Shore Bancshares, Inc. :SHBI-US: Earnings Analysis: Q3, 2016 By the Numbers : October 25, 2016

Shore Bancshares, Inc. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of Shore Bancshares, Inc. – Sandy Spring Bancorp, Inc., Old Line Bancshares, Inc., Howard Bancorp, Inc., M&T Bank Corporation, PNC Financial Services Group, Inc. and Wells Fargo & Company (SASR-US, OLBK-US, HBMD-US, MTB-US, PNC-US and WFC-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 13.67 million, Net Earnings of USD 2.41 million.
  • Net interest income margins widened from 69.76% to 70.68% compared to the same period last year.
  • Net loan assets changed 10.79% compared to same period last year and 4.83% from previous period, total deposits changed 3.43% compared to same period last year and 3.25% from previous period.
  • Earnings growth from operating margin improvements as well as from one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2015-09-30 2015-12-31 2016-03-31 2016-06-30 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 12.92 12.93 13.78 13.42 13.67
Revenue Growth (%YOY) 2.26 6.81 9.19 7.64 5.81
Earnings (mil) 1.91 2.16 2.46 2.27 2.41
Earnings Growth (%YOY) 51.27 76.43 74.59 39.64 26.3
Net Margin (%) 14.78 16.73 17.85 16.92 17.64
EPS 0.15 0.17 0.19 0.18 0.19
Return on Equity (%) 5.28 5.91 6.62 6.01 6.28
Return on Assets (%) 0.69 0.77 0.87 0.8 0.84

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Market Share Versus Profits

Revenues History
Earnings History

SHBI-US‘s change in revenue this period compared to the same period last year of 5.81% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that SHBI-US is holding onto its market share. Also, for comparison purposes, revenues changed by 1.80% and earnings by 6.12% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by the year-on-year improvement in net interest income margins from 69.76% to 70.68%. However, the company’s loan loss provisions have prevented it from fully capitalizing on these net interest income margin improvements. SHBI-US‘s net interest income after provisions margin showed no improvement. Loan loss provisions as a percentage of net interest income were 6.26% this period, and 4.55% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

The firm’s improvement in net interest income margins was influenced by the relative increase in the level of net loan assets. In addition, total deposits as a percentage of equity went from 6.58% to 6.41%. On an absolute basis, net loan assets changed 10.79% compared to the same period last year and 4.83% from the previous period, while total deposits changed 3.43% compared to the same period last year and 3.25% from the previous period.


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins from 24.13% to 28.12% and (2) one-time items. The company’s pretax margins are now 28.12%, compared to 24.07% for the same period last year.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for Shore Bancshares, Inc.

Company Profile

Shore Bancshares, Inc. operates as a bank holding company for the Talbot Bank of Easton and the Centreville National Bank of Maryland. The company operates through two segments: Community Banking and Insurance Products and Services. The Community Banking segment provides services to consumers and small businesses on the eastern shore of Maryland and in Delaware. Its activities include small business services, retail brokerage, trust services and consumer banking products and services. The Insurance Products and Services segment provides insurance products and services to businesses and consumers in the company’s market areas. Shore Bancshares was founded on March 15, 1996 and is headquartered in Easton, MD.

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