Exhibit 99.1
Shore Bancshares, Inc.
18 E. Dover Street
Easton, Maryland 21601
Phone 410-822-1400
PRESS RELEASE
Shore Bancshares Reports 33.7% Increase in Third Quarter Earnings
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November 9, 2004
Easton, Maryland - Shore Bancshares, Inc. (NASDAQ - SHBI) reported third quarter
earnings of $2,935,000 or $0.53 per diluted share, which represents a 33.7%
increase over third quarter 2003. Net income for the three months ended
September 30, 2003 was $2,195,000 or $0.40 per diluted share. Net income for the
nine-month period ended September 30, 2004 was $8,051,000 or $1.46 per diluted
share, representing a 12.3% increase over September 30, 2003 earnings of
$7,172,000 or $1.31 per diluted share.
Returns on average assets and stockholders' equity were 1.39% and 11.85%,
respectively, for the nine-months ended September 30, 2004. Total assets were
$780 million, total deposits were $648 million and total stockholders' equity
was $92 million.
Net Interest Income
Net interest income for the quarter ended September 30, 2004 was $7,704,000,
compared to $5,988,000 for the same period last year, which represents a 28.7%
increase. Net interest income for the nine months ended September 30, 2004
increased 17.4% totaling $21,213,000, a $3,140,000 increase over the same period
last year. The increases in net interest income for the three and nine months
ended September 30, 2004 resulted primarily from the acquisition in April 2004
of The Felton Bank, which contributed $658,000 and $1,267,000, respectively, in
net interest income, as well as interest income generated by loan growth and
increases in short-term interest rates. Interest expense declined $74,000 and
$872,000 for the three and nine-month periods ended September 30, 2004,
respectively.
The Company's net interest margin was 3.98% for the nine months ended September
30, 2004, which is 8 basis points higher than one year ago. The Company
continued to increase its volume of earning assets, which totaled $719,922,000
for the nine months ended September 30, 2004, as compared to $627,556,000 for
the nine months ended September 30, 2003. The average yield on earning assets
increased during the quarter to 5.21%, compared to 5.05% for the six months
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ended June 30, 2004. The average rate paid for interest-bearing liabilities for
the first nine months of 2004 declined to 1.52% from 1.95% for the same period
in 2003.
Loans and Deposits
Loans, net of unearned income, totaled $576,069,000 at September 30, 2004, an
increase of $101,114,000 or 21.3% since December 31, 2003. Approximately
$47,906,000 of the loan growth is attributable to The Felton Bank. Average
loans, net of unearned income, totaled $544,145,000 for the nine months ended
September 30, 2004, which represents an increase of $90,702,000 or 20.0% over
the same period last year.
Total deposits at September 30, 2004 were $648,379,000, compared to $592,409,000
at December 31, 2003. Certificates of deposit of $100,000 or more increased
$7,429,000 and other certificates of deposit increased $11,136,000 since
December 31, 2003. As of September 30, 2004, The Felton Bank had Certificates of
deposit of $100,000 or more totaling $5,898,000 and other certificates of
deposit totaling $19,876,000.
The provision for credit losses for the three- and nine-month periods ended
September 30, 2004 was $165,000 and $370,000, respectively, compared to $75,000
and $235,000 for the same periods in 2003. Net charge-offs were $454,000 for the
nine-month period ended September 30, 2004, compared to $204,000 for the same
period last year. The increased charge-offs related to nonaccrual loans with
losses that have been previously identified by management. Management believes
that the provision for credit losses and the resulting allowance are adequate at
September 30, 2004.
Noninterest Income
Excluding gains and losses on sales of securities for the three- and nine-month
periods ended September 30, 2004, noninterest income increased $528,000 and
$979,000, respectively, when compared to the same periods last year.
Approximately $88,000 and $159,000 of the increase for the three and nine-month
periods ended September 30, 2004, respectively, is attributable to The Felton
Bank, while service charges on deposit accounts and certain fee increases
implemented during the first quarter of 2004 added another $192,000 and $390,000
for the respective periods. Other fees and services offered by the Company
increased $113,000 and $287,000 for the three- and nine-month periods,
respectively, when compared to the same periods in 2003.
Noninterest Expenses
Total noninterest expense increased $923,000 and $2,167,000 for the three- and
nine-month periods ended September 30, 2004, respectively, from the comparable
periods in 2003. Operation of The Felton Bank represented $923,000 of this
increase. For the quarter ended September 30, 2004, excluding amounts related to
the Felton Bank, an additional $209,000 in salaries and benefits expense,
$41,000 in occupancy expense related to certain new facilities owned by the
Company, and $231,000 in other noninterest expense were recognized over the
amounts for the same period in 2003. For the nine months ended September 30,
2004, salaries and benefits expense increased $534,000, occupancy expense
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increased $154,000 and other noninterest expense increased $557,000, when
compared to the same period in 2003. These increases resulted from the overall
growth of the Company during the period.
Shore Bancshares Information
Shore Bancshares, Inc., headquartered in Easton, Maryland, is the largest
independent financial holding company located on Maryland's Eastern Shore. It is
the parent company of three banks, The Talbot Bank of Easton, Maryland, The
Centreville National Bank of Maryland, and The Felton Bank; two insurance
producer firms, The Avon-Dixon Agency, LLC, and Elliott Wilson Insurance, LLC;
an insurance premium finance company, Mubell Finance, LLC; and a registered
investment adviser firm, Wye Financial Services, LLC.
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 discussed in
detail under the heading "Risk Factors" in Item 1 of Part I of the Annual Report
of Shore Bancshares, Inc. on Form 10-K, as amended by Amendment No. 1 on Form
10-K/A, for the year ended December 31, 2003.
For further information contact: W. Moorhead Vermilye, President and CEO