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Ocean Shore Holding Co. Reports 3rd Quarter Earnings

2016-10-25 16:35 ET - News Release

OCEAN CITY, N.J., Oct. 25, 2016 /PRNewswire/ -- Ocean Shore Holding Co. (NASDAQ: OSHC) today announced net income of $1,701,000, or $0.27 per diluted share, for the quarter ended September 30, 2016, as compared to $1,669,000, or $0.27 per diluted share, for the quarter ended September 30, 2015.  Net income for the nine months ended September 30, 2016 was $5,233,000, or $0.84 per diluted share, as compared to $5,121,000, or $0.84 per diluted share, for the same period in 2015.

Ocean Shore Holding Co. (PRNewsFoto/Ocean Shore Holding Co.)

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 eleven full-service banking offices in eastern New Jersey.

"We are pleased with our continued strong and consistent financial performance," said Steven E. Brady, President and CEO. "In addition, we are moving forward to obtain the necessary approvals for our merger with OceanFirst Financial Corp. and look forward to our affiliation with OceanFirst and the strength of our combined franchise."

Balance Sheet Review

Total assets increased $53.5 million, or 5.1%, to $1,096.9 million at September 30, 2016 from $1,043.4 million at December 31, 2015.  Loans receivable, net, increased $9.0 million, or 1.1%, to $792.9 million at September 30, 2016 from $783.9 million at December 31, 2015.  Investments and mortgage-backed securities decreased $11.8 million, or 10.4%, to $101.2 million during the first nine months of 2016.  Cash and cash equivalents increased $57.8 million, or 65.9%, to $145.5 million at September 30, 2016 from $87.7 million at December 31, 2015.  Loan originations and other advances totaling $122.6 million were offset by payoffs and payments received of $113.6 million, resulting in a $9.0 million increase in the portfolio.  The decrease in investments and mortgage-backed securities resulted from repayments, calls, sales and payoffs of $27.9 million offset by purchases of $15.4 million and a decrease of $826,000 in unrealized holding loss on available for sale investments.  The increase in cash and cash equivalents resulted primarily from increased deposits offset by increased loans.

Deposits increased $45.1 million, or 5.6%, to $857.1 million at September 30, 2016 from $812.0 million at December 31, 2015.  Checking accounts increased $23.7 million, savings accounts increased $2.8 million, municipal deposits increased $9.0 million and certificates of deposit increased $9.7 million at September 30, 2016 compared to December 31, 2015.  Municipal deposits increased as a result of seasonal deposits. 

Asset Quality

The provision for loan losses totaled $150,000 for the third quarter of 2016 compared to $165,000 for the third quarter of 2015 and $161,000 for the second quarter of 2016.  The provision for loan losses totaled $463,000 for the nine months ended September 30, 2016 compared to $496,000 for the nine months ended September 30, 2015.  The allowance for loan losses totaled $3.3 million, or 0.42% of total loans, at September 30, 2016 compared to $3.2 million, or 0.41% of total loans, at December 31, 2015.  The Company experienced $346,000 in net charge-off activity for the nine months ended September 30, 2016 as compared to $1.3 million in net charge-off activity for the nine months ended September 30, 2015. 

Non-performing assets totaled $6.3 million, or 0.57% of total assets, at September 30, 2016, compared to $7.5 million, or 0.72% of total assets, at December 31, 2015.  Non-performing assets at September 30, 2016 consisted of 23 residential mortgages totaling $3.3 million, 2 commercial mortgages totaling $466,000, 1 real estate construction mortgage totaling $143,000, 3 commercial loans totaling $153,000, 5 consumer equity loans totaling $197,000, 3 TDR non-accrual loans totaling $961,000 and 6 real estate owned properties totaling $1.0 million

Income Statement Analysis

Net interest income increased $170,000, or 2.4%, to $7.3 million for the third quarter of 2016 compared to $7.1 million in the third quarter of 2015.  Net interest margin increased 7 basis points in the quarter ended September 30, 2016 to 3.24% from 3.17% for the quarter ended September 30, 2015.  On a linked-quarter basis, net interest margin decreased 4 basis points from 3.28% in the second quarter of 2016.  The increase in net interest income in the third quarter of 2016 compared to the third quarter of 2015 was the result of an increase in average interest-earning assets of $764,000, a decrease in the average cost of interest-bearing liabilities of 11basis points to 0.79% and a decrease in average interest-bearing liabilities of $653,000 offset by a decrease of 2 basis points in the average yield on interest-earning assets to 3.90%.

Net interest income increased $669,000, or 3.1%, to $21.9 million for the nine months ended September 30, 2016 compared to $21.2 million in the same period in the prior year.  Net interest margin increased 8 basis points for the nine months ended September 30, 2016 to 3.25% versus 3.17% for the nine months ended September 30, 2015.  The increase in net interest income for the nine months ended September 30, 2016 was the result of an increase in average interest-earning assets of $5.7 million, a decrease in the average cost of interest-bearing liabilities of 11 basis point to 0.81% offset by an increase in average interest-bearing liabilities of $4.2 million and a decrease of 2 basis points in the average yield on interest-earning assets to 3.92%.

Other income decreased $60,000 and $167,000 to $1.1 million and $3.1 million for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015.  The net decrease in other income for the quarter ended September 30, 2016 resulted from decreases in deposit account fees of $25,000, other income of $32,000 and gain on sale of investments of $3,000.  The net decrease in other income for the nine months ended September 30, 2016 resulted from decreases in deposit account fees of $147,000 and other income of $54,000 offset by an increases gain on sale of investments of $34,000 for the period.  The decreases in the three and nine month periods resulted primarily from lower fees collected on deposit accounts and debit card commissions.

Other expenses increased $144,000, or 2.6%, to $5.7 million for the third quarter of 2016, compared to the third quarter of 2015.  Other expenses increased $409,000, or 2.5%, to $16.8 million for the nine months ended September 30, 2016 compared to the same period in 2015.  The increase in other expense for the third quarter of 2016 compared to 2015 resulted from increases in salaries and benefits, FDIC insurance and of other expenses $318,000 offset by decreases in occupancy and equipment, marketing expenses and REO expenses of $174,000.  For the nine months ended September 30, 2016, increases in salaries and benefits, FDIC insurance REO expenses and other expenses of $657,000 were offset by decreases in occupancy and equipment and marketing expenses of $248,000.

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: risks, uncertainties and other factors relating to the merger of the Company with and into OceanFirst Financial Corp., including the ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval by shareholders of the Company and OceanFirst, and delay in closing the merger, 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,






2016


2015


% Change



(Dollars in thousands)



Total assets


$1,096,875


$1,043,379


5.1%

Cash and cash equivalents


145,469


87,710


65.9

Investment securities


101,188


112,992


(10.4)

Loans receivable, net


792,945


783,948


1.1

Deposits


857,150


812,033


5.6

FHLB advances


105,000


105,000


0.0

Stockholder's equity


118,241


111,789


5.8


















 

 

SELECTED OPERATING DATA (Unaudited)




Three Months Ended

September 30,




Nine Months Ended

September 30,






2016


2015


%Change


2016


2015


 % Change



(In thousands, except per share amounts)
















Interest and dividend income


$8,740


$8,777


(0.4)


$26,414


$26,328


0.3


Interest expense


1,478


1,685


(12.3)


4,505


5,088


(11.5)


     Net interest income


7,262


7,092


2.4


21,909


21,240


3.1
















Provision for loan losses


150


165


(9.1)


463


496


(6.7)
















Net interest income after

   provision for loan losses


 

7,112


 

6,927


 

2.7


 

21,446


 

20,744


 

3.4
















Other income


1,062


1,122


(5.3)


3,137


3,304


(5.1)


Other expense


5,680


5,536


2.6


16,759


16,350


2.5
















Income before taxes


2,494


2,513


(0.8)


7,824


7,698


1.6


Provision for income taxes


793


844


(6.0)


2,591


2,577


0.5
















     Net Income


$1,701


$1,669


1.9


$5,233


$5,121


2.2
















Earnings per share basic


$0.27


$0.28




$0.85


$0.86




Earnings per share diluted


$0.27


$0.27




$0.84


$0.84


















Average shares outstanding basic


6,207,118


6,043,604




6,158,551


5,983,355




Average shares outstanding diluted


6,308,171


6,145,136




6,247,723


6,088,627




































 

 


Three Months Ended

September 30, 2016


Three Months Ended

September 30, 2015


Average
Balance


Yield/Cost


Average
Balance


Yield/Cost


(Dollars in thousands)

Loans

$790,554


4.06%


$780,769


4.18%

Investment securities

105,222


2.71%


114,243


2.13%

   Total interest-earning assets

895,776


3.90%


895,012


3.92%









Interest-bearing deposits

$640,939


0.42%


$632,199


0.41%

Total borrowings

105,000


3.08%


114,393


3.65%

   Total interest-bearing liabilities

745,939


0.79%


746,592


0.90%









Interest rate spread



3.11%




3.02%

Net interest margin



3.24%




3.17%

 


Nine Months Ended

September 30, 2016


Nine Months Ended

September 30, 2015


Average
Balance


Yield/Cost


Average
Balance


Yield/Cost


(Dollars in thousands)

Loans

$790,309


4.11%


$777,226


4.21%


Investment securities

107,363


2.54%


114,748


2.10%


   Total interest-earning assets

897,672


3.92%


891,974


3.94%











Interest-bearing deposits

$635,362


0.42%


$619,869


0.40%


Total borrowings

105,000


3.20%


116,265


3.69%


   Total interest-bearing liabilities

740,362


0.81%


736,134


0.92%











Interest rate spread



3.11%




3.02%


Net interest margin



3.25%




3.17%


 

 

 

ASSET QUALITY DATA (Unaudited)




Nine Months Ended

September 30, 2016


Year Ended

December 31, 2015



(Dollars in thousands)

Allowance for Loan Losses:





Allowance at beginning of period


$ 3,190



$ 3,760


Provision for loan losses


463



689









Charge-offs


(348)



(1,259)


Recoveries


2




Net charge-offs


(346)



(1,259)









Allowance at end of period


$ 3,307



$ 3,190


Allowance for loan losses as a percent of total loans


0.42%



0.41%


Allowance for loan losses as a percent of nonperforming loans


62.9%



56.3%


 

 

 



September 30,
2016


December 31,
2015



(Dollars in thousands)

Nonperforming Assets:





Nonaccrual loans:





   Real estate mortgage - residential


$ 3,338


$ 2,597

   Real estate mortgage - commercial


466


1,580

   Real estate mortgage - construction


143


143

   Commercial business loans


153


41

   Consumer loans


198


601

        Total


4,298


4,962

Trouble debt restructurings - nonaccrual


961


708

        Total nonaccrual loans


5,259


5,670

Real estate owned


1,007


1,814

Total nonperforming assets


$ 6,266


$ 7,484

 

Nonperforming loans as a percent of total loans


0.66%


0.72%

Nonperforming assets as a percent of total assets


0.57%


0.72%

 

 

 

SELECTED FINANCIAL RATIOS (Unaudited)




Nine Months Ended

September 30,



2016


2015

Selected Performance Ratios:





Return on average assets (1)


0.66

%


0.65

%

Return on average equity (1)


6.06

%


6.34

%

Interest rate spread (1)


3.11

%


3.02

%

Net interest margin (1)


3.25

%


3.17

%

Efficiency ratio


66.91

%


66.61

%

   (1) Annualized.

 

 

 

OCEAN SHORE HOLDING COMPANY - QUARTERLY DATA (Unaudited)




Q3

2016


Q2

2016


Q1

2016


Q4

2015


Q3

2015




(In thousands except per share amounts)


Income Statement Data:












Net interest income


$7,262


$7,368


$7,279


$7,214


$7,092


Provision for loan losses


150


161


152


192


165


Net interest income after

   provision for loan losses


7,112


7,207


7,127


7,022


6,927


Other income


1,062


1,076


998


1,086


1,122


Other expense


5,680


5,587


5,491


5,539


5,536


Income before taxes


2,494


2,696


2,634


2,569


2,513


Provision for income taxes


793


920


878


821


844


Net income


$1,701


$1,776


$1,756


$1,748


$1,669














Share Data:












Earnings per share basic


$0.27


$0.29


$0.29


$0.29


$0.28


Earnings per share diluted


$0.27


$0.28


$0.28


$0.28


$0.27


Average shares outstanding basic


6,207,118


6,140,839


6,127,162


6,109,527


6,043,604


Average shares outstanding diluted


6,308,171


6,249,553


6,235,771


6,218,480


6,145,136


Total shares outstanding


6,512,806


6,412,678


6,411,678


6,403,058


6,403,191














Balance Sheet Data:












Total assets


$1,096,875


$1,042,835


$1,052,149


$1,043,379


$1,067,458


Investment securities


101,188


107,631


107,625


112,992


108,151


Loans receivable, net


792,945


791,219


792,784


783,948


785,549


Deposits


857,150


806,701


818,305


812,033


832,010


FHLB advances


105,000


105,000


105,000


105,000


110,000


Stockholders' equity


118,241


115,651


113,844


111,789


110,701














Asset Quality:












Non-performing assets


$6,266


$5,783


$6,922


$7,484


$7,654



Non-performing loans to total loans


0.66%


0.52%


0.59%


0.72%


0.73%



Non-performing assets to total assets


0.57%


0.55%


0.66%


0.72%


0.72%



Allowance for loan losses


$3,307


$3,245


$3,220


$3,190


$3,116



Allowance for loan losses to total loans


0.42%


0.41%


0.41%


0.41%


0.40%



Allowance for loan losses to non-performing loans


62.9%


78.8%


69.0%


56.3%


54.2%



 

 

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SOURCE Ocean Shore Holding Co.

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