Shares of Old Line Bancshares Inc. (OLBK) hit its 52-week high of $38.38 on Dec 3 on the back of solid third-quarter results and its efforts to strengthen its balance sheet.
Old Line Bancshares disposed about $22.6 million of loans acquired in the merger with Maryland Bankcorp, Inc. in the Apr 2011; merger with WSB Holdings, Inc. in May 2013 and the repurchase, from another bank, of participation on one of the WSB Holdings credit impaired loans.
This initiative will not only lower the costs of operating non-performing and underperforming assets, but will also help the company intensify focus on strong organic loan growth profile. Loans grew almost 32% year over year in the last reported quarter.
In September, Old Line Bancshares sold 0.9 million common shares to raise additional capital, which could be deployed in strategic opportunities.
With respect to earnings performance, after a dry spell of 3 quarters, Old Line Bancshares managed to deliver positive earnings surprise in the last reported quarter. Operating earnings came in at 22 cents per share, surpassing the Zacks Consensus Estimate by about 18%. The outperformance came on the back of an improved top line that also surpassed the estimate.
These positives caused the Zacks Consensus Estimate to move north by 21% to 63 cents over the last 30 days.
Valuation for Old Line Bancshares looks stretched. The shares are trading at a substantial premium to the peer group average on a forward price-to-earnings basis but at a discount on a price-to-book basis. Moreover, return on equity lags the return of the peer group. The 1-year return from the stock was 23.3%, below the Nasdaq’s return of 34.1%.
Old Line Bancshares presently carries a Zacks Rank #3 (Hold). Some better-ranked banking stocks include Arrow Financial Corp. (AROW), Center Bancorp, Inc. (CNBC) and CNB Financial Corp. (CCNE). All these stocks carry a Zacks Rank #1 (Strong Buy).