Old Line Bancshares Inc. in Bowie, Md., plans to acquire Maryland Bankcorp Inc. in a cash-and-stock deal valued at $20 million.
With the purchase of Maryland Bankcorp in Lexington Park, the $400 million-asset Old Line is seeking to expand in southern Maryland.
The deal, priced at $30.93 per share, or about 80% of Maryland Bankcorp's tangible book value, is expected to close in the first quarter of 2011.
The seller's bank unit, Maryland Bank and Trust, would be merged into Old Line Bank, the companies said in a press release Wednesday.
The deal would give Old Line $350 million more of assets and 10 additional branches, doubling its branch network.
In the press release, James W. Cornelsen, the president and chief executive of Old Line, said his company was attracted to Maryland Bankcorp's deposits, which totaled $297 million at June 30. Noninterest-bearing deposits made up 31% of total deposits, the highest percentage of such deposits of any Maryland-based commercial bank, the company said.
"MB&T over the years has built a core deposit base that is truly enviable in today's banking environment," Cornelsen said in the release.
Cornelsen said a nearly 87.5% anticipated increase in asset size was a motivator for the deal. The larger size would also provide the company with a significant reduction in overhead.
"By joining together with our southern Maryland neighbor, we envision being able to achieve significant cost savings of more than 35% over the next two years, and, take us a big step closer to reaching our goal of being Maryland's next $1 billion asset bank," he said in the release.
Although well-capitalized as of June 30, Maryland Bank & Trust has been burdened with credit problems.
At the end of the second quarter, noncurrent loans made up 5.17% of its total loans, an increase of 121 basis points from the end of 2009.
By comparison, the average noncurrent rate at the end of the second quarter for commercial banks in Maryland was 4.33%. Old Line's ratio was 1.62% for the same period.
Old Line said the deal would be accretive to earnings by the end of 2011.
Thomas B. Watts, chairman and chief executive of Maryland Bankcorp., and G. Thomas Daugherty, the company's president, are expected to join the board of Old Line.
"We have always been proud of being a Maryland-based community bank and by partnering with Old Line, we will continue that tradition," Watts said in the press release.
