Shore Bancshares Reports Third Quarter and Nine-Month Results
EASTON, Md., Oct. 26 /PRNewswire-FirstCall/ -- Shore Bancshares, Inc. (Nasdaq: SHBI) reported a net loss of $1.4 million or $(0.17) per diluted common share for the third quarter of 2010, compared to net income of $445 thousand or $0.05 per diluted common share for the second quarter of 2010, and net income of $1.951 million or $0.23 per diluted common share for the third quarter of 2009. During the third quarter of 2010, the Company recorded goodwill impairment charges of $3.0 million and other intangible assets impairment charges of $51 thousand. The provision for credit losses was $4.2 million in the third quarter of 2010, which was $724 thousand lower than the provision for the second quarter of 2010 but $2.5 million higher than the provision for the third quarter of 2009.
The Company reported a net loss of $2.5 million or $(0.30) per diluted common share for the first nine months of 2010, compared to net income of $4.2 million or $0.50 per diluted common share for the first nine months of 2009. The 2010 year-to-date net loss included the previously mentioned goodwill and other intangible assets impairment charges of $3.051 million. The provision for credit losses was $16.7 million and $5.3 million for the first nine months of 2010 and 2009, respectively. For the first nine months of 2009, net income available to common stockholders was negatively impacted by $1.9 million in dividends and discount accretion associated with the sale and subsequent repurchase of preferred stock under the U.S. Department of the Treasury’s Troubled Asset Relief Program Capital Purchase Program.
“Our underlying operating performance for the quarter was decent considering the ongoing tough business environment, and would have generated a profit had it not been for the offsetting impact of one-time goodwill impairment charges,” said W. Moorhead Vermilye, president and chief executive officer. “Half of the goodwill impairment charges related to our acquisition in 2004 of The Felton Bank and the other half to our purchase in 2007 of TSGIA, Inc., a wholesale insurance agency. It is important to note that the charge for goodwill impairment is a non-cash accounting entry that does not affect our regulatory capital levels. Further, the goodwill impairment charges were only for a portion of the total goodwill in those entities and 18.8% of the goodwill of the overall Company.”
The Company’s return on average assets for the third quarter of 2010 was (0.49)%, compared to 0.16% and 0.66% for the quarters ended June 30, 2010 and September 30, 2009, respectively. The return on average stockholders’ equity was (4.43)% for the third quarter of 2010, compared to 1.42% for the second quarter of 2010 and 6.03% for the third quarter of 2009.
The Company’s return on average assets for the first nine months of 2010 was (0.30)%, compared to 0.50% for the first nine months of 2009. The return on average stockholders’ equity was (2.66)% and 4.08% for the first nine months of 2010 and 2009, respectively.
Total assets were $1.135 billion at September 30, 2010, compared to $1.157 billion at the end of 2009, a decrease of 1.9%. Total loans were $906.5 million, a decrease of 1.1%, and total deposits were $982.4 million, a decrease of 0.9%, when compared to December 31, 2009. At September 30, 2010, total stockholders’ equity was $122.4 million, a decrease of 4.3% from $127.8 million at the end of 2009.
Review of Quarterly Financial Results
Net interest income for the third quarter of 2010 was $10.7 million, relatively unchanged from the second quarter of 2010 and an increase of 2.5% from the same period last year. The increase in net interest income when compared to the third quarter of 2009 was primarily due to a decrease in the balances and rates paid on interest bearing liabilities that more than offset the decline in the balances and yields on earning assets. The Company’s net interest margin was 4.00% for the third quarter of 2010, slightly lower than the 4.03% for the second quarter of 2010 and 21 basis points higher than the 3.79% for the third quarter of 2009.
As previously mentioned, the provision for credit losses was $4.2 million for the three months ended September 30, 2010, compared to $4.9 million and $1.7 million for the three months ended June 30, 2010 and September 30, 2009, respectively. The ratio of the allowance for credit losses to period-end loans was 1.45% at September 30, 2010, compared to 1.47% at June 30, 2010 and 1.17% at September 30, 2009. Management believes that the provision for credit losses and the resulting allowance were adequate at September 30, 2010.
The continued historically large level of provision for credit losses was primarily in response to the overall increase in nonperforming assets and loan charge-offs, as well as overall economic conditions. Net charge-offs were $4.3 million for the third quarter of 2010, $4.4 million for the second quarter of 2010 and $1.8 million for the third quarter of 2009. The ratio of quarter-to-date annualized net charge-offs to average loans was 1.90% for the third quarter of 2010, 1.95% for the second quarter of 2010 and 0.76% for the third quarter of 2009. The ratio of nonperforming assets to total assets was 3.38% at September 30, 2010. The comparable nonperforming asset ratio was 3.45% at June 30, 2010, and 1.51% at September 30, 2009.
Total noninterest income for the third quarter of 2010 increased $75 thousand when compared to the second quarter of 2010 and decreased $76 thousand when compared to the third quarter of 2009. The increase when compared to the second quarter of 2010 was primarily due to a $224 thousand gain relating to the surrender of directors’ life insurance policies which was partially offset by decreases in mortgage broker fees and insurance agency commissions. The decrease when compared to the third quarter of 2009 was mainly due to decreases in mortgage broker fees and insurance agency commissions which were partially offset by the $224 thousand gain from the life insurance policies.
Total noninterest expense for the third quarter of 2010 increased $2.9 million when compared to the second quarter of 2010 mainly due to goodwill impairment charges of $3.0 million and other intangible assets impairment charges of $51 thousand. The increase in noninterest expense was slightly offset by lower expenses related to other real estate owned activities. When compared to the third quarter of 2009, total noninterest expense for the third quarter of 2010 increased $2.3 million primarily due to the goodwill and other intangible assets impairment charges. The increase in noninterest expense was somewhat offset by lower expenses accrued for bonus and profit sharing plans. Excluding the goodwill and other intangible assets impairment charges, total noninterest expense decreased 1.1% and 7.0% when compared to the second quarter of 2010 and the third quarter of 2009, respectively.
Review of Nine-Month Financial Results
Net interest income for the first nine months of 2010 was $31.8 million, an increase of 3.9% when compared to the first nine months of 2009. The increase was primarily due to higher average balances of earning assets and lower rates paid on interest bearing liabilities offsetting the decline in yields on earning assets. The net interest margin increased from 3.90% for the first nine months of 2009 to 3.99% for the first nine months of 2010.
The provisions for credit losses for the nine months ended September 30, 2010 and 2009 were $16.7 million and $5.3 million, respectively. Net charge-offs were $14.5 million and $3.9 million for the nine months ended September 30, 2010 and 2009, respectively. The ratio of year-to-date annualized net charge-offs to average loans was 2.13% for the first nine months of 2010 and 0.57% for the first nine months of 2009.
Total noninterest income for the nine months ended September 30, 2010 declined $1.3 million when compared to the same period in 2009. The decrease in noninterest income was mainly due to a decline in mortgage broker fees and insurance agency commissions.
Total noninterest expense for the nine months ended September 30, 2010 increased $1.8 million when compared to the same period in 2009. The increase in noninterest expense was primarily due to the goodwill and other intangible assets impairment charges and higher expenses related to collection and other real estate owned activities which were partially offset by lower expenses accrued for bonus and profit sharing plans, lower insurance agency commissions expense and lower FDIC insurance premium expense. Excluding the goodwill and other intangible assets impairment charges, total noninterest expense decreased 4.2% when compared to the first nine months of 2009.
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 three banks, The Talbot Bank of Easton, Maryland, CNB, and The Felton Bank; 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.
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”.
Shore Bancshares, Inc. | Page 4 of 10 | |||||||||||
Financial Highlights | ||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||
PROFITABILITY FOR THE PERIOD | ||||||||||||
Net interest income | $ 10,687 | $ 10,428 | 2.5% | $ 31,773 | $ 30,572 | 3.9% | ||||||
Provision for credit losses | 4,193 | 1,702 | 146.4 | 16,727 | 5,318 | 214.5 | ||||||
Noninterest income | 4,643 | 4,719 | (1.6) | 14,093 | 15,416 | (8.6) | ||||||
Noninterest expense | 12,629 | 10,297 | 22.6 | 32,638 | 30,873 | 5.7 | ||||||
(Loss) income before income taxes | (1,492) | 3,148 | (147.4) | (3,499) | 9,797 | (135.7) | ||||||
Income tax (benefit) expense | (92) | 1,197 | (107.7) | (982) | 3,740 | (126.3) | ||||||
Net (loss) income | (1,400) | 1,951 | (171.8) | (2,517) | 6,057 | (141.6) | ||||||
Preferred stock dividends and discount accretion | - | - | - | - | 1,876 | (100.0) | ||||||
Net (loss) income available to common shareholders | $ (1,400) | $ 1,951 | (171.8) | $ (2,517) | $ 4,181 | (160.2) | ||||||
Return on average assets (1) | (0.49) % | 0.66% | (174.2) % | (0.30) % | 0.50% | (160.0) % | ||||||
Return on average equity (1) | (4.43) | 6.03 | (173.5) | (2.66) | 4.08 | (165.2) | ||||||
Net interest margin | 4.00 | 3.79 | 5.5 | 3.99 | 3.90 | 2.3 | ||||||
Efficiency ratio - GAAP based | 82.38 | 67.98 | 21.2 | 71.16 | 67.13 | 6.0 | ||||||
PER SHARE DATA | ||||||||||||
Basic net (loss) income per share | $ (0.17) | $ 0.23 | (173.9) % | $ (0.30) | $ 0.72 | (141.7) % | ||||||
Basic net (loss) income per common share | (0.17) | 0.23 | (173.9) | (0.30) | 0.50 | (160.0) | ||||||
Diluted net (loss) income per share | (0.17) | 0.23 | (173.9) | (0.30) | 0.72 | (141.7) | ||||||
Diluted net (loss) income per common share | (0.17) | 0.23 | (173.9) | (0.30) | 0.50 | (160.0) | ||||||
Dividends paid per common share | 0.06 | 0.16 | (62.5) | 0.18 | 0.48 | (62.5) | ||||||
Book value per common share at period end | 14.49 | 15.23 | (4.9) | |||||||||
Tangible book value per common share at period end | 12.37 | 12.68 | (2.4) | |||||||||
Market value at period end | 9.48 | 16.73 | (43.3) | |||||||||
Market range: | ||||||||||||
High | 12.10 | 20.72 | (41.6) | 14.80 | 24.43 | (39.4) | ||||||
Low | 9.20 | 16.64 | (44.7) | 9.20 | 11.00 | (16.4) | ||||||
PERIOD-END BALANCE SHEET DATA | ||||||||||||
Loans | $ 906,490 | $ 918,601 | (1.3) % | |||||||||
Securities | 104,075 | 100,772 | 3.3 | |||||||||
Assets | 1,134,503 | 1,157,685 | (2.0) | |||||||||
Deposits | 982,428 | 992,196 | (1.0) | |||||||||
Stockholders' equity | 122,355 | 128,219 | (4.6) | |||||||||
AVERAGE BALANCE SHEET DATA | ||||||||||||
Loans | $ 904,293 | $ 920,241 | (1.7) % | $ 907,965 | $ 910,842 | (0.3) % | ||||||
Securities | 105,466 | 97,226 | 8.5 | 108,469 | 88,240 | 22.9 | ||||||
Earning assets | 1,066,063 | 1,100,538 | (3.1) | 1,070,833 | 1,056,362 | 1.4 | ||||||
Assets | 1,139,043 | 1,166,587 | (2.4) | 1,139,747 | 1,115,499 | 2.2 | ||||||
Deposits | 984,018 | 1,001,304 | (1.7) | 980,968 | 931,693 | 5.3 | ||||||
Stockholders' equity | 125,308 | 128,409 | (2.4) | 126,343 | 137,089 | (7.8) | ||||||
CAPITAL AND CREDIT QUALITY RATIOS | ||||||||||||
Average equity to average assets | 11.00% | 11.01% | 11.09% | 12.29% | ||||||||
Annualized net charge-offs to average loans | 1.90 | 0.76 | 2.13 | 0.57 | ||||||||
Allowance for credit losses to period-end loans | 1.45 | 1.17 | ||||||||||
Nonperforming assets to total loans+other real estate | ||||||||||||
owned | 4.22 | 1.90 | ||||||||||
Nonperforming assets to total assets | 3.38 | 1.51 | ||||||||||
Nonperforming assets+Loans 90 days past due | ||||||||||||
and still accruing to total loans+other real estate | ||||||||||||
owned | 4.58 | 2.89 | ||||||||||
Nonperforming assets+Loans 90 days past due | ||||||||||||
and still accruing to total assets | 3.67 | 2.30 | ||||||||||
(1) Calculation uses net (loss) income available to common shareholders. | ||||||||||||
Shore Bancshares, Inc. | Page 5 of 10 | |||||||||
Consolidated Balance Sheets | ||||||||||
(In thousands, except per share data) | ||||||||||
Sep. 30, 2010 | Sep. 30, 2010 | |||||||||
Sep. 30, | Dec. 31, | Sep. 30, | compared to | compared to | ||||||
2010 | 2009 | 2009 | Dec. 31, 2009 | Sep. 30, 2009 | ||||||
ASSETS | ||||||||||
Cash and due from banks | $ 21,764 | $ 14,411 | $ 13,699 | 51.0% | 58.9% | |||||
Interest-bearing deposits with other banks | 18,014 | 598 | 1,601 | 2,912.4 | 1,025.2 | |||||
Federal funds sold | 35,161 | 60,637 | 72,061 | (42.0) | (51.2) | |||||
Investments available-for-sale (at fair value) | 96,219 | 97,595 | 91,768 | (1.4) | 4.9 | |||||
Investments held-to-maturity | 7,856 | 8,940 | 9,004 | (12.1) | (12.7) | |||||
Loans | 906,490 | 916,557 | 918,601 | (1.1) | (1.3) | |||||
Less: allowance for credit losses | (13,153) | (10,876) | (10,723) | 20.9 | 22.7 | |||||
Loans, net | 893,337 | 905,681 | 907,878 | (1.4) | (1.6) | |||||
Premises and equipment, net | 14,714 | 14,307 | 14,012 | 2.8 | 5.0 | |||||
Goodwill | 12,954 | 15,954 | 15,954 | (18.8) | (18.8) | |||||
Other intangible assets, net | 4,969 | 5,406 | 5,535 | (8.1) | (10.2) | |||||
Other real estate and other assets owned, net | 1,517 | 2,572 | 2,062 | (41.0) | (26.4) | |||||
Other assets | 27,998 | 30,415 | 24,111 | (7.9) | 16.1 | |||||
Total assets | $ 1,134,503 | $ 1,156,516 | $ 1,157,685 | (1.9) | (2.0) | |||||
LIABILITIES | ||||||||||
Noninterest-bearing deposits | $ 121,480 | $ 122,492 | $ 124,440 | (0.8) | (2.4) | |||||
Interest-bearing deposits | 860,948 | 868,445 | 867,756 | (0.9) | (0.8) | |||||
Total deposits | 982,428 | 990,937 | 992,196 | (0.9) | (1.0) | |||||
Short-term borrowings | 17,782 | 20,404 | 17,673 | (12.9) | 0.6 | |||||
Accrued expenses and other liabilities | 10,509 | 15,936 | 17,650 | (34.1) | (40.5) | |||||
Long-term debt | 1,429 | 1,429 | 1,947 | - | (26.6) | |||||
Total liabilities | 1,012,148 | 1,028,706 | 1,029,466 | (1.6) | (1.7) | |||||
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 | 30,173 | 29,872 | 29,844 | 1.0 | 1.1 | |||||
Retained earnings | 92,115 | 96,151 | 96,283 | (4.2) | (4.3) | |||||
Accumulated other comprehensive (loss) income | (1,560) | 160 | 465 | (1,075.0) | (435.5) | |||||
Total stockholders' equity | 122,355 | 127,810 | 128,219 | (4.3) | (4.6) | |||||
Total liabilities and stockholders' equity | $ 1,134,503 | $ 1,156,516 | $ 1,157,685 | (1.9) | (2.0) | |||||
Period-end common shares outstanding | 8,443 | 8,419 | 8,419 | 0.3 | 0.3 | |||||
Book value per common share | $ 14.49 | $ 15.18 | $ 15.23 | (4.5) | (4.9) | |||||
Shore Bancshares, Inc. | Page 6 of 10 | |||||||||
Consolidated Statements of Income | ||||||||||
(In thousands, except per share data) | ||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||
September 30, | September 30, | |||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||
INTEREST INCOME | ||||||||||
Interest and fees on loans | $ 13,083 | $ 14,001 | (6.6)% | $ 39,004 | $ 41,372 | (5.7)% | ||||
Interest and dividends on investment securities: | ||||||||||
Taxable | 677 | 800 | (15.4) | 2,405 | 2,324 | 3.5 | ||||
Tax-exempt | 50 | 77 | (35.1) | 165 | 241 | (31.5) | ||||
Interest on federal funds sold | 21 | 31 | (32.3) | 47 | 61 | (23.0) | ||||
Interest on deposits with other banks | 6 | 4 | 50.0 | 11 | 11 | - | ||||
Total interest income | 13,837 | 14,913 | (7.2) | 41,632 | 44,009 | (5.4) | ||||
INTEREST EXPENSE | ||||||||||
Interest on deposits | 3,117 | 4,368 | (28.6) | 9,744 | 13,094 | (25.6) | ||||
Interest on short-term borrowings | 17 | 19 | (10.5) | 68 | 96 | (29.2) | ||||
Interest on long-term debt | 16 | 98 | (83.7) | 47 | 247 | (81.0) | ||||
Total interest expense | 3,150 | 4,485 | (29.8) | 9,859 | 13,437 | (26.6) | ||||
NET INTEREST INCOME | 10,687 | 10,428 | 2.5 | 31,773 | 30,572 | 3.9 | ||||
Provision for credit losses | 4,193 | 1,702 | 146.4 | 16,727 | 5,318 | 214.5 | ||||
NET INTEREST INCOME AFTER PROVISION | ||||||||||
FOR CREDIT LOSSES | 6,494 | 8,726 | (25.6) | 15,046 | 25,254 | (40.4) | ||||
NONINTEREST INCOME | ||||||||||
Service charges on deposit accounts | 841 | 861 | (2.3) | 2,458 | 2,558 | (3.9) | ||||
Trust and investment fee income | 357 | 274 | 30.3 | 1,145 | 750 | 52.7 | ||||
Investment securities gains (losses) | - | - | - | - | 49 | (100.0) | ||||
Insurance agency commissions | 2,513 | 2,744 | (8.4) | 7,997 | 8,972 | (10.9) | ||||
Other noninterest income | 932 | 840 | 11.0 | 2,493 | 3,087 | (19.2) | ||||
Total noninterest income | 4,643 | 4,719 | (1.6) | 14,093 | 15,416 | (8.6) | ||||
NONINTEREST EXPENSE | ||||||||||
Salaries and wages | 4,404 | 4,765 | (7.6) | 13,257 | 14,064 | (5.7) | ||||
Employee benefits | 897 | 1,211 | (25.9) | 2,936 | 3,791 | (22.6) | ||||
Occupancy expense | 547 | 616 | (11.2) | 1,766 | 1,752 | 0.8 | ||||
Furniture and equipment expense | 325 | 299 | 8.7 | 938 | 915 | 2.5 | ||||
Data processing | 696 | 675 | 3.1 | 1,987 | 1,865 | 6.5 | ||||
Directors' fees | 118 | 109 | 8.3 | 344 | 394 | (12.7) | ||||
Goodwill and other intangible assets impairment | 3,051 | - | - | 3,051 | - | - | ||||
Amortization of intangible assets | 128 | 128 | - | 386 | 386 | - | ||||
Insurance agency commissions expense | 338 | 428 | (21.0) | 1,230 | 1,515 | (18.8) | ||||
FDIC insurance premium expense | 448 | 458 | (2.2) | 1,389 | 1,621 | (14.3) | ||||
Other noninterest expenses | 1,677 | 1,608 | 4.3 | 5,354 | 4,570 | 17.2 | ||||
Total noninterest expense | 12,629 | 10,297 | 22.6 | 32,638 | 30,873 | 5.7 | ||||
(Loss) income before income taxes | (1,492) | 3,148 | (147.4) | (3,499) | 9,797 | (135.7) | ||||
Income tax (benefit) expense | (92) | 1,197 | (107.7) | (982) | 3,740 | (126.3) | ||||
NET (LOSS) INCOME | (1,400) | 1,951 | (171.8) | (2,517) | 6,057 | (141.6) | ||||
Preferred stock dividends and discount accretion | - | - | - | - | 1,876 | (100.0) | ||||
Net (loss) income available to common shareholders | $ (1,400) | $ 1,951 | (171.8) | $ (2,517) | $ 4,181 | (160.2) | ||||
Weighted average shares outstanding - basic | 8,443 | 8,419 | 0.3 | 8,441 | 8,412 | 0.3 | ||||
Weighted average shares outstanding - diluted | 8,443 | 8,423 | 0.2 | 8,441 | 8,416 | 0.3 | ||||
Basic net (loss) income per share | $ (0.17) | $ 0.23 | (173.9) | $ (0.30) | $ 0.72 | (141.7) | ||||
Basic net (loss) income per common share | (0.17) | 0.23 | (173.9) | (0.30) | 0.50 | (160.0) | ||||
Diluted net (loss) income per share | (0.17) | 0.23 | (173.9) | (0.30) | 0.72 | (141.7) | ||||
Diluted net (loss) income per common share | (0.17) | 0.23 | (173.9) | (0.30) | 0.50 | (160.0) | ||||
Dividends paid per common share | 0.06 | 0.16 | (62.5) | 0.18 | 0.48 | (62.5) | ||||
Shore Bancshares, Inc. | Page 7 of 10 | |||||||||||||||
Consolidated Average Balance Sheets | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||
balance | rate | balance | rate | balance | rate | balance | rate | |||||||||
Earning assets | ||||||||||||||||
Loans | $ 904,293 | 5.76% | $ 920,241 | 6.05% | $ 907,965 | 5.76% | $ 910,842 | 6.09% | ||||||||
Investment securities | ||||||||||||||||
Taxable | 99,572 | 2.70 | 89,101 | 3.56 | 102,100 | 3.15 | 79,797 | 3.89 | ||||||||
Tax-exempt | 5,894 | 5.16 | 8,125 | 5.76 | 6,369 | 5.26 | 8,443 | 5.87 | ||||||||
Federal funds sold | 40,638 | 0.20 | 81,466 | 0.16 | 41,709 | 0.15 | 53,227 | 0.15 | ||||||||
Interest-bearing deposits | 15,666 | 0.15 | 1,605 | 0.77 | 12,690 | 0.12 | 4,053 | 0.35 | ||||||||
Total earning assets | 1,066,063 | 5.18% | 1,100,538 | 5.41% | 1,070,833 | 5.22% | 1,056,362 | 5.60% | ||||||||
Cash and due from banks | 21,865 | 20,042 | 15,455 | 16,960 | ||||||||||||
Other assets | 65,081 | 57,049 | 66,942 | 52,700 | ||||||||||||
Allowance for credit losses | (13,966) | (11,042) | (13,483) | (10,523) | ||||||||||||
Total assets | $ 1,139,043 | $ 1,166,587 | $ 1,139,747 | $ 1,115,499 | ||||||||||||
Interest-bearing liabilities | ||||||||||||||||
Demand deposits | $ 132,023 | 0.24% | $ 125,233 | 0.26% | $ 130,872 | 0.25% | $ 123,821 | 0.25% | ||||||||
Money market and savings | ||||||||||||||||
deposits | 259,511 | 0.81 | 245,801 | 0.67 | 258,628 | 0.73 | 207,588 | 0.60 | ||||||||
Certificates of deposit $100,000 | ||||||||||||||||
or more | 258,542 | 1.91 | 274,580 | 2.82 | 256,470 | 2.08 | 252,978 | 3.13 | ||||||||
Other time deposits | 212,098 | 2.37 | 237,757 | 3.20 | 215,911 | 2.53 | 236,643 | 3.39 | ||||||||
Interest-bearing deposits | 862,174 | 1.44 | 883,371 | 1.96 | 861,881 | 1.51 | 821,030 | 2.13 | ||||||||
Short-term borrowings | 16,092 | 0.38 | 18,373 | 0.42 | 16,673 | 0.55 | 27,718 | 0.46 | ||||||||
Long-term debt | 1,429 | 4.36 | 1,947 | 19.90 | 1,429 | 4.40 | 5,925 | 5.57 | ||||||||
Total interest-bearing liabilities | 879,695 | 1.42% | 903,691 | 1.97% | 879,983 | 1.50% | 854,673 | 2.10% | ||||||||
Noninterest-bearing deposits | 121,844 | 117,933 | 119,087 | 110,663 | ||||||||||||
Accrued expenses and other liabilities | 12,196 | 16,554 | 14,334 | 13,074 | ||||||||||||
Stockholders' equity | 125,308 | 128,409 | 126,343 | 137,089 | ||||||||||||
Total liabilities and stockholders' equity | $ 1,139,043 | $ 1,166,587 | $ 1,139,747 | $ 1,115,499 | ||||||||||||
Net interest spread | 3.76% | 3.44% | 3.72% | 3.50% | ||||||||||||
Net interest margin | 4.00% | 3.79% | 3.99% | 3.90% | ||||||||||||
Shore Bancshares, Inc. | Page 8 of 10 | |||||||||||||
Financial Highlights By Quarter | ||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||
3rd quarter | 2nd quarter | 1st quarter | 4th quarter | 3rd quarter | 3Q 10 | 3Q 10 | ||||||||
2010 | 2010 | 2010 | 2009 | 2009 | compared to | compared to | ||||||||
(3Q 10) | (2Q 10) | (1Q 10) | (4Q 09) | (3Q 09) | 2Q 10 | 3Q 09 | ||||||||
PROFITABILITY FOR THE PERIOD | ||||||||||||||
Net interest income | $ 10,687 | $ 10,691 | $ 10,395 | $ 10,806 | $ 10,428 | - % | 2.5% | |||||||
Provision for credit losses | 4,193 | 4,917 | 7,617 | 3,668 | 1,702 | (14.7) | 146.4 | |||||||
Noninterest income | 4,643 | 4,568 | 4,882 | 4,125 | 4,719 | 1.6 | (1.6) | |||||||
Noninterest expense | 12,629 | 9,688 | 10,321 | 9,375 | 10,297 | 30.4 | 22.6 | |||||||
(Loss) income before income taxes | (1,492) | 654 | (2,661) | 1,888 | 3,148 | (328.1) | (147.4) | |||||||
Income tax (benefit) expense | (92) | 209 | (1,099) | 672 | 1,197 | (144.0) | (107.7) | |||||||
Net (loss) income | (1,400) | 445 | (1,562) | 1,216 | 1,951 | (414.6) | (171.8) | |||||||
Preferred stock dividends and | ||||||||||||||
discount accretion | - | - | - | - | - | - | - | |||||||
Net (loss) income available to | ||||||||||||||
common shareholders | $ (1,400) | $ 445 | $ (1,562) | $ 1,216 | $ 1,951 | (414.6) | (171.8) | |||||||
Return on average assets (1) | (0.49)% | 0.16% | (0.55)% | 0.41% | 0.66% | (406.3)% | (174.2)% | |||||||
Return on average equity (1) | (4.43) | 1.42 | (4.95) | 3.75 | 6.03 | (412.0) | (173.5) | |||||||
Net interest margin | 4.00 | 4.03 | 3.95 | 3.90 | 3.79 | (0.7) | 5.5 | |||||||
Efficiency ratio - GAAP based | 82.38 | 63.49 | 67.56 | 62.79 | 67.98 | 29.8 | 21.2 | |||||||
PER SHARE DATA | ||||||||||||||
Basic net (loss) income per share | $ (0.17) | $ 0.05 | $ (0.19) | $ 0.14 | $ 0.23 | (440.0)% | (173.9)% | |||||||
Basic net (loss) income per common share | (0.17) | 0.05 | (0.19) | 0.14 | 0.23 | (440.0) | (173.9) | |||||||
Diluted net (loss) income per share | (0.17) | 0.05 | (0.19) | 0.14 | 0.23 | (440.0) | (173.9) | |||||||
Diluted net (loss) income per | ||||||||||||||
common share | (0.17) | 0.05 | (0.19) | 0.14 | 0.23 | (440.0) | (173.9) | |||||||
Dividends paid per common share | 0.06 | 0.06 | 0.06 | 0.16 | 0.16 | - | (62.5) | |||||||
Book value per common share at | ||||||||||||||
period end | 14.49 | 14.77 | 14.82 | 15.18 | 15.23 | (1.9) | (4.9) | |||||||
Tangible book value per common | ||||||||||||||
share at period end | 12.37 | 12.27 | 12.30 | 12.64 | 12.68 | 0.8 | (2.4) | |||||||
Market value at period end | 9.48 | 11.91 | 14.25 | 14.50 | 16.73 | (20.4) | (43.3) | |||||||
Market range: | ||||||||||||||
High | 12.10 | 14.80 | 14.75 | 17.71 | 20.72 | (18.2) | (41.6) | |||||||
Low | 9.20 | 11.75 | 10.21 | 13.52 | 16.64 | (21.7) | (44.7) | |||||||
PERIOD-END BALANCE SHEET DATA | ||||||||||||||
Loans | $ 906,490 | $ 905,477 | $ 905,194 | $ 916,557 | $ 918,601 | 0.1% | (1.3)% | |||||||
Securities | 104,075 | 106,556 | 112,929 | 106,535 | 100,772 | (2.3) | 3.3 | |||||||
Assets | 1,134,503 | 1,129,196 | 1,146,334 | 1,156,516 | 1,157,685 | 0.5 | (2.0) | |||||||
Deposits | 982,428 | 971,608 | 990,750 | 990,937 | 992,196 | 1.1 | (1.0) | |||||||
Stockholders' equity | 122,355 | 124,666 | 125,108 | 127,810 | 128,219 | (1.9) | (4.6) | |||||||
AVERAGE BALANCE SHEET DATA | ||||||||||||||
Loans | $ 904,293 | $ 909,295 | $ 910,374 | $ 921,908 | $ 920,241 | (0.6)% | (1.7)% | |||||||
Securities | 105,466 | 109,744 | 110,252 | 104,561 | 97,226 | (3.9) | 8.5 | |||||||
Earning assets | 1,066,063 | 1,071,115 | 1,075,425 | 1,104,919 | 1,100,538 | (0.5) | (3.1) | |||||||
Assets | 1,139,043 | 1,134,662 | 1,145,607 | 1,169,337 | 1,166,587 | 0.4 | (2.4) | |||||||
Deposits | 984,018 | 976,749 | 982,265 | 1,002,982 | 1,001,304 | 0.7 | (1.7) | |||||||
Stockholders' equity | 125,308 | 125,670 | 128,081 | 128,715 | 128,409 | (0.3) | (2.4) | |||||||
CAPITAL AND CREDIT QUALITY RATIOS | ||||||||||||||
Average equity to average assets | 11.00% | 11.08% | 11.18% | 11.01% | 11.01% | |||||||||
Annualized net charge-offs to | ||||||||||||||
average loans | 1.90 | 1.95 | 2.54 | 1.51 | 0.76 | |||||||||
Allowance for credit losses to | ||||||||||||||
period-end loans | 1.45 | 1.47 | 1.41 | 1.19 | 1.17 | |||||||||
Nonperforming assets to total | ||||||||||||||
loans+other real estate owned | 4.22 | 4.29 | 3.62 | 2.05 | 1.90 | |||||||||
Nonperforming assets to total assets | 3.38 | 3.45 | 2.87 | 1.63 | 1.51 | |||||||||
Nonperforming assets+Loans 90 | ||||||||||||||
days past due | ||||||||||||||
and still accruing to total | ||||||||||||||
loans+other real estate owned | 4.58 | 4.81 | 3.93 | 2.86 | 2.89 | |||||||||
Nonperforming assets+Loans 90 | ||||||||||||||
days past due | ||||||||||||||
and still accruing to total assets | 3.67 | 3.86 | 3.11 | 2.27 | 2.30 | |||||||||
(1) Calculation uses net (loss) income available to common shareholders. | ||||||||||||||
Shore Bancshares, Inc. | Page 9 of 10 | |||||||||||||
Consolidated Statements of Income By Quarter | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
3Q 10 | 3Q 10 | |||||||||||||
compared to | compared to | |||||||||||||
3Q 10 | 2Q 10 | 1Q 10 | 4Q 09 | 3Q 09 | 2Q 10 | 3Q 09 | ||||||||
INTEREST INCOME | ||||||||||||||
Interest and fees on loans | $ 13,083 | $ 13,047 | $ 12,874 | $ 13,837 | $ 14,001 | 0.3% | (6.6)% | |||||||
Interest and dividends on investment | ||||||||||||||
securities: | ||||||||||||||
Taxable | 677 | 846 | 882 | 860 | 800 | (20.0) | (15.4) | |||||||
Tax-exempt | 50 | 56 | 59 | 60 | 77 | (10.7) | (35.1) | |||||||
Interest on federal funds sold | 21 | 14 | 12 | 23 | 31 | 50.0 | (32.3) | |||||||
Interest on deposits with other banks | 6 | 4 | 1 | - | 4 | 50.0 | 50.0 | |||||||
Total interest income | 13,837 | 13,967 | 13,828 | 14,780 | 14,913 | (0.9) | (7.2) | |||||||
INTEREST EXPENSE | ||||||||||||||
Interest on deposits | 3,117 | 3,242 | 3,385 | 3,924 | 4,368 | (3.9) | (28.6) | |||||||
Interest on short-term borrowings | 17 | 19 | 32 | 31 | 19 | (10.5) | (10.5) | |||||||
Interest on long-term debt | 16 | 15 | 16 | 19 | 98 | 6.7 | (83.7) | |||||||
Total interest expense | 3,150 | 3,276 | 3,433 | 3,974 | 4,485 | (3.8) | (29.8) | |||||||
NET INTEREST INCOME | 10,687 | 10,691 | 10,395 | 10,806 | 10,428 | - | 2.5 | |||||||
Provision for credit losses | 4,193 | 4,917 | 7,617 | 3,668 | 1,702 | (14.7) | 146.4 | |||||||
NET INTEREST INCOME AFTER PROVISION | ||||||||||||||
FOR CREDIT LOSSES | 6,494 | 5,774 | 2,778 | 7,138 | 8,726 | 12.5 | (25.6) | |||||||
NONINTEREST INCOME | ||||||||||||||
Service charges on deposit accounts | 841 | 831 | 786 | 866 | 861 | 1.2 | (2.3) | |||||||
Trust and investment fee income | 357 | 372 | 416 | 350 | 274 | (4.0) | 30.3 | |||||||
Investment securities gains (losses) | - | - | - | - | - | - | - | |||||||
Insurance agency commissions | 2,513 | 2,595 | 2,889 | 2,159 | 2,744 | (3.2) | (8.4) | |||||||
Other noninterest income | 932 | 770 | 791 | 750 | 840 | 21.0 | 11.0 | |||||||
Total noninterest income | 4,643 | 4,568 | 4,882 | 4,125 | 4,719 | 1.6 | (1.6) | |||||||
NONINTEREST EXPENSE | ||||||||||||||
Salaries and wages | 4,404 | 4,363 | 4,490 | 4,424 | 4,765 | 0.9 | (7.6) | |||||||
Employee benefits | 897 | 758 | 1,281 | 840 | 1,211 | 18.3 | (25.9) | |||||||
Occupancy expense | 547 | 597 | 622 | 572 | 616 | (8.4) | (11.2) | |||||||
Furniture and equipment expense | 325 | 313 | 300 | 268 | 299 | 3.8 | 8.7 | |||||||
Data processing | 696 | 660 | 631 | 598 | 675 | 5.5 | 3.1 | |||||||
Directors' fees | 118 | 105 | 121 | 84 | 109 | 12.4 | 8.3 | |||||||
Goodwill and other intangible assets impairment | 3,051 | - | - | - | - | - | - | |||||||
Amortization of intangible assets | 128 | 129 | 129 | 129 | 128 | (0.8) | - | |||||||
Insurance agency commissions expense | 338 | 464 | 428 | 398 | 428 | (27.2) | (21.0) | |||||||
FDIC insurance premium expense | 448 | 460 | 481 | 457 | 458 | (2.6) | (2.2) | |||||||
Other noninterest expenses | 1,677 | 1,839 | 1,838 | 1,605 | 1,608 | (8.8) | 4.3 | |||||||
Total noninterest expense | 12,629 | 9,688 | 10,321 | 9,375 | 10,297 | 30.4 | 22.6 | |||||||
(Loss) income before income taxes | (1,492) | 654 | (2,661) | 1,888 | 3,148 | (328.1) | (147.4) | |||||||
Income tax (benefit) expense | (92) | 209 | (1,099) | 672 | 1,197 | (144.0) | (107.7) | |||||||
NET (LOSS) INCOME | (1,400) | 445 | (1,562) | 1,216 | 1,951 | (414.6) | (171.8) | |||||||
Preferred stock dividends and discount accretion | - | - | - | - | - | - | - | |||||||
Net (loss) income available to common shareholders | $ (1,400) | $ 445 | $ (1,562) | $ 1,216 | $ 1,951 | (414.6) | (171.8) | |||||||
Weighted average shares outstanding - basic | 8,443 | 8,443 | 8,436 | 8,419 | 8,419 | - | 0.3 | |||||||
Weighted average shares outstanding - diluted | 8,443 | 8,443 | 8,436 | 8,421 | 8,423 | - | 0.2 | |||||||
Basic net (loss) income per share | $ (0.17) | $ 0.05 | $ (0.19) | $ 0.14 | $ 0.23 | (440.0) | (173.9) | |||||||
Basic net (loss) income per common share | (0.17) | 0.05 | (0.19) | 0.14 | 0.23 | (440.0) | (173.9) | |||||||
Diluted net (loss) income per share | (0.17) | 0.05 | (0.19) | 0.14 | 0.23 | (440.0) | (173.9) | |||||||
Diluted net (loss) income per common share | (0.17) | 0.05 | (0.19) | 0.14 | 0.23 | (440.0) | (173.9) | |||||||
Dividends paid per common share | 0.06 | 0.06 | 0.06 | 0.16 | 0.16 | - | (62.5) | |||||||
Shore Bancshares, Inc. | Page 10 of 10 | |||||||||||||||||||||||
Consolidated Average Balance Sheets By Quarter | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Average balance | ||||||||||||||||||||||||
3Q 10 | 3Q 10 | |||||||||||||||||||||||
compared to | compared to | |||||||||||||||||||||||
3Q 10 | 2Q 10 | 1Q 10 | 4Q 09 | 3Q 09 | 2Q 10 | 3Q 09 | ||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||
balance | rate | balance | rate | balance | rate | balance | rate | balance | rate | |||||||||||||||
Earning assets | ||||||||||||||||||||||||
Loans | $ 904,293 | 5.76% | $ 909,295 | 5.77% | $ 910,374 | 5.75% | $ 921,908 | 5.97% | $ 920,241 | 6.05% | (0.6)% | (1.7)% | ||||||||||||
Investment | ||||||||||||||||||||||||
securities | ||||||||||||||||||||||||
Taxable | 99,572 | 2.70 | 103,284 | 3.29 | 103,488 | 3.45 | 97,595 | 3.50 | 89,101 | 3.56 | (3.6) | 11.8 | ||||||||||||
Tax-exempt | 5,894 | 5.16 | 6,460 | 5.30 | 6,764 | 5.39 | 6,966 | 4.96 | 8,125 | 5.76 | (8.8) | (27.5) | ||||||||||||
Federal | ||||||||||||||||||||||||
funds sold | 40,638 | 0.20 | 38,001 | 0.15 | 46,553 | 0.11 | 77,782 | 0.11 | 81,466 | 0.16 | 6.9 | (50.1) | ||||||||||||
Interest-bearing deposits | 15,666 | 0.15 | 14,075 | 0.12 | 8,246 | 0.06 | 668 | 0.45 | 1,605 | 0.77 | 11.3 | 876.1 | ||||||||||||
Total | ||||||||||||||||||||||||
earning assets | 1,066,063 | 5.18% | 1,071,115 | 5.26% | 1,075,425 | 5.24% | 1,104,919 | 5.33% | 1,100,538 | 5.41% | (0.5) | (3.1) | ||||||||||||
Cash and | ||||||||||||||||||||||||
due from banks | 21,865 | 9,997 | 14,422 | 17,312 | 20,042 | 118.7 | 9.1 | |||||||||||||||||
Other assets | 65,081 | 67,860 | 67,914 | 58,543 | 57,049 | (4.1) | 14.1 | |||||||||||||||||
Allowance for | ||||||||||||||||||||||||
credit losses | (13,966) | (14,310) | (12,154) | (11,437) | (11,042) | (2.4) | 26.5 | |||||||||||||||||
Total assets | $ 1,139,043 | $ 1,134,662 | $ 1,145,607 | $ 1,169,337 | $ 1,166,587 | 0.4 | (2.4) | |||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||
Demand | ||||||||||||||||||||||||
deposits | $ 132,023 | 0.24% | $ 132,563 | 0.25% | $ 127,986 | 0.25% | $ 127,537 | 0.26% | $ 125,233 | 0.26% | (0.4) | 5.4 | ||||||||||||
Money market | ||||||||||||||||||||||||
and savings deposits | 259,511 | 0.81 | 259,273 | 0.72 | 256,818 | 0.68 | 249,393 | 0.66 | 245,801 | 0.67 | 0.1 | 5.6 | ||||||||||||
Certificates of | ||||||||||||||||||||||||
deposit $100,000 | ||||||||||||||||||||||||
or more | 258,542 | 1.91 | 251,340 | 2.09 | 259,538 | 2.24 | 276,390 | 2.51 | 274,580 | 2.82 | 2.9 | (5.8) | ||||||||||||
Other time | ||||||||||||||||||||||||
deposits | 212,098 | 2.37 | 215,987 | 2.56 | 219,731 | 2.67 | 228,020 | 2.91 | 237,757 | 3.20 | (1.8) | (10.8) | ||||||||||||
Interest-bearing | ||||||||||||||||||||||||
deposits | 862,174 | 1.44 | 859,163 | 1.51 | 864,073 | 1.59 | 881,340 | 1.77 | 883,371 | 1.96 | 0.4 | (2.4) | ||||||||||||
Short-term | ||||||||||||||||||||||||
borrowings | 16,092 | 0.38 | 15,771 | 0.48 | 18,032 | 0.71 | 18,994 | 0.63 | 18,373 | 0.42 | 2.0 | (12.4) | ||||||||||||
Long-term | ||||||||||||||||||||||||
debt | 1,429 | 4.36 | 1,429 | 4.40 | 1,429 | 4.45 | 1,429 | 5.28 | 1,947 | 19.90 | - | (26.6) | ||||||||||||
Total interest- | ||||||||||||||||||||||||
bearing liabilities | 879,695 | 1.42% | 876,363 | 1.50% | 883,534 | 1.58% | 901,763 | 1.75% | 903,691 | 1.97% | 0.4 | (2.7) | ||||||||||||
Noninterest-bearing deposits | 121,844 | 117,586 | 118,192 | 121,642 | 117,933 | 3.6 | 3.3 | |||||||||||||||||
Accrued expenses and other liabilities | 12,196 | 15,043 | 15,800 | 17,217 | 16,554 | (18.9) | (26.3) | |||||||||||||||||
Stockholders' equity | 125,308 | 125,670 | 128,081 | 128,715 | 128,409 | (0.3) | (2.4) | |||||||||||||||||
Total liabilities and stockholders' equity | $ 1,139,043 | $ 1,134,662 | $ 1,145,607 | $ 1,169,337 | $ 1,166,587 | 0.4 | (2.4) | |||||||||||||||||
Net interest spread | 3.76% | 3.76% | 3.66% | 3.58% | 3.44% | |||||||||||||||||||
Net interest margin | 4.00% | 4.03% | 3.95% | 3.90% | 3.79% | |||||||||||||||||||
SOURCE Shore Bancshares, Inc.
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