Howard Bancorp closes Patapsco acquisition

Editor’s note: This article was published on on August 31, 2015.

By Rick Seltzer

Howard Bancorp Inc. closed its $10.1 million acquisition of Patapsco Bancorp Inc., it said Monday, continuing to climb higher on the list of the region’s largest banks and adding its first branch in Baltimore City.

The cash-and-stock deal, which was first announced in March, pushes Ellicott City-based Howard’s (NASDAQ: HBMD) Howard Bank subsidiary to nearly $1 billion in assets. It now has estimated assets of about $965 million and deposits of nearly $772 million, according to June 30 data filed with the U.S. Securities and Exchange Commission. Howard is becoming the seventh-largest bank in the state of Maryland and the largest publicly traded bank based in Greater Baltimore, it said.

In buying Dundalk-based Patapsco (OTC: PATD), the parent of Patapsco Bank, Howard added a Hampden branch that is its first location in Baltimore City. It also boosted its presence in Baltimore County.

Howard acquired four Patapsco Bank branches in the deal. It plans to keep all of them open. Customers may have already noticed the change — the branches were rebranded Friday and Saturday.

The acquisition gives Howard 275 full-time employees, up from 233. Positions were eliminated due to redundancies for a “small number” of employees, the bank said. It did not specify how many employees lost their jobs, saying only that they were informed several weeks ago and were encouraged to apply for open positions at the bank.

Patapsco Chairman Thomas O’Neill and Director Gary Bozel have joined Howard’s board of directors. The bank’s CEO, Phil Phillips, will stay on to assist with the leadership transition for a limited time but will not remain with Howard permanently. Phillips was offered a permanent position with Howard when the acquisition was first announced.

Howard has been on an expansion spree of late, buying the assets of the failed NBRS Financial Bank in October and planning a new downtown Columbia location. It has also added key employees in the residential mortgage area and grown organically, CEO Mary Ann Scully said in a statement.

“Howard has nearly tripled its asset size since its capital raise in 2012 and is now achieving the size and scale that is so important in the highly regulated and highly competitive banking industry today,” she said.

Under the terms of the acquisition, Patapsco shareholders received $5.09 in cash or 0.3547 shares of Howard stock for every share of Patapsco stock they owned. Cash accounted for 20 percent of the total consideration and stock made up 80 percent.

Griffin Financial Group LLC served as financial adviser and placement agent for Howard. Ober Kaler was its legal counsel.

Keefe, Bruyette & Woods Inc. advised Patapsco. Its legal counsel was Kilpatrick Townsend & Stockton LLP.

Source: Baltimore Business Journal

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