Exhibit 99.1
18 E. Dover Street
Easton, Maryland 21601
Phone 410-763-7800
PRESS RELEASE
Shore Bancshares Reports First Quarter 2022 Financial Results
Easton, Maryland (4/28/2022) - Shore Bancshares, Inc. (NASDAQ - SHBI) (the “Company”) reported net income of $5.613 million or $0.28 per diluted common share for the first quarter of 2022, compared to net income of $2.723 million or $0.16 per diluted common share for the fourth quarter of 2021, and net income of $3.998 million or $0.34 per diluted common share for the first quarter of 2021. Net income, excluding merger related expenses for the first quarter of 2022 was $6.156 million or $0.31 per diluted common share, compared to net income, excluding merger related expenses of $7.914 million or $0.46 per diluted common share for the fourth quarter of 2021.
When comparing net income, excluding merger related expenses, for the first quarter of 2022 to the fourth quarter of 2021, net income decreased $1.8 million, primarily due increases in noninterest expenses of $3.7 million and provision for credit losses of $2.3 million, partially offset by increases in net interest income of $1.8 million and noninterest income of $917 thousand. When comparing net income, excluding merger related expenses, for the first quarter of 2022 to the first quarter of 2021, net income increased $2.4 million, primarily due to increases in net interest income of $8.6 million and noninterest income of $3.5 million, partially offset by an increase in noninterest expenses of $9.1 million.
“We are pleased to announce our first quarter earnings and financial results.” said Lloyd L. “Scott” Beatty, Jr., President and Chief Executive Officer. “We saw significant growth in both loans and deposits during the quarter, resulting from our ability to be competitive in all areas of our footprint. Our current size allows us the ability to originate larger loans than some of our competitors, while providing the opportunity for borrowers to remain with a local community bank. We are already experiencing the advantages of having a stronger presence in Central Maryland, particularly Anne Arundel County, and continue to capitalize on opportunities in our Delaware market.”
Balance Sheet Review
Total assets were $3.494 billion at March 31, 2022, a $34.4 million, or 1.0%, increase when compared to $3.460 billion at the end of 2021. This increase was due to an increase in loans held for investment of $61.9 million, or 2.9%, partially offset by a decrease in loans held for sale of $24.8 million, or 65.8%. The positive organic loan growth for loans held for investment was due to strong loan demand, specifically within our commercial real estate, construction and consumer portfolios, while loan demand for residential real estate was limited by an increasing interest rate environment and lack of inventory. As of March 31, 2022, the Company had 114 Paycheck Protection Program (“PPP’) loans totaling $14.9 million that were outstanding.
Total deposits increased $42.3 million, or 1.4%, when compared to December 31, 2021. The increase in total deposits was primarily due to $171.3 million in additional checking deposits, partially offset by decreases in money market and savings deposits of $77.9 million and noninterest-bearing deposits of $51.1 million.
Total stockholders’ equity increased $1.2 million, or less than 1%, when compared to December 31, 2021, primarily due to first quarter earnings, partially offset by unrealized losses of $2.2 million on available for sale securities during the quarter, which are recorded in accumulated other comprehensive loss. At March 31, 2022, the ratio of total equity to total assets was 10.07% and the ratio of total tangible equity to total tangible assets was 8.22%.
Page 2 of 15
Review of Quarterly Financial Results
Net interest income was $22.4 million for the first quarter of 2022, compared to $20.6 million for the fourth quarter of 2021 and $13.8 million for the first quarter of 2021. The increase in net interest income when compared to the fourth quarter of 2021 was primarily due to increases in interest and fees on loans of $1.5 million, interest on taxable investment securities of $322 thousand and interest on deposits with other banks of $85 thousand, partially offset by increases in expense on interest-bearing deposits of $86 thousand and long-term borrowings of $25 thousand. The improvement in interest and fees on loans was due to an increase in the average balance of loans of $248.6 million, or 13.2%. The acquisition of loans from Severn had a significant impact on the average balance of loans due to carrying these loans for a full quarter but was also complemented by significant organic loan growth of $61.9 million, fees received from PPP loan forgiveness of $272 thousand and accretion income from loans acquired of $258 thousand. The increase in interest on deposits with other banks was primarily due to an increase in the average balance of $100.6 million, or 20.7%, combined with an increase in the yield on these deposits of 4bps due to an increase in the Fed funds rate during the first quarter. The increase in interest on taxable investment securities was driven by an increase in the average balance within these securities of $62.3 million, or 13.3%, due to a full quarter of acquired securities from Severn and additional purchases of held to maturity securities during the first quarter of 2022. The increase in deposits with other banks and investment securities was primarily due to excess liquidity. The increase in interest expense on interest-bearing deposits was primarily due an increase in the average balance of interest-bearing deposits of $284.4 million, or 15.4%, the result of both a full quarter of deposits acquired from Severn and $93.3 million in organic deposit growth during the first quarter of 2022. The rates paid on interest-bearing deposits decreased slightly to 26bps in the first quarter of 2022 from 27bps in the fourth quarter of 2021, maintaining a low cost of funds on core deposits. The increase in interest expenses was due to a full quarter of additional long-term debt, specifically the junior subordinated debt acquired from Severn.
The increase in net interest income when compared to the first quarter of 2021 was primarily due to increases in interest and fees on loans of $7.7 million, interest on taxable investment securities of $1.1 million and interest on deposits with other banks of $207 thousand, partially offset by increases in expense on interest-bearing deposits of $174 thousand and long-term borrowings of $175 thousand. The increase in interest income was due to a higher average balance in loans, taxable investment securities and deposits with other banks of $684.9 million, $303.2 million and $397.6 million, respectively. These assets were significantly impacted by the acquisition of Severn in the fourth quarter of 2021 as well as organic loan growth and excess liquidity throughout 2021 and 2022. Interest-bearing liabilities also increased when compared to the first quarter of 2021 due to a higher average balance in interest-bearing deposits of $902.9 million, coupled with the addition of long-term advances from the FHLB of $10.1 million and subordinated debt of $18.2 million net of a fair value adjustment of $2.4 million, both of which were acquired from Severn in the fourth quarter of 2021. The long-term advances from the FHLB are set to mature in October of 2022 and the subordinated debt acquired from Severn may be called at any time.
The Company’s net interest margin decreased to 2.78% for the first quarter of 2022 from 2.87% for the fourth quarter of 2021 and 3.00% for the first quarter of 2021. The decrease in net interest margin in the first quarter of 2022 when compared to the fourth quarter of 2021, was primarily due to lower yields on loans of 13bps resulting from decreases in accretion income on the acquired loan portfolio and PPP fee income. In addition, excess liquidity continues to put downward pressure on earning assets due to excess cash being invested in lower yielding assets. The decrease in net interest margin in the first quarter of 2022 when compared to the first quarter of 2021, was primarily due to a lower yield on taxable investment securities of 14bps, which was magnified by an increase in the average balance in these securities of $303.2 million, partially offset by a higher yield on loans of 17bps and lower rates paid on interest-bearing liabilities of 13bps. As previously mentioned, excess liquidity when compared to the first quarter of 2021 continues to compress the overall net interest margin. Absent excess liquidity of $400 million, we estimate our margin for the first quarter of 2022 would have been 3.07%.
The provision for credit losses was $600 thousand for the three months ended March 31, 2022. The comparable amounts were $(1.7) million and $425 thousand for the three months ended December 31, 2021 and March 31, 2021, respectively. The increase in the provision for credit losses during the first quarter of 2022 as compared to the prior quarter was primarily attributed to the Company’s reduction of pandemic related qualitative factors. The ratio of the allowance for credit losses to period-end loans, excluding PPP loans and acquired loans, was 0.92% at March 31, 2022, compared to 0.93% at December 31, 2021 and 1.11% at March 31, 2021. The decreased percentage of the allowance to total loans, excluding PPP loans and acquired loans, as compared to the fourth quarter of 2021, was due to further reduced pandemic qualitative factors previously mentioned, partially offset by the addition of organic loan growth in the first quarter of 2022 which required additional reserves. The decreased percentage of the allowance to total loans, excluding PPP loans and acquired loans, as compared to the first quarter of 2021, was primarily due to improved credit quality and reduced pandemic qualitative factors, during the fourth quarter of 2021 and first quarter of 2022. The Company reported net recoveries of $166 thousand in the first quarter of 2022, compared to net recoveries of $142 thousand in the fourth quarter of 2021 and no net charge offs or recoveries in the first quarter of 2021.
Page 3 of 15
At March 31, 2022, nonperforming assets were $3.9 million, compared to $3.8 million at December 31, 2021. The balance of nonperforming assets slightly increased due to increases in nonaccrual loans of $62 thousand, or 2.2%, and other real estate owned of $29 thousand, or 5.5%. Accruing troubled debt restructurings (“TDRs”) decreased $663 thousand, or 11.7% at March 31, 2022 compared to December 31, 2021. When comparing the first quarter of 2022 to the first quarter of 2021, nonperforming assets decreased $2.4 million, or 38.3%, primarily due to decreases in nonaccrual loans of $2.0 million, or 41.6%, and loans 90 days past due and still accruing of $729 thousand, or 61.4%. Accruing TDRs decreased $1.5 million, or 22.5%, and other real estate owned increased $356 thousand, or 173.7%, mainly due to acquiring other real estate owned from the Severn acquisition. The ratio of nonperforming assets and accruing TDRs to total assets was 0.25%, 0.27% and 0.63% at March 31, 2022, December 31, 2021 and March 31, 2021, respectively. In addition, the ratio of accruing TDRs to total loans at March 31, 2022 was 0.23%, compared to 0.27% at December 31, 2021 and 0.44% at March 31, 2021.
Total noninterest income for the first quarter of 2022 increased $917 thousand, or 17.9%, when compared to the fourth quarter of 2021 and increased $3.5 million, or 136.4%, when compared to the first quarter of 2021. The increase compared to the fourth quarter of 2021 was primarily due to increases in revenue associated with the mortgage division of $919 thousand, service charges on deposit accounts of $125 thousand and revenue from Mid-Maryland Title Company, Inc. (“Mid-MD”) of $76 thousand, partially offset by a reduction in other noninterest income primarily related to higher expenses related to retirement funding costs as well as lower other loan fee income. The increase in noninterest income when compared to the first quarter of 2021, was among all noninterest income categories, but primarily impacted by the addition of mortgage-banking revenue of $1.9 million, service charges on deposit accounts of $685 thousand, additional rental fee income of $345 thousand and Mid-MD revenue of $323 thousand.
Total noninterest expense, excluding merger related expenses, for the first quarter of 2022 increased $3.7 million, or 15.8%, when compared to the fourth quarter of 2021 and increased $9.1 million, or 86.7%, when compared to the first quarter of 2021. The increase in noninterest expense when compared to the fourth and first quarters of 2021 was primarily due to increases in salaries and wages, employee related benefits, occupancy expense, data processing, amortization of intangible assets and legal and professional fees, which were all significantly impacted by adding Severn and its operations for a full quarter in 2022. In addition, salaries and wages were impacted by incentive increases which took effect in January.
Shore Bancshares Information
Shore Bancshares 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 Shore United Bank. Shore Bancshares engages in trust and wealth management services through Wye Financial Partners, a division of Shore United Bank.
Additional information is available at www.shorebancshares.com.
Page 4 of 15
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: changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing war in Ukraine; the magnitude and duration of the COVID-19 pandemic and related variants and mutations and their impact on the global economy and financial market conditions and our business, results of operations, and financial condition; 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; the transition away from USD LIBOR and uncertainty regarding potential alternative reference rates, including SOFR; 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; 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.
For further information contact: Edward Allen, Executive Vice President and Chief Financial Officer, 410-763-7800
Page 5 of 15
Shore Bancshares, Inc.
Financial Highlights (Unaudited)
(Dollars in thousands, except per share data)
| For the Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2022 | 2021 | Change | ||||||||||
| PROFITABILITY FOR THE PERIOD | ||||||||||||
| Net interest income | $ | 22,430 | $ | 13,800 | 62.5 | % | ||||||
| Provision for credit losses | 600 | 425 | 41.2 | |||||||||
| Noninterest income | 6,046 | 2,557 | 136.4 | |||||||||
| Noninterest expense | 20,332 | 10,499 | 93.7 | |||||||||
| Income before income taxes | 7,544 | 5,433 | 38.9 | |||||||||
| Income tax expense | 1,931 | 1,435 | 34.6 | |||||||||
| Net income | $ | 5,613 | $ | 3,998 | 40.4 | |||||||
| Return on average assets | 0.65 | % | 0.82 | % | (17 | )bp | ||||||
| Return on average assets excluding amortization of intangibles and merger related expenses - Non-GAAP (2) | 0.76 | 0.82 | (6 | ) | ||||||||
| Return on average equity | 6.45 | 8.28 | (183 | ) | ||||||||
| Return on average tangible equity - Non-GAAP (1), (2) | 9.40 | 9.40 | — | |||||||||
| Net interest margin | 2.78 | 3.00 | (22 | ) | ||||||||
| Efficiency ratio - GAAP | 71.40 | 64.19 | 721 | |||||||||
| Efficiency ratio - Non-GAAP (1), (2) | 66.93 | 63.28 | 365 | |||||||||
| PER SHARE DATA | ||||||||||||
| Basic and diluted net income per common share | $ | 0.28 | $ | 0.34 | (17.6 | )% | ||||||
| Dividends paid per common share | $ | 0.12 | $ | 0.12 | — | |||||||
| Book value per common share at period end | 17.73 | 16.69 | 6.2 | |||||||||
| Tangible book value per common share at period end - Non-GAAP (1) | 14.19 | 15.06 | (5.8 | ) | ||||||||
| Market value at period end | 20.48 | 17.02 | 20.3 | |||||||||
| Market range: | ||||||||||||
| High | 21.41 | 18.10 | 18.3 | |||||||||
| Low | 19.34 | 12.99 | 48.9 | |||||||||
| AVERAGE BALANCE SHEET DATA | ||||||||||||
| Loans | $ | 2,135,734 | $ | 1,450,883 | 47.2 | % | ||||||
| Investment securities | 531,017 | 227,816 | 133.1 | |||||||||
| Earning assets | 3,253,549 | 1,867,930 | 74.2 | |||||||||
| Assets | 3,477,481 | 1,975,951 | 76.0 | |||||||||
| Deposits | 3,044,213 | 1,742,666 | 74.7 | |||||||||
| Stockholders' equity | 353,011 | 195,791 | 80.3 | |||||||||
Page 6 of 15
| CREDIT QUALITY DATA | ||||||||||||
| Net (recoveries) charge-offs | $ | (166 | ) | $ | — | (100.0 | )% | |||||
| Nonaccrual loans | $ | 2,848 | $ | 4,880 | (41.6 | ) | ||||||
| Loans 90 days past due and still accruing | 459 | 1,188 | (61.4 | ) | ||||||||
| Other real estate owned | 561 | 205 | — | |||||||||
| Total nonperforming assets | 3,868 | 6,273 | (38.3 | ) | ||||||||
| Accruing troubled debt restructurings (TDRs) excluding acquired | 5,004 | 6,456 | (22.5 | ) | ||||||||
| Total nonperforming assets and accruing TDRs excluding acquired | $ | 8,872 | $ | 12,729 | (30.3 | ) | ||||||
| CAPITAL AND CREDIT QUALITY RATIOS | ||||||||||||
| Period-end equity to assets | 10.07 | % | 9.61 | % | 46 | bp | ||||||
| Period-end tangible equity to tangible assets - Non-GAAP (1) | 8.22 | 8.76 | (54 | ) | ||||||||
| Annualized net (recoveries) charge-offs to average loans | (0.03 | ) | — | (3 | ) | |||||||
| Allowance for credit losses as a percent of: | ||||||||||||
| Period-end loans (3) | 0.67 | 0.98 | (31 | ) | ||||||||
| Period-end loans (4) | 0.92 | 1.11 | (19 | ) | ||||||||
| Nonaccrual loans | 516.50 | 293.30 | 223 | |||||||||
| Nonperforming assets | 380.30 | 228.17 | 152 | |||||||||
| Accruing TDRs | 293.96 | 221.70 | 72 | |||||||||
| Nonperforming assets and accruing TDRs | 165.80 | 112.44 | 53 | |||||||||
| As a percent of total loans: | ||||||||||||
| Nonaccrual loans | 0.13 | 0.33 | (20 | ) | ||||||||
| Accruing TDRs | 0.23 | 0.44 | (21 | ) | ||||||||
| Nonaccrual loans and accruing TDRs | 0.36 | 0.78 | (42 | ) | ||||||||
| As a percent of total loans+other real estate owned: | ||||||||||||
| Nonperforming assets | 0.18 | 0.43 | (25 | ) | ||||||||
| Nonperforming assets and accruing TDRs | 0.41 | 0.87 | (46 | ) | ||||||||
| As a percent of total assets: | ||||||||||||
| Nonaccrual loans | 0.08 | 0.24 | (16 | ) | ||||||||
| Nonperforming assets | 0.11 | 0.31 | (20 | ) | ||||||||
| Accruing TDRs | 0.14 | 0.32 | (18 | ) | ||||||||
| Nonperforming assets and accruing TDRs | 0.25 | 0.63 | (38 | ) |
| (1) | See the reconciliation table that begins on page 14 of 15. |
| (2) | This ratio excludes merger related expenses (Non-GAAP). |
| (3) | As of March 31, 2022 and March 31, 2021, these ratios included all loans held for investment, including PPP loans of $14.9 million and $129.1 million, respectively. |
| (4) | As of March 31, 2022 and March 31, 2021, these ratios exclude PPP loans, acquired loans, and the associated purchase discount mark on the acquired loans from both Severn and Northwest. |
Page 7 of 15
Shore Bancshares, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands, except per share data)
| March 31, 2022 | ||||||||||||||||
| March 31, | December 31, | March 31, | compared to | |||||||||||||
| 2022 | 2021 | 2021 | December 31, 2021 | |||||||||||||
| ASSETS | ||||||||||||||||
| Cash and due from banks | $ | 16,206 | $ | 16,919 | $ | 14,553 | (4.2 | )% | ||||||||
| Interest-bearing deposits with other banks | 554,770 | 566,694 | 212,533 | (2.1 | ) | |||||||||||
| Cash and cash equivalents | 570,976 | 583,613 | 227,086 | (2.2 | ) | |||||||||||
| Investment securities available for sale (at fair value) | 106,695 | 116,982 | 124,103 | (8.8 | ) | |||||||||||
| Investment securities held to maturity (at amortized cost) | 407,138 | 404,594 | 125,929 | 0.6 | ||||||||||||
| Equity securities, at fair value | 1,305 | 1,372 | 1,382 | (4.9 | ) | |||||||||||
| Restricted securities | 9,894 | 4,159 | 3,189 | 137.9 | ||||||||||||
| Loans held for sale, at fair value | 12,906 | 37,749 | - | (65.8 | ) | |||||||||||
| Loans held for investment | 2,181,106 | 2,119,175 | 1,461,522 | 2.9 | ||||||||||||
| Less: allowance for credit losses | (14,710 | ) | (13,944 | ) | (14,313 | ) | 5.5 | |||||||||
| Loans, net | 2,166,396 | 2,105,231 | 1,447,209 | 2.9 | ||||||||||||
| Premises and equipment, net | 52,049 | 51,624 | 25,308 | 0.8 | ||||||||||||
| Goodwill | 63,281 | 63,421 | 17,518 | (0.2 | ) | |||||||||||
| Other intangible assets, net | 7,018 | 7,535 | 1,593 | (6.9 | ) | |||||||||||
| Other real estate owned, net | 561 | 532 | 205 | 5.5 | ||||||||||||
| Mortgage servicing rights | 5,113 | 4,087 | — | 25.1 | ||||||||||||
| Right of use assets, net | 10,180 | 11,370 | 7,229 | (10.5 | ) | |||||||||||
| Other assets | 80,985 | 67,867 | 58,880 | 19.3 | ||||||||||||
| Total assets | $ | 3,494,497 | $ | 3,460,136 | $ | 2,039,631 | 1.0 | |||||||||
| LIABILITIES | ||||||||||||||||
| Noninterest-bearing deposits | $ | 876,415 | $ | 927,497 | $ | 533,823 | (5.5 | ) | ||||||||
| Interest-bearing deposits | 2,192,080 | 2,098,739 | 1,266,813 | 4.4 | ||||||||||||
| Total deposits | 3,068,495 | 3,026,236 | 1,800,636 | 1.4 | ||||||||||||
| Securities sold under retail repurchase agreements | — | 4,143 | 3,501 | (100.0 | ) | |||||||||||
| Advances from FHLB - long-term | 10,094 | 10,135 | — | (0.4 | ) | |||||||||||
| Subordinated debt | 42,840 | 42,762 | 24,460 | 0.2 | ||||||||||||
| Total borrowings | 52,934 | 57,040 | 27,961 | |||||||||||||
| Lease liabilities | 10,397 | 11,567 | 7,329 | (10.1 | ) | |||||||||||
| Accrued expenses and other liabilities | 10,807 | 14,600 | 7,601 | (26.0 | ) | |||||||||||
| Total liabilities | 3,142,633 | 3,109,443 | 1,843,527 | 1.1 | ||||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||||||
| Common stock, par value $0.01; authorized 35,000,000 shares | 198 | 198 | 118 | — | ||||||||||||
| Additional paid in capital | 200,640 | 200,473 | 51,445 | 0.1 | ||||||||||||
| Retained earnings | 153,198 | 149,966 | 143,794 | 2.2 | ||||||||||||
| Accumulated other comprehensive income (loss) | (2,172 | ) | 56 | 747 | (3,978.6 | ) | ||||||||||
| Total stockholders' equity | 351,864 | 350,693 | 196,104 | 0.3 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 3,494,497 | $ | 3,460,136 | $ | 2,039,631 | 1.0 | |||||||||
| Period-end common shares outstanding | 19,843 | 19,808 | 11,752 | 0.2 | ||||||||||||
| Book value per common share | $ | 17.73 | $ | 17.71 | $ | 16.69 | 0.1 | |||||||||
Page 8 of 15
Shore Bancshares, Inc.
Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
| For the Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
| INTEREST INCOME | ||||||||||||
| Interest and fees on loans | $ | 22,085 | $ | 14,366 | 53.7 | % | ||||||
| Interest on investment securities: | ||||||||||||
| Taxable | 1,985 | 931 | 113.2 | |||||||||
| Interest on deposits with other banks | 254 | 47 | 440.4 | |||||||||
| Total interest income | 24,324 | 15,344 | 58.5 | |||||||||
| INTEREST EXPENSE | ||||||||||||
| Interest on deposits | 1,358 | 1,184 | 14.7 | |||||||||
| Interest on short-term borrowings | 2 | 1 | 100.0 | |||||||||
| Interest on long-term borrowings | 534 | 359 | 48.7 | |||||||||
| Total interest expense | 1,894 | 1,544 | 22.7 | |||||||||
| NET INTEREST INCOME | 22,430 | 13,800 | 62.5 | |||||||||
| Provision for credit losses | 600 | 425 | 41.2 | |||||||||
| NET INTEREST INCOME AFTER PROVISION | ||||||||||||
| FOR CREDIT LOSSES | 21,830 | 13,375 | 63.2 | |||||||||
| NONINTEREST INCOME | ||||||||||||
| Service charges on deposit accounts | 1,359 | 674 | 101.6 | |||||||||
| Trust and investment fee income | 514 | 407 | 26.3 | |||||||||
| Interchange credits | 1,038 | 869 | 19.4 | |||||||||
| Mortgage-banking revenue | 1,867 | — | — | |||||||||
| Title Company revenue | 323 | — | — | |||||||||
| Other noninterest income | 945 | 607 | 55.7 | |||||||||
| Total noninterest income | 6,046 | 2,557 | 136.4 | |||||||||
| NONINTEREST EXPENSE | ||||||||||||
| Salaries and wages | 9,562 | 4,142 | 130.9 | |||||||||
| Employee benefits | 2,662 | 1,844 | 44.4 | |||||||||
| Occupancy expense | 1,567 | 814 | 92.5 | |||||||||
| Furniture and equipment expense | 429 | 307 | 39.7 | |||||||||
| Data processing | 1,607 | 1,127 | 42.6 | |||||||||
| Directors' fees | 190 | 149 | 27.5 | |||||||||
| Amortization of intangible assets | 517 | 126 | 310.3 | |||||||||
| FDIC insurance premium expense | 343 | 185 | 85.4 | |||||||||
| Other real estate owned, net | (6 | ) | 1 | (700.0 | ) | |||||||
| Legal and professional fees | 637 | 516 | 23.4 | |||||||||
| Merger related expenses | 730 | — | — | |||||||||
| Other noninterest expenses | 2,094 | 1,288 | 62.6 | |||||||||
| Total noninterest expense | 20,332 | 10,499 | 93.7 | |||||||||
| Income before income taxes | 7,544 | 5,433 | 38.9 | |||||||||
| Income tax expense | 1,931 | 1,435 | 34.6 | |||||||||
| NET INCOME | $ | 5,613 | $ | 3,998 | 40.4 | |||||||
| Weighted average shares outstanding - basic | 19,828 | 11,745 | 68.8 | |||||||||
| Weighted average shares outstanding - diluted | 19,828 | 11,747 | 68.8 | |||||||||
| Basic and diluted net income per common share | $ | 0.28 | $ | 0.34 | (17.6 | ) | ||||||
| Dividends paid per common share | 0.12 | 0.12 | — | |||||||||
Page 9 of 15
Shore Bancshares, Inc.
Consolidated Average Balance Sheets (Unaudited)
(Dollars in thousands)
| For the Three Months Ended | ||||||||||||||||
| March 31, | ||||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Average | Yield/ | Average | Yield/ | |||||||||||||
| balance | rate | balance | rate | |||||||||||||
| Earning assets | ||||||||||||||||
| Loans (1), (2), (3) | $ | 2,135,734 | 4.20 | % | $ | 1,450,883 | 4.03 | % | ||||||||
| Investment securities | ||||||||||||||||
| Taxable | 531,017 | 1.49 | 227,816 | 1.63 | ||||||||||||
| Interest-bearing deposits | 586,798 | 0.18 | 189,231 | 0.10 | ||||||||||||
| Total earning assets | 3,253,549 | 3.01 | % | 1,867,930 | 3.34 | % | ||||||||||
| Cash and due from banks | (15,253 | ) | 19,245 | |||||||||||||
| Other assets | 253,424 | 103,010 | ||||||||||||||
| Allowance for credit losses | (14,239 | ) | (14,234 | ) | ||||||||||||
| Total assets | $ | 3,477,481 | $ | 1,975,951 | ||||||||||||
| Interest-bearing liabilities | ||||||||||||||||
| Demand deposits | $ | 589,737 | 0.16 | % | $ | 438,340 | 0.14 | % | ||||||||
| Money market and savings deposits | 1,075,791 | 0.23 | 510,881 | 0.18 | ||||||||||||
| Certificates of deposit $100,000 or more | 286,587 | 0.40 | 130,745 | 1.26 | ||||||||||||
| Other time deposits | 175,683 | 0.57 | 144,919 | 1.10 | ||||||||||||
| Interest-bearing deposits | 2,127,798 | 0.26 | 1,224,885 | 0.39 | ||||||||||||
| Securities sold under retail repurchase | ||||||||||||||||
| agreements and federal funds purchased | 2,770 | 0.29 | 2,238 | 0.18 | ||||||||||||
| Advances from FHLB - long-term | 10,116 | 0.57 | — | — | ||||||||||||
| Subordinated debt | 42,804 | 4.93 | 24,443 | 5.96 | ||||||||||||
| Total interest-bearing liabilities | 2,183,488 | 0.35 | % | 1,251,566 | 0.50 | % | ||||||||||
| Noninterest-bearing deposits | 916,415 | 517,781 | ||||||||||||||
| Accrued expenses and other liabilities | 24,567 | 10,813 | ||||||||||||||
| Stockholders' equity | 353,011 | 195,791 | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 3,477,481 | $ | 1,975,951 | ||||||||||||
| Net interest spread | 2.66 | % | 2.84 | % | ||||||||||||
| Net interest margin | 2.78 | % | 3.00 | % | ||||||||||||
(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense.
(2) Average loan balances include nonaccrual loans.
(3) Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations.
Page 10 of 15
Shore Bancshares, Inc.
Financial Highlights By Quarter (Unaudited)
(Dollars in thousands, except per share data)
| 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | Q1 2022 | Q1 2022 | ||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | compared to | compared to | ||||||||||||||||||||||
| Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2021 | Q1 2021 | ||||||||||||||||||||||
| PROFITABILITY FOR THE PERIOD | ||||||||||||||||||||||||||||
| Taxable-equivalent net interest income | $ | 22,469 | $ | 20,652 | $ | 15,623 | $ | 14,141 | $ | 13,836 | 8.8 | % | 62.4 | % | ||||||||||||||
| Less: Taxable-equivalent adjustment | 39 | 13 | 34 | 38 | 36 | 200.0 | 8.3 | |||||||||||||||||||||
| Net interest income | 22,430 | 20,639 | 15,589 | 14,103 | 13,800 | 8.7 | 62.5 | |||||||||||||||||||||
| Provision for credit losses | 600 | (1,723 | ) | 290 | 650 | 425 | 134.8 | 41.2 | ||||||||||||||||||||
| Noninterest income | 6,046 | 5,129 | 2,909 | 2,903 | 2,557 | 17.9 | 136.4 | |||||||||||||||||||||
| Noninterest expense | 20,332 | 23,497 | 11,934 | 10,876 | 10,499 | (13.5 | ) | 93.7 | ||||||||||||||||||||
| Income before income taxes | 7,544 | 3,994 | 6,274 | 5,480 | 5,433 | 88.9 | 38.9 | |||||||||||||||||||||
| Income tax expense | 1,931 | 1,271 | 1,657 | 1,449 | 1,435 | 51.9 | 34.6 | |||||||||||||||||||||
| Net income | $ | 5,613 | $ | 2,723 | $ | 4,617 | $ | 4,031 | $ | 3,998 | 106.1 | 40.4 | ||||||||||||||||
| Return on average assets | 0.65 | % | 0.36 | % | 0.84 | % | 0.78 | % | 0.82 | % | 29 | bp | (17 | )bp | ||||||||||||||
| Return on average assets excluding merger expenses - Non-GAAP (2) | 0.76 | 1.07 | 0.94 | 0.86 | 0.82 | (31 | ) | (6 | ) | |||||||||||||||||||
| Return on average equity | 6.45 | 3.59 | 9.12 | 8.19 | 8.28 | 286 | (183 | ) | ||||||||||||||||||||
| Return on average tangible equity - Non-GAAP (1) | 9.40 | 13.06 | 11.12 | 9.89 | 9.40 | (366 | ) | — | ||||||||||||||||||||
| Net interest margin | 2.78 | 2.87 | 2.99 | 2.91 | 3.00 | (9 | ) | (22 | ) | |||||||||||||||||||
| Efficiency ratio - GAAP | 71.40 | 91.19 | 64.52 | 63.95 | 64.19 | (1,979 | ) | 721 | ||||||||||||||||||||
| Efficiency ratio - Non-GAAP (1), (2) | 66.93 | 60.13 | 60.92 | 60.90 | 63.28 | 680 | 365 | |||||||||||||||||||||
| PER SHARE DATA | ||||||||||||||||||||||||||||
| Basic and diluted net income per common share | $ | 0.28 | $ | 0.16 | $ | 0.39 | $ | 0.34 | $ | 0.34 | 75.0 | % | (17.6 | )% | ||||||||||||||
| Dividends paid per common share | 0.12 | 0.12 | 0.12 | 0.12 | 0.12 | — | — | |||||||||||||||||||||
| Book value per common share at period end | 17.73 | 17.71 | 17.15 | 16.91 | 16.69 | 0.1 | 6.2 | |||||||||||||||||||||
| Tangible book value per common share at period end - Non-GAAP (1) | 14.19 | 14.12 | 15.55 | 15.29 | 15.06 | 0.5 | (5.8 | ) | ||||||||||||||||||||
| Market value at period end | 20.48 | 20.85 | 17.73 | 16.75 | 17.02 | (1.8 | ) | 20.3 | ||||||||||||||||||||
| Market range: | ||||||||||||||||||||||||||||
| High | 21.41 | 23.19 | 18.00 | 18.01 | 18.10 | (7.7 | ) | 18.3 | ||||||||||||||||||||
| Low | 19.34 | 17.50 | 16.35 | 16.10 | 12.99 | 10.5 | 48.9 | |||||||||||||||||||||
Page 11 of 15
| AVERAGE BALANCE SHEET DATA | ||||||||||||||||||||||||||||
| Loans | $ | 2,135,734 | $ | 1,887,126 | $ | 1,487,281 | $ | 1,444,684 | $ | 1,450,883 | 13.2 | % | 47.2 | % | ||||||||||||||
| Investment securities | 531,017 | 468,724 | 334,205 | 286,121 | 227,816 | 13.3 | 133.1 | |||||||||||||||||||||
| Earning assets | 3,253,549 | 2,842,097 | 2,071,505 | 1,949,509 | 1,867,930 | 14.5 | 74.2 | |||||||||||||||||||||
| Assets | 3,477,481 | 3,037,262 | 2,184,448 | 2,061,214 | 1,975,951 | 14.5 | 76.0 | |||||||||||||||||||||
| Deposits | 3,044,213 | 2,547,151 | 1,943,225 | 1,822,148 | 1,742,666 | 19.5 | 74.7 | |||||||||||||||||||||
| Stockholders' equity | 353,011 | 301,095 | 200,881 | 197,532 | 195,791 | 17.2 | 80.3 | |||||||||||||||||||||
| CREDIT QUALITY DATA | ||||||||||||||||||||||||||||
| Net (recoveries) charge-offs | $ | (166 | ) | $ | (142 | ) | $ | (147 | ) | $ | (125 | ) | $ | — | (16.9 | )% | (100.0 | )% | ||||||||||
| Nonaccrual loans | $ | 2,848 | $ | 2,786 | $ | 3,457 | $ | 3,947 | $ | 4,880 | 2.2 | (41.6 | ) | |||||||||||||||
| Loans 90 days past due and still accruing | 459 | 508 | 748 | 752 | 1,188 | (9.6 | ) | (61.4 | ) | |||||||||||||||||||
| Other real estate owned | 561 | 532 | 203 | 203 | 205 | 5.5 | 173.7 | |||||||||||||||||||||
| Total nonperforming assets | $ | 3,868 | $ | 3,826 | $ | 4,408 | $ | 4,902 | $ | 6,273 | 1.1 | (38.3 | ) | |||||||||||||||
| Accruing troubled debt restructurings (TDRs) excluding acquired | $ | 5,004 | $ | 5,667 | $ | 5,750 | $ | 6,338 | $ | 6,456 | (11.7 | ) | (22.5 | ) | ||||||||||||||
| Total nonperforming assets and accruing TDRs | $ | 8,872 | $ | 9,493 | $ | 10,158 | $ | 11,240 | $ | 12,729 | (6.5 | ) | (30.3 | ) | ||||||||||||||
| CAPITAL AND CREDIT QUALITY RATIOS | ||||||||||||||||||||||||||||
| Period-end equity to assets | 10.07 | % | 10.14 | % | 8.92 | % | 9.37 | % | 9.61 | % | (7 | )bp | 46 | bp | ||||||||||||||
| Period-end tangible equity to tangible assets - Non-GAAP (1) | 8.22 | 8.25 | 8.15 | 8.55 | 8.76 | (3 | ) | (54 | ) | |||||||||||||||||||
| Annualized net (recoveries) charge-offs to average loans | (0.03 | ) | (0.03 | ) | (0.04 | ) | (0.03 | ) | — | — | (3 | ) | ||||||||||||||||
| Allowance for credit losses as a percent of: | ||||||||||||||||||||||||||||
| Period-end loans (3) | 0.67 | 0.66 | 1.04 | 1.02 | 0.98 | 1 | (31 | ) | ||||||||||||||||||||
| Period-end loans (4) | 0.92 | 0.93 | 1.10 | 1.12 | 1.11 | (1 | ) | (19 | ) | |||||||||||||||||||
| Nonaccrual loans | 516.50 | 500.50 | 449.09 | 382.27 | 293.30 | 1,600 | 223 | |||||||||||||||||||||
| Nonperforming assets | 380.30 | 364.45 | 352.20 | 307.79 | 228.17 | 1,585 | 152 | |||||||||||||||||||||
| Accruing TDRs | 293.96 | 246.06 | 270.00 | 238.06 | 221.70 | 4,790 | 72 | |||||||||||||||||||||
| Nonperforming assets and accruing TDRs | 165.80 | 146.89 | 152.84 | 134.23 | 112.44 | 1,891 | 53 | |||||||||||||||||||||
| As a percent of total loans: | ||||||||||||||||||||||||||||
| Nonaccrual loans | 0.13 | 0.13 | 0.23 | 0.27 | 0.33 | — | (20 | ) | ||||||||||||||||||||
| Accruing TDRs excluding acquired | 0.23 | 0.27 | 0.38 | 0.43 | 0.44 | (4 | ) | (21 | ) | |||||||||||||||||||
| Nonaccrual loans and accruing TDRs excluding acquired | 0.36 | 0.40 | 0.62 | 0.70 | 0.78 | (4 | ) | (42 | ) | |||||||||||||||||||
| As a percent of total loans+other real estate owned: | ||||||||||||||||||||||||||||
| Nonperforming assets | 0.18 | 0.18 | 0.29 | 0.33 | 0.43 | — | (25 | ) | ||||||||||||||||||||
| Nonperforming assets and accruing TDRs | 0.41 | 0.45 | 0.68 | 0.76 | 0.87 | (4 | ) | (46 | ) | |||||||||||||||||||
| As a percent of total assets: | ||||||||||||||||||||||||||||
| Nonaccrual loans | 0.08 | 0.08 | 0.15 | 0.19 | 0.24 | — | (16 | ) | ||||||||||||||||||||
| Nonperforming assets | 0.11 | 0.11 | 0.19 | 0.23 | 0.31 | — | (20 | ) | ||||||||||||||||||||
| Accruing TDRs | 0.14 | 0.16 | 0.25 | 0.30 | 0.32 | (2 | ) | (18 | ) | |||||||||||||||||||
| Nonperforming assets and accruing TDRs | 0.25 | 0.27 | 0.44 | 0.53 | 0.63 | (2 | ) | (38 | ) |
| (1) | See the reconciliation table that begins on page 14 of 15. |
| (2) | This ratio excludes merger related expenses (Non-GAAP). |
| (3) | Includes all loans held for investment, including PPP loan balances for all periods shown. |
| (4) | For all periods shown, these ratios exclude PPP loans, acquired loans, and the associated purchase discount mark on the acquired loans from both Severn and Northwest. |
Page 12 of 15
Shore Bancshares, Inc.
Consolidated Statements of Income By Quarter (Unaudited)
(In thousands, except per share data)
| Q1 2022 | Q1 2022 | |||||||||||||||||||||||||||
| compared to | compared to | |||||||||||||||||||||||||||
| Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2021 | Q1 2021 | ||||||||||||||||||||||
| INTEREST INCOME | ||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 22,085 | $ | 20,564 | $ | 15,484 | $ | 14,381 | $ | 14,366 | 7.4 | % | 53.7 | % | ||||||||||||||
| Interest on investment securities: | ||||||||||||||||||||||||||||
| Taxable | 1,985 | 1,663 | 1,318 | 1,095 | 931 | 19.4 | 113.2 | |||||||||||||||||||||
| Interest on deposits with other banks | 254 | 169 | 97 | 55 | 47 | 50.3 | 440.4 | |||||||||||||||||||||
| Total interest income | 24,324 | 22,396 | 16,899 | 15,531 | 15,344 | 8.6 | 58.5 | |||||||||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||||||||||
| Interest on deposits | 1,358 | 1,272 | 949 | 1,056 | 1,184 | 6.8 | 14.7 | |||||||||||||||||||||
| Interest on short-term borrowings | 2 | 3 | 2 | 2 | 1 | (33.3 | ) | 100.0 | ||||||||||||||||||||
| Interest on long-term borrowings | 534 | 482 | 359 | 370 | 359 | 10.8 | 48.7 | |||||||||||||||||||||
| Total interest expense | 1,894 | 1,757 | 1,310 | 1,428 | 1,544 | 7.8 | 22.7 | |||||||||||||||||||||
| NET INTEREST INCOME | 22,430 | 20,639 | 15,589 | 14,103 | 13,800 | 8.7 | 62.5 | |||||||||||||||||||||
| Provision for credit losses | 600 | (1,723 | ) | 290 | 650 | 425 | 134.8 | 41.2 | ||||||||||||||||||||
| NET INTEREST INCOME AFTER PROVISION | ||||||||||||||||||||||||||||
| FOR CREDIT LOSSES | 21,830 | 22,362 | 15,299 | 13,453 | 13,375 | (2.4 | ) | 63.2 | ||||||||||||||||||||
| NONINTEREST INCOME | ||||||||||||||||||||||||||||
| Service charges on deposit accounts | 1,359 | 1,234 | 805 | 683 | 674 | 10.1 | 101.6 | |||||||||||||||||||||
| Trust and investment fee income | 514 | 522 | 477 | 475 | 407 | (1.5 | ) | 26.3 | ||||||||||||||||||||
| Gains on sales and calls of investment securities | — | — | 2 | — | — | — | — | |||||||||||||||||||||
| Interchange credits | 1,038 | 1,043 | 1,016 | 1,036 | 869 | (0.5 | ) | 19.4 | ||||||||||||||||||||
| Mortgage-banking revenue | 1,867 | 948 | — | — | — | 96.9 | — | |||||||||||||||||||||
| Title Company revenue | 323 | 247 | — | — | — | 30.8 | — | |||||||||||||||||||||
| Other noninterest income | 945 | 1,135 | 609 | 709 | 607 | (16.7 | ) | 55.7 | ||||||||||||||||||||
| Total noninterest income | 6,046 | 5,129 | 2,909 | 2,903 | 2,557 | 17.9 | 136.4 | |||||||||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||||||||||||
| Salaries and wages | 9,562 | 7,727 | 5,091 | 4,262 | 4,142 | 23.7 | 130.9 | |||||||||||||||||||||
| Employee benefits | 2,662 | 2,271 | 1,654 | 1,493 | 1,844 | 17.2 | 44.4 | |||||||||||||||||||||
| Occupancy expense | 1,567 | 1,263 | 843 | 770 | 814 | 24.1 | 92.5 | |||||||||||||||||||||
| Furniture and equipment expense | 429 | 385 | 449 | 412 | 307 | 11.4 | 39.7 | |||||||||||||||||||||
| Data processing | 1,607 | 1,487 | 1,170 | 1,217 | 1,127 | 8.1 | 42.6 | |||||||||||||||||||||
| Directors' fees | 190 | 170 | 147 | 154 | 149 | 11.8 | 27.5 | |||||||||||||||||||||
| Amortization of intangible assets | 517 | 381 | 107 | 120 | 126 | 35.7 | 310.3 | |||||||||||||||||||||
| FDIC insurance premium expense | 343 | 362 | 245 | 223 | 185 | (5.2 | ) | 85.4 | ||||||||||||||||||||
| Other real estate owned expenses, net | (6 | ) | (2 | ) | 4 | 1 | 1 | (200.0 | ) | (700.0 | ) | |||||||||||||||||
| Legal and professional fees | 637 | 150 | 428 | 648 | 516 | 324.7 | 23.4 | |||||||||||||||||||||
| Merger related expenses | 730 | 7,615 | 538 | 377 | — | (90.4 | ) | — | ||||||||||||||||||||
| Other noninterest expenses | 2,094 | 1,688 | 1,258 | 1,199 | 1,288 | 24.1 | 62.6 | |||||||||||||||||||||
| Total noninterest expense | 20,332 | 23,497 | 11,934 | 10,876 | 10,499 | (13.5 | ) | 93.7 | ||||||||||||||||||||
| Income before income taxes | 7,544 | 3,994 | 6,274 | 5,480 | 5,433 | 88.9 | 38.9 | |||||||||||||||||||||
| Income tax expense | 1,931 | 1,271 | 1,657 | 1,449 | 1,435 | 51.9 | 34.6 | |||||||||||||||||||||
| NET INCOME | $ | 5,613 | $ | 2,723 | $ | 4,617 | $ | 4,031 | $ | 3,998 | 106.1 | 40.4 | ||||||||||||||||
| Weighted average shares outstanding - basic | 19,828 | 17,180 | 11,752 | 11,752 | 11,745 | 15.4 | 68.8 | |||||||||||||||||||||
| Weighted average shares outstanding - diluted | 19,828 | 17,180 | 11,752 | 11,754 | 11,747 | 15.4 | 68.8 | |||||||||||||||||||||
| Basic and diluted net income per common share | $ | 0.28 | $ | 0.16 | $ | 0.39 | $ | 0.34 | $ | 0.34 | 75.0 | (17.6 | ) | |||||||||||||||
| Dividends paid per common share | 0.12 | 0.12 | 0.12 | 0.12 | 0.12 | — | — | |||||||||||||||||||||
Page 13 of 15
Shore Bancshares, Inc.
Consolidated Average Balance Sheets By Quarter (Unaudited)
(Dollars in thousands)
| Average balance | ||||||||||||||||||||||||||||||||||||||||||||||||
| Q1 2022 | Q1 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| compared to | compared to | |||||||||||||||||||||||||||||||||||||||||||||||
| Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2021 | Q1 2021 | ||||||||||||||||||||||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||||||||||||||||||||||
| balance | rate | balance | rate | balance | rate | balance | rate | balance | rate | |||||||||||||||||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loans (1), (2), (3) | $ | 2,135,734 | 4.20 | % | $ | 1,887,126 | 4.33 | % | $ | 1,487,281 | 4.14 | % | $ | 1,444,684 | 4.00 | % | $ | 1,450,883 | 4.03 | % | 13.2 | % | 47.2 | % | ||||||||||||||||||||||||
| Investment securities | ||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable | 531,017 | 1.49 | 468,724 | 1.42 | 334,205 | 1.58 | 286,121 | 1.53 | 227,816 | 1.63 | 13.3 | 133.1 | ||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | 586,798 | 0.18 | 486,247 | 0.14 | 250,019 | 0.15 | 218,704 | 0.10 | 189,231 | 0.10 | 20.7 | 210.1 | ||||||||||||||||||||||||||||||||||||
| Total earning assets | 3,253,549 | 3.01 | % | 2,842,097 | 3.11 | % | 2,071,505 | 3.24 | % | 1,949,509 | 3.20 | % | 1,867,930 | 3.34 | % | 14.5 | 74.2 | |||||||||||||||||||||||||||||||
| Cash and due from banks | (15,253 | ) | 22,625 | 19,453 | 16,908 | 19,245 | (167.4 | ) | (179.3 | ) | ||||||||||||||||||||||||||||||||||||||
| Other assets | 253,424 | 188,399 | 108,989 | 109,457 | 103,010 | 34.5 | 146.0 | |||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (14,239 | ) | (15,859 | ) | (15,499 | ) | (14,660 | ) | (14,234 | ) | (10.2 | ) | — | |||||||||||||||||||||||||||||||||||
| Total assets | $ | 3,477,481 | $ | 3,037,262 | $ | 2,184,448 | $ | 2,061,214 | $ | 1,975,951 | 14.5 | 76.0 | ||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
| Demand deposits | $ | 589,737 | 0.16 | % | $ | 494,081 | 0.14 | % | $ | 462,950 | 0.14 | % | $ | 405,473 | 0.13 | % | $ | 438,340 | 0.14 | % | 19.4 | 34.5 | ||||||||||||||||||||||||||
| Money market and savings deposits | 1,075,791 | 0.23 | 1,001,115 | 0.26 | 644,330 | 0.18 | 605,202 | 0.17 | 510,881 | 0.18 | 7.5 | 110.6 | ||||||||||||||||||||||||||||||||||||
| Certificates of deposit $100,000 or more | 286,587 | 0.40 | 174,268 | 0.49 | 136,059 | 0.71 | 135,376 | 1.04 | 130,745 | 1.26 | 64.5 | 119.2 | ||||||||||||||||||||||||||||||||||||
| Other time deposits | 175,683 | 0.57 | 173,975 | 0.50 | 142,777 | 0.68 | 143,821 | 0.90 | 144,919 | 1.10 | 1.0 | 21.2 | ||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | 2,127,798 | 0.26 | 1,843,439 | 0.27 | 1,386,116 | 0.27 | 1,289,872 | 0.33 | 1,224,885 | 0.39 | 15.4 | 73.7 | ||||||||||||||||||||||||||||||||||||
| Securities sold under retail repurchase agreements | ||||||||||||||||||||||||||||||||||||||||||||||||
| and federal funds purchased | 2,770 | 0.29 | 3,972 | 0.30 | 2,718 | 0.29 | 3,123 | 0.26 | 2,238 | 0.18 | (30.3 | ) | 23.8 | |||||||||||||||||||||||||||||||||||
| Advances from FHLB - long-term | 10,116 | 0.57 | 6,630 | 2.21 | — | — | — | — | — | — | 100.0 | 100.0 | ||||||||||||||||||||||||||||||||||||
| Subordinated debt | 42,804 | 4.93 | 36,589 | 5.12 | 24,504 | 5.81 | 24,474 | 6.06 | 24,443 | 5.96 | 17.0 | 75.1 | ||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 2,183,488 | 0.35 | % | 1,890,630 | 0.37 | % | 1,413,338 | 0.37 | % | 1,317,469 | 0.43 | % | 1,251,566 | 0.50 | % | 15.5 | 74.5 | |||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 916,415 | 703,712 | 557,109 | 532,276 | 517,781 | 30.2 | 77.0 | |||||||||||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 24,567 | 141,825 | 13,120 | 13,937 | 10,813 | (82.7 | ) | 127.2 | ||||||||||||||||||||||||||||||||||||||||
| Stockholders' equity | 353,011 | 301,095 | 200,881 | 197,532 | 195,791 | 17.2 | 80.3 | |||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 3,477,481 | $ | 3,037,262 | $ | 2,184,448 | $ | 2,061,214 | $ | 1,975,951 | 14.5 | 76.0 | ||||||||||||||||||||||||||||||||||||
| Net interest spread | 2.66 | % | 2.74 | % | 2.87 | % | 2.77 | % | 2.84 | % | ||||||||||||||||||||||||||||||||||||||
| Net interest margin | 2.78 | % | 2.87 | % | 2.99 | % | 2.91 | % | 3.00 | % | ||||||||||||||||||||||||||||||||||||||
| (1) | All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense. | |
| (2) | Average loan balances include nonaccrual loans. | |
| (3) | Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. |
Page 14 of 15
Shore Bancshares, Inc.
Reconciliation of Generally Accepted Accounting Principles (GAAP)
and Non-GAAP Measures (Unaudited)
(In thousands, except per share data)
| YTD | YTD | |||||||||||||||||||||||||||
| Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | 3/31/2022 | 3/31/2021 | ||||||||||||||||||||||
| The following reconciles return on average equity and return on average tangible equity (Note 1): | ||||||||||||||||||||||||||||
| Net Income | $ | 5,613 | $ | 2,723 | $ | 4,617 | $ | 4,031 | $ | 3,998 | $ | 5,613 | $ | 3,998 | ||||||||||||||
| Net Income - annualized (A) | $ | 22,764 | $ | 10,803 | $ | 18,317 | $ | 16,168 | $ | 16,214 | $ | 22,764 | $ | 16,214 | ||||||||||||||
| Net income, excluding net amortization of intangible assets and merger related expenses | $ | 6,541 | $ | 8,176 | $ | 5,098 | $ | 4,402 | $ | 4,092 | $ | 6,541 | $ | 4,092 | ||||||||||||||
| Net income, excluding net amortization of intangible assets and merger related expenses - annualized (B) | $ | 26,527 | $ | 32,437 | $ | 20,226 | $ | 17,656 | $ | 16,595 | $ | 26,527 | $ | 16,595 | ||||||||||||||
| Return on average assets excluding net amortization of intangible assets and merger related expenses - Non-GAAP | 0.76 | % | 1.07 | % | 0.94 | % | 0.86 | % | 0.82 | % | 0.76 | % | 0.82 | % | ||||||||||||||
| Average stockholders' equity (C) | $ | 353,011 | $ | 301,095 | $ | 200,881 | $ | 197,532 | $ | 195,791 | $ | 353,011 | $ | 195,791 | ||||||||||||||
| Less: Average goodwill and other intangible assets | (70,711 | ) | (52,692 | ) | (18,942 | ) | (19,053 | ) | (19,178 | ) | (70,711 | ) | (19,178 | ) | ||||||||||||||
| Average tangible equity (D) | $ | 282,300 | $ | 248,403 | $ | 181,939 | $ | 178,479 | $ | 176,613 | $ | 282,300 | $ | 176,613 | ||||||||||||||
| Return on average equity (GAAP) (A)/(C) | 6.45 | % | 3.59 | % | 9.12 | % | 8.19 | % | 8.28 | % | 6.45 | % | 8.28 | % | ||||||||||||||
| Return on average tangible equity (Non-GAAP) (B)/(D) | 9.40 | % | 13.06 | % | 11.12 | % | 9.89 | % | 9.40 | % | 9.40 | % | 9.40 | % | ||||||||||||||
| The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio (Note 2): | ||||||||||||||||||||||||||||
| Noninterest expense (E) | $ | 20,332 | $ | 23,497 | $ | 11,934 | $ | 10,876 | $ | 10,499 | $ | 20,332 | $ | 10,499 | ||||||||||||||
| Less: Amortization of intangible assets | (517 | ) | (381 | ) | (107 | ) | (120 | ) | (126 | ) | (517 | ) | (126 | ) | ||||||||||||||
| Merger Expenses | (730 | ) | (7,615 | ) | (538 | ) | (377 | ) | — | (730 | ) | — | ||||||||||||||||
| Adjusted noninterest expense (F) | $ | 19,085 | $ | 15,501 | $ | 11,289 | $ | 10,379 | $ | 10,373 | $ | 19,085 | $ | 10,373 | ||||||||||||||
| Net interest income (G) | 22,430 | 20,639 | 15,589 | 14,103 | 13,800 | 22,430 | 13,800 | |||||||||||||||||||||
| Add: Taxable-equivalent adjustment | 39 | 13 | 34 | 38 | 36 | 39 | 36 | |||||||||||||||||||||
| Taxable-equivalent net interest income (H) | $ | 22,469 | $ | 20,652 | $ | 15,623 | $ | 14,141 | $ | 13,836 | $ | 22,469 | $ | 13,836 | ||||||||||||||
| Noninterest income (I) | $ | 6,046 | $ | 5,129 | $ | 2,909 | $ | 2,903 | $ | 2,557 | $ | 6,046 | 2,557 | |||||||||||||||
| Less: Investment securities (gains) | — | — | (2 | ) | — | — | — | — | ||||||||||||||||||||
| Adjusted noninterest income (J) | $ | 6,046 | $ | 5,129 | $ | 2,907 | $ | 2,903 | $ | 2,557 | $ | 6,046 | $ | 2,557 | ||||||||||||||
| Efficiency ratio (GAAP) (E)/(G)+(I) | 71.40 | % | 91.19 | % | 64.52 | % | 63.95 | % | 64.19 | % | 71.40 | % | 64.19 | % | ||||||||||||||
| Efficiency ratio (Non-GAAP) (F)/(H)+(J) | 66.93 | % | 60.13 | % | 60.92 | % | 60.90 | % | 63.28 | % | 66.93 | % | 63.28 | % | ||||||||||||||
Page 15 of 15
| The following reconciles book value per common share and tangible book value per common share (Note 1): | ||||||||||||||||||||||||||||
| Stockholders' equity (L) | $ | 351,864 | $ | 350,693 | $ | 201,607 | $ | 198,682 | $ | 196,104 | ||||||||||||||||||
| Less: Goodwill and other intangible assets | (70,299 | ) | (70,956 | ) | (18,883 | ) | (18,991 | ) | (19,111 | ) | ||||||||||||||||||
| Tangible equity (M) | $ | 281,565 | $ | 279,737 | $ | 182,724 | $ | 179,691 | $ | 176,993 | ||||||||||||||||||
| Shares outstanding (N) | 19,843 | 19,808 | 11,752 | 11,752 | 11,752 | |||||||||||||||||||||||
| Book value per common share (GAAP) (L)/(N) | $ | 17.73 | $ | 17.71 | $ | 17.15 | $ | 16.91 | $ | 16.69 | ||||||||||||||||||
| Tangible book value per common share (Non-GAAP) (M)/(N) | $ | 14.19 | $ | 14.12 | $ | 15.55 | $ | 15.29 | $ | 15.06 | ||||||||||||||||||
| The following reconciles equity to assets and tangible equity to tangible assets (Note 1): | ||||||||||||||||||||||||||||
| Stockholders' equity (O) | $ | 351,864 | $ | 350,693 | $ | 201,607 | $ | 198,682 | $ | 196,104 | ||||||||||||||||||
| Less: Goodwill and other intangible assets | (70,299 | ) | (70,956 | ) | (18,883 | ) | (18,991 | ) | (19,111 | ) | ||||||||||||||||||
| Tangible equity (P) | $ | 281,565 | $ | 279,737 | $ | 182,724 | $ | 179,691 | $ | 176,993 | ||||||||||||||||||
| Assets (Q) | $ | 3,494,497 | $ | 3,460,136 | $ | 2,260,774 | $ | 2,120,260 | $ | 2,039,631 | ||||||||||||||||||
| Less: Goodwill and other intangible assets | (70,299 | ) | (70,956 | ) | (18,883 | ) | (18,991 | ) | (19,111 | ) | ||||||||||||||||||
| Tangible assets (R) | $ | 3,424,198 | $ | 3,389,180 | $ | 2,241,891 | $ | 2,101,269 | $ | 2,020,520 | ||||||||||||||||||
| Period-end equity/assets (GAAP) (O)/(Q) | 10.07 | % | 10.14 | % | 8.92 | % | 9.37 | % | 9.61 | % | ||||||||||||||||||
| Period-end tangible equity/tangible assets (Non-GAAP) (P)/(R) | 8.22 | % | 8.25 | % | 8.15 | % | 8.55 | % | 8.76 | % |
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 of controlling cash-based operating activities.