ELLICOTT CITY, Md. & DUNDALK, Md.--(BUSINESS WIRE)--
Howard Bancorp, Inc. (NASDAQ: HBMD, “Howard”), the parent company of
Howard Bank, and Patapsco Bancorp, Inc. (OTC: PATD, “Patapsco”), the
parent company of Patapsco Bank, jointly announced today that they have
entered into an agreement to merge. At December 31, 2014, Howard,
headquartered in Ellicott City, Maryland, had approximately $691 million
in assets, $553 million in loans, $554 million in deposits and operates
14 banking offices in Greater Baltimore. At December 31, 2014, Patapsco,
headquartered in Dundalk, Maryland, had approximately $226 million in
assets, $171 million in loans, and $184 million in deposits and operates
three banking offices in Baltimore County and one in Baltimore City.
Assuming the merger closes in 2015, Howard Bank, which opened in 2004,
expects to end the year at, or near $1 billion in assets.
Under the merger agreement, Patapsco will merge into Howard, in a part
stock, part cash transaction having an aggregate fixed value of
$10.053 million. Patapsco shareholders will receive $5.09 per share in
cash (20% of total consideration) or shares of Howard common stock (80%
of total consideration), at their election, subject to an allocation and
proration process. The per share exchange ratio for the stock portion of
the merger consideration will be based upon the average closing price of
Howard’s common stock for the 20 trading days prior to the five business
days immediately before closing, subject to a maximum exchange ratio of
0.5656 and a minimum exchange ratio of 0.3030. Howard can elect to
change the stock/cash mix from 80%/20% to up to 50%/50% at its election,
subject to certain conditions. Patapsco has the right to terminate the
transaction if Howard’s 20 day average closing price is less than $7.20
per share and certain other conditions are met. The transaction is
subject to customary conditions, including regulatory and stockholder
approval. The fixed value of $10.053 million represents 127% of
Patapsco’s tangible common equity adjusted for accumulated and unpaid
TARP dividends at December 31, 2014. There are presently no planned
branch closings. Howard expects the transaction to be accretive to its
earnings per share in the first full year of operations.
Thomas O’Neill, Patapsco Chairman and Director Gary Bozel are expected
to join the Board of both Howard Bancorp and Howard Bank. Phil Phillips,
Patapsco’s President and CEO, has been invited to join Howard in an
executive leadership position.
“With the addition of Patapsco leadership, the combination of Howard and
Patapsco is transformational and of exceptional strategic importance to
us,” said Mary Ann Scully, Howard’s Chairman and CEO. “The merger will
result in an institution with pro forma assets of approximately
$1 billion, loans of $810 million and $815 million of deposits at
closing resulting from our linked strategies of strong organic and
acquired growth since we opened in 2004. We are excited to significantly
reinforce our present franchise in Baltimore County, to enter Baltimore
City, and for the opportunity to expand the reach of our diversified
financial solutions in these very desirable markets and to leverage the
considerable talents of the Patapsco team to ultimately enrich both our
stakeholder groups- shareholders, employees and customers. We are both
excited to offer the Baltimore community a strong, locally headquartered
bank in a market dominated by our out of state colleagues. Patapsco’s
board and management team has returned the bank to consistent
profitability after recession related challenges and we are impressed
with its turnaround. We are pleased to join forces with Patapsco to
create what together we expect to be the largest bank headquartered in
the Greater Baltimore metropolitan marketplace and the 7th largest
publicly traded bank based in Maryland given our new platform for
sustainable growth. As noted, the impact of Thomas O’Neill, Patapsco
Chairman and Director Gary Bozel as both Howard Bancorp and Howard Bank
directors and Phil Phillips, as a senior executive, enriches both our
leadership and our opportunities for success.”
Thomas O’Neill, Patapsco Chairman added, "The combination of Howard Bank
and Patapsco Bank is an exciting investment opportunity for our
shareholders. With combined assets of approximately one billion dollars
it will enable us to provide more sophisticated services to a broader
customer base. Patapsco's existing customers will also benefit through
access to these new products and services. I am looking forward to being
part of the development and growth of this premier banking franchise.
Our existing employees will also have tremendous growth potential in the
larger institution."
Phil Phillips, President and Chief Executive Officer of Patapsco
Bancorp, stated, “This transaction represents excellent value for
Patapsco Bancorp shareholders. We are excited to partner with Howard
Bank who shares our values of community service and will continue our
legacy of over 100 years of banking service to the Dundalk and eastern
Baltimore County community.”
The merger is expected to close in the third or early in the fourth
quarter of 2015 and has been approved by the boards of both institutions.
Howard also announced today that it has received binding commitments to
purchase an aggregate of 2,173,913 shares of its common stock for
$25 million, in a private placement, from a limited number of
institutional bank investors at a price of $11.50 per share, which
represents the closing price on the day the offering was commenced and
less than a 10% discount to the current rolling 20-day average.
Completion of this capital raise is subject to approval by Howard’s
shareholders. Howard intends to use the proceeds of the private
placement to support the merger as well as continued organic and
inorganic growth for the combined institution. Howard has no present
intent to redeem SBLF preferred stock with proceeds of the raise.
Griffin Financial Group, LLC acted as financial advisor and placement
agent to Howard, and Ober Kaler acted as its legal counsel. Patapsco was
advised by Keefe, Bruyette & Woods, Inc. and its legal counsel was
Kilpatrick Townsend & Stockton LLP.
Cautionary Statements about Forward Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements of the goals, intentions, and expectations of
Howard and Patapsco as to future trends, plans, events, results of
operations and policies and regarding general economic conditions.These
forward-looking statements include, but are not limited to, statements
about (i) the expected timing of and benefits of the merger between
Howard and Patapsco and (ii) Howard’s plans, obligations, expectations
and intentions.In some cases, forward-looking statements can be
identified by use of words such as “may”, “will”, “anticipates,”
“believes,” “expects,” “plans,” “estimates,” “potential,” “continue,”
“should,” and similar words or phrases.These statements are
based upon the beliefs of the managements of Howard and Patapsco as to
the expected outcome of future events, current and anticipated economic
conditions, nationally and in the parties’ market, and their impact on
the operations and assets of the parties, interest rates and interest
rate policy, competitive factors, judgments about the ability of the
parties to successfully consummate the merger and to integrate the
operations of the two companies, the ability of Howard and Patapsco to
avoid customer dislocation during the period leading up to and following
the merger, and other conditions which by their nature, are not
susceptible to accurate forecast and are subject to significant
uncertainty.Factors that could cause results and outcomes to
differ materially include, among others, the ability to obtain required
regulatory and shareholder approvals; the ability to complete the merger
as expected and within the expected timeframe; and the possibility that
one or more of the conditions to the consummation of the merger may not
be satisfied.Because of these uncertainties and the assumptions
on which this discussion and the forward-looking statements are based,
actual future operations and results in the future may differ materially
from those indicated herein.Readers are cautioned against
placing undue reliance on such forward-looking statements.Past
results are not necessarily indicative of future performance.Howard
assumes no obligations to revise, update, or clarify forward-looking
statements to reflect events or conditions after the date of this
release.
Additional Information Regarding the Proposed Merger
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote or approval. In connection with the merger, Howard will file with
the Securities and Exchange Commission (“SEC”) a registration statement
on Form S-4 to register shares of Howard common stock to be issued to
Patapsco’s shareholders.The registration statement will include
a proxy statement of Patapsco that also will constitute a proxy
statement and a prospectus of Howard.A definitive proxy
statement and prospectus will be mailed to stockholders of Patapsco and
Howard seeking their approval of the shares of the merger and the shares
of Howard common stock to be issued in the merger, respectively.Howard
and Patapsco may also file other relevant documents with SEC regarding
the proposed transaction.INVESTORS AND SECURITY HOLDERS OF
HOWARD AND PATAPSCO ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.Such
documents are not currently available.Investors and security
holders will be able to obtain the documents (when available) free of
charge at the SEC’s website, www.sec.gov.Copies of the documents filed with the SEC by Howard will be
available free of charge on Howard’s website at www.Howardbank.com
under the tab “Investor Relation” and then under the heading “SEC
Documents” or by contacting George C. Coffman, Investor Relations
Contact.You may also read and copy any reports, statements and
other information filed with the SEC at the SEC’s Public Reference Room
at 100 F Street, NE, Washington DC.Information about the
operation of the SEC Public Reference Room may be obtained by calling
the SEC at 1-800-SEC-0330.The information on Howard's websites
is not, and shall not be deemed to be, a part of this release or
incorporated into other filings Howard makes with the SEC.
Howard, Patapsco and their respective directors, executive officers
and members of management may be deemed to be participants in the
solicitation of proxies from the stockholders of Howard in connection
with the transaction.Information about the directors and
executive officers of Howard is set forth in the proxy statement for
Howard's 2014 annual meeting of stockholders filed with the SEC on
April 17, 2014.Additional information regarding the
interests of these participants and other persons who may be deemed
participants in the merger may be obtained by reading the joint proxy
statement/prospectus regarding the merger when it becomes available.
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Howard Bancorp, Inc.
George C. Coffman
Chief Financial Officer
410-750-0020
or
Patapsco
Bancorp, Inc.
John M. Wright
Chief Financial Officer
410-285-9327
Source: Howard Bancorp, Inc. and Patapsco Bancorp, Inc.