Shore Bancshares Reports First Quarter 2011 Financial Results
EASTON, Md., April 26, 2011 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) reported a net loss of $1.1 million or $(0.13) per diluted common share for the first quarter of 2011, compared to net income of $850 thousand or $0.10 per diluted common share for the fourth quarter of 2010, and a net loss of $1.6 million or $(0.19) per diluted common share for the first quarter of 2010. The first quarter of 2011 included a provision for credit losses of $6.4 million, which was $2.0 million higher than the provision for the fourth quarter of 2010 and $1.2 million lower than the provision for the first quarter of 2010.
“We are not yet seeing meaningful improvement in general economic conditions across our Delmarva markets. The values of both commercial and residential real estate remain well below historical levels. As is the case with every banking organization operating in the market, real estate comprises a substantial portion of the underlying collateral for the loan portfolios, so declining property values are largely driving credit quality and our ongoing higher provisioning for possible credit losses,” said W. Moorhead Vermilye, chief executive officer. “Thus, the $6.4 million provision for the first quarter was the main factor affecting our disappointing financial performance. We are moving as aggressively as possible to resolve and work out of troubled credits and to eventually dispose of them, as evidenced by the recent quarterly trend in net chargeoffs. We remain confident that our reserve coverage of problem loans is adequate, and we believe our solid capital position should enable us to patiently outlast this cycle to resume our track record of consistent growth and profitability.”
The Company’s return on average assets for the first quarter of 2011 was (0.39)%, compared to 0.30% and (0.55)% for the quarters ended December 31, 2010 and March 31, 2010, respectively. The return on average stockholders’ equity was (3.59)% for the first quarter of 2011, compared to 2.73% for the fourth quarter of 2010 and (4.95)% for the first quarter of 2010.
Total assets were $1.131 billion at March 31, 2011, compared to $1.130 billion at the end of 2010. Total loans decreased 1.2% to $884.7 million and total deposits increased slightly to $986.5 million, when compared to December 31, 2010. Total stockholders’ equity decreased 1.3% from the end of 2010.
Review of Quarterly Financial Results
Net interest income was $9.9 million for the first quarter of 2011, compared to $10.9 million for the fourth quarter of 2010 and $10.4 million for the first quarter of 2010. A decline in the yields earned on average earning assets was primarily the reason for the decrease in net interest income when compared to the fourth quarter of 2010. The decrease in net interest income when compared to the first quarter of 2010 was primarily due to a decrease in the balances of and yields earned on average earning assets. The Company’s net interest margin was 3.79% for the first quarter of 2011, a decrease of 30 basis points (bp) when compared to the fourth quarter of 2010 and a decrease of 16 bp when compared to the first quarter of 2010.
As previously mentioned, the provision for credit losses was $6.4 million for the three months ended March 31, 2011. The comparable amounts were $4.4 million and $7.6 million for the three months ended December 31, 2010 and March 31, 2010, respectively. The ratio of the allowance for credit losses to period-end loans increased to 1.97% at March 31, 2011, compared to 1.59% at December 31, 2010 and 1.41% at March 31, 2010. Management believes that the provision for credit losses and the resulting allowance were adequate at March 31, 2011.
The level of provision for credit losses in the first quarter of 2011 was primarily in response to the overall increase in nonperforming assets. In addition, loan charge-offs remain at historically high levels and overall economic conditions have not improved. Net charge-offs were $3.1 million for the first quarter of 2011, compared to $3.3 million for the fourth quarter of 2010 and $5.7 million for the first quarter of 2010. The ratio of quarter-to-date annualized net charge-offs to average loans was 1.44% for the first quarter of 2011, compared to 1.46% for the fourth quarter of 2010 and 2.54% for the first quarter of 2010. The ratio of nonperforming assets to total assets was 4.73% at March 31, 2011. The comparable nonperforming asset ratio was 3.53% at December 31, 2010 and 2.87% at March 31, 2010.
Total noninterest income for the first quarter of 2011 increased $447 thousand when compared to the fourth quarter of 2010 but declined $487 thousand when compared to the first quarter of 2010. The increase when compared to the fourth quarter of 2010 was primarily a result of an increase in insurance agency commissions of $394 thousand due to contingency payments which are typically received in the first quarter of each year and are based on the prior year’s performance. The decline in noninterest income during the first quarter of 2011 when compared to the first quarter of 2010 was primarily due to a decline in insurance agency commissions of $379 thousand, resulting from lower contingency payments.
Total noninterest expense for the first quarter of 2011 increased $809 thousand when compared to the fourth quarter of 2010. Other employee benefits increased $260 thousand mainly due to higher payroll taxes, data processing increased $231 thousand primarily due to charges relating to the merger of The Felton Bank into CNB, and other noninterest expenses increased $158 thousand mainly due to higher expenses related to collection and other real estate owned activities when compared to the fourth quarter of 2010.
Total noninterest expense for the first quarter of 2011 decreased $430 when compared to the first quarter of 2010. Salaries and wages decreased $244 thousand mainly due to lower bonus and stock-based compensation expense, employee benefits decreased $128 thousand primarily due to lower profit sharing expense, and other noninterest expenses decreased $136 thousand mainly due to lower expenses related to other real estate owned activities. Partially offsetting these decreases when compared to the first quarter of 2010 was a $220 thousand increase in data processing mainly due to the charges relating to the merger of The Felton Bank into CNB.
Shore Bancshares Information
Shore Bancshares, Inc. is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland’s Eastern Shore. It is the parent company of two banks, The Talbot Bank of Easton, Maryland, and CNB; three insurance producer firms, The Avon-Dixon Agency, LLC, Elliott Wilson Insurance, LLC and Jack Martin and Associates, Inc; a wholesale insurance company, TSGIA, Inc; two insurance premium finance companies, Mubell Finance, LLC and ESFS, Inc; and a registered investment adviser firm, Wye Financial Services, LLC. Shore Bancshares, Inc. engages in the mortgage broker business under the name “Wye Mortgage Group” through a minority series investment in an unrelated Delaware limited liability company. Additional information is available at www.shbi.com.
Forward-Looking Statements
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not represent historical facts, but statements about management’s beliefs, plans and objectives. 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”.
Page 4 of 11 Shore Bancshares, Inc. | |||||||
For the Three Months Ended | |||||||
March 31, | |||||||
2011 | 2010 | Change | |||||
PROFITABILITY FOR THE PERIOD | |||||||
Net interest income | $ 9,862 | $ 10,395 | (5.1) | % | |||
Provision for credit losses | 6,390 | 7,617 | (16.1) | ||||
Noninterest income | 4,395 | 4,882 | (10.0) | ||||
Noninterest expense | 9,891 | 10,321 | (4.2) | ||||
Loss before income tax benefit | (2,024) | (2,661) | 23.9 | ||||
Income tax benefit | (941) | (1,099) | 14.4 | ||||
Net loss | $ (1,083) | $ (1,562) | 30.7 | ||||
Return on average assets | (0.39) | % | (0.55) | % | 16 | bp | |
Return on average equity | (3.59) | (4.95) | 136 | ||||
Return on average tangible equity (1) | (3.92) | (5.64) | 172 | ||||
Net interest margin | 3.79 | 3.95 | (16) | ||||
Efficiency ratio - GAAP | 69.38 | 67.56 | 182 | ||||
Efficiency ratio - Non-GAAP (1) | 68.85 | 66.71 | 214 | ||||
PER SHARE DATA | |||||||
Basic net loss per common share | $ (0.13) | $ (0.19) | 31.6 | % | |||
Diluted net loss per common share | (0.13) | (0.19) | 31.6 | ||||
Dividends paid per common share | 0.06 | 0.06 | - | ||||
Book value per common share at period end | 14.32 | 14.82 | (3.4) | ||||
Tangible book value per common share at period end (1) | 12.14 | 12.30 | (1.3) | ||||
Market value at period end | 9.75 | 14.25 | (31.6) | ||||
Market range: | |||||||
High | 11.11 | 14.75 | (24.7) | ||||
Low | 9.42 | 10.21 | (7.7) | ||||
PERIOD-END BALANCE SHEET DATA | |||||||
Loans | $ 884,715 | $ 905,194 | (2.3) | % | |||
Securities | 106,920 | 112,929 | (5.3) | ||||
Assets | 1,131,334 | 1,146,334 | (1.3) | ||||
Deposits | 986,486 | 990,750 | (0.4) | ||||
Stockholders' equity | 120,926 | 125,108 | (3.3) | ||||
AVERAGE BALANCE SHEET DATA | |||||||
Loans | $ 887,531 | $ 910,374 | (2.5) | % | |||
Securities | 106,235 | 110,252 | (3.6) | ||||
Earning assets | 1,062,164 | 1,075,425 | (1.2) | ||||
Assets | 1,131,259 | 1,145,607 | (1.3) | ||||
Deposits | 982,249 | 982,265 | - | ||||
Stockholders' equity | 122,466 | 128,081 | (4.4) | ||||
CAPITAL AND CREDIT QUALITY RATIOS | |||||||
Average equity to average assets | 10.83 | % | 11.18 | % | (35) | bp | |
Average tangible equity to average tangible assets (1) | 9.35 | 9.50 | (15) | ||||
Annualized net charge-offs to average loans | 1.44 | 2.54 | (110) | ||||
Allowance for credit losses to period-end loans | 1.97 | 1.41 | 56 | ||||
Nonperforming assets to total loans+other real estate owned | 6.02 | 3.62 | 240 | ||||
Nonperforming assets to total assets | 4.73 | 2.87 | 186 | ||||
Nonperforming assets+Loans 90 days past due | |||||||
and still accruing to total loans+other real estate owned | 6.64 | 3.93 | 271 | ||||
Nonperforming assets+Loans 90 days past due | |||||||
and still accruing to total assets | 5.22 | 3.11 | 211 | ||||
(1) See the reconciliation table on page 11 of 11. | |||||||
Page 5 of 11 Shore Bancshares, Inc. | |||||||||||
March 31, 2011 | March 31, 2011 | ||||||||||
March 31, | December 31, | March 31, | compared to | compared to | |||||||
2011 | 2010 | 2010 | December 31, 2010 | March 31, 2010 | |||||||
ASSETS | |||||||||||
Cash and due from banks | $ 19,074 | $ 19,680 | $ 14,351 | (3.1) | % | 32.9 | % | ||||
Interest-bearing deposits with other banks | 31,311 | 21,593 | 11,648 | 45.0 | 168.8 | ||||||
Federal funds sold | 39,597 | 36,691 | 46,121 | 7.9 | (14.1) | ||||||
Investments available for sale (at fair value) | 100,234 | 99,055 | 104,109 | 1.2 | (3.7) | ||||||
Investments held to maturity | 6,686 | 6,727 | 8,820 | (0.6) | (24.2) | ||||||
Loans | 884,715 | 895,404 | 905,194 | (1.2) | (2.3) | ||||||
Less: allowance for credit losses | (17,471) | (14,227) | (12,791) | 22.8 | 36.6 | ||||||
Loans, net | 867,244 | 881,177 | 892,403 | (1.6) | (2.8) | ||||||
Premises and equipment, net | 14,304 | 14,483 | 14,682 | (1.2) | (2.6) | ||||||
Goodwill | 13,678 | 13,678 | 15,954 | - | (14.3) | ||||||
Other intangible assets, net | 4,711 | 4,840 | 5,277 | (2.7) | (10.7) | ||||||
Other real estate and other assets owned, net | 4,802 | 3,702 | 2,403 | 29.7 | 99.8 | ||||||
Other assets | 29,693 | 28,685 | 30,566 | 3.5 | (2.9) | ||||||
Total assets | $ 1,131,334 | $ 1,130,311 | $ 1,146,334 | 0.1 | (1.3) | ||||||
LIABILITIES | |||||||||||
Noninterest-bearing deposits | $ 122,490 | $ 124,188 | $ 119,271 | (1.4) | 2.7 | ||||||
Interest-bearing deposits | 863,996 | 855,328 | 871,479 | 1.0 | (0.9) | ||||||
Total deposits | 986,486 | 979,516 | 990,750 | 0.7 | (0.4) | ||||||
Short-term borrowings | 12,078 | 16,041 | 14,001 | (24.7) | (13.7) | ||||||
Accrued expenses and other liabilities | 10,912 | 11,309 | 15,046 | (3.5) | (27.5) | ||||||
Long-term debt | 932 | 932 | 1,429 | - | (34.8) | ||||||
Total liabilities | 1,010,408 | 1,007,798 | 1,021,226 | 0.3 | (1.1) | ||||||
STOCKHOLDERS' EQUITY | |||||||||||
Common stock, par value $0.01; authorized | |||||||||||
35,000,000 shares | 84 | 84 | 84 | - | - | ||||||
Warrant | 1,543 | 1,543 | 1,543 | - | - | ||||||
Additional paid in capital | 30,290 | 30,242 | 29,988 | 0.2 | 1.0 | ||||||
Retained earnings | 90,868 | 92,458 | 94,083 | (1.7) | (3.4) | ||||||
Accumulated other comprehensive loss | (1,859) | (1,814) | (590) | (2.5) | (215.1) | ||||||
Total stockholders' equity | 120,926 | 122,513 | 125,108 | (1.3) | (3.3) | ||||||
Total liabilities and stockholders' equity | $ 1,131,334 | $ 1,130,311 | $ 1,146,334 | 0.1 | (1.3) | ||||||
Period-end common shares outstanding | 8,443 | 8,443 | 8,443 | - | - | ||||||
Book value per common share | $ 14.32 | $ 14.51 | $ 14.82 | (1.3) | (3.4) | ||||||
Page 6 of 11 Shore Bancshares, Inc. | ||||||
For the Three Months Ended | ||||||
March 31, | ||||||
2011 | 2010 | % Change | ||||
INTEREST INCOME | ||||||
Interest and fees on loans | $ 12,001 | $ 12,874 | (6.8) | % | ||
Interest and dividends on investment securities: | ||||||
Taxable | 657 | 882 | (25.5) | |||
Tax-exempt | 38 | 59 | (35.6) | |||
Interest on federal funds sold | 16 | 12 | 33.3 | |||
Interest on deposits with other banks | 6 | 1 | 500.0 | |||
Total interest income | 12,718 | 13,828 | (8.0) | |||
INTEREST EXPENSE | ||||||
Interest on deposits | 2,833 | 3,385 | (16.3) | |||
Interest on short-term borrowings | 13 | 32 | (59.4) | |||
Interest on long-term debt | 10 | 16 | (37.5) | |||
Total interest expense | 2,856 | 3,433 | (16.8) | |||
NET INTEREST INCOME | 9,862 | 10,395 | (5.1) | |||
Provision for credit losses | 6,390 | 7,617 | (16.1) | |||
NET INTEREST INCOME AFTER PROVISION | ||||||
FOR CREDIT LOSSES | 3,472 | 2,778 | 25.0 | |||
NONINTEREST INCOME | ||||||
Service charges on deposit accounts | 704 | 786 | (10.4) | |||
Trust and investment fee income | 376 | 416 | (9.6) | |||
Investment securities gains | 79 | - | - | |||
Insurance agency commissions | 2,510 | 2,889 | (13.1) | |||
Other noninterest income | 726 | 791 | (8.2) | |||
Total noninterest income | 4,395 | 4,882 | (10.0) | |||
NONINTEREST EXPENSE | ||||||
Salaries and wages | 4,246 | 4,490 | (5.4) | |||
Employee benefits | 1,153 | 1,281 | (10.0) | |||
Occupancy expense | 596 | 622 | (4.2) | |||
Furniture and equipment expense | 272 | 300 | (9.3) | |||
Data processing | 851 | 631 | 34.9 | |||
Directors' fees | 107 | 121 | (11.6) | |||
Amortization of intangible assets | 129 | 129 | - | |||
Insurance agency commissions expense | 375 | 428 | (12.4) | |||
FDIC insurance premium expense | 460 | 481 | (4.4) | |||
Other noninterest expenses | 1,702 | 1,838 | (7.4) | |||
Total noninterest expense | 9,891 | 10,321 | (4.2) | |||
Loss before income tax benefit | (2,024) | (2,661) | 23.9 | |||
Income tax benefit | (941) | (1,099) | 14.4 | |||
NET LOSS | $ (1,083) | $ (1,562) | 30.7 | |||
Weighted average shares outstanding - basic | 8,443 | 8,436 | 0.1 | |||
Weighted average shares outstanding - diluted | 8,443 | 8,436 | 0.1 | |||
Basic net loss per common share | $ (0.13) | $ (0.19) | 31.6 | |||
Diluted net loss per common share | (0.13) | (0.19) | 31.6 | |||
Dividends paid per common share | 0.06 | 0.06 | - | |||
Page 7 of 11 Shore Bancshares, Inc. | |||||||||
For the Three Months Ended | |||||||||
March 31, | |||||||||
2011 | 2010 | ||||||||
Average | Yield/ | Average | Yield/ | ||||||
balance | rate | balance | rate | ||||||
Earning assets | |||||||||
Loans | $ 887,531 | 5.50 | % | $ 910,374 | 5.75 | % | |||
Investment securities | |||||||||
Taxable | 101,625 | 2.62 | 103,488 | 3.45 | |||||
Tax-exempt | 4,610 | 5.08 | 6,764 | 5.39 | |||||
Federal funds sold | 46,813 | 0.14 | 46,553 | 0.11 | |||||
Interest-bearing deposits | 21,585 | 0.12 | 8,246 | 0.06 | |||||
Total earning assets | 1,062,164 | 4.88 | % | 1,075,425 | 5.24 | % | |||
Cash and due from banks | 19,316 | 14,422 | |||||||
Other assets | 65,426 | 67,914 | |||||||
Allowance for credit losses | (15,647) | (12,154) | |||||||
Total assets | $ 1,131,259 | $ 1,145,607 | |||||||
Interest-bearing liabilities | |||||||||
Demand deposits | $ 131,628 | 0.22 | % | $ 127,986 | 0.25 | % | |||
Money market and savings deposits | 260,841 | 0.93 | 256,818 | 0.68 | |||||
Certificates of deposit $100,000 or more | 259,179 | 1.70 | 259,538 | 2.24 | |||||
Other time deposits | 208,301 | 2.10 | 219,731 | 2.67 | |||||
Interest-bearing deposits | 859,949 | 1.34 | 864,073 | 1.59 | |||||
Short-term borrowings | 14,165 | 0.37 | 18,032 | 0.71 | |||||
Long-term debt | 932 | 4.56 | 1,429 | 4.45 | |||||
Total interest-bearing liabilities | 875,046 | 1.32 | % | 883,534 | 1.58 | % | |||
Noninterest-bearing deposits | 122,300 | 118,192 | |||||||
Accrued expenses and other liabilities | 11,447 | 15,800 | |||||||
Stockholders' equity | 122,466 | 128,081 | |||||||
Total liabilities and stockholders' equity | $ 1,131,259 | $ 1,145,607 | |||||||
Net interest spread | 3.56 | % | 3.66 | % | |||||
Net interest margin | 3.79 | % | 3.95 | % | |||||
Page 8 of 11 Shore Bancshares, Inc. | |||||||||||||||
1st quarter | 4th quarter | 3rd quarter | 2nd quarter | 1st quarter | 1Q 11 | 1Q 11 | |||||||||
2011 | 2010 | 2010 | 2010 | 2010 | compared to | compared to | |||||||||
(1Q 11) | (4Q 10) | (3Q 10) | (2Q 10) | (1Q 10) | 4Q 10 | 1Q 10 | |||||||||
PROFITABILITY FOR THE PERIOD | |||||||||||||||
Net interest income | $ 9,862 | $ 10,866 | $ 10,687 | $ 10,691 | $ 10,395 | (9.2) | % | (5.1) | % | ||||||
Provision for credit losses | 6,390 | 4,392 | 4,193 | 4,917 | 7,617 | 45.5 | (16.1) | ||||||||
Noninterest income | 4,395 | 3,948 | 4,643 | 4,568 | 4,882 | 11.3 | (10.0) | ||||||||
Noninterest expense | 9,891 | 9,082 | 12,629 | 9,688 | 10,321 | 8.9 | (4.2) | ||||||||
(Loss) income before income taxes | (2,024) | 1,340 | (1,492) | 654 | (2,661) | (251.0) | 23.9 | ||||||||
Income tax (benefit) expense | (941) | 490 | (92) | 209 | (1,099) | (292.0) | 14.4 | ||||||||
Net (loss) income | $ (1,083) | $ 850 | $ (1,400) | $ 445 | $ (1,562) | (227.4) | 30.7 | ||||||||
Return on average assets | (0.39) | % | 0.30 | % | (0.49) | % | 0.16 | % | (0.55) | % | (69) | bp | 16 | bp | |
Return on average equity | (3.59) | 2.73 | (4.43) | 1.42 | (4.95) | (632) | 136 | ||||||||
Return on average tangible equity (1) | (3.92) | 3.49 | (1.56) | 2.01 | (5.64) | (741) | 172 | ||||||||
Net interest margin | 3.79 | 4.09 | 4.00 | 4.03 | 3.95 | (30) | (16) | ||||||||
Efficiency ratio - GAAP | 69.38 | 61.31 | 82.38 | 63.49 | 67.56 | 807 | 182 | ||||||||
Efficiency ratio - non-GAAP (1) | 68.85 | 60.44 | 62.56 | 62.64 | 66.71 | 841 | 214 | ||||||||
PER SHARE DATA | |||||||||||||||
Basic net (loss) income per common share | $ (0.13) | $ 0.10 | $ (0.17) | $ 0.05 | $ (0.19) | (230.0) | % | 31.6 | % | ||||||
Diluted net (loss) income per common share | (0.13) | 0.10 | (0.17) | 0.05 | (0.19) | (230.0) | 31.6 | ||||||||
Dividends paid per common share | 0.06 | 0.06 | 0.06 | 0.06 | 0.06 | - | - | ||||||||
Book value per common share at period end | 14.32 | 14.51 | 14.49 | 14.77 | 14.82 | (1.3) | (3.4) | ||||||||
Tangible book value per common share at period end (1) | 12.14 | 12.32 | 12.37 | 12.27 | 12.30 | (1.5) | (1.3) | ||||||||
Market value at period end | 9.75 | 10.54 | 9.48 | 11.91 | 14.25 | (7.5) | (31.6) | ||||||||
Market range: | |||||||||||||||
High | 11.11 | 10.73 | 12.10 | 14.80 | 14.75 | 3.5 | (24.7) | ||||||||
Low | 9.42 | 9.25 | 9.20 | 11.75 | 10.21 | 1.8 | (7.7) | ||||||||
PERIOD-END BALANCE SHEET DATA | |||||||||||||||
Loans | $ 884,715 | $ 895,404 | $ 906,490 | $ 905,477 | $ 905,194 | (1.2) | % | (2.3) | % | ||||||
Securities | 106,920 | 105,782 | 104,075 | 106,556 | 112,929 | 1.1 | (5.3) | ||||||||
Assets | 1,131,334 | 1,130,311 | 1,134,503 | 1,129,196 | 1,146,334 | 0.1 | (1.3) | ||||||||
Deposits | 986,486 | 979,516 | 982,428 | 971,608 | 990,750 | 0.7 | (0.4) | ||||||||
Stockholders' equity | 120,926 | 122,513 | 122,355 | 124,666 | 125,108 | (1.3) | (3.3) | ||||||||
AVERAGE BALANCE SHEET DATA | |||||||||||||||
Loans | $ 887,531 | $ 903,075 | $ 904,293 | $ 909,295 | $ 910,374 | (1.7) | % | (2.5) | % | ||||||
Securities | 106,235 | 103,600 | 105,466 | 109,744 | 110,252 | 2.5 | (3.6) | ||||||||
Earning assets | 1,062,164 | 1,060,645 | 1,066,063 | 1,071,115 | 1,075,425 | 0.1 | (1.2) | ||||||||
Assets | 1,131,259 | 1,128,517 | 1,139,043 | 1,134,662 | 1,145,607 | 0.2 | (1.3) | ||||||||
Deposits | 982,249 | 978,444 | 984,018 | 976,749 | 982,265 | 0.4 | - | ||||||||
Stockholders' equity | 122,466 | 123,341 | 125,308 | 125,670 | 128,081 | (0.7) | (4.4) | ||||||||
CAPITAL AND CREDIT QUALITY RATIOS | |||||||||||||||
Average equity to average assets | 10.83 | % | 10.93 | % | 11.00 | % | 11.08 | % | 11.18 | % | (10) | bp | (35) | bp | |
Average tangible equity to average tangible assets (1) | 9.35 | 9.50 | 9.33 | 9.38 | 9.50 | (15) | (15) | ||||||||
Annualized net charge-offs to average loans | 1.44 | 1.46 | 1.90 | 1.95 | 2.54 | (2) | (110) | ||||||||
Allowance for credit losses to period-end loans | 1.97 | 1.59 | 1.45 | 1.47 | 1.41 | 38 | 56 | ||||||||
Nonperforming assets to total loans+other real estate owned | 6.02 | 4.44 | 4.22 | 4.29 | 3.62 | 158 | 240 | ||||||||
Nonperforming assets to total assets | 4.73 | 3.53 | 3.38 | 3.45 | 2.87 | 120 | 186 | ||||||||
Nonperforming assets+Loans 90 days past due | |||||||||||||||
and still accruing to total loans+other real estate owned | 6.64 | 4.97 | 4.58 | 4.81 | 3.93 | 167 | 271 | ||||||||
Nonperforming assets+Loans 90 days past due | |||||||||||||||
and still accruing to total assets | 5.22 | 3.95 | 3.67 | 3.86 | 3.11 | 127 | 211 | ||||||||
(1) See the reconciliation table on page 11 of 11. | |||||||||||||||
Page 9 of 11 Shore Bancshares, Inc. | |||||||||||||||
1Q 11 | 1Q 11 | ||||||||||||||
compared to | compared to | ||||||||||||||
1Q 11 | 4Q 10 | 3Q 10 | 2Q 10 | 1Q 10 | 4Q 10 | 1Q 10 | |||||||||
INTEREST INCOME | |||||||||||||||
Interest and fees on loans | $ 12,001 | $ 12,958 | $ 13,083 | $ 13,047 | $ 12,874 | (7.4) | % | (6.8) | % | ||||||
Interest and dividends on investment securities: | |||||||||||||||
Taxable | 657 | 804 | 677 | 846 | 882 | (18.3) | (25.5) | ||||||||
Tax-exempt | 38 | 47 | 50 | 56 | 59 | (19.1) | (35.6) | ||||||||
Interest on federal funds sold | 16 | 13 | 21 | 14 | 12 | 23.1 | 33.3 | ||||||||
Interest on deposits with other banks | 6 | 7 | 6 | 4 | 1 | (14.3) | 500.0 | ||||||||
Total interest income | 12,718 | 13,829 | 13,837 | 13,967 | 13,828 | (8.0) | (8.0) | ||||||||
INTEREST EXPENSE | |||||||||||||||
Interest on deposits | 2,833 | 2,937 | 3,117 | 3,242 | 3,385 | (3.5) | (16.3) | ||||||||
Interest on short-term borrowings | 13 | 15 | 17 | 19 | 32 | (13.3) | (59.4) | ||||||||
Interest on long-term debt | 10 | 11 | 16 | 15 | 16 | (9.1) | (37.5) | ||||||||
Total interest expense | 2,856 | 2,963 | 3,150 | 3,276 | 3,433 | (3.6) | (16.8) | ||||||||
NET INTEREST INCOME | 9,862 | 10,866 | 10,687 | 10,691 | 10,395 | (9.2) | (5.1) | ||||||||
Provision for credit losses | 6,390 | 4,392 | 4,193 | 4,917 | 7,617 | 45.5 | (16.1) | ||||||||
NET INTEREST INCOME AFTER PROVISION | |||||||||||||||
FOR CREDIT LOSSES | 3,472 | 6,474 | 6,494 | 5,774 | 2,778 | (46.4) | 25.0 | ||||||||
NONINTEREST INCOME | |||||||||||||||
Service charges on deposit accounts | 704 | 799 | 841 | 831 | 786 | (11.9) | (10.4) | ||||||||
Trust and investment fee income | 376 | 358 | 357 | 372 | 416 | 5.0 | (9.6) | ||||||||
Investment securities gains | 79 | - | - | - | - | - | - | ||||||||
Insurance agency commissions | 2,510 | 2,116 | 2,513 | 2,595 | 2,889 | 18.6 | (13.1) | ||||||||
Other noninterest income | 726 | 675 | 932 | 770 | 791 | 7.6 | (8.2) | ||||||||
Total noninterest income | 4,395 | 3,948 | 4,643 | 4,568 | 4,882 | 11.3 | (10.0) | ||||||||
NONINTEREST EXPENSE | |||||||||||||||
Salaries and wages | 4,246 | 4,220 | 4,404 | 4,363 | 4,490 | 0.6 | (5.4) | ||||||||
Employee benefits | 1,153 | 893 | 897 | 758 | 1,281 | 29.1 | (10.0) | ||||||||
Occupancy expense | 596 | 562 | 547 | 597 | 622 | 6.0 | (4.2) | ||||||||
Furniture and equipment expense | 272 | 262 | 325 | 313 | 300 | 3.8 | (9.3) | ||||||||
Data processing | 851 | 620 | 696 | 660 | 631 | 37.3 | 34.9 | ||||||||
Directors' fees | 107 | 68 | 118 | 105 | 121 | 57.4 | (11.6) | ||||||||
Goodwill and other intangible assets impairment | - | - | 3,051 | - | - | - | - | ||||||||
Amortization of intangible assets | 129 | 129 | 128 | 129 | 129 | - | - | ||||||||
Insurance agency commissions expense | 375 | 339 | 338 | 464 | 428 | 10.6 | (12.4) | ||||||||
FDIC insurance premium expense | 460 | 445 | 448 | 460 | 481 | 3.4 | (4.4) | ||||||||
Other noninterest expenses | 1,702 | 1,544 | 1,677 | 1,839 | 1,838 | 10.2 | (7.4) | ||||||||
Total noninterest expense | 9,891 | 9,082 | 12,629 | 9,688 | 10,321 | 8.9 | (4.2) | ||||||||
(Loss) income before income taxes | (2,024) | 1,340 | (1,492) | 654 | (2,661) | (251.0) | 23.9 | ||||||||
Income tax (benefit) expense | (941) | 490 | (92) | 209 | (1,099) | (292.0) | 14.4 | ||||||||
NET (LOSS) INCOME | $ (1,083) | $ 850 | $ (1,400) | $ 445 | $ (1,562) | (227.4) | 30.7 | ||||||||
Weighted average shares outstanding - basic | 8,443 | 8,443 | 8,443 | 8,443 | 8,436 | - | 0.1 | ||||||||
Weighted average shares outstanding - diluted | 8,443 | 8,443 | 8,443 | 8,443 | 8,436 | - | 0.1 | ||||||||
Basic net (loss) income per common share | $ (0.13) | $ 0.10 | $ (0.17) | $ 0.05 | $ (0.19) | (230.0) | 31.6 | ||||||||
Diluted net (loss) income per common share | (0.13) | 0.10 | (0.17) | 0.05 | (0.19) | (230.0) | 31.6 | ||||||||
Dividends paid per common share | 0.06 | 0.06 | 0.06 | 0.06 | 0.06 | - | - | ||||||||
Page 10 of 11 Shore Bancshares, Inc. | |||||||||||||||||||||||||
Average balance | |||||||||||||||||||||||||
1Q 11 | 1Q 11 | ||||||||||||||||||||||||
compared to | compared to | ||||||||||||||||||||||||
1Q 11 | 4Q 10 | 3Q 10 | 2Q 10 | 1Q 10 | 4Q 10 | 1Q 10 | |||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | ||||||||||||||||
balance | rate | balance | rate | balance | rate | balance | rate | balance | rate | ||||||||||||||||
Earning assets | |||||||||||||||||||||||||
Loans | $ 887,531 | 5.50 | % | $ 903,075 | 5.71 | % | $ 904,293 | 5.76 | % | $ 909,295 | 5.77 | % | $ 910,374 | 5.75 | % | (1.7) | % | (2.5) | % | ||||||
Investment securities | |||||||||||||||||||||||||
Taxable | 101,625 | 2.62 | 98,378 | 3.24 | 99,572 | 2.70 | 103,284 | 3.29 | 103,488 | 3.45 | 3.3 | (1.8) | |||||||||||||
Tax-exempt | 4,610 | 5.08 | 5,222 | 5.40 | 5,894 | 5.16 | 6,460 | 5.30 | 6,764 | 5.39 | (11.7) | (31.9) | |||||||||||||
Federal funds sold | 46,813 | 0.14 | 34,018 | 0.16 | 40,638 | 0.20 | 38,001 | 0.15 | 46,553 | 0.11 | 37.6 | 0.6 | |||||||||||||
Interest-bearing deposits | 21,585 | 0.12 | 19,952 | 0.12 | 15,666 | 0.15 | 14,075 | 0.12 | 8,246 | 0.06 | 8.2 | 161.8 | |||||||||||||
Total earning assets | 1,062,164 | 4.88 | % | 1,060,645 | 5.20 | % | 1,066,063 | 5.18 | % | 1,071,115 | 5.26 | % | 1,075,425 | 5.24 | % | 0.1 | (1.2) | ||||||||
Cash and due from banks | 19,316 | 19,867 | 21,865 | 9,997 | 14,422 | (2.8) | 33.9 | ||||||||||||||||||
Other assets | 65,426 | 62,305 | 65,081 | 67,860 | 67,914 | 5.0 | (3.7) | ||||||||||||||||||
Allowance for credit losses | (15,647) | (14,300) | (13,966) | (14,310) | (12,154) | 9.4 | 28.7 | ||||||||||||||||||
Total assets | $ 1,131,259 | $ 1,128,517 | $ 1,139,043 | $ 1,134,662 | $ 1,145,607 | 0.2 | (1.3) | ||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||||||
Demand deposits | $ 131,628 | 0.22 | % | $ 128,592 | 0.22 | % | $ 132,023 | 0.24 | % | $ 132,563 | 0.25 | % | $ 127,986 | 0.25 | % | 2.4 | 2.9 | ||||||||
Money market and savings deposits | 260,841 | 0.93 | 258,713 | 0.84 | 259,511 | 0.81 | 259,273 | 0.72 | 256,818 | 0.68 | 0.8 | 1.6 | |||||||||||||
Certificates of deposit $100,000 or more | 259,179 | 1.70 | 256,167 | 1.77 | 258,542 | 1.91 | 251,340 | 2.09 | 259,538 | 2.24 | 1.2 | (0.1) | |||||||||||||
Other time deposits | 208,301 | 2.10 | 208,808 | 2.23 | 212,098 | 2.37 | 215,987 | 2.56 | 219,731 | 2.67 | (0.2) | (5.2) | |||||||||||||
Interest-bearing deposits | 859,949 | 1.34 | 852,280 | 1.37 | 862,174 | 1.44 | 859,163 | 1.51 | 864,073 | 1.59 | 0.9 | (0.5) | |||||||||||||
Short-term borrowings | 14,165 | 0.37 | 15,381 | 0.39 | 16,092 | 0.38 | 15,771 | 0.48 | 18,032 | 0.71 | (7.9) | (21.5) | |||||||||||||
Long-term debt | 932 | 4.56 | 932 | 4.46 | 1,429 | 4.36 | 1,429 | 4.40 | 1,429 | 4.45 | - | (34.8) | |||||||||||||
Total interest-bearing liabilities | 875,046 | 1.32 | % | 868,593 | 1.35 | % | 879,695 | 1.42 | % | 876,363 | 1.50 | % | 883,534 | 1.58 | % | 0.7 | (1.0) | ||||||||
Noninterest-bearing deposits | 122,300 | 126,164 | 121,844 | 117,586 | 118,192 | (3.1) | 3.5 | ||||||||||||||||||
Accrued expenses and other liabilities | 11,447 | 10,419 | 12,196 | 15,043 | 15,800 | 9.9 | (27.6) | ||||||||||||||||||
Stockholders' equity | 122,466 | 123,341 | 125,308 | 125,670 | 128,081 | (0.7) | (4.4) | ||||||||||||||||||
Total liabilities and stockholders' equity | $ 1,131,259 | $ 1,128,517 | $ 1,139,043 | $ 1,134,662 | $ 1,145,607 | 0.2 | (1.3) | ||||||||||||||||||
Net interest spread | 3.56 | % | 3.85 | % | 3.76 | % | 3.76 | % | 3.66 | % | |||||||||||||||
Net interest margin | 3.79 | % | 4.09 | % | 4.00 | % | 4.03 | % | 3.95 | % | |||||||||||||||
Page 11 of 11 Shore Bancshares, Inc. | |||||||||||
1Q 11 | 4Q 10 | 3Q 10 | 2Q 10 | 1Q 10 | |||||||
The following reconciles return on average equity and return on | |||||||||||
average tangible equity (Note 1): | |||||||||||
Net (loss) income | $ (1,083) | $ 850 | $ (1,400) | $ 445 | $ (1,562) | ||||||
Net (loss) income - annualized (A) | $ (4,392) | $ 3,372 | $ (5,554) | $ 1,785 | $ (6,335) | ||||||
Net (loss) income, excluding net amortization and impairment charges of intangible assets | $ (1,005) | $ 928 | $ (409) | $ 523 | $ (1,484) | ||||||
Net (loss) income, excluding net amortization and impairment charges of intangible assets - annualized (B) | $ (4,076) | $ 3,682 | $ (1,623) | $ 2,098 | $ (6,018) | ||||||
Average stockholders' equity (C) | $ 122,466 | $ 123,341 | $ 125,308 | $ 125,670 | $ 128,081 | ||||||
Less: Average goodwill and other intangible assets | (18,465) | (17,877) | (21,016) | (21,178) | (21,309) | ||||||
Average tangible equity (D) | $ 104,001 | $ 105,464 | $ 104,292 | $ 104,492 | $ 106,772 | ||||||
Return on average equity (GAAP) (A)/(C) | (3.59) | % | 2.73 | % | (4.43) | % | 1.42 | % | (4.95) | % | |
Return on average tangible equity (Non-GAAP) (B)/(D) | (3.92) | % | 3.49 | % | (1.56) | % | 2.01 | % | (5.64) | % | |
The following reconciles GAAP efficiency ratio and non-GAAP | |||||||||||
efficiency ratio (Note 2): | |||||||||||
Noninterest expense (E) | $ 9,891 | $ 9,082 | $ 12,629 | $ 9,688 | $ 10,321 | ||||||
Less: Amortization of intangible assets | (129) | (129) | (128) | (129) | (129) | ||||||
Impairment charges | - | - | (3,051) | - | - | ||||||
Adjusted noninterest expense (F) | $ 9,762 | $ 8,953 | $ 9,450 | $ 9,559 | $ 10,192 | ||||||
Net interest income (G) | $ 9,862 | $ 10,866 | $ 10,687 | $ 10,691 | $ 10,395 | ||||||
Noninterest income (H) | $ 4,395 | $ 3,948 | $ 4,643 | $ 4,568 | $ 4,882 | ||||||
Less: Investment securities (gains)/losses | (79) | - | - | - | - | ||||||
Other nonrecurring (gains)/losses | - | - | (224) | - | - | ||||||
Adjusted noninterest income (I) | $ 4,316 | $ 3,948 | $ 4,419 | $ 4,568 | $ 4,882 | ||||||
Efficiency ratio (GAAP) (E)/(G)+(H) | 69.38 | % | 61.31 | % | 82.38 | % | 63.49 | % | 67.56 | % | |
Efficiency ratio (Non-GAAP) (F)/(G)+(I) | 68.85 | % | 60.44 | % | 62.56 | % | 62.64 | % | 66.71 | % | |
The following reconciles book value per common share and tangible | |||||||||||
book value per common share (Note 1): | |||||||||||
Stockholders' equity (J) | $ 120,926 | $ 122,513 | $ 122,355 | $ 124,666 | $ 125,108 | ||||||
Less: Goodwill and other intangible assets | (18,389) | (18,518) | (17,923) | (21,102) | (21,231) | ||||||
Tangible equity (K) | $ 102,537 | $ 103,995 | $ 104,432 | $ 103,564 | $ 103,877 | ||||||
Shares outstanding (L) | 8,443 | 8,443 | 8,443 | 8,443 | 8,443 | ||||||
Book value per common share (GAAP) (J)/(L) | $ 14.32 | $ 14.51 | $ 14.49 | $ 14.77 | $ 14.82 | ||||||
Tangible book value per common share (Non-GAAP) (K)/(L) | $ 12.14 | $ 12.32 | $ 12.37 | $ 12.27 | $ 12.30 | ||||||
The following reconciles average equity to average assets and | |||||||||||
average tangible equity to average tangible assets (Note 1): | |||||||||||
Average stockholders' equity (M) | $ 122,466 | $ 123,341 | $ 125,308 | $ 125,670 | $ 128,081 | ||||||
Less: Average goodwill and other intangible assets | (18,465) | (17,877) | (21,016) | (21,178) | (21,309) | ||||||
Average tangible equity (N) | $ 104,001 | $ 105,464 | $ 104,292 | $ 104,492 | $ 106,772 | ||||||
Average assets (O) | $ 1,131,259 | $ 1,128,517 | $ 1,139,043 | $ 1,134,662 | $ 1,145,607 | ||||||
Less: Average goodwill and other intangible assets | (18,465) | (17,877) | (21,016) | (21,178) | (21,309) | ||||||
Average tangible assets (P) | $ 1,112,794 | $ 1,110,640 | $ 1,118,027 | $ 1,113,484 | $ 1,124,298 | ||||||
Average equity/average assets (GAAP) (M)/(O) | 10.83 | % | 10.93 | % | 11.00 | % | 11.08 | % | 11.18 | % | |
Average tangible equity/average tangible assets (Non-GAAP) (N)/(P) | 9.35 | % | 9.50 | % | 9.33 | % | 9.38 | % | 9.50 | % | |
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 in controlling cash-based operating activities. | |||||||||||
SOURCE Shore Bancshares, Inc.
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