OLD LINE BANCSHARES, INC. REPORTS AN INCREASE IN ASSET TO $1.5 BILLION AND AN EARNINGS INCREASE OF 46.82% FOR THE YEAR ENDING DECEMBER 31, 2015

BOWIE, MD – Old Line Bancshares, Inc. (“Company”) (NASDAQ: OLBK), the parent company of Old Line Bank, reports net income available to common stockholders of $2.0 million for the three months ended December 31, 2015, compared to $1.8 million for the three months ended December 31, 2014.  Earnings were $0.19 per basic and diluted common share for the three months ended December 31, 2015, compared to $0.17 per basic and $0.16 per diluted common share for the same period in 2014.  Net income included $1.4 million in merger-related expenses ($1.2 million net of taxes, or $0.11 per basic and diluted common share) in connection with the Company’s previously-announced acquisition of Regal Bancorp, Inc. (“Regal”), the parent company of Regal Bank & Trust (“Regal Bank”), through the merger of Regal with and into the Company effective December 4, 2015.  Excluding the merger related expenses, which is a non-GAAP measure, earnings were $0.30 per basic and diluted share for the three months ending December 31, 2015.

Net income available to common stockholders was $10.5 million, or 46.82% increase, for the year ended December 31, 2015, compared to $7.1 million for the year ended December 31, 2014.  Earnings were $0.98 per basic and $0.97 per diluted common share, respectively, for the year ended December 31, 2015 and $0.66 and $0.65, respectively, per basic and diluted common share in 2014.  Net income included merger-related expenses of $1.4 million, ($1.2 million net of taxes, or $0.11 per basic and diluted common share).  These merger-related expenses were primarily related to legal fees, investment banking fees, severance and charges associated with the termination of Regal Bank’s core data processing contract.  Approximately $863 thousand of these fees was not tax deductible.  Excluding the merger related expenses, which is a non-GAAP measure, earnings were $1.09 per basic and $1.08 per diluted share for the twelve months ending December 31, 2015.

Operating earnings, a non-GAAP measure, which exclude merger related-expenses related to the Regal acquisition amounting to $1.4 million, or $1.2 million net of tax, were $3.2 million and $11.6 million, respectively, for the three and twelve months ended December 31, 2015.  Reconciliations of GAAP income to operating income, a non-GAAP measure, are contained as footnote (1) in a separate chart in the financial highlights section of this press release.

As of December 31, 2015, including as a result of the Regal merger, the Company has aggregate assets of approximately $1.5 billion, net loans of approximately $1.2 billion and deposits of approximately $1.2 billion. 

Assets increased $178.1 million during the three months ended December 31, 2015 and $282.0 million during the year ended December 31, 2015, with the Regal acquisition accounting for $136.3 million of such increase during both the three and twelve month periods. Net loans increased $109.7 million, or 10.49%, during the three months ending December 31, 2015 and $224.0 million, or 24.06%, during the twelve months ending December 31, 2015.  Net loans exclusive of the Regal acquisition increased $18.7 million, or 1.78%, during the three months ending December 31, 2015 and $133.0 million, or 14.24%, during the twelve months ending December 31, 2015.  The growth in net loans during the three months ended December 31, 2015 was impacted by $27 million in payoffs during the quarter.

James W. Cornelsen, President and Chief Executive Officer of the Company, stated: “We are pleased that we have expanded our presence in the Montgomery County, Maryland market with the opening of our first branch in Rockville, Maryland on November 10, 2015.  A second location, located in the Rockville Town Center, is slated to open in 2016.  We are also extremely excited about the opportunities created by the combination of Old Line Bank and Regal Bank.  The combination facilitates Old Line Bank’s entry into the attractive markets of Baltimore County and Carroll County where the former Regal Bank banking team will have access to an enhanced lending capacity and product set to serve larger commercial customers in the market.  Regal Bank customers now have access to a $1.5 billion bank with a $20.6 million lending limit.  Old Line Bank is also bringing its residential lending capabilities to the markets formerly served by Regal Bank.  We are also very pleased to report that we continue to generate strong organic loan and deposit growth.  Total loans increased $132.6 million for the year, exclusive of the Regal merger.”   

“Anticipated merger and acquisition expenses were incurred during the quarter due to the Regal acquisition, which negatively impacted our fourth quarter and full-year earnings.  With the dedication and teamwork of personnel of Old Line Bank and the former Regal Bank, the two core processing systems are expected to be merged during the first quarter of 2016.  We believe that the Company is well positioned to continue its profitable growth to maximize stockholder value,” stated Mr. Cornelsen.

4th QUARTER HIGHLIGHTS: 

2015 FULL YEAR HIGHLIGHTS

Total assets at December 31, 2015 increased $282.0 million from December 31, 2014 primarily due to increases of $220.5 million in loans held for investment, $33.0 million in our investment securities available for sale and $18.3 million in cash and cash equivalents.  This increase includes our acquisition of Regal assets of approximately $132 million.

Nonperforming assets, which include non-accrual loans, foreclosed real estate and troubled debt restructured loans, decreased five basis points from 0.65% of total assets at December 31, 2014 to 0.60% of total assets at December 31, 2015.

Deposit growth for the twelve months ended December 31, 2015 consisted of increases in interest bearing deposits of $152.5 million and non-interest bearing deposits of $67.6 million.  The increase is the result of our continued efforts to enhance our deposit customer base in our surrounding areas as well as our acquisition of approximately $104.3 million of deposits in the Regal merger.

The $221 thousand increase in net income for the three months ending December 31, 2015 compared to the three months ending December 31, 2014, was primarily the result of a $1.7 million, or 15.77%, increase in net interest income, a $58 thousand, or 12.69%, decrease in the provision for loan losses and an increase of $201 thousand, or 14.48%, in non-interest income, partially offset by a $1.1 million, or 12.16%, increase in non-interest expenses.  The $3.4 million increase in net income for the twelve months ending December 31, 2015 compared to the twelve months ending December 31, 2014, was primarily the result of a $4.9 million, or 11.71%, increase in net interest income, a $1.5 million decrease in the provision for loan losses and an $888 thousand, or 14.91%, increase in non-interest income, offsetting an increase of $1.3 million, or 3.51%, in non-interest expenses.

Average interest earning assets for the three month period ending December 31, 2015 increased $196.4 million compared to the same period of 2014.  Average interest earning assets for the twelve month period ending December 31, 2015 increased $138.4 million compared to the same period of 2014.  The average yield on such assets was 4.41% and 4.49%, respectively, for the three and twelve months ending December 31, 2015 compared to 4.42% and 4.52% for the comparable 2014 periods.

Average interest bearing liabilities for the three month period ending December 31, 2015 increased $152.4 million compared to the same period of 2014.  Average interest bearing liabilities for the twelve month period ending December 31, 2015 increased $90.2 million compared to the same period of 2014.  The average rate paid on such liabilities increased to 0.56% and 0.54%, respectively, for the three and twelve months ending December 31, 2015 compared to 0.45% and 0.48% for the comparable 2014 periods.  

The net interest margin for the three months ended December 31, 2015 decreased to 3.98% from 4.08% during the three months ending December 31, 2014.  The net interest margin for the twelve months ended December 31, 2015 decreased to 4.08% from 4.15% during the twelve months ending December 31, 2014.  Among other things, the net effect of fair value accretion/amortization on acquired loans affects the net interest margin and net interest income.  The fair value accretion/amortization is recorded on pay downs during the period recognized.  Payoffs increased during the three months ending December 31, 2015, contributing a 12 basis point increase in net interest income, as compared to a one basis point increase in net interest income for the three months ending December 31, 2014.  The fair value accretion recorded on acquired deposits affects interest expense.  The amount of the accretion on such deposits during the three months ended December 31, 2015 decreased by three basis points as compared to the same three month period of 2014.

Net interest income increased for the three and twelve month periods ending December 31, 2015 compared to the same periods in 2014 primarily due to increases in the interest recognized on loans offsetting the increases in interest expense.  Loan interest income increased for the three and twelve month periods ending December 31, 2015 due to organic growth in our loan portfolio and, to a lesser extent, the acquisition of loans in the Regal merger.  Interest expense increased due to increases in our deposits and borrowings.  Our average interest bearing deposits and average rates paid on these deposits increased for both the three and twelve month periods ending December 31, 2015, offsetting a decrease in the average rate paid on our borrowings. 

The provision for loan losses decreased for the three and twelve month periods ending December 31, 2015 compared to the same periods of 2014.  The decrease for the three month period is the result of our continued improvements in asset quality.  The decrease for the twelve month period is the result of a provision for $1.4 million that was recognized during the second quarter of 2014 for one commercial loan that was sold at foreclosure during the third quarter of 2014, in addition to continued improvements in asset quality, as noted above.

Non-interest income increased for the three month period ending December 31, 2015 compared to the same period of 2014 primarily as a result of an increase of $198 thousand on gains on the sale of marketable loans and a $42 thousand decrease in the loss on disposal of assets, offsetting the decrease of $44 thousand in service charges on deposit accounts.  The increase in gain on sale of marketable loans is due to the gains recorded on the sale of $25.2 million in residential mortgage loans sold in the secondary market during the three months ending December 31, 2015 as compared to $17.8 million in the 2014 period.  Service charges on deposit accounts decreased as a result of lower overdraft and ATM fees compared to the same three month period of 2014.  Non-interest income also increased for the twelve month period ending December 31, 2015 compared to the same twelve months of 2014.  The increase is primarily the result of a $1.2 million increase in gain on the sale of marketable loans, offsetting a decrease of $174 thousand in service charges on deposit accounts.  The increase in gain on sale of marketable loans for the twelve months ending December 31, 2015 is due to the gains recorded on the sale of $103.2 million in residential mortgage loans sold in the secondary market compared to sales of $54.3 million for the period of 2014.

Non-interest expenses increased $1.1 million, or 12.16%, for the three month period ending December 31, 2015 compared to the

same period of 2014 primarily as a result of the $1.4 million of merger-related expenses incurred during the 2015 period, for which there was no corresponding expense in 2014, and a loss on the sale of bank owned real estate, partially offset by a decrease in occupancy and equipment expenses.  The loss on the sale of bank owned real estate for the three month period ending December 31, 2015 is the result of the sale of one property for a loss of $21 thousand compared to the sale of five properties for a gain of $155 thousand during the same three month period of 2014.  Occupancy and equipment expenses decreased during the 2015 period as a result of the closing of four of our branches on December 31, 2014. 

Non-interest expenses increased $1.2 million, or 3.51%, for the twelve month period ending December 31, 2015 compared to the same period of 2014 as a result of the previously discussed $1.4 million of merger-related expenses, a loss on the sale of bank owned real estate and an increase in other operating expenses, offsetting decreases in salaries and benefits and occupancy and equipment expenses.  Salaries and benefits decreased during 2015 due to severance payments in the 2014 period that were associated with merger-related staffing reductions from our previous acquisition of WSB Holdings, Inc.  Occupancy and equipment expenses decreased for the 2015 period as a result of the closure of four of our branches on December 31, 2014.  The closure of these branches included $462 thousand in occupancy and equipment expenses and a loss on disposal of assets of $48 thousand for the corresponding period last year.  Other operating expenses increased $229 thousand primarily as a result of increases in our marketing and advertising due to an enhanced ongoing marketing campaign during 2015.  The loss on sale of bank owned real estate for the twelve month period ending December 31, 2015 is the result of the sale of five properties for a loss of $50 thousand compared to the sale of thirteen properties for a gain of $698 thousand during the same period of 2014.

Old Line Bancshares, Inc. 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. Old Line Bank has 23 branches located in its primary market area of suburban Maryland (Washington, D.C. suburbs and Southern Maryland) counties of Anne Arundel, Baltimore, Calvert, Carroll, Charles, Montgomery, Prince George's and St. Mary's. It also targets customers throughout the greater Washington, D.C. metropolitan area. 

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.  Old Line Bancshares, Inc.’s management uses non-GAAP financial measures, including (i) net operating income; (ii) net operating income available to common stockholders; (iii) earnings per basic share; (iv) earnings per diluted share; (v) operating non-interest expense; (vi) operating efficiency ratio; (vii) operating non-interest expense as a percentage of average assets; (viii) return on average assets; (ix) return on average common equity.  Net income excludes merger-related expenses, net of tax.  Operating non-interest expense excludes merger related expense, net of tax.  The operating efficiency ratio excludes merger related expenses.  Management believes that non-GAAP financial measures provide additional useful information that allow readers to evaluate the ongoing performance of the Company and provide meaningful comparison to its peers.  Non-GAP financial measures should not be consider as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider Old Line’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 statements in this press release that are not historical facts, in particular the statements with respect to the opening of Old Line Bank’s Rockville Town Center branch and continued profitable growth, constitute a “forward-looking statement” as defined by Federal securities laws.  Such statements are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  These statements can generally be identified by the use of forward-looking terminology such as “believes,” “expects,” “intends,” “may,” “will,” “should,” “anticipates”, “plans” or similar terminology.  Actual results could differ materially from those currently anticipated due to a number of factors, including, but not limited to, deterioration in economic conditions or a slowdown in the recovery in our target markets or nationally, increases in the unemployment rate in our target markets, the actions of our competitors and our ability to successfully compete, in particular in new market areas, and changes in laws impacting our ability to collect on outstanding loans or otherwise negatively impact our business.  Forward-looking statements speak only as of the date they are made.  Old Line Bancshares, Inc. will not 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, Inc. may make, please refer to the filings made by Old Line Bancshares, Inc. with the U.S. Securities and Exchange Commission available at www.sec.gov.

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Balance Sheets

Old Line Bancshares, Inc. & Subsidiaries

Consolidated Statements of Income

Financial information at  December 31, 2014 has been derived from audited financial statements.

 RECONCILIATION OF NON-GAAP MEASURES

Old Line Bancshares, Inc. & Subsidiaries

Average Balances, Interest and Yields

The accretion of the fair value adjustments resulted in a positive impact in the yield on loans for the three months ending December 31, 2015 and 2014.  Fair value accretion for the current quarter and prior four quarter are as follows: 

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