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Old Line Bank acquiring Washington Savings Bank

Monday - 9/10/2012, 8:06pm  ET

There will soon be one less bank headquartered in Prince George's County.

Old Line Bancshares Inc. (Nasdaq: OLBK), the parent company of Old Line Bank, is acquiring WSB Holdings Inc. (Nasdaq: WSB), parent of The Washington Savings Bank, for $49 million in cash and stock. Both institutions are based in Bowie.

The purchase, announced after the markets closed Monday, is expected to close in the second quarter of 2013 and amounts to 88 percent of WSB's book value. This deal, another in a spurt of local bank mergers and acquisitions , is the fifth transaction announced in the past few months.

Old Line has $846 million in assets and 19 branches. WSB has $374 million in assets and five branches. The combined bank will be the ninth largest bank headquartered in the Washington area, based on June 30 assets — just a hair smaller than Middleburg Bank.

"They're a good match with us," said Old Line CEO Jim Cornelson in an interview, adding that Old Line was attracted to WSB's branch locations and its home mortgage lending division.

Under terms of the deal, WSB shareholders can elect to receive 0.5608 shares of Old Line stock or $6.09 for each share of WSB stock they own, subject to adjustment. Barring any changes, the stock/cash mix will be 65 percent/35 percent, consisting of about 2,917,571 shares of Old Line stock and $17 million in cash.

While Old Line Bank came through the downturn much stronger than most banks, WSB was hit hard during the recession, losing $9.6 million between 2009 and 2010. It swung to a $1.2 million profit in 2011 and has posted $452,222 in earnings so far in 2012.

"A lot of banks have gone through the tough times, and certainly banks are on their way to recovering, one way or another," Cornelson said. "Washington Savings Bank falls into that category. They've turned their financials around."

The deal comes about a year and a half after Old Line completed its acquisition of Maryland Bankcorp Inc., a transaction that nearly doubled Old Line's size.

As part of the current deal, WSB Chairman William Harnett and director Michael Sullivan will get board seats at Old Line. Cornelson said there has been no decision yet on whether WSB CEO Phillip Bowman will make the transition to Old Line or what his role will be.

Dave Danielson of Danielson Associates in Bethesda acted as financial adviser to Old Line, and Ober, Kaler, Grimes & Shriver PC was the legal counsel. RP Financial, LC provided the fairness opinion to WSB Holdings, and Gordon Feinblatt LLC acted as its legal counsel.