Core Viewpoint - Shore Bancshares Inc (SHBI) is showing potential for a bullish breakout due to a recent "golden cross" in its moving averages, indicating a key level of support and positive technical signals [1]. Technical Analysis - SHBI's 50-day simple moving average has crossed above its 200-day simple moving average, forming a "golden cross," which is a significant bullish indicator [1]. - The golden cross pattern typically involves three stages: a downtrend followed by a crossover of the shorter moving average over the longer one, and finally, an upward price movement [2]. Performance Metrics - Over the past four weeks, SHBI shares have increased by 10% [3]. - The company currently holds a 1 (Strong Buy) rating on the Zacks Rank, suggesting strong potential for further gains [3]. Earnings Outlook - There has been one upward revision in earnings estimates for SHBI in the last 60 days, with no downward revisions, indicating a positive earnings outlook for the current quarter [3]. - The Zacks Consensus Estimate for SHBI has also increased, reinforcing the bullish sentiment around the stock [4].

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Shore Bancshares (SHBI) - Shore Bancshares currently holds a Momentum Style Score of B, indicating a positive momentum outlook [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting strong potential for outperformance in the market [3] Performance Metrics - SHBI shares have increased by 6.63% over the past week, outperforming the Zacks Banks - Northeast industry, which rose by 4.31% [5] - Over the past month, SHBI's price change is 12.53%, compared to the industry's 7.77% [5] - In the last quarter, SHBI shares have risen by 30.83%, and over the past year, they have gained 44.22%, while the S&P 500 has only increased by 10.24% and 14.41%, respectively [6] Trading Volume - The average 20-day trading volume for SHBI is 191,516 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, one earnings estimate for SHBI has increased, while none have decreased, raising the consensus estimate from $1.62 to $1.67 [9] - For the next fiscal year, one estimate has also moved upwards with no downward revisions [9] Conclusion - Considering the positive momentum indicators and earnings outlook, SHBI is positioned as a 1 (Strong Buy) stock with a Momentum Score of B, making it a potential candidate for near-term investment [11]

Core Viewpoint - Shore Bancshares (SHBI) is identified as a strong value stock, currently holding a Zacks Rank of 2 (Buy) and an A for Value, indicating it is likely undervalued in the market [4][8]. Valuation Metrics - SHBI has a P/E ratio of 8.82, which is lower than the industry average of 9.63, suggesting it may be undervalued compared to its peers [4]. - The company has a P/B ratio of 0.91, compared to the industry's average P/B of 1.00, indicating a favorable valuation relative to its book value [5]. - SHBI's P/S ratio stands at 1.53, which is also lower than the industry average of 1.74, reinforcing the notion of undervaluation based on sales [6]. - The P/CF ratio for SHBI is 10.03, significantly lower than the industry's average of 15.75, highlighting its potential as an undervalued stock based on cash flow [7]. Investment Outlook - The combination of SHBI's strong earnings outlook and its favorable valuation metrics positions it as an attractive investment opportunity for value investors [8].

Core Viewpoint - Shore Bancshares (SHBI) is identified as a strong value stock with a Zacks Rank of 1 (Strong Buy) and a Value grade of A, indicating it is likely undervalued in the current market [4][8]. Valuation Metrics - SHBI has a Forward P/E ratio of 8.39, which is lower than the industry average of 9.35. The Forward P/E has fluctuated between 6.86 and 12.57 over the past 52 weeks, with a median of 9.79 [4]. - The P/B ratio for SHBI is 0.87, compared to the industry average of 0.95. Over the last 12 months, SHBI's P/B has ranged from 0.68 to 1.09, with a median of 0.88 [5]. - SHBI's P/S ratio stands at 1.44, which is lower than the industry's average of 1.76, indicating a favorable valuation based on sales [6]. - The P/CF ratio for SHBI is 9.50, significantly lower than the industry average of 15.12. This ratio has varied from 7.80 to 13.94 over the past year, with a median of 10.77 [7]. Investment Outlook - The combination of SHBI's attractive valuation metrics and strong earnings outlook suggests that it is an impressive value stock at present [8].

Group 1: Company Highlights - Carvana (CVNA) is a leading e-commerce platform for buying and selling used cars, with a Zacks Consensus Estimate for current year earnings increasing by 33.3% over the last 60 days [1] - PCB Bancorp (PCB) is a bank holding company offering various financial services, with a Zacks Consensus Estimate for current year earnings increasing by 14.2% over the last 60 days [2] - Pan American Silver (PAAS) focuses exclusively on silver mining, with a Zacks Consensus Estimate for current year earnings increasing by 10.7% over the last 60 days [3] - Howmet Aerospace (HWM) provides engineered solutions for the transportation and aerospace industries, with a Zacks Consensus Estimate for current year earnings increasing by 7.1% over the last 60 days [3] - Shore Bancshares (SHBI) is engaged in banking services, with a Zacks Consensus Estimate for current year earnings increasing by 5% over the last 60 days [4] Group 2: Market Insights - The Zacks Rank 1 (Strong Buy) List includes stocks that have shown significant increases in earnings estimates, indicating potential investment opportunities [5]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________ FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission File Number: 0-22345 SHORE BANCSHARES, INC. (Exact name ...

Core Insights - Shore Bancshares (SHBI) reported revenue of $53.03 million for the quarter ended March 2025, reflecting an 11% increase year-over-year and a surprise of +4.74% over the Zacks Consensus Estimate of $50.63 million [1] - The earnings per share (EPS) for the quarter was $0.45, compared to $0.41 in the same quarter last year, resulting in an EPS surprise of +28.57% against the consensus estimate of $0.35 [1] Financial Performance Metrics - Net Interest Margin was reported at 3.2%, exceeding the average estimate of 3.1% from two analysts [4] - The Efficiency Ratio stood at 63.6%, better than the average estimate of 65.8% from the same two analysts [4] - Total Non-Interest Income was $7 million, slightly below the average estimate of $7.26 million from the two analysts [4] Stock Performance - Over the past month, shares of Shore Bancshares have returned -3%, compared to a -0.8% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Company Performance - Shore Bancshares reported quarterly earnings of $0.45 per share, exceeding the Zacks Consensus Estimate of $0.35 per share, and up from $0.41 per share a year ago, representing an earnings surprise of 28.57% [1] - The company posted revenues of $53.03 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 4.74%, compared to $47.78 million in the same quarter last year [2] - Over the last four quarters, Shore Bancshares has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance and Outlook - Shore Bancshares shares have declined approximately 17.1% since the beginning of the year, while the S&P 500 has decreased by 6% [3] - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $52.16 million, and for the current fiscal year, it is $1.56 on revenues of $212.21 million [7] - The estimate revisions trend for Shore Bancshares is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Banks - Northeast industry, to which Shore Bancshares belongs, is currently in the top 21% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[Financial Performance Overview](index=1&type=section&id=Shore%20Bancshares%2C%20Inc.%20Reports%202025%20First%20Quarter%20Results) The company reported strong Q1 2025 results with significant improvements in net income, profitability metrics, and asset quality [Q1 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) The company reported strong Q1 2025 results with net income of $13.8 million ($0.41/share), up from both the prior quarter and the prior year, driven by record net interest income and stable expenses Key Financial Metrics | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Income | $13.8 million | $13.3 million | $8.2 million | | Diluted EPS | $0.41 | $0.40 | $0.25 | | ROAA | 0.91% | 0.86% | 0.57% | | Net Interest Income | $46.0 million | $44.0 million | $41.1 million | | Net Interest Margin | 3.24% | 3.03% | 3.08% | - Asset quality remained stable, with nonperforming assets to total assets decreasing to **0.31%** from 0.40% in Q4 2024, and the efficiency ratio improved to **63.64%** from 64.21% in the previous quarter[6](index=6&type=chunk) [CEO's Statement](index=1&type=section&id=CEO%20Statement) The CEO highlighted a good start to 2025, attributing the performance to record net interest income and stable expenses, with expectations for lower funding costs and increasing asset yields - Funding costs are expected to decline further as higher-cost seasonal municipal deposits roll off, while asset yields are expected to continue increasing[4](index=4&type=chunk) - Charlie Cullum was appointed as the new Chief Financial Officer, succeeding the retiring Todd Capitani[5](index=5&type=chunk) [Financial Condition Analysis](index=3&type=section&id=Balance%20Sheet%20Review) The company's financial condition at Q1 2025 shows a slight decrease in total assets, an increase in stockholders' equity, stable loan portfolio, and improved asset quality [Balance Sheet Overview](index=3&type=section&id=Balance%20Sheet%20Overview) Total assets decreased by 0.9% to $6.18 billion at the end of Q1 2025 compared to Q4 2024, primarily due to a decrease in cash and cash equivalents, while total stockholders' equity increased by 2.1% to $552.5 million Balance Sheet Summary | Balance Sheet Item | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $6.18 billion | $6.23 billion | -0.9% | | Total Loans, net | $4.72 billion | $4.71 billion | +0.1% | | Total Deposits | $5.46 billion | $5.53 billion | -1.2% | | Total Stockholders' Equity | $552.5 million | $541.1 million | +2.1% | [Loan Portfolio Analysis](index=3&type=section&id=Loan%20Portfolio%20Analysis) The total loan portfolio remained stable at $4.78 billion, with Commercial Real Estate (CRE) loans constituting the largest portion at 53.2% ($2.54 billion) Loan Portfolio Composition | Loan Type | Balance (March 31, 2025) | % of Total | | :--- | :--- | :--- | | Commercial real estate | $2,544.1 million | 53.2% | | Residential real estate | $1,325.9 million | 27.8% | | Construction | $366.2 million | 7.7% | | Commercial | $234.5 million | 4.9% | | Consumer & Credit Cards | $306.8 million | 6.4% | | **Total Loans** | **$4,777.5 million** | **100.0%** | [Commercial Real Estate (CRE) Portfolio](index=3&type=section&id=Commercial%20Real%20Estate%20(CRE)%20Portfolio) The CRE portfolio totaled $2.54 billion, with the office CRE sub-portfolio at $501.5 million (10.5% of total loans) being well-diversified with a low average Loan-to-Value (LTV) of 49.00% - The office CRE portfolio of $501.5 million has an average LTV of **49.00%** and an average debt-service coverage ratio of **1.8x**[13](index=13&type=chunk) Office CRE LTV Distribution | Office CRE LTV Range | Loan Balance | % of Office CRE | | :--- | :--- | :--- | | <= 50% | $180.1 M | 35.9% | | 50%-60% | $114.9 M | 22.9% | | 60%-70% | $120.3 M | 24.0% | | 70%-80% | $75.6 M | 15.1% | | > 80% | $10.6 M | 2.1% | - Of the office CRE portfolio, **74.3%** was secured by properties in rural or suburban areas, and **97.1%** was secured by properties with five stories or less[16](index=16&type=chunk) [Asset Quality](index=5&type=section&id=Asset%20Quality) Asset quality improved quarter-over-quarter, with nonperforming assets decreasing to $18.9 million, or 0.31% of total assets, down from 0.40% in Q4 2024 Asset Quality Metrics | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Nonperforming Assets | $18.9 million | $24.8 million | $16.4 million | | Nonperforming Assets / Total Assets | 0.31% | 0.40% | 0.28% | | ACL / Total Loans | 1.21% | 1.21% | 1.23% | - The **$5.9 million** decrease in nonperforming assets from Q4 2024 was primarily due to a commercial real estate nonaccrual loan and a decrease in repossessed marine assets[17](index=17&type=chunk) [Deposits, Funding, and Liquidity](index=5&type=section&id=Deposits%2C%20Funding%2C%20and%20Liquidity) Total deposits decreased by 1.2% to $5.46 billion from the previous quarter, mainly due to seasonal run-offs of municipal deposits, while the bank maintains a strong liquidity position - Total deposits decreased by **$68.0 million**, driven by a **$125.6 million** decrease in interest-bearing checking, partially offset by a **$60.8 million** increase in time deposits, primarily due to seasonal municipal run-offs[18](index=18&type=chunk) - The Bank's uninsured deposits were **$940.6 million** (17.2% of total deposits), or **$775.6 million** (14.2%) excluding deposits secured with pledged collateral[20](index=20&type=chunk) - At March 31, 2025, the Bank had approximately **$1.35 billion** of available liquidity, including cash, secured borrowing capacity, and unsecured lines of credit[20](index=20&type=chunk) [Capital Adequacy](index=3&type=section&id=Capital%20Adequacy) Capital levels strengthened during the quarter, with the Tangible Common Equity to Tangible Assets ratio improving to 7.46% from 7.17% in Q4 2024, and all regulatory capital ratios remaining well above required minimums Company Capital Ratios | Capital Ratio (Company) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Tangible Common Equity Ratio | 7.46% | 7.17% | | Tier 1 Risk-Based Capital | 10.37% | 10.06% | | Total Risk-Based Capital | 12.52% | 12.18% | [Results of Operations](index=6&type=section&id=Review%20of%20Quarterly%20Financial%20Results) The company's Q1 2025 operations show record net interest income and margin expansion, an increase in provision for credit losses, and a decrease in noninterest income and expense [Net Interest Income and Margin](index=6&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income (NII) for Q1 2025 increased by 4.6% quarter-over-quarter to a record $46.0 million, with the net interest margin (NIM) expanding significantly by 21 basis points to 3.24% Net Interest Performance | Metric | Q1 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $46.0 million | $44.0 million | +$2.0 million | | Net Interest Margin | 3.24% | 3.03% | +21 bps | | Core NIM | 3.02% | 2.85% | +17 bps | - The improvement in NIM was driven by a **17 bps** increase in loan yields (excluding accretion) and a **10 bps** decrease in funding costs compared to Q4 2024[6](index=6&type=chunk)[23](index=23&type=chunk) [Provision for Credit Losses](index=6&type=section&id=Provision%20for%20credit%20losses) The provision for credit losses was $1.0 million for Q1 2025, up from $0.8 million in Q4 2024, attributed to higher reserves for construction loan portfolio growth, partially offset by an improved economic outlook Provision and Charge-offs | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Provision for Credit Losses | $1.0 million | $0.78 million | $0.41 million | | Net Charge-offs | $0.55 million | $1.3 million | $0.57 million | [Noninterest Income](index=6&type=section&id=Noninterest%20income) Total noninterest income was $7.0 million, a decrease of $1.9 million from Q4 2024, primarily due to the absence of a prior quarter asset sale gain and a decrease in mortgage banking revenue Noninterest Income Summary | Metric | Q1 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | Total Noninterest Income | $7.0 million | $8.9 million | -$1.9 million | | Mortgage Banking Revenue | $0.27 million | $0.81 million | -$0.53 million | [Noninterest Expense](index=6&type=section&id=Noninterest%20expense) Total noninterest expense decreased slightly by 0.6% to $33.7 million compared to Q4 2024, mainly due to lower salary and benefit costs, leading to an improved efficiency ratio of 63.64% Noninterest Expense and Efficiency | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Total Noninterest Expense | $33.7 million | $33.9 million | $36.7 million | | Efficiency Ratio (GAAP) | 63.64% | 64.21% | 76.93% | | Efficiency Ratio (Non-GAAP) | 59.76% | 60.28% | 62.37% | [Detailed Financial Tables and Reconciliations](index=8&type=section&id=Financial%20Highlights%20By%20Quarter%20and%20Year%20(Unaudited)) This section provides comprehensive unaudited financial statements, detailed loan portfolio and asset quality data, and reconciliations of GAAP to non-GAAP financial measures [Consolidated Financial Statements](index=12&type=section&id=Consolidated%20Financial%20Statements) The report provides unaudited consolidated balance sheets, statements of income, and average balance sheets with yield/rate analysis for the five most recent quarters, offering a detailed view of the company's financial position and performance trends - Detailed Consolidated Balance Sheets are presented for the five quarters ending March 31, 2025[38](index=38&type=chunk)[39](index=39&type=chunk) - Detailed Consolidated Statements of Income are presented for the five quarters ending March 31, 2025[40](index=40&type=chunk)[41](index=41&type=chunk) - Detailed Consolidated Average Balance Sheets with yield/rate analysis are presented for Q1 2025, Q1 2024, and Q4 2024[43](index=43&type=chunk)[44](index=44&type=chunk) [Loan Portfolio and Asset Quality Details](index=23&type=section&id=Loan%20Portfolio%20and%20Asset%20Quality%20Details) Detailed tables provide a breakdown of the loan portfolio by type and a summary of classified and nonperforming assets over the last five quarters, showing trends in portfolio composition and credit quality - A five-quarter summary of the loan portfolio composition by loan type is provided[59](index=59&type=chunk) - A five-quarter summary of classified assets (substandard, special mention) and nonperforming assets is provided[60](index=60&type=chunk) [Reconciliation of GAAP and Non-GAAP Measures](index=18&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Measures%20(Unaudited)) The company provides detailed reconciliations for its non-GAAP financial measures, including return on average tangible equity, non-GAAP efficiency ratio, tangible book value per share, and tangible equity to tangible assets ratio, to provide a clearer view of core operating performance - Reconciliations are provided for key non-GAAP metrics such as ROAA, ROATE, efficiency ratio, and tangible book value per share[48](index=48&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - Detailed calculations for regulatory capital ratios for both the holding company and the bank are presented, reconciling from common equity to Tier 1 and Total Capital[56](index=56&type=chunk)[57](index=57&type=chunk)

Core Insights - Shore Bancshares reported a net income of $13.8 million for Q1 2025, an increase from $13.3 million in Q4 2024 and $8.2 million in Q1 2024, translating to $0.41 per diluted common share compared to $0.40 and $0.25 respectively [1][29]. Financial Performance - The company achieved a record net interest income of $46.0 million for Q1 2025, up from $44.0 million in Q4 2024 and $41.1 million in Q1 2024, driven by higher interest income on loans and a decrease in interest expense on deposits [19][29]. - The net interest margin (NIM) increased to 3.24% in Q1 2025 from 3.03% in Q4 2024, with core NIM rising from 2.85% to 3.02% [12][20]. - Return on average assets (ROAA) improved to 0.91% in Q1 2025, compared to 0.86% in Q4 2024 and 0.57% in Q1 2024 [12][29]. Balance Sheet Overview - Total assets decreased to $6.18 billion as of March 31, 2025, down from $6.23 billion at the end of 2024, primarily due to a reduction in cash and cash equivalents [5][18]. - The tangible common equity ratio improved to 7.46% from 7.17% at the end of 2024, while Tier 1 and Total Risk-Based Capital Ratios were 10.37% and 12.52% respectively [6][18]. Asset Quality - Nonperforming assets as a percentage of total assets decreased to 0.31% in Q1 2025 from 0.40% in Q4 2024, indicating stable asset quality [12][14]. - The allowance for credit losses (ACL) was $58.0 million, remaining flat at 1.21% of loans [12][21]. Deposits and Funding - Total deposits decreased by $68.0 million, or 1.2%, to $5.46 billion, primarily due to a drop in interest-bearing checking deposits [15][16]. - Uninsured deposits accounted for 17.2% of total deposits, with approximately $1.35 billion in available liquidity [17][18]. Noninterest Income and Expenses - Total noninterest income for Q1 2025 was $7.0 million, down from $8.9 million in Q4 2024, primarily due to lower mortgage banking revenue [22][29]. - Noninterest expenses decreased to $33.7 million in Q1 2025 from $33.9 million in Q4 2024, reflecting lower salaries and employee benefits [23][29]. Leadership Changes - The company welcomed Charlie Cullum as the new Chief Financial Officer, highlighting the importance of his financial expertise to the organization [4].