Corporate Profile

Howard Bancorp, Inc. is the holding company for Howard Bank,
a community bank serving the Greater Baltimore and Central Maryland Region.

Howard Bancorp, Inc.'s Common Stock is listed on NASDAQ under the symbol HBMD

Ellicott City, MD, January 27, 2016 --Howard Bancorp, Inc. (Nasdaq: HBMD), the parent company of Howard Bank (the “Bank”), today reported its financial results for the fiscal year ending December 31, 2015.

Highlights were as follows:

• In the second quarter of 2015, Howard Bancorp successfully closed a private placement with a number of highly regarded institutional bank investors, including Baltimore-based T. Rowe Price. This placement resulted in the issuance of 2,173,913 shares, which increased capital via gross proceeds of $25 million.

• During the third quarter of 2015, Howard closed on its acquisition of Baltimore headquartered Patapsco Bancorp, Inc.

• Total assets grew to $947 million at December 31, 2015, representing growth of $256 million, or 37%, compared to total assets of $691 million at December 31, 2014, of which $170 million, or 25% growth, is attributable to the Patapsco transaction, and $86 million, or 12%, is attributable to continuing organic growth.


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• Total loans increased by $207 million, or 37%, to $760 million when comparing December 31, 2015 to December 31 2014, of which $152 million, or 27% growth, is attributable to the Patapsco transaction, and $55 million, or 10%, is attributable to organic growth of the loan portfolio.

• Total deposits at December 31, 2015 increased to $747 million from $554 million at December 31, 2014, representing growth of $193 million, or 35%, of which $170 million, or 31% growth, is attributable to the Patapsco transaction, and $24 million, or 4%, is attributable to organic growth, due to intentional run off in higher-cost legacy CD portfolios. Noninterest bearing deposits grew by $31 million or 22% during the twelve months ended December 31, 2015.

• Total stockholders’ equity increased by $33.3 million or 56% to $92.9 million at December 31, 2015, compared to $59.6 million at December 31, 2014.

• Howard Bancorp’s primary sources of revenue continue to come from net interest income complemented by noninterest income, which includes the revenues generated from its mortgage banking operations, as well as service charges and fees on deposits and loans.
- Resulting primarily from our balance sheet growth, net interest income for 2015 was $30.3 million, representing an increase of $9.3 million, or 44%, compared to the $21.0 million recorded for 2014.
- Howard Bancorp’s other source of revenue is noninterest income, which for 2014, included a $16.1 million bargain purchase gain on the FDIC assisted transaction related to NBRS Financial Bank. Excluding this one-time gain from 2014, noninterest income increased by $4.8 million, or 66%, comparing noninterest income of $11.9 million for 2015 to $7.2 million for 2014. Mortgage banking activities contributed $4.0 million of the year over year increase in noninterest income, while service charges on deposits, income from bank owned life insurance and other banking related fees comprised the other $0.8 million increase.

• Total noninterest expenses were $38.3 million for 2015 compared to $23.7 million for 2014, an increase of $14.6 million, or 62%. These include one-time Non-Recurring Merger and Restructuring (Non-recurring) charges of over $4.3 million for 2015 and only $455 thousand for 2014.
- Excluding this large increase in non-recurring items, non-interest expenses were $33.9 million during the twelve months ended December 31, 2015, compared to $23.2 million for the same period of 2014, an increase of $10.7 million, or 46%.
- Included in this net $10.7 million increase, was a $3.4 million increase in mortgage banking expenses, which are largely variable in nature and correspond to increased origination levels. The higher origination levels led to an increase in noninterest expenses, were more than offset by in increases in mortgage banking noninterest income, earning assets, and additional interest income on the mortgage loans added to our portfolio.
- The remaining $7.3 million of the increase in expenses is largely attributable to the growth that we have experienced in the last twelve months. Compensation costs increased by $4.0 million as we increased full time equivalent employees from 214 at December 31, 2014 to 257 at December 31, 2015, including over $610 thousand in increased compensation costs attributable to staffing the additional locations acquired from Patapsco. Similarly, occupancy costs increased by $1.4 million as we have added branch and office locations. Also relating to our growth, data processing fees and insurance costs increased by nearly $600 thousand given the increase in our customer base. Other growth-related increases occurred in other operating items such as telephone costs, supplies, software licensing costs, and other costs directly related to the growth of our support infrastructure. Noninterest expenses in 2015 were also elevated by a $735 thousand expense in the third quarter due to decreases in the valuations of several of our Other Real Estate Owned assets. Also, a portion of the increased expenses were the result of temporary redundancies in operations and staffing given the two system conversions that occurred during 2015. Although not included in our non-recurring expenses of $4.3 million in 2015, we anticipate that the same level of resources will not be needed in the future and many of these redundancies have been eliminated or are scheduled for elimination.

• Provision for credit losses was $1.8 million for the year ended December 31, 2015 compared to $3.3 million for 2014. The third quarter of 2014 included a nearly $2.0 million provision due to a loan loss incurred on one commercial customer. The 2015 provision was for the most part reflective of the overall growth experienced in our loan portfolio, as total nonperforming assets to total assets only increased slightly from 1.26% at the end of 2014 to 1.36% at the end of 2015, even with the addition of impaired loans acquired from Patapsco during 2015.



The press release, in its entirety, is available under the "Press Release" tab on the right.
 
Contact Information
Howard Bancorp, Inc.
6011 University Boulevard
Suite 370
Ellicott City, MD 21043
(410) 750-0020

Investor Relations Contact
Mr. George C. Coffman
Howard Bancorp, Inc.
6011 University Boulevard
Suite 370
Ellicott City, MD 21043
(410) 750-0020

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