Financial Performance - Net income for Q4 2024 was $13.3 million, or $0.40 per diluted share, up from $11.2 million, or $0.34 per diluted share in Q3 2024, and $10.5 million, or $0.31 per diluted share in Q4 2023[3]. - Net income for the fiscal year 2024 increased to $43.9 million, or $1.32 per diluted share, compared to $11.2 million, or $0.42 per diluted share for fiscal year 2023[3]. - Net income for Q4 2024 reached $13,282 thousand, representing an 18.71% increase from Q3 2024 and a 26.60% increase from Q4 2023, totaling $43,889 thousand for the year, a significant rise of 290.89% compared to 2023[37]. - Basic net income per common share for Q4 2024 was $0.40, up 17.65% from Q3 2024 and 25.00% from Q4 2023, with an annual total of $1.32, a 214.29% increase from 2023[37]. - Net income for Q4 2024 was $13,282 thousand, an 18.71% increase from Q3 2024 and a 26.62% increase from Q4 2023[46]. Interest Income and Expenses - Net interest income for Q4 2024 rose by $748 thousand to $44.0 million, driven by a $363.1 million increase in average interest-earning assets[6]. - Net interest income for Q4 2024 was $44.0 million, up from $43.3 million in Q3 2024 and $41.5 million in Q4 2023, reflecting a $1.7 million increase in interest income[21]. - Total interest income for Q4 2024 was $76,404 thousand, a 2.30% increase compared to Q3 2024 and a 7.41% increase compared to Q4 2023[45]. - Total interest expense for Q4 2024 was $32,393 thousand, a 3.08% increase from Q3 2024 and a 9.40% increase from Q4 2023[45]. - Interest on deposits increased to $30,363 thousand in Q4 2024, a 5.22% increase from Q3 2024 and a 7.93% increase from Q4 2023[45]. Asset and Liability Management - Total assets increased by $219.8 million, or 3.66%, to $6.23 billion at December 31, 2024, compared to $6.01 billion at December 31, 2023[8]. - Total liabilities increased by 3.45% to $5,689,697 thousand compared to $5,499,783 thousand in December 2023[44]. - Total deposits rose by $142.2 million, or 2.64%, to $5.53 billion at December 31, 2024, primarily due to a $304.8 million increase in noninterest-bearing deposits[17]. - Total deposits increased by 2.64% to $5,528,336 thousand from $5,386,120 thousand in December 2023[44]. - Cash and cash equivalents rose by 23.48% to $459,851 thousand from $372,413 thousand in December 2023[43]. Credit Quality and Allowance for Losses - Nonperforming assets increased to $24.8 million, or 0.40% of total assets, at December 31, 2024, compared to $15.8 million, or 0.27% of total assets, at September 30, 2024[16]. - The allowance for credit losses was $57.9 million at December 31, 2024, with the ACL as a percentage of loans decreasing to 1.21%[6]. - The provision for credit losses was $780 thousand in Q4 2024, down from $1.5 million in Q3 2024 and $896 thousand in Q4 2023, indicating an improved economic outlook[23]. - The provision for credit losses for the year ended December 31, 2024, was $4.7 million, significantly lower than $31.0 million in 2023, reflecting improved credit quality post-merger[30]. - Nonperforming assets rose to $24,796 thousand in Q4 2024, compared to $13,701 thousand in Q4 2023, reflecting an increase of 81.06%[71]. Efficiency and Operational Metrics - The efficiency ratio improved to 64.21% in Q4 2024 from 67.49% in Q3 2024, indicating enhanced operating leverage[6]. - The efficiency ratio improved to 64.21% in Q4 2024 from 68.61% in Q4 2023, indicating better cost management[60]. - Total noninterest expense for Q4 2024 was $33.9 million, a decrease of $171 thousand from Q3 2024, but an increase of $273 thousand from Q4 2023, primarily due to higher salaries and employee benefits[25]. - Total noninterest income for Q4 2024 was $8.9 million, an increase of $1.6 million from Q3 2024 and $1.3 million from Q4 2023, driven by higher mortgage banking revenue[24]. - Adjusted noninterest expense for Q4 2024 was $31,645,000, slightly up from $30,473,000 in Q4 2023, reflecting a year-over-year increase of 3.8%[60]. Capital and Equity - Total stockholders' equity increased by $29.9 million, or 5.86%, compared to December 31, 2023, with total equity to total assets ratio at 8.68%[20]. - The tangible common equity ratio improved to 7.17% at December 31, 2024, compared to 6.78% at December 31, 2023[9]. - Common Tier 1 Capital to Risk-Weighted Assets (RWA) was 9.44% in Q4 2024, an increase of 17 basis points from Q3 2024 and 75 basis points from Q4 2023[42]. - Total capital reached $591,228,000 in Q4 2024, compared to $539,572,000 in Q4 2023, marking an increase of 9.6%[66]. - Stockholders' equity rose to $538,184 thousand as of December 31, 2024, compared to $507,040 thousand in the previous year, reflecting a growth of 6.15%[49].

Core Insights - Shore Bancshares, Inc. reported a net income of $13.3 million for Q4 2024, an increase from $11.2 million in Q3 2024 and $10.5 million in Q4 2023, resulting in a fiscal year net income of $43.9 million for 2024 compared to $11.2 million in 2023 [1][11][27] Financial Performance - The net interest income for Q4 2024 was $44.0 million, up from $43.3 million in Q3 2024 and $41.5 million in Q4 2023, driven by an increase in interest income and a decrease in provisions for credit losses [19][27] - The net interest margin (NIM) decreased to 3.03% in Q4 2024 from 3.17% in Q3 2024, while the core NIM increased slightly to 2.85% [20][11] - Noninterest income rose to $8.9 million in Q4 2024, compared to $7.3 million in Q3 2024 and $7.5 million in Q4 2023, primarily due to increased mortgage banking revenue [22][11] Balance Sheet Highlights - Total assets increased to $6.23 billion as of December 31, 2024, a 3.66% increase from $6.01 billion a year earlier, mainly due to growth in loans and cash equivalents [4][43] - The allowance for credit losses (ACL) decreased to 1.21% of total loans as of December 31, 2024, down from 1.24% a year prior [4][21] - Total deposits increased by $142.2 million, or 2.64%, to $5.53 billion compared to the previous year, driven by growth in noninterest-bearing deposits [14][16] Capital Ratios - The tangible common equity ratio improved to 7.17% as of December 31, 2024, compared to 6.78% a year earlier [5][17] - The Tier 1 capital ratio was reported at 10.06% and total risk-based capital ratio at 12.18% as of December 31, 2024 [5][55] Loan Portfolio - The total loan portfolio stood at $4.77 billion as of December 31, 2024, with commercial real estate loans comprising 53.60% of the total [58] - Nonperforming assets increased to $24.8 million, or 0.40% of total assets, compared to $15.8 million, or 0.27%, in the previous quarter [13][59] Operational Efficiency - The efficiency ratio improved to 64.21% in Q4 2024 from 67.49% in Q3 2024, indicating better cost management [24][31] - The company continues to focus on controlling expenses to enhance operating leverage and improve efficiency [3][11]

Financial Performance - The Company's net income for Q3 2024 was $11.2 million or $0.34 per diluted common share, unchanged from Q2 2024, compared to a net loss of $9.7 million or $(0.29) per diluted common share in Q3 2023 due to the merger with TCFC [187]. - Net income for the first nine months of 2024 was $30.6 million or $0.92 per diluted common share, a significant increase from $738 thousand or $0.03 per diluted common share in the same period of 2023 [187]. - Net income for Q3 2024 was $11.2 million, or $0.34 diluted earnings per share, compared to a net loss of $9.7 million, or $(0.29) per share, in Q3 2023 [197]. - Net income for the nine months ended September 30, 2024, was $30.6 million, or diluted earnings per share of $0.92, compared to net income of $738 thousand, or diluted earnings per share of $0.03, for the same period in 2023 [215]. - For the nine months ended September 30, 2024, net income significantly rose to $30,607 thousand compared to $738 thousand for the same period in 2023 [13]. - The net income for the three months ended September 30, 2024, was $11.19 million, compared to a net loss of $9.74 million for the same period in 2023 [303]. Return on Assets and Equity - Return on Average Assets (ROAA) for Q3 2024 was reported at 0.77%, consistent with Q2 2024, while Non-GAAP ROAA, excluding certain expenses, was 0.90% compared to 0.91% in Q2 2024 [188]. - The return on average assets (ROAA) improved to 0.77% in Q3 2024 from (0.67)% in Q3 2023 [197]. - The company's ROAA, Non-GAAP ROAA, ROACE, and ROATCE for the nine months ended September 30, 2024, were 0.70%, 0.91%, 7.84%, and 12.83%, respectively, compared to 0.02%, 0.49%, 0.24%, and 6.27% for the same period in 2023 [215]. - The Company reported a Return on Average Common Equity (ROACE) of 8.41% for the three months ended September 30, 2024, up from -7.25% in the same period last year [303]. Interest Income and Expenses - Net interest income for Q3 2024 increased by $1.1 million to $43.3 million from $42.1 million in Q2 2024, with a net interest margin (NIM) increase of six basis points to 3.17% [189]. - Tax-equivalent net interest income for Q3 2024 was $43.3 million, down from $45.7 million in Q3 2023, primarily due to increased interest on deposits [199]. - Net interest income for the third quarter of 2024 was $43.3 million, down from $45.6 million in the third quarter of 2023, a decrease of 5.05% [208]. - The company's net interest margin (NIM) decreased to 3.17% in Q3 2024 from 3.35% in Q3 2023, a decline of 18 basis points [209]. - Net interest income increased by $32.8 million to $126.8 million for the nine months ended September 30, 2024, compared to $94.0 million for the same period in 2023, driven by a 42.3% increase in average loan balances [218]. - Total interest and dividend income for the nine months ended September 30, 2024, was $218.93 million, an increase of 53.16% from $142.94 million in 2023 [220]. Credit Losses and Allowances - The allowance for credit losses (ACL) was $58.7 million as of September 30, 2024, stable at 1.24% of loans, while nonperforming assets to total assets decreased to 0.27% [190]. - The provision for credit losses decreased significantly by 94.78% to $1.5 million in Q3 2024 from $28.2 million in Q3 2023 [198]. - Provision for credit losses decreased to $3.96 million in 2024 from $30.06 million in 2023, a reduction of 86.83% [217]. - The allowance for credit losses was $(58.5) million as of September 30, 2024, compared to $(46.7) million in the previous year [202]. - The allowance for credit losses (ACL) was $58.7 million, representing 1.24% of total portfolio loans as of September 30, 2024 [259]. Deposits and Funding - Total deposits rose to $5.23 billion at September 30, 2024, from $5.15 billion at June 30, 2024, with average noninterest-bearing deposits increasing to 30.55% of average funding [192]. - Total deposits decreased by $160.4 million, or 3.0%, to $5.23 billion at September 30, 2024, compared to December 31, 2023, primarily due to a decrease in demand deposits of $414.0 million [270]. - The Bank's use of wholesale funding increased slightly to $50.0 million, or 0.84% of total assets, as of September 30, 2024 [192]. - The Company's total interest-bearing deposits decreased by $473.8 million, or 11.48%, to $3.65 billion at September 30, 2024 [270]. - The average balance of noninterest-bearing deposits increased by $424.9 million, or 43.2%, from 25.9% of average funding for the nine months ended September 30, 2023, to 27.2% for the same period in 2024 [227]. Assets and Liabilities - Total assets increased to $5,810 million as of September 30, 2024, compared to $5,769 million in the previous year, reflecting a growth of 0.71% [202]. - Total interest-bearing liabilities were $3,663 million for Q3 2024, down from $3,863 million in Q3 2023, a decrease of 5.17% [204]. - Total interest-bearing liabilities increased to $3.84 billion for the nine months ended September 30, 2024, compared to $2.87 billion for the same period in 2023, reflecting a growth of 33.4% [224]. - Total assets decreased to $5.92 billion at September 30, 2024, a decline of $93.2 million, or 1.6%, from $6.01 billion at December 31, 2023 [234]. - Cash and cash equivalents totaled $183.6 million at September 30, 2024, down from $372.4 million at December 31, 2023 [235]. Noninterest Income and Expenses - Noninterest income for Q3 2024 was $7.3 million, down 51.37% from $15.0 million in Q3 2023 [198]. - Total noninterest income for Q3 2024 was $7.3 million, a decrease of $7.7 million from $15.0 million in Q3 2023, primarily due to lower trust and investment fee income [211]. - Total noninterest expense for Q3 2024 was $34.1 million, down $13.0 million from $47.2 million in Q3 2023, mainly due to one-time merger-related expenses incurred in 2023 [212]. - Total noninterest expense rose to $104.3 million for the nine months ended September 30, 2024, an increase of $14.6 million, or 16.3%, compared to the same period in 2023 [231]. Merger and Acquisition Impact - The merger with TCFC significantly impacted the company's financial performance, resulting in higher net interest income and a lower provision for credit losses [216]. - The Company completed the acquisition of The Community Financial Corporation (TCFC) on July 1, 2023, with a total transaction consideration of approximately $153.6 million, including the issuance of 13,201,693 shares valued at $11.56 each [25]. - The merger with TCFC aims to extend the branch network and secure dominant market share positions in Maryland, Virginia, and Delaware [25]. Cannabis Industry Exposure - Deposit and loan balances from cannabis industry customers were approximately $134.0 million (2.6% of total deposits) and $75.1 million (1.6% of total gross loans) as of September 30, 2024 [296]. - Interest income from cannabis-related customers for the nine months ended September 30, 2024, was approximately $2.9 million [296]. - The Company had not accrued any amount for potential legal actions related to its banking services for cannabis customers as of September 30, 2024 [295]. Risk Management and Asset Quality - Classified assets increased to $23.3 million or 0.39% of total assets, up from $14.9 million or 0.25% at December 31, 2023 [265]. - Nonperforming assets totaled $15.8 million or 0.27% of total assets, compared to $13.7 million or 0.23% at December 31, 2023 [266]. - The Bank's office CRE loan portfolio was $509.4 million, representing 10.8% of total loans of $4.73 billion as of September 30, 2024 [254]. - The average loan debt-service coverage ratio for the office CRE portfolio was 2.5x, with an average loan-to-value (LTV) of 50.0% [255]. - The bank has classified certain loans as doubtful, indicating that loss is not only possible but probable, necessitating nonaccrual status for these credits [57].

Financial Performance - Net income for Q3 2024 was $11.2 million or $0.34 per diluted share, unchanged from Q2 2024, compared to a net loss of $9.7 million or $(0.29) per diluted share in Q3 2023[2]. - Net income for Q3 2024 was $11,189, a slight decrease of 0.4% from Q2 2024, but a significant increase of 214.9% compared to Q3 2023[31]. - Basic and diluted net income per common share rose to $0.34, compared to a loss of $0.29 in the same quarter last year, reflecting a 214.3% increase[18]. - Return on average assets improved to 0.77% from (0.67)% year-over-year, an increase of 144 basis points[18]. - The company reported a net income excluding net amortization of intangible assets, merger-related expenses, and credit card fraud losses was $13,187 thousand for Q3 2024[48]. Interest Income and Margin - Net interest income increased by $1.1 million to $43.3 million in Q3 2024 from $42.1 million in Q2 2024, driven by modest loan growth and faster repricing of loans and securities[2]. - The average interest-earning asset yield increased by 23 basis points to 5.47% in Q3 2024, while the cost of funds rose by 43 basis points to 2.38%[9]. - Net interest income for the first nine months of 2024 was $126.5 million, an increase of $32.8 million, or 34.9%, compared to the same period in 2023[12]. - Net interest income after provision for credit losses rose by 139.6% to $41,793,000 compared to $17,446,000 in the prior year[22]. - Total interest income grew by 2.2% from Q2 2024 to Q3 2024, reaching $74,689 thousand, and increased by 4.8% compared to Q3 2023[41]. Asset and Liability Management - Total assets decreased by $93.2 million or 1.6% to $5.9 billion compared to December 31, 2023, primarily due to a decrease in cash and cash equivalents[5]. - Total deposits increased to $5.23 billion at September 30, 2024, up from $5.15 billion at June 30, 2024, with average noninterest-bearing deposits rising to $1.58 billion, representing 30.55% of average funding[3]. - Total liabilities decreased by 2.1% to $5,384,433,000 compared to December 31, 2023[20]. - Total stockholders' equity increased by $22.1 million or 4.3% compared to December 31, 2023, primarily due to current year earnings[7]. - The period-end equity to assets ratio improved to 9.01%, up from 8.79%, reflecting a 22 basis points increase[19]. Credit Quality - The allowance for credit losses (ACL) was $58.7 million, stable at 1.24% of loans, with nonperforming assets to total assets at 0.27%[3]. - The provision for credit losses was $1.5 million for Q3 2024, down from $28.2 million in Q3 2023, reflecting an improved CECL model post-merger[10]. - Nonperforming assets decreased to $15.8 million, or 0.27% of total assets, as of September 30, 2024, compared to $17.0 million, or 0.29% of total assets, as of June 30, 2024[10]. - Nonperforming assets as a percent of total loans increased to 0.33%, compared to 0.24% in the prior year[19]. - The allowance for credit losses as a percent of nonaccrual loans decreased significantly to 395.24% from 635.17%[19]. Operational Efficiency - The efficiency ratio for Q3 2024 was 67.49%, impacted by one-time expenses, while the non-GAAP efficiency ratio was 62.10%[3]. - The efficiency ratio improved to 67.49% from 77.81%, a decrease of 1,032 basis points[18]. - The net operating expense ratio for Q3 2024 was 1.84%, compared to 2.21% in Q3 2023, reflecting better cost management[10]. - Total noninterest expense for the first nine months of 2024 increased by $14.6 million, or 16.3%, largely due to credit card fraud losses and expanded operations[14]. - Total noninterest expense decreased by 27.7% to $34,114 thousand compared to $47,158 thousand for the same period last year[24]. Deposits and Funding - Demand deposits increased to $581,517 thousand with an interest yield of 3.74% for the three months ended September 30, 2024, compared to $1,056,956 thousand and 2.50% in the same period last year[28]. - Noninterest-bearing deposits reached $1,579,519 thousand, up from $1,345,976 thousand year-over-year[28]. - Interest on deposits increased by 22.9% to $28,856,000 for the three months ended September 30, 2024, compared to $23,473,000 in the same period last year[22]. - The average balance of interest-bearing deposits was $3,506,829 thousand in Q3 2024, with an interest expense of $28,856 thousand, yielding a cost of funds of 2.38%[47]. - Total classified and special mention loans decreased to $37,183 thousand from $42,958 thousand in June 30, 2024, a decline of 13.54%[56].

Financial Performance - Net income for the three months ended June 30, 2024, was $4,018 thousand, compared to $10,475 thousand for the same period in 2023, a decrease of 61.7%[6] - Net income for Q2 2024 reached $11,234,000, a significant increase of 179% compared to $4,018,000 in Q2 2023[8] - Comprehensive income for the first half of 2024 was $18,652,000, up from $10,935,000 in the same period of 2023, reflecting a 70% increase[8] - Basic and diluted net income per common share for the three months ended June 30, 2024, was $0.20, down from $0.53 for the same period in 2023, a decline of 62.3%[6] - The efficiency ratio improved to 66.2% in Q2 2024 from 77.8% in Q2 2023, reflecting better operating leverage and expense management[184] Income and Revenue - Net interest income after provision for credit losses for the six months ended June 30, 2024, was $80,787 thousand, compared to $46,278 thousand for the same period in 2023, an increase of 74.5%[6] - Noninterest income for the six months ended June 30, 2024, totaled $15,007 thousand, compared to $10,628 thousand for the same period in 2023, an increase of 41.5%[6] - Noninterest income for Q2 2024 was $8.4 million, a 59.43% increase from $5.3 million in Q2 2023, driven by higher mortgage-banking revenue[191] - Total interest and dividend income for the three months ended June 30, 2024, was $73,106,000, a 99.56% increase from $36,633,000 in the same period last year[193] Assets and Liabilities - Total assets decreased to $5,864,017 thousand as of June 30, 2024, down from $6,010,918 thousand at December 31, 2023, representing a decline of approximately 2.43%[5] - Total deposits decreased to $5,148,885 thousand as of June 30, 2024, from $5,386,120 thousand at December 31, 2023, a decline of about 4.41%[5] - Total stockholders' equity as of June 30, 2024, was $522,783,000, compared to $363,140,000 as of June 30, 2023, indicating a growth of 44%[11] - Total loans as of June 30, 2024, amounted to $4,705.7 million, an increase from $4,641.0 million as of December 31, 2023[47] Credit Losses and Provisions - The allowance for credit losses increased to $58,478 thousand as of June 30, 2024, from $57,351 thousand at December 31, 2023, reflecting a rise of 1.96%[5] - The provision for credit losses for the first half of 2024 was $2,488,000, compared to $1,880,000 in the same period in 2023, representing a 32% increase[13] - Provision for credit losses increased to $2.1 million in Q2 2024, up 211.99% from $667,000 in Q2 2023, reflecting a cautious approach to potential credit risks[191] Deposits and Funding - Noninterest-bearing demand deposits increased to $1,587,252 thousand, representing 30.83% of total deposits, up from 23.36% at the end of 2023[93] - Total interest-bearing deposits decreased to $3,561,633 thousand, accounting for 69.17% of total deposits, down from 76.64%[93] - The aggregate amount of certificates of deposit exceeding the FDIC insurance limit of $250,000 was $372.7 million as of June 30, 2024, compared to $354.6 million at December 31, 2023[94] Capital Ratios - As of June 30, 2024, the Company reported a Common Tier 1 Capital to Risk-Weighted Assets (RWA) ratio of 9.06%, exceeding the minimum requirement of 7.00%[117] - The Company's Total Capital to RWA ratio stood at 11.82% on June 30, 2024, surpassing the minimum requirement of 10.50%[117] - The Company's Tier 1 Capital to Average Assets (Leverage) ratio was 8.07% on June 30, 2024, above the minimum requirement of 4.00%[117] Loan Performance - Non-accrual loans totaled $14.8 million as of June 30, 2024, with $10.986 million having no allowance for credit loss and $3.851 million with an allowance[49] - The residential real estate loan portfolio increased to $1,539.6 million, representing 32.72% of total loans as of June 30, 2024, up from 32.10% as of December 31, 2023[47] - The total amount of pass loans across all categories was $1,244,438 thousand, an increase from $441,351 thousand, representing a growth of approximately 182%[61] Strategic Initiatives - The company plans to continue focusing on market expansion and new product development to drive future growth[5] - The company plans to expand its market presence through new product offerings and technology advancements in the upcoming fiscal year[64] - The company is focusing on strategic acquisitions to enhance its market position and drive growth[64] Regulatory Compliance - The company maintained compliance with all capital adequacy requirements as of June 30, 2024[114] - The Company expects no material impact from the adoption of ASU 2023-09 regarding income tax disclosures, effective after December 15, 2024[18] - The Company does not anticipate a material impact from the adoption of ASU 2023-07 on segment reporting disclosures, effective after December 15, 2023[19]

Core Points - Shore Bancshares, Inc. has declared a quarterly common stock dividend of $0.12 per share, payable on August 30, 2024, to stockholders of record on August 12, 2024 [1] Company Information - Shore Bancshares is a financial holding company based in Easton, Maryland, and is the largest independent bank holding company on Maryland's Eastern Shore [2] - The company is the parent of Shore United Bank and offers trust and wealth management services through Wye Financial Partners, a division of Shore United Bank [2]

Financial Performance - Net income for Q2 2024 was $11.2 million, or $0.34 per diluted share, compared to $8.2 million, or $0.25 per diluted share in Q1 2024, and $4.0 million, or $0.20 per diluted share in Q2 2023[4]. - Net income rose by 179.6% to $11,234,000 for the three months ended June 30, 2024, up from $4,018,000 in the prior year[25]. - Basic and diluted net income per common share increased by 69.1% to $0.34 for the three months ended June 30, 2024, compared to $0.20 in 2023[25]. - Year-to-date net income as of June 30, 2024, reached $19,418,000, compared to $10,475,000 for the same period in 2023, reflecting an increase of 85.5%[89]. Interest Income and Margin - Net interest income increased to $42.1 million in Q2 2024, up from $41.1 million in Q1 2024 and $22.5 million in Q2 2023, representing a year-over-year increase of 87.3%[13]. - The net interest margin (NIM) expanded to 3.11% in Q2 2024 from 3.08% in Q1 2024, and from 2.68% in Q2 2023[5]. - Interest income from loans increased by 105.6% year-over-year, reaching $67,292 thousand for the three months ended June 30, 2024, compared to $32,729 thousand for the same period in 2023[24]. - Total interest income for Q2 2024 was $73,106,000, an increase of 2.8% compared to Q1 2024 and 99.6% compared to Q2 2023[84]. Deposits and Loans - Total deposits decreased by $237.2 million, or 4.4%, to $5.1 billion at June 30, 2024, primarily due to a decrease in demand deposits[11]. - Average interest-bearing deposits decreased by $395.0 million, or 9.9%, while noninterest-bearing deposits increased by $317.4 million, or 27.3%[13]. - Total loans for the three months ended June 30, 2024, amounted to $4,706,510,000, with interest income of $67,372,000, yielding a rate of 5.76%[50]. - Loans held for investment increased by 1.4% from $4,641,010 thousand on December 31, 2023, to $4,705,737 thousand on June 30, 2024, and by 70.9% compared to $2,753,223 thousand on June 30, 2023[23]. Noninterest Income and Expenses - Noninterest income for the first six months of 2024 increased by $4.4 million, or 41.2%, compared to the same period in 2023[16]. - Total noninterest income for Q2 2024 was $8.4 million, an increase of $1.9 million from Q1 2024 and an increase of $3.1 million from Q2 2023[37]. - Total noninterest expense for the first six months of 2024 increased by $27.7 million, or 65.2%, compared to the same period in 2023, largely due to the merger[16]. - Total noninterest expense for Q2 2024 was $33.5 million, a decrease of $3.2 million from Q1 2024 but an increase of $11.9 million from Q2 2023[37]. Credit Losses and Asset Quality - The provision for credit losses was $2.1 million for Q2 2024, compared to $0.4 million in Q1 2024 and $0.7 million in Q2 2023, reflecting a significant increase due to new loan growth[13]. - The allowance for credit losses increased by 212.0% to $2,081 thousand for the three months ended June 30, 2024, compared to $667 thousand for the same period in 2023[24]. - Nonperforming assets increased to $18.4 million, or 0.31% of total assets, as of June 30, 2024, up from $16.4 million, or 0.28% of total assets, as of March 31, 2024[37]. - The annualized net charge-offs to average loans ratio was 0.08%, up from 0.01% in the previous year, indicating a 7 basis points increase[45]. Capital Ratios and Equity - The Tier 1 Capital Ratio and Total Risk-Based Capital Ratio increased by 14 basis points to 9.67% and 11.82%, respectively, as of June 30, 2024[5]. - Total stockholders' equity increased by $11.6 million or 2.3% compared to December 31, 2023, primarily due to current year earnings[35]. - Book value per common share increased by 2.1% from $15.41 on December 31, 2023, to $15.74 on June 30, 2024, but decreased by 13.7% compared to $18.24 on June 30, 2023[23]. - Period-end equity to assets increased to 8.92% from 8.84% in Q1 2024, but decreased from 9.97% in Q2 2023[79]. Efficiency and Management - The efficiency ratio improved to 66.2% in Q2 2024 from 76.9% in Q1 2024 and 77.8% in Q2 2023[33]. - The company anticipates ongoing expense management and technology investments to improve operating leverage over time[33]. - The company reported a significant increase in fraud losses, which rose to $62,000 for the three months ended June 30, 2024, compared to $47,000 in the same period of 2023, marking a 31.9% increase[25]. Asset Growth and Composition - Total assets decreased by 2.4% from $6,010,918 thousand on December 31, 2023, to $5,864,017 thousand on June 30, 2024, while increasing by 61.0% compared to $3,641,631 thousand on June 30, 2023[23]. - Total assets as of June 30, 2024, were $5,839,328,000, compared to $3,596,311,000 in the previous year[50]. - Cash and due from banks increased by 16.6% to $50,090 thousand compared to $43,079 thousand in Q1 2024, and up 41.4% from $35,423 thousand in Q2 2023[81].

Financial Performance - Net income for Q1 2024 was $8,184 thousand, up 26.69% from $6,457 thousand in Q1 2023[15]. - Net interest income for the three months ended March 31, 2024, was $41,135 thousand, an increase of 60.06% compared to $25,664 thousand for the same period in 2023[13]. - Noninterest income increased to $6,567 thousand for Q1 2024, compared to $5,334 thousand in Q1 2023, reflecting a growth of 23.14%[13]. - The efficiency ratio increased to 76.93% in Q1 2024 from 67.40% in Q1 2023, indicating higher operational expenses relative to revenues[207]. - The return on average assets ("ROAA") decreased to 0.57% in Q1 2024 from 0.75% in Q1 2023[207]. - The net interest margin ("NIM") remained stable at 3.08% for Q1 2024, compared to 3.18% for Q1 2023[207]. Asset and Deposit Changes - Total assets decreased to $5,825,704 thousand as of March 31, 2024, down from $6,010,918 thousand at December 31, 2023, representing a decline of approximately 3.08%[11]. - Total deposits decreased to $5,184,279 thousand as of March 31, 2024, down from $5,386,120 thousand at December 31, 2023, a reduction of approximately 3.74%[11]. - The company reported a decrease in noninterest-bearing deposits by $57,357,000 and interest-bearing deposits by $144,851,000, indicating a tightening of liquidity[23]. - Cash and cash equivalents at the end of the period were $114,560,000, down from $372,413,000 at the beginning of the period, reflecting a net decrease of $257,853,000[23]. Credit Quality and Losses - The provision for credit losses was $407 thousand for Q1 2024, a decrease from $1,213 thousand in Q1 2023, indicating improved credit quality[13]. - The total allowance for credit losses (ACL) was $57,336 million, with net charge-offs of $654 million for the three months ended March 31, 2024[91]. - Gross charge-offs for the three months ended March 31, 2024, totaled $538 thousand, with specific charge-offs of $227 thousand for prior loans, $58 thousand for 2020 loans, and $238 thousand for 2022 loans[81]. - Non-accrual loans totaled $12.776 million as of March 31, 2024, compared to $12.784 million as of December 31, 2023[70]. Acquisition and Market Presence - The acquisition of TCFC was completed for approximately $153.6 million, enhancing the company's market presence in Maryland, Virginia, and Delaware[36]. - The total purchase price for the acquisition of TCFC was $153.592 million, which included the fair value of common shares issued, cash consideration, and the fair value of converted restricted stock units[40]. - The identifiable assets acquired from TCFC totaled $2.412833 billion, with loans netting $1.765255 billion and total securities amounting to $454.468 million[40]. Capital and Regulatory Compliance - The Common Equity Tier 1 capital ratio as of March 31, 2024, is 8.91%, exceeding the regulatory minimum of 7.00%[129]. - The Tier 1 capital ratio is reported at 9.53% as of March 31, 2024, above the regulatory minimum of 8.50%[129]. - The total risk-based capital ratio stands at 11.68% as of March 31, 2024, surpassing the minimum requirement of 10.50%[129]. - The Company maintained compliance with all capital adequacy requirements as of March 31, 2024, with no conditions affecting its classification as well capitalized[126]. Operational Changes - The company plans to close two branches, with the Onley branch scheduled for closure on or about July 17, 2024, and the Westgate branch on or about September 30, 2024[180]. - The total amortization expense for the three months ended March 31, 2024, was $2.6 million, significantly higher than $0.4 million for the same period in 2023[102]. - The company will continue to review doubtful assets quarterly, indicating a proactive approach to managing potential losses[77]. Loan Portfolio and Risk Management - The company reported a total loan portfolio of $4.648725 billion as of March 31, 2024, with an allowance for credit losses on loans of $57.336 million[67]. - The residential real estate loans accounted for 32.59% of total loans, increasing from 32.11% as of December 31, 2023[67]. - The total amount of residential real estate loans reached $1,515,134 thousand, with pass loans constituting $1,506,161 thousand[81]. - The company has a strong focus on maintaining high credit quality in its mortgage-backed securities, which are guaranteed by U.S. government entities[60].

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 four ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________ FORM 10-K þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Year Ended December 31, 2023 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-22345 SHORE BANCSHARES, INC. (Exact name of registrant as specified in its charter) Maryland 52-1974638 (State or other jurisdictio ...