Shore Bancshares Reports Second Quarter and First-Half Results

Rhea-AI Summary

Shore Bancshares (NASDAQ: SHBI) reported a net income of $5.335 million, or $0.43 per diluted share, for Q2 2020, up from $3.118 million in Q1 2020 and $4.228 million in Q2 2019. For the first half of 2020, income from continuing operations was $8.453 million, compared to $8.056 million in H1 2019. The rise in income is attributed to a $2.7 million decrease in noninterest expenses, along with increases in net interest income and noninterest income. Total assets reached $1.720 billion, with a 10.3% increase since the end of 2019, while total deposits increased by 12.2%. The company actively participated in the Paycheck Protection Program, providing loans to small businesses totaling $123 million.

Positive

• Net income increased to $5.335 million in Q2 2020, up from $3.118 million in Q1 2020.
• Total assets increased by $160.3 million, or 10.3%, compared to the end of 2019.
• Total deposits rose by $163.4 million, or 12.2%, since December 31, 2019.
• Successfully provided $123 million in PPP loans to small businesses.

Negative

• Provision for credit losses rose by $650 thousand in Q2 2020 compared to Q1 2020.
• Net interest margin decreased to 3.41% in Q2 2020 from 3.48% in Q1 2020.
• Nonperforming assets were $12.3 million as of June 30, 2020, unchanged from Q1 2020.

EASTON, Md., July 23, 2020 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) (the "Company") reported income from continuing operations of $5.335 million or $0.43 per diluted common share for the second quarter of 2020, compared to income from continuing operations of $3.118 million or $0.25 per diluted common share for the first quarter of 2020, and income from continuing operations of $4.228 million or $0.33 per diluted common share for the second quarter of 2019. Income from continuing operations for the first half of 2020 was $8.453 million or $0.68 per diluted common share, compared to income from continuing operations of $8.056 million or $0.63 per diluted common share for the first half of 2019.

When comparing income from continuing operations for the second quarter of 2020 to the first quarter of 2020, net income increased $2.2 million, primarily due to a decrease in noninterest expenses of $2.7 million. In addition, net interest income and noninterest income increased $513 thousand and $417 thousand, respectively, partially offset by an increase in the provision for credit losses of $650 thousand. When comparing income from continuing operations for the second quarter of 2020 to the second quarter of 2019, net income increased $1.1 million due to a decrease in noninterest expense of $1.3 million, coupled with increases in net interest income of $738 thousand and noninterest income of $160 thousand, partially offset by an increase in the provision for credit losses of $800 thousand.

"During these uncertain times in the midst of the current health and economic crisis, the Company has remained a viable source of strength in our communities," said Lloyd L. "Scott" Beatty, Jr., President and Chief Executive Officer.  "The first half of 2020 has been challenging, but the resolve of our committed team has produced very positive results. Our earnings remain healthy despite increases to our provision for credit losses during the second quarter, deposit growth has been remarkable, loan growth remains on budget, and the Company's strong capital position enables us to weather the current economic climate."  

Ongoing response to COVID-19

Employees
Many of our non-branch personnel have returned to our offices and continue to practice social distancing as the Company has implemented enhanced cleaning and disinfecting procedures across all locations. Most of our Company meetings have transitioned to telephonic or video conferencing. We suspended all unnecessary business-related travel, public events, and meetings with outside parties to promote the safety and well-being of our employees.

Banking Locations
All our branch locations remain open, with normal hours of operation. We have re-opened our branch lobbies to the public with limits on the number of people allowed in the branch at any time.  The drive-thru locations have expanded their capabilities to accommodate an array of transactions for our customers. We notified our customers of our changes in operations as well as promoted the use of online and mobile banking.

Customers
We thank our customers for their commitment and understanding as we continue to find ways to serve them as safely and securely as possible. For our customers impacted by the pandemic, we have provided fee waivers and loan payment deferrals to assist them during this challenging time. The Company has provided total loan deferrals of $221.1 million which consists of 15.7% of the total loan portfolio as of June 30, 2020. The most significant deferrals by loan type or industry were as follows: hospitality of $80.4 million, retail stores of $58.6 million, other commercial of $66.7 million, residential 1-4 family rentals of $10.0 million and restaurants of $5.3 million.

Small Business Administration's Paycheck Protection Program ("PPP")
We remain an SBA preferred lender and are actively participating in the PPP program. From the inception of the program through June 30, 2020, we had provided loans for 1,427 small business customers totaling $123.0 million. We will continue to process applications until the government funding is completely exhausted.

Share Repurchases
We have suspended all share buybacks of our Company's common stock until further notice.

Dividends
We currently expect to maintain our quarterly cash dividends based on our strong capital position.

Balance Sheet Review
Total assets were $1.720 billion at June 30, 2020, a $160.3 million, or 10.3%, increase when compared to $1.559 billion at the end of 2019.  The increase was primarily due to the $158.6 million, or 12.7% increase in gross loans, of which $123.0 million related to PPP loans.  The increase in gross loans was funded by an increase in deposits of $163.4 million, or 12.2%.   

Total deposits increased $163.4 million, or 12.2%, when compared to December 31, 2019.  The increase in total deposits consisted of increases in all deposit categories. Noninterest-bearing deposits increased $86.4 million, checking accounts increased $42.7 million, savings and money market accounts increased $32.7 million and time deposits increased $1.6 million. A significant amount of the PPP loan proceeds resided in deposit accounts as of June 30, 2020. The Company expects these funds to be utilized over the coming weeks and months, which may or may not result in a decline in deposit balances.

Total stockholders' equity increased $7.3 million, or 3.8%, when compared to the end of 2019. At June 30, 2020, the ratio of total equity to total assets was 11.64% and the ratio of total tangible equity to total tangible assets was 10.63%.

Total assets at June 30, 2020 increased $231.0 million, or 15.5%, when compared to total assets at June 30, 2019, primarily the result of loan growth of $167.0 million and an increase in cash and cash equivalents of $87.0 million. Investment securities (including restricted securities) decreased $55.0 million, which was used to partially fund loan growth. 

Total deposits at June 30, 2020 increased $255.7 million, or 20.5%, when compared to June 30, 2019. The increase in total deposits included growth within interest-bearing checking accounts of $112.8 million, noninterest-bearing deposits of $96.1 million, savings and money market accounts of $55.7 million and time deposits of $11.2 million. Brokered deposits of $20.0 million rolled off by June 30, 2020 as they were no longer needed as a funding source. 

Total stockholders' equity increased $8.8 million, or 4.6%, when compared to June 30, 2019.

Review of Quarterly Financial Results
Net interest income was $13.0 million for the second quarter of 2020, compared to $12.5 million for the first quarter of 2020 and $12.3 million for the second quarter of 2019. The increase in net interest income when compared to the first quarter of 2020 was primarily due to the decrease in the average rate paid on interest-bearing deposits of 23bps, coupled with the payoff of FHLB borrowings which reduced interest expense by $101 thousand. The increase in the average balance in noninterest bearing deposits of $67.6 million also contributed to lower interest expense for the quarter by reducing the Company's reliance on interest-bearing sources of funding. The significant growth in the average balance of loans of $110.9 million helped offset the decreased yield on loans of 31bps, which was primarily the result of adding the $123.0 million of PPP loans which had an average yield of 2.36% for the second quarter of 2020, inclusive of the stated interest rate of 1.0% and the net accretion of origination fees and costs. Also impacting total earning assets for the second quarter of 2020 was the decrease in the average balance of taxable investment securities of $21.5 million coupled with the decrease in yield on interest-bearing deposits with other banks of 113bps. Net interest income increased when compared to the second quarter of 2019 due to a decrease in interest expense of $893 thousand, or 36.4%. The decrease in interest expense was the direct result of the significant decline in both long-term and short-term borrowings which both carried higher rates than interest bearing deposits. In addition, the rates paid on interest bearing deposits declined by a combined 37bps.  The average balance of loans increased $153.1 million, when compared to the second quarter of 2019 which provided an additional $196 thousand of interest income, but was offset by the decline in the average balance in taxable securities of $52.0 million and the decrease in the yield on interest-bearing deposits with other banks of 240bps. The Company's net interest margin decreased to 3.41% for the second quarter of 2020 from 3.48% in the first quarter of 2020 and down from 3.54% in the second quarter of 2019. 

The provision for credit losses was $1.0 million for the three months ended June 30, 2020.  The comparable amounts were $350 thousand and $200 thousand for the three months ended March 31, 2020 and June 30, 2019, respectively. The ratio of the allowance for credit losses to period-end loans was 0.79% at June 30, 2020. Excluding PPP loans, the ratio of the allowance for credit losses to period-end loans was 0.86% at June 30, 2020, higher than both the 0.81% at March 31, 2020 and the 0.83% at June 30, 2019. The primary drivers of the increased percentage of the allowance to total loans, excluding PPP loans, and the increase in provision for loan losses as compared to both the prior periods were increases in qualitative factors and, in particular, elevated unemployment statistics, the impact of the COVID-19 pandemic, as well as an increase in loan volume. Net charge-offs were $288 thousand for the second quarter of 2020, compared to $479 thousand for the first quarter of 2020 and $313 thousand for the second quarter of 2019. The charge-offs in the second quarter related to continued workout efforts on nonperforming assets.

At June 30, 2020 and March 31, 2020, nonperforming assets were $12.3 million. Total nonperforming assets were $15.6 million at June 30, 2019. Total nonperforming assets decreased by $8 thousand between the linked quarters, which consisted of an increase in nonaccruals of $109 thousand, offset by a decrease in loans 90 days and still accruing of $117 thousand. Accruing troubled debt restructurings ("TDRs") decreased $132 thousand, or 1.8%, over the same time period. When comparing June 30, 2020 to June 30, 2019, nonperforming assets decreased $3.3 million, or 21.0%, and accruing TDRs decreased $456 thousand, or 5.9%. The decrease in nonperforming assets from June 30, 2019 to June 30, 2020 was due to diligent workout efforts by the Company to reduce nonaccrual loans and other real estate owned properties. The ratio of nonperforming assets and accruing TDRs to total assets was 1.14% at June 30, 2020, 1.25% at March 31, 2020 and 1.56% at June 30, 2019.  In addition, the ratio of accruing TDRs to total loans at June 30, 2020 was 0.52%, compared to 0.58% at March 31, 2020 and 0.63% at June 30, 2019.

Total noninterest income for the second quarter of 2020 increased $417 thousand, or 17.7%, when compared to the first quarter of 2020 and increased $160 thousand, or 6.1%, when compared to the second quarter of 2019. The increase from the first quarter of 2020 was primarily due to sales of available for sale securities at a gain of $347 thousand. The increase from the second quarter of 2019 was due to additional income from BOLI purchased late in the fourth quarter of 2019, offset by lower service charges on deposit accounts and gains on sales of securities.

Total noninterest expense from continuing operations for the second quarter of 2020 decreased $2.7 million, or 26.0%, when compared to the first quarter of 2020 and decreased $1.3 million, or 14.7%, when compared to the second quarter of 2019. The decrease in noninterest expense when compared to the first quarter of 2020 and the second quarter of 2019 was primarily in salaries and wages, due to the increased volume in PPP loans which resulted in heightened FASB 91 costs being deferred for the period. These loan origination costs were deferred at origination along with the related origination fees. The net fees have and will continue to be accreted to interest income as a yield adjustment over the lives of the related PPP loans, which for most was 24 months at the time of origination. The recognition of these deferred fees and costs as a component of interest income will be accelerated upon forgiveness or repayment of the PPP loans. As previously stated, the Company funded 1,427 PPP loans during the second quarter of 2020 and does not anticipate this level of volume resulting in a reduction of salaries and wages expense in future quarters.

Review of Six-Month Financial Results
Net interest income for the first six months of 2020 was $25.5 million, an increase of $862 thousand, or 3.5% when compared to the first six months of 2019.  The increase was due to lower interest expense of $991 thousand which was a result of reduced interest expense on short and long-term borrowings of $455 thousand and lower costs on deposits of $536 thousand. These cost savings in interest expense were partially offset by a decrease in total interest income of $129 thousand. The decrease in interest income was the result of a decline in the average balance in taxable investment securities of $43.8 million, almost entirely offset by an increase in the average balance on loans of $107.3 million, despite a decline in loan yields of 31bps. This resulted in a net interest margin of 3.45% for the first six months of 2020 compared to 3.57% for the first six months of 2019.   

The provision for credit losses for the six months ended June 30, 2020 and 2019 was $1.4 million and $300 thousand, respectively, while net charge-offs were $767 thousand and $338 thousand, respectively.  The increase in provision for credit losses was the result of higher charge-offs in 2020 and qualitative factors related to economic conditions and the COVID-19 pandemic.  The ratio of allowance to total loans decreased over the first six months of the year from 0.84% at December 31, 2019 to 0.79% at June 30, 2020. As previously discussed, this ratio decreased as a result of the PPP loans' inclusion in the balance of total loans. Additionally, a reduction in specific reserves for certain legacy credits through charge-offs during the six months ended June 30, 2020 reduced the allowance to total loans ratio. The general reserve component of the allowance to legacy, non-impaired and non-PPP loans increased from 0.75% at December 31, 2019 to 0.89% at June 30, 2020, primarily resulting from increased qualitative allocations related to the COVID-19 pandemic. The ratio of annualized net charge-offs to average loans was 0.12% for the first half of 2020 and 0.06% for the first half of 2019. Management will continue to evaluate the adequacy of the allowance for credit losses as more economic data becomes available and as changes within the Company's portfolio are known.

Total noninterest income from continuing operations for the six months ended June 30, 2020 increased $324 thousand, or 6.8%, when compared to the same period in 2019. The increase in noninterest income primarily consisted of increases in BOLI income, gains on sales of securities and other fees on bank services, partially offset by a decrease in service charges on deposit accounts. 

Total noninterest expense from continuing operations for the six months ended June 30, 2020 decreased $316 thousand, or 1.7%, when compared to the same period in 2019. The decrease was a result of lower salaries and wages due to FASB 91 deferrals, lower FDIC insurance premiums and other real estate owned expenses, partially offset by higher employee benefit costs. The deferred costs for salaries and wages are being recognized over the lives of the related loans as previously mentioned.

Shore Bancshares Information

Shore Bancshares is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland's Eastern Shore. It is the parent company of Shore United Bank. Shore Bancshares engages in trust and wealth management services through Wye Financial Partners, a division of Shore United Bank.

Additional information is available at www.shorebancshares.com.

Forward-Looking Statements

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

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be fully reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Board's target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and FDIC premiums may increase if the agency experience additional resolution costs.

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) (Dollars in thousands, except per share data)
		For the Three Months Ended		For the Six Months Ended
		June 30,		June 30,
		2020		2019		Change		2020		2019		Change
PROFITABILITY FOR THE PERIOD
Net interest income		$	13,031		$	12,293		6.0	%	$	25,549		$	24,687		3.5	%
Provision for credit losses			1,000			200		400.0			1,350			300		350.0
Noninterest income			2,769			2,609		6.1			5,121			4,797		6.8
Noninterest expense			7,663			8,985		(14.7)			18,012			18,328		(1.7)
Income from continuing operations before  income taxes			7,137			5,717		24.8			11,308			10,856		4.2
Income tax expense			1,802			1,489		21.0			2,855			2,800		2.0
Income from continuing operations		$	5,335		$	4,228		26.2		$	8,453		$	8,056		4.9
Loss from discontinued operations before income taxes			—			(4)		100.0			—			(103)		100.0
Income tax benefit			—			—		—			—			(25)		100.0
Loss from discontinued operations			—			(4)		100.0			—			(78)		100.0
Net income		$	5,335		$	4,224		26.3		$	8,453		$	7,978		6.0
From Continuing Operations:
Return on average assets			1.31	%		1.16	%	15	bp		1.07	%		1.11	%	(4)	bp
Return on average equity			10.79			8.97		182			8.65			8.69		(4)
Return on average tangible equity (1)			12.20			10.31		189			9.84			10.02		(18)
Net interest margin			3.41			3.54		(13)			3.45			3.57		(12)
Efficiency ratio - GAAP			48.50			60.29		(1,179)			58.73			62.16		(343)
Efficiency ratio - Non-GAAP (1)			48.58			59.09		(1,051)			58.33			60.93		(260)
PER SHARE DATA
Basic net income per common share
Income from continuing operations		$	0.43		$	0.33		30.3	%	$	0.68		$	0.63		7.9	%
Loss from discontinued operations			—			—		—			—			(0.01)		100.0
Net income		$	0.43		$	0.33		30.3		$	0.68		$	0.62		9.7
Diluted net income per common share
Income from continuing operations		$	0.43		$	0.33		30.3		$	0.68		$	0.63		7.9
Loss from discontinued operations			—			—		—			—			(0.01)		100.0
Net income		$	0.43		$	0.33		30.3		$	0.68		$	0.62		9.7
Dividends paid per common share		$	0.12		$	0.10		20.0		$	0.24		$	0.20		20.0
Book value per common share at period end			15.98			14.97		6.7
Tangible book value per common share at period end (1)			14.42			13.40		7.6
Market value at period end			11.09			16.34		(32.1)
Market range:
High			12.40			16.48		(24.8)			17.56			16.48		6.6
Low			8.00			14.84		(46.1)			7.63			14.00		(45.5)
AVERAGE BALANCE SHEET DATA
Loans		$	1,374,324		$	1,221,215		12.5	%	$	1,318,883		$	1,211,618		8.9	%
Investment securities			107,908			159,878		(32.5)			118,659			162,429		(26.9)
Earning assets			1,539,945			1,399,418		10.0			1,495,227			1,397,086		7.0
Assets			1,638,387			1,468,093		11.6			1,592,689			1,464,214		8.8
Deposits			1,427,063			1,233,951		15.6			1,377,112			1,224,876		12.4
Stockholders' equity			198,842			189,101		5.2			196,587			187,048		5.1
CREDIT QUALITY DATA
Net charge-offs		$	288		$	313		(8.0)	%	$	767		$	338		126.9	%
Nonaccrual loans		$	11,649		$	14,592		(20.2)
Loans 90 days past due and still accruing			604			439		37.6
Other real estate owned			38			524		(92.7)
Total nonperforming assets			12,291			15,555		(21.0)
Accruing troubled debt restructurings (TDRs)			7,312			7,768		(5.9)
Total nonperforming assets and accruing TDRs		$	19,603		$	23,323		(15.9)
CAPITAL AND CREDIT QUALITY RATIOS
Period-end equity to assets			11.64	%		12.85	%	(121)	bp
Period-end tangible equity to tangible assets (1)			10.63			11.66		(103)
Annualized net charge-offs to average loans			0.08			0.10		(2)			0.12	%		0.06	%	6	bp
Allowance for credit losses as a percent of:
Period-end loans (2)			0.79			0.83		(4)
Nonaccrual loans			95.20			70.62		2,458
Nonperforming assets			90.23			66.25		2,398
Accruing TDRs			151.67			132.66		1,901
Nonperforming assets and accruing TDRs			56.57			44.18		1,239
As a percent of total loans:
Nonaccrual loans			0.83			1.18		(35)
Accruing TDRs			0.52			0.63		(11)
Nonaccrual loans and accruing TDRs			1.35			1.80		(45)
As a percent of total loans+other real estate owned:
Nonperforming assets			0.87			1.25		(38)
Nonperforming assets and accruing TDRs			1.39			1.88		(49)
As a percent of total assets:
Nonaccrual loans			0.68			0.98		(30)
Nonperforming assets			0.71			1.04		(33)
Accruing TDRs			0.43			0.52		(9)
Nonperforming assets and accruing TDRs			1.14			1.56		(42)

(1)	See the reconciliation table on page 18 of 18.
(2)	As of 6/30/2020, this ratio includes PPP loans of $123.0 million. Excluding these loans, the ratio is 0.86%.

 

 

Shore Bancshares, Inc. Consolidated Balance Sheets (Unaudited) (In thousands, except per share data)
											June 30, 2020
		June 30,			December 31,			June 30,		compared to
		2020			2019			2019		December 31, 2019
ASSETS
Cash and due from banks		$	24,585		$	18,465		$	18,541		33.1	%
Interest-bearing deposits with other banks			101,699			76,506			20,739		32.9
Cash and cash equivalents			126,284			94,971			39,280		33.0
Investment securities available for sale (at fair value)			86,020			122,791			145,410		(29.9)
Investment securities held to maturity			11,710			8,786			5,905		33.3
Equity securities, at fair value			1,388			1,342			1,325		3.4
Restricted securities			3,626			4,190			5,095		(13.5)
Loans			1,407,249			1,248,654			1,240,295		12.7
Less: allowance for credit losses			(11,090)			(10,507)			(10,305)		5.5
Loans, net			1,396,159			1,238,147			1,229,990		12.8
Premises and equipment, net			24,668			23,821			22,710		3.6
Goodwill			17,518			17,518			17,518		—
Other intangible assets, net			1,970			2,252			2,540		(12.5)
Other real estate owned, net			38			74			524		(48.6)
Right of use assets, net			4,879			4,771			3,663		2.3
Other assets			45,264			40,572			14,602		11.6
Total assets		$	1,719,524		$	1,559,235		$	1,488,562		10.3
LIABILITIES
Noninterest-bearing deposits		$	442,996		$	356,618		$	346,916		24.2
Interest-bearing deposits			1,061,732			984,716			902,084		7.8
Total deposits			1,504,728			1,341,334			1,249,000		12.2
Short-term borrowings			1,064			1,226			25,508		(13.2)
Long-term borrowings			—			15,000			15,000		(100.0)
Lease liabilities			4,941			4,792			3,663		3.1
Accrued expenses and other liabilities			8,657			4,081			4,084		112.1
Total liabilities			1,519,390			1,366,433			1,297,255		11.2
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; authorized 35,000,000 shares			125			125			128		—
Additional paid in capital			61,129			61,045			65,376		0.1
Retained earnings			136,876			131,425			125,996		4.1
Accumulated other comprehensive income (loss)			2,004			207			(193)		868.1
Total stockholders' equity			200,134			192,802			191,307		3.8
Total liabilities and stockholders' equity		$	1,719,524		$	1,559,235		$	1,488,562		10.3
Period-end common shares outstanding			12,526			12,500			12,780		0.2
Book value per common share		$	15.98		$	15.42		$	14.97		3.6

 

 

Shore Bancshares, Inc. Consolidated Statements of Income (Unaudited) (In thousands, except per share data)
		For the Three Months Ended			For the Six Months Ended
		June 30,		June 30,
		2020		2019		% Change		2020		2019		% Change
INTEREST INCOME
Interest and fees on loans		$	13,945		$	13,749		1.4	%	$	27,740		$	27,248		1.8	%
Interest on investment securities:
Taxable			638			887		(28.1)			1,357			1,885		(28.0)
Interest on deposits with other banks			11			113		(90.3)			183			276		(33.7)
Total interest income			14,594			14,749		(1.1)			29,280			29,409		(0.4)
INTEREST EXPENSE
Interest on deposits			1,556			2,204		(29.4)			3,615			4,151		(12.9)
Interest on short-term borrowings			1			145		(99.3)			3			358		(99.2)
Interest on long-term borrowings			6			107		(94.4)			113			213		—
Total interest expense			1,563			2,456		(36.4)			3,731			4,722		(21.0)
NET INTEREST INCOME			13,031			12,293		6.0			25,549			24,687		3.5
Provision for credit losses			1,000			200		400.0			1,350			300		350.0
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES			12,031			12,093		(0.5)			24,199			24,387		(0.8)
NONINTEREST INCOME
Service charges on deposit accounts			544			1,028		(47.1)			1,410			1,962		(28.1)
Trust and investment fee income			363			385		(5.7)			738			757		(2.5)
Gains on sales and calls of investment securities			347			—		—			347			—		—
Other noninterest income			1,515			1,196		26.7			2,626			2,078		26.4
Total noninterest income			2,769			2,609		6.1			5,121			4,797		6.8
NONINTEREST EXPENSE
Salaries and wages			2,130			3,792		(43.8)			6,426			7,558		(15.0)
Employee benefits			1,535			1,068		43.7			3,257			2,322		40.3
Occupancy expense			702			668		5.1			1,400			1,359		3.0
Furniture and equipment expense			247			295		(16.3)			564			558		1.1
Data processing			1,037			919		12.8			2,081			1,829		13.8
Directors' fees			113			116		(2.6)			254			202		25.7
Amortization of intangible assets			138			155		(11.0)			282			317		(11.0)
FDIC insurance premium expense			124			181		(31.5)			215			386		(44.3)
Other real estate owned expenses, net			—			60		(100.0)			18			293		(93.9)
Legal and professional fees			553			559		(1.1)			1,187			1,160		2.3
Other noninterest expenses			1,084			1,172		(7.5)			2,328			2,344		(0.7)
Total noninterest expense			7,663			8,985		(14.7)			18,012			18,328		(1.7)
Income from continuing operations before income taxes			7,137			5,717		24.8			11,308			10,856		4.2
Income tax expense			1,802			1,489		21.0			2,855			2,800		2.0
Income from continuing operations			5,335			4,228		26.2			8,453			8,056		4.9
Loss from discontinued operations before income taxes			—			(4)		100.0			—			(103)		100.0
Income tax benefit			—			—		—			—			(25)		100.0
Loss from discontinued operations			—			(4)		100.0			—			(78)		100.0
NET INCOME		$	5,335		$	4,224		26.3		$	8,453		$	7,978		6.0
Weighted average shares outstanding - basic			12,524			12,779		(2.0)			12,519			12,774		(2.0)
Weighted average shares outstanding - diluted			12,525			12,784		(2.0)			12,521			12,779		(2.0)
Basic net income per common share
Income from continuing operations		$	0.43		$	0.33		30.3		$	0.68		$	0.63		7.9
Loss from discontinued operations			—			—		—			—			(0.01)		100.0
Net income		$	0.43		$	0.33		30.3		$	0.68		$	0.62		9.7
Diluted net income per common share
Income from continuing operations		$	0.43		$	0.33		30.3		$	0.68		$	0.63		7.9
Loss from discontinued operations			—			—		-			—			(0.01)		100.0
Net income		$	0.43		$	0.33		30.3		$	0.68		$	0.62		9.7
Dividends paid per common share			0.12			0.10		20.0			0.24			0.20		20.0

 

 

Shore Bancshares, Inc. Consolidated Average Balance Sheets (Unaudited) (Dollars in thousands)
		For the Three Months Ended		For the Six Months Ended
		June 30,		June 30,
		2020		2019		2020		2019
		Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/
		balance		rate		balance		rate		balance		rate		balance		rate
Earning assets
Loans (1), (2), (3)		$	1,374,324		4.09	%	$	1,221,215		4.53	%	$	1,318,883		4.24	%	$	1,211,618		4.55	%
Investment securities
Taxable			107,908		2.37			159,878		2.22			118,659		2.30			162,429		2.34
Interest-bearing deposits			57,713		0.07			18,325		2.47			57,685		0.64			23,039		2.42
Total earning assets			1,539,945		3.82	%		1,399,418		4.24	%		1,495,227		3.95	%		1,397,086		4.26	%
Cash and due from banks			18,167					17,225					18,020					17,211
Other assets			90,981					61,906					90,068					60,340
Allowance for credit losses			(10,706)					(10,456)					(10,626)					(10,423)
Total assets		$	1,638,387				$	1,468,093				$	1,592,689				$	1,464,214
Interest-bearing liabilities
Demand deposits		$	298,568		0.20	%	$	234,775		0.65	%	$	291,372		0.37	%	$	237,271		0.63	%
Money market and savings deposits			426,963		0.23			385,272		0.84			418,608		0.34			384,508		0.84
Brokered deposits			—		—			20,866		2.52			—		—			21,470		2.44
Certificates of deposit $100,000 or more			130,582		1.81			107,549		1.54			129,995		1.83			103,067		1.40
Other time deposits			150,675		1.54			145,900		1.31			150,659		1.58			143,226		1.16
Interest-bearing deposits			1,006,788		0.62			894,362		0.99			990,634		0.73			889,542		0.94
Short-term borrowings			2,030		0.20			21,557		2.70			1,632		0.37			27,239		2.65
Long-term borrowings			824		2.93			15,000		2.86			7,912		2.87			15,000		2.86
Total interest-bearing liabilities			1,009,642		0.62	%		930,919		1.06	%		1,000,178		0.75	%		931,781		1.02	%
Noninterest-bearing deposits			420,275					339,589					386,478					335,334
Accrued expenses and other liabilities			9,628					8,484					9,446					10,051
Stockholders' equity			198,842					189,101					196,587					187,048
Total liabilities and stockholders' equity		$	1,638,387				$	1,468,093				$	1,592,689				$	1,464,214
Net interest spread					3.20	%				3.18	%				3.20	%				3.24	%
Net interest margin					3.41	%				3.54	%				3.45	%				3.57	%

(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 amortized loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations.

 

 

Shore Bancshares, Inc. Financial Highlights By Quarter (Unaudited) (Dollars in thousands, except per share data)
		2nd Quarter		1st Quarter		4th Quarter		3rd Quarter		2nd Quarter		Q2 2020		Q2 2020
		2020		2020		2019		2019		2019		compared to		compared to
		Q2 2020		Q1 2020		Q4 2019		Q3 2019		Q2 2019		Q1 2020		Q2 2019
PROFITABILITY FOR THE PERIOD
Taxable-equivalent net interest income		$	13,068		$	12,554		$	12,808		$	12,724		$	12,334		4.1	%	6.0
Less: Taxable-equivalent adjustment			37			36			44			44			41		2.8		(9.8)
Net interest income			13,031			12,518			12,764			12,680			12,293		4.1		6.0
Provision for credit losses			1,000			350			200			200			200		185.7		400.0
Noninterest income			2,769			2,352			2,694			2,529			2,609		17.7		6.1
Noninterest expense			7,663			10,349			9,845			9,384			8,985		(26.0)		(14.7)
Income from continuing operations before income taxes			7,137			4,171			5,413			5,625			5,717		71.1		24.8
Income tax expense			1,802			1,053			1,399			1,411			1,489		71.1		21.0
Income from continuing operations			5,335			3,118			4,014			4,214			4,228		71.1		26.2
Loss from discontinued operations before income taxes			—			—			—			(10)			(4)		—		100.0
Income tax benefit			—			—			—			(2)			—		—		—
Loss from discontinued operations			—			—			—			(8)			(4)		—		100.0
Net income		$	5,335		$	3,118		$	4,014		$	4,206		$	4,224		71.1		26.3
From Continuing Operations:
Return on average assets			1.31	%		0.81	%		1.03	%		1.10	%		1.16	%	50	bp	15
Return on average equity			10.79			6.45			8.24			8.66			8.97		434		182
Return on average tangible equity (1)			12.20			7.43			9.43			9.90			10.31		477		189
Net interest margin			3.41			3.48			3.47			3.52			3.54		(7)		(13)
Efficiency ratio - GAAP			48.50			69.60			63.69			61.70			60.29		(2,110)		(1,179)
Efficiency ratio - Non-GAAP (1)			48.58			68.46			62.58			60.58			59.09		(1,988)		(1,051)
PER SHARE DATA
Basic net income per common share
Income from continuing operations		$	0.43		$	0.25		$	0.32		$	0.33		$	0.33		72.0	%	30.3
Loss from discontinued operations			—			—			—			—			—		—		—
Net income		$	0.43		$	0.25		$	0.32		$	0.33		$	0.33		72.0		30.3
Diluted net income per common share
Income from continuing operations		$	0.43		$	0.25		$	0.32		$	0.33		$	0.33		72.0		30.3
Loss from discontinued operations			—			—			—			—			—		—		—
Net income		$	0.43		$	0.25		$	0.32		$	0.33		$	0.33		72.0		30.3
Dividends paid per common share			0.12			0.12			0.12			0.10			0.10		—		20.0
Book value per common share at period end			15.98			15.62			15.42			15.22			14.97		2.3		6.7
Tangible book value per common share at period end (1)			14.42			14.06			13.84			13.66			13.40		2.6		7.6
Market value at period end			11.09			10.85			17.36			15.41			16.34		2.2		(32.1)
Market range:
High			12.40			17.56			17.90			17.00			16.48		(29.4)		(24.8)
Low			8.00			7.63			15.01			14.90			14.84		4.8		(46.1)
AVERAGE BALANCE SHEET DATA
Loans		$	1,374,324		$	1,263,441		$	1,246,355		$	1,235,374		$	1,221,215		8.8	%	12.5
Investment securities			107,908			129,410			145,544			155,324			159,878		(16.6)		(32.5)
Earning assets			1,539,945			1,450,508			1,463,490			1,432,252			1,399,418		6.2		10.0
Assets			1,638,387			1,546,991			1,553,017			1,513,790			1,468,093		5.9		11.6
Deposits			1,427,063			1,327,162			1,334,047			1,280,057			1,233,951		7.5		15.6
Stockholders' equity			198,842			194,332			193,239			193,120			189,101		2.3		5.2
CREDIT QUALITY DATA
Net charge-offs		$	288		$	479		$	131		$	67		$	313		(39.9)	%	(8.0)
Nonaccrual loans		$	11,649		$	11,540		$	10,590		$	12,530		$	14,592		0.9		(20.2)
Loans 90 days past due and still accruing			604			721			1,326			712			439		(16.2)		37.6
Other real estate owned			38			38			74			74			524		—		(92.7)
Total nonperforming assets		$	12,291		$	12,299		$	11,990		$	13,316		$	15,555		(0.1)		(21.0)
Accruing troubled debt restructurings (TDRs)		$	7,312		$	7,444		$	7,501		$	7,588		$	7,768		(1.8)		(5.9)
Total nonperforming assets and accruing TDRs		$	19,603		$	19,743		$	19,491		$	20,904		$	23,323		(0.7)		(15.9)
CAPITAL AND CREDIT QUALITY RATIOS
Period-end equity to assets			11.64	%		12.45	%		12.37	%		12.42	%		12.85	%	(81)	bp	(121)
Period-end tangible equity to tangible assets (1)			10.63			11.35			11.24			11.29			11.66		(72)		(103)
Annualized net charge-offs to average loans			0.08			0.15			0.04			0.02			0.10		(7)		(2)
Allowance for credit losses as a percent of:
Period-end loans (2)			0.79			0.81			0.84			0.85			0.83		(2)		(4)
Nonaccrual loans			95.20			89.93			99.22			83.30			70.62		527		2,458
Nonperforming assets			90.23			84.38			87.63			78.39			66.25		585		2,398
Accruing TDRs			151.67			139.41			140.07			137.56			132.66		1,226		1,901
Nonperforming assets and accruing TDRs			56.57			52.57			53.91			49.93			44.18		400		1,239
As a percent of total loans:
Nonaccrual loans			0.83			0.90			0.85			1.01			1.18		(7)		(35)
Accruing TDRs			0.52			0.58			0.60			0.61			0.63		(6)		(11)
Nonaccrual loans and accruing TDRs			1.35			1.49			1.45			1.63			1.80		(14)		(45)
As a percent of total loans+other real estate owned:
Nonperforming assets			0.87			0.96			0.96			1.08			1.25		(9)		(38)
Nonperforming assets and accruing TDRs			1.39			1.55			1.56			1.69			1.88		(16)		(49)
As a percent of total assets:
Nonaccrual loans			0.68			0.73			0.68			0.80			0.98		(5)		(30)
Nonperforming assets			0.71			0.78			0.77			0.85			1.04		(7)		(33)
Accruing TDRs			0.43			0.47			0.48			0.49			0.52		(4)		(9)
Nonperforming assets and accruing TDRs			1.14			1.25			1.25			1.34			1.56		(11)		(42)

(1)	See the reconciliation table on page 18 of 18.
(2)	As of 6/30/2020, this ratio includes PPP loans of $123.0 million. Excluding these loans, the ratio is 0.86%.

 

 

Shore Bancshares, Inc. Consolidated Statements of Income By Quarter (Unaudited) (In thousands, except per share data)
																	Q2 2020		Q2 2020
																	compared to		compared to
		Q2 2020		Q1 2020		Q4 2019		Q3 2019		Q2 2019		Q1 2020		Q2 2019
INTEREST INCOME
Interest and fees on loans		$	13,945		$	13,795		$	14,043		$	14,100		$	13,749		1.1	%	1.4	%
Interest on investment securities:
Taxable			638			719			827			870			887		(11.3)		(28.1)
Interest on deposits with other banks			11			172			295			223			113		(93.6)		(90.3)
Total interest income			14,594			14,686			15,165			15,193			14,749		(0.6)		(1.1)
INTEREST EXPENSE
Interest on deposits			1,556			2,059			2,287			2,288			2,204		(24.4)		(29.4)
Interest on short-term borrowings			1			2			6			117			145		(50.0)		(99.3)
Interest on long-term borrowings			6			107			108			108			107		(94.4)		(94.4)
Total interest expense			1,563			2,168			2,401			2,513			2,456		(27.9)		(36.4)
NET INTEREST INCOME			13,031			12,518			12,764			12,680			12,293		4.1		6.0
Provision for credit losses			1,000			350			200			200			200		185.7		400.0
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES			12,031			12,168			12,564			12,480			12,093		(1.1)		(0.5)
NONINTEREST INCOME
Service charges on deposit accounts			544			866			958			990			1,028		(37.2)		(47.1)
Trust and investment fee income			363			375			382			383			385		(3.2)		(5.7)
Gains on sales and calls of investment securities			347			—			—			—			—		—		—
Other noninterest income			1,515			1,111			1,354			1,156			1,196		36.4		26.7
Total noninterest income			2,769			2,352			2,694			2,529			2,609		17.7		6.1
NONINTEREST EXPENSE
Salaries and wages			2,130			4,296			4,002			3,853			3,792		(50.4)		(43.8)
Employee benefits			1,535			1,722			1,662			1,299			1,068		(10.9)		43.7
Occupancy expense			702			698			702			697			668		0.6		5.1
Furniture and equipment expense			247			317			286			263			295		(22.1)		(16.3)
Data processing			1,037			1,044			989			972			919		(0.7)		12.8
Directors' fees			113			141			137			140			116		(19.9)		(2.6)
Amortization of intangible assets			138			144			144			144			155		(4.2)		(11.0)
FDIC insurance premium expense			124			91			(42)			—			181		36.3		(31.5)
Other real estate owned expenses, net			—			18			(1)			133			60		(100.0)		(100.0)
Legal and professional fees			553			634			568			495			559		(12.8)		(1.1)
Other noninterest expenses			1,084			1,244			1,398			1,388			1,172		(12.9)		(7.5)
Total noninterest expense			7,663			10,349			9,845			9,384			8,985		(26.0)		(14.7)
Income from continuing operations before income taxes			7,137			4,171			5,413			5,625			5,717		71.1		24.8
Income tax expense			1,802			1,053			1,399			1,411			1,489		71.1		21.0
Income from continuing operations			5,335			3,118			4,014			4,214			4,228		71.1		26.2
Loss from discontinued operations before income taxes			—			—			—			(10)			(4)		—		100.0
Income tax benefit			—			—			—			(2)			—		—		—
Loss from discontinued operations			—			—			—			(8)			(4)		—		100.0
NET INCOME		$	5,335		$	3,118		$	4,014		$	4,206		$	4,224		71.1		26.3
Weighted average shares outstanding - basic			12,524			12,513			12,588			12,764			12,779		0.1		(2.0)
Weighted average shares outstanding - diluted			12,525			12,518			12,593			12,769			12,784		0.1		(2.0)
Basic net income per common share
Income from continuing operations		$	0.43		$	0.25		$	0.32		$	0.33		$	0.33		72.0		30.3
Loss from discontinued operations			—			—			—			—			—		—		—
Net income		$	0.43		$	0.25		$	0.32		$	0.33		$	0.33		72.0		30.3
Diluted net income per common share
Income from continuing operations		$	0.43		$	0.25		$	0.32		$	0.33		$	0.33		72.0		30.3
Loss from discontinued operations			—			—			—			—			—		—		—
Net income		$	0.43		$	0.25		$	0.32		$	0.33		$	0.33		72.0		30.3
Dividends paid per common share			0.12			0.12			0.12			0.10			0.10		—		20.0

 

 

Shore Bancshares, Inc. Consolidated Average Balance Sheets By Quarter (Unaudited) (Dollars in thousands)
																											Average balance
																											Q2 2020		Q2 2020
																											compared to		compared to
		Q2 2020		Q1 2020		Q4 2019		Q3 2019		Q2 2019		Q1 2020		Q2 2019
		Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/		Average		Yield/
		balance		rate		balance		rate		balance		rate		balance		rate		balance		rate
Earning assets
Loans (1), (2), (3)			1,374,324		4.09	%	$	1,263,441		4.40	%	$	1,246,355		4.48	%	$	1,235,374		4.54	%	$	1,221,215		4.53	%	8.8	%	12.5	%
Investment securities
Taxable			107,908		2.37			129,410		2.22			145,544		2.27			155,324		2.24			159,878		2.22		(16.6)		(32.5)
Interest-bearing deposits			57,713		0.07			57,657		1.20			71,591		1.63			41,554		2.13			18,325		2.47		0.1		214.9
Total earning assets			1,539,945		3.82	%		1,450,508		4.08	%		1,463,490		4.12	%		1,432,252		4.22	%		1,399,418		4.24	%	6.2		10.0
Cash and due from banks			18,167					17,874					20,382					18,127					17,225				1.6		5.5
Other assets			90,981					89,154					79,586					73,823					61,906				2.0		47.0
Allowance for credit losses			(10,706)					(10,545)					(10,441)					(10,412)					(10,456)				1.5		2.4
Total assets		$	1,638,387				$	1,546,991				$	1,553,017				$	1,513,790				$	1,468,093				5.9		11.6
Interest-bearing liabilities
Demand deposits		$	298,568		0.20	%	$	284,176		0.56	%	$	284,193		0.76	%	$	252,386		0.70	%	$	234,775		0.65	%	5.1		27.2
Money market and savings deposits			426,963		0.23			410,252		0.46			397,662		0.51			389,268		0.67			385,272		0.84		4.1		10.8
Brokered deposits			—		—			—		—			8,135		2.15			14,568		2.29			20,866		2.52		—		(100.0)
Certificates of deposit $100,000 or more			130,582		1.81			129,408		1.85			126,411		1.85			119,200		1.78			107,549		1.54		0.9		21.4
Other time deposits			150,675		1.54			150,645		1.60			149,197		1.58			149,708		1.49			145,900		1.31		—		3.3
Interest-bearing deposits			1,006,788		0.62			974,481		0.85			965,598		0.94			925,130		0.98			894,362		0.99		3.3		12.6
Short-term borrowings			2,030		0.20			1,235		0.65			1,889		1.26			17,729		2.64			21,557		2.70		64.4		(90.6)
Long-term borrowings			824		2.93			15,000		2.87			15,000		2.86			15,000		2.86			15,000		2.86		(94.5)		(94.5)
Total interest-bearing liabilities			1,009,642		0.62	%		990,716		0.88	%		982,487		0.97	%		957,859		1.04	%		930,919		1.06	%	1.9		8.5
Noninterest-bearing deposits			420,275					352,681					368,449					354,927					339,589				19.2		23.8
Accrued expenses and other liabilities			9,628					9,262					8,842					7,884					8,484				4.0		13.5
Stockholders' equity			198,842					194,332					193,239					193,120					189,101				2.3		5.2
Total liabilities and stockholders' equity		$	1,638,387				$	1,546,991				$	1,553,017				$	1,513,790				$	1,468,093				5.9		11.6
Net interest spread					3.20	%				3.20	%				3.15	%				3.18	%				3.18	%
Net interest margin					3.41	%				3.48	%				3.47	%				3.52	%				3.54	%

(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 amortized loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations.

 

Shore Bancshares, Inc. Reconciliation of Generally Accepted Accounting Principles (GAAP) and Non-GAAP Measures (Unaudited) (In thousands, except per share data)
																	YTD		YTD
		Q2 2020		Q1 2020		Q4 2019		Q3 2019		Q2 2019		6/30/2020		6/30/2019
The following reconciles return on average equity and return on average tangible equity from continuing operations (Note 1):
Income from continuing operations		$	5,335		$	3,118		$	4,014		$	4,214		$	4,228		$	8,453		$	8,056
Income from continuing operations - annualized (A)		$	21,457		$	12,541		$	15,925		$	16,719		$	16,958		$	16,999		$	16,246
Net income, excluding net amortization of intangible assets		$	5,438		$	3,225		$	4,121		$	4,321		$	4,344		$	8,663		$	8,293
Net income, excluding net amortization of intangible assets - annualized (B)		$	21,872		$	12,971		$	16,350		$	17,143		$	17,424		$	17,421		$	16,723
Average stockholders' equity (C)		$	198,842		$	194,332		$	193,239		$	193,120		$	189,101		$	196,587		$	187,048
Less:  Average goodwill and other intangible assets			(19,560)			(19,702)			(19,846)			(19,991)			(20,138)			(19,631)			(20,209)
Average tangible equity (D)		$	179,282		$	174,630		$	173,393		$	173,129		$	168,963		$	176,956		$	166,839
Return on average equity (GAAP)  (A)/(C)			10.79	%		6.45	%		8.24	%		8.66	%		8.97	%		8.65	%		8.69	%
Return on average tangible equity (Non-GAAP)  (B)/(D)			12.20	%		7.43	%		9.43	%		9.90	%		10.31	%		9.84	%		10.02	%
The following reconciles GAAP efficiency ratio and non- GAAP efficiency ratio from continuing operations (Note 2):
Noninterest expense (E)		$	7,663		$	10,349		$	9,845		$	9,384		$	8,985		$	18,012		$	18,328
Less:  Amortization of intangible assets			(138)			(144)			(144)			(144)			(155)			(282)			(317)
Adjusted noninterest expense (F)		$	7,525		$	10,205		$	9,701		$	9,240		$	8,830		$	17,730		$	18,011
Net interest income (G)			13,031			12,518			12,764			12,680			12,293			25,549			24,687
Add:  Taxable-equivalent adjustment			37			36			44			44			41			73			75
Taxable-equivalent net interest income (H)		$	13,068		$	12,554		$	12,808		$	12,724		$	12,334		$	25,622		$	24,762
Noninterest income (I)		$	2,769		$	2,352		$	2,694		$	2,529		$	2,609		$	5,121			4,797
Less:  Investment securities (gains)			(347)			—			—			—			—			(347)			—
Adjusted noninterest income (J)		$	2,422		$	2,352		$	2,694		$	2,529		$	2,609		$	4,774		$	4,797
Efficiency ratio (GAAP)  (E)/(G)+(I)			48.50	%		69.60	%		63.69	%		61.70	%		60.29	%		58.73	%		62.16	%
Efficiency ratio (Non-GAAP)  (F)/(H)+(J)			48.58	%		68.46	%		62.58	%		60.58	%		59.09	%		58.33	%		60.93	%
The following reconciles book value per common share and  tangible book value per common share (Note 1):
Stockholders' equity (L)		$	200,134		$	195,694		$	192,802		$	193,963		$	191,307
Less:  Goodwill and other intangible assets			(19,488)			(19,626)			(19,770)			(19,914)			(20,058)
Tangible equity (M)		$	180,646		$	176,068		$	173,032		$	174,049		$	171,249
Shares outstanding (N)			12,526			12,525			12,500			12,742			12,780
Book value per common share (GAAP)  (L)/(N)		$	15.98		$	15.62		$	15.42		$	15.22		$	14.97
Tangible book value per common share (Non-GAAP) (M)/(N)		$	14.42		$	14.06		$	13.84		$	13.66		$	13.40
The following reconciles equity to assets and tangible equity to tangible assets (Note 1):
Stockholders' equity (O)		$	200,134		$	195,694		$	192,802		$	193,963		$	191,307
Less:  Goodwill and other intangible assets			(19,488)			(19,626)			(19,770)			(19,914)			(20,058)
Tangible equity (P)		$	180,646		$	176,068		$	173,032		$	174,049		$	171,249
Assets (Q)		$	1,719,524		$	1,571,421		$	1,559,235		$	1,561,679		$	1,488,562
Less:  Goodwill and other intangible assets			(19,488)			(19,626)			(19,770)			(19,914)			(20,058)
Tangible assets (R)		$	1,700,036		$	1,551,795		$	1,539,465		$	1,541,765		$	1,468,504
Period-end equity/assets (GAAP)  (O)/(Q)			11.64	%		12.45	%		12.37	%		12.42	%		12.85	%
Period-end tangible equity/tangible assets (Non-GAAP) (P)/(R)			10.63	%		11.35	%		11.24	%		11.29	%		11.66	%

Note 1:	Management believes that reporting tangible equity and tangible assets more closely approximates the adequacy of capital for regulatory purposes.
Note 2:	Management believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling cash-based operating activities.

 

 

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SOURCE Shore Bancshares, Inc.

FAQ

What were Shore Bancshares' financial results for Q2 2020?

Shore Bancshares reported a net income of $5.335 million, or $0.43 per diluted share for Q2 2020.

How much did Shore Bancshares increase its total assets by in Q2 2020?

Total assets increased by $160.3 million, or 10.3%, compared to the end of 2019.

What is the status of Shore Bancshares' participation in the PPP program?

Shore Bancshares provided $123 million in loans to small businesses through the PPP.

What is the current status of Shore Bancshares' net interest margin?

The net interest margin decreased to 3.41% in Q2 2020 from 3.48% in Q1 2020.

How did nonperforming assets change in Q2 2020 for Shore Bancshares?

Nonperforming assets remained at $12.3 million as of June 30, 2020.