Old Line Bancshares, Inc. Reports $1.8 Million in Net Income Available to Common Stockholders, a 42.70% Increase, for the First Quarter Ended March 31, 2014

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| Source: Old Line Bancshares, Inc.

BOWIE, Md., April 18, 2014 (GLOBE NEWSWIRE) -- Old Line Bancshares, Inc. (Nasdaq:OLBK), the parent company of Old Line Bank, reported net income available to common stockholders increased $549,300 or 42.70% to $1.8 million for the three months ended March 31, 2014, compared to net income of $1.3 million for the three months ended March 31, 2013. Earnings were $0.17 per basic and diluted common share, respectively, for the three months ended March 31, 2014 and $.19 per basic and diluted common share for the same period in 2013. The increase in net income is primarily the result of a $2.5 million increase in net interest income, offsetting an increase of $1.9 million in non-interest expense.

1st QUARTER HIGHLIGHTS:

  • Net income of $1.8 million was recorded for the three month period ending March 31, 2014 compared to net income of $1.3 million representing an increase of $549,300 or 42.70% from the period ending March 31, 2013.
     
  • Total assets at March 31, 2014 increased by $25.7 million from December 31, 2013.
     
  • The first quarter Return of Average Assets (ROAA) and Return on Average Equity (ROAE) were 0.64% and 5.95%, respectively, compared to ROAA and ROAE of 0.61% and 7.26%, respectively, for the first quarter of 2013.
     
  • Net loans increased $1.8 million during the three months ended March 31, 2014, to $851.1 million, compared to $849.3 million at December 31, 2013.
     
  • Total deposits grew by $33.8 million, or 3.47%, since December 31, 2013.
     
  • The net interest margin was 4.29% compared to 4.36% for the same period in 2013 and 4.64% for the quarter ended December 31, 2013.
     
  • We ended the 1st quarter of 2014 with a book value of $11.99 per common share and a tangible book value of $10.79 per common share compared to $11.71 and $10.50, respectively, at December 31 2013.
     
  • Non-performing assets decreased to 1.12% of total assets at March 31, 2014 compared to 1.27% at December 31, 2014.
     
  • We maintained liquidity and by all regulatory measures remained "well capitalized".

Total assets increased $25.7 million from December 31, 2013 primarily due to an increase in cash and cash equivalents as a result of deposit growth. Deposit growth during the three month period was comprised of increases of $5.8 million, or 2.53%, in non-interest bearing deposits and $28.0 million, or 3.76%, in our interest bearing deposits. The increase in our deposit base is due to our enhanced presence in our primary market and surrounding areas due to our continued efforts by our cash management team and financial services team. We used some of these funds acquired from increased deposits to reduce our short term borrowings and expect to use the remainder to fund loan originations in the near future.

Total net loans increased $1.8 million during the three month period ended March 31, 2014. The unusual inclement weather for our area is a key factor for the low level in loan growth compared to recent periods. The first quarter is historically a soft quarter for loan growth however we are on target with projections. 

The increase in net income for the three months ending March 31, 2014 compared to the three months ending March 31, 2013 noted above was primarily the result of a $2.5 million, or 32.01%, increase in net interest income and a $165,000, or 13.41%, increase in non-interest income, partially offset by a $1.9 million increase in non-interest expense. Net interest income increased as a result of an increase in our average interest earning assets partially offset by a decrease in yield on such assets. In comparison to the fourth quarter 2013 net interest income decreased $1.2 million primarily as a result of a reduction to fair value accretion on our loan portfolio partially offset by a $28,000 reduction in interest paid on interest bearing liabilities due to a decline in fair value interest expense on acquired deposits. The increase in non-interest income of $165,000 was primarily the result of the $107,000 gain on sale of residential mortgage loans sold in the secondary market; Old Line Bank did not sell loans in the secondary market prior to its acquisition of this business as part of its acquisition of WSB Holdings, Inc. "WSB" in May 2013. The increase in non-interest expense was mainly attributable to increases in salaries and benefits and occupancy and equipment expenses. Salaries and benefits increased by $1.6 million, or 50.76%, compared to the same period of 2013 primarily as a result of the additional staff due to the WSB acquisition and additions to the commercial lending, marketing director and cash management teams.  Included in salaries and benefits is $550,000 in severance payments. The severance was associated with merger related staff reductions that eliminated $1.1 million in annual salaries and benefits in the quarter. In early April further reductions were made that will save an additional $330,000 in annual salaries and benefits for a total reduction of $1.4 million. The increases in occupancy and equipment expenses are also the result of the WSB acquisition as compared to the same three months last year. As a result of our final conversion of the core processing systems of the WSB merger on November 1, 2013, which was the last merger-related activity and expense with respect to the WSB acquisition, merger related costs decreased $211,300 compared to the same period in 2013.

The net interest margin for the three months ended March 31, 2014 decreased 35 basis points from the year ended December 31, 2013 due to a reduction to fair value accretion on our loan portfolio. The decrease in accretion is the result of the loan sale that occurred in the fourth quarter of 2013. The average interest rate on total interest-bearing liabilities decreased to 0.51% for the three months ended March 31, 2014 compared to 0.66% for the three months ended March 31, 2013. 

Mr. Cornelsen stated: "I am pleased to report strong earnings for the first quarter of 2014 and look forward to the remainder of the year ahead. We continue to execute our strategic plan of establishing ourselves as a strong leader in the Metro Washington D.C. market. Our continued investment of talent and infrastructure position us to expand our footprint and increase our customer base. Our asset quality remains strong and profitability is improving with the completion of the integration of WSB allowing us to continue to enhance Old Line Bank's franchise value as we move forward."

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 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 loan originations in the near future, expected savings from personnel reductions, expanding our footprint and increasing our customer base, improving profitability and enhancement of Old Line Bank's franchise following our recent merger with WSB 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 slowdown in the recovery in our target markets or nationally, sustained high levels of or 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 
           
  March 31,
2014
December 31,
2013 (1)
September 30,
2013
June 30,
2013
March 31,
2013
  (Unaudited)   (Unaudited) (Unaudited) (Unaudited)
Cash and due from banks   $ 54,197,169  $ 28,316,351  $ 49,957,119  $ 50,689,336  $ 37,651,112
Interest bearing accounts   30,383  30,375  30,364  30,352  30,291
Federal funds sold   178,806  711,574  1,005,491  3,017,257  331,153
Total cash and cash equivalents   54,406,358  29,058,300  50,992,974  53,736,945  38,012,556
Investment securities available for sale   172,094,347  172,169,776  181,527,632  184,190,791  154,081,188
Loans held for sale   1,646,330  2,014,711  22,584,750  4,764,595  -- 
Loans held for investment, less allowance for loan losses  849,429,721  847,248,590  805,890,567  787,172,298  611,850,594
Equity securities at cost   4,304,197  5,669,807  5,850,652  3,709,490  3,174,220
Premises and equipment   34,661,659  35,215,868  35,520,366  35,313,769  24,912,937
Accrued interest receivable   3,131,042  3,432,924  3,256,311  3,623,274  2,511,753
Deferred income taxes   20,639,961  21,868,076  21,451,728  23,111,238  8,015,351
Bank owned life insurance   30,787,554  30,577,187  30,357,357  30,135,483  16,977,347
Other real estate owned   4,593,154  4,311,342  5,909,260  5,396,654  2,726,910
Goodwill   7,793,665  7,793,665  7,793,665  6,847,424  633,790
Core deposit intangible   5,058,951  5,287,501  5,518,619  5,749,737  3,513,889
Other assets   4,390,527  2,575,377  3,059,574  3,332,944  2,575,612
Total assets   $ 1,192,937,466  $ 1,167,223,124  $ 1,179,713,455  $ 1,147,084,642  $ 868,986,147
           
Deposits           
Non-interest bearing   $ 234,512,077  $ 228,733,624  $ 223,503,418  $ 213,570,493  $ 188,172,189
Interest bearing   773,640,266  745,625,862  761,869,410  781,968,601  560,330,114
Total deposits   1,008,152,343  974,359,486  985,372,828  995,539,094  748,502,303
Short term borrowings   38,193,867  49,530,125  56,204,082  28,818,101  31,510,107
Long term borrowings   6,071,856  6,093,074  6,118,744  6,142,962  6,166,788
Accrued interest payable   241,981  264,807  250,164  259,847  279,907
Accrued pension   4,996,120  4,921,241  4,844,855  4,768,470  4,690,584
Other liabilities   5,733,491  5,505,073  3,791,019  3,825,204  2,749,707
Total liabilities   1,063,389,658  1,040,673,806  1,056,581,692  1,039,353,678  793,899,396
           
Stockholders' equity           
Common stock   107,854  107,772  107,612  98,202  68,538
Additional paid-in capital   104,748,891  104,622,171  104,408,960  92,145,572  53,875,593
Retained earnings   26,283,617  24,879,275  20,882,086  19,066,586  19,543,682
Accumulated other comprehensive income (loss)   (1,871,087)  (3,359,823)  (2,628,710)  (3,946,354)  1,220,486
Total Old Line Bancshares, Inc.          
stockholders' equity   129,269,275  126,249,395  122,769,948  107,364,006  74,708,299
Non-controlling interest   278,533  299,923  361,815  366,958  378,452
Total stockholders' equity   129,547,808  126,549,318  123,131,763  107,730,964  75,086,751
Total liabilities and  stockholders' equity   $ 1,192,937,466  $ 1,167,223,124  $ 1,179,713,455  $ 1,147,084,642  $ 868,986,147
Shares of basic common stock outstanding   10,785,370  10,777,112  10,761,112  9,820,217  6,853,814
           
(1) Financial information as of December 31, 2013 has been derived from audited financial statements. 
 
 
 
Old Line Bancshares, Inc. & Subsidiaries
Consolidated Statements of Income
           
  Three Months
Ended
March 31,
Three Months
Ended
December 31,
Three Months
Ended
September 30,
Three Months
Ended
June 30,
Three Months
Ended
March 31,
  2014 2013 (1) 2013 2013 2013
  (Unaudited)   (Unaudited) (Unaudited) (Unaudited)
Interest income          
Loans, including fees  $ 10,333,973  $ 11,519,191  $ 11,527,459  $ 9,327,905  $ 7,831,823
Investment securities and other  1,037,897  1,060,493  1,031,015  979,699  985,253
Total interest income  11,371,870  12,579,684  12,558,474  10,307,604  8,817,076
Interest expense          
Deposits  894,303  923,039  970,911  964,955  857,139
Borrowed funds  118,276  122,522  111,728  139,472  112,487
Total interest expense  1,012,579  1,045,561  1,082,639  1,104,427  969,626
Net interest income  10,359,291  11,534,123  11,475,835  9,203,177  7,847,450
Provision for loan losses  269,769  514,190  590,000  200,000  200,000
Net interest income after provision for loan losses  10,089,522  11,019,933  10,885,835  9,003,177  7,647,450
Non-interest income          
Service charges on deposit accounts  451,596  472,945  466,571  367,674  300,741
Gain on sales or calls of investment securities  --   --   --   9,659  631,429
Gain on sale of stock  96,993  --   --   --   -- 
Earnings on bank owned life insurance  243,607  252,265  253,894  200,641  133,228
Losses on disposal of assets  --   --   --   (19,078)  (85,561)
Gain on sale of loans  106,720  3,601,972  236,167  51,890  -- 
Other fees and commissions  493,209  852,470  594,324  301,268  247,683
Total non-interest income  1,392,125  5,179,652  1,550,956  912,054  1,227,520
Non-interest expense          
Salaries & employee benefits  4,873,634  4,668,944  4,684,407  4,031,892  3,232,677
Occupancy & Equipment  1,586,777  1,513,265  1,556,221  1,214,947  1,068,867
Data processing  307,160  393,863  459,973  329,878  239,057
Merger and integration  29,167  349,028  143,082  2,786,350  240,485
Core deposit amortization  228,550  231,119  231,118  198,875  177,582
(Gains)losses on sales other real estate owned  (203,068)  (210,665)  11,072  (145,795)  200,454
OREO expense  83,066  210,122  159,234  154,908  314,165
Other operating  2,071,256  2,284,281  2,017,902  1,723,373  1,606,608
Total non-interest expense  8,976,542  9,439,957  9,263,009  10,294,428  7,079,895
           
Income (loss) before income taxes  2,505,105  6,759,628  3,173,782  (379,197)  1,795,075
Income tax (benefit) expense  690,737  2,393,268  970,510  (283,417)  521,722
Net income (loss)  1,814,368  4,366,360  2,203,272  (95,780)  1,273,353
Less: Net (loss) attributable to the noncontrolling interest  (21,389)  (61,892)  (5,142)  (11,495)  (13,095)
Net income (loss) available to common stockholders  $ 1,835,757  $ 4,428,252  $ 2,208,414  $ (84,285)  $ 1,286,448
Earnings (loss) per basic share  $ 0.17  $ 0.41  $ 0.22  $ (0.01)  $ 0.19
Earnings (loss) per diluted share  $ 0.17  $ 0.41  $ 0.22  $ (0.01)  $ 0.19
Dividend per common share  $ 0.04  $ 0.04  $ 0.04  $ 0.04  $ 0.04
Average number of basic shares  10,780,141  10,768,104  10,004,138  8,505,016  6,848,505
Average number of dilutive shares  10,891,654  10,891,654  10,117,380  8,609,164  6,950,749
           
(1) Financial information as of December 31, 2013 has been derived from audited financial statements.
   
   
   
  Old Line Bancshares, Inc. & Subsidiaries
  Average Balances, Interest and Yields
                       
    3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
    Average
Balance

Yield
Average
Balance

Yield
Average
Balance

Yield
Average
Balance

Yield
Average
Balance

Yield
  Assets:                    
  Int. Bearing Deposits  $ 1,352,504 0.12%  $ 2,903,193 0.11%  $ 2,997,163 0.09%  $ 6,978,382 0.11%  $ 1,870,920 0.15%
  Investment Securities  174,564,325 3.06%  188,455,728 2.82%  193,421,563 2.70%  180,559,860 2.81%  168,672,425 3.06%
  Loans  851,079,999 5.00%  837,359,182 5.54%  817,877,455 5.67%  721,222,893 5.28%  605,701,991 5.35%
  Allowance for Loan Losses  (5,001,250)    (4,609,398)    (4,353,910)    (4,164,025)    (4,058,816)  
  Total Loans                    
  Net of allowance  846,078,749 5.03%  832,749,784 5.57%  813,523,545 5.71%  717,058,868 5.31%  601,643,175 5.39%
  Total interest-earning assets  1,021,995,578 4.69%  1,024,108,705 5.05%  1,009,942,271 5.11%  904,597,110 4.77%  772,186,520 4.87%
  Noninterest bearing cash  36,258,104    38,364,347    40,562,522    45,762,911    25,465,996  
  Other Assets  110,237,569    111,316,325    113,104,275    85,200,150    62,206,398  
  Total Assets  $ 1,168,491,251    $ 1,173,789,377    $ 1,163,609,068    $ 1,035,560,171    $ 859,858,914  
                       
  Liabilities and Stockholders' Equity                    
                       
  Interest-bearing Deposits  $ 751,439,481 0.48%  $ 754,128,604 0.49%  $ 770,907,260 0.50%  $ 686,544,106 0.56%  $ 552,649,682 0.63%
  Borrowed Funds  51,661,794 0.93%  53,222,290 0.91%  41,022,029 1.08%  41,494,215 1.35%  40,335,859 1.13%
  Total interest-bearing liabilities  803,101,275 0.51%  807,350,894 0.51%  811,929,289 0.53%  728,038,321 0.61%  592,985,541 0.66%
  Noninterest bearing deposits  229,229,562    228,810,018    226,431,720    205,050,472    187,697,564  
     1,032,330,837    1,036,160,912    1,038,361,009    933,088,793    780,683,105  
                       
  Other Liabilities  10,813,815    8,360,917    7,569,553    6,624,502    6,909,547  
  Noncontrolling Interest  285,355    300,800    363,349    369,671    387,467  
  Stockholder's Equity  125,061,244    128,966,748    117,315,157    95,477,205    71,878,795  
  Total Liabilities and Stockholder's Equity  $ 1,168,491,251    $ 1,173,789,377    $ 1,163,609,068    $ 1,035,560,171    $ 859,858,914  
                       
  Net interest spread   4.18%   4.54%   4.58%   4.16%   4.21%
  Net interest income and Net interest margin(1)  $ 10,809,169 4.29%  $ 11,986,354 4.64%  $ 11,933,938 4.69%  $ 9,657,000 4.28%  $ 8,299,213 4.36%
 (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 positively impacted the yield on loans and increased the net interest margin in each of these three month periods as follows:

  3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
                     
  Fair Value
Accretion
Dollars
% Impact on
Net Interest
Margin
Fair Value
Accretion
Dollars
% Impact on
Net Interest
Margin
Fair Value
Accretion
Dollars
% Impact on
Net Interest
Margin
Fair Value
Accretion
Dollars
% Impact on
Net Interest
Margin
Fair Value
Accretion
Dollars
% Impact on
Net Interest
Margin
 Commercial loans (1)  $ 7,468  0.00%  $ 102  0.00%  $ 14,763  0.01%  $ 38,933  0.02%  $ 209,144  0.11%
 Mortgage loans (1)  287,526  0.11  1,322,480  0.51  1,221,653  0.48  173,261  0.07  (4,500)  (0.00)
 Consumer loans  4,635  0.00  7,821  0.00  6,032  0.00  2,876  0.00  2,371  0.00
 Interest bearing deposits  129,327  0.05  164,527  0.06  178,556  0.07  85,046  0.05  33,461  0.02
 Total Fair Value Accretion  $ 428,956  0.16%  $ 1,494,930  0.57%  $ 1,421,004  0.56%  $ 300,116  0.14%  $ 240,476  0.13%
 (1)  Reclassification of a single loan from mortgage loans to commercial loans during the period caused the negative amortization in mortgage loans during the first quarter of 2013, The impact of this reclassification was immaterial in prior periods.

Below is a reconciliation of the fully tax equivalent adjustments and the GAAP basis information presented in this report:

  3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
  Net Interest
Income

Yield
Net Interest
Income

Yield
Net Interest
Income

Yield
Net Interest
Income

Yield
Net Interest
Income

Yield
GAAP net interest income  $ 10,359,291  4.11%  $ 11,534,123  4.46%  $ 11,475,835  4.51%  $ 9,203,177  4.08%  $ 7,847,450  4.12%
Tax equivalent adjustment                    
Federal funds sold  --   --   --   --   --   --   1  0.00  2  0.00
Investment securities  281,377  0.11  282,137  0.11  286,755  0.11  285,049  0.13  287,612  0.15
Loans  168,501  0.07  170,094  0.07  171,348  0.07  168,773  0.07  164,149  0.09
Total tax equivalent adjustment  449,878  0.18  452,231  0.18  458,103  0.18  453,823  0.20  451,763  0.24
Tax equivalent interest yield  $ 10,809,169  4.29%  $ 11,986,354  4.64%  $ 11,933,938  4.69%  $ 9,657,000  4.28%  $ 8,299,213  4.36%
 
 
Old Line Bancshares, Inc. & Subsidiaries
Selected Loan Information
(Dollars in thousands)
  March 31,
2014
December 31,
2013
September 30,
2013
June 30,
2013
March 31,
2013
 Acquired Loans(1)          
 Non-accrual(2)  $ 861  $ 663  $ --   $ --   $ 4,064
 Accruing 30-89 days past due  2,977  3,198  2,985  6,965  802
 Accruing 90 or more days past due(4)  477  --   2,434  15,251  -- 
           
 Legacy Loans(3)          
 Non-accrual  $ 7,202  $ 8,156  $ 1,870  $ 1,889  $ 1,388
 Accruing 30-89 days past due  1,601  1,574  2,292  2,607  2,077
 Accruing 90 or more days past due  218  2  1,951  --   -- 
           
 Allowance for loan losses as % of held for investment loans 0.57% 0.58% 0.55% 0.54% 0.66%
 Allowance for loan losses as % of legacy loans 0.76% 0.78% 0.77% 0.83% 0.84%
 Total non-performing loans as a % of held for investment loans 1.56% 1.73% 0.77% 2.18% 0.89%
 Total non-performing assets as a % of total assets 1.12% 1.27% 1.03% 1.96% 0.94%
(1)  Acquired loans represent all loans acquired on April 1, 2011 from MB&T and on May 10, 2013 from WSB. 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 and May 10, 2013.
(4)  Previously reported non-accrual loans have been reclassified due to the accretion of income and are reported on a past due basis.
OLD LINE BANCSHARES, INC.
MARK SEMANIE
ACTING CHIEF FINANCIAL OFFICER
(301) 430-2508