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Old Line Bancshares, Inc. Reports 39.97% Increase in 2012 Net Income to $7.5 Million

4th QUARTER HIGHLIGHTS

  • Net income available to common stockholders was $1.7 million or $0.25 per share for the fourth quarter of 2012.
  • The fourth quarter Return on Average Assets (ROAA) and Return on Average Equity (ROAE) were 0.79% and 9.76%, respectively.
  • The net interest margin for the fourth quarter of 2012 was 4.55%.

2012 FULL YEAR HIGHLIGHTS

  • In September 2012, Old Line Bancshares announced that it entered into an agreement and plan of merger with WSB Holdings Inc. We expect to complete the merger during the second quarter of 2013.
  • Net income available to common stockholders of $7.5 million or $1.10 per basic common share, for the twelve month period increased 39.97% from the $5.4 million or $0.86 per basic common share reported for the twelve months ended December 31, 2011.
  • For the twelve months ended December 31, 2012, the ROAA and ROAE were 0.90% and 11.17%, respectively.
  • Non-performing assets were 1.12% of total assets at December 31, 2012 compared to 1.22% at December 31, 2011.
  • The ratio of the allowance for loan losses as a percent of gross loans was 0.66% at December 31, 2012 compared to 0.69% at December 31, 2011.
  • The net interest margin was 4.65% for the twelve months ended December 31, 2012 compared to 4.61% for the twelve months ended December 31, 2011.

BOWIE, Md., Jan. 30, 2013 (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 $2.1 million to $7.5 million for the twelve months ended December 31, 2012, compared with $5.4 million for the twelve months ended December 31, 2011. Earnings were $1.10 and $1.09 per basic and diluted common share, respectively, for the twelve months ended December 31, 2012 and $0.86 per basic and diluted common share for the same period in 2011.

Mr. Cornelsen said, "We continue to make significant progress towards our goal of becoming the premier community bank in the Metro Washington, D.C. market. As we have grown the assets and the branches of the organization, through acquisition and organic growth, we have consistently maintained stellar asset quality indicators while improving annual profitability. Since the acquisition of Maryland Bankcorp, we have successfully disposed of troubled assets and have grown our loan and deposit base. Our future appears bright and I believe that with the acquisition of WSB Holdings, Inc. that we expect to complete during the second quarter of 2013 that we will continue to enhance Old Line Bank's franchise value in the years ahead."

The 39.97% increase in net income available to common stockholders was primarily the result of a $6.1 million increase in net interest income. This increase derived from the $142.6 million or 23.78% growth in average interest earning assets and a modest increase in the net interest margin from 4.61% for the period ending December 31, 2011 compared to 4.65% for the period ending December 31, 2012, while at the same time total interest expense decreased approximately $162,000 for the twelve months ended December 31, 2012 compared to the same period in 2011. The increase in average interest earning assets was the result of a $108.6 million increase in average gross loans and an approximately $35.0 million increase in average invested funds. The primary cause of this growth was the acquisition of Maryland Bankcorp, Inc. on April 1, 2011 coupled with organic growth of approximately $55.0 million during 2012. This growth and an approximately $1.2 million 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 $1.1 million during the twelve months primarily as a result of a $1.0 million increase in gains on sales of investment securities, a $155,501 increase in other fees and commissions and a $72,721 increase in service charges on deposit accounts. During 2011, we also incurred an other than temporary impairment on securities of $123,039 that we did not incur in 2012. These increases were partially offset by a $153,055 decrease in earnings on bank owned life insurance and a $137,301 decline in gains on sales of other real estate owned.

The improvements in net interest income and non-interest revenue were partially offset by a $4.4 million increase in non-interest expense. The primary cause of the increase in non-interest expense was the acquisition and the costs associated with operating a larger organization for a full twelve months compared to nine months in 2011. Another significant contributor to the increase in non-interest expense was the cost associated with terminating the Maryland Bankcorp pension plan. During the fourth quarter of 2012, we completed the termination of the pension plan and recorded a one-time expense of $700,884 associated with the purchase of annuity contracts for the remaining participants. Our work associated with the pending acquisition of WSB Holdings, Inc., which has cost approximately $350,000, caused the increase in merger and integration expenses.

For the three month period ended December 31, 2012, net income available to common stockholders was $1.7 million or $0.25 per basic and diluted common share. This was $249,988 or 12.71% lower than the same period in 2011. During the three month period ended December 31, 2012, net interest income increased $703,592 or 9.14% primarily as a result of an approximately $60.0 million increase in average gross loans outstanding. The $60.0 million in average gross loan growth was a result of our business development efforts, expanded market area and increased name recognition. The provision for loan losses for the fourth quarter of 2012 decreased $400,000 from the same period in 2011. Compared to the same period in 2011, non-interest revenue increased $60,848 primarily due to a $279,904 increase in gains on sales or calls of investment securities and an $18,415 increase in other fees and commissions. This was partially offset by a decline in service charges on deposit accounts, earnings on bank owned life insurance and gains on sales of other real estate owned. During the fourth quarter of 2011, we recorded gains on sales of other real estate owned of $199,425. We did not sell any other real estate owned during the fourth quarter of 2012. An increase in other operating expenses of $1.6 million offset the improvements in net interest income, the provision expense, and non-interest revenue. Salaries and employee benefits and data processing expenses increased primarily because of our efforts to continue to enhance our infrastructure to support a larger organization. As previously mentioned, during the fourth quarter of 2012, we recorded a $700,884 one-time pension termination expense and approximately $350,000 in merger and integration expense associated with the acquisition of WSB Holdings, Inc. The addition of these expenses was also the primary contributor to the reduction of fourth quarter 2012 income tax expense compared to fourth quarter 2011.

As we have previously reported, 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 during the second quarter of 2013. Until completion, we anticipate that we will continue to incur merger related expenses that 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 1.12% at December 31, 2012 compared to 1.22% at December 31, 2011 and the allowance for loan losses as a percent of gross loans decreased modestly to 0.66% compared to 0.69% at December 31, 2011. The entire loan portfolio's asset quality remained relatively stable and we have seen no significant increase in the delinquency. As a result, we had a slightly decreased provision expense for the 2012 year and fourth quarter. Based on our internal analysis, the ratio of non-performing assets to total 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. However, should we see any evidence that there is deterioration in the loan portfolio, we would adjust the allowance accordingly.

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 during the second quarter of 2013, that we will continue to enhance franchise value, 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
December 31, 2012 September 30, 2012 June 30, 2012 March 31, 2012 December 31, 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Cash and due from banks $ 28,332,456 $ 43,813,588 $ 37,533,354 $ 24,018,472 $ 43,434,375
Interest bearing accounts 130,192 26,137 122,824 1,020,231 119,235
Federal funds sold 228,113 908,495 508,150 1,094,891 83,114
Total cash and cash equivalents 28,690,761 44,748,220 38,164,328 26,133,594 43,636,724
Investment securities available for sale 171,541,222 180,363,532 168,502,783 163,204,721 161,784,835
Loans, less allowance for loan losses 595,144,928 573,147,401 573,146,131 552,843,016 539,297,666
Equity securities at cost 3,615,444 3,728,237 3,765,079 3,894,766 3,846,042
Premises and equipment 25,133,013 23,883,734 23,763,775 23,651,682 23,215,429
Accrued interest receivable 2,639,483 2,606,790 2,592,123 2,562,773 2,448,542
Prepaid income taxes -- -- -- 27,964 --
Deferred income taxes 7,139,545 6,791,483 7,346,728 7,307,974 7,244,029
Bank owned life insurance 16,869,307 16,757,707 16,644,925 16,530,205 16,416,566
Prepaid pension -- 1,030,551 1,030,551 1,030,551 1,030,551
Other real estate owned 3,719,449 3,231,449 3,490,730 3,919,461 4,004,609
Goodwill 633,790 633,790 633,790 633,790 633,790
Core deposit intangible 3,691,471 3,869,054 4,046,636 4,224,218 4,418,892
Other assets 3,038,064 3,090,530 3,036,820 3,727,066 3,064,626
Total assets $ 861,856,477 $ 863,882,478 $ 846,164,399 $ 809,691,781 $ 811,042,301
Deposits
Non-interest bearing $ 188,895,263 $ 185,347,907 $ 186,639,878 $ 169,180,497 $ 170,138,329
Interest bearing 546,562,555 545,730,571 532,956,475 517,467,161 520,629,456
Total deposits 735,457,818 731,078,478 719,596,353 686,647,658 690,767,785
Short term borrowings 37,905,467 44,544,608 41,955,385 40,505,782 38,672,657
Long term borrowings 6,192,350 6,216,463 6,239,129 6,261,429 6,284,479
Accrued interest payable 311,735 341,494 359,367 370,712 397,211
Accrued pension 4,615,699 4,570,725 4,480,261 4,411,462 4,342,664
Other liabilities 2,114,017 2,757,115 1,853,766 1,582,906 2,080,867
Total liabilities 786,597,086 789,508,883 774,484,261 739,779,949 742,545,663
Stockholders' equity
Common stock 68,454 68,308 68,285 68,285 68,177
Additional paid-in capital 53,798,245 53,647,456 53,574,827 53,519,196 53,489,075
Retained earnings 18,531,387 17,087,831 15,332,768 13,576,596 12,093,742
Accumulated other comprehensive income 2,469,758 3,171,006 2,284,600 2,311,030 2,388,972
Total Old Line Bancshares, Inc. stockholders' equity 74,867,844 73,974,601 71,260,480 69,475,107 68,039,966
Non-controlling interest 391,547 398,994 419,658 436,725 456,672
Total stockholders' equity 75,259,391 74,373,595 71,680,138 69,911,832 68,496,638
Total liabilities and stockholders' equity $ 861,856,477 $ 863,882,478 $ 846,164,399 $ 809,691,781 $ 811,042,301
Shares of basic common stock outstanding 6,845,432 6,830,832 6,828,452 6,828,452 6,817,694
Old Line Bancshares, Inc. & Subsidiaries
Consolidated Statements of Income
Three Months
Ended
Three Months
Ended
Three Months
Ended
Three Months
Ended
Twelve Months
Ended
Twelve Months
Ended
December 31, September 30, June 30, December 31, December 31, December 31,
2012 2012 2012 2011 2012 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Interest revenue
Loans, including fees $ 8,521,466 $ 8,702,142 $ 8,632,296 $ 7,922,484 $ 33,808,739 $ 28,432,701
Investment securities and other 1,034,100 1,098,431 1,131,401 1,139,091 4,413,384 3,887,812
Total interest revenue 9,555,566 9,800,573 9,763,697 9,061,575 38,222,123 32,320,513
Interest expense
Deposits 963,334 1,057,075 1,087,200 1,146,233 4,235,107 4,389,694
Borrowed funds 190,310 206,721 213,111 217,012 822,518 829,477
Total interest expense 1,153,644 1,263,796 1,300,311 1,363,245 5,057,625 5,219,171
Net interest income 8,401,922 8,536,777 8,463,386 7,698,330 33,164,498 27,101,342
Provision for loan losses 400,000 375,000 375,000 800,000 1,525,000 1,800,000
Net interest income after provision for loan losses 8,001,922 8,161,777 8,088,386 6,898,330 31,639,498 25,301,342
Non-interest revenue
Service charges on deposit accounts 318,250 315,468 328,142 349,166 1,281,187 1,208,466
Gain on sales or calls of investment securities 307,242 289,511 282,858 27,338 1,156,781 140,149
Other than temporary impairment on equity securities -- -- -- (539) -- (123,039)
Earnings on bank owned life insurance 136,171 137,082 138,496 143,840 548,454 701,509
Gains (losses) on sales other real estate owned -- (48,509) 191,201 199,425 110,704 248,005
Other fees and commissions 182,450 146,550 215,089 164,035 721,688 566,187
Total non-interest revenue 944,113 840,102 1,155,786 883,265 3,818,814 2,741,277
Non-interest expense
Salaries & employee benefits 3,188,366 3,016,334 3,024,815 2,519,638 12,038,509 10,024,591
Occupancy & Equipment 931,197 933,775 914,576 897,652 3,687,419 3,131,557
Pension plan termination 700,884 -- -- -- 700,884 --
Data processing 238,830 214,187 192,232 221,203 869,984 816,815
Merger and integration 363,375 49,290 29,166 29,167 470,999 574,321
Core deposit premium 177,582 177,582 177,582 194,675 727,422 584,024
Other operating 1,655,193 1,690,590 1,910,797 1,776,226 6,777,310 5,753,035
Total non-interest expense 7,255,427 6,081,758 6,249,168 5,638,561 25,272,527 20,884,343
Income before income taxes 1,690,608 2,920,121 2,995,004 2,143,034 10,185,785 7,158,276
Income taxes (18,808) 912,490 982,759 197,619 2,720,446 1,926,624
Net income 1,709,416 2,007,631 2,012,245 1,945,415 7,465,339 5,231,652
Less: Net income (loss) attributable to the noncontrolling interest (7,447) (20,664) (17,067) (21,436) (65,125) (148,319)
Net income available to common stockholders $ 1,716,863 $ 2,028,295 $ 2,029,312 $ 1,966,851 $ 7,530,464 $ 5,379,971
Earnings per basic share $ 0.25 $ 0.30 $ 0.30 $ 0.29 $ 1.10 $ 0.86
Earnings per diluted share $ 0.25 $ 0.29 $ 0.29 $ 0.29 $ 1.09 $ 0.86
Dividend per common share $ 0.04 $ 0.04 $ 0.04 $ 0.04 $ 0.16 $ 0.13
Average number of basic shares 6,834,665 6,829,785 6,828,452 6,817,694 6,828,512 6,223,057
Average number of dilutive shares 6,929,296 6,909,147 6,905,041 6,834,584 6,893,645 6,253,898
Old Line Bancshares, Inc. & Subsidiaries
Selected Average Balance Sheet and Loan Information
Average Balance Sheet
(Dollars in thousands)
Three Months Ended Twelve Months Ended
December 31, September 30, June 30, December 31, December 31, December 31,
2012 2012 2012 2011 2012 2011
Average total interest earning assets $ 770,905 $ 752,841 $ 729,382 $ 702,849 $ 741,952 $ 599,397
Average total interest bearing liabilities 587,551 603,133 570,972 550,177 565,398 481,927
Net interest earning assets $ 183,354 $ 149,708 $ 158,410 $ 152,672 $ 176,554 $ 117,470
Tax equivalent net interest margin 4.55% 4.72% 4.84% 4.45% 4.65% 4.61%
Loan Information
(Dollars in thousands)
December 31, September 30, June 30, December 31,
2012 2012 2012 2011
Acquired Loans(1)
Non-accrual(2) $ 4,092 $ 5,079 $ 4,842 $ 4,583
Accruing 30-89 days past due 602 24 726 839
Accruing 90 or more days past due 6 82 940 --
Legacy Loans(3)
Non-accrual $ 1,818 $ 3,151 $ 1,787 $ 1,247
Accruing 30-89 days past due 1,799 2,348 2,799 745
Accruing 90 or more days past due -- 2 -- 34
Allowance for loan losses 3,965 4,493 4,109 3,741
Allowance for loan losses as % of gross loans 0.66% 0.78% 0.71% 0.69%
Allowance for loan losses as % of legacy loans 0.85% 1.03% 0.96% 0.99%
Total non-perfoming loans as a % of gross loans 0.99% 2.00% 1.92% 1.08%
Total non-performing assets as a % of total assets 1.12% 1.34% 1.31% 1.22%
(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: CHRISTINE M. RUSH CHIEF FINANCIAL OFFICER (301) 430-2544Source:Old Line Bancshares, Inc.