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 31, 2019
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. | Result of Operation and Financial Condition. |
On January 31, 2019 Shore Bancshares, Inc. (the “Company”) issued a press release setting forth the Company’s fourth quarter and year-to-date 2018 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 31, 2019 | 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 31, 2019 (filed herewith) |
4 |
Shore Bancshares Reports 2018 Results
EASTON, Md., Jan. 31, 2019 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) reported net income of $12.094 million or $0.95 per diluted common share for the fourth quarter of 2018, which included the sale of its retail insurance business, Avon Dixon, LLC ("Avon") on December 31, 2018 for net proceeds of $25.2 million and a net gain after tax of $8.2 million, or $0.64 per diluted common share. Absent the sale of Avon, the Company reported net income of $3.905 million or $0.31 per diluted common share for the fourth quarter of 2018. This compared to net income of $4.454 million or $0.35 per diluted common share for the third quarter of 2018, and net income of $2.698 million or $0.21 per diluted common share for the fourth quarter of 2017. The Company reported net income of $24.997 million or $1.96 per diluted common share for fiscal year 2018. Excluding the sale of Avon, the Company reported net income of $16.832 million or $1.32 per diluted common share for fiscal year 2018. This compared to net income of $11.262 million, or $0.89 per diluted common share for fiscal year 2017, an increase of $5.6 million, or $0.43 per diluted common share.
When comparing the fourth quarter of 2018 to the third quarter of 2018, excluding the sale of Avon, net income decreased due to higher interest expenses on deposits and borrowings coupled with a higher provision for credit losses. When comparing the fourth quarter of 2018 to the fourth quarter of 2017, excluding the sale of Avon, the improved results were driven by an increase in net interest income due to higher loan volume, partially offset by an increase in interest expenses which included competitive pressure to increase core deposit rates. When comparing fiscal year 2018 to fiscal year 2017, excluding the sale of Avon, improved earnings were due to increases in net interest income of $5.1 million and noninterest income of $603 thousand. In addition, the provision for credit losses declined $617 thousand. Partially offsetting these positive variances were increases in interest expenses of $3.0 million and noninterest expenses of $3.5 million. The reduced corporate income tax rate from 35% in 2017 to 21% for 2018 was also a contributing factor for improved earnings when comparing the fourth quarter and fiscal year 2018 to the fourth quarter and fiscal year 2017.
"This has been a significant year for the Company, in terms of loan growth, core earnings and the divesture of our insurance agency Avon-Dixon," said Lloyd L. "Scott" Beatty Jr., CEO. "The proceeds from the sale of our insurance agency will provide the opportunity to fund new loan growth and expand our activities in some of our new markets. As we look forward to 2019, we are committed to our strategic plan for growing the Company both organically and through opportunistic acquisitions."
Balance Sheet Review
Total assets were $1.483 billion at December 31, 2018, a $89.2 million, or 6.4%, increase when compared to $1.394 billion at the end of 2017. The primary reason for the increase was the addition of $101.8 million in loans or 9.3%, which were funded by a decrease in investment securities available for sale of $42.5 million, and an increase in short-term and long-term borrowings of $54.1 million.
Total deposits at December 31, 2018 increased $9.6 million, or less than 1%, when compared to December 31, 2017. The increase was due to increases in rates paid on core deposits as well as a new insured cash sweep ("ICS") product for customers.
Total stockholders' equity increased $19.5 million, or 11.9%, when compared to the end of 2017 primarily due to current year's earnings which included the sale of Avon, partially offset by common stock dividends paid to shareholders of $4.1 million. At December 31, 2018, the ratio of total equity to total assets was 12.35% and the ratio of total tangible equity to total tangible assets was 11.13%, higher than the ratios of 11.75% and 9.65%, respectively, at December 31, 2017. These ratios were significantly impacted by the sale of Avon on December 31, 2018, which resulted in the transition of intangible assets to tangible assets.
Review of Quarterly Financial Results
Net interest income was $12.5 million for the fourth quarter of 2018, compared to $12.9 million for the third quarter of 2018 and $12.4 million for the fourth quarter of 2017. The decrease in net interest income when compared to the third quarter of 2018 was primarily due to an increase in interest on deposits of $751 thousand and borrowings of $128 thousand. The increase in interest on core deposits was implemented late in the third quarter and the entire fourth quarter of 2018 to combat competitive market rates. This had a significant impact on the net interest margin, resulting in a decline of 18 bps. The increase in net interest income when compared to the fourth quarter of 2017 was due to significant increases in average loans of $126.5 million, or 11.9%. Total interest income on loans increased $1.7 million, or 13.0% in the fourth quarter of 2018 as compared to the
fourth quarter of 2017, which was mostly offset by an increase in interest expense of $1.6 million, or 261.9%. In addition, the yield on total earning assets increased 21 bps, while the cost of interest-bearing liabilities increased 64 bps quarter over quarter. These variances resulted in a net interest margin of 3.58% for the fourth quarter of 2018, compared to 3.81% for the fourth quarter of 2017.
The provision for credit losses was $460 thousand for the fourth quarter of 2018, $307 thousand for the third quarter of 2018 and $545 thousand for the fourth quarter of 2017. The higher level of provision for credit losses when comparing the fourth quarter of 2018 to the third quarter of 2018 was primarily due to one large credit of approximately $7.5 million, transitioning to nonaccrual during the fourth quarter. The Company took a partial charge-off on this relationship and no additional loss is anticipated. The decline in the provision for credit losses when comparing the fourth quarter of 2018 to the fourth quarter of 2017, was due to significant growth in the portfolio and overall improved credit quality despite the large nonaccrual added in the fourth quarter of 2018. Net charge-offs were $445 thousand for the fourth quarter of 2018, $100 thousand for the third quarter of 2018 and $59 thousand for the fourth quarter of 2017. The increase in net charge-offs was directly related to the one large credit discussed above. The ratio of annualized net charge-offs to average loans was 0.15% for the fourth quarter of 2018, 0.03% for the third quarter of 2018 and 0.02% for the fourth quarter of 2017. The ratio of the allowance for credit losses to period-end loans for both December 31, 2018 and September 30, 2018 was 0.87% and was 0.89% at December 31, 2017.
At December 31, 2018, nonperforming assets, excluding accruing TDRs, were $18.0 million, an increase of $9.1 million, or 102.8%, when compared to September 30, 2018 and an increase of $10.6 million, or 143.3%, when compared to December 31, 2017. Additionally, accruing TDRs were $8.7 million at December 31, 2018, a decrease of $270 thousand, or 3.0%, when compared to September 30, 2018 and a decrease of $4.7 million, or 35.0%, when compared to December 31, 2017. Although a significant nonaccrual loan was added late in the fourth quarter of 2018, the Company had been experiencing positive trends through continued workout efforts and charge-offs on persistent troubled borrowers for the last 12 months. At December 31, 2018, the ratio of nonperforming assets to total assets was 1.21%, higher than the 0.60% at September 30, 2018 and 0.53% at December 31, 2017. However, the ratio of accruing TDRs to total assets at December 31, 2018 was 0.58%, compared to 0.61% at September 30, 2018 and 0.96% at December 31, 2017.
Total noninterest income for the fourth quarter of 2018, excluding the sale of Avon, decreased $292 thousand, or 6.2%, when compared to the third quarter of 2018 and increased $79 thousand, or 1.8%, when compared to the fourth quarter of 2017. The decrease from the third quarter of 2018 was primarily due to a decline in insurance agency commissions of $179 thousand, which is typical during the last quarter of the year, and the additional distraction of the sale of Avon. The increase from the fourth quarter of 2017, excluding the sale of Avon, of $79 thousand was the result of increases in insurance agency commissions of $93 thousand and service charges on deposit accounts of $74 thousand, partially offset by a decrease in trust and investment fee income of $50 thousand.
Total noninterest expense for the fourth quarter of 2018 decreased $112 thousand, or 1.0%, when compared to the third quarter of 2018 and increased $542 thousand, or 5.1%, when compared to the fourth quarter of 2017. The decrease from the third quarter of 2018 was primarily due to lower costs associated with employee benefits due to reduced medical claims from the Company's self-funded insurance program and lower salaries and wages due to lower accrued bonus and incentive payouts. Partially offsetting these decreases in noninterest expense were higher legal and professional fees, mostly related to negotiating the sale of Avon, and a write-down of a single other real estate owned property of $212 thousand. The increase from the fourth quarter of 2017 was primarily due to increases in other real estate owned write-downs, higher legal fees due to the sale of Avon and additional amortization of intangibles acquired in the Northwest branch acquisition in 2017.
Review of 2018 Financial Results
Net interest income for 2018 was $50.6 million, an increase of $5.1 million, or 11.2%, when compared to 2017 primarily due to an increase in average loans of $169.7 million, or 17.3%. The significant increase in loans generated higher interest income of approximately $7.7 million, or 17.7%. Although the yields on loans remained flat when compared to 2017, the growth and the transition of lower yielding assets to higher yielding loans resulted in a higher overall yield on earning assets of 18bps. This was offset by higher rates paid on interest-bearing deposits and increased borrowings resulting in compression of the net interest margin to 3.74% for fiscal 2018 from 3.76% for fiscal 2017.
The provision for credit losses for 2018 and 2017 was $1.7 million and $2.3 million, respectively, while net charge-offs were $1.1 million and $1.2 million, respectively. The ratio of annualized net charge-offs to average loans was 0.10% for 2018 and 0.13% for 2017.
Total noninterest income, excluding the sale of Avon, for 2018 increased $603 thousand, or 3.4%, when compared to 2017. The increase was primarily due to increases in service charges on deposit accounts of $251 thousand and insurance agency commissions of $169 thousand.
Total noninterest expense for 2018 increased $3.5 million, or 8.6%, when compared to 2017. The increase was primarily due to the cost of operating four additional branches for an entire year which caused increases in almost all noninterest expense line items, offset by lower fees for data processing due to renegotiating the core processor contract in 2018 and lower legal/professional fees related to the branch acquisition in 2017.
Shore Bancshares Information
Shore Bancshares is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland's Eastern Shore. It is the parent company of Shore United Bank and an insurance premium finance company, Mubell Finance, LLC. Shore Bancshares engages in trust and wealth management services through Wye Financial & Trust, a division of Shore United Bank. 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 Twelve Months Ended |
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| December 31, |
| December 31, |
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| 2018 |
| 2017 | Change |
| 2018 |
| 2017 | Change |
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PROFITABILITY FOR THE PERIOD |
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Net interest income | $ 12,726 |
| $ 12,369 |
| 2.9 | % | $ 50,635 |
| $ 45,528 |
| 11.2 | % |
Provision for credit losses | 460 |
| 545 |
| (15.6) |
| 1,674 |
| 2,291 |
| (26.9) |
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Noninterest income | 16,910 |
| 4,339 |
| 289.7 |
| 31,089 |
| 17,750 |
| 75.1 |
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Noninterest expense | 11,174 |
| 10,632 |
| 5.1 |
| 44,750 |
| 41,202 |
| 8.6 |
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Income before income taxes | 18,002 |
| 5,531 |
| 225.5 |
| 35,300 |
| 19,785 |
| 78.4 |
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Income tax expense | 5,908 |
| 2,833 |
| 108.5 |
| 10,303 |
| 8,523 |
| 20.9 |
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Net income | $ 12,094 |
| $ 2,698 |
| 348.3 |
| $ 24,997 |
| $ 11,262 |
| 122.0 |
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Return on average assets | 3.28 | % | 0.78 | % | 250 | bp | 1.74 | % | 0.87 | % | 87 | bp |
Return on average equity | 27.70 |
| 6.53 |
| 2,117 |
| 14.81 |
| 7.05 |
| 776 |
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Return on average tangible equity (1) | 34.42 |
| 8.36 |
| 2,606 |
| 18.78 |
| 8.36 |
| 1,042 |
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Net interest margin | 3.58 |
| 3.81 |
| (23) |
| 3.74 |
| 3.76 |
| (2) |
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Efficiency ratio - GAAP | 37.70 |
| 63.63 |
| (2,593) |
| 54.76 |
| 65.11 |
| (1,035) |
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Efficiency ratio - Non-GAAP (1) | 36.72 |
| 62.73 |
| (2,601) |
| 53.57 |
| 64.37 |
| (1,080) |
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PER SHARE DATA |
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Basic net income per common share | $ 0.95 |
| $ 0.21 |
| 352.4 | % | $ 1.96 |
| $ 0.89 |
| 120.2 | % |
Diluted net income per common share | 0.95 |
| 0.21 |
| 352.4 |
| 1.96 |
| 0.89 |
| 120.2 |
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Dividends paid per common share | 0.09 |
| 0.07 |
| 28.6 |
| 0.32 |
| 0.22 |
| 45.5 |
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Book value per common share at period end | 14.37 |
| 12.90 |
| 11.4 |
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Tangible book value per common share at period end (1) | 12.77 |
| 10.36 |
| 23.3 |
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Market value at period end | 14.54 |
| 16.70 |
| (12.9) |
| 14.54 |
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Market range: |
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High | 18.32 |
| 18.49 |
| (0.9) |
| 20.09 |
| 18.49 |
| 8.7 |
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Low | 12.95 |
| 15.74 |
| (17.7) |
| 12.95 |
| 14.64 |
| (11.5) |
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AVERAGE BALANCE SHEET DATA |
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Loans | $ 1,189,504 |
| $ 1,062,980 |
| 11.9 | % | $ 1,153,169 |
| $ 983,484 |
| 17.3 | % |
Investment securities | 177,700 |
| 211,910 |
| (16.1) |
| 189,879 |
| 201,879 |
| (5.9) |
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Earning assets | 1,385,368 |
| 1,294,768 |
| 7.0 |
| 1,357,755 |
| 1,216,182 |
| 11.6 |
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Assets | 1,463,839 |
| 1,378,553 |
| 6.2 |
| 1,435,914 |
| 1,287,751 |
| 11.5 |
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Deposits | 1,197,445 |
| 1,202,260 |
| (0.4) |
| 1,180,288 |
| 1,118,075 |
| 5.6 |
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Stockholders' equity | 173,214 |
| 163,893 |
| 5.7 |
| 168,782 |
| 159,741 |
| 5.7 |
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CREDIT QUALITY DATA |
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Net charge-offs | $ 445 |
| $ 59 |
| 654.2 | % | $ 1,112 |
| $ 1,236 |
| (10.0) | % |
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Nonaccrual loans | $ 16,655 |
| $ 4,971 |
| 235.0 |
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Loans 90 days past due and still accruing | 139 |
| 639 |
| (78.2) |
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Other real estate owned | 1,222 |
| 1,794 |
| (31.9) |
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Total nonperforming assets | 18,016 |
| 7,404 |
| 143.3 |
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Accruing troubled debt restructurings (TDRs) | 8,663 |
| 13,326 |
| (35.0) |
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Total nonperforming assets and accruing TDRs | $ 26,679 |
| $ 20,730 |
| 28.7 |
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CAPITAL AND CREDIT QUALITY RATIOS |
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Period-end equity to assets | 12.35 | % | 11.75 | % | 60 | bp |
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Period-end tangible equity to tangible assets (1) | 11.13 |
| 9.65 |
| 148 |
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Annualized net charge-offs to average loans | 0.15 |
| 0.02 |
| 13 |
| 0.10 | % | 0.13 | % | (3) | bp |
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Allowance for credit losses as a percent of: |
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Period-end loans | 0.87 |
| 0.89 |
| (2) |
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Nonaccrual loans | 62.10 |
| 196.76 |
| (13,466) |
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Nonperforming assets | 57.41 |
| 132.10 |
| (7,469) |
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Accruing TDRs | 119.39 |
| 73.40 |
| 4,599 |
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Nonperforming assets and accruing TDRs | 38.77 |
| 47.18 |
| (841) |
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As a percent of total loans: |
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Nonaccrual loans | 1.39 |
| 0.45 |
| 94 |
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Accruing TDRs | 0.72 |
| 1.22 |
| (50) |
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Nonaccrual loans and accruing TDRs | 2.12 |
| 1.67 |
| 45 |
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As a percent of total loans+other real estate owned: |
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Nonperforming assets | 1.51 |
| 0.68 |
| 83 |
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Nonperforming assets and accruing TDRs | 2.23 |
| 1.89 |
| 34 |
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As a percent of total assets: |
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Nonaccrual loans | 1.12 |
| 0.36 |
| 76 |
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Nonperforming assets | 1.21 |
| 0.53 |
| 68 |
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Accruing TDRs | 0.58 |
| 0.96 |
| (38) |
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Nonperforming assets and accruing TDRs | 1.80 |
| 1.49 |
| 31 |
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(1) See the reconciliation table on page 12 of 12. |
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Shore Bancshares, Inc. |
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Consolidated Balance Sheets |
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(In thousands, except per share data) |
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| December 31, 2018 |
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| December 31, |
| December 31, |
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| 2018 |
| 2017 |
| December 31, 2017 |
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ASSETS |
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Cash and due from banks | $ 16,294 |
| $ 21,534 |
| (24.3) | % |
Interest-bearing deposits with other banks | 50,931 |
| 10,286 |
| 395.1 |
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Cash and cash equivalents | 67,225 |
| 31,820 |
| 111.3 |
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|
|
Investment securities available for sale (at fair value) | 154,432 |
| 196,955 |
| (21.6) |
|
Investment securities held to maturity | 6,043 |
| 6,247 |
| (3.3) |
|
Equity securities, at fair value | 1,269 |
| - |
| - |
|
Federal Reserve and Federal Home Loan Bank stock | 6,476 |
| 3,735 |
| 73.4 |
|
|
|
|
|
|
|
|
Loans | 1,195,355 |
| 1,093,514 |
| 9.3 |
|
Less: allowance for credit losses | (10,343) |
| (9,781) |
| 5.7 |
|
Loans, net | 1,185,012 |
| 1,083,733 |
| 9.3 |
|
|
|
|
|
|
|
|
Premises and equipment, net | 22,711 |
| 23,054 |
| (1.5) |
|
Goodwill | 17,526 |
| 27,618 |
| (36.5) |
|
Other intangible assets, net | 2,857 |
| 4,719 |
| (39.5) |
|
Other real estate owned, net | 1,222 |
| 1,794 |
| (31.9) |
|
Other assets | 18,303 |
| 14,185 |
| 29.0 |
|
|
|
|
|
|
|
|
Total assets | $ 1,483,076 |
| $ 1,393,860 |
| 6.4 |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Noninterest-bearing deposits | $ 330,466 |
| $ 328,322 |
| 0.7 |
|
Interest-bearing deposits | 881,875 |
| 874,459 |
| 0.8 |
|
Total deposits | 1,212,341 |
| 1,202,781 |
| 0.8 |
|
|
|
|
|
|
|
|
Short-term borrowings | 60,812 |
| 21,734 |
| 179.8 |
|
Long-term borrowings | 15,000 |
| - |
| - |
|
Accrued expenses and other liabilities | 11,738 |
| 5,609 |
| 109.3 |
|
Total liabilities | 1,299,891 |
| 1,230,124 |
| 5.7 |
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Common stock, par value $0.01; authorized |
|
|
|
|
|
|
35,000,000 shares | 127 |
| 127 |
| - |
|
Additional paid in capital | 65,434 |
| 65,256 |
| 0.3 |
|
Retained earnings | 120,574 |
| 99,662 |
| 21.0 |
|
Accumulated other comprehensive (loss) | (2,950) |
| (1,309) |
| (125.4) |
|
Total stockholders' equity | 183,185 |
| 163,736 |
| 11.9 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity | $ 1,483,076 |
| $ 1,393,860 |
| 6.4 |
|
|
|
|
|
|
|
|
Period-end common shares outstanding | 12,749 |
| 12,688 |
| 0.5 |
|
Book value per common share | $ 14.37 |
| $ 12.90 |
| 11.4 |
|
Shore Bancshares, Inc. |
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Income |
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| For the Twelve Months Ended |
| ||||||
| December 31, |
| December 31, |
| ||||||
| 2018 |
| 2017 | % Change |
| 2018 |
| 2017 | % Change |
|
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans | $ 13,452 |
| $ 11,855 | 13.5 | % | $ 51,332 |
| $ 43,617 | 17.7 | % |
Interest on investment securities: |
|
|
|
|
|
|
|
|
|
|
Taxable | 1,339 |
| 1,048 | 27.8 |
| 4,289 |
| 3,847 | 11.5 |
|
Tax-exempt | - |
| - | - |
| - |
| 3 | (100.0) |
|
Interest on deposits with other banks | 103 |
| 65 | 58.5 |
| 286 |
| 334 | (14.4) |
|
Total interest income | 14,894 |
| 12,968 | 14.9 |
| 55,907 |
| 47,801 | 17.0 |
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
Interest on deposits | 1,577 |
| 586 | 169.1 |
| 3,531 |
| 2,242 | 57.5 |
|
Interest on short-term borrowings | 486 |
| 13 | 3,638.5 |
| 1,636 |
| 31 | 5,177.4 |
|
Interest on long-term borrowings | 105 |
| - | - |
| 105 |
| - | - |
|
Total interest expense | 2,168 |
| 599 | 261.9 |
| 5,272 |
| 2,273 | 131.9 |
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME | 12,726 |
| 12,369 | 2.9 |
| 50,635 |
| 45,528 | 11.2 |
|
Provision for credit losses | 460 |
| 545 | (15.6) |
| 1,674 |
| 2,291 | (26.9) |
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME AFTER PROVISION |
|
|
|
|
|
|
|
|
|
|
FOR CREDIT LOSSES | 12,266 |
| 11,824 | 3.7 |
| 48,961 |
| 43,237 | 13.2 |
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts | 1,045 |
| 971 | 7.6 |
| 3,879 |
| 3,628 | 6.9 |
|
Trust and investment fee income | 360 |
| 410 | (12.2) |
| 1,557 |
| 1,532 | 1.6 |
|
Gains on sales and calls of investment securities | - |
| - | - |
| - |
| 5 | - |
|
Gain on sale of insurance agency | 12,736 |
| - | - |
| 12,736 |
| - | - |
|
Insurance agency commissions | 1,991 |
| 1,898 | 4.9 |
| 9,006 |
| 8,837 | 1.9 |
|
Other noninterest income | 778 |
| 1,060 | (26.6) |
| 3,911 |
| 3,748 | 4.3 |
|
Total noninterest income | 16,910 |
| 4,339 | 289.7 |
| 31,089 |
| 17,750 | 75.1 |
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
Salaries and wages | 5,319 |
| 5,503 | (3.3) |
| 21,691 |
| 20,011 | 8.4 |
|
Employee benefits | 1,017 |
| 1,081 | (5.9) |
| 5,174 |
| 4,645 | 11.4 |
|
Occupancy expense | 747 |
| 746 | 0.1 |
| 3,050 |
| 2,696 | 13.1 |
|
Furniture and equipment expense | 271 |
| 232 | 16.8 |
| 1,084 |
| 1,035 | 4.7 |
|
Data processing | 875 |
| 871 | 0.5 |
| 3,455 |
| 3,680 | (6.1) |
|
Directors' fees | 145 |
| 99 | 46.5 |
| 556 |
| 380 | 46.3 |
|
Amortization of intangible assets | 281 |
| 112 | 150.9 |
| 912 |
| 315 | 189.5 |
|
FDIC insurance premium expense | 159 |
| 201 | (20.9) |
| 771 |
| 599 | 28.7 |
|
Other real estate owned expenses, net | 228 |
| (86) | 365.1 |
| 353 |
| 272 | 29.8 |
|
Legal and professional fees | 626 |
| 453 | 38.2 |
| 2,058 |
| 2,308 | (10.8) |
|
Other noninterest expenses | 1,506 |
| 1,420 | 6.1 |
| 5,646 |
| 5,261 | 7.3 |
|
Total noninterest expense | 11,174 |
| 10,632 | 5.1 |
| 44,750 |
| 41,202 | 8.6 |
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes | 18,002 |
| 5,531 | 225.5 |
| 35,300 |
| 19,785 | 78.4 |
|
Income tax expense | 5,908 |
| 2,833 | 108.5 |
| 10,303 |
| 8,523 | 20.9 |
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME | $ 12,094 |
| $ 2,698 | 348.3 |
| $ 24,997 |
| $ 11,262 | 122.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic | 12,749 |
| 12,688 | 0.5 |
| 12,739 |
| 12,682 | 0.4 |
|
Weighted average shares outstanding - diluted | 12,766 |
| 12,750 | 0.1 |
| 12,753 |
| 12,718 | 0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share | $ 0.95 |
| $ 0.21 | 352.4 |
| $ 1.96 |
| $ 0.89 | 120.2 |
|
Diluted net income per common share | 0.95 |
| 0.21 | 352.4 |
| 1.96 |
| 0.89 | 120.2 |
|
Dividends paid per common share | 0.09 |
| 0.07 | 28.6 |
| 0.32 |
| 0.22 | 45.5 |
|
Shore Bancshares, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Average Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| For the Twelve Months Ended |
|
| ||||||||||||
| December 31, |
| December 31, |
|
| ||||||||||||
| 2018 |
| 2017 |
| 2018 |
| 2017 |
|
| ||||||||
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
|
|
| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
|
|
Earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans (1), (2), (3) | $ 1,189,504 |
| 4.50 | % | $ 1,062,980 |
| 4.45 | % | $ 1,153,169 |
| 4.46 | % | $ 983,484 |
| 4.46 | % |
|
Investment securities (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable | 177,700 |
| 2.46 |
| 211,910 |
| 1.98 |
| 189,879 |
| 2.26 |
| 201,792 |
| 1.91 |
|
|
Tax-exempt | - |
| - |
| - |
| - |
| - |
| - |
| 87 |
| 5.42 |
|
|
Interest-bearing deposits | 18,164 |
| 2.25 |
| 19,878 |
| 1.30 |
| 14,707 |
| 1.94 |
| 30,819 |
| 1.08 |
|
|
Total earning assets | 1,385,368 |
| 4.20 | % | 1,294,768 |
| 3.99 | % | 1,357,755 |
| 4.13 | % | 1,216,182 |
| 3.95 | % |
|
Cash and due from banks | 18,204 |
|
|
| 18,589 |
|
|
| 17,327 |
|
|
| 15,896 |
|
|
|
|
Other assets | 70,858 |
|
|
| 74,700 |
|
|
| 71,110 |
|
|
| 64,854 |
|
|
|
|
Allowance for credit losses | (10,591) |
|
|
| (9,504) |
|
|
| (10,278) |
|
|
| (9,181) |
|
|
|
|
Total assets | $ 1,463,839 |
|
|
| $ 1,378,553 |
|
|
| $ 1,435,914 |
|
|
| $ 1,287,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits | $ 218,519 |
| 0.53 | % | $ 222,321 |
| 0.24 | % | $ 215,600 |
| 0.32 | % | $ 210,139 |
| 0.20 | % |
|
Money market and savings deposits | 378,163 |
| 0.68 |
| 382,438 |
| 0.12 |
| 378,344 |
| 0.27 |
| 339,971 |
| 0.12 |
|
|
Brokered deposits | 22,816 |
| 2.17 |
| - |
| - |
| 14,844 |
| 2.12 |
| - |
| - |
|
|
Certificates of deposit $100,000 or more | 97,023 |
| 0.94 |
| 110,458 |
| 0.49 |
| 98,331 |
| 0.67 |
| 118,723 |
| 0.51 |
|
|
Other time deposits | 141,702 |
| 0.80 |
| 158,241 |
| 0.49 |
| 146,492 |
| 0.57 |
| 152,959 |
| 0.53 |
|
|
Interest-bearing deposits | 858,223 |
| 0.73 |
| 873,458 |
| 0.27 |
| 853,611 |
| 0.41 |
| 821,792 |
| 0.27 |
|
|
Short-term borrowings | 72,462 |
| 2.66 |
| 6,087 |
| 0.86 |
| 77,311 |
| 2.12 |
| 4,525 |
| 0.68 |
|
|
Long-term borrowings | 14,348 |
| 2.89 |
| - |
| - |
| 3,616 |
| 2.89 |
| - |
| - |
|
|
Total interest-bearing liabilities | 945,033 |
| 0.91 | % | 879,545 |
| 0.27 | % | 934,538 |
| 0.56 | % | 826,317 |
| 0.28 | % |
|
Noninterest-bearing deposits | 339,222 |
|
|
| 328,802 |
|
|
| 326,677 |
|
|
| 296,283 |
|
|
|
|
Accrued expenses and other liabilities | 6,370 |
|
|
| 6,313 |
|
|
| 5,917 |
|
|
| 5,410 |
|
|
|
|
Stockholders' equity | 173,214 |
|
|
| 163,893 |
|
|
| 168,782 |
|
|
| 159,741 |
|
|
|
|
Total liabilities and stockholders' equity | $ 1,463,839 |
|
|
| $ 1,378,553 |
|
|
| $ 1,435,914 |
|
|
| $ 1,287,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread |
|
| 3.29 | % |
|
| 3.72 | % |
|
| 3.57 | % |
|
| 3.67 | % |
|
Net interest margin |
|
| 3.58 | % |
|
| 3.81 | % |
|
| 3.74 | % |
|
| 3.76 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, |
|
|
|
|
|
|
|
| |||||||||
for the fourth quarter of 2018 and the year to date period in 2018 and 35% for all quarters during 2017, exclusive of the alternative minimum tax rate | |||||||||||||||||
and nondeductible interest expense. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Average loan balances include nonaccrual loans. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(3) Interest income on loans includes amortized loan fees, net of costs and accretion of discounts on acquired loans, |
|
|
|
|
|
|
|
| |||||||||
which are included in the yield calculations. |
|
|
|
|
|
|
|
|
Shore Bancshares, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights By Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4th Quarter |
| 3rd Quarter |
| 2nd Quarter |
| 1st Quarter |
| 4th Quarter |
| Q4 2018 |
| Q4 2018 |
|
| 2018 |
| 2018 |
| 2018 |
| 2018 |
| 2017 |
| compared to |
| compared to |
|
| Q4 2018 |
| Q3 2018 |
| Q2 2018 |
| Q1 2018 |
| Q4 2017 |
| Q3 2018 |
| Q4 2017 |
|
PROFITABILITY FOR THE PERIOD |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable-equivalent net interest income | $ 12,756 |
| $ 12,975 |
| $ 12,661 |
| $ 12,357 |
| $ 12,430 |
| (1.7) | % | 2.6 | % |
Less: Taxable-equivalent adjustment | 30 |
| 28 |
| 28 |
| 28 |
| 61 |
| 7.1 |
| (50.8) |
|
Net interest income | 12,726 |
| 12,947 |
| 12,633 |
| 12,329 |
| 12,369 |
| (1.7) |
| 2.9 |
|
Provision for credit losses | 460 |
| 307 |
| 418 |
| 489 |
| 545 |
| 49.8 |
| (15.6) |
|
Noninterest income | 16,910 |
| 4,710 |
| 4,540 |
| 4,929 |
| 4,339 |
| 259.0 |
| 289.7 |
|
Noninterest expense | 11,174 |
| 11,286 |
| 10,828 |
| 11,462 |
| 10,632 |
| (1.0) |
| 5.1 |
|
Income before income taxes | 18,002 |
| 6,064 |
| 5,927 |
| 5,307 |
| 5,531 |
| 196.9 |
| 225.5 |
|
Income tax expense | 5,908 |
| 1,610 |
| 1,536 |
| 1,249 |
| 2,833 |
| 267.0 |
| 108.5 |
|
Net income | $ 12,094 |
| $ 4,454 |
| $ 4,391 |
| $ 4,058 |
| $ 2,698 |
| 171.5 |
| 348.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets | 3.28 | % | 1.21 | % | 1.24 | % | 1.18 | % | 0.78 | % | 207 | bp | 250 | bp |
Return on average equity | 27.70 |
| 10.38 |
| 10.58 |
| 9.97 |
| 6.53 |
| 1,732 |
| 2,117 |
|
Return on average tangible equity (1) | 34.42 |
| 13.36 |
| 13.65 |
| 12.70 |
| 8.36 |
| 2,106 |
| 2,606 |
|
Net interest margin | 3.58 |
| 3.76 |
| 3.79 |
| 3.83 |
| 3.81 |
| (18) |
| (23) |
|
Efficiency ratio - GAAP | 37.70 |
| 63.92 |
| 63.05 |
| 66.42 |
| 63.63 |
| (2,622) |
| (2,593) |
|
Efficiency ratio - Non-GAAP (1) | 36.72 |
| 62.23 |
| 61.56 |
| 65.67 |
| 62.73 |
| (2,551) |
| (2,601) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share | $ 0.95 |
| $ 0.35 |
| $ 0.34 |
| $ 0.32 |
| $ 0.21 |
| 171.4 | % | 352.4 | % |
Diluted net income per common share | 0.95 |
| 0.35 |
| 0.34 |
| 0.32 |
| 0.21 |
| 171.4 |
| 352.4 |
|
Dividends paid per common share | 0.09 |
| 0.08 |
| 0.08 |
| 0.07 |
| 0.07 |
| 12.5 |
| 28.6 |
|
Book value per common share at period end | 14.37 |
| 13.45 |
| 13.19 |
| 12.95 |
| 12.90 |
| 6.8 |
| 11.4 |
|
Tangible book value per common share at period end (1) | 12.77 |
| 10.96 |
| 10.68 |
| 10.42 |
| 10.36 |
| 16.5 |
| 23.3 |
|
Market value at period end | 14.54 |
| 17.82 |
| 19.02 |
| 18.86 |
| 16.70 |
| (18.4) |
| (12.9) |
|
Market range: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High | 18.32 |
| 19.84 |
| 20.09 |
| 19.80 |
| 18.49 |
| (7.7) |
| (0.9) |
|
Low | 12.95 |
| 16.63 |
| 17.92 |
| 16.28 |
| 15.74 |
| (22.1) |
| (17.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCE SHEET DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans | $ 1,189,504 |
| $ 1,174,513 |
| $ 1,141,296 |
| $ 1,106,213 |
| $ 1,062,980 |
| 1.3 | % | 11.9 | % |
Investment securities | 177,700 |
| 178,572 |
| 186,453 |
| 197,285 |
| 211,910 |
| (0.5) |
| (16.1) |
|
Earning assets | 1,385,368 |
| 1,370,573 |
| 1,341,050 |
| 1,313,249 |
| 1,294,768 |
| 1.1 |
| 7.0 |
|
Assets | 1,463,839 |
| 1,457,074 |
| 1,425,947 |
| 1,396,001 |
| 1,378,553 |
| 0.5 |
| 6.2 |
|
Deposits | 1,197,445 |
| 1,192,845 |
| 1,161,790 |
| 1,168,613 |
| 1,202,260 |
| 0.4 |
| (0.4) |
|
Stockholders' equity | 173,214 |
| 170,299 |
| 166,480 |
| 165,070 |
| 163,893 |
| 1.7 |
| 5.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CREDIT QUALITY DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs | $ 445 |
| $ 100 |
| $ 84 |
| $ 352 |
| $ 59 |
| 345.0 | % | 654.2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans | $ 16,655 |
| $ 7,362 |
| $ 6,757 |
| $ 7,009 |
| $ 4,971 |
| 126.2 |
| 235.0 |
|
Loans 90 days past due and still accruing | 139 |
| 3 |
| - |
| 61 |
| 639 |
| 4,533.3 |
| (78.2) |
|
Other real estate owned | 1,222 |
| 1,518 |
| 1,569 |
| 1,569 |
| 1,794 |
| (19.5) |
| (31.9) |
|
Total nonperforming assets | $ 18,016 |
| $ 8,883 |
| $ 8,326 |
| $ 8,639 |
| $ 7,404 |
| 102.8 |
| 143.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruing troubled debt restructurings (TDRs) | $ 8,663 |
| $ 8,933 |
| $ 9,620 |
| $ 9,726 |
| $ 13,326 |
| (3.0) |
| (35.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming assets and accruing TDRs | $ 26,679 |
| $ 17,816 |
| $ 17,946 |
| $ 18,365 |
| $ 20,730 |
| 49.7 |
| 28.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL AND CREDIT QUALITY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end equity to assets | 12.35 | % | 11.63 | % | 11.58 | % | 11.60 | % | 11.75 | % | 72 | bp | 60 | bp |
Period-end tangible equity to tangible assets (1) | 11.13 |
| 9.69 |
| 9.59 |
| 9.55 |
| 9.65 |
| 144 |
| 148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized net charge-offs to average loans | 0.15 |
| 0.03 |
| 0.03 |
| 0.13 |
| 0.02 |
| 12 |
| 13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses as a percent of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end loans | 0.87 |
| 0.87 |
| 0.87 |
| 0.89 |
| 0.89 |
| - |
| (2) |
|
Nonaccrual loans | 62.10 |
| 140.29 |
| 149.79 |
| 141.50 |
| 196.76 |
| (7,819) |
| (13,466) |
|
Nonperforming assets | 57.41 |
| 116.27 |
| 121.56 |
| 114.80 |
| 132.10 |
| (5,886) |
| (7,469) |
|
Accruing TDRs | 119.39 |
| 115.62 |
| 105.21 |
| 101.97 |
| 73.40 |
| 377 |
| 4,599 |
|
Nonperforming assets and accruing TDRs | 38.77 |
| 57.97 |
| 56.40 |
| 54.00 |
| 47.18 |
| (1,920) |
| (841) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percent of total loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans | 1.39 |
| 0.62 |
| 0.58 |
| 0.63 |
| 0.45 |
| 77 |
| 94 |
|
Accruing TDRs | 0.72 |
| 0.76 |
| 0.83 |
| 0.87 |
| 1.22 |
| (4) |
| (50) |
|
Nonaccrual loans and accruing TDRs | 2.12 |
| 1.38 |
| 1.42 |
| 1.50 |
| 1.67 |
| 74 |
| 45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percent of total loans+other real estate owned: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets | 1.51 |
| 0.75 |
| 0.72 |
| 0.77 |
| 0.68 |
| 76 |
| 83 |
|
Nonperforming assets and accruing TDRs | 2.23 |
| 1.51 |
| 1.55 |
| 1.64 |
| 1.89 |
| 72 |
| 34 |
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
As a percent of total assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans | 1.12 |
| 0.50 |
| 0.47 |
| 0.49 |
| 0.36 |
| 62 |
| 76 |
|
Nonperforming assets | 1.21 |
| 0.60 |
| 0.57 |
| 0.61 |
| 0.53 |
| 61 |
| 68 |
|
Accruing TDRs | 0.58 |
| 0.61 |
| 0.66 |
| 0.68 |
| 0.96 |
| (3) |
| (38) |
|
Nonperforming assets and accruing TDRs | 1.80 |
| 1.21 |
| 1.24 |
| 1.29 |
| 1.49 |
| 59 |
| 31 |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
(1) See the reconciliation table on page 12 of 12. |
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|
Shore Bancshares, Inc. |
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Consolidated Statements of Income By Quarter |
|
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|
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|
|
(In thousands, except per share data) |
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
| Q4 2018 |
| Q4 2018 |
|
|
|
|
|
|
|
|
|
|
|
| compared to |
| compared to |
|
| Q4 2018 |
| Q3 2018 |
| Q2 2018 |
| Q1 2018 |
| Q4 2017 |
| Q3 2018 |
| Q4 2017 |
|
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans | $ 13,452 |
| $ 13,205 |
| $ 12,631 |
| $ 12,044 |
| $ 11,855 |
| 1.9 | % | 13.5 | % |
Interest on investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable | 1,339 |
| 947 |
| 982 |
| 1,021 |
| 1,048 |
| 41.4 |
| 27.8 |
|
Interest on deposits with other banks | 103 |
| 84 |
| 61 |
| 38 |
| 65 |
| 22.6 |
| 58.5 |
|
Total interest income | 14,894 |
| 14,236 |
| 13,674 |
| 13,103 |
| 12,968 |
| 4.6 |
| 14.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on deposits | 1,577 |
| 826 |
| 580 |
| 548 |
| 586 |
| 90.9 |
| 169.1 |
|
Interest on short-term borrowings | 486 |
| 463 |
| 461 |
| 226 |
| 13 |
| 5.0 |
| 3,638.5 |
|
Interest on long-term borrowings | 105 |
| - |
| - |
| - |
| - |
| - |
| - |
|
Total interest expense | 2,168 |
| 1,289 |
| 1,041 |
| 774 |
| 599 |
| 68.2 |
| 261.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME | 12,726 |
| 12,947 |
| 12,633 |
| 12,329 |
| 12,369 |
| (1.7) |
| 2.9 |
|
Provision for credit losses | 460 |
| 307 |
| 418 |
| 489 |
| 545 |
| 49.8 |
| (15.6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME AFTER PROVISION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR CREDIT LOSSES | 12,266 |
| 12,640 |
| 12,215 |
| 11,840 |
| 11,824 |
| (3.0) |
| 3.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts | 1,045 |
| 982 |
| 947 |
| 905 |
| 971 |
| 6.4 |
| 7.6 |
|
Trust and investment fee income | 360 |
| 383 |
| 414 |
| 400 |
| 410 |
| (6.0) |
| (12.2) |
|
Gain on sale of insurance agency | 12,736 |
| - |
| - |
| - |
| - |
| - |
| - |
|
Insurance agency commissions | 1,991 |
| 2,170 |
| 2,151 |
| 2,694 |
| 1,898 |
| (8.2) |
| 4.9 |
|
Other noninterest income | 778 |
| 1,175 |
| 1,028 |
| 930 |
| 1,060 |
| (33.8) |
| (26.6) |
|
Total noninterest income | 16,910 |
| 4,710 |
| 4,540 |
| 4,929 |
| 4,339 |
| 259.0 |
| 289.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and wages | 5,319 |
| 5,516 |
| 5,383 |
| 5,473 |
| 5,503 |
| (3.6) |
| (3.3) |
|
Employee benefits | 1,017 |
| 1,271 |
| 1,369 |
| 1,517 |
| 1,081 |
| (20.0) |
| (5.9) |
|
Occupancy expense | 747 |
| 767 |
| 755 |
| 781 |
| 746 |
| (2.6) |
| 0.1 |
|
Furniture and equipment expense | 271 |
| 251 |
| 275 |
| 287 |
| 232 |
| 8.0 |
| 16.8 |
|
Data processing | 875 |
| 963 |
| 720 |
| 897 |
| 871 |
| (9.1) |
| 0.5 |
|
Directors' fees | 145 |
| 145 |
| 152 |
| 114 |
| 99 |
| - |
| 46.5 |
|
Amortization of intangible assets | 281 |
| 281 |
| 239 |
| 111 |
| 112 |
| - |
| 150.9 |
|
FDIC insurance premium expense | 159 |
| 193 |
| 214 |
| 205 |
| 201 |
| (17.6) |
| (20.9) |
|
Other real estate owned expenses, net | 228 |
| 166 |
| 5 |
| (46) |
| (86) |
| 37.3 |
| 365.1 |
|
Legal and professional fees | 626 |
| 463 |
| 505 |
| 464 |
| 453 |
| 35.2 |
| 38.2 |
|
Other noninterest expenses | 1,506 |
| 1,270 |
| 1,211 |
| 1,659 |
| 1,420 |
| 18.6 |
| 6.1 |
|
Total noninterest expense | 11,174 |
| 11,286 |
| 10,828 |
| 11,462 |
| 10,632 |
| (1.0) |
| 5.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes | 18,002 |
| 6,064 |
| 5,927 |
| 5,307 |
| 5,531 |
| 196.9 |
| 225.5 |
|
Income tax expense | 5,908 |
| 1,610 |
| 1,536 |
| 1,249 |
| 2,833 |
| 267.0 |
| 108.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME | $ 12,094 |
| $ 4,454 |
| $ 4,391 |
| $ 4,058 |
| $ 2,698 |
| 171.5 |
| 348.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic | 12,749 |
| 12,748 |
| 12,744 |
| 12,715 |
| 12,688 |
| 0.0 |
| 0.5 |
|
Weighted average shares outstanding - diluted | 12,766 |
| 12,761 |
| 12,757 |
| 12,731 |
| 12,750 |
| 0.0 |
| 0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share | $ 0.95 |
| $ 0.35 |
| $ 0.34 |
| $ 0.32 |
| $ 0.21 |
| 171.4 |
| 352.4 |
|
Diluted net income per common share | 0.95 |
| 0.35 |
| 0.34 |
| 0.32 |
| 0.21 |
| 171.4 |
| 352.4 |
|
Dividends paid per common share | 0.09 |
| 0.08 |
| 0.08 |
| 0.07 |
| 0.07 |
| 12.5 |
| 28.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shore Bancshares, Inc. |
|
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|
|
|
Consolidated Average Balance Sheets By Quarter |
|
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|
|
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|
|
|
|
|
|
|
| |
(Dollars in thousands) |
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
| Average balance |
| ||
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
| Q4 2018 |
| Q4 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| compared to |
| compared to |
|
| Q4 2018 |
| Q3 2018 |
| Q2 2018 |
| Q1 2018 |
|
|
| Q4 2017 |
|
|
| Q3 2018 |
| Q4 2017 |
| ||||||
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
| Average |
| Yield/ |
|
|
|
|
|
| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
| balance |
| rate |
|
|
|
|
|
Earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans (1), (2), (3) | 1,189,504 |
| 4.50 | % | $ 1,174,513 |
| 4.47 | % | $ 1,141,296 |
| 4.45 | % | $ 1,106,213 |
| 4.44 | % | $ 1,062,980 |
| 4.45 | % | 1.3 | % | 11.9 | % |
Investment securities (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable | 177,700 |
| 2.46 |
| 178,572 |
| 2.12 |
| 186,453 |
| 2.11 |
| 197,285 |
| 2.07 |
| 211,910 |
| 1.98 |
| (0.5) |
| (16.1) |
|
Interest-bearing deposits | 18,164 |
| 2.25 |
| 17,488 |
| 1.91 |
| 13,301 |
| 1.82 |
| 9,751 |
| 1.60 |
| 19,878 |
| 1.30 |
| 3.9 |
| (8.6) |
|
Total earning assets | 1,385,368 |
| 4.20 | % | 1,370,573 |
| 4.13 | % | 1,341,050 |
| 4.10 | % | 1,313,249 |
| 4.06 | % | 1,294,768 |
| 3.99 | % | 1.1 |
| 7.0 |
|
Cash and due from banks | 18,204 |
|
|
| 17,790 |
|
|
| 16,905 |
|
|
| 16,384 |
|
|
| 18,589 |
|
|
| 2.3 |
| (2.1) |
|
Other assets | 70,858 |
|
|
| 79,065 |
|
|
| 78,185 |
|
|
| 76,336 |
|
|
| 74,700 |
|
|
| (10.4) |
| (5.1) |
|
Allowance for credit losses | (10,591) |
|
|
| (10,354) |
|
|
| (10,193) |
|
|
| (9,968) |
|
|
| (9,504) |
|
|
| 2.3 |
| 11.4 |
|
Total assets | $ 1,463,839 |
|
|
| $ 1,457,074 |
|
|
| $ 1,425,947 |
|
|
| $ 1,396,001 |
|
|
| $ 1,378,553 |
|
|
| 0.5 |
| 6.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Interest-bearing liabilities |
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Demand deposits | $ 218,519 |
| 0.53 | % | $ 221,905 |
| 0.32 | % | $ 204,068 |
| 0.21 | % | $ 216,808 |
| 0.23 | % | $ 222,321 |
| 0.24 | % | (1.5) |
| (1.7) |
|
Money market and savings deposits | 378,163 |
| 0.68 |
| 373,357 |
| 0.14 |
| 381,047 |
| 0.13 |
| 380,890 |
| 0.13 |
| 382,438 |
| 0.12 |
| 1.3 |
| (1.1) |
|
Brokered deposits | 22,816 |
| 2.17 |
| 25,507 |
| 2.01 |
| 10,684 |
| 1.96 |
| - |
| - |
| - |
| - |
| (10.6) |
| - |
|
Certificates of deposit $100,000 or more | 97,023 |
| 0.94 |
| 97,563 |
| 0.69 |
| 96,873 |
| 0.54 |
| 101,929 |
| 0.50 |
| 110,458 |
| 0.49 |
| (0.6) |
| (12.2) |
|
Other time deposits | 141,702 |
| 0.80 |
| 145,130 |
| 0.57 |
| 146,946 |
| 0.45 |
| 152,321 |
| 0.48 |
| 158,241 |
| 0.49 |
| (2.4) |
| (10.5) |
|
Interest-bearing deposits | 858,223 |
| 0.73 |
| 863,462 |
| 0.36 |
| 839,618 |
| 0.27 |
| 851,948 |
| 0.26 |
| 873,458 |
| 0.27 |
| (0.6) |
| (1.7) |
|
Short-term borrowings | 72,462 |
| 2.66 |
| 87,925 |
| 2.09 |
| 91,980 |
| 2.01 |
| 56,586 |
| 1.62 |
| 6,087 |
| 0.86 |
| (17.6) |
| 1,090.4 |
|
Long-term borrowings | 14,348 |
| 2.89 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
|
Total interest-bearing liabilities | 945,033 |
| 0.91 | % | 951,387 |
| 0.52 | % | 931,598 |
| 0.44 | % | 908,534 |
| 0.35 | % | 879,545 |
| 0.27 | % | (0.7) |
| 7.4 |
|
Noninterest-bearing deposits | 339,222 |
|
|
| 329,383 |
|
|
| 322,172 |
|
|
| 316,665 |
|
|
| 328,802 |
|
|
| 3.0 |
| 3.2 |
|
Accrued expenses and other liabilities | 6,370 |
|
|
| 6,005 |
|
|
| 5,697 |
|
|
| 5,732 |
|
|
| 6,313 |
|
|
| 6.1 |
| 0.9 |
|
Stockholders' equity | 173,214 |
|
|
| 170,299 |
|
|
| 166,480 |
|
|
| 165,070 |
|
|
| 163,893 |
|
|
| 1.7 |
| 5.7 |
|
Total liabilities and stockholders' equity | $ 1,463,839 |
|
|
| $ 1,457,074 |
|
|
| $ 1,425,947 |
|
|
| $ 1,396,001 |
|
|
| $ 1,378,553 |
|
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| 0.5 |
| 6.2 |
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Net interest spread |
|
| 3.29 | % |
|
| 3.61 | % |
|
| 3.66 | % |
|
| 3.71 | % |
|
| 3.72 | % |
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Net interest margin |
|
| 3.58 | % |
|
| 3.76 | % |
|
| 3.79 | % |
|
| 3.83 | % |
|
| 3.81 | % |
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(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, |
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for all quarters of 2018 and 35% for all quarters during 2017, exclusive of the alternative minimum tax rate |
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and nondeductible interest expense. |
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(2) Average loan balances include nonaccrual loans. |
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(3) Interest income on loans includes amortized loan fees, net of costs and accretion of discounts on acquired loans, |
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which are included in the yield calculations. |
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Shore Bancshares, Inc. |
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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 |
|
| Q4 2018 |
| Q3 2018 |
| Q2 2018 |
| Q1 2018 |
| Q4 2017 |
| 12/31/2018 |
| 12/31/2017 |
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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 | $ 12,094 |
| $ 4,454 |
| $ 4,391 |
| $ 4,058 |
| $ 2,698 |
| $ 24,997 |
| $ 11,262 |
|
Net income - annualized (A) | $ 47,982 |
| $ 17,671 |
| $ 17,612 |
| $ 16,457 |
| $ 10,704 |
| $ 24,997 |
| $ 11,262 |
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Net income, excluding net amortization of intangible assets | $ 12,304 |
| $ 4,664 |
| $ 4,574 |
| $ 4,143 |
| $ 2,766 |
| $ 25,685 |
| $ 11,453 |
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Net income, excluding net amortization of intangible |
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assets - annualized (B) | $ 48,815 |
| $ 18,504 |
| $ 18,346 |
| $ 16,802 |
| $ 10,974 |
| $ 25,685 |
| $ 11,453 |
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Average stockholders' equity (C) | $ 173,214 |
| $ 170,299 |
| $ 166,480 |
| $ 165,070 |
| $ 163,893 |
| $ 168,782 |
| $ 159,741 |
|
Less: Average goodwill and other intangible assets | (31,410) |
| (31,810) |
| (32,088) |
| (32,721) |
| (32,678) |
| (32,003) |
| (22,816) |
|
Average tangible equity (D) | $ 141,804 |
| $ 138,489 |
| $ 134,392 |
| $ 132,349 |
| $ 131,215 |
| $ 136,779 |
| $ 136,925 |
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Return on average equity (GAAP) (A)/(C) | 27.70 | % | 10.38 | % | 10.58 | % | 9.97 | % | 6.53 | % | 14.81 | % | 7.05 | % |
Return on average tangible equity (Non-GAAP) (B)/(D) | 34.42 | % | 13.36 | % | 13.65 | % | 12.70 | % | 8.36 | % | 18.78 | % | 8.36 | % |
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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) | $ 11,174 |
| $ 11,286 |
| $ 10,828 |
| $ 11,462 |
| $ 10,632 |
| $ 44,750 |
| $ 41,202 |
|
Less: Amortization of intangible assets | (281) |
| (281) |
| (239) |
| (111) |
| (112) |
| (912) |
| (315) |
|
Adjusted noninterest expense (F) | $ 10,893 |
| $ 11,005 |
| $ 10,589 |
| $ 11,351 |
| $ 10,520 |
| $ 43,838 |
| $ 40,887 |
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Net interest income (G) | 12,726 |
| 12,947 |
| 12,633 |
| 12,329 |
| 12,369 |
| 50,635 |
| 45,528 |
|
Add: Taxable-equivalent adjustment | 30 |
| 28 |
| 28 |
| 28 |
| 61 |
| 114 |
| 242 |
|
Taxable-equivalent net interest income (H) | $ 12,756 |
| $ 12,975 |
| $ 12,661 |
| $ 12,357 |
| $ 12,430 |
| $ 50,749 |
| $ 45,770 |
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Noninterest income (I) | $ 16,910 |
| $ 4,710 |
| $ 4,540 |
| $ 4,929 |
| $ 4,339 |
| $ 31,089 |
| 17,750 |
|
Less: Investment securities (gains) | - |
| - |
| - |
| - |
| - |
| - |
| (5) |
|
Adjusted noninterest income (J) | $ 16,910 |
| $ 4,710 |
| $ 4,540 |
| $ 4,929 |
| $ 4,339 |
| $ 31,089 |
| $ 17,745 |
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Efficiency ratio (GAAP) (E)/(G)+(I) | 37.70 | % | 63.92 | % | 63.05 | % | 66.42 | % | 63.63 | % | 54.76 | % | 65.11 | % |
Efficiency ratio (Non-GAAP) (F)/(H)+(J) | 36.72 | % | 62.23 | % | 61.56 | % | 65.67 | % | 62.73 | % | 53.57 | % | 64.37 | % |
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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 (L) | $ 183,185 |
| $ 171,419 |
| $ 168,115 |
| $ 164,977 |
| $ 163,736 |
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Less: Goodwill and other intangible assets | (20,383) |
| (31,706) |
| (31,987) |
| (32,226) |
| (32,337) |
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Tangible equity (M) | $ 162,802 |
| $ 139,713 |
| $ 136,128 |
| $ 132,751 |
| $ 131,399 |
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Shares outstanding (N) | 12,749 |
| 12,748 |
| 12,747 |
| 12,736 |
| 12,688 |
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Book value per common share (GAAP) (L)/(N) | $ 14.37 |
| $ 13.45 |
| $ 13.19 |
| $ 12.95 |
| $ 12.90 |
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Tangible book value per common share (Non-GAAP) (M)/(N) | $ 12.77 |
| $ 10.96 |
| $ 10.68 |
| $ 10.42 |
| $ 10.36 |
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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 (O) | $ 183,185 |
| $ 171,419 |
| $ 168,115 |
| $ 164,977 |
| $ 163,736 |
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Less: Goodwill and other intangible assets | (20,383) |
| (31,706) |
| (31,987) |
| (32,226) |
| (32,337) |
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Tangible equity (P) | $ 162,802 |
| $ 139,713 |
| $ 136,128 |
| $ 132,751 |
| $ 131,399 |
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Assets (Q) | $ 1,483,076 |
| $ 1,473,543 |
| $ 1,451,714 |
| $ 1,421,606 |
| $ 1,393,860 |
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Less: Goodwill and other intangible assets | (20,383) |
| (31,706) |
| (31,987) |
| (32,226) |
| (32,337) |
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Tangible assets (R) | $ 1,462,693 |
| $ 1,441,837 |
| $ 1,419,727 |
| $ 1,389,380 |
| $ 1,361,523 |
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Period-end equity/assets (GAAP) (O)/(Q) | 12.35 | % | 11.63 | % | 11.58 | % | 11.60 | % | 11.75 | % |
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Period-end tangible equity/tangible assets (Non-GAAP) (P)/(R) | 11.13 | % | 9.69 | % | 9.59 | % | 9.55 | % | 9.65 | % |
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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: Edward Allen, Senior Vice President and Chief Financial Officer, 410-763-7800
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