Howard Bancorp, Inc. (NASDAQ: HBMD) (“Howard Bancorp” or the
“Company”), the parent company of Howard Bank (“Howard Bank” or the
“Bank”), today reported its financial results for the quarter ended
March 31, 2021.
First Quarter 2021 Highlights
- Strong net income growth:
- Net income, of $6.2 million for the quarter, was up 86% from
first quarter of 2020 and up 39% from fourth quarter of 2020
- Core net income, 1 of $6.2 million for the quarter, was up 134%
from first quarter of 2020 and up 13% from fourth quarter of
2020
- Strong earnings per share growth:
- Earnings per share (“EPS”), both basic and diluted, of $0.33
for the quarter, was up 83% from first quarter of 2020 and up 38%
from fourth quarter of 2020
- Core EPS, 1 both basic and diluted, of $0.33 for the quarter,
was up 136% from first quarter of 2020 and up 14% from fourth
quarter of 2020
- Strong pre-provision net revenue (“PPNR”) 1 growth:
- PPNR, 1 at $9.4 million for the quarter, was up 49% from first
quarter of 2020 and up 30% from fourth quarter of 2020
- Core PPNR, 1 at $9.4 million for the quarter, was up 35% from
first quarter of 2020 and up 7% from fourth quarter of 2020
- Core PPNR, as a percentage of average assets, 1 1.50% for the
quarter, was up 0.31% , or 31 basis points “BP”), from first
quarter of 2020 and up 12 BP from fourth quarter of 2020
- Strong loan growth:
- Total loan growth of $81.5 million during the quarter,
including $33.9 million of Paycheck Protection Program (“PPP”)
loans
- Portfolio loan 1 growth (which excludes PPP loans) of $47.5
million during the quarter (11.2% annualized growth rate)
- Stable / improving net interest margin:
- Net interest margin, at 3.43% for the quarter, was up 4 BP from
fourth quarter of 2020
- Operating net interest margin, 1 which excludes the impact of
loan fair value accretion and net income from PPP lending, was
3.20% for the quarter, down 1 BP from fourth quarter of 2020
- Stable asset quality:
- Loan deferrals of $54.2 million at March 31, 2021 (2.8% of
total loans and 3.1% of portfolio loans
- Nonperforming assets to total assets was 0.62% as of March 31,
2021, down 16 BP from first quarter of 2020 and down 17 BP from
fourth quarter of 2020
- Provision for credit losses was $1.0 million for the quarter,
down $2.4 million from first quarter of 2020 and down $700 thousand
from fourth quarter of 2020
- Net charge-offs were $1.8 million for the quarter, or 0.43% of
average total loans (annualized)
- Allowance for loan losses was 0.94% of total loans and 1.05% of
portfolio loans 1 as of March 31, 2021; compared to March 31, 2020,
up by 18 BP and 29 BP, respectively; compared to December 31, 2020,
both down by 8 BP
- Good expense management:
- Noninterest expenses were $12.3 million for the quarter, down
15% from both first quarter of 2020 and fourth quarter of 2020
- Core noninterest expenses, 1 were $12.3 million for the
quarter, flat compared to first quarter of 2020 and down 5% from
fourth quarter of 2020
- PPP update:
- $95.7 million of PPP loans funded during the quarter
- $60.1 million of 2020 PPP loan originations forgiven during the
quarter
1 These are financial measures not calculated in accordance with
generally accepted accounting principles (“GAAP”). Please refer to
the section entitled “Reconciliation of Non-GAAP Financial
Measures” in this press release and to the financial tables
entitled “GAAP to Non-GAAP reconciliation” for a reconciliation to
the most directly comparable GAAP financial measures.
Mary Ann Scully, Chairman and CEO, commented, “The first quarter
of 2021 demonstrated significant tangible progress towards our goal
of driving revenue-led PPNR growth and returns which is, in turn,
generating positive operating leverage. Revenue growth was led by
commercial loan growth, through net origination of both portfolio
loans and PPP loans, funded by low-cost deposits. This was
accompanied by strong cost control and resource allocation devoted
to customer-facing staff. We believe our low noninterest expense to
average assets ratio positions us well against peers and reflects
three years of focus on both branch optimization and core process
improvements. However, we are proudest of our revenue growth as we
believe that confirms differentiation. Our net interest margin is
stable despite a very challenging low interest rate environment
and, as the asset mix continues to shift toward loans, the margin
should improve. Howard Bank’s historical emphasis on full
commercial relationships has allowed us to significantly lower our
cost of funds and that tailwind has almost completely offset the
headwinds of compressed yields in both the loan and the securities
portfolios. Those lower yields have been exacerbated by a higher
proportion of assets in low-yielding but high-quality securities.
The headwind of lower commercial line usage contributes to this
excess liquidity, as does higher commercial deposit levels
maintained by former net borrowers.
Strong commercial loan origination led to annualized
double-digit growth in C&I balances. This growth was generated
by our staff focused on our core Baltimore market and also showed
early efforts of the two-person CRE team and the three-person
C&I team now focused on the demographically attractive
contiguous Greater Washington marketplace. The talent pipeline has
been strong in both markets; approximately 20% of our commercial
bankers are now focused on the Greater Washington market. We
believe our loan pipelines in both markets bode well for the
remainder of the year. We look forward to a general uplift in the
economy and we hope to begin welcoming some staff back into the
offices later in the second quarter. The loyalty of staff and
existing customers has, however, given us strength, and we believe
has continued to enhance the value of our brand, allowing us to
acquire both new talent and new customers.”
Net Income and EPS
The Company reported net income of $6.2 million, or $0.33 per
both basic and diluted common share, for the first quarter of 2021.
This compares to net income of $3.3 million, or $0.18 per both
basic and diluted common share, for the first quarter of 2020 and
net income of $4.5 million, or $0.24 per both basic and diluted
common share, for the fourth quarter of 2020.
First quarter 2021 basic and diluted EPS increased by $0.15 when
compared to the first quarter of 2020 and $0.09 when compared to
the fourth quarter of 2020. The following table presents an EPS
rollforward for the first quarter of 2021 compared to both the
first quarter of 2020 and the fourth quarter of 2020. The column
noted as “FN” references each item in the rollforward to a footnote
with additional information; reconciling items are presented on an
after tax basis.
First Quarter 2021Compared to: FN Q1 2020 Q4 2020
EPS, First
Quarter 2020 / Fourth Quarter 2020
$
0.18
$
0.24
Decrease in the provision for credit losses
1
0.10
0.03
Pretax income from SBA Paycheck Protection Program ("PPP")
2
0.08
0.02
CFO departure charge (first quarter 2020)
3
0.03
-
Pretax income from former mortgage banking activities (first
quarter 2020)
4
(0.01
)
-
Litigation settlement charge (fourth quarter 2020)
5
-
0.04
Branch optimization charge (fourth quarter 2020)
6
-
0.02
Tax benefit resulting from CARES Act (first quarter 2020)
7
(0.06
)
(0.01
)
All other, net
0.01
(0.01
)
EPS, First Quarter 2021
$
0.33
$
0.33
CHANGE
$
0.15
$
0.09
- The first quarter 2021 provision for credit losses was $1.0
million, a decrease of $2.4 million from the first quarter of 2020,
and a decrease of $0.7 million from the fourth quarter of
2020.
- The Company commenced originating loans under the SBA’s PPP
program in the second quarter of 2020 and began the process of loan
forgiveness in the fourth quarter of 2020. First quarter 2021
pretax income of $2.1 million from this program represented an
increase of $388 thousand from the fourth quarter of 2020. The PPP
program did not exist prior to the second quarter of 2020.
- The first quarter of 2020 included noninterest expenses of $788
thousand attributable to the departure of the Company’s former CFO.
There were no expenses attributable to the departure of any
executive officers since that quarter.
- The first quarter of 2020 included $130 thousand in pretax
income from the Company’s former mortgage banking activities, which
were concluded in the first quarter of 2020.
- The fourth quarter of 2020 included a $1.0 million additional
charge (total charge of $2.0 million), included within noninterest
expense, for the settlement of potential litigation claims stemming
from certain mortgages originated by First Mariner Bank. The
settlement of this potential litigation was completed in January
2021.
- The fourth quarter of 2020 included a branch optimization
charge, included within noninterest expense, of $554 thousand.
There were no branch optimization charges in the first quarters of
2021 or 2020.
- A $1.3 million tax benefit resulting from the carryback of our
2018 net operating loss as a result of a provision in the
Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)
was recorded in 2020, with $1.2 million recorded in the first
quarter of 2020 and an additional $94 thousand in the fourth
quarter of 2020. There was no comparable item in the first quarter
of 2021.
Core net income is a non-GAAP financial measure that excludes,
if applicable, the earnings contribution of the Company’s mortgage
banking activities and certain other items to provide a picture of
ongoing activities deemed core to the Company’s strategy. Core net
income for the first quarter of 2021, which is unchanged from
reported net income, was $6.2 million, or $0.33 per both basic and
diluted common share. This compares to core net income of $2.6
million, or $0.14 per both basic and diluted common share for the
first quarter of 2020. The $0.19 per share increase in core EPS in
the first quarter of 2021, when compared to the first quarter of
2020, was primarily the result of a lower provision for credit
losses, which was down $2.4 million (+$0.10 after tax per share),
and the pretax contribution from PPP lending activities of $2.1
million (+$0.08 after tax per share). This also compares to core
net income of $5.5 million, or $0.29 per both basic and diluted
common share, for the fourth quarter of 2020. The $0.04 per share
increase in core earnings per share in the first quarter of 2021,
when compared to the fourth quarter of 2020, was primarily the
result of a lower provision for credit losses, which was down $0.7
million (+$0.03 after tax per share), and an increased pretax
contribution from PPP lending activities of $388 thousand (+$0.02
after tax per share). *
Core pre-provision net revenue (“core PPNR”), a non-GAAP
financial measure that adds back the provision for credit losses to
GAAP pretax income and excludes the pretax earnings contribution of
the Company’s former mortgage banking activities and certain other
items, was $9.4 million for the first quarter of 2021. The first
quarter of 2021 core PPNR was up $2.4 million, or 34.7%, from $7.0
million for the first quarter of 2020, and was up $617 thousand, or
7.0%, when compared to $8.8 million for the fourth quarter 2020.
*
Paycheck Protection Program
Loans
The Company continues to actively participate in the SBA’s PPP
program. With the relaunch of the program by the SBA on January 19,
2021, $95.7 million in PPP loans were originated in the first
quarter of 2021, consisting of 548 loans with an average loan size
of $175 thousand. An additional 49 applications, totaling $4.2
million, were pending approval at March 31, 2021. An additional 13
loans, totaling $1.8 million, were funded through April 16,
2021.
During the second and third quarters of 2020, a total of $201.0
million in PPP loans were originated under the program, consisting
of 1,062 loans with an average loan size of $189 thousand. A total
of 409 loans, with an aggregate principal balance of $60.1 million,
were forgiven during the first quarter of 2021. An additional 66
loans, with an aggregate principal balance of $7.2 million, were
forgiven through April 16, 2021. Of the 1,062 loans originated in
2020, 611 have been forgiven totaling $97.5 million through April
16, 2021, representing 57.5% of the number of 2020 loans and 48.5%
of 2020 principal balances.
During 2020, the Company deferred total processing fees from the
SBA for originated PPP loans of $6.7 million. In addition, $782
thousand of origination costs were deferred. The PPP originations
in the first quarter of 2021 resulted in $4.0 million of additional
deferred processing fees from the SBA and $578 thousand of
additional deferred origination costs. The net deferred fees are
being accreted as a yield adjustment over the contractual term of
the underlying PPP loans, with accelerated accretion upon
forgiveness. PPP lending generated pretax income of $2.1 million,
or $0.08 after tax per share, in the first quarter of 2021, an
increase of $388 thousand, or $0.02 after tax per share, from the
fourth quarter of 2020. PPP loans, net of unearned income, totaled
$201.6 million at March 31, 2021, an increase of $33.9 million from
$167.6 million at December 31, 2020. PPP loan principal balances
were $206.4 million at March 31, 2021.
Certain information in this earnings release is presented with
respect to “portfolio loans,” a non-GAAP financial measure defined
as total loans and leases, but excluding the PPP loans. The Company
believes that portfolio loan related measures provide additional
useful information for purposes of evaluating the Company’s results
of operations and financial condition with respect to the first
quarter of 2021 when comparing to other periods, since the PPP
loans are 100% guaranteed, were not subject to traditional loan
underwriting standards, and a substantial portion of these loans
are expected to be forgiven and repaid by the SBA within the next
12 months. *
COVID-19 Loan Modifications
The Company has provided loan modifications to both commercial
and retail customers, on a case by case basis, in the form of
payment deferrals for periods up to six months. Deferrals trended
favorably from their peak of $315 million (17.9% of both total
loans and portfolio loans) on April 24, 2020, dropping to a low of
$41.4 million (2.2% of total loans and 2.4% of portfolio loans) at
January 22, 2021, before increasing slightly to $55.8 million at
March 12, 2021 (3.0% of total loans and 3.3% of portfolio loans),
the most recent date when the Company previously disclosed deferral
data. Since that date, deferrals have decreased slightly. As of
both March 31 and April 16, 2021, deferrals are $54.2 million, or
2.8% of total loans and 3.1% of portfolio loans. Included in total
deferrals at both March 31 and April 16, 2021 are second deferrals
(including deferrals where the cumulative inception to date
deferral is greater than six months) of $27.6 million. Full payment
deferrals represent 36% of total deferrals while principal only
deferrals represent 64% of total deferrals. *
Asset Quality and Allowance for Loan and
Lease Losses
Nonperforming assets (“NPAs”) totaled $16.4 million at March 31,
2021, a decrease of $3.8 million from December 31, 2020 and a
decrease of $3.2 million from March 31, 2020. NPAs consisted of
$15.7 million of nonperforming loans (“NPLs”) and $629 thousand of
other real estate owned (“OREO”) at March 31, 2021. NPLs were 0.81%
of total loans and 0.90% of portfolio loans at March 31, 2021. NPAs
represented 0.62% of total assets, 0.84% of total loans and OREO,
and 0.94% of portfolio loans and OREO at March 31, 2021. *
- This compares to NPAs of $19.5 million at March 31, 2020 that
consisted of $17.2 million in NPLs and $2.3 million of OREO. NPLs
were 0.98% of total loans at March 31, 2020 while nonperforming
assets represented 0.78% of total assets and 1.11% of total loans
and OREO at March 31, 2020.
- This compares to NPAs of $20.2 million at December 31, 2020
that consisted of $19.4 million in NPLs and $743 thousand of OREO.
NPLs were 1.04% of total loans and 1.14% of portfolio loans at
December 31, 2020 while NPAs represented 0.79% of total assets,
1.08% of total loans and OREO, and 1.19% of portfolio loans and
OREO at December 31, 2020.
Net charge-offs were $1.8 million in the first quarter of 2021
and represented 0.43% of average loans (annualized). This compares
to net charge-offs of $462 thousand, or 0.11% of average loans
(annualized) in the first quarter of 2020 and $195 thousand, or
0.05% of average loans (annualized) in the fourth quarter of 2020.
The allowance for loan and lease losses (the “allowance”) was $18.4
million on March 31, 2021. The provision for credit losses for the
first quarter of 2021 was $1.0 million. Included in first quarter
2021 net charge-offs was $677 thousand attributable to one loan
relationship where the Company had established an $894 thousand
specific allocation of the allowance as of December 31, 2020. There
were no specific allocations of the allowance at March 31,
2021.*
Because the Company is a smaller reporting company under SEC
rules, the allowance was determined under the incurred loss model.
The $18.4 million allowance represented 0.94% of total loans, 1.05%
of portfolio loans, and 116.8% of NPLs at March 31, 2021. *
- This compares to an allowance of $13.4 million at March 31,
2020. The March 31, 2020 allowance represented 0.76% of total loans
and 77.8% of NPLs. The $5.0 million increase in the allowance at
March 31, 2021 was the result of aggregate provisions for credit
losses attributable to the allowance of $7.1 million partially
offset by aggregate net charge-offs of $2.1 million during the
four-quarter period ending March 31, 2021.
- This compares to an allowance of $19.2 million at December 31,
2020. The December 31, 2020 allowance represented 1.03% of total
loans, 1.13% of portfolio loans, and 98.6% of NPLs. The $794
thousand decrease in the allowance at March 31, 2021 was the result
of net charge-offs of $1.8 million during the quarter ended March
31, 2021 partially offset by a provision for credit losses of $1.0
million.
The Company’s allowance as a percentage of total loans has
historically been lower than certain of our peers due to the
accounting for acquired loans and their initial impact on the
allowance. The allowance and unamortized fair value marks as a
percentage of portfolio loans, a non-GAAP measure used by
management to assess credit coverage, adds the unamortized fair
value marks to total loans, portfolio loans, and the allowance. The
fair value marks, unlike the allowance, are not available to absorb
general losses but are only available to absorb losses for the
specific loan to which they apply. However, this measure provides
the Company with an additional indicator of potential loss
absorption capacity. The allowance and unamortized fair value marks
as a percentage of total loans plus fair value marks was 1.21% at
March 31, 2021, a decrease of 4 BP from March 31, 2020 and a
decrease of 16 BP from December 31, 2020. The allowance and
unamortized fair value marks as a percentage of portfolio loans
plus fair value marks was 1.35% at March 31, 2021, an increase of
10 BP from March 31, 2020 and a decrease of 15 BP from December 31,
2020. *
The Company’s asset quality trends indicate modest additional
stress in the loan portfolio, although we believe our ongoing
active management of the portfolio, COVID-19 related loan
modifications, and PPP loans have reduced the short-term risk in
the portfolio. With the exception of the specific allocation
previously discussed, the growth in the allowance since the start
of the pandemic has been based on management’s evaluation of
certain qualitative factors included in the determination of the
allowance, primarily economic factors driven by the unemployment
rate and GDP as well as factors driven by the level of loans to
potentially highly impacted industries and risk rating
downgrades.
The Maryland economy, like most of the nation, is open with
limited restrictions and substantial economic activity has
returned; however, unemployment still remains high, and many
businesses are still experiencing challenges. Continued government
stimulus and the quickening pace of vaccination availability
provide reason for optimism that the worst of the pandemic may soon
be in the past, although there remains much uncertainty, including
the ability of the Company’s customers and businesses to return to
their pre-pandemic routine.
Management will continue to closely monitor portfolio conditions
and reevaluate the adequacy of the allowance. While the level of
payment deferrals and PPP loan assistance have reduced the
short-term risk in the Company’s loan portfolio and traditional
lagging indicators of delinquencies and nonperforming loans remain
historically modest, management believes there is the potential for
additional risk rating downgrades and an increase in charge-offs in
future periods.
Stockholders’ Equity and Regulatory
Capital Ratios
Stockholders’ equity at March 31, 2021 was $292.7 million, a
decrease of $2.0 million from December 31, 2020. The decrease was
primarily due to an $8.5 million decrease in accumulated other
comprehensive income (“AOCI”), which represents the after tax
impact of changes in the fair value of available-for-sale
securities. The decline in the fair value of available-for-sale
securities was the result of the rapid increase in intermediate and
long-term treasury yields during the first quarter of 2021. The
decrease in AOCI was partially offset by first quarter 2021 net
income of $6.2 million. Book value per common share was $15.58 at
March 31, 2021, a decrease of $0.14 per share since December 31,
2020, with the change in AOCI representing a $0.45 per share
decrease partially offset by first quarter 2021 EPS of $0.33.
Tangible stockholders’ equity, a non-GAAP financial measure that
deducts goodwill and other intangible assets, net of any applicable
deferred tax liabilities, was $257.3 million at March 31, 2021.
This compares to $258.8 million at December 31, 2020, with the $1.5
million decrease primarily due to the first quarter 2021 decrease
in AOCI of $8.5 million, partially offset by first quarter 2021 net
income of $6.2 million and the $449 thousand after tax effect of
core deposit intangible amortization. Tangible book value per
common share, a non-GAAP measure that divides tangible
stockholders’ equity by the number of shares outstanding, was
$13.70 per share at March 31, 2021, a decrease of $0.11 per share
since December 31, 2020. *
The Company’s regulatory capital ratios are all well in excess
of regulatory “well-capitalized” and internal target minimum
levels. Note that the Company had adopted the regulatory AOCI
opt-out election; as a result, AOCI is not a component of
regulatory capital and, therefore, the change in AOCI has not
impacted regulatory capital ratios. The total capital ratio was
14.47% while both the Common Equity Tier 1 (“CET 1”) and Tier 1
capital ratios were 12.06% at March 31, 2021. The Tier 1 to average
assets (“leverage”) ratio was 9.53%. A comparison of the Company’s
March 31, 2021 regulatory capital ratios to March 31, 2020 and
December 31, 2020 is as follows:
- Regulatory capital ratios at March 31, 2020 consisted of a
total capital ratio of 13.16% while both the CET 1 and Tier 1
capital ratios were 10.95%. The leverage ratio was 9.10%. All March
31, 2021 regulatory capital ratios were above the March 31, 2020
levels.
- Regulatory capital ratios at December 31, 2020 consisted of a
total capital ratio of 14.32% while both the CET 1 and Tier 1
capital ratios were 11.83%. The leverage ratio was 9.26%. All March
31, 2021 regulatory capital ratios were above the December 31, 2020
levels.
Liquidity
The Company’s liquidity position remains strong. The Company has
continued to experience increases in low-cost customer deposits
since the end of the first quarter of 2020. The Company also
continues to build stable sources of contingency funding capacity,
and management remains confident that it will be able to access
these funds in the event that the markets again become
restricted.
Net Interest Income and Net Interest
Margin
Net interest income was $19.7 million for the first quarter of
2021, unchanged from $19.7 million for the fourth quarter of 2020,
and an increase of $2.2 million, or 12.3%, from $17.5 million in
the first quarter of 2020. PPP net interest income increased by
$317 thousand from the fourth quarter of 2020 and $2.0 million from
the first quarter of 2020. The PPP program did not exist in the
first quarter of 2020. Non-PPP related changes in net interest
income were attributable to the impact of lower funding costs and
lower yields on earning assets.
The following table presents selected yields and rates for the
first quarters of 2021 and 2020 as well as the fourth quarter of
2020. Changes in the first quarter 2021 yields and rates from the
first quarter of 2020 and the fourth quarter of 2020 are also
included in the table.
First Quarter 2021Change from: FirstQuarter2021 FirstQuarter2020
FourthQuarter2020 FirstQuarter2020 FourthQuarter2020
Selected yields and rates: Net interest margin
3.43%
3.34%
3.39%
0.09%
0.04%
Operating net interest margin *
3.20%
3.29%
3.21%
-0.09%
-0.01%
Earning asset yield
3.70%
4.24%
3.74%
-0.54%
-0.04%
Total loan yield
4.22%
4.58%
4.23%
-0.36%
-0.01%
Cost of total IBL + demand deposits
0.28%
0.93%
0.37%
-0.65%
-0.09%
Impact of fair value adjustments on acquired loans: Net interest
margin
0.14%
0.05%
0.16%
0.09%
-0.02%
Earning asset yield
0.15%
0.06%
0.17%
0.09%
-0.02%
Total loan yield
0.17%
0.07%
0.21%
0.10%
-0.04%
Impact of PPP loans: Net interest margin
0.09%
0.00%
0.02%
0.09%
0.07%
Earning asset yield
0.09%
0.00%
0.03%
0.09%
0.06%
Total loan yield
0.07%
0.00%
-0.02%
0.07%
0.09%
The first quarter 2021 net interest margin of 3.43% was up 9 BP
from the first quarter of 2020 and up 4 BP from the fourth quarter
of 2020. The impact of the accretion of fair value adjustments on
acquired loans (“FV accretion”) and net interest income from PPP
lending had a significant impact on the reported net interest
margin. Operating net interest margin is a non-GAAP financial
measure defined as net interest income excluding both FV accretion
and net interest income from PPP lending divided by average earning
assets excluding both the average balance of fair value adjustments
on acquired loans and the average balance of PPP loans. The Company
believes that operating net interest margin related measures
provide additional useful information for purposes of evaluating
the Company’s results of operations. *
The first quarter 2021 operating net interest margin of 3.20%
was down 9 BP from the first quarter of 2020. While the cost of
funds (defined as average total IBLs + demand deposits) decreased
by 65 BP, the yield on earning assets, as adjusted for FV accretion
and interest income from PPP lending, decreased by 72 BP. The first
quarter 2021 operating net interest margin of 3.20% is down 1 BP
from 3.21% in the fourth quarter of 2020. The cost of funds
decreased by 9 BP while the yield on earning assets, as adjusted
for FV accretion and interest income from PPP lending, decreased by
8 BP during the first quarter of 2021.
Net interest margin compression is a continuing trend as market
interest rates, after falling to historically low levels due to the
COVID-19 pandemic through the second quarter of 2020, have
generally stabilized, while intermediate and longer-term Treasury
rates have risen. The yield on the 10-year Treasury bond, after
reaching a low of 0.52% in early August 2020, has increased
significantly since that time, increasing to 0.93% at December 31,
2020 and to 1.74% at March 31, 2021. The following table presents
selected market interest rates for the periods presented; all are
averages except the rates at March 31, 2021, March 31, 2020, and
December 31, 2020:
Prime Rate Fed FundsEffective Rate 30 DayLIBOR 10 YearTreasury
2021 First Quarter
3.25%
0.08%
0.12%
1.30%
2020 Fourth Quarter
3.25%
0.09%
0.15%
0.86%
2020 First Quarter
4.40%
1.25%
1.41%
1.38%
Change from: 2020 Fourth Quarter
0.00%
-0.01%
-0.03%
0.44%
2020 First Quarter
-1.15%
-1.17%
-1.29%
-0.08%
At March 31, 2021
3.25%
0.06%
0.11%
1.74%
At December 31, 2020
3.25%
0.09%
0.14%
0.93%
At March 31, 2020
3.25%
0.08%
0.99%
0.70%
Noninterest Income
Noninterest income was $2.1 million for the first quarter of
2021, a decrease of $1.3 million from the $3.4 million reported in
the first quarter of 2020, and a decrease of $76 thousand from the
$2.1 million reported in the fourth quarter of 2020. There was no
noninterest income attributable to the Company’s former mortgage
banking activities in either the first quarter of 2021 or fourth
quarter of 2020 compared to $1.4 million in the first quarter of
2020.
Core noninterest income, a non-GAAP financial measure that
excludes noninterest income attributable to the Company’s former
mortgage banking activities in the first quarter of 2020, was $2.1
million for the first quarter of 2021, a $128 thousand increase
from $1.9 million for the first quarter of 2020, and a $76 thousand
decrease from the fourth quarter of 2020. *
- The $128 thousand increase when compared to the first quarter
of 2020 primarily consisted of the following: an increase in loan
related fees and service charges (+$82 thousand), and an increase
in interchange fees, as card activity volumes gradually continue to
improve, included in other income (+$80 thousand). These items were
partially offset by lower service charges on deposit accounts
(-$103 thousand), primarily attributable to lower levels of
nonsufficient funds and overdraft charges, partially due to
accommodations to COVID-19 impacted customers in the current
economic environment and higher liquidity maintained by other
customers.
- The $76 thousand decrease when compared to the fourth quarter
of 2020 was primarily due to a decrease in interchange fees,
included in other income (-$80 thousand), that resulted from VISA
incentive payment revenue included in the fourth quarter of
2020.
Noninterest Expenses
Noninterest expenses totaled $12.3 million for the first quarter
of 2021, a decrease of $2.2 million from the $14.6 million reported
in the first quarter of 2020, and a decrease of $2.2 million from
the $14.6 million reported in the fourth quarter of 2020. There
were no noninterest expenses attributable to the Company’s former
mortgage banking activities in either the first quarter of 2021 or
the fourth quarter of 2020 compared to $1.4 million in the first
quarter of 2020.
Core noninterest expenses is a non-GAAP financial measure that
excludes noninterest expenses attributable to the following: the
Company’s former mortgage banking activities in the first quarter
of 2020; the $788 thousand charge associated with the departure of
the Company’s former CFO in the first quarter of 2020; the $554
thousand branch optimization charge recorded in the fourth quarter
of 2020; and the $980 thousand charge, recorded in the fourth
quarter of 2020 and included within other operating expense, for
the settlement of potential litigation claims stemming from certain
mortgages originated by First Mariner Bank before its merger with
Howard Bank.
Core noninterest expenses were $12.3 million for the first
quarter of 2021, a $9 thousand increase from $12.3 million in the
first quarter of 2020, and a $691 thousand decrease from $13.0
million in the fourth quarter of 2020. *
- The $9 thousand increase when compared to the first quarter of
2020 resulted from higher compensation and benefits expenses (+$108
thousand) offset by lower expenses in all other categories (-$99
thousand). The higher level of compensation and benefits expense
included an increase of staff costs and benefits (+$292 thousand),
resulting from talent acquisitions since the first quarter of 2020,
including staff increases in connection with the Company’s Greater
Washington initiative. This increase was partially offset by a
higher level of loan origination internal cost deferrals (-$184
thousand) driven by stronger loan origination volume in the first
quarter of 2021 compared to the first quarter of 2020 (with $71
thousand of the internal cost deferrals attributable to PPP loans
originated in the first quarter of 2021).
- The $691 thousand decrease when compared to the fourth quarter
of 2020 included the impact of $618 thousand of additional fourth
quarter 2020 expenses that resulted from the Company’s
implementation of an enhanced methodology to accrue certain
noninterest expenses (included within data processing fees (+$386
thousand) and professional fees (+$232 thousand)); these expenses
did not reoccur in the first quarter of 2021. The remaining $73
thousand decrease in first quarter 2021 core noninterest expenses
resulted from higher compensation and benefits expenses (+$198
thousand), partially driven by staff increases in connection with
the greater Washington initiative, more than offset by lower
expenses in all other categories (-$271 thousand).
Income Taxes
The Company reported an income tax expense of $2.2 million for
the quarter ended March 31, 2021. The effective tax rate for the
first quarter of 2021 was 26.3%. The effective tax rate for the
fourth quarter of 2020 was 19.6%. In the first quarter of 2020, the
Company recognized an income tax benefit of $1.2 million
attributable to a change in net operating loss carryback rules
under the CARES Act. The effective tax rate for the first quarter
of 2020 was -15.8%; before the recognition of the CARES Act tax
benefit, the effective tax rate would have been 25.0%.
Loans
Loans totaled $1.95 billion at March 31, 2021, an increase of
$81.5 million, or 4.4%, from total loans at December 31, 2020.
Compared to March 31, 2020, total loans grew by $186.0 million, or
10.6%.
Portfolio loans, a non-GAAP measure defined as total loans and
leases, but excluding PPP loans, totaled $1.75 billion at March 31,
2021, an increase of $47.5 million, or 2.8%, from portfolio loans
at December 31, 2020. Compared to March 31, 2020, portfolio loans
decreased by $15.6 million, or 0.9%. Changes in portfolio loans
were as follows: *
- Compared to December 31, 2020, the $47.5 million increase
(11.2% annualized growth rate) in portfolio loans was primarily
driven by growth in our commercial lending portfolio totaling $1.23
billion at March 31, 2021, a $36.6 million increase (12.3%
annualized growth rate) from $1.19 billion at December 31, 2020:
- Commercial and industrial (“C&I”) loans were up $25.3
million, or 7.6%, commercial real estate (“CRE”) loans were up $8.3
million, or 1.1%, and construction and land (“C&L”) loans were
up $3.0 million, or 2.5%. New loan originations of $74.5 million
during the first quarter of 2021 were partially offset by $37.9
million in loan maturities, payoffs, partial paydowns, and lower
line utilization.
- Consumer loans were up $10.7 million, or 16.7%, reflecting
early successes in some niche lending activities.
- Residential real estate loans were up $242 thousand, or 0.1%.
Despite $33.1 million of secondary market loan purchases during the
first quarter of 2021, this purchase volume was offset by a
continued substantially higher level of prepayments due to lower
interest rates that led to another strong mortgage refinance
quarter.
- Compared to March 31, 2020, the $15.6 million decrease in
portfolio loans was a result of the following:
- Residential real estate loans were down $58.7 million, or
11.7%.
- The commercial lending portfolio modestly increased by $13.2
million, or 1.1%, with CRE loans up $54.2 million, or 7.8%, C&I
loans down $29.7 million, or 7.6%, primarily due to lower line
utilization, and C&L loans down $11.3 million, or 8.7%, due
primarily to transfers to other loan portfolios.
- Consumer loans were up $30.0 million, or 67.0%, reflecting
early successes in some niche lending activities such as marine
lending.
Average loans were $1.89 billion for the first quarter of 2021,
an increase of $10.1 million, or 0.5%, over average loans for the
fourth quarter of 2020, and an increase of $139.1 million, or 7.9%,
over average loans for the first quarter of 2020. Average portfolio
loans were $1.71 billion for the first quarter of 2021, an increase
of $9.7 million, or 0.6%, from average loans for the fourth quarter
of 2020. Compared to the first quarter of 2020, average portfolio
loans declined by $47.6 million, or 2.7%, with residential real
estate loans down by $65.8 million, or 12.9%.
Deposits
Total deposits were $2.04 billion at March 31, 2021, an increase
of $69.5 million, or 3.5%, over the December 31, 2020 balance of
$1.98 billion. Compared to March 31, 2020, total deposits grew by
$256.0 million, or 14.3%. Changes in deposits were as follows:
- Customer deposits, which exclude brokered and other
non-customer deposits, were $1.78 billion at March 31, 2021,
compared to $1.70 billion at December 31, 2020, an increase of
$80.2 million, or 4.7%.
- Low-cost, non-maturity deposits increased by $118.3 million, or
8.1%, during the first quarter of 2021. $78.0 million of the growth
was in transaction accounts, with $49.8 million of the transaction
account growth in noninterest-bearing deposits.
- The increase in non-maturity deposits was partially offset by
the continued managed decline in customer CD balances, down $38.1
million, or 16.2%. The Company continues to manage for lower
retention rates on maturing CDs with substantially higher rates
than current market rates. Management’s strategy is to not offer
above-market renewal rates on non-transactional, non-relationship
deposits.
- Compared to March 31, 2020, customer deposits increased by
$334.4 million, or 23.2%.
- The increase in customer deposits was primarily the result of
strong growth in low-cost, non-maturity deposits, which increased
by $431.5 million, or 37.6%. $312.3 million of the growth was in
transaction accounts, with $243.1 million of the transaction
account growth in noninterest-bearing deposits.
- Customer CD balances declined by $97.1 million, or 33.0%.
- Brokered and other non-customer deposits were $268.7 million at
March 31, 2021, compared to $279.4 million at December 31, 2020 and
$347.1 million at March 31, 2020. Non-customer deposits are
currently the Company’s lowest-cost incremental funding
source.
Average customer deposits for the first quarter of 2021 were
$1.72 billion, an increase of $56.2 million, or 3.4%, from the
fourth quarter 2020 average balance. Customer non-maturity deposit
balances increased by $90.8 million, or 6.4%, with transaction
accounts up $56.4 million; $38.5 million of the transaction account
growth was in noninterest-bearing deposits. Compared to the first
quarter of 2020, average customer deposits were up by $258.2
million, or 17.7%. Customer non-maturity deposit balances increased
by $357.8 million, or 31.1%, with transaction accounts up $269.1
million; $234.3 million of the transaction account growth was in
noninterest-bearing deposits.
Investment Securities
Investment securities available for sale were $377.0 million at
March 31, 2021, an increase of $1.6 million, or 0.4%, from the
December 31, 2020 balance of $375.4 million. Compared to March 31,
2020, total investment securities available for sale grew by $101.8
million, or 37.0%. This portfolio growth was primarily the result
of a leveraging strategy in the mortgage-backed securities
portfolio, implemented in the third quarter of 2020.
Exit of Mortgage Banking
Activities
The Company completed its previously announced exit of mortgage
banking activities during the second quarter of 2020, with no
pretax income contribution since the first quarter of 2020. The
contribution of mortgage banking activities for the first quarter
of 2020, which are excluded from the Company’s core results, are as
follows:
- Total revenues of $1.6 million ($143 thousand of net interest
income and $1.4 million of noninterest income),
- Noninterest expenses of $1.4 million, and
- Pretax income of $130 thousand.
* Please refer to the section entitled “Reconciliation of
Non-GAAP Financial Measures” in this press release and to the
financial tables entitled “GAAP to Non-GAAP reconciliation” for a
reconciliation to the most directly comparable GAAP financial
measures.
Earnings Conference Call
The Company will host a conference call on Thursday, April 22,
2021, at 10:00 a.m. (EDT) to discuss the results and presentation
slides and to answer questions. Those who wish to participate may
do so by calling 1-877-269-7756 and asking for the Howard Bancorp
conference call. We encourage participants to call at least ten
minutes prior to the scheduled start time so that you can be sure
to be entered into the conference before it begins. You may also
connect to the live conference and ask questions via an instant
call-back from the automated conference host to the phone number
you specify.
The Call-Back link will be available on our website at
https://www.HowardBank.com/InvestorCall until the call has
ended.
A presentation will be used during the earnings call and will be
available on the Investor Relations section of our website at
https://www.HowardBank.com/InvestorCall.
An internet-based audio replay of the call will be available on
the Investor Relations page of our website at
https://www.HowardBank.com/InvestorCall shortly following the
conclusion of the call and will be available until May 19,
2021.
Company management will not be available to discuss the first
quarter 2021 results prior to the earnings conference call.
About the Company
Howard Bancorp, Inc. is the parent company of Howard Bank, a
Maryland-chartered trust company operating as a commercial bank.
Headquartered in Baltimore City, Maryland, Howard Bank operates a
general commercial banking business through its 13 branches located
throughout the Greater Baltimore Metropolitan Area. Additional
information about Howard Bancorp, Inc. and Howard Bank are
available on its website at www.HowardBank.com.
Cautionary Note Regarding Forward-Looking
Statements
This press release and statements by the Company’s management
contains “forward-looking statements” as that phrase is defined in
the Private Securities Litigation Reform Act of 1995. Forward
looking statements can be identified by words such as
“anticipated,” “expects,” “intends,” “believes,” “may,” “likely,”
“will,” “look forward” or other statements that indicate future
periods. Such statements include, without limitation, statements
regarding management’s predictions or expectations about future
economic conditions, statements about the Company’s business or
financial performance, as well as management’s outlook or
expectations for earnings, revenues, expenses, capital levels,
liquidity levels, asset quality or other future financial or
business performance, strategies or expectations. Such
forward-looking statements are based on various assumptions (some
of which may be beyond the Company’s control) and are subject to
risks and uncertainties which change over time and other factors
which could cause actual results to differ materially from those
currently anticipated. These risks and uncertainties include, but
are not limited to: the impact of the global COVID-19 pandemic on
our business, including the impact of the actions taken by
governmental authorities to try and contain the virus or address
the impact of the virus on the United States economy (including,
without limitation, the CARES Act and the Consolidated
Appropriations Act, 2021), and the resulting effect of these items
on our operations, liquidity and capital position, and on the
financial condition of the Company’s borrowers and other customers;
conditions in the financial markets and economic conditions
generally and in the bank and non-bank financial services
industries, nationally and within our local market areas, including
the effects of declines in housing markets, an increase in
unemployment levels and slowdowns in economic growth; the Company’s
level of nonperforming assets and the costs associated with
resolving problem loans including litigation and other costs; the
potential inability to replace income lost from exiting our
mortgage banking activities with new revenues; the impact of
changes in interest rates; credit quality and strength of
underlying collateral; the credit risk associated with the
substantial amount of commercial real estate, construction and land
development, and commercial and industrial loans in the Company’s
loan portfolio; the extensive federal and state regulation,
supervision and examination governing almost every aspect of the
Company’s operations and potential expenses associated with
complying with such regulations; possible additional loan losses
and impairment of the collectability of loans; the Company’s
ability to comply with applicable capital and liquidity
requirements; any further impairment of the Company’s goodwill or
other intangible assets; losses resulting from pending or potential
litigation claims may exceed amounts accrued with respect to such
matters; system failure or cybersecurity breaches of the Company’s
network security; the Company’s ability to recruit and retain key
employees; the effects of weather and natural disasters such as
floods, droughts, wind, tornadoes and hurricanes as well as effects
from geopolitical instability and man-made disasters including
terrorist attacks; the effects of any reputation, credit, interest
rate, market, operational, legal, liquidity, regulatory and
compliance risk resulting from developments related to any of the
risks discussed above; and other risks and uncertainties.
Additional risks and uncertainties are contained in the “Risk
Factors” and forward-looking statements disclosure in the Company’s
most recent Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q. The inclusion of this forward-looking information should
not be construed as a representation by us or any person that
future events, plans, or expectations contemplated by us will be
achieved. Forward-looking statements are as of the date they are
made, and the Company does not undertake to update any
forward-looking statement, whether written or oral, whether as a
result of new information, future events, or otherwise, except as
required by law.
Additional information is available at www.HowardBank.com.
HOWARD BANCORP, INC. AND
SUBSIDIARY
Selected Unaudited Financial
Data
(in thousands except per share
data)
FOR THE THREE MONTHS ENDED
March 31,
December 31,
March 31,
2021
2020
2020
Income Statement Data: Interest income
$
21,235
$
21,713
$
22,226
Interest expense
1,547
2,027
4,701
Net interest income
19,688
19,686
17,525
Provision for credit losses
1,000
1,700
3,445
Net interest income after provision for credit losses
18,688
17,986
14,080
Noninterest income
2,069
2,145
3,366
Noninterest expense
12,342
14,567
14,559
Income before income taxes
8,415
5,564
2,887
Income tax expense (benefit)
2,213
1,093
(456
)
Net income
$
6,202
$
4,471
$
3,343
Per Share Data and Shares Outstanding: Net income per
common share - basic
$
0.33
$
0.24
$
0.18
Net income per common share - diluted
$
0.33
$
0.24
$
0.18
Book value per common share, at period end
$
15.58
$
15.72
$
16.85
Tangible book value per common share, at period end (1)
$
13.70
$
13.81
$
13.02
Average common shares outstanding
18,768
18,743
18,867
Diluted average common shares outstanding
18,797
18,748
18,915
Shares outstanding, at period end
18,782
18,745
18,715
Balance Sheet Data: Total assets
$
2,625,550
$
2,537,991
$
2,507,894
Portfolio loans, net of unearned income (1)
1,745,862
1,698,322
1,761,419
Paycheck Protection Program loans, net of unearned income
201,588
167,639
-
Total loans and leases, net of unearned income
1,947,450
1,865,961
1,761,419
Allowance for loan losses
18,368
19,162
13,384
Other interest-earning assets
461,818
458,488
483,553
Total deposits
2,044,926
1,975,414
1,788,899
Total borrowings
263,838
242,071
377,611
Common and total stockholders' equity
292,675
294,632
315,358
Average total assets
2,539,849
2,527,869
2,369,848
Average common and total stockholders' equity
297,280
294,285
314,805
Selected Performance Metrics: Return on average
assets (2)
0.99
%
0.70
%
0.57
%
Return on average common equity (2)
8.46
%
6.04
%
4.27
%
Pre-provision net revenue ("PPNR") (1)
$
9,415
$
8,798
$
6,990
PPNR to average assets (1)
1.50
%
1.38
%
1.19
%
Net interest margin (2),(3)
3.43
%
3.39
%
3.34
%
Efficiency ratio (4)
56.73
%
66.73
%
69.69
%
Asset Quality Ratios: Nonperforming loans to
portfolio loans (1)
0.90
%
1.14
%
0.98
%
Nonperforming assets to portfolio loans and OREO (1)
0.94
%
1.19
%
1.11
%
Nonperforming assets to total assets
0.62
%
0.79
%
0.78
%
Allowance for loan losses to total loans
0.94
%
1.03
%
0.76
%
Allowance for loan losses to portfolio loans (1)
1.05
%
1.13
%
0.76
%
Allowance for loan losses to nonperforming loans
116.82
%
98.62
%
77.80
%
Net chargeoffs to average total loans and leases (2)
0.43
%
0.05
%
0.11
%
Capital Ratios (Bancorp): Tier 1 capital to average
assets (leverage ratio)
9.53
%
9.26
%
9.10
%
Common equity tier 1 capital to risk-weighted assets
12.06
%
11.83
%
10.95
%
Tier 1 capital to risk-weighted assets
12.06
%
11.83
%
10.95
%
Total capital to risk-weighted assets
14.47
%
14.32
%
13.16
%
Average equity to average assets
11.70
%
11.64
%
13.28
%
(1) This is a non-GAAP measure. See the GAAP to Non-GAAP
Reconciliation at the end of the financial statements. (2)
Annualized (3) Net interest income divided by average earning
assets (4) Noninterest expense divided by the sum of net interest
income and noninterest income
HOWARD BANCORP, INC.
AND SUBSIDIARY Unaudited Consolidated Statements of Income
(Loss) (in thousands except per share data)
FOR THE THREE
MONTHS ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Interest income
$
21,235
$
21,713
$
20,951
$
21,473
$
22,226
Interest expense
1,547
2,027
2,679
3,354
4,701
Net interest income
19,688
19,686
18,272
18,119
17,525
Provision for credit losses
1,000
1,700
1,700
3,000
3,445
Net interest income after provision for credit losses
18,688
17,986
16,572
15,119
14,080
Noninterest income: Service charges on deposit accounts
539
535
506
433
642
Realized and unrealized gains from mortgage banking
-
-
-
-
1,036
Gain (loss) on sale of securities
-
-
-
3,044
-
Gain (loss) on the disposal of premises & equipment
-
-
-
6
-
Income from bank owned life insurance
424
440
441
441
445
Loan related fees and service charges
297
247
365
175
581
Other income
809
923
777
660
662
Total noninterest income
2,069
2,145
2,089
4,759
3,366
Noninterest expense: Compensation and benefits
6,922
6,724
7,136
6,259
8,441
Occupancy and equipment
1,325
1,896
1,301
1,242
1,033
Marketing and business development
297
306
189
453
450
Professional fees
734
1,019
823
633
726
Data processing fees
884
1,306
897
850
927
FDIC assessment
295
342
358
229
193
Other real estate owned
40
26
115
269
78
Loan production expense
154
222
247
192
468
Amortization of core deposit intangible
615
636
659
680
699
Goodwill impairment charge
-
-
-
34,500
-
Other operating expense
1,076
2,090
984
2,320
1,544
Total noninterest expense
12,342
14,567
12,709
47,627
14,559
Income (loss) before income taxes
8,415
5,564
5,952
(27,749
)
2,887
Income tax expense (benefit)
2,213
1,093
1,348
1,660
(456
)
Net income (loss)
$
6,202
$
4,471
$
4,604
$
(29,409
)
$
3,343
Net income (loss) per common share: Basic
$
0.33
$
0.24
$
0.25
$
(1.57
)
$
0.18
Diluted
$
0.33
$
0.24
$
0.25
$
(1.57
)
$
0.18
Average common shares outstanding: Basic
18,768
18,743
18,737
18,716
18,867
Diluted
18,797
18,748
18,737
18,716
18,915
Selected Performance Metrics: Return on average
assets
0.99
%
0.70
%
0.73
%
-4.68
%
0.57
%
Return on average common equity
8.46
%
6.04
%
6.34
%
-37.06
%
4.27
%
Core Pre-provision net revenue ("PPNR") (1)
$
9,415
$
8,798
$
7,652
$
7,931
$
6,990
Core PPNR to average assets (1)
1.50
%
1.38
%
1.21
%
1.26
%
1.19
%
Net interest margin
3.43
%
3.39
%
3.15
%
3.22
%
3.34
%
Efficiency ratio
56.73
%
66.73
%
62.42
%
208.18
%
69.69
%
Core efficiency ratio (1)
56.73
%
59.70
%
62.42
%
60.01
%
63.83
%
(1) This is a non-GAAP measure. See the GAAP to Non-GAAP
Reconciliation at the end of the financial statements.
HOWARD BANCORP, INC. AND SUBSIDIARY Unaudited
Consolidated Balance Sheets (in thousands except per share
data)
PERIOD ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
ASSETS Cash and due from banks
$
10,750
$
9,415
$
11,043
$
12,652
$
15,951
Interest bearing deposits with banks
68,822
65,204
59,539
46,418
179,999
Total cash and cash equivalents
79,572
74,619
70,582
59,070
195,950
Securities available for sale, at fair value
377,040
375,397
377,471
276,889
275,252
Securities held to maturity, at amortized cost
6,250
7,250
7,250
7,250
7,750
Federal Home Loan Bank of Atlanta stock, at cost
9,706
10,637
10,637
12,592
16,757
Loans held for sale, at fair value
-
-
-
-
3,795
Portfolio loans, net of unearned income (1)
1,745,862
1,698,322
1,688,030
1,704,911
1,761,419
Paycheck Protection Program loans, net of unearned inc
201,588
167,639
196,375
193,719
-
Total loans and leases, net of unearned income
1,947,450
1,865,961
1,884,405
1,898,630
1,761,419
Allowance for loan losses
(18,368
)
(19,162
)
(17,657
)
(16,356
)
(13,384
)
Net loans and leases
1,929,082
1,846,799
1,866,748
1,882,274
1,748,035
Bank premises and equipment, net
40,700
41,142
42,147
42,434
42,543
Goodwill
31,449
31,449
31,449
31,449
65,949
Core deposit intangible
5,180
5,795
6,431
7,090
7,770
Bank owned life insurance
78,021
77,597
77,157
76,716
76,275
Other real estate owned
629
743
1,155
2,137
2,322
Deferred tax assets, net
32,175
31,254
34,687
35,034
33,529
Interest receivable and other assets
35,746
35,309
33,470
30,515
31,967
Total assets
$
2,625,550
$
2,537,991
$
2,559,184
$
2,463,450
$
2,507,894
LIABILITIES Noninterest-bearing deposits
$
726,643
$
676,801
$
657,028
$
671,598
$
483,499
Interest-bearing deposits
1,318,283
1,298,613
1,315,710
1,159,076
1,305,400
Total deposits
2,044,926
1,975,414
1,972,738
1,830,674
1,788,899
FHLB advances
225,000
200,000
200,000
246,000
344,000
Fed funds and repos
10,353
13,634
41,473
37,834
5,321
Subordinated debt
28,485
28,437
28,388
28,339
28,290
Total borrowings
263,838
242,071
269,861
312,173
377,611
Accrued expenses and other liabilities
24,111
25,874
27,085
37,322
26,026
Total liabilities
2,332,875
2,243,359
2,269,684
2,180,169
2,192,536
STOCKHOLDERS' EQUITY Common stock - $0.01 par value
188
187
187
187
187
Additional paid in capital
270,934
270,591
270,445
270,057
269,918
Retained earnings
24,369
18,167
13,696
9,090
38,501
Accumulated other comprehensive income
(2,816
)
5,687
5,172
3,947
6,752
Total stockholders' equity
292,675
294,632
289,500
283,281
315,358
Total liabilities and stockholders' equity
$
2,625,550
$
2,537,991
$
2,559,184
$
2,463,450
$
2,507,894
Capital Ratios (Bancorp) Tier 1 capital to average
assets (leverage ratio)
9.53
%
9.26
%
9.07
%
8.73
%
9.10
%
Common equity tier 1 capital to risk-weighted assets
12.06
%
11.83
%
11.65
%
11.66
%
10.95
%
Tier 1 capital to risk-weighted assets
12.06
%
11.83
%
11.65
%
11.66
%
10.95
%
Total capital to risk-weighted assets
14.47
%
14.32
%
14.11
%
14.09
%
13.16
%
Asset Quality Measures Nonperforming loans
$
15,723
$
19,430
$
16,984
$
18,469
$
17,203
Other real estate owned (OREO)
629
743
1,155
2,137
2,322
Total nonperforming assets
$
16,352
$
20,173
$
18,139
$
20,606
$
19,525
Nonperforming loans to portfolio loans (1)
0.90
%
1.14
%
1.01
%
1.08
%
0.98
%
Nonperforming assets to portfolio loans and OREO (1)
0.94
%
1.19
%
1.07
%
1.21
%
1.11
%
Nonperforming assets to total assets
0.62
%
0.79
%
0.71
%
0.84
%
0.78
%
Allowance for loan losses to total loans
0.94
%
1.03
%
0.94
%
0.86
%
0.76
%
Allowance for loan losses to portfolio loans (1)
1.05
%
1.13
%
1.05
%
0.96
%
0.76
%
Allowance for loan losses to nonperforming loans
116.82
%
98.62
%
103.96
%
88.56
%
77.80
%
Net chargeoffs to average portfolio loans and leases (1), (2)
0.43
%
0.05
%
0.02
%
0.01
%
0.11
%
Provision for credit losses to average portfolio loans (1), (2)
0.24
%
0.40
%
0.40
%
0.69
%
0.79
%
(1) This is a non-GAAP measure. See the GAAP to Non-GAAP
Reconciliation at the end of the financial statements. (2)
Annualized
HOWARD BANCORP, INC. AND SUBSIDIARY
Average Balances, Yields, and Rates (in thousands) Three
Months Ended March 31, 2021 Three Months Ended December 31, 2020
Three Months Ended March 31, 2020 AverageBalance Income /Expense
Yield /Rate AverageBalance Income /Expense Yield /Rate
AverageBalance Income /Expense Yield /Rate Earning assets Loans and
leases: Commercial loans and leases
$
344,841
$
3,085
3.63
%
$
353,596
$
3,159
3.55
%
$
377,198
$
4,305
4.59
%
Commercial real estate
736,282
8,556
4.71
733,116
8,764
4.76
690,930
8,446
4.92
Construction and land
117,251
1,109
3.84
108,020
1,054
3.88
131,489
1,463
4.48
Residential real estate
443,225
4,072
3.73
443,753
4,508
4.04
509,034
5,244
4.14
Consumer
65,136
658
4.09
58,548
632
4.29
45,664
520
4.58
Total portfolio loans
1,706,735
17,479
4.15
1,697,033
18,117
4.25
1,754,315
19,978
4.58
Paycheck Protection Program loans
186,728
2,203
4.79
186,267
1,886
4.03
-
-
-
Total loans and leases
1,893,463
19,682
4.22
1,883,300
20,003
4.23
1,754,315
19,978
4.58
Securities available for sale: U.S Gov agencies
48,253
288
2.42
58,424
365
2.49
70,831
492
2.79
Mortgage-backed
319,063
929
1.18
308,737
963
1.24
151,399
978
2.60
Corporate debentures
9,152
140
6.20
8,910
137
6.12
5,522
92
6.70
Total available for sale securities
376,467
1,357
1.46
376,071
1,465
1.55
227,752
1,562
2.76
Securities held to maturity
6,283
89
5.72
7,250
107
5.87
7,750
112
5.81
FHLB Atlanta stock, at cost
10,687
101
3.85
10,951
132
4.80
15,708
174
4.46
Interest bearing deposits in banks
38,297
6
0.06
32,356
6
0.07
84,860
234
1.11
Loans held for sale
-
-
-
-
-
-
18,424
166
3.62
Total earning assets
2,325,198
21,235
3.70
%
2,309,928
21,713
3.74
%
2,108,809
22,226
4.24
%
Cash and due from banks
10,586
11,534
13,610
Bank premises and equipment, net
40,993
41,979
42,689
Goodwill
31,449
31,449
65,949
Core deposit intangible
5,563
6,195
8,219
Other assets
145,158
144,336
141,291
Less: allowance for loan losses
(19,098
)
(17,552
)
(10,719
)
Total assets
$
2,539,849
$
2,527,869
$
2,369,848
Interest-bearing liabilities Deposits: Interest-bearing
demand accounts
$
218,053
$
22
0.04
%
$
200,144
$
27
0.05
%
$
183,305
$
157
0.34
%
Money market
442,930
83
0.08
431,769
107
0.10
368,779
706
0.77
Savings
171,508
12
0.03
154,953
20
0.05
133,577
45
0.14
Time deposits
438,545
543
0.50
505,462
971
0.76
523,980
2,302
1.77
Total interest-bearing deposits
1,271,036
660
0.21
1,292,328
1,125
0.35
1,209,641
3,210
1.07
Borrowings: FHLB advances
207,696
441
0.86
207,335
450
0.86
320,868
1,025
1.28
Fed funds and repos
12,983
1
0.03
18,706
5
0.11
6,665
5
0.30
Subordinated debt
28,455
446
6.35
28,405
447
6.26
28,258
461
6.56
Total borrowings
249,133
888
1.44
254,446
902
1.41
355,791
1,491
1.69
Total interest-bearing funds
1,520,169
1,547
0.41
%
1,546,774
2,027
0.52
%
1,565,432
4,701
1.21
%
Noninterest-bearing deposits
699,021
660,549
464,701
Other liabilities
23,379
26,261
24,910
Total liabilities
2,242,569
2,233,584
2,055,043
Stockholders' equity
297,280
294,285
314,805
Total liabilities & equity
$
2,539,849
$
2,527,869
$
2,369,848
Net interest rate spread (1)
$
19,688
3.29
%
$
19,686
3.22
%
$
17,525
3.03
%
Effect of noninterest-bearing funds
0.14
0.17
0.31
Net interest margin on earning assets (2)
3.43
%
3.39
%
3.34
%
(1) The difference between the annualized yield on average
total earning assets and the annualized cost of average total
interest-bearing liabilities (2) Annualized net interest income
divided by average total earning assets
Reconciliation of Non-GAAP Financial Measures
This press release contains references to financial measures
that are not defined in generally accepted accounting principles
(“GAAP”). Such non-GAAP financial measures should not be considered
in isolation or as a substitute for the most directly comparable or
other financial measures calculated in accordance with GAAP.
Moreover, the manner in which we calculate the non-GAAP financial
measures that we discuss in this press release may differ from that
of other companies reporting measures with similar names. You
should understand how such other banking organizations calculate
their financial measures with names similar to the non-GAAP
financial measures we have discussed in this press release when
comparing such non-GAAP financial measures.
The Company considers the use of select non-GAAP financial
measures and ratios to be useful for financial and operational
decision making and useful in evaluating period-to-period
comparisons. The Company believe that these non-GAAP financial
measures provide meaningful supplemental information regarding our
performance by excluding certain expenditures or assets that we
believe are not indicative of our primary business operating
results. We believe these measures provide investors with
information regarding balance sheet profitability, and we believe
that management and investors benefit from referring to these
non-GAAP financial measures in assessing our performance and when
planning, forecasting, analyzing and comparing past, present and
future periods.
The Company has excluded the after tax impact of its former
mortgage banking activities, the goodwill impairment charge, and
certain other items, as well as the income tax benefit of the
change in net operating loss carryback rules as a result of the
CARES Act. The reconciliation is presented on the following
pages.
HOWARD BANCORP, INC. AND SUBSIDIARY GAAP TO NON-GAAP
RECONCILIATION - CORE NET INCOME AND EPS (in thousands except
per share data)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Net income (loss) (GAAP)
$
6,202
$
4,471
$
4,604
$
(29,409
)
$
3,343
Adjustments: Mortgage banking activities: Net interest income
-
-
-
-
(143
)
Noninterest income
-
-
-
-
(1,425
)
Noninterest expenses
-
-
-
-
1,438
Total pretax - mortgage banking activities
-
-
-
-
(130
)
Certain other items: Securities gains
-
-
-
(3,044
)
-
Prepayment penalty - FHLB advances
-
-
-
224
-
Branch optimization charge
-
554
-
-
-
Litigation expense
-
980
-
1,000
-
CFO departure
-
-
-
-
788
Goodwill impairment charge
-
-
-
34,500
-
Total pretax - certain other items
-
1,534
-
32,680
788
Total core pretax income adjustments
-
1,534
-
32,680
658
Income tax expense (benefit) of adjustments
-
414
-
(454
)
178
Total core pretax income adjustments, net of tax
-
1,120
-
33,134
480
Less: One-time benefit of NOL carryback (CARES Act)
-
(94
)
-
-
(1,177
)
Total core adjustments to net income
-
1,026
-
33,134
(697
)
Core net income (Non-GAAP)
$
6,202
$
5,497
$
4,604
$
3,725
$
2,646
Diluted average common shares
18,797
18,748
18,737
18,716
18,915
Diluted EPS (GAAP)
$
0.33
$
0.24
$
0.25
$
(1.57
)
$
0.18
Total core adjustments to net income
-
0.05
-
1.77
(0.04
)
Core diluted EPS (Non-GAAP)
$
0.33
$
0.29
$
0.25
$
0.20
$
0.14
GAAP TO NON-GAAP RECONCILIATION - PRE-PROVISION
NET REVENUE ("PPNR") (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Net income (loss) (GAAP)
$
6,202
$
4,471
$
4,604
$
(29,409
)
$
3,343
Plus: provision for credit losses
1,000
1,700
1,700
3,000
3,445
Plus: income tax expense
2,213
1,093
1,348
1,660
(456
)
Pre-provision net revenue (Non-GAAP)
$
9,415
$
7,264
$
7,652
$
(24,749
)
$
6,332
Adjustments to net revenue: Mortgage banking activities
-
-
-
-
(130
)
Securities gains
-
-
-
(3,044
)
-
Prepayment penalty - FHLB advances
-
-
-
224
-
Branch optimization charge
-
554
-
-
-
Litigation accrual
-
980
-
1,000
-
CFO departure
-
-
-
-
788
Goodwill impairment charge
-
-
-
34,500
-
Total core pretax net revenue adjustments
-
1,534
-
32,680
658
Core pre-provision net revenue (PPNR)
$
9,415
$
8,798
$
7,652
$
7,931
$
6,990
HOWARD BANCORP, INC. AND SUBSIDIARY GAAP TO
NON-GAAP RECONCILIATION - PPNR / AVERAGE TANGIBLE COMMON EQUITY
(in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Core PPNR (Non-GAAP)
$
9,415
$
8,798
$
7,652
$
7,931
$
6,990
Average common equity (GAAP)
$
297,280
$
294,285
$
288,727
$
319,152
$
314,805
Less average goodwill
(31,449
)
(31,449
)
(31,449
)
(65,570
)
(65,949
)
Less average core deposit intangible, net
(4,246
)
(4,716
)
(5,076
)
(5,672
)
(6,170
)
Average tangible common equity (Non-GAAP)
$
261,584
$
258,120
$
252,202
$
247,910
$
242,686
Core PPNR / average tangible common equity (Non-GAAP)
14.60
%
13.56
%
12.07
%
12.87
%
11.58
%
Annualized ratio based on days in quarter divided by days in
year
GAAP TO NON-GAAP RECONCILIATION - PPNR /
AVERAGE TOTAL ASSETS (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Core PPNR (Non-GAAP)
$
9,415
$
8,798
$
7,652
$
7,931
$
6,990
Average total assets (GAAP)
2,539,849
2,527,869
2,524,773
2,529,797
2,369,848
Core PPNR / average total assets (Non-GAAP)
1.50
%
1.38
%
1.21
%
1.26
%
1.19
%
Annualized ratio based on days in quarter divided by days in
year
HOWARD BANCORP, INC. AND SUBSIDIARY GAAP TO NON-GAAP
RECONCILIATION - EFFICIENCY RATIO (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Net interest income (GAAP)
$
19,688
$
19,686
$
18,272
$
18,119
$
17,525
Adjustments: Mortgage banking activities
-
-
-
-
(143
)
Total core net interest income adjustments
-
-
-
-
(143
)
Core net interest income (Non-GAAP)
$
19,688
$
19,686
$
18,272
$
18,119
$
17,382
Noninterest income (GAAP)
$
2,069
$
2,145
$
2,089
$
4,759
$
3,366
Adjustments: Mortgage banking activities
-
-
-
-
(1,425
)
Securities gains
-
-
-
(3,044
)
-
Total core noninterest income adjustments
-
-
-
(3,044
)
(1,425
)
Core noninterest income (Non-GAAP)
$
2,069
$
2,145
$
2,089
$
1,715
$
1,941
Total net interest income and noninterest income
(GAAP)
$
21,757
$
21,831
$
20,361
$
22,878
$
20,891
Adjustments: Total core net interest income adjustments
-
-
-
-
(143
)
Total core noninterest income adjustments
-
-
-
(3,044
)
(1,425
)
Total core net interest income and noninterest income adjustments
-
-
-
(3,044
)
(1,568
)
Core net interest income + noninterest income (Non-GAAP)
$
21,757
$
21,831
$
20,361
$
19,834
$
19,323
Noninterest expense (GAAP)
$
12,342
$
14,567
$
12,709
$
47,627
$
14,559
Adjustments: Mortgage banking activities
-
-
-
-
(1,438
)
Prepayment penalty - FHLB advances
-
-
-
(224
)
-
Branch optimization charge
-
(554
)
-
-
-
Litigation accrual
-
(980
)
-
(1,000
)
-
CFO departure
-
-
-
-
(788
)
Goodwill impairment charge
-
-
-
(34,500
)
-
Total core noninterest expense adjustments
-
(1,534
)
-
(35,724
)
(2,226
)
Core noninterest expense (Non-GAAP)
$
12,342
$
13,033
$
12,709
$
11,903
$
12,333
Efficiency ratio (GAAP)
56.73
%
66.73
%
62.42
%
208.18
%
69.69
%
Core efficiency ratio (Non-GAAP)
56.73
%
59.70
%
62.42
%
60.01
%
63.83
%
HOWARD BANCORP, INC. AND SUBSIDIARY GAAP TO NON-GAAP
RECONCILIATION - TANGIBLE BOOK VALUE PER COMMON SHARE (in
thousands except per share data)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Common and total stockholder's equity (GAAP)
$
292,675
$
294,632
$
289,500
$
283,281
$
315,358
Total shares outstanding at period end
18,782
18,745
18,742
18,716
18,715
Book value per common share at period end (GAAP)
$
15.58
$
15.72
$
15.45
$
15.14
$
16.85
Common and total stockholder's equity (GAAP)
$
292,675
$
294,632
$
289,500
$
283,281
$
315,358
Less goodwill
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(65,949
)
Less deposit intangible, net of deferred tax liability
(3,942
)
(4,398
)
(4,869
)
(5,358
)
(5,802
)
Tangible common equity (Non-GAAP)
$
257,284
$
258,785
$
253,182
$
246,474
$
243,607
Total shares outstanding at period end
18,782
18,745
18,742
18,716
18,715
Tangible book value per common share (Non GAAP)
$
13.70
$
13.81
$
13.51
$
13.17
$
13.02
GAAP TO NON-GAAP RECONCILIATION - TANGIBLE COMMON
EQUITY / TANGIBLE ASSETS (in thousands except per share data)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Common (and total) stockholder's equity (GAAP)
$
292,675
$
294,632
$
289,500
$
283,281
$
315,358
Less goodwill
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(65,949
)
Less deposit intangible, net of deferred tax liability
(3,942
)
(4,398
)
(4,869
)
(5,358
)
(5,802
)
Tangible common equity (Non-GAAP)
$
257,284
$
258,785
$
253,182
$
246,474
$
243,607
Total assets (GAAP)
$
2,625,550
$
2,537,991
$
2,559,184
$
2,463,450
$
2,507,894
Less goodwill
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(65,949
)
Less deposit intangible, net of deferred tax liability
(3,942
)
(4,398
)
(4,869
)
(5,358
)
(5,802
)
Tangible assets (Non-GAAP)
$
2,590,159
$
2,502,144
$
2,522,866
$
2,426,643
$
2,436,143
Tangible common equity / tangible assets (period end)
9.93
%
10.34
%
10.04
%
10.16
%
10.00
%
GAAP TO NON-GAAP RECONCILIATION - RETURN ON
AVERAGE COMMON EQUITY (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Net income (loss) (GAAP)
$
6,202
$
4,471
$
4,604
$
(29,409
)
$
3,343
Average common (and total) equity (GAAP)
297,280
294,285
288,727
319,152
314,805
Return on average common equity (GAAP)
8.46
%
6.04
%
6.34
%
-37.06
%
4.27
%
Net income (loss) (GAAP)
$
6,202
$
4,471
$
4,604
$
(29,409
)
$
3,343
Total core adjustments to net income (loss)
-
1,026
-
33,134
(697
)
Core net income (Non-GAAP)
$
6,202
$
5,497
$
4,604
$
3,725
$
2,646
Average common equity
297,280
294,285
288,727
319,152
314,805
Core return on average common equity (Non-GAAP)
8.46
%
7.43
%
6.34
%
4.69
%
3.38
%
Annualized ratio based on days in quarter divided by days in
year
HOWARD BANCORP, INC. AND SUBSIDIARY GAAP TO NON-GAAP
RECONCILIATION - TANGIBLE RETURN ON AVERAGE TANGIBLE COMMON
EQUITY (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Net income (loss) (GAAP)
$
6,202
$
4,471
$
4,604
$
(29,409
)
$
3,343
Goodwill impairment charge
-
-
-
34,500
-
CDI amortization
615
636
659
680
699
Income tax expense on pretax total
(166
)
(172
)
(178
)
(184
)
(189
)
CDI amortization, net of tax
449
464
481
496
510
Total adjustments to net income
449
464
481
34,996
510
Tangible net income (Non-GAAP)
$
6,651
$
4,936
$
5,085
$
5,587
$
3,853
Average common equity (GAAP)
$
297,280
$
294,285
$
288,727
$
319,152
$
314,805
Less average goodwill
(31,449
)
(31,449
)
(31,449
)
(65,570
)
(65,949
)
Less average core deposit intangible, net
(4,246
)
(4,716
)
(5,076
)
(5,672
)
(6,170
)
Average tangible common equity (Non-GAAP)
$
261,584
$
258,120
$
252,202
$
247,910
$
242,686
Tangible return on average tangible common equity
(Non-GAAP)
10.31
%
7.61
%
8.02
%
9.06
%
6.39
%
Tangible net income (Non-GAAP)
$
6,651
$
4,936
$
5,085
$
5,587
$
3,853
Total core adjustments to net income (loss) (ex goodwill
impairment)
-
1,026
-
(1,366
)
(697
)
Core tangible net income (Non-GAAP)
$
6,651
$
5,961
$
5,085
$
4,221
$
3,157
Average tangible common equity (Non-GAAP)
$
261,584
$
258,120
$
252,202
$
247,910
$
242,686
Core tangible return on average tangible common
equity (Non-GAAP)
10.31
%
9.19
%
8.02
%
6.85
%
5.23
%
Annualized ratio based on days in quarter divided by days in
year
GAAP TO NON-GAAP RECONCILIATION - RETURN ON
AVERAGE ASSETS (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Net income (loss) (GAAP)
$
6,202
$
4,471
$
4,604
$
(29,409
)
$
3,343
Average total assets (GAAP)
2,539,849
2,527,869
2,524,773
2,529,797
2,369,848
Return on average assets (GAAP)
0.99
%
0.70
%
0.73
%
-4.68
%
0.57
%
Net income (loss) (GAAP)
6,202
4,471
4,604
(29,409
)
3,343
Total core adjustments to net income (loss)
-
1,026
-
33,134
(697
)
Core net income (Non-GAAP)
$
6,202
$
5,497
$
4,604
$
3,725
$
2,646
Average total assets (GAAP)
2,539,849
2,527,869
2,524,773
2,529,797
2,369,848
Core return on average assets (Non-GAAP)
0.99
%
0.87
%
0.73
%
0.59
%
0.45
%
Annualized ratio based on days in quarter divided by days in
year
HOWARD BANCORP, INC. AND SUBSIDIARY GAAP TO NON-GAAP
RECONCILIATION - TANGIBLE RETURN ON AVERAGE TANGIBLE ASSETS (in
thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Net income (loss) (GAAP)
$
6,202
$
4,471
$
4,604
$
(29,409
)
$
3,343
Goodwill impairment charge
-
-
-
34,500
-
CDI amortization
615
636
659
680
699
Income tax expense on pretax total
(166
)
(172
)
(178
)
(184
)
(189
)
CDI amortization, net of tax
449
464
481
496
510
Total adjustments to net income
449
464
481
34,996
510
Tangible net income (Non-GAAP)
$
6,651
$
4,936
$
5,085
$
5,587
$
3,853
Average total assets (GAAP)
2,539,849
2,527,869
2,524,773
2,529,797
2,369,848
Less average goodwill
(31,449
)
(31,449
)
(31,449
)
(65,570
)
(65,949
)
Less average core deposit intangible, net
(4,246
)
(4,716
)
(5,076
)
(5,672
)
(6,170
)
Average tangible assets (Non-GAAP)
$
2,504,154
$
2,491,704
$
2,488,248
$
2,458,555
$
2,297,729
Tangible return on average tangible assets (Non-GAAP)
1.08
%
0.79
%
0.81
%
0.91
%
0.67
%
Tangible net income (Non-GAAP)
$
6,651
$
4,936
$
5,085
$
5,587
$
3,853
Total core adjustments to net income (loss) (ex goodwill
impairment)
-
1,026
-
(1,366
)
(697
)
Core tangible net income (Non-GAAP)
$
6,651
$
5,961
$
5,085
$
4,221
$
3,157
Average tangible assets (Non-GAAP)
$
2,504,154
$
2,491,704
$
2,488,248
$
2,458,555
$
2,297,729
Core tangible return on average tangible assets
(Non-GAAP)
1.08
%
0.95
%
0.81
%
0.69
%
0.55
%
Annualized ratio based on days in quarter divided by days in
year
GAAP TO NON-GAAP RECONCILIATION - ALLOWANCE
FOR LOAN LOSSES AS A % OF PORTFOLIO LOANS (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Allowance for loan losses (GAAP)
$
18,368
$
19,162
$
17,657
$
16,356
$
13,384
Total loans and leases (GAAP)
1,947,450
1,865,961
1,884,405
1,898,630
1,761,419
Allowance as a % of total loans and leases (GAAP)
0.94
%
1.03
%
0.94
%
0.86
%
0.76
%
Allowance for loan losses (GAAP)
$
18,368
$
19,162
$
17,657
$
16,356
$
13,384
Total loans and leases (GAAP)
1,947,450
1,865,961
1,884,405
1,898,630
1,761,419
Less PPP loans outstanding
(201,588
)
(167,639
)
(196,375
)
(193,719
)
-
Portfolio loans (Non-GAAP)
1,745,862
1,698,322
1,688,030
1,704,911
1,761,419
Allowance as a % of portfolio loans (Non-GAAP)
1.05
%
1.13
%
1.05
%
0.96
%
0.76
%
HOWARD BANCORP, INC. AND SUBSIDIARY GAAP TO
NON-GAAP RECONCILIATION - NONPERFORMING LOANS AS A % OF PORTFOLIO
LOANS (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Nonperforming loans
$
15,723
$
19,430
$
16,984
$
18,469
$
17,203
Total loans and leases (GAAP)
1,947,450
1,865,961
1,884,405
1,898,630
1,761,419
Nonperforming loans as a % of total loans and leases
(GAAP)
0.81
%
1.04
%
0.90
%
0.97
%
0.98
%
Nonperforming loans
$
15,723
$
19,430
$
16,984
$
18,469
$
17,203
Total loans and leases (GAAP)
1,947,450
1,865,961
1,884,405
1,898,630
1,761,419
Less PPP loans outstanding
(201,588
)
(167,639
)
(196,375
)
(193,719
)
-
Portfolio loans (Non-GAAP)
1,745,862
1,698,322
1,688,030
1,704,911
1,761,419
Nonperforming loans as a % of portfolio loans
(Non-GAAP)
0.90
%
1.14
%
1.01
%
1.08
%
0.98
%
GAAP TO NON-GAAP RECONCILIATION - NONPERFORMING
ASSETS AS A % OF PORTFOLIO LOANS + OREO (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Nonperforming assets
$
16,352
$
20,173
$
18,139
$
20,606
$
19,525
Total loans and leases (GAAP)
1,947,450
1,865,961
1,884,405
1,898,630
1,761,419
OREO
629
743
1,155
2,137
2,322
Total loans and leases + OREO
1,948,079
1,866,704
1,885,560
1,900,767
1,763,741
Nonperforming assets as a % of total loans and
leases + OREO (GAAP)
0.84
%
1.08
%
0.96
%
1.08
%
1.11
%
Nonperforming assets
$
16,352
$
20,173
$
18,139
$
20,606
$
19,525
Total loans and leases (GAAP)
1,947,450
1,865,961
1,884,405
1,898,630
1,761,419
OREO
629
743
1,155
2,137
2,322
Total loans and leases + OREO
1,948,079
1,866,704
1,885,560
1,900,767
1,763,741
Less PPP loans outstanding
(201,588
)
(167,639
)
(196,375
)
(193,719
)
-
Portfolio loans + OREO
$
1,746,491
$
1,699,065
$
1,689,185
$
1,707,048
$
1,763,741
Nonperforming assets as a % of portfolio loans +
OREO (Non-GAAP)
0.94
%
1.19
%
1.07
%
1.21
%
1.11
%
HOWARD BANCORP, INC. AND SUBSIDIARY GAAP TO
NON-GAAP RECONCILIATION - ALLOWANCE FOR LOAN LOSSES + FV MARKS AS A
% OF PORTFOLIO LOANS + FV MARKS (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Allowance for loan losses (GAAP)
$
18,368
$
19,162
$
17,657
$
16,356
$
13,384
Add: Fair value marks
5,302
6,454
7,365
8,105
8,737
Allowance + fair value marks (Non-GAAP)
$
23,670
$
25,616
$
25,022
$
24,461
$
22,121
Total loans and leases (GAAP)
$
1,947,450
$
1,865,961
$
1,884,405
$
1,898,630
$
1,761,419
Add: fair value marks
5,302
6,454
7,365
8,105
8,737
Total loans and leases + fair value marks (Non-GAAP)
$
1,952,752
$
1,872,415
$
1,891,770
$
1,906,735
$
1,770,156
Allowance + fair value marks as a % of total loans
and leases + fair value marks (Non-GAAP)
1.21
%
1.37
%
1.32
%
1.28
%
1.25
%
Allowance for loan losses (GAAP)
$
18,368
$
19,162
$
17,657
$
16,356
$
13,384
Add: Fair value marks
5,302
6,454
7,365
8,105
8,737
Allowance + fair value marks (Non-GAAP)
$
23,670
$
25,616
$
25,022
$
24,461
$
22,121
Total loans and leases (GAAP)
$
1,947,450
$
1,865,961
$
1,884,405
$
1,898,630
$
1,761,419
Less PPP loans outstanding
(201,588
)
(167,639
)
(196,375
)
(193,719
)
-
Portfolio loans (Non-GAAP)
$
1,745,862
$
1,698,322
$
1,688,030
$
1,704,911
$
1,761,419
Add: fair value marks
5,302
6,454
7,365
8,105
8,737
Portfolio loans + fair value marks (Non-GAAP)
$
1,751,164
$
1,704,776
$
1,695,395
$
1,713,016
$
1,770,156
Allowance + fair value marks as a % of portfolio
loans and leases + fair value marks (Non-GAAP)
1.35
%
1.50
%
1.48
%
1.43
%
1.25
%
GAAP TO NON-GAAP RECONCILIATION - NET INTEREST
MARGIN (in thousands)
FOR THE THREE MONTHS
ENDED
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Net interest income (GAAP)
$
19,688
$
19,686
$
18,272
$
18,119
$
17,525
Average earning assets (GAAP)
2,325,198
2,309,928
2,305,205
2,265,240
2,108,809
Net interest margin (GAAP)
3.43
%
3.39
%
3.15
%
3.22
%
3.34
%
Net interest income (GAAP)
$
19,688
$
19,686
$
18,272
$
18,119
$
17,525
Less net accretion of net fair value discounts on acquired loans
(725
)
(888
)
(548
)
(448
)
(219
)
Less PPP net interest income (implied cost of funds at 0.35%)
(2,042
)
(1,633
)
(1,038
)
(743
)
-
Operating net interest income (Non-GAAP)
$
16,921
$
17,165
$
16,686
$
16,928
$
17,306
Average earning assets (GAAP)
2,325,198
2,309,928
2,305,205
2,265,240
2,108,809
Add net fair value discounts on acquired loans
5,956
6,921
7,696
8,408
9,045
Less PPP loans
(186,728
)
(186,267
)
(195,588
)
(142,715
)
-
Operating average earning assets (Non-GAAP)
$
2,144,426
$
2,130,582
$
2,117,313
$
2,130,933
$
2,117,854
Operating net interest margin (Non-GAAP)
3.20
%
3.21
%
3.14
%
3.20
%
3.29
%
Annualized ratio based on days in quarter divided by days in
year
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210421005628/en/
Howard Bancorp, Inc. Robert L. Carpenter, Jr., Executive Vice
President and Chief Financial Officer 410-750-0020
bcarpenter@HowardBank.com
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