AND EQUIPMENT
  2007
    
    
    2006Land
    
    $
    3,036
    
    
    $
    1,728Buildings and improvements
    
    
    8,967
    
    
    
    7,155Furniture, fixtures and equipment
    
    
    2,218
    
    
    
    2,067Leasehold improvements
    
    
    452
    
    
    
    44014,673
    
    
    
    11,390Less: accumulated depreciation
    
    
    2,676
    
    
    
    2,182$
    11,997
    
    
    $
    9,208
   Year ending December 31:2008
    
    $
    1302009
    
    
    1342010
    
    
    1062011
    
    
    932012
    
    
    95Thereafter
    
    
    94
    2007 and 2006Gross
    
    
    
    NetCarrying
    
    Accumulated
    
    CarryingAmount
    
    Amortization
    
    Amount$2,816
    
    $
    634
    
    
    $
    2,182
 49




---



##### 



2007
    
    
    2006Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageAmount
    
    
    Rate
    
    
    Amount
    
    
    RateNOW and Money Market accounts
    
    $
    28,675
    
    
    
    1.68
    %
    
    $
    22,331
    
    
    
    1.77
    %Savings accounts
    
    
    20,095
    
    
    
    0.75
    
    
    
    20,742
    
    
    
    0.75Term certificates
    
    
    200,498
    
    
    
    4.95
    
    
    
    209,716
    
    
    
    4.65Checking accounts
    
    
    17,764
    
    
    
    0.00
    
    
    
    17,815
    
    
    
    0.00$
    267,032
    
    
    
    
    
    
    $
    270,604
  Three months or less
    
    $
    73,429Three months to twelve months
    
    
    104,716Twelve months to twenty-four months
    
    
    16,477Twenty-four months to thirty-six months
    
    
    4,323Thirty-six months to forty-eight months
    
    
    501Forty-eight months to sixty months
    
    
    1,052$
    200,498
       2007
    
    
    2006Maturity
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    Maturity
    
    
    InterestAmount
    
    
    
    
    Date
    
    
    Rate
    
    
    Type
    
    
    Amount
    
    
    Date
    
    
    Rate
    
    
    Type$
    20,570
    
    
    
    
    On Demand
    
    Variable
    
    Overnight
    
    $
    6,060
    
    
    On Demand
    
    Variable
    
    Overnight429
    
    
    
    
    
    2010
    
    
    
    3.930
    %
    
    Fixed
    
    
    571
    
    
    
    2010
    
    
    
    3.930
    %
    
    Fixed10,000
    
    
    
    
    
    2012
    
    
    
    5.060
    %
    
    Fixed
    
    
    14,000
    
    
    
    2007
    
    
    
    5.320
    %
    
    30 Day7,500
    
    
    
    
    
    2017
    
    
    
    3.776
    %
    
    Fixed
    
    
    10,000
    
    
    
    2007
    
    
    
    5.360
    %
    
    30 Day7,500
    
    
    
    
    
    2017
    
    
    
    3.690
    %
    
    Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,000
    
    
    
    
    
    2017
    
    
    
    3.588
    %
    
    Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,500
    
    
    
    
    
    2017
    
    
    
    3.875
    %
    
    Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    
    
    2017
    
    
    
    3.448
    %
    
    Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    2017
    
    
    
    2.955
    %
    
    Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    84,499
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    30,631
 50




---



##### 



51




---



##### 



2007
    
    
    2006Current income taxes:Federal
    
    $
    2,486
    
    
    $
    1,660State
    
    
    550
    
    
    
    3673,036
    
    
    
    2,027Deferred income taxes:Federal
    
    
    (731
    )
    
    
    (420
    )State
    
    
    (246
    )
    
    
    (87
    )(977
    )
    
    
    (507
    )Total income tax expense
    
    $
    2,059
    
    
    $
    1,520
  2007
    
    
    2006Deferred tax assets:Deferred loan origination fees
    
    $
    395
    
    
    $
    361Loan loss allowance
    
    
    1,227
    
    
    
    856Deferred compensation
    
    
    1,398
    
    
    
    879Net unrealized loss on available-for-sale securities
    
    
    58
    
    
    
    18State net operating loss carry-forwards
    
    
    89
    
    
    
    61Other
    
    
    170
    
    
    
    34Total gross deferred tax assets
    
    
    3,337
    
    
    
    2,209Deferred tax liabilities:FHLB stock dividends
    
    
    28
    
    
    
    28Mortgage servicing rights
    
    
    95
    
    
    
    74Carrying value in excess of tax basis of goodwill
    
    
    373
    
    
    
    291Tax accumulated depreciation in excess of book
    
    
    186
    
    
    
    206Total gross deferred tax liabilities
    
    
    682
    
    
    
    599Net deferred tax assets before valuation allowance
    
    
    2,655
    
    
    
    1,610Valuation allowance
    
    
    (89
    )
    
    
    (61
    )Net deferred tax assets
    
    $
    2,566
    
    
    $
    1,549
   2007
    
    2006Federal income tax rate
    
    
    34.0
    %
    
    
    34.0
    %Increase (decrease) resulting from:State income taxes, net of federal
income tax benefit
    
    
    4.5
    
    
    
    4.5Other
    
    
    (0.8
    )
    
    
    (2.5
    )Effective tax rate
    
    
    37.7
    %
    
    
    36.0
    %
 52




---



##### 



53




---



##### 



To Be WellCapitalized UnderPrompt Corrective
    
    For CapitalActual
    
    Action Provisions
    
    Adequacy PurposesAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(in thousands)
    
    (in thousands)
    
    (in thousands)As of December 31, 2007:Total risk-based capital
(to risk-weighted assets)The Bank
    
    $
    44,190
    
    
    
    13.05
    %
    
    $
    33,860
    
    
    
    10.00
    %
    
    $
    27,088
    
    
    
    8.00
    %Tier I capital
(to risk-weighted assets)The Bank
    
    
    28,481
    
    
    
    8.41
    
    
    
    20,316
    
    
    
    6.00
    
    
    
    13,554
    
    
    
    4.00Tier I capital
(to adjusted total assets)The Bank
    
    
    28,481
    
    
    
    7.34
    
    
    
    19,406
    
    
    
    5.00
    
    
    
    15,525
    
    
    
    4.00As of December 31, 2006:Total risk-based capital
(to risk-weighted assets)The Bank
    
    $
    39,867
    
    
    
    13.80
    %
    
    $
    28,893
    
    
    
    10.00
    %
    
    $
    23,114
    
    
    
    8.00
    %Tier I capital
(to risk-weighted assets)The Bank
    
    
    25,050
    
    
    
    8.67
    
    
    
    17,336
    
    
    
    6.00
    
    
    
    11,557
    
    
    
    4.00Tier I capital
(to adjusted total assets)The Bank
    
    
    25,050
    
    
    
    7.72
    
    
    
    16,214
    
    
    
    5.00
    
    
    
    12,971
    
    
    
    4.00
  Employee Stock Ownership Plan
   54




---



##### 



Stock-Based Compensation Plans
       2007
    
    
    2006Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageShares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise PriceOutstanding at beginning of year
    
    
    16,032
    
    
    $
    6.00
    
    
    
    20,426
    
    
    $
    5.33Forfeited
    
    
    
    
    
    
    
    
    
    
    (4,394
    )
    
    
    2.81Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    16,032
    
    
    $
    6.00
    
    
    
    16,032
    
    
    $
    6.00Options exercisable at year end
    
    
    16,032
    
    
    $
    6.00
    
    
    
    16,032
    
    
    $
    6.00
 55




---



##### 



Options Outstanding and ExercisableRemainingExercise
    
    Number
    
    LifePrice
    
    Outstanding
    
    (Years)
    
    Intrinsic Value$6.00
    
    
    16,032
    
    
    
    1.3
    
    
    $
    48,096
   Deferred Compensation
      56




---



##### 



2007
    
    
    2006BASIC:Net income available to common stockholders
    
    $
    3,400,000
    
    
    $
    2,708,000Average common shares outstanding
    
    
    3,678,286
    
    
    
    3,678,286Basic net income per share
    
    $
    0.92
    
    
    $
    0.74DILUTED:Net income available to common stockholders
    
    $
    3,400,000
    
    
    $
    2,708,000Average common shares outstanding
    
    
    3,678,286
    
    
    
    3,678,286Stock option adjustment
    
    
    5,828
    
    
    
    4,806Average common shares outstanding  diluted
    
    
    3,684,114
    
    
    
    3,683,092Diluted net income per share
    
    $
    0.92
    
    
    $
    0.74
  57




---



##### 



Disclosure About Fair Value of Financial Instruments
 Cash and Cash Equivalents
 Investment Securities
 Loans
  Accrued Interest Receivable
 Restricted Investment Securities
 Deposits
 Advances from the FHLB
 Commitments to Extend Credit
 58




---



##### 



EstimatedCarrying
    
    FairValue
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    5,511
    
    
    $
    5,511Investment securities:Available-for-sale
    
    
    2,470
    
    
    
    2,470Held-to-maturity
    
    
    2,749
    
    
    
    2,753Loans receivable
    
    
    358,704
    
    
    
    376,632Restricted investment securities
    
    
    4,750
    
    
    
    4,750Accrued interest receivable
    
    
    2,122
    
    
    
    2,122Financial liabilities:Deposits
    
    
    267,032
    
    
    
    263,836Guaranteed preferred beneficial interest
in junior subordinated debentures
    
    
    17,000
    
    
    
    17,301Advances from FHLB
    
    
    84,499
    
    
    
    84,446
  EstimatedCarrying
    
    FairValue
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    6,575
    
    
    $
    6,575Investment securities:Available-for-sale
    
    
    2,534
    
    
    
    2,534Held-to-maturity
    
    
    3,737
    
    
    
    3,738Loans receivable
    
    
    312,300
    
    
    
    322,557Restricted investment securities
    
    
    2,382
    
    
    
    2,382Accrued interest receivable
    
    
    1,695
    
    
    
    1,695Financial liabilities:Deposits
    
    
    270,604
    
    
    
    266,635Guaranteed preferred beneficial interest
in junior subordinated debentures
    
    
    17,000
    
    
    
    16,835Advances from FHLB
    
    
    30,631
    
    
    
    30,619
 59




---



##### 



2007
    
    
    2006ASSETSCash
    
    $
    220
    
    
    $
    1,321Investment in subsidiaries
    
    
    31,452
    
    
    
    27,949Notes receivable from subsidiaries
    
    
    12,923
    
    
    
    12,600Premises and equipment
    
    
    398
    
    
    
    Accrued interest receivable from subsidiaries
    
    
    25
    
    
    
    24Other assets
    
    
    100
    
    
    
    Total assets
    
    $
    45,118
    
    
    $
    41,894LIABILITIES AND STOCKHOLDERS EQUITYJunior subordinated debentures
    
    $
    17,000
    
    
    $
    17,000Loans payable to subsidiaries
    
    
    200
    
    
    
    Other liabilities
    
    
    676
    
    
    
    621Total liabilities
    
    
    17,876
    
    
    
    17,621Stockholders equity:Common stock, $.01 par value, authorized 10,000,000
shares in 2007 and 4,000,000 shares in 2006, issued
and outstanding 3,678,286 shares in 2007 and
1,839,143 shares in 2006
    
    
    37
    
    
    
    18Additional paid-in capital
    
    
    11,441
    
    
    
    11,460Retained earnings
    
    
    15,856
    
    
    
    12,824Accumulated other comprehensive loss
    
    
    (92
    )
    
    
    (29
    )Total stockholders equity
    
    
    27,242
    
    
    
    24,273Total liabilities and stockholders equity
    
    $
    45,118
    
    
    $
    41,894
 60




---



##### 



Years Ended December 312007
    
    
    2006Income:Interest income on notes receivable from subsidiaries
    
    $
    880
    
    
    $
    460Equity in undistributed earnings of subsidiaries
    
    
    3,536
    
    
    
    2,783Other income
    
    
    56
    
    
    
    Total income
    
    
    4,472
    
    
    
    3,243Operating expenses:Compensation and benefits
    
    
    11
    
    
    
    11Interest expense on junior subordinated debentures
    
    
    1,121
    
    
    
    550Interest expense on loans payable to subsidiaries
    
    
    4
    
    
    
    Other
    
    
    9
    
    
    
    12Total operating expenses
    
    
    1,145
    
    
    
    573Net income before income taxes
    
    
    3,327
    
    
    
    2,670Income tax benefit
    
    
    73
    
    
    
    38Net income
    
    $
    3,400
    
    
    $
    2,708
 61




---



##### 



Years Ended December 312007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    3,400
    
    
    $
    2,708Adjustments to reconcile net income to net cash
provided by operating activities:Equity in undistributed earnings of subsidiaries
    
    
    (3,536
    )
    
    
    (2,783
    )Net change in other assets and other liabilities
    
    
    (46
    )
    
    
    593Net cash flows (used) provided by operating activities
    
    
    (182
    )
    
    
    518CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of premises and equipment
    
    
    (398
    )
    
    
    Notes receivable from subsidiaries
    
    
    (323
    )
    
    
    (12,600
    )Net cash used in investing activities
    
    
    (721
    )
    
    
    (12,600
    )CASH FLOWS FROM FINANCING ACTIVITIES:Dividends paid
    
    
    (368
    )
    
    
    (374
    )Loans payable to subsidiaries
    
    
    200
    
    
    
    Proceeds from sale of junior subordinated debentures
    
    
    
    
    
    
    17,000Investment in subsidiaries
    
    
    (30
    )
    
    
    (3,527
    )Net cash (used) provided by financing activities
    
    
    (198
    )
    
    
    13,099NET (DECREASE) INCREASE IN CASH
    
    
    (1,101
    )
    
    
    1,017CASH AT BEGINNING OF PERIOD
    
    
    1,321
    
    
    
    304CASH AT END OF PERIOD
    
    $
    220
    
    
    $
    1,321
 62




---



##### 



Name
    
    Age
    
    TitleBrian J. Hale
    
    
    48
    
    
    Executive Vice President/Chief Operating OfficerSandra D. Feltman
    
    
    58
    
    
    Sr. Vice President/Director of LendingR. Lee Whitehead
    
    
    30
    
    
    Vice President/Chief Financial Officer
 63




---



##### 



64




---



##### 



Documents Filed as Part of this Report
 Financial Statements
     
   Financial Statement Schedules
 65




---



##### 



Exhibits
 Exhibit No.
    
    Description
    
    Incorporated by Reference to:3.1
    
    Articles of Incorporation of Cecil Bancorp, Inc.
    
    Exhibit 3.1 to Registration
Statement on Form S-1 (File
No. 33-81374)3.2
    
    Bylaws of Cecil Bancorp, Inc.
    
    Exhibit 3.2 to Form 10-KSB
for the year ended December
31, 2003, SEC File No.
0-24926.3.3
    
    Articles of Incorporation of Cecil Federal Bank
    
    Exhibit 3.3 to Form 10-KSB
for the year ended December
31, 2004, SEC File No.
0-24926.3.4
    
    Bylaws of Cecil Federal Bank
    
    Exhibit 3.4 to Form 10-KSB
for the year ended December
31, 2004, SEC File No.
0-24926.4
    
    Form of Common Stock Certificate
    
    Exhibit 4 to Registration
Statement on Form S-1 (File
No. 33-81374)10.1*
    
    Employment Agreement between Cecil Bancorp,
Inc., Cecil Federal Savings Bank and Mary
Halsey
    
    Exhibit 10.1 to Registration
Statement on Form S-1 (File
No. 33-81374)10.2*
    
    Cecil Bancorp, Inc. Stock Option and Incentive
Plan
    
    Exhibit to Companys Proxy
Statement for its Annual
Meeting of May 25, 1995
(File No. 0-24926).10.3*
    
    Cecil Bancorp, Inc. Management Recognition Plan
    
    Exhibit to Companys Proxy
Statement for its Annual
Meeting of May 25, 1995
(File No. 0-24926).10.4*
    
    Cecil Federal Savings Bank Retirement Plan for
Non-Employee Directors
    
    Exhibit 10.4 to Form 10-KSB
for the year ended December
31, 1994, SEC File No.
0-24926.10.5*
    
    Columbian Bank, a Federal Savings Bank 1994
Stock Option and Incentive Plan
    
    Columbian Bank, a Federal
Savings Bank, Registration
Statement on Form S-B.10.6*
    
    Cecil Federal Bank Supplemental Executive
Retirement Plan covering Charles F. Sposato,
Chairman; Mary B. Halsey, President and Chief
Executive Officer; and Brian J. Hale, Executive
Vice President and Chief Operating Officer and
related agreements with such officers
    
    Exhibit 10.1 to the
Companys Quarterly Report
on Form 10-QSB for the
quarterly period ending June
30, 200421
    
    Subsidiaries
 66




---



##### 



Exhibit No.
    
    Description
    
    Incorporated by Reference to:23
    
    Consent of Stegman & Company31
    
    Rule 13a-14(a)/15d-14(a) Certification32
    
    18 U.S.C. Section 1350 Certification
 
 *
    
    Management Contract or Compensatory Plan or Arrangement. 67




---



##### 



CECIL BANCORP, INC.March 27, 2008
    By:
    /s/ Mary B. HalseyMary B. HalseyPresident and Chief Executive Officer March 27, 2008
    By:
    /s/ Robert Lee WhiteheadRobert Lee WhiteheadVice President and Chief Financial Officer  By:
    /s/ Mary B. Halsey
    Date:  March 27, 2008Mary B. HalseyPresident and Chief Executive Officer
(Principal Executive Officer)By:
    /s/ Robert Lee Whitehead
    Date:  March 27, 2008Robert Lee WhiteheadVice President and Chief Financial Officer
(Principal Financial and Accounting Officer)By:
    /s/ Charles F. Sposato
    Date:  March 27, 2008Charles F. SposatoChairman of the BoardBy:
    /s/ Donald F. Angert
    Date:  March 27, 2008Donald F. AngertDirectorBy:
    /s/ Matthew G. Bathon
    Date:  March 27, 2008Matthew G. BathonDirectorBy:
    /s/ Brian L. Lockhart
    Date:  March 27, 2008Brian L. LockhartDirectorBy:
    /s/ Mark W. Saunders
    Date:  March 27, 2008Mark W. SaundersDirectorBy:
    /s/ Thomas L. Vaughan, Sr.
    Date: March 27, 2008Thomas L. Vaughan, Sr.Director 68