SHORE BANCSHARES, INC. 
By EASTON, Md., Jan. 23, 2014 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ - SHBI) today reported net income of $1.2 million or $0.14 per diluted common share for the fourth quarter of 2013, compared to a net loss of $11.4 million or $(1.35) per diluted common share for the third quarter of 2013, and a net loss of $5.1 million or $(0.60) per diluted common share for the fourth quarter of 2012. The Company reported a net loss of $9.6 million or $(1.14) per diluted common share for both fiscal year 2013 and fiscal year 2012.
When comparing the fourth quarter of 2013 to the third quarter of 2013, the primary reason for the improved results was a decline in the provision for credit losses which was impacted during the third quarter of 2013 by the execution of agreements by the Company's wholly owned subsidiary, The Talbot Bank of Easton (the "Bank"), to sell loans and other real estate owned (the "Asset Sale"). Charge-offs of $19.6 million were taken on the loans subject to the Asset Sale to reflect the value to be realized upon sale. Subsequently, the provision for credit losses was increased $19.6 million to replenish the allowance for credit losses while other real estate owned subject to the Asset Sale was written down $182 thousand for a total pretax loss of $19.8 million. When comparing the fourth quarter of 2013 to the fourth quarter of 2012, the primary reasons for the improved results were a decline in the provision for credit losses due to lower charge-offs and nonaccrual loans, and a $1.3 million loss incurred during the fourth quarter of 2012 to terminate a portion of an interest rate cap instrument. Results were flat when comparing fiscal year 2013 to fiscal year 2012, with higher noninterest income offset by higher noninterest expenses and lower net interest income.
"We were pleased to report fourth quarter net income which was ahead of consensus estimates. The completion of the Asset Sale in the third quarter resulted in a much lower provision for credit losses in the fourth quarter and was the principal driver of our results. We are still focused on reducing charge-offs and nonaccrual loans. However, with a substantial portion of our credit problems behind us we can now turn our attention to revenue generation. Despite the significant strategic initiatives undertaken during the last year, total stockholders' equity to total assets at December 31, 2013 was 9.80%," said Lloyd L. "Scott" Beatty, Jr., president and chief executive officer. "The economy across our footprint is showing some signs of improvement in the retail, small business and commercial middle-market sectors. However, real estate development and construction remains anemic compared to the pre-recession levels."
Balance Sheet Review
Total assets were $1.054 billion at December 31, 2013, a $131.7 million, or 11.1%, decrease when compared to the $1.186 billion at the end of 2012. The decline in total assets was primarily due to a decrease in loans ($73.2 million) and interest-bearing deposits with other banks ($55.5 million). The decline in loans was mainly due to the Asset Sale and charge-offs while the decline in interest-bearing deposits reflected a reduction in excess liquidity.
Total deposits decreased $115.8 million, or 11.0%, to $933.5 million at December 31, 2013, mainly due to a decline in money market deposit accounts ($67.9 million) and time deposits ($56.0 million), partially offset by an increase in noninterest-bearing demand deposits ($18.8 million). The decrease in money market deposit accounts was associated with the Company's participation in the Promontory Insured Network Deposits Program ("IND Program"). In December 2012, the Company decided to partially exit the IND Program to decrease its excess liquidity and, in June 2013, the Company fully exited the IND Program. The decrease in time deposits also reduced the Company's excess liquidity. Total stockholders' equity declined $10.7 million, or 9.4%, to $103.3 million at December 31, 2013. For fiscal year 2013, the ratio of average equity to average assets was 10.31% and the ratio of average tangible equity to average tangible assets was 8.95%.
Review of Quarterly Financial Results
Net interest income was $8.6 million for the fourth quarter of 2013, compared to $8.8 million for the third quarter of 2013 and $8.4 million for the fourth quarter of 2012. The decrease in net interest income when compared to the third quarter of 2013 was due to a greater decline in interest income than the decline in interest expense. The decrease in interest income was primarily due to a decline in average loan balances while the decrease in interest expense was primarily due to lower average balances of and rates paid on time deposits. The higher net interest income for the fourth quarter of 2013 when compared to the fourth quarter of 2012 was due to a greater decline in interest expense than the decline in interest income. The decrease in interest expense was mainly due to exiting the IND Program and terminating the interest rate caps associated with the IND Program. The Company's net interest margin was 3.47% for the fourth quarter of 2013, 3.54% for the third quarter of 2013 and 3.02% for the fourth quarter of 2012.
The provision for credit losses was $474 thousand for the fourth quarter of 2013, $22.5 million for the third quarter of 2013 and $9.7 million for the fourth quarter of 2012. The provision for credit losses for the third quarter of 2013 included $19.6 million to replenish the allowance for credit losses for the charge-off of loans associated with the Asset Sale. The lower provision for credit losses for the fourth quarter of 2013 when compared to the third quarter of 2013 and the fourth quarter of 2012 was due to lower charge-offs and nonaccrual loans. Net charge-offs were $1.1 million for the fourth quarter of 2013, $26.9 million for the third quarter of 2013 ($19.6 million related to the Asset Sale) and $6.6 million for the fourth quarter of 2012. The charge offs in all three quarters were mainly real estate related loans. The ratio of annualized net charge-offs to average loans was 0.58% for the fourth quarter of 2013, 13.81% for the third quarter of 2013 and 3.29% for the fourth quarter of 2012. The ratio of the allowance for credit losses to period-end loans was 1.51% at December 31, 2013, 1.57% at September 30, 2013 and 2.04% at December 31, 2012.
At December 31, 2013, nonperforming assets excluding nonaccrual loans held for sale were $18.7 million, a decrease of $4.6 million, or 19.8%, when compared to September 30, 2013 and a decrease of $25.9 million, or 58.1%, when compared to December 31, 2012. Similarly, accruing troubled debt restructurings ("TDRs") excluding TDRs held for sale were $26.1 million at December 31, 2013, a decrease of $3.4 million, or 11.4%, when compared to September 30, 2013 and $26.3 million, or 50.2%, when compared to December 31, 2012. At December 31, 2013, the ratio of nonaccrual loans excluding nonaccrual loans held for sale to total assets was 1.39%, lower than the 1.66% and 3.08% at September 30, 2013 and December 31, 2012, respectively. Likewise, the ratio of accruing TDRs excluding TDRs held for sale to total assets at December 31, 2013 was 2.47%, decreasing from 2.80% at September 30, 2013 and 4.41% at December 31, 2012. When comparing December 31, 2013 to September 30, 2013, the positive trend in nonperforming assets and TDRs, as well as the corresponding asset quality ratios, was primarily due to the Company's continued focus on the resolution of its nonperforming assets and TDRs. When comparing December 31, 2013 to December 31, 2012, the positive trend in nonperforming assets and TDRs was mainly accomplished with the Asset Sale. See pages 4 and 9 of this release for additional detail.
Total noninterest income for the fourth quarter of 2013 decreased $577 thousand, or 12.0%, when compared to the third quarter of 2013. The decrease was primarily due to $265 thousand less in income from an insurance investment included in other noninterest income and $247 thousand less in insurance agency commissions. Total noninterest income for the fourth quarter of 2013 increased $1.6 million, or 61.7%, when compared to the fourth quarter of 2012. Included in other noninterest income for the fourth quarter of 2012 was a $1.3 million loss incurred to terminate a portion of the previously mentioned interest rate caps.
Total noninterest expense for the fourth quarter of 2013 increased $500 thousand, or 5.0%, when compared to the third quarter of 2013 primarily due to higher write-downs of other real estate owned ($152 thousand) and FDIC insurance premiums ($146 thousand). When compared to the fourth quarter of 2012, total noninterest expense for the fourth quarter of 2013 increased $783 thousand, or 8.1%, primarily due to higher FDIC insurance premiums ($226 thousand), salaries and benefits ($156 thousand) and write-downs of other real estate owned ($120 thousand).
Review of 2013 Financial Results
Net interest income for 2013 was $34.9 million, a decrease of $463 thousand, or 1.3%, when compared to 2012 due to a greater decline in interest income than the decline in interest expense. The decrease in interest income was primarily due to lower average balances of and yields earned on loans while the decrease in interest expense was primarily due to lower balances of and rates paid on money market and time deposits. However, the net interest margin improved to 3.48% for 2013 when compared to 3.23% for 2012.
The provisions for credit losses for 2013 and 2012 were $27.8 million and $27.7 million, respectively, while net charge-offs were $33.1 million and $26.0 million for 2013 and 2012, respectively. The ratio of annualized net charge-offs to average loans was 4.32% for 2013 and 3.20% for 2012.
Total noninterest income for 2013increased $1.7 million, or 10.8%, when compared to 2012. The increase was primarily due to higher insurance agency commissions ($833 thousand) and gains on sales of investment securities ($635 thousand), and fewer losses on sales of other real estate owned ($452 thousand), partially offset by lower service charges on deposit accounts ($180 thousand).
Total noninterest expense for 2013 increased $1.1 million, or 2.9%, when compared to 2012. The increase was primarily due to higher marketing expenses ($510 thousand) included in other noninterest expenses, FDIC insurance premiums ($433 thousand) and insurance agency commissions expense ($407 thousand). The increased marketing costs were mainly related to a branding project for the Company and its subsidiaries.
Shore Bancshares Information
Shore Bancshares, Inc. is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland's Eastern Shore. It is the parent company of two banks, The Talbot Bank of Easton, Maryland, and CNB; three insurance producer firms, The Avon-Dixon Agency, LLC, Elliott Wilson Insurance, LLC and Jack Martin and Associates, Inc; a wholesale insurance company, TSGIA, Inc; and an insurance premium finance company, Mubell Finance, LLC. Shore Bancshares, Inc. engages in the trust services business through the trust department at CNB under the name "Wye Financial & Trust". Additional information is available at www.shorebancshares.com.
Forward-Looking Statements
The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Shore Bancshares, Inc. with the Securities and Exchange Commission entitled "Risk Factors".
The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
Shore Bancshares, Inc. Page 4 of
13
Financial Highlights
(Dollars in thousands, except per share data)
For the Three Months
Ended For the Twelve Months Ended
December 31, December 31,
------------ ------------
2013 2012 Change 2013 2012 Change
---- ---- ------ ---- ---- ------
PROFITABILITY FOR THE PERIOD
Net interest income $8,570 $8,381 2.3% $34,876 $35,339 (1.3)%
Provision for credit losses 474 9,650 (95.1) 27,784 27,745 0.1
Noninterest income 4,215 2,606 61.7 17,459 15,758 10.8
Noninterest expense 10,468 9,685 8.1 40,686 39,555 2.9
------ ----- ------ ------
Income (loss) before income taxes 1,843 (8,348) 122.1 (16,135) (16,203) 0.4
Income tax expense (benefit) 668 (3,274) 120.4 (6,501) (6,565) 1.0
--- ------ ------ ------
Net income (loss) $1,175 $(5,074) 123.2 $(9,634) $(9,638) -
====== ======= ======= =======
Return on average assets 0.44% (1.71)% 215 bp (0.89)% (0.82)% (7) bp
Return on average equity 4.50 (17.15) 2,165 (8.64) (8.07) (57)
Return on average tangible equity (1) 5.53 (19.73) 2,526 (9.92) (9.14) (78)
Net interest margin 3.47 3.02 45 3.48 3.23 25
Efficiency ratio - GAAP 81.72 87.89 (617) 77.59 77.17 42
Efficiency ratio - Non-GAAP (1) 81.14 77.77 337 77.43 75.16 227
PER SHARE DATA
Basic net income (loss) per common share $0.14 $(0.60) 123.3% $(1.14) $(1.14) - %
Diluted net income (loss) per common share 0.14 (0.60) 123.3 (1.14) (1.14) -
Dividends paid per common share - - - - 0.01 (100.0)
Book value per common share at period end 12.19 13.48 (9.6)
Tangible book value per common share at period end (1) 10.31 11.56 (10.8)
Market value at period end 9.22 5.39 71.1
Market range:
High 9.45 6.98 35.4 9.45 7.45 26.8
Low 8.50 4.65 82.8 5.20 4.65 11.8
AVERAGE BALANCE SHEET DATA
Loans $718,070 $799,512 (10.2)% $764,659 $814,167 (6.1)%
Securities 145,181 144,459 0.5 139,241 137,686 1.1
Earning assets 982,519 1,108,585 (11.4) 1,006,311 1,097,851 (8.3)
Assets 1,060,315 1,183,135 (10.4) 1,081,127 1,172,452 (7.8)
Deposits 938,293 1,042,842 (10.0) 950,332 1,028,809 (7.6)
Stockholders' equity 103,507 117,700 (12.1) 111,445 119,359 (6.6)
CREDIT QUALITY DATA AT PERIOD END
Net charge-offs $1,050 $6,614 (84.1)% $33,050 $26,042 26.9%
Nonaccrual loans excluding nonaccrual loans held for sale (hfs) $14,626 $36,474 (59.9)
Loans 90 days past due and still accruing 270 460 (41.3)
Other real estate owned 3,779 7,659 (50.7)
----- -----
Total nonperforming assets excluding nonaccrual loans hfs 18,675 44,593 (58.1)
Nonaccrual loans hfs 3,521 - -
----- ---
Total nonperforming assets including nonaccrual loans hfs $22,196 $44,593 (50.2)
======= =======
Accruing troubled debt restructurings (TDRs) $26,088 $52,353 (50.2)
======= =======
Total nonperforming assets and accruing TDRs excluding nonaccrual loans hfs $44,763 $96,946 (53.8)
Nonaccrual loans hfs 3,521 - -
----- ---
Total nonperforming assets and accruing TDRs including nonaccrual loans hfs $48,284 $96,946 (50.2)
======= =======
(1) See the reconciliation table on page 13 of 13.
Shore Bancshares, Inc. Page 5 of
13
Financial Highlights
(Dollars in thousands, except per share data)
For the Three Months For the Twelve Months
Ended Ended
December 31, December 31,
------------ ------------
2013 2012 Change 2013 2012 Change
---- ---- ------ ---- ---- ------
CAPITAL AND CREDIT QUALITY RATIOS
Average equity to average assets 9.76% 9.95% (19) bp 10.31% 10.18% 13 bp
Average tangible equity to average tangible assets (1) 8.38 8.69 (31) 8.95 8.90 5
Annualized net charge-offs to average loans 0.58 3.29 (271) 4.32 3.20 112
Allowance for credit losses as a percent of:
Period-end loans 1.51 2.04 (53)
Nonaccrual loans excluding nonaccrual loans hfs 73.33 43.84 2,949
Nonaccrual loans including nonaccrual loans hfs 59.10 43.84 1,526
Nonperforming assets excluding nonaccrual loans hfs 57.43 35.86 2,157
Nonperforming assets including nonaccrual loans hfs 48.32 35.86 1,246
Accruing TDRs 41.11 30.54 1,057
Nonperforming assets and accruing TDRs excluding nonaccrual loans hfs 23.96 16.49 747
Nonperforming assets and accruing TDRs including nonaccrual loans hfs 22.21 16.49 572
As a percent of total loans:
Nonaccrual loans excluding nonaccrual loans hfs 2.05 4.65 (260)
Accruing TDRs 3.66 6.67 (301)
Nonaccrual loans and accruing TDRs excluding nonaccrual loans hfs 5.71 11.32 (561)
As a percent of total loans+other real estate owned:
Nonperforming assets excluding nonaccrual loans hfs 2.61 5.63 (302)
Nonperforming assets and accruing TDRs excluding nonaccrual loans hfs 6.25 12.23 (598)
As a percent of total assets:
Nonaccrual loans excluding nonaccrual loans hfs 1.39 3.08 (169)
Nonaccrual loans including nonaccrual loans hfs 1.72 3.08 (136)
Nonperforming assets excluding nonaccrual loans hfs 1.77 3.76 (199)
Nonperforming assets including nonaccrual loans hfs 2.11 3.76 (165)
Accruing TDRs 2.47 4.41 (194)
Nonperforming assets and accruing TDRs excluding nonaccrual loans hfs 4.25 8.18 (393)
Nonperforming assets and accruing TDRs including nonaccrual loans hfs 4.58 8.18 (360)
(1) See the reconciliation table on page 13 of 13.
Shore Bancshares, Inc. Page 6 of 13
Consolidated Balance Sheets
(In thousands, except per share data)
December 31, 2013
December 31, December 31, compared to
2013 2012 December 31, 2012
---- ---- -----------------
ASSETS
Cash and due from banks $21,238 $26,579 (20.1)%
Interest-bearing deposits with other banks 109,384 164,864 (33.7)
Federal funds sold 468 8,750 (94.7)
Investments available for sale (at fair value) 147,101 145,508 1.1
Investments held to maturity 5,185 2,657 95.1
Loans held for sale 3,521 - -
Loans 711,919 785,082 (9.3)
Less: allowance for credit losses (10,725) (15,991) (32.9)
-------
Loans, net 701,194 769,091 (8.8)
------- -------
Premises and equipment, net 15,198 15,593 (2.5)
Goodwill 12,454 12,454 -
Other intangible assets, net 3,520 3,816 (7.8)
Other real estate owned, net 3,779 7,659 (50.7)
Other assets 31,082 28,836 7.8
------ ------
Total assets $1,054,124 $1,185,807 (11.1)
========== ==========
LIABILITIES
Noninterest-bearing deposits $172,797 $153,992 12.2
Interest-bearing deposits 760,671 895,281 (15.0)
------- -------
Total deposits 933,468 1,049,273 (11.0)
Short-term borrowings 10,140 13,761 (26.3)
Accrued expenses and other liabilities 7,217 8,747 (17.5)
----- -----
Total liabilities 950,825 1,071,781 (11.3)
------- ---------
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; authorized
35,000,000 shares 85 85 -
Additional paid in capital 32,207 32,155 0.2
Retained earnings 71,444 81,078 (11.9)
Accumulated other comprehensive (loss) income (437) 708 (161.7)
---- ---
Total stockholders' equity 103,299 114,026 (9.4)
------- -------
Total liabilities and stockholders' equity $1,054,124 $1,185,807 (11.1)
========== ==========
Period-end common shares outstanding 8,471 8,457 0.2
Book value per common share $12.19 $13.48 (9.6)
Shore Bancshares, Inc. Page 7 of
13
Consolidated Statements of Operations
(In thousands, except per share data)
For the Three Months For the Twelve Months
Ended Ended
December 31, December 31,
------------ ------------
2013 2012 % Change 2013 2012 % Change
---- ---- -------- ---- ---- --------
INTEREST INCOME
Interest and fees on loans $9,242 $10,193 (9.3)% $39,058 $42,698 (8.5)%
Interest and dividends on investment securities:
Taxable 504 666 (24.3) 2,072 2,815 (26.4)
Tax-exempt 3 12 (75.0) 17 104 (83.7)
Interest on federal funds sold 1 3 (66.7) 4 10 (60.0)
Interest on deposits with other banks 57 86 (33.7) 200 274 (27.0)
--- ---
Total interest income 9,807 10,960 (10.5) 41,351 45,901 (9.9)
----- ------
INTEREST EXPENSE
Interest on deposits 1,230 2,570 (52.1) 6,448 10,501 (38.6)
Interest on short-term borrowings 7 9 (22.2) 27 45 (40.0)
Interest on long-term debt - - - - 16 (100.0)
--- --- --- ---
Total interest expense 1,237 2,579 (52.0) 6,475 10,562 (38.7)
----- ----- ----- ------
NET INTEREST INCOME 8,570 8,381 2.3 34,876 35,339 (1.3)
Provision for credit losses 474 9,650 (95.1) 27,784 27,745 0.1
--- ----- ------ ------
NET INTEREST INCOME (LOSS) AFTER PROVISION
FOR CREDIT LOSSES 8,096 (1,269) 738.0 7,092 7,594 (6.6)
-----
NONINTEREST INCOME
Service charges on deposit accounts 599 653 (8.3) 2,371 2,551 (7.1)
Trust and investment fee income 429 365 17.5 1,613 1,644 (1.9)
Investment securities gains - - - 913 278 228.4
Insurance agency commissions 2,477 2,292 8.1 10,647 9,814 8.5
Loss on termination of cash flow hedge - (1,339) 100.0 (1,306) (1,339) 2.5
Other noninterest income 710 635 11.8 3,221 2,810 14.6
--- -----
Total noninterest income 4,215 2,606 61.7 17,459 15,758 10.8
----- ----- ------ ------
NONINTEREST EXPENSE
Salaries and wages 4,336 4,240 2.3 17,346 17,418 (0.4)
Employee benefits 983 923 6.5 4,094 3,994 2.5
Occupancy expense 569 609 (6.6) 2,344 2,559 (8.4)
Furniture and equipment expense 252 235 7.2 1,020 963 5.9
Data processing 773 654 18.2 2,900 2,717 6.7
Directors' fees 92 107 (14.0) 354 474 (25.3)
Amortization of intangible assets 74 74 - 296 392 (24.5)
Insurance agency commissions expense 470 387 21.4 1,798 1,391 29.3
FDIC insurance premium expense 613 387 58.4 1,813 1,380 31.4
Write-downs of other real estate owned 371 251 47.8 1,318 1,328 (0.8)
Other noninterest expenses 1,935 1,818 6.4 7,403 6,939 6.7
----- ----- -----
Total noninterest expense 10,468 9,685 8.1 40,686 39,555 2.9
------ ----- ------ ------
Income (loss) before income taxes 1,843 (8,348) 122.1 (16,135) (16,203) 0.4
Income tax expense (benefit) 668 (3,274) 120.4 (6,501) (6,565) 1.0
------ ------ ------
NET INCOME (LOSS) $1,175 $(5,074) 123.2 $(9,634) $(9,638) -
====== ======= ======= =======
Weighted average shares outstanding - basic 8,463 8,457 0.1 8,461 8,457 -
Weighted average shares outstanding - diluted 8,474 8,457 0.2 8,461 8,457 -
Basic net income (loss) per common share $0.14 $(0.60) 123.3 $(1.14) $(1.14) -
Diluted net income (loss) per common share 0.14 (0.60) 123.3 (1.14) (1.14) -
Dividends paid per common share - - - - 0.01 (100.0)
Shore Bancshares, Inc. Page 8 of
13
Consolidated Average Balance Sheets
(Dollars in thousands)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
------------ ------------
2013 2012 2013 2012
---- ---- ---- ----
Average Yield/ Average Yield/ Average Yield/ Average Yield/
balance rate balance rate balance rate balance rate
------- ---- ------- ---- ------- ---- ------- ----
Earning assets
Loans $718,070 5.07% $799,512 5.09% $764,659 5.11% $814,167 5.26%
Loans held for sale 15,047 2.38 - - 3,857 2.34 - -
Investment securities
Taxable 144,699 1.38 143,137 1.85 138,701 1.49 134,697 2.09
Tax-exempt 482 4.39 1,322 5.05 540 4.84 2,989 5.25
Federal funds sold 2,692 0.06 7,782 0.12 3,850 0.10 10,185 0.10
Interest-bearing deposits 101,529 0.22 156,832 0.22 94,704 0.21 135,813 0.20
------- ------- ------ -------
Total earning assets 982,519 3.97% 1,108,585 3.94% 1,006,311 4.12% 1,097,851 4.20%
Cash and due from banks 20,900 21,258 22,603 20,256
Other assets 70,048 67,596 67,724 68,813
Allowance for credit losses (13,152) (14,304) (15,511) (14,468)
-------
Total assets $1,060,315 $1,183,135 $1,081,127 $1,172,452
========== ========== ========== ==========
Interest-bearing liabilities
Demand deposits $176,492 0.15% $169,398 0.18% $171,244 0.16% $160,741 0.18%
Money market and savings deposits (1) 211,294 0.12 281,593 1.21 221,808 0.49 279,126 1.17
Certificates of deposit $100,000 or more 190,117 1.16 231,232 1.40 202,053 1.28 238,241 1.44
Other time deposits 188,645 1.14 204,213 1.59 195,045 1.29 204,644 1.70
------- ------- ------- -------
Interest-bearing deposits 766,548 0.64 886,436 1.15 790,150 0.82 882,752 1.19
Short-term borrowings 10,505 0.23 13,573 0.27 10,980 0.24 14,976 0.30
Long-term debt - - - - - - 341 4.61
--- --- --- ---
Total interest-bearing liabilities 777,053 0.63% 900,009 1.14% 801,130 0.81% 898,069 1.18%
Noninterest-bearing deposits 171,745 156,406 160,182 146,057
Accrued expenses and other liabilities 8,010 9,020 8,370 8,967
Stockholders' equity 103,507 117,700 111,445 119,359
-------
Total liabilities and stockholders' equity $1,060,315 $1,183,135 $1,081,127 $1,172,452
========== ========== ========== ==========
Net interest spread 3.34% 2.80% 3.31% 3.02%
Net interest margin 3.47% 3.02% 3.48% 3.23%
(1) Interest
on money
market
and
savings
deposits
includes
an
adjustment
to
expense
related
to
interest
rate
caps and
the
hedged
deposits
associated
with
them.
Interest
expense
for the
fourth
quarter
of 2013
does not
reflect
this
adjustment
because
the
interest
rate
caps
were
terminated
in June
of 2013.
However,
this
adjustment
increased
interest
expense
$552
thousand
for the
fourth
quarter
of 2012,
$695
thousand
for
fiscal
year
2013 and
$2.0
million
for
fiscal
year
2012.
Shore Bancshares, Inc. Page 9 of
13
Financial Highlights By Quarter
(Dollars in thousands, except per share data)
4th quarter 3rd quarter 2nd quarter 1st quarter 4th quarter 4Q 13 4Q 13
2013 2013 2013 2013 2012 compared to compared to
(4Q 13) (3Q 13) (2Q 13) (1Q 13) (4Q 12) 3Q 13 4Q 12
------ ------ ------ ------ ------ ----- -----
PROFITABILITY FOR THE PERIOD
Taxable-equivalent net interest income $8,595 $8,852 $9,028 $8,504 $8,413 (2.9)% 2.2%
Less: Taxable-equivalent adjustment 25 24 27 27 32 4.2 (21.9)
--- --- --- --- ---
Net interest income 8,570 8,828 9,001 8,477 8,381 (2.9) 2.3
Provision for credit losses 474 22,460 2,700 2,150 9,650 (97.9) (95.1)
Noninterest income 4,215 4,792 3,962 4,490 2,606 (12.0) 61.7
Noninterest expense 10,468 9,968 9,759 10,491 9,685 5.0 8.1
------ ----- ----- ------ -----
Income (loss) before income taxes 1,843 (18,808) 504 326 (8,348) 109.8 122.1
Income tax expense (benefit) 668 (7,416) 143 104 (3,274) 109.0 120.4
--- ------ --- --- ------
Net income (loss) $1,175 $(11,392) $361 $222 $(5,074) 110.3 123.2
====== ======== ==== ==== =======
Return on average assets 0.44% (4.24)% 0.13% 0.08% (1.71)% 468 bp 215 bp
Return on average equity 4.50 (39.68) 1.27 0.79 (17.15) 4,418 2,165
Return on average tangible equity (1) 5.53 (46.03) 1.66 1.11 (19.73) 5,156 2,526
Net interest margin 3.47 3.54 3.60 3.30 3.02 (7) 45
Efficiency ratio - GAAP 81.72 73.06 75.13 80.74 87.89 866 (617)
Efficiency ratio - Non-GAAP (1) 81.14 74.13 74.45 80.17 77.77 701 337
PER SHARE DATA
Basic net income (loss) per common share $0.14 $(1.35) $0.04 $0.03 $(0.60) 110.4% 123.3%
Diluted net income (loss) per common share 0.14 (1.35) 0.04 0.03 (0.60) 110.4 123.3
Dividends paid per common share - - - - - - -
Book value per common share at period end 12.19 12.06 13.43 13.51 13.48 1.1 (9.6)
Tangible book value per common share at period end (1) 10.31 10.16 11.52 11.60 11.56 1.5 (10.8)
Market value at period end 9.22 8.80 7.36 6.79 5.39 4.8 71.1
Market range:
High 9.45 9.06 7.75 6.91 6.98 4.3 35.4
Low 8.50 7.06 5.97 5.20 4.65 20.4 82.8
AVERAGE BALANCE SHEET DATA
Loans $718,070 $772,008 $785,442 $783,757 $799,512 (7.0)% (10.2)%
Securities 145,181 124,020 141,193 146,756 144,459 17.1 0.5
Earning assets 982,519 993,068 1,005,474 1,044,755 1,108,585 (1.1) (11.4)
Assets 1,060,315 1,064,919 1,077,852 1,122,310 1,183,135 (0.4) (10.4)
Deposits 938,293 932,867 943,577 987,325 1,042,842 0.6 (10.0)
Stockholders' equity 103,507 113,904 114,208 114,250 117,700 (9.1) (12.1)
CREDIT QUALITY DATA AT PERIOD END
Net charge-offs $1,050 $26,882 $2,712 $2,406 $6,614 (96.1)% (84.1)%
Nonaccrual loans excluding nonaccrual loans held for sale (hfs) $14,626 $17,501 $34,818 $31,813 $36,474 (16.4) (59.9)
Loans 90 days past due and still accruing 270 9 3 22 460 2,900.0 (41.3)
Other real estate owned 3,779 5,776 6,408 8,366 7,659 (34.6) (50.7)
----- ----- ----- ----- -----
Total nonperforming assets excluding nonaccrual loans hfs 18,675 23,286 41,229 40,201 44,593 (19.8) (58.1)
Nonaccrual loans hfs 3,521 7,265 - - - (51.5) -
----- ----- --- --- ---
Total nonperforming assets including nonaccrual loans hfs $22,196 $30,551 $41,229 $40,201 $44,593 (27.3) (50.2)
======= ======= ======= ======= =======
Accruing troubled debt restructurings (TDRs) excluding TDRs hfs $26,088 $29,439 $50,278 $52,545 $52,353 (11.4) (50.2)
Accruing TDRs hfs - 14,842 - - - (100.0) -
Total accruing TDRs including TDRs hfs $26,088 $44,281 $50,278 $52,545 $52,353 (41.1) (50.2)
======= ======= ======= ======= =======
Total nonperforming assets and accruing TDRs excluding nonaccrual loans and TDRs hfs $44,763 $52,725 $91,507 $92,746 $96,946 (15.1) (53.8)
Nonaccrual loans and TDRs hfs 3,521 22,107 - - - (84.1) -
Total nonperforming assets and accruing TDRs including nonaccrual loans and TDRs hfs $48,284 $74,832 $91,507 $92,746 $96,946 (35.5) (50.2)
======= ======= ======= ======= =======
(1) See the reconciliation table on page 13 of 13.
Shore Bancshares, Inc. Page 10 of
13
Financial Highlights By Quarter
(Dollars in thousands, except per share data)
4Q 13 4Q 13
compared to compared to
4Q 13 3Q 13 2Q 13 1Q 13 4Q 12 3Q 13 4Q 12
----- ----- ----- ----- ----- ----- -----
CAPITAL AND CREDIT QUALITY RATIOS
Average equity to average assets 9.76% 10.70% 10.60% 10.18% 9.95% (94) bp (19) bp
Average tangible equity to average tangible assets (1) 8.38 9.33 9.23 8.86 8.69 (95) (31)
Annualized net charge-offs to average loans 0.58 13.81 1.38 1.25 3.29 (1,323) (271)
Allowance for credit losses as a percent of:
Period-end loans 1.51 1.57 2.01 2.00 2.04 (6) (53)
Nonaccrual loans excluding nonaccrual loans hfs 73.33 64.57 45.16 49.46 43.84 876 2,949
Nonaccrual loans including nonaccrual loans hfs 59.10 45.63 45.16 49.46 43.84 1,347 1,526
Nonperforming assets excluding nonaccrual loans hfs 57.43 48.53 38.14 39.14 35.86 890 2,157
Nonperforming assets including nonaccrual loans hfs 48.32 36.99 38.14 39.14 35.86 1,133 1,246
Accruing TDRs excluding TDRs hfs 41.11 38.39 31.27 29.95 30.54 272 1,057
Accruing TDRs including TDRs hfs 41.11 25.52 31.27 29.95 30.54 1,559 1,057
Nonperforming assets and accruing TDRs excluding nonaccrual loans and TDRs hfs 23.96 21.43 17.18 16.97 16.49 253 747
Nonperforming assets and accruing TDRs including nonaccrual loans and TDRs hfs 22.21 15.10 17.18 16.97 16.49 711 572
As a percent of total loans:
Nonaccrual loans excluding nonaccrual loans hfs 2.05 2.44 4.45 4.05 4.65 (39) (260)
Accruing TDRs excluding TDRs hfs 3.66 4.10 6.43 6.69 6.67 (44) (301)
Nonaccrual loans and accruing TDRs excluding nonaccrual loans and TDRs hfs 5.71 6.54 10.88 10.74 11.32 (83) (561)
As a percent of total loans+other real estate owned:
Nonperforming assets excluding nonaccrual loans hfs 2.61 3.21 5.23 5.06 5.63 (60) (302)
Nonperforming assets and accruing TDRs excluding nonaccrual loans and TDRs hfs 6.25 7.28 11.60 11.68 12.23 (103) (598)
As a percent of total assets:
Nonaccrual loans excluding nonaccrual loans hfs 1.39 1.66 3.30 2.88 3.08 (27) (169)
Nonaccrual loans including nonaccrual loans hfs 1.72 2.36 3.30 2.88 3.08 (64) (136)
Nonperforming assets excluding nonaccrual loans hfs 1.77 2.21 3.91 3.64 3.76 (44) (199)
Nonperforming assets including nonaccrual loans hfs 2.11 2.91 3.91 3.64 3.76 (80) (165)
Accruing TDRs excluding TDRs hfs 2.47 2.80 4.77 4.76 4.41 (33) (194)
Accruing TDRs including TDRs hfs 2.47 4.21 4.77 4.76 4.41 (174) (194)
Nonperforming assets and accruing TDRs excluding nonaccrual loans and TDRs hfs 4.25 5.01 8.68 8.40 8.18 (76) (393)
Nonperforming assets and accruing TDRs including nonaccrual loans and TDRs hfs 4.58 7.12 8.68 8.40 8.18 (254) (360)
(1) See the reconciliation table on page 13 of 13.
Shore Bancshares, Inc. Page 11 of
13
Consolidated Statements of Operations By Quarter
(In thousands, except per share data)
4Q 13 4Q 13
compared to compared to
4Q 13 3Q 13 2Q 13 1Q 13 4Q 12 3Q 13 4Q 12
----- ----- ----- ----- ----- ----- -----
INTEREST INCOME
Interest and fees on loans $9,242 $9,767 $10,142 $9,907 $10,193 (5.4)% (9.3)%
Interest and dividends on investment securities:
Taxable 504 357 568 643 666 41.2 (24.3)
Tax-exempt 3 5 4 5 12 (40.0) (75.0)
Interest on federal funds sold 1 - 1 2 3 - (66.7)
Interest on deposits with other banks 57 53 40 50 86 7.5 (33.7)
--- --- --- --- ---
Total interest income 9,807 10,182 10,755 10,607 10,960 (3.7) (10.5)
INTEREST EXPENSE
Interest on deposits 1,230 1,348 1,748 2,122 2,570 (8.8) (52.1)
Interest on short-term borrowings 7 6 6 8 9 16.7 (22.2)
--- --- --- --- ---
Total interest expense 1,237 1,354 1,754 2,130 2,579 (8.6) (52.0)
----- ----- ----- ----- -----
NET INTEREST INCOME 8,570 8,828 9,001 8,477 8,381 (2.9) 2.3
Provision for credit losses 474 22,460 2,700 2,150 9,650 (97.9) (95.1)
--- ------ ----- ----- -----
NET INTEREST INCOME (LOSS) AFTER PROVISION
FOR CREDIT LOSSES 8,096 (13,632) 6,301 6,327 (1,269) 159.4 738.0
NONINTEREST INCOME
Service charges on deposit accounts 599 600 600 572 653 (0.2) (8.3)
Trust and investment fee income 429 401 393 390 365 7.0 17.5
Investment securities gains - - 913 - - - -
Insurance agency commissions 2,477 2,724 2,633 2,813 2,292 (9.1) 8.1
Loss on termination of cash flow hedge - - (1,306) - (1,339) - 100.0
Other noninterest income 710 1,067 729 715 635 (33.5) 11.8
----- --- --- ---
Total noninterest income 4,215 4,792 3,962 4,490 2,606 (12.0) 61.7
----- ----- ----- ----- -----
NONINTEREST EXPENSE
Salaries and wages 4,336 4,420 4,307 4,283 4,240 (1.9) 2.3
Employee benefits 983 971 1,006 1,134 923 1.2 6.5
Occupancy expense 569 566 612 597 609 0.5 (6.6)
Furniture and equipment expense 252 275 243 250 235 (8.4) 7.2
Data processing 773 718 706 703 654 7.7 18.2
Directors' fees 92 86 55 121 107 7.0 (14.0)
Amortization of intangible assets 74 74 74 74 74 - -
Insurance agency commissions expense 470 409 458 461 387 14.9 21.4
FDIC insurance premium expense 613 467 367 366 387 31.3 58.4
Write-downs of other real estate owned 371 219 56 672 251 69.4 47.8
Other noninterest expenses 1,935 1,763 1,875 1,830 1,818 9.8 6.4
----- ----- ----- ----- -----
Total noninterest expense 10,468 9,968 9,759 10,491 9,685 5.0 8.1
------ ----- ----- ------ -----
Income (loss) before income taxes 1,843 (18,808) 504 326 (8,348) 109.8 122.1
Income tax expense (benefit) 668 (7,416) 143 104 (3,274) 109.0 120.4
--- ------ --- --- ------
NET INCOME (LOSS) $1,175 $(11,392) $361 $222 $(5,074) 110.3 123.2
====== ======== ==== ==== =======
Weighted average shares outstanding - basic 8,463 8,461 8,461 8,458 8,457 - 0.1
Weighted average shares outstanding - diluted 8,474 8,461 8,465 8,458 8,457 0.2 0.2
Basic net income (loss) per common share $0.14 $(1.35) $0.04 $0.03 $(0.60) 110.4 123.3
Diluted net income (loss) per common share 0.14 (1.35) 0.04 0.03 (0.60) 110.4 123.3
Dividends paid per common share - - - - - - -
Shore Bancshares, Inc. Page 12 of
13
Consolidated Average Balance Sheets By Quarter
(Dollars in thousands)
Average balance
---------------
4Q 13 4Q 13
compared to compared to
4Q 13 3Q 13 2Q 13 1Q 13 4Q 12 3Q 13 4Q 12
----- ----- ----- ----- ----- ----- -----
Average Yield/ Average Yield/ Average Yield/ Average Yield/ Average Yield/
balance rate balance rate balance rate balance rate balance rate
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Earning assets
Loans $718,070 5.07% $772,008 5.03% $785,442 5.19% $783,757 5.14% $799,512 5.09% (7.0)% (10.2)%
Loans held for sale 15,047 2.38 - - - - - - - - - -
Investment securities
Taxable 144,699 1.38 123,499 1.15 140,614 1.62 146,176 1.78 143,137 1.85 17.2 1.1
Tax-exempt 482 4.39 521 5.27 579 4.81 580 4.85 1,322 5.05 (7.5) (63.5)
Federal funds sold 2,692 0.06 1,618 0.07 2,992 0.10 8,184 0.11 7,782 0.12 66.4 (65.4)
Interest-bearing deposits 101,529 0.22 95,422 0.22 75,847 0.21 106,058 0.19 156,832 0.22 6.4 (35.3)
------- ------ ------ ------- -------
Total earning assets 982,519 3.97% 993,068 4.08% 1,005,474 4.30% 1,044,755 4.13% 1,108,585 3.94% (1.1) (11.4)
Cash and due from banks 20,900 22,088 22,510 24,966 21,258 (5.4) (1.7)
Other assets 70,048 65,001 66,967 69,185 67,596 7.8 3.6
Allowance for credit losses (13,152) (15,238) (17,099) (16,596) (14,304) (13.7) (8.1)
Total assets $1,060,315 $1,064,919 $1,077,852 $1,122,310 $1,183,135 (0.4) (10.4)
========== ========== ========== ========== ==========
Interest-bearing liabilities
Demand deposits $176,492 0.15% $172,143 0.16% $162,589 0.15% $173,714 0.17% $169,398 0.18% 2.5 4.2
Money market and savings deposits (1) 211,294 0.12 207,162 0.12 225,117 0.67 244,182 0.97 281,593 1.21 2.0 (25.0)
Certificates of deposit $100,000 or more 190,117 1.16 198,495 1.23 203,641 1.32 216,288 1.39 231,232 1.40 (4.2) (17.8)
Other time deposits 188,645 1.14 192,878 1.24 197,644 1.30 201,171 1.47 204,213 1.59 (2.2) (7.6)
------- ------- ------- ------- -------
Interest-bearing deposits 766,548 0.64 770,678 0.69 788,991 0.89 835,355 1.03 886,436 1.15 (0.5) (13.5)
Short-term borrowings 10,505 0.23 10,695 0.23 10,752 0.24 11,987 0.27 13,573 0.27 (1.8) (22.6)
------ ------ ------ ------ ------
Total interest-bearing liabilities 777,053 0.63% 781,373 0.69% 799,743 0.88% 847,342 1.02% 900,009 1.14% (0.6) (13.7)
Noninterest-bearing deposits 171,745 162,189 154,586 151,970 156,406 5.9 9.8
Accrued expenses and other liabilities 8,010 7,453 9,315 8,748 9,020 7.5 (11.2)
Stockholders' equity 103,507 113,904 114,208 114,250 117,700 (9.1) (12.1)
Total liabilities and stockholders' equity $1,060,315 $1,064,919 $1,077,852 $1,122,310 $1,183,135 (0.4) (10.4)
========== ========== ========== ========== ==========
Net interest spread 3.34% 3.39% 3.42% 3.11% 2.80%
Net interest margin 3.47% 3.54% 3.60% 3.30% 3.02%
(1) Interest
on money
market
and
savings
deposits
includes
an
adjustment
to
expense
related
to
interest
rate
caps and
the
hedged
deposits
associated
with
them.
Interest
expense
for the
fourth
and
third
quarters
of 2013
does not
reflect
this
adjustment
because
the
interest
rate
caps
were
terminated
in June
of 2013.
However,
this
adjustment
increased
interest
expense
$279
thousand
for the
second
quarter
of 2013,
$416
thousand
for the
first
quarter
of 2013
and $552
thousand
for the
fourth
quarter
of 2012.
Shore Bancshares, Inc. Page 13 of
13
Reconciliation of Generally Accepted Accounting Principles (GAAP)
and Non-GAAP Measures
(In thousands, except per share data)
YTD YTD
4Q 13 3Q 13 2Q 13 1Q 13 4Q 12 12/31/2013 12/31/2012
----- ----- ----- ----- ----- ---------- ----------
The following reconciles return on average equity and return on
average tangible equity (Note 1):
Net income (loss) $1,175 $(11,392) $361 $222 $(5,074) $(9,634) $(9,638)
====== ======== ==== ==== ======= ======= =======
Net income (loss) - annualized (A) $4,662 $(45,197) $1,448 $900 $(20,186) $(9,634) $(9,638)
====== ======== ====== ==== ======== ======= =======
Net income (loss), excluding net amortization of intangible assets $1,220 $(11,347) $406 $267 $(5,029) $(9,455) $(9,401)
====== ======== ==== ==== ======= ======= =======
Net income (loss), excluding net amortization of intangible
assets - annualized (B) $4,840 $(45,018) $1,628 $1,083 $(20,007) $(9,455) $(9,401)
====== ======== ====== ====== ======== ======= =======
Average stockholders' equity (C) $103,507 $113,904 $114,208 $114,250 $117,700 $111,445 $119,359
Less: Average goodwill and other intangible assets (16,018) (16,092) (16,166) (16,242) (16,313) (16,129) (16,454)
------- ------- ------- ------- ------- ------- -------
Average tangible equity (D) $87,489 $97,812 $98,042 $98,008 $101,387 $95,316 $102,905
======= ======= ======= ======= ======== ======= ========
Return on average equity (GAAP) (A)/(C) 4.50% (39.68)% 1.27% 0.79% (17.15)% (8.64)% (8.07)%
==== ======= ==== ==== ======= ====== ======
Return on average tangible equity (Non-GAAP) (B)/(D) 5.53% (46.03)% 1.66% 1.11% (19.73)% (9.92)% (9.14)%
==== ======= ==== ==== ======= ====== ======
The following reconciles GAAP efficiency ratio and non-GAAP
efficiency ratio (Note 2):
Noninterest expense (E) $10,468 $9,968 $9,759 $10,491 $9,685 $40,686 $39,555
Less: Amortization of intangible assets (74) (74) (74) (74) (74) (296) (392)
Other nonrecurring adjustments - - 49 - - 49 -
Adjusted noninterest expense (F) $10,394 $9,894 $9,734 $10,417 $9,611 $40,439 $39,163
======= ====== ====== ======= ====== ======= =======
Taxable-equivalent net interest income (G) $8,595 $8,852 $9,028 $8,504 $8,413 $34,979 $35,502
Nonrecurring adjustment - - (308) - - (308) -
Taxable-equivalent net interest income excluding nonrecurring adjustment (H) $8,595 $8,852 $8,720 $8,504 $8,413 $34,671 $35,502
====== ====== ====== ====== ====== ======= =======
Noninterest income (I) $4,215 $4,792 $3,962 $4,490 $2,606 $17,459 $15,758
Less: Investment securities (gains)/losses - - (913) - - (913) (278)
Other nonrecurring (gains)/losses - (297) 1,306 - 1,339 1,009 1,122
Adjusted noninterest income (J) $4,215 $4,495 $4,355 $4,490 $3,945 $17,555 $16,602
====== ====== ====== ====== ====== ======= =======
Efficiency ratio (GAAP) (E)/(G)+(I) 81.72% 73.06% 75.13% 80.74% 87.89% 77.59% 77.17%
===== ===== ===== ===== ===== ===== =====
Efficiency ratio (Non-GAAP) (F)/(H)+(J) 81.14% 74.13% 74.45% 80.17% 77.77% 77.43% 75.16%
===== ===== ===== ===== ===== ===== =====
The following reconciles book value per common share and tangible
book value per common share (Note 1):
Stockholders' equity (K) $103,299 $102,001 $113,594 $114,348 $114,026
Less: Goodwill and other intangible assets (15,974) (16,048) (16,122) (16,196) (16,270)
------- ------- ------- ------- -------
Tangible equity (L) $87,325 $85,953 $97,472 $98,152 $97,756
======= ======= ======= ======= =======
Shares outstanding (M) 8,471 8,461 8,461 8,461 8,457
===== ===== ===== ===== =====
Book value per common share (GAAP) (K)/(M) $12.19 $12.06 $13.43 $13.51 $13.48
====== ====== ====== ====== ======
Tangible book value per common share (Non-GAAP) (L)/(M) $10.31 $10.16 $11.52 $11.60 $11.56
====== ====== ====== ====== ======
The following reconciles average equity to average assets and
average tangible equity to average tangible assets (Note 1):
Average stockholders' equity (N) $103,507 $113,904 $114,208 $114,250 $117,700 $111,445 $119,359
Less: Average goodwill and other intangible assets (16,018) (16,092) (16,166) (16,242) (16,313) (16,129) (16,454)
------- ------- ------- ------- ------- ------- -------
Average tangible equity (O) $87,489 $97,812 $98,042 $98,008 $101,387 $95,316 $102,905
======= ======= ======= ======= ======== ======= ========
Average assets (P) $1,060,315 $1,064,919 $1,077,852 $1,122,310 $1,183,135 $1,081,127 $1,172,452
Less: Average goodwill and other intangible assets (16,018) (16,092) (16,166) (16,242) (16,313) (16,129) (16,454)
------- ------- ------- ------- ------- ------- -------
Average tangible assets (Q) $1,044,297 $1,048,827 $1,061,686 $1,106,068 $1,166,822 $1,064,998 $1,155,998
========== ========== ========== ========== ========== ========== ==========
Average equity/average assets (GAAP) (N)/(P) 9.76% 10.70% 10.60% 10.18% 9.95% 10.31% 10.18%
==== ===== ===== ===== ==== ===== =====
Average tangible equity/average tangible assets (Non-GAAP) (O)/(Q) 8.38% 9.33% 9.23% 8.86% 8.69% 8.95% 8.90%
==== ==== ==== ==== ==== ==== ====
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.
SOURCE Shore Bancshares, Inc.
