Old Line Bancshares Inc. Reports Operating Results (10-Q)
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 $24.14 million; its shares were traded at around $6.25 with a P/E ratio of 14.53 and P/S ratio of 1.47. The dividend yield of Old Line Bancshares Inc. stocks is 1.92%. 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 second quarter of 2009. Net income available to common stockholders was $447,486 or $0.12 per basic and diluted common share for the three month period ending June 30, 2009. This was $49,338 or 9.93% lower than net income available to common stockholders of $496,824 or $0.13 per basic and diluted common share for the same period in 2008. Net income available to common stockholders for the six month period ended June 30, 2009 was $857,241 or $0.22 per basic and diluted common share. This represented a decrease of $84,416 or 8.96% compared to net income available to common stockholders of $941,657 or $0.24 per basic and diluted common share for the six months ended June 30, 2008.
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 $355,000 increase in non-interest revenue, a $207,000 increase in interest expense, a $259,000 reduction in occupancy expense, a $100,000 increase in non-interest expense and an approximately $167,000 increase in pre-tax earnings.
On July 15, 2009, we repurchased from the U.S. Treasury 7,000 shares of preferred stock that we issued to them in December 2008 under the U.S. Treasury s Capital Purchase Program through the Troubled Asset Relief Program. We paid the U.S. Treasury $7,058,333 to repurchase the preferred stock which reflects the liquidation value of the preferred stock and $58,333 of accrued but unpaid dividends. As a result of this repurchase, we will record the approximately $264,000 accretion of the preferred stock during the period ended September 30, 2009. After careful consideration, we determined that we would repay the U.S. Treasury and believe this repayment will be in the best long term interest of our stockholders.
Net interest income after provision for loan losses for the three months ended June 30, 2009 increased $327,762 or 14.68% to $2.6 million from $2.2 million for the same period in 2008.
Interest revenue increased from $3.7 million for the three months ended June 30, 2008 to $4.2 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 and the interest yield on interest bearing liabilities declining at a faster rate than the interest yield on interest bearing assets. The increase in interest bearing assets was primarily caused by a $40.2 million increase in average total loans and a $19.6 million increase in total investment securities. In order to fund this loan growth, we deployed funds from lower yielding federal funds sold. The growth in average total loans was attributable to the business development efforts of the entire Old Line Bank lending team and directors and the expansion of our branch network. We believe that the expansion of our branch network provides us with increased name recognition and new opportunities that contributed to our growth. The growth in interest bearing assets was partially offset by a 25 basis point decrease in the yield on investment securities and a 52 basis point decline in the yield on the loan portfolio.
Interest expense for all interest-bearing liabilities increased $50,476 or 3.70% to $1.4 million for the three months ended June 30, 2009. This was primarily attributable to a $60.7 million increase in average interest bearing deposits. This increase in average interest bearing deposits was partially offset by a 91 basis point decrease in the cost of interest-bearing deposits and a 54 basis point increase in the cost of borrowed funds. The consolidation of Pointer Ridge s assets, liabilities, and equity caused the increase in the cost of borrowed funds. The remaining increase was because we used overnight federal funds borrowing during the period. As a result of these items, our net interest margin was 3.71% for the three months ended June 30, 2009, as compared to 3.95 % for the three months ended June 30, 2008.
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