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Old Line Bancshares, Inc. Reports Record Net Income of $6.1 Million, a 52.63% Increase for the Quarter Ended March 31, 2018

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BOWIE, Md., April 17, 2018 (GLOBE NEWSWIRE) -- Old Line Bancshares, Inc. ("Old Line Bancshares" or the "Company") (NASDAQ:OLBK), the parent company of Old Line Bank, reports net income available to common stockholders increased $2.1 million, or 52.63%, to $6.1 million for the three months ended March 31, 2018, compared to $4.0 million for the three month period ended March 31, 2017.  Earnings were $0.48 per basic and diluted common share for the three months ended March 31, 2018, compared to $0.36 per basic and diluted common share for the three months ended March 31, 2017.  The increase in net income for the first quarter of 2018 as compared to the same 2017 period is primarily the result of a $3.5 million increase in net interest income, partially offset by an increase of $1.5 million in non-interest expense.  In addition, the decline in the income tax rate to 25.04% from 34.25% compared to March 31, 2017 resulted in an increase to net income of approximately $745 thousand.

Net interest income increased during the three months ended March 31, 2018 compared to the same period last year primarily as a result of an increase in net loans held for investment, partially offset by an increase in interest expense.  Non-interest expense increased $1.5 million, or 15.31%, for the three month period ended March 31, 2018 compared to the three month period ended March 31, 2017.  Non-interest expense increased primarily due to increases in salaries and benefits and occupancy expense associated with the additional staff and the new branches that we acquired upon our acquisition of DCB Bancshares, Inc. ("DCBB"), the former parent company of Damascus Community Bank ("DCB"), in July 2017. 

Net loans held for investment at March 31, 2018 increased $60.2 million, or 3.55%, compared to December 31, 2017 and $339.5 million, or 23.96%, compared to March 31, 2017.  Total deposits at March 31, 2018 increased by $132.8 million since December 31, 2017, while total assets increased $105.1 million to $2.2 billion at March 31, 2018 from $2.1 billion at December 31, 2017.    

James W. Cornelsen, President and Chief Executive Officer of Old Line Bancshares, stated: "I am excited to report the increase in net income and growth in loans and deposits that we achieved during the first quarter while maintaining our outstanding credit metrics. We were able to grow core loan and deposits consistently with our strategic goals.  Further, during the quarter we received all necessary regulatory and stockholder approvals with respect to, followed by the completion on April 13, 2018 of, the acquisition of Bay Bancorp, Inc.  Core conversion related to the merger is slated for June of this year.  We expect to recognize overhead cost savings within the year and are confident in the future growth this business combination will provide, allowing us to deliver improved financial results.  We are enthusiastic about the expansion into the City of Baltimore and Harford and Howard Counties as well as the additional presence in the Baltimore Metropolitan Area and the value the merger will add to our company."  

1st QUARTER HIGHLIGHTS:

  • Net loans held for investment increased $60.2 million during the three month period ended March 31, 2018 as a result of organic growth.  Average gross loans increased $338.4 million, or 24.47%, to $1.7 billion during the three month period ended March 31, 2018, from $1.4 billion for the three months ended March 31, 2017.  $192.1 million of the increase in average loans is due to the July 2017 acquisition of DCBB and the remaining $146.3 million increase is due to organic loan growth.
  • Nonperforming assets remained consistent at our 10 year historical low of 0.18% of total assets at both March 31, 2018 and December 31, 2017.
  • Total yield on interest earning assets increased to 4.52% for the three months ended March 31, 2018, compared to 4.37% for the same period of 2017. 
  • Return on average assets ("ROAA") and return on average equity ("ROAE") were 1.16% and 11.36%, respectively, for the three months ended March 31, 2018, compared to ROAA and ROAE of 0.93% and 9.63%, respectively, for the three months ended March 31, 2017. 

  • Net income available to common stockholders increased 52.63% to $6.1 million, or $0.48 per basic and diluted share, for the three month period ended March 31, 2018, from $4.0 million, or $0.36 per basic and diluted share, for the first quarter of 2017. 

  • Total assets increased $105.1 million, or 4.99%, since December 31, 2017.
  • Total deposits grew by $132.8 million, or 8.03%, since December 31, 2017.

  • We ended the first quarter of 2018 with a book value of $16.74 per common share and a tangible book value of $14.27 per common share compared to $16.61 and $14.10, respectively, at December 31, 2017.

  • We maintained appropriate levels of liquidity and by all regulatory measures remained "well capitalized."

Total assets at March 31, 2018 increased $105.1 million from December 31, 2017 primarily due to increases of $60.2 million in loans held for investment and $52.1 million in cash and cash equivalents, partially offset by a decrease of $8.0 million in investment securities available for sale.  Deposits increased $132.8 million during the three months ended March 31, 2018, of which $120.3 million is attributable to an increase in our non-interest bearing deposits and the remaining $12.5 million, is attributable to an increase in our interest bearing deposits. Deposits at March 31, 2018 included approximately $99.8 million that one commercial customer deposited on March 29, 2018, following the customer's sale of properties.  The customer has since withdrawn approximately $97.5 million of the $99.8 million deposited on March 29. Excluding this deposit, deposits increased $33.0 million or 2.0% during the three month period ended March 31, 2018.

Average interest earning assets increased $352.7 million for the three month period ended March 31, 2018 compared to the same period of 2017.  The average yield on such assets was 4.52% for the three months ended March 31, 2018 compared to 4.37% for the comparable 2017 period.  The increase in the average yield is primarily the result of higher yields on our investment securities available for sale and on our loans held for investment.  Average interest bearing liabilities increased $215.8 million for the three month period ended March 31, 2018 compared to the same period of 2017.  The average rate paid on such liabilities increased to 1.03% for the three month period ended March 31, 2018 compared to 0.82% for the same period in 2017 due to higher rates paid on both interest bearing deposits and borrowings.

The net interest margin for the three months ended March 31, 2018 increased to 3.76% from 3.74% for the three months ended March 31, 2017.  The net interest margin increased due to an improvement in asset yields in addition to an increase in non-interest bearing deposits as a source of funding.  This increase was partially offset by a reduction in the tax equivalent yield as a result of the tax rate change that was enacted in December 2017 in accordance with the Tax Cut and Jobs Act bill.  The change in the tax rate resulted in a reduction of six basis points in the net interest margin for the three months ended March 31, 2018 as compared to the three month period ended March 31, 2017.
               
Net interest income increased $3.5 million, or 24.87%, for the three month period ended March 31, 2018 compared to the same period of 2017, primarily due to a $4.3 million increase in loan interest income resulting from increases in both the average balance of and yields on loans, partially offset by an increase in interest expense.  The increase in loan interest income consisted of $2.7 million in interest recognized on acquired DCBB loans and an increase of $1.6 million recognized on organic loans as a result of increases in both the average balance and average yields on such loans.  Interest expense increased due to increases in the both the average balance of and average interest rates on our deposits and borrowings. 
               
The provision for loan losses decreased $46 thousand for the three month period ended March 31, 2018 compared to the same period of 2017 due to an improvement in our asset quality, in particular, a decrease in the balance of our special mention loans, and a slight decrease in our reserves on specific loans.

Non-interest income decreased $60 thousand, or 3.22%, for the three month period ended March 31, 2018 compared to the same period of 2017, primarily as a result of decreases of $212 thousand in income on marketable loans and $98 thousand in gains on disposal of assets, partially offset by increases of $164 thousand in service charges on deposit accounts and $91 thousand in other fees and commissions.  The decrease in income on marketable loans is a result of a decrease in the volume of residential mortgage loans sold in the secondary market compared to the same period of 2017.  The increase in service charges on deposits accounts is the result of increased income on bank debit cards due to the increased deposit base primarily as a result of the DCBB merger.  The increase in other fees and commissions is primarily the result of recoveries of previously charged-off acquired loans and an increase in other loan fees. 

Non-interest expense increased $1.5 million, or 15.31%, for the three month period ended March 31, 2018 compared to the same period of 2017, primarily as a result of increases in salaries and benefits, occupancy and equipment, data processing, and OREO expenses.  Salaries and benefits increased $618 thousand primarily as a result of the additional staff, and occupancy and equipment expenses increased $327 thousand primarily as a result of the new branches that we acquired in the DCBB merger.  The $253 thousand increase in data processing expenses resulted from additional customer transactions due to growth as well as new and enhanced products that increased the payments to our core processor.  OREO expenses increased primarily due to a $137 thousand real estate tax payment that we made on one property during the 2018 period.

Old Line Bancshares 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 39 branches located in its primary market area of the suburban Maryland (Washington, D.C. suburbs, Southern Maryland and Baltimore suburbs) counties of Anne Arundel, Baltimore, Calvert, Carroll, Charles, Harford, Howard, Frederick, Montgomery, Prince George's and St. Mary's, and Baltimore City.  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 these non-GAAP financial measures, and 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, statements regarding the timing of the recognition of overhead cost savings from the recent merger with Bay Bancorp and the future growth, added value and improved financial results expected from the merger, 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: Bay Bancorp's business may not be integrated successfully with ours or such integration may be more difficult, time consuming or costly than expected; expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected timeframe; revenues following the merger may be lower than expected; customer and employee relationships of the former Bay Bank may be disrupted by the merger; 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; 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; and other risks discussed in our annual report on Form 10-K for the year ended December 31, 2017 and that may be discussed in other filings we may make with the U.S. Securities and Exchange Commission.  Forward-looking statements speak only as of the date they are made.  Old Line Bancshares 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 with the U.S. Securities and Exchange Commission available at www.sec.gov.  

           
 Old Line Bancshares, Inc. & Subsidiaries 
 Consolidated Balance Sheets 
           
  March 31,
2018
December 31,
2017 (1)
September 30,
2017
June 30,
2017
March 31,
2017
  (Unaudited)   (Unaudited) (Unaudited) (Unaudited)
Cash and due from banks $ 85,617,226   $ 33,562,652   $ 33,063,210   $ 25,025,269   $ 27,168,603  
Interest bearing accounts   2,687,988     1,354,870     1,017,257     1,136,343     1,144,100  
Federal funds sold   200,366     256,589     383,737     302,970     237,294  
Total cash and cash equivalents   88,505,580     35,174,111     34,464,204     26,464,582     28,549,997  
Investment securities available for sale   210,353,788     218,352,558     213,664,342     198,372,453     199,741,104  
Loans held for sale   3,934,086     4,404,294     2,729,060     6,615,208     3,504,268  
Loans held for invesment, less allowance for loan losses of $6,257,519                              
and $5,920,586 for March 31, 2018 and December 31, 2017   1,756,576,833     1,696,361,431     1,666,505,168     1,446,573,249     1,417,086,149  
Equity securities at cost   7,782,847     8,977,747     7,277,746     9,972,744     9,335,247  
Premises and equipment   40,991,968     41,173,810     42,074,857
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