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

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

Source:Old Line Bancshares, Inc.