Howard Bancorp, Inc. Announces Second Quarter 2007 Profit and Growth Results

Ellicott City, MD, July 26, 2007 — Howard Bancorp, Inc. (OTC, Electronic Bulletin Board: HBMD), the parent company of Howard Bank, today announced net income of $16 thousand for the second quarter of 2007. The second quarter net income compares to a $116 thousand loss recorded in the first quarter of 2007.  On a year-to-date basis, Howard Bancorp’s net loss of $100 thousand reflects an 80% improvement over the $520 thousand loss reported for the first six months of 2006. Revenues rose 38% for the six month period ending June 30, 2007 as compared to June 30, 2006, significantly outpacing the 17% increase in non-interest expenses over the same period.  The revenue growth was primarily attributable to gains in net interest income resulting from continued balance sheet growth. Total assets grew to $167 million as of June 30, 2007, a 37% increase compared to the same period in 2006. Total loans increased by 52% ending at $147 million at the end of the second quarter of 2007 versus loans of $97 million at June 30, 2006. The loan growth was funded substantially with deposits and other customer funds. Total deposits grew by 39%, with June 30, 2007 deposits of $138 million compared to deposits of $99 million at June 30, 2006.  The 17% increase in non-interest expenses for the six months of 2007 versus 2006 was primarily attributable to the operating expenses associated with a third branch location which opened in late September of 2006.

For the first time since it commenced operations in 2004, Howard Bank placed a loan into non-accrual status. The loan in question is a $2.8 million land development loan. Despite the property’s location in an attractive market, the bank has determined it is prudent, given the recent downturn in the local real estate market, to independently re-evaluate the sufficiency of the collateral value under various scenarios. The bank is presently awaiting the results of those evaluations.

Chairman and CEO Mary Ann Scully stated: “We are pleased with our financial results thus far for 2007. Strong loan demand from our target market of local small and medium sized businesses continues to drive our balance sheet growth.  In a notably difficult funding environment, our ability to fund this asset growth by growing deposits through our branches, and not having to rely on external borrowings, which generally have both a higher cost and less strategic value is significant. As a result, our increase in revenues, coupled with managing and leveraging our existing infrastructure, allowed us to overcome the incremental increase in costs of our third branch, and report this return to profitability for the second quarter of 2007.

We continue to focus on credit quality as well as quantity. Deterioration of some small percentage of seasoned credits is inevitable in a real estate market returning to normalcy and the combination of knowledgeable underwriting with proactive management of relationships should serve us well in this challenging environment.

In addition to our financial performance, we are also honored to have been named “Small Business of the Year” by the Maryland Chamber of Commerce in its 6 – 50 employee category.  The award is designed to honor the dedication, innovation and entrepreneurial spirit displayed by small businesses in Maryland. We are also very proud of the recognition received in the community by several associates as well as the promotion of several associates into leadership roles on the boards of various charitable and civic organizations, all reflecting Howard Bancorp’s successful integration into the communities we serve.

Howard Bancorp and Howard Bank have been able to navigate through a compressed and inverted interest rate cycle, ever increasing competitive and regulatory pressures, and continued change in the local banking providers through merger/acquisition activities to become a recognized leader as Howard County’s only locally owned and locally managed financial institution.  We are proud that customers and the community have embraced our commitment to combine a competitively broad suite of products and services with a much higher level of personalized and experienced advice than is available elsewhere.”

This press release contains statements that are forward-looking, as that term is defined by the Private Securities Litigation Reform Act of 1995 or the Securities and Exchange Commission in its rules, regulations, and releases. The Company intends that such forward-looking statements be subject to the safe harbors created thereby. All forward-looking statements are based on current expectations regarding important risk factors, including but not limited to real estate values, local and national economic conditions, and the impact of interest rates on financing. Accordingly, actual results may differ from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by the Company or any other person that results expressed therein will be achieved. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Additional information is available at www.howardbank.com.

Contact:

Howard Bancorp, Inc.
George C. Coffman, Chief Financial Officer, 410-750-0020

 

HOWARD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS

Annual
Increase / (Decrease)
June 30, 2007
June 30, 2006
$
%
ASSETS
Cash and due from banks
 $5,450,625
 $2,791,336
 $2,659,289
 95
%
Federal funds sold
 2,369,110
 6,918,693
 (4,549,583)
 (66)
Total cash and cash equivalents
 7,819,735
 9,710,029
 (1,890,294)
 (19)
Securities available-for-sale
 10,084,786
 13,792,226
 (3,707,440)
 (27)
Nonmarketable equity securities
 266,000
 278,300
 (12,300)
 (4)
Loans, net of unearned income
146,783,316
96,684,120
50,099,196
52
Allowance for credit losses
(1,643,500)
(1,083,000)
(560,500)
52
Net loans
145,139,816
95,601,120
49,538,696
52
Bank premises and equipment, net
 2,621,475
 1,514,717
 1,106,758
 73
Interest receivable and other assets
 1,137,814
 701,111
 436,703
 62
Total assets
 $167,069,626
 $121,597,503
 $45,472,123
 37
%
LIABILITIES
Noninterest-bearing deposits
 $21,759,763
 $13,441,923
 $8,317,840
 62
%
Interest-bearing deposits
 116,457,274
 85,979,211
 30,478,063
 35
Total deposits
 138,217,037
 99,421,134
 38,795,903
 39
Federal funds purchased and repurchase agreements
 5,793,908
 2,237,452
 3,556,456
 159
Borrowings
 -
 2,000,000
 (2,000,000)
 (100)
Accrued expenses and other liabilities
 571,526
 536,585
 34,941
 7
Total liabilities
 144,582,471
 104,195,171
 40,387,300
 39
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock
 26,280
 22,392
 3,888
 17
Capital surplus
 27,897,079
 22,549,276
 5,347,803
 24
Accumulated deficit
 (5,419,854)
 (5,093,779)
 (326,075)
 6
Accumulated other comprehensive loss
 (16,350)
 (75,557)
 59,207
 (78)
Total shareholders’ equity
 22,487,155
 17,402,332
 5,084,823
 29
Total liabilities and shareholders’equity
 $167,069,626
 $121,597,503
 $45,472,123
 37
%

 

HOWARD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS

Quarterly
Increase / (Decrease)
June 30, 2007
March 31 , 2006
$
%
ASSETS
Cash and due from banks
 $5,450,625
 $4,018,246
 $1,432,379
36
%
Federal funds sold
 2,369,110
12,524,871
 (10,155,761)
 (81)
Total cash and cash equivalents
 7,819,735
16,543,117
 (8,723,382)
 (53)
Securities available-for-sale
 10,084,786
9,207,831
876,955
10
Nonmarketable equity securities
 266,000
356,000
 (90,000)
 (25)
Loans, net of unearned income
146,783,316
130,017,371
16,765,945
13
Allowance for credit losses
(1,643,500)
(1,460,000)
(183,500)
13
Net loans
145,139,816
128,557,371
16,582,445
13
Bank premises and equipment, net
 2,621,475
2,677,186
(55,711)
 (2)
Interest receivable and other assets
 1,137,814
1,049,166
88,648
 8
Total assets
 $167,069,626
 $158,390,671
 $8,678,955
 5
%
LIABILITIES
Noninterest-bearing deposits
$21,759,763
$19,439,562
$2,320,201
12
%
Interest-bearing deposits
116,457,274
111,104,584
5,352,690
5
Total deposits
138,217,037
130,544,146
7,672,891
6
Federal funds purchased and repurchase agreements
5,793,908
4,912,686
881,222
18
Borrowings
-
-
-
-
Accrued expenses and other liabilities
571,526
517,237
54,289
10
Total liabilities
144,582,471
135,974,069
8,608,402
6
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock
26,280
26,233
47
0
Capital surplus
27,897,079
27,815,025
82,054
0
Accumulated deficit
(5,419,854)
(5,436,229)
16,375
(0)
Accumulated other comprehensive (loss)/income
(16,350)
11,574
(27,924)
(241)
Total shareholders’ equity
22,487,155
22,416,602
70,553
0
Total liabilities and shareholders’equity
$167,069,626
$158,390,671
$8,678,955
5
%

HOWARD BANCORP, INC.
CONSOLIDATED STATEMENTS of OPERATIONS

For the six months
ended June 30,
Increase /
(Decrease)
2007
2006
$
%
INTEREST INCOME
Interest and fees on loans
$4,831,106
$2,783,347
$2,047,759
74%
Interest and dividends on securities
235,928
313,581
(77,653)
(25)
Other interest income
273,299
164,533
108,766
66
Total interest income
5,340,333
3,261,461
2,078,872
64
                 
INTEREST EXPENSE  
Deposits  
2,444,930
1,231,337
1,213,593
99
Borrowings  
111,619
23,717
87,902
371
Total interest expense  
2,556,549
1,255,054
1,301,495
104
                 
NET INTEREST INCOME  
2,783,784
2,006,407
777,377
39
Provision for credit losses  
297,500
307,500
(10,000)
(3)
Net interest income after
provision for credit losses
 
2,486,284
1,698,907
787,377
46
                 
NONINTEREST INCOME  
Service charges on deposit accounts  
47,964
18,623
29,341
158
Other operating income  
67,783
72,537
(4,754)
(7)
Total noninterest income  
115,747
91,160
24,587
27
                 
REVENUES  
2,899,531
2,097,567
801,964
38
                 
NONINTEREST EXPENSE  
Compensation and benefits  
1,467,296
1,295,527
171,769
13
Occupancy and equipment  
557,963
440,570
117,393
27
Marketing and business development  
204,525
185,380
19,145
10
Professional fees  
106,491
108,302
(1,811)
(2)
Data processing fees  
166,581
121,373
45,208
37
Other operating expense  
198,883
158,616
40,267
25
Total noninterest expense  
2,701,739
2,309,768
391,971
17
                 
LOSS BEFORE
INCOME TAXES
 
(99,709)
(519,701)
419,992
(81)
Income tax benefit  
-
-
NET LOSS  
$(99,709)
$(519,701)
$419,992
(81)%

 

HOWARD BANCORP, INC.
CONSOLIDATED STATEMENTS of OPERATIONS

For the three months ended:
Increase /
(Decrease)
June 30, 2007
March 31, 2006
$
%
INTEREST INCOME
Interest and fees on loans
$2,527,837
$2,303,269
$224,568
10%
Interest and dividends on securities
119,953
115,975
3,978
3
Other interest income
116,547
156,752
(40,204)
(26)
Total interest income
2,764,337
2,575,996
188,342
7
                 
INTEREST EXPENSE  
Deposits  
1,250,160
1,194,770
55,391
5
Borrowings  
53,207
58,412
(5,206)
(9)
Total interest expense  
1,303,367
1,253,182
50,185
4
                 
NET INTEREST INCOME  
1,460,970
1,322,814
138,157
10
Provision for credit losses  
183,500
114,000
69,500
61
Net interest income after
provision for credit losses
 
1,277,470
1,208,814
68,657
6
                 
NONINTEREST INCOME  
Service charges on deposit accounts  
26,566
21,398
5,168
24
Other operating income  
37,698
30,085
7,612
25
Total noninterest income  
64,264
51,483
12,780
25
                 
REVENUES  
1,525,234
1,374,297
150,937
11
                 
NONINTEREST EXPENSE  
Compensation and benefits  
714,377
752,919
(38,542)
(5)
Occupancy and equipment  
269,542
288,421
(18,879)
(7)
Marketing and business development  
115,059
89,466
25,594
29
Professional fees  
46,403
60,088
(13,684)
(23)
Data processing fees  
85,374
81,207
4,168
5
Other operating expense  
94,601
104,282
(9,681)
(9)
Total noninterest expense  
1,325,356
1,376,381
(51,024)
(4)
                 
INCOME/(LOSS) BEFORE
INCOME TAXES
 
16,376
(116,084)
132,462
114
Income tax benefit  
-
-
NET INCOME/(LOSS)  
$16,376
$(116,084)
$132,462
114%