Shore Bancshares, Inc. · NASDAQ:SHBI
Shore Bancshares — Sterne Agee 2014 Financial Institutions Investor Conference
28 slides from Shore Bancshares's conference presentation, Feb 19, 2014
Slide 1: Sterne Agee 2014 Financial Institutions Investor Conference
Lloyd L. “Scott” Beatty, Jr. President CEO George S. Rapp Vice President CFO Sterne Agee 2014 Financial Institutions Investor Conference February 12 – 14, 2014
Slide 2: Forward-Looking Statement
Forward - Looking Statement This presentation includes forward - looking statements, including statements about future results. These statements are subject to uncertainties and risks, including but not limited to our ability to integrate acquisitions; the strength of the U.S. economy and the local
Slide 3: Management Team
Management Team 3 Years Years in with Name Title/Function Entity Banking Company L. Scott Beatty, Jr. President and Chief Executive Officer SHBI 22 8 George S. Rapp EVP and Chief Financial Officer SHBI 35 1 Pat Bilbrough President and Chief Executive Officer Talbot Bank 18 2 F. Winfield Trice, Jr. P
Slide 4: Financial Summary (As of 12/31/2013)
Financial Summary (As of 12/31/2013) 4 Assets: $1,054.1 million Gross Loans: $711.9 million Total Deposits: $933.5 million Total Equity: $103.3 million Tangible Common Equity: $87.3 million Tangible Book Value per Share: $10.31 Headquarters: Easton, Maryland Branches: Depository 18 Other 7 Shares Ou
Slide 5: Investment Highlights
Investment Highlights Eastern Shore based Multi-Bank holding Company with two bank subs and 5 insurance agencies - - three entities over 100 years old 5‘ largest bank headquartered in Maryland Largest independent Maryland-based bank headquartered and operating on the Delmarva Peninsula. Presence in
Slide 6: Locations: branches and non-bank offices
25 locations 18 branches 7 non - bank offices 6
Slide 7: Deposit Market Share Delmarva Peninsula
Deposit Market Share Delmarva Peninsula 7 NOTE: Delmarva Peninsula defined as Maryland counties of Kent, Queen Anne’s, Talbot, Caroline, Dorchester, Wicomico, Somerset, and Worcester; and Delaware counties of Kent and Sussex; Deposit m arket share excludes Discover Financial Services Data as of June
Slide 8: Bank Branch Competitors Report
Shore Bancshares, Inc. Bank Branch Competitors Report Within 1 Mile Within 5 Miles Company Name Competing Branches Deposits in Competing Branches Competing Branches Deposits in Competing Branches Shore Bancshares, Inc . 18 925,966 Money Centers/Regionals 7 1,168,403 7 1,930,539 Community Banks 45 89
Slide 9: Loans and Deposits (As of 12/31/2013)
• Loan Composition • Deposit Composition Loans and Deposits (As of 12/31/2013) Construction 9.0% Residential Real Estate 26.2% Commercial Real Estate 37.8% Farmland 5.0% Multi - Family 3.8% Commercial and Industrial 8.0% Consumer 10.2% Noninterest - bearing demand 18.5% Interest - bearing demand 19.
Slide 10: Deposit Composition
Deposit Composition (Dollar Value in Thousands) As of December 31, 2012 As of June 30, 2013 December 31, 2013 Annual Growth Deposit Type Balance % of Total Balance % of Total Balance % of Total % Noninterest Bearing Demand $ 153,992 14.7% $ 158,562 17.2% $ 172,797 18.5% 12.2% 1 Interest Bearing Dema
Slide 11: Improving Credit Quality
Improving Credit Quality 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 3/31/2013 6/30/2013 9/30/2013 12/31/2013 NON - PERFORMING ASSETS Nonaccrual Loans $51,370 $49,405 $47,958 $39,442 $36,474 $31,813 $34,818 $24,766 $18,147 90 or More Days Past Due 2,723 3,796 3,519 4,675 460 22 3 9 270 Other
Slide 12: Revenue Composition
Revenue Composition Revenue Breakdown 2013 Noninterest Income Detail (1) ( 1) Noninterest income excludes investment securities gains and loss on termination of cash flow hedge. Dollars in thousands 24% 25% 26% 34% 32% 31% 12 Service charges on deposit accounts 15.2% Trust and Investment fee income
Slide 13: Key Ratios Versus Peers – 4Q13
Key Ratios Versus Peers – 4Q13 Peer* SHBI Return on Average Assets 0.24% 0.44% Return on Average Equity 4.16% 4.50% Total Equity/Total Assets 10.19% 9.80% Tangible Equity/Tangible Assets 8.90% 8.41% Risk - Based Capital Ratio 15.90% 11.34% Net Interest Margin 3.89% 3.47% Non - interest Income/Operat
Slide 14: Selected Financial Data 2009 – 2013
Selected Financial Data 2009 – 2013 RESULTS OF OPERATION: Years Ended December 31 , $(000) 2013 2012 2011 2010 2009 Net interest income 34,878 35,339 39,764 42,639 41,378 Provision for credit losses 27,784 27,745 19,470 21,119 8,986 Noninterest income 17,459 15,758 17,318 18,041 19,541 Noninterest e
Slide 15: Capital Adequacy
Capital Adequacy 9.38% 9.35% 9.16% 8.36% 8.41% 12.59% 13.07% 13.80% 13.32% 11.34% 11.45% 11.81% 12.55% 12.05% 10.09% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 2009 2010 2011 2012 2013 Tangible Common Equity/Tangible Asset Total Risk-Based Capital Ratio Tier 1 Risk-Based Capital Ratio
Slide 16: What Makes SHBI Unique?
What Makes SHBI Unique? ● Track record of consistent financial performance ▪ Diversity of Revenue Sources - - without Mortgage ▪ Capital Position Remains Solid ▪ Stable Net Interest Margin ▪ Strong Control of Operating Expenses ● Dominant independent financial services company in all markets within
Slide 17: Looking Ahead Strategically
Looking Ahead Strategically ● Focus on organic growth - Re - engage sales efforts across all business lines - Grow customer base by taking share from local/national competitors ($4.1 billion available) - Focus on relationships to increase deposit penetration multi - product usage ● Leverage infrastr
Slide 18: Compelling Investment Considerations
Compelling Investment Considerations ● We are a very different Company now x Reduced emphasis on R/E as collateral x Strengthened noninterest revenue sources x Continuing to build organizational depth x Forge a sales culture with new branding thrust x Revamped strategic plan positions for growth x I
Slide 19: SHBI - Price Change (%)
SHBI - Price Change (%) ‘Shore Bancshares, Inc. - Price Change (%) —she1 «79.70% row Bank (25.00%) rie Change (%) $ Ss i = z i ks ‘ ShORE BANCSHARES, INC. Good things are happening here ™ 4
Slide 20: Addendum
ADDENDUM SHORE BANCSHARES, INC. Good things are happening here ™
Slide 21: Peer Group Definition
Peer Group Definition Publically traded banking companies in MD, DC, VA, DE with total assets between $750M - $2B. 21
Slide 22: Peer Group Financial Comparison
22 Company Name Location Total Assets MRQ ($000) Tang Common Equity/ Tang Assets MRQ (%) NPAs/ Assets MRQ (%) Total Equity/ Total Assets MRQ (%) Efficiency Ratio MRQ (%) Risk - based Capital Ratio MRQ (%) ROAA MRQ (%) ROAE MRQ (%) Noninterest Inc / Operating Rev MRQ (%) Net Interest Margin MRQ (%) O
Slide 23: Bank Branch Competitors Report (1 Mile)
23 Shore Bancshares, Inc. Bank Branch Competitors Report Ownership Pro - forma Distance (mi.) 1 Include Credit Unions? Yes This report lists banks, thrifts and credit unions that own branches within 1 mile of any Shore Bancshares Inc. branch in the Un ited States and its territories. The number of b
Slide 24: Bank Branch Competitors Report (5 Miles)
Shore Bancshares, Inc. Bank Branch Competitors Report Ownership Pro - forma Distance (mi.) 5 Include Credit Unions? Yes This report lists banks, thrifts and credit unions that own branches within 5 miles of any Shore Bancshares Inc. branch in th e U nited States and its territories. The number of br
Slide 25: SHBI Management Team
SHBI Management Team Talent, depth, unique skills • Lloyd L. Beatty, Jr., 61, CPA, President CEO of SHBI since June 2013, Director of SHBI since December 2000, Director of Talbot Bank since 1992. From October 2005, President COO of SHBI. Formerly COO, private equity firm Darby Overseas Investments.
Slide 26: Selected SHBI Market Highlights
Selected SHBI Market Highlights • Projected 5 - year population growth (2010 - 2015) in DE market exceeds 10%; growth rates in two leading MD counties (Talbot Queen Anne’s) to exceed 4% combined. • Current median age across market is ~40 years old. • Household income for entire 2 - state franchise i
Slide 27: Loan Composition
Loan Composition (Dollar Value in Thousands) As of December 31, 2012 As of June 30, 2013 As of 12/31/2013 Loan Type Balance % of Total Balance % of Total Balance % of Total Construction – 1 - 4 Family $ 11,309 1.4% $ 10,825 1.4% $ 10,221 1.4% Construction – Other 96,742 12.3 93,691 12.0 54,370 7.6 R
Slide 28: Overview of TDRs
Overview of TDRs ● 38 performing restructured loans currently outstanding with $22.3 million in aggregate balances ● 37% of TDRs were performing prior to restructuring ● Weighted average yield on TDRs = 3.89% ● Restructurings by type: – Reduction of interest rate = 5 loans – Extension of term = 1 lo
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