Shore Bancshares, Inc. · NASDAQ:SHBI
Shore Bancshares — KBW 2018 Community Bank Investor Conference
28 slides from Shore Bancshares's conference presentation, Aug 1, 2018
Slide 1: KBW 2018 Community Bank Investor Conference
KBW 2017 COMMUNITY BANK KEEFE, BRUYETTE & WOODS 2018 Community Bank Investor Conference July 31 – August 1, 2018
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 Name Title/Function Entity Years in Banking Years with Company L. Lloyd “Scott” Beatty, Jr. President and Chief Executive Officer SHBI 25 12 Edward C. Allen SVP and Chief Financial Officer SHBI, Bank 41 7 Donna J. Stevens SVP and Chief Operating Officer SHBI, Bank 38 20 Patrick M. Bi
Slide 4: Financial Summary
Financial Summary As of June 30, 2018 Total Assets: $ 1.452 billion Gross Loans: $ 1.157 billion Total Deposits: $ 1.175 billion Total Shareholder’s Equity: $ 168.1 million Tangible Common Equity: $ 136.1 million Tangible Book value per Share: $ 10.68 Branches: Holding Company 1 Depository 21 Insura
Slide 5: Strategic Direction
Strategic Direction Market Expansion ▪ LPO’s and Strategic Branching ▪ Acquire Banks Contiguous to our Existing Markets ▪ Leverage Back Office Capability ▪ Additions to Staff Were Primarily Production ● Striving to be the Bank and Employer of Choice on the Delmarva ▪ Dominant Independent Locally H
Slide 6: Shore Bancshares' Community of Companies
Shore Bancshares’ Community of Companies SHBI Shore United Bank ($1.43 billion of Assets) Wye Financial Trust (1) Avon - Dixon Agency LLC (Retail) 2 (Gross Revenue 2018 YTD $5,131,085) Mubell Finance LLC NOTE: Reorganized Company Structure to reduce number of entities, regulatory agencies and associ
Slide 7: Shore Bancshares' Community of Companies
Shore Bancshares’ Community of Companies 7
Slide 8: Shore Bancshares, Inc. Locations
@ SHORE BANCSHARES, INC. Headquarters 28969 Information Lane Easton, MD 21601 410.763.7800 BANKING INSURANCE fue @ Shore United Bank @ Avon-Dixon Agency, LLC “DR 1B E. Dover Street 28640 Marys Court Easton, MD 21601 Easton, MD 21601 410.822.1400 410.822.0506 877.758.1600 800.242.8758 shoreunitedbank
Slide 9: Geographical Diversification
Geographical Diversification 2017 Market Expansion Provides Opportunities In • C&I Loans • Core Deposits • M&A • Baltimore Branches • Acquired 3 Branches • Local Seasoned Market Manager & Experienced Lender • Lower Shore • Local Seasoned Market Executive • Ocean City, MD LPO - Local Top C&I Lender -
Slide 10: Selected SHBI Market Highlights
Selected SHBI Market Highlights ▪ Median Household income for entire franchise is $81,294 in MD, $66,322 in DE, $71,167 in VA, vs. $61,045 for the US. ▪ Projected HH income change (2018 - 2023) is 6.98% for MD, and 7.18% for DE, and 5.80% for VA ▪ Projected 5 - year population growth rate (2018 - 20
Slide 11: Deposit Market Share: SHBI Market
Deposit Market Share: SHBI Market Market Rank Ticker Company Name City (HQ) HQ State Branches 2017 Total Deposits 2017 ($000) ’17 Market Share(%) 1 BAC Bank of America Corp. Charlotte NC 41 5,862,663 18.98 2 MTB M&T Bank Corp. Buffalo NY 54 4,988,771 16.15 3 PNC PNC Financial Services Group Inc. Pit
Slide 12: 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. 21 1,346,948 Money Centers/Regionals 51 3,053,044 236 39,303.754 Community Banks 21 853,450 41 2,109,708 TOTALS
Slide 13: Loan Portfolio
Loan Portfolio (Dollar Value in Thousands) As of June 30, 2018 Loan Type Balance % of Total Construction - 1 - 4 family residential - Other $ 137,318 16,793 120,525 11.9% Residential Real Estate - Secured by 1 - 4 family - revolving - Secured by 1 - 4 family - closed end - Secured by multifamily res
Slide 14: Improving Credit Quality
Improving Credit Quality 6/30/2018 6/30/2017 6/30/2016 NON - PERFORMING ASSETS Nonaccrual Loans $6,757 $7,157 $13,531 90+ or More Days Past Due - 314 6 Other Real Estate Owned 1,569 2,302 1,897 Total Non - Performing Assets 8,326 9,773 15,434 Performing TDRs (Yield 4.06%) 9,620 12,124 13,338 Total N
Slide 15: Credit Trends: NPAs & TDRs
Credit Trends: NPAs & TDRs 6/30/2018 6/30/2017 6/30/2016 Construction $ 6,376 $ 7,037 $ 9,670 Residential Real Estate 5,176 6,646 9,720 Commercial Real Estate 4,343 5,567 7,187 Commercial 482 345 192 Consumer --- --- 106 Total $ 16,377 $ 19,595 $ 26,875 OREO 1,569 2,302 1,897 Total NPAs & TDRs $ 17,
Slide 16: Securities Portfolio
Securities Portfolio (Dollars in thousands) Amortized Cost G Gross Unrealized Gains/(Losses) E Estimated Fair Value Available - for - sale securities: June 30, 2018 U.S. Government Agencies $ 42,578 $ (851) $ 41,727 Mortgage - backed 138,111 (4,272) 133,839 Total $ 180,689 $ (5,123) $ 175,566 Held -
Slide 17: Attractive Deposit Base
Attractive Deposit Base (Dollar Value in Thousands) June 30, 2018 Deposit Type Quarterly Balance % of Total Cost Noninterest Bearing Demand $ 326,634 27.8% 0.00% Interest Bearing Demand 203,108 17.3 0.22 Money Market & Savings 375,294 31.9 0.13 CDs $100,000 or more 96,832 8.3 0.52 Other Time 145,850
Slide 18: Transaction Deposit Growth
Transaction Deposit Growth 77% 75% 74% 23% 25% 26% 6/30/2018 6/30/2017 6/30/2016 Transaction Deposits Time Deposits 18
Slide 19: Income Statement (Quarterly)
Income Statement (Quarterly) (Dollars in thousands, except per share amounts) 2Q18 1Q18 4Q17 3Q17 2Q17 Interest income 13,674 13,103 12,968 $12,937 $11,449 Interest expense 1,041 774 599 611 549 Net interest income 12,633 12,329 12,369 12,326 10,900 Provision for credit losses 418 489 545 345 974 No
Slide 20: Continued Focus on Fee Revenue
Continued Focus on Fee Revenue Total Revenue Breakdown Noninterest Income * Numbers are as of 6/30 Dollars in thousands 24% 25% 26% 34% 32% 31% Trust and Investment Fee Income 8.2% Other Non - interest Income 18.8% Retail Insurance Agency Commission 54.0% Service Charges on Deposits 19.0% 20 $0 $10,
Slide 21: Key Ratios As of June 30, 2018
YTD 6/30/18 12/31/17 12/31/16 Return on Average Assets 1.21% 0.87% 0.84% Return on Average Equity 10.28 7.05 6.32 Net Interest Margin 3.80 3.76 3.56 Non - interest Income/Operating Revenue (NII) 37.93 38.99 43.52 Non - interest Income/Average Assets (1) 1.34 1.38 1.46 Non - interest Expense/Average
Slide 22: Capital Ratios
Capital Ratios 9.56% 9.84% 12.31% 11.29% 11.40% 11.90% 15.78% 15.55% 12.29% 12.81% 16.79% 16.61% 11.40% 11.90% 15.78% 15.55% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 6/30/2018 YE 2017 YE 2016 YE 2015 Tangible Common equity / Tangible Assets Tier 1 Risk-Based Capital Ratio Tot
Slide 23: Institutional Ownership as of 03/31/18
Institutional Ownership as of 03/31/18 Major Holders % of Ownership Wellington Management Company 7.43% Blackrock Inc. 5.84% Banc Funds Company LLC Vanguard Group Inc. 5.64% 4.19% Manulife Asset Management 4.11% Basswood Capital Management LLC 4.06% Dimensional Fund Advisors LP 2.76% Renaissance Tec
Slide 24: Compelling Investment Considerations
• Exceptional Cost of Funds • Strategic plan positioned for organic growth and acquisitions • Focused on creating sustainable competitive advantages • Strengthened noninterest revenue sources • Driving a sales culture with both a commercial and retail focus while maintaining our credit discipline Co
Slide 25: SHBI – LTM Price Change (%)
SHBI – LTM Price Change (%) 25 SHBI: 16.85% SHBI - VOL
Slide 26: Peer Group Definition
Peer Group Definition Publically traded banking companies in MD, DC, VA, DE with total assets between $750M - $2B. 26
Slide 27: Peer Group
Peer Group Company Name State Total Assets ($000) ROAA LTM (%) Total Equity/ Total Assets (%) Tangible Equity/ Tangible Assets (%) Tier 1 Capital Ratio (%) Net Interest Margin (%) Noninterest Inc/ Operating Rev (%) Efficiency Ratio LTM (%) NPAs/ Assets (%) ROAE (%) 2018Q1 2018Q1 2018Q1 2018Q1 2018Q1
Slide 28: Talent, depth, unique skills
Talent, depth, unique skills • Lloyd L. “Scott” Beatty, Jr ., 65, CPA, President & CEO of SHBI since June 2013, Director of SHBI since December 2000, Director of Shore United Bank (for mer ly the Talbot Bank and CNB) since 1992. COO from 2006 until 2012 and named President and COO in 2012. Formerly
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