Getting Out of Memory exception with graphic.DrawImage

Bitmap bmp;
using(Bitmap temp = System.Drawing.Image.FromStream(fuInsertImage1.PostedFile.InputStream))
bmp = resize_image(temp);
bmp.Save(directory);
bmp.Dispose();

protected Bitmap resize_image(Bitmap img)
{
 //determines if image width is larger that 1024 pixels
 //if yes, resizes image to 1024 width and keeps aspect ratio for height.
 int width, height;
 float percentage = 1; //This is to keep the aspect ratio of the image
 width = img.Width;
 height = img.Height;

 if (width > 1024)
  {
   percentage = (float)1024 / width;
   Bitmap bmp = new Bitmap((int)Math.Round(width * percentage, 0), (int)Math.Round(height * percentage, 0));
   Graphics graphic = Graphics.FromImage((System.Drawing.Image)bmp);

    try
    {
     graphic.InterpolationMode = System.Drawing.Drawing2D.InterpolationMode.HighQualityBicubic;
     graphic.DrawImage(img, 0, 0, (int)Math.Round(width * percentage), (int)Math.Round(height * percentage)); //This is where the exception is thrown.  

     return bmp;
    }
     
    catch (Exception ex)
    {
     return null;
    }

    finally
    {
     bmp.Dispose();
     graphic.Dispose();
    }
   }

   else
   {
    return img;
   }
  }