| | Contacts: |
| | Steven E. Brady, President and CEO |
| | Donald F. Morgenweck, CFO |
| | (609) 399-0012 |
Press Release
Ocean Shore Holding Co. Reports 3rd Quarter Earnings
Ocean City, New Jersey – October 29, 2013 – Ocean Shore Holding Co. (NASDAQ: OSHC) today announced net income of $1,324,000, or $0.20 per diluted share, for the quarter ended September 30, 2013, as compared to $1,192,000, or $0.18 per diluted share, for the quarter ended September 30, 2012. Net income for the nine months ended September 30, 2013 was $3,863,000, or $0.58 per diluted share, as compared to $3,843,000, or $0.57 per diluted share, for the same period in 2012.
Ocean Shore Holding Co. (the "Company") is the holding company for Ocean City Home Bank (the "Bank"), a federal savings bank headquartered in Ocean City, New Jersey. The Bank operates a total of twelve full-service banking offices in eastern New Jersey.
"Modest loan growth supported by continued deposit generation, favorable asset quality trends and continued expense controls all contributed to solid operating results for the quarter" said Steven E. Brady, President and CEO. “During the quarter we completed the process of redeeming $5 million of our outstanding trust preferred securities by reducing the outstanding balance from $15 million to $10 million. Taking this step reduces our annual interest expense, which will benefit our net interest margin.”
Balance Sheet Review
Total assets decreased $2.0 million, or 0.2%, to $1,043.5 million at September 30, 2013 from $1,045.5 million at December 31, 2012. Loans receivable, net, increased $23.7 million, or 3.4%, to $727.6 million at September 30, 2013 from $703.9 million at December 31, 2012. Investments and mortgage-backed securities increased $13.7 million, or 11.7%, to $130.5 million during the first nine months of 2013. Cash and cash equivalents decreased $37.9 million, or 23.2%, to $125.5 million at September 30, 2013 from $163.4 million at December 31, 2012 as excess liquidity was deployed into loans and investments. Loan originations and other advances totaling $143.9 million were offset by payoffs and payments received of $120.2 million resulting in a $23.7 million increase in the portfolio. The increase in investments and mortgage-backed securities resulted from purchases of $48.2 million offset by repayments, calls and payoffs of $30.8 million and valuation allowance adjustments of $3.7 million.
Deposits increased $2.3 million, or 0.3%, to $804.1 million at September 30, 2013 from $801.8 million at December 31, 2012. Checking accounts increased $13.1 million, municipal deposits increased $6.0 million, savings accounts increased $3.6 million and certificates of deposit decreased $20.4 million at September 30, 2013 compared to December 31, 2012. Total borrowings decreased $5.2 million, or 4.1%, to $120.3 million at September 30, 2013 as compared to $125.5 million at December 31, 2012. The Company redeemed $5.2 million of trust preferred borrowings in August of 2013.
Asset Quality
The provision for loan losses totaled $186,000 for the third quarter of 2013 compared to $148,000 for the third quarter of 2012 and $192,000 for the second quarter of 2013. The provision for loan losses totaled $580,000 for the nine months ended September 30, 2013 compared to $574,000 for the nine months ended September 30, 2012. The allowance for loan losses totaled $4.2 million, or 0.58% of total loans, at September 30, 2013 compared to $4.0 million, or 0.57% of total loans, at December 31, 2012. The Company experienced $366,000 in net charge-off activity for the nine months ended September 30, 2013 as compared to $640,000 in net charge-off activity for the nine months ended September 30, 2012.
Non-performing assets totaled $6.4 million, or 0.61% of total assets, at September 30, 2013, compared to $6.7 million, or 0.64% of total assets, at December 31, 2012. Non-performing assets at September 30, 2013 consisted of twenty three residential mortgages totaling $3.9 million, one commercial mortgage totaling $466,000, one residential construction loan totaling $84,000, two commercial loans totaling $525,000, seven consumer equity loans totaling $458,000 and six real estate owned properties totaling $909,000.
Income Statement Analysis
Net interest income increased $73,000, or 1.1%, to $6.6 million for the third quarter of 2013 compared to $6.5 million in the third quarter of 2012. Net interest margin decreased 24 basis points in the quarter ended September 30, 2013 to 3.08% from 3.32% for the quarter ended September 30, 2012. On a linked-quarter basis, net interest margin decreased 1 basis point from 3.09% in the second quarter of 2013. The increase in net interest income in the third quarter of 2013 compared to the third quarter of 2012 was the result of an increase in average interest-earning assets of $70.8 million, a decrease in the average cost of interest-bearing liabilities of 19 basis points to 1.02% and a decrease in average interest-bearing liabilities of $25.3 million offset by a decrease of 57 basis points in the average yield on interest-earning assets to 4.06%
Net interest income decreased $601,000, or 3.0%, to $19.6 million for the first nine months of 2013 compared to $20.2 million in the same period in the prior year. Net interest margin decreased 31 basis points for the nine months ended September 30, 2013 to 3.11% versus 3.42% for the nine months ended September 30, 2012. The decrease in net interest income for the nine month period was the result of a decrease of 62 basis points in the average yield on interest-earning assets to 4.14% and an increase in average interest-bearing liabilities of $1.1 million. These changes were partially offset by a decrease in the average cost of interest-bearing liabilities of 23 basis points to 1.04% and an increase in the average interest-earning assets of $53.7 million.
Other income increased $99,000 and $454,000 to $1.1 million and $3.4 million for the three and nine months ended September 30, 2013, respectively, compared to the same periods in 2012. The increase in other income resulted from increases in deposit account fees, cash surrender value of life insurance and debit card commissions over the prior periods.
Other expenses increased $56,000, or 1.0%, to $5.5 million for the third quarter of 2013, compared to $5.4 million for the third quarter of 2012. Other expenses increased $182,000, or 1.1%, to $16.4 million for the nine months ended September 30, 2013 compared to $16.2 million for the nine months ended September 30, 2012. Results for the third quarter and nine months of 2013 include a one-time expense of $112,000 for the premium paid for the early redemption of $5.2 million of junior subordinated debentures in connection with the concurrent redemption of trust preferred securities. Apart from this one-time expense, decreases in salaries and benefits, marketing and REO expenses other expenses of $95,000 were partially offset by increases in occupancy and equipment and FDIC insurance of $39,000 for the third quarter of 2013 compared to 2012. For the nine month period, increases in salaries and benefits, occupancy and equipment, FDIC insurance and REO expenses of $213,000 were partially offset by decreases in marketing expenses and other expenses of $143,000.
Income tax expense decreased $54,000, or 7.2%, to $696,000 for the third quarter of 2013, compared to $750,000 for the third quarter of 2012. Income tax expense decreased $355,000, or 14.6%, to $2.1 million for the nine months ended September 30, 2013 as compared to $2.4 million for the nine months ended September 30, 2012. The effective tax rate decreased to 34.4% from 38.6% for the third quarter of 2013 compared to the same quarter in 2012 and to 35.0% from 38.8% for the nine months ended September 30, 2013 compared to the same period in 2012. The decrease in the effective rate was primarily based upon a reduction in state income tax expense as a result of forming a subsidiary real estate investment trust in the second quarter.
This press release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.
The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and geopolitical conditions; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services and other factors that may be described in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
SELECTED FINANCIAL CONDITION DATA (Unaudited)
| | | September 30, | | | December 31, | | | | |
| | | 2013 | | | 2012 | | | % Change | |
| | | (Dollars in thousands) | | | | |
| | | | | | | | | | |
| Total assets | | $ | 1,043,497 | | | $ | 1,045,488 | | | | (0.2 | )% |
| Cash and cash equivalents | | | 125,524 | | | | 163,422 | | | | (23.2 | ) |
| Investment securities | | | 130,493 | | | | 116,774 | | | | 11.7 | |
| Loans receivable, net | | | 727,618 | | | | 703,898 | | | | 3.4 | |
| Deposits | | | 804,050 | | | | 801,765 | | | | 0.3 | |
| FHLB advances | | | 110,000 | | | | 110,000 | | | | 0.0 | |
| Subordinated debt | | | 10,309 | | | | 15,464 | | | | (33.3 | ) |
| Stockholder’s equity | | | 106,123 | | | | 104,728 | | | | 1.3 | |
SELECTED OPERATING DATA (Unaudited)
| | | Three Months Ended
September 30, | | | | | Nine Months Ended
September 30, | | | |
| | | 2013 | | | 2012 | | | % Change | | 2013 | | | 2012 | | | % Change |
| | | (In thousands, except per share amounts) | |
| | | | | | | | | | | | | | | | | |
| Interest and dividend income | | $ | 8,683 | | | $ | 9,075 | | | (4.3) | | $ | 26,112 | | | $ | 28,100 | | | (7.1) |
| Interest expense | | | 2,102 | | | | 2,567 | | | (18.1) | | | 6,522 | | | | 7,909 | | | (17.6) |
| Net interest income | | | 6,581 | | | | 6,508 | | | 1.1 | | | 19,590 | | | | 20,191 | | | (3.0) |
| | | | | | | | | | | | | | | | | | | | | |
| Provision for loan losses | | | 186 | | | | 148 | | | 25.7 | | | 580 | | | | 574 | | | 1.0 |
| | | | | | | | | | | | | | | | | | | | | |
Net interest income after
provision for loan losses | | | 6,395 | | | | 6,360 | | | 0.6 | | | 19,010 | | | | 19,617 | | | (3.1) |
| | | | | | | | | | | | | | | | | | | | | |
| Other income | | | 1,128 | | | | 1,029 | | | 9.6 | | | 3,354 | | | | 2,900 | | | 15.7 |
| Other expense | | | 5,503 | | | | 5,447 | | | 1.0 | | | 16,422 | | | | 16,240 | | | 1.1 |
| | | | | | | | | | | | | | | | | | | | | |
| Income before taxes | | | 2,020 | | | | 1,942 | | | 4.0 | | | 5,942 | | | | 6,277 | | | (5.3) |
| Provision for income taxes | | | 696 | | | | 750 | | | (7.2) | | | 2,079 | | | | 2,434 | | | (14.6) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Income | | $ | 1,324 | | | $ | 1,192 | | | 11.1 | | $ | 3,863 | | | $ | 3,843 | | | 0.5 |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings per share basic | | $ | 0.20 | | | $ | 0.18 | | | | | $ | 0.59 | | | $ | 0.57 | | | |
| Earnings per share diluted | | $ | 0.20 | | | $ | 0.18 | | | | | $ | 0.58 | | | $ | 0.57 | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Average shares outstanding basic | | | 6,533,760 | | | | 6,625,221 | | | | | | 6,514,699 | | | | 6,715,043 | | | |
| Average shares outstanding diluted | | | 6,645,418 | | | | 6,681,163 | | | | | | 6,633,754 | | | | 6,785,801 | | | |
| | | Three Months Ended
September 30, 2013 | | Three Months Ended
September 30, 2012 |
| | | Average Balance | | | Yield/Cost | | Average Balance | | | Yield/Cost |
| | | (Dollars in thousands) |
| Loans | | $ | 721,487 | | | 4.42% | | $ | 696,198 | | | 4.87% |
| Investment securities | | | 133,628 | | | 2.15% | | | 88,117 | | | 2.75% |
| Total interest-earning assets | | | 855,115 | | | 4.06% | | | 784,315 | | | 4.63% |
| | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 701,044 | | | 0.42% | | $ | 724,526 | | | 0.58% |
| Total borrowings | | | 123,671 | | | 4.42% | | | 125,464 | | | 4.82% |
| Total interest-bearing liabilities | | | 824,715 | | | 1.02% | | | 849,990 | | | 1.21% |
| | | | | | | | | | | | | |
| Interest rate spread | | | | | | 3.04% | | | | | | 3.42% |
| Net interest margin | | | | | | 3.08% | | | | | | 3.32% |
| | | Nine Months Ended
September 30, 2013 | | Nine Months Ended
September 30, 2012 |
| | | Average Balance | | | Yield/Cost | | Average Balance | | | Yield/Cost |
| | | (Dollars in thousands) |
| Loans | | $ | 712,500 | | | 4.49% | | $ | 708,200 | | | 4.93% |
| Investment securities | | | 127,746 | | | 2.24% | | | 78,330 | | | 3.23% |
| Total interest-earning assets | | | 840,246 | | | 4.14% | | | 786,530 | | | 4.76% |
| | | | | | | | | | | | | |
| Interest-bearing deposits | | $ | 706,209 | | | 0.44% | | $ | 704,547 | | | 0.64% |
| Total borrowings | | | 124,860 | | | 4.45% | | | 125,464 | | | 4.82% |
| Total interest-bearing liabilities | | | 831,069 | | | 1.04% | | | 830,011 | | | 1.27% |
| | | | | | | | | | | | | |
| Interest rate spread | | | | | | 3.10% | | | | | | 3.49% |
| Net interest margin | | | | | | 3.11% | | | | | | 3.42% |
ASSET QUALITY DATA (Unaudited)
| | | Nine Months Ended
September 30, 2013 | | | Year Ended
December 31, 2012 | |
| | | (Dollars in thousands) | |
| Allowance for Loan Losses: | | | | | | | | |
| Allowance at beginning of period | | $ | 3,997 | | | $ | 3,762 | |
| Provision for loan losses | | | 580 | | | | 893 | |
| | | | | | | | | |
| Charge-offs | | | (379 | ) | | | (691 | ) |
| Recoveries | | | 13 | | | | 33 | |
| Net charge-offs | | | (366 | ) | | | (658 | ) |
| | | | | | | | | |
| Allowance at end of period | | $ | 4,211 | | | $ | 3,997 | |
| Allowance for loan losses as a percent of total loans | | | 0.58 | % | | | 0.57 | % |
| Allowance for loan losses as a percent of nonperforming loans | | | 77.3 | % | | | 69.5 | % |
| | | September 30, 2013 | | | December 31, 2012 | |
| | | (Dollars in thousands) | |
| Nonperforming Assets: | | | | | | | | |
| Nonaccrual loans: | | | | | | | | |
| Real estate mortgage - residential | | $ | 3,914 | | | $ | 3,850 | |
| Real estate mortgage - commercial | | | 466 | | | | 1,275 | |
| Real estate mortgage - construction | | | 84 | | | | 84 | |
| Commercial business loans | | | 525 | | | | 200 | |
| Consumer loans | | | 457 | | | | 342 | |
| Total nonaccrual loans | | | 5,446 | | | | 5,751 | |
| Real estate owned | | | 909 | | | | 906 | |
| Total nonperforming assets | | $ | 6,355 | | | $ | 6,657 | |
Nonperforming loans as a percent of total loans | | | 0.75 | % | | | 0.82 | % |
| Nonperforming assets as a percent of total assets | | | 0.61 | % | | | 0.64 | % |
SELECTED FINANCIAL RATIOS (Unaudited)
| | | Nine Months Ended
September 30, | |
| | | 2013 | | | 2012 | |
| Selected Performance Ratios: | | | | | | | | |
| Return on average assets (1) | | | 0.49 | % | | | 0.50 | % |
| Return on average equity (1) | | | 4.84 | % | | | 4.83 | % |
| Interest rate spread (1) | | | 3.10 | % | | | 3.49 | % |
| Net interest margin (1) | | | 3.11 | % | | | 3.42 | % |
| Efficiency ratio | | | 71.57 | % | | | 70.33 | % |
OCEAN SHORE HOLDING COMPANY - QUARTERLY DATA (Unaudited)
| | | Q3
2013 | | | Q2
2013 | | | Q1
2013 | | | Q4
2012 | | | Q3
2012 | |
| | | (In thousands except per share amounts) | |
| Income Statement Data: | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | $ | 6,581 | | | $ | 6,530 | | | $ | 6,479 | | | $ | 6,443 | | | $ | 6,508 | |
| Provision for loan losses | | | 186 | | | | 192 | | | | 202 | | | | 320 | | | | 148 | |
Net interest income after
provision for loan losses | | | 6,395 | | | | 6,338 | | | | 6,277 | | | | 6,123 | | | | 6,360 | |
| Other income | | | 1,128 | | | | 1,125 | | | | 1,102 | | | | 1,104 | | | | 1,029 | |
| Other expense | | | 5,503 | | | | 5,449 | | | | 5,470 | | | | 5,323 | | | | 5,447 | |
| Income before taxes | | | 2,020 | | | | 2,014 | | | | 1,909 | | | | 1,904 | | | | 1,942 | |
| Provision for income taxes | | | 696 | | | | 655 | | | | 729 | | | | 746 | | | | 750 | |
| Net income | | $ | 1,324 | | | $ | 1,359 | | | $ | 1,180 | | | $ | 1,158 | | | $ | 1,192 | |
| | | | | | | | | | | | | | | | | | | | | |
| Share Data: | | | | | | | | | | | | | | | | | | | | |
| Earnings per share basic | | $ | 0.20 | | | $ | 0.21 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | |
| Earnings per share diluted | | $ | 0.20 | | | $ | 0.21 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | |
| Average shares outstanding basic | | | 6,533,760 | | | | 6,518,558 | | | | 6,491,786 | | | | 6,466,377 | | | | 6,625,221 | |
| Average shares outstanding diluted | | | 6,645,418 | | | | 6,614,475 | | | | 6,602,398 | | | | 6,545,484 | | | | 6,681,163 | |
| Total shares outstanding | | | 6,964,952 | | | | 6,970,746 | | | | 6,970,346 | | | | 6,936,733 | | | | 6,963,672 | |
| | | | | | | | | | | | | | | | | | | | | |
| Balance Sheet Data: | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 1,043,497 | | | $ | 1,031,999 | | | $ | 1,053,872 | | | $ | 1,045,488 | | | $ | 1,061,543 | |
| Investment securities | | | 130,493 | | | | 134,639 | | | | 129,445 | | | | 116,774 | | | | 94,292 | |
| Loans receivable, net | | | 727,618 | | | | 718,925 | | | | 709,337 | | | | 703,898 | | | | 691,636 | |
| Deposits | | | 804,050 | | | | 787,028 | | | | 808,670 | | | | 801,765 | | | | 819,414 | |
| FHLB advances | | | 110,000 | | | | 110,000 | | | | 110,000 | | | | 110,000 | | | | 110,000 | |
| Subordinated debt | | | 10,309 | | | | 15,464 | | | | 15,464 | | | | 15,464 | | | | 15,464 | |
| Stockholders’ equity | | | 106,123 | | | | 105,304 | | | | 106,040 | | | | 104,728 | | | | 104,143 | |
| | | | | | | | | | | | | | | | | | | | | |
| Asset Quality: | | | | | | | | | | | | | | | | | | | | |
| Non-performing assets | | $ | 6,355 | | | $ | 5,576 | | | $ | 6,374 | | | $ | 6,657 | | | $ | 5,652 | |
| Non-performing loans to total loans | | | 0.75 | % | | | 0.65 | % | | | 0.76 | % | | | 0.82 | % | | | 0.68 | % |
| Non-performing assets to total assets | | | 0.61 | % | | | 0.54 | % | | | 0.60 | % | | | 0.64 | % | | | 0.53 | % |
| Allowance for loan losses | | $ | 4,211 | | | $ | 4,091 | | | $ | 4,142 | | | $ | 3,997 | | | $ | 3,696 | |
| Allowance for loan losses to total loans | | | 0.58 | % | | | 0.57 | % | | | 0.58 | % | | | 0.57 | % | | | 0.53 | % |
| Allowance for loan losses to non-performing loans | | | 77.3 | % | | | 87.7 | % | | | 76.7 | % | | | 69.5 | % | | | 78.9 | % |
