Howard Bancorp, Inc.
Howard Bancorp, Inc. (OTC, Electronic Bulletin Board:HBMD), the parent company of Howard Bank, today announced net income of $76 thousand for the first three months of 2008, compared to the $116 thousand loss recorded in the first quarter of 2007. In late 2007 the company began to record income tax expense, which was not a factor for the first quarter of 2007. Pretax income in the first quarter of 2008 was $147 thousand, an improvement of $263 thousand or 227% versus 2007. Net Interest Income of $1.6 million increased by 24% over the comparable period in 2007, while noninterest income increased by 95% over the same period. Total expenses of $1.5 million for the first quarter reflected a modest increase of $74 thousand or 5% compared to the same period in 2007.
The growth in both net interest income and non-interest income were primarily attributable to continued balance sheet growth. Total assets grew to $204 million as of March 31, 2008, a $45 million or 29% increase compared to assets of $158 million at March 31, 2007. Total loans increased by $51 million (39%), ending at $181 million at the end of the first quarter of 2008 versus loans of $130 million at the same period in 2007. Total deposits grew by 28%, with March 31, 2007 deposits of $167 million compared to deposits of $131 million at March 31, 2007. Noninterest bearing deposits, which are the lowest cost source of deposits, the key measurement of a customer's primary relationship, and the source of a large portion of noninterest income, increased by $11 million or 56% when comparing the first quarter of 2008 to 2007. Total capital at March 31, 2008 was $24 million which represents an increase of $1.9 million over the capital level for the same period in 2007. Since loan growth for the year outpaced the increase in deposits, some additional funding for the loan growth was provided both by decreasing the levels of lower yielding overnight investments and by utilizing advances from the Federal Home Loan Bank.
Chairman and CEO Mary Ann Scully stated: "We are pleased with our financial results for the first quarter of 2008, despite the uncertainty about the future direction of the US economy in the short term. Our balance sheet, our revenue and our net income reflect continued strong growth, on target with our strategic plan and attributable to the faith that our marketplace has placed in our capabilities. These positive variances differentiate us from many others in the market. In an attempt to signal support for the credit markets, the Federal Reserve has repeatedly lowered key interest rates which has both put pressure on the securities portfolio and floating rate loan portfolio yields and necessitated a drop in the rates paid on certain customer deposit categories. These yield pressures have affected all banks. Certainly, Howard Bank's focus on loans to customers as the key component of our earning assets and customer transaction and savings deposits as the primary source of funding mitigates our exposure to the investment marketplace swings borne by some other banks. Our intentionally balanced mix of fixed and floating rate loans also provides us with some protection from the full force of net interest margin compression. Howard Bank is not exposed to the subprime residential mortgage market correction and the vast majority of our commercial clients- even those directly or indirectly serving the building industry- remain on solid footing even if their growth has been stymied in these conditions. The region's mix of government related contractors and a reasonably buoyant sector serving local consumers also supports the continuing high credit quality in our loan portfolio. However, a rapid and sustained drop in interest rates, such as we have experienced, also provides challenges for us. A slowing economic environment necessitates a prudent approach to adding to reserves to reflect both general and specific conditions in our marketplace and our loan portfolio. We are convinced that the greatest point of our differentiation lies in our focus on the still relevant fundamentals of banking. Client specific as well as market sensitive risk management, a deep commitment to relationship based core deposit funding, and the early establishment and ongoing maintenance of a very strong capital base are serving us, our customers and our shareholders very well. These values and commitments are also responsible for our growing leadership role in one of the healthiest and most robust markets in the country as the only locally managed bank in Howard County."
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.