Market Overview

Old Line Bancshares, Inc. Reports $2.2 Million in Net Income Available to Common Stockholders for the Quarter Ended March 31, 2016

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BOWIE, Md., April 25, 2016 (GLOBE NEWSWIRE) -- Old Line Bancshares, Inc. ("Company") (NASDAQ: OLBK), the parent company of Old Line Bank, reports that net income available to common stockholders decreased $603 thousand, or 21.90%, to $2.2 million for the three months ended March 31, 2016, compared to net income of $2.8 million for the three months ended March 31, 2015.  Earnings were $0.20 per basic and diluted common share for the three months ended March 31, 2016 and $0.25 per basic and diluted common share for the same period in 2015.  The decrease in net income is primarily the result of a $1.9 million increase in non-interest expenses and a $217 thousand increase in the provision for loan losses, offsetting increases of $1.2 million in net interest income and $152 thousand in non-interest income.  Net income included $359 thousand in merger-related expenses (or $0.03 per basic and $0.02 per diluted common share) in connection with the Company's acquisition of Regal Bancorp, Inc. ("Regal"), the parent company of Regal Bank & Trust ("Regal Bank"), in December 2015.  Excluding the merger-related expenses, which is a non-GAAP financial measure; earnings were $0.23 per basic and $0.22 per diluted share for the three months ending March 31, 2016.

Total assets at March 31, 2016 increased by $12.9 million compared to December 31, 2015.  Total net loans held-for-investment increased $28.8 million, or 2.51% (10.04% annualized), during the three month period ended March 31, 2016. 

James W. Cornelsen, President and Chief Executive Officer of Old Line Bancshares, Inc. stated: "We look forward to a great 2016 and are confident that our exceptionally strong organic loan growth should allow us to continue to build our franchise and enhance our profitability.  We are pleased that we are expanding our presence in the Montgomery County, Maryland market with the scheduled opening of a second branch located in the Rockville Town Center in the second quarter of 2016.  With the dedication and teamwork of our staff, the core processing system for Regal Bank was successfully merged into Old Line Bank's core processing system in February 2016.  We believe that the superior level of customer service we offer is widely recognized in our marketplace and our talented staff continues to strive to expand our footprint and increase our customer base.  We are pleased to report that our total net loans held for investment increased $28.8 million in the first quarter.  We will continue to build on our solid foundation to better serve our customers, while steadily investing in new growth opportunities to enhance our profitability."

1st QUARTER HIGHLIGHTS:

  • Net loans held-for-investment increased $28.8 million, or 2.51%, during the three months ended March 31, 2016, to $1.2 billion at March 31, 2016, compared to $1.1 billion at December 31, 2015, primarily as a result of organic growth within our market area.  Average gross loans increased $85.1 million, or 7.83%, to $1.2 billion for the three month period ending March 31, 2016 compared to $1.1 billion for the three month period ended December 31, 2015. Average gross loans increased $217.9 million, or 22.82%, compared to $955 million for the three month period ended March 31, 2015.  The growth for the first quarter this year as compared to the same quarter last year includes approximately $91.0 million in loans acquired in the Regal merger.
  • Total assets increased $12.9 million, 0.86%, since December 31, 2015.
  • Net income decreased 21.90% to $2.2 million, or $0.20 per basic and diluted share, for the three month period ending March 31, 2016, from net income of $2.8 million, or $0.25 per basic and diluted share, for the first quarter of 2015. 
  • The net interest margin was 3.85% compared to 4.32% for the same period in 2015.  Total yield on interest earning assets decreased to 4.30% for the three months ending March 31, 2016, compared to 4.70% for the same three month period last year.  
  • The first quarter Return on Average Assets (ROAA) and Return on Average Equity (ROAE) were 0.57% and 6.01%, respectively, compared to ROAA and ROAE of 0.89% and 8.27%, respectively, for the first quarter of 2015.
  • The first quarter of 2016 ended with a book value of $13.52 per common share and a tangible book value of $12.23 per common share compared to $13.16 and $12.02, respectively, at December 31 2015.
  • We maintained liquidity and by all regulatory measures remained "well capitalized."

Total assets at March 31, 2016 increased $12.9 million from December 31, 2015 primarily due to an increase of $28.8 million in loans held-for-investment, offsetting decreases of $8.1 million in cash and cash equivalents, $3.9 million in our investment portfolio and $4.0 million in our loans held for sale.

Deposits decreased $2.3 million for the three months ended March 31, 2016 compared to December 31, 2015.  Non-interest bearing deposits increased $248 thousand, partially offsetting a decrease in our interest bearing deposits of $2.6 million. 

Average interest earning assets for the three month period ending March 31, 2016 increased $251.8 million compared to the same period of 2015.  The average yield on such assets was 4.30% for the three months ending March 31, 2016 compared to 4.70% for the comparable 2015 period.  The decrease on the yield on interest earning assets is the result of lower levels of accretion on acquired loans due to a lower amount of early payoffs on acquired loans with credit marks for the three months ending March 31, 2016 as compared to the same three month period in 2015.  Re-pricing in the loan portfolio and lower yields on new loans also caused the average loan yield to decline.

Average interest bearing liabilities for the three month period ending March 31, 2016 increased $192.4 million compared to the same three month period of 2015.  The average rate paid on such liabilities increased to 0.60% for the three months ending March 31, 2016 compared to 0.50% for the comparable 2015 period, primarily due to higher rates paid on our borrowings, which includes the interest paid on our trust preferred securities and, to a lesser extent, higher rates on the deposits acquired in the Regal merger. 

The net interest margin for the three months ended March 31, 2016 decreased to 3.85% from 4.32% for the three months ending March 31, 2015.  Among other things, the net effect of fair value accretion/amortization on acquired loans affects the net interest margin and net interest income.  The net interest margin in 2016 also was affected by a lower amount of accretion on acquired loans due to a lower amount of early payoffs on acquired loans with credit marks for the three months ending March 31, 2016 as compared to the same three month period in 2015.  The fair value accretion/amortization is recorded on pay downs recognized during the period, which contributed to a six basis point increase for the three months ended March 31, 2016, as compared to a 21 basis point increase for the three months ending March 31, 2015.  Also, our average interest bearing liabilities and the rate paid on such liabilities increased for the three month period ending March 31, 2016, compared to the same three months last year.  The amount of the accretion on such deposits during the three months ended December 31, 2015 increased by two basis points as compared to the same three month period of 2015.

Net interest income increased $1.2 million, or 10.04%, for the three month period ending March 31, 2016 compared to the same period in 2015 primarily due to increases in the interest recognized on loans offsetting the increase in interest expense.  Loan interest income increased for the three month period ending March 31, 2016 due to organic growth as well as the loans we acquired in the Regal acquisition.  Interest expense increased primarily due to increases in our deposits both from organic growth and the deposits we acquired in the Regal acquisition as well as an increase in borrowings.

Non-interest income increased $152 thousand, or 8.28%, for the three month period ending March 31, 2016 compared to the same period of 2015 primarily as a result of increases of $103 thousand in other fees and commissions, and $34 thousand in earnings on bank owned life insurance, offsetting the lack of any gain on disposal of assets compared to a $20 thousand gain during the comparable 2015 period.  The increase in other fees and commissions is primarily related to a one-time incentive fee received for our debit card program.  The increase in earnings on bank owned life insurance is due to the bank owned life insurance we acquired with the Regal acquisition.

Non-interest expenses increased $1.9 million, or 22.24%, for the three month period ending March 31, 2016 compared to the same period of 2015 primarily as a result of increases in salaries and benefits, occupancy and equipment, and merger and integration expenses, partially offset by a decrease in the loss on other real estate owned properties.  Salaries and benefits increased $1.2 million primarily as a result of additional staff due to our acquisition of Regal Bank and the additional staff for our new Rockville location that opened in November 2015.  Occupancy and equipment increased $325 thousand as a result of the addition of the former Regal bank branches and the addition of our new Rockville branch.  Gain on the sale of other real estate owned was $4 thousand for a property that sold compared to net losses of $135 thousand on the sale of three other real estate properties during the three months ended March 31, 2015. Merger and integration expenses include approximately $140 thousand in severance payments associated with merger-related staff reductions. 

The provision for loan losses increased $217 thousand for the three month period ending March 31, 2016 compared to the same period last year due to the increase in our loan held-for-investment portfolio and an increase in our reserves on specific loans.

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 23 branches located in its primary market area of suburban Maryland (Washington, D.C. suburbs, Southern Maryland and Baltimore suburbs) counties of Anne Arundel, Baltimore, Calvert, Carroll, Charles, Montgomery, Prince George's and St. Mary's. It also targets customers throughout the greater Washington, D.C. and Baltimore metropolitan areas. 

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures.  The Company's management uses non-GAAP financial measures, including: (i) net operating income; (ii) net operating income available to common stockholders; (iii) earnings per basic share; (iv) earnings per diluted share; (v) operating non-interest expense; (vi) operating efficiency ratio; (vii) operating non-interest expense as a percentage of average assets; (viii) return on average assets; (ix) return on average common equity.  Net income excludes merger-related expenses, net of tax.  Operating non-interest expense excludes merger related expense, net of tax.  The operating efficiency ratio excludes merger related expenses.  Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company and provide meaningful comparison to its peers.  Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company.  Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.

The statements in this press release that are not historical facts, in particular the statements with respect to the opening of Old Line Bank's Rockville Town Center branch and enhanced profitability, 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, deterioration in economic conditions in our target markets or nationally or a return to recessionary conditions,  the actions of our competitors and our ability to successfully compete, in particular in new market areas, and changes in regulatory requirements and/or restrictive banking legislation that may adversely affect our ability to collect on outstanding loans or otherwise negatively impact our business.  Forward-looking statements speak only as of the date they are made.  Old Line Bancshares, Inc. undertakes no obligation to 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 
      
 March 31,December 31,September 30,June 30,March 31,
 20162015 (1)201520152015
 (Unaudited) (Unaudited)(Unaudited)(Unaudited)
 Cash and due from banks $  34,108,645 $  40,239,384 $  29,107,355 $  40,494,305 $  37,061,793 
 Interest bearing accounts    1,150,474    1,135,263    1,147,181    1,034,085    1,080,570 
 Federal funds sold    325,606    2,326,045    362,726    331,178    624,888 
Total cash and cash equivalents    35,584,725    43,700,692    30,617,262    41,859,568    38,767,251 
 Investment securities available for sale    190,749,087    194,705,675    151,522,391    151,179,573    158,380,719 
 Loans held for sale    4,148,506    8,112,488    5,264,444    6,361,652    8,692,297 
 Loans held for invesment, less allowance for loan losses of $5,705,857                
  and $4,909,818 for March 31, 2016 and December 31, 2015.    1,175,828,165    1,147,034,715    1,040,227,945    1,008,618,046    963,706,538 
 Equity securities at cost    5,710,845    4,942,346    3,671,895    3,565,596    3,353,096 
 Premises and equipment    35,995,176    36,174,978    33,948,846    33,786,623    33,874,131 
 Accrued interest receivable    3,655,444    3,814,546    3,223,748    3,341,570    3,172,615 
 Deferred income taxes    12,828,069    13,820,679    12,734,261    13,108,799    12,506,347 
 Current income taxes receivable    -     -     -     1,198,299    1,312,872 
 Bank owned life insurance    36,843,873    36,606,105    32,071,875    31,856,947    31,643,001 
 Other real estate owned    2,698,344    2,472,044    1,948,625    1,215,690    1,600,015 
 Goodwill    9,786,357    9,786,357    7,793,665    7,793,665    7,793,665 
 Core deposit intangible    4,124,985    4,351,226    3,822,953    4,016,913    4,210,679 
 Other assets    5,062,691    4,567,038    4,530,443    4,127,881    6,087,688 
Total assets $  1,523,016,267 $  1,510,088,889 $  1,331,378,353 $  1,312,030,822 $  1,275,100,914 
                
 Deposits                
Non-interest bearing $  328,797,753 $  328,549,405 $  279,339,255 $  275,953,182 $  269,733,047 
Interest bearing    904,751,898    907,330,561    811,186,492    808,460,674    781,718,574 
Total deposits    1,233,549,651    1,235,879,966    1,090,525,747    1,084,413,856    1,051,451,621 
 Short term borrowings    118,571,030    107,557,246    85,695,507    76,722,442    71,236,281 
 Long term borrowings    9,561,842    9,593,318    5,903,665    5,931,298    5,958,485 
 Accrued interest payable    448,677    416,686    357,691    322,926    284,444 
 Supplemental executive retirement plan    5,405,763    5,336,509    5,276,167    5,222,669    5,162,732 
 Income taxes payable    4,721,336    3,615,677    379,247    -     -  
 Other liabilities    4,473,968    3,700,598    4,967,326    3,457,441    3,420,900 
Total liabilities    1,376,732,267    1,366,100,000    1,193,105,350    1,176,070,632    1,137,514,463 
                
 Stockholders' equity                
  Common stock    108,026    108,026    105,131    105,745    107,551 
  Additional paid-in capital    105,408,038    105,293,606    100,614,804    101,500,434    104,313,092 
  Retained earnings    39,793,541    38,290,876    36,935,945    34,353,501    32,281,404 
  Accumulated other comprehensive income (loss)    717,881    38,200    359,840    (253,879)   630,791 
 Total Old Line Bancshares, Inc. stockholders' equity    146,027,486    143,730,708    138,015,720    135,705,801    137,332,838 
  Non-controlling interest    256,514    258,181    257,283    254,389    253,613 
 Total stockholders' equity    146,284,000    143,988,889    138,273,003    135,960,190    137,586,451 
 Total liabilities and stockholders' equity $  1,523,016,267 $  1,510,088,889 $  1,331,378,353 $  1,312,030,822 $  1,275,100,914 
 Shares of basic common stock outstanding    10,802,560    10,802,560    10,513,025    10,574,439    10,755,017 
                
 (1) Financial information at December 31, 2015 has been derived from audited financial statements. 

 

Old Line Bancshares, Inc. & Subsidiaries
Consolidated Statements of Income
      
 Three MonthsThree MonthsThree MonthsThree MonthsThree Months
 EndedEndedEndedEndedEnded
 March 31,December 31,September 30,June 30,March 31,
  2016 2015 (1) 2015  2015  2015 
 (Unaudited) (Unaudited)(Unaudited)(Unaudited)
Interest income               
  Loans, including fees$13,057,180 $  12,646,217 $  12,202,174 $  11,516,860 $  11,621,493 
  Investment securities and other   1,101,146    977,533    805,172    835,594    886,084 
  Total interest income 14,158,326    13,623,750    13,007,346    12,352,454    12,507,577 
Interest expense               
  Deposits 1,270,421    1,196,381    1,118,092    1,021,560    910,957 
  Borrowed funds   275,659    181,876    141,009    159,707    134,716 
  Total interest expense   1,546,080    1,378,257    1,259,101    1,181,267    1,045,673 
  Net interest income   12,612,246    12,245,493    11,748,245    11,171,187    11,461,904 
Provision for loan losses   778,611    400,000    263,595    85,658    561,731 
  Net interest income after provision for loan losses   11,833,635    11,845,493    11,484,650    11,085,529    10,900,173 
Non-interest income               
  Service charges on deposit accounts   411,337    430,964    442,225    441,382    415,202 
  Gain on sales or calls of investment securities   76,998    -     604    3,924    60,694 
  Earnings on bank owned life insurance   282,186    260,898    250,950    249,421    248,384 
  Gains (losses) on disposal of assets   -     (5,847)   -     -     19,975 
  Gain on sale of loans   377,138    474,941    457,613    484,635    354,650 
  Other fees and commissions   835,994    432,810    692,106    325,028    733,004 
  Total non-interest income   1,983,653    1,593,766    1,843,498    1,504,390    1,831,909 
Non-interest expense               
  Salaries & employee benefits   5,376,552    4,319,029    4,407,726    4,331,572    4,217,370 
  Occupancy & Equipment   1,724,553    1,487,028    1,478,740    1,338,660    1,399,877 
  Data processing   397,792    361,991    350,941    367,190    352,060 
  Merger and integration   359,481    1,420,570    -     -     -  
  Core deposit amortization   226,241    194,507    193,960    193,766    210,117 
  (Gains)losses on sales of other real estate owned   (4,208)   20,502    (114,709)   9,169    134,754 
  OREO expense   154,966    75,824    158,983    75,552    120,201 
  Other operating   2,389,142    2,270,861    2,132,067    2,477,041    2,257,235 
  Total non-interest expense   10,624,519    10,150,312    8,607,708    8,792,950    8,691,614 
                
Income before income taxes   3,192,769    3,288,947    4,720,440    3,796,969    4,040,468 
  Income tax expense   1,043,366    1,286,496    1,605,586    1,195,273    1,295,035 
Net income    2,149,403    2,002,451    3,114,854    2,601,696    2,745,433 
  Less: Net income (loss) attributable to the noncontrolling interest   (1,667)   898    2,894    776    (8,720)
Net income available to common stockholders$  2,151,070 $  2,001,553 $  3,111,960 $  2,600,920 $  2,754,153 
Earnings per basic share$  0.20 $  0.19 $  0.30 $  0.25 $  0.25 
Earnings per diluted share$  0.20 $  0.19 $  0.29 $  0.24 $  0.25 
Adjusted per basic share$  0.23 $  0.30 $  -  $  -  $  -  
Adjusted per diluted share$  0.22 $  0.30 $  -  $  -  $  -  
Dividend per common share$  0.06 $  0.06 $  0.05 $  0.05 $  0.05 
Average number of basic shares   10,802,560    10,604,667    10,544,357    10,617,225    10,807,366 
Average number of dilutive shares   11,022,469    10,760,832    10,685,306    10,759,628    10,899,030 
                
(1) Financial information as of December 31, 2015 has been derived from audited financial statements. 


RECONCILIATION OF AND PRESENTATION OF NON-GAAP FINANCIAL MEASURES

(1) As the magnitude of the merger expenses distorts the operational results of the Company, we present in the GAAP reconciliation below and in the accompanying text certain performance ratios excluding the effect of the merger expenses during the three month period ended March 31, 2016.  We believe this information is important to enable shareholders and other interested parties to assess the core operational performance of the Company.

         
  Three Months  Twelve Months 
  ending March 31,   ending December  
Reconciliation of Non-GAAP measures (Unaudited) 2016  31, 2015 
  Net Interest  Net Interest 
  Income  Income 
Net Income (GAAP) $  2,149,403  $  10,464,434 
Merger-related expenses, net of tax    306,003     1,200,825 
Operating Net Income (non-GAAP) $  2,455,406  $  11,665,259 
         
Net income available to common shareholders$  2,151,070  $  10,468,586 
Merger-related expenses, net of tax    306,003     1,200,825 
Operating earnings $  2,457,073  $  11,669,411 
         
         
Earnings per weighted average common shares, basic (GAAP)$0.20  $0.98 
Merger-related expenses, net of tax  0.03   0.11 
Operating earnings per weighted average common share basic (non GAAP) $0.23  $1.09 
         
         
Earnings per weighted average common shares, diluted (GAAP)$0.20  $0.97 
Merger-related expenses, net of tax  0.02   0.11 
Operating earnings per weighted average common share basic (non-GAAP)$0.22  $1.08 
         
Summary Operating Results (non-GAAP)       
Noninterest expense (GAAP) $10,624,519  $36,275,682 
Merger-related expenses, net of tax  306,003   1,200,825 
Operating noninterest expense (non-GAAP) 10,318,516  $35,074,857 
         
Operating efficiency ratio (non-GAAP)  70.33%  65.64%
         
Operating noninterest expense as a % of average assets 2.71%  2.65%
         
Return on average assets        
Net income $  2,149,403  $  10,464,434 
Merger-related expenses, net of tax    306,003     1,200,825 
Operating net income $  2,455,406  $  11,665,259 
         
Adjusted return on average assets  0.66%  0.88%
         
Return on average common equity        
Net income available to common shareholders$2,151,070  $10,468,586 
Merger-related expenses, net of tax  306,003   1,200,825 
Operating earnings (non-GAAP) $2,457,073  $11,669,411 
         
Adjusted return on average common equity (non-GAAP)  7.01%  8.40%
         

 

Old Line Bancshares, Inc. & Subsidiaries 
Average Balances, Interest and Yields 
                
  3/31/2016 12/31/2015  9/30/2015  6/30/2015  3/31/2015  
  AverageYield/Average Yield/ Average Yield/ Average Yield/Average Yield/
  BalanceRateBalance RateBalance RateBalance RateBalance Rate
Assets:               
Int. Bearing Deposits  $  2,538,719  0.47%$  2,163,496   0.26%$  1,754,437   0.05%$  914,076   0.08%$  593,602   0.12%
Investment Securities (2)    197,036,394  2.71%   182,660,126   2.65%   154,931,599   2.56%   161,858,721   2.56%   164,560,281   2.70%
Loans    1,172,758,851  4.56%   1,087,653,696   4.70%   1,036,066,492   4.76%   1,002,896,056   4.70%   954,873,037   5.02%
Allowance for Loan Losses    (5,050,728)    (3,505,864)     (4,567,326)     (4,576,511)     (4,498,086)  
  Total Loans Net of allowance    1,167,708,123  4.58%   1,084,147,832   4.71%   1,031,499,166   4.78%   998,319,545   4.72%   950,374,951   5.04%
Total interest-earning assets    1,367,283,236  4.30%   1,268,971,454   4.41%   1,188,185,202   4.49%   1,161,092,342   4.42%   1,115,528,834   4.70%
Noninterest bearing cash    43,812,578     42,032,492      39,141,171      37,463,216      34,422,919   
Other Assets    110,530,441     103,829,394      99,737,905      99,548,767      102,782,917   
  Total Assets  $  1,521,626,255  $  1,414,833,340   $  1,327,064,278   $  1,298,104,325   $  1,252,734,670   
                
Liabilities and Stockholders' Equity               
                
Interest-bearing Deposits $  908,510,119  0.56%$  841,394,142   0.56%$  813,731,631   0.55%$  765,327,795   0.54%$  772,838,785   0.48%
Borrowed Funds    129,440,961  0.86%   128,656,699   0.56%   87,448,890   0.64%   117,595,112   0.54%   72,721,100   0.75%
Total interest-bearing liabilities    1,037,951,080  0.60%   970,050,841   0.56%   901,180,521   0.55%   882,922,907   0.54%   845,559,885   0.50%
Noninterest bearing deposits    326,249,639     293,242,708      278,650,167      269,427,296      262,926,103   
     1,364,200,719     1,263,293,549      1,179,830,688      1,152,350,203      1,108,485,988   
                
Other Liabilities    13,130,368     9,526,486      8,422,924      7,866,395      9,009,800   
Noncontrolling Interest    256,330     256,218      256,636      252,293      258,240   
Stockholder's Equity    144,038,838     141,757,087      138,554,030      137,635,434      134,980,642   
  Total Liabilities and Stockholder's Equity $  1,521,626,255  $  1,414,833,340   $  1,327,064,278   $  1,298,104,325   $  1,252,734,670   
                
Net interest spread   3.70%   3.85%   3.93%   3.88%   4.20%
                                    
Net interest income and Net interest margin(1) $  13,077,828  3.85%$  12,731,170   3.98%$  12,184,339   4.07%$  11,602,656   4.01%$  11,891,497   4.32%
                                    

(1) Interest revenue is presented on a fully taxable equivalent (FTE) basis.  The FTE basis adjusts for the tax favored status of these types of assets.  Management believes providing this information on a FTE basis provides investors with a more accurate picture of our net interest spread and net interest income and we believe it to be the preferred industry measurement of these calculations.  See "Reconciliation of Non-GAAP Measures."

(2) Available for sale investment securities are presented at amortized cost.

The accretion of the fair value adjustments resulted in a positive impact in the yield on loans for the three months ending March 31, 2016 and 2015.    Fair value accretion for the current quarter and prior four quarter are as follows: 

          
 3/31/201612/31/2015  9/30/2015 6/30/2015 3/31/2015 
 Fair Value % Impact on Fair Value% Impact on Fair Value % Impact on Fair Value % Impact on Fair Value % Impact on 
 Accretion Net Interest AccretionNet Interest Accretion Net Interest Accretion Net Interest Accretion Net Interest 
 Dollars Margin DollarsMargin Dollars Margin Dollars Margin Dollars Margin 
Commercial loans (1)$  27,404    0.01%$  (2,772)   (0.00)$  18,940    0.01%$  (3,114)    (0.00)%$  8,690    0.00%
Mortgage loans (1)   179,550    0.05    399,729    0.13     514,073    0.17    35,386     0.01     589,266    0.21 
Consumer loans   11,553    0.00    3,486    0.00     3,771    0.00    4,298     0.00     11,390    0.00 
Interest bearing deposits   92,833    0.03    38,091    0.01     38,091    0.01    37,677     0.01     37,263    0.01 
Total Fair Value Accretion (Amortization)$  311,340    0.09%$  438,534    0.14  %$  574,875    0.19%$  74,247     0.02 %$  646,609    0.22%
                                  

(1) Negative accretion on commercial and mortgage loans is due to the early payoff of loans which caused a reduction in fair value income on acquired loan portfolio.

Below is a reconciliation of the fully tax equivalent adjustments and the GAAP basis information presented in this report:

         
 3/31/201612/31/20159/30/2015 6/30/2015 3/31/2015 
 Net Interest   Net Interest   Net Interest   Net Interest   Net Interest   
 Income Yield Income Yield Income Yield Income Yield Income Yield 
GAAP net interest income$  12,612,246    3.71%$  12,245,493    3.83%$  11,748,245    3.93%$  11,171,187    3.86%$  11,461,904    4.17
Tax equivalent adjustment                              
   Federal funds sold   5    0.00   -    -    -     -    1    0.00    1    0.00 
   Investment securities   226,861    0.07    243,378    0.08    193,491    0.06    195,785    0.07    200,498    0.07 
   Loans   238,716    0.07    242,299    0.07    242,602    0.08    235,683    0.08    229,094    0.08 
Total tax equivalent adjustment   465,582    0.14    485,677    0.15    436,093    0.14    431,469    0.15    429,593    0.15 
Tax equivalent interest yield$  13,077,828    3.85%$  12,731,170    3.98%$  12,184,338    4.07%$  11,602,656    4.01%$  11,891,497    4.32

 

Old Line Bancshares, Inc. & Subsidiaries
Selected Loan Information
(Dollars in thousands)
 March 31,December 31,September 30,June 30,March 31,
 20162015201520152015
Acquired Loans(1)     
Period End Loan Balance$  229,026 $  237,061 $  152,004 $  164,300 $  171,527 
Accruing 225,957  235,816  150,702  161,495  165,956 
Non-accrual(2)   3,069    1,245    1,302    2,546    2,518 
Accruing 30-89 days past due   2,127    6,132    603    2,102    3,053 
Accruing 90 or more days past due   902    1    214    -     -  
Otther real estate owned   2,273    2,047    1,524    741    1,125 
Net charge offs (recoveries)   2    (39)   225    320    (16)
                
Legacy Loans(3)               
Period End Loan Balance$  946,803 $  913,609 $  891,407 $  847,499 $  795,532 
Deferred Costs   1,168    1,274    1,270    1,255    1,283 
Accruing 951,197  907,915  889,364  845,391  793,576 
Non-accrual   4,292    4,420    773    853    1,105 
Accruing 30-89 days past due   4,529    994    2,630    1,199    851 
Accruing 90 or more days past due   -     -     203    -     -  
Other real estate owned   425    425    425    475    475 
Net charge offs (recoveries)   15    (18)   20    (34)   224 
                
Allowance for loan losses as % of held for investment loans 0.48% 0.43% 0.43% 0.44% 0.48%
Allowance for loan losses as % of legacy held for investment loans 0.60% 0.54% 0.50% 0.52% 0.59%
Allowance for loan losses as % of acquired held for investment loans 2.49% 2.07% 2.93% 2.70% 2.60%
Total non-performing loans as a % of held for investment loans 0.85% 0.71% 0.46% 0.49% 0.37%
Total non-performing assets as a % of total assets 0.78% 0.60% 0.36% 0.38% 0.44%
                

(1) Acquired loans represent all loans acquired on April 1, 2011 from MB&T on May 10, 2013 from WSB and on December 4, 2015 for Regal.  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.  Until the December 31, 2013 quarter, we recognized interest income on these loans through the accretion of the difference between the carrying value of these loans and their expected cash flows.  In the fourth quarter of 2013, we are no longer recording interest on these loans that were not purchased as credit impaired. 
(3) Legacy loans represent total loans excluding loans acquired on April 1, 2011, May 10, 2013 and December 4, 2015.

 

OLD LINE BANCSHARES, INC. CONTACT: ELISE HUBBARD CHIEF FINANCIAL OFFICER (301) 430-2560
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