Exhibit 99.1
Shore Bancshares, Inc.
18 E. Dover Street
Easton, Maryland 21601
Phone 410-763-7800
PRESS RELEASE
Shore Bancshares Reports 2011 Results
Easton, Maryland (1/25/2012) - Shore Bancshares, Inc. (NASDAQ - SHBI) today reported net income of $325 thousand, or $0.04 per diluted common share, for the fourth quarter of 2011, compared to net income of $94 thousand, or $0.01 per diluted common share, for the third quarter of 2011 and net income of $850 thousand, or $0.10 per diluted common share, for the fourth quarter of 2010. The Company reported a net loss of $897 thousand, or $(0.11) per diluted common share, for 2011, compared to a net loss of $1.7 million, or $(0.20) per diluted common share, for 2010.
When comparing the fourth quarter of 2011 to the third quarter of 2011, the increase in net income was primarily due to lower impairment charges of $1.3 million. During the third quarter of 2011, the Company recorded goodwill impairment charges of $1.2 million and other intangible assets impairment charges of $120 thousand. The decrease in impairment charges was mainly offset by a higher provision for credit losses ($385 thousand) and lower net interest income ($286 thousand) and investment securities gains ($226 thousand). When comparing the fourth quarter of 2011 to the fourth quarter of 2010, the main reason for the lower net income was a decline in net interest income of $1.0 million, which was partially offset by a decrease in the provision for credit losses of $357 thousand.
When comparing fiscal year 2011 to fiscal year 2010, the principal factors resulting in the lower net loss were a $1.7 million decrease in impairment charges and a $1.6 million decrease in the provision for credit losses, which were partially offset by a decline in net interest income of $2.9 million.
“Net income was modest for the final quarter of 2011, but we did produce an improvement over the linked third quarter of last year,” said W. Moorhead Vermilye, chief executive officer. “We were disappointed to show a loss for the full year of 2011, but encouraged that the loss narrowed to about half the amount we reported for the full year of 2010.”
“Our ratio of nonperforming assets to total assets was 7.66% at December 31, 2011, compared to 8.02% at September 30, 2011.Nonperforming assets decreased $4.2 million from where they stood at the end of the third quarter as two large credits totaling $8.2 million were brought current during the final three months of the year, and our ratio of the allowance for credit losses to period-end loans increased to 1.70% at December 31, 2011, up from 1.57% at September 30, 2011 and 1.59% at December 31, 2010.”
“All of these statistics are evidence of a very tough ongoing credit environment, but they do reflect that we are making gradual progress. Although we remain very cautious, evidence suggests to us that area real estate prices might have bottomed out, which, if true, should lead to better progress in resolving and disposing our problem assets. In the meantime, we believe our provision for credit losses and the resulting allowance as of year end are adequate to provide for probable losses in our loan portfolio.”
“As we have noted previously, it took a year or two more than in other regions for the Delmarva Peninsula micro-economy to fully experience the impact of this long-running national economic downturn, and we believe that the recovery in our market areas and our return to consistent profitability will likewise lag behind much of the regional community banking industry. As we work diligently to improve credit quality and our overall performance, it is important to note that our capital levels remain strong. For 2011, the Company’s ratio of average tangible equity to average tangible assets was 9.23% which compared very favorably to area peers,” said Vermilye.
Page 2 of 11
The Company’s return on average assets for the fourth quarter of 2011 was 0.11%, compared to 0.03% and 0.30% for the quarters ended September 30, 2011 and December 31, 2010, respectively. The return on average equity was 1.07% for the fourth quarter of 2011, compared to 0.31% for the third quarter of 2011 and 2.73% for the fourth quarter of 2010. The return on average tangible equity was 1.53% for the fourth quarter of 2011, compared to 4.21% for the third quarter of 2011 and 3.49% for the fourth quarter of 2010. The return on average tangible equity for the third quarter of 2011 was positively impacted by the impairment charges of $1.3 million. See the financial tables that follow for additional information.
The Company’s return on average assets for 2011 was (0.08)%, compared to (0.15)% for 2010. The return on average equity was (0.74)% and (1.33)% for 2011 and 2010, respectively, while the return on average tangible equity was 0.32% and 1.05% for 2011and 2010, respectively.
Total assets were $1.158 billion at December 31, 2011, a 2.5% increase when compared to the $1.130 billion at the end of 2010. Total loans decreased 6.1% to $841.1 million while total earning assets increased 2.1% to $1.082 billion when compared to December 31, 2010. Total deposits increased 3.1% to $1.010 billion while total stockholders’ equity decreased 1.0% from the end of 2010. The ratio of average equity to average assets was 10.66% and 11.05% for 2011 and 2010, respectively, while the ratio of average tangible equity to average tangible assets was 9.23% and 9.43% for 2011 and 2010, respectively. Capital levels remain well above regulatory minimums to be considered well-capitalized.
Review of Quarterly Financial Results
Net interest income for the fourth quarter of 2011 was $9.8 million, a 2.8% decrease from the third quarter of 2011 and a 9.5% decrease from the same period last year. The decrease in net interest income when compared to the third quarter of 2011 and the fourth quarter of 2010 was primarily due to lower yields earned on average earning assets and a decline in higher-yielding average loan balances. The Company’s net interest margin was 3.60% for the fourth quarter of 2011, 3.77% for the third quarter of 2011 and 4.09% for the fourth quarter of 2010.
The provision for credit losses was $4.0 million for the three months ended December 31, 2011. The comparable amounts were $3.7 million and $4.4 million for the three months ended September 30, 2011 and December 31, 2010, respectively. The ratio of the allowance for credit losses to period-end loans was 1.70% at December 31, 2011, increasing from 1.57% at September 30, 2011 and 1.59% at December 31, 2010. Management believes that the provision for credit losses and the resulting allowance were adequate at December 31, 2011 to provide for probable losses in our loan portfolio.
The level of provision for credit losses was primarily in response to loan charge-offs, nonperforming loans and a weak economy. Net charge-offs were $3.3 million for the fourth quarter of 2011, lower than the $6.5 million for the third quarter of 2011 and even with the amount for the fourth quarter of 2010. The ratio of quarter-to-date annualized net charge-offs to average loans was 1.53% for the fourth quarter of 2011, 2.95% for the third quarter of 2011 and 1.46% for the fourth quarter of 2010. Nonperforming assets decreased $4.2 million when compared to the end of September 2011 but increased $19.1 million when compared to the end of December 2010. The decrease from the end of the prior quarter was primarily in loans 90 days past due and still accruing. This decrease was mainly due to two large credits totaling $8.2 million which were brought current during the fourth quarter of 2011. The ratio of nonperforming assets to total assets was 7.66% at December 31, 2011, compared to 8.02% at September 30, 2011 and 6.16% at December 31, 2010.
Total noninterest income for the fourth quarter of 2011 decreased $504 thousand, or 11.1%, when compared to the third quarter of 2011. The decrease was primarily due to a $251 thousand decline in insurance agency commissions and a $226 thousand decline in gains on sales of investment securities. Noninterest income for the fourth quarter of 2011 increased $71 thousand, or 1.8%, when compared to the fourth quarter of 2010. The increase was primarily due to gains on sales of investment securities of $128 thousand and an increase in other noninterest income of $75 thousand, partially offset by a $99 thousand decline in service charges on deposit accounts. Included in other noninterest income for the fourth quarter of 2011 was a $56 thousand gain relating to proceeds from a life insurance policy on a former CNB director. The lower service charges on deposit accounts were due to a decrease in customer use of overdraft protection programs.
Page 3 of 11
Total noninterest expense for the fourth quarter of 2011 decreased $1.3 million, or 11.9%, when compared to the third quarter of 2011 mainly due to the $1.3 million goodwill and other intangible assets impairment charges recorded in the third quarter of 2011. When compared to the fourth quarter of 2010, total noninterest expense for the fourth quarter of 2011 increased $323 thousand, or 3.6%, primarily due to higher expenses related to other real estate owned activities included in other noninterest expenses.
Review of 2011 Financial Results
Net interest income for 2011 was $39.8 million, a decrease of 6.7% when compared to 2010. As with the quarterly results, the decrease was primarily due to lower yields earned on average earning assets and a decline in higher-yielding average loan balances.The net interest margin was 3.74% for 2011 and 4.02% for 2010.
The provisions for credit losses for 2011 and 2010 were $19.5 million and $21.1 million, respectively. Net charge-offs were $19.4 million and $17.8 million for 2011 and 2010, respectively. The ratio of year-to-date annualized net charge-offs to average loans was 2.22% for 2011 and 1.96% for 2010.
Total noninterest income for 2011 declined $723 thousand when compared to the same period in 2010. The decrease in noninterest income was mainly due to declines in insurance agency commissions, service charges on deposit accounts and other noninterest income. Other noninterest income for 2010 included a$224 thousand gain relating to the surrender of directors’ life insurance policies. These decreases in noninterest income werepartially offset by $563 thousandin gains on sales of investment securities
Total noninterest expense for 2011 decreased $2.6 million when compared to the same period in 2010. The primary reason for the decreasewas lower expenses related to impairment charges, salaries, FDIC insurance premiums and insurance agency commissions. These expenses were somewhat offset by higher expenses related to other real estate owned activities and higher data processing charges relating to the merger of The Felton Bank into CNB during the first quarter of 2011.
Shore Bancshares Information
Shore Bancshares, Inc. is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland’s Eastern Shore. It is the parent company of two banks, The Talbot Bank of Easton, Maryland, and CNB; three insurance producer firms, The Avon-Dixon Agency, LLC, Elliott Wilson Insurance, LLC and Jack Martin and Associates, Inc; a wholesale insurance company, TSGIA, Inc; two insurance premium finance companies, Mubell Finance, LLC and ESFS, Inc; and a registered investment adviser firm, Wye Financial Services, LLC. Shore Bancshares, Inc. engages in the mortgage broker business under the name “Wye Mortgage Group” through a minority series investment in an unrelated Delaware limited liability company. Additional information is available atwww.shbi.com.
Forward-Looking Statements
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not represent historical facts, but statements about management’s beliefs, plans and objectives. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed byShore Bancshares, Inc. with the Securities and Exchange Commission entitled “Risk Factors”.
For further information contact: W. Moorhead Vermilye, Chief Executive Officer, 410-763-7800
| Shore Bancshares, Inc. | Page 4 of 11 |
| Financial Highlights | |
| (Dollars in thousands, except per share data) |
| For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
| PROFITABILITY FOR THE PERIOD | ||||||||||||||||||||||||
| Net interest income | $ | 9,837 | $ | 10,866 | (9.5 | )% | $ | 39,764 | $ | 42,639 | (6.7 | )% | ||||||||||||
| Provision for credit losses | 4,035 | 4,392 | (8.1 | ) | 19,470 | 21,119 | (7.8 | ) | ||||||||||||||||
| Noninterest income | 4,019 | 3,948 | 1.8 | 17,318 | 18,041 | (4.0 | ) | |||||||||||||||||
| Noninterest expense | 9,405 | 9,082 | 3.6 | 39,167 | 41,720 | (6.1 | ) | |||||||||||||||||
| Income (loss) before income taxes | 416 | 1,340 | (69.0 | ) | (1,555 | ) | (2,159 | ) | 28.0 | |||||||||||||||
| Income tax expense (benefit) | 91 | 490 | (81.4 | ) | (658 | ) | (492 | ) | (33.7 | ) | ||||||||||||||
| Net income (loss) | $ | 325 | $ | 850 | (61.8 | ) | $ | (897 | ) | $ | (1,667 | ) | 46.2 | |||||||||||
| Return on average assets | 0.11 | % | 0.30 | % | (19 | )bp | (0.08 | )% | (0.15 | )% | 7 | bp | ||||||||||||
| Return on average equity | 1.07 | 2.73 | (166 | ) | (0.74 | ) | (1.33 | ) | 59 | |||||||||||||||
| Return on average tangible equity (1) | 1.53 | 3.49 | (196 | ) | 0.32 | 1.05 | (73 | ) | ||||||||||||||||
| Net interest margin | 3.60 | 4.09 | (49 | ) | 3.74 | 4.02 | (28 | ) | ||||||||||||||||
| Efficiency ratio - GAAP | 67.62 | 61.03 | 659 | 68.35 | 68.46 | (11 | ) | |||||||||||||||||
| Efficiency ratio - Non-GAAP (1) | 67.61 | 60.17 | 744 | 65.83 | 62.83 | 300 | ||||||||||||||||||
| PER SHARE DATA | ||||||||||||||||||||||||
| Basic net income (loss) per common share | $ | 0.04 | $ | 0.10 | (60.0 | )% | $ | (0.11 | ) | $ | (0.20 | ) | 45.0 | % | ||||||||||
| Diluted net income (loss) per common share | 0.04 | 0.10 | (60.0 | ) | (0.11 | ) | (0.20 | ) | 45.0 | |||||||||||||||
| Dividends paid per common share | 0.01 | 0.06 | (83.3 | ) | 0.09 | 0.24 | (62.5 | ) | ||||||||||||||||
| Book value per common share at period end | 14.34 | 14.51 | (1.2 | ) | ||||||||||||||||||||
| Tangible book value per common share at period end (1) | 12.37 | 12.32 | 0.4 | |||||||||||||||||||||
| Market value at period end | 5.15 | 10.54 | (51.1 | ) | ||||||||||||||||||||
| Market range: | ||||||||||||||||||||||||
| High | 6.13 | 10.73 | (42.9 | ) | 11.11 | 14.80 | (24.9 | ) | ||||||||||||||||
| Low | 4.20 | 9.25 | (54.6 | ) | 3.95 | 9.20 | (57.1 | ) | ||||||||||||||||
| PERIOD-END BALANCE SHEET DATA | ||||||||||||||||||||||||
| Loans | $ | 841,050 | $ | 895,404 | (6.1 | )% | ||||||||||||||||||
| Securities | 136,260 | 105,782 | 28.8 | |||||||||||||||||||||
| Assets | 1,158,193 | 1,130,311 | 2.5 | |||||||||||||||||||||
| Deposits | 1,009,919 | 979,516 | 3.1 | |||||||||||||||||||||
| Stockholders' equity | 121,249 | 122,513 | (1.0 | ) | ||||||||||||||||||||
| AVERAGE BALANCE SHEET DATA | ||||||||||||||||||||||||
| Loans | $ | 854,302 | $ | 903,075 | (5.4 | )% | $ | 873,155 | $ | 906,732 | (3.7 | )% | ||||||||||||
| Securities | 122,725 | 103,600 | 18.5 | 113,568 | 107,242 | 5.9 | ||||||||||||||||||
| Earning assets | 1,089,078 | 1,060,645 | 2.7 | 1,069,458 | 1,068,264 | 0.1 | ||||||||||||||||||
| Assets | 1,160,652 | 1,128,517 | 2.8 | 1,139,943 | 1,136,916 | 0.3 | ||||||||||||||||||
| Deposits | 1,013,848 | 978,444 | 3.6 | 992,071 | 980,332 | 1.2 | ||||||||||||||||||
| Stockholders' equity | 121,020 | 123,341 | (1.9 | ) | 121,496 | 125,586 | (3.3 | ) | ||||||||||||||||
| CAPITAL AND CREDIT QUALITY RATIOS | ||||||||||||||||||||||||
| Average equity to average assets | 10.43 | % | 10.93 | % | (50 | )bp | 10.66 | % | 11.05 | % | (39 | )bp | ||||||||||||
| Average tangible equity to average tangible assets (1) | 9.12 | 9.50 | (38 | ) | 9.23 | 9.43 | (20 | ) | ||||||||||||||||
| Annualized net charge-offs to average loans | 1.53 | 1.46 | 7 | 2.22 | 1.96 | 26 | ||||||||||||||||||
| Allowance for credit losses to period-end loans | 1.70 | 1.59 | 11 | |||||||||||||||||||||
| Allowance for credit losses to nonaccrual loans | 27.81 | 39.26 | (1,145 | ) | ||||||||||||||||||||
| Allowance for credit losses to nonperforming loans (2) | 18.02 | 21.59 | (357 | ) | ||||||||||||||||||||
| Nonaccrual loans to total loans | 6.11 | 4.05 | 206 | |||||||||||||||||||||
| Nonaccrual loans to total assets | 4.44 | 3.21 | 123 | |||||||||||||||||||||
| Nonperforming assets to total loans+other real estate and other assets owned (3) | 10.43 | 7.74 | 269 | |||||||||||||||||||||
| Nonperforming assets to total assets | 7.66 | 6.16 | 150 | |||||||||||||||||||||
| (1) | See the reconciliation table on page 11 of 11. |
| (2) | Nonperforming loans include nonaccrual, 90 days past dueand still accruing and accruing troubled debt restructurings. |
| (3) | Nonperforming assets include nonperforming loans and other real estate and other assets owned. |
| Shore Bancshares, Inc. | Page 5 of 11 |
| Consolidated Balance Sheets | |
| (In thousands, except per share data) |
| December 31, 2011 | ||||||||||||
| December 31, | December 31, | compared to | ||||||||||
| 2011 | 2010 | December 31, 2010 | ||||||||||
| ASSETS | ||||||||||||
| Cash and due from banks | $ | 22,986 | $ | 19,680 | 16.8 | % | ||||||
| Interest-bearing deposits with other banks | 99,776 | 21,593 | 362.1 | |||||||||
| Federal funds sold | 4,980 | 36,691 | (86.4 | ) | ||||||||
| Investments available for sale (at fair value) | 129,780 | 99,055 | 31.0 | |||||||||
| Investments held to maturity | 6,480 | 6,727 | (3.7 | ) | ||||||||
| Loans | 841,050 | 895,404 | (6.1 | ) | ||||||||
| Less: allowance for credit losses | (14,288 | ) | (14,227 | ) | 0.4 | |||||||
| Loans, net | 826,762 | 881,177 | (6.2 | ) | ||||||||
| Premises and equipment, net | 14,662 | 14,483 | 1.2 | |||||||||
| Goodwill | 12,454 | 13,678 | (8.9 | ) | ||||||||
| Other intangible assets, net | 4,208 | 4,840 | (13.1 | ) | ||||||||
| Other real estate and other assets owned, net | 9,385 | 3,702 | 153.5 | |||||||||
| Other assets | 26,720 | 28,685 | (6.9 | ) | ||||||||
| Total assets | $ | 1,158,193 | $ | 1,130,311 | 2.5 | |||||||
| LIABILITIES | ||||||||||||
| Noninterest-bearing deposits | $ | 133,801 | $ | 124,188 | 7.7 | |||||||
| Interest-bearing deposits | 876,118 | 855,328 | 2.4 | |||||||||
| Total deposits | 1,009,919 | 979,516 | 3.1 | |||||||||
| Short-term borrowings | 17,817 | 16,041 | 11.1 | |||||||||
| Accrued expenses and other liabilities | 8,753 | 11,309 | (22.6 | ) | ||||||||
| Long-term debt | 455 | 932 | (51.2 | ) | ||||||||
| Total liabilities | 1,036,944 | 1,007,798 | 2.9 | |||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||
| Common stock, par value $0.01; authorized 35,000,000 shares | 85 | 84 | 1.2 | |||||||||
| Warrant | - | 1,543 | (100.0 | ) | ||||||||
| Additional paid in capital | 32,052 | 30,242 | 6.0 | |||||||||
| Retained earnings | 90,801 | 92,458 | (1.8 | ) | ||||||||
| Accumulated other comprehensive loss | (1,689 | ) | (1,814 | ) | 6.9 | |||||||
| Total stockholders' equity | 121,249 | 122,513 | (1.0 | ) | ||||||||
| Total liabilities and stockholders' equity | $ | 1,158,193 | $ | 1,130,311 | 2.5 | |||||||
| Period-end common shares outstanding | 8,457 | 8,443 | 0.2 | |||||||||
| Book value per common share | $ | 14.34 | $ | 14.51 | (1.2 | ) | ||||||
| Shore Bancshares, Inc. | Page 6 of 11 |
| Consolidated Statements of Income | |
| (In thousands, except per share data) |
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | |||||||||||||||||||
| INTEREST INCOME | ||||||||||||||||||||||||
| Interest and fees on loans | $ | 11,649 | $ | 12,958 | (10.1 | )% | $ | 47,549 | $ | 51,962 | (8.5 | )% | ||||||||||||
| Interest and dividends on investment securities: | ||||||||||||||||||||||||
| Taxable | 797 | 804 | (0.9 | ) | 3,031 | 3,209 | (5.5 | ) | ||||||||||||||||
| Tax-exempt | 38 | 47 | (19.1 | ) | 154 | 212 | (27.4 | ) | ||||||||||||||||
| Interest on federal funds sold | 1 | 13 | (92.3 | ) | 25 | 60 | (58.3 | ) | ||||||||||||||||
| Interest on deposits with other banks | 46 | 7 | 557.1 | 93 | 18 | 416.7 | ||||||||||||||||||
| Total interest income | 12,531 | 13,829 | (9.4 | ) | 50,852 | 55,461 | (8.3 | ) | ||||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||||||
| Interest on deposits | 2,673 | 2,937 | (9.0 | ) | 10,995 | 12,681 | (13.3 | ) | ||||||||||||||||
| Interest on short-term borrowings | 15 | 15 | - | 56 | 83 | (32.5 | ) | |||||||||||||||||
| Interest on long-term debt | 6 | 11 | (45.5 | ) | 37 | 58 | (36.2 | ) | ||||||||||||||||
| Total interest expense | 2,694 | 2,963 | (9.1 | ) | 11,088 | 12,822 | (13.5 | ) | ||||||||||||||||
| NET INTEREST INCOME | 9,837 | 10,866 | (9.5 | ) | 39,764 | 42,639 | (6.7 | ) | ||||||||||||||||
| Provision for credit losses | 4,035 | 4,392 | (8.1 | ) | 19,470 | 21,119 | (7.8 | ) | ||||||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 5,802 | 6,474 | (10.4 | ) | 20,294 | 21,520 | (5.7 | ) | ||||||||||||||||
| NONINTEREST INCOME | ||||||||||||||||||||||||
| Service charges on deposit accounts | 700 | 799 | (12.4 | ) | 2,845 | 3,257 | (12.6 | ) | ||||||||||||||||
| Trust and investment fee income | 380 | 358 | 6.1 | 1,563 | 1,503 | 4.0 | ||||||||||||||||||
| Investment securities gains | 128 | - | - | 563 | - | - | ||||||||||||||||||
| Insurance agency commissions | 2,061 | 2,116 | (2.6 | ) | 9,358 | 10,113 | (7.5 | ) | ||||||||||||||||
| Other noninterest income | 750 | 675 | 11.1 | 2,989 | 3,168 | (5.7 | ) | |||||||||||||||||
| Total noninterest income | 4,019 | 3,948 | 1.8 | 17,318 | 18,041 | (4.0 | ) | |||||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||||||||
| Salaries and wages | 4,378 | 4,220 | 3.7 | 16,825 | 17,477 | (3.7 | ) | |||||||||||||||||
| Employee benefits | 923 | 893 | 3.4 | 3,840 | 3,829 | 0.3 | ||||||||||||||||||
| Occupancy expense | 563 | 562 | 0.2 | 2,312 | 2,328 | (0.7 | ) | |||||||||||||||||
| Furniture and equipment expense | 234 | 262 | (10.7 | ) | 1,059 | 1,200 | (11.8 | ) | ||||||||||||||||
| Data processing | 660 | 620 | 6.5 | 2,852 | 2,607 | 9.4 | ||||||||||||||||||
| Directors' fees | 83 | 68 | 22.1 | 500 | 412 | 21.4 | ||||||||||||||||||
| Goodwill and other intangible assets impairment | - | - | - | 1,344 | 3,051 | (55.9 | ) | |||||||||||||||||
| Amortization of intangible assets | 126 | 129 | (2.3 | ) | 512 | 515 | (0.6 | ) | ||||||||||||||||
| Insurance agency commissions expense | 285 | 339 | (15.9 | ) | 1,267 | 1,569 | (19.2 | ) | ||||||||||||||||
| FDIC insurance premium expense | 254 | 445 | (42.9 | ) | 1,298 | 1,834 | (29.2 | ) | ||||||||||||||||
| Other noninterest expenses | 1,899 | 1,544 | 23.0 | 7,358 | 6,898 | 6.7 | ||||||||||||||||||
| Total noninterest expense | 9,405 | 9,082 | 3.6 | 39,167 | 41,720 | (6.1 | ) | |||||||||||||||||
| Income (loss) before income taxes | 416 | 1,340 | (69.0 | ) | (1,555 | ) | (2,159 | ) | 28.0 | |||||||||||||||
| Income tax expense (benefit) | 91 | 490 | (81.4 | ) | (658 | ) | (492 | ) | (33.7 | ) | ||||||||||||||
| NET INCOME (LOSS) | $ | 325 | $ | 850 | (61.8 | ) | $ | (897 | ) | $ | (1,667 | ) | 46.2 | |||||||||||
| Weighted average shares outstanding - basic | 8,457 | 8,443 | 0.2 | 8,451 | 8,442 | 0.1 | ||||||||||||||||||
| Weighted average shares outstanding - diluted | 8,457 | 8,443 | 0.2 | 8,451 | 8,442 | 0.1 | ||||||||||||||||||
| Basic net income (loss) per common share | $ | 0.04 | $ | 0.10 | (60.0 | ) | $ | (0.11 | ) | $ | (0.20 | ) | 45.0 | |||||||||||
| Diluted net income (loss) per common share | 0.04 | 0.10 | (60.0 | ) | (0.11 | ) | (0.20 | ) | 45.0 | |||||||||||||||
| Dividends paid per common share | 0.01 | 0.06 | (83.3 | ) | 0.09 | 0.24 | (62.5 | ) | ||||||||||||||||
| Shore Bancshares, Inc. | Page 7 of 11 |
| Consolidated Average Balance Sheets | |
| (Dollars in thousands) |
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||||||||
| balance | rate | balance | rate | balance | rate | balance | rate | |||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||||||||||
| Loans | $ | 854,302 | 5.42 | % | $ | 903,075 | 5.71 | % | $ | 873,155 | 5.46 | % | $ | 906,732 | 5.75 | % | ||||||||||||||||
| Investment securities | ||||||||||||||||||||||||||||||||
| Taxable | 118,315 | 2.67 | 98,378 | 3.24 | 109,059 | 2.78 | 101,162 | 3.17 | ||||||||||||||||||||||||
| Tax-exempt | 4,410 | 5.27 | 5,222 | 5.40 | 4,509 | 5.19 | 6,080 | 5.29 | ||||||||||||||||||||||||
| Federal funds sold | 8,709 | 0.05 | 34,018 | 0.16 | 23,808 | 0.10 | 39,770 | 0.15 | ||||||||||||||||||||||||
| Interest-bearing deposits | 103,342 | 0.18 | 19,952 | 0.12 | 58,927 | 0.16 | 14,520 | 0.12 | ||||||||||||||||||||||||
| Total earning assets | 1,089,078 | 4.58 | % | 1,060,645 | 5.20 | % | 1,069,458 | 4.78 | % | 1,068,264 | 5.22 | % | ||||||||||||||||||||
| Cash and due from banks | 18,728 | 19,867 | 19,198 | 16,567 | ||||||||||||||||||||||||||||
| Other assets | 68,014 | 62,305 | 67,695 | 65,774 | ||||||||||||||||||||||||||||
| Allowance for credit losses | (15,168 | ) | (14,300 | ) | (16,408 | ) | (13,689 | ) | ||||||||||||||||||||||||
| Total assets | $ | 1,160,652 | $ | 1,128,517 | $ | 1,139,943 | $ | 1,136,916 | ||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||||||||
| Demand deposits | $ | 157,657 | 0.19 | % | $ | 128,592 | 0.22 | % | $ | 145,533 | 0.21 | % | $ | 130,297 | 0.24 | % | ||||||||||||||||
| Money market and savings deposits | 273,906 | 1.07 | 258,713 | 0.84 | 265,910 | 1.00 | 258,650 | 0.76 | ||||||||||||||||||||||||
| Certificates of deposit $100,000 or more | 241,810 | 1.46 | 256,167 | 1.77 | 245,214 | 1.62 | 256,393 | 2.00 | ||||||||||||||||||||||||
| Other time deposits | 201,249 | 1.91 | 208,808 | 2.23 | 205,154 | 1.99 | 214,121 | 2.46 | ||||||||||||||||||||||||
| Interest-bearing deposits | 874,622 | 1.21 | 852,280 | 1.37 | 861,811 | 1.28 | 859,461 | 1.48 | ||||||||||||||||||||||||
| Short-term borrowings | 16,421 | 0.37 | 15,381 | 0.39 | 15,319 | 0.37 | 16,348 | 0.51 | ||||||||||||||||||||||||
| Long-term debt | 466 | 4.46 | 932 | 4.46 | 814 | 4.50 | 1,304 | 4.41 | ||||||||||||||||||||||||
| Total interest-bearing liabilities | 891,509 | 1.20 | % | 868,593 | 1.35 | % | 877,944 | 1.26 | % | 877,113 | 1.46 | % | ||||||||||||||||||||
| Noninterest-bearing deposits | 139,226 | 126,164 | 130,260 | 120,871 | ||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 8,897 | 10,419 | 10,243 | 13,346 | ||||||||||||||||||||||||||||
| Stockholders' equity | 121,020 | 123,341 | 121,496 | 125,586 | ||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,160,652 | $ | 1,128,517 | $ | 1,139,943 | $ | 1,136,916 | ||||||||||||||||||||||||
| Net interest spread | 3.38 | % | 3.85 | % | 3.52 | % | 3.76 | % | ||||||||||||||||||||||||
| Net interest margin | 3.60 | % | 4.09 | % | 3.74 | % | 4.02 | % | ||||||||||||||||||||||||
| Shore Bancshares, Inc. | Page 8 of 11 |
| Financial Highlights By Quarter | |
| (Dollars in thousands, except per share data) |
| 4th quarter | 3rd quarter | 2nd quarter | 1st quarter | 4th quarter | 4Q 11 | 4Q 11 | ||||||||||||||||||||||
| 2011 | 2011 | 2011 | 2011 | 2010 | compared to | compared to | ||||||||||||||||||||||
| (4Q 11) | (3Q 11) | (2Q 11) | (1Q 11) | (4Q 10) | 3Q 11 | 4Q 10 | ||||||||||||||||||||||
| PROFITABILITY FOR THE PERIOD | ||||||||||||||||||||||||||||
| Taxable-equivalent net interest income | $ | 9,889 | $ | 10,172 | $ | 10,001 | $ | 9,921 | $ | 10,932 | (2.8 | )% | (9.5 | )% | ||||||||||||||
| Less: Taxable-equivalent adjustment | 52 | 49 | 59 | 59 | 66 | 6.1 | (21.2 | ) | ||||||||||||||||||||
| Net interest income | 9,837 | 10,123 | 9,942 | 9,862 | 10,866 | (2.8 | ) | (9.5 | ) | |||||||||||||||||||
| Provision for credit losses | 4,035 | 3,650 | 5,395 | 6,390 | 4,392 | 10.5 | (8.1 | ) | ||||||||||||||||||||
| Noninterest income | 4,019 | 4,523 | 4,381 | 4,395 | 3,948 | (11.1 | ) | 1.8 | ||||||||||||||||||||
| Noninterest expense | 9,405 | 10,677 | 9,194 | 9,891 | 9,082 | (11.9 | ) | 3.6 | ||||||||||||||||||||
| Income (loss) before income taxes | 416 | 319 | (266 | ) | (2,024 | ) | 1,340 | 30.4 | (69.0 | ) | ||||||||||||||||||
| Income tax expense (benefit) | 91 | 225 | (33 | ) | (941 | ) | 490 | (59.6 | ) | (81.4 | ) | |||||||||||||||||
| Net income (loss) | $ | 325 | $ | 94 | $ | (233 | ) | $ | (1,083 | ) | $ | 850 | 245.7 | (61.8 | ) | |||||||||||||
| Return on average assets | 0.11 | % | 0.03 | % | (0.08 | )% | (0.39 | )% | 0.30 | % | 8 | bp | (19 | )bp | ||||||||||||||
| Return on average equity | 1.07 | 0.31 | (0.77 | ) | (3.59 | ) | 2.73 | 76 | (166 | ) | ||||||||||||||||||
| Return on average tangible equity (1) | 1.53 | 4.21 | (0.60 | ) | (3.92 | ) | 3.49 | (268 | ) | (196 | ) | |||||||||||||||||
| Net interest margin | 3.60 | 3.77 | 3.80 | 3.79 | 4.09 | (17 | ) | (49 | ) | |||||||||||||||||||
| Efficiency ratio - GAAP | 67.62 | 72.66 | 63.93 | 69.09 | 61.03 | (504 | ) | 659 | ||||||||||||||||||||
| Efficiency ratio - Non-GAAP (1) | 67.61 | 64.18 | 63.05 | 68.57 | 60.17 | 343 | 744 | |||||||||||||||||||||
| PER SHARE DATA | ||||||||||||||||||||||||||||
| Basic net income (loss) per common share | $ | 0.04 | $ | 0.01 | $ | (0.03 | ) | $ | (0.13 | ) | $ | 0.10 | 300.0 | % | (60.0 | )% | ||||||||||||
| Diluted net income (loss) per common share | 0.04 | 0.01 | (0.03 | ) | (0.13 | ) | 0.10 | 300.0 | (60.0 | ) | ||||||||||||||||||
| Dividends paid per common share | 0.01 | 0.01 | 0.01 | 0.06 | 0.06 | - | (83.3 | ) | ||||||||||||||||||||
| Book value per common share at period end | 14.34 | 14.31 | 14.30 | 14.32 | 14.51 | 0.2 | (1.2 | ) | ||||||||||||||||||||
| Tangible book value per common share at period end (1) | 12.37 | 12.32 | 12.14 | 12.14 | 12.32 | 0.4 | 0.4 | |||||||||||||||||||||
| Market value at period end | 5.15 | 4.36 | 6.98 | 9.75 | 10.54 | 18.1 | (51.1 | ) | ||||||||||||||||||||
| Market range: | ||||||||||||||||||||||||||||
| High | 6.13 | 7.06 | 10.21 | 11.11 | 10.73 | (13.2 | ) | (42.9 | ) | |||||||||||||||||||
| Low | 4.20 | 3.95 | 6.51 | 9.42 | 9.25 | 6.3 | (54.6 | ) | ||||||||||||||||||||
| PERIOD-END BALANCE SHEET DATA | ||||||||||||||||||||||||||||
| Loans | $ | 841,050 | $ | 862,566 | $ | 877,331 | $ | 884,715 | $ | 895,404 | (2.5 | )% | (6.1 | )% | ||||||||||||||
| Securities | 136,260 | 112,328 | 113,271 | 106,920 | 105,782 | 21.3 | 28.8 | |||||||||||||||||||||
| Assets | 1,158,193 | 1,157,536 | 1,124,191 | 1,131,334 | 1,130,311 | 0.1 | 2.5 | |||||||||||||||||||||
| Deposits | 1,009,919 | 1,011,919 | 973,442 | 986,486 | 979,516 | (0.2 | ) | 3.1 | ||||||||||||||||||||
| Stockholders' equity | 121,249 | 120,986 | 120,941 | 120,926 | 122,513 | 0.2 | (1.0 | ) | ||||||||||||||||||||
| AVERAGE BALANCE SHEET DATA | ||||||||||||||||||||||||||||
| Loans | $ | 854,302 | $ | 869,221 | $ | 881,976 | $ | 887,531 | $ | 903,075 | (1.7 | )% | (5.4 | )% | ||||||||||||||
| Securities | 122,725 | 113,938 | 111,190 | 106,235 | 103,600 | 7.7 | 18.5 | |||||||||||||||||||||
| Earning assets | 1,089,078 | 1,069,636 | 1,056,658 | 1,062,164 | 1,060,645 | 1.8 | 2.7 | |||||||||||||||||||||
| Assets | 1,160,652 | 1,142,588 | 1,125,213 | 1,131,259 | 1,128,517 | 1.6 | 2.8 | |||||||||||||||||||||
| Deposits | 1,013,848 | 994,968 | 976,840 | 982,249 | 978,444 | 1.9 | 3.6 | |||||||||||||||||||||
| Stockholders' equity | 121,020 | 121,327 | 121,187 | 122,466 | 123,341 | (0.3 | ) | (1.9 | ) | |||||||||||||||||||
| CAPITAL AND CREDIT QUALITY RATIOS | ||||||||||||||||||||||||||||
| Average equity to average assets | 10.43 | % | 10.62 | % | 10.77 | % | 10.83 | % | 10.93 | % | (19 | )bp | (50 | )bp | ||||||||||||||
| Average tangible equity to average tangible assets (1) | 9.12 | 9.17 | 9.29 | 9.35 | 9.50 | (6 | ) | (38 | ) | |||||||||||||||||||
| Annualized net charge-offs to average loans | 1.53 | 2.95 | 2.96 | 1.44 | 1.46 | (142 | ) | 7 | ||||||||||||||||||||
| Allowance for credit losses to period-end loans | 1.70 | 1.57 | 1.86 | 1.97 | 1.59 | 13 | 11 | |||||||||||||||||||||
| Allowance for credit losses to nonaccrual loans | 27.81 | 27.31 | 33.74 | 35.83 | 39.26 | 50 | (1,145 | ) | ||||||||||||||||||||
| Allowance for credit losses to nonperforming loans (2) | 18.02 | 16.31 | 22.68 | 21.16 | 21.59 | 171 | (357 | ) | ||||||||||||||||||||
| Nonaccrual loans to total loans | 6.11 | 5.75 | 5.53 | 5.51 | 4.05 | 36 | 206 | |||||||||||||||||||||
| Nonaccrual loans to total assets | 4.44 | 4.28 | 4.31 | 4.31 | 3.21 | 16 | 123 | |||||||||||||||||||||
| Nonperforming assets to total loans+other real estate and other assets owned (3) | 10.43 | 10.65 | 9.04 | 9.82 | 7.74 | (22 | ) | 269 | ||||||||||||||||||||
| Nonperforming assets to total assets | 7.66 | 8.02 | 7.12 | 7.72 | 6.16 | (36 | ) | 150 | ||||||||||||||||||||
| (1) | See the reconciliation table on page 11 of 11. |
| (2) | Nonperforming loans include nonaccrual, 90 days past due and still accruing and accruing troubled debt restructurings. |
| (3) | Nonperforming assets include nonperforming loans and other real estate and other assets owned. |
| Shore Bancshares, Inc. | Page 9 of 11 |
| Consolidated Statements of Income By Quarter | |
| (In thousands, except per share data) |
| 4Q 11 | 4Q 11 | |||||||||||||||||||||||||||
| compared to | compared to | |||||||||||||||||||||||||||
| 4Q 11 | 3Q 11 | 2Q 11 | 1Q 11 | 4Q 10 | 3Q 11 | 4Q 10 | ||||||||||||||||||||||
| INTEREST INCOME | ||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 11,649 | $ | 12,003 | $ | 11,896 | $ | 12,001 | $ | 12,958 | (2.9 | )% | (10.1 | )% | ||||||||||||||
| Interest and dividends on investment securities: | ||||||||||||||||||||||||||||
| Taxable | 797 | 795 | 782 | 657 | 804 | 0.3 | (0.9 | ) | ||||||||||||||||||||
| Tax-exempt | 38 | 38 | 40 | 38 | 47 | - | (19.1 | ) | ||||||||||||||||||||
| Interest on federal funds sold | 1 | 3 | 5 | 16 | 13 | (66.7 | ) | (92.3 | ) | |||||||||||||||||||
| Interest on deposits with other banks | 46 | 29 | 12 | 6 | 7 | 58.6 | 557.1 | |||||||||||||||||||||
| Total interest income | 12,531 | 12,868 | 12,735 | 12,718 | 13,829 | (2.6 | ) | (9.4 | ) | |||||||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||||||||||
| Interest on deposits | 2,673 | 2,720 | 2,769 | 2,833 | 2,937 | (1.7 | ) | (9.0 | ) | |||||||||||||||||||
| Interest on short-term borrowings | 15 | 15 | 13 | 13 | 15 | - | - | |||||||||||||||||||||
| Interest on long-term debt | 6 | 10 | 11 | 10 | 11 | (40.0 | ) | (45.5 | ) | |||||||||||||||||||
| Total interest expense | 2,694 | 2,745 | 2,793 | 2,856 | 2,963 | (1.9 | ) | (9.1 | ) | |||||||||||||||||||
| NET INTEREST INCOME | 9,837 | 10,123 | 9,942 | 9,862 | 10,866 | (2.8 | ) | (9.5 | ) | |||||||||||||||||||
| Provision for credit losses | 4,035 | 3,650 | 5,395 | 6,390 | 4,392 | 10.5 | (8.1 | ) | ||||||||||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 5,802 | 6,473 | 4,547 | 3,472 | 6,474 | (10.4 | ) | (10.4 | ) | |||||||||||||||||||
| NONINTEREST INCOME | ||||||||||||||||||||||||||||
| Service charges on deposit accounts | 700 | 697 | 744 | 704 | 799 | 0.4 | (12.4 | ) | ||||||||||||||||||||
| Trust and investment fee income | 380 | 389 | 418 | 376 | 358 | (2.3 | ) | 6.1 | ||||||||||||||||||||
| Investment securities gains | 128 | 354 | 2 | 79 | - | (63.8 | ) | - | ||||||||||||||||||||
| Insurance agency commissions | 2,061 | 2,312 | 2,475 | 2,510 | 2,116 | (10.9 | ) | (2.6 | ) | |||||||||||||||||||
| Other noninterest income | 750 | 771 | 742 | 726 | 675 | (2.7 | ) | 11.1 | ||||||||||||||||||||
| Total noninterest income | 4,019 | 4,523 | 4,381 | 4,395 | 3,948 | (11.1 | ) | 1.8 | ||||||||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||||||||||||
| Salaries and wages | 4,378 | 4,097 | 4,104 | 4,246 | 4,220 | 6.9 | 3.7 | |||||||||||||||||||||
| Employee benefits | 923 | 878 | 886 | 1,153 | 893 | 5.1 | 3.4 | |||||||||||||||||||||
| Occupancy expense | 563 | 585 | 568 | 596 | 562 | (3.8 | ) | 0.2 | ||||||||||||||||||||
| Furniture and equipment expense | 234 | 262 | 291 | 272 | 262 | (10.7 | ) | (10.7 | ) | |||||||||||||||||||
| Data processing | 660 | 661 | 680 | 851 | 620 | (0.2 | ) | 6.5 | ||||||||||||||||||||
| Directors' fees | 83 | 198 | 112 | 107 | 68 | (58.1 | ) | 22.1 | ||||||||||||||||||||
| Goodwill and other intangible assets impairment | - | 1,344 | - | - | - | (100.0 | ) | - | ||||||||||||||||||||
| Amortization of intangible assets | 126 | 129 | 128 | 129 | 129 | (2.3 | ) | (2.3 | ) | |||||||||||||||||||
| Insurance agency commissions expense | 285 | 250 | 357 | 375 | 339 | 14.0 | (15.9 | ) | ||||||||||||||||||||
| FDIC insurance premium expense | 254 | 180 | 404 | 460 | 445 | 41.1 | (42.9 | ) | ||||||||||||||||||||
| Other noninterest expenses | 1,899 | 2,093 | 1,664 | 1,702 | 1,544 | (9.3 | ) | 23.0 | ||||||||||||||||||||
| Total noninterest expense | 9,405 | 10,677 | 9,194 | 9,891 | 9,082 | (11.9 | ) | 3.6 | ||||||||||||||||||||
| Income (loss) before income taxes | 416 | 319 | (266 | ) | (2,024 | ) | 1,340 | 30.4 | (69.0 | ) | ||||||||||||||||||
| Income tax expense (benefit) | 91 | 225 | (33 | ) | (941 | ) | 490 | (59.6 | ) | (81.4 | ) | |||||||||||||||||
| NET INCOME (LOSS) | $ | 325 | $ | 94 | $ | (233 | ) | $ | (1,083 | ) | $ | 850 | 245.7 | (61.8 | ) | |||||||||||||
| Weighted average shares outstanding - basic | 8,457 | 8,457 | 8,446 | 8,443 | 8,443 | - | 0.2 | |||||||||||||||||||||
| Weighted average shares outstanding - diluted | 8,457 | 8,457 | 8,446 | 8,443 | 8,443 | - | 0.2 | |||||||||||||||||||||
| Basic net income (loss) per common share | $ | 0.04 | $ | 0.01 | $ | (0.03 | ) | $ | (0.13 | ) | $ | 0.10 | 300.0 | (60.0 | ) | |||||||||||||
| Diluted net income (loss) per common share | 0.04 | 0.01 | (0.03 | ) | (0.13 | ) | 0.10 | 300.0 | (60.0 | ) | ||||||||||||||||||
| Dividends paid per common share | 0.01 | 0.01 | 0.01 | 0.06 | 0.06 | - | (83.3 | ) | ||||||||||||||||||||
| Shore Bancshares, Inc. | Page 10 of 11 |
| Consolidated Average Balance Sheets By Quarter | |
| (Dollars in thousands) |
| Average balance | ||||||||||||||||||||||||||||||||||||||||||||||||
| 4Q 11 | 3Q 11 | 2Q 11 | 1Q 11 | 4Q 10 | 4Q 11 | 4Q 11 | ||||||||||||||||||||||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | compared to | compared to | |||||||||||||||||||||||||||||||||||||
| balance | rate | balance | rate | balance | rate | balance | rate | balance | rate | 3Q 11 | 4Q 10 | |||||||||||||||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 854,302 | 5.42 | % | $ | 869,221 | 5.49 | % | $ | 881,976 | 5.43 | % | $ | 887,531 | 5.50 | % | $ | 903,075 | 5.71 | % | (1.7 | )% | (5.4 | )% | ||||||||||||||||||||||||
| Investment securities | ||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable | 118,315 | 2.67 | 109,498 | 2.88 | 106,609 | 2.94 | 101,625 | 2.62 | 98,378 | 3.24 | 8.1 | 20.3 | ||||||||||||||||||||||||||||||||||||
| Tax-exempt | 4,410 | 5.27 | 4,440 | 5.12 | 4,581 | 5.27 | 4,610 | 5.08 | 5,222 | 5.40 | (0.7 | ) | (15.5 | ) | ||||||||||||||||||||||||||||||||||
| Federal funds sold | 8,709 | 0.05 | 15,905 | 0.07 | 24,310 | 0.09 | 46,813 | 0.14 | 34,018 | 0.16 | (45.2 | ) | (74.4 | ) | ||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | 103,342 | 0.18 | 70,572 | 0.16 | 39,182 | 0.12 | 21,585 | 0.12 | 19,952 | 0.12 | 46.4 | 418.0 | ||||||||||||||||||||||||||||||||||||
| Total earning assets | 1,089,078 | 4.58 | % | 1,069,636 | 4.79 | % | 1,056,658 | 4.86 | % | 1,062,164 | 4.88 | % | 1,060,645 | 5.20 | % | 1.8 | 2.7 | |||||||||||||||||||||||||||||||
| Cash and due from banks | 18,728 | 20,414 | 18,327 | 19,316 | 19,867 | (8.3 | ) | (5.7 | ) | |||||||||||||||||||||||||||||||||||||||
| Other assets | 68,014 | 69,394 | 68,190 | 65,426 | 62,305 | (2.0 | ) | 9.2 | ||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (15,168 | ) | (16,856 | ) | (17,962 | ) | (15,647 | ) | (14,300 | ) | (10.0 | ) | 6.1 | |||||||||||||||||||||||||||||||||||
| Total assets | $ | 1,160,652 | $ | 1,142,588 | $ | 1,125,213 | $ | 1,131,259 | $ | 1,128,517 | 1.6 | 2.8 | ||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
| Demand deposits | $ | 157,657 | 0.19 | % | $ | 154,685 | 0.20 | % | $ | 137,775 | 0.22 | % | $ | 131,628 | 0.22 | % | $ | 128,592 | 0.22 | % | 1.9 | 22.6 | ||||||||||||||||||||||||||
| Money market and savings deposits | 273,906 | 1.07 | 266,871 | 1.03 | 261,869 | 0.97 | 260,841 | 0.93 | 258,713 | 0.84 | 2.6 | 5.9 | ||||||||||||||||||||||||||||||||||||
| Certificates of deposit $100,000 or more | 241,810 | 1.46 | 235,362 | 1.63 | 244,805 | 1.67 | 259,179 | 1.70 | 256,167 | 1.77 | 2.7 | (5.6 | ) | |||||||||||||||||||||||||||||||||||
| Other time deposits | 201,249 | 1.91 | 204,836 | 1.91 | 206,310 | 2.02 | 208,301 | 2.10 | 208,808 | 2.23 | (1.8 | ) | (3.6 | ) | ||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | 874,622 | 1.21 | 861,754 | 1.25 | 850,759 | 1.31 | 859,949 | 1.34 | 852,280 | 1.37 | 1.5 | 2.6 | ||||||||||||||||||||||||||||||||||||
| Short-term borrowings | 16,421 | 0.37 | 15,640 | 0.37 | 15,020 | 0.36 | 14,165 | 0.37 | 15,381 | 0.39 | 5.0 | 6.8 | ||||||||||||||||||||||||||||||||||||
| Long-term debt | 466 | 4.46 | 932 | 4.46 | 932 | 4.51 | 932 | 4.56 | 932 | 4.46 | (50.0 | ) | (50.0 | ) | ||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 891,509 | 1.20 | % | 878,326 | 1.24 | % | 866,711 | 1.29 | % | 875,046 | 1.32 | % | 868,593 | 1.35 | % | 1.5 | 2.6 | |||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 139,226 | 133,214 | 126,081 | 122,300 | 126,164 | 4.5 | 10.4 | |||||||||||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 8,897 | 9,721 | 11,234 | 11,447 | 10,419 | (8.5 | ) | (14.6 | ) | |||||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 121,020 | 121,327 | 121,187 | 122,466 | 123,341 | (0.3 | ) | (1.9 | ) | |||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,160,652 | $ | 1,142,588 | $ | 1,125,213 | $ | 1,131,259 | $ | 1,128,517 | 1.6 | 2.8 | ||||||||||||||||||||||||||||||||||||
| Net interest spread | 3.38 | % | 3.55 | % | 3.57 | % | 3.56 | % | 3.85 | % | ||||||||||||||||||||||||||||||||||||||
| Net interest margin | 3.60 | % | 3.77 | % | 3.80 | % | 3.79 | % | 4.09 | % | ||||||||||||||||||||||||||||||||||||||
| Shore Bancshares, Inc. | Page 11 of 11 |
| Reconciliation of Generally Accepted Accounting Principles (GAAP) | |
| and Non-GAAP Measures | |
| (In thousands, except per share data) |
| YTD | YTD | |||||||||||||||||||||||||||
| 4Q 11 | 3Q 11 | 2Q 11 | 1Q 11 | 4Q 10 | 12/31/2011 | 12/31/2010 | ||||||||||||||||||||||
| The following reconciles return on average equity and return on average tangible equity (Note 1): | ||||||||||||||||||||||||||||
| Net income (loss) | $ | 325 | $ | 94 | $ | (233 | ) | $ | (1,083 | ) | $ | 850 | $ | (897 | ) | $ | (1,667 | ) | ||||||||||
| Net income (loss) - annualized (A) | $ | 1,289 | $ | 373 | $ | (935 | ) | $ | (4,392 | ) | $ | 3,372 | $ | (897 | ) | $ | (1,667 | ) | ||||||||||
| Net income (loss), excluding net amortization and impairment charges of intangible assets | $ | 401 | $ | 1,094 | $ | (155 | ) | $ | (1,005 | ) | $ | 928 | $ | 335 | $ | 1,101 | ||||||||||||
| Net income (loss), excluding net amortization and impairment charges of intangible assets - annualized (B) | $ | 1,591 | $ | 4,340 | $ | (622 | ) | $ | (4,076 | ) | $ | 3,682 | $ | 335 | $ | 1,101 | ||||||||||||
| Average stockholders' equity (C) | $ | 121,020 | $ | 121,327 | $ | 121,187 | $ | 122,466 | $ | 123,341 | $ | 121,496 | $ | 125,586 | ||||||||||||||
| Less: Average goodwill and other intangible assets | (16,732 | ) | (18,190 | ) | (18,334 | ) | (18,465 | ) | (17,877 | ) | (17,926 | ) | (20,337 | ) | ||||||||||||||
| Average tangible equity (D) | $ | 104,288 | $ | 103,137 | $ | 102,853 | $ | 104,001 | $ | 105,464 | $ | 103,570 | $ | 105,249 | ||||||||||||||
| Return on average equity (GAAP) (A)/(C) | 1.07 | % | 0.31 | % | (0.77 | )% | (3.59 | )% | 2.73 | % | (0.74 | )% | (1.33 | )% | ||||||||||||||
| Return on average tangible equity (Non-GAAP) (B)/(D) | 1.53 | % | 4.21 | % | (0.60 | )% | (3.92 | )% | 3.49 | % | 0.32 | % | 1.05 | % | ||||||||||||||
| The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio (Note 2): | ||||||||||||||||||||||||||||
| Noninterest expense (E) | $ | 9,405 | $ | 10,677 | $ | 9,194 | $ | 9,891 | $ | 9,082 | $ | 39,167 | $ | 41,720 | ||||||||||||||
| Less: Amortization of intangible assets | (126 | ) | (129 | ) | (128 | ) | (129 | ) | (129 | ) | (512 | ) | (515 | ) | ||||||||||||||
| Impairment charges | - | (1,344 | ) | - | - | - | (1,344 | ) | (3,051 | ) | ||||||||||||||||||
| Adjusted noninterest expense (F) | $ | 9,279 | $ | 9,204 | $ | 9,066 | $ | 9,762 | $ | 8,953 | $ | 37,311 | $ | 38,154 | ||||||||||||||
| Taxable-equivalent net interest income (G) | $ | 9,889 | $ | 10,172 | $ | 10,001 | $ | 9,921 | $ | 10,932 | $ | 39,983 | $ | 42,904 | ||||||||||||||
| Noninterest income (H) | $ | 4,019 | $ | 4,523 | $ | 4,381 | $ | 4,395 | $ | 3,948 | $ | 17,318 | $ | 18,041 | ||||||||||||||
| Less: Investment securities (gains)/losses | (128 | ) | (354 | ) | (2 | ) | (79 | ) | - | (563 | ) | - | ||||||||||||||||
| Other nonrecurring (gains)/losses | (56 | ) | - | - | - | - | (56 | ) | (224 | ) | ||||||||||||||||||
| Adjusted noninterest income (I) | $ | 3,835 | $ | 4,169 | $ | 4,379 | $ | 4,316 | $ | 3,948 | $ | 16,699 | $ | 17,817 | ||||||||||||||
| Efficiency ratio (GAAP) (E)/(G)+(H) | 67.62 | % | 72.66 | % | 63.93 | % | 69.09 | % | 61.03 | % | 68.35 | % | 68.46 | % | ||||||||||||||
| Efficiency ratio (Non-GAAP) (F)/(G)+(I) | 67.61 | % | 64.18 | % | 63.05 | % | 68.57 | % | 60.17 | % | 65.83 | % | 62.83 | % | ||||||||||||||
| The following reconciles book value per common share and tangible book value per common share (Note 1): | ||||||||||||||||||||||||||||
| Stockholders' equity (J) | $ | 121,249 | $ | 120,986 | $ | 120,941 | $ | 120,926 | $ | 122,513 | ||||||||||||||||||
| Less: Goodwill and other intangible assets | (16,662 | ) | (16,788 | ) | (18,261 | ) | (18,389 | ) | (18,518 | ) | ||||||||||||||||||
| Tangible equity (K) | $ | 104,587 | $ | 104,198 | $ | 102,680 | $ | 102,537 | $ | 103,995 | ||||||||||||||||||
| Shares outstanding (L) | 8,457 | 8,457 | 8,457 | 8,443 | 8,443 | |||||||||||||||||||||||
| Book value per common share (GAAP) (J)/(L) | $ | 14.34 | $ | 14.31 | $ | 14.30 | $ | 14.32 | $ | 14.51 | ||||||||||||||||||
| Tangible book value per common share (Non-GAAP) (K)/(L) | $ | 12.37 | $ | 12.32 | $ | 12.14 | $ | 12.14 | $ | 12.32 | ||||||||||||||||||
| The following reconciles average equity to average assets and average tangible equity to average tangible assets (Note 1): | ||||||||||||||||||||||||||||
| Average stockholders' equity (M) | $ | 121,020 | $ | 121,327 | $ | 121,187 | $ | 122,466 | $ | 123,341 | $ | 121,496 | $ | 125,586 | ||||||||||||||
| Less: Average goodwill and other intangible assets | (16,732 | ) | (18,190 | ) | (18,334 | ) | (18,465 | ) | (17,877 | ) | (17,926 | ) | (20,337 | ) | ||||||||||||||
| Average tangible equity (N) | $ | 104,288 | $ | 103,137 | $ | 102,853 | $ | 104,001 | $ | 105,464 | $ | 103,570 | $ | 105,249 | ||||||||||||||
| Average assets (O) | $ | 1,160,652 | $ | 1,142,588 | $ | 1,125,213 | $ | 1,131,259 | $ | 1,128,517 | $ | 1,139,943 | $ | 1,136,916 | ||||||||||||||
| Less: Average goodwill and other intangible assets | (16,732 | ) | (18,190 | ) | (18,334 | ) | (18,465 | ) | (17,877 | ) | (17,926 | ) | (20,337 | ) | ||||||||||||||
| Average tangible assets (P) | $ | 1,143,920 | $ | 1,124,398 | $ | 1,106,879 | $ | 1,112,794 | $ | 1,110,640 | $ | 1,122,017 | $ | 1,116,579 | ||||||||||||||
| Average equity/average assets (GAAP) (M)/(O) | 10.43 | % | 10.62 | % | 10.77 | % | 10.83 | % | 10.93 | % | 10.66 | % | 11.05 | % | ||||||||||||||
| Average tangible equity/average tangible assets (Non-GAAP) (N)/(P) | 9.12 | % | 9.17 | % | 9.29 | % | 9.35 | % | 9.50 | % | 9.23 | % | 9.43 | % | ||||||||||||||
| Note 1: | Management believes that reporting tangible equity and tangible assets more closely approximates the adequacy of capital for regulatory purposes. |
| Note 2: | Management believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling cash-based operating activities. |