PRESS RELEASE
OCEAN SHORE HOLDING CO. REPORTS THIRD QUARTER EARNINGS
Ocean City, New Jersey - October 26, 2005 - Ocean Shore Holding Co.
(NASDAQ: OSHC) today announced net income of $778,000, or $.09 per share (basic
and diluted), for the quarter ended September 30, 2005, as compared to $643,000
for the third quarter of 2004. Net income for the nine months ended September
30, 2005 was $2,311,000, or $.27 per share (basic and diluted), as compared to
$2,062,000 for the same period in 2004. Per share amounts for the prior year are
not applicable as Ocean Shore Holding Co. was wholly-owned by its mutual holding
company during those periods.
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 seven full-service banking
offices in eastern New Jersey.
NET INTEREST INCOME AND NET INTEREST MARGIN IMPROVE OVER PRIOR YEAR
Net interest income grew 19.0% for the third quarter of 2005 compared
to the third quarter of 2004 and 13.8% for the first nine months of 2005
compared to the same period in 2004. The growth in net interest income was
mainly the result of growth in average interest-earning assets for both periods.
The growth in average assets generally occurred in the loan portfolio, which
increased by 21.0% over 2004 in the third quarter and increased by 16.7% in the
first nine months of 2005 over the comparable 2004 period.
Net interest margin increased to 3.09% from 2.86% for the third quarter
of 2005 compared to the third quarter of 2004 and to 3.04% from 2.94% for the
nine months ended September 2005 compared to the same period in 2004. The
average yield on the loan portfolio increased 19 basis points for the third
quarter of 2005 compared to 2004 while increasing 3 basis points during the
first nine months of 2005 compared to 2004. The average cost of interest-bearing
deposits increased as municipal deposit rates rose with the rise in short-term
interest rates.
TOTAL ASSETS AND DEPOSITS GROW
Total assets grew 7.0% to $565.3 million at September 30, 2005 from
December 31, 2004. The loan portfolio grew 16.6% to $397.3 million, while
investment and mortgage-backed securities declined 13.5% to $101.0 million. Real
estate mortgage loans grew by $40.1 million, consumer loans grew by $7.9 million
and commercial and construction loans increased by $8.4 million.
Deposits grew 8.3% to $449.8 million at September 30, 2005 from
December 31, 2004. The Company continued its focus on non-interest bearing
deposits, which increased 43.3% to $50.6 million. Non-interest bearing
commercial checking accounts increased $11.2 million during the period. FHLB
advances and subordinated debt were unchanged from December 31, 2004, while
other borrowings increased 9.8% to $25.1 million at September 30, 2005.
SALARIES, DATA PROCESSING AND PROFESSIONAL SERVICES IMPACT OTHER EXPENSES
The efficiency ratio in the third quarter of 2005 rose to 70.1% from
69.4% in 2004 due to other expenses of $3.2 million for the quarter, compared to
$2.7 million for the third quarter of 2004. The efficiency ratio rose to 69.2%
for the nine months ended September 30, 2005 from 68.5% in 2004 due to other
expenses of $9.1 million for the period, compared to $8.0 million for the nine
months ended September 30, 2004. Salary and employee benefits expense increased
over the prior year due primarily to regular salary increases and higher costs
of employee benefits. The Company also experienced increases in occupancy and
equipment expense due to increases in data processing expenses related to
improvements to network security, increased accounting and legal services due to
additional compliance requirements associated with being a public company and
increases associated with the opening of a new branch office.
ASSET QUALITY REMAINS EXCELLENT
The Company's asset quality continues to be excellent. Non-performing
assets totaled $60,000 at September 30, 2005. Net charge-offs were $6,000 for
the first nine months of 2005, compared to $10,000 in the same period last year.
The allowance for loan losses was .42% of total loans at September 30, 2005
compared to .43% of total loans at December 31, 2004.
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)
-------------------------------------
AS OF AS OF
9-30-2005 12-31-2004 % CHANGE
------------------ ------------------ -------------
(IN THOUSANDS)
Total assets $565,320 $528,444 7.0
Cash and cash equivalents 41,673 47,396 -12.1
Investment securities 55,296 62,621 -11.7
Mortgage-backed securities 45,754 54,182 -15.6
Loans receivable, net 397,280 340,585 16.6
Deposits 449,758 415,328 8.3
FHLB advances 10,000 10,000 0.0
Subordinated debt 15,464 15,464 0.0
Other borrowings 25,080 22,840 9.8
Stockholder's equity 59,773 59,795 0.0
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
--------------------------------- --------------------------------
AVERAGE AVERAGE
BALANCE YIELD/COST BALANCE YIELD/COST
---------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Loans $385,064 5.70% $318,317 5.51%
Investment securities 107,154 4.25% 109,778 4.14%
Other interest-earning assets 14,680 3.48% 33,057 1.46%
Interest-bearing deposits 389,605 2.16% 377,710 1.69%
Total borrowings 51,272 5.71% 60,049 5.03%
Interest rate spread 2.76% 2.75%
Net interest margin 3.09% 2.86%
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
--------------------------------- --------------------------------
AVERAGE AVERAGE
BALANCE YIELD/COST BALANCE YIELD/COST
---------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Loans $362,511 5.62% $310,685 5.59%
Investment securities 112,240 4.18% 115,194 4.10%
Other interest-earning assets 21,246 2.85% 25,994 1.20%
Interest-bearing deposits 384,367 2.01% 370,824 1.66%
Total borrowings 50,023 5.70% 60,783 4.93%
Interest rate spread 2.74% 2.84%
Net interest margin 3.04% 2.94%
SELECTED OPERATIONS DATA (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2005 2004 % CHANGE 2005 2004 % CHANGE
-------------- ------------- ------------- --------------- ------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Interest and dividend income $ 6,757 $ 5,646 19.7 $ 19,259 $ 16,801 14.6
Interest expense 2,836 2,351 20.6 7,933 6,852 15.8
---------- --------- ---------- ----------
Net interest income 3,921 3,295 19.0 11,326 9,949 13.8
Provision for loan losses 75 90 -16.7 225 270 -16.7
---------- --------- ---------- -----------
Net interest income after
provision for loan losses 3,846 3,205 20.0 11,101 9,679 14.7
Other income 621 641 -3.0 1,761 1,759 0.1
Other expense 3,183 2,732 16.5 9,061 8,018 13.0
---------- --------- ---------- ----------
Income before taxes 1,284 1,114 15.3 3,801 3,420 11.1
Provision for income taxes 506 471 7.5 1,490 1,358 9.7
---------- --------- ---------- ----------
Net Income $ 778 $ 643 21.1 $ 2,311 $ 2,062 12.1
========== ========= ========== ==========
Earnings per share basic $ 0.09 N/A $ 0.27 N/A
Earnings per share diluted $ 0.09 N/A $ 0.27 N/A
Average shares outstanding:
Basic 8,437,655 N/A 8,444,395 N/A
Diluted 8,456,455 N/A 8,450,731 N/A
ASSET QUALITY DATA (UNAUDITED)
-------------------------------------
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
2005 2004
-------------------------------------
(DOLLARS IN THOUSANDS)
Allowance for Loan Losses:
Allowance at beginning of period $1,466 $1,116
Provision for loan losses 225 360
Recoveries 3 6
Charge-offs 9 16
------ ------
Net charge-offs 6 10
------ ------
Allowance at end of period $1,685 $1,466
====== ======
Allowance for loan losses as a percent of total loans 0.42% 0.43%
Allowance for loan losses as a percent of
nonperforming loans N/M N/M
AS OF AS OF
9-30-2005 12-31-2004
-------------------------------------
Nonperforming Assets: (DOLLARS IN THOUSANDS)
Nonaccrual loans:
Mortgage loans $ 60 $ 0
Commercial business loans 0 0
Consumer loans 0 4
------ ------
Total 60 4
Real estate owned 0 0
Other nonperforming assets 0 0
Total nonperforming assets $ 60 $ 4
====== ======
Nonperforming loans as a percent of total loans 0.02% N/M
Nonperforming assets as a percent of total assets 0.01% N/M
SELECTED FINANCIAL RATIOS (UNAUDITED)
------------------------------------
NINE MONTHS
ENDED YEAR ENDED
------------------------------------
9-30-2005 12-31-2004
----------------- ------------------
SELECTED PERFORMANCE RATIOS (1):
Return on average assets 0.57% 0.26%
Return on average equity 5.06% 4.95%
Interest rate spread 2.74% 2.79%
Net interest margin 3.04% 2.90%
Efficiency ratio (2) 69.24% 82.74%
(1) Ratios for the nine-month period are annualized.
(2) The efficiency ratio for the year ended December 31, 2004 includes a
$2,000,000 donation to the Ocean City Home Charitable Foundation.
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Contact:
Ocean Shore Holding Co.
Steven E. Brady
Donald F. Morgenweck
609-399-0012