Shore Bancshares, Inc. Reports Third Quarter 2023 Net Loss of $6.4 million Due to One-Time Merger Related Activity

EASTON, Md., Nov. 1, 2023 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ - SHBI) (the "Company" or "Shore Bancshares"), the holding company for Shore United Bank N.A. (the "Bank" or "SUB") reported financial results for the third quarter and first nine months of 2023. Third quarter results include the successful completion of the merger (the "merger") on July 1, 2023 with The Community Financial Corporation with total assets exceeding $5.7 billion for the combined company. In the third quarter of 2023, the Company reported a net loss of $6.4 million or $0.19 per diluted common share compared to net income of $4.0 million or $0.20 per diluted common share for the second quarter of 2023, and net income of $9.7 million or $0.49 per diluted common share for the third quarter of 2022. Net income for the first nine months of 2023 was $4.1 million or $0.17 per diluted common share, compared to net income for the  first nine months of 2022 of $22.8 million or $1.15 per diluted common share.

Third Quarter 2023 Highlights

• Completed Merger of Equals with The Community Financial Corporation ("TCFC") - Established a leading $5.7 billion Maryland-based community bank with operations in Delaware and Virginia that is positioned to deliver significant shareholder value. At the July 1, 2023 closing date of the merger, TCFC contributed, after fair value accounting adjustments, approximately $2.4 billion in total assets, $1.8 billion in loans, and $2.1 billion in deposits.
  
  
• Expanded Margins by Repositioning the Balance Sheet - Sold most of available-for-sale securities portfolio acquired from TCFC for net proceeds of $430 million and used $380 million to reduce higher cost Federal Home Loan Bank ("FHLB") advances and brokered deposits. As a result of these actions net interest margin ("NIM") increased to 3.35% for the third quarter of 2023 from 2.68% for the second quarter of 2023. Excluding net accretion interest income of $5.4 million and $0.3 million for the same time periods, NIM increased 32 basis points to 2.96% for the third quarter of 2023 from 2.64% for the second quarter of 2023.
  
  
• Robust Deposit Franchise - During the third quarter, the merger drove a 73.91% quarterly increase in total deposits to $5.1 billion and a 55.5% quarterly increase in non-interest bearing ("NIB") deposits to $1.2 billion at September 30, 2023. At September 30, 2023, brokered deposits amounted to $111.0 million or 2.2% of total deposits. The Bank's loan to deposit ratio at September 30, 2023 was 89%.
  
  
• Continued Stable Funding and Liquidity - Total funding, which includes customer deposits, FHLB advances, and brokered deposits increased $1.9 billion from $3.2 billion at June 30, 2023 to $5.1 billion at September 30, 2023. The Bank had no FHLB advances at September 30, 2023. The Bank's uninsured deposits at September 30, 2023 greater than the Federal Deposit Insurance Corporation's ("FDIC") $250,000 insurance limit were $1,009.5 million or 19.76% of total deposits. At September 30, 2023, there were $144.9 million included in uninsured deposits that the Bank secured using the market value of pledged collateral. The Bank's uninsured deposits, excluding the market value of pledged collateral, at September 30, 2023 were $864.6 million or 16.92% of total deposits.
  
  At September 30, 2023, the Bank had approximately $1.1 billion of available liquidity including: $108.7 million in cash, $954.4 million in secured borrowing capacity at the FHLB and the other correspondent banks, and $35.0 million in unsecured lines of credit. At September 30, 2023, available liquidity of approximately $1.1 billion was 127% of uninsured deposits, excluding the market value of pledged collateral, of $864.6 million.
  
  
• Increased Allowance for Credit Losses ("ACL") - The ACL increased during the third quarter of 2023 primarily to account for the TCFC acquisition. Management implemented a new ACL methodology subsequent to the legal merger, increasing the ACL from $29.0 million and 1.05% of total loans at June 30, 2023 to $57.1 million and 1.24% of total loans at September 30, 2023. The Bank's provision for credit losses for the third quarter of 2023 was $28.2 million and consisted of approximately $20.1 million related to the acquisition of TCFC legacy loans, $7.3 million due to the change in ACL methodology on SUB legacy loans and $0.8 million related to third quarter activity. Management believes that the allowance is adequate as of September 30, 2023.
  
  
• Continued Solid Asset Quality: Non-accrual loans, OREO and loan modifications to borrowers' experiencing financial difficulties ("BEFDs") were $11.3 million or 0.20% of total assets at September 30, 2023 compared to $3.9 million or 0.11% of total assets at December 31, 2022, and $4.7 million or 0.13% of total assets at June 30, 2023. Classified assets increased $8.4 million to $11.1 million or 0.19% of total assets at September 30, 2023 from $2.7 million or 0.08% of total assets at December 31, 2022. Classified assets are substandard loans and OREO. The increase in classified assets was due to the acquisition of TCFC classified loans of $5.1 million and the Shore legacy classified loans of $5.8 million and OREO of $0.2 million at September 30, 2023. The modest increase in nonperforming and classified assets was the result of a small increase in late payments in consumer loans and a proactive review of larger commercial relationships in the current interest rate environment.

"The merger of Shore Bancshares with TCFC established a dominant community banking franchise that we believe can deliver exceptional financial services to the communities we serve," stated James ("Jimmy") M. Burke, President and Chief Executive Officer of Shore Bancshares, Inc. "We believe our increased scale, expanded products, and greater resources will drive growth and create long-term shareholder value. While merger-related expenses and accounting adjustments negatively impacted third quarter earnings, we are pleased with our core operating performance and the opportunities to further enhance our financial results. Since the closing of the merger, we successfully completed our core system conversion in September 2023 and we have reduced headcount and undertaken several cost-saving initiatives that we expect will further reduce expenses in future quarters. We want to thank our associates for their tireless efforts helping customers and their colleagues through the merger close and systems conversion."

Merger with TCFC 

Shore United Bancshares, Inc. acquired TCFC and its wholly-owned subsidiary Community Bank of the Chesapeake ("CBTC") on July 1 2023. The merger and acquisition method of accounting was used to account for the transaction with the Company as the acquirer. The Company recorded the assets and liabilities of TCFC at their respective fair values as of July 1, 2023. The transaction was valued at approximately $153.6 million and expanded Shore United Bank's footprint into the Southern Maryland Counties of Charles, St. Mary's and Calvert and the greater Fredericksburg area in Virginia, which includes, Stafford and Spotsylvania Counties. This acquired market area is one of the fastest growing regions in the country and is home to a mix of federal facilities and industrial and high-tech businesses. These areas boast a strong median household income, low unemployment and projected population growth better than national averages. Based on information from the U.S. Bureau of Labor Statistics, unemployment rates in legacy CBTC's  footprint have historically remained well below the national average.

At the time of the acquisition, TCFC added $2.4 billion in assets, $454.5 million in investments, $1.8 billion in loans, $2.0 billion in deposits, $150.6 million in brokered deposits, $69.0 million in FHLB advances and $32.0 million in subordinated debt and trust preferred debentures. The excess of the fair value of net TCFC assets acquired over the merger consideration resulted in a $12.2 million bargain purchase gain. Subsequent to the merger, the Company sold virtually all of the available-for-sale securities portfolio acquired for net proceeds of $430.0 million and used $380.0 million of the proceeds to reduce FHLB advances and brokered deposits. The TCFC merger led to a 20% dilution in our tangible book value per share which was $11.80 at September 30, 2023 compared to $14.83 at June 30, 2023. The principal cause of the dilution was fair value discount adjustments of approximately $110.0 million to the acquired loan portfolio due to increasing interest rates in the last 12-18 months. The Company's tangible common equity ratio at September 30, 2023 was 7.00%. The Company's Tier 1 and Tier 2 Risk-Based Capital Ratios at September 30, 2023 were 9.27% and 11.42%, respectively. The Bank's Tier 1 and Tier 2 Risk-Based Capital Ratios at September 30, 2023 were 9.97% and 11.20%, respectively. The loan fair value adjustments will accrete back through income (and capital) as the loans mature and should lead to earnings per share accretion moving forward.

The Company incurred net expenses of $33.8 million and $36.5 million for the three and nine months ended September 30, 2023, respectively, related to merger and acquisition costs, balance sheet restructuring costs, an increased allowance for credit losses related to the acquisition of TCFC loans and a change in methodology for legacy SHBI loans. These expenses were partially offset by non-recurring revenues and a bargain purchase gain.

The Company's financial results for any periods ended prior to July 1, 2023 reflect Shore Bancshares' results only on a standalone basis. As a result of this factor and the below listed adjustments related to the merger, the Company's financial results for the third quarter of 2023 may not be directly comparable to prior reported periods. The following schedule highlights specific merger related activity for the three and nine months ended September 30, 2023:

Schedule of Merger & Acquisition Cost and Non-Recurring Merger Related Activity (Unaudited)

Balance Sheet Review

Total assets were $5.7 billion at September 30, 2023, an increase of $2.2 billion or 64.2% , when compared to $3.5 billion at December 31, 2022. The aggregate increase was primarily due to the merger, with significant increases in loans held for investment of $2.1 billion, or 80.7%, and cash and cash equivalents of $53.2 million, partially offset by an increase in allowance for credit losses of $40.4 million. The ratio of the allowance to total loans increased from 0.65% at December 31, 2022, to 1.05% at June 30, 2023 and 1.24% at September 30, 2023. The increases were due to the adoption of CECL on January 1, 2023 and the merger with TCFC in July 2023. Due to a lack of uniformity of historical data between the legacy banks in their respective models, management implemented a new post merger model methodology. The Bank's provision for credit losses for the third quarter of 2023 was $28.2 million and consisted of approximately $20.1 million related to the acquisition of TCFC legacy loans, $7.3 million due to the change in ACL methodology on SUB legacy loans and $0.8 million related to third quarter activity.

The Company's tangible common equity ratio at September 30, 2023 was 7.00%. The Company's Tier 1 and Tier 2 Capital Ratios at September 30, 2023 were 9.27% and 11.42%, respectively.  The Bank's Tier 1 and Tier 2 Capital Ratios at September 30, 2023 were 9.97% and 11.20%, respectively. Non-owner occupied commercial real estate ("CRE") as a percentage of the Bank's Tier 1 Capital + ACL at September 30, 2023 and December 31, 2022 were $2.1 billion or 394.5% and $1.0 billion or 289.4%, respectively. Construction loans as a percentage of the Bank's Tier 1 Capital + ACL at September 30, 2023 and December 31, 2022 were $330.0 million or 62.8% and $246.3 million or 69.9%, respectively.

The Bank's office CRE portfolio, which included owner-occupied and non-owner occupied CRE loans, was $520.7 million or 11.2% of total loans of $4.6 billion at September 30, 2023, which included $139.0 million or 26.7% with medical tenants and $56.5 million or 10.8% with government or government contractor tenants. There were 529 loans in the office CRE portfolio with an average and median loan size of $1.0 million and $0.3 million, respectively. Loan to Value ("LTV") estimates are less than 70% for $356.7 million or 68.0% of the office CRE portfolio.

The Bank had 23 CRE office loans totaling $207.0 million that were greater than $5.0 million at September 30, 2023. For this subset of the office CRE portfolio, at September 30, 2023, the average loan DSC ratio was 1.42x and average LTV was 57.04%. Most buildings in the Bank's office CRE portfolio are two stories or less.

Total borrowings were $72.0 million at September 30, 2023, a decrease of $11.0 million, or 13.3%, when compared to $83.1 million at December 31, 2022. Total borrowings at September 30, 2023 were comprised of $43.0 million of subordinated debt and $29.1 million of trust preferred debentures. This decrease in total borrowings at September 30, 2023 when compared to December 31, 2022 was primarily due to repayment of $40.0 million in Federal Home Loan Bank ("FHLB") short-term advances, partially offset by an increase of $29.0 million in subordinated debt and trust preferred debentures from the acquisition of TCFC. The Company's wholesale funding increased $71.0 million, which includes brokered deposits and FHLB advances, from $40.0 million in FHLB advances at December 31, 2022 to $111.0 million in brokered deposits at September 30, 2023. The Bank decreased wholesale funding by $380.0 million during the third quarter of 2023 using proceeds from the sale of TCFC's securities portfolio after the legal merger date.

Total deposits increased $2.1 billion, or 69.7% to $5.1 billion at September 30, 2023 when compared to December 31, 2022. The increase in total deposits was primarily due to the merger and acquisition of TCFC which resulted in an increase in time deposits of $713.5 million, demand deposits of $516.0 million, money market and savings of $520.2 million and noninterest-bearing deposits of $349.4 million.

Non-interest bearing (NIB) accounts increased from $779.0 million at June 30, 2023 to $1.2 billion at September 30, 2023, and represent 23.7% of total deposits. During the core system conversion in September 2023 there were NIB accounts at CBTC that were mapped to low interest-bearing accounts at the Bank. The balance in these acquired deposit accounts at September 30, 2023 were $138.8 million and were at an average cost of four basis points. In addition, management sold low cost reciprocal deposits during the third quarter of 2023 to manage liquidity and earn additional interest income of $0.4 million, earning greater than a 4.5% yield. These funds are off-balance sheet and totaled $68.7 million at September 30, 2023 of which $53.5 million were at an average rate paid to customers of 0.37%.

Total stockholders' equity increased $140.6 million, or 38.6%, when compared to December 31, 2022, primarily due to the $153.1 million increase in paid in capital due to the merger. As of September 30, 2023, the ratio of total equity to total assets was 8.84% and the ratio of total tangible equity to total tangible assets was 7.00% compared to 10.48% and 8.67% at the end of 2022, respectively.

Review of Quarterly Financial Results

Net interest income was $45.6 million for the third quarter of 2023, compared to $22.5 million for the second quarter of 2023 and $27.3 million for the third quarter of 2022. The increase in net interest income when compared to the prior periods was primarily due to the overall increased size of the balance sheet from the merger in the third quarter of 2023 as well as increases in net accretion interest income. Net accretion interest income for the three months ended September 30, 2023, June 30, 2023 and September 30, 2022 was $5.4 million, $0.3 million and $0.5 million, respectively. In addition, interest expense decreased due to lower borrowings when comparing the third quarter of 2023 to the second quarter of 2023, as higher cost average FHLB advances and other borrowings decreased $162.7 million from $305.0 million for the second quarter of 2023 to $142.3 million for the third quarter of 2023.

In general, since late 2022 and throughout 2023, deposits have repriced at a faster rate than loans due to the Federal Reserve Open Market Committee's increases in short-term interest rates over the last 18 months from 0.25% to 5.50%. However, the Company's net interest margin increased to 3.35% for the third quarter of 2023 from 2.68% for the second quarter of 2023 due to accretion interest from fair value marks, higher yields on CBTC's legacy loan portfolio and the paydown of higher cost wholesale funding with the proceeds received from the sale of CBTC's securities portfolio in July 2023. The Company's increase in interest-earning asset yields were 68 basis points greater than the increases in the cost of funds for the comparable periods. Comparing the third quarter of 2023 to the second quarter of 2023, the Company's interest-earning asset yields increased 87 basis points to 5.24% from 4.37%, while the cost funds increased at a slower rate of 19 basis points to 1.95% from 1.76% for the same period. In addition, excluding net accretion interest income for the same time periods, NIM increased 32 basis points to 2.96% for the third quarter of 2023 from 2.64% for the second quarter of 2023.

The Company's net interest margin decreased to 3.35% for the third quarter of 2023 from 3.38% for the third quarter of 2022 as the increase in funding costs slightly exceeded the additional interest income from accretion interest from fair value marks, higher yields on CBTC's legacy loan portfolio and the paydown of higher cost wholesale funding with the proceeds received from the sale of CBTC's securities portfolio in July 2023. The Company's increase in the cost of funds were seven basis points greater than the increase in interest-earning asset yields for the comparable periods. Comparing the third quarter of 2023 to the third quarter of 2022, the Company's interest-earning asset yields increased 146 basis points to 5.24% from 3.78%, while the cost funds increased at a faster rate of 153 basis points to 1.95% from 0.42% for the same period. 

The provision for credit losses was $28.2 million for the three months ended September 30, 2023. The comparable amounts were $0.7 million for both the three months ended June 30, 2023, and September 30, 2022, respectively. The $28.2 million provision for the third quarter of 2023 reflected approximately $20.1 million related to the acquisition of TCFC legacy loans, $7.3 million due to the change in ACL methodology on SUB legacy loans and $0.8 million related to third quarter activity. The increase in the provision for credit losses when compared to the third quarter of 2022 was also impacted by higher reserves required by the Company's CECL allowance model as compared to the incurred loss model utilized in 2022. Net charge-offs for the third quarter of 2023 were $1.4 million compared to net charge-offs of $50,000 for the second quarter of 2023 and net recoveries of $119,000 for the third quarter of 2022. Included in the net charge-offs for the third quarter of 2023 were $1.2 million in charge-offs related to the strategic loan sale of $10.7 million in loans that reduced classified assets and CRE concentrations.

At September 30, 2023 and June 30, 2023, nonperforming assets were $11.3 million or 0.20% of total assets and $4.7 million, or 0.13% of total assets, respectively. The balance of nonperforming assets increased primarily due to an increase in nonaccrual loans of $5.5 million, and an increase of $1.1 million in loans 90 days past due and still accruing. When comparing September 30, 2023 to September 30, 2022, nonperforming assets increased $8.5 million, primarily due to increases in nonaccrual loans of $7.0 million and loans 90 days past due and still accruing of $1.5 million. The modest increase in nonperforming assets was the result of assets acquired in the merger, a small increase in late payments in consumer loans and a proactive review of larger commercial relationships in the current interest rate environment.

Total noninterest income for the third quarter of 2023 of $18.3 million increased $13.0 million from $5.3 million for the second quarter of 2023 and increased $13.0 million from $5.3 million for the third quarter of 2022. The increases for both the three months ended June 30, 2023 and September 30, 2022 were primarily due to the bargain purchase gain of $12.2 million and an increase of $1.1 million in trust and investment fee income both the result of the acquisition of TCFC, partially offset by a loss of $2.2 million on the sale of investment securities in the third quarter of 2023. Management sold virtually all of CBTC available for sale investment securities soon after the merger close on July 1, 2023. The $2.2 million loss relates to the difference in the fair values of the securities on July 1, 2023 compared to actual sales proceeds received from the sales on the settlement date.

Total noninterest expense of $47.2 million for the third quarter of 2023 increased  $25.6 million or 118.2%,when compared to the second  quarter of 2023 expense of $21.6 million and increased $28.3 million or 149.5%, when compared to the third quarter of 2022 expense of $18.9 million. The increases in noninterest expense for the comparable periods were primarily due to merger costs and the addition of headcount and infrastructure, including 11 additional branches, amortization of intangible assets, and processing fees. Excluding merger and acquisition costs and core deposit amortization, of $17.5 million for the third quarter of 2023, $1.6 million for the second quarter of 2023 and $0.7 million for the third quarter of  2022, noninterest expense for the comparable periods was $29.7 million, $20.0 million and $18.2 million, respectively.

Review of Nine-Month Financial Results

Net interest income for the first nine months of 2023 was $93.8 million, an increase of $19.4 million, or 26.1%, when compared to the first nine months of 2022. The increase in net interest income was primarily due to an increase in total interest income of $61.4 million, or 75.2%, which included an increase in interest and fees on loans of $57.0 million, or 79.7%. The increase of interest and fees on loans was primarily due to increases in loan yields and in the average balance of loans of $1.1 billion, or 47.7%, largely due to the merger. Interest on investment securities increased $5.3 million, or 69.8%, primarily due to an increase in the average balance of $127.2 million, or 22.5%. Increases to net interest income were partially offset by increased total interest expense of $42.0 million, or 582.1%, primarily due to increases in the cost of funds and in the average balance of interest-bearing deposits of $547.0 million, or 25.7%, largely due to the merger.

The Company's net interest margin increased to 3.12% for the first nine months of 2023 from 3.09% for the first nine months of 2022. The increase in the net interest margin was primarily due to an increase in the average balance and rates earned on total earning assets of $800.2 million and 136 basis points, partially offset by an increase in the average balance and rates paid on interest-bearing liabilities of $694.5 million and 185 basis points. For the comparable periods, the cost of funds increased at a similar rate as interest-earning assets or 139 basis points to 1.70% for the nine months ended September 30, 2023 compared to 0.31% for the nine months ended September 30, 2022. Total net accretion income for the first nine months of 2023 was $6.4 million, compared to $1.2 million for the first nine months of 2022. During 2023, until the balance sheet restructuring in the third quarter of 2023, the net interest margin experienced compression due to the Company's liability sensitive position, the result of deposit rate pressures and significantly higher FHLB borrowing rates.

The provision for credit losses for the nine months ended September 30, 2023 and 2022 was $30.1 million and $1.5 million, respectively. The increase in the provision for credit losses for the first nine months of 2023 was impacted by higher levels of reserves required by the Company's CECL model as compared to the incurred loss methodology utilized in 2022 and higher reserves required for the acquisition of TCFC in the third quarter of 2023 as well as the impact on the change in CECL methodology in the third quarter of 2023 for the legacy SUB loans.

Total noninterest income for the nine months ended September 30, 2023 increased $11.7 million or 68.2%, when compared to the same period in 2022. The increase in noninterest income was primarily due to the bargain purchase gain of $12.2 million associated with the merger, an increase of $1.4 million in trust and investment fee income and an increase of $0.5 million in interchange credits, partially offset by a $2.2 million loss on sales of investment securities and a decrease of $0.7 million in title company revenue.

Total noninterest expense for the nine months ended September 30, 2023 increased $30.3 million, or 51.1%, when compared to the same period in 2022. Almost all noninterest expense line items increased as a result of the merger and the expanded operations of the newly combined Company. Merger-related expenses were almost entirely captured during the third quarter of 2023 and totaled $16.8 million for the first nine months of 2023, compared to the first nine months of 2022 of $1.1 million. As the Company continues its merger integration, a key focus of management will be to streamline processes, unlock operational efficiencies and reduce overall noninterest expenses.

Shore Bancshares Information

Shore Bancshares is a financial holding company headquartered in Easton, Maryland and is the parent company of Shore United Bank, N.A. Shore Bancshares engages in title work related to real estate transactions through its wholly-owned subsidiary, Mid-Maryland Title Company, Inc. and in trust and wealth management services through Wye Financial Partners, a division of Shore United Bank, N.A. 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. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: the expected cost savings, synergies and other financial benefits from the acquisition of TCFC or any other acquisition the Company has made or may make might not be realized within the expected time frames or at all; the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; recent adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments; changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing wars in Ukraine and the Middle East; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; any failures to adequately manage the transition from USD LIBOR as a reference rate; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; and other factors that may affect our future results. 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.