OSHC Ocean Shore Holding Co.

Ocean Shore Holding Co. (NASDAQ: OSHC) today announced net income of $1,192,000, or $0.18 per diluted share, for the quarter ended September 30, 2012, as compared to $1,215,000, or $0.18 per diluted share, for the quarter ended September 30, 2011. Net income for the nine months ended September 30, 2012 was $3,843,000, or $0.57 per diluted share, as compared to $3,577,000, or $0.52 per diluted share, for the same period in 2011.

Ocean Shore Holding Co. (the "Company") is the holding company for Ocean City Home Bank (the "Bank"), a federal savings bank headquartered in Ocean City, New Jersey. The Bank operates a total of twelve full-service banking offices in eastern New Jersey.

“Earnings for the quarter were strong,” said Steven E. Brady, President and CEO, “although lagging slightly behind our prior quarter as heavy refinancing activity put pressure on our net interest margin. Intense competition and the interest rate environment have prompted another re-financing boom that has led to increased pay-offs in our portfolio.”

“Asset quality remains very strong as non-performing assets were $5.7 million, or 0.53% of total assets, at September 30, 2012, compared to $6.6 million, or 0.66%, at December 31, 2011.”

Balance Sheet Review

Total assets grew $66.8 million, or 6.7%, to $1,061.5 million at September 30, 2012 from December 31, 2011. Loans receivable, net, decreased $36.0 million, or 4.9%, to $691.6 million at September 30, 2012 from $727.6 million at December 31, 2011. Investment and mortgage-backed securities increased $41.6 million, or 78.8%, to $94.3 million during the first nine months of 2012. Cash and cash equivalents increased $59.1 million, or 38.0%, to $214.8 million at September 30, 2012 from December 31, 2011. The decrease in total net loans resulted from loan originations and other advances totaling $116.6 million offset by payoffs and payments received of $152.7 million. The increase in investments and mortgage-backed securities resulted from new purchases of short duration agency investments of $62.8 million offset by normal repayments, calls and payoffs of $21.2 million. Cash and cash equivalents increase resulted from increased deposit activity and cash flow from loans offset by increased investment activity.

Deposits grew $67.0 million, or 8.9%, to $819.4 million at September 30, 2012 from December 31, 2011. The Company continued its focus on core deposits, which increased $85.6 million, or 16.8%, to $594.2 million. Certificates of deposit decreased $18.6 million, or 8.3%, to $225.2 million at September 30, 2012 compared to December 31, 2011. Total borrowings were unchanged at $125.5 million for the period ended September 30, 2012.

Stock Repurchase Plan Completed

During the September 2012 quarter, the Company repurchased a total of 228,600 shares at a weighted average cost of $13.31. Subsequent to the end of the quarter, the Company purchased an additional 30,600 shares, which completed its announced repurchase of 365,000 shares at a weighted average cost of $12.96.

Asset Quality

The provision for loan losses totaled $148,000 for the third quarter of 2012 compared to $141,000 for the third quarter of 2011 and $253,000 for the second quarter of 2012. The provision for loan losses totaled $574,000 for the nine months ended September 30, 2012 compared to $344,000 for the nine months ended September 30, 2011. The allowance for loan losses totaled $3.7 million, or 0.53% of total loans, at September 30, 2012 compared to $3.8 million, or 0.52% of total loans, at December 31, 2011. The Company experienced $640,000 in net charge-off activity for the nine months ended September 30, 2012 as compared to $213,000 in net charge-off activity for the nine months ended September 30, 2011.

Non-performing assets totaled $5.7 million, or 0.53% of total assets, at September 30, 2012, compared to $6.6 million, or 0.66% of total assets, at December 31, 2011. Non-performing assets consisted of seventeen residential mortgages totaling $3.6 million, one commercial mortgage totaling $475,000, one residential construction loan totaling $84,000, one commercial loan totaling $200,000, five consumer equity loans totaling $299,000 and five real estate owned properties totaling $968,000. Specific reserves recorded at September 30, 2012 totaled $383,000.

Income Statement Analysis

Net interest income decreased $270,000, or 4.0%, to $6.5 million for the third quarter of 2012 compared to $6.8 million in the third quarter of 2011. Net interest margin decreased 23 basis points in the quarter ended September 30, 2012 to 3.32% from 3.55% for the quarter ended September 30, 2011. On a linked-quarter basis, net interest margin decreased 10 basis points from 3.42% in the second quarter of 2012. The decrease in net interest income for the third quarter of 2012 as compared to the third quarter of 2011 was the result of a decrease of 61 basis points in the average yield on interest-earning assets to 4.63% and an increase in average interest-bearing liabilities of $72.2 million offset by an increase in average interest-earning assets of $20.8 million and a decrease in the average cost of interest-bearing liabilities of 45 basis points to 1.21%. Heavy refinancing activity resulted in a shift of the mix of interest-earning assets to a higher percentage of investment securities, which have lower yields than loans. Average deposits were higher in the current quarter as a result of seasonal activity in municipal deposits.

Net interest income increased $1.3 million, or 6.7%, for the nine months ended September 30, 2012 to $20.2 million compared to the same period in the prior year. A decrease in net interest margin of 8 basis points to 3.42% from 3.50% was the result of a decrease of 46 basis points in the average yield on earning assets to 4.76% and an increase in average interest bearing liabilities of $103.8 million offset by a decrease of 44 basis points in the average cost of interest bearing liabilities to 1.27% and an increase in average interest-earning assets of $66.5 million.

Other income increased $95,000 and $301,000 to $1.0 million and $2.9 million for the three and nine months ended September 30, 2012, respectively, compared to the same periods in 2011. The increase in other income resulted from increases in deposit and loan account fees, debit card commissions, cash surrender value of life insurance and gains on called securities over the prior period.

Other expenses decreased $74,000, or 1.3%, to $5.4 million for the third quarter of 2012, compared to $5.5 million for the third quarter of 2011. Other expenses increased $1.3 million, or 8.4%, to $16.2 million for the nine months ended September 30, 2012 compared to $15.0 million for the nine months ended September 30, 2011. Additional costs associated with two branch locations added with last year’s acquisition of Select Bank totaled $110,000 for the third quarter of 2012 and $760,000 for the nine months ended September 30, 2012.

This press release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and geopolitical conditions; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services and other factors that may be described in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

 

SELECTED FINANCIAL CONDITION DATA (Unaudited)

      September 30, December 31, 2012 2011 % Change (Dollars in thousands)   Total assets $1,061,543 $ 994,730 6.7 % Cash and cash equivalents 214,774 155,653 38.0 Investment securities 94,292 52,732 78.8 Loans receivable, net 691,636 727,626 (4.9) Deposits 819,414 752,455 8.9 FHLB advances 110,000 110,000 0.0 Subordinated debt 15,464 15,464 0.0 Stockholder’s equity 104,143 104,680 (0.5)    

SELECTED OPERATING DATA (Unaudited)

      Three Months Ended

September 30,

Nine Months Ended

September 30,

2012   2011 % Change 2012  

2011

% Change (In thousands, except per share amounts)   Interest and dividend income $9,075 $9,999 (9.2 ) $28,100 $28,204 (0.4 ) Interest expense 2,567 3,221 (20.3 ) 7,909 9,289 (14.9 ) Net interest income 6,508 6,778 (4.0 ) 20,191 18,915 6.7   Provision for loan losses 148 141 5.0 574 344 66.9   Net interest income after provision for loan losses 6,360 6,637 (4.2 ) 19,617 18,571 5.6   Other income 1,029 934 10.2 2,900 2,598 11.6 Other expense 5,447 5,521 (1.3 ) 16,240 14,987 8.4   Income before taxes 1,942 2,050 (5.3 ) 6,277 6,182 1.5 Provision for income taxes 750 835 (10.2 ) 2,434 2,605 (6.6 )   Net Income $1,192 $1,215 (1.9 ) $3,843 $3,577 7.4   Earnings per share basic $0.18 $0.18 $0.57 $0.53 Earnings per share diluted $0.18 $0.18 $0.57 $0.52   Average shares outstanding basic 6,625,221 6,753,956 6,715,043 6,741,124 Average shares outstanding diluted 6,681,163 6,836,697 6,785,801 6,828,283     Three Months Ended

September 30, 2012

Three Months Ended

September 30, 2011

Average   Average   Balance   Yield/Cost   Balance   Yield/Cost (Dollars in thousands) Loans $696,198 4.87% $717,630 5.26% Investment securities 88,117 2.75% 45,876 4.93% Total interest-earning assets 784,315 4.63% 763,506 5.24%   Interest-bearing deposits $724,526 0.58% $652,300 1.04% Total borrowings 125,464 4.82% 125,464 4.86% Total interest-bearing liabilities 849,990 1.21% 777,764 1.66%   Interest rate spread 3.42% 3.58% Net interest margin 3.32% 3.55%       Nine Months Ended Nine Months Ended September 30, 2012 September 30, 2011 Average   Average   Balance   Yield/Cost   Balance   Yield/Cost (Dollars in thousands) Loans $708,200 4.93 % $679,317 5.22 % Investment securities 78,330 3.23 % 40,703 5.20 % Total interest-earning assets 786,530 4.76 % 720,020 5.22 %   Interest-bearing deposits $704,547 0.64 % $600,723 1.06 % Total borrowings 125,464 4.82 % 125,464 4.82 % Total interest-bearing liabilities 830,011 1.27 % 726,187 1.71 %   Interest rate spread 3.49 % 3.52 % Net interest margin 3.42 % 3.50 %      

ASSET QUALITY DATA (Unaudited)

  Nine Months Ended Year Ended September 30, December 31,   2012       2011   (Dollars in thousands) Allowance for Loan Losses: Allowance at beginning of period $ 3,762 $ 3,988 Provision for loan losses 574 473   Charge-offs (669 ) (700 ) Recoveries   29     1   Net charge-offs   (640 )   (699 )   Allowance at end of period $ 3,696   $ 3,762   Allowance for loan losses as a percent of total loans 0.53 % 0.52 % Allowance for loan losses as a percent of nonperforming loans 78.9 % 58.0 %     September 30, December 31, 2012   2011 (Dollars in thousands) Nonperforming Assets:   Nonaccrual loans: Real estate mortgage - residential $ 3,626 $ 4,768 Real estate mortgage - commercial 475 392 Real estate mortgage - construction 84

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Commercial 200 318 Consumer   299     198   Total 4,684 5,676 Trouble debt restructurings - nonaccrual

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    805   Total nonaccrual loans 4,684 6,481 Real estate owned   968     98   Total nonperforming assets $ 5,652   $ 6,579     Nonperforming loans as a percent of total loans 0.68 % 0.89 % Nonperforming assets as a percent of total assets 0.53 % 0.66 %    

SELECTED FINANCIAL RATIOS (Unaudited)

  Nine Months Ended September 30, 2012   2011 Selected Performance Ratios: Return on average assets (1) 0.50 % 0.53 % Return on average equity (1) 4.83 % 4.64 % Interest rate spread (1) 3.49 % 3.52 % Net interest margin (1) 3.42 % 3.50 % Efficiency ratio 70.33 % 69.66 %

(1) Annualized.

   

OCEAN SHORE HOLDING COMPANY - QUARTERLY DATA (Unaudited)

          Q3 Q2 Q1 Q4 Q3 2012 2012 2012 2011 2011 (In thousands except per share amounts) Income Statement Data: Net interest income $6,508 $6,797 $6,885 $6,987 $6,777 Provision for loan losses 148 253 173 129 141

Net interest income after provision for loan losses

6,360

6,544

6,712

6,858

6,636

Other income 1,029 966 905 939 935 Other expense 5,447 5,391 5,401 5,389 5,521 Income before taxes 1,942 2,119 2,216 2,408 2,050 Provision for income taxes 750 822 862 927 835 Net income $1,192 $1,297 $1,354 $1,481 $1,215   Share Data: Earnings per share basic $0.18 $0.19 $0.20 $0.22 $0.18 Earnings per share diluted $0.18 $0.19 $0.20 $0.22 $0.18 Average shares outstanding basic 6,625,221 6,742,591 6,778,305 6,769,726 6,753,956 Average shares outstanding diluted 6,681,163 6,797,333 6,842,452 6,843,937 6,836,697 Total shares outstanding 6,963,672 7,185,843 7,291,643 7,291,643 7,291,643   Balance Sheet Data: Total assets $1,061,543 $1,026,273 $1,002,690 $994,926 $1,021,625 Investment securities 94,292 92,486 75,266 53,732 49,679 Loans receivable, net 691,636 701,750 714,993 727,887 743,945 Deposits 819,414 782,351 758,806 752,455 780,564 FHLB advances 110,000 110,000 110,000 110,000 110,000 Subordinated debt 15,464 15,464 15,464 15,464 15,464 Stockholders’ equity 104,143 105,607 105,558 104,680 104,063   Asset Quality: Non-performing assets $5,652 $5,323 $6,703 $6,579 $5,297 Non-performing loans to total loans 0.68% 0.68% 0.90% 0.89% 0.67% Non-performing assets to total assets 0.53% 0.52% 0.67% 0.66% 0.52% Allowance for loan losses $3,696 $3,698 $3,895 $3,762 $4,119 Allowance for loan losses to total loans 0.53% 0.53% 0.54% 0.52% 0.55% Allowance for loan losses to non-performing loans 78.9% 80.2% 60.3% 58.0% 82.6%