SHORE BANCSHARES, INC. EASTON, Md., Jan. 25, 2017 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) reported net income of $2.495 million or $0.20 per diluted common share for the fourth quarter of 2016, compared to net income of $2.411 million or $0.19 per diluted common share for the third quarter of 2016, and net income of $2.163 million or $0.17 per diluted common share for the fourth quarter of 2015. The Company reported net income of $9.638 million or $0.76 per diluted common share for fiscal year 2016, compared to net income of $7.108 million or $0.56 per diluted common share for fiscal year 2015, an increase of $2.530 million or 35.6%.
When comparing the fourth quarter of 2016 to the third quarter of 2016, net income increased due to higher net interest income resulting from increased loan volume, an increase in noninterest income and a decrease in provision for credit losses. When comparing the fourth quarter of 2016 to the fourth quarter of 2015, the improved results were driven by an increase in net interest income due to higher loan volume, and an increase in noninterest income. When comparing fiscal year 2016 to fiscal year 2015, improved earnings were due to an increase in net interest income of $2.7 million, an increase in noninterest income of $1.2 million, a decline in provision for credit losses of $227 thousand and the reduction of noninterest expenses of $203 thousand.
"2016 proved to be a great year for Shore Bancshares Inc. and its family of companies," said Lloyd L. "Scott" Beatty Jr. "During the year, we consolidated our bank subsidiaries (CNB and The Talbot Bank) and rebranded the merged bank as Shore United Bank. We feel strongly that our new name will travel well as we expand our footprint. Continued growth in both our deposit and loan portfolios during 2016 allowed us to achieve significantly improved earnings while continuing to strengthen our balance sheet. 2017 will be an exciting year. Earlier this month we announced the purchase of three branches on the western shore of Maryland. These new branches will allow us to expand our market, generate significant net interest income and diversify our loan portfolio."
Balance Sheet Review
Total assets were $1.160 billion at December 31, 2016, a $25.1 million, or 2.2%, increase when compared to $1.135 billion at the end of 2015. The higher amount of total assets was the result of significant loan growth of $76.4 million, primarily in the consumer and commercial real estate loan portfolios of $20.1 and $47.4 million, respectively. The significant growth in the loan portfolio was partially funded by deposit growth of $22.0 million and a decrease in investment securities of $45.7 million.
Total deposits at December 31, 2016 increased $22.0 million, or 2.3%, when compared to December 31, 2015. The increase in total deposits was mainly due to an increase in noninterest-bearing deposits of $31.9 million and savings deposits of $20.9 million, partially offset by a decrease in time deposits of $29.5 million and interest-bearing accounts of $1.3 million. Total stockholders' equity increased $7.3 million, or 5.0%, when compared to the end of 2015 primarily due to current year's earnings, partially offset by common stock dividends paid to shareholders of $1.8 million. At December 31, 2016, the ratio of total equity to total assets was 13.30% and the ratio of total tangible equity to total tangible assets was 12.32%, higher than the 12.95% and 11.93%, respectively, at December 31, 2015.
Review of Quarterly Financial Results
Net interest income was $10.0 million for the fourth quarter of 2016, compared to $9.7 million for the third quarter of 2016 and $9.3 million for the fourth quarter of 2015. The increase in net interest income for the fourth quarter of 2016 when compared to the third quarter of 2016 was the direct result of increased loan volume and lower rates paid on interest-bearing deposits. When comparing the fourth quarter of 2016 to the fourth quarter of 2015, significant loan growth resulted in an increase in average loans of $80.8 million. The Company's net interest margin was 3.63% for the fourth quarter of 2016, compared to 3.54% for the third quarter of 2016 and 3.45% for the fourth quarter of 2015. The increase in net interest margin was primarily due to the increase in loan volume which was partially funded through proceeds from the sale of short-term, lower yielding investments.
The provision for credit losses was $418 thousand for the fourth quarter of 2016, $605 thousand for the third quarter of 2016 and $475 thousand for the fourth quarter of 2015. The lower level of provision for credit losses when comparing the fourth quarter of 2016 to the third quarter of 2016 was primarily due to a decline in nonperforming assets of $2.6 million and a decrease in net charge-offs of $43 thousand. The level of provision for credit losses decreased when comparing the fourth quarter of 2016 to the fourth quarter of 2015, despite the growth in the loan portfolio, primarily due to declines in nonaccrual loans and troubled debt restructurings ("TDRs"). Net charge-offs were $306 thousand for the fourth quarter of 2016, $349 thousand for the third quarter of 2016 and $257 thousand for the fourth quarter of 2015. The ratio of annualized net charge-offs to average loans was 0.14% for the fourth quarter of 2016, 0.17% for the third quarter of 2016 and 0.13% for the fourth quarter of 2015. The ratio of the allowance for credit losses to period-end loans was 1.00% at December 31, 2016 and September 30, 2016, respectively. This was lower than the 1.05% at December 31, 2015.
At December 31, 2016, nonperforming assets, excluding TDRs, were $11.5 million, a decrease of $2.3 million, or 16.6%, when compared to September 30, 2016 and a decrease of $4.9 million, or 29.9%, when compared to December 31, 2015. Additionally, accruing TDRs were $13.0 million at December 31, 2016, a decrease of $272 thousand, or 2.0%, when compared to September 30, 2016 and a decrease of $2.5 million, or 16.1%, when compared to December 31, 2015. The positive trend in nonperforming assets and TDRs when comparing December 31, 2016 to both September 30, 2016 and December 31, 2015 was mainly accomplished through continued workout efforts and charge-offs over the last 12 months. At December 31, 2016, the ratio of nonperforming assets to total assets was 0.99%, lower than the 1.19% at September 30, 2016 and 1.44% at December 31, 2015. In addition, the ratio of accruing TDRs to total assets at December 31, 2016 was 1.12%, compared to 1.15% at September 30, 2016 and 1.37% at December 31, 2015, which reflects improved credit quality in the loan portfolio.
Total noninterest income for the fourth quarter of 2016 increased $49 thousand, or 1.2%, when compared to the third quarter of 2016 and increased $418 thousand, or 11.5%, when compared to the fourth quarter of 2015. The increase from the third quarter of 2016 was primarily due to a gain on sale of the Bank's credit card portfolio of $198 thousand which was sold in November of 2016 and the absence of a loss in other real estate owned of $130 thousand, almost entirely offset by a decline in insurance agency commissions of $257 thousand. The increase from the fourth quarter of 2015 of $418 thousand was the result of the gain on sale of the Bank's credit card portfolio, increases in service charges on deposit accounts, bank service fees, insurance agency commissions and wealth management fee income.
Total noninterest expense for the fourth quarter of 2016 increased $9 thousand, or 0.1%, when compared to the third quarter of 2016 and increased $276 thousand, or 3.1%, when compared to the fourth quarter of 2015. The increase from the third quarter of 2016 was due to an increase in write-downs of other real estate owned of $165 thousand and increased software expenses of $153 thousand, partially offset by a decrease in employee benefits of $103 thousand and data processing costs of $119 thousand. The increase from the fourth quarter of 2015 was primarily due to higher loan production and servicing costs, the direct result of higher loan volume, and an increase in write-downs of other real estate owned. These increases were partially offset by lower FDIC insurance premium expenses, the result of the consolidation of the two former bank subsidiaries.
Review of 2016 Financial Results
Net interest income for 2016 was $38.2 million, an increase of $2.7 million, or 7.7%, when compared to 2015 due to an increase in average earning assets of $43.1 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 2015, the funding of loan growth with lower yielding assets and lower cost liabilities resulted in a slight increase in yields on total interest earning assets. The increase in the average balance of loans along with the decrease in rates on interest bearing deposits resulted in an improved net interest margin to 3.56% for fiscal 2016 from 3.43% for fiscal 2015.
The provision for credit losses for 2016 and 2015 was $1.8 million and $2.1 million, respectively, while net charge-offs were $1.4 million and $1.5 million, respectively. The ratio of annualized net charge-offs to average loans was 0.17% for 2016 and 0.19% for 2015.
Total noninterest income for 2016 increased $1.2 million, or 8.0%, when compared to 2015. The increase was primarily due to increases in service charges on deposit accounts of $598 thousand, insurance agency commissions of $277 thousand, bank service and loan fees of $207 thousand and a gain on sale of the Bank's credit card portfolio of $198 thousand. These increases were partially offset by a decrease in trust and investment fee income of $185 thousand.
Total noninterest expense for 2016 decreased $203 thousand, or 0.5%, when compared to 2015. The decrease was primarily due to a decline in legal and professional fees of $505 thousand and reduced FDIC insurance premiums of $518 thousand, partially offset by consolidation expenses for the former bank subsidiaries of $507 thousand and increases in write-downs on other real estate owned of $115 thousand and employee salaries/wages and employee benefits of $174 thousand. The increased legal and professional fees in 2015 were the direct result of management outsourcing its internal audit function which resulted in significant implementation costs. In addition, the lower FDIC insurance premiums over the prior period are the direct result of the upgraded regulatory status and financial performance of the former Talbot Bank of Easton in the second quarter of 2015 and an adjustment of the annual assessment in the third quarter of 2016.
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 Shore United Bank; one retail insurance producer firm, The Avon-Dixon Agency, LLC ("Avon-Dixon"), with two specialty lines, Elliott Wilson Insurance (Trucking) and Jack Martin Associates (Marine); and an insurance premium finance company, Mubell Finance, LLC ("Mubell"). Shore Bancshares Inc. engages in trust and wealth management services through Wye Financial & Trust, a division of Shore United Bank. 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,
------------ ------------
2016 2015 Change 2016 2015 Change
---- ---- ------ ---- ---- ------
PROFITABILITY FOR THE PERIOD
Net interest income $9,965 $9,293 7.2% $38,249 $35,525 7.7%
Provision for credit
losses 418 475 (12.0) 1,848 2,075 (10.9)
Noninterest income 4,056 3,638 11.5 16,645 15,416 8.0
Noninterest expense 9,226 8,950 3.1 37,147 37,350 (0.5)
----- ----- ------ ------
Income before income
taxes 4,377 3,506 24.8 15,899 11,516 38.1
Income tax expense 1,882 1,343 40.1 6,261 4,408 42.0
----- ----- ----- -----
Net income $2,495 $2,163 15.3 $9,638 $7,108 35.6
====== ====== ====== ======
Return on average
assets 0.86% 0.75% 11 bp 0.84% 0.64% 20 bp
Return on average
equity 6.39 5.85 54 6.32 4.93 139
Return on average
tangible equity (1) 7.03 6.49 54 6.97 5.49 148
Net interest margin 3.63 3.45 18 3.56 3.43 13
Efficiency ratio -
GAAP 65.50 69.10 (360) 67.43 73.21 (578)
Efficiency ratio -
Non-GAAP (1) 65.28 68.84 (356) 67.23 72.95 (572)
PER SHARE DATA
Basic net income per
common share $0.20 $0.17 17.6% $0.76 $0.56 35.7%
Diluted net income per
common share 0.20 0.17 17.6 0.76 0.56 35.7
Dividends paid per
common share 0.05 0.02 150.0 0.14 0.04 250.0
Book value per common
share at period end 12.18 11.64 4.6
Tangible book value
per common share at
period end (1) 11.16 10.59 5.4
Market value at period
end 15.25 10.88 40.2
Market range:
High 16.90 11.00 53.6 16.90 9.94 70.0
Low 11.49 10.64 8.0 10.23 8.51 20.2
AVERAGE BALANCE SHEET DATA
Loans $866,360 $785,572 10.3% $825,475 $748,101 10.3
Investment securities 175,417 213,307 (17.8) 196,236 232,288 (15.5)
Earning assets 1,100,197 1,072,728 2.6 1,079,954 1,036,839 4.2
Assets 1,159,131 1,137,430 1.9 1,141,142 1,105,666 3.2
Deposits 993,918 978,049 1.6 976,881 949,132 2.9
Stockholders' equity 155,367 146,597 6.0 152,426 144,176 5.7
CREDIT QUALITY DATA AT PERIOD END
Net charge-offs $306 $257 19.1% $1,438 $1,454 (1.1)%
Nonaccrual loans $8,972 $12,093 (25.8)
Loans 90 days past due
and still accruing 20 7 185.7
Other real estate
owned 2,477 4,252 (41.7)
----- -----
Total nonperforming
assets 11,469 16,352 (29.9)
Accruing troubled debt
restructurings (TDRs) 13,001 15,495 (16.1)
Total nonperforming
assets and accruing
TDRs $24,470 $31,847 (23.2)
======= =======
CAPITAL AND CREDIT QUALITY RATIOS
Period-end equity to
assets 13.30% 12.95% 35 bp
Period-end tangible
equity to tangible
assets (1) 12.32 11.93 39
Annualized net charge-
offs to average loans 0.14 0.13 1 0.17% 0.19% (2) bp
Allowance for credit losses as a percent of:
Period-end loans 1.00 1.05 (5)
Nonaccrual loans 97.26 68.77 2,849
Nonperforming assets 76.08 50.86 2,522
Accruing TDRs 67.12 53.67 1,345
Nonperforming assets
and accruing TDRs 35.66 26.11 955
As a percent of total loans:
Nonaccrual loans 1.03 1.52 (49)
Accruing TDRs 1.49 1.95 (46)
Nonaccrual loans and
accruing TDRs 2.52 3.47 (95)
As a percent of total loans+other real estate owned:
Nonperforming assets 1.31 2.05 (74)
Nonperforming assets
and accruing TDRs 2.80 3.98 (118)
As a percent of total assets:
Nonaccrual loans 0.77 1.07 (30)
Nonperforming assets 0.99 1.44 (45)
Accruing TDRs 1.12 1.37 (25)
Nonperforming assets
and accruing TDRs 2.11 2.81 (70)
(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, 2016
December 31, December 31, compared to
2016 2015 December 31, 2015
---- ---- -----------------
ASSETS
Cash and due from banks $14,596 $15,080 (3.2)%
Interest-bearing deposits
with other banks 61,342 54,223 13.1
Federal funds sold - 4,508 (100.0)
--- -----
Cash and cash equivalents 75,938 73,811 2.9
Investment securities
available for sale (at
fair value) 163,798 212,165 (22.8)
Investment securities held
to maturity 6,808 4,191 62.4
Loans 871,525 795,114 9.6
Less: allowance for credit
losses (8,726) (8,316) 4.9
Loans, net 862,799 786,798 9.7
------- -------
Premises and equipment, net 16,558 16,864 (1.8)
Goodwill 11,931 11,931 -
Other intangible assets,
net 1,079 1,211 (10.9)
Other real estate owned,
net 2,477 4,252 (41.7)
Other assets 18,883 23,920 (21.1)
------ ------
Total assets $1,160,271 $1,135,143 2.2
========== ==========
LIABILITIES
Noninterest-bearing
deposits $261,575 $229,686 13.9
Interest-bearing deposits 735,914 745,778 (1.3)
------- -------
Total deposits 997,489 975,464 2.3
Short-term borrowings 3,203 6,672 (52.0)
Accrued expenses and other
liabilities 5,280 6,040 (12.6)
----- -----
Total liabilities 1,005,972 988,176 1.8
--------- -------
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; authorized
35,000,000 shares 127 126 0.8
Additional paid in capital 64,201 63,815 0.6
Retained earnings 90,964 83,097 9.5
Accumulated other
comprehensive (loss)
income (993) (71) (1,298.6)
---- ---
Total stockholders' equity 154,299 146,967 5.0
------- -------
Total liabilities and
stockholders' equity $1,160,271 $1,135,143 2.2
========== ==========
Period-end common shares
outstanding 12,665 12,631 0.3
Book value per common share $12.18 $11.64 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,
------------ ------------
2016 2015 % Change 2016 2015 % Change
---- ---- -------- ---- ---- --------
INTEREST INCOME
Interest and fees on
loans $9,679 $9,142 5.9% $37,155 $35,126 5.8%
Interest and dividends on investment securities:
Taxable 747 854 (12.5) 3,195 3,602 (11.3)
Tax-exempt 1 2 (50.0) 7 10 (30.0)
Interest on federal
funds sold - 1 (100.0) 6 3 100.0
Interest on deposits
with other banks 78 48 62.5 289 130 122.3
Total interest
income 10,505 10,047 4.6 40,652 38,871 4.6
------ ------
INTEREST EXPENSE
Interest on deposits 537 750 (28.4) 2,389 3,331 (28.3)
Interest on short-
term borrowings 3 4 (25.0) 14 15 (6.7)
--- --- --- ---
Total interest
expense 540 754 (28.4) 2,403 3,346 (28.2)
--- --- ----- -----
NET INTEREST INCOME 9,965 9,293 7.2 38,249 35,525 7.7
Provision for credit
losses 418 475 (12.0) 1,848 2,075 (10.9)
--- --- ----- -----
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 9,547 8,818 8.3 36,401 33,450 8.8
-----
NONINTEREST INCOME
Service charges on
deposit accounts 883 806 9.6 3,465 2,867 20.9
Trust and investment
fee income 369 348 6.0 1,442 1,627 (11.4)
Investment
securities gains - - - 30 - -
Insurance agency
commissions 1,797 1,760 2.1 8,551 8,274 3.3
Other noninterest
income 1,007 724 39.1 3,157 2,648 19.2
Total noninterest
income 4,056 3,638 11.5 16,645 15,416 8.0
----- ----- ------ ------
NONINTEREST EXPENSE
Salaries and wages 4,381 4,366 0.3 17,626 17,540 0.5
Employee benefits 906 890 1.8 3,993 3,905 2.3
Occupancy expense 613 583 5.1 2,452 2,420 1.3
Furniture and
equipment expense 235 215 9.3 963 926 4.0
Data processing 857 809 5.9 3,496 3,260 7.2
Directors' fees 156 114 36.8 511 470 8.7
Amortization of
intangible assets 32 33 (3.0) 131 133 (1.5)
FDIC insurance
premium expense 42 281 (85.1) 696 1,214 (42.7)
Write-downs of
other real estate
owned 167 39 328.2 242 127 90.6
Legal and
professional fees 441 440 0.2 1,875 2,380 (21.2)
Other noninterest
expenses 1,396 1,180 18.3 5,162 4,975 3.8
Total noninterest
expense 9,226 8,950 3.1 37,147 37,350 (0.5)
----- ----- ------ ------
Income before income
taxes 4,377 3,506 24.8 15,899 11,516 38.1
Income tax expense 1,882 1,343 40.1 6,261 4,408 42.0
NET INCOME $2,495 $2,163 15.3 $9,638 $7,108 35.6
====== ====== ====== ======
Weighted average
shares outstanding
-basic 12,665 12,631 0.3 12,652 12,629 0.2
Weighted average
shares outstanding
-diluted 12,686 12,645 0.3 12,670 12,639 0.2
Basic net income per
common share $0.20 $0.17 17.6 $0.76 $0.56 35.7
Diluted net income
per common share 0.20 0.17 17.6 0.76 0.56 35.7
Dividends paid per
common share 0.05 0.02 150.0 0.14 0.04 250.0
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,
------------ ------------
2016 2015 2016 2015
---- ---- ---- ----
Average Yield/ Average Yield/ Average Yield/ Average Yield/
balance rate balance rate balance rate balance rate
------- ---- ------- ---- ------- ---- ------- ----
Earning assets
Loans $866,360 4.47% $785,572 4.63% $825,475 4.52% $748,101 4.71%
Investment securities
Taxable 175,207 1.70 213,097 1.60 196,026 1.63 231,960 1.55
Tax-exempt 210 5.30 210 5.30 210 5.30 328 4.54
Federal funds sold 27 0.38 3,886 0.12 1,764 0.34 2,991 0.10
Interest-bearing
deposits 58,393 0.54 69,963 0.27 56,479 0.51 53,459 0.24
------ ------ ------ ------
Total earning
assets 1,100,197 3.82% 1,072,728 3.72% 1,079,954 3.78% 1,036,839 3.76%
Cash and due from
banks 16,707 16,628 15,844 18,497
Other assets 51,065 56,512 53,899 58,502
Allowance for
credit losses (8,838) (8,438) (8,555) (8,172)
Total assets $1,159,131 $1,137,430 $1,141,142 $1,105,666
========== ========== ========== ==========
Interest-bearing liabilities
Demand deposits $197,810 0.12% $190,237 0.13% $194,062 0.12% $180,810 0.13%
Money market and
savings deposits 272,786 0.13 255,974 0.14 265,323 0.13 243,731 0.14
Certificates of
deposit $100,000
or more 122,725 0.56 139,663 0.80 127,468 0.64 149,181 0.93
Other time
deposits 141,641 0.60 158,011 0.80 148,671 0.67 164,239 0.84
------- ------- ------- -------
Interest-bearing
deposits 734,962 0.29 743,885 0.40 735,524 0.32 737,961 0.45
Short-term
borrowings 3,908 0.25 6,199 0.23 5,753 0.24 6,226 0.24
----- ----- ----- -----
Total interest-
bearing
liabilities 738,870 0.29% 750,084 0.40% 741,277 0.32% 744,187 0.45%
Noninterest-
bearing deposits 258,956 234,164 241,357 211,171
Accrued expenses
and other
liabilities 5,938 6,585 6,082 6,132
Stockholders'
equity 155,367 146,597 152,426 144,176
Total liabilities
and stockholders'
equity $1,159,131 $1,137,430 $1,141,142 $1,105,666
========== ========== ========== ==========
Net interest spread 3.53% 3.32% 3.46% 3.31%
Net interest margin 3.63% 3.45% 3.56% 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 16 4Q 16
2016 2016 2016 2016 2015 compared to compared to
(4Q 16) (3Q 16) (2Q 16) (1Q 16) (4Q 15) 3Q 16 4Q 15
------ ------ ------ ------ ------ ----- -----
PROFITABILITY FOR THE PERIOD
Taxable-equivalent
net interest income $10,029 $9,730 $9,415 $9,273 $9,315 3.1% 7.7%
Less: Taxable-
equivalent adjustment 64 72 32 30 22 (11.1) 190.9
--- --- --- --- ---
Net interest income 9,965 9,658 9,383 9,243 9,293 3.2 7.2
Provision for credit
losses 418 605 375 450 475 (30.9) (12.0)
Noninterest income 4,056 4,007 4,041 4,541 3,638 1.2 11.5
Noninterest expense 9,226 9,217 9,365 9,339 8,950 0.1 3.1
----- ----- ----- ----- -----
Income before income
taxes 4,377 3,843 3,684 3,995 3,506 13.9 24.8
Income tax expense 1,882 1,432 1,412 1,535 1,343 31.4 40.1
----- ----- ----- ----- -----
Net income $2,495 $2,411 $2,272 $2,460 $2,163 3.5 15.3
====== ====== ====== ====== ======
Return on average
assets 0.86% 0.83% 0.81% 0.88% 0.76% 3 bp 10 bp
Return on average
equity 6.39 6.23 6.04 6.64 5.85 16 54
Return on average
tangible equity (1) 7.03 6.86 6.67 7.34 6.49 17 54
Net interest margin 3.63 3.54 3.57 3.50 3.45 9 18
Efficiency ratio -
GAAP 65.50 67.10 69.60 67.61 69.10 (160) (360)
Efficiency ratio -
Non-GAAP (1) 65.28 67.00 69.35 67.37 68.84 (172) (356)
PER SHARE DATA
Basic net income per
common share $0.20 $0.19 $0.18 $0.19 $0.17 5.3% 17.6%
Diluted net income per
common share 0.20 0.19 0.18 0.19 0.17 5.3 17.6
Dividends paid per
common share 0.05 0.03 0.03 0.03 0.02 66.7 100.0
Book value per common
share at period end 12.18 12.23 12.04 11.88 11.64 (0.4) 4.6
Tangible book value
per common share at
period end (1) 11.16 11.20 11.00 10.84 10.59 (0.4) 5.4
Market value at period
end 15.25 11.78 11.75 11.98 10.88 29.5 40.2
Market range:
High 16.90 11.95 12.50 12.08 11.00 41.4 53.6
Low 11.49 11.32 10.23 11.95 10.64 1.5 8.0
AVERAGE BALANCE SHEET DATA
Loans $866,360 $836,955 $807,231 $790,777 $785,572 3.5% 10.3%
Investment securities 175,417 190,475 204,357 214,988 213,307 (7.9) (17.8)
Earning assets 1,100,197 1,092,105 1,061,645 1,065,514 1,072,728 0.7 2.6
Assets 1,159,131 1,152,309 1,122,568 1,130,238 1,137,430 0.6 1.9
Deposits 993,918 984,940 959,397 968,991 978,049 0.9 1.6
Stockholders' equity 155,367 153,985 151,270 149,032 146,597 0.9 6.0
CREDIT QUALITY DATA AT PERIOD END
Net charge-offs $306 $349 $326 $457 $257 (12.3)% 19.1%
Nonaccrual loans $8,972 $11,490 $13,531 $11,925 $12,093 (21.9) (25.8)
Loans 90 days past due
and still accruing 20 64 6 35 7 (68.8) 185.7
Other real estate
owned 2,477 2,197 1,897 3,896 4,252 12.7 (41.7)
----- ----- ----- ----- -----
Total nonperforming
assets $11,469 $13,751 $15,434 $15,856 $16,352 (16.6) (29.9)
======= ======= ======= ======= =======
Accruing troubled debt
restructurings (TDRs) $13,001 $13,273 $13,338 $14,753 $15,495 (2.0) (16.1)
------- ------- ------- ------- -------
Total nonperforming
assets and accruing
TDRs $24,470 $27,024 $28,772 $30,609 $31,847 (9.5) (23.2)
======= ======= ======= ======= =======
CAPITAL AND CREDIT QUALITY RATIOS
Period-end equity to
assets 13.30% 13.37% 13.53% 13.27% 12.95% (7) bp 35 bp
Period-end tangible
equity to tangible
assets (1) 12.32 12.39 12.52 12.25 11.93 (7) 39
Annualized net charge-
offs to average loans 0.14 0.17 0.16 0.23 0.13 (3) 1
Allowance for credit losses as a percent of:
Period-end loans 1.00 1.00 1.02 1.04 1.05 - (5)
Nonaccrual loans 97.26 74.97 61.77 69.68 68.77 2,229 2,849
Nonperforming assets 76.08 62.64 54.15 52.40 50.86 1,344 2,522
Accruing TDRs 67.12 64.90 62.66 56.32 53.67 222 1,345
Nonperforming assets
and accruing TDRs 35.66 31.88 29.05 27.15 26.11 378 955
As a percent of total loans:
Nonaccrual loans 1.03 1.34 1.65 1.49 1.52 (31) (49)
Accruing TDRs 1.49 1.54 1.62 1.85 1.95 (5) (46)
Nonaccrual loans and
accruing TDRs 2.52 2.88 3.27 3.34 3.47 (36) (95)
As a percent of total loans+other real estate owned:
Nonperforming assets 1.31 1.59 1.88 1.98 2.05 (28) (74)
Nonperforming assets
and accruing TDRs 2.80 3.13 3.50 3.81 3.98 (33) (118)
As a percent of total assets:
Nonaccrual loans 0.77 0.99 1.20 1.05 1.07 (22) (30)
Nonperforming assets 0.99 1.19 1.37 1.40 1.44 (20) (45)
Accruing TDRs 1.12 1.15 1.18 1.30 1.37 (3) (25)
Nonperforming assets
and accruing TDRs 2.11 2.34 2.55 2.70 2.81 (23) (70)
(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 16 4Q 16
compared to compared to
4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 3Q 16 4Q 15
----- ----- ----- ----- ----- ----- -----
INTEREST INCOME
Interest and fees on
loans $9,679 $9,398 $9,117 $8,961 $9,142 3.0% 5.9%
Interest and dividends on investment
securities:
Taxable 747 754 824 870 854 (0.9) (12.5)
Tax-exempt 1 2 2 2 2 (50.0) (50.0)
Interest on federal
funds sold - 1 2 3 1 (100.0) (100.0)
Interest on deposits
with other banks 78 81 58 72 48 (3.7) 62.5
--- --- --- --- ---
Total interest
income 10,505 10,236 10,003 9,908 10,047 2.6 4.6
INTEREST EXPENSE
Interest on deposits 537 574 617 661 750 (6.4) (28.4)
Interest on short-
term borrowings 3 4 3 4 4 (25.0) (25.0)
--- --- --- --- ---
Total interest
expense 540 578 620 665 754 (6.6) (28.4)
--- --- --- --- ---
NET INTEREST INCOME 9,965 9,658 9,383 9,243 9,293 3.2 7.2
Provision for credit
losses 418 605 375 450 475 (30.9) (12.0)
--- --- --- --- ---
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 9,547 9,053 9,008 8,793 8,818 5.5 8.3
NONINTEREST INCOME
Service charges on
deposit accounts 883 899 870 813 806 (1.8) 9.6
Trust and investment
fee income 369 358 364 351 348 3.1 6.0
Investment
securities gains - 30 - - - (100.0) -
Insurance agency
commissions 1,797 2,054 1,941 2,759 1,760 (12.5) 2.1
Other noninterest
income 1,007 666 866 618 724 51.2 39.1
Total noninterest
income 4,056 4,007 4,041 4,541 3,638 1.2 11.5
----- ----- ----- ----- -----
NONINTEREST EXPENSE
Salaries and wages 4,381 4,346 4,422 4,477 4,366 0.8 0.3
Employee benefits 906 1,009 964 1,114 890 (10.2) 1.8
Occupancy expense 613 643 583 613 583 (4.7) 5.1
Furniture and
equipment expense 235 245 248 235 215 (4.1) 9.3
Data processing 857 976 854 809 809 (12.2) 5.9
Directors' fees 156 120 131 104 114 30.0 36.8
Amortization of
intangible assets 32 33 33 33 33 (3.0) (3.0)
FDIC insurance
premium expense 42 104 268 282 281 (59.6) (85.1)
Write-downs of
other real estate
owned 167 2 66 7 39 8,250.0 328.2
Legal and
professional fees 441 440 609 385 440 0.2 0.2
Other noninterest
expenses 1,396 1,299 1,187 1,280 1,180 7.5 18.3
----- ----- ----- ----- -----
Total noninterest
expense 9,226 9,217 9,365 9,339 8,950 0.1 3.1
----- ----- ----- ----- -----
Income before income
taxes 4,377 3,843 3,684 3,995 3,506 13.9 24.8
Income tax expense 1,882 1,432 1,412 1,535 1,343 31.4 40.1
----- ----- ----- ----- -----
NET INCOME $2,495 $2,411 $2,272 $2,460 $2,163 3.5 15.3
====== ====== ====== ====== ======
Weighted average
shares outstanding
-basic 12,665 12,661 12,648 12,635 12,631 0.0 0.3
Weighted average
shares outstanding
-diluted 12,686 12,676 12,665 12,649 12,645 0.1 0.3
Basic net income per
common share $0.20 $0.19 $0.18 $0.19 $0.17 5.3 17.6
Diluted net income
per common share 0.20 0.19 0.18 0.19 0.17 5.3 17.6
Dividends paid per
common share 0.05 0.03 0.03 0.03 0.02 66.7 150.0
Shore Bancshares, Inc.
Page 11 of 12
Consolidated Average Balance Sheets By Quarter
(Dollars in thousands)
Average balance
---------------
4Q 16 4Q 16
compared to compared to
4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 3Q 16 4Q 15
----- ----- ----- ----- ----- ----- -----
Average Yield/ Average Yield/ Average Yield/ Average Yield/ Average Yield/
balance rate balance rate balance rate balance rate balance rate
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Earning assets
Loans $866,360 4.47% $836,955 4.50% $807,231 4.56% $790,777 4.57% $785,572 4.63% 3.5% 10.3%
Investment securities
Taxable 175,207 1.70 190,265 1.59 204,147 1.61 214,778 1.62 213,097 1.60 (7.9) (17.8)
Tax-exempt 210 5.30 210 5.30 210 5.30 210 5.30 210 5.30 - -
Federal funds sold 27 0.38 511 0.37 2,910 0.34 3,640 0.33 3,886 0.12 (94.7) (99.3)
Interest-bearing
deposits 58,393 0.54 64,164 0.50 47,147 0.50 56,109 0.51 69,963 0.27 (9.0) (16.5)
------ ------ ------ ------ ------
Total earning
assets 1,100,197 3.82% 1,092,105 3.75% 1,061,645 3.80% 1,065,514 3.75% 1,072,728 3.72% 0.7 2.6
Cash and due from
banks 16,707 15,678 14,776 16,205 16,628 6.6 0.5
Other assets 51,065 52,836 54,699 57,037 56,512 (3.4) (9.6)
Allowance for
credit losses (8,838) (8,310) (8,552) (8,518) (8,438) 6.4 4.7
Total assets $1,159,131 $1,152,309 $1,122,568 $1,130,238 $1,137,430 0.6 1.9
========== ========== ========== ========== ==========
Interest-bearing liabilities
Demand deposits $197,810 0.12% $199,116 0.12% $186,137 0.12% $193,087 0.12% $190,237 0.13% (0.7) 4.0
Money market and
savings deposits 272,786 0.13 268,183 0.13 261,495 0.13 258,715 0.13 255,974 0.14 1.7 6.6
Certificates of
deposit $100,000
or more 122,725 0.56 125,265 0.61 129,544 0.69 132,412 0.71 139,663 0.80 (2.0) (12.1)
Other time
deposits 141,641 0.60 147,780 0.64 151,577 0.68 153,774 0.74 158,011 0.80 (4.2) (10.4)
------- ------- ------- ------- -------
Interest-bearing
deposits 734,962 0.29 740,344 0.31 728,753 0.34 737,988 0.36 743,885 0.40 (0.7) (1.2)
Short-term
borrowings 3,908 0.25 7,075 0.25 5,792 0.24 6,242 0.24 6,199 0.23 (44.8) (37.0)
----- ----- ----- ----- -----
Total interest-
bearing
liabilities 738,870 0.29% 747,419 0.31% 734,545 0.34% 744,230 0.36% 750,084 0.40% (1.1) (1.5)
Noninterest-
bearing deposits 258,956 244,596 230,644 231,003 234,164 5.9 10.6
Accrued expenses
and other
liabilities 5,938 6,309 6,109 5,973 6,585 (5.9) (9.8)
Stockholders'
equity 155,367 153,985 151,270 149,032 146,597 0.9 6.0
Total liabilities
and stockholders'
equity $1,159,131 $1,152,309 $1,122,568 $1,130,238 $1,137,430 0.6 1.9
========== ========== ========== ========== ==========
Net interest spread 3.53% 3.44% 3.46% 3.39% 3.32%
Net interest margin 3.63% 3.54% 3.57% 3.50% 3.45%
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 16 3Q 16 2Q 16 1Q 16 4Q 15 12/31/2016 12/31/2015
----- ----- ----- ----- ----- ---------- ----------
The following reconciles return on average equity
and return on average tangible equity (Note 1):
Net income $2,495 $2,411 $2,272 $2,460 $2,163 $9,638 $7,108
====== ====== ====== ====== ====== ====== ======
Net income -
annualized (A) $9,926 $9,592 $9,138 $9,894 $8,581 $9,638 $7,108
====== ====== ====== ====== ====== ====== ======
Net income,
excluding net
amortization of
intangible assets $2,514 $2,431 $2,292 $2,480 $2,183 $9,717 $7,189
====== ====== ====== ====== ====== ====== ======
Net income, excluding net amortization of intangible
assets -annualized
(B) $10,001 $9,671 $9,218 $9,975 $8,661 $9,717 $7,189
======= ====== ====== ====== ====== ====== ======
Average
stockholders'
equity (C) $155,367 $153,985 $151,270 $149,032 $146,597 $152,426 $144,176
Less: Average
goodwill and other
intangible assets (13,030) (13,063) (13,096) (13,129) (13,155) (13,079) (13,200)
------- ------- ------- ------- ------- ------- -------
Average tangible
equity (D) $142,337 $140,922 $138,174 $135,903 $133,442 $139,347 $130,976
======== ======== ======== ======== ======== ======== ========
Return on average
equity (GAAP)
(A)/(C) 6.39% 6.23% 6.04% 6.64% 5.85% 6.32% 4.93%
==== ==== ==== ==== ==== ==== ====
Return on average
tangible equity
(Non-GAAP)
(B)/(D) 7.03% 6.86% 6.67% 7.34% 6.49% 6.97% 5.49%
==== ==== ==== ==== ==== ==== ====
The following reconciles GAAP efficiency ratio and
non-GAAP efficiency ratio (Note 2):
Noninterest expense
(E) $9,226 $9,217 $9,365 $9,339 $8,950 $37,147 $37,350
Less: Amortization
of intangible
assets (32) (33) (33) (33) (33) (131) (133)
Adjusted noninterest
expense (F) $9,194 $9,184 $9,332 $9,306 $8,917 $37,016 $37,217
====== ====== ====== ====== ====== ======= =======
Taxable-equivalent
net interest income
(G) $10,029 $9,730 $9,415 $9,273 $9,315 $38,447 $35,604
Taxable-equivalent
net interest income
excluding
nonrecurring
adjustment (H) $10,029 $9,730 $9,415 $9,273 $9,315 $38,447 $35,604
======= ====== ====== ====== ====== ======= =======
Noninterest income
(I) $4,056 $4,007 $4,041 $4,541 $3,638 $16,645 $15,416
Adjusted noninterest
income (J) $4,056 $4,007 $4,041 $4,541 $3,638 $16,615 $15,416
====== ====== ====== ====== ====== ======= =======
Efficiency ratio
(GAAP) (E)/(G)+(I) 65.50% 67.10% 69.60% 67.61% 69.10% 67.43% 73.21%
===== ===== ===== ===== ===== ===== =====
Efficiency ratio
(Non-GAAP)
(F)/(H)+(J) 65.28% 67.00% 69.35% 67.37% 68.84% 67.23% 72.95%
===== ===== ===== ===== ===== ===== =====
The following reconciles book value per common share
and tangible book value per common share (Note 1):
Stockholders' equity
(K) $154,299 $154,835 $152,321 $150,109 $146,967
Less: Goodwill and
other intangible
assets (13,010) (13,043) (13,076) (13,109) (13,142)
------- ------- ------- ------- -------
Tangible equity (L) $141,289 $141,792 $139,245 $137,000 $133,825
======== ======== ======== ======== ========
Shares outstanding
(M) 12,665 12,663 12,655 12,640 12,631
====== ====== ====== ====== ======
Book value per
common share (GAAP)
(K)/(M) $12.18 $12.23 $12.04 $11.88 $11.64
====== ====== ====== ====== ======
Tangible book value
per common share
(Non-GAAP)
(L)/(M) $11.16 $11.20 $11.00 $10.84 $10.59
====== ====== ====== ====== ======
The following reconciles equity to assets and
tangible equity to tangible assets (Note 1):
Stockholders' equity
(N) $154,299 $154,835 $152,321 $150,109 $146,967
Less: Goodwill and
other intangible
assets (13,010) (13,043) (13,076) (13,109) (13,142)
------- ------- ------- ------- -------
Tangible equity (O) $141,289 $141,792 $139,245 $137,000 $133,825
======== ======== ======== ======== ========
Assets (P) $1,160,271 $1,157,866 $1,125,690 $1,131,175 $1,135,143
Less: Goodwill and
other intangible
assets (13,010) (13,043) (13,076) (13,109) (13,142)
------- ------- ------- ------- -------
Tangible assets (Q) $1,147,261 $1,144,823 $1,112,614 $1,118,066 $1,122,001
========== ========== ========== ========== ==========
Period-end equity/
assets (GAAP) (N)/
(P) 13.30% 13.37% 13.53% 13.27% 12.95%
===== ===== ===== ===== =====
Period-end tangible
equity/tangible
assets (Non-GAAP)
(O)/(Q) 12.32% 12.39% 12.52% 12.25% 11.93%
===== ===== ===== ===== =====
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-2016-results-300396756.html
SOURCE Shore Bancshares, Inc.
