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

3rd QUARTER 2012 AND YEAR TO DATE HIGHLIGHTS

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

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

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

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

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

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

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

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

Old Line Bancshares, Inc. & Subsidiaries
Consolidated Balance Sheets
September 30,
2012
June 30,
2012
March 31,
2012
December 31,
2011
September 30,
2011
(Unaudited) (Unaudited) (Unaudited) (Audited) (Unaudited)
Cash and due from banks $ 43,813,588 $ 37,533,354 $ 24,018,472 $ 43,434,375 $ 44,591,494
Interest bearing accounts 26,137 122,824 1,020,231 119,235 14,157
Federal funds sold 908,495 508,150 1,094,891 83,114 720,898
Total cash and cash equivalents 44,748,220 38,164,328 26,133,594 43,636,724 45,326,549
Investment securities available for sale 180,363,532 168,502,783 163,204,721 161,784,835 158,503,556
Loans, less allowance for loan losses 573,147,401 573,146,131 552,843,016 539,297,666 515,738,796
Equity securities at cost 3,828,237 3,865,079 3,994,766 3,946,042 4,051,482
Premises and equipment 23,883,734 23,763,775 23,651,682 23,215,429 22,748,048
Accrued interest receivable 2,606,790 2,592,123 2,562,773 2,448,542 2,349,748
Prepaid income taxes -- -- 27,964 -- 162,043
Deferred income taxes 6,791,483 7,346,728 7,307,974 7,244,029 6,353,633
Bank owned life insurance 16,757,707 16,644,925 16,530,205 16,416,566 16,298,382
Prepaid pension 1,030,551 1,030,551 1,030,551 1,030,551 1,315,642
Other real estate owned 3,231,449 3,490,730 3,919,461 4,004,609 4,126,434
Goodwill 633,790 633,790 633,790 633,790 141,723
Core deposit intangible 3,869,054 4,046,636 4,224,218 4,418,892 4,613,568
Other assets 2,990,530 2,936,820 3,627,066 2,964,626 4,255,685
Total assets $ 863,882,478 $ 846,164,399 $ 809,691,781 $ 811,042,301 $ 785,985,289
Deposits
Non-interest bearing $ 185,347,907 $ 186,639,878 $ 169,180,497 $ 170,138,329 $ 176,167,359
Interest bearing 545,730,571 532,956,475 517,467,161 520,629,456 487,824,952
Total deposits 731,078,478 719,596,353 686,647,658 690,767,785 663,992,311
Short term borrowings 44,544,608 41,955,385 40,505,782 38,672,657 32,605,607
Long term borrowings 6,216,463 6,239,129 6,261,429 6,284,479 16,307,146
Accrued interest payable 341,494 359,367 370,712 397,211 392,340
Accrued pension 4,570,725 4,480,261 4,411,462 4,342,664 4,554,285
Other liabilities 2,757,115 1,853,766 1,582,906 2,080,867 1,867,752
Total liabilities 789,508,883 774,484,261 739,779,949 742,545,663 719,719,441
Stockholders' equity
Common stock 68,308 68,285 68,285 68,177 68,096
Additional paid-in capital 53,647,456 53,574,827 53,519,196 53,489,075 53,421,825
Retained earnings 17,087,831 15,332,768 13,576,596 12,093,742 10,399,491
Accumulated other comprehensive income 3,171,006 2,284,600 2,311,030 2,388,972 1,898,327
Total Old Line Bancshares, Inc.
stockholders' equity
73,974,601 71,260,480 69,475,107 68,039,966 65,787,739
Non-controlling interest 398,994 419,658 436,725 456,672 478,109
Total stockholders' equity 74,373,595 71,680,138 69,911,832 68,496,638 66,265,848
Total liabilities and
stockholders' equity
$ 863,882,478 $ 846,164,399 $ 809,691,781 $ 811,042,301 $ 785,985,289
Shares of basic common stock outstanding 6,830,832 6,828,452 6,828,452 6,817,694 6,809,594
Old Line Bancshares, Inc. & Subsidiaries
Consolidated Statements of Income
Three Months
Ended
September 30, 2012
Three Months
Ended
June 30, 2012
Three Months
Ended
March 31, 2012
Three Months
Ended
September 30, 2011
Nine Months
Ended
September 30, 2012
Nine Months
Ended
September 30, 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest revenue
Loans, including fees $ 8,702,142 $ 8,632,296 $ 7,952,835 $ 8,573,052 $ 25,287,273 $ 20,510,217
Investment securities and other 1,098,431 1,131,401 1,149,451 1,164,052 3,379,284 2,748,721
Total interest revenue 9,800,573 9,763,697 9,102,286 9,737,104 28,666,557 23,258,938
Interest expense
Deposits 1,057,075 1,087,200 1,127,498 1,175,773 3,271,773 3,243,461
Borrowed funds 206,721 213,111 212,376 216,756 632,208 612,465
Total interest expense 1,263,796 1,300,311 1,339,874 1,392,529 3,903,981 3,855,926
Net interest income 8,536,777 8,463,386 7,762,412 8,344,575 24,762,576 19,403,012
Provision for loan losses 375,000 375,000 375,000 800,000 1,125,000 1,000,000
Net interest income after
provision for loan losses
8,161,777 8,088,386 7,387,412 7,544,575 23,637,576 18,403,012
Non-interest revenue
Service charges on
deposit accounts
315,468 328,142 319,327 380,065 962,937 859,300
Gain on sales or calls
of investment securities
289,511 282,858 277,170 72,252 849,539 112,811
Other than temporary impairment on
equity securities
-- -- -- -- -- (122,500)
Earnings on bank owned
life insurance
137,082 138,496 136,705 356,281 412,283 557,669
Gains (losses) on sales
other real estate owned
(48,509) 191,201 (31,988) 45,595 110,704 48,580
Other fees and commissions 146,550 215,089 177,599 161,608 539,238 402,152
Total non-interest revenue 840,102 1,155,786 878,813 1,015,801 2,874,701 1,858,012
Non-interest expense
Salaries & employee benefits 3,016,334 3,024,815 2,808,994 3,030,508 8,850,143 7,504,953
Occupancy & Equipment 933,775 914,576 907,871 916,610 2,756,222 2,233,905
Data processing 214,187 192,232 224,735 232,530 631,154 595,612
Merger and integration 49,290 29,166 29,167 77,880 107,624 545,154
Core deposit premium 177,582 177,582 194,675 194,674 549,839 389,349
Other operating 1,690,590 1,910,797 1,520,731 1,700,964 5,122,118 3,976,809
Total non-interest expense 6,081,758 6,249,168 5,686,173 6,153,166 18,017,100 15,245,782
Income before income taxes 2,920,121 2,995,004 2,580,052 2,407,210 8,495,177 5,015,242
Income taxes 912,490 982,759 844,005 737,405 2,739,254 1,729,005
Net income 2,007,631 2,012,245 1,736,047 1,669,805 5,755,923 3,286,237
Less: Net income (loss)
attributable to the
noncontrolling interest
(20,664) (17,067) (19,947) (37,688) (57,678) (126,883)
Net income available to
common stockholders
$ 2,028,295 $ 2,029,312 $ 1,755,994 $ 1,707,493 $ 5,813,601 $ 3,413,120
Earnings per basic share $ 0.30 $ 0.30 $ 0.26 $ 0.25 $ 0.85 $ 0.56
Earnings per diluted share $ 0.29 $ 0.29 $ 0.26 $ 0.25 $ 0.84 $ 0.56
Dividend per common share $ 0.04 $ 0.04 $ 0.04 $ 0.03 $ 0.12 $ 0.09
Average number of basic shares 6,829,785 6,828,452 6,820,894 6,809,594 6,826,390 6,024,660
Average number of dilutive
shares
6,909,147 6,905,041 6,855,568 6,834,584 6,886,147 6,056,953
Old Line Bancshares, Inc. & Subsidiaries
Selected Average Balance Sheet and Loan Information
Average Balance Sheet
(Dollars in thousands)
Three Months Ended Nine
Months
Ended
Nine
Months
Ended
September 30,
2012
June 30,
2012
December 31,
2011
September 30,
2011
September 30,
2012
September 30,
2011
Average total interest earning assets $ 752,848 $ 729,382 $ 702,849 $ 674,069 $ 732,230 $ 566,912
Average total interest bearing liabilities 603,133 570,972 550,177 535,191 580,826 455,799
Net interest earning assets $ 149,715 $ 158,410 $ 152,672 $ 138,878 $ 151,404 $ 111,113
Tax equivalent net interest margin 4.72% 4.84% 4.45% 5.01% 4.69% 4.66%
Loan Information
(Dollars in thousands)
September 30,
2012
June 30,
2012
March 31,
2012
December 31,
2011
September 30,
2011
Acquired Loans(1)
Non-accrual(2) $ 5,079 $ 4,842 $ 4,860 $ 4,583 $ 4,255
Accruing 30-89 days past due 24 726 2,652 839 955
Accruing 90 or more days past due 81 940 6 -- 1,388
Legacy Loans(3)
Non-accrual $ 3,151 $ 1,787 $ 1,787 $ 1,247 $ 1,169
Accruing 30-89 days past due 2,348 2,799 1,278 745 307
Accruing 90 or more days past due 2 -- -- 34 --
Allowance for loan losses as % of gross loans 0.78% 0.71% 0.68% 0.69% 0.58%
Allowance for loan losses as % of legacy loans 1.03% 0.96% 0.96% 0.99% 0.88%
Total non-performing loans as a % of gross loans 2.00% 1.92% 1.90% 1.08% 1.05%
Total non-performing assets as a % of total assets 1.34% 1.31% 1.31% 1.22% 1.25%
(1) Acquired loans represent all loans acquired on April 1, 2011. We originally recorded these loans at fair value upon acquisition.
(2) These loans are loans that are considered non-accrual because they are not paying in conformance with the original contractual agreement. At acquisition, we recorded these loans at fair value. As provided for under ASC 310-30, we recognize interest income on these loans through the accretion of the difference between the carrying value of these loans and their expected cash flows.
(3) Legacy loans represent total loans excluding loans acquired April 1, 2011.
CONTACT: OLD LINE BANCSHARES, INC. CHRISTINE M. RUSH CHIEF FINANCIAL OFFICER (301) 430-2544Source:Old Line Bancshares, Inc.

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