Ocean Shore Holding Co. Reports 2nd Quarter Earnings

Jul 29, 2014, 16:02 ET from Ocean Shore Holding Co.

OCEAN CITY, N.J., July 29, 2014 /PRNewswire/ -- Ocean Shore Holding Co. (NASDAQ: OSHC) today announced net income of $1,532,000 or $0.24 per diluted share, for the quarter ended June 30, 2014, as compared to $1,359,000, or $0.21 per diluted share, for the second quarter of 2013.  Net income for the six months ended June 30, 2014 was $3,119,000, or $0.48 per diluted share, as compared to $2,539,000, or $0.38 per diluted share, for the same period in 2013. 

Ocean Shore Holding Co. is the holding company for Ocean City Home Bank, a federal savings bank headquartered in Ocean City, New Jersey.  Ocean City Home Bank operates a total of eleven full-service banking offices in eastern New Jersey. 

"Earnings for the quarter benefited from improved net interest income over the prior year," said Steven E. Brady, President and CEO. "We continue to grow our loan portfolio and are on pace to top last year's growth.  Shifts in our asset mix to increase loans and reduce lower yielding investments and cash balances, along with a reduction in funding costs, have resulted in improved net interest income and slight improvement in net interest margin over the comparable periods in the prior year".

Balance Sheet Review

Total assets decreased $6.7 million, or 0.7%, to $1,013.3 million at June 30, 2014 from $1,020.0 million at December 31, 2013.  Loans receivable, net, increased $24.8 million, or 3.3%, to $769.6 million at June 30, 2014 from $744.8 million at December 31, 2013.  Investments and mortgage-backed securities decreased $8.8 million, or 6.8%, to $119.9 million during the first six months of 2014.  Cash and cash equivalents decreased $21.9 million, or 25.0%, to $65.7 million at June 30, 2014 from $87.6 million at December 31, 2013 as excess liquidity was deployed into loans and used to fund deposit withdrawals.  Loan originations and other advances totaling $80.6 million were offset by payoffs and payments received of $56.1 million resulting in a $24.5 million increase in the portfolio.  The increase in loans primarily resulted from steady volume of one-to-four family residential loans. The decrease in investments resulted from repayments, calls and payoffs.   

Deposits decreased $9.8 million, or 1.3%, to $770.8 million at June 30, 2014 from $780.6 million at December 31, 2013.  Checking accounts increased $9.9 million, savings accounts decreased $104,000, certificates of deposit decreased $6.4 million and municipal deposits decreased $13.2 million at June 30, 2014 compared to December 31, 2013.  Municipal deposits declined as a result of seasonal withdrawals.  Total borrowings were unchanged at $120.3 million.

Asset Quality

The provision for loan losses totaled $50,000 for the second quarter of 2014 compared to $192,000 for the second quarter of 2013 and $88,000 for the first quarter of 2014.  The allowance for loan losses totaled $4.1 million, or 0.53% of total loans, at June 30, 2014 compared to $4.2 million, or 0.56% of total loans, at December 31, 2013.  The Company experienced $270,000 in net charge-off activity for the first six months of 2014 as compared to $300,000 in net charge-off activity for the first six months of 2013. 

Non-performing assets totaled $7.3 million, or 0.73% of total assets, at June 30, 2014, compared to $5.6 million, or 0.55% of total assets, at December 31, 2013.  Non-performing assets consisted of twenty-one real estate residential mortgages totaling $4.5 million, three real estate commercial mortgage totaling $731,000, one commercial loan totaling $501,000, eight consumer equity loans totaling $533,000, two TDR non-accrual loans totaling $699,000 and four real estate owned properties totaling $340,000.

Income Statement Analysis

Net interest income increased $355,000, or 5.4%, to $6.9 million for the second quarter of 2014 compared to $6.5 million in the second quarter of 2013.  Net interest margin increased 3 basis points in the quarter ended June 30, 2014 to 3.12% versus 3.09% for the quarter ended June 30, 2013 and decreased 5 basis points from 3.17% for the quarter ended March 31, 2014.  The increase in net interest income in the second quarter of 2014 compared to the second quarter of 2013 was the result of a decrease in the average cost of interest-bearing liabilities of 11 basis points to 0.94%, a decrease in average interest-bearing liabilities of $15.3 million and an increase in average interest-earning assets of $39.2 million offset by a decrease of 14 basis points in the average yield on interest-earning assets.

Net interest income increased $837,000, or 6.4%, to $13.8 million for the first six months of 2014 compared to the same period in the prior year.  Net interest margin increased 2 basis points for the six months ended June 30, 2014 to 3.14% versus 3.12% for the six months ended June 30, 2013.  The increase in net interest income for the six month period was the result of a decrease in the average cost of interest-bearing liabilities of 12 basis points to 0.94%, a decrease in average interest-bearing liabilities of $20.7 million and an increase in average interest-earning assets of $47.9 million offset by a decrease of 18 basis points in the average yield on interest-earning assets.

Other income decreased $39,000 to $1.1 million and $135,000 to $2.1 million for the second quarter and first six months of 2014, respectively, compared to the same periods in 2013.  The decrease in other income resulted from decreases in deposit account fees and cash surrender value of life insurance offset by increases in debit card commissions over the prior periods. 

Other expenses increased $81,000, or 1.5%, to $5.5 million for the second quarter of 2014, compared to $5.4 million for the second quarter of 2013.  Other expenses increased $57,000, or 0.5%, to $11.0 million for the six months ended June 30, 2014, compared to $10.9 million for the six months ended June 30, 2013.  For the second quarter of 2014 increases in salaries and benefits and REO expenses of $98,000 were offset by decreases in marketing, occupancy and equipment, FDIC insurance and other expenses of $79,000.  For the six months ended June 30, 2014 increases in salaries and benefits, occupancy and equipment, FDIC insurance and REO expenses of $189,000 were offset by decreases in marketing and other expenses of $132,000.

This press release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the PSLRA). Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and geopolitical conditions; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services and other factors that may be described in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission.  The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

 

SELECTED FINANCIAL CONDITION DATA (Unaudited)

June 30,

December 31,

2014

2013

% Change

(Dollars in thousands)

Total assets

$1,013,305

$1,020,048

(0.7)%

Cash and cash equivalents

65,739

87,619

(25.0)

Investment securities

119,899

128,701

(6.8)

Loans receivable, net

769,556

744,802

3.3

Deposits

770,831

780,648

(1.3)

FHLB advances

110,000

110,000

0.0

Subordinated debt

10,309

10,309

0.0

Stockholder's equity

108,217

106,223

1.9

 

SELECTED OPERATING DATA (Unaudited)

Three Months Ended June 30,

Six Months Ended

June 30,

2014

2013

% Change

2014

2013

% Change

(In thousands, except per share and per share amounts)

Interest and dividend income

$8,793

$8,698

1.1%

$17,665

$17,429

1.4%

Interest expense

1,908

2,168

(12.0)

3,819

4,420

(13.6)

     Net interest income

6,885

6,530

5.4

13,846

13,009

6.4

Provision for loan losses

50

192

(74.0)

138

394

(65.0)

Net interest income after

   provision for loan losses

 

6,835

 

6,338

 

7.8

 

13,708

 

12,615

 

8.7

Other income

1,086

1,125

(3.5)

2,092

2,227

(6.1)

Other expense

5,530

5,449

1.5

10,976

10,919

0.5

Income before taxes

2,391

2,014

18.7

4,824

3,923

23.0

Provision for income taxes

859

655

31.1

1,705

1,384

23.2

     Net Income

$1,532

$1,359

12.7

$3,119

$2,539

22.8

Earnings per share basic

$0.24

$0.21

$0.49

$0.39

Earnings per share diluted

$0.24

$0.21

$0.48

$0.38

Average shares outstanding basic

6,361,499

6,518,558

6,386,799

6,505,246

Average shares outstanding diluted

6,495,037

6,614,475

6,507,498

6,608,352

 

Three Months Ended

June 30, 2014

Three Months Ended

June 30, 2013

Average Balance

Yield/Cost

Average Balance

Yield/Cost

(Dollars in thousands)

Loans

$762,364

4.27%

$712,496

4.47%

Investment securities

121,709

2.14%

132,386

2.21%

   Total interest-earning assets

884,073

3.98%

844,882

4.12%

Interest-bearing deposits

690,693

0.36%

700,793

0.44%

Total borrowings

120,309

4.25%

125,464

4.43%

   Total interest-bearing liabilities

811,002

0.94%

826,257

1.05%

Interest rate spread

3.04%

3.07%

Net interest margin

3.12%

3.09%

 

Six Months Ended

June 30, 2014

Six Months Ended

June 30, 2013

Average Balance

Yield/Cost

Average Balance

Yield/Cost

(Dollars in thousands)

Loans

$756,318

4.32%

$707,932

4.52%

Investment securities

124,247

2.16%

124,756

2.28%

   Total interest-earning assets

880,565

4.01%

832,688

4.19%

Interest-bearing deposits

693,324

0.37%

708,834

0.46%

Total borrowings

120,309

4.23%

125,464

4.47%

   Total interest-bearing liabilities

813,633

0.94%

834,298

1.06%

Interest rate spread

3.07%

3.13%

Net interest margin

3.14%

3.12%

 

ASSET QUALITY DATA (Unaudited)

Six Months Ended

June 30, 2014

Year Ended

December 31, 2013

(Dollars in thousands)

Allowance for Loan Losses:

Allowance at beginning of period

$ 4,199

$ 3,997

Provision for loan losses

138

757

Charge-offs

(346)

(568)

Recoveries

76

13

Net charge-offs

(270)

(555)

Allowance at end of period

$ 4,067

$ 4,199

 

Allowance for loan losses as a percent of total loans

0.53%

0.56%

Allowance for loan losses as a percent of nonperforming loans

58.0%

82.8%

 

At June 30,   2014

At December 31, 2013

(Dollars in thousands)

Nonperforming Assets:

Nonaccrual loans:

   Real estate mortgage - residential

$ 4,545

$ 3,618

   Real estate mortgage - commercial

731

463

   Commercial business loans

501

-

   Consumer loans

533

674

        Total

6,310

4,755

Trouble debt restructurings - nonaccrual

699

316

        Total nonaccrual loans

7,009

5,071

Real estate owned

340

498

Total nonperforming assets

$ 7,349

$ 5,569

 

Nonperforming loans as a percent of total loans

0.91%

0.68%

Nonperforming assets as a percent of total assets

0.73%

0.55%

 

SELECTED FINANCIAL RATIOS (Unaudited)

Six Months Ended

June 30,

2014

2013

Selected Performance Ratios:

Return on average assets (1)

0.61

%

0.48

%

Return on average equity (1)

5.82

%

4.77

%

Interest rate spread (1)

3.07

%

3.13

%

Net interest margin (1)

3.14

%

3.12

%

Efficiency ratio

68.87

%

71.67

%

--(1) Annualized.

 

OCEAN SHORE HOLDING COMPANY - QUARTERLY DATA (Unaudited)

Q2

2014

Q1

2014

Q4

2013

Q3

2013

Q2

2013

(In thousands except per share amounts)

Income Statement Data:

Net interest income

$6,885

$6,960

$6,870

$6,581

$6,530

Provision for loan losses

50

88

177

186

192

Net interest income after

provision for loan losses

6,835

6,872

6,693

6,395

6,338

Other income

1,086

1,006

1,108

1,128

1,125

Other expense

5,530

5,446

5,550

5,503

5,449

Income before taxes

2,391

2,432

2,251

2,020

2,014

Provision for income taxes

859

845

765

696

655

Net income

$1,532

$1,587

$1,486

$1,324

$1,359

Share Data:

Earnings per share basic

$0.24

$0.25

$0.23

$0.20

$0.21

Earnings per share diluted

$0.24

$0.24

$0.22

$0.20

$0.21

Average shares outstanding basic

6,361,499

6,412,372

6,535,559

6,533,760

6,518,558

Average shares outstanding diluted

6,495,037

6,522,024

6,628,203

6,645,418

6,614,475

Total shares outstanding

6,759,423

6,757,072

6,903,352

6,964,952

6,970,746

Balance Sheet Data:

Total assets

$1,013,305

$1,023,032

$1,020,048

$1,043,497

$1,031,999

Investment securities

119,899

124,768

128,701

130,493

134,639

Loans receivable, net

769,556

757,639

744,802

727,618

718,925

Deposits

770,831

783,434

780,648

804,050

787,028

FHLB advances

110,000

110,000

110,000

110,000

110,000

Subordinated debt

10,309

10,309

10,309

10,309

15,464

Stockholders' equity

108,217

106,194

106,223

106,123

105,304

Asset Quality:

Non-performing assets

$7,349

$4,859

$5,569

$6,355

$5,576

Non-performing loans to total loans

0.91%

0.60%

0.68%

0.75%

0.65%

Non-performing assets to total assets

0.73%

0.47%

0.55%

0.61%

0.54%

Allowance for loan losses

$4,067

$4,214

$4,199

$4,211

$4,091

Allowance for loan losses to total loans

0.53%

0.56%

0.56%

0.58%

0.57%

Allowance for loan losses to non-performing loans

58.0%

93.3%

82.8%

77.3%

87.7%

 

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SOURCE Ocean Shore Holding Co.