10-Q

FORM 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-50345

Old Line Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Maryland	20-0154352
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

1525 Pointer Ridge Place
Bowie, Maryland
(Address of principal executive offices)
20716
(Zip Code)

Registrant’s telephone number, including area code: (301) 430-2500

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   þ   No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o 
Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   o   No   þ

As of July 25, 2008, the registrant had 3,891,150 shares of common stock outstanding.

Part I. Financial Information

Item 1. Financial Statements

Old Line Bancshares, Inc. & Subsidiary
Consolidated Balance Sheets

	June 30,			December 31,
	2008			2007
	(Unaudited)
Assets
Cash and due from banks	$	6,098,646		$	3,172,089
Federal funds sold		11,048,810			9,822,079
Total cash and cash equivalents		17,147,456			12,994,168
Time deposits in other banks		2,052,009			2,000,000
Investment securities available for sale		6,258,432			9,393,356
Investment securities held to maturity		10,175,547			2,301,591
Loans, less allowance for loan losses		217,258,833			201,941,667
Restricted equity securities at cost		2,126,550			2,080,250
Investment in real estate LLC		819,663			805,971
Bank premises and equipment		4,686,670			4,207,395
Accrued interest receivable		840,807			918,078
Deferred income taxes		201,223			161,940
Bank owned life insurance		7,932,654			7,769,290
Other assets		920,264			637,570
	$	270,420,108		$	245,211,276
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	40,055,451		$	35,141,289
Interest-bearing		157,834,605			142,670,944
Total deposits		197,890,056			177,812,233
Short-term borrowings		22,343,877			16,347,096
Long-term borrowings		15,000,000			15,000,000
Accrued interest payable		559,064			693,868
Income tax payable		100,259			238,226
Other liabilities		618,209			488,599
		236,511,465			210,580,022
Stockholders’ equity
Common stock, par value $.01 per share; authorized 15,000,000 shares; issued and outstanding 3,898,050 in 2008, and 4,075,849 in 2007		38,980			40,758
Additional paid-in capital		29,073,627			30,465,013
Retained earnings		4,858,245			4,155,232
		33,970,852			34,661,003
Accumulated other comprehensive income		(62,209	)		(29,749	)
		33,908,643			34,631,254
	$	270,420,108		$	245,211,276

The accompanying notes are an integral part of these consolidated financial statements

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Old Line Bancshares, Inc. & Subsidiary
Consolidated Statements of Income
(Unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2008		2007			2008		2007
Interest revenue
Loans, including fees	$	3,473,981	$	2,970,722		$	6,977,665	$	5,851,279
U.S. Treasury securities		18,698		29,769			41,185		61,344
U.S. government agency securities		24,175		79,622			49,707		159,982
Mortgage backed securities		94,791		12,801			112,850		26,716
Municipal securities		23,894		26,966			48,811		53,944
Federal funds sold		45,591		381,489			171,969		754,954
Other		44,566		21,640			93,951		42,928
Total interest revenue		3,725,696		3,523,009			7,496,138		6,951,147
Interest expense
Deposits		1,181,809		1,402,699			2,516,646		2,763,213
Borrowed funds		184,049		133,052			390,121		239,296
Total interest expense		1,365,858		1,535,751			2,906,767		3,002,509
Net interest income		2,359,838		1,987,258			4,589,371		3,948,638
Provision for loan losses		126,600		30,000			165,000		86,000
Net interest income after provision for loan losses		2,233,238		1,957,258			4,424,371		3,862,638
Non-interest revenue
Service charges on deposit accounts		79,252		72,998			152,204		143,918
Marine division broker origination fees		—		135,284			—		212,958
Earnings on bank owned life insurance		91,111		89,288			182,714		156,638
Income (loss) on investment in real estate LLC		745		(6,000	)		13,641		3,768
Other fees and commissions		89,552		79,474			144,539		119,669
Total non-interest revenue		260,660		371,044			493,098		636,951
Non-interest expense
Salaries		751,700		800,866			1,486,631		1,555,037
Employee benefits		231,905		228,451			501,358		513,265
Occupancy		270,787		224,183			550,709		434,621
Equipment		76,191		56,956			146,666		118,402
Data processing		64,627		54,652			125,879		114,092
Other operating		336,659		356,566			665,936		689,224
Total non-interest expense		1,731,869		1,721,674			3,477,179		3,424,641
Income before income taxes		762,029		606,628			1,440,290		1,074,948
Income taxes		265,205		198,968			498,633		339,746
Net income	$	496,824	$	407,660		$	941,657	$	735,202
Basic earnings per common share	$	0.13	$	0.10		$	0.24	$	0.17
Diluted earnings per common share	$	0.13	$	0.10		$	0.24	$	0.17

The accompanying notes are an integral part of these consolidated financial statements

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Old Line Bancshares, Inc. & Subsidiary
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)

													Accumulated
							Additional						other
	Common stock						paid-in			Retained			comprehensive			Comprehensive
	Shares			Par value			capital			earnings			income			income
Balance, December 31, 2007		4,075,849.0		$	40,758		$	30,465,013		$	4,155,232		$	(29,749	)
Common stock repurchased		(177,799.0	)		(1,778	)		(1,456,186	)		—			—
Net income		—			—			—			941,657			—		$	941,657
Unrealized loss on securities available for sale, net of income tax benefit of $21,145		—			—			—			—			(32,460	)		(32,460	)
Comprehensive income																$	909,197
Stock based compensation awards		—			—			64,800			—			—
Cash dividend $0.06 per share		—			—			—			(238,644	)		—
Balance, June 30, 2008		3,898,050.0		$	38,980		$	29,073,627		$	4,858,245		$	(62,209	)

The accompanying notes are an integral part of these consolidated financial statements

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Old Line Bancshares, Inc. & Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)

Six Months Ended June 30,	2008			2007
Cash flows from operating activities
Interest received	$	7,533,235		$	6,925,518
Fees and commissions received		316,042			498,080
Interest paid		(3,041,571	)		(2,918,677	)
Cash paid to suppliers and employees		(3,370,809	)		(3,418,998	)
Income taxes paid		(654,738	)		(706,268	)
		782,159			379,655
Cash flows from investing activities
Purchases of time deposits in other banks		(52,009	)		—
Purchase of investment securities
Held to maturity		(8,237,285	)		—
Available for sale		(3,000,000	)		—
Proceeds from disposal of investment securities
Held to maturity		363,834			500,000
Available for sale at maturity or call		6,079,589			1,243,312
Loans made, net of principal collected		(15,440,767	)		(21,013,675	)
Purchase of equity securities		(46,300	)		(54,700	)
Investment in bank owned life insurance (BOLI)		—			(4,000,000	)
Investment in real estate LLC		(51	)		8,852
Purchase of premises, equipment and software		(673,878	)		(429,104	)
Proceeds from sale of premises and equipment		—			60,533
		(21,006,867	)		(23,684,782	)
Cash flows from financing activities
Net increase (decrease) in
Time deposits		16,130,974			12,462,215
Other deposits		3,946,849			(819,642	)
(Decrease) increase in short-term borrowings		5,996,781			10,191,813
Proceeds from stock options exercised, including tax benefit		—			6,250
Repurchase of common stock		(1,457,964	)		—
Dividends paid		(238,644	)		(255,276	)
		24,377,996			21,585,360
Net increase (decrease) in cash and cash equivalents		4,153,288			(1,719,767	)
Cash and cash equivalents at beginning of year		12,994,168			39,628,195
Cash and cash equivalents at end of year	$	17,147,456		$	37,908,428

The accompanying notes are an integral part of these consolidated financial statements

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Old Line Bancshares, Inc. & Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)

Six Months Ended June 30,	2008			2007
Reconciliation of net income to net cash provided (used) by operating activities
Net income	$	941,657		$	735,202
Adjustments to reconcile net income to net cash provided (used) by operating activities
Depreciation and amortization		201,283			171,149
Provision for loan losses		165,000			86,000
Loss on sale of equipment		—			(12,190	)
Change in deferred loan fees net of costs		(41,399	)		(10,389	)
Amortization of premiums and discounts		1,225			2,094
Deferred income taxes		(18,138	)		(32,026	)
Stock based compensation awards		64,800			119,290
(Income) loss from investment in real estate LLC		(13,641	)		(3,768	)
Increase (decrease) in
Accrued interest payable		(134,804	)		83,832
Income tax payable & other liabilities		(8,357	)		(405,506	)
Decrease (increase) in
Accrued interest receivable		77,271			(17,334	)
Bank owned life insurance		(163,364	)		(143,955	)
Other assets		(289,374	)		(192,744	)
	$	782,159		$	379,655

The accompanying notes are an integral part of these consolidated financial statements

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Old Line Bancshares, Inc. & Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business-Old Line Bancshares, Inc. was incorporated under the laws of the State of Maryland on April 11, 2003 to serve as the holding company of Old Line Bank. The primary business of Old Line Bancshares, Inc. is to own all of the capital stock of Old Line Bank. Old Line Bancshares, Inc. also has an approximately $820,000 investment in a real estate investment limited liability company named Pointer Ridge Office Investment, LLC (“Pointer Ridge”).

Old Line Bank is a full service commercial bank operating in the suburban Maryland (Washington, D.C. suburbs) counties of Prince George’s, Anne Arundel, Charles and northern St. Mary’s. Old Line Bank offers deposit services and loans to individuals, small businesses, associations and government entities. Other services include direct deposit of payroll and social security checks, automatic drafts from accounts, automated teller machine services, cash management services, safe deposit boxes, money orders and travelers cheques. Old Line Bank also offers credit card services and on-line account access with bill payer service.

Basis of Presentation and Consolidation-The accompanying consolidated financial statements include the activity of Old Line Bancshares, Inc. and its wholly owned subsidiary, Old Line Bank. We have eliminated all significant intercompany transactions and balances.

The foregoing consolidated financial statements are unaudited; however, in the opinion of management we have included all adjustments (comprising only normal recurring accruals) necessary for a fair presentation of the results of the interim period. We derived the balances as of December 31, 2007 from audited financial statements. These statements should be read in conjunction with Old Line Bancshares’ financial statements and accompanying notes included in Old Line Bancshares, Inc.’s Form 10-K for the year ended December 31, 2007. We have made no significant changes to Old Line Bancshares’ accounting policies as disclosed in the Form 10-K.

The accounting and reporting policies of Old Line Bancshares, Inc. conform to accounting principles generally accepted in the United States of America.

2. INVESTMENT SECURITIES

As Old Line Bancshares purchases securities, management determines if we should classify the securities as held to maturity, available for sale or trading. We record the securities which management has the intent and ability to hold to maturity at amortized cost which is cost adjusted for amortization of premiums and accretion of discounts to maturity. We classify securities which we may sell before maturity as available for sale and carry these securities at fair value with unrealized gains and losses included in stockholders’ equity on an after tax basis. Management has not identified any investment securities as trading.

We record gains and losses on the sale of securities on the trade date and determine these gains or losses using the specific identification method. We amortize premiums and accrete discounts using the interest method.

3. INVESTMENT IN REAL ESTATE LLC

We have a 50% investment in a real estate limited liability company named Pointer Ridge Office Investment, LLC (“Pointer Ridge). As required under FASB Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN46R”), we have considered our investment in Pointer Ridge and determined Pointer Ridge is a variable interest entity, but Old Line Bancshares is not the primary beneficiary. Therefore, we do not consolidate Pointer Ridge’s results and financial position with that of Old Line Bancshares. Rather, we account for investment in Pointer Ridge using the equity method.

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The following table summarizes the condensed Balance Sheets and Statements of Income information for Pointer Ridge.

Pointer Ridge Office Investment, LLC

	June 30,		December 31,
	2008		2007
Balance Sheets
Current assets	$	491,112	$	440,256
Non-current assets		7,734,316		7,815,892
Liabilities		6,586,102		6,644,206
Equity		1,639,326		1,611,942

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2008		2007			2008		2007
Statements of Income
Revenue	$	243,123	$	228,080		$	489,246	$	453,713
Expenses		241,633		240,080			461,964		446,177
Net income (loss)	$	1,490	$	(12,000	)	$	27,282	$	7,536

4. INCOME TAXES

The provision for income taxes includes taxes payable for the current year and deferred income taxes. We determine deferred tax assets and liabilities based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which we expect the differences to reverse. We allocate tax expense and tax benefits to the Bank and Bancshares based on their proportional share of taxable income.

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Old Line Bancshares, Inc. & Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)

5. EARNINGS PER SHARE

We determine basic earnings per common share by dividing net income by the weighted average number of shares of common stock outstanding giving retroactive effect to the stock dividends.

We calculate diluted earnings per share by including the average dilutive common stock equivalents outstanding during the period. Dilutive common equivalent shares consist of stock options, calculated using the treasury stock method.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
Weighted average number of shares		3,906,753		4,254,599		3,970,440		4,254,479
Dilutive average number of shares		916		10,232		3,539		13,565

6. STOCK-BASED COMPENSATION

We account for employee stock options under the fair value method of accounting using a Black-Scholes valuation model to measure stock-based compensation expense at the date of grant. In the first quarter of 2006, we adopted Statement of Financial Accounting Standards (SFAS) 123R, Share-Based Payment, under the modified prospective method. Statement 123R requires companies to recognize compensation expense related to stock-based compensation awards in their income statements over the period during which an individual is required to provide service in exchange for such award. For the six months ended June 30, 2008 and 2007, we recorded stock-based compensation expense of $64,800 and $119,290, respectively. For the three months ended June 30, 2008 and 2007, we recorded stock-based compensation expense of $19,921 and $36,097, respectively.

Under SFAS 123R, a company may only recognize tax benefits for options that ordinarily will result in a tax deduction when the grant is exercised (non-qualified options). There were no non-qualified options included in the expense calculation during the three and six months ended June 30, 2008. For the three and six months ended June 30, 2007, we recognized an $11,887 tax benefit associated with the portion of the expense that was related to the issuance of non-qualified options.

We have two stock option plans under which we may issue options, the 2001 Incentive Stock Option Plan, as amended, and the 2004 Equity Incentive Plan. Our Compensation Committee administers the stock option plans. As the plans outline, the Compensation Committee approves stock option grants to directors and employees, determines the number of shares, the type of option, the option price, the term (not to exceed 10 years from the date of issuance) and the vesting period of options issued. The Compensation Committee has approved and we have issued grants with options vesting immediately as well as over periods of two, three and five years. We recognize the compensation expense associated with these grants over their respective vesting period. At June 30, 2008, there was $99,169 of total unrecognized compensation cost related to nonvested stock options that we expect to realize over the next 4.5 years. As of June 30, 2008, there were 134,180 shares remaining available for future issuance under the stock option plans.

Directors and officers did not exercise any options during the three or six month period ended June 30, 2008. The intrinsic value of the 900 options that directors and officers exercised during the three and six months ended June 30, 2007 was $0 and $5,184, respectively.

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Old Line Bancshares, Inc. & Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)

6. STOCK-BASED COMPENSATION (Continued)

A summary of the stock option activity during the six month period follows:

	June 30,
	2008					2007
				Weighted					Weighted
	Number			average		Number			average
	of shares			exercise price		of shares			exercise price
Outstanding, beginning of period		216,920		$	9.37		182,820		$	8.91
Options granted		37,300			7.75		47,200			10.57
Options exercised		—			—		(900	)		4.72
Option forfeited		(14,000	)		11.09		—			—
Outstanding, end of period		240,220		$	9.02		229,120		$	9.27

Information related to options as of June 30, 2008 follows:

	Outstanding options						Exercisable options
			Weighted		Weighted				Weighted
	Number		average		average		Number		average
Exercise	of shares at		remaining		exercise		of shares at		exercise
price	June 30, 2008		term		price		June 30, 2008		price
$3.33-$4.17		11,700		2.50	$	3.44		11,700	$	3.44
$4.18-$5.00		21,600		3.46		4.65		21,600		4.65
$5.01-$10.00		83,920		7.68		8.85		59,054		9.32
$10.01-$11.31		123,000		7.81		10.43		93,800		10.42
		240,220		7.12	$	9.02		186,154	$	8.96
Intrinsic value of outstanding options where the market value exceeds the exercise price			$	82,743
Intrinsic value of exercisable options where the market value exceeds the exercise price			$	53,708

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7. RETIREMENT PLAN

Eligible employees participate in a profit sharing plan that qualifies under Section 401(k) of the Internal Revenue Code. The plan allows for elective employee deferrals and Old Line Bank makes matching contributions of up to 4% of employee eligible compensation. Our contributions to the plan, included in employee benefit expenses, for the six months ended June 30, 2008 and 2007 were $66,993, and $61,010, respectively. Old Line Bank’s contributions to the plan for the three months ended June 30, 2008 and 2007 were $34,879 and $27,711, respectively.

Old Line Bank also offers Supplemental Executive Retirement Plans (SERPs) to its executive officers providing for retirement income benefits. We accrue the present value of the SERPs over the remaining number of years to the executives’ retirement dates. Old Line Bank’s expenses for the SERPs for the six month periods ended June 30, 2008 and 2007 were $59,622 and $48,970, respectively. The SERP expense for the three month periods ended June 30, 2008 and 2007 were $29,811 and $23,478, respectively.

8. ASSETS MEASURED AT FAIR VALUE ON A CONTINUING BASIS

On January 1, 2008, we adopted Statement of Financing Accounting Standards No. 157, Fair Value Measurements. Old Line Bank values investment securities classified as available for sale at fair value. The fair value hierarchy established in SFAS 157, defines three input levels for fair value measurement. Level 1 is based on quoted market prices in active markets for identical assets. Level 2 is based on significant observable inputs other than those in Level 1. Level 3 is based on significant unobservable inputs. We value collateralized mortgage obligations, and some agency securities under Level 2 and some agency securities under Level 3. At June 30, 2008, we established values for available for sale investment securities as follows:

	Total		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Invesment securities available for sale		6,258,432		—		3,321,694		2,936,738

The following table reconciles the changes in Level 3 input balances during the quarter (000’s):

Balance beginning of quarter	$	504
Total unrealized losses included in other comprehensive income		(69	)
Purchases, issuances, and settlments		1,000
Transfers in and/or out of Level 3		1,502
Balance June 30, 2008	$	2,937
The amount of total losses for the period attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	(69	)

There were no changes in gains and losses (realized and unrealized) included in earnings for the quarter ended June 30, 2008.

9. RECENT ACCOUNTING STANDARDS

The following are recent accounting pronouncements approved by the Financial Accounting Standards Board (FASB). These Statements will not have any material impact on the financial statements of Bancshares or the Bank.

In December 2007, the FASB issued SFAS No. 160 (revised 2007), Noncontrolling Interests in Consolidated Financial Statements. SFAS 160 amends Accounting Research Bulletin 51, Consolidated Financial Statements, to establish accounting and reporting standards for noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.

10

It also clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 also changes the way the consolidated income statement is presented by requiring consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated income statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. SFAS 160 is effective at the beginning of the company’s first fiscal year after December 15, 2008. We do not expect that SFAS 160 will have a material impact on our consolidated results of operations or financial position.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations. SFAS No. 141(R) will significantly change the accounting for business combinations in a number of areas, including the treatment of contingent consideration, contingencies, acquisition costs, in-process research and development costs and restructuring costs. Additionally, under SFAS No. 141(R), changes in deferred tax asset valuation allowances and acquired income uncertainties in a business combination after the measurement period will impact income tax expense. The provisions of this standard are effective beginning January 1, 2009. We do not expect that SFAS No. 141(R) will have a material impact on our consolidated results of operations or financial position.

FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133, requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financing reporting. The use and complexity of derivative instruments and hedging activities have increased significantly over the past several years. Constituents have expressed concerns that the existing disclosure requirements in FASB Statement No. 133, Accounting for Derivative Instruments Hedging Activities, do not provide adequate information about how derivative and hedging activities affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. We do not expect SFAS No. 161 will have a material impact on our consolidated results of operations or financial position.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

     Some of the matters discussed below include forward-looking statements. Forward-looking statements often use words such as “believe,” “expect,” “plan,” “may,” “will,” “should,” “project,” “contemplate,” “anticipate,” “forecast,” “intend” or other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts. Our actual results and the actual outcome of our expectations and strategies could be different from those anticipated or estimated for the reasons discussed below and under the heading “Information Regarding Forward Looking Statements.”

Overview

     Old Line Bancshares, Inc. was incorporated under the laws of the State of Maryland on April 11, 2003 to serve as the holding company of Old Line Bank.

     Our primary business is to own all of the capital stock of Old Line Bank. We also have an approximately $820,000 investment in a real estate investment limited liability company named Pointer Ridge Office Investment, LLC (“Pointer Ridge”). We own 50% of Pointer Ridge. Frank Lucente, one of our directors and a director of Old Line Bank, controls 25% of Pointer Ridge and controls the manager of Pointer Ridge. The purpose of Pointer Ridge is to acquire, own, hold for profit, sell, assign, transfer, operate, lease, develop, mortgage, refinance, pledge and otherwise deal with real property located at the intersection of Pointer Ridge Road and Route 301 in Bowie, Maryland. Pointer Ridge owns a commercial office building containing approximately 40,000 square feet and leases this space to tenants. We lease approximately 50% of this building for our main office and operate a branch of Old Line Bank from this address.

Summary of Recent Performance and Other Activities

     We are pleased to report sound financial performance for the second quarter of 2008. Net income was $496,824 or $0.13 per basic and diluted common share for the three month period ending June 30, 2008. This was $89,164 or 21.87% higher than net income of $407,660 or $0.10 per basic and diluted common share for the same period in 2007. Net income for the six month period ended June 30, 2008 was $941,657 or $0.24 per basic and diluted common share. This represented an increase of $206,455 or 28.08% compared to net income of $735,202 or $0.17 per basic and diluted common share for the six months ended June 30, 2007.

     During the first six months of 2008, the following events occurred.

• We maintained asset quality and collected all principal, interests and costs on an approximately $127,000 non-accrual loan that we previously reported.

• We increased the provision for loan losses 91.86% or $79,000.

• The loan portfolio grew $15.4 million (7.63%).

• Total assets increased $25.2 million (10.28%).

• We announced the execution of a lease and our plans to open a new Annapolis, Maryland branch located at 167-U Jennifer Road, Annapolis, Maryland.

• We repurchased 177,799 shares of our common stock at an average price of $8.20 per share.

• We increased earnings per basic share $0.07 or 41.18%.

• We increased the number of shares of the Company’s common stock that we may repurchase under the previously approved Stock Repurchase Program from 400,000 shares of common stock to 500,000 shares.

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     We believe that it was an accomplishment to increase earnings, grow the loan portfolio and maintain credit quality despite the continued weak economic environment and the uncertainties faced by our industry. Because of this weak economic environment and growth in the loan portfolio, we increased the provision for loan losses 322.00% or $96,600 during the three month period and 91.86% or $79,000 during the six month period ended June 30, 2008.

     The following summarizes the highlights of our financial performance for the three month period ended June 30, 2008 compared to the three month period ended June 30, 2007 (figures in the table may not match those discussed in the balance of this section due to rounding).

	Three months ended June 30,
	(Dollars in thousands)
	2008			2007			$ Change			% Change
Net income	$	497		$	408		$	89			21.81	%
Interest revenue		3,726			3,523			203			5.76
Interest expense		1,366			1,536			(170	)		(11.07	)
Net interest income after provision for loan losses		2,233			1,957			276			14.10
Non-interest revenue		261			371			(110	)		(29.65	)
Non-interest expense		1,732			1,722			10			0.58
Average total loans		213,192			159,871			53,321			33.35
Average interest earning assets		241,207			205,462			35,745			17.40
Average total interest-bearing deposits		154,495			138,254			16,241			11.75
Average noninterest-bearing deposits		36,014			34,829			1,185			3.40
Net interest Margin (1)		3.95	%		3.93	%
Return on average equity		5.88	%		4.61	%
Basic earnings per common share	$	0.13		$	0.10		$	0.03			30.00
Diluted earnings per common share		0.13			0.10			0.03			30.00

(1) See “Reconciliation of Non-GAAP Measures”

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The following outlines the highlights of our financial performance for the six month period ended June 30, 2008 compared to the six month period ended June 30, 2007.

	Six months ended June 30,
	(Dollars in thousands)
	2008			2007			$ Change			% Change
Net income	$	942		$	735		$	207			28.16	%
Interest revenue		7,496			6,951			545			7.84
Interest expense		2,907			3,003			(96	)		(3.20	)
Net interest income after provision for loan losses		4,424			3,863			561			14.52
Non-interest revenue		493			637			(144	)		(22.61	)
Non-interest expense		3,477			3,425			52			1.52
Average total loans		208,990			158,690			50,300			31.70
Average interest earning assets		237,853			204,327			33,526			16.41
Average total interest-bearing deposits		151,459			137,302			14,157			10.31
Average noninterest-bearing deposits		35,660			35,415			245			0.69
Net interest Margin (1)		3.90	%		3.95	%
Return on average equity		5.48	%		4.20	%
Basic earnings per common share	$	0.24		$	0.17		$	0.07			41.18
Diluted earnings per common share		0.24			0.17			0.07			41.18

(1) See “Reconciliation of Non-GAAP Measures”

Growth Strategy

     We have based our strategic plan on the premise of enhancing stockholder value and growth through branching and operating profits. Our short-term goals include maintaining credit quality, creating an attractive branch network, expanding fee income, generating extensions of core banking services and using technology to maximize stockholder value.

     We believe a natural evolution of a community-focused bank like Old Line Bank is to expand the delivery channels via the branch network. We plan to expand in Prince George’s County and Anne Arundel County, Maryland and may expand in Charles County and contiguous northern and western counties, such as Montgomery County and Howard County, Maryland.

     In February 2008, we opened a branch in College Park (Prince George’s County), Maryland at 9658 Baltimore Avenue, College Park, Maryland. This branch is in the same building as the loan production office that houses our team of loan officers. We hired the Branch Manager and staff for this location in February 2008.

     As part of our expansion efforts, in July 2004, Old Line Bank executed a lease and applied to regulatory authorities to open a branch at 1641 State Route 3 North, Crofton, Maryland in Anne Arundel County. We anticipated that construction of the building in which we plan to locate the branch would begin during the second or third quarter of 2006 and we expected to open the branch in the first quarter of 2007. However, the owner of the property was unable to complete the requirements contained in the lease and begin construction of the branch. Construction of this location began in 2007. We expect to open this branch during the fourth quarter of 2008 or the first quarter of 2009.

     In July 2007, we identified a site for a second branch location in Bowie, Maryland. Currently, the landlord is preparing a pad site. Assuming the landlord completes the preparation of the pad site and meets all of the conditions of the lease, we plan to lease the pad site and construct a branch. The pad site is located in the Fairwood Office Park in Bowie, Maryland. We anticipate we will open this branch during the 3^rd or 4^th quarter of 2008.

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     In May 2008, we executed a lease agreement to lease 1,620 square feet of space in a store unit located at 167-U Jennifer Road, Annapolis, Maryland in the County of Anne Arundel. The building is located in the Jennifer Square Shopping Center. We plan to open this branch during the 3^rd quarter of 2008.

     As expected, the operations of the Greenbelt branch that we opened in June 2007 was the primary reason for the $65,839 or 23.42% increase in occupancy and equipments costs during the three month period ended June 30, 2008. The openings of the Greenbelt branch and the College Park branch in February 2006, were the major factors contributing to the $144,352 or 26.10% increase in these costs during the six month period ended June 30, 2008. Because of the new branches, we anticipate salaries and benefits expenses and other operating expenses will increase. We anticipate that, over time, income generated from the branches will offset any increase in expenses.

     Expansion of Commercial, Construction and Commercial Real Estate Lending

     We hired a new Vice President of Commercial Lending for our Waldorf office and a new Senior Vice President of Commercial Lending to service the Anne Arundel County market during 2007. As we expected, the increase in personnel during 2007 and the staffing for the new College Park and Greenbelt branches caused an increase in salary and benefit expenses in the second quarter of 2008 compared to the second quarter of 2007. This increase was offset by the termination of the employees that worked in the marine division that we closed at the end of the third quarter of 2007.

     As a result of the new branches and lending personnel, we anticipate the bank will experience continued improvement in loan and deposit growth during 2008 and beyond. We anticipate that after establishment of the Bowie, Annapolis and Crofton branches outlined above that we will slow down the rate of branch expansion, although should we identify new branch locations that will support our long term growth plans we may open additional branches.

     Other Opportunities

     We use the Internet and technology to augment our growth plans. Currently, we offer our customers image technology, telephone banking and Internet banking with on-line account access and bill payer service. In the fourth quarter of 2007, we began offering selected commercial customers the ability to remotely capture their deposits and electronically transmit them to us. We anticipate that this service will modestly increase equipment cost, reduce courier fees, and positively impact deposit growth. We will continue to evaluate cost effective ways that technology can enhance our management, products and services.

     We plan to take advantage of strategic opportunities presented to us via mergers occurring in our marketplace. For example, we may purchase branches that other banks close or lease branch space from other banks or hire additional loan officers. We currently have no specific plans to acquire existing financial institutions or branches thereof or to hire additional loan officers.

Results of Operations

     Net Interest Income

     Net interest income is the difference between income on interest earning assets and the cost of funds supporting those assets. Earning assets are comprised primarily of loans, investments, and federal funds sold; interest-bearing deposits and other borrowings make up the cost of funds. Noninterest-bearing deposits and capital are also funding sources. Changes in the volume and mix of earning assets and funding sources along with changes in associated interest rates determine changes in net interest income.

     Three months ended June 30, 2008 compared to three months ended June 30, 2007

     Net interest income after provision for loan losses for the three months ended June 30, 2008 increased $275,980 or 14.10% to $2.2 million from $2.0 million for the same period in 2007.

     Interest revenue increased from $3.5 million for the three months ended June 30, 2007 to $3.7 million for the same period in 2008. As discussed below and outlined in detail in the Rate/Volume Analysis, these changes were the result of interest earning assets growing at a faster rate than interest-bearing liabilities.

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The increase in interest bearing assets was primarily caused by a $53.3 million increase in average total loans. In order to fund this loan growth, we deployed funds from lower yielding federal funds sold. The growth in average total loans was attributable to the business development efforts of the entire Old Line Bank lending team and directors and the expansion of our branch network. We believe that the expansion of our branch network provides us with increased name recognition and new opportunities that contributed to our growth. In June 2008, we also recognized approximately $20,000 in non-accrued interest and late fees from the repayment of a non-accrual loan. This collection improved the net interest margin approximately 3 basis points for the three months ended June 30, 2008.

     Interest expense for all interest-bearing liabilities decreased 169,893 or 11.06% to $1.4 million for the three months ended June 30, 2008. This was primarily attributable to a 100 basis point decrease in the cost of interest-bearing deposits and a 162 basis point decrease in the cost of borrowed funds. As a result of these items, our net interest margin was 3.95% for the three months ended June 30, 2008, as compared to 3.93% for the three months ended June 30, 2007.

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     The following table illustrates average balances of total interest earning assets and total interest-bearing liabilities for the three months ended June 30, 2008 and 2007, showing the average distribution of assets, liabilities, stockholders’ equity and related income, expense and corresponding weighted average yields and rates. The average balances used in this table and other statistical data were calculated using average daily balances.

	Average Balances, Interest and Yields
Three Months Ended June 30,	2008							2007
	Average							Average
	balance		Interest		Yield			balance		Interest		Yield
Assets:
Federal funds sold(1)	$	9,165,249	$	46,087		2.02	%	$	29,120,215	$	389,850		5.37	%
Time deposits in other banks		2,014,860		15,849		3.16			—		—
Investment securities(1)(2)
U.S. Treasury		2,269,547		19,776		3.50			3,747,278		31,211		3.34
U.S. government agency		2,791,209		25,569		3.67			7,987,457		83,479		4.19
Mortgage backed securities		8,440,752		94,791		4.50			1,305,353		12,801		3.93
Municipal securities		2,873,597		32,614		4.55			3,227,886		39,151		4.86
Other		2,127,436		29,649		5.59			1,536,277		22,079		5.76
Total investment securities		18,502,541		202,399		4.39			17,804,251		188,721		4.25
Loans: (3)
Commercial		61,916,953		1,019,303		6.60			39,954,588		839,629		8.43
Mortgage		134,384,770		2,240,256		6.69			99,372,763		1,856,773		7.49
Installment		16,890,014		214,422		5.09			20,543,263		274,320		5.36
Total loans		213,191,737		3,473,981		6.54			159,870,614		2,970,722		7.45
Allowance for loan losses		1,667,185		—		—			1,332,860		—		—
Total loans, net of allowance		211,524,552		3,473,981		6.59			158,537,754		2,970,722		7.52
Total interest earning assets(1)		241,207,202		3,738,316		6.22			205,462,220		3,549,293		6.93
Non-interest bearing cash		3,923,614							3,905,758
Premises and equipment		4,487,093							4,118,188
Other assets		11,125,146							10,517,675
Total assets	$	260,743,055						$	224,003,841
Liabilities and Stockholders’ Equity:
Interest bearing deposits
Savings	$	6,803,272		10,069		0.59		$	8,562,350		14,191		0.66
Money market and NOW		33,659,255		71,301		0.85			25,228,155		123,889		1.97
Other time deposits		114,032,475		1,100,439		3.87			104,463,830		1,264,619		4.86
Total interest-bearing deposits		154,495,002		1,181,809		3.07			138,254,335		1,402,699		4.07
Borrowed funds		35,004,683		184,049		2.11			14,320,072		133,052		3.73
Total interest-bearing liabilities		189,499,685		1,365,858		2.89			152,574,407		1,535,751		4.04
Noninterest-bearing deposits		36,013,714							34,829,430
		225,513,399							187,403,837
Other liabilities		1,334,766							1,104,793
Stockholders’ equity		33,894,890							35,495,211
Total liabilities and stockholders’ equity	$	260,743,055						$	224,003,841
Net interest spread(1)						3.33							2.89
Net interest income and
Net interest margin(1)			$	2,372,458		3.95	%			$	2,013,542		3.93	%

1)	Interest revenue is presented on a fully taxable equivalent (FTE) basis. The FTE basis adjusts for the tax favored status of these investments. 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.
3)	Average non-accruing loans for the three month periods ended June 30, 2008 and 2007 were $1,061,145 and $126,440, respectively.

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     Six months ended June 30, 2008 compared to six months ended June 30, 2007

     Net interest income after provision for loan losses for the six months ended June 30, 2008 amounted to $4.4 million, which was $561,733 or 14.54% greater than the 2007 level of $3.9 million. The increase was primarily attributable to a $33.6 million increase in total average interest earning assets to $237.9 million for the six months ended June 30, 2008 from $204.3 million for the six months ended June 30, 2007. As previously discussed, in June 2008, we also collected approximately $20,000 in non-accrued interest and late fees from the repayment of a non-accrual loan. Interest expense for all interest bearing liabilities was $2.9 million for the six months ended June 30, 2008 versus $3.0 million for the six months ended June 30, 2007. The increase in earnings assets was a result of increased business development efforts from the entire Old Line Bank lending team. Additionally, we believe that the opening of the College Park and Greenbelt branches provided us with increased name recognition that also contributed to our growth.

     Our net interest margin was 3.90% for the six months ended June 30, 2008, as compared to 3.95% for the six months ended June 30, 2007. The decrease in the net interest margin is the result of several components. The yield on average interest-earning assets declined during the period 56 basis points from 6.91% in 2007 to 6.35% in 2007. This decrease was because of the rapid 300 basis point reduction in the federal funds interest rate that the Federal Reserve implemented. We partially offset these rate reductions through growth in the loan portfolio. As a result of this growth, there were a higher percentage of funds invested in higher yielding commercial and mortgage loans during the period. The collection of the $20,000 in non-accrued interest and late charges in June 2008 increased the net interest margin approximately 2 basis points for the six month period.

     The 90 basis point reduction in the cost of interest-bearing liabilities that occurred as a result of re-pricing of interest bearing accounts to current market interest rates and maturities of and subsequent re-pricing of time deposits partially offset the decrease in yield on interest earning assets and improved our net interest spread. However, because of an increase in the percentage of average total interest bearing liabilities relative to total average liabilities the net interest margin declined.

     Because of increased recognition in the Prince George’s County market, the new loan officers in Charles and Anne Arundel Counties, the addition of the College Park and Greenbelt branches and with continued growth in deposits, we anticipate that we will continue to grow earning assets during the remainder of 2008. Provided that the Federal Reserve maintains the federal funds rate at current levels, we believe that the anticipated growth in earning assets, the change in the composition of earning assets as more funds are deployed to loans and the relatively low cost of funds will result in an increase in our net interest income and modest improvement in the net interest margin during the remainder of 2008, although there is no assurance that this will be the case.

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     The following table illustrates average balances of total interest earning assets and total interest-bearing liabilities for the periods indicated, showing the average distribution of assets, liabilities, stockholders’ equity and related income, expense and corresponding weighted average yields and rates. The average balances used in this table and other statistical data were calculated using average daily balances.

	Average Balances, Interest and Yields
Six Months Ended June 30,	2008							2007
	Average							Average
	balance		Interest		Yield			balance		Interest		Yield
Assets:
Federal funds sold(1)	$	12,938,850	$	175,281		2.72	%	$	28,988,555	$	774,054		5.38	%
Time deposits in other banks		2,007,430		36,115		3.61			—		—
Investment securities(1)(2)
U.S. Treasury		2,519,447		43,559		3.47			3,872,978		64,315		3.35
U.S. government agency		2,928,474		52,572		3.60			8,036,855		167,731		4.21
Mortgage backed securities		5,058,323		112,850		4.47			1,362,224		26,716		3.95
Municipal securities		2,945,581		68,862		4.69			3,228,427		78,446		4.90
Other		2,104,046		59,690		5.69			1,502,068		43,765		5.88
Total investment securities		15,555,871		337,533		4.35			18,002,552		380,973		4.27
Loans: (3)
Commercial		58,906,900		2,073,065		7.06			39,573,748		1,663,362		8.48
Mortgage		132,582,911		4,451,193		6.73			98,064,317		3,644,152		7.49
Installment		17,499,743		453,407		5.20			21,051,455		543,765		5.21
Total loans		208,989,554		6,977,665		6.70			158,689,520		5,851,279		7.44
Allowance for loan losses		1,638,847		—					1,353,354		—
Total loans, net of allowance		207,350,707		6,977,665		6.75			157,336,166		5,851,279		7.50
Total interest earning assets(1)		237,852,858		7,526,594		6.35			204,327,273		7,006,306		6.91
Non-interest bearing cash		3,884,020							3,872,730
Premises and equipment		4,341,407							4,099,803
Other assets		10,950,208							9,469,549
Total assets	$	257,028,493						$	221,769,355
Liabilities and Stockholders’ Equity:
Interest bearing deposits
Savings	$	6,524,155		21,630		0.66		$	8,812,237		29,200		0.67
Money market and NOW		33,971,627		182,705		1.08			24,428,931		240,314		1.98
Other time deposits		110,963,539		2,312,311		4.18			104,060,965		2,493,699		4.83
Total interest-bearing deposits		151,459,321		2,516,646		3.33			137,302,133		2,763,213		4.06
Borrowed funds		34,155,764		390,121		2.29			12,507,453		239,296		3.86
Total interest-bearing liabilities		185,615,085		2,906,767		3.14			149,809,586		3,002,509		4.04
Noninterest-bearing deposits		35,660,411							35,415,159
		221,275,496							185,224,745
Other liabilities		1,272,551							1,225,693
Stockholders’ equity		34,480,446							35,318,917
Total liabilities and stockholders’ equity	$	257,028,493						$	221,769,355
Net interest spread(1)						3.21							2.87
Net interest income and Net interest margin(1)			$	4,619,827		3.90	%			$	4,003,797		3.95	%

1)	Interest revenue is presented on a fully taxable equivalent (FTE) basis. The FTE basis adjusts for the tax favored status of these investments. 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.
3)	Average non-accruing loans for the six months ended June 30, 2008 and 2007 were $1,061,145 and $88,088, respectively.

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The following tables describe the impact on our interest income and expense resulting from changes in average balances and average rates for the periods indicated. We have allocated the change in interest revenue, interest expense and net interest income due to both volume and rate proportionately to the rate and volume variances.

Rate/Volume Variance Analysis

	Three months Ended June 30,
	2008 compared to 2007
	Variance due to:
	Total			Rate			Volume
Interest earning assets:
Federal funds sold(1)	$	(343,763	)	$	(269,910	)	$	(73,853	)
Time deposits in other banks		15,849			—			15,849
Investment Securities(1)
U.S. Treasury		(11,435	)		4,213			(15,648	)
U.S. Government agency		(57,910	)		(25,033	)		(32,877	)
Mortgage backed securities		81,990			7,893			74,097
Municipal securities		(6,537	)		(4,585	)		(1,952	)
Other		7,570			(2,261	)		9,831
Loans:
Commercial		179,674			(455,324	)		634,998
Mortgage		383,483			(509,660	)		893,143
Installment		(59,898	)		(31,531	)		(28,367	)
Total interest revenue (1)		189,023			(1,286,198	)		1,475,221
Interest-bearing liabilities
Savings		(4,122	)		(2,788	)		(1,334	)
Money market and NOW		(52,588	)		(118,091	)		65,503
Other time deposits		(164,180	)		(355,796	)		191,616
Borrowed funds		50,997			(182,216	)		233,213
Total interest expense		(169,893	)		(658,891	)		488,998
Net interest income(1)	$	358,916		$	(627,307	)	$	986,223

(1) Interest revenue is presented on a fully taxable equivalent (FTE) basis. 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.”

20

Rate/Volume Variance Analysis

	Six months Ended June 30,
	2008 compared to 2007
				Variance due to:
	Total			Rate			Volume
Interest earning assets:
Federal funds sold(1)	$	(598,773	)	$	(384,517	)	$	(214,256	)
Time deposits in other banks		36,115			—			36,115
Investment Securities(1)
U.S. Treasury		(20,756	)		4,129			(24,885	)
U.S. Government agency		(115,159	)		(36,071	)		(79,088	)
Mortgage backed securities		86,134			7,620			78,514
Municipal securities		(9,584	)		(4,763	)		(4,821	)
Other		15,925			(2,648	)		18,573
Loans:
Commercial		409,703			(498,610	)		908,313
Mortgage		807,041			(649,553	)		1,456,594
Installment		(90,358	)		(2,557	)		(87,801	)
Total interest revenue (1)		520,288			(1,566,970	)		2,087,258
Interest-bearing liabilities
Savings		(7,570	)		(279	)		(7,291	)
Money market and NOW		(57,609	)		(172,681	)		115,072
Other time deposits		(181,388	)		(413,002	)		231,614
Borrowed funds		150,825			(218,331	)		369,156
Total interest expense		(95,742	)		(804,293	)		708,551
Net interest income(1)	$	616,030		$	(762,677	)	$	1,378,707

(1) Interest revenue is presented on a fully taxable equivalent (FTE) basis. 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.”

     Provision for Loan Losses

     Originating loans involves a degree of risk that credit losses will occur in varying amounts according to, among other factors, the type of loans being made, the credit-worthiness of the borrowers over the term of the loans, the quality of the collateral for the loan, if any, as well as general economic conditions. We charge the provision for loan losses to earnings to maintain the total allowance for loan losses at a level considered by management to represent its best estimate of the losses known and inherent in the portfolio that are both probable and reasonable to estimate, based on, among other factors, prior loss experience, volume and type of lending conducted, estimated value of any underlying collateral, economic conditions (particularly as such conditions relate to Old Line Bank’s market area), regulatory guidance, peer statistics, management’s judgment, past due loans in the loan portfolio, loan charge off experience and concentrations of risk (if any). We charge losses on loans against the allowance when we believe that collection of loan principal is unlikely. We add back recoveries on loans previously charged to the allowance.

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     The provision for loan losses was $126,600 for the three months ended June 30, 2008, as compared to $30,000 for the three months ended June 30, 2007, an increase of $96,600 or 322.00%. After completing the analysis outlined below, during the three month period ended June 30, 2008, we increased the provision for loan losses primarily because there was a 7.58% growth in the loan portfolio from December 31, 2007 to June 30, 2008 and there is continued weakness in the economic environment in which we operate. We have not experienced any change in the quality of the loans in the portfolio and we have no loans, other than the one non-performing asset, past due more than 30 days. We believe that most of our clients, even those that directly or indirectly serve the real estate industry, remain financially strong. However, as the real estate industry continues to encounter weakness and gasoline prices escalate, we believe that it is prudent to continue to increase our provision for loan losses.

     The provision for the six month period was $165,000. This represented a $79,000 or 91.86% increase as compared to the six months ended June 30, 2007. For the six months ended June 30, 2008, we increased the provision for loan losses because the real estate industry continues to encounter difficulties. Although we do not have any investments or substantive loans comprised of sub-prime mortgages, because the real estate industry is a significant contributor to our local economy, we believe that its difficulties and higher gasoline prices may cause financial turmoil for other segments of the local economy. After completing the analysis outlined below, we determined during the six month period that there were changes in economic factors during the period that would directly impact the quality of the loan portfolio and warrant a higher provision. Although we continue to closely monitor our loan portfolio and have not identified any specific areas of weakness, in the current economic environment, we believe that it is prudent to continue to increase the loan loss provision for all segments of our portfolio.

     We review the adequacy of the allowance for loan losses at least quarterly. Our review includes evaluation of impaired loans as required by SFAS No. 114, Accounting by Creditors for Impairment of a Loan, and SFAS No. 118, Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosure. Also incorporated in determining the adequacy of the allowance is guidance contained in the Securities and Exchange Commission’s SAB No. 102, Loan Loss Allowance Methodology and Documentation; the Federal Financial Institutions Examination Council’s Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Banks and Savings Institutions and the Interagency Policy Statement on the Allowance for Loan and Lease Losses provided by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration and Office of Thrift Supervision.

     We base the evaluation of the adequacy of the allowance for loan losses upon loan categories. We categorize loans as installment and other consumer loans (other than boat loans), boat loans, mortgage loans (commercial real estate, residential real estate and real estate construction) and commercial loans. We apply loss ratios to each category of loan other than commercial loans. We further divide commercial loans by risk rating and apply loss ratios by risk rating, to determine estimated loss amounts. We evaluate delinquent loans and loans for which management has knowledge about possible credit problems of the borrower or knowledge of problems with loan collateral separately and assign loss amounts based upon the evaluation.

     We determine loss ratios for installment and other consumer loans (other than boat loans), boat loans and mortgage loans (commercial real estate, residential real estate and real estate construction) based upon a review of prior 18 months delinquency trends for the category, the three year loss ratio for the category, peer group loss ratios and industry standards.

     With respect to commercial loans, management assigns a risk rating of one through eight to each loan at inception, with a risk rating of one having the least amount of risk and a risk rating of eight having the greatest amount of risk. For commercial loans of less than $250,000, we may review the risk rating annually based on, among other things, the borrower’s financial condition, cash flow and ongoing financial viability; the collateral securing the loan; the borrower’s industry; and payment history. We review the risk rating for all commercial loans in excess of $250,000 at least annually. We evaluate loans with a risk rating of five or greater separately and assign loss amounts based upon the evaluation. For loans with risk ratings between one and four, we determine loss ratios based upon a review of prior 18 months delinquency trends, the three year loss ratio, peer group loss ratios and industry standards.

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     We also identify and make any necessary allocation adjustments for any specific concentrations of credit in a loan category that in management’s estimation increase the risk inherent in the category. If necessary, we will also make an adjustment within one or more loan categories for economic considerations in our market area that may impact the quality of the loans in the category. For all periods presented, there were no specific adjustments made for concentrations of credit. As discussed above, we have increased our provision for loan losses for the period in all segments of our portfolio as a result of economic considerations. We consider qualitative or environmental factors that are likely to cause estimated credit losses associated with our existing portfolio to differ from historical loss experience. These factors include, but are not limited to, changes in lending policies and procedures, changes in the nature and volume of the loan portfolio, changes in the experience, ability and depth of lending management and the effect of other external factors such as economic factors, competition and legal and regulatory requirements on the level of estimated credit losses in our existing portfolio.

     In the event that our review of the adequacy of the allowance results in any unallocated amounts, we reallocate such amounts to our loan categories based on the percentage that each category represents to total gross loans. We have risk management practices designed to ensure timely identification of changes in loan risk profiles. However, undetected losses inherently exist within the portfolio. We believe that the allocation of the unallocated portion of the reserve in the manner described above is appropriate.

     We will not create a separate valuation allowance unless we consider a loan impaired under SFAS No. 114 and SFAS No. 118. At June 30, 2008, we had one non-accrual loan totaling approximately $935,000. We have not designated a specific allowance for this non-accrual loan. We have no other loans past due 30 days or more. We also do not have any substantive loans comprised of sub-prime mortgages.

     Our policies require a review of assets on a regular basis, and we believe that we appropriately classify loans as well as other assets if warranted. We believe that we use the best information available to make a determination with respect to the allowance for loan losses, recognizing that the determination is inherently subjective and that future adjustments may be necessary depending upon, among other factors, a change in economic conditions of specific borrowers or generally in the economy, and new information that becomes available to us. However, there are no assurances that the allowance for loan losses will be sufficient to absorb losses on non-performing assets, or that the allowance will be sufficient to cover losses on non-performing assets in the future.

     The allowance for loan losses represents 0.79% of gross loans at June 30, 2008 and 0.78% at December 31, 2007. We have no exposure to foreign countries or foreign borrowers. Based on our analysis and the satisfactory historical performance of the loan portfolio, we believe this allowance appropriately reflects the inherent risk of loss in our portfolio.

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     The following table provides an analysis of the allowance for loan losses for the periods indicated:

Allowance for Loan Losses

	Six Months Ended						Year Ended
	June 30,						December 31,
	2008			2007			2007
Balance, beginning of period	$	1,586,737		$	1,280,396		$	1,280,396
Provision for loan losses		165,000			86,000			318,000
Chargeoffs:
Commercial		—			—			(6,064	)
Installment		(15,000	)		(4,979	)		(6,085	)
Total chargeoffs		(15,000	)		(4,979	)		(12,149	)
Recoveries:
Installment		362			306			490
Total recoveries		362			306			490
Net (chargeoffs) recoveries		(14,638	)		(4,673	)		(11,659	)
Balance, end of period	$	1,737,099		$	1,361,723		$	1,586,737
Allowance for loan losses to gross loans		0.79	%		0.79	%		0.78	%
Ratio of net-chargeoffs during period to average loans outstanding during period		0.007	%		0.000	%		0.007	%

The following table provides a breakdown of the allowance for loan losses:

Allocation of Allowance for Loan Losses

	June 30, 2008										December 31,
	2008					2007					2007
			% of Loans					% of Loans					% of Loans
			in Each					in Each					in Each
	Amount		Category			Amount		Category			Amount		Category
Installment & others	$	10,378		0.36	%	$	11,254		0.56	%	$	10,236		0.45	%
Boat		102,125		7.08			127,841		11.02			106,405		8.66
Mortgage		1,133,736		63.05			902,839		64.42			1,080,897		63.57
Commercial		490,860		29.51			319,789		24.00			389,199		27.32
Total	$	1,737,099		100.00	%	$	1,361,723		100.00	%	$	1,586,737		100.00	%

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     Non-interest Revenue

     Three months ended June 30, 2008 compared to three months ended June 30, 2007

     Non-interest revenue totaled $260,660 for the three months ended June 30, 2008, a decrease of $110,384 or 29.75% from the 2007 amount of $371,044. Non-interest revenue for the three months ended June 30, 2008 and June 30, 2007 included fee income from service charges on deposit accounts, earnings on bank owned life insurance, income from our investment in real estate LLC (Pointer Ridge) and other fees and commissions. For the period ended June 30, 2007, non-interest revenue also included broker origination fees from the marine division.

     The following table outlines the changes in non-interest revenue for the three month periods.

	June 30,		June 30,
	2008		2007			$ Change			% Change
Service charges on deposit accounts	$	79,252	$	72,998		$	6,254			8.57	%
Marine division broker origination fees		—		135,284			(135,284	)		(100.00	)
Earnings on bank owned life insurance		91,111		89,288			1,823			2.04
Income (loss) on investment in real estate LLC		745		(6,000	)		6,745			(112.42	)
Other fees and commissions		89,552		79,474			10,078			12.68
Total non-interest revenue	$	260,660	$	371,044		$	(110,384	)		(29.75	)%

     Service charges on deposit accounts increased due to increases in the number of customers and the services they used. There were no fees earned from marine division broker origination fees during the quarter ended June 30, 2008 because late in the third quarter of 2007, we closed this division. Earnings on bank owned life insurance increased primarily because the rate earned on the investment increased. Pointer Ridge was fully leased during the 2nd quarter of 2008 and had vacancies during the 2nd quarter of 2007. As a result of this and rental increases, income on investment in real estate LLC was higher in the 2nd quarter of 2008 than the comparable period of 2007. Other fees and commissions increased $10,078 primarily because of growth in other loan fees caused by the increased number and dollar volume of settlements and the collection of $10,000 in other loan fees from the payoff of a non-accrual loan.

      Six months ended June 30, 2008 compared to six months ended June 30, 2007

     The following table outlines the changes in non-interest revenue for the six month periods.

	June 30,		June 30,
	2008		2007		$ Change			% Change
Service charges on deposit accounts	$	152,204	$	143,918	$	8,286			5.76	%
Marine division broker origination fees		—		212,958		(212,958	)		(100.00	)
Earnings on bank owned life insurance		182,714		156,638		26,076			16.65
Income (loss) on investment in real estate LLC		13,641		3,768		9,873			262.02
Other fees and commissions		144,539		119,669		24,870			20.78
Total non-interest revenue	$	493,098	$	636,951	$	(143,853	)		(22.58	)%

     Service charges on deposit accounts increased due to increases in the number of customers and the services they use. We did not earn any marine division broker origination fees during the period because we closed this division at the end of the third quarter of 2007. Earnings on bank owned life insurance increased because we invested an additional $4 million in February 2007. As a result, we had an additional thirty days of interest income on the investment in 2008. Pointer Ridge income increased $9,873 because it had more tenants and as a result of rent increases. Other fees and commissions increased $24,870 primarily because in April 2007, we began leasing the Waldorf office space that we vacated in July 2006 and because of increases in loan income received from the repayment of a non-accrual loan as well as an increased volume of closings of loans and letters of credit.

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     Because of the new lenders we have hired and the new College Park and Greenbelt branches that we have opened, we expect that customer relationships will continue to grow during the remainder of 2008. We anticipate this growth will cause an increase in service charges on deposit accounts. As a result of our decision to cease operations in the marine division, we will not have any fee income from the marine division in 2008. We believe the demand in the commercial real estate market will remain stable and we will have an additional number of opportunities to provide financing of these facilities. Therefore, other loan fees which are included in other fees and commissions should remain constant. We expect our earnings on bank owned life insurance will remain stable during the remainder of 2008. We anticipate the income from Pointer Ridge will remain stable during the remainder of the year and will produce moderate earnings.

     Non-interest Expense

     Three months ended June 30, 2008 compared to three months ended June 30, 2007

     Non-interest expense remained relatively stable for the three months ended June 30, 2008 at $1.7 million compared to the same period in 2007. The following chart outlines the changes in non-interest expenses for the period.

	June 30,		June 30,
	2008		2007		$ Change			% Change
Salaries	$	751,700	$	800,866	$	(49,166	)		(6.14	)%
Employee benefits		231,905		228,451		3,454			1.51
Occupancy		270,787		224,183		46,604			20.79
Equipment		76,191		56,956		19,235			33.77
Data processing		64,627		54,652		9,975			18.25
Other operating		336,659		356,566		(19,907	)		(5.58	)
Total non-interest expenses	$	1,731,869	$	1,721,674	$	10,195			0.59	%

     Salaries decreased primarily because we closed the marine division late in the third quarter of 2007 and terminated the employees associated with it. This reduction was partially offset by the costs associated with the new personnel hired for the Greenbelt and College Park branches and the new loan officer hired in September of 2007.

     Occupancy and equipment expenses increased because of the opening of the new Greenbelt branch in June 2007 and annual rental increases. Data processing increased because of our new locations and new services provided by our data processor. Other operating expenses decreased primarily because there were no origination costs derived from the marine division during the period.

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     Six months ended June 30, 2008 compared to six months ended June 30, 2007

     Non-interest expense for the six months ended June 30, 2008 remained relatively comparable to the amount reported in the same period in 2007. The following chart outlines the changes in non-interest expenses for the period.

	June 30,		June 30,
	2008		2007		$ Change			% Change
Salaries	$	1,486,631	$	1,555,037	$	(68,406	)		(4.40	)%
Employee benefits		501,358		513,265		(11,907	)		(2.32	)
Occupancy		550,709		434,621		116,088			26.71
Equipment		146,666		118,402		28,264			23.87
Data processing		125,879		114,092		11,787			10.33
Other operating		665,936		689,224		(23,288	)		(3.38	)
Total non-interest expenses	$	3,477,179	$	3,424,641	$	52,538			1.53	%

     Salary and benefit expenses decreased primarily because we closed the marine division late in the third quarter of 2007 and terminated the employees associated with it and stock based compensation expense decreased from $119,290 in 2007 to $64,800 for the same period in 2008. The stock based compensation expense decreased because the Board of Directors did not receive any vested options in 2008 and they received 10,000 vested options in 2007. These reductions were partially offset by the costs associated with the new personnel hired for the Greenbelt and College Park branches and the new loan officers hired in April and September 2007.

     Occupancy and equipment expenses increased because of the opening of the new Greenbelt branch in June 2007 and the College Park branch in February 2008 and annual rental increases. Data processing increased because of the new locations, new services provided by our data processor, and contractual increases. Other operating expenses decreased primarily because of the elimination of the costs associated with the marine division.

     For the remainder of 2008, we anticipate non-interest expenses will increase. We will incur increased rent expense related to the new Greenbelt and Annapolis locations and increased operational expenses associated with these branches as well as costs associated with the additional branches we expect to open during 2008.

     Income Taxes

     Three months ended June 30, 2008 compared to three months ended June 30, 2007

     Income tax expense was $265,205 (34.80% of pre-tax income) for the three months ended June 30, 2008 as compared to $198,968 (32.80% of pre-tax income) for the same period in 2007. The increase in the effective tax rate is primarily due to a decrease in interest on tax exempt securities as a percent of pre-tax income during the period.

     Six months ended June 30, 2008 compared to six months ended June 30, 2007

     Income tax expense was $498,633 (34.62% of pre-tax income) for the six months ended June 30, 2008 compared to $339,746 (31.61% of pre-tax income) for the same period in 2007. The increase in the effective tax rate is primarily due to a decrease in interest on tax exempt securities as a percent of pre-tax income during the period.

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     Net Income

     Three months ended June 30, 2008 compared to three months ended June 30, 2007

     Net income was $496,824 or $0.13 per basic and diluted common share for the three month period ending June 30, 2008 compared to net income of $407,660 or $0.10 per basic and diluted common share for the same period in 2007. The increase in net income was the result of a $275,980 increase in net interest income after provision for loan losses that was partially offset by a $110,384 decrease in non-interest revenue, a $10,195 increase in non-interest expense and a $66,237 increase in income taxes for the period compared to the same period in 2007. Earnings per common share increased on a basic and diluted basis because of higher earnings in 2008 and because the average number of common shares decreased by 347,846 common shares from 4,254,599 for the three months ended June 30, 2007 to 3,906,753 for the same period in 2008. This occurred because we repurchased 177,799 shares of common stock during 2008 and 185,950 shares of common stock in the 4^th quarter of 2007 that caused the average shares outstanding to decline.

     Six months ended June 30, 2008 compared to six months ended June 30, 2007

     Net income was $941,657 or $0.24 per basic and diluted common share for the six month period ending June 30, 2008, an increase of $206,455 or 28.08% compared to net income of $735,202 or $0.17 per basic and diluted common share for the same period in 2007. The increase in net income was the result of a $561,733 increase in net interest income after provision for loan losses. This was partially offset by a $143,853 decrease in non-interest revenue, a $52,538 increase in non-interest expense and a $158,887 increase in income taxes. Earnings per share increased on a basic and diluted basis because of higher earnings and because we repurchased 177,799 shares of common stock during the six month period ended June 30, 2008 and 185,950 shares of common stock in the 4^th quarter of 2007 that caused the average number of common shares outstanding to decline to 3,970,440 from 4,254,479 for the same period in 2007.

Analysis of Financial Condition

     Investment Securities

     Our portfolio consists primarily of U.S. Treasury securities, U.S. government agency securities, securities issued by states, counties and municipalities, mortgage-backed securities, and certain equity securities, including Federal Reserve Bank stock, Federal Home Loan Bank stock, Maryland Financial Bank stock and Atlantic Central Bankers Bank stock. The portfolio provides a source of liquidity, collateral for repurchase agreements as well as a means of diversifying our earning asset portfolio. While we generally intend to hold the investment securities until maturity, we classify a significant portion of the investment securities as available for sale. We account for investment securities so classified at fair value and report the unrealized appreciation and depreciation as a separate component of stockholders’ equity, net of income tax effects. We account for investment securities classified in the held to maturity category at amortized cost. We invest in securities for the yield they produce and not to profit from trading the securities. There are no trading securities in the portfolio.

     The investment securities at June 30, 2008 amounted to $16.4 million, an increase of $4.7 million, or 40.17%, from the December 31, 2007 amount of $11.7 million. Available for sale investment securities decreased to $6.3 million at June 30, 2008 from $9.4 million at December 31, 2007. The decrease in the available for sale investment securities occurred because some of these assets matured and with the proceeds we purchased federal funds, investment securities held to maturity, and deployed the proceeds into loans. Held to maturity securities at June 30, 2008 increased to $10.2 million from the $2.3 million balance on December 31, 2007 because we purchased new securities during the period. The fair value of available for sale securities included net unrealized losses of $102,732 at June 30, 2008 (reflected as unrealized losses of $62,209 in stockholders’ equity after deferred taxes) as compared to net unrealized losses of $49,127 ($29,749 net of taxes) as of December 31, 2007. In general, the decrease in fair value was a result of maturities, increasing interest rates on investments and changes in investment ratings. As required under SFAS No. 115, we have evaluated securities with unrealized losses for an extended period of time and determined that these losses are temporary because, at this point in time, we expect to hold them until maturity. As the maturity date moves closer and/or interest rates decline, the unrealized losses in the portfolio will decline or dissipate.

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     Investment in real estate LLC

     As discussed above, Old Line Bancshares has a 50% ownership or $819,663 investment in Pointer Ridge, a real estate investment limited liability company. In July 2006, we moved our main office facility from Waldorf, Maryland to the building owned by Pointer Ridge at 1525 Pointer Ridge Place, Bowie, Maryland in Prince George’s County and established a branch in this facility.

     Frank Lucente, a director of Old Line Bancshares, Inc. and Old Line Bank, controls 25% of Pointer Ridge and controls the manager of Pointer Ridge. On June 6, 2006, we executed leases for 2,557 square feet on the 1^st floor of the building for a new branch office, 5,449 square feet on the 3^rd floor and 11,053 square feet on the 4^th floor of this building for our new headquarters. The leases which commenced on July 1, 2006, are for thirteen years, with two, five-year renewal options. The leases are full service leases and payment terms include the cost of taxes, insurance and maintenance with basic monthly payments of $41,967 and 3% annual increases in base rents plus adjustment for increased taxes, insurances and maintenance.

     Loan Portfolio

     Loans secured by real estate or luxury boats comprise the majority of the loan portfolio. Old Line Bank’s loan customers are generally located in the greater Washington, D.C. metropolitan area.

     The loan portfolio, net of allowance, unearned fees and origination costs, increased $15.4 million or 7.63% to $217.3 million at June 30, 2008 from $201.9 million at December 31, 2007. Commercial business loans increased by $9.0 million (16.22%), commercial real estate loans increased by $5.0 million (5.21%), residential real estate loans (generally home equity and fixed rate home improvement loans) decreased by $592,769 (5.28%), real estate construction loans (primarily commercial real estate construction) increased by $3.1 million (0.01%) and installment loans decreased by $2.2 million (11.89%) from their respective balances at December 31, 2007.

     During the first six months of 2008, we received several loan payoffs that negatively impacted our loan growth for the period. These payoffs were primarily attributable to a significant slowdown in the real estate market. In spite of these payoffs, we experienced growth in the loan portfolio. We saw loan and deposit growth generated from our entire team of lenders, branch personnel and board of directors. We anticipate the entire team will continue to focus their efforts on business development during the remainder of 2008 and continue to grow the loan portfolio.

     The following table summarizes the composition of the loan portfolio by dollar amount and percentages:

	Loan Portfolio
	(Dollars in thousands)
	June 30,					December 31,
	2008					2007
Real Estate
Commercial	$	101,037		46.22	%	$	96,018		47.26	%
Construction		24,962		11.42			21,905		10.78
Residential		11,820		5.41			11,227		5.53
Commercial		64,522		29.51			55,513		27.32
Installment		16,276		7.44			18,528		9.11
		218,617		100.00	%		203,191		100.00	%
Allowance for loan losses		(1,737	)				(1,586	)
Deferred loan costs, net		379					337
	$	217,259				$	201,942

     Asset Quality

     Management performs reviews of all delinquent loans and directs relationship officers to work with customers to resolve potential credit issues in a timely manner. Management generally classifies loans as non-accrual when it does not expect collection of full principal and interest under the original terms of the loan or payment of principal or interest has become 90 days past due.

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Classifying a loan as non-accrual results in our no longer accruing interest on such loan and reversing any interest previously accrued but not collected. We will generally restore a non-accrual loan to accrual status when the borrower brings delinquent principal and interest payments current and we expect to collect future monthly principal and interest payments. We recognize interest on non-accrual loans only when received. At December 31, 2007, we had two loans totaling $1.1 million that were 90 days past due and were classified as non-accrual. The foreclosure process on one of these loans in the amount of $127,000 was completed in January 2008 and we received payment in full in June 2008. The borrower on the second loan in the amount of $934,144 filed for bankruptcy protection in November, 2007. A commercial real estate property secures this loan. The loan to value at inception of this loan was 80%. During the first quarter, the borrower began remitting payments and advised us that the borrower will make all past due interest and principal current prior to March 31, 2009. We do not expect to incur any losses on this loan. As of June 30, 2008, the interest not accrued on this loan was $18,166 none of which was included in net income for the six months or quarter ended June 30, 2008. During the 2^nd quarter, we repossessed a boat that secured a loan at the time of repossession of approximately $80,000. At the time of repossession, we charged $15,000 to the allowance for loan losses for anticipated losses we expect to incur on this transaction and reversed all accrued and unpaid interest. We anticipate we will sell the boat and we do not expect to recognize any substantive additional losses on the boat. Other than the loans outlined above there were no loans 30 days or more past due as of June 30, 2008 and only one loan in the amount of approximately $6,000 was more than 30 days past due as of December 31, 2007.

     We classify any property acquired as a result of foreclosure on a mortgage loan as “real estate owned” and record it at the lower of the unpaid principal balance or fair value at the date of acquisition and subsequently carry the loan at the lower of cost or net realizable value. We charge any required write-down of the loan to its net realizable value against the allowance for loan losses at the time of foreclosure. We charge to expense any subsequent adjustments to net realizable value. Upon foreclosure, Old Line Bank generally requires an appraisal of the property and, thereafter, appraisals of the property on at least an annual basis and external inspections on at least a quarterly basis. As of June 30, 2008 and December 31, 2007, we held no real estate acquired as a result of foreclosure.

     We apply the provisions of Statement of Financial Accounting Standards No. 114 (“SFAS No. 114”), Accounting by Creditors for Impairment of a Loan, as amended by Statement of Financial Accounting Standards No. 118 (“SFAS No. 118”), Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosure. SFAS No. 114 and SFAS No. 118 require that impaired loans, which consist of all modified loans and other loans for which collection of all contractual principal and interest is not probable, be measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. If the measure of the impaired loan is less than the recorded investment in the loan, we recognize impairment through a valuation allowance and corresponding provision for loan losses. Old Line Bank considers consumer loans as homogenous loans and thus does not apply the SFAS No. 114 impairment test to these loans. We write off impaired loans when collection of the loan is doubtful.

     As of June 30, 2008 and December 31, 2007, we had no impaired or restructured loans.

     Bank owned life insurance

     We increased our investment in Bank Owned Life Insurance (“BOLI”) in February 2007 by $4.0 million. In June 2005, we purchased $3.3 million of BOLI on the lives of our executive officers, Messrs. Cornelsen and Burnett and Ms. Rush. With the new investment made in February 2007, we increased the insurance on Messrs. Cornelsen and Burnett and expanded the coverage of the insurance policies to insure the lives of several other officers of Old Line Bank. We anticipate the earnings on these policies will pay for our employee benefit expenses as well as our obligations under our Salary Continuation Agreements and Supplemental Life Insurance Agreements that we entered into with our executive officers in January 2006. The additional $4 million investment and higher rates caused increased earnings, during the first six months of 2008 and the cash surrender value of the insurance policies increased by $163,364. There were no post retirement death benefits associated with the BOLI policies.

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     Deposits

     We seek deposits within our market area by paying competitive interest rates, offering high quality customer service and using technology to deliver deposit services effectively.

     At June 30, 2008, the deposit portfolio had grown to $197.9 million, a $20.1 million or 11.30% increase over the December 31, 2007 level of $177.8 million. Noninterest-bearing deposits increased $5.0 million during the period to $40.1 million from $35.1 million primarily due to the addition of new customers which caused an increase in commercial checking accounts. Interest-bearing deposits grew $15.1 million to $157.8 million from $142.7 million. The majority of the growth in interest-bearing deposits was in certificates of deposit. Certificates of deposit grew $16.2 million or 13.69% to $118.3 million from $102.1 million. The growth in these deposits was offset by a $1.1 million decline in money market and savings accounts. Certificates of deposit grew because during the period we implemented a new Internet related deposit service that allows other financial institutions to electronically open certificates of deposit with us. As a result of this service, our new branches and our business development efforts, we opened new customer relationships and collected new deposits from existing customers.

     In the first quarter of 2006, we began acquiring brokered certificates of deposit through the Promontory Interfinancial Network. Through this deposit matching network and its certificate of deposit account registry service (CDARS), we obtained the ability to offer our customers access to FDIC-insured deposit products in aggregate amounts exceeding current insurance limits. When we place funds through CDARS on behalf of a customer, we receive matching deposits through the network’s reciprocal deposit program. We can also receive deposits through this network without receiving matching deposits. At June 30, 2008, we had $16.2 million in CDARS through the reciprocal deposit program compared to $13.5 million at December 31, 2007. At June 30, 2008, we had received $5 million in deposits through the CDARS network that were not reciprocal deposits. At December 31, 2007, we had $5 million in brokered certificates of deposit.

     Borrowings

     Old Line Bank has available lines of credit, including overnight federal funds and repurchase agreements from its correspondent banks totaling $33.3 million as of June 30, 2008. Old Line Bank has an additional secured line of credit from the Federal Home Loan Bank of Atlanta (FHLB) that totaled $72.9 million at June 30, 2008 and $71.1 million at December 31, 2007. As a condition of obtaining the line of credit from the FHLB, the FHLB requires that Old Line Bank purchase shares of capital stock in the FHLB. Prior to allowing Old Line Bank to borrow under the line of credit, the FHLB also requires that Old Line Bank provide collateral to support borrowings. Therefore, at June 30, 2008 we have provided collateral to support up to $39.3 million of borrowings. Of this, we had borrowed $15 million at June 30, 2008 and December 31, 2007.

     Short-term borrowings consisted of short-term promissory notes issued to Old Line Bank’s customers. Old Line Bank offers its commercial customers an enhancement to the basic non-interest bearing demand deposit account. This service electronically sweeps excess funds from the customer’s account into an interest-bearing Master Note with Old Line Bank. These Master Notes re-price daily and have maturities of 270 days or less. At June 30, 2008, Old Line Bank had $22.3 million outstanding in these short term promissory notes with an average interest rate of 1.23%. At December 31, 2007, Old Line Bank had $16.3 million outstanding with an average interest rate of 2.53%.

     At June 30, 2008 and December 31, 2007, Old Line Bank had three advances in the amount of $5.0 million each, from the FHLB totaling $15.0 million. On November 24, 2007, Old Line Bank borrowed $5.0 million with an interest rate of 3.66%. Interest is due on the 23^rd day of each February, May, August and November, commencing on February 23, 2008. On November 23, 2008, or any interest payment date thereafter, the FHLB has the option to convert the interest rate on this advance from a fixed rate to a three (3) month London Interbank Offer Rate (LIBOR) based variable rate. Old Line Bank must repay this advance in full on November 23, 2010.

     On December 12, 2007, Old Line Bank borrowed another $5.0 million from the FHLB. The interest rate on this advance is 3.3575% and interest is payable on the 12^th day of each March, June, September and December, commencing on March 12, 2008. On December 12, 2008, or any interest payment date thereafter, the FHLB has the option to convert the interest rate on this advance to a fixed rate three (3) month LIBOR. The maturity date on this advance is December 12, 2012.

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     On December 19, 2007, Old Line Bank borrowed an additional $5.0 million from the FHLB. The interest rate on this borrowing is 3.119% and is payable on the 19^th day of each month. On January 22, 2008 or any interest payment date thereafter, the FHLB has the option to convert the interest rate on this advance from a fixed rate to a one (1) month LIBOR based variable rate. This borrowing matures on December 19, 2012.

     Interest Rate Sensitivity Analysis and Interest Rate Risk Management

     A principal objective of Old Line Bank’s asset/liability management policy is to minimize exposure to changes in interest rates by an ongoing review of the maturity and re-pricing of interest-earning assets and interest-bearing liabilities. The Asset and Liability Committee of the Board of Directors oversees this review.

     The Asset and Liability Committee establishes policies to control interest rate sensitivity. Interest rate sensitivity is the volatility of a bank’s earnings resulting from movements in market interest rates. Management monitors rate sensitivity in order to reduce vulnerability to interest rate fluctuations while maintaining adequate capital levels and acceptable levels of liquidity. Monthly financial reports supply management with information to evaluate and manage rate sensitivity and adherence to policy. Old Line Bank’s asset/liability policy’s goal is to manage assets and liabilities in a manner that stabilizes net interest income and net economic value within a broad range of interest rate environments. Management makes adjustments to the mix of assets and liabilities periodically in an effort to achieve dependable, steady growth in net interest income regardless of the behavior of interest rates in general.

     As part of the interest rate risk sensitivity analysis, the Asset and Liability Committee examines the extent to which Old Line Bank’s assets and liabilities are interest rate sensitive and monitors the interest rate sensitivity gap. An interest rate sensitive asset or liability is one that, within a defined time period, either matures or experiences an interest rate change in line with general market rates. The interest rate sensitivity gap is the difference between interest-earning assets and interest-bearing liabilities scheduled to mature or re-price within such time period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. During a period of rising interest rates, a negative gap would tend to adversely affect net interest income, while a positive gap would tend to result in an increase in net interest income. During a period of declining interest rates, a negative gap would tend to result in an increase in net interest income, while a positive gap would tend to adversely affect net interest income. If re-pricing of assets and liabilities were equally flexible and moved concurrently, the impact of any increase or decrease in interest rates on net interest income would be minimal.

     Old Line Bank currently has a negative gap over the short term, which suggests that the net yield on interest earning assets may decrease during periods of rising interest rates. However, a simple interest rate “gap” analysis by itself may not be an accurate indicator of how changes in interest rates will affect net interest income. Changes in interest rates may not uniformly affect income associated with interest-earning assets and costs associated with interest-bearing liabilities. In addition, the magnitude and duration of changes in interest rates may have a significant impact on net interest income. Although certain assets and liabilities may have similar maturities or periods of re-pricing, they may react in different degrees to changes in market interest rates. Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market interest rates, while interest rates on other types may lag behind changes in general market rates. In the event of a change in interest rates, prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the interest-rate gap. The ability of many borrowers to service their debts also may decrease in the event of an interest rate increase.

     Liquidity

     Our overall asset/liability strategy takes into account our need to maintain adequate liquidity to fund asset growth and deposit runoff. Our management monitors the liquidity position daily in conjunction with Federal Reserve guidelines. We have credit lines unsecured and secured available from several correspondent banks totaling $33.3 million. Additionally, we may borrow funds from the Federal Home Loan Bank of Atlanta.

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We can use these credit facilities in conjunction with the normal deposit strategies, which include pricing changes to increase deposits as necessary. We can also sell or pledge available for sale investment securities to create additional liquidity. From time to time we may sell or participate out loans to create additional liquidity as required. Additional sources of liquidity include funds held in time deposits and cash from the investment and loan portfolios.

     Our immediate sources of liquidity are cash and due from banks and federal funds sold. On June 30, 2008, we had $6.1 million in cash and due from banks, and $11.0 million in federal funds sold and overnight investments. As of December 31, 2007, we had $3.2 million in cash and due from banks, and $9.8 million in federal funds sold and other overnight investments.

     Old Line Bank has sufficient liquidity to meet its loan commitments as well as fluctuations in deposits. We usually retain maturing certificates of deposit as we offer competitive rates on certificates of deposit. Management is not aware of any demands, trends, commitments, or events that would result in Old Line Bank’s inability to meet anticipated or unexpected liquidity needs.

     Capital

     Our stockholders’ equity amounted to $33.9 million at June 30, 2008 and $34.6 million at December 31, 2007. We are considered “well capitalized” under the risk-based capital guidelines adopted by the Federal Reserve. Stockholders’ equity decreased during the six month period because of the $1.5 million cost for stock repurchases during the period, the $32,460 after tax unrealized loss in available for sale securities and the $238,644 dividend paid in March and June 2008. These items were partially offset by net income of $941,657, plus the $64,800 adjustment for stock based compensation awards.

Contractual Obligations, Commitments, Contingent Liabilities, and Off-balance Sheet Arrangements

     Old Line Bancshares, Inc. is a party to financial instruments with off-balance sheet risk in the normal course of business. These financial instruments primarily include commitments to extend credit, lines of credit and standby letters of credit. Old Line Bancshares, Inc. uses these financial instruments to meet the financing needs of its customers. These financial instruments involve, to varying degrees, elements of credit, interest rate, and liquidity risk. These commitments do not represent unusual risks and management does not anticipate any losses which would have a material effect on Old Line Bancshares, Inc. Old Line Bancshares, Inc. also has operating lease obligations.

     Old Line Bancshares, Inc’s guaranty obligation made in connection with Pointer Ridge’s mortgage loan, outlined below, also creates off-balance sheet risk, as further described below.

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     Outstanding loan commitments and lines and letters of credit at June 30, 2008 and December 31, 2007, are as follows:

	June 30,		December 31,
	2008		2007
	(Dollars in thousands)
Commitments to extend credit and available credit lines:
Commercial	$	23,352	$	16,398
Real estate-undisbursed development and construction		42,203		35,966
Real estate-undisbursed home equity lines of credit		5,241		5,250
	$	70,796	$	57,614
Standby letters of credit	$	1,564	$	1,634

     Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Old Line Bancshares, Inc. generally requires collateral to support financial instruments with credit risk on the same basis as it does for on-balance sheet instruments. The collateral is based on management’s credit evaluation of the counter party. Commitments generally have interest rates fixed at current market rates, expiration dates or other termination clauses and may require payment of a fee. Available credit lines represent the unused portion of lines of credit previously extended and available to the customer so long as there is no violation of any contractual condition. These lines generally have variable interest rates. Since many of the commitments are expected to expire without being drawn upon, and since it is unlikely that customers will draw upon their lines of credit in full at any time, the total commitment amount or line of credit amount does not necessarily represent future cash requirements. We evaluate each customer’s credit-worthiness on a case-by-case basis. We are not aware of any loss that we would incur by funding our commitments or lines of credit.

     Commitments for real estate development and construction, which totaled $42.2 million, or 59.60% of the $70.8 million of outstanding commitments, are generally short-term and turn over rapidly with principal repayment from permanent financing arrangements upon completion of construction or from sales of the properties financed.

     Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Our exposure to credit loss in the event of nonperformance by the customer is the contract amount of the commitment. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

     On August 25, 2006, Pointer Ridge entered into a loan agreement with an unrelated bank, pursuant to which the bank agreed to make a mortgage loan to Pointer Ridge in a principal amount of $6.6 million to finance the commercial office building at 1525 Pointer Ridge Place, Bowie, Maryland. We lease approximately half of this building for our main office and operate a branch of Old Line Bank from this address. Old Line Bancshares, Inc. has a 50% ownership in Pointer Ridge and we record this investment on the equity method.

     The Amended Promissory Note provides that the loan will accrue interest from the date of the Amended Promissory Note through September 5, 2016 at a rate of 6.28% (“Initial Term Interest Rate”). After September 5, 2016, the interest rate will adjust to the greater of (i) the Initial Term Interest Rate plus 200 basis points or (ii) the Treasury Rate (as defined in the Amended Promissory Note) plus 200 basis points.

     Payments on the Amended Promissory Note began October 5, 2006. For the first 12 months, Pointer Ridge paid to the lender an installment of interest only. Commencing with the 13^th payment and continuing until August 5, 2036, Pointer Ridge pays equal monthly payments of principal and interest based on a 30-year amortization. There is a prepayment penalty if Pointer Ridge prepays the loan prior to September 5, 2016. At June 30, 2008, Pointer Ridge had borrowed $6.6 million under the Amended Promissory Note.

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     On August 25, 2006, Old Line executed a new Guaranty Agreement with the lender that was effective upon Pointer Ridge’s execution of the Amended Promissory Note and Amended Deed of Trust. Pursuant to the terms of the guaranty, Old Line has guaranteed the payment to the lender of up to 50% of the loan amount plus any costs incurred by the lender resulting from any acts, omissions or alleged acts or omissions arising out of or relating to: (1) the misapplication or misappropriation by Pointer Ridge of any or all money collected, paid or received; (2) rents, issues, profits and revenues of all or any portion of the property located at 1525 Pointer Ridge Place, Bowie, Maryland (the “Security Property”) received or applicable to a period after the occurrence of any Event of Default which are not applied to pay, first (a) real estate taxes and other charges which, if unpaid, could result in liens superior to that of the Amended Deed of Trust and (b) premiums on insurance policies required under the loan documents, and, second, the other ordinary and necessary expenses of owning and operating the Security Property; (3) waste committed on the Security Property or damage to the Security Property as a result of intentional misconduct or gross negligence or the removal of all or any portion of the Security Property in violation of the terms of the loan documents; (4) fraud or material misrepresentation or failure to disclose a material fact; (5) the filing of any petition for bankruptcy; or (6) Pointer Ridge’s failure to maintain its status as a single purpose entity as required by the loan documents.

     We do not believe that we will incur any obligations under the guaranty. If we were to become obligated under the guaranty, we do not believe that it would have any material effect on our liquidity or capital resources.

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Reconciliation of Non-GAAP Measures

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

Three months ended June 30, 2008

	Federal						Interest			Net			Net
	Funds			Investment			Earning			Interest			Interest
	Sold			Securities			Assets			Income			Spread
GAAP interest income	$	45,591		$	190,275		$	3,725,696		$	2,359,838
Tax equivalent adjustment		496			12,124			12,620			12,620
Tax equivalent interest income	$	46,087		$	202,399		$	3,738,316		$	2,372,458
GAAP interest yield		2.00	%		4.12	%		6.19	%		3.92	%		3.30	%
Taxable equivalent adjustment		0.02	%		0.27	%		0.03	%		0.03	%		0.03	%
Tax equivalent interest yield		2.02	%		4.39	%		6.22	%		3.95	%		3.33	%

Three months ended June 30, 2007

	Federal						Interest			Net			Net
	Funds			Investment			Earning			Interest			Interest
	Sold			Securities			Assets			Income			Spread
GAAP interest income	$	381,489		$	170,798		$	3,523,009		$	1,987,258
Tax equivalent adjustment		8,361			17,923			26,284			26,284
Tax equivalent interest income	$	389,850		$	188,721		$	3,549,293		$	2,013,542
GAAP interest yield		5.25	%		3.85	%		6.88	%		3.88	%		2.84	%
Taxable equivalent adjustment		0.12	%		0.40	%		0.05	%		0.05	%		0.05	%
Tax equivalent interest yield		5.37	%		4.25	%		6.93	%		3.93	%		2.89	%

Six months ended June 30, 2008

	Federal						Interest			Net			Net
	Funds			Investment			Earning			Interest			Interest
	Sold			Securities			Assets			Income			Spread
GAAP interest income	$	171,969		$	310,389		$	7,496,138		$	4,589,371
Tax equivalent adjustment		3,312			27,144			30,456			30,456
Tax equivalent interest income	$	175,281		$	337,533		$	7,526,594		$	4,619,827
GAAP interest yield		2.67	%		4.00	%		6.32	%		3.87	%		3.18	%
Taxable equivalent adjustment		0.05	%		0.35	%		0.03	%		0.03	%		0.03	%
Tax equivalent interest yield		2.72	%		4.35	%		6.35	%		3.90	%		3.21	%

Six months ended June 30, 2007

	Federal						Interest			Net			Net
	Funds			Investment			Earning			Interest			Interest
	Sold			Securities			Assets			Income			Spread
GAAP interest income	$	754,954		$	344,914		$	6,951,147		$	3,948,638
Tax equivalent adjustment		19,100			36,059			55,159			55,159
Tax equivalent interest income	$	774,054		$	380,973		$	7,006,306		$	4,003,797
GAAP interest yield		5.25	%		3.86	%		6.86	%		3.90	%		2.82	%
Taxable equivalent adjustment		0.13	%		0.41	%		0.05	%		0.05	%		0.05	%
Tax equivalent interest yield		5.38	%		4.27	%		6.91	%		3.95	%		2.87	%

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Impact of Inflation and Changing Prices

     Management has prepared the financial statements and related data presented herein in accordance with generally accepted accounting principles which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation.

     Unlike industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the price of goods and services, and may frequently reflect government policy initiatives or economic factors not measured by price index. As discussed above, we strive to manage our interest sensitive assets and liabilities in order to offset the effects of rate changes and inflation.

Application of Critical Accounting Policies

     We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America and follow general practices within the industry in which we operate. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. We base these estimates, assumptions, and judgments on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. We base the fair values and the information used to record valuation adjustments for certain assets and liabilities on quoted market prices or from information other third-party sources provide, when available.

     Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the provision for loan losses as the accounting area that requires the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available.

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     Management has significant discretion in making the judgments inherent in the determination of the provision and allowance for loan losses, including in connection with the valuation of collateral and the financial condition of the borrower, and in establishing loss ratios and risk ratings. The establishment of allowance factors is a continuing exercise and allowance factors may change over time, resulting in an increase or decrease in the amount of the provision or allowance based upon the same volume and classification of loans.

     Changes in allowance factors or in management’s interpretation of those factors will have a direct impact on the amount of the provision, and a corresponding effect on income and assets. Also, errors in management’s perception and assessment of the allowance factors could result in the allowance not being adequate to cover losses in the portfolio, and may result in additional provisions or charge-offs, which would adversely affect income and capital. For additional information regarding the allowance for loan losses, see “Provision for Loan Losses”.

Information Regarding Forward-Looking Statements

     This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We may also include forward-looking statements in other statements that we make. All statements that are not descriptions of historical facts are forward-looking statements. Forward-looking statements often use words such as “believe,” “expect,” “plan,” “may,” “will,” “should,” “project,” “contemplate,” “anticipate,” “forecast,” “intend” or other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts.

     The statements presented herein with respect to, among other things, Old Line Bancshares, Inc.’s plans, objectives, expectations and intentions, including market expansion, statements regarding anticipated changes in revenue and expenses, future sources of earnings/income, sources of liquidity, the allowance for loan losses, expected loan, deposit and asset growth, costs of funds, commercial real estate demand and related financing opportunities, losses on non-performing loans, interest rate sensitivity, the anticipated impact of new services we offer, financial and other goals and plans, the expected income from new branches offsetting related expenses, the impact of remote deposit capture on expenses and deposit growth, expected openings of new branches, earnings on BOLI, and customer growth are forward looking. Old Line Bancshares, Inc. bases these statements on our beliefs, assumptions and on information available to us as of the date of this filing, which involves risks and uncertainties. These risks and uncertainties include, among others those discussed in this report; the ability of Old Line Bancshares, Inc. to retain key personnel; the ability of Old Line Bancshares, Inc. to successfully implement its growth and expansion strategy; risk of loan losses; that the allowance for loan losses may not be sufficient; that changes in interest rates and monetary policy could adversely affect Old Line Bancshares, Inc.; that changes in regulatory requirements and/or restrictive banking legislation may adversely affect Old Line Bancshares, Inc.; that the market value of investments could negatively impact stockholders’ equity; risks associated with Old Line Bancshares, Inc.’s lending limit; increased expenses due to stock benefit plans; expenses associated with operating as a public company; potential conflicts of interest associated with the interest in Pointer Ridge; and changes in economic, competitive, governmental, regulatory, technological and other factors which may affect Old Line Bancshares, Inc. specifically or the banking industry generally. For a more complete discussion of some of these risks and uncertainties see “Factors Affecting Future Results” in Old Line Bancshares, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007.

     Old Line Bancshares, Inc.’s actual results and the actual outcome of our expectations and strategies could differ materially from those anticipated or estimated because of these risks and uncertainties and you should not put undue reliance on any forward-looking statements. All forward-looking statements speak only as of the date of this filing, and Old Line Bancshares, Inc. undertakes no obligation to update the forward-looking statements to reflect factual assumptions, circumstances or events that have changed after we have made the forward-looking statements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

     Market risk is the exposure to economic loss that arises from changes in the values of certain financial instruments. Due to the nature of our operations, only interest rate risk is significant to our consolidated results of operations or financial position. For information regarding our Quantitative and Qualitative Disclosure about Market Risk, see “Interest Rate Sensitivity Analysis and Interest Rate Risk Management” in Part I, Item 2 of this Form 10-Q.

Item 4. Controls and Procedures

     As of the end of the period covered by this quarterly report on Form 10-Q, Old Line Bancshares, Inc.’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of Old Line Bancshares, Inc.’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based upon that evaluation, Old Line Bancshares, Inc.’s Chief Executive Officer and Chief Financial Officer concluded that Old Line Bancshares, Inc.’s disclosure controls and procedures are effective as of June 30, 2008. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by Old Line Bancshares, Inc. in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

     In addition, there were no changes in Old Line Bancshares, Inc.’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2008, that have materially affected, or are reasonably likely to materially affect, Old Line Bancshares, Inc.’s internal control over financial reporting.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

          None

Item 1A. Risk Factors

          There have been no material changes in the risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2007.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     Issuer Purchases of Equity Securities

     We announced on August 17, 2007 that our board of directors had authorized our repurchase of up to 300,000 shares of our common stock. On March 12, 2008, we announced that the board of directors had authorized the repurchase of an additional 100,000 shares of our common stock. On July 18, 2008, we announced that the board of directors had authorized the repurchase of another 100,000 shares of our common stock. The following table outlines the purchases we have made of our shares of common stock during the quarter ended June 30, 2008.

					Total Number
					of		Maximum Number
					Shares Purchased		of Shares That
					as		May
	Total Number				Part of Publicly		Yet Be Purchased
	of		Average Price		Announced Plan		Under the Plan or
Date	Shares Purchased		Paid Per Share(1)		or Program		Programs
March 31, 2008								45,651
April 1-30, 2008		—	$	—		—		45,651
May 1-31, 2008		—		—		—		45,651
June 1-30, 2008		9,400		7.70		9,400		36,251
Total Second Quarter		9,400	$	7.70		9,400		36,251

1) Includes commissions and fees.

     At June 30, 2008, there are 36,251 shares of common stock that we may yet repurchase as part of our publicly announced plan.

Item 3. Defaults Upon Senior Securities

          None

Item 4. Submission of Matters to a Vote of Security Holders

          (a) Old Line Bancshares, Inc. held its annual meeting of stockholders on May 29, 2008.

          (b) At the annual meeting Craig E. Clark, Gail D. Manuel, Gregory S. Proctor, Jr. and Suhas R. Shah were elected to serve a three-year term expiring upon the date of Old Line Bancshares, Inc.’s 2011 Annual Meeting and John P. Davey was elected to serve the remainder of a three year term expiring in 2010. The term of office of the following directors continued after the meeting:

Term Expiring at 2009 Annual Meeting

Charles A. Bongar, Jr.

Nancy L. Gasparovic

Frank Lucente, Jr.

John M. Suit, II

Term Expiring at 2010 Annual Meeting

James W. Cornelsen

Daniel W. Deming

James F. Dent

John D. Mitchell, Jr.

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          (c) 1. The following individuals were nominees for the Board of Directors for a term to expire at the 2011 Annual Meeting. The number of votes for or withheld for each nominee was as follows:

	For		Withheld		Total
Craig E. Clark		3,391,853		131,199		3,523,052
Gail D. Manuel		3,387,209		135,843		3,523,052
Gregory S. Proctor, Js.		3,386,654		136,398		3,523,052
Suhas R. Shah		3,391,654		131,398		3,523,052

               John P. Davey was elected to serve the remainder of a three year term expiring in 2010. The number of votes for or withheld for John P. Davey were as follows:

	For		Withheld		Total
John P. Davey		3,393,109		129,943		3,523,052

                    2. Votes were cast to ratify the appointment of Rowles & Company, LLP as independent public accountants to audit the financial statements of Old Line Bancshares, Inc. for 2008 as follows:

For	Against		Abstain		Broker Non-Votes		Total
3,173,220		6,750		343,082		0		3,523,052

Item 5. Other Information

          None

Item 6. Exhibits

10.41	Lease Agreement by and between Old Line Bank and AF Limited Partnership dated May 31, 2008
31.1	Rule 13a-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a) Certification of Chief Financial Officer
32	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Old Line Bancshares, Inc.
Date: August 7, 2008	By:	/s/ James W. Cornelsen
		James W. Cornelsen,
		President and Chief Executive Officer (Principal Executive Officer)

Date: August 7, 2008	By:	/s/ Christine M. Rush
		Christine M. Rush,
		Executive Vice President and Chief Financial Officer (Principal Accounting and Financial Officer)

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EX-10.41

Exhibit 10.41

LEASE AGREEMENT

1. PARTIES.

     This Lease Agreement (this “Lease”) made this 31st day of May, 2008, by and between AF Limited Partnership (hereinafter referred to as “Landlord”) and Old Line Bank (hereinafter referred to as “Tenant”).

WITNESSETH:

2. PREMISES.

     In consideration of the rents and covenants set forth herein, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, a store unit described as follows: 167-U Jennifer Road, Annapolis, Maryland, County of Anne Arundel (hereinafter referred to as the “Premises”), in the Jennifer Square Shopping Center (hereinafter referred to as the “Shopping Center”). The Premises contain approximately 1,620 square feet of floor area (computed from measurements to the exterior of outside walls of the building and to the center of interior walls). Said Premises are shown crosshatched on Exhibit A attached hereto and by this reference incorporated herein.

     Together with the Premises demised hereby, Landlord grants to Tenant a non-exclusive right of use, in common with others, of the parking areas, roadways, means of ingress and egress and service areas of the Shopping Center. Tenant acknowledges that Landlord has the right and power to manage and operate the common areas, including all sidewalks and means of exit and entrance and approaches thereto within the Shopping Center, and the Landlord shall at all times have the right, in Landlord’s sole and absolute discretion, to determine and change the common areas and parking plan for the Shopping Center, and the arrangement of entrances, exits and approaches thereto, providing same meets governmental codes.

3. TERM.

     The Lease commences, as hereinafter specified, and, unless sooner terminated as provided in this Lease, shall continue for a term (hereinafter referred to as “Term”) of approximately five (5) years and three (3) months, plus that part of the month, if any, from the date of commencement of the Term to the first day of the first full calendar month in the Term.

     Each of the parties hereto agrees that the commencement and termination dates of the Term are as follows:

          Lease Commencement: See Paragraph 1 of the Addendum

          Lease Termination: See Paragraph 1 of the Addendum

4. USE; RADIUS RESTRICTION.

     Tenant shall use the Premises for the purposes more particularly set forth in Paragraph 2 of the Addendum to Lease, and for no other purpose. Tenant agrees to operate its business under the trade name Old Line Bank, or, upon thirty (30) days prior written notice to Landlord, any other trade name adopted by Tenant for the majority of its branches, and no other trade name without the prior written consent of Landlord.

     Notwithstanding anything in this Lease to the contrary, if, at any time during the Term of this Lease (or any options or extensions thereof), Tenant displays any items in, sells any items from, and/or operates any business from the Premises that (i) is not specifically authorized by the terms of this Lease, and/or (ii) is prohibited by the terms of the attached Exhibit B, then Tenant agrees to pay Landlord, in addition to all other sums due under this Lease, as additional rent (“Use Violation Additional Rent”) an amount equal to $200.00 per day for each day that elapses from the date Landlord notifies Tenant of such violation until the date that such violation ceases to occur.

5. POSSESSION. See Paragraph 3 of the Addendum

     Tenant shall accept the Premises in its “As-Is” physical condition and subject to all applicable zoning, municipal, county, state and federal laws, ordinances and regulations governing and regulating the use of the Premises. Landlord shall have no responsibilities with respect to the condition of the Premises and/or the equipment serving the Premises and the repair and maintenance of all the foregoing items shall be Tenant’s responsibility. Tenant represents that Tenant has carefully inspected the Premises (and all equipment serving the Premises). Tenant acknowledges that neither Landlord nor Landlord’s agent has made any representation or warranty of any kind as to the present or future adequacy and/or suitability of the Premises (or the equipment serving the Premises) for Tenant’s intended use. Tenant shall be responsible at its sole risk and expense for obtaining any required construction, occupancy or other permits. Tenant shall use best efforts to obtain all such permits prior to Lease Commencement and shall furnish Landlord with a copy of all such permits prior to commencing business from the Premises. Landlord shall have no obligation to do any work in the Premises and Landlord shall bear no cost or expense whatsoever in connection with the modification, alteration or repair of the Premises.

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     Possession of the Premises is to be delivered by Landlord to Tenant on or before five (5) business days after the execution by Landlord of this Lease Agreement (hereinafter the “Estimated Possession Date”). Upon the date that Landlord is in the position to deliver possession of the Premises to Tenant (the “Possession Date”), Tenant agrees to accept possession of the Premises and to proceed diligently to perform all work reasonably necessary in order to allow Tenant to operate its business in the Premises as set forth in Paragraph 4 of this Lease, including, without limitation, the installation of all fixtures, furniture and equipment. All work performed in the Premises, including any alterations and improvements, shall be subject to Landlord’s prior written consent, shall be made at Tenant’s sole cost and expense and shall be performed in accordance with the requirements of Paragraph 21 of this Lease. Tenant shall indemnify Landlord and hold Landlord harmless from any and all claims or liability arising from Tenant’s occupancy of and work in the Premises (including, without limitation, any work to the roof). Any work by Tenant causing venting, opening, sealing, waterproofing or any altering of the roof shall be performed by Landlord’s roofing contractor at Tenant’s expenses. Tenant shall provide Landlord with a certificate from Landlord’s roofing contractor that all of Tenant’s work which may, in any manner, alter the roof, has been properly performed and has not negated any roof warranties. On or before the Possession Date, Tenant shall obtain the insurance coverage required by Paragraph 15 of this Lease and Tenant shall provide Landlord with proof of such coverage. Tenant shall pay all charges for utilities furnished to the Premises after the Possession Date. Landlord shall not be liable to Tenant if Landlord does not deliver possession of the Premises to Tenant on the Estimated Possession Date. Landlord’s non-delivery of the Premises to Tenant on that date shall not affect the Lease or the obligations of Tenant under the Lease. If Landlord does not deliver possession of the Premises to Tenant within ninety (90) days after the Estimated Possession Date (the “Outside Possession Date”), Tenant may elect to cancel the Lease by giving written notice to Landlord within ten (10) days after the Outside Possession Date. If Tenant gives such notice, the Lease shall be canceled and neither Landlord nor Tenant shall have any further obligations to the other and Landlord shall refund to Tenant any rental deposit and security deposit paid hereunder. If Tenant does not give such notice, Tenant’s right to cancel the Lease shall expire and the Lease Term shall commence on the Possession Date.

6. RENTAL DEPOSIT.

     Upon the execution of the Lease, Tenant shall deposit with Landlord the sum of six thousand two hundred fifty-four and 69/100 dollars ($6,254.69). Upon Lease Commencement, such sum shall be applied by Landlord toward the first rental payments due under the Lease. If the Term of the Lease does not commence for any reason whatsoever (other than Landlord’s failure to deliver possession of the Premises to Tenant), the rental deposit shall be retained by and become the exclusive property of Landlord, and shall be deemed consideration to Landlord for the reservation of the Premises for Tenant’s use and the retention of such sum by Landlord shall not be construed as a settlement of any additional claim Landlord may have against Tenant.

7. SECURITY DEPOSIT.

     Upon the execution of the Lease, Tenant shall deposit with Landlord the sum of six thousand two hundred fifty-four and 69/100 dollars ($6,254.69) to be held by Landlord as security for the payment of any rentals and any other sums of money for which Tenant shall become liable to Landlord under this Lease, and for the faithful performance by Tenant of all other obligations hereunder. Under no circumstances may Tenant deem or seek to use the security deposit as payment for the rent or other sums due hereunder. Said security deposit (less any sums expended by Landlord to cure Tenant’s default), shall be returned to Tenant within sixty (60) days after the later to occur of (i) the expiration or sooner termination of the Term or (ii) Tenant’s surrender of possession of the Premises to Landlord in accordance with the terms of the Lease. Landlord shall not be required to keep the security deposit separate from its other accounts and no trust relationship is created with respect to the security deposit. Tenant shall not be entitled to interest on the security deposit. The security deposit may be used in whole or in part, by Landlord from time to time, to make any payments due to it from Tenant or to cure any default of Tenant hereunder, but such use shall not waive or release Tenant from any liability or obligation of Tenant under this Lease. If Landlord uses any portion of the security deposit, Tenant shall within ten (10) days after written demand by Landlord, promptly reimburse Landlord for the amount so used. In the event of a sale of the Shopping Center, Landlord may transfer the security deposit to the purchaser, and Landlord shall be released from any liability for the security deposit.

8. MINIMUM GUARANTEED RENT.

     In consideration of the demise and leasing of the Premises, Tenant covenants and agrees to pay Landlord, without demand, commencing on Rent Commencement (as hereinafter defined), Minimum Guaranteed Rent in the amounts set forth in Paragraph 4 of the Addendum to Lease, with no offsets, deductions or abatement, except as otherwise provided herein, which Minimum Guaranteed Rent shall be paid in equal monthly payments as more particularly set forth in Paragraph 4 of the Addendum to Lease, on or before the first day of each calendar month, in advance, at the address set forth in Paragraph 43 of the Lease for Landlord or at such other place as shall be designated in writing to Tenant by Landlord. If the Lease Commencement or Lease Termination is a date other than the first or last day of the month, then the Minimum Guaranteed Rent and all other payments provided for under this Lease for any such partial period shall be computed and pro-rated on a daily basis.

9. INTENTIONALLY DELETED.

10. INTENTIONALLY DELETED.

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11. REAL ESTATE TAXES; INSURANCE; COMMON AREA MAINTENANCE.

     In addition to the Minimum Guaranteed Rent payable under this Lease, Tenant shall pay, commencing on Rent Commencement, and as additional rent, a proportionate share as set forth below, of the real estate taxes, sewer taxes and/or charges, school taxes, general or special assessments, front foot benefit charges, solid waste charges and other such taxes levied or assessed directly upon Landlord as, or in substitution (in whole or in part) of real estate property taxes or charges upon the land, building and improvements constituting that portion of the Shopping Center now or hereafter owned by Landlord (herein referred to as “real estate taxes”). Tenant shall pay Landlord 2.0161 percent of the amount of such real estate taxes, which percentage represents Tenant’s agreed share of such taxes based on the current proportion the square footage of the Premises bears to the total leasable square footage of the Shopping Center now owned by Landlord. Throughout the Term of the Lease (including any renewal term) Tenant shall pay to Landlord Tenant’s agreed share of such real estate taxes in equal monthly payments of estimated real estate taxes based on the prior year’s or, if ascertainable, the current year’s actual or budgeted real estate taxes. An appropriate proration of real estate taxes shall be made as of the commencement and expiration of the Lease. Tenant shall be responsible for any taxes assessed against Tenant’s personal property. Tenant shall also be responsible for payment to Landlord, within ten (10) days after demand therefor, of the rental income or gross receipts taxes levied on the Minimum Guaranteed Rent and all additional rent payable under this Lease. If Landlord undertakes action to reduce the tax assessment for the Shopping Center, Tenant’s agreed share of the real estate taxes shall include the reasonable fees and costs incurred by Landlord in contesting the assessment. Current real estate taxes for the Shopping Center are estimated to be $147,847.68 and Tenant’s agreed share equates to $248.40 per month.

     For the purposes of this Lease, the calculation of Tenant’s agreed share of real estate taxes for any particular calendar year shall be based on the taxes actually due and payable in accordance with applicable law during such calendar year even though such taxes may relate to a different period of time (such as tax authority’s fiscal year). [For example, as of the date of this Lease, general real estate taxes in the State of Maryland are payable on or before September 30 of each year with respect to the fiscal period beginning on the immediately preceding July 1 and ending on the immediately succeeding June 30. In such case, for all purposes of the Lease, real estate taxes for calendar year “X” refers to the taxes due and payable on September 30 of such calendar year even though the same relate in part both to such calendar year and the succeeding calendar year.]

     Tenant shall also pay, commencing on Rent Commencement and as additional rent, a proportionate share as set forth below, of Landlord’s cost of obtaining public liability, casualty and extended coverage insurance for the Shopping Center (herein referred to as “insurance costs”). The insurance costs shall also include an administration fee for the supervision and administration of such insurance in an amount equal to fifteen (15%) of the total insurance costs. Tenant shall pay Landlord 2.0161 percent of the amount of such insurance costs, which percentage represents Tenant’s agreed share of such insurance costs based on the current proportion the square footage of the Premises bears to the total leasable square footage of the Shopping Center now owned by Landlord. Throughout the term of the Lease (including any renewal term) Tenant shall pay to Landlord its agreed share of such insurance costs in equal monthly payments of estimated insurance costs based on the prior year’s or, if ascertainable, the current year’s actual or budgeted insurance costs. An appropriate proration of insurance costs shall be made as of the commencement and expiration of the Lease. Current insurance costs for the Shopping Center are estimated to be $16,070.40 and Tenant’s agreed share equates to $27.00 per month.

     Tenant shall also pay, commencing on Rent Commencement and as additional rent, a proportionate share as set forth below, of Landlord’s cost of maintaining the common areas of the Shopping Center (herein “common area expenses”). Tenant shall pay Landlord 2.0161 percent of the amount of such common area expenses, which percentage represents Tenant’s agreed share of such common area expenses based on the current proportion the square footage of the Premises bears to the total leasable square footage of the Shopping Center now owned by Landlord. Throughout the Term of the Lease (including any renewal term) Tenant shall pay to Landlord its agreed share of such common area expenses in equal monthly payments of estimated common area expenses based on the prior year’s actual or, if available, the current years budgeted common area expenses. An appropriate proration of common area expenses shall be made as of the commencement and expiration of the Lease. Common area expenses shall include all costs incurred by Landlord for (a) the operation, equipping, cleaning, maintenance, repair and replacement of all common areas, parking lots, exterior lighting and signage, landscape, sidewalks, driveways, storm water management facilities, utility systems and other areas used in common by tenants of the Shopping Center, including reasonable reserves for such repairs and replacements,(b) security (including patrolling and policing) of all common areas, (c) painting, plumbing and sprinkler repairs, canopy repairs and replacement (if applicable), roof repairs and replacement, including reasonable reserves for such repairs and replacements, masonry repairs and pest control, (d) all utility charges incurred in operating the common areas of the Shopping Center, including charges for water and electricity usage, (e) decorations and promotions and (f) the supervision and administration of said common areas, including such fees as may be paid to a third party in connection with same and shall in any event include a fee to Landlord to supervise and administer same in an amount equal to fifteen (15%) percent of the total common area expenses. This provision shall not be construed to impose on Landlord any specific responsibility or obligation for maintenance of the common areas of the Shopping Center. Current common area expenses are estimated to be $496,575.36 and Tenant’s agreed share equates to $834.29 per month.

     Each calendar year, Landlord shall provide Tenant with a reconciliation of Tenant’s actual agreed share of real estate taxes, insurance costs, common area expenses, trash removal costs (if applicable) and water costs (if applicable) for the preceding calendar year and, at such time, shall adjust the aforementioned monthly estimated payments for the then current calendar year. If, on the basis of such annual reconciliation, it is determined that estimated payments made by Tenant for said preceding calendar year were less than Tenant’s actual agreed share, then Tenant shall pay to Landlord, as additional rent, such deficiency (plus any amounts due as a result of the adjustment to the monthly estimated payments for the elapsed portion of the then current calendar year) within thirty (30) days of billing. If, however, the estimated payments made by Tenant were more than Tenant’s actual agreed share, then Landlord shall apply such overage (plus any amounts due as a result of the adjustment to monthly estimated payments for the elapsed portion of the then current calendar year) toward Tenant’s agreed share of real estate taxes, insurance costs, common area expenses, trash removal costs (if applicable) and water costs (if applicable) next due. In the event this Lease commences or terminates on a date other than the first day of a calendar year, the amounts due from Tenant pursuant to this Paragraph 11 of this Lease shall be a proportionate share of the expenses incurred during the entire calendar year.

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     Tenant’s agreed share of real estate taxes, insurance costs, common area expenses, trash removal costs (if applicable) and water costs (if applicable) may change during the Term if portions of the Shopping Center (other than the Premises) are removed, if additions are made to the Shopping Center or for other various reasons. Landlord shall notify Tenant in writing of any change in Tenant’s agreed share.

12. CHARGE TO TENANT FOR LATE PAYMENT.

     Monthly payments of Minimum Guaranteed Rent and all items of additional rent are due and payable on the first day of each calendar month of the Term. In the event a payment is not received by Landlord on or before the 7th day of the month in which said payment is due (including, without limitation, amounts due pursuant to a reconciliation or certain items of additional rent), then Tenant agrees to pay to Landlord, upon demand, a late charge fee (to cover Landlord’s additional costs and effort in processing such payment) of one hundred fifty dollars ($150.00) for each such late payment, plus interest at the rate of twelve percent (12%) (or, the maximum legal rate, if less) per annum (360 days) on the unpaid amount from the date said payment was due until the date the payment is received by Landlord, plus reimbursement to Landlord of any bank charges for Tenant’s checks returned due to insufficient funds. All other sums payable to Landlord under this Lease (including the security deposit) shall also be deemed additional rent and collectible as such, and if paid after the due date thereof, shall be paid together with interest accruing from the due date until paid at the rate of twelve percent (12%) (or, the maximum legal rate, if less) per annum (360 days). Unless otherwise specifically provided, all payments of additional rent shall be due ten (10) days after written demand therefor. Landlord shall be entitled to reimbursement for any and all reasonable attorneys’ fees and court costs incurred for collection of delinquent rent or other sums due Landlord. The provisions set forth herein are cumulative and shall in no way restrict other remedies available to Landlord in the event of Tenant’s default as provided for under this Lease. If Landlord receives two (2) or more checks from Tenant which are returned by Tenant’s bank for insufficient funds, Tenant agrees that all checks for Minimum Guaranteed Rent and all other sums due under the Lease thereafter shall be bank certified or cashier’s and that Landlord shall not be required to accept checks except in such form. In the event Tenant shall fail to remit any payment when due twice within any twelve (12) consecutive calendar month period, Landlord may request current financial information from Tenant, and Tenant hereby agrees to provide, within twenty (20) days following Tenant’s receipt of Landlord’s request therefor, its then most current financial information (but in no event dated more than ninety (90) days prior to the date of Landlord’s request for such information) and such financial information shall include a balance sheet and an income statement.

13. UTILITIES.

     Tenant shall, at its own cost and expense, pay promptly all charges when due for water, telephone, electricity, heat, gas, sewer charges, and any other utility charges rendered or furnished to the Premises or incurred by Tenant in its use and occupancy thereof. If any such utility is not separately metered to Tenant, Tenant shall pay a reasonable proportion, to be determined by Landlord, of all utilities which are jointly metered with other premises at the Shopping Center. If water charges are not separately metered to Tenant, Tenant may, at its option, install, at its own cost and expense, a submeter in the Premises in order to accurately determine the amount of water consumed by Tenant in the Premises. Tenant shall pay, commencing on Lease Commencement and as additional rent, in equal monthly installments, estimated water charges based on the Landlord’s reasonable determination of Tenant’s usage of water, which charges are currently estimated to be $15.00 per month. Tenant agrees that the plumbing facilities shall not be used by Tenant, Tenant’s employees, agents, customers, invitees or licensees for any other purpose than that for which they were intended, and no foreign substance of any kind shall be thrown or deposited therein, and the expense of curing and repairing any breakage, stoppage or damage resulting from a violation of this provision shall be paid by Tenant immediately upon demand by Landlord. Tenant shall use reasonable diligence in the conservation of all utilities.

14. INSURANCE RATE INCREASE.

     Landlord shall be responsible for procuring fire and extended coverage and public liability insurance for the Shopping Center (excluding insurance on Tenant’s inventory, furniture, improvements and fixtures). An increase in insurance rates attributable to Tenant’s conduct, acts or failure to act, whether negligent or otherwise, shall be assessed directly to Tenant. Said assessment shall be due and payable to Landlord ten (10) days after receipt by Tenant of written demand therefor. Landlord’s insurer or insurance broker shall be responsible for determining the cause of any increase in insurance premiums.

15. PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE; OTHER INSURANCE.

     Tenant shall keep in full force and effect during the Term, at Tenant’s expense, a policy of comprehensive public liability insurance and property damage insurance with respect to the Premises and the business operated by Tenant, and/or any sub-tenant or assignee of Tenant in the Premises, which policy (and insurance carrier) shall have an A.M. Best rating of at least “A”, shall name Landlord, Landlord’s agent (which as of the date hereof is Nellis Corporation) and Landlord’s general partner (which as of the date hereof is NC Associates Corporation) as additional insureds, and shall have limits of liability not less than one million dollars ($1,000,000) combined single limit coverage for public liability and for property damage. The policy shall cover losses, injuries, death and damage occurring in the Premises and on the immediately adjacent sidewalks. If Tenant sells, serves or distributes alcoholic beverages in or on the Premises, then such public liability insurance shall include, at the same minimum limits of liability set forth herein, Liquor Legal Liability coverage. Landlord may require reasonable increases in and additions to coverage during the Term if so advised by Landlord’s insurance agent and such endorsements as are commercially reasonable.

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     Tenant shall keep in full force and effect during the Term, at Tenant’s expense, insurance policies for fire and extended coverage, malicious mischief, vandalism and plate glass damage in amounts at least equal to the full replacement cost of Tenant’s improvements, fixtures, goods, wares and other property in or about the Premises.

     Tenant shall maintain such other insurance coverage (i.e., worker’s compensation, business interruption, pollution liability, dram shop) as Landlord may reasonably require. Tenant shall furnish Landlord prior to Lease Commencement with a certificate or certificates of insurance or other acceptable evidence that all insurance required under this Paragraph 15 of the Lease is in full force and effect. Renewal certificate(s) shall be provided to Landlord at least thirty (30) days prior to expiration of any policy. The insurance policy or policies shall contain a clause not allowing cancellation or alteration in coverage except upon at least ten (10) days prior written notice to Landlord. If the original certificate(s) or renewal certificate(s) are not received by Landlord when due, then, in addition to all other remedies of Landlord, Tenant shall pay to Landlord upon demand the same late charge fee assessed for late payment of Minimum Guaranteed Rent.

     Landlord hereby waives it right of recovery against Tenant for any loss insured by fire, casualty, extended coverage, public liability and other property insurance policies existing for the benefit of Landlord. Tenant hereby waives its right of recovery against Landlord, Landlord’s agent (which as of the date hereof is Nellis Corporation) and Landlord’s general partner (which as of the date hereof is NC Associates Corporation) for any loss insured by fire, casualty, extended coverage, public liability and other property insurance policies existing for the benefit of Tenant. Landlord and Tenant shall each apply to their insurer to obtain waivers of subrogation as set forth herein.

16. LIMITATION OF LANDLORD’S LIABILITY.

     Except in the case of the gross negligence or willful misconduct of Landlord, Landlord’s general partner, or Landlord’s agent, or each of the foregoing’s respective partners, officers, directors, agents, employees or contractors (each of the foregoing, individually, a “Landlord Party”), and to the maximum extent permitted by law, a Landlord Party shall not be liable for any loss, damage or injury to the person, business (or any loss of income therefrom), goods, wares, merchandise or other property of Tenant, Tenant’s agents, employees, invitees, customers, contractors or any other person in or about the Premises, whether such loss, damage or injury is caused by or results from: (a) theft, fire, steam, electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other defects of pipes, the Shopping Center roof, sprinklers, wires, appliances, plumbing, heating, air conditioning, lighting or electrical fixtures or any other causes; (c) interruption or failure in the supply of any utilities to the Premises; (d) conditions arising in or about the Premises or upon the immediately adjacent sidewalks; or (e) any act or omission of any other tenant of the Shopping Center. The gross negligence or willful misconduct of a Landlord Party shall not affect the liability of any other Landlord Party.

17. OPERATION OF PREMISES.

     Tenant shall not cause or permit the Premises to be used in any way which constitutes a violation of any law, ordinance or governmental regulation or order, which interferes with the rights of other tenants in the Shopping Center, which constitutes a nuisance or waste, which permits any objectionable or unpleasant odors or noise to emanate from the Premises, which is immoral or offensive, which is inconsistent with the uses permitted in Paragraph 4 of the Lease, or which in any manner involves dangerous, hazardous or toxic substances (as defined in Paragraph 18 of the Lease). Tenant shall not offer for sale any immoral or offensive material. Tenant will not, without the prior written consent of Landlord, place or maintain any merchandise or other articles in any vestibule or entry of the Premises, on the sidewalks adjacent thereto or elsewhere on the exterior of the Premises or in the common areas.

18. EXTRA HAZARDS.

     Tenant will not do or suffer to be done, or keep or suffer to be kept, anything in, upon or about the Premises which shall contravene Landlord’s policies insuring against loss or damage by fire or other hazards (including, without limitation, public liability), increase the premium for such policies or prevent Landlord from procuring such policies in companies acceptable to Landlord. Tenant shall comply with all requests and recommendations of insurance underwriters of the Shopping Center.

     The term “Hazardous Substances”, as used in this Lease, shall mean pollutants, contaminants, toxic or hazardous wastes, or any other substances, the removal of which is required or the use or storage of which is restricted, prohibited, regulated or penalized by any “Environmental Law”, which term shall mean any federal, state or local law or ordinance relating to pollution or protection of the environment. Tenant hereby agrees that (i) no activity will be conducted on the Premises that will produce any Hazardous Substances,; (ii) the Premises will not be used in any manner for the storage of any Hazardous Substances; (iii) no portion of the Premises will be used as a landfill or a dump; (iv) Tenant will not install any underground tanks of any type; (v) Tenant will not allow any surface or subsurface conditions to exist or come into existence that constitute, or with the passage of time may constitute, a public or private nuisance; and (vi) Tenant will not permit any Hazardous Substances to be brought into the Premises. If any such Hazardous Substance is brought or found located in or on the Premises, the same shall be immediately removed by Tenant, with proper disposal, and all required cleanup procedures to be diligently undertaken in accordance with all Environmental Laws, by Tenant, at Tenant’s sole expense. If at any time during or after the term of this Lease, the Premises are found to be so contaminated or subject to said conditions, or if Tenant shall, by act or omission, breach any of its obligations under this Paragraph 18 of the Lease, then Tenant agrees to indemnify, defend and/or pay for such defense, and hold harmless Landlord from any and all claims, demands, actions, liabilities, causes, damages, losses and obligations of any nature (including, without limitation, attorneys’ fees and litigation costs) arising from or as a result thereof. The foregoing indemnification shall survive the expiration or earlier termination of this Lease.

19. DAMAGE TO PREMISES OR IMPROVEMENTS.

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     Tenant will repair promptly at its own expense any damage to the Premises or to any improvements or installations within or without the Shopping Center, caused by bringing into the Premises any property for Tenant’s use, or by the installation or removal of such property, or caused by any act or failure to act, negligent or otherwise, by Tenant or Tenant’s agents, employees, invitees, customers, licensees or service contractors; and in default of such repairs by Tenant, Landlord may make the same and Tenant agrees to pay one hundred fifteen percent (115%) of the cost thereof to Landlord immediately upon receipt of Landlord’s demand therefor.

20. MAINTENANCE AND REPAIRS.

     Landlord shall keep the foundation, roof, and the structural portions of the exterior walls (excluding doors, windows, door and window frames, floors, glass, sprinkler system, lighting equipment and facilities, mechanical, electrical and plumbing systems and equipment, all of which shall be Tenant’s responsibility) of Tenant’s Premises in good repair, except that Landlord shall not be called on to make any such repairs caused by the act or failure to act, whether negligent or otherwise, of Tenant, its agents, invitees, customers, licensees, employees, or service contractors. Except as provided in this Paragraph 20 of the Lease, Landlord shall not be obligated to make any repairs, replacements or improvements of any kind upon the Premises, but Tenant shall give Landlord prompt written notice of any accident, casualty, damage or other similar occurrence in or to the Premises or the common areas of which Tenant has knowledge. Tenant, at its sole cost and expense, shall at all times maintain said Premises, its fixtures, equipment, systems, and utility lines (including any equipment, systems and/or utility lines located outside of the Premises which solely serve Tenant) in good condition and repair, and also in a clean, orderly, sanitary and safe condition, and also in accordance with all directions, rules and regulations of the health officer, fire marshal, building inspector or other proper officers of the governmental agencies having jurisdiction. Tenant shall at its own cost and expense operate, maintain and repair the heating, air conditioning, ventilation and other equipment, and shall replace all or any portion of such equipment which cannot be fully repaired, regardless of whether the benefit of such replacement extends beyond the Term. Tenant shall cause the heating, air conditioning and ventilation equipment to be inspected and maintained by a qualified mechanic not less than twice annually during the Term and shall provide Landlord with satisfactory evidence of each such inspection within thirty (30) days after such inspection is conducted. If Tenant fails to provide Landlord with evidence of the inspection and maintenance of the heating, air conditioning and ventilation equipment as required hereinabove, Tenant shall pay to Landlord upon demand the same late charge fee assessed for late payment of Minimum Guaranteed Rent for each such failure. If Tenant serves or prepares food on the Premises, Tenant shall contract with a reputable firm for monthly pest control. Tenant, at its cost and expense, shall comply with all requirements of law, ordinances and otherwise, affecting the Premises and shall permit no waste, damage, or injury to said Premises. Tenant shall at its cost and expense replace any broken or cracked doors and plate or window glass (including any glass with holes) in the Premises with materials of like kind and quality. All maintenance, repairs and replacements shall be accomplished in a good and workmanlike manner. Tenant shall also initiate and carry out a program of regular maintenance and repair of the Premises, including, but not limited to, the painting or refinishing of all areas of the interior of the Premises and maintaining or replacing of all items on display used in the conduct of Tenant’s business, so as to impede, to the extent possible, deterioration by ordinary wear and tear and to keep the same in attractive condition throughout the Term. If Tenant fails to maintain and repair as required herein, Landlord may, on ten (10) days prior notice (except no notice shall be required in case of emergency) enter the Premises and perform such repair and maintenance on behalf of Tenant, without liability to Tenant for loss or damage that may accrue to Tenant’s merchandise, fixtures or other property, or to Tenant’s business, by reason or as result thereof. In such case, Tenant shall reimburse Landlord for one hundred fifteen percent (115%) of all costs incurred immediately upon receipt by Tenant of Landlord’s demand therefor. In order to coordinate services for tenants in the Shopping Center, Landlord may assume the responsibility for regularly maintaining and repairing Tenant’s heating and air conditioning and ventilation system, in which case Landlord shall use good faith efforts to provide such services at a cost equivalent to or lower than the cost Tenant would incur if it contracted for the services. Tenant shall reimburse Landlord for Tenant’s equitable share of the cost of such services within ten (10) days after Landlord’s demand therefor.

21. ALTERATIONS.

     Tenant shall be permitted, without Landlord’s consent, to make alterations, additions or improvements to the Premises so long as such alterations, additions or improvements (i) do not exceed $50,000.00 in the aggregate and (ii) do not, in any way, alter or affect the plumbing, mechanical, electrical, or sprinkler systems or the heating, air conditioning and ventilation equipment. Tenant shall not make any alterations, replacements, additions or improvements (including, without limitation, the installation of any antennas or aerials or the penetration through the roof for any purpose or any alterations to plumbing, mechanical or electrical systems) on or to the Premises that exceed $50,000.00 without Landlord’s prior written consent, which consent shall not be unreasonably withheld. Tenant’s request for Landlord’s consent shall be accompanied by plans and specifications, satisfactory to Landlord, covering all work to be performed. In no event shall Tenant make any alterations to the exterior facade of the Premises. Landlord may require Tenant to provide demolition and/or lien and completion bonds, insurance coverage and copies of all required permits. All alterations, replacements, additions or improvements will be accomplished at Tenant’s sole cost and expense, in a good and workmanlike manner and in conformity with all laws and regulations. All work performed by Tenant in the Premises shall be performed without interference with, or disruption to, the operations of Landlord or other tenants or occupants of the Shopping Center. Upon completion of the work, Tenant shall provide Landlord with proof of payment for all materials and labor.

22. MECHANIC’S LIEN.

     In the event a mechanic’s lien shall at any time be filed against the Premises by reason of work, labor, services or materials performed or furnished at Tenant’s request or direction, then Tenant shall immediately cause the same to be bonded, or discharged of record and immediately provide evidence of such action to Landlord. If Tenant shall fail to cause such lien to be discharged within seven (7) days after being notified of the filing thereof, then, in addition to any other rights or remedies, Landlord may, but shall not be obligated to, discharge the same by paying the amount claimed to be due, and one hundred twenty percent (120%) of the amount so paid by Landlord and all costs and expenses, including reasonable attorneys’ fees incurred by Landlord in procuring the discharge of such lien, shall be due and payable by Tenant to Landlord immediately upon receipt by Tenant of Landlord’s demand therefor.

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23. TENANT’S SIGNS. See Paragraph 5 of the Addendum

     Tenant shall, at its expense, prior to opening for business in the Premises, install identifying signs above the Premises and, if applicable, under the overhang. Such signs shall be of the same type and color as the other tenant signs in the Shopping Center and be in conformance with the sign criteria attached hereto as Exhibit C to the Lease. Prior to the execution of this Lease, Landlord approved Tenant’s identifying sign as set forth on the attached Exhibit E. Tenant is responsible for getting any required permits and approvals for such signs. Tenant, at its sole cost and expense, shall keep Tenant’s sign(s) and the equipment that illuminates Tenant’s sign(s) in good condition and repair. Tenant shall be responsible at its expense promptly to replace burned out fluorescent bulbs that illuminate the sign above the Premises. All new signs (including any to be displayed in windows or doors for more than ten days) and any alteration or modification to existing signs must be first approved by Landlord and, if required, by any necessary governmental authority. Tenant shall be in default hereunder if Tenant installs a sign which has not been first approved by Landlord, and any sign installed without such prior written approval may be removed by Landlord at Tenant’s cost and expense. Prior to termination of the Lease, Tenant shall remove any identifying signs above the Premises or, if applicable, under the overhang or elsewhere at the Shopping Center, and repair, at Tenant’s expense, any damage to the Premises (or the Shopping Center) caused by the removal of any such signs.

24. USE AND MAINTENANCE OF PARKING AREAS.

     Landlord hereby grants to Tenant and Tenant’s invitees a non-exclusive right, during the Term, to use in common with others entitled to the use thereof, the parking area or areas of the Shopping Center. The parking area will be maintained by the Landlord. The manner in which such areas shall be maintained, and the expenditures therefor, shall be in the Landlord’s discretion, and the use of such areas and facilities shall be subject to such reasonable regulations as the Landlord shall make from time to time. Tenant and Tenant’s employees, salespersons, agents and subtenants shall not park their vehicles in the parking areas set forth on the attached Exhibit F. Tenant shall, upon five (5) days written notice from Landlord, provide to Landlord a list of license numbers of all of Tenant’s and its employees’ vehicles. Tenant agrees that if any vehicle owned by Tenant or any of its employees, salespersons, agents, or subtenants shall at any time be parked in any area set forth on Exhibit F, Tenant shall pay to Landlord as additional rent upon demand an amount equal to $25.00 per incident, and the Landlord shall have the right, without notice to Tenant, to tow the vehicle at Tenant’s expense. Tenant agrees that the parking spaces, fire lanes and the lanes in front of the Premises shall not be used for deliveries or the loading or unloading of trucks, except for armor car/truck pickups and deliveries. All deliveries and the loading and unloading of trucks (except for armor car/truck pickups and deliveries) shall occur from such entrances, exits and service lanes designated by Landlord in the rear of the Shopping Center. Tenant shall not use the common areas of the Shopping Center for any sales or display purposes or for any purpose which would impede or create hazardous conditions for the flow of pedestrian or other traffic, without Landlord’s prior written consent. Further, Tenant shall not distribute handbills or undertake any other advertising in the common areas.

25. SNOW AND TRASH REMOVAL.

     The Landlord is responsible for providing snow removal for the parking area and travel lanes. Snow and ice removal from the sidewalks and loading areas directly adjacent to the Premises and from the exterior store front surfaces of the Premises shall be the responsibility of Tenant and shall be accomplished at Tenant’s sole cost and expense. Tenant shall promptly remove snow and ice from such locations and shall use sand or salt whenever necessary. In order to coordinate services for tenants in the Shopping Center, Landlord may, at its option, assume responsibility for the disposal of trash from the Premises and for providing dumpsters at the Shopping Center. If Landlord elects to provide trash removal service for the tenants, then Tenant shall pay to Landlord, as additional rent, in equal monthly installments, its agreed share of the estimated trash removal costs (including, but not limited to a fee for the supervision and administration of such trash removal service in an amount equal to fifteen percent (15%) of the trash removal costs), which agreed share shall be calculated based on the proportion the square footage of the Premises bears to the total leasable square footage of the Shopping Center receiving trash removal service from Landlord (such payments shall be reconciled in the manner set forth in Paragraph 11 of this Lease). Tenant’s agreed share of trash removal costs are currently included in common area expenses. Tenant’s share may change as other tenants are included or removed from Landlord’s trash removal service. At any time, Landlord may require Tenant to arrange for its own dumpster and trash removal service. Landlord may, in its sole discretion, specify the size, number and location of garbage containers to be placed at the Shopping Center. Tenant shall not permit accumulations of garbage or refuse upon the parking or common areas adjacent to the Premises.

26. ACCESS.

     Landlord or Landlord’s agents may enter the Premises, following twenty-four (24) hours advance notice, during business hours (or at other times in the case of an emergency) to examine the Premises, show it to potential buyers, lenders or tenants and to make such alterations or improvements as Landlord deems necessary, provided that Landlord does not unreasonably, materially and adversely interfere with Tenant’s business. Landlord shall have the right beginning ninety (90) days before Lease Termination (or earlier termination of this Lease) to place a “For Rent” sign in the front window of the Premises. Landlord may erect scaffolding and other necessary structures for the purpose of repairing, altering or improving the Shopping Center, provided that the entrance to the Premises and the operation of Tenant’s business shall not be unreasonably interfered with.

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27. OCCUPANCY.

     Tenant hereby covenants, warrants and represents that it shall open for business in the Premises within ninety (90) days after the Possession Date, time of the essence, and it will continuously conduct from the Premises the business stated herein, and shall keep the Premises open for business during the normal business hours of each and every business day as is customary for a business of like character in the general area of the Shopping Center (this being a material inducement for Landlord to enter into this Lease). Tenant shall conduct no distress sales, such as “going out of business”, fire or bankruptcy sales, on the Premises or elsewhere at the Shopping Center. At a minimum, Tenant shall be open for business (except for Federal Bank Holidays) Monday through Friday from 9:00 a.m. to 4:00 p.m. Tenant may not cease to operate its business from the Premises in the regular course for a period greater than fifteen (15) consecutive days, without Landlord’s prior written consent, which consent shall not be unreasonably withheld. If Tenant ceases to operate its business from the Premises for a period greater than fifteen (15) consecutive days (and such cessation is not due to a casualty), then, Landlord shall have the right to collect upon demand, in addition to Minimum Guaranteed Rent, additional rent and all other payments due from Tenant under the Lease, liquidated damages in an amount equal to One Hundred Fifty Percent (150%) of the per diem Minimum Guaranteed Rent for each and every day that such violation shall continue. Payment of such liquidated damages (i) shall be in addition to Minimum Guaranteed Rent, additional rent and all other payments due from Tenant under the Lease and (ii) is intended to be only a partial and temporary remedy for Landlord during the continuance of such violation (and therefore shall not relieve Tenant of any obligation under the Lease, excuse any such default or waive Landlord’s other remedies therefor). Specifically, such payments shall not prevent Landlord from obtaining mandatory injunctive relief against such violation.

28. DEFAULT.

     Tenant shall be in default under this Lease (i) if Tenant abandons or vacates the Premises, or refuses to take possession of the Premises, or (ii) if Tenant fails to make any payment of Minimum Guaranteed Rent, additional rent or any other sums due hereunder as and when the same is due and payable, and such failure continues without cure for a period of five (5) days after written notice thereof by Landlord to Tenant; provided, however, if Landlord has already given two (2) prior notices of default to Tenant in any calendar year, any subsequent failure of Tenant to make a payment of Minimum Guaranteed Rent, additional rent or any other sums within five (5) days after the same is due and payable shall be an incurable default hereunder, or (iii) if Tenant shall violate or be in default of any of the other covenants, agreements, stipulations or conditions herein set forth, and such violation or default shall continue without cure by Tenant for a period of fifteen (15) days after Tenant receives written notice of such violation or default (except however, in the event of an emergency, as reasonably determined by Landlord, such time period shall be shortened to immediately upon receipt of written notice of such violation or default); provided, however, that if more than fifteen (15) days are reasonably required to cure, Tenant shall not be deemed in default if Tenant commences such cure within the fifteen (15) day period and thereafter diligently prosecutes such cure to completion, or (iv) if Tenant or Tenant’s guarantor, if any, shall make an assignment for the benefit of creditors or shall be adjudicated a bankrupt, or (v) if any petition shall be filed by or against Tenant or Tenant’s guarantor, if any, in any bankruptcy, reorganization, insolvency or similar proceeding, and the petition shall be approved, or the court shall assume jurisdiction over the subject matter, or (vi) if a receiver or trustee be appointed for all or any portion of Tenant’s property, and such receivership or trusteeship shall not be vacated or set aside within thirty (30) days after the appointment of such receiver or trustee.

     If Tenant defaults under this Lease, Landlord shall have the option, in its sole and absolute discretion, to do the following: (a) maintain this Lease and Tenant’s right to possession in full force and effect; (b) declare this Lease terminated and said Term ended, and to re-enter the Premises, with or without process of law, using such force as may be necessary to remove all persons or chattels therefrom, and Landlord shall not be liable for damages by reason of such re-entry or termination; but notwithstanding such re-entry, Tenant shall remain liable to Landlord for any Minimum Guaranteed Rent, additional rent and other sums due or damages sustained prior thereto, and Tenant shall remain liable to pay the Minimum Guaranteed Rent, additional rent and other sums payable under this Lease, at the times herein stipulated for such payments, for the balance of the Term, less any amounts received by Landlord during such period from others to whom the Premises may be rented on such terms and conditions and at such rentals as Landlord in its sole and absolute discretion shall deem proper; it being further understood that Tenant will pay immediately upon demand, in addition to the other sums agreed to be paid hereunder, reasonable attorneys’ fees and other costs and damages incurred by Landlord to: re-enter and repossess the Premises, make good any defaults of Tenant, put the Premises in proper repair, make such alterations, decorations and paintings deemed necessary by Landlord (including an administration fee to Landlord of fifteen percent (15%) of such costs) and to re-let the Premises to a new tenant (including brokerage fees); it being further understood that Landlord may recover from Tenant the worth at the time of award of the net present value (discounted at 10% per annum) of the amount by which the unpaid Minimum Guaranteed Rent, additional rent and other sums due hereunder for the balance of the Lease Term exceeds the net present value (discounted at 10% per annum) of the amount of such loss for the same period that Tenant proves could be reasonably avoided; or (c) terminate Tenant’s right to possession of the Premises without terminating this Lease, in which case this Lease shall continue in full force and effect, but Landlord shall be entitled but not obligated to re-enter and re-let the Premises (such re-entering and re-letting to be in mitigation of damages, without diminishing Landlord’s right to recover unmitigated damages) with all the rights and remedies provided for in subparagraph (b) above without having the effect of terminating this Lease; and/or (d) pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the State where the Premises are located. If the Lease or Tenant’s right to possession under the Lease shall at any time be terminated under the terms and conditions of this Paragraph 28 of the Lease, or in any other way, Tenant hereby covenants and agrees to immediately surrender and deliver the Premises peaceably to Landlord. In addition, any reletting by Landlord shall not be construed as an election on the part of Landlord to terminate this Lease unless a notice of such intention is given by Landlord to Tenant. Notwithstanding any reletting without termination of this Lease, Landlord may at any time thereafter elect to terminate this Lease. In any event, Landlord shall not be liable for, nor shall Tenant’s obligations hereunder be diminished by reason of, any failure by Landlord to relet the Premises or any failure by Landlord to collect any sums due upon such reletting. Landlord’s rights and remedies hereunder are cumulative. Any suit brought by Landlord to enforce the collection of a deficiency shall not prejudice Landlord’s right to enforce the collection for any further deficiency for a subsequent month(s).

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     Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event Tenant is evicted or dispossessed for any cause, or in the event Landlord obtains possession of the Premises, by reason of Tenant’s violation of any covenants or conditions in this Lease.

29. CASUALTY TO PREMISES. See Paragraph 6 of the Addendum

     Tenant shall immediately notify Landlord in writing of any damage to or destruction of the Premises or the Shopping Center (or any portion of the Premises or the Shopping Center). If the permanent improvements of the Premises shall be partially destroyed by fire, or other casualty, whereby the Premises shall be rendered untenantable only in part, Landlord shall cause the damage to be repaired (due allowance being made for settlement of insurance claims and delays resulting from governmental restrictions or controls, or other causes beyond Landlord’s control), and this Lease shall remain in full force and effect except that the Minimum Guaranteed Rent, real estate taxes, insurance costs and common area expenses payable by Tenant hereunder, shall be abated in proportion to that portion of the Premises rendered untenantable, until such portion of the Premises is restored. If by reason of said fire or other casualty the Premises shall be rendered wholly untenantable, or if the damage results from a cause not covered by Landlord’s fire and extended coverage insurance, or if the casualty occurs during the last twenty-four months of the Term or any extension thereof, Landlord shall have the option to either (a) cause such damage to be repaired, in which event this Lease shall remain in full force and effect except that the Minimum Guaranteed Rent, real estate taxes, insurance costs and common area expenses payable by Tenant hereunder shall be abated in proportion to that portion of the Premises rendered untenantable until said Premises are restored; or (b) terminate this Lease by providing Tenant with written notice thereof within sixty (60) days after the casualty, in which event this Lease and the tenancy hereby created shall cease as of the date of said damage or destruction; and the Minimum Guaranteed Rent and other payments due herein shall be adjusted equitably as of such date. In the event that twenty five percent (25%) or more of the rentable area of the Shopping Center is damaged or destroyed by fire or other casualty, notwithstanding that the Premises may be unaffected, Landlord may terminate this Lease by providing Tenant with written notice within sixty (60) days after the occurrence of the damage or destruction. Landlord’s obligation to repair any damage hereunder shall be limited to the proceeds actually received by Landlord from insurance coverage, and shall be limited to the basic building, store front (other than Tenant decoration or modification thereof), and interior structural work existing as of the date of Lease Commencement, and in no event shall include repair of any alterations, improvements, betterments or fixturing made by Tenant in or about the Premises. Tenant, after the occurrence of any such fire or other casualty shall, at its own cost and expense, promptly repair and restore the portion of the Premises Landlord is not obligated to restore, as well as Tenant’s fixtures, equipment and appurtenances. Tenant shall not be entitled to any abatement of rent in the event of a casualty if the damage is due to the negligence or willful misconduct of Tenant or its employees, agents, servants or invitees.

30. CONDEMNATION.

     In the event that any portion of the Premises shall be taken or condemned for public use, and this Lease is not terminated as hereinbelow provided, the Minimum Guaranteed Rent, real estate taxes, insurance costs and common area expenses provided for under this Lease shall be reduced in proportion to that portion of the Premises which is taken or condemned. However, in the event that all or a sufficient portion of the Premises shall be taken or condemned so as to render the Premises unsuitable for the Tenant’s business, either Tenant or Landlord may cancel and terminate this Lease by serving upon the other party a written notice of its intention to do so within sixty (60) days after the condemnation judgment shall be entered. Moreover, in the event that twenty-five percent (25%) or more of the Shopping Center (other than the Premises) or of the parking areas or other common areas shall be so taken (and adequate substitute parking area cannot be provided), Landlord or Tenant shall have the right to terminate this Lease by serving upon the other a written notice of its intention to do so within sixty (60) days after the condemnation judgment shall be entered. Tenant shall have no right or claim to any portion of Landlord’s condemnation award, and shall have no right or claim against Landlord based on the condemnation of the store unit or the improvements thereto or of Tenant’s leasehold interest therein. Tenant hereby irrevocably and unconditionally assigns to Landlord any interest it may have in any condemnation award made to Landlord. Notwithstanding the foregoing, Tenant shall have the right to collect and pursue any separate award as may be available under local procedure for moving expenses, Tenant’s property, or Tenant’s build-out expenses if such condemnation occurs during the first five (5) years after Rent Commencement, so long as such award does not reduce the award otherwise belonging to Landlord as aforesaid. If this Lease is not terminated, Landlord shall repair any damage to the Premises caused by the taking, except that Landlord shall not be obligated to repair damage if the condemnation award is not sufficient to pay for such repair.

31. TERMINATION.

     Upon the expiration or earlier termination for any reason of this Lease, Tenant will quit and surrender the Premises, without the necessity of any notice from Landlord, and Tenant hereby waives notice to vacate said Premises, and agrees that Landlord shall be entitled to the benefit of all provisions of law respecting the summary recovery of possession of said Premises from a Tenant holding over to the same extent as if statutory notice had been given. Tenant shall reimburse Landlord for all damages and costs incurred by Landlord from any delay by Tenant in vacating the Premises. Tenant will quit and surrender said Premises and Landlord’s equipment and fixtures in at least as good a state and condition as they were when the Premises were first occupied by Tenant, and all plumbing, electrical (including light bulbs and ballasts) and mechanical systems and equipment shall be returned in good working order and repair. Upon the expiration or earlier termination of this Lease, Tenant shall not be released from any of Tenant’s indemnities under this Lease (including, without limitation, the indemnities made in Paragraph 5, Paragraph 18, this Paragraph 31, Paragraph 37 and Paragraph 46 of this Lease) or from liability for any violations of laws or environmental contamination caused by Tenant during the Term. All alterations, erections or improvements on said Premises at the expiration or earlier termination of this Lease, except only such furniture, fixtures, and equipment removable by Tenant pursuant to Paragraph 32 of this Lease, shall become a part of the Premises and shall remain upon and be surrendered with said Premises as a part thereof at the expiration or earlier termination of this Lease, unless Landlord notifies Tenant, on or before that date which is sixty (60) days after the expiration or earlier termination of this Lease, that said alterations, erections or improvements should be removed by Tenant, in which event Tenant shall do so at its own cost and expense and shall repair any damage resulting therefrom.

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Tenant shall return to Landlord all keys for any locks to or in the Premises immediately upon surrender of the Premises. An appropriate proration of additional rent and other sums payable hereunder shall be made at the expiration or earlier termination of this Lease or at such other times thereafter as the actual amount of such additional rent or other sums may be determined.

32. TENANT’S FIXTURES.

     All trade fixtures, equipment and signage owned by Tenant and installed in the Premises by Tenant (unless such fixtures or equipment were installed as a replacement for fixtures or equipment in the Premises as of the date the Premises were first occupied by Tenant) shall remain the property of Tenant and shall be removable from time to time or upon the expiration or earlier termination of this Lease, provided such removal can be done without causing material damage to the Premises and, provided further, that Tenant shall not at any time be in default under any covenant or agreement contained herein; and if in default, Landlord shall have a lien on said furniture, fixtures and equipment as security against loss or damage resulting from any such default by Tenant and said furniture, fixtures and equipment shall not be removable by Tenant until such default is cured. Tenant hereby agrees to execute such instruments as Landlord deems reasonably necessary to perfect the security interest hereby created or any instrument to be filed as a financing statement. Prior to termination of the Lease, Tenant shall repair, at Tenant’s expense, any damage to the Premises caused by the removal of any furniture, fixtures or equipment. If Tenant fails to make such repairs, Tenant agrees to pay Landlord one hundred fifteen percent (115%) of the cost incurred by Landlord (or estimated cost) for such repairs.

33. HOLDING OVER.

     In the event the Tenant remains in possession of the Premises upon the expiration or earlier termination of this Lease, Tenant shall be occupying the Premises as a Tenant from month-to-month, subject to all of the conditions, provisions and obligations of this Lease insofar as the same are applicable to a month-to-month tenancy. Minimum Guaranteed Rent during any such hold-over period (and/or during any period that Tenant remains in possession of the Premises after the expiration or earlier termination of this Lease when rent is ultimately deemed to be due) shall be one hundred and fifty percent (150%) of the Minimum Guaranteed Rent in effect during the last full month of the Lease preceding expiration or earlier termination.

34. SUBORDINATION.

     Tenant agrees that this Lease is and shall be subject and subordinate to any mortgages or trust deeds that may now exist or hereafter be placed upon the Shopping Center and to any and all advances to be made thereunder, and to the interest thereon, and all renewals, replacements, and extensions thereof, and Tenant shall attorn to any purchaser of the Shopping Center in a foreclosure or sale in lieu of foreclosure, provided Tenant’s right to quiet possession of the Premises is not disturbed if Tenant is not in default under this Lease. The foregoing sentence is self-operative; however, Tenant agrees to execute, acknowledge and deliver, to Landlord, upon five (5) days request by Landlord, such instruments as Landlord may request confirming such subordination. In the event any mortgagee or trustee elects to have the Lease a prior lien to its mortgage or deed of trust, then and in such an event, upon such mortgagee or trustee notifying Tenant to that effect, this Lease shall be deemed prior in lien to the said mortgage or trust deed, whether or not this Lease is dated prior to or subsequent to the date of said mortgage or trust deed. In the event any lender requires as a condition of a loan secured by the Shopping Center that any amendments be made to this Lease which shall not require Tenant to make any additional payments or otherwise materially change the rights or obligations of Tenant hereunder, Tenant shall, upon Landlord’s request, execute and deliver appropriate instruments effecting such amendments.

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35. ASSIGNMENT AND SUBLEASE.

     Tenant shall not assign this Lease nor sublet the Premises (nor enter into any management or similar contract which provides for a direct or indirect transfer of operating control over the business operated in the Premises), without first obtaining the written consent of Landlord, which consent shall not be unreasonably withheld. Tenant shall provide Landlord with all documentation related to a proposed sublease or assignment at least thirty (30) days prior to the anticipated date of the sublease or assignment and shall forward, to Landlord, a non-refundable sublease/assignment consideration fee of two thousand five hundred and no/100 dollars ($2,500.00) with such documentation. In granting or withholding its consent to a sublease or assignment, Landlord may consider, inter alia, the financial condition and reputation of the proposed assignee or sublessee, the effect of the proposed business on the existing tenant mix, the likely magnitude of additional customer traffic the proposed business would bring into the Shopping Center and the benefit such traffic would provide to the other stores in the Shopping Center as well as the impact such traffic would have on the availability of parking in the Shopping Center. Landlord shall not be obligated to consent to any sublease or assignment which is not consistent with the uses permitted in Paragraph 4 of this Lease, which will violate any use exclusives contained in other leases within the Shopping Center, which will compete with the primary business of any other tenant in the Shopping Center as of the date of such assignment or which will violate any other document relating to the Shopping Center. Landlord may require an additional or different Percentage Rent as a condition to approval of any subtenant or assignee of this Lease. Under no circumstances shall Tenant assign less than the entire Lease or sublease less than the entire Premises. Any assignment or subletting approved by Landlord shall not release or discharge any obligation or liability of Tenant under this Lease. If Tenant’s transferee defaults under this Lease, Landlord may proceed directly against Tenant or Tenant’s transferee without pursuing or waiving any remedies against the other. The term “assignment” includes any transfer (by operation of law or otherwise) of this Lease, any transfer of effective control of Tenant’s business, any transfer of effective control or ownership of Tenant if Tenant is a corporation, partnership or other entity and any sale of all or a substantial part of Tenant’s assets or the assets owned or used by Tenant in the operation of Tenant’s business on the Premises. However, Landlord cannot withhold its consent to an assignment of the Lease to an entity (i) purchasing all or the majority of the stock in Old Line Bank or (ii) with which Tenant or into which Tenant has merged, provided that in any of the events listed in subparagraph (i) and/or (ii) hereinabove, the tangible net worth of the successor entity at the time of the assignment is equal to or greater than the tangible net worth of the assigning entity as of that date which is one (1) year prior to the date of the assignment. The term “sublet” shall be deemed to include the granting of licenses, concessions, and any other rights of occupancy of any portion of the Premises. In the event Landlord consents to an assignment or sublease, Landlord shall be entitled to 75% of any and all funds paid to Tenant as consideration for the assignment of this Lease or for the subletting of the Premises (in excess of the Minimum Guaranteed Rent), regardless of whether such funds are paid in a lump sum or on a periodic basis. Tenant shall provide Landlord with evidence or a certification reasonably acceptable to Landlord of the amount or absence of consideration paid for a sublease or assignment. Tenant shall not, either voluntarily or by operation of law, mortgage, pledge, hypothecate or encumber this Lease nor allow any other person (other than employees of Tenant) to occupy or use the Premises or any portion thereof. Any assignment or subletting without Landlord’s consent shall not be binding upon Landlord, and shall confer no rights upon any third person. Each such unpermitted assignment or subletting shall, without notice or grace period of any kind, constitute a default by Tenant under this Lease. The acceptance by Landlord of the payment of Minimum Guaranteed Rent or any other payment due under this Lease following any assignment or subletting prohibited by this Paragraph 35 of the Lease shall not be deemed to be a consent by Landlord to any such assignment or subletting, an acceptance of the sublessee or assignee as a tenant, a release of Tenant from the performance of any covenants herein contained, or a waiver by Landlord of any remedy of Landlord under this Lease, although amounts actually received shall be credited by Landlord against Tenant’s monetary obligations under this Lease.

36. INTENTIONALLY DELETED.

37. INDEMNITY.

     Tenant shall indemnify each Landlord Party against, and hold each Landlord Party harmless from, any and all costs, claims or liability (including, but not limited to, costs, claims and liabilities incurred directly by each Landlord Party and/or relating to the property of each Landlord Party) arising from: (a) Tenant’s use of the Premises and the immediately adjacent sidewalks or loading areas; (b) the conduct of Tenant’s business or anything else done or permitted by Tenant to be done in or about the Premises; (c) any breach or default in the performance of Tenant’s obligations under this Lease; and (d) other acts or omissions of Tenant, its employees, agents, patrons or other invitees. As a material part of the consideration to Landlord, Tenant hereby assumes all risk of damage to property or injury to person in or about the Premises and the immediately adjacent sidewalks or loading areas arising from any cause, and Tenant hereby waives all claims in respect thereof against each Landlord Party except for any claim arising out of a Landlord Party’s (as applicable) gross negligence or willful misconduct. The gross negligence and/or willful misconduct of a Landlord Party shall have no affect on the indemnification of another Landlord Party. Tenant shall reimburse Landlord, upon demand, for any costs or expenses, including reasonable legal fees, incurred by Landlord in connection with any default of Tenant under this Lease, whether or not suit is commenced. Landlord shall indemnify Tenant against, and hold Tenant harmless from, any and all costs, claims or liability arising from: (a) Landlord’s negligent maintenance of the common area (except for any claim arising out of the acts or omissions of Tenant, its employees, agents and/or contractors); (b) any breach or default in the performance of Landlord’s obligations under this Lease; and (c) other negligent acts or omissions of Landlord, its employees, management agent, patrons or other invitees. Landlord shall not indemnify Tenant for Tenant’s negligence and/or willful misconduct.

38. QUIET ENJOYMENT.

     Landlord hereby warrants that it has title to the Premises or other indicia of ownership, giving the Landlord and no other person or corporation the right to lease said Premises. Tenant shall have the peaceful and quiet use and possession of said Premises without hindrance on the part of the Landlord, provided Tenant is not in default of any provision of this Lease.

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39. ESTOPPEL CERTIFICATES.

     Upon Landlord’s written request, Tenant shall execute, acknowledge and deliver to Landlord a written statement certifying: (i) that none of the terms or provisions of this Lease have been changed or waived (or if they have been changed or waived, stating how they have been changed or waived); (ii) that this Lease is in full force and effect and has not been canceled or terminated; (iii) that the Lease has not been assigned by Tenant and the Premises have not been subleased (or if an assignment or sublease has occurred, stating the name of the assignee or sublessee and the terms and duration of the sublease or assignment); (iv) that Landlord is not in default under this Lease (or, if Landlord is claimed to be in default, stating why); and (v) such other items as Landlord or any lender or prospective purchaser reasonably requests. Tenant shall deliver such statement to Landlord within ten (10) days after Landlord’s request. Any such statement by Tenant may be given by Landlord to any prospective purchaser or encumbrancer of the Shopping Center. Such purchaser or encumbrancer may rely conclusively upon such statement as true and correct.

     Provided Landlord has complied with the notice provisions set forth in Paragraph 43, the failure of Tenant to execute, acknowledge and deliver to Landlord a statement in accordance with the provisions of this Paragraph 39 of the Lease within ten (10) days after Landlord’s request shall constitute an acknowledgment by Tenant which may be relied upon by any prospective purchaser or encumbrancer of the Shopping Center that (i) except as set forth by Landlord, this Lease has not been assigned, amended, changed or modified and is in full force and effect and (ii) that the Minimum Guaranteed Rent, Percentage Rent, additional rent and other sums due hereunder have been duly and fully paid through the date set forth by Landlord. Failure to produce a statement pursuant to this Paragraph 39 of the Lease shall constitute, as to any persons entitled to rely on such statements, a waiver of any defaults by Landlord and of any and all defenses or offsets against the enforcement of this Lease by Landlord which may exist prior to the date of the written request, and shall entitle Landlord, at its option, to declare Tenant in default under the Lease.

40. JOINT AND SEVERAL LIABILITY.

     All parties signing this Lease as Tenant shall be jointly and severally liable for all obligations of Tenant.

41. MISCELLANEOUS.

     It is understood and agreed that this Lease contains the entire agreement between the parties and shall not be modified in any manner except by an instrument in writing executed by the parties hereto. The conditions and agreements contained herein are binding on, and may be legally enforced by the parties hereto, their heirs, executors, administrators, successors and assigns, subject to the provisions hereof regarding assignment of this Lease or subletting of the Premises by Tenant. The headings, titles and captions contained herein are for convenience and reference only, and shall not be deemed to explain, modify, amplify, expand, limit or define the terms and provisions of this Lease. In any provision relating to the conduct, acts or omissions of Tenant, the term “Tenant” shall include Tenant’s agents, licensees, employees, contractors, invitees, successors, subtenants, assigns, or others using the Premises with Tenant’s consent. Tenant agrees that all provisions herein relating to notice to Tenant shall supersede, to the extent permitted by law, any statutory or judicially required notice. Time shall be of the essence for the performance of all agreements and obligations hereunder. If any terms or provisions of this Lease or the application thereof shall to any extent be invalid or unenforceable, the remainder of this Lease, or the application of such terms or provisions to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and enforced to the fullest extent permitted by law. The covenants to pay rent and other amounts hereunder are independent covenants and Tenant shall have no right to hold back, offset or fail to pay any such amounts for default by Landlord or any other reason whatsoever, it being understood and acknowledged by Tenant that Tenant’s only recourse is to seek an independent action against Landlord. Any payment by Tenant of a lesser amount than that due under the Lease shall be treated as a payment on account. In the event that any check for a lesser amount than that due bears an endorsement or statement, or is accompanied by a letter stating, that such lesser amount constitutes “payment in full” (or terms of similar import), Landlord’s acceptance thereof shall not be an accord and satisfaction, and such statement shall be given no effect. Landlord may accept any such check without prejudice to any rights or remedies which Landlord may have against Tenant. No failure of Landlord to insist upon strict performance of any provision of this Lease, and no failure of Landlord to exercise any right, remedy or option hereby reserved shall be construed as a waiver for the future of any such provision, right, option or remedy or as a waiver of a subsequent breach thereof. The consent or approval by Landlord of any act by Tenant requiring Landlord’s consent or approval shall not be construed to waive or render unnecessary the requirement for Landlord’s consent or approval in the future of any similar act by Tenant. No provision of this Lease shall be deemed to have been waived unless such waiver shall be in writing signed by Landlord or Tenant, as the case may be. This Lease shall be governed and construed under the laws of the State where the Premises are located. Landlord and Tenant hereby waive trial by jury in any action, proceeding or claim brought by either against each other on any matter arising out of or connected with this Lease or Tenant’s use of the Premises.

42. RULES AND REGULATIONS; MERCHANTS’ ASSOCIATION.

     Tenant shall observe and comply with the non-discriminatory rules and regulations, set forth on attached Exhibit D, that Landlord shall from time to time promulgate and/or modify. Such rules and regulations shall be binding upon the Tenant upon delivery of a copy thereof to Tenant. Landlord shall not be responsible to Tenant for the non-performance of any said rules and regulations by any other tenants, but Landlord shall enforce all of said rules and regulations in a non-discriminatory manner.

     In the event a merchant’s association or similar organization is formed, Tenant hereby agrees to actively participate in Shopping Center advertising, marketing and promotions.

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43. ADDRESS AND NOTICES.

     Until further notification in writing by Landlord to Tenant, all payments to Landlord called for herein shall be made payable to “AF Limited Partnership” and delivered to the following address:

AF Limited Partnership
c/o Nellis Corporation
6001 Montrose Road
Suite 600
Rockville, MD 20852

     All notices required under this Lease shall be in writing and deemed to be effective only (i) upon delivery, if delivered personally or if sent by Federal Express (or a comparable overnight carrier) or (ii) three (3) days after the date such notice is mailed if sent by registered or certified mail. All notices required under this Lease shall be sent to Landlord at the address set forth above, and to Tenant at the following address:

TENANT: Old Line Bank
c/o James W. Cornelsen
1525 Pointer Ridge Place
Bowie, Md. 20716

44. ATTORNEYS’ FEES.

     In the event of any action or proceeding brought by either party against the other under this Lease, the substantially prevailing party shall be entitled to recover for the fees of its attorney in such action or proceeding, including costs of appeal, if any, in such amount as the court may adjudge reasonable.

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45. LANDLORD’S LIABILITY.

     Landlord shall be in default under this Lease if Landlord fails to perform any of its obligations hereunder without cure for a period of twenty (20) days after written notice thereof is provided to Landlord and to any holder of a mortgage or deed of trust covering the Premises; provided, however, that if more than twenty (20) days are reasonably required to cure, Landlord shall not be deemed in default if Landlord commences such cure within the twenty (20) day period and thereafter diligently prosecutes such cure to completion. If Tenant claims that Landlord has breached any obligation and failed to cure such breach within the time frames set forth herein, then Tenant shall give any holder of a mortgage or deed of trust covering the Premises notice specifying the breach and permit such holder of a mortgage or deed of trust covering the Premises a reasonable opportunity (not less than sixty (60) days) to cure the breach. In no event shall Tenant have the right to terminate this Lease as a result of Landlord’s default and Tenant’s remedies shall be limited to damages and/or injunction. In the event of any sale or other transfer of the Premises by Landlord, of which Landlord shall make a good faith effort to give notice to Tenant, Landlord shall be and is hereby entirely freed and relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission occurring after the consummation of such sale or transfer; and the purchaser or transferee, as of such sale, shall be deemed, without any further agreement between the parties or their successors in interest or between the parties and any such purchaser or transferee, to have assumed and agreed to carry out any and all of the covenants and obligations of the Landlord under this Lease. It is specifically understood and agreed that the liability of Landlord hereunder shall be limited solely to the Shopping Center; that no partner of Landlord (whether a general partner or a limited partner), nor any officer, director, agent or employee of Landlord shall be personally liable with respect to any claim arising out of or related to this Lease. Notwithstanding anything set forth in this Lease to the contrary, it is agreed that in no event shall Landlord and/or any of the other Landlord Parties be liable for any punitive and/or consequential damages relating in any way to the terms and conditions of this Lease.

46. BROKERS.

     Tenant warrants to Landlord that Tenant has not dealt with any brokers, finders or other parties who are or may be entitled to any commission or fee with respect to the Lease, except for Paraclete Realty, LLC and Commercial 100. Tenant shall indemnify and hold Landlord harmless from and against all liabilities, obligations and damages arising, directly or indirectly, out of or in connection with any misstatement or misrepresentation made by Tenant pursuant to this Paragraph 46 of the Lease, including, without limitation, costs and attorneys’ fees incurred in the defense of any claim.

47. CHANGES TO THE SHOPPING CENTER.

     Exhibit A sets forth the general layout of the Shopping Center. Exhibit A is not and shall not be deemed Landlord’s representation or agreement that all or any part of the Shopping Center is, will be, or will continue to be, configured as indicated therein. Landlord reserves the right to determine all tenancies in the Shopping Center, and Tenant does not rely on, nor does Landlord represent, the tenancy of any specific tenant. Landlord shall have the right, at any time, to (i) make alterations or additions to, demolish all or any part of, the Shopping Center (including, without limitation, the common areas); (ii) build other buildings or improvements in or about the Shopping Center (including, without limitation, the common areas); and (iii) convey to others or withdraw portions of the Shopping Center (including, without limitation, the common areas), provided that all of the foregoing actions meet governmental codes.

     In the event Landlord improves, alters or modifies any portion of the exterior facade (including without limitation the exterior walls, roof line, soffit, fascia, signage, lighting, doors, windows, storefronts and adjacent sidewalks) of the Premises or the Shopping Center (hereinafter the “Renovation”), Landlord shall be entitled to replace Tenant’s storefront and Tenant shall be responsible for replacing, at its sole cost and expense, and to conform with new criteria adopted by Landlord as part of the Renovation, the sign face or lettering identifying Tenant’s business. Landlord shall install over the Premises a temporary sign banner on behalf of Tenant during the course of Renovation. It may be necessary to erect scaffolds or other construction equipment during any remodeling or other construction at the Shopping Center, but access to the Premises shall not be denied. Nothing in this Paragraph 47 of the Lease shall be construed as a representation that Landlord will be remodeling the Shopping Center and Landlord is under no obligation to ever do so.

48. FRANCHISE.

     If Tenant is a franchisee, Tenant shall provide Landlord with a copy of its franchise agreement prior to Lease Commencement. Tenant shall notify Landlord if it is declared in default under the franchise agreement and such default shall be deemed a default under Paragraph 28 of this Lease.

49. INTENTIONALLY DELETED.

50. NO OPTION.

     The submission of this Lease for examination does not constitute a reservation of or option for, the Premises, and this Lease shall become effective only upon execution by all parties hereto and delivery of a fully executed copy thereof to Landlord. Upon execution of this Lease by Tenant, Landlord is granted an irrevocable option for fifteen (15) days to execute this Lease within said period and thereafter return a fully executed copy to Tenant.

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51. AUTHORITY.

     Each of the persons executing this Lease on behalf of Tenant represents and warrants that Tenant has complied with all applicable laws, rules and governmental regulations relative to its right to do business in the Shopping Center, that such entity has the full right and authority to enter into this Lease, and that all persons signing on behalf of the Tenant were authorized to do so by any and all necessary or appropriate actions.

     IN WITNESS WHEREOF, the parties hereto have executed this Lease Agreement under their respective seals on the day and year first written above.

LANDLORD:

AF LIMITED PARTNERSHIP
(Tax I.D.# 52-1801823)

By:	NC Associates Corporation, General Partner
By:	/s/ Richard B. Toran	[SEAL]
	Name: Richard B. Toran Title: Vice President

TENANT:

OLD LINE BANK
(Tax I.D. #                     ).

By:	/s/ James W. Cornelsen	[SEAL]
	Name: James W. Cornelsen Title: President

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EX-31.1

Exhibit 31.1

I, James W. Cornelsen, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Old Line Bancshares, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2008	By:	/s/ James W. Cornelsen
		Name:	James W. Cornelsen
		Title:	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Christine M. Rush, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Old Line Bancshares, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2008	By:	/s/ Christine M. Rush
		Name:	Christine M. Rush
		Title:	Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of Old Line Bancshares, Inc. (the “Company”) each certifies to the best of his or her knowledge that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James W. Cornelsen

James W. Cornelsen
President and Chief Executive Officer
August 7, 2008

/s/ Christine M. Rush

Christine M. Rush
Executive Vice President and
Chief Financial Officer
August 7, 2008

This certification is made solely for the purpose of 18 U.S.C. Section 1350, and is not being filed as part of the Form 10-Q or as a separate disclosure document, and may not be disclosed, distributed or used by any person for any reason other than as specifically required by law.