Author: Will Harris

Ellicott City-based Howard Bancorp earnings beats analyst estimates

ELLICOTT CITY, MD – Howard Bancorp reported first quarter net income for 2017 of $1.6 million or 18 cents per share, beating analyst expectations of 16 cents per share.HB Howard Bancorp

The Ellicott City–based community bank reported net income available to common shareholders had increased 73 percent compared to the same quarter last year, but earnings per share were up only 38 percent.

Chairman and CEO Anne Scully attributed the disparity in EPS and net income growth to a common stock offering, which increased the company’s equity by 1.8 million shares worth $41 million.

Scully stated, “Our capital raise was not about doing anything differently but rather was about ensuring that we have the capital infrastructure in place to support the continued growth we can achieve given our focus on talent retention as well as the talent we attracted during 2016 and early 2017.”

The offering closed on Feb. 1, and included an additional 360,000 shares available to the underwriters for purchase at $15 per share.

After the decision to exercise this option, the total number of shares sold by the company was 2.76 million

Average common shares outstanding increased from 7 million at the end of 2016 to 8.8 million on Mar. 31, 2017, and the company’s total equity increased from $85 million to $126 million over the same time.

The addition of equity increased the company’s leverage ratio to 12.1 percent from 8.4 percent the same time last year.

Scully said that the 73 percent increase in net income was due in part to the growth of the bank’s commercial loan portfolio by an annualized 12 percent.

As a result of the company’s mortgage banking operations, non-interest income increased 56 percent to $4.5 million in the first quarter of 2017 from $2.9 million the same time last year.

The bank’s primary market focus is on providing loans to small and medium size commercial business and high-net-worth individuals, and the bank has 13 branches in the Baltimore area with just over $1 billion in total assets.

Since the company reported fourth quarter earnings on Jan. 21, the stock price has increased nearly 25 percent.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism.

Quality Care Properties CEO Ordan paid $14 million in 2016

BETHESDA, MD — Quality Care Properties Chief Executive Officer Mark S. Ordan was paid $14 million in compensation last year, according to a proxy filed Friday with the Securities and Exchange Commission, after he helped orchestrate the REIT’s spin-off from HCP Inc. in late 2016.Quality Care Properties Maryland healthcare REIT

Ordan began consulting for HCP in August 2016 as the company sought to divest the poorly performing HCR ManorCare portfolio, one of HCP’s main tenants, which had also been accused of defrauding Medicare.

HCP successfully spun off the ManorCare portfolio into a new company called Quality Care Properties, which operates as a publicly traded health care REIT focused on post-acute nursing services and assisted living.

 

The spin-off was also motivated by HCP’s desire to exit the “post-acute” space of health care properties, which then made up 26 percent of the company’s portfolio, in order to focus its revenue stream on private-pay sources.

Post-acute care consists of rehabilitation required after a patient’s stay in an acute-care hospital.

Ordan’s total compensation includes $1.2 million for his consulting work, $9.5 million in stock and options awards and a $3 million “completion bonus” in association with the successful spin-off from California-based HCP.

Prior to his consulting work at HCP, Ordan was CEO at Sunrise Senior Living from 2008 to 2013 and led the restructuring effort and eventual sale of the REIT. He has also been a director at VEREIT, WP Glimcher, and Washington Prime, all commercial REITs.

Greg Need, QCP’s president and chief investment officer, received $9.2 million in compensation in 2016, consisting of $6.5 million in stock and option awards and a $2 million completion bonus.

Need worked alongside Ordan at Sunrise Senior Living as chief investment officer from 2008 to 2013.

Chief Financial Officer and Treasurer C. Marc Richards also worked with Ordan previously as CFO at both Washington Prime and Sunrise Senior Living.

Richards was paid $5.1 million in 2016, with a $1 million bonus and $3.8 in stock and option awards.

According to QCP’s updated employment contracts, in 2017 Ordan, Need and Richards will receive base salaries of $800,000, $575,000 and $400,000 respectively, along with possible cash and equity awards grants as multiples of their salaries.

REITs are required by the SEC to distribute 90 percent of their taxable income to shareholders as dividends.

However, the company has also reserved the right to make future dividend payments that are made up of both dividends and stock in the company, which might concern some investors who are attracted to the strong dividend streams associated with REITs.

In May 2017, QCP announced it entered into a forbearance agreement with HCR ManorCare to defer $7.5 million of rent a month for April, May, and June while requiring HCR to make cash rent payments of $32 million each month.

QCP is also in a good-faith discussions with HCR concerning the long-term restructuring of the master lease terms, and has agreed to provide a temporary credit extension of up to $7 million each month for the same time period.

The QCP’s stock closed down slightly Thursday at $18.82 per share.

This story is from the North Carolina Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

Bethesda-based REIT First Potomac CEO’s compensation tripled in 2016

BETHESDA, MD – First Potomac Realty Trust CEO Robert Milkovich received $3.6 million in total compensation in 2016, up from a total of $978,000 in 2015, according to a filing with the Securities and Exchange Commission.

The CEO’s increase in compensation was driven primarily by a special equity award of 150,000 restricted common shares worth about $1.5 million.

CFO Andrew Blocher and General Counsel Samantha Gallagher each saw their total compensation more than double in 2016, also driven by awards of special equity.  First Potomac Realty Trust Logo

In total compensation, Blocher received $2.2 million in 2016, up from $987,000 in 2015, and Gallagher received $1.9 million, up from $812,000 in 2015.

Total compensation for executives at First Potomac is comprised of base salary, short and long term incentive compensation, and special equity awards.

In the past First Potomac has relied only upon base salary and incentive-based pay to retain executive talent.

In a proxy statement filed with the SEC, the company said that it has not made special equity awards in the past.

The company acknowledges that the significant jump in compensation “may appear outsized with respect to historical practices,” but maintains that the additional pay is necessary in light of increased responsibility.

The executives have had to take on more important roles in the company as leadership and strategic goals have changed dramatically in the past 18 months.

Milkovich was promoted in November 2015 from chief operating officer to the additional role of chief executive officer. He replaced Douglas J. Donatelli, one of the two founding partners, who resigned unexpectedly.

Donatelli had served as the company’s CEO since the company was founded by himself and Nicholas R. Smith in 1997. Smith also resigned from his position as chief investment officer in November 2015.

Donatelli and Smith resigned at a time when the company’s board wanted to implement significant strategic changes. The board sought to de-risk the portfolio, de-lever the balance sheet and maximize asset values.

In 2015 this strategy took the form of a $200 million reduction in underperforming assets, the proceeds from which were used to buy back shares.

The company also justified the special equity awards by the fact that they will vest over a five-year period in one-quarter increments, maximizing the potential for retention and long-term performance.

In 2016, Blocher received 75,000 shares of restricted common stock worth about $750,000, and Gallagher received 65,000 shares worth about $650,000.

All three executives saw their base salaries increase 2.75 percent for 2017.

In the fourth quarter of 2016 the company reported core funds from operations of 27 cents per share, beating the consensus expectation of 26 cents per share.

The company’s stock rose 7 cents to $10.59 in Friday afternoon trading.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

Money manager buys 8.3 percent stake in Radio One

SILVER SPRING, MD – A New York-based money manager has acquired an 8.3 percent stake in broadcasting company Radio One Inc., according to a Friday filing with the Securities and Exchange Commission.

The New York-based investment fund Brigade Capital Management purchased 3,415,721 shares on March 8, out of nearly 41 million outstanding shares.

Radio_one_logo

On that day Radio One’s stock closed at $2.45, and since climbed to a closing price on Friday of $3.20.

Radio One is a broadcasting company founded in 1980 which has holdings in radio, cable television and digital media.

In 2014, the company reported a loss per share of $1.32, which in 2016 shrunk to a loss of only 1 cent per share with revenue over $450 million.

On March 16, the company announced in an 8-k filing with the SEC that it was seeking to refinance the $345 million in borrowings which were scheduled to mature in Dec. 2018.

Brigade Capital Management is a New York-based hedge fund that specializes in credit investment strategies. It has $18 billion of assets spread over five hedge fund vehicles that specialize in certain types of investments.

Radio One’s founder, Cathy Hughes, built the company initially by purchasing small, under-performing radio stations in urban markets and changing the content to better suit an African American audience.

It is the largest African American-owned broadcasting company in the U.S.

Her son, Alfred Liggins III, took over as CEO in 1997 and still maintains the position. As of Dec. 31, 2016, the mother and son collectively own 95 percent of Class A voting shares.

This is a story from the Maryland Business News Wire, a service of the UNC-Chapel Hill School of Media and Journalism

AGNC Investment reports loss, blames presidential election

Screen Shot 2017-02-03 at 9.42.55 PMBETHESDA, MD – Real estate investment trust AGNC Investment Corp. reported a fourth quarter loss in comprehensive net income per share of $1.19 in 2016 but beat Wall Street expectations.

The company also announced it had entered into separate sales agreements with Cantor Fitzgerald & Co. and Wells Fargo Securities LLC and may offer up to $750 million of common stock.

In an 8-k filing with the Securities and Exchange Commission AGNC reported a minus 5.2 percent total economic return for the quarter, and a 7.6 percent decrease in the net book value per share since Sept. 30, 2016.

Essentially all of the company’s $57.7 billion portfolio consists of agency mortgage backed security debts. Agency debts are backed by the Federal government through Fannie Mae and Freddie Mac.

Gary Kain, the company’s president and chief executive officer, attributed the decline to the U.S. presidential election and the resulting volatility in the financial markets.

“The unanticipated outcome of the U.S. presidential election triggered a major repricing in nearly every financial market,” Kain said. “U.S equity prices increased to new highs, and U.S. Treasury prices fell significantly during the quarter.”

AGNC is a mortgage REIT and invests money it has raised by purchasing mortgages on the secondary mortgage market. The company’s profit is roughly based on the spread between short and long term bond interest rates.

Following the U.S. presidential election, the yield for 10-year treasury notes increased by over 100 basis points. According to the company, this increase in yields, along with the Federal Reserve’s decision to raise interest rates, caused the declining net book value per share.

However the 64-cent fourth quarter net spread per common share beat the Zach’s Investment Research consensus estimate of 60 cents. This also excludes 26 cents per share of estimated “catch-up” amortization benefit from changes to project constant prepayment rate estimates.

The company declared a 54-cent dividend for the quarter, bringing total distributions to stockholders since the company’s IPO in 2008 to $35. REITs are required by law to pay out 90 percent of income in dividends, and they typically yield dividends of around 10 percent.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

EagleBank earnings beat estimates

OLNEY, MD – Eagle Bancorp Inc. reported on Wednesday fourth quarter earning rose 15 percent from the same period last year and beat analyst expectations due to strong gains in loan and deposit balEagleBank logoances.

Eagle Bancorp is a holding company for EagleBank, a bank with headquarters in Bethesda but operates in the metropolitan area of Washington D.C.

In an 8-K filing with the Securities and Exchange Commission, the company reported net income per share of 76 cents for the fourth quarter, a 13 percent increase over the same quarter last year. This beat the consensus estimate of 71 cents per share.

Loan balances for the fourth quarter increased 4 percent while deposit balances were up 3 percent.

Ronald D. Paul,  chief executive officer for EagleBank, attributed the company’s performance to a “combination of steady balance sheet growth, revenue growth, solid asset quality, and favorable operating leverage.”

Net income in 2016 was up 16 percent from last year, and total revenue for the year increased 10 percent.

While the bank’s loan portfolio yield increased slightly in the fourth quarter, its net interest margin declined 15 basis points from the third quarter of 2016. Paul attributed most of the decline to higher average liquidity resulting from deposits outpacing loan growth by about $275 million in the fourth quarter.

EagleBank’s stock opened at $62 Thursday morning, a 6 percent increase from Wednesday’s close.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

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