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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): July 25, 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 July 25, 2024, Shore Bancshares, Inc. (the “Company”) issued a press release announcing its results of operations and financial condition for the three and six months ended June 30, 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: July 25, 2024
By: /s/ James M. Burke
James M. Burke
President and Chief Executive Officer
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EX-99.1 2 shbi-20240630xexx991.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 Second Quarter and First-Half Financial Results
Easton, Maryland (July 25, 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 second quarter of 2024 of $11.2 million or $0.34 per diluted common share compared to net income of $8.2 million or $0.25 per diluted common share for the first quarter of 2024, and net income of $4.0 million or $0.20 per diluted common share for the second quarter of 2023. Net income for the first-half of 2024 was $19.4 million or $0.58 per diluted common share, compared to net income for the first-half of 2023 of $10.5 million or $0.53 per diluted common share. Unless the context clearly suggests otherwise, references to “the merger” refers to the merger of equals which took place on July 1, 2023 between the Company and The Community Financial Corporation (“TCFC”).
Second Quarter and First-Half of 2024 Highlights
■Return on Average Assets (“ROAA”) - The Company reported ROAA of 0.77% for the second quarter of 2024, compared to 0.57% for the first quarter of 2024 and 0.45% for the second quarter of 2023. Non-GAAP, ROAA(1), which excludes fraud expense, core deposit intangible amortization, and merger-related expenses, was 0.91% for the second quarter of 2024, compared to 0.94% for the first quarter of 2024 and 0.59% for the second quarter of 2023.
■Net Interest Margin Expansion - Net interest margin (“NIM”) increased to 3.11% for the second quarter of 2024 from 3.08% for the first quarter of 2024. Excluding net accretion interest income of $3.8 million and $3.6 million for the same time periods, NIM increased two basis points (“bps”) to 2.83% for the second quarter of 2024 from 2.81% for the first quarter of 2024.
■Continued Stable and Low Cost Funding - Total deposits remained stable in the second quarter of 2024 with noninterest-bearing deposits increasing $386.6 million to 30.8% of total deposits. The increase in noninterest-bearing deposits was primarily due to the migration of low-cost demand deposits to noninterest-bearing deposits and successful initiatives designed to drive noninterest-bearing deposit growth. The total average cost of deposits for the second quarter of 2024 declined four bps to 2.19% when compared to the first quarter of 2024.
■Improving Earnings Drive Capital Accretion - Second quarter net interest income and noninterest income increased $1.0 million and $1.9 million, respectively, from the first quarter of 2024. Net interest income increased due to modest loan growth, slightly higher accelerated accretion income, and loan and securities repricing. Noninterest income increased primarily due to higher mortgage-banking revenue from increased volume and sales of residential mortgages. The improved earnings for the second quarter resulted in a 14 bps increase in the Company’s Tier 1 Capital Ratio and a 14 bps increase in the Company’s Total Risk-Based Capital Ratio, which were 9.67% and 11.82%, respectively, on June 30, 2024. The Company’s leverage ratio and tangible common equity ratio(1) also increased to 8.07% and 7.23%, respectively, in the second quarter of 2024.
■Reduced Commercial Real Estate (“CRE”) Concentration - The CRE Concentration Ratio, which is calculated as non-owner occupied CRE loans as a percentage of the Bank’s Tier 1 Capital + Allowance for Credit Losses (“ACL”), decreased in the second quarter of 2024 to 368.7% from 370.0% in the first quarter of 2024 and 382.6% in the fourth quarter of 2023. Capital accretion has allowed the Bank to meet the needs of its customers and fund new CRE loans.
■Improving Operating Leverage - The second quarter efficiency ratio improved to 66.2% when compared to 76.9% in the first quarter 2024 and 77.8% in the second quarter 2023. The second quarter non-GAAP efficiency, which excludes core deposit intangible amortization and non-recurring activity, improved to 61.1% when compared to 62.4% in the first quarter 2024 and 71.8% in the second quarter 2023. Management anticipates ongoing expense management and technology investments will result in continued improvements in operating leverage over time.
“Throughout our first post-merger operating year, we have worked to strengthen our balance sheet and streamline our operations. Our second quarter financial results reflect our progress and momentum on both fronts.” stated James (“Jimmy”) M. Burke, President and Chief Executive Officer of Shore Bancshares, Inc. “Stable deposit balances and increasing asset yields drove NIM expansion and improving financial results built capital and supported loan growth. We continue to closely manage expenses and make investments that will improve
(1) Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.
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operating leverage over time. Credit remains broadly stable and economic activity in our markets remains strong. We appreciate the focus and commitment of all our associates who continue to deliver outstanding service to our clients and our communities.”
Balance Sheet Review
Total assets were $5.9 billion at June 30, 2024, a decrease of $145 million or 2.4%, 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 $233.5 million and investment securities held to maturity of $13.8 million partially offset by an increase in investment securities available for sale of $21.1 million and loans held for investment of $64.7 million. The ratio of the ACL to total loans increased slightly from 1.23% at December 31, 2023 to 1.24% at June 30, 2024.
The Company’s tangible common equity ratio(1) at June 30, 2024 was 7.23% compared to 7.11% at December 31, 2023. The Company’s Tier 1 and Total Risk-Based Capital Ratios at June 30, 2024 were 9.67% and 11.82%, respectively. The Bank’s Tier 1 and Total Risk-Based Capital Ratios at June 30, 2024 were 10.45% and 11.69%, respectively. Non-owner occupied CRE loans as a percentage of the Bank’s Tier 1 Capital + ACL at June 30, 2024 and December 31, 2023 were $2.1 billion or 368.7% and $2.0 billion or 382.6%, respectively. Construction loans as a percentage of the Bank’s Tier 1 Capital + ACL at June 30, 2024 and December 31, 2023 were $327.9 million or 58.6% and $299.0 million or 56.7%, respectively.
The Bank's office CRE loan portfolio, which includes owner-occupied and non-owner occupied CRE loans, was $504.9 million or 10.7% of total loans of $4.7 billion at June 30, 2024. The Bank’s office CRE loan portfolio included $141.1 million or 28.0% of the total with medical tenants and $72.9 million or 14.4% of the total with government or government contractor tenants. There were 507 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 for the office CRE portfolio are summarized below and LTV collateral values are based on the most recent appraisal, which varies from the initial loan boarding to interim credit reviews:
LTV Range Loan Count  Loan Balance % of Total CRE
Less than or equal to 50% 257 $ 169,209  34  %
50%-60% 67 131,378  26  %
60%-70% 84 99,728  20  %
70%-80% 74 87,971  17  %
Greater than 80% 25 16,583  %
Grand Total 507 $ 504,869  100  %
The Bank had 18 office CRE loans totaling $164.1 million that were greater than $5.0 million at June 30, 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 two large loan payoffs in the quarter. For the office CRE portfolio, at June 30, 2024, the average loan debt-service coverage ratio was 2.5x and average LTV was 51.0%. Of the office CRE portfolio balance, 74% is secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 87% is secured by properties with five stories or less. Of the office CRE loans, $5.9 million will mature and $4.1 million of the office CRE loans will reprice prior to December 31, 2024. Of the office CRE loans, $2.1 million were classified as special mention or substandard at June 30, 2024.
Total deposits decreased $237.2 million, or 4.4% to $5.1 billion at June 30, 2024 when compared to December 31, 2023. The decrease in total deposits was primarily due to decreases in demand deposits of $507.0 million and money market and savings of $88.6 million, partially offset by increases in noninterest-bearing deposits of $329.2 million and time deposits of $29.2 million. The decrease in deposits is primarily attributable to seasonal municipal runoff and a decrease in interest rate-sensitive cannabis-related deposits. The increase in noninterest bearing deposits was significantly impacted by a transfer of $399.4 million of demand deposits which carried an average rate of four bps during the second quarter of 2024.
Total funding, which includes customer deposits, Federal Home Loan Bank (“FHLB”) short and long-term advances, and brokered deposits remained flat at $5.2 billion at June 30, 2024 and March 31, 2024. The Bank had $81 million in total FHLB advances at June 30, 2024 compared to zero at March 31, 2024. These advances consisted of short-term direct rate credits of $31 million and an 18-month Bermuda Convertible of $50 million. The Bank's uninsured deposits at June 30, 2024 were $948.9 million or 18.43% of total deposits. The Bank's uninsured deposits, excluding deposits secured with pledged collateral, at June 30, 2024 were $819.4 million or 15.91% of total deposits. At June 30, 2024, the Bank had approximately $1.0 billion of available liquidity including: $138.9 million in cash, $894.3 million in secured borrowing capacity at the FHLB and other correspondent banks, and $95.0 million in unsecured lines of credit.
Total stockholders’ equity increased $11.6 million, or 2.3%, when compared to December 31, 2023, primarily due to current year earnings, offset by cash dividends paid. As of June 30, 2024, the ratio of total equity to total assets was 8.92% and the ratio of total tangible equity to total tangible assets(1) was 7.23% compared to 8.50% and 6.78% at December 31, 2023, respectively.
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Review of Quarterly Financial Results
Net interest income was $42.1 million for the second quarter of 2024, compared to $41.1 million for the first quarter of 2024 and $22.5 million for the second quarter of 2023. The increase in net interest income when compared to the first quarter of 2024 was primarily due to the increase in interest and fees on loans of $1.5 million and interest and dividends on investment securities of $0.8 million, partially offset by an increase in interest expense of $1.0 million. The increase in interest expense in the second quarter of 2024 was the result of carrying short-term advances from FHLB during the quarter to offset seasonal outflows from municipal customers of $1.5 million, partially offset by lower interest expense on deposits of $0.9 million. The increase when compared to the second quarter of 2023 was primarily due to the increase in interest and fees on loans of $34.6 million, interest and dividends on investment securities of $1.5 million and interest on deposits from other banks of $0.4 million, coupled with a decrease in interest on short-term borrowings of $1.9 million. These increases were partially offset by the increase in interest on deposits of $17.7 million and interest on long-term borrowings of $1.0 million all significantly impacted by the merger in the third quarter of 2023.
The Company’s net interest margin increased to 3.11% for the second quarter of 2024 from 3.08% for the first quarter of 2024 primarily due to loans and securities repricing at a greater rate than deposits. The Company’s cost of funds was positively impacted during the second quarter due to a shift from interest-bearing to noninterest-bearing deposits. Average interest-bearing deposits decreased $395.0 million, or 9.9% which resulted in $0.9 million less interest expense. These interest-bearing deposits were almost entirely replaced with an increase in the average balance on noninterest-bearing deposits of $317.4 million, or 27.3%. The Company’s net interest margin increased to 3.11% for the second quarter of 2024 from 2.68% for the second quarter of 2023. Comparing the second quarter of 2024 to the second quarter of 2023, the Company’s interest-earning asset yields increased 102 bps to 5.39% from 4.37%, while the cost of funds repriced at a slower pace resulting in an increase of 60 bps to 2.36% from 1.76% for the same period.
The provision for credit losses was $2.1 million for the three months ended June 30, 2024. The comparable amounts were $0.4 million for the three months ended March 31, 2024, and $0.7 million for the three months ended June 30, 2023. The increase in the provision for credit losses for the second quarter of 2024 compared to the first quarter of 2024 was due to new loan growth, a small increase in the Bank’s CECL model loss factors and increases in specific reserves and charge-offs in the second quarter of 2024. Coverage ratios were 1.24% and 1.23% at June 30, 2024 and March 31, 2024, respectively. The increase in the provision for credit losses when compared to the second quarter of 2023 was primarily due to an updated CECL model in the third quarter of 2023 due to the merger. Net charge-offs for the second quarter of 2024 were $0.9 million compared to net charge-offs of $0.6 million for the first quarter of 2024 and net charge offs of $50,000 for the second quarter of 2023.
At June 30, 2024 and March 31, 2024, nonperforming assets were $18.4 million, or 0.31% of total assets and $16.4 million, or 0.28% of total assets, respectively. The balance of nonperforming assets increased primarily due to an increase in assets held for sale of $1.1 million and an increase of $1.1 million in loans 90 days past due and still accruing. When comparing June 30, 2024 to June 30, 2023, nonperforming assets increased $13.7 million, primarily due to increases in nonaccrual loans of $11.4 million, an increase in repossessed marine loans and assets held for sale of $2.9 million, and an increase of $0.7 million in loans 90 days past due and still accruing almost entirely impacted by the merger in the third quarter of 2023.
Total noninterest income for the second quarter of 2024 was $8.4 million, an increase of $1.9 million from $6.6 million for the first quarter of 2024 and an increase $3.1 million from $5.3 million for the second quarter of 2023. The increase from the first quarter of 2024 was primarily due to improved mortgage banking revenue. In addition, both Wye Financial Partners, the Bank’s wealth management division, and the Mid-Maryland Title Company, Inc. (the “title company”) have experienced improved revenue streams due to increased activity. The increase from the second quarter of 2023 was due to higher revenue among almost all revenue line items, a direct result of the merger in the third quarter of 2023.
Total noninterest expense of $33.5 million for the second quarter of 2024 decreased $3.2 million when compared to the first quarter of 2024 expense of $36.7 million and increased $11.9 million when compared to the second quarter of 2023 expense of $21.6 million. The decrease from the first quarter of 2024 was primarily due to a credit card fraud loss of $4.3 million in the first quarter of 2024, partially offset by an increase in salaries and wages of $1.5 million. The increase from the second quarter of 2023 was primarily due to the operation of a larger branch network and employee base due to the merger, which significantly impacted almost all expense line items. In addition, despite the increased size, the Company has prudently reduced its staff by approximately 72 FTE’s since the consummation of the merger. The efficiency ratio for the second quarter of 2024 when compared to the first quarter of 2024 and the second quarter of 2023 was 66.23%, 76.93% and 77.76%, respectively. Furthermore, Non-GAAP efficiency ratios(1) for the same periods were 61.05%, 62.37% and 71.75%, respectively. The net operating expense ratio,which is non-interest expense less non-interest income divided by average assets, for the second quarter 2024 was 1.73%, compared to 2.10% and 1.82% for the first quarter of 2024 and the second quarter of 2023, respectively. The Non-GAAP net operating expense ratio, which excludes core deposit intangible amortization and non-recurring activity, for the second quarter 2024 was 1.55%, compared to 1.62% and 1.64% for the first quarter of 2024 and the second quarter of 2023, respectively.
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Review of Six Month Financial Results
Net interest income for the first six months of 2024 was $83.3 million, an increase of $35.1 million, or 72.9%, when compared to the first six months of 2023. The increase in net interest income was primarily due to an increase in total interest income of $72.6 million, or 101.2%, which included an increase in interest and fees on loans of $69.5 million, or 109.3%. The increase of interest and fees on loans was primarily due to the increase in the average balance of loans of $2.0 billion, or 75.9%, and an increase in net accretion income of $6.7 million due to the merger. Increases to net interest income were partially offset by increased total interest expense of $37.4 million, or 159.0%, primarily due to increases in the cost of funds and in the average balance of interest-bearing deposits of $1.6 billion, or 76.8%. All of these increases were largely due to the merger.
The Company’s net interest margin increased to 3.09% for 2024 from 2.93% for 2023, primarily due to recent loan growth and repricing of earning assets, higher net accretion due to the merger, a positive shift in lower cost deposits and an overall stabilized funding base. The increase in the average balance and yields earned on average earning assets of $2.1 billion and 100 bps, respectively, were partially offset by increases in the average balance and rates paid on interest-bearing deposits of $1.6 billion and 136 bps, respectively. The average balance on noninterest-bearing deposits increased $522.7 million, or 65.4%. Net accretion income impacted the increased net interest margin by 27 bps and five bps for the six months ended June 30, 2024 and 2023, respectively. Until the balance sheet restructuring in the third quarter of 2024, the net interest margin experienced compression due to the Company’s liability sensitive position, deposit rate pressures and significantly higher FHLB borrowing rates.
The provision for credit losses for the six months ended June 30, 2024 and 2023 was $2.5 million and $1.9 million, respectively. The increase in the provision for credit losses for 2024 was due to higher levels of reserves required by the Company’s CECL model and higher net charge-offs. Net charge offs for the six months ended June 30, 2024 were $1.5 million compared to net recoveries of $70,000 for the six months ended June 30, 2023.
Total noninterest income for the six months ended June 30, 2024 increased $4.4 million or 41.2%, when compared to the same period in 2023. The increase in noninterest income was experienced among almost all revenue line items. These increases were attributable to the increased size and scale of the Company following the merger as well as strategic initiatives to improve business line operations and profitability.
Total noninterest expense for the six months ended June 30, 2024 increased $27.7 million, or 65.2%, when compared to the same period in 2023. Almost all noninterest expense line items increased as a result of the merger and the expanded operations of the newly combined Company. There were no merger-related expenses for the six months ended June 30, 2024, compared to $1.9 million for the six months ended June 30, 2023. The Company continues to focus on streamlining processes to unlock operational efficiencies and reduce overall noninterest expenses.
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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 June 30, For the Six Months Ended June 30,
(Dollars in thousands, except per share data)
2024 2023  Change 2024 2023 Change
PROFITABILITY FOR THE PERIOD
Net interest income $ 42,140 $ 22,494 87.3  % $ 83,275 $ 48,158 72.9  %
Provision for credit losses 2,081 667 212.0  2,488 1,880 32.3 
Noninterest income 8,440 5,294 59.4  15,007 10,628 41.2 
Noninterest expense 33,499 21,608 55.0  70,197 42,501 65.2 
Income before income taxes 15,000 5,513 172.1  25,597 14,405 77.7 
Income tax expense 3,766 1,495 151.9  6,179 3,930 57.2 
Net income $ 11,234 $ 4,018 179.6  $ 19,418 $ 10,475 85.4 
Return on average assets 0.77  % 0.45  % 32  bp 0.67  % 0.59  % bp
Return on average assets excluding amortization of intangibles, merger related expenses and credit card fraud losses - Non-GAAP (1) (2)
0.91  0.59  32  0.92  0.71  21 
Return on average equity 8.70  4.49  421  7.54  5.83  171 
Return on average tangible equity - Non-GAAP (1), (2)
12.85  7.16  569  13.08  8.57  451 
Interest rate spread 2.11  2.04  2.23  2.35  (12)
Net interest margin 3.11  2.68  43  3.09  2.93  16 
Efficiency ratio - GAAP 66.23  77.76  (1,153) 71.42  72.30  (88)
Efficiency ratio - Non-GAAP (1)
61.05  71.76  (1,071) 61.69  67.49  (580)
Non-interest income to average assets 0.58  0.59  (1) 0.52  0.60  (8)
Non-interest expense to average assets 2.31  2.41  (10) 2.43  2.41 
Net operating expense to average assets - GAAP 1.73  1.82  (9) 1.91  1.81  10 
Net operating expense to average assets - Non-GAAP (1)
1.55  1.64  (9) 1.58  1.65  (7)
PER SHARE DATA
Basic and diluted net income per common share $ 0.34 $ 0.20 69.1  % $ 0.58 $ 0.53 9.9  %
Dividends paid per common share $ 0.12 $ 0.12 —  % $ 0.24 $ 0.24 —  %
Book value per common share at period end 15.74 18.24 (13.7)
Tangible book value per common share at period end - Non-GAAP (1)
12.54 14.83 (15.4)
Market value at period end 11.45 11.56 (1.0)
Market range:
High 11.90 14.45 (17.6) 14.38 18.15 (20.8)
Low 10.06 10.65 (5.5) 10.06 10.65 (5.5)
AVERAGE BALANCE SHEET DATA
Loans $ 4,706,510 $ 2,709,944 73.7  % $ 4,680,846 $ 2,661,066 75.9  %
Investment securities 706,079 645,842 9.3  680,701 649,994 4.7 
Earning assets 5,459,961 3,369,183 62.1  5,423,871 3,324,682 63.1 
Assets 5,839,328 3,596,311 62.4  5,807,076 3,551,573 63.5 
Deposits 5,064,974 2,908,662 74.1  5,103,815 2,938,389 73.7 
Short-term and Long Term FHLB advances 143,769 261,797 (45.1) 73,885 188,293 (60.8)
Subordinated Debt & TRUPS 72,680 43,185 68.3  72,549 43,147 68.1 
Stockholders' equity 519,478 363,225 43.0  517,727 362,205 42.9 
____________________________________
(1)See the reconciliation table that begins on page 23.
(2)This ratio excludes merger related expenses (Non-GAAP) on page 23.
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Shore Bancshares, Inc.
Financial Highlights (Unaudited) - Continued
For the Three Months Ended June 30, For the Six Months Ended June 30,
(Dollars in thousands, except per share data) 2024 2023  Change 2024 2023 Change
CREDIT QUALITY DATA
Net charge-offs $ 886 $ 50 1,672.0  % $ 1,451 $ 70 1972.9  %
Nonaccrual loans $ 14,837 $ 3,481 326.2  %
Loans 90 days past due and still accruing 414 1,050 (60.6)
Other real estate owned and Repossessed Property 3,126 179 1,646.4 
Total nonperforming assets 18,377 4,710 290.2 
Borrowers experiencing financial difficulty ("BEFDs") (still accruing) — 
Total nonperforming assets and BEFDs modifications $ 18,377 $ 4,710 290.2 
CAPITAL AND CREDIT QUALITY RATIOS
Period-end equity to assets 8.92  % 9.97  % (105) bp
Period-end tangible equity to tangible assets - Non-GAAP (1)
7.23  8.26  (103)
Annualized net charge-offs to average loans 0.08  % 0.01  % bp 0.06  % 0.01  % bp
Allowance for credit losses as a percent of:
Period-end loans 1.24  % 1.05  % 19  bp
Nonaccrual loans 394.14  833.50  (43,936)
Nonperforming assets 318.21  616.01  (29,780)
Accruing BEFDs modifications —  —  — 
Nonperforming assets and accruing BEFDs 318.21  616.01  (29,780)
As a percent of total loans:
Nonaccrual loans 0.32  % 0.13  % 19  bp
As a percent of total loans, other real estate owned, and repossessed property
Nonperforming assets 0.39  % 0.17  % 22  bp
As a percent of total assets:
Nonaccrual loans 0.25  % 0.10  % 15  bp
Nonperforming assets 0.31  % 0.13  % 18 
____________________________________
(1)See the reconciliation table that begins on page 23.
(2)This ratio excludes merger related expenses (Non-GAAP) on page 23.

7


Shore Bancshares, Inc.
Consolidated Balance Sheets (Unaudited)
June 30, 2024 June 30, 2024
compared to compared to
(In thousands, except per share data) June 30, 2024 December 31, 2023 June 30, 2023 December 31, 2023 June 30, 2023
ASSETS
Cash and due from banks $ 50,090 $ 63,172 $ 35,423 (20.7) % 41.4  %
Interest-bearing deposits with other banks 88,793 309,241 10,404 (71.3) 753.5 
Cash and cash equivalents 138,883 372,413 45,827 (62.7) 203.1 
Investment securities available for sale (at fair value) 131,594 110,521 78,069 19.1  68.6 
Investment securities held to maturity (net of allowance for credit losses of $108 (June 30, 2024), $94 (December 31, 2023), $163 (June 30, 2023)) at amortized cost) 499,431 513,188 536,970 (2.7) (7.0)
Equity securities, at fair value 5,699 5,703 1,245 (0.1) 357.8 
Restricted securities 21,725 17,900 21,208 21.4  2.4 
Loans held for sale, at fair value 27,829 8,782 6,845 216.9  306.6 
Loans held for investment 4,705,737 4,641,010 2,753,223 1.4  70.9 
Less: allowance for credit losses (58,478) (57,351) (29,014) (2.0) (101.6)
Loans, net 4,647,259 4,583,659 2,724,209 1.4  70.6 
Premises and equipment, net 82,176 82,386 51,036 (0.3) 61.0 
Goodwill 63,266 63,266 63,266 —  — 
Other intangible assets, net 42,945 48,090 4,671 (10.7) 819.4 
Other real estate owned, net 179 179 179 —  — 
Repossessed property, net 1,560 —  — 
Assets held for sale 1,387 — 
Mortgage servicing rights, at fair value 5,995 5,926 5,466 1.2  9.7 
Right of use assets, net 11,762 12,487 9,077 (5.8) 29.6 
Cash surrender value on life insurance 102,969 101,704 60,150 1.2  71.2 
Accrued interest receivable 19,641 19,217 8,778 2.2  123.8 
Deferred income taxes 36,078 40,707 10,879 (11.4) 231.6 
Other assets 23,639 24,790 13,756 (4.6) 71.8 
Total assets $ 5,864,017 $ 6,010,918 $ 3,641,631 (2.4) 61.0 
LIABILITIES
Noninterest-bearing deposits $ 1,587,252 $ 1,258,037 $ 778,963 26.2  % 103.8  %
Interest-bearing deposits 3,561,633 4,128,083 2,158,563 (13.7) 65.0 
Total deposits 5,148,885 5,386,120 2,937,526 (4.4) 75.3 
Advances from FHLB - short-term 31,000 276,000 —  (88.8)
Advances from FHLB - long-term 50,000 —  — 
Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS") 29,316 29,158 18,492 0.5  58.5 
Subordinated debt 43,504 43,139 24,735 0.8  75.9 
Total borrowings 153,820 72,297 319,227 112.8  (51.8)
Lease liabilities 12,189 12,857 9,392 (5.2) 29.8 
Accrued expenses and other liabilities 26,340 28,509 12,346 (7.6) 113.3 
Total liabilities $ 5,341,234 $ 5,499,783 $ 3,278,491 (2.9) 62.9 
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; authorized 50,000,000 shares $ 333 $ 332 $ 199 0.3  67.3 
Additional paid in capital 356,994 356,007 202,008 0.3  76.7 
Retained earnings 173,716 162,290 169,494 7.0  2.5 
Accumulated other comprehensive loss (8,260) (7,494) (8,561) (10.2) 3.5 
Total stockholders' equity 522,783 511,135 363,140 2.3  44.0 
Total liabilities and stockholders' equity $ 5,864,017 $ 6,010,918 $ 3,641,631 (2.4) 61.0 
Period-end common shares outstanding $ 33,215 $ 33,162 $ 19,907 0.2  66.8 
Book value per common share $ 15.74 $ 15.41 $ 18.24 2.1  (13.7)
8


Shore Bancshares, Inc.
Consolidated Statements of Income (Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,
(In thousands, except per share data) 2024 2023 % Change 2024 2023 % Change
INTEREST INCOME
Interest and fees on loans $ 67,292 $ 32,729 105.6  % $ 133,045 $ 63,557 109.3  %
Interest on investment securities:
Taxable 5,230 3,729 40.3  9,650 7,793 23.8 
Tax-exempt 6 5 20.0  12 12 — 
Interest on deposits with other banks 578 170 240.0  1,538 333 361.9 
Total interest income $ 73,106 $ 36,633 99.6  $ 144,245 $ 71,695 101.2 
INTEREST EXPENSE
Interest on deposits $ 27,585 $ 9,914 178.2  $ 56,081 $ 17,195 226.1 
Interest on short-term borrowings 1,584 3,449 (54.1) 1,641 4,810 (65.9)
Interest on long-term borrowings 1,797 776 131.6  3,248 1,532 112.0 
Total interest expense $ 30,966 $ 14,139 119.0  $ 60,970 $ 23,537 159.0 
NET INTEREST INCOME $ 42,140 $ 22,494 87.3  $ 83,275 $ 48,158 72.9 
Provision for credit losses 2,081 667 212.0  2,488 1,880 32.3 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES $ 40,059 $ 21,827 83.5  $ 80,787 $ 46,278 74.6 
NONINTEREST INCOME
Service charges on deposit accounts $ 1,493 $ 1,264 18.1  $ 3,001 $ 2,477 21.2 
Trust and investment fee income 896 399 124.6  1,630 831 96.1 
Interchange credits 1,717 1,311 31.0  3,304 2,523 31.0 
Mortgage-banking revenue 1,983 1,054 88.1  2,783 2,031 37.0 
Title Company revenue 165 186 (11.3) 243 323 (24.8)
Other noninterest income 2,186 1,080 102.4  4,046 2,443 65.6 
Total noninterest income $ 8,440 $ 5,294 59.4  $ 15,007 $ 10,628 41.2 

9


Shore Bancshares, Inc.
Consolidated Statements of Income (Unaudited) - Continued
For the Three Months Ended June 30, For the Six Months Ended June 30,
(In thousands, except per share data) 2024 2023 % Change 2024 2023 % Change
NONINTEREST EXPENSE
Salaries and wages $ 13,307 $ 8,955 48.6  % $ 25,158 $ 17,639 42.6  %
Employee benefits 3,593 2,440 47.3  7,689 5,361 43.4 
Occupancy expense 2,432 1,599 52.1  4,848 3,218 50.7 
Furniture and equipment expense 900 477 88.7  1,804 1,011 78.4 
Data processing 2,978 1,739 71.2  5,845 3,537 65.3 
Directors' fees 359 185 94.1  654 435 50.3 
Amortization of intangible assets 2,569 435 490.6  5,145 876 487.3 
FDIC insurance premium expense 1,089 758 43.7  2,240 1,129 98.4 
Other real estate owned, net —  (1) 100.0 
Legal and professional fees 1,354 959 41.2  2,954 1,709 72.8 
Fraud losses (1)
62 47 31.9  4,564 114 3903.5 
Merger related expenses 1,197 (100.0) 1,888 (100.0)
Other noninterest expenses 4,856 2,817 72.4  9,296 5,585 66.4 
Total noninterest expense $ 33,499 $ 21,608 55.0  70,197 42,501 65.2 
Income before income taxes $ 15,000 $ 5,513 172.1  25,597 14,405 77.7 
Income tax expense 3,766 1,495 151.9  6,179 3,930 57.2 
NET INCOME $ 11,234 $ 4,018 179.6  $ 19,418 $ 10,475 85.4 
Weighted average shares outstanding - basic and diluted 33,215 19,903 66.9  33,337 19,895 67.6 
Basic and diluted net income per common share $ 0.34 $ 0.20 69.1  $ 0.58 $ 0.53 9.9 
Dividends paid per common share $ 0.12 $ 0.12 —  $ 0.24 $ 0.24 — 
____________________________________
(1)Fraud losses includes $4.3 million of credit card fraud losses for the six months ended June 30, 2024.

10


Shore Bancshares, Inc.
Consolidated Average Balance Sheets (Unaudited)
For the Three Months Ended For the Three Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 March 31, 2024
(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 $ 1,388,168 $ 19,278 5.59  % $ 946,545 $ 10,876 4.61  % $ 1,388,168 $ 19,278 5.59  % $ 1,361,636 $ 18,492 5.46  %
Commercial real estate 2,738,693 39,370 5.78  1,292,406 15,620 4.85  2,738,693 39,370 5.78  2,722,600 38,604 5.70 
Commercial 216,809 3,926 7.28  137,554 2,177 6.35  216,809 3,926 7.28  219,884 4,097 7.49 
Consumer 327,781 4,265 5.23  323,798 3,983 4.93  327,781 4,265 5.23  329,118 4,272 5.22 
State and political 2,331 30 5.18  900 8 3.57  2,331 30 5.18  1,473 16 4.37 
Credit Cards 8,378 201 9.65  —  8,378 201 9.65  7,457 167 9.01 
Other 24,350 302 4.99  8,741 117 5.37  24,350 302 4.99  13,015 183 5.66 
Total Loans 4,706,510 67,372 5.76  2,709,944 32,781 4.85  4,706,510 67,372 5.76  4,655,183 65,831 5.69 
Investment securities
Taxable 705,421 5,230 2.97  645,178 3,729 2.31  705,421 5,230 2.97  654,663 4,419 2.70 
Tax-exempt (1)
658 8 4.86  664 9 5.42  658 8 4.86  660 8 4.85 
Interest-bearing deposits 47,372 578 4.91  13,397 170 5.09  47,372 578 4.91  77,276 960 5.00 
Total earning assets 5,459,961 73,188 5.39  3,369,183 36,689 4.37  5,459,961 73,188 5.39  5,387,782 71,218 5.32 
Cash and due from banks 45,141 29,923 45,141 49,499
Other assets 391,854 225,935 391,854 395,023
Allowance for credit losses (57,628) (28,730) (57,628) (57,480)
Total assets $ 5,839,328 $ 3,596,311 $ 5,839,328 $ 5,774,824
11


For the Three Months Ended For the Three Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 March 31, 2024
(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 $ 711,138 $ 5,550 3.14  % $ 685,674 $ 3,913 2.29  % $ 711,138 $ 5,550 3.14  % $ 1,110,524 $ 6,362 2.30  %
Money market and savings deposits 1,690,157 10,291 2.45  907,068 2,526 1.12  1,690,157 10,291 2.45  1,669,074 10,160 2.45 
Brokered deposits 7,753 94 4.88  —  7,753 94 4.88  20,465 251 4.93 
Certificates of deposit $100,000 or more 758,211 7,581 4.02  312,367 2,337 3.00  758,211 7,581 4.02  762,210 7,675 4.05 
Other time deposits 417,331 4,069 3.92  225,495 1,139 2.03  417,331 4,069 3.92  417,362 4,049 3.90 
Interest-bearing deposits (4)
3,584,590 27,585 3.10  2,130,604 9,915 1.87  3,584,590 27,585 3.10  3,979,635 28,497 2.88 
Advances from FHLB - short-term 113,549 1,584 5.61  261,797 3,449 5.28  113,549 1,584 5.61  4,000 56 5.63 
Advances from FHLB - long-term 30,220 346 4.60  —  30,220 346 4.60  — 
Subordinated debt and Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS") (4)
72,680 1,451 8.03  43,185 776 7.21  72,680 1,451 8.03  72,418 1,451 8.06 
Total interest-bearing liabilities 3,801,039 30,966 3.28  2,435,586 14,140 2.33  3,801,039 30,966 3.28  4,056,053 30,004 2.98 
Noninterest-bearing deposits 1,480,384 778,058 1,480,384 1,163,023
Accrued expenses and other liabilities 38,427 19,442 38,427 39,772
Stockholders' equity 519,478 363,225 519,478 515,976
Total liabilities and stockholders' equity $ 5,839,328 $ 3,596,311 $ 5,839,328 $ 5,774,824
Net interest income $ 42,222 $ 22,549 $ 42,222 $ 41,214
Net interest spread 2.11  % 2.04  % 2.11  % 2.34  %
Net interest margin 3.11  % 2.68  % 3.11  % 3.08  %
Cost of Funds 2.36  % 1.76  % 2.36  % 2.31  %
Cost of Deposits 2.19  % 1.37  % 2.19  % 2.23  %
Cost of Debt 6.28  % 5.56  % 6.28  % 7.93  %
____________________________________
(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 $4.5 million, $0.3 million and $4.2 million of accretion interest on loans for the three months ended June 30, 2024 and 2023, and March 31, 2024, 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, $41,000 and $(0.4) 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 June 30, 2024 and 2023, and March 31, 2024, respectively.
12


Shore Bancshares, Inc.
Consolidated Average Balance Sheets (Unaudited)
For the Six Months Ended June 30,
2024 2023
(Dollars in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate
Earning assets
Loans (1), (2), (3)
  Consumer real estate $ 1,374,902 $ 37,770  5.52  % $ 914,351 $ 21,383  4.72  %
  Commercial real estate 2,730,646 77,974  5.74  1,286,199 30,793  4.83 
  Commercial 218,346 8,024  7.39  140,161 3,997  5.75 
  Consumer 328,450 8,537  5.23  310,736 7,257  4.71 
  State and political 1,902 46  4.86  939 17  3.65 
  Credit Cards 7,918 368  9.35  —  — 
  Other 18,682 484  5.21  8,680 199  4.62 
Total Loans 4,680,846  133,203  5.72  2,661,066  63,646  4.82 
Investment securities
Taxable 680,042 9,650  2.84  649,329 7,793  2.40 
Tax-exempt (1)
659 15  4.55  665 15  4.51 
Interest-bearing deposits 62,324 1,538  4.96  13,622 333  4.93 
Total earning assets 5,423,871 144,406  5.35  3,324,682 71,787  4.35 
Cash and due from banks 47,320 29,266
Other assets 393,439 226,989
Allowance for credit losses (57,554) (29,364)
Total assets $ 5,807,076  $ 3,551,573 
Interest-bearing liabilities
Demand deposits $ 910,831 $ 11,911  2.63  % $ 690,258 $ 7,149  2.09  %
Money market and savings deposits 1,679,615 20,451  2.45  955,541 4,899  1.03 
Brokered deposits 14,107 345  4.92  —  — 
Certificates of deposit $100,000 or more 760,211 15,256  4.04  277,096 3,413  2.48 
Other time deposits 417,346 8,118  3.91  216,500 1,734  1.62 
Interest-bearing deposits (4)
3,782,110 56,081  2.98  2,139,395 17,195  1.62 
Advances from FHLB - short-term 58,775 1,641  5.61  188,293 4,810  5.15 
Advances from FHLB - long-term 15,110 346  4.60  —  — 
Subordinated debt and Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS") (4)
72,549 2,902  8.04  43,147 1,532  7.16 
Total interest-bearing liabilities 3,928,544 60,970  3.12  2,370,835 23,537  2.00 
Noninterest-bearing deposits 1,321,705 798,994
Accrued expenses and other liabilities 39,100 19,539
Stockholders' equity 517,727  362,205 
Total liabilities and stockholders' equity $ 5,807,076  $ 3,551,573 
Net interest income $ 83,436  $ 48,250 
Net interest spread 2.23  % 2.35  %
Net interest margin 3.09  % 2.93  %
Cost of Funds 2.34  % 1.50  %
Cost of Deposits 2.21  % 1.18  %
Cost of Debt 6.71  % 5.53  %
____________________________________
(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 $8.7 million and $0.7 million of accretion interest on loans for the six months ended June 30, 2024 and 2023, respectively.
(4) Interest expense on deposits and borrowing includes amortization of deposit premiums and amortization of borrowing fair value adjustment. There were $(0.8) million of amortization of deposit discounts and $0.2 million of amortization of deposit premium, and $(0.5) million and $(0.1) million of amortization of borrowing fair value adjustment for the six months ended June 30, 2024 and 2023, respectively.
13


Shore Bancshares, Inc.
Financial Highlights By Quarter (Unaudited)
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 6/30/2024 6/30/2024
2024 2024 2023 2023 2023 compared to compared to
(Dollars in thousands, except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2024 Q2 2023
PROFITABILITY FOR THE PERIOD
Taxable-equivalent net interest income $ 42,222 $ 41,214 $ 41,606 $ 45,702 $ 22,545 2.5  % 87.3  %
Less: Taxable-equivalent adjustment 82 79 81 80 51 3.8  60.8 
Net interest income 42,140 41,135 41,525 45,622 22,494 2.4  87.3 
Provision for credit losses 2,081 407 896 28,176 667 411.3  212.0 
Noninterest income 8,440 6,567 7,548 14,984 5,294 28.5  59.4 
Noninterest expense 33,499 36,698 33,670 47,158 21,608 (8.7) 55.0 
Income/(loss) before income taxes 15,000 10,597 14,507 (14,728) 5,513 41.6  172.1 
Income tax expense/ (benefit) 3,766 2,413 4,017 (4,991) 1,495 56.1  151.9 
Net income/ (loss) $ 11,234 $ 8,184 $ 10,490 $ (9,737) $ 4,018 37.3  179.6 
Return on average assets 0.77% 0.57% 0.72% (0.67)% 0.45% 20  bp 32  bp
Return on average assets excluding amortization of intangibles, fraud losses and merger related expenses - Non-GAAP (1), (2)
0.91 0.94 0.88 0.01 0.59 (3) 32 
Return on average equity 8.70 6.38 8.21 (7.25) 4.49 232  421 
Return on average tangible equity - Non-GAAP (1), (2)
12.85 13.39 12.88 1.74 7.16 (54) 569 
Net interest margin 3.11 3.08 3.09 3.35 2.68 43 
Efficiency ratio - GAAP 66.23 76.93 68.61 77.81 77.76 (1,070) (1,153)
Efficiency ratio - Non-GAAP (1)
61.05 62.37 61.99 47.19 71.75 (132) (1,070)
PER SHARE DATA
Basic and diluted net income/(loss) per common share $ 0.34 $ 0.25 $ 0.32 $ (0.29) $ 0.20 35.3  % 69.1  %
Dividends paid per common share 0.12 0.12 0.12 0.12 0.12 —  — 
Book value per common share at period end 15.74 15.51 15.41 15.14 18.24 1.5  (13.7)
Tangible book value per common share at period end - Non-GAAP (1)
12.54 12.24 12.06 11.70 14.83 2.5  (15.4)
Market value at period end 11.45 11.50 14.25 10.52 11.56 (0.4) (1.0)
Market range:
High 11.90 14.38 14.51 13.37 14.45 (17.3) (17.7)
Low 10.06 10.56 9.66 10.27 10.65 (4.7) (5.5)
____________________________________
(1)See the reconciliation table (Non-GAAP) that begins on page 23.
(2)This ratio excludes merger related expenses (Non-GAAP) on page 23.

14


Shore Bancshares, Inc.
Financial Highlights By Quarter (Unaudited) - Continued
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 6/30/2024 6/30/2024
2024 2024 2023 2023 2023 compared to compared to
(Dollars in thousands, except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2024 Q2 2023
AVERAGE BALANCE SHEET DATA
Loans $ 4,706,510 $ 4,655,183 $ 4,639,467 $ 4,562,748 $ 2,709,944 1.10  % 73.68  %
Investment securities 706,079 655,323 619,920 778,744 645,842 7.75  9.33 
Earning assets 5,459,961 5,387,782 5,339,833 5,404,572 3,369,183 1.34  62.06 
Assets 5,839,328 5,774,824 5,745,440 5,769,312 3,596,311 1.12  62.37 
Deposits 5,064,974 5,142,658 5,136,818 5,066,886 2,908,662 (1.51) 74.13 
Short-term and Long Term FHLB advances 143,769 4,000 1,141 70,348 261,797 3494.23  (45.08)
Subordinated Debt & TRUPS 72,680 72,418 72,155 71,907 43,185 0.36  68.30 
Stockholders' equity 519,478 515,976 507,040 533,114 363,225 0.68  43.02 
CREDIT QUALITY DATA
Net charge offs $ 886 $ 565 $ 500 $ 1,449 $ 50 56.81  % 1,672.00  %
Nonaccrual loans $ 14,837 $ 12,776 $ 12,784 $ 8,982 $ 3,481 16.13  % 326.23  %
Loans 90 days past due and still accruing 414 1,560 738 2,149 1,065 (73.46) (61.13)
Other real estate owned and repossessed property 3,126 2,024 179 179 179 54.45  1,646.37 
Total nonperforming assets $ 18,377 $ 16,360 $ 13,701 $ 11,310 $ 4,725 12.33  288.93 

15


Shore Bancshares, Inc.
Financial Highlights By Quarter (Unaudited) - Continued
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 6/30/2024 6/30/2024
2024 2024 2023 2023 2023 compared to compared to
(Dollars in thousands, except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2024 Q2 2023
CAPITAL AND CREDIT QUALITY RATIOS
Period-end equity to assets 8.92  % 8.84  % 8.50  % 8.79  % 9.97  % bp (105) bp
Period-end tangible equity to tangible assets - Non-GAAP (1)
7.23  7.11  6.78  6.93  8.26  12  (103)
Annualized net charge-offs to average loans 0.08  % 0.05  % 0.04  % 0.13  % 0.01  % bp bp
Allowance for credit losses as a percent of:
Period-end loans (3)
1.24  % 1.23  % 1.24  % 1.24  % 1.05  % bp 19  bp
Period-end loans (4)
1.24  1.23  1.24  1.24  1.05  19 
Nonaccrual loans 394.14  448.78  448.62  635.17  833.50  (5,464) (43,936)
Nonperforming assets 318.21  350.46  418.59  504.43  614.05  (3,225) (29,584)
As a percent of total loans:
Nonaccrual loans 0.32  % 0.27  % 0.28  % 0.19  % 0.13  % bp 19  bp
As a percent of total loans, other real estate owned, and repossessed property
Nonperforming assets 0.39  % 0.35  % 0.30  % 0.24  % 0.17  % bp 22  bp
As a percent of total assets:
Nonaccrual loans 0.25  % 0.22  % 0.21  % 0.16  % 0.10  % bp 15  bp
Nonperforming assets 0.31  0.28  0.23  0.20  0.13  18 
____________________________________
(1)See the reconciliation table (Non-GAAP) that begins on page 23.
(2)This ratio excludes merger related expenses (Non-GAAP) on page 23.
(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.
16


Shore Bancshares, Inc.
Consolidated Balance Sheets (Unaudited)
June 30, 2024 June 30, 2024
compared to compared to
(In thousands, except per share data) June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 December 31, 2023 June 30, 2023
ASSETS
Cash and due from banks $ 50,090  $ 43,079  $ 63,172  $ 68,097  $ 35,423  (20.7) % 41.4  %
Interest-bearing deposits with other banks 88,793  71,481  309,241  40,612  10,404  (71.3) 753.5 
Cash and cash equivalents 138,883  114,560  372,413  108,709  45,827  (62.7) 203.1 
Investment securities available for sale (at fair value) 131,594  179,496  110,521  79,143  78,069  19.1  68.6 
Investment securities held to maturity (net of allowance for credit losses of $108 (June 30, 2024), $116 (March 31, 2024), $94 (December 31,2023), $126 (September 30, 2023), and $163 (June 30, 2023)) at amortized cost) 499,431  503,822  513,188  523,051  536,970  (2.7) (7.0)
Equity securities, at fair value 5,699  5,681  5,703  5,434  1,245  (0.1) 357.8 
Restricted securities 21,725  17,863  17,900  13,361  21,208  21.4  2.4 
Loans held for sale, at fair value 27,829  13,767  8,782  14,725  6,845  216.9  306.6 
Loans held for investment 4,705,737  4,648,725  4,641,010  4,617,719  2,753,223  1.4  70.9 
Less: allowance for credit losses (58,478) (57,336) (57,351) (57,051) (29,014) (2.0) (101.6)
Loans, net 4,647,259  4,591,389  4,583,659  4,560,668  2,724,209  1.4  70.6 
Premises and equipment, net 82,176  83,084  82,386  81,149  51,036  (0.3) 61.0 
Goodwill 63,266  63,266  63,266  63,266  63,266  —  — 
Other intangible assets, net 42,945  45,515  48,090  50,685  4,671  (10.7) 819.4 
Other real estate owned, net 179  179  179  179  179  —  — 
Repossessed property, net 1,560  1,845  —  —  —  —  — 
Assets held for sale 1,387  —  —  —  —  —  — 
Mortgage servicing rights, at fair value 5,995  5,821  5,926  5,890  5,466  1.2  9.7 
Right of use assets, net 11,762  12,153  12,487  12,741  9,077  (5.8) 29.6 
Cash surrender value on life insurance 102,969  102,321  101,704  100,950  60,150  1.2  71.2 
Accrued interest receivable 19,641  19,541  19,217  15,683  8,778  2.2  123.8 
Deferred income taxes 36,078  38,978  40,707  45,346  10,879  (11.4) 231.6 
Other assets 23,639  26,423  24,790  24,392  13,756  (4.6) 71.8 
Total assets $ 5,864,017  $ 5,825,704  $ 6,010,918  $ 5,705,372  $ 3,641,631  (2.4) 61.0 

17


Shore Bancshares, Inc.
Consolidated Balance Sheets (Unaudited) - Continued
June 30, 2024 June 30, 2024
compared to compared to
(In thousands, except per share data) June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 December 31, 2023 June 30, 2023
LIABILITIES
Noninterest-bearing deposits $ 1,587,252  $ 1,200,680  $ 1,258,037  $ 1,211,401  $ 778,963  26.2  % 103.8 
Interest-bearing deposits 3,561,633  3,983,599  4,128,083  3,897,343  2,158,563  (13.7) 65.0 
Total deposits 5,148,885  5,184,279  5,386,120  5,108,744  2,937,526  (4.4) 75.3 
Advances from FHLB - short-term 31,000  —  —  —  276,000  —  (88.8)
Advances from FHLB - long-term 50,000  —  —  —  —  —  — 
Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS") 29,316  29,237  29,158  29,079  18,492  0.5  58.5 
Subordinated debt 43,504  43,322  43,139  42,956  24,735  0.8  75.9 
Total borrowings 153,820  72,559  72,297  72,035  319,227  112.8  (51.8)
Lease liabilities 12,189  12,552  12,857  13,082  9,392  (5.3) 29.8 
Accrued expenses and other liabilities 26,340  41,086  28,509  9,933  12,346  (5.3) 113.3 
Total liabilities 5,341,234  5,310,476  5,499,783  5,203,794  3,278,491  (3.0) 62.9 
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; authorized 50,000,000 shares 333  332  332  331  199  0.3  67.3 
Additional paid in capital 356,994  356,464  356,007  355,575  202,008  0.3  76.7 
Retained earnings 173,716  166,490  162,290  155,781  169,494  6.9  2.5 
Accumulated other comprehensive loss (8,260) (8,058) (7,494) (10,109) (8,561) (9.5) 3.5 
Total stockholders' equity 522,783  515,228  511,135  501,578  363,140  2.3  44.0 
— 
Total liabilities and stockholders' equity $ 5,864,017  $ 5,825,704  $ 6,010,918  $ 5,705,372  $ 3,641,631  (2.5) 61.0 
Period-end common shares outstanding 33,215 33,211  33,162  33,136  19,907  0.2  66.8 
Book value per common share $ 15.74  $ 15.51  $ 15.41  $ 15.14  $ 18.24  2.1  (13.7)
18


Shore Bancshares, Inc.
Consolidated Statements of Income By Quarter (Unaudited)
6/30/2024 6/30/2024
compared to compared to
(In thousands, except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2024 Q2 2023
INTEREST INCOME
Interest and fees on loans $ 67,292 $ 65,754 $ 65,914 $ 64,869 $ 32,729 2.3  % 105.6  %
Interest on investment securities:
Taxable 5,230 4,419 3,992 5,047 3,729 18.4  40.3 
Tax-exempt 6 6 6 27 5 —  20.0 
Interest on federal funds sold 92 —  — 
Interest on deposits with other banks 578 960 1,224 1,213 170 (39.8) 240.0 
Total interest income 73,106 71,139 71,136 71,248 36,633 2.8  99.6 
INTEREST EXPENSE
Interest on deposits 27,585 28,497 28,133 23,473 9,914 (3.2) 178.2 
Interest on short-term borrowings 1,584 56 16 692 3,449 2728.6  (54.1)
Interest on long-term borrowings 1,797 1,451 1,462 1,461 776 23.9  131.6 
Total interest expense 30,966 30,004 29,611 25,626 14,139 3.2  119.0 
NET INTEREST INCOME 42,140 41,135 41,525 45,622 22,494 2.4  87.3 
Provision for credit losses 2,081 407 896 28,176 667 411.3  212.0 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 40,059 40,728 40,629 17,446 21,827 (1.6) 83.5 
NONINTEREST INCOME
Service charges on deposit accounts 1,493 1,507 1,519 1,505 1,264 (0.9) 18.1 
Trust and investment fee income 896 734 844 1,933 399 22.1  124.6 
Loss on sales and calls of investment securities (2,166) —  — 
Interchange credits 1,717 1,587 1,633 1,557 1,311 8.2  31.0 
Mortgage-banking revenue 1,983 801 1,105 1,377 1,054 147.6  88.1 
Title Company revenue 165 78 139 89 186 111.5  (11.3)
Bargain purchase gain 8,816 —  — 
Other noninterest income 2,186 1,860 2,308 1,873 1,080 17.5  102.4 
Total noninterest income $ 8,440 $ 6,567 $ 7,548 $ 14,984 $ 5,294 28.5  59.4 

19


Shore Bancshares, Inc.
Consolidated Statements of Income By Quarter (Unaudited) - Continued
6/30/2024 6/30/2024
compared to compared to
(In thousands, except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2024 Q2 2023
NONINTEREST EXPENSE
Salaries and wages $ 13,307 $ 11,852 $ 12,823 $ 14,183 $ 8,955 12.3  % 48.6  %
Employee benefits 3,593 4,097 3,389 3,607 2,440 (12.3) 47.3 
Occupancy expense 2,432 2,416 2,328 2,245 1,599 0.7  52.1 
Furniture and equipment expense 900 904 790 750 477 (0.4) 88.7 
Data processing 2,978 2,867 2,762 2,485 1,739 3.9  71.3 
Directors' fees 359 295 426 295 185 21.7  94.1 
Amortization of intangible assets 2,569 2,576 2,595 2,634 435 (0.3) 490.6 
FDIC insurance premium expense 1,089 1,150 1,733 618 758 (5.3) 43.7 
Other real estate owned expenses, net 2 —  — 
Legal and professional fees 1,354 1,599 1,411 1,217 959 (15.3) 41.2 
Fraud losses (1)
62 4,502 503 262 47 (98.6) 31.9 
Merger related expenses 602 14,866 1,197 —  (100.0)
Other noninterest expenses 4,856 4,440 4,308 3,994 2,817 9.4  72.4 
Total noninterest expense 33,499 36,698 33,670 47,158 21,608 (8.7) 55.0 
Income/(loss) before income taxes 15,000 10,597 14,507 (14,728) 5,513 41.6  172.1 
Income tax expense/(benefit) 3,766 2,413 4,017 (4,991) 1,495 56.1  151.9 
NET INCOME/(LOSS) $ 11,234 $ 8,184 $ 10,490 $ (9,737) $ 4,018 37.3  179.6 
Weighted average shares outstanding - basic and diluted 33,215 33,337 33,322 33,246 19,903 (0.4) 66.9 
Basic and diluted net income/(loss) per common share $ 0.34 $ 0.25 $ 0.32 $ (0.29) $ 0.20 35.3  69.1 
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.
20


Shore Bancshares, Inc.
Consolidated Average Balance Sheets By Quarter (Unaudited)
Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 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 $ 1,388,168 $ 19,278 5.59  % $ 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  %
Commercial real estate 2,738,693 39,370 5.78  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 
Commercial 216,809 3,926 7.28  219,884 4,097 7.49  221,342 4,295 7.70  233,756 5,315 9.02  137,554 2,177 6.35 
Consumer 327,781 4,265 5.23  329,118 4,272 5.22  333,807 3,859 4.59  332,486 4,183 4.99  323,798 3,983 4.93 
State and political 2,331 30 5.18  1,473 16 4.37  1,290 13 4.00  929 10 4.27  900 8 3.57 
Credit Cards 8,378 201 9.65  7,457 167 9.01  6,320 166 10.42  6,164 149 9.59  — 
Other 24,350 302 4.99  13,015 183 5.66  17,464 277 6.29  16,137 201 4.94  8,741 116 5.32 
Total Loans 4,706,510 67,372 5.76  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 
Investment securities
Taxable 705,421 5,230 2.97  654,663 4,419 2.70  619,259 3,992 2.58  778,081 5,047 2.59  645,178 3,729 2.31 
Tax-exempt (1)
658 8 4.86  660 8 4.85  661 8 4.84  663 34 20.51  664 6 3.61 
Federal funds sold —  —  —  7,533 92 4.85  — 
Interest-bearing deposits 47,372 578 4.91  77,276 960 5.00  80,446 1,224 6.04  55,547 1,213 8.66  13,397 170 5.09 
Total earning assets 5,459,961 73,188 5.39  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 
Cash and due from banks 45,141 49,499 63,506 51,714 29,923
Other assets 391,854 395,023 399,409 359,726 225,935
Allowance for credit losses (57,628) (57,480) (57,308) (46,700) (28,730)
Total assets $ 5,839,328 $ 5,774,824 $ 5,745,440 $ 5,769,312 $ 3,596,311
21


Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 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 $ 711,138 $ 5,550 3.14  % $ 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  %
Money market and savings deposits 1,690,157 10,291 2.45  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 
Brokered deposits 7,753 94 4.88  20,465 251 4.93  92,840 1,347 5.76  98,649 1,225 4.93  — 
Certificates of deposit $100,000 or more 758,211 7,581 4.02  762,210 7,675 4.05  701,051 6,898 3.90  706,642 6,272 3.52  312,367 2,337 3.00 
Other time deposits 417,331 4,069 3.92  417,362 4,049 3.90  391,820 4,885 4.95  285,743 2,507 3.48  225,495 1,138 2.02 
Interest-bearing deposits (4)
3,584,590 27,585 3.10  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 
Advances from FHLB - short-term 113,549 1,584 5.61  4,000 56 5.63  1,141 16 5.56  70,348 692 3.90  261,797 3,449 5.28 
Advances from FHLB - long-term 30,220 346 4.60  —  —  —  — 
Subordinated debt and Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS") (4)
72,680 1,451 8.03  72,418 1,451 8.06  72,155 1,462 8.04  71,907 1,461 8.06  43,185 776 7.21 
Total interest-bearing liabilities 3,801,039 30,966 3.28  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 
Noninterest-bearing deposits 1,480,384 1,163,023 1,228,060 1,345,976 778,058
Accrued expenses and other liabilities 38,427 39,772 28,286 27,057 19,442
Stockholders' equity 519,478 515,976 507,040 533,114 363,225
Total liabilities and stockholders' equity $ 5,839,328 $ 5,774,824 $ 5,745,440 $ 5,769,312 $ 3,596,311
Net interest income $ 42,222 $ 41,214 $ 41,606 $ 45,702 $ 22,546
Net interest spread 2.11  % 2.34  % 2.34  % 2.61  % 2.04  %
Net interest margin 3.11  % 3.08  % 3.09  % 3.35  % 2.68  %
Cost of Funds 2.36  % 2.31  % 2.25  % 1.95  % 1.76  %
Cost of Deposits 2.19  % 2.23  % 2.17  % 1.84  % 1.37  %
Cost of Debt 6.28  % 7.93  % 8.00  % 6.00  % 5.56  %
____________________________________
(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 $4.5 million, $4.2 million, $4.8 million, $6.1 million and $0.3 million of accretion interest on loans for the three months ended June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 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, $(0.4) million, $(1.5) million, $(0.5) million and $41,000 of amortization of deposits premium, and $(0.2) million, $(0.2) million, $(0.2) million, $(0.2) million and $(47,000) of amortization of borrowing fair value adjustment for the three months ended June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, respectively.
22


Shore Bancshares, Inc.
Reconciliation of Generally Accepted Accounting Principles (GAAP) and Non-GAAP Measures (Unaudited)
YTD YTD
(In thousands, except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 6/30/2024 6/30/2023
The following reconciles return on average assets, average equity and return on average tangible equity (Note 1):
Net income (loss) $ 11,234  $ 8,184  $ 10,490  $ (9,737) $ 4,018  $ 19,418  $ 10,475 
Net income (loss) - annualized (A) $ 45,183  $ 32,916  $ 41,618  $ (38,632) $ 16,295  $ 39,049  $ 21,124 
Net income (loss) $ 11,234  $ 8,184  $ 10,490  $ (9,737) $ 4,018  $ 19,418  $ 10,475 
Add: Amortization of intangible assets, net of tax 1,924  1,989  1,876  1,741  317  3,903  637 
Add: Merger Expenses, net of tax —  —  435  9,828  872  —  1,373 
Add: Credit Card Fraud Losses, net of tax —  3,339  —  —  —  3,279  — 
Net income, excluding net amortization of intangible assets, merger related expenses and credit card fraud losses 13,158  13,512  12,801  1,832  5,207  26,600  12,485 
Net income, excluding net amortization of intangible assets, merger related expenses and credit card fraud losses - annualized (B) $ 52,921  $ 54,345  $ 50,787  $ 7,268  $ 21,121  $ 53,492  $ 25,177 
Return on average assets (GAAP) 0.77  % 0.57  % 0.72  % (0.67) % 0.45  % 0.67  % 0.59  %
Return on average assets excluding net amortization of intangible assets, merger related expenses and credit card fraud losses - (Non-GAAP) 0.91  % 0.94  % 0.88  % 0.01  % 0.59  % 0.92  % 0.71  %
Average assets $ 5,839,328  $ 5,774,824  $ 5,745,440  $ 5,769,312  $ 3,596,311  $ 5,807,076  $ 3,551,573 
Average stockholders' equity (C) $ 519,478  $ 515,976  $ 507,040  $ 533,114  $ 363,225  $ 517,727  $ 362,205 
Less: Average goodwill and core deposit intangible (107,594) (110,167) (112,752) (115,604) (68,172) (108,881) (68,388)
Average tangible equity (D) $ 411,884  $ 405,809  $ 394,288  $ 417,510  $ 295,053  $ 408,846  $ 293,817 
Return on average equity (GAAP) (A)/(C) 8.70  % 6.38  % 8.21  % (7.25) % 4.49  % 7.54  % 5.83  %
Return on average tangible equity (Non-GAAP) (B)/(D) 12.85  % 13.39  % 12.88  % 1.74  % 7.16  % 13.08  % 8.57  %
23


Shore Bancshares, Inc.
Reconciliation of Generally Accepted Accounting Principles (GAAP) and Non-GAAP Measures (Unaudited) - Continued
YTD YTD
(In thousands, except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 6/30/2024 6/30/2023
The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio (Note 2):
Noninterest expense (E) $ 33,499  $ 36,698  $ 33,670  $ 47,158  $ 21,608  $ 70,197  $ 42,501 
Less: Amortization of intangible assets (2,569) (2,576) (2,595) (2,634) (435) (5,145) (876)
Less: Merger Expenses —  —  (602) (14,866) (1,197) —  (1,888)
Less: Credit Card Fraud Losses —  (4,323) —  —  —  (4,323) — 
Adjusted noninterest expense (F) $ 30,930  $ 29,799  $ 30,473  $ 29,658  $ 19,976  $ 60,729  $ 39,737 
Net interest income (G) $ 42,140  $ 41,135  $ 41,525  $ 45,622  $ 22,494  $ 83,275  $ 48,158 
Add: Taxable-equivalent adjustment 82  79  81  80  51  161  92 
Taxable-equivalent net interest income (H) $ 42,222  $ 41,214  $ 41,606  $ 45,702  $ 22,545  $ 83,436  $ 48,250 
Noninterest income (I) $ 8,440  $ 6,567  $ 7,548  $ 14,984  $ 5,294  $ 15,007  $ 10,628 
Investment securities losses (gains) —  —  —  2,166  —  —  — 
Less: Bargain purchase gain —  —  —  (8,816) —  —  — 
Adjusted noninterest income (J) $ 8,440  $ 6,567  $ 7,548  $ 8,334  $ 5,294  $ 15,007  $ 10,628 
Efficiency ratio (GAAP) (E)/(G)+(I) 66.23  % 76.93  % 68.61  % 77.81  % 77.76  % 71.42  % 72.30  %
Efficiency ratio (Non-GAAP) (F)/(H)+(J) 61.05  % 62.37  % 61.99  % 54.89  % 71.76  % 61.69  % 67.49  %
Net operating expense to average assets (GAAP) 1.73  % 2.10  % 1.80  % 2.21  % 1.82  % 1.91  % 1.81  %
Net operating expense to average assets (Non-GAAP) 1.55  % 1.62  % 1.58  % 1.47  % 1.64  % 1.58  % 1.65  %
24


Shore Bancshares, Inc.
Reconciliation of Generally Accepted Accounting Principles (GAAP) and Non-GAAP Measures (Unaudited) - Continued
(In thousands, except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023
The following reconciles book value per common share and tangible book value per common share (Note 1):
Stockholders' equity (K) $ 522,783  $ 515,228  $ 511,135  $ 501,578  $ 363,140 
Less: Goodwill and core deposit intangible (106,211) (108,781) (111,356) (113,951) (67,937)
Tangible equity (L) $ 416,572  $ 406,447  $ 399,779  $ 387,627  $ 295,203 
Shares outstanding (M) 33,215 33,211 33,162 33,136 19,907
Book value per common share (GAAP) (K)/(M) $ 15.74 $ 15.51 $ 15.41 $ 15.14 $ 18.24
Tangible book value per common share (Non-GAAP) (L)/(M) $ 12.54 $ 12.24 $ 12.06 $ 11.70 $ 14.83
The following reconciles equity to assets and tangible equity to tangible assets (Note 1):
Stockholders' equity (N) $ 522,783 $ 515,228 $ 511,135 $ 501,578 $ 363,140
Less: Goodwill and core deposit intangible (106,211) (108,781) (111,356) (113,951) (67,937)
Tangible equity (O) $ 416,572 $ 406,447 $ 399,779 $ 387,627 $ 295,203
Assets (P) $ 5,864,017 $ 5,825,704 $ 6,010,918 $ 5,705,372 $ 3,641,631
Less: Goodwill and core deposit intangible (106,211) (108,781) (111,356) (113,951) (67,937)
Tangible assets (Q) $ 5,757,806 $ 5,716,923 $ 5,899,562 $ 5,591,421 $ 3,573,694
Period-end equity/assets (GAAP) (N)/(P) 8.92% 8.84% 8.50% 8.79% 9.97%
Period-end tangible equity/tangible assets (Non-GAAP) (O)/(Q) 7.23% 7.11% 6.78% 6.93% 8.26%
____________________________________
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.
25


Shore Bancshares, Inc.
Summary of Loan Portfolio (Unaudited)
Portfolio loans are summarized by loan type as follows:
(Dollars in thousands) June 30, 2024 % March 31, 2024 % December 31, 2023 % September 30, 2023 % June 30, 2023 %
Portfolio Loans by Loan Type
Construction $ 327,875  6.97  % $ 299,133  6.43  % $ 299,000  6.44  % $ 328,750  7.12  % $ 220,228  8.00  %
Residential real estate 1,539,590  32.72  % 1,515,134  32.59  % 1,490,438  32.11  % 1,439,464  31.17  % 938,151  34.07  %
Commercial real estate 2,287,497  48.60  % 2,272,867  48.90  % 2,286,154  49.27  % 2,283,521  49.45  % 1,130,346  41.06  %
Commercial 218,987  4.65  % 229,594  4.94  % 229,939  4.95  % 229,474  4.97  % 138,459  5.03  %
Consumer 324,480  6.90  % 325,076  6.99  % 328,896  7.09  % 330,411  7.16  % 326,039  11.84  %
Credit Cards 7,308  0.16  % 6,921  0.15  % 6,583  0.14  % 6,099  0.13  % —  —  %
Total loans 4,705,737  100.00  % 4,648,725  100.00  % 4,641,010  100.00  % 4,617,719  100.00  % 2,753,223  100.00  %
Less: Allowance for credit losses (58,478) (57,336) (57,351) (57,051) (29,014)
Total loans, net $ 4,647,259  $ 4,591,389  $ 4,583,659  $ 4,560,668  $ 2,724,209 

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Shore Bancshares, Inc.
Classified Assets and Nonperforming Loans (Unaudited)
Classified loans and nonperforming loans are summarized as follows:
(dollars in thousands) June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023
Classified Loans
Substandard $ 17,409  $ 13,403  $ 14,673  $ 10,888  $ 13,108 
Doubtful —  —  —  —  — 
Loss —  —  —  —  — 
Total Classified Loans $ 17,409  $ 13,403  $ 14,673  $ 10,888  $ 13,108 
Special Mention Loans 25,549  27,192  28,264  24,931  11,405 
Total Classified and Special Mention Loans $ 42,958  $ 40,595  $ 42,937  $ 35,819  $ 24,513 
Classified Loans $ 17,409  $ 13,403  $ 14,673  $ 10,888  $ 13,108 
Other Real Estate Owned 3,126  2,024  179  179  179 
Classified Securities —  —  —  —  — 
Total Classified Assets $ 20,535  $ 15,427  $ 14,852  $ 11,067  $ 13,287 
Non-accrual Loans $ 14,837  $ 12,776  $ 12,784  $ 8,982  $ 3,481 
90+ Days Delinquent Accruing 414  1,560  738  2,149  1,050 
Accruing BEFDs Loans ("BEFDs") —  —  —  —  — 
Other Real Estate Owned ("OREO") 3,126  2,024  179  179  179 
Total Nonperforming Loans $ 18,377  $ 16,360  $ 13,701  $ 11,310  $ 4,710 

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Shore Bancshares, Inc.
Summary of Deposits (Unaudited)
June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023
(dollars in thousands) Balance % Balance % Balance % Balance % Balance %
Noninterest-bearing demand $ 1,587,252  30.83  % $ 1,200,680  23.15  % $ 1,258,037  23.36  % $ 1,211,401  23.70  % $ 778,963  26.52  %
Interest-bearing:
Demand 658,512  12.79  % 1,101,954  21.26  % 1,165,546  21.64  % 1,210,051  23.69  % 694,221  23.63  %
Money market deposits 1,337,274  25.97  % 1,358,205  26.20  % 1,430,603  26.56  % 1,179,049  23.08  % 600,724  20.45  %
Savings 352,069  6.84  % 354,098  6.83  % 347,324  6.45  % 371,755  7.28  % 270,884  9.22  %
Certificates of deposit 1,213,778  23.57  % 1,169,342  22.56  % 1,184,610  21.99  % 1,136,488  22.25  % 592,734  20.18  %
Total interest-bearing 3,561,633  69.17  % 3,983,599  76.85  % 4,128,083  76.64  % 3,897,343  76.30  % 2,158,563  73.48  %
Total Deposits $ 5,148,885  100.00  % $ 5,184,279  100.00  % $ 5,386,120  100.00  % $ 5,108,744  100.00  % $ 2,937,526  100.00  %
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