Shore Bancshares, Inc. · NASDAQ:SHBI
Shore Bancshares — FIG Partners' 9th Annual Bank CEO Forum 2013
27 slides from Shore Bancshares's conference presentation, Sep 20, 2013
Slide 1: FIG Partners' 9th Annual Bank CEO Forum
Lloyd L. “Scott” Beatty, Jr. President & CEO George S. Rapp Vice President & CFO FIG Partners’ 9 th Annual Bank CEO Forum September 16 - 17, 2013
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: Corporate Overview
● A community of companies, with three over 100 years old. ● Largest Delmarva independent with $1.054 billion assets, $75MM market cap, 25 locations (18 branches, 7 non - bank offices). ● Headquarters, Easton, MD. ● We are located in the best strategic, natural submarkets with population growth rate
Slide 4: Locations, branches, non-bank offices
25 locations 18 branches 7 non - bank offices 4
Slide 5: 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
Slide 6: 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 1,034,121 Money Centers 25 1,001,128 41 1,842,106 Community Banks 23 982,376
Slide 7: SHBI Current QTD Highlights (6/30/2013)
SHBI Current QTD Highlights (6/30/2013) Peer* SHBI Return on Average Assets 0.77% 0.13% Return on Average Equity 8.07% 1.27% Total Equity/Total Assets 10.30% 10.77% Tangible Equity/Tangible Assets 9.78% 9.39% Risk - Based Capital Ratio 15.87% 13.69% Net Interest Margin 3.82% 3.60% Non - interest Inc
Slide 8: Selected Financial Data 2008 – 2012
Selected Financial Data 2008 – 2012 RESULTS OF OPERATION: Years Ended December 31, $(000) 2012 2011 2010 2009 2008 Net interest income 35,339 39,764 42,639 41,378 39,919 Provision for credit losses 27,745 19,470 21,119 8,986 3,337 Noninterest income 15,758 17,318 18,041 19,541 20,350 Noninterest exp
Slide 9: Pre Tax Pre Provision ROA
Pre Tax Pre Provision ROA 1.36 1.02 0.44 0.89 1.19 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 2Q12 3Q12 4Q12 1Q13 2Q13 9
Slide 10: Loans and Deposits (As of 6/30/2013)
• Loan Composition • Deposit Composition Loans and Deposits (As of 6/30/2013) Construction 13.4% Residential Real Estate 24.9% Commercial Real Estate 36.3% Farmland 4.7% Multi - Family 3.7% Commercial and Industrial 7.2% Consumer 9.8 % Noninterest - bearing demand 17.2% Interest - bearing demand 17.
Slide 11: Loan Composition
Loan Composition (Dollar Value in Thousands) As of June 30, 2012 As of December 31, 2012 As of June 30, 2013 Annu al Growth Loan Type Balance % of Total Balance % of Total Balance % of Total % Construction – 1 - 4 Family $ 8,793 1.1% $ 11,309 1.4% $ 10,825 1.4% 23.1% Construction – Other 102,274 12.
Slide 12: Deposit Composition
Deposit Composition (Dollar Value in Thousands) As of June 30, 2012 As of December 31, 2012 As of June 30, 2013 A nn ual Growth Deposit Type Balance % of Total Balance % of Total Balance % of Total % Noninterest Bearing Demand $ 149,472 14.5% $ 153,992 14.7% $ 158,562 17.2% 6.1% 1 Interest Bearing D
Slide 13: Credit Composition & Quality
Credit Composition & Quality ● Historically, SHBI’s asset quality has been strong 2008 2009 2010 2011 2012 6/30/2013 NPAs / Assets (1) 0.81% 1.78% 5.74% 7.42% 8.14% 8.68% Non accrual Loans/Loans 0.91% 1.78% 4.05% 6.11% 4.65% 4.45% Accruing Troubled Debt Restructurings/Loans 0.03% 0.19% 2.79% 3.00% 6
Slide 14: Credit Quality Trends
Credit Quality Trends (Dollars in Thousands) As of 6/30/2011 As of 12/31/2011 As of 6/30/2012 As of 12/31/2012 As of 6/30/2013 Nonaccrual Loans $ 48,476 $ 51,370 $ 47,958 $ 36,474 $ 34,818 Accruing Troubled Debt Restructurings 22,659 25,208 37,231 52,353 50,278 Total Nonperforming Loans 71,135 76,57
Slide 15: Overview of TDRs
Overview of TDRs ● 57 performing restructured loans currently outstanding with $50.3 million in aggregate balances ● 49% of TDRs were performing prior to restructuring ● Restructurings by type: – Reduction of interest rate = 9 loans – Extension of term = 2 loans – Reduction of interest rate and exte
Slide 16: 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% 66% 68% 70% 70% 70% 67% 34% 32% 30% 30% 30% 33% $0 $10,000 $20,000 $30,000 $4
Slide 17: Capital Adequacy
Capital Adequacy 10.32% 9.38% 9.35% 9.16% 8.36% 9.39% 12.74% 12.59% 13.07% 13.80% 13.32% 13.69% 11.65% 11.45% 11.81% 12.55% 12.05% 12.43% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 2008 2009 2010 2011 2012 6/30/2013 Tangible Equity/Tangible Assets Total Risk-Based Capital Ratio Tier 1
Slide 18: What Makes SHBI Unique?
What Makes SHBI Unique? ● Track record of consistent financial performance ▪ Capital Position Remains Solid ▪ Respectable Net Interest Margin ▪ Diversity of Revenue Sources ▪ Strong Control of Operating Expenses ● Dominant independent financial services company in all markets within footprint 18
Slide 19: Looking Ahead Strategically
Looking Ahead Strategically Strategic Direction ● Capitalize on investments in infrastructure and dominant market position ● Restore consistent profitability - Credit discipline along with refining risk tolerance with emphasis on credit quality - Continued emphasis on fee revenue growth - Diligent e
Slide 20: 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 21: SHBI – Price Change (%)
SHBI – Price Change (%) 21
Slide 22: Addendum
ADDENDUM 22
Slide 23: Peer Group Definition
Peer Group Definition Publically traded banking companies in MD, DC, VA, DE with total assets between $750M - $2B. 23
Slide 24: Bank Branch Competitors Report – Within 1 Mile
Shore Bancshares, Inc. Bank Branch Competitors Report Ownership Pro - forma Distance (mi.) 1 This report lists banks and thrifts that own branches within 1 mile of any Shore Bancshares Inc. branch in the United States and its territories. The number of branches and amount of deposits in those branch
Slide 25: Bank Branch Competitors Report – Within 5 Miles
Shore Bancshares, Inc. Bank Branch Competitors Report Ownership Pro - forma Distance (mi.) 5 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 branches and amount of deposi
Slide 26: Peer Group Financial Comparison
Company Name State Total Assets ($000) ROAA (%) ROAE (%) Total Equity/ Total Assets (%) Tangible Equity/ Tangible Assets (%) Risk Based Capital Ratio (%) Net Interest Margin (%) Noninterest Inc/ Operating Rev (%) Efficiency Ratio (%) NPAs/ Assets (%) MRQ 2013Q2 2013Q2 2013Q2 2013Q2 2013Q2 2013Q2 201
Slide 27: SHBI Management Team
SHBI Management Team Talent, depth, unique skills • Lloyd L. Beatty, Jr., 60, 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 Investmen
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