Howard Bancorp, Inc. Announces Second Quarter 2011 Results
Ellicott City, MD, --(BUSINESS WIRE)-- 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, 2011. For the first six months of 2011, Howard Bancorp recorded net income of $694 thousand which represents an increase of 31% compared to net income of $530 thousand for the first half of 2010. Net interest income of $6.1 million for the first six months of 2011 increased by over $700 thousand or 13% compared to the same period in 2010. Noninterest income for the six month period in 2011 was modestly up to $364 thousand as compared to the $353 thousand recorded for 2010. Noninterest expenses related to investments in staffing to support a growing organization increased by almost $300 thousand or 13% for the first half of 2011- a pace consistent with the revenue growth. As we proceed through this economic cycle, some portions of the loan portfolio which are stressed are being resolved, and over $600 thousand of increased expenditures related to valuation adjustments and maintenance costs on Other Real Estate Owned (OREO) and collection activities on distressed loans were recorded. Somewhat offsetting this increase in OREO and collection costs was a drop of $476 thousand or 72% in specific loan loss provisions from $658 thousand for the first half of 2010, to $182 thousand for the same period in 2011.
Total assets ended June 30, 2011 at $311 million an increase of $2 million or 1% over assets of $309 at the same point in 2010. Total loans of $258 million and total deposits of $242 million at the end of the second quarter of 2011 reflected slight decreases of 1% compared to June 30, 2010. The flattening of the loan balances experienced in the fourth quarter of 2010 and the first quarter of 2011 reversed itself in this second quarter as loan balances were up $6 million or 2% since March 2011. Given the modest changes in the balance sheet, much of the increase in earnings was attributable to a reduction in the cost of funding, primarily due to lower rates on deposit products for 2011 compared to 2010. The interest expense associated with deposits fell by nearly $650 thousand or 39% for the first half of 2011 versus 2010. The bank continued to show strong growth in demand deposits which were up 15% from June 2010. This growth underpins the drop in cost of funds.
As mentioned above, the bank recorded a provision for loan losses of $182 thousand for the first half of 2011, compared to $658 thousand for the same period in 2010 as non accrual loans of $3.3 million and OREO of $4.4 million represented 2.50% of our total assets at June 30, 2011. This compares to second quarter 2010 non accrual loans of $5.8 million and OREO of $1.1 million which represented 2.22% of total assets and March 31, 2011 non accrual loans of $3.5 million and OREO of $4.6 million which represented 2.67% of our total assets. The reduction in nonperforming loans directly impacts the provision for loan losses, while the increase in OREO resulted in the large increase in collection related non interest expense levels for 2011 discussed above. From a regulatory perspective, the bank remains well capitalized with a tier one leverage ratio, tier one risk based ratio, and total risk based capital ratio of 9.67%, 11.02% and 12.27%, respectively, versus 8.13%, 9.65% and 10.90%, respectively for the same measures in 2010.
For the three months ending June 30, 2011, Howard Bancorp recorded second quarter net income of $351 thousand which is an increase of $136 thousand or 63% over the second quarter of 2010, and also approximately 2% higher than the $344 thousand for the first quarter of 2011. Comparing the second quarter of 2011 to the same period of 2010, quarterly net interest income rose 13% while the provision for loan losses for the three months ended June 30, 2011 was $70 thousand compared to $447 thousand for the second quarter of 2010. Similar to the year to date expenses discussed above, second quarter of 2011 expenses grew by $580 thousand largely due to collection expenditures and OREO related valuation and maintenance costs.
Chairman and CEO Mary Ann Scully stated: “The present economic environment represents not only one of the most difficult in memory but one of the most persistent in terms of longevity. We are proud that we have navigated through these times with higher profits but more importantly, consistent profits in nine of the last ten quarters. More uniquely, we have maintained our focus on growing the number of customers that we serve with both loan and deposit products and continue to see our balance sheet grow along with our revenues and net income at a time when some others in our industry are focused on shrinking. Howard Bancorp continues to view the Greater Baltimore market of small and medium sized businesses, which we target and serve, as representative of unprecedented long term opportunity and we are well positioned, both for the short term challenges and for the better environment that is to come.”
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.