Howard Bancorp IncfalseQ10001390162--12-3120211878239918744710P1Y0001390162us-gaap:RetainedEarningsMember2021-03-310001390162us-gaap:AdditionalPaidInCapitalMember2021-03-310001390162us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001390162us-gaap:RetainedEarningsMember2020-12-310001390162us-gaap:AdditionalPaidInCapitalMember2020-12-310001390162us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001390162us-gaap:RetainedEarningsMember2020-03-310001390162us-gaap:AdditionalPaidInCapitalMember2020-03-310001390162us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001390162us-gaap:RetainedEarningsMember2019-12-310001390162us-gaap:AdditionalPaidInCapitalMember2019-12-310001390162us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001390162us-gaap:CommonStockMember2021-03-310001390162us-gaap:CommonStockMember2020-12-310001390162us-gaap:CommonStockMember2020-03-310001390162us-gaap:CommonStockMember2019-12-310001390162us-gaap:ShareBasedPaymentArrangementNonemployeeMember2021-01-012021-03-310001390162us-gaap:ShareBasedPaymentArrangementNonemployeeMember2020-01-012020-03-310001390162hbmd:PerformanceBasedRestrictedStockUnitsRsuMemberhbmd:ShareBasedPaymentArrangementThreeYearsVestingPeriodMember2021-01-012021-03-310001390162us-gaap:EmployeeStockOptionMember2019-12-310001390162hbmd:TimeBasedRestrictedStockUnitsRsuMemberhbmd:ShareBasedPaymentArrangementOneThreeOrFiveVestingPeriodMember2021-01-012021-03-310001390162us-gaap:EmployeeStockOptionMember2020-01-012020-12-310001390162us-gaap:EmployeeStockOptionMember2020-12-310001390162us-gaap:RestrictedStockMember2021-03-310001390162us-gaap:RestrictedStockMember2020-12-310001390162us-gaap:RestrictedStockMember2019-12-310001390162us-gaap:RestrictedStockMember2021-01-012021-03-310001390162us-gaap:RestrictedStockMember2020-01-012020-12-310001390162hbmd:OtherRealEstateOwnedMember2021-01-012021-03-310001390162hbmd:OtherRealEstateOwnedMember2020-01-012020-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:OtherRealEstateOwnedMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:OtherRealEstateOwnedMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:OtherRealEstateOwnedMember2021-03-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:OtherRealEstateOwnedMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:OtherRealEstateOwnedMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:OtherRealEstateOwnedMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:OtherRealEstateOwnedMember2020-12-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:OtherRealEstateOwnedMember2020-12-310001390162us-gaap:RetainedEarningsMember2021-01-012021-03-310001390162us-gaap:CommonStockMember2021-01-012021-03-310001390162us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001390162us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001390162us-gaap:RetainedEarningsMember2020-01-012020-03-310001390162us-gaap:CommonStockMember2020-01-012020-03-310001390162us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001390162us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001390162hbmd:OneResidentialJuniorLienLoansMember2021-03-310001390162hbmd:CommercialRealEstateLoanMember2021-03-310001390162srt:MinimumMemberhbmd:FederalOpenMarketCommitteeMember2021-03-310001390162srt:MaximumMemberhbmd:FederalOpenMarketCommitteeMember2021-03-310001390162us-gaap:USTreasuryBondSecuritiesMember2021-03-310001390162srt:MinimumMemberus-gaap:USTreasuryBondSecuritiesMember2020-08-310001390162us-gaap:DiscontinuedOperationsHeldforsaleMemberhbmd:MortgageBankingActivitiesMember2021-03-310001390162us-gaap:DiscontinuedOperationsHeldforsaleMemberhbmd:MortgageBankingActivitiesMember2020-12-310001390162us-gaap:DiscontinuedOperationsHeldforsaleMemberhbmd:MortgageBankingActivitiesMember2020-03-310001390162us-gaap:DiscontinuedOperationsHeldforsaleMemberhbmd:MortgageBankingActivitiesMember2019-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:ConsumerLoanMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialLoanMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialsFirstLienMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialJuniorLienMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ConstructionAndLandMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialOwnerOccupiedMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialNonOwnerOccupiedMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:ConsumerLoanMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialLoanMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialsFirstLienMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialJuniorLienMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ConstructionAndLandMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialOwnerOccupiedMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialNonOwnerOccupiedMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:ConsumerLoanMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialLoanMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialsFirstLienMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialJuniorLienMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ConstructionAndLandMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialOwnerOccupiedMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialNonOwnerOccupiedMember2021-03-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:ConsumerLoanMember2021-03-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialLoanMember2021-03-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialsFirstLienMember2021-03-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialJuniorLienMember2021-03-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ConstructionAndLandMember2021-03-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialOwnerOccupiedMember2021-03-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialNonOwnerOccupiedMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-03-310001390162us-gaap:FairValueMeasurementsNonrecurringMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:ConsumerLoanMember2020-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialLoanMember2020-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialsFirstLienMember2020-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialJuniorLienMember2020-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ConstructionAndLandMember2020-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialOwnerOccupiedMember2020-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialNonOwnerOccupiedMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:ConsumerLoanMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialLoanMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialsFirstLienMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialJuniorLienMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ConstructionAndLandMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialOwnerOccupiedMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialNonOwnerOccupiedMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:ConsumerLoanMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialLoanMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialsFirstLienMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialJuniorLienMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ConstructionAndLandMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialOwnerOccupiedMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialNonOwnerOccupiedMember2020-12-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:ConsumerLoanMember2020-12-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialLoanMember2020-12-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialsFirstLienMember2020-12-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ResidentialJuniorLienMember2020-12-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:ConstructionAndLandMember2020-12-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialOwnerOccupiedMember2020-12-310001390162us-gaap:FairValueMeasurementsNonrecurringMemberhbmd:CommercialNonOwnerOccupiedMember2020-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2020-12-310001390162us-gaap:FairValueMeasurementsNonrecurringMember2020-12-310001390162us-gaap:SubstandardMemberus-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SubstandardMemberus-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SubstandardMemberhbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SubstandardMemberhbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SubstandardMemberhbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SubstandardMemberhbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SubstandardMemberhbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SubstandardMemberhbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SpecialMentionMemberus-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SpecialMentionMemberus-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SpecialMentionMemberhbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SpecialMentionMemberhbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SpecialMentionMemberhbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SpecialMentionMemberhbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SpecialMentionMemberhbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SpecialMentionMemberhbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:DoubtfulMemberus-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:DoubtfulMemberus-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:DoubtfulMemberhbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:DoubtfulMemberhbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:DoubtfulMemberhbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:DoubtfulMemberhbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:DoubtfulMemberhbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:DoubtfulMemberhbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:NotClassifiedMemberus-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:NotClassifiedMemberus-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:NotClassifiedMemberhbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:NotClassifiedMemberhbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:NotClassifiedMemberhbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:NotClassifiedMemberhbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:NotClassifiedMemberhbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:NotClassifiedMemberhbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SubstandardMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:SpecialMentionMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:DoubtfulMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:NotClassifiedMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:ImpairedFinancingReceivableMember2021-03-310001390162us-gaap:SubstandardMemberus-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SubstandardMemberus-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SubstandardMemberhbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SubstandardMemberhbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SubstandardMemberhbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SubstandardMemberhbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SubstandardMemberhbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SubstandardMemberhbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SpecialMentionMemberus-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SpecialMentionMemberus-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SpecialMentionMemberhbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SpecialMentionMemberhbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SpecialMentionMemberhbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SpecialMentionMemberhbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SpecialMentionMemberhbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SpecialMentionMemberhbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:DoubtfulMemberus-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:DoubtfulMemberus-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:DoubtfulMemberhbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:DoubtfulMemberhbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:DoubtfulMemberhbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:DoubtfulMemberhbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:DoubtfulMemberhbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:DoubtfulMemberhbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:NotClassifiedMemberus-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:NotClassifiedMemberus-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:NotClassifiedMemberhbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:NotClassifiedMemberhbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:NotClassifiedMemberhbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:NotClassifiedMemberhbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:NotClassifiedMemberhbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:NotClassifiedMemberhbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SubstandardMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:SpecialMentionMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:DoubtfulMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:NotClassifiedMemberhbmd:LegacyLoansMember2020-12-310001390162srt:MaximumMember2020-12-310001390162hbmd:ImpairedFinancingReceivableMember2020-12-310001390162hbmd:ImpairedFinancingReceivableMember2020-03-310001390162hbmd:ImpairedFinancingReceivableMember2019-12-310001390162hbmd:ResidentialRealEstateFirstLienMember2021-03-310001390162hbmd:ResidentialRealEstateFirstLienMember2020-12-310001390162us-gaap:ConsumerLoanMember2019-12-310001390162us-gaap:CommercialLoanMember2019-12-310001390162hbmd:ResidentialsFirstLienMember2019-12-310001390162hbmd:ResidentialJuniorLienMember2019-12-310001390162hbmd:PaycheckProtectionProgramLoansMember2019-12-310001390162hbmd:ConstructionAndLandMember2019-12-310001390162hbmd:CommercialOwnerOccupiedMember2019-12-310001390162hbmd:CommercialNonOwnerOccupiedMember2019-12-310001390162hbmd:PaycheckProtectionProgramLoansMember2020-01-012020-12-310001390162srt:MinimumMember2021-03-310001390162srt:MaximumMember2021-03-310001390162us-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2021-01-012021-03-310001390162us-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2021-01-012021-03-310001390162hbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2021-01-012021-03-310001390162hbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2021-01-012021-03-310001390162hbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2021-01-012021-03-310001390162hbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2021-01-012021-03-310001390162hbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2021-01-012021-03-310001390162hbmd:LegacyLoansMember2021-01-012021-03-310001390162us-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2020-01-012020-12-310001390162us-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2020-01-012020-12-310001390162hbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2020-01-012020-12-310001390162hbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2020-01-012020-12-310001390162hbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2020-01-012020-12-310001390162hbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2020-01-012020-12-310001390162hbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2020-01-012020-12-310001390162hbmd:LegacyLoansMember2020-01-012020-12-310001390162us-gaap:CorporateDebtSecuritiesMember2021-03-310001390162us-gaap:CorporateDebtSecuritiesMember2020-12-310001390162hbmd:NonInterestExpenseMember2020-04-012020-06-3000013901622020-04-012020-06-300001390162us-gaap:CoreDepositsMember2021-03-310001390162us-gaap:CoreDepositsMember2020-12-310001390162us-gaap:ConsumerLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-310001390162us-gaap:ConsumerLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-03-310001390162us-gaap:ConsumerLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-03-310001390162us-gaap:CommercialLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-310001390162us-gaap:CommercialLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-03-310001390162us-gaap:CommercialLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-03-310001390162hbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-310001390162hbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-03-310001390162hbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-03-310001390162hbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-310001390162hbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-03-310001390162hbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-03-310001390162hbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-310001390162hbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-03-310001390162hbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-03-310001390162hbmd:ConstructionAndLandMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-310001390162hbmd:ConstructionAndLandMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-03-310001390162hbmd:ConstructionAndLandMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-03-310001390162hbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-310001390162hbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-03-310001390162hbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-03-310001390162hbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-310001390162hbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-03-310001390162hbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-03-310001390162hbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-310001390162hbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-03-310001390162hbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-03-310001390162us-gaap:ConsumerLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-310001390162us-gaap:ConsumerLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001390162us-gaap:ConsumerLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001390162us-gaap:CommercialLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-310001390162us-gaap:CommercialLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001390162us-gaap:CommercialLoanMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001390162hbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-310001390162hbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001390162hbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001390162hbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-310001390162hbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001390162hbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001390162hbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-310001390162hbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001390162hbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001390162hbmd:ConstructionAndLandMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-310001390162hbmd:ConstructionAndLandMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001390162hbmd:ConstructionAndLandMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001390162hbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-310001390162hbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001390162hbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001390162hbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-310001390162hbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001390162hbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001390162hbmd:LegacyLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-310001390162hbmd:LegacyLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2020-12-310001390162hbmd:LegacyLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2020-12-310001390162us-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2021-03-310001390162us-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2021-03-310001390162hbmd:LegacyLoansMember2021-03-310001390162us-gaap:ConsumerLoanMemberhbmd:LegacyLoansMember2020-12-310001390162us-gaap:CommercialLoanMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:ResidentialsFirstLienMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:ResidentialJuniorLienMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:PaycheckProtectionProgramLoansMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:ConstructionAndLandMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:CommercialOwnerOccupiedMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:CommercialNonOwnerOccupiedMemberhbmd:LegacyLoansMember2020-12-310001390162hbmd:LegacyLoansMember2020-12-310001390162us-gaap:PerformingFinancingReceivableMemberhbmd:ResidentialRealEstateFirstLienAndExtensionOrOtherModificationMember2021-03-310001390162us-gaap:PerformingFinancingReceivableMemberhbmd:LoansAndLeasesMember2021-03-310001390162us-gaap:PerformingFinancingReceivableMemberhbmd:CommercialLoansAndForberancesMember2021-03-310001390162us-gaap:PerformingFinancingReceivableMemberhbmd:CommercialLoanAndExtensionOrOtherModificationMember2021-03-310001390162us-gaap:NonperformingFinancingReceivableMemberhbmd:ResidentialRealEstateFirstLienAndExtensionOrOtherModificationMember2021-03-310001390162us-gaap:NonperformingFinancingReceivableMemberhbmd:CommercialLoansAndForberancesMember2021-03-310001390162us-gaap:NonperformingFinancingReceivableMemberhbmd:CommercialLoanAndExtensionOrOtherModificationMember2021-03-310001390162hbmd:ResidentialRealEstateFirstLienAndExtensionOrOtherModificationMemberus-gaap:AllowanceForLossesOnFinanceReceivablesMember2021-03-310001390162hbmd:CommercialLoansAndForberancesMemberus-gaap:AllowanceForLossesOnFinanceReceivablesMember2021-03-310001390162hbmd:CommercialLoanAndExtensionOrOtherModificationMemberus-gaap:AllowanceForLossesOnFinanceReceivablesMember2021-03-310001390162us-gaap:PerformingFinancingReceivableMember2021-03-310001390162us-gaap:NonperformingFinancingReceivableMember2021-03-310001390162us-gaap:AllowanceForLossesOnFinanceReceivablesMember2021-03-310001390162hbmd:ResidentialRealEstateFirstLienAndExtensionOrOtherModificationMember2021-03-310001390162hbmd:CommercialLoansAndForberancesMember2021-03-310001390162hbmd:CommercialLoanAndExtensionOrOtherModificationMember2021-03-310001390162us-gaap:PerformingFinancingReceivableMemberhbmd:ResidentialRealEstateFirstLienAndExtensionOrOtherModificationMember2020-12-310001390162us-gaap:PerformingFinancingReceivableMemberhbmd:CommercialLoansAndForberancesMember2020-12-310001390162us-gaap:PerformingFinancingReceivableMemberhbmd:CommercialLoanAndExtensionOrOtherModificationMember2020-12-310001390162us-gaap:NonperformingFinancingReceivableMemberhbmd:ResidentialRealEstateFirstLienAndExtensionOrOtherModificationMember2020-12-310001390162us-gaap:NonperformingFinancingReceivableMemberhbmd:CommercialLoansAndForberancesMember2020-12-310001390162us-gaap:NonperformingFinancingReceivableMemberhbmd:CommercialLoanAndExtensionOrOtherModificationMember2020-12-310001390162hbmd:ResidentialRealEstateFirstLienAndExtensionOrOtherModificationMemberus-gaap:AllowanceForLossesOnFinanceReceivablesMember2020-12-310001390162hbmd:CommercialLoansAndForberancesMemberus-gaap:AllowanceForLossesOnFinanceReceivablesMember2020-12-310001390162hbmd:CommercialLoanAndExtensionOrOtherModificationMemberus-gaap:AllowanceForLossesOnFinanceReceivablesMember2020-12-310001390162us-gaap:PerformingFinancingReceivableMember2020-12-310001390162us-gaap:NonperformingFinancingReceivableMember2020-12-310001390162us-gaap:AllowanceForLossesOnFinanceReceivablesMember2020-12-310001390162hbmd:ResidentialRealEstateFirstLienAndExtensionOrOtherModificationMember2020-12-310001390162hbmd:CommercialLoansAndForberancesMember2020-12-310001390162hbmd:CommercialLoanAndExtensionOrOtherModificationMember2020-12-310001390162us-gaap:PerformingFinancingReceivableMemberhbmd:CommercialLoansAndForberancesMember2020-03-310001390162hbmd:ResidentialRealEstateFirstLienMember2021-01-012021-03-310001390162hbmd:ResidentialRealEstateFirstLienMember2020-01-012020-12-310001390162hbmd:PaycheckProtectionProgramLoansMember2021-03-310001390162hbmd:PaycheckProtectionProgramLoansMember2020-12-310001390162hbmd:LoansHeldForInvestmentMember2021-01-012021-03-310001390162hbmd:LoansHeldForInvestmentMember2020-01-012020-12-310001390162us-gaap:FairValueInputsLevel3Member2021-01-012021-03-310001390162us-gaap:FairValueInputsLevel3Member2020-01-012020-12-310001390162us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2021-03-310001390162us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2021-03-310001390162us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-03-310001390162us-gaap:RestrictedStockUnitsRSUMemberhbmd:SharebasedCompensationAwardTrancheFourMember2021-03-310001390162us-gaap:RestrictedStockUnitsRSUMemberhbmd:SharebasedCompensationAwardTrancheFiveMember2021-03-310001390162us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2021-03-310001390162us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-03-310001390162us-gaap:RestrictedStockUnitsRSUMember2021-03-310001390162hbmd:InterestRateSwapWithCounterpartyMember2021-03-310001390162hbmd:InterestRateSwapWithBorrowersMember2021-03-310001390162hbmd:InterestRateSwapWithCounterpartyMember2020-12-310001390162hbmd:InterestRateSwapWithBorrowersMember2020-12-310001390162hbmd:InterestRateSwapWithCounterpartyMember2021-01-012021-03-310001390162hbmd:InterestRateSwapWithBorrowersMember2021-01-012021-03-310001390162hbmd:InterestRateSwapWithCounterpartyMember2020-01-012020-12-310001390162hbmd:InterestRateSwapWithBorrowersMember2020-01-012020-12-310001390162us-gaap:EmployeeStockOptionMember2021-03-310001390162hbmd:CreditImpairedLoansAcquiredMember2021-03-310001390162hbmd:CreditImpairedLoansAcquiredMember2020-12-3100013901622020-03-3100013901622019-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherInvestmentsMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberhbmd:UsFederalAgenciesMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherInvestmentsMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberhbmd:UsFederalAgenciesMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherInvestmentsMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberhbmd:UsFederalAgenciesMember2021-03-310001390162us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherInvestmentsMember2021-03-310001390162us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2021-03-310001390162us-gaap:FairValueMeasurementsRecurringMemberhbmd:UsFederalAgenciesMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherInvestmentsMember2020-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2020-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberhbmd:UsFederalAgenciesMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherInvestmentsMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberhbmd:UsFederalAgenciesMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherInvestmentsMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberhbmd:UsFederalAgenciesMember2020-12-310001390162us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherInvestmentsMember2020-12-310001390162us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2020-12-310001390162us-gaap:FairValueMeasurementsRecurringMemberhbmd:UsFederalAgenciesMember2020-12-310001390162us-gaap:OtherInvestmentsMember2021-03-310001390162us-gaap:MortgageBackedSecuritiesMember2021-03-310001390162hbmd:UsFederalAgenciesMember2021-03-310001390162us-gaap:OtherInvestmentsMember2020-12-310001390162us-gaap:MortgageBackedSecuritiesMember2020-12-310001390162hbmd:UsFederalAgenciesMember2020-12-310001390162us-gaap:ConsumerLoanMember2021-01-012021-03-310001390162us-gaap:CommercialLoanMember2021-01-012021-03-310001390162hbmd:ResidentialsFirstLienMember2021-01-012021-03-310001390162hbmd:ResidentialJuniorLienMember2021-01-012021-03-310001390162hbmd:PaycheckProtectionProgramLoansMember2021-01-012021-03-310001390162hbmd:ConstructionAndLandMember2021-01-012021-03-310001390162hbmd:CommercialOwnerOccupiedMember2021-01-012021-03-310001390162hbmd:CommercialNonOwnerOccupiedMember2021-01-012021-03-310001390162us-gaap:ConsumerLoanMember2020-01-012020-12-310001390162us-gaap:CommercialLoanMember2020-01-012020-12-310001390162hbmd:ResidentialsFirstLienMember2020-01-012020-12-310001390162hbmd:ResidentialJuniorLienMember2020-01-012020-12-310001390162hbmd:PaycheckProtectionProgramLoansMember2020-01-012020-12-310001390162hbmd:ConstructionAndLandMember2020-01-012020-12-310001390162hbmd:CommercialOwnerOccupiedMember2020-01-012020-12-310001390162hbmd:CommercialNonOwnerOccupiedMember2020-01-012020-12-3100013901622020-01-012020-12-310001390162hbmd:ImpairedFinancingReceivableMember2021-01-012021-03-310001390162hbmd:ImpairedFinancingReceivableMember2020-01-012020-03-310001390162us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001390162us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001390162srt:DirectorMember2021-01-012021-03-310001390162us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-03-310001390162us-gaap:EmployeeStockOptionMember2020-01-012020-03-310001390162srt:DirectorMember2020-01-012020-03-310001390162us-gaap:CoreDepositsMember2021-01-012021-03-310001390162us-gaap:CoreDepositsMember2020-01-012020-12-310001390162us-gaap:FairValueInputsLevel3Member2019-12-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001390162us-gaap:FairValueMeasurementsRecurringMember2021-03-310001390162us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001390162us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001390162us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001390162us-gaap:FairValueMeasurementsRecurringMember2020-12-310001390162us-gaap:ResidentialRealEstateMember2021-03-310001390162us-gaap:RealEstateMember2021-03-310001390162us-gaap:ConsumerLoanMember2021-03-310001390162us-gaap:CommercialRealEstateMember2021-03-310001390162us-gaap:CommercialLoanMember2021-03-310001390162hbmd:ResidentialsFirstLienMember2021-03-310001390162hbmd:ResidentialJuniorLienMember2021-03-310001390162hbmd:PaycheckProtectionProgramLoansMember2021-03-310001390162hbmd:ConstructionAndLandMember2021-03-310001390162hbmd:CommercialOwnerOccupiedMember2021-03-310001390162hbmd:CommercialNonOwnerOccupiedMember2021-03-310001390162us-gaap:ResidentialRealEstateMember2020-12-310001390162us-gaap:RealEstateMember2020-12-310001390162us-gaap:ConsumerLoanMember2020-12-310001390162us-gaap:CommercialRealEstateMember2020-12-310001390162us-gaap:CommercialLoanMember2020-12-310001390162hbmd:ResidentialsFirstLienMember2020-12-310001390162hbmd:ResidentialJuniorLienMember2020-12-310001390162hbmd:PaycheckProtectionProgramLoansMember2020-12-310001390162hbmd:ConstructionAndLandMember2020-12-310001390162hbmd:CommercialOwnerOccupiedMember2020-12-310001390162hbmd:CommercialNonOwnerOccupiedMember2020-12-310001390162us-gaap:FairValueInputsLevel3Member2020-12-310001390162us-gaap:FairValueInputsLevel2Member2020-12-310001390162us-gaap:FairValueInputsLevel1Member2020-12-310001390162hbmd:OtherRealEstateOwnedMember2021-03-3100013901622020-12-310001390162us-gaap:DiscontinuedOperationsHeldforsaleMemberhbmd:MortgageBankingActivitiesMember2021-01-012021-03-310001390162us-gaap:DiscontinuedOperationsHeldforsaleMemberhbmd:MortgageBankingActivitiesMember2020-01-012020-03-310001390162us-gaap:FairValueInputsLevel3Member2021-03-310001390162us-gaap:FairValueInputsLevel2Member2021-03-310001390162us-gaap:FairValueInputsLevel1Member2021-03-3100013901622021-03-310001390162hbmd:HowardBankMember2021-03-310001390162hbmd:HowardBancorpMember2021-03-310001390162hbmd:HowardBankMember2020-12-310001390162hbmd:HowardBancorpMember2020-12-310001390162hbmd:HowardBankMember2005-12-1500013901622020-01-012020-03-310001390162hbmd:LoansHeldForInvestmentMember2021-03-310001390162hbmd:LoansHeldForInvestmentMember2020-12-310001390162hbmd:PaycheckProtectionProgramLoansMember2021-01-012021-03-3100013901622021-05-0700013901622021-01-012021-03-31hbmd:itemxbrli:sharesiso4217:USDxbrli:purehbmd:subsidiaryhbmd:lawsuithbmd:securityiso4217:USDxbrli:shareshbmd:loanhbmd:segment

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-35489

HOWARD BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland

20-3735949

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

3301 Boston Street, Baltimore, MD

21224

(Address of principal executive offices)

(Zip Code)

(410) 750-0020

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Common Stock, par value $0.01 per share

HBMD

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No    

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  

Accelerated filer  

Non-accelerated filer  

Smaller reporting company  

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No 

The number of shares of common stock outstanding as of May 7, 2021.

Common Stock, $0.01 par value – 18,782,399 shares

Table of Contents

HOWARD BANCORP, INC.

TABLE OF CONTENTS

 

 

Page

PART I

Financial Information

3

Item 1.

Financial Statements

3

Condensed Consolidated Balance Sheets – Unaudited at March 31, 2021 and December 31, 2020

3

Condensed Consolidated Statements of Income – Unaudited for the Three Months Ended March 31, 2021 and 2020

4

Condensed Consolidated Statements of Comprehensive (Loss) Income – Unaudited for the Three Months Ended March 31, 2021 and 2020

5

Condensed Consolidated Statements of Changes in Stockholders' Equity – Unaudited for the Three Months Ended March 31, 2021 and 2020

6

Condensed Consolidated Statements of Cash Flows – Unaudited for the Three Months Ended March 31, 2021 and 2020

7

Notes to the Condensed Consolidated Financial Statements - Unaudited

8

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

33

 

 

Item 3.

Quantitative and Qualitative Disclosure about Market Risk

60

 

 

Item 4.

Controls and Procedures

61

 

 

PART II

Other Information

Item 1.

Legal Proceedings

62

 

 

Item 1A.

Risk Factors

62

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

62

 

 

Item 3.

Defaults Upon Senior Securities

62

 

 

Item 4.

Mine Safety Disclosures

62

 

 

Item 5.

Other Information

62

 

 

Item 6.

Exhibits

63

 

 

Signatures

64

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “report”) contains “forward-looking statements,” as that phrase is defined in the Private Securities Litigation Reform Act of 1995, which can be identified by the use of words such as “estimate,” “project,” “believe,” “goal,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “could” and words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts. These forward-looking statements include, but are not limited to statements of our goals, intentions and expectations, including the expected impact of COVID-19 on our operations, our expectations related to requests for payment deferrals on loans, our expectations that many of our unfunded commitments will expire without being drawn, and statements regarding our business plan and strategies. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and may be outside of the Company’s control. Actual events and results may differ materially from those described in such forward-looking statements due to numerous factors, including:

the impact of the outbreak of the novel coronavirus, or COVID-19, 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 Coronavirus Aid, Relief and Economic Security Act, or the CARES Act), and the resulting effect of these items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers;
negative economic conditions that adversely affect the economy, real estate values, the job market and other factors nationally and in our market area, in each case that may affect our liquidity and the performance of our loan portfolio;
any negative perception of our reputation or financial strength;
competition among depository and other financial institutions;
changes in U.S. monetary policy, the level and volatility of interest rates, the capital markets and other market conditions that may affect, among other things, our liquidity and the value of our assets and liabilities;
changes in laws or government regulations or policies affecting financial institutions, including as a result of the new presidential administration and Democratic control of Congress;
the composition of our management team and our ability to attract and retain key personnel;
our ability to enter new markets successfully and capitalize on growth opportunities, and to otherwise implement our growth strategy;
material weaknesses in our internal control over financial reporting;
our ability to successfully integrate acquired entities, if any;
our inability to replace income lost from exiting our mortgage banking activities with new revenues;
changes in consumer spending, borrowing and savings habits;
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board;
changes in our organization, compensation and benefit plans;
negative reactions to our branch closures by our customers, employees and other counterparties;
execution risk related to the opening of new branches, including increased expenses;
our ability to maintain the asset quality of our investment portfolios and the anticipated recovery and collection of unrealized losses on securities available for sale;
impairment of goodwill, other intangible assets or deferred tax assets;
changes in tax laws and policies;
our ability to continue our expected focus on commercial customers as well as maintaining our residential mortgage loan portfolio;
changes in our expected occupancy and equipment expenses;
changes to our allowance for loan and lease losses, and the adequacy thereof;
our ability to maintain adequate liquidity levels and future sources of liquidity;
our ability to retain a large portion of maturing certificates of deposit;
the impact on us of recent changes to accounting standards;
the impact of future cash requirements relating to commitments to extend credit;

1

Table of Contents

risks associated with actual or potential litigation or investigations by customers, regulatory agencies or others;
the risk of changes in technology and customer preferences;
the impact of any material failure or breach in our infrastructure or the infrastructure of third parties on which we rely as a result of cyber-attacks;
the impact of interest rate changes on our net interest income;
the adverse effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as epidemics and pandemics (including COVID-19), war or terrorist activities, disruptions in our customer's supply chains, disruptions in transportation, essential utility outages, or trade disputes and related tariffs;
other economic, competitive, governmental, regulatory, technological, and geopolitical factors affecting our operations, pricing, and services; and
each of the factors and risks under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, and in subsequent filings we make with the SEC.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. You should not put undue reliance on any forward-looking statements. These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not undertake any obligation to update any forward-looking statements after the date of this report, except as required by law.

2

Table of Contents

PART I

Item 1. Financial Statements

Howard Bancorp, Inc. and Subsidiary

Condensed Consolidated Balance Sheets - Unaudited

March 31, 

December 31, 

(dollars in thousands, except share data)

    

2021

    

2020

ASSETS

 

  

 

  

 

Cash and due from banks

$

10,750

$

9,415

Interest-bearing deposits with banks

 

68,822

 

65,204

Total cash and cash equivalents

 

79,572

 

74,619

Securities available for sale, at fair value

 

377,040

 

375,397

Securities held to maturity, at amortized cost

 

6,250

 

7,250

Nonmarketable equity securities

 

9,706

 

10,637

Loans and leases, net of unearned income

 

1,947,450

 

1,865,961

Allowance for loan and lease losses

 

(18,368)

 

(19,162)

Net loans and leases

 

1,929,082

 

1,846,799

Bank premises and equipment, net

 

40,700

 

41,142

Goodwill

 

31,449

 

31,449

Core deposit intangible

 

5,180

 

5,795

Bank owned life insurance

 

78,021

 

77,597

Other real estate owned

 

629

 

743

Deferred tax assets, net

 

32,175

 

31,254

Interest receivable and other assets

 

35,746

 

35,309

Total assets

$

2,625,550

$

2,537,991

LIABILITIES

 

 

  

Noninterest-bearing deposits

$

726,643

$

676,801

Interest-bearing deposits

 

1,318,283

 

1,298,613

Total deposits

 

2,044,926

 

1,975,414

FHLB advances

225,000

200,000

Customer repurchase agreements and other borrowings

10,353

13,634

Subordinated debt

28,485

28,437

Total borrowings

263,838

242,071

Accrued expenses and other liabilities

 

24,111

 

25,874

Total liabilities

 

2,332,875

 

2,243,359

COMMITMENTS AND CONTINGENCIES

 

 

  

STOCKHOLDERS’ EQUITY

 

 

  

Common stock - par value of $0.01 authorized 20,000,000 shares; issued and outstanding 18,782,399 shares at March 31, 2021 and 18,744,710 at December 31, 2020

 

188

 

187

Capital surplus

 

270,934

 

270,591

Retained earnings

 

24,369

 

18,167

Accumulated other comprehensive (loss) income

 

(2,816)

 

5,687

Total stockholders’ equity

 

292,675

 

294,632

Total liabilities and stockholders’ equity

$

2,625,550

$

2,537,991

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

3

Table of Contents

Condensed Consolidated Statements of Income - Unaudited

Three Months Ended

March 31, 

(dollars in thousands, except per share data)

    

2021

    

2020

INTEREST INCOME

 

  

 

Interest and fees on loans and leases

$

19,682

$

19,978

Interest and dividends on securities

1,547

1,848

Other interest income

6

400

Total interest income

21,235

22,226

INTEREST EXPENSE

Deposits

660

3,210

FHLB advances

441

1,026

Customer repurchase agreements and other borrowings

1

4

Subordinated debt

445

461

Total interest expense

1,547

4,701

NET INTEREST INCOME

19,688

17,525

Provision for credit losses

1,000

3,445

Net interest income after provision for credit losses

18,688

14,080

NONINTEREST INCOME

Service charges on deposit accounts

539

642

Realized and unrealized gains on mortgage banking activity

1,036

Income from bank owned life insurance

424

445

Loan related fees and service charges

297

581

Other operating income

809

662

Total noninterest income

2,069

3,366

NONINTEREST EXPENSE

Compensation and benefits

6,922

8,441

Occupancy and equipment

1,325

1,033

Marketing and business development

297

450

Professional fees

734

726

Data processing fees

884

927

FDIC assessment

295

193

Other real estate owned

40

78

Loan production expense

154

468

Amortization of core deposit intangible

615

699

Other operating expense

1,076

1,544

Total noninterest expense

12,342

14,559

INCOME BEFORE INCOME TAXES

8,415

2,887

Income tax expense (benefit)

2,213

(456)

NET INCOME

$

6,202

$

3,343

NET INCOME PER COMMON SHARE

 

  

  

Basic

$

0.33

$

0.18

Diluted

$

0.33

$

0.18

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

4

Table of Contents

Condensed Consolidated Statements of Comprehensive (Loss) Income - Unaudited

Three Months Ended

March 31, 

(dollars in thousands)

    

2021

    

2020

Net income

$

6,202

$

3,343

Other comprehensive (loss) income:

 

Investments available for sale:

 

Unrealized holding (losses) gains

 

(11,662)

5,669

Related income tax benefit (expense)

 

3,159

(1,560)

Comprehensive (loss) income

$

(2,301)

$

7,452

5

Table of Contents

Condensed Consolidated Statements of Changes in Stockholders’ Equity - Unaudited

Accumulated

 

other

 

Number of

Common

Capital

Retained

comprehensive

 

(dollars in thousands, except share data)

    

shares

    

stock

    

surplus

    

earnings

    

 income (loss)

    

Total

Balances at December 31, 2019

 

19,066,913

191

276,156

35,158

2,643

314,148

Net income

 

3,343

3,343

Other comprehensive income

 

4,109

4,109

Director stock awards

 

8,151

137

137

Employee stock purchase plan

12,581

195

195

Repurchased shares

(372,801)

(4)

(6,673)

(6,677)

Stock-based compensation

103

103

Balances at March 31, 2020

 

18,714,844

$

187

$

269,918

$

38,501

$

6,752

$

315,358

Balances at December 31, 2020

 

18,744,710

187

270,591

18,167

5,687

294,632

Net income

 

6,202

6,202

Other comprehensive loss

(8,503)

(8,503)

Director stock awards

12,408

150

150

Employee stock purchase plan

10,587

1

108

109

Stock-based compensation

 

14,694

85

85

Balances at March 31, 2021

 

18,782,399

$

188

$

270,934

$

24,369

$

(2,816)

$

292,675

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

6

Table of Contents

Condensed Consolidated Statements of Cash Flows - Unaudited

Three Months Ended

March 31

(in thousands)

    

2021

    

2020

    

CASH FLOWS FROM OPERATING ACTIVITIES:

 

  

 

  

 

Net income

$

6,202

$

3,343

Adjustments to reconcile net income to net cash from operating activities:

 

Provision for credit losses

 

1,000

3,445

Deferred income tax

 

2,238

921

Provision for other real estate owned

 

21

Depreciation and amortization

 

595

558

Stock-based compensation

 

235

240

Net accretion of discount on purchased loans

 

(411)

(204)

Net amortization of intangible asset

 

615

699

Loans originated for sale

 

(79,847)

Proceeds from sale of loans originated for sale

 

107,798

Realized and unrealized gains on mortgage banking activity

 

(1,036)

Loss on sale of other real estate owned, net

 

25

28

Cash surrender value of bank owned life insurance

 

(424)

(445)

Decrease (increase) in interest receivable and other assets

495

(3,179)

Decrease in accrued expenses and other liabilities

 

(1,763)

(2,723)

Other, net

21

13

Net cash provided by operating activities

 

8,828

29,632

CASH FLOWS FROM INVESTING ACTIVITIES:

 

  

 

  

Purchases of investment securities

 

(43,824)

(64,441)

Proceeds from sales, maturities and calls of investment securities

 

31,498

10,350

Net increase in loans and leases outstanding

 

(82,873)

(16,164)

Proceeds from the sale of other real estate owned

 

89

 

727

Purchase of premises and equipment

 

(105)

(377)

Net cash used in investing activities

 

(95,215)

(69,905)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

Net increase in deposits

 

69,512

74,534

Net decrease in customer repurchase agreements and other borrowings

 

(3,281)

 

(806)

Net increase in FHLB advances

 

25,000

 

59,000

Proceeds from issuance of common stock, net of cost

 

109

 

195

Repurchase of common stock

 

(6,677)

Net cash provided by financing activities

 

91,340

126,246

Net increase in cash and cash equivalents

 

4,953

85,973

Cash and cash equivalents at beginning of period

 

74,619

109,977

Cash and cash equivalents at end of period

$

79,572

$

195,950

SUPPLEMENTAL INFORMATION

 

Cash payments for interest

$

1,254

$

4,230

Cash payments for income taxes

 

15

Cash payments for operating leases

188

195

Lease liabilities arising from obtaining right of use assets (see Note 7)

2,011

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

7

Table of Contents

Notes to the Condensed Consolidated Financial Statements - Unaudited

Note 1:  Summary of Significant Accounting Policies

Nature of Operations

Howard Bancorp, Inc. (“Bancorp” or the “Company”) was incorporated in April 2005 under the laws of the State of Maryland. On December 15, 2005, Bancorp acquired all of the stock of Howard Bank (the “Bank”) pursuant to the Plan of Reorganization approved by the stockholders of the Bank and by federal and state regulatory agencies. Each share of the Bank’s common stock was converted into two shares of Bancorp common stock effected by the filing of Articles of Exchange on that date, and the stockholders of the Bank became the stockholders of Bancorp. Bancorp is now a bank holding company registered under the Bank Holding Company Act of 1956, with a single bank subsidiary, Howard Bank, which operates as a state trust company with commercial banking powers regulated by the Maryland Office of the Commissioner of Financial Regulation (the “Commissioner”).

The Bank has nine subsidiaries; six were formed to hold foreclosed real estate (three of which are currently inactive), two own and manage real estate used for corporate purposes, and one holds historic tax credit investments.

The Company is a diversified financial services company providing commercial banking and consumer finance through banking branches, the internet and other distribution channels to businesses, business owners, professionals and other consumers located primarily in the Greater Baltimore – Washington Metropolitan Area.

These statements should be read in conjunction with the financial statements and accompanying notes included in the Company’s 2020 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 16, 2021. There have been no significant changes to the Company’s accounting policies as disclosed in the 2020 Annual Report on Form 10-K.

The following is a description of the Company’s significant accounting policies.

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the financial services industry for financial information. The Company has one reportable segment, “Community Banking.”

Principles of Consolidation

The Unaudited Condensed Consolidated Financial Statements include the accounts of Bancorp, the Bank and the Bank’s subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near-term relate to the determination of the allowance for loan and lease losses, the valuation of goodwill and deferred tax assets, other-than-temporary impairment of investment securities and the fair value of loans held for sale.

8

Table of Contents

Allowance for Loan and Lease Losses

The allowance for loan and lease losses (the “allowance”) is maintained at a level believed adequate by management to absorb probable incurred losses inherent in the loan and lease portfolio and is based on the size and current risk characteristics of the loan and lease portfolio, an assessment of individual problem loans and leases, actual loss experience, current economic events in specific industries and geographic areas including unemployment levels and other pertinent factors including general economic conditions. Determination of the allowance is inherently subjective as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans and leases, estimated losses on pools of homogenous loans and leases based on historical loss experience and consideration of economic trends, all of which may be susceptible to significant change. Loan and lease losses are charged off against the allowance, while recoveries of amounts previously charged off are credited to the allowance. A provision for credit losses is charged to operations based on management’s periodic evaluation of the factors previously mentioned, as well as other pertinent factors. Evaluations are conducted at least quarterly and more often if deemed necessary.

The allowance consists of a specific component and a nonspecific component. The components of the allowance represent an estimation performed pursuant to either the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) Topic 450 Contingencies or ASC Topic 310 Receivables. The specific component of the allowance reflects estimated incurred losses resulting from analysis developed through credit allocations for individual loans and leases. The credit allocations are based on a regular analysis of all loans and leases over a fixed-dollar amount where the internal credit rating is at or below a predetermined classification.

The nonspecific portion of the allowance is determined based on management’s assessment of general economic conditions, as well as economic factors in the individual markets in which the Company operates including the strength and timing of economic cycles and concerns over the effects of a prolonged economic downturn in the current cycle. This determination inherently involves a higher risk of uncertainty and considers current risk factors that may not have yet manifested themselves in the Bank’s historical loss factors used to determine the nonspecific component of the allowance, and it recognizes that knowledge of the portfolio may be incomplete. The Bank’s historic loss factors are based upon actual losses incurred by portfolio segment over the preceding 24-month period. In portfolio segments where no actual losses have been incurred within the most recent 24-month period, industry loss data for that portfolio segment, as provided by the Federal Deposit Insurance Corporation (“FDIC”), are utilized. In addition to historic loss factors, the Bank’s methodology for the allowance incorporates other risk factors that may be inherent within the portfolio segments. For each portfolio segment, in addition to the historic loss experience, the qualitative factors that are measured and monitored in the overall determination of the allowance include:

changes in lending policies, procedures, and practices;
changes in international, national, state and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments;
changes in the nature and volume of the loan portfolio;
changes in the experience, ability and depth of the lending staff;
changes in the volume and severity of past due, nonaccrual, and adversely classified loans;
changes in the quality of our loan review system;
changes in the value of underlying collateral for collateral-dependent loans;
the existence of any concentrations of credit, and changes in the level of such concentrations;
the effect of other external factors such as competition and legal and regulatory requirements; and
any other factors that management considers relevant to the quality or performance of the loan portfolio.

Each of these qualitative risk factors is measured based upon data generated either internally, or in the case of economic conditions utilizing independently provided data on items such as unemployment rates, commercial real estate vacancy rates, or other market data deemed relevant to the business conditions within the markets served.

9

Table of Contents

The Company’s credit policies state that after all collection efforts have been exhausted, and the loan or lease is deemed to be a loss, then the remaining loan or lease balance will be charged to the Company’s established allowance. All loans and leases are evaluated for loss potential once it has been determined by the Watch Committee that the likelihood of repayment is in doubt. When a loan is past due for at least 90 days or a deterioration in debt service coverage ratio, guarantor liquidity, or loan-to-value ratio has occurred that would cause concern regarding the likelihood of the full repayment of principal and interest, and the loan or lease is deemed not to be well secured, the loan or lease would be moved to non-accrual status and a specific reserve is established if the net realizable value is less than the principal value of the loan balance(s). Once the actual loss value has been determined, a charge-off against the allowance for the amount of the loss is taken. Each loss is evaluated on its specific facts regarding the appropriate timing to recognize the loss.

Goodwill, Other Intangible Assets and Long-Lived Assets

Goodwill represents the excess of the purchase price over the sum of the estimated fair values of tangible and identifiable intangible assets acquired less the estimated fair value of the liabilities assumed. Core deposit intangibles represent the estimated value of long-term deposit relationships acquired in a business combination. The core deposit intangible is amortized over the estimated useful lives of the long-term deposits acquired, and the remaining amounts of the core deposit intangible are periodically reviewed for impairment. Goodwill has an indefinite useful life and is evaluated for impairment annually or more frequently if events and circumstances indicate that the asset might be impaired. Long-lived assets are those that provide the Company with a future economic benefit beyond the current year or operating period. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset is greater than the fair value of the asset. Assets to be disposed of are reported at the lower of the cost or the fair value, less costs to sell.

Effective April 1, 2020, the Company adopted the FASB’s Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, to the extent that the loss recognized does not exceed the amount of goodwill allocated to that reporting unit.

Management has determined that the Company has one reporting unit. The sudden and continuing decline in economic conditions triggered by the Coronavirus (“COVID-19”) pandemic in the first half of 2020 included a significant decline in stock market valuations and the stock price of the Company and peer banks. These events indicated that goodwill may be impaired and resulted in the Company performing a goodwill impairment assessment. Based on this assessment, the Company's estimated fair value was less than its book value, resulting in a goodwill impairment charge of $34.5 million recorded in the quarter ended June 30, 2020. Based on the annual impairment analysis, performed in the fourth quarter of 2020, the Company determined that there was not an impairment of the carrying value of either the goodwill or core deposit intangible at December 31, 2020. The Company is not aware of any events or circumstances since the completion of the annual impairment analysis that would impact the carrying value of either the goodwill or core deposit intangible at March 31, 2021.

Income Taxes

The Company uses the asset/liability method of accounting for income taxes. Under the asset/liability method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities (i.e., temporary differences) and are measured at the enacted rates that will be in effect when these differences reverse. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. In addition, deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or the entire deferred tax asset will not be realized. The Company does not have uncertain tax positions that are deemed material, and did not recognize any adjustments for unrecognized tax benefits. The Company’s policy is to recognize interest and penalties on income taxes in other noninterest expenses. The Company remains subject to examination by federal and state taxing authorities for income tax returns for the years ending after December 31, 2016.

10

Table of Contents

Reclassifications

Certain reclassifications have been made to previously reported amounts, as necessary, to conform to the current period presentation. These reclassifications did not affect previously reported net income or total stockholders’ equity.

Recent Accounting Pronouncements

The FASB has issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform, on financial reporting. The risk of termination of the London Interbank Offered Rate (LIBOR), has caused regulators to undertake reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based that are less susceptible to manipulation. ASU 2020-04 is effective between March 12, 2020 and December 31, 2022.

In addition, the FASB has issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in this update refine the scope for certain optional expedients and exceptions for contract modifications and hedge accounting to apply to derivative contracts and certain hedging relationships affected by the discounting transition. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of adopting the reference rate reform guidance (both ASU 2020-04 and ASU 2021-01) on its consolidated financial statements. The Company has identified its products that utilize LIBOR, has begun efforts to transition to an alternative reference rate, and is continuing to evaluate systems to assist in the transition to a new rate.

The FASB has issued ASU 2016-13, Financial Instruments—Loan Losses (Topic 326). The main objective of this update is to provide financial statement users with more decision-useful information about the expected loan losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the guidance in this update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected loan losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The measurement of expected loan losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. This ASU, as amended by ASU 2019-10, will be effective for the Company on January 1, 2023. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements, and has licensed and implemented third party software to gather historical data and review the methodologies and assumptions to be utilized.

In addition, the FASB has issued ASU 2019-10, Financial Instruments – Credit losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This ASU amends the effective date of the credit loss standard (ASU 2016-13) for smaller reporting companies, as defined by the SEC. The one-time determination of whether an entity is eligible to be a smaller reporting company is based on an entity’s most recent determination as of November 15, 2019, in accordance with SEC regulations. The Company met this definition of smaller reporting company based on its most recent determination as of November 15, 2019. As a result, the effective date of this ASU for the Company has been amended from fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, to fiscal years beginning after December 31, 2022, and interim periods within those fiscal years.

COVID-19 Risks and Uncertainties

The coronavirus (COVID-19) pandemic was declared a national emergency in the United States in March 2020, and its impact is fluid and continues to evolve. The COVID-19 pandemic and related restrictive measures taken by governments, businesses and individuals to contain the spread of the virus caused unprecedented uncertainty, volatility and disruption in financial markets and in governmental, commercial and consumer activity in the United States and globally, including the Company’s local markets. As these restrictive measures have begun to ease in the second half of 2020 and into 2021, the U.S. economy has begun to recover and, with the broad availability and distribution of COVID-19 vaccines, the Company anticipates continued improvements in commercial and consumer activity, the local economy, and the U.S. economy.

11

Table of Contents

The Company recognizes that its customers are experiencing varying degrees of financial distress, which are expected to continue into the second half of 2021. Commercial activity has improved, but has not returned to the levels existing before the outbreak of the pandemic, which may result in borrowers’ inability to meet their loan obligations. Economic pressures and uncertainties related to the COVID-19 pandemic have also resulted in changes in consumer spending behaviors, which may negatively impact the demand for loans and other services offered by the Company. In addition, the Company’s loan portfolio includes customers in industries such as hotels, restaurants and caterers, arts / entertainment / recreation, and retail commercial real estate, all of which have been significantly impacted by the COVID-19 pandemic. These industries may take longer to recover as consumers may be hesitant to return to full social interaction or may change their spending habits on a more permanent basis as a result of the pandemic. The Company continues to monitor these customers closely. As of March 31, 2021, the State of Maryland, like most of the nation, is open with limited restrictions.

In addition, due to the COVID-19 pandemic, market interest rates declined significantly, with the 10-year Treasury bond falling to a low of 0.52% in early August 2020, but increasing significantly since that time to 1.74% at March 31, 2021. Additionally, in March 2020, the Federal Open Market Committee reduced the targeted federal funds interest rate range to 0% to 0.25% percent, and this low rate was still in effect as of March 31, 2021. These reductions in interest rates could have, possibly materially, an adverse effect on the Company’s business, financial condition and results of operations.

The ultimate extent of the impact of the COVID-19 pandemic on the Company’s business, financial condition and results of operations is currently uncertain and will depend on various developments and other factors, including the effect of governmental and private sector initiatives, the effect of the rollout of vaccinations for the virus, whether such vaccinations will be effective against any resurgence of the virus, including any new strain, and the ability for customers and businesses to return to their pre-pandemic routine.

Note 2:  Investment Securities

The Bank holds securities classified as available for sale and held to maturity.

The amortized cost and estimated fair values of investments at the dates indicated are presented in the following table:

(in thousands)

March 31, 2021

December 31, 2020

Gross

Gross

Gross

Gross

Amortized

Unrealized

Unrealized

Estimated

Amortized

Unrealized

Unrealized

Estimated

    

Cost

    

Gains

    

Losses

    

Fair Value

    

Cost

    

Gains

    

Losses

    

Fair Value

    

Available for sale

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

U.S. Government Agencies

$

45,276

$

1,060

$

244

$

46,092

$

48,297

$

1,308

$

$

49,605

Mortgage-backed

 

326,616

2,458

7,393

321,681

310,289

6,429

46

316,672

Other investments

 

9,008

267