Actionable news
0
All posts from Actionable news
Actionable news in SHBI: Shore Bancshares Inc,

Shore Bancshares Reports First Quarter 2016 Financial Results

The following excerpt is from the company's SEC filing.

EASTON, Md., April 21, 2016 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) reported net income of $2.460 million or $0.19 per diluted common share for the first quarter of 2016, compared to net income of $2.163 million or $0.17 per diluted common share for the fourth quarter of 2015, and net income of $1.409 million or $0.11 per diluted common share for the first quarter of 2015.

When comparing the first quarter of 2016 to the fourth quarter of 2015, the primary reason for the improved results was a $903 thousand increase in noninterest income partially offset by an increase in noninterest expense of $389 thousand. When comparing the first quarter of 2016 to the first quarter of 2015, the primary reasons for the improved results were increases in net interest income of $704 thousand and noninterest income of $456 thousand. Also contributing to the improved earnings were decreases in noninterest expenses of $365 thousand and provision for credit losses of $200 thousand.

"We are pleased to report our continuing improved earnings over the linked quarter and the first quarter of 2015," said Lloyd L. "Scott" Beatty, Jr., president and chief executive officer. "2016 will be an exciting year as we continue to focus on loan and deposit growth as well as revenues of our other fee based businesses."

Balance Sheet Review

Total assets were $1.131 billion at March 31, 2016, a $4.0 million, or less than 1%, decrease when compared to $1.135 billion at the end of 2015. The decrease in total assets included a decline in investment securities available for sale of $5.4 million, which funded loan growth of $3.8 million for the quarter. Other assets declined $1.5 million, primarily in deferred taxes as the Company continued to utilize net operating loss carryforwards to offset taxable earnings.

Total deposits decreased $5.7 million, or less than 1%, when compared to December 31, 2015. The decrease in total deposits was mainly due to reductions in municipal deposits impacted by tax collections resulting in declines in checking deposits of $9.2 million and time deposits of $6.9 million, which were offset by an increase in money market and savings deposits of $10.4 million. Total stockholders' equity increased $3.1 million, or 2.1%, when compared to the end of 2015. At March 31, 2016, the ratio of total equity to total assets was 13.27% and the ratio of total tangible equity to total tangible assets was 12.25%.

Total assets at March 31, 2016 increased $37.1 million, or 3.4%, when compared to total assets at March 31, 2015. The increase in total assets was primarily due to significant loan growth of $77.3 million, partially funded by a decrease in investment securities of $33.9 million and cash and cash equivalents of $2.3 million.

Review of Quarterly Financial Results

Net interest income was $9.2 million for the first quarter of 2016, compared to $9.3 million for the fourth quarter of 2015 and $8.5 million for the first quarter of 2015. Net interest income when compared to the fourth quarter of 2015 was lower by $50 thousand due to one less earnings day, as well as, lower yields on loans, partially offset by a higher yield on taxable investment securities. Also impacting the margin was the increase in the federal funds rate of 25bps in late December of 2015 which resulted in a higher yield on deposits with other banks. The Company's net interest margin improved by 5 basis points to 3.50% over the fourth quarter of 2015. The increase in net interest income when compared to the first quarter of 2015 was primarily the result of significant loan growth, with average loans increasing $76 million. The Company's net interest margin when compared to the first quarter of 2015 increased 7 basis points to 3.50%, the result of higher loan volume and higher yields on investment securities, partially offset by a decline in yields on loans. Additionally, average rates paid on deposits declined 13 basis points primarily related to time deposit repricing.

The provision for credit losses was $450 thousand for the three months ended March 31, 2016. The comparable amounts were $475 thousand and $650 thousand for the three months ended December 31, 2015 and March 31, 2015, respectively. The provision for credit losses slightly decreased between the first quarter of 2016 and the fourth quarter of 2015, due to a decline in nonaccrual loans. The lower level of provision for credit losses when comparing the first quarter of 2016 to the first quarter of 2015 was primarily due to decreases in loan charge-offs and nonaccrual loans. Net charge-offs were $457 thousand for the first quarter of 2016, $257 thousand for the fourth quarter of 2015 and $547 thousand for the first quarter of 2015. The ratio of annualized net charge-offs to average loans was 0.23% for the first quarter of 2016, 0.13% for the fourth quarter of 2015 and 0.31% for the first quarter of 2015. The ratio of the allowance for credit losses to period-end loans at March 31, 2016 was 1.04%, lower than the 1.05% at December 31, 2015 and 1.08% at March 31, 2015.

Nonperforming assets excluding accruing troubled debt restructurings (TDRs) were $15.9 million at March 31, 2016, $16.4 million at December 31, 2015 and $16.4 million at March 31, 2015. Nonperforming assets including accruing TDRs at March 31, 2016 were $30.6 million, compared to $31.8 million at December 31, 2015 and $33.1 million at March 31, 2015. The decreases in nonperforming assets and TDRs are the result of the continued work out efforts and charge-offs period over period. At March 31, 2016, the ratio of nonaccrual loans to total assets was 1.05%, compared to 1.07% and 1.18% at December 31, 2015 and March 31, 2015, respectively. In addition, the ratio of accruing TDRs to total assets at March 31, 2016 was 1.30%, improving from 1.37% and 1.52% at December 31, 2015 and March 31, 2015.

Total noninterest income for the first quarter of 2016 increased $903 thousand when compared to the fourth quarter of 2015 and increased $456 thousand when compared to the first quarter of 2015. The increase from the fourth quarter of 2015 was the result of higher insurance agency commissions, mainly from contingency payments which are typically received in the first quarter of each year and are based on the prior year's performance. The increase from the first quarter of 2015 was due to increases in service charges on deposits and other banking service fees of $179 thousand, an increase in retail insurance commissions of $184 thousand, and an increase in contingency payments of $100 thousand, offset by decline in trust and investment fee income of $118 thousand.

Total noninterest expense for the first quarter of 2016 increased $389 thousand when compared to the fourth quarter of 2015 and decreased $365 thousand when compared to the first quarter of 2015. The increase in noninterest expense compared to the fourth quarter of 2015 was primarily due to higher costs associated with employee benefits of $224 thousand, which included higher insurance premiums for group insurance and federal unemployment insurance which is usually paid the first two quarters of the year. Salaries and wages also increased by $111 thousand in the first quarter due to pay increases implemented during the period. The decrease from the first quarter of 2015 was primarily due to lower legal and professional fees of $340 thousand, lower FDIC insurance premiums of $102 thousand, offset by an increase in salary and wages of $164 thousand due to pay increases.

Shore Bancshares Information

Shore Bancshares, Inc. is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland's Eastern Shore. It is the parent company of two Maryland chartered commercial banks, The Talbot Bank of Easton, Maryland, and CNB; one retail insurance producer firm, The Avon-Dixon Agency, LLC, with two specialty lines, Elliot Wilson Insurance (Trucking), and Jack Martin and Associates (Marine); and an insurance premium finance company, Mubell Finance, LLC. Shore Bancshares, Inc. engages in the trust services business through the trust department at CNB under the name "Wye Financial & Trust". Additional information is available at www.shorebancshares.com.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Shore Bancshares, Inc. with the Securities and Exchange Commission entitled "Risk Factors".

The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

Page 4 of 11

Financial Highlights

(Dollars in thousands, except per share data)

For the Three Months Ended

Change

Net interest income

$ 9,243

$ 8,539

Provision for credit losses

(30.8)

Noninterest income

Noninterest expense

Income before income taxes

Income tax expense

Net income

$ 2,460

$ 1,409

Return on average assets

Return on average equity

Return on average tangible equity (1)

Net interest margin

Efficiency ratio - GAAP

Efficiency ratio - Non-GAAP (1)

PER SHARE DATA

Basic net income per common share

$ 0.19

$ 0.11

Diluted net income per common share

Dividends paid per common share

Book value per common share at period end

Tangible book value per common share at period end (1)

Market value at period end

Market range:

High

Low

AVERAGE BALANCE SHEET DATA

Loans

$ 790,777

$ 714,780

Investment securities

214,988

244,300

(12.0)

Earning assets

1,065,514

1,013,490

Assets

1,130,238

1,087,401

Deposits

968,991

932,460

Stockholders' equity

149,032

141,884

CREDIT QUALITY DATA AT PERIOD END

Net charge-offs

$ 457

$ 547

(16.5)

Nonaccrual loans

$ 11,925

$ 12,913

Loans 90 days past due and still accruing

Other real estate owned

Total nonperforming assets

15,856

16,418

Accruing troubled debt restructurings (TDRs)

14,753

16,644

(11.4)

Total nonperforming assets and accruing TDRs

$ 30,609

$ 33,062

CAPITAL AND CREDIT QUALITY RATIOS

Period-end equity to assets

Period-end tangible equity to tangible assets (1)

Annualized net charge-offs to average loans

Allowance for credit losses as a percent of:

Period-end loans

Nonperforming assets

Accruing TDRs

Nonperforming assets and accruing TDRs

As a percent of total loans:

Accruing TDRs

Nonaccrual loans and accruing TDRs

As a percent of total loans+other real estate owned:

As a percent of total assets:

(1) See the reconciliation table on page 11 of 11.

Page 5 of 11

Consolidated Balance Sheets

(In thousands, except per share data)

ASSETS

Cash and due from banks

$ 14,566

$ 15,080

$ 24,319

(40.1)

Interest-bearing deposits with other banks

58,507

54,223

48,398

Federal funds sold

(87.7)

(82.9)

Cash and cash equivalents

73,626

73,811

75,958

Investment securities available for sale (at fair value)

206,735

212,165

240,111

(13.9)

Investment securities held to maturity

(11.5)

798,921

795,114

721,605

Less: allowance for credit losses

(8,309)

(8,316)

(7,798)

Loans, net

790,612

786,798

713,807

Premises and equipment, net

16,813

16,864

16,728

Goodwill

11,931

Other intangible assets, net

Other real estate owned, net

Other assets

22,388

23,920

26,312

(14.9)

Total assets

$ 1,131,175

$ 1,135,143

$ 1,094,128

LIABILITIES

Noninterest-bearing deposits

$ 229,646

$ 229,686

$ 201,518

740,087

745,778

739,256

Total deposits

969,733

975,464

940,774

Short-term borrowings

Accrued expenses and other liabilities

Total liabilities

981,066

988,176

951,382

STOCKHOLDERS' EQUITY

Common stock, par value $0.01; authorized

35,000,000 shares

Additional paid in capital

63,929

63,815

63,669

Retained earnings

85,178

83,097

77,903

Accumulated other comprehensive (loss) income

1,333.8

(16.4)

Total stockholders' equity

150,109

146,967

142,746

Total liabilities and stockholders' equity

$ 1,131,175

Period-end common shares outstanding

12,640

12,631

12,625

$ 11.88

$ 11.64

$ 11.31

Page 6 of 11

Consolidated Statements of Operations

% Change

INTEREST INCOME

Interest and fees on loans

$ 8,961

$ 8,491

Interest and dividends on investment securities:

Taxable

Tax-exempt

(33.3)

Interest on federal funds sold

Interest on deposits with other banks

Total interest income

INTEREST EXPENSE

(26.6)

Interest on short-term borrowings

(20.0)

Total interest expense

NET INTEREST INCOME

NET INTEREST INCOME AFTER PROVISION

FOR CREDIT LOSSES

NONINTEREST INCOME

Service charges on deposit accounts

Trust and investment fee income

(25.2)

Insurance agency commissions

Other noninterest income

Total noninterest income

NONINTEREST EXPENSE

Salaries and wages

Employee benefits

Occupancy expense

Furniture and equipment expense

Data processing

Directors' fees

(15.4)

Amortization of intangible assets

FDIC insurance premium expense

Write-downs of other real estate owned

(74.1)

Legal and professional fees

(46.9)

Other noninterest expenses

Total noninterest expense

NET INCOME

$ 2,460

$ 1,409

Weighted average shares outstanding - basic

12,635

Weighted average shares outstanding - diluted

12,649

12,633

$ 0.19

$ 0.11

Page 7 of 11

Consolidated Average Balance Sheets

(Dollars in thousands)

Yield/

balance

$ 790,777

$ 714,780

214,778

243,869

56,109

51,609

Total earning assets

16,205

21,268

57,037

60,611

(8,518)

(7,968)

$ 1,130,238

$ 1,087,401

Interest-bearing liabilities

Demand deposits

$ 193,087

$ 177,071

Money market and savings deposits

258,715

237,755

Certificates of deposit $100,000 or more

132,412

156,154

Other time deposits

153,774

169,584

737,988

740,564

Total interest-bearing liabilities

744,230

747,904

231,003

191,896

Net interest spread

Page 8 of 11

Financial Highlights By Quarter

1st quarter

4th quarter

3rd quarter

2nd quarter

(1Q 16)

(4Q 15)

(3Q 15)

(2Q 15)

(1Q 15)

PROFITABILITY FOR THE PERIOD

Taxable-equivalent net interest income

$ 9,273

$ 9,315

$ 9,027

$ 8,701

$ 8,560

Less: Taxable-equivalent adjustment

$ 2,460

$ 2,163

$ 1,909

$ 1,627

$ 0.19

$ 0.17

$ 0.15

$ 0.13

High

Low

$ 790,777

$ 785,572

$ 763,306

$ 727,800

213,307

230,222

241,684

1,072,728

1,044,230

1,016,172

1,137,430

1,111,361

1,085,857

978,049

953,826

931,637

146,597

144,897

143,266

$ 457

$ 257

$ 229

$ 421

$ 11,925

$ 12,093

$ 13,143

$ 14,009

$ 15,856

$ 16,352

$ 16,031

$ 16,542

$ 16,418

$ 14,753

$ 15,495

$ 16,431

$ 18,353

$ 16,644

$ 30,609

$ 31,847

$ 32,462

$ 34,895

Period-end loans

Page 9 of 11

Consolidated Statements of Operations By Quarter

$ 8,961

$ 9,142

$ 8,912

$ 8,581

10,047

(11.9)

(11.8)

Insurance agency commissions

(14.6)

Total noninterest income

Occupancy expense

(82.1)

(12.5)

$ 2,460

$ 2,163

$ 1,909

$ 1,627

12,630

12,629

12,645

12,638

$ 0.19

$ 0.17

$ 0.15

$ 0.13

$ 0.11

Page 10 of 11

Consolidated Average Balance Sheets By Quarter

Average balance

$ 785,572

$ 763,306

$ 727,800

213,097

229,979

241,254

(51.3)

69,963

48,361

43,757

(19.8)

16,628

17,434

18,723

(23.8)

56,512

57,891

59,045

(8,438)

(8,194)

(8,083)

$ 1,137,430

$ 1,111,361

$ 1,085,857

$ 190,237

$ 184,471

$ 171,274

255,974

242,830

238,173

139,663

148,617

152,478

(15.2)

158,011

163,224

166,277

743,885

739,142

728,202

(15.0)

750,084

745,643

733,074

234,164

214,684

203,435

Page 11 of 11

Reconciliation of Generally Accepted Accounting Principles (GAAP)

and Non-GAAP Measures

The following reconciles return on average equity and return on

average tangible equity (Note 1):

$ 2,163

$ 1,909

$ 1,627

$ 1,409

Net income - annualized (A)

$ 9,894

$ 8,581

$ 7,574

$ 6,526

$ 5,714

Net income, excluding net amortization of intangible assets

$ 2,480

$ 2,183

$ 1,930

$ 1,647

$ 1,429

assets - annualized (B)

$ 9,975

$ 8,661

$ 7,657

$ 6,606

$ 5,795

Average stockholders' equity (C)

$ 149,032

$ 146,597

$ 144,897

$ 143,266

$ 141,884

Less: Average goodwill and other intangible assets

(13,129)

(13,155)

(13,182)

(13,215)

(13,248)

Average tangible equity (D)

$ 135,903

$ 133,442

$ 131,715

$ 130,051

$ 128,636

Return on average equity (GAAP) (A)/(C)

Return on average tangible equity (Non-GAAP) (B)/(D)

The following reconciles GAAP efficiency ratio and non-GAAP

efficiency ratio (Note 2):

Noninterest expense (E)

$ 9,339

$ 8,950

$ 9,396

$ 9,300

$ 9,704

Less: Amortization of intangible assets

Adjusted noninterest expense (F)

$ 9,306

$ 8,917

$ 9,362

$ 9,267

$ 9,671

Taxable-equivalent net interest income (G)

$ 9,315

$ 9,027

$ 8,701

$ 8,560

Taxable-equivalent net interest income excluding nonrecurring adjustment (H)

Noninterest income (I)

$ 4,541

$ 3,638

$ 3,905

$ 3,788

$ 4,085

Adjusted noninterest income (J)

Efficiency ratio (GAAP) (E)/(G)+(I)

Efficiency ratio (Non-GAAP) (F)/(H)+(J)

The following reconciles book value per common share and tangible

book value per common share (Note 1):

Stockholders' equity (K)

$ 150,109

$ 146,967

$ 145,887

$ 143,402

$ 142,746

Less: Goodwill and other intangible assets

(13,109)

(13,142)

(13,162)

(13,195)

(13,228)

Tangible equity (L)

$ 137,000

$ 133,825

$ 132,725

$ 130,207

$ 129,518

Shares outstanding (M)

Book value per common share (GAAP) (K)/(M)

$ 11.88

$ 11.64

$ 11.55

$ 11.35

$ 11.31

Tangible book value per common share (Non-GAAP) (L)/(M)

$ 10.84

$ 10.59

$ 10.51

$ 10.31

$ 10.26

The following reconciles equity to assets and

tangible equity to tangible assets (Note 1):

Stockholders' equity (N)

Tangible equity (O)

Assets (P)

$ 1,131,175

$ 1,135,143

$ 1,117,813

$ 1,084,352

$ 1,094,128

Tangible assets (Q)

$ 1,118,066

$ 1,122,001

$ 1,104,651

$ 1,071,157

$ 1,080,900

Period-end equity/assets (GAAP) (N)/(P)

Period-end tangible equity/tangible assets (Non-GAAP) (O)/(Q)

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.

CONTACT: George Rapp, Chief Financial Officer, 410-763-7800

The above information was disclosed in a filing to the SEC. To see the filing, click here.

To receive a free e-mail notification whenever Shore Bancshares Inc makes a similar move, sign up!

Other recent filings from the company include the following:

Shore Bancshares Inc director just picked up 163 shares - April 25, 2016
Shore Bancshares Inc director just picked up 175 shares - April 25, 2016
Shore Bancshares Inc director just picked up 408 shares - April 25, 2016
Shore Bancshares Inc director just picked up 408 shares - April 25, 2016