Columbia, Maryland—January 31, 2018—Bay Bancorp, Inc. (“Bay”) (NASDAQ: BYBK), the savings and loan holding company for Bay Bank, FSB (“Bank”), announced today net income of $4.8 million, or $0.46 per basic common share and $0.45 per diluted common share, for the year ended December 31, 2017, compared to $2.0 million, or $0.16 per basic common share and diluted common share, for the year ended December 31, 2016.

For the fourth quarter ended December 31, 2017, net income decreased to $0.5 million, or $0.04 per basic common share and $0.04 per diluted common share, over the $0.8 million, or $0.07 per basic common share and $0.07 per diluted common share, reported for the fourth quarter of 2016. Net income results were decreased this quarter due to a $0.7 million increase in income tax expense related to the revaluation of our deferred tax assets and liabilities upon the enactment of the Tax Cuts and Jobs Act signed into law on December 22, 2017 and a $0.3 million increase in expenses related to our proposed merger with Old Line Bank. The adjustment of our deferred tax assets and liabilities represents a reasonable estimate and actual results could differ from those estimates. The enactment of the tax legislation is expected to reflect positively in our future results.

For the year ended December 31, 2017, we grew loans by $55.1 million or 11%. In the fourth quarter of 2017, loans increased by $17.0 million, or 3%, when compared to the quarter ended September 30, 2017. For the year ended December 31, 2017, deposits grew by $46.3 million. For the quarter ended December 31, 2017, deposits grew by $23.4 million primarily a result of a temporary escrow deposit. The Bank now has total assets exceeding $650 million and 11 branches in the Baltimore-Washington region, and is the fifth largest community bank headquartered in the Baltimore region based upon deposit market share.

Commenting on the earnings announcement, Joseph J. Thomas, President and CEO, said, “I am very proud to announce yet another quarter with continued growth in our balance sheet and net interest income. These results were achieved while we have begun planning efforts for our pending merger with Old Line Bank which is expected to close in the second quarter of 2018. For the quarter ended December 31, 2017, the company’s net income before taxes was $1.7 million, an increase of $0.8 million over the $0.9 million recorded for the quarter ended December 31, 2016. We were also able to maintain and improve asset quality during the year through resolutions of acquired loans and our nonperforming assets which were $12.0 million at December 31, 2017, $11.4 million at September 30, 2017 and $15.8 million at December 31, 2016.

Since announcing our proposed merger with Old Line Bank, our discussions with shareholders, employees and clients have been universally positive. We believe that the merger will create the best banking franchise headquartered in the Baltimore Washington corridor with a size of $3.0 billion in assets, customer accessibility with 40 branches, strong client relationships, talented team of associates, diverse loan portfolio, low-cost core deposits and solid fee based revenues.”

Highlights for the Quarter and Year ended December 31, 2017

The Bank continued organic net growth in the fourth quarter of 2017. Loan growth for the quarter was favorable and for the year exceeded $55 million, up 11%. The Bank maintains an attractive 0.45% cost of funds for the fourth quarter of 2017. The Bank has strong liquidity and capital positions along with capacity for future growth, with total regulatory capital to risk weighted assets of approximately 12.85% at December 31, 2017. The Bank had $6.5 million in remaining net purchase discounts on acquired loan portfolios at December 31, 2017.

Specific highlights are listed below:

• Return on average assets for the quarter ended December 31, 2017 was 0.28% as compared to 1.35% and 0.53% for the quarter ended September 30, 2017 and December 31, 2016, respectively, and return on average equity for the quarter ended December 31, 2017 was 2.71%, as compared to 13.07% and 5.04% for the quarter ended September 30, 2017 and December 31, 2016, respectively.

• With consistent organic growth, total assets were $659 million at December 31, 2017 compared to $652 million at September 30, 2017 and $620 million at December 31, 2016.

• Total loans were $542 million at December 31, 2017, an increase of 3% from $525 million at September 30, 2017, and an increase of 11% from $487 million at December 31, 2016.

• Total deposits were $573 million at December 31, 2017, an increase of 4% from $549 million at September 30, 2017, and an increase of 9% from $526 million at December 31, 2016. Non-interest bearing deposits were $135 million at December 31, 2017, an increase of 4% from $130 million at September 30, 2017, and an increase of 21% from $111 million at December 31, 2016.

• Net interest income for the three-month period ended December 31, 2017 totaled $6.7 million, compared to $6.6 million for the third quarter of 2017 and $5.9 million for the three-month period ended December 31, 2016. Interest income associated with discount accretion on purchased loans, deferred costs and deferred fees will vary due to the timing and nature of loan principal payments. Earning asset leverage was the primary driver in year-over-year results, as average earning loans and investments increased to $619 million for the three-month period ended December 31, 2017, compared to $576 million for the same period of 2016.

• Net interest margin for the quarter and year ended December 31, 2017 were 4.33% and 4.23%, respectively, which were higher than the 4.05% and 4.14%, respectively, recorded for the same periods of 2016. The margin for the year ended December 31, 2017 reflects the variable pace of discount accretion recognition within interest income and the impact of fair value amortization on the interest expense of acquired deposits, and the higher level of investments, including interest bearing federal funds acquired in the Bank’s merger with Hopkins Federal Savings Bank on July 8, 2016 (the “Hopkins Merger”). Nonperforming assets represented 1.8% of total assets at December 31, 2017 and at September 30, 2017, compared to 2.6% at December 31, 2016.

• Nonperforming assets increased $0.6 million to $12.0 million at December 31, 2017 from $11.4 million at September 30, 2017 and were $15.8 million at December 31, 2016. The increase over the third quarter of 2017 resulted primarily from the addition of nonaccrual loans during the period. The changes since December 31, 2016 were driven by decreases in purchased credit impaired loans partially offset by increases in nonaccrual loans.

• The provision for loan losses for the quarter and year ended December 31, 2017 was $0.4 million and $1.7 million, respectively, compared to $0.4 million and $1.4 million, respectively, for the same periods of 2016. The increase for the year ended December 31, 2017 was primarily the result of increases in loan originations. As a result, the allowance for loan losses was $4.2 million at December 31, 2017, representing 0.77% of total loans, compared to $4.0 million, or 0.77% of total loans, at September 30, 2017, $2.8 million, or 0.58% of total loans, at December 31, 2016. Management expects both the allowance for loan losses and the related provision for loan losses to increase in the future periods due to the gradual accretion of the discount on the acquired loan portfolios and an increase in new loan originations.

• As part of the Hopkins Merger, the Bank acquired a 51% interest in iReverse Home Loans, LLC (“iReverse”). The Bank’s interest in iReverse qualified as held for sale upon acquisition and was therefore required to be presented as a discontinued operations. Discontinued operations include noninterest income and noninterest expense related to iReverse. On December 15, 2016, the Bank entered into an Ownership Interest Sale Agreement and Assignment with the other owner of iReverse pursuant to which the Bank agreed to sell its 51% interest effective March 31, 2017 for $70,000 which was paid in cash on February 28, 2017. The net income from discontinued operations, net of taxes, for the quarter ended December 31, 2016 was $273,629, with $61,279 attributable to non-controlling interest and $212,350 attributable to common stockholders. The net income from discontinued operations, net of taxes, for the year ended December 31, 2016 was $366,034, with $199,491 attributable to non-controlling interest and $166,543 attributable to common stockholders.


Balance Sheet Review

Total assets were $659 million at December 31, 2017, representing increases of $7 million, or 1%, and $39 million, or 6%, when compared to September 30, 2017, and December 31, 2016, respectively. Investment securities were $58 million at December 31, 2017, representing decreases of $3 million, or 4%, from September 30, 2017 and $5 million, or 8% from December 31, 2016. Loans held for sale were $1.1 million, $0.4 million and $1.6 million at December 31, 2017, September 30, 2017 and December 31, 2016, respectively.

Total deposits were $573 million at December 31, 2017, an increase of $23 million, or 4%, when compared to the $549 million recorded at September 30, 2017 and an increase of $46 million, or 9%, when compared to the $526 million recorded at December 31, 2016. The activity for the fourth quarter was primarily a result of a temporary escrow deposit. The activity for the year included normal cyclical deposit fluctuations and a $23 million increase in non-interest bearing deposits. Short-term borrowings from the Federal Home Loan Bank decreased to $10 million compared to $25 million at September 30, 2017 and $20 million at December 31, 2016.

Stockholders’ equity was $72 million at December 31, 2017 and $72 million at September 30, 2017, and increased from $66 million at December 31, 2016. The minor change in the fourth quarter was related primarily to $0.5 million in lower corporate earnings which included the $0.7 million increase in income tax expense related to the revaluation of our deferred tax assets and liabilities upon the enactment of the Tax Cuts and Jobs Act and a $0.3 million increase in expenses related to our proposed merger with Old Line Bank offset by $0.4 million in pension related other comprehensive losses. The increase for the year was primarily related to $4.8 million in corporate earnings and $0.8 million related to the issuance of common stock under the stock compensation plan.  The book value of Bay’s common stock was $6.74 per share at December 31, 2017, compared to $6.73 per share at September 30, 2017, and $6.29 per share at December 31, 2016.

During 2016, Bay purchased a total of 743,436 shares of its common stock at an average price of $5.10 per share. Bay Bancorp has not elected to repurchase additional shares since that time.

At December 31, 2017, the Bank remained above all “well-capitalized” regulatory requirement levels. The Bank’s tier 1 risk-based capital ratio was approximately 12.11% at December 31, 2017 as compared to 12.27% at September 30, 2017, and 12.32% at December 31, 2016. Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the investment portfolio.

Review of Financial Results

For the three-month periods ended December 31, 2017 and 2016

Net income for the three-month period ended December 31, 2017 was $0.5 million, compared to net income of $2.2 million and $0.8 million for the three-month periods ended September 30, 2017 and December 31, 2016, respectively.

Net interest income for the three-month period ended December 31, 2017 totaled $6.7 million compared to $6.6 million for the previous quarter and $5.9 million for the fourth quarter of 2016. The increase in interest income primarily resulted from interest-earning asset growth from expansion of the Bank originated loan portfolio. As of December 31, 2017, the remaining net loan discounts on the Bank’s loan portfolio was $6.5 million.

Noninterest income for the three-month period ended December 31, 2017 was $1.3 million compared to $2.7 million and $1.1 million for the three-month periods ended September 30, 2017 and December 31, 2016, respectively. These results were lower when compared to the three-month period ended September 30, 2017, which included a $1.4 million insurance income gain related to the Hopkins Merger. Adjusted for these merger related changes, Bay recorded a small difference in noninterest income when compared to the third quarter of 2017 and the fourth quarter of 2016.

For the three-month period ended December 31, 2017, noninterest expense was $6.0 million, compared to $5.3 million and $5.7 for the three-month periods ended September 30, 2017 and December 31, 2016, respectively.  After adjusting for the $0.3 million in merger related expenses in the fourth quarter of 2017, the primary contributor to the $0.4 million increase when compared to the third quarter of 2017 was an increase in salaries and employee benefit expense related to higher incentive and health insurance expenses. The primary contributor to the $0.3 million increase when compared to the fourth quarter of 2016 was an increase in salaries and employee benefit expense related to higher incentive and health insurance expenses partially offset by decreases in legal and professional fees, and foreclosed property and FDIC insurance expenses.

For the twelve-month periods ended December 31, 2017 and 2016

Net income for the year ended December 31, 2017 was $4.8 million, compared to net income of $2.0 million for the year ended December 31, 2016.

Net interest income for the year ended December 31, 2017 totaled $25.5 million, compared to $21.2 million for the same period of 2016. The increase in interest income resulted from interest-earning asset growth from expansion of the Bank originated loan portfolio, selective investment purchases and the effects of the Hopkins Merger.

Noninterest income for the year ended December 31, 2017 was $6.6 million, which included a $1.4 million insurance income gain. Noninterest income was $6.0 million recorded for the year ended December 31, 2016, which included a $0.9 million bargain purchase gain related to the Hopkins Merger. After adjusting for these merger related changes, the $0.1 million increase in 2017 compared to 2016 was related to an increase in sponsorship fee income and BOLI earnings partially offset by lower net gains on securities and lower mortgage banking fee income.

For the year ended December 31, 2017, noninterest expense was $21.6 million, compared to $23.2 million for the same period in 2016, or $21.2 million and $21.4 million when adjusting for $0.4 million and $1.8 million in merger expenses for 2017 and 2016, respectively. Adjusted for the merger related expenses, the primary contributors to the $0.2 million decrease in noninterest expenses were decreases in legal and professional fees, and lower occupancy, foreclosed property and FDIC insurance expenses partially offset by an increase in salaries and employee benefit expense related to higher incentive and health insurance expenses.


Bay Bancorp, Inc. Information

Bay is a financial holding company and a savings and loan holding company headquartered in Columbia, Maryland. Through the Bank, Bay serves the community with a network of 11 branches strategically located throughout the Baltimore Metropolitan Statistical Area, particularly Baltimore City and the Maryland counties of Baltimore Washington corridor. The Bank serves small and medium size businesses, professionals and other valued customers by offering a broad suite of financial products and services, including on-line and mobile banking, commercial banking, cash management, mortgage lending and retail banking. The Bank funds a variety of loan types including commercial and residential real estate loans, commercial term loans and lines of credit, consumer loans and letters of credit. Additional information is available at www.baybankmd.com.


Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on Bay. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Bay. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Bay with the Securities and Exchange Commission entitled “Risk Factors”.


For investor inquiries contact:

Joseph J. Thomas, President and CEO
410-536-7336
jthomas@baybankmd.com
7151 Columbia Gateway Drive,
Suite A
Columbia, MD 21046


For further information contact:

Larry D. Pickett, Chief Financial Officer
lpickett@baybankmd.com
410-312-5415

 

 

Columbia Maryland—October 26, 2017—Bay Bancorp, Inc. (“Bay”) (NASDAQ: BYBK), the savings and loan holding company for Bay Bank, FSB (“Bank”), announced today net income increased to $2.2 million, or $0.21 per basic common share and $0.20 per diluted common share, for the third quarter of 2017 over the $0.5 million, or $0.04 per basic common share and $0.03 per diluted common share, recorded for the third quarter of 2016.  Bay reported net income of $4.4 million, or $0.41 per basic common share and diluted common share, for the first nine months of 2017, compared to $1.1 million, or $0.09 per basic common share and diluted common share, for the first nine months of 2016.  Net loans increased by $15.2 million, or 3%, when compared to June 30, 2017.  The Bank now has total assets exceeding $650 million and 11 branches in the Baltimore-Washington region, and is the fifth largest community bank headquartered in the Baltimore region based upon deposit market share.

Commenting on the earnings announcement, Joseph J. Thomas, President and CEO, said, “I am very proud to announce yet another record quarter with solid balance sheet growth, sustained earnings momentum and improved returns on equity and assets.  Core income continued its strong growth and net income growth this quarter was further augmented by the $1.4 million in other income related to the insurance recovery in connection with the Bank’s settlement of the lawsuit filed by Alvin and Lois Lapidus. As part of the settlement, the Bank agreed to pay $1.4 million to Alvin and Lois Lapidus. The Bank had set up a liability for this settlement last year and did not incur additional expense in the third quarter of 2017 for the payment. For the three-month period ending September 30, 2017, we grew loans and deposits at 12% and 10% on an annualized basis, respectively.  Along with the insurance income, our organic growth in loans, our low cost core deposit funding and improved operational efficiencies drove the company’s net income before taxes to $3.7 million, an 85% increase over the $2.0 million recorded for the quarter ended June 30, 2017.  We were also able to improve asset quality through resolutions of acquired loans and our nonperforming assets decreased 22% on an annualized basis to $11.4 million at September 30, 2017 from $14.6 million at June 30, 2017.  We are excited about the proposed merger, announced on September 27, 2017, with Old Line Bank expected to close during the second quarter of 2018, where Bay’s attractive geographic footprint, strong client relationships, talented team of associates, diverse loan portfolio, low-cost core deposits and solid fee based revenues should complement and strengthen Old Line Bank’s high performing franchise.” 


Highlights from the First Nine Months of 2017  

The Bank continued organic net growth in the third quarter of 2017.  Net loan and deposit growth was favorable.  Planned declines in certificate of deposit balances following the successful closing of Bay’s merger with Hopkins Bancorp, Inc. and the related merger of Hopkins Federal Savings Bank into the Bank (collectively, the “Hopkins Merger”) led to an attractive 0.46% cost of funds for the third quarter of 2017.  Bay has strong liquidity and capital positions along with capacity for future growth, with total regulatory capital to risk weighted assets of approximately 13.01% at September 30, 2017.  The Bank had $7.2 million in remaining net purchase discounts on acquired loan portfolios at September 30, 2017.


Specific highlights are listed below:


·   Return on average assets for the three-month period ended September 30, 2017 was 1.37% as compared to 0.79% and 0.33% for the three-month periods ended June 30, 2017 and September 30, 2016, respectively, and return on average equity for the three-month period ended September 30, 2017 was 13.21%, as compared to 7.44% and 3.14% for the three-month periods ended June 30, 2017 and September 30, 2016, respectively.

·   With consistent organic growth, total assets were $652 million at September 30, 2017 compared to $646 million at June 30, 2017 and $606 million at September 30, 2016.

·   Total loans were $525 million at September 30, 2017, an increase of 3% from $510 million at June 30, 2017, an increase of 8% from $487 million at December 31, 2016 and an increase of 9% from $482 million at September 30, 2016.

·   Total deposits were $549 million at September 30, 2017, an increase of 3% from $536 million at June 30, 2017, an increase of 4% from $526 million at December 31, 2016 and an increase of 3% from $531 million at September 30, 2016.  Non-interest bearing deposits were $130 million at September 30, 2017, an increase of 8% from $120 million at June 30, 2017, an increase of 16% from $111 million at December 31, 2016, and an increase of 30% from $100 million at September 30, 2016.

·   Net interest income for the three-month period ended September 30, 2017 totaled $6.6 million, compared to $6.3 million for the second quarter of 2017 and $5.7 million for the three-month period ended September 30, 2016.  Interest income associated with discount accretion on purchased loans, deferred costs and deferred fees will vary due to the timing and nature of loan principal payments.  Earning asset leverage was the primary driver in year-over-year results, as average earning loans and investments increased to $580 million for the three-month period ended September 30, 2017, compared to $534 million for the same period of 2016.

·   Net interest margin for the three- and nine-month periods ended September 30, 2017 was 4.66% and 4.19%, which were higher than the 3.86% and 4.11%, respectively, recorded for the same periods of 2016.  The margin for the nine-month period ended September 30, 2017 reflects the variable pace of discount accretion recognition within interest income and the impact of fair value amortization on the interest expense of acquired deposits, and the higher level of investments, including interest bearing federal funds acquired in the Hopkins Merger. Nonperforming assets represented 1.8% of total assets at September 30, 2017, compared to 2.3% at June 30, 2017, 2.6% at December 31, 2016 and 2.6% at September 30, 2016.

·   Nonperforming assets decreased to $11.4 million at September 30, 2017 from $14.6 million at June 30, 2017 and compared favorably to the $15.8 million recorded at December 31, 2016 and the $15.7 million recorded at September 30, 2016.  The decrease over the second quarter of 2017 resulted primarily from continued resolution of acquired nonperforming loans. The changes since September 30, 2016 were driven by loans acquired in the Hopkins Merger offset by decreases in purchased credit impaired loans.

·   The provision for loan losses for the three- and nine-month periods ended September 30, 2017 was $0.3 million and $1.3 million, respectively, compared to $0.4 million and $1.0 million, respectively, for the same periods of 2016.  The increase for the nine-month period ended September 30, 2017 was primarily the result of increases in loan originations.  As a result, the allowance for loan losses was $4.0 million at September 30, 2017, representing 0.77% of total loans, compared to $3.6 million, or 0.71% of total loans, at June 30, 2017, $2.8 million, or 0.58% of total loans, at December 31, 2016, and $2.4 million, or 0.51% of total loans, at September 30, 2016.  Management expects both the allowance for loan losses and the related provision for loan losses to increase in the future periods due to the gradual accretion of the discount on the acquired loan portfolios and an increase in new loan originations. 

·   As part of the Hopkins Merger on July 8, 2016, the Bank acquired a 51% interest in iReverse.  The Bank’s interest in iReverse qualifies as held for sale upon acquisition and is therefore required to be presented as a discontinued operations.  Discontinued operations include noninterest income and noninterest expense related to iReverse.  On December 15, 2016, the Bank entered into an Ownership Interest Sale Agreement and Assignment with the other owner of iReverse pursuant to which the Bank agreed to sell its 51% interest effective March 31, 2017 for $70,000 which was paid in cash on February 28, 2017.  The net income from discontinued operations, net of taxes, for the three- months and nine- months ended September 30, 2016 was $228,221, with $138,212 attributable to non-controlling interest and $90,009 attributable to common stockholders.


Balance Sheet Review

Total assets were $652 million at September 30, 2017, representing increases of $6 million, or 1%, $31 million, or 5%, and $45 million, or 7%, when compared to June 30, 2017, December 31, 2016 and September 30, 2016, respectively.  Investment securities were $61 million at September 30, 2017, representing decreases of $5 million, or 8%, from June 30, 2017 and $2 million, or 4% from December 31, 2016, and an increase of $7 million, or 12%, when compared to September 30, 2016. Loans held for sale were $0.4 million at September 30, 2017, which decreased $2.5 million, $1.2 million and $2.4 million since June 30, 2017, December 31, 2016 and September 30, 2016, respectively.

Total deposits were $549 million at September 30, 2017, an increase of $13 million, or 3%, when compared to the $536 million recorded at June 30, 2017.  Activity included normal cyclical deposit fluctuations and a $9 million increase in non-interest bearing deposits.  Short-term borrowings from the Federal Home Loan Bank decreased to $25 million compared to $35 million at June 30, 2017.

Stockholders’ equity increased to $72 million at September 30, 2017, from $69 million at June 30, 2017, $66 million at December 31, 2016, and $65 million at September 30, 2016.  These increases related primarily to corporate earnings, with the increase over the third quarter of 2016 being offset by the $2.9 million decline related to the purchase of 568,436 shares of Bay’s common stock.  The combined activity improved the book value of Bay’s common stock to $6.73 per share at September 30, 2017, compared to $6.51 per share at June 30, 2017, $6.29 per share at December 31, 2016 and $6.28 per share at September 30, 2016.

During the second and third quarters of 2016, Bay purchased a total of 743,436 shares of its common stock at an average price of $5.10 per share.  Bay Bancorp has not elected to repurchase additional shares since that time.  The Board may modify, suspend or discontinue the program at any time.

At September 30, 2017, the Bank remained above all “well-capitalized” regulatory requirement levels.  The Bank’s tier 1 risk-based capital ratio was approximately 12.27% at September 30, 2017 as compared to 12.15% at June 30, 2017, 12.32% at December 31, 2016 and 12.31% at September 30, 2016.  Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the investment portfolio.


Review of Financial Results

For the three-month periods ended September 30, 2017 and 2016

Net income for the three-month period ended September 30, 2017 was $2.2 million, compared to net income of $1.2 million and $0.5 million for the three-month periods ended June 30, 2017 and September 30, 2016, respectively.

Net interest income for the three-month period ended September 30, 2017 totaled $6.6 million compared to $6.3 million for the previous quarter and $5.7 million for the same period of 2016.  The increase in interest income resulted from interest-earning asset growth from expansion of the Bay originated loan portfolio, selective investment purchases and the effects of the Hopkins Merger.  As of September 30, 2017, the remaining net loan discounts on the Bank’s loan portfolio totaled $7.2 million.

Noninterest income for the three-month period ended September 30, 2017 was $2.7 million, which included a $1.4 million insurance income gain. These results were lower when compared to the $2.4 million recorded for the three-month period ended September 30, 2016, which included a $1.0 million bargain purchase gain related to the Hopkins Merger. Adjusted for these merger related changes, Bay recorded a small decrease in noninterest income for the third quarter of 2017 when compared to the same period of 2016.

Noninterest expense reduction continues to be our focus for 2017 net income improvement.  For the three-month period ended September 30, 2017, noninterest expense was $5.3 million, compared to $7.2 million for the same period in 2016, or $5.8 million when adjusting for $1.4 million in merger expenses related to the Hopkins Merger in 2016.  After adjusting for the merger related expenses, the primary contributors to the change when compared to the third quarter of 2016 was a $0.5 million decrease in occupancy, legal, accounting and professional expenses. Loan collection costs were negative for the third quarter of 2017 as a result of larger than expected reimbursements of loan collection costs expensed during prior periods.


For the nine-month periods ended September 30, 2017 and 2016

Net income for the nine-month period ended September 30, 2017 was $4.4 million, compared to net income of $1.1 million for the nine-month period ended September 30, 2016.

Net interest income for the nine-month period ended September 30, 2017 totaled $18.8 million, compared to $15.3 million for the same period of 2016.  The increase in interest income resulted from interest-earning asset growth from expansion of the Bay originated loan portfolio, selective investment purchases and the effects of the Hopkins Merger.

Noninterest income for the nine-month period ended September 30, 2017 was $5.3 million, which included a $1.4 million insurance income gain. These results were $4.9 million recorded for the nine-month period ended September 30, 2016, which included a $1.0 million bargain purchase gain related to the Hopkins Merger.  After adjusting for these merger related changes, Bay recorded a similar results in noninterest income for the first nine months of 2017 when compared to the same period of 2016.

For the nine-month period ended September 30, 2017, noninterest expense was $15.7 million, compared to $19.0 million for the same period in 2016, or $16.1 million when adjusting for $1.6 million in merger expenses and $1.3 million in reverse mortgage subsidiary expenses related to the Hopkins Merger in 2016.  Adjusted for the merger related expenses, the primary contributor to the change when compared to the first nine months of 2016 was a decrease in occupancy, foreclosed property, legal, accounting and professional expenses.


Bay Bancorp, Inc. Information

Bay is a financial holding company and a savings and loan holding company headquartered in Columbia, Maryland.  Through the Bank, Bay serves the community with a network of 11 branches strategically located throughout the Baltimore Metropolitan Statistical Area, particularly Baltimore City and the Maryland counties of Baltimore Washington corridor.  The Bank serves small and medium size businesses, professionals and other valued customers by offering a broad suite of financial products and services, including on-line and mobile banking, commercial banking, cash management, mortgage lending and retail banking.  The Bank funds a variety of loan types including commercial and residential real estate loans, commercial term loans and lines of credit, consumer loans and letters of credit.  Additional information is available at www.baybankmd.com.
 

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on Bay. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Bay.  There can be no assurance that future developments affecting the Company will be the same as those anticipated by management.  These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions.  Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true.  These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements.  For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Bay with the Securities and Exchange Commission entitled “Risk Factors”.
 

For investor inquiries contact:

Joseph J. Thomas, President and CEO
410-536-7336
jthomas@baybankmd.com
7151 Columbia Gateway Drive,
Suite A
Columbia, MD 21046
 

For further information contact:

Larry D. Pickett, Chief Financial Officer
lpickett@baybankmd.com
410-312-5415

 

 

BOWIE, MD (September 27, 2017) — Old Line Bancshares, Inc. (NASDAQ Capital Market: OLBK), the parent company of Old Line Bank, and Bay Bancorp, Inc. (NASDAQ Capital Market: BYBK), the parent company of Bay Bank, FSB, today announced the execution of a definitive merger agreement (the “Merger Agreement”) that provides for the acquisition of Bay Bancorp by Old Line Bancshares for stock in a deal valued at approximately $128.6 million.  This amount is subject to change based on the trading prices of Old Line Bancshares common stock and the amount of after-tax income that Bay Bancorp or Bay Bank recognizes from the recent resolution of Bay Bank litigation and the resolution of certain problem loans. The merger consideration will be paid in newly issued shares of Old Line Bancshares common stock (“OLB Shares”).

 

Pursuant to the terms of the Merger Agreement, Bay Bancorp, with consolidated assets of approximately $646 million at June 30, 2017, will be merged with and into Old Line Bancshares, an institution with consolidated assets of approximately $2.0 billion after the completion of its merger with DCB Bancshares, Inc. on July 28, 2017, with Old Line Bancshares surviving the merger (the “Merger”). Immediately after the Merger, Bay Bank, FSB, a federal savings bank with 11 banking locations, will merge with and into Old Line Bank, a Maryland trust company with 28 banking offices, with Old Line Bank being the surviving bank. The Merger, anticipated to close in the second quarter of 2018, will be Old Line Bancshares’ fifth since 2011. The Merger is expected to be immediately accretive to its earnings, excluding the expenses of the Merger.

 

Craig E. Clark, Chairman of the Board of Directors of Old Line Bancshares, Inc., said, “the combination of Old Line Bank and Bay Bank will create the strongest footprint of any Maryland-based independent commercial bank serving the Baltimore/Washington corridor. The combined bank will have assets approaching $3 billion and, with full service banking offices serving Baltimore City and 11 counties, the combined institution will have the second-most banking locations in Maryland of all independent Maryland-based commercial banks.”

 

James W. Cornelsen, President and Chief Executive Officer of Old Line Bancshares, said, “we are extremely pleased to be joining with Bay Bank, an exceptional bank with strong dedication to its local depositors, creditors, employees and stockholders. This partnership expands and strengthens our presence in the Baltimore market following on our initial entry in December 2015. We believe that Bay Bank and Old Line Bank share a similar set of values and we look forward to building a strong and lasting partnership that will make Old Line Bank the premier bank in the Baltimore-Washington corridor.”

 

Joseph J. Thomas, President and Chief Executive Officer of Bay Bancorp, Inc., stated, “our merger with Old Line Bank will enable our stockholders to realize an attractive return and higher earnings growth potential going forward.  Bay clients will  enjoy a relationship with a bank that has a much larger branch footprint in the Baltimore Washington corridor, more accessibility with nearly 40 branches, a broader product array, and a larger legal lending limit. Our employees will have the opportunity to work for a market leading, Maryland headquartered, community bank with exceptional momentum and reputation.  I am delighted to be joining Old Line Bank’s Board of Directors to help facilitate the transaction and sustain the great momentum our colleagues at Bay Bank have achieved in recent years.”

 

Under the terms of the Merger Agreement, each share of Bay Bancorp common stock (“BYBK Shares”) will be exchanged for a number of OLB Shares (the “Per Share Consideration”) calculated by dividing $11.80 by the volume weighted average closing prices of Old Line Bancshares common stock for the 20 trading days ending five trading days before the closing date of the Merger (the “Average Price”), subject to a minimum Average Price of $25.65 and a maximum average price of $29.16 and adjustments for the proceeds recognized in the recent settlement of certain litigation and the resolution of certain loans. As such, the Per Share Consideration may be as low as 0.4047 OLB Shares if the Average Price is $29.16 or more and as high as 0.4600 OLB Shares if the Average Price is $25.65 or less, subject to the adjustments provided for in the Merger Agreement.  In addition to the parties’ other termination rights, the Merger Agreement provides that it may be terminated by Bay Bancorp if two adverse market price conditions are satisfied, subject to Old Line Bancshares’ right to cure by agreeing to increase the Per Share Consideration.

 

Pursuant to the Merger Agreement, Old Line Bancshares’ board of directors will elect Joseph J. Thomas, a current Bay Bancorp director, Eric D. Hovde, the Chairman of Bay Bancorp, and one other mutually-acceptable member of the Bay Bancorp board of directors to serve as directors of Old Line Bancshares and Old Line Bank.

 

The foregoing is intended only as a summary and is qualified in its entirety by reference to the terms of the Merger Agreement, which will be included as an exhibit to Old Line Bancshares’ Current Report on Form 8-K to be filed with the Securities and Exchange Commission (the “SEC”) on or about September 27, 2017.

 

The Merger Agreement provides that the effectiveness of the Merger is subject to customary closing conditions, including approval of the Merger by Old Line Bancshares’ and Bay Bancorp’s stockholders and applicable banking regulatory authorities.

 

FIG Partners, LLC acted as financial adviser to Old Line Bancshares and Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, acted as its legal counsel. Hovde Group, LLC acted as financial adviser to Bay Bancorp, Inc., RP Financial, LC provided the fairness opinion to Bay Bancorp and Gordon Feinblatt LLC acted as Bay Bancorp’s legal counsel.

 

Old Line Bancshares, Inc. is the parent company of Old Line Bank, a Maryland chartered trust company 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 28 banking locations located in its primary market area of suburban Maryland (Washington, D.C. suburbs, Southern Maryland and Baltimore suburbs) counties of Anne Arundel, Baltimore, Calvert, Carroll, Charles, Frederick, Montgomery, Prince George's and St. Mary's. It also targets customers throughout the greater Washington, D.C. and Baltimore metropolitan areas.

 

Bay Bancorp, Inc. is a financial holding company and a savings and loan holding company headquartered in Columbia, Maryland. Through Bay Bank, FSB, Bay Bancorp serves the community with a network of 11 branches strategically located throughout the Baltimore Metropolitan Statistical Area, particularly Baltimore City and the Maryland counties of Baltimore, Anne Arundel, Howard, and Harford. BayBank serves small- and medium-size businesses, professionals and other valued customers by offering a broad suite of financial products and services, including online and mobile banking, commercial banking, cash management, mortgage lending and retail banking, and is a leader in the payment sponsorship services space. Bay Bank funds a variety of loan types including commercial and residential real estate loans, commercial term loans and lines of credit, consumer loans and letters of credit. 

 

Additional Information and Where to Find It

 

In connection with the Merger, Old Line Bancshares will file with the SEC a registration statement on Form S-4 to register the shares of Old Line Bancshares common stock to be issued to the stockholders of Bay Bancorp. The registration statement will include a joint proxy statement/prospectus that will be sent to the stockholders of both Old Line Bancshares and Bay Bancorp seeking their approval of the Merger at meetings thereof to be called on dates to be set in the future. In addition, Old Line Bancshares and Bay Bancorp may file other relevant documents concerning the Merger with the SEC.

 

Security holders of Old Line Bancshares and Bay Bancorp are urged to read the registration statement on Form S-4 and the joint proxy statement/prospectus included within the registration statement and any other relevant documents to be filed with the SEC in connection with the Merger because they will contain important information about Old Line Bancshares, Bay Bancorp and the Merger. Stockholders of Old Line Bancshares and Bay Bancorp may obtain free copies of these documents and any other documents that Old Line Bancshares and Bay Bancorp may file with respect to the Merger when they become available through the website maintained by the SEC at www.sec.gov or by accessing Old Line Bancshares’ website at www.oldlinebank.com under “Investor Relations – SEC Filings” or Bay Bancorp’s website at www.baybankmd.com under “About Us – Investor Relations – SEC Filings.” The information on these websites is not, and shall not, be deemed to be a part of this release or incorporated into other filings that Old Line Bancshares or Bay Bancorp make with the SEC. Security holders of Old Line Bancshares may also obtain free copies of the joint proxy statement/prospectus, and any other documents related to the Merger that Old Line Bancshares files, when they become available, by directing a request by telephone or mail to Old Line Bancshares, Inc., 1525 Pointer Ridge Place, Bowie, Maryland 20716, Attention: Mark A. Semanie (telephone 301-430-2500).  Security holders of Bay Bancorp may also obtain free copies of the joint proxy statement/prospectus, and any documents related to the Merger that Bay Bancorp files, when they become available, by directing a request by telephone or mail to Bay Bancorp, Inc., Attention: Joseph J. Thomas, 7151 Columbia Gateway Drive, Suite A, Columbia, MD 21046 (telephone: 410-312-5400).

 

Old Line Bancshares, Bay Bancorp and their directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Old Line Bancshares and Bay Bancorp in connection with the Merger. Information regarding the interests of these participants and other persons who may, under the rules of the SEC, be deemed participants in the solicitation of proxies with respect to the Merger will be set forth in the proxy statement/prospectus when it is filed with the SEC. Additional information about the directors and executive officers of Old Line and their ownership of Old Line common stock is set forth in the definitive proxy statement for Old Line’s 2017 annual meeting of stockholders, as previously filed with the SEC on May 8, 2017 and available as noted above. Information about the directors and executive officers of Bay Bancorp and their ownership of Bay common stock is set forth in the definitive proxy statement for Bay Bancorp’s annual meeting of stockholders, as previously filed with the SEC on April 12, 2017. Copies of these proxy statements may be obtained free of charge as described above.

 

Conference Call

 

Old Line Bancshares will hold a conference call Thursday, September 28, 2017, at 10:00 a.m. Eastern Time to discuss the proposed transaction.  Interested parties may access the conference call by dialing 833-812-9306, and will be put into the call automatically after stating their first and last name.  Replays of the conference call will be available until November 28, 2017 by calling 855-859-2056, conference code 92430980.

 

Caution Regarding Forward-Looking Statements

 

The statements in this press release that are not historical facts, in particular the statements with respect to the expected timing of and benefits of the merger between Old Line Bancshares and Bay Bancorp, the parties’ plans, obligations, expectations and intentions, and that the acquisition of Bay Bancorp will become immediately accretive to Old Line Bancshares’ earnings, constitute “forward-looking statements” as defined by federal securities laws. 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. 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. Actual results could differ materially from those currently anticipated due to a number of factors, including, but not limited to: (1) the businesses of Bay Bancorp may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the Merger may not be fully realized or realized within the expected timeframe; (3) revenues following the Merger may be lower than expected; (4) customer and employee relationships and business operations may be disrupted by the Merger; (5) the ability to obtain required regulatory and stockholder approvals; (6) the ability to complete the Merger on the expected timeframe may be more difficult, time-consuming or costly than expected; (7) deterioration in economic conditions in our target markets or nationally; (8) changes in interest rates; (9) changes in laws, regulations, policies and guidelines impacting our ability to collect on outstanding loans or otherwise negatively impact our business; and (10) other risk factors detailed from time to time in filings made by Old Line Bancshares and Bay Bancorp with the SEC. Forward-looking statements speak only as of the date they are made. Neither Old Line Bancshares nor Bay Bancorp will update forward-looking statements to reflect factual assumptions, circumstances or events that have changed after a forward-looking statement was made.

 

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This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation, or sale is unlawful before registration or qualification of the securities under the securities laws of the jurisdiction. No offer of securities shall be made except by means of a prospectus satisfying the requirements of Section 10 of the Securities Act of 1933, as amended.

 

Columbia, Md. (September 21, 2017) — Bay Bank, the bank built by entrepreneurs for entrepreneurs, announced today that Jeff Schroll has joined the company as Senior Mortgage Loan Officer.

Schroll brings over 20 years of experience to the Bay Bank team and carries a certification in Construction Loans. He began his career in 1990 as part of the consumer finance team at Norwest Financials before accepting a position in mortgage banking at Maryland National Mortgage four years later. Prior to joining Bay Bank, Schroll held positions at Sandy Spring Bank and Citizen One Home Loans located in Annapolis.

“Our ability to provide comprehensive, personalized mortgage services is one of Bay Bank’s most distinct advantages that sets us apart from larger banks,” said Director of Mortgage Banking, Kyle Becraft. “With Jeff’s extensive background and expertise within mortgage banking, we’re thrilled to have him as part of the team.”

In this role, Schroll will help expand Bay Bank’s presence in the Baltimore-Washington mortgage banking market focusing on construction permanent mortgage loans. His primary responsibilities will be to form meaningful relationships with regional builders, assist consumers with construction/permanent financing for home building and support builders with builder line financing.

“I’m eager to join the Bay Bank team as they’ve proven to be a reliable and forward-thinking financial services solution for consumers throughout the region,” said Schroll. “As we continue to grow the mortgage banking division, our customers can expect a more comprehensive range of services and personalized customer service experiences than ever before.”

Schroll received his Bachelor of Arts degree in Economics from St. Mary’s College of Maryland. Under the strategic direction of Becraft, he will be located at Bay Bank’s corporate headquarters in Columbia, Maryland.

About Bay Bank

Bay Bank, FSB is headquartered in Columbia, Maryland, and serves the community with a network of 11 branches strategically located throughout the region. Founded in 2010, the bank has quickly developed a strong reputation for its focus on being the bank built by entrepreneurs, for entrepreneurs. The bank has total assets of around $646 million. The bank’s parent company, Bay Bancorp, Inc., trades on the NASDAQ Capital Market under the ticker symbol “BYBK.” For more information, please visit www.baybankmd.com.

 

Columbia, Md. (September 6, 2017) — Bay Bank, the bank built by entrepreneurs for entrepreneurs, today announced that Bryan Becraft and Jacob Gebhardt have joined the company as Relationship Management Analysts. This position was created by Bay Bank to exclusively train new employees who are interested in a professional banking career. The multi-faceted position that fuses mentorship and various certifications will engage new hires in all areas of banking and ultimately guide them on a clear career path within the industry. Becraft and Gebhardt will work under the close mentorship of Bay Bank’s Baltimore Market President, Todd Warren, and Corridor Market President, Richard Ohnmacht, respectively.

“This is the perfect role for those looking to become fully immersed in the banking world and Bay Bank’s dynamic work environment,” said Warren. “When we bring on employees and help them succeed, in turn, we are successful, as well as our clients. This position encompasses the right amount of training and mentorship to motivate and push recruits to new heights.”

As Relationship Management Analysts, Becraft and Gebhardt’s primary responsibilities include supporting and retaining client relationships, managing client portfolios, developing sales and lead generation expertise, assessing loan risk and ensuring quality assurance, among other duties. In addition, the new recruits will learn the various service level agreements and lending processes and gain exposure to different career specialties by partnering with Treasury Services and Mortgage Banking departments. The Omega and Baker Hill training programs, as well as numerous courses offered by the American Banking Association, will round out their knowledge of the industry. 

“This position not only ensures the quality of people we hire to help expand our business and deliver superior services to our clients, but also provides a clear career path for young professionals interested in learning what the banking industry has to offer,” said Ohnmacht. “We are excited to provide this level of coaching and hope to continue this program into the future.”

Becraft received his Bachelor of Science degree in Exercise Science from Towson University in 2014. Since, he has held several professional positions including Physical Therapy Technician at Evolution Sports Physiotherapy, Staffing Coordinator at Abacus Corporation and Technical Recruiter at TEKsystems.

A 2014 graduate of Towson University, Gebhardt received his Bachelor of Science degree in Accounting. During that time, he served as Treasurer for Towson University’s Men’s Lacrosse Club and was a member of Beta Alpha Psi. Upon graduation, he held the position of Financial Planning Associate at WMS Partners, LLC. Currently, Gebhardt volunteers as a coach for Charm City Lacrosse and serves on the board for the Old Line Society, a philanthropic organization catering to social and civically-minded young professionals in the Baltimore area.

Becraft will work from Bay Bank’s offices in Lutherville and Gebhardt will be located at the bank’s corporate headquarters in Columbia, Maryland.

About Bay Bank

Bay Bank, FSB is headquartered in Columbia, Maryland, and serves the community with a network of 11 branches strategically located throughout the region. Founded in 2010, the bank has quickly developed a strong reputation for its focus on being the bank built by entrepreneurs, for entrepreneurs. The bank has total assets of around $633 million. The bank’s parent company, Bay Bancorp, Inc., trades on the NASDAQ Capital Market under the ticker symbol “BYBK.”