Howard Bancorp, Inc. Announces First Quarter 2009 Profitable Results

ELLICOTT CITY, Md.--(BUSINESS WIRE)-- Howard Bancorp, Inc. (OTC, Electronic Bulletin Board:HBMD), the parent company of Howard Bank, today reported its financial results for the period ending March 31, 2009. The company announced its eighth consecutive quarter of profitability driven by double digit net interest income and noninterest income growth. Net interest income of $1.82 million increased $180 thousand or 11% over the $1.64 million recorded for the same period in 2008. Due to successive quarters of growth in the bank's transactional deposit base, service charges on deposit account revenues of $113 thousand, increased by $63 thousand or 125% for the first quarter of 2009 compared to the same period in 2008. There was a 27% increase in non interest expenses ($1.84 million vs $1.45 million in the first quarter of 2008) related to the execution of the company's infrastructure investment strategy. As had been previously announced, Howard Bank opened a fourth branch location in the final week of 2008, and also increased market presence via expansion into Anne Arundel County, Maryland with the addition late in the fourth quarter of 2008 of an experienced senior team leader to spearhead expansion efforts there.

The bank's first quarter provision for loan losses was $106 thousand; this was largely related to higher loan originations in the quarter but was lower than the $331 thousand recorded in the fourth quarter of 2008. That higher provision reflected a decision at the time to reserve for certain specific loans negatively impacted by the ongoing economic downturn. The net result of the double digit net interest income, non interest income and non interest expense growth was a quarterly net profit of $17 thousand. The quarterly net income of $17 thousand, compared to net income of $77 thousand for the first three months of 2008 and $103 thousand for the fourth quarter of 2008. This is the first quarter since the Bank's inception in late 2004 in which all comparison numbers can be presented on a net income vs. pre tax income basis following the company's recognition of a deferred tax asset in the third quarter of 2007.

The investments in infrastructure growth showed some early signs of success with total assets at March 31, 2009 of $250 million, which represents an increase of $46 million or 23% over total assets of $204 million at the end of the first quarter of 2008. During the same period, total loans increased from $181 million at March 31, 2008 to $217 million at the end of the quarter for 2009. This represents growth in loans in excess of $35 million or 20% year over year. Similarly, total deposits ended the first quarter of 2009 at $194 million which reflects deposit growth of $27 million or 16% over the $167 million in deposits at March 31, 2008. Of this $27 million in deposit growth, over $11 million of the growth was in Demand Deposits which represent the lowest cost source of funds, and are also indicative of having a full relationship with our clients. For the three month period comparing March 31, 2009 to December 31, 2008, assets, loans and deposits grew by 9%, 6% and 6%, respectively. The Company's capital accounts increased by $6.8 million or 28% reflecting the retention of modest earnings as well as the issuance in late February 2009 of $5.98 MM in preferred shares to the US Treasury under the Capital Purchase Program created to encourage healthy banks to increase their lending support of local communities.

Chairman and CEO Mary Ann Scully stated: "We are gratified in this most difficult economic environment to be able to report another profitable quarter for the first quarter of 2009. The results for the quarter represent the short term effects of making significant investments in the future of the bank, and are lower than net income results of the prior quarter, and the similar quarter of 2008. They are consistent with our growth strategy as executed over the last five years. The decrease was anticipated when our fourth branch opened and our expansion into the Anne Arundel market commenced late in the fourth quarter of 2008. The banking industry has experienced a number of headwinds over the last few quarters. These include: a difficult interest rate environment that leads to pressure on and compression of margins; increasing competition for local deposits especially from out of state bank and non bank competitors anxious to offset the loss of access to some of the institutional interbank funding markets upon which they had traditionally relied; a related increase in deposit insurance assessments as the FDIC has had to simultaneously cover some losses related to bank failures while insuring a larger deposit base; ongoing confusion in some circles about what participation in the government's Capital Purchase Program means for participants; and, of course, a strained economy where some assets are not performing as contracted.

"Despite these challenges, Howard Bancorp sees multiple opportunities created by our consistent execution of community banking fundamentals in a very sound marketplace. We remain committed to moving forward to seize these opportunities at this critical time when others have been forced to regress. The increase in our non interest expense base and the increase in our capital base both reflect this commitment to the future. The growth in our market share, customer loans and deposits, and related revenue streams rewards these decisions to continue investing in our targeted communities. Our inherent optimism about the underlying health and resilience of our communities and our strong belief that our business model is more than ever the right one remain as steadfast as ever."

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.

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