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Old Line Bank and Bay Bancorp Announce Execution of Merger Agreement

Bowie, Md. – September 27, 2017

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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, Eric D. Hovde 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 is the parent company of Old Line Bank, a Maryland chartered commercial bank 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 more than 35 branches located in its primary market area of suburban Maryland (Washington, D.C. suburbs, Southern Maryland and Baltimore suburbs) counties of Anne Arundel, Baltimore, Baltimore City, Calvert, Carroll, Charles, Frederick, Harford, Howard, 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.


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