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0001035092false00010350922024-05-022024-05-02

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 2, 2024
Shore_Bancshares_Logo.jpg
SHORE BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Maryland 000-22345 52-1974638
(State or other jurisdiction of incorporation or organization) (Commission file number) (IRS Employer Identification No.)
18 E. Dover St., Easton, Maryland 21601
(Address of principal executive offices) (Zip Code)
(410) 763-7800
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol Name of Each Exchange on Which Registered
Common stock, par value $.01 per share SHBI Nasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o On May 2, 2024, Shore Bancshares, Inc. (the “Company”) issued a press release announcing its results of operations and financial condition for the three months ended March 31, 2024. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.



Item 2.02. Result of Operation and Financial Condition.
The information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Company under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits.
The exhibits that are filed or furnished with this report are listed in the Exhibit Index that immediately follows the signatures hereto, which list is incorporated herein by reference.
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EXHIBIT INDEX
Exhibit Number
Description
104
Cover Page Interactive Data File (embedded within the inline XBRL document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SHORE BANCSHARES, INC.
Dated: May 2, 2024
By: /s/ James M. Burke
James M. Burke
President and Chief Executive Officer
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EX-99.1 2 shbi-20240331xexx991.htm EX-99.1 Document

shore_bancsharesxlogo.jpg
18 E. Dover Street
Easton, Maryland 21601
Phone 410-763-7800
PRESS RELEASE
Shore Bancshares, Inc. Reports 2024 First Quarter Financial Results
Easton, Maryland (May 2, 2024) - Shore Bancshares, Inc. (NASDAQ - SHBI) (the “Company” or “Shore Bancshares”), the holding company for Shore United Bank, N.A. (the “Bank” or “SUB”) reported net income for the first quarter of 2024 of $8.2 million or $0.25 per diluted common share compared to a net income of $10.5 million or $0.32 per diluted common share for the fourth quarter of 2023, and net income of $6.5 million or $0.32 per diluted common share for the first quarter of 2023.
First Quarter 2024 Highlights
■Credit Card Fraud - On April 2, 2024, the Bank detected that it had been subjected to fraudulent credit card account openings during the first quarter of 2024 and commenced an investigation. Bad actors used stolen personal information to open Bank-issued credit cards through the Bank’s online credit card activation system. The personal information used had been stolen from individuals who are not customers of the Bank. No existing Bank customers were impacted by this fraudulent activity and the Bank’s core processing system was not compromised. Upon detection, the Bank immediately closed all fraudulently-opened credit card accounts and suspended all credit card activations. The Bank will not open new credit card accounts until its investigation is complete. The Bank is implementing enhanced activity monitoring on all existing cards outstanding.
As a result of the fraudulent activity, the Company recognized a $4.3 million fraud-related expense in the first quarter of 2024 and does not anticipate additional losses related to this event. The majority of the fraud loss, approximately $3.6 million, or 84%, occurred between March 25, 2024 and April 2, 2024. In coordination with the Bank’s credit card processor, management is evaluating the root causes of the fraud event and the preventative and monitoring controls that would have mitigated the fraud loss. Management will also consider in this evaluation whether the credit card product can attain the size and scale needed in the near-term for the Bank to continue as an issuer. The Bank has notified and is actively working with law enforcement to recover a portion of the fraud losses by various means.
The above information was reported on the Company’s Current Report on Form 8-K filed with SEC on April 30, 2024 describing the event. The impact of this event resulted in a $0.10 decrease to basic and diluted earnings per share.
■Return on Average Assets (“ROAA”) - The Company reported ROAA of 0.57% for the first quarter of 2024, compared to 0.72% and 0.75% for the fourth and first quarters of 2023, respectively. Excluding the fraud expense, amortization from core deposit intangibles, and merger-related expenses the Company’s Non-GAAP, ROAA was 0.94% for the first quarter of 2024, compared to 0.88% and 0.84% for the fourth and first quarters of 2023, respectively.
■Stable Net Interest Margin - Net interest margin (“NIM”) remained relatively stable at 3.08% for the first quarter of 2024 from 3.09% for the fourth quarter of 2023. Excluding net accretion interest income of $3.6 million and $3.0 million for the same time periods, NIM decreased six basis points to 2.81% for the first quarter of 2024 from 2.87% for the fourth quarter of 2023.
■Active Management of Deposit Costs - Decreases in rates on higher cost deposit relationships mitigated margin compression in the first quarter of 2024. For the month of March 2024, asset yields grew more quickly than funding costs which positively impacted the Company’s net interest margin and may position the Bank to see positive margin movement during the second quarter of 2024. As a result of decreased rates paid on some deposits and expected seasonal cash outflows in the first quarter of 2024, deposits decreased $201.8 million, or 3.7% to $5.2 billion at March 31, 2024 when compared to December 31, 2023. Liquidity remained relatively stable with the loan to deposit ratio modestly increasing from 86.2% at December 31, 2023 to 89.7% at March 31, 2024. The Bank had no brokered deposits or advances at March 31, 2024.
■Stable Credit Trends - The Company’s total nonperforming assets to total assets for the first quarter of 2024 was 0.28% compared to the fourth quarter of 2023 of 0.23%. The Company’s credit quality metrics remain at historical lows with no signs of significant deterioration or systemic issues within its loan portfolios.
■Branch Closings and Office Space Rationalization - The Company expects to close two branches by the end of the third quarter and to consolidate two office buildings into a single space by the end of the third quarter.
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“While the first quarter’s credit card fraud was disappointing, I am pleased with the response of our team after the incident was identified to contain the problem, and that no customers were impacted,” stated James (“Jimmy”) M. Burke, President and Chief Executive Officer of Shore Bancshares, Inc. “We are undertaking a comprehensive review of the incident to recover as much of the fraudulent charges as possible and are evaluating our options regarding the future of an in-house credit card program.”
Burke continued, “Active balance sheet management in the first quarter resulted in stabilizing margins and net interest income while continued focus on reducing expenses is expected to enhance future operating leverage. Credit remains stable and we believe we are well positioned to deliver improving profitability in future quarters.”
Balance Sheet Review
Total assets were $5.8 billion at March 31, 2024, a decrease of $185 million or 3.1%, when compared to $6.0 billion at December 31, 2023. The aggregate decrease was primarily due to a decrease in cash and cash equivalents of $257.9 million and investment securities held to maturity of $9.4 million partially offset by an increase in investment securities available for sale of $69.0 million and loans held for investment of $7.7 million. The ratio of the Allowance for Credit Losses (“ACL”) to total loans decreased slightly from 1.24% at December 31, 2023, to 1.23% at March 31, 2024.
The Company’s tangible common equity ratio at March 31, 2024 was 7.11% compared to 6.78% at December 31, 2023. The Company’s Tier 1 and Total Risk-Based Capital Ratios at March 31, 2024 were 9.53% and 11.68%, respectively. The Bank’s Tier 1 and Total Risk-Based Capital Ratios at March 31, 2024 were 10.32% and 11.56%, respectively. Non-owner occupied commercial real estate (“CRE”) loans as a percentage of the Bank’s Tier 1 Capital + ACL at March 31, 2024 and December 31, 2023 were $2.0 billion or 370.0% and $2.0 billion or 382.6%, respectively. Construction loans as a percentage of the Bank’s Tier 1 Capital + ACL at March 31, 2024 and December 31, 2023 were $299.1 million or 54.9% and $299.0 million or 56.7%, respectively.
The Bank's office CRE loan portfolio, which includes owner-occupied and nonowner-occupied CRE loans, was $516.0 million or 11.1% of total loans of $4.6 billion at March 31, 2024. The Bank’s office CRE loan portfolio included $137.7 million or 26.7% of the total with medical tenants and $73.3 million or 14.2% of the total with government or government contractor tenants. There were 513 loans in the office CRE portfolio with an average and median loan size of $1.0 million and $0.4 million, respectively. Loan to Value ("LTV") estimates are less than 70% for $395.8 million or 76.7% of the office CRE portfolio and less than 80% for $490.4 million or 95.0% of the office CRE portfolio.
The Bank had 19 office CRE loans totaling $172.0 million that were greater than $5.0 million at March 31, 2024, compared to 24 office CRE loans totaling $189.8 million at December 31, 2023. The decrease in this portfolio segment was the result of normal amortization and a two large loan payoffs in the quarter. For the office CRE portfolio, at March 31, 2024, the average loan debt-service coverage ratio was 1.7x and average LTV was 57.6%. Of the office CRE portfolio balance, 73% is secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 92% are secured by properties with five stories or less. Of the office CRE loans, $5.8 million will mature and $5.1 million of the office CRE loans will reprice prior to December 31, 2024. Of the office CRE loans, $2.2 million are special mention or substandard.
Total deposits decreased $201.8 million, or 3.7% to $5.2 billion at March 31, 2024 when compared to December 31, 2023. The decrease in total deposits was primarily due to a decrease in time deposits of $15.3 million, demand deposits of $63.6 million, money market and savings of $65.6 million and noninterest-bearing deposits of $57.4 million. The decrease in deposits is primarily attributable to seasonal municipal runoff and disintermediation of interest-sensitive cannabis-related deposits.
Total funding, which includes customer deposits, Federal Home Loan Bank (“FHLB”) advances, and brokered deposits decreased $246.3 million from $5.4 billion at December 31, 2023 to $5.2 billion at March 31, 2024. The Bank had no FHLB advances at March 31, 2024 or December 31, 2023 and reduced brokered deposits from $44.5 million at December 31, 2023 to zero at March 31, 2024. The Bank's uninsured deposits at March 31, 2024 were $981.3 million or 18.93% of total deposits. The Bank's uninsured deposits, excluding deposits secured with pledged collateral, at March 31, 2024 were $825.9 million or 15.93% of total deposits. At March 31, 2024, the Bank had approximately $1.2 billion of available liquidity including: $114.6 million in cash, $1.1 billion in secured borrowing capacity at the FHLB and other correspondent banks, and $45.0 million in unsecured lines of credit.
Total stockholders’ equity increased $4.1 million, or 0.8%, when compared to December 31, 2023, primarily due to current year earnings, offset by the cash dividend paid. As of March 31, 2024, the ratio of total equity to total assets was 8.84% and the ratio of total tangible equity to total tangible assets was 7.11% compared to 8.50% and 6.78% at December 31, 2023, respectively.
Management continues to pursue opportunities to increase efficiencies and decrease expenses as a percentage of operating revenues. Following feasibility assessments, management decided to close two branches by the end of the third quarter, subject to regulatory approval. The Onley, VA branch should close on or about July 17, 2024 and the Westgate branch located in Annapolis, MD should close on or about September 30, 2024. Limited growth opportunities within the Eastern Shore of Virginia and a conscientious focus on profitability led to the decision to close the Onley branch. The Westgate branch has limited foot traffic and is located less than a mile from another SUB branch within the City of Annapolis. Customer disruption is expected to be limited. These closures are estimated to cost $0.2 million.
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The Company is expected to reduce four positions as part of these closings Additionally, the Company plans to reduce professional office space located in Easton, MD. By the end of the third quarter, a newly renovated office building is expected to be put into service eliminating the need for two currently-occupied office buildings. In the second quarter, the Company expects to begin marketing for sale the two redundant office properties. Recent appraisals on these properties exceed the Bank’s cost bases resulting in no impairment. At the present time the two properties remain in service, are not listed for immediate sale, and are classified as active assets on our balance sheet. Once these properties meet the accounting criteria they will be moved to held for sale.
Review of Quarterly Financial Results
Net interest income was $41.1 million for the first quarter of 2024, compared to $41.5 million for the fourth quarter of 2023 and $25.7 million for the first quarter of 2023. The decrease in net interest income when compared to the fourth quarter of 2023 was primarily due to the increase in interest expense of $0.4 million resulting from an increase in the average balance of interest bearing deposits of $70.9 million. The increase when compared to the first quarter of 2023 was primarily due to the increase in interest and fees on loans, interest on deposits from other banks, a decrease in interest on short-term borrowings partially offset by the increase in interest on deposits and interest on long-term borrowings all significantly impacted by the merger of equals with TCFC in the third quarter of 2023.
The Company’s net interest margin decreased slightly to 3.08% for the first quarter of 2024 from 3.09% for the fourth quarter of 2023 primarily due to an increase in the overall mix of interest-bearing deposits compared to noninterest-bearing deposits. Average interest-bearing deposits increased $70.9 million which resulted in a two basis point rate increase. In addition to the change in deposit mix, rates on money market and time deposits also increased, which were partly offset by lower rates on demand deposits. The Company’s net interest margin decreased to 3.08% for the first quarter of 2024 from 3.18% for the first quarter of 2023. Comparing the first quarter of 2024 to the first quarter of 2023, the Company’s interest-earning asset yields increased 98 basis points to 5.32% from 4.34%, while the cost of funds repriced at a faster pace resulting in an increase of 109 basis points to 2.31% from 1.22% for the same period.
The provision for credit losses was $0.4 million for the three months ended March 31, 2024. The comparable amounts were $0.9 million for the three months ended December 31, 2023, and $1.2 million for the three months ended March 31, 2023. The decrease in the provision for credit losses for the first quarter of 2024 compared to the fourth quarter of 2023 was primarily related to more optimistic short-term forecasts for unemployment and Gross Domestic Product (“GDP”). Coverage ratios were 1.23% and 1.24% for the three months ended March 31, 2024 and December 31, 2023, respectively. The decrease in the provision for credit losses when compared to the first quarter of 2023 was primarily due to improved economic factors and forecasts. Net charge-offs for the first quarter of 2024 were $0.6 million compared to net charge-offs of $0.5 million for the fourth quarter of 2023 and net charge offs of $20,000 for the first quarter of 2023.
At March 31, 2024 and December 31, 2023, nonperforming assets were $16.4 million or 0.28% of total assets and $13.7 million, or 0.23% of total assets, respectively. The balance of nonperforming assets increased primarily due to an increase in repossessed marine loans of $1.8 million and an increase of $0.8 million in loans 90 days past due and still accruing. When comparing March 31, 2024 to March 31, 2023, nonperforming assets increased $13.7 million, primarily due to increases in nonaccrual loans of $10.9 million, an increase in repossessed marine loans of $1.8 million, and an increase of $0.9 million in loans 90 days past due and still accruing almost entirely impacted by the merger with TCFC in the third quarter of 2023.
Total noninterest income for the first quarter of 2024 was $6.6 million, a decrease of $1.0 million from $7.5 million for the fourth quarter of 2023 and an increase $1.2 million from $5.3 million for the first quarter of 2023. The decrease from the fourth quarter of 2023 was primarily due to other noninterest income which included decreases in other fees on bank services and other loan fee income, decreases in mortgage banking revenue and trust and investment fee income. The increase from the first quarter of 2023 was primarily due to other noninterest income which included increases in other loan fee income, gains on life insurance contracts, an increase in credit card income, increases in trust and investment fee income and interchange credits all a result of the merger in the third quarter of 2023.
Total noninterest expense of $36.7 million for the first quarter of 2024 increased $3.0 million when compared to the fourth quarter of 2023 expense of $33.7 million and increased $15.8 million when compared to the first quarter of 2023 expense of $20.9 million. The increase from the fourth quarter of 2023 was primarily due to credit card fraud expense of $4.3 million, and an increase in employee benefits of $0.7 million partially offset by decreases in salaries and wages expense of $1.0 million, merger related expenses of $0.6 million, and FDIC insurance premium expense of $0.6 million. The increase from the first quarter of 2023 was primarily due to the operation of a larger branch network due to the merger with TCFC which significantly impacted almost all expense line items. Unrelated to the merger were the fraud expenses in the first quarter of 2024 previously mentioned above.
Subsequent Event
On May 1, 2024, the Company’s board of directors declared a quarterly common stock dividend in the amount of $0.12 per share, payable May 31, 2024 to stockholders of record on May 16, 2024.
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Shore Bancshares Information
Shore Bancshares is a financial holding company headquartered in Easton, Maryland and is the parent company of Shore United Bank, N.A. Shore Bancshares engages in title work related to real estate transactions through its wholly-owned subsidiary, Mid-Maryland Title Company, Inc. and in trust and wealth management services through Wye Financial Partners, a division of Shore United Bank, N.A. Additional information is available at www.shorebancshares.com.
Forward-Looking Statements
The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; recent adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments; changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing wars in Ukraine and the Middle East; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding debt ceiling and the federal budget; the impact of recent or future changes in FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount, including any special assessments; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; the Company’s evaluation of the effect of the credit card fraud on the Company’s internal controls over financial reporting and its ability to remediate the existing material weakness identified in its internal control over financial reporting; the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; and other factors that may affect our future results. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's 2023 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) and available at the SEC’s Internet site (http://www.sec.gov).
The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
For further information contact: Todd Capitani, Executive Vice President, and Chief Financial Officer, 240-427-1068
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Shore Bancshares, Inc.
Financial Highlights (Unaudited)
For the Three Months Ended March 31,
(Dollars in thousands, except per share data)
2024 2023  Change
PROFITABILITY FOR THE PERIOD
Net interest income $ 41,135 $ 25,664 60.3  %
Provision for credit losses 407 1,213 (66.4)
Noninterest income 6,567 5,334 23.1 
Noninterest expense 36,698 20,893 75.6 
Income before income taxes 10,597 8,892 19.2 
Income tax expense 2,413 2,435 (0.9)
Net income $ 8,184 $ 6,457 26.7 
Return on average assets 0.57  % 0.75  % (18) bp
Return on average assets excluding amortization of intangibles, merger related expenses and credit card fraud losses - Non-GAAP (1 ) (2) 0.94  0.84  10 
Return on average equity 6.38  7.25  (87)
Return on average tangible equity - Non-GAAP (1), (2) 13.39  10.09  330 
Interest rate spread 2.34  2.69  (35)
Net interest margin 3.08  3.18  (10)
Efficiency ratio - GAAP 76.93  67.40  953 
Efficiency ratio - Non-GAAP (1) 62.37  63.67  (130)
Non-interest income to avg assets 0.46  0.62  (16)
Non-interest expense to avg assets 2.56  2.42  14 
Net operating expense to avg assets 2.10  1.80  30 
PER SHARE DATA
Basic and diluted net income per common share $ 0.25 $ 0.32 (21.9) %
Dividends paid per common share $ 0.12 $ 0.12 —  %
Book value per common share at period end 15.51 18.17 (14.6)
Tangible book value per common share at period end - Non-GAAP (1) 12.24 14.74 (17.0)
Market value at period end 11.50 14.28 (19.5)
Market range:
High 14.38 18.15 (20.8)
Low 10.56 14.00 (24.6)
AVERAGE BALANCE SHEET DATA
Loans $ 4,655,183 $ 2,611,644 78.2  %
Investment securities 655,323 654,193 0.2 
Earning assets 5,387,782 3,279,686 64.3 
Assets 5,774,824 3,506,336 64.7 
Deposits 5,142,658 2,968,448 73.2 
Short-term and Long Term FHLB advances 4,000 113,972 (96.5)
Subordinated Debt & TRUPS 72,418 43,108 68.0 
Stockholders' equity 515,976 361,174 42.9 
____________________________________
(1)See the reconciliation table that begins on page 21.
(2)This ratio excludes merger related expenses (Non-GAAP) on page 21.
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Shore Bancshares, Inc.
Financial Highlights (Unaudited) - Continued
For the Three Months Ended March 31,
(Dollars in thousands, except per share data) 2024 2023  Change
CREDIT QUALITY DATA
Net charge-offs $ 565 $ 20 2,725.0  %
Nonaccrual loans $ 12,776 $ 1,894 574.6  %
Loans 90 days past due and still accruing 1,560 611 155.3 
Other real estate owned and Repossessed Property 2,024 179 1,030.7 
Total nonperforming assets 16,360 2,684 509.5 
Borrowers experiencing financial difficulty ("BEFD") (still accruing) — 
Total nonperforming assets and BEFD modifications $ 16,360 $ 2,684 509.5 
CAPITAL AND CREDIT QUALITY RATIOS
Period-end equity to assets 8.84  % 10.18  % (134) bp
Period-end tangible equity to tangible assets - Non-GAAP (1) 7.11  8.41  (130)
Annualized net charge-offs to average loans 0.05  % —  % bp
Allowance for credit losses as a percent of:
Period-end loans 1.23  % 1.07  % 16  bp
Nonaccrual loans 448.78  1,502.85  (105,407)
Nonperforming assets 350.46  1,060.51  (71,005)
Accruing BEFD modifications —  —  — 
Nonperforming assets and accruing BEFDs 350.46  1,060.51  (71,005)
As a percent of total loans:
Nonaccrual loans 0.27  % 0.07  % 20  bp
As a percent of total loans, other real estate owned, and repossessed property
Nonperforming assets 0.35  % 0.10  % 25  bp
As a percent of total assets:
Nonaccrual loans 0.22  % 0.05  % 17  bp
Nonperforming assets 0.28  % 0.08  % 20 
____________________________________
(1)See the reconciliation table that begins on page 21.
(2)This ratio excludes merger related expenses (Non-GAAP) on page 21.

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Shore Bancshares, Inc.
Consolidated Balance Sheets (Unaudited)
March 31, 2024 March 31, 2024
compared to compared to
(In thousands, except per share data) March 31, 2024 December 31, 2023 March 31, 2023 December 31, 2023 March 31, 2023
ASSETS
Cash and due from banks $ 43,079 $ 63,172 $ 23,863 (31.8) % 80.5  %
Interest-bearing deposits with other banks 71,481 309,241 13,846 (76.9) 416.3 
Cash and cash equivalents 114,560 372,413 37,709 (69.2) 203.8 
Investment securities available for sale (at fair value) 179,496 110,521 81,525 62.4  120.2 
Investment securities held to maturity (net of allowance for credit losses of $116 (March 31, 2024), $94 (December 31, 2023), $0 (March 31, 2023)) at amortized cost) 503,822 513,188 549,096 (1.8) (8.2)
Equity securities, at fair value 5,681 5,703 1,258 (0.4) 351.6 
Restricted securities 17,863 17,900 15,067 (0.2) 18.6 
Loans held for sale, at fair value 13,767 8,782 3,514 56.8  291.8 
Loans held for investment 4,648,725 4,641,010 2,668,681 0.2  74.2 
Less: allowance for credit losses (57,336) (57,351) (28,464) —  (101.4)
Loans, net 4,591,389 4,583,659 2,640,217 0.2  73.9 
Premises and equipment, net 83,084 82,386 50,516 0.8  64.5 
Goodwill 63,266 63,266 63,266 —  — 
Other intangible assets, net 45,515 48,090 5,106 (5.4) 791.4 
Other real estate owned, net 179 179 179 —  — 
Repossessed property, net 1,845 —  — 
Mortgage servicing rights, at fair value 5,821 5,926 5,310 (1.8) 9.6 
Right of use assets, net 12,153 12,487 9,344 (2.7) 30.1 
Cash surrender value on life insurance 102,321 101,704 59,711 0.6  71.4 
Accrued interest receivable 19,541 19,217 8,218 1.7  137.8 
Deferred income taxes 38,978 40,707 10,436 (4.2) 273.5 
Other assets 26,423 24,790 13,222 6.6  99.8 
Total assets $ 5,825,704 $ 6,010,918 $ 3,553,694 (3.1) 63.9 
LIABILITIES
Noninterest-bearing deposits $ 1,200,680 $ 1,258,037 $ 808,679 (4.6) % 48.5  %
Interest-bearing deposits 3,983,599 4,128,083 2,185,883 (3.5) 82.2 
Total deposits 5,184,279 5,386,120 2,994,562 (3.7) 73.1 
Advances from FHLB - short-term 131,500 —  (100.0)
Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS") 29,237 29,158 18,445 0.3  58.5 
Subordinated debt 43,322 43,139 24,705 0.4  75.4 
Total borrowings 72,559 72,297 174,650 0.4  (58.5)
Lease liabilities 12,552 12,857 9,642 (2.4) 30.2 
Accrued expenses and other liabilities 41,086 28,509 13,202 44.1  211.2 
Total liabilities $ 5,310,476 $ 5,499,783 $ 3,192,056 (3.4) 66.4 
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; authorized 50,000,000 shares $ 332 $ 332 $ 199 —  66.8 
Additional paid in capital 356,464 356,007 201,736 0.1  76.7 
Retained earnings 166,490 162,290 167,864 2.6  (0.8)
Accumulated other comprehensive loss (8,058) (7,494) (8,161) (7.5) 1.3 
Total stockholders' equity 515,228 511,135 361,638 0.8  42.5 
Total liabilities and stockholders' equity $ 5,825,704 $ 6,010,918 $ 3,553,694 (3.1) 63.9 
Period-end common shares outstanding $ 33,211 $ 33,162 $ 19,898 0.1  66.9 
Book value per common share $ 15.51 $ 15.41 $ 18.17 0.6  (14.6)
7


Shore Bancshares, Inc.
Consolidated Statements of Income (Unaudited)
For the Three Months Ended March 31,
(In thousands, except per share data) 2024 2023 % Change
INTEREST INCOME
Interest and fees on loans $ 65,754 $ 30,828 113.3  %
Interest on investment securities:
Taxable 4,419 4,064 8.7 
Tax-exempt 6 7 (14.3)
Interest on deposits with other banks 960 163 489.0 
Total interest income $ 71,139 $ 35,062 102.9 
INTEREST EXPENSE
Interest on deposits $ 28,497 $ 7,281 291.4 
Interest on short-term borrowings 56 1,361 (95.9)
Interest on long-term borrowings 1,451 756 91.9 
Total interest expense $ 30,004 $ 9,398 219.3 
NET INTEREST INCOME $ 41,135 $ 25,664 60.3 
Provision for credit losses 407 1,213 (66.4)
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES $ 40,728 $ 24,451 66.6 
NONINTEREST INCOME
Service charges on deposit accounts $ 1,507 $ 1,213 24.2 
Trust and investment fee income 734 432 69.9 
Interchange credits 1,587 1,212 30.9 
Mortgage-banking revenue 801 977 (18.0)
Title Company revenue 78 137 (43.1)
Other noninterest income 1,860 1,363 36.5 
Total noninterest income $ 6,567 $ 5,334 23.1 

8


Shore Bancshares, Inc.
Consolidated Statements of Income (Unaudited) - Continued
For the Three Months Ended March 31,
(In thousands, except per share data) 2024 2023 % Change
NONINTEREST EXPENSE
Salaries and wages $ 11,852 $ 8,684 36.5  %
Employee benefits 4,097 2,921 40.3 
Occupancy expense 2,416 1,619 49.2 
Furniture and equipment expense 904 534 69.3 
Data processing 2,867 1,798 59.5 
Directors' fees 295 250 18.0 
Amortization of intangible assets 2,576 441 484.1 
FDIC insurance premium expense 1,150 371 210.0 
Other real estate owned, net (1) 100.0 
Legal and professional fees 1,599 750 113.2 
Fraud losses (1) 4,502 67 6,619.4 
Merger related expenses 691 (100.0)
Other noninterest expenses 4,440 2,768 60.4 
Total noninterest expense $ 36,698 $ 20,893 75.6 
Income before income taxes $ 10,597 $ 8,892 19.2 
Income tax expense 2,413 2,435 (0.9)
NET INCOME $ 8,184 $ 6,457 26.7 
Weighted average shares outstanding - basic and diluted 33,337 19,886 67.6 
Basic and diluted net income per common share $ 0.25 $ 0.32 (21.9)
Dividends paid per common share $ 0.12 $ 0.12 — 
____________________________________
(1)Fraud losses includes $4.3 million of credit card fraud losses for the quarter ended March 31, 2024.

9


Shore Bancshares, Inc.
Consolidated Average Balance Sheets (Unaudited)
For the Three Months Ended For the Three Months Ended
March 31, 2024 March 31, 2023 March 31, 2024 December 31, 2023
(Dollars in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate
Earning assets
Loans (1), (2), (3)
Consumer real estate $ 1,361,636 $ 18,492 5.46  % $ 881,799 $ 10,507 4.83  % $ 1,361,636 $ 18,492 5.46  % $ 1,331,150 $ 18,653 5.56  %
Commercial real estate 2,722,600 38,604 5.70  1,279,923 15,173 4.81  2,722,600 38,604 5.70  2,728,094 38,730 5.63 
Commercial 219,884 4,097 7.49  142,797 1,819 5.17  219,884 4,097 7.49  221,342 4,295 7.70 
Consumer 329,118 4,272 5.22  297,528 3,274 4.46  329,118 4,272 5.22  333,807 3,859 4.59 
State and political 1,473 16 4.37  978 9 3.73  1,473 16 4.37  1,290 13 4.00 
Credit Cards 7,457 167 9.01  —  7,457 167 9.01  6,320 166 10.42 
Other 13,015 183 5.66  8,619 84 3.91  13,015 183 5.66  17,464 277 6.29 
Total Loans 4,655,183 65,831 5.69  2,611,644 30,866 4.79  4,655,183 65,831 5.69  4,639,467 65,993 5.64 
Investment securities
Taxable 654,663 4,419 2.70  653,527 4,064 2.49  654,663 4,419 2.70  619,259 3,992 2.58 
Tax-exempt (1) 660 8 4.85  666 9 5.41  660 8 4.85  661 8 4.84 
Interest-bearing deposits 77,276 960 5.00  13,849 163 4.77  77,276 960 5.00  80,446 1,224 6.04 
Total earning assets 5,387,782 71,218 5.32  3,279,686 35,102 4.34  5,387,782 71,218 5.32  5,339,833 71,217 5.29 
Cash and due from banks 49,499 28,602 49,499 63,506
Other assets 395,023 228,054 395,023 399,409
Allowance for credit losses (57,480) (30,006) (57,480) (57,308)
Total assets $ 5,774,824 $ 3,506,336 $ 5,774,824 $ 5,745,440
10


For the Three Months Ended For the Three Months Ended
March 31, 2024 March 31, 2023 March 31, 2024 December 31, 2023
(Dollars in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate
Interest-bearing liabilities
Demand deposits $ 1,110,524 $ 6,362 2.30  % $ 694,894 $ 3,236 1.89  % $ 1,110,524 $ 6,362 2.30  % $ 1,117,117 $ 6,673 2.37  %
Money market and savings deposits 1,669,074 10,160 2.45  1,004,553 2,374 0.96  1,669,074 10,160 2.45  1,605,930 8,330 2.06 
Brokered deposits 20,465 251 4.93  —  20,465 251 4.93  92,840 1,347 5.76 
Certificates of deposit $100,000 or more 762,210 7,675 4.05  241,436 1,076 1.81  762,210 7,675 4.05  701,051 6,898 3.90 
Other time deposits 417,362 4,049 3.90  207,403 595 1.16  417,362 4,049 3.90  391,820 4,885 4.95 
Interest-bearing deposits (4) 3,979,635 28,497 2.88  2,148,286 7,281 1.37  3,979,635 28,497 2.88  3,908,758 28,133 2.86 
Advances from FHLB - short-term 4,000 56 5.63  113,972 1,361 4.84  4,000 56 5.63  1,141 16 5.56 
Subordinated debt and Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS") (4) 72,418 1,451 8.06  43,108 756 7.11  72,418 1,451 8.06  72,155 1,462 8.04 
Total interest-bearing liabilities 4,056,053 30,004 2.98  2,305,366 9,398 1.65  4,056,053 30,004 2.98  3,982,054 29,611 2.95 
Noninterest-bearing deposits 1,163,023 820,162 1,163,023 1,228,060
Accrued expenses and other liabilities 39,772 19,634 39,772 28,286
Stockholders' equity 515,976 361,174 515,976 507,040
Total liabilities and stockholders' equity $ 5,774,824 $ 3,506,336 $ 5,774,824 $ 5,745,440
Net interest income $ 41,214 $ 25,704 $ 41,214 $ 41,606
Net interest spread 2.34  % 2.69  % 2.34  % 2.34  %
Net interest margin 3.08  % 3.18  % 3.08  % 3.09  %
Cost of Funds 2.31  % 1.22  % 2.31  % 2.25  %
Cost of Deposits 2.23  % 0.99  % 2.23  % 2.17  %
Cost of Debt 7.93  % 5.47  % 7.93  % 8.00  %
____________________________________
(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense.
(2) Average loan balances include nonaccrual loans.
(3) Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $4.2 million, $0.5 million and $4.8 million of accretion interest on loans for the three months ended March 31, 2024 and 2023, and December 31, 2023, respectively.
(4) Interest expense on deposits and borrowing includes amortization of deposit discount and amortization of borrowing fair value adjustments. There were $(0.4) million, $0.1 million and $(1.5) million of amortization of deposits premium, and $(0.2) million, $(47,000), and $(0.2) million of amortization of borrowing fair value adjustments for the three months ended March 31, 2024 and 2023, and December 31, 2023, respectively.
11


Shore Bancshares, Inc.
Financial Highlights By Quarter (Unaudited)
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 3/31/2024 3/31/2024
2024 2023 2023 2023 2023 compared to compared to
(Dollars in thousands, except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2023 Q1 2023
PROFITABILITY FOR THE PERIOD
Taxable-equivalent net interest income $ 41,214 $ 41,606 $ 45,702 $ 22,545 $ 25,704 (0.9) % 60.3  %
Less: Taxable-equivalent adjustment 79 81 80 51 40 (2.5) 97.5 
Net interest income 41,135 41,525 45,622 22,494 25,664 (0.9) 60.3 
Provision for credit losses 407 896 28,176 667 1,213 (54.6) (66.5)
Noninterest income 6,567 7,548 14,984 5,294 5,334 (13.0) 23.1 
Noninterest expense 36,698 33,670 47,158 21,608 20,893 9.0  75.6 
Income/(loss) before income taxes 10,597 14,507 (14,728) 5,513 8,892 (27.0) 19.2 
Income tax expense/ (benefit) 2,413 4,017 (4,991) 1,495 2,435 (39.9) (0.9)
Net income/ (loss) $ 8,184 $ 10,490 $ (9,737) $ 4,018 $ 6,457 (22.0) 26.7 
Return on average assets 0.57% 0.72% (0.67)% 0.45% 0.75% (15) bp (18) bp
Return on average assets excluding amortization of intangibles, fraud losses and merger related expenses - Non-GAAP (1), (2) 0.94 0.88 0.01 0.59 0.84 10 
Return on average equity 6.38 8.21 (7.25) 4.49 7.25 (183) (87)
Return on average tangible equity - Non-GAAP (1), (2) 13.39 12.88 1.74 7.16 10.09 51  330 
Net interest margin 3.08 3.09 3.35 2.68 3.18 (1) (10)
Efficiency ratio - GAAP 76.93 68.61 77.81 77.76 67.40 832  953 
Efficiency ratio - Non-GAAP (1) 62.37 61.99 47.19 71.75 63.67 38  (130)
PER SHARE DATA
Basic and diluted net income/(loss) per common share $ 0.25 $ 0.32 $ (0.29) $ 0.20 $ 0.32 (21.9) % (21.9) %
Dividends paid per common share 0.12 0.12 0.12 0.12 0.12 —  — 
Book value per common share at period end 15.51 15.41 15.14 18.24 18.17 0.6  (14.6)
Tangible book value per common share at period end - Non-GAAP (1) 12.24 12.06 11.70 14.83 14.74 1.5  (17.0)
Market value at period end 11.50 14.25 10.52 11.56 14.28 (19.3) (19.5)
Market range:
High 14.38 14.51 13.37 14.45 18.15 (0.9) (20.8)
Low 10.56 9.66 10.27 10.65 14.00 9.3  (24.6)
____________________________________
(1)See the reconciliation table (Non-GAAP) that begins on page 21.
(2)This ratio excludes merger related expenses (Non-GAAP) on page 21.

12


Shore Bancshares, Inc.
Financial Highlights By Quarter (Unaudited) - Continued
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 3/31/2024 3/31/2024
2024 2023 2023 2023 2023 compared to compared to
(Dollars in thousands, except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2023 Q1 2023
AVERAGE BALANCE SHEET DATA
Loans $ 4,655,183 $ 4,639,467 $ 4,562,748 $ 2,709,944 $ 2,611,644 0.34  % 78.25  %
Investment securities 655,323 619,920 778,744 645,842 654,193 5.71  0.17 
Earning assets 5,387,782 5,339,833 5,404,572 3,369,183 3,279,686 0.90  64.28 
Assets 5,774,824 5,745,440 5,769,312 3,596,311 3,506,336 0.51  64.70 
Deposits 5,142,658 5,136,818 5,066,886 2,908,662 2,968,448 0.11  73.24 
Short-term and Long Term FHLB advances 4,000 1,141 70,348 261,797 113,972 250.57  (96.49)
Subordinated Debt & TRUPS 72,418 72,155 71,907 43,185 43,108 0.36  67.99 
Stockholders' equity 515,976 507,040 533,114 363,225 361,174 1.76  42.86 
CREDIT QUALITY DATA
Net charge offs $ 565 $ 500 $ 1,449 $ 50 $ 20 13.00  % 2,725.00  %
Nonaccrual loans $ 12,776 $ 12,784 $ 8,982 $ 3,481 $ 1,894 (0.06) % 574.55  %
Loans 90 days past due and still accruing 1,560 738 2,149 1,065 611 111.38  155.32 
Other real estate owned and repossessed property 2,024 179 179 179 179 1,030.73  1,030.73 
Total nonperforming assets $ 16,360 $ 13,701 $ 11,310 $ 4,725 $ 2,684 19.41  509.54 

13


Shore Bancshares, Inc.
Financial Highlights By Quarter (Unaudited) - Continued
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 3/31/2024 3/31/2024
2024 2023 2023 2023 2023 compared to compared to
(Dollars in thousands, except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2023 Q1 2023
CAPITAL AND CREDIT QUALITY RATIOS
Period-end equity to assets 8.84  % 8.50  % 8.79  % 9.97  % 10.18  % 34  bp (134) bp
Period-end tangible equity to tangible assets - Non-GAAP (1) 7.11  6.78  6.93  8.26  8.41  33  (130)
Annualized net charge-offs to average loans 0.05  % 0.04  % 0.13  % 0.01  % —  % bp bp
Allowance for credit losses as a percent of:
Period-end loans (3) 1.23  % 1.24  % 1.24  % 1.05  % 1.07  % (1) bp 16  bp
Period-end loans (4) 1.23  1.24  1.24  1.05  1.07  (1) 16 
Nonaccrual loans 448.78  448.62  635.17  833.50  1502.85  16  (105,407)
Nonperforming assets 350.46  418.59  504.43  614.05  1060.51  (6,813) (71,005)
As a percent of total loans:
Nonaccrual loans 0.27  % 0.28  % 0.19  % 0.13  % 0.07  % (1) bp 20  bp
As a percent of total loans, other real estate owned, and repossessed property
Nonperforming assets 0.35  % 0.30  % 0.24  % 0.17  % 0.10  % bp 25  bp
As a percent of total assets:
Nonaccrual loans 0.22  % 0.21  % 0.16  % 0.10  % 0.05  % bp 17  bp
Nonperforming assets 0.28  0.23  0.20  0.13  0.08  20 
____________________________________
(1)See the reconciliation table (Non-GAAP) that begins on page 21.
(2)This ratio excludes merger related expenses (Non-GAAP) on page 21.
(3)Includes all loans held for investment, including PPP loan balances for all periods shown.
(4)For 2023, this ratio excludes only PPP loans given the Company’s adoption of the CECL standard.
14


Shore Bancshares, Inc.
Consolidated Balance Sheets (Unaudited)
March 31, 2024 March 31, 2024
compared to compared to
(In thousands, except per share data) March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2023 March 31, 2023
ASSETS
Cash and due from banks $ 43,079  $ 63,172  $ 68,097  $ 35,423  $ 23,863  (31.8) % 80.5  %
Interest-bearing deposits with other banks 71,481  309,241  40,612  10,404  13,846  (76.9) 416.3 
Cash and cash equivalents 114,560  372,413  108,709  45,827  37,709  (69.2) 203.8 
Investment securities available for sale (at fair value) 179,496  110,521  79,143  78,069  81,525  62.4  120.2 
Investment securities held to maturity (net of allowance for credit losses of $116 (March 31, 2024), $94 (December 31,2023), $126 ( September 30, 2023), $163 (June 30, 2023) and $0 (March 31, 2023)) at amortized cost) 503,822  513,188  523,051  536,970  549,096  (1.8) (8.2)
Equity securities, at fair value 5,681  5,703  5,434  1,245  1,258  (0.4) 351.6 
Restricted securities 17,863  17,900  13,361  21,208  15,067  (0.2) 18.6 
Loans held for sale, at fair value 13,767  8,782  14,725  6,845  3,514  56.8  291.8 
Loans held for investment 4,648,725  4,641,010  4,617,719  2,753,223  2,668,681  0.2  74.2 
Less: allowance for credit losses (57,336) (57,351) (57,051) (29,014) (28,464) —  (101.4)
Loans, net 4,591,389  4,583,659  4,560,668  2,724,209  2,640,217  0.2  73.9 
Premises and equipment, net 83,084  82,386  81,149  51,036  50,516  0.8  64.5 
Goodwill 63,266  63,266  63,266  63,266  63,266  —  — 
Other intangible assets, net 45,515  48,090  50,685  4,671  5,106  (5.4) 791.4 
Other real estate owned, net 179  179  179  179  179  —  — 
Repossessed property, net 1,845  —  —  —  —  —  — 
Mortgage servicing rights, at fair value 5,821  5,926  5,890  5,466  5,310  (1.8) 9.6 
Right of use assets, net 12,153  12,487  12,741  9,077  9,344  (2.7) 30.1 
Cash surrender value on life insurance 102,321  101,704  100,950  60,150  59,711  0.6  71.4 
Accrued interest receivable 19,541  19,217  15,683  8,778  8,218  1.7  137.8 
Deferred income taxes 38,978  40,707  45,346  10,879  10,436  (4.2) 273.5 
Other assets 26,423  24,790  24,392  13,756  13,222  6.6  99.8 
Total assets $ 5,825,704  $ 6,010,918  $ 5,705,372  $ 3,641,631  $ 3,553,694  (3.1) 63.9 

15


Shore Bancshares, Inc.
Consolidated Balance Sheets (Unaudited) - Continued
March 31, 2024 March 31, 2024
compared to compared to
(In thousands, except per share data) March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2023 March 31, 2023
LIABILITIES
Noninterest-bearing deposits $ 1,200,680  $ 1,258,037  $ 1,211,401  $ 778,963  $ 808,679  (4.6) % 48.5 
Interest-bearing deposits 3,983,599  4,128,083  3,897,343  2,158,563  2,185,883  (3.5) 82.2 
Total deposits 5,184,279  5,386,120  5,108,744  2,937,526  2,994,562  (3.7) 73.1 
Advances from FHLB - short-term —  —  —  276,000  131,500  —  (100.0)
Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS") 29,237  29,158  29,079  18,492  18,445  0.3  58.5 
Subordinated debt 43,322  43,139  42,956  24,735  24,705  0.4  75.4 
Total borrowings 72,559  72,297  72,035  319,227  174,650  0.4  (58.5)
Lease liabilities 12,552  12,857  13,082  9,392  9,642  (2.4) 30.2 
Accrued expenses and other liabilities 41,086  28,509  9,933  12,346  13,202  44.1  211.2 
Total liabilities 5,310,476  5,499,783  5,203,794  3,278,491  3,192,056  (3.4) 66.4 
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; authorized 50,000,000 shares 332  332  331  199  199  —  66.8 
Additional paid in capital 356,464  356,007  355,575  202,008  201,736  0.1  76.7 
Retained earnings 166,490  162,290  155,781  169,494  167,864  2.6  (0.8)
Accumulated other comprehensive loss (8,058) (7,494) (10,109) (8,561) (8,161) (7.5) 1.3 
Total stockholders' equity 515,228  511,135  501,578  363,140  361,638  0.8  42.5 
—  — 
Total liabilities and stockholders' equity $ 5,825,704  $ 6,010,918  $ 5,705,372  $ 3,641,631  $ 3,553,694  (3.1) 63.9 
Period-end common shares outstanding 33,211 33,162  33,136  19,907  19,898  0.1  66.9 
Book value per common share $ 15.51  $ 15.41  $ 15.14  $ 18.24  $ 18.17  0.6  (14.6)
16


Shore Bancshares, Inc.
Consolidated Statements of Income By Quarter (Unaudited)
3/31/2024 3/31/2024
compared to compared to
(In thousands, except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2023 Q1 2023
INTEREST INCOME
Interest and fees on loans $ 65,754 $ 65,914 $ 64,869 $ 32,729 $ 30,828 (0.2) % 113.3  %
Interest on investment securities:
Taxable 4,419 3,992 5,047 3,729 4,064 10.7  8.7 
Tax-exempt 6 6 27 5 7 —  (14.3)
Interest on federal funds sold 92 —  — 
Interest on deposits with other banks 960 1,224 1,213 170 163 (21.6) 489.0 
Total interest income 71,139 71,136 71,248 36,633 35,062 —  102.9 
INTEREST EXPENSE
Interest on deposits 28,497 28,133 23,473 9,914 7,281 1.3  291.4 
Interest on short-term borrowings 56 16 692 3,449 1,361 250.0  (95.9)
Interest on long-term borrowings 1,451 1,462 1,461 776 756 (0.8) 91.9 
Total interest expense 30,004 29,611 25,626 14,139 9,398 1.3  219.3 
NET INTEREST INCOME 41,135 41,525 45,622 22,494 25,664 (0.9) 60.3 
Provision for credit losses 407 896 28,176 667 1,213 (54.6) (66.4)
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 40,728 40,629 17,446 21,827 24,451 0.2  66.6 
NONINTEREST INCOME
Service charges on deposit accounts 1,507 1,519 1,505 1,264 1,213 (0.8) 24.2 
Trust and investment fee income 734 844 1,933 399 432 (13.0) 69.9 
Loss on sales and calls of investment securities (2,166) —  — 
Interchange credits 1,587 1,633 1,557 1,311 1,212 (2.8) 30.9 
Mortgage-banking revenue 801 1,105 1,377 1,054 977 (27.5) (18.0)
Title Company revenue 78 139 89 186 137 (43.9) (43.1)
Bargain purchase gain 8,816 —  — 
Other noninterest income 1,860 2,308 1,873 1,080 1,363 (19.4) 36.5 
Total noninterest income $ 6,567 $ 7,548 $ 14,984 $ 5,294 $ 5,334 (13.0) 23.1 

17


Shore Bancshares, Inc.
Consolidated Statements of Income By Quarter (Unaudited) - Continued
3/31/2024 3/31/2024
compared to compared to
(In thousands, except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2023 Q1 2023
NONINTEREST EXPENSE
Salaries and wages $ 11,852 $ 12,823 $ 14,183 $ 8,955 $ 8,684 (7.6) % 36.5  %
Employee benefits 4,097 3,389 3,607 2,440 2,921 20.9  40.3 
Occupancy expense 2,416 2,328 2,245 1,599 1,619 3.8  49.2 
Furniture and equipment expense 904 790 750 477 534 14.4  69.3 
Data processing 2,867 2,762 2,485 1,739 1,798 3.8  59.5 
Directors' fees 295 426 295 185 250 (30.8) 18.0 
Amortization of intangible assets 2,576 2,595 2,634 435 441 (0.7) 484.1 
FDIC insurance premium expense 1,150 1,733 618 758 371 (33.6) 210.0 
Other real estate owned expenses, net 2 (1) —  100.0 
Legal and professional fees 1,599 1,411 1,217 959 750 13.3  113.2 
Fraud losses (1) 4,502 503 262 47 67 795.0  6619.4 
Merger related expenses 602 14,866 1,197 691 (100.0) (100.0)
Other noninterest expenses 4,440 4,308 3,994 2,817 2,768 3.1  60.4 
Total noninterest expense 36,698 33,670 47,158 21,608 20,893 9.0  75.6 
Income/(loss) before income taxes 10,597 14,507 (14,728) 5,513 8,892 (27.0) 19.2 
Income tax expense/(benefit) 2,413 4,017 (4,991) 1,495 2,435 (39.9) (0.9)
NET INCOME/(LOSS) $ 8,184 $ 10,490 $ (9,737) $ 4,018 $ 6,457 (22.0) 26.7 
Weighted average shares outstanding - basic and diluted 33,337 33,322 33,246 19,903 19,886 0.1  67.6 
Basic and diluted net income/(loss) per common share $ 0.25 $ 0.32 $ (0.29) $ 0.20 $ 0.32 (21.9) (21.9)
Dividends paid per common share 0.12 0.12 0.12 0.12 0.12 —  — 
____________________________________
(1)Fraud losses includes $4.3 million of credit card fraud losses for the quarter ended March 31, 2024.
18


Shore Bancshares, Inc.
Consolidated Average Balance Sheets By Quarter (Unaudited)
Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023
(Dollars in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate
Earning assets
Loans (1), (2), (3)
Consumer real estate $ 1,361,636 $ 18,492 5.46  % $ 1,331,150 $ 18,653 5.56  % $ 1,141,707 $ 14,548 5.06  % $ 946,545 $ 10,876 4.61  % $ 881,799 $ 10,507 4.83  %
Commercial real estate 2,722,600 38,604 5.70  2,728,094 38,730 5.63  2,831,569 40,536 5.68  1,292,406 15,620 4.85  1,279,923 15,173 4.81 
Commercial 219,884 4,097 7.49  221,342 4,295 7.70  233,756 5,315 9.02  137,554 2,177 6.35  142,797 1,819 5.17 
Consumer 329,118 4,272 5.22  333,807 3,859 4.59  332,486 4,183 4.99  323,798 3,983 4.93  297,528 3,274 4.46 
State and political 1,473 16 4.37  1,290 13 4.00  929 10 4.27  900 8 3.57  978 9 3.73 
Credit Cards 7,457 167 9.01  6,320 166 10.42  6,164 149 9.59  —  — 
Other 13,015 183 5.66  17,464 277 6.29  16,137 201 4.94  8,741 116 5.37  8,619 84 3.91 
Total Loans 4,655,183 65,831 5.69  4,639,467 65,993 5.64  4,562,748 64,942 5.65  2,709,944 32,780 4.85  2,611,644 30,866 4.79 
Investment securities
Taxable 654,663 4,419 2.70  619,259 3,992 2.58  778,081 5,047 2.59  645,178 3,729 2.32  653,527 4,064 2.49 
Tax-exempt (1) 660 8 4.85  661 8 4.84  663 34 20.51  664 6 3.62  666 9 5.41 
Federal funds sold —  —  7,533 92 4.85  —  — 
Interest-bearing deposits 77,276 960 5.00  80,446 1,224 6.04  55,547 1,213 8.66  13,397 170 5.09  13,849 163 4.77 
Total earning assets 5,387,782 71,218 5.32  5,339,833 71,217 5.29  5,404,572 71,328 5.24  3,369,183 36,685 4.37  3,279,686 35,102 4.34 
Cash and due from banks 49,499 63,506 51,714 29,923 28,602
Other assets 395,023 399,409 359,726 225,935 228,054
Allowance for credit losses (57,480) (57,308) (46,700) (28,730) (30,006)
Total assets $ 5,774,824 $ 5,745,440 $ 5,769,312 $ 3,596,311 $ 3,506,336
19


Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023
(Dollars in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate
Interest-bearing liabilities
Demand deposits $ 1,110,524 $ 6,362 2.30  % $ 1,117,117 $ 6,673 2.37  % $ 1,056,956 $ 6,659 2.50  % $ 685,674 $ 3,913 2.29  % $ 694,894 $ 3,236 1.89  %
Money market and savings deposits 1,669,074 10,160 2.45  1,605,930 8,330 2.06  1,572,920 6,810 1.72  907,068 2,526 1.12  1,004,553 2,374 0.96 
Brokered deposits 20,465 251 4.93  92,840 1,347 5.76  98,649 1,225 4.93  —  — 
Certificates of deposit $100,000 or more 762,210 7,675 4.05  701,051 6,898 3.90  706,642 6,272 3.52  312,367 2,337 3.00  241,436 1,076 1.81 
Other time deposits 417,362 4,049 3.90  391,820 4,885 4.95  285,743 2,507 3.48  225,495 1,138 2.03  207,403 595 1.16 
Interest-bearing deposits (4) 3,979,635 28,497 2.88  3,908,758 28,133 2.86  3,720,910 23,473 2.50  2,130,604 9,914 1.87  2,148,286 7,281 1.37 
Advances from FHLB - short-term 4,000 56 5.63  1,141 16 5.56  70,348 692 3.90  261,797 3,449 5.28  113,972 1,361 4.84 
Subordinated debt and Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS") (4) 72,418 1,451 8.06  72,155 1,462 8.04  71,907 1,461 8.06  43,185 776 7.21  43,108 756 7.11 
Total interest-bearing liabilities 4,056,053 30,004 2.98  3,982,054 29,611 2.95  3,863,165 25,626 2.63  2,435,586 14,139 2.33  2,305,366 9,398 1.65 
Noninterest-bearing deposits 1,163,023 1,228,060 1,345,976 778,058 820,162
Accrued expenses and other liabilities 39,772 28,286 27,057 19,442 19,634
Stockholders' equity 515,976 507,040 533,114 363,225 361,174
Total liabilities and stockholders' equity $ 5,774,824 $ 5,745,440 $ 5,769,312 $ 3,596,311 $ 3,506,336
Net interest income $ 41,214 $ 41,606 $ 45,702 $ 22,546 $ 25,704
Net interest spread 2.34  % 2.34  % 2.61  % 2.04  % 2.69  %
Net interest margin 3.08  % 3.09  % 3.35  % 2.68  % 3.18  %
Cost of Funds 2.31  % 2.25  % 1.95  % 1.76  % 1.22  %
Cost of Deposits 2.23  % 2.17  % 1.84  % 1.37  % 0.99  %
Cost of Debt 7.93  % 8.00  % 6.00  % 5.56  % 5.47  %
____________________________________
(1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense.
(2) Average loan balances include nonaccrual loans.
(3) Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $4.2 million, $4.8 million, $6.1 million, $0.3 million and $0.5 million of accretion interest on loans for the three months ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, respectively.
(4) Interest expense on deposits and borrowing includes amortization of deposit premiums and amortization of borrowing fair value adjustment. There were $(0.4) million, $(1.5) million, $(0.5) million, $41,000 and $0.1 million of amortization of deposits premium, and $(0.2) million, $(0.2) million, $(0.2) million, $(47,000) and $(47,000) of amortization of borrowing fair value adjustment for the three months ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, respectively.
20


Shore Bancshares, Inc.
Reconciliation of Generally Accepted Accounting Principles (GAAP) and Non-GAAP Measures (Unaudited)
YTD YTD
(In thousands, except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 3/31/2024 3/31/2023
The following reconciles return on average assets, average equity and return on average tangible equity (Note 1):
Net income (loss) $ 8,184  $ 10,490  $ (9,737) $ 4,018  $ 6,457  $ 8,184  $ 6,457 
Net income (loss) - annualized (A) $ 32,916  $ 41,618  $ (38,632) $ 16,295  $ 26,187  $ 32,916  $ 26,187 
Net income (loss) $ 8,184  $ 10,490  $ (9,737) $ 4,018  $ 6,457  $ 8,184  $ 6,457 
Add: Amortization of intangible assets, net of tax 1,989  1,876  1,741  317  320  1,989  320 
Add: Merger Expenses, net of tax —  435  9,828  872  502  —  502 
Add: Credit Card Fraud Losses, net of tax 3,339  —  —  —  —  3,339  — 
Net income, excluding net amortization of intangible assets, merger related expenses and credit card fraud losses 13,512  12,801  1,832  5,207  7,279  13,512  7,279 
Net income, excluding net amortization of intangible assets, merger related expenses and credit card fraud losses - annualized (B) $ 54,345  $ 50,787  $ 7,268  $ 21,121  $ 29,520  $ 54,345  $ 29,520 
Return on average assets (GAAP) 0.57  % 0.72  % (0.67) % 0.45  % 0.75  % 0.57  % 0.75  %
Return on average assets excluding net amortization of intangible assets, merger related expenses and credit card fraud losses- (Non-GAAP) 0.94  % 0.88  % 0.01  % 0.59  % 0.84  % 0.94  % 0.84  %
Average assets $ 5,774,824  $ 5,745,440  $ 5,769,312  $ 3,596,311  $ 3,506,336  $ 5,774,824  $ 3,506,336 
Average stockholders' equity (C) $ 515,976  $ 507,040  $ 533,114  $ 363,225  $ 361,174  $ 515,976  $ 361,174 
Less: Average goodwill and core deposit intangible (110,167) (112,752) (115,604) (68,172) (68,607) (110,167) (68,607)
Average tangible equity (D) $ 405,809  $ 394,288  $ 417,510  $ 295,053  $ 292,567  $ 405,809  $ 292,567 
Return on average equity (GAAP) (A)/(C) 6.38  % 8.21  % (7.25) % 4.49  % 7.25  % 6.38  % 7.25  %
Return on average tangible equity (Non-GAAP) (B)/(D) 13.39  % 12.88  % 1.74  % 7.16  % 10.09  % 13.39  % 10.09  %
The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio (Note 2):
Noninterest expense (E) $ 36,698  $ 33,670  $ 47,158  $ 21,608  $ 20,893  $ 36,698  $ 20,893 
Less: Amortization of intangible assets (2,576) (2,595) (2,634) (435) (441) (2,576) (441)
Less: Merger Expenses —  (602) (14,866) (1,197) (691) —  (691)
Less: Credit Card Fraud Losses (4,323) —  —  —  —  (4,323) — 
Adjusted noninterest expense (F) $ 29,799  $ 30,473  $ 29,658  $ 19,976  $ 19,761  $ 29,799  $ 19,761 
Net interest income (G) $ 41,135  $ 41,525  $ 45,622  $ 22,494  $ 25,664  $ 41,135  $ 25,664 
Add: Taxable-equivalent adjustment 79  81  80  51  40  79  40 
Taxable-equivalent net interest income (H) $ 41,214  $ 41,606  $ 45,702  $ 22,545  $ 25,704  $ 41,214  $ 25,704 
Noninterest income (I) $ 6,567  $ 7,548  $ 14,984  $ 5,294  $ 5,334  $ 6,567  $ 5,334 
Investment securities losses (gains) —  —  2,166  —  —  —  — 
Adjusted noninterest income (J) $ 6,567  $ 7,548  $ 17,150  $ 5,294  $ 5,334  $ 6,567  $ 5,334 
Efficiency ratio (GAAP) (E)/(G)+(I) 76.93  % 68.61  % 77.81  % 77.76  % 67.40  % 76.93  % 67.40  %
Efficiency ratio (Non-GAAP) (F)/(H)+(J) 62.37  % 61.99  % 47.19  % 71.76  % 63.67  % 62.37  % 63.67  %
21


Shore Bancshares, Inc.
Reconciliation of Generally Accepted Accounting Principles (GAAP) and Non-GAAP Measures (Unaudited) - Continued
(In thousands, except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023
The following reconciles book value per common share and tangible book value per common share (Note 1):
Stockholders' equity (K) $ 515,228  $ 511,135  $ 501,578  $ 363,140  $ 361,638 
Less: Goodwill and core deposit intangible (108,781) (111,356) (113,951) (67,937) (68,372)
Tangible equity (L) $ 406,447  $ 399,779  $ 387,627  $ 295,203  $ 293,266 
Shares outstanding (M) 33,211 33,162 33,136 19,907 19,898
Book value per common share (GAAP) (K)/(M) $ 15.51 $ 15.41 $ 15.14 $ 18.24 $ 18.17
Tangible book value per common share (Non-GAAP) (L)/(M) $ 12.24 $ 12.06 $ 11.70 $ 14.83 $ 14.74
The following reconciles equity to assets and tangible equity to tangible assets (Note 1):
Stockholders' equity (N) $ 515,228 $ 511,135 $ 501,578 $ 363,140 $ 361,638
Less: Goodwill and core deposit intangible (108,781) (111,356) (113,951) (67,937) (68,372)
Tangible equity (O) $ 406,447 $ 399,779 $ 387,627 $ 295,203 $ 293,266
Assets (P) $ 5,825,704 $ 6,010,918 $ 5,705,372 $ 3,641,631 $ 3,553,694
Less: Goodwill and core deposit intangible (108,781) (111,356) (113,951) (67,937) (68,372)
Tangible assets (Q) $ 5,716,923 $ 5,899,562 $ 5,591,421 $ 3,573,694 $ 3,485,322
Period-end equity/assets (GAAP) (N)/(P) 8.84% 8.50% 8.79% 9.97% 10.18%
Period-end tangible equity/tangible assets (Non-GAAP) (O)/(Q) 7.11% 6.78% 6.93% 8.26% 8.41%
____________________________________
Note 1: Management believes that reporting tangible equity and tangible assets more closely approximates the adequacy of capital for regulatory purposes.
Note 2: Management believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling cash-based operating activities.
22


Shore Bancshares, Inc.
Summary of Loan Portfolio (Unaudited)
Portfolio loans are summarized by loan type as follows:
(Dollars in thousands) March 31, 2024 % December 31, 2023 % September 30, 2023 % June 30, 2023 % March 31, 2023 %
Portfolio Loans by Loan Type
Construction $ 299,133  6.43  % $ 299,000  6.44  % $ 328,750  7.12  % $ 220,228  8.00  % $ 250,447  9.38  %
Residential real estate 1,515,134  32.59  % 1,490,438  32.11  % 1,439,464  31.17  % 938,151  34.07  % 866,225  32.46  %
Commercial real estate 2,272,867  48.90  % 2,286,154  49.27  % 2,283,521  49.45  % 1,130,346  41.06  % 1,096,937  41.11  %
Commercial 229,594  4.94  % 229,939  4.95  % 229,474  4.97  % 138,459  5.03  % 140,312  5.26  %
Consumer 325,076  6.99  % 328,896  7.09  % 330,411  7.16  % 326,039  11.84  % 314,760  11.79  %
Credit Cards 6,921  0.15  % 6,583  0.14  % 6,099  0.13  % —  —  % —  —  %
Total loans 4,648,725  100.00  % 4,641,010  100.00  % 4,617,719  100.00  % 2,753,223  100.00  % 2,668,681  100.00  %
Less: Allowance for credit losses (57,336) (57,351) (57,051) (29,014) (28,464)
Total loans, net $ 4,591,389  $ 4,583,659  $ 4,560,668  $ 2,724,209  $ 2,640,217 

23


Shore Bancshares, Inc.
Summary of Deposits (Unaudited)
March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023
(dollars in thousands) Balance % Balance % Balance % Balance % Balance %
Noninterest-bearing demand $ 1,200,680  23.15  % $ 1,258,037  23.36  % $ 1,211,401  23.70  % $ 778,963  26.52  % $ 808,679  27.00  %
Interest-bearing:
Demand 1,101,954  21.26  % 1,165,546  21.64  % 1,210,051  23.69  % 694,221  23.63  % 726,070  24.25  %
Money market deposits 1,358,205  26.20  % 1,430,603  26.56  % 1,179,049  23.08  % 600,724  20.45  % 675,751  22.57  %
Savings 354,098  6.83  % 347,324  6.45  % 371,755  7.28  % 270,884  9.22  % 295,002  9.85  %
Certificates of deposit 1,169,342  22.56  % 1,184,610  21.99  % 1,136,488  22.25  % 592,734  20.18  % 489,060  16.33  %
Total interest-bearing 3,983,599  76.85  % 4,128,083  76.64  % 3,897,343  76.30  % 2,158,563  73.48  % 2,185,883  73.00  %
Total Deposits $ 5,184,279  100.00  % $ 5,386,120  100.00  % $ 5,108,744  100.00  % $ 2,937,526  100.00  % $ 2,994,562  100.00  %
24