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Old Line Bancshares Inc. Reports Operating Results (10-Q)

May 13, 2009 | About:
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Old Line Bancshares Inc. (OLBK) filed Quarterly Report for the period ended 2009-03-31.

Old Line Bancshares is the parent company of Old Line Bank a Maryland chartered commercial bank headquartered in Waldorf Maryland. Old Line Bank's primary market area is the suburban Maryland (Washington D.C. suburbs) counties of Prince George's Charles and northern St. Mary's. It also targets customers throughout the greater Washington D.C. metropolitan area. Old Line Bancshares Inc. has a market cap of $23.94 million; its shares were traded at around $6.198 with a P/E ratio of 14.09 and P/S ratio of 1.46. The dividend yield of Old Line Bancshares Inc. stocks is 1.94%. Old Line Bancshares Inc. had an annual average earning growth of 10.4% over the past 5 years.

Highlight of Business Operations:

During one of the most challenging economic periods in the last thirty years, we are pleased to report continued profitability for the first quarter of 2009. Net income available to common shareholders declined $35,078 or 7.89% to $409,755 for the three month period ending March 31, 2009 and there was no change to earnings of $0.11 per basic and diluted common share.

As previously reported, in December 2008, we increased our ownership in Pointer Ridge Office Investment, LLC from 50.0% to 62.5%. As a result, we now consolidate their results of operations and financial performance. This consolidation caused an approximately $405,000 increase in non-interest revenue, a $102,000 increase in interest expense, an $81,000 reduction in occupancy expense, a $119,000 increase in non-interest expense and an approximately $165,000 increase in pre-tax earnings.

Net interest income after provision for loan losses for the three months ended March 31, 2009 increased $161,120 or 7.35% to $2.4 million from $2.2 million for the same period in 2008

Interest revenue increased from $3.8 million for the three months ended March 31, 2008 to $4.1 million for the same period in 2009. As discussed below and outlined in detail in the Rate/Volume Analysis, these changes were the result of interest earning assets growing at a faster rate than interest-bearing liabilities. A decline in the interest rates on these interest earning assets partially offset the growth. The decline in rates was a result of the Federal Reserve decreasing the federal funds rate from 4.25% in the first quarter of 2008 to 0.25% in the first quarter of 2009. The increase in interest earning assets was primarily caused by a $35.2 million increase in average total loans. In order to fund this loan growth, we deployed funds from lower yielding federal funds sold. The growth in average total loans was attributable to a $1.1 million increase in our legal lending limit that occurred as a result of the issuance of the $7 million of Series A Preferred Stock to the U.S. Treasury in December 2008, because of the business development efforts of the entire Old Line Bank lending team and directors, and the expansion of our branch network. We believe that the expansion of our branch network provides us with increased name recognition and new opportunities that contributed to our growth. During the fourth quarter of 2008, we also transferred balances from lower yielding federal funds into higher yielding investment securities. This transfer also improved interest income.

Interest expense for all interest-bearing liabilities decreased $91,214 or 5.92% to $1.4 million for the three months ended March 31, 2009. This was primarily attributable to a 121 basis point decrease in the cost of interest-bearing deposits. This decrease was partially offset by a 10 basis point increase in the cost of borrowed funds. The decrease in the interest rate on interest-bearing deposits was a result of the decrease in the Federal Reserve interest rate previously discussed. The consolidation of Pointer Ridges assets, liabilities and equity caused a 10 basis point increase in the cost of borrowed funds. The decrease in the cost of interest-bearing liabilities was partially offset by a $59.9 million increase in average total interest-bearing liabilities. As a result of these items, our net interest margin was 3.70% for the three months ended March 31, 2009, as compared to 3.84% for the three months ended March 31, 2008.

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