Core Viewpoint - Shore Bancshares, Inc. has appointed Charles Cullum as the new Executive Vice President and Chief Financial Officer, effective April 21, 2025, succeeding Todd L. Capitani, who will assist during the transition until August 15, 2025 [1][3]. Group 1: Leadership Transition - Charles Cullum has over 20 years of financial experience, most recently serving as CFO at Sandy Spring Bancorp since May 2024 [2]. - Todd L. Capitani has announced his retirement after serving as CFO since July 2023 and previously as CFO of Community Financial since 2009, expressing gratitude for his tenure [3]. Group 2: Company Overview - Shore Bancshares is a financial holding company based in Easton, Maryland, and is the parent company of Shore United Bank, N.A., which also provides trust and wealth management services through Wye Financial Partners [4].

Financial Performance - The Company recorded net income of $43.9 million for the year ended December 31, 2024, compared to $11.2 million for 2023, representing a 290.89% increase[242]. - Net income for the year ended December 31, 2024, was reported at $43.89 million, significantly up from $11.23 million in 2023, representing an increase of approximately 290%[363]. - Basic and diluted net income per common share for 2024 was $1.32, compared to $0.42 in 2023, representing a growth of 214%[411]. - The return on average assets improved to 0.74% in 2024 from 0.24% in 2023, while return on average common equity increased to 8.35% from 2.54%[248]. - Return on average common equity improved to 8.35% in 2024 from 2.54% in 2023, indicating enhanced profitability relative to equity[363]. - The company reported a return on average tangible common equity of 12.21% for 2024, compared to 7.74% in 2023, indicating improved operational efficiency[365]. Asset and Liability Management - Total assets increased by $219.8 million, or 3.7%, to $6.23 billion at December 31, 2024, primarily due to a $131.0 million increase in loans held for investment[243]. - Total liabilities rose by $189.9 million, or 3.45%, to $5.69 billion at December 31, 2024, mainly due to an increase in deposits and borrowings[244]. - Total stockholder's equity grew by $29.9 million, or 5.9%, to $541.1 million at December 31, 2024, supported by net income of $43.9 million[246]. - Cash and cash equivalents totaled $459.9 million at December 31, 2024, compared to $372.4 million at December 31, 2023, reflecting a 23.5% increase[263]. - Total deposits increased to $5,528,336 thousand as of December 31, 2024, up from $5,386,120 thousand in 2023, reflecting a growth of approximately 2.64%[409]. Income and Expense Analysis - Interest and dividend income increased by $81.3 million, or 37.96%, to $295.3 million for the year ended December 31, 2024[248]. - Net interest income rose by $35.3 million, or 26.05%, to $170.9 million for 2024, primarily due to an increase in interest and fees on loans[249]. - Total noninterest income for 2024 was $31.1 million, a decrease of $2.0 million or 6.1% from $33.2 million in 2023[256]. - Total noninterest expense increased to $138.3 million in 2024, up $14.9 million or 12.1% compared to $123.3 million in 2023[257]. - The effective tax rate increased to 25.2% in 2024 from 20.8% in 2023, driven by bargain purchase gains and nondeductible merger-related costs[260]. Credit Quality and Risk Management - The provision for credit losses decreased significantly by $26.2 million, or 84.69%, to $4.7 million in 2024[248]. - The allowance for credit losses on loans was $57.91 million, slightly increasing from $57.35 million in 2023[277]. - Total past due loans decreased to $9.1 million at December 31, 2024, compared to $11.6 million at December 31, 2023, with nonaccrual loans increasing to $21.0 million[291]. - Nonperforming assets rose to $24.8 million, an increase of $11.1 million or 80.98% from $13.7 million in 2023, with the ratio of nonperforming assets to total assets increasing to 0.40% from 0.23%[305]. - The company continues to prioritize the resolution of nonperforming and problem loans through various strategies, including loan charge-offs and marketing of repossessed assets[306]. Capital and Regulatory Compliance - The Bank was classified as "well-capitalized" under applicable regulatory capital requirements as of December 31, 2024[348]. - The Company maintained a Common Equity Tier 1 ratio of 8.02% and a Total Risk-Based Capital ratio of 12.18% as of December 31, 2024[349]. - The company has no speculative grade HTM securities, maintaining a focus on investment-grade securities rated BBB- or higher[271]. Investment Portfolio - The investment portfolio included 23.7% classified as available-for-sale (AFS) and 76.3% as held-to-maturity (HTM) at December 31, 2024[264]. - As of December 31, 2024, investment securities totaled $656.4 million, reflecting a $9.0 million increase or 1.4% from $647.3 million in 2023[266]. - Available-for-sale (AFS) securities at fair value amounted to $149.2 million, up from $110.5 million in 2023, with a composition of 82.0% mortgage-backed, 13.5% U.S. government agency securities, and 4.4% corporate bonds[266]. - Held-to-maturity (HTM) securities at amortized cost decreased to $481.1 million from $513.2 million in 2023, with 70.0% in mortgage-backed securities and 27.6% in U.S. government agency securities[267]. Operational Efficiency - The company maintained effective internal control over financial reporting as of December 31, 2024, as confirmed by the independent auditor's report[389]. - The independent auditor Crowe LLP provided an unqualified opinion on the financial statements, affirming their conformity with generally accepted accounting principles[389].

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 A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting it is expected to outperform the market [3] Performance Metrics - SHBI shares have increased by 0.86% over the past week, while the Zacks Banks - Northeast industry has risen by 1.03% [5] - Over the past month, SHBI's price change is 7.35%, significantly outperforming the industry's 1.9% [5] - In the last quarter, SHBI shares rose by 3.12%, and over the past year, they gained 46.89%, compared to the S&P 500's increases of 1.43% and 21.95%, respectively [6] Trading Volume - The average 20-day trading volume for SHBI is 164,042 shares, which serves as a baseline for price-to-volume analysis [7] Earnings Outlook - In the past two months, one earnings estimate for SHBI has increased, while none have decreased, raising the consensus estimate from $1.46 to $1.59 [9] - For the next fiscal year, one estimate has also moved upwards with no downward revisions [9] Conclusion - Considering the strong performance metrics and positive earnings outlook, SHBI is positioned as a 1 (Strong Buy) stock with a Momentum Score of A, making it a potential candidate for near-term investment [11]

Core Insights - Shore Bancshares (SHBI) reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.34 per share, and showing an increase from $0.39 per share a year ago, resulting in an earnings surprise of 29.41% [1] - The company achieved revenues of $52.95 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.84% and increasing from $49.15 million year-over-year [2] - The stock has underperformed the market, losing about 0.8% since the beginning of the year compared to the S&P 500's gain of 2.7% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.32 on revenues of $50.1 million, and for the current fiscal year, it is $1.46 on revenues of $210.4 million [7] - The estimate revisions trend for Shore Bancshares is favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Zacks Industry Rank for Banks - Northeast is currently in the top 6% of over 250 Zacks industries, suggesting that the industry outlook is positive and can significantly impact stock performance [8]

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]