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PRESS RELEASE
OCEAN SHORE HOLDING CO. REPORTS THIRD QUARTER EARNINGS
Ocean City, New Jersey - October 26, 2006 - Ocean Shore Holding Co.
(NASDAQ: OSHC) today announced net income of $1,169,000, or $.14 per basic and
diluted share, for the quarter ended September 30, 2006, as compared to
$778,000, or $.09 per basic and diluted share for the third quarter of 2005. Net
income for the nine months ended September 30, 2006 was $2,572,000, or $.31 per
share basic and $.30 per share diluted, as compared to $2,311,000, or $.27 per
basic and diluted share, for the same period in 2005. The increase in net income
over the prior periods was primarily due to a change in tax policy that
decreased the provision for income taxes in the third quarter.
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 REMAINS STEADY OVER PRIOR YEAR
Net interest income was essentially unchanged at $3.9 million for the
third quarter of 2006 compared to the same quarter of 2005. Interest income grew
13.0% over the prior year as a result of growth in interest earning assets and
an increase in the average yield on both loans and investments. However, growth
in interest expense, driven primarily by higher rates paid on deposits and a
larger average balance of borrowings, offset the increase in interest income.
For the quarter, the Company's interest rate spread was 2.55% compared to 2.59%
for the prior quarter and 2.76% for the same quarter last year.
For the first nine months of 2006, net interest income increased 1.2%
to $11.5 million compared to $11.3 million the prior year. The growth in net
interest income was the result of an increase in average interest-earning assets
that was partially offset by a reduction in the interest rate spread to 2.59%
from 2.74%.
TOTAL ASSETS AND DEPOSITS GROW
Total assets grew $18.8 million, or 3.5%, to $562.7 million at
September 30, 2006 from December 31, 2005. Loans receivable grew $21.7 million,
or 5.3%, to $433.7 million on steady loan activity. Increases of $24.8 million
in real estate mortgage loans and $6.0 million in consumer loans were partially
offset by decreases in commercial loans of $1.5 million and real estate
construction of $7.5 million. Investments and mortgage-backed securities
declined $21.2 million or 22.5% during the first nine months of 2006 to $73.0
million due to normal maturities and repayments of principal. Cash and cash
equivalents increased $17.5 million, or 130.9%, to
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$30.9 million due to an increase in Overnight Federal Funds of $15.0 million and
an increase of $2.5 million in balances due from other banks.
Deposits grew $10.0 million, or 2.4%, to $426.9 million at September
30, 2006 from December 31, 2005. The Company continued its focus on
non-interest-bearing deposits, which increased 1.85% to $34.8 million. FHLB
advances increased $17.0 million, or 63.0%, to $44.0 million while other
borrowings decreased $10.3 million, or 55.6%, to $8.2 million at September 30,
2006 from December 31, 2005.
ASSET QUALITY REMAINS EXCELLENT
The Company's asset quality continues to be excellent. Non-performing
assets totaled $248,000 at September 30, 2006. Net charge-offs were $4,000 in
the first nine months of 2006, compared to $6,000 in the same period last year.
The allowance for loan losses was 0.46% of total loans at September 30, 2006
compared to 0.42% at December 31, 2005 and 0.41% of total loans at September 30,
2005.
OTHER EXPENSES INCREASE
Other expenses increased $36,000, or 1.1%, to $3.22 million for the
third quarter of 2006 compared to $3.18 million for the same quarter in 2005 and
increased $442,000, or 4.9%, to $9.5 million for the first nine months of 2006
compared to $9.1 million for the same period in 2005. Salaries and benefits
expense increased $111,000 for the third quarter and $401,000 for the first nine
months of 2006 over the prior year as share-based compensation costs increased
$98,000 for the third quarter and $449,000 for the first nine months of 2006
compared to the same periods in 2005. Occupancy expense increased $28,000 for
the quarter and $184,000 year to date over the prior year mostly from costs
associated with the opening of a new branch in September of 2005.
INCOME TAXES DECREASE
Income tax expense was $5,000 for the third quarter of 2006 compared to
$506,000 for the same period in 2005. During the quarter, the Company changed
its policy regarding the tax treatment on bank owned life insurance. As a
result, the Company reversed a $600,000 deferred tax liability that it had
previously established to reflect the estimated tax amount that would be
incurred upon the termination of such policies. Partially offsetting the change
in tax policy was a $100,000 tax valuation allowance relating to the deferred
tax asset established in connection with the Company's contribution to the
charitable foundation established in connection with its public offering. The
Company determined that based on its assessment of future taxable income and
expectations of charitable contributions it is probable that the tax benefit of
the contribution may not be fully realized. Income taxes decreased $580,000 for
the first nine months of 2006 compared to 2005 for the reasons stated above as
well as lower taxable income.
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.
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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)
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AS OF AS OF % CHANGE
9-30-2006 12-31-2005
------------------ ----------------- ------------------
(DOLLARS IN THOUSANDS)
Total assets....................................... $562,655 $543,846 3.5
Cash and cash equivalents.......................... 30,938 13,400 130.9
Investment securities.............................. 36,664 51,578 -28.9
Mortgage-backed securities ........................ 36,320 42,612 -14.8
Loans receivable, net.............................. 433,698 412,005 5.3
Deposits. 426,898 416,914 2.4
FHLB advances...................................... 44,000 27,000 63.0
Subordinated debt.................................. 15,464 15,464 0.0
Other borrowings................................... 8,190 18,460 -55.6
Stockholder's equity............................... 62,088 60,568 2.5
SELECTED OPERATIONS DATA (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2006 2005 % CHANGE 2006 2005 % CHANGE
-------------- ------------- ------------- --------------- ------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Interest and dividend income.... $7,635 $6,757 13.0 $22,133 $19,259 14.9
Interest expense ............... 3,758 2,836 32.5 10,671 7,933 34.5
-------- --------- --------- --------
Net interest income........ 3,877 3,921 -1.1 11,462 11,326 1.2
Provision for loan losses....... 75 75 0.0 225 225 0.0
-------- --------- --------- --------
Net interest income after
provision for loan losses.... 3,802 3,846 -1.2 11,237 11,101 1.2
Other income.................... 591 621 -4.8 1,746 1,761 -0.9
Other expense................... 3,219 3,183 1.1 9,503 9,061 4.9
-------- --------- --------- --------
Income before taxes............. 1,174 1,284 -8.6 3,480 3,801 -8.4
Provision for income taxes...... 5 506 -99.0 908 1,490 -39.1
--------- --------- --------- --------
Net Income................. $1,169 $ 778 50.2 $2,572 $2,311 11.3
======== ========= ======== ========
Earnings per share basic $0.14 $0.09 $0.31 $0.27
Earnings per share diluted $0.14 $0.09 $0.30 $0.27
Average shares outstanding:
Basic 8,255,269 8,437,655 8,280,798 8,444,395
Diluted 8,393,456 8,456,455 8,444,622 8,450,731
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THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
--------------------------------- --------------------------------
AVERAGE YIELD/COST AVERAGE YIELD/COST
BALANCE BALANCE
---------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Loans $430,728 6.00% $385,064 5.70%
Investment securities 77,097 5.12% 107,154 4.25%
Other interest-earning assets 14,000 5.22% 14,680 3.48%
Interest-bearing deposits 388,536 2.93% 389,605 2.16%
Total borrowings 67,316 5.44% 51,272 5.71%
Interest rate spread 2.55% 2.76%
Net interest margin 2.97% 3.09%
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
--------------------------------- --------------------------------
AVERAGE YIELD/COST AVERAGE YIELD/COST
BALANCE BALANCE
---------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Loans $422,574 5.92% $362,511 5.62%
Investment securities 82,915 4.90% 112,240 4.18%
Other interest-earning assets 9,155 4.95% 21,246 2.85%
Interest-bearing deposits 386,724 2.75% 384,367 2.01%
Total borrowings 66,461 5.41% 50,023 5.70%
Interest rate spread 2.59% 2.74%
Net interest margin 2.97% 3.04%
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ASSET QUALITY DATA (UNAUDITED)
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NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
2006 2005
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Allowance for Loan Losses: (DOLLARS IN THOUSANDS)
Allowance at beginning of period..................... $ 1,753 $ 1,466
Provision for loan losses............................ 225 300
Recoveries........................................... 5 5
Charge-offs.......................................... 9 18
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Net charge-offs...................................... 4 13
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Allowance at end of period........................... $ 1,974 $ 1,753
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Allowance for loan losses as a percent of total loans 0.46% 0.42%
Allowance for loan losses as a percent of nonperforming
loans................................................ N/M N/M
AS OF AS OF
9-30-2006 12-31-2005
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Nonperforming Assets: (DOLLARS IN THOUSANDS)
Nonaccrual loans:
Mortgage loans.................................... $ 248 $ 91
Commercial business loans......................... 0 0
Consumer loans.................................... 0 7
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Total........................................ 248 98
Real estate owned.................................... 0 0
Other nonperforming assets........................... 0 0
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Total nonperforming assets........................... $248 $ 98
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Nonperforming loans as a percent of total loans...... 0.06% 0.02%
Nonperforming assets as a percent of total assets.... 0.04% 0.02%
SELECTED FINANCIAL RATIOS (UNAUDITED)
--------------------------------
NINE MONTHS
ENDED YEAR ENDED
--------------------------------
9-30-2006 12-31-2005
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SELECTED PERFORMANCE RATIOS (1):
Return on average assets ................................... 0.62% 0.57%
Return on average equity ................................... 5.56% 5.07%
Interest rate spread ....................................... 2.59% 2.73%
Net interest margin ........................................ 2.97% 3.02%
Efficiency ratio ............................................ 71.95% 68.79%
(1) Ratios for the nine-month period are annualized.
Contact:
Ocean Shore Holding Co.
Steven E. Brady, 609-399-0012
Donald F. Morgenweck, 609-399-0012