Shore Bancshares(SHBI) - 2025 Q3 - Quarterly Report

Financial Performance - The Company's net income for Q3 2025 was $14.3 million, or $0.43 per diluted common share, down from $15.5 million, or $0.46 per diluted common share in Q2 2025[176] - Net income for the nine months ended September 30, 2025, was $43.6 million, compared to $30.6 million for the same period in 2024, driven by increased net interest income[178] - The company reported net income of $14.3 million for Q3 2025, a 28.2% increase from $11.2 million in Q3 2024, resulting in diluted earnings per share of $0.43 compared to $0.34[185] - Net income for the three months ended September 30, 2025, was $14.3 million, compared to $11.2 million for the same period in 2024, reflecting an increase of 28.8%[293] Interest Income and Margin - Net interest income increased by $1.4 million to $48.7 million in Q3 2025, with a Net Interest Margin (NIM) of 3.42%, up from 3.35% in Q2 2025[178] - Total interest income increased by 3.3% to $77.2 million in Q3 2025 from $74.7 million in Q3 2024, driven by higher loan fees and interest on deposits[186] - Net interest income rose by 12.5% to $48.7 million in Q3 2025, up from $43.3 million in Q3 2024, primarily due to a decrease in interest expense on deposits and borrowings[186] - Tax-equivalent net interest income for Q3 2025 was $48.7 million, up 12.4% from $43.3 million in Q3 2024, reflecting effective interest rate management[187] - The company's net interest margin (NIM) improved to 3.42% in Q3 2025, up from 3.17% in Q3 2024[196] Asset Quality - Nonperforming assets to total assets increased to 0.45% at September 30, 2025, from 0.33% at June 30, 2025[178] - The allowance for credit losses (ACL) was $59.6 million at September 30, 2025, compared to $57.9 million at December 31, 2024[178] - Provision for credit losses increased significantly by 103.5% to $3.0 million in Q3 2025 from $1.5 million in Q3 2024[186] - The ratio of the allowance for credit losses (ACL) as a percentage of loans was 1.22% at September 30, 2025, compared to 1.21% at December 31, 2024[234] - Nonperforming assets totaled $28.08 million, or 0.45% of total assets, at September 30, 2025, up from $24.80 million, or 0.40% of total assets, at December 31, 2024[276] Efficiency and Management - The efficiency ratio for Q3 2025 was 61.00%, slightly up from 60.83% in Q2 2025, but improved from 67.49% in Q3 2024[178] - The efficiency ratio improved to 61.00% in Q3 2025 from 67.49% in Q3 2024, indicating better cost management[186] - Management anticipates ongoing improvements in operating leverage due to expense management and technology investments[178] - The efficiency ratio – non-GAAP improved to 57.30% for the three months ended September 30, 2025, compared to 62.10% for the same period in 2024[298] Capital and Liquidity - Book value per share rose to $17.27 at September 30, 2025, from $16.94 at June 30, 2025, and $16.00 at September 30, 2024[178] - The Bank was classified as "well-capitalized" under regulatory capital requirements as of September 30, 2025, with a Common Equity Tier 1 ratio of 8.86%[231] - Total stockholders' equity increased by $36.1 million, or 6.7%, to $577.2 million at September 30, 2025, primarily due to $43.6 million of net income[288] - The Company had approximately $1.37 billion of available liquidity, including $416.5 million in cash and cash equivalents and $294.4 million in unpledged securities[224] Loans and Deposits - Total loans increased by $110.981 million, or 2.3%, from $4.771 billion on December 31, 2024, to $4.883 billion on September 30, 2025[247] - The commercial real estate (CRE) loan portfolio grew to $2.643 billion, representing 54.1% of total loans, up from $2.558 billion, or 53.6%, at the end of 2024, marking a $84.795 million increase, or 3.3%[247] - Total deposits decreased by $171 thousand to $5,528.17 million at September 30, 2025, compared to $5,528.34 million at December 31, 2024[279] - Interest-bearing checking deposits fell by $126.11 million, while time deposits increased by $99.57 million during the same period[279] Market Sensitivity - Estimated changes in Net Interest Income (NII) for September 30, 2025, show a decrease of (3.8)% under a +400 basis points scenario[302] - The economic value of equity is projected to increase by 16.1% under a +400 basis points scenario for September 30, 2025[303] - Under a -200 basis points scenario, the economic value of equity is projected to decrease by (24.6)% for September 30, 2025[303] - The analysis indicates that certain assets and liabilities may react differently to changes in market interest rates[304]