Contacts:
Steven E. Brady, President and CEO
Donald F. Morgenweck, CFO
(609) 399-0012
PRESS RELEASE
OCEAN SHORE HOLDING CO. REPORTS 2006 YEAR-END RESULTS
Ocean City, New Jersey - January 31, 2007 - Ocean Shore Holding Co.
(NASDAQ: OSHC) today announced net income for the year ended December 31, 2006
of $3,149,000, or $.38 per share basic and $.37 per share diluted, as compared
to $3,076,000, or $.37 per share basic and $.36 per share diluted, for 2005. Net
income for the quarter ended December 31, 2006 was $576,000 or $.07 per basic
and diluted share, as compared to $765,000, or $.09 per basic and diluted share
for the fourth quarter of 2005.
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 eight full-service banking
offices in eastern New Jersey.
NET INTEREST INCOME
For the year ended 2006 net interest income decreased $36,000, or 0.2%,
to $15.2 million compared to $15.3 million for the year ended 2005. For the
fourth quarter of 2006, net interest income decreased $172,000, or 4.4%, to $3.8
million compared to $3.9 million for the same quarter of 2005. For both the
fourth quarter and the full year, interest income grew 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, which was
driven primarily by higher rates paid on deposits and a larger average balance
of borrowings, offset the increase in interest income, resulting in margin
compression. For 2006, the Company's interest rate spread was 2.56%, compared to
2.75% in 2005. For the quarter, the Company's interest rate spread was 2.47%
compared to 2.55% for the prior quarter and 2.77% for the same quarter last
year.
TOTAL ASSETS GROW
Total assets grew $18.4 million, or 3.4%, to $562.3 million at December
31, 2006 from December 31, 2005. Loans receivable grew $21.3 million, or 5.2%,
to $433.3 million on steady loan activity. Increases of $25.6 million in real
estate mortgage loans, $4.4 million in consumer loans and $0.8 million in
commercial loans were partially offset by a decrease of real estate construction
loans of $9.5 million. Investments and mortgage-backed securities declined $26.1
million, or 27.7%, during 2006 to $68.1 million due to normal maturities and
repayments of principal partially offset by new investments. Cash and cash
equivalents increased $20.0 million, or 148.9%, to $33.3 million due to an
increase in Overnight Federal Funds of $17.7 million and an increase of $2.3
million in balances due from other banks. The Company currently is maintaining
greater liquidity in order to fund continued loan growth.
ASSET QUALITY REMAINS EXCELLENT
The Company's asset quality continues to be excellent as the ratio of
nonperforming loans to total assets at December 31, 2006 was very low at 0.12%.
Net charge-offs were $3,000 for the year ended 2006, compared to $13,000 in
2005. The allowance for loan losses was 0.47% of total loans at December 31,
2006 compared to 0.42% at December 31, 2005.
OTHER EXPENSES INCREASE SLIGHTLY
Other expenses increased $159,000, or 5.1%, to $3.3 million for the
fourth quarter of 2006 compared to $3.1 million for the same quarter in 2005 and
increased $601,000, or 4.9%, to $12.8 million for the year-ended 2006 compared
to $12.2 million for the year-ended 2005. Salaries and benefits expense
increased $191,000 for the fourth quarter and $592,000 for the year-ended 2006
as share-based compensation costs increased $57,000 for the fourth quarter and
$506,000 for the for the year-ended 2006 compared to the same periods in 2005
due to the adoption of Statement of Financial Accounting Standards No. 123,
"Share-Based Payment," on January 1, 2006 which required the recognition of
expenses for share based payment transactions including stock options based on
the fair value of the equity instruments issued. Prior to January 1, 2006, the
Company had accounted for the issuance of stock options under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
Accordingly, no compensation expense was recognized for options prior to January
1, 2006. Occupancy expense increased $31,000 for the quarter and $215,000 for
the year.
INCOME TAXES DECREASE
Income tax expense was $1.3 million for the year-ended 2006 compared to
$2.0 million for the year-ended 2005. During the 3rd quarter, the Company
changed its investment strategy related to bank owned life insurance. Prior to
September of 2003, the Company's investment strategy for bank owned life
insurance was to frequently purchase and surrender policies prior to term. The
surrender of a policy prior to term triggers a taxable event and results in a
tax liability. As a result, the Company provided a deferred tax liability for
the estimated amount that would be incurred upon the termination of such
policies. During the third quarter of 2006, the Company changed its investment
policy to purchase and hold the insurance policies for the duration of the term.
This policy does not require the build up of a deferred tax liability. As a
result, the Company reversed $600,000 of previously recorded deferred tax
liability. Partially offsetting the impact of the change in investment 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 in December of
2004. 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
$112,000 for the fourth quarter of 2006 compared to 2005 as a result of 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.
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
12-31-2006 12-31-2005 % CHANGE
------------------ ----------------- ------------------
(DOLLARS IN THOUSANDS)
Total assets....................................... $562,261 $543,846 3.4
Cash and cash equivalents.......................... 33,357 13,400 148.9
Investment securities.............................. 23,760 51,578 -53.9
Mortgage-backed securities ........................ 44,371 42,612 4.1
Loans receivable, net.............................. 433,342 412,005 5.2
Deposits........................................... 417,024 416,914 0.0
FHLB advances...................................... 54,000 27,000 100.0
Subordinated debt.................................. 15,464 15,464 0.0
Other borrowings................................... 7,090 18,460 -61.6
Stockholder's equity............................... 62,551 60,568 3.3
SELECTED OPERATIONS DATA (UNAUDITED)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------------------- -----------------------------
2006 2005 % CHANGE 2006 2005 % CHANGE
-------------- ------------- ------------- --------------- ------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Interest and dividend income.... $7,706 $7,013 9.9 $29,839 $26,272 13.6
Interest expense ............... 3,949 3,083 28.1 14,620 11,017 32.7
------ ------ ------- -------
Net interest income........ 3,757 3,929 -4.4 15,219 15,255 -0.2
Provision for loan losses....... 75 75 0.0 300 300 0.0
------ ------ ------- -------
Net interest income after
provision for loan losses.... 3,682 3,854 -4.5 14,919 14,955 -0.2
Other income.................... 586 555 5.6 2,332 2,316 0.7
Other expense................... 3,299 3,140 5.1 12,802 12,201 4.9
------ ------ ------- -------
Income before taxes............. 969 1,269 -23.7 4,449 5,071 -12.3
Provision for income taxes...... 393 504 -22.1 1,300 1,995 -34.8
------ ------ ------- -------
Net Income................. $ 576 $ 765 -24.7 $ 3,149 $ 3,076 2.4
====== ====== ======= =======
Earnings per share basic $ 0.07 $ 0.09 $ 0.38 $ 0.37
Earnings per share diluted $ 0.07 $ 0.09 $ 0.37 $ 0.36
Average shares outstanding:
Basic 8,196,193 8,290,881 8,259,473 8,405,677
Diluted 8,313,853 8,462,181 8,410,151 8,453,593
THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
--------------------------------- --------------------------------
AVERAGE AVERAGE
BALANCE YIELD/COST BALANCE YIELD/COST
-------------- --------------- -------------- --------------
(DOLLARS IN THOUSANDS)
Loans $433,236 5.98% $405,341 5.80%
Investment securities 67,306 5.50% 98,376 4.47%
Other interest-earning assets 22,988 5.26% 2,861 4.29%
Interest-bearing deposits 390,825 3.06% 392,682 2.37%
Total borrowings 71,031 5.40% 53,050 5.72%
Interest rate spread 2.47% 2.77%
Net interest margin 2.87% 3.10%
YEAR ENDED YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
--------------------------------- --------------------------------
AVERAGE AVERAGE
BALANCE YIELD/COST BALANCE YIELD/COST
-------------- --------------- -------------- --------------
(DOLLARS IN THOUSANDS)
Loans $425,262 5.93% $373,306 5.67%
Investment securities 78,981 5.03% 108,746 4.25%
Other interest-earning assets 12,641 5.08% 16,612 2.91%
Interest-bearing deposits 387,758 2.83% 386,463 2.10%
Total borrowings 67,613 5.41% 50,786 5.70%
Interest rate spread 2.56% 2.75%
Net interest margin 2.94% 3.06%
ASSET QUALITY DATA (UNAUDITED)
-------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2006 2005
--------------------------------------
(DOLLARS IN THOUSANDS)
Allowance for Loan Losses:
Allowance at beginning of period..................... $ 1,753 $ 1,466
Provision for loan losses............................ 300 300
Recoveries........................................... 6 5
Charge-offs.......................................... 9 18
------- -------
Net charge-offs...................................... 3 13
------- -------
Allowance at end of period........................... $ 2,050 $ 1,753
======= =======
Allowance for loan losses as a percent of total loans 0.47% 0.42%
Allowance for loan losses as a percent of nonperforming
loans................................................ 385.5% N/M
AS OF AS OF
12-31-2006 12-31-2005
-------------------------------------
Nonperforming Assets: (DOLLARS IN THOUSANDS)
Nonaccrual loans:
Mortgage loans.................................... $ 416 $ 91
Commercial business loans......................... 0 0
Consumer loans.................................... 116 7
------- -------
Total........................................ 532 98
Real estate owned.................................... 0 0
Other nonperforming assets........................... 0 0
------- -------
Total nonperforming assets........................... $ 532 $ 98
======= =======
Nonperforming loans as a percent of total loans...... 0.12% 0.02%
Nonperforming assets as a percent of total assets.... 0.09% 0.02%
SELECTED FINANCIAL RATIOS (UNAUDITED)
-------------------------------------
YEAR ENDED YEAR ENDED
-------------------------------------
12-31-2006 12-31-2005
----------------- -------------------
SELECTED PERFORMANCE RATIOS:
Return on average assets .................................................. 0.56% 0.57%
Return on average equity .................................................. 5.08% 5.07%
Interest rate spread ...................................................... 2.56% 2.75%
Net interest margin ....................................................... 2.94% 3.06%
Efficiency ratio ........................................................... 72.94% 69.44%