Howard Bancorp, Inc. Announces Second Quarter and Year-to-Date 2009 Growth in Assets, Loans, Deposits and Net Income
Howard Bancorp, Inc. (OTC, Electronic Bulletin Board: HBMD), the parent company of Howard Bank, today reported its quarterly and year-to-date financial results for the period ending June 30, 2009. The company announced its ninth consecutive quarter of profitability with net income of $87 thousand for the second quarter of 2009, compared to net income of $17 thousand for the first quarter of 2009, and $10 thousand for the second quarter of 2008. In comparing the second quarter of 2009 to the similar quarter of 2008, quarterly net interest income of $2.14 million for the second quarter of 2009, increased by nearly $400 thousand or 21% over the net interest income of $1.77 million in 2008. Deposit related service charges and other fee related income similarly increased by 20% when comparing the second quarter of 2009 versus 2008. The quarterly net income increase was achieved while also absorbing significantly higher regulatory assessments as well as higher expenses associated with our recent opening of a fourth branch location in Howard County, and our expansion into Anne Arundel County. Second quarter of 2009 total expenses were nearly $2.0 million, which represents an increase of almost $600 thousand over the $1.4 million in expenses for the second quarter of 2008. Regulatory assessments accounted for $226 thousand of total non interest expense, compared to approximately $34 thousand for the same period of 2008, representing increased deposit insurance costs of $193 thousand (of which $115 thousand was the special assessment announced by the FDIC earlier this year that is applicable to all FDIC insured institutions.) Without this FDIC special assessment, our quarterly net income results would have been much higher.
On a year-to-date basis, Howard Bancorp recorded net income of $104 thousand for the first six months of 2009 which is a 21% increase over net income of $87 thousand for the similar six month period of 2008. Year-to-date net interest income for 2009 versus 2008 rose by $546 thousand or 16% and noninterest income increased by $105 thousand or 43%. These increases in revenue sources, along with a lower provision expense, were sufficient to cover the increase in normal operating expenses, the increased level of regulatory assessments, as well as the additional costs of expanding our marketplace. For the six months of 2009 compared to 2008, total expenses increased by $924 thousand or 32%, $455 thousand or 49% of which was attributable to the increased costs of compensation and occupancy costs associated with our infrastructure growth and expanded market presence, while $240 thousand or 26% related to increases in regulatory costs.
The investments in additional delivery channels and ongoing infrastructure growth continued to show signs of success with total assets at June 30, 2009 of $257 million, which represents an increase of $42 million or 20% over total assets of $215 million at the end of the second quarter of 2008. Most of the asset growth was reflected in the loan portfolio which grew 22% from $190 million at June 30, 2008 to $231 million at the end of the quarter for 2009. Similarly, total deposits ended the second quarter of 2009 at $198 million which reflects deposit growth of $18 million or 10% over the $180 million in deposits at June 30, 2008. Of this $18 million in deposit growth, more than half, or over $9.5 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. 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 proud to report that, in an exceedingly difficult interest rate and credit environment and despite markedly higher regulatory costs, Howard Bancorp's core operating performance was strong in this quarter and the first half of the year. Double digit growth in customer generated revenue - both net interest income and non interest income- allowed us to fund significant investments in our customer delivery systems in both Howard and Anne Arundel counties as well as special regulatory assessments. Our revenue growth is, in turn, attributable to both strong balance sheet growth and disciplined funding strategies. The balance sheet growth was led by loan originations to local businesses and residents, which provide tangible evidence of the value of our participation in the U S Treasury Capital Purchase Program. Additionally, the growth in customer transaction deposits not only lowers funding costs but also provides evidence of strong operating relationships with our targeted small and medium sized businesses and business owners. While our national economy's decline is less precipitous and our local economy continues to perform better than most in the country, many risks remain. However, the strained environment is actually fostering the growing recognition in our communities of the consistently invaluable role played by strong community banks. Opportunities present themselves every day to demonstrate to customers and prospective customers alike the inherent advantages of our commitment to providing expert advice face to face. We look forward to continuing to successfully seize these opportunities."
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.