Old Line Bancshares, Inc. Reports Record Quarterly Results of $4.3 Million in Net Income, Loan Growth of 5.32%, Return on Average Assets of 1.03% and Operating Efficiency of 55.63% for the Quarter Ended December 31, 2016

BOWIE, MD / ACCESSWIRE / January 17, 2017 / Old Line Bancshares, Inc. (“Company”) (NASDAQ: OLBK), the parent company of Old Line Bank, reports net income available to common stockholders increased $788 thousand, or 22.24%, and $2.3 million, or 116.35%, respectively, to $4.3 million for the three months ended December 31, 2016, compared to $3.5 million for the three month period ended September 30, 2016 and $2.0 million for the three month period ended December 31, 2015. Earnings were $0.40 per basic and $0.39 per diluted common share for the three months ended December 31, 2016, compared to $0.33 per basic and $0.32 per diluted common share for the three months ended September 30, 2016 and $0.19 per basic and diluted common share for the three months ended December 31, 2015. The increase in net income for the fourth quarter of 2016, as compared to the same 2015 period, is primarily the result of a $1.8 million increase in net interest income, a decrease of $1.5 million in non-interest expenses, and a decrease of $200 thousand in the provision for loan losses

Net loans held-for-investment at December 31, 2016 increased $68.7 million, or 5.32%, compared to September 30, 2016 and $214.1 million, or 18.67%, compared to December 31, 2015. Total assets increased $66.6 million to $1.72 billion at December 31, 2016, as compared to $1.65 billion at September 30, 2016. Non-interest income decreased $567 thousand, as compared to third quarter of 2016, primarily as a result of a reduction on the gain on investment securities and marketable loans, and $23 thousand compared to the fourth quarter of 2015. Non-interest expense decreased $1.1 million, or 11.52%, and $1.5 million, or 15.60%, respectively, for the three month period ending December 31, 2016, compared to the three month periods ending September 30, 2016 and December 31, 2015. This decrease is the result of a reduction in salaries and benefits and occupancy expense associated with the staff reduction and branch closures implemented in the second and third quarters of 2016.

Net income available to common stockholders was $13.2 million for the twelve months ended December 31, 2016, compared to $10.5 million for the same period of 2015, an increase of $2.7 million, or 25.66%. Earnings were $1.21 per basic and $1.20 per diluted common share for the twelve months ended December 31, 2016, compared to $0.98 per basic and $0.97 per diluted common share for the same period of 2015. The increase in net income is primarily the result of increases of $6.4 million, or 13.63%, in net interest income and an increase of $1.4 million, or 20.61%, in non-interest income, partially offset by increases of $3.4 million in non-interest expenses and $274 thousand in the provision for loan losses. Included in net income for 2016 was $443 thousand for severance payments and $285 thousand in occupancy and equipment expense resulting from the previously announced strategic staff reductions and branch closures, as well as $661 thousand in merger related expense associated with the acquisition of Regal Bancorp, Inc., the parent company of Regal Bank & Trust (“Regal Bank”) during the fourth quarter of 2015.

James W. Cornelsen, President and Chief Executive Officer of Old Line Bancshares, Inc., stated: “Robust loan growth of 5.32%, along with improving operating efficiency to 55.63%, resulted in record earnings for the quarter. Achieving Return on Average Assets of 1.03% in conjunction with increased earnings per share is significant for our shareholders. We are proud of our 2016 results with loan growth at a rate of 18.67% and an increase to income of $2.7 million over 2015. Looking forward to 2017, our focus is to continue to enhance our profitability, build on our solid foundation by growing our loan and non-maturity deposit portfolios, and maintain our operating efficiency while investing in new growth opportunities.”

4th QUARTER HIGHLIGHTS:

Net income available to common stockholders increased 22.24% to $4.3 million, or $0.40 per basic and $0.39 per diluted share, for the three month period ending December 31, 2016, from $3.5 million, or $0.33 per basic and $0.32 per diluted share, for the prior quarter ending September 30, 2016.
Net loans held-for-investment increased $68.7 million, or 5.32% during the three months ended December 31, 2016, to $1.4 billion at December 31, 2016, compared to $1.3 billion at September 30, 2016, as a result of organic growth within our market area.
Non-performing assets decreased to 0.58% of total assets at December 31, 2016, compared to 0.63% at September 30, 2016.
The fourth quarter 2016 Return on Average Assets (ROAA) and Return on Average Equity (ROAE) were 1.03% and 11.10%, respectively, compared to ROAA and ROAE of 0.56% and 5.59%, respectively, for the fourth quarter of 2015.
Operating efficiency improved to 55.63% during the quarter ended December 31, 2016, compared to 63.30% during the three months ended September 30, 2016 and 73.34% during the three months ended December 31, 2015.
The net interest margin during the three months ended December 31, 2016 was 3.75%, compared to 3.73% for the three months ended September 30, 2016 and 3.98% for the three months ended December 31, 2015. Total yield on interest earning assets increased to 4.36% for the three months ending December 31, 2016, from 4.27% for the three months ended September 30, 2016 and decreased from 4.41% for the three month period ended December 31, 2015. Interest expense as a percentage of total interest-bearing liabilities was 0.79% for the three months ended December 31, 2016, compared to 0.56% for the same three month period of 2015, with the increase being driven by the issuance of $35 million in aggregate principal amount of the Company’s 5.625% Fixed-to-Floating Rate Subordinated Notes due in 2026 (the “Notes”).

2016 FULL YEAR HIGHLIGHTS:

Net income available to common stockholders increased $2.7 million, or 25.66% to $13.2 million, or $1.21 per basic and $1.20 per diluted share, for the twelve month period ending December 31, 2016, from $10.5 million, or $0.98 per basic and $0.97 per diluted share, for the twelve months ending December 31, 2015.
Net loans held-for-investment grew $214.1 million, or 18.67%, during the twelve months ended December 31, 2016, to $1.4 billion at December 31, 2016, compared to $1.1 billion at December 31, 2015, as a result of organic growth within our market area.
The growth in average loans outstanding for the twelve month period ending December 31, 2016 as compared to the same period of 2015 includes approximately $91.0 million in loans from the acquisition of Regal Bank in December 2015. Average gross loans increased $242.8 million, or 22.33% to $1.3 billion for the three month period ending December 31, 2016 compared to $1.1 billion during the three months ended December 31, 2015
Non-performing assets decreased to 0.58% of total assets at December 31, 2016 compared to 0.60% at December 31, 2015.
ROAA and ROAE were 0.83% and 8.83%, respectively, for the twelve months ended December 31, 2016 compared to ROAA and ROAE of 0.79% and 7.54%, respectively, for the twelve months ending December 31, 2015.
Total assets increased $206.6 million, or 13.68%, since December 31, 2015.
Total deposits increased $90.0 million, or 7.28%, since December 31, 2015.
The net interest margin during the year ended December 31, 2016 was 3.79%, compared to 4.08% for 2015. Total yield on interest earning assets decreased to 4.31% for the year ending December 31, 2016, compared to 4.49% for 2015. Interest expense as a percentage of total interest-bearing liabilities was 0.68% for the year ended December 31, 2016, compared to 0.54% for 2015.
The Company ended 2016 with a book value of $13.81 per common share and a tangible book value of $12.59 per common share, compared to $13.31 and $12.02, respectively, at December 31, 2015.
We maintained appropriate levels of liquidity and by all regulatory measures remained “well capitalized.”
On August 15, 2016, the Company completed the sale of the Notes.
On August 19, 2016, Old Line Bank purchased the aggregate 37.5% interest in Pointer Ridge Office Investment, LLC (“Pointer Ridge”) not held by the Company for an aggregate of $280,139 pursuant to Agreements of Purchase and Sale of Membership Interests that the Bank entered into with each of the prior owners of the remaining (in aggregate) 37.5% interest in Pointer Ridge. Pointer Ridge owns our headquarters building, which we lease from Pointer Ridge.

Total assets at December 31, 2016 increased $206.6 million from December 31, 2015, primarily due to increases of $214.1 million in loans held-for-investment and $4.8 million in investment securities available-for-sale, partially offset by a decrease of $20.2 million in cash and cash equivalents. Deposits increased $90.0 million during the twelve months ended December 31, 2016, almost all of which is attributable to an increase in our interest bearing deposits.

Average interest earning assets increased $268.8 million and $260.4 million, respectively, during the three and twelve month periods ending December 31, 2016, compared to the same periods of 2015. The average yield on such assets was 4.36% and 4.31%, respectively, for the three and twelve months ending December 31, 2016, compared to 4.41% and 4.49% for the comparable 2015 periods. The decreases in the yield on interest earning assets is the result of re-pricing in the loan portfolio and lower yields on new loans, causing the average loan yield to decline. Average interest bearing liabilities increased $202.5 million and $200.4 million, respectively, during the three and twelve month periods ending December 31, 2016, compared to the same periods of 2015. The average rate paid on such liabilities increased to 0.79% and 0.68%, respectively, for the three and twelve months ending December 31, 2016, compared to 0.56% and 0.54% for the same periods in 2015, primarily due to higher rates paid on our borrowings, which includes the interest paid on the Notes and our trust preferred securities and, to a lesser extent, higher rates on the deposits acquired in the Regal Bank acquisition.

The net interest margin for the three and twelve months ended December 31, 2016 decreased to 3.75% and 3.79%, respectively, from 3.98% and 4.08%, respectively, for the three and twelve months ending December 31, 2015. The net interest margin during the 2016 periods was affected by the increase in the interest expense, primarily due to the interest due on the Notes and our trust preferred securities, for which there was no comparable expense during 2015. The net interest margin during 2016 was also affected by a lower amount of accretion on acquired loans due to a lower amount of early payoffs on acquired loans with credit marks during the twelve months ending December 31, 2016, compared to the same periods of 2015. The fair value accretion/amortization is recorded on pay-downs recognized during the period, which contributed to a five basis point decrease for the twelve months ended December 31, 2016 as compared to the same twelve month period of 2015.

Net interest income increased $1.8 million, or 14.43%, and $6.4 million, or 13.63%, for the three and twelve month periods ending December 31, 2016, compared to the same periods of 2015, primarily due to increases in the interest recognized on loans, partially offset by the increases in interest expense. Loan interest income increased for the three and twelve month periods ending December 31, 2016 due to organic growth as well as the loans we acquired in the Regal Bank acquisition. Interest expense during these periods increased due to increases in both our deposits and borrowings. Borrowings include the Notes issued during the third quarter of 2016 as discussed above.

The provision for loan losses decreased $200 thousand for the three months ending December 31, 2016, compared to the same period of 2015, due to an improvement in our historical loss trend, and increased $274 thousand for the twelve months ending December 31, 2016, compared to the same period of 2015 due to an increase in our loans held-for-investment portfolio as the result of organic growth and reserves on specific loans. The reserves on specific loans increased primarily due to one large commercial borrower, consisting of two commercial real estate loans totaling $2.4 million, and 21 commercial and industrial loans totaling $1.0 million. These loans are classified as impaired and have been adequately reserved for at December 31, 2016.

Non-interest income decreased $23 thousand, or 1.44%, for the three month period ending December 31, 2016, compared to the same period of 2015, primarily as a result of a decrease of $155 thousand in other fee and commissions, partially offset by the increases of $96 thousand in gain on sale of loans and $22 thousand in earnings on bank owned life insurance, compared to the same period of 2015. The increase in the gain on the sale of loans is a result of an increase in the number of residential mortgage loans sold in the secondary market, compared to the same period of 2015. The increase in earnings on bank owned life insurance is due to the bank owned life insurance we acquired in the Regal Bank acquisition. The decrease in other fees and commissions is primarily related to a decrease in other loan fees, primarily due to a prepayment penalty of $78 thousand received during the fourth quarter of 2015.

Non-interest income increased $1.4 million, or 20.61%, for the twelve month period ending December 31, 2016, compared to the same period of 2015. The increase is primarily the result of increases of $1.2 million in gain on sales or calls of investment securities, $298 thousand in gain on sale of loans and $123 thousand in earnings on bank owned life insurance, partially offset by decreases of $130 thousand in other fees and commissions and $41 thousand in gains or losses on disposal of assets. The increase in gain on sales of investment securities is the result of re-positioning our investment portfolio during 2016, pursuant to which we sold approximately $108 million of our lowest yielding, longer duration investments, resulting in a gain on investments. The decrease in other fees and commissions is primarily related to other loan fees that were included in 2015 for a prepayment penalty and the gain of $153 thousand received during the third quarter of 2015 as a result of selling our credit card portfolio in 2015, partially offset by a one-time incentive fee received for our debit card program during 2016. The increase in earnings on bank owned life insurance is due to the bank owned life insurance we acquired in the Regal Bank acquisition. The increase in gain on sale of loans is the result of an increase in the premiums received on residential mortgage loans sold in the secondary market during the twelve months period ending December 31, 2016 as compared to the same period last year.

Non-interest expense decreased $1.5 million, or 14.60%, for the three month period ending December 31, 2016, compared to the same period of 2015, primarily as a result of decreases in merger and integration and other real estate owned (“OREO”) expenses, partially offset by increases in occupancy and equipment and data processing expenses. There were no merger and integration expenses during the 2016 period, whereas we incurred $661 thousand of merger and integration expenses during the fourth quarter of 2015 in connection with the Regal Bancorp acquisition that consummated that quarter. OREO expenses decreased for the 2016 period as a result of a reduction on our expenses associated with properties in our OREO portfolio. Occupancy and equipment expense increased as a result of the addition of the former Regal Bank branches and the addition of our new Rockville branches in November 2015 and June 2016.

Non-interest expenses increased $3.4 million, or 9.28%, for the twelve month period ending December 31, 2016, compared to the same period of 2015, primarily as a result of increases in salaries and benefits, severance payments, occupancy and equipment data processing, and other operating expenses, partially offset by a reduction in merger and integration expenses, a gain on sales of OREO properties, and a decrease in OREO expenses. Salaries and benefits increased $2.4 million, primarily as a result of additional staff due to our acquisition of Regal Bank and the additional staff for our two new Rockville locations. Severance payments of $443 thousand were associated with the previously discussed reductions in our operating staff. Occupancy and equipment increased $1.0 million as a result of the additional branches acquired in the Regal Bank acquisition and the additional opening of our two new Rockville locations, as well as the costs associated with the branch closures during the third quarter of 2016. Data processing increased as a result of the additional branches acquired through Regal Bank and the new Rockville locations. Merger and integration expenses decreased due to the majority of such expenses associated with the acquisition of Regal Bancorp being incurred during the year that the merger was consummated – 2015. Gain on sales of OREO properties increased $128 thousand as a result of recording a net gain of $78 thousand for seven properties that sold during the twelve months ending December 31, 2016, compared to a net loss of $50 thousand during the same period last year. OREO expenses decreased as a result of a reduction in our expenses on the properties in our OREO portfolio.

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 21 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, 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.

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Balance Sheets

December 31,

2016

September 30,

2016

June 30,

2016

March 31,

2016

December 31,

2015 (1)

(Unaudited)

Cash and due from banks

$
22,062,912

$
28,696,913

$
32,123,006

$
34,108,645

$
40,239,384

Interest bearing accounts

1,151,917

1,159,687

1,167,418

1,150,474

1,135,263

Federal funds sold

248,342

301,262

352,572

325,606

2,326,045

Total cash and cash equivalents

23,463,171

30,157,862

33,642,996

35,584,725

43,700,692

Investment securities available for sale

199,505,204

201,830,885

190,297,596

190,749,087

194,705,675

Loans held for sale

8,418,435

7,578,285

6,111,808

4,148,506

8,112,488

Loans held for investment, less allowance for loan losses of $6,195,469 and $4,909,818 for December 31, 2016 and December 31, 2015

1,361,175,206

1,292,431,559

1,242,017,598

1,175,828,165

1,147,034,715

Equity securities at cost

8,303,347

6,603,346

7,304,646

5,710,845

4,942,346

Premises and equipment

35,700,659

36,153,064

36,567,012

35,995,176

36,174,978

Accrued interest receivable

4,278,229

3,686,161

3,704,287

3,655,444

3,814,546

Deferred income taxes

17,248,375

13,600,152

12,666,462

12,828,069

13,820,679

Bank owned life insurance

37,557,566

37,321,217

37,081,638

36,843,873

36,606,105

Other real estate owned

2,746,000

1,934,720

2,443,543

2,698,344

2,472,044

Goodwill

9,786,357

Core deposit intangible

3,520,421

3,721,858

3,923,987

4,124,985

4,351,226

Other assets

4,986,685

5,299,676

4,482,981

5,062,691

4,567,038

Total assets

$
1,716,689,655

$
1,650,105,142

$
1,590,030,911

$
1,523,016,267

$
1,510,088,889

Deposits

Non-interest bearing

$
331,331,263

$
328,967,215

$
313,439,435

$
328,797,753

$
328,549,405

Interest bearing

994,549,269

972,325,625

949,451,184

904,751,898

907,330,561

Total deposits

1,325,880,532

1,301,292,840

1,262,890,619

1,233,549,651

1,235,879,966

Short term borrowings

183,433,892

141,775,684

153,751,725

118,571,030

107,557,246

Long term borrowings

37,842,567

37,776,841

9,559,018

9,561,842

9,593,318

Accrued interest payable

1,269,356

712,080

448,406

448,677

416,686

Supplemental executive retirement plan

5,613,799

5,547,176

5,479,842

5,405,763

5,336,509

Income taxes payable

7,688,731

6,677,102

5,418,623

4,721,336

3,615,677

Other liabilities

4,293,993

4,466,051

3,275,804

4,473,968

3,700,598

Total liabilities

1,566,022,870

1,498,247,774

1,440,824,037

1,376,732,267

1,366,100,000

Stockholders’ equity

Common stock

109,109

108,591

108,164

108,026

Additional paid-in capital

106,692,958

106,000,537

105,555,548

105,408,038

105,293,606

Retained earnings

48,842,026

45,166,362

42,275,517

39,793,541

38,290,876

Accumulated other comprehensive income (loss)

(4,977,308
)

581,878

1,009,402

717,881

38,200

Total Old Line Bancshares, Inc. stockholders’ equity

150,666,785

151,857,368

148,948,631

146,027,486

143,730,708

Non-controlling interest

–

258,243

256,514

258,181

Total stockholders’ equity

150,666,785

151,857,368

149,206,874

146,284,000

143,988,889

Total liabilities and stockholders’ equity

$
1,716,689,655

$
1,650,105,142

$
1,590,030,911

$
1,523,016,267

$
1,510,088,889

Shares of basic common stock outstanding

10,910,915

10,859,074

10,816,429

10,802,560

(1) Financial information at December 31, 2015 has been derived from audited financial statements.

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Statements of Income

Three Months

Ended

December

Three Months

Ended

September 30,

Three Months

Ended

June 30,

Three Months

Ended

March 31,

Three Months

Ended

December 31,

Twelve Months

Ended

December 31,

Twelve Months

Ended

December 31,

2016

2015

2016

2015

(Unaudited)

(1)

Interest income

Loans, including fees

$
15,219,684

$
14,191,639

$
13,562,643

$
13,057,180

$
12,646,217

$
56,031,146

$
47,948,411

Investment securities and other

1,134,253

1,146,898

1,051,097

1,101,146

977,533

4,433,394

3,504,383

Total interest income

16,353,937

15,338,537

14,613,740

14,158,326

13,623,750

60,464,540

51,452,794

Interest expense

Deposits

1,507,180

1,421,842

1,309,379

1,270,432

1,196,381

$
5,508,833

4,246,990

Borrowed funds

834,298

577,709

328,613

275,659

181,876

2,016,279

617,308

Total interest expense

2,341,478

1,999,551

1,637,992

1,546,091

1,378,257

7,525,112

4,864,298

Net interest income

14,012,459

13,338,986

12,975,748

12,612,235

12,245,493

52,939,428

46,588,496

Provision for loan losses

200,000

305,931

300,000

778,611

400,000

1,584,542

1,310,984

Net interest income after provision for loan losses

13,812,459

13,033,055

12,675,748

11,833,624

11,845,493

51,354,886

45,277,512

Non-interest income

Service charges on deposit accounts

437,900

445,901

433,498

411,337

430,964

1,728,636

1,729,773

Gain on sales or calls of investment securities

1,682

326,021

823,214

76,998

–

1,227,915

65,222

Earnings on bank owned life insurance

282,875

284,982

282,358

282,186

260,898

1,132,401

1,009,653

Gains (losses) on disposal of assets

(3
)

(49,957
)

22,784

–

(5,847
)

(27,176
)

14,128

Gain on sale of loans

570,970

782,510

587,030

377,138

474,941

2,317,648

2,019,403

Other fees and commissions

277,428

348,391

414,800

835,994

432,810

1,876,613

2,006,816

Total non-interest income

1,570,852

2,137,848

2,563,684

1,983,653

1,593,766

8,256,037

6,844,995

Non-interest expense

Salaries & employee benefits

4,319,736

4,812,949

5,079,143

5,376,552

4,319,029

19,588,380

17,237,223

Severance expense

–

49,762

393,495

–

443,257

–

Occupancy & Equipment

1,509,077

1,907,090

1,647,490

1,724,553

1,487,028

6,788,210

5,775,878

Data processing

384,000

384,382

383,689

397,792

361,991

1,549,863

1,432,182

Merger and integration

–

301,538

359,481

1,420,570

661,019

1,420,570

Core deposit amortization

201,437

202,129

200,998

226,241

194,507

830,805

792,350

(Gains) losses on sales of other real estate owned

2,278

(27,914
)

(48,099
)

(4,208
)

20,502

(77,943
)

49,716

OREO expense

23,116

77,224

63,192

154,966

75,824

318,498

430,560

Other operating

2,228,915

2,391,728

2,531,292

2,389,142

2,270,861

9,541,077

9,137,204

Total non-interest expense

8,668,559

9,797,350

10,552,738

10,624,519

10,150,312

39,643,166

36,275,683

Income before income taxes

6,714,752

5,373,553

4,686,694

3,192,758

3,288,947

19,967,757

15,846,824

Income tax expense

2,384,312

1,830,921

1,554,000

1,043,366

1,286,496

6,812,599

5,382,390

Net income

4,330,440

3,542,632

3,132,694

2,149,392

2,002,451

13,155,158

10,464,434

Less: Net income (loss) attributable to the noncontrolling interest

–

1,728

(1,667
)

898

(4,152
)

Net income available to common stockholders

$
4,330,440

$
3,542,632

$
3,130,966

$
2,151,059

$
2,001,553

$
13,155,097

$
10,468,586

Earnings per basic share

$
0.40

$
0.33

$
0.29

$
0.20

$
0.19

$
1.21

$
0.98

Earnings per diluted share

$
0.39

$
0.32

$
0.28

$
0.20

$
0.19

$
1.20

$
0.97

Dividend per common share

$
0.06

$
0.24

$
0.21

Average number of basic shares

10,878,153

10,848,418

10,816,429

10,802,560

10,604,667

10,837,939

10,647,986

Average number of dilutive shares

11,054,979

11,033,655

10,989,854

10,962,867

10,760,832

10,997,485

10,784,323

Return on Average Assets

1.03
%

0.88
%

0.81
%

0.57
%

0.56
%

0.83
%

0.79
%

Return on Average Equity

10.93
%

9.39
%

8.63
%

6.01
%

5.60
%

8.83
%

7.54
%

Operating Efficiency (2)

55.63
%

63.30
%

67.91
%

72.79
%

73.34
%

64.78
%

67.89
%

(1) Financial information at December 31, 2015 has been derived from audited financial statements.
(2) Operating efficiency is derived by dividing non-interest expense by the total of net interest income and non-interest income.

Old Line Bancshares, Inc. & Subsidiaries

Average Balances, Interest and Yields

12/31/2016

9/30/2016

6/30/2016

3/31/2016

12/31/2015

Average

Balance

Yield/ Rate

Average

Balance

Yield/ Rate

Average

Balance

Yield/ Rate

Average

Balance

Yield/ Rate

Average

Balance

Yield/ Rate

Assets:

Int. Bearing Deposits

$
1,480,748

0.52
%

$
1,504,448

0.47
%

$
1,848,237

0.47
%

$
2,538,719

0.47
%

$
2,163,496

0.26
%

Investment Securities (2)

212,267,718

2.44
%

202,986,618

2.72
%

192,652,161

2.67
%

197,036,394

2.71
%

182,660,126

2.65
%

Loans

1,330,488,055

4.62
%

1,271,170,965

4.50
%

1,214,193,241

4.57
%

1,172,758,851

4.56
%

1,087,653,696

4.70
%

Allowance for Loan Losses

(6,420,517
)

(6,145,988
)

(5,844,078
)

(5,050,728
)

(3,505,864
)

Total Loans

Net of allowance

1,324,067,538

4.64
%

1,265,024,977

4.52
%

1,208,349,163

4.59
%

1,167,708,123

4.58
%

1,084,147,832

4.71
%

Total interest-earning assets

1,537,816,004

4.36
%

1,469,516,043

4.27
%

1,402,849,561

4.32
%

1,367,283,236

4.30
%

1,268,971,454

4.41
%

Noninterest bearing cash

27,124,238

28,168,294

43,063,212

43,812,578

42,032,492

Goodwill and Intangibles

13,438,139

13,639,968

13,841,392

14,055,039

11,213,710

Other Assets

98,599,277

94,685,204

96,131,050

96,475,402

92,615,684

Total Assets

$
1,676,977,658

$
1,606,009,509

$
1,555,885,215

$
1,521,626,255

$
1,414,833,340

Liabilities and Stockholders’ Equity

Interest-bearing Deposits

$
976,900,133

0.61
%

$
962,097,781

0.59
%

$
916,951,641

0.57
%

$
908,510,119

0.56
%

$
841,394,142

0.56
%

Borrowed Funds

195,628,913

1.70
%

152,091,696

1.51
%

165,943,308

0.80
%

129,440,961

0.86
%

128,656,699

0.56
%

Total interest-bearing liabilities

1,172,529,046

0.79
%

1,114,189,477

0.71
%

1,082,894,949

0.61
%

1,037,951,080

0.60
%

970,050,841

0.56
%

Noninterest bearing deposits

331,686,582

326,480,191

313,709,097

326,249,639

293,242,708

1,504,215,628

1,440,669,668

1,396,604,046

1,364,200,719

1,263,293,549

Other Liabilities

17,590,193

15,260,196

13,171,739

13,130,368

9,526,486

Noncontrolling Interest

–

257,582

256,330

256,218

Stockholder’s Equity

155,171,837

150,079,645

145,851,848

144,038,838

141,757,087

Total Liabilities and Stockholder’s Equity

$
1,676,977,658

$
1,606,009,509

$
1,555,885,215

$
1,521,626,255

$
1,414,833,340

Net interest spread

3.56
%

3.71
%

3.70
%

3.85
%

Net interest income and Net interest margin (1)

$
14,497,216

3.75
%

$
13,814,036

3.73
%

$
13,424,559

3.85
%

$
13,077,828

3.85
%

$
12,731,170

3.98
%

(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.
(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 December 31, 2016 and 2015. Fair value accretion for the current quarter and prior four quarters are as follows:

12/3/2016

9/30/2016

6/30/2016

3/31/2016

12/31/2015

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)

$
(3,913
)

(0.00
)%

$
12,442

0.00
%

$
(479
)

(0.00
)%

$
27,404

0.01
%

$
(2,772
)

(0.00
)%

Mortgage loans

473,922

0.12

67,300

0.02

127,100

0.04

179,550

0.05

399,729

0.13

Consumer loans

71,118

0.02

12,947

0.00

10,963

0.00

11,553

0.00

3,486

0.00

Interest bearing deposits

45,705

0.01

52,728

0.01

68,569

0.02

92,833

0.03

38,091

0.01

Total Fair Value Accretion

$
586,832

0.15
%

$
145,417

0.03
%

$
206,153

0.06
%

$
311,340

0.08
%

$
438,534

0.14
%

(1) Negative accretion on commercial 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:

12/31/2016

9/30/2016

6/30/2016

3/31/2016

12/31/2015

Net Interest

Income

Yield

Net Interest

Income

Yield

Net Interest

Income

Yield

Net Interest

Income

Yield

Net Interest

Income

Yield

GAAP net interest income

$
14,012,459

3.62
%

$
13,338,986

3.61
%

$
12,975,748

3.72
%

$
12,612,246

3.71
%

$
12,245,493

3.83
%

Tax equivalent adjustment

Federal funds sold

0.00

–

Investment securities

253,166

0.07

243,510

0.06

228,532

0.07

226,861

0.07

243,378

0.08

Loans

231,587

0.06

231,536

0.06

220,276

0.06

238,716

0.07

242,299

0.07

Total tax equivalent adjustment

484,757

0.13

475,050

0.12

448,811

0.13

465,582

0.14

485,677

0.15

Tax equivalent interest yield

$
14,497,216

3.75
%

$
13,814,036

3.73
%

$
13,424,559

3.85
%

$
13,077,828

3.85
%

$
12,731,170

3.98
%

Old Line Bancshares, Inc. & Subsidiaries

Selected Loan Information

(Dollars in thousands)

December 31,

2016

September 30,

2016

June 30,

2016

March 31,

2016

December 31,

2015

Legacy Loans (1)

Period End Loan Balance

$
1,177,232

$
1,093,436

$
1,027,579

$
946,803

$
913,609

Deferred Costs

1,257

1,222

1,227

1,168

1,274

Accruing

1,167,381

1,084,851

1,021,867

951,197

907,915

Non-accrual

6,090

5,803

5,712

4,292

4,420

Accruing 30-89 days past due

3,742

2,524

2,479

4,529

994

Accruing 90 or more days past due

259

–

Allowance for loan losses

6,084

5,967

5,703

5,401

4,821

Other real estate owned

425

Net charge offs (recoveries)

–

(3
)

(4
)

(18
)

Acquired Loans (2)

Period End Loan Balance

$
188,881

$
204,126

$
219,231

$
229,026

$
237,061

Accruing

185,631

200,412

216,971

225,957

235,816

Non-accrual (3)

294

1,545

2,260

3,069

1,245

Accruing 30-89 days past due

2,072

1,284

2,203

2,127

6,132

Accruing 90 or more days past due

884

885

–

902

Allowance for loan losses

111

385

316

305

Other real estate owned

2,321

1,510

2,019

2,273

2,047

Net charge offs (recoveries)

357

(25
)

(9
)

(39
)

Allowance for loan losses as % of held for investment loans

0.45
%

0.49
%

0.48
%

0.43
%

Allowance for loan losses as % of legacy held for investment loans

0.52
%

0.55
%

0.57
%

0.53
%

Allowance for loan losses as % of acquired held for investment loans

0.06
%

0.19
%

0.14
%

0.13
%

0.04
%

Total non-performing loans as a % of held for investment loans

0.53
%

0.65
%

0.83
%

0.85
%

0.71
%

Total non-performing assets as a % of total assets

0.58
%

0.63
%

0.71
%

0.78
%

0.60
%

(1) Legacy loans represent total loans excluding loans acquired on April 1, 2011, May 10, 2013 and December 4, 2015.
(2) 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.
(3) These loans are loans that are considered non-accrual because they are not paying in conformance with the original contractual agreement.

OLD LINE BANCSHARES, INC.

CONTACT: ELISE HUBBARD
CHIEF FINANCIAL OFFICER
(301) 430-2560

SOURCE: Old Line Bancshares, Inc.

ReleaseID: 452841

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