- The Enterprise
- The Recorder
Prince George’s County’s largest locally owned bank agreed this week to purchase the county’s fourth-largest community bank for $49 million in cash and stock, executives said.
With the acquisition of WSB Holdings, parent of the Washington Savings Bank, Old Line Bank parent Old Line Bancshares will jump from the eighth-largest bank in Maryland deposits to the fifth.
Both banks have their headquarters in Bowie; both previously were in Waldorf.
The purchase, which is expected to close by June, comes at a time of increased merger and acquisition activity in the banking industry fueled by financial pressures such as lower interest rates that are squeezing banks’ profit margins and tougher regulatory capital requirements.
Community banks in regions that heavily participated in the real estate bubble, which include some in Maryland, are “still struggling with asset quality,” David G. Danielson, president of Bethesda banking consulting firm Danielson Associates, said in a recent report.
The acquisition is just the latest in a series of recent bank deals.
The parent of Baltimore area Bay Bank is buying Carrollton Bancorp of Columbia for $25 million in stock and cash. Sandy Spring Bancorp of Olney completed its $25.4 million purchase of CommerceFirst Bancorp of Annapolis in May. And in April, Sonabank of McLean, Va., took over most assets of the failing HarVest Bank of Maryland in Gaithersburg.
Washington Savings, which has five branches and formed in 1982, saw its assets dip by 4 percent to $372.8 million and deposits drop by 3 percent to $251.1 million in the past year, according to the Federal Deposit Insurance Corp. The institution was hit hard by the Great Recession, losing $5.5 million in 2009, although the bank remained highly capitalized with its total risk-based capital ratio at almost 20 percent in June. Anything above 10 percent is considered well capitalized.
Meanwhile, Old Line remained profitable during the recession and, in fact, has a string of 73 consecutive profitable quarters. The institution’s assets grew by about 12 percent in the past year to $846 million, while deposits increased by 11.2 percent to $719.8 million.
After the transaction closes, Old Line will have more than $1.2 billion in total assets in 24 branches in Prince George’s, Anne Arundel, Calvert, Charles and St. Mary’s counties. The bank’s Maryland deposits will rise to some $906 million.
As of last year, Old Line had $285 million in deposits in Prince George’s County alone, more than any other state-based bank. Washington Savings had $96 million in the county, behind Old Line, Columbia Bank of Columbia and Revere Bank of Laurel.
Old Line had 171 employees on June 30, up from 157 a year earlier, according to the FDIC. Washington Savings had 105 workers, down two from a year earlier.
Old Line is not contemplating consolidating branches “at this time,” CFO Christine M. Rush said Tuesday.
“It’s an opportune time in the market,” Rush said.
After completing its acquisition of Maryland Bankcorp, the parent company of Maryland Bank & Trust, a little more than a year ago, Old Line executives looked around for other reasonable deals, she said.
The acquisition will better serve customers “by expanding branch network and expanding our banking services with the addition of a successful and growing mortgage origination team,” James W. Cornelsen, president and CEO of Old Line, said in a statement.
Phillip C. Bowman, CEO of WSB Holdings, said in a statement that numerous state banks have been purchased by non-Maryland institutions in the past decade, and this deal “is a step toward beginning to fill that void.”
Old Line was founded in 1989 originally as a national bank and converted to a Maryland charter in 2002. WSB board Chairman William Harnett and director Michael Sullivan will join Old Line’s board after the deal closes, subject to regulatory review.