Shore Bancshares Reports 2016 Results

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Shore Bancshares Reports 2016 Results

PR Newswire

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.

Copyright CNW Group 2017

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