As filed with the U.S. Securities and Exchange Commission on October 6, 2016

 

Registration No. 333-_____

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

Old Line Bancshares, Inc.

(Exact name of registrant as specified in its charter)

 

 

1525 Pointer Ridge Place

Bowie, Maryland 20716

(301) 430-2500

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

James W. Cornelsen

President and Chief Executive Officer

Old Line Bancshares, Inc.

1525 Pointer Ridge Place

Bowie, Maryland 20716

(301) 430-2500

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

With copies to:

Frank C. Bonaventure, Esq.

Ober, Kaler, Grimes & Shriver, a Professional Corporation

100 Light Street

Baltimore, Maryland 21202

(410) 685-1120

 

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

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If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

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If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

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The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such dates as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

Offer to Exchange

 

$35,000,000 aggregate principal amount of 5.625% Fixed-to-Floating Rate Subordinated Notes due 2026

 

the offer and sale of which have been registered under the Securities Act of 1933

 

for any and all outstanding unregistered 5.625% Fixed-to-Floating Rate Subordinated Notes due 2026

 

 

We are offering to exchange 5.625% Fixed-to-Floating Rate Subordinated Notes due 2026, the offer and sale of which have been registered under the Securities Act of 1933, which we refer to as the “New Notes,” for any and all of our outstanding unregistered 5.625% Fixed-to-Floating Rate Subordinated Notes due 2026 that were issued in a private offering on August 15, 2016, which we refer to as the “Old Notes.”  We are offering to exchange the New Notes for the Old Notes to satisfy our obligations contained in the registration rights agreement that we entered into in connection with the issuance of the Old Notes.  We will not receive any additional proceeds from the exchange offer, and issuance of the New Notes will not increase our outstanding debt.

 

The terms of the New Notes are identical in all material respects to the terms of the Old Notes, except that the New Notes will be issued in a transaction registered under the Securities Act of 1933, as amended (the “Securities Act”) and, accordingly, generally will not be subject to transfer restrictions affecting nonaffiliate transferors.  Because this exchange offer satisfies certain of our obligations relating to the Old Notes, the New Notes do not carry registration rights and do not have the right to earn additional interest under circumstances related to our registration obligations.  The New Notes evidence the same debt as the Old Notes and are governed by the same indenture under which the Old Notes were issued.

 

We do not intend to list the New Notes on any securities exchange or seek approval for quotation through any automated trading system.  There is currently no public market for the New Notes.

 

You may withdraw your tender of Old Notes at any time prior to the expiration of the exchange offer.  We will exchange all of the outstanding Old Notes that are validly tendered and not validly withdrawn prior to the expiration of the exchange offer for an equal principal amount of New Notes.

 

The exchange offer will expire at 11:59 p.m., New York City time, on [], 2016, unless we extend the exchange offer.  All untendered Old Notes will continue to be subject to the restrictions on transfer set forth in the Old Notes and in the related indenture.  In general, the Old Notes may not be offered or sold except in transactions that are registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws.  We currently do not anticipate that we will register the resale of the Old Notes under the Securities Act.

 

Each broker-dealer that receives New Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes.  A broker-dealer that acquired Old Notes because of market-making or other trading activities may use this prospectus, as supplemented or amended from time to time, in connection with resales of the New Notes for a period of 180 days after the completion of the exchange offer.  We have agreed to make this prospectus, as amended or supplemented, available to any such broker-dealer that requests copies of this prospectus in the letter of transmittal for use in connection with any such resale.  See “Plan of Distribution.”

 

See “Risk Factors” beginning on page 12 for a discussion of certain risks that you should consider in connection with the exchange offer.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus.  Any representation to the contrary is a criminal offense.

 

The date of this prospectus is [], 2016.

 

 

TABLE OF CONTENTS

 

 

This prospectus is part of a registration statement we filed with the Securities and Exchange Commission (“SEC”).  We are submitting this prospectus to holders of Old Notes so that they can consider exchanging their Old Notes for New Notes.  You should rely only on the information contained or incorporated by reference in this prospectus and in the accompanying transmittal documents.  We have not authorized any other person to provide you with any other information.  If anyone provides you with different or inconsistent information, you should not rely on it.  You should not assume that the information contained or incorporated by reference in this prospectus is accurate as of any date other than the date of the applicable document that contains that information.  Our business, financial condition, results of operations and prospects may have changed since that date.  We are not making this exchange offer in jurisdictions where the exchange offer is not permitted.

 

This prospectus incorporates important business and financial information about us that is not included in or delivered with this prospectus.  Such information is available without charge to holders of Old Notes upon written or oral request made to: Old Line Bancshares, Inc., 1525 Pointer Ridge Place, Bowie, Maryland 20716, ATTN: Mark A Semanie, telephone: (301) 430-2500.  To obtain timely delivery of any requested information, holders of Old Notes must make any request no later than [●], 2016, five business days before the expiration date of the exchange offer, or, if we decide to extend the expiration date of the exchange offer, five business days before such extended expiration date.

 

In this prospectus, unless the context requires otherwise, “Old Line Bancshares,” the “Company,” “we,” “our” and “us” refer to Old Line Bancshares, Inc. and, when discussing its history, business, operations and financial condition, Old Line Bancshares, Inc. on a consolidated basis with its subsidiaries, including Old Line Bank, and references to the “Bank” refer to Old Line Bank.  We refer to the Old Notes and the New Notes collectively as the “notes.”

 

 

WHERE YOU CAN FIND MORE INFORMATION

 

We are subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  In accordance with the Exchange Act, we file reports, proxy statements and other information with the SEC.  Such reports, proxy statements and other information filed by us are available to the public free of charge at www.sec.gov.  Copies of certain information filed by us with the SEC are also available on our website at www.oldlinebank.com.  Our website is not a part of this prospectus and is not incorporated by reference in this prospectus.  You may also read and copy any document we file with the SEC, including the registration statement on Form S-4 of which this prospectus forms a part, the documents incorporated by reference herein and therein, any supplements to this prospectus, and the exhibits to the registration statement, at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549.  You may obtain information on the operation of the public reference facilities by calling the SEC at 1-800-SEC-0330.

 

This prospectus omits some information contained in the registration statement of which this prospectus forms a part in accordance with SEC rules and regulations.  You should review the information and exhibits in the registration statement for further information about us and the securities we are offering.  Statements in this prospectus concerning any document we filed as an exhibit to the registration statement or that we otherwise filed with the SEC are not intended to be comprehensive and are qualified by reference to these filings.  You should review the complete document to evaluate these statements.

 

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

SEC rules allow us to “incorporate by reference” into this prospectus much of the information we file with the SEC, which means that we can disclose important information to you by referring you to those publicly available documents.  The information that we incorporate by reference into this prospectus is considered to be part of this prospectus.  This prospectus incorporates by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act (in each case, other than those documents or the portions of those documents deemed to be furnished and not filed in accordance with SEC rules) until the offering of the securities under the registration statement of which this prospectus forms a part is terminated or completed:

 

 

 

 

 

We also specifically incorporate by reference any documents filed by us with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than portions of these documents that are either (1) described in paragraph (e) of Item 201 of Regulation S-K or paragraphs (d)(1)-(3) and (e)(5) of Item 407 of Regulation S-K promulgated by the SEC or (2) furnished under Item 2.02 or Item 7.01 of a Current Report on Form 8-K, unless otherwise indicated therein) after the date of this prospectus and prior to the termination of the offerings under this prospectus.  The information contained in any such document will automatically be considered part of this prospectus from the date the document is filed with the SEC.  Any information contained in this prospectus or in any document incorporated or deemed to be incorporated by reference in this prospectus will be deemed to have been modified or superseded to the extent that a statement contained in this prospectus, in any other document we subsequently file with the SEC that is also incorporated or deemed to be incorporated by reference in this prospectus or in the applicable prospectus supplement, modifies or supersedes the original statement.  Any statement so modified or superseded will not be deemed, except as so modified or superseded, to be a part of this prospectus.  In no event, however, will any of the

information that we “furnish” to the SEC in any current report on Form 8-K or any other report or filing be incorporated by reference into, or otherwise included in, this prospectus.  Because we are incorporating by reference future filings with the SEC, this prospectus is continually updated and later information filed with the SEC may update and supersede some of the information included or incorporated by reference in this prospectus.  This means that you must look at all of the SEC filings that we incorporate by reference to determine if any of the statements in this prospectus or in any document previously incorporated by reference have been modified or superseded.

 

We will provide without charge to each person, including any beneficial owners, to whom this prospectus is delivered, upon his, her or its written or oral request, a copy of any or all documents referred to above that have been or may be incorporated by reference into this prospectus but not delivered with this prospectus, excluding exhibits to those documents unless they are specifically incorporated by reference into those documents.  You may request a copy of these documents by writing or telephoning us at the following address:

 

Mark A. Semanie

Executive Vice President and Chief Operating Officer

Old Line Bancshares, Inc.

1525 Pointer Ridge Place

Bowie, Maryland 20716

(301) 430-2500

 

TO OBTAIN TIMELY DELIVERY OF ANY REQUESTED INFORMATION, HOLDERS OF OLD NOTES MUST MAKE ANY REQUEST NO LATER THAN [], 2016, FIVE BUSINESS DAYS BEFORE THE EXPIRATION OF THE EXCHANGE OFFER, OR, IF WE DECIDE TO EXTEND THE EXPIRATION DATE OF THE EXCHANGE OFFER, FIVE BUSINESS DAYS BEFORE SUCH EXTENDED EXPIRATION DATE.

 

You should rely only on the information contained or incorporated by reference in this prospectus.  We have not authorized anyone to provide you with information that is different from what is contained in this prospectus.  This prospectus is dated October 6, 2016.  You should not assume that the information contained in this prospectus is accurate as of any date other than that date.

 

FORWARD-LOOKING STATEMENTS 

 

This prospectus, and the documents incorporated herein by reference, certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.  We may also include forward-looking statements in other statements that we make.  All statements that are not descriptions of historical facts are forward-looking statements.  Forward-looking statements often use words such as “believe,” “expect,” “plan,” “may,” “will,” “should,” “project,” “contemplate,” “anticipate,” “forecast,” “intend” or other words of similar meaning.  You can also identify them by the fact that they do not relate strictly to historical or current facts.  The statements presented herein with respect to the expected reduction in certain non-interest expenses resulting from the closing of three branches on September 30, 2016 as well as the elimination of a number of positions during the second quarter of 2016, may constitute forward-looking statements.

 

We base these statements on our beliefs, assumptions and on information available to us as of the date of this prospectus, which involves risks and uncertainties.  Many events or factors could affect our future financial results and performance and could cause those results or performance to differ materially from those expressed in our forward-looking statements.  These risks are described in detail in our Annual Report on Form 10-K for the year ended December 31, 2015, incorporated by reference into this prospectus.  These risks include, but are not limited to, the following: our ability to retain key personnel; our ability to successfully implement our growth and expansion strategy; risk of loan losses; that the allowance for loan losses may not be sufficient; that changes in interest rates and monetary policy could adversely affect Old Line Bancshares; that changes in regulatory requirements and/or restrictive banking legislation may adversely affect Old Line Bancshares; that the market value of our investments could negatively impact stockholders’ equity; risks associated with or lending limit; expenses associated with operating as a public company; deterioration in general economic conditions or a return to recessionary conditions; and changes in competitive, governmental, regulatory, technological and other factors which may affect us specifically or the banking industry generally.  These

risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

 

The forward-looking statements included in this prospectus are made only as of the date of this prospectus and we undertake no obligation to update any statement in light of new information or future events.  Further information concerning us and our business, including additional factors that could materially affect our financial results, is included in our filings with the SEC.  See “Where You Can Find More Information.”

 

SUMMARY

 

The following information is a summary of the significant terms of the exchange offer and other information contained elsewhere or incorporated by reference in this prospectus.  The summary is qualified in its entirety by the more detailed information and the financial statements and related notes included or incorporated by reference into this prospectus.  You should carefully read this prospectus to understand fully the terms of the exchange offer, as well as other considerations that are important to you in making a decision about whether to participate in the exchange offer.  You should pay special attention to the “Risk Factors” section beginning on page 12 of this prospectus.

 

Old Line Bancshares, Inc.

 

General

 

We were incorporated under the laws of the State of Maryland on April 11, 2003 to serve as the holding company of Old Line Bank.  Our primary business is to own all of the capital stock of Old Line Bank. 

 

We are headquartered in Bowie, Maryland, approximately ten miles east of Andrews Air Force Base and 20 miles east of Washington, D.C.  We engage in a general commercial banking business, making various types of loans and accepting deposits.  We market our financial services to small to medium sized businesses, entrepreneurs, professionals, consumers and high net worth clients.  Our current market area consists of the suburban Maryland counties of Anne Arundel, Calvert, Charles, Montgomery, Prince George’s and St. Mary’s (Washington, D.C. suburbs) and Baltimore and Carroll (Baltimore City suburbs).

 

Our principal source of revenue is interest income and fees generated by lending and investing funds on deposit.  We typically balance the loan and investment portfolio towards loans.  Generally speaking, loans earn more attractive returns than investments and are a key source of product cross sales and customer referrals.  Our loan and investment strategies balance the need to maintain adequate liquidity via excess cash or federal funds sold with opportunities to leverage our capital appropriately.

 

Old Line Bank is a trust company chartered by the State of Maryland.  Old Line Bank was originally chartered in 1989 as a national bank under the title “Old Line National Bank.”  Old Line Bank converted to a Maryland chartered trust company exercising the powers of a commercial bank in June 2002, and does not exercise trust powers - its regulatory structure is the same as a Maryland chartered commercial bank.  Old Line Bank is regulated by the Maryland Commissioner of Financial Regulation (the “Commissioner”) and by the Federal Deposit Insurance Corporation (“FDIC”) and is subject to regulation, supervision and regular examination by the Commissioner and the FDIC.  Old Line Bank’s deposits are insured to the maximum legal limits by the FDIC. 

 

In June 2012, we established Old Line Financial Services as a division of Old Line Bank and hired an individual with over 25 years of experience to manage this division.  Old Line Financial Services allows us to expand the services we provide our customers to include retirement planning and products.  Additionally, this division offers investment services including investment management, estate and succession planning and allows our customers to directly purchase individual stocks, bonds and mutual funds.  Through this division customers may also purchase life insurance, long term care insurance and key man/woman insurance.

 

As of June 30, 2016, we had consolidated assets, deposits and stockholders’ equity of approximately $1.6 billion, $1.3 billion and $149.2 million, respectively.

 

Our principal executive offices are located at 1525 Pointer Ridge Place, Bowie, Maryland 20716.  Our telephone number is (301) 430-2500.  Our website address is www.oldlinebank.com.  The information on our website is not part of this prospectus.

 

Recent Acquisitions

 

Regal Bancorp, Inc.  On December 4, 2015, we completed our acquisition of Regal Bancorp, Inc., the parent company of Regal Bank & Trust (“Regal Bank”).  Immediately thereafter Regal Bank was merged with and into Old Line Bank, with Old Line Bank the surviving bank.  We acquired Regal Bank’s three branches in the merger, facilitating Old Line Bank’s entry into the Baltimore County and Carroll County, Maryland markets.  The merger strengthened Old Line Bank’s status as the third largest independent commercial bank based in Maryland, with assets of more than $1.4 billion at closing and 23 full service branches serving eight Maryland counties.

 

WSB Holdings, Inc.  On May 10, 2013, Old Line Bancshares acquired WSB Holdings, Inc., the parent company of The Washington Savings Bank, F.S.B. (“WSB”).  In connection with the acquisition, WSB was merged with and into Old Line Bank, with Old Line Bank the surviving bank.  We acquired five WSB branches, its headquarters building and its established mortgage origination group in this acquisition.  The mortgage origination group originates residential real estate loans for our portfolio and loans classified as held for sale to be sold in the secondary market.  Two of the acquired branches were closed on December 31, 2014 and two more have been targeted for closure in September 2016, as discussed below under “— Recent Developments — 2016 Organizational Review.”  This acquisition increased Old Line Bancshares, Inc.’s total assets by more than $310 million immediately after closing.

 

Maryland Bankcorp, Inc.  On April 1, 2011, Old Line Bancshares acquired Maryland Bankcorp, Inc., the parent company of Maryland Bank & Trust Company, N.A. (“MB&T”).  In connection with the acquisition, MB&T was merged with and into Old Line Bank, with Old Line Bank the surviving bank.  The acquisition of MB&T’s ten full-service branches expanded our market presence in Calvert and St. Mary’s Counties.  The acquisition increased Old Line Bancshares’ total assets by more than $340 million immediately after closing to approximately $750 million.  Two of the acquired branches were closed on December 31, 2014.

 

Recent Developments

 

2016 Organizational Review

 

In June 2016, our management conducted an organizational review that identified areas of job overlap as well as areas requiring improved staffing efficiencies.  As a part of this process several departments were identified for small strategic reductions in order to maintain competitive efficiency levels.  The implementation of this organizational review is expected to produce quarterly savings in salaries, benefits and taxes of approximately $285,000. 

 

In addition, on July 5, 2016, we announced plans to realign Old Line Bank’s branch offices within our market area, which includes the closing and consolidation of three branches.  We closed the Accokeek, Bowie-Mitchellville Road and Odenton branches on September 30, 2016, which is expected to further reduce salaries and benefits, taxes and operational expenses.  These closings and consolidations are a result of an evaluation that measured near-term growth potential in the current locations as well as Old Line Bank’s ability to continue to service clients’ needs at nearby locations.

 

Pointer Ridge

 

On August 19, 2016, Old Line Bank purchased the aggregate 37.5% interest in Pointer Ridge Office Investment, LLC (“Pointer Ridge”) not held by Old Line Bancshares for an aggregate of $280,139 pursuant to Agreements of Purchase and Sale of Membership Interests that the Bank entered into with each of the prior owners of the remaining (in aggregate) 37.5% interest in Pointer Ridge.  Pointer Ridge owns our headquarters building, which we lease from Pointer Ridge.

 

An entity controlled by Frank Lucente, a director of Old Line Bancshares and Old Line Bank, owned 12.50% of Pointer Ridge and therefore received at the closing of the transaction a portion of the purchase price equal to $93,380. 

 

On September 2, 2016, we paid off the entire $5.8 million principal amount of a promissory note previously issued by Pointer Ridge, for which Old Line Bancshares had guaranteed payment of up to 62.50% of any loan payments plus any costs the lender incurred resulting from any omissions or alleged acts by Pointer Ridge.  Upon the Bank’s purchase of the remaining 37.5% interest in Pointer Ridge, the entire principal amount of the promissory note, which matured on September 5, 2016, became our obligation.

 

At a later date, we intend to transfer Old Line Bancshares, Inc.’s ownership interest in Pointer Ridge to the Bank and then dissolve Pointer Ridge. 

 

The Exchange Offer

 

The following summary is provided solely for your convenience.  You should read the full text and more specific details contained elsewhere in this prospectus.

 

 

 

Summary of the New Notes

 

 

 

RISK FACTORS

 

An investment in the notes involves certain risks.  You should carefully consider the risk factors and other information included or incorporated by reference in this prospectus before making an investment decision.  In particular, you should carefully consider, among other things, the matters discussed below and under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, which are incorporated herein by reference.  The risks described below and incorporated by reference herein are not the only risks we face.  Any of these risks could materially affect our business, financial condition or results of operations, as could additional risks or uncertainties not currently known to us or that we currently believe to be immaterial.  If any of the events or circumstances described in these risks actually occur, our business, financial condition or results of operations could suffer, our ability to pay interest on the notes when due or to repay the notes at maturity could be materially adversely affected, and the trading price of the notes could decline substantially.

 

Risks Related to the Exchange Offer

 

If you do not properly tender your Old Notes, you will continue to hold unregistered Old Notes and your ability to transfer Old Notes will be adversely affected.

 

We will only issue New Notes in exchange for Old Notes that you timely and properly tender.  Therefore, you should allow sufficient time to ensure timely delivery of the Old Notes and you should carefully follow the instructions on how to tender your Old Notes.  Neither we nor the exchange agent is required to tell you of any defects or irregularities with respect to your tender of Old Notes.  Please see “The Exchange Offer — Procedures for Tendering Old Notes.”

 

If you do not exchange your Old Notes for New Notes in the exchange offer, you will continue to be subject to the restrictions on transfer of your Old Notes described in the legend on the certificates for your Old Notes.  In general, you may only offer, sell pledge or transfer the Old Notes if the offer and sale of the Old Notes are registered under the Securities Act and applicable state securities laws, or you offer and sell your Old Notes under an exemption from these requirements.  We do not plan to register any offer or sale of the Old Notes under the Securities Act.  For further information regarding the consequences of failing to exchange your Old Notes in the exchange offer, please see “The Exchange Offer — Consequences of Failure to Exchange.”

 

Some holders who exchange their Old Notes may be deemed to be underwriters.

 

If you exchange your Old Notes in the exchange offer for the purpose of participating in a distribution of the New Notes, you may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction.

 

Risks Relating to the Notes

 

The risks discussed below relate to both the New Notes and the Old Notes, as the New Notes are identical in all material respects to the Old Notes (subject to certain limited exceptions discussed elsewhere in this prospectus).  As a result, you should not infer that risks applicable to the New Notes are different from the risks applicable to the Old Notes, or that this exchange offer materially modifies the risks attendant to the Old Notes.

 

We cannot make payments on the notes if we default on our obligations that are more senior. 

 

Our obligations under the notes are unsecured and rank junior to:

 

 

in each case, whether outstanding on the date that we entered into the indenture or arising after that time.

 

This means that we cannot pay our obligations under the notes if we default on payments under any of these senior obligations, or if any of these senior obligations accelerate or any judicial proceeding with respect to a default is pending.  If we liquidate, go bankrupt or dissolve, we would be able to pay under the notes only after we have paid all of our liabilities that are senior to the notes.  As of June 30, 2016, on a consolidated basis, the outstanding indebtedness and other liabilities of Old Line Bancshares totaled approximately $1.4 billion, which includes approximately $1.3 billion of deposit liabilities and $3.6 million of outstanding promissory notes that rank structurally senior to the notes.  As of June 30, 2016, we also had approximately $6.7 million of outstanding trust preferred subordinated debentures that ranks junior to the notes.  The indenture does not limit the amount indebtedness senior to the notes that we may incur.  For more information on the subordination of payments under the notes, see “Description of the Notes—Subordination of the Notes.”

 

The notes are not guaranteed by, and will be structurally subordinated to, all indebtedness of Old Line Bank.

 

The notes are not obligations of, or guaranteed by, Old Line Bank.  As a result, our right and the rights of our creditors, including holders of the notes, to participate in any distribution of assets of our subsidiary Old Line Bank upon its liquidation, reorganization or otherwise would be subject to the prior claims of Old Line Bank’s creditors.  In the event of any such distribution of assets of Old Line Bank, the claims of depositors and other general or subordinated creditors of Old Line Bank would be entitled to priority over the claims of holders of the notes.  As of June 30, 2016, the Bank had outstanding approximately $1.4 billion in financial obligations that would effectively rank senior to the notes in case of liquidation or reorganization, such as deposit liabilities. 

 

The notes are not secured by the assets of Old Line Bancshares or Old Line Bank.

 

The notes are unsecured obligations of Old Line Bancshares.  The notes will be effectively subordinated to current and future secured debt to the extent of the value of the collateral securing such debt.  In addition, we may incur additional secured debt, and the notes will be effectively subordinated to any such additional secured debt we may incur to the extent of the value of the collateral securing such debt.

 

We are a holding company, and banking laws and regulations could limit our access to funds from Old Line Bank with the result that we may not have access to sufficient cash to make payments on the notes.

 

Old Line Bancshares is a legal entity separate and distinct from Old Line Bank.  Virtually all of our source of funds to service our debt, including the notes, is dividends paid to us by Old Line Bank.  Under Maryland law, Old Line Bank may declare a cash dividend, after providing for due or accrued expenses, losses, interest and taxes, from its undivided profits or, with the prior approval of the Commissioner, from its surplus in excess of 100% of its required capital stock.  Also, if Old Line Bank’s surplus is less than 100% of its required capital stock, then, until its surplus is 100% of its capital stock, Old Line Bank must transfer to its surplus annually at least 10% of its net earnings and may not declare or pay any cash dividends that exceed 90% of its net earnings.  In addition to these specific restrictions, the FDIC has the ability to prohibit or limit proposed dividends if it determines that the payment of such dividends would

result in the Bank being in an unsafe and unsound condition.  Further, pursuant to the Commissioner’s approval of the merger between Old Line Bank and Regal Bank, the Bank is prohibited from paying dividends to Old Line Bancshares without prior written approval of the Commissioner until December 5, 2016, although the Bank has never been denied such approval when requested.

 

Accordingly, we can provide no assurance that we will receive dividends or other distributions from Old Line Bank in an amount sufficient to pay interest on or principal of the notes.

 

The total amount available for payment of dividends by Old Line Bank to Old Line Bancshares was approximately $6.0 million at June 30, 2016, based on Old Line Bank maintaining enough capital to remain “well capitalized” under regulatory guidelines. 

 

The notes are subject to limited rights of acceleration.

 

Payment of principal of the notes may be accelerated only in the case of certain events of default, as described herein, relating certain bankruptcy, insolvency or receivership events with respect to us.  Thus, you have no right to accelerate the payment of principal of the notes if we fail to pay principal of or interest on the notes or if we fail in the performance of any of our other obligations under the notes.

 

The limited covenants relating to the notes do not protect you.

 

The covenants in the indenture are limited.  In addition, the notes and the indenture do not limit our or Old Line Bank’s ability to issue additional subordinated notes or to incur additional debt, including Senior Indebtedness.  As a result, the indenture does not protect you in the event of an adverse change in our financial condition or results of operations.

 

There may be no active market for the notes.

 

The notes are a new issue of securities with no established trading market.  We do not intend to apply for listing of the notes on any national securities exchange.  The initial purchasers have advised us that they presently intend to make a market in the notes.  However, the initial purchasers are not under any obligation to do so and any of the initial purchasers may discontinue any market-making activities at any time without notice.  A liquid or active trading market for the notes may not develop.  If an active trading market for the notes does not develop, the market price and liquidity of the notes may be adversely affected.  If the notes are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, our performance and other factors.

 

Our indebtedness could adversely affect our financial results and prevent us from fulfilling our obligations under the notes.

 

In addition to our currently outstanding indebtedness, we may be able to borrow substantial additional unsecured indebtedness in the future.  If we incur new indebtedness in addition to our current debt levels, the related risks that we now face could increase.

 

Our indebtedness, including the indebtedness we may incur in the future, could have important consequences for the holders of the notes, including:

 

 

 

 

 

 

 

Our business operations may not generate the cash needed to service our indebtedness.

 

Our ability to make payments on our indebtedness, including the notes, and to fund planned capital expenditures will depend on our ability to generate cash in the future.  We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay interest on and principal of our indebtedness, including the notes, or to fund our other liquidity needs.

 

A downgrade in our credit ratings or the ratings of Old Line Bank could have a material adverse impact on us.

 

Rating agencies continuously evaluate Old Line Bancshares and Old Line Bank, and their ratings of our and Old Line Bank’s long-term and short-term debt are based on a number of factors, including financial strength, as well as factors not entirely within our control, such as conditions affecting the financial services industry generally.  In addition, ratings agencies have themselves been subject to scrutiny arising from the 2007-2008 market crash and there is no assurance that rating agencies will not make or be required to make substantial changes to their ratings policies and practices or that such changes would not affect ratings of our securities or of securities in which we have an economic interest.  In light of this, there can be no assurance that Old Line Bancshares or Old Line Bank will maintain current credit ratings.

 

Ratings downgrades by a rating agency could have a significant and immediate impact on our funding and liquidity through cash obligations, reduced funding capacity and collateral triggers.  A reduction in Old Line Bancshares’ or Old Line Bank’s credit ratings could also increase our borrowing costs and limit our access to the capital markets.  Downgrades in the credit or financial strength ratings assigned to the counterparties with whom we transact could create the perception that our financial condition will be adversely impacted as a result of potential future defaults by such counterparties.  Additionally, we could be adversely affected by a general, negative perception of financial institutions caused by the downgrade of other financial institutions.  Accordingly, ratings downgrades for other financial institutions could affect the market price of our stock and could limit access to or increase our cost of capital.

 

The notes are not insured or guaranteed by the Federal Deposit Insurance Corporation.

 

The notes are not savings accounts, deposits or other obligations of Old Line Bank and are not insured or guaranteed by the FDIC or by any other governmental agency or instrumentality.

 

SELECTED FINANCIAL DATA

 

The following table sets forth our consolidated summary financial data for each of the years ended December 31, 2015, 2014, 2013, 2012 and 2011 and for the six months ended June 30, 2016 and 2015.  The summary statements of income data for the years ended December 31, 2015, 2014 and 2013 and the summary balance sheet data as of December 31, 2015 and 2014 have been derived from our audited consolidated financial statements and related notes thereto, which are incorporated by reference herein.  The summary statements of income data for the years ended December 31, 2012 and 2011 and the summary balance sheet data as of December 31, 2013, 2012 and 2011 have been derived from our audited consolidated financial statements and related notes thereto not included or incorporated by reference herein.

 

The summary balance sheet data as of June 30, 2016 and the statements of income data for the six months ended June 30, 2016 and 2015 have been derived from our unaudited consolidated financial statements and related notes thereto, which are incorporated by reference herein.  The financial data for the six months ended June 30, 2016 is not necessarily indicative of results we will record for the full year.  Quarterly information is not audited but, in our opinion, contains all adjustments (including normal recurring adjustments) necessary to present fairly the financial position,

results of operations and cash flows for the periods presented.  You should read this information together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2015 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, incorporated by reference herein.

 

 

 

USE OF PROCEEDS

 

This exchange offer is intended to satisfy our obligations under the registration rights agreement.  We will not receive any cash proceeds from the exchange offer.  In exchange for the Old Notes that you tender as a result of this exchange offer, you will receive New Notes in like principal amount.  The Old Notes that are surrendered in exchange for the New Notes will be retired and cancelled by us upon receipt and will not be reissued.  Accordingly, the issuance of the New Notes under this exchange offer will not result in any increase in our outstanding indebtedness. 

 

RATIOS OF EARNINGS TO FIXED CHARGES

 

The following table sets forth our ratios of earnings to fixed charges for the periods shown.

 

 

For purposes of computing the ratios, earnings represent income before income taxes plus fixed charges.    

 

THE EXCHANGE OFFER

 

General

 

In connection with the issuance of the Old Notes on August 15, 2016, we entered into a registration rights agreement with Sandler O’Neill & Partners, L.P., as representative of the initial purchasers, which provides for the exchange offer.  The exchange offer will permit eligible holders of the Old Notes to exchange the Old Notes for the New Notes, which are identical in all material respects to the Old Notes, except that:

 

 

 

 

 

The New Notes will evidence the same debt as the Old Notes and will be issued under, and be entitled to the benefits of, the indenture that governs all of the notes, including the payment of principal and interest.  As a result, both the New Notes and the Old Notes will be treated as a single series of subordinated debt securities.  The exchange offer does not depend on any minimum aggregate principal amount of Old Notes being tendered for exchange.

 

We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement and the applicable requirements of the Exchange Act, and the related rules and regulations of the SEC.  We will issue New Notes in exchange for the same principal amount of Old Notes accepted in the exchange offer.  Old Notes that are not tendered for exchange in the exchange offer will remain outstanding and interest on those Old Notes will continue to accrue at the applicable interest rate.  This prospectus and the letter of transmittal are being sent to all registered holders of Old Notes.  Only a registered holder of Old Notes or such holder’s legal representative or attorney-in-fact as reflected on the records of the trustee under the indenture may participate in the exchange offer.  There will be no fixed record date for determining registered holders of Old Notes entitled to participate in the exchange offer.

 

We will be deemed to have accepted validly tendered Old Notes when and if we have given oral or written notice to the exchange agent of our acceptance.  Subject to the terms and conditions of this exchange offer, delivery of New Notes will be made by the exchange agent promptly after receipt of such notice.  The exchange agent will act as agent for the tendering holders for the purpose of receiving New Notes from us.  If any tendered Old Notes are not accepted for exchange because of an invalid tender, our withdrawal of the exchange offer, the occurrence of certain other events set forth herein or otherwise, certificates for any such unaccepted Old Notes will be returned, without expense, to the tendering holder, unless otherwise provided in the letter of transmittal, as soon as practicable after the expiration date of the exchange offer or our withdrawal of the exchange offer, as applicable.  Any acceptance, waiver of default or rejection of a tender of notes shall be at our sole discretion and shall be conclusive, final and binding.

 

If you validly tender Old Notes in the exchange offer, you will not be required to pay us brokerage commissions or fees. In addition, subject to the instructions in the letter of transmittal and certain limited exceptions described in this prospectus, you will not have to pay transfer taxes for the exchange of Old Notes.  Subject to certain exceptions, we will pay all charges and expenses in connection with the exchange offer, other than certain applicable taxes.  See “The Exchange Offer — Fees and Expenses; Transfer Taxes.”

 

Holders of outstanding Old Notes do not have any appraisal or dissenters’ rights in connection with the exchange offer. Outstanding Old Notes that are not tendered, or are tendered but not accepted, in connection with the exchange offer will remain outstanding.  See “Risk Factors —  Risks Related to the Exchange Offer — If you do not properly tender your Old Notes, you will continue to hold unregistered Old Notes and your ability to transfer Old Notes will be adversely affected.”

 

WE MAKE NO RECOMMENDATION TO THE HOLDERS OF THE OUTSTANDING OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OUTSTANDING OLD NOTES IN THE EXCHANGE OFFER.  IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION.  HOLDERS OF THE OUTSTANDING OLD NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER, AND, IF SO, THE AGGREGATE AMOUNT OF OUTSTANDING OLD NOTES TO TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR FINANCIAL POSITION AND REQUIREMENTS.

 

Registration Rights Agreement

 

We issued the Old Notes in a private placement offering not subject to registration under the Securities Act or applicable state securities laws.  In connection with the issuance of the Old Notes, we entered into a registration rights agreement with Sandler O’Neill & Partners, L.P., as representative of the initial purchasers, and we are making the exchange offer to comply with our contractual obligations under the registration rights agreement.  Except under limited circumstances, upon completion of the exchange offer, our obligations with respect to the registration of the Old Notes will terminate.

 

Registration of the Offer and Sale of the New Notes

 

We are registering the New Notes under the Securities Act in reliance on the SEC staff’s position in the following no-action letters: Exxon Capital Holdings Corporation (available May 13, 1988), referred to as “Exxon Capital Letter,” Morgan Stanley & Co. Incorporated (available June 5, 1991), and Shearman & Sterling (available July 2, 1993).  Neither we, nor any of our affiliates, have entered into any arrangement or understanding with any person (including any broker-dealer) to distribute the New Notes, and, to the best of our information and belief, each person participating in the exchange offer is acquiring the New Notes in the ordinary course of its business and has no arrangement or understanding with any person to participate in the distribution of the New Notes to be received in the exchange offer.

 

Any person (including any broker-dealer) using the exchange offer to participate in a distribution of New Notes to be acquired in the exchange offer (a) cannot rely on the SEC Staff’s position in the Exxon Capital Letter or interpretive letters to similar effect and (b) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction unless such sale or transfer is made pursuant to an exemption from such requirements.

 

Eligibility; Transferability

 

We are making this exchange offer in reliance on interpretations of the staff of the SEC set forth in several no-action letters.  We have not, however, sought our own no-action letter.  Based upon these interpretations, we believe that you, or any other person receiving New Notes, may offer for resale, resell or otherwise transfer the New Notes without complying with the registration and prospectus delivery requirements of the U.S. federal securities laws, if:

 

 

 

 

 

 

To participate in the exchange offer, you must represent as a holder of Old Notes that each of these statements is true.

 

In addition, to participate in the exchange offer each broker-dealer registered under the Exchange Act must also (i) represent that it will receive New Notes in exchange for Old Notes that were acquired for its own account as a result of market-making activities or other trading activities, (ii) represent that it did not purchase the Old Notes to be exchanged for New Notes from us, and (iii) acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the New Notes.  The letter of transmittal states that by acknowledging that it will deliver, and by delivering, a prospectus, a broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the Securities Act.  This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resale of the New Notes received in exchange for the Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities.  

 

Any holder of Old Notes who is our affiliate, who does not acquire the New Notes in the ordinary course of business, who intends to participate in the exchange offer for the purpose of distributing the New Notes or who is a broker-dealer who purchased the Old Notes directly from us:

 

 

 

 

The exchange offer is not being made to, nor will we accept tenders for exchange from, holders of Old Notes in any jurisdiction in which the exchange offer or the acceptance of the exchange offer would not be in compliance with the securities or blue sky laws of such jurisdiction.  The exchange offer is not subject to any federal or state regulatory requirements other than securities laws.

 

Following the completion of the exchange offer, the holders of notes will not have any further registration rights (except in the limited circumstances provided under the registration rights agreement), and the Old Notes will continue to be subject to certain restrictions on transfer.  See “— Consequences of Failure to Exchange.”  Accordingly, the liquidity of the market for the Old Notes could be adversely affected.

 

Participation in the exchange offer is voluntary and you should carefully consider whether to accept.  We urge you to consult your financial and tax advisors in making your own decision on whether to participate in the exchange offer.

 

Expiration of the Exchange Offer; Extensions; Amendments

 

The exchange offer will expire at 11:59 p.m., New York City time on [●], 2016, or the expiration date, unless we extend the exchange offer.  If we extend the exchange offer, the expiration date will be the latest date and time to which the exchange offer is extended.  If we extend the exchange offer, we will notify the exchange agent of any extension by oral or written notice and will make a public announcement thereof, each no later than 9:00 a.m., New York City time, on the business day following the previously scheduled expiration date.  We reserve the right to extend the exchange offer, delay accepting any tendered Old Notes or, if any of the conditions described below under the heading “— Conditions to the Exchange Offer” have not been satisfied, to terminate the exchange offer or not accept for exchange any particular Old Notes.  We also reserve the right to amend the terms of the exchange offer in any manner.  We will give oral or written notice of any delay, termination, amendment or nonacceptance to the exchange agent as promptly as practicable.  If we determine to make a public announcement of any delay, amendment or termination of the exchange offer, we will do so by making a timely release through an appropriate news agency.  We will keep the exchange offer open for not less than 20 business days, or longer if required by applicable law, after the date on which notice of the exchange offer is mailed to holders of the Old Notes.

 

If we amend the exchange offer in a manner that we consider material, we will disclose that amendment by means of a prospectus supplement, and we will extend the exchange offer so that at least five business days remain in the exchange offer following notice of the material change.

 

Conditions to the Exchange Offer

 

The exchange offer is not conditioned on any minimum aggregate principal amount of Old Notes being tendered or accepted for exchange.  Notwithstanding any other term of the exchange offer, we will not be required to accept for exchange, or issue any New Notes for, any Old Notes, and may terminate, amend or extend the exchange offer before the acceptance of the Old Notes, if:

 

 

 

 

 

The conditions listed above are for our sole benefit and may be asserted by us regardless of the circumstances giving rise to any of these conditions.  We may waive these conditions in our absolute discretion in whole or in part at any time and from time to time prior to the expiration date.  Our failure at any time to exercise any of the above rights will not be considered a waiver of that right, and that right will be considered an ongoing right that we may assert at any time and from time to time.

 

In addition, we will not accept for exchange any Old Notes tendered, and no New Notes will be issued in exchange for those Old Notes, if at any time any stop order is threatened or issued with respect to the registration statement for the exchange offer and the New Notes.  In any such event, we must use reasonable best efforts to obtain the withdrawal of any stop order as soon as practicable.

 

In addition, we will not be obligated to accept for exchange the Old Notes of any holder that has not made to us the representations described under “— Eligibility; Transferability” and “Plan of Distribution.”

 

Procedures for Tendering Old Notes

 

The tender by a holder of Old Notes pursuant to any of the procedures set forth below will constitute the tendering holder’s acceptance of the terms and conditions of the exchange offer.  Our acceptance for exchange of Old Notes tendered pursuant to any of the procedures described below will constitute a binding agreement between such tendering holder and us in accordance with the terms and subject to the conditions of the exchange offer.  Only registered holders are authorized to tender their Old Notes.  Beneficial owners of Old Notes that are registered in the name of a broker, dealer, bank, trust company or other nominee should contact the nominee holder of the Old Notes if they wish to have their Old Notes tendered in the exchange offer.

 

If the letter of transmittal is signed by a person other than the registered holder of any Old Notes listed on the Old Notes, such Old Notes must be endorsed or accompanied by a properly completed bond power.  The bond power must be signed by the registered holder as the registered holder’s name appears on the Old Notes and an eligible guarantor institution must guarantee the signature on the bond power.

 

If the letter of transmittal or any certificates representing Old Notes, or bond powers, are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or

representative capacity, those persons should also indicate when signing and, unless waived by us, they should also submit evidence satisfactory to us of their authority to so act.

 

The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s Automated Tender Offer Program to tender.  Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, electronically transmit their acceptance of the exchange by causing DTC to transfer the Old Notes to the exchange agent in accordance with DTC’s Automated Tender Offer Program procedures for transfer.  DTC will then send an agent’s message to the exchange agent.  The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, which states that:

 

 

 

 

In all cases, we will promptly issue New Notes for Old Notes that we have accepted for exchange under the exchange offer only after the exchange agent timely receives:

 

 

 

Book-Entry Delivery Procedures.  Within two business days after the date of this prospectus, the exchange agent will establish an account with respect to the Old Notes at DTC, as book-entry transfer facilities, for purposes of the exchange offer.  Any financial institution that is a participant in the book-entry transfer facility’s system may make book-entry delivery of the Old Notes by causing the book-entry transfer facility to transfer those Old Notes into the exchange agent’s account at the facility in accordance with the facility’s procedures for such transfer.  To be timely, book-entry delivery of Old Notes requires receipt of a confirmation of a book-entry transfer, a “book-entry confirmation,” prior to the expiration date.  In addition, although delivery of Old Notes may be effected through book-entry transfer into the exchange agent’s account at the book-entry transfer facility, the letter of transmittal or a manually signed facsimile thereof, together with any required signature guarantees and any other required documents, or an “agent’s message,” as defined above, in connection with a book-entry transfer, must, in any case, be delivered or transmitted to and received by the exchange agent at its address set forth on the cover page of the letter of transmittal prior to the expiration date to receive New Notes for tendered Old Notes, or the guaranteed delivery procedure described below must be complied with.  Tender will not be deemed made until such documents are received by the exchange agent.  Delivery of documents to the book-entry transfer facility does not constitute delivery to the exchange agent.

 

Holders of Old Notes who are unable to deliver confirmation of the book-entry tender of their Old Notes into the exchange agent’s account at the book-entry transfer facility or all other documents required by the letter of transmittal to the exchange agent on or prior to the expiration date must tender their Old Notes according to the guaranteed delivery procedures described below.

 

Determination of Validity 

 

We will interpret the terms and conditions of the exchange offer, including the letters of transmittal and the instructions to the letters of transmittal, and will resolve all questions as to the validity, form, eligibility, including time of receipt, and acceptance of Old Notes tendered for exchange.  We reserve the absolute right to reject any and all

tenders of any particular Old Notes not properly tendered or to not accept any particular Old Notes if the acceptance might, in our or our counsel’s judgment, be unlawful. 

 

We also reserve the right to waive any conditions of the exchange offer or defects or irregularities of tenders as to particular Old Notes.  Our interpretation of the terms and conditions of the exchange offer (including the instructions in the letter of transmittal) will be conclusive, final and binding on all parties.  Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as we shall determine.

 

Although we intend to notify, or have the exchange agent notify, holders of defects or irregularities with respect to tenders of Old Notes through the exchange agent, none of we, the exchange agent and any other person is under any duty to give such notification, nor shall we or they incur any liability for failure to give such notification.  Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived.  Any Old Notes received by the exchange agent that are not validly tendered and as to which the defects or irregularities have not been cured or waived, or if Old Notes are submitted in a principal amount greater than the principal amount of Old Notes being tendered by a tendering holder, such unaccepted or non-exchanged Old Notes will either be:

 

 

 

Signature Guarantees

 

Signatures on all letters of transmittal must be guaranteed by a recognized member of the Medallion Signature Guarantee Program or by any other “Eligible Guarantor Institution,” as that term is defined in Rule 17Ad-15 under the Exchange Act, either of which we refer to as an Eligible Institution, unless the Old Notes tendered thereby are tendered (1) by a registered holder of Old Notes (or by a participant in DTC whose name appears on a DTC security position listing as the owner of such Old Notes) that has not completed either the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal or (2) for the account of an Eligible Institution.  See Instruction 5 of the letter of transmittal.

 

Guaranteed Delivery Procedures

 

If you wish to tender your Old Notes but your Old Notes are not immediately available or you cannot deliver your Old Notes, the letter of transmittal or any other required documents to the exchange agent or comply with the applicable procedures under DTC’s Automatic Tender Offer Program, prior to the expiration date, you may still tender if:

 

 

 

 

Withdrawal of Tenders

 

Except as otherwise provided in this prospectus, you may withdraw your tender of Old Notes at any time on or prior to the expiration date.  For a withdrawal to be effective:

 

 

 

Any notice of withdrawal must:

 

 

 

 

If Old Notes have been tendered pursuant to the procedures for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with such withdrawn Old Notes and must otherwise comply with DTC procedures.

 

If the Old Notes to be withdrawn have been delivered or otherwise identified to the exchange agent, a signed notice of withdrawal meeting the requirements discussed above is effective immediately upon written or facsimile notice of withdrawal even if physical release is not yet effected.  A withdrawal of tendered Old Notes can only be accomplished in accordance with these procedures.

 

We will determine all questions as to the validity, form, and eligibility, including time of receipt of notices of withdrawal and their determination will be final and binding on all parties.  No withdrawal of tendered Old Notes will be deemed to have been properly made until all defects or irregularities have been cured or expressly waived.  Neither we, the exchange agent nor any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal, nor shall we or they incur any liability for failure to give any such notification.  Any Old Notes so withdrawn will be deemed not to have been validly tendered for purposes of the exchange offer and no New Notes will be issued with respect thereto unless the Old Notes so withdrawn are retendered on or prior to the expiration date of the exchange offer.  Properly withdrawn Old Notes may be retendered by following one of the procedures described above at any time on or prior to the expiration date of the exchange offer.

 

Any Old Notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder, without cost to the holder, or, in the case of book-entry transfer, the Old Notes will be credited to an account at the book-entry transfer facility, promptly after withdrawal, rejection of tender or termination of the exchange offer.

 

Exchange Agent

 

U.S. Bank National Association will serve as exchange agent for the exchange offer.  You should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery and other documents to the exchange agent addressed as follows:

 

By Mail, Overnight Mail or Courier:

U. S. Bank National Association

Attn: Corporate Actions

111 Fillmore Avenue

St. Paul, MN  55107-1402

 

By Facsimile Transmission (Eligible Institutions Only):

651-466-7367

 

Confirm by Telephone:

800-934-6802

 

For Information Call:

800-934-6802

 

Fees and Expenses; Transfer Taxes

 

We will bear the expenses of soliciting tenders.  The principal solicitation is being made by mail.  We may, however, make additional solicitations by email, telephone or in person by our officers and employees and those of our affiliates.

 

We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer.  We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses.  We have also agreed to indemnify the exchange agent against any losses, liabilities, costs and expenses in connection with the provisions of its services in connection with the exchange offer.  Other expenses of the exchange offer that we will pay include fees and expenses of the trustee under the indenture that governs the notes, accounting and legal fees and printing costs, among others.

 

Except as described below, we will pay all transfer taxes, if any, applicable to the exchange of Old Notes under the exchange offer.  The tendering holder will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:

 

 

 

 

If satisfactory evidence of payment of transfer taxes is not submitted with the letter of transmittal, the amount of any transfer taxes will be billed to the tendering holder.

 

Accounting Treatment

 

We will record the New Notes at the same carrying value as the Old Notes reflected in our accounting records on the date of the exchange.  Accordingly, we will not recognize any gain or loss for accounting purposes upon completion of the exchange offer.

 

Consequences of Failure to Exchange

 

Old Notes that are not exchanged will remain “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act.  Accordingly, they may not be offered, sold, pledged or otherwise transferred except:

 

 

 

 

in each case subject to compliance with any applicable foreign, state or other securities laws.

 

Upon completion of the exchange offer, due to the restrictions on transfer of the Old Notes and the absence of such restrictions applicable to the New Notes, it is likely that the market, if any, for Old Notes will be relatively less liquid than the market for the New Notes.  Consequently, holders of Old Notes who do not participate in the exchange offer could experience significant reduction in the value of their Old Notes, compared to the value of the New Notes.  The holders of Old Notes not tendered will have no further registration rights, except that, under limited circumstances, we may be required to file a shelf registration statement for a continuous offer of Old Notes.

 

Additional Information Regarding the Registration Rights Agreement

 

As noted above, we are effecting the exchange offer to comply with the registration rights agreement.  The registration rights agreement requires us to cause an exchange offer registration statement to be filed with the SEC, use our commercially reasonable efforts to cause the registration statement to become effective, and satisfy certain other obligations.  Our obligation to register the offer and sale of the New Notes will terminate upon completion of the exchange offer.  Under certain circumstances specified in the registration rights agreement, however, we may be required to file a shelf registration statement for a continuous offer in connection with the Old Notes.

 

DESCRIPTION OF THE NOTES

 

General

 

The Old Notes are and the New Notes will be a series of our subordinated debt securities and were and will be issued under a subordinated indenture dated as of August 15, 2016 and a first supplemental indenture to the subordinated indenture dated as of August 15, 2016, between us and U.S. Bank National Association, as trustee, which together we refer to as the “indenture.”  The New Notes are identical in all material respects (other than as set forth herein) to the Old Notes.  We refer to the Old Notes and the New Notes collectively as the “notes.”

 

The following is a brief description of the notes and the indenture.  It does not purport to be complete in all respects.  This description is subject to, and qualified in its entirety by reference to, the indenture and the forms of certificates evidencing the notes, copies of which are available from us upon request.

 

The notes will be limited initially to $35 million aggregate principal amount.  The notes will mature on August 15, 2026 (which we refer to as the “maturity date”) unless redeemed prior to such date as described below under “— Redemption.”  There is no sinking fund for the notes.  The notes are not convertible into, or exchangeable for, any equity securities, other securities or other assets of Old Line Bancshares or Old Line Bank.

 

The maturity of the notes may not be accelerated in the absence of certain Events of Default (as such term is defined in the indenture).  There is no right to accelerate the maturity of the notes if we fail to pay interest or any Additional Amounts, as defined below, on any note for 30 days after such payment is due, fail to pay the principal on any note when due, or fail to perform or breach any other covenant or warranty under any note or in the indenture for 90 days after we receive written notice of such failure or breach.  See “—  Defaults; Events of Default; Limitation on Suits.”

 

“Additional Amounts” means any additional amounts that are required by the indenture or the notes, under circumstances specified by the indenture or the notes, to be paid by the Company in respect of certain taxes, duties, levies, imposts, assessments or other governmental charges imposed on holders of the notes specified by the indenture or the notes.

 

As a bank holding company, our ability to make payments on the notes will depend primarily on the receipt of dividends and other distributions from Old Line Bank.  There are various regulatory restrictions on the ability of Old Line Bank to pay dividends or make other distributions to us.  See Risk Factors — We are a holding company, and banking laws and regulations could limit our access to funds from Old Line Bank with the result that we may not have access to sufficient cash to make payments on the notes” in this prospectus, “Risk Factors — Recently issued capital rules require insured depository institutions and their holding companies to hold more capital,” and “Item 1 — Business — Supervision and Regulation — Old Line Bank” and “Item 5 —  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Dividends” in our Annual Report on Form 10-K for the year ended December 31, 2015.  The notes are not savings accounts, deposits or other obligations of Old Line Bank and are not insured or guaranteed by the FDIC or any other governmental agency or instrumentality.  The notes are solely obligations of Old Line Bancshares and are neither obligations of, nor guaranteed by any of our subsidiaries.

 

The notes will be issued in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof.

 

Payment of Principal and Interest

 

Payment of the full principal amount of the notes is due on August 15, 2026, unless redeemed prior to such date as described below under “— Redemption.”  Principal and, in the case of redemption, interest, if any, due on the stated maturity date or any earlier date of redemption will be payable against presentation and surrender of the notes.

 

The notes bear interest (i) at an initial rate of 5.625% per annum, payable semi-annually in arrears on February 15 and August 15 of each year (each, a “fixed rate interest payment date”), commencing on February 15, 2017, from and including the date of issuance to but excluding August 15, 2021 (the “First Reset Date”) and (ii) thereafter at an annual floating rate equal to the three-month LIBOR rate as determined for the applicable Interest Period (as defined below) plus a spread of 450.2 basis points payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year (each, a “floating rate interest payment date,” and together with the fixed rate interest payment dates, the “interest payment dates”), commencing on August 15, 2021.  Notwithstanding the foregoing, in the event that three-month LIBOR is less than zero, three-month LIBOR will be deemed to be zero.

 

Interest on the notes accrues from and including the immediately preceding interest payment date in respect of which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from and including the date of issuance of the notes to but excluding the applicable interest payment date or the stated maturity date or date of earlier redemption, if applicable (each, an “Interest Period”).

 

“Three-month LIBOR” means, for any Interest Period, as determined by the Company on the Reset Rate Determination Date and provided to the Trustee in writing, the offered rate for deposits in U.S. dollars having a maturity of three months that appears on the Designated LIBOR Page as of 11:00 a.m., London time, on the Reset Rate

Determination Date related to such Interest Period.  If such rate does not appear on such page at such time, then the Company will request the principal London office of each of four major reference banks in the London interbank market, selected by the Company, to provide such bank’s offered quotation to prime banks in the London interbank market for deposits in U.S. dollars with a term of three months as of 11:00 a.m., London time, on such Reset Rate Determination Date and in a principal amount equal to an amount that, in the judgment of the Company, is representative for a single transaction in U.S. dollars in the relevant market at the relevant time (a “Representative Amount”).  If at least two such quotations are so provided, three-month LIBOR for the Interest Period related to such Reset Rate Determination Date will be the arithmetic mean of such quotations.  If fewer than two such quotations are provided, the Company will request each of three major banks in the City of New York to provide such bank’s rate for loans in U.S. dollars to leading European banks with a term of three months as of approximately 11:00 a.m., New York City time, on such Reset Rate Determination Date and in a Representative Amount.  If at least two such rates are so provided, three-month LIBOR for the Interest Period related to such Reset Rate Determination Date will be the arithmetic mean of such quotations.  If fewer than two such rates are so provided, then three-month LIBOR for the Interest Period related to such Reset Rate Determination Date will be set to equal the three-month LIBOR for the immediately preceding Interest Period or, in the case of the Interest Period commencing on the First Reset Date, 1.123%.  All percentages used in or resulting from any calculation of three-month LIBOR will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with 0.000005% rounded up to 0.00001%.  Notwithstanding the foregoing, in the event that three-month LIBOR as determined in accordance with this definition for any Interest Period after the First Reset Date is less than zero, three-month LIBOR for such Interest Period shall be deemed to be zero.

 

“Designated LIBOR Page” means the display on Reuters, or any successor service, on page LIBOR01, or any other page as may replace that page on that service, for the purpose of displaying the London interbank rates for U.S. dollars.

 

“London Banking Day” means any day on which commercial banks are open for business (including dealings in U.S. dollars) in London.

 

“Reset Rate Determination Date” means the second London Banking Day immediately preceding the first day of each applicable Interest Period commencing after the First Reset Date.

 

The determination of three-month LIBOR for each applicable Interest Period commencing on the First Reset Date by the Company will (in the absence of manifest error) be final and binding.  The Company’s calculation of the amount of any interest payable after the First Reset Date will be maintained on file at the Company’s principal offices.

 

The interest payable on the notes on any interest payment date, subject to certain exceptions, will be paid to the person in whose name the notes are registered at the close of business on January 31 and July 31, whether or not a Business Day (as defined below), immediately preceding the applicable fixed rate interest payment date or the 15th day immediately preceding the applicable floating rate interest payment date, as the case may be.  Interest payable on an interest payment date will be made by wire transfer in immediately available funds in U.S. dollars at the office of the principal paying agent in the City of Boston or, at option of Old Line Bancshares in the event the notes are not represented by global notes (as defined below), by check mailed to the address of the related holders.

 

In the event that a fixed rate interest payment date or the stated maturity date or any earlier date of redemption falls on a day that is not a Business Day, then the amounts payable on such date will be paid on the next succeeding Business Day without the accumulation of additional interest.  In the event that a floating rate interest payment date falls on a day that is not a Business Day, then such floating rate interest payment date will be postponed to the next succeeding Business Day unless such day falls in the next succeeding calendar month, in which case such floating rate interest payment date will be accelerated to the immediately preceding Business Day, and, in each such case, the amounts payable on such Business Day will include interest accrued to but excluding such Business Day.

 

“Business Day” means, for interest or any Additional Amounts payable on or prior to the First Reset Date or for any repayment of principal on the stated maturity date or any earlier date of redemption, any day other than a Saturday, a Sunday, or a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed, and for interest or any Additional Amounts payable after the First Reset Date, any day that would

be considered a business day with respect to interest or any Additional Amounts payable on or prior to the First Reset Date that is also a London Banking Day.

 

Any interest payable on the notes on or prior to the First Reset Date is computed on the basis of a 360-day year consisting of twelve 30-day months and any interest payable on the notes after the First Reset Date will be computed on the basis of the actual number of days in the Interest Period in respect of which interest is payable divided by 360.  Dollar amounts resulting from that calculation will be rounded to the nearest cent, with one-half cent being rounded upward.

 

Any interest that is payable, but is not punctually paid or duly provided for, on any interest payment date (“Defaulted Interest”) shall cease to be payable to the holder on the relevant record date by virtue of having been a holder on such date, and such Defaulted Interest may be paid by us to the person in whose name the notes are registered at the close of business on a special record date for the payment of Defaulted Interest.

 

Payment of principal on the notes may be accelerated only in the case of certain events of bankruptcy or insolvency.  See “— Defaults; Events of Default; Limitation on Suits.”

 

No recourse will be available for the payment of principal of, or interest or any Additional Amounts on, any note, for any claim based thereon, or otherwise in respect thereof, against any stockholder, employee, officer or director, as such, past, present or future, of Old Line Bancshares or of any successor entity.  Neither the indenture nor the notes contain any covenants or restrictions restricting the incurrence of debt by us or by our subsidiaries.  The indenture and the notes contain no financial covenants and do not restrict us from paying dividends or issuing or repurchasing other securities, and do not contain any provision that would provide protection to the holders of the notes against a sudden and dramatic decline in credit quality resulting from a merger, takeover, recapitalization or similar restructuring or any other event involving us or our subsidiaries that may adversely affect our credit quality.

 

The notes and the indenture are governed by, and shall be construed in accordance with, the laws of the State of New York.

 

Subordination of the Notes

 

Our obligation to make any payment on account of the principal and interest on the notes is subordinate and junior in right of payment to our obligations to the holders of our Senior Indebtedness.  “Senior Indebtedness” is defined in the indenture to mean all of our:

 

 

in each case, whether outstanding on the date that we entered into the indenture or arising after that time, and other than obligations ranking equally with the notes or ranking junior to the notes.  Notwithstanding the foregoing, and for the