Please ensure Javascript is enabled for purposes of website accessibility

Merger costs hit Howard Bancorp hard in first quarter

Howard Bank President and CEO Mary Ann Scully was named an “Enterprising Builder” as part of its 2017 Banker of the Year awards. She was one of five bankers across the country recognized by the newspaper. (file photo)

‘Mergers of this size are never easy to execute and implement,’ says Howard Bank Chairman and CEO Mary Ann Scully. (File Photo)

Howard Bancorp reported a loss in the first quarter of 2018, citing extensive costs associated with its March 1 acquisition of First Mariner Bank.

The parent company of Howard Bank noted that the majority of acquisition costs were booked for the first quarter, dampening what officials said was otherwise a strong financial performance.

“A near doubling of assets, loans and deposits concentrated in our target markets and target segments following a prior year of strong double-digit organic growth positions us uniquely for both the strategic goals we have for the company as well as achieving the scale necessary to achieve sustainably higher returns,” said Howard Chairman and CEO Mary Ann Scully. “Much of the scaffolding for this scaling has taken place in the first quarter with initial cost savings enacted immediately after the effective date of the merger.”

Howard, which moved its headquarters to Baltimore following the merger, reported a quarterly net loss of $5.7 million after recording $10 million in merger and restructuring expenses, the bank said.

Scully said that the bank anticipates savings of at least 37 percent from the merger and has already proceeded with some “hard decisions” — such as closing the Consumer Direct division of its mortgage operation — to become more efficient and to concentrate on core business areas.

“Mergers of this size are never easy to execute and implement,” Scully said. “Our combined focus on business is unusual for a bank our size, and our emphasis on Greater Baltimore business is virtually unique.”

The merger with First Mariner resulted in Howard acquiring $1 billion in assets, $664.3 million in portfolio loans, and $706.4 million in deposits, the bank said in a statement. Howard also recorded a deferred tax asset of $32.5 million, based on recently enacted federal tax law changes, and $71.4 million of goodwill.

Total deposits increased from $864.0 million in December 31, 2017 to $1.5 billion at the end of March, representing net deposit growth of $686.0 million or 79 percent, the bank said.

Shareholders’ equity increased by $159.5 million, or 121 percent, from $132.3 million at the end of last year.

 


To purchase a reprint of this article, contact reprints@thedailyrecord.com.