SHORE BANCSHARES, INC. EASTON, Md., Jan. 21, 2016 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) reported net income of $2.163 million or $0.17 per diluted common share for the fourth quarter of 2015, compared to net income of $1.909 million or $0.15 per diluted common share for the third quarter of 2015, and net income of $1.226 million or $0.10 per diluted common share for the fourth quarter of 2014. The Company reported net income of $7.108 million or $0.56 per diluted common share for fiscal year 2015, compared to net income of $5.051 million or $0.46 per diluted common share for fiscal year 2014.
When comparing the fourth quarter of 2015 to the third quarter of 2015, net income increased due to higher net interest income due to increased loan volume and lower noninterest expenses. When comparing the fourth quarter of 2015 to the fourth quarter of 2014, the improved results were driven by an increase in net interest income due to higher loan volume, resulting in a shift from lower to higher yielding assets coupled with a decrease in provision for credit losses and a decline in operating expenses. When comparing fiscal year 2015 to fiscal year 2014, improved earnings were due to an increase in net interest income of $1.5 million, a decline in provision for credit losses of $1.3 million, and the reduction of noninterest expenses of $2.0 million. These improvements were partially offset by a decrease in noninterest income of $1.4 million.
"2015 was an exciting year for our Company," said Lloyd L "Scott" Beatty Jr. "The removal of the Consent Order from The Talbot Bank was a significant achievement that has enabled us to once again focus on the future. We have already produced consistent quarterly earnings growth and we were able to restore our shareholder dividend during the year. As we look forward to 2016 we have put plans in place to strengthen our core deposits, continue to grow our loan portfolio and expand our insurance and wealth management businesses thereby reasserting Shore Bancshares as the dominant financial services company in our market."
Balance Sheet Review
Total assets were $1.135 billion at December 31, 2015, a $34.7 million, or 3.2%, increase when compared to $1.100 billion at the end of 2014. The higher amount of total assets is the result of significant loan growth of $84.4 million, primarily in the consumer and commercial real estate loan portfolios of $44.5 and $29.8 million, respectively. The significant growth in the loan portfolio was partially funded by deposit growth of $26.5 million and a decrease in investment securities of $24.4 million.
Total deposits at December 31, 2015 increased $26.5 million, or 2.8%, when compared to December 31, 2014. The increase in total deposits was mainly due to an increase in noninterest-bearing deposits of $35.9 million, partially offset by a decrease in interest-bearing transaction accounts of $9.4 million. Total stockholders' equity increased $6.5 million, or 4.6%, when compared to the end of 2014 due to current year's earnings, partially offset by common stock dividends paid to shareholders of $506 thousand. At December 31, 2015, the ratio of total equity to total assets was 12.95% and the ratio of total tangible equity to total tangible assets was 11.93%, higher than the 12.77% and 11.70%, respectively, at December 31, 2014.
Review of Quarterly Financial Results
Net interest income was $9.3 million for the fourth quarter of 2015, compared to $9.0 million for the third quarter of 2015 and $8.6 million for the fourth quarter of 2014. The increase in net interest income for the fourth quarter of 2015 when compared to the third quarter of 2015 was the direct result of increased loan volume and lower rates paid on interest-bearing deposits. When comparing the fourth quarter of 2015 to the fourth quarter of 2014, significant loan growth resulted in an increase in average loans of $78.1 million. The Company's net interest margin was 3.45% for the fourth quarter of 2015, compared to 3.43% for the third quarter of 2015 and 3.35% for the fourth quarter of 2014. The increase in net interest margin was primarily due to the increase in loan volume which was partially funded by short term lower yielding investments.
The provision for credit losses was $475 thousand for the fourth quarter of 2015, $410 thousand for the third quarter of 2015 and $650 thousand for the fourth quarter of 2014. The higher level of provision for credit losses when comparing the fourth quarter of 2015 to the third quarter of 2015 was primarily due to growth in the loan portfolio. The level of provision for credit losses decreased when comparing the fourth quarter of 2015 to the fourth quarter of 2014, despite the growth in the loan portfolio, primarily due to declines in nonaccrual loans and troubled debt restructurings ("TDRs") as well as net charge-offs. Net charge-offs were $257 thousand for the fourth quarter of 2015, $229 thousand for the third quarter of 2015 and $1.6 million for the fourth quarter of 2014. The ratio of annualized net charge-offs to average loans was 0.13% for the fourth quarter of 2015, 0.12% for the third quarter of 2015 and 0.88% for the fourth quarter of 2014. The ratio of the allowance for credit losses to period-end loans was 1.05% at December 31, 2015, higher than the 1.04% at September 30, 2015 and lower than the 1.08% at December 31, 2014.
At December 31, 2015, nonperforming assets, excluding TDRs, were $16.4 million, an increase of $321 thousand, or 2.0%, when compared to September 30, 2015 and a decrease of $893 thousand, or 5.2%, when compared to December 31, 2014. Additionally, accruing TDRs were $15.5 million at December 31, 2015, a decrease of $936 thousand, or 5.7%, when compared to September 30, 2015 and a decrease of $1.2 million, or 7.1% when compared to December 31, 2014. The positive trend in nonperforming assets and TDRs when comparing December 31, 2015 to both September 30, 2015 and December 31, 2014 was mainly accomplished through continued workout efforts and charge-offs over the last 12 months. At December 31, 2015, the ratio of nonperforming assets to total assets was 1.44%, slightly higher than the 1.43% at September 30, 2015 and lower than the 1.57% at December 31, 2014. In addition, the ratio of accruing TDRs to total assets at December 31, 2015 was 1.37%, compared to 1.47% at September 30, 2015 and 1.52% at December 31, 2014, which reflects improved credit quality in the loan portfolio.
Total noninterest income for the fourth quarter of 2015 decreased $267 thousand, or 6.8%, when compared to the third quarter of 2015 and increased $167 thousand, or 4.8%, when compared to the fourth quarter of 2014. The decrease from the third quarter of 2015 was primarily due to lower retail insurance commissions which are typically higher in the first and third quarters of the Company's fiscal year, resulting in a decline of $347 thousand. The decline in retail commissions was partially offset by increases in service charges on deposit accounts and a gain on sale of other real estate owned "OREO" property. The increase from the fourth quarter of 2014 of $167 thousand was the result of increases in service charges on deposit accounts, bank service fees, and a gain on sale of OREO property, offset by a decline in trust and investment fee income.
Total noninterest expense for the fourth quarter of 2015 decreased $446 thousand, or 4.7%, when compared to the third quarter of 2015 and decreased $560 thousand, or 5.9%, when compared to the fourth quarter of 2014. The decrease from the third quarter of 2015 was due to decreases in salary and wages which resulted from lower insurance commission expense and lower legal and professional fees. The decrease from the fourth quarter of 2014 was primarily due to lower legal and professional fees, lower FDIC insurance assessments, lower costs associated with customer collections and decreased write-downs on OREO properties.
Review of 2015 Financial Results
Net interest income for 2015 was $35.5 million, an increase of $1.5 million, or 4.4%, when compared to 2014 due to an increase in average earning assets of $41.9 million. The increase in interest income was primarily due to higher average balances on loans and lower average balances and rates paid on time deposits. Although the yields on loans declined compared to 2014, the funding of loan growth with lower cost liabilities partially offset the decrease in yields on interest earning assets. The increase in the average balance of loans along with the decrease in rates on interest bearing deposits resulted in the net interest margin remaining unchanged at 3.43% for both 2015 and 2014.
The provision for credit losses for 2015 and 2014 was $2.1 million and $3.4 million, respectively, while net charge-offs were $1.5 million and $6.4 million, respectively. The ratio of annualized net charge-offs to average loans was 0.19% for 2015 and 0.90% 2014.
Total noninterest income for 2015 decreased $1.4 million, or 8.1%, when compared to 2014. The decrease was primarily due to the loss of wholesale insurance commissions and fees of $2.1 million from the formerly owned Tri-State General Insurance Agency ("Tri-State") which was sold late in the second quarter of 2014 for a gain of $114 thousand. Excluding Tri-State and the gain on sale, noninterest income increased $777 thousand in 2015 compared to 2014. The increases in noninterest income consisted of service charges on deposit accounts of $460 due to an initiative to raise bank fees and retail insurance commissions and contingencies of $504 thousand, offset by a decrease in trust and investment fee income of $233 thousand.
Total noninterest expense for 2015 decreased $2.0 million, or 5.1%, when compared to 2014. The sale of Tri-State reduced noninterest expenses by $1.9 million, primarily insurance agency commissions. In addition, lower write-downs on OREO property, lower FDIC insurance premium expense due to the upgraded regulatory status and financial performance of The Talbot Bank in the second quarter of 2015, and lower credit costs, almost entirely offset by increases in salary and wages, data processing and legal and professional fees contributed to the decrease in noninterest expense.
Shore Bancshares Information
Shore Bancshares, Inc. is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland's Eastern Shore. It is the parent company of two Maryland chartered commercial banks, The Talbot Bank of Easton, Maryland, and CNB; one retail insurance producer firm, The Avon-Dixon Agency, LLC, with two specialty lines, Elliot Wilson Insurance (Trucking), and Jack Martin and Associates (Marine); and an insurance premium finance company, Mubell Finance, LLC. Shore Bancshares, Inc. engages in the trust services business through the trust department at CNB under the name "Wye Financial & Trust". Additional information is available at www.shorebancshares.com.
Forward-Looking Statements
The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Shore Bancshares, Inc. with the Securities and Exchange Commission entitled "Risk Factors".
The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
Shore Bancshares, Inc. Page 5 of 12
Financial Highlights
(Dollars in thousands, except per share data)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
------------ ------------
2015 2014 Change 2015 2014 Change
---- ---- ------ ---- ---- ------
PROFITABILITY FOR THE PERIOD
Net interest income $9,293 $8,636 7.6% $35,525 $34,042 4.4%
Provision for credit losses 475 650 (26.9) 2,075 3,350 (38.1)
Noninterest income 3,638 3,471 4.8 15,416 16,781 (8.1)
Noninterest expense 8,950 9,510 (5.9) 37,350 39,361 (5.1)
----- ----- ------ ------
Income before income taxes 3,506 1,947 80.1 11,516 8,112 42.0
Income tax expense 1,343 721 86.3 4,408 3,061 44.0
----- --- ----- -----
Net income $2,163 $1,226 76.4 $7,108 $5,051 40.7
====== ====== ====== ======
Return on average assets 0.75% 0.44% 31 bp 0.64% 0.47% 17 bp
Return on average equity 5.85 3.48 237 4.93 4.04 89
Return on average tangible equity (1) 6.49 3.91 258 5.49 4.68 81
Net interest margin 3.45 3.35 10 3.43 3.43 -
Efficiency ratio - GAAP 69.10 78.40 (930) 73.21 77.31 (410)
Efficiency ratio - Non-GAAP (1) 68.84 78.28 (944) 72.95 77.12 (417)
PER SHARE DATA
Basic net income per common share $0.17 $0.10 70.0% $0.56 $0.46 21.7%
Diluted net income per common share 0.17 0.10 70.0 0.56 0.46 21.7
Dividends paid per common share 0.02 - 100.0 0.04 - 100.0
Book value per common share at period end 11.64 11.13 4.6
Tangible book value per common share at period end (1) 10.59 10.08 5.1
Market value at period end 10.88 9.34 16.5
Market range:
High 11.00 9.34 17.8 9.94 10.49 (5.2)
Low 10.64 9.34 13.9 8.51 8.57 (0.7)
AVERAGE BALANCE SHEET DATA
Loans $785,572 $707,484 11.0% $748,101 $707,381 5.8%
Investment securities 213,307 232,803 (8.4) 232,288 198,639 16.9
Earning assets 1,072,728 1,026,061 4.5 1,036,839 994,898 4.2
Assets 1,137,430 1,103,355 3.1 1,105,666 1,072,622 3.1
Deposits 978,049 950,720 2.9 949,132 932,546 1.8
Stockholders' equity 146,597 139,676 5.0 144,176 125,094 15.3
CREDIT QUALITY DATA AT PERIOD END
Net charge-offs $257 $1,561 (83.5)% $1,454 $6,380 (77.2)%
Nonaccrual loans $12,093 $13,467 (10.2)
Loans 90 days past due and still accruing 7 87 100.0
Other real estate owned 4,252 3,691 15.2
----- -----
Total nonperforming assets 16,352 17,245 (5.2)
Accruing troubled debt restructurings (TDRs) 15,495 16,674 (7.1)
Total nonperforming assets and accruing TDRs $31,847 $33,919 (6.1)
======= =======
CAPITAL AND CREDIT QUALITY RATIOS
Period-end equity to assets 12.95% 12.77% 18 bp
Period-end tangible equity to tangible assets (1) 11.93 11.70 23
Annualized net charge-offs to average loans 0.13 0.88 (75) 0.19% 0.90% (71) bp
Allowance for credit losses as a percent of:
Period-end loans 1.05 1.08 (3)
Nonaccrual loans 68.77 57.14 1,163
Nonperforming assets 50.86 44.62 624
Accruing TDRs 53.67 46.15 752
Nonperforming assets and accruing TDRs 26.11 22.69 342
As a percent of total loans:
Nonaccrual loans 1.52 1.89 (37)
Accruing TDRs 1.95 2.35 (40)
Nonaccrual loans and accruing TDRs 3.47 4.24 (77)
As a percent of total loans+other real estate owned:
Nonperforming assets 2.05 2.41 (36)
Nonperforming assets and accruing TDRs 3.98 4.75 (77)
As a percent of total assets:
Nonaccrual loans 1.07 1.22 (15)
Nonperforming assets 1.44 1.57 (13)
Accruing TDRs 1.37 1.52 (15)
Nonperforming assets and accruing TDRs 2.81 3.09 (28)
(1) See the reconciliation table on page 12 of 12.
Shore Bancshares, Inc. Page 6 of 12
Consolidated Balance Sheets
(In thousands, except per share data)
December 31, 2015
December 31, December 31, compared to
2015 2014 December 31, 2014
---- ---- -----------------
ASSETS
Cash and due from banks $15,080 $24,211 (37.7)%
Interest-bearing deposits with other banks 54,223 68,460 (20.8)
Federal funds sold 4,508 3,552 26.9
----- -----
Cash and cash equivalents 73,811 96,223 (23.3)
Investment securities available for sale (at fair value) 212,165 236,108 (10.1)
Investment securities held to maturity 4,191 4,630 (9.5)
Loans 795,114 710,746 11.9
Less: allowance for credit losses (8,316) (7,695) 8.1
------
Loans, net 786,798 703,051 11.9
------- -------
Premises and equipment, net 16,864 16,275 3.6
Goodwill 11,931 11,931 -
Other intangible assets, net 1,211 1,331 (9.0)
Other real estate owned, net 4,252 3,691 15.2
Other assets 23,920 27,162 (11.9)
------ ------
Total assets $1,135,143 $1,100,402 3.2
========== ==========
LIABILITIES
Noninterest-bearing deposits $229,686 $193,814 18.5
Interest-bearing deposits 745,778 755,190 (1.2)
------- -------
Total deposits 975,464 949,004 2.8
Short-term borrowings 6,672 4,808 38.8
Accrued expenses and other liabilities 6,040 6,121 (1.3)
----- -----
Total liabilities 988,176 959,933 2.9
------- -------
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; authorized
35,000,000 shares 126 126 -
Additional paid in capital 63,816 63,532 0.4
Retained earnings 83,097 76,495 8.6
Accumulated other comprehensive (loss) income (72) 316 (122.8)
--- ---
Total stockholders' equity 146,967 140,469 4.6
------- -------
Total liabilities and stockholders' equity $1,135,143 $1,100,402 3.2
========== ==========
Period-end common shares outstanding 12,631 12,618 0.1
Book value per common share $11.64 $11.13 4.6
Shore Bancshares, Inc. Page 7 of 12
Consolidated Statements of Operations
(In thousands, except per share data)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
------------ ------------
2015 2014 % Change 2015 2014 % Change
---- ---- -------- ---- ---- --------
INTEREST INCOME
Interest and fees on loans $9,142 $8,665 5.5% $35,126 $35,140 (0.0)%
Interest and dividends on investment securities:
Taxable 854 917 (6.9) 3,602 2,957 21.8
Tax-exempt 2 3 (33.3) 10 12 (16.7)
Interest on federal funds sold 1 - 100.0 3 1 200.0
Interest on deposits with other banks 48 40 20.0 130 179 (27.4)
--- ---
Total interest income 10,047 9,625 4.4 38,871 38,289 1.5
------ ------
INTEREST EXPENSE
Interest on deposits 750 985 (23.9) 3,331 4,229 (21.2)
Interest on short-term borrowings 4 4 - 15 18 (16.7)
--- --- --- ---
Total interest expense 754 989 (23.8) 3,346 4,247 (21.2)
--- --- ----- -----
NET INTEREST INCOME 9,293 8,636 7.6 35,525 34,042 4.4
Provision for credit losses 475 650 (26.9) 2,075 3,350 (38.1)
--- --- ----- -----
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 8,818 7,986 10.4 33,450 30,692 9.0
-----
NONINTEREST INCOME
Service charges on deposit accounts 806 629 28.1 2,867 2,407 19.1
Trust and investment fee income 348 478 (27.2) 1,627 1,860 (12.5)
Investment securities gains - 23 (100.0) - 23 (100.0)
Insurance agency commissions 1,760 1,736 1.4 8,274 9,525 (13.1)
Other noninterest income 724 605 19.7 2,648 2,966 (10.7)
--- -----
Total noninterest income 3,638 3,471 4.8 15,416 16,781 (8.1)
----- ----- ------ ------
NONINTEREST EXPENSE
Salaries and wages 4,366 4,305 1.4 17,540 17,600 (0.3)
Employee benefits 890 956 (6.9) 3,905 4,092 (4.6)
Occupancy expense 583 570 2.3 2,420 2,339 3.5
Furniture and equipment expense 215 234 (8.1) 926 975 (5.0)
Data processing 809 766 5.6 3,260 3,006 8.4
Directors' fees 114 99 15.2 470 474 (0.8)
Amortization of intangible assets 33 33 - 133 201 (33.8)
Insurance agency commissions expense - - - - 906 (100.0)
FDIC insurance premium expense 281 402 (30.1) 1,214 1,636 (25.8)
Write-downs of other real estate owned 39 192 (79.7) 127 658 (80.7)
Legal and professional fees 440 619 (28.9) 2,380 2,055 15.8
Other noninterest expenses 1,180 1,334 (11.5) 4,975 5,419 (8.2)
Total noninterest expense 8,950 9,510 (5.9) 37,350 39,361 (5.1)
----- ----- ------ ------
Income before income taxes 3,506 1,947 80.1 11,516 8,112 42.0
----- ------ -----
Income tax expense 1,343 721 86.3 4,408 3,061 44.0
NET INCOME $2,163 $1,226 76.4 $7,108 $5,051 40.7
====== ====== ====== ======
Weighted average shares outstanding - basic 12,631 12,615 0.1 12,629 10,945 15.4
Weighted average shares outstanding - diluted 12,645 12,625 0.2 12,639 10,956 15.4
Basic net income per common share $0.17 $0.10 70.0 $0.56 $0.46 21.7
Diluted net income per common share 0.17 0.10 70.0 0.56 0.46 21.7
Dividends paid per common share 0.02 - - 0.04 - -
Shore Bancshares, Inc. Page 8 of 12
Consolidated Average Balance Sheets
(Dollars in thousands)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
Average Yield/ Average Yield/ Average Yield/ Average Yield/
balance rate balance rate balance rate balance rate
------- ---- ------- ---- ------- ---- ------- ----
Earning assets
Loans $785,572 4.63% $707,484 4.87% $748,101 4.71% $707,381 4.98%
Investment securities
Taxable 213,097 1.60 232,371 1.58 231,960 1.55 198,207 1.49
Tax-exempt 210 5.30 432 4.19 328 4.54 432 4.20
Federal funds sold 3,886 0.12 2,962 0.07 2,991 0.10 1,883 0.06
Interest-bearing deposits 69,963 0.27 82,812 0.19 53,459 0.24 86,995 0.21
------ ------ ------ ------
Total earning assets 1,072,728 3.72% 1,026,061 3.73% 1,036,839 3.76% 994,898 3.86%
Cash and due from banks 16,628 24,329 18,497 22,973
Other assets 56,512 61,370 58,502 64,200
Allowance for credit losses (8,438) (8,405) (8,172) (9,449)
------
Total assets $1,137,430 $1,103,355 $1,105,666 $1,072,622
========== ========== ========== ==========
Interest-bearing liabilities
Demand deposits $190,237 0.13% $183,251 0.13% $180,810 0.13% $177,828 0.14%
Money market and savings deposits 255,974 0.14 233,441 0.12 243,731 0.14 225,616 0.12
Certificates of deposit $100,000 or more 139,663 0.80 163,813 1.06 149,181 0.93 170,252 1.10
Other time deposits 158,011 0.80 173,695 0.95 164,239 0.84 180,848 1.01
------- ------- ------- -------
Interest-bearing deposits 743,885 0.40 754,200 0.52 737,961 0.45 754,544 0.56
Short-term borrowings 6,199 0.23 6,356 0.23 6,226 0.24 8,061 0.22
----- ----- ----- -----
Total interest-bearing liabilities 750,084 0.40% 760,556 0.52% 744,187 0.45% 762,605 0.56%
Noninterest-bearing deposits 234,164 196,520 211,171 178,002
Accrued expenses and other liabilities 6,585 6,603 6,132 6,921
Stockholders' equity 146,597 139,676 144,176 125,094
-------
Total liabilities and stockholders' equity $1,137,430 $1,103,355 $1,105,666 $1,072,622
========== ========== ========== ==========
Net interest spread 3.32% 3.21% 3.31% 3.30%
Net interest margin 3.45% 3.35% 3.43% 3.43%
Shore Bancshares, Inc. Page 9 of 12
Financial Highlights By Quarter
(Dollars in thousands, except per share data)
4th quarter 3rd quarter 2nd quarter 1st quarter 4th quarter 4Q 15 4Q 15
2015 2015 2015 2015 2014 compared to compared to
(4Q 15) (3Q 15) (2Q 15) (1Q 15) (4Q 14) 3Q 15 4Q 14
------ ------ ------ ------ ------ ----- -----
PROFITABILITY FOR THE PERIOD
Taxable-equivalent net interest income $9,315 $9,027 $8,701 $8,560 $8,659 3.2% 7.6%
Less: Taxable-equivalent adjustment 22 17 18 21 23 41.2 4.3
--- --- --- --- ---
Net interest income 9,293 9,010 8,683 8,539 8,636 3.1 7.6
Provision for credit losses 475 410 540 650 650 15.9 (26.9)
Noninterest income 3,638 3,905 3,788 4,085 3,471 (6.8) 4.8
Noninterest expense 8,950 9,396 9,300 9,704 9,510 (4.7) (5.9)
----- ----- ----- ----- -----
Income before income taxes 3,506 3,109 2,631 2,270 1,947 12.8 80.1
Income tax expense 1,343 1,200 1,004 861 721 11.9 86.3
----- ----- ----- --- ---
Net income $2,163 $1,909 $1,627 $1,409 $1,226 13.3 76.4
====== ====== ====== ====== ======
Return on average assets 0.75% 0.68% 0.60% 0.53% 0.44% 7 bp 31 bp
Return on average equity 5.85 5.23 4.56 4.03 3.48 62 237
Return on average tangible equity (1) 6.49 5.81 5.08 4.50 3.91 68 258
Net interest margin 3.45 3.43 3.43 3.43 3.35 2 10
Efficiency ratio - GAAP 69.10 72.66 74.47 76.74 78.40 (356) (930)
Efficiency ratio - Non-GAAP (1) 68.84 72.39 74.20 76.48 78.28 (355) (944)
PER SHARE DATA
Basic net income per common share $0.17 $0.15 $0.13 $0.11 $0.10 13.3% 70.0%
Diluted net income per common share 0.17 0.15 0.13 0.11 0.10 13.3 70.0
Dividends paid per common share 0.02 0.02 - - - 100.0 100.0
Book value per common share at period end 11.64 11.55 11.35 11.31 11.13 0.8 4.6
Tangible book value per common share at period end (1) 10.59 10.51 10.31 10.26 10.08 0.8 5.1
Market value at period end 10.88 9.72 9.43 9.18 9.34 11.9 16.5
Market range:
High 11.00 9.72 9.55 9.30 9.34 13.2 17.8
Low 10.64 9.37 9.43 9.03 9.34 13.6 13.9
AVERAGE BALANCE SHEET DATA
Loans $785,572 $763,306 $727,800 $714,780 $707,484 2.9% 11.0%
Investment securities 213,307 230,222 241,684 244,300 232,803 (7.3) (8.4)
Earning assets 1,072,728 1,044,230 1,016,172 1,013,490 1,026,061 2.7 4.5
Assets 1,137,430 1,111,361 1,085,857 1,087,401 1,103,355 2.3 3.1
Deposits 978,049 953,826 931,637 932,460 950,720 2.5 2.9
Stockholders' equity 146,597 144,897 143,266 141,884 139,676 1.2 5.0
CREDIT QUALITY DATA AT PERIOD END
Net charge-offs $257 $229 $421 $547 $1,561 12.2% (83.5)%
Nonaccrual loans $12,093 $13,143 $14,009 $12,913 $13,467 (8.0) (10.2)
Loans 90 days past due and still accruing 7 4 35 36 87 75.0 100.0
Other real estate owned 4,252 2,884 2,498 3,469 3,691 47.4 15.2
----- ----- ----- ----- -----
Total nonperforming assets $16,352 $16,031 $16,542 $16,418 $17,245 2.0 (5.2)
======= ======= ======= ======= =======
Accruing troubled debt restructurings (TDRs) $15,495 $16,431 $18,353 $16,644 $16,674 (5.7) (7.1)
------- ------- ------- ------- -------
Total nonperforming assets and accruing TDRs $31,847 $32,462 $34,895 $33,062 $33,919 (1.9) (6.1)
======= ======= ======= ======= =======
CAPITAL AND CREDIT QUALITY RATIOS
Period-end equity to assets 12.95% 13.05% 13.22% 13.05% 12.77% (10) bp 18 bp
Period-end tangible equity to tangible assets (1) 11.93 12.02 12.16 11.98 11.70 (9) 23
Annualized net charge-offs to average loans 0.13 0.12 0.23 0.31 0.88 1 (75)
Allowance for credit losses as a percent of:
Period-end loans 1.05 1.04 1.07 1.08 1.08 1 (3)
Nonaccrual loans 68.77 61.61 56.51 60.39 54.14 716 1,463
Nonperforming assets 50.86 50.51 47.86 47.50 44.62 35 624
Accruing TDRs 53.67 49.28 43.14 46.85 46.15 439 752
Nonperforming assets and accruing TDRs 26.11 24.95 22.69 23.59 22.69 116 342
As a percent of total loans:
Nonaccrual loans 1.52 1.69 1.89 1.79 1.89 (17) (37)
Accruing TDRs 1.95 2.11 2.48 2.31 2.35 (16) (40)
Nonaccrual loans and accruing TDRs 3.47 3.80 4.37 4.10 4.24 (33) (77)
As a percent of total loans+other real estate owned:
Nonperforming assets 2.05 2.06 2.22 2.26 2.41 (1) (36)
Nonperforming assets and accruing TDRs 3.98 4.16 4.69 4.56 4.75 (18) (77)
As a percent of total assets:
Nonaccrual loans 1.07 1.18 1.29 1.18 1.22 (11) (15)
Nonperforming assets 1.44 1.43 1.53 1.50 1.57 1 (13)
Accruing TDRs 1.37 1.47 1.69 1.52 1.52 (10) (15)
Nonperforming assets and accruing TDRs 2.81 2.90 3.22 3.02 3.09 (9) (28)
(1) See the reconciliation table on page 12 of 12.
Shore Bancshares, Inc. Page 10 of 12
Consolidated Statements of Operations By Quarter
(In thousands, except per share data)
4Q 15 4Q 15
compared to compared to
4Q 15 3Q 15 2Q 15 1Q 15 4Q 14 3Q 15 4Q 14
----- ----- ----- ----- ----- ----- -----
INTEREST INCOME
Interest and fees on loans $9,142 $8,912 $8,581 $8,491 $8,665 2.6% 5.5%
Interest and dividends on investment securities:
Taxable 854 892 932 924 917 (4.3) (6.9)
Tax-exempt 2 2 3 3 3 - (33.3)
Interest on federal funds sold 1 1 - 1 - - 100.0
Interest on deposits with other banks 48 30 26 26 40 60.0 20.0
--- --- --- --- ---
Total interest income 10,047 9,837 9,542 9,445 9,625 2.1 4.4
INTEREST EXPENSE
Interest on deposits 750 824 856 901 985 (9.0) (23.9)
Interest on short-term borrowings 4 3 3 5 4 33.3 -
--- --- --- --- ---
Total interest expense 754 827 859 906 989 (8.8) (23.8)
--- --- --- --- ---
NET INTEREST INCOME 9,293 9,010 8,683 8,539 8,636 3.1 7.6
Provision for credit losses 475 410 540 650 650 15.9 (26.9)
--- --- --- --- ---
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 8,818 8,600 8,143 7,889 7,986 2.5 10.4
NONINTEREST INCOME
Service charges on deposit accounts 806 769 658 634 629 4.8 28.1
Trust and investment fee income 348 360 450 469 478 (3.3) (27.2)
Investment securities gains - - - - 23 - (100.0)
Insurance agency commissions 1,760 2,107 1,932 2,475 1,736 (16.5) 1.4
Other noninterest income 724 669 748 507 605 8.2 19.7
--- --- --- ---
Total noninterest income 3,638 3,905 3,788 4,085 3,471 (6.8) 4.8
----- ----- ----- ----- -----
NONINTEREST EXPENSE
Salaries and wages 4,366 4,468 4,393 4,313 4,305 (2.3) 1.4
Employee benefits 890 935 924 1,156 956 (4.8) (6.9)
Occupancy expense 583 600 611 626 570 (2.8) 2.3
Furniture and equipment expense 215 223 233 255 234 (3.6) (8.1)
Data processing 809 800 868 783 766 1.1 5.6
Directors' fees 114 117 116 123 99 (2.6) 15.2
Amortization of intangible assets 33 34 33 33 33 (2.9) -
FDIC insurance premium expense 281 243 306 384 402 15.6 (30.1)
Write-downs of other real estate owned 39 7 54 27 192 457.1 (79.7)
Legal and professional fees 440 642 573 725 619 (31.5) (28.9)
Other noninterest expenses 1,180 1,327 1,189 1,279 1,334 (11.1) (11.5)
Total noninterest expense 8,950 9,396 9,300 9,704 9,510 (4.7) (5.9)
----- ----- ----- ----- -----
Income before income taxes 3,506 3,109 2,631 2,270 1,947 12.8 80.1
Income tax expense 1,343 1,200 1,004 861 721 11.9 86.3
----- ----- ----- --- ---
NET INCOME $2,163 $1,909 $1,627 $1,409 $1,226 13.3 76.4
====== ====== ====== ====== ======
Weighted average shares outstanding - basic 12,631 12,630 12,629 12,625 12,617 0.0 0.1
Weighted average shares outstanding - diluted 12,645 12,640 12,638 12,633 12,626 0.0 0.2
Basic net income per common share $0.17 $0.15 $0.13 $0.11 $0.10 13.3 70.0
Diluted net incomeper common share 0.17 0.15 0.13 0.11 0.10 13.3 70.0
Dividends paid per common share 0.02 0.02 - - - - -
Shore Bancshares, Inc. Page 11 of 12
Consolidated Average Balance Sheets By Quarter
(Dollars in thousands)
Average balance
---------------
4Q 15 4Q 15
compared to compared to
4Q 15 3Q 15 2Q 15 1Q 15 4Q 14 3Q 15 4Q 14
----- ----- ----- ----- ----- ----- -----
Average Yield/ Average Yield/ Average Yield/ Average Yield/ Average Yield/
balance rate balance rate balance rate balance rate balance rate
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Earning assets
Loans $785,572 4.63% $763,306 4.64% $727,800 4.74% $714,780 4.83% $707,484 4.87% 2.9% 11.0%
Investment securities
Taxable 213,097 1.60 229,979 1.55 241,254 1.55 243,869 1.52 232,371 1.58 (7.3) (8.3)
Tax-exempt 210 5.30 243 5.01 430 4.21 431 4.19 432 4.19 (13.6) (51.4)
Federal funds sold 3,886 0.12 2,341 0.10 2,931 0.09 2,801 0.09 2,962 0.07 66.0 31.2
Interest-bearing deposits 69,963 0.27 48,361 0.25 43,757 0.24 51,609 0.20 82,812 0.19 44.7 (15.5)
------ ------ ------ ------ ------
Total earning assets 1,072,728 3.72% 1,044,230 3.74% 1,016,172 3.77% 1,013,490 3.79% 1,026,061 3.73% 2.7 4.5
Cash and due from banks 16,628 17,434 18,723 21,268 24,329 (4.6) (31.7)
Other assets 56,512 57,891 59,045 60,611 61,370 (2.4) (7.9)
Allowance for credit losses (8,438) (8,194) (8,083) (7,968) (8,405) 3.0 0.4
Total assets $1,137,430 $1,111,361 $1,085,857 $1,087,401 $1,103,355 2.3 3.1
========== ========== ========== ========== ==========
Interest-bearing liabilities
Demand deposits $190,237 0.13% $184,471 0.13% $171,274 0.12% $177,071 0.13% $183,251 0.13% 3.1 3.8
Money market and savings deposits 255,974 0.14 242,830 0.14 238,173 0.14 237,755 0.14 233,441 0.12 5.4 9.7
Certificates of deposit $100,000 or more 139,663 0.80 148,617 0.92 152,478 0.97 156,154 1.00 163,813 1.06 (6.0) (14.7)
Other time deposits 158,011 0.80 163,224 0.82 166,277 0.85 169,584 0.90 173,695 0.95 (3.2) (9.0)
------- ------- ------- ------- -------
Interest-bearing deposits 743,885 0.40 739,142 0.44 728,202 0.47 740,564 0.49 754,200 0.52 0.6 (1.4)
Short-term borrowings 6,199 0.23 6,501 0.24 4,872 0.23 7,340 0.27 6,356 0.23 (4.6) (2.5)
----- ----- ----- ----- -----
Total interest-bearing liabilities 750,084 0.40% 745,643 0.44% 733,074 0.47% 747,904 0.49% 760,556 0.52% 0.6 (1.4)
Noninterest-bearing deposits 234,164 214,684 203,435 191,896 196,520 9.1 19.2
Accrued expenses and other liabilities 6,585 6,137 6,082 5,717 6,603 7.3 (0.3)
Stockholders' equity 146,597 144,897 143,266 141,884 139,676 1.2 5.0
Total liabilities and stockholders' equity $1,137,430 $1,111,361 $1,085,857 $1,087,401 $1,103,355 2.3 3.1
========== ========== ========== ========== ==========
Net interest spread 3.32% 3.30% 3.30% 3.30% 3.21%
Net interest margin 3.45% 3.43% 3.43% 3.43% 3.35%
Shore Bancshares, Inc. Page 12 of 12
Reconciliation of Generally Accepted Accounting Principles (GAAP)
and Non-GAAP Measures
(In thousands, except per share data)
YTD YTD
4Q 15 3Q 15 2Q 15 1Q 15 4Q 14 12/31/2015 12/31/2014
----- ----- ----- ----- ----- ---------- ----------
The following reconciles return on average equity and return on
average tangible equity (Note 1):
Net income $2,163 $1,909 $1,627 $1,409 $1,226 $7,108 $5,051
====== ====== ====== ====== ====== ====== ======
Net income - annualized (A) $8,581 $7,574 $6,526 $5,714 $4,864 $7,108 $5,051
====== ====== ====== ====== ====== ====== ======
Net income, excluding net amortization of intangible assets $2,183 $1,930 $1,647 $1,429 $1,246 $7,189 $5,173
====== ====== ====== ====== ====== ====== ======
Net income, excluding net amortization of intangible
assets - annualized (B) $8,661 $7,657 $6,606 $5,795 $4,943 $7,189 $5,173
====== ====== ====== ====== ====== ====== ======
Average stockholders' equity (C) $146,597 $144,897 $143,266 $141,884 $139,676 $144,176 $125,094
Less: Average goodwill and other intangible assets (13,155) (13,182) (13,215) (13,248) (13,281) (13,200) (14,448)
------- ------- ------- ------- ------- ------- -------
Average tangible equity (D) $133,442 $131,715 $130,051 $128,636 $126,395 $130,976 $110,646
======== ======== ======== ======== ======== ======== ========
Return on average equity (GAAP) (A)/(C) 5.85% 5.23% 4.56% 4.03% 3.48% 4.93% 4.04%
==== ==== ==== ==== ==== ==== ====
Return on average tangible equity (Non-GAAP) (B)/(D) 6.49% 5.81% 5.08% 4.50% 3.91% 5.49% 4.68%
==== ==== ==== ==== ==== ==== ====
The following reconciles GAAP efficiency ratio and non-GAAP
efficiency ratio (Note 2):
Noninterest expense (E) $8,950 $9,396 $9,300 $9,704 $9,510 $37,350 $39,361
Less: Amortization of intangible assets (33) (34) (33) (33) (33) (133) (201)
Adjusted noninterest expense (F) $8,917 $9,362 $9,267 $9,671 $9,477 $37,217 $39,160
====== ====== ====== ====== ====== ======= =======
Taxable-equivalent net interest income (G) $9,315 $9,027 $8,701 $8,560 $8,659 $35,604 $34,134
Taxable-equivalent net interest income excluding nonrecurring adjustment (H) $9,315 $9,027 $8,701 $8,560 $8,659 $35,604 $34,134
====== ====== ====== ====== ====== ======= =======
Noninterest income (I) $3,638 $3,905 $3,788 $4,085 $3,471 $15,416 $16,781
Less: Investment securities (gains)/losses - - - - (23) - (23)
Other nonrecurring (gains)/losses - - - - - - (114)
Adjusted noninterest income (J) $3,638 $3,905 $3,788 $4,085 $3,448 $15,416 $16,644
====== ====== ====== ====== ====== ======= =======
Efficiency ratio (GAAP) (E)/(G)+(I) 69.10% 72.66% 74.47% 76.74% 78.40% 73.21% 77.31%
===== ===== ===== ===== ===== ===== =====
Efficiency ratio (Non-GAAP) (F)/(H)+(J) 68.84% 72.39% 74.20% 76.48% 78.28% 72.95% 77.12%
===== ===== ===== ===== ===== ===== =====
The following reconciles book value per common share and tangible
book value per common share (Note 1):
Stockholders' equity (K) $146,967 $145,887 $143,402 $142,746 $140,469
Less: Goodwill and other intangible assets (13,142) (13,162) (13,195) (13,228) (13,262)
------- ------- ------- ------- -------
Tangible equity (L) $133,825 $132,725 $130,207 $129,518 $127,207
======== ======== ======== ======== ========
Shares outstanding (M) 12,631 12,630 12,630 12,625 12,618
====== ====== ====== ====== ======
Book value per common share (GAAP) (K)/(M) $11.64 $11.55 $11.35 $11.31 $11.13
====== ====== ====== ====== ======
Tangible book value per common share (Non-GAAP) (L)/(M) $10.59 $10.51 $10.31 $10.26 $10.08
====== ====== ====== ====== ======
The following reconciles equity to assets and
tangible equity to tangible assets (Note 1):
Stockholders' equity (N) $146,967 $145,887 $143,402 $142,746 $140,469
Less: Goodwill and other intangible assets (13,142) (13,162) (13,195) (13,228) (13,262)
------- ------- ------- ------- -------
Tangible equity (O) $133,825 $132,725 $130,207 $129,518 $127,207
======== ======== ======== ======== ========
Assets (P) $1,135,143 $1,117,813 $1,084,352 $1,094,128 $1,100,402
Less: Goodwill and other intangible assets (13,142) (13,162) (13,195) (13,228) (13,262)
------- ------- ------- ------- -------
Tangible assets (Q) $1,122,001 $1,104,651 $1,071,157 $1,080,900 $1,087,140
========== ========== ========== ========== ==========
Period-end equity/assets (GAAP) (N)/(P) 12.95% 13.05% 13.22% 13.05% 12.77%
===== ===== ===== ===== =====
Period-end tangible equity/tangible assets (Non-GAAP) (O)/(Q) 11.93% 12.02% 12.16% 11.98% 11.70%
===== ===== ===== ===== =====
Note 1: Management believes that reporting tangible equity and tangible assets more closely approximates the adequacy of capital for regulatory purposes.
Note 2: Management believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling cash-based operating activities.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/shore-bancshares-reports-2015-results-300207769.html
SOURCE Shore Bancshares, Inc.
