Howard Bancorp (HBMD) 8-K/A Completion of Acquisition or Disposition of Assets

Exhibit 99.2

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

On August 28, 2015, Howard Bancorp, Inc. (the "Company"), acquired Patapsco Bancorp, Inc. (“Patapsco”). The following unaudited pro forma combined balance sheets at June 30, 2015 and unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2015 and twelve months ended December 31, 2014, illustrate the effect of the acquisition of Patapsco with and into the Company (the “Patapsco Acquisition”).

The unaudited pro forma condensed combined balance sheet gives effect to the Patapsco Acquisition based on the historical balance sheets of the Company and Patapsco at June 30, 2015 as if it occurred on that date. The Company's balance sheet information was derived from its unaudited balance sheet at June 30, 2015 that was included in its Quarterly Report on Form 10-Q for the quarter then ended, which was filed with the Securities and Exchange Commission on August 13, 2015. The balance sheet information for Patapsco was derived from its unaudited balance sheet that is included as part of Exhibit 99.2 to this Current Report on Form 8-K, as amended (this “Report”). The pro forma adjustments are described in the accompanying notes presented on the following pages.

The unaudited pro forma condensed combined statements of operations for the Company and Patapsco for the six months ended June 30, 2015 and the year ended December 31, 2014 give effect to the Patapsco Acquisition as if it had occurred on January 1, 2015 and January 1, 2014, respectively. The historical results of the Company were derived from its unaudited condensed consolidated financial statements for the six months ended June 30, 2015 that were included in its Quarterly Report on Form 10-Q for the quarter then ended, filed on August 13, 2015, and its audited consolidated statement of operations for the year ended December 31, 2014 that was included in its Annual Report on Form 10-K for the year then ended, filed on March 27, 2015. The historical results of Patapsco were derived from its audited consolidated statement of operations for their fiscal year ended June 30, 2015, which are included as part of Exhibit 99.1 to this Report, and its unaudited consolidated statement of operations for the period ended December 31, 2014. The adjustments for the unaudited pro forma combined condensed statements of operations for the six months ended June 30, 2015 and for the year ended December 31, 2014 were prepared assuming the Patapsco Acquisition was completed on January 1, 2015 and January 1, 2014, respectively. The pro forma adjustments are described in the accompanying notes presented on the following pages.

As required by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805-Business Combinations, we have used the acquisition method of accounting and adjusted the acquired assets and liabilities of Patapsco to fair value as of the balance sheet date. Under this method, we will record Patapsco’s assets and liabilities as of August 28, 2015, the date of the acquisition, at their respective fair values and add them to those of the Company. The unaudited pro forma adjustments, including the allocations of the purchase price, are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed consolidated financial information. The actual amounts recorded as of the completion of the Patapsco Acquisition may differ materially from the information presented in these unaudited pro forma condensed combined financial statements as a result of both changes in the balance sheet between the June 30, 2015 pro forma date and the acquisition date of August 28, 2015 as well as the finalization of the valuation analyses.

The following unaudited pro forma condensed combined financial statements have been prepared for illustrative purposes only and are not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been realized had the Company and Patapsco been combined during the specified periods. The notes to the unaudited pro forma combined consolidated financial statements describe the pro forma amounts and adjustments presented below. THIS PRO FORMA DATA IS NOT NECESSARILY INDICATIVE OF THE OPERATING RESULTS THAT THE COMPANY WOULD HAVE ACHIEVED HAD IT COMPLETED THE PATAPSCO ACQUISITION AS OF THE BEGINNING OF THE PERIODS PRESENTED AND SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF FUTURE OPERATIONS.

In connection with the acquisition, the Company incurred certain transactional and other acquisition related costs and is currently working to consolidate the operations of Patapsco. We have not included any of the costs incurred or projected after June 30, 2015 into the combined condensed pro forma financial statements that follow. We continue to assess the two companies’ personnel, premises, equipment, computer systems and service contracts to determine where we may take advantage of redundancies. We will record any additional cost associated with such decisions as incurred and have not included them in the pro forma adjustments to the pro forma consolidated statements of operations. We also have not included any potential operational or other savings in the pro forma consolidated statements of operations and there are no assurances that we will realize these savings in the future.

Unaudited Pro Forma Combined Condensed Balance Sheet

June 30, 2015*

(in thousands)	Howard Bancorp, Inc.			Patapsco Bancorp, Inc.			Combined			Pro Forma Merger Adjustments				Pro Forma Combined
ASSETS
Cash and due from banks	$	28,107		$	19,086		$	47,193		$	(12,161	)	(A)(B)(C)	$	35,032
Federal funds sold		899			-			899							899
Total cash and cash equivalents		29,006			19,086			48,092			(12,161	)			35,931
Investment Securities		34,581			25,819			60,400			(207	)	(D)		60,193
Nonmarketable equity securities		3,385			1,439			4,824							4,824
Loans held for sale, at fair value		65,759			-			65,759							65,759
Loans and leases, net of unearned income		582,702			164,927			747,629			(2,951	)	(E)		744,678
Allowance for credit losses		(4,199	)		(2,478	)		(6,677	)		2,478		(F)		(4,199	)
Net loans and leases		578,503			162,449			740,952			(473	)			740,479
Bank premises and equipment, net		16,108			2,893			19,001			1,388		(G)		20,389
Core deposit intangible		1,224			-			1,224			1,974		(H)		3,198
Goodwill Resulting from Merger		-			-			-			216		(N)		216
Bank owned life insurance		11,834			4,657			16,491							16,491
Other real estate owned		2,480			776			3,256							3,256
Interest receivable and other assets		4,001			892			4,893			(100	)	(I)		4,793
Total assets	$	746,881		$	218,011		$	964,892		$	(9,362	)		$	955,530
LIABILITIES
Noninterest-bearing deposits	$	148,928		$	11,584		$	160,512		$	-			$	160,512
Interest-bearing deposits		426,788			169,355			596,143			254		(J)		596,397
Total deposits		575,716			180,939			756,655			254				756,909
Short-term borrowings		52,025			-			52,025			393		(K)		52,419
Long-term borrowings		27,500			19,000			46,500			(1,656	)	(L)		44,844
Deferred tax liability		3,330			(729	)		2,601			1,161		(M)		3,762
Accrued expenses and other liabilities		3,683			2,512			6,195			(1,266	)	(C)		4,929
Total liabilities		662,254			201,722			863,976			(1,113	)			862,863
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock		12,562			6,392			18,954			(6,392	)	(B)		12,562
Common stock		64			20			84			(14	)	(A)		69
Capital surplus		61,919			7,900			69,819			134		(A)		69,954
Accumulated earnings		10,073			1,946			12,019			(1,946	)	(A)(B)		10,073
Accumulated other comprehensive (loss) income		9			31			40			(31	)			9
Total shareholders’ equity		84,627			16,289			100,916			(8,249	)			92,667
Total liabilities and shareholders’equity	$	746,881		$	218,011		$	964,892		$	(9,362	)		$	955,530
Per Share Data
Shares outstanding		6,358,788			1,974,843			8,333,631			-1,414,462				6,919,169
Book value per common share	$	11.33		$	5.01		$	9.84						$	11.58
Tangible book value per common share	$	11.14		$	5.01		$	9.69						$	11.08

* Assumed date of Patapsco Acquisition for pro forma combined condensed balance sheet presented is June 30, 2015.

Unaudited Pro Forma Combined Condensed Statement of Operations

For the six months ended June 30, 2015*

(in thousands)	Howard Bancorp, Inc.		Patapsco Bancorp			Combined		Pro Forma Merger Adjustments				Pro Forma Combined
INTEREST INCOME
Interest and fees on loans	$	14,772	$	3,849		$	18,621	$	211		(E)	$	18,832
Interest and dividends on securities		111		361			472		-				472
Other interest income		27		10			37		-				37
Total interest income		14,910		4,220			19,130		211				19,341
INTEREST EXPENSE
Deposits		1,173		500			1,673		(42	)	(J)		1,631
Borrowings		171		213			384		(24	)	(K)(L)		360
Total interest expense		1,344		713			2,057		(67	)			1,991
NET INTEREST INCOME		13,566		3,507			17,073		278				17,351
Provision for credit losses		785		-			785		-				785
Net interest income after provision for credit losses		12,781		3,507			16,288		278				16,566
NONINTEREST INCOME
Service charges on deposit accounts		403		213			616		-				616
Mortgage banking revenues		3,505		-			3,505		-				3,505
Gain/(Loss) on the sale of securities		-		5			5						5
Income from bank owned life insurance		175		76			251						251
Loan related income		1,292		-			1,292						1,292
Other operating income		412		3			415		-				415
Total noninterest income		5,787		297			6,083		-				6,083
NONINTEREST EXPENSE
Compensation and benefits		7,789		1,660			9,449		-				9,449
Occupancy and equipment		1,879		376			2,255		14		(G)		2,269
Amortization of core deposit intangible		167		-			167		110		(H)		277
Marketing and business development		1,307		2			1,309		-				1,309
Professional fees		1,218		806			2,024		-				2,024
Data processing fees		1,166		202			1,368		-				1,368
FDIC Assessment		209		148			357		-				357
Provision for other real estate owned		-		24			24		-				24
Loan related expense		935		106			1,041		-				1,041
Other operating expense		1,605		344			1,949						1,949
Total noninterest expense		16,274		3,668			19,941		124				20,065
INCOME BEFORE INCOME TAXES		2,293		136			2,429		155				2,584
Income tax expense (benefit)		853		171			1,024		61				1,085
NET INCOME		1,440		(35	)		1,405		94				1,499
Preferred stock dividends		63		382			445		-				445
Net income available to common shareholders	$	1,377	$	(417	)	$	959	$	94			$	1,055
NET INCOME PER COMMON SHARE
Basic	$	0.31	$	(0.21	)	$	0.15	$	(0.07	)		$	0.21
Diluted	$	0.30	$	(0.21	)	$	0.15	$	(0.07	)		$	0.20

* Assumed date of Patapsco Acquisition for pro forma combined condensed statement of operations presented is January 1, 2014.

Unaudited Pro Forma Combined Condensed Statement of Operations

For the year ended December 31, 2014*

(in thousands)	Howard Bancorp, Inc.			Patapsco Bancorp		Combined			Pro Forma Merger Adjustments				Pro Forma Combined
INTEREST INCOME
Interest and fees on loans	$	23,056		$	7,892	$	30,948		$	422		(E)	$	31,369
Interest and dividends on securities		250			962		1,212			-				1,212
Other interest income		54			16		70			-				70
Total interest income		23,360			8,871		32,230			422				32,652
INTEREST EXPENSE
Deposits		2,079			1,210		3,289			(85	)	(J)		3,205
Borrowings		323			418		741			(48	)	(K)(L)		692
Total interest expense		2,402			1,628		4,030			(133	)			3,897
NET INTEREST INCOME		20,958			7,243		28,200			555				28,755
Provision for credit losses		3,255			-		3,255			-				3,255
Net interest income after provision for credit losses		17,704			7,243		24,946			555				25,500
NONINTEREST INCOME
Service charges on deposit accounts		597			432		1,029			-				1,029
Mortgage banking revenues		4,341			-		4,341			-				4,341
Bargain purchase gain		16,090			-		16,090			-				16,090
Loss on the sale of securities		(228	)		-		(228	)		-				(228	)
Income from bank owned life insurance		377			-		377			-				377
Loan related income		1,601			-		1,601			-				1,601
Other operating income		478			140		618			-				618
Total noninterest income		23,256			572		23,828			-				23,828
NONINTEREST EXPENSE
Compensation and benefits		13,434			3,182		16,616			-				16,616
Occupancy and equipment		2,462			700		3,162			28		(G)		3,189
Amortization of core deposit intangible		111			-		111			219		(H)		331
Marketing and business development		1,674			12		1,686			-				1,686
Professional fees		1,501			508		2,009			-				2,009
Data processing fees		866			426		1,292			-				1,292
FDIC Assessment		442			302		744			-				744
Loan related expense		1,170			-		1,170			-				1,170
Other operating expense		2,034			914		2,948							2,948
Total noninterest expense		23,694			6,043		29,738			247				29,984
INCOME BEFORE INCOME TAXES		17,265			1,772		19,035			308				19,343
Income tax expense		6,853			320		7,173			121				7,294
NET INCOME		10,412			1,452		11,862			186				12,049
Preferred stock dividends		126			-		126			-				126
Net income available to common shareholders	$	10,286		$	1,452	$	11,736		$	187			$	11,924
NET INCOME PER COMMON SHARE
Basic	$	2.53		$	0.74	$	1.94		$	(0.13	)		$	2.57
Diluted	$	2.48		$	0.74	$	1.91		$	(0.13	)		$	2.52

* Assumed date of Patapsco Acquisition for pro forma combined condensed statement of operations presented is January 1, 2014.

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

(A) As of the date of this filing, the acquisition was effected by the distribution of cash and issuance of shares of the Company’s common stock to Patapsco’s common stockholders. The following unaudited pro forma combined consolidated financial information reflects the 80% of the outstanding shares of Patapsco common stock that was exchanged for Company common stock at an exchange ratio of 0.3547 shares of Company common stock for each share of Patapsco common stock. Additionally, the Company paid the cash portion of the consideration of approximately $2.01 million to Patapsco stockholders.

The unaudited pro forma combined consolidated financial information is based upon the assumption that the total number of shares of Patapsco common stock immediately outstanding prior to the completion of the Patapsco Acquisition would be 1,974,843 and utilizes the exchange ratio of 0.3547 for 80% of Patapsco’s outstanding shares and cash consideration of $2.01 million. This would result in the issuance of 560,381 shares of Company common stock with an estimated fair value of $8.04 million, for a total estimated purchase price of $10.1 million. The final exchange ratio was established in accordance with the merger agreement. The final allocation of the purchase price was determined after the Patapsco Acquisition was completed and additional analyses are performed to determine the fair values of Patapsco’s tangible and identifiable intangible assets and liabilities as of the date the Patapsco Acquisition was completed. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein. The unaudited pro forma combined consolidated financial information has been prepared to include the estimated adjustments necessary to record the assets and liabilities of Patapsco at their respective fair values and represents management’s best estimate based upon the information available at this time. The pro forma adjustments included herein are subject to change as additional information becomes available and as additional analyses are performed. Such adjustments, when compared to the information shown in this document, may change the amount of the purchase price allocation to goodwill while changes to other assets and liabilities may impact the statement of operations due to adjustments in the yield and/or amortization/accretion of the adjusted assets and liabilities.

The total estimated purchase price for the purpose of this unaudited pro forma combined consolidated financial information is $10.1 million. Goodwill is created when the purchase price consideration exceeds the fair value of the assets acquired or a bargain purchase gain results when the current fair value of the assets acquired exceeds the purchase price consideration. For purposes of this analysis as of June 30, 2015, goodwill of $216 thousand results from the transaction; however, the final purchase accounting analysis will be performed as of the Patapsco Acquisition date and these amounts are subject to change based on operations subsequent to June 30, 2015 as additional information becomes available and as additional analyses are performed. The following table provides the calculation and allocation of the purchase price used in the pro forma financial statements and a reconcilement of pro forma shares to be outstanding.

(B) Adjustment of $8.9 million to reflect the intention to redeem the preferred stock issued under the U. S. Treasury Troubled Asset Recovery Plan (TARP) of $6.4 million, and also remit unpaid dividends of approximately $2.5 million.

(C) Adjustment to reflect the intention to remit approximately $1.3 million in accrued but unpaid dividends on long term debt.

(D) Mark-to-market adjustment to reflect the fair value of the Patapsco investment portfolio, based on preliminary valuations performed by independent capital market firms.

(E) Mark-to-market adjustment to reflect the fair value of Patapsco’s loan portfolio, based on preliminary valuations performed by an independent valuation firm. The adjustment will be recognized over the estimated life of the loan portfolio for the interest mark using the level yield method and over the life of the loan for the credit mark. The unaudited pro forma condensed combined statement of operations impact for the interest component of the fair value adjustment would have resulted in increases to interest income of $211 thousand and $422 thousand for the six months ended June 30, 2015 and year ended December 31, 2014, respectively.

(F) Reversal of the Patapsco allowance for loan losses of $2.5 million in accordance with acquisition method of accounting for the Patapsco Acquisition.

(G) Mark-to-market adjustment to reflect the fair value of Patapsco’s owned real property, based on preliminary valuations performed by an independent appraisal firm. The increased valuation attributable to the buildings will be depreciated on a straight line basis over the life of the building. The unaudited pro forma condensed combined statement of operations impact for the depreciation expense would have resulted in increases to occupancy expenses of $14 thousand and $28 thousand for the six months ended June 30, 2015 and year ended December 31, 2014, respectively.

(H) Adjustment to record the core deposit intangible which reflects the estimated fair value of this asset and related amortization. The related amortization adjustment is based upon a straight-line method over an expected life of approximately 9 years. The unaudited pro forma condensed combined statement of operations impact for this adjustment would have resulted in expected increases to non-interest expense of $110 thousand and $219 thousand for the six months ended June 30, 2015 and year ended December 31, 2014, respectively.

(I) Adjustment to record the diminution in value of an investment made by Patapsco in a correspondent banking firm.

(J) Adjustment to record the fair value of the Patapsco certificate of deposit portfolio based on preliminary valuations performed by an independent valuation firm. The $0.3 million adjustment will be recognized over the estimated life of the certificate of deposit portfolio using the straight line method and over the life of these deposits. The unaudited pro forma condensed combined statement of operations impact for the of the fair value adjustment would have resulted in decreases to interest expense of $42 thousand and $85 thousand for the six months ended June 30, 2015 and year ended December 31, 2014, respectively.

(K) A fair value premium of $0.4 million to reflect the fair values of certain interest-bearing FHLB borrowings based on current interest rates for similar instruments. The adjustment will be recognized using an amortization method based upon the estimated maturities of the borrowings. This adjustment is expected to decrease pro forma interest expense by $66 thousand and $131 thousand for the six months ended June 30, 2015 and year ended December 31, 2014, respectively.

(L) Adjustment to record a fair value adjustment of $1.7 million on a long term borrowing based on preliminary valuations performed. The adjustment will be recognized over the estimated life of the long term borrowing. The unaudited pro forma condensed combined statement of operations impact for the of the fair value adjustment would have resulted in an increase in interest expense of $41 thousand and $83 thousand for the six months ended June 30, 2015 and year ended December 31, 2014, respectively.

(M) An adjustment to record the deferred tax impact of $1.2 million on many of the other adjustments listed above.

(N) The following table presents the preliminary allocation of the consideration paid to the acquired assets and assumed liabilities in the Patapsco Acquisition as of the acquisition date. The tax effects of adjustments were calculated based on the statutory rate (39.45%) in effect during the periods for which the pro forma statements of operations were presented. The preliminary allocation results in goodwill of $216 thousand.

Summary of Purchase Price Calculation and Goodwill Resutling from Merger

And Reconciliation of Pro Forma Shares Outstanding at June 30, 2015

($ in thousands except share and per share data)

Purchase Price Consideration-Common Stock
Patapsco shares outstanding exchanged for stock		1,579,874
Exchange ratio		35.47	%
Howard Bancorp shares to be issued to Patapsco stockholders		560,381
Purchase price per Patapsco common share	$	5.09
Cash consideration		2,012
Purchase price assigned to shares exchanged for stock		8,040
Total purchase price				$	10,052
Patapsco common shareholders' equity at June 30, 2015		9,897
			��
Estimated adjustments to reflect assets acquired at fair value:
Loans		(2,951	)
Securities		(207	)
Allowance for loan losses		2,478
Core deposit intangible		1,974
Fixed Assets		1,388
Other assets		(100	)
Estimated adjustments to reflect liabilities acquired at fair value:
Interest bearing deposits		(254	)
Long term borrowings		(393	)
Trust Preferred Borrowings		1,656
TARP Dividends Payable		(2,491	)
Deferred tax assets		(1,161	)
Net assets aquired at estimated fair value					9,836
Goodwill resulting from merger				$	216
Reconcilement of Pro Forma Shares Outstanding
Patapsco shares outstanding					1,974,843
Less 20% elect cash consideration					(394,969	)
Patapsco shares converted					1,579,874
Exchange ratio					35.47	%
Howard Bancorp shares to be issued to Patapsco stockholders					560,381
Howard Bancorp shares outstanding					6,358,788
Pro forma Howard Bancorp shares outstanding					6,919,169
Pro forma % ownership by Patapsco					8.10	%
Pro forma % ownership by legacy Howard Bancorp					91.90	%

COMPARATIVE PER SHARE DATA

The following table summarizes per share information for the Company and Patapsco on a historical basis and on a pro forma combined basis.

The pro forma per share information gives effect to the Patapsco Acquisition had it occurred on the dates presented, in the case of the book value data, as if the Patapsco Acquisition had occurred on June 30, 2015, and in the case of earnings per share data, as if the Patapsco Acquisition had occurred on January 1, 2015 and January 1, 2014 for the six months ended June 30, 2015 and year ended December 31, 2014, respectively.

The pro forma per share information assumes that the Patapsco Acquisition is accounted for using the acquisition method of accounting. As explained in more detail in the “NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION” section, the pro forma financial adjustments record the assets and liabilities acquired in the Patapsco Acquisition at their estimated fair values at the acquisition date and are subject to adjustment as additional information becomes available.

The following historical and pro forma per share information is derived from and should be read in conjunction with the historical financial statements and related notes of Patapsco which are included within this document and of the Company which are available through the SEC's website at http://www.sec.gov. The pro forma per share information below is presented for illustrative purposes only and is not necessarily indicative of the income per share and book value per share that would have occurred if the Patapsco Acquisition had been completed as of the beginning of the periods presented, nor is it necessarily indicative of the future operating results or financial position of the combined company.

	Howard Bancorp, Inc.		Patapsco Bancorp			Pro Forma Combined
Earnings (Loss) Per Common Share:
For the quarter ended June 30, 2015
Basic	$	0.31	$	(0.21	)	$	0.21
Fully diluted	$	0.30	$	(0.21	)	$	0.20
Earnings (Loss) Per Common Share:
For the year ended December 31, 2014
Basic	$	2.53	$	0.74		$	2.57
Fully diluted	$	2.48	$	0.74		$	2.52
Book Value Per Common Share:
June 30, 2015	$	11.33	$	5.01		$	11.58
Tangible Book Value Per Common Share:
June 30, 2015	$	11.14	$	5.01		$	11.08