EX-99.1 2 exh_991.htm PRESS RELEASE EdgarFiling

EXHIBIT 99.1

Old Line Bancshares, Inc. Reports Record Net Income of $10.2 Million, a 73% Increase, for the Quarter Ended December 31, 2018

BOWIE, Md., Jan. 23, 2019 (GLOBE NEWSWIRE) -- Old Line Bancshares, Inc. (“Old Line Bancshares” or the “Company”) (Nasdaq: OLBK), the parent company of Old Line Bank (the “Bank”), reports net income increased $4.3 million, or 73.49%, to $10.2 million for the three months ended December 31, 2018, compared to $5.9 million for the three month period ended December 31, 2017.  Earnings were $0.60 per basic and $0.59 per diluted common share for the three months ended December 31, 2018, compared to $0.47 per basic and $0.46 per diluted common share for the three months ended December 31, 2017.  The increase in net income for the fourth quarter of 2018 as compared to the same 2017 period is primarily the result of increases of $6.8 million in net interest income and $2.4 million in non-interest income, partially offset by a $3.2 million increase in non-interest expense.    

Our efficiency ratio was 49.39% for the three months ended December 31, 2018 compared to 56.45% for the same three month period of 2017. Return on average assets (“ROAA”) was 1.37% for the quarter compared to 1.12% for the quarter ended December 31, 2017.

Net loans held for investment at December 31, 2018 increased $712.9 million, or 42.02%, compared to December 31, 2017.  Net loans held for investment includes loans that were acquired in the Bay Bancorp, Inc. (“BYBK”) acquisition of approximately $477 million at December 31, 2018.  We sold an additional $3.7 million in loans during the quarter that we previously identified as troubled loans acquired in the BYBK acquisition, resulting in a gain on sale of $556 thousand. Loans held for sale increased approximately $7.2 million compared to December 31, 2017.

Net income was $27.2 million for the twelve months ended December 31, 2018, compared to $16.0 million for the same period of 2017, an increase of $11.3 million, or 70.50%.  Earnings were $1.73 per basic and $1.71 per diluted common share for the twelve months ended December 31, 2018, an increase of 25.73% and 26.42%, compared to $1.38 per basic and $1.35 per diluted common share for the same period of 2017.  The increase in net income is primarily the result of increases of $27.8 million, or 44.81%, in net interest income and $4.2 million in non-interest income, partially offset by a $17.8 million increase in non-interest expense. 

The Company incurred merger expenses during the twelve month periods ended December 31, 2018 and 2017 in connection with the Company’s acquisitions of BYBK in April 2018 and DCB Bancshares, Inc. (“DCBB”), the former parent company of Damascus Community Bank, in July 2017.  Excluding these expenses, operating net income (which is a non-GAAP financial measure) for the twelve months ended December 31, 2018 would have been $34.9 million or $2.22 per basic and $2.19 per diluted common share, compared to operating net income of $18.9 million or $1.63 per basic and $1.60 per diluted common share for the twelve months ended December 31, 2017, an increase of 84.78% for the 2018 period over the same twelve month period of 2017.

Our efficiency ratio was 61.51% and 64.14%, respectively, for the twelve months ended December 31, 2018 and 2017.  Excluding the merger-related expenses we incurred during 2018 and 2017, the adjusted operating efficiency ratio (a non-GAAP financial measure) improved to 52.28% for the twelve months ended December 31, 2018 from 58.44% for the same period of 2017.

ROAA was 1.01% and 0.84%, respectively, for the twelve months ended December 31, 2018 and 2017.  Excluding the merger-related expenses we incurred during 2018 and 2017, the adjusted ROAA (a non-GAAP financial measure) improved to 1.29% from 0.99% for the twelve months ended December 31, 2018 and 2017, respectively.

Net interest income increased during each of the three and twelve month periods ended December 31, 2018 compared to the same periods of 2017, primarily as a result of increases in interest income on loans, partially offset by increases in interest expense.  Non-interest expense increased for the three month period ended December 31, 2018 compared to the same period of 2017 primarily due to increases in salaries and benefits, occupancy and equipment, core deposit amortization, and other operating expenses.  Non-interest expense increased for the twelve month period ended December 31, 2018 primarily as a result of increases of $6.4 million in salaries and employee benefits and $5.4 million in merger-related expenses, as well as increases in occupancy and equipment, data processing, core deposit amortization, and other operating expenses.  Salaries and benefits and occupancy and equipment expenses increased primarily as a result of the additional staff and the new branches, and core deposit amortization increased primarily as a result of higher premiums due to the deposits, that we acquired in the BYBK and DCBB acquisitions.  Other operating expenses increased due to increases in general operating costs, such as FDIC insurance, marketing and advertising, sponsorships and donations, loan expenses, software expense, and telephone expense.

As of December 31, 2018, the Company had total assets of approximately $2.95 billion, net loans of approximately $2.4 billion and deposits of approximately $2.3 billion.

James W. Cornelsen, President and Chief Executive Officer of Old Line Bancshares, stated: “We are extremely pleased to report a positive trend in our financial performance and steady balance sheet growth.  We had a record-breaking fourth quarter, increasing net income by 73.49% to $10.2 million.  Cost management was a key driver of our improved performance during the quarter, as reflected in our improved efficiency ratio of 49.39% and ROA of 1.37%.  Net income for the year also increased, up 70.50% over 2017.  We continue to pride ourselves in building relationships with our customers that results in loan and deposit growth.  We had significant organic loan growth of 23.15% for the year while maintaining strong asset quality, with non-performing assets at 0.20% of total assets at December 31, 2018.  Our efforts have led to great strides in our financial performance this year, to the benefit of our stockholders.  While we do not expect to continue to experience this level of  growth during 2019, we believe that we are in a good position heading into the year to continue to enhance earnings and our balance sheet.”

4th QUARTER HIGHLIGHTS:

  • Average gross loans increased $740.3 million, or 44.19%, during the three month period ended December 31, 2018, to $2.4 billion from $1.7 billion during the three month period ended December 31, 2017. 

  • Total yield on interest earning assets increased to 4.70% for the three months ended December 31, 2018, compared to 4.39% for the same period of 2017. 

  • ROAA and return on average equity (“ROAE”) were 1.37% and 10.70%, respectively, compared to ROAA and ROAE of 1.12% and 11.09%, respectively, for the fourth quarter of 2017. 

  • The efficiency ratio was 49.39% for the three months ended December 31, 2018 compared to 56.45% for the same period of 2017.

  • We terminated the BYBK pension plan at more advantageous terms than we had expected, resulting in a decrease in goodwill of $1.1 million.

  • Total deposits grew by $53.8 million, or 2.40%, during the quarter.  

2018 FULL YEAR HIGHLIGHTS:

  • The merger with BYBK became effective April 13, 2018, resulting in total assets of $2.9 billion.

  • ROAA and ROAE were 1.01% and 8.29%, respectively, compared to ROAA and ROAE of 0.84% and 8.53%, respectively, for the twelve months ended December 31, 2017.  Excluding the merger-related expenses, adjusted ROAA and ROAE (each a non-GAAP financial measure) would have been 1.29% and 10.62%, respectively, for the twelve months ended December 31, 2018 and 0.99% and 9.77% for the twelve months ended December 31, 2017.

  • Excluding merger-related expenses, the adjusted efficiency ratio (a non-GAAP financial measure) was 52.28% for the twelve months ended December 31, 2018 compared to 58.44% for the same period of 2017.

  • The net interest margin was 3.75% compared to 3.69% for the twelve months ended December 31, 2017.  Total yield on interest earning assets increased to 4.63%  compared to 4.35% for the twelve months ended December 31, 2017. 

  • Net loans held for investment increased $712.9 million to $2.4 billion from $1.7 billion at December 31, 2017.  Organic loan growth was $313.5 million, or 23.15%.

  • Average gross loans increased $675.6 million, or 44.29%, to $2.4 billion from $1.5 billion during the twelve month period ended December 31, 2017.  

  • Troubled acquired loans totaling $25.3 million were sold.

  • Total assets increased $844.4 million, or 40.10%, primarily due to increases of $712.9 million in loans held for investment, $68.2 million in goodwill, $26.3 million in bank owned life insurance, $9.1 million in core deposit intangibles, and $9.3 million in cash and cash equivalents.

  • Total deposits grew by $643.1 million, or 38.91%.  

  • Non-performing assets to total assets remain consistent at 0.20% at December 31, 2018 compared to 0.18% at December 31, 2017.

  • We ended the fourth quarter of 2018 with a book value of $21.77 per common share and a tangible book value of $15.39 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.”

Results of Operations for the Three Months Ended December 31, 2018 Compared to December 31, 2017

Average interest earning assets increased $751.7 million for the three month period ended December 31, 2018 compared to the same period of 2017.  The average yield on such assets was 4.70% for the three months ended December 31, 2018 compared to 4.39% for the comparable 2017 period.  The increase in the average yield is primarily the result of higher yields on our loans held for investment.  Average interest bearing liabilities increased $585.8 million for the three month period ended December 31, 2018 compared to the same period of 2017, primarily as a result of the deposits we acquired in the BYBK acquisition.  The average rate paid on such liabilities increased to 1.39% for the three month period ended December 31, 2018 compared to 0.91% for the same period in 2017 due to higher rates paid on both interest bearing deposits and borrowings.

The net interest margin for the three months ended December 31, 2018 decreased to 3.66% from 3.72% in the fourth quarter of 2017.  The net interest margin decreased due to increased interest rates on both deposits and on our borrowed funds, partially offset by an increase in the yield on our interest-earning assets.  The net interest margin during the fourth quarter of 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 fair value marks during the three months ended December 31, 2018 compared to the same period of 2017.  The fair value accretion/amortization is recorded on pay-downs recognized during the quarter, which contributed 13 basis points for the three months ended December 31, 2018 compared to five basis points for the three months ended December 31, 2017.  

Net interest income increased $6.8 million, or 39.71%, for the three months ended December 31, 2018 compared to the same period of 2017, almost entirely due to an increase in loan interest income resulting from increases in both the average balance of and yields on loans, partially offset by an increase in interest expense.  Interest expense increased due to increases in both the average balance of and average interest rates on our deposits and borrowings. 

The provision for loan losses increased $514 thousand for the three month period ended December 31, 2018 compared to the same period of 2017 due to the organic loan growth.

Non-interest income increased $2.4 million, or 133.06%, for the three month period ended December 31, 2018 compared to the same period of 2017, primarily as a result of income of $641 thousand from our new point of sale (“POS”) sponsorship program and increases of $772 thousand in other fees and commissions, $556 thousand in gain on sales of loans and $225 thousand in earnings on bank owned life insurance (“BOLI”).  The increase in other fees and commissions is primarily due to $518 thousand of reversals on previously charged-off loans during the quarter.  The increase in gain on sale of loans is the result of the sale of $3.7 million in loans that we previously identified as troubled loans acquired in the BYBK acquisition; we had no such sales during the same period of 2017. The increase in earnings on BOLI is due to the $16.3 million of BOLI acquired in the BYBK acquisition and $8.5 million in new BOLI policies purchased since December 31, 2017.

Non-interest expense increased $3.2 million, or 29.96%, for the three month period ended December 31, 2018 compared to the same period of 2017, primarily as a result of increases in salaries and benefits, occupancy and equipment, core deposit amortization, and other operating expenses.  Salaries and benefits increased $1.5 million primarily as a result of the additional staff, and occupancy and equipment expenses increased $403 thousand primarily as a result of the new branches, that we acquired in the BYBK acquisition.  Core deposit amortization increased $345 thousand as a result of the higher premiums resulting from the deposits we acquired in the BYBK acquisition. Other operating expenses increased $801 thousand due to increases in general operating costs, such as FDIC insurance, marketing and advertising, sponsorships and donations, loan expenses, software expense, and telephone expense.

Results of Operations for the Twelve Months Ended December 31, 2018 Compared to December 31, 2017

Average interest earning assets increased $692.2 million for the twelve month period ended December 31, 2018 compared to the same period of 2017.  The average yield on such assets was 4.63% for the twelve months ended December 31, 2018 compared to 4.35% for the comparable 2017 period.  The increase in the average yield on interest earning assets is primarily the result of higher yields on our loans held for investment and our investment portfolio.  Average interest-bearing liabilities increased $489.3 million for the twelve month period ended December 31, 2018 compared to the same period of 2017.  The average rate paid on such liabilities increased to 1.19% for the twelve month period ended December 31, 2018 compared to 0.88% for the same period in 2017, due to higher rates paid on both interest bearing deposits and borrowings.

The net interest margin for the twelve months ended December 31, 2018 increased to 3.75% from 3.69% in the same period of 2017.  The net interest margin increased due to an improvement in the yield on interest earning assets and an increase in non-interest bearing deposits as a source of funding, partially offset by the increase in interest expense, due to increased interest paid on both deposits and on our borrowed funds.  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 fair value marks during the twelve months ended December 31, 2018 compared to the same period of 2017.  The fair value accretion/amortization is recorded on pay-downs recognized during the periods, which contributed 13 basis points for the twelve months ended December 31, 2018 compared to seven basis points for 2017.                                                                              

Net interest income increased $27.8 million, or 44.81%, for the twelve month period ended December 31, 2018 compared to the same period of 2017, almost entirely due to an increase in loan interest income resulting from increases in both the average balance of and yields on loans, partially offset by an increase in interest expense.  Interest expense increased due to increases in both the average balance of and average interest rates on our deposits and borrowings. 

The provision for loan losses increased $894 thousand for the twelve month period ended December 31, 2018 compared to the same period of 2017 due to organic loan growth.

Non-interest income increased $4.2 million, or 53.59%, for the twelve month period ended December 31, 2018 compared to the same period of 2017, primarily as a result of income of $2.0 million from our new POS sponsorship program as well as increases of $1.0 million in other fees and commissions, $639 thousand in earnings on BOLI, $791 thousand in service charges on deposit accounts, and $462 thousand in gain on sale of loans, partially offset by a decrease of $498 thousand in income on marketable loans.  The increase in other fees and commissions is primarily due to increases of $131 thousand in rental income, $415 thousand in miscellaneous income and $182 thousand of reversals on previously charged-off loans during 2018. The increase in earnings on BOLI is due to the $16.3 million of BOLI acquired in the BYBK acquisition and $8.5 million in new BOLI policies purchased since December 31, 2017.  The increase in service charges on deposit accounts is the result of increased income on bank debit cards due to the higher deposit base primarily as a result of the DCBB and BYBK acquisitions.  The decrease in income on marketable loans is the result of a decrease in the premium amounts we received on residential mortgage loans that we sold in the secondary market compared to the same period of 2017. 

Non-interest expense increased $17.8 million, or 39.80%, for the twelve month period ended December 31, 2018 compared to the same period of 2017, primarily as a result of increases in merger and integration expenses, salaries and benefits, occupancy and equipment, data processing, core deposit amortization, and other operating expenses.  We incurred $9.4 million in merger and integration expenses during the twelve month period ended December 31, 2018 due to the BYBK acquisition compared to $4.0 million in merger and integration expenses due to the DCBB acquisition during 2017.  Salaries and benefits increased $6.4 million primarily as a result of the additional staff, and occupancy and equipment expenses increased $1.8 million primarily as a result of the new branches, that we acquired in the DCBB and BYBK acquisitions.  The $1.0 million increase in data processing expenses resulted from additional customer transactions due to growth.  Core deposit amortization increased $1.2 million as a result of the higher premiums resulting from the deposits we acquired in the DCBB and BYBK acquisitions. Other operating expenses increased $2.1 million during the 2018 period due to increases in general operating costs.  

Old Line Bancshares is the parent company of Old Line Bank, a Maryland chartered commercial bank headquartered in Bowie, Maryland, approximately 10 miles east of Andrews Air Force Base and 20 miles east of Washington, D.C. The Bank has 37 branches located in its primary market area of the suburban Maryland (Washington, D.C. suburbs, Southern Maryland and Baltimore suburbs) counties of Anne Arundel, Baltimore, Calvert, Carroll, Charles, Harford, Howard, Frederick, Montgomery, Prince George's and St. Mary's, and Baltimore City.  It also targets customers throughout the greater Washington, D.C. and Baltimore metropolitan areas. 

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

The statement in this press release that “while we do not expect to continue to experience this level of growth during 2019, we believe that we are in a good position heading into the year to continue to enhance earnings and our balance sheet,” constitutes a “forward-looking statement” as defined by Federal securities laws.  Such statement is subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statement.  Actual results could differ materially from those currently anticipated due to a number of factors, including, but not limited to: deterioration in general economic conditions, an economic slowdown greater than we have anticipated in 2019, or a return to recessionary conditions; that changes in interest rates and monetary policy could adversely affect Old Line Bancshares; changes in competitive, governmental, regulatory, technological, and other factors that may affect Old Line Bancshares specifically or the banking industry generally, including effects on the economy in our local markets as a result of the ongoing partial government shutdown; changes in regulatory requirements and/or restrictive banking legislation that may adversely affect our ability to collect on outstanding loans or otherwise negatively impact our business; and other risks discussed in our annual report on Form 10-K for the year ended December 31, 2017 and that may be discussed in other filings we may make with the U.S. Securities and Exchange Commission.  Forward-looking statements speak only as of the date they are made.  Old Line Bancshares undertakes no obligation to update forward-looking statements to reflect factual assumptions, circumstances or events that have changed after a forward-looking statement was made.  For further information regarding risks and uncertainties that could affect forward-looking statements Old Line Bancshares may make, please refer to the filings made by Old Line Bancshares with the U.S. Securities and Exchange Commission available at www.sec.gov.

Old Line Bancshares, Inc. & Subsidiaries
 Consolidated Balance Sheets
      
 December 31,
2018		September 30,
2018		June 30,
2018		March 31,
2018		December 31,
2017 (1)
 (Unaudited)(Unaudited)(Unaudited)(Unaudited) 
Cash and due from banks$41,495,763 $45,774,719 $61,684,888 $85,617,226 $33,562,652 
Interest bearing accounts 2,051,273  3,522,685  3,845,419  2,687,988  1,354,870 
Federal funds sold 953,582  1,008,801  928,337  200,366  256,589 
Total cash and cash equivalents 44,500,618  50,306,205  66,458,644  88,505,580  35,174,111 
Investment securities available for sale 219,705,762  216,358,059  209,941,534  210,353,788  218,352,558 
Loans held for sale 11,564,993  8,829,777  34,037,532  3,934,086  4,404,294 
Loans held for investment, less allowance for loan losses of $7,471,023               
and $5,920,586 for December 31, 2018 and December 31, 2017 2,409,227,698  2,384,579,814  2,347,821,496  1,756,576,833  1,696,361,431 
Equity securities at cost 11,150,750  13,063,250  14,854,746  7,782,847  8,977,747 
Premises and equipment 42,624,787  43,060,727  43,719,013  40,991,968  41,173,810 
Accrued interest receivable 7,958,511  8,072,826  7,715,123  5,310,151  5,476,230 
Bank owned life insurance 67,920,021  67,490,846  67,062,920  41,849,569  41,612,496 
Annuity plan 6,268,426  6,298,627  6,276,320  5,981,809  5,981,809 
Other real estate owned 882,510  1,469,166  2,357,947  1,799,598  2,003,998 
Goodwill 93,297,441  94,403,635  94,403,635  25,083,675  25,083,675 
Core deposit intangible 15,362,232  16,024,950  16,688,635  5,985,657  6,297,970 
Other assets 19,543,346  21,060,315  22,038,116  16,556,056  14,713,323 
Total assets$2,950,007,095 $2,931,018,197 $2,933,375,661 $2,210,711,617 $2,105,613,452 
                
Deposits               
Non-interest bearing$559,059,672 $581,339,177 $603,257,708 $572,119,981 $451,803,052 
Interest bearing 1,736,989,227  1,660,902,293  1,604,420,214  1,213,584,463  1,201,100,317 
Total deposits 2,296,048,899  2,242,241,470  2,207,677,922  1,785,704,444  1,652,903,369 
Short term borrowings 228,184,856  272,534,890  314,676,164  161,477,872  192,611,971 
Long term borrowings 38,371,291  38,304,981  38,238,670  38,172,653  38,106,930 
Accrued interest payable 2,844,715  1,643,666  1,827,605  1,105,830  1,471,954 
Supplemental executive retirement plan 5,997,819  6,123,518  6,057,063  5,975,159  5,893,255 
Income taxes payable 139,579  -  -  4,182,749  2,157,375 
Other liabilities 7,649,402  9,989,481  10,553,800  3,700,120  4,741,412 
Total liabilities 2,579,236,561  2,570,838,006  2,579,031,224  2,000,318,827  1,897,886,266 
                
Stockholders' equity               
Common stock 170,311  169,889  169,889  125,667  125,083 
Additional paid-in capital 293,501,107  293,139,653  292,836,679  149,691,736  148,882,865 
Retained earnings 82,628,356  74,167,389  67,601,752  66,573,919  61,054,487 
Accumulated other comprehensive loss (5,529,240) (7,296,740) (6,263,883) (5,998,532) (2,335,249)
Total stockholders' equity 370,770,534  360,180,191  354,344,437  210,392,790  207,727,186 
Total liabilities and
  stockholders' equity		$2,950,007,095 $2,931,018,197 $2,933,375,661 $2,210,711,617 $2,105,613,452 
Shares of basic common stock outstanding 17,031,052  16,988,883  16,988,883  12,566,696  12,508,332 
                
(1) Financial information at December 31, 2017 has been derived from audited financial statements.


Old Line Bancshares, Inc. & Subsidiaries
Consolidated Statements of Income
        
 Three Months
Ended
December 31,		Three Months
Ended
September 30,		Three Months
Ended
June 30,		Three Months
Ended
March 31,		Three Months
Ended
December 31,		Twelve Months
Ended
December 31,		Twelve
Months
Ended
December 31,
  2018  2018  2018  2018  2017  2018  2017 
 (Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Interest income       
Loans, including fees$29,284,012 $29,056,813 $26,448,728 $19,700,762 $18,979,170 $104,490,315 $68,132,398 
Investment securities and other 1,743,737  1,696,512  1,719,989  1,623,577  1,452,644  6,783,815  5,480,323 
Total interest income 31,027,749  30,753,325  28,168,717  21,324,339  20,431,814  111,274,130  73,612,721 
Interest expense                     
Deposits 5,067,752  4,098,787  3,146,235  2,306,733  2,146,390  14,619,507  7,321,031 
Borrowed funds 1,891,413  1,768,532  1,714,250  1,334,831  1,057,846  6,709,026  4,177,602 
Total interest expense 6,959,165  5,867,319  4,860,485  3,641,564  3,204,236  21,328,533  11,498,633 
Net interest income 24,068,584  24,886,006  23,308,232  17,682,775  17,227,578  89,945,597  62,114,088 
Provision for loan losses 613,672  307,870  532,257  394,896  100,000  1,848,695  955,108 
Net interest income after
  provision for loan losses		 23,454,912  24,578,136  22,775,975  17,287,879  17,127,578  88,096,902  61,158,980 
Non-interest income                     
Service charges on
  deposit accounts		 745,646  728,550  722,879  576,584  593,641  2,773,659  1,982,981 
POS sponsorship program 641,063  711,577  673,502  -  -  2,026,142  - 
Gain on sales or calls
  of investment securities		 -  -  -  -  -  -  35,258 
Earnings on bank owned
  life insurance		 531,604  520,785  461,056  292,936  306,355  1,806,381  1,167,467 
Gains (losses) on disposal of assets -  (1,100) -  14,366  (46,400) 13,266  73,663 
Loss on write down of stock -  (91,498) (60,998) -  -  (152,496) - 
Gain on sale of loans 556,358  -  -  -  -  556,358  94,714 
Income on marketable loans 479,824  411,850  511,879  418,472  479,588  1,822,025  2,319,806 
Other fees and commissions 1,238,049  525,171  879,733  492,663  465,697  3,135,616  2,126,716 
Total non-interest income 4,192,544  2,805,335  3,188,051  1,795,021  1,798,881  11,980,951  7,800,605 
Non-interest expense                     
Salaries & employee benefits 6,743,042  7,491,736  7,201,335  5,485,450  5,267,469  26,921,563  20,551,525 
Occupancy & equipment 2,339,115  2,349,691  2,242,640  1,980,401  1,936,420  8,911,847  7,073,696 
Data processing 699,769  659,926  702,182  609,639  510,073  2,671,516  1,671,720 
Merger and integration -  2,282,705  7,121,802  -  -  9,404,507  3,985,514 
Core deposit amortization 662,718  663,685  540,737  312,313  317,268  2,179,453  968,880 
(Gains) losses on sales of
  other real estate owned		 (27,801) 26,266  41,956  12,516  -  52,937  (13,589)
OREO expense 77,142  (99,957) 27,995  184,994  45,224  190,174  301,394 
Other operating 3,465,550  3,288,286  3,198,759  2,406,646  2,664,559  12,359,241  10,303,907 
Total non-interest expense 13,959,535  16,662,338  21,077,406  10,991,959  10,741,013  62,691,238  44,843,047 
                      
Income before income taxes 13,687,921  10,721,133  4,886,620  8,090,941  8,185,446  37,386,615  24,116,538 
Income tax expense 3,526,073  2,456,304  2,160,787  2,025,759  2,328,011  10,168,923  8,152,724 
Net income available to
  common stockholders		$10,161,848 $8,264,829 $2,725,833 $6,065,182 $5,857,435 $27,217,692 $15,963,814 
Earnings per basic share$0.60 $0.49 $0.17 $0.48 $0.47 $1.73 $1.38 
Earnings per diluted share$0.59 $0.48 $0.17 $0.48 $0.46 $1.71 $1.35 
Adjusted per basic share (non-GAAP)$- $0.58 $0.55 $- $- $2.22 $1.63 
Adjusted per diluted share (non-GAAP)$- $0.57 $0.54 $- $- $2.19 $1.60 
Dividend per common share$0.10 $0.10 $0.10 $0.08 $0.08 $0.38 $0.32 
Average number of basic shares 17,008,504  16,988,883  16,249,625  12,544,266  12,483,692  15,713,597  11,588,045 
Average number of dilutive shares 17,181,820  17,187,837  16,464,580  12,743,282  12,696,087  15,913,220  11,799,184 
Return on Average Assets 1.37% 1.12% 0.39% 1.16% 1.12% 1.01% 0.84%
Return on Average Equity 10.70% 8.89% 3.13% 11.36% 11.09% 8.29% 8.53%
Operating Efficiency (1) 49.39% 60.17% 79.55% 56.43% 56.45% 61.51% 64.14%
                      
(1) Operating efficiency is derived by dividing non-interest expense by the total of net interest income and non-interest income. 

RECONCILIATION OF NON-GAAP MEASURES

As the magnitude of merger-related expenses during the periods set forth below distorts the operational results of the Company, we present in the GAAP reconciliation below and in the accompanying text certain performance measures excluding the effect of the merger-related expenses during the three and twelve month periods ended December 31, 2018 and 2017.  We believe this information is important to enable stockholders and other interested parties to assess the adjusted operational performance of the Company.

Reconciliation of Non-GAAP measures (Unaudited)   Twelve Months ended
December 31, 2018		  Twelve Months ended
December 31, 2017		 
Net Income (GAAP)  $27,217,692 $15,963,814 
Merger-related expenses, net of tax   7,643,988  2,902,912 
Operating net income (non-GAAP)  $34,861,680 $18,866,726 
         
Earnings per weighted average common shares, basic (GAAP)  $1.73 $1.38 
Merger-related expenses, net of tax   0.49  0.25 
Operating earnings per weighted average common share basic (non GAAP)  $2.22 $1.63 
         
         
Earnings per weighted average common shares, diluted (GAAP)  $1.71 $1.35 
Merger-related expenses, net of tax   0.48  0.25 
Operating earnings per weighted average common share basic (non-GAAP)  $2.19 $1.60 
         
Summary Operating Results (non-GAAP)        
Noninterest expense (GAAP)  $62,691,238 $44,843,047 
Merger-related expenses, gross   9,404,507  3,985,514 
Operating noninterest expense (non-GAAP)  $72,095,745  40,857,533 
         
Operating efficiency ratio (non-GAAP)   52.28% 58.44%
         
Operating noninterest expense as a % of average assets (annualized)   8.08% 2.15%
         
Return on average assets        
Net income  $27,217,692 $15,963,814 
Merger-related expenses, net of tax   7,643,988  2,902,912 
Operating net income (non-GAAP)  $34,861,680 $18,866,726 
         
Adjusted Return of Average Assets        
Return on average assets (GAAP)   1.01  0.84 
Effect to adjust for merger-related expenses, net of tax   0.28  0.15 
Adjusted return on average assets   1.29% 0.99%
         
Return on average common equity        
Net income available to common shareholders  $27,217,692 $15,963,814 
Merger-related expenses, net of tax   7,643,988  2,902,912 
Operating earnings (non-GAAP)  $34,861,680 $18,866,726 
         
Adjusted Return on Average Equity        
Return on average equity (GAAP)   8.29  8.53 
Effect to adjust for merger-related expenses, net of tax   2.33  1.24 
Adjusted return on average common equity (non-GAAP)   10.62% 9.77%


Old Line Bancshares, Inc. & Subsidiaries
Quarterly Average Balances, Interest and Yields
            
  12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 
  Average
Balance		Yield/
Rate		Average
Balance		Yield/
Rate		Average
Balance		Yield/
Rate		Average
Balance		Yield/
Rate		Average
Balance		Yield/
Rate
Assets:           
Int. Bearing Deposits  $4,130,258 2.96%$4,765,138 1.52%$8,795,004 1.53%$2,003,369 1.47%$1,751,234 1.30%
Investment Securities (2)  236,018,603 3.18% 233,633,128 3.09% 235,854,989 3.19% 229,456,764 3.15% 225,504,844 3.04%
Loans  2,414,758,155 4.84% 2,397,054,094 4.84% 2,261,479,332 4.72% 1,720,721,476 4.69% 1,674,725,155 4.56%
Allowance for Loan Losses  (7,122,881)  (6,885,911)  (6,363,239)  (5,973,556)  (5,893,906) 
Total Loans
  Net of allowance		  2,407,635,274 4.86% 2,390,168,183 4.85% 2,255,116,093 4.74% 1,714,747,920 4.70% 1,668,831,249 4.58%
Total interest-earning assets  2,647,784,135 4.70% 2,628,566,449 4.69% 2,499,766,086 4.58% 1,946,208,053 4.52% 1,896,087,327 4.39%
Noninterest bearing cash  43,728,188   48,035,416   47,014,071   36,844,268   36,504,676  
Goodwill and Intangibles  110,188,394   110,861,142   100,901,255   31,272,865   31,587,482  
Premises and Equipment  42,902,372   43,626,501   43,592,991   41,088,624   41,956,286  
Other Assets  101,812,816   103,995,121   98,152,802   69,837,318   63,412,181  
Total Assets   $2,946,415,905  $2,935,084,629  $2,789,427,205  $2,125,251,128  $2,069,547,952  
            
Liabilities and Stockholders' Equity          
            
Interest-bearing Deposits $1,726,574,227 1.16%$1,658,060,302 0.98%$1,522,249,880 0.83%$1,200,931,980 0.78%$1,209,362,167 0.70%
Borrowed Funds  255,083,457 2.94% 283,169,572 2.48% 288,666,185 2.38% 235,924,800 2.29% 186,472,353 2.25%
Total interest-bearing
  liabilities		  1,981,657,684 1.39% 1,941,229,874 1.20% 1,810,916,065 1.08% 1,436,856,780 1.03% 1,395,834,520 0.91%
Noninterest bearing deposits  572,704,465   601,558,786   615,780,315   457,850,993   450,655,820  
   2,554,362,149   2,542,788,660   2,426,696,380   1,894,707,773   1,846,490,340  
            
Other Liabilities  15,264,196   23,355,099   13,536,574   13,931,983   13,450,844  
Stockholder's Equity  376,789,560   368,940,870   349,194,251   216,611,372   209,606,768  
Total Liabilities and
  Stockholder's Equity		 $2,946,415,905  $2,935,084,629  $2,789,427,205  $2,125,251,128  $2,069,547,952  
            
Net interest spread  3.31% 3.49% 3.50% 3.49% 3.48%
Net interest income and
  Net interest margin(1)		 $24,412,499 3.66%$25,227,248 3.81%$23,659,244 3.80%$18,033,758 3.76%$17,793,020 3.72%

(1)   Interest revenue is presented on a fully taxable equivalent (FTE) basis.  The FTE basis adjusts for the tax favored status of these types of assets.  Management believes providing this information on a FTE basis provides investors with a more accurate picture of our net interest spread and net interest income and we believe it to be the preferred industry measurement of these calculations. 
(2)  Available for sale investment securities are presented at amortized cost.

The accretion of the fair value adjustments resulted in a positive impact in the yield on loans for the three months ended December 31, 2018 and 2017.    Fair value accretion for the current quarter and prior four quarters are as follows: 

 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 
 Fair Value
Accretion
Dollars		 % Impact on
Net Interest
Margin		 Fair Value
Accretion
Dollars		 % Impact on
Net Interest
Margin		 Fair Value
Accretion
Dollars		 % Impact on
Net Interest
Margin		 Fair Value
Accretion
Dollars		 % Impact on
Net Interest
Margin		 Fair Value
Accretion
Dollars		 % Impact on
Net Interest
Margin		 
Commercial loans (1)$140,822 0.02%$113,378 0.02%$209,819 0.03%$47,705 0.01%$43,318  0.01 %
Mortgage loans (1) 504,905 0.08  620,664 0.09  752,461 0.12  78,188 0.02  (10,675) (0.00) 
Consumer loans 104,350 0.02  110,220 0.02  126,575 0.02  97,544 0.02  106,269  0.02  
Interest bearing deposits 61,038 0.01  70,157 0.01  70,178 0.01  80,886 0.02  95,755  0.02  
Total Fair Value Accretion$811,115 0.13%$914,419 0.14%$1,159,033 0.18%$304,323 0.07%$234,667  0.05 %
                     

(1) Negative accretion on commercial and mortgage loans is due to the early payoff of loans which caused a reduction in fair value income on acquired loan portfolio.

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

 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 
 Net Interest
Income		 Yield Net Interest
Income		 Yield Net Interest
Income		 Yield Net Interest
Income		 Yield Net Interest
Income		 Yield 
GAAP net interest income$24,068,584 3.61%$24,886,006 3.76%$23,308,232 3.74%$17,682,775 3.68%$17,227,578 3.60%
Tax equivalent adjustment                    
Federal funds sold 124 0.00  92 0.00  80 0.00  36 0.00  31 0.00 
Investment securities 157,634 0.02  159,520 0.02  161,340 0.03  160,911 0.04  275,685 0.06 
Loans 186,157 0.03  181,630 0.03  189,592 0.03  190,036 0.04  289,726 0.06 
Total tax equivalent adjustment 343,915 0.05  341,242 0.05  351,012 0.06  350,983 0.08  565,442 0.12 
Tax equivalent interest yield$24,412,499 3.66%$25,227,248 3.81%$23,659,244 3.80%$18,033,758 3.76%$17,793,020 3.72%
                     


Old Line Bancshares, Inc. & Subsidiaries
Selected Loan Information
(Dollars in thousands)
 December 31,
2018		September 30,
2018		June 30,
2018		March 31,
2018		December 31,
2017
      
Legacy Loans(1)     
Period End Loan Balance$1,668,118 $1,609,695 $1,543,113 $1,434,375 $1,354,573 
Deferred Costs 3,087  2,805  2,364  2,374  2,013 
Accruing 1,667,179  1,608,808  1,542,371  1,433,907  1,352,407 
Non-accrual 939  887  742  468  474 
Accruing 30-89 days past due 7,988  6,352  4,565  4,587  1,692 
Accruing 90 or more days past due -  1,785  178  -  - 
Allowance for loan losses 7,005  6,699  6,444  6,075  5,739 
Other real estate owned -  -  -  425  425 
Net charge offs (recoveries) 27  (1) (3) (2) (2)
      
Acquired Loans(2)     
Period End Loan Balance$745,494 $779,060 $809,049 $326,085 $345,696 
Accruing 741,777  775,438  807,241  324,787  338,914 
Non-accrual(3) 3,718  3,622  1,808  1,298  1,291 
Accruing 30-89 days past due 11,796  8,120  13,770  4,932  5,375 
Accruing 90 or more days past due 243  733  361  330  116 
Allowance for loan losses 466  281  260  182  182 
Other real estate owned 883  1,469  2,358  1,375  1,579 
Net charge offs (recoveries) 96  33  88  60  (2)
      
Allowance for loan losses as % of held for investment loans 0.31% 0.29% 0.29% 0.36% 0.35%
Allowance for loan losses as % of legacy held for investment loans 0.45% 0.42% 0.43% 0.42% 0.42%
Allowance for loan losses as % of acquired held for investment loans 0.06% 0.04% 0.03% 0.06% 0.05%
Total non-performing loans as a % of held for investment loans 0.20% 0.30% 0.13% 0.12% 0.11%
Total non-performing assets as a % of total assets 0.20% 0.29% 0.19% 0.18% 0.18%
      

(1) Legacy loans represent total loans excluding loans acquired on April 1, 2011, May 10, 2013, December 4, 2015, July 28, 2017 and April 13, 2018.
(2) Acquired loans represent all loans acquired on April 1, 2011 from Maryland Bank & Trust Company, N.A., on May 10, 2013 from The Washington Savings Bank, on December 4, 2015, from Regal Bank & Trust, on July 28, 2017 from DCB, and on April 13, 2018 from Bay Bancorp.  We originally recorded these loans at fair value upon acquisition.
(3) These loans are loans that are considered non-accrual because they are not paying in conformance with the original contractual agreement.

OLD LINE BANCSHARES, INC.
CONTACT: ELISE HUBBARD
CHIEF FINANCIAL OFFICER
(301) 430-2560