Ocean Shore Holding Co. Reports 3rd Quarter Earnings

Ocean Shore Holding Co. (NASDAQ: OSHC) today announced net income of $1,215,000, or $0.18 per diluted share, for the quarter ended September 30, 2011, as compared to $1,441,000, or $0.21 per diluted share, for the quarter ended September 30, 2010. Net income for the nine months ended September 30, 2011 was $3,577,000, or $0.52 per diluted share, as compared to $4,016,000, or $0.59 per diluted share, for the same period in 2010. Results reflect after tax expenses of $294,000 during the third quarter and $538,000 for the first nine months of 2011 associated with the acquisition of CBHC Financialcorp, Inc and its subsidiary Select Bank, compared to no activity during the same periods in 2010. The acquisition closed on August 1, 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.

"We are very pleased to welcome the customers of Select Bank to Ocean City Home Bank," said Steven E. Brady, President and CEO. "We completed the systems conversion and the integration of offices in mid-September, so now all of our customers are able to utilize our full branch network, which has expanded to 12 locations. With this acquisition, the Company has surpassed the $1.0 billion mark in total assets."

Balance Sheet Review

Total assets grew $181.8 million, or 21.6%, to $1,021.6 million at September 30, 2011 from December 31, 2010 including $123.6 million in net assets acquired from Select Bank. Loans receivable, net, increased $83.6 million, or 12.7%, to $743.9 million. The increase in loans receivable resulted from $82.9 million of loans acquired from Select Bank. Cash and cash equivalents increased $64.2 million to $175.0 million including $38.8 million acquired from Select Bank. Investments and mortgage-backed securities increased $26.0 million, or 109.4%, to $49.7 million. The increase resulted from $20.0 million in purchases of agency securities and $6.0 million of investments acquired from Select Bank.

Deposits grew $177.2 million, or 29.4%, to $780.6 million at September 30, 2011 from December 31, 2010 including $122.7 million of deposits acquired from Select Bank. Additionally, core deposits grew $71.8 million during 2011 offset by a decrease in time deposits of $17.3 million. Total borrowings remained unchanged at $125.5 million, including $110.0 million of FHLB advances.

Asset Quality

The provision for loan losses totaled $141,000 for the third quarter of 2011 compared to $125,000 for the third quarter of 2010 and $128,000 for the second quarter of 2011. The provision decreased to $344,000 for the first nine months of 2011 compared to $816,000 for the same period in 2010. The allowance for loan losses was $4.1 million, or 0.55% of total loans, at September 30, 2011 compared to $4.0 million, or 0.60% of total loans, at December 31, 2010 and $4.0 million, or 0.59% of total loans, at September 30, 2010. The Company experienced $213,000 in charge-off activity for the first nine months of 2011 compared to $310,000 during the same period in 2010.

Non-performing assets totaled $5.3 million, or 0.52% of total assets, at September 30, 2011, compared to $5.3 million, or 0.79% of total assets, at December 31, 2010 and $4.1 million, or 0.48% of total assets, at September 30, 2010. Non-performing assets consisted of fourteen residential mortgages totaling $4.4 million, two commercial mortgages totaling $240,000, two commercial loans totaling $118,000, three consumer equity loans totaling $264,000 and two real estate owned properties totaling $313,000. Specific reserves recorded for these loans at September 30, 2011 were $930,000.

Income Statement Analysis

Net interest income increased $837,000, or 14.1%, to $6.8 million for the third quarter of 2011 compared to $5.9 million in the third quarter of 2010. Net interest margin increased 16 basis point in the quarter ended September 30, 2011 to 3.55% from 3.39% for the quarter ended September 30, 2010. On a linked-quarter basis, net interest margin increased 6 basis points from 3.49% in the second quarter of 2011. The increase in net interest income for the third quarter was the result of an increase in average interest-earning assets of $63.4 million and a decrease of 46 basis points in the average cost of interest-bearing liabilities to 1.66% from 2.12% offset by a decrease of 16 basis points in the average yield on interest-earning assets to 5.24% from 5.40% and an increase in average interest-bearing liabilities of $115.3 million.

Net interest income increased $940,000, or 5.2%, for the first nine months of 2011 to $18.9 million compared to the same period in the prior year. An increase in net interest margin of 6 basis points to 3.50% from 3.44% was the result of an increase in average interest-earning assets of $23.9 million and a decrease of 47 basis points in the average cost of interest bearing liabilities to 1.71%, offset by an increase in average interest bearing liabilities of $86.6 million and a decrease of 23 basis points in the average yield on earning assets to 5.22%.

Other income increased $98,000 and $68,000 to $934,000 and $2.6 million, for the third quarter and first nine months of 2011, respectively, compared to the same periods in 2010. The increase in other income resulted from increases in deposit and loan account fees and debit card commissions offset by decreases in cash surrender value of life insurance over the prior period.

Other expenses increased $1.2 million, or 27.8%, to $5.5 million for the third quarter of 2011, compared to $4.3 million for the third quarter of 2010. Other expenses increased $1.8 million, or 14.0%, to $15.0 million for the nine months ended September 30, 2011 compared to $13.1 million for the nine months ended September 30, 2010. Costs associated with the merger with CBCH Financialcorp and its subsidiary Select Bank accounted for increases totaling $433,000 for the third quarter of 2011 and $736,000 for the first nine months of 2011. Increases of $268,000 resulted from the acquired operations of Select Bank. The remaining $501,000 for the third quarter and $831,000 for the first nine months of 2011 resulted from normal increases in year over year operations.

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
     
September 30, December 31,
2011 2010 % Change
(Dollars in thousands)
 
Total assets $1,021,625 $ 839,857 21.6 %
Cash and cash equivalents 175,024 110,865 57.9
Investment securities 49,679 23,721 109.4
Loans receivable, net 743,945 660,340 12.7
Deposits 780,564 603,334 29.4
FHLB advances 110,000 110,000 0.0
Subordinated debt 15,464 15,464 0.0
Stockholder’s equity 104,063 100,554 3.5
 
       

SELECTED OPERATING DATA
 
Three Months Ended Nine Months Ended
September 30, September 30,
2011   2010 % Change 2011  

2010

 

% Change
(In thousands, except per share amounts)
 
Interest and dividend income $9,999 $9,447 5.8 $28,204 $28,446 (0.9 )
Interest expense 3,221 3,506 (8.1 ) 9,289 10,472 (11.3 )
Net interest income 6,778 5,941 14.1 18,915 17,974 5.2
 
Provision for loan losses 141 125 12.8 344 816 (57.8 )
 

Net interest income after

provision for loan losses

6,637

5,816

14.1

18,571

17,158

8.2
 
Other income 934 836 11.7 2,598 2,530 2.7
Other expense 5,521 4,319 27.8 14,987 13,146 14.0
 
Income before taxes 2,050 2,333 (12.1 ) 6,182 6,542 (5.5 )
Provision for income taxes 835 892 (6.4 ) 2,605 2,526 3.1
 
Net Income $1,215 $1,441 (15.7 ) $3,577 $4,016 (10.9 )
 
Earnings per share basic $0.18 $0.21 $0.53 $0.59
Earnings per share diluted $0.18 $0.21 $0.52 $0.59
 
Average shares outstanding basic 6,753,956 6,826,698 6,741,124 6,824,073
Average shares outstanding diluted 6,836,697 6,835,521 6,828,283 6,824,073
 
     
Three Months Ended Three Months Ended
September 30, 2011 September 30, 2010
Average   Average  
Balance   Yield/Cost     Balance   Yield/Cost
(Dollars in thousands)
Loans $717,630 5.26% $674,048 5.34%
Investment securities 45,876 4.93% 26,074 6.80%
Total interest-earning assets 763,506 5.24% 700,122 5.40%
 
Interest-bearing deposits $652,300 1.04% $536,706 1.48%
Total borrowings 125,464 4.86% 125,464 4.86%
Total interest-bearing liabilities 777,764 1.66% 662,170 2.12%
 
Interest rate spread 3.58% 3.28%
Net interest margin 3.55% 3.39%
 
     
Nine Months Ended Nine Months Ended
September 30, 2011 September 30, 2010
Average   Average  
Balance   Yield/Cost     Balance   Yield/Cost
(Dollars in thousands)
Loans $679,317 5.22% $668,872 5.40%
Investment securities 40,703 5.20% 27,264 6.62%
Total interest-earning assets 720,020 5.22% 696,136 5.45%
 
Interest-bearing deposits $600,723 1.06% $514,068 1.54%
Total borrowings 125,464 4.82% 125,464 4.82%
Total interest-bearing liabilities 726,187 1.71% 639,532 2.18%
 
Interest rate spread 3.52% 3.27%
Net interest margin 3.50% 3.44%
 
   

ASSET QUALITY DATA
 
Nine Months
Ended Year Ended
September 30, December 31,
2011   2010
(Dollars in thousands)
Allowance for Loan Losses:
Allowance at beginning of period $ 3,988 $ 3,476
Provision for loan losses 344 892
 
Charge-offs (213 ) (380 )
Recoveries -   -  
Net charge-offs (213 ) (380 )
 
Allowance at end of period $ 4,119   $ 3,988  
Allowance for loan losses as a percent of total loans 0.55 % 0.60 %
Allowance for loan losses as a percent of nonperforming loans 82.6 % 76.4 %
 
   
September 30, December 31,
2011   2010
(Dollars in thousands)
Nonperforming Assets:
Nonaccrual loans:
Real estate mortgage - residential $ 4,362 $ 4,282
Real estate mortgage - commercial 240 729
Commercial 118 134
Consumer 264   77  
Total 4,984 5,222
 
Real estate owned 313 98
Other nonperforming assets -   -  
 
Total nonperforming assets $ 5,297   $ 5,320  
Nonperforming loans as a percent of total loans 0.67 % 0.79 %
Nonperforming assets as a percent of total assets 0.52 % 0.63 %
 
   

SELECTED FINANCIAL RATIOS
 
Nine Months Ended
September 30,

  2011  
 

  2010  
 
Selected Performance Ratios:
Return on average assets (1) 0.53 % 0.66 %
Return on average equity (1) 4.64 % 5.37 %
Interest rate spread (1) 3.52 % 3.27 %
Net interest margin (1) 3.50 % 3.44 %
Efficiency ratio 69.66 % 64.12 %

(1) Annualized.
 
         

OCEAN SHORE HOLDING COMPANY - QUARTERLY DATA (Unaudited)
 
Q3 Q2 Q1 Q4 Q3
2011 2011 2011 2010 2010
(In thousands except per share amounts)
Income Statement Data:
Net interest income $6,778 $6,162 $5,975 $5,913 $5,941
Provision for loan losses 141 128 75 76 125
Net interest income after

provision for loan losses

6,637

6,034

5,900

5,837

5,816
Other income 934 862 802 874 836
Other expense 5,521 4,810 4,656 4,377 4,319
Income before taxes 2,050 2,086 2,046 2,334 2,333
Provision for income taxes 835 928 841 906 892
Net income $1,215 $1,158 $1,205 $1,428 $1,441
 
Share Data:
Earnings per share basic $0.18 $0.17 $0.18 $0.21 $0.21
Earnings per share diluted $0.18 $0.17 $0.18 $0.21 $0.21
Average shares outstanding basic 6,753,956 6,738,827 6,730,331 6,721,891 6,826,698
Average shares outstanding diluted 6,836,697 6,809,077 6,801,558 6,769,445 6,835,521
Total shares outstanding 7,291,643 7,296,780 7,296,780 7,296,780 7,296,904
 
Balance Sheet Data:
Total assets $1,021,625 $860,269 $861,365 $839,857 $838,165
Investment securities 49,679 47,474 42,131 23,721 25,363
Loans receivable, net 743,945 662,841 660,385 660,340 669,868
Deposits 780,564 621,189 623,685 603,334 603,547
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 104,063 102,822 101,750 100,554 99,314
 
Asset Quality:
Non-performing assets $5,297 $6,033 $5,910 $5,320 $4,052
Non-performing loans to total loans 0.67% 0.90% 0.88% 0.79% 0.59%
Non-performing assets to total assets 0.52% 0.70% 0.69% 0.63% 0.48%
Allowance for loan losses $4,119 $4,068 $4,063 $3,988 $3,982

Allowance for loan losses to total loans
0.55% 0.61% 0.62% 0.60% 0.59%
Allowance for loan losses to non-performing loans 82.6% 68.5% 69.9% 76.4% 100.7%

Copyright Business Wire 2010

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