Shore Bancshares(SHBI) - 2024 Q2 - Quarterly Results

Financial Performance - Net income for Q2 2024 was $11.2 million, or $0.34 per diluted share, compared to $8.2 million, or $0.25 per diluted share in Q1 2024, and $4.0 million, or $0.20 per diluted share in Q2 2023[4]. - Net income rose by 179.6% to $11,234,000 for the three months ended June 30, 2024, up from $4,018,000 in the prior year[25]. - Basic and diluted net income per common share increased by 69.1% to $0.34 for the three months ended June 30, 2024, compared to $0.20 in 2023[25]. - Year-to-date net income as of June 30, 2024, reached $19,418,000, compared to $10,475,000 for the same period in 2023, reflecting an increase of 85.5%[89]. Interest Income and Margin - Net interest income increased to $42.1 million in Q2 2024, up from $41.1 million in Q1 2024 and $22.5 million in Q2 2023, representing a year-over-year increase of 87.3%[13]. - The net interest margin (NIM) expanded to 3.11% in Q2 2024 from 3.08% in Q1 2024, and from 2.68% in Q2 2023[5]. - Interest income from loans increased by 105.6% year-over-year, reaching $67,292 thousand for the three months ended June 30, 2024, compared to $32,729 thousand for the same period in 2023[24]. - Total interest income for Q2 2024 was $73,106,000, an increase of 2.8% compared to Q1 2024 and 99.6% compared to Q2 2023[84]. Deposits and Loans - Total deposits decreased by $237.2 million, or 4.4%, to $5.1 billion at June 30, 2024, primarily due to a decrease in demand deposits[11]. - Average interest-bearing deposits decreased by $395.0 million, or 9.9%, while noninterest-bearing deposits increased by $317.4 million, or 27.3%[13]. - Total loans for the three months ended June 30, 2024, amounted to $4,706,510,000, with interest income of $67,372,000, yielding a rate of 5.76%[50]. - Loans held for investment increased by 1.4% from $4,641,010 thousand on December 31, 2023, to $4,705,737 thousand on June 30, 2024, and by 70.9% compared to $2,753,223 thousand on June 30, 2023[23]. Noninterest Income and Expenses - Noninterest income for the first six months of 2024 increased by $4.4 million, or 41.2%, compared to the same period in 2023[16]. - Total noninterest income for Q2 2024 was $8.4 million, an increase of $1.9 million from Q1 2024 and an increase of $3.1 million from Q2 2023[37]. - Total noninterest expense for the first six months of 2024 increased by $27.7 million, or 65.2%, compared to the same period in 2023, largely due to the merger[16]. - Total noninterest expense for Q2 2024 was $33.5 million, a decrease of $3.2 million from Q1 2024 but an increase of $11.9 million from Q2 2023[37]. Credit Losses and Asset Quality - The provision for credit losses was $2.1 million for Q2 2024, compared to $0.4 million in Q1 2024 and $0.7 million in Q2 2023, reflecting a significant increase due to new loan growth[13]. - The allowance for credit losses increased by 212.0% to $2,081 thousand for the three months ended June 30, 2024, compared to $667 thousand for the same period in 2023[24]. - Nonperforming assets increased to $18.4 million, or 0.31% of total assets, as of June 30, 2024, up from $16.4 million, or 0.28% of total assets, as of March 31, 2024[37]. - The annualized net charge-offs to average loans ratio was 0.08%, up from 0.01% in the previous year, indicating a 7 basis points increase[45]. Capital Ratios and Equity - The Tier 1 Capital Ratio and Total Risk-Based Capital Ratio increased by 14 basis points to 9.67% and 11.82%, respectively, as of June 30, 2024[5]. - Total stockholders' equity increased by $11.6 million or 2.3% compared to December 31, 2023, primarily due to current year earnings[35]. - Book value per common share increased by 2.1% from $15.41 on December 31, 2023, to $15.74 on June 30, 2024, but decreased by 13.7% compared to $18.24 on June 30, 2023[23]. - Period-end equity to assets increased to 8.92% from 8.84% in Q1 2024, but decreased from 9.97% in Q2 2023[79]. Efficiency and Management - The efficiency ratio improved to 66.2% in Q2 2024 from 76.9% in Q1 2024 and 77.8% in Q2 2023[33]. - The company anticipates ongoing expense management and technology investments to improve operating leverage over time[33]. - The company reported a significant increase in fraud losses, which rose to $62,000 for the three months ended June 30, 2024, compared to $47,000 in the same period of 2023, marking a 31.9% increase[25]. Asset Growth and Composition - Total assets decreased by 2.4% from $6,010,918 thousand on December 31, 2023, to $5,864,017 thousand on June 30, 2024, while increasing by 61.0% compared to $3,641,631 thousand on June 30, 2023[23]. - Total assets as of June 30, 2024, were $5,839,328,000, compared to $3,596,311,000 in the previous year[50]. - Cash and due from banks increased by 16.6% to $50,090 thousand compared to $43,079 thousand in Q1 2024, and up 41.4% from $35,423 thousand in Q2 2023[81].