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
June 30, 2021.
Second Quarter 2021 Highlights
- Net income:
- Net income of $7.5 million for the quarter, up 20% from first
quarter of 2021
- Core net income 1 of $7.5 million for the quarter, up 100% from
second quarter of 2020 and up 20% from first quarter of 2021
- Earnings per share:
- Earnings per share (“EPS”), both basic and diluted, of $0.40
for the quarter, up 20% from first quarter of 2021
- Core EPS, 1 both basic and diluted, of $0.40 for the quarter,
up 100% from second quarter of 2020 and up 20% from first quarter
of 2021
- Pre-provision net revenue (“PPNR”) 1:
- PPNR, 1 at $10.1 million for the quarter, up 8% from first
quarter of 2021
- Core PPNR, 1 at $10.1 million for the quarter, up 28% from
second quarter of 2020 and up 8% from first quarter of 2021
- Core PPNR, as a percentage of average assets, 1 1.57% for the
quarter, up 31 basis points (“BP”) from second quarter of 2020 and
up 7 BP from first quarter of 2021
- Loans:
- Total loans declined by $4.9 million during the quarter, with
Paycheck Protection Program (“PPP”) loans down $58.9 million
- Portfolio loan 1 growth (which excludes PPP loans) of $54.0
million during the quarter (12.4% annualized growth rate)
- Net interest margin:
- Net interest margin, at 3.39% for the quarter, was down 4 BP
from first quarter of 2021 due to a decline in PPP loan net
interest income
- Operating net interest margin, 1 which excludes the impact of
loan fair value accretion and net interest income from PPP lending,
was 3.25% for the quarter, up 5 BP from first quarter of 2021
- Asset quality:
- COVID-19 related loan deferrals of $30.4 million at June 30,
2021 (1.6% of total loans and 1.7% of portfolio loans)
- Nonperforming assets to total assets was 0.65% as of June 30,
2021, down 19 BP from second quarter of 2020 and up 3 BP from first
quarter of 2021
- No provision for credit losses was recorded during the quarter,
compared to $3.0 million in the second quarter of 2020 and $1.0
million in the first quarter of 2021
- Net charge-offs were $80 thousand for the quarter, or 0.02% of
average total loans (annualized)
- Allowance for loan losses was 0.94% of total loans and 1.02% of
portfolio loans 1 as of June 30, 2021; compared to 0.86% and 0.96%,
respectively, at June 30, 2020, and 0.94% and 1.05%, respectively,
at March 31, 2021
- Noninterest expense management:
- Noninterest expenses were $12.3 million for the quarter, down
74% from second quarter of 2020 (second quarter of 2020 included a
$34.5 million goodwill impairment charge) and unchanged from first
quarter of 2021
- Core noninterest expenses, 1 were $12.3 million for the
quarter, up 3% from second quarter of 2020 and unchanged from first
quarter of 2021
- PPP update:
- $4.8 million of PPP loans funded during the quarter
- $64.9 million of PPP loans forgiven during the quarter ($62.5
million from 2020 originations)
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.
Net Income and EPS
The Company reported net income of $7.5 million, or $0.40 per
both basic and diluted common share, for the second quarter of
2021. This compares to a net loss of $29.4 million, or a loss of
$1.57 per both basic and diluted common share, for the second
quarter of 2020 and net income of $6.2 million, or $0.33 per both
basic and diluted common share, for the first quarter of 2021.
Second quarter 2021 basic and diluted EPS increased by $1.97
when compared to the second quarter of 2020 and $0.07 when compared
to the first quarter of 2021. The following table presents an EPS
rollforward for the second quarter of 2021 compared to both the
second quarter of 2020 and the first quarter of 2021. 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.
Second Quarter 2021Compared to: FN Q2 2020 Q1 2021
EPS, Second
Quarter 2020 / First Quarter 2021
$
(1.57
)
$
0.33
Goodwill impairment charge (second quarter 2020; no tax impact)
1
1.84
-
Decrease in the provision for credit losses
2
0.12
0.04
Pretax income from SBA Paycheck Protection Program ("PPP")
3
0.02
(0.02
)
Litigation accrual (second quarter 2020)
4
0.04
-
Securities gains (second quarter 2020)
5
(0.12
)
-
Prepayment penalties on FHLB advances (second quarter 2020)
6
0.01
-
All other, net
0.06
0.05
EPS, Second Quarter 2021
$
0.40
$
0.40
CHANGE
$
1.97
$
0.07
- The second quarter of 2020 included a $34.5 million goodwill
impairment charge, included within noninterest expense. There were
no goodwill impairment charges in the first or second quarters of
2021.
- No provision for credit losses was recorded in the second
quarter of 2021, a decrease of $3.0 million from the second quarter
of 2020, and a decrease of $1.0 million from the first quarter of
2021.
- 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. Second quarter 2021
pretax income of $1.6 million from this program represented an
increase of $613 thousand from the second quarter of 2020 and a
decrease of $486 thousand from the first quarter of 2021.
- The second quarter of 2020 included a $1.0 million accrual,
included within noninterest expense, for potential litigation
claims stemming from certain mortgages originated by First Mariner
Bank before its merger with Howard Bank. The settlement of this
potential litigation was completed in January 2021. There were no
litigation accruals in the first or second quarters of 2021.
- The second quarter of 2020 included securities gains of $3.0
million, which increased second quarter 2020 earnings per share.
There were no securities gains recognized in the first or second
quarters of 2021.
- The second quarter of 2020 included prepayment penalties on
Federal Home Loan Bank of Atlanta (“FHLB”) advances of $224
thousand, which reduced second quarter 2020 earnings per share.
There were no prepayment penalties on FHLB advances in the first or
second quarters of 2021.
Core net income is a non-GAAP financial measure that excludes,
if applicable, goodwill impairment charges and certain other items
to provide a picture of ongoing activities deemed core to the
Company’s strategy. Core net income for the second quarter of 2021,
which is unchanged from reported net income, was $7.5 million, or
$0.40 per both basic and diluted common share. This compares to
core net income of $3.7 million, or $0.20 per both basic and
diluted common share, for the second quarter of 2020. The $0.20 per
share increase in core EPS in the second quarter of 2021, when
compared to the second quarter of 2020, was primarily the result of
a lower provision for credit losses, which was down $3.0 million
(+$0.12 after tax per share), and an increase in the pretax
contribution from PPP lending activities of $613 thousand (+$0.02
after tax per share). This also compares to core net income, which
was unchanged from reported net income, of $6.2 million, or $0.33
per both basic and diluted common share, for the first quarter of
2021. The $0.07 per share increase in core earnings per share in
the second quarter of 2021, when compared to the first quarter of
2021, included the result of a lower provision for credit losses,
which was down $1.0 million (+$0.04 after tax per share), and a
lower pretax contribution from PPP lending activities of $486
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, if applicable, goodwill impairment
charges and certain other items, was $10.1 million for the second
quarter of 2021. The second quarter of 2021 core PPNR was up $2.2
million, or 27.8%, from $7.9 million for the second quarter of
2020, and was up $723 thousand, or 7.7%, when compared to $9.4
million for the first quarter of 2021. *
The Company reported net income of $13.7 million, or $0.73 and
$0.72 per basic and diluted share, respectively, for the six months
ended June 30, 2021. This compared to a net loss of $26.1 million,
or a loss of $1.39 per both basic and diluted share, for the six
months ended June 30, 2020. Core net income for the six months
ended June 30, 2021 was also $13.7 million, or $0.73 and $0.72 per
basic and diluted share, respectively, compared to $6.4 million, or
$0.34 per both basic and diluted share, for the six months ended
June 30, 2020. Core PPNR for the six months ended June 30, 2021 was
$19.6 million, a $4.7 million, or 31.0% increase from $14.9 million
for the six months ended June 30, 2020.
Paycheck Protection Program
Loans
After the SBA relaunched the program on January 19, 2021, the
Company originated $100.5 million of PPP loans in the first and
second quarters of 2021, consisting of 591 loans with an average
loan size of $170 thousand; $4.8 million of this total were
originated in the second quarter of 2021 before the program ended.
Of these 2021 originations, 36 loans, with an aggregate principal
balance of $2.4 million, were forgiven during the second quarter of
2021. While the PPP program ended on May 31, 2021, the Company is
now focused on assisting our customers through the loan forgiveness
process.
During the second and third quarters of 2020, the Company
originated a total of $201.0 million in PPP loans, consisting of
1,062 loans with an average loan size of $189 thousand. A total of
329 loans, with an aggregate principal balance of $62.5 million,
were forgiven during the second quarter of 2021. Of the 1,062 loans
originated in 2020, 887 have been forgiven totaling $152.7 million
through June 30, 2021, representing 83.5% of the number of 2020 PPP
loans and 76.0% of 2020 principal balances.
During 2020, the Company deferred total processing fees of $6.7
million from the SBA for originated PPP loans. In addition, $782
thousand of origination costs were deferred. The PPP originations
in the first and second quarters of 2021 resulted in $4.2 million
of additional deferred processing fees from the SBA and $547
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 $1.6 million,
or $0.06 after tax per share, in the second quarter of 2021, an
increase of $613 thousand, or $0.02 after tax per share, from the
second quarter of 2020 and a decrease of $486 thousand, or $0.02
after tax per share, from the first quarter of 2021. PPP loans, net
of unaccreted net deferred fees, totaled $142.7 million at June 30,
2021, a decrease of $51.1 million from $193.7 million at June 30,
2020 and a decrease of $58.9 million from $201.6 million at March
31, 2021. PPP loan principal balances were $146.3 million at June
30, 2021 while unaccreted net deferred fees were $3.6 million at
June 30, 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 second
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
COVID-19 related loan modifications to both commercial and
retail customers that the Company provided on a case by case basis,
in the form of payment deferrals for periods up to six months,
continue to trend favorably from their peak of $315 million (17.9%
of both total loans and portfolio loans) on April 24, 2020. As of
June 30, 2021, deferrals were $30.4 million, or 1.6% of total loans
and 1.7% of portfolio loans, down from $47.9 million as of May 6,
2021, the most recent date when the Company previously disclosed
deferral data. Included in total deferrals at June 30, 2021 are
second deferrals (including deferrals where the cumulative
inception to date deferral is greater than six months) of $17.6
million. Full payment deferrals represent 5% of total deferrals
while principal only deferrals represent 95% of total deferrals.
*
Asset Quality and Allowance for Loan and
Lease Losses
Nonperforming assets (“NPAs”) totaled $16.8 million at June 30,
2021, an increase of $0.4 million from March 31, 2021 and a
decrease of $3.8 million from June 30, 2020. NPAs consisted of
$16.2 million of nonperforming loans (“NPLs”) and $629 thousand of
other real estate owned (“OREO”) at June 30, 2021. NPLs were 0.83%
of total loans and 0.90% of portfolio loans at June 30, 2021. NPAs
represented 0.65% of total assets, 0.87% of total loans and OREO,
and 0.94% of portfolio loans and OREO at June 30, 2021. *
- This compares to NPAs of $20.6 million at June 30, 2020 that
consisted of $18.5 million in NPLs and $2.1 million of OREO. NPLs
were 0.97% of total loans and 1.08% of portfolio loans at June 30,
2020 while nonperforming assets represented 0.84% of total assets,
1.08% of total loans and OREO, and 1.21% of portfolio loans and
OREO at June 30, 2020.
- This compares to NPAs of $16.4 million at March 31, 2021 that
consisted of $15.7 million in NPLs and $629 thousand of OREO. NPLs
were 0.81% of total loans and 0.90% of portfolio loans at March 31,
2021 while 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.
Net charge-offs were $80 thousand in the second quarter of 2021
and represented 0.02% of average loans (annualized). This compares
to net charge-offs of $28 thousand, or 0.01% of average loans
(annualized) in the second quarter of 2020 and $1.8 million, or
0.43% of average loans (annualized) in the first quarter of 2021.
The allowance for loan and lease losses (the “allowance”) was $18.3
million on June 30, 2021. No provision for credit losses was
recorded in the second quarter of 2021.
Because the Company is a smaller reporting company under SEC
rules, the allowance was determined under the incurred loss model.
The $18.3 million allowance represented 0.94% of total loans, 1.02%
of portfolio loans, and 112.8% of NPLs at June 30, 2021. *
- This compares to an allowance of $16.4 million at June 30,
2020. The June 30, 2020 allowance represented 0.86% of total loans,
0.96% of portfolio loans, and 88.6% of NPLs. The $1.9 million
increase in the allowance at June 30, 2021 was the result of
aggregate provisions for credit losses attributable to the
allowance of $4.1 million partially offset by aggregate net
charge-offs of $2.2 million during the four-quarter period ending
June 30, 2021.
- This compares to an allowance of $18.4 million at March 31,
2021. The March 31, 2021 allowance represented 0.94% of total
loans, 1.05% of portfolio loans, and 116.8% of NPLs. The $80
thousand decrease in the allowance at June 30, 2021 was the result
of net charge-offs of $80 thousand during the quarter ended June
30, 2021 and no provision for credit losses.
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 1.18% at
June 30, 2021, a decrease of 10 BP from June 30, 2020 and a
decrease of 3 BP from March 31, 2021. The allowance and unamortized
fair value marks as a percentage of portfolio loans plus fair value
marks was 1.27% at June 30, 2021, a decrease of 16 BP from June 30,
2020 and a decrease of 8 BP from March 31, 2021. *
The Company’s asset quality trends indicate very modest
additional stress in the loan portfolio; we believe our ongoing
active management of the portfolio, COVID-19 related loan
modifications, and PPP loan relief have reduced the risk in the
portfolio. 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 still 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 June 30, 2021 was $303.3 million, an
increase of $10.6 million from March 31, 2021. The increase was
primarily due to second quarter 2021 net income of $7.5 million and
a $3.0 million increase in accumulated other comprehensive income
(“AOCI”), which represents the after tax impact of changes in the
fair value of available-for-sale securities. Book value per common
share was $16.14 at June 30, 2021, an increase of $0.56 per share
since March 31, 2021, with second quarter EPS of $0.40 per share
and the change in AOCI representing a $0.16 per share increase.
Tangible stockholders’ equity, a non-GAAP financial measure that
deducts goodwill and other intangible assets, net of any applicable
deferred tax liabilities, was $268.3 million at June 30, 2021. This
compares to $257.3 million at March 31, 2021, with the $11.0
million increase primarily due to second quarter net income of $7.5
million, a $3.0 million increase in AOCI, and $594 thousand 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 $14.28 per share at
June 30, 2021, an increase of $0.58 per share since March 31, 2021.
*
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, changes in AOCI do not impact
regulatory capital ratios. The total capital ratio was 14.62% while
both the Common Equity Tier 1 (“CET 1”) and Tier 1 capital ratios
were 12.26% at June 30, 2021. The Tier 1 to average assets
(“leverage”) ratio was 9.74%. A comparison of the Company’s June
30, 2021 regulatory capital ratios to June 30, 2020 and March 31,
2021 is as follows:
- Regulatory capital ratios at June 30, 2020 consisted of a total
capital ratio of 14.09% while both the CET 1 and Tier 1 capital
ratios were 11.66%. The leverage ratio was 8.73%. All June 30, 2021
regulatory capital ratios were above the June 30, 2020 levels.
- Regulatory capital ratios at March 31, 2021 consisted of a
total capital ratio of 14.47% while both the CET 1 and Tier 1
capital ratios were 12.06%. The leverage ratio was 9.53%. All June
30, 2021 regulatory capital ratios were above the March 31, 2021
levels.
Net Interest Income and Net Interest
Margin
Net interest income was $20.1 million for the second quarter of
2021, an increase of $394 thousand from $19.7 million for the first
quarter of 2021, and an increase of $2.0 million, or 10.8%, from
$18.1 million in the second quarter of 2020. PPP net interest
income decreased by $421 thousand from the first quarter of 2021
but increased by $849 thousand from the second quarter of 2020.
Non-PPP related changes in net interest income were attributable to
the impact of portfolio loan growth and lower funding costs,
partially offset by lower yields on earning assets.
The following table presents selected yields and rates for the
second quarters of 2021 and 2020 as well as the first quarter of
2021. Changes in the second quarter 2021 yields and rates from the
second quarter of 2020 and the first quarter of 2021 are also
included in the table.
Second Quarter 2021 Change
from:
Second Quarter 2021
Second Quarter 2020
First Quarter 2021
Second Quarter 2020
First Quarter 2021
Selected yields and rates: Net interest margin
3.39%
3.22%
3.43%
0.17%
-0.04%
Operating net interest margin *
3.25%
3.20%
3.20%
0.05%
0.05%
Earning asset yield
3.61%
3.81%
3.70%
-0.20%
-0.09%
Total loan yield
4.07%
4.18%
4.22%
-0.11%
-0.15%
Cost of total IBL + demand deposits
0.23%
0.62%
0.28%
-0.39%
-0.05%
Impact of fair value adjustments on acquired loans: Net interest
margin
0.12%
0.10%
0.14%
0.02%
-0.02%
Earning asset yield
0.12%
0.10%
0.15%
0.02%
-0.03%
Total loan yield
0.13%
0.12%
0.17%
0.01%
-0.04%
Impact of PPP loans: Net interest margin
0.02%
-0.08%
0.09%
0.10%
-0.07%
Earning asset yield
0.03%
-0.09%
0.09%
0.12%
-0.06%
Total loan yield
-0.01%
-0.13%
0.07%
0.12%
-0.08%
The second quarter 2021 net interest margin of 3.39% was up 17
BP from the second quarter of 2020 and down 4 BP from the first
quarter of 2021. 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, by eliminating
the non-sustainable contribution from PPP lending and the
volatility from FV accretion. *
The second quarter 2021 operating net interest margin of 3.25%
was up 5 BP from the second quarter of 2020. While the cost of
funds (defined as average total interest-bearing liabilities
(“IBL”) + demand deposits) decreased by 39 BP, the yield on earning
assets, as adjusted for FV accretion and interest income from PPP
lending, decreased by 34 BP, with these decreases due to the
significant drop in market interest rates. The second quarter 2021
operating net interest margin of 3.25% is also up 5 BP from 3.20%
in the first quarter of 2021. The cost of funds decreased by 5 BP
while the yield on earning assets, as adjusted for FV accretion and
interest income from PPP lending, was unchanged.
Noninterest Income
Noninterest income was $2.4 million for the second quarter of
2021, a decrease of $2.4 million from the $4.8 million reported in
the second quarter of 2020, and an increase of $284 thousand from
the $2.1 million reported in the first quarter of 2021. There were
no securities gains in either the first or second quarters of 2021
compared to $3.0 million in the second quarter of 2020.
Core noninterest income, a non-GAAP financial measure that
excludes noninterest income attributable to securities gains in the
second quarter of 2020, was $2.4 million for the first quarter of
2021, a $638 thousand increase from $1.7 million for the second
quarter of 2020, and a $284 thousand increase from the first
quarter of 2021. *
- The $638 thousand increase when compared to the second quarter
of 2020 primarily consisted of the following: an increase in
interchange fees, as card activity volumes continue to improve,
included in other income (+$225 thousand), an increase in service
charges on deposit accounts (+$221 thousand), and an increase in
loan related fees and service charges (+$96 thousand). The $284
thousand increase when compared to the first quarter of 2021 was
primarily due to an increase in interchange fees (+$147 thousand),
and an increase in service charges on deposit accounts (+$115
thousand).
Noninterest Expenses
Noninterest expenses totaled $12.3 million for the second
quarter of 2021, a decrease of $35.3 million from the $47.6 million
reported in the second quarter of 2020, and a decrease of $45
thousand from the $12.3 million reported in the first quarter of
2021. A goodwill impairment charge of $34.5 million was included in
noninterest expenses in the second quarter of 2020.
Core noninterest expenses is a non-GAAP financial measure that,
with respect to the second quarter of 2020, excludes noninterest
expenses attributable to the following: the $34.5 million goodwill
impairment charge, a $1.0 million accrual for potential litigation
claims stemming from certain mortgages originated by First Mariner
Bank before its merger with Howard Bank (included within other
operating expense), and prepayment penalties on FHLB advances of
$224 thousand (included within other operating expense). There were
no related adjustments to reported noninterest expense in the first
and second quarter of 2021.
Core noninterest expenses were $12.3 million for the second
quarter of 2021, a $393 thousand increase from $11.9 million in the
second quarter of 2020, and a $45 thousand decrease from $12.3
million in the first quarter of 2021. *
- The $393 thousand increase when compared to the second quarter
of 2020 resulted primarily from higher compensation and benefits
expenses (+$884 thousand) partially offset by lower other real
estate owned expenses (-$268 thousand), and lower expenses in the
aggregate in all other categories (-$221 thousand). The higher
level of compensation and benefits expense included an increase in
staff costs and benefits (+$544 thousand), resulting from talent
acquisitions since the second quarter of 2020, including staff
increases in connection with the Company’s Greater Washington
initiative. In addition, the second quarter of 2021 included a
lower level of loan origination internal cost deferrals (+$231
thousand), as the second quarter of 2020 included $242 thousand of
internal cost deferrals attributable to the PPP program.
- The $45 thousand decrease when compared to the first quarter of
2021 resulted primarily from higher compensation and benefits
expenses (+$221 thousand), partially driven by staff increases in
connection with the Greater Washington initiative, more than offset
by lower expenses in the aggregate in all other categories (-$266
thousand).
Loans
Loans totaled $1.94 billion at June 30, 2021, a decrease of $4.9
million, or 0.3%, from total loans at March 31, 2021. Compared to
June 30, 2020, total loans grew by $43.9 million, or 2.3%.
Portfolio loans, a non-GAAP measure defined as total loans and
leases, but excluding PPP loans, totaled $1.80 billion at June 30,
2021, an increase of $54.0 million, or 3.1%, from portfolio loans
at March 31, 2021. Compared to June 30, 2020, portfolio loans
increased by $94.9 million, or 5.6%. Changes in portfolio loans
were as follows: *
- Compared to March 31, 2021, the $54.0 million increase (12.4%
annualized growth rate) in portfolio loans was primarily driven by
growth in our commercial lending portfolio totaling $1.25 billion
at June 30, 2021, a $20.9 million increase (6.8% annualized growth
rate) from $1.23 billion at March 31, 2021:
- Commercial real estate (“CRE”) loans were up $23.7 million, or
3.2%, while commercial and industrial (“C&I”) loans and
construction and land loans were down slightly. New loan
originations of $88.2 million during the second quarter of 2021
were partially offset by $67.3 million in loan maturities, payoffs,
partial paydowns, and lower line utilization.
- Consumer loans were up $10.7 million, or 14.3%, reflecting
continued growth in some niche lending activities.
- Residential real estate loans were up $22.4 million, or 5.1%.
Secondary market loan purchases were $58.6 million during the
second quarter of 2021, partially offset by $36.2 million of
prepayments.
- Compared to June 30, 2020, the $94.9 million increase in
portfolio loans was a result of the following:
- The commercial lending portfolio increased by $69.5 million, or
5.9%, with CRE loans up $74.9 million, or 10.7%, C&I loans up
$4.8 million, or 1.3%, despite lower line utilization, and
construction and land loans down $10.1 million, or 7.9%, due
partially to transfers to CRE upon completion of construction.
- Consumer loans were up $38.7 million, or 83.0%, reflecting
strong growth in some niche lending activities such as marine
lending.
- Residential real estate loans were down $13.3 million, or
2.8%.
Average total loans were $1.94 billion for the second quarter of
2021, an increase of $44.8 million, or 2.4%, over average loans for
the first quarter of 2021, and an increase of $56.5 million, or
3.0%, over average loans for the second quarter of 2020. Average
portfolio loans were $1.76 billion for the second quarter of 2021,
an increase of $54.0 million, or 3.2%, from average loans for the
first quarter of 2021. Compared to the second quarter of 2020,
average portfolio loans increased by $21.6 million, or 1.2%.
Deposits
Total deposits were $2.03 billion at June 30, 2021, a decrease
of $19.4 million, or 0.9%, from the March 31, 2021 balance of $2.04
billion. Compared to June 30, 2020, total deposits grew by $194.9
million, or 10.6%. Changes in deposits were as follows:
- Customer deposits, which exclude brokered and other
non-customer deposits, were $1.79 billion at June 30, 2021,
compared to $1.78 billion at March 31, 2021, an increase of $17.5
million, or 1.0%.
- Low-cost, non-maturity deposits increased by $27.3 million, or
1.7%, during the second quarter of 2021. $17.9 million of the
growth was in transaction accounts, with noninterest-bearing
transaction accounts up $51.7 million, or 7.1%.
- The increase in non-maturity deposits was partially offset by
the continued managed decline in customer CD balances, down $9.8
million, or 5.0%. The Company continues to manage for lower
retention rates on maturing CDs that have 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 June 30, 2020, customer deposits increased by
$124.9 million, or 7.5%.
- The increase in customer deposits was primarily the result of
strong growth in low-cost, non-maturity deposits, which increased
by $219.0 million, or 15.8%. $129.1 million of the growth was in
transaction accounts, with noninterest-bearing transaction accounts
up $106.8 million, or 15.9%.
- Customer CD balances declined by $94.2 million, or 33.5%.
- Brokered and other non-customer deposits were $231.8 million at
June 30, 2021, compared to $268.7 million at March 31, 2021 and
$161.8 million at June 30, 2020. Non-customer deposits continue to
be the Company’s lowest-cost incremental funding source.
Average customer deposits for the second quarter of 2021 were
$1.80 billion, an increase of $82.1 million, or 4.8%, from the
first quarter 2021 average balance. Customer non-maturity deposit
balances increased by $102.1 million, or 6.8%, with transaction
accounts up $84.0 million; $74.8 million of the transaction account
growth was in noninterest-bearing deposits. Compared to the second
quarter of 2020, average customer deposits were up by $189.5
million, or 11.7%. Customer non-maturity deposit balances increased
by $284.8 million, or 21.5%, with transaction accounts up $182.2
million; $141.7 million of the transaction account growth was in
noninterest-bearing deposits.
* 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.
Pending Merger
On July 13, 2021, the boards of directors of F.N.B. Corporation
(NYSE: FNB), the holding company for First National Bank of
Pennsylvania, and the Company announced the execution of a
definitive merger agreement for F.N.B. Corporation to acquire
Howard Bancorp, including its wholly-owned banking subsidiary,
Howard Bank, in an all-stock transaction. The completion of the
merger remains subject to receipt of regulatory approvals, approval
of the Company’s stockholders and satisfaction of other customary
closing conditions.
Due to the pending merger, the Company will not be holding an
earnings call to review its second quarter 2021 financial
results.
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;
risks related to the Company’s proposed merger with F.N.B.
Corporation, 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 SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
June 30,
2021
2020
2021
2021
2020
Income Statement Data:
Interest income
$
42,617
$
43,700
$
21,382
$
21,235
$
21,474
Interest expense
2,847
8,055
1,300
1,547
3,354
Net interest income
39,770
35,645
20,082
19,688
18,120
Provision for credit losses
1,000
6,445
-
1,000
3,000
Net interest income after provision for credit losses
38,770
29,200
20,082
18,688
15,120
Noninterest income
4,422
8,125
2,353
2,069
4,759
Noninterest expense
24,639
62,187
12,297
12,342
47,628
Income (loss) before income taxes
18,553
(24,862
)
10,138
8,415
(27,749
)
Income tax expense (benefit)
4,895
1,204
2,682
2,213
1,660
Net income (loss)
$
13,658
$
(26,066
)
$
7,456
$
6,202
$
(29,409
)
Per Share Data and Shares
Outstanding: Net income
(loss) per common share - basic
$
0.73
$
(1.39
)
$
0.40
$
0.33
$
(1.57
)
Net income (loss) per common share - diluted
$
0.72
$
(1.39
)
$
0.40
$
0.33
$
(1.57
)
Book value per common share, at period end
$
16.14
$
15.14
$
16.14
$
15.58
$
15.14
Tangible book value per common share, at period end (1)
$
14.28
$
13.17
$
14.28
$
13.70
$
13.17
Average common shares outstanding
18,777
18,791
18,787
18,768
18,716
Diluted average common shares outstanding
18,847
18,791
18,871
18,797
18,716
Shares outstanding, at period end
18,795
18,716
18,795
18,782
18,716
Balance Sheet Data:
Total assets
$
2,599,541
$
2,463,450
$
2,599,541
$
2,625,550
$
2,463,450
Portfolio loans, net of unearned
income (1)
1,799,847
1,704,911
1,799,847
1,745,862
1,704,911
Paycheck Protection Program loans, net of unearned income
142,660
193,719
142,660
201,588
193,719
Total loans and leases, net of unearned income
1,942,507
1,898,630
1,942,507
1,947,450
1,898,630
Allowance for loan losses
18,288
16,356
18,288
18,368
16,356
Other interest-earning assets
442,583
343,149
442,583
461,818
343,149
Total deposits
2,025,557
1,830,674
2,025,557
2,044,926
1,830,674
Total borrowings
247,126
312,173
247,126
263,838
312,173
Common and total stockholders' equity
303,263
283,281
303,263
292,675
283,281
Average total assets
2,563,631
2,449,822
2,587,151
2,539,849
2,529,797
Average common and total stockholders' equity
298,765
316,980
300,234
297,280
319,152
Selected Performance
Metrics: Return on average
assets (2)
1.07
%
(2.14
)%
1.16
%
0.99
%
(4.68
)%
Return on average common equity (2)
9.22
%
(16.54
)%
9.96
%
8.46
%
(37.06
)%
Pre-provision net revenue ("PPNR") (1)
$
19,553
$
(18,417
)
$
10,138
$
9,415
$
(24,749
)
PPNR to average assets (1)
1.54
%
1.22
%
1.57
%
1.50
%
1.26
%
Net interest margin (2),(3)
3.41
%
3.28
%
3.39
%
3.43
%
3.22
%
Efficiency ratio (4)
55.75
%
142.08
%
54.81
%
56.73
%
208.17
%
Core efficiency ratio (1)
55.75
%
61.90
%
54.81
%
56.73
%
60.01
%
Asset Quality Ratios:
Nonperforming loans to portfolio
loans (1)
0.90
%
1.08
%
0.90
%
0.90
%
1.08
%
Nonperforming assets to portfolio loans and OREO (1)
0.94
%
1.21
%
0.94
%
0.94
%
1.21
%
Nonperforming assets to total assets
0.65
%
0.84
%
0.65
%
0.62
%
0.84
%
Allowance for loan losses to total loans
0.94
%
0.86
%
0.94
%
0.94
%
0.86
%
Allowance for loan losses to portfolio loans (1)
1.02
%
0.96
%
1.02
%
1.05
%
0.96
%
Allowance for loan losses to nonperforming loans
112.76
%
88.56
%
112.76
%
116.82
%
88.56
%
Net chargeoffs to average total loans and leases (2)
0.20
%
0.05
%
0.02
%
0.43
%
0.01
%
Capital Ratios (Bancorp):
Tier 1 capital to average assets
(leverage ratio)
9.74
%
8.73
%
9.74
%
9.53
%
8.73
%
Common equity tier 1 capital to risk-weighted assets
12.26
%
11.66
%
12.26
%
12.06
%
11.66
%
Tier 1 capital to risk-weighted assets
12.26
%
11.66
%
12.26
%
12.06
%
11.66
%
Total capital to risk-weighted assets
14.62
%
14.09
%
14.62
%
14.47
%
14.09
%
Average equity to average assets
11.65
%
12.94
%
11.60
%
11.70
%
12.62
%
(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 SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
June 30,
2021
2020
2021
2021
2020
Interest income
$
42,617
$
43,700
$
21,382
$
21,235
$
21,474
Interest expense
2,847
8,055
1,300
1,547
3,354
Net interest income
39,770
35,645
20,082
19,688
18,120
Provision for credit losses
1,000
6,445
-
1,000
3,000
Net interest income after provision for credit losses
38,770
29,200
20,082
18,688
15,120
Noninterest income: Service
charges on deposit accounts
1,193
1,075
654
539
433
Realized and unrealized gains from mortgage banking
-
1,036
-
-
-
Gain (loss) on sale of securities
-
3,044
-
-
3,044
Gain (loss) on the disposal of premises & equipment
-
6
-
-
6
Income from bank owned life insurance
845
886
421
424
441
Loan related fees and service charges
568
755
271
297
175
Other income
1,816
1,323
1,007
809
660
Total noninterest income
4,422
8,125
2,353
2,069
4,759
Noninterest expense:
Compensation and benefits
14,065
14,700
7,143
6,922
6,259
Occupancy and equipment
2,643
2,275
1,318
1,325
1,242
Marketing and business development
638
903
341
297
453
Professional fees
1,543
1,360
809
734
634
Data processing fees
1,866
1,776
982
884
849
FDIC assessment
466
499
171
295
236
Other real estate owned
40
346
-
40
268
Loan production expense
335
660
181
154
192
Amortization of core deposit intangible
1,209
1,379
594
615
680
Goodwill impairment charge
-
34,500
-
-
34,500
Other operating expense
1,834
3,789
758
1,076
2,315
Total noninterest expense
24,639
62,187
12,297
12,342
47,628
Income (loss) before income taxes
18,553
(24,862
)
10,138
8,415
(27,749
)
Income tax expense (benefit)
4,895
1,204
2,682
2,213
1,660
Net income (loss)
$
13,658
$
(26,066
)
$
7,456
$
6,202
$
(29,409
)
Net income (loss) per
common share: Basic
$
0.73
$
(1.39
)
$
0.40
$
0.33
$
(1.57
)
Diluted
$
0.72
$
(1.39
)
$
0.40
$
0.33
$
(1.57
)
Average common shares
outstanding: Basic
18,777
18,791
18,787
18,768
18,716
Diluted
18,847
18,791
18,871
18,797
18,716
Selected Performance
Metrics: Return on average
assets
1.07
%
-2.14
%
1.16
%
0.99
%
-4.68
%
Return on average common equity
9.22
%
-16.54
%
9.96
%
8.46
%
-37.06
%
Core Pre-provision net revenue ("PPNR") (1)
$
19,553
$
14,921
$
10,138
$
9,415
$
7,931
Core PPNR to average assets (1)
1.54
%
1.22
%
1.57
%
1.50
%
1.26
%
Net interest margin
3.41
%
3.28
%
3.39
%
3.43
%
3.22
%
Efficiency ratio
55.75
%
142.08
%
54.81
%
56.73
%
208.17
%
Core efficiency ratio (1)
55.75
%
61.90
%
54.81
%
56.73
%
60.01
%
(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
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2021
2020
2020
2020
ASSETS Cash and due from
banks
$
12,681
$
10,750
$
9,415
$
11,043
$
12,652
Interest bearing deposits with banks
59,754
68,822
65,204
59,539
46,418
Total cash and cash equivalents
72,435
79,572
74,619
70,582
59,070
Securities available for sale, at fair value
367,873
377,040
375,397
377,471
276,889
Securities held to maturity, at amortized cost
6,000
6,250
7,250
7,250
7,250
Federal Home Loan Bank of Atlanta stock, at cost
8,956
9,706
10,637
10,637
12,592
Portfolio loans, net of unearned income (1)
1,799,847
1,745,862
1,698,322
1,688,030
1,704,911
Paycheck Protection Program loans, net of unearned inc
142,660
201,588
167,639
196,375
193,719
Total loans and leases, net of unearned income
1,942,507
1,947,450
1,865,961
1,884,405
1,898,630
Allowance for loan losses
(18,288
)
(18,368
)
(19,162
)
(17,657
)
(16,356
)
Net loans and leases
1,924,219
1,929,082
1,846,799
1,866,748
1,882,274
Bank premises and equipment, net
40,290
40,700
41,142
42,147
42,434
Goodwill
31,449
31,449
31,449
31,449
31,449
Core deposit intangible
4,586
5,180
5,795
6,431
7,090
Bank owned life insurance
78,443
78,021
77,597
77,157
76,716
Other real estate owned
629
629
743
1,155
2,137
Deferred tax assets, net
28,324
32,175
31,254
34,687
35,034
Interest receivable and other assets
36,337
35,746
35,309
33,470
30,515
Total assets
$
2,599,541
$
2,625,550
$
2,537,991
$
2,559,184
$
2,463,450
LIABILITIES
Noninterest-bearing deposits
$
778,388
$
726,643
$
676,801
$
657,028
$
671,598
Interest-bearing deposits
1,247,169
1,318,283
1,298,613
1,315,710
1,159,076
Total deposits
2,025,557
2,044,926
1,975,414
1,972,738
1,830,674
FHLB advances
205,000
225,000
200,000
200,000
246,000
Fed funds and repos
13,436
10,353
13,634
41,473
37,834
Subordinated debt
28,690
28,485
28,437
28,388
28,339
Total borrowings
247,126
263,838
242,071
269,861
312,173
Accrued expenses and other liabilities
23,595
24,111
25,874
27,085
37,322
Total liabilities
2,296,278
2,332,875
2,243,359
2,269,684
2,180,169
STOCKHOLDERS'
EQUITY Common stock - $0.01
par value
188
188
187
187
187
Additional paid in capital
271,086
270,934
270,591
270,445
270,057
Retained earnings
31,825
24,369
18,167
13,696
9,090
Accumulated other comprehensive income
164
(2,816
)
5,687
5,172
3,947
Total stockholders' equity
303,263
292,675
294,632
289,500
283,281
Total liabilities and stockholders' equity
$
2,599,541
$
2,625,550
$
2,537,991
$
2,559,184
$
2,463,450
Capital Ratios
(Bancorp) Tier 1 capital to
average assets (leverage ratio)
9.74
%
9.53
%
9.26
%
9.07
%
8.73
%
Common equity tier 1 capital to risk-weighted assets
12.26
%
12.06
%
11.83
%
11.65
%
11.66
%
Tier 1 capital to risk-weighted assets
12.26
%
12.06
%
11.83
%
11.65
%
11.66
%
Total capital to risk-weighted assets
14.62
%
14.47
%
14.32
%
14.11
%
14.09
%
Asset Quality
Measures Nonperforming loans
$
16,219
$
15,723
$
19,430
$
16,984
$
18,469
Other real estate owned (OREO)
629
629
743
1,155
2,137
Total nonperforming assets
$
16,848
$
16,352
$
20,173
$
18,139
$
20,606
Nonperforming loans to
portfolio loans (1)
0.90
%
0.90
%
1.14
%
1.01
%
1.08
%
Nonperforming assets to portfolio loans and OREO (1)
0.94
%
0.94
%
1.19
%
1.07
%
1.21
%
Nonperforming assets to total assets
0.65
%
0.62
%
0.79
%
0.71
%
0.84
%
Allowance for loan losses to total loans
0.94
%
0.94
%
1.03
%
0.94
%
0.86
%
Allowance for loan losses to portfolio loans (1)
1.02
%
1.05
%
1.13
%
1.05
%
0.96
%
Allowance for loan losses to nonperforming loans
112.76
%
116.82
%
98.62
%
103.96
%
88.56
%
Net chargeoffs to average portfolio loans and leases (1), (2)
0.02
%
0.43
%
0.05
%
0.02
%
0.01
%
Provision for credit losses to average portfolio loans (1), (2)
0.00
%
0.24
%
0.40
%
0.40
%
0.69
%
(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 June 30,
2021
Three Months Ended March 31,
2021
Three Months Ended June 30,
2020
Average
Balance
Income /
Expense
Yield /
Rate
Average
Balance
Income /
Expense
Yield /
Rate
Average
Balance
Income /
Expense
Yield /
Rate
Earning assets Loans and leases: Commercial loans and
leases
$
358,980
$
3,271
3.65
%
$
344,841
$
3,085
3.63
%
$
375,835
$
3,730
3.99
%
Commercial real estate
755,815
8,528
4.53
736,282
8,556
4.71
694,613
8,143
4.71
Construction and land
118,704
1,116
3.77
117,251
1,109
3.84
132,899
1,287
3.89
Residential real estate
446,784
4,249
3.81
443,225
4,072
3.73
490,110
4,948
4.06
Consumer
80,418
748
3.73
65,136
658
4.09
45,619
536
4.73
Total portfolio loans
1,760,701
17,912
4.08
1,706,735
17,479
4.15
1,739,076
18,644
4.31
Paycheck Protection Program loans
177,546
1,776
4.01
186,728
2,203
4.79
142,715
896
2.53
Total loans and leases
1,938,247
19,688
4.07
1,893,463
19,682
4.22
1,881,791
19,540
4.18
Securities available for sale: U.S Gov agencies
45,256
274
2.43
48,253
288
2.42
80,217
532
2.67
Mortgage-backed
320,960
1,088
1.36
319,063
929
1.18
189,419
945
2.01
Corporate debentures
9,294
139
6.00
9,152
140
6.20
5,507
92
6.72
Total available for sale securities
375,510
1,501
1.60
376,467
1,357
1.46
275,143
1,569
2.29
Securities held to maturity
6,206
88
5.69
6,283
89
5.72
7,745
112
5.82
FHLB Atlanta stock, at cost
9,008
99
4.39
10,687
101
3.85
13,015
220
6.80
Interest bearing deposits in banks
45,741
6
0.06
38,297
6
0.06
86,181
20
0.09
Loans held for sale
-
-
-
-
-
-
1,365
13
3.83
Total earning assets
2,374,712
21,382
3.61
%
2,325,198
21,235
3.70
%
2,265,240
21,474
3.81
%
Cash and due from banks
10,781
10,586
16,056
Bank premises and equipment, net
40,593
40,993
42,431
Goodwill
31,449
31,449
65,570
Core deposit intangible
4,956
5,563
7,522
Other assets
143,052
145,158
146,395
Less: allowance for loan losses
(18,392
)
(19,098
)
(13,417
)
Total assets
$
2,587,151
$
2,539,849
$
2,529,797
Interest-bearing liabilities Deposits:
Interest-bearing demand accounts
$
227,272
$
19
0.03
%
$
218,053
$
22
0.04
%
$
186,781
$
57
0.12
%
Money market
428,169
66
0.06
442,930
83
0.08
365,658
342
0.38
Savings
180,992
15
0.03
171,508
12
0.03
140,904
25
0.07
Time deposits
409,404
310
0.30
438,545
543
0.50
557,401
1,959
1.41
Total interest-bearing deposits
1,245,837
410
0.13
1,271,036
660
0.21
1,250,744
2,383
0.77
Borrowings: FHLB advances
206,231
443
0.86
207,696
441
0.86
255,945
506
0.80
Fed funds and repos
10,751
1
0.04
12,983
1
0.03
16,747
13
0.31
Subordinated debt
28,608
446
6.25
28,455
446
6.35
28,307
452
6.42
Total borrowings
245,590
890
1.45
249,133
888
1.44
300,999
971
1.30
Total interest-bearing funds
1,491,427
1,300
0.35
%
1,520,169
1,547
0.41
%
1,551,743
3,354
0.87
%
Noninterest-bearing deposits
773,825
699,021
632,080
Other liabilities
21,665
23,379
26,822
Total liabilities
2,286,917
2,242,569
2,210,645
Stockholders' equity
300,234
297,280
319,152
Total liabilities & equity
$
2,587,151
$
2,539,849
$
2,529,797
Net interest rate spread (1)
$
20,082
3.26
%
$
19,688
3.29
%
$
18,120
2.94
%
Effect of noninterest-bearing funds
0.13
0.14
0.27
Net interest margin on earning assets (2)
3.39
%
3.43
%
3.22
%
(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
HOWARD BANCORP,
INC. AND SUBSIDIARY Average Balances, Yields, and Rates
(in thousands)
Six Months Ended June 30,
2021
Six Months Ended June 30,
2020
Average
Balance
Income /
Expense
Yield /
Rate
Average
Balance
Income /
Expense
Yield /
Rate
Earning assets Loans and leases: Commercial loans and
leases
$
351,950
$
6,356
3.64
%
$
376,517
$
8,034
4.29
%
Commercial real estate
746,102
17,084
4.62
692,772
16,589
4.82
Construction and land
117,982
2,225
3.80
132,194
2,750
4.18
Residential real estate
445,014
8,321
3.77
499,572
10,193
4.10
Consumer
72,819
1,405
3.89
45,641
1,056
4.65
Total portfolio loans
1,733,867
35,391
4.12
1,746,696
38,622
4.45
Paycheck Protection Program loans
182,112
3,979
4.41
71,357
896
2.53
Total loans and leases
1,915,979
39,370
4.14
1,818,053
39,518
4.37
Securities available for sale: U.S Gov agencies
46,746
562
2.42
75,523
1,024
2.73
Mortgage-backed
320,017
2,017
1.27
170,409
1,923
2.27
Corporate debentures
9,224
279
6.11
5,515
184
6.71
Total available for sale securities
375,986
2,858
1.53
251,447
3,131
2.50
Securities held to maturity
6,244
177
5.71
7,747
225
5.84
FHLB Atlanta stock, at cost
9,843
200
4.09
14,361
393
5.50
Interest bearning deposits in banks
42,039
12
0.06
85,521
254
0.60
Loans held for sale
-
-
-
9,894
179
3.64
Total earning assets
2,350,092
42,617
3.66
%
2,187,023
43,700
4.02
%
Cash and due from banks
10,684
14,833
Bank premises and equipment, net
40,792
42,560
Goodwill
31,449
65,760
Core deposit intangible
5,258
7,871
Other assets
144,099
143,843
Less: allowance for loan losses
(18,743
)
(12,068
)
Total assets
$
2,563,631
$
2,449,822
Interest-bearing liabilities Deposits:
Interest-bearing demand accounts
$
222,688
$
41
0.04
%
$
185,043
$
214
0.23
%
Money market
435,509
149
0.07
367,218
1,047
0.57
Savings
176,276
27
0.03
137,240
70
0.10
Time deposits
423,894
853
0.41
540,691
4,262
1.59
Total interest-bearing deposits
1,258,367
1,070
0.17
1,230,192
5,593
0.91
Borrowings: FHLB advances
206,959
884
0.86
288,407
1,532
1.07
Fed funds and other borrowings
11,860
2
0.03
11,707
17
0.29
Subordinated debt
28,532
891
6.30
28,282
913
6.49
Total borrowings
247,351
1,777
1.45
328,396
2,462
1.51
Total interest-bearing funds
1,505,718
2,847
0.38
%
1,558,588
8,055
1.04
%
Noninterest-bearing deposits
736,630
548,390
Other liabilities
22,518
25,864
Total liabilities
2,264,866
2,132,842
Stockholders' equity
298,765
316,980
Total liabilities & equity
$
2,563,631
$
2,449,822
Net interest rate spread (1)
$
39,770
3.28
%
$
35,645
2.98
%
Effect of noninterest-bearing funds
0.13
0.30
Net interest margin on earning assets (2)
3.41
%
3.28
%
(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 SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Net income (loss) (GAAP)
$
13,658
$
(26,066
)
$
7,456
$
6,202
$
4,471
$
4,604
$
(29,409
)
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
)
-
-
-
-
(3,044
)
Prepayment penalty - FHLB advances
-
224
-
-
-
-
224
Branch optimization charge
-
-
-
-
554
-
-
Litigation expense
-
1,000
-
-
980
-
1,000
CFO departure
-
788
-
-
-
-
-
Goodwill impairment charge
-
34,500
-
-
-
-
34,500
Total pretax - certain other items
-
33,468
-
-
1,534
-
32,680
Total core pretax income adjustments
-
33,338
-
-
1,534
-
32,680
Income tax expense (benefit) of adjustments
-
(276
)
-
-
414
-
(454
)
Total core pretax income adjustments, net of tax
-
33,614
-
-
1,120
-
33,134
Less: One-time benefit of NOL carryback (CARES Act)
-
(1,177
)
-
-
(94
)
-
-
Total core adjustments to net income
-
32,437
-
-
1,026
-
33,134
Core net income (Non-GAAP)
$
13,658
$
6,371
$
7,456
$
6,202
$
5,497
$
4,604
$
3,725
Diluted average common shares
18,847
18,791
18,871
18,797
18,748
18,737
18,716
Diluted EPS (GAAP)
$
0.72
$
(1.39
)
$
0.40
$
0.33
$
0.24
$
0.25
$
(1.57
)
Total core adjustments to net income
$
-
1.73
-
-
0.05
-
1.77
Core diluted EPS (Non-GAAP)
$
0.72
$
0.34
$
0.40
$
0.33
$
0.29
$
0.25
$
0.20
GAAP TO
NON-GAAP RECONCILIATION - PRE-PROVISION NET REVENUE ("PPNR")
(in thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Net income (loss) (GAAP)
$
13,658
$
(26,066
)
$
7,456
$
6,202
$
4,471
$
4,604
$
(29,409
)
Plus: provision for credit losses
1,000
6,445
-
1,000
1,700
1,700
3,000
Plus: income tax expense
4,895
1,204
2,682
2,213
1,093
1,348
1,660
Pre-provision net revenue (Non-GAAP)
$
19,553
$
(18,417
)
$
10,138
$
9,415
$
7,264
$
7,652
$
(24,749
)
Adjustments to net revenue:
Mortgage banking activities
-
(130
)
-
-
-
-
-
Securities gains
-
(3,044
)
-
-
-
-
(3,044
)
Prepayment penalty - FHLB advances
-
224
-
-
-
-
224
Branch optimization charge
-
-
-
-
554
-
-
Litigation accrual
-
1,000
-
-
980
-
1,000
CFO departure
-
788
-
-
-
-
-
Goodwill impairment charge
-
34,500
-
-
-
-
34,500
Total core pretax net revenue adjustments
-
33,338
-
-
1,534
-
32,680
Core pre-provision net revenue (PPNR)
$
19,553
$
14,921
$
10,138
$
9,415
$
8,798
$
7,652
$
7,931
GAAP TO
NON-GAAP RECONCILIATION - PPNR / AVERAGE TANGIBLE COMMON EQUITY
(in thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Core PPNR (Non-GAAP)
$
19,553
$
14,921
$
10,138
$
9,415
$
8,798
$
7,652
$
7,931
Average common equity (GAAP)
$
298,765
$
316,980
$
300,234
$
297,280
$
294,285
$
288,727
$
319,152
Less average goodwill
(31,449
)
(65,760
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(65,570
)
Less average core deposit intangible, net
(4,018
)
(5,921
)
(3,795
)
(4,246
)
(4,716
)
(5,076
)
(5,671
)
Average tangible common equity (Non-GAAP)
$
263,297
$
245,299
$
264,991
$
261,584
$
258,120
$
252,202
$
247,911
Core PPNR / average tangible common equity (Non-GAAP)
14.98
%
12.23
%
15.35
%
14.60
%
13.56
%
12.07
%
12.87
%
Annualized
ratio based on days in quarter divided by days in year
HOWARD
BANCORP, INC. AND SUBSIDIARY GAAP TO NON-GAAP RECONCILIATION
- PPNR / AVERAGE TOTAL ASSETS (in thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Core
PPNR (Non-GAAP)
$
19,553
$
14,921
$
10,138
$
9,415
$
8,798
$
7,652
$
7,931
Average
total assets (GAAP)
2,563,631
2,449,822
2,587,151
2,539,849
2,527,869
2,524,773
2,529,797
Core
PPNR / average total assets (Non-GAAP)
1.54
%
1.22
%
1.57
%
1.50
%
1.38
%
1.21
%
1.26
%
Annualized
ratio based on days in quarter divided by days in year
GAAP TO NON-GAAP
RECONCILIATION - EFFICIENCY RATIO (in thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Net
interest income (GAAP)
$
39,770
$
35,645
$
20,082
$
19,688
$
19,686
$
18,272
$
18,120
Adjustments:
Mortgage banking activities
-
(143
)
-
-
-
-
-
Total core net interest income adjustments
-
(143
)
-
-
-
-
-
Core net interest income (Non-GAAP)
$
39,770
$
35,502
$
20,082
$
19,688
$
19,686
$
18,272
$
18,120
Noninterest
income (GAAP)
$
4,422
$
8,125
$
2,353
$
2,069
$
2,145
$
2,089
$
4,759
Adjustments:
Mortgage banking activities
-
(1,425
)
-
-
-
-
-
Securities gains
-
(3,044
)
-
-
-
-
(3,044
)
Total core noninterest income adjustments
-
(4,469
)
-
-
-
-
(3,044
)
Core noninterest income (Non-GAAP)
$
4,422
$
3,656
$
2,353
$
2,069
$
2,145
$
2,089
$
1,715
Total
net interest income and noninterest income (GAAP)
$
44,192
$
43,770
$
22,435
$
21,757
$
21,831
$
20,361
$
22,879
Adjustments: Total
core net interest income adjustments
-
(143
)
-
-
-
-
-
Total core noninterest income adjustments
-
(4,469
)
-
-
-
-
(3,044
)
Total core net interest income and noninterest income adjustments
-
(4,612
)
-
-
-
-
(3,044
)
Core net interest income + noninterest income (Non-GAAP)
$
44,192
$
39,158
$
22,435
$
21,757
$
21,831
$
20,361
$
19,835
Noninterest expense (GAAP)
$
24,639
$
62,187
$
12,297
$
12,342
$
14,567
$
12,709
$
47,628
Adjustments:
Mortgage banking activities
-
(1,438
)
-
-
-
-
-
Prepayment penalty - FHLB advances
-
(224
)
-
-
-
-
(224
)
Branch optimization charge
-
-
-
-
(554
)
-
-
Litigation accrual
-
(1,000
)
-
-
(980
)
-
(1,000
)
CFO departure
-
(788
)
-
-
-
-
-
Goodwill impairment charge
-
(34,500
)
-
-
-
-
(34,500
)
Total core noninterest expense adjustments
-
(37,950
)
-
-
(1,534
)
-
(35,724
)
Core noninterest expense (Non-GAAP)
$
24,639
$
24,237
$
12,297
$
12,342
$
13,033
$
12,709
$
11,904
Efficiency ratio (GAAP)
55.75
%
142.08
%
54.81
%
56.73
%
66.73
%
62.42
%
208.17
%
Core
efficiency ratio (Non-GAAP)
55.75
%
61.90
%
54.81
%
56.73
%
59.70
%
62.42
%
60.01
%
GAAP TO
NON-GAAP RECONCILIATION - TANGIBLE BOOK VALUE PER COMMON SHARE
(in thousands except per share data)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Common and
total stockholder's equity (GAAP)
$
303,263
$
283,281
$
303,263
$
292,675
$
294,632
$
289,500
$
283,281
Total
shares outstanding at period end
18,795
18,716
18,795
18,782
18,745
18,742
18,716
Book
value per common share at period end (GAAP)
$
16.14
$
15.14
$
16.14
$
15.58
$
15.72
$
15.45
$
15.14
Common and
total stockholder's equity (GAAP)
$
303,263
$
283,281
$
303,263
$
292,675
$
294,632
$
289,500
$
283,281
Less goodwill
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
Less deposit intangible, net of deferred tax liability
(3,501
)
(5,358
)
(3,501
)
(3,942
)
(4,398
)
(4,869
)
(5,358
)
Tangible common equity (Non-GAAP)
$
268,313
$
246,474
$
268,313
$
257,284
$
258,785
$
253,182
$
246,474
Total
shares outstanding at period end
18,795
18,716
18,795
18,782
18,745
18,742
18,716
Tangible
book value per common share (Non GAAP)
$
14.28
$
13.17
$
14.28
$
13.70
$
13.81
$
13.51
$
13.17
HOWARD BANCORP, INC. AND SUBSIDIARY GAAP TO NON-GAAP
RECONCILIATION - TANGIBLE COMMON EQUITY / TANGIBLE ASSETS (in
thousands except per share data)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Common (and
total) stockholder's equity (GAAP)
$
303,263
$
283,281
$
303,263
$
292,675
$
294,632
$
289,500
$
283,281
Less goodwill
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
Less deposit intangible, net of deferred tax liability
(3,501
)
(5,358
)
(3,501
)
(3,942
)
(4,398
)
(4,869
)
(5,358
)
Tangible common equity (Non-GAAP)
$
268,313
$
246,474
$
268,313
$
257,284
$
258,785
$
253,182
$
246,474
Total
assets (GAAP)
$
2,599,541
$
2,463,450
$
2,599,541
$
2,625,550
$
2,537,991
$
2,559,184
$
2,463,450
Less goodwill
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
Less deposit intangible, net of deferred tax liability
(3,501
)
(5,358
)
(3,501
)
(3,942
)
(4,398
)
(4,869
)
(5,358
)
Tangible assets (Non-GAAP)
$
2,564,591
$
2,426,643
$
2,564,591
$
2,590,159
$
2,502,144
$
2,522,866
$
2,426,643
Tangible
common equity / tangible assets (period end)
10.46
%
10.16
%
10.46
%
9.93
%
10.34
%
10.04
%
10.16
%
GAAP TO
NON-GAAP RECONCILIATION - RETURN ON AVERAGE COMMON EQUITY (in
thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Net income
(loss) (GAAP)
$
13,658
$
(26,066
)
$
7,456
$
6,202
$
4,471
$
4,604
$
(29,409
)
Average
common (and total) equity (GAAP)
298,765
316,980
300,234
297,280
294,285
288,727
319,152
Return
on average common equity (GAAP)
9.22
%
-16.54
%
9.96
%
8.46
%
6.04
%
6.34
%
-37.06
%
Net income
(loss) (GAAP)
$
13,658
$
(26,066
)
$
7,456
$
6,202
$
4,471
$
4,604
$
(29,409
)
Total core adjustments to net income (loss)
-
32,437
-
-
1,026
-
33,134
Core net income (Non-GAAP)
$
13,658
$
6,371
$
7,456
$
6,202
$
5,497
$
4,604
$
3,725
Average
common equity
298,765
316,980
300,234
297,280
294,285
288,727
319,152
Core
return on average common equity (Non-GAAP)
9.22
%
4.04
%
9.96
%
8.46
%
7.43
%
6.34
%
4.69
%
Annualized
ratio based on days in quarter divided by days in year
GAAP TO NON-GAAP
RECONCILIATION - TANGIBLE RETURN ON AVERAGE TANGIBLE COMMON
EQUITY (in thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Net income
(loss) (GAAP)
$
13,658
$
(26,066
)
$
7,456
$
6,202
$
4,471
$
4,604
$
(29,409
)
Goodwill
impairment charge
-
34,500
-
-
-
-
34,500
CDI
amortization
1,209
1,379
594
615
636
659
680
Income tax expense on pretax total
(326
)
(372
)
(160
)
(166
)
(172
)
(178
)
(184
)
CDI amortization, net of tax
883
1,007
434
449
464
481
496
Total adjustments to net income
883
35,507
434
449
464
481
34,996
Tangible net income (Non-GAAP)
$
14,541
$
9,441
$
7,890
$
6,651
$
4,936
$
5,085
$
5,587
Average
common equity (GAAP)
$
298,765
$
316,980
$
300,234
$
297,280
$
294,285
$
288,727
$
319,152
Less average goodwill
(31,449
)
(65,760
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(65,570
)
Less average core deposit intangible, net
(4,018
)
(5,921
)
(3,795
)
(4,246
)
(4,716
)
(5,076
)
(5,671
)
Average tangible common equity (Non-GAAP)
$
263,297
$
245,299
$
264,991
$
261,584
$
258,120
$
252,202
$
247,911
Tangible
return on average tangible common equity (Non-GAAP)
11.14
%
7.74
%
11.94
%
10.31
%
7.61
%
8.02
%
9.06
%
Tangible
net income (Non-GAAP)
$
14,541
$
9,441
$
7,890
$
6,651
$
4,936
$
5,085
$
5,587
Total core adjustments to net income (loss) (ex goodwill
impairment)
-
(2,063
)
-
-
1,026
-
(1,366
)
Core tangible net income (Non-GAAP)
$
14,541
$
7,378
$
7,890
$
6,651
$
5,961
$
5,085
$
4,222
Average
tangible common equity (Non-GAAP)
$
263,297
$
245,299
$
264,991
$
261,584
$
258,120
$
252,202
$
247,911
Core
tangible return on average tangible common equity
(Non-GAAP)
11.14
%
6.05
%
11.94
%
10.31
%
9.19
%
8.02
%
6.85
%
Annualized
ratio based on days in quarter divided by days in year
HOWARD
BANCORP, INC. AND SUBSIDIARY GAAP TO NON-GAAP RECONCILIATION
- RETURN ON AVERAGE ASSETS (in thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Net income
(loss) (GAAP)
$
13,658
$
(26,066
)
$
7,456
$
6,202
$
4,471
$
4,604
$
(29,409
)
Average
total assets (GAAP)
2,563,631
2,449,822
2,587,151
2,539,849
2,527,869
2,524,773
2,529,797
Return
on average assets (GAAP)
1.07
%
-2.14
%
1.16
%
0.99
%
0.70
%
0.73
%
-4.68
%
Net income
(loss) (GAAP)
13,658
(26,066
)
7,456
6,202
4,471
4,604
(29,409
)
Total core adjustments to net income (loss)
-
32,437
-
-
1,026
-
33,134
Core net income (Non-GAAP)
$
13,658
$
6,371
$
7,456
$
6,202
$
5,497
$
4,604
$
3,725
Average
total assets (GAAP)
2,563,631
2,449,822
2,587,151
2,539,849
2,527,869
2,524,773
2,529,797
Core
return on average assets (Non-GAAP)
1.07
%
0.52
%
1.16
%
0.99
%
0.87
%
0.73
%
0.59
%
Annualized
ratio based on days in quarter divided by days in year
GAAP TO NON-GAAP
RECONCILIATION - TANGIBLE RETURN ON AVERAGE TANGIBLE ASSETS (in
thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Net income
(loss) (GAAP)
$
13,658
$
(26,066
)
$
7,456
$
6,202
$
4,471
$
4,604
$
(29,409
)
Goodwill
impairment charge
-
34,500
-
-
-
-
34,500
CDI
amortization
1,209
1,379
594
615
636
659
680
Income tax expense on pretax total
(326
)
(372
)
(160
)
(166
)
(172
)
(178
)
(184
)
CDI amortization, net of tax
883
1,007
434
449
464
481
496
Total adjustments to net income
883
35,507
434
449
464
481
34,996
Tangible net income (Non-GAAP)
$
14,541
$
9,441
$
7,890
$
6,651
$
4,936
$
5,085
$
5,587
Average
total assets (GAAP)
2,563,631
2,449,822
2,587,151
2,539,849
2,527,869
2,524,773
2,529,797
Less average goodwill
(31,449
)
(65,760
)
(31,449
)
(31,449
)
(31,449
)
(31,449
)
(65,570
)
Less average core deposit intangible, net
(4,018
)
(5,921
)
(3,795
)
(4,246
)
(4,716
)
(5,076
)
(5,671
)
Average tangible assets (Non-GAAP)
$
2,528,163
$
2,378,141
$
2,551,908
$
2,504,154
$
2,491,704
$
2,488,248
$
2,458,556
Tangible
return on average tangible assets (Non-GAAP)
1.16
%
0.80
%
1.24
%
1.08
%
0.79
%
0.81
%
0.91
%
Tangible
net income (Non-GAAP)
$
14,541
$
9,441
$
7,890
$
6,651
$
4,936
$
5,085
$
5,587
Total core adjustments to net income (loss) (ex goodwill
impairment)
-
(2,063
)
-
-
1,026
-
(1,366
)
Core tangible net income (Non-GAAP)
$
14,541
$
7,378
$
7,890
$
6,651
$
5,961
$
5,085
$
4,222
Average
tangible assets (Non-GAAP)
$
2,528,163
$
2,378,141
$
2,551,908
$
2,504,154
$
2,491,704
$
2,488,248
$
2,458,556
Core
tangible return on average tangible assets (Non-GAAP)
1.16
%
0.62
%
1.24
%
1.08
%
0.95
%
0.81
%
0.69
%
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 SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Allowance
for loan losses (GAAP)
$
18,288
$
16,356
$
18,288
$
18,368
$
19,162
$
17,657
$
16,356
Total loans
and leases (GAAP)
1,942,507
1,898,630
1,942,507
1,947,450
1,865,961
1,884,405
1,898,630
Allowance as a % of total loans and leases (GAAP)
0.94
%
0.86
%
0.94
%
0.94
%
1.03
%
0.94
%
0.86
%
Allowance
for loan losses (GAAP)
$
18,288
$
16,356
$
18,288
$
18,368
$
19,162
$
17,657
$
16,356
Total loans
and leases (GAAP)
1,942,507
1,898,630
1,942,507
1,947,450
1,865,961
1,884,405
1,898,630
Less PPP loans outstanding
(142,660
)
(193,719
)
(142,660
)
(201,588
)
(167,639
)
(196,375
)
(193,719
)
Portfolio loans (Non-GAAP)
1,799,847
1,704,911
1,799,847
1,745,862
1,698,322
1,688,030
1,704,911
Allowance as a % of portfolio loans (Non-GAAP)
1.02
%
0.96
%
1.02
%
1.05
%
1.13
%
1.05
%
0.96
%
HOWARD
BANCORP, INC. AND SUBSIDIARY GAAP TO NON-GAAP RECONCILIATION
- NONPERFORMING LOANS AS A % OF PORTFOLIO LOANS (in thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Nonperforming loans
$
16,219
$
18,469
$
16,219
$
15,723
$
19,430
$
16,984
$
18,469
Total loans
and leases (GAAP)
1,942,507
1,898,630
1,942,507
1,947,450
1,865,961
1,884,405
1,898,630
Nonperforming loans as a % of total loans and leases (GAAP)
0.83
%
0.97
%
0.83
%
0.81
%
1.04
%
0.90
%
0.97
%
Nonperforming loans
$
16,219
$
18,469
$
16,219
$
15,723
$
19,430
$
16,984
$
18,469
Total loans
and leases (GAAP)
1,942,507
1,898,630
1,942,507
1,947,450
1,865,961
1,884,405
1,898,630
Less PPP loans outstanding
(142,660
)
(193,719
)
(142,660
)
(201,588
)
(167,639
)
(196,375
)
(193,719
)
Portfolio loans (Non-GAAP)
1,799,847
1,704,911
1,799,847
1,745,862
1,698,322
1,688,030
1,704,911
Nonperforming loans as a % of portfolio loans (Non-GAAP)
0.90
%
1.08
%
0.90
%
0.90
%
1.14
%
1.01
%
1.08
%
GAAP TO
NON-GAAP RECONCILIATION - NONPERFORMING ASSETS AS A % OF PORTFOLIO
LOANS + OREO (in thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Nonperforming assets
$
16,848
$
20,606
$
16,848
$
16,352
$
20,173
$
18,139
$
20,606
Total loans
and leases (GAAP)
1,942,507
1,898,630
1,942,507
1,947,450
1,865,961
1,884,405
1,898,630
OREO
629
2,137
629
629
743
1,155
2,137
Total loans and leases + OREO
1,943,136
1,900,767
1,943,136
1,948,079
1,866,704
1,885,560
1,900,767
Nonperforming assets as a % of total loans and leases +
OREO (GAAP)
0.87
%
1.08
%
0.87
%
0.84
%
1.08
%
0.96
%
1.08
%
Nonperforming assets
$
16,848
$
20,606
$
16,848
$
16,352
$
20,173
$
18,139
$
20,606
Total loans
and leases (GAAP)
1,942,507
1,898,630
1,942,507
1,947,450
1,865,961
1,884,405
1,898,630
OREO
629
2,137
629
629
743
1,155
2,137
Total loans and leases + OREO
1,943,136
1,900,767
1,943,136
1,948,079
1,866,704
1,885,560
1,900,767
Less PPP loans outstanding
(142,660
)
(193,719
)
(142,660
)
(201,588
)
(167,639
)
(196,375
)
(193,719
)
Portfolio loans + OREO
$
1,800,476
$
1,707,048
$
1,800,476
$
1,746,491
$
1,699,065
$
1,689,185
$
1,707,048
Nonperforming assets as a % of portfolio loans + OREO
(Non-GAAP)
0.94
%
1.21
%
0.94
%
0.94
%
1.19
%
1.07
%
1.21
%
GAAP TO
NON-GAAP RECONCILIATION - ALLOWANCE FOR LOAN LOSSES + FV MARKS AS A
% OF PORTFOLIO LOANS + FV MARKS (in thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Allowance
for loan losses (GAAP)
$
18,288
$
16,356
$
18,288
$
18,368
$
19,162
$
17,657
$
16,356
Add: Fair value marks
4,634
8,105
4,634
5,302
6,454
7,365
8,105
Allowance +
fair value marks (Non-GAAP)
$
22,922
$
24,461
$
22,922
$
23,670
$
25,616
$
25,022
$
24,461
Total loans
and leases (GAAP)
$
1,942,507
$
1,898,630
$
1,942,507
$
1,947,450
$
1,865,961
$
1,884,405
$
1,898,630
Add: fair value marks
4,634
8,105
4,634
5,302
6,454
7,365
8,105
Total loans
and leases + fair value marks (Non-GAAP)
$
1,947,141
$
1,906,735
$
1,947,141
$
1,952,752
$
1,872,415
$
1,891,770
$
1,906,735
Allowance + fair value marks as a % of total loans and
leases + fair value marks (Non-GAAP)
1.18
%
1.28
%
1.18
%
1.21
%
1.37
%
1.32
%
1.28
%
Allowance
for loan losses (GAAP)
$
18,288
$
16,356
$
18,288
$
18,368
$
19,162
$
17,657
$
16,356
Add: Fair value marks
4,634
8,105
4,634
5,302
6,454
7,365
8,105
Allowance +
fair value marks (Non-GAAP)
$
22,922
$
24,461
$
22,922
$
23,670
$
25,616
$
25,022
$
24,461
Total loans
and leases (GAAP)
$
1,942,507
$
1,898,630
$
1,942,507
$
1,947,450
$
1,865,961
$
1,884,405
$
1,898,630
Less PPP loans outstanding
(142,660
)
(193,719
)
(142,660
)
(201,588
)
(167,639
)
(196,375
)
(193,719
)
Portfolio loans (Non-GAAP)
$
1,799,847
$
1,704,911
$
1,799,847
$
1,745,862
$
1,698,322
$
1,688,030
$
1,704,911
Add: fair value marks
4,634
8,105
4,634
5,302
6,454
7,365
8,105
Portfolio
loans + fair value marks (Non-GAAP)
$
1,804,481
$
1,713,016
$
1,804,481
$
1,751,164
$
1,704,776
$
1,695,395
$
1,713,016
Allowance + fair value marks as a % of portfolio loans
and leases + fair value marks (Non-GAAP)
1.27
%
1.43
%
1.27
%
1.35
%
1.50
%
1.48
%
1.43
%
HOWARD
BANCORP, INC. AND SUBSIDIARY GAAP TO NON-GAAP RECONCILIATION
- NET INTEREST MARGIN (in thousands)
FOR THE SIX MONTHS
ENDED
FOR THE THREE MONTHS
ENDED
June 30,
June 30,
June 30,
March 31,
December 31,
September 30,
June 30,
2021
2020
2021
2021
2020
2020
2020
Net
interest income (GAAP)
$
39,770
$
35,645
$
20,082
$
19,688
$
19,686
$
18,272
$
18,120
Average
earning assets (GAAP)
2,350,092
2,187,023
2,374,712
2,325,198
2,309,928
2,305,205
2,265,240
Net
interest margin (GAAP)
3.41
%
3.28
%
3.39
%
3.43
%
3.39
%
3.15
%
3.22
%
Net
interest income (GAAP)
39,770
35,645
$
20,082
$
19,688
$
19,686
$
18,272
$
18,120
Less net accretion of net fair value discounts on acquired loans
(1,340
)
(667
)
(616
)
(725
)
(888
)
(548
)
(448
)
Less PPP net interest income (implied cost of funds at 0.35%)
(3,663
)
(743
)
(1,621
)
(2,042
)
(1,633
)
(1,038
)
(743
)
Operating net interest income (Non-GAAP)
$
34,767
$
34,235
$
17,845
$
16,921
$
17,165
$
16,686
$
16,929
Average
earning assets (GAAP)
2,350,092
2,187,023
2,374,712
2,325,198
2,309,928
2,305,205
2,265,240
Add net fair value discounts on acquired loans
5,437
8,727
4,918
5,956
6,921
7,696
8,408
Less PPP loans
(182,112
)
(71,357
)
(177,546
)
(186,728
)
(186,267
)
(195,588
)
(142,715
)
Operating average earning assets (Non-GAAP)
$
2,173,417
$
2,124,393
$
2,202,084
$
2,144,426
$
2,130,582
$
2,117,313
$
2,130,933
Operating net interest margin (Non-GAAP)
3.23
%
3.24
%
3.25
%
3.20
%
3.21
%
3.14
%
3.20
%
Annualized
ratio based on days in quarter divided by days in year
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210721005272/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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