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Shore Bancshares Inc

Shore Bancshares, Inc. Reports 2025 Second Quarter Results

EASTON, Md. , July 24, 2025 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) (the "Company" or "Shore Bancshares"), the holding company for Shore United Bank, N.A. (the "Bank") reported net income for the second quarter of 2025 of $15.5 million, or $0.46 per diluted common share, compared to net income of $13.8 million, or $0.41 per diluted common share for the first quarter of 2025, and net income of $11.2 million, or $0.34 per diluted common share, for the second quarter of 2024.

Second  Quarter 2025 Highlights

  • Net Income Growth – Net income for the second quarter of 2025 increased $1.7 million to $15.5 million from $13.8 million in the first quarter of 2025. Net income increased primarily due to higher net interest income and noninterest income driven by higher mortgage banking activity, partially offset by higher noninterest expense. Net income for the first half of 2025 was $29.3 million, compared to $19.4 million for the first half of 2024.
  • Improved Return on Average Assets ("ROAA") – The Company reported ROAA of 1.03% for the second quarter of 2025, compared to 0.91% for the first quarter of 2025 and 0.77% for the second quarter of 2024. Non-U.S. generally accepted accounting principles ("GAAP") ROAA(1) was 1.15% for the second quarter of 2025, compared to 1.02% for the first quarter of 2025 and 0.91% for the second quarter of 2024.
  • Net Interest Margin ("NIM") Expansion – Net interest income for the second quarter of 2025 increased $1.2 million to $47.3 million from $46.0 million for the first quarter of 2025. NIM increased 11 basis points ("bps") to 3.35% during the second quarter of 2025 from 3.24% in the first quarter of 2025. NIM excluding accretion(1) increased for the comparable periods from 3.02% to 3.10%. Excluding accretion interest, loan yields increased 2 bps and funding costs decreased 4 bps for the comparable periods. Net interest income increased due to modest loan growth, slightly higher accelerated accretion income, and loan and securities repricing, coupled with lower cost of deposits during the period.
  • Book Value per Share Growth - Book value per share increased to $16.94 at June 30, 2025 from $16.55 at March 31, 2025 and $15.74 at June 30, 2024.
  • Stable Asset Quality – Nonperforming assets to total assets were 0.33% for the second quarter of 2025, an increase from 0.31% for the first quarter of 2025 and 0.29% for the second quarter of 2024. Classified assets to total assets were 0.37% in the second quarter of 2025, an increase when compared to 0.36% for the first quarter of 2025 and 0.33% for the second quarter of 2024. The allowance for credit losses ("ACL") was $58.5 million at June 30, 2025, compared to $57.9 million at December 31, 2024 and $58.5 million at June 30, 2024. The ACL as a percentage of loans remained flat at 1.21% at June 30, 2025 compared to December 31, 2024, and decreased compared to 1.24% at June 30, 2024.
  • Improved Operating Leverage – The efficiency ratio for the second quarter of 2025 was 60.83% compared to 63.64% in the first quarter of 2025 and 66.23% for the second quarter of 2024. The non-GAAP efficiency ratio(1), which excludes amortization, was 56.73% for the second quarter of 2025, compared to 59.25% for the first quarter of 2025 and 61.05% for the second quarter of 2024. Management anticipates ongoing expense management and technology investments will result in continued improvements in operating leverage over time.

"We continued to see steady improvement in our performance in the second quarter," stated James ("Jimmy") M. Burke, President and Chief Executive Officer of Shore Bancshares. "Net income and margins continue to expand as our efficiency improves and capital builds.  Loan growth remains constrained but asset yield increases are expected to support margins for the remainder of 2025. Continued investments in our infrastructure and personnel position us well for growth."



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

Balance Sheet Review

Total assets were $6.04 billion at June 30, 2025, a decrease of $192.9 million, or 3.1%, when compared to $6.23 billion at December 31, 2024. The aggregate decrease was primarily due to the decrease of interest-bearing deposits at other banks of $285.4 million, partially offset by an increase in our loan portfolio of $55.6 million and an increase in our investment securities portfolio of $16.8 million. The decrease in interest-bearing deposits was primarily driven by seasonal municipal run-offs of deposits. Total assets increased $173.9 million, or 3.0%, from $5.86 billion when compared to June 30, 2024.

The Company's tangible common equity ratio at June 30, 2025 was 7.88% compared to 7.17% at December 31, 2024. The Company's Tier 1 and Total Risk-Based Capital Ratios at June 30, 2025 were 10.51% and 12.65%, respectively. Non-owner occupied commercial real estate ("CRE") loans were $2.14 billion and $2.08 billion, and as a percentage of the Bank's Tier 1 Capital + ACL were 354.15% and 359.52% at June 30, 2025 and December 31, 2024, respectively.

CRE loans (excluding land and construction) at June 30, 2025 were $2.60 billion compared to $2.56 billion at December 31, 2024. The following table provides the stratification of the classes of CRE loans at June 30, 2025.

June 30, 2025



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


42.72 %


$                578


$          31,769


50.59 %


$             1,852


$        103,718

Office, govt. or govt. contractor


50.00


617


4,939


56.93


2,907


49,424

Office, other


49.10


482


91,486


47.71


1,223


202,962

Office, total


47.80


507


128,194


49.06


1,490


356,104

Retail


49.43


609


65,214


49.40


2,454


466,209

Multi-family (5+ units)


—


—


—


55.73


2,302


276,222

Hotel/motel


—


—


—


43.76


3,976


194,811

Industrial/warehouse


48.30


662


95,292


48.27


1,532


212,915

Commercial-improved


41.76


1,164


199,122


48.95


1,254


160,552

Marine/boat slips


29.53


1,408


39,419


39.41


2,208


15,459

Restaurant


48.99


1,008


60,476


46.47


1,000


47,000

Church


33.76


815


57,081


13.41


2,395


2,395

Other


39.62


1,085


84,652


60.67


515


411,315

Total CRE loans, gross(3)


43.87


801


$        729,450


53.00


1,247


$     2,142,982



(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.

(3)

CRE loans include land and construction.

The Bank's office CRE loan portfolio, which includes owner occupied and non-owner occupied CRE loans, was $484.3 million, or 10.0% of total loans at June 30, 2025. The Bank's office CRE loan portfolio included medical tenants of $135.5 million, or 28.0% of the total office CRE loan portfolio, at June 30, 2025. The Bank's office CRE loan portfolio also included government or government contractor tenants of $54.4 million, or 11.2% of the total office CRE loan portfolio for the same period. At June 30, 2025, the average loan debt-service coverage ratio was 1.8x and the average LTV was 48.41%.

There were 492 loans in the office CRE portfolio, which had an average loan size of $1.0 million and a median loan size of $369 thousand. LTV estimates for the office CRE portfolio at June 30, 2025 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%


245


$                    168,874


34.9 %

50%-60%


74


111,092


22.9

60%-70%


94


130,718


27.0

70%-80%


65


62,601


12.9

Greater than 80%


14


11,013


2.3

Total


492


$                    484,298


100.0 %

The Bank had 17 office CRE loans with balances greater than $5.0 million, totaling $150.9 million at June 30, 2025, compared to 18 office CRE loans totaling $164.5 million at December 31, 2024. The decrease in this portfolio segment was the result of normal amortization and the change in purpose of collateral of an $11.0 million loan from office to school. Of the office CRE portfolio balance, 80.5% was secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 97.0% was secured by properties with five stories or less. Of the office CRE loans, $2.5 million were classified as special mention or substandard at June 30, 2025. The Bank did not have any charge-offs related to the office CRE portfolio during 2025.

At June 30, 2025 and March 31, 2025, nonperforming assets were $19.6 million, or 0.33% of total assets, and $18.9 million, or 0.31% of total assets, respectively. The balance of nonperforming assets increased $729 thousand, primarily due to commercial real estate and consumer loans. When comparing June 30, 2025 to June 30, 2024, nonperforming assets increased $2.6 million, primarily due to an increase in nonaccrual loans of $1.9 million and an increase in repossessed marine loans of $897 thousand.

Total deposits decreased $214.4 million, or 3.9%, to $5.31 billion at June 30, 2025 when compared to December 31, 2024. The decrease in total deposits was primarily due to a decrease in interest-bearing checking deposits of $214.8 million and a decrease in money market and savings of $114.4 million, partially offset by an increase in time deposits of $91.7 million. The decrease in interest-bearing deposits was primarily driven by seasonal municipal run-offs of deposits. The rate on interest-bearing deposits remained flat at 2.94% at June 30, 2025 compared to March 31, 2025.

Total funding, which includes customer deposits, Federal Home Loan Bank ("FHLB") advances and brokered deposits was $5.36 billion at June 30, 2025, compared to $5.51 billion at March 31, 2025. The Bank had a $50.0 million FHLB advance at June 30, 2025 and March 31, 2025. The advance consisted of an 18-month Bermuda Convertible note of $50.0 million. The Bank had $10.8 million of brokered deposits at June 30, 2025 and zero at March 31, 2025. Total reciprocal deposits were $1.31 billion at June 30, 2025 and $1.46 billion at March 31, 2025. 

The Bank's uninsured deposits were $886.8 million, or 16.7% of total deposits, at June 30, 2025. The Bank's uninsured deposits, excluding deposits secured with pledged collateral, were $768.7 million, or 14.5% of total deposits, at June 30, 2025. At June 30, 2025, the Bank had approximately $1.16 billion of available liquidity, including $185.0 million in cash and cash equivalents, $974.1 million in secured borrowing capacity at the FHLB and other correspondent banks and $95.0 million in unsecured lines of credit.

Total stockholders' equity increased $24.1 million, or 4.5%, when compared to December 31, 2024, primarily due to current year earnings and a decrease in accumulated other comprehensive losses, partially offset by cash dividends paid. As of June 30, 2025, the ratio of total equity to total assets was 9.36% and the ratio of total tangible equity to total tangible assets(1) was 7.88% compared to 8.68% and 7.17%, respectively, at December 31, 2024.


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

Review of Quarterly Financial Results

Net interest income was $47.3 million for the second quarter of 2025, compared to $46.0 million for the first quarter of 2025 and $42.1 million for the second quarter of 2024. The increase in net interest income when compared to the first quarter of 2025 was primarily due to an increase in interest income on loans of $2.0 million, an increase in interest income on investment securities of $330 thousand and a decrease in interest expense on deposits of $701 thousand, partially offset by a decrease in interest income on deposits at other banks of $1.8 million. The increase in net interest income was $5.1 million when compared to the second quarter of 2024, and was primarily due to an increase in interest and fees on loans of $2.4 million, an increase in interest on deposits at other banks of $1.0 million and a decrease in interest expense on short-term borrowings of 1.6 million.

The Company's NIM increased to 3.35% for the second quarter of 2025 from 3.24% for the first quarter of 2025, primarily due to higher core interest income. NIM excluding accretion increased for the comparable periods from 3.02% to 3.10%. Excluding accretion interest, loan yields increased 2 bps and funding costs decreased 4 bps, for the comparable periods. Interest expense for the second quarter of 2025 decreased $666 thousand when compared to the first quarter of 2025. All products repriced at favorable rates, and were partially offset by the seasonal run off of municipal deposits. The Company's NIM increased to 3.35% for the second quarter of 2025 from 3.11% for the second quarter of 2024. The Company's average interest-earning asset yield increased to 5.44% for the second quarter of 2025 from 5.39% for the second quarter of 2024, while the average cost of funds decreased 19 bps to 2.17% from 2.36% for the same periods.

The provision for credit losses was $1.5 million for the three months ended June 30, 2025. The comparable amounts were $1.0 million for the three months ended March 31, 2025 and $2.1 million for the three months ended June 30, 2024. The increase in the provision for credit losses for the second quarter of 2025 compared to the first quarter of 2025 was due to higher reserves related to growth in the loan portfolio, partially offset by higher charge-offs. Coverage ratios remained flat at 1.21% at June 30, 2025 from March 31, 2025, and decreased from 1.24% at June 30, 2024. Net charge-offs increased to $649 thousand for the second quarter of 2025 compared to $554 thousand for the first quarter of 2025, and decreased compared to $886 thousand for the second quarter of 2024.

Total noninterest income for the second quarter of 2025 was $9.3 million, an increase of $2.3 million from $7.0 million for the first quarter of 2025, and an increase of $878 thousand from $8.4 million for the second quarter of 2024. When comparing the second quarter of 2025 to the first quarter of 2025, the increase in noninterest income was primarily due to an increase in mortgage banking revenue of $780 thousand, an increase in gain on loans held for sale of $359 thousand and an one-time credit card incentive. Comparing the second quarter of 2025 to the second quarter of 2024, the increase in noninterest income was primarily due to an increase in mortgage banking and related activity driven by increased mortgage servicing activity and lower prepayment rates.

Total noninterest expense of $34.4 million for the second quarter of 2025 increased $663 thousand compared to the first quarter of 2025 expense of $33.7 million, and increased $911 thousand compared to the second quarter of 2024 expense of $33.5 million. The increase from the first quarter of 2025 was primarily due to higher salaries and employee benefit expenses of $1.3 million, partially offset by lower professional service fees of $388 thousand. The increase from the second quarter of 2024 was primarily due to higher salaries and benefits expense of $842 thousand and higher software and data processing costs of  $600 thousand, partially offset by lower amortization of other intangible assets of $297 thousand.

The efficiency ratio for the second quarter of 2025 when compared to the first quarter of 2025 and the second quarter of 2024 was 60.83%, 63.64% and 66.23%, respectively. Non-GAAP efficiency ratios(1) for the same periods were 56.73%, 59.25% and 61.05%, respectively. The net operating expense ratio, which is noninterest expense less noninterest income divided by average assets, for the second quarter of 2025 was 1.67%, compared to 1.77% and 1.73% for the first quarter of 2025 and the second quarter of 2024, respectively. The non-GAAP net operating expense ratio(1), which excludes core deposit intangible amortization and non-recurring activity, was 1.52% for the second quarter of 2025, compared to 1.62% and 1.55% for the first quarter of 2025 and the second quarter of 2024, respectively.



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

Review of  Six Month Financial Results

Net interest income for the six months ended June 30, 2025 was $93.3 million, an increase of $10.0 million, or 12.0%, when compared to the six months ended June 30, 2024. The increase in net interest income was primarily due to an increase in total interest income of $8.4 million, or 5.9%, which included an increase in interest and fees on loans of $4.3 million, or 3.2%, and an increase in interest on deposits with other banks of $3.5 million, or 224.9%. The increase in interest and fees on loans was primarily due to the increase in the average balance of loans of $128.6 million, or 2.7% and a decrease in total interest expense, primarily due to a decrease in interest paid on short-term borrowings of $1.6 million and a decrease in interest on deposits of $641 thousand. These decreases were partially offset by an increase in interest expenses on long-term borrowings of $715 thousand due to the 18-month Bermuda Convertible note.

The Company's NIM increased from 3.09% for the six months ended June 30, 2024 to 3.30% for the six months ended June 30, 2025. Margins were higher due to a $288.2 million increase in interest-earning asset balances and a 5 basis point increase in interest-earning asset yields. These positive movements were coupled with lower cost interest-bearing deposits. The increase in the average balances of interest-bearing deposits of $20.0 million was offset by a 4 basis point decrease in the associated rates paid, as well as a $23.9 million decrease in the average balance of FHLB advances and a 56 basis point decrease in the associated rates paid. Net accretion income impacted net interest margin by 24 basis points and 27 basis points for the six months ended June 30, 2025 and 2024, respectively, which resulted in NIMs excluding accretion of 3.06% and 2.82% for the same periods.

The provision for credit losses for the six months ended June 30, 2025 and 2024 was $2.6 million and $2.5 million, respectively. The increase in the provision for credit losses during 2025 was due to higher reserves related to growth in the loan portfolio, partially offset by an improved economic outlook. Net charge-offs for the six months ended June 30, 2025 were $1.2 million compared to $1.5 million for the six months ended June 30, 2024.

Total noninterest income for the six months ended June 30, 2025 increased $1.3 million, or 8.8%, when compared to the same period in 2024. The increase was primarily due to a $453 thousand gain on sales of loans held for sale, $383 thousand of mortgage banking revenue and $249 thousand of other noninterest income.

Total noninterest expense for the six months ended June 30, 2025 decreased $2.0 million, or 2.9%, when compared to the same period in 2024. Noninterest expense line items decreased primarily due to the absence of the $4.3 million credit card fraud event during the six months ended June 30, 2024, which was partially offset by higher salaries and employee benefit expenses of $1.3 million and an increase of $1.3 million of software and data processing expense in the six months ended June 30, 2025.

The efficiency ratio for the six months ended June 30, 2025 was 62.19% compared to 71.42% for the six months ended June 30, 2024. Non-GAAP efficiency ratios for the same periods were 57.95% and 61.69%, respectively. The net operating expense ratio, which is noninterest expense less noninterest income divided by average assets, for the six months ended June 30, 2025 was 1.72% compared to 1.91% for the six months ended June 30, 2024. The non-GAAP net operating expense ratio(1), which excludes core deposit intangible amortization and non-recurring activity, was 1.57% for the six months ended June 30, 2025, compared to 1.58% for the six months ended June 30, 2024.




(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

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: the strength of the United States ("U.S.") economy and general economic conditions, (including the interest rate environment, government economic and monetary policies, the strength of global financial markets and inflation/deflation and supply chain issues), whether national or regional, and conditions in the lending markets in which we participate that may have an adverse effect on the demand for our loans and other products, our credit quality and related levels of nonperforming assets and loan losses, and the value and salability of the real estate that we own or that is the collateral for our loans; the ability to effectively manage the information technology systems, including third-party vendors, cyber or data privacy incidents or other failures, disruptions or security breaches, and risk related to the development and use of artificial intelligence; the ability to develop and use technologies to provide products and services that will satisfy customer demands; results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our reserve for loan losses or to write-down assets; changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, which could lead to restrictions on activities of banks generally, or our subsidiary bank in particular, more restrictive regulatory capital requirements, increased costs, including deposit insurance premiums, regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products; changes in market rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our balance sheet; our liquidity requirements could be adversely affected by changes in our assets and liabilities; our ability to prudently manage our growth and execute our strategy; impairment of our goodwill and intangible assets; competitive factors among financial services organizations, including product and pricing pressures and our ability to attract, develop and retain qualified banking professionals; the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; the growth and profitability of noninterest or fee income being less than expected; the effect of legislative or regulatory developments, including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial services industry; the effect of any change in federal government enforcement of federal laws affecting the cannabis industry; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the U.S. Securities and Exchange Commission (the "SEC"), the Public Company Accounting Oversight Board and other regulatory agencies; changes in U.S. trade policies, including the implementation of tariffs and other protectionist trade policies; the impact of governmental efforts to restructure or adjust the U.S. financial regulatory system; the impact of recent or future changes in Federal Deposit Insurance Corporation (the "FDIC") insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount, including any special assessments; the effect of fiscal and governmental policies of the U.S. federal government; climate change and other catastrophic events or disasters; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts of terrorism, and/or military conflicts, which could impact business and economic conditions in the United States and abroad; and other factors that may affect our future results. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's 2024 Annual Report on Form 10-K filed with the SEC and available at the SEC's Internet site (https://www.sec.gov).

The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments. 

 

Shore Bancshares, Inc.

Financial Highlights By Quarter and Year (Unaudited)













Q2 2025 vs.


Q2 2025 vs.


Six Months Ended June 30,

($ in thousands, except per share data)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024


Q1 2025


Q2 2024


2025


2024


2025 vs. 2024

PROFITABILITY FOR THE PERIOD





















Taxable-equivalent net interest income


$         47,333


$         46,110


$         44,093


$         43,345


$         42,222


2.7 %


12.1 %


$        93,442


$        83,436


11.99 %

Less: Taxable-equivalent adjustment


81


81


82


82


82


—


(1.2)


161


161


—

Net interest income


47,252


46,029


44,011


43,263


42,140


2.7


12.1


93,281


83,275


12.02

Provision for credit losses


1,528


1,028


780


1,470


2,081


48.6


(26.6)


2,556


2,488


2.73

Noninterest income


9,318


7,003


8,853


7,287


8,440


33.1


10.4


16,320


15,007


8.75

Noninterest expense


34,410


33,747


33,943


34,114


33,499


2.0


2.7


68,157


70,197


(2.91)

Income before income taxes


20,632


18,257


18,141


14,966


15,000


13.0


37.6


38,888


25,597


51.92

Income tax expense


5,125


4,493


4,859


3,777


3,766


14.1


36.1


9,617


6,179


55.64

Net income


$         15,507


$         13,764


$         13,282


$         11,189


$         11,234


12.7


38.0


$        29,271


$        19,418


50.74






















Return on average assets


1.03 %


0.91 %


0.86 %


0.77 %


0.77 %


             12 bp


             26 bp


0.97 %


0.67 %


              30 bp

Return on average assets excluding net amortization
of other intangible assets, credit card fraud losses
and assets held for sale – non-GAAP(1)


1.15


1.02


0.94


0.90


0.91


13


24


1.09


0.92


17

Return on average common equity


11.13


10.20


9.82


8.41


8.70


93


243


10.67


7.54


313

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


14.99


14.05


13.37


12.37


12.85


94


214


14.53


13.08


145

Interest rate spread


2.39


2.30


2.02


2.06


2.11


9


28


2.35


2.23


12

Net interest margin


3.35


3.24


3.03


3.17


3.11


11


24


3.30


3.09


21

Efficiency ratio – GAAP


60.83


63.64


64.21


67.49


66.23


(281)


(540)


62.19


71.42


(923)

Efficiency ratio – non-GAAP(1)


56.73


59.25


60.28


62.10


61.05


(252)


(432)


57.95


61.69


(374)

Noninterest income to average assets


0.62


0.46


0.57


0.50


0.58


16


4


0.54


0.52


2

Noninterest expense to average assets


2.29


2.23


2.19


2.34


2.31


6


(2)


2.26


2.43


(17)

Net operating expense to average assets – GAAP


1.67


1.77


1.62


1.84


1.73


(10)


(6)


1.72


1.91


(19)

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


1.52


1.62


1.50


1.65


1.55


(10)


(3)


1.57


1.58


(1)






















PER SHARE DATA





















Basic net income per common share


$             0.46


$             0.41


$             0.40


$             0.34


$             0.34


12.2 %


35.3 %


$           0.88


$           0.58


51.72 %

Diluted net income per common share


0.46


0.41


0.40


0.34


0.34


12.2


35.3


0.88


0.58


51.72

Dividends paid per common share


0.12


0.12


0.12


0.12


0.12


—


—


0.24


0.24


—

Book value per common share at period end


16.94


16.55


16.23


16.00


15.74


2.4


7.6


16.94


15.74


7.62

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


14.03


13.58


13.19


12.88


12.54


3.3


11.9


14.03


12.54


11.88

Common share market value at period end


15.72


13.54


15.85


13.99


11.45


16.1


37.3


15.72


11.45


37.29

Common share intraday price:





















High


$           15.88


$           17.24


$           17.61


$           14.99


$           11.90


(7.9) %


33.5 %


17.24


14.38


19.89

Low


11.47


13.15


13.21


11.03


10.06


(12.8)


14.0


11.47


10.06


14.02




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

 

Shore Bancshares, Inc.

Financial Highlights By Quarter and Year (Unaudited) - Continued













Q2 2025 vs.


Q2 2025 vs.


Six Months Ended June 30,

($ in thousands, except per share data)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024


Q1 2025


Q2 2024


2025


2024


2025 vs. 2024

AVERAGE BALANCE SHEET DATA





















Loans


$     4,833,558


$     4,784,991


$     4,796,245


$     4,734,001


$     4,706,510


1.0 %


2.7 %


$   4,809,409


$   4,680,846


2.75 %

Investment securities


683,680


664,655


655,610


656,375


706,079


2.9


(3.2)


674,220


680,701


(0.95)

Earning assets


5,660,409


5,768,080


5,798,454


5,435,311


5,459,961


(1.9)


3.7


5,712,117


5,423,871


5.31

Assets


6,021,385


6,129,241


6,163,497


5,810,492


5,839,328


(1.8)


3.1


6,075,339


5,807,076


4.62

Deposits


5,297,567


5,417,514


5,461,583


5,086,348


5,064,974


(2.2)


4.6


5,357,545


5,103,815


4.97

FHLB advances


50,000


50,000


50,000


83,500


143,769


—


(65.2)


50,000


73,885


(32.33)

Subordinated debt & TRUPS


74,102


73,840


73,578


72,946


72,680


0.4


2.0


73,971


72,549


1.96

Stockholders' equity


558,952


547,443


538,184


529,155


519,478


2.1


7.6


553,229


517,727


6.86






















CREDIT QUALITY DATA





















Net charge-offs (recoveries)


$              649


$              554


$           1,333


$           1,288


$              886


17.2 %


(26.8) %


1,203


1,451


(17.09) %






















Nonaccrual loans


$         16,782


$         15,402


$         21,008


$         14,844


$         14,837


9.0 %


13.1 %







Loans 90 days past due and still accruing


215


894


294


454


414


(76.0)


(48.1)







Other real estate owned and repossessed property


2,636


2,608


3,494


485


1,739


1.1


51.6







Total nonperforming assets


$         19,633


$         18,904


$         24,796


$         15,783


$         16,990


3.9


15.6







 

Shore Bancshares, Inc.

Financial Highlights By Quarter and Year (Unaudited) - Continued













Q2 2025 vs.


Q2 2025 vs.


Six Months Ended June 30,

($ in thousands, except per share data)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024


Q1 2025


Q2 2024


2025


2024


2025 vs. 2024

CAPITAL AND CREDIT QUALITY RATIOS





















Period-end equity to assets – GAAP


9.36 %


8.94 %


8.68 %


9.01 %


8.92 %


42 bp


44 bp







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


7.88


7.46


7.17


7.39


7.23


42


65




























Annualized net charge-offs to average loans


0.05 %


0.05 %


0.11 %


0.11 %


0.08 %


— bp


 (3) bp


0.05 %


0.06 %


              (1) bp






















Allowance for credit losses as a percent of:





















Period-end loans


1.21 %


1.21 %


1.21 %


1.24 %


1.24 %


 — bp


 (3)  bp







Nonaccrual loans


348.49


376.85


275.66


395.24


394.14


(2,836)


(4,565)







Nonperforming assets


297.88


307.04


233.55


371.72


344.19


(916)


(4,631)




























As a percent of total loans:





















Nonaccrual loans


0.35 %


0.32 %


0.44 %


0.31 %


0.32 %


3 bp


3 bp




























As a percent of total loans, other real estate owned and
repossessed property:





















Nonperforming assets


0.41 %


0.40 %


0.52 %


0.33 %


0.36 %


1 bp


5 bp




























As a percent of total assets:





















Nonaccrual loans


0.28 %


0.25 %


0.34 %


0.25 %


0.25 %


3 bp


3 bp







Nonperforming assets


0.33


0.31


0.40


0.27


0.29


2


4










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

 

Shore Bancshares, Inc.

Financial Highlights By Quarter and Year (Unaudited) - Continued













Q2 2025 vs.


Q2 2025 vs.

($ in thousands)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024


Q1 2025


Q2 2024

The Company Amounts















Common Equity Tier 1 Capital


$   483,947


$   470,223


$   458,258


$   446,402


$     435,238


2.92 %


11.19 %

Tier 1 Capital


513,952


500,149


488,105


476,170


464,554


2.76


10.63

Total Capital


618,793


603,928


591,228


579,664


567,680


2.46


9.00

Risk-Weighted Assets


4,890,679


4,823,833


4,852,564


4,816,165


4,803,230


1.39


1.82
















The Company Ratios















Common Equity Tier 1 Capital to RWA


9.90 %


9.75 %


9.44 %


9.27 %


9.06 %


15 bp


83 bp

Tier 1 Capital to RWA


10.51


10.37


10.06


9.89


9.67


14


84

Total Capital to RWA


12.65


12.52


12.18


12.04


11.82


13


83

Tier 1 Capital to AA (Leverage)


8.65


8.27


8.02


8.31


8.07


38


58
















The Bank Amounts















Common Equity Tier 1 Capital


$   546,630


$   534,824


$   521,453


$   509,511


$   501,003


2.21 %


9.11 %

Tier 1 Capital


546,630


534,824


521,453


509,511


501,003


2.21


9.11

Total Capital


607,235


594,550


580,706


569,317


560,625


2.13


8.31

Risk-Weighted Assets


4,888,558


4,821,975


4,851,903


4,808,058


4,796,512


1.38


1.92
















The Bank Ratios















Common Equity Tier 1 Capital to RWA


11.18 %


11.09 %


10.75 %


10.60 %


10.45 %


9 bp


74 bp

Tier 1 Capital to RWA


11.18


11.09


10.75


10.60


10.45


9


74

Total Capital to RWA


12.42


12.33


11.97


11.84


11.69


9


73

Tier 1 Capital to AA (Leverage)


9.20


8.84


8.58


8.90


8.71


36


49

 

Shore Bancshares, Inc.

Consolidated Balance Sheets (Unaudited)













June 30, 2025


June 30, 2025













compared to


compared to

($ in thousands, except per share data)


June 30, 2025


March 31, 2025


December 31, 2024


September 30, 2024


June 30, 2024


December 31, 2024


June 30, 2024

ASSETS















Cash and due from banks


$                  54,512


$                  46,886


$                  44,008


$                  52,363


$                  50,090


23.9 %


8.8 %

Interest-bearing deposits with other banks


130,472


342,120


415,843


131,258


88,793


(68.6)


46.9

  Cash and cash equivalents


184,984


389,006


459,851


183,621


138,883


(59.8)


33.2

Investment securities:















  Available for sale, at fair value


187,679


179,148


149,212


133,339


131,594


25.8


42.6

  Held to maturity, net of allowance for credit losses


459,246


469,572


481,077


484,583


499,431


(4.5)


(8.0)

  Equity securities, at fair value


6,010


5,945


5,814


5,950


5,699


3.4


5.5

Restricted securities, at cost


20,412


20,411


20,253


20,253


21,725


0.8


(6.0)

Loans held for sale, at fair value


34,319


15,717


19,606


26,877


27,829


75.0


23.3

Loans held for investment


4,827,628


4,777,489


4,771,988


4,733,909


4,705,737


1.2


2.6

  Less: allowance for credit losses


(58,483)


(58,042)


(57,910)


(58,669)


(58,478)


1.0


—

Loans, net


4,769,145


4,719,447


4,714,078


4,675,240


4,647,259


1.2


2.6
















Premises and equipment, net


81,426


81,692


81,806


81,663


82,176


(0.5)


(0.9)

Goodwill


63,266


63,266


63,266


63,266


63,266


—


—

Other intangible assets, net


33,761


36,033


38,311


40,609


42,945


(11.9)


(21.4)

Mortgage servicing rights


5,396


5,535


5,874


5,309


5,995


(8.1)


(10.0)

Right-of-use assets


11,052


11,709


11,385


11,384


11,762


(2.9)


(6.0)

Cash surrender value on life insurance


105,860


105,040


104,421


103,729


102,969


1.4


2.8

Accrued interest receivable


19,821


20,555


19,570


19,992


19,641


1.3


0.9

Deferred income taxes


30,972


31,428


31,857


32,191


36,078


(2.8)


(14.2)

Other assets


24,525


22,059


24,382


29,698


26,765


0.6


(8.4)

TOTAL ASSETS


$             6,037,874


$             6,176,563


$             6,230,763


$             5,917,704


$             5,864,017


(3.1)


3.0

 

Shore Bancshares, Inc.

Consolidated Balance Sheets (Unaudited) - Continued













June 30, 2025













compared to

($ in thousands, except per share data)


June 30, 2025


March 31, 2025


December 31, 2024


September 30, 2024


June 30, 2024


December 31, 2024

LIABILITIES













Deposits:













  Noninterest-bearing


$             1,575,120


$             1,565,017


$             1,562,815


$             1,571,393


$             1,587,252


0.8 %

  Interest-bearing checking


763,309


852,480


978,076


751,533


658,512


(22.0)

  Money market and savings


1,691,438


1,800,529


1,805,884


1,634,140


1,689,343


(6.3)

  Time deposits


1,273,285


1,242,319


1,181,561


1,268,657


1,213,778


7.8

  Brokered deposits


10,806


—


—


—


—


—

Total deposits


5,313,958


5,460,345


5,528,336


5,225,723


5,148,885


(3.9)

FHLB advances


50,000


50,000


50,000


50,000


81,000


—

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


30,005


29,926


29,847


29,768


29,316


0.5

Subordinated debt, net


44,236


44,053


43,870


43,688


43,504


0.8

Total borrowings


124,241


123,979


123,717


123,456


153,820


0.4

Lease liabilities


11,541


12,183


11,844


11,816


12,189


(2.6)

Other liabilities


22,940


27,586


25,800


23,438


26,340


(11.1)

TOTAL LIABILITIES


5,472,680


5,624,093


5,689,697


5,384,433


5,341,234


(3.8)

STOCKHOLDERS' EQUITY













Common stock, $0.01 par value per share


334


333


333


333


333


0.3

Additional paid in capital


359,063


358,572


358,112


357,580


356,994


0.3

Retained earnings


211,400


199,898


190,166


180,884


173,716


11.2

Accumulated other comprehensive loss


(5,603)


(6,333)


(7,545)


(5,526)


(8,260)


(25.7)

TOTAL STOCKHOLDERS' EQUITY


565,194


552,470


541,066


533,271


522,783


4.5

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$             6,037,874


$             6,176,563


$             6,230,763


$             5,917,704


$             5,864,017


(3.1)














Shares of common stock issued and outstanding


33,374,265


33,374,265


33,332,177


33,326,772


33,214,522


0.1

Book value per common share


$                    16.94


$                    16.55


$                    16.23


$                    16.00


$                    15.74


4.4

 

Shore Bancshares, Inc.

Consolidated Statements of Income By Quarter (Unaudited)













Q2 2025 vs.


Q2 2025 vs.


Six Months Ended June 30,

($ in thousands, except per share data)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024


Q1 2025


Q2 2024


2025


2024


% Change

INTEREST INCOME





















Interest and fees on loans


$        69,695


$        67,647


$        67,428


$        69,157


$        67,292


3.0 %


3.6 %


$      137,343


$      133,045


3.2 %

Interest and dividends on taxable investment securities


5,331


5,001


4,833


4,962


5,230


6.6


1.9


10,332


9,650


7.1

Interest and dividends on tax-exempt investment securities


6


6


6


6


6


—


—


12


12


—

Interest on deposits with other banks


1,588


3,409


4,137


564


578


(53.4)


174.7


4,997


1,538


224.9

Total interest income


76,620


76,063


76,404


74,689


73,106


0.7


4.8


152,684


144,245


5.9






















INTEREST EXPENSE





















Interest on deposits


27,369


28,070


30,363


28,856


27,585


(2.5)


(0.8)


55,440


56,081


(1.1)

Interest on short-term borrowings


—


—


—


491


1,584


—


(100.0)


—


1,641


(100.0)

Interest on long-term borrowings


1,999


1,964


2,030


2,079


1,797


1.8


11.2


3,963


3,248


22.0

Total interest expense


29,368


30,034


32,393


31,426


30,966


(2.2)


(5.2)


59,403


60,970


(2.6)






















NET INTEREST INCOME


47,252


46,029


44,011


43,263


42,140


2.7


12.1


93,281


83,275


12.0

Provision for credit losses


1,528


1,028


780


1,470


2,081


48.6


(26.6)


2,556


2,488


2.7

NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES


45,724


45,001


43,231


41,793


40,059


1.6


14.1


90,725


80,787


12.3






















NONINTEREST INCOME





















Service charges on deposit accounts


1,519


1,514


1,606


1,543


1,493


0.3


1.7


3,033


3,001


1.1

Trust and investment fee income


942


823


857


880


896


14.5


5.1


1,765


1,630


8.3

Gain on sale of loans held for sale


1,325


966


1,221


1,961


1,131


37.2


17.2


2,291


1,838


24.7

Mortgage-banking revenue


1,054


274


805


(784)


852


284.7


23.7


1,328


945


40.5

Interchange credits


1,788


1,577


1,726


1,711


1,717


13.4


4.1


3,365


3,304


1.9

Other noninterest income


2,690


1,849


2,638


1,976


2,351


45.5


14.4


4,538


4,289


5.8

Total noninterest income


$          9,318


$          7,003


$          8,853


$          7,287


$          8,440


33.1


10.4


$        16,320


$        15,007


8.8

 

Shore Bancshares, Inc.

Consolidated Statements of Income By Quarter (Unaudited) - Continued













Q2 2025 vs.


Q2 2025 vs.







($ in thousands, except per share data)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024


Q1 2025


Q2 2024


2025


2024


% Change

NONINTEREST EXPENSE





















Salaries and employee benefits


$       17,742


$       16,440


$       17,209


$       16,523


$       16,900


7.9 %


5.0 %


$      34,182


$      32,847


4.1 %

Occupancy expense


2,472


2,538


2,474


2,384


2,432


(2.6)


1.6


5,010


4,848


3.3

Furniture and equipment expense


796


853


760


876


900


(6.7)


(11.6)


1,650


1,804


(8.5)

Software and data processing


4,819


4,691


4,512


4,419


4,219


2.7


14.2


9,510


8,240


15.4

Directors' fees


219


348


460


443


359


(37.1)


(39.0)


567


654


(13.3)

Amortization of other intangible assets


2,272


2,278


2,298


2,336


2,569


(0.3)


(11.6)


4,550


5,145


(11.6)

FDIC insurance premium expense


1,023


1,091


1,013


1,160


1,089


(6.2)


(6.1)


2,114


2,240


(5.6)

Legal and professional fees


1,225


1,613


1,521


1,362


1,354


(24.1)


(9.5)


2,838


2,954


(3.9)

Fraud losses


83


105


98


673


62


(21.0)


33.9


188


4,564


(95.9)

Other noninterest expense


3,759


3,790


3,598


3,938


3,615


(0.8)


4.0


7,548


6,901


9.4

Total noninterest expense


34,410


33,747


33,943


34,114


33,499


2.0


2.7


68,157


70,197


(2.9)






















Income before income taxes


20,632


18,257


18,141


14,966


15,000


13.0


37.6


38,888


25,597


51.9

Income tax expense


5,125


4,493


4,859


3,777


3,766


14.1


36.1


9,617


6,179


55.6

NET INCOME


$       15,507


$       13,764


$       13,282


$       11,189


$       11,234


12.7


38.0


$      29,271


$      19,418


50.7






















Weighted average shares outstanding - basic


33,374,265


33,350,869


33,327,243


33,317,739


33,233,870


0.1 %


0.4 %


33,362,632


33,211,558


0.5 %

Weighted average shares outstanding - diluted


33,388,013


33,375,318


33,363,612


33,339,005


33,233,870


0.0 %


0.5 %


33,377,165


33,211,558


0.5 %






















Basic net income per common share


$           0.46


$           0.41


$           0.40


$           0.34


$           0.34


12.2 %


35.3 %


$          0.88


$          0.58


51.7 %

Diluted net income per common share


$           0.46


$           0.41


$           0.40


$           0.34


$           0.34


12.2 %


35.3 %


$          0.88


$          0.58


51.7 %






















Dividends paid per common share


$           0.12


$           0.12


$           0.12


$           0.12


$           0.12


— %


— %


$          0.24


$          0.24


— %

 

Shore Bancshares, Inc.

Consolidated Average Balance Sheets (Unaudited)



Three Months Ended



June 30, 2025


June 30, 2024


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


$          2,572,931


$              37,276


5.81 %


$          2,522,708


$              36,110


5.76 %


$          2,541,527


$              35,889


5.73 %

  Residential real estate


1,378,940


18,986


5.52


1,306,260


17,938


5.52


1,347,035


18,462


5.56

  Construction


352,803


5,697


6.48


319,205


4,902


6.18


352,323


5,526


6.36

  Commercial


224,218


3,658


6.54


219,140


3,956


7.26


232,900


3,705


6.45

  Consumer


298,544


4,036


5.42


330,819


4,265


5.19


304,520


4,058


5.40

  Credit card


6,122


121


7.93


8,378


201


9.65


6,686


86


5.22

Total loans


4,833,558


69,774


5.79


4,706,510


67,372


5.76


4,784,991


67,726


5.74




















Investment securities



















Taxable


683,028


5,331


3.12


705,421


5,230


2.97


664,002


5,001


3.01

Tax-exempt(1)


652


8


4.91


658


8


4.86


653


8


4.90

Interest-bearing deposits


143,171


1,588


4.45


47,372


578


4.91


318,434


3,409


4.34

Total earning assets


5,660,409


76,701


5.44


5,459,961


73,188


5.39


5,768,080


76,144


5.35

Cash and due from banks


46,620






45,141






43,526





Other assets


372,725






391,854






375,929





Allowance for credit losses


(58,369)






(57,628)






(58,294)





Total assets


$          6,021,385






$          5,839,328






$          6,129,241





 

Shore Bancshares, Inc.

Consolidated Average Balance Sheets (Unaudited) - Continued



Three Months Ended



June 30, 2025


June 30, 2024


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


$            720,967


$                5,697


3.17 %


$            711,138


$                5,550


3.14 %


$            859,698


$                7,025


3.31 %

Money market and savings deposits


1,747,854


9,580


2.20


1,690,157


10,291


2.45


1,799,707


10,015


2.26

Time deposits


1,258,802


12,000


3.82


1,175,542


11,650


3.99


1,208,250


11,030


3.70

Brokered deposits


9,720


92


3.80


7,753


94


4.88


—


—


—

Interest-bearing deposits(4)


3,737,343


27,369


2.94


3,584,590


27,585


3.10


3,867,655


28,070


2.94

Securities sold under retail
repurchase agreements and federal
funds purchased


—


—


—


—


—


—


—


—


—

FHLB advances


50,000


605


4.85


143,769


1,930


5.40


50,000


598


4.85

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


74,102


1,394


7.55


72,680


1,451


8.03


73,840


1,366


7.50

Total interest-bearing liabilities


3,861,445


29,368


3.05


3,801,039


30,966


3.28


3,991,495


30,034


3.05

Noninterest-bearing deposits


1,560,224






1,480,384






1,549,859





Accrued expenses and other liabilities


40,764






38,427






40,444





Stockholders' equity


558,952






519,478






547,443





Total liabilities and stockholders'
equity


$          6,021,385






$          5,839,328






$          6,129,241
























Net interest spread






2.39 %






2.11 %






2.30 %

Net interest margin






3.35






3.11






3.24

Net interest margin excluding accretion






3.10






2.83






3.02

Cost of funds






2.17






2.36






2.20

Cost of deposits






2.07






2.19






2.10

Cost of debt






6.46






6.28






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 $4.2 million, $4.5 million and $3.7 million of accretion interest on loans for the three months ended June 30, 2025, June 30, 2024 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 $435 thousand, $421 thousand and $334 thousand of amortization of deposit discounts, and $232 thousand, $243 thousand, and $232 thousand of amortization of borrowing fair value adjustments for the three months ended June 30, 2025, June 30, 2024 and March 31, 2025, respectively.

 

Shore Bancshares, Inc.

Consolidated Average Balance Sheets (Unaudited) - Continued



Six Months Ended June 30,



2025


2024

($ in thousands)


Average Balance


Interest


Yield/Rate


Average Balance


Interest


Yield/Rate

Earning assets













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













  Commercial real estate


$              2,557,316


$                   73,167


5.77 %


$              2,520,796


$                   71,743


5.72 %

  Residential real estate


1,363,076


37,448


5.54


1,291,225


35,179


5.48

  Construction


352,564


11,222


6.42


309,661


9,306


6.04

  Commercial


228,535


7,363


6.50


220,248


8,070


7.37

  Consumer


301,515


8,094


5.41


330,998


8,537


5.19

  Credit card


6,403


207


6.52


7,918


368


9.35

Total loans


4,809,409


137,501


5.77


4,680,846


133,203


5.72














Investment securities













Taxable


673,567


10,332


3.07


680,042


9,650


2.84

Tax-exempt(1)


653


15


4.59


659


15


4.55

Interest-bearing deposits


228,488


4,997


4.41


62,324


1,538


4.96

Total earning assets


5,712,117


152,845


5.40


5,423,871


144,406


5.35

Cash and due from banks


46,912






47,320





Other assets


374,641






393,439





Allowance for credit losses


(58,331)






(57,554)





Total assets


$              6,075,339






$              5,807,076





 

Shore Bancshares, Inc.

Consolidated Average Balance Sheets (Unaudited) - Continued



Six Months Ended June 30,



2025


2024

($ in thousands)


Average Balance


Interest


Yield/Rate


Average Balance


Interest


Yield/Rate

Interest-bearing liabilities













Interest-bearing checking


$                 789,949


$                   12,722


3.25 %


$                 910,831


$                   11,911


2.63 %

Money market and savings deposits


1,773,637


19,595


2.23


1,679,615


20,451


2.45

Time deposits


1,233,666


23,031


3.76


1,177,557


23,374


3.99

Brokered deposits


4,888


92


3.80


14,107


345


4.92

Interest-bearing deposits(4)


3,802,140


55,440


2.94


3,782,110


56,081


2.98

Securities sold under retail repurchase agreements and federal funds
purchased


—


—


—


—


—


—

FHLB advances


50,000


1,203


4.85


73,885


1,987


5.41

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


73,971


2,760


7.52


72,549


2,902


8.04

Total interest-bearing liabilities


3,926,111


59,403


3.05


3,928,544


60,970


3.12

Noninterest-bearing deposits


1,555,405






1,321,705





Accrued expenses and other liabilities


40,594






39,100





Stockholders' equity


553,229






517,727





Total liabilities and stockholders' equity


$              6,075,339






$              5,807,076


















Net interest spread






2.35 %






2.23 %

Net interest margin






3.30






3.09

Net interest margin excluding accretion






3.06






2.82

Cost of funds






2.19






2.34

Cost of deposits






2.09






2.21

Cost of debt






6.45






6.71





(1)

All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense.

(2)

Average loan balances include nonaccrual loans.

(3)

Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $8.0 million and $8.7 million of accretion interest on loans for the six months ended June 30, 2025 and 2024, respectively.

(4)

Interest expense on deposits and borrowings includes amortization of deposit discounts and amortization of borrowing fair value adjustments. There were $769 thousand and $788 thousand of amortization of deposit discounts, and $463 thousand and $463 thousand of amortization of borrowing fair value adjustments for the six months ended June 30, 2025 and 2024, respectively.

 

Shore Bancshares, Inc.

Reconciliation of GAAP and Non-GAAP Measures (Unaudited)


($ in thousands, except per share data)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024














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

Net income


$         15,507


$         13,764


$         13,282


$         11,189


$         11,234


Net income - annualized (A)


$         62,198


$         55,821


$         52,839


$         44,513


$         45,183














Net income


$         15,507


$         13,764


$         13,282


$         11,189


$         11,234


Add: Amortization of other intangible assets, net of tax


1,708


1,717


1,683


1,746


1,924


Add: Merger expenses, net of tax


—


—


—


—


—


Add: Credit card fraud losses, net of tax


—


—


—


252


—


Less: Sale and fair value of held for sale assets, net of tax


—


—


(329)


—


—


Net income, excluding net amortization of other intangible assets, credit card fraud losses
and held for sale assets


17,215


15,481


14,636


13,187


13,158


Net income, excluding net amortization of other intangible assets, credit card fraud losses
and held for sale assets - annualized (B)


$         69,049


$         62,784


$         58,226


$         52,461


$         52,921














Return on average assets – GAAP


1.03 %


0.91 %


0.86 %


0.77 %


0.77 %


Return on average assets excluding net amortization of other intangible assets, credit card
fraud losses and held for sale assets – non-GAAP


1.15 %


1.02 %


0.94 %


0.90 %


0.91 %














Average assets


$   6,021,385


$    6,129,241


$    6,163,497


$    5,810,492


$    5,839,328














Average stockholders' equity (C)


$      558,952


$       547,443


$       538,184


$       529,155


$       519,478


Less: Average goodwill and core deposit intangible


(98,241)


(100,514)


(102,794)


(105,136)


(107,594)


Average tangible common equity (D)


$      460,711


$       446,929


$       435,390


$       424,019


$       411,884














Return on average equity – GAAP (A)/(C)


11.13 %


10.20 %


9.82 %


8.41 %


8.70 %


Return on average tangible equity – non-GAAP (A)/(D)


13.50 %


12.49 %


12.14 %


10.50 %


10.97 %


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


14.99 %


14.05 %


13.37 %


12.37 %


12.85 %


 

Shore Bancshares, Inc.

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














($ in thousands, except per share data)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024














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

Noninterest expense (E)


$         34,410


$         33,747


$         33,943


$         34,114


$         33,499


Less: Amortization of other intangible assets


(2,272)


(2,278)


(2,298)


(2,336)


(2,569)


Less: Credit card fraud losses


—


—


—


(337)


—


Adjusted noninterest expense (F)


$         32,138


$         31,469


$         31,645


$         31,441


$         30,930














Net interest income (G)


$         47,252


$         46,029


$         44,011


$         43,263


$         42,140


Add: Taxable-equivalent adjustment


81


81


82


82


82


Taxable-equivalent net interest income (H)


$         47,333


$         46,110


$         44,093


$         43,345


$         42,222














Noninterest income (I)


$           9,318


$            7,003


$            8,853


$            7,287


$            8,440


Less: Sale and fair value of held for sale assets


—


—


(450)


—


—


Adjusted noninterest income (J)


$           9,318


$            7,003


$            8,403


$            7,287


$            8,440














Efficiency ratio – GAAP (E)/(G)+(I)


60.83 %


63.64 %


64.21 %


67.49 %


66.23 %


Efficiency ratio – non-GAAP (F)/(H)+(J)


56.73 %


59.25 %


60.28 %


62.10 %


61.05 %














Net operating expense to average assets – GAAP


1.67 %


1.77 %


1.62 %


1.84 %


1.73 %


Net operating expense to average assets – non-GAAP


1.52 %


1.62 %


1.50 %


1.65 %


1.55 %


 

Shore Bancshares, Inc.

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


($ in thousands, except per share data)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024












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

Stockholders' equity (K)


$            565,194


$            552,470


$            541,066


$            533,271


$            522,783

Less: Goodwill and core deposit intangible


(97,027)


(99,299)


(101,577)


(103,875)


(106,211)

Tangible equity (L)


$            468,167


$            453,171


$            439,489


$            429,396


$            416,572












Shares outstanding (M)


33,374


33,374


33,332


33,327


33,215












Book value per common share – GAAP (K)/(M)


$                 16.94


$                 16.55


$                 16.23


$                 16.00


$                 15.74

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


$                 14.03


$                 13.58


$                 13.19


$                 12.88


$                 12.54












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

Stockholders' equity (N)


$            565,194


$            552,470


$            541,066


$            533,271


$            522,783

Less: Goodwill and core deposit intangible


(97,027)


(99,299)


(101,577)


(103,875)


(106,211)

Tangible equity (O)


$            468,167


$            453,171


$            439,489


$            429,396


$            416,572












Assets (P)


$         6,037,874


$         6,176,563


$         6,230,763


$         5,917,704


$         5,864,017

Less: Goodwill and core deposit intangible


(97,027)


(99,299)


(101,577)


(103,875)


(106,211)

Tangible assets (Q)


$         5,940,847


$         6,077,264


$         6,129,186


$         5,813,829


$         5,757,806












Period-end equity to assets – GAAP (N)/(P)


9.36 %


8.94 %


8.68 %


9.01 %


8.92 %

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


7.88 %


7.46 %


7.17 %


7.39 %


7.23 %




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

(2) Management believes that reporting the non-GAAP efficiency ratio 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)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024

Common equity


$            565,194


$             552,470


$             541,066


$             533,271


$             522,783

Goodwill (1)


(61,238)


(61,300)


(61,362)


(61,397)


(61,460)

Core deposit intangible(2)


(25,573)


(27,280)


(28,991)


(30,572)


(32,313)

DTAs that arise from net operating loss and tax credit carryforwards


(39)


—


—


(426)


(2,032)

Accumulated other comprehensive loss


5,603


6,333


7,545


5,526


8,260

Common Equity Tier 1 Capital


483,947


470,223


458,258


446,402


435,238

TRUPS


30,005


29,926


29,847


29,768


29,316

Tier 1 Capital


513,952


500,149


488,105


476,170


464,554

Allowable reserve for credit losses and other Tier 2 adjustments


60,605


59,726


59,253


59,806


59,622

Subordinated debt


44,236


44,053


43,870


43,688


43,504

Total Capital


$            618,793


$             603,928


$             591,228


$             579,664


$             567,680












Risk-Weighted Assets ("RWA")


$        4,890,679


$         4,823,833


$         4,852,564


$         4,816,165


$         4,803,230

Average Assets ("AA")


5,943,124


6,050,310


6,083,760


5,729,576


5,756,260












Common Equity Tier 1 Capital to RWA


9.90 %


9.75 %


9.44 %


9.27 %


9.06 %

Tier 1 Capital to RWA


10.51


10.37


10.06


9.89


9.67

Total Capital to RWA


12.65


12.52


12.18


12.04


11.82

Tier 1 Capital to AA (Leverage)


8.65


8.27


8.02


8.31


8.07

 

Shore Bancshares, Inc.

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












Regulatory Capital and Ratios for the Bank











($ in thousands)


Q2 2025


Q1 2025


Q4 2024


Q3 2024


Q2 2024

Common equity


$            627,838


$             617,071


$             604,261


$             595,954


$             587,283

Goodwill (1)


(61,238)


(61,300)


(61,362)


(61,397)


(61,460)

Core deposit intangible(2)


(25,573)


(27,280)


(28,991)


(30,572)


(32,313)

DTAs that arise from net operating loss and tax credit carryforwards


—


—


—


—


(767)

Accumulated other comprehensive loss


5,603


6,333


7,545


5,526


8,260

Common Equity Tier 1 Capital


546,630


534,824


521,453


509,511


501,003

Tier 1 Capital


546,630


534,824


521,453


509,511


501,003

Allowable reserve for credit losses and other Tier 2 adjustments


60,605


59,726


59,253


59,806


59,622

Total Capital


$            607,235


$             594,550


$             580,706


$             569,317


$             560,625












Risk-Weighted Assets ("RWA")


$        4,888,558


$         4,821,975


$         4,851,903


$         4,808,058


$         4,796,512

Average Assets ("AA")


5,940,411


6,050,130


6,077,540


5,721,995


5,750,604




(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)


June 30, 2025


% of Total
Loans


March 31, 2025


% of Total
Loans


December 31, 2024


% of Total
Loans


September 30, 2024


% of Total
Loans


June 30, 2024


% of Total
Loans

Commercial real estate


$             2,603,974


54.0 %


$             2,544,107


53.3 %


$             2,557,806


53.6 %


$             2,535,004


53.6 %


$             2,546,114


54.1 %

Residential real estate


1,349,010


27.9


1,325,858


27.8


1,329,406


27.9


1,312,375


27.7


1,280,973


27.2

Construction


350,053


7.3


366,218


7.7


335,999


7.0


337,113


7.1


327,875


7.0

Commercial


224,092


4.6


234,499


4.9


237,932


5.0


225,083


4.8


218,987


4.7

Consumer


294,239


6.1


300,007


6.3


303,746


6.4


317,149


6.7


324,480


6.9

Credit cards


6,260


0.1


6,800


0.1


7,099


0.2


7,185


0.2


7,308


0.2

Total loans


4,827,628


100.0 %


4,777,489


100.0 %


4,771,988


100.0 %


4,733,909


100.0 %


4,705,737


100.0 %

Less: allowance for credit losses


(58,483)




(58,042)




(57,910)




(58,669)




(58,478)



Total loans, net


$             4,769,145




$             4,719,447




$             4,714,078




$             4,675,240




$             4,647,259



 

Shore Bancshares, Inc.

Classified Assets and Nonperforming Assets (Unaudited)

Classified assets and nonperforming assets are summarized as follows:


($ in thousands)


June 30, 2025


March 31, 2025


December 31, 2024


September 30, 2024


June 30, 2024












Classified loans











Substandard


$                   19,930


$                   19,434


$                   24,679


$                   22,798


$                   17,409

Total classified loans


19,930


19,434


24,679


22,798


17,409

Special mention loans


65,564


33,456


33,519


14,385


25,549

Total classified and special mention loans


$                   85,494


$                   52,890


$                   58,198


$                   37,183


$                   42,958












Classified loans


$                   19,930


$                   19,434


$                   24,679


$                   22,798


$                   17,409

Other real estate owned


179


179


179


179


179

Repossessed assets


2,457


2,429


3,315


306


1,560

Total classified assets


$                   22,566


$                   22,042


$                   28,173


$                   23,283


$                   19,148












Classified assets to total assets


0.37 %


0.36 %


0.45 %


0.39 %


0.33 %












Nonaccrual loans


$                   16,782


$                   15,402


$                   21,008


$                   14,844


$                   14,837

90+ days delinquent accruing


215


894


294


454


414

Other real estate owned ("OREO")


179


179


179


179


179

Repossessed property


2,457


2,429


3,315


306


1,560

Total nonperforming assets


$                   19,633


$                   18,904


$                   24,796


$                   15,783


$                   16,990

Accruing borrowers experiencing financial difficulty loans
("BEFD")


6,709


1,356


1,662


—


—

Total nonperforming assets and BEFDs modifications


$                   26,342


$                   20,260


$                   26,458


$                   15,783


$                   16,990












Nonperforming assets to total assets


0.33 %


0.31 %


0.40 %


0.27 %


0.29 %












Total assets


$             6,037,874


$             6,176,563


$             6,230,763


$             5,917,704


$             5,864,017

 

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SOURCE Shore Bancshares, Inc.