Howard Bancorp, Inc. Announces Third Quarter of 2013 Results
October 22, 2013
Company Release - 10/22/2013 14:46
Howard Bancorp, Inc. (Nasdaq: HBMD), the parent company of Howard Bank (the “Bank”), today reported its financial results for the six months ended September 30, 2013 with the following highlights:
Through the first nine months of 2013, net income was $1.41 million, versus net income of $1.18 million for the nine month period in 2012 representing a 19% increase in net income. The dividends paid on our preferred stock fell from $471 thousand for the first nine months of 2012 to $134 thousand for the nine months ended September 30, 2013, due to a reduction in the dividend rate that was achieved given our growth in qualifying small business loans.
Through the first nine months of 2013, net interest income was $11.4 million compared to $10.0 million for the same period of 2012, an increase of nearly $1.4 million or 14%. Noninterest income also increased, to $962 thousand during the first nine months of 2013 compared to $549 thousand for the same period of 2012, representing an increase of $413 thousand or 75%. A large contributor to the increase was because the bank initiated a Bank Owned Life Insurance (BOLI) program in January 2013, which generated $210 thousand of income during the first nine months of 2013. Year to date total noninterest expenses of $9.5 million represented an increase of $1.7 million or 21% compared to total noninterest expenses for the first three quarters of 2012. Included in the $1.7 million increase in expenses during 2013 were increased compensation costs of nearly $1.0 million due to the anticipated opening of our sixth branch location, additions to our business development initiatives in Greater Baltimore and also our desire to create a more robust mortgage banking platform. In addition to the growth in staffing related expenses was an increase in professional fees of nearly $200 thousand resulting from legal and investment banking fees associated with our acquisition of our Aberdeen, Maryland branch during the third quarter of 2013, and also an expense increase of approximately $300 thousand due to valuation adjustments on the carrying value of certain Other Real Estate Owned (OREO) properties.
When comparing the results for the third quarter of 2013 to the same period in 2012, net interest income of $4.2 million for 2013 also showed positive momentum, increasing by nearly $750 thousand or 22% compared to net interest income of $3.4 million in the third quarter of 2012. For the three months ended in September, noninterest income was $319 thousand versus $216 thousand for the same period of 2012. The provision for credit losses for the third quarter of 2013 was $140 thousand compared to $308 thousand for the third quarter of 2012, a decrease of nearly $168 thousand or 55%. Noninterest expenses for the third quarter of 2013 were $3.7 million, which reflected an increase of $1.0 million over the $2.7 million in expenses for the third quarter of 2012. The $1.0 million increase for the third quarter of 2013 versus the third quarter of 2012 was due to an increase of approximately $400 thousand in compensation costs associated with our branch expansion and focus on growing our greater Baltimore presence and also our mortgage banking activities. In addition to the compensation increase, we incurred the previously mentioned increase in professional fees resulting from legal and investment banking fees on our branch acquisition and also the OREO valuation adjustment in the third quarter of 2013.
At September 30, 2013, Howard Bancorp, Inc. had total capital of $48.0 million representing 10.30% of period end total assets compared to a 12.57% ratio at September 30, 2012. This decreased equity-to-asset ratio is the result of utilizing much of the additional capital raised during 2012 toward revenue producing organic and acquired asset growth.
In addition to growing our balance sheet categories, our asset quality measures continue to improve. As of September 30, 2013 Howard Bank had non-accrual loans totaling $3.4 million, representing less than 1% of total loans. The total of nonaccrual loans and OREO totaled $5.8 million at September 30, 2013, which represented 1.23% of total assets, while this same measure at the end of the third quarter of 2012 was 1.51%.
Chairman and CEO Mary Ann Scully stated, "A consistent ability to grow customer driven loans and deposits, earnings and community impact is the surest indication of Howard Bancorp's success in meeting its goal of maximizing long term stakeholder return. We believe that all of our recent investments in experienced staff, desirable sales and servicing locations, acquisitions and new business lines are showing tangible signs of achieving higher returns on these investments; ensuring that an upward trajectory continues to be our focus."
This statement in this press release regarding our anticipated sixth 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 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 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.
Howard Bancorp, Inc.
Source: Howard Bancorp, Inc.