Shore Bancshares, Inc. · NASDAQ:SHBI
Shore Bancshares — FIG Partners 10th Annual Bank CEO Forum 2014
26 slides from Shore Bancshares's conference presentation, Sep 17, 2014
Slide 1: FIG Partners 10th Annual Bank CEO Forum
Nasdaq: SHBI FIG Partners 10 th Annual Bank CEO Forum September 15 - 16, 2014
Slide 2: Safe Harbor Regarding Forward-Looking Statements
Safe Harbor Regarding Forward - Looking Statements This presentation may contain “forward - looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Shore Bancshares, Inc. (the “Company”). Forward - looking statements often include the words “believes,
Slide 3: Management Team
Management Team 3 Years Years in with Name Title/Function Entity Banking Company L. Lloyd "Scott" Beatty, Jr.President and Chief Executive Officer SHBI 22 9 George S. Rapp EVP and Chief Financial Officer SHBI 35 1 Patrick M. Bilbrough President and Chief Executive Officer Talbot Bank 18 3 F. Winfiel
Slide 4: Financial Summary
Financial Summary As of June 30, 2014 4 Total Assets: $1,064.8 million Gross Loans: $709.7 million Total Deposits: $913.5 million Total Shareholder’s Equity: $137.5 million Tangible Common Equity: $124.2 million Tangible Book value per Share: $9.84 Branches: Depository 18 Insurance and Wealth Manage
Slide 5: Strategic Direction
Strategic Direction 5 Focus on Driving Profitability Diversity of Revenues – No Mortgage Banking o Banking o Insurance o Service Charges o Wealth Management Improving Asset Quality Leverage Size and Existing Platform to Take Advantage of Market Dislocation Emphasis on Core Deposits/Funding
Slide 6: Shore Bancshares' Community of Companies
Shore Bancshares’ Community of Companies SHBI CNB ($475mm of Assets) Wye Financial & Trust 1 The Talbot Bank of Easton Maryland ($613mm of Assets) Dover Street Realty Inc. Avon - Dixon Agency LLC (Retail) 2 Jack Martin & Associates Inc. Mubell Finance LLC Elliott Wilson Insurance, LLC 1. Wye Financi
Slide 7: Shore Bancshares' Community of Companies
Shore Bancshares’ Community of Companies 7
Slide 8: Branch Map
24 locations 18 branches 6 non - bank offices 8 Branch Map Dover
Slide 9: Deposit Market Share: Delmarva Peninsula
Deposit Market Share: Delmarva Peninsula NOTE: Delmarva Peninsula defined as Maryland counties of Kent, Queen Anne’s, Talbot, Caroline, Dorchester, Wicomico, Somerse t, and Worcester; and Delaware counties of Kent and Sussex; Deposit market share excludes Discover Financial Services Data as of June
Slide 10: Competitors' Branch Proximity Report
Competitors ’ Branch Proximity Report Within 1 Mile Within 5 Miles Competing Branches Deposits in Competing Branches Competing Branches Deposits in Competing Branches Shore Bancshares, Inc . 18 922,107 Money Centers/Regionals 27 1,210,265 42 2,020,912 Community Banks 25 851,468 46 2,063,467 TOTALS 5
Slide 11: Loan Portfolio
Loan Portfolio (Dollar Value in Thousands) As of June 30, 2014 Loan Type Balance % of Total Construction $ 68,348 9.6% Residential Real Estate 277,184 39.1% Commercial Real Estate 297,762 41.9% Commercial 56,492 8.0% Consumer 9,873 1.4% Total $ 709,659 100.0% 11 Commercial Real Estate 42% Commercial
Slide 12: Improving Credit Quality
Improving Credit Quality As of or for 3 Months Ended 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 6/30/2014 NON - PERFORMING ASSETS $36,474 Nonaccrual Loans $16,302 $36,238 $51,370 $18,147 $15,176 90+ or More Days Past Due 7,425 4,702 2,723 460 270 5 Other Real Estate Owned 2,572 3,702 9,3
Slide 13: Credit Trends: NPAs & TDRs
Credit Trends: NPAs & TDRs (Dollars in thousands) December 31 , June 30 , 2009 2010 2011 2012 2013 2014 Construction $12,259 $28,175 $27,661 $37,029 $5,569 $11,878 Residential Real Estate 8,242 18,790 26,299 18,839 19,768 19,232 23,578 Commercial Real Estate 2,828 14,266 32,612 14,462 9,126 Commerci
Slide 14: Attractive Deposit Base
Attractive Deposit Base 14 (Dollar Value in Thousands) June 30, 2014 Deposit Type Quarterly Average Balance % of Total Cost Noninterest Bearing Demand $ 168,221 18.4% 0.00% Interest Bearing Demand 171,004 18.7% 0.14% Money Market & Savings 220,850 24.1% 0.12% CDs $100,000 or more 171,830 18.8% 1.11%
Slide 15: Securities Portfolio
S ecurities Portfolio (Dollars in thousands) Amortized Cost G Gross Unrealized Gains G Gross Unrealized Losses E Estimated Fair Value Available - for - sale securities: June 30, 2014 U.S. Treasury $5,276 $8 $ - 0 - $5,284 U.S. Government Agencies 57,289 85 243 57,131 Mortgage - backed 139,872 640 72
Slide 16: Income Statement (Quarterly)
Income Statement (Quarterly) (Dollars in thousands, except per share amounts) 2Q13 3Q13 4Q13 1Q14 2Q14 Interest income $10,755 $10,182 $9,807 $9,455 $9,523 Interest expense 1,754 1,354 1,237 1,132 1,076 Net interest income 9,001 8,828 8,570 8,323 8,447 Provision for credit losses 2,700 22,460 474 97
Slide 17: SHBI Net Interest Margin
SHBI Net Interest Margin 17 3.90% 4.02% 3.74% 3.23% 3.48% 3.49% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 2009 2010 2011 2012 2013 2Q 2014
Slide 18: Continued Focus on Fee Revenue
Continued Focus on Fee Revenue Total Revenue Breakdown Noninterest Income ( 1) Q2 2014 is annualized. Dollars in thousands 24% 25% 26% 34% 32% 31% 68% 70% 70% 69% 67% 65% $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 2009 2010 2011 2012 2013 2Q14 Net Interest income % Noninterest Income
Slide 19: Insurance Segment Performance
19 Total Revenue ($mm) Net Income ($mm) Insurance Segment Performance NOTE: In 2010, SHBI incurred $1.5mm in impairment charges related to TSGIA, its wholesale insurance business. In 2011, SHBI incurred an impairment charge of $1.3mm related to its retail insurance business. See page 29 for a reconc
Slide 20: Key Ratios
SHBI Return on Average Assets 0.50% Return on Average Equity 4.47% Net Interest Margin 3.49% Non - interest Income/Operating Revenue 34.90% Noninterest Income/Average Assets 1.73% Noninterest Expense/Average Assets 3.79% Efficiency Ratio (Non - GAAP) (1) 76.51% Nonperforming Assets/Assets (Excluding
Slide 21: Capital Ratios
Capital Ratios 21 9.35% 9.16% 8.36% 8.41% 11.81% 11.81% 13.07% 13.80% 13.32% 11.34% 14.97% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 2010 2011 2012 2013 Q2 2014 Tangible Common equity / Tangible Assets Tier 1 Risk-Based Capital Ratio Total Risk-Based Capital Ratio 12.55% 12.05% 10.09
Slide 22: SHBI LTM Price Change (%)
SHBI-—LTM Price Change (%) Shore Bancshares, Inc. - Price Change (%) sul (or 25%) ok 8 2156 —s8P 500 Bank (10.97%) nasoae Bank (08 36) 25 Price Change (%) Thousands ‘Good things are happening here.
Slide 23: What Makes SHBI Unique?
What Makes SHBI Unique? ● Diversity of Revenue Sources - - without Mortgage ● Strong Capital Position ● Stable Net Interest Margin ● Strong Control of Operating Expenses ● Dominant independent financial services company in all markets within footprint 23
Slide 24: Compelling Investment Considerations
24 ● We are a very different Company now x Improved credit process x Continuing to build organizational depth x Revamped strategic plan positions for growth x Focused on creating sustainable competitive advantages x Strengthened noninterest revenue sources x Forging a sales culture with new branding
Slide 25: Talent, depth, unique skills
25 Talent, depth, unique skills • L. Lloyd “Scott” Beatty, Jr ., 61, CPA, President & CEO of SHBI since June 2013, Director of SHBI since December 2000, Director of Talbot Bank since 1992. COO from 2006 until 2012 and named President and COO in 2012. Formerly COO, private equity firm Darby Overseas
Slide 26: Non-GAAP Financial Measures
Non - GAAP Financial Measures Dollars in thousands except per share amounts December 31 , June 30 , 2009 2010 2011 2012 2013 2014 Total Assets $1,156,516 $1,130,311 $1,158,193 $1,185,807 $1,054,124 $1,051,525 Less: Intangible Assets 21,360 18,518 16,662 16,270 15,974 13,328 Tangible Assets $1,135,15
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