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Shore Bancshares Inc

Shore Bancshares, Inc. Reports 2026 First Quarter Results

EASTON, Md. , April 23, 2026 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ – SHBI) (the "Company" or "Shore Bancshares"), the holding company for Shore United Bank, N.A. (the "Bank"), reported record net income for the first quarter of 2026 of $17.1 million, or $0.51 per diluted common share, compared to net income of $15.9 million, or $0.48 per diluted common share, for the fourth quarter of 2025, and net income of $13.8 million, or $0.41 per diluted common share, for the first quarter of 2025.

First Quarter 2026 Highlights

  • Net Income – Net income for the first quarter of 2026 increased $1.2 million to a record $17.1 million from $15.9 million in the fourth quarter of 2025. Net income increased primarily due to an increase in net interest income of $2.4 million and a decrease in the provision for credit losses of $2.7 million, partially offset by lower noninterest income of $1.7 million and an increase in noninterest expense of $1.6 million. The lower noninterest income was due to a one-time receipt of insurance proceeds in the fourth quarter of 2025.

  • Return on Average Assets ("ROAA") – The Company reported ROAA of 1.12% for the first quarter of 2026, compared to 1.02% for the fourth quarter of 2025 and 0.91% for the first quarter of 2025. Adjusted ROAA – non-U.S. generally accepted accounting principles ("GAAP")(1) was 1.22% for the first quarter of 2026, compared to 1.11% for the fourth quarter of 2025 and 1.02% for the first quarter of 2025.

  • Net Interest Margin ("NIM") – Net interest income for the first quarter of 2026 increased $2.4 million to $52.6 million compared to the fourth quarter of 2025. NIM increased 21 basis points ("bps") to 3.64% during the first quarter of 2026 compared to the fourth quarter of 2025. NIM excluding accretion(1) increased for the comparable periods from 3.24% to 3.35%. Excluding accretion interest, loan yields decreased 1 bp and funding costs decreased 13 bps for the comparable periods. Net interest income increased due to accelerated accretion due to loan payoffs coupled with a lower cost of deposits and lower long-term borrowing expenses. These favorable changes were partially offset by lower yields on interest-bearing deposits with other institutions.

  • Book Value per Share – Book value per share increased to $18.02 at March 31, 2026 from $17.65 at December 31, 2025 and $16.55 at March 31, 2025.

  • Asset Quality – Nonperforming assets were 1.10% of total assets at March 31, 2026, an increase from 0.69% at December 31, 2025 and 0.31% at March 31, 2025. Classified assets were 1.38% of total assets at March 31, 2026, an increase when compared to 0.96% at December 31, 2025 and 0.36% at March 31, 2025. The allowance for credit losses ("ACL") was $58.5 million at March 31, 2026, compared to $58.8 million at December 31, 2025 and $58.0 million at March 31, 2025. The ACL as a percentage of loans increased to 1.21% at March 31, 2026 compared to 1.20% at December 31, 2025 and remained flat compared to March 31, 2025. 

  • Operating Leverage – The efficiency ratio for the first quarter of 2026 was 61.97%, compared to 60.06% in the fourth quarter of 2025 and 63.64% for the first quarter of 2025. The adjusted efficiency ratio – non-GAAP(1), which excludes amortization of intangibles, was 58.57% for the first quarter of 2026, compared to 56.59% for the fourth quarter of 2025 and 59.25% for the first quarter of 2025. Management anticipates ongoing expense management of professional services and technology investments will result in continued improvements in operating leverage over time.

"Shore Bancshares delivered another strong quarter to begin 2026, with higher net income, expanding net interest margin and continued growth in book value per share," stated James ("Jimmy") M. Burke, President and Chief Executive Officer of Shore Bancshares. "Lower funding costs, accelerated loan repricing and disciplined balance sheet management drove record net interest income and record profitability during the quarter. We also continued to make progress improving our core operating performance while maintaining prudent expense control.

"Although nonperforming and classified assets increased during the quarter, overall asset quality remains sound and is supported by strong collateral values, conservative underwriting and solid reserve levels. We remain focused on managing risk, strengthening operating leverage and building long-term value for our shareholders as we move through 2026."

Balance Sheet Review

Total assets were $6.21 billion at March 31, 2026, a decrease of $52.8 million, or 0.8%, when compared to $6.26 billion at December 31, 2025. The decrease was primarily due to a decrease in our loan portfolio of $52.3 million and a decrease in cash and cash equivalents of $14.7 million, which were partially offset by an increase in our investment securities portfolio of $22.5 million. The decrease in cash and cash equivalents was primarily driven by seasonal run-off of the municipal deposits. Total assets increased $29.5 million, or 0.5%, from $6.18 billion when compared to March 31, 2025.

Non-owner occupied commercial real estate ("CRE") loans were $2.14 billion and $2.15 billion, and as a percentage of the Bank's Tier 1 Capital + ACL were 333% and 343% at March 31, 2026 and December 31, 2025, respectively.

CRE loans (excluding land and construction) were $2.60 billion at March 31, 2026 compared to $2.64 billion at December 31, 2025. The office CRE loan portfolio, which includes owner occupied and non-owner occupied CRE loans, was $480.9 million, or 9.9% of total loans at March 31, 2026. The following table provides the stratification of the classes of CRE loans (excluding land and construction) at March 31, 2026.

March 31, 2026



Owner Occupied


Non-Owner Occupied

 ($ in thousands)


Average LTV (1)


Average
Loan Size


Loan
Balance (2)


Average LTV (1)


Average
Loan Size


Loan
Balance (2)

Office, medical


45.25 %


$          597


$       28,074


47.74 %


$        1,746


$       85,570

Office, govt. or govt. contractor


49.80


875


6,999


53.80


3,057


62,308

Office, other


46.58


467


84,074


48.66


1,328


213,825

Office, total


46.43


507


119,147


48.91


1,574


361,703

Retail


49.55


610


65,223


48.07


2,554


482,785

Multifamily (5+ units)


—


—


—


54.46


2,353


261,226

Hotel/motel


—


—


—


44.46


4,056


190,614

Industrial/warehouse


45.74


654


92,883


46.49


1,412


184,927

Commercial-improved


41.57


1,182


217,492


50.02


1,291


160,134

Marine/boat slips


32.52


804


17,696


36.45


1,472


7,359

Restaurant


47.86


976


54,657


48.40


1,008


41,310

Church


33.03


861


56,797


13.18


2,354


2,354

Land/lot loans


44.54


551


1,103


—


—


—

Other


40.21


1,440


119,558


32.94


543


162,847

Total CRE loans, gross


43.14


830


$     744,556


44.39


1,584


$   1,855,259

(1)

Loan-to-value ("LTV") is determined based on latest available appraisal against current bank owned principal. Loans without an updated appraisal utilized the original transaction value.

(2)

Loan balance includes deferred fees and costs.

The office CRE loan portfolio included loans to medical tenants of $113.6 million, or 23.6% of the total office CRE loan portfolio, at March 31, 2026. The office CRE loan portfolio also included loans to government or government contractor tenants of $69.3 million, or 14.4% of the total office CRE loan portfolio for the same period. At March 31, 2026, the average loan debt service coverage ratio on the office CRE loan portfolio was 1.7x and the average LTV was 47.66%.

The 467 loans in the office CRE portfolio at March 31, 2026 had an average loan size of $1.0 million and a median loan size of $378 thousand. LTV estimates for the office CRE portfolio at March 31, 2026 are summarized below and LTV collateral values are based on the most recent appraisal, which may vary from the appraised value at loan origination.

LTV Range ($ in thousands)


Loan Count


 Loan Balance


% of Office CRE

Less than or equal to 50%


234


$             167,305


34.8 %

Greater than 50% and less than or equal to 60%


75


122,649


25.5

Greater than 60% and less than or equal to 70%


92


142,127


29.6

Greater than 70% and less than or equal to 80%


52


37,694


7.8

Greater than 80%


14


11,075


2.3

Total


467


$             480,850


100.0 %

There were 17 office CRE loans with balances greater than $5.0 million, totaling $164.8 million at March 31, 2026 and totaling $166.1 million at December 31, 2025. The decrease in this portfolio segment was the result of normal amortization. 81.1% of the office CRE loan balance was secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 97.5% was secured by properties with five stories or less. $28.7 million of these loan balances were classified as special mention or substandard at March 31, 2026. There were no charge-offs within the office CRE portfolio during the three months ended March 31, 2026.

Nonperforming assets were $68.4 million and $43.2 million, or 1.10% and 0.69% of total assets, as of March 31, 2026 and December 31, 2025, respectively. Nonperforming assets primarily consist of two large relationships with an aggregate loan balance of $45.6 million.  These nonperforming loans primarily consists of multifamily and office commercial real estate based in North Carolina and Virginia. As of March 31, 2026, these loans are well-secured by collateral and required minimal individual reserves. When comparing March 31, 2026 to March 31, 2025, nonperforming assets increased $49.5 million, primarily due to an increase in nonaccrual loans of $49.6 million and an increase in repossessed marine and auto loans of $806 thousand, partially offset by a decrease in loans 90 days past due and accruing of $894 thousand. Substandard loans, which include nonaccrual loans and accruing loans 90 days or more past due were $82.3 million at March 31, 2026 compared to $57.4 million at December 31, 2025 and $19.4 million at March 31, 2025.

Special mention loans increased to $97.8 million at March 31, 2026 compared to $73.4 million at December 31, 2025 and $33.5 million at March 31, 2025. As of March 31, 2026, there were six special mention loans with individual balances greater than $5.0 million, totaling $79.1 million. These loans consist primarily of multifamily commercial real estate and other commercial real estate exposures that are well-collateralized, and the Company continues to closely monitor their cash flows. Management does not currently expect material losses on these credits and is actively engaged in credit oversight and timely execution of workout strategies.

Total deposits decreased $72.2 million from December 31, 2025 to $5.46 billion at March 31, 2026 and increased $1.3 million when compared to March 31, 2025. The year-to-date decrease in total deposits was primarily due to a decrease in interest-bearing deposits of $39.7 million, a decrease in noninterest-bearing deposits of $20.5 million and a decrease in money market and savings accounts of $19.3 million. These decreases were partially offset by an increase in time deposits of $7.3 million. Core deposits, which exclude municipal deposits, increased by $25.3 million, or 0.6%, during the same period.

Total funding, which includes customer deposits, Federal Home Loan Bank ("FHLB") advances and brokered deposits, was $5.46 billion at March 31, 2026, compared to $5.53 billion at December 31, 2025. The Company had no FHLB advances at March 31, 2026 and December 31, 2025. Brokered deposits were $11.0 million and $10.9 million at March 31, 2026 and December 31, 2025, respectively. Total reciprocal deposits were $1.42 billion and $1.52 billion at March 31, 2026 and December 31, 2025, respectively.

Uninsured deposits were $933.0 million, or 17.1% of total deposits, at March 31, 2026. Uninsured deposits, excluding deposits secured with pledged collateral, were $786.0 million, or 14.4% of total deposits, at March 31, 2026. At March 31, 2026, the available liquidity was $1.82 billion, including $340.8 million in cash and cash equivalents, $328.0 million in unpledged securities, $777.6 million in secured borrowing capacity at the FHLB and $376.3 million in unsecured lines of credit with other correspondent banks.

Total stockholders' equity increased $12.8 million, or 2.2%, when compared to December 31, 2025, primarily due to current year earnings, partially offset by cash dividends paid and an increase in accumulated other comprehensive losses. As of March 31, 2026 and 2025, the ratio of total equity to total assets was 9.71% and 8.94%, respectively. As of March 31, 2026, the ratio of total tangible equity to total tangible assets(2) was 8.37%, compared to 8.06% and 7.46% as of December 31, 2025 and March 31, 2025, respectively. The Company's Tier 1 and Total Risk-Based Capital Ratios at March 31, 2026 were 11.60% and 14.08%, respectively.

Review of Quarterly Financial Results

Net interest income was $52.6 million for the first quarter of 2026, compared to $50.2 million for the fourth quarter of 2025 and $45.9 million for the first quarter of 2025. The increase in net interest income when compared to the fourth quarter of 2025 was primarily due to a decrease in interest expense on deposits of $3.0 million, a decrease in interest expense on long-term borrowings of $608 thousand and a decrease of $246 thousand in interest expense on short-term borrowings. The decrease in interest expense on long-term borrowings is due to a new debt issuance of $60 million during the fourth quarter 2025, which replaced $45 million of subordinated debt that was redeemed at the end of the fourth quarter 2025. These favorable changes were partially offset by a decrease in interest income on loans of $1.3 million and a decrease in interest income on deposits at other banks of $352 thousand. The increase in net interest income was $6.7 million when compared to the first quarter of 2025, and was primarily due to a decrease in interest expense on deposits of $3.8 million, an increase in interest and fees on loans of $3.3 million and a decrease in interest expense on short-term borrowings of $598 thousand. These favorable changes were partially offset by a decrease in interest on deposits with other banks of $951 thousand and an increase in interest expense on long-term borrowings of $207 thousand. The decrease in interest expense on deposits is reflective of the rate reductions during 2025.

The Company's NIM increased to 3.64% for the first quarter of 2026 from 3.43% for the fourth quarter of 2025, primarily due to lower interest expense on deposits. NIM excluding accretion increased for the comparable periods from 3.24% to 3.35%. Excluding accretion interest income, loan yields decreased 1 bp and funding costs decreased 13 bps for the comparable periods. Interest expense for the first quarter of 2026 decreased $3.9 million compared to the fourth quarter of 2025, primarily due to lower rates during the quarter and the absence of the write-offs of merger-related interest rate marks on certain deposit products in the fourth quarter of 2025. The Company's NIM increased to 3.64% for the first quarter of 2026 from 3.21% for the first quarter of 2025. The Company's average interest-earning asset yield increased to 5.44% for the first quarter of 2026 from 5.32% for the first quarter of 2025, while the average cost of funds decreased 30 bps to 1.90% from 2.20% for the same periods.

The provision for credit losses was $85 thousand for the three months ended March 31, 2026. The comparable amounts were $2.8 million for the three months ended December 31, 2025 and $1.0 million for the three months ended March 31, 2025. The decrease in the provision for credit losses for the first quarter of 2026 compared to the fourth quarter of 2025 was due to lower reserves resulting from lower loan balances and recoveries of certain charged-off loans, partially offset by the absence by the large charge-off driven by a commercial real estate loan in the fourth quarter of 2025. Coverage ratios increased to 1.21% at March 31, 2026 from 1.20% at December 31, 2025, and remained flat compared to March 31, 2025. Net charge-offs decreased to $847 thousand for the first quarter of 2026 compared to $3.6 million for the fourth quarter of 2025 and $554 thousand for the first quarter of 2025. The decrease was driven by the absence of the large commercial real estate write-down in the fourth quarter of 2025 and recoveries of previous write-downs of $409 thousand during the quarter.

Total noninterest income for the first quarter of 2026 was $7.2 million, a decrease of $1.7 million from $8.9 million for the fourth quarter of 2025, and an increase of $110 thousand from $7.1 million for the first quarter of 2025. When comparing the first quarter of 2026 to the fourth quarter of 2025, the decrease in noninterest income was primarily due to the absence of a one-time receipt of insurance proceeds in the fourth quarter of 2025.

Total noninterest expense of $37.1 million for the first quarter of 2026 increased $1.6 million compared to $35.5 million for the fourth quarter of 2025, and increased $3.3 million compared to $33.7 million for the first quarter of 2025. The increase from the fourth quarter of 2025 was primarily due to salaries and employee benefit expenses increasing $1.1 million and professional service fees increasing $368 thousand. The increase in salaries and employee benefits are primarily related to higher health care costs and one-time employee incentive related expense. The increase from the first quarter of 2025 was primarily due to an increase in salaries and employee benefits expense of $3.2 million and an increase in software and data processing costs of $449 thousand, partially offset by a decrease in amortization of other intangible assets of $298 thousand.

The efficiency ratio for the first quarter of 2026 when compared to the fourth quarter of 2025 and the first quarter of 2025 was 61.97%, 60.06% and 63.64%, respectively. Adjusted efficiency ratios – non-GAAP(1) for the same periods were 58.57%, 56.59% and 59.25%, respectively.

(1) See the Reconciliation of GAAP and Non-GAAP Measures tables.

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 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

This news release contains statements relating to future events or our future results that are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. We also may make forward-looking statements in other documents filed with or furnished to the Securities and Exchange Commission, and our senior management may make forward-looking statements orally to investors, analysts, representatives of the media, and others. Forward-looking statements may be identified by the use of words such as "believe," "expect," "anticipate," "plan," "estimate," "intend," "potential," "target," "plan," "goal," or words of similar meaning, or future or conditional verbs such as "could," "would," or "may." Forward-looking statements include statements of our goals, intentions, or expectations; statements regarding our business plans, prospects, growth, or operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits.

Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. We caution that the forward-looking statements are based largely on our expectations and information available at the time the statements are made and are subject to known and unknown risks and uncertainties that are subject to change based on factors, which in many instances are beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements. You should bear this in mind when reading this news release and not place undue reliance on these forward-looking statements.

The factors that could cause actual results to differ materially from those expressed in such forward-looking statements include, but are not limited to, the risks identified in our Annual Report on Form 10-K for the year ended December 31, 2025, and in any subsequent filings with the Securities and Exchange Commission and the following: local, regional and global business, economic and political conditions and geopolitical events; changes in laws, rules and regulatory requirements, including capital and liquidity requirements; changes in consumer and business confidence, investor sentiment, and consumer spending and savings behavior; changes in the level of inflation; changes in monetary and fiscal policies; changes in trade policies, including the imposition of tariffs and retaliatory responses; changes in the demand for loans, deposits, and other financial services that we provide; the possibility that future credit losses may be higher than currently expected; changes in FDIC assessments; changes in the interest rate environment; changes in income tax laws and regulations; our ability to manage effectively our capital and liquidity; the ability to realize benefits and cost savings from, and limit any unexpected liabilities associated with, any business combinations; changes in credit ratings assigned to us; competitive pressures among financial services companies; technology changes instituted by us, our counterparties, or competitors; the ability to attract, develop, and retain qualified employees; change in federal government enforcement of federal laws affecting the cannabis industry; our ability to maintain the security of our financial, accounting, technology, data processing and other operational systems and facilities; our ability to effectively defend ourselves against cyber-attacks and other attempts by unauthorized parties to access our information or information of our customers or to disrupt our systems; our ability to withstand disruptions that may be caused by any failure of our operational systems or those of third parties; our ability to control expenses; the impact of changes in accounting policies, including the introduction of new accounting standards; the impact of judicial or regulatory proceedings; and the impact of natural or man-made disasters or calamities, including health emergencies, the spread of infectious diseases, epidemics or pandemics, an outbreak or escalation of hostilities or other geopolitical instabilities, the effects of climate change or extraordinary events beyond our control.

Forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

 

Shore Bancshares, Inc.

Financial Highlights By Quarter (Unaudited)














Q1 2026 vs.


Q1 2026 vs.

($ in thousands, except per share data)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025


Q4 2025


Q1 2025

PROFITABILITY FOR THE PERIOD















Taxable-equivalent net interest income


$     52,644


$     50,294


$     48,501


$     47,244


$     45,979


4.7 %


14.5 %

Less: Taxable-equivalent adjustment


89


92


83


81


81


(3.3)


9.9

Net interest income


52,555


50,202


48,418


47,163


45,898


4.7


14.5

Provision for credit losses


85


2,827


2,992


1,528


1,028


(97.0)


(91.7)

Noninterest income


7,244


8,906


7,938


9,406


7,134


(18.7)


1.5

Noninterest expense


37,056


35,499


34,379


34,410


33,747


4.4


9.8

Income before income taxes


22,658


20,782


18,985


20,631


18,257


9.0


24.1

Income tax expense


5,570


4,895


4,637


5,124


4,493


13.8


24.0

NET INCOME


$     17,088


$     15,887


$     14,348


$     15,507


$     13,764


7.6


24.1
















Adjusted net income – non-GAAP(1)


$     18,581


$     17,416


$     15,889


$     17,215


$     15,481


6.7 %


20.0 %

Pre-tax pre-provision net income – non-GAAP(1)


22,743


23,609


21,977


22,159


19,285


(3.7)


17.9
















Return on average assets – GAAP


1.12 %


1.02 %


0.95 %


1.03 %


0.91 %


        10 bp


        21 bp

Adjusted return on average assets – non-GAAP


1.22


1.11


1.05


1.15


1.02


11


20

Return on average common equity – GAAP


11.55


10.79


9.96


11.13


10.20


76


135

Return on average tangible common equity – non-GAAP(1)


14.83


14.10


13.27


14.99


14.05


73


78

Net interest spread


2.80


2.48


2.45


2.37


2.27


32


53

Net interest margin


3.64


3.43


3.41


3.34


3.21


21


43

Efficiency ratio – GAAP


61.97


60.06


61.00


60.83


63.64


191


(167)

Adjusted efficiency ratio – non-GAAP(1)


58.57


56.59


57.30


56.73


59.25


198


(68)

Noninterest income to average assets


0.48


0.57


0.52


0.63


0.47


(9)


1

Noninterest expense to average assets


2.43


2.27


2.27


2.29


2.23


16


20

Net operating expense to average assets – GAAP


1.96


1.70


1.74


1.67


1.76


26


20

Net operating expense to average assets – non-GAAP(1)


1.83


1.57


1.61


1.51


1.61


26


22
















PER SHARE DATA















Basic net income per common share


$       0.51


$       0.48


$       0.43


$       0.46


$       0.41


6.3 %


24.4 %

Diluted net income per common share


0.51


0.48


0.43


0.46


0.41


6.3


24.4

Dividends paid per common share


0.12


0.12


0.12


0.12


0.12


—


—

Book value per common share at period end


18.02


17.65


17.27


16.94


16.55


2.1


8.9

Tangible book value per common share at period end – non-GAAP(1)


15.30


14.87


14.43


14.03


13.58


2.9


12.7

Common share market value at period end


18.68


17.68


16.41


15.72


13.54


5.7


38.0

Common share intraday price:















High


$      20.68


$      19.22


$      17.67


$      15.88


$      17.24


7.6 %


20.0 %

Low


17.98


14.93


14.96


11.47


13.15


20.4


36.7














(1)

See the Reconciliation of GAAP and Non-GAAP Measures tables.

Shore Bancshares, Inc.

Financial Highlights By Quarter (Unaudited) – Continued














Q1 2026 vs.


Q1 2026 vs.

($ in thousands, except per share data)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025


Q4 2025


Q1 2025

AVERAGE BALANCE SHEET DATA















Loans


$  4,887,488


$  4,909,619


$  4,884,003


$  4,833,558


$  4,784,991


(0.5) %


2.1 %

Investment securities


666,376


653,639


664,535


683,680


664,655


1.9


0.3

Earning assets


5,823,244


5,843,816


5,658,981


5,660,409


5,768,080


(0.4)


1.0

Assets


6,174,655


6,206,753


6,020,574


6,021,385


6,129,241


(0.5)


0.7

Deposits


5,438,914


5,452,082


5,280,252


5,297,567


5,417,514


(0.2)


0.4

FHLB advances


—


20,108


52,391


50,000


50,000


(100.0)


(100.0)

Subordinated debt & TRUPS


89,024


104,752


74,363


74,102


73,840


(15.0)


20.6

Stockholders' equity


600,212


584,209


571,247


558,952


547,443


2.7


9.6
















CREDIT QUALITY DATA















Net charge-offs


$        847


$      3,619


$      1,825


$        649


$        554


(76.6) %


52.9 %
















Nonaccrual loans


$     64,958


$     39,960


$     24,378


$     16,782


$     15,402


62.6 %


321.8 %

Loans 90 days past due and still accruing


—


255


153


215


894


(100.0)


(100.0)

Other real estate owned and repossessed property


3,414


2,992


3,552


2,636


2,608


14.1


30.9

Total nonperforming assets


$     68,372


$     43,207


$     28,083


$     19,633


$     18,904


58.2


261.7

Shore Bancshares, Inc.

Financial Highlights By Quarter (Unaudited) – Continued














Q1 2026 vs.


Q1 2026 vs.

($ in thousands, except per share data)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025


Q4 2025


Q1 2025

CAPITAL AND CREDIT QUALITY RATIOS















Period-end equity to assets – GAAP


9.71 %


9.42 %


9.19 %


9.36 %


8.94 %


        29 bp


        77 bp

Period-end tangible equity to tangible assets – non-GAAP(1)


8.37


8.06


7.80


7.88


7.46


31


91
















Annualized net charge-offs to average loans


0.07 %


0.29 %


0.15 %


0.05 %


0.05 %


       (22) bp


         2 bp
















Allowance for credit losses as a percent of:















Period-end loans


1.21 %


1.20 %


1.22 %


1.21 %


1.21 %


         1 bp


        — bp

Period-end nonaccrual loans


90.03


147.24


244.29


348.49


376.85


(5,721)


(28,682)

Period-end nonperforming assets


85.53


136.17


212.06


297.88


307.04


(5,064)


(22,151)
















As a percent of total loans at period-end:















Nonaccrual loans


1.34 %


0.82 %


0.50 %


0.35 %


0.32 %


        52 bp


       102 bp
















As a percent of total loans, other real estate owned and repossessed property at period-end:















Nonperforming assets


1.41 %


0.88 %


0.57 %


0.41 %


0.40 %


        53 bp


       101 bp
















As a percent of total assets at period-end:















Nonaccrual loans


1.05 %


0.64 %


0.39 %


0.28 %


0.25 %


        41 bp


        80 bp

Nonperforming assets


1.10


0.69


0.45


0.33


0.31


41


79














(1)

See the Reconciliation of GAAP and Non-GAAP Measures tables.

Shore Bancshares, Inc.

Financial Highlights By Quarter (Unaudited) – Continued














Q1 2026 vs.


Q1 2026 vs.

($ in thousands)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025


Q4 2025


Q1 2025

Company Amounts















Common Equity Tier 1 Capital


$  525,849


$  510,729


$  496,709


$  483,947


$   470,223


2.96 %


11.83 %

Tier 1 Capital


556,096


540,897


526,794


513,952


500,149


2.81


11.19

Total Capital


674,811


660,451


627,055


618,793


603,928


2.17


11.74

Risk-Weighted Assets


4,794,374


4,852,573


4,867,237


4,890,679


4,823,833


(1.20)


(0.61)
















Company Ratios















Common Equity Tier 1 Capital to Risk-Weighted Assets ("RWA")


10.97 %


10.52 %


10.21 %


9.90 %


9.75 %


         45 bp


       122 bp

Tier 1 Capital to RWA


11.60


11.15


10.82


10.51


10.37


45


123

Total Capital to RWA


14.08


13.61


12.88


12.65


12.52


47


156

Tier 1 Capital to AA (Leverage)(2)


9.12


8.82


8.86


8.65


8.27


30


85
















Bank Amounts















Common Equity Tier 1 Capital


$  583,733


$  569,183


$  559,212


$  546,630


$  534,824


2.56 %


9.14 %

Tier 1 Capital


583,733


569,183


559,212


546,630


534,824


2.56


9.14

Total Capital


643,627


629,746


620,034


607,235


594,550


2.20


8.25

Risk-Weighted Assets


4,791,223


4,844,639


4,864,871


4,888,558


4,821,975


(1.10)


(0.64)
















Bank Ratios















Common Equity Tier 1 Capital to RWA


12.18 %


11.75 %


11.49 %


11.18 %


11.09 %


         43 bp


       109 bp

Tier 1 Capital to RWA


12.18


11.75


11.49


11.18


11.09


43


109

Total Capital to RWA


13.43


13.00


12.75


12.42


12.33


43


110

Tier 1 Capital to AA (Leverage)(2)


9.58


9.30


9.41


9.20


8.84


28


74

Shore Bancshares, Inc.

Consolidated Balance Sheets













March 31, 2026


March 31, 2026













compared to


compared to

($ in thousands, except per share data)


March 31, 2026


December 31, 2025


September 30, 2025


June 30, 2025


March 31, 2025


December 31, 2025


March 31, 2025



(unaudited)




(unaudited)


(unaudited)


(unaudited)





ASSETS















Cash and due from banks


$           44,054


$           50,164


$           62,289


$           54,512


$           46,886


(12.2) %


(6.0) %

Interest-bearing deposits with other banks


296,768


305,402


354,224


130,472


342,120


(2.8)


(13.3)

Cash and cash equivalents


340,822


355,566


416,513


184,984


389,006


(4.1)


(12.4)

Investment securities:















Available for sale, at fair value


264,026


220,358


181,720


187,679


179,148


19.8


47.4

Held to maturity, net of allowance for credit losses


393,615


414,827


433,440


459,246


469,572


(5.1)


(16.2)

Equity securities, at fair value


6,195


6,186


6,113


6,010


5,945


0.1


4.2

Restricted securities, at cost


18,003


17,989


20,364


20,412


20,411


0.1


(11.8)

Loans held for sale, at fair value


24,034


32,540


21,500


34,319


15,717


(26.1)


52.9

Loans held for investment


4,848,030


4,900,302


4,882,969


4,827,628


4,777,489


(1.1)


1.5

Less: allowance for credit losses


(58,481)


(58,836)


(59,554)


(58,483)


(58,042)


(0.6)


0.8

Loans, net


4,789,549


4,841,466


4,823,415


4,769,145


4,719,447


(1.1)


1.5
















Premises and equipment, net


80,137


80,168


80,812


81,426


81,692


—


(1.9)

Goodwill


63,266


63,266


63,266


63,266


63,266


—


—

Other intangible assets, net


27,742


29,722


31,722


33,761


36,033


(6.7)


(23.0)

Right-of-use assets


10,102


10,523


10,896


11,052


11,709


(4.0)


(13.7)

Cash surrender value on life insurance


106,684


105,839


105,055


105,860


105,040


0.8


1.6

Accrued interest receivable


20,676


18,551


20,408


19,821


20,555


11.5


0.6

Deferred income taxes


29,752


29,825


30,328


30,972


31,428


(0.2)


(5.3)

Other assets


31,460


31,992


32,927


29,921


27,594


(1.7)


14.0

TOTAL ASSETS


$       6,206,063


$       6,258,818


$       6,278,479


$       6,037,874


$       6,176,563


(0.8)


0.5

Shore Bancshares, Inc.

Consolidated Balance Sheets – Continued














March 31, 2026


March 31, 2026













compared to


compared to

($ in thousands, except per share data)


March 31, 2026


December 31, 2025


September 30, 2025


June 30, 2025


March 31, 2025


December 31, 2025


March 31, 2025



(unaudited)




(unaudited)


(unaudited)


(unaudited)





LIABILITIES















Deposits:















Noninterest-bearing


$       1,567,425


$       1,587,953


$       1,594,212


$       1,575,120


$       1,565,017


(1.3) %


0.2 %

Interest-bearing checking


812,847


852,585


851,963


763,309


852,480


(4.7)


(4.6)

Money market and savings


1,795,619


1,814,928


1,790,001


1,691,438


1,800,529


(1.1)


(0.3)

Time deposits


1,274,766


1,267,487


1,281,132


1,273,285


1,242,319


0.6


2.6

Brokered deposits


10,963


10,911


10,857


10,806


—


0.5


—

Total deposits


5,461,620


5,533,864


5,528,165


5,313,958


5,460,345


(1.3)


—

FHLB advances


—


—


50,000


50,000


50,000


—


(100.0)

Guaranteed preferred beneficial interest in junior
subordinated debentures ("TRUPS"), net


30,247


30,168


30,085


30,005


29,926


0.3


1.1

Subordinated debt, net


58,782


58,893


44,409


44,236


44,053


(0.2)


33.4

Total borrowings


89,029


89,061


124,494


124,241


123,979


—


(28.2)

Lease liabilities


10,608


11,027


11,395


11,541


12,183


(3.8)


(12.9)

Other liabilities


42,092


34,993


37,218


22,940


27,586


20.3


52.6

TOTAL LIABILITIES


5,603,349


5,668,945


5,701,272


5,472,680


5,624,093


(1.2)


(0.4)

STOCKHOLDERS' EQUITY















Common stock, $0.01 par value per share


335


334


334


334


333


0.3


0.6

Additional paid-in capital


361,013


360,554


359,939


359,063


358,572


0.1


0.7

Retained earnings


246,636


233,578


221,693


211,400


199,898


5.6


23.4

Accumulated other comprehensive loss


(5,270)


(4,593)


(4,759)


(5,603)


(6,333)


14.7


(16.8)

TOTAL STOCKHOLDERS' EQUITY


602,714


589,873


577,207


565,194


552,470


2.2


9.1

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY


$       6,206,063


$       6,258,818


$       6,278,479


$       6,037,874


$       6,176,563


(0.8)


0.5
















Shares of common stock issued and outstanding


33,451,063


33,413,503


33,421,672


33,374,265


33,374,265


0.1


0.2

Book value per common share at period end


$            18.02


$            17.65


$            17.27


$            16.94


$            16.55


2.1


8.9

Shore Bancshares, Inc.

Consolidated Statements of Income By Quarter (Unaudited)














Q1 2026 vs.


Q1 2026 vs.

($ in thousands, except per share data)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025


Q4 2025


Q1 2025

INTEREST INCOME















Interest on loans


$    70,814


$    72,092


$    70,693


$    69,607


$    67,516


(1.8) %


4.9 %

Interest and dividends on taxable investment securities


5,114


5,010


5,036


5,331


5,001


2.1


2.3

Interest and dividends on tax-exempt investment securities


6


6


6


6


6


—


—

Interest on deposits with other banks


2,458


2,810


1,215


1,588


3,409


(12.5)


(27.9)

Total interest income


78,392


79,918


76,950


76,532


75,932


(1.9)


3.2
















INTEREST EXPENSE















Interest on deposits


24,264


27,289


26,474


27,370


28,070


(11.1)


(13.6)

Interest on short-term borrowings


—


246


640


605


598


(100.0)


(100.0)

Interest on long-term borrowings


1,573


2,181


1,418


1,394


1,366


(27.9)


15.2

Total interest expense


25,837


29,716


28,532


29,369


30,034


(13.1)


(14.0)
















NET INTEREST INCOME


52,555


50,202


48,418


47,163


45,898


4.7


14.5

Provision for credit losses


85


2,827


2,992


1,528


1,028


(97.0)


(91.7)

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES


52,470


47,375


45,426


45,635


44,870


10.8


16.9
















NONINTEREST INCOME















Service charges on deposit accounts


1,596


1,663


1,599


1,519


1,514


(4.0)


5.4

Trust and investment fee income


1,137


1,042


898


942


823


9.1


38.2

Mortgage banking revenue


1,450


1,181


1,278


2,379


1,240


22.8


16.9

Interchange credits


1,698


1,862


1,858


1,788


1,577


(8.8)


7.7

Other noninterest income


1,363


3,158


2,305


2,778


1,980


(56.8)


(31.2)

Total noninterest income


$     7,244


$     8,906


$     7,938


$     9,406


$     7,134


(18.7)


1.5

Shore Bancshares, Inc.

Consolidated Statements of Income By Quarter and Year (Unaudited) – Continued














Q1 2026 vs.


Q1 2026 vs.

($ in thousands, except per share data)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025


Q4 2025


Q1 2025

NONINTEREST EXPENSE















Salaries and employee benefits


$    19,639


$    18,582


$    18,642


$    17,742


$    16,440


5.7 %


19.5 %

Occupancy expense


2,567


2,461


2,406


2,472


2,538


4.3


1.1

Furniture and equipment expense


855


792


892


797


853


8.0


0.2

Software and data processing


5,140


5,197


5,155


4,819


4,691


(1.1)


9.6

Amortization of other intangible assets


1,980


2,000


2,039


2,272


2,278


(1.0)


(13.1)

Legal and professional fees


1,605


1,237


989


1,225


1,613


29.7


(0.5)

FDIC insurance premium expense


995


845


794


1,023


1,091


17.8


(8.8)

Marketing and advertising


311


367


315


384


254


(15.3)


22.4

Fraud losses


111


227


45


83


105


(51.1)


5.7

Other noninterest expense


3,853


3,791


3,102


3,593


3,884


1.6


(0.8)

Total noninterest expense


37,056


35,499


34,379


34,410


33,747


4.4


9.8
















Income before income taxes


22,658


20,782


18,985


20,631


18,257


9.0


24.1

Income tax expense


5,570


4,895


4,637


5,124


4,493


13.8


24.0

NET INCOME


$    17,088


$    15,887


$    14,348


$    15,507


$    13,764


7.6


24.1
















Weighted average shares outstanding – basic


33,428,444


33,426,198


33,419,291


33,374,265


33,350,869


0.0 %


0.2 %

Weighted average shares outstanding – diluted


33,447,767


33,446,103


33,435,862


33,388,013


33,375,318


0.0 %


0.2 %
















Basic net income per common share


$       0.51


$       0.48


$       0.43


$       0.46


$       0.41


6.3 %


24.4 %

Diluted net income per common share


$       0.51


$       0.48


$       0.43


$       0.46


$       0.41


6.3 %


24.4 %
















Dividends paid per common share


$       0.12


$       0.12


$       0.12


$       0.12


$       0.12


— %


— %

Shore Bancshares, Inc.

Consolidated Average Balance Sheets (Unaudited)




Three Months Ended



March 31, 2026


December 31, 2025


March 31, 2025

($ in thousands)


Average
Balance


Interest


Yield/Rate


Average
Balance


Interest


Yield/Rate


Average
Balance


Interest


Yield/Rate

Earning assets



















Loans(1), (2), (3)



















Commercial real estate


$     2,601,316


$        39,029


6.08 %


$     2,624,581


$        38,796


5.86 %


$     2,541,527


$        35,822


5.72 %

Residential real estate


1,450,114


19,311


5.33


1,442,055


19,477


5.40


1,347,035


18,433


5.47

Construction


347,973


5,631


6.56


343,796


5,740


6.62


352,323


5,526


6.36

Commercial


221,542


3,296


6.03


219,874


4,326


7.81


232,900


3,695


6.43

Consumer


262,174


3,534


5.47


274,715


3,711


5.36


304,520


4,042


5.38

Credit cards


4,369


100


9.29


4,598


132


11.40


6,686


77


4.67

Total loans


4,887,488


70,901


5.86


4,909,619


72,182


5.85


4,784,991


67,595


5.71




















Investment securities



















Taxable


665,729


5,114


3.07


652,990


5,010


3.07


664,002


5,001


3.01

Tax-exempt(1)


647


8


4.95


649


8


4.93


653


8


4.90

Interest-bearing deposits


269,380


2,458


3.70


280,558


2,810


3.97


318,434


3,409


4.34

Total earning assets


5,823,244


78,481


5.44


5,843,816


80,010


5.45


5,768,080


76,013


5.32

Cash and due from banks


44,182






51,611






43,526





Other assets


365,971






371,205






375,929





Allowance for credit losses


(58,742)






(59,879)






(58,294)





Total assets


$     6,174,655






$     6,206,753






$     6,129,241





Shore Bancshares, Inc.

Consolidated Average Balance Sheets (Unaudited) – Continued




Three Months Ended



March 31, 2026


December 31, 2025


March 31, 2025

($ in thousands)


Average
Balance


Interest


Yield/Rate


Average
Balance


Interest


Yield/Rate


Average
Balance


Interest


Yield/Rate

Interest-bearing liabilities



















Interest-bearing checking


$       780,713


$         4,840


2.51 %


$       768,769


$         5,386


2.78 %


$       859,698


$         7,025


3.31 %

Money market and savings deposits


1,812,071


8,696


1.95


1,784,972


9,373


2.08


1,799,707


10,015


2.26

Time deposits


1,270,156


10,624


3.39


1,277,732


12,425


3.86


1,208,250


11,030


3.70

Brokered deposits


11,107


104


3.80


10,942


105


3.81


—


—


—

Interest-bearing deposits(4)


3,874,047


24,264


2.54


3,842,415


27,289


2.82


3,867,655


28,070


2.94

FHLB advances


—


—


—


20,108


246


4.85


50,000


598


4.85

Subordinated debt and guaranteed
preferred beneficial interest in junior
subordinated debentures ("TRUPS")(4)


89,024


1,573


7.17


104,752


2,181


8.26


73,840


1,366


7.50

Total interest-bearing liabilities


3,963,071


25,837


2.64


3,967,275


29,716


2.97


3,991,495


30,034


3.05

Noninterest-bearing deposits


1,564,867






1,609,667






1,549,859





Accrued expenses and other liabilities


46,505






45,602






40,444





Stockholders' equity


600,212






584,209






547,443





Total liabilities and stockholders'
equity


$     6,174,655






$     6,206,753






$     6,129,241
























Net interest spread






2.80 %






2.48 %






2.27 %

Net interest margin






3.64






3.43






3.21

Net interest margin excluding
accretion(3)






3.35






3.24






2.99

Cost of funds






1.90






2.11






2.20

Cost of deposits






1.81






1.99






2.10

Cost of debt






7.17






7.71






6.43














(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 $4.3 million, $4.1 million and $3.7 million of accretion interest on loans for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025, respectively.

(4)

Interest expense on deposits and borrowings includes amortization of deposit discounts and amortization of borrowing fair value adjustments. There were zero, $1.2 million and $334 thousand of amortization of deposit discounts and $79 thousand, $171 thousand and $232 thousand of amortization of borrowing fair value adjustments for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025, respectively.

Shore Bancshares, Inc.

Reconciliation of GAAP and Non-GAAP Measures (Unaudited)




Quarter to Date

($ in thousands, except per share data)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025

The following reconciles return on average assets, average equity and return on average tangible common equity(1):

Net income


$     17,088


$     15,887


$     14,348


$     15,507


$     13,764

Annualized net income (A)


$     69,301


$     63,030


$     56,924


$     62,198


$     55,821












Net income


$     17,088


$     15,887


$     14,348


$     15,507


$     13,764

Add: amortization of other intangible assets, net of tax


1,493


1,529


1,541


1,708


1,717

Net income excluding amortization of other intangible assets – non-GAAP


18,581


17,416


15,889


17,215


15,481

Annualized net income excluding amortization of other intangible assets – non-GAAP (B)


$     75,356


$     69,096


$     63,038


$     69,049


$     62,784












Net income


$     17,088


$     15,887


$     14,348


$     15,507


$     13,764

Add: amortization of other intangible assets, net of tax


1,493


1,529


1,541


1,708


1,717

Adjusted net income – non-GAAP


18,581


17,416


15,889


17,215


15,481

Annualized adjusted net income – non-GAAP (C)


$     75,356


$     69,096


$     63,038


$     69,049


$     62,784












Net income


$     17,088


$     15,887


$     14,348


$     15,507


$     13,764

Less: income tax expense


5,570


4,895


4,637


5,124


4,493

Less: provision for credit losses


85


2,827


2,992


1,528


1,028

Pre-tax pre-provision net income – non-GAAP


$     22,743


$     23,609


$     21,977


$     22,159


$     19,285












Return on average assets – GAAP


1.12 %


1.02 %


0.95 %


1.03 %


0.91 %

Adjusted return on average assets – non-GAAP


1.22 %


1.11 %


1.05 %


1.15 %


1.02 %












Average assets


$ 6,174,655


$  6,206,753


$  6,020,574


$  6,021,385


$  6,129,241












Average stockholders' equity (D)


$   600,212


$    584,209


$    571,247


$    558,952


$    547,443

Less: average goodwill and core deposit intangible


(92,086)


(94,059)


(96,074)


(98,241)


(100,514)

Average tangible common equity (E)


$   508,126


$    490,150


$    475,173


$    460,711


$    446,929












Return on average common equity – GAAP (A)/(D)


11.55 %


10.79 %


9.96 %


11.13 %


10.20 %

Return on average tangible common equity – non-GAAP (B)/(E)


14.83 %


14.10 %


13.27 %


14.99 %


14.05 %

Adjusted return on average tangible common equity – non-GAAP (C)/(E)


14.83 %


14.10 %


13.27 %


14.99 %


14.05 %

Shore Bancshares, Inc.

Reconciliation of GAAP and Non-GAAP Measures (Unaudited) – Continued




Quarter to Date

($ in thousands, except per share data)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025

The following reconciles efficiency ratio – GAAP and adjusted efficiency ratio – non-GAAP(2):

Noninterest expense (F)


$     37,056


$     35,499


$     34,379


$     34,410


$     33,747

Less: amortization of other intangible assets


(1,980)


(2,000)


(2,039)


(2,272)


(2,278)

Adjusted noninterest expense (G)


$     35,076


$     33,499


$     32,340


$     32,138


$     31,469












Net interest income (H)


$     52,555


$     50,202


$     48,418


$     47,163


$     45,898

Add: taxable-equivalent adjustment


89


92


83


81


81

Taxable-equivalent net interest income (I)


$     52,644


$     50,294


$     48,501


$     47,244


$     45,979












Noninterest income (J)


$      7,244


$       8,906


$       7,938


$       9,406


$       7,134

Adjusted noninterest income (K)


$      7,244


$       8,906


$       7,938


$       9,406


$       7,134












Efficiency ratio – GAAP (F)/(H)+(J)


61.97 %


60.06 %


61.00 %


60.83 %


63.64 %

Adjusted efficiency ratio – non-GAAP (G)/(I)+(K)


58.57 %


56.59 %


57.30 %


56.73 %


59.25 %












Net operating expense to average assets – GAAP


1.96 %


1.70 %


1.74 %


1.67 %


1.76 %

Adjusted net operating expense to average assets – non-GAAP


1.83 %


1.57 %


1.61 %


1.51 %


1.61 %

Shore Bancshares, Inc.

Reconciliation of GAAP and Non-GAAP Measures (Unaudited) – Continued

 


($ in thousands, except per share data)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025












The following reconciles book value per common share and tangible book value per common share(1):

Stockholders' equity (L)


$         602,714


$         589,873


$         577,207


$         565,194


$         552,470

Less: goodwill and core deposit intangible


(91,008)


(92,988)


(94,988)


(97,027)


(99,299)

Tangible common equity (M)


$         511,706


$         496,885


$         482,219


$         468,167


$         453,171












Shares of common stock outstanding (N)


33,451,063


33,413,503


33,421,672


33,374,265


33,374,265












Book value per common share – GAAP (L)/(N)


$            18.02


$            17.65


$            17.27


$            16.94


$            16.55

Tangible book value per common share – non-GAAP (M)/(N)


$            15.30


$            14.87


$            14.43


$            14.03


$            13.58












The following reconciles equity to assets and tangible common equity to tangible assets(1):

Stockholders' equity (O)


$         602,714


$         589,873


$         577,207


$         565,194


$         552,470

Less: goodwill and core deposit intangible


(91,008)


(92,988)


(94,988)


(97,027)


(99,299)

Tangible common equity (P)


$         511,706


$         496,885


$         482,219


$         468,167


$         453,171












Assets (Q)


$       6,206,063


$       6,258,818


$       6,278,479


$       6,037,874


$       6,176,563

Less: goodwill and core deposit intangible


(91,008)


(92,988)


(94,988)


(97,027)


(99,299)

Tangible assets (R)


$       6,115,055


$       6,165,830


$       6,183,491


$       5,940,847


$       6,077,264












Period-end equity to assets – GAAP (O)/(Q)


9.71 %


9.42 %


9.19 %


9.36 %


8.94 %

Period-end tangible common equity to tangible assets – non-GAAP (P)/(R)


8.37 %


8.06 %


7.80 %


7.88 %


7.46 %














(1)

Management believes that reporting tangible common equity and tangible assets more closely approximates the adequacy of capital for regulatory purposes.

(2)

Management believes that reporting the adjusted efficiency ratio – non-GAAP more closely measures its effectiveness of controlling cash-based operating activities.

Shore Bancshares, Inc.

Reconciliation of GAAP and Non-GAAP Measures (Unaudited) – Continued

 


Regulatory Capital and Ratios for the Company











($ in thousands)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025

Common equity


$      602,714


$      589,873


$      577,207


$      565,194


$      552,470

Goodwill (1)


(61,061)


(61,123)


(61,176)


(61,238)


(61,300)

Core deposit intangible(2)


(21,074)


(22,566)


(24,041)


(25,573)


(27,280)

DTAs that arise from net operating loss and tax credit carryforwards


—


(48)


(40)


(39)


—

Accumulated other comprehensive loss


5,270


4,593


4,759


5,603


6,333

Common Equity Tier 1 Capital


525,849


510,729


496,709


483,947


470,223

TRUPS


30,247


30,168


30,085


30,005


29,926

Tier 1 Capital


556,096


540,897


526,794


513,952


500,149

Allowable reserve for credit losses and other Tier 2 adjustments


59,933


60,661


60,852


60,605


59,726

Subordinated debt


58,782


58,893


39,409


44,236


44,053

Total Capital


$      674,811


$      660,451


$      627,055


$      618,793


$      603,928












Risk-Weighted Assets ("RWA")


$    4,794,374


$    4,852,573


$    4,867,237


$    4,890,679


$    4,823,833

Average Assets ("AA")


6,098,196


6,129,306


5,942,911


5,943,124


6,050,310












Common Equity Tier 1 Capital to RWA


10.97 %


10.52 %


10.21 %


9.90 %


9.75 %

Tier 1 Capital to RWA


11.60


11.15


10.82


10.51


10.37

Total Capital to RWA


14.08


13.61


12.88


12.65


12.52

Tier 1 Capital to AA (Leverage)


9.12


8.82


8.86


8.65


8.27

Shore Bancshares, Inc.

Reconciliation of GAAP and Non-GAAP Measures (Unaudited) – Continued

 


Regulatory Capital and Ratios for the Bank











($ in thousands)


Q1 2026


Q4 2025


Q3 2025


Q2 2025


Q1 2025

Common equity


$      660,598


$      648,279


$      639,670


$      627,838


$      617,071

Goodwill (1)


(61,061)


(61,123)


(61,176)


(61,238)


(61,300)

Core deposit intangible(2)


(21,074)


(22,566)


(24,041)


(25,573)


(27,280)

Accumulated other comprehensive loss


5,270


4,593


4,759


5,603


6,333

Common Equity Tier 1 Capital


583,733


569,183


559,212


546,630


534,824

Tier 1 Capital


583,733


569,183


559,212


546,630


534,824

Allowable reserve for credit losses and other Tier 2 adjustments


59,894


60,563


60,822


60,605


59,726

Total Capital


$      643,627


$      629,746


$      620,034


$      607,235


$      594,550












Risk-Weighted Assets ("RWA")


$    4,791,223


$    4,844,639


$    4,864,871


$    4,888,558


$    4,821,975

Average Assets ("AA")


6,093,905


6,122,775


5,939,890


5,940,411


6,050,130














(1)

Goodwill is net of deferred tax liability.

(2)

Core deposit intangible is net of deferred tax liability.

Shore Bancshares, Inc.

Summary of Loan Portfolio (Unaudited)

 

Portfolio loans are summarized by loan type as follows:


($ in thousands)


March 31,
2026


% of Total
Loans


December
31, 2025


% of Total
Loans


September
30, 2025


% of Total
Loans


June 30,
2025


% of Total
Loans


March 31,
2025


% of Total
Loans

Commercial real estate


$  2,599,815


53.62 %


$  2,643,996


53.95 %


$  2,642,601


54.12 %


$  2,603,974


53.95 %


$  2,544,107


53.25 %

Residential real estate


1,425,733


29.41


1,414,964


28.88


1,383,348


28.33


1,349,010


27.94


1,325,858


27.75

Construction


342,835


7.07


344,903


7.04


352,116


7.21


350,053


7.25


366,218


7.67

Commercial


220,833


4.56


226,006


4.61


221,598


4.54


224,092


4.64


234,499


4.91

Consumer


254,478


5.25


265,912


5.43


278,242


5.70


294,239


6.09


300,007


6.28

Credit cards


4,336


0.09


4,521


0.09


5,064


0.10


6,260


0.13


6,800


0.14

Total loans


4,848,030


100.00 %


4,900,302


100.00 %


4,882,969


100.00 %


4,827,628


100.00 %


4,777,489


100.00 %

Less: allowance for
credit losses


(58,481)




(58,836)




(59,554)




(58,483)




(58,042)



Total loans, net


$  4,789,549




$  4,841,466




$  4,823,415




$  4,769,145




$  4,719,447



Shore Bancshares, Inc.

Classified Assets and Nonperforming Assets (Unaudited)

 

Classified assets and nonperforming assets are summarized as follows:


($ in thousands)


March 31, 2026


December 31, 2025


September 30, 2025


June 30, 2025


March 31, 2025












Classified loans











Substandard


$            82,337


$            57,366


$            48,470


$            19,930


$            19,434

Total classified loans


82,337


57,366


48,470


19,930


19,434

Special mention loans


97,771


73,401


70,997


65,564


33,456

Total classified and special mention loans


$          180,108


$           130,767


$           119,467


$            85,494


$            52,890












Classified loans


$            82,337


$            57,366


$            48,470


$            19,930


$            19,434

Other real estate owned


69


113


120


179


179

Repossessed assets


3,345


2,879


3,432


2,457


2,429

Total classified assets


$            85,751


$            60,358


$            52,022


$            22,566


$            22,042












Classified assets to total assets


1.38 %


0.96 %


0.83 %


0.37 %


0.36 %












Nonaccrual loans


$            64,958


$            39,960


$            24,378


$            16,782


$            15,402

90+ days delinquent accruing


—


255


153


215


894

Other real estate owned ("OREO")


69


113


120


179


179

Repossessed property


3,345


2,879


3,432


2,457


2,429

Total nonperforming assets


$            68,372


$            43,207


$            28,083


$            19,633


$            18,904

Accruing borrowers experiencing financial difficulty loans
("BEFD")


5,263


5,311


6,704


6,709


1,356

Total nonperforming assets and BEFDs modifications


$            73,635


$            48,518


$            34,787


$            26,342


$            20,260












Nonperforming assets to total assets


1.10 %


0.69 %


0.45 %


0.33 %


0.31 %












Total assets


$        6,206,063


$         6,258,818


$         6,278,479


$         6,037,874


$         6,176,563

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SOURCE Shore Bancshares, Inc.