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): January 26, 2015
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 January 26, 2015 Shore Bancshares, Inc. (the “Company”) issued a press release setting forth the Company’s fourth 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.
2 |
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: January 26, 2015 | By: | /s/ Lloyd L. Beatty, Jr. | |
Lloyd L. Beatty, Jr. President and Chief Executive Officer |
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EXHIBIT INDEX
Exhibit Number |
Description |
99.1 | Press Release, dated January 26, 2015 (filed herewith) |
4 |
Shore Bancshares Reports 2014 Results
EASTON, Md., Jan. 26, 2015 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ - SHBI) reported net income of $1.226 million or $0.10 per diluted common share for the fourth quarter of 2014, compared to net income of $1.262 million or $0.10 per diluted common share for the third quarter of 2014, and net income of $1.175 million or $0.14 per diluted common share for the fourth quarter of 2013. The Company reported net income of $5.05 million or $0.46 per diluted common share for fiscal year 2014, compared to a net loss of $9.6 million or $(1.14) per diluted common share for fiscal year 2013.
When comparing the fourth quarter of 2014 to the third quarter of 2014, net income remained relatively unchanged due to lower noninterest income and lower noninterest expense. When comparing the fourth quarter of 2014 to the fourth quarter of 2013, the main reasons for the slightly improved results were a decline in non-interest income and expense which related to the sale of Tri-State General Insurance Agency, LTD ("TSGIA") the Company's wholesale insurance subsidiary during the second quarter of 2014, and an increase in retail commissions of $100 thousand. When comparing fiscal year 2014 to fiscal year 2013, improved earnings were due to a decline in the provision for credit losses of $24.4 million partially offset by a decrease in net interest income of $834 thousand.
"Our regional economy is finally showing signs of stability. We are well capitalized and in a position to meet the needs of our customers and generate healthy loan growth. Cultivating new business development opportunities will be our primary focus in 2015," said Lloyd L. "Scott" Beatty, Jr., President and Chief Executive Officer.
Balance Sheet Review
Total assets were $1.1 billion at December 31, 2014, a $46.3 million, or 4.4%, increase when compared to $1.054 billion at the end of 2013. The slightly higher amount of total assets was primarily due to proceeds from the second quarter capital raise which were primarily invested in available for sale investment securities. Such securities increased $89 million, which was partially offset by the decline in interest-bearing deposits with other banks of $41 million as well as a slight reduction in loans. Loans held for sale at December 31, 2013 were reclassified to loans during the first quarter of 2014.
Total deposits at December 31, 2014 increased $15.5 million, or 1.7%, when compared to December 31, 2013. The increase in total deposits was mainly due to an increase in noninterest-bearing deposits of $21 million as well as an increase in interest-bearing
transaction accounts of $22 million, partially offset by a decline in time deposits of $25 million. Total stockholders' equity increased $37.2 million, or 36%, 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 December 31, 2014 the ratio of total equity to total assets was 12.77% and the ratio of total tangible equity to total tangible assets was 11.70%, significantly higher than the 9.80% and 8.41%, respectively, at December 31, 2013.
Review of Quarterly Financial Results
Net interest income was $8.6 million for the fourth and third quarter of 2014. Although net interest income remained flat between quarters, the average balance sheet reflects a decline in yields on loans, which was offset by higher volumes of and rates earned on investment securities and lower volumes of and rates paid on time deposits. Net interest income for the fourth quarter of 2014 increased $66 thousand over the fourth quarter of 2013. The Company's net interest margin was 3.35% for the fourth quarter of 2014, compared to 3.38% for the third quarter of 2014 and 3.49% for the fourth 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 yields earned on investment securities.
The provision for credit losses was $650 thousand for the fourth quarter of 2014, $775 thousand for the third quarter of 2014 and $474 thousand for the fourth quarter of 2013. The lower level of provision for credit losses when comparing the fourth quarter of 2014 to the third quarter of 2014 was primarily due to declines in nonperforming loans. The level of provision for credit losses increased when comparing the fourth quarter of 2014 to the fourth quarter of 2013, primarily due to a charge off on a large troubled debt restructuring (TDR) loan in the fourth quarter of 2014. Net charge-offs were $1.6 million for the fourth quarter of 2014, $1.2 million for the third quarter of 2014 and $1.1 million for the fourth quarter of 2013. The ratio of annualized net charge-offs to average loans was .88% for the fourth quarter of 2014, .70% for the third quarter of 2014 and .58% for the fourth quarter of 2013. The ratio of the allowance for credit losses to period-end loans was 1.08% at December 31, 2014, lower than the 1.22% at September 30, 2014 and 1.51% at December 31, 2013.
At December 31, 2014, nonperforming assets, excluding (TDRs), were $17.2 million, a decline of $272 thousand, or 1.6%, when compared to September 30, 2014 and a decrease of $1.4 million, or 7.7%, when compared to December 31, 2013. Additionally, accruing (TDRs) were $16.7 million at December 31, 2014, a decrease of $8.6 million, or 34%, when compared to September 30, 2014 and a decrease of $9.4 million, or 36.1% when compared to December 31, 2013. The positive trend in nonperforming assets and TDRs when comparing December 31, 2014 to both September 30, 2014 and December 31, 2013 was mainly accomplished through continued workout efforts and charge-offs over the last 12 months. At December 31, 2014 the ratio of nonperforming assets to total assets was 1.57%, lower than the 1.60% and 2.11% at September 30, 2014 and December 31, 2013, respectively. In addition, the ratio of accruing TDRs to total assets at December 31, 2014 was 1.52%, compared to 2.30% at September 30, 2014 and 2.47% at December 31, 2013, which reflects improved credit quality in the loan portfolio.
Total noninterest income for the fourth quarter of 2014 decreased $523 thousand, or 13.1%, when compared to the third quarter of 2014 and decreased $744 thousand, or 17.7 %, when compared to the fourth quarter of 2013. The decrease from the third quarter of 2014 was due to lower retail commissions which are typically higher in the first and third quarters of the Company's fiscal year, resulting in a decline of $440 thousand. The decrease from the fourth quarter of 2013 of $741 thousand was the result of the sale of Tri-State General Insurance Agency, LTD ("TSGIA"), the Company's wholesale insurance subsidiary, in June of 2014, which resulted in a loss of commission income of $849 thousand. This loss of commissions income was slightly offset by an increase in ongoing retail commissions of $108 thousand for the fourth quarter of 2014. During the fourth quarter of 2014, management made the decision to close a Talbot Bank branch in Trappe, MD in early 2015, which was part of one of the Company's wholly owned subsidiaries, resulting in an offset to noninterest income of $88 thousand relating to leasehold improvements of the branch.
Total noninterest expense for the fourth quarter of 2014 decreased $309 thousand, or 3.1%, when compared to the third quarter of 2014 and decreased $958 thousand, or 9.2%, when compared to the fourth quarter of 2013. The decrease from the third quarter of 2014 was attributed mainly to the salaries and wages line item, which decreased $384 thousand as a result of a one-time severance and related benefits payout of $400 thousand to the former Chief Executive Officer of CNB accrued in the third quarter of 2014 and a decrease in write-downs of other real estate owned of $98 thousand for the fourth quarter of 2014, which were offset by the fourth quarter accrual of bonuses and incentive awards to members of management of $180 thousand. The significant decrease when compared to the fourth quarter of 2013 was primarily due to a decline in operating expenses of $1 million as a result of the sale of TSGIA discussed above.
Review of 2014 Financial Results
Net interest income for 2014 was $34 million, a decrease of $834 thousand, or 2.4%, when compared to 2013 due to a greater decline in interest income from loans than the increase in securities interest income and decrease in interest expense combined. The decrease in interest income was primarily due to lower average balances of and yields earned on loans, partially offset by an increase in higher average balances and yields earned on investment securities and a decrease in interest expense due to lower balances of and rates paid on time deposits. The decline in the average balance of loans along with the decrease in rates resulted in the net interest margin declining to 3.43% for 2014 when compared to 3.48% for 2013.
The provision for credit losses for 2014 and 2013 were $3.4 million and $27.8 million, respectively, while net charge-offs were $6.4 million and $33.1 million, respectively. The decline in provision and charge-offs were primarily due to the sale of loans and other real estate owned by The Talbot Bank of Easton, one of the Company's wholly owned subsidiaries, which occurred in the third quarter of 2013. The ratio of annualized net charge-offs to average loans was .90% for 2014 and 4.32% 2013.
Total noninterest income for 2014 decreased $678 thousand, or 3.9%, when compared to 2013. The decrease was primarily due to the loss of wholesale insurance commissions and fees of $1.9 million from the formerly owned Tri-State General Insurance Agency mentioned above and a gain on investment securities of $913 thousand in 2013. The decreases were partially offset by increases of $493 thousand in retail commissions, the gain on sale of Tri-State of $114 thousand and increased trust and fee income of $247 thousand reduced the losses in noninterest income for 2014. In addition, during 2013, the Company incurred a loss of $1.3 million related to the termination of a cash flow hedge. As a result of the termination in 2013, no loss was incurred in 2014.
Total noninterest expense for 2014 decreased $1.3 million, or 3.3%, when compared to 2013. The decrease was primarily due to lower write-downs of other real estate owned of $660 thousand, or 50.1%, and insurance agency commission's expense of $892 thousand, or 49.6%, associated with the Tri-State Sale, which were partially offset by increases in salary and wage expense of $254 thousand, or 1.5%, data processing of $106 thousand, or 3.7%, and directors' fees of $120 thousand, or 33.9%.
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 Maryland chartered commercial 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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| Page 5 of 12 |
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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 Twelve Months Ended |
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| December 31, |
| December 31, |
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| 2014 |
| 2013 | Change |
| 2014 |
| 2013 | Change |
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PROFITABILITY FOR THE PERIOD |
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Net interest income | $ 8,636 |
| $ 8,570 |
| 0.8 | % | $ 34,042 |
| $ 34,876 |
| (2.4) | % |
Provision for credit losses | 650 |
| 474 |
| 37.1 |
| 3,350 |
| 27,784 |
| (87.9) |
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Noninterest income | 3,471 |
| 4,215 |
| (17.7) |
| 16,781 |
| 17,459 |
| (3.9) |
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Noninterest expense | 9,510 |
| 10,468 |
| (9.2) |
| 39,361 |
| 40,686 |
| (3.3) |
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Income (loss) before income taxes | 1,947 |
| 1,843 |
| 5.6 |
| 8,112 |
| (16,135) |
| 150.3 |
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Income tax (benefit) expense | 721 |
| 668 |
| 7.9 |
| 3,061 |
| (6,501) |
| 147.1 |
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Net income | $ 1,226 |
| $ 1,175 |
| 4.3 |
| $ 5,051 |
| $ (9,634) |
| 152.4 |
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Return on average assets | 0.44 | % | 0.44 | % | - | bp | 0.47 | % | (0.89) | % | 136 | bp |
Return on average equity | 3.48 |
| 4.50 |
| (102) |
| 4.04 |
| (8.64) |
| 1,268 |
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Return on average tangible equity (1) | 3.91 |
| 5.53 |
| (162) |
| 4.68 |
| (9.92) |
| 1,460 |
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Net interest margin | 3.35 |
| 3.47 |
| (12) |
| 3.43 |
| 3.48 |
| (5) |
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Efficiency ratio - GAAP | 78.40 |
| 81.72 |
| (332) |
| 77.31 |
| 77.59 |
| (28) |
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Efficiency ratio - Non-GAAP (1) | 78.28 |
| 81.14 |
| (286) |
| 77.12 |
| 77.43 |
| (31) |
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PER SHARE DATA |
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Basic net income (loss) per common share | $ 0.10 |
| $ 0.14 |
| (28.6) | % | $ 0.46 |
| $ (1.14) |
| 140.4 | % |
Diluted net income (loss) per common share | 0.10 |
| 0.14 |
| (28.6) |
| 0.46 |
| (1.14) |
| 140.4 |
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Dividends paid per common share | - |
| - |
| - |
| - |
| - |
| - |
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Book value per common share at period end | 11.13 |
| 12.19 |
| (8.7) |
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Tangible book value per common share at period end (1) | 10.08 |
| 10.31 |
| (2.2) |
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Market value at period end | 9.34 |
| 9.22 |
| 1.3 |
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Market range: |
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High | 9.34 |
| 9.45 |
| (1.2) |
| 10.49 |
| 9.45 |
| 11.0 |
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Low | 9.34 |
| 8.50 |
| 9.9 |
| 8.57 |
| 5.20 |
| 64.8 |
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AVERAGE BALANCE SHEET DATA |
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Loans | $ 707,484 |
| $ 718,070 |
| (1.5) | % | $ 707,381 |
| $ 764,659 |
| (7.5) | % |
Investment securities | 232,803 |
| 145,181 |
| 60.4 |
| 198,639 |
| 139,241 |
| 42.7 |
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Earning assets | 1,026,061 |
| 982,519 |
| 4.4 |
| 994,898 |
| 1,006,311 |
| (1.1) |
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Assets | 1,103,355 |
| 1,060,315 |
| 4.1 |
| 1,072,622 |
| 1,081,127 |
| (0.8) |
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Deposits | 950,720 |
| 938,293 |
| 1.3 |
| 932,546 |
| 950,332 |
| (1.9) |
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Stockholders' equity | 139,676 |
| 103,507 |
| 34.9 |
| 125,094 |
| 111,445 |
| 12.2 |
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CREDIT QUALITY DATA AT PERIOD END |
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Net charge-offs | $ 1,561 |
| $ 1,050 |
| 48.7 | % | $ 6,380 |
| $ 33,050 |
| (80.7) | % |
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Nonaccrual loans | $ 13,467 |
| $ 14,626 |
| (7.9) |
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Loans 90 days past due and still accruing | 87 |
| 270 |
| (67.8) |
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Other real estate owned | 3,691 |
| 3,779 |
| (2.3) |
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Total nonperforming assets | 17,245 |
| 18,675 |
| (7.7) |
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Accruing troubled debt restructurings (TDRs) | 16,674 |
| 26,088 |
| (36.1) |
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Total nonperforming assets and accruing TDRs | $ 33,919 |
| $ 44,763 |
| (24.2) |
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CAPITAL AND CREDIT QUALITY RATIOS |
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Period-end equity to assets | 12.77 | % | 9.80 | % | 297 | bp |
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| 9.80 |
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Period-end tangible equity to tangible assets (1) | 11.70 |
| 8.41 |
| 329 |
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| 8.41 |
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Annualized net charge-offs to average loans | 0.88 |
| 0.58 |
| 30 |
| 0.90 | % | 4.32 | % | (342) | bp |
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Allowance for credit losses as a percent of: |
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Period-end loans | 1.08 |
| 1.51 |
| (43) |
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Nonaccrual loans | 57.14 |
| 73.33 |
| (1,619) |
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Nonperforming assets | 44.62 |
| 57.43 |
| (1,281) |
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Accruing TDRs | 46.15 |
| 41.11 |
| 504 |
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Nonperforming assets and accruing TDRs | 22.69 |
| 23.96 |
| (127) |
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As a percent of total loans: |
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Nonaccrual loans | 1.89 |
| 2.05 |
| (16) |
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Accruing TDRs | 2.35 |
| 3.66 |
| (131) |
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Nonaccrual loans and accruing TDRs | 4.24 |
| 5.71 |
| (147) |
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As a percent of total loans+other real estate owned: |
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Nonperforming assets | 2.41 |
| 2.61 |
| (20) |
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Nonperforming assets and accruing TDRs | 4.75 |
| 6.25 |
| (150) |
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As a percent of total assets: |
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Nonaccrual loans | 1.22 |
| 1.39 |
| (17) |
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Nonperforming assets | 1.57 |
| 1.77 |
| (20) |
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Accruing TDRs | 1.52 |
| 2.47 |
| (95) |
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Nonperforming assets and accruing TDRs | 3.09 |
| 4.24 |
| (115) |
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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 6 of 12 |
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Consolidated Balance Sheets |
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(In thousands, except per share data) |
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| December 31, 2014 |
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| December 31, |
| December 31, |
| compared to |
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| 2014 |
| 2013 |
| December 31, 2013 |
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ASSETS |
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Cash and due from banks | $ 24,211 |
| $ 21,238 |
| 14.0 | % |
Interest-bearing deposits with other banks | 68,460 |
| 109,384 |
| (37.4) |
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Federal funds sold | 3,552 |
| 468 |
| 659.0 |
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Investment securities available for sale (at fair value) | 236,108 |
| 147,101 |
| 60.5 |
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Investment securities held to maturity | 4,630 |
| 5,185 |
| (10.7) |
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Loans held for sale | - |
| 3,521 |
| (100.0) |
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Loans | 710,746 |
| 711,919 |
| (0.2) |
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Less: allowance for credit losses | (7,695) |
| (10,725) |
| (28.3) |
|
Loans, net | 703,051 |
| 701,194 |
| 0.3 |
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Premises and equipment, net | 16,275 |
| 15,198 |
| 7.1 |
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Goodwill | 11,931 |
| 12,454 |
| (4.2) |
|
Other intangible assets, net | 1,331 |
| 3,520 |
| (62.2) |
|
Other real estate owned, net | 3,691 |
| 3,779 |
| (2.3) |
|
Other assets | 27,162 |
| 31,082 |
| (12.6) |
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Total assets | $ 1,100,402 |
| $ 1,054,124 |
| 4.4 |
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LIABILITIES |
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Noninterest-bearing deposits | $ 193,814 |
| $ 172,797 |
| 12.2 |
|
Interest-bearing deposits | 755,190 |
| 760,671 |
| (0.7) |
|
Total deposits | 949,004 |
| 933,468 |
| 1.7 |
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Short-term borrowings | 4,808 |
| 10,140 |
| (52.6) |
|
Accrued expenses and other liabilities | 6,121 |
| 7,217 |
| (15.2) |
|
Total liabilities | 959,933 |
| 950,825 |
| 1.0 |
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STOCKHOLDERS' EQUITY |
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Common stock, par value $0.01; authorized |
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35,000,000 shares | 126 |
| 85 |
| 48.2 |
|
Additional paid in capital | 63,533 |
| 32,207 |
| 97.3 |
|
Retained earnings | 76,494 |
| 71,444 |
| 7.1 |
|
Accumulated other comprehensive loss | 316 |
| (437) |
| 172.3 |
|
Total stockholders' equity | 140,469 |
| 103,299 |
| 36.0 |
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Total liabilities and stockholders' equity | $ 1,100,402 |
| $ 1,054,124 |
| 4.4 |
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Period-end common shares outstanding | 12,618 |
| 8,471 |
| 49.0 |
|
Book value per common share | $ 11.13 |
| $ 12.19 |
| (8.7) |
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Shore Bancshares, Inc. |
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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 Twelve Months Ended |
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| December 31, |
| December 31, |
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| 2014 |
| 2013 | % Change |
| 2014 |
| 2013 | % Change |
|
INTEREST INCOME |
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Interest and fees on loans | $ 8,665 |
| $ 9,242 | (6.2) | % | $ 35,140 |
| $ 39,058 | (10.0) | % |
Interest and dividends on investment securities: |
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Taxable | 917 |
| 504 | 81.9 |
| 2,957 |
| 2,072 | 42.7 |
|
Tax-exempt | 3 |
| 3 | - |
| 12 |
| 17 | (29.4) |
|
Interest on federal funds sold | - |
| 1 | (100.0) |
| 1 |
| 4 | (75.0) |
|
Interest on deposits with other banks | 40 |
| 57 | (29.8) |
| 179 |
| 200 | (10.5) |
|
Total interest income | 9,625 |
| 9,807 | (1.9) |
| 38,289 |
| 41,351 | (7.4) |
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INTEREST EXPENSE |
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Interest on deposits | 985 |
| 1,230 | (19.9) |
| 4,229 |
| 6,448 | (34.4) |
|
Interest on short-term borrowings | 4 |
| 7 | (42.9) |
| 18 |
| 27 | (33.3) |
|
Total interest expense | 989 |
| 1,237 | (20.0) |
| 4,247 |
| 6,475 | (34.4) |
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NET INTEREST INCOME | 8,636 |
| 8,570 | 0.8 |
| 34,042 |
| 34,876 | (2.4) |
|
Provision for credit losses | 650 |
| 474 | 37.1 |
| 3,350 |
| 27,784 | (87.9) |
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NET INTEREST INCOME (LOSS) AFTER PROVISION |
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FOR CREDIT LOSSES | 7,986 |
| 8,096 | (1.4) |
| 30,692 |
| 7,092 | 332.8 |
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NONINTEREST INCOME |
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Service charges on deposit accounts | 629 |
| 599 | 5.0 |
| 2,407 |
| 2,371 | 1.5 |
|
Trust and investment fee income | 478 |
| 429 | 11.4 |
| 1,860 |
| 1,613 | 15.3 |
|
Investment securities gains | 23 |
| - | - |
| 23 |
| 913 | (97.5) |
|
Insurance agency commissions | 1,736 |
| 2,477 | (29.9) |
| 9,525 |
| 10,647 | (10.5) |
|
Loss on termination of cash flow hedge | - |
| - | - |
| - |
| (1,306) | 100.0 |
|
Other noninterest income | 605 |
| 710 | (14.8) |
| 2,966 |
| 3,221 | (7.9) |
|
Total noninterest income | 3,471 |
| 4,215 | (17.7) |
| 16,781 |
| 17,459 | (3.9) |
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NONINTEREST EXPENSE |
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Salaries and wages | 4,305 |
| 4,336 | (0.7) |
| 17,600 |
| 17,346 | 1.5 |
|
Employee benefits | 956 |
| 983 | (2.7) |
| 4,092 |
| 4,094 | (0.0) |
|
Occupancy expense | 570 |
| 569 | 0.2 |
| 2,339 |
| 2,344 | (0.2) |
|
Furniture and equipment expense | 234 |
| 252 | (7.1) |
| 975 |
| 1,020 | (4.4) |
|
Data processing | 766 |
| 773 | (0.9) |
| 3,006 |
| 2,900 | 3.7 |
|
Directors' fees | 99 |
| 92 | 7.6 |
| 474 |
| 354 | 33.9 |
|
Amortization of intangible assets | 33 |
| 74 | (55.4) |
| 201 |
| 296 | (32.1) |
|
Insurance agency commissions expense | - |
| 470 | (100.0) |
| 906 |
| 1,798 | (49.6) |
|
FDIC insurance premium expense | 402 |
| 613 | (34.4) |
| 1,636 |
| 1,813 | (9.8) |
|
Write-downs of other real estate owned | 192 |
| 371 | (48.2) |
| 658 |
| 1,318 | (50.1) |
|
Other noninterest expenses | 1,953 |
| 1,935 | 0.9 |
| 7,474 |
| 7,403 | 1.0 |
|
Total noninterest expense | 9,510 |
| 10,468 | (9.2) |
| 39,361 |
| 40,686 | (3.3) |
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Income (loss) before income taxes | 1,947 |
| 1,843 | 5.6 |
| 8,112 |
| (16,135) | 150.3 |
|
Income tax (benefit) expense | 721 |
| 668 | 7.9 |
| 3,061 |
| (6,501) | 147.1 |
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NET (LOSS) INCOME | $ 1,226 |
| $ 1,175 | 4.3 |
| $ 5,051 |
| $ (9,634) | 152.4 |
|
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Weighted average shares outstanding - basic | 12,617 |
| 8,463 | 49.1 |
| 10,945 |
| 8,461 | 29.4 |
|
Weighted average shares outstanding - diluted | 12,626 |
| 8,474 | 49.0 |
| 10,956 |
| 8,461 | 29.5 |
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Basic net income per common share | $ 0.10 |
| $ 0.14 | (28.6) |
| $ 0.46 |
| $ (1.14) | 140.4 |
|
Diluted net income per common share | 0.10 |
| 0.14 | (28.6) |
| 0.46 |
| (1.14) | 140.4 |
|
Dividends paid per common share | - |
| - | - |
| - |
| - | - |
|
Shore Bancshares, Inc. |
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| Page 8 of 12 |
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Consolidated Average Balance Sheets |
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(Dollars in thousands) |
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| For the Three Months Ended |
| For the Twelve Months Ended |
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| December 31, |
| December 31, |
| ||||||||||||
| 2014 |
| 2013 |
| 2014 |
| 2013 |
| ||||||||
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
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| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
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Earning assets |
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Loans | $ 707,484 |
| 4.87 | % | $ 733,117 |
| 5.01 | % | $ 707,381 |
| 4.98 | % | $ 768,516 |
| 5.09 | % |
Investment securities |
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|
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Taxable | 232,371 |
| 1.56 |
| 144,699 |
| 1.38 |
| 198,207 |
| 1.49 |
| 138,701 |
| 1.49 |
|
Tax-exempt | 432 |
| 4.16 |
| 482 |
| 4.39 |
| 432 |
| 4.20 |
| 540 |
| 4.84 |
|
Federal funds sold | 2,962 |
| 0.07 |
| 2,692 |
| 0.06 |
| 1,883 |
| 0.06 |
| 3,850 |
| 0.10 |
|
Interest-bearing deposits | 82,812 |
| 0.19 |
| 101,529 |
| 0.22 |
| 86,995 |
| 0.21 |
| 94,704 |
| 0.21 |
|
Total earning assets | 1,026,061 |
| 3.73 | % | 982,519 |
| 3.98 | % | 994,898 |
| 3.86 | % | 1,006,311 |
| 4.12 | % |
Cash and due from banks | 24,329 |
|
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| 20,900 |
|
|
| 22,973 |
|
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| 22,603 |
|
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Other assets | 61,370 |
|
|
| 70,048 |
|
|
| 64,200 |
|
|
| 67,724 |
|
|
|
Allowance for credit losses | (8,405) |
|
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| (13,152) |
|
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| (9,449) |
|
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| (15,511) |
|
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Total assets | $ 1,103,355 |
|
|
| $ 1,060,315 |
|
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| $ 1,072,622 |
|
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| $ 1,081,127 |
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Interest-bearing liabilities |
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Demand deposits | $ 183,251 |
| 0.13 | % | $ 176,492 |
| 0.15 | % | $ 177,828 |
| 0.14 | % | $ 171,244 |
| 0.16 | % |
Money market and savings deposits (1) | 233,441 |
| 0.12 |
| 211,294 |
| 0.12 |
| 225,616 |
| 0.12 |
| 221,808 |
| 0.49 |
|
Certificates of deposit $100,000 or more | 163,813 |
| 1.06 |
| 190,117 |
| 1.16 |
| 170,252 |
| 1.10 |
| 202,053 |
| 1.28 |
|
Other time deposits | 173,695 |
| 0.95 |
| 188,645 |
| 1.14 |
| 180,848 |
| 1.01 |
| 195,045 |
| 1.29 |
|
Interest-bearing deposits | 754,200 |
| 0.52 |
| 766,548 |
| 0.64 |
| 754,544 |
| 0.56 |
| 790,150 |
| 0.82 |
|
Short-term borrowings | 6,356 |
| 0.23 |
| 10,505 |
| 0.23 |
| 8,061 |
| 0.22 |
| 10,980 |
| 0.24 |
|
Total interest-bearing liabilities | 760,556 |
| 0.52 | % | 777,053 |
| 0.63 | % | 762,605 |
| 0.56 | % | 801,130 |
| 0.81 | % |
Noninterest-bearing deposits | 196,520 |
|
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| 171,745 |
|
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| 178,002 |
|
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| 160,182 |
|
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Accrued expenses and other liabilities | 6,603 |
|
|
| 8,010 |
|
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| 6,921 |
|
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| 8,370 |
|
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Stockholders' equity | 139,676 |
|
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| 103,507 |
|
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| 125,094 |
|
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| 111,445 |
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Total liabilities and stockholders' equity | $ 1,103,355 |
|
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| $ 1,060,315 |
|
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| $ 1,072,622 |
|
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| $ 1,081,127 |
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Net interest spread |
|
| 3.21 | % |
|
| 3.35 | % |
|
| 3.30 | % |
|
| 3.31 | % |
Net interest margin |
|
| 3.35 | % |
|
| 3.49 | % |
|
| 3.43 | % |
|
| 3.48 | % |
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(1) Interest on money market and savings deposits for 2013 included an adjustment to expense related to interest rate caps and the hedged deposits |
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associated with them. This adjustment increased interest expense $695 thousand for 2013, respectively. Interest expense for 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 9 of 12 |
Financial Highlights By Quarter |
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(Dollars in thousands, except per share data) |
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| 4th quarter |
| 3rd quarter |
| 2nd quarter |
| 1st quarter |
| 4th quarter |
| 4Q 14 |
| 4Q 14 |
| 2014 |
| 2014 |
| 2014 |
| 2014 |
| 2013 |
| compared to |
| compared to |
| (4Q 14) |
| (3Q 14) |
| (2Q 14) |
| (1Q 14) |
| (4Q 13) |
| 3Q 14 |
| 4Q 13 |
PROFITABILITY FOR THE PERIOD |
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Taxable-equivalent net interest income | $ 8,659 |
| $ 8,659 |
| $ 8,469 |
| $ 8,347 |
| $ 8,595 |
| - | % | 0.7 |
Less: Taxable-equivalent adjustment | 23 |
| 23 |
| 22 |
| 24 |
| 25 |
| - |
| (8.0) |
Net interest income | 8,636 |
| 8,636 |
| 8,447 |
| 8,323 |
| 8,570 |
| - |
| 0.8 |
Provision for credit losses | 650 |
| 775 |
| 950 |
| 975 |
| 474 |
| (16.1) |
| 37.1 |
Noninterest income | 3,471 |
| 3,994 |
| 4,528 |
| 4,788 |
| 4,215 |
| (13.1) |
| (17.7) |
Noninterest expense | 9,510 |
| 9,819 |
| 9,917 |
| 10,115 |
| 10,468 |
| (3.1) |
| (9.2) |
Income (loss) before income taxes | 1,947 |
| 2,036 |
| 2,108 |
| 2,021 |
| 1,843 |
| (4.4) |
| 5.6 |
Income tax expense (benefit) | 721 |
| 774 |
| 803 |
| 763 |
| 668 |
| (6.8) |
| 7.9 |
Net income (loss) | $ 1,226 |
| $ 1,262 |
| $ 1,305 |
| $ 1,258 |
| $ 1,175 |
| (2.9) |
| 4.3 |
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Return on average assets | 0.44 | % | 0.46 | % | 0.50 | % | 0.49 | % | 0.44 | % | (2) | bp | - |
Return on average equity | 3.48 |
| 3.61 |
| 4.47 |
| 4.88 |
| 4.50 |
| (13) |
| (102) |
Return on average tangible equity (1) | 3.91 |
| 4.06 |
| 5.28 |
| 5.97 |
| 5.53 |
| (15) |
| (162) |
Net interest margin | 3.35 |
| 3.38 |
| 3.49 |
| 3.50 |
| 3.47 |
| (3) |
| (12) |
Efficiency ratio - GAAP | 78.40 |
| 77.60 |
| 76.30 |
| 77.01 |
| 81.72 |
| 80 |
| (332) |
Efficiency ratio - Non-GAAP (1) | 78.28 |
| 77.33 |
| 76.51 |
| 76.44 |
| 81.14 |
| 95 |
| (286) |
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PER SHARE DATA |
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Basic net income (loss) per common share | $ 0.10 |
| $ 0.10 |
| $ 0.13 |
| $ 0.15 |
| $ 0.14 |
| - | % | (28.6) |
Diluted net income (loss) per common share | 0.10 |
| 0.10 |
| 0.13 |
| 0.15 |
| 0.14 |
| - |
| (28.6) |
Dividends paid per common share | - |
| - |
| - |
| - |
| - |
| - |
| - |
Book value per common share at period end | 11.13 |
| 10.99 |
| 10.90 |
| 12.35 |
| 12.19 |
| 1.3 |
| (8.7) |
Tangible book value per common share at period end (1) | 10.08 |
| 9.94 |
| 9.84 |
| 10.47 |
| 10.31 |
| 1.4 |
| (2.2) |
Market value at period end | 9.34 |
| 9.00 |
| 9.01 |
| 9.51 |
| 9.22 |
| 3.8 |
| 1.3 |
Market range: |
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High | 9.34 |
| 9.03 |
| 10.49 |
| 9.99 |
| 9.45 |
| 3.4 |
| (1.2) |
Low | 9.34 |
| 8.96 |
| 8.57 |
| 9.00 |
| 8.50 |
| 4.2 |
| 9.9 |
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AVERAGE BALANCE SHEET DATA |
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Loans | $ 707,484 |
| $ 705,637 |
| $ 708,718 |
| $ 707,708 |
| $ 718,070 |
| 0.3 | % | (1.5) |
Investment securities | 232,803 |
| 221,537 |
| 183,559 |
| 155,556 |
| 145,181 |
| 5.1 |
| 60.4 |
Earning assets | 1,026,061 |
| 1,015,767 |
| 972,976 |
| 966,304 |
| 982,519 |
| 1.0 |
| 4.4 |
Assets | 1,103,355 |
| 1,093,103 |
| 1,048,592 |
| 1,044,568 |
| 1,060,315 |
| 0.9 |
| 4.1 |
Deposits | 950,720 |
| 940,312 |
| 915,241 |
| 923,524 |
| 938,293 |
| 1.1 |
| 1.3 |
Stockholders' equity | 139,676 |
| 138,615 |
| 117,089 |
| 104,462 |
| 103,507 |
| 0.8 |
| 34.9 |
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CREDIT QUALITY DATA AT PERIOD END |
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|
Net charge-offs | $ 1,561 |
| $ 1,245 |
| $ 1,943 |
| $ 1,631 |
| $ 1,050 |
| 25.4 | % | 48.7 |
|
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|
|
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Nonaccrual loans excluding nonaccrual loans held for sale (hfs) | $ 13,467 |
| $ 12,718 |
| $ 15,176 |
| $ 19,156 |
| $ 14,626 |
| 5.9 |
| (7.9) |
Loans 90 days past due and still accruing | 87 |
| - |
| 5 |
| 121 |
| 270 |
| - |
| (67.8) |
Other real estate owned | 3,691 |
| 4,799 |
| 4,201 |
| 4,672 |
| 3,779 |
| (23.1) |
| (2.3) |
Total nonperforming assets excluding nonaccrual loans hfs | 17,245 |
| 17,517 |
| 19,382 |
| 23,949 |
| 18,675 |
| (1.6) |
| (7.7) |
Nonaccrual loans hfs | - |
| - |
| - |
| - |
| 3,521 |
| - |
| (100.0) |
Total nonperforming assets including nonaccrual loans hfs | $ 17,245 |
| $ 17,517 |
| $ 19,382 |
| $ 23,949 |
| $ 22,196 |
| (1.6) |
| (22.3) |
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|
|
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Accruing troubled debt restructurings (TDRs) excluding TDRs hfs | $ 16,674 |
| $ 25,246 |
| $ 25,402 |
| $ 25,333 |
| $ 26,088 |
| (34.0) |
| (36.1) |
Accruing TDRs hfs | - |
| - |
| - |
| - |
| - |
| - |
| - |
Total accruing TDRs including TDRs hfs | $ 16,674 |
| $ 25,246 |
| $ 25,402 |
| $ 25,333 |
| $ 26,088 |
| (34.0) |
| (36.1) |
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|
|
|
Total nonperforming assets and accruing TDRs excluding nonaccrual loans and TDRs hfs | $ 33,919 |
| $ 42,763 |
| $ 44,784 |
| $ 49,282 |
| $ 44,763 |
| (20.7) |
| (24.2) |
Nonaccrual loans and TDRs hfs | - |
| - |
| - |
| - |
| 3,521 |
| - |
| (100.0) |
Total nonperforming assets and accruing TDRs including nonaccrual loans and TDRs hfs | $ 33,919 |
| $ 42,763 |
| $ 44,784 |
| $ 49,282 |
| $ 48,284 |
| (20.7) |
| (29.8) |
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CAPITAL AND CREDIT QUALITY RATIOS |
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Period-end equity to assets | 12.77 | % | 12.65 | % | 12.91 | % | 9.97 | % | 9.80 | % | 12 | bp | 297 |
Period-end tangible equity to tangible assets (1) | 11.70 |
| 11.58 |
| 11.81 |
| 8.58 |
| 8.41 |
| 12 |
| 329 |
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Annualized net charge-offs to average loans | 0.88 |
| 0.70 |
| 1.10 |
| 0.93 |
| 0.58 |
| 18 |
| 30 |
|
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Allowance for credit losses as a percent of (including loans hfs): |
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Period-end loans | 1.08 |
| 1.22 |
| 1.28 |
| 1.43 |
| 1.51 |
| (14) |
| (43) |
Nonaccrual loans | 57.14 |
| 67.67 |
| 59.80 |
| 52.56 |
| 59.10 |
| (1,053) |
| (196) |
Nonperforming assets | 44.62 |
| 49.13 |
| 46.83 |
| 42.04 |
| 48.32 |
| (451) |
| (370) |
Accruing TDRs | 46.15 |
| 34.09 |
| 35.73 |
| 39.75 |
| 41.11 |
| 1,206 |
| 504 |
Nonperforming assets and accruing TDRs | 22.69 |
| 20.12 |
| 20.27 |
| 20.43 |
| 22.21 |
| 257 |
| 48 |
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As a percent of total loans (including loans hfs): |
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Nonaccrual loans | 1.89 |
| 1.80 |
| 2.14 |
| 2.72 |
| 2.54 |
| 9 |
| (65) |
Accruing TDRs | 2.35 |
| 3.58 |
| 3.58 |
| 3.60 |
| 3.65 |
| (123) |
| (130) |
Nonaccrual loans and accruing TDRs | 4.24 |
| 5.38 |
| 5.72 |
| 6.32 |
| 6.19 |
| (114) |
| (195) |
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As a percent of total loans+other real estate owned (including loans hfs): |
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Nonperforming assets | 2.41 |
| 2.47 |
| 2.72 |
| 3.38 |
| 3.09 |
| (6) |
| (68) |
Nonperforming assets and accruing TDRs | 4.75 |
| 6.02 |
| 6.27 |
| 6.96 |
| 6.72 |
| (127) |
| (197) |
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As a percent of total assets (including loans hfs): |
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Nonaccrual loans | 1.22 |
| 1.16 |
| 1.43 |
| 1.83 |
| 1.72 |
| 6 |
| (50) |
Nonperforming assets | 1.57 |
| 1.60 |
| 1.82 |
| 2.28 |
| 2.11 |
| (3) |
| (54) |
Accruing TDRs | 1.52 |
| 2.30 |
| 2.39 |
| 2.41 |
| 2.47 |
| (78) |
| (95) |
Nonperforming assets and accruing TDRs | 3.09 |
| 3.90 |
| 4.21 |
| 4.69 |
| 4.58 |
| (81) |
| (149) |
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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 10 of 12 |
Consolidated Statements of Operations By Quarter |
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(In thousands, except per share data) |
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| 4Q 14 |
| 4Q 14 |
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| compared to |
| compared to |
| 4Q 14 |
| 3Q 14 |
| 2Q 14 |
| 1Q 14 |
| 4Q 13 |
| 3Q 14 |
| 4Q 13 |
INTEREST INCOME |
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Interest and fees on loans | $ 8,665 |
| $ 8,788 |
| $ 8,812 |
| $ 8,875 |
| $ 9,242 |
| (1.4) | % | (6.2) |
Interest and dividends on investment securities: |
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|
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Taxable | 917 |
| 850 |
| 669 |
| 521 |
| 504 |
| 7.9 |
| 81.9 |
Tax-exempt | 3 |
| 3 |
| 3 |
| 3 |
| 3 |
| - |
| - |
Interest on federal funds sold | - |
| 1 |
| - |
| - |
| 1 |
| (100.0) |
| (100.0) |
Interest on deposits with other banks | 40 |
| 44 |
| 39 |
| 56 |
| 57 |
| (9.1) |
| (29.8) |
Total interest income | 9,625 |
| 9,686 |
| 9,523 |
| 9,455 |
| 9,807 |
| (0.6) |
| (1.9) |
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INTEREST EXPENSE |
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|
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Interest on deposits | 985 |
| 1,046 |
| 1,071 |
| 1,127 |
| 1,230 |
| (5.8) |
| (19.9) |
Interest on short-term borrowings | 4 |
| 4 |
| 5 |
| 5 |
| 7 |
| - |
| (42.9) |
Total interest expense | 989 |
| 1,050 |
| 1,076 |
| 1,132 |
| 1,237 |
| (5.8) |
| (20.0) |
|
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NET INTEREST INCOME | 8,636 |
| 8,636 |
| 8,447 |
| 8,323 |
| 8,570 |
| - |
| 0.8 |
Provision for credit losses | 650 |
| 775 |
| 950 |
| 975 |
| 474 |
| (16.1) |
| 37.1 |
|
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NET INTEREST INCOME (LOSS) AFTER PROVISION |
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FOR CREDIT LOSSES | 7,986 |
| 7,861 |
| 7,497 |
| 7,348 |
| 8,096 |
| 1.6 |
| (1.4) |
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NONINTEREST INCOME |
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Service charges on deposit accounts | 629 |
| 618 |
| 602 |
| 558 |
| 599 |
| 1.8 |
| 5.0 |
Trust and investment fee income | 478 |
| 496 |
| 455 |
| 431 |
| 429 |
| (3.6) |
| 11.4 |
Investment securities gains | 23 |
| - |
| - |
| - |
| - |
| - |
| - |
Insurance agency commissions | 1,736 |
| 2,176 |
| 2,536 |
| 3,077 |
| 2,477 |
| (20.2) |
| (29.9) |
Loss on termination of cash flow hedge | - |
| - |
| - |
| - |
| - |
| - |
| - |
Other noninterest income | 605 |
| 704 |
| 935 |
| 722 |
| 710 |
| (14.1) |
| (14.8) |
Total noninterest income | 3,471 |
| 3,994 |
| 4,528 |
| 4,788 |
| 4,215 |
| (13.1) |
| (17.7) |
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NONINTEREST EXPENSE |
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Salaries and wages | 4,305 |
| 4,689 |
| 4,292 |
| 4,314 |
| 4,336 |
| (8.2) |
| (0.7) |
Employee benefits | 956 |
| 934 |
| 1,020 |
| 1,182 |
| 983 |
| 2.4 |
| (2.7) |
Occupancy expense | 570 |
| 565 |
| 577 |
| 627 |
| 569 |
| 0.9 |
| 0.2 |
Furniture and equipment expense | 234 |
| 225 |
| 243 |
| 273 |
| 252 |
| 4.0 |
| (7.1) |
Data processing | 766 |
| 741 |
| 739 |
| 760 |
| 773 |
| 3.4 |
| (0.9) |
Directors' fees | 99 |
| 131 |
| 132 |
| 112 |
| 92 |
| (24.4) |
| 7.6 |
Amortization of intangible assets | 33 |
| 34 |
| 60 |
| 74 |
| 74 |
| (2.9) |
| (55.4) |
Insurance agency commissions expense | - |
| - |
| 394 |
| 512 |
| 470 |
| - |
| (100.0) |
FDIC insurance premium expense | 402 |
| 399 |
| 377 |
| 458 |
| 613 |
| 0.8 |
| (34.4) |
Write-downs of other real estate owned | 192 |
| 290 |
| 101 |
| 75 |
| 371 |
| (33.8) |
| (48.2) |
Other noninterest expenses | 1,953 |
| 1,811 |
| 1,982 |
| 1,728 |
| 1,935 |
| 7.8 |
| 0.9 |
Total noninterest expense | 9,510 |
| 9,819 |
| 9,917 |
| 10,115 |
| 10,468 |
| (3.1) |
| (9.2) |
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|
|
Income (loss) before income taxes | 1,947 |
| 2,036 |
| 2,108 |
| 2,021 |
| 1,843 |
| (4.4) |
| 5.6 |
Income tax expense (benefit) | 721 |
| 774 |
| 803 |
| 763 |
| 668 |
| (6.8) |
| 7.9 |
|
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|
|
NET INCOME (LOSS) | $ 1,226 |
| $ 1,262 |
| $ 1,305 |
| $ 1,258 |
| $ 1,175 |
| (2.9) |
| 4.3 |
|
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|
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Weighted average shares outstanding - basic | 12,617 |
| 12,615 |
| 10,013 |
| 8,471 |
| 8,463 |
| 0.0 |
| 49.1 |
Weighted average shares outstanding - diluted | 12,626 |
| 12,625 |
| 10,024 |
| 8,484 |
| 8,474 |
| 0.0 |
| 49.0 |
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Basic net income (loss) per common share | $ 0.10 |
| $ 0.10 |
| $ 0.13 |
| $ 0.15 |
| $ 0.14 |
| - |
| (28.6) |
Diluted net income (loss) per common share | 0.10 |
| 0.10 |
| 0.13 |
| 0.15 |
| 0.14 |
| - |
| (28.6) |
Dividends paid per common share | - |
| - |
| - |
| - |
| - |
| - |
| - |
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Shore Bancshares, Inc. |
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| Page 11 of 12 |
Consolidated Average Balance Sheets By Quarter |
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(Dollars in thousands) |
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| Average balance | ||
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| 4Q 14 |
| 4Q 14 |
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| compared to |
| compared to |
| 4Q 14 |
| 3Q 14 |
| 2Q 14 |
| 1Q 14 |
| 4Q 13 |
| 3Q 14 |
| 4Q 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 | $ 707,484 |
| 4.87 | % | $ 705,637 |
| 4.95 | % | $ 708,718 |
| 5.00 | % | $ 707,708 |
| 5.10 | % | $ 733,117 |
| 5.01 | % | 0.3 | % | (3.5) |
Investment securities |
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Taxable | 232,371 |
| 1.56 |
| 221,105 |
| 1.53 |
| 183,128 |
| 1.46 |
| 155,123 |
| 1.36 |
| 144,699 |
| 1.38 |
| 5.1 |
| 60.6 |
Tax-exempt | 432 |
| 4.16 |
| 432 |
| 4.16 |
| 431 |
| 4.23 |
| 433 |
| 4.25 |
| 482 |
| 4.39 |
| - |
| (10.4) |
Federal funds sold | 2,962 |
| 0.07 |
| 1,378 |
| 0.06 |
| 1,476 |
| 0.05 |
| 1,708 |
| 0.05 |
| 2,692 |
| 0.06 |
| 114.9 |
| 10.0 |
Interest-bearing deposits | 82,812 |
| 0.19 |
| 87,215 |
| 0.20 |
| 79,223 |
| 0.20 |
| 98,907 |
| 0.23 |
| 101,529 |
| 0.22 |
| (5.0) |
| (18.4) |
Total earning assets | 1,026,061 |
| 3.73 | % | 1,015,767 |
| 3.79 | % | 972,976 |
| 3.93 | % | 963,879 |
| 3.98 | % | 982,519 |
| 3.98 | % | 1.0 |
| 4.4 |
Cash and due from banks | 24,329 |
|
|
| 24,445 |
|
|
| 20,376 |
|
|
| 22,708 |
|
|
| 20,900 |
|
|
| (0.5) |
| 16.4 |
Other assets | 61,370 |
|
|
| 61,989 |
|
|
| 64,915 |
|
|
| 68,628 |
|
|
| 70,048 |
|
|
| (1.0) |
| (12.4) |
Allowance for credit losses | (8,405) |
|
|
| (9,098) |
|
|
| (9,675) |
|
|
| (10,647) |
|
|
| (13,152) |
|
|
| (7.6) |
| (36.1) |
Total assets | $ 1,103,355 |
|
|
| $ 1,093,103 |
|
|
| $ 1,048,592 |
|
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| $ 1,044,568 |
|
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| $ 1,060,315 |
|
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| 0.9 |
| 4.1 |
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Interest-bearing liabilities |
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Demand deposits | $ 183,251 |
| 0.13 | % | $ 183,094 |
| 0.14 | % | $ 171,004 |
| 0.14 | % | $ 173,801 |
| 0.14 | % | $ 176,492 |
| 0.15 | % | 0.1 |
| 3.8 |
Money market and savings deposits (1) | 233,441 |
| 0.12 |
| 225,670 |
| 0.12 |
| 220,850 |
| 0.12 |
| 222,378 |
| 0.12 |
| 211,294 |
| 0.12 |
| 3.4 |
| 10.5 |
Certificates of deposit $100,000 or more | 163,813 |
| 1.06 |
| 166,806 |
| 1.11 |
| 171,830 |
| 1.11 |
| 178,792 |
| 1.13 |
| 190,117 |
| 1.16 |
| (1.8) |
| (13.8) |
Other time deposits | 173,695 |
| 0.95 |
| 179,533 |
| 0.98 |
| 183,336 |
| 1.02 |
| 186,960 |
| 1.08 |
| 188,645 |
| 1.14 |
| (3.3) |
| (7.9) |
Interest-bearing deposits | 754,200 |
| 0.52 |
| 755,103 |
| 0.55 |
| 747,020 |
| 0.58 |
| 761,931 |
| 0.60 |
| 766,548 |
| 0.64 |
| (0.1) |
| (1.6) |
Short-term borrowings | 6,356 |
| 0.23 |
| 7,946 |
| 0.21 |
| 8,633 |
| 0.22 |
| 9,345 |
| 0.22 |
| 10,505 |
| 0.23 |
| (20.0) |
| (39.5) |
Total interest-bearing liabilities | 760,556 |
| 0.52 | % | 763,049 |
| 0.55 | % | 755,653 |
| 0.57 | % | 771,276 |
| 0.60 | % | 777,053 |
| 0.63 | % | (0.3) |
| (2.1) |
Noninterest-bearing deposits | 196,520 |
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| 185,209 |
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| 168,221 |
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| 161,593 |
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| 171,745 |
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| 6.1 |
| 14.4 |
Accrued expenses and other liabilities | 6,603 |
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| 6,230 |
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| 7,629 |
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| 7,237 |
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| 8,010 |
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| 6.0 |
| (17.6) |
Stockholders' equity | 139,676 |
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| 138,615 |
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| 117,089 |
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| 104,462 |
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| 103,507 |
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| 0.8 |
| 34.9 |
Total liabilities and stockholders' equity | $ 1,103,355 |
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| $ 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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| 0.9 |
| 4.1 |
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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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| 3.35 | % |
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Net interest margin |
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| 3.35 | % |
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| 3.38 | % |
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| 3.49 | % |
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| 3.50 | % |
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| 3.49 | % |
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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 12 of 12 |
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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 |
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| 4Q 14 |
| 3Q 14 |
| 2Q 14 |
| 1Q 14 |
| 4Q 13 |
| 12/31/2014 |
| 12/31/2013 |
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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) | $ 1,226 |
| $ 1,262 |
| $ 1,305 |
| $ 1,258 |
| $ 1,175 |
| $ 5,051 |
| $ (9,634) |
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Net income (loss) - annualized (A) | $ 4,864 |
| $ 5,007 |
| $ 5,234 |
| $ 5,102 |
| $ 4,662 |
| $ 5,051 |
| $ (9,634) |
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Net income (loss), excluding net amortization of intangible assets | $ 1,246 |
| $ 1,283 |
| $ 1,341 |
| $ 1,303 |
| $ 1,220 |
| $ 5,173 |
| $ (9,455) |
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Net income (loss), excluding net amortization of intangible |
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assets - annualized (B) | $ 4,943 |
| $ 5,090 |
| $ 5,379 |
| $ 5,284 |
| $ 4,840 |
| $ 5,173 |
| $ (9,455) |
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Average stockholders' equity (C) | $ 139,676 |
| $ 138,615 |
| $ 117,089 |
| $ 104,462 |
| $ 103,507 |
| $125,094 |
| $ 111,445 |
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Less: Average goodwill and other intangible assets | (13,281) |
| (13,315) |
| (15,295) |
| (15,945) |
| (16,018) |
| (14,448) |
| (16,129) |
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Average tangible equity (D) | $ 126,395 |
| $ 125,300 |
| $ 101,794 |
| $ 88,517 |
| $ 87,489 |
| $110,646 |
| $ 95,316 |
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Return on average equity (GAAP) (A)/(C) | 3.48 | % | 3.61 | % | 4.47 | % | 4.88 | % | 4.50 | % | 4.04 | % | (8.64) | % |
Return on average tangible equity (Non-GAAP) (B)/(D) | 3.91 | % | 4.06 | % | 5.28 | % | 5.97 | % | 5.53 | % | 4.68 | % | (9.92) | % |
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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) | $ 9,510 |
| $ 9,819 |
| $ 9,917 |
| $ 10,115 |
| $ 10,468 |
| $ 39,361 |
| $ 40,686 |
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Less: Amortization of intangible assets | (33) |
| (34) |
| (60) |
| (74) |
| (74) |
| (201) |
| (296) |
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Other nonrecurring adjustments | - |
| - |
| - |
| - |
| - |
| - |
| 49 |
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Adjusted noninterest expense (F) | $ 9,477 |
| $ 9,785 |
| $ 9,857 |
| $ 10,041 |
| $ 10,394 |
| $ 39,160 |
| $ 40,439 |
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Taxable-equivalent net interest income (G) | $ 8,659 |
| $ 8,659 |
| $ 8,469 |
| $ 8,347 |
| $ 8,595 |
| $ 34,134 |
| $ 34,979 |
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Nonrecurring adjustment | - |
| - |
| - |
| - |
| - |
| - |
| (308) |
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Taxable-equivalent net interest income excluding nonrecurring adjustment (H) | $ 8,659 |
| $ 8,659 |
| $ 8,469 |
| $ 8,347 |
| $ 8,595 |
| $ 34,134 |
| $ 34,671 |
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Noninterest income (I) | $ 3,471 |
| $ 3,994 |
| $ 4,528 |
| $ 4,788 |
| $ 4,215 |
| $ 16,781 |
| $ 17,459 |
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Less: Investment securities (gains)/losses | (23) |
| - |
| - |
| - |
| - |
| (23) |
| (913) |
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Other nonrecurring (gains)/losses | - |
| - |
| (114) |
| - |
| - |
| (114) |
| 1,009 |
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Adjusted noninterest income (J) | $ 3,448 |
| $ 3,994 |
| $ 4,414 |
| $ 4,788 |
| $ 4,215 |
| $ 16,644 |
| $ 17,555 |
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Efficiency ratio (GAAP) (E)/(G)+(I) | 78.40 | % | 77.60 | % | 76.30 | % | 77.01 | % | 81.72 | % | 77.31 | % | 77.59 | % |
Efficiency ratio (Non-GAAP) (F)/(H)+(J) | 78.28 | % | 77.33 | % | 76.51 | % | 76.44 | % | 81.14 | % | 77.12 | % | 77.43 | % |
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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) | $ 140,469 |
| $ 138,674 |
| $ 137,493 |
| $ 104,632 |
| $ 103,299 |
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Less: Goodwill and other intangible assets | (13,262) |
| (13,295) |
| (13,328) |
| (15,900) |
| (15,974) |
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Tangible equity (L) | $ 127,207 |
| $ 125,379 |
| $ 124,165 |
| $ 88,732 |
| $ 87,325 |
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Shares outstanding (M) | 12,618 |
| 12,615 |
| 12,615 |
| 8,471 |
| 8,471 |
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Book value per common share (GAAP) (K)/(M) | $ 11.13 |
| $ 10.99 |
| $ 10.90 |
| $ 12.35 |
| $ 12.19 |
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Tangible book value per common share (Non-GAAP) (L)/(M) | $ 10.08 |
| $ 9.94 |
| $ 9.84 |
| $ 10.47 |
| $ 10.31 |
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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) | $ 140,469 |
| $ 138,674 |
| $ 137,493 |
| $ 104,632 |
| $ 103,299 |
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Less: Goodwill and other intangible assets | (13,262) |
| (13,295) |
| (13,328) |
| (15,900) |
| (15,974) |
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Tangible equity (O) | $ 127,207 |
| $ 125,379 |
| $ 124,165 |
| $ 88,732 |
| $ 87,325 |
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Assets (P) | $ 1,100,402 |
| $ 1,096,285 |
| $ 1,064,853 |
| $ 1,049,514 |
| $ 1,054,124 |
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Less: Goodwill and other intangible assets | (13,262) |
| (13,295) |
| (13,328) |
| (15,900) |
| (15,974) |
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Tangible assets (Q) | $ 1,087,140 |
| $ 1,082,990 |
| $ 1,051,525 |
| $ 1,033,614 |
| $ 1,038,150 |
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Period-end equity/assets (GAAP) (N)/(P) | 12.77 | % | 12.65 | % | 12.91 | % | 9.97 | % | 9.80 | % |
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Period-end tangible equity/tangible assets (Non-GAAP) (O)/(Q) | 11.70 | % | 11.58 | % | 11.81 | % | 8.58 | % | 8.41 | % |
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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