Shore Bancshares Reports Third Quarter and Nine-Month Results
EASTON, Md., Oct. 18, 2018 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) reported net income of $4.454 million or $0.35 per diluted common share for the third quarter of 2018, compared to net income of $4.391 million or $0.34 per diluted common share for the second quarter of 2018, and net income of $3.412 million or $0.27 per diluted common share for the third quarter of 2017. The Company reported net income of $12.903 million or $1.01 per diluted common share for the first nine months of 2018, compared to net income of $8.564 million or $0.68 per diluted common share for the first nine months of 2017.
When comparing the third quarter of 2018 to the second quarter of 2018, the primary reasons for the improved results were increases in net interest income of $314 thousand, noninterest income of $170 thousand and a reduction in provision for credit losses of $111 thousand. These improvements to income were partially offset by an increase in noninterest expenses of $458 thousand. When comparing the third quarter of 2018 to the third quarter of 2017, improved results were due to increases in net interest income of $621 thousand, noninterest income of $285 thousand and a reduced corporate income tax rate from 35% to 21%, respectively, offset by an increase in noninterest expenses of $566 thousand. When comparing the first nine months of 2018 to the first nine months of 2017, improved earnings were due to increases in net interest income of $4.8 million, noninterest income of $768 thousand, a reduction in provision for credit losses of $532 thousand and a lower corporate income tax rate. Noninterest expenses increased $3.0 million when comparing the first nine months of 2018 to the first nine months of 2017, primarily due to operating four additional branches for the entire nine months of 2018 compared to only four months in 2017.
"We are pleased to report improved earnings for the quarter as we continue to experience strong loan demand and growth in our core deposits," said Lloyd L. "Scott" Beatty, Jr., President and Chief Executive Officer. "Loans increased $23.7 million, while deposits increased $6.7 million when comparing the third and second quarter of 2018. We remain diligent in our efforts to be a major participant in all lending and saving activities in the states of Maryland and Delaware as well as the Eastern Shore of Virginia."
Balance Sheet Review
Total assets were $1.474 billion at September 30, 2018, a $79.0 million, or 5.7%, increase when compared to $1.394 billion at the end of 2017. The primary reason for the increase was the addition of $87.0 million in loans, which were funded by a decrease in investment securities available for sale of $29.3 million, and an increase in short-term borrowings of $92.3 million.
Total deposits at September 30, 2018 decreased $20.9 million, or 1.7%, when compared to December 31, 2017. The decrease in deposits was spread among all interest-bearing deposit categories with the exception of brokered deposits which increased $23.5 million in 2018. In addition, noninterest-bearing deposits have increased $3.4 million in 2018 helping offset the decrease in interest-bearing deposits. The decline in deposits was primarily due to seasonal shifts in municipal deposits coupled with deployment of capital by many small business customers.
Total stockholders' equity increased $7.7 million, or 4.7%, when compared to the end of 2017. At September 30, 2018, the ratio of total equity to total assets was 11.63% and the ratio of total tangible equity to total tangible assets was 9.69%, lower than the 11.75% and slightly higher than the 9.65%, respectively, at December 31, 2017.
Total assets at September 30, 2018 increased $97.4 million, or 7.1%, when compared to total assets at September 30, 2017. The primary reason for the increase was the growth in loans of $133.3 million, or 12.7% which was partially funded by the decrease in investment securities available for sale of $45.7 million. Total deposits decreased $24.4 million, or 2.0%, when compared to September 30, 2017, which included a reduction in interest-bearing deposits of $30.1 million, partially offset by an increase in noninterest-bearing deposits of $5.7 million. Total stockholders' equity increased $8.8 million, or 5.4%, when compared to September 30, 2017.
Review of Quarterly Financial Results
Net interest income was $12.9 million for the third quarter of 2018, compared to $12.6 million for the second quarter of 2018 and $12.3 million for the third quarter of 2017. The increase in net interest income when compared to the second quarter of 2018 was primarily due to an increase in average loans of $33.2 million contributing $574 thousand in interest and fees on loans, partially offset by an increase in interest expense on interest-bearing deposits of $246 thousand. The increase in net interest income for the third quarter of 2018 when compared to the third quarter of 2017 was primarily due to an increase in average loans of $140.0 million resulting in $1.4 million in additional interest and fees on loans, partially offset by an increase in interest on short-term borrowings of $459 thousand and higher rates paid on interest-bearing deposits of $219 thousand. The Company's net interest margin decreased to 3.76% from 3.79% in both the second quarter of 2018 and third quarter of 2017. The decline in net interest margin from the second quarter of 2018 and the third quarter of 2017 was the direct result of increased short-term borrowings and rising rates paid on interest-bearing deposits which allowed the Bank to remain competitive for core deposits and help fund loan growth during the period.
The provision for credit losses was $307 thousand for the three months ended September 30, 2018. The comparable amounts were $418 thousand and $345 thousand for the three months ended June 30, 2018 and September 30, 2017, respectively. Net charge-offs were $100 thousand for the third quarter of 2018, $84 thousand for the second quarter of 2018 and $182 thousand for the third quarter of 2017. The ratio of annualized net charge-offs to average loans was 0.03% for the third and second quarters of 2018 and 0.07% for the third quarter of 2017. The ratio of the allowance for credit losses to period-end loans was 0.87% at September 30, 2018 and June 30, 2018 and 0.89% at September 30, 2017.
At September 30, 2018, nonperforming assets were $8.9 million, an increase of $557 thousand, or 6.7%, when compared to June 30, 2018. Nonaccrual loans increased $605 thousand, or 9.0%, while accruing TDRs decreased $687 thousand, or 7.1%. When comparing September 30, 2018 to September 30, 2017, nonperforming assets increased $780 thousand, or 9.6%, and accruing TDRs decreased $4.6 million, or 33.8%. The ratio of nonperforming assets to total assets was 0.60%, 0.57% and 0.59% at September 30, 2018, June 30, 2018 and September 30, 2017, respectively. In addition, the ratio of accruing TDRs to total assets at September 30, 2018 was 0.61%, compared to 0.66% at June 30, 2018 and 0.98% at September 30, 2017.
Total noninterest income for the third quarter of 2018 increased $170 thousand, or 3.7%, when compared to the second quarter of 2018 and increased $285 thousand, or 6.4%, when compared to the third quarter of 2017. The increase from the second quarter of 2018 was primarily due to increases in loan fee income, fees on bank services and service charges on deposit accounts. The increase when compared to the third quarter of 2017 was due to increased loan servicing and fee income and higher insurance agency commissions.
Total noninterest expense for the third quarter of 2018 increased $458 thousand, or 4.2%, when compared to the second quarter of 2018 and increased $566 thousand, or 5.3%, when compared to the third quarter of 2017. The increase in noninterest expenses from the second quarter of 2018 was primarily due to increased salary and wages due to an additional working day in the quarter, increased data processing fees and a write-down on an OREO property of $128 thousand. The increase in noninterest expense for the third quarter of 2018 compared to the third quarter of 2017 was primarily due to increases in salary and wages and employee benefits resulting from pay increases, the filling of vacant positions throughout the Company and additional amortization of intangibles acquired in the Northwest branch acquisition in 2017.
Review of Nine-Month Financial Results
Net interest income for the first nine months of 2018 was $37.9 million, an increase of $4.7 million, or 14.3% when compared to the first nine months of 2017. The increase was primarily due an increase in average loans of approximately $184.2 million and higher yields earned on taxable investment securities. This contributed to an increase in the yield on total earning assets of 17 bps over the first nine months of 2017. Partially offsetting the significant improvement on total earning assets for the first nine months of 2018 were increases in the average balance on short-term borrowings of $75.0 million and interest-bearing deposits of $47.4 million. Despite the increase in the cost of total interest-bearing liabilities of 16 bps, the net interest margin improved to 3.79% for the first nine months of 2018 compared to 3.75% for the first nine months of 2017.
The provisions for credit losses for the nine months ended September 30, 2018 and 2017 were $1.2 million and $1.7 million, respectively, while net charge-offs were $667 thousand and $1.2 million, respectively. The ratio of year-to-date annualized net charge-offs to average loans was 0.08% for the first nine months of 2018 and 0.16% for the first nine months of 2017.
Total noninterest income for the nine months ended September 30, 2018 increased $768 thousand, or 5.7%, when compared to the same period in 2017, primarily due to other noninterest income of $445 thousand which included higher fees on bank services of $326 thousand and higher loan fee income of $69 thousand. In addition, service charges on deposit accounts increased $177 thousand while both Trust and Insurance divisions had positive variances.
Total noninterest expense for the nine months ended September 30, 2018 increased $3.0 million, or 9.8%, when compared to the same period in 2017. The increase was primarily due to the cost of operating four additional branches which caused increases in almost all noninterest expense line items, offset by lower data processing fees, other real estate owned expenses and legal and professional fees.
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 Shore United Bank; one retail insurance producer firm, The Avon-Dixon Agency, LLC, with two specialty lines, Elliott Wilson Insurance (Trucking) and Jack Martin Associates (Marine); and an insurance premium finance company, Mubell Finance, LLC. Shore Bancshares Inc. engages in trust and wealth management services through Wye Financial & Trust, a division of Shore United Bank. Additional information is available at www.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 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 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.
Shore Bancshares, Inc. | ||||||||||||
Financial Highlights | ||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||
Net interest income | $ 12,947 | $ 12,326 | 5.0 | % | $ 37,909 | $ 33,159 | 14.3 | % | ||||
Provision for credit losses | 307 | 345 | (11.0) | 1,214 | 1,746 | (30.5) | ||||||
Noninterest income | 4,710 | 4,425 | 6.4 | 14,179 | 13,411 | 5.7 | ||||||
Noninterest expense | 11,286 | 10,720 | 5.3 | 33,576 | 30,570 | 9.8 | ||||||
Income before income taxes | 6,064 | 5,686 | 6.6 | 17,298 | 14,254 | 21.4 | ||||||
Income tax expense | 1,610 | 2,274 | (29.2) | 4,395 | 5,690 | (22.8) | ||||||
Net income | $ 4,454 | $ 3,412 | 30.5 | $ 12,903 | $ 8,564 | 50.7 | ||||||
Return on average assets | 1.21 | % | 0.98 | % | 23 | bp | 1.21 | % | 0.91 | % | 30 | bp |
Return on average equity | 10.38 | 8.48 | 190 | 10.31 | 7.23 | 308 | ||||||
Return on average tangible equity (1) | 13.36 | 10.84 | 252 | 13.24 | 8.36 | 488 | ||||||
Net interest margin | 3.76 | 3.79 | (3) | 3.79 | 3.75 | 4 | ||||||
Efficiency ratio - GAAP | 63.92 | 64.00 | (8) | 64.46 | 65.64 | (118) | ||||||
Efficiency ratio - Non-GAAP (1) | 62.23 | 63.11 | (88) | 63.15 | 64.96 | (181) | ||||||
PER SHARE DATA | ||||||||||||
Basic net income per common share | $ 0.35 | $ 0.27 | 29.6 | % | $ 1.01 | $ 0.68 | 48.5 | % | ||||
Diluted net income per common share | 0.35 | 0.27 | 29.6 | 1.01 | 0.68 | 48.5 | ||||||
Dividends paid per common share | 0.08 | 0.05 | 60.0 | 0.23 | 0.15 | 53.3 | ||||||
Book value per common share at period end | 13.45 | 12.82 | 4.9 | |||||||||
Tangible book value per common share at period end (1) | 10.96 | 10.24 | 7.0 | |||||||||
Market value at period end | 17.82 | 16.65 | 7.0 | |||||||||
Market range: | ||||||||||||
High | 19.84 | 17.34 | 14.4 | 20.09 | 17.92 | 12.1 | ||||||
Low | 16.63 | 15.97 | 4.1 | 16.28 | 14.64 | 11.2 | ||||||
AVERAGE BALANCE SHEET DATA | ||||||||||||
Loans | $ 1,174,513 | $ 1,034,553 | 13.5 | % | $ 1,140,925 | $ 956,694 | 19.3 | % | ||||
Investment securities | 178,572 | 218,675 | (18.3) | 186,936 | 198,499 | (5.8) | ||||||
Earning assets | 1,370,573 | 1,295,432 | 5.8 | 1,341,403 | 1,189,699 | 12.8 | ||||||
Assets | 1,457,074 | 1,377,975 | 5.7 | 1,426,504 | 1,257,152 | 13.5 | ||||||
Deposits | 1,192,845 | 1,210,894 | (1.5) | 1,174,505 | 1,089,704 | 7.8 | ||||||
Stockholders' equity | 170,299 | 159,551 | 6.7 | 167,288 | 158,342 | 5.6 | ||||||
CREDIT QUALITY DATA | ||||||||||||
Net charge-offs | $ 100 | $ 182 | (45.1) | % | $ 667 | $ 1,177 | (43.3) | % | ||||
Nonaccrual loans | $ 7,362 | $ 6,289 | 17.1 | |||||||||
Loans 90 days past due and still accruing | 3 | 5 | (40.0) | |||||||||
Other real estate owned | 1,518 | 1,809 | (16.1) | |||||||||
Total nonperforming assets | 8,883 | 8,103 | 9.6 | |||||||||
Accruing troubled debt restructurings (TDRs) | 8,933 | 13,493 | (33.8) | |||||||||
Total nonperforming assets and accruing TDRs | $ 17,816 | $ 21,596 | (17.5) | |||||||||
CAPITAL AND CREDIT QUALITY RATIOS | ||||||||||||
Period-end equity to assets | 11.63 | % | 11.82 | % | (19) | bp | ||||||
Period-end tangible equity to tangible assets (1) | 9.69 | 9.67 | 2 | |||||||||
Annualized net charge-offs to average loans | 0.03 | 0.07 | (4) | 0.08 | % | 0.16 | % | (8) | bp | |||
Allowance for credit losses as a percent of: | ||||||||||||
Period-end loans | 0.87 | 0.89 | (2) | |||||||||
Nonaccrual loans | 140.29 | 147.80 | (751) | |||||||||
Nonperforming assets | 116.27 | 114.71 | 156 | |||||||||
Accruing TDRs | 115.62 | 68.89 | 4,673 | |||||||||
Nonperforming assets and accruing TDRs | 57.97 | 43.04 | 1,493 | |||||||||
As a percent of total loans: | ||||||||||||
Nonaccrual loans | 0.62 | 0.60 | 2 | |||||||||
Accruing TDRs | 0.76 | 1.29 | (53) | |||||||||
Nonaccrual loans and accruing TDRs | 1.38 | 1.89 | (51) | |||||||||
As a percent of total loans+other real estate owned: | ||||||||||||
Nonperforming assets | 0.75 | 0.77 | (2) | |||||||||
Nonperforming assets and accruing TDRs | 1.51 | 2.06 | (55) | |||||||||
As a percent of total assets: | ||||||||||||
Nonaccrual loans | 0.50 | 0.46 | 4 | |||||||||
Nonperforming assets | 0.60 | 0.59 | 1 | |||||||||
Accruing TDRs | 0.61 | 0.98 | (37) | |||||||||
Nonperforming assets and accruing TDRs | 1.21 | 1.57 | (36) | |||||||||
(1) See the reconciliation table on page 12 of 12. | ||||||||||||
Shore Bancshares, Inc. | ||||||||||
Consolidated Balance Sheets | ||||||||||
(In thousands, except per share data) | ||||||||||
September 30, 2018 | September 30, 2018 | |||||||||
September 30, | December 31, | September 30, | compared to | compared to | ||||||
2018 | 2017 | 2017 | December 31, 2017 | September 30, 2017 | ||||||
ASSETS | ||||||||||
Cash and due from banks | $ 18,859 | $ 21,534 | $ 22,315 | (12.4) | % | (15.5) | % | |||
Interest-bearing deposits with other banks | 29,918 | 10,286 | 21,601 | 190.9 | 38.5 | |||||
Cash and cash equivalents | 48,777 | 31,820 | 43,916 | 53.3 | 11.1 | |||||
Investment securities available for sale (at fair value) | 167,675 | 196,955 | 213,390 | (14.9) | (21.4) | |||||
Investment securities held to maturity | 6,037 | 6,247 | 6,241 | (3.4) | (3.3) | |||||
Equity securities, at fair value | 649 | - | - | - | - | |||||
Loans | 1,180,557 | 1,093,514 | 1,047,247 | 8.0 | 12.7 | |||||
Less: allowance for credit losses | (10,328) | (9,781) | (9,295) | 5.6 | (11.1) | |||||
Loans, net | 1,170,229 | 1,083,733 | 1,037,952 | 8.0 | 12.7 | |||||
Premises and equipment, net | 23,252 | 23,054 | 23,124 | 0.9 | 0.6 | |||||
Goodwill | 27,618 | 27,618 | 27,909 | - | (1.0) | |||||
Other intangible assets, net | 4,088 | 4,719 | 4,831 | (13.4) | (15.4) | |||||
Other real estate owned, net | 1,518 | 1,794 | 1,809 | (15.4) | (16.1) | |||||
Other assets | 23,700 | 17,920 | 16,955 | 32.3 | 39.8 | |||||
Total assets | $ 1,473,543 | $ 1,393,860 | $ 1,376,127 | 5.7 | 7.1 | |||||
LIABILITIES | ||||||||||
Noninterest-bearing deposits | $ 331,766 | $ 328,322 | $ 326,020 | 1.0 | 1.8 | |||||
Interest-bearing deposits | 850,070 | 874,459 | 880,175 | (2.8) | (3.4) | |||||
Total deposits | 1,181,836 | 1,202,781 | 1,206,195 | (1.7) | (2.0) | |||||
Short-term borrowings | 114,043 | 21,734 | 1,469 | 424.7 | 7,663.3 | |||||
Accrued expenses and other liabilities | 6,245 | 5,609 | 5,815 | 11.3 | 7.4 | |||||
Total liabilities | 1,302,124 | 1,230,124 | 1,213,479 | 5.9 | 7.3 | |||||
STOCKHOLDERS' EQUITY | ||||||||||
Common stock, par value $0.01; authorized | ||||||||||
35,000,000 shares | 127 | 127 | 127 | - | - | |||||
Additional paid in capital | 65,730 | 65,256 | 64,949 | 0.7 | 1.2 | |||||
Retained earnings | 109,628 | 99,662 | 97,626 | 10.0 | 12.3 | |||||
Accumulated other comprehensive (loss) | (4,066) | (1,309) | (54) | (210.6) | (7,429.6) | |||||
Total stockholders' equity | 171,419 | 163,736 | 162,648 | 4.7 | 5.4 | |||||
Total liabilities and stockholders' equity | $ 1,473,543 | $ 1,393,860 | $ 1,376,127 | 5.7 | 7.1 | |||||
Period-end common shares outstanding | 12,748 | 12,688 | 12,687 | 0.5 | 0.5 | |||||
Book value per common share | $ 13.45 | $ 12.90 | $ 12.82 | 4.3 | 4.9 |
Shore Bancshares, Inc. | ||||||||||
Consolidated Statements of Income | ||||||||||
(In thousands, except per share data) | ||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||
September 30, | September 30, | |||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||
INTEREST INCOME | ||||||||||
Interest and fees on loans | $ 13,205 | $ 11,771 | 12.2 | % | $ 37,880 | $ 31,762 | 19.3 | % | ||
Interest on investment securities: | ||||||||||
Taxable | 947 | 1,035 | (8.5) | 2,950 | 2,799 | 5.4 | ||||
Tax-exempt | - | - | - | - | 3 | (100.0) | ||||
Interest on deposits with other banks | 84 | 131 | (35.9) | 183 | 269 | (32.0) | ||||
Total interest income | 14,236 | 12,937 | 10.0 | 41,013 | 34,833 | 17.7 | ||||
INTEREST EXPENSE | ||||||||||
Interest on deposits | 826 | 607 | 36.1 | 1,954 | 1,656 | 18.0 | ||||
Interest on short-term borrowings | 463 | 4 | 11,475.0 | 1,150 | 18 | 6,288.9 | ||||
Total interest expense | 1,289 | 611 | 111.0 | 3,104 | 1,674 | 85.4 | ||||
NET INTEREST INCOME | 12,947 | 12,326 | 5.0 | 37,909 | 33,159 | 14.3 | ||||
Provision for credit losses | 307 | 345 | (11.0) | 1,214 | 1,746 | (30.5) | ||||
NET INTEREST INCOME AFTER PROVISION | ||||||||||
FOR CREDIT LOSSES | 12,640 | 11,981 | 5.5 | 36,695 | 31,413 | 16.8 | ||||
NONINTEREST INCOME | ||||||||||
Service charges on deposit accounts | 982 | 945 | 3.9 | 2,834 | 2,657 | 6.7 | ||||
Trust and investment fee income | 383 | 389 | (1.5) | 1,197 | 1,122 | 6.7 | ||||
Gains on sales and calls of investment securities | - | 5 | (100.0) | - | 5 | (100.0) | ||||
Insurance agency commissions | 2,170 | 2,088 | 3.9 | 7,015 | 6,939 | 1.1 | ||||
Other noninterest income | 1,175 | 998 | 17.7 | 3,133 | 2,688 | 16.6 | ||||
Total noninterest income | 4,710 | 4,425 | 6.4 | 14,179 | 13,411 | 5.7 | ||||
NONINTEREST EXPENSE | ||||||||||
Salaries and wages | 5,516 | 5,203 | 6.0 | 16,372 | 14,508 | 12.8 | ||||
Employee benefits | 1,271 | 1,197 | 6.2 | 4,157 | 3,564 | 16.6 | ||||
Occupancy expense | 767 | 696 | 10.2 | 2,303 | 1,950 | 18.1 | ||||
Furniture and equipment expense | 251 | 286 | (12.2) | 813 | 803 | 1.2 | ||||
Data processing | 963 | 922 | 4.4 | 2,580 | 2,809 | (8.2) | ||||
Directors' fees | 145 | 99 | 46.5 | 411 | 281 | 46.3 | ||||
Amortization of intangible assets | 281 | 115 | 144.3 | 631 | 203 | 210.8 | ||||
FDIC insurance premium expense | 193 | 189 | 2.1 | 612 | 398 | 53.8 | ||||
Other real estate owned expenses, net | 166 | 195 | (14.9) | 125 | 358 | (65.1) | ||||
Legal and professional fees | 463 | 493 | (6.1) | 1,432 | 1,855 | (22.8) | ||||
Other noninterest expenses | 1,270 | 1,325 | (4.2) | 4,140 | 3,841 | 7.8 | ||||
Total noninterest expense | 11,286 | 10,720 | 5.3 | 33,576 | 30,570 | 9.8 | ||||
Income before income taxes | 6,064 | 5,686 | 6.6 | 17,298 | 14,254 | 21.4 | ||||
Income tax expense | 1,610 | 2,274 | (29.2) | 4,395 | 5,690 | (22.8) | ||||
NET INCOME | $ 4,454 | $ 3,412 | 30.5 | $ 12,903 | $ 8,564 | 50.7 | ||||
Weighted average shares outstanding - basic | 12,748 | 12,687 | 0.5 | 12,736 | 12,679 | 0.4 | ||||
Weighted average shares outstanding - diluted | 12,761 | 12,718 | 0.3 | 12,749 | 12,736 | 0.1 | ||||
Basic net income per common share | $ 0.35 | $ 0.27 | 29.6 | $ 1.01 | $ 0.68 | 48.5 | ||||
Diluted net income per common share | 0.35 | 0.27 | 29.6 | 1.01 | 0.67 | 50.7 | ||||
Dividends paid per common share | 0.08 | 0.05 | 60.0 | 0.23 | 0.15 | 53.3 | ||||
Shore Bancshares, Inc. | ||||||||||||||||
Consolidated Average Balance Sheets | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||
balance | rate | balance | rate | balance | rate | balance | rate | |||||||||
Earning assets | ||||||||||||||||
Loans (1), (2), (3) | $ 1,174,513 | 4.47 | % | $ 1,034,553 | 4.54 | % | $ 1,140,925 | 4.45 | % | $ 956,694 | 4.46 | % | ||||
Investment securities (1) | ||||||||||||||||
Taxable | 178,572 | 2.12 | 218,675 | 1.89 | 186,936 | 2.10 | 198,383 | 1.88 | ||||||||
Tax-exempt | - | - | - | - | - | - | 116 | 5.41 | ||||||||
Interest-bearing deposits | 17,488 | 1.91 | 42,204 | 1.23 | 13,542 | 1.80 | 34,506 | 1.04 | ||||||||
Total earning assets | 1,370,573 | 4.13 | % | 1,295,432 | 3.98 | % | 1,341,403 | 4.10 | % | 1,189,699 | 3.93 | % | ||||
Cash and due from banks | 17,790 | 16,232 | 17,031 | 14,988 | ||||||||||||
Other assets | 79,065 | 75,611 | 78,243 | 61,537 | ||||||||||||
Allowance for credit losses | (10,354) | (9,300) | (10,173) | (9,072) | ||||||||||||
Total assets | $ 1,457,074 | $ 1,377,975 | $ 1,426,504 | $ 1,257,152 | ||||||||||||
Interest-bearing liabilities | ||||||||||||||||
Demand deposits | $ 221,905 | 0.32 | % | $ 224,180 | 0.23 | % | $ 214,317 | 0.26 | % | $ 206,033 | 0.18 | % | ||||
Money market and savings deposits | 373,357 | 0.14 | 378,711 | 0.12 | 378,404 | 0.13 | 325,660 | 0.12 | ||||||||
Brokered deposits | 25,507 | 2.01 | - | - | 12,157 | 2.09 | - | - | ||||||||
Certificates of deposit $100,000 or more | 97,563 | 0.69 | 123,538 | 0.50 | 98,772 | 0.58 | 121,508 | 0.51 | ||||||||
Other time deposits | 145,130 | 0.57 | 164,459 | 0.50 | 148,107 | 0.50 | 151,179 | 0.54 | ||||||||
Interest-bearing deposits | 863,462 | 0.36 | 890,888 | 0.27 | 851,757 | 0.30 | 804,380 | 0.28 | ||||||||
Short-term borrowings | 87,925 | 2.09 | 2,274 | 0.62 | 78,945 | 1.95 | 3,997 | 0.59 | ||||||||
Total interest-bearing liabilities | 951,387 | 0.52 | % | 893,162 | 0.27 | % | 930,702 | 0.44 | % | 808,377 | 0.28 | % | ||||
Noninterest-bearing deposits | 329,383 | 320,006 | 322,748 | 285,324 | ||||||||||||
Accrued expenses and other liabilities | 6,005 | 5,256 | 5,766 | 5,109 | ||||||||||||
Stockholders' equity | 170,299 | 159,551 | 167,288 | 158,342 | ||||||||||||
Total liabilities and stockholders' equity | $ 1,457,074 | $ 1,377,975 | $ 1,426,504 | $ 1,257,152 | ||||||||||||
Net interest spread | 3.61 | % | 3.71 | % | 3.66 | % | 3.65 | % | ||||||||
Net interest margin | 3.76 | % | 3.79 | % | 3.79 | % | 3.75 | % | ||||||||
(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, | ||||||||||||||||
for the third quarter of 2018 and the year to date period in 2018 and 35% for all quarters during 2017, exclusive of the alternative minimum tax rate | ||||||||||||||||
and and nondeductible interest expense. | ||||||||||||||||
(2) Average loan balances include nonaccrual loans. | ||||||||||||||||
(3) Interest income on loans includes amortized loan fees, net of costs and accretion of discounts on acquired loans, | ||||||||||||||||
which are included in the yield calculations. | ||||||||||||||||
Shore Bancshares, Inc. | ||||||||||||||
Financial Highlights By Quarter | ||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||
3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | Q3 2018 | Q3 2018 | ||||||||
2018 | 2018 | 2018 | 2017 | 2017 | compared to | compared to | ||||||||
Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | Q3 2017 | Q2 2018 | Q3 2017 | ||||||||
PROFITABILITY FOR THE PERIOD | ||||||||||||||
Taxable-equivalent net interest income | $ 12,975 | $ 12,661 | $ 12,357 | $ 12,430 | $ 12,384 | 2.5 | % | 4.8 | % | |||||
Less: Taxable-equivalent adjustment | 28 | 28 | 28 | 61 | 58 | - | (51.7) | |||||||
Net interest income | 12,947 | 12,633 | 12,329 | 12,369 | 12,326 | 2.5 | 5.0 | |||||||
Provision for credit losses | 307 | 418 | 489 | 545 | 345 | (26.6) | (11.0) | |||||||
Noninterest income | 4,710 | 4,540 | 4,929 | 4,339 | 4,425 | 3.7 | 6.4 | |||||||
Noninterest expense | 11,286 | 10,828 | 11,462 | 10,632 | 10,720 | 4.2 | 5.3 | |||||||
Income before income taxes | 6,064 | 5,927 | 5,307 | 5,531 | 5,686 | 2.3 | 6.6 | |||||||
Income tax expense | 1,610 | 1,536 | 1,249 | 2,833 | 2,274 | 4.8 | (29.2) | |||||||
Net income | $ 4,454 | $ 4,391 | $ 4,058 | $ 2,698 | $ 3,412 | 1.4 | 30.5 | |||||||
Return on average assets | 1.21 | % | 1.24 | % | 1.18 | % | 0.78 | % | 0.98 | % | (3) | bp | 23 | bp |
Return on average equity | 10.38 | 10.58 | 9.97 | 6.53 | 8.48 | (20) | 190 | |||||||
Return on average tangible equity (1) | 13.36 | 13.65 | 12.70 | 8.36 | 10.84 | (29) | 254 | |||||||
Net interest margin | 3.76 | 3.79 | 3.83 | 3.81 | 3.79 | (3) | (3) | |||||||
Efficiency ratio - GAAP | 63.92 | 63.05 | 66.42 | 63.63 | 64.00 | 87 | (8) | |||||||
Efficiency ratio - Non-GAAP (1) | 62.23 | 61.56 | 65.67 | 62.73 | 63.11 | 67 | (88) | |||||||
PER SHARE DATA | ||||||||||||||
Basic net income per common share | $ 0.35 | $ 0.34 | $ 0.32 | $ 0.21 | $ 0.27 | 2.9 | % | 29.6 | % | |||||
Diluted net income per common share | 0.35 | 0.34 | 0.32 | 0.21 | 0.27 | 2.9 | 29.6 | |||||||
Dividends paid per common share | 0.08 | 0.08 | 0.07 | 0.07 | 0.05 | - | 60.0 | |||||||
Book value per common share at period end | 13.45 | 13.19 | 12.95 | 12.90 | 12.82 | 2.0 | 4.9 | |||||||
Tangible book value per common share at period end (1) | 10.96 | 10.68 | 10.42 | 10.36 | 10.24 | 2.6 | 7.0 | |||||||
Market value at period end | 17.82 | 19.02 | 18.86 | 16.70 | 16.65 | (6.3) | 7.0 | |||||||
Market range: | ||||||||||||||
High | 19.84 | 20.09 | 19.80 | 18.49 | 17.34 | (1.2) | 14.4 | |||||||
Low | 16.63 | 17.92 | 16.28 | 15.74 | 15.97 | (7.2) | 4.1 | |||||||
AVERAGE BALANCE SHEET DATA | ||||||||||||||
Loans | $ 1,174,513 | $ 1,141,296 | $ 1,106,213 | $ 1,062,980 | $ 1,034,553 | 2.9 | % | 13.5 | % | |||||
Investment securities | 178,572 | 186,453 | 197,285 | 211,910 | 218,675 | (4.2) | (18.3) | |||||||
Earning assets | 1,370,573 | 1,341,050 | 1,313,249 | 1,294,768 | 1,295,432 | 2.2 | 5.8 | |||||||
Assets | 1,457,074 | 1,425,947 | 1,396,001 | 1,378,553 | 1,377,975 | 2.2 | 5.7 | |||||||
Deposits | 1,192,845 | 1,161,790 | 1,168,613 | 1,202,260 | 1,210,894 | 2.7 | (1.5) | |||||||
Stockholders' equity | 170,299 | 166,480 | 165,070 | 163,893 | 159,551 | 2.3 | 6.7 | |||||||
CREDIT QUALITY DATA | ||||||||||||||
Net charge-offs | $ 100 | $ 84 | $ 352 | $ 59 | $ 182 | 19.0 | % | (45.1) | % | |||||
Nonaccrual loans | $ 7,362 | $ 6,757 | $ 7,009 | $ 4,971 | $ 6,289 | 9.0 | 17.1 | |||||||
Loans 90 days past due and still accruing | 3 | - | 61 | 639 | 5 | - | (40.0) | |||||||
Other real estate owned | 1,518 | 1,569 | 1,569 | 1,794 | 1,809 | (3.3) | (16.1) | |||||||
Total nonperforming assets | $ 8,883 | $ 8,326 | $ 8,639 | $ 7,404 | $ 8,103 | 6.7 | 9.6 | |||||||
Accruing troubled debt restructurings (TDRs) | $ 8,933 | $ 9,620 | $ 9,726 | $ 13,326 | $ 13,493 | (7.1) | (33.8) | |||||||
Total nonperforming assets and accruing TDRs | $ 17,816 | $ 17,946 | $ 18,365 | $ 20,730 | $ 21,596 | (0.7) | (17.5) | |||||||
CAPITAL AND CREDIT QUALITY RATIOS | ||||||||||||||
Period-end equity to assets | 11.63 | % | 11.58 | % | 11.60 | % | 11.75 | % | 11.82 | % | 5 | bp | (19) | bp |
Period-end tangible equity to tangible assets (1) | 9.69 | 9.59 | 9.55 | 9.65 | 9.67 | 10 | 2 | |||||||
Annualized net charge-offs to average loans | 0.03 | 0.03 | 0.13 | 0.02 | 0.07 | - | (4) | |||||||
Allowance for credit losses as a percent of: | ||||||||||||||
Period-end loans | 0.87 | 0.87 | 0.89 | 0.89 | 0.89 | - | (2) | |||||||
Nonaccrual loans | 140.29 | 149.79 | 141.50 | 196.76 | 147.80 | (950) | (751) | |||||||
Nonperforming assets | 116.27 | 121.56 | 114.80 | 132.10 | 114.71 | (529) | 156 | |||||||
Accruing TDRs | 115.62 | 105.21 | 101.97 | 73.40 | 68.89 | 1,041 | 4,673 | |||||||
Nonperforming assets and accruing TDRs | 57.97 | 56.40 | 54.00 | 47.18 | 43.04 | 157 | 1,493 | |||||||
As a percent of total loans: | ||||||||||||||
Nonaccrual loans | 0.62 | 0.58 | 0.63 | 0.45 | 0.60 | 4 | 2 | |||||||
Accruing TDRs | 0.76 | 0.83 | 0.87 | 1.22 | 1.29 | (7) | (53) | |||||||
Nonaccrual loans and accruing TDRs | 1.38 | 1.42 | 1.50 | 1.67 | 1.89 | (4) | (51) | |||||||
As a percent of total loans+other real estate owned: | ||||||||||||||
Nonperforming assets | 0.75 | 0.72 | 0.77 | 0.68 | 0.77 | 3 | (2) | |||||||
Nonperforming assets and accruing TDRs | 1.51 | 1.55 | 1.64 | 1.89 | 2.06 | (4) | (55) | |||||||
As a percent of total assets: | ||||||||||||||
Nonaccrual loans | 0.50 | 0.47 | 0.49 | 0.36 | 0.46 | 3 | 4 | |||||||
Nonperforming assets | 0.60 | 0.57 | 0.61 | 0.53 | 0.59 | 3 | 1 | |||||||
Accruing TDRs | 0.61 | 0.66 | 0.68 | 0.96 | 0.98 | (5) | (37) | |||||||
Nonperforming assets and accruing TDRs | 1.21 | 1.24 | 1.29 | 1.49 | 1.57 | (3) | (36) | |||||||
(1) See the reconciliation table on page 12 of 12. |
Shore Bancshares, Inc. | ||||||||||||||
Consolidated Statements of Income By Quarter | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
Q3 2018 | Q3 2018 | |||||||||||||
compared to | compared to | |||||||||||||
Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | Q3 2017 | Q2 2018 | Q3 2017 | ||||||||
INTEREST INCOME | ||||||||||||||
Interest and fees on loans | $ 13,205 | $ 12,631 | $ 12,044 | $ 11,855 | $ 11,771 | 4.5 | % | 12.2 | % | |||||
Interest on investment securities: | ||||||||||||||
Taxable | 947 | 982 | 1,021 | 1,048 | 1,035 | (3.6) | (8.5) | |||||||
Interest on deposits with other banks | 84 | 61 | 38 | 65 | 131 | 37.7 | (35.9) | |||||||
Total interest income | 14,236 | 13,674 | 13,103 | 12,968 | 12,937 | 4.1 | 10.0 | |||||||
INTEREST EXPENSE | ||||||||||||||
Interest on deposits | 826 | 580 | 548 | 586 | 607 | 42.4 | 36.1 | |||||||
Interest on short-term borrowings | 463 | 461 | 226 | 13 | 4 | 0.4 | 11,475.0 | |||||||
Total interest expense | 1,289 | 1,041 | 774 | 599 | 611 | 23.8 | 111.0 | |||||||
NET INTEREST INCOME | 12,947 | 12,633 | 12,329 | 12,369 | 12,326 | 2.5 | 5.0 | |||||||
Provision for credit losses | 307 | 418 | 489 | 545 | 345 | (26.6) | (11.0) | |||||||
NET INTEREST INCOME AFTER PROVISION | ||||||||||||||
FOR CREDIT LOSSES | 12,640 | 12,215 | 11,840 | 11,824 | 11,981 | 3.5 | 5.5 | |||||||
NONINTEREST INCOME | ||||||||||||||
Service charges on deposit accounts | 982 | 947 | 905 | 971 | 945 | 3.7 | 3.9 | |||||||
Trust and investment fee income | 383 | 414 | 400 | 410 | 389 | (7.5) | (1.5) | |||||||
Gains on sales and calls of investment securities | - | - | - | - | 5 | - | (100.0) | |||||||
Insurance agency commissions | 2,170 | 2,151 | 2,694 | 1,898 | 2,088 | 0.9 | 3.9 | |||||||
Other noninterest income | 1,175 | 1,028 | 930 | 1,060 | 998 | 14.3 | 17.7 | |||||||
Total noninterest income | 4,710 | 4,540 | 4,929 | 4,339 | 4,425 | 3.7 | 6.4 | |||||||
NONINTEREST EXPENSE | ||||||||||||||
Salaries and wages | 5,516 | 5,383 | 5,473 | 5,503 | 5,203 | 2.5 | 6.0 | |||||||
Employee benefits | 1,271 | 1,369 | 1,517 | 1,081 | 1,197 | (7.2) | 6.2 | |||||||
Occupancy expense | 767 | 755 | 781 | 746 | 696 | 1.6 | 10.2 | |||||||
Furniture and equipment expense | 251 | 275 | 287 | 232 | 286 | (8.7) | (12.2) | |||||||
Data processing | 963 | 720 | 897 | 871 | 922 | 33.8 | 4.4 | |||||||
Directors' fees | 145 | 152 | 114 | 99 | 99 | (4.6) | 46.5 | |||||||
Amortization of intangible assets | 281 | 239 | 111 | 112 | 115 | 17.6 | 144.3 | |||||||
FDIC insurance premium expense | 193 | 214 | 205 | 201 | 189 | (9.8) | 2.1 | |||||||
Other real estate owned expenses, net | 166 | 5 | (46) | (86) | 185 | 3,220.0 | (10.3) | |||||||
Legal and professional fees | 463 | 505 | 464 | 453 | 493 | (8.3) | (6.1) | |||||||
Other noninterest expenses | 1,270 | 1,211 | 1,659 | 1,420 | 1,335 | 4.9 | (4.9) | |||||||
Total noninterest expense | 11,286 | 10,828 | 11,462 | 10,632 | 10,720 | 4.2 | 5.3 | |||||||
Income before income taxes | 6,064 | 5,927 | 5,307 | 5,531 | 5,686 | 2.3 | 6.6 | |||||||
Income tax expense | 1,610 | 1,536 | 1,249 | 2,833 | 2,274 | 4.8 | (29.2) | |||||||
NET INCOME | $ 4,454 | $ 4,391 | $ 4,058 | $ 2,698 | $ 3,412 | 1.4 | 30.5 | |||||||
Weighted average shares outstanding - basic | 12,748 | 12,744 | 12,715 | 12,688 | 12,687 | 0.0 | 0.5 | |||||||
Weighted average shares outstanding - diluted | 12,761 | 12,757 | 12,731 | 12,750 | 12,718 | 0.0 | 0.3 | |||||||
Basic net income per common share | $ 0.35 | $ 0.34 | $ 0.32 | $ 0.21 | $ 0.27 | 2.9 | 29.6 | |||||||
Diluted net income per common share | 0.35 | 0.34 | 0.32 | 0.21 | 0.27 | 2.9 | 29.6 | |||||||
Dividends paid per common share | 0.08 | 0.08 | 0.07 | 0.07 | 0.05 | - | 60.0 |
Shore Bancshares, Inc. | ||||||||||||||||||||||||
Consolidated Average Balance Sheets By Quarter | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Average balance | ||||||||||||||||||||||||
Q3 2018 | Q3 2018 | |||||||||||||||||||||||
compared to | compared to | |||||||||||||||||||||||
Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | Q3 2017 | Q2 2018 | Q3 2017 | ||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||
balance | rate | balance | rate | balance | rate | balance | rate | balance | rate | |||||||||||||||
Earning assets | ||||||||||||||||||||||||
Loans (1), (2), (3) | 1,174,513 | 4.47 | % | $ 1,141,296 | 4.45 | % | $ 1,106,213 | 4.44 | % | $ 1,062,980 | 4.45 | % | $ 1,034,553 | 4.54 | % | 2.9 | % | 13.5 | % | |||||
Investment securities (1) | ||||||||||||||||||||||||
Taxable | 178,572 | 2.12 | 186,453 | 2.11 | 197,285 | 2.07 | 211,910 | 1.98 | 218,675 | 1.89 | (4.2) | (18.3) | ||||||||||||
Interest-bearing deposits | 17,488 | 1.91 | 13,301 | 1.82 | 9,751 | 1.60 | 19,878 | 1.30 | 42,204 | 1.23 | 31.5 | (58.6) | ||||||||||||
Total earning assets | 1,370,573 | 4.13 | % | 1,341,050 | 4.10 | % | 1,313,249 | 4.06 | % | 1,294,768 | 3.99 | % | 1,295,432 | 3.98 | % | 2.2 | 5.8 | |||||||
Cash and due from banks | 17,790 | 16,905 | 16,384 | 18,589 | 16,232 | 5.2 | 9.6 | |||||||||||||||||
Other assets | 79,065 | 78,185 | 76,336 | 74,700 | 75,611 | 1.1 | 4.6 | |||||||||||||||||
Allowance for credit losses | (10,354) | (10,193) | (9,968) | (9,504) | (9,300) | 1.6 | 11.3 | |||||||||||||||||
Total assets | $ 1,457,074 | $ 1,425,947 | $ 1,396,001 | $ 1,378,553 | $ 1,377,975 | 2.2 | 5.7 | |||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||
Demand deposits | $ 221,905 | 0.32 | % | $ 204,068 | 0.21 | % | $ 216,808 | 0.23 | % | $ 222,321 | 0.24 | % | $ 224,180 | 0.23 | % | 8.7 | (1.0) | |||||||
Money market and savings deposits | 373,357 | 0.14 | 381,047 | 0.13 | 380,890 | 0.13 | 382,438 | 0.12 | 378,711 | 0.12 | (2.0) | (1.4) | ||||||||||||
Brokered deposits | 25,507 | 2.01 | 10,684 | 1.96 | - | - | - | - | - | - | 138.7 | - | ||||||||||||
Certificates of deposit $100,000 or more | 97,563 | 0.69 | 96,873 | 0.54 | 101,929 | 0.50 | 110,458 | 0.49 | 123,538 | 0.50 | 0.7 | (21.0) | ||||||||||||
Other time deposits | 145,130 | 0.57 | 146,946 | 0.45 | 152,321 | 0.48 | 158,241 | 0.49 | 164,459 | 0.50 | (1.2) | (11.8) | ||||||||||||
Interest-bearing deposits | 863,462 | 0.36 | 839,618 | 0.27 | 851,948 | 0.26 | 873,458 | 0.27 | 890,888 | 0.27 | 2.8 | (3.1) | ||||||||||||
Short-term borrowings | 87,925 | 2.09 | 91,980 | 2.01 | 56,586 | 1.62 | 6,087 | 0.86 | 2,274 | 0.62 | (4.4) | 3,766.5 | ||||||||||||
Total interest-bearing liabilities | 951,387 | 0.52 | % | 931,598 | 0.44 | % | 908,534 | 0.35 | % | 879,545 | 0.27 | % | 893,162 | 0.27 | % | 2.1 | 6.5 | |||||||
Noninterest-bearing deposits | 329,383 | 322,172 | 316,665 | 328,802 | 320,006 | 2.2 | 2.9 | |||||||||||||||||
Accrued expenses and other liabilities | 6,005 | 5,697 | 5,732 | 6,313 | 5,256 | 5.4 | 14.3 | |||||||||||||||||
Stockholders' equity | 170,299 | 166,480 | 165,070 | 163,893 | 159,551 | 2.3 | 6.7 | |||||||||||||||||
Total liabilities and stockholders' equity | $ 1,457,074 | $ 1,425,947 | $ 1,396,001 | $ 1,378,553 | $ 1,377,975 | 2.2 | 5.7 | |||||||||||||||||
Net interest spread | 3.61 | % | 3.66 | % | 3.71 | % | 3.72 | % | 3.71 | % | ||||||||||||||
Net interest margin | 3.76 | % | 3.79 | % | 3.83 | % | 3.81 | % | 3.79 | % | ||||||||||||||
(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, for the first, second and third quarter of 2018 and 35.0% for all quarters during 2017, | ||||||||||||||||||||||||
exclusive of the alternative minimum tax rate and nondeductible interest expense. | ||||||||||||||||||||||||
(2) Average loan balances include nonaccrual loans. | ||||||||||||||||||||||||
(3) Interest income on loans includes amortized loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. | ||||||||||||||||||||||||
Shore Bancshares, Inc. | ||||||||||||||
Reconciliation of Generally Accepted Accounting Principles (GAAP) | ||||||||||||||
and Non-GAAP Measures | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
YTD | YTD | |||||||||||||
Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | Q3 2017 | 9/30/2018 | 9/30/2017 | ||||||||
The following reconciles return on average equity and return on | ||||||||||||||
average tangible equity (Note 1): | ||||||||||||||
Net income | $ 4,454 | $ 4,391 | $ 4,058 | $ 2,698 | $ 3,412 | $ 12,903 | $ 8,564 | |||||||
Net income - annualized (A) | $ 17,671 | $ 17,612 | $ 16,457 | $ 10,704 | $ 13,537 | $ 17,251 | $ 11,450 | |||||||
Net income, excluding net amortization of intangible assets | $ 4,664 | $ 4,574 | $ 4,143 | $ 2,766 | $ 3,482 | $ 13,374 | $ 8,687 | |||||||
Net income, excluding net amortization of intangible | ||||||||||||||
assets - annualized (B) | $ 18,504 | $ 18,346 | $ 16,802 | $ 10,974 | $ 13,814 | $ 17,881 | $ 11,614 | |||||||
Average stockholders' equity (C) | $ 170,299 | $ 166,480 | $ 165,070 | $ 163,893 | $ 159,551 | $ 167,288 | $ 158,342 | |||||||
Less: Average goodwill and other intangible assets | (31,810) | (32,088) | (32,721) | (32,678) | (32,097) | (32,203) | (19,493) | |||||||
Average tangible equity (D) | $ 138,489 | $ 134,392 | $ 132,349 | $ 131,215 | $ 127,454 | $ 135,085 | $ 138,849 | |||||||
Return on average equity (GAAP) (A)/(C) | 10.38 | % | 10.58 | % | 9.97 | % | 6.53 | % | 8.48 | % | 10.31 | % | 7.23 | % |
Return on average tangible equity (Non-GAAP) (B)/(D) | 13.36 | % | 13.65 | % | 12.70 | % | 8.36 | % | 10.84 | % | 13.24 | % | 8.36 | % |
The following reconciles GAAP efficiency ratio and non-GAAP | ||||||||||||||
efficiency ratio (Note 2): | ||||||||||||||
Noninterest expense (E) | $ 11,286 | $ 10,828 | $ 11,462 | $ 10,632 | $ 10,720 | $ 33,576 | $ 30,570 | |||||||
Less: Amortization of intangible assets | (281) | (239) | (111) | (112) | (115) | (631) | (203) | |||||||
Adjusted noninterest expense (F) | $ 11,005 | $ 10,589 | $ 11,351 | $ 10,520 | $ 10,605 | $ 32,945 | $ 30,367 | |||||||
Net interest income (G) | 12,947 | 12,633 | 12,329 | 12,369 | 12,326 | 37,909 | 33,159 | |||||||
Add: Taxable-equivalent adjustment | 28 | 28 | 28 | 61 | 58 | 84 | 180 | |||||||
Taxable-equivalent net interest income (H) | $ 12,975 | $ 12,661 | $ 12,357 | $ 12,430 | $ 12,384 | $ 37,993 | $ 33,339 | |||||||
Noninterest income (I) | $ 4,710 | $ 4,540 | $ 4,929 | $ 4,339 | $ 4,425 | $ 14,179 | 13,411 | |||||||
Less: Investment securities (gains) | - | - | - | - | (5) | - | (5) | |||||||
Adjusted noninterest income (J) | $ 4,710 | $ 4,540 | $ 4,929 | $ 4,339 | $ 4,420 | $ 14,179 | $ 13,406 | |||||||
Efficiency ratio (GAAP) (E)/(G)+(I) | 63.92 | % | 63.05 | % | 66.42 | % | 63.63 | % | 64.00 | % | 64.46 | % | 65.64 | % |
Efficiency ratio (Non-GAAP) (F)/(H)+(J) | 62.23 | % | 61.56 | % | 65.67 | % | 62.73 | % | 63.11 | % | 63.15 | % | 64.96 | % |
The following reconciles book value per common share and tangible | ||||||||||||||
book value per common share (Note 1): | ||||||||||||||
Stockholders' equity (L) | $ 171,419 | $ 168,115 | $ 164,977 | $ 163,736 | $ 162,648 | |||||||||
Less: Goodwill and other intangible assets | (31,706) | (31,987) | (32,226) | (32,337) | (32,740) | |||||||||
Tangible equity (M) | $ 139,713 | $ 136,128 | $ 132,751 | $ 131,399 | $ 129,908 | |||||||||
Shares outstanding (N) | 12,748 | 12,747 | 12,736 | 12,688 | 12,687 | |||||||||
Book value per common share (GAAP) (L)/(N) | $ 13.45 | $ 13.19 | $ 12.95 | $ 12.90 | $ 12.82 | |||||||||
Tangible book value per common share (Non-GAAP) (M)/(N) | $ 10.96 | $ 10.68 | $ 10.42 | $ 10.36 | $ 10.24 | |||||||||
The following reconciles equity to assets and | ||||||||||||||
tangible equity to tangible assets (Note 1): | ||||||||||||||
Stockholders' equity (O) | $ 171,419 | $ 168,115 | $ 164,977 | $ 163,736 | $ 162,648 | |||||||||
Less: Goodwill and other intangible assets | (31,706) | (31,987) | (32,226) | (32,337) | (32,740) | |||||||||
Tangible equity (P) | $ 139,713 | $ 136,128 | $ 132,751 | $ 131,399 | $ 129,908 | |||||||||
Assets (Q) | $ 1,473,543 | $ 1,451,714 | $ 1,421,606 | $ 1,393,860 | $ 1,376,127 | |||||||||
Less: Goodwill and other intangible assets | (31,706) | (31,987) | (32,226) | (32,337) | (32,740) | |||||||||
Tangible assets (R) | $ 1,441,837 | $ 1,419,727 | $ 1,389,380 | $ 1,361,523 | $ 1,343,387 | |||||||||
Period-end equity/assets (GAAP) (O)/(Q) | 11.63 | % | 11.58 | % | 11.60 | % | 11.75 | % | 11.82 | % | ||||
Period-end tangible equity/tangible assets (Non-GAAP) (P)/(R) | 9.69 | % | 9.59 | % | 9.55 | % | 9.65 | % | 9.67 | % | ||||
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: Edward Allen, Senior Vice President and Chief Financial Officer, 410-763-7800