Shore Bancshares(SHBI) - 2024 Q3 - Quarterly Results

Financial Performance - Net income for Q3 2024 was $11.2 million or $0.34 per diluted share, unchanged from Q2 2024, compared to a net loss of $9.7 million or $(0.29) per diluted share in Q3 2023[2]. - Net income for Q3 2024 was $11,189, a slight decrease of 0.4% from Q2 2024, but a significant increase of 214.9% compared to Q3 2023[31]. - Basic and diluted net income per common share rose to $0.34, compared to a loss of $0.29 in the same quarter last year, reflecting a 214.3% increase[18]. - Return on average assets improved to 0.77% from (0.67)% year-over-year, an increase of 144 basis points[18]. - The company reported a net income excluding net amortization of intangible assets, merger-related expenses, and credit card fraud losses was $13,187 thousand for Q3 2024[48]. Interest Income and Margin - Net interest income increased by $1.1 million to $43.3 million in Q3 2024 from $42.1 million in Q2 2024, driven by modest loan growth and faster repricing of loans and securities[2]. - The average interest-earning asset yield increased by 23 basis points to 5.47% in Q3 2024, while the cost of funds rose by 43 basis points to 2.38%[9]. - Net interest income for the first nine months of 2024 was $126.5 million, an increase of $32.8 million, or 34.9%, compared to the same period in 2023[12]. - Net interest income after provision for credit losses rose by 139.6% to $41,793,000 compared to $17,446,000 in the prior year[22]. - Total interest income grew by 2.2% from Q2 2024 to Q3 2024, reaching $74,689 thousand, and increased by 4.8% compared to Q3 2023[41]. Asset and Liability Management - Total assets decreased by $93.2 million or 1.6% to $5.9 billion compared to December 31, 2023, primarily due to a decrease in cash and cash equivalents[5]. - Total deposits increased to $5.23 billion at September 30, 2024, up from $5.15 billion at June 30, 2024, with average noninterest-bearing deposits rising to $1.58 billion, representing 30.55% of average funding[3]. - Total liabilities decreased by 2.1% to $5,384,433,000 compared to December 31, 2023[20]. - Total stockholders' equity increased by $22.1 million or 4.3% compared to December 31, 2023, primarily due to current year earnings[7]. - The period-end equity to assets ratio improved to 9.01%, up from 8.79%, reflecting a 22 basis points increase[19]. Credit Quality - The allowance for credit losses (ACL) was $58.7 million, stable at 1.24% of loans, with nonperforming assets to total assets at 0.27%[3]. - The provision for credit losses was $1.5 million for Q3 2024, down from $28.2 million in Q3 2023, reflecting an improved CECL model post-merger[10]. - Nonperforming assets decreased to $15.8 million, or 0.27% of total assets, as of September 30, 2024, compared to $17.0 million, or 0.29% of total assets, as of June 30, 2024[10]. - Nonperforming assets as a percent of total loans increased to 0.33%, compared to 0.24% in the prior year[19]. - The allowance for credit losses as a percent of nonaccrual loans decreased significantly to 395.24% from 635.17%[19]. Operational Efficiency - The efficiency ratio for Q3 2024 was 67.49%, impacted by one-time expenses, while the non-GAAP efficiency ratio was 62.10%[3]. - The efficiency ratio improved to 67.49% from 77.81%, a decrease of 1,032 basis points[18]. - The net operating expense ratio for Q3 2024 was 1.84%, compared to 2.21% in Q3 2023, reflecting better cost management[10]. - Total noninterest expense for the first nine months of 2024 increased by $14.6 million, or 16.3%, largely due to credit card fraud losses and expanded operations[14]. - Total noninterest expense decreased by 27.7% to $34,114 thousand compared to $47,158 thousand for the same period last year[24]. Deposits and Funding - Demand deposits increased to $581,517 thousand with an interest yield of 3.74% for the three months ended September 30, 2024, compared to $1,056,956 thousand and 2.50% in the same period last year[28]. - Noninterest-bearing deposits reached $1,579,519 thousand, up from $1,345,976 thousand year-over-year[28]. - Interest on deposits increased by 22.9% to $28,856,000 for the three months ended September 30, 2024, compared to $23,473,000 in the same period last year[22]. - The average balance of interest-bearing deposits was $3,506,829 thousand in Q3 2024, with an interest expense of $28,856 thousand, yielding a cost of funds of 2.38%[47]. - Total classified and special mention loans decreased to $37,183 thousand from $42,958 thousand in June 30, 2024, a decline of 13.54%[56].