Shore Bancshares, Inc. · NASDAQ:SHBI
Shore Bancshares — KBW 2017 Community Bank Investor Conference
32 slides from Shore Bancshares's conference presentation, Aug 2, 2017
Slide 1: KBW 2017 Community Bank Investor Conference
KBW 2017 COMMUNITY BANK KBW 2017 COMMUNITY BANK INVESTOR CONFERENCE August 1 - 2, 2017
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 24 11 Edward C. Allen SVP and Chief Financial Officer SHBI, Bank 40 6 Donna J. Stevens SVP and Chief Operating Officer SHBI, Bank 37 19 Patrick M. Bi
Slide 4: Financial Summary
Financial Summary As of June 30, 2017 Total Assets: $ 1.363 billion Gross Loans: $ 1.035 billion Total Deposits: $ 1.196 billion Total Shareholder’s Equity: $ 159.9 million Tangible Common Equity: $ 127.8 million Tangible Book value per Share: $ 10.07 Branches: Depository 20 Insurance and Wealth Man
Slide 5: Strategic Direction
Strategic Direction Consolidate Banking Subsidiaries ▪ Legal Merger 7/1/2016 ▪ Operational Merger 9/26/2016 Marketing Strategy ▪ Drive Profitability ▪ Emphasis on Core Deposits ▪ Cross Sell Across Subsidiaries ▪ Diversify Revenue • Banking, Insurance, Service Charges, Wealth Management 5
Slide 6: Strategic Direction
Strategic Direction Market Expansion ▪ LPO’s and Strategic Branching ▪ Acquire Banks Contiguous to our Existing Markets ▪ Leverage Existing Platform ● Striving to be the Bank and Employer of Choice on the Delmarva ▪ Dominant Independent Locally Headquartered Company in our Footprint ▪ Opportunity
Slide 7: Shore Bancshares' Community of Companies
Shore Bancshares’ Community of Companies SHBI Shore United Bank ($1.35 billion of Assets) Wye Financial Trust (1) Avon - Dixon Agency LLC (Retail) 2 (Gross Revenue 2016 $8,881,286) Mubell Finance LLC 1. Wye Financial & Trust is a division of Shore United Bank 2. Freestate & Son, Elliott Wilson and J
Slide 8: Shore Bancshares' Community of Companies
Shore Bancshares’ Community of Companies 8
Slide 9: Branch Map
28 locations 20 branches 2 loan production offices 6 non - bank offices Branch Map 9
Slide 10: Geographical Diversification
Geographical Diversification In addition to expansion to the Baltimore suburbs, Shore United is entering new markets East and Southeast: Lower Shore expansion – Hiring of Market Executive LPO – Ocean City, MD opened early 2 nd quarter - Hired top lenders in market - Potential for full service br
Slide 11: Selected SHBI Market Highlights
Selected SHBI Market Highlights ▪ Household income for entire franchise is $76,252 in MD and $63,487 in DE vs. $57,462 for the US. ▪ Projected HH income change (2017 - 2022) is 4.05% for MD, and 5.78% for DE ▪ Projected 5 - year population growth rate (2017 - 2022) in overall market = 3.60% for MD a
Slide 12: Deposit Market Share: SHBI Market
Deposit Market Share: SHBI Market Market Rank Ticker Company Name City (HQ) HQ State Branches 06/30/16 Total Deposits as of June 30, 2016 ($000) ’16 Market Share(%) 1 BAC Bank of America Corp. Charlotte NC 60 15,825,119 29.11 2 MTB M&T Bank Corp. Buffalo NY 75 12,778,343 23.51 3 PNC PNC Financial Se
Slide 13: 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. 20 1,182,485 Money Centers/Regionals 34 2,280,065 176 33,046,820 Community Banks 25 1,055,250 51 2,443,803 TOTA
Slide 14: Loan Portfolio
Loan Portfolio (Dollar Value in Thousands) As of June 30, 2017 Loan Type Balance % of Total Construction - 1 - 4 family residential - Other $ 100,095 18,632 81,463 9.7% Residential Real Estate - Secured by 1 - 4 family - revolving - Secured by 1 - 4 family - closed end - Secured by multifamily resid
Slide 15: Improving Credit Quality
Improving Credit Quality 06/30/2017 03/31/2017 12/31/2016 09/30/2016 NON - PERFORMING ASSETS Nonaccrual Loans $7,157 $8,729 $8,972 $11,490 90+ or More Days Past Due 314 118 20 64 Other Real Estate Owned 2,302 2,354 2,477 2,192 Total Non - Performing Assets 9,773 11,201 11,469 13,751 Performing TDRs
Slide 16: Credit Trends: NPAs & TDRs
Credit Trends: NPAs & TDRs 06/30/2017 03/31/2017 12/31/2016 09/30/2016 Construction $ 7,037 $ 7,883 $ 8,007 $ 9,554 Residential Real Estate 6,646 7,974 7,778 7,986 Commercial Real Estate 5,567 5,663 6,089 7,145 Commercial 345 --- 10 41 Consumer --- 109 109 100 Total $19,595 $21,629 $21,993 $24,826 O
Slide 17: Securities Portfolio
Securities Portfolio (Dollars in thousands) Amortized Cost G Gross Unrealized Gains/Losses E Estimated Fair Value Available - for - sale securities: June 30, 2017 U.S. Treasury $ --- $ --- $ --- U.S. Government Agencies 49,173 43 216 Mortgage - backed 151,375 338 713 Equity Securities 659 <1> 658 To
Slide 18: Attractive Deposit Base
Attractive Deposit Base (Dollar Value in Thousands) June 30, 2017 Deposit Type Quarterly Balance % of Total Cost Noninterest Bearing Demand $ 311,438 26.0% 0.00% Interest Bearing Demand 202,651 16.9 0.16 Money Market & Savings 380,934 31.9 0.12 CDs $100,000 or more 131,243 11.0 0.51 Other Time 169,9
Slide 19: Transaction Deposit Growth
Transaction Deposit Growth 75% 74% 70% 65% 60% 25% 26% 30% 35% 40% 6/30/2017 12/31/2016 12/31/2015 12/31/2014 12/31/2013 Transaction Deposits Time Deposits 19
Slide 20: Income Statement (Quarterly)
Income Statement (Quarterly) (Dollars in thousands, except per share amounts) 2Q17 1Q17 4Q16 3Q16 2Q16 Interest income $11,449 $10,447 $10,505 $10,236 $10,003 Interest expense 549 514 540 578 620 Net interest income 10,900 9,933 9,965 9,658 9,383 Provision for credit losses 974 427 418 605 375 Nonin
Slide 21: SHBI Net Interest Margin
SHBI Net Interest Margin 3.71% 3.71% 3.63% 3.54% 3.57% 3.00% 3.10% 3.20% 3.30% 3.40% 3.50% 3.60% 3.70% 3.80% 2Q17 1Q17 4Q16 3Q16 2Q16 21
Slide 22: Continued Focus on Fee Revenue
Continued Focus on Fee Revenue Total Revenue Breakdown Noninterest Income * annualized Dollars in thousands 24% 25% 26% 34% 32% 31% Trust and Investment Fee Income 8.1% Other Non - interest Income 18.8% Retail Insurance Agency Commission 54.0% Service Charges on Deposits 19.1% 22 $0 $10,000 $20,000
Slide 23: Key Ratios as of June 30, 2017
6/30/17 12/31/16 6/30/16 Return on Average Assets 0.75% 0.84% 0.81% Return on Average Equity 5.47% 6.32% 6.04% Net Interest Margin 3.71% 3.56% 3.57% Non - interest Income/Operating Revenue 30.13% 30.32% 31.54% Non - interest Income/Average Assets (1) 1.50% 1.46% 1.52% Non - interest Expense/Average
Slide 24: Capital Ratios
Capital Ratios 10.52% 12.30% 11.29% 11.70% 12.18% 15.78% 15.55% 15.27% 13.08% 16.79% 16.61% 16.36% 12.18% 15.78% 15.55% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 6/30/2017 YE 2016 YE 2015 YE 2014 Tangible Common equity / Tangible Assets Tier 1 Risk-Based Capital Ratio Total Ri
Slide 25: Institutional Ownership as of 03/31/17
Institutional Ownership as of 03/31/17 Major Holders % of Ownership Wellington Management Company 9.73% FJ Capital Management LLC 8.49% Blackrock Inc. 5.91% Banc Funds Company LLC 5.67% Manufactures Live Insurance Company 4.01% Vanguard Group Inc. 3.62% Basswood Partners, LLC 2.62% Bridgeway Capital
Slide 26: Compelling Investment Considerations
● We are a very different Company now x Improved credit culture x Entirely new Management Team at Bank and Holding Company x Revamped strategic plan positioned for organic growth and acquisitions x Focused on creating sustainable competitive advantages x Strengthened noninterest revenue sources x Fo
Slide 27: SHBI LTM Price Change
HBI-—LTM Price Change (%) NASDAQ:SHBI (SNL Inst Key: 1027751) Period: 1 Year Metric: Price Change (%) Frequency: Daily my £ 2 é a ° 20 2 § 250k 3 a sandal Ladd fd tn Sep't6Nov't6 don't? Mar"t7—May"17 “ul 7 —— SHBI-US [i SHBI-US-Vol -—- KBW Nasdaq Bank Shore Bancshar.
Slide 28: Addendum
ADDENDUM Shore
Slide 29: Peer Group Definition
Peer Group Definition Publically traded banking companies in MD, DC, VA, DE with total assets between $750M - $2B. 29
Slide 30: 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 (%) 2017Q1 2017Q1 2017Q1 2017Q1 2017Q1
Slide 31: Talent, depth, unique skills
Talent, depth, unique skills • Lloyd L. “Scott” Beatty, Jr ., 64, 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
Slide 32: Non-GAAP Financial Measures
Non - GAAP Financial Measures 6/30/2017 December 31, 2016 2015 2014 2013 2012 Total Assets $1,362,798 $1,160,271 $1,135,143 $1,100,402 $1,054,124 $1,185,807 Less: Intangible Assets 32,153 13,010 13,142 13,262 15,974 16,270 Tangible Assets $1,330,645 $1,147,261 $1,122,001 $1,087,140 $1,038,150 $1,169
Shore Bancshares — KBW 2017 Community Bank Investor Conference on 6ix