-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IfQT0f2TzrBeGVTHE33kl2BvRPTTNRFe1/UsW/j+iE6pB8xCfcmk/1isdf6Ir9Mi GC9o6E4ORJ2iCAcch9miIA== 0001014100-04-000234.txt : 20041110 0001014100-04-000234.hdr.sgml : 20041110 20041109171905 ACCESSION NUMBER: 0001014100-04-000234 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041104 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041109 DATE AS OF CHANGE: 20041109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHORE BANCSHARES INC CENTRAL INDEX KEY: 0001035092 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 521974638 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22345 FILM NUMBER: 041130647 BUSINESS ADDRESS: STREET 1: 18 EAST DOVER STREET CITY: EASTON STATE: MD ZIP: 21601-3013 BUSINESS PHONE: 4108221400 MAIL ADDRESS: STREET 1: 18 EAST DOVER STREET CITY: EASTON STATE: MD ZIP: 21601-3013 8-K 1 edg24688.txt CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 4, 2004 SHORE BANCSHARES, INC. (Exact name of registrant as specified in its charter) Maryland 0-22345 52-1974638 -------- ------- ---------- (State or other jurisdiction of (Commission file number) (IRS Employer incorporation or organization) Identification No.) 18 East Dover Street, Easton, Maryland 21601 -------------------------------------------- (Address of principal executive offices) (Zip Code) (410) 822-1400 -------------- (Registrant's telephone number, including area code) N/A --- (Former Name or Former Address, if Changed Since Last Report) Item 2.02. Results of Operations and Financial Condition. On November 9, 2004, Shore Bancshares, Inc. (the "Company") issued a press release describing the Company's unaudited financial results for the three and nine months ended September 30, 2004, a copy of which is furnished herewith as Exhibit 99.1. The information contained in this Item 2.02 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers. (d) Election of Directors. Effective November 4, 2004, the Board of Directors of Shore Bancshares, Inc. (the "Company") filed two vacancies on the Board by electing Steven A. Fulwood and Thomas H. Evans to serve as directors of the Company. Messrs. Fulwood and Evans have each been appointed to serve on the Board's Executive Committee and Strategic Planning Committee. Neither person was elected pursuant to any arrangement or understanding with any other person. Mr. Fulwood is the President of The Avon-Dixon Agency, LLC ("Avon-Dixon"), which is a wholly-owned subsidiary of the Company. The terms of Mr. Fulwood's employment, including his compensation and benefits, are detailed in his employment agreement with Avon-Dixon, a copy of which was filed with the Securities and Exchange Commission as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2004 and is incorporated herein by reference. In 2004, The Talbot Bank of Easton, Maryland ("Talbot Bank") made a loan to Mr. Fulwood in the principal amount of $375,000. Talbot Bank is a wholly-owned subsidiary of the Company. The loan was made in the normal course of Talbot Bank's business and on substantially the same terms, including interest rates, collateral, and repayment terms, as those prevailing at the same time for comparable transactions with third parties and does not involve more than the normal risk of collectability or present other unfavorable features. Mr. Evans is the President and Chief Executive Officer of The Felton Bank, which is also a wholly-owned subsidiary of the Company. In April 2004, Mr. Evans and the Company entered into a four-year employment agreement pursuant to which Mr. Evans is to receive an annual salary of $105,000, discretionary bonuses, fringe benefits, and participation in the pension, profit sharing, retirement, equity and incentive compensation plans, and vacation generally available to other officers of the Company's subsidiaries. -2- Item 9.01. Financial Statements and Exhibits. (c) Exhibits: Exhibit 10.1--Employment Agreement between The Avon-Dixon Agency, LLC and Steven Fulwood (incorporated by reference to Exhibit 10.6 of the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2004). Exhibit 99.1--Press Release dated November 9, 2004 (furnished herewith). SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SHORE BANCSHARES, INC. Dated: November 9, 2004 By: /s/ W. Moorhead Vermilye ----------------------------------------- W. Moorhead Vermilye President and CEO -3- EXHIBIT INDEX Exhibit Number Description - ------- ----------- 10.1 Employment Agreement between The Avon-Dixon Agency, LLC and Steven Fulwood (incorporated by reference to Exhibit 10.6 of the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2004). 99.1 Press Release dated November 9, 2004. EX-99.1 2 edg24688ex991.txt PRESS RELEASE Exhibit 99.1 Shore Bancshares, Inc. 18 E. Dover Street Easton, Maryland 21601 Phone 410-822-1400 PRESS RELEASE Shore Bancshares Reports 33.7% Increase in Third Quarter Earnings ----------------------------------------------------------------- November 9, 2004 Easton, Maryland - Shore Bancshares, Inc. (NASDAQ - SHBI) reported third quarter earnings of $2,935,000 or $0.53 per diluted share, which represents a 33.7% increase over third quarter 2003. Net income for the three months ended September 30, 2003 was $2,195,000 or $0.40 per diluted share. Net income for the nine-month period ended September 30, 2004 was $8,051,000 or $1.46 per diluted share, representing a 12.3% increase over September 30, 2003 earnings of $7,172,000 or $1.31 per diluted share. Returns on average assets and stockholders' equity were 1.39% and 11.85%, respectively, for the nine-months ended September 30, 2004. Total assets were $780 million, total deposits were $648 million and total stockholders' equity was $92 million. Net Interest Income Net interest income for the quarter ended September 30, 2004 was $7,704,000, compared to $5,988,000 for the same period last year, which represents a 28.7% increase. Net interest income for the nine months ended September 30, 2004 increased 17.4% totaling $21,213,000, a $3,140,000 increase over the same period last year. The increases in net interest income for the three and nine months ended September 30, 2004 resulted primarily from the acquisition in April 2004 of The Felton Bank, which contributed $658,000 and $1,267,000, respectively, in net interest income, as well as interest income generated by loan growth and increases in short-term interest rates. Interest expense declined $74,000 and $872,000 for the three and nine-month periods ended September 30, 2004, respectively. The Company's net interest margin was 3.98% for the nine months ended September 30, 2004, which is 8 basis points higher than one year ago. The Company continued to increase its volume of earning assets, which totaled $719,922,000 for the nine months ended September 30, 2004, as compared to $627,556,000 for the nine months ended September 30, 2003. The average yield on earning assets increased during the quarter to 5.21%, compared to 5.05% for the six months -5- ended June 30, 2004. The average rate paid for interest-bearing liabilities for the first nine months of 2004 declined to 1.52% from 1.95% for the same period in 2003. Loans and Deposits Loans, net of unearned income, totaled $576,069,000 at September 30, 2004, an increase of $101,114,000 or 21.3% since December 31, 2003. Approximately $47,906,000 of the loan growth is attributable to The Felton Bank. Average loans, net of unearned income, totaled $544,145,000 for the nine months ended September 30, 2004, which represents an increase of $90,702,000 or 20.0% over the same period last year. Total deposits at September 30, 2004 were $648,379,000, compared to $592,409,000 at December 31, 2003. Certificates of deposit of $100,000 or more increased $7,429,000 and other certificates of deposit increased $11,136,000 since December 31, 2003. As of September 30, 2004, The Felton Bank had Certificates of deposit of $100,000 or more totaling $5,898,000 and other certificates of deposit totaling $19,876,000. The provision for credit losses for the three- and nine-month periods ended September 30, 2004 was $165,000 and $370,000, respectively, compared to $75,000 and $235,000 for the same periods in 2003. Net charge-offs were $454,000 for the nine-month period ended September 30, 2004, compared to $204,000 for the same period last year. The increased charge-offs related to nonaccrual loans with losses that have been previously identified by management. Management believes that the provision for credit losses and the resulting allowance are adequate at September 30, 2004. Noninterest Income Excluding gains and losses on sales of securities for the three- and nine-month periods ended September 30, 2004, noninterest income increased $528,000 and $979,000, respectively, when compared to the same periods last year. Approximately $88,000 and $159,000 of the increase for the three and nine-month periods ended September 30, 2004, respectively, is attributable to The Felton Bank, while service charges on deposit accounts and certain fee increases implemented during the first quarter of 2004 added another $192,000 and $390,000 for the respective periods. Other fees and services offered by the Company increased $113,000 and $287,000 for the three- and nine-month periods, respectively, when compared to the same periods in 2003. Noninterest Expenses Total noninterest expense increased $923,000 and $2,167,000 for the three- and nine-month periods ended September 30, 2004, respectively, from the comparable periods in 2003. Operation of The Felton Bank represented $923,000 of this increase. For the quarter ended September 30, 2004, excluding amounts related to the Felton Bank, an additional $209,000 in salaries and benefits expense, $41,000 in occupancy expense related to certain new facilities owned by the Company, and $231,000 in other noninterest expense were recognized over the amounts for the same period in 2003. For the nine months ended September 30, 2004, salaries and benefits expense increased $534,000, occupancy expense -6- increased $154,000 and other noninterest expense increased $557,000, when compared to the same period in 2003. These increases resulted from the overall growth of the Company during the period. Shore Bancshares Information Shore Bancshares, Inc., headquartered in Easton, Maryland, is the largest independent financial holding company located on Maryland's Eastern Shore. It is the parent company of three banks, The Talbot Bank of Easton, Maryland, The Centreville National Bank of Maryland, and The Felton Bank; two insurance producer firms, The Avon-Dixon Agency, LLC, and Elliott Wilson Insurance, LLC; an insurance premium finance company, Mubell Finance, LLC; and a registered investment adviser firm, Wye Financial Services, LLC. Forward-Looking Statements This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements present management's expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are discussed in detail under the heading "Risk Factors" in Item 1 of Part I of the Annual Report of Shore Bancshares, Inc. on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A, for the year ended December 31, 2003. For further information contact: W. Moorhead Vermilye, President and CEO -----END PRIVACY-ENHANCED MESSAGE-----