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Shore Bancshares, Inc. Reports Three and Nine Months Financial Results

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Shore Bancshares (NASDAQ: SHBI) reported Q3 2024 net income of $11.2 million ($0.34 per diluted share), equal to Q2 2024. Net interest income increased $1.1 million to $43.3 million, with net interest margin rising to 3.17%. Total deposits grew to $5.23 billion, while asset quality remained strong with nonperforming assets at 0.27% of total assets. The efficiency ratio was 67.49%, slightly up from 66.23% in Q2. The company maintained strong capital ratios with Tier 1 and Total Risk-Based Capital Ratios at 9.89% and 12.04% respectively.

Shore Bancshares (NASDAQ: SHBI) ha riportato un utile netto per il terzo trimestre del 2024 di $11,2 milioni ($0,34 per azione diluita), pari a quello del secondo trimestre del 2024. Il reddito netto da interessi è aumentato di $1,1 milioni, raggiungendo $43,3 milioni, con un margine di interesse netto che è salito al 3,17%. I depositi totali sono cresciuti fino a $5,23 miliardi, mentre la qualità degli attivi è rimasta solida con attivi non performing allo 0,27% del totale degli attivi. Il rapporto di efficienza è stato del 67,49%, leggermente aumentato rispetto al 66,23% del secondo trimestre. L'azienda ha mantenuto solidi rapporti di capitale con i rapporti di capitale di tipo 1 e il capitale complessivo basato sul rischio rispettivamente al 9,89% e al 12,04%.

Shore Bancshares (NASDAQ: SHBI) reportó un ingreso neto para el tercer trimestre de 2024 de $11.2 millones ($0.34 por acción diluida), igual al del segundo trimestre de 2024. Los ingresos netos por intereses aumentaron en $1.1 millones alcanzando $43.3 millones, con un margen de interés neto que subió al 3.17%. Los depósitos totales crecieron a $5.23 mil millones, mientras que la calidad de los activos se mantuvo fuerte con activos no productivos en el 0.27% del total de activos. La ratio de eficiencia fue del 67.49%, ligeramente superior al 66.23% del segundo trimestre. La empresa mantuvo sólidos ratios de capital, con los ratios de capital de nivel 1 y total basado en riesgo en 9.89% y 12.04% respectivamente.

Shore Bancshares (NASDAQ: SHBI)는 2024년 3분기 순이익으로 $11.2백만 ($0.34 희석 주당) 을 보고하였으며, 이는 2024년 2분기와 동일합니다. 순이자 수익은 $1.1백만 증가하여 $43.3백만에 달했으며, 순이자 마진은 3.17%로 상승했습니다. 총 예금은 $5.23억으로 증가하였고, 자산 품질은 총 자산의 0.27%에서 비이자 수익 자산이 유지되며 강력했습니다. 효율성 비율은 67.49%로 2분기의 66.23%에서 소폭 상승했습니다. 회사는 Tier 1 및 총 위험 기반 자본 비율이 각각 9.89% 및 12.04%인 강력한 자본 비율을 유지했습니다.

Shore Bancshares (NASDAQ: SHBI) a déclaré un bénéfice net pour le troisième trimestre 2024 de 11,2 millions de dollars (0,34 $ par action diluée), égal à celui du deuxième trimestre 2024. Les revenus nets d'intérêts ont augmenté de 1,1 million de dollars pour atteindre 43,3 millions de dollars, avec une marge d'intérêt nette passant à 3,17 %. Les dépôts totaux ont crû jusqu'à 5,23 milliards de dollars, tandis que la qualité des actifs est restée solide avec des actifs non performants à 0,27 % des actifs totaux. Le ratio d'efficacité était de 67,49 %, légèrement en hausse par rapport à 66,23 % au deuxième trimestre. L'entreprise a maintenu de solides ratios de capital avec des ratios de capital de niveau 1 et de capital total basé sur le risque respectivement à 9,89 % et 12,04 %.

Shore Bancshares (NASDAQ: SHBI) berichtete für das dritte Quartal 2024 einen Nettogewinn von 11,2 Millionen Dollar (0,34 Dollar pro verwässerter Aktie), gleich dem des zweiten Quartals 2024. Die Nettozinseinnahmen stiegen um 1,1 Millionen Dollar auf 43,3 Millionen Dollar, wobei die Nettozinsmarge auf 3,17% anstieg. Die Gesamteinlagen wuchsen auf 5,23 Milliarden Dollar, während die Asset-Qualität stark blieb, mit notleidenden Vermögenswerten bei 0,27% der Gesamtaktiva. Die Effizienzquote lag bei 67,49%, leicht gestiegen von 66,23% im zweiten Quartal. Das Unternehmen hielt starke Kapitalquoten mit einer Tier-1-Quote und einer Gesamt-Risiko-Kapitalquote von 9,89% bzw. 12,04%.

Positive
  • Net interest income increased by $1.1 million to $43.3 million in Q3 2024
  • Net interest margin improved to 3.17% from 3.11% in Q2 2024
  • Total deposits increased to $5.23 billion
  • Strong asset quality with nonperforming assets at only 0.27% of total assets
  • Tangible common equity ratio improved to 7.39% from 6.78% at year-end 2023
Negative
  • Total assets decreased by $93.2 million (1.6%) compared to December 2023
  • Efficiency ratio worsened to 67.49% from 66.23% in Q2 2024
  • Net charge-offs increased to $1.4 million in Q3 2024 from $886 thousand in Q2 2024
  • Noninterest income decreased by $1.2 million from Q2 2024

Insights

Shore Bancshares delivered a solid Q3 2024 performance with net income of $11.2 million ($0.34 per share), maintaining stability from Q2. Key positives include 6 bps increase in net interest margin to 3.17%, strong deposit growth with total deposits reaching $5.23 billion and improved asset quality with nonperforming assets at just 0.27% of total assets.

The bank's capital position strengthened with tangible common equity ratio improving to 7.39% from 6.78% at year-end 2023. Credit quality remains robust with stable loan loss reserves at 1.24%. The efficiency ratio of 67.49% was slightly impacted by one-time data processing expenses related to a Q1 fraud incident.

Of note is the bank's manageable exposure to office CRE at 10.8% of total loans, with strong average debt-service coverage of 2.5x and conservative average LTV of 50%. The institution maintains healthy liquidity of $1.1 billion and has minimal reliance on wholesale funding.

EASTON, Md., Oct. 24, 2024 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ - SHBI) (the "Company" or "Shore Bancshares"), the holding company for Shore United Bank, N.A. (the "Bank" or "SUB") reported net income for the third quarter of 2024 of $11.2 million or $0.34 per diluted common share which was equal to the second quarter of 2024. The Company's had a net loss of $9.7 million or $(0.29) per diluted common share for the third quarter of 2023 as a result of the merger of equals on July 1, 2023 between the Company and The Community Financial Corporation. Net income for the first nine months of 2024 was $30.6 million or $0.92 per diluted common share, compared to the first nine months of 2023 of $0.7 million or $0.03 per diluted common share.

Third Quarter and Nine-Months Ended September 30, 2024 Highlights

  • Steady Return on Average Assets ("ROAA") - The Company reported ROAA of 0.77% for the third quarter of 2024, which was equal to reported ROAA for the second quarter of 2024. Non-GAAP, ROAA([1]) was 0.90% for the third quarter of 2024, compared to 0.91% for the second quarter of 2024.
  • Increased Net Interest Income and Net Interest Margin - Third quarter 2024 net interest income increased $1.1 million to $43.3 million from $42.1 million in the second quarter of 2024. Net interest income increased due to modest loan growth, slightly higher accelerated accretion income, and loans and securities repricing at a faster pace than the Bank's cost of funds. Net interest margin ("NIM") increased six basis points ("bps") to 3.17% for the third quarter of 2024 from 3.11% for the second quarter of 2024. Excluding net accretion interest income of $4.5 million and $3.8 million for the same time periods, NIM increased one bps to 2.84% for the third quarter of 2024 from 2.83% for the second quarter of 2024.
  • Asset Quality Remains Strong - Allowance for credit losses ("ACL") was $58.7 million at September 30, 2024 compared to $58.5 million at June 30, 2024. The third quarter of 2024 ACL as a percentage of loans remained stable at 1.24% from the second quarter of 2024. Nonperforming assets to total assets were 0.27% for the third quarter of 2024 compared to 0.29% for the second quarter of 2024 and 0.23% for the fourth quarter of 2023. Classified assets to total assets increased to 0.39% in the third quarter of 2024 compared to 0.33% for the second quarter of 2024 and 0.25% for the fourth quarter of 2023.
  • Stable Operating Leverage - The third quarter of 2024 efficiency ratio was 67.49% when compared to 66.23% in the second quarter of 2024. The third quarter efficiency ratio was affected by one-time data processing expense related to the fraud incident in the first quarter of 2024. The third quarter of 2024 non-GAAP efficiency ratio(1) was 62.10% when compared to 61.05% in the second quarter of 2024.
  • Strong Deposit Growth - Total deposits increased to $5.23 billion at September 30, 2024 from $5.15 billion at June 30, 2024. Average noninterest bearing deposits increased to $1.58 billion for the third quarter of 2024 representing 30.55% of average funding, excluding subordinated debt, compared to 28.42% during the second quarter of 2024. The Bank's use of wholesale funding, which includes Federal Home Loan Bank ("FHLB") advances and brokered deposits, has been minimal in 2024. Wholesale funding increased from $44.5 million or 0.74% of assets at December 31, 2023 to $50.0 million or 0.84% of total assets at September 30, 2024. Sustained efforts to enhance the Bank's deposit franchise are expected to continue to attract additional deposits in future quarters.

"Increasing net interest income drove a healthy increase in net interest margin in the third quarter," stated James ("Jimmy") M. Burke, President and Chief Executive Officer of Shore Bancshares, Inc. "Active management of our deposit relationships, combined with the recent reduction in rates by the Federal Reserve, have helped us stabilize our cost of funding even as assets yields continue to increase. Credit remains stable and economic activity in our markets remains strong. We continue to rapidly build capital and are optimistic that decreasing rates and clarity in November will result in loan growth."







(1)

Reconciliations of the non–U.S. generally accepted accounting principles ("GAAP") measures are set forth at the end of this press release.

Balance Sheet Review

Total assets were $5.9 billion at September 30, 2024, a decrease of $93.2 million or 1.6%, when compared to $6.0 billion at December 31, 2023. The aggregate decrease was primarily due to a decrease in cash and cash equivalents of $188.8 million and investment securities held to maturity of $28.6 million partially offset by an increase in investment securities available for sale of $22.8 million and loans held for investment of $92.9 million. The ratio of the ACL to total loans remained flat at 1.24% at September 30, 2024 compared to December 31, 2023.

The Company's tangible common equity ratio(1) at September 30, 2024 was 7.39% compared to 6.78% at December 31, 2023. The Company's Tier 1 and Total Risk-Based Capital Ratios at September 30, 2024 were 9.89% and 12.04%, respectively. The Bank's Tier 1 and Total Risk-Based Capital Ratios at September 30, 2024 were 10.60% and 11.84%, respectively. Non-owner occupied CRE loans as a percentage of the Bank's Tier 1 Capital + ACL at September 30, 2024 and December 31, 2023 were $2.1 billion or 364.0% and $2.0 billion or 382.6%, respectively. Construction loans as a percentage of the Bank's Tier 1 Capital + ACL at September 30, 2024 and December 31, 2023 were $337.1 million or 59.3% and $299.0 million or 56.7%, respectively.

The Bank's office CRE loan portfolio, which includes owner-occupied and non-owner occupied CRE loans, was $509.4 million or 10.8% of total loans of $4.7 billion at September 30, 2024. The Bank's office CRE loan portfolio included $140.9 million or 27.7% of the total with medical tenants and $71.8 million or 14.1% of the total with government or government contractor tenants. There were 503 loans in the office CRE portfolio with an average and median loan size of $1.0 million and $0.4 million, respectively. Loan to Value ("LTV") estimates for the office CRE portfolio are summarized below and LTV collateral values are based on the most recent appraisal, which may vary from the appraised value at loan origination.

LTV Range


Loan Count


 Loan Balance


% of Total CRE

Less than or equal to 50%


258


$                    177,771


35 %

50%-60%


69


118,547


23 %

60%-70%


80


111,951


22 %

70%-80%


73


82,674


16 %

Greater than 80%


23


18,433


4 %

Grand Total


503


$                    509,376


100 %

The Bank had 18 office CRE loans totaling $164.6 million with balances greater than $5.0 million at September 30, 2024, compared to 24 office CRE loans totaling $189.8 million at December 31, 2023. The decrease in this portfolio segment was the result of normal amortization and two large loan payoffs in the quarter. At September 30, 2024, the average loan debt-service coverage ratio was 2.5x and average LTV was 50.0%. Of the office CRE portfolio balance, 73% is secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 97% is secured by properties with five stories or less. Of the office CRE loans, $2.0 million were classified as special mention or substandard at September 30, 2024.

Total deposits decreased $160.4 million, or 3.0% to $5.2 billion at September 30, 2024 when compared to December 31, 2023. The decrease in total deposits was primarily due to decreases in demand deposits of $414.0 million and money market and savings of $143.8 million, partially offset by increases in noninterest-bearing deposits of $313.4 million and time deposits of $84.0 million. The decrease in deposits is primarily attributable to seasonal municipal runoff and a decrease in interest rate-sensitive cannabis-related deposits. During the second quarter of 2024, the Company reclassified $399.4 million of demand deposits which carried an average rate of 4 bps to noninterest bearing deposits.

Total funding, which includes customer deposits, FHLB short and long-term advances, and brokered deposits was $5.28 billion at September 30, 2024 compared to $5.26 billion at June 30, 2024 and $5.43 billion at December 31, 2023. The Bank had $50.0 million in total FHLB advances at September 30, 2024 compared to aggregate advances of $81.0 million at June 30, 2024 and zero at December 31, 2023. The advance consisted of 18-month Bermuda Convertible of $50 million. The Bank had zero brokered deposits (excluding reciprocal deposits) at September 30, 2024 compared to $28.2 million at June 30, 2024 and $19.4 million at December 31, 2023. Total reciprocal deposits were $1.3 billion at September 30, 2024 compared to $1.2 billion at June 30, 2024 and $1.3 billion at December 31, 2023. 

The Bank's uninsured deposits at September 30, 2024 were $895.9 million or 17.14% of total deposits. The Bank's uninsured deposits, excluding deposits secured with pledged collateral, at September 30, 2024 were $768.6 million or 14.71% of total deposits. At September 30, 2024, the Bank had approximately $1.1 billion of available liquidity including: $183.6 million in cash, $932.5 million in secured borrowing capacity at the FHLB and other correspondent banks, and $95.0 million in unsecured lines of credit.

Total stockholders' equity increased $22.1 million, or 4.3%, when compared to December 31, 2023, primarily due to current year earnings, offset by cash dividends paid. As of September 30, 2024, the ratio of total equity to total assets was 9.01% and the ratio of total tangible equity to total tangible assets(1) was 7.39% compared to 8.50% and 6.78% at December 31, 2023, respectively.

Review of Quarterly Financial Results

Net interest income was $43.3 million for the third quarter of 2024, compared to $42.1 million for the second quarter of 2024 and $45.6 million for the third quarter of 2023. The increase in net interest income when compared to the second quarter of 2024 was primarily due to the increase in interest and fees on loans of $1.9 million and interest and dividends on investment securities of $268 thousand, partially offset by an increase in interest expense of $460 thousand. The increase in interest expense in the third quarter of 2024 was the result of higher interest expense on deposits of $1.3 million, partially offset by lower interest expense from carrying lower short-term advances from the FHLB during the quarter to offset seasonal outflows from municipal customers of $1.1 million. The decrease in net interest income when compared to the third quarter of 2023 was primarily due the higher interest expense on deposits of $5.4 million and long-term borrowings of $618 thousand. These were partially offset by an increase in interest and fees on loans of $4.3 million. All of these items were significantly impacted by the merger in the third quarter of 2023.

The Company's net interest margin increased to 3.17% for the third quarter of 2024 from 3.11% for the second quarter of 2024 primarily due to loans repricing at a greater rate than deposits. The Company's cost of funds was positively impacted during the second quarter due to a shift from interest-bearing to noninterest-bearing deposits. Average interest-bearing deposits decreased $77.8 million, or 2.2% which resulted in $1.3 million less interest expense. These interest-bearing deposits were almost entirely replaced with an increase in the average balance on noninterest-bearing deposits of $99.1 million, or 6.7%. The Company's net interest margin decreased to 3.17% for the third quarter of 2024 from 3.35% for the third quarter of 2023. Comparing the third quarter of 2024 to the third quarter of 2023, the Company's interest-earning asset yields increased 23 bps to 5.47% from 5.24%, while the cost of funds repriced at a slower pace resulting in an increase of 43 bps to 2.38% from 1.95% for the same period.

The provision for credit losses was $1.5 million for the three months ended September 30, 2024. The comparable amounts were $2.1 million for the three months ended June 30, 2024, and $28.2 million for the three months ended September 30, 2023. The increase in the provision for credit losses for the third quarter of 2024 compared to the second quarter of 2024 was due to new loan growth, increases in specific reserves and charge-offs in the third quarter of 2024. Coverage ratios remained flat at 1.24% at September 30, 2024 and June 30, 2024. The decrease in the provision for credit losses when compared to the third quarter of 2023 was primarily due to an enhanced CECL model in the third quarter of 2023 due to the merger. Net charge-offs were $1.4 million for the third quarter of 2024 and third quarter of 2023, compared to $886 thousand for the second quarter of 2024.

At September 30, 2024 and June 30, 2024, nonperforming assets were $15.8 million, or 0.27% of total assets and $17.0 million, or 0.29% of total assets, respectively. The balance of nonperforming assets decreased primarily due to a decrease in repossessed properties of $1.3 million. When comparing September 30, 2024 to September 30, 2023, nonperforming assets increased $4.5 million, primarily due to increases in nonaccrual loans of $5.9 million, an increase in repossessed marine loans and assets held for sale of $306 thousand, partially offset by a decrease of $1.7 million in loans 90 days past due and still accruing almost entirely impacted by the merger in the third quarter of 2023.

Total noninterest income for the third quarter of 2024 was $7.3 million, a decrease of $1.2 million from $8.4 million for the second quarter of 2024 and a decrease $7.7 million from $15.0 million for the third quarter of 2023. The decrease from the second quarter of 2024 was lower revenues from mortgage banking and Mid-Maryland Title Company, Inc. (the "title Company"). The Bank's mortgage revenue declined $806 thousand due to lower interest rates which decreased the value of mortgage servicing rights $686 thousand and also drove higher prepayment rates. The title company revenues declined due to lower settlement activity than the prior quarter.

Total noninterest expense of $34.1 million for the third quarter of 2024 increased $615 thousand when compared to the second quarter of 2024 expense of $33.5 million and decreased $13.0 million when compared to the third quarter of 2023 expense of $47.2 million. The increase from the second quarter of 2024 was primarily due to one time data processing costs related to the fraud incident in the first quarter of 2024 and other fraud expenses. The decrease from the third quarter of 2023 was primarily due to one time merger related expenses that were incurred in 2023 partially offset by an increase in expenses due to the operation of a larger branch network and employee base due to the merger, which significantly impacted almost all expense line items. In addition, despite the increased size, the Company has prudently reduced its staff by approximately 72 FTE's since the consummation of the merger. The efficiency ratio for the third quarter of 2024 when compared to the second quarter of 2024 and the third quarter of 2023 was 67.49%, 66.23% and 77.81%, respectively. Furthermore, non-GAAP efficiency ratios(1) for the same periods were 62.10%, 61.05% and 54.89%, respectively. The net operating expense ratio, which is non-interest expense less non-interest income divided by average assets, for the third quarter 2024 was 1.84%, compared to 1.73% and 2.21% for the second quarter of 2024 and the third quarter of 2023, respectively. The non-GAAP net operating expense ratio(1), which excludes core deposit intangible amortization and non-recurring activity, for the third quarter 2024 was 1.65%, compared to 1.55% and 1.48% for the second quarter of 2024 and the third quarter of 2023, respectively.

Review of Nine Month Financial Results

Net interest income for the first nine months of 2024 was $126.5 million, an increase of $32.8 million, or 34.9%, when compared to the first nine months of 2023. The increase in net interest income was primarily due to an increase in total interest income of $76.0 million, or 53.2%, which included an increase in interest and fees on loans of $73.8 million, or 57.4%. The increase of interest and fees on loans was primarily due to the increase in the average balance of loans of $1.4 billion, or 42.3%, and an increase in net accretion income of $5.5 million due to the merger. Increases to net interest income were partially offset by increased total interest expense of $43.2 million, or 87.9%, primarily due to increases in the cost of funds and in the average balance of interest-bearing deposits of $1.0 billion, or 38.1%. All of the increases in average balances were largely due to the merger.

The Company's net interest margin remained flat at 3.12% for the nine months ended September 30, 2024 and 2023. Margins were flat as more rapid increases in rates on interest-bearing liabilities were offset by lower increases in interest-earning assets yields and larger balances in noninterest-bearing deposits. The increases in the average balance and rates paid on interest-bearing deposits of $1.0 billion and 104 bps, respectively, were partially offset by increases in  the average balance and yields earned on average earning assets of $1.4 billion and 64 bps, respectively. Additionally, margins were positively impacted as average balances of noninterest-bearing deposits increased $424.9 million, or 43.2% from 25.9% of average funding for the nine months ended September 30, 2023 to 27.2% of average funding for the nine months ended September 30, 2024. Net accretion income impacted net interest margin by 29 bps and 21 bps for the nine months ended September 30, 2024 and 2023, respectively.

The provision for credit losses for the nine months ended September 30, 2024 and 2023 was $4.0 million and $30.1 million, respectively. The decrease in the provision for credit losses was due to higher levels of reserves required by the Company's CECL model related to the merger in 2023. Net charge-offs for the nine months ended September 30, 2024 were $3.0 million compared to net recoveries of $1.5 million for the nine months ended September 30, 2023.

Total noninterest income for the nine months ended September 30, 2024 decreased $3.3 million or 13.0%, when compared to the same period in 2023. The decrease was primarily due to lower trust and investment fee income of $1.1 million and one-time third quarter 2023 bargain purchase income of $8.8 million offset by $2.2 million of losses on sale of investment securities, both a direct result of the merger with TCFC in the third quarter of 2023.

Total noninterest expense for the nine months ended September 30, 2024 increased $14.6 million, or 16.3%, when compared to the same period in 2023. Almost all noninterest expense line items increased as a result of the credit card fraud losses and the expanded operations of the newly combined Company. There were no merger-related expenses and $4.7 million of credit card fraud losses for the nine months ended September 30, 2024, compared to $16.8 million expenses and no fraud losses for the nine months ended September 30, 2023, respectively. The Company continues to focus on streamlining processes to unlock operational efficiencies and reduce overall noninterest expenses.

Shore Bancshares Information

Shore Bancshares is a financial holding company headquartered in Easton, Maryland and is the parent company of Shore United Bank, N.A. Shore Bancshares engages in title work related to real estate transactions through its wholly-owned subsidiary, Mid-Maryland Title Company, Inc. and in trust and wealth management services through Wye Financial Partners, a division of Shore United Bank, N.A. 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. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; recent adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments; changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing wars in Ukraine and the Middle East; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding debt ceiling and the federal budget; the impact of recent or future changes in FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount, including any special assessments; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; the Company's ability to remediate the existing material weaknesses identified in its internal control over financial reporting; the effectiveness of the Company's internal control over financial reporting and disclosure controls and procedures; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; and other factors that may affect our future results. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's 2023 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") and available at the SEC's Internet site (http://www.sec.gov).

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 (Unaudited)




For the Three Months Ended September 30,


For the Nine Months Ended September 30,

(Dollars in thousands, except per share data)


2024


2023


 Change


2024


2023


Change














PROFITABILITY FOR THE PERIOD













Net interest income


$            43,263


$            45,622


(5.2) %


$          126,538


$            93,782


34.9 %

Provision for credit losses


1,470


28,176


(94.8)


3,958


30,056


(86.8)

Noninterest income


7,287


14,984


(51.4)


22,294


25,613


(13.0)

Noninterest expense


34,114


47,158


(27.7)


104,311


89,661


16.3

Income before income taxes


14,966


(14,728)


201.6


40,563


(322)


12694.3

Income tax expense


3,777


(4,991)


175.7


9,956


(1,060)


1039.2

Net income


$            11,189


$           (9,737)


214.9


$            30,607


$                738


4047.7














Return on average assets


0.77 %


(0.67) %


144 bp


0.70 %


0.02 %


68 bp

Return on average assets excluding amortization of
intangibles, merger related expenses and credit card fraud
losses - Non-GAAP (1) (2)


0.90


0.01


89


0.91


0.49


42

Return on average equity


8.41


(7.25)


1,566


7.84


0.24


760

Return on average tangible equity - Non-GAAP (1), (2)


12.37


1.74


1,063


12.83


6.27


656

Interest rate spread


2.06


2.61


(55)


2.18


2.46


(28)

Net interest margin


3.17


3.35


(18)


3.12


3.12


—

Efficiency ratio - GAAP


67.49


77.81


(1,032)


70.09


75.10


(501)

Efficiency ratio - Non-GAAP (1)


62.10


54.89


721


61.83


54.98


685

Non-interest income to average assets


0.50


1.03


(53)


0.51


0.80


(29)

Non-interest expense to average assets


2.34


3.24


(90)


2.40


2.79


(39)

Net operating expense to average assets - GAAP


1.84


2.24


(40)


1.89


3.00


(111)

Net operating expense to average assets - Non-GAAP (1)


1.65


1.48


17


1.61


1.74


(13)














PER SHARE DATA













Basic and diluted net income per common share


$                0.34


$             (0.29)


214.3 %


$               0.92


$               0.03


2938.3 %














Dividends paid per common share


$                0.12


$                0.12


— %


$               0.36


$               0.36


— %

Book value per common share at period end


16.00


15.14


5.7







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


12.88


11.70


10.1







Market value at period end


13.99


10.52


33.0







Market range:













  High


14.99


13.37


12.1


14.99


18.15


(17.4)

  Low


11.03


10.27


7.4


10.06


10.27


(2.0)














AVERAGE BALANCE SHEET DATA













Loans


$        4,734,001


$        4,562,748


3.8 %


$       4,698,694


$       3,301,926


42.3 %

Investment securities


656,375


778,744


(15.7)


672,533


693,382


(3.0)

Earning assets


5,435,311


5,404,572


0.6


5,427,713


4,025,597


34.8

Assets


5,810,492


5,769,312


0.7


5,808,153


4,298,943


35.1

Deposits


5,086,348


5,066,886


0.4


5,097,951


3,655,684


39.5

Short-term and Long Term FHLB advances


83,500


70,348


18.7


77,113


148,546


(48.1)

Subordinated Debt & TRUPS


72,946


71,907


1.4


72,682


52,839


37.6

Stockholders' equity


529,155


533,114


(0.7)


521,564


419,801


24.2





(1)     See the reconciliation of GAAP and Non-GAAP Measures table.

(2)     This ratio excludes merger related expenses. See the reconciliation of GAAP and Non-GAAP Measures table. 

 

Shore Bancshares, Inc.

Financial Highlights (Unaudited) - Continued




For the Three Months Ended September 30,


For the Nine Months Ended September 30,

(Dollars in thousands, except per share data)


2024


2023


 Change


2024


2023


Change














CREDIT QUALITY DATA













Net charge-offs


$              1,379


$              1,449


(4.8) %


$              2,995


$             1,519


97.2 %














Nonaccrual loans


$            14,844


$              8,982


65.3 %







Loans 90 days past due and still accruing


454


2,149


(78.9)







Other real estate owned and Repossessed Property


485


179


170.9







Total nonperforming assets


15,783


11,310


39.5







Borrowers experiencing financial difficulty ("BEFDs")
(still accruing)


—


—


—







Total nonperforming assets and BEFDs modifications


$            15,783


$            11,310


39.5




















CAPITAL AND CREDIT QUALITY RATIOS













Period-end equity to assets


9.01 %


8.79 %


22 bp







Period-end tangible equity to tangible assets - Non-
GAAP (1)


7.39


6.93


46




















Annualized net charge-offs to average loans


0.12 %


0.13 %


(1) bp


0.09 %


0.06 %


3 bp














Allowance for credit losses as a percent of:













Period-end loans


1.24 %


1.24 %


— bp







Nonaccrual loans


395.24


635.17


(23,993)







Nonperforming assets


371.72


504.43


(13,271)







Accruing BEFDs modifications


—


—


—







Nonperforming assets and accruing BEFDs


371.72


504.43


(13,271)




















As a percent of total loans:













Nonaccrual loans


0.31 %


0.19 %


12 bp




















As a percent of total loans, other real estate owned, and
repossessed property













Nonperforming assets


0.33 %


0.24 %


9 bp




















As a percent of total assets:













Nonaccrual loans


0.25 %


0.16 %


9 bp







Nonperforming assets


0.27 %


0.20 %


7








(1)     See the reconciliation of GAAP and Non-GAAP Measures table. 

 

Shore Bancshares, Inc.

Consolidated Balance Sheets (Unaudited)









September 30, 2024


September 30, 2024









compared to


compared to

(In thousands, except per share data)


September 30, 2024


December 31, 2023


September 30, 2023


December 31, 2023


September 30, 2023












ASSETS











Cash and due from banks


$                  52,363


$                63,172


$                68,097


(17.1) %


(23.1) %

Interest-bearing deposits with other banks


131,258


309,241


40,612


(57.6)


223.2

Cash and cash equivalents


183,621


372,413


108,709


(50.7)


68.9

Investment securities available for sale (at fair value)


133,339


110,521


79,143


20.6


68.5

Investment securities held to maturity (net of allowance
for credit losses of $101 (September 30, 2024), $94
(December 31, 2023), $126 (September 30, 2023)) at
amortized cost)


484,583


513,188


523,051


(5.6)


(7.4)

Equity securities, at fair value


5,950


5,703


5,434


4.3


9.5

Restricted securities


20,253


17,900


13,361


13.1


51.6

Loans held for sale, at fair value


26,877


8,782


14,725


206.0


82.5

Loans held for investment


4,733,909


4,641,010


4,617,719


2.0


2.5

  Less: allowance for credit losses


(58,669)


(57,351)


(57,051)


(2.3)


(2.8)

Loans, net


4,675,240


4,583,659


4,560,668


2.0


2.5

Premises and equipment, net


81,663


82,386


81,149


(0.9)


0.6

Goodwill


63,266


63,266


63,266


—


—

Other intangible assets, net


40,609


48,090


50,685


(15.6)


(19.9)

Other real estate owned, net


179


179


179


—


—

Repossessed property, net


306


—


—


—


—

Assets held for sale


1,387


—


—


—


—

Mortgage servicing rights, at fair value


5,309


5,926


5,890


(10.4)


(9.9)

Right of use assets, net


11,384


12,487


12,741


(8.8)


(10.7)

Cash surrender value on life insurance


103,729


101,704


100,950


2.0


2.8

Accrued interest receivable


19,992


19,217


15,683


4.0


27.5

Deferred income taxes


32,191


40,707


45,346


(20.9)


(29.0)

Other assets


27,826


24,790


24,392


12.2


14.1

Total assets


$             5,917,704


$           6,010,918


$            5,705,372


(1.6)


3.7












LIABILITIES











Noninterest-bearing deposits


$             1,571,393


$           1,258,037


$            1,211,401


24.9 %


29.7 %

Interest-bearing deposits


3,654,330


4,128,083


3,897,343


(11.5)


(6.2)

Total deposits


5,225,723


5,386,120


5,108,744


(3.0)


2.3












Advances from FHLB - long-term


50,000


—


—


—


—

Guaranteed preferred beneficial interest in junior
subordinated debentures ("TRUPS")


29,768


29,530


29,451


0.8


1.1

Subordinated debt


43,688


43,139


42,956


1.3


1.7

Total borrowings


123,456


72,669


72,407


69.9


70.5

Lease liabilities


11,816


12,857


13,082


(8.1)


(9.7)

Accrued expenses and other liabilities


23,438


28,137


9,561


(16.7)


145.1

Total liabilities


$             5,384,433


$           5,499,783


$            5,203,794


(2.1)


3.5












STOCKHOLDERS' EQUITY











Common stock, par value $0.01; authorized 50,000,000
shares


$                      333


$                    332


$                     331


0.3


0.6

Additional paid in capital


357,580


356,007


355,575


0.4


0.6

Retained earnings


180,884


162,290


155,781


11.5


16.1

Accumulated other comprehensive loss


(5,526)


(7,494)


(10,109)


26.3


45.3

Total stockholders' equity


533,271


511,135


501,578


4.3


6.3

Total liabilities and stockholders' equity


$             5,917,704


$           6,010,918


$            5,705,372


(1.6)


3.7












Period-end common shares outstanding


$                  33,327


$                33,162


$                33,136


0.5


0.6

Book value per common share


$                        16


$                  15.41


$                  15.14


3.8


5.7

 

Shore Bancshares, Inc.

Consolidated Statements of Income (Unaudited)




For the Three Months Ended September 30,


For the Nine Months Ended September 30,

(In thousands, except per share data)


2024


2023


% Change


2024


2023


% Change














INTEREST INCOME













Interest and fees on loans


$           69,157


$           64,869


6.6 %


$         202,203


$         128,424


57.4 %

Interest on investment securities:













  Taxable


4,962


5,047


(1.7)


14,611


12,840


13.8

  Tax-exempt


6


27


(77.8)


18


41


(56.1)

Interest on federal funds sold


—


92


(100.0)


—


92


(100.0)

Interest on deposits with other banks


564


1,213


(53.5)


2,102


1,546


36.0

Total interest income


$           74,689


$           71,248


4.8


$         218,934


$         142,943


53.2














INTEREST EXPENSE













Interest on deposits


$           28,856


$           23,473


22.9


$           84,938


$           40,668


108.9

Interest on short-term borrowings


491


692


(29.0)


2,131


5,501


(61.3)

Interest on long-term borrowings


2,079


1,461


42.3


5,327


2,992


78.0

Total interest expense


$           31,426


$           25,626


22.6


$           92,396


$           49,161


87.9














NET INTEREST INCOME


$           43,263


$           45,622


(5.2)


$         126,538


$           93,782


34.9

Provision for credit losses


1,470


28,176


(94.8)


3,958


30,056


(86.8)














NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES


$           41,793


$           17,446


139.6


$         122,580


$           63,726


92.4














NONINTEREST INCOME













Service charges on deposit accounts


$             1,543


$             1,505


2.5


$             4,543


$             3,981


14.1

Trust and investment fee income


880


1,933


(54.5)


2,510


2,764


(9.2)

Loss on sales and calls of investment securities


—


(2,166)


100.0


—


(2,166)


100.0

Interchange credits


1,711


1,557


9.9


5,015


4,081


22.9

Mortgage-banking revenue


1,177


1,377


(14.5)


3,961


3,408


16.2

Title Company revenue


100


89


12.4


344


412


(16.5)

Bargain purchase gain


—


8,816


(100.0)


—


8,816


(100.0)

Other noninterest income


1,876


1,873


0.2


5,921


4,317


37.2

Total noninterest income


$             7,287


$           14,984


(51.4)


$           22,294


$           25,613


(13.0)

 

Shore Bancshares, Inc.

Consolidated Statements of Income (Unaudited) - Continued




For the Three Months Ended September 30,


For the Nine Months Ended September 30,

(In thousands, except per share data)


2024


2023


% Change


2024


2023


% Change














NONINTEREST EXPENSE













Salaries and wages


$           13,197


$           14,183


(7.0) %


$           38,355


$           31,822


20.5 %

Employee benefits


3,326


3,607


(7.8)


11,015


8,968


22.8

Occupancy expense


2,384


2,245


6.2


7,232


5,463


32.4

Furniture and equipment expense


876


750


16.8


2,681


1,761


52.2

Data processing


3,081


2,485


24.0


8,925


6,022


48.2

Directors' fees


443


295


50.2


1,097


730


50.3

Amortization of intangible assets


2,336


2,634


(11.3)


7,482


3,510


113.2

FDIC insurance premium expense


1,160


618


87.7


3,400


1,747


94.6

Legal and professional fees


1,362


1,217


11.9


4,315


2,926


47.5

Fraud losses (1)


673


262


156.9


5,237


376


1292.8

Merger related expenses


—


14,866


(100.0)


—


16,754


(100.0)

Other noninterest expenses


5,276


3,996


32.0


14,572


9,582


52.1

Total noninterest expense


$           34,114


$           47,158


(27.7)


104,311


89,661


16.3














Income (loss) before income taxes


$           14,966


$        (14,728)


201.6


40,563


(322)


12694.3

Income tax expense (benefit)


3,777


(4,991)


175.7


9,956


(1,060)


1039.2

NET INCOME (LOSS)


$           11,189


$          (9,737)


214.9


$           30,607


$                738


4047.7














Weighted average shares outstanding - basic


33,318


33,129


0.6


33,247


24,354


36.5

Weighted average shares outstanding - diluted


33,339


33,129


0.6


33,255


24,354


36.5














Basic net income (loss) per common share


$               0.34


$            (0.29)


214.3


$               0.92


$               0.03


2938.3

Diluted net income (loss) per common share


$               0.34


$            (0.29)


214.3


$               0.92


$               0.03


2938.3














Dividends paid per common share


$               0.12


$               0.12


—


$               0.36


$               0.36


—






(1)

Fraud losses for the third quarter of 2024 and nine months ended September 30, 2024 include $337 thousand and $4.7 million in losses related to the one-time online credit card account opening credit card event. The third quarter expense of $337 thousand was related to non-recurring data processing charges to close the fraudulent accounts. 

 

Shore Bancshares, Inc.

Consolidated Average Balance Sheets (Unaudited)




For the Three Months Ended


For the Three Months Ended



September 30, 2024


September 30, 2023


June 30, 2024

(Dollars in thousands)


Average Balance


Interest


Yield/Rate


Average Balance


Interest


Yield/Rate


Average Balance


Interest


Yield/Rate




















Earning assets



















Loans (1), (2), (3)



















Consumer real estate


$         1,412,086


$       20,723


5.84 %


$        1,141,707


$       14,548


5.06 %


$        1,388,168


$       19,278


5.59 %

Commercial real estate


2,749,395


39,858


5.77


2,831,569


40,536


5.68


2,738,693


39,370


5.78

Commercial


210,728


3,732


7.05


233,756


5,315


9.02


216,809


3,926


7.28

Consumer


320,960


4,306


5.34


332,486


4,183


4.99


327,781


4,265


5.23

State and political


1,883


32


6.76


929


10


4.27


2,331


30


5.18

Credit Cards


7,132


170


9.48


6,164


149


9.59


8,378


201


9.65

Other


31,817


416


5.20


16,137


201


4.94


24,350


302


4.99

Total Loans


4,734,001


69,237


5.82


4,562,748


64,942


5.65


4,706,510


67,372


5.76




















Investment securities



















Taxable


655,718


4,962


3.03


778,081


5,047


2.59


705,421


5,230


2.97

Tax-exempt (1)


657


8


4.87


663


34


20.51


658


8


4.86

Interest-bearing deposits


44,935


564


4.99


55,547


1,213


8.66


47,372


578


4.91

Total earning assets


5,435,311


74,771


5.47


5,404,572


71,328


5.24


5,459,961


73,188


5.39

Cash and due from banks


46,996






51,714






45,141





Other assets


386,700






359,726






391,854





Allowance for credit losses


(58,515)






(46,700)






(57,628)





Total assets


$         5,810,492






$        5,769,312






$        5,839,328











































Interest-bearing liabilities



















  Demand deposits


$            581,517


$         5,472


3.74 %


$        1,056,956


$         6,659


2.50 %


$           711,138


$         5,550


3.14 %

  Money market and savings deposits


1,670,210


10,420


2.48


1,572,920


6,810


1.72


1,690,157


10,291


2.45

  Brokered deposits


25,829


222


3.42


98,649


1,225


4.93


7,753


94


4.88

  Certificates of deposit $100,000 or more


797,439


8,433


4.21


706,642


6,272


3.52


758,211


7,581


4.02

  Other time deposits


431,834


4,309


3.97


285,743


2,507


3.48


417,331


4,069


3.92

  Interest-bearing deposits (4)


3,506,829


28,856


3.27


3,720,910


23,473


2.50


3,584,590


27,585


3.10

  Advances from FHLB - short-term


33,500


491


5.83


70,348


692


3.90


113,549


1,584


5.61

  Advances from FHLB - long-term


50,000


625


4.97


—


—


—


30,220


346


4.60

  Subordinated debt and Guaranteed preferred beneficial interest in junior
  subordinated debentures ("TRUPS") (4)


72,946


1,454


7.93


71,907


1,461


8.06


72,680


1,451


8.03

  Total interest-bearing liabilities


3,663,275


31,426


3.41


3,863,165


25,626


2.63


3,801,039


30,966


3.28

Noninterest-bearing deposits


1,579,519






1,345,976






1,480,384





Accrued expenses and other liabilities


38,543






27,057






38,427





Stockholders' equity


529,155






533,114






519,478





Total liabilities and stockholders' equity


$         5,810,492






$        5,769,312






$        5,839,328
























Net interest income




$       43,345






$       45,702






$       42,222






















Net Interest Spread






2.06 %






2.61 %






2.11 %

Net Interest Margin






3.17 %






3.35 %






3.11 %

Cost of Funds






2.38 %






1.95 %






2.36 %

Cost of Deposits






2.26 %






1.84 %






2.19 %

Cost of Debt






6.54 %






6.00 %






6.28 %






(1)

All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense.

(2)

Average loan balances include nonaccrual loans.

(3)

Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $5.0 million, $6.1 million and $4.5 million of accretion interest on loans for the three months ended September 30, 2024 and 2023, and June 30, 2024, respectively.

(4)

Interest expense on deposits and borrowing includes amortization of deposit discount and amortization of borrowing fair value adjustments. There were $(287) thousand, $(484) thousand and $(421) thousand of amortization of deposits premium, and $(232) thousand, $(232) thousand, and $(243) thousand of amortization of borrowing fair value adjustments for the three months ended September 30, 2024 and 2023, and June 30, 2024, respectively.

 

Shore Bancshares, Inc.

Consolidated Average Balance Sheets (Unaudited)




For the Nine Months Ended September 30,



2024


2023

(Dollars in thousands)


Average
Balance


Interest


Yield/Rate


Average
Balance


Interest


Yield/Rate














Earning assets













Loans (1), (2), (3)













  Consumer real estate


$      1,387,387


$      58,493


5.63 %


$         990,970


$      35,929


4.85 %

  Commercial real estate


2,736,941


117,832


5.75


1,806,983


71,328


5.28

  Commercial


215,788


11,755


7.28


171,702


9,312


7.25

  Consumer


325,935


12,843


5.26


318,066


11,440


4.81

  State and political


1,896


78


5.50


936


27


3.86

  Credit Cards


7,654


539


9.41


2,077


149


9.59

  Other


23,093


900


5.21


11,192


400


4.78

Total Loans


4,698,694


202,440


5.76


3,301,926


128,585


5.21














Investment securities













Taxable


671,875


14,611


2.90


692,718


12,840


2.47

Tax-exempt (1)


658


23


4.66


664


52


10.44

Interest-bearing deposits


56,486


2,102


4.97


27,750


1,546


7.45

Total earning assets


5,427,713


219,176


5.39


4,025,597


143,115


4.75

Cash and due from banks


47,211






36,831





Other assets


391,106






271,721





Allowance for credit losses


(57,877)






(35,206)





Total assets


$      5,808,153






$      4,298,943


















Interest-bearing liabilities













Demand deposits


$         800,258


$      17,384


2.90 %


$         813,834


$      13,808


2.27 %

Money market and savings deposits


1,676,457


30,871


2.46


1,163,595


11,709


1.35

Brokered deposits


16,642


567


4.55


33,244


1,225


4.93

Certificates of deposit $100,000 or more


774,112


23,689


4.09


421,852


9,685


3.07

Other time deposits


422,212


12,427


3.93


239,834


4,241


2.36

Interest-bearing deposits (4)


3,689,681


84,938


3.07


2,672,359


40,668


2.03

Advances from FHLB - short-term


50,288


2,131


5.66


148,546


5,501


4.95

Advances from FHLB - long-term


26,825


971


4.84


—


—


—

Subordinated debt and Guaranteed preferred beneficial interest in junior
subordinated debentures ("TRUPS") (4)


72,682


4,356


8.01


52,839


2,992


7.57

Total interest-bearing liabilities


3,839,476


92,396


3.21


2,873,744


49,161


2.29

Noninterest-bearing deposits


1,408,270






983,325





Accrued expenses and other liabilities


38,843






22,073





Stockholders' equity


521,564






419,801





Total liabilities and stockholders' equity


$      5,808,153






$      4,298,943


















Net interest income




$    126,780






$      93,954
















Net Interest Spread






2.18 %






2.46 %

Net Interest Margin






3.12 %






3.12 %

Cost of Funds






2.35 %






1.70 %

Cost of Deposits






2.23 %






1.49 %

Cost of Debt






6.65 %






5.64 %






(1)

All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense.

(2)

Average loan balances include nonaccrual loans.

(3)

Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $13.7 million and $7.0 million of accretion interest on loans for the nine months ended September 30, 2024 and 2023, respectively.

(4)

Interest expense on deposits and borrowing includes amortization of deposit premiums and amortization of borrowing fair value adjustment. There were $(1.1) million of amortization of deposit discounts and $(308) thousand of amortization of deposit premium, and $(695) thousand and $(325) thousand of amortization of borrowing fair value adjustment for the nine months ended September 30, 2024 and 2023, respectively.

 

Shore Bancshares, Inc.

Financial Highlights By Quarter (Unaudited)




3rd Quarter


2nd Quarter


1st Quarter


4th Quarter


3rd Quarter


Q3 2024


Q3 2024



2024


2024


2024


2023


2023


compared to


compared to

(Dollars in thousands, except per share data)


Q3 2024


Q2 2024


Q1 2024


Q4 2023


Q3 2023


Q2 2024


Q3 2023

PROFITABILITY FOR THE PERIOD















Taxable-equivalent net interest income


$         43,345


$         42,222


$         41,214


$           41,606


$         45,702


2.7 %


(5.2) %

Less: Taxable-equivalent adjustment


82


82


79


81


80


—


2.5

Net interest income


43,263


42,140


41,135


41,525


45,622


2.7


(5.2)

Provision for credit losses


1,470


2,081


407


896


28,176


(29.4)


(94.8)

Noninterest income


7,287


8,440


6,567


7,548


14,984


(13.7)


(51.4)

Noninterest expense


34,114


33,499


36,698


33,670


47,158


1.8


(27.7)

Income/(loss) before income taxes


14,966


15,000


10,597


14,507


(14,728)


(0.2)


201.6

Income tax expense/ (benefit)


3,777


3,766


2,413


4,017


(4,991)


0.3


175.7

Net income/ (loss)


$         11,189


$         11,234


$           8,184


$           10,490


$        (9,737)


(0.4)


214.9
















Return on average assets


0.77 %


0.77 %


0.57 %


0.72 %


(0.67) %


 — bp


 144 bp

Return on average assets excluding amortization of intangibles, fraud losses and merger related
expenses - Non-GAAP (1), (2)


0.90


0.91


0.94


0.88


0.01


(1)


89

Return on average equity


8.41


8.70


6.38


8.21


(7.25)


(29)


1,566

Return on average tangible equity - Non-GAAP (1), (2)


12.37


12.85


13.39


12.88


1.74


(48)


1,063

Net interest margin


3.17


3.11


3.08


3.09


3.35


6


(18)

Efficiency ratio - GAAP


67.49


66.23


76.93


68.61


77.81


126


(1,032)

Efficiency ratio - Non-GAAP (1)


62.10


61.05


62.37


61.99


54.89


105


721
















PER SHARE DATA















Basic and diluted net income/(loss) per common share


$             0.34


$             0.34


$             0.25


$              0.32


$          (0.29)


(0.7) %


215.8 %
















Dividends paid per common share


0.12


0.12


0.12


0.12


0.12


—


—

Book value per common share at period end


16.00


15.74


15.51


15.41


15.14


1.7


5.7

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


12.88


12.54


12.24


12.06


11.70


2.7


10.1

Market value at period end


13.99


11.45


11.50


14.25


10.52


22.2


33.0

Market range:















  High


14.99


11.90


14.38


14.51


13.37


26.0


12.1

  Low


11.03


10.06


10.56


9.66


10.27


9.6


7.4





(1)     See the reconciliation of GAAP and Non-GAAP Measures table.

(2)     This ratio excludes merger related expenses. See the reconciliation of GAAP and Non-GAAP Measures table 

 

Shore Bancshares, Inc.

Financial Highlights By Quarter (Unaudited) - Continued




3rd Quarter


2nd Quarter


1st Quarter


4th Quarter


3rd Quarter


Q3 2024


Q3 2024



2024


2024


2024


2023


2023


compared to


compared to

(Dollars in thousands, except per share data)


Q3 2024


Q2 2024


Q1 2024


Q4 2023


Q3 2023


Q2 2024


Q3 2023
















AVERAGE BALANCE SHEET DATA















Loans


$     4,734,001


$     4,706,510


$     4,655,183


$      4,639,467


$     4,562,748


0.58 %


3.75 %

Investment securities


656,375


706,079


655,323


619,920


778,744


(7.04)


(15.71)

Earning assets


5,435,311


5,459,961


5,387,782


5,339,833


5,404,572


(0.45)


0.57

Assets


5,810,492


5,839,328


5,774,824


5,745,440


5,769,312


(0.49)


0.71

Deposits


5,086,348


5,064,974


5,142,658


5,136,818


5,066,886


0.42


0.38

Short-term and Long Term FHLB advances


83,500


143,769


4,000


1,141


70,348


(41.92)


18.70

Subordinated Debt & TRUPS


72,946


72,680


72,418


72,155


71,907


0.37


1.44

Stockholders' equity


529,155


519,478


515,976


507,040


533,114


1.86


(0.74)
















CREDIT QUALITY DATA















Net charge offs


$           1,379


$              886


$              565


$               500


$           1,449


55.64 %


(4.83) %
















Nonaccrual loans


$         14,844


$         14,837


$         12,776


$           12,784


$           8,982


0.05 %


65.26 %

Loans 90 days past due and still accruing


454


414


1,560


738


2,149


9.66


(78.87)

Other real estate owned and repossessed property


485


1,739


2,024


179


179


(72.11)


170.95

Total nonperforming assets


$         15,783


$         16,990


$         16,360


$           13,701


$         11,310


(7.10)


39.55
















 

Shore Bancshares, Inc.

Financial Highlights By Quarter (Unaudited) - Continued




3rd Quarter


2nd Quarter


1st Quarter


4th Quarter


3rd Quarter


Q3 2024


Q3 2024



2024


2024


2024


2023


2023


compared to


compared to

(Dollars in thousands, except per share data)


Q3 2024


Q2 2024


Q1 2024


Q4 2023


Q3 2023


Q2 2024


Q3 2023
















CAPITAL AND CREDIT QUALITY RATIOS















Period-end equity to assets


9.01 %


8.92 %


8.84 %


8.50 %


8.79 %


9 bp


 22 bp

Period-end tangible equity to tangible assets - Non-GAAP (1)


7.39


7.23


7.11


6.78


6.93


16


46
















Annualized net charge-offs to average loans


0.12 %


0.08 %


0.05 %


0.04 %


0.13 %


4 bp


(1) bp
















Allowance for credit losses as a percent of:















Period-end loans


1.24 %


1.24 %


1.23 %


1.24 %


1.24 %


— bp


— bp

Period-end loans 


1.24


1.24


1.23


1.24


1.24


—


—

Nonaccrual loans


395.24


394.14


448.78


448.62


635.17


110


(23,993)

Nonperforming assets


371.72


344.19


350.46


418.59


504.43


2,753


(13,271)
















As a percent of total loans:















Nonaccrual loans


0.31 %


0.32 %


0.27 %


0.28 %


0.19 %


(1) bp


12 bp
















As a percent of total loans, other real estate owned, and repossessed property















Nonperforming assets


0.33 %


0.36 %


0.35 %


0.30 %


0.24 %


(3) bp


9 bp
















As a percent of total assets:















Nonaccrual loans


0.25 %


0.25 %


0.22 %


0.21 %


0.16 %


— bp


9 bp

Nonperforming assets


0.27


0.29


0.28


0.23


0.20


(2)


7





(1)     See the reconciliation of GAAP and Non-GAAP Measures table.

 

Shore Bancshares, Inc.

Consolidated Balance Sheets (Unaudited)














September 30, 2024


September 30, 2024













compared to


compared to

(In thousands, except per share data)


September 30, 2024


June 30, 2024


March 31, 2024


December 31, 2023


September 30, 2023


December 31, 2023


September 30, 2023
















ASSETS















Cash and due from banks


$                  52,363


$                50,090


$                 43,079


$                 63,172


$                 68,097


(17.1) %


(23.1) %

Interest-bearing deposits with other banks


131,258


88,793


71,481


309,241


40,612


(57.6)


223.2

Cash and cash equivalents


183,621


138,883


114,560


372,413


108,709


(50.7)


68.9
















Investment securities available for sale (at fair value)


133,339


131,594


179,496


110,521


79,143


20.6


68.5

Investment securities held to maturity (net of allowance for credit
losses of $101 (September 30, 2024), $108 (June 30, 2024), $116
(March 31, 2024), $94 (December 31,2023), and $126 (September
30, 2023)) at amortized cost)


484,583


499,431


503,822


513,188


523,051


(5.6)


(7.4)

Equity securities, at fair value


5,950


5,699


5,681


5,703


5,434


4.3


9.5

Restricted securities


20,253


21,725


17,863


17,900


13,361


13.1


51.6
















Loans held for sale, at fair value


26,877


27,829


13,767


8,782


14,725


206.0


82.5
















Loans held for investment


4,733,909


4,705,737


4,648,725


4,641,010


4,617,719


2.0


2.5

Less: allowance for credit losses


(58,669)


(58,478)


(57,336)


(57,351)


(57,051)


(2.3)


(2.8)

Loans, net


4,675,240


4,647,259


4,591,389


4,583,659


4,560,668


2.1


2.5
















Premises and equipment, net


81,663


82,176


83,084


82,386


81,149


(0.9)


0.6

Goodwill


63,266


63,266


63,266


63,266


63,266


—


—

Other intangible assets, net


40,609


42,945


45,515


48,090


50,685


(15.6)


(19.9)

Other real estate owned, net


179


179


179


179


179


—


—

Repossessed property, net


306


1,560


1,845


—


—


—


—

Assets held for sale


1,387


1,387


—


—


—


—


—

Mortgage servicing rights, at fair value


5,309


5,995


5,821


5,926


5,890


(10.4)


(9.9)

Right of use assets, net


11,384


11,762


12,153


12,487


12,741


(8.8)


(10.7)

Cash surrender value on life insurance


103,729


102,969


102,321


101,704


100,950


2.0


2.8

Accrued interest receivable


19,992


19,641


19,541


19,217


15,683


4.0


27.5

Deferred income taxes


32,191


36,078


38,978


40,707


45,346


(20.9)


(29.0)

Other assets


27,826


23,639


26,423


24,790


24,392


12.2


14.1
















Total assets


$             5,917,704


$           5,864,017


$            5,825,704


$            6,010,918


$            5,705,372


(1.5)


3.7

 

Shore Bancshares, Inc.

Consolidated Balance Sheets (Unaudited) - Continued














September 30, 2024


September 30, 2024













compared to


compared to

(In thousands, except per share data)


September 30, 2024


June 30, 2024


March 31, 2024


December 31, 2023


September 30, 2023


December 31, 2023


September 30, 2023
















LIABILITIES















Noninterest-bearing deposits


$             1,571,393


$           1,587,252


$            1,200,680


$            1,258,037


$            1,211,401


24.9 %


29.7

Interest-bearing deposits


3,654,330


3,561,633


3,983,599


4,128,083


3,897,343


(11.5)


(6.2)

Total deposits


5,225,723


5,148,885


5,184,279


5,386,120


5,108,744


(3.0)


2.3
















Advances from FHLB - short-term


—


31,000


—


—


—


—


—

Advances from FHLB - long-term


50,000


50,000


—


—


—


—


—

Guaranteed preferred beneficial interest in junior subordinated
debentures ("TRUPS")


29,768


29,316


29,237


29,158


29,079


2.1


2.4

Subordinated debt


43,688


43,504


43,322


43,139


42,956


1.3


1.7

Total borrowings


123,456


153,820


72,559


72,297


72,035


70.8


71.4
















Lease liabilities


11,816


12,189


12,552


12,857


13,082


(8.5)


(9.7)

Accrued expenses and other liabilities


23,438


26,340


41,086


28,509


9,933


(19.3)


136.0

Total liabilities


5,384,433


5,341,234


5,310,476


5,499,783


5,203,794


(2.2)


3.5
















STOCKHOLDERS' EQUITY















Common stock, par value $0.01; authorized 50,000,000 shares


333


333


332


332


331


0.3


0.6

Additional paid in capital


357,580


356,994


356,464


356,007


355,575


0.4


0.6

Retained earnings


180,884


173,716


166,490


162,290


155,781


10.7


16.1

Accumulated other comprehensive loss


(5,526)


(8,260)


(8,058)


(7,494)


(10,109)


23.8


45.3

Total stockholders' equity


533,271


522,783


515,228


511,135


501,578


4.2


6.3















—

Total liabilities and stockholders' equity


$             5,917,704


$           5,864,017


$            5,825,704


$            6,010,918


$            5,705,372


(1.6)


3.7
















Period-end common shares outstanding


33,327


33,215


33,211


33,162


33,136


0.5


0.6

Book value per common share


$                    16.00


$                  15.74


$                  15.51


$                  15.41


$                  15.14


3.8


5.7

 

Shore Bancshares, Inc.

Consolidated Statements of Income By Quarter (Unaudited)














Q3 2024


Q3 2024













compared to


compared to

(In thousands, except per share data)


Q3 2024


Q2 2024


Q1 2024


Q4 2023


Q3 2023


Q2 2024


Q3 2023
















INTEREST INCOME















Interest and fees on loans


$       69,157


$       67,292


$       65,754


$       65,914


$       64,869


2.8 %


6.6 %

Interest on investment securities:















  Taxable


4,962


5,230


4,419


3,992


5,047


(5.1)


(1.7)

  Tax-exempt


6


6


6


6


27


—


(77.8)

Interest on federal funds sold


—


—


—


—


92


—


(100.0)

Interest on deposits with other banks


564


578


960


1,224


1,213


(2.4)


(53.5)

Total interest income


74,689


73,106


71,139


71,136


71,248


2.2


4.8
















INTEREST EXPENSE















Interest on deposits


28,856


27,585


28,497


28,133


23,473


4.6


22.9

Interest on short-term borrowings


491


1,584


56


16


692


(69.0)


(29.1)

Interest on long-term borrowings


2,079


1,797


1,451


1,462


1,461


15.7


42.3

Total interest expense


31,426


30,966


30,004


29,611


25,626


1.5


22.6
















NET INTEREST INCOME


43,263


42,140


41,135


41,525


45,622


2.7


(5.2)

Provision for credit losses


1,470


2,081


407


896


28,176


(29.4)


(94.8)
















NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES


41,793


40,059


40,728


40,629


17,446


4.3


139.6
















NONINTEREST INCOME















Service charges on deposit accounts


1,543


1,493


1,507


1,519


1,505


3.4


2.5

Trust and investment fee income


880


896


734


844


1,933


(1.8)


(54.5)

Loss on sales and calls of investment securities


—


—


—


—


(2,166)


—


100.0

Interchange credits


1,711


1,717


1,587


1,633


1,557


(0.4)


9.9

Mortgage-banking revenue


1,177


1,983


801


1,105


1,377


(40.7)


(14.5)

Title Company revenue


100


165


78


139


89


(39.4)


12.4

Bargain purchase gain


—


—


—


—


8,816


—


(100.0)

Other noninterest income


1,876


2,186


1,860


2,308


1,873


(14.2)


0.2

Total noninterest income


$         7,287


$         8,440


$         6,567


$         7,548


$       14,984


(13.7)


(51.4)

 

Shore Bancshares, Inc.

Consolidated Statements of Income By Quarter (Unaudited) - Continued














Q3 2024


Q3 2024













compared to


compared to

(In thousands, except per share data)


Q3 2024


Q2 2024


Q1 2024


Q4 2023


Q3 2023


Q2 2024


Q3 2023
















NONINTEREST EXPENSE















Salaries and wages


$      13,197


$      13,307


$      11,852


$      12,823


$      14,183


(0.8) %


(7.0) %

Employee benefits


3,326


3,593


4,097


3,389


3,607


(7.4)


(7.8)

Occupancy expense


2,384


2,432


2,416


2,328


2,245


(2.0)


6.2

Furniture and equipment expense


876


900


904


790


750


(2.7)


16.8

Data processing


3,081


2,978


2,867


2,762


2,485


3.5


24.0

Directors' fees


443


359


295


426


295


23.4


50.2

Amortization of intangible assets


2,336


2,569


2,576


2,595


2,634


(9.1)


(11.3)

FDIC insurance premium expense


1,160


1,089


1,150


1,733


618


6.5


87.7

Other real estate owned expenses, net


—


—


—


—


2


—


(100.0)

Legal and professional fees


1,362


1,354


1,599


1,411


1,217


0.6


11.9

Fraud losses (1)


673


62


4,502


503


262


985.5


156.9

Merger related expenses


—


—


—


602


14,866


—


(100.0)

Other noninterest expenses


5,276


4,856


4,440


4,308


3,994


8.7


32.1

Total noninterest expense


34,114


33,499


36,698


33,670


47,158


1.8


(27.7)
















Income/(loss) before income taxes


14,966


15,000


10,597


14,507


(14,728)


(0.2)


201.6

Income tax expense/(benefit)


3,777


3,766


2,413


4,017


(4,991)


0.3


175.7

NET INCOME/(LOSS)


$      11,189


$      11,234


$        8,184


$      10,490


$     (9,737)


(0.4)


214.9
















Weighted average shares outstanding - basic


33,318


33,234


33,189


33,153


33,129


0.3


0.6

Weighted average shares outstanding - diluted


33,339


33,234


33,191


33,322


33,129


0.3


0.6
















Basic net income/(loss) per common share


$          0.34


$          0.34


$          0.25


$          0.32


$       (0.29)


(0.7)


215.8

Diluted net income/(loss) per common share


$          0.34


$          0.34


$          0.25


$          0.32


$       (0.29)


(0.8)


215.7
















Dividends paid per common share


0.12


0.12


0.12


0.12


0.12


—


—






(1)

Fraud losses for the third quarter of 2024 and first quarter of 2024 include $337 thousand and $4.3 million in losses related to the one-time online credit card account opening credit card event. The third quarter expense of $337 thousand was related to non-recurring data processing charges to close the fraudulent accounts. 

 

Shore Bancshares, Inc.

Consolidated Average Balance Sheets By Quarter (Unaudited)


































Q3 2024


Q2 2024


Q1 2024


Q4 2023


Q3 2023

(Dollars in thousands)


Average
Balance


Interest


Yield/Rate


Average
Balance


Interest


Yield/Rate


Average
Balance


Interest


Yield/Rate


Average
Balance


Interest


Yield/Rate


Average
Balance


Interest


Yield/Rate
































Earning assets































Loans (1), (2), (3)































Consumer real estate


$        1,412,086


$       20,723


5.84 %


$        1,388,168


$       19,278


5.59 %


$        1,361,636


$       18,492


5.46 %


$        1,331,150


$       18,653


5.56 %


$        1,141,707


$       14,548


5.06 %

Commercial real estate


2,749,395


39,858


5.77


2,738,693


39,370


5.78


2,722,600


38,604


5.70


2,728,094


38,730


5.63


2,831,569


40,536


5.68

Commercial


210,728


3,732


7.05


216,809


3,926


7.28


219,884


4,097


7.49


221,342


4,295


7.70


233,756


5,315


9.02

Consumer


320,960


4,306


5.34


327,781


4,265


5.23


329,118


4,272


5.22


333,807


3,859


4.59


332,486


4,183


4.99

State and political


1,883


32


6.76


2,331


30


5.18


1,473


16


4.37


1,290


13


4.00


929


10


4.27

Credit Cards


7,132


170


9.48


8,378


201


9.65


7,457


167


9.01


6,320


166


10.42


6,164


149


9.59

Other


31,817


416


5.20


24,350


302


4.99


13,015


183


5.66


17,464


277


6.29


16,137


201


4.94

Total Loans


4,734,001


69,237


5.82


4,706,510


67,372


5.76


4,655,183


65,831


5.69


4,639,467


65,993


5.64


4,562,748


64,942


5.65
































Investment securities































  Taxable


655,718


4,962


3.03


705,421


5,230


2.97


654,663


4,419


2.70


619,259


3,992


2.58


778,081


5,047


2.59

  Tax-exempt (1)


657


8


4.87


658


8


4.86


660


8


4.85


661


8


4.84


663


34


20.51

Federal funds sold


—


—


—


—


—


—


—


—


—


—


—


—


7,533


92


4.85

Interest-bearing deposits


44,935


564


4.99


47,372


578


4.91


77,276


960


5.00


80,446


1,224


6.04


55,547


1,213


8.66

Total earning assets


5,435,311


74,771


5.47


5,459,961


73,188


5.39


5,387,782


71,218


5.32


5,339,833


71,217


5.29


5,404,572


71,328


5.24

Cash and due from banks


46,996






45,141






49,499






63,506






51,714





Other assets


386,700






391,854






395,023






399,409






359,726





Allowance for credit losses


(58,515)






(57,628)






(57,480)






(57,308)






(46,700)





Total assets


$        5,810,492






$        5,839,328






$        5,774,824






$        5,745,440






$        5,769,312



































































Interest-bearing liabilities































Demand deposits


$            581,517


$          5,472


3.74 %


$            711,138


$          5,550


3.14 %


$        1,110,524


$          6,362


2.30 %


$        1,117,117


$          6,673


2.37 %


$        1,056,956


$          6,659


2.50 %

Money market and savings
deposits


1,670,210


10,420


2.48


1,690,157


10,291


2.45


1,669,074


10,160


2.45


1,605,930


8,330


2.06


1,572,920


6,810


1.72

Brokered deposits


25,829


222


3.42


7,753


94


4.88


20,465


251


4.93


92,840


1,347


5.76


98,649


1,225


4.93

Certificates of deposit
$100,000 or more


797,439


8,433


4.21


758,211


7,581


4.02


762,210


7,675


4.05


701,051


6,898


3.90


706,642


6,272


3.52

Other time deposits


431,834


4,309


3.97


417,331


4,069


3.92


417,362


4,049


3.90


391,820


4,885


4.95


285,743


2,507


3.48

Interest-bearing deposits (4)


3,506,829


28,856


3.27


3,584,590


27,585


3.10


3,979,635


28,497


2.88


3,908,758


28,133


2.86


3,720,910


23,473


2.50

Advances from FHLB -
short-term


33,500


491


5.83


113,549


1,584


5.61


4,000


56


5.63


1,141


16


5.56


70,348


692


3.90

Advances from FHLB -
long-term


50,000


625


4.97


30,220


346


4.60


—


—


—


—


—


—


—


—


—

Subordinated debt and
Guaranteed preferred
beneficial interest in junior
subordinated debentures
("TRUPS") (4)


72,946


1,454


7.93


72,680


1,451


8.03


72,418


1,451


8.06


72,155


1,462


8.04


71,907


1,461


8.06

Total interest-bearing
liabilities


3,663,275


31,426


3.41


3,801,039


30,966


3.28


4,056,053


30,004


2.98


3,982,054


29,611


2.95


3,863,165


25,626


2.63

Noninterest-bearing
deposits


1,579,519






1,480,384






1,163,023






1,228,060






1,345,976





Accrued expenses and
other liabilities


38,543






38,427






39,772






28,286






27,057





Stockholders' equity


529,155






519,478






515,976






507,040






533,114





Total liabilities and
stockholders' equity


$        5,810,492






$        5,839,328






$        5,774,824






$        5,745,440






$        5,769,312




































Net interest income




$       43,345






$       42,222






$       41,214






$       41,606






$       45,702


































Net interest spread






2.06 %






2.11 %






2.34 %






2.34 %






2.61 %

Net interest margin






3.17 %






3.11 %






3.08 %






3.09 %






3.35 %

Cost of Funds






2.38 %






2.36 %






2.31 %






2.25 %






1.95 %

Cost of Deposits






2.26 %






2.19 %






2.23 %






2.17 %






1.84 %

Cost of Debt






6.54 %






6.28 %






7.93 %






8.00 %






6.00 %






(1)

All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense.

(2)

Average loan balances include nonaccrual loans.

(3)

Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $5.0 million, $4.5 million, $4.2 million, $4.8 million and $6.1 million of accretion interest on loans for the three months ended September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively.

(4)

Interest expense on deposits and borrowing includes amortization of deposit premiums and amortization of borrowing fair value adjustment. There were $(287) thousand, $(421) thousand, $(367) thousand, $(1.5) million and $(484) thousand of amortization of deposits premium, and $(232) thousand, $(243) thousand, $(220) thousand, $(232) thousand and $(232) thousand of amortization of borrowing fair value adjustment for the three months ended September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively.

 

Shore Bancshares, Inc.

Reconciliation of Generally Accepted Accounting Principles (GAAP) and Non-GAAP Measures (Unaudited)














YTD


YTD

(In thousands, except per share data)


Q3 2024


Q2 2024


Q1 2024


Q4 2023


Q3 2023


9/30/2024


9/30/2023
















The following reconciles return on average assets, average equity and return on average tangible equity (Note 1):

Net income (loss)


$         11,189


$         11,234


$            8,184


$         10,490


$          (9,737)


$         30,607


$               738

Net income (loss) - annualized (A)


$         44,513


$         45,183


$         32,916


$         41,618


$        (38,632)


$         40,884


$               987
















Net income (loss)


$         11,189


$         11,234


$            8,184


$         10,490


$          (9,737)


$         30,607


$               738

Add: Amortization of intangible assets, net of tax


1,746


1,924


1,989


1,876


1,741


5,646


2,597

Add: Merger Expenses, net of tax


—


—


—


435


9,828


—


12,398

Add: Credit Card Fraud Losses, net of tax


252


—


3,339


—


—


3,516


—

Net income, excluding net amortization of intangible
assets, merger related expenses and credit card fraud
losses


13,187


13,158


13,512


12,801


1,832


39,769


15,733

Net income, excluding net amortization of intangible
assets, merger related expenses and credit card fraud
losses - annualized (B)


$         52,461


$         52,921


$         54,345


$         50,787


$            7,268


$         53,122


$         21,035
















Return on average assets (GAAP)


0.77 %


0.77 %


0.57 %


0.72 %


(0.67) %


0.70 %


0.02 %

Return on average assets excluding net amortization of
intangible assets, merger related expenses and credit
card fraud losses - (Non-GAAP)


0.90 %


0.91 %


0.94 %


0.88 %


0.01 %


0.91 %


0.49 %
















Average assets


$   5,810,492


$    5,839,328


$    5,774,824


$    5,745,440


$    5,769,312


$   5,808,153


$    4,298,943
















Average stockholders' equity (C)


$      529,155


$       519,478


$       515,976


$       507,040


$       533,114


$      521,564


$       419,801

Less: Average goodwill and core deposit intangible


(105,136)


(107,594)


(110,167)


(112,752)


(115,604)


(107,623)


(84,300)

Average tangible equity (D)


$      424,019


$       411,884


$       405,809


$       394,288


$       417,510


$      413,941


$       335,501
















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


8.41 %


8.70 %


6.38 %


8.21 %


(7.25) %


7.84 %


0.24 %

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


12.37 %


12.85 %


13.39 %


12.88 %


1.74 %


12.83 %


6.27 %

 

Shore Bancshares, Inc.

Reconciliation of Generally Accepted Accounting Principles (GAAP) and Non-GAAP Measures (Unaudited) - Continued














YTD


YTD

(In thousands, except per share data)


Q3 2024


Q2 2024


Q1 2024


Q4 2023


Q3 2023


9/30/2024


9/30/2023
















The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio (Note 2):

Noninterest expense (E)


$         34,114


$         33,499


$         36,698


$         33,670


$         47,158


$      104,311


$         89,661

Less: Amortization of intangible assets


(2,336)


(2,569)


(2,576)


(2,595)


(2,634)


(7,482)


(3,510)

Less: Merger Expenses


—


—


—


(602)


(14,866)


—


(16,754)

Less: Credit Card Fraud Losses


(337)


—


(4,323)


—


—


(4,660)


—

Adjusted noninterest expense (F)


$         31,441


$         30,930


$         29,799


$         30,473


$         29,658


$         92,169


$         69,397
















Net interest income (G)


$         43,263


$         42,140


$         41,135


$         41,525


$         45,622


$      126,538


$         93,782

Add: Taxable-equivalent adjustment


82


82


79


81


80


242


172

Taxable-equivalent net interest income (H)


$         43,345


$         42,222


$         41,214


$         41,606


$         45,702


$      126,780


$         93,954
















Noninterest income (I)


$           7,287


$            8,440


$            6,567


$            7,548


$         14,984


$         22,294


$         25,613

Investment securities losses (gains)


—


—


—


—


2,166


—


(2,166)

Less: Bargain purchase gain


—


—


—


—


(8,816)


—


8,816

Adjusted noninterest income (J)


$           7,287


$            8,440


$            6,567


$            7,548


$            8,334


$         22,294


$         32,263
















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


67.49 %


66.23 %


76.93 %


68.61 %


77.81 %


70.09 %


75.10 %

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


62.10 %


61.05 %


62.37 %


61.99 %


54.89 %


61.83 %


54.98 %
















Net operating expense to average assets (GAAP)


1.84 %


1.73 %


2.07 %


1.80 %


2.24 %


1.89 %


3.00 %

Net operating expense to average assets (Non-GAAP)


1.65 %


1.55 %


1.60 %


1.58 %


1.48 %


1.61 %


1.74 %

 

Shore Bancshares, Inc.

Reconciliation of Generally Accepted Accounting Principles (GAAP) and Non-GAAP Measures (Unaudited) - Continued


(In thousands, except per share data)


Q3 2024


Q2 2024


Q1 2024


Q4 2023


Q3 2023












The following reconciles book value per common share and tangible book value per common share (Note 1):

Stockholders' equity (K)


$            533,271


$            522,783


$            515,228


$            511,135


$            501,578

Less: Goodwill and core deposit intangible


(103,875)


(106,211)


(108,781)


(111,356)


(113,951)

Tangible equity (L)


$            429,396


$            416,572


$            406,447


$            399,779


$            387,627












Shares outstanding (M)


33,327


33,215


33,211


33,162


33,136












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


$                 16.00


$                 15.74


$                 15.51


$                 15.41


$                 15.14

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


$                 12.88


$                 12.54


$                 12.24


$                 12.06


$                 11.70












The following reconciles equity to assets and tangible equity to tangible assets (Note 1):

Stockholders' equity (N)


$            533,271


$            522,783


$            515,228


$            511,135


$            501,578

Less: Goodwill and core deposit intangible


(103,875)


(106,211)


(108,781)


(111,356)


(113,951)

Tangible equity (O)


$            429,396


$            416,572


$            406,447


$            399,779


$            387,627












Assets (P)


$         5,917,704


$         5,864,017


$         5,825,704


$         6,010,918


$         5,705,372

Less: Goodwill and core deposit intangible


(103,875)


(106,211)


(108,781)


(111,356)


(113,951)

Tangible assets (Q)


$         5,813,829


$         5,757,806


$         5,716,923


$         5,899,562


$         5,591,421












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


9.01 %


8.92 %


8.84 %


8.50 %


8.79 %

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


7.39 %


7.23 %


7.11 %


6.78 %


6.93 %





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.

 

Shore Bancshares, Inc.

Summary of Loan Portfolio (Unaudited)
 

Portfolio loans are summarized by loan type as follows:


(Dollars in thousands)


September 30, 2024


%


June 30, 2024


%


March 31, 2024


%


December 31, 2023


%


September 30, 2023


%

Portfolio Loans by Loan Type





















Construction


$                337,113


7.12 %


$         327,875


6.97 %


$          299,133


6.43 %


$               299,000


6.44 %


$                328,750


7.12 %

Residential real estate


1,570,998


33.19 %


1,539,590


32.72 %


1,515,134


32.59 %


1,490,438


32.11 %


1,439,464


31.17 %

Commercial real estate


2,276,381


48.09 %


2,287,497


48.60 %


2,272,867


48.90 %


2,286,154


49.27 %


2,283,521


49.45 %

Commercial


225,083


4.75 %


218,987


4.65 %


229,594


4.94 %


229,939


4.95 %


229,474


4.97 %

Consumer


317,149


6.70 %


324,480


6.90 %


325,076


6.99 %


328,896


7.09 %


330,411


7.16 %

Credit Cards


7,185


0.15 %


7,308


0.16 %


6,921


0.15 %


6,583


0.14 %


6,099


0.13 %

Total loans


4,733,909


100.00 %


4,705,737


100.00 %


4,648,725


100.00 %


4,641,010


100.00 %


4,617,719


100.00 %

Less: Allowance for credit losses


(58,669)




(58,478)




(57,336)




(57,351)




(57,051)



Total loans, net


$             4,675,240




$      4,647,259




$       4,591,389




$             4,583,659




$             4,560,668



 

Shore Bancshares, Inc.

Classified Assets and Nonperforming Assets (Unaudited)
 

Classified assets and nonperforming assets are summarized as follows:


(dollars in thousands)


September 30, 2024


June 30, 2024


March 31, 2024


December 31, 2023


September 30, 2023












Classified Loans











Substandard


$                   22,798


$                   17,409


$                   13,403


$                   14,673


$                   10,888

Doubtful


—


—


—


—


—

Loss


—


—


—


—


—

Total Classified Loans


$                   22,798


$                   17,409


$                   13,403


$                   14,673


$                   10,888

Special Mention Loans


14,385


25,549


27,192


28,264


24,931

Total Classified and Special Mention Loans


$                   37,183


$                   42,958


$                   40,595


$                   42,937


$                   35,819












Classified Loans


$                   22,798


$                   17,409


$                   13,403


$                   14,673


$                   10,888

Other Real Estate Owned


179


179


179


179


179

Repossessed Property


306


1,560


1,845


—


—

Classified Securities


—


—


—


—


—

Total Classified Assets


$                   23,283


$                   19,148


$                   15,427


$                   14,852


$                   11,067












Classified Assets to Total Assets


0.39 %


0.33 %


0.26 %


0.25 %


0.19 %












Non-accrual Loans


$                   14,844


$                   14,837


$                   12,776


$                   12,784


$                     8,982

90+ Days Delinquent Accruing


454


414


1,560


738


2,149

Accruing BEFDs Loans ("BEFDs")


—


—


—


—


—

Other Real Estate Owned ("OREO")


179


179


179


179


179

Repossessed Property


306


1,560


1,845


—


—

Total Nonperforming Assets


$                   15,783


$                   16,990


$                   16,360


$                   13,701


$                   11,310












Nonperforming Assets to Total Assets


0.27 %


0.29 %


0.28 %


0.23 %


0.20 %












Total Assets


$             5,917,704


$             5,864,017


$             5,825,704


$             6,010,918


$             5,705,372

 

Shore Bancshares, Inc.

Summary of Deposits (Unaudited)




September 30, 2024


June 30, 2024


March 31, 2024


December 31, 2023


September 30, 2023

(dollars in thousands)


Balance


%


Balance


%


Balance


%


Balance


%


Balance


%

Noninterest-bearing demand


$          1,571,393


30.07 %


$          1,587,252


30.83 %


$          1,200,680


23.15 %


$          1,258,037


23.36 %


$          1,211,401


23.70 %

Interest-bearing:





















Demand


751,533


14.38 %


658,512


12.79 %


1,101,954


21.26 %


1,165,546


21.64 %


1,210,051


23.69 %

Money market deposits


1,297,237


24.82 %


1,337,274


25.97 %


1,358,205


26.20 %


1,430,603


26.56 %


1,179,049


23.08 %

Savings


336,903


6.45 %


352,069


6.84 %


354,098


6.83 %


347,324


6.45 %


371,755


7.28 %

Certificates of deposit


1,268,657


24.28 %


1,213,778


23.57 %


1,169,342


22.56 %


1,184,610


21.99 %


1,136,488


22.25 %

Total interest-bearing


3,654,330


69.93 %


3,561,633


69.17 %


3,983,599


76.85 %


4,128,083


76.64 %


3,897,343


76.30 %






















Total Deposits


$          5,225,723


100.00 %


$          5,148,885


100.00 %


$          5,184,279


100.00 %


$          5,386,120


100.00 %


$          5,108,744


100.00 %

 

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SOURCE Shore Bancshares, Inc.

FAQ

What was Shore Bancshares (SHBI) earnings per share in Q3 2024?

Shore Bancshares reported earnings of $0.34 per diluted share in Q3 2024.

How much was Shore Bancshares (SHBI) net interest income in Q3 2024?

Shore Bancshares reported net interest income of $43.3 million in Q3 2024, an increase of $1.1 million from Q2 2024.

What was Shore Bancshares (SHBI) total deposit balance as of September 30, 2024?

Shore Bancshares reported total deposits of $5.23 billion as of September 30, 2024.

What was Shore Bancshares (SHBI) net interest margin in Q3 2024?

Shore Bancshares' net interest margin was 3.17% in Q3 2024, up from 3.11% in Q2 2024.

Stock SHBI logo
Shore Bancshares Inc

NASDAQ:SHBI

SHBI Rankings

#3116 Ranked by Market Cap
#973 Ranked by Dividends

SHBI Latest News

Oct 30, 2024
Shore Bancshares, Inc. Reports Quarterly Dividend of $0.12 Per Share
Aug 1, 2024
Shore Bancshares, Inc. Reports Quarterly Dividend of $0.12 Per Share
Jul 25, 2024
Shore Bancshares, Inc. Reports Second Quarter and First-Half Financial Results
May 2, 2024
Shore Bancshares, Inc. Reports 2024 First Quarter Financial Results
Feb 2, 2024
Shore Bancshares, Inc. Reports Quarterly Dividend of $0.12 Per Share

SHBI Stock Data

483.07M
33.22M
8.81%
58.62%
0.65%
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