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): October 23, 2014
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.) | |
28969 Information Lane, Easton, Maryland 21601
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (410) 763-7800
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
£ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
£ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
£ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
£ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Result of Operation and Financial Condition.
On October 23, 2014, Shore Bancshares, Inc. (the “Company”) issued a press release setting forth the Company’s third quarter and year-to-date 2014 financial results. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.
The information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Company under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The exhibits that are filed or furnished with this report are listed in the Exhibit Index that immediately follows the signatures hereto, which list is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SHORE BANCSHARES, INC. | ||
Dated: October 23, 2014 | By: | /s/ Lloyd L. Beatty, Jr. |
Lloyd L. Beatty, Jr. President and Chief Executive Officer |
EXHIBIT INDEX
Exhibit Number |
Description |
99.1 | Press Release, dated October 23, 2014 (filed herewith) |
Shore Bancshares Reports Third Quarter and Nine-Month Results
EASTON, Md., Oct. 23, 2014 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ - SHBI) reported net income of $1.262 million or $0.10 per diluted common share for the third quarter of 2014, compared to net income of $1.305 million or $0.13 per diluted common share for the second quarter of 2014, and a net loss of $11.4 million or $(1.35) per diluted common share for the third quarter of 2013. The Company reported net income of $3.8 million or $0.37 per diluted common share for the first nine months of 2014, compared to a net loss of $10.8 million or $(1.28) per diluted common share for the first nine months of 2013.
On September 30, 2014, CNB, one of the two banking subsidiaries of Shore Bancshares, Inc. announced the appointment of CNB CFO, Edward C. Allen as President and Chief Executive Officer, effective immediately following the resignation of F. Winfield Trice, Jr. as the bank's President, Chief Executive Officer, and member of the CNB Board of Directors. As a result of Mr. Trice's resignation, the Company recorded approximately $400 thousand in severance and related benefit expenses which represents $.02 per common share in after tax expense.
When comparing the third quarter of 2014 to the second quarter of 2014, the primary reasons net income decreased was the resignation discussed above resulting in an increase of salaries and wage expense in the third quarter of $397 thousand, which was mainly offset by an increase in net interest income of $189 thousand and a decrease in credit loss provision of $175 thousand. When comparing the third quarter of 2014 to the third quarter of 2013, the main reason for the improved results was a decline in the provision for credit losses of $21.7 million, which was impacted by the sale of loans and other real estate owned (the "Asset Sale") by the company's other banking subsidiary, The Talbot Bank of Easton in 2013. When comparing the first nine months of 2014 to the first nine months of 2013, improved earnings were due to a decline in the provision for credit losses of $24.6 million partially offset by a decrease in net interest income of $900 thousand.
"Excluding the onetime severance charge to net income net of tax, we reflected a 16.2% increase over the linked quarter. We are pleased with the improvement of our credit metrics and our continued positive earnings trend," said Lloyd L. "Scott" Beatty, Jr., President and Chief Executive Officer. "Our credit profile continues to improve with total nonperforming assets and accruing troubled debt restructurings declining $2.0 million, or 4.5%, from the end of the second quarter of 2014, and $32 million, or 42.9%, since September 30, 2013."
Balance Sheet Review
Total assets were $1.096 billion at September 30, 2014, a $42.1 million, or 4.0%, increase when compared to $1.054 billion at the end of 2013. The slightly higher amount of total assets was primarily due to the second quarter capital raise which was invested in AFS investment securities which increased $76.2 million, which was partially offset by the decline in interest-bearing deposits with other banks of $30.3 million and loans, including loans held for sale of $3.5 million. Loans held for sale at December 31, 2013 were reclassified to loans during the first quarter of 2014.
Total deposits at September 30, 2014 increased $7.2 million, or .77%, when compared to December 31, 2013. The increase in total deposits was mainly due to an increase in noninterest-bearing deposits of $17.4 million, partially offset by a decline in interest-bearing demand deposits of $10.2 million. Total stockholders' equity increased $35.4 million, or 34.2%, when compared to the end of 2013 primarily due to the stock sale in the second quarter of 2014 which resulted in $31.2 million in net proceeds. At September 30, 2014, the ratio of total equity to total assets was 12.65% and the ratio of total tangible equity to total tangible assets was 11.58%, higher than the 9.80% and 8.41%, respectively, at December 31, 2013.
Total assets at September 30, 2014 increased $44.9 million, or 4.3%, when compared to total assets at September 30, 2013. The increase in assets was due to higher investment securities of $87.4 million that was partially offset by a decline in loans and loans held for sale of $13.6 million and $23.6 million, respectively. The decline in loans was primarily a result of the Asset Sale during the fourth quarter of 2013, loan charge offs and net loan repayments. Total deposits increased $10.2 million, or 1.1%, when compared to September 30, 2013. The increase in total deposits was mainly due to an increase in noninterest-bearing deposits of $24 million, which was partially offset by a decline in interest-bearing deposits of $13.7 million. Total stockholders' equity increased $36.7 million, or 36.0%, when compared to September 30, 2013 primarily as a result of the stock sale.
Review of Quarterly Financial Results
Net interest income was $8.6 million for the third quarter of 2014, compared to $8.4 million for the second quarter of 2014 and $8.8 million for the third quarter of 2013. The increase in net interest income when compared to the second quarter of 2014 was mainly due to higher volumes of and yields earned on average investment securities and lower volumes of and rates paid on average time deposits. The decline in net interest income for the third quarter of 2014 when compared to the third quarter of 2013 was primarily due to lower volumes of and yields earned on loans, partially offset by lower volumes of and rates paid on time deposits and money market and savings deposits. The Company's net interest margin was 3.38% for the third quarter of 2014, compared to 3.49% for the second quarter of 2014 and 3.54% for the third quarter of 2013 the decrease in net interest margin was primarily due to lower volumes of and yields earned on loans, partially offset by higher volumes of and rates paid on investment securities.
The provision for credit losses was $775 thousand for the three months ended September 30, 2014. The comparable amounts were $950 thousand and $22.5 million for the three months ended June 30, 2014 and September 30, 2013, respectively. The lower level of provision for credit losses when comparing the third quarter of 2014 to the second quarter of 2014 was primarily due to declines in nonaccrual loans and loan net charge-offs. The lower level of provision for credit losses when comparing the third quarter of 2014 to the third quarter of 2013 was primarily due to decreases in both loan net charge-offs and nonaccrual loans. Net charge-offs were $1.2 million for the third quarter of 2014, $1.9 million for the second quarter of 2014 and $26.8 million for the third quarter of 2013. The ratio of annualized net charge-offs to average loans was .70% for the third quarter of 2014, 1.10% for the second quarter of 2014 and 13.81% for the third quarter of 2013. The ratio of the allowance for credit losses to period-end loans was 1.22% at September 30, 2014, lower than the 1.28% at June 30, 2014 and 1.57% at September 30, 2013, which reflects improved credit quality in the loan portfolio.
At September 30, 2014, nonperforming assets were $17.5 million, a decline of $1.9 million, or 9.6%, when compared to June 30, 2014. Additionally, accruing troubled debt restructurings ("TDRs") decreased .61% to $25.2 million at September 30, 2014 from $25.4 million at June 30, 2014. When comparing September 30, 2014 to September 30, 2013, nonperforming assets decreased $13 million, or 42.7%, and accruing TDRs decreased $19 million, or 43%. The positive trend in nonperforming assets and TDRs when comparing September 30, 2014 to September 30, 2013 was mainly accomplished with the previously-mentioned Asset Sale as well as the continued workout efforts over the last 12 months. At September 30, 2014, the ratio of nonperforming assets to total assets was 1.60%, lower than the 1.82% and 2.21% at June 30, 2014 and September 30, 2013, respectively. In addition, the ratio of accruing TDRs to total assets at September 30, 2014 was 2.30%, compared to 2.39% at June 30, 2014 and 4.21% at September 30, 2013.
Total noninterest income for the third quarter of 2014 decreased $534 thousand, or 11.8%, when compared to the second quarter of 2014 and decreased $798 thousand, or 16.7 %, when compared to the third quarter of 2013. The decrease from the second quarter of 2014 was due to the sale of Tri-State General Insurance Agency, LTD ("TSGIA") the Company's wholesale insurance subsidiary, which resulted in a gain of $114 thousand recorded in the second quarter of 2014, and the loss of commission income of $728 thousand for the third quarter of 2014. These transactions in the prior quarter were partially offset by an increase in retail commissions of $370 thousand. The decreases from the third quarter of 2013 were the result of a nonrecurring adjustment from an insurance investment of $297 thousand and the loss of commission income of $756 thousand as the result of the TSGIA sale discussed above, partially offset by increases in retail commissions of $208 thousand.
Total noninterest expense for the third quarter of 2014 decreased $98 thousand, or 1.0%, when compared to the second quarter of 2014 and decreased $149 thousand, or 1.5%, when compared to the third quarter of 2013. The decreases from the second quarter of 2014 and the third quarter of 2013 were primarily due to a decline in operating expenses of $836 thousand as a result of the sale of TSGIA discussed above. This decline was offset by increases in salary and wages of $397 thousand as a result of the cost of severance and related benefits for the former Chief Executive Officer of CNB and $189 thousand in write-downs of other real estate owned. The decreases from the third quarter of 2013 were the result of the transactions noted in the prior quarter of 2014.
Review of Nine-Month Financial Results
Net interest income for the first nine months of 2014 was $25.4 million, a decrease of 3.4% when compared to the first nine months of 2013. The decrease was primarily due to lower volumes of and yields earned on loans, partially offset by lower volumes of and rates paid on time deposits and money market and savings deposits. The average balance on loans along with the decrease in rates resulted in the net interest margin declining to 3.46% for the first nine months of 2014 when compared to 3.48% for the first nine months of 2013.
The provision for credit losses for the nine months ended September 30, 2014 and 2013 were $2.7 million and $27.3 million, respectively, while net charge-offs were $4.8 million and $32 million, respectively. The ratio of year-to-date annualized net charge-offs to average loans was .91% for the first nine months of 2014 and 5.48% for the first nine months of 2013.
Total noninterest income for the nine months ended September 30, 2014 increased $66 thousand, or 0.5%, when compared to the same period in 2013. Included in total noninterest income for the first nine months of 2013 were the $1.3 million loss incurred to terminate the interest rate caps and the $913 thousand in gains on sales of investment securities. In addition, insurance agency commissions decreased $381 thousand, other noninterest income decreased $150 thousand and trust and investment fee income grew $198 thousand in the first nine months of 2014 when compared to the first nine months of 2013.
Total noninterest expense for the nine months ended September 30, 2014 decreased $367 thousand, or 1.2%, when compared to the same period in 2013. The decrease was primarily due to lower write-downs of other real estate owned of $481 thousand, or 50.8%, and insurance agency commission's expense of $422 thousand, or 31.8%, which was partially offset by severance cost of $400 thousand.
Shore Bancshares Information
Shore Bancshares, Inc. is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland's Eastern Shore. It is the parent company of two banks, The Talbot Bank of Easton, Maryland, and CNB; three insurance producer firms, The Avon-Dixon Agency, LLC, Elliott Wilson Insurance, LLC and Jack Martin and Associates, Inc.; and an insurance premium finance company, Mubell Finance, LLC. Shore Bancshares, Inc. engages in the trust services business through the trust department at CNB under the name "Wye Financial & Trust". 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. 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.
Shore Bancshares, Inc. |
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Financial Highlights |
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(Dollars in thousands, except per share data) |
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| For the Three Months Ended |
| For the Nine Months Ended |
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| September 30, |
| September 30, |
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| 2014 |
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| 2014 |
| 2013 | Change |
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PROFITABILITY FOR THE PERIOD |
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Net interest income | $ 8,636 |
| $ 8,828 |
| (2.2) | % | $ 25,406 |
| $ 26,306 |
| (3.4) | % |
Provision for credit losses | 775 |
| 22,460 |
| (96.5) |
| 2,700 |
| 27,310 |
| (90.1) |
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Noninterest income | 3,994 |
| 4,792 |
| (16.7) |
| 13,310 |
| 13,244 |
| 0.5 |
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Noninterest expense | 9,819 |
| 9,968 |
| (1.5) |
| 29,851 |
| 30,218 |
| (1.2) |
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Income (loss) before income taxes | 2,036 |
| (18,808) |
| (110.8) |
| 6,165 |
| (17,978) |
| (134.3) |
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Income tax (benefit) expense | 774 |
| (7,416) |
| (110.4) |
| 2,340 |
| (7,169) |
| (132.6) |
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Net income | $ 1,262 |
| $ (11,392) |
| (111.1) |
| $ 3,825 |
| $ (10,809) |
| (135.4) |
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Return on average assets | 0.46 | % | (4.24) | % | 470 | bp | 0.48 | % | (1.33) | % | 181 | bp |
Return on average equity | 3.61 |
| (39.68) |
| 4,329 |
| 4.26 |
| (12.66) |
| 1,692 |
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Return on average tangible equity (1) | 4.06 |
| (46.03) |
| 5,009 |
| 4.98 |
| (14.57) |
| 1,955 |
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Net interest margin | 3.38 |
| 3.54 |
| (16) |
| 3.46 |
| 3.48 |
| (2) |
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Efficiency ratio - GAAP | 77.60 |
| 73.06 |
| 454 |
| 76.97 |
| 76.25 |
| 72 |
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Efficiency ratio - Non-GAAP (1) | 77.33 |
| 29.59 |
| 4,774 |
| 76.76 |
| 50.49 |
| 2,627 |
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PER SHARE DATA |
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Basic net income (loss) per common share | $ 0.10 |
| $ (1.35) |
| (107.4) | % | $ 0.37 |
| $ (1.28) |
| (128.9) | % |
Diluted net income (loss) per common share | 0.10 |
| (1.35) |
| (107.4) |
| 0.37 |
| (1.28) |
| (128.9) |
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Dividends paid per common share | - |
| - |
| - |
| - |
| - |
| - |
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Book value per common share at period end | 10.99 |
| 12.06 |
| (8.9) |
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Tangible book value per common share at period end (1) | 9.94 |
| 10.16 |
| (2.2) |
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Market value at period end | 9.00 |
| 8.80 |
| 2.3 |
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Market range: |
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High | 9.03 |
| 9.06 |
| (0.3) |
| 10.49 |
| 9.06 |
| 15.8 |
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Low | 8.96 |
| 7.06 |
| 26.9 |
| 8.57 |
| 5.20 |
| 64.8 |
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AVERAGE BALANCE SHEET DATA |
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Loans | $ 705,637 |
| $ 772,008 |
| (8.6) | % | $ 707,347 |
| $ 780,359 |
| (9.4) | % |
Investment securities | 221,537 |
| 124,020 |
| 78.6 |
| 187,126 |
| 137,240 |
| 36.3 |
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Earning assets | 1,015,767 |
| 993,068 |
| 2.3 |
| 984,397 |
| 1,014,243 |
| (2.9) |
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Assets | 1,093,103 |
| 1,064,919 |
| 2.6 |
| 1,062,266 |
| 1,088,150 |
| (2.4) |
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Deposits | 940,312 |
| 932,867 |
| 0.8 |
| 926,421 |
| 954,390 |
| (2.9) |
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Stockholders' equity | 138,615 |
| 113,904 |
| 21.7 |
| 120,180 |
| 114,120 |
| 5.3 |
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CREDIT QUALITY DATA AT PERIOD END |
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Net charge-offs | $ 1,245 |
| $ 26,882 |
| (95.4) | % | $ 4,819 |
| $ 32,000 |
| (84.9) | % |
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Nonaccrual loans | $ 12,718 |
| $ 17,501 |
| (27.3) |
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Loans 90 days past due and still accruing | - |
| 9 |
| (100.0) |
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Other real estate owned | 4,799 |
| 5,776 |
| (16.9) |
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Total nonperforming assets | 17,517 |
| 23,286 |
| (24.8) |
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Accruing troubled debt restructurings (TDRs) | 25,246 |
| 29,439 |
| (14.2) |
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Total nonperforming assets and accruing TDRs | $ 42,763 |
| $ 52,725 |
| (18.9) |
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CAPITAL AND CREDIT QUALITY RATIOS |
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Period-end equity to assets | 12.65 | % | 10.70 | % | 195 | bp |
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Period-end tangible equity to tangible assets (1) | 11.58 |
| 9.33 |
| 225 |
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Annualized net charge-offs to average loans | 0.70 |
| 13.81 |
| (1,311) |
| 0.91 | % | 5.48 | % | (457) | bp |
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Allowance for credit losses as a percent of: |
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Period-end loans | 1.22 |
| 1.57 |
| (35) |
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Nonaccrual loans | 67.67 |
| 64.57 |
| 310 |
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Nonperforming assets | 49.13 |
| 48.53 |
| 60 |
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Accruing TDRs | 34.09 |
| 38.39 |
| (430) |
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Nonperforming assets and accruing TDRs | 20.12 |
| 21.43 |
| (131) |
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As a percent of total loans: |
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Nonaccrual loans | 1.80 |
| 2.44 |
| (64) |
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Accruing TDRs | 3.58 |
| 4.10 |
| (52) |
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Nonaccrual loans and accruing TDRs | 5.38 |
| 6.54 |
| (116) |
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As a percent of total loans+other real estate owned: |
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Nonperforming assets | 2.47 |
| 3.21 |
| (74) |
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Nonperforming assets and accruing TDRs | 6.02 |
| 7.28 |
| (126) |
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As a percent of total assets: |
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Nonaccrual loans | 1.16 |
| 1.66 |
| (50) |
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Nonperforming assets | 1.60 |
| 2.21 |
| (61) |
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Accruing TDRs | 2.30 |
| 2.80 |
| (50) |
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Nonperforming assets and accruing TDRs | 3.90 |
| 5.01 |
| (111) |
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(1) See the reconciliation table on page 11 of 11. |
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Shore Bancshares, Inc. |
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| Page 5 of 11 | |||||||
Consolidated Balance Sheets |
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(In thousands, except per share data) |
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| September 30, 2014 |
| September 30, 2014 |
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| September 30, |
| December 31, |
| September 30, |
| compared to |
| compared to |
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| 2014 |
| 2013 |
| 2013 |
| December 31, 2013 |
| September 30, 2013 |
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ASSETS |
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|
|
|
|
|
|
|
|
|
Cash and due from banks | $ 26,879 |
| $ 21,238 |
| $ 26,133 |
| 26.6 | % | 2.9 | % |
Interest-bearing deposits with other banks | 79,045 |
| 109,384 |
| 79,165 |
| (27.7) |
| (0.2) |
|
Federal funds sold | 3,715 |
| 468 |
| 1,624 |
| 693.8 |
| 128.8 |
|
Investment securities available for sale (at fair value) | 223,273 |
| 147,101 |
| 135,862 |
| 51.8 |
| 64.3 |
|
Investment securities held to maturity | 4,732 |
| 5,185 |
| 2,357 |
| (8.7) |
| 100.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale | - |
| 3,521 |
| 23,635 |
| (100.0) |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
Loans | 705,042 |
| 711,919 |
| 718,627 |
| (1.0) |
| (1.9) |
|
Less: allowance for credit losses | (8,606) |
| (10,725) |
| (11,301) |
| (19.8) |
| (23.8) |
|
Loans, net | 696,436 |
| 701,194 |
| 707,326 |
| (0.7) |
| (1.5) |
|
|
|
|
|
|
|
|
|
|
|
|
Premises and equipment, net | 15,229 |
| 15,198 |
| 15,175 |
| 0.2 |
| 0.4 |
|
Goodwill | 11,931 |
| 12,454 |
| 12,454 |
| (4.2) |
| (4.2) |
|
Other intangible assets, net | 1,364 |
| 3,520 |
| 3,594 |
| (61.3) |
| (62.0) |
|
Other real estate owned, net | 4,799 |
| 3,779 |
| 5,776 |
| 27.0 |
| (16.9) |
|
Other assets | 28,882 |
| 31,082 |
| 38,283 |
| (7.1) |
| (24.6) |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets | $ 1,096,285 |
| $ 1,054,124 |
| $ 1,051,384 |
| 4.0 |
| 4.3 |
|
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LIABILITIES |
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|
|
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Noninterest-bearing deposits | $ 190,197 |
| $ 172,797 |
| $ 166,225 |
| 10.1 |
| 14.4 |
|
Interest-bearing deposits | 750,455 |
| 760,671 |
| 764,188 |
| (1.3) |
| (1.8) |
|
Total deposits | 940,652 |
| 933,468 |
| 930,413 |
| 0.8 |
| 1.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings | 10,755 |
| 10,140 |
| 11,468 |
| 6.1 |
| (6.2) |
|
Accrued expenses and other liabilities | 6,204 |
| 7,217 |
| 7,502 |
| (14.0) |
| (17.3) |
|
Total liabilities | 957,611 |
| 950,825 |
| 949,383 |
| 0.7 |
| 0.9 |
|
|
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|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
Common stock, par value $0.01; authorized |
|
|
|
|
|
|
|
|
|
|
35,000,000 shares | 126 |
| 85 |
| 85 |
| 48.2 |
| 48.2 |
|
Additional paid in capital | 63,524 |
| 32,207 |
| 32,187 |
| 97.2 |
| 97.4 |
|
Retained earnings | 75,269 |
| 71,444 |
| 70,269 |
| 5.4 |
| 7.1 |
|
Accumulated other comprehensive loss | (245) |
| (437) |
| (540) |
| 43.9 |
| 54.6 |
|
Total stockholders' equity | 138,674 |
| 103,299 |
| 102,001 |
| 34.2 |
| 36.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity | $ 1,096,285 |
| $ 1,054,124 |
| $ 1,051,384 |
| 4.0 |
| 4.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Period-end common shares outstanding | 12,615 |
| 8,471 |
| 8,461 |
| 48.9 |
| 49.1 |
|
Book value per common share | $ 10.99 |
| $ 12.19 |
| $ 12.06 |
| (9.8) |
| (8.9) |
|
Shore Bancshares, Inc. |
| Page 6 of 11 | ||||||||
Consolidated Statements of Operations |
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(In thousands, except per share data) |
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| For the Three Months Ended |
| For the Nine Months Ended |
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| September 30, |
| September 30, |
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| 2014 |
| 2013 | % Change |
| 2014 |
| 2013 | % Change |
|
INTEREST INCOME |
|
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|
|
|
|
Interest and fees on loans | $8,788 |
| $ 9,767 | (10.0) | % | $26,475 |
| $ 29,816 | (11.2) | % |
Interest and dividends on investment securities: |
|
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|
|
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|
|
Taxable | 850 |
| 357 | 138.1 |
| 2,040 |
| 1,568 | 30.1 |
|
Tax-exempt | 3 |
| 5 | (40.0) |
| 9 |
| 14 | (35.7) |
|
Interest on federal funds sold | 1 |
| - | - |
| 1 |
| 3 | (66.7) |
|
Interest on deposits with other banks | 44 |
| 53 | (17.0) |
| 139 |
| 143 | (2.8) |
|
Total interest income | 9,686 |
| 10,182 | (4.9) |
| 28,664 |
| 31,544 | (9.1) |
|
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INTEREST EXPENSE |
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|
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Interest on deposits | 1,046 |
| 1,348 | (22.4) |
| 3,244 |
| 5,218 | (37.8) |
|
Interest on short-term borrowings | 4 |
| 6 | (33.3) |
| 14 |
| 20 | (30.0) |
|
Total interest expense | 1,050 |
| 1,354 | (22.5) |
| 3,258 |
| 5,238 | (37.8) |
|
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|
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NET INTEREST INCOME | 8,636 |
| 8,828 | (2.2) |
| 25,406 |
| 26,306 | (3.4) |
|
Provision for credit losses | 775 |
| 22,460 | (96.5) |
| 2,700 |
| 27,310 | (90.1) |
|
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NET INTEREST INCOME (LOSS) AFTER PROVISION |
|
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|
|
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|
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FOR CREDIT LOSSES | 7,861 |
| (13,632) | (157.7) |
| 22,706 |
| (1,004) | (2,361.6) |
|
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|
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|
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|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts | 618 |
| 600 | 3.0 |
| 1,778 |
| 1,772 | 0.3 |
|
Trust and investment fee income | 496 |
| 401 | 23.7 |
| 1,382 |
| 1,184 | 16.7 |
|
Investment securities gains | - |
| - | - |
| - |
| 913 | (100.0) |
|
Insurance agency commissions | 2,176 |
| 2,724 | (20.1) |
| 7,789 |
| 8,170 | (4.7) |
|
Loss on termination of cash flow hedge | - |
| - | - |
| - |
| (1,306) | (100.0) |
|
Other noninterest income | 704 |
| 1,067 | (34.0) |
| 2,361 |
| 2,511 | (6.0) |
|
Total noninterest income | 3,994 |
| 4,792 | (16.7) |
| 13,310 |
| 13,244 | 0.5 |
|
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|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
Salaries and wages | 4,689 |
| 4,420 | 6.1 |
| 13,295 |
| 13,010 | 2.2 |
|
Employee benefits | 934 |
| 971 | (3.8) |
| 3,136 |
| 3,111 | 0.8 |
|
Occupancy expense | 565 |
| 566 | (0.2) |
| 1,769 |
| 1,775 | (0.3) |
|
Furniture and equipment expense | 225 |
| 275 | (18.2) |
| 741 |
| 768 | (3.5) |
|
Data processing | 741 |
| 718 | 3.2 |
| 2,240 |
| 2,127 | 5.3 |
|
Directors' fees | 131 |
| 86 | 52.3 |
| 375 |
| 262 | 43.1 |
|
Amortization of intangible assets | 34 |
| 74 | (54.1) |
| 168 |
| 222 | (24.3) |
|
Insurance agency commissions expense | - |
| 409 | (100.0) |
| 906 |
| 1,328 | (31.8) |
|
FDIC insurance premium expense | 399 |
| 467 | (14.6) |
| 1,234 |
| 1,200 | 2.8 |
|
Write-downs of other real estate owned | 290 |
| 219 | 32.4 |
| 466 |
| 947 | (50.8) |
|
Other noninterest expenses | 1,811 |
| 1,763 | 2.7 |
| 5,521 |
| 5,468 | 1.0 |
|
Total noninterest expense | 9,819 |
| 9,968 | (1.5) |
| 29,851 |
| 30,218 | (1.2) |
|
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Income (loss) before income taxes | 2,036 |
| (18,808) | (110.8) |
| 6,165 |
| (17,978) | (134.3) |
|
Income tax (benefit) expense | 774 |
| (7,416) | (110.4) |
| 2,340 |
| (7,169) | (132.6) |
|
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|
|
|
NET (LOSS) INCOME | $1,262 |
| $(11,392) | (111.1) |
| $ 3,825 |
| $(10,809) | (135.4) |
|
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|
Weighted average shares outstanding - basic | 12,615 |
| 8,461 | 49.1 |
| 10,381 |
| 8,460 | 22.7 |
|
Weighted average shares outstanding - diluted | 12,625 |
| 8,472 | 49.0 |
| 10,393 |
| 8,463 | 22.8 |
|
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Basic net income per common share | $ 0.10 |
| $ (1.35) | (107.4) |
| $ 0.37 |
| $ (1.28) | (128.9) |
|
Diluted net income per common share | 0.10 |
| (1.35) | (107.4) |
| 0.37 |
| (1.28) | (128.9) |
|
Dividends paid per common share | - |
| - | - |
| - |
| - | - |
|
Shore Bancshares, Inc. |
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| Page 7 of 11 | |||||||||
Consolidated Average Balance Sheets |
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(Dollars in thousands) |
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| For the Three Months Ended |
| For the Nine Months Ended |
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| September 30, |
| September 30, |
| ||||||||||||
| 2014 |
| 2013 |
| 2014 |
| 2013 |
| ||||||||
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
|
| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
|
Earning assets |
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Loans | $ 705,637 |
| 4.95 | % | $ 772,008 |
| 5.03 | % | $ 707,347 |
| 5.02 | % | $ 780,359 |
| 5.12 | % |
Investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable | 221,105 |
| 1.53 |
| 123,499 |
| 1.15 |
| 186,694 |
| 1.46 |
| 136,680 |
| 1.53 |
|
Tax-exempt | 432 |
| 4.16 |
| 521 |
| 5.27 |
| 432 |
| 4.21 |
| 560 |
| 4.97 |
|
Federal funds sold | 1,378 |
| 0.06 |
| 1,618 |
| 0.07 |
| 1,519 |
| 0.05 |
| 4,241 |
| 0.10 |
|
Interest-bearing deposits | 87,215 |
| 0.20 |
| 95,422 |
| 0.22 |
| 88,405 |
| 0.21 |
| 92,403 |
| 0.21 |
|
Total earning assets | 1,015,767 |
| 3.79 | % | 993,068 |
| 4.08 | % | 984,397 |
| 3.90 | % | 1,014,243 |
| 4.17 | % |
Cash and due from banks | 24,445 |
|
|
| 22,088 |
|
|
| 22,516 |
|
|
| 23,177 |
|
|
|
Other assets | 61,989 |
|
|
| 65,001 |
|
|
| 65,154 |
|
|
| 67,036 |
|
|
|
Allowance for credit losses | (9,098) |
|
|
| (15,238) |
|
|
| (9,801) |
|
|
| (16,306) |
|
|
|
Total assets | $1,093,103 |
|
|
| $1,064,919 |
|
|
| $1,062,266 |
|
|
| $1,088,150 |
|
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Interest-bearing liabilities |
|
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|
|
|
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|
|
|
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|
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|
|
Demand deposits | $ 183,094 |
| 0.14 | % | $ 172,143 |
| 0.16 | % | $ 176,000 |
| 0.14 | % | $ 169,476 |
| 0.16 | % |
Money market and savings deposits (1) | 225,670 |
| 0.12 |
| 207,162 |
| 0.12 |
| 222,979 |
| 0.12 |
| 225,351 |
| 0.61 |
|
Certificates of deposit $100,000 or more | 166,806 |
| 1.11 |
| 198,495 |
| 1.23 |
| 172,422 |
| 1.12 |
| 206,076 |
| 1.31 |
|
Other time deposits | 179,533 |
| 0.98 |
| 192,878 |
| 1.24 |
| 183,259 |
| 1.03 |
| 197,201 |
| 1.34 |
|
Interest-bearing deposits | 755,103 |
| 0.55 |
| 770,678 |
| 0.69 |
| 754,660 |
| 0.57 |
| 798,104 |
| 0.87 |
|
Short-term borrowings | 7,946 |
| 0.21 |
| 10,695 |
| 0.23 |
| 8,636 |
| 0.22 |
| 11,140 |
| 0.25 |
|
Total interest-bearing liabilities | 763,049 |
| 0.55 | % | 781,373 |
| 0.69 | % | 763,296 |
| 0.57 | % | 809,244 |
| 0.87 | % |
Noninterest-bearing deposits | 185,209 |
|
|
| 162,189 |
|
|
| 171,761 |
|
|
| 156,286 |
|
|
|
Accrued expenses and other liabilities | 6,230 |
|
|
| 7,453 |
|
|
| 7,029 |
|
|
| 8,500 |
|
|
|
Stockholders' equity | 138,615 |
|
|
| 113,904 |
|
|
| 120,180 |
|
|
| 114,120 |
|
|
|
Total liabilities and stockholders' equity | $1,093,103 |
|
|
| $1,064,919 |
|
|
| $1,062,266 |
|
|
| $1,088,150 |
|
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|
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|
|
|
Net interest spread |
|
| 3.24 | % |
|
| 3.39 | % |
|
| 3.33 | % |
|
| 3.30 | % |
Net interest margin |
|
| 3.38 | % |
|
| 3.54 | % |
|
| 3.46 | % |
|
| 3.48 | % |
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(1) Interest on money market and savings deposits for the three and nine months ended September 30, 2013 included an adjustment to expense related to |
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interest rate caps and the hedged deposits associated with them. This adjustment increased interest expense $0 and $695 thousand |
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for the three and nine months ended September 30, 2013, respectively. Interest expense for the three and nine months ended September 30, 2014 did not reflect |
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this adjustment because the interest rate caps were terminated in June of 2013. |
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Shore Bancshares, Inc. |
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| Page 8 of 11 | |||||||||
Financial Highlights By Quarter |
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(Dollars in thousands, except per share data) |
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| 3rd quarter |
| 2nd quarter |
| 1st quarter |
| 4th quarter |
| 3rd quarter |
| 3Q 14 |
| 3Q 14 |
|
| 2014 |
| 2014 |
| 2014 |
| 2013 |
| 2013 |
| compared to |
| compared to |
|
| (3Q 14) |
| (2Q 14) |
| (1Q 14) |
| (4Q 13) |
| (3Q 13) |
| 2Q 14 |
| 3Q 13 |
|
PROFITABILITY FOR THE PERIOD |
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Taxable-equivalent net interest income | $ 8,659 |
| $ 8,469 |
| $ 8,347 |
| $ 8,595 |
| $ 8,852 |
| 2.2 | % | (2.2) | % |
Less: Taxable-equivalent adjustment | 24 |
| 22 |
| 24 |
| 25 |
| 24 |
| 9.1 |
| - |
|
Net interest income | 8,636 |
| 8,447 |
| 8,323 |
| 8,570 |
| 8,828 |
| 2.2 |
| (2.2) |
|
Provision for credit losses | 775 |
| 950 |
| 975 |
| 474 |
| 22,460 |
| (18.4) |
| (96.5) |
|
Noninterest income | 3,994 |
| 4,528 |
| 4,788 |
| 4,215 |
| 4,792 |
| (11.8) |
| (16.7) |
|
Noninterest expense | 9,819 |
| 9,917 |
| 10,115 |
| 10,468 |
| 9,968 |
| (1.0) |
| (1.5) |
|
Income (loss) before income taxes | 2,036 |
| 2,108 |
| 2,021 |
| 1,843 |
| (18,808) |
| (3.4) |
| (110.8) |
|
Income tax expense (benefit) | 774 |
| 803 |
| 763 |
| 668 |
| (7,416) |
| (3.6) |
| (110.4) |
|
Net income (loss) | $ 1,262 |
| $ 1,305 |
| $ 1,258 |
| $ 1,175 |
| $ (11,392) |
| (3.3) |
| (111.1) |
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Return on average assets | 0.46 | % | 0.50 | % | 0.49 | % | 0.44 | % | (4.24) | % | (4) | bp | 470 | bp |
Return on average equity | 3.61 |
| 4.47 |
| 4.88 |
| 4.50 |
| (39.68) |
| (86) |
| 4,329 |
|
Return on average tangible equity (1) | 4.06 |
| 5.28 |
| 5.97 |
| 5.53 |
| (46.03) |
| (122) |
| 5,009 |
|
Net interest margin | 3.38 |
| 3.49 |
| 3.50 |
| 3.47 |
| 3.54 |
| (11) |
| (16) |
|
Efficiency ratio - GAAP | 77.60 |
| 76.30 |
| 77.01 |
| 81.72 |
| 73.06 |
| 130 |
| 454 |
|
Efficiency ratio - Non-GAAP (1) | 77.33 |
| 76.51 |
| 76.44 |
| 81.14 |
| 74.13 |
| 82 |
| 320 |
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PER SHARE DATA |
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|
|
|
|
Basic net income (loss) per common share | $ 0.10 |
| $ 0.13 |
| $ 0.15 |
| $ 0.14 |
| $ (1.35) |
| (23.1) | % | (107.4) | % |
Diluted net income (loss) per common share | 0.10 |
| 0.13 |
| 0.15 |
| 0.14 |
| (1.35) |
| (23.1) |
| (107.4) |
|
Dividends paid per common share | - |
| - |
| - |
| - |
| - |
| - |
| - |
|
Book value per common share at period end | 10.99 |
| 10.90 |
| 12.35 |
| 12.19 |
| 12.06 |
| 0.8 |
| (8.9) |
|
Tangible book value per common share at period end (1) | 9.94 |
| 9.84 |
| 10.47 |
| 10.31 |
| 10.16 |
| 1.0 |
| (2.2) |
|
Market value at period end | 9.00 |
| 9.01 |
| 9.51 |
| 9.22 |
| 8.80 |
| (0.1) |
| 2.3 |
|
Market range: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High | 9.03 |
| 10.49 |
| 9.99 |
| 9.45 |
| 9.06 |
| (13.9) |
| (0.3) |
|
Low | 8.96 |
| 8.57 |
| 9.00 |
| 8.50 |
| 7.06 |
| 4.6 |
| 26.9 |
|
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AVERAGE BALANCE SHEET DATA |
|
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|
|
|
Loans | $ 705,637 |
| $ 708,718 |
| $ 707,708 |
| $ 718,070 |
| $ 772,008 |
| (0.4) | % | (8.6) | % |
Investment securities | 221,537 |
| 183,559 |
| 155,556 |
| 145,181 |
| 124,020 |
| 20.7 |
| 78.6 |
|
Earning assets | 1,015,767 |
| 972,976 |
| 966,304 |
| 982,519 |
| 993,068 |
| 4.4 |
| 2.3 |
|
Assets | 1,093,103 |
| 1,048,592 |
| 1,044,568 |
| 1,060,315 |
| 1,064,919 |
| 4.2 |
| 2.6 |
|
Deposits | 940,312 |
| 915,241 |
| 923,524 |
| 938,293 |
| 932,867 |
| 2.7 |
| 0.8 |
|
Stockholders' equity | 138,615 |
| 117,089 |
| 104,462 |
| 103,507 |
| 113,904 |
| 18.4 |
| 21.7 |
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CREDIT QUALITY DATA AT PERIOD END |
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Net charge-offs | $ 1,245 |
| $ 1,943 |
| $ 1,631 |
| $ 1,050 |
| $ 26,882 |
| (35.9) | % | (95.4) | % |
|
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Nonaccrual loans excluding nonaccrual loans held for sale (hfs) | $ 12,718 |
| $ 15,176 |
| $ 19,156 |
| $ 14,626 |
| $ 17,501 |
| (16.2) |
| (27.3) |
|
Loans 90 days past due and still accruing | - |
| 5 |
| 121 |
| 270 |
| 9 |
| (100.0) |
| (100.0) |
|
Other real estate owned | 4,799 |
| 4,201 |
| 4,672 |
| 3,779 |
| 5,776 |
| 14.2 |
| (16.9) |
|
Total nonperforming assets excluding nonaccrual loans hfs | 17,517 |
| 19,382 |
| 23,949 |
| 18,675 |
| 23,286 |
| (9.6) |
| (24.8) |
|
Nonaccrual loans hfs | - |
| - |
| - |
| 3,521 |
| 7,265 |
| - |
| - |
|
Total nonperforming assets including nonaccrual loans hfs | $ 17,517 |
| $ 19,382 |
| $ 23,949 |
| $ 22,196 |
| $ 30,551 |
| (9.6) |
| (42.7) |
|
|
|
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|
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|
|
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|
|
|
Accruing troubled debt restructurings (TDRs) excluding TDRs hfs | $ 25,246 |
| $ 25,402 |
| $ 25,333 |
| $ 26,088 |
| $ 29,439 |
| (0.6) |
| (14.2) |
|
Accruing TDRs hfs | - |
| - |
| - |
| - |
| 14,842 |
| - |
| - |
|
Total accruing TDRs including TDRs hfs | $ 25,246 |
| $ 25,402 |
| $ 25,333 |
| $ 26,088 |
| $ 44,281 |
| (0.6) |
| (43.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming assets and accruing TDRs excluding nonaccrual loans and TDRs hfs | $ 42,763 |
| $ 44,784 |
| $ 49,282 |
| $ 44,763 |
| $ 52,725 |
| (4.5) |
| (18.9) |
|
Nonaccrual loans and TDRs hfs | - |
| - |
| - |
| 3,521 |
| 22,107 |
| - |
| - |
|
Total nonperforming assets and accruing TDRs including nonaccrual loans and TDRs hfs | $ 42,763 |
| $ 44,784 |
| $ 49,282 |
| $ 48,284 |
| $ 74,832 |
| (4.5) |
| (42.9) |
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|
CAPITAL AND CREDIT QUALITY RATIOS |
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|
Period-end equity to assets | 12.65 | % | 12.91 | % | 9.97 | % | 9.80 | % | 9.70 | % | (26) | bp | 295 | bp |
Period-end tangible equity to tangible assets (1) | 11.58 |
| 11.81 |
| 8.58 |
| 8.41 |
| 8.30 |
| (23) |
| 328 |
|
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|
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Annualized net charge-offs to average loans | 0.70 |
| 1.10 |
| 0.93 |
| 0.58 |
| 13.81 |
| (40) |
| (1,311) |
|
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|
Allowance for credit losses as a percent of (including loans hfs): |
|
|
|
|
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|
|
|
|
|
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|
|
Period-end loans | 1.22 |
| 1.28 |
| 1.43 |
| 1.51 |
| 1.57 |
| (6) |
| (35) |
|
Nonaccrual loans | 67.67 |
| 59.80 |
| 52.56 |
| 59.10 |
| 45.63 |
| 787 |
| 2,204 |
|
Nonperforming assets | 49.13 |
| 46.83 |
| 42.04 |
| 48.32 |
| 36.99 |
| 230 |
| 1,214 |
|
Accruing TDRs | 34.09 |
| 35.73 |
| 39.75 |
| 41.11 |
| 25.52 |
| (164) |
| 857 |
|
Nonperforming assets and accruing TDRs | 20.12 |
| 20.27 |
| 20.43 |
| 22.21 |
| 15.10 |
| (15) |
| 502 |
|
|
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|
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|
As a percent of total loans (including loans hfs): |
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|
|
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|
|
|
Nonaccrual loans | 1.80 |
| 2.14 |
| 2.72 |
| 2.54 |
| 3.34 |
| (34) |
| (154) |
|
Accruing TDRs | 3.58 |
| 3.58 |
| 3.60 |
| 3.65 |
| 5.97 |
| - |
| (239) |
|
Nonaccrual loans and accruing TDRs | 5.38 |
| 5.72 |
| 6.32 |
| 6.19 |
| 9.31 |
| (34) |
| (393) |
|
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|
|
As a percent of total loans+other real estate owned (including loans hfs): |
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|
|
Nonperforming assets | 2.47 |
| 2.72 |
| 3.38 |
| 3.09 |
| 4.08 |
| (25) |
| (161) |
|
Nonperforming assets and accruing TDRs | 6.02 |
| 6.27 |
| 6.96 |
| 6.72 |
| 10.00 |
| (25) |
| (398) |
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As a percent of total assets (including loans hfs): |
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|
|
Nonaccrual loans | 1.16 |
| 1.43 |
| 1.83 |
| 1.72 |
| 2.36 |
| (27) |
| (120) |
|
Nonperforming assets | 1.60 |
| 1.82 |
| 2.28 |
| 2.11 |
| 2.91 |
| (22) |
| (131) |
|
Accruing TDRs | 2.30 |
| 2.39 |
| 2.41 |
| 2.47 |
| 4.21 |
| (9) |
| (191) |
|
Nonperforming assets and accruing TDRs | 3.90 |
| 4.21 |
| 4.69 |
| 4.58 |
| 7.12 |
| (31) |
| (322) |
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(1) See the reconciliation table on page 11 of 11. |
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Shore Bancshares, Inc. |
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| Page 9 of 11 | |||||||||
Consolidated Statements of Operations By Quarter |
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(In thousands, except per share data) |
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| 3Q 14 |
| 3Q 14 |
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| compared to |
| compared to |
|
| 3Q 14 |
| 2Q 14 |
| 1Q 14 |
| 4Q 13 |
| 3Q 13 |
| 2Q 14 |
| 3Q 13 |
|
INTEREST INCOME |
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|
Interest and fees on loans | $8,788 |
| $8,812 |
| $8,875 |
| $9,242 |
| $ 9,767 |
| (0.3) | % | (10.0) | % |
Interest and dividends on investment securities: |
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|
|
Taxable | 850 |
| 669 |
| 521 |
| 504 |
| 357 |
| 27.1 |
| 138.1 |
|
Tax-exempt | 3 |
| 3 |
| 3 |
| 3 |
| 5 |
| - |
| (40.0) |
|
Interest on federal funds sold | 1 |
| - |
| - |
| 1 |
| - |
| - |
| - |
|
Interest on deposits with other banks | 44 |
| 39 |
| 56 |
| 57 |
| 53 |
| 12.8 |
| (17.0) |
|
Total interest income | 9,686 |
| 9,523 |
| 9,455 |
| 9,807 |
| 10,182 |
| 1.7 |
| (4.9) |
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INTEREST EXPENSE |
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|
Interest on deposits | 1,046 |
| 1,071 |
| 1,127 |
| 1,230 |
| 1,348 |
| (2.3) |
| (22.4) |
|
Interest on short-term borrowings | 4 |
| 5 |
| 5 |
| 7 |
| 6 |
| (20.0) |
| (33.3) |
|
Total interest expense | 1,050 |
| 1,076 |
| 1,132 |
| 1,237 |
| 1,354 |
| (2.4) |
| (22.5) |
|
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|
NET INTEREST INCOME | 8,636 |
| 8,447 |
| 8,323 |
| 8,570 |
| 8,828 |
| 2.2 |
| (2.2) |
|
Provision for credit losses | 775 |
| 950 |
| 975 |
| 474 |
| 22,460 |
| (18.4) |
| (96.5) |
|
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NET INTEREST INCOME (LOSS) AFTER PROVISION |
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FOR CREDIT LOSSES | 7,861 |
| 7,497 |
| 7,348 |
| 8,096 |
| (13,632) |
| 4.9 |
| (157.7) |
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NONINTEREST INCOME |
|
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|
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|
|
|
Service charges on deposit accounts | 618 |
| 602 |
| 558 |
| 599 |
| 600 |
| 2.7 |
| 3.0 |
|
Trust and investment fee income | 496 |
| 455 |
| 431 |
| 429 |
| 401 |
| 9.0 |
| 23.7 |
|
Investment securities gains | - |
| - |
| - |
| - |
| - |
| - |
| - |
|
Insurance agency commissions | 2,176 |
| 2,536 |
| 3,077 |
| 2,477 |
| 2,724 |
| (14.2) |
| (20.1) |
|
Loss on termination of cash flow hedge | - |
| - |
| - |
| - |
| - |
| - |
| - |
|
Other noninterest income | 704 |
| 935 |
| 722 |
| 710 |
| 1,067 |
| (24.7) |
| (34.0) |
|
Total noninterest income | 3,994 |
| 4,528 |
| 4,788 |
| 4,215 |
| 4,792 |
| (11.8) |
| (16.7) |
|
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NONINTEREST EXPENSE |
|
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|
|
Salaries and wages | 4,689 |
| 4,292 |
| 4,314 |
| 4,336 |
| 4,420 |
| 9.2 |
| 6.1 |
|
Employee benefits | 934 |
| 1,020 |
| 1,182 |
| 983 |
| 971 |
| (8.4) |
| (3.8) |
|
Occupancy expense | 565 |
| 577 |
| 627 |
| 569 |
| 566 |
| (2.1) |
| (0.2) |
|
Furniture and equipment expense | 225 |
| 243 |
| 273 |
| 252 |
| 275 |
| (7.4) |
| (18.2) |
|
Data processing | 741 |
| 739 |
| 760 |
| 773 |
| 718 |
| 0.3 |
| 3.2 |
|
Directors' fees | 131 |
| 132 |
| 112 |
| 92 |
| 86 |
| (0.8) |
| 52.3 |
|
Amortization of intangible assets | 34 |
| 60 |
| 74 |
| 74 |
| 74 |
| (43.3) |
| (54.1) |
|
Insurance agency commissions expense | - |
| 394 |
| 512 |
| 470 |
| 409 |
| (100.0) |
| (100.0) |
|
FDIC insurance premium expense | 399 |
| 377 |
| 458 |
| 613 |
| 467 |
| 5.8 |
| (14.6) |
|
Write-downs of other real estate owned | 290 |
| 101 |
| 75 |
| 371 |
| 219 |
| 187.1 |
| 32.4 |
|
Other noninterest expenses | 1,811 |
| 1,982 |
| 1,728 |
| 1,935 |
| 1,763 |
| (8.6) |
| 2.7 |
|
Total noninterest expense | 9,819 |
| 9,917 |
| 10,115 |
| 10,468 |
| 9,968 |
| (1.0) |
| (1.5) |
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Income (loss) before income taxes | 2,036 |
| 2,108 |
| 2,021 |
| 1,843 |
| (18,808) |
| (3.4) |
| (110.8) |
|
Income tax expense (benefit) | 774 |
| 803 |
| 763 |
| 668 |
| (7,416) |
| (3.6) |
| (110.4) |
|
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|
NET INCOME (LOSS) | $1,262 |
| $1,305 |
| $1,258 |
| $1,175 |
| $(11,392) |
| (3.3) |
| (111.1) |
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Weighted average shares outstanding - basic | 12,615 |
| 10,013 |
| 8,471 |
| 8,463 |
| 8,461 |
| 26.0 |
| 49.1 |
|
Weighted average shares outstanding - diluted | 12,625 |
| 10,024 |
| 8,484 |
| 8,474 |
| 8,461 |
| 25.9 |
| 49.2 |
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Basic net income (loss) per common share | $ 0.10 |
| $ 0.13 |
| $ 0.15 |
| $ 0.14 |
| $ (1.35) |
| (23.1) |
| (107.4) |
|
Diluted net income (loss) per common share | 0.10 |
| 0.13 |
| 0.15 |
| 0.14 |
| (1.35) |
| (23.1) |
| (107.4) |
|
Dividends paid per common share | - |
| - |
| - |
| - |
| - |
| - |
| - |
|
Shore Bancshares, Inc. |
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| Page 10 of 11 | |||||||||
Consolidated Average Balance Sheets By Quarter |
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| Average balance |
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| 3Q 14 |
| 3Q 14 |
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| compared to |
| compared to |
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| 3Q 14 |
| 2Q 14 |
| 1Q 14 |
| 4Q 13 |
| 3Q 13 |
| 2Q 14 |
| 3Q 13 |
| ||||||||||
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
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| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
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Earning assets |
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Loans | $ 705,637 |
| 4.95 | % | $ 708,718 |
| 5.00 | % | $ 707,708 |
| 5.10 | % | $ 718,070 |
| 5.07 | % | $ 772,008 |
| 5.03 | % | (0.4) | % | (8.6) | % |
Investment securities |
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Taxable | 221,105 |
| 1.53 |
| 183,128 |
| 1.46 |
| 155,123 |
| 1.36 |
| 144,699 |
| 1.38 |
| 123,499 |
| 1.15 |
| 20.7 |
| 79.0 |
|
Tax-exempt | 432 |
| 4.16 |
| 431 |
| 4.23 |
| 433 |
| 4.25 |
| 482 |
| 4.39 |
| 521 |
| 5.27 |
| 0.2 |
| (17.1) |
|
Federal funds sold | 1,378 |
| 0.06 |
| 1,476 |
| 0.05 |
| 1,708 |
| 0.05 |
| 2,692 |
| 0.06 |
| 1,618 |
| 0.07 |
| (6.6) |
| (14.8) |
|
Interest-bearing deposits | 87,215 |
| 0.20 |
| 79,223 |
| 0.20 |
| 98,907 |
| 0.23 |
| 101,529 |
| 0.22 |
| 95,422 |
| 0.22 |
| 10.1 |
| (8.6) |
|
Total earning assets | 1,015,767 |
| 3.79 | % | 972,976 |
| 3.93 | % | 963,879 |
| 3.98 | % | 967,472 |
| 3.97 | % | 993,068 |
| 4.08 | % | 4.4 |
| 2.3 |
|
Cash and due from banks | 24,445 |
|
|
| 20,376 |
|
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| 22,708 |
|
|
| 20,900 |
|
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| 22,088 |
|
|
| 20.0 |
| 10.7 |
|
Other assets | 61,989 |
|
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| 64,915 |
|
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| 68,628 |
|
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| 85,095 |
|
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| 65,001 |
|
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| (4.5) |
| (4.6) |
|
Allowance for credit losses | (9,098) |
|
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| (9,675) |
|
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| (10,647) |
|
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| (13,152) |
|
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| (15,238) |
|
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| (6.0) |
| (40.3) |
|
Total assets | $1,093,103 |
|
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| $1,048,592 |
|
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| $1,044,568 |
|
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| $1,060,315 |
|
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| $1,064,919 |
|
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| 4.2 |
| 2.6 |
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Interest-bearing liabilities |
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Demand deposits | $ 183,094 |
| 0.14 | % | $ 171,004 |
| 0.14 | % | $ 173,801 |
| 0.14 | % | $ 176,492 |
| 0.15 | % | $ 172,143 |
| 0.16 | % | 7.1 |
| 6.4 |
|
Money market and savings deposits (1) | 225,670 |
| 0.12 |
| 220,850 |
| 0.12 |
| 222,378 |
| 0.12 |
| 211,294 |
| 0.12 |
| 207,162 |
| 0.12 |
| 2.2 |
| 8.9 |
|
Certificates of deposit $100,000 or more | 166,806 |
| 1.11 |
| 171,830 |
| 1.11 |
| 178,792 |
| 1.13 |
| 190,117 |
| 1.16 |
| 198,495 |
| 1.23 |
| (2.9) |
| (16.0) |
|
Other time deposits | 179,533 |
| 0.98 |
| 183,336 |
| 1.02 |
| 186,960 |
| 1.08 |
| 188,645 |
| 1.14 |
| 192,878 |
| 1.24 |
| (2.1) |
| (6.9) |
|
Interest-bearing deposits | 755,103 |
| 0.55 |
| 747,020 |
| 0.58 |
| 761,931 |
| 0.60 |
| 766,548 |
| 0.64 |
| 770,678 |
| 0.69 |
| 1.1 |
| (2.0) |
|
Short-term borrowings | 7,946 |
| 0.21 |
| 8,633 |
| 0.22 |
| 9,345 |
| 0.22 |
| 10,505 |
| 0.23 |
| 10,695 |
| 0.23 |
| (8.0) |
| (25.7) |
|
Total interest-bearing liabilities | 763,049 |
| 0.55 | % | 755,653 |
| 0.57 | % | 771,276 |
| 0.60 | % | 777,053 |
| 0.63 | % | 781,373 |
| 0.69 | % | 1.0 |
| (2.3) |
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Noninterest-bearing deposits | 185,209 |
|
|
| 168,221 |
|
|
| 161,593 |
|
|
| 171,745 |
|
|
| 162,189 |
|
|
| 10.1 |
| 14.2 |
|
Accrued expenses and other liabilities | 6,230 |
|
|
| 7,629 |
|
|
| 7,237 |
|
|
| 8,010 |
|
|
| 7,453 |
|
|
| (18.3) |
| (16.4) |
|
Stockholders' equity | 138,615 |
|
|
| 117,089 |
|
|
| 104,462 |
|
|
| 103,507 |
|
|
| 113,904 |
|
|
| 18.4 |
| 21.7 |
|
Total liabilities and stockholders' equity | $1,093,103 |
|
|
| $1,048,592 |
|
|
| $1,044,568 |
|
|
| $1,060,315 |
|
|
| $1,064,919 |
|
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| 4.2 |
| 2.6 |
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Net interest spread |
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| 3.24 | % |
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| 3.36 | % |
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| 3.38 | % |
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| 3.34 | % |
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| 3.39 | % |
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Net interest margin |
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| 3.38 | % |
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| 3.49 | % |
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| 3.50 | % |
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| 3.47 | % |
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| 3.54 | % |
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(1) Interest on money market and savings deposits for the third quarter of 2013 included an adjustment to expense related to interest rate caps and the hedged |
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deposits associated with them. This adjustment increased interest expense $0 for the third quarter of 2013. Interest expense for the other |
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quarters presented did not reflect this adjustment because the interest rate caps were terminated in June of 2013. |
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Shore Bancshares, Inc. |
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| Page 11 of 11 | |||||||||
Reconciliation of Generally Accepted Accounting Principles (GAAP) |
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and Non-GAAP Measures |
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(In thousands, except per share data) |
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| YTD |
| YTD |
|
| 3Q 14 |
| 2Q 14 |
| 1Q 14 |
| 4Q 13 |
| 3Q 13 |
| 9/30/2014 |
| 9/30/2013 |
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The following reconciles return on average equity and return on |
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average tangible equity (Note 1): |
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Net income (loss) | $ 1,262 |
| $ 1,305 |
| $ 1,258 |
| $ 1,175 |
| $ (11,392) |
| $ 3,825 |
| $ (10,809) |
|
Net income (loss) - annualized (A) | $ 5,007 |
| $ 5,234 |
| $ 5,102 |
| $ 4,662 |
| $ (45,197) |
| $ 5,114 |
| $ (14,452) |
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Net income (loss), excluding net amortization of intangible assets | $ 1,283 |
| $ 1,341 |
| $ 1,303 |
| $ 1,220 |
| $ (11,347) |
| $ 3,927 |
| $ (10,675) |
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Net income (loss), excluding net amortization of intangible |
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assets - annualized (B) | $ 5,090 |
| $ 5,379 |
| $ 5,284 |
| $ 4,840 |
| $ (45,018) |
| $ 5,250 |
| $ (14,272) |
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Average stockholders' equity (C) | $ 138,615 |
| $ 117,089 |
| $ 104,462 |
| $ 103,507 |
| $ 113,904 |
| $120,180 |
| $ 114,120 |
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Less: Average goodwill and other intangible assets | (13,315) |
| (15,295) |
| (15,945) |
| (16,018) |
| (16,092) |
| (14,842) |
| (16,166) |
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Average tangible equity (D) | $ 125,300 |
| $ 101,794 |
| $ 88,517 |
| $ 87,489 |
| $ 97,812 |
| $105,338 |
| $ 97,954 |
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Return on average equity (GAAP) (A)/(C) | 3.61 | % | 4.47 | % | 4.88 | % | 4.50 | % | (39.68) | % | 4.26 | % | (12.66) | % |
Return on average tangible equity (Non-GAAP) (B)/(D) | 4.06 | % | 5.28 | % | 5.97 | % | 5.53 | % | (46.03) | % | 4.98 | % | (14.57) | % |
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The following reconciles GAAP efficiency ratio and non-GAAP |
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efficiency ratio (Note 2): |
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Noninterest expense (E) | $ 9,819 |
| $ 9,917 |
| $ 10,115 |
| $ 10,468 |
| $ 9,968 |
| $ 29,851 |
| $ 30,218 |
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Less: Amortization of intangible assets | (34) |
| (60) |
| (74) |
| (74) |
| (74) |
| (168) |
| (222) |
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Other nonrecurring adjustments | - |
| - |
| - |
| - |
| - |
| - |
| 49 |
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Adjusted noninterest expense (F) | $ 9,785 |
| $ 9,857 |
| $ 10,041 |
| $ 10,394 |
| $ 9,894 |
| $ 29,683 |
| $ 30,045 |
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Taxable-equivalent net interest income (G) | $ 8,659 |
| $ 8,469 |
| $ 8,347 |
| $ 8,595 |
| $ 8,852 |
| $ 25,475 |
| $ 26,384 |
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Nonrecurring adjustment | - |
| - |
| - |
| - |
| - |
| - |
| (308) |
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Taxable-equivalent net interest income excluding nonrecurring adjustment (H) | $ 8,659 |
| $ 8,469 |
| $ 8,347 |
| $ 8,595 |
| $ 8,852 |
| $ 25,475 |
| $ 26,076 |
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Noninterest income (I) | $ 3,994 |
| $ 4,528 |
| $ 4,788 |
| $ 4,215 |
| $ 4,792 |
| $ 13,310 |
| $ 13,244 |
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Less: Investment securities (gains)/losses | - |
| - |
| - |
| - |
| - |
| - |
| (913) |
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Other nonrecurring (gains)/losses | - |
| (114) |
| - |
| - |
| (297) |
| (114) |
| 21,098 |
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Adjusted noninterest income (J) | $ 3,994 |
| $ 4,414 |
| $ 4,788 |
| $ 4,215 |
| $ 4,495 |
| $ 13,196 |
| $ 33,429 |
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Efficiency ratio (GAAP) (E)/(G)+(I) | 77.60 | % | 76.30 | % | 77.01 | % | 81.72 | % | 73.06 | % | 76.97 | % | 76.25 | % |
Efficiency ratio (Non-GAAP) (F)/(H)+(J) | 77.33 | % | 76.51 | % | 76.44 | % | 81.14 | % | 74.13 | % | 76.76 | % | 50.49 | % |
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The following reconciles book value per common share and tangible |
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book value per common share (Note 1): |
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Stockholders' equity (K) | $ 138,674 |
| $ 137,493 |
| $ 104,632 |
| $ 103,299 |
| $ 102,001 |
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Less: Goodwill and other intangible assets | (13,295) |
| (13,328) |
| (15,900) |
| (15,974) |
| (16,048) |
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Tangible equity (L) | $ 125,379 |
| $ 124,165 |
| $ 88,732 |
| $ 87,325 |
| $ 85,953 |
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Shares outstanding (M) | 12,615 |
| 12,615 |
| 8,471 |
| 8,471 |
| 8,461 |
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Book value per common share (GAAP) (K)/(M) | $ 10.99 |
| $ 10.90 |
| $ 12.35 |
| $ 12.19 |
| $ 12.06 |
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Tangible book value per common share (Non-GAAP) (L)/(M) | $ 9.94 |
| $ 9.84 |
| $ 10.47 |
| $ 10.31 |
| $ 10.16 |
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The following reconciles equity to assets and |
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tangible equity to tangible assets (Note 1): |
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Stockholders' equity (N) | $ 138,674 |
| $ 137,493 |
| $ 104,632 |
| $ 103,299 |
| $ 102,001 |
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Less: Goodwill and other intangible assets | (13,295) |
| (13,328) |
| (15,900) |
| (15,974) |
| (16,048) |
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Tangible equity (O) | $ 125,379 |
| $ 124,165 |
| $ 88,732 |
| $ 87,325 |
| $ 85,953 |
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Assets (P) | $1,096,285 |
| $1,064,853 |
| $1,049,514 |
| $1,054,124 |
| $1,051,384 |
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Less: Goodwill and other intangible assets | (13,295) |
| (13,328) |
| (15,900) |
| (15,974) |
| (16,048) |
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Tangible assets (Q) | $1,082,990 |
| $1,051,525 |
| $1,033,614 |
| $1,038,150 |
| $1,035,336 |
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Period-end equity/assets (GAAP) (N)/(P) | 12.65 | % | 12.91 | % | 9.97 | % | 9.80 | % | 9.70 | % |
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Period-end tangible equity/tangible assets (Non-GAAP) (O)/(Q) | 11.58 | % | 11.81 | % | 8.58 | % | 8.41 | % | 8.30 | % |
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Note 1: Management believes that reporting tangible equity and tangible assets more closely approximates the adequacy of capital for regulatory purposes. | ||||||||||||||
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Note 2: Management believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling cash-based operating activities. | ||||||||||||||
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CONTACT: George Rapp, Chief Financial Officer, 410-763-7800