Market Overview

Old Line Bancshares, Inc. Reports $5.8 Million in Net Income Available to Common Stockholders, an Increase of 70.33 Percent for the Nine Months Ended September 30, 2012

Share:

3rd QUARTER 2012 AND YEAR TO DATE HIGHLIGHTS

  • Net income available to common stockholders of $2.0 million or $0.30 per basic share for the quarter increased 18.79% from the $1.7 million or $0.25 per basic share reported for the third quarter of 2011.
  • Net income available to common stockholders of $5.8 million or $0.85 per basic share for the nine month period increased 70.33% from the $3.4 million or $0.56 per share reported for the nine months ended September 30, 2011.
  • The 2012 third quarter Return on Average Assets (ROAA) and Return on Average Equity (ROAE) were 0.93% and 11.83%, respectively.
  • For the nine months ended September 30, 2012, the ROAA and ROAE were 0.93% and 11.67%, respectively.
  • Non-performing assets were 1.34% of total assets at September 30, 2012.
  • The ratio of the allowance for loan losses as a percent of gross loans was 0.78% at September 30, 2012 compared to 0.69% at December 31, 2011.
  • The net interest margin was 4.72% for the third quarter and 4.69% for the nine month period in 2012.
  • On September 10, 2012, we announced that we had executed a merger agreement that provided for the acquisition of WSB Holdings, Inc.

BOWIE, Md., Oct. 29, 2012 (GLOBE NEWSWIRE) -- James W. Cornelsen, President & Chief Executive Officer of Old Line Bancshares, Inc. (Nasdaq: OLBK), the parent company of Old Line Bank, reported that net income available to common stockholders increased $2.4 million to $5.8 million for the nine months ended September 30, 2012, compared with $3.4 million for the nine months ended September 30, 2011. Earnings were $0.85 and $0.84 per basic and diluted common share for the nine months ended September 30, 2012 and $0.56 per basic and diluted common share for the same period in 2011. The 70.33% increase in net income available to common stockholders was primarily the result of a $5.4 million increase in net interest income. This increase derived from the $165.3 million or 29.16% growth in average interest earning assets and a modest increase in the net interest margin from 4.66% for the period ending September 30, 2011 compared to 4.69% for the period ending September 30, 2012, while at the same time total interest expense remained stable, increasing only $48,055 for the nine months ended September 30, 2012 compared to the same period in 2011. The increase in average interest earning assets was the result of a $125.1 million increase in average gross loans and a $51.5 million increase in average investments. The primary cause of this growth was the acquisition of Maryland Bankcorp, Inc. on April 1, 2011. This growth coupled with an approximately $786,000 increase in the accretion of fair value adjustments that were recorded in conjunction with the merger, were the predominant causes of the increase in net interest income. Non-interest revenue also increased $1.0 million during the nine month period as a result of the acquisition, a $736,728 increase in gains on sales of investment securities, and a $62,124 increase in gains on sales of other real estate owned. These improvements were partially offset by a $2.8 million increase in non-interest expense and a $125,000 increase in the provision for loan losses. 

For the three month period ended September 30, 2012, net income available to common stockholders was $2.0 million or $0.30 per basic common share and $0.29 per diluted common share. This was $320,802 or 18.79% higher than the same period in 2011. During the three month period ended September 30, 2012, net interest income increased $192,202 or 2.30% primarily as a result of a $69.0 million increase in average gross loans outstanding. The $69.0 million in average gross loan growth was a result of our business development efforts, expanded market area and increased name recognition. Compared to the same period in 2011, non-interest revenue decreased $175,699 primarily due to a $219,199 decline in earnings on bank owned life insurance, a $64,597 decline in service charges on deposit accounts and because we recognized losses totaling $48,509 on the sales of other real estate owned compared to gains of $45,595 in 2011. This was partially offset by an increase of $217,259 in gains on sales or calls of investment securities for the three month period ended September 30, 2012 compared to the same period in 2011. Salaries and employee benefits, data processing and other operating expenses decreased primarily because of our efforts to continue to manage operating cost.

"We are extremely pleased to report a solid financial performance. Since the acquisition of Maryland Bankcorp, we have made significant progress in disposing of troubled assets, reducing expenses, and maintaining and growing our loan and deposit base. The acquisition of Maryland Bankcorp continues to positively enhance our operating performance. It is a testament to the quality of the Old Line Bank team that we were able to accomplish this solid financial performance while completing the due diligence of WSB," said Mr. Cornelsen. 

"On September 10, 2012, we announced that we had executed a merger agreement that provided for the acquisition of WSB Holdings, Inc. We plan to complete the merger by the 2nd quarter of 2013. Until completion, we anticipate that merger related expenses may cause earnings to be slightly lower than would otherwise be expected. However, we anticipate the WSB merger will be accretive to earnings within three quarters of closing. This combination will create a $1.2 billion banking institution and will allow us to expand our financial services with the addition of a successful and growing mortgage origination team. We also anticipate that the acquisition and integration of WSB will enhance the liquidity of our stock as well as our overall financial condition and operating performance."

Asset quality continues to remain strong even with the addition of the acquired loan portfolio. Non-performing assets to total assets remained stable and statistically low at 1.34% and the allowance for loan losses as a percent of gross loans increased modestly to 0.78% compared to 0.69% at December 31, 2011. For the three month period ended September 30, 2012, we decreased the provision for loan losses by $425,000 while increasing it $125,000 for the nine month period.  Although the entire loan portfolio's asset quality remained stable, the economy continues to experience flat or minimal growth and there are no indications that this will change significantly in the near term. Ultimately, this could impact our borrowers' financial stability. As a result of our loan growth and the continued stagnation of the economy, we believe it is prudent to continue to increase the allowance for loan losses as a percent of gross loans. Based on our internal analysis, the ratio of non-performing assets, and the satisfactory historical performance of the loan portfolio, management believes the allowance continues to appropriately reflect the inherent risk of loss in our portfolio and the current economic climate.   

Old Line Bancshares, Inc. is the parent company of Old Line Bank, a Maryland chartered commercial bank headquartered in Bowie, Maryland, approximately 10 miles east of Andrews Air Force Base and 20 miles east of Washington, D.C. Old Line Bank has 19 branches located in its primary market area of suburban Maryland (Washington, D.C. suburbs and Southern Maryland) counties of Anne Arundel, Calvert, Charles, Prince George's and St. Mary's. It also targets customers throughout the greater Washington, D.C. metropolitan area. 

The statements in this press release that are not historical facts, in particular the statements with respect to the acquisition and integration of WSB and that this acquisition will enhance stock liquidity as well as our financial condition and operating performance, that merger related costs will cause earnings to be slightly lower than would otherwise be expected, that the merger will be accretive to earnings within three quarters of closing and our ability to complete this acquisition by the second quarter of 2013, expanding our financial services and market and the adequacy of our loan loss allowance constitute "forward-looking statements" as defined by Federal securities laws. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These statements can generally be identified by the use of forward-looking terminology such as "believes," "expects," "intends," "may," "will," "should," "anticipates," "plans" or similar terminology. Actual results could differ materially from those currently anticipated due to a number of factors, including, but not limited to, failure to receive required regulator or stockholder approvals necessary to complete the merger, that the pending stockholder lawsuit related to the merger could delay or prevent the merger, that integrating WSB's business into our own could take longer or be more difficult than anticipated, deterioration in economic conditions or a slower than anticipated recovery in our target markets or nationally, sustained high levels of or further increases in the unemployment rate in our target markets, the actions of our competitors and our ability to successfully compete, in particular in new market areas, and changes in laws impacting our ability to collect on outstanding loans or otherwise negatively impact our business, including regulations implemented pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in July 2010. Forward-looking statements speak only as of the date they are made. Old Line Bancshares, Inc. will not update forward-looking statements to reflect factual assumptions, circumstances or events that have changed after a forward-looking statement was made. For further information regarding risks and uncertainties that could affect forward-looking statements Old Line Bancshares, Inc. may make, please refer to the filings made by Old Line Bancshares, Inc. with the U.S. Securities and Exchange Commission available at www.sec.gov.

 Old Line Bancshares, Inc. & Subsidiaries 
 Consolidated Balance Sheets 
           
  September 30,
2012
June 30,
2012
March 31,
2012
December 31,
2011
September 30,
2011
  (Unaudited) (Unaudited) (Unaudited) (Audited) (Unaudited)
 Cash and due from banks   $ 43,813,588  $ 37,533,354  $ 24,018,472  $ 43,434,375  $ 44,591,494
 Interest bearing accounts   26,137  122,824  1,020,231  119,235  14,157
 Federal funds sold   908,495  508,150  1,094,891  83,114  720,898
 Total cash and cash equivalents   44,748,220  38,164,328  26,133,594  43,636,724  45,326,549
 Investment securities available for sale   180,363,532  168,502,783  163,204,721  161,784,835  158,503,556
 Loans, less allowance for loan losses  573,147,401  573,146,131  552,843,016  539,297,666  515,738,796
 Equity securities at cost   3,828,237  3,865,079  3,994,766  3,946,042  4,051,482
 Premises and equipment   23,883,734  23,763,775  23,651,682  23,215,429  22,748,048
 Accrued interest receivable   2,606,790  2,592,123  2,562,773  2,448,542  2,349,748
 Prepaid income taxes   --   --   27,964  --   162,043
 Deferred income taxes   6,791,483  7,346,728  7,307,974  7,244,029  6,353,633
 Bank owned life insurance   16,757,707  16,644,925  16,530,205  16,416,566  16,298,382
 Prepaid pension   1,030,551  1,030,551  1,030,551  1,030,551  1,315,642
 Other real estate owned   3,231,449  3,490,730  3,919,461  4,004,609  4,126,434
 Goodwill   633,790  633,790  633,790  633,790  141,723
 Core deposit intangible   3,869,054  4,046,636  4,224,218  4,418,892  4,613,568
 Other assets   2,990,530  2,936,820  3,627,066  2,964,626  4,255,685
 Total assets   $ 863,882,478  $ 846,164,399  $ 809,691,781  $ 811,042,301  $ 785,985,289
           
 Deposits           
 Non-interest bearing   $ 185,347,907  $ 186,639,878  $ 169,180,497  $ 170,138,329  $ 176,167,359
 Interest bearing   545,730,571  532,956,475  517,467,161  520,629,456  487,824,952
 Total deposits   731,078,478  719,596,353  686,647,658  690,767,785  663,992,311
 Short term borrowings   44,544,608  41,955,385  40,505,782  38,672,657  32,605,607
 Long term borrowings   6,216,463  6,239,129  6,261,429  6,284,479  16,307,146
 Accrued interest payable   341,494  359,367  370,712  397,211  392,340
 Accrued pension   4,570,725  4,480,261  4,411,462  4,342,664  4,554,285
 Other liabilities   2,757,115  1,853,766  1,582,906  2,080,867  1,867,752
 Total liabilities   789,508,883  774,484,261  739,779,949  742,545,663  719,719,441
           
 Stockholders' equity           
 Common stock   68,308  68,285  68,285  68,177  68,096
 Additional paid-in capital   53,647,456  53,574,827  53,519,196  53,489,075  53,421,825
 Retained earnings   17,087,831  15,332,768  13,576,596  12,093,742  10,399,491
 Accumulated other comprehensive income   3,171,006  2,284,600  2,311,030  2,388,972  1,898,327
 Total Old Line Bancshares, Inc.
 stockholders' equity 
 73,974,601  71,260,480  69,475,107  68,039,966  65,787,739
 Non-controlling interest   398,994  419,658  436,725  456,672  478,109
 Total stockholders' equity   74,373,595  71,680,138  69,911,832  68,496,638  66,265,848
 Total liabilities and
 stockholders' equity 
 $ 863,882,478  $ 846,164,399  $ 809,691,781  $ 811,042,301  $ 785,985,289
 Shares of basic common stock outstanding   6,830,832  6,828,452  6,828,452  6,817,694  6,809,594
 
Old Line Bancshares, Inc. & Subsidiaries
Consolidated Statements of Income
             
  Three Months
Ended
September 30, 2012

Three Months
Ended
June 30, 2012

Three Months
Ended
March 31, 2012

Three Months
Ended
September 30, 2011

Nine Months
Ended
September 30, 2012

Nine Months
Ended
September 30, 2011

  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest revenue            
 Loans, including fees  $ 8,702,142  $ 8,632,296  $ 7,952,835  $ 8,573,052  $ 25,287,273  $ 20,510,217
 Investment securities and other  1,098,431  1,131,401  1,149,451  1,164,052  3,379,284  2,748,721
 Total interest revenue  9,800,573  9,763,697  9,102,286  9,737,104  28,666,557  23,258,938
Interest expense            
 Deposits  1,057,075  1,087,200  1,127,498  1,175,773  3,271,773  3,243,461
 Borrowed funds  206,721  213,111  212,376  216,756  632,208  612,465
 Total interest expense  1,263,796  1,300,311  1,339,874  1,392,529  3,903,981  3,855,926
 Net interest income  8,536,777  8,463,386  7,762,412  8,344,575  24,762,576  19,403,012
Provision for loan losses  375,000  375,000  375,000  800,000  1,125,000  1,000,000
 Net interest income after
 provision for loan losses
 8,161,777  8,088,386  7,387,412  7,544,575  23,637,576  18,403,012
Non-interest revenue            
 Service charges on
 deposit accounts
 315,468  328,142  319,327  380,065  962,937  859,300
 Gain on sales or calls
 of investment securities
 289,511  282,858  277,170  72,252  849,539  112,811
 Other than temporary impairment on
 equity securities
 --   --   --   --   --   (122,500)
 Earnings on bank owned
 life insurance
 137,082  138,496  136,705  356,281  412,283  557,669
 Gains (losses) on sales
 other real estate owned
 (48,509)  191,201  (31,988)  45,595  110,704  48,580
 Other fees and commissions  146,550  215,089  177,599  161,608  539,238  402,152
 Total non-interest revenue  840,102  1,155,786  878,813  1,015,801  2,874,701  1,858,012
Non-interest expense            
 Salaries & employee benefits  3,016,334  3,024,815  2,808,994  3,030,508  8,850,143  7,504,953
 Occupancy & Equipment  933,775  914,576  907,871  916,610  2,756,222  2,233,905
 Data processing  214,187  192,232  224,735  232,530  631,154  595,612
 Merger and integration  49,290  29,166  29,167  77,880  107,624  545,154
 Core deposit premium  177,582  177,582  194,675  194,674  549,839  389,349
 Other operating  1,690,590  1,910,797  1,520,731  1,700,964  5,122,118  3,976,809
 Total non-interest expense  6,081,758  6,249,168  5,686,173  6,153,166  18,017,100  15,245,782
             
Income before income taxes  2,920,121  2,995,004  2,580,052  2,407,210  8,495,177  5,015,242
 Income taxes  912,490  982,759  844,005  737,405  2,739,254  1,729,005
Net income  2,007,631  2,012,245  1,736,047  1,669,805  5,755,923  3,286,237
 Less: Net income (loss)
 attributable to the
 noncontrolling interest

 (20,664)  (17,067)  (19,947)  (37,688)  (57,678)  (126,883)
Net income available to
 common stockholders
 $ 2,028,295  $ 2,029,312  $ 1,755,994  $ 1,707,493  $ 5,813,601  $ 3,413,120
Earnings per basic share  $ 0.30  $ 0.30  $ 0.26  $ 0.25  $ 0.85  $ 0.56
Earnings per diluted share  $ 0.29  $ 0.29  $ 0.26  $ 0.25  $ 0.84  $ 0.56
Dividend per common share  $ 0.04  $ 0.04  $ 0.04  $ 0.03  $ 0.12  $ 0.09
Average number of basic shares  6,829,785  6,828,452  6,820,894  6,809,594  6,826,390  6,024,660
Average number of dilutive
 shares
 6,909,147  6,905,041  6,855,568  6,834,584  6,886,147  6,056,953
 
 Old Line Bancshares, Inc. & Subsidiaries 
 Selected Average Balance Sheet and Loan Information 
             
 Average Balance Sheet
(Dollars in thousands) 
  Three Months Ended Nine
Months
Ended

Nine
Months
Ended

 
  September 30,
2012
June 30,
2012
December 31,
2011
September 30,
2011
September 30,
2012
September 30,
2011
 Average total interest earning assets   $ 752,848  $ 729,382  $ 702,849  $ 674,069  $ 732,230  $ 566,912
 Average total interest bearing liabilities   603,133  570,972  550,177  535,191  580,826  455,799
 Net interest earning assets   $ 149,715  $ 158,410  $ 152,672  $ 138,878  $ 151,404  $ 111,113
 Tax equivalent net interest margin  4.72% 4.84% 4.45% 5.01% 4.69% 4.66%
             
Loan Information
(Dollars in thousands)
         
  September 30,
2012
June 30,
2012
March 31,
2012
December 31,
2011
September 30,
2011
 
Acquired Loans(1)            
Non-accrual(2)  $ 5,079  $ 4,842  $ 4,860  $ 4,583  $ 4,255  
Accruing 30-89 days past due  24  726  2,652  839  955  
Accruing 90 or more days past due  81  940  6  --   1,388  
             
Legacy Loans(3)            
Non-accrual  $ 3,151  $ 1,787  $ 1,787  $ 1,247  $ 1,169  
Accruing 30-89 days past due  2,348  2,799  1,278  745  307  
Accruing 90 or more days past due  2  --   --   34  --   
             
Allowance for loan losses as % of gross loans 0.78% 0.71% 0.68% 0.69% 0.58%  
Allowance for loan losses as % of legacy loans 1.03% 0.96% 0.96% 0.99% 0.88%  
Total non-performing loans as a % of gross loans 2.00% 1.92% 1.90% 1.08% 1.05%  
Total non-performing assets as a % of total assets 1.34% 1.31% 1.31% 1.22% 1.25%  
             
(1) Acquired loans represent all loans acquired on April 1, 2011. We originally recorded these loans at fair value upon acquisition.
(2)  These loans are loans that are considered non-accrual because they are not paying in conformance with the original contractual agreement. At acquisition, we recorded these loans at fair value. As provided for under ASC 310-30, we recognize interest income on these loans through the accretion of the difference between the carrying value of these loans and their expected cash flows.
(3)  Legacy loans represent total loans excluding loans acquired April 1, 2011.
CONTACT: OLD LINE BANCSHARES, INC. CHRISTINE M. RUSH CHIEF FINANCIAL OFFICER (301) 430-2544
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