ONLEY, Va., Jan. 23 /PRNewswire-FirstCall/ -- Shore Financial Corporation announced today that quarterly earnings were $831,100, or $0.33 per diluted share, for the three months ended December 31, 2006, compared to earnings of $730,400, or $0.29 per diluted share, for the same period of 2005. This represents an increase of 13.8% over the fourth quarter of 2005. Earnings for the year ended December 31, 2006 also increased to $2.93 million, or $1.16 per diluted share, compared to $2.68 million, or $1.06 per diluted share for the 2005 year.
The company's earnings benefited from continued growth in core noninterest income. Quarterly core noninterest income increased 32.8% to $831,200 during 2006 from $625,900 during 2005, while annual core noninterest income increased 57.7% to $3.25 million during 2006 from $2.06 million during 2005. Deposit accounts fees continued to drive noninterest income growth, increasing 37.4% to $561,100 and 76.8% to $2.37 million for the three and twelve months ended December 31, 2006, respectively. The company's investment subsidiary operations finished the year strong almost doubling annual commissions to $337,200 compared to $172,100 for the 2005 twelve month period. During the fourth quarter of 2006 commissions were $79,600 compared to $64,200 in the fourth quarter of 2005.
Other noninterest income included gains on sales of investment securities which contributed $157,400 to 2006 quarterly pretax earnings compared to a loss of $3,900 in 2005. For the year 2006 gains on sales of securities contributed $210,000 to annual pretax earnings compared to $315,900 in gains on sales of securities and real estate in 2005.
Net interest income was $2.13 million and $8.50 million for the three and twelve month periods ended December 31, 2006, respectively, compared to $2.17 million and $8.44 million for the same periods of 2005, respectively. The company's net interest margin continued to experience downward pressure due to the inverted interest rate yield curve. The company's total assets were $260.7 million at December 31, 2006, compared to $247.4 million at December 2005. Asset growth was driven primarily by residential real estate loans with a 17.7% increase in average balances during 2006 over the comparable amount in 2005. Deposit balances were $198.1 million at December 31, 2006, compared to $189.0 million at December 31, 2005.
Noninterest expense for the December 2006 quarter and twelve month periods was $2.07 million and $7.74 million, respectively, as compared to $1.69 million and $6.64 million, respectively, during the same periods of 2005. Noninterest expenses during 2006 were impacted by increased compensation and benefit expense, investments in long range planning initiatives and the expansion of customer services offered by the company. The rise in compensation and benefit expense resulted primarily from increases in commissions associated with operating the company's mortgage and investment brokerage services, the expensing of employee stock options granted to non- executive employees during March 2006 and general increases in other employee benefits. Additional customer service initiatives implemented during 2006 included expansion of the bank's ATM network, additional internet banking services and new deposit products. While these initiatives have and should continue to result in increased income, they negatively impacted noninterest expense by approximately $140,000 during 2006.
Asset quality remained strong during the quarter. The bank's allowance for loan losses to period end loans ratio was 1.36% at December 31, 2006, a level management considers commensurate with the risk existing in the bank's loan portfolio. Additionally, the bank's delinquent loan levels remain manageable with a non current loan to total loan ratio of 0.89% at December 31, 2006.
Shore Financial Corporation is the only publicly traded company with headquarters on the Eastern Shore of Virginia. Its stock is traded on the NASDAQ Global Stock Market under the symbol SHBK. Its banking subsidiary, Shore Bank, serves the Eastern Shore of Maryland and Virginia through seven full-service banking facilities, twenty-three ATMs and twenty-four hour telephone and online banking services. Through banking subsidiaries and affiliated companies, the bank provides title insurance, trust services, and non deposit investment products. For more information on stock, products and services, visit http://www.shorebank.com/.
This press release may contain "forward-looking statements," within the meaning of federal securities laws that involve significant risks and uncertainties. Statements herein are based on certain assumptions and analyses by the company and are factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in economic conditions; significant changes in regulatory requirements; and significant changes in securities markets. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the company's most recent Form 10-K report and other documents filed with the Securities and Exchange Commission. Shore Financial Corporation does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
Shore Financial Corporation
Earnings Release
Financial Highlights:
Three Months Ended
December 31, Year Ended December 31,
2006 2005 2006 2005
OPERATIONS:
Net Interest Income $2,127,600 $2,171,600 $8,495,000 $8,436,500
Noninterest Income $1,003,900 $620,700 $3,480,000 $2,379,400
Loan Loss Provision $21,200 $57,300 $146,800 $303,700
Noninterest Expense $2,068,000 $1,687,600 $7,739,400 $6,644,100
Income Tax Expense $211,200 $317,000 $1,155,600 $1,192,800
Net Income $831,100 $730,400 $2,933,200 $2,675,300
RATIOS AND OTHER:
Total Shares
Outstanding $2,497,327 $2,074,207 $2,497,327 $2,074,207
Weighted Avg Shares-
Basic $2,493,809 $2,488,526 $2,492,052 $2,485,103
Weighted Avg Shares-
Diluted $2,528,410 $2,522,189 $2,522,598 $2,521,325
Basic Earnings Per
Share $0.33 $0.29 $1.18 $1.08
Diluted Earnings Per
Share $0.33 $0.29 $1.16 $1.06
Total Assets 260,662,300 247,418,900 260,662,300 247,418,900
Gross Loans 210,598,000 195,547,200 210,598,000 195,547,200
Deposits 198,102,800 188,969,700 198,102,800 188,969,700
Total Equity 26,134,400 23,628,600 26,134,400 23,628,600
Average Assets 258,379,400 256,531,000 245,447,500 244,267,700
Average Equity 26,017,600 23,382,700 24,949,500 22,791,800
Net Interest Margin 3.56% 3.81% 3.56% 3.75%
Return on Average
Assets 1.29% 1.14% 1.20% 1.10%
Return on Average
Equity 12.78% 12.49% 11.76% 11.74%
Efficiency Ratio 65.42% 61.45% 63.99% 63.54%
