Ocean Shore Holding Co. Reports 2nd Quarter Earnings

OCEAN CITY, N.J.--(BUSINESS WIRE)--Ocean Shore Holding Co. (NASDAQ:OSHC) today announced net income of $1,089,000 or $.14 per basic and $.13 diluted share for the quarter ended June 30, 2008, as compared to $619,000 or $.08 per basic and diluted share for the quarter ended June 30, 2007. Net income for the six months ended June 30, 2008 was $1,819,000 or $.23 per basic and $.22 diluted share as compared to $1,120,000 or $.14 per basic and diluted share for the same period in 2007.

“We are pleased to report our continuing success in growing our loan portfolio and increasing earnings despite all of the negative news about the economy and real estate markets”

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 eight full-service banking offices in eastern New Jersey.

“We are pleased to report our continuing success in growing our loan portfolio and increasing earnings despite all of the negative news about the economy and real estate markets,” said Steven E. Brady, President and CEO. “This quarter’s net interest income and income before taxes are both record amounts for the Company since going public.”

“The Bank’s asset quality remains excellent – nonperforming assets are only 0.29% of total assets – and capital levels are well above what is required to be considered well-capitalized,” said Mr. Brady. “We are very proud of the fact that the Bank has maintained a consistent, conservative approach throughout the ups and downs of the recent lending cycle and has not engaged in subprime or Alt-A lending. The capital and loan quality problems emerging at Fannie Mae and Freddie Mac and certain other large institutions are not problems that we are facing.”

Total Assets and Loans Grow; Deposits Remain Steady

Total assets grew $28.3 million, or 4.5%, to $657.8 million at June 30, 2008 from December 31, 2007. Loans receivable, net, grew $39.2 million, or 7.4%, to $567.3 million on steady loan activity, while investment and mortgage-backed securities decreased $15.5 million, or 26.3%, to $43.4 million. Growth in real estate loans of $40.9 million and construction loans of $486,000 was offset by a decline in consumer loans of $1.2 million and commercial loans of $1.0 million.

Deposits decreased $1.5 million, or 0.4%, to $413.7 million at June 30, 2008 from $415.2 million at December 31, 2007. FHLB advances increased $29.0 million, or 24.1%, to $149.2 million. The proceeds from the additional borrowings were used to fund the growth in the loan portfolio.

Asset Quality Remains Excellent

The Company’s asset quality continues to be excellent. Non-performing assets totaled only $1.9 million at June 30, 2008. The Company experienced no charge-off activity for the six months of 2008, compared to $1,000 in the same period last year. The allowance for loan losses was 0.44% of total loans at June 30, 2008, compared to 0.44% at December 31, 2007 and 0.47% of total loans at June 30, 2007.

Net Interest Income Increases over Prior Periods

Net interest income increased $952,000, or 25.9%, to $4.6 million for the second quarter of 2008 compared to $3.7 million in the second quarter of 2007. Net interest margin increased 26 basis points in the quarter ended June 30, 2008 to 3.00% from 2.74% for the quarter ended June 30, 2007. On a linked-quarter basis, net interest margin increased 10 basis points from 2.90% for the first quarter of 2008. The growth in interest income for the second quarter was the result of an increase in average interest-earning assets of $81.0 million and a decrease of 37 basis points in the average cost of interest bearing liabilities to 3.21% offset by an increase in average interest bearing liabilities of $60.8 million and a decrease of 13 basis points in the average yield on earning assets to 5.80%.

Net interest income increased $1.6 million for the first six months of 2008, or 22.5%, to $9.0 million compared to the same period in the prior year. An increase in net interest margin of 19 basis points to 2.95% from 2.76% was the result of a decrease in cost of interest-bearing liabilities of 28 basis points offset by a decrease in the yield on interest earning assets of 5 basis points.

Other Expenses Increase

Other expenses increased $206,000, or 6.4%, to $3.4 million for the second quarter of 2008 compared to $3.2 million for the second quarter of 2007 and $249,000, or 3.8%, to $6.8 million for the six months ended June 30, 2008 compared to $6.5 million for the six months ended June 30, 2007. The increases in ongoing operating costs for both periods are consistent with variable spending associated with our asset growth.

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

	June 30,		December 31,
	2008		2007		% Change
	(Dollars in thousands)
Total assets	$	657,837	$	629,509	4.5	%
Cash and cash equivalents		10,978		9,540	15.1
Investment securities		11,694		22,273	(47.5	)
Mortgage-backed securities		31,726		36,643	(13.4	)
Loans receivable, net		567,297		528,058	7.4
Deposits		413,735		415,231	(0.4	)
FHLB advances		149,190		120,230	24.1
Subordinated debt		15,464		15,464	0.0
Other borrowings		7,250		8,000	(9.4	)
Stockholder’s equity		63,551		63,047	0.8

SELECTED OPERATING DATA

	Three Months Ended June 30,					Six Months Ended June 30,
	2008		2007		% Change	2008		2007		% Change
	(In thousands, except per share and per share amounts)
Interest and dividend income	$	8,935	$	7,937	12.6	$	17,812	$	15,666	13.7
Interest expense		4,310		4,264	1.1		8,861		8,358	6.0
Net interest income		4,625		3,673	25.9		8,951		7,308	22.5
Provision for loan losses		90		75	20.0		159		150	5.7
Net interest income after provision for loan losses		4,535		3,598	26.1		8,792		7,158	22.8
Other income		666		637	4.7		977		1,235	(20.9	)
Other expense		3,414		3,209	6.4		6,789		6,541	3.8
Income before taxes		1,787		1,026	74.3		2,980		1,852	60.9
Provision for income taxes		698		407	71.7		1,161		732	58.6
Net Income	$	1,089	$	619	76.0	$	1,819	$	1,120	62.4
Earnings per share basic	$	0.14	$	0.08		$	0.23	$	0.14
Earnings per share diluted	$	0.13	$	0.08		$	0.22	$	0.14
Average shares outstanding basic		7,990,246		8,127,619			7,995,153		8,147,779
Average shares outstanding diluted		8,079,285		8,235,465			8,088,756		8,260,985

	Three Months Ended June 30, 2008				Three Months Ended June 30, 2007
	Average Balance		Yield/Cost		Average Balance		Yield/Cost
	(Dollars in thousands)
Loans	$	561,576	5.80	%	$	452,846	5.97	%
Investment securities		47,163	6.33	%		67,018	5.72	%
Other interest-earning assets		7,932	2.07	%		15,856	5.43	%
Interest-bearing deposits		372,733	2.71	%		389,627	3.24	%
Total borrowings		164,167	4.35	%		86,451	5.14	%
Interest rate spread			2.58	%			2.34	%
Net interest margin			3.00	%			2.74	%

	Six Months Ended June 30, 2008				Six Months Ended June 30, 2007
	Average Balance		Yield/Cost		Average Balance		Yield/Cost
	(Dollars in thousands)
Loans	$	548,963	5.86	%	$	444,422	5.97	%
Investment securities		52,119	6.39	%		68,154	5.76	%
Other interest-earning assets		5,642	2.28	%		16,271	5.32	%
Interest-bearing deposits		384,901	2.80	%		388,440	3.22	%
Total borrowings		154,609	4.49	%		81,685	5.17	%
Interest rate spread			2.59	%			2.37	%
Net interest margin			2.95	%			2.76	%

ASSET QUALITY DATA

	Six Months Ended June 30, 2008			Year Ended December 31, 2007
	(Dollars in thousands)
Allowance for Loan Losses:
Allowance at beginning of period	$	2,307		$	2,050
Provision for loan losses		159			261
Recoveries		2			4
Charge-offs		0			8
Net charge-offs		(2	)		4
Allowance at end of period	$	2,468		$	2,307
Allowance for loan losses as a percent of total loans		0.44	%		0.44	%
Allowance for loan losses as a percent of nonperforming loans		129.06	%		779.88	%

	Six Months Ended June 30, 2008			Year Ended December 31, 2007
	(Dollars in thousands)
Nonperforming Assets:
Nonaccrual loans:
Mortgage loans	$	320		$	295
Commercial business loans		1,551			0
Consumer loans		41			1
Total		1,912			296
Real estate owned		0			0
Other nonperforming assets		0			0
Total nonperforming assets	$	1,912		$	296
Nonperforming loans as a percent of total loans		0.34	%		0.06	%
Nonperforming assets as a percent of total assets		0.29	%		0.05	%

SELECTED FINANCIAL RATIOS

	Six Months Ended June 30,
	2008		2007
Selected Performance Ratios:
Return on average assets (1)	0.56	%	0.36	%
Return on average equity (1)	5.69	%	3.18	%
Interest rate spread (1)	2.59	%	2.40	%
Net interest margin (1)	2.95	%	2.79	%
Efficiency ratio	65.97	%	78.70	%

(1) Annualized.