28969 Information Lane
Easton, Maryland 21601
Phone 410-763-7800
PRESS RELEASE
Shore Bancshares Reports First Quarter 2014 Financial Results
Easton, Maryland (04/24/2014) - Shore Bancshares, Inc. (NASDAQ - SHBI) today reported net income of $1.3 million or $0.15 per diluted common share for the first quarter of 2014, compared to net income of $1.2 million or $0.14 per diluted common share for the fourth quarter of 2013, and net income of $222 thousand or $0.03 per diluted common share for the first quarter of 2013.
When comparing the first quarter of 2014 to the fourth quarter of 2013, theprimary reasons for the improved results were a $573 thousand increase in noninterest income and a $353 thousand decline in noninterest expense, which were partially offset by a $501 thousand increase in the provision for credit losses and a $247 thousand decline in net interest income. When comparing the first quarter of 2014 to the first quarter of 2013,the primary reasons for the improved results were a $1.2 million decline in the provision for credit losses which was impacted by the sale of loans and other real estate owned(the “Asset Sale”) by the Company’s wholly-owned subsidiary, The Talbot Bank of Easton, Maryland (“Talbot Bank”), during the fourth quarter of 2013, a $376 thousand decline in noninterest expense and a $298 thousand increase in noninterest income, which were partially offset by a $154 thousand decline in net interest income.
“We are pleased to report improved earnings over the linked quarter and the first quarter of 2013,” said Lloyd L. “Scott” Beatty, Jr., president and chief executive officer. “Much of this improvement is due to lower credit-related expenses as a result of the Asset Sale, which was recorded in the third quarter and completed during the fourth quarter of 2013. With the Asset Sale, we are able to re-emphasize our focus on healthy loan originations and overall business development; however, we still see that the slowly improving local economy is delaying our progress. Our total stockholders’ equity to total assets was 9.97% at March 31, 2014, improving from the 9.80% at the end of 2013.”
Balance Sheet Review
Total assets were $1.050 billion at March 31, 2014, a $4.6 million, or less than 1%, decrease when compared to the $1.054 billion at the end of 2013. The decrease in total assets included a decline in total loans of $8.3 million, or 1.2%, partially offset by an increase in investment securities of $5.0 million, or 3.3%. Loans held for sale at December 31, 2013 were reclassified to loans during the first quarter of 2014. Total deposits decreased $4.0 million, or less than 1%, when compared to December 31, 2013. The decrease in total deposits was mainly due to a decline in noninterest-bearing deposits ($7.3 million) and time deposits ($11.3 million), which was partially offset by a shift to money market and savings deposits ($11.5 million) and interest-bearing demand deposits ($3.1 million). Total stockholders’ equity increased $1.3 million, or 1.3%, when compared to the end of 2013. At March 31, 2014, the ratio of total equity to total assets was 9.97% and the ratio of total tangible equity to total tangible assets was 8.58%.
Total assets at March 31, 2014, decreased $55.1 million, or 5%, when compared to total assets at March 31, 2013. The decrease in assets was primarily due to a decline in loans as a result of the Asset Sale during the fourth quarter of 2013. Total deposits decreased $40.7 million, or 4.2%, when compared to March 31, 2013. The decrease in total deposits was mainly due to a decline in time deposits ($44.4 million) and money market and savings deposits ($12.2 million). The decrease in money market deposit accounts was associated with the Company’s participation in the Promontory Insured Network Deposits Program (“IND Program”). In December 2012, the Company decided to partially exit the IND Program to decrease its excess liquidity and, in June 2013, the Company fully exited the IND Program in which $20 million in money market deposits remained. The decrease in time deposits also reduced the Company’s excess liquidity.
Review of Quarterly Financial Results
Net interest income was $8.3 million for the first quarter of 2014, compared to $8.6 million for the fourth quarter of 2013 and $8.5 million for the first quarter of 2013. The decrease in net interest income when compared to the fourth quarter of 2013 was primarily due to lower volumes of average loan balances, partially offset by lower volumes of and rates paid on time deposits. The decrease in net interest income when compared to the first quarter of 2013 was primarily due to lower volumes of average loan balances, partially offset by lower volumes of and rates paid on money market and savings deposits, and time deposits. However, the Company’s net interest margin improved to 3.50% for the first quarter of 2014 when compared to the 3.47% for the fourth quarter of 2013 and 3.30% for the first quarter of 2013. The higher net interest margin when compared to the fourth quarter of 2013 was mainly due to a decline of $211 thousand in reversals of nonaccrual income. The higher net interest margin for the first quarter of 2014 when compared to the first quarter of 2013 was mainly due to the impact of exiting the IND Program, which resulted in a reduction in both the money market account balances as well as the associated higher rate related to this program.
The provision for credit losses was $975 thousand for the three months ended March 31, 2014. The comparable amounts were $474 thousand and $2.2 million for the three months ended December 31, 2013 and March 31, 2013, respectively. The higher level of provision for credit losses when comparing the first quarter of 2014 to the fourth quarter of 2013 was primarily due to increases in loan charge-offs and nonaccrual loans. The lower level of provision for credit losses when comparing the first quarter of 2014 to the first quarter of 2013 was primarily due to decreases in loan charge-offs and nonaccrual loans. Net charge-offs were $1.6 million for the first quarter of 2014, $1.1 million for the fourth quarter of 2013 and $2.4 million for the first quarter of 2013. The ratio of annualized net charge-offs to average loans was 0.93% for the first quarter of 2014, 0.58% for the fourth quarter of 2013 and 1.25% for the first quarter of 2013. The ratio of the allowance for credit losses to period-end loans was 1.43% at March 31, 2014, compared to 1.51% at December 31, 2013 and 2.00% at March 31, 2013.
At March 31, 2014, nonperforming assets were $23.9 million, an increase of $1.8 million, or 7.9%, when compared to December 31, 2013. This increase was primarily due to the addition of one nonaccrual commercial real estate loan, net of the transfer of one nonaccrual residential real estate loan to other real estate owned. Additionally, accruing troubled debt restructurings (“TDRs”) were $25.3 million at March 31, 2014, a decrease of $755 thousand, or 2.9%, when compared to December 31, 2013. When comparing March 31, 2014 to March 31, 2013, nonperforming assets decreased $16.3 million, or 40.4%, and accruing TDRs decreased $27.2 million, or 51.8%. The positive trend in nonperforming assets and TDRs when comparing March 31, 2014 to March 31, 2013, was mainly accomplished with the previously-mentioned Asset Sale. At March 31, 2014, the ratio of nonaccrual loans to total assets was 1.83%, compared to 1.72% and 2.88% at December 31, 2013 and March 31, 2013, respectively. In addition, the ratio of accruing TDRs to total assets at March 31, 2014 was 2.41%, improving from 2.47% at December 31, 2013 and 4.76% at March 31, 2013.
| Page 2 of 12 |
Total noninterest income for the first quarter of 2014 increased $573 thousand when compared to the fourth quarter of 2013 and $298 thousand when compared to the first quarter of 2013. The increase for both periods was primarily due to higher insurance agency commissions, mainly from contingency payments which are typically received in the first quarter of each year and are based on the prior year’s performance.
Total noninterest expense for the first quarter of 2014 declined $353 thousand when compared to the fourth quarter of 2013 and $376 thousand when compared to the first quarter of 2013. The decrease in noninterest expense was primarily due to lower costs associated with problem assets, which was a positive result of the Asset Sale. The decrease from the fourth quarter of 2013 was mainly due to lower write-downs of other real estate owned ($296 thousand), loan collection ($137 thousand) and marketing ($125 thousand) included in other noninterest expense, and FDIC insurance premiums ($155 thousand) due to improved capital ratios at Talbot Bank. These decreases in noninterest expense were partially offset by an increase in employee benefits of $199 thousand, which included higher payroll taxes ($116 thousand) and group insurance ($73 thousand). When compared to the first quarter of 2013, the decrease in noninterest expense for the first quarter of 2014 was primarily due to lower write-downs of other real estate owned.
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; and an insurance premium finance company, Mubell Finance, LLC; and a registered investment adviser firm, Wye Financial Services, LLC. Shore Bancshares, Inc. engages in the trust services business through the trust department at CNB under the name “Wye Financial & Trust”. Additional information is available atwww.shorebancshares.com.
Forward-Looking Statements
The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. 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 risks 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 by Shore Bancshares, Inc. with the Securities and Exchange Commission entitled “Risk Factors”.
The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
For further information contact: George Rapp, Chief Financial Officer, 410-763-7800
| Page 3 of 12 |
Shore Bancshares, Inc.
Financial Highlights
(Dollars in thousands, except per share data)
| For the Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2014 | 2013 | Change | ||||||||||
| PROFITABILITY FOR THE PERIOD | ||||||||||||
| Net interest income | $ | 8,323 | $ | 8,477 | (1.8 | )% | ||||||
| Provision for credit losses | 975 | 2,150 | (54.7 | ) | ||||||||
| Noninterest income | 4,788 | 4,490 | 6.6 | |||||||||
| Noninterest expense | 10,115 | 10,491 | (3.6 | ) | ||||||||
| Income before income taxes | 2,021 | 326 | 519.9 | |||||||||
| Income tax expense | 763 | 104 | 633.7 | |||||||||
| Net income | $ | 1,258 | $ | 222 | 466.7 | |||||||
| Return on average assets | 0.49 | % | 0.08 | % | 41 | bp | ||||||
| Return on average equity | 4.88 | 0.79 | 409 | |||||||||
| Return on average tangible equity (1) | 5.97 | 1.11 | 486 | |||||||||
| Net interest margin | 3.50 | 3.30 | 20 | |||||||||
| Efficiency ratio - GAAP | 77.01 | 80.74 | (373 | ) | ||||||||
| Efficiency ratio - Non-GAAP (1) | 76.44 | 80.17 | (373 | ) | ||||||||
| PER SHARE DATA | ||||||||||||
| Basic net income per common share | $ | 0.15 | $ | 0.03 | 400.0 | % | ||||||
| Diluted net income per common share | 0.15 | 0.03 | 400.0 | |||||||||
| Dividends paid per common share | - | - | - | |||||||||
| Book value per common share at period end | 12.35 | 13.51 | (8.6 | ) | ||||||||
| Tangible book value per common share at period end (1) | 10.47 | 11.60 | (9.7 | ) | ||||||||
| Market value at period end | 9.51 | 6.79 | 40.1 | |||||||||
| Market range: | ||||||||||||
| High | 9.99 | 6.91 | 44.6 | |||||||||
| Low | 9.00 | 5.20 | 73.1 | |||||||||
| AVERAGE BALANCE SHEET DATA | ||||||||||||
| Loans | $ | 707,708 | $ | 783,757 | (9.7 | )% | ||||||
| Investment securities | 155,556 | 146,756 | 6.0 | |||||||||
| Earning assets | 966,304 | 1,044,755 | (7.5 | ) | ||||||||
| Assets | 1,044,568 | 1,122,310 | (6.9 | ) | ||||||||
| Deposits | 923,524 | 987,325 | (6.5 | ) | ||||||||
| Stockholders' equity | 104,462 | 114,250 | (8.6 | ) | ||||||||
| CREDIT QUALITY DATA AT PERIOD END | ||||||||||||
| Net charge-offs | $ | 1,631 | $ | 2,406 | (32.2 | )% | ||||||
| Nonaccrual loans | $ | 19,156 | $ | 31,813 | (39.8 | ) | ||||||
| Loans 90 days past due and still accruing | 121 | 22 | 450.0 | |||||||||
| Other real estate owned | 4,672 | 8,366 | (44.2 | ) | ||||||||
| Total nonperforming assets | 23,949 | 40,201 | (40.4 | ) | ||||||||
| Accruing troubled debt restructurings (TDRs) | 25,333 | 52,545 | (51.8 | ) | ||||||||
| Total nonperforming assets and accruing TDRs | $ | 49,282 | $ | 92,746 | (46.9 | ) | ||||||
| CAPITAL AND CREDIT QUALITY RATIOS | ||||||||||||
| Period-end equity to assets | 9.97 | % | 10.35 | % | (38 | )bp | ||||||
| Period-end tangible equity to tangible assets (1) | 8.58 | 9.02 | (44 | ) | ||||||||
| Annualized net charge-offs to average loans | 0.93 | 1.25 | (32 | ) | ||||||||
| Allowance for credit losses as a percent of: | ||||||||||||
| Period-end loans | 1.43 | 2.00 | (57 | ) | ||||||||
| Nonaccrual loans | 52.56 | 49.46 | 310 | |||||||||
| Nonperforming assets | 42.04 | 39.14 | 290 | |||||||||
| Accruing TDRs | 39.75 | 29.95 | 980 | |||||||||
| Nonperforming assets and accruing TDRs | 20.43 | 16.97 | 346 | |||||||||
| As a percent of total loans: | ||||||||||||
| Nonaccrual loans | 2.72 | 4.05 | (133 | ) | ||||||||
| Accruing TDRs | 3.60 | 6.69 | (309 | ) | ||||||||
| Nonaccrual loans and accruing TDRs | 6.32 | 10.74 | (442 | ) | ||||||||
| As a percent of total loans+other real estate owned: | ||||||||||||
| Nonperforming assets | 3.38 | 5.06 | (168 | ) | ||||||||
| Nonperforming assets and accruing TDRs | 6.96 | 11.68 | (472 | ) | ||||||||
| As a percent of total assets: | ||||||||||||
| Nonaccrual loans | 1.83 | 2.88 | (105 | ) | ||||||||
| Nonperforming assets | 2.28 | 3.64 | (136 | ) | ||||||||
| Accruing TDRs | 2.41 | 4.76 | (235 | ) | ||||||||
| Nonperforming assets and accruing TDRs | 4.70 | 8.40 | (370 | ) | ||||||||
(1) See the reconciliation table on page 12 of 12.
| Page 4 of 12 |
Shore Bancshares, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
| March 31, 2014 | March 31, 2014 | |||||||||||||||||||
| March 31, | December 31, | March 31, | compared to | compared to | ||||||||||||||||
| 2014 | 2013 | 2013 | December 31, 2013 | March 31, 2013 | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 22,668 | $ | 21,238 | $ | 24,808 | 6.7 | % | (8.6 | )% | ||||||||||
| Interest-bearing deposits with other banks | 109,831 | 109,384 | 94,090 | 0.4 | 16.7 | |||||||||||||||
| Federal funds sold | 399 | 468 | 2,789 | (14.7 | ) | (85.7 | ) | |||||||||||||
| Investment securities available for sale (at fair value) | 152,247 | 147,101 | 142,238 | 3.5 | 7.0 | |||||||||||||||
| Investment securities held to maturity | 5,074 | 5,185 | 2,594 | (2.1 | ) | 95.6 | ||||||||||||||
| Loans held for sale | - | 3,521 | - | (100.0 | ) | - | ||||||||||||||
| Loans | 703,637 | 711,919 | 785,753 | (1.2 | ) | (10.5 | ) | |||||||||||||
| Less: allowance for credit losses | (10,069 | ) | (10,725 | ) | (15,735 | ) | (6.1 | ) | (36.0 | ) | ||||||||||
| Loans, net | 693,568 | 701,194 | 770,018 | (1.1 | ) | (9.9 | ) | |||||||||||||
| Premises and equipment, net | 15,108 | 15,198 | 15,502 | (0.6 | ) | (2.5 | ) | |||||||||||||
| Goodwill | 12,454 | 12,454 | 12,454 | - | - | |||||||||||||||
| Other intangible assets, net | 3,446 | 3,520 | 3,742 | (2.1 | ) | (7.9 | ) | |||||||||||||
| Other real estate owned, net | 4,672 | 3,779 | 8,366 | 23.6 | (44.2 | ) | ||||||||||||||
| Other assets | 30,047 | 31,082 | 28,010 | (3.3 | ) | 7.3 | ||||||||||||||
| Total assets | $ | 1,049,514 | $ | 1,054,124 | $ | 1,104,611 | (0.4 | ) | (5.0 | ) | ||||||||||
| LIABILITIES | ||||||||||||||||||||
| Noninterest-bearing deposits | $ | 165,459 | $ | 172,797 | $ | 155,412 | (4.2 | ) | 6.5 | |||||||||||
| Interest-bearing deposits | 763,985 | 760,671 | 814,747 | 0.4 | (6.2 | ) | ||||||||||||||
| Total deposits | 929,444 | 933,468 | 970,159 | (0.4 | ) | (4.2 | ) | |||||||||||||
| Short-term borrowings | 8,070 | 10,140 | 11,088 | (20.4 | ) | (27.2 | ) | |||||||||||||
| Accrued expenses and other liabilities | 7,368 | 7,217 | 9,016 | 2.1 | (18.3 | ) | ||||||||||||||
| Total liabilities | 944,882 | 950,825 | 990,263 | (0.6 | ) | (4.6 | ) | |||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||||||||||
| Common stock, par value $0.01; authorized 35,000,000 shares | 85 | 85 | 85 | - | - | |||||||||||||||
| Additional paid in capital | 32,229 | 32,207 | 32,151 | 0.1 | 0.2 | |||||||||||||||
| Retained earnings | 72,702 | 71,444 | 81,300 | 1.8 | (10.6 | ) | ||||||||||||||
| Accumulated other comprehensive (loss) income | (384 | ) | (437 | ) | 812 | 12.1 | (147.3 | ) | ||||||||||||
| Total stockholders' equity | 104,632 | 103,299 | 114,348 | 1.3 | (8.5 | ) | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,049,514 | $ | 1,054,124 | $ | 1,104,611 | (0.4 | ) | (5.0 | ) | ||||||||||
| Period-end common shares outstanding | 8,471 | 8,471 | 8,461 | - | 0.1 | |||||||||||||||
| Book value per common share | $ | 12.35 | $ | 12.19 | $ | 13.51 | 1.3 | (8.6 | ) | |||||||||||
| Page 5 of 12 |
Shore Bancshares, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
| For the Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2014 | 2013 | % Change | ||||||||||
| INTEREST INCOME | ||||||||||||
| Interest and fees on loans | $ | 8,875 | $ | 9,907 | (10.4 | )% | ||||||
| Interest and dividends on investment securities: | ||||||||||||
| Taxable | 521 | 643 | (19.0 | ) | ||||||||
| Tax-exempt | 3 | 5 | (40.0 | ) | ||||||||
| Interest on federal funds sold | - | 2 | (100.0 | ) | ||||||||
| Interest on deposits with other banks | 56 | 50 | 12.0 | |||||||||
| Total interest income | 9,455 | 10,607 | (10.9 | ) | ||||||||
| INTEREST EXPENSE | ||||||||||||
| Interest on deposits | 1,127 | 2,122 | (46.9 | ) | ||||||||
| Interest on short-term borrowings | 5 | 8 | (37.5 | ) | ||||||||
| Total interest expense | 1,132 | 2,130 | (46.9 | ) | ||||||||
| NET INTEREST INCOME | 8,323 | 8,477 | (1.8 | ) | ||||||||
| Provision for credit losses | 975 | 2,150 | (54.7 | ) | ||||||||
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 7,348 | 6,327 | 16.1 | |||||||||
| NONINTEREST INCOME | ||||||||||||
| Service charges on deposit accounts | 558 | 572 | (2.4 | ) | ||||||||
| Trust and investment fee income | 431 | 390 | 10.5 | |||||||||
| Investment securities gains | - | - | - | |||||||||
| Insurance agency commissions | 3,077 | 2,813 | 9.4 | |||||||||
| Other noninterest income | 722 | 715 | 1.0 | |||||||||
| Total noninterest income | 4,788 | 4,490 | 6.6 | |||||||||
| NONINTEREST EXPENSE | ||||||||||||
| Salaries and wages | 4,314 | 4,283 | 0.7 | |||||||||
| Employee benefits | 1,182 | 1,134 | 4.2 | |||||||||
| Occupancy expense | 627 | 597 | 5.0 | |||||||||
| Furniture and equipment expense | 273 | 250 | 9.2 | |||||||||
| Data processing | 760 | 703 | 8.1 | |||||||||
| Directors' fees | 112 | 121 | (7.4 | ) | ||||||||
| Amortization of intangible assets | 74 | 74 | - | |||||||||
| Insurance agency commissions expense | 512 | 461 | 11.1 | |||||||||
| FDIC insurance premium expense | 458 | 366 | 25.1 | |||||||||
| Write-downs of other real estate owned | 75 | 672 | (88.8 | ) | ||||||||
| Other noninterest expenses | 1,728 | 1,830 | (5.6 | ) | ||||||||
| Total noninterest expense | 10,115 | 10,491 | (3.6 | ) | ||||||||
| Income before income taxes | 2,021 | 326 | 519.9 | |||||||||
| Income tax expense | 763 | 104 | 633.7 | |||||||||
| NET INCOME | $ | 1,258 | $ | 222 | 466.7 | |||||||
| Weighted average shares outstanding - basic | 8,471 | 8,458 | 0.2 | |||||||||
| Weighted average shares outstanding - diluted | 8,484 | 8,458 | 0.3 | |||||||||
| Basic net income per common share | $ | 0.15 | $ | 0.03 | 400.0 | |||||||
| Diluted net income per common share | 0.15 | 0.03 | 400.0 | |||||||||
| Dividends paid per common share | - | - | - | |||||||||
| Page 6 of 12 |
Shore Bancshares, Inc.
Consolidated Average Balance Sheets
(Dollars in thousands)
| For the Three Months Ended | ||||||||||||||||
| March 31, | ||||||||||||||||
| 2014 | 2013 | |||||||||||||||
| Average | Yield/ | Average | Yield/ | |||||||||||||
| balance | rate | balance | rate | |||||||||||||
| Earning assets | ||||||||||||||||
| Loans | $ | 707,708 | 5.10 | % | $ | 783,757 | 5.14 | % | ||||||||
| Loans held for sale | 2,425 | - | - | - | ||||||||||||
| Investment securities | ||||||||||||||||
| Taxable | 155,123 | 1.36 | 146,176 | 1.78 | ||||||||||||
| Tax-exempt | 433 | 4.25 | 580 | 4.85 | ||||||||||||
| Federal funds sold | 1,708 | 0.05 | 8,184 | 0.11 | ||||||||||||
| Interest-bearing deposits | 98,907 | 0.23 | 106,058 | 0.19 | ||||||||||||
| Total earning assets | 966,304 | 3.98 | % | 1,044,755 | 4.13 | % | ||||||||||
| Cash and due from banks | 22,708 | 24,966 | ||||||||||||||
| Other assets | 66,203 | 69,185 | ||||||||||||||
| Allowance for credit losses | (10,647 | ) | (16,596 | ) | ||||||||||||
| Total assets | $ | 1,044,568 | $ | 1,122,310 | ||||||||||||
| Interest-bearing liabilities | ||||||||||||||||
| Demand deposits | $ | 173,801 | 0.14 | % | $ | 173,714 | 0.17 | % | ||||||||
| Money market and savings deposits (1) | 222,378 | 0.12 | 244,182 | 0.97 | ||||||||||||
| Certificates of deposit $100,000 or more | 178,792 | 1.13 | 216,288 | 1.39 | ||||||||||||
| Other time deposits | 186,960 | 1.08 | 201,171 | 1.47 | ||||||||||||
| Interest-bearing deposits | 761,931 | 0.60 | 835,355 | 1.03 | ||||||||||||
| Short-term borrowings | 9,345 | 0.22 | 11,987 | 0.27 | ||||||||||||
| Total interest-bearing liabilities | 771,276 | 0.60 | % | 847,342 | 1.02 | % | ||||||||||
| Noninterest-bearing deposits | 161,593 | 151,970 | ||||||||||||||
| Accrued expenses and other liabilities | 7,237 | 8,748 | ||||||||||||||
| Stockholders' equity | 104,462 | 114,250 | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,044,568 | $ | 1,122,310 | ||||||||||||
| Net interest spread | 3.38 | % | 3.11 | % | ||||||||||||
| Net interest margin | 3.50 | % | 3.30 | % | ||||||||||||
| (1) | Interest on money market and savings deposits for the three months ended March 31, 2013 included an adjustment to expense related to interest rate caps and the hedged deposits associated with them. This adjustment increased interest expense $416 thousand for the three months ended March 31, 2013. Interest expense for the three months ended March 31, 2014 did not reflect this adjustment because the interest rate caps were terminated in June of 2013. |
| Page 7 of 12 |
Shore Bancshares, Inc.
Financial Highlights By Quarter
(Dollars in thousands, except per share data)
| 1st quarter | 4th quarter | 3rd quarter | 2nd quarter | 1st quarter | 1Q 14 | 1Q 14 | |||||||||||||||||||||||
| 2014 | 2013 | 2013 | 2013 | 2013 | compared to | compared to | |||||||||||||||||||||||
| (1Q 14) | (4Q 13) | (3Q 13) | (2Q 13) | (1Q 13) | 4Q 13 | 1Q 13 | |||||||||||||||||||||||
| PROFITABILITY FOR THE PERIOD | |||||||||||||||||||||||||||||
| Taxable-equivalent net interest income | $ | 8,347 | $ | 8,595 | $ | 8,852 | $ | 9,028 | $ | 8,504 | (2.9 | )% | (1.8 | )% | |||||||||||||||
| Less: Taxable-equivalent adjustment | 24 | 25 | 24 | 27 | 27 | (4.0 | ) | (11.1 | ) | ||||||||||||||||||||
| Net interest income | 8,323 | 8,570 | 8,828 | 9,001 | 8,477 | (2.9 | ) | (1.8 | ) | ||||||||||||||||||||
| Provision for credit losses | 975 | 474 | 22,460 | 2,700 | 2,150 | 105.7 | (54.7 | ) | |||||||||||||||||||||
| Noninterest income | 4,788 | 4,215 | 4,792 | 3,962 | 4,490 | 13.6 | 6.6 | ||||||||||||||||||||||
| Noninterest expense | 10,115 | 10,468 | 9,968 | 9,759 | 10,491 | (3.4 | ) | (3.6 | ) | ||||||||||||||||||||
| Income (loss) before income taxes | 2,021 | 1,843 | (18,808 | ) | 504 | 326 | 9.7 | 519.9 | |||||||||||||||||||||
| Income tax expense (benefit) | 763 | 668 | (7,416 | ) | 143 | 104 | 14.2 | 633.7 | |||||||||||||||||||||
| Net income (loss) | $ | 1,258 | $ | 1,175 | $ | (11,392 | ) | $ | 361 | $ | 222 | 7.1 | 466.7 | ||||||||||||||||
| Return on average assets | 0.49 | % | 0.44 | % | (4.24 | )% | 0.13 | % | 0.08 | % | 5 | bp | 41 | bp | |||||||||||||||
| Return on average equity | 4.88 | 4.50 | (39.68 | ) | 1.27 | 0.79 | 38 | 409 | |||||||||||||||||||||
| Return on average tangible equity (1) | 5.97 | 5.53 | (46.03 | ) | 1.66 | 1.11 | 44 | 486 | |||||||||||||||||||||
| Net interest margin | 3.50 | 3.47 | 3.54 | 3.60 | 3.30 | 3 | 20 | ||||||||||||||||||||||
| Efficiency ratio - GAAP | 77.01 | 81.72 | 73.06 | 75.13 | 80.74 | (471 | ) | (373 | ) | ||||||||||||||||||||
| Efficiency ratio - Non-GAAP (1) | 76.44 | 81.14 | 74.13 | 74.45 | 80.17 | (470 | ) | (373 | ) | ||||||||||||||||||||
| PER SHARE DATA | |||||||||||||||||||||||||||||
| Basic net income (loss) per common share | $ | 0.15 | $ | 0.14 | $ | (1.35 | ) | $ | 0.04 | $ | 0.03 | 7.1 | % | 400.0 | % | ||||||||||||||
| Diluted net income (loss) per common share | 0.15 | 0.14 | (1.35 | ) | 0.04 | 0.03 | 7.1 | 400.0 | |||||||||||||||||||||
| Dividends paid per common share | - | - | - | - | - | - | - | ||||||||||||||||||||||
| Book value per common share at period end | 12.35 | 12.19 | 12.06 | 13.43 | 13.51 | 1.3 | (8.6 | ) | |||||||||||||||||||||
| Tangible book value per common share at period end (1) | 10.47 | 10.31 | 10.16 | 11.52 | 11.60 | 1.6 | (9.7 | ) | |||||||||||||||||||||
| Market value at period end | 9.51 | 9.22 | 8.80 | 7.36 | 6.79 | 3.1 | 40.1 | ||||||||||||||||||||||
| Market range: | |||||||||||||||||||||||||||||
| High | 9.99 | 9.45 | 9.06 | 7.75 | 6.91 | 5.7 | 44.6 | ||||||||||||||||||||||
| Low | 9.00 | 8.50 | 7.06 | 5.97 | 5.20 | 5.9 | 73.1 | ||||||||||||||||||||||
| AVERAGE BALANCE SHEET DATA | |||||||||||||||||||||||||||||
| Loans | $ | 707,708 | $ | 718,070 | $ | 772,008 | $ | 785,442 | $ | 783,757 | (1.4 | )% | (9.7 | )% | |||||||||||||||
| Investment securities | 155,556 | 145,181 | 124,020 | 141,193 | 146,756 | 7.1 | 6.0 | ||||||||||||||||||||||
| Earning assets | 966,304 | 982,519 | 993,068 | 1,005,474 | 1,044,755 | (1.7 | ) | (7.5 | ) | ||||||||||||||||||||
| Assets | 1,044,568 | 1,060,315 | 1,064,919 | 1,077,852 | 1,122,310 | (1.5 | ) | (6.9 | ) | ||||||||||||||||||||
| Deposits | 923,524 | 938,293 | 932,867 | 943,577 | 987,325 | (1.6 | ) | (6.5 | ) | ||||||||||||||||||||
| Stockholders' equity | 104,462 | 103,507 | 113,904 | 114,208 | 114,250 | 0.9 | (8.6 | ) | |||||||||||||||||||||
| CREDIT QUALITY DATA AT PERIOD END | |||||||||||||||||||||||||||||
| Net charge-offs | $ | 1,631 | $ | 1,050 | $ | 26,882 | $ | 2,712 | $ | 2,406 | 55.3 | % | (32.2 | )% | |||||||||||||||
| Nonaccrual loans excluding nonaccrual loans held for sale (hfs) | $ | 19,156 | $ | 14,626 | $ | 17,501 | $ | 34,818 | $ | 31,813 | 31.0 | (39.8 | ) | ||||||||||||||||
| Loans 90 days past due and still accruing | 121 | 270 | 9 | 3 | 22 | (55.2 | ) | 450.0 | |||||||||||||||||||||
| Other real estate owned | 4,672 | 3,779 | 5,776 | 6,408 | 8,366 | 23.6 | (44.2 | ) | |||||||||||||||||||||
| Total nonperforming assets excluding nonaccrual loans hfs | 23,949 | 18,675 | 23,286 | 41,229 | 40,201 | 28.2 | (40.4 | ) | |||||||||||||||||||||
| Nonaccrual loans hfs | - | 3,521 | 7,265 | - | - | (100.0 | ) | - | |||||||||||||||||||||
| Total nonperforming assets including nonaccrual loans hfs | $ | 23,949 | $ | 22,196 | $ | 30,551 | $ | 41,229 | $ | 40,201 | 7.9 | (40.4 | ) | ||||||||||||||||
| Accruing troubled debt restructurings (TDRs) excluding TDRs hfs | $ | 25,333 | $ | 26,088 | $ | 29,439 | $ | 50,278 | $ | 52,545 | (2.9 | ) | (51.8 | ) | |||||||||||||||
| Accruing TDRs hfs | - | - | 14,842 | - | - | - | - | ||||||||||||||||||||||
| Total accruing TDRs including TDRs hfs | $ | 25,333 | $ | 26,088 | $ | 44,281 | $ | 50,278 | $ | 52,545 | (2.9 | ) | (51.8 | ) | |||||||||||||||
| Total nonperforming assets and accruing TDRs excluding nonaccrual loans and TDRs hfs | $ | 49,282 | $ | 44,763 | $ | 52,725 | $ | 91,507 | $ | 92,746 | 10.1 | (46.9 | ) | ||||||||||||||||
| Nonaccrual loans and TDRs hfs | - | 3,521 | 22,107 | - | - | (100.0 | ) | - | |||||||||||||||||||||
| Total nonperforming assets and accruing TDRs including nonaccrual loans and TDRs hfs | $ | 49,282 | $ | 48,284 | $ | 74,832 | $ | 91,507 | $ | 92,746 | 2.1 | (46.9 | ) | ||||||||||||||||
(1) See the reconciliation table on page 12 of 12.
| Page 8 of 12 |
Shore Bancshares, Inc.
Financial Highlights By Quarter
(Dollars in thousands, except per share data)
| 1st quarter | 4th quarter | 3rd quarter | 2nd quarter | 1st quarter | 1Q 14 | 1Q 14 | ||||||||||||||||||||||
| 2014 | 2013 | 2013 | 2013 | 2013 | compared to | compared to | ||||||||||||||||||||||
| (1Q 14) | (4Q 13) | (3Q 13) | (2Q 13) | (1Q 13) | 4Q 13 | 1Q 13 | ||||||||||||||||||||||
| CAPITAL AND CREDIT QUALITY RATIOS | ||||||||||||||||||||||||||||
| Period-end equity to assets | 9.97 | % | 9.80 | % | 9.70 | % | 10.77 | % | 10.35 | % | 17 | bp | (38 | )bp | ||||||||||||||
| Period-end tangible equity to tangible assets (1) | 8.58 | 8.41 | 8.30 | 9.39 | 9.02 | 17 | (44 | ) | ||||||||||||||||||||
| Annualized net charge-offs to average loans | 0.93 | 0.58 | 13.81 | 1.38 | 1.25 | 35 | (32 | ) | ||||||||||||||||||||
| Allowance for credit losses as a percent of (excluding loans hfs): | ||||||||||||||||||||||||||||
| Period-end loans | 1.43 | 1.51 | 1.57 | 2.01 | 2.00 | (8 | ) | (57 | ) | |||||||||||||||||||
| Nonaccrual loans | 52.56 | 73.33 | 64.57 | 45.16 | 49.46 | (2,077 | ) | 310 | ||||||||||||||||||||
| Nonperforming assets | 42.04 | 57.43 | 48.53 | 38.14 | 39.14 | (1,539 | ) | 290 | ||||||||||||||||||||
| Accruing TDRs | 39.75 | 41.11 | 38.39 | 31.27 | 29.95 | (136 | ) | 980 | ||||||||||||||||||||
| Nonperforming assets and accruing TDRs | 20.43 | 23.96 | 21.43 | 17.18 | 16.97 | (353 | ) | 346 | ||||||||||||||||||||
| Allowance for credit losses as a percent of (including loans hfs): | ||||||||||||||||||||||||||||
| Nonaccrual loans | 52.56 | 59.10 | 45.63 | 45.16 | 49.46 | (654 | ) | 310 | ||||||||||||||||||||
| Nonperforming assets | 42.04 | 48.32 | 36.99 | 38.14 | 39.14 | (628 | ) | 290 | ||||||||||||||||||||
| Accruing TDRs | 39.75 | 41.11 | 25.52 | 31.27 | 29.95 | (136 | ) | 980 | ||||||||||||||||||||
| Nonperforming assets and accruing TDRs | 20.43 | 22.21 | 15.10 | 17.18 | 16.97 | (178 | ) | 346 | ||||||||||||||||||||
| As a percent of total loans (excluding loans hfs): | ||||||||||||||||||||||||||||
| Nonaccrual loans | 2.72 | 2.05 | 2.44 | 4.45 | 4.05 | 67 | (133 | ) | ||||||||||||||||||||
| Accruing TDRs | 3.60 | 3.66 | 4.10 | 6.43 | 6.69 | (6 | ) | (309 | ) | |||||||||||||||||||
| Nonaccrual loans and accruing TDRs | 6.32 | 5.71 | 6.54 | 10.88 | 10.74 | 61 | (442 | ) | ||||||||||||||||||||
| As a percent of total loans+other real estate owned (excluding loans hfs): | ||||||||||||||||||||||||||||
| Nonperforming assets | 3.38 | 2.61 | 3.21 | 5.23 | 5.06 | 77 | (168 | ) | ||||||||||||||||||||
| Nonperforming assets and accruing TDRs | 6.96 | 6.25 | 7.28 | 11.60 | 11.68 | 71 | (472 | ) | ||||||||||||||||||||
| As a percent of total assets (excluding loans hfs): | ||||||||||||||||||||||||||||
| Nonaccrual loans | 1.83 | 1.39 | 1.66 | 3.30 | 2.88 | 44 | (105 | ) | ||||||||||||||||||||
| Nonperforming assets | 2.28 | 1.77 | 2.21 | 3.91 | 3.64 | 51 | (136 | ) | ||||||||||||||||||||
| Accruing TDRs | 2.41 | 2.47 | 2.80 | 4.77 | 4.76 | (6 | ) | (235 | ) | |||||||||||||||||||
| Nonperforming assets and accruing TDRs | 4.70 | 4.25 | 5.01 | 8.68 | 8.40 | 45 | (370 | ) | ||||||||||||||||||||
| �� | ||||||||||||||||||||||||||||
| As a percent of total assets (including loans hfs): | ||||||||||||||||||||||||||||
| Nonaccrual loans | 1.83 | 1.72 | 2.36 | 3.30 | 2.88 | 11 | (105 | ) | ||||||||||||||||||||
| Nonperforming assets | 2.28 | 2.11 | 2.91 | 3.91 | 3.64 | 17 | (136 | ) | ||||||||||||||||||||
| Accruing TDRs | 2.41 | 2.47 | 4.21 | 4.77 | 4.76 | (6 | ) | (235 | ) | |||||||||||||||||||
| Nonperforming assets and accruing TDRs | 4.70 | 4.58 | 7.12 | 8.68 | 8.40 | 12 | (370 | ) | ||||||||||||||||||||
(1) See the reconciliation table on page 12 of 12.
| Page 9 of 12 |
Shore Bancshares, Inc.
Consolidated Statements of Operations By Quarter
(In thousands, except per share data)
| 1Q 14 | 1Q 14 | |||||||||||||||||||||||||||
| compared to | compared to | |||||||||||||||||||||||||||
| 1Q 14 | 4Q 13 | 3Q 13 | 2Q 13 | 1Q 13 | 4Q 13 | 1Q 13 | ||||||||||||||||||||||
| INTEREST INCOME | ||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 8,875 | $ | 9,242 | $ | 9,767 | $ | 10,142 | $ | 9,907 | (4.0 | )% | (10.4 | )% | ||||||||||||||
| Interest and dividends on investment securities: | ||||||||||||||||||||||||||||
| Taxable | 521 | 504 | 357 | 568 | 643 | 3.4 | (19.0 | ) | ||||||||||||||||||||
| Tax-exempt | 3 | 3 | 5 | 4 | 5 | - | (40.0 | ) | ||||||||||||||||||||
| Interest on federal funds sold | - | 1 | - | 1 | 2 | (100.0 | ) | (100.0 | ) | |||||||||||||||||||
| Interest on deposits with other banks | 56 | 57 | 53 | 40 | 50 | (1.8 | ) | 12.0 | ||||||||||||||||||||
| Total interest income | 9,455 | 9,807 | 10,182 | 10,755 | 10,607 | (3.6 | ) | (10.9 | ) | |||||||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||||||||||
| Interest on deposits | 1,127 | 1,230 | 1,348 | 1,748 | 2,122 | (8.4 | ) | (46.9 | ) | |||||||||||||||||||
| Interest on short-term borrowings | 5 | 7 | 6 | 6 | 8 | (28.6 | ) | (37.5 | ) | |||||||||||||||||||
| Total interest expense | 1,132 | 1,237 | 1,354 | 1,754 | 2,130 | (8.5 | ) | (46.9 | ) | |||||||||||||||||||
| NET INTEREST INCOME | 8,323 | 8,570 | 8,828 | 9,001 | 8,477 | (2.9 | ) | (1.8 | ) | |||||||||||||||||||
| Provision for credit losses | 975 | 474 | 22,460 | 2,700 | 2,150 | 105.7 | (54.7 | ) | ||||||||||||||||||||
| NET INTEREST INCOME (LOSS) AFTER PROVISION FOR CREDIT LOSSES | 7,348 | 8,096 | (13,632 | ) | 6,301 | 6,327 | (9.2 | ) | 16.1 | |||||||||||||||||||
| NONINTEREST INCOME | ||||||||||||||||||||||||||||
| Service charges on deposit accounts | 558 | 599 | 600 | 600 | 572 | (6.8 | ) | (2.4 | ) | |||||||||||||||||||
| Trust and investment fee income | 431 | 429 | 401 | 393 | 390 | 0.5 | 10.5 | |||||||||||||||||||||
| Investment securities gains | - | - | - | 913 | - | - | - | |||||||||||||||||||||
| Insurance agency commissions | 3,077 | 2,477 | 2,724 | 2,633 | 2,813 | 24.2 | 9.4 | |||||||||||||||||||||
| Loss on termination of cash flow hedge | - | - | - | (1,306 | ) | - | - | - | ||||||||||||||||||||
| Other noninterest income | 722 | 710 | 1,067 | 729 | 715 | 1.7 | 1.0 | |||||||||||||||||||||
| Total noninterest income | 4,788 | 4,215 | 4,792 | 3,962 | 4,490 | 13.6 | 6.6 | |||||||||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||||||||||||
| Salaries and wages | 4,314 | 4,336 | 4,420 | 4,307 | 4,283 | (0.5 | ) | 0.7 | ||||||||||||||||||||
| Employee benefits | 1,182 | 983 | 971 | 1,006 | 1,134 | 20.2 | 4.2 | |||||||||||||||||||||
| Occupancy expense | 627 | 569 | 566 | 612 | 597 | 10.2 | 5.0 | |||||||||||||||||||||
| Furniture and equipment expense | 273 | 252 | 275 | 243 | 250 | 8.3 | 9.2 | |||||||||||||||||||||
| Data processing | 760 | 773 | 718 | 706 | 703 | (1.7 | ) | 8.1 | ||||||||||||||||||||
| Directors' fees | 112 | 92 | 86 | 55 | 121 | 21.7 | (7.4 | ) | ||||||||||||||||||||
| Amortization of intangible assets | 74 | 74 | 74 | 74 | 74 | - | - | |||||||||||||||||||||
| Insurance agency commissions expense | 512 | 470 | 409 | 458 | 461 | 8.9 | 11.1 | |||||||||||||||||||||
| FDIC insurance premium expense | 458 | 613 | 467 | 367 | 366 | (25.3 | ) | 25.1 | ||||||||||||||||||||
| Write-downs of other real estate owned | 75 | 371 | 219 | 56 | 672 | (79.8 | ) | (88.8 | ) | |||||||||||||||||||
| Other noninterest expenses | 1,728 | 1,935 | 1,763 | 1,875 | 1,830 | (10.7 | ) | (5.6 | ) | |||||||||||||||||||
| Total noninterest expense | 10,115 | 10,468 | 9,968 | 9,759 | 10,491 | (3.4 | ) | (3.6 | ) | |||||||||||||||||||
| Income (loss) before income taxes | 2,021 | 1,843 | (18,808 | ) | 504 | 326 | 9.7 | 519.9 | ||||||||||||||||||||
| Income tax expense (benefit) | 763 | 668 | (7,416 | ) | 143 | 104 | 14.2 | 633.7 | ||||||||||||||||||||
| NET INCOME (LOSS) | $ | 1,258 | $ | 1,175 | $ | (11,392 | ) | $ | 361 | $ | 222 | 7.1 | 466.7 | |||||||||||||||
| Weighted average shares outstanding - basic | 8,471 | 8,463 | 8,461 | 8,461 | 8,458 | 0.1 | 0.2 | |||||||||||||||||||||
| Weighted average shares outstanding - diluted | 8,484 | 8,474 | 8,461 | 8,465 | 8,458 | 0.1 | 0.3 | |||||||||||||||||||||
| Basic net income (loss) per common share | $ | 0.15 | $ | 0.14 | $ | (1.35 | ) | $ | 0.04 | $ | 0.03 | 7.1 | 400.0 | |||||||||||||||
| Diluted net income (loss) per common share | 0.15 | 0.14 | (1.35 | ) | 0.04 | 0.03 | 7.1 | 400.0 | ||||||||||||||||||||
| Dividends paid per common share | - | - | - | - | - | - | - | |||||||||||||||||||||
| Page 10 of 12 |
Shore Bancshares, Inc.
Consolidated Average Balance Sheets By Quarter
(Dollars in thousands)
| Average balance | ||||||||||||||||||||||||||||||||||||||||||||||||
| 1Q 14 | 1Q 14 | |||||||||||||||||||||||||||||||||||||||||||||||
| compared to | compared to | |||||||||||||||||||||||||||||||||||||||||||||||
| 1Q 14 | 4Q 13 | 3Q 13 | 2Q 13 | 1Q 13 | 4Q 13 | 1Q 13 | ||||||||||||||||||||||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||||||||||||||||||||||
| balance | rate | balance | rate | balance | rate | balance | rate | balance | rate | |||||||||||||||||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 707,708 | 5.10 | % | $ | 718,070 | 5.07 | % | $ | 772,008 | 5.03 | % | $ | 785,442 | 5.19 | % | $ | 783,757 | 5.14 | % | (1.4 | )% | (9.7 | )% | ||||||||||||||||||||||||
| Loans held for sale | 2,425 | - | 15,047 | 2.38 | - | - | - | - | - | - | (83.9 | ) | - | |||||||||||||||||||||||||||||||||||
| Investment securities | ||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable | 155,123 | 1.36 | 144,699 | 1.38 | 123,499 | 1.15 | 140,614 | 1.62 | 146,176 | 1.78 | 7.2 | 6.1 | ||||||||||||||||||||||||||||||||||||
| Tax-exempt | 433 | 4.25 | 482 | 4.39 | 521 | 5.27 | 579 | 4.81 | 580 | 4.85 | (10.2 | ) | (25.3 | ) | ||||||||||||||||||||||||||||||||||
| Federal funds sold | 1,708 | 0.05 | 2,692 | 0.06 | 1,618 | 0.07 | 2,992 | 0.10 | 8,184 | 0.11 | (36.6 | ) | (79.1 | ) | ||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | 98,907 | 0.23 | 101,529 | 0.22 | 95,422 | 0.22 | 75,847 | 0.21 | 106,058 | 0.19 | (2.6 | ) | (6.7 | ) | ||||||||||||||||||||||||||||||||||
| Total earning assets | 966,304 | 3.98 | % | 982,519 | 3.97 | % | 993,068 | 4.08 | % | 1,005,474 | 4.30 | % | 1,044,755 | 4.13 | % | (1.7 | ) | (7.5 | ) | |||||||||||||||||||||||||||||
| Cash and due from banks | 22,708 | 20,900 | 22,088 | 22,510 | 24,966 | 8.7 | (9.0 | ) | ||||||||||||||||||||||||||||||||||||||||
| Other assets | 66,203 | 70,048 | 65,001 | 66,967 | 69,185 | (5.5 | ) | (4.3 | ) | |||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (10,647 | ) | (13,152 | ) | (15,238 | ) | (17,099 | ) | (16,596 | ) | (19.0 | ) | (35.8 | ) | ||||||||||||||||||||||||||||||||||
| Total assets | $ | 1,044,568 | $ | 1,060,315 | $ | 1,064,919 | $ | 1,077,852 | $ | 1,122,310 | (1.5 | ) | (6.9 | ) | ||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
| Demand deposits | $ | 173,801 | 0.14 | % | $ | 176,492 | 0.15 | % | $ | 172,143 | 0.16 | % | $ | 162,589 | 0.15 | % | $ | 173,714 | 0.17 | % | (1.5 | ) | 0.1 | |||||||||||||||||||||||||
| Money market and savings deposits (1) | 222,378 | 0.12 | 211,294 | 0.12 | 207,162 | 0.12 | 225,117 | 0.67 | 244,182 | 0.97 | 5.2 | (8.9 | ) | |||||||||||||||||||||||||||||||||||
| Certificates of deposit $100,000 or more | 178,792 | 1.13 | 190,117 | 1.16 | 198,495 | 1.23 | 203,641 | 1.32 | 216,288 | 1.39 | (6.0 | ) | (17.3 | ) | ||||||||||||||||||||||||||||||||||
| Other time deposits | 186,960 | 1.08 | 188,645 | 1.14 | 192,878 | 1.24 | 197,644 | 1.30 | 201,171 | 1.47 | (0.9 | ) | (7.1 | ) | ||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | 761,931 | 0.60 | 766,548 | 0.64 | 770,678 | 0.69 | 788,991 | 0.89 | 835,355 | 1.03 | (0.6 | ) | (8.8 | ) | ||||||||||||||||||||||||||||||||||
| Short-term borrowings | 9,345 | 0.22 | 10,505 | 0.23 | 10,695 | 0.23 | 10,752 | 0.24 | 11,987 | 0.27 | (11.0 | ) | (22.0 | ) | ||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 771,276 | 0.60 | % | 777,053 | 0.63 | % | 781,373 | 0.69 | % | 799,743 | 0.88 | % | 847,342 | 1.02 | % | (0.7 | ) | (9.0 | ) | |||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 161,593 | 171,745 | 162,189 | 154,586 | 151,970 | (5.9 | ) | 6.3 | ||||||||||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 7,237 | 8,010 | 7,453 | 9,315 | 8,748 | (9.7 | ) | (17.3 | ) | |||||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 104,462 | 103,507 | 113,904 | 114,208 | 114,250 | 0.9 | (8.6 | ) | ||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,044,568 | $ | 1,060,315 | $ | 1,064,919 | $ | 1,077,852 | $ | 1,122,310 | (1.5 | ) | (6.9 | ) | ||||||||||||||||||||||||||||||||||
| Net interest spread | 3.38 | % | 3.34 | % | 3.39 | % | 3.42 | % | 3.11 | % | ||||||||||||||||||||||||||||||||||||||
| Net interest margin | 3.50 | % | 3.47 | % | 3.54 | % | 3.60 | % | 3.30 | % | ||||||||||||||||||||||||||||||||||||||
| (1) | Interest on money market and savings deposits for the second and first quarters of 2013 included an adjustment to expense related to interest rate caps and the hedged deposits associated with them. This adjustment increased interest expense $279 thousand for the second quarter of 2013 and $416 thousand for the first quarter of 2013. Interest expense for the other quarters presented did not reflect this adjustment because the interest rate caps were terminated in June of 2013. |
| Page 11 of 12 |
Shore Bancshares, Inc.
Reconciliation of Generally Accepted Accounting Principles (GAAP)
and Non-GAAP Measures
(In thousands, except per share data)
| 1Q 14 | 4Q 13 | 3Q 13 | 2Q 13 | 1Q 13 | ||||||||||||||||
| The following reconciles return on average equity and return on average tangible equity (Note 1): | ||||||||||||||||||||
| Net income (loss) | $ | 1,258 | $ | 1,175 | $ | (11,392 | ) | $ | 361 | $ | 222 | |||||||||
| Net income (loss) - annualized (A) | $ | 5,102 | $ | 4,662 | $ | (45,197 | ) | $ | 1,448 | $ | 900 | |||||||||
| Net income (loss), excluding net amortization of intangible assets | $ | 1,303 | $ | 1,220 | $ | (11,347 | ) | $ | 406 | $ | 267 | |||||||||
| Net income (loss), excluding net amortization of intangible assets - annualized (B) | $ | 5,284 | $ | 4,840 | $ | (45,018 | ) | $ | 1,628 | $ | 1,083 | |||||||||
| Average stockholders' equity (C) | $ | 104,462 | $ | 103,507 | $ | 113,904 | $ | 114,208 | $ | 114,250 | ||||||||||
| Less: Average goodwill and other intangible assets | (15,945 | ) | (16,018 | ) | (16,092 | ) | (16,166 | ) | (16,242 | ) | ||||||||||
| Average tangible equity (D) | $ | 88,517 | $ | 87,489 | $ | 97,812 | $ | 98,042 | $ | 98,008 | ||||||||||
| Return on average equity (GAAP) (A)/(C) | 4.88 | % | 4.50 | % | (39.68 | )% | 1.27 | % | 0.79 | % | ||||||||||
| Return on average tangible equity (Non-GAAP) (B)/(D) | 5.97 | % | 5.53 | % | (46.03 | )% | 1.66 | % | 1.11 | % | ||||||||||
| The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio (Note 2): | ||||||||||||||||||||
| Noninterest expense (E) | $ | 10,115 | $ | 10,468 | $ | 9,968 | $ | 9,759 | $ | 10,491 | ||||||||||
| Less: Amortization of intangible assets | (74 | ) | (74 | ) | (74 | ) | (74 | ) | (74 | ) | ||||||||||
| Other nonrecurring adjustments | - | - | - | 49 | - | |||||||||||||||
| Adjusted noninterest expense (F) | $ | 10,041 | $ | 10,394 | $ | 9,894 | $ | 9,734 | $ | 10,417 | ||||||||||
| Taxable-equivalent net interest income (G) | $ | 8,347 | $ | 8,595 | $ | 8,852 | $ | 9,028 | $ | 8,504 | ||||||||||
| Nonrecurring adjustment | - | - | - | (308 | ) | - | ||||||||||||||
| Taxable-equivalent net interest income excluding nonrecurring adjustment (H) | $ | 8,347 | $ | 8,595 | $ | 8,852 | $ | 8,720 | $ | 8,504 | ||||||||||
| Noninterest income (I) | $ | 4,788 | $ | 4,215 | $ | 4,792 | $ | 3,962 | $ | 4,490 | ||||||||||
| Less: Investment securities (gains)/losses | - | - | - | (913 | ) | - | ||||||||||||||
| Other nonrecurring (gains)/losses | - | - | (297 | ) | 1,306 | - | ||||||||||||||
| Adjusted noninterest income (J) | $ | 4,788 | $ | 4,215 | $ | 4,495 | $ | 4,355 | $ | 4,490 | ||||||||||
| Efficiency ratio (GAAP) (E)/(G)+(I) | 77.01 | % | 81.72 | % | 73.06 | % | 75.13 | % | 80.74 | % | ||||||||||
| Efficiency ratio (Non-GAAP) (F)/(H)+(J) | 76.44 | % | 81.14 | % | 74.13 | % | 74.45 | % | 80.17 | % | ||||||||||
| The following reconciles book value per common share and tangible book value per common share (Note 1): | ||||||||||||||||||||
| Stockholders' equity (K) | $ | 104,632 | $ | 103,299 | $ | 102,001 | $ | 113,594 | $ | 114,348 | ||||||||||
| Less: Goodwill and other intangible assets | (15,900 | ) | (15,974 | ) | (16,048 | ) | (16,122 | ) | (16,196 | ) | ||||||||||
| Tangible equity (L) | $ | 88,732 | $ | 87,325 | $ | 85,953 | $ | 97,472 | $ | 98,152 | ||||||||||
| Shares outstanding (M) | 8,471 | 8,471 | 8,461 | 8,461 | 8,461 | |||||||||||||||
| Book value per common share (GAAP) (K)/(M) | $ | 12.35 | $ | 12.19 | $ | 12.06 | $ | 13.43 | $ | 13.51 | ||||||||||
| Tangible book value per common share (Non-GAAP) (L)/(M) | $ | 10.47 | $ | 10.31 | $ | 10.16 | $ | 11.52 | $ | 11.60 | ||||||||||
| The following reconciles equity to assets and tangible equity to tangible assets (Note 1): | ||||||||||||||||||||
| Stockholders' equity (N) | $ | 104,632 | $ | 103,299 | $ | 102,001 | $ | 113,594 | $ | 114,348 | ||||||||||
| Less: Goodwill and other intangible assets | (15,900 | ) | (15,974 | ) | (16,048 | ) | (16,122 | ) | (16,196 | ) | ||||||||||
| Tangible equity (O) | $ | 88,732 | $ | 87,325 | $ | 85,953 | $ | 97,472 | $ | 98,152 | ||||||||||
| Assets (P) | $ | 1,049,514 | $ | 1,054,124 | $ | 1,051,384 | $ | 1,054,277 | $ | 1,104,611 | ||||||||||
| Less: Goodwill and other intangible assets | (15,900 | ) | (15,974 | ) | (16,048 | ) | (16,122 | ) | (16,196 | ) | ||||||||||
| Tangible assets (Q) | $ | 1,033,614 | $ | 1,038,150 | $ | 1,035,336 | $ | 1,038,155 | $ | 1,088,415 | ||||||||||
| Period-end equity/assets (GAAP) (N)/(P) | 9.97 | % | 9.80 | % | 9.70 | % | 10.77 | % | 10.35 | % | ||||||||||
| Period-end tangible equity/tangible assets (Non-GAAP) (O)/(Q) | 8.58 | % | 8.41 | % | 8.30 | % | 9.39 | % | 9.02 | % | ||||||||||
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.
CONTACT: George Rapp, Chief Financial Officer, 410-763-7800
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