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

November 09, 2009 | About:
10qk

10qk

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Old Line Bancshares Inc. (OLBK) filed Quarterly Report for the period ended 2009-09-30.

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 $25.03 million; its shares were traded at around $6.48 with a P/E ratio of 17.05 and P/S ratio of 1.53. The dividend yield of Old Line Bancshares Inc. stocks is 1.85%. 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 third quarter of 2009. Net income available to common stockholders was $226,683 or $0.06 per basic and diluted common share for the three month period ending September 30, 2009. This was $206,710 or 47.70% lower than net income available to common stockholders of $433,393 or $0.11 per basic and diluted common share for the same period in 2008. Net income available to common stockholders for the nine month period ended September 30, 2009 was $1.1 million or $0.28 per basic and diluted common share. This represented a decrease of $291,126 or 21.17% compared to net income available to common stockholders of $1.4 million or $0.35 per basic and diluted common share for the nine months ended September 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 $479,000 increase in non-interest revenue, a $311,000 increase in interest expense, a $393,000 reduction in occupancy expense and a $73,000 increase in non-interest expense.

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. Treasurys 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 recorded approximately $281,000 for the remaining dividend due and the accretion of the preferred stock during the three month period ended September 30, 2009. For the nine month period ended September 30, 2009, we recorded approximately $486,000 for the dividend due and the accretion of the preferred stock. 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. We have also repurchased at a fair market value of $225,000 the warrant to purchase 141,892 shares of our common stock that was issued to the U.S. Treasury in conjunction with the issuance of the preferred stock.

Net interest income after provision for loan losses for the three months ended September 30, 2009 increased $479,804 or 20.89% to $2.8 million from $2.3 million for the same period in 2008.

Interest revenue increased from $3.9 million for the three months ended September 30, 2008 to $4.4 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 $37.4 million increase in average total loans and a $20.3 million increase in average 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 32 basis point decrease in the yield on investment securities and a 41 point decline in the yield on the loan portfolio.

Interest expense for all interest-bearing liabilities decreased $54,210 or 3.71% to $1.4 million for the three months ended September 30, 2009. This was primarily attributable to an 88 basis point decrease in the cost of interest-bearing deposits. This decrease in the cost of interest-bearing deposits was partially offset by a $54.8 million increase in average interest bearing deposits and a 63 basis point increase in the cost of borrowed funds. The consolidation of Pointer Ridges assets, liabilities, and equity caused the increase in the cost of borrowed funds. We also used overnight federal funds borrowing during the period. As a result of these items, our net interest margin was 3.89% for the three months ended September 30, 2009, as compared to 3.81% for the three months ended September 30, 2008.

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