Shore Bancshares Reports First Quarter 2017 Financial Results

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April 20, 2017 4:15 PM EDT

EASTON, Md., April 20, 2017 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) reported net income of $2.800 million or $0.22 per diluted common share for the first quarter of 2017, compared to net income of $2.495 million or $0.20 per diluted common share for the fourth quarter of 2016, and net income of $2.460 million or $0.19 per diluted common share for the first quarter of 2016. 

When comparing the first quarter of 2017 to the fourth quarter of 2016, the primary reason for the improved results was a $753 thousand increase in noninterest income partially offset by an increase in noninterest expense of $427 thousand.  When comparing the first quarter of 2017 to the first quarter of 2016, the primary reasons for the improved results were increases in net interest income of $690 thousand and noninterest income of $268 thousand, partially offset by an increase in noninterest expenses of $314 thousand.      

"We are pleased to report our continuing improved earnings over the linked quarter and the first quarter of 2016," said Lloyd L. "Scott" Beatty, Jr., President and Chief Executive Officer.  "2017 is off to a great start as we outpaced loan growth goals for the quarter and increased deposits by $4.1 million, since December 31, 2016. The next few months will be an exciting time for Shore United Bank as we have already opened a new loan production office in West Ocean City, MD and will be expanding our market with three new branches in the greater metropolitan area of Baltimore, MD in May."     

Balance Sheet ReviewTotal assets were $1.167 billion at March 31, 2017, a $6.6 million, or less than 1%, increase when compared to $1.160 billion at the end of 2016.  The increase in total assets included increases in gross loans of $20.3 million and investment securities of $14.1 million, almost entirely funded by a decrease in interest-bearing deposits with other banks of $27.4 million.                                     

Total deposits increased $4.1 million, or less than 1%, when compared to December 31, 2016.  The increase in total deposits was mainly due to an increase in noninterest-bearing accounts of $5.0 million and money market and savings deposits of $6.7 million, which were offset by a decrease in time deposits of $6.9 million.  Total stockholders' equity increased $3.3 million, or 2.2%, when compared to the end of 2016.  At March 31, 2017, the ratio of total equity to total assets was 13.51% and the ratio of total tangible equity to total tangible assets was 12.54%.

Total assets at March 31, 2017 increased $35.7 million, or 3.2%, when compared to total assets at March 31, 2016.  The increase in total assets was primarily due to significant loan growth of $92.9 million, partially funded by a decrease in investment securities of $28.7 million and cash and cash equivalents of $24.8 million.  Total deposits at March 31, 2017 increased $31.8 million, or 3.3%, when compared to total deposits at March 31, 2016, further funding the additional loan growth.     

Review of Quarterly Financial Results Net interest income was $9.9 million for the first quarter of 2017, compared to $10.0 million for the fourth quarter of 2016 and $9.2 million for the first quarter of 2016.  Net interest income when compared to the fourth quarter of 2016 was lower by $32 thousand due to two fewer earnings days as well as lower yields on loans. This was partially offset by a higher yield on taxable investment securities and an increase in the federal funds rate resulting in higher yield on deposits with other banks.  The Company's net interest margin improved by 8 basis points to 3.71% over the fourth quarter of 2016.  The increase in net interest income when compared to the first quarter of 2016 was primarily the result of significant loan growth, with average loans increasing $90.0 million.  The Company's net interest margin when compared to the first quarter of 2016 increased 21 basis points from 3.50%, the result of transitioning lower yielding assets to fund loan volume, higher yields on investment securities, and an increase in the federal funds rate, partially offset by a decline in yields on loans.  Additionally, average rates paid on deposits declined 8 basis points primarily related to time deposit repricing.

The provision for credit losses was $427 thousand for the three months ended March 31, 2017.  The comparable amounts were $418 thousand and $450 thousand for the three months ended December 31, 2016 and March 31, 2016, respectively.  The provision for credit losses slightly increased in the first quarter of 2017 over the fourth quarter of 2016, due to an increase in outstanding loans.  The lower level of provision for credit losses when comparing the first quarter of 2017 to the first quarter of 2016 was primarily due to decreases in loan charge-offs and nonaccrual loans.  Net charge-offs were $226 thousand for the first quarter of 2017, $306 thousand for the fourth quarter of 2016 and $457 thousand for the first quarter of 2016.  The ratio of annualized net charge-offs to average loans was 0.10% for the first quarter of 2017, 0.14% for the fourth quarter of 2016 and 0.23% for the first quarter of 2016.  The ratio of the allowance for credit losses to period-end loans at March 31, 2017 and December 31, 2016 was 1.00%, lower than the 1.04% at March 31, 2016.  

Nonperforming assets excluding accruing troubled debt restructurings (TDRs) were $11.2 million at March 31, 2017, $11.5 million at December 31, 2016 and $15.9 million at March 31, 2016. Nonperforming assets including accruing TDRs at March 31, 2017 were $24.0 million, compared to $24.5 million at December 31, 2016 and $30.6 million at March 31, 2016.  The decreases in nonperforming assets and TDRs are the result of the continued work out efforts and charge-offs period over period.  At March 31, 2017, the ratio of nonaccrual loans to total assets was 0.75%, compared to 0.77% and 1.05% at December 31, 2016 and March 31, 2016, respectively.  In addition, the ratio of accruing TDRs to total assets at March 31, 2017 was 1.10%, improving from 1.12% and 1.30% at December 31, 2016 and March 31, 2016.

Total noninterest income for the first quarter of 2017 increased $753 thousand when compared to the fourth quarter of 2016 and increased $268 thousand when compared to the first quarter of 2016.  The increase from the fourth quarter of 2016 was the result of higher insurance agency commissions, mainly from contingency payments which are typically received in the first quarter of each year and are based on the prior year's performance.  The increase from the first quarter of 2016 was due to increases in an insurance investment of $152 thousand, increase in retail insurance commissions of $60 thousand, and other bank service charges and fees of $40 thousand.

Total noninterest expense for the first quarter of 2017 increased $427 thousand when compared to the fourth quarter of 2016 and increased $314 thousand when compared to the first quarter of 2016.  The increase in noninterest expense compared to the fourth quarter of 2016 was primarily due to higher costs associated with employee benefits of $334 thousand, which included higher insurance premiums for group insurance and federal unemployment insurance which is usually paid in the first two quarters of the year.  Salaries and wages increased by $121 thousand in the first quarter due to pay increases implemented during the period.  The remaining increases were related to merger and acquisition costs for the branch purchase which is presently scheduled to be completed in the second quarter of 2017 of $226 thousand, partially offset by decreases in write-downs of other real estate owned of $111 thousand, loan servicing costs of $62 thousand, and advertising of $36 thousand.  

The increase from the first quarter of 2016 was primarily due to higher legal and professional fees of $275 thousand mainly due to the branch acquisition, and higher employee benefits of $126 thousand, partially offset by lower FDIC insurance premiums of $118 thousand, resulting from the consolidation of the two former bank subsidiaries.

Shore Bancshares InformationShore 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 StatementsThe 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 4 of 11

Financial Highlights

(Dollars in thousands, except per share data)

   For the Three Months Ended

March 31,

2017

2016

 Change

     Net interest income

$      9,933

$      9,243

7.5

%

     Provision for credit losses

427

450

(5.1)

     Noninterest income

4,809

4,541

5.9

     Noninterest expense

9,653

9,339

3.4

     Income before income taxes

4,662

3,995

16.7

     Income tax expense 

1,862

1,535

21.3

     Net income 

$      2,800

$      2,460

13.8

     Return on average assets 

0.99

%

0.88

%

11

bp

     Return on average equity 

7.27

6.64

63

     Return on average tangible equity (1)

7.98

7.34

64

     Net interest margin

3.71

3.50

21

     Efficiency ratio - GAAP 

65.21

67.61

(240)

     Efficiency ratio - Non-GAAP (1)

64.99

67.37

(238)

PER SHARE DATA

     Basic net income per common share

$        0.22

$        0.19

15.8

%

     Diluted net income per common share

0.22

0.19

15.8

     Dividends paid per common share

0.05

0.03

66.7

     Book value per common share at period end

12.44

11.88

4.7

     Tangible book value per common share at period end (1)

11.41

10.84

5.3

     Market value at period end

16.71

11.98

27.3

     Market range:

       High

17.92

12.08

48.3

       Low

14.64

11.95

22.5

AVERAGE BALANCE SHEET DATA

     Loans

$  880,791

$  790,777

11.4

%

     Investment securities

178,074

214,988

(17.2)

     Earning assets

1,092,934

1,065,514

2.6

     Assets

1,148,757

1,130,238

1.6

     Deposits

982,956

968,991

1.4

     Stockholders' equity

156,274

149,032

4.9

CREDIT QUALITY DATA AT PERIOD END

     Net charge-offs

$         226

$         457

(50.5)

%

     Nonaccrual loans 

$      8,729

$    11,925

(26.8)

     Loans 90 days past due and still accruing

118

35

237.1

     Other real estate owned

2,354

3,896

(39.6)

     Total nonperforming assets 

11,201

15,856

(29.4)

     Accruing troubled debt restructurings (TDRs) 

12,782

14,753

(13.4)

     Total nonperforming assets and accruing TDRs 

$    23,983

$    30,609

(21.6)

CAPITAL AND CREDIT QUALITY RATIOS

     Period-end equity to assets

13.51

%

13.27

%

24

bp

     Period-end tangible equity to tangible assets (1)

12.54

12.25

29

     Annualized net charge-offs to average loans

0.10

0.23

(13)

     Allowance for credit losses as a percent of:

     Period-end loans

1.00

1.04

(4)

     Nonaccrual loans 

102.27

69.68

3,259

     Nonperforming assets 

79.70

52.40

2,730

     Accruing TDRs 

69.84

56.32

1,352

     Nonperforming assets and accruing TDRs 

37.22

27.15

1,007

     As a percent of total loans:

     Nonaccrual loans 

0.98

1.49

(51)

     Accruing TDRs  

1.43

1.85

(42)

     Nonaccrual loans and accruing TDRs 

2.41

3.34

(93)

     As a percent of total loans+other real estate owned:

     Nonperforming assets

1.25

1.98

(73)

     Nonperforming assets and accruing TDRs 

2.68

3.81

(113)

     As a percent of total assets:

     Nonaccrual loans 

0.75

1.05

(30)

     Nonperforming assets 

0.96

1.40

(44)

     Accruing TDRs 

1.10

1.30

(20)

     Nonperforming assets and accruing TDRs 

2.06

2.70

(64)

(1)  See the reconciliation table on page 11 of 11.

 

 

Shore Bancshares, Inc.

Page 5 of 11

Consolidated Balance Sheets

(In thousands, except per share data)

March 31, 2017

March 31, 2017

March 31,

December 31,

March 31,

compared to

compared to

2017

2016

2016

December 31, 2016

March 31, 2016

ASSETS

    Cash and due from banks

$              14,884

$              14,596

$              14,566

2.0

%

2.2

%

    Interest-bearing deposits with other banks

33,967

61,342

58,507

(44.6)

(41.9)

    Federal funds sold

-

-

553

-

(100.0)

  Cash and cash equivalents

48,851

75,938

73,626

(35.7)

(33.6)

    Investment securities available for sale (at fair value)

178,072

163,798

206,735

8.7

(13.9)

    Investment securities held to maturity 

6,615

6,808

3,996

(2.8)

65.5

    Loans

891,864

871,525

798,921

2.3

11.6

    Less: allowance for credit losses

(8,927)

(8,726)

(8,309)

2.3

7.4

    Loans, net

882,937

862,799

790,612

2.3

11.7

    Premises and equipment, net

16,831

16,558

16,813

1.6

0.1

    Goodwill

11,931

11,931

11,931

-

-

    Other intangible assets, net

1,047

1,079

1,178

(3.0)

(11.1)

    Other real estate owned, net

2,354

2,477

3,896

(5.0)

(39.6)

    Other assets

18,251

18,883

22,388

(3.3)

(18.5)

                         Total assets

$         1,166,889

$         1,160,271

$         1,131,175

0.6

3.2

LIABILITIES

    Noninterest-bearing deposits

$            266,611

$            261,575

$            229,646

1.9

16.1

    Interest-bearing deposits

734,931

735,914

740,087

(0.1)

(0.7)

                Total deposits

1,001,542

997,489

969,733

0.4

3.3

    Short-term borrowings

2,919

3,203

5,872

(8.9)

(50.3)

    Accrued expenses and other liabilities

4,802

5,280

5,461

(9.1)

(12.1)

                          Total liabilities

1,009,263

1,005,972

981,066

0.3

2.9

STOCKHOLDERS' EQUITY

    Common stock, par value $0.01; authorized  

       35,000,000 shares

127

127

126

-

0.8

    Additional paid in capital

64,619

64,201

63,929

0.7

1.1

    Retained earnings

93,131

90,964

85,178

2.4

9.3

    Accumulated other comprehensive (loss) income

(251)

(993)

876

74.7

(128.7)

                          Total stockholders' equity

157,626

154,299

150,109

2.2

5.0

                          Total liabilities and stockholders' equity

$         1,166,889

$         1,160,271

$         1,131,175

0.6

3.2

Period-end common shares outstanding

12,673

12,665

12,640

0.1

0.3

Book value per common share

$                 12.44

$                 12.18

$                 11.88

2.1

4.7

 

 

Shore Bancshares, Inc.

 Page 6 of 11

Consolidated Statements of Operations

(In thousands, except per share data)

For the Three Months Ended

March 31,

2017

2016

% Change

INTEREST INCOME

    Interest and fees on loans 

$   9,550

$    8,961

6.6

%

    Interest and dividends on investment securities:

        Taxable

827

870

(4.9)

        Tax-exempt 

2

2

-

    Interest on federal funds sold

-

3

(100.0)

    Interest on deposits with other banks

68

72

(5.6)

                   Total interest income

10,447

9,908

5.4

INTEREST EXPENSE

    Interest on deposits

511

661

(22.7)

    Interest on short-term borrowings

3

4

(25.0)

                   Total interest expense

514

665

(22.7)

NET INTEREST INCOME

9,933

9,243

7.5

Provision for credit losses

427

450

(5.1)

NET INTEREST INCOME AFTER PROVISION 

  FOR CREDIT LOSSES

9,506

8,793

8.1

NONINTEREST INCOME

    Service charges on deposit accounts

834

813

2.6

    Trust and investment fee income

361

351

2.8

    Insurance agency commissions

2,819

2,759

2.2

    Other noninterest income

795

618

28.6

                      Total noninterest income

4,809

4,541

5.9

NONINTEREST EXPENSE

    Salaries and wages

4,502

4,477

0.6

    Employee benefits

1,240

1,114

11.3

    Occupancy expense 

625

613

2.0

    Furniture and equipment expense

233

235

(0.9)

    Data processing

872

809

7.8

    Directors' fees

80

104

(23.1)

    Amortization of intangible assets

33

33

-

    FDIC insurance premium expense

164

282

(41.8)

    Write-downs of other real estate owned

56

7

700.0

    Legal and professional fees

660

385

71.4

    Other noninterest expenses

1,188

1,280

(7.2)

                      Total noninterest expense

9,653

9,339

3.4

Income before income taxes

4,662

3,995

16.7

Income tax expense 

1,862

1,535

21.3

NET INCOME 

$   2,800

$    2,460

13.8

Weighted average shares outstanding - basic

12,670

12,635

0.3

Weighted average shares outstanding - diluted

12,707

12,649

0.5

Basic net income per common share

$     0.22

$       0.19

15.8

Diluted net income per common share

0.22

0.19

15.8

Dividends paid per common share

0.05

0.03

66.7

 

 

Shore Bancshares, Inc.

 Page 7 of 11

Consolidated Average Balance Sheets

(Dollars in thousands)

For the Three Months Ended

March 31,

2017

2016

Average 

Yield/

Average 

Yield/

balance

rate 

balance

rate 

Earning assets

  Loans 

$    880,791

4.43

%

$    790,777

4.57

%

  Investment securities

   Taxable

177,864

1.86

214,778

1.62

   Tax-exempt

210

5.38

210

5.30

  Federal funds sold

-

-

3,640

0.33

  Interest-bearing deposits

34,069

0.80

56,109

0.51

    Total earning assets

1,092,934

3.90

%

1,065,514

3.75

%

Cash and due from banks

13,907

16,205

Other assets

50,763

57,037

Allowance for credit losses

(8,847)

(8,518)

Total assets

$ 1,148,757

$ 1,130,238

Interest-bearing liabilities

  Demand deposits

$    195,005

0.14

%

$    193,087

0.12

%

  Money market and savings deposits 

276,175

0.13

258,715

0.13

  Certificates of deposit $100,000 or more

118,970

0.54

132,412

0.71

  Other time deposits

137,832

0.58

153,774

0.74

    Interest-bearing deposits

727,982

0.28

737,988

0.36

  Short-term borrowings

4,150

0.27

6,242

0.24

    Total interest-bearing liabilities

732,132

0.28

%

744,230

0.36

%

Noninterest-bearing deposits

254,974

231,003

Accrued expenses and other liabilities

5,377

5,973

Stockholders' equity

156,274

149,032

Total liabilities and stockholders' equity

$ 1,148,757

$ 1,130,238

Net interest spread

3.62

%

3.39

%

Net interest margin

3.71

%

3.50

%

 

 

Shore Bancshares, Inc.

 Page 8 of 11

Financial Highlights By Quarter

(Dollars in thousands, except per share data)

1st quarter

4th quarter

3rd quarter

2nd quarter

1st quarter

1Q 17

1Q 17

2017

2016

2016

2016

2016

compared to

compared to

(1Q 17)

(4Q 16)

(3Q 16)

(2Q 16)

(1Q 16)

4Q 16

1Q 16

PROFITABILITY FOR THE PERIOD

     Taxable-equivalent net interest income

$       9,994

$    10,029

$      9,730

$      9,415

$      9,273

(0.3)

%

7.8

%

     Less:  Taxable-equivalent adjustment

61

64

72

32

30

(4.7)

103.3

     Net interest income

9,933

9,965

9,658

9,383

9,243

(0.3)

7.5

     Provision for credit losses

427

418

605

375

450

2.2

(5.1)

     Noninterest income

4,809

4,056

4,007

4,041

4,541

18.6

5.9

     Noninterest expense

9,653

9,226

9,217

9,365

9,339

4.6

3.4

     Income before income taxes

4,662

4,377

3,843

3,684

3,995

6.5

16.7

     Income tax expense 

1,862

1,882

1,432

1,412

1,535

(1.1)

21.3

     Net income

$       2,800

$      2,495

$      2,411

$      2,272

$      2,460

12.2

13.8

     Return on average assets 

0.99

%

0.86

%

0.83

%

0.81

%

0.88

%

13

bp

11

bp

     Return on average equity 

7.27

6.39

6.23

6.04

6.64

88

63

     Return on average tangible equity (1)

7.98

7.03

6.86

6.67

7.34

95

64

     Net interest margin

3.71

3.63

3.54

3.57

3.50

8

21

     Efficiency ratio - GAAP 

65.21

65.50

67.10

69.60

67.61

(29)

(240)

     Efficiency ratio - Non-GAAP (1)

64.99

65.28

67.00

69.35

67.37

(29)

(238)

PER SHARE DATA

     Basic net income per common share

$         0.22

$        0.20

$        0.19

$        0.18

$        0.19

10.0

%

15.8

%

     Diluted net income per common share

0.22

0.20

0.19

0.18

0.19

10.0

15.8

     Dividends paid per common share

0.05

0.05

0.03

0.03

0.03

-

100.0

     Book value per common share at period end

12.44

12.18

12.23

12.04

11.88

2.1

4.7

     Tangible book value per common share at period end (1)

11.41

11.16

11.20

11.00

10.84

2.2

5.3

     Market value at period end

16.71

15.25

11.78

11.75

11.98

-

27.3

     Market range:

        High

17.92

16.90

11.95

12.50

12.08

6.0

48.3

        Low

14.64

11.49

11.32

10.23

11.95

27.4

22.5

AVERAGE BALANCE SHEET DATA

     Loans

$   880,791

$  866,360

$  836,955

$  807,231

$  790,777

1.7

%

11.4

%

     Investment securities

178,074

175,417

190,475

204,357

214,988

1.5

(17.2)

     Earning assets

1,092,934

1,100,197

1,092,105

1,061,645

1,065,514

(0.7)

2.6

     Assets

1,148,757

1,159,131

1,152,309

1,122,568

1,130,238

(0.9)

1.6

     Deposits

982,956

993,918

984,940

959,397

968,991

(1.1)

1.4

     Stockholders' equity

156,274

155,367

153,985

151,270

149,032

0.6

4.9

CREDIT QUALITY DATA AT PERIOD END

     Net charge-offs

$          226

$         306

$         349

$         326

$         457

(26.1)

%

(50.5)

%

     Nonaccrual loans 

$       8,729

$      8,972

$    11,490

$    13,531

$    11,925

(2.7)

(26.8)

     Loans 90 days past due and still accruing

118

20

64

6

35

490.0

237.1

     Other real estate owned

2,354

2,477

2,197

1,897

3,896

(5.0)

(39.6)

     Total nonperforming assets 

$     11,201

$    11,469

$    13,751

$    15,434

$    15,856

(2.3)

(29.4)

     Accruing troubled debt restructurings (TDRs) 

$     12,782

$    13,001

$    13,273

$    13,338

$    14,753

(1.7)

(13.4)

     Total nonperforming assets and accruing TDRs 

$     23,983

$    24,470

$    27,024

$    28,772

$    30,609

(2.0)

(21.6)

CAPITAL AND CREDIT QUALITY RATIOS

     Period-end equity to assets

13.51

%

13.30

%

13.37

%

13.53

%

13.27

%

21

bp

24

bp

     Period-end tangible equity to tangible assets (1)

12.54

12.32

12.39

12.52

12.25

22

29

     Annualized net charge-offs to average loans

0.10

0.14

0.17

0.16

0.23

(4)

(13)

     Allowance for credit losses as a percent of:

     Period-end loans      

1.00

1.00

1.00

1.02

1.04

-

(4)

     Nonaccrual loans 

102.27

97.26

74.97

61.77

69.68

501

3,259

     Nonperforming assets 

79.70

76.08

62.64

54.15

52.40

362

2,730

     Accruing TDRs 

69.84

67.12

64.90

62.66

56.32

272

1,352

     Nonperforming assets and accruing TDRs 

37.22

35.66

31.88

29.05

27.15

156

1,007

    As a percent of total loans:

    Nonaccrual loans 

0.98

1.03

1.34

1.65

1.49

(5)

(51)

    Accruing TDRs 

1.43

1.49

1.54

1.62

1.85

(6)

(42)

    Nonaccrual loans and accruing TDRs 

2.41

2.52

2.88

3.27

3.34

(11)

(93)

    As a percent of total loans+other real estate owned:

    Nonperforming assets 

1.25

1.31

1.59

1.88

1.98

(6)

(73)

    Nonperforming assets and accruing TDRs 

2.68

2.80

3.13

3.50

3.81

(12)

(113)

    As a percent of total assets:

    Nonaccrual loans 

0.75

0.77

0.99

1.20

1.05

(2)

(30)

    Nonperforming assets 

0.96

0.99

1.19

1.37

1.40

(3)

(44)

    Accruing TDRs 

1.10

1.12

1.15

1.18

1.30

(2)

(20)

    Nonperforming assets and accruing TDRs 

2.06

2.11

2.34

2.55

2.70

(5)

(64)

(1)  See the reconciliation table on page 11 of 11.

 

 

Shore Bancshares, Inc.

 Page 9 of 11

Consolidated Statements of Operations By Quarter

(In thousands, except per share data)

1Q 17

1Q 17

compared to

compared to

1Q 17

4Q 16

3Q 16

2Q 16

1Q 16

4Q 16

1Q 16

INTEREST INCOME

    Interest and fees on loans 

$  9,550

$  9,679

$  9,398

$  9,117

$    8,961

(1.3)

%

6.6

%

    Interest and dividends on investment securities:

        Taxable

827

747

754

824

870

10.7

(4.9)

        Tax-exempt

2

1

2

2

2

100.0

-

    Interest on federal funds sold

-

-

1

2

3

-

(100.0)

    Interest on deposits with other banks

68

78

81

58

72

(12.8)

(5.6)

                   Total interest income

10,447

10,505

10,236

10,003

9,908

(0.6)

5.4

INTEREST EXPENSE

    Interest on deposits

511

537

574

617

661

(4.8)

(22.7)

    Interest on short-term borrowings

3

3

4

3

4

-

(25.0)

                   Total interest expense

514

540

578

620

665

(4.8)

(22.7)

NET INTEREST INCOME

9,933

9,965

9,658

9,383

9,243

(0.3)

7.5

Provision for credit losses

427

418

605

375

450

2.2

(5.1)

NET INTEREST INCOME AFTER PROVISION

  FOR CREDIT LOSSES

9,506

9,547

9,053

9,008

8,793

(0.4)

8.1

NONINTEREST INCOME

    Service charges on deposit accounts

834

883

899

870

813

(5.5)

2.6

    Trust and investment fee income

361

369

358

364

351

(2.2)

2.8

    Investment securities gains 

-

-

30

-

-

-

-

    Insurance agency commissions 

2,819

1,797

2,054

1,941

2,759

56.9

2.2

    Other noninterest income

795

1,007

666

866

618

(21.1)

28.6

                      Total noninterest income

4,809

4,056

4,007

4,041

4,541

18.6

5.9

NONINTEREST EXPENSE

    Salaries and wages

4,502

4,381

4,346

4,422

4,477

2.8

0.6

    Employee benefits

1,240

906

1,009

964

1,114

36.9

11.3

    Occupancy expense 

625

613

643

583

613

2.0

2.0

    Furniture and equipment expense

233

235

245

248

235

(0.9)

(0.9)

    Data processing

872

857

976

854

809

1.8

7.8

    Directors' fees

80

156

120

131

104

(48.7)

(23.1)

    Amortization of intangible assets

33

32

33

33

33

3.1

-

    FDIC insurance premium expense

164

42

104

268

282

290.5

(41.8)

    Write-downs of other real estate owned

56

167

2

66

7

(66.5)

700.0

    Legal and professional fees

660

441

440

609

385

49.7

71.4

    Other noninterest expenses

1,188

1,396

1,299

1,187

1,280

(14.9)

(7.2)

                      Total noninterest expense

9,653

9,226

9,217

9,365

9,339

4.6

3.4

Income before income taxes

4,662

4,377

3,843

3,684

3,995

6.5

16.7

Income tax expense 

1,862

1,882

1,432

1,412

1,535

(1.1)

21.3

NET INCOME 

$  2,800

$  2,495

$  2,411

$  2,272

$    2,460

12.2

13.8

Weighted average shares outstanding - basic

12,670

12,665

12,661

12,648

12,635

0.0

0.3

Weighted average shares outstanding - diluted

12,707

12,686

12,676

12,665

12,649

0.2

0.5

Basic net income per common share

$    0.22

$    0.20

$    0.19

$    0.18

$      0.19

10.0

15.8

Diluted net income per common share

0.22

0.20

0.19

0.18

0.19

10.0

15.8

Dividends paid per common share

0.05

0.05

0.03

0.03

0.03

-

66.7

 

 

Shore Bancshares, Inc.

Page 10 of 11

Consolidated Average Balance Sheets By Quarter

(Dollars in thousands)

Average balance

1Q 17

1Q 17

compared to

compared to

1Q 17

4Q 16

3Q 16

2Q 16

1Q 16

4Q 16

1Q 16

Average 

Yield/

Average 

Yield/

Average 

Yield/

Average 

Yield/

Average 

Yield/

balance

rate

balance

rate

balance

rate

balance

rate

balance

rate

Earning assets

  Loans 

$    880,791

4.43

%

$    866,360

4.47

%

$    836,955

4.50

%

$    807,231

4.56

%

$    790,777

4.57

%

1.7

%

11.4

%

  Investment securities

   Taxable

177,864

1.86

175,207

1.70

190,265

1.59

204,147

1.61

214,778

1.62

1.5

(17.2)

   Tax-exempt

210

5.38

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

(100.0)

(100.0)

  Interest-bearing deposits

34,069

0.80

58,393

0.54

64,164

0.50

47,147

0.50

56,109

0.51

(41.7)

(39.3)

    Total earning assets

1,092,934

3.90

%

1,100,197

3.82

%

1,092,105

3.75

%

1,061,645

3.80

%

1,065,514

3.75

%

(0.7)

2.6

Cash and due from banks

13,907

16,707

15,678

14,776

16,205

(16.8)

(14.2)

Other assets

50,763

51,065

52,836

54,699

57,037

(0.6)

(11.0)

Allowance for credit losses

(8,847)

(8,838)

(8,310)

(8,552)

(8,518)

0.1

3.9

Total assets

$ 1,148,757

$ 1,159,131

$ 1,152,309

$ 1,122,568

$ 1,130,238

(0.9)

1.6

Interest-bearing liabilities

  Demand deposits

$    195,005

0.14

%

$    197,810

0.12

%

$    199,116

0.12

%

$    186,137

0.12

%

$    193,087

0.12

%

(1.4)

1.0

  Money market and savings deposits 

276,175

0.13

272,786

0.13

268,183

0.13

261,495

0.13

258,715

0.13

1.2

6.7

  Certificates of deposit $100,000 or more

118,970

0.54

122,725

0.56

125,265

0.61

129,544

0.69

132,412

0.71

(3.1)

(10.2)

  Other time deposits

137,832

0.58

141,641

0.60

147,780

0.64

151,577

0.68

153,774

0.74

(2.7)

(10.4)

    Interest-bearing deposits

727,982

0.28

734,962

0.29

740,344

0.31

728,753

0.34

737,988

0.36

(0.9)

(1.4)

  Short-term borrowings

4,150

0.27

3,908

0.25

7,075

0.25

5,792

0.24

6,242

0.24

6.2

(33.5)

    Total interest-bearing liabilities

732,132

0.28

%

738,870

0.29

%

747,419

0.31

%

734,545

0.34

%

744,230

0.36

%

(0.9)

(1.6)

Noninterest-bearing deposits

254,974

258,956

244,596

230,644

231,003

(1.5)

10.4

Accrued expenses and other liabilities

5,377

5,938

6,309

6,109

5,973

(9.4)

(10.0)

Stockholders' equity

156,274

155,367

153,985

151,270

149,032

0.6

4.9

Total liabilities and stockholders' equity

$ 1,148,757

$ 1,159,131

$ 1,152,309

$ 1,122,568

$ 1,130,238

(0.9)

1.6

Net interest spread

3.62

%

3.53

%

3.44

%

3.46

%

3.39

%

Net interest margin

3.71

%

3.63

%

3.54

%

3.57

%

3.50

%

 

 

Shore Bancshares, Inc.

Page 11 of 11

Reconciliation of Generally Accepted Accounting Principles (GAAP) 

  and Non-GAAP Measures

(In thousands, except per share data)

1Q 17

4Q 16

3Q 16

2Q 16

1Q 16

The following reconciles return on average equity and return on

  average tangible equity (Note 1):

Net income

$          2,800

$          2,495

$          2,411

$          2,272

$          2,460

Net income - annualized (A)

$       11,356

$          9,926

$          9,592

$          9,138

$          9,894

Net income, excluding net amortization of intangible assets

$          2,820

$          2,514

$          2,431

$          2,292

$          2,480

Net income, excluding net amortization of intangible 

  assets - annualized (B)

$       11,437

$       10,001

$          9,671

$          9,218

$          9,975

Average stockholders' equity (C)

$     156,274

$     155,367

$     153,985

$     151,270

$     149,032

Less:  Average goodwill and other intangible assets

(12,997)

(13,030)

(13,063)

(13,096)

(13,129)

Average tangible equity (D)

$     143,277

$     142,337

$     140,922

$     138,174

$     135,903

Return on average equity (GAAP)  (A)/(C)

7.27

%

6.39

%

6.23

%

6.04

%

6.64

%

Return on average tangible equity (Non-GAAP)  (B)/(D)

7.98

%

7.03

%

6.86

%

6.67

%

7.34

%

The following reconciles GAAP efficiency ratio and non-GAAP 

  efficiency ratio (Note 2):

Noninterest expense (E)

$          9,653

$          9,226

$          9,217

$          9,365

$          9,339

Less:  Amortization of intangible assets

(33)

(32)

(33)

(33)

(33)

Adjusted noninterest expense (F)

$          9,620

$          9,194

$          9,184

$          9,332

$          9,306

Taxable-equivalent net interest income (G)

$          9,994

$       10,029

$          9,730

$          9,415

$          9,273

Taxable-equivalent net interest income excluding nonrecurring adjustment (H)

$          9,994

$       10,029

$          9,730

$          9,415

$          9,273

Noninterest income (I)

$          4,809

$          4,056

$          4,007

$          4,041

$          4,541

Adjusted noninterest income (J)

$          4,809

$          4,056

$          4,007

$          4,041

$          4,541

Efficiency ratio (GAAP)  (E)/(G)+(I) 

65.21

%

65.50

%

67.10

%

69.60

%

67.61

%

Efficiency ratio (Non-GAAP)  (F)/(H)+(J)

64.99

%

65.28

%

67.00

%

69.35

%

67.37

%

Stockholders' equity (K)

$     157,626

$     154,299

$     154,835

$     152,321

$     150,109

Less:  Goodwill and other intangible assets

(12,978)

(13,010)

(13,043)

(13,076)

(13,109)

Tangible equity (L)

$     144,648

$     141,289

$     141,792

$     139,245

$     137,000

Shares outstanding (M)

12,673

12,665

12,663

12,655

12,640

Book value per common share (GAAP)  (K)/(M)

$          12.44

$          12.18

$          12.23

$          12.04

$          11.88

Tangible book value per common share (Non-GAAP)  (L)/(M)

$          11.41

$          11.16

$          11.20

$          11.00

$          10.84

The following reconciles equity to assets and

  tangible equity to tangible assets (Note 1):

Stockholders' equity (N)

$     157,626

$     154,299

$     154,835

$     152,321

$     150,109

Less:  Goodwill and other intangible assets

(12,978)

(13,010)

(13,043)

(13,076)

(13,109)

Tangible equity (O)

$     144,648

$     141,289

$     141,792

$     139,245

$     137,000

Assets (P)

$  1,166,889

$  1,160,271

$  1,157,866

$  1,125,690

$  1,131,175

Less:  Goodwill and other intangible assets

(12,978)

(13,010)

(13,043)

(13,076)

(13,109)

Tangible assets (Q)

$  1,153,911

$  1,147,261

$  1,144,823

$  1,112,614

$  1,118,066

Period-end equity/assets (GAAP)  (N)/(P)

13.51

%

13.30

%

13.37

%

13.53

%

13.27

%

Period-end tangible equity/tangible assets (Non-GAAP)  (O)/(Q)

12.54

%

12.32

%

12.39

%

12.52

%

12.25

%

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-first-quarter-2017-financial-results-300441934.html

SOURCE Shore Bancshares, Inc.


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