10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2018

OR

☐ 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	20716
(Address of principal executive offices)	(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 ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

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

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Yes ☐     No ☒

As of October 25, 2018, the registrant had 16,989,883 shares of common stock outstanding.

OLD LINE BANCSHARES, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

			Page
			Number
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Consolidated Balance Sheets as of September 30, 2018 (Unaudited) and December 31, 2017	3
		Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2018 and 2017	4
		Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2018 and 2017	5
		Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) for the Nine Months Ended September 30, 2018	6
		Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2018 and 2017	7
		Notes to Consolidated Financial Statements (Unaudited)	9
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	66
	Item 4.	Controls and Procedures	67
PART II.
	Item 1.	Legal Proceedings	68
	Item 1A.	Risk Factors	68
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
	Item 3.	Defaults Upon Senior Securities	68
	Item 4.	Mine Safety Disclosures	68
	Item 5.	Other Information	68
	Item 6.	Exhibits	69
	Signatures		70

2

Part 1. Financial Information

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Balance Sheets

	September 30,			December 31,
	2018			2017
	(Unaudited)
Assets
Cash and due from banks	$	45,774,719		$	33,562,652
Interest bearing accounts		3,522,685			1,354,870
Federal funds sold		1,008,801			256,589
Total cash and cash equivalents		50,306,205			35,174,111
Investment securities available for sale-at fair value		216,358,059			218,352,558
Loans held for sale, fair value of $9,056,027 and $4,557,722		8,829,777			4,404,294
Loans held for investment (net of allowance for loan losses of $6,980,050 and $5,920,586, respectively)		2,384,579,814			1,696,361,431
Equity securities at cost		13,063,250			8,977,747
Premises and equipment		43,060,727			41,173,810
Accrued interest receivable		8,072,826			5,476,230
Deferred income taxes		11,385,296			7,317,096
Bank owned life insurance		67,490,846			41,612,496
Annuity Plan		6,298,627			5,981,809
Other real estate owned		1,469,166			2,003,998
Goodwill		94,403,635			25,083,675
Core deposit intangible		16,024,950			6,297,970
Other assets		9,675,019			7,396,227
Total assets	$	2,931,018,197		$	2,105,613,452
Liabilities and Stockholders’ Equity
Deposits
Non-interest bearing	$	581,339,177		$	451,803,052
Interest bearing		1,660,902,293			1,201,100,317
Total deposits		2,242,241,470			1,652,903,369
Short term borrowings		272,534,890			192,611,971
Long term borrowings		38,304,981			38,106,930
Accrued interest payable		1,643,666			1,471,954
Supplemental executive retirement plan		6,123,518			5,893,255
Income taxes payable		—			2,157,375
Other liabilities		9,989,481			4,741,412
Total liabilities		2,570,838,006			1,897,886,266
Stockholders’ equity
Common stock, par value $0.01 per share; 25,000,000 shares authorized; 16,988,883 and 12,508,332 shares issued and outstanding in 2018 and 2017, respectively		169,889			125,083
Additional paid-in capital		293,139,653			148,882,865
Retained earnings		74,167,389			61,054,487
Accumulated other comprehensive loss		(7,296,740	)		(2,335,249	)
Total stockholders’ equity		360,180,191			207,727,186
Total liabilities and stockholders’ equity	$	2,931,018,197		$	2,105,613,452

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

3

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
Interest Income
Loans, including fees	$	29,056,814		$	18,022,324	$	75,206,303		$	49,153,228
U.S. treasury securities		16,325			6,859		42,953			18,772
U.S. government agency securities		89,953			78,713		262,905			194,549
Corporate bonds		221,995			189,274		643,580			428,153
Mortgage backed securities		563,384			548,779		1,690,299			1,657,619
Municipal securities		498,200			455,227		1,498,163			1,301,582
Federal funds sold		3,553			3,797		7,079			5,381
Other		303,100			186,829		895,099			421,623
Total interest income		30,753,324			19,491,802		80,246,381			53,180,907
Interest expense
Deposits		4,098,787			1,926,590		9,551,755			5,174,640
Borrowed funds		1,768,532			1,092,736		4,817,613			3,119,757
Total interest expense		5,867,319			3,019,326		14,369,368			8,294,397
Net interest income		24,886,005			16,472,476		65,877,013			44,886,510
Provision for loan losses		307,870			135,701		1,235,023			855,108
Net interest income after provision for loan losses		24,578,135			16,336,775		64,641,990			44,031,402
Non-interest income
Account service charges		728,550			542,909		2,028,013			1,389,340
Point of sale sponsorship program		711,577			—		1,385,079			—
Gain on sales or calls of investment securities		—			—		—			35,258
Earnings on bank owned life insurance		520,785			297,656		1,274,777			861,112
Gain (loss) on disposal of assets		(1,100	)		7,469		13,266			120,063
Loss on write down of stock		(91,498	)		—		(152,496	)		—
Gain on sale of loans		—			—		—			94,714
Rental income		204,714			188,505		602,208			498,961
Income on marketable loans		411,850			482,641		1,342,201			1,840,218
Other fees and commissions		320,457			632,191		1,295,359			1,162,058
Total non-interest income		2,805,335			2,151,371		7,788,407			6,001,724
Non-interest expense
Salaries and benefits		7,491,736			5,365,890		20,178,521			15,284,057
Occupancy and equipment		2,349,691			1,828,593		6,572,733			5,137,273
Data processing		659,926			443,453		1,971,747			1,161,647
FDIC insurance and State of Maryland assessments		278,109			281,587		786,506			799,700
Merger and integration		2,282,705			3,985,514		9,404,507			3,985,514
Core deposit premium amortization		663,685			272,354		1,516,734			651,613
Loss (gain) on sales of other real estate owned		26,266			4,100		80,738			(13,589	)
OREO expense		(99,957	)		200,959		113,032			256,170
Directors fees		172,550			148,800		539,750			485,700
Network services		127,226			133,301		302,038			437,140
Telephone		269,070			218,316		725,976			598,618
Other operating		2,441,331			1,757,586		6,539,421			5,318,191
Total non-interest expense		16,662,338			14,640,453		48,731,703			34,102,034
Income before income taxes		10,721,132			3,847,693		23,698,694			15,931,092
Income tax expense		2,456,303			1,684,505		6,642,850			5,824,713
Net income available to common stockholders		8,264,829			2,163,188		17,055,844			10,106,379
Basic earnings per common share	$	0.49		$	0.18	$	1.12		$	0.90
Diluted earnings per common share	$	0.48		$	0.18	$	1.10		$	0.88
Dividend per common share	$	0.10		$	0.08	$	0.28		$	0.24

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

4

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

Three Months Ended September 30,	2018			2017
Net income	$	8,264,829		$	2,163,188
Other comprehensive income:
Unrealized (loss) gain on securities available for sale, net of taxes of ($392,117), and $60,922, respectively		(1,032,857	)		93,526
Reclassification adjustment for realized gain on securities available for sale included in net income, net of taxes of $0 and $0, respectively		—			—
Other comprehensive income (loss)		(1,032,857	)		93,526
Comprehensive income	$	7,231,972		$	2,256,714

Nine Months Ended September 30,	2018			2017
Net income	$	17,055,844		$	10,106,379
Other comprehensive income:
Unrealized (loss) gain on securities available for sale, net of taxes of ($1,708,971) and $2,386,772, respectively		(4,501,518	)		3,664,114
Reclassification adjustment for realized gain on securities available for sale included in net income, gross of taxes of $0 and $13,908, respectively		—			(21,350	)
Other comprehensive income (loss)		(4,501,518	)		3,642,764
Comprehensive income		12,554,326			13,749,143

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

5

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Statement of Changes in Stockholders’ Equity

(Unaudited)

											Accumulated
					Additional						other			Total
	Common stock				paid-in			Retained			comprehensive			Stockholders’
	Shares		Par value		capital			earnings			loss			Equity
Balance December 31, 2017		12,508,332	$	125,083	$	148,882,865		$	61,054,487		$	(2,335,249	)	$	207,727,186
Net income attributable to Old Line Bancshares, Inc.		—		—		—			17,055,844			—			17,055,844
Other comprehensive loss, net of income tax of $1,708,971		—		—		—			—			(4,501,518	)		(4,501,518	)
Reclassification of stranded tax effect resulting from the Tax Cuts and Jobs Act		—		—		—			459,973			(459,973	)		—
Acquisition of Bay Bancorp, Inc.		4,408,087		44,081		142,601,614			—			—			142,645,695
Stock based compensation awards		—		—		872,284			—			—			872,284
Stock options exercised		53,021		530		783,085			—			—			783,615
Restricted stock issued		19,443		195		(195	)		—			—			—
Common stock cash dividends $0.28 per share		—		—		—			(4,402,915	)		—			(4,402,915	)
Balance September 30, 2018		16,988,883	$	169,889	$	293,139,653		$	74,167,389		$	(7,296,740	)	$	360,180,191

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

6

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2018			2017
Cash flows from operating activities
Net income	$	17,055,844		$	10,106,379
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		2,334,125			1,915,955
Provision for loan losses		1,235,023			855,108
Change in deferred loan fees net of costs		(791,450	)		(203,092	)
Gain on sales or calls of securities		—			(35,258	)
Amortization of premiums and discounts		636,357			729,996
Origination of loans held for sale		(77,092,451	)		(71,093,124	)
Proceeds from sale of loans held for sale		72,666,968			76,782,499
Loss on write down of stock		152,496			—
Income on marketable loans		(1,342,201	)		(1,840,218	)
(Gain) loss on sales of other real estate owned		80,738			(13,589	)
Gain on the sale of loans		—			(94,714	)
Gain on sale of fixed assets		(13,266	)		(120,062	)
Amortization of intangible assets		1,516,734			651,613
Deferred income taxes		278,439			30,193
Stock based compensation awards		872,284			449,935
Increase (decrease) in
Accrued interest payable		171,712			(448,720	)
Income tax payable		(2,157,375	)		845,554
Supplemental executive retirement plan		230,263			209,592
Other liabilities		(436,815	)		(1,558,077	)
Decrease (increase) in
Accrued interest receivable		(882,542	)		(83,399	)
Bank owned life insurance		(1,059,152	)		(717,522	)
Annuity plan		(316,818	)		—
Income tax receivable		1,134,944			—
Other assets		(86,942	)		1,899,050
Net cash provided by operating activities	$	14,186,915		$	18,268,099
Cash flows from investing activities
Cash and cash equivalents of acquired bank, net of cash consideration		21,617,611			35,566,945
Purchase of investment securities available for sale		(20,483,491	)		(39,289,497	)
Proceeds from disposal of investment securities
Available for sale at maturity, call or paydowns		15,876,726			18,998,110
Available for sale sold		51,650,175			53,802,337
Loans made, net of principal collected		(141,256,263	)		(88,297,883	)
Purchase of bank owned life insurance		(8,500,000	)		—
Proceeds from sale of other real estate owned		1,495,173			1,178,439
Change in equity securities		(1,745,803	)		1,025,601
Purchase of premises and equipment		(1,093,079	)		(3,075,960	)
Proceeds from the sale of premises and equipment		13,266			120,062
Net cash used in investing activities		(82,425,685	)		(19,971,846	)
Cash flows from financing activities
Net increase (decrease) in
Time deposits		245,116,710			83,108,361
Other deposits		(197,147,516	)		(32,221,712	)
Short term borrowings		38,822,919			(36,008,301	)
Long term borrowings		198,051			198,051
Proceeds from stock options exercised		783,615			378,679
Cash dividends paid-common stock		(4,402,915	)		(2,750,298	)
Net cash provided by financing activities		83,370,864			12,704,780
Net increase in cash and cash equivalents		15,132,094			11,001,033
Cash and cash equivalents at beginning of period		35,174,111			23,463,171
Cash and cash equivalents at end of period	$	50,306,205		$	34,464,204

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

7

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Statements of Cash Flows (continued)

(Unaudited)

	Nine Months Ended September 30,
	2018		2017
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	14,197,656	$	8,695,869
Income taxes	$	7,600,000	$	5,018,000
Supplemental Disclosure of Non-Cash Flow Operating Activities:
Loans transferred to other real estate owned	$	1,041,079	$	422,848

		2018			2017
Fair value of assets and liabilities from acquisition:
Fair value of assets acquired	$	720,529,155		$	310,974,425
Other intangible assets acquired		11,243,714			15,297,318
Fair value of liabilities assumed		(588,153,791	)		(285,421,333	)
Total merger consideration	$	143,619,078		$	40,850,410

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

8

OLD LINE BANCSHARES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business - Old Line Bancshares, Inc. (“Old Line Bancshares”) 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 is to own all of the capital stock of Old Line Bank. We provide a full range of banking services to customers located in Anne Arundel, Baltimore, Baltimore City, Calvert, Carroll, Charles, Frederick, Harford, Howard, Montgomery, Prince George’s, and St. Mary’s Counties in Maryland and surrounding areas.

Basis of Presentation and Consolidation - The accompanying condensed consolidated financial statements include the activity of Old Line Bancshares and its wholly owned subsidiary, Old Line Bank, and its wholly-owned subsidiary Pointer Ridge Office Investments, LLC (“Pointer Ridge”), a real estate investment company. We have eliminated all significant intercompany transactions and balances.

The foregoing consolidated financial statements for the periods ended September 30, 2018 and 2017 are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), however, in the opinion of management we have included all adjustments necessary for a fair presentation of the results of the interim period. We derived the balances as of December 31, 2017 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’ Form 10-K for the year ended December 31, 2017. We have made no significant changes to Old Line Bancshares’ accounting policies as disclosed in the Form 10-K, except as described in the Recent Accounting Pronouncements section below

Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions may affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. A material estimate that is particularly susceptible to significant change in the near term relates to the determination of the allowance for loan losses.

Revenue from Contracts with Customers - Old Line Bancshares records revenue from contracts with customers in accordance with Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“Topic 606”). Under Topic 606, we must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) we satisfy a performance obligation.

Our primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are not within the scope of Topic 606. We have evaluated the nature of Old Line Bancshares’ contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. Old Line Bancshares generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.

As a result of the BYBK acquisition, the Bank became a member of the POS network sponsorship program, which allows our customers to access several processing and settlement networks; when our customers use one of these networks, the Bank receives a transaction fee from the network.

9

Reclassifications - We have made certain reclassifications to the 2017 financial presentation to conform to the 2018 presentation. These reclassifications did not change net income or stockholders’ equity.

Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 – Revenue from Contracts with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of this ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The ASU allows for either full retrospective or modified retrospective adoption. The ASU does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under U.S. GAAP. Our revenue is comprised of net interest income on financial assets and liabilities, which is explicitly excluded from the scope of the new guidance, and non-interest income. The contracts that are within scope of the guidance are primarily related to service charges on deposit accounts, cardholder and merchant income, point of sale sponsorship program, wealth advisory services income, other service charges and fees, sales of other real estate owned, insurance commissions and miscellaneous fees. Old Line Bancshares adopted the ASU on January 1, 2018, utilizing the modified retrospective approach. The adoption of this ASU did not have a material impact on our consolidated financial position or consolidated results of operations.

In January 2016, FASB issued ASU No. 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Liabilities, which is intended to improve the recognition and measurement of financial instruments by: requiring equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. This ASU is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We adopted this ASU effective January 1, 2018. With the adoption of this ASU, equity securities can no longer be classified as available for sale, and as such marketable equity securities are disclosed as a separate line item on the balance sheet with changes in the fair value of equity securities reflected in net income. During the first quarter of 2018, we began using an exit price notion when measuring the fair value of our loan portfolio, excluding loans held for sale, for disclosure purposes. The adoption of this ASU did not have a significant impact on our consolidated financial statements.

In February 2016, FASB issued ASU 2016-02, Leases (Topic 842). FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early application of this ASU is permitted for all entities. This ASU will be effective for us in our first quarter of 2019. We are currently evaluating third party software options to assist in implementation of policy and procedures in order to be compliant with ASU 2016-02 Old Line Bancshares is currently assessing the impact that the adoption of this standard will have on its financial condition and results of operations and will closely monitor any new developments or additional guidance to determine the potential impact the new standard will have on our consolidated financial statements.

10

In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which sets forth a “current expected credit loss” (“CECL”) model requiring Old Line Bancshares to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. For public business entities that are U.S. Securities and Exchange Commission filers, the amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Old Line Bancshares has constituted a committee that has the responsibility to gather loan information and consider acceptable methodologies to comply with this ASU. The committee meets periodically to discuss the latest developments and committee members keep themselves updated on such developments via webcasts, publications, and conferences. We have also evaluated and selected a third party vendor solution to assist us in the application of ASU 2016-13. The adoption of ASU 2016-13 is likely to result in an increase in the allowance for loan losses as a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. We expect to run our current model compared to the CECL model by the end of the second quarter in 2019. Furthermore, ASU 2016-13 will necessitate that we establish an allowance for expected credit losses on debt securities. Old Line Bancshares’ evaluation indicates that the provisions of ASU 2016-13 will impact its consolidated financial statements, in particular the level of the reserve for loan losses. We are, however, continuing to evaluate the extent of the potential impact.

In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows.  The amendments provide guidance on the following nine specific cash flow issues:  1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned; 6) life insurance policies; 7) distributions received from equity method investees; 8) beneficial interests in securitization transactions; and 9) separately identifiable cash flows and application of the predominance principle.  The ASU is effective for all annual and interim periods beginning January 1, 2018 and is required to be applied retrospectively to all periods presented. We adopted this guidance January 1, 2018, which did not result in a change in the classification in the statement of cash flows and did not have a material impact on our consolidated financial statements or on our financial position or results of operations.

In January 2017, FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business, which clarifies the definition of a business and assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under this guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or group of similar assets), the assets acquired would not represent a business. In addition, in order to be considered a business, an acquisition would have to include at a minimum an input and a substantive process that together significantly contribute to the ability to create an output. The guidance also narrows the definition of outputs by more closely aligning it with how outputs are described in FASB guidance for revenue recognition. We adopted this guidance effective January 1, 2018. The adoption of this ASU did not have a material impact on our consolidated financial statements.

In January 2017, FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under the ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We expect to implement ASU 2017-04 beginning with our upcoming goodwill testing during the fourth quarter of 2018. Old Line Bancshares does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements.

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In March 2017, FASB issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities. This ASU shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Today, entities generally amortize the premium over the contractual life of the security. The new guidance does not change the accounting for purchased callable debt securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for interim and annual reporting periods beginning after December 15, 2018; early adoption is permitted. The guidance calls for a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. We do not expect the adoption of this guidance to have a material impact on Old Line Bancshares’ consolidated financial statements.

In August 2017, FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. This ASU’s objectives are to: (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities; and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018; early adoption is permitted. Old Line Bancshares currently does not designate any derivative financial instruments as formal hedging relationships, and therefore, does not utilize hedge accounting. However, Old Line Bancshares is currently evaluating this ASU to determine whether its provisions will enhance its ability to employ risk management strategies, while improving the transparency and understanding of those strategies for financial statement users.

In February 2018, FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220). This ASU allows an entity to elect a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act that changed our income tax rate from 35% to 21%. The amount of that reclassification should include the effect of changes of tax rate on the deferred tax amount, any related valuation allowance and other income tax effects on the items in AOCI. The ASU requires an entity to state if an election to reclassify the tax effect to retained earnings is made along with the description of other income tax effects that are reclassified from AOCI. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. Old Line Bancshares adopted ASU 2018-02 in the first quarter of 2018. The change in accounting principal was accounted for as a cumulative effect adjustment to the balance sheet resulting in a reclass of $459,973 from AOCI to retained earnings during the first quarter of 2018.

In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements.  These amendments provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP (Topic 840, Leases).  The amendments also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606) and certain criteria are met: If the non-lease component or components associated with the lease component are the predominant component of the combined component, an entity is required to account for the combined component in accordance with Topic 606. Otherwise, the entity must account for the combined component as an operating lease in accordance with Topic 842. The amendments have the same effective date as ASU 2016-02 (January 1, 2019 for the Company). Old Line Bancshares expects to elect the transition options. ASU 2018-11 is not expected to have a material impact on the company’s consolidated financial statements.

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2. ACQUISITION OF BAY BANCORP, INC.

On April 13, 2018, Old Line Bancshares acquired Bay Bancorp, Inc. (“BYBK”), the parent company of Bay Bank, FSB (“Bay Bank”). Upon the consummation of the merger, each share of common stock of BYBK outstanding immediately before the merger was converted into the right to receive 0.4088 shares of Old Line Bancshares’ common stock, provided that cash was paid in lieu of any fractional shares of Old Line Bancshares common stock. As a result, Old Line Bancshares issued 4,408,087 shares of its common stock in exchange for the shares of BYBK common stock in the merger. The aggregate merger consideration was approximately $143.6 million based on the closing sales price of Old Line Bancshares’ common stock on April 13, 2018.

In connection with the merger, Bay Bank merged with and into Old Line Bank, with Old Line Bank the surviving bank.

At April 13, 2018, BYBK had consolidated assets of approximately $663 million. This merger added eleven banking locations located in BYBK’s primary market areas of Baltimore City and Anne Arundel, Baltimore, Howard and Harford Counties in Maryland.

The BYBK transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. Management made significant estimates and exercised significant judgment in accounting for the acquisition of BYBK. Management judgmentally assigned risk ratings to loans based on appraisals and estimated collateral values, expected cash flows, prepayment speeds and estimated loss factors to measure fair value for loans. Management used quoted or current market prices to determine the fair value of BYBK’s investment securities.

The following table provides the purchase price as of the acquisition date and the identifiable assets acquired and liabilities assumed at their estimated fair values.

Purchase Price Consideration
Cash consideration	$	973,383
Purchase price assigned to shares exchanged for stock		142,645,695
Total purchase price for BYBK acquisition		143,619,078

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Fair Value of Assets Acquired
Cash and due from banks	$	22,590,994
Investment securities		51,895,757
Restricted equity securities, at cost		2,339,700
Loans, net		546,215,988
Premises and equipment		3,127,963
Accrued interest receivable		1,714,054
Accrued taxes receivable		1,912,807
Deferred income taxes		2,637,668
Bank owned life insurance		16,319,198
Other real estate owned		1,041,079
Core deposit intangible		11,243,714
Other assets		1,413,987
Total assets acquired	$	662,452,909
Fair Value of Liabilities assumed
Deposits	$	541,368,907
Short term borrowings		41,100,000
Other liabilities		5,684,884
Total liabilities assumed	$	588,153,791
Fair Value of net assets acquired		74,299,118
Total Purchase Price		143,619,078
Goodwill recorded for BYBK	$	69,319,960

Comparative and Pro Forma Financial Information for the BYBK Acquisition

The adjusted results of Old Line Bancshares for the periods ended September 30, 2018 and 2017, as presented below, include the results of the acquired assets and assumed liabilities from the BYBK acquisition since the acquisition date of April 13, 2018; adjusted net income figures shown below exclude merger and integration expenses incurred during the periods presented. Merger-related expenses of $2.3 million and $9.4 million, respectively, are recorded in the consolidated statement of income for the three and nine months ended September 30, 2018, and include costs related to the conversion of systems, termination of contracts, branch closures and severance.

The following table discloses the impact of the merger with BYBK (excluding the impact of the merger-related expenses) for the three and nine months ended September 30, 2018. The table also presents certain pro forma information as if BYBK had been acquired on January 1, 2018. These results combine the historical results of BYBK into our consolidated statements of income and, while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition related activity, they are not necessarily indicative of what would have occurred had the acquisition actually taken place on January 1, 2018.

Old Line Bancshares incurred merger-related expenses of $2.3 million and $9.4 million, respectively, during the three and nine months ended September 30, 2018, which are excluded from the pro forma information below. In addition, no adjustments have been made to the pro formas to eliminate the $300 thousand BYBK provision for loans losses for each of the three and nine months ended September 30, 2018. No adjustments were made to reduce the impact of any other real estate owned (“OREO”) write downs, investment securities sold or repayment of borrowings recognized by BYBK in the three and nine months ended September 30, 2018. Old Line Bancshares expects to continue to record in the fourth quarter of 2018 expenses related to conversion, contract cancellation and personnel in connection with the BYBK merger. Old Line Bancshares also expects to achieve operating costs savings as a result of the BYBK acquisition that are not reflected in the pro forma amounts below.

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	Pro Forma		Pro Forma		Pro Forma		Pro Forma
	Three months ended September 30, 2018		Three months ended September 30, 2017		Nine months ended September 30, 2018		Nine months ended September 30, 2017
Total revenues (net interest income plus noninterest income)	$	27,691,340	$	28,218,087	$	82,628,420	$	75,991,779
Net proforma income available to common stockholders	$	9,739,452	$	7,245,186	$	26,636,060	$	17,323,544

3. INVESTMENT SECURITIES

Presented below is a summary of the amortized cost and estimated fair value of securities.

			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
September 30, 2018
Available for sale
U.S. treasury	$	3,006,397	$	—	$	(14,834	)	$	2,991,563
U.S. government agency		18,791,500		—		(780,168	)		18,011,332
Corporate bonds		18,117,144		24,548		(31,480	)		18,110,212
Municipal securities		79,459,426		6,219		(3,771,161	)		75,694,484
Mortgage backed securities:
FHLMC certificates		19,663,844		1,115		(1,083,073	)		18,581,886
FNMA certificates		58,902,507		—		(3,311,751	)		55,590,756
GNMA certificates		28,484,140		116		(1,106,430	)		27,377,826
Total available for sale securities	$	226,424,958	$	31,998	$	(10,098,897	)	$	216,358,059
December 31, 2017
Available for sale
U.S. treasury	$	3,007,728	$	—	$	(2,337	)	$	3,005,391
U.S. government agency		18,001,200		—		(267,434	)		17,733,766
Corporate bonds		14,621,378		144,574		(107,893	)		14,658,059
Municipal securities		80,791,431		126,566		(1,362,709	)		79,555,288
Mortgage backed securities
FHLMC certificates		19,907,299		2,516		(455,580	)		19,454,235
FNMA certificates		64,476,038		—		(1,530,121	)		62,945,917
GNMA certificates		21,403,894		—		(403,992	)		20,999,902
Total available for sale securities	$	222,208,968	$	273,656	$	(4,130,066	)	$	218,352,558

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At September 30, 2018 and December 31, 2017, securities with unrealized losses segregated by length of impairment were as follows:

	September 30, 2018
	Less than 12 months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
U.S. treasury	$	2,991,563	$	14,834	$	—	$	—	$	2,991,563	$	14,834
U.S. government agency		4,207,260		175,329		13,804,072		604,839		18,011,332		780,168
Corporate bonds		8,985,665		31,480		—		—		8,985,665		31,480
Municipal securities		32,490,897		1,168,344		37,832,127		2,602,817		70,323,024		3,771,161
Mortgage backed securities
FHLMC certificates		1,724,767		24,379		16,777,049		1,058,694		18,501,816		1,083,073
FNMA certificates		3,562,727		104,100		52,028,029		3,207,651		55,590,756		3,311,751
GNMA certificates		6,644,013		123,405		17,418,219		983,025		24,062,233		1,106,430
Total	$	60,606,892	$	1,641,871	$	137,859,496	$	8,457,026	$	198,466,389	$	10,098,897

	December 31, 2017
	Less than 12 months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
U.S. treasury	$	1,506,328	$	1,422	$	1,499,063	$	915	$	3,005,391	$	2,337
U.S. government agency		12,266,502		93,043		5,467,264		174,391		17,733,766		267,434
Corporate bonds		9,407,810		107,893		—		—		9,407,810		107,893
Municipal securities		25,548,751		189,668		31,343,394		1,173,041		56,892,145		1,362,709
Mortgage backed securities
FHLMC certificates		—		—		19,314,957		455,580		19,314,957		455,580
FNMA certificates		2,516,080		19,937		60,429,837		1,510,184		62,945,917		1,530,121
GNMA certificates		8,822,021		114,278		12,177,882		289,714		20,999,904		403,992
Total	$	60,067,492	$	526,241	$	130,232,397	$	3,603,825	$	190,299,890	$	4,130,066

At September 30, 2018 and December 31, 2017, we had 135 and 56 investment securities, respectively, in an unrealized loss position for 12 months or more and 73 and 56 securities, respectively, in an unrealized loss position for less than 12 months.  We consider all unrealized losses on securities as of September 30, 2018 to be temporary losses because we will redeem each security at face value at or prior to maturity. We have the ability and intent to hold these securities until recovery or maturity. As of September 30, 2018, we do not have the intent to sell any of the securities classified as available for sale and believe that it is more likely than not that we will not have to sell any such securities before a recovery of cost. In most cases, market interest rate fluctuations cause a temporary impairment in value. We expect the fair value to recover as the investments approach their maturity date or re-pricing date or if market yields for these investments decline. We do not believe that credit quality caused the impairment in any of these securities. Because we believe these impairments are temporary, we have not realized any loss in our consolidated statement of income.

During the three months ended September 30, 2018, we received $4.3 million in proceeds from maturities and principal pay-downs on investment securities. The net proceeds of these transactions were used to reduce our Federal Home Loan Bank of Atlanta (“FHLB”) borrowings and fund loan growth. During the three months ended September 30, 2017, we received $45.8 million in proceeds from sales, maturities or calls of, and principal pay-downs on, investment securities and realized no gains or losses. The net proceeds of these transactions were used to pay down our FHLB borrowings and purchase new investment securities. In July 2017 we acquired a $42.3 million investment portfolio as a result of our acquisition of DCB Bancshares, Inc. (“DCB”), the parent company of Damascus Community Bank (“Damascus”). The securities sold during the three months ended September 30, 2017 included $41.8 million of securities that we acquired in the DCB merger, which we sold immediately after the closing of the merger, resulting in no gain or loss on such sales.

During the nine months ended September 30, 2018, we received $67.5 million in proceeds from sales, maturities or calls of, and principal pay-downs on, investment securities. The securities sold include $51.7 million of securities that we acquired in the BYBK merger and sold immediately after the closing of the merger, resulting in no gain or loss on such sales. During the nine months ended September 30, 2017, we received $72.5 million in proceeds from sales, maturities or calls of, and principal pay-downs on, investment securities, and realized gains of $164 thousand and losses of $129 thousand for total realized net gain of $35 thousand. We used the net proceeds of these transactions to re-balance our investment portfolio, which resulted in an overall slightly higher yield on our security investments. The securities sold included $41.8 million of securities that we acquired in the DCB merger and sold immediately after the closing of the merger, resulting in no gain or loss on such sales.

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Contractual maturities and pledged securities at September 30, 2018 are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties. We classify mortgage-backed securities (“MBS”) based on contractual maturity date. However, we receive payments on a monthly basis.

	Available for Sale
	Amortized		Fair
September 30, 2018	cost		value
Maturing
Within one year	$	4,283,142	$	4,271,753
Over one to five years		4,282,063		4,254,785
Over five to ten years		59,101,418		57,063,268
Over ten years		158,758,335		150,768,253
Total	$	226,424,958	$	216,358,059
Pledged securities	$	65,861,752	$	62,395,938

4. LOANS

Major classifications of loans held for investment are as follows:

	September 30, 2018									December 31, 2017
	Legacy (1)			Acquired			Total			Legacy (1)			Acquired			Total
Commercial Real Estate
Owner Occupied	$	275,339,040		$	152,433,104		$	427,772,144		$	268,128,087		$	87,658,855		$	355,786,942
Investment		601,113,264			197,662,549			798,775,813			485,536,921			52,926,739			538,463,660
Hospitality		148,312,837			13,265,447			161,578,284			164,193,228			7,395,186			171,588,414
Land and A&D		91,987,559			24,883,469			116,871,028			67,310,660			9,230,771			76,541,431
Residential Real Estate
First Lien-Investment		90,285,266			50,629,554			140,914,820			79,762,682			21,220,518			100,983,200
First Lien-Owner Occupied		98,966,442			142,135,278			241,101,720			67,237,699			62,524,794			129,762,493
Residential Land and A&D		49,708,005			18,494,088			68,202,093			35,879,853			6,536,160			42,416,013
HELOC and Jr. Liens		20,581,673			43,445,979			64,027,652			21,520,339			16,019,418			37,539,757
Commercial and Industrial		215,729,656			97,412,805			313,142,461			154,244,645			33,100,688			187,345,333
Consumer		17,671,242			38,697,723			56,368,965			10,758,589			49,082,751			59,841,340
Total loans		1,609,694,984			779,059,996			2,388,754,980			1,354,572,703			345,695,880			1,700,268,583
Allowance for loan losses		(6,698,812	)		(281,238	)		(6,980,050	)		(5,738,534	)		(182,052	)		(5,920,586	)
Deferred loan costs, net		2,804,884			—			2,804,884			2,013,434			—			2,013,434
Net loans	$	1,605,801,056		$	778,778,758		$	2,384,579,814		$	1,350,847,603		$	345,513,828		$	1,696,361,431

_______________________

(1) As a result of the acquisitions of Maryland Bankcorp, Inc. (“Maryland Bankcorp”), the parent company of Maryland Bank & Trust Company, N.A. (“MB&T”), in April 2011, WSB Holdings Inc., the parent company of The Washington Savings Bank (“WSB”), in May 2013, Regal Bancorp, Inc. (“Regal”), the parent company of Regal Bank & Trust (“Regal Bank”), in December 2015, DCB in July 2017, and BYBK, the parent company of Bay Bank, in April 2018, we have segmented the portfolio into two components, “Legacy” loans originated by Old Line Bank and “Acquired” loans acquired from MB&T, WSB, Regal Bank, Damascus and Bay Bank.

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Credit Policies and Administration

We have adopted a comprehensive lending policy, which includes stringent underwriting standards for all types of loans. We have designed our underwriting standards to promote a complete banking relationship rather than a transactional relationship. Our lending staff follows pricing guidelines established periodically by our management team. In an effort to manage risk, prior to funding, the loan committee, consisting of four non-employee members of the board of directors and four executive officers, must approve by majority vote all credit decisions in excess of a lending officer’s lending authority. Management believes that we employ experienced lending officers, secure appropriate collateral and carefully monitor the financial condition of our borrowers and the concentrations of loans in the portfolio.

In addition to the internal business processes employed in the credit administration area, Old Line Bank retains an outside independent firm to review the loan portfolio. This firm performs a detailed annual review and an interim update. We use the results of the firm’s report to validate our internal ratings and we review the commentary on specific loans and on our loan administration activities in order to improve our operations.

Commercial Real Estate Loans

We finance commercial real estate for our clients, for owner occupied and investment properties, hospitality and land acquisition and development. Commercial real estate loans totaled $1.5 billion and $1.1 billion at September 30, 2018 and December 31, 2017, respectively. This lending has involved loans secured by owner-occupied commercial buildings for office, storage and warehouse space, as well as non-owner occupied commercial buildings. Our underwriting criteria for commercial real estate loans include maximum loan-to-value ratios, debt coverage ratios, secondary sources of repayments, guarantor requirements, net worth requirements and quality of cash flows. Loans secured by commercial real estate may be large in size and may involve a greater degree of risk than one-to-four family residential mortgage loans. Payments on such loans are often dependent on successful operation or management of the properties. We will generally finance owner occupied commercial real estate that does not exceed loan to value of 80% and investor real estate at a maximum loan to value of 75%.

Commercial real estate lending entails significant risks. Risks inherent in managing our commercial real estate portfolio relate to sudden or gradual drops in property values as well as changes in the economic climate that may detrimentally impact the borrower’s ability to repay. We monitor the financial condition and operating performance of the borrower through a review of annual tax returns and updated financial statements. In addition, we meet with the borrower and/or perform site visits as required.

At September 30, 2018, we had approximately $161.6 million of commercial real estate loans outstanding to the hospitality industry. An individual review of these loans indicates that they generally have a low loan to value, more than acceptable existing or projected cash flow, are to experienced operators and are generally dispersed throughout the region.

Residential Real Estate Loans

We offer a variety of consumer oriented residential real estate loans including home equity lines of credit, home improvement loans and first or second mortgages on owner occupied and investment properties. Our residential loan portfolio amounted to $514.2 million and $310.7 million at September 30, 2018 and December 31, 2017, respectively. Although most of these loans are in our market area, the diversity of the individual loans in the portfolio reduces our potential risk. Usually, we secure our residential real estate loans with a security interest in the borrower’s primary or secondary residence with a loan to value not exceeding 85%. Our initial underwriting includes an analysis of the borrower’s debt/income ratio which generally may not exceed 43%, collateral value, length of employment and prior credit history. A credit score of at least 640 is required. We do not originate any subprime residential real estate loans.

This segment of our portfolio also consists of funds advanced for construction of custom single family residences homes (where the home buyer is the borrower) and financing to builders for the construction of pre-sold homes and multi-family housing. These loans generally have short durations, meaning maturities typically of twelve months or less. Old Line Bank limits its construction lending risk through adherence to established underwriting procedures. These loans generally have short durations, meaning maturities typically of twelve months or less. Residential houses, multi-family dwellings and commercial buildings under construction and the underlying land for which the loan was obtained secure the construction loans. The vast majority of these loans are concentrated in our market area.

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Construction lending also entails significant risk. These risks generally involve larger loan balances concentrated with single borrowers with funds advanced upon the security of the land or the project under construction. An appraisal of the property estimates the value of the project “as is and as if” completed. An appraisal of the property estimates the value of the project prior to completion of construction. Thus, initial funds are advanced based on the current value of the property with the remaining construction funds advanced under a budget sufficient to successfully complete the project within the “as completed” loan to value. To further mitigate the risks, we generally limit loan amounts to 80% or less of appraised values and obtain first lien positions on the property.

We generally only offer real estate construction financing only to experienced builders, commercial entities or individuals who have demonstrated the ability to obtain a permanent loan “take-out” (conversion to a permanent mortgage upon completion of the project). We also perform a complete analysis of the borrower and the project under construction. This analysis includes a review of the cost to construct, the borrower’s ability to obtain a permanent “take-out” the cash flow available to support the debt payments and construction costs in excess of loan proceeds, and the value of the collateral. During construction, we advance funds on these loans on a percentage of completion basis. We inspect each project as needed prior to advancing funds during the term of the construction loan. We may provide permanent financing on the same projects for which we have provided the construction financing.

We also offer fixed rate home improvement loans. Our home equity and home improvement loan portfolio gives us a diverse client base. Although most of these loans are in our market area, the diversity of the individual loans in the portfolio reduces our potential risk. Usually, we secure our home equity loans and lines of credit with a security interest in the borrower’s primary or secondary residence.

Under our loan approval policy, all residential real estate loans approved must comply with federal regulations. Generally, we will make residential mortgage loans in amounts up to the limits established by Fannie Mae and Freddie Mac for secondary market resale purposes. Currently this amount for single-family residential loans varies from $453,100 up to a maximum of $679,650 for certain high-cost designated areas. We also make residential mortgage loans up to limits established by the Federal Housing Administration, which currently is $679,650. The Washington, D.C. and Baltimore areas are both considered high-cost designated areas. We will, however, make loans in excess of these amounts if we believe that we can sell the loans in the secondary market or that the loans should be held in our portfolio. For loans we originate for sale in the secondary market, we typically require a credit score of 620 or higher, with some exceptions provided we receive an approval recommendation from FannieMae, FreddieMac or the Federal Housing Administration’s automated underwriting approval system.  Loans sold in the secondary market are sold to investors on a servicing released basis and recorded as loans as held for sale.  The premium is recorded in income on marketable loans in non-interest income, net of commissions paid to the loan officers.

Commercial and Industrial Lending

Our commercial and industrial lending consists of lines of credit, revolving credit facilities, accounts receivable financing, term loans, equipment loans, Small Business Administration loans, standby letters of credit and unsecured loans. We originate commercial loans for any business purpose including the financing of leasehold improvements and equipment, the carrying of accounts receivable, general working capital, and acquisition activities. We have a diverse client base and we do not have a concentration of these types of loans in any specific industry segment. We generally secure commercial business loans with accounts receivable, equipment, deeds of trust and other collateral such as marketable securities, cash value of life insurance and time deposits at Old Line Bank.

Commercial business loans have a higher degree of risk than residential mortgage loans because the availability of funds for repayment generally depends on the success of the business. They may also involve high average balances, increased difficulty monitoring and a high risk of default. To help manage this risk, we typically limit these loans to proven businesses and we generally obtain appropriate collateral and personal guarantees from the borrower’s principal owners and monitor the financial condition of the business. For loans in excess of $250,000, monitoring generally includes a review of the borrower’s annual tax returns and updated financial statements.

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Consumer Installment Lending

We offer various types of secured and unsecured consumer loans. We make consumer loans for personal, family or household purposes as a convenience to our customer base. Consumer loans, however, are not a focus of our lending activities. The underwriting standards for consumer loans include a determination of the applicant’s payment history on other debts and an assessment of his or her ability to meet existing obligations and payments on the proposed loan. As a general guideline, a consumer’s total debt service should not exceed 40% of his or her gross income.

Our consumer loan portfolio, includes indirect loans, which consists primarily of auto and RV loans. These loans are financed through dealers and the dealers receive a percentage of the finance charge, which varies depending on the terms of each loan. We use the same underwriting standards in originating these indirect loans as we do for consumer loans generally.

Consumer loans may present greater credit risk than residential mortgage loans because many consumer loans are unsecured or rapidly depreciating assets secure these loans. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance because of the greater likelihood of damage, loss or depreciation. Consumer loan collections depend on the borrower’s continuing financial stability. If a borrower suffers personal financial difficulties, the consumer may not repay the loan. Also, various federal and state laws, including bankruptcy and insolvency laws, may limit the amount we can recover on such loans.

Concentrations of Credit

Most of our lending activity occurs within the state of Maryland within the suburban Washington, D.C. and Baltimore market areas in Anne Arundel, Baltimore, Baltimore City, Calvert, Carroll, Charles, Frederick, Harford, Howard, Montgomery, Prince George’s and St. Mary’s Counties. The majority of our loan portfolio consists of commercial real estate loans and residential real estate loans.

Non-Accrual and Past Due Loans

We consider loans past due if the borrower has not paid the required principal and interest payments when due under the original or modified terms of the promissory note and place a loan on non-accrual status when the payment of principal or interest has become 90 days past due. When we classify a loan as non-accrual, we no longer accrue interest on such loan and we reverse 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 legacy loans only when received. We originally recorded purchased, credit-impaired loans at fair value upon acquisition, and an accretable yield is established and recognized as interest income on purchased loans to the extent subsequent cash flows support the estimated accretable yield. Purchased, credit-impaired loans that perform consistently with the accretable yield expectations are not reported as non-accrual or nonperforming. However, purchased, credit-impaired loans that do not continue to perform according to accretable yield expectations are considered impaired, and presented as non-accrual and nonperforming. Currently, management expects to fully collect the carrying value of acquired, credit-impaired loans.

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The table below presents an age analysis of the loans held for investment portfolio at September 30, 2018 and December 31, 2017.

Age Analysis of Past Due Loans

	September 30, 2018						December 31, 2017
	Legacy		Acquired		Total		Legacy		Acquired		Total
Current	$	1,600,670,724	$	766,584,894	$	2,367,255,618	$	1,352,406,852	$	338,913,557	$	1,691,320,409
Accruing past due loans:
30-89 days past due
Commercial Real Estate:
Owner Occupied		2,689,179		—		2,689,179		—		—		—
Investment		438,456		1,819,810		2,258,266		1,089,022		843,706		1,932,728
Hospitality		—		4,915		4,915		—		—		—
Land and A&D		1,015,998		—		1,015,998		254,925		158,899		413,824
Residential Real Estate:
First Lien-Investment		180,764		718,673		899,437		270,822		506,600		777,422
First Lien-Owner Occupied		93,817		2,705,941		2,799,758		229		2,457,299		2,457,528
Land and A&D		1,032,599		170,000		1,202,599		—		—		—
HELOC and Jr. Liens		325,914		1,026,737		1,352,651		—		130,556		130,556
Commercial and Industrial		290,290		295,841		586,131		51,088		261,081		312,169
Consumer		284,843		1,378,380		1,663,223		26,134		1,017,195		1,043,329
Total 30-89 days past due		6,351,860		8,120,297		14,472,157		1,692,220		5,375,336		7,067,556
90 or more days past due
Commercial Real Estate:
Owner Occupied		1,042,909		179,718		1,222,627		—		—		—
Investment		291,278		—		291,278		—		—		—
Residential Real Estate:
First Lien-Owner Occupied		—		143,625		143,625		—		37,560		37,560
Land and A&D		417,110		—		417,110
HELOC and Jr. Liens		—		308,796		308,796		—		—		—
Commercial		29,134		—		29,134		—		—		—
Consumer		4,476		101,079		105,555		—		78,407		78,407
Total 90 or more days past due		1,784,907		733,218		2,518,125		—		115,967		115,967
Total accruing past due loans		8,136,767		8,853,515		16,990,282		1,692,220		5,491,303		7,183,523
Commercial Real Estate:
Owner Occupied		—		412,785		412,785		—		228,555		228,555
Investment		—		179,091		179,091		—		—		—
Land and A&D		—		151,780		151,780		—		190,193		190,193
Residential Real Estate:
First Lien-Investment		192,501		219,681		412,182		192,501		—		192,501
First Lien-Owner Occupied		266,811		1,734,910		2,001,721		281,130		872,272		1,153,402
HELOC and Jr. Liens		—		126,240		126,240		—		—		—
Land and A&D		277,704		594,505		872,209		—		—		—
Commercial and Industrial		150,477		150,924		301,401		—		—		—
Consumer		—		51,671		51,671		—		—		—
Non-accruing loans:		887,493		3,621,587		4,509,080		473,631		1,291,020		1,764,651
Total Loans	$	1,609,694,984	$	779,059,996	$	2,388,754,980	$	1,354,572,703	$	345,695,880	$	1,700,268,583

We consider all nonperforming loans and troubled debt restructurings (“TDRs”) to be impaired. We do not recognize interest income on nonperforming loans during the time period that the loans are nonperforming. We only recognize interest income on nonperforming loans when we receive payment in full for all amounts due of all contractually required principle and interest, and the loan is current with its contractual terms. The tables below present our impaired loans at and for the periods ended September 30, 2018 and December 31, 2017.

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	Impaired Loans
							Three months September 30, 2018				Nine months September 30, 2018
	Unpaid						Average		Interest		Average		Interest
	Principal		Recorded		Related		Recorded		Income		Recorded		Income
	Balance		Investment		Allowance		Investment		Recognized		Investment		Recognized
Legacy
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied	$	1,752,561	$	1,752,561	$	—	$	1,758,968	$	13,509		1,773,719	$	55,910
Investment		1,701,018		1,701,018		—		1,708,471		18,586		1,723,700		69,746
Residential Real Estate:
First Lien-Investment		—		—		—		—		—		—		—
First Lien-Owner Occupied		216,720		216,720		—		229,349		743		230,150		7,192
Land and A&D		277,704		277,704		—		277,704		—		277,704		—
Commercial and Industrial		509,772		509,772		—		515,840		2,201		526,281		13,287
With an allowance recorded:
Commercial Real Estate:
Investment		—		—		—		—		—		—		—
Residential Real Estate:
First Lien-Investment		192,501		192,501		39,420		192,501		—		192,501		—
First Lien-Owner Occupied		50,091		50,091		37,075		55,510		290		56,322		1,424
Commercial and Industrial		93,892		93,892		93,892		94,163		812		94,932		3,622
Total legacy impaired		4,794,259		4,794,259		170,387		4,832,506		36,141		4,875,309		151,181
Acquired(1)
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied		516,170		465,723		—		590,642		—		591,057		3,281
Investment		221,197		200,954		—		627,792		10,855		628,745		25,790
Land and A&D		243,329		106,780		—		349,809		—		349,809		—
Residential Real Estate:
First Lien-Owner Occupied		2,028,054		1,915,795		—		2,030,925		4,321		2,035,333		26,246
First Lien-Investment		224,868		224,868		—		238,294		—		238,294		4,664
Land and A&D		654,644		451,627		—		767,290		—		767,315		1,518
HELOC and Jr. Liens		128,063		128,063		—		128,063		—		128,063		964
Commercial		1,031,496		167,560		—		1,303,135		15,576		1,303,808		23,427
Consumer		52,730		52,730		—		85,421		—		92,987		1,438
With an allowance recorded:
Commercial Real Estate:
Land and A&D		328,851		45,000		45,000		328,851		—		329,705		—
Residential Real Estate:
First Lien-Owner Occupied		253,437		253,437		88,723		276,861		—		275,590		—
Land and A&D		154,297		154,297		96,391		161,153		—		159,370		—
Commercial and Industrial		68,888		68,888		24,517		69,324		589		70,367		2,683
Consumer		27,009		27,009		26,607		27,456		291		27,720		533
Total acquired impaired		5,933,033		4,262,731		281,238		6,985,016		31,632		6,998,163		90,544
Total impaired	$	10,727,292	$	9,056,990	$	451,625	$	11,817,522	$	67,773		11,873,472	$	241,725

_______________________

(1) Generally accepted accounting principles require that we record acquired loans at fair value at acquisition, which includes a discount for loans with credit impairment. These purchased credit impaired loans are not performing according to their contractual terms and meet the definition of an impaired loan. Although we do not accrue interest income at the contractual rate on these loans, we do recognize an accretable yield as interest income to the extent such yield is supported by cash flow analysis of the underlying loans.

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Impaired Loans
Twelve months ended December 31, 2017
	Unpaid						Average		Interest
	Principal		Recorded		Related		Recorded		Income
	Balance		Investment		Allowance		Investment		Recognized
Legacy
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied	$	1,797,030	$	1,797,030	$	—	$	1,913,873	$	70,623
Investment		1,155,595		1,155,595		—		1,183,738		51,806
Residential Real Estate:
First Lien-Owner Occupied		226,554		226,554		—		233,618		10,536
Commercial and Industrial		387,208		387,208		—		379,983		30,245
With an allowance recorded:
Commercial Real Estate:
Investment		592,432		592,432		69,903		601,959		30,576
Residential Real Estate:
First Lien-Owner Occupied		54,576		54,576		37,075		217,673		—
First Lien-Investment		192,501		192,501		39,420		192,501		—
Commercial and Industrial		96,212		96,212		96,212		97,923		4,960
Total legacy impaired		4,502,108		4,502,108		242,610		4,821,268		198,746
Acquired(1)
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied		253,865		253,865		—		252,988		2,155
Land and A&D		334,271		45,000		—		334,271		—
Residential Real Estate:
First Lien-Owner Occupied		1,382,055		1,269,796		—		1,390,037		31,601
First Lien-Investment		131,294		74,066		—		132,812		4,378
With an allowance recorded:
Commercial Real Estate:
Land and A&D		148,196		148,196		80,072		155,621		2,498
Residential Real Estate:
First Lien-Owner Occupied		250,194		250,194		77,464		273,596		23,424
Commercial and Industrial		72,125		72,125		24,517		74,279		3,775
Total acquired impaired		2,572,000		2,113,242		182,053		2,613,604		67,831
Total impaired	$	7,074,108	$	6,615,350	$	424,663	$	7,434,872	$	266,577

_______________________

(1) Generally accepted accounting principles require that we record acquired loans at fair value at acquisition, which includes a discount for loans with credit impairment. These purchased credit impaired loans are not performing according to their contractual terms and meet the definition of an impaired loan. Although we do not accrue interest income at the contractual rate on these loans, we do recognize an accretable yield as interest income to the extent such yield is supported by cash flow analysis of the underlying loans.

We consider a loan a TDR when we conclude that both of the following conditions exist: the restructuring constitutes a concession and the debtor is experiencing financial difficulties. Restructured loans at September 30, 2018 consisted of seven loans for an aggregate of $2.4 million compared to seven loans for an aggregate of $2.7 million at December 31, 2017.

We had no loan modifications reported as TDRs during the three months ended September 30, 2018 or 2017. The following table includes the recorded investment in and number of modifications reported as TDRs during the nine months ended September 30, 2018 and 2017. We report the recorded investment in loans prior to a modification and also the recorded investment in the loans after the loans were restructured. Reductions in the recorded investment are primarily due to the partial charge-off of the principal balance prior to the modification. TDR’s consisted on one consumer loan of which we extended the original maturity date from 75 months to 117 months. We had no loans that were modified as a TDR that defaulted during the three or nine month periods ended September 30, 2018 or 2017.

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	Loans Modified as a TDR for the nine months ended
	September 30, 2018						September 30, 2017
			Pre-		Post				Pre-		Post
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
Troubled Debt Restructurings—	# of		Recorded		Recorded		# of		Recorded		Recorded
(Dollars in thousands)	Contracts		Investment		Investment		Contracts		Investment		Investment
Legacy
Commercial Real Estate		—		—		—		1		1,596,740		1,572,976
Commercial and Industrial		—		—		—		1		414,324		399,351
Consumer		1		28,009		27,009		—		—		—
Total legacy TDR's		1	$	28,009	$	27,009		2	$	2,011,064	$	1,972,327

Acquired impaired loans

The following table documents changes in the accretable (premium) discount on acquired impaired loans during the nine months ended September 30, 2018 and 2017, along with the outstanding balances and related carrying amounts for the beginning and end of those respective periods.

	September 30, 2018			September 30, 2017
Balance at beginning of period	$	115,066		$	(22,980	)
Additions due to BYBK acquisition		50,984			—
Additions due to DCB acquisition		—			99,981
Accretion of fair value discounts		(873,308	)		(83,099	)
Reclassification (to)/from non-accretable discount		847,153			(15,428	)
Balance at end of period	$	139,895		$	(21,526	)

	Contractually
	Required Payments
	Receivable		Carrying Amount
At September 30, 2018	$	17,975,448	$	14,109,972
At December 31, 2017		8,277,731		6,617,774
At September 30, 2017		8,301,260		6,611,444
At December 31, 2016		9,597,703		7,558,415

For our acquisition of Bay Bank on April 13, 2018, we recorded all loans acquired at the estimated fair value on their purchase date with no carryover of the related allowance for loan losses. On the acquisition date, we segregated the loan portfolio into two loan pools, performing and non-performing.

We had an independent third party determine the net discounted value of cash flows on 1,991 performing loans totaling $520.5 million. The valuation took into consideration the loans’ underlying characteristics including account types, remaining terms, annual interest rates, interest types, past delinquencies, timing of principal and interest payments, current market rates, loan-to-value ratios, loss exposures, and remaining balances. These performing loans were segregated into pools based on loan and payment type and, in some cases, risk grade. The effect of this fair valuation process was a net discount of $8.3 million at acquisition.

We also individually evaluated 132 impaired loans totaling $13.5 million to determine their fair value as of the April 13, 2018 measurement date. In determining the fair value for each individually evaluated impaired loan, we considered a number of factors including the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral and net present value of cash flows we expect to receive, among others.

We established a credit related non-accretable difference of $3.2 million relating to these purchased credit impaired loans, reflected in the recorded fair value.

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We re-classified $21.7 million (net of fair value marks) of our acquired loans to available for sale. These loans consisted primarily of purchase credit impaired loans that we were working to market with brokers. Settlement occurred on these loans during the third quarter of 2018, resulting in no gain or loss on the sale.

The following table outlines the contractually required payments receivable, cash flows we expect to receive, non-accretable credit adjustment and the accretable yield for all of Bay Bank’s impaired loans as of the acquisition date, April 13, 2018.

	Purchased
	Credit
	Impaired
	(in millions)
Contractually required principal at acquisition	$	14,766
Contractual cash flows not expected to be collected (non-accretable difference)		(3,201	)
Expected cash flows at acquisition-Total		11,565

Credit Quality Indicators

We review the adequacy of the allowance for loan losses at least quarterly. We base the evaluation of the adequacy of the allowance for loan losses upon loan categories. We categorize loans as residential real estate loans, commercial real estate loans, commercial loans and consumer loans. We further divide commercial real estate loans by owner occupied, investment, hospitality and land acquisition and development. We also divide residential real estate by owner occupied, investment, land acquisition and development and junior liens. All categories are divided by risk rating and loss factors and weighed 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 collateral separately and assign loss amounts based upon the evaluation.

We determine loss ratios for all loans based upon a review of the three year loss ratio for the category and qualitative factors.

We charge off loans that management has identified as losses. We consider suggestions from our external loan review firm and bank examiners when determining which loans to charge off. We automatically charge off consumer loan accounts based on regulatory requirements. We partially charge off real estate loans that are collateral dependent based on the value of the collateral.

If a loan that was previously rated a pass performing loan, from our acquisitions, deteriorates subsequent to the acquisition, the subject loan will be assessed for risk and, if necessary, evaluated for impairment. If the risk assessment rating is adversely changed and the loan is determined to not be impaired, the loan will be placed in a migration category and the credit mark established for the loan will be compared to the general reserve allocation that would be applied using the current allowance for loan losses formula for General Reserves. If the credit mark exceeds the allowance for loan losses formula for General Reserves, there will be no change to the allowance for loan losses. If the credit mark is less than the current allowance for loan losses formula for General Reserves, the allowance for loan losses will be increased by the amount of the shortfall by a provision recorded in the income statement. If the loan is deemed impaired, the loan will be subject to evaluation for loss exposure and a specific reserve. If the estimate of loss exposure exceeds the credit mark, the allowance for loan losses will be increased by the amount of the excess loss exposure through a provision. If the credit mark exceeds the estimate of loss exposure there will be no change to the allowance for loan losses. If a loan from the acquired loan portfolio is carrying a specific credit mark and a current evaluation determines that there has been an increase in loss exposure, the allowance for loan losses will be increased by the amount of the current loss exposure in excess of the credit mark.

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The following tables outline the class of loans by risk rating at September 30, 2018 and December 31, 2017:

At September 30, 2018	Legacy		Acquired		Total
Risk Rating
Pass(1 - 5)
Commercial Real Estate:
Owner Occupied	$	269,706,878	$	147,139,598	$	416,846,476
Investment		598,321,509		195,074,793		793,396,302
Hospitality		148,312,837		13,260,532		161,573,369
Land and A&D		89,964,201		24,431,791		114,395,992
Residential Real Estate:
First Lien-Investment		89,462,345		47,521,236		136,983,581
First Lien-Owner Occupied		98,636,095		137,076,969		235,713,064
Land and A&D		47,318,505		17,796,181		65,114,686
HELOC and Jr. Liens		20,581,673		43,265,816		63,847,489
Commercial and Industrial		213,311,801		94,484,613		307,796,414
Consumer		17,671,242		38,541,584		56,212,826
Total pass		1,593,287,086		758,593,113		2,351,880,199
Special Mention(6)
Commercial Real Estate:
Owner Occupied		424,315		3,074,210		3,498,525
Investment		1,090,737		1,304,518		2,395,255
Hospitality		—		4,915		4,915
Land and A&D		2,023,358		299,898		2,323,256
Residential Real Estate:
First Lien-Investment		292,445		1,738,070		2,030,515
First Lien-Owner Occupied		63,536		1,576,527		1,640,063
Land and A&D		2,111,796		103,402		2,215,198
HELOC and Jr. Liens		—		—		—
Commercial and Industrial		588,904		97,737		686,641
Consumer		—		70,382		70,382
Total special mention		6,595,091		8,269,659		14,864,750
Substandard(7)
Commercial Real Estate:
Owner Occupied		5,207,847		2,219,296		7,427,143
Investment		1,701,018		1,283,238		2,984,256
Hospitality		—		—		—
Land and A&D		—		151,780		151,780
Residential Real Estate:
First Lien-Investment		530,476		1,370,248		1,900,724
First Lien-Owner Occupied		266,811		3,481,782		3,748,593
Land and A&D		277,704		594,505		872,209
HELOC and Jr. Liens		—		180,163		180,163
Commercial and Industrial		1,828,951		2,830,455		4,659,406
Consumer		—		85,757		85,757
Total substandard		9,812,807		12,197,224		22,010,031
Doubtful(8)		—		—		—
Loss(9)		—		—		—
Total	$	1,609,694,984	$	779,059,996	$	2,388,754,980

26

At December 31, 2017	Legacy		Acquired		Total
Risk Rating
Pass(1 - 5)
Commercial Real Estate:
Owner Occupied	$	262,377,665	$	83,069,390	$	345,447,055
Investment		483,404,883		51,064,247		534,469,130
Hospitality		164,193,228		7,395,186		171,588,414
Land and A&D		65,184,837		9,065,405		74,250,242
Residential Real Estate:
First Lien-Investment		78,814,931		19,846,749		98,661,680
First Lien-Owner Occupied		66,888,943		57,895,058		124,784,001
Land and A&D		33,712,187		5,727,719		39,439,906
HELOC and Jr. Liens		21,520,339		16,019,418		37,539,757
Commercial and Industrial		150,881,948		32,738,715		183,620,663
Consumer		10,758,589		49,017,427		59,776,016
Total pass		1,337,737,550		331,839,314		1,669,576,864
Special Mention(6)
Commercial Real Estate:
Owner Occupied		435,751		2,816,057		3,251,808
Investment		384,011		1,037,254		1,421,265
Hospitality		—		—		—
Land and A&D		2,125,823		120,366		2,246,189
Residential Real Estate:
First Lien-Investment		300,824		1,034,942		1,335,766
First Lien-Owner Occupied		67,626		1,848,385		1,916,011
Land and A&D		2,167,666		663,248		2,830,914
Commercial and Industrial		1,519,394		59,902		1,579,296
Consumer		—		65,324		65,324
Total special mention		7,001,095		7,645,478		14,646,573
Substandard(7)
Commercial Real Estate:
Owner Occupied		5,314,671		1,773,408		7,088,079
Investment		1,748,027		825,238		2,573,265
Hospitality		—		—		—
Land and A&D		—		45,000		45,000
Residential Real Estate:
First Lien-Investment		646,927		338,827		985,754
First Lien-Owner Occupied		281,130		2,781,351		3,062,481
Land and A&D		—		145,193		145,193
Commercial and Industrial		1,843,303		302,071		2,145,374
Consumer		—		—		—
Total substandard		9,834,058		6,211,088		16,045,146
Doubtful(8)		—		—		—
Loss(9)		—		—		—
Total	$	1,354,572,703	$	345,695,880	$	1,700,268,583

27

The following table details activity in the allowance for loan losses by portfolio segment for the three and nine month periods ended September 30, 2018 and 2017. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Commercial			Commercial		Residential
Three Months Ended September 30, 2018	and Industrial			Real Estate		Real Estate		Consumer			Total
Beginning balance	$	1,680,448		$	4,196,752	$	749,630	$	77,747		$	6,704,577
Provision for loan losses		(141,751	)		303,547		34,609		111,465			307,870
Recoveries		65,819			417		3,119		5,127			74,482
Total		1,604,516			4,500,716		787,358		194,339			7,086,929
Loans charged off		—			—		—		(106,879	)		(106,879	)
Ending Balance	$	1,604,516		$	4,500,716	$	787,358	$	87,460		$	6,980,050

	Commercial		Commercial		Residential
Nine Months Ended September 30, 2018	and Industrial		Real Estate		Real Estate			Consumer			Total
Beginning balance	$	1,262,030	$	3,783,735	$	844,355		$	30,466		$	5,920,586
Provision for loan losses		273,017		716,147		(70,403	)		316,262			1,235,023
Recoveries		69,469		834		15,230			11,980			97,513
Total		1,604,516		4,500,716		789,182			358,708			7,253,122
Loans charged off		—		—		(1,824	)		(271,248	)		(273,072	)
Ending Balance	$	1,604,516	$	4,500,716	$	787,358		$	87,460		$	6,980,050
Amount allocated to:
Legacy Loans:
Individually evaluated for impairment	$	93,892	$	—	$	76,495		$	—		$	170,387
Other loans not individually evaluated		1,441,108		4,500,716		525,749			60,852			6,528,425
Acquired Loans:
Individually evaluated for impairment		69,516		—		185,114			26,608			281,238
Ending balance	$	1,604,516	$	4,500,716	$	787,358		$	87,460		$	6,980,050

				Commercial		Residential
Three Months Ended September 30, 2017	Commercial			Real Estate		Real Estate			Consumer			Total
Beginning balance	$	1,318,247		$	3,789,423	$	793,795		$	10,377		$	5,911,842
Provision for loan losses		81,378			113,694		(97,691	)		38,320			135,701
Recoveries		786			417		—			6,280			7,483
Total		1,400,411			3,903,534		696,104			54,977			6,055,026
Loans charged off		(202,528	)		—		—			(36,311	)		(238,839	)
Ending Balance	$	1,197,883		$	3,903,534	$	696,104		$	18,666		$	5,816,187

				Commercial			Residential
Nine Months Ended September 30, 2017	Commercial			Real Estate			Real Estate			Consumer			Total
Beginning balance	$	1,372,235		$	3,990,152		$	823,520		$	9,562		$	6,195,469
Provision for loan losses		596,350			352,054			(126,048	)		32,752			855,108
Recoveries		2,350			1,250			900			31,811			36,311
Total		1,970,935			4,343,456			698,372			74,125			7,086,888
Loans charged off		(773,052	)		(439,922	)		(2,268	)		(55,459	)		(1,270,701	)
Ending Balance	$	1,197,883		$	3,903,534		$	696,104		$	18,666		$	5,816,187
Amount allocated to:
Legacy Loans:
Individually evaluated for impairment	$	96,712		$	69,903		$	35,647		$	—		$	202,262
Other loans not individually evaluated		1,076,654			3,753,559			582,994			18,666			5,431,873
Acquired Loans:
Individually evaluated for impairment		24,517			80,072			77,463			—			182,052
Ending balance	$	1,197,883		$	3,903,534		$	696,104		$	18,666		$	5,816,187

28

Our recorded investment in loans at September 30, 2018 and 2017 related to each balance in the allowance for probable loan losses by portfolio segment and disaggregated on the basis of our impairment methodology was as follows:

	Commercial		Commercial		Residential
September 30, 2018	and Industrial		Real Estate		Real Estate		Consumer		Total
Legacy loans:
Individually evaluated for impairment with specific reserve	$	93,892	$	—	$	242,592	$	—	$	336,484
Individually evaluated for impairment without specific reserve		509,772		3,453,579		494,423		—		4,457,774
Other loans not individually evaluated		215,125,991		1,113,299,121		258,804,372		17,671,242		1,604,900,726
Acquired loans:
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		68,888		45,000		407,735		27,009		548,632
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		167,560		773,457		2,720,353		52,730		3,714,100
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		559,248		7,872,328		5,664,394		14,000		14,109,970
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		96,617,110		379,553,784		245,912,416		38,603,984		760,687,294
Ending balance	$	313,142,461	$	1,504,997,269	$	514,246,285	$	56,368,965	$	2,388,754,980

			Commercial		Residential
September 30, 2017	Commercial		Real Estate		Real Estate		Consumer		Total
Legacy loans:
Individually evaluated for impairment with specific reserve	$	96,712	$	597,053	$	411,383	$	—	$	1,105,148
Individually evaluated for impairment without specific reserve		399,351		2,981,975		274,701		—		3,656,027
Other loans not individually evaluated		143,238,162		941,537,848		207,916,920		7,076,344		1,299,769,274
Acquired loans:
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		73,167		149,226		250,194		—		472,587
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		—		298,279		1,192,153		—		1,490,432
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		—		3,492,464		3,156,119		14,000		6,662,583
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		39,101,483		157,924,243		106,619,402		53,712,972		357,358,100
Ending balance	$	182,908,875	$	1,106,981,088	$	319,820,872	$	60,803,316	$	1,670,514,151

5. OTHER REAL ESTATE OWNED

At September 30, 2018 and December 31, 2017, the fair value of other real estate owned was $1.5 million and $2.0 million, respectively. As a result of the acquisitions of Maryland Bankcorp, WSB Holdings, Regal and BYBK, we have segmented the OREO into two components, real estate obtained as a result of loans originated by Old Line Bank (legacy) and other real estate acquired from MB&T, WSB, Regal Bank and Bay Bank or obtained as a result of loans originated by MB&T, WSB, Regal Bank and Bay Bank (acquired); we did not acquire any OREO properties in the DCB acquisition. We are currently aggressively either marketing these properties for sale or improving them in preparation for sale.

29

The following outlines the transactions in OREO during the period.

Nine months ended September 30, 2018	Legacy			Acquired			Total
Beginning balance	$	425,000		$	1,578,998		$	2,003,998
Acquisition of Bay Bancorp, Inc.		—			1,041,079			1,041,079
Sales/deposits on sales		(425,000	)		(1,070,173	)		(1,495,173	)
Net realized gain/(loss)		—			(80,738	)		(80,738	)
Total end of period	$	—		$	1,469,166		$	1,469,166

Residential Foreclosures and Repossessed Assets — Once all potential alternatives for reinstatement are exhausted, past due loans collateralized by residential real estate are referred for foreclosure proceedings in accordance with local requirements of the applicable jurisdiction. Once possession of the property collateralizing the loan is obtained, the repossessed property will be recorded within other assets either as OREO or, where management has both the intent and ability to recover its losses through a government guarantee, as a foreclosure claim receivable. At September 30, 2018, residential foreclosures classified as OREO totaled $686 thousand. We had three loans for an aggregate of $597 thousand secured by residential real estate in process of foreclosure at September 30, 2018 compared to one loan for $277 thousand at December 31, 2017.

6. EARNINGS PER COMMON SHARE

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

We calculate diluted earnings per common 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				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Weighted average number of shares		16,988,883		11,969,536		15,277,219		11,286,215
Dilutive average number of shares		17,187,837		12,172,868		15,485,452		11,496,659

7. STOCK-BASED COMPENSATION

For the three months ended September 30, 2018 and 2017, we recorded stock-based compensation expense of $302,974 and $187,904, respectively.  For the nine months ended September 30, 2018 and 2017, we recorded stock-based compensation expense of $872,284 and $449,935, respectively. At September 30, 2018, there was $1.6 million of total unrecognized compensation cost related to non-vested stock options that we expect to realize over the next 2.0 years. As of September 30, 2018, there were 212,005 shares remaining available for future issuance under the 2010 equity incentive plan. The officers exercised 53,021 options during the nine month period ended September 30, 2018 compared to 14,300 options exercised during the nine month period ended September 30, 2017.

For purposes of determining estimated fair value of stock options, we have computed the estimated fair value of all stock-based compensation using the Black-Scholes option pricing model and, for stock options granted prior to December 31 2017, we have applied the assumptions set forth in Old Line Bancshares’ Annual Report on Form 10-K for the year ended December 31, 2017.  Restricted stock awards are valued at the current stock price on the date of the award. During the nine months ended September 30, 2018, there were 50,000 stock options granted compared to no stock options granted during the nine months ended September 30, 2017.  The weighted average grant date fair value of the 2018 stock options is $8.90 and was computed using the Black-Scholes option pricing model under similar assumptions.

30

During the nine months ended September 30, 2018 and 2017, we granted 19,443 and 40,713 restricted common stock awards, respectively. The weighted average grant date fair value of these restricted stock awards was $32.00 at September 30, 2018.  At September 30, 2018, there was $3.6 million of total unrecognized compensation cost related to restricted stock awards that we expect to realize over the next 2.5 years. There were no restricted shares forfeited during the nine month periods ended September 30, 2018 or 2017.

8. FAIR VALUE MEASUREMENT

The fair value of an asset or liability is the price that participants would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability, or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

The fair value hierarchy established by accounting standards defines three input levels for fair value measurement. The applicable standard describes three levels of inputs that may be used to measure fair value: Level 1 is based on quoted market prices in active markets for identical assets. Level 2 is based on significant observable inputs other than Level 1 prices. Level 3 is based on significant unobservable inputs that reflect a company’s own assumptions about the assumption that market participants would use in pricing an asset or liability. We evaluate fair value measurement inputs on an ongoing basis in order to determine if there is a change of sufficient significance to warrant a transfer between levels. There were no transfers between levels during the three and nine months ended September 30, 2018 or the year ended December 31, 2017.

At September 30, 2018, we hold, as part of our investment portfolio, available for sale securities reported at fair value consisting of municipal securities, U.S. government sponsored entities, corporate bonds, and mortgage-backed securities. The fair value of the majority of these securities is determined using widely accepted valuation techniques including matrix pricing and broker-quote based applications. Inputs include benchmark yields, reported trades, issuer spreads, prepayments speeds and other relevant items. These are inputs used by a third-party pricing service used by us.

To validate the appropriateness of the valuations provided by the third party, we regularly update the understanding of the inputs used and compare valuations to an additional third party source. We classify all our investment securities available for sale in Level 2 of the fair value hierarchy, with the exception of treasury securities that fall into Level 1 and our corporate bonds, which fall into Level 3.

31

Assets and Liabilities Measured at Fair Value on a Recurring Basis

	At September 30, 2018 (In thousands)
			Quoted Prices in		Other		Significant		Total Changes
			Active Markets for		Observable		Unobservable		in Fair Values
			Identical Assets		Inputs		Inputs		Included in
	Carrying Value		(Level 1)		(Level 2)		(Level 3)		Period Earnings
Available-for-sale:
Treasury securities	$	2,992	$	2,992	$	—	$	—	$	—
U.S. government agency		18,011		—		18,011		—		—
Corporate bonds		18,110		—		—		18,110		—
Municipal securities		75,694		—		75,694		—		—
FHLMC MBS		18,582		—		18,582		—		—
FNMA MBS		55,591		—		55,591		—		—
GNMA MBS		27,378		—		27,378		—		—
Total recurring assets at fair value	$	216,358	$	2,992	$	195,256	$	18,110	$	—

	At December 31, 2017 (In thousands)
			Quoted Prices in		Other		Significant		Total Changes
			Active Markets for		Observable		Unobservable		in Fair Values
			Identical Assets		Inputs		Inputs		Included in
	Carrying Value		(Level 1)		(Level 2)		(Level 3)		Period Earnings
Available-for-sale:
Treasury securities	$	3,005	$	3,005	$	—	$	—	$	—
U.S. government agency		17,734		—		17,734		—		—
Corporate bonds		14,658		—		—		14,658		—
Municipal securities		79,555		—		79,555		—		—
FHLMC MBS		19,455		—		19,455		—		—
FNMA MBS		62,946		—		62,946		—		—
GNMA MBS		21,000		—		21,000		—		—
Total recurring assets at fair value	$	218,353	$	3,005	$	200,690	$	14,658	$	—

Our valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes our methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value. Furthermore, we have not comprehensively revalued the fair value amounts since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the above presented amounts.

The fair value of the majority of the securities in significant unobservable inputs (Level 3) is determined using widely accepted valuation techniques including matrix pricing and broker-quote based applications. Inputs include benchmark yields, reported trades, issuer spreads, prepayments speeds and other relevant items. These are inputs used by a third-party pricing service used by us.

The following table provides a reconciliation of changes in fair value included in assets measured in the Consolidated Balance Sheet using inputs classified as level 3 in the fair value for the period indicated:

(in thousands)	Level 3
Investment available-for-sale
Balance as of January 1, 2018	$	14,658
Realized and unrealized gains (losses)
Included in earnings		—
Included in other comprehensive income		(48	)
Purchases, issuances, sales and settlements		3,500
Transfers into or out of level 3		—
Balance at September 30, 2018	$	18,110

32

The fair value calculated may not be indicative of net realized value or reflective of future fair values.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We may be required, from time to time, to measure certain assets at fair value on a non-recurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis at September 30, 2018 and December 31, 2017 are included in the tables below.

We also measure certain non-financial assets such as OREO, TDRs, and repossessed or foreclosed property at fair value on a non-recurring basis. Generally, we estimate the fair value of these items using Level 2 inputs based on observable market data or Level 3 inputs based on discounting criteria.

	At September 30, 2018 (In thousands)
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Impaired Loans
Legacy:	$	4,624		—		—	$	4,624
Acquired:		3,981		—		—		3,981
Total Impaired Loans		8,605		—		—		8,605
Other real estate owned:
Legacy:	$	—		—		—	$	—
Acquired:		1,469		—		—		1,469
Total other real estate owned:		1,469		—		—		1,469
Total	$	10,074	$	—	$	—	$	10,074

	At December 31, 2017 (In thousands)
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Impaired Loans
Legacy:	$	4,260		—		—	$	4,260
Acquired:		1,931		—		—		1,931
Total Impaired Loans		6,191		—		—		6,191
Other real estate owned:
Legacy:	$	425		—		—	$	425
Acquired:		1,579		—		—		1,579
Total other real estate owned:		2,004		—		—		2,004
Total	$	8,195	$	—	$	—	$	8,195

As of September 30, 2018 and December 31, 2017, we estimated the fair value of impaired assets using Level 3 inputs to be $10.1 million and $8.2 million, respectively. We determined these Level 3 inputs based on appraisal evaluations, offers to purchase and/or appraisals that we obtained from an outside third party during the preceding twelve months less costs to sell. Discounts have predominantly been in the range of 0% to 50%. As a result of the acquisitions of Maryland Bankcorp, WSB Holdings, Regal and BYBK, we have segmented the OREO into two components, real estate obtained as a result of loans originated by Old Line Bank (legacy) and other real estate acquired from MB&T, WSB, Regal Bank and Bay Bank or obtained as a result of loans originated by MB&T, WSB, Regal Bank and Bay Bank (acquired).

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of Old Line Bancshares’ financial instruments not recorded at fair value on a recurring or non-recurring basis as of September 30, 2018 and December 31, 2017.  For short term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization.  For non-marketable equity securities the carrying amount is a reasonable estimate of fair value as these securities can only be redeemed or sold at their par value and only to the respective issuing government-supported institution or to another member institution.  For net loans receivable, an exit price notion is used consistent with ASC Topic 820-Fair Value Measurement. Prior to adoption, loans were calculated using an entry price notion. For financial liabilities such as noninterest-bearing demand, interest bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

33

	September 30, 2018 (in thousands)
					Quoted Prices		Significant		Significant
			Total		in Active		Other		Other
	Carrying		Estimated		Markets for		Observable		Unobservable
	Amount		Fair		Identical Assets		Inputs		Inputs
	(000’s)		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	50,306	$	50,306	$	50,306	$	—	$	—
Loans receivable, net		2,384,580		2,331,418		—		—		2,331,418
Loans held for sale		8,830		8,830		—		8,830		—
Investment securities available for sale		216,358		216,358		2,992		195,256		18,110
Equity Securities at cost		13,063		13,063		—		13,063		—
Bank Owned Life Insurance		67,491		67,491		—		67,491		—
Accrued interest receivable		8,073		8,073		—		1,310		6,763
Liabilities:
Deposits:
Non-interest-bearing		581,339		581,339		—		581,339		—
Interest bearing		1,660,902		1,668,053		—		1,668,053		—
Short term borrowings		272,535		272,535		—		272,535		—
Long term borrowings		38,305		38,305		—		38,305		—
Accrued Interest payable		1,644		1,644		—		1,644		—

	December 31, 2017 (in thousands)
					Quoted Prices		Significant		Significant
			Total		in Active		Other		Other
	Carrying		Estimated		Markets for		Observable		Unobservable
	Amount		Fair		Identical Assets		Inputs		Inputs
	(000’s)		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	35,174	$	35,174	$	35,174	$	—	$	—
Loans receivable, net		1,696,361		1,692,018		—		—		1,692,018
Loans held for sale		4,404		4,558		—		4,558		—
Investment securities available for sale		218,353		218,353		3,005		200,690		14,658
Equity Securities at cost		8,978		8,978		—		8,978		—
Bank Owned Life Insurance		41,612		41,612		—		41,612		—
Accrued interest receivable		5,476		5,476		—		1,215		4,261
Liabilities:
Deposits:
Non-interest-bearing		451,803		451,803		—		451,803		—
Interest bearing		1,201,100		1,205,936		—		1,205,936		—
Short term borrowings		192,612		192,612		—		192,612		—
Long term borrowings		38,107		38,107		—		38,107		—
Accrued Interest payable		1,472		1,472		—		1,472		—

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9. SHORT TERM BORROWINGS

Short term borrowings consist of promissory notes or overnight repurchase agreements sold to Old Line Bank’s customers, federal funds purchased and advances from the FHLB. At September 30, 2018, we had $235.0 million outstanding in short term FHLB borrowings, compared to $155.0 million at December 31, 2017. At September 30, 2018 and December 31, 2017, we had no unsecured promissory notes and $37.5 million and $37.6 million, respectively, in secured promissory notes.

Securities Sold Under Agreements to Repurchase

To support the $37.5 million in repurchase agreements at September 30, 2018, we have provided collateral in the form of investment securities. At September 30, 2018 we have pledged $62.4 million in U.S. government agency securities and mortgage-backed securities to customers who require collateral for overnight repurchase agreements and deposits. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. As a result, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. We monitor collateral levels on a continuous basis. We may be required to provide additional collateral based on the fair value of the underlying securities in the event the collateral fair value falls below stipulated levels. We closely monitor the collateral levels to ensure adequate levels are maintained. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents. We have the right to sell or re-pledge the investment securities. For government entity repurchase agreements, the collateral is held by Old Line Bank in a segregated custodial account under a tri-party agreement. The repurchase agreements totaling $37.5 million mature daily and will remain fully collateralized until the account has been closed or terminated.

10. LONG TERM BORROWINGS

Long term borrowings consist of $35 million in aggregate principal amount of Old Line Bancshares 5.625% Fixed-to-Floating Rate Subordinated Notes due 2026 (the “Notes”). The Notes were issued pursuant to an indenture and a supplemental indenture, each dated as of August 15, 2016, between Old Line Bancshares and U.S. Bank National Association as Trustee. The Notes are unsecured subordinated obligations of Old Line Bancshares and rank equally with all other unsecured subordinated indebtedness currently outstanding or issued in the future. The Notes are subordinated in right of payment of all senior indebtedness. The fair value of the Notes is $34.2 million.

Also included in long term borrowings are trust preferred subordinated debentures totaling $4.1 million (net of $2.6 million fair value adjustment) at September 30, 2018 acquired in the Regal acquisition. The trust preferred subordinated debentures consists of two trusts – Trust 1 in the amount of $4.0 million (fair value adjustment of $1.4 million) maturing on March 17, 2034 and Trust 2 in the amount of $2.5 million (fair value adjustment $1.2 million) maturing on December 14, 2035.

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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.”

In this report, references to the “Company,” “we,” “us,” and “ours” refer to Old Line Bancshares, Inc. and its subsidiaries, collectively, unless the context otherwise requires, and references to the “Bank” refer to Old Line Bank.

Overview

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

On April 1, 2011, we acquired Maryland Bankcorp, Inc. (“Maryland Bankcorp”), the parent company of Maryland Bank & Trust Company, N.A (“MB&T”), on May 10, 2013, we acquired WSB Holdings, Inc. (“WSB Holdings”), the parent company of The Washington Savings Bank, F.S.B. (“WSB”), on December 4, 2015, we acquired Regal Bancorp, Inc. (“Regal”), the parent company of Regal Bank & Trust (“Regal Bank”), on July 28, 2017, we acquired DCB Bancshares, Inc. (“DCB”), the parent company of Damascus Community Bank (“Damascus”), and on April 13, 2018, we acquired Bay Bancorp, Inc. (“BYBK”), the parent company of Bay Bank, FSB. This acquisition brought our assets to approximately $2.8 billion and we now operate 37 full service branches serving 11 Maryland counties and Baltimore City.

Summary of Recent Performance and Other Activities

Net income available to common stockholders increased $6.1 million, or 282.07%, to $8.3 million for the three months ended September 30, 2018, compared to $2.2 million for the three month period ended September 30, 2017. Earnings were $0.49 per basic and $0.48 per diluted common share for the three months ended September 30, 2018, compared to $0.18 per basic and diluted common share for the three months ended September 30, 2017. The increase in net income for the third quarter of 2018 as compared to the same 2017 period is primarily the result of an increase of $8.4 million in net interest income and $654 thousand in non-interest income, partially offset by a $2.0 million increase in non-interest expense. Net income included $2.3 million ($1.5 million net of taxes) of merger-related expenses (or $0.09 per basic and diluted common share) in connection with the Company’s acquisition of BYBK.

Net income available to common stockholders was $17.1 million for the nine months ended September 30, 2018, compared to $10.1 million for the same period last year, an increase of $6.9 million, or 68.76%. Earnings were $1.12 per basic and $1.10 per diluted common share for the nine months ended September 30, 2018, compared to $0.90 per basic and $0.88 per diluted common share for the same period last year. The increase in net income is primarily the result of increases of $21.0 million, or 46.76%, in net interest income and $1.8 million in non-interest income, partially offset by a $14.6 million increase in non-interest expenses. Included in net income for the 2018 period was $9.4 million ($7.6 million net of taxes, or $0.50 per basic and common share) of merger-related expenses associated with the acquisition of BYBK.

The following highlights contain additional financial data and events that have occurred during the three and nine month periods ended September 30, 2018:

• Net loans held for investment increased $36.8 million and $688.2 million, respectively, during the three and nine month periods ended September 30, 2018, to $2.4 billion at September 30, 2018 from $1.7 billion at December 31, 2017 and $2.3 billion at June 30, 2018.

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• Average gross loans increased $796.6 million, or 49.78%, and $653.9 million, or 44.33%, respectively, during the three and nine month periods ended September 30, 2018, to $2.4 billion and $2.1 billion, respectively, from $1.6 billion and $1.5 billion, respectively, during the three and nine month periods ended September 30, 2017.

• The net interest margin during the three months ended September 30, 2018 was 3.81% compared to 3.71% for the same period in 2017. Total yield on interest earning assets increased to 4.69% for the three months ended September 30, 2018, compared to 4.37% for the same period last year.

• The net interest margin during the nine months ended September 30, 2018 was 3.79% compared to 3.68% for the same period in 2017. The average yield on total interest earning increased to 4.60% for the nine months ended September 30, 2018, compared to 4.34% for the same period last year.

• The third quarter return on average assets (“ROAA”) and return on average equity (“ROAE”) were 1.12% and 8.89%, respectively, compared to ROAA and ROAE of 0.43% and 4.26%, respectively, for the third quarter of 2017. Excluding the merger-related expenses (non-GAAP), ROAA and ROAE would have been 1.32% and 10.47%, respectively, for the third quarter of 2018 and 1.01% and 9.68%, respectively, for the nine months ended September 30, 2017.

• ROAA and ROAE were 0.87% and 7.31%, respectively, for the nine months ended September 30, 2018, compared to ROAA and ROAE of 0.73% and 7.52%, respectively, for the nine months ended September 30, 2017. Excluding the merger-related expenses (non-GAAP), ROAA and ROAE would have been 1.26% and 10.59%, respectively, for the nine months ended September 30, 2018 and 0.94% and 9.68% for the nine months ended September 30, 2017.

• The adjusted (non-GAAP) efficiency ratio was 51.93% and 53.39%, respectively, for the three and nine months ended September 30, 2018 compared to 57.21% and 59.18%, respectively, for the same periods of 2017.

• Total assets increased $825.4 million, or 39.20%, since December 31, 2017, primarily due to increases of $688.2 million in loans held for investment, $69.3 million in goodwill, $15.1 million in cash and cash equivalents, and $25.9 million in bank owned life insurance.

• Total deposits grew by $589.3 million, or 35.65%, since December 31, 2017.

• We ended the third quarter of 2018 with a book value of $21.20 per common share and a tangible book value of $14.70 per common share compared to $16.61 and $14.10, respectively, at December 31, 2017.

• We maintained appropriate levels of liquidity and by all regulatory measures remained “well capitalized.”

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The following summarizes the highlights of our financial performance for the three and nine month periods ended September 30, 2018 compared to same periods in 2017 (figures in the table may not match those discussed in the balance of this section due to rounding).

	Three months ended September 30,
	(Dollars in thousands)
	2018			2017			$ Change		% Change
Net income available to common stockholders	$	8,265		$	2,163		$	6,102		282.11	%
Interest income		30,753			19,492			11,261		57.77
Interest expense		5,867			3,019			2,848		94.34
Net interest income before provision for loan losses		24,886			16,472			8,414		51.08
Provision for loan losses		308			136			172		126.47
Non-interest income		2,805			2,151			654		30.40
Non-interest expense		16,662			14,640			2,022		13.81
Average total loans		2,397,054			1,600,429			796,625		49.78
Average interest earning assets		2,628,566			1,820,594			807,972		44.38
Average total interest bearing deposits		1,658,060			1,142,438			515,622		45.13
Average non-interest bearing deposits		601,559			430,326			171,233		39.79
Net interest margin		3.81	%		3.71	%				2.70
Return on average assets		1.12	%		0.43	%				160.47
Return on average equity		8.89	%		4.26	%				108.69
Basic earnings per common share	$	0.49		$	0.18		$	0.31		172.22
Diluted earnings per common share		0.48			0.18			0.30		166.67

	Nine months ended September 30,
	(Dollars in thousands)
	2018			2017			$ Change		% Change
Net income available to common stockholders	$	17,056		$	10,106		$	6,950		68.77	%
Interest income		80,246			53,181			27,065		50.89
Interest expense		14,369			8,294			6,075		73.25
Net interest income before provision for loan losses		65,877			44,887			20,990		46.76
Provision for loan losses		1,235			855			380		44.44
Non-interest income		7,788			6,002			1,786		29.76
Non-interest expense		48,732			34,102			14,630		42.90
Average total loans		2,128,896			1,475,004			653,892		44.33
Average interest earning assets		2,360,680			1,688,473			672,207		39.81
Average total interest bearing deposits		1,462,088			1,047,891			414,197		39.53
Average non-interest bearing deposits		558,923			375,237			183,686		48.95
Net interest margin		3.79	%		3.68	%				2.99
Return on average assets		0.87	%		0.73	%				19.18
Return on average equity		7.31	%		7.52	%				(2.79	)
Basic earnings per common share	$	1.12		$	0.90		$	0.22		24.44
Diluted earnings per common share		1.10			0.88			0.22		25.00

Recent Acquisitions

Bay Bancorp, Inc. On April 13, 2018, Old Line Bancshares acquired BYBK, the parent company of Bay Bank. The aggregate merger consideration was approximately $143.6 million based on the closing sales price of Old Line Bancshares’ common stock on April 13, 2018.

In connection with the merger, Bay Bank merged with and into Old Line Bank, with Old Line Bank the surviving bank.

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At April 12, 2018, BYBK had consolidated assets of approximately $662.5 million. This merger added 11 banking locations located in BYBK’s primary market areas of Baltimore City and Anne Arundel, Baltimore, Howard and Harford Counties in Maryland.

The acquired assets and assumed liabilities of BYBK were measured at estimated fair value. Management made significant estimates and exercised significant judgment in accounting for the acquisition of BYBK. Management judgmentally assigned risk ratings to loans based on appraisals and estimated collateral values, expected cash flows, prepayment speeds and estimated loss factors to measure fair value for loans. Management used quoted or current market prices to determine the fair value of BYBK’ investment securities.

DCB Bancshares, Inc. On July 28, 2017, Old Line Bancshares acquired DCB, the parent company of Damascus. The aggregate merger consideration was approximately $40.9 million based on the closing sales price of Old Line Bancshares’ common stock on July 28, 2017.

In connection with the merger, Damascus merged with and into Old Line Bank, with Old Line Bank the surviving bank.

At July 28, 2017, DCB had consolidated assets of approximately $311 million. This merger added six banking locations located in Montgomery, Frederick and Carroll Counties in Maryland.

The acquired assets and assumed liabilities of DCB were measured at estimated fair value. Management made significant estimates and exercised significant judgment in accounting for the acquisition of DCB. Management judgmentally assigned risk ratings to loans based on appraisals and estimated collateral values, expected cash flows, prepayment speeds and estimated loss factors to measure fair value for loans. Management used quoted or current market prices to determine the fair value of Damascus’ investment securities.

Strategic Plan

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 continuing our strong pattern of organic loan and deposit growth, enhancing and maintaining credit quality, collecting payments on non-accrual and past due loans, profitably disposing of certain acquired loans and other real estate owned (“OREO”), maintaining an attractive branch network, expanding fee income, generating extensions of core banking services, and using technology to maximize stockholder value. During the past few years, we have expanded by acquisition into Baltimore, Carroll, Howard, Harford and Frederick Counties and Baltimore City, Maryland, organically and through acquisitions in Montgomery and Anne Arundel Counties, Maryland, and organically in Prince George’s County, Maryland.

We use the Internet and technology to augment our growth plans. Currently, we offer our customers image technology, Internet banking with online account access and bill pay service and mobile banking. We provide selected commercial customers the ability to remotely capture their deposits and electronically transmit them to us. We will continue to evaluate cost effective ways that technology can enhance our management capabilities, products and services.

We may continue 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 also continually evaluate and consider opportunities with financial services companies or institutions with which we may become a strategic partner, merge or acquire such as we have done with Maryland Bankcorp, WSB Holdings, Regal, DCB and BYBK. We believe that, going forward, the BYBK acquisition will continue to generate increased earnings and increased returns for our stockholders, including the former stockholders of BYBK.

Although the current interest rate climate continues to present challenges for our industry, we have worked diligently towards our goal of becoming the premier community bank in Maryland. While we are uncertain about the continued pace of economic growth or the impact of the current political environment, recent tariffs imposed on imports into the United States, and the growing national debt, we remain cautiously optimistic that we have identified any problem assets, that our remaining borrowers will stay current on their loans and that we can continue to grow our balance sheet and earnings.

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Although the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) has been slowly increasing the federal funds rate since December 2015, interest rates are still at historically low levels, and if the economy remains stable, we believe that we can continue to grow total loans during the remainder of 2018 and during 2019 even with the additional expected incremental increases in the federal funds rate, which will increase market interest rates, and that we can continue to grow total deposits during the remainder of 2018 and during 2019 even with interest rates that are, and are expected to remain during the remainder of 2018 and during 2019, low by historical levels. As a result of this expected growth, we expect that net interest income will continue to increase during the remainder of 2018 and during 2019, although there can be no guarantee that this will be the case.

We also expect that salaries and benefits expenses and occupancy and equipment expenses will continue to be higher in 2018 and going forward generally than they were in 2017 as a result of including the expenses related to the former Damascus and Bay Bank employees and the staff associated with our branch in Riverdale, Maryland, that opened in June 2017, as well as the occupancy costs associated with the new Damascus, Bay Bank and Riverdale branches; such expenses may increase even further if we selectively take the opportunity to add more business development talent. We will continue to look for opportunities to reduce expenses as we did with the closing of three branches in 2016 and the July 2018 closure of two legacy Old Line Bank branches that were consolidated with former Bay Bank locations within close proximity. We believe with our existing branches, our lending staff, our corporate infrastructure and our solid balance sheet and strong capital position, we can continue to focus our efforts on improving earnings per share and enhancing stockholder value.

Critical Accounting Policies

Critical accounting policies are those that involve significant judgments and assessments by management, and which could potentially result in materially different results under different assumptions and conditions. As discussed in Old Line Bancshares’ Form 10-K for the fiscal year ended December 31, 2017, we consider our critical accounting policies to be the allowance for loan losses, other-than-temporary impairment of investment securities, goodwill and other intangible assets, income taxes, business combinations and accounting for acquired loans. There have been no material changes in our critical accounting policies during the three months ended September 30, 2018.

Results of Operations for the Three Months Ended September 30, 2018 Compared to Three Months Ended September 30, 2017.

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, interest bearing deposits and federal funds sold. Cost of funds consists of interest paid on interest bearing deposits and other borrowings. Non-interest 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.

Net interest income before the provision for loan losses for the three months ended September 30, 2018 increased $8.4 million, or 51.08%, to $24.9 million from $16.5 million for the same period in 2017. As outlined in detail in the Rate/Volume Variance Analysis, this increase was the result of an increase in total interest income, resulting from an increase in the average balance of and, to a lesser extent, the average yield on, our loans, partially offset by an increase in interest expense resulting from increases in the average rate on and, to a lesser extent, the average balance of, our interest bearing liabilities, all as discussed further below. We continue to adjust the mix and volume of interest earning assets and liabilities on the balance sheet to maintain a relatively strong net interest margin.

Total interest income increased $11.3 million, or 57.78%, to $30.8 million during the three months ended September 30, 2018 compared to $19.5 million during the three months ended September 30, 2017, almost entirely as a result of a $11.0 million increase in interest and fees on loans. The increase in interest and fees on loans is primarily the result of a $796.6 million increase in the average balance of our loans, driven primarily by an increase in the average balance of our mortgage loans, for the three months ended September 30, 2018 compared to the same period last year, as a result of both the loans we acquired in the BYBK acquisition and organic loan growth. An increase in the average yield on the loan portfolio to 4.84% for the three months ended September 30, 2018 from 4.54% during the three months ended September 30, 2017, due to higher yields on new mortgage loans and, to a lesser extent, commercial loans, also contributed to the increase in interest and fees on loans. The fair value accretion/amortization on acquired loans affects interest income, primarily due to payoffs on such acquired loans. Payoffs during the three months ended September 30, 2018 contributed a 13 basis point increase in interest income, compared to five basis points for the three months ended September 30, 2017.

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Total interest expense increased $2.8 million, or 94.33%, to $5.9 million during the three months ended September 30, 2018 from $3.0 million for the same period in 2017, as a result of increases in the average interest rate paid on and, to a lesser extent, the average balance of, our interest bearing liabilities. The average interest rate paid on all interest bearing liabilities increased to 1.20% during the three months ended September 30, 2018, from 0.89% during the three months ended September 30, 2017, due to higher rates paid on both our deposits, primarily on our time deposits but also on our money market and NOW accounts, and our borrowings, primarily our FHLB borrowings. The increases in the average rates paid on both our deposits and our FHLB borrowings is the result of us paying higher rates as a result of recent Federal Reserve Board rate increases.

The average balance of our interest bearing liabilities increased $591.5 million, or 43.83%, to $1.9 billion for the three months ended September 30, 2018 from $1.3 billion for the three months ended September 30, 2017, as a result of increases of $515.6 million, or 45.13%, in our average interest bearing deposits and $75.9 million, or 36.62%, in our average borrowings quarter over quarter. The increase in our average interest bearing deposits is due to the deposits acquired in the BYBK merger and, to a lesser extent, organic deposit growth. The increase in our average borrowings is primarily due to the use of short term FHLB advances to fund new loan originations.

Non-interest bearing deposits allow us to fund growth in interest earning assets at minimal cost. Average non-interest bearing deposits increased $171.2 million to $601.6 million for the three months ended September 30, 2018, compared to $430.3 million for the three months ended September 30, 2017, primarily as a result of the deposits we acquired in the BYBK merger.

Our net interest margin increased to 3.81% for the three months ended September 30, 2018 from 3.71% for the three months ended September 30, 2017. The net interest margin increased due to an improvement in the yield on average interest earning assets, which increased 32 basis points from 4.37% for the quarter ended September 30, 2017 to 4.69% for the quarter ended September 30, 2018, as well as an increase in non-interest bearing deposits as a source of funding, partially offset by increases in the amount of interest expense and in the average rate paid on our interest bearing liabilities, which increased 31 basis points during the three months ended September 30, 2018 compared to the same period last year. The net interest margin during the 2018 period was also affected by the amount of accretion on acquired loans. Accretion increased due to a higher amount of early payoffs on acquired loans with credit marks during the three months ended September 30, 2018 compared to the same period of 2017. The fair value accretion/amortization is recorded on pay-downs recognized during the period, which contributed 13 basis points for the three months ended September 30, 2018 compared to five basis points for the three months ended September 30, 2017. A reduction in the tax equivalent yield as a result of the tax rate change that was enacted in December 2017 in accordance with the Tax Cut and Jobs Act also had a negative impact on the net interest margin during the period. The change in the tax rate contributed to a reduction of seven basis points for the three months ended September 30, 2018 as compared to the three month period ended September 30, 2017.

During the three months ended September 30, 2018 and 2017, we continued to successfully collect payments on acquired loans that we had recorded at fair value at the acquisition date, which resulted in a positive impact in interest income. Total accretion increased by $580 thousand for the three months ended September 30, 2018, compared to the same period last year. The payments received were a direct result of our efforts to negotiate payments, sell notes or foreclose on and sell collateral after the acquisition date.

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The accretion positively impacted the yield on loans and increased the net interest margin during these periods as follows:

	Three months ended September 30,
	2018					2017
			% Impact on					% Impact on
	Accretion		Net Interest			Accretion		Net Interest
	Dollars		Margin			Dollars		Margin
Commercial loans	$	113,378		0.02	%	$	28,420		0.01	%
Mortgage loans		620,664		0.09			159,941		0.03
Consumer loans		110,220		0.02			57,514		0.01
Interest bearing deposits		70,157		0.01			88,766		0.02
Total accretion	$	914,419		0.14	%	$	334,641		0.07	%

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Average Balances, Yields and Accretion of Fair Value Adjustments Impact. The following table illustrates average balances of total interest earning assets and total interest bearing liabilities for the three months ended September 30, 2018 and 2017, showing the average distribution of assets, liabilities, stockholders’ equity and related income, expense and corresponding weighted average yields and rates. Non-accrual loans are included in total loan balances lowering the effective yield for the portfolio in the aggregate. The average balances used in this table and other statistical data were calculated using average daily balances.

	Average Balances, Interest and Yields
	2018							2017
	Average				Yield/			Average				Yield/
Three months ended September 30,	balance		Interest		Rate			balance		Interest		Rate
Assets:
Federal funds sold (1)	$	952,087	$	3,645		1.52	%	$	1,260,824	$	3,974		1.25	%
Interest bearing deposits (1)		3,813,051		34,902		3.63			1,127,347		861		0.30
Investment securities (1)(2)
U.S. Treasury		3,008,239		17,453		2.30			3,017,254		7,593		1.01
U.S. government agency		14,152,697		95,222		2.67			12,820,505		83,300		2.58
Corporate bonds		18,118,051		221,994		4.86			13,881,570		189,274		5.41
Mortgage backed securities		107,063,440		563,384		2.09			111,341,791		548,779		1.96
Municipal securities		79,535,757		640,470		3.19			74,532,759		710,453		3.70
Other equity securities		11,754,944		279,052		9.42			8,139,686		192,797		9.40
Total investment securities		233,633,128		1,817,575		3.09			223,733,565		1,732,196		3.07
Loans(1)
Commercial		325,406,078		3,844,213		4.69			198,584,446		2,056,390		4.11
Mortgage real estate		2,015,218,388		24,438,610		4.81			1,357,993,372		15,518,319		4.53
Consumer		56,429,628		955,621		6.72			43,851,679		733,422		6.64
Total loans		2,397,054,094		29,238,444		4.84			1,600,429,497		18,308,131		4.54
Allowance for loan losses		6,885,911		—					5,956,956		—
Total loans, net of allowance		2,390,168,183		29,238,444		4.85			1,594,472,541		18,308,131		4.56
Total interest earning assets(1)		2,628,566,449		31,094,566		4.69			1,820,594,277		20,045,162		4.37
Non-interest bearing cash		48,035,416							38,671,275
Goodwill and intangibles		110,861,142							26,317,526
Premises and equipment		43,626,501							40,923,913
Other assets		103,995,121							67,286,798
Total assets(1)		2,935,084,629							1,993,793,789
Liabilities and Stockholders’ Equity:
Interest bearing deposits
Savings		224,657,254		107,608		0.19			126,473,041		33,417		0.10
Money market and NOW		678,323,856		968,323		0.57			490,678,732		496,535		0.40
Time deposits		755,079,192		3,022,855		1.59			525,286,683		1,396,638		1.05
Total interest bearing deposits		1,658,060,302		4,098,786		0.98			1,142,438,456		1,926,590		0.67
Borrowed funds		283,169,572		1,768,532		2.48			207,268,687		1,092,736		2.09
Total interest bearing liabilities		1,941,229,874		5,867,318		1.20			1,349,707,143		3,019,326		0.89
Non-interest bearing deposits		601,558,786							430,325,956
		2,542,788,660							1,780,033,099
Other liabilities		23,355,099							12,465,862
Stockholders’ equity		368,940,870							201,294,828
Total liabilities and stockholders’ equity	$	2,935,084,629						$	1,993,793,789
Net interest spread(1)						3.49							3.48
Net interest margin(1)			$	25,227,248		3.81	%			$	17,025,836		3.71	%

_______________________

(1) Interest income is presented on a fully taxable equivalent (“FTE”) basis. The FTE basis adjusts for the tax favored status of these types of assets. Management believes providing this information on a FTE basis provides investors with a more accurate picture of our net interest spread and net interest income and we believe it to be the preferred industry measurement of these calculations. See “Reconciliation of Non-GAAP Measures.”

(2) Available for sale investment securities are presented at amortized cost.

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The following table describes the impact on our interest income and expense resulting from changes in average balances and average rates for the three months ended September 30, 2018 and 2017. We have allocated the change in interest income, 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 September 30,
	2018 compared to 2017
	Variance due to:
	Total			Rate			Volume
Interest earning assets:
Federal funds sold(1)	$	(329	)	$	1,256		$	(1,585	)
Interest bearing deposits		34,041			32,295			1,746
Investment Securities(1)
U.S. treasury		9,860			9,900			(40	)
U.S. government agency		11,922			6,788			5,134
Corporate bonds		32,721			(47,104	)		79,825
Mortgage backed securities		14,605			49,517			(34,912	)
Municipal securities		(69,983	)		(149,030	)		79,047
Other		86,254			1,467			84,787
Loans:(1)
Commercial		1,787,823			832,798			955,025
Mortgage		8,920,291			3,008,856			5,911,435
Consumer		222,199			31,288			190,911
Total interest income (1)		11,049,404			3,778,031			7,271,373
Interest bearing liabilities
Savings		74,191			59,796			14,395
Money market and NOW		471,788			383,016			88,772
Time deposits		1,626,217			1,338,358			287,859
Borrowed funds		675,796			451,310			224,486
Total interest expense		2,847,992			2,232,480			615,512
Net interest income(1)	$	8,201,412		$	1,545,551		$	6,655,861

_______________________

(1) Interest income is presented on a FTE basis. The FTE basis adjusts for the tax favored status of these types of assets. Management believes providing this information on a FTE basis provides investors with a more accurate picture of our net interest spread and net interest income and we believe it to be the preferred industry measurement of these calculations. See “Reconciliation of Non-GAAP Measures.”

Provision for Loan Losses. The provision for loan losses for the three months ended September 30, 2018 was $308 thousand, an increase of $172 thousand, or 126.87%, compared to $136 thousand for the three months ended September 30, 2017. This increase was primarily due to organic growth in our loan portfolio.

Management identified additional probable losses in the loan portfolio and recorded $107 thousand in charge-offs during the three month period ended September 30, 2018, compared to $239 thousand in charge-offs for the three months ended September 30, 2017. We recognized recoveries of $74 thousand during the three months ended September 30, 2018 compared to recoveries of $7 thousand during the same period in 2017.

The allowance for loan losses to gross loans held for investment was 0.29% and 0.35%, and the allowance for loan losses to non-accrual loans was 154.80% and 335.51%, at September 30, 2018 and December 31, 2017, respectively. The decrease in the allowance for loan losses as a percentage of gross loans held for investment was primarily the result of growth in the acquired loan portfolio. The decrease in the allowance for loan losses to non-accrual loans is primarily the result of the increase in our acquired non-accrual loans.

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Non-interest Income. Non-interest income totaled $2.8 million for the three months ended September 30, 2018, an increase of $654 thousand, or 30.40%, from the corresponding period of 2017 amount of $2.2 million.

The following table outlines the amounts of and changes in non-interest income for the three month periods.

	Three months ended September 30,
	2018			2017		$ Change			% Change
Service charges on deposit accounts	$	342,012		$	256,128	$	85,884			33.53	%
POS sponsorship program		711,577			—		711,577			100.00
Wire transfer fees		36,743			25,520		11,223			43.98
ATM Income		349,795			261,261		88,534			33.89
Earnings on bank owned life insurance		520,785			297,656		223,129			74.96
Loss (gain) on disposal of assets		(1,100	)		7,469		(8,569	)		(114.73	)
Write down on stock		(91,498	)		—		(91,498	)		100.00
Rental income		204,714			188,505		16,209			8.60
Income on marketable loans		411,850			482,641		(70,791	)		(14.67	)
Other fees and commissions		320,457			632,191		(311,734	)		(49.31	)
Total non-interest income	$	2,805,335		$	2,151,371	$	653,964			30.40	%

Non-interest income increased during the 2018 period primarily as a result of income of $712 thousand from our new point of sale (“POS”) sponsorship program, as well as increases in earnings on bank owned life insurance (“BOLI”), service charges on deposit accounts and ATM income, partially offset by decreases in other fees and commissions and income on marketable loans and a $91 loss on the write down of stock.

As a result of the BYBK acquisition, the Bank became a member of the POS network sponsorship program, which allows our customers to access several processing and settlement networks; when our customers use one of these networks, the Bank receives a transaction fee from the network.

Earnings on BOLI increased $223 thousand due to the $16.3 million of BOLI acquired in the BYBK acquisition and $8.5 million in new BOLI policies purchased since September 30, 2017.

The $89 thousand increase in ATM income resulting from increased income on bank debit cards, and the $86 thousand increase in service charges, are each due to the increase in the Bank’s deposit customers, primarily as a result of the BYBK acquisition.

Other fees and commissions, which consists of other loan fees and the commissions earned on loans as well as recoveries of previously charged-off loans, decreased $312 thousand during the three months ended September 30, 2018 compared to the same period last year, primarily due to lower recoveries on previously charged-off acquired loans compared to the third quarter of last year.

Income on marketable loans consists of gain on the sale of residential mortgage loans originated for sale and any fees we receive in connection with such sales. Income on marketable loans decreased $71 thousand during the three months ended September 30, 2018, compared to the same period last year due to a decrease in gains recorded on the sale of residential mortgage loans primarily as a result of a decrease in the premiums received on mortgage loans sold in the secondary market as a result on lower premium amounts on each loan sold, resulting primarily from increased competition, partially offset by an increase in the amount of loans sold. The residential mortgage division sold loans in the secondary market aggregating $28.8 million during the third quarter of 2018 compared to $21.3 million for the same period last year.

Non-interest Expense. Non-interest expense increased $2.0 million, or 13.81%, for the three months ended September 30, 2018 compared to the three months ended September 30, 2017.

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The following table outlines the amounts of and changes in non-interest expenses for the periods.

	Three months ended September 30,
	2018			2017		$ Change			% Change
Salaries and benefits	$	7,491,736		$	5,365,890	$	2,125,846			39.62	%
Occupancy and equipment		2,349,691			1,828,593		521,098			28.50
Data processing		659,926			443,453		216,473			48.82
FDIC insurance and State of Maryland assessments		278,109			281,587		(3,478	)		(1.24	)
Merger related expenses		2,282,705			3,985,514		(1,702,809	)		100.00
Core deposit premium amortization		663,685			272,354		391,331			143.68
Loss (gain) on sale of other real estate owned		26,266			4,100		22,166			100.00
OREO expense		(99,957	)		200,959		(300,916	)		(149.74	)
Director fees		172,550			148,800		23,750			15.96
Network services		127,226			133,301		(6,075	)		(4.56	)
Telephone		269,070			218,316		50,754			23.25
Other operating		2,441,331			1,757,586		683,745			38.90
Total non-interest expenses	$	16,662,338		$	14,640,453	$	2,021,885			13.81	%

Non-interest expenses increased quarter over quarter primarily as a result of increases in salaries and benefits, occupancy and equipment, core deposit premium amortization, data processing and other operating expenses for the three months ended September 30, 2018 compared to the same period of 2017, partially offset by the decrease in merger-related expenses.

The $2.1 million increase in salaries and benefits and the $521 thousand increase in occupancy and equipment expenses are primarily due to the additional staff and new branches, respectively, that we acquired in the BYBK merger.

Core deposit premium amortization increased $391 thousand as a result of the higher premiums resulting from the deposits we acquired in the BYBK acquisition.

The $216 thousand increase in data processing expenses resulted from additional customer transactions due to growth.

Other operating expenses (which includes, for example, office supplies, software expense, marketing and advertising expenses) increased $684 thousand, primarily as a result of the additional branches and staff we acquired in the BYBK merger.

Income Taxes. We had income tax expense of $2.5 million (22.91% of pre-tax income) for the three months ended September 30, 2018 compared to income tax expense of $1.7 million (43.78% of pre-tax income) for the same period in 2017. The effective tax rate decreased for the 2018 period primarily as a result of the decrease in the federal corporate tax income rate from 35% in 2017 to 21% during 2018, which was enacted as part of the Tax Cuts and Jobs Act, and the $1.7 million decrease in the amount of non-deductible merger expenses that we incurred during the three months ended September 30, 2018 compared to the same period last year.

Results of Operations for the Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017.

Net interest income before provision for loan losses for the nine months ended September 30, 2018 increased $21.0 million, or 46.76%, to $65.9 million from $44.9 million for the same period in 2017. As outlined in detail in the Rate/Volume Variance Analysis, this increase was the result of an increase in total interest income, resulting primarily from an increase in the average balance of our loans, partially offset by an increase in interest expense resulting from increases in both the average rate on and the average balance of our interest bearing liabilities, all as discussed further below.

Total interest income increased $27.1 million, or 50.89%, to $80.2 million during the nine months ended September 30, 2018 compared to $53.2 million during the nine months ended September 30, 2017, almost entirely as a result of a $26.1 million increase in interest and fees on loans. The increase in interest and fees on loans is primarily the result of a $653.9 million increase in the average balance of our loans during the nine months ended September 30, 2018 compared to the same period in 2017, as a result of the loans acquired in the BYBK and DCB acquisitions as well as strong organic loan growth. In addition, the average yield on the loan portfolio increased to 4.76% for the nine months ended September 30, 2018 from 4.53% during the nine months ended September 30, 2017 due to higher yields on new mortgage and commercial loans, although this had much less of an impact on the total increase in interest income than did the increase in the average balance of our loans. The fair value accretion/amortization on acquired loans affects interest income, primarily due to payoffs on such acquired loans. Payoffs during the nine months ended September 30, 2018 contributed a 12 basis point increase in interest income, as compared to seven basis points for the nine months ended September 30, 2017.

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A $690 thousand increase in interest earned on investment securities also contributed to the increase in total interest income. This increase was the result of increases in the both the average yield on and the average balance of our securities. The average yield on our investment securities increased 20 basis points during the 2018 period compared to the same period of 2017 as a result of increases in the average rates on our MBS and our U.S. Treasury, agency, and other equity securities, partially offset by decreases in the average yield on our municipal securities and corporate bonds. The average balance of our investment securities increased period over period as a result of increases in the average balance of our corporate bonds and municipal securities, partially offset by a decrease in the average balance of our MBS.

Total interest expense increased $6.1 million, or 73.24%, to $14.4 million during the nine months ended September 30, 2018 from $8.3 million for the same period in 2017, as a result of increases in both the average rate paid on and the average balance of our interest bearing liabilities. The average interest rate paid on all interest bearing liabilities increased to 1.11% during the nine months ended September 30, 2018 from 0.87% during the nine months ended September 30, 2017, due primarily to higher interest rates paid on our borrowings, time deposits, and money market and NOW accounts.

The average balance of our interest bearing liabilities increased $456.8 million, or 35.83%, to $1.7 billion for the nine months ended September 30, 2018 from $1.3 billion for the nine months ended September 30, 2017, as a result of increases of $414.2 million, or 39.53%, in our average interest bearing deposits and $42.6 million, or 18.77%, in our average borrowings period over period. The increase in our average interest bearing deposits is primarily due to the deposits acquired in the BYBK and DCB acquisitions. The increase in our average borrowings is primarily due to the use of short-term FHLB advances to fund new loan originations.

As a result of the growth generated primarily from the DCB and BYBK acquisitions, and our branch network from the efforts of our commercial loan officers in working with loan clients to move their commercial deposits to Old Line Bank, average non-interest bearing deposits increased $183.7 million to $558.9 million for the nine months ended September 30, 2018, compared to $375.2 million for the nine months ended September 30, 2017.

Our net interest margin increased to 3.79% for the nine months ended September 30, 2018 from 3.68% for the nine months ended September 30, 2017. The net interest margin increased due to an improvement in the yield on average interest earning assets, which increased 26 basis points from 4.34% for the nine months ended September 30, 2017 to 4.60% for the nine months ended September 30, 2018, as well as an increase in non-interest bearing deposits as a source of funding, partially offset by the increases in the amount of interest expense and in the average rate paid on our interest bearing liabilities, which increased 24 basis points during the nine months ended September 30, 2018 compared to the same period last year. The net interest margin during 2018 was also affected by the amount of accretion on acquired loans. Accretion increased due to a higher amount of early payoffs on acquired loans with credit marks during the nine months ended September 30, 2018 compared to the same period of 2017. The fair value accretion/amortization is recorded on pay-downs recognized during the period, which contributed 12 basis points for the nine months ended September 30, 2018 compared to eight basis points for the nine months ended September 30, 2017. A reduction in the tax equivalent yield as a result of the tax rate change that was enacted in December 2017 in accordance with the Tax Cut and Jobs Act also had a negative impact on the net interest margin during the period. The change in the tax rate contributed to a reduction of seven basis points for the nine months ended September 30, 2018 as compared to the nine month period ended September 30, 2017.

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During the nine months ended September 30, 2018 and 2017, we continued to successfully collect payments on acquired loans that we had recorded at fair value at the acquisition date, which resulted in a positive impact in interest income. Total accretion increased by $1.4 million for the nine months ended September 30, 2018, as compared to the same period last year. The higher level of accretion on acquired loans was due to a higher level of early payoffs on acquired loans with credit marks and the higher level of acquired loans with accreting marks.

The accretion positively impacted the yield on loans and increased the net interest margin during these periods as follows:

	Nine months ended September 30,
	2018					2017
			% Impact on					% Impact on
	Accretion		Net Interest			Accretion		Net Interest
	Dollars		Margin			Dollars		Margin
Commercial loans	$	370,902		0.02	%	$	32,120		—	%
Mortgage loans		1,451,314		0.08			748,109		0.06
Consumer loans		334,338		0.02			67,830		0.01
Interest bearing deposits		221,221		0.01			153,340		0.01
Total accretion	$	2,377,775		0.13	%	$	1,001,399		0.08	%

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Average Balances, Yields and Accretion of Fair Value Adjustments Impact. The following table illustrates average balances of total interest earning assets and total interest bearing liabilities for the nine months ended September 30, 2018 and 2017, showing the average distribution of assets, liabilities, stockholders’ equity and related income, expense and corresponding weighted average yields and rates. Non-accrual loans are included in total loan balances lowering the effective yield for the portfolio in the aggregate. The average balances used in this table and other statistical data were calculated using average daily balances.

	Average Balances, Interest and Yields
	2018							2017
	Average				Yield/			Average				Yield/
Nine months ended September 30,	balance		Interest		Rate			balance		Interest		Rate
Assets:
Federal funds sold (1)	$	641,625	$	7,287		1.52	%	$	619,171	$	5,594		1.21	%
Interest bearing deposits (1)		4,556,328		34,909		1.02			1,138,256		870		0.10
Investment securities (1)(2)
U.S. Treasury		3,184,060		46,190		1.94			3,024,635		20,540		0.91
U.S. government agency		13,957,146		278,303		2.67			10,688,042		205,813		2.57
Corporate bonds		16,883,969		643,580		5.10			10,641,774		428,153		5.38
Mortgage backed securities		108,259,016		1,690,299		2.09			113,821,895		1,657,619		1.95
Municipal securities		79,767,641		1,927,042		3.23			70,616,753		2,039,585		3.86
Other equity securities		10,945,092		894,447		10.93			8,875,175		437,854		6.60
Total investment securities		232,996,924		5,479,861		3.14			217,668,274		4,789,564		2.94
Loans(1)
Commercial		285,941,800		10,273,526		4.80			182,017,682		5,414,494		3.98
Mortgage real estate		1,783,718,356		62,548,306		4.69			1,274,851,962		43,711,489		4.58
Consumer		59,235,553		2,945,729		6.65			18,134,018		859,704		6.34
Total loans		2,128,895,709		75,767,561		4.76			1,475,003,662		49,985,687		4.53
Allowance for loan losses		6,410,911		—					5,955,985		—
Total loans, net of allowance		2,122,484,798		75,767,561		4.77			1,469,047,677		49,985,687		4.55
Total interest earning assets(1)		2,360,679,675		81,289,618		4.60			1,688,473,378		54,781,715		4.34
Non-interest bearing cash		44,005,578							32,229,686
Goodwill and intangibles		81,303,285							17,581,658
Premises and equipment		42,778,668							37,765,947
Other assets		90,534,120							65,102,766
Total assets(1)		2,619,301,326							1,841,153,435
Liabilities and Stockholders’ Equity:
Interest bearing deposits
Savings		193,371,948		245,133		0.17			111,211,961		95,308		0.11
Money market and NOW		616,787,570		2,478,336		0.54			451,502,260		1,263,078		0.37
Time deposits		651,928,973		6,828,286		1.40			485,176,995		3,816,254		1.05
Total interest bearing deposits		1,462,088,491		9,551,755		0.87			1,047,891,216		5,174,640		0.66
Borrowed funds		269,426,578		4,817,613		2.39			226,845,847		3,119,758		1.84
Total interest bearing liabilities		1,731,515,069		14,369,368		1.11			1,274,737,063		8,294,398		0.87
Non-interest bearing deposits		558,923,100							375,236,607
		2,290,438,169							1,649,973,670
Other liabilities		17,072,083							11,543,009
Stockholders’ equity		311,791,074							179,636,756
Total liabilities and stockholders’ equity	$	2,619,301,326						$	1,841,153,435
Net interest spread(1)						3.49							3.47
Net interest margin(1)			$	66,920,250		3.79	%			$	46,487,317		3.68	%

_______________________

(1) Interest income is presented on a FTE basis. The FTE basis adjusts for the tax favored status of these types of assets. Management believes providing this information on a FTE basis provides investors with a more accurate picture of our net interest spread and net interest income and we believe it to be the preferred industry measurement of these calculations. See “Reconciliation of Non-GAAP Measures.”

(2) Available for sale investment securities are presented at amortized cost.

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The following table describes the impact on our interest income and expense resulting from changes in average balances and average rates for the nine months ended September 30, 2018 and 2017. We have allocated the change in interest income, interest expense and net interest income due to both volume and rate proportionately to the rate and volume variances.

Rate/Volume Variance Analysis

	Nine months ended September 30,
	2018 compared to 2017
	Variance due to:
	Total			Rate			Volume
Interest earning assets:
Federal funds sold(1)	$	1,693		$	1,530		$	163
Interest bearing deposits		34,039			27,385			6,654
Investment Securities(1)
U.S. treasury		25,650			24,786			864
U.S. government agency		72,490			10,170			62,320
Corporate bond		215,427			(30,784	)		246,211
Mortgage backed securities		32,680			128,395			(95,715	)
Municipal securities		(112,543	)		(402,141	)		289,598
Other		456,593			360,621			95,972
Loans:(1)
Commercial		4,859,032			1,586,095			3,272,937
Mortgage		18,836,817			1,382,984			17,453,833
Consumer		2,086,025			58,253			2,027,772
Total interest income (1)		26,507,903			3,119,249			23,388,654
Interest bearing liabilities
Savings		149,825			74,107			75,718
Money market and NOW		1,215,258			756,780			458,478
Time deposits		3,012,032			1,701,343			1,310,689
Borrowed funds		1,697,855			1,155,708			542,147
Total interest expense		6,074,970			3,687,938			2,387,032
Net interest income(1)	$	20,432,933		$	(568,689	)	$	21,001,622

_______________________

(1) Interest income is presented on a FTE basis. The FTE basis adjusts for the tax favored status of these types of assets. Management believes providing this information on a FTE basis provides investors with a more accurate picture of our net interest spread and net interest income and we believe it to be the preferred industry measurement of these calculations. See “Reconciliation of Non-GAAP Measures.”

Provision for Loan Losses. The provision for loan losses for the nine months ended September 30, 2018 was $1.2 million, an increase of $380 thousand, or 44.43%, compared to $855 thousand for the nine months ended September 30, 2017. This increase is due to the organic growth in our loan portfolio.

Management identified additional probable losses in the loan portfolio and recorded $273 thousand in charge-offs for the nine months ended September 30, 2018 compared to charge-offs of $1.3 million for the nine months ended September 30, 2017. We recognized recoveries of $98 thousand during the nine months ended September 30, 2018 compared to $36 thousand for the same period in 2017.

Non-interest Income. Non-interest income totaled $7.8 million for the nine months ended September 30, 2018, an increase of $1.8 million, or 29.77%, from the corresponding period of 2017 amount of $6.0 million.

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The following table outlines the amounts of and changes in non-interest income for the nine month periods.

	Nine months ended September 30,
	2018			2017		$ Change			% Change
Service charges on deposit accounts	$	926,343		$	664,654	$	261,689			39.37	%
POS Sponsorship program		1,385,079			—		1,385,079			100.00
Wire transfer fees		98,887			68,035		30,852			45.35
ATM income		1,002,783			656,651		346,132			52.71
Gain on sales or calls of investment securities		—			35,258		(35,258	)		(100.00	)
Earnings on bank owned life insurance		1,274,777			861,112		413,665			48.04
Gain on disposal of assets		13,266			120,063		(106,797	)		(88.95	)
Gain on sale of loans		—			94,714		(94,714	)		100.00
Write down on stock		(152,496	)		—		(152,496	)		100.00
Rental income		602,208			498,961		103,247			20.69
Income on marketable loans		1,342,201			1,840,218		(498,017	)		(27.06	)
Other fees and commissions		1,295,359			1,162,058		133,301			11.47
Total non-interest income	$	7,788,407		$	6,001,724	$	1,786,683			29.77	%

Non-interest income increased during the 2018 period primarily as a result of income of $1.4 million from our new POS sponsorship program, as well as increases in earnings on BOLI, ATM income and service charges on deposit accounts, partially offset by decreases in income on marketable loans, gain on sale of loans, and gain on disposal of assets and a loss on the write down of stock.

As a result of the BYBK acquisition, the Bank became a member of the POS network sponsorship program, which allows our customers to access several processing and settlement networks; when our customers use one of these networks, the Bank receives a transaction fee from the network.

The $414 thousand increase in earnings on bank owned life insurance is due to the increase in the balance of BOLI due to the $16.3 million of BOLI acquired in the BYBK acquisition and $8.5 million in new BOLI policies purchased since September 30, 2017.

The $346 thousand increase in ATM income resulting from increased income on bank debit cards, and the $262 thousand increase in service charges, are each due to the increase in Bank deposit customers, primarily as a result of the DCB and BYBK acquisitions.

Income on marketable loans decreased $498 thousand during the nine months ended September 30, 2018, compared to the same period last year due to a decrease in gains recorded on the sale of residential mortgage loans primarily as a result of a decrease in the premiums on loans sold in the secondary market as a result on lower premium amounts on each loan sold, resulting primarily from increased competition, partially offset by an increase in the amount of loans sold. The residential mortgage division originated loans in the secondary market aggregating $77.1 million during the nine months ended September 30, 2018 compared to $73.1 million for the same period last year.

Income on marketable loans decreased $71 thousand during the three months ended September 30, 2018, compared to the same period last year due to a decrease in gains recorded on the sale of residential mortgage loans primarily as a result of a decrease in the premiums received on mortgage loans sold in the secondary market as a result on lower premium amounts on each loan sold, resulting primarily from increased competition, partially offset by an increase in the amount of loans sold. The residential mortgage division sold loans in the secondary market aggregating $28.8 million during the third quarter of 2018 compared to $21.3 million for the same period last year.

The $95 thousand in gain on sale of loans (other than residential mortgage loans held for sale) during the nine month period ended September 30, 2017, is due to the sale of one SBA loan during the period, whereas we did not sell any portfolio loans during the 2018 period.

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The $107 thousand decrease in gain on disposal of assets is due to the sale during 2017 of our previously-owned location, the Accokeek branch, whereas we had no such sales during the 2018 period.

Non-interest Expense. Non-interest expense increased $14.6 million, or 42.90%, for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017.

The following table outlines the amounts of and changes in non-interest expenses for the periods.

	Nine months ended September 30,
	2018		2017			$ Change			% Change
Salaries and benefits	$	20,178,521	$	15,284,057		$	4,894,464			32.02	%
Occupancy and equipment		6,572,733		5,137,273			1,435,460			27.94
Data processing		1,971,747		1,161,647			810,100			69.74
FDIC insurance and State of Maryland assessments		786,506		799,700			(13,194	)		(1.65	)
Merger and integration		9,404,507		3,985,514			5,418,993			100.00
Core deposit premium amortization		1,516,734		651,613			865,121			132.77
Gain on sale of other real estate owned		80,738		(13,589	)		94,327			(694.14	)
OREO expense		113,032		256,170			(143,138	)		(55.88	)
Director fees		539,750		485,700			54,050			11.13
Network services		302,038		437,140			(135,102	)		(30.91	)
Telephone		725,976		598,618			127,358			21.28
Other operating		6,539,421		5,318,191			1,221,230			22.96
Total non-interest expenses	$	48,731,703	$	34,102,034		$	14,629,669			42.90	%

Non-interest expenses increased period over period primarily as a result of increases in merger and integration expenses and salaries and benefits, as well as increases in core deposit premium amortization, occupancy and equipment, data processing and other operating expenses, partially offset by decreases in OREO expense and network services, for the nine months ended September 30, 2018 compared to the same nine month period of 2017.

Merger and integration expenses increased $5.4 million period over period; we incurred merger and integration expenses of $9.4 million during the 2018 period in connection with the BYBK acquisition, compared to $4.0 of merger and integration expenses during the 2017 period in connection with the DCB acquisition.

The increases of $4.9 million in salaries and benefits and $1.4 million in occupancy and equipment expenses are primarily due to the additional staff and new branches, respectively, that we acquired in the DCB and BYBK mergers.

Core deposit amortization increased $865 thousand as a result of the higher premiums resulting from the deposits we acquired in the DCB and BYBK acquisitions.

Data processing expenses increased $810 thousand for the 2018 period as a result of additional customer transactions due to growth.

Other operating expenses increased $1.2 million primarily as a result of the additional branches and staff we acquired in the BYBK and DCB mergers.

The decrease in OREO expenses is the result of real estate taxes collected on one OREO property.

Income Taxes. We had income tax expense of $6.6 million (28.03% of pre-tax income) for the nine months ended September 30, 2018 compared to income tax expense of $5.8 million (36.57% of pre-tax income) for the same period in 2017. The effective tax rate decreased for the 2018 period primarily as a result of the decrease in the federal corporate tax income rate from 35% to 21% enacted as part of the Tax Cuts and Jobs Act, although the impact of the lower tax rate was partially offset by our incurring an additional $5.4 million of non-deductible merger expenses during the nine months ended September 30, 2018 compared to the same period of 2017.

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Analysis of Financial Condition

Investment Securities. Our portfolio consists primarily of investment grade securities including U.S. Treasury securities, U.S. government agency securities, U.S. government sponsored entity securities, corporate bonds, securities issued by states, counties and municipalities, MBS, certain equity securities (recorded at cost), Federal Home Loan Bank stock, Maryland Financial Bank stock, and Atlantic Community Bankers Bank stock.

We have prudently managed our investment portfolio to maintain liquidity and safety. The portfolio provides a source of liquidity and collateral for borrowings, as well as a means of diversifying our earning asset portfolio. While we usually intend to hold the investment securities until maturity, currently we classify all of our investment securities as available for sale. This classification provides us the opportunity to divest of securities that may no longer meet our liquidity objectives. We account for investment securities at fair value and report the unrealized appreciation and depreciation as a separate component of stockholders’ equity, net of income tax effects. Although we may sell securities to reposition the portfolio, generally, we invest in securities for the yield they produce and not to profit from trading the securities. We continually evaluate our investment portfolio to ensure it is adequately diversified, provides sufficient cash flow and does not subject us to undue interest rate risk. There are no trading securities in our portfolio.

The investment securities at September 30, 2018 amounted to $216.4 million, a decrease of $2.0 million, or 0.91%, from the December 31, 2017 amount of $218.4 million. As outlined above, at September 30, 2018, all securities are classified as available for sale.

The fair value of available for sale securities included net unrealized losses of $10.1 million at September 30, 2018 (reflected as $7.3 million net of taxes) compared to net unrealized losses of $3.9 million (reflected as $2.3 million net of taxes) at December 31, 2017. The decline in the value of the investment securities is due to the increase in market interest rates, which resulted in a decrease in bond values. We have evaluated securities with unrealized losses for an extended period of time and determined that all such losses are temporary because, at this point in time, we expect to hold them until maturity. We have no intent or plan to sell these securities, it is not likely that we will have to sell these securities and we have not identified any portion of the loss that is a result of credit deterioration in the issuer of the security. As the maturity date moves closer and/or interest rates decline, any unrealized losses in the portfolio will decline or dissipate.

Loan Portfolio. Net of allowance, unearned fees and origination costs, loans held for investment increased $688.2 million, or 40.57%, during the nine months ended September 30, 2018, bringing the balance to $2.4 billion at September 30, 2018 compared to $1.7 billion at December 31, 2017. The loan growth during the nine months ending September 30, 2018 was due to the loans that we acquired from BYBK as well as organic growth resulting from the addition of several experienced loan officers to our team over the last year and our enhanced presence in our market area. Commercial real estate loans increased by $362.6 million, residential real estate loans increased by $203.5 million, commercial and industrial loans increased by $125.8 million, and consumer loans decreased by $3.5 million from their respective balances at December 31, 2017 Excluding the loans acquired in the BYBK Bacquisition, net loans held for investment during the nine month period increased by $194.4 million; the acquisition of the Bay Bank loan portfolio accounted for approximately $494 million of the growth in net loans held for investment during the nine month period ended September 30, 2018.

Most of our lending activity occurs within the state of Maryland in the suburban Washington, D.C. and Baltimore market areas in Anne Arundel, Baltimore, Baltimore County, Calvert, Carroll, Charles, Frederick, Harford, Howard, Montgomery, Prince George’s and St. Mary’s Counties. The majority of our loan portfolio consists of commercial real estate loans and residential real estate loans.

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The following table summarizes the composition of the loan portfolio held for investment by dollar amount at the dates indicated:

	September 30, 2018									December 31, 2017
	Legacy (1)			Acquired			Total			Legacy (1)			Acquired			Total
Commercial Real Estate
Owner Occupied	$	275,339,040		$	152,433,104		$	427,772,144		$	268,128,087		$	87,658,855		$	355,786,942
Investment		601,113,264			197,662,549			798,775,813			485,536,921			52,926,739			538,463,660
Hospitality		148,312,837			13,265,447			161,578,284			164,193,228			7,395,186			171,588,414
Land and A&D		91,987,559			24,883,469			116,871,028			67,310,660			9,230,771			76,541,431
Residential Real Estate
First Lien-Investment		90,285,266			50,629,554			140,914,820			79,762,682			21,220,518			100,983,200
First Lien-Owner Occupied		98,966,442			142,135,278			241,101,720			67,237,699			62,524,794			129,762,493
Residential Land and A&D		49,708,005			18,494,088			68,202,093			35,879,853			6,536,160			42,416,013
HELOC and Jr. Liens		20,581,673			43,445,979			64,027,652			21,520,339			16,019,418			37,539,757
Commercial and Industrial		215,729,656			97,412,805			313,142,461			154,244,645			33,100,688			187,345,333
Consumer		17,671,242			38,697,723			56,368,965			10,758,589			49,082,751			59,841,340
Total loans		1,609,694,984			779,059,996			2,388,754,980			1,354,572,703			345,695,880			1,700,268,583
Allowance for loan losses		(6,698,812	)		(281,238	)		(6,980,050	)		(5,738,534	)		(182,052	)		(5,920,586	)
Deferred loan costs, net		2,804,884			—			2,804,884			2,013,434			—			2,013,434
Net loans	$	1,605,801,056		$	778,778,758		$	2,384,579,814		$	1,350,847,603		$	345,513,828		$	1,696,361,431

_______________________

(1) As a result of the acquisitions of Maryland Bankcorp, WSB Holdings, Regal Bancorp, DCB and Bay Bancorp, we have segmented the portfolio into two components, “Legacy” loans originated by Old Line Bank and “Acquired” loans acquired from MB&T, WSB, Regal Bank, Damascus and Bay Bank.

Bank Owned Life Insurance (“BOLI”). At September 30, 2018, we have invested $67.5 million in life insurance policies on our executive officers, other officers of Old Line Bank, retired officers of MB&T and former officers of WSB, Regal Bank, Damascus and Bay Bank. Bank owned life insurance increased $25.9 million during the nine months ended September 30, 2018, primary due to $16.3 million of bank owned life insurance acquired in the BYBK acquisition and $8.5 million in new BOLI policies purchased since December 31, 2017. The increase also includes interest earned on these policies. Gross earnings on BOLI were $1.3 million during the nine months ended September 30, 2018, which earnings were partially offset by $209 thousand in expenses associated with the policies, for total net earnings of $1.1 million in 2018. We anticipate that the earnings on these policies will continue to help offset our employee benefit expenses as well as our obligations under our salary continuation agreements and supplemental life insurance agreements that we have entered into with our executive officers and that MB&T and WSB had entered into with their executive officers. There are no post-retirement death benefits associated with the BOLI policies owned by Old Line Bank prior to the acquisition of MB&T. We have accrued a $200 thousand liability associated with the post-retirement death benefits of the BOLI policies acquired from MB&T and there are no such benefits related to the BOLI policies acquired from WSB, Regal Bank, Damascus or BYBK.

Annuity Plan. Our annuity plan is an interest earning investment that we purchased to fund a new supplemental retirement plan and amendments to existing retirement plans that will provide lifetime payments to two of our executive officers; we entered into these new agreements as of May 7, 2018, as described in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018. We invested $6.0 million during the fourth quarter of 2017 and the annuity plan was effective January 1, 2018. The annuity plan was valued at $6.3 million at September 30, 2018.

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Deposits. Deposits increased $589.3 million during the nine months ended September 30, 2018 to $2.2 billion, compared to $1.7 billion at December 31, 2017. The increase is comprised of a $129.5 million increase in our non-interest bearing deposits and a $459.8 million increase in our interest bearing deposits. These increases are due predominantly to the deposits acquired from BYBK.

The following table outlines the changes in interest bearing deposits:

	September 30,		December 31,
	2018		2017		$ Change		% Change
	(Dollars in thousands)
Certificates of deposit	$	775,143	$	530,027	$	245,116		46.25	%
Interest bearing checking		664,394		538,102		126,292		23.47
Savings		221,365		132,971		88,394		66.48
Total	$	1,660,902	$	1,201,100	$	459,802		38.28	%

We acquire brokered certificates of deposit and money market accounts through the Promontory Interfinancial Network (“Promontory”). Through this deposit matching network and its certificate of deposit account registry service (CDARS) and money market account service, we have the ability to offer our customers access to Federal Deposit Insurance Corporation (the “FDIC”) insured deposit products in aggregate amounts exceeding current insurance limits. When we place funds through Promontory on behalf of a customer, we receive matching deposits through the network’s reciprocal deposit program. We can also place deposits through this network without receiving matching deposits. At September 30, 2018, we had $47.7 million in CDARS and $165.5 million in money market accounts through Promontory’s reciprocal deposit program compared to $49.2 million and $144.9 million, respectively, at December 31, 2017.

We do not currently have any brokered certificates of deposits other than CDARS. Old Line Bank did not obtain any brokered certificates of deposit during the nine months ended September 30, 2018. We may, however, use brokered deposits in the future as an element of our funding strategy if and when required to maintain an acceptable loan to deposit ratio.

Borrowings. Short term borrowings consist of short term borrowings with the FHLB and short term promissory notes issued to Old Line Bank’s commercial customers as an enhancement to the basic non-interest bearing demand deposit account. This service electronically sweeps excess funds from the customer’s account into a short term promissory note with Old Line Bank. These obligations are payable on demand and are secured by investments. At September 30, 2018, we had $235.0 million outstanding in short term FHLB borrowings, compared to $155.0 million at December 31, 2017. At September 30, 2018 and December 31, 2017, we had no unsecured promissory notes and $37.5 million and $37.6 million, respectively, in secured promissory notes.

Long term borrowings at September 30, 2018 consist primarily of the Notes in the amount of $35.0 million (fair value of $34.1 million) due in 2026. The initial interest rate on the Notes is 5.625% per annum from August 15, 2016 to August 14, 2021, payable semi-annually on each February 15 and August 15. Beginning August 15, 2021, the interest rate will reset quarterly to an interest rate per annum equal to the then current three-month LIBOR rate plus 450.2 basis points, payable quarterly on each February 15, May 15, August 15 and November 15 through maturity or early redemption. Also included in long term borrowings are trust preferred subordinated debentures totaling $4.1 million (net of $2.6 million fair value adjustment) we acquired in the Regal acquisition. The trust preferred subordinated debentures consists of two trusts – Trust 1 in the amount of $4.0 million (fair value adjustment of $1.4 million) with an interest rate of floating 90-day LIBOR plus 2.85%, maturing in 2034 and Trust 2 in the amount of $2.5 million (fair value adjustment $1.2 million) with an interest rate of floating 90-day LIBOR plus 1.60%, maturing in 2035.

Liquidity and Capital Resources. 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 regulatory guidelines. As further discussed below, we have credit lines, unsecured and secured, available from several correspondent banks totaling $70.0 million. Additionally, we may borrow funds from the FHLB and the Federal Reserve Bank of Richmond. 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 available for sale investment securities or pledge investment securities as collateral 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 flow from the investment and loan portfolios.

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Our immediate sources of liquidity are cash and due from banks, federal funds sold and deposits in other banks. On September 30, 2018, we had $45.8 million in cash and due from banks, $3.5 million in interest bearing accounts, and $1.0 million in federal funds sold. As of December 31, 2017, we had $33.6 million in cash and due from banks, $1.4 million in interest bearing accounts, and $257 thousand in federal funds sold.

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.

We did not have any unusual liquidity requirements during the nine months ended September 30, 2018. Although we plan for various liquidity scenarios, if turmoil in the financial markets occurs and our depositors lose confidence in us, we could experience liquidity issues.

Old Line Bancshares has available a $5.0 million unsecured line of credit at September 30, 2018. In addition, Old Line Bank has $65.0 million in available lines of credit at September 30, 2018, consisting of overnight federal funds from its correspondent banks. Old Line Bank has an additional secured line of credit from the FHLB of $644.5 million at September 30, 2018. 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, we have provided collateral to support up to $421.5 million in lendable collateral value for FHLB borrowings. We may increase availability by providing additional collateral. Additionally, we have overnight repurchase agreements sold to Old Line Bank’s customers and have provided collateral in the form of investment securities to support the $37.5 million in repurchase agreements.

In July 2013, the Federal Reserve Board and the FDIC adopted rules implementing Basel III. Under the rules, which became effective January 1, 2015, minimum requirements increased for both the quantity and quality of capital held by Old Line Bancshares and Old Line Bank. Among other things, the rules established a new minimum common equity Tier 1 capital for risk-weighted assets ratio of 4.5%, a minimum Tier 1 risk-based capital ratio of 6.0%, a minimum total risk-based capital ratio requirement of 8.0% and a minimum Tier 1 leverage ratio of 4.0%. These capital requirements also included changes in the risk-weights of certain assets to better reflect credit risk and other risk exposures. Additionally, subject to a transition schedule, the rule limits a banking organization’s ability to make capital distributions, engage in share repurchases and pay certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. Implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will increase ratably each subsequent January 1, until it reaches 2.5% on January 1, 2019. Old Line Bank has elected to permanently opt out of the inclusion of accumulated other comprehensive income in our capital calculations, as permitted by the regulations. This opt-out will reduce the impact of market volatility on our regulatory capital levels.

As of September 30, 2018, Old Line Bancshares’ capital levels remained characterized as “well-capitalized” under the rules.

Current regulations require subsidiaries of a financial institution to be separately capitalized and require investments in and extensions of credit to any subsidiary engaged in activities not permissible for a bank to be deducted in the computation of the institution’s regulatory capital. Regulatory capital and regulatory assets below also reflect increases of $10.1 million and $7.3 million, respectively, which represents unrealized losses (after-tax for capital additions and pre-tax for asset additions, respectively) on mortgage-backed securities and investment securities classified as available for sale. In addition, the risk-based capital reflects an increase of $7.0 million for the general loan loss reserve during the nine months ended September 30, 2018.

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As of September 30, 2018, Old Line Bank met all capital adequacy requirements to be considered well capitalized. There were no conditions or events since the end of the third quarter of 2018 that management believes have changed Old Line Bank’s classification as well capitalized.

The following table shows Old Line Bank’s regulatory capital ratios and the minimum capital ratios currently required by its banking regulator to be “well capitalized” at September 30, 2018.

						Minimum capital					To be well
	Actual					adequacy					capitalized
September 30, 2018	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in 000’s)
Common equity tier 1 (to risk-weighted assets)	$	288,158		11.06	%	$	117,198		4.5	%	$	169,286		6.5	%
Total capital (to risk weighted assets)	$	295,234		11.34	%	$	208,352		8	%	$	260,440		10	%
Tier 1 capital (to risk weighted assets)	$	288,158		11.06	%	$	156,264		6	%	$	208,352		8	%
Tier 1 leverage (to average assets)	$	288,158		10.22	%	$	112,799		4	%	$	140,999		5	%

Our management believes that, under current regulations, and eliminating the assets of Old Line Bancshares, Old Line Bank remains well capitalized and will continue to meet its minimum capital requirements in the foreseeable future. However, events beyond our control, such as a shift in interest rates or an economic downturn in areas where we extend credit, could adversely affect future earnings and, consequently, our ability to meet minimum capital requirements in the future.

Asset Quality

Overview. Management performs reviews of all delinquent loans and foreclosed assets and directs relationship officers to work with customers to resolve potential credit issues in a timely manner. Management reports to the Bank’s Loan Committee weekly and requests its approval for loans that require such approval pursuant to our loan policies. Management also reports to the board of directors with respect to certain loan matters on a monthly basis. Such reports include, among other things, information on delinquent loans and foreclosed real estate. We have formal action plans on criticized assets and provide status reports on OREO on a quarterly basis. These action plans include our actions and plans to cure the delinquent status of the loans and to dispose of foreclosed properties. The Loan Committee consists of four executive officers and four non-employee members of the board of directors.

We classify any property acquired as a result of foreclosure on a mortgage loan as OREO and record it at the lower of the unpaid principal balance or fair value at the date of acquisition and subsequently carry the property 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 generally on an annual basis and external inspections on at least a quarterly basis.

As required by ASC Topic 310-Receivables and ASC Topic 450-Contingencies, we measure all impaired loans, which consist of all modified loans (TDRs) and other loans for which collection of all contractual principal and interest is not probable, 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 impairment test to these loans. We write off impaired loans when collection of the loan is doubtful.

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Potential problem loans represent those loans with a well-defined weakness and where information about possible credit problems of a borrower has caused management to have serious doubts about the borrower’s ability to comply with present repayment terms. These loans do not meet the criteria for, and are therefore not included in, nonperforming assets. Management, however, classifies potential problem loans as either special mention, watch, or substandard. These loans were considered in determining the adequacy of the allowance for loan losses and are closely and regularly monitored to protect our interests. Potential problem loans, which are not included in nonperforming assets, amounted to $29.8 million at September 30, 2018 compared to $28.9 million at December 31, 2017. At September 30, 2018, we had $13.7 million and $16.1 million, respectively, of potential problem loans attributable to our legacy and acquired loan portfolios, compared to $16.4 million and $12.5 million, respectively, at December 31, 2017.

Acquired Loans. Loans acquired in mergers are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan losses. Generally accepted accounting principles require that we record acquired loans at fair value, which includes a discount for loans with credit impairment. These loans are not performing according to their contractual terms and meet our definition of a nonperforming loan. The discounts that arise from recording these loans at fair value were due to credit quality. Although we do not accrue interest income at the contractual rate on these loans, we may accrete these discounts to interest income as a result of pre-payments that exceed our expectations or payment in full of amounts due. Purchased, credit-impaired loans that perform consistent with the accretable yield expectations are not reported as non-accrual or nonperforming.

We recorded at fair value all acquired loans from MB&T, WSB, Regal Bank, Damascus and Bay Bank. The fair value of the acquired loans includes expected loan losses, and as a result there was no allowance for loan losses recorded for acquired loans at the time of acquisition. Accordingly, the existence of the acquired loans reduces the ratios of the allowance for loan losses to total gross loans and the allowance for loan losses to non-accrual loans, and this measure is not directly comparable to prior periods. Similarly, net loan charge-offs are normally lower for acquired loans since we recorded these loans net of expected loan losses. Therefore, the ratio of net charge-offs during the period to average loans outstanding is reduced as a result of the existence of acquired loans, and the measures are not directly comparable to prior periods. Other institutions may not have acquired loans, and therefore there may be no direct comparability of these ratios between and among other institutions when compared in total.

Applicable accounting guidance requires that if we experience a decrease in the expected cash flows of a loan subsequent to its acquisition date, we establish an allowance for loan losses for such acquired loan with decreased cash flows. At September 30, 2018, there was $281 thousand of allowance reserved for potential loan losses on acquired loans compared to $182 thousand at December 31, 2017.

Nonperforming Assets. As of September 30, 2018, our nonperforming assets totaled $8.5 million and consisted of $4.5 million of nonaccrual loans, $2.5 million of loans past due 90 days and still accruing and OREO of $1.5 million.

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The table below sets forth the amounts and categories of our nonperforming assets at the dates indicated.

	Nonperforming Assets
	September 30, 2018						December 31, 2017
	Legacy		Acquired		Total		Legacy		Acquired		Total
Accruing loans 90 or more days past due
Commercial Real Estate
Owner Occupied	$	1,042,909	$	179,718	$	1,222,627	$	—	$	—	$	—
Residential Real Estate:
First Lien-Investment		291,278		—		291,278		—		—		—
First Lien-Owner Occupied		—		143,625		143,625		—		37,560		37,560
HELOC and Jr. Lien		—		308,796		308,796		—		—		—
Land and A&D		417,110		—		417,110
Commercial		29,134		—		29,134
Consumer		4,476		101,079		105,555		—		78,406		78,406
Total accruing loans 90 or more days past due		1,784,907		733,218		2,518,125		—		115,966		115,966
Non-accrued loans:
Commercial Real Estate
Owner Occupied		—		412,785		412,785		—		228,555		228,555
Investment		—		179,091		179,091		—		—		—
Land and A&D		—		151,780		151,780		—		190,193		190,193
Residential Real Estate:
First Lien-Investment		192,501		219,681		412,182		192,501		—		192,501
First Lien-Owner Occupied		266,811		1,734,910		2,001,721		281,130		872,272		1,153,402
HELOC and Jr. Lien		—		126,240		126,240
Land and A&D		277,704		594,505		872,209		—		—		—
Commercial		150,477		150,924		301,401		—		—		—
Consumer		—		51,671		51,671		—		—		—
Total non-accrued past due loans:		887,493		3,621,587		4,509,080		473,631		1,291,020		1,764,651
Other real estate owned (“OREO”)		—		1,469,166		1,469,166		425,000		1,578,998		2,003,998
Total non performing assets	$	2,672,400	$	5,823,971	$	8,496,371	$	898,631	$	2,985,984	$	3,884,615
Accruing Troubled Debt Restructurings
Commercial Real Estate:
Owner Occupied	$	1,523,389	$	—	$	1,523,389	$	1,560,726	$	—	$	1,560,726
Residential Real Estate:
First Lien-Owner Occupied		—		406,497		406,497		—		644,744		644,744
Commercial		359,296		68,888		428,184		459,333		—		459,333
Consumer		—		27,009		27,009
Total Accruing Troubled Debt Restructurings	$	1,882,685	$	502,394	$	2,385,079	$	2,020,059	$	644,744	$	2,664,803

The table below reflects our ratios of our nonperforming assets at September 30, 2018 and December 31, 2017.

	September 30,			December 31,
	2018			2017
Ratios, Excluding Acquired Assets
Total nonperforming assets as a percentage of total loans held for investment and OREO		0.17	%		0.07	%
Total nonperforming assets as a percentage of total assets		0.13	%		0.05	%
Total nonperforming assets as a percentage of total loans held for investment		0.17	%		0.07	%
Ratios, Including Acquired Assets
Total nonperforming assets as a percentage of total loans held for investment and OREO		0.36	%		0.23	%
Total nonperforming assets as a percentage of total assets		0.29	%		0.18	%
Total nonperforming assets as a percentage of total loans held for investment		0.36	%		0.23	%

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The table below presents a breakdown of the recorded book balance of non-accruing loans at September 30, 2018 and December 31, 2017.

	September 30, 2018								December 31, 2017
			Unpaid				Interest				Unpaid
	# of		Principal		Recorded		Not		# of		Principal		Recorded		Interest Not
	Contracts		Balance		Investment		Accrued		Contracts		Balance		Investment		Accrued
Legacy
Commercial Real Estate:
Residential Real Estate
First Lien-Investment		1	$	192,501	$	192,501	$	31,390		1	$	192,501	$	192,501	$	21,901
First Lien-Owner Occupied		2		266,811		266,811		1,352		2		281,130		281,130		13,303
Land and A & D		1		277,704		277,704		12,866
Commercial		1		150,476		150,477		3,712		—		—		—		—
Consumer		—		—		—		—		—		—		—		—
Total non-accrual loans		5		887,492		887,493		49,320		3		473,631		473,631		35,204
Acquired(1)
Commercial Real Estate:
Owner Occupied		3	$	516,170	$	412,785	$	34,435		1	$	253,865	$	228,555	$	12,334
Investment		3		221,197		179,091		8,137		—		—		—		—
Land and A & D		2		572,180		151,780		232,479		2	$	482,467	$	190,193	$	169,657
Residential Real Estate
First Lien-Investment		11		1,876,825		1,734,910		164,500		—		—		—		—
First Lien-Owner Occupied		2		224,868		219,681		9,682		5		987,505		872,272		82,452
HELOC and Jr. Lien		1		128,063		126,240		3,847
Land and A & D		3		808,941		594,505		129,787
Commercial		6		1,031,496		150,924		293,501		—		—		—		—
Consumer		7		52,730		51,671		2,379		—		—		—		—
Total non-accrual loans		38		5,432,470		3,621,587		878,747		8		1,723,837		1,291,020		264,443
Total all non-accrued loans		43		6,319,962		4,509,080		928,067		11		2,197,468		1,764,651		299,647

_______________________

(1) Generally accepted accounting principles require that we record acquired loans at fair value, which includes a discount for loans with credit impairment. These loans are not performing according to their contractual terms and meet our definition of a non-performing loan. The discounts that arise from recording these loans at fair value were due to credit quality. Although we do not accrue interest income at the contractual rate on these loans, we may accrete these discounts to interest income as a result of pre-payments that exceed our cash flow expectations or payment in full of amounts due even though we classify them as 90 or more days past due.

Non-accrual legacy loans at September 30, 2018 increased $413 thousand from December 31, 2017, due to the addition of one commercial real estate land and acquisition and development loan and one commercial loan.

Non-accrual acquired loans at September 30, 2018 increased $2.3 million from December 31, 2017 primarily due to the addition of 11 residential investment real estate loans and six commercial loans.

At September 30, 2018, there was no legacy OREO. We sold the $425 thousand of OREO that we had on December 31, 2017 during the second quarter of 2018.

Acquired OREO at September 30, 2018, decreased $110 thousand from December 31, 2017, as a result of the sale of eight OREO properties during the nine month period.

Allowance for Loan Losses. We review the adequacy of the allowance for loan losses at least quarterly. Our review includes evaluation of impaired loans as required by ASC Topic 310-Receivables, and ASC Topic 450-Contingencies. Also incorporated in determining the adequacy of the allowance is guidance contained in the Securities and Exchange Commission’s Staff Accounting Bulletin 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. We also continue to measure the credit impairment at each period end on all loans that have been classified as a TDR using the guidance in ASC 310-10-35.

60

We have risk management practices designed to ensure timely identification of changes in loan risk profiles. Undetected losses, however, inherently exist within the portfolio. Although we may allocate specific portions of the allowance for specific loans or other factors, the entire allowance is available for any loans that we should charge off. We will not create a specific valuation allowance unless we consider a loan impaired.

The following tables provide an analysis of the allowance for loan losses for the periods indicated:

	Commercial		Commercial		Residential
September 30, 2018	and Industrial		Real Estate		Real Estate			Consumer			Total
Beginning balance	$	1,262,030	$	3,783,735	$	844,355		$	30,466		$	5,920,586
Provision for loan losses		273,017		716,147		(70,403	)		316,262			1,235,023
Recoveries		69,469		834		15,230			11,980			97,513
Total		1,604,516		4,500,716		789,182			358,708			7,253,122
Loans charged off		—		—		(1,824	)		(271,248	)		(273,072	)
Ending Balance	$	1,604,516	$	4,500,716	$	787,358		$	87,460		$	6,980,050
Amount allocated to:
Legacy Loans:
Individually evaluated for impairment	$	93,892	$	—	$	76,495		$	—		$	170,387
Other loans not individually evaluated		1,441,108		4,500,716		525,749			60,852			6,528,425
Acquired Loans:
Individually evaluated for impairment		69,516		—		185,114			26,608			281,238
Ending balance	$	1,604,516	$	4,500,716	$	787,358		$	87,460		$	6,980,050

				Commercial			Residential
December 31, 2017	Commercial			Real Estate			Real Estate			Consumer			Total
Beginning balance	$	1,372,235		$	3,990,152		$	823,520		$	9,562		$	6,195,469
Provision for loan losses		660,497			231,488			22,203			40,920			955,108
Recoveries		2,350			2,017			900			35,525			40,792
Total		2,035,082			4,223,657			846,623			86,007			7,191,369
Loans charged off		(773,052	)		(439,922	)		(2,268	)		(55,541	)		(1,270,783	)
Ending Balance	$	1,262,030		$	3,783,735		$	844,355		$	30,466		$	5,920,586
Amount allocated to:
Legacy Loans:
Individually evaluated for impairment	$	96,212		$	69,903		$	76,496		$	—		$	242,611
Other loans not individually evaluated		1,141,301			3,633,760			690,396			30,466			5,495,923
Acquired Loans:
Individually evaluated for impairment		24,517			80,072			77,463			—			182,052
Ending balance	$	1,262,030		$	3,783,735		$	844,355		$	30,466		$	5,920,586

The ratios of the allowance for loan losses are as follows:

	September 30, 2018			December 31, 2017
Ratio of allowance for loan losses to:
Total gross loans held for investment		0.29	%		0.35	%
Non-accrual loans		154.80	%		335.51	%
Net charge-offs to average loans		0.01	%		0.08	%

During the nine months ended September 30, 2018, we charged off $273 thousand in loans through the allowance for loan losses.

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The allowance for loan losses represented 0.29% and 0.35% of gross loans held for investment at September 30, 2018 and December 31, 2017, respectively and 0.42% and 0.42% of legacy loans at September 30, 2018 and December 31, 2017, respectively. 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.

Overall, we continue to believe that the loan portfolio remains manageable in terms of charge-offs and nonperforming assets as a percentage of total loans. We remain diligent and aware of our credit costs and the impact that these can have on our financial institution, and we have taken proactive measures to identify problem loans, including in-house and independent review of larger transactions. Our policy for evaluating problem loans includes obtaining new certified real estate appraisals as needed. We continue to monitor and review frequently the overall asset quality within the loan portfolio.

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

Old Line Bancshares 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 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 that would have a material effect on Old Line Bancshares. Old Line Bancshares also has operating lease obligations.

Outstanding loan commitments and lines and letters of credit at September 30, 2018 and December 31, 2017, are as follows:

	September 30, 2018		December 31, 2017
	(Dollars in thousands)
Commitments to extend credit and available credit lines:
Commercial	$	214,291	$	132,246
Real estate-undisbursed development and construction		198,096		132,855
Consumer		78,378		41,151
Total	$	490,765	$	306,252
Standby letters of credit	$	14,271	$	12,362

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 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 counterparty. 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 all 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 regularly reevaluate many of our commitments to extend credit. Because we conservatively underwrite these facilities at inception, we generally do not have to withdraw any commitments. 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 $198.1 million, or 40.37% of the $490.8 million of outstanding commitments at September 30, 2018, 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 non-performance 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. In general, loan commitments, credit lines and letters of credit are made on the same terms, including with respect to collateral, as outstanding loans. We evaluate each customer’s credit worthiness and the collateral required on a case by case basis.

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Reconciliation of Non-GAAP Measures

As the magnitude of the merger expenses distorts our operational results, we present in the GAAP reconciliation below and in the accompanying text certain performance measures excluding the effect of the merger expenses during the three and nine month periods ended September 30, 2018 and 2017. We believe this information is important to enable our stockholders and other interested parties to assess our operational performance - in other words, our performance based on our ongoing operations.

Reconciliation of Non-GAAP measures (Unaudited)	Three Months ended September 30, 2018			Nine Months ended September 30, 2018			Three Months ended September 30, 2017			Nine Months ended September 30, 2017
Net Income (GAAP)	$	8,264,829		$	17,055,844		$	2,163,187		$	10,106,379
Merger-related expenses, net of tax		1,474,623			7,643,988			2,902,912			2,902,912
Operating net income (non-GAAP)	$	9,739,452		$	24,699,832		$	5,066,099		$	13,009,291
Net income available to common shareholders	$	8,264,829		$	17,055,844		$	2,163,187		$	10,106,379
Merger-related expenses, net of tax		1,474,623			7,643,988			2,902,912			2,902,912
Operating earnings (non-GAAP)	$	9,739,452		$	24,699,832		$	5,066,099		$	13,009,291
Earnings per weighted average common shares, basic (GAAP)	$	0.49		$	1.12		$	0.18		$	0.90
Merger-related expenses, net of tax		0.09			0.50			0.24			0.25
Operating earnings per weighted average common share basic (non GAAP)	$	0.58		$	1.62		$	0.42		$	1.15
Earnings per weighted average common shares, diluted (GAAP)	$	0.48		$	1.10		$	0.18		$	0.88
Meger-related expenses, net of tax		0.09			0.50			0.24			0.25
Operating earnings per weighted average common share basic (non-GAAP)	$	0.57		$	1.60		$	0.42		$	1.13
Summary Operating Results (non-GAAP)
Noninterest expense (GAAP)	$	16,662,338		$	48,731,703		$	14,640,453		$	34,102,034
Merger-related expenses, gross		2,282,705			9,404,507			3,985,514			3,985,514
Operating noninterest expense (non-GAAP)		18,945,043		$	58,136,210			10,654,939			30,116,520
Operating efficiency ratio (non-GAAP)		51.93	%		53.39	%		57.21	%		59.18	%
Operating noninterest expense as a % of average assets (annualized)		1.94	%		2.01	%		2.12	%		2.19	%
Return on average assets
Net income	$	8,264,829		$	17,055,844		$	2,163,187		$	10,106,379
Merger-related expenses, net of tax		1,474,623			7,643,988			2,902,912			2,902,912
Operating net income (non-GAAP)	$	9,739,452		$	24,699,832		$	5,066,099		$	13,009,291
Adjusted Return of Average Assets
Return on average assets (GAAP)		1.12			0.87			0.43			0.73
Effect to adjust for merger-related expenses, net of tax		0.20			0.39			0.58			0.21
Adjusted return on average assets		1.32	%		1.26	%		1.01	%		0.94	%
Return on average common equity
Net income available to common shareholders	$	8,264,829		$	17,055,844		$	2,163,187		$	10,106,379
Merger-related expenses, net of tax		1,474,623			7,643,988			2,902,912			2,902,912
Operating earnings (non-GAAP)	$	9,739,452		$	24,699,832		$	5,066,099		$	13,009,291
Adjusted Return on Average Equity
Return on average equity (GAAP)		8.89			7.31			4.26			7.52
Effect to adjust for merger-related expenses, net of tax		1.58			3.28			5.72			2.16
Adjusted return on average common equity (non-GAAP)		10.47	%		10.59	%		9.98	%		9.68	%

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

Three months ended September 30, 2018

						Net
	Net Interest					Interest
	Income		Yield			Spread
GAAP net interest income	$	24,886,006		3.76	%		3.44	%
Tax equivalent adjustment
Federal funds sold		92		—			—
Investment securities		159,520		0.02			0.02
Loans		181,630		0.03			0.03
Total tax equivalent adjustment		341,242		0.05			0.05
Tax equivalent interest yield	$	25,227,248		3.81	%		3.49	%

Three months ended September 30, 2017

						Net
	Net Interest					Interest
	Income		Yield			Spread
GAAP net interest income	$	16,472,476		3.59	%		3.36	%
Tax equivalent adjustment
Federal funds sold		177		—			—
Investment securities		267,376		0.06			0.06
Loans		285,807		0.06			0.06
Total tax equivalent adjustment		553,360		0.12			0.12
Tax equivalent interest yield	$	17,025,836		3.71	%		3.48	%

Nine months ended September 30, 2018

						Net
	Net Interest					Interest
	Income		Yield			Spread
GAAP net interest income	$	65,877,013		3.73	%		3.43	%
Tax equivalent adjustment
Federal funds sold		208		—			—
Investment securities		481,771		0.03			0.03
Loans		561,258		0.03			0.03
Total tax equivalent adjustment		1,043,237		0.06			0.06
Tax equivalent interest yield	$	66,920,250		3.79	%		3.49	%

Nine months ended September 30, 2017

						Net
	Net Interest					Interest
	Income		Yield			Spread
GAAP net interest income	$	44,886,510		3.55	%		3.34	%
Tax equivalent adjustment
Federal funds sold		213		—			—
Investment securities		768,136		0.06			0.06
Loans		832,458		0.07			0.07
Total tax equivalent adjustment		1,600,807		0.13			0.13
Tax equivalent interest yield	$	46,487,317		3.68	%		3.47	%

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Non-GAAP financial measures included in this quarterly report should be read along with these tables providing a reconciliation of non-GAAP financial measures to U.S. GAAP financial measures. The Company’s management believes that the non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company and provide meaningful comparison to its peers. Non-GAAP financial measures should not be consider as an alternative to any measure of performance or financial condition as promulgated under U.S. GAAP, and investors should consider the Company’s performance and financial condition as reported under U.S. GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under U.S. GAAP.

Impact of Inflation and Changing Prices

Management has prepared the financial statements and related data presented herein in accordance with U.S. GAAP, 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 a 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.

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 forward-looking statements presented herein with respect to, among other things: (a) our objectives, expectations and intentions, including (i) that, going forward, the BYBK acquisition will continue to generate increased earnings and increased returns for our stockholders, (ii) anticipated increases in certain non-interest expenses and that net interest income will continue to increase during the remainder of 2018 and during 2019, (iii) the amount of potential problem loans, (iv) our belief that we have identified any problem assets and that our borrowers will continue to remain current on their loans, (v) expected losses on and our intentions with respect to our investment securities, (vi) continued earnings on bank owned life insurance, (vii) expanding fee income and generating extensions of core banking services, (viii) hiring and acquisition possibilities, (ix) that we expect to continue to record expenses related to conversion, contract cancelation, and personnel in connection with the BYBK acquisition during the fourth quarter of 2018 and to achieve operating cost savings as a result of the acquisition, and (x) cash flows we expect to receive on impaired loans we acquired from Bay Bank; (b) sources of and sufficiency of liquidity; (c) the impact of outstanding off-balance sheet commitments; (d) the adequacy of the allowance for loan losses; (e) expected loan, deposit, balance sheet and earnings growth; (f)  expectations with respect to the impact of pending legal proceedings; (g) the anticipated impact of recent accounting pronouncements; (h) continuing to meet regulatory capital requirements; (i) improving earnings per share and stockholder value; and (j) financial and other goals and plans.

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Old Line Bancshares 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: our ability to retain key personnel; our ability to successfully implement our 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; that changes in regulatory requirements and/or restrictive banking legislation may adversely affect Old Line Bancshares; that the market value of our investments could negatively impact stockholders’ equity; risks associated with our lending limit; expenses associated with operating as a public company; potential conflicts of interest associated with our interest in Pointer Ridge; deterioration in general economic conditions or a return to recessionary conditions; and changes in competitive, governmental, regulatory, technological and other factors that may affect us specifically or the banking industry generally; and other risks otherwise discussed in this report.

For a more complete discussion of some of these risks and uncertainties referred to above, see “Risk Factors” in Old Line Bancshares’ Annual Report on Form 10-K for the year ended December 31, 2017.

Old Line Bancshares’ 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 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.

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. Various factors, including interest rates, foreign exchange rates, commodity prices, or equity prices, may cause these changes. We are subject to market risk primarily through the effect of changes in interest rates on our portfolio of assets and liabilities. Foreign exchange rates, commodity prices, or equity prices do not pose significant market risk to us. Due to the nature of our operations, only interest rate risk is significant to our consolidated results of operations or financial position. We have no material changes in our quantitative and qualitative disclosures about market risk as of September 30, 2018 from that presented in our Annual Report on Form 10-K for the year ended December 31, 2017.

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 tables below present Old Line Bank’s interest rate sensitivity at September 30, 2018 and December 31, 2017. Because certain categories of securities and loans are prepaid before their maturity date even without regard to interest rate fluctuations, we have made certain assumptions to calculate the expected maturity of securities and loans.

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	Interest Sensitivity Analysis
	September 30, 2018
	Maturing or Repricing
	Within			4 - 12			1 - 5			Over
	3 Months			Months			Years			5 Years			Total
	(Dollars in thousands)
Interest Earning Assets:
Interest bearing accounts	$	30		$	—		$	—		$	—		$	30
Time deposits in other banks		—			—			—			—			—
Federal funds sold		1,009			—			—			—			1,009
Investment securities		1,496			2,776			4,255			207,831			216,358
Loans		429,203			79,162			1,006,324			873,835			2,388,524
Total interest earning assets		431,738			81,938			1,010,579			1,081,666			2,605,921
Interest Bearing Liabilities:
Interest-bearing transaction deposits		442,758			221,636			—			—			664,394
Savings accounts		73,788			73,788			73,788			—			221,364
Time deposits		91,974			340,532			342,169			468			775,143
Total interest-bearing deposits		608,520			635,956			415,957			468			1,660,901
FHLB advances		235,000			—			—			—			235,000
Other borrowings		37,535			—			—			38,305			75,840
Total interest-bearing liabilities		881,055			635,956			415,957			38,773			1,971,741
Period Gap	$	(449,317	)	$	(554,018	)	$	594,622		$	1,042,893		$	634,180
Cumulative Gap	$	(449,317	)	$	(1,003,335	)	$	(408,713	)	$	634,180
Cumulative Gap/Total Assets		(15.33	)%		(34.23	)%		(13.94	)%		21.64	%

	Interest Sensitivity Analysis
	December 31, 2017
	Maturing or Repricing
	Within			4 - 12			1 - 5			Over
	3 Months			Months			Years			5 Years			Total
	(Dollars in thousands)
Interest Earning Assets:
Interest bearing accounts	$	30		$	—		$	—		$	—		$	30
Time deposits in other banks		—			—			—			—			—
Federal funds sold		257			—			—			—			257
Investment securities		1,499			3,304			623			212,927			218,353
Loans		291,403			115,769			771,105			521,991			1,700,268
Total interest earning assets		293,189			119,073			771,728			734,918			1,918,908
Interest Bearing Liabilities:
Interest-bearing transaction deposits		355,498			182,605			—			—			538,103
Savings accounts		44,323			44,324			44,324			—			132,971
Time deposits		98,292			183,750			247,984			—			530,026
Total interest-bearing deposits		498,113			410,679			292,308			—			1,201,100
FHLB advances		155,000			—			—			—			155,000
Other borrowings		37,612			—			—			38,107			75,719
Total interest-bearing liabilities		690,725			410,679			292,308			38,107			1,431,819
Period Gap	$	(397,536	)	$	(291,606	)	$	479,420		$	696,811		$	487,089
Cumulative Gap	$	(397,536	)	$	(689,142	)	$	(209,722	)	$	487,089
Cumulative Gap/Total Assets		(18.88	)%		(32.73	)%		(9.96	)%		23.13	%

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report on Form 10-Q, Old Line Bancshares’ Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of Old Line Bancshares’ disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based upon that evaluation, Old Line Bancshares’ Chief Executive Officer and Chief Financial Officer concluded that Old Line Bancshares’ disclosure controls and procedures are effective as of September 30, 2018. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by Old Line Bancshares 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 Securities and Exchange Commission’s rules and forms.

67

In addition, there were no changes in Old Line Bancshares’ internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended September 30, 2018, that have materially affected, or are reasonably likely to materially affect, Old Line Bancshares’ internal control over financial reporting.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our normal course of business. Currently, we are not involved in any legal proceedings the outcome of which, in management’s opinion, would be material to our financial condition or results of operations.

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, 2017.

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

As reflected in the following table there were no share repurchases by the Company during the quarter ended September 30, 2018:

Shares Purchased during the period:	Total number of shares repurchased		Average Price paid per share		Total number of share purchased as part of publicly announced program(1)		Maximum number of shares that may yet be purchased under the program (1)
July 1 -September 30, 2018		—		—		339,237		160,763

_______________________

(1) On February 25, 2015, Old Line Bancshares’ board of directors approved the repurchase of up to 500,000 shares of our outstanding common stock. As of September 30, 2018, 339,237 shares have been repurchased at an average price of $15.77 per share or a total cost of approximately $5.3 million.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

68

Item 6. Exhibits

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
101	Interactive Data Files pursuant to Rule 405 of Regulation S-T.

69

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: November 2, 2018	By:	/s/ James W. Cornelsen
		James W. Cornelsen, President and Chief Executive Officer
		(Principal Executive Officer)
Date: November 2, 2018	By:	/s/ Elise M. Hubbard
		Elise M. Hubbard, Executive Vice President and Chief Financial Officer
		(Principal Accounting and Financial Officer)

70

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: November 2, 2018	By: /s/ James W. Cornelsen
	Name: James W. Cornelsen
	Title: President and
	Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Elise M. Hubbard, 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: November 2, 2018	By: /s/ Elise M. Hubbard
	Name: Elise M. Hubbard
	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 September 30, 2018 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.

By: /s/ James W. Cornelsen                             

James W. Cornelsen

President and Chief Executive Officer

November 2, 2018

By: /s/ Elise M. Hubbard                                  

Elise M. Hubbard

Executive Vice President and Chief Financial Officer

November 2, 2018

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.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 25, 2018
Document Information [Line Items]
Entity Registrant Name	OLD LINE BANCSHARES INC
Entity Central Index Key	0001253317
Trading Symbol	olbk
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding (in shares)		16,989,883
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Assets
Cash and due from banks	$ 45,774,719	$ 33,562,652
Interest bearing accounts	3,522,685	1,354,870
Federal funds sold	1,008,801	256,589
Total cash and cash equivalents	50,306,205	35,174,111
Investment securities available for sale-at fair value	216,358,059	218,352,558
Loans held for sale, fair value of $9,056,027 and $4,557,722	8,829,777	4,404,294
Loans held for investment (net of allowance for loan losses of $6,980,050 and $5,920,586, respectively)	2,384,579,814	1,696,361,431
Equity securities at cost	13,063,250	8,977,747
Premises and equipment	43,060,727	41,173,810
Accrued interest receivable	8,072,826	5,476,230
Deferred income taxes	11,385,296	7,317,096
Bank owned life insurance	67,490,846	41,612,496
Annuity Plan	6,298,627	5,981,809
Other real estate owned	1,469,166	2,003,998
Goodwill	94,403,635	25,083,675
Core deposit intangible	16,024,950	6,297,970
Other assets	9,675,019	7,396,227
Total assets	2,931,018,197	2,105,613,452
Deposits
Non-interest bearing	581,339,177	451,803,052
Interest bearing	1,660,902,293	1,201,100,317
Total deposits	2,242,241,470	1,652,903,369
Short term borrowings	272,534,890	192,611,971
Long term borrowings	38,304,981	38,106,930
Accrued interest payable	1,643,666	1,471,954
Supplemental executive retirement plan	6,123,518	5,893,255
Income taxes payable		2,157,375
Other liabilities	9,989,481	4,741,412
Total liabilities	2,570,838,006	1,897,886,266
Stockholders’ equity
Common stock, par value $0.01 per share; 25,000,000 shares authorized; 16,988,883 and 12,508,332 shares issued and outstanding in 2018 and 2017, respectively	169,889	125,083
Additional paid-in capital	293,139,653	148,882,865
Retained earnings	74,167,389	61,054,487
Accumulated other comprehensive loss	(7,296,740)	(2,335,249)
Total stockholders’ equity	360,180,191	207,727,186
Total liabilities and stockholders’ equity	$ 2,931,018,197	$ 2,105,613,452

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Loans held for sale, fair value	$ 9,056,027	$ 4,557,722
Loans held for investment, allowance for loan losses	$ 6,980,050	$ 5,920,586
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	16,988,883	12,508,332
Common stock, shares outstanding (in shares)	16,988,883	12,508,332

XML

Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Interest Income
Loans, including fees	$ 29,056,814	$ 18,022,324	$ 75,206,303	$ 49,153,228
U.S. treasury securities	16,325	6,859	42,953	18,772
U.S. government agency securities	89,953	78,713	262,905	194,549
Corporate bonds	221,995	189,274	643,580	428,153
Mortgage backed securities	563,384	548,779	1,690,299	1,657,619
Municipal securities	498,200	455,227	1,498,163	1,301,582
Federal funds sold	3,553	3,797	7,079	5,381
Other	303,100	186,829	895,099	421,623
Total interest income	30,753,324	19,491,802	80,246,381	53,180,907
Interest expense
Deposits	4,098,787	1,926,590	9,551,755	5,174,640
Borrowed funds	1,768,532	1,092,736	4,817,613	3,119,757
Total interest expense	5,867,319	3,019,326	14,369,368	8,294,397
Net interest income	24,886,005	16,472,476	65,877,013	44,886,510
Provision for loan losses	307,870	135,701	1,235,023	855,108
Net interest income after provision for loan losses	24,578,135	16,336,775	64,641,990	44,031,402
Non-interest income
Gain on sales or calls of investment securities				35,258
Earnings on bank owned life insurance	520,785	297,656	1,274,777	861,112
Gain (loss) on disposal of assets	(1,100)	7,469	13,266	120,063
Loss on write down of stock	(91,498)		(152,496)
Gain on sale of loans				94,714
Rental income	204,714	188,505	602,208	498,961
Income on marketable loans	411,850	482,641	1,342,201	1,840,218
Total non-interest income	2,805,335	2,151,371	7,788,407	6,001,724
Non-interest expense
Salaries and benefits	7,491,736	5,365,890	20,178,521	15,284,057
Occupancy and equipment	2,349,691	1,828,593	6,572,733	5,137,273
Data processing	659,926	443,453	1,971,747	1,161,647
FDIC insurance and State of Maryland assessments	278,109	281,587	786,506	799,700
Merger and integration	2,282,705	3,985,514	9,404,507	3,985,514
Core deposit premium amortization	663,685	272,354	1,516,734	651,613
Loss (gain) on sales of other real estate owned	26,266	4,100	80,738	(13,589)
OREO expense	(99,957)	200,959	113,032	256,170
Directors fees	172,550	148,800	539,750	485,700
Network services	127,226	133,301	302,038	437,140
Other operating	2,441,331	1,757,586	6,539,421	5,318,191
Total non-interest expense	16,662,338	14,640,453	48,731,703	34,102,034
Income before income taxes	10,721,132	3,847,693	23,698,694	15,931,092
Income tax expense	2,456,303	1,684,505	6,642,850	5,824,713
Net income available to common stockholders	$ 8,264,829	$ 2,163,188	$ 17,055,844	$ 10,106,379
Basic earnings per common share (in dollars per share)	$ 0.49	$ 0.18	$ 1.12	$ 0.90
Diluted earnings per common share (in dollars per share)	0.48	0.18	1.10	0.88
Dividend per common share (in dollars per share)	$ 0.10	$ 0.08	$ 0.28	$ 0.24
Deposit Account [Member]
Non-interest income
Non-interest income	$ 728,550	$ 542,909	$ 2,028,013	$ 1,389,340
Point of Sale Sponsorship Program [Member]
Non-interest income
Non-interest income	711,577		1,385,079
Financial Service, Other [Member]
Non-interest income
Non-interest income	320,457	632,191	1,295,359	1,162,058
Public Utilities [Member]
Non-interest expense
Telephone	$ 269,070	$ 218,316	$ 725,976	$ 598,618

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net income	$ 8,264,829	$ 2,163,188	$ 17,055,844	$ 10,106,379
Other comprehensive income:
Unrealized gain/(loss) on securities available for sale, net of taxes	(1,032,857)	93,526	(4,501,518)	3,664,114
Reclassification adjustment for realized gain on securities available for sale included in net income, net of taxes				(21,350)
Other comprehensive income (loss)	(1,032,857)	93,526	(4,501,518)	3,642,764
Comprehensive income	7,231,972	2,256,714	12,554,326	13,749,143
Net income	$ 8,264,829	$ 2,163,188	$ 17,055,844	$ 10,106,379

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parentheticals) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Unrealized gain (loss) on securities available for sale, taxes	$ (392,117)	$ 60,922	$ 1,708,971	$ (2,386,772)
Reclassification adjustment for realized gain on securities available for sale included in net income, taxes	0	0	0	13,908
Unrealized gain (loss) on securities available for sale, taxes	$ 392,117	$ (60,922)	$ (1,708,971)	$ 2,386,772

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2017	12,508,332				12,508,332
Balance at Dec. 31, 2017	$ 125,083	$ 148,882,865	$ 61,054,487	$ (2,335,249)	$ 207,727,186
Net income attributable to Old Line Bancshares, Inc.			17,055,844		17,055,844
Other comprehensive loss, net of income tax of $1,708,971				(4,501,518)	(4,501,518)
Reclassification of stranded tax effect resulting from the Tax Cuts and Jobs Act			459,973	(459,973)
Acquisition of Bay Bancorp, Inc. (in shares)	4,408,087
Acquisition of Bay Bancorp, Inc.	$ 44,081	142,601,614			142,645,695
Stock based compensation awards		872,284			872,284
Stock options exercised (in shares)	53,021
Stock options exercised	$ 530	783,085			783,615
Restricted stock issued (in shares)	19,443
Restricted stock issued	$ 195	(195)
Common stock cash dividends $0.28 per share			(4,402,915)		$ (4,402,915)
Balance (in shares) at Sep. 30, 2018	16,988,883				16,988,883
Balance at Sep. 30, 2018	$ 169,889	$ 293,139,653	$ 74,167,389	$ (7,296,740)	$ 360,180,191

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parentheticals)	9 Months Ended
	Sep. 30, 2018 USD ($) $ / shares
AOCI Attributable to Parent [Member]
Other comprehensive income, tax | $	$ 1,708,391
Retained Earnings [Member]
Dividends per common share (in dollars per share) | $ / shares	$ 0.28

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities
Net income	$ 17,055,844	$ 10,106,379
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	2,334,125	1,915,955
Provision for loan losses	1,235,023	855,108
Change in deferred loan fees net of costs	(791,450)	(203,092)
Gain on sales or calls of securities		(35,258)
Amortization of premiums and discounts	636,357	729,996
Origination of loans held for sale	(77,092,451)	(71,093,124)
Proceeds from sale of loans held for sale	72,666,968	76,782,499
Loss on write down of stock	152,496
Income on marketable loans	(1,342,201)	(1,840,218)
Net realized gain/(loss)	80,738	(13,589)
Gain (loss) on the sale of loans		(94,714)
Gain on sale of fixed assets	(13,266)	(120,062)
Amortization of intangible assets	1,516,734	651,613
Deferred income taxes	278,439	30,193
Stock based compensation awards	872,284	449,935
Increase (decrease) in
Accrued interest payable	171,712	(448,720)
Income tax payable	(2,157,375)	845,554
Supplemental executive retirement plan	230,263	209,592
Other liabilities	(436,815)	(1,558,077)
Decrease (increase) in
Accrued interest receivable	(882,542)	(83,399)
Bank owned life insurance	(1,059,152)	(717,522)
Annuity plan	(316,818)
Income tax receivable	1,134,944
Other assets	(86,942)	1,899,050
Net cash provided by operating activities	14,186,915	18,268,099
Cash flows from investing activities
Cash and cash equivalents of acquired bank, net of cash consideration	21,617,611	35,566,945
Purchase of investment securities available for sale	(20,483,491)	(39,289,497)
Available for sale at maturity, call or paydowns	15,876,726	18,998,110
Available for sale sold	51,650,175	53,802,337
Loans made, net of principal collected	(141,256,263)	(88,297,883)
Purchase of bank owned life insurance	(8,500,000)
Proceeds from sale of other real estate owned	1,495,173	1,178,439
Change in equity securities	(1,745,803)	1,025,601
Purchase of premises and equipment	(1,093,079)	(3,075,960)
Proceeds from the sale of premises and equipment	13,266	120,062
Net cash used in investing activities	(82,425,685)	(19,971,846)
Cash flows from financing activities
Time deposits	245,116,710	83,108,361
Other deposits	(197,147,516)	(32,221,712)
Short term borrowings	38,822,919	(36,008,301)
Long term borrowings	198,051	198,051
Proceeds from stock options exercised	783,615	378,679
Cash dividends paid-common stock	(4,402,915)	(2,750,298)
Net cash provided by financing activities	83,370,864	12,704,780
Net increase in cash and cash equivalents	15,132,094	11,001,033
Cash and cash equivalents at beginning of period	35,174,111	23,463,171
Cash and cash equivalents at end of period	50,306,205	34,464,204
Supplemental Disclosure of Cash Flow Information:
Interest	14,197,656	8,695,869
Income taxes	7,600,000	5,018,000
Loans transferred to other real estate owned	1,041,079	422,848
Fair value of assets acquired	720,529,155	310,974,425
Other intangible assets acquired	11,243,714	15,297,318
Fair value of liabilities assumed	(588,153,791)	(285,421,333)
Total merger consideration	$ 143,619,078	$ 40,850,410

XML

Note 1 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

-

Old Line Bancshares, Inc. (“Old Line Bancshares”) 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 is to own all of the capital stock of Old Line Bank. We provide a full range of banking services to customers located in Anne Arundel, Baltimore, Baltimore City, Calvert, Carroll, Charles, Frederick, Harford, Howard, Montgomery, Prince George’s, and St. Mary’s Counties in Maryland and surrounding areas.

Basis of Presentation and Consolidation

- The accompanying condensed consolidated financial statements include the activity of Old Line Bancshares and its wholly owned subsidiary, Old Line Bank, and its wholly-owned subsidiary Pointer Ridge Office Investments, LLC (“Pointer Ridge”), a real estate investment company. We have eliminated all significant intercompany transactions and balances.

The foregoing consolidated financial statements for the periods ended

September 30, 2018

and

2017

are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), however, in the opinion of management we have included all adjustments necessary for a fair presentation of the results of the interim period. We derived the balances as of

December 

31,

2017

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’ Form 

10

-K for the year ended

December 

31,

2017.

We have made

no

significant changes to Old Line Bancshares’ accounting policies as disclosed in the Form 

10

-K, except as described in the Recent Accounting Pronouncements section below

Use of Estimates

- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions

may

affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. A material estimate that is particularly susceptible to significant change in the near term relates to the determination of the allowance for loan losses.

Revenue from Contracts with Customers

- Old Line Bancshares records revenue from contracts with customers in accordance with Accounting Standards Codification Topic

606,

“Revenue from Contracts with Customers” (“Topic

606”

). Under Topic

606,

we must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) we satisfy a performance obligation.

Our primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are

not

within the scope of Topic

606.

We have evaluated the nature of Old Line Bancshares’ contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was

not

necessary. Old Line Bancshares generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic

606

that significantly affects the determination of the amount and timing of revenue from contracts with customers.

As a result of the BYBK acquisition, the Bank became a member of the POS network sponsorship program, which allows our customers to access several processing and settlement networks; when our customers use

one

of these networks, the Bank receives a transaction fee from the network.

Reclassifications

- We have made certain reclassifications to the

2017

financial presentation to conform to the

2018

presentation. These reclassifications did

not

change net income or stockholders’ equity.

Recent Accounting Pronouncements

– In

May 2014,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2014

-

09

– Revenue from Contracts with Customers

, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of this ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The ASU allows for either full retrospective or modified retrospective adoption. The ASU does

not

apply to revenue associated with financial instruments, including loans and securities that are accounted for under U.S. GAAP. Our revenue is comprised of net interest income on financial assets and liabilities, which is explicitly excluded from the scope of the new guidance, and non-interest income. The contracts that are within scope of the guidance are primarily related to service charges on deposit accounts, cardholder and merchant income, point of sale sponsorship program, wealth advisory services income, other service charges and fees, sales of other real estate owned, insurance commissions and miscellaneous fees. Old Line Bancshares adopted the ASU on

January 1, 2018,

utilizing the modified retrospective approach. The adoption of this ASU did

not

have a material impact on our consolidated financial position or consolidated results of operations.

In

January 2016,

FASB issued ASU

No.

2016

-

01

, Financial Instruments – Recognition and Measurement of Financial Assets and Liabilities,

which is intended to improve the recognition and measurement of financial instruments by: requiring equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are

not

public business entities; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. This ASU is effective for public companies for fiscal years beginning after

December 15, 2017,

including interim periods within those fiscal years. We adopted this ASU effective

January 1, 2018.

With the adoption of this ASU, equity securities can

no

longer be classified as available for sale, and as such marketable equity securities are disclosed as a separate line item on the balance sheet with changes in the fair value of equity securities reflected in net income. During the

first

quarter of

2018,

we began using an exit price notion when measuring the fair value of our loan portfolio, excluding loans held for sale, for disclosure purposes. The adoption of this ASU did

not

have a significant impact on our consolidated financial statements.

In

February 2016,

FASB issued ASU

2016

-

02

, Leases (Topic

842

). FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after

December 15, 2018.

Early application of this ASU is permitted for all entities. This ASU will be effective for us in our

first

quarter of

2019.

We are currently evaluating

third

party software options to assist in implementation of policy and procedures in order to be compliant with ASU

2016

-

02

Old Line Bancshares is currently assessing the impact that the adoption of this standard will have on its financial condition and results of operations and will closely monitor any new developments or additional guidance to determine the potential impact the new standard will have on our consolidated financial statements.

In

June 2016,

FASB issued ASU

2016

-

13

, Financial Instruments – Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments

, which sets forth a “current expected credit loss” (“CECL”) model requiring Old Line Bancshares to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. For public business entities that are U.S. Securities and Exchange Commission filers, the amendments in this update are effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years. Old Line Bancshares has constituted a committee that has the responsibility to gather loan information and consider acceptable methodologies to comply with this ASU. The committee meets periodically to discuss the latest developments and committee members keep themselves updated on such developments via webcasts, publications, and conferences. We have also evaluated and selected a

third

party vendor solution to assist us in the application of ASU 

2016

-

13.

The adoption of ASU 

2016

-

13

is likely to result in an increase in the allowance for loan losses as a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. We expect to run our current model compared to the CECL model by the end of the

second

quarter in

2019.

Furthermore, ASU 

2016

-

13

will necessitate that we establish an allowance for expected credit losses on debt securities. Old Line Bancshares’ evaluation indicates that the provisions of ASU

2016

-

13

will impact its consolidated financial statements, in particular the level of the reserve for loan losses. We are, however, continuing to evaluate the extent of the potential impact.

In

August 2016,

FASB issued ASU

2016

-

15

, Statement of Cash Flows (Topic

230

):

Classification of Certain Cash Receipts and Cash Payments

, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows.  The amendments provide guidance on the following

nine

specific cash flow issues: 

1

) debt prepayment or debt extinguishment costs;

2

) settlement of

zero

-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing;

3

) contingent consideration payments made after a business combination;

4

) proceeds from the settlement of insurance claims;

5

) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned;

6

) life insurance policies;

7

) distributions received from equity method investees;

8

) beneficial interests in securitization transactions; and

9

) separately identifiable cash flows and application of the predominance principle.  The ASU is effective for all annual and interim periods beginning

January 1, 2018

and is required to be applied retrospectively to all periods presented. We adopted this guidance

January 1, 2018,

which did

not

result in a change in the classification in the statement of cash flows and did

not

have a material impact on our consolidated financial statements or on our financial position or results of operations.

In

January 2017,

FASB issued ASU

2017

-

01,

Business Combinations (Topic

805

)

:

Clarifying the definition of a business

, which clarifies the definition of a business and assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under this guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or group of similar assets), the assets acquired would

not

represent a business. In addition, in order to be considered a business, an acquisition would have to include at a minimum an input and a substantive process that together significantly contribute to the ability to create an output. The guidance also narrows the definition of outputs by more closely aligning it with how outputs are described in FASB guidance for revenue recognition. We adopted this guidance effective

January 1, 2018.

The adoption of this ASU did

not

have a material impact on our consolidated financial statements.

In

January 2017,

FASB issued ASU

2017

-

04,

Simplifying the Test for Goodwill Impairment,

which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step

2

of the goodwill impairment test. As a result, under the ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. The ASU is effective for annual and interim goodwill impairment tests in fiscal years beginning after

December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

We expect to implement ASU

2017

-

04

beginning with our upcoming goodwill testing during the

fourth

quarter of

2018.

Old Line Bancshares does

not

expect the adoption of ASU

2017

-

04

to have a material impact on its consolidated financial statements.

In

March 2017,

FASB issued ASU

2017

-

08,

Premium Amortization on Purchased Callable Debt Securities

. This ASU shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Today, entities generally amortize the premium over the contractual life of the security. The new guidance does

not

change the accounting for purchased callable debt securities held at a discount; the discount continues to be amortized to maturity. ASU

2017

-

08

is effective for interim and annual reporting periods beginning after

December 15, 2018;

early adoption is permitted. The guidance calls for a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the

first

reporting period in which the guidance is adopted. We do

not

expect the adoption of this guidance to have a material impact on Old Line Bancshares’ consolidated financial statements.

In

August 2017,

FASB issued ASU

2017

-

12,

Targeted Improvements to Accounting for Hedging Activities

. This ASU’s objectives are to: (

1

) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities; and (

2

) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU

2017

-

12

is effective for interim and annual reporting periods beginning after

December 15, 2018;

early adoption is permitted. Old Line Bancshares currently does

not

designate any derivative financial instruments as formal hedging relationships, and therefore, does

not

utilize hedge accounting. However, Old Line Bancshares is currently evaluating this ASU to determine whether its provisions will enhance its ability to employ risk management strategies, while improving the transparency and understanding of those strategies for financial statement users.

In

February 2018,

FASB issued ASU

2018

-

02,

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic

22

0

). This ASU allows an entity to elect a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act that changed our income tax rate from

35%

to

21%.

The amount of that reclassification should include the effect of changes of tax rate on the deferred tax amount, any related valuation allowance and other income tax effects on the items in AOCI. The ASU requires an entity to state if an election to reclassify the tax effect to retained earnings is made along with the description of other income tax effects that are reclassified from AOCI. ASU

2018

-

02

is effective for fiscal years beginning after

December 15, 2018

and interim periods within those fiscal years with early adoption permitted. Old Line Bancshares adopted ASU

2018

-

02

in the

first

quarter of

2018.

The change in accounting principal was accounted for as a cumulative effect adjustment to the balance sheet resulting in a reclass of

$459,973

from AOCI to retained earnings during the

first

quarter of

2018.

In

July 2018,

the FASB issued ASU

2018

-

11,

Leases (Topic

842

): Targeted Improvements.

  These amendments provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP (Topic

840,

Leases).  The amendments also provide lessors with a practical expedient, by class of underlying asset, to

not

separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic

606

) and certain criteria are met: If the non-lease component or components associated with the lease component are the predominant component of the combined component, an entity is required to account for the combined component in accordance with Topic

606.

Otherwise, the entity must account for the combined component as an operating lease in accordance with Topic

842

. 

The amendments have the same effective date as ASU

2016

-

02

(

January 1, 2019

for the Company). Old Line Bancshares expects to elect the transition options. ASU

2018

-

11

is

not

expected to have a material impact on the company’s consolidated financial statements.

XML

Note 2 - Acquisition of Bay Bancorp, Inc.

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Business Combination Disclosure [Text Block]

2. ACQUISITION OF BAY BANCORP, INC.

On

April 13, 2018,

Old Line Bancshares acquired Bay Bancorp, Inc. (“BYBK”), the parent company of Bay Bank, FSB (“Bay Bank”). Upon the consummation of the merger, each share of common stock of BYBK outstanding immediately before the merger was converted into the right to receive

0.4088

shares of Old Line Bancshares’ common stock, provided that cash was paid in lieu of any fractional shares of Old Line Bancshares common stock. As a result, Old Line Bancshares issued

4,408,087

shares of its common stock in exchange for the shares of BYBK common stock in the merger. The aggregate merger consideration was approximately

$143.6

million based on the closing sales price of Old Line Bancshares’ common stock on

April 13, 2018.

In connection with the merger, Bay Bank merged with and into Old Line Bank, with Old Line Bank the surviving bank.

At

April 13, 2018,

BYBK had consolidated assets of approximately

$663

million. This merger added

eleven

banking locations located in BYBK’s primary market areas of Baltimore City and Anne Arundel, Baltimore, Howard and Harford Counties in Maryland.

The BYBK transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. Management made significant estimates and exercised significant judgment in accounting for the acquisition of BYBK. Management judgmentally assigned risk ratings to loans based on appraisals and estimated collateral values, expected cash flows, prepayment speeds and estimated loss factors to measure fair value for loans. Management used quoted or current market prices to determine the fair value of BYBK’s investment securities.

The following table provides the purchase price as of the acquisition date and the identifiable assets acquired and liabilities assumed at their estimated fair values.

Purchase Price Consideration
Cash consideration	$	973,383
Purchase price assigned to shares exchanged for stock		142,645,695
Total purchase price for BYBK acquisition		143,619,078

Fair Value of Assets Acquired
Cash and due from banks	$	22,590,994
Investment securities		51,895,757
Restricted equity securities, at cost		2,339,700
Loans, net		546,215,988
Premises and equipment		3,127,963
Accrued interest receivable		1,714,054
Accrued taxes receivable		1,912,807
Deferred income taxes		2,637,668
Bank owned life insurance		16,319,198
Other real estate owned		1,041,079
Core deposit intangible		11,243,714
Other assets		1,413,987
Total assets acquired	$	662,452,909
Fair Value of Liabilities assumed
Deposits	$	541,368,907
Short term borrowings		41,100,000
Other liabilities		5,684,884
Total liabilities assumed	$	588,153,791
Fair Value of net assets acquired		74,299,118
Total Purchase Price		143,619,078
Goodwill recorded for BYBK	$	69,319,960

Comparative and Pro Forma Financial Information for the BYBK Acquisition

The adjusted results of Old Line Bancshares for the periods ended

September 30, 2018

and

2017,

as presented below, include the results of the acquired assets and assumed liabilities from the BYBK acquisition since the acquisition date of

April 13, 2018;

adjusted net income figures shown below exclude merger and integration expenses incurred during the periods presented. Merger-related expenses of

$2.3

million and

$9.4

million, respectively, are recorded in the consolidated statement of income for the

three

and

nine

months ended

September 30, 2018,

and include costs related to the conversion of systems, termination of contracts, branch closures and severance.

The following table discloses the impact of the merger with BYBK (excluding the impact of the merger-related expenses) for the

three

and

nine

months ended

September 30, 2018.

The table also presents certain pro forma information as if BYBK had been acquired on

January 1, 2018.

These results combine the historical results of BYBK into our consolidated statements of income and, while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition related activity, they are

not

necessarily indicative of what would have occurred had the acquisition actually taken place on

January 1, 2018.

Old Line Bancshares incurred merger-related expenses of

$2.3

million and

$9.4

million, respectively, during the

three

and

nine

months ended

September 30, 2018,

which are excluded from the pro forma information below. In addition,

no

adjustments have been made to the pro formas to eliminate the

$300

thousand BYBK provision for loans losses for each of the

three

and

nine

months ended

September 30, 2018.

No

adjustments were made to reduce the impact of any other real estate owned (“OREO”) write downs, investment securities sold or repayment of borrowings recognized by BYBK in the

three

and

nine

months ended

September 30, 2018.

Old Line Bancshares expects to continue to record in the

fourth

quarter of

2018

expenses related to conversion, contract cancellation and personnel in connection with the BYBK merger. Old Line Bancshares also expects to achieve operating costs savings as a result of the BYBK acquisition that are

not

reflected in the pro forma amounts below.

	Pro Forma		Pro Forma		Pro Forma		Pro Forma
	Three months ended September 30, 2018		Three months ended September 30, 2017		Nine months ended September 30, 2018		Nine months ended September 30, 2017
Total revenues (net interest income plus noninterest income)	$	27,691,340	$	28,218,087	$	82,628,420	$	75,991,779
Net proforma income available to common stockholders	$	9,739,452	$	7,245,186	$	26,636,060	$	17,323,544

XML

Note 3 - Investment Securities

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

3. INVESTMENT SECURITIES

Presented below is a summary of the amortized cost and estimated fair value of securities.

			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
September 30, 2018
Available for sale
U.S. treasury	$	3,006,397	$	—	$	(14,834	)	$	2,991,563
U.S. government agency		18,791,500		—		(780,168	)		18,011,332
Corporate bonds		18,117,144		24,548		(31,480	)		18,110,212
Municipal securities		79,459,426		6,219		(3,771,161	)		75,694,484
Mortgage backed securities:
FHLMC certificates		19,663,844		1,115		(1,083,073	)		18,581,886
FNMA certificates		58,902,507		—		(3,311,751	)		55,590,756
GNMA certificates		28,484,140		116		(1,106,430	)		27,377,826
Total available for sale securities	$	226,424,958	$	31,998	$	(10,098,897	)	$	216,358,059
December 31, 2017
Available for sale
U.S. treasury	$	3,007,728	$	—	$	(2,337	)	$	3,005,391
U.S. government agency		18,001,200		—		(267,434	)		17,733,766
Corporate bonds		14,621,378		144,574		(107,893	)		14,658,059
Municipal securities		80,791,431		126,566		(1,362,709	)		79,555,288
Mortgage backed securities
FHLMC certificates		19,907,299		2,516		(455,580	)		19,454,235
FNMA certificates		64,476,038		—		(1,530,121	)		62,945,917
GNMA certificates		21,403,894		—		(403,992	)		20,999,902
Total available for sale securities	$	222,208,968	$	273,656	$	(4,130,066	)	$	218,352,558

At

September 30, 2018

and

December 

31,

2017,

securities with unrealized losses segregated by length of impairment were as follows:

	September 30, 2018
	Less than 12 months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
U.S. treasury	$	2,991,563	$	14,834	$	—	$	—	$	2,991,563	$	14,834
U.S. government agency		4,207,260		175,329		13,804,072		604,839		18,011,332		780,168
Corporate bonds		8,985,665		31,480		—		—		8,985,665		31,480
Municipal securities		32,490,897		1,168,344		37,832,127		2,602,817		70,323,024		3,771,161
Mortgage backed securities
FHLMC certificates		1,724,767		24,379		16,777,049		1,058,694		18,501,816		1,083,073
FNMA certificates		3,562,727		104,100		52,028,029		3,207,651		55,590,756		3,311,751
GNMA certificates		6,644,013		123,405		17,418,219		983,025		24,062,233		1,106,430
Total	$	60,606,892	$	1,641,871	$	137,859,496	$	8,457,026	$	198,466,389	$	10,098,897

	December 31, 2017
	Less than 12 months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
U.S. treasury	$	1,506,328	$	1,422	$	1,499,063	$	915	$	3,005,391	$	2,337
U.S. government agency		12,266,502		93,043		5,467,264		174,391		17,733,766		267,434
Corporate bonds		9,407,810		107,893		—		—		9,407,810		107,893
Municipal securities		25,548,751		189,668		31,343,394		1,173,041		56,892,145		1,362,709
Mortgage backed securities
FHLMC certificates		—		—		19,314,957		455,580		19,314,957		455,580
FNMA certificates		2,516,080		19,937		60,429,837		1,510,184		62,945,917		1,530,121
GNMA certificates		8,822,021		114,278		12,177,882		289,714		20,999,904		403,992
Total	$	60,067,492	$	526,241	$	130,232,397	$	3,603,825	$	190,299,890	$	4,130,066

At

September 30, 2018

and

December 

31,

2017,

we had

135

and

56

investment securities, respectively, in an unrealized loss position for

12

months or more and 

73

and

56

securities, respectively, in an unrealized loss position for less than

12

months.  We consider all unrealized losses on securities as of

September 30, 2018

to be temporary losses because we will redeem each security at face value at or prior to maturity. We have the ability and intent to hold these securities until recovery or maturity. As of

September 30, 2018,

we do

not

have the intent to sell any of the securities classified as available for sale and believe that it is more likely than

not

that we will

not

have to sell any such securities before a recovery of cost. In most cases, market interest rate fluctuations cause a temporary impairment in value. We expect the fair value to recover as the investments approach their maturity date or re-pricing date or if market yields for these investments decline. We do

not

believe that credit quality caused the impairment in any of these securities. Because we believe these impairments are temporary, we have

not

realized any loss in our consolidated statement of income.

During the

three

months ended

September 30, 2018,

we received

$4.3

million in proceeds from maturities and principal pay-downs on investment securities. The net proceeds of these transactions were used to reduce our Federal Home Loan Bank of Atlanta (“FHLB”) borrowings and fund loan growth. During the

three

months ended

September 30, 2017,

we received

$45.8

million in proceeds from sales, maturities or calls of, and principal pay-downs on, investment securities and realized

no

gains or losses. The net proceeds of these transactions were used to pay down our FHLB borrowings and purchase new investment securities. In

July 2017

we acquired a

$42.3

million investment portfolio as a result of our acquisition of DCB Bancshares, Inc. (“DCB”), the parent company of Damascus Community Bank (“Damascus”). The securities sold during the

three

months ended

September 30, 2017

included

$41.8

million of securities that we acquired in the DCB merger, which we sold immediately after the closing of the merger, resulting in

no

gain or loss on such sales.

During the

nine

months ended

September 30, 2018,

we received

$67.5

million in proceeds from sales, maturities or calls of, and principal pay-downs on, investment securities. The securities sold include

$51.7

million of securities that we acquired in the BYBK merger and sold immediately after the closing of the merger, resulting in

no

gain or loss on such sales. During the

nine

months ended

September 30, 2017,

we received

$72.5

million in proceeds from sales, maturities or calls of, and principal pay-downs on, investment securities, and realized gains of

$164

thousand and losses of

$129

thousand for total realized net gain of

$35

thousand. We used the net proceeds of these transactions to re-balance our investment portfolio, which resulted in an overall slightly higher yield on our security investments. The securities sold included

$41.8

million of securities that we acquired in the DCB merger and sold immediately after the closing of the merger, resulting in

no

gain or loss on such sales.

Contractual maturities and pledged securities at

September 30, 2018

are shown below. Actual maturities will differ from contractual maturities because borrowers

may

have the right to call or prepay obligations with or without prepayment penalties. We classify mortgage-backed securities (“MBS”) based on contractual maturity date. However, we receive payments on a monthly basis.

	Available for Sale
	Amortized		Fair
September 30, 2018	cost		value
Maturing
Within one year	$	4,283,142	$	4,271,753
Over one to five years		4,282,063		4,254,785
Over five to ten years		59,101,418		57,063,268
Over ten years		158,758,335		150,768,253
Total	$	226,424,958	$	216,358,059
Pledged securities	$	65,861,752	$	62,395,938

XML

Note 4 - Loans

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

4. LOANS

Major classifications of loans held for investment are as follows:

	September 30, 2018									December 31, 2017
	Legacy (1)			Acquired			Total			Legacy (1)			Acquired			Total
Commercial Real Estate
Owner Occupied	$	275,339,040		$	152,433,104		$	427,772,144		$	268,128,087		$	87,658,855		$	355,786,942
Investment		601,113,264			197,662,549			798,775,813			485,536,921			52,926,739			538,463,660
Hospitality		148,312,837			13,265,447			161,578,284			164,193,228			7,395,186			171,588,414
Land and A&D		91,987,559			24,883,469			116,871,028			67,310,660			9,230,771			76,541,431
Residential Real Estate
First Lien-Investment		90,285,266			50,629,554			140,914,820			79,762,682			21,220,518			100,983,200
First Lien-Owner Occupied		98,966,442			142,135,278			241,101,720			67,237,699			62,524,794			129,762,493
Residential Land and A&D		49,708,005			18,494,088			68,202,093			35,879,853			6,536,160			42,416,013
HELOC and Jr. Liens		20,581,673			43,445,979			64,027,652			21,520,339			16,019,418			37,539,757
Commercial and Industrial		215,729,656			97,412,805			313,142,461			154,244,645			33,100,688			187,345,333
Consumer		17,671,242			38,697,723			56,368,965			10,758,589			49,082,751			59,841,340
Total loans		1,609,694,984			779,059,996			2,388,754,980			1,354,572,703			345,695,880			1,700,268,583
Allowance for loan losses		(6,698,812	)		(281,238	)		(6,980,050	)		(5,738,534	)		(182,052	)		(5,920,586	)
Deferred loan costs, net		2,804,884			—			2,804,884			2,013,434			—			2,013,434
Net loans	$	1,605,801,056		$	778,778,758		$	2,384,579,814		$	1,350,847,603		$	345,513,828		$	1,696,361,431

_______________________

( 1 ) As a result of the acquisitions of Maryland Bankcorp, Inc. (“Maryland Bankcorp”), the parent company of Maryland Bank & Trust Company, N.A. (“MB&T”), in April  2011, WSB Holdings Inc., the parent company of The Washington Savings Bank (“WSB”), in May  2013, Regal Bancorp, Inc. (“Regal”), the parent company of Regal Bank & Trust (“Regal Bank”), in December 2015, DCB in July 2017, and BYBK, the parent company of Bay Bank, in April 2018, we have segmented the portfolio into two components, “Legacy” loans originated by Old Line Bank and “Acquired” loans acquired from MB&T, WSB, Regal Bank, Damascus and Bay Bank.

Credit Policies and Administration

We have adopted a comprehensive lending policy, which includes stringent underwriting standards for all types of loans. We have designed our underwriting standards to promote a complete banking relationship rather than a transactional relationship. Our lending staff follows pricing guidelines established periodically by our management team. In an effort to manage risk, prior to funding, the loan committee, consisting of

four

non-employee members of the board of directors and

four

executive officers, must approve by majority vote all credit decisions in excess of a lending officer’s lending authority. Management believes that we employ experienced lending officers, secure appropriate collateral and carefully monitor the financial condition of our borrowers and the concentrations of loans in the portfolio.

In addition to the internal business processes employed in the credit administration area, Old Line Bank retains an outside independent firm to review the loan portfolio. This firm performs a detailed annual review and an interim update. We use the results of the firm’s report to validate our internal ratings and we review the commentary on specific loans and on our loan administration activities in order to improve our operations.

Commercial Real Estate Loans

We finance commercial real estate for our clients, for owner occupied and investment properties, hospitality and land acquisition and development. Commercial real estate loans totaled

$1.5

billion and

$1.1

 billion at

September 30, 2018

and

December 31, 2017,

respectively. This lending has involved loans secured by owner-occupied commercial buildings for office, storage and warehouse space, as well as non-owner occupied commercial buildings. Our underwriting criteria for commercial real estate loans include maximum loan-to-value ratios, debt coverage ratios, secondary sources of repayments, guarantor requirements, net worth requirements and quality of cash flows. Loans secured by commercial real estate

may

be large in size and

may

involve a greater degree of risk than

one

-to-

four

family residential mortgage loans. Payments on such loans are often dependent on successful operation or management of the properties. We will generally finance owner occupied commercial real estate that does

not

exceed loan to value of

80%

and investor real estate at a maximum loan to value of

75%.

Commercial real estate lending entails significant risks. Risks inherent in managing our commercial real estate portfolio relate to sudden or gradual drops in property values as well as changes in the economic climate that

may

detrimentally impact the borrower’s ability to repay. We monitor the financial condition and operating performance of the borrower through a review of annual tax returns and updated financial statements. In addition, we meet with the borrower and/or perform site visits as required.

At

September 30, 2018,

we had approximately

$161.6

million of commercial real estate loans outstanding to the hospitality industry. An individual review of these loans indicates that they generally have a low loan to value, more than acceptable existing or projected cash flow, are to experienced operators and are generally dispersed throughout the region.

Residential Real Estate Loans

We offer a variety of consumer oriented residential real estate loans including home equity lines of credit, home improvement loans and

first

or

second

mortgages on owner occupied and investment properties. Our residential loan portfolio amounted to

$514.2

million and

$310.7

 million at

September 30, 2018

and

December 31, 2017,

respectively. Although most of these loans are in our market area, the diversity of the individual loans in the portfolio reduces our potential risk. Usually, we secure our residential real estate loans with a security interest in the borrower’s primary or secondary residence with a loan to value

not

exceeding

85%.

Our initial underwriting includes an analysis of the borrower’s debt/income ratio which generally

may

not

exceed

43%,

collateral value, length of employment and prior credit history. A credit score of at least

640

is required. We do

not

originate any subprime residential real estate loans.

This segment of our portfolio also consists of funds advanced for construction of custom single family residences homes (where the home buyer is the borrower) and financing to builders for the construction of pre-sold homes and multi-family housing. These loans generally have short durations, meaning maturities typically of

twelve

months or less. Old Line Bank limits its construction lending risk through adherence to established underwriting procedures. These loans generally have short durations, meaning maturities typically of

twelve

months or less. Residential houses, multi-family dwellings and commercial buildings under construction and the underlying land for which the loan was obtained secure the construction loans. The vast majority of these loans are concentrated in our market area.

Construction lending also entails significant risk. These risks generally involve larger loan balances concentrated with single borrowers with funds advanced upon the security of the land or the project under construction. An appraisal of the property estimates the value of the project “as is and as if” completed. An appraisal of the property estimates the value of the project prior to completion of construction. Thus, initial funds are advanced based on the current value of the property with the remaining construction funds advanced under a budget sufficient to successfully complete the project within the “as completed” loan to value. To further mitigate the risks, we generally limit loan amounts to

80%

or less of appraised values and obtain

first

lien positions on the property.

We generally only offer real estate construction financing only to experienced builders, commercial entities or individuals who have demonstrated the ability to obtain a permanent loan “take-out” (conversion to a permanent mortgage upon completion of the project). We also perform a complete analysis of the borrower and the project under construction. This analysis includes a review of the cost to construct, the borrower’s ability to obtain a permanent “take-out” the cash flow available to support the debt payments and construction costs in excess of loan proceeds, and the value of the collateral. During construction, we advance funds on these loans on a percentage of completion basis. We inspect each project as needed prior to advancing funds during the term of the construction loan. We

may

provide permanent financing on the same projects for which we have provided the construction financing.

We also offer fixed rate home improvement loans. Our home equity and home improvement loan portfolio gives us a diverse client base. Although most of these loans are in our market area, the diversity of the individual loans in the portfolio reduces our potential risk. Usually, we secure our home equity loans and lines of credit with a security interest in the borrower’s primary or secondary residence.

Under our loan approval policy, all residential real estate loans approved must comply with federal regulations. Generally, we will make residential mortgage loans in amounts up to the limits established by Fannie Mae and Freddie Mac for secondary market resale purposes. Currently this amount for single-family residential loans varies from 

$453,100

 up to a maximum of 

$679,650

 for certain high-cost designated areas. We also make residential mortgage loans up to limits established by the Federal Housing Administration, which currently is

$679,650.

The Washington, D.C. and Baltimore areas are both considered high-cost designated areas. We will, however, make loans in excess of these amounts if we believe that we can sell the loans in the secondary market or that the loans should be held in our portfolio. For loans we originate for sale in the secondary market, we typically require a credit score of 

620

or higher, with some exceptions provided we receive an approval recommendation from FannieMae, FreddieMac or the Federal Housing Administration’s automated underwriting approval system.  Loans sold in the secondary market are sold to investors on a servicing released basis and recorded as loans as held for sale.  The premium is recorded in income on marketable loans in non-interest income, net of commissions paid to the loan officers.

Commercial and Industrial Lending

Our commercial and industrial lending consists of lines of credit, revolving credit facilities, accounts receivable financing, term loans, equipment loans, Small Business Administration loans, standby letters of credit and unsecured loans. We originate commercial loans for any business purpose including the financing of leasehold improvements and equipment, the carrying of accounts receivable, general working capital, and acquisition activities. We have a diverse client base and we do

not

have a concentration of these types of loans in any specific industry segment. We generally secure commercial business loans with accounts receivable, equipment, deeds of trust and other collateral such as marketable securities, cash value of life insurance and time deposits at Old Line Bank.

Commercial business loans have a higher degree of risk than residential mortgage loans because the availability of funds for repayment generally depends on the success of the business. They

may

also involve high average balances, increased difficulty monitoring and a high risk of default. To help manage this risk, we typically limit these loans to proven businesses and we generally obtain appropriate collateral and personal guarantees from the borrower’s principal owners and monitor the financial condition of the business. For loans in excess of

$250,000,

monitoring generally includes a review of the borrower’s annual tax returns and updated financial statements.

Consumer Installment Lending

We offer various types of secured and unsecured consumer loans. We make consumer loans for personal, family or household purposes as a convenience to our customer base. Consumer loans, however, are

not

a focus of our lending activities. The underwriting standards for consumer loans include a determination of the applicant’s payment history on other debts and an assessment of his or her ability to meet existing obligations and payments on the proposed loan. As a general guideline, a consumer’s total debt service should

not

exceed

40%

of his or her gross income.

Our consumer loan portfolio, includes indirect loans, which consists primarily of auto and RV loans. These loans are financed through dealers and the dealers receive a percentage of the finance charge, which varies depending on the terms of each loan. We use the same underwriting standards in originating these indirect loans as we do for consumer loans generally.

Consumer loans

may

present greater credit risk than residential mortgage loans because many consumer loans are unsecured or rapidly depreciating assets secure these loans. Repossessed collateral for a defaulted consumer loan

may

not

provide an adequate source of repayment of the outstanding loan balance because of the greater likelihood of damage, loss or depreciation. Consumer loan collections depend on the borrower’s continuing financial stability. If a borrower suffers personal financial difficulties, the consumer

may

not

repay the loan. Also, various federal and state laws, including bankruptcy and insolvency laws,

may

limit the amount we can recover on such loans.

Concentrations of Credit

Most of our lending activity occurs within the state of Maryland within the suburban Washington, D.C. and Baltimore market areas in Anne Arundel, Baltimore, Baltimore City, Calvert, Carroll, Charles, Frederick, Harford, Howard, Montgomery, Prince George’s and St. Mary’s Counties. The majority of our loan portfolio consists of commercial real estate loans and residential real estate loans.

Non-Accrual and Past Due Loans

We consider loans past due if the borrower has

not

paid the required principal and interest payments when due under the original or modified terms of the promissory note and place a loan on non-accrual status when the payment of principal or interest has become

90

 days past due. When we classify a loan as non-accrual, we

no

longer accrue interest on such loan and we reverse 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 legacy loans only when received. We originally recorded purchased, credit-impaired loans at fair value upon acquisition, and an accretable yield is established and recognized as interest income on purchased loans to the extent subsequent cash flows support the estimated accretable yield. Purchased, credit-impaired loans that perform consistently with the accretable yield expectations are

not

reported as non-accrual or nonperforming. However, purchased, credit-impaired loans that do

not

continue to perform according to accretable yield expectations are considered impaired, and presented as non-accrual and nonperforming. Currently, management expects to fully collect the carrying value of acquired, credit-impaired loans.

The table below presents an age analysis of the loans held for investment portfolio at

September 30, 2018

and

December 

31,

2017.

Age Analysis of Past Due Loans

	September 30, 2018						December 31, 2017
	Legacy		Acquired		Total		Legacy		Acquired		Total
Current	$	1,600,670,724	$	766,584,894	$	2,367,255,618	$	1,352,406,852	$	338,913,557	$	1,691,320,409
Accruing past due loans:
30-89 days past due
Commercial Real Estate:
Owner Occupied		2,689,179		—		2,689,179		—		—		—
Investment		438,456		1,819,810		2,258,266		1,089,022		843,706		1,932,728
Hospitality		—		4,915		4,915		—		—		—
Land and A&D		1,015,998		—		1,015,998		254,925		158,899		413,824
Residential Real Estate:
First Lien-Investment		180,764		718,673		899,437		270,822		506,600		777,422
First Lien-Owner Occupied		93,817		2,705,941		2,799,758		229		2,457,299		2,457,528
Land and A&D		1,032,599		170,000		1,202,599		—		—		—
HELOC and Jr. Liens		325,914		1,026,737		1,352,651		—		130,556		130,556
Commercial and Industrial		290,290		295,841		586,131		51,088		261,081		312,169
Consumer		284,843		1,378,380		1,663,223		26,134		1,017,195		1,043,329
Total 30-89 days past due		6,351,860		8,120,297		14,472,157		1,692,220		5,375,336		7,067,556
90 or more days past due
Commercial Real Estate:
Owner Occupied		1,042,909		179,718		1,222,627		—		—		—
Investment		291,278		—		291,278		—		—		—
Residential Real Estate:
First Lien-Owner Occupied		—		143,625		143,625		—		37,560		37,560
Land and A&D		417,110		—		417,110
HELOC and Jr. Liens		—		308,796		308,796		—		—		—
Commercial		29,134		—		29,134		—		—		—
Consumer		4,476		101,079		105,555		—		78,407		78,407
Total 90 or more days past due		1,784,907		733,218		2,518,125		—		115,967		115,967
Total accruing past due loans		8,136,767		8,853,515		16,990,282		1,692,220		5,491,303		7,183,523
Commercial Real Estate:
Owner Occupied		—		412,785		412,785		—		228,555		228,555
Investment		—		179,091		179,091		—		—		—
Land and A&D		—		151,780		151,780		—		190,193		190,193
Residential Real Estate:
First Lien-Investment		192,501		219,681		412,182		192,501		—		192,501
First Lien-Owner Occupied		266,811		1,734,910		2,001,721		281,130		872,272		1,153,402
HELOC and Jr. Liens		—		126,240		126,240		—		—		—
Land and A&D		277,704		594,505		872,209		—		—		—
Commercial and Industrial		150,477		150,924		301,401		—		—		—
Consumer		—		51,671		51,671		—		—		—
Non-accruing loans:		887,493		3,621,587		4,509,080		473,631		1,291,020		1,764,651
Total Loans	$	1,609,694,984	$	779,059,996	$	2,388,754,980	$	1,354,572,703	$	345,695,880	$	1,700,268,583

We consider all nonperforming loans and troubled debt restructurings (“TDRs”) to be impaired. We do

not

recognize interest income on nonperforming loans during the time period that the loans are nonperforming. We only recognize interest income on nonperforming loans when we receive payment in full for all amounts due of all contractually required principle and interest, and the loan is current with its contractual terms. The tables below present our impaired loans at and for the periods ended

September 30, 2018

and

December 

31,

2017.

	Impaired Loans
							Three months September 30, 2018				Nine months September 30, 2018
	Unpaid						Average		Interest		Average		Interest
	Principal		Recorded		Related		Recorded		Income		Recorded		Income
	Balance		Investment		Allowance		Investment		Recognized		Investment		Recognized
Legacy
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied	$	1,752,561	$	1,752,561	$	—	$	1,758,968	$	13,509		1,773,719	$	55,910
Investment		1,701,018		1,701,018		—		1,708,471		18,586		1,723,700		69,746
Residential Real Estate:
First Lien-Investment		—		—		—		—		—		—		—
First Lien-Owner Occupied		216,720		216,720		—		229,349		743		230,150		7,192
Land and A&D		277,704		277,704		—		277,704		—		277,704		—
Commercial and Industrial		509,772		509,772		—		515,840		2,201		526,281		13,287
With an allowance recorded:
Commercial Real Estate:
Investment		—		—		—		—		—		—		—
Residential Real Estate:
First Lien-Investment		192,501		192,501		39,420		192,501		—		192,501		—
First Lien-Owner Occupied		50,091		50,091		37,075		55,510		290		56,322		1,424
Commercial and Industrial		93,892		93,892		93,892		94,163		812		94,932		3,622
Total legacy impaired		4,794,259		4,794,259		170,387		4,832,506		36,141		4,875,309		151,181
Acquired(1)
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied		516,170		465,723		—		590,642		—		591,057		3,281
Investment		221,197		200,954		—		627,792		10,855		628,745		25,790
Land and A&D		243,329		106,780		—		349,809		—		349,809		—
Residential Real Estate:
First Lien-Owner Occupied		2,028,054		1,915,795		—		2,030,925		4,321		2,035,333		26,246
First Lien-Investment		224,868		224,868		—		238,294		—		238,294		4,664
Land and A&D		654,644		451,627		—		767,290		—		767,315		1,518
HELOC and Jr. Liens		128,063		128,063		—		128,063		—		128,063		964
Commercial		1,031,496		167,560		—		1,303,135		15,576		1,303,808		23,427
Consumer		52,730		52,730		—		85,421		—		92,987		1,438
With an allowance recorded:
Commercial Real Estate:
Land and A&D		328,851		45,000		45,000		328,851		—		329,705		—
Residential Real Estate:
First Lien-Owner Occupied		253,437		253,437		88,723		276,861		—		275,590		—
Land and A&D		154,297		154,297		96,391		161,153		—		159,370		—
Commercial and Industrial		68,888		68,888		24,517		69,324		589		70,367		2,683
Consumer		27,009		27,009		26,607		27,456		291		27,720		533
Total acquired impaired		5,933,033		4,262,731		281,238		6,985,016		31,632		6,998,163		90,544
Total impaired	$	10,727,292	$	9,056,990	$	451,625	$	11,817,522	$	67,773		11,873,472	$	241,725

_______________________

( 1 ) Generally accepted accounting principles require that we record acquired loans at fair value at acquisition, which includes a discount for loans with credit impairment. These purchased credit impaired loans are not performing according to their contractual terms and meet the definition of an impaired loan. Although we do not accrue interest income at the contractual rate on these loans, we do recognize an accretable yield as interest income to the extent such yield is supported by cash flow analysis of the underlying loans.

Impaired Loans
Twelve months ended December 31, 2017
	Unpaid						Average		Interest
	Principal		Recorded		Related		Recorded		Income
	Balance		Investment		Allowance		Investment		Recognized
Legacy
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied	$	1,797,030	$	1,797,030	$	—	$	1,913,873	$	70,623
Investment		1,155,595		1,155,595		—		1,183,738		51,806
Residential Real Estate:
First Lien-Owner Occupied		226,554		226,554		—		233,618		10,536
Commercial and Industrial		387,208		387,208		—		379,983		30,245
With an allowance recorded:
Commercial Real Estate:
Investment		592,432		592,432		69,903		601,959		30,576
Residential Real Estate:
First Lien-Owner Occupied		54,576		54,576		37,075		217,673		—
First Lien-Investment		192,501		192,501		39,420		192,501		—
Commercial and Industrial		96,212		96,212		96,212		97,923		4,960
Total legacy impaired		4,502,108		4,502,108		242,610		4,821,268		198,746
Acquired(1)
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied		253,865		253,865		—		252,988		2,155
Land and A&D		334,271		45,000		—		334,271		—
Residential Real Estate:
First Lien-Owner Occupied		1,382,055		1,269,796		—		1,390,037		31,601
First Lien-Investment		131,294		74,066		—		132,812		4,378
With an allowance recorded:
Commercial Real Estate:
Land and A&D		148,196		148,196		80,072		155,621		2,498
Residential Real Estate:
First Lien-Owner Occupied		250,194		250,194		77,464		273,596		23,424
Commercial and Industrial		72,125		72,125		24,517		74,279		3,775
Total acquired impaired		2,572,000		2,113,242		182,053		2,613,604		67,831
Total impaired	$	7,074,108	$	6,615,350	$	424,663	$	7,434,872	$	266,577

_______________________

( 1 ) Generally accepted accounting principles require that we record acquired loans at fair value at acquisition, which includes a discount for loans with credit impairment. These purchased credit impaired loans are not performing according to their contractual terms and meet the definition of an impaired loan. Although we do not accrue interest income at the contractual rate on these loans, we do recognize an accretable yield as interest income to the extent such yield is supported by cash flow analysis of the underlying loans.

We consider a loan a TDR when we conclude that both of the following conditions exist: the restructuring constitutes a concession and the debtor is experiencing financial difficulties. Restructured loans at

September 30, 2018

consisted of

seven

loans for an aggregate of

$2.4

million compared to

seven

loans for an aggregate of

$2.7

million at

December 31, 2017.

We had

no

loan modifications reported as TDRs during the

three

months ended

September 30, 2018

or

2017.

The following table includes the recorded investment in and number of modifications reported as TDRs during the

nine

months ended

September 30, 2018

and

2017.

We report the recorded investment in loans prior to a modification and also the recorded investment in the loans after the loans were restructured. Reductions in the recorded investment are primarily due to the partial charge-off of the principal balance prior to the modification. TDR’s consisted on

one

consumer loan of which we extended the original maturity date from

75

months to

117

months. We had

no

loans that were modified as a TDR that defaulted during the

three

or

nine

month periods ended

September 30, 2018

or

2017.

	Loans Modified as a TDR for the nine months ended
	September 30, 2018						September 30, 2017
			Pre-		Post				Pre-		Post
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
Troubled Debt Restructurings—	# of		Recorded		Recorded		# of		Recorded		Recorded
(Dollars in thousands)	Contracts		Investment		Investment		Contracts		Investment		Investment
Legacy
Commercial Real Estate		—		—		—		1		1,596,740		1,572,976
Commercial and Industrial		—		—		—		1		414,324		399,351
Consumer		1		28,009		27,009		—		—		—
Total legacy TDR's		1	$	28,009	$	27,009		2	$	2,011,064	$	1,972,327

Acquired impaired loans

The following table documents changes in the accretable (premium) discount on acquired impaired loans during the

nine

months ended

September 30, 2018

and

2017,

along with the outstanding balances and related carrying amounts for the beginning and end of those respective periods.

	September 30, 2018			September 30, 2017
Balance at beginning of period	$	115,066		$	(22,980	)
Additions due to BYBK acquisition		50,984			—
Additions due to DCB acquisition		—			99,981
Accretion of fair value discounts		(873,308	)		(83,099	)
Reclassification (to)/from non-accretable discount		847,153			(15,428	)
Balance at end of period	$	139,895		$	(21,526	)

	Contractually
	Required Payments
	Receivable		Carrying Amount
At September 30, 2018	$	17,975,448	$	14,109,972
At December 31, 2017		8,277,731		6,617,774
At September 30, 2017		8,301,260		6,611,444
At December 31, 2016		9,597,703		7,558,415

For our acquisition of Bay Bank on

April 13, 2018,

we recorded all loans acquired at the estimated fair value on their purchase date with

no

carryover of the related allowance for loan losses. On the acquisition date, we segregated the loan portfolio into

two

loan pools, performing and non-performing.

We had an independent

third

party determine the net discounted value of cash flows on

1,991

performing loans totaling

$520.5

million. The valuation took into consideration the loans’ underlying characteristics including account types, remaining terms, annual interest rates, interest types, past delinquencies, timing of principal and interest payments, current market rates, loan-to-value ratios, loss exposures, and remaining balances. These performing loans were segregated into pools based on loan and payment type and, in some cases, risk grade. The effect of this fair valuation process was a net discount of

$8.3

million at acquisition.

We also individually evaluated

132

impaired loans totaling

$13.5

million to determine their fair value as of the

April 13, 2018

measurement date. In determining the fair value for each individually evaluated impaired loan, we considered a number of factors including the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral and net present value of cash flows we expect to receive, among others.

We established a credit related non-accretable difference of

$3.2

million relating to these purchased credit impaired loans, reflected in the recorded fair value.

We re-classified

$21.7

million (net of fair value marks) of our acquired loans to available for sale. These loans consisted primarily of purchase credit impaired loans that we were working to market with brokers. Settlement occurred on these loans during the

third

quarter of

2018,

resulting in

no

gain or loss on the sale.

The following table outlines the contractually required payments receivable, cash flows we expect to receive, non-accretable credit adjustment and the accretable yield for all of Bay Bank’s impaired loans as of the acquisition date,

April 13, 2018.

	Purchased
	Credit
	Impaired
	(in millions)
Contractually required principal at acquisition	$	14,766
Contractual cash flows not expected to be collected (non-accretable difference)		(3,201	)
Expected cash flows at acquisition-Total		11,565

Credit Quality Indicators

We review the adequacy of the allowance for loan losses at least quarterly. We base the evaluation of the adequacy of the allowance for loan losses upon loan categories. We categorize loans as residential real estate loans, commercial real estate loans, commercial loans and consumer loans. We further divide commercial real estate loans by owner occupied, investment, hospitality and land acquisition and development. We also divide residential real estate by owner occupied, investment, land acquisition and development and junior liens. All categories are divided by risk rating and loss factors and weighed 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 collateral separately and assign loss amounts based upon the evaluation.

We determine loss ratios for all loans based upon a review of the

three

year loss ratio for the category and qualitative factors.

We charge off loans that management has identified as losses. We consider suggestions from our external loan review firm and bank examiners when determining which loans to charge off. We automatically charge off consumer loan accounts based on regulatory requirements. We partially charge off real estate loans that are collateral dependent based on the value of the collateral.

If a loan that was previously rated a pass performing loan, from our acquisitions, deteriorates subsequent to the acquisition, the subject loan will be assessed for risk and, if necessary, evaluated for impairment. If the risk assessment rating is adversely changed and the loan is determined to

not

be impaired, the loan will be placed in a migration category and the credit mark established for the loan will be compared to the general reserve allocation that would be applied using the current allowance for loan losses formula for General Reserves. If the credit mark exceeds the allowance for loan losses formula for General Reserves, there will be

no

change to the allowance for loan losses. If the credit mark is less than the current allowance for loan losses formula for General Reserves, the allowance for loan losses will be increased by the amount of the shortfall by a provision recorded in the income statement. If the loan is deemed impaired, the loan will be subject to evaluation for loss exposure and a specific reserve. If the estimate of loss exposure exceeds the credit mark, the allowance for loan losses will be increased by the amount of the excess loss exposure through a provision. If the credit mark exceeds the estimate of loss exposure there will be

no

change to the allowance for loan losses. If a loan from the acquired loan portfolio is carrying a specific credit mark and a current evaluation determines that there has been an increase in loss exposure, the allowance for loan losses will be increased by the amount of the current loss exposure in excess of the credit mark.

The following tables outline the class of loans by risk rating at

September 30, 2018

and

December 

31,

2017:

At September 30, 2018	Legacy		Acquired		Total
Risk Rating
Pass(1 - 5)
Commercial Real Estate:
Owner Occupied	$	269,706,878	$	147,139,598	$	416,846,476
Investment		598,321,509		195,074,793		793,396,302
Hospitality		148,312,837		13,260,532		161,573,369
Land and A&D		89,964,201		24,431,791		114,395,992
Residential Real Estate:
First Lien-Investment		89,462,345		47,521,236		136,983,581
First Lien-Owner Occupied		98,636,095		137,076,969		235,713,064
Land and A&D		47,318,505		17,796,181		65,114,686
HELOC and Jr. Liens		20,581,673		43,265,816		63,847,489
Commercial and Industrial		213,311,801		94,484,613		307,796,414
Consumer		17,671,242		38,541,584		56,212,826
Total pass		1,593,287,086		758,593,113		2,351,880,199
Special Mention(6)
Commercial Real Estate:
Owner Occupied		424,315		3,074,210		3,498,525
Investment		1,090,737		1,304,518		2,395,255
Hospitality		—		4,915		4,915
Land and A&D		2,023,358		299,898		2,323,256
Residential Real Estate:
First Lien-Investment		292,445		1,738,070		2,030,515
First Lien-Owner Occupied		63,536		1,576,527		1,640,063
Land and A&D		2,111,796		103,402		2,215,198
HELOC and Jr. Liens		—		—		—
Commercial and Industrial		588,904		97,737		686,641
Consumer		—		70,382		70,382
Total special mention		6,595,091		8,269,659		14,864,750
Substandard(7)
Commercial Real Estate:
Owner Occupied		5,207,847		2,219,296		7,427,143
Investment		1,701,018		1,283,238		2,984,256
Hospitality		—		—		—
Land and A&D		—		151,780		151,780
Residential Real Estate:
First Lien-Investment		530,476		1,370,248		1,900,724
First Lien-Owner Occupied		266,811		3,481,782		3,748,593
Land and A&D		277,704		594,505		872,209
HELOC and Jr. Liens		—		180,163		180,163
Commercial and Industrial		1,828,951		2,830,455		4,659,406
Consumer		—		85,757		85,757
Total substandard		9,812,807		12,197,224		22,010,031
Doubtful(8)		—		—		—
Loss(9)		—		—		—
Total	$	1,609,694,984	$	779,059,996	$	2,388,754,980

At December 31, 2017	Legacy		Acquired		Total
Risk Rating
Pass(1 - 5)
Commercial Real Estate:
Owner Occupied	$	262,377,665	$	83,069,390	$	345,447,055
Investment		483,404,883		51,064,247		534,469,130
Hospitality		164,193,228		7,395,186		171,588,414
Land and A&D		65,184,837		9,065,405		74,250,242
Residential Real Estate:
First Lien-Investment		78,814,931		19,846,749		98,661,680
First Lien-Owner Occupied		66,888,943		57,895,058		124,784,001
Land and A&D		33,712,187		5,727,719		39,439,906
HELOC and Jr. Liens		21,520,339		16,019,418		37,539,757
Commercial and Industrial		150,881,948		32,738,715		183,620,663
Consumer		10,758,589		49,017,427		59,776,016
Total pass		1,337,737,550		331,839,314		1,669,576,864
Special Mention(6)
Commercial Real Estate:
Owner Occupied		435,751		2,816,057		3,251,808
Investment		384,011		1,037,254		1,421,265
Hospitality		—		—		—
Land and A&D		2,125,823		120,366		2,246,189
Residential Real Estate:
First Lien-Investment		300,824		1,034,942		1,335,766
First Lien-Owner Occupied		67,626		1,848,385		1,916,011
Land and A&D		2,167,666		663,248		2,830,914
Commercial and Industrial		1,519,394		59,902		1,579,296
Consumer		—		65,324		65,324
Total special mention		7,001,095		7,645,478		14,646,573
Substandard(7)
Commercial Real Estate:
Owner Occupied		5,314,671		1,773,408		7,088,079
Investment		1,748,027		825,238		2,573,265
Hospitality		—		—		—
Land and A&D		—		45,000		45,000
Residential Real Estate:
First Lien-Investment		646,927		338,827		985,754
First Lien-Owner Occupied		281,130		2,781,351		3,062,481
Land and A&D		—		145,193		145,193
Commercial and Industrial		1,843,303		302,071		2,145,374
Consumer		—		—		—
Total substandard		9,834,058		6,211,088		16,045,146
Doubtful(8)		—		—		—
Loss(9)		—		—		—
Total	$	1,354,572,703	$	345,695,880	$	1,700,268,583

The following table details activity in the allowance for loan losses by portfolio segment for the

three

and

nine

month periods ended

September 30, 2018

and

2017.

Allocation of a portion of the allowance to

one

category of loans does

not

preclude its availability to absorb losses in other categories.

	Commercial			Commercial		Residential
Three Months Ended September 30, 2018	and Industrial			Real Estate		Real Estate		Consumer			Total
Beginning balance	$	1,680,448		$	4,196,752	$	749,630	$	77,747		$	6,704,577
Provision for loan losses		(141,751	)		303,547		34,609		111,465			307,870
Recoveries		65,819			417		3,119		5,127			74,482
Total		1,604,516			4,500,716		787,358		194,339			7,086,929
Loans charged off		—			—		—		(106,879	)		(106,879	)
Ending Balance	$	1,604,516		$	4,500,716	$	787,358	$	87,460		$	6,980,050

	Commercial		Commercial		Residential
Nine Months Ended September 30, 2018	and Industrial		Real Estate		Real Estate			Consumer			Total
Beginning balance	$	1,262,030	$	3,783,735	$	844,355		$	30,466		$	5,920,586
Provision for loan losses		273,017		716,147		(70,403	)		316,262			1,235,023
Recoveries		69,469		834		15,230			11,980			97,513
Total		1,604,516		4,500,716		789,182			358,708			7,253,122
Loans charged off		—		—		(1,824	)		(271,248	)		(273,072	)
Ending Balance	$	1,604,516	$	4,500,716	$	787,358		$	87,460		$	6,980,050
Amount allocated to:
Legacy Loans:
Individually evaluated for impairment	$	93,892	$	—	$	76,495		$	—		$	170,387
Other loans not individually evaluated		1,441,108		4,500,716		525,749			60,852			6,528,425
Acquired Loans:
Individually evaluated for impairment		69,516		—		185,114			26,608			281,238
Ending balance	$	1,604,516	$	4,500,716	$	787,358		$	87,460		$	6,980,050

				Commercial		Residential
Three Months Ended September 30, 2017	Commercial			Real Estate		Real Estate			Consumer			Total
Beginning balance	$	1,318,247		$	3,789,423	$	793,795		$	10,377		$	5,911,842
Provision for loan losses		81,378			113,694		(97,691	)		38,320			135,701
Recoveries		786			417		—			6,280			7,483
Total		1,400,411			3,903,534		696,104			54,977			6,055,026
Loans charged off		(202,528	)		—		—			(36,311	)		(238,839	)
Ending Balance	$	1,197,883		$	3,903,534	$	696,104		$	18,666		$	5,816,187

				Commercial			Residential
Nine Months Ended September 30, 2017	Commercial			Real Estate			Real Estate			Consumer			Total
Beginning balance	$	1,372,235		$	3,990,152		$	823,520		$	9,562		$	6,195,469
Provision for loan losses		596,350			352,054			(126,048	)		32,752			855,108
Recoveries		2,350			1,250			900			31,811			36,311
Total		1,970,935			4,343,456			698,372			74,125			7,086,888
Loans charged off		(773,052	)		(439,922	)		(2,268	)		(55,459	)		(1,270,701	)
Ending Balance	$	1,197,883		$	3,903,534		$	696,104		$	18,666		$	5,816,187
Amount allocated to:
Legacy Loans:
Individually evaluated for impairment	$	96,712		$	69,903		$	35,647		$	—		$	202,262
Other loans not individually evaluated		1,076,654			3,753,559			582,994			18,666			5,431,873
Acquired Loans:
Individually evaluated for impairment		24,517			80,072			77,463			—			182,052
Ending balance	$	1,197,883		$	3,903,534		$	696,104		$	18,666		$	5,816,187

Our recorded investment in loans at

September 30, 2018

and

2017

related to each balance in the allowance for probable loan losses by portfolio segment and disaggregated on the basis of our impairment methodology was as follows:

	Commercial		Commercial		Residential
September 30, 2018	and Industrial		Real Estate		Real Estate		Consumer		Total
Legacy loans:
Individually evaluated for impairment with specific reserve	$	93,892	$	—	$	242,592	$	—	$	336,484
Individually evaluated for impairment without specific reserve		509,772		3,453,579		494,423		—		4,457,774
Other loans not individually evaluated		215,125,991		1,113,299,121		258,804,372		17,671,242		1,604,900,726
Acquired loans:
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		68,888		45,000		407,735		27,009		548,632
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		167,560		773,457		2,720,353		52,730		3,714,100
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		559,248		7,872,328		5,664,394		14,000		14,109,970
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		96,617,110		379,553,784		245,912,416		38,603,984		760,687,294
Ending balance	$	313,142,461	$	1,504,997,269	$	514,246,285	$	56,368,965	$	2,388,754,980

			Commercial		Residential
September 30, 2017	Commercial		Real Estate		Real Estate		Consumer		Total
Legacy loans:
Individually evaluated for impairment with specific reserve	$	96,712	$	597,053	$	411,383	$	—	$	1,105,148
Individually evaluated for impairment without specific reserve		399,351		2,981,975		274,701		—		3,656,027
Other loans not individually evaluated		143,238,162		941,537,848		207,916,920		7,076,344		1,299,769,274
Acquired loans:
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		73,167		149,226		250,194		—		472,587
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		—		298,279		1,192,153		—		1,490,432
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		—		3,492,464		3,156,119		14,000		6,662,583
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		39,101,483		157,924,243		106,619,402		53,712,972		357,358,100
Ending balance	$	182,908,875	$	1,106,981,088	$	319,820,872	$	60,803,316	$	1,670,514,151

XML

Note 5 - Other Real Estate Owned

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Real Estate Owned [Text Block]

5. OTHER REAL ESTATE OWNED

At

September 30, 2018

and

December 

31,

2017,

the fair value of other real estate owned was

$1.5

million and

$2.0

million, respectively. As a result of the acquisitions of Maryland Bankcorp, WSB Holdings, Regal and BYBK, we have segmented the OREO into

two

components, real estate obtained as a result of loans originated by Old Line Bank (legacy) and other real estate acquired from MB&T, WSB, Regal Bank and Bay Bank or obtained as a result of loans originated by MB&T, WSB, Regal Bank and Bay Bank (acquired); we did

not

acquire any OREO properties in the DCB acquisition. We are currently aggressively either marketing these properties for sale or improving them in preparation for sale.

The following outlines the transactions in OREO during the period.

Nine months ended September 30, 2018	Legacy			Acquired			Total
Beginning balance	$	425,000		$	1,578,998		$	2,003,998
Acquisition of Bay Bancorp, Inc.		—			1,041,079			1,041,079
Sales/deposits on sales		(425,000	)		(1,070,173	)		(1,495,173	)
Net realized gain/(loss)		—			(80,738	)		(80,738	)
Total end of period	$	—		$	1,469,166		$	1,469,166

Residential Foreclosures and Repossessed Assets

 — Once all potential alternatives for reinstatement are exhausted, past due loans collateralized by residential real estate are referred for foreclosure proceedings in accordance with local requirements of the applicable jurisdiction. Once possession of the property collateralizing the loan is obtained, the repossessed property will be recorded within other assets either as OREO or, where management has both the intent and ability to recover its losses through a government guarantee, as a foreclosure claim receivable. At

September 30, 2018,

residential foreclosures classified as OREO totaled

$686

thousand. We had

three

loans for an aggregate of

$597

thousand secured by residential real estate in process of foreclosure at

September 30, 2018

compared to

one

loan for

$277

thousand at

December 31, 2017.

XML

Note 6 - Earnings Per Common Share

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Earnings Per Share [Text Block]

6. EARNINGS PER COMMON SHARE

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

We calculate diluted earnings per common 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				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Weighted average number of shares		16,988,883		11,969,536		15,277,219		11,286,215
Dilutive average number of shares		17,187,837		12,172,868		15,485,452		11,496,659

XML

Note 7 - Stock-based Compensation

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Shareholders' Equity and Share-based Payments [Text Block]

7. STOCK-BASED COMPENSATION

For the

three

months ended

September 30, 2018

and

2017,

we recorded stock-based compensation expense of

$302,974

and

$187,904,

respectively.  For the

nine

months ended

September 30, 2018

and

2017,

we recorded stock-based compensation expense of

$872,284

and

$449,935,

respectively. At

September 30, 2018,

there was

$1.6

million of total unrecognized compensation cost related to non-vested stock options that we expect to realize over the next

2.0

years. As of

September 30, 2018,

there were

212,005

shares remaining available for future issuance under the

2010

equity incentive plan. The officers exercised

53,021

options during the

nine

month period ended

September 30, 2018

compared to

14,300

options exercised during the

nine

month period ended

September 30, 2017.

For purposes of determining estimated fair value of stock options, we have computed the estimated fair value of all stock-based compensation using the Black-Scholes option pricing model and, for stock options granted prior to

December 31 2017,

we have applied the assumptions set forth in Old Line Bancshares’ Annual Report on Form 

10

-K for the year ended

December 

31,

2017.

  Restricted stock awards are valued at the current stock price on the date of the award. During the

nine

months ended

September 30, 2018,

there were

50,000

stock options granted compared to

no

stock options granted during the

nine

months ended

September 30, 2017. 

The weighted average grant date fair value of the

2018

stock options is

$8.90

and was computed using the Black-Scholes option pricing model under similar assumptions.

During the

nine

months ended

September 30, 2018

and

2017,

we granted

19,443

and

40,713

restricted common stock awards, respectively. The weighted average grant date fair value of these restricted stock awards was

$32.00

at

September 30, 2018. 

At

September 30, 2018,

there was

$3.6

million of total unrecognized compensation cost related to restricted stock awards that we expect to realize over the next

2.5

years. There were

no

restricted shares forfeited during the

nine

month periods ended

September 30, 2018

or

2017.

XML

Note 8 - Fair Value Measurement

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Fair Value Disclosures [Text Block]

8. FAIR VALUE MEASUREMENT

The fair value of an asset or liability is the price that participants would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability, or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall

not

be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is

not

a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

The fair value hierarchy established by accounting standards defines

three

input levels for fair value measurement. The applicable standard describes

three

levels of inputs that

may

be used to measure fair value: Level

1

is based on quoted market prices in active markets for identical assets. Level

2

is based on significant observable inputs other than Level

1

prices. Level

3

is based on significant unobservable inputs that reflect a company’s own assumptions about the assumption that market participants would use in pricing an asset or liability. We evaluate fair value measurement inputs on an ongoing basis in order to determine if there is a change of sufficient significance to warrant a transfer between levels. There were

no

transfers between levels during the

three

and

nine

months ended

September 30, 2018

or the year ended

December 31, 2017.

At

September 30, 2018,

we hold, as part of our investment portfolio, available for sale securities reported at fair value consisting of municipal securities, U.S. government sponsored entities, corporate bonds, and mortgage-backed securities. The fair value of the majority of these securities is determined using widely accepted valuation techniques including matrix pricing and broker-quote based applications. Inputs include benchmark yields, reported trades, issuer spreads, prepayments speeds and other relevant items. These are inputs used by a

third

-party pricing service used by us.

To validate the appropriateness of the valuations provided by the

third

party, we regularly update the understanding of the inputs used and compare valuations to an additional

third

party source. We classify all our investment securities available for sale in Level

2

of the fair value hierarchy, with the exception of treasury securities that fall into Level

1

and our corporate bonds, which fall into Level

3.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

	At September 30, 2018 (In thousands)
			Quoted Prices in		Other		Significant		Total Changes
			Active Markets for		Observable		Unobservable		in Fair Values
			Identical Assets		Inputs		Inputs		Included in
	Carrying Value		(Level 1)		(Level 2)		(Level 3)		Period Earnings
Available-for-sale:
Treasury securities	$	2,992	$	2,992	$	—	$	—	$	—
U.S. government agency		18,011		—		18,011		—		—
Corporate bonds		18,110		—		—		18,110		—
Municipal securities		75,694		—		75,694		—		—
FHLMC MBS		18,582		—		18,582		—		—
FNMA MBS		55,591		—		55,591		—		—
GNMA MBS		27,378		—		27,378		—		—
Total recurring assets at fair value	$	216,358	$	2,992	$	195,256	$	18,110	$	—

	At December 31, 2017 (In thousands)
			Quoted Prices in		Other		Significant		Total Changes
			Active Markets for		Observable		Unobservable		in Fair Values
			Identical Assets		Inputs		Inputs		Included in
	Carrying Value		(Level 1)		(Level 2)		(Level 3)		Period Earnings
Available-for-sale:
Treasury securities	$	3,005	$	3,005	$	—	$	—	$	—
U.S. government agency		17,734		—		17,734		—		—
Corporate bonds		14,658		—		—		14,658		—
Municipal securities		79,555		—		79,555		—		—
FHLMC MBS		19,455		—		19,455		—		—
FNMA MBS		62,946		—		62,946		—		—
GNMA MBS		21,000		—		21,000		—		—
Total recurring assets at fair value	$	218,353	$	3,005	$	200,690	$	14,658	$	—

Our valuation methodologies

may

produce a fair value calculation that

may

not

be indicative of net realizable value or reflective of future fair values. While management believes our methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value. Furthermore, we have

not

comprehensively revalued the fair value amounts since the presentation dates, and therefore, estimates of fair value after the balance sheet date

may

differ significantly from the above presented amounts.

The fair value of the majority of the securities in significant unobservable inputs (Level

3

) is determined using widely accepted valuation techniques including matrix pricing and broker-quote based applications. Inputs include benchmark yields, reported trades, issuer spreads, prepayments speeds and other relevant items. These are inputs used by a

third

-party pricing service used by us.

The following table provides a reconciliation of changes in fair value included in assets measured in the Consolidated Balance Sheet using inputs classified as level

3

in the fair value for the period indicated:

(in thousands)	Level 3
Investment available-for-sale
Balance as of January 1, 2018	$	14,658
Realized and unrealized gains (losses)
Included in earnings		—
Included in other comprehensive income		(48	)
Purchases, issuances, sales and settlements		3,500
Transfers into or out of level 3		—
Balance at September 30, 2018	$	18,110

The fair value calculated

may

not

be indicative of net realized value or reflective of future fair values.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We

may

be required, from time to time, to measure certain assets at fair value on a non-recurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis at

September 30, 2018

and

December 31, 2017

are included in the tables below.

We also measure certain non-financial assets such as OREO, TDRs, and repossessed or foreclosed property at fair value on a non-recurring basis. Generally, we estimate the fair value of these items using Level

2

inputs based on observable market data or Level

3

inputs based on discounting criteria.

	At September 30, 2018 (In thousands)
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Impaired Loans
Legacy:	$	4,624		—		—	$	4,624
Acquired:		3,981		—		—		3,981
Total Impaired Loans		8,605		—		—		8,605
Other real estate owned:
Legacy:	$	—		—		—	$	—
Acquired:		1,469		—		—		1,469
Total other real estate owned:		1,469		—		—		1,469
Total	$	10,074	$	—	$	—	$	10,074

	At December 31, 2017 (In thousands)
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Impaired Loans
Legacy:	$	4,260		—		—	$	4,260
Acquired:		1,931		—		—		1,931
Total Impaired Loans		6,191		—		—		6,191
Other real estate owned:
Legacy:	$	425		—		—	$	425
Acquired:		1,579		—		—		1,579
Total other real estate owned:		2,004		—		—		2,004
Total	$	8,195	$	—	$	—	$	8,195

As of

September 30, 2018

and

December 31, 2017,

we estimated the fair value of impaired assets using Level

3

inputs to be

$10.1

million and

$8.2

million, respectively. We determined these Level

3

inputs based on appraisal evaluations, offers to purchase and/or appraisals that we obtained from an outside

third

party during the preceding

twelve

months less costs to sell. Discounts have predominantly been in the range of

0%

to

50%.

As a result of the acquisitions of Maryland Bankcorp, WSB Holdings, Regal and BYBK, we have segmented the OREO into

two

components, real estate obtained as a result of loans originated by Old Line Bank (legacy) and other real estate acquired from MB&T, WSB, Regal Bank and Bay Bank or obtained as a result of loans originated by MB&T, WSB, Regal Bank and Bay Bank (acquired).

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of Old Line Bancshares’ financial instruments

not

recorded at fair value on a recurring or non-recurring basis as of

September 30, 2018

and

December 

31,

2017.

  For short term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization.  For non-marketable equity securities the carrying amount is a reasonable estimate of fair value as these securities can only be redeemed or sold at their par value and only to the respective issuing government-supported institution or to another member institution.  For net loans receivable, an exit price notion is used consistent with ASC Topic

820

-

Fair Value Measurement

. Prior to adoption, loans were calculated using an entry price notion. For financial liabilities such as noninterest-bearing demand, interest bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having

no

stated maturity.

	September 30, 2018 (in thousands)
					Quoted Prices		Significant		Significant
			Total		in Active		Other		Other
	Carrying		Estimated		Markets for		Observable		Unobservable
	Amount		Fair		Identical Assets		Inputs		Inputs
	(000’s)		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	50,306	$	50,306	$	50,306	$	—	$	—
Loans receivable, net		2,384,580		2,331,418		—		—		2,331,418
Loans held for sale		8,830		8,830		—		8,830		—
Investment securities available for sale		216,358		216,358		2,992		195,256		18,110
Equity Securities at cost		13,063		13,063		—		13,063		—
Bank Owned Life Insurance		67,491		67,491		—		67,491		—
Accrued interest receivable		8,073		8,073		—		1,310		6,763
Liabilities:
Deposits:
Non-interest-bearing		581,339		581,339		—		581,339		—
Interest bearing		1,660,902		1,668,053		—		1,668,053		—
Short term borrowings		272,535		272,535		—		272,535		—
Long term borrowings		38,305		38,305		—		38,305		—
Accrued Interest payable		1,644		1,644		—		1,644		—

	December 31, 2017 (in thousands)
					Quoted Prices		Significant		Significant
			Total		in Active		Other		Other
	Carrying		Estimated		Markets for		Observable		Unobservable
	Amount		Fair		Identical Assets		Inputs		Inputs
	(000’s)		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	35,174	$	35,174	$	35,174	$	—	$	—
Loans receivable, net		1,696,361		1,692,018		—		—		1,692,018
Loans held for sale		4,404		4,558		—		4,558		—
Investment securities available for sale		218,353		218,353		3,005		200,690		14,658
Equity Securities at cost		8,978		8,978		—		8,978		—
Bank Owned Life Insurance		41,612		41,612		—		41,612		—
Accrued interest receivable		5,476		5,476		—		1,215		4,261
Liabilities:
Deposits:
Non-interest-bearing		451,803		451,803		—		451,803		—
Interest bearing		1,201,100		1,205,936		—		1,205,936		—
Short term borrowings		192,612		192,612		—		192,612		—
Long term borrowings		38,107		38,107		—		38,107		—
Accrued Interest payable		1,472		1,472		—		1,472		—

XML

Note 9 - Short Term Borrowings

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Short-term Debt [Text Block]

9. SHORT TERM BORROWINGS

Short term borrowings consist of promissory notes or overnight repurchase agreements sold to Old Line Bank’s customers, federal funds purchased and advances from the FHLB. At

September 30, 2018,

we had

$235.0

million outstanding in short term FHLB borrowings, compared to

$155.0

million at

December 31, 2017.

At

September 30, 2018

and

December 31, 2017,

we had

no

unsecured promissory notes and

$37.5

million and

$37.6

million, respectively, in secured promissory notes.

Securities Sold Under Agreements to Repurchase

To support the

$37.5

million in repurchase agreements at

September 30, 2018,

we have provided collateral in the form of investment securities. At

September 30, 2018

we have pledged

$62.4

million in U.S. government agency securities and mortgage-backed securities to customers who require collateral for overnight repurchase agreements and deposits. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. As a result, there is

no

offsetting or netting of the investment securities assets with the repurchase agreement liabilities. We monitor collateral levels on a continuous basis. We

may

be required to provide additional collateral based on the fair value of the underlying securities in the event the collateral fair value falls below stipulated levels. We closely monitor the collateral levels to ensure adequate levels are maintained. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents. We have the right to sell or re-pledge the investment securities. For government entity repurchase agreements, the collateral is held by Old Line Bank in a segregated custodial account under a tri-party agreement. The repurchase agreements totaling

$37.5

million mature daily and will remain fully collateralized until the account has been closed or terminated.

XML

Note 10 - Long Term Borrowings

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Long-term Debt [Text Block]

10. LONG TERM BORROWINGS

Long term borrowings consist of

$35

million in aggregate principal amount of Old Line Bancshares

5.625%

Fixed-to-Floating Rate Subordinated Notes due

2026

(the “Notes”). The Notes were issued pursuant to an indenture and a supplemental indenture, each dated as of

August 15, 2016,

between Old Line Bancshares and U.S. Bank National Association as Trustee. The Notes are unsecured subordinated obligations of Old Line Bancshares and rank equally with all other unsecured subordinated indebtedness currently outstanding or issued in the future. The Notes are subordinated in right of payment of all senior indebtedness. The fair value of the Notes is

$34.2

million.

Also included in long term borrowings are trust preferred subordinated debentures totaling

$4.1

million (net of

$2.6

million fair value adjustment) at

September 30, 2018

acquired in the Regal acquisition. The trust preferred subordinated debentures consists of

two

trusts – Trust

1

in the amount of

$4.0

million (fair value adjustment of

$1.4

million) maturing on

March 17, 2034

and Trust

2

in the amount of

$2.5

million (fair value adjustment

$1.2

million) maturing on

December 14, 2035.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Basis of Presentation and Consolidation

- The accompanying condensed consolidated financial statements include the activity of Old Line Bancshares and its wholly owned subsidiary, Old Line Bank, and its wholly-owned subsidiary Pointer Ridge Office Investments, LLC (“Pointer Ridge”), a real estate investment company. We have eliminated all significant intercompany transactions and balances.

The foregoing consolidated financial statements for the periods ended

September 30, 2018

and

2017

are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), however, in the opinion of management we have included all adjustments necessary for a fair presentation of the results of the interim period. We derived the balances as of

December 

31,

2017

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’ Form 

10

-K for the year ended

December 

31,

2017.

We have made

no

significant changes to Old Line Bancshares’ accounting policies as disclosed in the Form 

10

-K, except as described in the Recent Accounting Pronouncements section below

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions

may

affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. A material estimate that is particularly susceptible to significant change in the near term relates to the determination of the allowance for loan losses.

Revenue from Contract with Customer [Policy Text Block]

Revenue from Contracts with Customers

- Old Line Bancshares records revenue from contracts with customers in accordance with Accounting Standards Codification Topic

606,

“Revenue from Contracts with Customers” (“Topic

606”

). Under Topic

606,

we must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) we satisfy a performance obligation.

Our primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are

not

within the scope of Topic

606.

We have evaluated the nature of Old Line Bancshares’ contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was

not

necessary. Old Line Bancshares generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic

606

that significantly affects the determination of the amount and timing of revenue from contracts with customers.

As a result of the BYBK acquisition, the Bank became a member of the POS network sponsorship program, which allows our customers to access several processing and settlement networks; when our customers use

one

of these networks, the Bank receives a transaction fee from the network.

Reclassification, Policy [Policy Text Block]

Reclassifications

- We have made certain reclassifications to the

2017

financial presentation to conform to the

2018

presentation. These reclassifications did

not

change net income or stockholders’ equity.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

– In

May 2014,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2014

-

09

– Revenue from Contracts with Customers

, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of this ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The ASU allows for either full retrospective or modified retrospective adoption. The ASU does

not

apply to revenue associated with financial instruments, including loans and securities that are accounted for under U.S. GAAP. Our revenue is comprised of net interest income on financial assets and liabilities, which is explicitly excluded from the scope of the new guidance, and non-interest income. The contracts that are within scope of the guidance are primarily related to service charges on deposit accounts, cardholder and merchant income, point of sale sponsorship program, wealth advisory services income, other service charges and fees, sales of other real estate owned, insurance commissions and miscellaneous fees. Old Line Bancshares adopted the ASU on

January 1, 2018,

utilizing the modified retrospective approach. The adoption of this ASU did

not

have a material impact on our consolidated financial position or consolidated results of operations.

In

January 2016,

FASB issued ASU

No.

2016

-

01

, Financial Instruments – Recognition and Measurement of Financial Assets and Liabilities,

which is intended to improve the recognition and measurement of financial instruments by: requiring equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are

not

public business entities; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. This ASU is effective for public companies for fiscal years beginning after

December 15, 2017,

including interim periods within those fiscal years. We adopted this ASU effective

January 1, 2018.

With the adoption of this ASU, equity securities can

no

longer be classified as available for sale, and as such marketable equity securities are disclosed as a separate line item on the balance sheet with changes in the fair value of equity securities reflected in net income. During the

first

quarter of

2018,

we began using an exit price notion when measuring the fair value of our loan portfolio, excluding loans held for sale, for disclosure purposes. The adoption of this ASU did

not

have a significant impact on our consolidated financial statements.

In

February 2016,

FASB issued ASU

2016

-

02

, Leases (Topic

842

). FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after

December 15, 2018.

Early application of this ASU is permitted for all entities. This ASU will be effective for us in our

first

quarter of

2019.

We are currently evaluating

third

party software options to assist in implementation of policy and procedures in order to be compliant with ASU

2016

-

02

Old Line Bancshares is currently assessing the impact that the adoption of this standard will have on its financial condition and results of operations and will closely monitor any new developments or additional guidance to determine the potential impact the new standard will have on our consolidated financial statements.

In

June 2016,

FASB issued ASU

2016

-

13

, Financial Instruments – Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments

, which sets forth a “current expected credit loss” (“CECL”) model requiring Old Line Bancshares to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. For public business entities that are U.S. Securities and Exchange Commission filers, the amendments in this update are effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years. Old Line Bancshares has constituted a committee that has the responsibility to gather loan information and consider acceptable methodologies to comply with this ASU. The committee meets periodically to discuss the latest developments and committee members keep themselves updated on such developments via webcasts, publications, and conferences. We have also evaluated and selected a

third

party vendor solution to assist us in the application of ASU 

2016

-

13.

The adoption of ASU 

2016

-

13

is likely to result in an increase in the allowance for loan losses as a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. We expect to run our current model compared to the CECL model by the end of the

second

quarter in

2019.

Furthermore, ASU 

2016

-

13

will necessitate that we establish an allowance for expected credit losses on debt securities. Old Line Bancshares’ evaluation indicates that the provisions of ASU

2016

-

13

will impact its consolidated financial statements, in particular the level of the reserve for loan losses. We are, however, continuing to evaluate the extent of the potential impact.

In

August 2016,

FASB issued ASU

2016

-

15

, Statement of Cash Flows (Topic

230

):

Classification of Certain Cash Receipts and Cash Payments

, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows.  The amendments provide guidance on the following

nine

specific cash flow issues: 

1

) debt prepayment or debt extinguishment costs;

2

) settlement of

zero

-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing;

3

) contingent consideration payments made after a business combination;

4

) proceeds from the settlement of insurance claims;

5

) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned;

6

) life insurance policies;

7

) distributions received from equity method investees;

8

) beneficial interests in securitization transactions; and

9

) separately identifiable cash flows and application of the predominance principle.  The ASU is effective for all annual and interim periods beginning

January 1, 2018

and is required to be applied retrospectively to all periods presented. We adopted this guidance

January 1, 2018,

which did

not

result in a change in the classification in the statement of cash flows and did

not

have a material impact on our consolidated financial statements or on our financial position or results of operations.

In

January 2017,

FASB issued ASU

2017

-

01,

Business Combinations (Topic

805

)

:

Clarifying the definition of a business

, which clarifies the definition of a business and assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under this guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or group of similar assets), the assets acquired would

not

represent a business. In addition, in order to be considered a business, an acquisition would have to include at a minimum an input and a substantive process that together significantly contribute to the ability to create an output. The guidance also narrows the definition of outputs by more closely aligning it with how outputs are described in FASB guidance for revenue recognition. We adopted this guidance effective

January 1, 2018.

The adoption of this ASU did

not

have a material impact on our consolidated financial statements.

In

January 2017,

FASB issued ASU

2017

-

04,

Simplifying the Test for Goodwill Impairment,

which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step

2

of the goodwill impairment test. As a result, under the ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. The ASU is effective for annual and interim goodwill impairment tests in fiscal years beginning after

December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

We expect to implement ASU

2017

-

04

beginning with our upcoming goodwill testing during the

fourth

quarter of

2018.

Old Line Bancshares does

not

expect the adoption of ASU

2017

-

04

to have a material impact on its consolidated financial statements.

In

March 2017,

FASB issued ASU

2017

-

08,

Premium Amortization on Purchased Callable Debt Securities

. This ASU shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Today, entities generally amortize the premium over the contractual life of the security. The new guidance does

not

change the accounting for purchased callable debt securities held at a discount; the discount continues to be amortized to maturity. ASU

2017

-

08

is effective for interim and annual reporting periods beginning after

December 15, 2018;

early adoption is permitted. The guidance calls for a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the

first

reporting period in which the guidance is adopted. We do

not

expect the adoption of this guidance to have a material impact on Old Line Bancshares’ consolidated financial statements.

In

August 2017,

FASB issued ASU

2017

-

12,

Targeted Improvements to Accounting for Hedging Activities

. This ASU’s objectives are to: (

1

) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities; and (

2

) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU

2017

-

12

is effective for interim and annual reporting periods beginning after

December 15, 2018;

early adoption is permitted. Old Line Bancshares currently does

not

designate any derivative financial instruments as formal hedging relationships, and therefore, does

not

utilize hedge accounting. However, Old Line Bancshares is currently evaluating this ASU to determine whether its provisions will enhance its ability to employ risk management strategies, while improving the transparency and understanding of those strategies for financial statement users.

In

February 2018,

FASB issued ASU

2018

-

02,

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic

22

0

). This ASU allows an entity to elect a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act that changed our income tax rate from

35%

to

21%.

The amount of that reclassification should include the effect of changes of tax rate on the deferred tax amount, any related valuation allowance and other income tax effects on the items in AOCI. The ASU requires an entity to state if an election to reclassify the tax effect to retained earnings is made along with the description of other income tax effects that are reclassified from AOCI. ASU

2018

-

02

is effective for fiscal years beginning after

December 15, 2018

and interim periods within those fiscal years with early adoption permitted. Old Line Bancshares adopted ASU

2018

-

02

in the

first

quarter of

2018.

The change in accounting principal was accounted for as a cumulative effect adjustment to the balance sheet resulting in a reclass of

$459,973

from AOCI to retained earnings during the

first

quarter of

2018.

In

July 2018,

the FASB issued ASU

2018

-

11,

Leases (Topic

842

): Targeted Improvements.

  These amendments provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP (Topic

840,

Leases).  The amendments also provide lessors with a practical expedient, by class of underlying asset, to

not

separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic

606

) and certain criteria are met: If the non-lease component or components associated with the lease component are the predominant component of the combined component, an entity is required to account for the combined component in accordance with Topic

606.

Otherwise, the entity must account for the combined component as an operating lease in accordance with Topic

842

. 

The amendments have the same effective date as ASU

2016

-

02

(

January 1, 2019

for the Company). Old Line Bancshares expects to elect the transition options. ASU

2018

-

11

is

not

expected to have a material impact on the company’s consolidated financial statements.

XML

Note 2 - Acquisition of Bay Bancorp, Inc. (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Purchase Price Consideration
Cash consideration	$	973,383
Purchase price assigned to shares exchanged for stock		142,645,695
Total purchase price for BYBK acquisition		143,619,078

Fair Value of Assets Acquired
Cash and due from banks	$	22,590,994
Investment securities		51,895,757
Restricted equity securities, at cost		2,339,700
Loans, net		546,215,988
Premises and equipment		3,127,963
Accrued interest receivable		1,714,054
Accrued taxes receivable		1,912,807
Deferred income taxes		2,637,668
Bank owned life insurance		16,319,198
Other real estate owned		1,041,079
Core deposit intangible		11,243,714
Other assets		1,413,987
Total assets acquired	$	662,452,909
Fair Value of Liabilities assumed
Deposits	$	541,368,907
Short term borrowings		41,100,000
Other liabilities		5,684,884
Total liabilities assumed	$	588,153,791
Fair Value of net assets acquired		74,299,118
Total Purchase Price		143,619,078
Goodwill recorded for BYBK	$	69,319,960

Business Acquisition, Pro Forma Information [Table Text Block]

	Pro Forma		Pro Forma		Pro Forma		Pro Forma
	Three months ended September 30, 2018		Three months ended September 30, 2017		Nine months ended September 30, 2018		Nine months ended September 30, 2017
Total revenues (net interest income plus noninterest income)	$	27,691,340	$	28,218,087	$	82,628,420	$	75,991,779
Net proforma income available to common stockholders	$	9,739,452	$	7,245,186	$	26,636,060	$	17,323,544

XML

Note 3 - Investment Securities (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
September 30, 2018
Available for sale
U.S. treasury	$	3,006,397	$	—	$	(14,834	)	$	2,991,563
U.S. government agency		18,791,500		—		(780,168	)		18,011,332
Corporate bonds		18,117,144		24,548		(31,480	)		18,110,212
Municipal securities		79,459,426		6,219		(3,771,161	)		75,694,484
Mortgage backed securities:
FHLMC certificates		19,663,844		1,115		(1,083,073	)		18,581,886
FNMA certificates		58,902,507		—		(3,311,751	)		55,590,756
GNMA certificates		28,484,140		116		(1,106,430	)		27,377,826
Total available for sale securities	$	226,424,958	$	31,998	$	(10,098,897	)	$	216,358,059
December 31, 2017
Available for sale
U.S. treasury	$	3,007,728	$	—	$	(2,337	)	$	3,005,391
U.S. government agency		18,001,200		—		(267,434	)		17,733,766
Corporate bonds		14,621,378		144,574		(107,893	)		14,658,059
Municipal securities		80,791,431		126,566		(1,362,709	)		79,555,288
Mortgage backed securities
FHLMC certificates		19,907,299		2,516		(455,580	)		19,454,235
FNMA certificates		64,476,038		—		(1,530,121	)		62,945,917
GNMA certificates		21,403,894		—		(403,992	)		20,999,902
Total available for sale securities	$	222,208,968	$	273,656	$	(4,130,066	)	$	218,352,558

Schedule of Unrealized Loss on Investments [Table Text Block]

	September 30, 2018
	Less than 12 months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
U.S. treasury	$	2,991,563	$	14,834	$	—	$	—	$	2,991,563	$	14,834
U.S. government agency		4,207,260		175,329		13,804,072		604,839		18,011,332		780,168
Corporate bonds		8,985,665		31,480		—		—		8,985,665		31,480
Municipal securities		32,490,897		1,168,344		37,832,127		2,602,817		70,323,024		3,771,161
Mortgage backed securities
FHLMC certificates		1,724,767		24,379		16,777,049		1,058,694		18,501,816		1,083,073
FNMA certificates		3,562,727		104,100		52,028,029		3,207,651		55,590,756		3,311,751
GNMA certificates		6,644,013		123,405		17,418,219		983,025		24,062,233		1,106,430
Total	$	60,606,892	$	1,641,871	$	137,859,496	$	8,457,026	$	198,466,389	$	10,098,897

	December 31, 2017
	Less than 12 months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
U.S. treasury	$	1,506,328	$	1,422	$	1,499,063	$	915	$	3,005,391	$	2,337
U.S. government agency		12,266,502		93,043		5,467,264		174,391		17,733,766		267,434
Corporate bonds		9,407,810		107,893		—		—		9,407,810		107,893
Municipal securities		25,548,751		189,668		31,343,394		1,173,041		56,892,145		1,362,709
Mortgage backed securities
FHLMC certificates		—		—		19,314,957		455,580		19,314,957		455,580
FNMA certificates		2,516,080		19,937		60,429,837		1,510,184		62,945,917		1,530,121
GNMA certificates		8,822,021		114,278		12,177,882		289,714		20,999,904		403,992
Total	$	60,067,492	$	526,241	$	130,232,397	$	3,603,825	$	190,299,890	$	4,130,066

Investments Classified by Contractual Maturity Date [Table Text Block]

	Available for Sale
	Amortized		Fair
September 30, 2018	cost		value
Maturing
Within one year	$	4,283,142	$	4,271,753
Over one to five years		4,282,063		4,254,785
Over five to ten years		59,101,418		57,063,268
Over ten years		158,758,335		150,768,253
Total	$	226,424,958	$	216,358,059
Pledged securities	$	65,861,752	$	62,395,938

XML

Note 4 - Loans (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	September 30, 2018									December 31, 2017
	Legacy (1)			Acquired			Total			Legacy (1)			Acquired			Total
Commercial Real Estate
Owner Occupied	$	275,339,040		$	152,433,104		$	427,772,144		$	268,128,087		$	87,658,855		$	355,786,942
Investment		601,113,264			197,662,549			798,775,813			485,536,921			52,926,739			538,463,660
Hospitality		148,312,837			13,265,447			161,578,284			164,193,228			7,395,186			171,588,414
Land and A&D		91,987,559			24,883,469			116,871,028			67,310,660			9,230,771			76,541,431
Residential Real Estate
First Lien-Investment		90,285,266			50,629,554			140,914,820			79,762,682			21,220,518			100,983,200
First Lien-Owner Occupied		98,966,442			142,135,278			241,101,720			67,237,699			62,524,794			129,762,493
Residential Land and A&D		49,708,005			18,494,088			68,202,093			35,879,853			6,536,160			42,416,013
HELOC and Jr. Liens		20,581,673			43,445,979			64,027,652			21,520,339			16,019,418			37,539,757
Commercial and Industrial		215,729,656			97,412,805			313,142,461			154,244,645			33,100,688			187,345,333
Consumer		17,671,242			38,697,723			56,368,965			10,758,589			49,082,751			59,841,340
Total loans		1,609,694,984			779,059,996			2,388,754,980			1,354,572,703			345,695,880			1,700,268,583
Allowance for loan losses		(6,698,812	)		(281,238	)		(6,980,050	)		(5,738,534	)		(182,052	)		(5,920,586	)
Deferred loan costs, net		2,804,884			—			2,804,884			2,013,434			—			2,013,434
Net loans	$	1,605,801,056		$	778,778,758		$	2,384,579,814		$	1,350,847,603		$	345,513,828		$	1,696,361,431

Past Due Financing Receivables [Table Text Block]

	September 30, 2018						December 31, 2017
	Legacy		Acquired		Total		Legacy		Acquired		Total
Current	$	1,600,670,724	$	766,584,894	$	2,367,255,618	$	1,352,406,852	$	338,913,557	$	1,691,320,409
Accruing past due loans:
30-89 days past due
Commercial Real Estate:
Owner Occupied		2,689,179		—		2,689,179		—		—		—
Investment		438,456		1,819,810		2,258,266		1,089,022		843,706		1,932,728
Hospitality		—		4,915		4,915		—		—		—
Land and A&D		1,015,998		—		1,015,998		254,925		158,899		413,824
Residential Real Estate:
First Lien-Investment		180,764		718,673		899,437		270,822		506,600		777,422
First Lien-Owner Occupied		93,817		2,705,941		2,799,758		229		2,457,299		2,457,528
Land and A&D		1,032,599		170,000		1,202,599		—		—		—
HELOC and Jr. Liens		325,914		1,026,737		1,352,651		—		130,556		130,556
Commercial and Industrial		290,290		295,841		586,131		51,088		261,081		312,169
Consumer		284,843		1,378,380		1,663,223		26,134		1,017,195		1,043,329
Total 30-89 days past due		6,351,860		8,120,297		14,472,157		1,692,220		5,375,336		7,067,556
90 or more days past due
Commercial Real Estate:
Owner Occupied		1,042,909		179,718		1,222,627		—		—		—
Investment		291,278		—		291,278		—		—		—
Residential Real Estate:
First Lien-Owner Occupied		—		143,625		143,625		—		37,560		37,560
Land and A&D		417,110		—		417,110
HELOC and Jr. Liens		—		308,796		308,796		—		—		—
Commercial		29,134		—		29,134		—		—		—
Consumer		4,476		101,079		105,555		—		78,407		78,407
Total 90 or more days past due		1,784,907		733,218		2,518,125		—		115,967		115,967
Total accruing past due loans		8,136,767		8,853,515		16,990,282		1,692,220		5,491,303		7,183,523
Commercial Real Estate:
Owner Occupied		—		412,785		412,785		—		228,555		228,555
Investment		—		179,091		179,091		—		—		—
Land and A&D		—		151,780		151,780		—		190,193		190,193
Residential Real Estate:
First Lien-Investment		192,501		219,681		412,182		192,501		—		192,501
First Lien-Owner Occupied		266,811		1,734,910		2,001,721		281,130		872,272		1,153,402
HELOC and Jr. Liens		—		126,240		126,240		—		—		—
Land and A&D		277,704		594,505		872,209		—		—		—
Commercial and Industrial		150,477		150,924		301,401		—		—		—
Consumer		—		51,671		51,671		—		—		—
Non-accruing loans:		887,493		3,621,587		4,509,080		473,631		1,291,020		1,764,651
Total Loans	$	1,609,694,984	$	779,059,996	$	2,388,754,980	$	1,354,572,703	$	345,695,880	$	1,700,268,583

Impaired Financing Receivables [Table Text Block]

	Impaired Loans
							Three months September 30, 2018				Nine months September 30, 2018
	Unpaid						Average		Interest		Average		Interest
	Principal		Recorded		Related		Recorded		Income		Recorded		Income
	Balance		Investment		Allowance		Investment		Recognized		Investment		Recognized
Legacy
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied	$	1,752,561	$	1,752,561	$	—	$	1,758,968	$	13,509		1,773,719	$	55,910
Investment		1,701,018		1,701,018		—		1,708,471		18,586		1,723,700		69,746
Residential Real Estate:
First Lien-Investment		—		—		—		—		—		—		—
First Lien-Owner Occupied		216,720		216,720		—		229,349		743		230,150		7,192
Land and A&D		277,704		277,704		—		277,704		—		277,704		—
Commercial and Industrial		509,772		509,772		—		515,840		2,201		526,281		13,287
With an allowance recorded:
Commercial Real Estate:
Investment		—		—		—		—		—		—		—
Residential Real Estate:
First Lien-Investment		192,501		192,501		39,420		192,501		—		192,501		—
First Lien-Owner Occupied		50,091		50,091		37,075		55,510		290		56,322		1,424
Commercial and Industrial		93,892		93,892		93,892		94,163		812		94,932		3,622
Total legacy impaired		4,794,259		4,794,259		170,387		4,832,506		36,141		4,875,309		151,181
Acquired(1)
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied		516,170		465,723		—		590,642		—		591,057		3,281
Investment		221,197		200,954		—		627,792		10,855		628,745		25,790
Land and A&D		243,329		106,780		—		349,809		—		349,809		—
Residential Real Estate:
First Lien-Owner Occupied		2,028,054		1,915,795		—		2,030,925		4,321		2,035,333		26,246
First Lien-Investment		224,868		224,868		—		238,294		—		238,294		4,664
Land and A&D		654,644		451,627		—		767,290		—		767,315		1,518
HELOC and Jr. Liens		128,063		128,063		—		128,063		—		128,063		964
Commercial		1,031,496		167,560		—		1,303,135		15,576		1,303,808		23,427
Consumer		52,730		52,730		—		85,421		—		92,987		1,438
With an allowance recorded:
Commercial Real Estate:
Land and A&D		328,851		45,000		45,000		328,851		—		329,705		—
Residential Real Estate:
First Lien-Owner Occupied		253,437		253,437		88,723		276,861		—		275,590		—
Land and A&D		154,297		154,297		96,391		161,153		—		159,370		—
Commercial and Industrial		68,888		68,888		24,517		69,324		589		70,367		2,683
Consumer		27,009		27,009		26,607		27,456		291		27,720		533
Total acquired impaired		5,933,033		4,262,731		281,238		6,985,016		31,632		6,998,163		90,544
Total impaired	$	10,727,292	$	9,056,990	$	451,625	$	11,817,522	$	67,773		11,873,472	$	241,725

Impaired Loans
Twelve months ended December 31, 2017
	Unpaid						Average		Interest
	Principal		Recorded		Related		Recorded		Income
	Balance		Investment		Allowance		Investment		Recognized
Legacy
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied	$	1,797,030	$	1,797,030	$	—	$	1,913,873	$	70,623
Investment		1,155,595		1,155,595		—		1,183,738		51,806
Residential Real Estate:
First Lien-Owner Occupied		226,554		226,554		—		233,618		10,536
Commercial and Industrial		387,208		387,208		—		379,983		30,245
With an allowance recorded:
Commercial Real Estate:
Investment		592,432		592,432		69,903		601,959		30,576
Residential Real Estate:
First Lien-Owner Occupied		54,576		54,576		37,075		217,673		—
First Lien-Investment		192,501		192,501		39,420		192,501		—
Commercial and Industrial		96,212		96,212		96,212		97,923		4,960
Total legacy impaired		4,502,108		4,502,108		242,610		4,821,268		198,746
Acquired(1)
With no related allowance recorded:
Commercial Real Estate:
Owner Occupied		253,865		253,865		—		252,988		2,155
Land and A&D		334,271		45,000		—		334,271		—
Residential Real Estate:
First Lien-Owner Occupied		1,382,055		1,269,796		—		1,390,037		31,601
First Lien-Investment		131,294		74,066		—		132,812		4,378
With an allowance recorded:
Commercial Real Estate:
Land and A&D		148,196		148,196		80,072		155,621		2,498
Residential Real Estate:
First Lien-Owner Occupied		250,194		250,194		77,464		273,596		23,424
Commercial and Industrial		72,125		72,125		24,517		74,279		3,775
Total acquired impaired		2,572,000		2,113,242		182,053		2,613,604		67,831
Total impaired	$	7,074,108	$	6,615,350	$	424,663	$	7,434,872	$	266,577

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	Loans Modified as a TDR for the nine months ended
	September 30, 2018						September 30, 2017
			Pre-		Post				Pre-		Post
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
Troubled Debt Restructurings—	# of		Recorded		Recorded		# of		Recorded		Recorded
(Dollars in thousands)	Contracts		Investment		Investment		Contracts		Investment		Investment
Legacy
Commercial Real Estate		—		—		—		1		1,596,740		1,572,976
Commercial and Industrial		—		—		—		1		414,324		399,351
Consumer		1		28,009		27,009		—		—		—
Total legacy TDR's		1	$	28,009	$	27,009		2	$	2,011,064	$	1,972,327

Schedule of Loans and Leases Receivable Outstanding Balances and Related Carrying Amounts for Acquired Impaired Loans [Table Text Block]

	September 30, 2018			September 30, 2017
Balance at beginning of period	$	115,066		$	(22,980	)
Additions due to BYBK acquisition		50,984			—
Additions due to DCB acquisition		—			99,981
Accretion of fair value discounts		(873,308	)		(83,099	)
Reclassification (to)/from non-accretable discount		847,153			(15,428	)
Balance at end of period	$	139,895		$	(21,526	)

	Contractually
	Required Payments
	Receivable		Carrying Amount
At September 30, 2018	$	17,975,448	$	14,109,972
At December 31, 2017		8,277,731		6,617,774
At September 30, 2017		8,301,260		6,611,444
At December 31, 2016		9,597,703		7,558,415

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Table Text Block]

	Purchased
	Credit
	Impaired
	(in millions)
Contractually required principal at acquisition	$	14,766
Contractual cash flows not expected to be collected (non-accretable difference)		(3,201	)
Expected cash flows at acquisition-Total		11,565

Financing Receivable Credit Quality Indicators [Table Text Block]

At September 30, 2018	Legacy		Acquired		Total
Risk Rating
Pass(1 - 5)
Commercial Real Estate:
Owner Occupied	$	269,706,878	$	147,139,598	$	416,846,476
Investment		598,321,509		195,074,793		793,396,302
Hospitality		148,312,837		13,260,532		161,573,369
Land and A&D		89,964,201		24,431,791		114,395,992
Residential Real Estate:
First Lien-Investment		89,462,345		47,521,236		136,983,581
First Lien-Owner Occupied		98,636,095		137,076,969		235,713,064
Land and A&D		47,318,505		17,796,181		65,114,686
HELOC and Jr. Liens		20,581,673		43,265,816		63,847,489
Commercial and Industrial		213,311,801		94,484,613		307,796,414
Consumer		17,671,242		38,541,584		56,212,826
Total pass		1,593,287,086		758,593,113		2,351,880,199
Special Mention(6)
Commercial Real Estate:
Owner Occupied		424,315		3,074,210		3,498,525
Investment		1,090,737		1,304,518		2,395,255
Hospitality		—		4,915		4,915
Land and A&D		2,023,358		299,898		2,323,256
Residential Real Estate:
First Lien-Investment		292,445		1,738,070		2,030,515
First Lien-Owner Occupied		63,536		1,576,527		1,640,063
Land and A&D		2,111,796		103,402		2,215,198
HELOC and Jr. Liens		—		—		—
Commercial and Industrial		588,904		97,737		686,641
Consumer		—		70,382		70,382
Total special mention		6,595,091		8,269,659		14,864,750
Substandard(7)
Commercial Real Estate:
Owner Occupied		5,207,847		2,219,296		7,427,143
Investment		1,701,018		1,283,238		2,984,256
Hospitality		—		—		—
Land and A&D		—		151,780		151,780
Residential Real Estate:
First Lien-Investment		530,476		1,370,248		1,900,724
First Lien-Owner Occupied		266,811		3,481,782		3,748,593
Land and A&D		277,704		594,505		872,209
HELOC and Jr. Liens		—		180,163		180,163
Commercial and Industrial		1,828,951		2,830,455		4,659,406
Consumer		—		85,757		85,757
Total substandard		9,812,807		12,197,224		22,010,031
Doubtful(8)		—		—		—
Loss(9)		—		—		—
Total	$	1,609,694,984	$	779,059,996	$	2,388,754,980

At December 31, 2017	Legacy		Acquired		Total
Risk Rating
Pass(1 - 5)
Commercial Real Estate:
Owner Occupied	$	262,377,665	$	83,069,390	$	345,447,055
Investment		483,404,883		51,064,247		534,469,130
Hospitality		164,193,228		7,395,186		171,588,414
Land and A&D		65,184,837		9,065,405		74,250,242
Residential Real Estate:
First Lien-Investment		78,814,931		19,846,749		98,661,680
First Lien-Owner Occupied		66,888,943		57,895,058		124,784,001
Land and A&D		33,712,187		5,727,719		39,439,906
HELOC and Jr. Liens		21,520,339		16,019,418		37,539,757
Commercial and Industrial		150,881,948		32,738,715		183,620,663
Consumer		10,758,589		49,017,427		59,776,016
Total pass		1,337,737,550		331,839,314		1,669,576,864
Special Mention(6)
Commercial Real Estate:
Owner Occupied		435,751		2,816,057		3,251,808
Investment		384,011		1,037,254		1,421,265
Hospitality		—		—		—
Land and A&D		2,125,823		120,366		2,246,189
Residential Real Estate:
First Lien-Investment		300,824		1,034,942		1,335,766
First Lien-Owner Occupied		67,626		1,848,385		1,916,011
Land and A&D		2,167,666		663,248		2,830,914
Commercial and Industrial		1,519,394		59,902		1,579,296
Consumer		—		65,324		65,324
Total special mention		7,001,095		7,645,478		14,646,573
Substandard(7)
Commercial Real Estate:
Owner Occupied		5,314,671		1,773,408		7,088,079
Investment		1,748,027		825,238		2,573,265
Hospitality		—		—		—
Land and A&D		—		45,000		45,000
Residential Real Estate:
First Lien-Investment		646,927		338,827		985,754
First Lien-Owner Occupied		281,130		2,781,351		3,062,481
Land and A&D		—		145,193		145,193
Commercial and Industrial		1,843,303		302,071		2,145,374
Consumer		—		—		—
Total substandard		9,834,058		6,211,088		16,045,146
Doubtful(8)		—		—		—
Loss(9)		—		—		—
Total	$	1,354,572,703	$	345,695,880	$	1,700,268,583

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	Commercial			Commercial		Residential
Three Months Ended September 30, 2018	and Industrial			Real Estate		Real Estate		Consumer			Total
Beginning balance	$	1,680,448		$	4,196,752	$	749,630	$	77,747		$	6,704,577
Provision for loan losses		(141,751	)		303,547		34,609		111,465			307,870
Recoveries		65,819			417		3,119		5,127			74,482
Total		1,604,516			4,500,716		787,358		194,339			7,086,929
Loans charged off		—			—		—		(106,879	)		(106,879	)
Ending Balance	$	1,604,516		$	4,500,716	$	787,358	$	87,460		$	6,980,050

	Commercial		Commercial		Residential
Nine Months Ended September 30, 2018	and Industrial		Real Estate		Real Estate			Consumer			Total
Beginning balance	$	1,262,030	$	3,783,735	$	844,355		$	30,466		$	5,920,586
Provision for loan losses		273,017		716,147		(70,403	)		316,262			1,235,023
Recoveries		69,469		834		15,230			11,980			97,513
Total		1,604,516		4,500,716		789,182			358,708			7,253,122
Loans charged off		—		—		(1,824	)		(271,248	)		(273,072	)
Ending Balance	$	1,604,516	$	4,500,716	$	787,358		$	87,460		$	6,980,050
Amount allocated to:
Legacy Loans:
Individually evaluated for impairment	$	93,892	$	—	$	76,495		$	—		$	170,387
Other loans not individually evaluated		1,441,108		4,500,716		525,749			60,852			6,528,425
Acquired Loans:
Individually evaluated for impairment		69,516		—		185,114			26,608			281,238
Ending balance	$	1,604,516	$	4,500,716	$	787,358		$	87,460		$	6,980,050

				Commercial		Residential
Three Months Ended September 30, 2017	Commercial			Real Estate		Real Estate			Consumer			Total
Beginning balance	$	1,318,247		$	3,789,423	$	793,795		$	10,377		$	5,911,842
Provision for loan losses		81,378			113,694		(97,691	)		38,320			135,701
Recoveries		786			417		—			6,280			7,483
Total		1,400,411			3,903,534		696,104			54,977			6,055,026
Loans charged off		(202,528	)		—		—			(36,311	)		(238,839	)
Ending Balance	$	1,197,883		$	3,903,534	$	696,104		$	18,666		$	5,816,187

				Commercial			Residential
Nine Months Ended September 30, 2017	Commercial			Real Estate			Real Estate			Consumer			Total
Beginning balance	$	1,372,235		$	3,990,152		$	823,520		$	9,562		$	6,195,469
Provision for loan losses		596,350			352,054			(126,048	)		32,752			855,108
Recoveries		2,350			1,250			900			31,811			36,311
Total		1,970,935			4,343,456			698,372			74,125			7,086,888
Loans charged off		(773,052	)		(439,922	)		(2,268	)		(55,459	)		(1,270,701	)
Ending Balance	$	1,197,883		$	3,903,534		$	696,104		$	18,666		$	5,816,187
Amount allocated to:
Legacy Loans:
Individually evaluated for impairment	$	96,712		$	69,903		$	35,647		$	—		$	202,262
Other loans not individually evaluated		1,076,654			3,753,559			582,994			18,666			5,431,873
Acquired Loans:
Individually evaluated for impairment		24,517			80,072			77,463			—			182,052
Ending balance	$	1,197,883		$	3,903,534		$	696,104		$	18,666		$	5,816,187

Schedule of Recorded Investment Based on Impairment Methodology [Table Text Block]

	Commercial		Commercial		Residential
September 30, 2018	and Industrial		Real Estate		Real Estate		Consumer		Total
Legacy loans:
Individually evaluated for impairment with specific reserve	$	93,892	$	—	$	242,592	$	—	$	336,484
Individually evaluated for impairment without specific reserve		509,772		3,453,579		494,423		—		4,457,774
Other loans not individually evaluated		215,125,991		1,113,299,121		258,804,372		17,671,242		1,604,900,726
Acquired loans:
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		68,888		45,000		407,735		27,009		548,632
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		167,560		773,457		2,720,353		52,730		3,714,100
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		559,248		7,872,328		5,664,394		14,000		14,109,970
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		96,617,110		379,553,784		245,912,416		38,603,984		760,687,294
Ending balance	$	313,142,461	$	1,504,997,269	$	514,246,285	$	56,368,965	$	2,388,754,980

			Commercial		Residential
September 30, 2017	Commercial		Real Estate		Real Estate		Consumer		Total
Legacy loans:
Individually evaluated for impairment with specific reserve	$	96,712	$	597,053	$	411,383	$	—	$	1,105,148
Individually evaluated for impairment without specific reserve		399,351		2,981,975		274,701		—		3,656,027
Other loans not individually evaluated		143,238,162		941,537,848		207,916,920		7,076,344		1,299,769,274
Acquired loans:
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		73,167		149,226		250,194		—		472,587
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		—		298,279		1,192,153		—		1,490,432
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		—		3,492,464		3,156,119		14,000		6,662,583
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		39,101,483		157,924,243		106,619,402		53,712,972		357,358,100
Ending balance	$	182,908,875	$	1,106,981,088	$	319,820,872	$	60,803,316	$	1,670,514,151

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Note 5 - Other Real Estate Owned (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Other Real Estate, Roll Forward [Table Text Block]

Nine months ended September 30, 2018	Legacy			Acquired			Total
Beginning balance	$	425,000		$	1,578,998		$	2,003,998
Acquisition of Bay Bancorp, Inc.		—			1,041,079			1,041,079
Sales/deposits on sales		(425,000	)		(1,070,173	)		(1,495,173	)
Net realized gain/(loss)		—			(80,738	)		(80,738	)
Total end of period	$	—		$	1,469,166		$	1,469,166

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Note 6 - Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Weighted Average Number of Shares [Table Text Block]

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Weighted average number of shares		16,988,883		11,969,536		15,277,219		11,286,215
Dilutive average number of shares		17,187,837		12,172,868		15,485,452		11,496,659

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Note 8 - Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	At September 30, 2018 (In thousands)
			Quoted Prices in		Other		Significant		Total Changes
			Active Markets for		Observable		Unobservable		in Fair Values
			Identical Assets		Inputs		Inputs		Included in
	Carrying Value		(Level 1)		(Level 2)		(Level 3)		Period Earnings
Available-for-sale:
Treasury securities	$	2,992	$	2,992	$	—	$	—	$	—
U.S. government agency		18,011		—		18,011		—		—
Corporate bonds		18,110		—		—		18,110		—
Municipal securities		75,694		—		75,694		—		—
FHLMC MBS		18,582		—		18,582		—		—
FNMA MBS		55,591		—		55,591		—		—
GNMA MBS		27,378		—		27,378		—		—
Total recurring assets at fair value	$	216,358	$	2,992	$	195,256	$	18,110	$	—

	At December 31, 2017 (In thousands)
			Quoted Prices in		Other		Significant		Total Changes
			Active Markets for		Observable		Unobservable		in Fair Values
			Identical Assets		Inputs		Inputs		Included in
	Carrying Value		(Level 1)		(Level 2)		(Level 3)		Period Earnings
Available-for-sale:
Treasury securities	$	3,005	$	3,005	$	—	$	—	$	—
U.S. government agency		17,734		—		17,734		—		—
Corporate bonds		14,658		—		—		14,658		—
Municipal securities		79,555		—		79,555		—		—
FHLMC MBS		19,455		—		19,455		—		—
FNMA MBS		62,946		—		62,946		—		—
GNMA MBS		21,000		—		21,000		—		—
Total recurring assets at fair value	$	218,353	$	3,005	$	200,690	$	14,658	$	—

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

(in thousands)	Level 3
Investment available-for-sale
Balance as of January 1, 2018	$	14,658
Realized and unrealized gains (losses)
Included in earnings		—
Included in other comprehensive income		(48	)
Purchases, issuances, sales and settlements		3,500
Transfers into or out of level 3		—
Balance at September 30, 2018	$	18,110

Fair Value Measurements, Nonrecurring [Table Text Block]

	At September 30, 2018 (In thousands)
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Impaired Loans
Legacy:	$	4,624		—		—	$	4,624
Acquired:		3,981		—		—		3,981
Total Impaired Loans		8,605		—		—		8,605
Other real estate owned:
Legacy:	$	—		—		—	$	—
Acquired:		1,469		—		—		1,469
Total other real estate owned:		1,469		—		—		1,469
Total	$	10,074	$	—	$	—	$	10,074

	At December 31, 2017 (In thousands)
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Carrying Value		(Level 1)		(Level 2)		(Level 3)
Impaired Loans
Legacy:	$	4,260		—		—	$	4,260
Acquired:		1,931		—		—		1,931
Total Impaired Loans		6,191		—		—		6,191
Other real estate owned:
Legacy:	$	425		—		—	$	425
Acquired:		1,579		—		—		1,579
Total other real estate owned:		2,004		—		—		2,004
Total	$	8,195	$	—	$	—	$	8,195

Fair Value, by Balance Sheet Grouping [Table Text Block]

	September 30, 2018 (in thousands)
					Quoted Prices		Significant		Significant
			Total		in Active		Other		Other
	Carrying		Estimated		Markets for		Observable		Unobservable
	Amount		Fair		Identical Assets		Inputs		Inputs
	(000’s)		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	50,306	$	50,306	$	50,306	$	—	$	—
Loans receivable, net		2,384,580		2,331,418		—		—		2,331,418
Loans held for sale		8,830		8,830		—		8,830		—
Investment securities available for sale		216,358		216,358		2,992		195,256		18,110
Equity Securities at cost		13,063		13,063		—		13,063		—
Bank Owned Life Insurance		67,491		67,491		—		67,491		—
Accrued interest receivable		8,073		8,073		—		1,310		6,763
Liabilities:
Deposits:
Non-interest-bearing		581,339		581,339		—		581,339		—
Interest bearing		1,660,902		1,668,053		—		1,668,053		—
Short term borrowings		272,535		272,535		—		272,535		—
Long term borrowings		38,305		38,305		—		38,305		—
Accrued Interest payable		1,644		1,644		—		1,644		—

	December 31, 2017 (in thousands)
					Quoted Prices		Significant		Significant
			Total		in Active		Other		Other
	Carrying		Estimated		Markets for		Observable		Unobservable
	Amount		Fair		Identical Assets		Inputs		Inputs
	(000’s)		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	35,174	$	35,174	$	35,174	$	—	$	—
Loans receivable, net		1,696,361		1,692,018		—		—		1,692,018
Loans held for sale		4,404		4,558		—		4,558		—
Investment securities available for sale		218,353		218,353		3,005		200,690		14,658
Equity Securities at cost		8,978		8,978		—		8,978		—
Bank Owned Life Insurance		41,612		41,612		—		41,612		—
Accrued interest receivable		5,476		5,476		—		1,215		4,261
Liabilities:
Deposits:
Non-interest-bearing		451,803		451,803		—		451,803		—
Interest bearing		1,201,100		1,205,936		—		1,205,936		—
Short term borrowings		192,612		192,612		—		192,612		—
Long term borrowings		38,107		38,107		—		38,107		—
Accrued Interest payable		1,472		1,472		—		1,472		—

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Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			35.00%
New Accounting Pronouncement, Early Adoption, Effect [Member] | Reclassification of Stranded Tax Debit From Accumulated Other Comprehensive Income to Retained Earnings [Member]
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings, Tax Effect	$ 459,973
Scenario, Forecast [Member]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent		21.00%

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Note 2 - Acquisition of Bay Bancorp, Inc. (Details Textual) - USD ($)		3 Months Ended		9 Months Ended
	Apr. 13, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Business Combination, Consideration Transferred, Total				$ 143,619,078	$ 40,850,410
Business Combination, Integration Related Costs		$ 2,282,705	$ 3,985,514	9,404,507	3,985,514
Provision for Loan and Lease Losses, Total		307,870	$ 135,701	1,235,023	$ 855,108
Bay Bancorp, Inc [Member]
Business Acquisition Amount of Company Stock Received Per Share	$ 0.4088
Stock Issued During Period, Shares, Acquisitions	4,408,087
Business Combination, Consideration Transferred, Total	$ 143,619,078
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets, Total	$ 662,452,909
Business Combination, Integration Related Costs		$ 2,300,000		9,400,000
Provision for Loan and Lease Losses, Total				$ 300,000

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Note 2 - Acquisition of Bay Bancorp, Inc. - Assets and Liabilities Acquired (Details) - USD ($)		9 Months Ended
	Apr. 13, 2018	Sep. 30, 2018	Sep. 30, 2017
Total purchase price for BYBK acquisition		$ 143,619,078	$ 40,850,410
Total liabilities assumed		588,153,791	285,421,333
Total Purchase Price		$ 143,619,078	$ 40,850,410
Bay Bancorp, Inc [Member]
Cash consideration	$ 973,383
Purchase price assigned to shares exchanged for stock	142,645,695
Total purchase price for BYBK acquisition	143,619,078
Cash and due from banks	22,590,994
Investment securities	51,895,757
Restricted equity securities, at cost	2,339,700
Loans, net	546,215,988
Premises and equipment	3,127,963
Accrued interest receivable	1,714,054
Accrued taxes receivable	1,912,807
Deferred income taxes	2,637,668
Bank owned life insurance	16,319,198
Other real estate owned	1,041,079
Core deposit intangible	11,243,714
Other assets	1,413,987
Total assets acquired	662,452,909
Deposits	541,368,907
Short term borrowings	41,100,000
Other liabilities	5,684,884
Total liabilities assumed	588,153,791
Fair Value of net assets acquired	74,299,118
Total Purchase Price	143,619,078
Goodwill recorded for BYBK	$ 69,319,960

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Note 2 - Acquisition of Bay Bancorp, Inc. - Pro Forma Information (Details) - Bay Bancorp, Inc [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Total revenues (net interest income plus noninterest income)	$ 27,691,340		$ 82,628,420
Total revenues (net interest income plus noninterest income)		$ 28,218,087		$ 75,991,779
Net proforma income available to common stockholders	$ 9,739,452		$ 26,636,060
Net proforma income available to common stockholders		$ 7,245,186		$ 17,323,544

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Note 3 - Investment Securities (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Apr. 13, 2018 USD ($)	Dec. 31, 2017
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Positions	135		135			56
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Number of Positions	73		73			56
Proceeds from Sale and Maturity of Debt Securities, Available-for-sale, Total	$ 4,300,000	$ 45,800,000	$ 67,500,000	$ 72,500,000
Debt Securities, Available-for-sale, Gain (Loss), Total		0
Proceeds from Sale of Available-for-sale Securities, Total			51,650,175	53,802,337
Debt Securities, Available-for-sale, Realized Gain				164,000
Debt Securities, Available-for-sale, Realized Loss				129,000
Debt Securities, Available-for-sale, Realized Gain (Loss), Total				35,000
DCB Bancshares [Member]
Debt Securities, Available-for-sale, Gain (Loss), Total				0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Marketable Securities		$ 42,300,000		42,300,000
Proceeds from Sale of Available-for-sale Securities, Total				$ 41,800,000
Bay Bancorp, Inc [Member]
Proceeds from Sale and Maturity of Debt Securities, Available-for-sale, Total			51,700,000
Debt Securities, Available-for-sale, Gain (Loss), Total			$ 0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Marketable Securities					$ 51,895,757

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Note 3 - Investment Securities - Amortized Cost and Fair Value (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Amortized cost	$ 226,424,958	$ 222,208,968
Gross unrealized gains	31,998	273,656
Gross unrealized losses	(10,098,897)	(4,130,066)
Estimated fair value	216,358,059	218,352,558
US Treasury Securities [Member]
Amortized cost	3,006,397	3,007,728
Gross unrealized gains
Gross unrealized losses	(14,834)	(2,337)
Estimated fair value	2,991,563	3,005,391
US Government Agencies Debt Securities [Member]
Amortized cost	18,791,500	18,001,200
Gross unrealized gains
Gross unrealized losses	(780,168)	(267,434)
Estimated fair value	18,011,332	17,733,766
Corporate Debt Securities [Member]
Amortized cost	18,117,144	14,621,378
Gross unrealized gains	24,548	144,574
Gross unrealized losses	(31,480)	(107,893)
Estimated fair value	18,110,212	14,658,059
US States and Political Subdivisions Debt Securities [Member]
Amortized cost	79,459,426	80,791,431
Gross unrealized gains	6,219	126,566
Gross unrealized losses	(3,771,161)	(1,362,709)
Estimated fair value	75,694,484	79,555,288
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Amortized cost	19,663,844	19,907,299
Gross unrealized gains	1,115	2,516
Gross unrealized losses	(1,083,073)	(455,580)
Estimated fair value	18,581,886	19,454,235
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Amortized cost	58,902,507	64,476,038
Gross unrealized gains
Gross unrealized losses	(3,311,751)	(1,530,121)
Estimated fair value	55,590,756	62,945,917
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Amortized cost	28,484,140	21,403,894
Gross unrealized gains	116
Gross unrealized losses	(1,106,430)	(403,992)
Estimated fair value	$ 27,377,826	$ 20,999,902

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Note 3 - Investment Securities - Unrealized Losses (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Less than 12 months, fair value	$ 60,606,892	$ 60,067,492
Less than 12 months, unrealized losses	1,641,871	526,241
12 months or more, fair value	137,859,496	130,232,397
12 months or more, unrealized losses	8,457,026	3,603,825
Total, fair value	198,466,389	190,299,890
Total, unrealized losses	10,098,897	4,130,066
US Treasury Securities [Member]
Less than 12 months, fair value	2,991,563	1,506,328
Less than 12 months, unrealized losses	14,834	1,422
12 months or more, fair value		1,499,063
12 months or more, unrealized losses		915
Total, fair value	2,991,563	3,005,391
Total, unrealized losses	14,834	2,337
US Government Agencies Debt Securities [Member]
Less than 12 months, fair value	4,207,260	12,266,502
Less than 12 months, unrealized losses	175,329	93,043
12 months or more, fair value	13,804,072	5,467,264
12 months or more, unrealized losses	604,839	174,391
Total, fair value	18,011,332	17,733,766
Total, unrealized losses	780,168	267,434
Corporate Debt Securities [Member]
Less than 12 months, fair value	8,985,665	9,407,810
Less than 12 months, unrealized losses	31,480	107,893
12 months or more, fair value
12 months or more, unrealized losses
Total, fair value	8,985,665	9,407,810
Total, unrealized losses	31,480	107,893
US States and Political Subdivisions Debt Securities [Member]
Less than 12 months, fair value	32,490,897	25,548,751
Less than 12 months, unrealized losses	1,168,344	189,668
12 months or more, fair value	37,832,127	31,343,394
12 months or more, unrealized losses	2,602,817	1,173,041
Total, fair value	70,323,024	56,892,145
Total, unrealized losses	3,771,161	1,362,709
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Less than 12 months, fair value	1,724,767
Less than 12 months, unrealized losses	24,379
12 months or more, fair value	16,777,049	19,314,957
12 months or more, unrealized losses	1,058,694	455,580
Total, fair value	18,501,816	19,314,957
Total, unrealized losses	1,083,073	455,580
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Less than 12 months, fair value	3,562,727	2,516,080
Less than 12 months, unrealized losses	104,100	19,937
12 months or more, fair value	52,028,029	60,429,837
12 months or more, unrealized losses	3,207,651	1,510,184
Total, fair value	55,590,756	62,945,917
Total, unrealized losses	3,311,751	1,530,121
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Less than 12 months, fair value	6,644,013	8,822,021
Less than 12 months, unrealized losses	123,405	114,278
12 months or more, fair value	17,418,219	12,177,882
12 months or more, unrealized losses	983,025	289,714
Total, fair value	24,062,233	20,999,904
Total, unrealized losses	$ 1,106,430	$ 403,992

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Note 3 - Investment Securities - Contractual Maturities (Details)	Sep. 30, 2018 USD ($)
Within one year, amortized cost	$ 4,283,142
Within one year, fair value	4,271,753
Over one to five years, amortized cost	4,282,063
Over one to five years, fair value	4,254,785
Over five to ten years, amortized cost	59,101,418
Over five to ten years, fair value	57,063,268
Over ten years, amortized cost	158,758,335
Over ten years, fair value	150,768,253
Total, amortized cost	226,424,958
Total, fair value	216,358,059
Pledged securities, amortized cost	65,861,752
Pledged securities, fair value	$ 62,395,938

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Note 4 - Loans (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Apr. 13, 2018 USD ($)	Dec. 31, 2017 USD ($)
Loans and Leases Receivable, Gross, Total	$ 2,388,754,980	$ 1,670,514,151	$ 2,388,754,980	$ 1,670,514,151		$ 1,700,268,583
Number of Restructured Loans	7		7			7
Financing Receivable, Modifications, Recorded Investment	$ 2,400,000		$ 2,400,000			$ 2,700,000
Financing Receivable, Modifications, Number of Contracts	0	0
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	0	0	0
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Acquired During Period, Consumer, Contractually Required Payments Receivable at Acquisition	$ 14,766		$ 14,766
Impaired Financing Receivable, Recorded Investment, Total	9,056,990		9,056,990			6,615,350
Certain Loans Acquired in Transfer, Nonaccretable Difference	3,201		3,201
Transfer of Portfolio Loans and Leases to Held-for-sale			21,700,000
Bay Bancorp, Inc [Member]
Receivable with Imputed Interest, Discount					$ 8,300,000
Number of Loans and Leases Receivable Impaired Evaluated					132
Impaired Financing Receivable, Recorded Investment, Total					$ 13,500,000
Certain Loans Acquired in Transfer, Nonaccretable Difference					$ 3,200,000
Performing Financial Instruments [Member] | Bay Bancorp, Inc [Member]
Number of Loans and Leases Receivable Evaluated					1,991
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Acquired During Period, Consumer, Contractually Required Payments Receivable at Acquisition					$ 520,500,000
Commercial Real Estate Portfolio Segment [Member]
Loans and Leases Receivable, Gross, Total	1,504,997,269	$ 1,106,981,088	1,504,997,269	$ 1,106,981,088		1,100,000,000
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Loans and Leases Receivable, Gross, Total	$ 427,772,144		$ 427,772,144			355,786,942
Loan to Value Maximum Threshold	80.00%		80.00%
Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Loans and Leases Receivable, Gross, Total	$ 798,775,813		$ 798,775,813			538,463,660
Loan to Value Maximum Threshold	75.00%		75.00%
Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Loans and Leases Receivable, Gross, Total	$ 161,578,284		$ 161,578,284			171,588,414
Residential Portfolio Segment [Member]
Loans and Leases Receivable, Gross, Total	$ 514,246,285	319,820,872	$ 514,246,285	319,820,872		310,700,000
Loan to Value Maximum Threshold	85.00%		85.00%
Borrowers Debt to Income Ratio Maximum Threshold, Percent	43.00%		43.00%
Residential Portfolio Segment [Member] | Minimum [Member]
Loan Limits Amount	$ 453,100		$ 453,100
Residential Portfolio Segment [Member] | Maximum [Member]
Loan Limits Amount, Maximum, Threshold for Certain Designated Areas	$ 679,650		$ 679,650
Residential Portfolio Segment [Member] | Construction Loans [Member]
Loan to Value Maximum Threshold	80.00%		80.00%
Consumer Portfolio Segment [Member]
Loans and Leases Receivable, Gross, Total	$ 56,368,965	$ 60,803,316	$ 56,368,965	$ 60,803,316		$ 59,841,340
Borrowers Debt to Income Ratio Maximum Threshold, Percent	40.00%		40.00%

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Note 4 - Loans - Loans Held (Details) - USD ($)		Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Loans		$ 2,388,754,980		$ 1,700,268,583	$ 1,670,514,151
Allowance for loan losses		(6,980,050)	$ (6,704,577)	(5,920,586)	(5,816,187)	$ (5,911,842)	$ (6,195,469)
Deferred loan costs, net		2,804,884		2,013,434
Net loans		2,384,579,814		1,696,361,431
Financial Asset Originated [Member]
Loans	[1]	1,609,694,984		1,354,572,703
Allowance for loan losses	[1]	(6,698,812)		(5,738,534)
Deferred loan costs, net	[1]	2,804,884		2,013,434
Net loans	[1]	1,605,801,056		1,350,847,603
Financial Assets Acquired [Member]
Loans		779,059,996		345,695,880
Allowance for loan losses		(281,238)		(182,052)
Deferred loan costs, net
Net loans		778,778,758		345,513,828
Commercial Real Estate Portfolio Segment [Member]
Loans		1,504,997,269		1,100,000,000	1,106,981,088
Allowance for loan losses		(4,500,716)	(4,196,752)	(3,783,735)	(3,903,534)	(3,789,423)	(3,990,152)
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Loans		427,772,144		355,786,942
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Asset Originated [Member]
Loans	[1]	275,339,040		268,128,087
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Assets Acquired [Member]
Loans		152,433,104		87,658,855
Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Loans		798,775,813		538,463,660
Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Asset Originated [Member]
Loans	[1]	601,113,264		485,536,921
Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Assets Acquired [Member]
Loans		197,662,549		52,926,739
Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Loans		161,578,284		171,588,414
Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member] | Financial Asset Originated [Member]
Loans	[1]	148,312,837		164,193,228
Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member] | Financial Assets Acquired [Member]
Loans		13,265,447		7,395,186
Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Loans		116,871,028		76,541,431
Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Asset Originated [Member]
Loans	[1]	91,987,559		67,310,660
Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Assets Acquired [Member]
Loans		24,883,469		9,230,771
Residential Portfolio Segment [Member]
Loans		514,246,285		310,700,000	319,820,872
Allowance for loan losses		(787,358)	(749,630)	(844,355)	(696,104)	(793,795)	(823,520)
Residential Portfolio Segment [Member] | Residential First Investment [Member]
Loans		140,914,820		100,983,200
Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Asset Originated [Member]
Loans	[1]	90,285,266		79,762,682
Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Assets Acquired [Member]
Loans		50,629,554		21,220,518
Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Loans		241,101,720		129,762,493
Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Asset Originated [Member]
Loans	[1]	98,966,442		67,237,699
Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Assets Acquired [Member]
Loans		142,135,278		62,524,794
Residential Portfolio Segment [Member] | Residential Land and A&D [Member]
Loans		68,202,093		42,416,013
Residential Portfolio Segment [Member] | Residential Land and A&D [Member] | Financial Asset Originated [Member]
Loans	[1]	49,708,005		35,879,853
Residential Portfolio Segment [Member] | Residential Land and A&D [Member] | Financial Assets Acquired [Member]
Loans		18,494,088		6,536,160
Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Loans		64,027,652		37,539,757
Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Asset Originated [Member]
Loans	[1]	20,581,673		21,520,339
Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Assets Acquired [Member]
Loans		43,445,979		16,019,418
Commercial and Industrial [Member]
Loans		313,142,461		187,345,333
Commercial and Industrial [Member] | Financial Asset Originated [Member]
Loans	[1]	215,729,656		154,244,645
Commercial and Industrial [Member] | Financial Assets Acquired [Member]
Loans		97,412,805		33,100,688
Consumer Portfolio Segment [Member]
Loans		56,368,965		59,841,340	60,803,316
Allowance for loan losses		(87,460)	$ (77,747)	(30,466)	$ (18,666)	$ (10,377)	$ (9,562)
Consumer Portfolio Segment [Member] | Financial Asset Originated [Member]
Loans	[1]	17,671,242		10,758,589
Consumer Portfolio Segment [Member] | Financial Assets Acquired [Member]
Loans		$ 38,697,723		$ 49,082,751

[1] As a result of the acquisitions of Maryland Bankcorp, Inc. ("Maryland Bankcorp"), the parent company of Maryland Bank & Trust Company, N.A. ("MB&T"), in April 2011, WSB Holdings Inc., the parent company of The Washington Savings Bank ("WSB"), in May 2013, Regal Bancorp, Inc. ("Regal"), the parent company of Regal Bank & Trust ("Regal Bank"), in December 2015, DCB in July 2017, and BYBK, the parent company of Bay Bank, in April 2018, we have segmented the portfolio into two components, "Legacy" loans originated by Old Line Bank and "Acquired" loans acquired from MB&T, WSB, Regal Bank, Damascus and Bay Bank.

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Note 4 - Loans - Past Due Loans (Details) - USD ($)		Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Current		$ 2,367,255,618	$ 1,691,320,409
Accruing past due loans		16,990,282	7,183,523
Non-accruing loans		4,509,080	1,764,651
Total Loans		2,388,754,980	1,700,268,583	$ 1,670,514,151
Commercial Real Estate Portfolio Segment [Member]
Total Loans		1,504,997,269	1,100,000,000	1,106,981,088
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Non-accruing loans		412,785	228,555
Total Loans		427,772,144	355,786,942
Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Non-accruing loans		179,091
Total Loans		798,775,813	538,463,660
Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Total Loans		161,578,284	171,588,414
Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Non-accruing loans		151,780	190,193
Total Loans		116,871,028	76,541,431
Residential Portfolio Segment [Member]
Total Loans		514,246,285	310,700,000	319,820,872
Residential Portfolio Segment [Member] | Land and A&D [Member]
Non-accruing loans		872,209
Residential Portfolio Segment [Member] | Residential First Investment [Member]
Non-accruing loans		412,182	192,501
Total Loans		140,914,820	100,983,200
Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Non-accruing loans		2,001,721	1,153,402
Total Loans		241,101,720	129,762,493
Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Non-accruing loans		126,240
Total Loans		64,027,652	37,539,757
Commercial Portfolio Segment [Member]
Non-accruing loans		301,401
Total Loans		313,142,461		182,908,875
Consumer Portfolio Segment [Member]
Non-accruing loans		51,671
Total Loans		56,368,965	59,841,340	$ 60,803,316
Financing Receivables 30 To 89 Days Past Due [Member]
Accruing past due loans		14,472,157	7,067,556
Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Accruing past due loans		2,689,179
Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Accruing past due loans		2,258,266	1,932,728
Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Accruing past due loans		4,915
Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Accruing past due loans		1,015,998	413,824
Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | Land and A&D [Member]
Accruing past due loans		1,202,599
Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member]
Accruing past due loans		899,437	777,422
Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Accruing past due loans		2,799,758	2,457,528
Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Accruing past due loans		1,352,651	130,556
Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Portfolio Segment [Member]
Accruing past due loans		586,131	312,169
Financing Receivables 30 To 89 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Accruing past due loans		1,663,223	1,043,329
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Accruing past due loans		2,518,125	115,967
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Accruing past due loans		1,222,627
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Accruing past due loans		291,278
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member] | Land and A&D [Member]
Accruing past due loans		417,110
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Accruing past due loans		143,625	37,560
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Accruing past due loans		308,796
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Portfolio Segment [Member]
Accruing past due loans		29,134
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Accruing past due loans		105,555	78,407
Financial Asset Originated [Member]
Current		1,600,670,724	1,352,406,852
Accruing past due loans		8,136,767	1,692,220
Non-accruing loans		887,493	473,631
Total Loans	[1]	1,609,694,984	1,354,572,703
Financial Asset Originated [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Non-accruing loans
Total Loans	[1]	275,339,040	268,128,087
Financial Asset Originated [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Non-accruing loans
Total Loans	[1]	601,113,264	485,536,921
Financial Asset Originated [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Total Loans	[1]	148,312,837	164,193,228
Financial Asset Originated [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Non-accruing loans
Total Loans	[1]	91,987,559	67,310,660
Financial Asset Originated [Member] | Residential Portfolio Segment [Member] | Land and A&D [Member]
Non-accruing loans		277,704
Financial Asset Originated [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member]
Non-accruing loans		192,501	192,501
Total Loans	[1]	90,285,266	79,762,682
Financial Asset Originated [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Non-accruing loans		266,811	281,130
Total Loans	[1]	98,966,442	67,237,699
Financial Asset Originated [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Non-accruing loans
Total Loans	[1]	20,581,673	21,520,339
Financial Asset Originated [Member] | Commercial Portfolio Segment [Member]
Non-accruing loans		150,477
Financial Asset Originated [Member] | Consumer Portfolio Segment [Member]
Non-accruing loans
Total Loans	[1]	17,671,242	10,758,589
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member]
Accruing past due loans		6,351,860	1,692,220
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Accruing past due loans		2,689,179
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Accruing past due loans		438,456	1,089,022
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Accruing past due loans
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Accruing past due loans		1,015,998	254,925
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | Land and A&D [Member]
Accruing past due loans		1,032,599
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member]
Accruing past due loans		180,764	270,822
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Accruing past due loans		93,817	229
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Accruing past due loans		325,914
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Portfolio Segment [Member]
Accruing past due loans		290,290	51,088
Financial Asset Originated [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Accruing past due loans		284,843	26,134
Financial Asset Originated [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Accruing past due loans		1,784,907
Financial Asset Originated [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Accruing past due loans		1,042,909
Financial Asset Originated [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Accruing past due loans		291,278
Financial Asset Originated [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member] | Land and A&D [Member]
Accruing past due loans		417,110
Financial Asset Originated [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Accruing past due loans
Financial Asset Originated [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Accruing past due loans
Financial Asset Originated [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Portfolio Segment [Member]
Accruing past due loans		29,134
Financial Asset Originated [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Accruing past due loans		4,476
Financial Assets Acquired [Member]
Current		766,584,894	338,913,557
Accruing past due loans		8,853,515	5,491,303
Non-accruing loans		3,621,587	1,291,020
Total Loans		779,059,996	345,695,880
Financial Assets Acquired [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Non-accruing loans		412,785	228,555
Total Loans		152,433,104	87,658,855
Financial Assets Acquired [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Non-accruing loans		179,091
Total Loans		197,662,549	52,926,739
Financial Assets Acquired [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Total Loans		13,265,447	7,395,186
Financial Assets Acquired [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Non-accruing loans		151,780	190,193
Total Loans		24,883,469	9,230,771
Financial Assets Acquired [Member] | Residential Portfolio Segment [Member] | Land and A&D [Member]
Non-accruing loans		594,505
Financial Assets Acquired [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member]
Non-accruing loans		219,681
Total Loans		50,629,554	21,220,518
Financial Assets Acquired [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Non-accruing loans		1,734,910	872,272
Total Loans		142,135,278	62,524,794
Financial Assets Acquired [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Non-accruing loans		126,240
Total Loans		43,445,979	16,019,418
Financial Assets Acquired [Member] | Commercial Portfolio Segment [Member]
Non-accruing loans		150,924
Financial Assets Acquired [Member] | Consumer Portfolio Segment [Member]
Non-accruing loans		51,671
Total Loans		38,697,723	49,082,751
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member]
Accruing past due loans		8,120,297	5,375,336
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Accruing past due loans
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Accruing past due loans		1,819,810	843,706
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Accruing past due loans		4,915
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Accruing past due loans			158,899
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | Land and A&D [Member]
Accruing past due loans		170,000
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member]
Accruing past due loans		718,673	506,600
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Accruing past due loans		2,705,941	2,457,299
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Accruing past due loans		1,026,737	130,556
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Commercial Portfolio Segment [Member]
Accruing past due loans		295,841	261,081
Financial Assets Acquired [Member] | Financing Receivables 30 To 89 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Accruing past due loans		1,378,380	1,017,195
Financial Assets Acquired [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Accruing past due loans		733,218	115,967
Financial Assets Acquired [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Accruing past due loans		179,718
Financial Assets Acquired [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Accruing past due loans
Financial Assets Acquired [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member] | Land and A&D [Member]
Accruing past due loans
Financial Assets Acquired [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Accruing past due loans		143,625	37,560
Financial Assets Acquired [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Accruing past due loans		308,796
Financial Assets Acquired [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Portfolio Segment [Member]
Accruing past due loans
Financial Assets Acquired [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Accruing past due loans		$ 101,079	$ 78,407

[1] As a result of the acquisitions of Maryland Bankcorp, Inc. ("Maryland Bankcorp"), the parent company of Maryland Bank & Trust Company, N.A. ("MB&T"), in April 2011, WSB Holdings Inc., the parent company of The Washington Savings Bank ("WSB"), in May 2013, Regal Bancorp, Inc. ("Regal"), the parent company of Regal Bank & Trust ("Regal Bank"), in December 2015, DCB in July 2017, and BYBK, the parent company of Bay Bank, in April 2018, we have segmented the portfolio into two components, "Legacy" loans originated by Old Line Bank and "Acquired" loans acquired from MB&T, WSB, Regal Bank, Damascus and Bay Bank.

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Note 4 - Loans - Impaired Loans (Details) - USD ($)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Dec. 31, 2017
Related allowance	$ 451,625	$ 451,625	$ 424,663
Unpaid principal balance, total	10,727,292	10,727,292	7,074,108
Recorded investment, total	9,056,990	9,056,990	6,615,350
Interest income recognized, total	67,773	241,725	266,577
Average recorded investment, total	11,817,522	11,873,472	7,434,872
Financial Asset Originated [Member]
Related allowance	170,387	170,387	242,610
Average recorded investment, with an allowance recorded	4,832,506	4,875,309
Unpaid principal balance, total	4,794,259	4,794,259	4,502,108
Recorded investment, total	4,794,259	4,794,259	4,502,108
Interest income recognized, total	36,141	151,181	198,746
Average recorded investment, total			4,821,268
Financial Assets Acquired [Member]
Related allowance	281,238	281,238	182,053
Unpaid principal balance, total	5,933,033	5,933,033	2,572,000
Recorded investment, total	4,262,731	4,262,731	2,113,242
Interest income recognized, total	31,632	90,544	67,831
Average recorded investment, total	6,985,016	6,998,163	2,613,604
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Asset Originated [Member]
Unpaid principal balance, with no related allowance recorded	1,752,561	1,752,561	1,797,030
Recorded investment, with no related allowance recorded	1,752,561	1,752,561	1,797,030
Average recorded investment, with no related allowance recorded	1,758,968	1,773,719	1,913,873
Interest income recognized, with no related allowance recorded	13,509	55,910	70,623
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Assets Acquired [Member]
Unpaid principal balance, with no related allowance recorded	516,170	516,170	253,865
Recorded investment, with no related allowance recorded	465,723	465,723	253,865
Average recorded investment, with no related allowance recorded	590,642	591,057	252,988
Interest income recognized, with no related allowance recorded		3,281	2,155
Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Asset Originated [Member]
Unpaid principal balance, with no related allowance recorded	1,701,018	1,701,018	1,155,595
Recorded investment, with no related allowance recorded	1,701,018	1,701,018	1,155,595
Average recorded investment, with no related allowance recorded	1,708,471	1,723,700	1,183,738
Interest income recognized, with no related allowance recorded	18,586	69,746	51,806
Unpaid principal balance, with an allowance recorded			592,432
Recorded investment, with an allowance recorded			592,432
Related allowance			69,903
Average recorded investment, with an allowance recorded			601,959
Interest income recognized, with an allowance recorded			30,576
Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Assets Acquired [Member]
Unpaid principal balance, with no related allowance recorded	221,197	221,197
Recorded investment, with no related allowance recorded	200,954	200,954
Average recorded investment, with no related allowance recorded	627,792	628,745
Interest income recognized, with no related allowance recorded	10,855	25,790
Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Asset Originated [Member]
Unpaid principal balance, with no related allowance recorded	277,704	277,704
Recorded investment, with no related allowance recorded	277,704	277,704
Average recorded investment, with no related allowance recorded	277,704	277,704
Interest income recognized, with no related allowance recorded
Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Assets Acquired [Member]
Unpaid principal balance, with no related allowance recorded	243,329	243,329	334,271
Recorded investment, with no related allowance recorded	106,780	106,780	45,000
Average recorded investment, with no related allowance recorded	349,809	349,809	334,271
Interest income recognized, with no related allowance recorded
Unpaid principal balance, with an allowance recorded	328,851	328,851	148,196
Recorded investment, with an allowance recorded	45,000	45,000	148,196
Related allowance	45,000	45,000	80,072
Average recorded investment, with an allowance recorded	328,851	329,705	155,621
Interest income recognized, with an allowance recorded			2,498
Residential Portfolio Segment [Member] | Residential First Investment [Member]
Average recorded investment, with an allowance recorded			192,501
Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Asset Originated [Member]
Unpaid principal balance, with no related allowance recorded
Recorded investment, with no related allowance recorded
Average recorded investment, with no related allowance recorded
Interest income recognized, with no related allowance recorded
Unpaid principal balance, with an allowance recorded	192,501	192,501	192,501
Recorded investment, with an allowance recorded	192,501	192,501	192,501
Related allowance	39,420	39,420	39,420
Average recorded investment, with an allowance recorded	192,501	192,501
Interest income recognized, with an allowance recorded
Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Assets Acquired [Member]
Unpaid principal balance, with no related allowance recorded	224,868	224,868	131,294
Recorded investment, with no related allowance recorded	224,868	224,868	74,066
Average recorded investment, with no related allowance recorded	238,294	238,294	132,812
Interest income recognized, with no related allowance recorded		4,664	4,378
Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Asset Originated [Member]
Unpaid principal balance, with no related allowance recorded	216,720	216,720	226,554
Recorded investment, with no related allowance recorded	216,720	216,720	226,554
Average recorded investment, with no related allowance recorded	229,349	230,150	233,618
Interest income recognized, with no related allowance recorded	743	7,192	10,536
Unpaid principal balance, with an allowance recorded	50,091	50,091	54,576
Recorded investment, with an allowance recorded	50,091	50,091	54,576
Related allowance	37,075	37,075	37,075
Average recorded investment, with an allowance recorded	55,510	56,322	217,673
Interest income recognized, with an allowance recorded	290	1,424
Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Assets Acquired [Member]
Unpaid principal balance, with no related allowance recorded	2,028,054	2,028,054	1,382,055
Recorded investment, with no related allowance recorded	1,915,795	1,915,795	1,269,796
Average recorded investment, with no related allowance recorded	2,030,925	2,035,333	1,390,037
Interest income recognized, with no related allowance recorded	4,321	26,246	31,601
Unpaid principal balance, with an allowance recorded	253,437	253,437	250,194
Recorded investment, with an allowance recorded	253,437	253,437	250,194
Related allowance	88,723	88,723	77,464
Average recorded investment, with an allowance recorded	276,861	275,590	273,596
Interest income recognized, with an allowance recorded			23,424
Residential Portfolio Segment [Member] | Land and A&D [Member] | Financial Assets Acquired [Member]
Unpaid principal balance, with no related allowance recorded	654,644	654,644
Recorded investment, with no related allowance recorded	451,627	451,627
Average recorded investment, with no related allowance recorded	767,290	767,315
Interest income recognized, with no related allowance recorded		1,518
Unpaid principal balance, with an allowance recorded	154,297	154,297
Recorded investment, with an allowance recorded	154,297	154,297
Related allowance	96,391	96,391
Average recorded investment, with an allowance recorded	161,153	159,370
Interest income recognized, with an allowance recorded
Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Assets Acquired [Member]
Unpaid principal balance, with no related allowance recorded	128,063	128,063
Recorded investment, with no related allowance recorded	128,063	128,063
Average recorded investment, with no related allowance recorded	128,063	128,063
Interest income recognized, with no related allowance recorded		964
Commercial Portfolio Segment [Member] | Financial Asset Originated [Member]
Unpaid principal balance, with no related allowance recorded	509,772	509,772	387,208
Recorded investment, with no related allowance recorded	509,772	509,772	387,208
Average recorded investment, with no related allowance recorded	515,840	526,281	379,983
Interest income recognized, with no related allowance recorded	2,201	13,287	30,245
Unpaid principal balance, with an allowance recorded	93,892	93,892	96,212
Recorded investment, with an allowance recorded	93,892	93,892	96,212
Related allowance	93,892	93,892	96,212
Average recorded investment, with an allowance recorded	94,163	94,932	97,923
Interest income recognized, with an allowance recorded	812	3,622	4,960
Commercial Portfolio Segment [Member] | Financial Assets Acquired [Member]
Unpaid principal balance, with no related allowance recorded	1,031,496	1,031,496
Recorded investment, with no related allowance recorded	167,560	167,560
Average recorded investment, with no related allowance recorded	1,303,135	1,303,808
Interest income recognized, with no related allowance recorded	15,576	23,427
Unpaid principal balance, with an allowance recorded	68,888	68,888	72,125
Recorded investment, with an allowance recorded	68,888	68,888	72,125
Related allowance	24,517	24,517	24,517
Average recorded investment, with an allowance recorded	69,324	70,367	74,279
Interest income recognized, with an allowance recorded	589	2,683	$ 3,775
Consumer Portfolio Segment [Member] | Financial Assets Acquired [Member]
Unpaid principal balance, with no related allowance recorded	52,730	52,730
Recorded investment, with no related allowance recorded	52,730	52,730
Average recorded investment, with no related allowance recorded	85,421	92,987
Interest income recognized, with no related allowance recorded		1,438
Unpaid principal balance, with an allowance recorded	27,009	27,009
Recorded investment, with an allowance recorded	27,009	27,009
Related allowance	26,607	26,607
Average recorded investment, with an allowance recorded	27,456	27,720
Interest income recognized, with an allowance recorded	$ 291	$ 533

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Note 4 - Loans - Loans Modified as TDRs (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)
Number of contracts	0	0
Financial Asset Originated [Member]
Number of contracts			1	2
Pre-modification outstanding recorded investment			$ 28,009	$ 2,011,064
Post-modification outstanding recorded investment			$ 27,009	$ 1,972,327
Commercial Real Estate Portfolio Segment [Member] | Financial Asset Originated [Member]
Number of contracts				1
Pre-modification outstanding recorded investment				$ 1,596,740
Post-modification outstanding recorded investment				$ 1,572,976
Commercial Portfolio Segment [Member] | Financial Asset Originated [Member]
Number of contracts				1
Pre-modification outstanding recorded investment				$ 414,324
Post-modification outstanding recorded investment				$ 399,351
Consumer Portfolio Segment [Member] | Financial Asset Originated [Member]
Number of contracts			1
Pre-modification outstanding recorded investment			$ 28,009
Post-modification outstanding recorded investment			$ 27,009

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Note 4 - Loans - Acquired Impaired Loans (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Balance at beginning of period	$ 115,066	$ (22,980)
Accretion of fair value discounts	(873,308)	(83,099)
Reclassification (to)/from non-accretable discount	847,153	(15,428)
Balance at end of period	139,895	(21,526)
Contractually required payments receivable	17,975,448	8,301,260	$ 8,277,731	$ 9,597,703
Carrying amount	14,109,972	6,611,444	$ 6,617,774	$ 7,558,415
Bay Bancorp, Inc [Member]
Additions due to acquisition	50,984
DCB Bancshares [Member]
Additions due to acquisition		$ 99,981

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Note 4 - Loans - Contractually Required Payments Receivable, Cash Flows Expected, Non-accretable Credit Adjustment and Accretable Yield (Details)	Sep. 30, 2018 USD ($)
Contractually required principal at acquisition	$ 14,766
Contractual cash flows not expected to be collected (non-accretable difference)	(3,201)
Expected cash flows at acquisition-Total	$ 11,565

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Note 4 - Loans - Credit Quality (Details) - USD ($)		Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Loans		$ 2,388,754,980	$ 1,700,268,583	$ 1,670,514,151
Financial Asset Originated [Member]
Loans	[1]	1,609,694,984	1,354,572,703
Financial Assets Acquired [Member]
Loans		779,059,996	345,695,880
Commercial Real Estate Portfolio Segment [Member]
Loans		1,504,997,269	1,100,000,000	1,106,981,088
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Loans		427,772,144	355,786,942
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Asset Originated [Member]
Loans	[1]	275,339,040	268,128,087
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Assets Acquired [Member]
Loans		152,433,104	87,658,855
Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Loans		798,775,813	538,463,660
Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Asset Originated [Member]
Loans	[1]	601,113,264	485,536,921
Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Assets Acquired [Member]
Loans		197,662,549	52,926,739
Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Loans		161,578,284	171,588,414
Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member] | Financial Asset Originated [Member]
Loans	[1]	148,312,837	164,193,228
Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member] | Financial Assets Acquired [Member]
Loans		13,265,447	7,395,186
Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Loans		116,871,028	76,541,431
Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Asset Originated [Member]
Loans	[1]	91,987,559	67,310,660
Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Assets Acquired [Member]
Loans		24,883,469	9,230,771
Residential Portfolio Segment [Member]
Loans		514,246,285	310,700,000	319,820,872
Residential Portfolio Segment [Member] | Residential First Investment [Member]
Loans		140,914,820	100,983,200
Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Asset Originated [Member]
Loans	[1]	90,285,266	79,762,682
Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Assets Acquired [Member]
Loans		50,629,554	21,220,518
Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Loans		241,101,720	129,762,493
Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Asset Originated [Member]
Loans	[1]	98,966,442	67,237,699
Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Assets Acquired [Member]
Loans		142,135,278	62,524,794
Residential Portfolio Segment [Member] | Residential Land and A&D [Member]
Loans		68,202,093	42,416,013
Residential Portfolio Segment [Member] | Residential Land and A&D [Member] | Financial Asset Originated [Member]
Loans	[1]	49,708,005	35,879,853
Residential Portfolio Segment [Member] | Residential Land and A&D [Member] | Financial Assets Acquired [Member]
Loans		18,494,088	6,536,160
Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Loans		64,027,652	37,539,757
Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Asset Originated [Member]
Loans	[1]	20,581,673	21,520,339
Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Assets Acquired [Member]
Loans		43,445,979	16,019,418
Commercial Portfolio Segment [Member]
Loans		313,142,461		182,908,875
Consumer Portfolio Segment [Member]
Loans		56,368,965	59,841,340	$ 60,803,316
Consumer Portfolio Segment [Member] | Financial Asset Originated [Member]
Loans	[1]	17,671,242	10,758,589
Consumer Portfolio Segment [Member] | Financial Assets Acquired [Member]
Loans		38,697,723	49,082,751
Pass [Member]
Loans		2,351,880,199	1,669,576,864
Pass [Member] | Financial Asset Originated [Member]
Loans		1,593,287,086	1,337,737,550
Pass [Member] | Financial Assets Acquired [Member]
Loans		758,593,113	331,839,314
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Loans		416,846,476	345,447,055
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Asset Originated [Member]
Loans		269,706,878	262,377,665
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Assets Acquired [Member]
Loans		147,139,598	83,069,390
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Loans		793,396,302	534,469,130
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Asset Originated [Member]
Loans		598,321,509	483,404,883
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Assets Acquired [Member]
Loans		195,074,793	51,064,247
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Loans		161,573,369	171,588,414
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member] | Financial Asset Originated [Member]
Loans		148,312,837	164,193,228
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member] | Financial Assets Acquired [Member]
Loans		13,260,532	7,395,186
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Loans		114,395,992	74,250,242
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Asset Originated [Member]
Loans		89,964,201	65,184,837
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Assets Acquired [Member]
Loans		24,431,791	9,065,405
Pass [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member]
Loans		136,983,581	98,661,680
Pass [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Asset Originated [Member]
Loans		89,462,345	78,814,931
Pass [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Assets Acquired [Member]
Loans		47,521,236	19,846,749
Pass [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Loans		235,713,064	124,784,001
Pass [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Asset Originated [Member]
Loans		98,636,095	66,888,943
Pass [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Assets Acquired [Member]
Loans		137,076,969	57,895,058
Pass [Member] | Residential Portfolio Segment [Member] | Residential Land and A&D [Member]
Loans		65,114,686	39,439,906
Pass [Member] | Residential Portfolio Segment [Member] | Residential Land and A&D [Member] | Financial Asset Originated [Member]
Loans		47,318,505	33,712,187
Pass [Member] | Residential Portfolio Segment [Member] | Residential Land and A&D [Member] | Financial Assets Acquired [Member]
Loans		17,796,181	5,727,719
Pass [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Loans		63,847,489	37,539,757
Pass [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Asset Originated [Member]
Loans		20,581,673	21,520,339
Pass [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Assets Acquired [Member]
Loans		43,265,816	16,019,418
Pass [Member] | Commercial Portfolio Segment [Member]
Loans		307,796,414	183,620,663
Pass [Member] | Commercial Portfolio Segment [Member] | Financial Asset Originated [Member]
Loans		213,311,801	150,881,948
Pass [Member] | Commercial Portfolio Segment [Member] | Financial Assets Acquired [Member]
Loans		94,484,613	32,738,715
Pass [Member] | Consumer Portfolio Segment [Member]
Loans		56,212,826	59,776,016
Pass [Member] | Consumer Portfolio Segment [Member] | Financial Asset Originated [Member]
Loans		17,671,242	10,758,589
Pass [Member] | Consumer Portfolio Segment [Member] | Financial Assets Acquired [Member]
Loans		38,541,584	49,017,427
Special Mention [Member]
Loans		14,864,750	14,646,573
Special Mention [Member] | Financial Asset Originated [Member]
Loans		6,595,091	7,001,095
Special Mention [Member] | Financial Assets Acquired [Member]
Loans		8,269,659	7,645,478
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Loans		3,498,525	3,251,808
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Asset Originated [Member]
Loans		424,315	435,751
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Assets Acquired [Member]
Loans		3,074,210	2,816,057
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Loans		2,395,255	1,421,265
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Asset Originated [Member]
Loans		1,090,737	384,011
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Assets Acquired [Member]
Loans		1,304,518	1,037,254
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Loans		4,915
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member] | Financial Asset Originated [Member]
Loans
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member] | Financial Assets Acquired [Member]
Loans		4,915
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Loans		2,323,256	2,246,189
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Asset Originated [Member]
Loans		2,023,358	2,125,823
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Assets Acquired [Member]
Loans		299,898	120,366
Special Mention [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member]
Loans		2,030,515	1,335,766
Special Mention [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Asset Originated [Member]
Loans		292,445	300,824
Special Mention [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Assets Acquired [Member]
Loans		1,738,070	1,034,942
Special Mention [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Loans		1,640,063	1,916,011
Special Mention [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Asset Originated [Member]
Loans		63,536	67,626
Special Mention [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Assets Acquired [Member]
Loans		1,576,527	1,848,385
Special Mention [Member] | Residential Portfolio Segment [Member] | Residential Land and A&D [Member]
Loans		2,215,198	2,830,914
Special Mention [Member] | Residential Portfolio Segment [Member] | Residential Land and A&D [Member] | Financial Asset Originated [Member]
Loans		2,111,796	2,167,666
Special Mention [Member] | Residential Portfolio Segment [Member] | Residential Land and A&D [Member] | Financial Assets Acquired [Member]
Loans		103,402	663,248
Special Mention [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Loans
Special Mention [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Asset Originated [Member]
Loans
Special Mention [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Assets Acquired [Member]
Loans
Special Mention [Member] | Commercial Portfolio Segment [Member]
Loans		686,641	1,579,296
Special Mention [Member] | Commercial Portfolio Segment [Member] | Financial Asset Originated [Member]
Loans		588,904	1,519,394
Special Mention [Member] | Commercial Portfolio Segment [Member] | Financial Assets Acquired [Member]
Loans		97,737	59,902
Special Mention [Member] | Consumer Portfolio Segment [Member]
Loans		70,382	65,324
Special Mention [Member] | Consumer Portfolio Segment [Member] | Financial Asset Originated [Member]
Loans
Special Mention [Member] | Consumer Portfolio Segment [Member] | Financial Assets Acquired [Member]
Loans		70,382	65,324
Substandard [Member]
Loans		22,010,031	16,045,146
Substandard [Member] | Financial Asset Originated [Member]
Loans		9,812,807	9,834,058
Substandard [Member] | Financial Assets Acquired [Member]
Loans		12,197,224	6,211,088
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member]
Loans		7,427,143	7,088,079
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Asset Originated [Member]
Loans		5,207,847	5,314,671
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied [Member] | Financial Assets Acquired [Member]
Loans		2,219,296	1,773,408
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member]
Loans		2,984,256	2,573,265
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Asset Originated [Member]
Loans		1,701,018	1,748,027
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment [Member] | Financial Assets Acquired [Member]
Loans		1,283,238	825,238
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member]
Loans
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member] | Financial Asset Originated [Member]
Loans
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Hospitality Industry [Member] | Financial Assets Acquired [Member]
Loans
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member]
Loans		151,780	45,000
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Asset Originated [Member]
Loans
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Land and A&D [Member] | Financial Assets Acquired [Member]
Loans		151,780	45,000
Substandard [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member]
Loans		1,900,724	985,754
Substandard [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Asset Originated [Member]
Loans		530,476	646,927
Substandard [Member] | Residential Portfolio Segment [Member] | Residential First Investment [Member] | Financial Assets Acquired [Member]
Loans		1,370,248	338,827
Substandard [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member]
Loans		3,748,593	3,062,481
Substandard [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Asset Originated [Member]
Loans		266,811	281,130
Substandard [Member] | Residential Portfolio Segment [Member] | Residential First Owner Occupied [Member] | Financial Assets Acquired [Member]
Loans		3,481,782	2,781,351
Substandard [Member] | Residential Portfolio Segment [Member] | Residential Land and A&D [Member]
Loans		872,209	145,193
Substandard [Member] | Residential Portfolio Segment [Member] | Residential Land and A&D [Member] | Financial Asset Originated [Member]
Loans		277,704
Substandard [Member] | Residential Portfolio Segment [Member] | Residential Land and A&D [Member] | Financial Assets Acquired [Member]
Loans		594,505	145,193
Substandard [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member]
Loans		180,163
Substandard [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Asset Originated [Member]
Loans
Substandard [Member] | Residential Portfolio Segment [Member] | HELOC and Jr Liens [Member] | Financial Assets Acquired [Member] | Acquired [Member]
Loans		180,163
Substandard [Member] | Commercial Portfolio Segment [Member]
Loans		4,659,406	2,145,374
Substandard [Member] | Commercial Portfolio Segment [Member] | Financial Asset Originated [Member]
Loans		1,828,951	1,843,303
Substandard [Member] | Commercial Portfolio Segment [Member] | Financial Assets Acquired [Member]
Loans		2,830,455	302,071
Substandard [Member] | Consumer Portfolio Segment [Member]
Loans		85,757
Substandard [Member] | Consumer Portfolio Segment [Member] | Financial Asset Originated [Member]
Loans
Substandard [Member] | Consumer Portfolio Segment [Member] | Financial Assets Acquired [Member]
Loans		85,757
Doubtful [Member]
Loans
Doubtful [Member] | Financial Asset Originated [Member]
Loans
Doubtful [Member] | Financial Assets Acquired [Member]
Loans
Unlikely to be Collected Financing Receivable [Member]
Loans
Unlikely to be Collected Financing Receivable [Member] | Financial Asset Originated [Member]
Loans
Unlikely to be Collected Financing Receivable [Member] | Financial Assets Acquired [Member]
Loans

[1] As a result of the acquisitions of Maryland Bankcorp, Inc. ("Maryland Bankcorp"), the parent company of Maryland Bank & Trust Company, N.A. ("MB&T"), in April 2011, WSB Holdings Inc., the parent company of The Washington Savings Bank ("WSB"), in May 2013, Regal Bancorp, Inc. ("Regal"), the parent company of Regal Bank & Trust ("Regal Bank"), in December 2015, DCB in July 2017, and BYBK, the parent company of Bay Bank, in April 2018, we have segmented the portfolio into two components, "Legacy" loans originated by Old Line Bank and "Acquired" loans acquired from MB&T, WSB, Regal Bank, Damascus and Bay Bank.

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Note 4 - Loans - Allowance for Loan Losses Activity (Details) - USD ($)		3 Months Ended		9 Months Ended
		Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Beginning balance		$ 6,704,577	$ 5,911,842	$ 5,920,586	$ 6,195,469
Provision for loan losses		307,870	135,701	1,235,023	855,108
Recoveries		74,482	7,483	97,513	36,311
Total		7,086,929	6,055,026	7,253,122	7,086,888
Loans charged off		(106,879)	(238,839)	(273,072)	(1,270,701)
Ending Balance		6,980,050	5,816,187	6,980,050	5,816,187
Loans held for investment, allowance for loan losses		6,980,050	5,911,842	6,980,050	5,816,187	$ 6,980,050	$ 5,816,187
Financial Asset Originated [Member]
Beginning balance	[1]			5,738,534
Ending Balance	[1]	6,698,812		6,698,812
Individually evaluated for impairment						170,387	202,262
Other loans not individually evaluated						6,528,425	5,431,873
Loans held for investment, allowance for loan losses	[1]	6,698,812		6,698,812		6,698,812
Financial Assets Acquired [Member]
Beginning balance				182,052
Ending Balance		281,238		281,238
Individually evaluated for impairment						281,238	182,052
Loans held for investment, allowance for loan losses		281,238		281,238		281,238
Commercial Portfolio Segment [Member]
Beginning balance		1,680,448	1,318,247	1,262,030	1,372,235
Provision for loan losses		(141,751)	81,378	273,017	596,350
Recoveries		65,819	786	69,469	2,350
Total		1,604,516	1,400,411	1,604,516	1,970,935
Loans charged off			(202,528)		(773,052)
Ending Balance		1,604,516	1,197,883	1,604,516	1,197,883
Loans held for investment, allowance for loan losses		1,680,448	1,318,247	1,604,516	1,197,883	1,604,516	1,197,883
Commercial Portfolio Segment [Member] | Financial Asset Originated [Member]
Individually evaluated for impairment						93,892	96,712
Other loans not individually evaluated						1,441,108	1,076,654
Commercial Portfolio Segment [Member] | Financial Assets Acquired [Member]
Individually evaluated for impairment						69,516	24,517
Commercial Real Estate Portfolio Segment [Member]
Beginning balance		4,196,752	3,789,423	3,783,735	3,990,152
Provision for loan losses		303,547	113,694	716,147	352,054
Recoveries		417	417	834	1,250
Total		4,500,716	3,903,534	4,500,716	4,343,456
Loans charged off					(439,922)
Ending Balance		4,500,716	3,903,534	4,500,716	3,903,534
Loans held for investment, allowance for loan losses		4,196,752	3,789,423	4,500,716	3,903,534	4,500,716	3,903,534
Commercial Real Estate Portfolio Segment [Member] | Financial Asset Originated [Member]
Individually evaluated for impairment							69,903
Other loans not individually evaluated						4,500,716	3,753,559
Commercial Real Estate Portfolio Segment [Member] | Financial Assets Acquired [Member]
Individually evaluated for impairment							80,072
Residential Portfolio Segment [Member]
Beginning balance		749,630	793,795	844,355	823,520
Provision for loan losses		34,609	(97,691)	(70,403)	(126,048)
Recoveries		3,119		15,230	900
Total		787,358	696,104	789,182	698,372
Loans charged off				(1,824)	(2,268)
Ending Balance		787,358	696,104	787,358	696,104
Loans held for investment, allowance for loan losses		749,630	793,795	787,358	696,104	787,358	696,104
Residential Portfolio Segment [Member] | Financial Asset Originated [Member]
Individually evaluated for impairment						76,495	35,647
Other loans not individually evaluated						525,749	582,994
Residential Portfolio Segment [Member] | Financial Assets Acquired [Member]
Individually evaluated for impairment						185,114	77,463
Consumer Portfolio Segment [Member]
Beginning balance		77,747	10,377	30,466	9,562
Provision for loan losses		111,465	38,320	316,262	32,752
Recoveries		5,127	6,280	11,980	31,811
Total		194,339	54,977	358,708	74,125
Loans charged off		(106,879)	(36,311)	(271,248)	(55,459)
Ending Balance		87,460	18,666	87,460	18,666
Loans held for investment, allowance for loan losses		$ 77,747	$ 10,377	$ 87,460	$ 18,666	87,460	18,666
Consumer Portfolio Segment [Member] | Financial Asset Originated [Member]
Individually evaluated for impairment
Other loans not individually evaluated						60,852	18,666
Consumer Portfolio Segment [Member] | Financial Assets Acquired [Member]
Individually evaluated for impairment						$ 26,608

[1] As a result of the acquisitions of Maryland Bankcorp, Inc. ("Maryland Bankcorp"), the parent company of Maryland Bank & Trust Company, N.A. ("MB&T"), in April 2011, WSB Holdings Inc., the parent company of The Washington Savings Bank ("WSB"), in May 2013, Regal Bancorp, Inc. ("Regal"), the parent company of Regal Bank & Trust ("Regal Bank"), in December 2015, DCB in July 2017, and BYBK, the parent company of Bay Bank, in April 2018, we have segmented the portfolio into two components, "Legacy" loans originated by Old Line Bank and "Acquired" loans acquired from MB&T, WSB, Regal Bank, Damascus and Bay Bank.

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Note 4 - Loans - Allowance by Impairment Methodology (Details) - USD ($)		Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Total Loans		$ 2,388,754,980	$ 1,700,268,583	$ 1,670,514,151
Financial Asset Originated [Member]
Individually evaluated for impairment with specific reserve		336,484		1,105,148
Individually evaluated for impairment without specific reserve		4,457,774		3,656,027
Other loans not individually evaluated		1,604,900,726		1,299,769,274
Total Loans	[1]	1,609,694,984	1,354,572,703
Financial Assets Acquired [Member]
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		548,632		472,587
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		3,714,100		1,490,432
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		14,109,970		6,662,583
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		760,687,294		357,358,100
Total Loans		779,059,996	345,695,880
Commercial Portfolio Segment [Member]
Total Loans		313,142,461		182,908,875
Commercial Portfolio Segment [Member] | Financial Asset Originated [Member]
Individually evaluated for impairment with specific reserve		93,892		96,712
Individually evaluated for impairment without specific reserve		509,772		399,351
Other loans not individually evaluated		215,125,991		143,238,162
Commercial Portfolio Segment [Member] | Financial Assets Acquired [Member]
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		68,888		73,167
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		167,560
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		559,248
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		96,617,110		39,101,483
Commercial Real Estate Portfolio Segment [Member]
Total Loans		1,504,997,269	1,100,000,000	1,106,981,088
Commercial Real Estate Portfolio Segment [Member] | Financial Asset Originated [Member]
Individually evaluated for impairment with specific reserve				597,053
Individually evaluated for impairment without specific reserve		3,453,579		2,981,975
Other loans not individually evaluated		1,113,299,121		941,537,848
Commercial Real Estate Portfolio Segment [Member] | Financial Assets Acquired [Member]
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		45,000		149,226
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		773,457		298,279
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		7,872,328		3,492,464
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		379,553,784		157,924,243
Residential Portfolio Segment [Member]
Total Loans		514,246,285	310,700,000	319,820,872
Residential Portfolio Segment [Member] | Financial Asset Originated [Member]
Individually evaluated for impairment with specific reserve		242,592		411,383
Individually evaluated for impairment without specific reserve		494,423		274,701
Other loans not individually evaluated		258,804,372		207,916,920
Residential Portfolio Segment [Member] | Financial Assets Acquired [Member]
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		407,735		250,194
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		2,720,353		1,192,153
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		5,664,394		3,156,119
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		245,912,416		106,619,402
Consumer Portfolio Segment [Member]
Total Loans		56,368,965	59,841,340	60,803,316
Consumer Portfolio Segment [Member] | Financial Asset Originated [Member]
Individually evaluated for impairment with specific reserve
Individually evaluated for impairment without specific reserve
Other loans not individually evaluated		17,671,242		7,076,344
Total Loans	[1]	17,671,242	10,758,589
Consumer Portfolio Segment [Member] | Financial Assets Acquired [Member]
Individually evaluated for impairment with specific reserve subsequent to acquisition (ASC 310-20 at acquisition)		27,009
Individually evaluated for impairment without specific reserve (ASC 310-20 at acquisition)		52,730
Individually evaluated for impairment without specific reserve (ASC 310-30 at acquisition)		14,000		14,000
Collectively evaluated for impairment without reserve (ASC 310-20 at acquisition)		38,603,984		$ 53,712,972
Total Loans		$ 38,697,723	$ 49,082,751

[1] As a result of the acquisitions of Maryland Bankcorp, Inc. ("Maryland Bankcorp"), the parent company of Maryland Bank & Trust Company, N.A. ("MB&T"), in April 2011, WSB Holdings Inc., the parent company of The Washington Savings Bank ("WSB"), in May 2013, Regal Bancorp, Inc. ("Regal"), the parent company of Regal Bank & Trust ("Regal Bank"), in December 2015, DCB in July 2017, and BYBK, the parent company of Bay Bank, in April 2018, we have segmented the portfolio into two components, "Legacy" loans originated by Old Line Bank and "Acquired" loans acquired from MB&T, WSB, Regal Bank, Damascus and Bay Bank.

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Note 5 - Other Real Estate Owned (Details Textual)	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Other Real Estate, Foreclosed Assets, and Repossessed Assets, Total	$ 1,469,166	$ 2,003,998
Loans in Process of Foreclosure, Number	3	1
Mortgage Loans in Process of Foreclosure, Amount	$ 597,000	$ 277,000
Residential Portfolio Segment [Member]
Other Real Estate, Foreclosed Assets, and Repossessed Assets, Total	$ 686,000

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Note 5 - Other Real Estate Owned - Transactions in Other Real Estate Owned (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Beginning balance			$ 2,003,998
Acquisition of Bay Bancorp, Inc.			1,041,079
Sales/deposits on sales			(1,495,173)
Net realized gain/(loss)	$ 26,266	$ 4,100	80,738	$ (13,589)
Total end of period	1,469,166		1,469,166
Financial Asset Originated [Member]
Beginning balance			425,000
Acquisition of Bay Bancorp, Inc.
Sales/deposits on sales			(425,000)
Net realized gain/(loss)
Total end of period
Financial Assets Acquired [Member]
Beginning balance			1,578,998
Acquisition of Bay Bancorp, Inc.			1,041,079
Sales/deposits on sales			(1,070,173)
Net realized gain/(loss)			80,738
Total end of period	$ 1,469,166		$ 1,469,166

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Note 6 - Earnings Per Common Share - Weighted Average Number of Shares (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Weighted average number of shares (in shares)	16,988,883	11,969,536	15,277,219	11,286,215
Dilutive average number of shares (in shares)	17,187,837	12,172,868	15,485,452	11,496,659

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Note 7 - Stock-based Compensation (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Allocated Share-based Compensation Expense, Total	$ 302,974	$ 187,904	$ 872,284	$ 449,935
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 1,600,000		$ 1,600,000
Common Stock, Capital Shares Reserved for Future Issuance	212,005		212,005
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			50,000	0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 8.90
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			19,443	40,713
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value			$ 32
Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			53,021	14,300
Employee Stock Option [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			2 years
Restricted Stock [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			2 years 182 days
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 3,600,000		$ 3,600,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period			0	0

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Note 8 - Fair Value Measurement (Details Textual) - Fair Value, Inputs, Level 3 [Member] $ in Millions	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Assets, Fair Value Disclosure	$ 10.1	$ 8.2
Minimum [Member] | Measurement Input, Discount Rate [Member]
Other Real Estate Owned, Measurement Input	0
Maximum [Member] | Measurement Input, Discount Rate [Member]
Other Real Estate Owned, Measurement Input	50

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Note 8 - Fair Value Measurement - Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Investment securities available for sale-at fair value	$ 216,358,059	$ 218,352,558
US Treasury Securities [Member]
Investment securities available for sale-at fair value	2,991,563	3,005,391
US Government Agencies Debt Securities [Member]
Investment securities available for sale-at fair value	18,011,332	17,733,766
Corporate Debt Securities [Member]
Investment securities available for sale-at fair value	18,110,212	14,658,059
US States and Political Subdivisions Debt Securities [Member]
Investment securities available for sale-at fair value	75,694,484	79,555,288
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Investment securities available for sale-at fair value	18,581,886	19,454,235
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Investment securities available for sale-at fair value	55,590,756	62,945,917
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Investment securities available for sale-at fair value	27,377,826	20,999,902
Fair Value, Measurements, Recurring [Member]
Investment securities available for sale-at fair value	216,358,000	218,353,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale-at fair value	2,992,000	3,005,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale-at fair value	195,256,000	200,690,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale-at fair value	18,110,000	14,658,000
Fair Value, Measurements, Recurring [Member] | US Treasury Securities [Member]
Investment securities available for sale-at fair value	2,992,000	3,005,000
Fair Value, Measurements, Recurring [Member] | US Treasury Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale-at fair value	2,992,000	3,005,000
Fair Value, Measurements, Recurring [Member] | US Treasury Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | US Treasury Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | US Government Agencies Debt Securities [Member]
Investment securities available for sale-at fair value	18,011,000	17,734,000
Fair Value, Measurements, Recurring [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale-at fair value	18,011,000	17,734,000
Fair Value, Measurements, Recurring [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member]
Investment securities available for sale-at fair value	18,110,000	14,658,000
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale-at fair value	18,110,000	14,658,000
Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Investment securities available for sale-at fair value	75,694,000	79,555,000
Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale-at fair value	75,694,000	79,555,000
Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Investment securities available for sale-at fair value	18,582,000	19,455,000
Fair Value, Measurements, Recurring [Member] | Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale-at fair value	18,582,000	19,455,000
Fair Value, Measurements, Recurring [Member] | Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Investment securities available for sale-at fair value	55,591,000	62,946,000
Fair Value, Measurements, Recurring [Member] | Federal National Mortgage Association Certificates and Obligations (FNMA) [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | Federal National Mortgage Association Certificates and Obligations (FNMA) [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale-at fair value	55,591,000	62,946,000
Fair Value, Measurements, Recurring [Member] | Federal National Mortgage Association Certificates and Obligations (FNMA) [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Investment securities available for sale-at fair value	27,378,000	21,000,000
Fair Value, Measurements, Recurring [Member] | Government National Mortgage Association Certificates and Obligations (GNMA) [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale-at fair value
Fair Value, Measurements, Recurring [Member] | Government National Mortgage Association Certificates and Obligations (GNMA) [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale-at fair value	27,378,000	21,000,000
Fair Value, Measurements, Recurring [Member] | Government National Mortgage Association Certificates and Obligations (GNMA) [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale-at fair value

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Note 8 - Fair Value Measurement - Reconciliation of Changes in Fair Value (Details) - Fair Value, Inputs, Level 3 [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
Balance	$ 14,658
Included in earnings
Included in other comprehensive income	(48)
Purchases, issuances, sales and settlements	3,500
Transfers into or out of level 3
Balance	$ 18,110

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Note 8 - Fair Value Measurement - Loan Fair Value on a Non-recurring Basis (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Impaired Financing Receivable, Recorded Investment, Total	$ 9,056,990	$ 6,615,350
Fair Value, Inputs, Level 3 [Member]
Total	10,100,000	8,200,000
Fair Value, Measurements, Nonrecurring [Member]
Impaired Financing Receivable, Recorded Investment, Total	8,605,000	6,191,000
Other real estate owned	1,469,000	2,004,000
Total	10,074,000	8,195,000
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Impaired Financing Receivable, Recorded Investment, Total
Other real estate owned
Total
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Impaired Financing Receivable, Recorded Investment, Total
Other real estate owned
Total
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired Financing Receivable, Recorded Investment, Total	8,605,000	6,191,000
Other real estate owned	1,469,000	2,004,000
Total	10,074,000	8,195,000
Legacy [Member] | Fair Value, Measurements, Nonrecurring [Member]
Impaired Financing Receivable, Recorded Investment, Total	4,624,000	4,260,000
Other real estate owned		425,000
Legacy [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Impaired Financing Receivable, Recorded Investment, Total
Other real estate owned
Legacy [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Impaired Financing Receivable, Recorded Investment, Total
Other real estate owned
Legacy [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired Financing Receivable, Recorded Investment, Total	4,624,000	4,260,000
Other real estate owned		425,000
Acquired [Member] | Fair Value, Measurements, Nonrecurring [Member]
Impaired Financing Receivable, Recorded Investment, Total	3,981,000	1,931,000
Other real estate owned	1,469,000	1,579,000
Acquired [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Impaired Financing Receivable, Recorded Investment, Total
Other real estate owned
Acquired [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Impaired Financing Receivable, Recorded Investment, Total
Other real estate owned
Acquired [Member] | Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired Financing Receivable, Recorded Investment, Total	3,981,000	1,931,000
Other real estate owned	$ 1,469,000	$ 1,579,000

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Note 8 - Fair Value Measurement - Carrying and Fair Value (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Loans held for sale, fair value	$ 9,056,027	$ 4,557,722
Bank owned life insurance	67,490,846	41,612,496
Accrued interest receivable	8,072,826	5,476,230
Non-interest bearing	581,339,177	451,803,052
Interest bearing	1,660,902,293	1,201,100,317
Long term borrowings	34,200,000
Accrued Interest payable	1,643,666	1,471,954
Reported Value Measurement [Member]
Cash and cash equivalents	50,306,000	35,174,000
Loans receivable, net	2,384,580,000	1,696,361,000
Loans held for sale, fair value	8,830,000	4,404,000
Investment securities available for sale	216,358,000	218,353,000
Equity Securities at cost	13,063,000	8,978,000
Bank owned life insurance	67,491,000	41,612,000
Accrued interest receivable	8,073,000	5,476,000
Non-interest bearing	581,339,000	451,803,000
Interest bearing	1,660,902,000	1,201,100,000
Short term borrowings	272,535,000	192,612,000
Long term borrowings	38,305,000	38,107,000
Accrued Interest payable	1,644,000	1,472,000
Estimate of Fair Value Measurement [Member]
Cash and cash equivalents	50,306,000	35,174,000
Loans receivable, net	2,331,418,000	1,692,018,000
Loans held for sale, fair value	8,830,000	4,558,000
Investment securities available for sale	216,358,000	218,353,000
Equity Securities at cost	13,063,000	8,978,000
Bank owned life insurance	67,491,000	41,612,000
Accrued interest receivable	8,073,000	5,476,000
Non-interest bearing	581,339,000	451,803,000
Interest bearing	1,668,053,000	1,205,936,000
Short term borrowings	272,535,000	192,612,000
Long term borrowings	38,305,000	38,107,000
Accrued Interest payable	1,644,000	1,472,000
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Cash and cash equivalents	50,306,000	35,174,000
Loans receivable, net
Loans held for sale, fair value
Investment securities available for sale	2,992,000	3,005,000
Equity Securities at cost
Bank owned life insurance
Accrued interest receivable
Non-interest bearing
Interest bearing
Short term borrowings
Long term borrowings
Accrued Interest payable
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Cash and cash equivalents
Loans receivable, net
Loans held for sale, fair value	8,830,000	4,558,000
Investment securities available for sale	195,256,000	200,690,000
Equity Securities at cost	13,063,000	8,978,000
Bank owned life insurance	67,491,000	41,612,000
Accrued interest receivable	1,310,000	1,215,000
Non-interest bearing	581,339,000	451,803,000
Interest bearing	1,668,053,000	1,205,936,000
Short term borrowings	272,535,000	192,612,000
Long term borrowings	38,305,000	38,107,000
Accrued Interest payable	1,644,000	1,472,000
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Cash and cash equivalents
Loans receivable, net	2,331,418,000	1,692,018,000
Loans held for sale, fair value
Investment securities available for sale	18,110,000	14,658,000
Equity Securities at cost
Bank owned life insurance
Accrued interest receivable	6,763,000	4,261,000
Non-interest bearing
Interest bearing
Short term borrowings
Long term borrowings
Accrued Interest payable

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Note 9 - Short Term Borrowings (Details Textual) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Secured Debt, Repurchase Agreements	$ 37.5	$ 37.6
Secured Debt [Member] | Federal Home Loan Bank of Atlanta [Member]
Federal Home Loan Bank, Advances, Maturities Summary, Due in Next Twelve Months, Total	235.0	$ 155.0
Securities Sold under Agreements to Repurchase [Member]
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged	$ 62.4

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Note 10 - Long Term Borrowings (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Long-term Debt, Total	$ 38,304,981	$ 38,106,930
Long-term Debt, Fair Value	34,200,000
Trust One Maturing on March 17, 2034 [Member]
Long-term Debt, Fair Value	4,000,000
Liabilities, Fair Value Adjustment	1,400,000
Trust Two Maturing on December 14, 2035 [Member]
Long-term Debt, Fair Value	2,500,000
Liabilities, Fair Value Adjustment	1,200,000
Subordinated Debt [Member]
Long-term Debt, Total	$ 35,000,000
Debt Instrument, Interest Rate, Stated Percentage	5.625%
Trust Preferred Subordinated Debentures [Member]
Long-term Debt, Fair Value	$ 4,100,000
Liabilities, Fair Value Adjustment	$ 2,600,000