Situation
Howard Bancorp, Inc. (NASDAQ: HBMD), headquartered in Ellicott City, Maryland, with pro forma assets of approximately $1 billion after giving effect to its recently announced acquisition of Patapsco Bancorp, Inc., serves superior demographic markets in the greater Baltimore marketplace and is led by a pedigreed “big bank” management team, has experienced exceptional growth since inception in 2004 despite the recession and banking crisis and its aftermath. Howard sought additional capital to support continued organic and inorganic growth, including “Just in Time” capital to support its acquisition of Patapsco on a basis which would improve the mix of investors and improve its market structure and liquidity.
Solution
Howard engaged Griffin Financial Group to advise on the type, size, pricing, mix of institutional investors and timing of the offering and to serve as its placement agent. With Griffin’s assistance, Howard received binding commitments to purchase an aggregate of 2,173,913 shares of its common stock for $25 million at a price of $11.50 per share from seven well-known bank investors. The price represented the closing price on the day the offering was commenced and less than a 10% discount to the current rolling 20-day average on the date the commitments were signed. Following the placement of shares, four of the seven investors will own less than 4.9% of shares outstanding, none will have a position in excess of 8.0% and none will have board seats or board observation rights. The transaction closed on June 2, 2015.
Measures of Success
The addition of $25 million of common equity strengthens an already formidable company solidifying it as the consolidator of choice in good markets with substantial acquisition opportunities and gives it the cushion necessary to accelerate organic growth via opportunistic lift-outs and other opportunities.
For more information on this transaction, contact Joseph M. Harenza, CEO/Senior Managing Director, at 610.478.2160 or Stacey V. Weikel, Senior Vice President, at 610.478.2015.
