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%.
- 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.
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|
|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|
|Other real estate owned||3,719,449||3,231,449||3,490,730||3,919,461||4,004,609|
|Core deposit intangible||3,691,471||3,869,054||4,046,636||4,224,218||4,418,892|
|Total assets||$ 861,856,477||$ 863,882,478||$ 846,164,399||$ 809,691,781||$ 811,042,301|
|Non-interest bearing||$ 188,895,263||$ 185,347,907||$ 186,639,878||$ 169,180,497||$ 170,138,329|
|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|
|Additional paid-in capital||53,798,245||53,647,456||53,574,827||53,519,196||53,489,075|
|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|
|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,|
|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|
|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|
|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|
|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||--|
|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|
|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|
|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,|
|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,|
|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||--|
|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) 430-2544