Howard Bancorp, Inc. Announces Annual and Fourth Quarter 2007 Profits

ELLICOTT CITY, Md.— (BUSINESS WIRE) — Howard Bancorp, Inc. (OTC, Electronic Bulletin Board: HBMD), the parent company of Howard Bank, today reported its first full fiscal year profit for 2007, as well as its third consecutive profitable quarter for the fourth quarter of 2007. For the year ended December 31, 2007, the company reported net income of $1.5 million compared to a $746 thousand net loss in 2006. For the fourth quarter of 2007, Howard Bancorp recorded net income after taxes of $265 thousand, which is its largest quarterly profit since commencing operations in August of 2004.

Net interest income increased 32% for the twelve months ending December 31, 2007 as compared to 2006. For the fourth quarter of 2007 net interest income increased by $128 thousand or 9% over the third quarter due to the continued growth in earning assets, while total expenses decreased from the prior quarter.

Revenue growth was directly attributable to the gains in net interest income resulting from strong balance sheet growth, improvement in asset mix and increases in core deposit funding. Total assets grew to $191 million as of December 31, 2007, a 29% increase compared to the same period in 2006. Total loans increased by 44% to $172 million at December 31, 2007 versus loans of $120 million at December 31, 2006. The loan growth was originated internally as the bank has no dependency on brokered or purchased loans. Consequently, Howard Bank does not have the type of exposure to the recent downturn in the residential real estate mortgage market as do some other institutions. This growth was funded primarily with deposits and other customer funds as total deposits grew by 24%, with December 31, 2007 deposits of $152 million compared to deposits of $123 million at December 31, 2006. Since loan growth for the year outpaced the increased deposits, some additional funding for the loan growth was provided by decreasing the levels of lower yielding overnight investments and utilizing advances from the Federal Home Loan Bank. Demand deposits, which are the lowest cost source of funds and the key metric of a commercial customer’s primary relationship, grew by 32% when comparing December 2007 to December 2006. This consistent improvement in both growth and optimal mix of the balance sheet led to core revenue growth as shown in the 32% improvement in net interest income before loan loss provision and a 17% increase in net interest income after the provision.

As has been previously announced, Howard Bank placed a land development loan into non-accrual status, independently re-evaluated the sufficiency of the collateral value, and increased its allowance for loan losses by an additional $709 thousand to specifically reflect the collateral valuation reduction. During the fourth quarter of 2007, the Bank commenced foreclosure proceedings and, pending legal ratification, has taken title to the land which was held as collateral. The Bank will continue to pursue alternatives relating to the final disposition of the acquired land.

Chairman and CEO Mary Ann Scully stated: “We are very pleased with the operating results for 2007 that we can present to our stakeholders. Loan growth remains strong and is still generated by relationships with those local client segments most consistent with our strategy of differentiating ourselves in the small business marketplace. In addition, the credit quality of that loan portfolio remains high despite the stresses in the regional marketplace due to both the residential real estate downturn and some nascent signs of economic slowing in a few segments. We continue to allocate a high percentage of our capital to higher earning and performing loan assets and to growing our market share with selective investments such as our fourth branch which is projected to open on Route 40 in the western area of the county in the summer of 2008. Our healthy funding mix and reliance on customer deposits allow us to generate stronger earnings in an environment made more difficult by the shape of the yield curve and the intense competition for core deposits. We are proud of our continuous improvements in quarterly and full fiscal year profits and are grateful to the community which we serve for their demonstrated faith in and support of our differentiated positioning and value added execution.

“We are 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 even more proud of the recognition received in the community by our associates who live the values and brand of the company each and every day. We have been pleased to see the contributions of associates recognized with promotion into expanded leadership roles on the boards of various charitable and civic organizations, all reflecting Howard Bancorp’s successful integration into the communities we serve. The bank and its associates have been recognized in multiple publications for our philanthropic work especially with financial literacy advancements for adults as well as youth in the county.

“In summary, Howard Bancorp and Howard Bank have been able to successfully navigate through a more difficult economic environment, the ongoing challenge of a compressed and inverted interest rate cycle, ever increasing competitive and regulatory pressures, and continued turnover in other local banking providers through merger/acquisition activities. We have become a recognized leader as Howard County’s only locally owned and locally managed financial institution. We are honored that customers and the community have embraced our commitment to combine in a unique fashion our geographic and segment focus with a competitively broad suite of products and services and a demonstrably higher level of personalized and experienced advice than is available elsewhere to those segments in those geographies. To see this support so clearly reflected in our financial results is, we believe, gratifying both to them and to our shareholders.”
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

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