28969 Information Lane
Easton, Maryland 21601
Phone 410-763-7800
PRESS RELEASE
Shore Bancshares Reports Third Quarter and Nine-Month Results
Easton, Maryland (10/24/19) - Shore Bancshares, Inc. (NASDAQ - SHBI) (the “Company”) reported net income of $4.206 million or $0.33 per diluted common share for the third quarter of 2019, compared to net income of $4.224 million or $0.33 per diluted common share for the second quarter of 2019, and net income of $4.454 million or $0.35 per diluted common share for the third quarter of 2018. Net income from continuing operations for the third quarter of 2019 was $4.214 million or $0.33 per diluted common share, compared to net income from continuing operations of $4.228 million or $0.33 per diluted common share for the second quarter of 2019, and net income from continuing operations of $4.256 million or $0.33 per diluted common share for the third quarter of 2018. The Company reported net income of $12.184 million or $0.95 per diluted common share for the first nine months of 2019, compared to net income of $12.903 million or $1.01 per diluted common share for the first nine months of 2018. Net income from continuing operations for the first nine months of 2019 was $12.270 million or $0.96 per diluted common share, compared to net income from continuing operations of $11.910 million or $0.93 per diluted common share for the first nine months of 2018.
When comparing net income from continuing operations for the third quarter of 2019 to the second quarter of 2019, net interest income increased $387 thousand, offset by an increase in noninterest expenses of $399 thousand. When comparing net income from continuing operations for the third quarter of 2019 to the third quarter of 2018, the decrease was due to lower net interest income of $267 thousand and higher noninterest expenses of $74 thousand, offset by a lower provision for credit losses of $107 thousand and higher noninterest income of $64 thousand.
“During the third quarter we experienced significant growth in deposits resulting in stable earnings for the quarter,” said Lloyd L. “Scott” Beatty, Jr., President and Chief Executive Officer. “Our loan demand remains strong and the lack of growth in the third quarter was partially a result of deals being delayed into the fourth quarter, coupled with some significant payoffs. During the third quarter, the Company began repurchasing its shares under the stock repurchase plan approved in April of 2019. As of September 30, 2019, the Company had repurchased 36,700 shares for approximately $558 thousand. As we move forward into the last quarter of the year, we remain focused on continuing to grow our loan portfolio, repurchasing shares and increasing our market share within our footprint.”
Balance Sheet Review
Total assets were $1.562 billion at September 30, 2019, a $78.6 million, or 5.3%, increase when compared to $1.483 billion at the end of 2018. The increase was primarily due to total deposits increasing $113.1 million or 9.3%. The significant growth in deposits funded increases in loans of $39.7 million, or 3.3%, interest-bearing deposits with other banks of $29.7 million, or 58.2%, and other assets of $12.9 million, or 72.9%, which includes the purchase of approximately $14 million of bank owned life insurance (“BOLI”) during the third quarter of 2019. In addition, the increase in deposits allowed the Company to decrease its short-term borrowings by $43.5 million or 71.6%.
Total deposits increased $113.1 million, or 9.3%, when compared to December 31, 2018. The increase in total deposits primarily consisted of increases in interest-bearing checking deposits of $48.7 million, noninterest-bearing deposits of $32.1 million, time deposits greater than $100 thousand of $25.2 million, other time deposits of $8.8 million and savings and money market accounts of $8.3 million, partially offset by a decrease in brokered deposits of $10.0 million.
Total stockholders’ equity increased $10.8 million, or 5.9%, when compared to the end of 2018. At September 30, 2019, the ratio of total equity to total assets was 12.42% and the ratio of total tangible equity to total tangible assets was 11.29%.
Total assets at September 30, 2019 increased $88.1 million, or 6.0%, when compared to total assets at September 30, 2018. The primary reason for the increase was due to total deposits increasing $143.7 million or 12.2%. The significant growth in deposits funded increases in loans of $54.5 million or 4.6%, interest-bearing deposits with other banks of $50.7 million or 169.4% and other assets of $15.4 million or 102.0%, partially offset by a decrease in investment securities available for sale of $28.8 million or 17.2%. In addition, the increase in deposits allowed the Company to decrease its short-term borrowings by $96.8 million or 84.9%.
Total deposits at September 30, 2019 increased $143.7 million, or 12.2%, when compared to September 30, 2018. The increase in total deposits primarily consisted of increases in interest-bearing checking deposits of $73.6 million, noninterest-bearing deposits of $30.8 million, time deposits greater than $100 thousand of $26.6 million, savings and money market accounts of $19.2 million, and other time deposits of $4.8 million partially offset by a decrease in brokered deposits of $11.5 million. Total stockholders’ equity increased $22.5 million, or 13.2%, when compared to September 30, 2018.
Review of Quarterly Financial Results
Net interest income was $12.7 million for the third quarter of 2019, compared to $12.3 million for the second quarter of 2019 and $12.9 million for the third quarter of 2018. The primary reasons for the increase in net interest income when compared to the second quarter of 2019 were loan growth late in the second quarter allowing a full quarter of earning interest, coupled with an extra day of earning interest on legacy loans as well as an increase in interest-bearing deposits with other banks of $59.8 million. Interest on deposits increased $84 thousand and was partially offset by a decrease in interest on short-term borrowings of $28 thousand when comparing the third quarter of 2019 to the second quarter of 2019. Net interest income decreased when compared to the third quarter of 2018 due to an increase in interest expense of $1.2 million, partially offset by an increase in interest income of $957 thousand. The improvement in interest income was the result of increases in the average balances of loans of $60.9 million or 5.2% and interest-bearing deposits with other banks of $24.1 million or 137.6%. The Company’s net interest margin decreased to 3.52% from 3.54% in the second quarter of 2019 and decreased from 3.76% in the third quarter of 2018. The decline in net interest margin from the second quarter of 2019 was due to a higher average balance in interest-bearing deposits with other banks, which experienced a decrease in yield of 34bps. The decline in net interest margin from the third quarter of 2018 was due to an increase in rates paid on all interest-bearing liabilities, most significantly interest-bearing deposits which experienced an increase in the average balance of $61.7 million and rates paid on these deposits of 62bps, partially offset by an increase in the average balance of total earnings assets $61.7 million and a yield of 9bps.
The provision for credit losses was $200 thousand for the three months ended September 30, 2019. The comparable amounts were $200 thousand and $307 thousand for the three months ended June 30, 2019 and September 30, 2018, respectively. The provision for credit losses remained unchanged from the second quarter of 2019 due to stagnant growth within the loan portfolio. The decrease in the amount of provision for credit losses from the third quarter of 2018 was due to lower loan growth in the third quarter of 2019. Net charge-offs were $67 thousand for the third quarter of 2019, $313 thousand for the second quarter of 2019 and $100 thousand for the third quarter of 2018. The ratio of annualized net charge-offs to average loans was 0.02% for the third quarter of 2019, 0.10% for the second quarter of 2019 and 0.03% for the third quarter of 2018. The ratio of the allowance for credit losses to period-end loans was 0.85% at September 30, 2019, slightly higher than the 0.83% at June 30, 2019 and lower than the 0.87% at September 30, 2018.
At September 30, 2019, nonperforming assets were $13.3 million, a decrease of $2.2 million, or 14.4%, when compared to June 30, 2019, primarily due to a decrease in nonaccrual loans of $2.1, or 14.1%. Other real estate owned decreased $450 thousand, or 85.9% and accruing troubled debt restructurings (“TDRs”) decreased $180 thousand, or 2.3% over the same time period. When comparing September 30, 2019 to September 30, 2018, nonperforming assets increased $4.4 million, or 49.9%, and accruing TDRs decreased $1.3 million, or 15.1%. The increase in nonperforming assets was due to a large nonaccrual loan with an outstanding loan balance of $7.5 million added late in the fourth quarter of 2018, in which the Company does not anticipate any further losses. The ratio of nonperforming assets and accruing TDRs to total assets was 1.34%, 1.56% and 1.21% at September 30, 2019, June 30, 2019 and September 30, 2018, respectively. In addition, the ratio of accruing TDRs to total loans at September 30, 2019 was 0.61% at September 30, 2019, compared to 0.63% at June 30, 2019 and 0.76% at September 30, 2018.
Total noninterest income from continuing operations for the third quarter of 2019 decreased $80 thousand when compared to the second quarter of 2019 and increased $64 thousand when compared to the third quarter of 2018. The decrease from the second quarter of 2019 was the result of a decrease in service charges on deposit accounts and additional fees on bank service charges included in other noninterest income. The increase from the third quarter of 2018 was due to higher loan fees and additional fees on bank service charges.
Total noninterest expense from continuing operations for the third quarter of 2019 increased $399 thousand when compared to the second quarter of 2019 and increased $74 thousand when compared to the third quarter of 2018. The increase in noninterest expense compared to the second quarter of 2019 was primarily due to higher employee benefits, which included the funding of a new supplemental executive retirement plan, a write down on an other real estate owned property and other loan expenses, partially offset by lower FDIC insurance premiums for the quarter due to an FDIC assessment credit for banks under $10 billion. The slight increase in noninterest expenses from the third quarter of 2018 was primarily due to increases in employee benefits and other loan and service costs, almost entirely offset by lower salaries and wages, amortization on intangible assets and FDIC insurance premiums.
Review of Nine-Month Financial Results
Net interest income for the first nine months of 2019 was $37.4 million, a decrease of $542 thousand, or 1.4%, when compared to the first nine months of 2018. The decrease was the direct result of an increase in interest expense on deposits, which was partially offset by an increase in interest and fees on loans. The average balance on loans increased $78.7 million and the yield on loans increased 10bps when comparing the periods. This increase in volume and yields on loans was offset by an increase in the average balance of interest-bearing deposits of $49.7 million, with an associated increase in rates paid on these deposits of 66bps. This resulted in a net interest margin of 3.56% for the first nine months of 2019 compared to 3.79% for the first nine months of 2018.
The provision for credit losses for the nine months ended September 30, 2019 and 2018 was $500 thousand and $1.2 million, respectively, while net charge-offs were $405 thousand and $667 thousand, respectively. The decrease in provision for credit losses was the result of improved overall credit quality exclusive of the one large relationship mentioned above and lower net charge-offs for the first nine months of 2019 compared to the first nine months of 2018. In addition, loan growth in the first nine months of 2019 has lagged the first nine months of 2018. The ratio of annualized net charge-offs to average loans was 0.04% for the first nine months of 2019 and 0.08% for the first nine months of 2018.
Total noninterest income from continuing operations for the nine months ended September 30, 2019 increased $426 thousand, or 6.2%, when compared to the same period in 2018. The increase in noninterest income primarily consisted of increases in service charges on deposit accounts and other fees on bank services.
Total noninterest expense from continuing operations for the nine months ended September 30, 2019 increased $98 thousand, or 0.4%, when compared to the same period in 2018. Despite the insignificant aggregate increase in total noninterest expenses, salaries and wages decreased $1.1 million and FDIC insurance premiums decreased $226 thousand, which were offset by increases in employee benefits of $417 thousand, data processing of $314 thousand, legal and professional fees of $277 thousand and other real estate owned expenses of $301 thousand.
Shore Bancshares Information
Shore Bancshares 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. Shore Bancshares 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.
For further information contact: Edward Allen, Executive Vice President and Chief Financial Officer,
410-763-7800
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, | |
| | 2019 | | 2018 | | Change | | 2019 | | 2018 | | Change | |
PROFITABILITY FOR THE PERIOD | | | | | | | | | | | | | | | | | |
Net interest income | | $ | 12,680 | | $ | 12,947 | | (2.1) | % | $ | 37,367 | | $ | 37,909 | | (1.4) | % |
Provision for credit losses | | | 200 | | | 307 | | (34.9) | | | 500 | | | 1,214 | | (58.8) | |
Noninterest income | | | 2,529 | | | 2,465 | | 2.6 | | | 7,326 | | | 6,901 | | 6.2 | |
Noninterest expense | | | 9,384 | | | 9,310 | | 0.8 | | | 27,712 | | | 27,615 | | 0.4 | |
Income from continuing operations before income taxes | | | 5,625 | | | 5,795 | | (2.9) | | | 16,481 | | | 15,981 | | 3.1 | |
Income tax expense | | | 1,411 | | | 1,539 | | (8.3) | | | 4,211 | | | 4,071 | | 3.4 | |
Income from continuing operations | | $ | 4,214 | | $ | 4,256 | | (1.0) | | $ | 12,270 | | $ | 11,910 | | 3.0 | |
| | | | | | | | | | | | | | | | | |
(Loss) Income from discontinued operations before income taxes | | | (10) | | | 269 | | (103.7) | | | (113) | | | 1,317 | | (108.6) | |
Income tax expense (benefit) | | | (2) | | | 71 | | (102.8) | | | (27) | | | 324 | | (108.3) | |
(Loss) Income from discontinued operations | | | (8) | | | 198 | | (104.0) | | | (86) | | | 993 | | (108.7) | |
Net income | | $ | 4,206 | | $ | 4,454 | | (5.6) | | $ | 12,184 | | $ | 12,903 | | (5.6) | |
| | | | | | | | | | | | | | | | | |
From Continuing Operations: | | | | | | | | | | | | | | | | | |
Return on average assets | | | 1.10 | % | | 1.16 | % | (6) | bp | | 1.11 | % | | 1.12 | % | (1) | bp |
Return on average equity | | | 8.66 | | | 9.92 | | (126) | | | 8.68 | | | 9.52 | | (84) | |
Return on average tangible equity (1) | | | 9.90 | | | 12.77 | | (287) | | | 9.98 | | | 12.26 | | (228) | |
Net interest margin | | | 3.52 | | | 3.76 | | (24) | | | 3.56 | | | 3.79 | | (23) | |
Efficiency ratio - GAAP | | | 61.70 | | | 60.41 | | 129 | | | 62.01 | | | 61.63 | | 38 | |
Efficiency ratio - Non-GAAP (1) | | | 60.58 | | | 58.55 | | 203 | | | 60.81 | | | 60.11 | | 70 | |
| | | | | | | | | | | | | | | | | |
PER SHARE DATA | | | | | | | | | | | | | | | | | |
Basic net income per common share | | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.33 | | $ | 0.33 | | — | % | $ | 0.96 | | $ | 0.93 | | 3.2 | % |
(Loss) Income from discontinued operations | | | — | | | 0.02 | | (100.0) | | | (0.01) | | | 0.08 | | (112.5) | |
Net income | | $ | 0.33 | | $ | 0.35 | | (5.7) | | $ | 0.95 | | $ | 1.01 | | (5.9) | |
Diluted net income per common share | | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.33 | | $ | 0.33 | | — | | $ | 0.96 | | $ | 0.93 | | 3.2 | |
(Loss) Income from discontinued operations | | | — | | | 0.02 | | (100.0) | | | (0.01) | | | 0.08 | | (112.5) | |
Net income | | $ | 0.33 | | $ | 0.35 | | (5.7) | | $ | 0.95 | | $ | 1.01 | | (5.9) | |
| | | | | | | | | | | | | | | | | |
Dividends paid per common share | | | 0.10 | | | 0.08 | | 25.0 | | | 0.30 | | | 0.23 | | 30.4 | |
Book value per common share at period end | | | 15.22 | | | 13.45 | | 13.2 | | | | | | | | | |
Tangible book value per common share at period end (1) | | | 13.66 | | | 10.96 | | 24.6 | | | | | | | | | |
Market value at period end | | | 15.41 | | | 17.82 | | (13.5) | | | | | | | | | |
Market range: | | | | | | | | | | | | | | | | | |
High | | | 17.00 | | | 19.84 | | (14.3) | | | 17.00 | | | 20.09 | | (15.4) | |
Low | | | 14.90 | | | 16.63 | | (10.4) | | | 14.00 | | | 16.28 | | (14.0) | |
| | | | | | | | | | | | | | | | | |
AVERAGE BALANCE SHEET DATA | | | | | | | | | | | | | | | | | |
Loans | | $ | 1,235,374 | | $ | 1,174,513 | | 5.2 | % | $ | 1,219,623 | | $ | 1,140,925 | | 6.9 | % |
Investment securities | | | 155,324 | | | 178,572 | | (13.0) | | | 160,035 | | | 186,936 | | (14.4) | |
Earning assets | | | 1,432,252 | | | 1,370,573 | | 4.5 | | | 1,408,937 | | | 1,341,403 | | 5.0 | |
Assets | | | 1,513,790 | | | 1,457,074 | | 3.9 | | | 1,480,813 | | | 1,426,504 | | 3.8 | |
Deposits | | | 1,280,057 | | | 1,192,845 | | 7.3 | | | 1,243,472 | | | 1,174,505 | | 5.9 | |
Stockholders' equity | | | 193,120 | | | 170,299 | | 13.4 | | | 189,094 | | | 167,288 | | 13.0 | |
| | | | | | | | | | | | | | | | | |
CREDIT QUALITY DATA | | | | | | | | | | | | | | | | | |
Net charge-offs | | $ | 67 | | $ | 100 | | (33.0) | % | $ | 405 | | $ | 667 | | (39.3) | % |
| | | | | | | | | | | | | | | | | |
Nonaccrual loans | | $ | 12,530 | | $ | 7,362 | | 70.2 | | | | | | | | | |
Loans 90 days past due and still accruing | | | 712 | | | 3 | | 23,633.3 | | | | | | | | | |
Other real estate owned | | | 74 | | | 1,518 | | (95.1) | | | | | | | | | |
Total nonperforming assets | | | 13,316 | | | 8,883 | | 49.9 | | | | | | | | | |
Accruing troubled debt restructurings (TDRs) | | | 7,588 | | | 8,933 | | (15.1) | | | | | | | | | |
Total nonperforming assets and accruing TDRs | | $ | 20,904 | | $ | 17,816 | | 17.3 | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
CAPITAL AND CREDIT QUALITY RATIOS | | | | | | | | | | | | | | | | | |
Period-end equity to assets | | | 12.42 | % | | 11.63 | % | 79 | bp | | | | | | | | |
Period-end tangible equity to tangible assets (1) | | | 11.29 | | | 9.69 | | 160 | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Annualized net charge-offs to average loans | | | 0.02 | | | 0.03 | | (1) | | | 0.04 | % | | 0.08 | % | (4) | bp |
| | | | | | | | | | | | | | | | | |
Allowance for credit losses as a percent of: | | | | | | | | | | | | | | | | | |
Period-end loans | | | 0.85 | | | 0.87 | | (2) | | | | | | | | | |
Nonaccrual loans | | | 83.30 | | | 140.29 | | (5,699) | | | | | | | | | |
Nonperforming assets | | | 78.39 | | | 116.27 | | (3,788) | | | | | | | | | |
Accruing TDRs | | | 137.56 | | | 115.62 | | 2,194 | | | | | | | | | |
Nonperforming assets and accruing TDRs | | | 49.93 | | | 57.97 | | (804) | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
As a percent of total loans: | | | | | | | | | | | | | | | | | |
Nonaccrual loans | | | 1.01 | | | 0.62 | | 39 | | | | | | | | | |
Accruing TDRs | | | 0.61 | | | 0.76 | | (15) | | | | | | | | | |
Nonaccrual loans and accruing TDRs | | | 1.63 | | | 1.38 | | 25 | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
As a percent of total loans+other real estate owned: | | | | | | | | | | | | | | | | | |
Nonperforming assets | | | 1.08 | | | 0.75 | | 33 | | | | | | | | | |
Nonperforming assets and accruing TDRs | | | 1.69 | | | 1.51 | | 18 | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
As a percent of total assets: | | | | | | | | | | | | | | | | | |
Nonaccrual loans | | | 0.80 | | | 0.50 | | 30 | | | | | | | | | |
Nonperforming assets | | | 0.85 | | | 0.60 | | 25 | | | | | | | | | |
Accruing TDRs | | | 0.49 | | | 0.61 | | (12) | | | | | | | | | |
Nonperforming assets and accruing TDRs | | | 1.34 | | | 1.21 | | 13 | | | | | | | | | |
| (1) | | See the reconciliation table on page 17 of 17. |
Shore Bancshares, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
| | | | | | | | | | | | |
| | | | | | | | | | | September 30, 2019 | |
| | | September 30, | | | December 31, | | September 30, | | compared to | |
| | 2019 | | 2018 | | 2018 | | December 31, 2018 | |
ASSETS | | | | | | | | | | | | |
Cash and due from banks | | $ | 22,777 | | $ | 16,294 | | $ | 18,859 | | 39.8 | % |
Interest-bearing deposits with other banks | | | 80,596 | | | 50,931 | | | 29,918 | | 58.2 | |
Cash and cash equivalents | | | 103,373 | | | 67,225 | | | 48,777 | | 53.8 | |
| | | | | | | | | | | | |
Investment securities available for sale (at fair value) | | | 138,911 | | | 154,432 | | | 167,675 | | (10.1) | |
Investment securities held to maturity | | | 9,780 | | | 6,043 | | | 6,037 | | 61.8 | |
Equity securities, at fair value | | | 1,339 | | | 1,269 | | | 649 | | 5.5 | |
Restricted securities | | | 4,655 | | | 6,476 | | | 8,110 | | (28.1) | |
| | | | | | | | | | | | |
Loans | | | 1,235,035 | | | 1,195,355 | | | 1,180,557 | | 3.3 | |
Less: allowance for credit losses | | | (10,438) | | | (10,343) | | | (10,328) | | 0.9 | |
Loans, net | | | 1,224,597 | | | 1,185,012 | | | 1,170,229 | | 3.3 | |
| | | | | | | | | | | | |
Premises and equipment, net | | | 23,871 | | | 22,711 | | | 22,866 | | 5.1 | |
Goodwill | | | 17,518 | | | 17,518 | | | 17,518 | | — | |
Other intangible assets, net | | | 2,396 | | | 2,857 | | | 4,088 | | (16.1) | |
Other real estate owned, net | | | 74 | | | 1,222 | | | 1,518 | | (93.9) | |
Right of use assets, net | | | 4,908 | | | — | | | — | | — | |
Other assets | | | 30,257 | | | 17,678 | | | 15,129 | | 71.2 | |
Assets of discontinued operations | | | — | | | 633 | | | 10,947 | | (100.0) | |
| | | | | | | | | | | | |
Total assets | | $ | 1,561,679 | | $ | 1,483,076 | | $ | 1,473,543 | | 5.3 | |
| | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 362,557 | | $ | 330,466 | | $ | 331,766 | | 9.7 | |
Interest-bearing deposits | | | 962,934 | | | 881,875 | | | 850,070 | | 9.2 | |
Total deposits | | | 1,325,491 | | | 1,212,341 | | | 1,181,836 | | 9.3 | |
| | | | | | | | | | | | |
Short-term borrowings | | | 17,263 | | | 60,812 | | | 114,043 | | (71.6) | |
Long-term borrowings | | | 15,000 | | | 15,000 | | | — | | — | |
Lease liabilities | | | 4,923 | | | — | | | — | | — | |
Accrued expenses and other liabilities | | | 5,039 | | | 8,415 | | | 5,893 | | (40.1) | |
Liabilities of discontinued operations | | | — | | | 3,323 | | | 352 | | (100.0) | |
Total liabilities | | | 1,367,716 | | | 1,299,891 | | | 1,302,124 | | 5.2 | |
| | | | | | | | | | | | |
COMMITMENTS AND CONTINGENCIES | | | | | | | | | | | | |
| | | | | | | | | | | | |
STOCKHOLDERS' EQUITY | | | | | | | | | | | | |
Common stock, par value $0.01; authorized 35,000,000 shares | | | 127 | | | 127 | | | 127 | | — | |
Additional paid in capital | | | 64,879 | | | 65,434 | | | 65,730 | | (0.8) | |
Retained earnings | | | 128,924 | | | 120,574 | | | 109,628 | | 6.9 | |
Accumulated other comprehensive (loss) | | | 33 | | | (2,950) | | | (4,066) | | 101.1 | |
Total stockholders' equity | | | 193,963 | | | 183,185 | | | 171,419 | | 5.9 | |
| | | | | | | | | | | | |
Total liabilities and stockholders' equity | | $ | 1,561,679 | | $ | 1,483,076 | | $ | 1,473,543 | | 5.3 | |
| | | | | | | | | | | | |
Period-end common shares outstanding | | | 12,742 | | | 12,749 | | | 12,748 | | (0.1) | |
Book value per common share | | $ | 15.22 | | $ | 14.37 | | $ | 13.45 | | 5.9 | |
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, | |
| | 2019 | | 2018 | | % Change | | 2019 | | 2018 | | % Change | |
INTEREST INCOME | | | | | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 14,100 | | $ | 13,205 | | 6.8 | % | $ | 41,348 | | $ | 37,880 | | 9.2 | % |
Interest on investment securities: | | | | | | | | | | | | | | | | | |
Taxable | | | 870 | | | 947 | | (8.1) | | | 2,755 | | | 2,950 | | (6.6) | |
Interest on deposits with other banks | | | 223 | | | 84 | | 165.5 | | | 499 | | | 183 | | 172.7 | |
Total interest income | | | 15,193 | | | 14,236 | | 6.7 | | | 44,602 | | | 41,013 | | 8.8 | |
| | | | | | | | | | | | | | | | | |
INTEREST EXPENSE | | | | | | | | | | | | | | | | | |
Interest on deposits | | | 2,288 | | | 826 | | 177.0 | | | 6,439 | | | 1,954 | | 229.5 | |
Interest on short-term borrowings | | | 117 | | | 463 | | (74.7) | | | 475 | | | 1,150 | | (58.7) | |
Interest on long-term borrowings | | | 108 | | | — | | — | | | 321 | | | — | | — | |
Total interest expense | | | 2,513 | | | 1,289 | | 95.0 | | | 7,235 | | | 3,104 | | 133.1 | |
| | | | | | | | | | | | | | | | | |
NET INTEREST INCOME | | | 12,680 | | | 12,947 | | (2.1) | | | 37,367 | | | 37,909 | | (1.4) | |
Provision for credit losses | | | 200 | | | 307 | | (34.9) | | | 500 | | | 1,214 | | (58.8) | |
| | | | | | | | | | | | | | | | | |
NET INTEREST INCOME AFTER PROVISION | | | | | | | | | | | | | | | | | |
FOR CREDIT LOSSES | | | 12,480 | | | 12,640 | | (1.3) | | | 36,867 | | | 36,695 | | 0.5 | |
| | | | | | | | | | | | | | | | | |
NONINTEREST INCOME | | | | | | | | | | | | | | | | | |
Service charges on deposit accounts | | | 990 | | | 982 | | 0.8 | | | 2,952 | | | 2,834 | | 4.2 | |
Trust and investment fee income | | | 383 | | | 383 | | — | | | 1,140 | | | 1,197 | | (4.8) | |
Other noninterest income | | | 1,156 | | | 1,100 | | 5.1 | | | 3,234 | | | 2,870 | | 12.7 | |
Total noninterest income | | | 2,529 | | | 2,465 | | 2.6 | | | 7,326 | | | 6,901 | | 6.2 | |
| | | | | | | | | | | | | | | | | |
NONINTEREST EXPENSE | | | | | | | | | | | | | | | | | |
Salaries and wages | | | 3,853 | | | 4,209 | | (8.5) | | | 11,411 | | | 12,536 | | (9.0) | |
Employee benefits | | | 1,299 | | | 983 | | 32.1 | | | 3,621 | | | 3,204 | | 13.0 | |
Occupancy expense | | | 697 | | | 646 | | 7.9 | | | 2,056 | | | 1,973 | | 4.2 | |
Furniture and equipment expense | | | 263 | | | 212 | | 24.1 | | | 821 | | | 714 | | 15.0 | |
Data processing | | | 972 | | | 930 | | 4.5 | | | 2,801 | | | 2,487 | | 12.6 | |
Directors' fees | | | 140 | | | 145 | | (3.4) | | | 342 | | | 411 | | (16.8) | |
Amortization of intangible assets | | | 144 | | | 270 | | (46.7) | | | 461 | | | 597 | | (22.8) | |
FDIC insurance premium expense | | | — | | | 193 | | (100.0) | | | 386 | | | 612 | | (36.9) | |
Other real estate owned expenses, net | | | 133 | | | 166 | | (19.9) | | | 426 | | | 125 | | 240.8 | |
Legal and professional fees | | | 495 | | | 443 | | 11.7 | | | 1,655 | | | 1,378 | | 20.1 | |
Other noninterest expenses | | | 1,388 | | | 1,113 | | 24.7 | | | 3,732 | | | 3,578 | | 4.3 | |
Total noninterest expense | | | 9,384 | | | 9,310 | | 0.8 | | | 27,712 | | | 27,615 | | 0.4 | |
| | | | | | | | | | | | | | | | | |
Income from continuing operations before income taxes | | | 5,625 | | | 5,795 | | (2.9) | | | 16,481 | | | 15,981 | | 3.1 | |
Income tax expense | | | 1,411 | | | 1,539 | | (8.3) | | | 4,211 | | | 4,071 | | 3.4 | |
| | | | | | | | | | | | | | | | | |
Income from continuing operations | | | 4,214 | | | 4,256 | | (1.0) | | | 12,270 | | | 11,910 | | 3.0 | |
| | | | | | | | | | | | | | | | | |
(Loss) income from discontinued operations before income taxes | | | (10) | | | 269 | | (103.7) | | | (113) | | | 1,317 | | (108.6) | |
Income tax (benefit) expense | | | (2) | | | 71 | | (102.8) | | | (27) | | | 324 | | (108.3) | |
| | | | | | | | | | | | | | | | | |
(Loss) Income from discontinued operations | | | (8) | | | 198 | | (104.0) | | | (86) | | | 993 | | (108.7) | |
| | | | | | | | | | | | | | | | | |
NET INCOME | | $ | 4,206 | | $ | 4,454 | | (5.6) | | $ | 12,184 | | $ | 12,903 | | (5.6) | |
| | | | | | | | | | | | | | | | | |
Weighted average shares outstanding - basic | | | 12,764 | | | 12,748 | | 0.1 | | | 12,771 | | | 12,736 | | 0.3 | |
Weighted average shares outstanding - diluted | | | 12,769 | | | 12,761 | | 0.1 | | | 12,776 | | | 12,749 | | 0.2 | |
| | | | | | | | | | | | | | | | | |
Basic net income per common share | | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.33 | | $ | 0.33 | | — | | $ | 0.96 | | $ | 0.93 | | 3.2 | |
(Loss) Income from discontinued operations | | | — | | | 0.02 | | (100.0) | | | (0.01) | | | 0.08 | | (112.5) | |
Net income | | $ | 0.33 | | $ | 0.35 | | (5.7) | | $ | 0.95 | | $ | 1.01 | | (5.9) | |
| | | | | | | | | | | | | | | | | |
Diluted net income per common share | | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.33 | | $ | 0.33 | | - | | $ | 0.96 | | $ | 0.93 | | 3.2 | |
(Loss) Income from discontinued operations | | | — | | | 0.02 | | (100.0) | | | (0.01) | | | 0.08 | | (112.5) | |
Net income | | $ | 0.33 | | $ | 0.35 | | (5.7) | | $ | 0.95 | | $ | 1.01 | | (5.9) | |
| | | | | | | | | | | | | | | | | |
Dividends paid per common share | | | 0.10 | | | 0.08 | | 25.0 | | | 0.30 | | | 0.23 | | 30.4 | |
Shore Bancshares, Inc.
Consolidated Average Balance Sheets
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | For the Nine Months Ended | |
| | September 30, | | September 30, | |
| | 2019 | | 2018 | | 2019 | | 2018 | |
| | Average | | Yield/ | | Average | | Yield/ | | Average | | Yield/ | | Average | | Yield/ | |
| | balance | | rate | | balance | | rate | | balance | | rate | | balance | | rate | |
Earning assets | | | | | | | | | | | | | | | | | | | | | |
Loans (1), (2), (3) | | $ | 1,235,374 | | 4.54 | % | $ | 1,174,513 | | 4.47 | % | $ | 1,219,623 | | 4.55 | % | $ | 1,140,925 | | 4.45 | % |
Investment securities | | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 155,324 | | 2.24 | | | 178,572 | | 2.12 | | | 160,035 | | 2.30 | | | 186,936 | | 2.10 | |
Interest-bearing deposits | | | 41,554 | | 2.13 | | | 17,488 | | 1.91 | | | 29,279 | | 2.28 | | | 13,542 | | 1.80 | |
Total earning assets | | | 1,432,252 | | 4.22 | % | | 1,370,573 | | 4.13 | % | | 1,408,937 | | 4.24 | % | | 1,341,403 | | 4.10 | % |
Cash and due from banks | | | 18,127 | | | | | 17,790 | | | | | 17,520 | | | | | 17,031 | | | |
Other assets | | | 73,823 | | | | | 79,065 | | | | | 64,775 | | | | | 78,243 | | | |
Allowance for credit losses | | | (10,412) | | | | | (10,354) | | | | | (10,419) | | | | | (10,173) | | | |
Total assets | | $ | 1,513,790 | | | | $ | 1,457,074 | | | | $ | 1,480,813 | | | | $ | 1,426,504 | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | $ | 252,386 | | 0.70 | % | $ | 221,905 | | 0.32 | % | $ | 242,364 | | 0.66 | % | $ | 214,317 | | 0.26 | % |
Money market and savings deposits | | | 389,268 | | 0.67 | | | 373,357 | | 0.14 | | | 386,113 | | 0.79 | | | 378,404 | | 0.13 | |
Brokered deposits | | | 14,568 | | 2.29 | | | 25,507 | | 2.01 | | | 19,144 | | 2.40 | | | 12,157 | | 2.09 | |
Certificates of deposit $100,000 or more | | | 119,200 | | 1.78 | | | 97,563 | | 0.69 | | | 108,504 | | 1.54 | | | 98,772 | | 0.58 | |
Other time deposits | | | 149,708 | | 1.49 | | | 145,130 | | 0.57 | | | 145,381 | | 1.28 | | | 148,107 | | 0.50 | |
Interest-bearing deposits | | | 925,130 | | 0.98 | | | 863,462 | | 0.36 | | | 901,506 | | 0.96 | | | 851,757 | | 0.30 | |
Short-term borrowings | | | 17,729 | | 2.64 | | | 87,925 | | 2.09 | | | 24,034 | | 2.64 | | | 78,945 | | 1.95 | |
Long-term borrowings | | | 15,000 | | 2.86 | | | — | | — | | | 15,000 | | 2.86 | | | — | | — | |
Total interest-bearing liabilities | | | 957,859 | | 1.04 | % | | 951,387 | | 0.52 | % | | 940,540 | | 1.03 | % | | 930,702 | | 0.44 | % |
Noninterest-bearing deposits | | | 354,927 | | | | | 329,383 | | | | | 341,966 | | | | | 322,748 | | | |
Accrued expenses and other liabilities | | | 7,884 | | | | | 6,005 | | | | | 9,213 | | | | | 5,766 | | | |
Stockholders' equity | | | 193,120 | | | | | 170,299 | | | | | 189,094 | | | | | 167,288 | | | |
Total liabilities and stockholders' equity | | $ | 1,513,790 | | | | $ | 1,457,074 | | | | $ | 1,480,813 | | | | $ | 1,426,504 | | | |
| | | | | | | | | | | | | | | | | | | | | |
Net interest spread | | | | | 3.18 | % | | | | 3.61 | % | | | | 3.21 | % | | | | 3.66 | % |
Net interest margin | | | | | 3.52 | % | | | | 3.76 | % | | | | 3.56 | % | | | | 3.79 | % |
(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, 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.
Financial Highlights By Quarter
(Dollars in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | |
| | 3rd Quarter | | 2nd Quarter | | 1st Quarter | | 4th Quarter | | 3rd Quarter | | Q3 2019 | | Q3 2019 | |
| | 2019 | | 2019 | | 2019 | | 2018 | | 2018 | | compared to | | compared to | |
| | Q3 2019 | | Q2 2019 | | Q1 2019 | | Q4 2018 | | Q3 2018 | | Q2 2019 | | Q3 2018 | |
PROFITABILITY FOR THE PERIOD | | | | | | | | | | | | | | | | | | | | |
Taxable-equivalent net interest income | | $ | 12,724 | | $ | 12,334 | | $ | 12,428 | | $ | 12,756 | | $ | 12,975 | | 3.2 | % | (1.9) | % |
Less: Taxable-equivalent adjustment | | | 44 | | | 41 | | | 34 | | | 30 | | | 28 | | 7.3 | | 57.1 | |
Net interest income | | | 12,680 | | | 12,293 | | | 12,394 | | | 12,726 | | | 12,947 | | 3.1 | | (2.1) | |
Provision for credit losses | | | 200 | | | 200 | | | 100 | | | 460 | | | 307 | | — | | (34.9) | |
Noninterest income | | | 2,529 | | | 2,609 | | | 2,188 | | | 2,112 | | | 2,465 | | (3.1) | | 2.6 | |
Noninterest expense | | | 9,384 | | | 8,985 | | | 9,343 | | | 9,216 | | | 9,310 | | 4.4 | | 0.8 | |
Income from continuing operations before income taxes | | | 5,625 | | | 5,717 | | | 5,139 | | | 5,162 | | | 5,795 | | (1.6) | | (2.9) | |
Income tax expense | | | 1,411 | | | 1,489 | | | 1,311 | | | 1,309 | | | 1,539 | | (5.2) | | (8.3) | |
Income from continuing operations | | | 4,214 | | | 4,228 | | | 3,828 | | | 3,853 | | | 4,256 | | (0.3) | | (1.0) | |
| | | | | | | | | | | | | | | | | | | | |
(Loss) Income from discontinued operations before income taxes | | | (10) | | | (4) | | | (99) | | | 104 | | | 269 | | (150.0) | | (103.7) | |
Gain on sale of insurance agency | | | — | | | — | | | — | | | 12,736 | | | — | | — | | — | |
Income tax expense (benefit) | | | (2) | | | — | | | (25) | | | 4,599 | | | 71 | | — | | (102.8) | |
(Loss) Income from discontinued operations | | | (8) | | | (4) | | | (74) | | | 8,241 | | | 198 | | (100.0) | | (104.0) | |
| | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 4,206 | | $ | 4,224 | | $ | 3,754 | | $ | 12,094 | | $ | 4,454 | | (0.4) | | (5.6) | |
| | | | | | | | | | | | | | | | | | | | |
From Continuing Operations: | | | | | | | | | | | | | | | | | | | | |
Return on average assets | | | 1.10 | % | | 1.16 | % | | 1.06 | % | | 1.04 | % | | 1.16 | % | (6) | bp | (6) | bp |
Return on average equity | | | 8.66 | | | 8.97 | | | 8.39 | | | 8.83 | | | 9.92 | | (31) | | (126) | |
Return on average tangible equity (1) | | | 9.90 | | | 10.31 | | | 9.72 | | | 11.34 | | | 12.77 | | (41) | | (287) | |
Net interest margin | | | 3.52 | | | 3.54 | | | 3.61 | | | 3.58 | | | 3.76 | | (2) | | (24) | |
Efficiency ratio - GAAP | | | 61.70 | | | 60.29 | | | 64.07 | | | 62.11 | | | 60.41 | | 141 | | 129 | |
Efficiency ratio - Non-GAAP (1) | | | 60.58 | | | 59.09 | | | 62.81 | | | 60.18 | | | 58.55 | | 149 | | 203 | |
| | | | | | | | | | | | | | | | | | | | |
PER SHARE DATA | | | | | | | | | | | | | | | | | | | | |
Basic net income per common share | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.33 | | $ | 0.33 | | $ | 0.30 | | $ | 0.30 | | $ | 0.33 | | — | % | — | % |
(Loss) Income from discontinued operations | | | — | | | — | | | (0.01) | | | 0.65 | | | 0.02 | | — | | (100.0) | |
Net income | | $ | 0.33 | | $ | 0.33 | | $ | 0.29 | | $ | 0.95 | | $ | 0.35 | | — | | (5.7) | |
Diluted net income per common share | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.33 | | $ | 0.33 | | $ | 0.30 | | $ | 0.30 | | $ | 0.33 | | — | | — | |
(Loss) Income from discontinued operations | | | — | | | — | | | (0.01) | | | 0.65 | | | 0.02 | | — | | (100.0) | |
Net income | | $ | 0.33 | | $ | 0.33 | | $ | 0.29 | | $ | 0.95 | | $ | 0.35 | | — | | (5.7) | |
| | | | | | | | | | | | | | | | | | | | |
Dividends paid per common share | | | 0.10 | | | 0.10 | | | 0.10 | | | 0.09 | | | 0.08 | | — | | 25.0 | |
Book value per common share at period end | | | 15.22 | | | 14.97 | | | 14.64 | | | 14.37 | | | 13.45 | | 1.7 | | 13.2 | |
Tangible book value per common share at period end (1) | | | 13.66 | | | 13.40 | | | 13.06 | | | 12.77 | | | 10.96 | | 1.9 | | 24.6 | |
Market value at period end | | | 15.41 | | | 16.34 | | | 14.91 | | | 14.54 | | | 17.82 | | (5.7) | | (13.5) | |
Market range: | | | | | | | | | | | | | | | | | | | | |
High | | | 17.00 | | | 16.48 | | | 16.11 | | | 18.32 | | | 19.84 | | 3.2 | | (14.3) | |
Low | | | 14.90 | | | 14.84 | | | 14.00 | | | 12.95 | | | 16.63 | | 0.4 | | (10.4) | |
| | | | | | | | | | | | | | | | | | | | |
AVERAGE BALANCE SHEET DATA | | | | | | | | | | | | | | | | | | | | |
Loans | | $ | 1,235,374 | | $ | 1,221,215 | | $ | 1,201,913 | | $ | 1,189,504 | | $ | 1,174,513 | | 1.2 | % | 5.2 | % |
Investment securities | | | 155,324 | | | 159,878 | | | 165,009 | | | 177,700 | | | 178,572 | | (2.8) | | (13.0) | |
Earning assets | | | 1,432,252 | | | 1,399,418 | | | 1,394,728 | | | 1,385,368 | | | 1,370,573 | | 2.3 | | 4.5 | |
Assets | | | 1,513,790 | | | 1,468,093 | | | 1,460,291 | | | 1,463,839 | | | 1,457,074 | | 3.1 | | 3.9 | |
Deposits | | | 1,280,057 | | | 1,233,951 | | | 1,215,702 | | | 1,197,445 | | | 1,192,845 | | 3.7 | | 7.3 | |
Stockholders' equity | | | 193,120 | | | 189,101 | | | 184,972 | | | 173,214 | | | 170,299 | | 2.1 | | 13.4 | |
| | | | | | | | | | | | | | | | | | | | |
CREDIT QUALITY DATA | | | | | | | | | | | | | | | | | | | | |
Net charge-offs | | $ | 67 | | $ | 313 | | $ | 25 | | $ | 445 | | $ | 100 | | (78.6) | % | (33.0) | % |
| | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans | | $ | 12,530 | | $ | 14,592 | | $ | 15,360 | | $ | 16,655 | | $ | 7,362 | | (14.1) | | 70.2 | |
Loans 90 days past due and still accruing | | | 712 | | | 439 | | | 47 | | | 139 | | | 3 | | 62.2 | | 23,633.3 | |
Other real estate owned | | | 74 | | | 524 | | | 979 | | | 1,222 | | | 1,518 | | (85.9) | | (95.1) | |
Total nonperforming assets | | $ | 13,316 | | $ | 15,555 | | $ | 16,386 | | $ | 18,016 | | $ | 8,883 | | (14.4) | | 49.9 | |
| | | | | | | | | | | | | | | | | | | | |
Accruing troubled debt restructurings (TDRs) | | $ | 7,588 | | $ | 7,768 | | $ | 7,828 | | $ | 8,663 | | $ | 8,933 | | (2.3) | | (15.1) | |
| | | | | | | | | | | | | | | | | | | | |
Total nonperforming assets and accruing TDRs | | $ | 20,904 | | $ | 23,323 | | $ | 24,214 | | $ | 26,679 | | $ | 17,816 | | (10.4) | | 17.3 | |
| | | | | | | | | | | | | | | | | | | | |
CAPITAL AND CREDIT QUALITY RATIOS | | | | | | | | | | | | | | | | | | | | |
Period-end equity to assets | | | 12.42 | % | | 12.85 | % | | 12.59 | % | | 12.35 | % | | 11.63 | % | (43) | bp | 79 | bp |
Period-end tangible equity to tangible assets (1) | | | 11.29 | | | 11.66 | | | 11.39 | | | 11.13 | | | 9.69 | | (37) | | 160 | |
| | | | | | | | | | | | | | | | | | | | |
Annualized net charge-offs to average loans | | | 0.02 | | | 0.10 | | | 0.01 | | | 0.15 | | | 0.03 | | (8) | | (1) | |
| | | | | | | | | | | | | | | | | | | | |
Allowance for credit losses as a percent of: | | | | | | | | | | | | | | | | | | | | |
Period-end loans | | | 0.85 | | | 0.83 | | | 0.86 | | | 0.87 | | | 0.87 | | 2 | | (2) | |
Nonaccrual loans | | | 83.30 | | | 70.62 | | | 67.83 | | | 62.10 | | | 140.29 | | 1,268 | | (5,699) | |
Nonperforming assets | | | 78.39 | | | 66.25 | | | 63.58 | | | 57.41 | | | 116.27 | | 1,214 | | (3,788) | |
Accruing TDRs | | | 137.56 | | | 132.66 | | | 133.09 | | | 119.39 | | | 115.62 | | 490 | | 2,194 | |
Nonperforming assets and accruing TDRs | | | 49.93 | | | 44.18 | | | 43.02 | | | 38.77 | | | 57.97 | | 575 | | (804) | |
| | | | | | | | | | | | | | | | | | | | |
As a percent of total loans: | | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans | | | 1.01 | | | 1.18 | | | 1.27 | | | 1.39 | | | 0.62 | | (17) | | 39 | |
Accruing TDRs | | | 0.61 | | | 0.63 | | | 0.65 | | | 0.72 | | | 0.76 | | (2) | | (15) | |
Nonaccrual loans and accruing TDRs | | | 1.63 | | | 1.80 | | | 1.91 | | | 2.12 | | | 1.38 | | (17) | | 25 | |
| | | | | | | | | | | | | | | | | | | | |
As a percent of total loans+other real estate owned: | | | | | | | | | | | | | | | | | | | | |
Nonperforming assets | | | 1.08 | | | 1.25 | | | 1.35 | | | 1.51 | | | 0.75 | | (17) | | 33 | |
Nonperforming assets and accruing TDRs | | | 1.69 | | | 1.88 | | | 2.00 | | | 2.23 | | | 1.51 | | (19) | | 18 | |
| | | | | | | | | | | | | | | | | | | | |
As a percent of total assets: | | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans | | | 0.80 | | | 0.98 | | | 1.03 | | | 1.12 | | | 0.50 | | (18) | | 30 | |
Nonperforming assets | | | 0.85 | | | 1.04 | | | 1.10 | | | 1.21 | | | 0.60 | | (19) | | 25 | |
Accruing TDRs | | | 0.49 | | | 0.52 | | | 0.53 | | | 0.58 | | | 0.61 | | (3) | | (12) | |
Nonperforming assets and accruing TDRs | | | 1.34 | | | 1.56 | | | 1.63 | | | 1.80 | | | 1.21 | | (22) | | 13 | |
| (1) | | See the reconciliation table on page 17 of 17. |
Shore Bancshares, Inc.
Consolidated Statements of Income By Quarter
(In thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | Q3 2019 | | Q3 2019 | |
| | | | | | | | | | | | | | | | | compared to | | compared to | |
| | Q3 2019 | | Q2 2019 | | Q1 2019 | | Q4 2018 | | Q3 2018 | | Q2 2019 | | Q3 2018 | |
INTEREST INCOME | | | | | | | | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 14,100 | | $ | 13,749 | | $ | 13,499 | | $ | 13,452 | | $ | 13,205 | | 2.6 | % | 6.8 | % |
Interest on investment securities: | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 870 | | | 887 | | | 998 | | | 1,339 | | | 947 | | (1.9) | | (8.1) | |
Interest on deposits with other banks | | | 223 | | | 113 | | | 163 | | | 103 | | | 84 | | 97.3 | | 165.5 | |
Total interest income | | | 15,193 | | | 14,749 | | | 14,660 | | | 14,894 | | | 14,236 | | 3.0 | | 6.7 | |
| | | | | | | | | | | | | | | | | | | | |
INTEREST EXPENSE | | | | | | | | | | | | | | | | | | | | |
Interest on deposits | | | 2,288 | | | 2,204 | | | 1,947 | | | 1,577 | | | 826 | | 3.8 | | 177.0 | |
Interest on short-term borrowings | | | 117 | | | 145 | | | 213 | | | 486 | | | 463 | | (19.3) | | (74.7) | |
Interest on long-term borrowings | | | 108 | | | 107 | | | 106 | | | 105 | | | — | | 0.9 | | — | |
Total interest expense | | | 2,513 | | | 2,456 | | | 2,266 | | | 2,168 | | | 1,289 | | 2.3 | | 95.0 | |
| | | | | | | | | | | | | | | | | | | | |
NET INTEREST INCOME | | | 12,680 | | | 12,293 | | | 12,394 | | | 12,726 | | | 12,947 | | 3.1 | | (2.1) | |
Provision for credit losses | | | 200 | | | 200 | | | 100 | | | 460 | | | 307 | | — | | (34.9) | |
| | | | | | | | | | | | | | | | | | | | |
NET INTEREST INCOME AFTER PROVISION | | | | | | | | | | | | | | | | | | | | |
FOR CREDIT LOSSES | | | 12,480 | | | 12,093 | | | 12,294 | | | 12,266 | | | 12,640 | | 3.2 | | (1.3) | |
| | | | | | | | | | | | | | | | | | | | |
NONINTEREST INCOME | | | | | | | | | | | | | | | | | | | | |
Service charges on deposit accounts | | | 990 | | | 1,028 | | | 934 | | | 1,045 | | | 982 | | (3.7) | | 0.8 | |
Trust and investment fee income | | | 383 | | | 385 | | | 372 | | | 360 | | | 383 | | (0.5) | | — | |
Other noninterest income | | | 1,156 | | | 1,196 | | | 882 | | | 707 | | | 1,100 | | (3.3) | | 5.1 | |
Total noninterest income | | | 2,529 | | | 2,609 | | | 2,188 | | | 2,112 | | | 2,465 | | (3.1) | | 2.6 | |
| | | | | | | | | | | | | | | | | | | | |
NONINTEREST EXPENSE | | | | | | | | | | | | | | | | | | | | |
Salaries and wages | | | 3,853 | | | 3,792 | | | 3,766 | | | 3,999 | | | 4,209 | | 1.6 | | (8.5) | |
Employee benefits | | | 1,299 | | | 1,068 | | | 1,254 | | | 797 | | | 983 | | 21.6 | | 32.1 | |
Occupancy expense | | | 697 | | | 668 | | | 691 | | | 649 | | | 646 | | 4.3 | | 7.9 | |
Furniture and equipment expense | | | 263 | | | 295 | | | 263 | | | 236 | | | 212 | | (10.8) | | 24.1 | |
Data processing | | | 972 | | | 919 | | | 910 | | | 844 | | | 930 | | 5.8 | | 4.5 | |
Directors' fees | | | 140 | | | 116 | | | 86 | | | 145 | | | 145 | | 20.7 | | (3.4) | |
Amortization of intangible assets | | | 144 | | | 155 | | | 162 | | | 269 | | | 270 | | (7.1) | | (46.7) | |
FDIC insurance premium expense | | | — | | | 181 | | | 205 | | | 159 | | | 193 | | (100.0) | | (100.0) | |
Other real estate owned expenses, net | | | 133 | | | 60 | | | 233 | | | 228 | | | 166 | | 121.7 | | (19.9) | |
Legal and professional fees | | | 495 | | | 559 | | | 601 | | | 603 | | | 443 | | (11.4) | | 11.7 | |
Other noninterest expenses | | | 1,388 | | | 1,172 | | | 1,172 | | | 1,287 | | | 1,113 | | 18.4 | | 24.7 | |
Total noninterest expense | | | 9,384 | | | 8,985 | | | 9,343 | | | 9,216 | | | 9,310 | | 4.4 | | 0.8 | |
| | | | | | | | | | | | | | | | | | | | |
Income from continuing operations before income taxes | | | 5,625 | | | 5,717 | | | 5,139 | | | 5,162 | | | 5,795 | | (1.6) | | (2.9) | |
Income tax expense | | | 1,411 | | | 1,489 | | | 1,311 | | | 1,309 | | | 1,539 | | (5.2) | | (8.3) | |
| | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | | | 4,214 | | | 4,228 | | | 3,828 | | | 3,853 | | | 4,256 | | (0.3) | | (1.0) | |
| | | | | | | | | | | | | | | | | | | | |
(Loss) Income from discontinued operations before income taxes | | | (10) | | | (4) | | | (99) | | | 104 | | | 269 | | (150.0) | | (103.7) | |
Gain on sale of insurance agency | | | — | | | — | | | — | | | 12,736 | | | — | | — | | — | |
(Loss) Income tax expense (benefit) | | | (2) | | | — | | | (25) | | | 4,599 | | | 71 | | — | | (102.8) | |
| | | | | | | | | | | | | | | | | | | | |
(Loss) Income from discontinued operations | | | (8) | | | (4) | | | (74) | | | 8,241 | | | 198 | | (100.0) | | (104.0) | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
NET INCOME | | $ | 4,206 | | $ | 4,224 | | $ | 3,754 | | $ | 12,094 | | $ | 4,454 | | (0.4) | | (5.6) | |
| | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding - basic | | | 12,764 | | | 12,779 | | | 12,769 | | | 12,749 | | | 12,748 | | (0.1) | | 0.1 | |
Weighted average shares outstanding - diluted | | | 12,769 | | | 12,784 | | | 12,773 | | | 12,766 | | | 12,761 | | (0.1) | | 0.1 | |
| | | | | | | | | | | | | | | | | | | | |
Basic net income per common share | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.33 | | $ | 0.33 | | $ | 0.30 | | $ | 0.30 | | $ | 0.33 | | — | | — | |
(Loss) Income from discontinued operations | | | — | | | — | | | (0.01) | | | 0.65 | | | 0.02 | | — | | (100.0) | |
Net income | | $ | 0.33 | | $ | 0.33 | | $ | 0.29 | | $ | 0.95 | | $ | 0.35 | | — | | (5.7) | |
Diluted net income per common share | | | | | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 0.33 | | $ | 0.33 | | $ | 0.30 | | $ | 0.30 | | $ | 0.33 | | — | | — | |
(Loss) Income from discontinued operations | | | — | | | — | | | (0.01) | | | 0.65 | | | 0.02 | | — | | (100.0) | |
Net income | | $ | 0.33 | | $ | 0.33 | | $ | 0.29 | | $ | 0.95 | | $ | 0.35 | | — | | (5.7) | |
| | | | | | | | | | | | | | | | | | | | |
Dividends paid per common share | | | 0.10 | | | 0.10 | | | 0.10 | | | 0.09 | | | 0.08 | | — | | 25.0 | |
Shore Bancshares, Inc.
Consolidated Average Balance Sheets By Quarter
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Average balance | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Q3 2019 | | Q3 2019 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | compared to | | compared to | |
| | Q3 2019 | | Q2 2019 | | Q1 2019 | | Q4 2018 | | Q3 2018 | | Q2 2019 | | Q3 2018 | |
| | 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) | | | 1,235,374 | | 4.54 | % | $ | 1,221,215 | | 4.53 | % | $ | 1,201,913 | | 4.57 | % | $ | 1,189,504 | | 4.50 | % | $ | 1,174,513 | | 4.47 | % | 1.2 | % | 5.2 | % |
Investment securities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 155,324 | | 2.24 | | | 159,878 | | 2.22 | | | 165,009 | | 2.45 | | | 177,700 | | 2.46 | | | 178,572 | | 2.12 | | (2.8) | | (13.0) | |
Interest-bearing deposits | | | 41,554 | | 2.13 | | | 18,325 | | 2.47 | | | 27,806 | | 2.38 | | | 18,164 | | 2.25 | | | 17,488 | | 1.91 | | 126.8 | | 137.6 | |
Total earning assets | | | 1,432,252 | | 4.22 | % | | 1,399,418 | | 4.24 | % | | 1,394,728 | | 4.27 | % | | 1,385,368 | | 4.20 | % | | 1,370,573 | | 4.13 | % | 2.3 | | 4.5 | |
Cash and due from banks | | | 18,127 | | | | | 17,225 | | | | | 17,196 | | | | | 18,204 | | | | | 17,790 | | | | 5.2 | | 1.9 | |
Other assets | | | 73,823 | | | | | 61,906 | | | | | 58,756 | | | | | 70,858 | | | | | 79,065 | | | | 19.3 | | (6.6) | |
Allowance for credit losses | | | (10,412) | | | | | (10,456) | | | | | (10,389) | | | | | (10,591) | | | | | (10,354) | | | | (0.4) | | 0.6 | |
Total assets | | $ | 1,513,790 | | | | $ | 1,468,093 | | | | $ | 1,460,291 | | | | $ | 1,463,839 | | | | $ | 1,457,074 | | | | 3.1 | | 3.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | $ | 252,386 | | 0.70 | % | $ | 234,775 | | 0.65 | % | $ | 239,794 | | 0.61 | % | $ | 218,519 | | 0.53 | % | $ | 221,905 | | 0.32 | % | 7.5 | | 13.7 | |
Money market and savings deposits | | | 389,268 | | 0.67 | | | 385,272 | | 0.84 | | | 383,738 | | 0.85 | | | 378,163 | | 0.68 | | | 373,357 | | 0.14 | | 1.0 | | 4.3 | |
Brokered deposits | | | 14,568 | | 2.29 | | | 20,866 | | 2.52 | | | 22,080 | | 2.37 | | | 22,816 | | 2.17 | | | 25,507 | | 2.01 | | (30.2) | | (42.9) | |
Certificates of deposit $100,000 or more | | | 119,200 | | 1.78 | | | 107,549 | | 1.54 | | | 98,535 | | 1.24 | | | 97,023 | | 0.94 | | | 97,563 | | 0.69 | | 10.8 | | 22.2 | |
Other time deposits | | | 149,708 | | 1.49 | | | 145,900 | | 1.31 | | | 140,523 | | 1.02 | | | 141,702 | | 0.80 | | | 145,130 | | 0.57 | | 2.6 | | 3.2 | |
Interest-bearing deposits | | | 925,130 | | 0.98 | | | 894,362 | | 0.99 | | | 884,670 | | 0.89 | | | 858,223 | | 0.73 | | | 863,462 | | 0.36 | | 3.4 | | 7.1 | |
Short-term borrowings | | | 17,729 | | 2.64 | | | 21,557 | | 2.70 | | | 32,984 | | 2.62 | | | 72,462 | | 2.66 | | | 87,925 | | 2.09 | | (17.8) | | (79.8) | |
Long-term borrowings | | | 15,000 | | 2.86 | | | 15,000 | | 2.86 | | | 15,000 | | 2.87 | | | 14,348 | | 2.89 | | | — | | — | | — | | — | |
Total interest-bearing liabilities | | | 957,859 | | 1.04 | % | | 930,919 | | 1.06 | % | | 932,654 | | 0.99 | % | | 945,033 | | 0.91 | % | | 951,387 | | 0.52 | % | 2.9 | | 0.7 | |
Noninterest-bearing deposits | | | 354,927 | | | | | 339,589 | | | | | 331,032 | | | | | 339,222 | | | | | 329,383 | | | | 4.5 | | 7.8 | |
Accrued expenses and other liabilities | | | 7,884 | | | | | 8,484 | | | | | 11,633 | | | | | 6,370 | | | | | 6,005 | | | | (7.1) | | 31.3 | |
Stockholders' equity | | | 193,120 | | | | | 189,101 | | | | | 184,972 | | | | | 173,214 | | | | | 170,299 | | | | 2.1 | | 13.4 | |
Total liabilities and stockholders' equity | | $ | 1,513,790 | | | | $ | 1,468,093 | | | | $ | 1,460,291 | | | | $ | 1,463,839 | | | | $ | 1,457,074 | | | | 3.1 | | 3.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest spread | | | | | 3.18 | % | | | | 3.18 | % | | | | 3.28 | % | | | | 3.29 | % | | | | 3.61 | % | | | | |
Net interest margin | | | | | 3.52 | % | | | | 3.54 | % | | | | 3.61 | % | | | | 3.58 | % | | | | 3.76 | % | | | | |
(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, 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 2019 | | Q2 2019 | | Q1 2019 | | Q4 2018 | | Q3 2018 | | 9/30/2019 | | 9/30/2018 | |
| | | | | | | | | | | | | | | | | | | | | | |
The following reconciles return on average equity and return on average tangible equity from continuing operations (Note 1): | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Net income from continuing operations | | $ | 4,214 | | $ | 4,228 | | $ | 3,828 | | $ | 3,853 | | $ | 4,256 | | $ | 12,270 | | $ | 11,910 | |
Net income from continuing operations - annualized (A) | | $ | 16,719 | | $ | 16,958 | | $ | 15,525 | | $ | 15,286 | | $ | 16,885 | | $ | 16,405 | | $ | 15,924 | |
| | | | | | | | | | | | | | | | | | | | | | |
Net income, excluding net amortization of intangible assets | | $ | 4,321 | | $ | 4,344 | | $ | 3,949 | | $ | 4,054 | | $ | 4,457 | | $ | 12,614 | | $ | 12,382 | |
| | | | | | | | | | | | | | | | | | | | | | |
Net income, excluding net amortization of intangible assets - annualized (B) | | $ | 17,143 | | $ | 17,424 | | $ | 16,015 | | $ | 16,084 | | $ | 17,683 | | $ | 16,865 | | $ | 16,555 | |
| | | | | | | | | | | | | | | | | | | | | | |
Average stockholders' equity (C) | | $ | 193,120 | | $ | 189,101 | | $ | 184,972 | | $ | 173,214 | | $ | 170,299 | | $ | 189,094 | | $ | 167,288 | |
Less: Average goodwill and other intangible assets | | | (19,991) | | | (20,138) | | | (20,281) | | | (31,410) | | | (31,810) | | | (20,136) | | | (32,203) | |
Average tangible equity (D) | | $ | 173,129 | | $ | 168,963 | | $ | 164,691 | | $ | 141,804 | | $ | 138,489 | | $ | 168,958 | | $ | 135,085 | |
| | | | | | | | | | | | | | | | | | | | | | |
Return on average equity (GAAP) (A)/(C) | | | 8.66 | % | | 8.97 | % | | 8.39 | % | | 8.83 | % | | 9.91 | % | | 8.68 | % | | 9.52 | % |
Return on average tangible equity (Non-GAAP) (B)/(D) | | | 9.90 | % | | 10.31 | % | | 9.72 | % | | 11.34 | % | | 12.77 | % | | 9.98 | % | | 12.26 | % |
| | | | | | | | | | | | | | | | | | | | | | |
The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio from continuing operations (Note 2): | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Noninterest expense (E) | | $ | 9,384 | | $ | 8,985 | | $ | 9,343 | | $ | 9,216 | | $ | 9,310 | | $ | 27,712 | | $ | 27,615 | |
Less: Amortization of intangible assets | | | (144) | | | (155) | | | (162) | | | (269) | | | (270) | | | (461) | | | (631) | |
Adjusted noninterest expense (F) | | $ | 9,240 | | $ | 8,830 | | $ | 9,181 | | $ | 8,947 | | $ | 9,040 | | $ | 27,251 | | $ | 26,984 | |
| | | | | | | | | | | | | | | | | | | | | | |
Net interest income (G) | | | 12,680 | | | 12,293 | | | 12,394 | | | 12,726 | | | 12,947 | | | 37,367 | | | 37,909 | |
Add: Taxable-equivalent adjustment | | | 44 | | | 41 | | | 34 | | | 30 | | | 28 | | | 119 | | | 84 | |
Taxable-equivalent net interest income (H) | | $ | 12,724 | | $ | 12,334 | | $ | 12,428 | | $ | 12,756 | | $ | 12,975 | | $ | 37,486 | | $ | 37,993 | |
| | | | | | | | | | | | | | | | | | | | | | |
Noninterest income (I) | | $ | 2,529 | | $ | 2,609 | | $ | 2,188 | | $ | 2,112 | | $ | 2,465 | | $ | 7,326 | | | 6,901 | |
Adjusted noninterest income (J) | | $ | 2,529 | | $ | 2,609 | | $ | 2,188 | | $ | 2,112 | | $ | 2,465 | | $ | 7,326 | | $ | 6,901 | |
| | | | | | | | | | | | | | | | | | | | | | |
Efficiency ratio (GAAP) (E)/(G)+(I) | | | 61.70 | % | | 60.29 | % | | 64.07 | % | | 62.11 | % | | 60.41 | % | | 62.01 | % | | 61.63 | % |
Efficiency ratio (Non-GAAP) (F)/(H)+(J) | | | 60.58 | % | | 59.09 | % | | 62.81 | % | | 60.18 | % | | 58.55 | % | | 60.81 | % | | 60.11 | % |
| | | | | | | | | | | | | | | | | | | | | | |
The following reconciles book value per common share and tangible book value per common share (Note 1): | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Stockholders' equity (L) | | $ | 193,963 | | $ | 191,307 | | $ | 187,082 | | $ | 183,185 | | $ | 171,419 | | | | | | | |
Less: Goodwill and other intangible assets | | | (19,914) | | | (20,058) | | | (20,214) | | | (20,383) | | | (31,706) | | | | | | | |
Tangible equity (M) | | $ | 174,049 | | $ | 171,249 | | $ | 166,868 | | $ | 162,802 | | $ | 139,713 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Shares outstanding (N) | | | 12,742 | | | 12,780 | | | 12,780 | | | 12,749 | | | 12,748 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Book value per common share (GAAP) (L)/(N) | | $ | 15.22 | | $ | 14.97 | | $ | 14.64 | | $ | 14.37 | | $ | 13.45 | | | | | | | |
Tangible book value per common share (Non-GAAP) (M)/(N) | | $ | 13.66 | | $ | 13.40 | | $ | 13.06 | | $ | 12.77 | | $ | 10.96 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
The following reconciles equity to assets and tangible equity to tangible assets (Note 1): | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Stockholders' equity (O) | | $ | 193,963 | | $ | 191,307 | | $ | 187,082 | | $ | 183,185 | | $ | 171,419 | | | | | | | |
Less: Goodwill and other intangible assets | | | (19,914) | | | (20,058) | | | (20,214) | | | (20,383) | | | (31,706) | | | | | | | |
Tangible equity (P) | | $ | 174,049 | | $ | 171,249 | | $ | 166,868 | | $ | 162,802 | | $ | 139,713 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Assets (Q) | | $ | 1,561,679 | | $ | 1,488,562 | | $ | 1,485,799 | | $ | 1,483,076 | | $ | 1,473,543 | | | | | | | |
Less: Goodwill and other intangible assets | | | (19,914) | | | (20,058) | | | (20,214) | | | (20,383) | | | (31,706) | | | | | | | |
Tangible assets (R) | | $ | 1,541,765 | | $ | 1,468,504 | | $ | 1,465,585 | | $ | 1,462,693 | | $ | 1,441,837 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Period-end equity/assets (GAAP) (O)/(Q) | | | 12.42 | % | | 12.85 | % | | 12.59 | % | | 12.35 | % | | 11.63 | % | | | | | | |
Period-end tangible equity/tangible assets (Non-GAAP) (P)/(R) | | | 11.29 | % | | 11.66 | % | | 11.39 | % | | 11.13 | % | | 9.69 | % | | | | | | |
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.
