Shore Bancshares, Inc.
18 E. Dover Street
Easton, Maryland 21601
Phone 410-822-1400
PRESS RELEASE
Shore Bancshares Reports Third Quarter EPS of $0.40
November 13, 2003
Easton, Maryland - Shore Bancshares, Inc., (NASDAQ - SHBI) reported net income
for the third quarter of 2003 of $2,195,000 or $.40 per diluted share compared
to the $2,488,000 or $.46 per diluted share reported for the third quarter of
2002. Net income for the nine-month period ended September 30, 2003 was
$7,172,000 or $1.31 per diluted share, an increase of 12.3% over September 30,
2002 earnings which totaled $6,385,000 or $1.18 per diluted share.
During the third quarter of 2003, net interest income declined $317,000 or 5%
when compared to the same period in 2002. Lower overall yields on loans and
investment securities were the primary reason for the decline. Noninterest
income increased $476,000 for the third quarter of 2003 compared to the same
period in 2002, primarily as a result of increased insurance agency commissions
and income from the Company's mortgage banking activities. Comparing the third
quarter of 2003 and 2002, noninterest expense increased $534,000 or 12.6%. This
increase is attributable to the Company's insurance agency operations, a new
branch location opened during the first quarter of 2003, and, generally, the
growth of the Company. A $91,000 gain on sales of securities was recognized
during the third quarter of 2003.
For the nine-month period ended September 30, 2003, net interest income
increased $326,000 or 1.8% when compared to the same period in 2002. The
increase is attributable to a decline in interest expense of $2,032,000 for the
nine-month period in 2003 compared to 2002. Noninterest income for the first
nine months of 2003 increased $3,818,000, primarily as a result of the Company's
insurance agency operations. Insurance agency commissions totaled $4,683,000 for
the nine-months ended September 30, 2003, an increase of $2,945,000 when
compared to the same period last year. This included approximately $668,000 of
contingency income received from insurance companies based upon the recent claim
history of the agency's customers. Contingency income is typically recognized in
the first quarter of each year. Increased gains on investment securities and
income generated by the Company's mortgage banking activities also contributed
to noninterest income growth. The Company generated approximately $390,000 in
fee income during the first nine months of 2003 from its mortgage banking
division, which began operating in September 2002, and gains on sale of
securities totaled $449,000 during the nine-month period ended September 30,
2003 compared to $23,000 for the nine months ended September 30, 2002. When
compared to the same period last year, noninterest expenses increased $2,836,000
for the nine months ended September 30, 2003. Insurance agency operations
accounted for $2,175,000 of the increase in noninterest expense. Other increases
in noninterest expenses were attributable to overall growth of the Company.
The Company's provision for credit losses was $75,000 and $66,000 for the
three-month periods ended September 30, 2003 and 2002, respectively. For the
nine-month periods ended September 30, 2003 and 2002, the provision for credit
losses was $235,000 and $277,000, respectively.
Total assets were approximately $710,852,000 at September 30, 2003 compared to
$654,067,000 at December 31, 2002. The increase was primarily the result of loan
growth funded by increased deposits. Total loans were $458,725,000 at September
30, 2003, an increase of $19,186,000 over December 31, 2002, and total deposits
at September 30, 2003 were $591,762,000, an increase of $46,570,000 over
December 31, 2002.
The Company paid a cash dividend of $0.17 per share during the third quarter of
2003.
Shore Bancshares, Inc. is a financial holding company headquartered in Easton,
Maryland and is the largest independent bank holding company located on the
Eastern Shore. It is the sole shareholder of The Talbot Bank of Easton, Maryland
and The Centreville National Bank of Maryland. On May 1, 2002 Shore began the
operation of its insurance subsidiaries, The Avon Dixon Agency, LLC and Elliott
Wilson Insurance, LLC. Also during 2002, Wye Financial Services, LLC, a
registered investment advisory firm, was formed.
Forward-Looking Statements
This press release may contain forward-looking statements as defined by the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
present management's expectations, beliefs, plans and objectives regarding
future financial performance, and assumptions or judgments concerning such
performance. Any discussions contained in this press release, except to the
extent that they contain historical facts, are forward-looking and accordingly
involve estimates, assumptions, judgments and uncertainties. There are a number
of factors that could cause actual results or outcomes to differ materially from
those addressed in the forward-looking statements. Such factors are detailed in
Part I, Item 1 of Shore's Annual Report on Form 10-K, as amended on Form 10-K/A,
for the year ended December 31, 2002, under the heading "Risk Factors."
For further information contact: W. Moorhead Vermilye, President and CEO