Howard Bancorp, Inc. Reports 2009 Results

Ellicott City, MD, January 21, 2010 — Howard Bancorp, Inc. (OTC, Electronic Bulletin Board: HBMD), the parent company of Howard Bank, today reported its financial results for the year ending December 31, 2009. For the year ended December 31, 2009, the company reported a net loss of $2.2 million versus net income of $ 337 thousand for 2008. The results for 2009 include a provision for possible credit losses of $3.7 million of which $2.8 million was charged off. The comparable period one year ago reflected $1.2 million in provision for credit losses and also $1.2 million in net charge-offs. Net charge-offs for the fourth quarter of 2009 were primarily in the commercial and industrial loan and commercial real estate segments of the loan portfolio. In addition to the increased provision for loan losses, 2009 was also negatively impacted by a substantial deterioration in the value of real estate classified as other real estate owned. During 2008, the bank took possession of several parcels of undeveloped real estate associated with one loan via foreclosure proceedings, and based upon a recent appraisal sought by the bank near the end of 2009, the bank recorded a $1.3 million diminution in value.

Continued growth in both loans and deposits resulted in an increase in net interest income of nearly $1.3 million or 18% when comparing net interest income of $8.7 million in 2009 to the $7.4 million during 2008. Similarly, non interest income which is primarily composed of service charges on deposits and fees on loans generated income of $756 thousand for 2009 compared to $515 thousand for the same period in 2008, an increase of $240 thousand or 47%. During 2009, total noninterest expenses increased from the $6.1 million recorded in 2008 to nearly $9.3 million in 2009. Included in the year over year increase in expenses of $3.1 million, $1.3 million of this increase was from the real estate valuation adjustment, and over $440 thousand was due to an increase in regulatory assessments related to increased FDIC insurance. Excluding these two factors, total expenses increased by $1.4 million or 23% due to our continued growth, expansion and investment initiatives- in line with revenue growth.

As of December 31, 2009 total assets had increased by 25% from 2008 levels to $286 million. Outstanding loans grew by nearly $49 million or 24%, with loans of $253 million and $204 million at December 31, 2009 and 2008, respectively. Loan growth was funded primarily from increases in deposits, with total deposits of $229 million at year end 2009 versus $182 million at December 31, 2008, resulting in an increase of deposits of $46 million or 25% during 2009. Total capital was also increased by $6.3 million in 2009 as a result of the issuance of preferred shares under the US Treasury Capital Purchase Plan contributing to an increase in shareholders’ equity at 12/31/09 of $3.7 million, up 15 % from 2008 levels. Howard Bank continues to be considered well capitalized under regulatory definitions and Howard Bancorp Inc. ended the year with a total risk based capital ratio of 12.58%, a tier one capital ratio of 11.33% and a leverage ratio of 10.01%.

Asset quality for Howard Bank has been a major focus of attention for management and the board of directors throughout 2009. The bank’s primary measure of asset quality is the relationship between non-accrual loans and other real estate owned (OREO) as a percentage of total assets. This ratio showed improvement for 2009 with a ratio of 2.01% as of December 31, 2009 versus 2.48% at the end of 2008.

For the fourth quarter of 2009, the company reported a quarterly increase of nearly 20% in net interest income and an increase of $97 thousand or 78% in noninterest revenues compared to the same three month period in 2008.

Chairman and CEO Mary Ann Scully stated: “While Howard Bancorp experienced solid growth in assets, revenue and pre-provision operating income in 2009, our positive core operating results were offset by increased provisions for loan losses and charge-offs arising out of the prolonged economic downturn and its effect on the bank’s targeted small business customers. These provisions were the result of a small number of problem credits - with 80% of our losses attributable to six relationships. As such there are no indications that these credits represent any systemic weaknesses. Since Howard Bank focuses on small business and commercial lending, we anticipated the impact of the continued downturn in the economic cycle on small and mid-sized business early in 2009 and we determined that prudent and realistic provisioning would be necessary as the cycle progressed. That provisioning has proceeded throughout the year.

To safely meet the need for economic cycle related provisioning and to continue to seize the market opportunities for strategically targeted growth, we successfully applied for and received $6 million in the new capital carved out for healthy community banks by the US Treasury Capital Purchase Program in February of this year. This capital allowed us to grow our capital base in line with our assets. It has also, as the Treasury program intended, allowed us to continue to meet the needs of our targeted small and medium sized business marketplace in both Howard and Anne Arundel counties.

While we believe that there will be, at best, modest economic recovery in 2010, we also believe that there will be continued opportunities for a fundamentally strong company doing business in a still exceptional geographic market. As a result, we remain committed to safely growing our assets in reaction to potential shifts in market share from larger institutions to community banks and we remain positively focused on the future.”

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 CEO Mary Ann Scully answers questions about the 2009 results at

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