ONLEY, Va., Jan. 22 /PRNewswire-FirstCall/ -- Shore Financial
Corporation (NASDAQ:SHBK) announced today that quarterly earnings
were $788,800, or $0.31 per diluted share, for the three months
ended December 31, 2007, compared to earnings of $831,000, or $0.33
per diluted share, for the same period of 2006, a decline of 5.0%.
Fourth quarter 2007 earnings improved over the preceding quarter by
8.0% and over the second quarter of 2007 by 37%, as the company
began to benefit from a steeper yield curve and an improved
interest margin. For the year ended December 31, 2007, the
company's net income was $2.73 million, or $1.08 per diluted share,
compared to earnings of $2.93 million, or $1.16 per diluted share,
during 2006. During 2007 the company continued to implement planned
expansion and product development initiatives and continued to
build a strong team of commercial bankers within its market. While
these initiatives have had a negative impact on earnings in the
short term, the bank is building a strong foundation for market
share expansion in coming years. Shore Bank began the year with the
addition of key executives to its team, having an initial negative
impact on earnings. However, the addition of experienced commercial
bankers provided the depth to expand the branch network and the
product offerings within the bank's markets. During the first half
of the year the bank began rebuilding its suite of online banking
products which resulted in increased online banking and bill pay
usage of 43% and 47%, respectively. In addition, the bank began
offering mortgage loans on line in the fourth quarter and
production has exceeded expectations. In the second quarter, the
bank received regulatory approval to open its eighth branch to be
located in Pocomoke City, Maryland. The branch opened for business
in September fully staffed and is ahead of projections through year
end. In the fourth quarter, the bank began construction on two
branch relocation projects, both of which have been under
development since the beginning of the year. In Salisbury Maryland,
the bank razed an existing obsolete facility with the new facility
scheduled to open in June 2008. In Northampton County Virginia, the
bank is building a full service facility on a new location near the
entrance to the Bay Creek Community in Cape Charles Virginia. This
branch will be a relocation of the bank's existing Cheriton
Virginia branch and is scheduled to open in the summer of 2008.
Both branches are utilizing leased space during the construction
phases. Faced with a softening residential real estate market and a
very competitive deposit market during 2007, the company's overall
growth was generally flat. In spite of the market's impact on loan
growth, the company was able to increase net interest income during
the year. Existing loan yields repriced higher in many cases while
the bank managed funding costs with pricing and core deposit
promotions. As a result, the company's net interest margin was
3.67% and 3.63% for the three and twelve months ended December 31,
2007, respectively, with the quarterly margin representing an
increase of 32 basis points since January 2007. With the improved
net interest margin, the company's net interest income increased to
$2.24 million and $8.80 million, respectively, during the three and
twelve month periods ended December 31, 2007, compared to $2.13
million and $8.50 million, respectively, during the same periods of
2006. Outstanding loan balances on December 31, 2007 were $221.6
million, compared to $210.6 million at December 31, 2006, an
increase of $11 million or 5%. The quality of the bank's loan
portfolio remains strong with no exposure to the subprime loans
that have decimated the financial markets since mid 2007. The
bank's non current loan to total loan ratio of 1.23% at December
31, 2007, while the bank's allowance for loan losses to period end
loans ratio was 1.22%, representing 340% coverage of non accrual
loans. Management considers these levels manageable and
commensurate with the risk existing in the bank's loan portfolio.
The company's noninterest income declined slightly to $947,500 for
the December 2007 quarter, compared to $991,200 for the December
2006 quarter end. For the full year non interest income also saw a
slight decline impacted by some non recurring items. Non interest
income was $3.25 million and $3.39 million for the years ended
December 31, 2007 and 2006, respectively. Included in the 2007
annual amount is a $147,900 charge related to the disposal of the
original Salisbury, Maryland branch building as part of building a
new full service facility on the existing site. Additionally, prior
year's amount includes $210,000 of net gains from investment
activities compared to $74,500 of such gains during 2007. The
bank's mortgage banking division posted significant gains in fee
income during 2007 with an increase from $130,600 during the 2006
twelve month period to $221,700 during the 2007 comparable period,
representing a 69.8% increase. The company's noninterest expense
was $2.16 million during the December 2007 quarter, compared to
$2.07 million during the 2006 three month period. Noninterest
expense for the year ended December 31, 2007 was $8.29 million,
compared to $7.74 million during the 2006 twelve month period. The
2007 expense included cost associated with opening the bank's
eighth banking facility and additional personnel employed to
enhance the company's loan administration, operations, mortgage
banking and internet banking divisions, as well as, normal annual
salary and benefit adjustments. Additionally, the bank instituted a
new marketing and branding program during the year to generate a
more consistent message in the markets it serves. 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 eight full-service banking facilities, twenty-two 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/. Information about Merger of Shore
Financial Corporation and Hampton Roads Bankshares On January 9,
2008, Shore Financial Corporation announced the signing of a
definitive merger agreement with Hampton Roads Bankshares pursuant
to which Shore Financial will be merged into Hampton Roads
Bankshares. Hampton Roads Bankshares will file with the Securities
and Exchange Commission a registration statement on Form S-4 to
register the shares of its common stock to be issued to the
shareholders of Shore Financial Corporation in connection with the
proposed transaction. The registration statement will include a
proxy statement/prospectus that will be sent to the shareholders of
Shore Financial Corporation seeking their approval of the proposed
merger. The proxy statement/prospectus will contain important
information about Hampton Roads Bankshares, Shore Financial
Corporation, and the merger and about the persons soliciting
proxies from Shore Financial's shareholders in the merger,
including the officers and directors of Shore Financial, and their
interests in the merger, such as their stock ownership in Shore
Financial. Additional information about Shore Financial's directors
and executive officers is included in Shore Financial's Annual
Report on Form 10-K for the year ended December 31, 2006, which was
filed with the Securities and Exchange Commission and is available
on Shore Financial's website at http://www.shorebank.com/ and at
the Shore Financial address provided below. Hampton Roads
Bankshares and Shore Financial Corporation urge the shareholders of
Shore Financial and other investors to read the registration
statement on Form S-4 and the proxy statement/prospectus included
in the registration statement on Form S-4, and any other relevant
documents to be filed with the SEC in connection with the proposed
transaction, because they will contain important information about
Hampton Roads Bankshares, Shore Financial, and the proposed
transaction. Shareholders and investors may obtain free copies of
the proxy statement/prospectus and other documents related to the
merger, once they are filed with the SEC, through the SEC's website
at http://www.sec.gov/. Free copies of the proxy
statement/prospectus and other relevant documents also may be
obtained by directing a request by telephone or mail to the
following: Hampton Roads Bankshares, Inc. Shore Financial
Corporation 999 Waterside Drive, Suite 200 25020 Shore Parkway
Norfolk, VA 23510 Onley, Virginia 23418 Attention: Jack W. Gibson
Attention: Scott C. Harvard Telephone Number: (757) 217-1000
Telephone Number: (757) 787-1335 Certain statements in this report
may constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements that include projections,
predictions, expectations, or beliefs about events or results or
otherwise are not statements of historical facts. Although Shore
Financial believes that its expectations with respect to certain
forward-looking statements are based upon reasonable assumptions
within the bounds of its existing knowledge of its business and
operations, there can be no assurance that actual results,
performance or achievements of Shore Financial will not differ
materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. Actual
future results and trends may differ materially from historical
results or those anticipated depending on a variety of factors. For
an explanation of the risks and uncertainties associated with
forward-looking statements, please refer to the Shore Financial's
Annual Report on Form 10-K for the year ended December 31, 2006,
and other reports filed and furnished to the Securities and
Exchange Commission. Shore Financial undertakes no obligation to
update any forward-looking statements made in this press release
and this release shall not constitute an offer to sell or the
solicitation of an offer to buy securities in any jurisdiction in
which such solicitation would be unlawful. Shore Financial
Corporation Earnings Release Financial Highlights: Three Months
Ended Years Ended December 31, December 31, 2007 2006 2007 2006
OPERATIONS: Net Interest Income $2,239,300 $2,127,600 $8,804,400
$8,495,000 Noninterest Income $947,500 $991,200 $3,252,500
$3,391,900 Loan Loss Provision (Recovery) ($96,700) $8,500
($72,600) $58,700 Noninterest Expense $2,161,400 $2,067,800
$8,292,200 $7,739,200 Income Tax Expense $333,300 $211,500
$1,106,700 $1,155,900 Net Income $788,800 $831,000 $2,730,600
$2,933,100 RATIOS AND OTHER: Total Shares Outstanding 2,500,927
2,497,327 2,500,927 2,497,327 Weighted Avg Shares-Basic 2,500,900
2,493,800 2,499,800 2,492,100 Weighted Avg Shares-Diluted 2,511,500
2,522,500 2,519,200 2,522,600 Basic Earnings Per Share $0.32 $0.33
$1.09 $1.18 Diluted Earnings Per Share $0.31 $0.33 $1.08 $1.16
Total Assets $266,632,800 $260,676,000 $266,632,800 $260,676,000
Gross Loans $221,586,100 $210,598,000 $221,586,100 $210,598,000
Deposits $196,563,900 $198,102,800 $196,563,900 $198,102,800 Total
Equity $27,720,700 $26,126,300 $27,720,700 $26,126,300 Average
Assets $265,898,500 $258,379,300 $263,224,000 $256,532,000 Average
Equity $27,898,100 $26,018,100 $27,169,000 $24,949,700 Net Interest
Margin 3.67% 3.56% 3.63% 3.57% Return on Average Assets 1.19% 1.29%
1.04% 1.14% Return on Average Equity 11.31% 12.78% 10.05% 11.76%
Efficiency Ratio 67.92% 69.83% 68.05% 66.28% DATASOURCE: Shore
Financial Corporation CONTACT: Lynn M. Badger of Shore Financial
Corporation, +1-757-787-1335, Web site: http://www.shorebank.com/
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