Howard Bancorp, Inc. reports increased earnings, strong capital levels and continued balance sheet growth


Ellicott City, MD, October 16, 2008 --Howard Bancorp, Inc. (OTC, Electronic Bulletin Board: HBMD), the parent company of Howard Bank, today announced its operating results through September 30, 2008. For the three months ended September 30, 2008, the company reported pre-tax income of $233 thousand compared to pre-tax income of $40 thousand for the three months ending June 30, 2008, and a pre-tax loss of $1.2 million for the third quarter of 2007. For the first nine months of 2008, pretax income was $420 thousand, which represents increased pre-tax earnings of $1.7 million over the pre-tax loss of $1.3 million for the nine month period in 2007. Since the company was not yet recording tax expense during the similar period in 2007, the most meaningful comparison of operating results is achieved by comparing pre-tax income from period to period.

The improvement in operating performance was primarily the result of an increase in net interest income which increased by $1.1 million or 27% from $4.2 million in 2007 to $5.4 million for the nine months ending September 30, 2008. The increased net interest income was, in turn, due to a 25% growth in interest earning assets when comparing September 30, 2008 to September 30, 2007. Complementing the increase in earning assets was deposit growth of $33 million or 23% over the prior 12 months, of which demand deposits, which are the lowest cost source of deposits, rose by 58%. The growth in net interest income of $1.1 million along with increases in non interest income which grew by $205 thousand, significantly outpaced growth in non-interest expenses, which increased by only $12 thousand representing less than 1% increase in expenses. 

Total Assets as of September 30, 2008 were $226.1 million which represents growth of $45.6 million or 26% over an asset level of $179.4 million at September 30, 2007. Over the last twelve months total loans grew by $31.3 million or 19%, while the levels of investment securities and federal funds sold also increased. Since September 30, 2007, total capital has increased by $587 thousand, with a current capital level of $24.4 million, which represents a capital to asset ratio of 10.81%. Howard Bank had a leverage capital ratio as of September 30, 2008 of 10.66%, which is more than double what is required to be considered “well-capitalized” based upon regulatory minimum capital requirements

Asset quality measures improved during the third quarter with only two non-accrual loans as of September 30, 2008 totaling $481 thousand which represents 0.25% of loans. Including our one Other Real Estate Owned (OREO) property, identified very early in this cycle that has been written down to fair market value, our non-performing assets totaled $2.6 million or 1.34% of outstanding loans plus OREO.

Chairman and CEO Mary Ann Scully reported that “Howard Bancorp’s focus on the basics of relationship management, portfolio lending, deposit generation and strong capital formation has served us well in this tumultuous time. Unlike many others, Howard Bancorp has not been negatively impacted by the turmoil in the financial services industry.  Our investment portfolio has been structured to maximize both liquidity and safety and we have never held stock in Fannie Mae or Freddie Mac or invested in more exotic securities.   Accordingly, we have not had to record any losses in the investment portfolio. We also do not hold any residential mortgages or other loans that require government assistance in a troubled asset restructuring. We rely on deposits for funding, not inter-bank borrowing, and have, therefore, experienced stable to falling funding costs. All of these decisions have allowed us to not only maintain, but to continue to grow a very strong capital base. This has continued to fuel strong asset growth which has generated   increased operating earnings. In fact, given our sound operating platform, we are in position to benefit in these uncertain times. We continue to see that the targeted businesses and professionals in our markets appreciate our commitment to core banking activities, and we believe that this will continue to foster healthy balance sheet and earnings growth.

While funding has presented huge challenges for some in our industry, our deposit base has grown considerably. In the recently released FDIC deposit market share statistics, Howard Bank moved from the top 10 to the top 8 in share and experienced the highest market share growth in the county.  We are most fortunate that we are able to continue our now four year old focus on expanding our market share of the small and medium sized businesses, their owners and employees headquartered in Howard and contiguous counties. We have the time to maintain an external focus - working with clients worried about the disruptions in parts of the local and national credit markets and assuring them that Howard Bank continues to lend while also working with customers seeking to preserve their own liquidity by offering them a safe, local haven for deposits. We expect our fourth branch located near the intersections of Route 40 and Centennial Lane in Ellicott City to open by year-end.  We remain focused on our priority investments in products, delivery systems and, most importantly, talented and experienced people. All of which allows us to leverage our leadership role in our communities. We remain grateful for this opportunity.“

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.