As the economy slumps, one Maryland bank has not only stayed out of trouble but has burnished the kind of 24-karat lending record that rivals would covet even in a boom.
Bowie-based Old Line Bank has lent more than $200 million to local homebuilders, hoteliers, auto repair shops, lawyers, homebuyers and landscapers. But as banks fail nationwide at the greatest rate since 1993, so far every one of Old Line's borrowers is paying interest and principal as planned.
A church that was behind on payments is catching up. Other than that, Old Line has zero "nonperforming" loans, defined as at least 90 days overdue. It doesn't even have a loan that is 30 days overdue.
There's no guarantee that it won't take some lumps. But Old Line's performance so far in the greatest financial crisis in decades is up there with pitching a perfect game against the 1927 Yankees or bowling 300 wearing mittens.
"This is absolutely amazing," says independent banking analyst Bert Ely as he looks at Old Line's recently published Sept. 30 numbers. "This is one of the cleanest loan books I've seen. It's almost like these are too good to be true."
Something else is amazing. Old Line didn't stay perfect by sitting on its dough. Its loans have doubled since 2005. It's making new loans today, although not at the same pace as a year ago.
"It seems like bankers are getting a little skittish right now," said Al Patel, president of Greenbelt-based Baywood Hotels. But Baywood just got $8.5 million from Old Line to build a Marriott hotel in St. Mary's County. "In today's environment I would not have been surprised if they hadn't done the deal."
With eight branches from Annapolis to Waldorf and two under construction, Old Line belies the notion that business has frozen. Community banks like this, which have stayed generally healthier than their giant competitors, must carry the economy now that Wall Street has checked out.
"We do this only on relationship banking," says Old Line President James W. Cornelsen. "We do it with absolutely the most talented people we can find. And we do it with superior credit underwriting."
Translation: Old Line got to know borrowers. It ensured that they had enough income to make payments. It did not assume that property prices would ascend forever. It didn't do deals just to pocket closing fees.
Radical concepts, for sure.
