Howard Bancorp, Inc. Announces Results for the First Quarter of 2011
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, 2011. The company announced that for the first quarter of 2011 net income was $344 thousand, which represents an increase of 9% over the net income for the first quarter of 2010, and an increase of 26% over the fourth quarter of 2010.
The company's total assets were relatively unchanged when comparing March 31, 2011 assets of $305.4 million to the $304.9 million at the same point in 2010. Total loans outstanding of $251.2 million at the end of March 2011, showed a decline of nearly 3% compared to total loans of $260.1 million on March 31, 2010. Demand deposits, which not only represent the lowest cost source of funding available to a bank, but also are most reflective of the core customer relationships targeted by the bank, grew from $39.6 million at March 31, 2010 to $50.5 million at the end of the first quarter of 2011, representing growth in this highly coveted deposit category of $10.9 million or 27%. Because of the lack of significant asset growth, the bank was able to utilize these additional low cost deposits to reduce balances in higher cost deposit categories.
Even with the modest decline in loans over the twelve month period, total interest income for the first quarter of 2011 was similar to the same three month period in 2010. However, given the continuing favorable shift in the composition of deposits and other funding sources, the bank was able to reduce interest expense by $324 thousand or 39% for the first quarter of 2011 versus the same period in 2010. The resulting net interest income for 2011 was $3.0 million versus $2.7 million for the first three months of 2010, an increase of approximately $348 thousand or 13%.
The provision for loan and lease losses required for the first quarter of 2011 was $112 thousand compared to $211 thousand for the same period in 2010. The bank benefitted from recoveries on loan losses recorded in previous periods and these recoveries offset some additions to reserves. Reserve coverage of non performing loans remained strong at 108%. Additionally, some asset value impairment was reflected in non interest expenses as described below.
Partially offsetting the increase in net interest income and a reduced net provision expense was a higher level of expenses for the first three months of 2011. When comparing total expenses of $2.5 million in 2011 to the $2.1 million for the same period in 2010, nearly 75% of the increased expenditures in 2011 resulted from an expense related to the decline of approximately $190 thousand in the value of a property held as Other Real Estate Owned, and other expenditures relating to troubled loan workouts, including OREO expenses, and related collection efforts in 2011. These other loan related expenses increased by nearly $316 thousand for the first quarter of 2011 versus 2010. The modest residual increase in expenses was from continuing expansion of our operating infrastructure.
The company's nonperforming asset levels have continued to compare favorably to peers but remain higher than historical norms. The Company continues to focus time and talent on asset quality improvement- valuation, restructuring, and collection. We continue to see some stabilization in the overall nonperforming assets levels, as well as a reduction in the number of newly identified borrowers showing signs of stress.
All of our regulatory capital ratios continue to significantly exceed those that define a well capitalized bank.
Chairman and CEO Mary Ann Scully stated: "Howard Bancorp's leadership remains encouraged by many components of our financial performance: continuing profitability, driven by strong core earnings that reflect especially robust customer based funding; stability in asset quality metrics; and a strong capital base that allows us to continue to adequately provide for any loan losses or impairments while investing in a bright future. We are grateful for the positive responses in our targeted markets to our message of differentiation as reflected in steady growth in the demand deposits so sought after by other banks. And we are proud of the recognition that we receive not only in our home Howard and Anne Arundel counties but in the extended Greater Baltimore marketplace- the naming of seven Howard bankers as Top Baltimore Bankers, the honoring of our executive management team as Smart CXO's, the invitation to be the Title Sponsor of the Greater Baltimore Acclerent group. We are also challenged by certain characteristics of our environmental landscape: the length of time required to work through troubled loan situations with certain clients; and the lingering slowness of even our normally robust economy as reflected in a pause in the growth of parts of our commercial loan portfolio.
As always, we are proactively addressing both challenges. In particular, while it seems to us that many businesses in Central Maryland are not borrowing because they do not yet have enough confidence and/ or enough capacity to begin hiring again or investing in new equipment software or infrastructures, we also believe that there are still many good credit worthy clients in our Central Maryland marketplace who just do not yet know Howard Bank. We are successfully working with both existing and new networks of influencers to identify them and introduce them to Howard Bank's unique way of doing business. The bank has successfully executed on a profitable growth strategy and we will continue to do so."
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 www.howardbank.com.