EASTON, Md., July 25, 2019 /PRNewswire/ -- Shore Bancshares, Inc. SHBI (the "Company") reported net income of $4.224 million or $0.33 per diluted common share for the second quarter of 2019, compared to net income of $3.754 million or $0.29 per diluted common share for the first quarter of 2019, and net income of $4.391 million or $0.34 per diluted common share for the second quarter of 2018. Net income from continuing operations for the second quarter of 2019 was $4.228 million or $0.33 per diluted common share, compared to net income from continuing operations of $3.828 million or $0.30 per diluted common share for the first quarter of 2019, and net income from continuing operations of $4.192 million or $0.33 per diluted common share for the second quarter of 2018. The Company reported net income of $7.978 million or $0.62 per diluted common share for the first half of 2019, compared to net income of $8.449 million or $0.66 per diluted common share for the first half of 2018. Net income from continuing operations for the first half of 2019 was $8.056 million or $0.63 per diluted common share, compared to net income from continuing operations of $7.654 million or $0.60 per diluted common share for the first half of 2018.
When comparing net income from continuing operations for the second quarter of 2019 to the first quarter of 2019, the increase was primarily the result of higher noninterest income and lower noninterest expenses, partially offset by an increase in interest expense on deposits and an increase in the provision for credit losses. When comparing net income from continuing operations for the second quarter of 2019 to the second quarter of 2018, the slightly better results were attributed to interest and fees on loans, an increase in noninterest income and a lower provision for credit losses, almost entirely offset by an increase in interest expense on deposits and higher noninterest expenses.
"The second quarter produced positive results as we experienced strong growth in both loans and deposits," said Lloyd L. "Scott" Beatty, Jr., President and Chief Executive Officer. "During the second quarter loans and deposits grew $28.6 million and $11.7 million, respectively. Loan growth had gotten off to a slow start in 2019, but we experienced a significant amount of growth late in the second quarter and we continue to see steady demand for the last half of 2019. Our focus on deposit growth has produced very positive results."
Balance Sheet Review
Total assets were $1.489 billion at June 30, 2019, a $5.5 million, or less than 1.0%, increase when compared to $1.483 billion at the end of 2018. The increase in total assets included loan growth of $44.9 million which was almost entirely funded by decreases in interest-bearing deposits with other banks of $30.2 million and investment securities (including restricted securities) of $10.5 million.
Total deposits increased $36.7 million, or 3.0%, when compared to December 31, 2018. The increase in total deposits primarily consisted of increases in time deposits greater than $100 thousand of $20.0 million, noninterest-bearing deposits of $16.5 million, other time deposits of $8.9 million and savings and money market accounts of $1.1 million, partially offset by decreases in interest-bearing checking deposits of $7.7 million and brokered deposits of $2.1 million.
Total stockholders' equity increased $8.1 million, or 4.4%, when compared to the end of 2018. At June 30, 2019, the ratio of total equity to total assets was 12.85% and the ratio of total tangible equity to total tangible assets was 11.66%.
Total assets at June 30, 2019 increased $36.8 million, or 2.5%, when compared to total assets at June 30, 2018. Total assets year over year increased primarily as a result of loan growth of $83.4 million which was partially funded by a decrease in investment securities (including restricted securities) of $32.2 million. In addition, the sale of Avon Dixon resulted in a decrease in assets of $11.3 million.
Total deposits at June 30, 2019 increased $73.9 million, or 6.3%, when compared to June 30, 2018. The increase in total deposits included growth within interest-bearing checking deposits of $29.0 million, time deposits of $100 thousand or more of $21.0 million, noninterest-bearing deposits of $20.3 million, money market and savings deposits of $7.1 million and other time deposits of $3.8 million. These increases resulted in a reduced dependence on brokered deposits which experienced a decrease of $7.4 million or 27.0% at June 30, 2019. Total stockholders' equity increased $23.2 million, or 13.8%, when compared to June 30, 2018.
Review of Quarterly Financial Results
Net interest income was $12.3 million for the second quarter of 2019, compared to $12.4 million for the first quarter of 2019 and $12.6 million for the second quarter of 2018. The primary reasons for the decrease in net interest income when compared to the first quarter of 2019 and second quarter 2018 were higher interest expense on deposits and lower interest income on taxable securities. Interest income increased when compared to the first quarter of 2019 due to an increase in the average balance on loans of $19.3 million. Similarly, interest income increased when compared to the second quarter of 2018 due to an increase in the average balance on loans of $79.9 million. The Company's net interest margin decreased to 3.54% from 3.61% in the first quarter of 2019 and decreased from 3.79% in the second quarter of 2018. The decline in net interest margin from the first quarter of 2019 and the second quarter 2018 was the direct result of higher rates paid on interest-bearing deposits and the timing of significant loan growth late in the second quarter of 2019 which had little impact on the average balance on loans and, correspondingly, interest income, partially offset by a decline in the average balance on short-term borrowings.
The provision for credit losses was $200 thousand for the three months ended June 30, 2019. The comparable amounts were $100 thousand and $418 thousand for the three months ended March 31, 2019 and June 30, 2018, respectively. The increase in the amount of provision for credit losses from the first quarter of 2019 was due the absence of recoveries experienced in the first quarter of 2019 which totaled $185 thousand. The decrease in the amount of provision for credit losses from the second quarter of 2018 was due to lower loan growth in the second quarter of 2019. Net charge-offs were $313 thousand for the second quarter of 2019, $25 thousand for the first quarter of 2019 and $84 thousand for the second quarter of 2018. The ratio of annualized net charge-offs to average loans was 0.10% for the second quarter of 2019, 0.01% for the first quarter of 2019 and 0.03% for the second quarter of 2018. The ratio of the allowance for credit losses to period-end loans was 0.83% at June 30, 2019, lower than the 0.86% at March 31, 2019 and 0.87% at June 30, 2018.
At June 30, 2019, nonperforming assets were $15.6 million, a decrease of $831 thousand, or 5.1%, when compared to March 31, 2019, primarily due to a decrease in nonaccrual loans of $768 thousand, or 5.0%. Accruing troubled debt restructurings ("TDRs") decreased $60 thousand, or 0.8% over the same time period. When comparing June 30, 2019 to June 30, 2018, nonperforming assets increased $7.2 million, or 86.8%, and accruing TDRs decreased $1.9 million, or 19.3%. The increase in nonperforming assets was due to a large nonaccrual loan with an outstanding loan balance of $7.5 million added late in the fourth quarter of 2018, in which the Company does not anticipate any further losses. The ratio of nonperforming assets and accruing TDRs to total assets was 1.56%, 1.63% and 1.24% at June 30, 2019, March 31, 2019 and June 30, 2018, respectively. In addition, the ratio of accruing TDRs to total loans at June 30, 2019 was 0.63%, compared to 0.65% at March 31, 2019 and 0.83% at June 30, 2018.
Total noninterest income from continuing operations for the second quarter of 2019 increased $421 thousand when compared to the first quarter of 2019 and increased $313 thousand when compared to the second quarter of 2018. The increase from the first quarter of 2019 and the second quarter of 2018 was the result of an increase in service charges on deposit accounts and additional fees on bank service charges included in other noninterest income.
Total noninterest expense from continuing operations for the second quarter of 2019 decreased $358 thousand when compared to the first quarter of 2019 and increased $132 thousand when compared to the second quarter of 2018. The decrease in noninterest expense compared to the first quarter of 2019 was primarily due to lower employee benefits and payroll taxes, other real estate owned expenses and legal and professional fees. The increase in noninterest expenses from the second quarter of 2018 was primarily due to increases in data processing fees, other real estate owned expenses and legal and professional fees, partially offset by lower salaries and wages expense.
Review of Six-Month Financial Results
Net interest income for the first six months of 2019 was $24.7 million, a decrease of $275 thousand, or 1.1% when compared to the first six months of 2018. The decrease was the direct result of an increase in interest expense on deposits, which was partially offset by an increase in interest and fees on loans. The average balance on loans increased $87.8 million and the yield on loans increased 11bps when comparing the periods. This increase in volume and yields on loans was offset by an increase in the average balance of interest-bearing deposits of $43.8 million, with an associated increase in rates paid on these deposits of 67bps. This resulted in a net interest margin of 3.57% for the first six months of 2019 compared to 3.80% for the first six months of 2018.
The provision for credit losses for the six months ended June 30, 2019 and 2018 was $300 thousand and $907 thousand, respectively, while net charge-offs were $338 thousand and $567 thousand, respectively. The decrease in provision for credit losses was the result of improved overall credit quality exclusive of the one large relationship mentioned above and lower net charge-offs for the first six months of 2019 compared to the first six months of 2018. In addition, loan growth in the first six months of 2019 has lagged the first six months of 2018. The ratio of annualized net charge-offs to average loans was 0.06% for the first half of 2019 and 0.10% for the first half of 2018.
Total noninterest income from continuing operations for the six months ended June 30, 2019 increased $361 thousand, or 8.1%, when compared to the same period in 2018. The increase in noninterest income primarily consisted of increases in service charges on deposit accounts and other fees on bank services.
Total noninterest expense from continuing operations for the six months ended June 30, 2019 increased $23 thousand, or 0.1%, when compared to the same period in 2018. Despite the insignificant increase in total noninterest expenses, salaries and wages decreased $769 thousand, which was offset by increases in employee benefits of $101 thousand, data processing of $272 thousand, legal and professional fees $225 thousand and other real estate owned expenses of $334 thousand.
Shore Bancshares Information
Shore Bancshares is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland's Eastern Shore. It is the parent company of Shore United Bank. Shore Bancshares engages in trust and wealth management services through Wye Financial & 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. Financial Highlights (Dollars in thousands, except per share data) | |||||||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||
PROFITABILITY FOR THE PERIOD | |||||||||||||||||
Net interest income | $ | 12,293 | $ | 12,633 | (2.7) | % | $ | 24,687 | $ | 24,962 | (1.1) | % | |||||
Provision for credit losses | 200 | 418 | (52.2) | 300 | 907 | (66.9) | |||||||||||
Noninterest income | 2,609 | 2,296 | 13.6 | 4,797 | 4,436 | 8.1 | |||||||||||
Noninterest expense | 8,985 | 8,853 | 1.5 | 18,328 | 18,305 | 0.1 | |||||||||||
Income from continuing operations | 5,717 | 5,658 | 1.0 | 10,856 | 10,186 | 6.6 | |||||||||||
Income tax expense | 1,489 | 1,466 | 1.6 | 2,800 | 2,532 | 10.6 | |||||||||||
Income from continuing operations | $ | 4,228 | $ | 4,192 | 0.9 | $ | 8,056 | $ | 7,654 | 5.3 | |||||||
(Loss) Income from discontinued operations before income taxes | (4) | 269 | (101.5) | (103) | 1,048 | (109.8) | |||||||||||
Income tax expense (benefit) | — | 70 | (100.0) | (25) | 253 | (109.9) | |||||||||||
(Loss) Income from discontinued operations | (4) | 199 | (102.0) | (78) | 795 | (109.8) | |||||||||||
Net income | $ | 4,224 | $ | 4,391 | (3.8) | $ | 7,978 | $ | 8,449 | (5.6) | |||||||
From Continuing Operations: | |||||||||||||||||
Return on average assets | 1.16 | % | 1.18 | % | (2) | bp | 1.11 | % | 1.09 | % | 2 | bp | |||||
Return on average equity | 8.97 | 10.10 | (113) | 8.69 | 9.31 | (62) | |||||||||||
Return on average tangible equity (1) | 10.31 | 13.02 | (271) | 10.02 | 11.94 | (192) | |||||||||||
Net interest margin | 3.54 | 3.79 | (25) | 3.57 | 3.80 | (23) | |||||||||||
Efficiency ratio - GAAP | 60.29 | 59.30 | 99 | 62.16 | 62.22 | (6) | |||||||||||
Efficiency ratio - Non-GAAP (1) | 59.09 | 57.67 | 142 | 60.93 | 61.04 | (11) | |||||||||||
PER SHARE DATA | |||||||||||||||||
Basic net income per common share | |||||||||||||||||
Income from continuing operations | $ | 0.33 | $ | 0.33 | — | % | $ | 0.63 | $ | 0.60 | 5.0 | % | |||||
(Loss) Income from discontinued | — | 0.01 | (100.0) | (0.01) | 0.06 | (116.7) | |||||||||||
Net income | $ | 0.33 | $ | 0.34 | (2.9) | $ | 0.62 | $ | 0.66 | (6.1) | |||||||
Diluted net income per common share | |||||||||||||||||
Income from continuing operations | $ | 0.33 | $ | 0.33 | — | $ | 0.63 | $ | 0.60 | 5.0 | |||||||
(Loss) Income from discontinued | — | 0.01 | (100.0) | (0.01) | 0.06 | (116.7) | |||||||||||
Net income | $ | 0.33 | $ | 0.34 | (2.9) | $ | 0.62 | $ | 0.66 | (6.1) | |||||||
Dividends paid per common share | 0.10 | 0.08 | 25.0 | 0.20 | 0.15 | 33.3 | |||||||||||
Book value per common share at period | 14.97 | 13.19 | 13.5 | ||||||||||||||
Tangible book value per common share at | 13.40 | 10.68 | 25.5 | ||||||||||||||
Market value at period end | 16.34 | 19.02 | (14.1) | ||||||||||||||
Market range: | |||||||||||||||||
High | 16.48 | 20.09 | (18.0) | 16.48 | 20.09 | (18.0) | |||||||||||
Low | 14.84 | 17.92 | (17.2) | 14.00 | 16.28 | (14.0) | |||||||||||
AVERAGE BALANCE SHEET DATA | |||||||||||||||||
Loans | $ | 1,221,215 | $ | 1,141,296 | 7.0 | % | $ | 1,211,618 | $ | 1,123,852 | 7.8 | % | |||||
Investment securities | 159,878 | 186,453 | (14.3) | 162,429 | 191,839 | (15.3) | |||||||||||
Earning assets | 1,399,418 | 1,341,050 | 4.4 | 1,397,086 | 1,327,227 | 5.3 | |||||||||||
Assets | 1,468,093 | 1,425,947 | 3.0 | 1,464,214 | 1,411,058 | 3.8 | |||||||||||
Deposits | 1,233,951 | 1,161,790 | 6.2 | 1,224,876 | 1,165,184 | 5.1 | |||||||||||
Stockholders' equity | 189,101 | 166,480 | 13.6 | 187,048 | 165,778 | 12.8 | |||||||||||
CREDIT QUALITY DATA | |||||||||||||||||
Net charge-offs | $ | 313 | $ | 84 | 272.6 | % | $ | 338 | $ | 567 | (40.4) | % | |||||
Nonaccrual loans | $ | 14,592 | $ | 6,757 | 116.0 | ||||||||||||
Loans 90 days past due and still accruing | 439 | — | — | ||||||||||||||
Other real estate owned | 524 | 1,569 | (66.6) | ||||||||||||||
Total nonperforming assets | 15,555 | 8,326 | 86.8 | ||||||||||||||
Accruing troubled debt restructurings (TDRs) | 7,768 | 9,620 | (19.3) | ||||||||||||||
Total nonperforming assets and accruing TDRs | $ | 23,323 | $ | 17,946 | 30.0 | ||||||||||||
CAPITAL AND CREDIT QUALITY RATIOS | |||||||||||||||||
Period-end equity to assets | 12.85 | % | 11.58 | % | 127 | bp | |||||||||||
Period-end tangible equity to tangible assets (1) | 11.66 | 9.59 | 207 | ||||||||||||||
Annualized net charge-offs to average loans | 0.10 | 0.03 | 7 | 0.06 | % | 0.10 | % | (4) | bp | ||||||||
Allowance for credit losses as a percent of: | |||||||||||||||||
Period-end loans | 0.83 | 0.87 | (4) | ||||||||||||||
Nonaccrual loans | 70.62 | 149.79 | (7,917) | ||||||||||||||
Nonperforming assets | 66.25 | 121.56 | (5,531) | ||||||||||||||
Accruing TDRs | 132.66 | 105.21 | 2,745 | ||||||||||||||
Nonperforming assets and accruing TDRs | 44.18 | 56.40 | (1,222) | ||||||||||||||
As a percent of total loans: | |||||||||||||||||
Nonaccrual loans | 1.18 | 0.58 | 60 | ||||||||||||||
Accruing TDRs | 0.63 | 0.83 | (20) | ||||||||||||||
Nonaccrual loans and accruing TDRs | 1.80 | 1.42 | 38 | ||||||||||||||
As a percent of total loans+other real estate owned: | |||||||||||||||||
Nonperforming assets | 1.25 | 0.72 | 53 | ||||||||||||||
Nonperforming assets and accruing TDRs | 1.88 | 1.55 | 33 | ||||||||||||||
As a percent of total assets: | |||||||||||||||||
Nonaccrual loans | 0.98 | 0.47 | 51 | ||||||||||||||
Nonperforming assets | 1.04 | 0.57 | 47 | ||||||||||||||
Accruing TDRs | 0.52 | 0.66 | (14) | ||||||||||||||
Nonperforming assets and accruing TDRs | 1.56 | 1.24 | 32 | ||||||||||||||
________________________ | |||||||||||||||||
(1) See the reconciliation table on page 16 of 16. | |||||||||||||||||
Shore Bancshares, Inc. Consolidated Balance Sheets (In thousands, except per share data) | ||||||||||||
June 30, 2019 | ||||||||||||
June 30, | December 31, | June 30, | compared to | |||||||||
2019 | 2018 | 2018 | December 31, 2018 | |||||||||
ASSETS | ||||||||||||
Cash and due from banks | $ | 18,541 | $ | 16,294 | $ | 19,420 | 13.8 | % | ||||
Interest-bearing deposits with other banks | 20,739 | 50,931 | 24,059 | (59.3) | ||||||||
Cash and cash equivalents | 39,280 | 67,225 | 43,479 | (41.6) | ||||||||
Investment securities available for sale (at fair value) | 145,410 | 154,432 | 175,566 | (5.8) | ||||||||
Investment securities held to maturity | 5,905 | 6,043 | 6,168 | (2.3) | ||||||||
Equity securities, at fair value | 1,325 | 1,269 | 652 | 4.4 | ||||||||
Restricted securities | 5,095 | 6,476 | 7,578 | (21.3) | ||||||||
Loans | 1,240,295 | 1,195,355 | 1,156,884 | 3.8 | ||||||||
Less: allowance for credit losses | (10,305) | (10,343) | (10,121) | (0.4) | ||||||||
Loans, net | 1,229,990 | 1,185,012 | 1,146,763 | 3.8 | ||||||||
Premises and equipment, net | 22,710 | 22,711 | 22,906 | (0.0) | ||||||||
Goodwill | 17,518 | 17,518 | 17,518 | — | ||||||||
Other intangible assets, net | 2,540 | 2,857 | 4,369 | (11.1) | ||||||||
Other real estate owned, net | 524 | 1,222 | 1,569 | (57.1) | ||||||||
Right of use assets, net | 3,663 | — | — | — | ||||||||
Other assets | 14,602 | 17,678 | 13,876 | (17.4) | ||||||||
Assets of discontinued operations | — | 633 | 11,270 | (100.0) | ||||||||
Total assets | $ | 1,488,562 | $ | 1,483,076 | $ | 1,451,714 | 0.4 | |||||
LIABILITIES | ||||||||||||
Noninterest-bearing deposits | $ | 346,916 | $ | 330,466 | $ | 326,634 | 5.0 | |||||
Interest-bearing deposits | 902,084 | 881,875 | 848,465 | 2.3 | ||||||||
Total deposits | 1,249,000 | 1,212,341 | 1,175,099 | 3.0 | ||||||||
Short-term borrowings | 25,508 | 60,812 | 102,741 | (58.1) | ||||||||
Long-term borrowings | 15,000 | 15,000 | — | — | ||||||||
Lease liabilities | 3,663 | — | — | — | ||||||||
Accrued expenses and other liabilities | 4,084 | 8,415 | 5,117 | (51.5) | ||||||||
Liabilities of discontinued operations | — | 3,323 | 642 | (100.0) | ||||||||
Total liabilities | 1,297,255 | 1,299,891 | 1,283,599 | (0.2) | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||
Common stock, par value $0.01; authorized 35,000,000 shares | 128 | 127 | 127 | 0.8 | ||||||||
Additional paid in capital | 65,376 | 65,434 | 65,562 | (0.1) | ||||||||
Retained earnings | 125,996 | 120,574 | 106,193 | 4.5 | ||||||||
Accumulated other comprehensive (loss) | (193) | (2,950) | (3,767) | 93.5 | ||||||||
Total stockholders' equity | 191,307 | 183,185 | 168,115 | 4.4 | ||||||||
Total liabilities and stockholders' equity | $ | 1,488,562 | $ | 1,483,076 | $ | 1,451,714 | 0.4 | |||||
Period-end common shares outstanding | 12,780 | 12,749 | 12,747 | 0.2 | ||||||||
Book value per common share | $ | 14.97 | $ | 14.37 | $ | 13.19 | 4.2 | |||||
Shore Bancshares, Inc. Consolidated Statements of Income (In thousands, except per share data) | |||||||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||||
INTEREST INCOME | |||||||||||||||||
Interest and fees on loans | $ | 13,749 | $ | 12,631 | 8.9 | % | $ | 27,248 | $ | 24,675 | 10.4 | % | |||||
Interest on investment securities: | |||||||||||||||||
Taxable | 887 | 982 | (9.7) | 1,885 | 2,003 | (5.9) | |||||||||||
Interest on deposits with other banks | 113 | 61 | 85.2 | 276 | 99 | 178.8 | |||||||||||
Total interest income | 14,749 | 13,674 | 7.9 | 29,409 | 26,777 | 9.8 | |||||||||||
INTEREST EXPENSE | |||||||||||||||||
Interest on deposits | 2,204 | 580 | 280.0 | 4,151 | 1,128 | 268.0 | |||||||||||
Interest on short-term borrowings | 145 | 461 | (68.5) | 358 | 687 | (47.9) | |||||||||||
Interest on long-term borrowings | 107 | — | — | 213 | — | — | |||||||||||
Total interest expense | 2,456 | 1,041 | 135.9 | 4,722 | 1,815 | 160.2 | |||||||||||
NET INTEREST INCOME | 12,293 | 12,633 | (2.7) | 24,687 | 24,962 | (1.1) | |||||||||||
Provision for credit losses | 200 | 418 | (52.2) | 300 | 907 | (66.9) | |||||||||||
NET INTEREST INCOME AFTER PROVISION | |||||||||||||||||
FOR CREDIT LOSSES | 12,093 | 12,215 | (1.0) | 24,387 | 24,055 | 1.4 | |||||||||||
NONINTEREST INCOME | |||||||||||||||||
Service charges on deposit accounts | 1,028 | 947 | 8.6 | 1,962 | 1,852 | 5.9 | |||||||||||
Trust and investment fee income | 385 | 414 | (7.0) | 757 | 814 | (7.0) | |||||||||||
Other noninterest income | 1,196 | 935 | 27.9 | 2,078 | 1,770 | 17.4 | |||||||||||
Total noninterest income | 2,609 | 2,296 | 13.6 | 4,797 | 4,436 | 8.1 | |||||||||||
NONINTEREST EXPENSE | |||||||||||||||||
Salaries and wages | 3,792 | 4,101 | (7.5) | 7,558 | 8,327 | (9.2) | |||||||||||
Employee benefits | 1,068 | 1,045 | 2.2 | 2,322 | 2,221 | 4.5 | |||||||||||
Occupancy expense | 668 | 650 | 2.8 | 1,359 | 1,327 | 2.4 | |||||||||||
Furniture and equipment expense | 295 | 247 | 19.4 | 558 | 502 | 11.2 | |||||||||||
Data processing | 919 | 689 | 33.4 | 1,829 | 1,557 | 17.5 | |||||||||||
Directors' fees | 116 | 152 | (23.7) | 202 | 266 | (24.1) | |||||||||||
Amortization of intangible assets | 155 | 228 | (32.0) | 317 | 327 | (3.1) | |||||||||||
FDIC insurance premium expense | 181 | 214 | (15.4) | 386 | 419 | (7.9) | |||||||||||
Other real estate owned expenses, net | 60 | 5 | 1,100.0 | 293 | (41) | 814.6 | |||||||||||
Legal and professional fees | 559 | 487 | 14.8 | 1,160 | 935 | 24.1 | |||||||||||
Other noninterest expenses | 1,172 | 1,035 | 13.2 | 2,344 | 2,465 | (4.9) | |||||||||||
Total noninterest expense | 8,985 | 8,853 | 1.5 | 18,328 | 18,305 | 0.1 | |||||||||||
Income from continuing operations before income taxes | 5,717 | 5,658 | 1.0 | 10,856 | 10,186 | 6.6 | |||||||||||
Income tax expense | 1,489 | 1,466 | 1.6 | 2,800 | 2,532 | 10.6 | |||||||||||
Income from continuing operations | 4,228 | 4,192 | 0.9 | 8,056 | 7,654 | 5.3 | |||||||||||
(Loss) income from discontinued operations before income taxes | (4) | 269 | (101.5) | (103) | 1,048 | (109.8) | |||||||||||
Income tax (benefit) expense | — | 70 | (100.0) | (25) | 253 | (109.9) | |||||||||||
(Loss) Income from discontinued operations | (4) | 199 | (102.0) | (78) | 795 | (109.8) | |||||||||||
NET INCOME | $ | 4,224 | $ | 4,391 | (3.8) | $ | 7,978 | $ | 8,449 | (5.6) | |||||||
Weighted average shares outstanding - basic | 12,779 | 12,744 | 0.3 | 12,774 | 12,730 | 0.3 | |||||||||||
Weighted average shares outstanding - diluted | 12,784 | 12,757 | 0.2 | 12,779 | 12,743 | 0.3 | |||||||||||
Basic net income per common share | |||||||||||||||||
Income from continuing operations | $ | 0.33 | $ | 0.33 | — | $ | 0.63 | $ | 0.60 | 5.0 | |||||||
(Loss) Income from discontinued operations | — | 0.01 | (100.0) | (0.01) | 0.06 | (116.7) | |||||||||||
Net income | $ | 0.33 | $ | 0.34 | (2.9) | $ | 0.62 | $ | 0.66 | (6.1) | |||||||
Diluted net income per common share | |||||||||||||||||
Income from continuing operations | $ | 0.33 | $ | 0.33 | - | $ | 0.63 | $ | 0.60 | 5.0 | |||||||
(Loss) Income from discontinued operations | — | 0.01 | (100.0) | (0.01) | 0.06 | (116.7) | |||||||||||
Net income | $ | 0.33 | $ | 0.34 | (2.9) | $ | 0.62 | $ | 0.66 | (6.1) | |||||||
Dividends paid per common share | 0.10 | 0.08 | 25.0 | 0.20 | 0.15 | 33.3 | |||||||||||
Shore Bancshares, Inc. Consolidated Average Balance Sheets (Dollars in thousands) | |||||||||||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | ||||||||||||||
balance | rate | balance | rate | balance | rate | balance | rate | ||||||||||||||
Earning assets | |||||||||||||||||||||
Loans (1), (2), (3) | $ | 1,221,215 | 4.53 | % | $ | 1,141,296 | 4.45 | % | $ | 1,211,618 | 4.55 | % | $ | 1,123,852 | 4.44 | % | |||||
Investment securities | |||||||||||||||||||||
Taxable | 159,878 | 2.22 | 186,453 | 2.11 | 162,429 | 2.34 | 191,839 | 2.09 | |||||||||||||
Interest-bearing deposits | 18,325 | 2.47 | 13,301 | 1.82 | 23,039 | 2.42 | 11,536 | 1.72 | |||||||||||||
Total earning assets | 1,399,418 | 4.24 | % | 1,341,050 | 4.10 | % | 1,397,086 | 4.26 | % | 1,327,227 | 4.08 | % | |||||||||
Cash and due from banks | 17,225 | 16,905 | 17,211 | 16,646 | |||||||||||||||||
Other assets | 61,906 | 78,185 | 60,340 | 77,266 | |||||||||||||||||
Allowance for credit losses | (10,456) | (10,193) | (10,423) | (10,081) | |||||||||||||||||
Total assets | $ | 1,468,093 | $ | 1,425,947 | $ | 1,464,214 | $ | 1,411,058 | |||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||
Demand deposits | $ | 234,775 | 0.65 | % | $ | 204,068 | 0.21 | % | $ | 237,271 | 0.63 | % | $ | 210,403 | 0.22 | % | |||||
Money market and savings deposits | 385,272 | 0.84 | 381,047 | 0.13 | 384,508 | 0.84 | 380,969 | 0.13 | |||||||||||||
Brokered deposits | 20,866 | 2.52 | 10,684 | 1.96 | 21,470 | 2.44 | 5,372 | 1.96 | |||||||||||||
Certificates of deposit $100,000 or more | 107,549 | 1.54 | 96,873 | 0.54 | 103,067 | 1.40 | 99,387 | 0.52 | |||||||||||||
Other time deposits | 145,900 | 1.31 | 146,946 | 0.45 | 143,226 | 1.16 | 149,619 | 0.46 | |||||||||||||
Interest-bearing deposits | 894,362 | 0.99 | 839,618 | 0.27 | 889,542 | 0.94 | 845,750 | 0.27 | |||||||||||||
Short-term borrowings | 21,557 | 2.70 | 91,980 | 2.01 | 27,239 | 2.65 | 74,381 | 1.86 | |||||||||||||
Long-term borrowings | 15,000 | 2.86 | — | — | 15,000 | 2.86 | — | — | |||||||||||||
Total interest-bearing liabilities | 930,919 | 1.06 | % | 931,598 | 0.44 | % | 931,781 | 1.02 | % | 920,131 | 0.40 | % | |||||||||
Noninterest-bearing deposits | 339,589 | 322,172 | 335,334 | 319,434 | |||||||||||||||||
Accrued expenses and other liabilities | 8,484 | 5,697 | 10,051 | 5,715 | |||||||||||||||||
Stockholders' equity | 189,101 | 166,480 | 187,048 | 165,778 | |||||||||||||||||
Total liabilities and stockholders' equity | $ | 1,468,093 | $ | 1,425,947 | $ | 1,464,214 | $ | 1,411,058 | |||||||||||||
Net interest spread | 3.18 | % | 3.66 | % | 3.24 | % | 3.68 | % | |||||||||||||
Net interest margin | 3.54 | % | 3.79 | % | 3.57 | % | 3.80 | % | |||||||||||||
____________________________ | |||||||||||||||||||||
(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of the alternative minimum tax rate | |||||||||||||||||||||
(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) | ||||||||||||||||||||
2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | Q2 2019 | Q2 2019 | ||||||||||||||
2019 | 2019 | 2018 | 2018 | 2018 | compared to | compared to | ||||||||||||||
Q2 2019 | Q1 2019 | Q4 2018 | Q3 2018 | Q2 2018 | Q1 2019 | Q2 2018 | ||||||||||||||
PROFITABILITY FOR THE PERIOD | ||||||||||||||||||||
Taxable-equivalent net interest income | $ | 12,334 | $ | 12,428 | $ | 12,756 | $ | 12,975 | $ | 12,661 | (0.8) | % | (2.6) | % | ||||||
Less: Taxable-equivalent adjustment | 41 | 34 | 30 | 28 | 28 | 20.6 | 46.4 | |||||||||||||
Net interest income | 12,293 | 12,394 | 12,726 | 12,947 | 12,633 | (0.8) | (2.7) | |||||||||||||
Provision for credit losses | 200 | 100 | 460 | 307 | 418 | 100.0 | (52.2) | |||||||||||||
Noninterest income | 2,609 | 2,188 | 2,112 | 2,465 | 2,296 | 19.2 | 13.6 | |||||||||||||
Noninterest expense | 8,985 | 9,343 | 9,216 | 9,310 | 8,853 | (3.8) | 1.5 | |||||||||||||
Income from continuing operations | 5,717 | 5,139 | 5,162 | 5,795 | 5,658 | 11.2 | 1.0 | |||||||||||||
Income tax expense | 1,489 | 1,311 | 1,309 | 1,539 | 1,466 | 13.6 | 1.6 | |||||||||||||
Income from continuing operations | 4,228 | 3,828 | 3,853 | 4,256 | 4,192 | 10.4 | 0.9 | |||||||||||||
(Loss) Income from discontinued | (4) | (99) | 104 | 269 | 269 | 96.0 | (101.5) | |||||||||||||
Gain on sale of insurance agency | — | — | 12,736 | — | — | — | — | |||||||||||||
Income tax expense (benefit) | — | (25) | 4,599 | 71 | 70 | 100.0 | (100.0) | |||||||||||||
(Loss) Income from discontinued | (4) | (74) | 8,241 | 198 | 199 | 94.6 | (102.0) | |||||||||||||
Net income | $ | 4,224 | $ | 3,754 | $ | 12,094 | $ | 4,454 | $ | 4,391 | 12.5 | (3.8) | ||||||||
From Continuing Operations: | ||||||||||||||||||||
Return on average assets | 1.16 | % | 1.06 | % | 1.04 | % | 1.16 | % | 1.18 | % | 10 | bp | (2) | bp | ||||||
Return on average equity | 8.97 | 8.39 | 8.83 | 9.92 | 10.10 | 58 | (113) | |||||||||||||
Return on average tangible equity (1) | 10.31 | 9.72 | 11.34 | 12.77 | 13.02 | 59 | (271) | |||||||||||||
Net interest margin | 3.54 | 3.61 | 3.58 | 3.76 | 3.79 | (7) | (25) | |||||||||||||
Efficiency ratio - GAAP | 60.29 | 64.07 | 62.11 | 60.41 | 59.30 | (378) | 99 | |||||||||||||
Efficiency ratio - Non-GAAP (1) | 59.09 | 62.81 | 60.18 | 58.55 | 57.67 | (372) | 142 | |||||||||||||
PER SHARE DATA | ||||||||||||||||||||
Basic net income per common share | ||||||||||||||||||||
Income from continuing operations | $ | 0.33 | $ | 0.30 | $ | 0.30 | $ | 0.33 | $ | 0.33 | 10.0 | % | — | % | ||||||
(Loss) Income from discontinued | — | (0.01) | 0.65 | 0.02 | 0.01 | 100.0 | (100.0) | |||||||||||||
Net income | $ | 0.33 | $ | 0.29 | $ | 0.95 | $ | 0.35 | $ | 0.34 | 13.8 | (2.9) | ||||||||
Diluted net income per common share | ||||||||||||||||||||
Income from continuing operations | $ | 0.33 | $ | 0.30 | $ | 0.30 | $ | 0.33 | $ | 0.33 | 10.0 | — | ||||||||
(Loss) Income from discontinued | — | (0.01) | 0.65 | 0.02 | 0.01 | 100.0 | (100.0) | |||||||||||||
Net income | $ | 0.33 | $ | 0.29 | $ | 0.95 | $ | 0.35 | $ | 0.34 | 13.8 | (2.9) | ||||||||
Dividends paid per common share | 0.10 | 0.10 | 0.09 | 0.08 | 0.08 | — | 25.0 | |||||||||||||
Book value per common share at | 14.97 | 14.64 | 14.37 | 13.45 | 13.19 | 2.3 | 13.5 | |||||||||||||
Tangible book value per common | 13.40 | 13.06 | 12.77 | 10.96 | 10.68 | 2.6 | 25.5 | |||||||||||||
Market value at period end | 16.34 | 14.91 | 14.54 | 17.82 | 19.02 | 9.6 | (14.1) | |||||||||||||
Market range: | ||||||||||||||||||||
High | 16.48 | 16.11 | 18.32 | 19.84 | 20.09 | 2.3 | (18.0) | |||||||||||||
Low | 14.84 | 14.00 | 12.95 | 16.63 | 17.92 | 6.0 | (17.2) | |||||||||||||
AVERAGE BALANCE SHEET DATA | ||||||||||||||||||||
Loans | $ | 1,221,215 | $ | 1,201,913 | $ | 1,189,504 | $ | 1,174,513 | $ | 1,141,296 | 1.6 | % | 7.0 | % | ||||||
Investment securities | 159,878 | 165,009 | 177,700 | 178,572 | 186,453 | (3.1) | (14.3) | |||||||||||||
Earning assets | 1,399,418 | 1,394,728 | 1,385,368 | 1,370,573 | 1,341,050 | 0.3 | 4.4 | |||||||||||||
Assets | 1,468,093 | 1,460,291 | 1,463,839 | 1,457,074 | 1,425,947 | 0.5 | 3.0 | |||||||||||||
Deposits | 1,233,951 | 1,215,702 | 1,197,445 | 1,192,845 | 1,161,790 | 1.5 | 6.2 | |||||||||||||
Stockholders' equity | 189,101 | 184,972 | 173,214 | 170,299 | 166,480 | 2.2 | 13.6 | |||||||||||||
CREDIT QUALITY DATA | ||||||||||||||||||||
Net charge-offs | $ | 313 | $ | 25 | $ | 445 | $ | 100 | $ | 84 | 1,152.0 | % | 272.6 | % | ||||||
Nonaccrual loans | $ | 14,592 | $ | 15,360 | $ | 16,655 | $ | 7,362 | $ | 6,757 | (5.0) | 116.0 | ||||||||
Loans 90 days past due and still | 439 | 47 | 139 | 3 | — | 834.0 | — | |||||||||||||
Other real estate owned | 524 | 979 | 1,222 | 1,518 | 1,569 | (46.5) | (66.6) | |||||||||||||
Total nonperforming assets | $ | 15,555 | $ | 16,386 | $ | 18,016 | $ | 8,883 | $ | 8,326 | (5.1) | 86.8 | ||||||||
Accruing troubled debt | $ | 7,768 | $ | 7,828 | $ | 8,663 | $ | 8,933 | $ | 9,620 | (0.8) | (19.3) | ||||||||
Total nonperforming assets and | $ | 23,323 | $ | 24,214 | $ | 26,679 | $ | 17,816 | $ | 17,946 | (3.7) | 30.0 | ||||||||
CAPITAL AND CREDIT | ||||||||||||||||||||
Period-end equity to assets | 12.85 | % | 12.59 | % | 12.35 | % | 11.63 | % | 11.58 | % | 26 | bp | 127 | bp | ||||||
Period-end tangible equity to | 11.66 | 11.39 | 11.13 | 9.69 | 9.59 | 27 | 207 | |||||||||||||
Annualized net charge-offs to | 0.10 | 0.01 | 0.15 | 0.03 | 0.03 | 9 | 7 | |||||||||||||
Allowance for credit losses as a | ||||||||||||||||||||
Period-end loans | 0.83 | 0.86 | 0.87 | 0.87 | 0.87 | (3) | (4) | |||||||||||||
Nonaccrual loans | 70.62 | 67.83 | 62.10 | 140.29 | 149.79 | 279 | (7,917) | |||||||||||||
Nonperforming assets | 66.25 | 63.58 | 57.41 | 116.27 | 121.56 | 267 | (5,531) | |||||||||||||
Accruing TDRs | 132.66 | 133.09 | 119.39 | 115.62 | 105.21 | (43) | 2,745 | |||||||||||||
Nonperforming assets and | 44.18 | 43.02 | 38.77 | 57.97 | 56.40 | 116 | (1,222) | |||||||||||||
As a percent of total loans: | ||||||||||||||||||||
Nonaccrual loans | 1.18 | 1.27 | 1.39 | 0.62 | 0.58 | (9) | 60 | |||||||||||||
Accruing TDRs | 0.63 | 0.65 | 0.72 | 0.76 | 0.83 | (2) | (20) | |||||||||||||
Nonaccrual loans and accruing | 1.80 | 1.91 | 2.12 | 1.38 | 1.42 | (11) | 38 | |||||||||||||
As a percent of total loans+other | ||||||||||||||||||||
Nonperforming assets | 1.25 | 1.35 | 1.51 | 0.75 | 0.72 | (10) | 53 | |||||||||||||
Nonperforming assets and | 1.88 | 2.00 | 2.23 | 1.51 | 1.55 | (12) | 33 | |||||||||||||
As a percent of total assets: | ||||||||||||||||||||
Nonaccrual loans | 0.98 | 1.03 | 1.12 | 0.50 | 0.47 | (5) | 51 | |||||||||||||
Nonperforming assets | 1.04 | 1.10 | 1.21 | 0.60 | 0.57 | (6) | 47 | |||||||||||||
Accruing TDRs | 0.52 | 0.53 | 0.58 | 0.61 | 0.66 | (1) | (14) | |||||||||||||
Nonperforming assets and accruing TDRs | 1.56 | 1.63 | 1.80 | 1.21 | 1.24 | (7) | 32 | |||||||||||||
______________________ | ||||||||||||||||||||
(1) See the reconciliation table on page 16 of 16. | ||||||||||||||||||||
Shore Bancshares, Inc. Consolidated Statements of Income By Quarter (In thousands, except per share data) | ||||||||||||||||||||
Q2 2019 | Q2 2019 | |||||||||||||||||||
compared to | compared to | |||||||||||||||||||
Q2 2019 | Q1 2019 | Q4 2018 | Q3 2018 | Q2 2018 | Q1 2019 | Q2 2018 | ||||||||||||||
INTEREST INCOME | ||||||||||||||||||||
Interest and fees on loans | $ | 13,749 | $ | 13,499 | $ | 13,452 | $ | 13,205 | $ | 12,631 | 1.9 | % | 8.9 | % | ||||||
Interest on investment securities: | ||||||||||||||||||||
Taxable | 887 | 998 | 1,339 | 947 | 982 | (11.1) | (9.7) | |||||||||||||
Interest on deposits with other banks | 113 | 163 | 103 | 84 | 61 | (30.7) | 85.2 | |||||||||||||
Total interest income | 14,749 | 14,660 | 14,894 | 14,236 | 13,674 | 0.6 | 7.9 | |||||||||||||
INTEREST EXPENSE | ||||||||||||||||||||
Interest on deposits | 2,204 | 1,947 | 1,577 | 826 | 580 | 13.2 | 280.0 | |||||||||||||
Interest on short-term borrowings | 145 | 213 | 486 | 463 | 461 | (31.9) | (68.5) | |||||||||||||
Interest on long-term borrowings | 107 | 106 | 105 | — | — | 0.9 | — | |||||||||||||
Total interest expense | 2,456 | 2,266 | 2,168 | 1,289 | 1,041 | 8.4 | 135.9 | |||||||||||||
NET INTEREST INCOME | 12,293 | 12,394 | 12,726 | 12,947 | 12,633 | (0.8) | (2.7) | |||||||||||||
Provision for credit losses | 200 | 100 | 460 | 307 | 418 | 100.0 | (52.2) | |||||||||||||
NET INTEREST INCOME AFTER PROVISION | ||||||||||||||||||||
FOR CREDIT LOSSES | 12,093 | 12,294 | 12,266 | 12,640 | 12,215 | (1.6) | (1.0) | |||||||||||||
NONINTEREST INCOME | ||||||||||||||||||||
Service charges on deposit accounts | 1,028 | 934 | 1,045 | 982 | 947 | 10.1 | 8.6 | |||||||||||||
Trust and investment fee income | 385 | 372 | 360 | 383 | 414 | 3.5 | (7.0) | |||||||||||||
Other noninterest income | 1,196 | 882 | 707 | 1,100 | 935 | 35.6 | 27.9 | |||||||||||||
Total noninterest income | 2,609 | 2,188 | 2,112 | 2,465 | 2,296 | 19.2 | 13.6 | |||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||
Salaries and wages | 3,792 | 3,766 | 3,999 | 4,209 | 4,101 | 0.7 | (7.5) | |||||||||||||
Employee benefits | 1,068 | 1,254 | 797 | 983 | 1,045 | (14.8) | 2.2 | |||||||||||||
Occupancy expense | 668 | 691 | 649 | 646 | 650 | (3.3) | 2.8 | |||||||||||||
Furniture and equipment expense | 295 | 263 | 236 | 212 | 247 | 12.2 | 19.4 | |||||||||||||
Data processing | 919 | 910 | 844 | 930 | 689 | 1.0 | 33.4 | |||||||||||||
Directors' fees | 116 | 86 | 145 | 145 | 152 | 34.9 | (23.7) | |||||||||||||
Amortization of intangible assets | 155 | 162 | 269 | 270 | 228 | (4.3) | (32.0) | |||||||||||||
FDIC insurance premium expense | 181 | 205 | 159 | 193 | 214 | (11.7) | (15.4) | |||||||||||||
Other real estate owned expenses, net | 60 | 233 | 228 | 166 | 5 | (74.2) | 1,100.0 | |||||||||||||
Legal and professional fees | 559 | 601 | 603 | 443 | 487 | (7.0) | 14.8 | |||||||||||||
Other noninterest expenses | 1,172 | 1,172 | 1,287 | 1,113 | 1,035 | — | 13.2 | |||||||||||||
Total noninterest expense | 8,985 | 9,343 | 9,216 | 9,310 | 8,853 | (3.8) | 1.5 | |||||||||||||
Income from continuing operations before income taxes | 5,717 | 5,139 | 5,162 | 5,795 | 5,658 | 11.2 | 1.0 | |||||||||||||
Income tax expense | 1,489 | 1,311 | 1,309 | 1,539 | 1,466 | 13.6 | 1.6 | |||||||||||||
Income from continuing operations | 4,228 | 3,828 | 3,853 | 4,256 | 4,192 | 10.4 | 0.9 | |||||||||||||
(Loss) Income from discontinued operations before | (4) | (99) | 104 | 269 | 269 | 96.0 | (101.5) | |||||||||||||
Gain on sale of insurance agency | — | — | 12,736 | — | — | — | — | |||||||||||||
(Loss) Income tax expense (benefit) | — | (25) | 4,599 | 71 | 70 | 100.0 | (100.0) | |||||||||||||
Income from discontinued operations | (4) | (74) | 8,241 | 198 | 199 | 94.6 | (102.0) | |||||||||||||
NET INCOME | $ | 4,224 | $ | 3,754 | $ | 12,094 | $ | 4,454 | $ | 4,391 | 12.5 | (3.8) | ||||||||
Weighted average shares outstanding - basic | 12,779 | 12,769 | 12,749 | 12,748 | 12,744 | 0.1 | 0.3 | |||||||||||||
Weighted average shares outstanding - diluted | 12,784 | 12,773 | 12,766 | 12,761 | 12,757 | 0.1 | 0.2 | |||||||||||||
Basic net income per common share | ||||||||||||||||||||
Income from continuing operations | $ | 0.33 | $ | 0.30 | $ | 0.30 | $ | 0.33 | $ | 0.33 | 10.0 | — | ||||||||
(Loss) Income from discontinued operations | — | (0.01) | 0.65 | 0.02 | 0.01 | 100.0 | (100.0) | |||||||||||||
Net income | $ | 0.33 | $ | 0.29 | $ | 0.95 | $ | 0.35 | $ | 0.34 | 13.8 | (2.9) | ||||||||
Diluted net income per common share | ||||||||||||||||||||
Income from continuing operations | $ | 0.33 | $ | 0.30 | $ | 0.30 | $ | 0.33 | $ | 0.33 | 10.0 | — | ||||||||
(Loss) Income from discontinued operations | — | (0.01) | 0.65 | 0.02 | 0.01 | 100.0 | (100.0) | |||||||||||||
Net income | $ | 0.33 | $ | 0.29 | $ | 0.95 | $ | 0.35 | $ | 0.34 | 13.8 | (2.9) | ||||||||
Dividends paid per common share | 0.10 | 0.10 | 0.09 | 0.08 | 0.08 | — | 25.0 | |||||||||||||
Shore Bancshares, Inc. Consolidated Average Balance Sheets By Quarter (Dollars in thousands) | ||||||||||||||||||||||||||||||
Average balance | ||||||||||||||||||||||||||||||
Q2 2019 | Q2 2019 | |||||||||||||||||||||||||||||
compared to | compared to | |||||||||||||||||||||||||||||
Q2 2019 | Q1 2019 | Q4 2018 | Q3 2018 | Q2 2018 | Q1 2019 | Q2 2018 | ||||||||||||||||||||||||
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) | 1,221,215 | 4.53 | % | $ | 1,201,913 | 4.57 | % | $ | 1,189,504 | 4.50 | % | $ | 1,174,513 | 4.47 | % | $ | 1,141,296 | 4.45 | % | 1.6 | % | 7.0 | % | |||||||
Investment securities | ||||||||||||||||||||||||||||||
Taxable | 159,878 | 2.22 | 165,009 | 2.45 | 177,700 | 2.46 | 178,572 | 2.12 | 186,453 | 2.11 | (3.1) | (14.3) | ||||||||||||||||||
Interest-bearing deposits | 18,325 | 2.47 | 27,806 | 2.38 | 18,164 | 2.25 | 17,488 | 1.91 | 13,301 | 1.82 | (34.1) | 37.8 | ||||||||||||||||||
Total earning assets | 1,399,418 | 4.24 | % | 1,394,728 | 4.27 | % | 1,385,368 | 4.20 | % | 1,370,573 | 4.13 | % | 1,341,050 | 4.10 | % | 0.3 | 4.4 | |||||||||||||
Cash and due from banks | 17,225 | 17,196 | 18,204 | 17,790 | 16,905 | 0.2 | 1.9 | |||||||||||||||||||||||
Other assets | 61,906 | 58,756 | 70,858 | 79,065 | 78,185 | 5.4 | (20.8) | |||||||||||||||||||||||
Allowance for credit losses | (10,456) | (10,389) | (10,591) | (10,354) | (10,193) | 0.6 | 2.6 | |||||||||||||||||||||||
Total assets | $ | 1,468,093 | $ | 1,460,291 | $ | 1,463,839 | $ | 1,457,074 | $ | 1,425,947 | 0.5 | 3.0 | ||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||||||||
Demand deposits | $ | 234,775 | 0.65 | % | $ | 239,794 | 0.61 | % | $ | 218,519 | 0.53 | % | $ | 221,905 | 0.32 | % | $ | 204,068 | 0.21 | % | (2.1) | 15.0 | ||||||||
Money market and savings deposits | 385,272 | 0.84 | 383,738 | 0.85 | 378,163 | 0.68 | 373,357 | 0.14 | 381,047 | 0.13 | 0.4 | 1.1 | ||||||||||||||||||
Brokered deposits | 20,866 | 2.52 | 22,080 | 2.37 | 22,816 | 2.17 | 25,507 | 2.01 | 10,684 | 1.96 | (5.5) | 95.3 | ||||||||||||||||||
Certificates of deposit $100,000 or more | 107,549 | 1.54 | 98,535 | 1.24 | 97,023 | 0.94 | 97,563 | 0.69 | 96,873 | 0.54 | 9.1 | 11.0 | ||||||||||||||||||
Other time deposits | 145,900 | 1.31 | 140,523 | 1.02 | 141,702 | 0.80 | 145,130 | 0.57 | 146,946 | 0.45 | 3.8 | (0.7) | ||||||||||||||||||
Interest-bearing deposits | 894,362 | 0.99 | 884,670 | 0.89 | 858,223 | 0.73 | 863,462 | 0.36 | 839,618 | 0.27 | 1.1 | 6.5 | ||||||||||||||||||
Short-term borrowings | 21,557 | 2.70 | 32,984 | 2.62 | 72,462 | 2.66 | 87,925 | 2.09 | 91,980 | 2.01 | (34.6) | (76.6) | ||||||||||||||||||
Long-term borrowings | 15,000 | 2.86 | 15,000 | 2.87 | 14,348 | 2.89 | — | — | — | — | — | — | ||||||||||||||||||
Total interest-bearing liabilities | 930,919 | 1.06 | % | 932,654 | 0.99 | % | 945,033 | 0.91 | % | 951,387 | 0.52 | % | 931,598 | 0.44 | % | (0.2) | (0.1) | |||||||||||||
Noninterest-bearing deposits | 339,589 | 331,032 | 339,222 | 329,383 | 322,172 | 2.6 | 5.4 | |||||||||||||||||||||||
Accrued expenses and other liabilities | 8,484 | 11,633 | 6,370 | 6,005 | 5,697 | (27.1) | 48.9 | |||||||||||||||||||||||
Stockholders' equity | 189,101 | 184,972 | 173,214 | 170,299 | 166,480 | 2.2 | 13.6 | |||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 1,468,093 | $ | 1,460,291 | $ | 1,463,839 | $ | 1,457,074 | $ | 1,425,947 | 0.5 | 3.0 | ||||||||||||||||||
Net interest spread | 3.18 | % | 3.28 | % | 3.29 | % | 3.61 | % | 3.66 | % | ||||||||||||||||||||
Net interest margin | 3.54 | % | 3.61 | % | 3.58 | % | 3.76 | % | 3.79 | % | ||||||||||||||||||||
____________________________________ | ||||||||||||||||||||||||||||||
(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, 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. Reconciliation of Generally Accepted Accounting Principles (GAAP) and Non-GAAP Measures (In thousands, except per share data) | ||||||||||||||||||||||
YTD | YTD | |||||||||||||||||||||
Q2 2019 | Q1 2019 | Q4 2018 | Q3 2018 | Q2 2018 | 6/30/2019 | 6/30/2018 | ||||||||||||||||
The following reconciles return on average equity and return | ||||||||||||||||||||||
Net income from continuing operations | $ | 4,228 | $ | 3,828 | $ | 3,853 | $ | 4,256 | $ | 4,192 | $ | 8,056 | $ | 7,654 | ||||||||
Net income from continuing operations - annualized (A) | $ | 16,958 | $ | 15,525 | $ | 15,286 | $ | 16,885 | $ | 16,814 | $ | 16,246 | $ | 15,435 | ||||||||
Net income, excluding net amortization of intangible assets | $ | 4,344 | $ | 3,949 | $ | 4,054 | $ | 4,457 | $ | 4,362 | $ | 8,293 | $ | 7,898 | ||||||||
Net income, excluding net amortization of intangible assets - annualized (B) | $ | 17,424 | $ | 16,015 | $ | 16,084 | $ | 17,683 | $ | 17,496 | $ | 16,723 | $ | 15,927 | ||||||||
Average stockholders' equity (C) | $ | 189,101 | $ | 184,972 | $ | 173,214 | $ | 170,299 | $ | 166,480 | $ | 187,048 | $ | 165,778 | ||||||||
Less: Average goodwill and other intangible assets | (20,138) | (20,281) | (31,410) | (31,810) | (32,088) | (20,209) | (32,403) | |||||||||||||||
Average tangible equity (D) | $ | 168,963 | $ | 164,691 | $ | 141,804 | $ | 138,489 | $ | 134,392 | $ | 166,839 | $ | 133,375 | ||||||||
Return on average equity (GAAP) (A)/(C) | 8.97 | % | 8.39 | % | 8.83 | % | 9.91 | % | 10.10 | % | 8.69 | % | 9.31 | % | ||||||||
Return on average tangible equity (Non-GAAP) (B)/(D) | 10.31 | % | 9.72 | % | 11.34 | % | 12.77 | % | 13.02 | % | 10.02 | % | 11.94 | % | ||||||||
The following reconciles GAAP efficiency ratio and non- | ||||||||||||||||||||||
Noninterest expense (E) | $ | 8,985 | $ | 9,343 | $ | 9,216 | $ | 9,310 | $ | 8,853 | $ | 18,328 | $ | 18,305 | ||||||||
Less: Amortization of intangible assets | (155) | (162) | (269) | (270) | (228) | (317) | (327) | |||||||||||||||
Adjusted noninterest expense (F) | $ | 8,830 | $ | 9,181 | $ | 8,947 | $ | 9,040 | $ | 8,625 | $ | 18,011 | $ | 17,978 | ||||||||
Net interest income (G) | 12,293 | 12,394 | 12,726 | 12,947 | 12,633 | 24,687 | 24,962 | |||||||||||||||
Add: Taxable-equivalent adjustment | 41 | 34 | 30 | 28 | 28 | 75 | 56 | |||||||||||||||
Taxable-equivalent net interest income (H) | $ | 12,334 | $ | 12,428 | $ | 12,756 | $ | 12,975 | $ | 12,661 | $ | 24,762 | $ | 25,018 | ||||||||
Noninterest income (I) | $ | 2,609 | $ | 2,188 | $ | 2,112 | $ | 2,465 | $ | 2,296 | $ | 4,797 | 4,436 | |||||||||
Adjusted noninterest income (J) | $ | 2,609 | $ | 2,188 | $ | 2,112 | $ | 2,465 | $ | 2,296 | $ | 4,797 | $ | 4,436 | ||||||||
Efficiency ratio (GAAP) (E)/(G)+(I) | 60.29 | % | 64.07 | % | 62.11 | % | 60.41 | % | 59.30 | % | 62.16 | % | 62.22 | % | ||||||||
Efficiency ratio (Non-GAAP) (F)/(H)+(J) | 59.09 | % | 62.81 | % | 60.18 | % | 58.55 | % | 57.67 | % | 60.93 | % | 61.04 | % | ||||||||
The following reconciles book value per common share and | ||||||||||||||||||||||
Stockholders' equity (L) | $ | 191,307 | $ | 187,082 | $ | 183,185 | $ | 171,419 | $ | 168,115 | ||||||||||||
Less: Goodwill and other intangible assets | (20,058) | (20,214) | (20,383) | (31,706) | (31,987) | |||||||||||||||||
Tangible equity (M) | $ | 171,249 | $ | 166,868 | $ | 162,802 | $ | 139,713 | $ | 136,128 | ||||||||||||
Shares outstanding (N) | 12,780 | 12,780 | 12,749 | 12,748 | 12,747 | |||||||||||||||||
Book value per common share (GAAP) (L)/(N) | $ | 14.97 | $ | 14.64 | $ | 14.37 | $ | 13.45 | $ | 13.19 | ||||||||||||
Tangible book value per common share (Non-GAAP) | $ | 13.40 | $ | 13.06 | $ | 12.77 | $ | 10.96 | $ | 10.68 | ||||||||||||
The following reconciles equity to assets and tangible equity to tangible assets (Note 1): | ||||||||||||||||||||||
Stockholders' equity (O) | $ | 191,307 | $ | 187,082 | $ | 183,185 | $ | 171,419 | $ | 168,115 | ||||||||||||
Less: Goodwill and other intangible assets | (20,058) | (20,214) | (20,383) | (31,706) | (31,987) | |||||||||||||||||
Tangible equity (P) | $ | 171,249 | $ | 166,868 | $ | 162,802 | $ | 139,713 | $ | 136,128 | ||||||||||||
Assets (Q) | $ | 1,488,562 | $ | 1,485,799 | $ | 1,483,076 | $ | 1,473,543 | $ | 1,451,714 | ||||||||||||
Less: Goodwill and other intangible assets | (20,058) | (20,214) | (20,383) | (31,706) | (31,987) | |||||||||||||||||
Tangible assets (R) | $ | 1,468,504 | $ | 1,465,585 | $ | 1,462,693 | $ | 1,441,837 | $ | 1,419,727 | ||||||||||||
Period-end equity/assets (GAAP) (O)/(Q) | 12.85 | % | 12.59 | % | 12.35 | % | 11.63 | % | 11.58 | % | ||||||||||||
Period-end tangible equity/tangible assets (Non-GAAP) | 11.66 | % | 11.39 | % | 11.13 | % | 9.69 | % | 9.59 | % | ||||||||||||
____________________________________ | ||||||||||||||||||||||
Note 1: Management believes that reporting tangible equity and tangible assets more closely approximates the adequacy of capital for regulatory purposes. | ||||||||||||||||||||||
Note 2: Management believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling cash-based operating activities. | ||||||||||||||||||||||
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SOURCE Shore Bancshares, Inc.
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