Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|X| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
EXHIBIT INDEX
Exhibit No. Description
------------------------ -------------------------------------
99.1 Press Release dated January 22, 2008,
announcing results of operations for
the quarter ended December 31, 2007.
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Exhibit 99.1
FOR IMMEDIATE RELEASE
Onley, Virginia
Tuesday, January 22, 2008
Shore Financial Corporation Announces Earnings
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
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 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 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
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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.
For further information, contact:
Lynn M. Badger
Shore Financial Corporation
P.O. Box 920
Onley, Virginia 23418
(757) 787-1335
lbadger@shorebank.com
Shore Financial Corporation
Earnings Release
Financial Highlights:
Three Months Ended December 31, Years Ended 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%
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