Shore Bancshares(SHBI) - 2024 Q4 - Annual Report

Financial Performance - The Company recorded net income of $43.9 million for the year ended December 31, 2024, compared to $11.2 million for 2023, representing a 290.89% increase[242]. - Net income for the year ended December 31, 2024, was reported at $43.89 million, significantly up from $11.23 million in 2023, representing an increase of approximately 290%[363]. - Basic and diluted net income per common share for 2024 was $1.32, compared to $0.42 in 2023, representing a growth of 214%[411]. - The return on average assets improved to 0.74% in 2024 from 0.24% in 2023, while return on average common equity increased to 8.35% from 2.54%[248]. - Return on average common equity improved to 8.35% in 2024 from 2.54% in 2023, indicating enhanced profitability relative to equity[363]. - The company reported a return on average tangible common equity of 12.21% for 2024, compared to 7.74% in 2023, indicating improved operational efficiency[365]. Asset and Liability Management - Total assets increased by $219.8 million, or 3.7%, to $6.23 billion at December 31, 2024, primarily due to a $131.0 million increase in loans held for investment[243]. - Total liabilities rose by $189.9 million, or 3.45%, to $5.69 billion at December 31, 2024, mainly due to an increase in deposits and borrowings[244]. - Total stockholder's equity grew by $29.9 million, or 5.9%, to $541.1 million at December 31, 2024, supported by net income of $43.9 million[246]. - Cash and cash equivalents totaled $459.9 million at December 31, 2024, compared to $372.4 million at December 31, 2023, reflecting a 23.5% increase[263]. - Total deposits increased to $5,528,336 thousand as of December 31, 2024, up from $5,386,120 thousand in 2023, reflecting a growth of approximately 2.64%[409]. Income and Expense Analysis - Interest and dividend income increased by $81.3 million, or 37.96%, to $295.3 million for the year ended December 31, 2024[248]. - Net interest income rose by $35.3 million, or 26.05%, to $170.9 million for 2024, primarily due to an increase in interest and fees on loans[249]. - Total noninterest income for 2024 was $31.1 million, a decrease of $2.0 million or 6.1% from $33.2 million in 2023[256]. - Total noninterest expense increased to $138.3 million in 2024, up $14.9 million or 12.1% compared to $123.3 million in 2023[257]. - The effective tax rate increased to 25.2% in 2024 from 20.8% in 2023, driven by bargain purchase gains and nondeductible merger-related costs[260]. Credit Quality and Risk Management - The provision for credit losses decreased significantly by $26.2 million, or 84.69%, to $4.7 million in 2024[248]. - The allowance for credit losses on loans was $57.91 million, slightly increasing from $57.35 million in 2023[277]. - Total past due loans decreased to $9.1 million at December 31, 2024, compared to $11.6 million at December 31, 2023, with nonaccrual loans increasing to $21.0 million[291]. - Nonperforming assets rose to $24.8 million, an increase of $11.1 million or 80.98% from $13.7 million in 2023, with the ratio of nonperforming assets to total assets increasing to 0.40% from 0.23%[305]. - The company continues to prioritize the resolution of nonperforming and problem loans through various strategies, including loan charge-offs and marketing of repossessed assets[306]. Capital and Regulatory Compliance - The Bank was classified as "well-capitalized" under applicable regulatory capital requirements as of December 31, 2024[348]. - The Company maintained a Common Equity Tier 1 ratio of 8.02% and a Total Risk-Based Capital ratio of 12.18% as of December 31, 2024[349]. - The company has no speculative grade HTM securities, maintaining a focus on investment-grade securities rated BBB- or higher[271]. Investment Portfolio - The investment portfolio included 23.7% classified as available-for-sale (AFS) and 76.3% as held-to-maturity (HTM) at December 31, 2024[264]. - As of December 31, 2024, investment securities totaled $656.4 million, reflecting a $9.0 million increase or 1.4% from $647.3 million in 2023[266]. - Available-for-sale (AFS) securities at fair value amounted to $149.2 million, up from $110.5 million in 2023, with a composition of 82.0% mortgage-backed, 13.5% U.S. government agency securities, and 4.4% corporate bonds[266]. - Held-to-maturity (HTM) securities at amortized cost decreased to $481.1 million from $513.2 million in 2023, with 70.0% in mortgage-backed securities and 27.6% in U.S. government agency securities[267]. Operational Efficiency - The company maintained effective internal control over financial reporting as of December 31, 2024, as confirmed by the independent auditor's report[389]. - The independent auditor Crowe LLP provided an unqualified opinion on the financial statements, affirming their conformity with generally accepted accounting principles[389].