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Howard Bancorp, Inc. Announces Second Quarter of 2013 Results

  Howard Bancorp, Inc. Announces Second Quarter of 2013 Results

Business Wire

ELLICOTT CITY, Md. -- July 18, 2013

Howard Bancorp, Inc. (Nasdaq: HBMD), the parent company of Howard Bank (the
“Bank”), today reported its financial results for the six months ended June
30, 2013 with the following highlights:

  *Net income available to common shareholders increased to $895 thousand for
    the first half of 2013, compared to $480 thousand in the first six months
    of 2012, representing an increase of $415 thousand or 86%. For the three
    month period ended June 30, 2013, net income available to common
    shareholders increased to $481 thousand, compared to $238 thousand for the
    second quarter of 2012, representing an increase of $243 thousand or 102%.
  *Earnings per common share (EPS) for the first half of 2013 and the second
    quarter of 2013 were $.22 and $.12, respectively, compared to EPS of $.18
    and $.09 for the same periods during 2012. This growth in EPS was achieved
    even with the issuance of an additional 1.4 million shares, which
    increased our shares outstanding by approximately 53%, resulting from our
    stock offering that closed in the third quarter of 2012.
  *Total assets grew to $415 million at June 30, 2013, representing growth of
    nearly $59 million or 16% over assets at June 30, 2012.
  *Total loans increased by nearly $61 million or 21%, to $352 million, when
    comparing June 30, 2013 to June 30, 2012.
  *Deposits increased to $326 million at June 30, 2013 from $283 million on
    June 30, 2012, representing growth of over $43 million or 15%, of which
    noninterest bearing deposits grew by $10 million or 14%.
  *As a result of both positive earnings for each quarter and the stock
    offering which closed in the third quarter of 2012, our total capital
    increased to $48 million at June 30, 2013 from $37 million at June 30,
    2012, representing an increase of $11 million or 28%.
  *Given the continuing growth in certain qualifying loan categories under
    the Small Business Lending Fund (SBLF) preferred stock program, the
    dividend rate on our outstanding preferred stock has been reduced to the
    minimum rate of 1%. During most of 2012, the dividend rate we paid was
    approximately 5%.
  *We are proceeding with the design and construction of our first Baltimore
    County, MD branch along with a regional office to be located in Towson,
    MD, which we expect will open in the fourth quarter of 2013.
  *As reported earlier, we have executed an agreement to acquire
    approximately $39 million in additional loans and deposits via the
    purchase of a branch in Harford County, MD from Cecil Bank, subject to
    regulatory approval. Approval from the Office of the Commissioner of
    Financial Regulation for Maryland has been received and we await FDIC
    approval.

Chairman and CEO Mary Ann Scully stated, “We are pleased to be able to report
to all of our stakeholders - investors, clients, colleagues and the community
- that our business model and our actions in support of that model continue to
reap rewards for all stakeholders: growth in loans to local small and medium
sized businesses which leads to growth in local employment; efficient funding
of those loans through core operating accounts with businesses and employees
in the community; growth in capital to assure our capacity to continue making
this impact; and growth in net income available at both an aggregate level and
on an earnings per share basis. We consistently take a long-term view and
therefore continue to invest in the infrastructure necessary to prudently grow
and successfully deliver our high level of customer service with a positive
impact on our community. We also continue to invest time and talent exploring
non-organic growth opportunities to supplement our track record of strong
organic growth, our branch expansion into Baltimore County and the pending
Cecil branch acquisition. We remain committed to growth that is strategic as
well as disciplined and accretive and look forward to the intersection of
those goals.”

The Company’s total assets increased by nearly $59 million or 16% when
comparing June 30, 2013 assets of $415 million to the $356 million at the same
point in 2012. Total loans outstanding of $353 million at the end of June
2013, showed an increase of nearly 21% compared to total loans of $291 million
on June 30, 2012. 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 $73 million at
June 30, 2012 to $83 million at the end of the first half of 2013,
representing growth in this highly coveted deposit category of $10 million or
14%. Total deposits grew by $43 million or 15% when comparing June 30, 2013 to
June 30, 2012.

The growth in loan levels generated a 7% increase in total interest income for
the first six months of 2013, which was $541 thousand higher than the same six
month period a year ago. Even with overall growth in deposits and borrowing
levels, the continuing favorable shift in the composition of deposits and our
ability to attract and maintain lower cost funding sources, allowed the
Company to record and reduce total interest expense by $180 thousand or 17%
for the first half of 2013 versus the same period in 2012. The resulting net
interest income for the six months ended June 30, 2013 was $7.3 million versus
$6.6 million for the first six months of 2012, an increase of approximately
$721 thousand or 11%.

Asset quality measures continue to show signs of gradual improvement, and
remain a major focus of attention for management and the Board of Directors.
One of the Company’s primary measures of asset quality is the ratio of
non-accrual loans and OREO as a percentage of total assets. This asset quality
measure showed improvement for 2013 with a ratio of 1.48% as of June 30, 2013,
which although higher than the 1.21% as of March 31, 2013, compared favorably
to the 1.90% at the end of the June 2012.

The provision for credit losses for the first half of 2013 was $526 thousand
compared to $342 thousand for the same period in 2012. The ratio of the
allowance for credit losses as a percentage of total loans outstanding was
0.84% at June 30, 2013, compared to 1.06% at June 30, 2012, while the ratio of
the allowance for credit losses in relation to nonperforming loans improved to
86% at the end of the first half of 2013, up from 60% at the same point in
2012.

In addition to the growth in net interest income there was an increase in
noninterest income for the first half of 2013 compared to the first half of
2012. Service charges on deposits increased by nearly 14% for the first six
months of 2013 versus the same period in 2012, while other sources of
noninterest income grew from $185 thousand in the 2012 period to $474 thousand
in the 2013 period, an increase of $289 thousand. The first half of 2012 was
impacted by a loss on the sale of an Other Real Estate Owned (OREO) property
of $131 thousand, while a smaller loss of $37 thousand was recorded during the
first six months of 2013. The Bank initiated a Bank Owned Life Insurance
(BOLI) program in January 2013, which generated $137 thousand of income during
the first six months of 2013. The remainder of the additional noninterest
income resulted from additional revenue on mortgage banking activities. The
addition of Robert Altieri to our executive management team this year has
resulted in not only a high focus on this revenue diversification opportunity
but early signs of success in underwriting designations, broadening secondary
market investor base, product updates and attracting talent.

Total noninterest expenses grew to $5.8 million for the first half of 2013
compared to $5.2 million for the first half of 2012, an increase of $600
thousand or 12%. The majority of the increase in noninterest expenses was in
the compensation category, which grew by $555 thousand when comparing the
first six months of 2013 versus the same period in 2012. These increases
result from our initiative to build and staff a more robust mortgage banking
platform, and the continuing growth of our business development initiatives,
branch expansion efforts, and operating infrastructure enhancement.

When comparing second quarter of 2013 results to the first quarter of 2013,
assets, loans, and deposits grew by 2%, 6%, and 1%, respectively. Second
quarter net income available to common shareholders increased from $414
thousand in the first quarter of 2013 to $481 thousand in the second quarter,
and resulting earnings per share increased to $.12 for the second quarter
compared to $.10 in the prior quarter. This was due primarily to a 5% increase
in net interest income quarter over quarter, and a reduction in the dividend
rate paid on the preferred stock. Additional details on 2013 year-to-date and
quarterly results are provided in the financial table below.

All of our regulatory capital ratios continue to significantly exceed those
levels that categorize us as a well capitalized bank. Average equity to
average assets was 11.96% at the end the second quarter of 2013, up from
10.81% at June 30, 2012.

This statement in this press release regarding the expected opening of our new
Towson, MD branch is 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 statement be subject to the safe harbors created thereby.
Such forward-looking statement is based on current expectations regarding
important risk factors, including but not limited to receipt of any required
regulatory approvals, real estate values, local and national economic
conditions, and the impact of interest rates on financing, as well as other
risks and uncertainties, as described in Howard Bancorp, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2012 as filed with the Securities
and Exchange Commission. Accordingly, actual results may differ from those
expressed in the forward-looking statement, and the making of such statement
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.

HOWARD BANCORP,                                   
INC.

                  Six months ended                  Three months ended
(in thousands,
except per share  June 30,                          June 30,
data.)
Operation         2013            2012              2013            2012
Statement Data:
Interest income     8,149           7,608           $ 4,160         $ 3,799
Interest expense    883             1,063             444             536
Provision for       526             342               165             201
credit losses
Noninterest         642             333               315             247
income
Noninterest         5,801           5,184             3,049           2,638
expense
Federal and
state income tax   584           558             303           276       
expense
(benefit)
Net income        $ 997          $ 794             514           395       
Preferred Stock    102           314             33            157       
Dividends
Net income
available to      $ 895          $ 480             481           238       
common
shareholder
                                                                                  
Per share data
and shares
outstanding:
Net income per
common share,     $ 0.22          $ 0.18            $ 0.12          $ 0.09
basic
Net income per
common share,     $ 0.22          $ 0.18            $ 0.12          $ 0.09
diluted
Book value per
common share at   $ 8.68          $ 9.29            $ 8.68          $ 9.29
period end
Average common
shares              4,040,471       2,640,264         4,040,471       2,640,264
outstanding
Diluted average
common shares       4,040,471       2,640,264         4,040,471       2,640,264
outstanding
Shares
outstanding at      4,040,471       2,640,264         4,040,471       2,640,264
period end
                                                                                  
Financial
Condition data:
Total assets      $ 414,896       $ 356,142         $ 414,896       $ 356,142
Loans receivable  $ 353,293       $ 291,368         $ 353,293       $ 291,368
(gross)
Allowance for     $ (2,951    )   $ (3,076    )     $ (2,951    )   $ (3,076    )
credit losses
Other
interest-earning  $ 22,307        $ 31,560          $ 22,307        $ 31,560
assets
Total deposits    $ 325,543       $ 282,566         $ 325,543       $ 282,566
Borrowings        $ 41,009        $ 35,726          $ 41,009        $ 35,726
Total
stockholders’     $ 47,633        $ 37,103          $ 47,633        $ 37,103
equity
Common equity     $ 35,071        $ 24,541          $ 35,071        $ 24,541
                                                                                  
Average assets      395,076         342,819           399,286         348,196
Average
stockholders'       47,246          37,009            47,404          37,039
equity
Average common
stockholders'       34,684          24,447            34,842          24,477
equity
                                                                                  
Selected
performance
ratios:
Return on           0.51        %   0.47        %     0.52        %   0.46        %
average assets
Return on
average common      5.79        %   6.57        %     5.91        %   6.48        %
equity
Net interest        3.96        %   4.04        %     3.99        %   3.94        %
margin^(1)
Efficiency          73.36       %   75.36       %     75.63       %   75.15       %
ratio^(2)
                                                                                  
Asset quality
ratios:
Nonperforming
loans to gross      0.97        %   1.84        %     0.97        %   1.84        %
loans
Allowance for
credit losses to    0.84        %   1.06        %     0.84        %   1.06        %
loans
Allowance for
credit losses to    86.29       %   57.42       %     86.29       %   57.42       %
nonperforming
loans
Nonperforming
assets to loans     1.73        %   2.37        %     1.73        %   2.37        %
and other real
estate
Nonperforming
assets to total     1.48        %   1.95        %     1.48        %   1.95        %
assets
                                                                                  
Capital ratios:
Leverage ratio      11.91       %   10.61       %     11.91       %   10.61       %
Tier I
risk-based          13.12       %   12.49       %     13.12       %   12.49       %
capital ratio
Total risk-based    13.93       %   13.53       %     13.93       %   13.53       %
capital ratio
Average equity
to average          11.96       %   10.80       %     11.87       %   10.64       %
assets

(1) Net interest margin is net interest income divided by average earning
assets.
(2) Efficiency ratio is noninterest expense divided by the sum of net interest
income and noninterest income.

Contact:

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