Shore Bancshares, Inc. · NASDAQ:SHBI
Shore Bancshares — Sandler O'Neill + Partners 2019 DC Field Trip
24 slides from Shore Bancshares's conference presentation, Sep 11, 2019
Slide 1: Sandler O'Neill + Partners 2019 DC Field Trip
Sandler O’Neill + Partners, L.P. 2019 DC Field Trip September 11,2019
Slide 2: Important Statements: Safe Harbor Regarding Forward-Looking Statements
Important 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 w
Slide 3: Management Team
Name Title/Function Entity Years in Banking Years with Company L. Lloyd “Scott” Beatty, Jr. President and Chief Executive Officer SHBI, Bank 25 13 Edward C. Allen EVP and Chief Financial Officer SHBI, Bank 41 8 Donna J. Stevens EVP and Chief Operating Officer SHBI, Bank 38 21 Charles E. Ruch, Jr. EV
Slide 4: Financial Summary
Financial Summary As of June 30, 2019 Total Assets: $ 1.489 billion Gross Loans: $ 1.240 billion Total Deposits: $ 1.249 billion Total Shareholder’s Equity: $ 191.3 million Tangible Common Equity: $ 171.2 million Tangible Book value per Share: $ 13.40 Branches: Holding Company 1 Depository and Wealt
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: Headquarters and Locations
HEADQUARTERS 28969 Information Lane Easton, MD 21601 Store UNITED BANK 18 E. Dover Street Easton, MD 21601 877.758.1600 ShoreUnitedBank.com Store UniteD BANK 651 N. Broad Street Suite 201 Middletown, DE 19709 9748 Stephen Decatur Highway Unit 104 Ocean City, MD 21842 Wye Financiat & Trust 16N. Washi
Slide 7: Selected SHBI Market Highlights
Selected SHBI Market Highlights ▪ Median Household income for entire franchise is $85,459 in MD, $66,479 in DE, $73,579 in VA, vs. $63,174 for the US. ▪ Projected HH income change (2019-2024) is 9.01% for MD, and 5.61% for DE, and 7.93% for VA ▪ Projected 5-year population growth rate (2019-2024) in
Slide 8: Deposit Market Share: SHBI Market
Deposit Market Share: SHBI Market Market Rank Ticker Company Name City (HQ) HQ State Branches 2018 Total Deposits 2018 ($000) ’18 Market Share(%) 1 BAC Bank of America Corp. Charlotte NC 41 6,280,377 19.46 2 MTB M&T Bank Corp. Buffalo NY 54 5,058,554 15.68 3 PNC PNC Financial Services Group Inc. Pit
Slide 9: 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 1,177,470 Money Centers/Regionals 34 2,596,035 153 32,315,125 Community Banks 23 994,442 47 2,421,220 Credit
Slide 10: Loan Portfolio
Loan Portfolio Commercial Real Estate Concentration as of 6/30/19: -Non-Owner Occupied Commercial Real Estate – 299.9% of total risk based capital -Construction – 84.2% of total risk based capital -Hotel – 58.4% -Retail – 54.5% Coverage Ratio of 120 – 140%. (Dollar Value in Thousands) As of June 30,
Slide 11: Credit Quality Statistics
Credit Quality Statistics 6/30/2019 6/30/2018 6/30/2017 NON-PERFORMING ASSETS Nonaccrual Loans $ 14,592 $ 6,757 $7,157 90+ or More Days Past Due 439 - 314 Other Real Estate Owned 524 1,569 2,302 Total Non-Performing Assets 15,555 8,326 9,773 Performing TDRs 7,768 9,620 12,124 Total NPAs + TDRs $23,3
Slide 12: Credit Trends: NPAs & TDRs
Credit Trends: NPAs & TDRs 6/30/2019 6/30/2018 6/30/2017 Construction $ 1,494 $ 3,968 $ 7,037 Residential Real Estate 6,913 5,693 6,646 Commercial Real Estate 14,072 6,383 5,567 Commercial 320 333 345 Consumer 0 0 0 Total $ 22,799 $ 16,377 $ 19,595 OREO 524 1,569 2,302 Total NPAs & TDRs $ 23,323 $ 1
Slide 13: Securities Portfolio
Securities Portfolio (Dollars in thousands) Amortized Cost G Gross Unrealized Gains/(Losses) E Estimated Fair Value Available-for-sale securities: June 30, 2019 U.S. Government Agencies $ 34,125 $ (106) $ 34,019 Mortgage-backed 111,520 (129) 111,391 Total $ 145,645 $ (235) $ 145,410 Held-to-maturity
Slide 14: Attractive Deposit Base
Attractive Deposit Base (Dollar Value in Thousands) June 30, 2019 Deposit Type Balance % of Total Average Rate Noninterest Bearing Demand $ 346,916 27.8% 0.00% Interest Bearing Demand 232,123 18.6 0.63 Money Market & Savings 382,439 30.6 0.84 CDs $100,000 or more 117,855 9.4 1.40 Other Time 149,669
Slide 15: Income Statement from Continuing Operations (Quarterly)
Income Statement from Continuing Operations (Quarterly) (Dollars in thousands, except per share amounts) 2Q19 1Q19 4Q18 3Q18 2Q18 Interest income 14,749 14,660 14,894 14,236 $13,674 Interest expense 2,456 2,266 2,168 1,289 1,041 Net interest income 12,293 12,394 12,726 12,947 12,633 Provision for cr
Slide 16: Sale of Avon Dixon
Sale of Avon Dixon 16 $(000) 12/31/2018 Net Proceeds from Sale of Avon Dixon $ 25,159 Less: Net Assets Sold 12,423 Income Tax Expense 4,124 Net Gain After Tax Expense from Sale 8,299 Net Income from Core Operations 16,698 Total Net Income $ 24,997 Earnings Per Share from Sale of Avon Dixon $ 0.65 Ea
Slide 17: Key Ratios
Key Ratios As of June 30, 2019 YTD 6/30/19 12/31/18 12/31/17 Return on Average Assets 1.11 % 1.04 % 0.87% Return on Average Equity 8.69 8.83 7.05 Net Interest Margin 3.57 3.58 3.76 Non-interest Income/Operating Revenue (NII) 19.43 16.60 38.99 Non-interest Income/Average Assets(1) 0.66 0.63 1.38 Non-
Slide 18: Capital Ratios (Bank Only)
Capital Ratios (Bank Only) 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 6/30/2019 YE 2018 YE 2017 10.29% 9.79% 9.44% 12.11% 11.84% 11.45% 12.98% 12.73% 12.36% 12.11% 11.84% 11.45% Tier 1 Leverage Ratio Tier 1 Risk-Based Capital Ratio Total Risk-Based Capital Ratio Common Equity Tier 1 18
Slide 19: Institutional Ownership
Institutional Ownership as of 6/30/19 Major Holders % of Ownership Wellington Management Company 7.00% Blackrock Inc. 5.61% Vanguard Group Inc. 5.21% Fourthstone LLC 5.00% FJ Capital Management LLC 4.44% Banc Funds Company LLC 4.32% Manulife Asset Management 3.97% Dimensional Fund Advisors LP 3.95%
Slide 20: Compelling Investment Considerations
Compelling Investment Considerations • Excellent 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 m
Slide 21: SHBI-LTM Price Change (%)
SHBI-LTM Price Change (%) ‘Shore Baneshares, Inc. - Price Change (%) —si81 (1728 EW Masse Bank nce baie didatind 839%)
Slide 22: Peer Group Definition
Peer Group Definition Publicly traded banking companies in MD, DC, VA, DE with total assets between $1B - $5B. 22
Slide 23: Peer Group
Peer Group Company State Total Assets ($000) ROAA LTM (%) Total Equity/ Total Assets (%) Tangible Equity/ Tangible Assets (%) Net Interest Margin (%) Noninterest Inc/ Operating Rev (%) Efficiency Ratio LTM (%) NPAs/ Assets (%) ROAE (%) 2019Q2 2019Q2 2019Q2 2019Q2 2019Q2 2019Q2 2019Q2 2019Q2 2019Q2 A
Slide 24: SHBI Management Team
SHBI Management Team Talent, depth, unique skills • Lloyd L. “Scott” Beatty, Jr., 66, CPA, President & CEO of SHBI since June 2013, Director of SHBI since December 2000, Director of Shore United Bank (formerly the Talbot Bank and CNB) since 1992. COO from 2006 until 2012 and named President and COO
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