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8-K - FORM 8-K FILING DOCUMENT - OLD LINE BANCSHARES INCdocument.htm

EXHIBIT 99.1

Old Line Bancshares, Inc. Reports Substantial Increase in Net Income Available to Common Stockholders for the Quarter and Nine Months Ended September 30, 2011

2011 3rd QUARTER AND YEAR TO DATE HIGHLIGHTS

  • In April 2011, Old Line Bancshares, Inc. successfully completed the acquisition and integration of Maryland Bankcorp, Inc., the former holding company of Maryland Bank & Trust Company, N.A. ("MB&T").
  • Net income available to common stockholders increased $1.4 million or 446.28% during the third quarter.
  • Net income available to common stockholders increased $2.1 million or 161.10% during the nine months ended September 30, 2011.
  • Earnings per basic and dilutive common share were $0.25 for the three month period and $0.56 per share for the nine month period ended September 30, 2011.
  • The provision for loan losses increased $600,000 for the three month period and $560,000 for the nine month period.
  • Non-performing loans as a percentage of total gross loans were 1.05% at September 30, 2011.
  • Non-performing assets as a percentage of total assets were 1.25% at September 30, 2011.

BOWIE, Md., Oct. 27, 2011 (GLOBE NEWSWIRE) -- James W. Cornelsen, President and 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 $2.1 million or 161.10% for the nine months ended September 30, 2011 to $3.4 million from $1.3 million for the nine month period ended September 30, 2010. Earnings per basic and diluted common share were $0.56 for the nine months ended September 30, 2011 and $0.34 for the same period in 2010.

For the three month period ended September 30, 2011, net income available to common stockholders was $1.7 million or $0.25 per basic and diluted common share. This was $1.4 million or 446.28% higher than the same period in 2010.

The acquisition of Maryland Bankcorp, Inc., on April 1, 2011, was the primary contributor to the increase in net income available to common stockholders as well as the increases in net interest income, non-interest revenue, and non-interest expense during the nine and three month periods ended September 30, 2011.

During the three month period, total interest revenue increased primarily because we received full and partial payments on several acquired non-accrual loans that allowed us to accrete approximately $1.1 million from credit related discounts to interest income. Earnings on bank owned life insurance increased as the result of an approximately $213,000 non-recurring gain on earnings on bank owned life insurance that occurred due to the loss of a colleague during the period that was offset by a $183,000 expense payable to the estate and recorded in employee benefits. We recorded a gain of $45,495 on the sale of other real estate owned and also recognized gains from calls of investment securities totaling $72,252.

Mr. Cornelsen said "We are extremely pleased to report an increase in net income, organic growth of approximately $17.9 million in interest earning assets during the quarter and continued improvement in the net interest margin while we continued to retain the deposits that we obtained in the MB&T acquisition. During the quarter, we began to proceed with collection of the acquired problem assets with the sale of an OREO property, payment in full on a non-accrual loan that we had discounted by approximately $350,000 and payments on several other credit facilities that exceeded our expectations. We also continued to successfully manage the company to produce deposit growth and maintain stellar credit quality metrics in a difficult operating environment." Mr. Cornelsen also said that, "It's important to note that we increased the provision for loan losses $600,000 and $560,000 during the three and nine month periods. Profitability for the quarter and the nine month period were also negatively impacted by the integration and merger expenses of $77,880 for the three month period, $545,154 for the nine month period and a non-recurring impairment on equity securities of $122,500 during the nine month period. Although we will continue to expense minimal merger and integration expenses, we expect that these expenses will continue to decrease. We have also identified additional areas within the former MB&T non-interest expense structure that we expect will provide expense reductions during the remainder of 2011 and beyond."

Mr. Cornelsen continued, "As expected, the net interest margin increased 111 basis points in the third quarter of 2011 compared to last year's third quarter, 100 basis points from the first quarter of 2011 and 35 basis points from the second quarter of 2011. The increase in the third quarter of 2011 compared to 2010 was primarily attributable to the acquisition of MB&T which contributed approximately $93.0 million in non-interest bearing deposits. These deposits are a primary source of funding for our investment and loan portfolios and should continue to enhance our net interest margin. The collection of the non-accrual loan previously mentioned also contributed approximately five basis points to the improvement in the margin."

Our asset quality continues to remain strong even with the addition of the MB&T loan portfolio. We did not experience any increase in non-performing assets that we held prior to the acquisition (legacy loans). In accordance with accounting for business combinations, we have recorded the acquired assets and liabilities at their estimated fair value on April 1, 2011, the acquisition date. At April 1, 2011, the determination of the fair value of the loans acquired (acquired loans) caused an approximately $24.3 million write down in the value of certain loans and other real estate owned, that we assigned to an accretable or non-accretable balance. We will recognize the $2.0 million accretable balance as interest income over the remaining term of the loans. We will recognize the $22.3 million non-accretable balance as the borrowers repay the loans or we sell the other real estate owned. These decreases to the loan portfolio were offset by an approximately $3.1 million fair value adjustment based on current interest rates of similar loans that we will recognize over the remaining life of the loans. The accretion of these adjustments favorably impacted our net interest income by approximately $819,000 and $426,000 during the three and nine month periods, respectively. We continue to have proactive efforts underway to collect payments on many of these loans or to develop satisfactory resolutions.

As part of the fair value process, we were also required by current accounting principles to eliminate the allowance for loan and lease losses associated with the acquired loans which caused the allowance for loan losses to decline to 0.58% of total gross loans from 0.82% at December 31, 2010. We increased our provision for loan losses $600,000 and $560,000 for the three and nine month periods ended September 30, 2011, respectively. Although our legacy loan portfolio's asset quality remained stable, we did experience approximately $15.4 million in growth in the legacy portfolio. There are indications that the economy may experience either flat or negative growth in the near term and this could negatively impact our borrowers' financial stability. Additionally, until we are able to adequately access the underwriting skills of our new lenders and the impact the acquisition may have on our internal management capabilities, we believe it is prudent to increase the allowance. Our legacy non-performing assets remain statistically low at 0.43% of total assets and $307,060 past due between 30-89 days at quarter end. Based on our history, 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 continued decrease in merger and integration expenses, further expense reductions related to MB&T's non-interest expense structure, that the deposits acquired from MB&T will continue to enhance our net interest margin 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, deterioration in economic conditions or a slower than anticipated recovery in our target markets or nationally, further increases in the unemployment rate in our target markets, 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,
2011
June 30,
2011
March 31,
2011
December 31,
2010
  (Unaudited) (Unaudited) (Unaudited)  
 Cash and due from banks   $ 44,591,494  $ 48,628,138  $ 8,512,884  $ 14,325,266
 Interest bearing accounts   14,157  102,921  115,680  109,170
 Federal funds sold   720,898  264,506  558,214  180,536
 Total cash and cash equivalents   45,326,549  48,995,565  9,186,778  14,614,972
 Time deposits in other banks   --   --   99,000  297,000
 Investment securities available for sale   158,503,556  144,694,675  37,658,830  33,049,795
 Investment securities held to maturity  --   --   20,267,496  21,736,469
 Loans, less allowance for loan losses  515,738,796  500,370,124  306,653,965  299,606,430
 Equity securities at cost   4,051,482  3,402,531  2,596,650  2,562,750
 Premises and equipment   22,748,048  22,163,745  16,703,016  16,867,561
 Accrued interest receivable   2,349,748  2,278,496  1,239,489  1,252,970
 Prepaid income taxes   162,043  1,042,054  --   189,523
 Deferred income taxes   6,353,633  6,963,981  190,186  265,551
 Bank owned life insurance   16,298,382  16,377,113  8,765,616  8,703,175
 Prepaid pension   1,315,642  1,315,642  --   -- 
 Other real estate owned   4,126,434  3,947,340  1,976,516  1,153,039
 Goodwill   141,723  116,723  --   -- 
 Core deposit intangible   4,613,568  4,808,242  --   -- 
 Other assets   4,255,685  2,935,860  2,214,039  1,610,715
 Total assets   $ 785,985,289  $ 759,412,091  $ 407,551,581  $ 401,909,950
         
 Deposits         
 Non-interest bearing   $ 176,167,359  $ 160,538,320  $ 56,827,155  $ 67,494,744
 Interest bearing   487,824,952  486,450,237  281,811,895  273,032,442
 Total deposits   663,992,311  646,988,557  338,639,050  340,527,186
 Short term borrowings   32,605,607  26,153,000  6,584,128  5,669,332
 Long term borrowings   16,307,146  16,328,337  16,349,219  16,371,947
 Accrued interest payable   392,340  391,294  363,763  434,656
 Accrued pension   4,554,285  4,527,294  711,653  673,048
 Other liabilities   1,867,752  1,193,613  565,476  575,031
 Total liabilities   719,719,441  695,582,095  363,213,289  364,251,200
         
 Stockholders' equity         
 Common stock   68,096  68,096  46,774  38,917
 Additional paid-in capital   53,421,825  53,411,845  35,582,975  29,206,617
 Retained earnings   10,399,491  8,896,285  7,917,628  7,535,268
 Accumulated other comprehensive income   1,898,327  937,973  208,879  272,956
 Total Old Line Bancshares, Inc. stockholders' equity   65,787,739  63,314,199  43,756,256  37,053,758
 Non-controlling interest   478,109  515,797  582,036  604,992
 Total stockholders' equity   66,265,848  63,829,996  44,338,292  37,658,750
 Total liabilities and stockholders' equity   $ 785,985,289  $ 759,412,091  $ 407,551,581  $ 401,909,950
 Shares of basic common stock outstanding   6,809,594  6,809,594  4,677,363  3,891,705
             
             
Old Line Bancshares, Inc. & Subsidiaries
Consolidated Statements of Income
             
  Three Months
Ended
September 30,
Three Months
Ended
June 30,
Three Months
Ended
March 31,
Three Months
Ended
September 30,
Nine Months
Ended
September 30,
Nine Months
Ended
September 30,
  2011 2011 2011 2010 2011 2010
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest revenue            
 Loans, including fees  $ 8,573,052  $ 7,741,299  $ 4,195,866  $ 4,260,382  $ 20,510,217  $ 12,259,381
 Investment securities and other  1,164,052  1,132,673  451,996  498,814  2,748,721  1,463,747
 Total interest revenue  9,737,104  8,873,972  4,647,862  4,759,196  23,258,938  13,723,128
Interest expense            
 Deposits  1,175,773  1,191,712  875,976  985,950  3,243,461  2,960,315
 Borrowed funds  216,756  211,086  184,623  248,292  612,465  803,025
 Total interest expense  1,392,529  1,402,798  1,060,599  1,234,242  3,855,926  3,763,340
 Net interest income  8,344,575  7,471,174  3,587,263  3,524,954  19,403,012  9,959,788
Provision for loan losses  800,000  50,000  150,000  200,000  1,000,000  440,000
 Net interest income after provision for loan losses  7,544,575  7,421,174  3,437,263  3,324,954  18,403,012  9,519,788
Non-interest revenue            
 Service charges on deposit accounts  380,065  396,785  82,450  78,247  859,300  231,478
 Gains on sales or calls of investment securities  72,252  2,489  38,070  --   112,811  -- 
 Permanent impairment on equity securities  --   (122,500)  --   --   (122,500)  -- 
 Earnings on bank owned life insurance  356,281  122,350  79,038  83,963  557,669  254,071
 Gains on sales other real estate owned  45,595  --   2,985  --   48,580  -- 
 Gains (losses) on disposal of assets  8,995  (14,155)  --   --   (5,160)  -- 
 Other fees and commissions  152,613  132,362  122,337  141,036  407,312  381,639
 Total non-interest revenue  1,015,801  517,331  324,880  303,246  1,858,012  867,188
Non-interest expense            
 Salaries & employee benefits  3,030,508  2,973,734  1,500,711  1,582,918  7,504,953  4,547,215
 Occupancy  746,356  686,897  366,023  330,752  1,799,276  983,209
 Equipment  170,254  170,484  93,891  105,342  434,629  311,370
 Data processing  232,530  233,332  129,750  126,412  595,612  325,912
 FDIC insurance and State of Maryland assessments  143,680  167,312  151,504  130,595  462,496  361,263
 Merger and integration  77,880  377,214  90,060  187,125  545,154  187,125
 Core deposit premium  194,674  194,675  --   --   389,349  -- 
 Other operating  1,557,284  1,361,794  595,235  605,068  3,514,313  1,656,814
 Total non-interest expense  6,153,166  6,165,442  2,927,174  3,068,212  15,245,782  8,372,908
             
Income before income taxes  2,407,210  1,773,063  834,969  559,988  5,015,242  2,014,068
 Income taxes  737,405  656,357  335,243  265,299  1,729,005  765,431
Net income  1,669,805  1,116,706  499,726  294,689  3,286,237  1,248,637
 Less: Net income (loss) attributable to the noncontrolling interest  (37,688)  (66,239)  (22,956)  (17,876)  (126,883)  (58,559)
Net income available to common stockholders  $ 1,707,493  $ 1,182,945  $ 522,682  $ 312,565  $ 3,413,120  $ 1,307,196
Earnings per basic share  $ 0.25  $ 0.17  $ 0.12  $ 0.08  $ 0.56  $ 0.34
Earnings per diluted share  $ 0.25  $ 0.17  $ 0.12  $ 0.08  $ 0.56  $ 0.34
Dividend per common share  $ 0.03  $ 0.03  $ 0.03  $ 0.03  $ 0.09  $ 0.09
Average number of basic shares  6,809,594  6,809,594  4,428,629  3,880,005  6,024,660  3,880,005
Average number of dilutive shares  6,834,584  6,841,535  4,465,562  3,904,016  6,056,953  3,899,159
             
             
 Old Line Bancshares, Inc. & Subsidiaries 
 Selected Average Balance Sheet and Loan Information 
             
 Average Balance Sheet
(Dollars in thousands) 
 
  Three Months Ended Nine Months Ended 
  September 30,
2011
June 30,
 2011
March 31, 2011 September 30,
2010
September 30,
2011
September 30,
2010
 Average total interest earning assets   $ 674,069  $ 656,173  $ 367,123  $ 362,678  $ 566,912  $ 351,169
 Average total interest bearing liabilities   535,191  500,738  301,017  307,294  455,799  299,676
 Net interest earning assets   $ 138,878  $ 155,435  $ 66,106  $ 55,384  $ 111,113  $ 51,493
 Tax equivalent net interest margin  5.01% 4.66% 4.01% 3.90% 4.66% 3.84%
             
Loan Information
(Dollars in thousands)
         
  September 30,
2011
June 30,
2011
March 31,
2011
September 30,
2010
December 31,
2010
 
Acquired Loans(1            
Non-accrual(2  $ 4,255  $ 5,354  $ --   $ --   $ --   
Accruing 30-89 days past due  955  2,431  --   --   --   
Accruing 90 or more days past due  1,388  42  --   --   --   
             
Legacy Loans(3            
Non-accrual  $ 1,169  $ 1,169  $ 1,169  $ 3,803  $ 2,711  
Accruing 30-89 days past due  307  5,242  1,130  83  --   
Accruing 90 or more days past due  --   --   --   --   --   
             
Allowance for loan losses as % of gross loans 0.58% 0.45% 0.69% 0.61% 0.82%  
Allowance for loan losses as % of legacy loans 0.88% 0.70% 0.69% 0.61% 0.82%  
Total non-performing loans as a % of gross loans 1.05% 0.23% 0.38% 1.00% 0.90%  
Total non-performing assets as a % of total assets 1.25% 0.41% 0.77% 0.92% 0.96%  
             
(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