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 third quarter of 2025 of $14.3 million, or $0.43 per diluted common share, compared to net income of $15.5 million, or $0.46 per diluted common share, for the second quarter of 2025, and net income of $11.2 million,or $0.34 per diluted common share, for the third quarter of 2024.
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ThirdQuarter 2025 Highlights
— Return on Average Assets (“ROAA”) – The Company reported ROAA of 0.95% for the third quarter of 2025, compared to 1.03% for the second quarter of 2025 and 0.77% for the third quarter of 2024. Non-U.S. generally accepted accounting principles (“GAAP”) ROAA(1)was 1.05% for the third quarter of 2025, compared to 1.15% for the second quarter of 2025 and 0.90% for the third quarter of 2024.
— Net Income – Net income for the third quarter of 2025 decreased $1.2 million to $14.3 million from $15.5 million in the second quarter of 2025. Net income decreased primarily due to lower noninterest income of $1.6 million driven by reduced mortgage banking activity and a higher provision for loan losses of $1.5 million due to a large marine loan write-off, partially offset by an increase in net interest income of $1.4 million. Net income for the nine months ended September 30, 2025 was $43.6 million, compared to $30.6 million for the nine months ended September 30, 2024. The increase was primarily driven by an increase in net interest income due to loans repricing favorably coupled with a lower cost of deposits during the period.
— Net Interest Margin (“NIM”) Expansion – Net interest income for the third quarter of 2025 increased $1.4 million to $48.7 million from $47.3 million for the second quarter of 2025. NIM increased 7 basis points (“bps”) to 3.42% during the third quarter of 2025 from 3.35% in the second quarter of 2025. NIM excluding accretion(1) increased for the comparable periods from 3.10% to 3.22%. Excluding accretion interest, loan yields increased 6 bps and funding costs decreased 6 bps for the comparable periods. Net interest income increased due to modest loan growth coupled with a lower cost of deposits. These favorable changes were partially offset by a lower yield on investments and lower average deposits with other institutions.
— Book Value per Share – Book value per share increased to $17.27 at September 30, 2025 from $16.94 at June 30, 2025 and $16.00 at September 30, 2024.
— Asset Quality – Nonperforming assets to total assets were 0.45% at September 30, 2025, an increase from 0.33% at June 30, 2025 and 0.27% at September 30, 2024. Classified assets to total assets were 0.83% at September 30, 2025, an increase when compared to 0.37% at June 30, 2025 and 0.39% at September 30, 2024. The allowance for credit losses (“ACL”) was $59.6 million at September 30, 2025, compared to $57.9 million at December 31, 2024 and $58.7 million at September 30, 2024. The ACL as a percentage of loans increased to 1.22% at September 30, 2025 compared to 1.21% at December 31, 2024, and decreased compared to 1.24% at September 30, 2024.
— Operating Leverage – The efficiency ratio for the third quarter of 2025 was 61.00% compared to 60.83% in the second quarter of 2025 and 67.49% for the third quarter of 2024. The non-GAAP efficiency ratio(1), which excludes amortization, was 57.30% for the third quarter of 2025, compared to 56.73% for the second quarter of 2025 and 62.10% for the third quarter of 2024. Management anticipates ongoing expense management of professional services and technology investments will result in continued improvements in operating leverage over time.
“We continue to demonstrate resilience and operational strength in the third quarter,” stated James (“Jimmy”) M. Burke, President and Chief Executive Officer of Shore Bancshares. “Despite a modest decline in net income for the quarter due to a large marine loan write-off and softer noninterest income, we saw meaningful expansion in net interest margin and continued growth in book value per share. Asset quality remains sound, supported by strong collateral and prudent reserve levels, despite a temporary increase in nonperforming and classified assets driven by a few commercial real estate exposures. As we navigate a dynamic environment, we remain focused on enhancing operating leverage through strategic investments in technology and talent. We are confident in our ability to deliver sustainable long-term value.”
__________________________________(1)See the Reconciliation of GAAP and non-GAAP Measures tables.
Balance Sheet Review
Total assets were $6.28 billion at September30, 2025, an increase of $47.7 million, or 0.8%, when compared to $6.23 billion at December31, 2024. The aggregate increase was primarily due to an increase in our loan portfolio of $111.0 million, partially offset by adecrease in interest-bearing deposits at other banks of $61.6 million and a decrease in our investment securities portfolio of $14.8 million. The decrease in interest-bearing deposits with other institutions was primarily driven by loan growth. Total assets increased $360.8 million, or 6.1%, from $5.92 billion when compared to September30, 2024.
The Company's tangible common equity ratio at September30, 2025 was 7.80% compared to 7.17% at December31, 2024. The Company's Tier 1 and Total Risk-Based Capital Ratios at September30, 2025 were 10.82% and 12.88%, respectively. Non-owner occupied commercial real estate (“CRE”) loans were $2.16billion and $2.08billion, and as a percentage of the Bank's Tier 1 Capital + ACL were 348.42% and 359.52% at September30, 2025 and December31, 2024, respectively.
CRE loans (excluding land and construction) at September30, 2025 were $2.64billion compared to $2.56billion at December31, 2024. The following table provides the stratification of the classes of CRE loans at September30, 2025.
September 30, 2025 Owner Occupied Non-Owner Occupied($ in thousands) Average LTV(1) Average Loan Average LTV(1) Average Loan Loan Size Balance(2) Loan Size Balance(2)Office, medical 43.00% $ 562 $ 31,462 50.82% $ 1,820 $ 98,278Office, govt. or govt. contractor 53.78 603 4,820 56.48 2,892 49,170Office, other 48.85 480 91,125 47.72 1,198 198,837Office, total 47.76 502 127,407 49.07 1,461 346,285Retail 49.72 614 66,951 49.03 2,510 486,968Multi-family (5+ units) – – – 55.05 2,412 287,016Hotel/motel – – – 45.05 4,090 204,511Industrial/warehouse 48.16 673 96,857 49.59 1,555 211,455Commercial-improved 40.79 1,161 206,657 49.31 1,266 160,729Marine/boat slips 29.78 1,512 39,313 35.31 1,647 9,885Restaurant 48.43 999 59,928 47.34 992 46,602Church 33.95 863 60,434 13.34 2,383 2,383Land/lot loans 51.17 660 1,320 49.02 253 86,901Other 40.15 1,409 114,157 83.01 682 313,150Total CRE loans, gross(3) 43.52 837 $ 773,024 54.25 1,254 $ 2,155,885
(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 $473.7million, or 9.7% of total loans at September30, 2025. The Bank's office CRE loan portfolio included loans to medical tenants of $129.7million, or 27.4% of the total office CRE loan portfolio, at September30, 2025. The Bank's office CRE loan portfolio also included loans to government or government contractor tenants of $54.0million, or 11.4% of the total office CRE loan portfolio for the same period. At September30, 2025, the average loan debt-service coverage ratio on the office CRE loan portfolio was 1.8x and the average LTV was 48.40%.
There were 491 loans in the office CRE portfolio, which had an average loan size of $965 thousand and a median loan size of $366 thousand. LTV estimates for the office CRE portfolio at September30, 2025 are summarized below and LTV collateral values are based on the most recent appraisal, which may vary from the appraised value at loan origination.
LTV Range ($ in thousands) Loan Count Loan Balance % of Office CRELess than or equal to 50% 242 $ 156,733 33.1%50%-60% 78 111,682 23.660%-70% 92 132,631 28.070%-80% 63 62,485 13.2Greater than 80% 16 10,161 2.1Total 491 $ 473,692 100.0%
The Bank had 16 office CRE loans with balances greater than $5.0million, totaling $144.7million at September30, 2025, compared to 18 office CRE loans totaling $164.5million at December31, 2024. The decrease in this portfolio segment was the result of normal amortization, the payoff of a $5.6million loan, and the change in purpose of collateral of an $11.8million loan from office to school. Of the office CRE portfolio balance, 80.1% was secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 96.9% was secured by properties with five stories or less. Of the office CRE loans, $13.7 million were classified as special mention or substandard at September30, 2025. The Bank did not have any charge-offs related to the office CRE portfolio during 2025.
At September30, 2025 and June30, 2025, nonperforming assets were $28.1 million, or 0.45%of total assets, and $19.6 million, or 0.33%of total assets, respectively. The balance of nonperforming assets increased $8.5 million, primarily due to commercial real estate and consumer loans. When comparing September30, 2025 to September30, 2024, nonperforming assets increased $12.3 million, primarily due to an increase in nonaccrual loans of $9.5 million and an increase in repossessed marine and auto loans of $3.1 million. Substandard loans, which include nonaccrual loans, accruing loans and accruing loans 90 days or more past due were $48.5 million at September30, 2025 compared to $19.9 million at June30, 2025 and $22.8 million at September30, 2024. The increase was primarily due to several commercial non-owner occupied real estate loans, which were downgraded during the current period. All of these loans are well secured by collateral and required minimal individual reserves as of September30, 2025.
Total deposits increased $214.2 million from June30, 2025 to $5.53 billion at September30, 2025 and decreased $171 thousand when compared to December31, 2024. The third-quarter increase was primarily driven by seasonal growth in municipal deposits, which typically accumulate during this period. The decrease in total deposits year-to-date was primarily due to a decrease in interest-bearing checking deposits of $126.1 million and a decrease in money market and savings of $15.9 million. These decreases were partially offset by an increase in time deposits of $99.6 million. Core deposits, which exclude municipal deposits, increased by $224.2 million, or 5.5%, during the same period which was partially offset by volatility driven by a large client relationship.
Total funding, which includes customer deposits, Federal Home Loan Bank (“FHLB”) advances and brokered deposits was $5.58 billion at September30, 2025, compared to $5.36 billion at June30, 2025. The Bank had a $50.0million FHLB advance at September30, 2025 and June30, 2025. The advance consisted of an 18-month Bermuda Convertible note of $50.0million. The Bank had $10.9 million and $10.8 million of brokered deposits at September30, 2025 and June30, 2025, respectively. Total reciprocaldepositswere $1.48 billionat September30, 2025 and $1.31 billion at June30, 2025.
The Bank's uninsured deposits were $936.3 million, or 16.9% of total deposits, at September30, 2025. The Bank's uninsured deposits, excluding deposits secured with pledged collateral, were $792.2 million, or 14.3% of total deposits, at September30, 2025. At September30, 2025, the Bank had approximately $1.37 billion of available liquidity, including $416.5 million in cash and cash equivalents, $950.9 million in secured borrowing capacity at the FHLB and other correspondent banks and $65.0 million in unsecured lines of credit.
Total stockholders' equity increased $36.1 million, or 6.7%, when compared to December31, 2024, primarily due to current year earnings and a decreasein accumulated other comprehensive losses, partially offset by cash dividends paid. As of September30, 2025 and December31, 2024, the ratio of total equity to total assets was 9.19% and 8.68%, respectively,and the ratio of total tangible equity to total tangible assets(1) was 7.80% and 7.17%, respectively.
__________________________________(1)See the Reconciliation of GAAP and non-GAAP Measures tables.
Review of Quarterly Financial Results
Net interest income was $48.7 million for the third quarter of 2025, compared to $47.3 million for the second quarter of 2025 and $43.3 million for the third quarter of 2024. The increase in net interest income when compared to the second quarter of 2025 was primarily due to an increase in interest income on loans of $1.2 million and a decrease in interest expense on deposits of $895 thousand, partially offset by a decrease in interest income on deposits at other banks of $373 thousand and a decrease in interest income on investment securities of $295 thousand. The increase in net interest income was $5.4 millionwhen compared to the third quarter of 2024, and was primarily due to a decrease in interest expense on deposits of $2.4 million,an increasein interest and fees on loans of $1.8 million, a decrease in interest expense on long term borrowings of $661 thousand and an increasein interest on deposits at other banks of $651 thousand, partially offset by an increase in interest expense on short-term borrowings of $149 thousand.
The Company's NIM increased to 3.42% for the third quarter of 2025 from 3.35% for the second quarter of 2025,primarily due to higher core interest income. NIM excluding accretion increased for the comparable periods from 3.10% to 3.22%. Excluding accretion interest, loan yields increased 6 bps and funding costs decreased 6 bps, for the comparable periods. Interest expense for the third quarter of 2025 decreased $836 thousand when compared to the second quarter of 2025. All deposit products repricedat favorable rates, coupled with lower interest-bearing deposit balances during the period. The Company's NIM increasedto 3.42%for the third quarter of 2025 from 3.17%for the third quarter of 2024. The Company's average interest-earning asset yield decreasedto 5.42% for the third quarter of 2025 from 5.47% for the third quarter of 2024, while the average cost of funds decreased29bps to 2.09%from 2.38%for the same periods.
The provision for credit losses was $3.0 million for the three months ended September30, 2025. The comparable amounts were $1.5 million for the three months ended June30, 2025 and $1.5 million for the three months ended September30, 2024. The increase in the provision for credit losses for the third quarter of 2025 compared to the second quarter of 2025 was due tohigher reserves related to growth in the loan portfolio and higher charge-offs driven by a large marine loan write-off. Coverage ratios increased to 1.22% at September30, 2025from 1.21% at June30, 2025, and decreased from 1.24% at September30, 2024. Net charge-offs increased to $1.8 million for the third quarter of 2025 compared to $649 thousand for the second quarter of 2025, and increased compared to$1.3 million for the third quarter of 2024. The increase was driven by a large marine loan write-down in the third quarter 2025.
Total noninterest income for the third quarter of 2025 was $7.7 million, a decrease of $1.6 million from $9.3 million for the second quarter of 2025, and anincrease of$414 thousand from $7.3 million for the third quarter of 2024. When comparing the third quarter of 2025 to the second quarter of 2025, the decrease in noninterest income was primarily due to a decrease in mortgage banking revenue of $1.1 million and the absence of the one-time credit card incentive in the second quarter 2025. Comparing the third quarter of 2025 to the third quarter of 2024, the increase in noninterest income was primarily due to an increase in interchange credits and an increase in mortgage banking revenue.
Total noninterest expense of $34.4 million for the third quarter of 2025 decreased $31 thousand compared to the second quarter of 2025 expense of $34.4 million, and increased $265 thousand compared to the third quarter of 2024 expense of $34.1 million. The decrease from the second quarter of 2025 was primarily due to lower professional service fees of $236 thousand and other noninterest expense, partially offset by higher salaries and employee benefit expenses of $0.9 million. The increase from the third quarter of 2024 was primarily due to higher salaries and benefits expense of $2.1 million and higher software and data processing costs of $736 thousand, partially offset by the absence of the credit fraud loss-related expenses incurred in the third quarter 2024, lower legal and professional services of $373 thousand andlower amortization of other intangible assets of $297 thousand.
The efficiency ratio for the third quarter of 2025 when compared to the second quarter of 2025 and the third quarter of 2024 was 61.00%, 60.83% and 67.49%, respectively. Non-GAAP efficiency ratios(1) for the same periods were 57.30%, 56.73% and 62.10%, respectively. The net operating expense ratio, which is noninterest expense less noninterest income divided by average assets, for the third quarter of 2025 was 1.76%, compared to 1.67%and 1.84% for the second quarter of 2025 and the third quarter of 2024, respectively. The non-GAAP net operating expense ratio(1), which excludes core deposit intangible amortization and non-recurring activity, was 1.62% for the third quarter of 2025, compared to 1.52% and 1.65% for the second quarter of 2025 and the third quarter of 2024, respectively.
__________________________________(1) See the Reconciliation of GAAP and Non-GAAP Measures tables.
Review of NineMonthFinancial Results
Net interest income for the nine months ended September 30, 2025 was $141.9 million, an increase of $15.4 million, or 12.2%, when compared to the nine months ended September 30, 2024. The increase in net interest income was primarily due to an increase in total interest income of $10.9 million, or 5.0%, which included an increase in interest and fees on loans of $6.1 million, or 3.0%, and an increase in interest on deposits with other banks of $4.1 million, or 195.5%. The increase in interest and fees on loans was primarily due to the increase in the average balance of loans of $135.9 million, or 2.9%. The decrease in total interest expense was primarily due to a decrease in interest on deposits of $3.0 million and a decrease in interest expense on borrowings of $1.4 million as a result of lower average FHLB advances and associated rates during the year.
The Company's NIM increasedfrom 3.12% for the nine months ended September 30, 2024 to3.34% for the nine months ended September 30, 2025. Margins were higher due to a $266.5 million increase ininterest-earning asset balances and a 1 basis pointincrease 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 $75.5 million was offset by a 16 basis point decrease in the associated rates paid, as well as a $26.3 million decrease in the average balance of FHLB advances and a 52 basis point decrease in the associated rates paid. Net accretion income impacted net interest margin by 23 basis points and 29 basis points for the nine months ended September 30, 2025 and 2024, respectively, which resulted in NIMs excluding accretion of 3.11% and 2.83% for the same periods.
The provision for credit losses for the nine months ended September30, 2025 and 2024 was $5.5 million and $4.0 million, respectively. The increase in the provision for credit losses during 2025 was due to higher reserves related to growth in the loan portfolio and higher charge-offs, partially offset by an improved economic outlook. Net charge-offs for the nine months ended September 30, 2025 were $3.0 million compared to $2.7 million for the nine months ended September 30, 2024.
Total noninterest income for the nine months ended September 30, 2025 increased $1.7 million, or 7.7%, when compared to the same period in 2024. The increase was primarily due to a $936 thousandincrease in mortgage-banking revenue, a $341 thousand increase in other noninterest income and a $208 thousand increase in interchange credits.
Total noninterest expense for the nine months ended September 30, 2025 decreased $1.8 million, or 1.7%, when compared to the same period in 2024. Noninterest expense line items decreased primarily due to the absence of the $4.7 million credit card fraud event during the nine months ended September 30, 2024and lower amortization of intangible assets of $893 thousand, which was partially offset by higher salaries and employee benefit expenses of $3.5 million and an increase of $2.0 million of software and data processing expense in the nine months ended September 30, 2025.
The efficiency ratio for the nine months ended September 30, 2025 was 61.78%compared to 70.09% for the nine months ended September 30, 2024. Non-GAAP efficiency ratios for the same periods were 57.73% and 61.83%, respectively. The net operating expense ratio, which is noninterest expense less noninterest income divided by average assets, for the nine months ended September 30, 2025 was 1.73% compared to 1.89% for the nine months ended September 30, 2024. The non-GAAP net operating expense ratio(1), which excludes core deposit intangible amortization and non-recurring activity, was 1.59% for the nine months ended September 30, 2025, compared to 1.61% for the nine months ended September 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 effects of federal government shutdowns, debt ceiling standoff, or other uncertainty regarding 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) Q3 2025 vs. Q3 2025 vs. Nine Months Ended September 30,($ in thousands, except per share data) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2025 Q3 2024 2025 2024 2025 vs. 2024PROFITABILITY FOR THE PERIODTaxable-equivalent net interest income $ 48,738 $ 47,333 $ 46,110 $ 44,093 $ 43,345 3.0% 12.4% $ 142,180 $ 126,780 12.15%Less: Taxable-equivalent adjustment 83 81 81 82 82 2.5 1.2 244 242 0.83Net interest income 48,655 47,252 46,029 44,011 43,263 3.0 12.5 141,936 126,538 12.17Provision for credit losses 2,992 1,528 1,028 780 1,470 95.8 103.5 5,548 3,958 40.17Noninterest income 7,701 9,318 7,003 8,853 7,287 (17.4) 5.7 24,021 22,294 7.75Noninterest expense 34,379 34,410 33,747 33,943 34,114 (0.1) 0.8 102,536 104,311 (1.70)Income before income taxes 18,985 20,632 18,257 18,141 14,966 (8.0) 26.9 57,873 40,563 42.67Income tax expense 4,637 5,125 4,493 4,859 3,777 (9.5) 22.8 14,254 9,956 43.17Net income $ 14,348 $ 15,507 $ 13,764 $ 13,282 $ 11,189 (7.5) 28.2 $ 43,619 $ 30,607 42.51Adjusted net income – non-GAAP(1) $ 15,889 $ 17,215 $ 15,481 $ 14,636 $ 13,187 (7.7)% 20.5% $ 48,585 $ 39,769 22.2%Pre-tax pre-provision net income – non-GAAP(1) $ 21,977 $ 22,160 $ 19,285 $ 18,921 $ 16,436 (0.8)% 33.7% $ 63,421 $ 44,521 42.5%Return on average assets – GAAP 0.95% 1.03% 0.91% 0.86% 0.77% (8) bp 18 bp 0.96% 0.70% 26 bpAdjusted return on average assets – non-GAAP(1) 1.05 1.15 1.02 0.94 0.90 (10) 15 1.07 0.91 16Return on average common equity – GAAP 9.96 11.13 10.20 9.82 8.41 (117) 155 10.43 7.84 259Return on average tangible common equity – non-GAAP(1) 11.98 13.50 12.49 12.14 10.50 (152) 148 12.65 9.88 277Interest rate spread 2.46 2.39 2.30 2.02 2.06 7 40 2.38 2.18 20Net interest margin 3.42 3.35 3.24 3.03 3.17 7 25 3.34 3.12 22Efficiency ratio – GAAP 61.00 60.83 63.64 64.21 67.49 17 (649) 61.78 70.09 (831)Efficiency ratio – non-GAAP(1) 57.30 56.73 59.25 60.28 62.10 57 (480) 57.73 61.83 (410)Noninterest income to average assets 0.51 0.62 0.46 0.57 0.50 (11) 1 0.53 0.51 2Noninterest expense to average assets 2.27 2.29 2.23 2.19 2.34 (2) (7) 2.26 2.40 (14)Net operating expense to average assets – GAAP 1.76 1.67 1.77 1.62 1.84 9 (8) 1.73 1.89 (16)Net operating expense to average assets – non-GAAP(1) 1.62 1.52 1.62 1.50 1.65 10 (3) 1.59 1.61 (2)PER SHARE DATABasic net income per common share $ 0.43 $ 0.46 $ 0.41 $ 0.40 $ 0.34 (6.5)% 26.5% $ 1.31 $ 0.92 42.39%Diluted net income per common share 0.43 0.46 0.41 0.40 0.34 (6.5) 26.5 1.31 0.92 42.39Dividends paid per common share 0.12 0.12 0.12 0.12 0.12 – – 0.36 0.36 -Book value per common share at period end 17.27 16.94 16.55 16.23 16.00 2.0 7.9 17.27 16.00 7.94Tangible book value per common share at period end – non-GAAP(1) 14.43 14.03 13.58 13.19 12.88 2.9 12.0 14.43 12.88 12.03Common share market value at period end 16.41 15.72 13.54 15.85 13.99 4.4 17.3 16.41 13.99 17.30Common share intraday price:High $ 17.67 $ 15.88 $ 17.24 $ 17.61 $ 14.99 11.3% 17.9% 17.67 14.99 17.88Low 14.96 11.47 13.15 13.21 11.03 30.4 35.6 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 Q3 2025 vs. Q3 2025 vs. Nine Months Ended September 30,($ in thousands, except per share data) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2025 Q3 2024 2025 2024 2025 vs. 2024AVERAGE BALANCE SHEET DATALoans $ 4,884,003 $ 4,833,558 $ 4,784,991 $ 4,796,245 $ 4,734,001 1.0% 3.2% $ 4,834,547 $ 4,698,694 2.89%Investment securities 664,535 683,680 664,655 655,610 656,375 (2.8) 1.2 670,956 672,533 (0.23)Earning assets 5,658,981 5,660,409 5,768,080 5,798,454 5,435,311 0.0 4.1 5,694,210 5,427,713 4.91Assets 6,020,574 6,021,385 6,129,241 6,163,497 5,810,492 0.0 3.6 6,056,883 5,808,153 4.28Deposits 5,280,252 5,297,567 5,417,514 5,461,583 5,086,348 (0.3) 3.8 5,331,498 5,097,951 4.58FHLB advances 52,391 50,000 50,000 50,000 83,500 4.8 (37.3) 50,806 77,113 (34.11)Subordinated debt & TRUPS 74,363 74,102 73,840 73,578 72,946 0.4 1.9 74,103 72,682 1.96Stockholders' equity 571,247 558,952 547,443 538,184 529,155 2.2 8.0 559,301 521,564 7.24CREDIT QUALITY DATANet charge-offs (recoveries) $ 1,825 $ 649 $ 554 $ 1,333 $ 1,288 181.2% 41.7% $ 3,028 $ 2,739 10.55%Nonaccrual loans $ 24,378 $ 16,782 $ 15,402 $ 21,008 $ 14,844 45.3% 64.2%Loans 90 days past due and still accruing 153 215 894 294 454 (28.8) (66.3)Other real estate owned and repossessed property 3,552 2,636 2,608 3,494 485 34.8 632.4Total nonperforming assets $ 28,083 $ 19,633 $ 18,904 $ 24,796 $ 15,783 43.0 77.9
Shore Bancshares, Inc.Financial Highlights By Quarter and Year (Unaudited) – Continued Q3 2025 vs. Q3 2025 vs. Nine Months Ended September 30,($ in thousands, except per share data) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2025 Q3 2024 2025 2024 2025 vs. 2024CAPITAL AND CREDIT QUALITY RATIOSPeriod-end equity to assets – GAAP 9.19% 9.36% 8.94% 8.68% 9.01% (17) bp 18 bpPeriod-end tangible equity to tangible assets – non-GAAP(1) 7.80 7.88 7.46 7.17 7.39 (8) 41Annualized net charge-offs to average loans 0.15% 0.05% 0.05% 0.11% 0.11% 10 bp 4 bp 0.08% 0.08% – bpAllowance for credit losses as a percent of:Period-end loans 1.22% 1.21% 1.21% 1.21% 1.24% 1 bp (2) bpPeriod-end nonaccrual loans 244.29 348.49 376.85 275.66 395.24 (10,420) (15,095)Period-end nonperforming assets 212.06 297.88 307.04 233.55 371.72 (8,582) (15,966)As a percent of total loans at period-end:Nonaccrual loans 0.50% 0.35% 0.32% 0.44% 0.31% 15 bp 19 bpAs a percent of total loans, other real estate owned and repossessed property at period-end:Nonperforming assets 0.57% 0.41% 0.40% 0.52% 0.33% 16 bp 24 bpAs a percent of total assets at period-end:Nonaccrual loans 0.39% 0.28% 0.25% 0.34% 0.25% 11 bp 14 bpNonperforming assets 0.45 0.33 0.31 0.40 0.27 12 18
____________________________________(1) See the Reconciliation of GAAP and N1on-GAAP Measures tables.
Shore Bancshares, Inc.Financial Highlights By Quarter and Year (Unaudited) – Continued Q3 2025 vs. Q3 2025 vs.($ in thousands) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2025 Q3 2024The Company AmountsCommon Equity Tier 1 Capital $ 496,709 $ 483,947 $ 470,223 $ 458,258 $ 446,402 2.64% 11.27%Tier 1 Capital 526,794 513,952 500,149 488,105 476,170 2.50 10.63Total Capital 627,055 618,793 603,928 591,228 579,664 1.34 8.18Risk-Weighted Assets 4,867,237 4,890,679 4,823,833 4,852,564 4,816,165 (0.48) 1.06The Company RatiosCommon Equity Tier 1 Capital to RWA 10.21% 9.90% 9.75% 9.44% 9.27% 31 bp 94 bpTier 1 Capital to RWA 10.82 10.51 10.37 10.06 9.89 31 94Total Capital to RWA 12.88 12.65 12.52 12.18 12.04 23 85Tier 1 Capital to AA (Leverage) 8.86 8.65 8.27 8.02 8.31 22 55The Bank AmountsCommon Equity Tier 1 Capital $ 559,212 $ 546,630 $ 534,824 $ 521,453 $ 509,511 2.30% 9.75%Tier 1 Capital 559,212 546,630 534,824 521,453 509,511 2.30 9.75Total Capital 620,034 607,235 594,550 580,706 569,317 2.11 8.91Risk-Weighted Assets 4,864,871 4,888,558 4,821,975 4,851,903 4,808,058 (0.48) 1.18The Bank RatiosCommon Equity Tier 1 Capital to RWA 11.49% 11.18% 11.09% 10.75% 10.60% 31 bp 90 bpTier 1 Capital to RWA 11.49 11.18 11.09 10.75 10.60 31 90Total Capital to RWA 12.75 12.42 12.33 11.97 11.84 32 90Tier 1 Capital to AA (Leverage) 9.41 9.20 8.84 8.58 8.90 21 51
Shore Bancshares, Inc.Consolidated Balance Sheets (Unaudited) September 30, 2025 September 30, 2025 compared to compared to($ in thousands, except per share data) September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 December 31, 2024 September 30, 2024ASSETSCash and due from banks $ 62,289 $ 54,512 $ 46,886 $ 44,008 $ 52,363 41.5% 19.0%Interest-bearing deposits with other banks 354,224 130,472 342,120 415,843 131,258 (14.8) 169.9Cash and cash equivalents 416,513 184,984 389,006 459,851 183,621 (9.4) 126.8Investment securities:Available for sale, at fair value 181,720 187,679 179,148 149,212 133,339 21.8 36.3Held to maturity, net of allowance for credit losses 433,440 459,246 469,572 481,077 484,583 (9.9) (10.6)Equity securities, at fair value 6,113 6,010 5,945 5,814 5,950 5.1 2.7Restricted securities, at cost 20,364 20,412 20,411 20,253 20,253 0.5 0.5Loans held for sale, at fair value 21,500 34,319 15,717 19,606 26,877 9.7 (20.0)Loans held for investment 4,882,969 4,827,628 4,777,489 4,771,988 4,733,909 2.3 3.1Less: allowance for credit losses (59,554) (58,483) (58,042) (57,910) (58,669) 2.8 1.5Loans, net 4,823,415 4,769,145 4,719,447 4,714,078 4,675,240 2.3 3.2Premises and equipment, net 80,812 81,426 81,692 81,806 81,663 (1.2) (1.0)Goodwill 63,266 63,266 63,266 63,266 63,266 – -Other intangible assets, net 31,722 33,761 36,033 38,311 40,609 (17.2) (21.9)Mortgage servicing rights 5,293 5,396 5,535 5,874 5,309 (9.9) (0.3)Right-of-use assets 10,896 11,052 11,709 11,385 11,384 (4.3) (4.3)Cash surrender value on life insurance 105,055 105,860 105,040 104,421 103,729 0.6 1.3Accrued interest receivable 20,408 19,821 20,555 19,570 19,992 4.3 2.1Deferred income taxes 30,328 30,972 31,428 31,857 32,191 (4.8) (5.8)Other assets 27,634 24,525 22,059 24,382 29,698 13.3 (6.9)TOTAL ASSETS $ 6,278,479 $ 6,037,874 $ 6,176,563 $ 6,230,763 $ 5,917,704 0.8 6.1
Shore Bancshares, Inc.Consolidated Balance Sheets (Unaudited) – Continued September 30, 2025 September 30, 2025 compared to compared to($ in thousands, except per share data) September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 December 31, 2024 September 30, 2024LIABILITIESDeposits:Noninterest-bearing $ 1,594,212 $ 1,575,120 $ 1,565,017 $ 1,562,815 $ 1,571,393 2.0% 1.5%Interest-bearing checking 851,963 763,309 852,480 978,076 751,533 (12.9) 13.4Money market and savings 1,790,001 1,691,438 1,800,529 1,805,884 1,634,140 (0.9) 9.5Time deposits 1,281,132 1,273,285 1,242,319 1,181,561 1,268,657 8.4 1.0Brokered deposits 10,857 10,806 – – – -Total deposits 5,528,165 5,313,958 5,460,345 5,528,336 5,225,723 – 5.8FHLB advances 50,000 50,000 50,000 50,000 50,000 – -Guaranteed preferred beneficial interest in junior subordinated debentures (“TRUPS”), net 30,085 30,005 29,926 29,847 29,768 0.8 1.1Subordinated debt, net 44,409 44,236 44,053 43,870 43,688 1.2 1.7Total borrowings 124,494 124,241 123,979 123,717 123,456 0.6 0.8Lease liabilities 11,395 11,541 12,183 11,844 11,816 (3.8) (3.6)Other liabilities 37,218 22,940 27,586 25,800 23,438 44.3 58.8TOTAL LIABILITIES 5,701,272 5,472,680 5,624,093 5,689,697 5,384,433 0.2 5.9STOCKHOLDERS' EQUITYCommon stock, $0.01 par value per share 334 334 333 333 333 0.3 0.3Additional paid in capital 359,939 359,063 358,572 358,112 357,580 0.5 0.7Retained earnings 221,693 211,400 199,898 190,166 180,884 16.6 22.6Accumulated other comprehensive loss (4,759) (5,603) (6,333) (7,545) (5,526) (36.9) (13.9)TOTAL STOCKHOLDERS' EQUITY 577,207 565,194 552,470 541,066 533,271 6.7 8.2TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,278,479 $ 6,037,874 $ 6,176,563 $ 6,230,763 $ 5,917,704 0.8 6.1Shares of common stock issued and outstanding 33,421,672 33,374,265 33,374,265 33,332,177 33,326,772 0.3 0.3Book value per common share $ 17.27 $ 16.94 $ 16.55 $ 16.23 $ 16.00 6.4 7.9
Shore Bancshares, Inc.Consolidated Statements of Income By Quarter (Unaudited) Q3 2025 vs. Q3 2025 vs. Nine Months Ended September 30,($ in thousands, except per share data) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2025 Q3 2024 2025 2024 % ChangeINTEREST INCOMEInterest and fees on loans $ 70,930 $ 69,695 $ 67,647 $ 67,428 $ 69,157 1.8% 2.6% $ 208,273 $ 202,203 3.0%Interest and dividends on taxable investment securities 5,036 5,331 5,001 4,833 4,962 (5.5) 1.5 15,368 14,611 5.2Interest and dividends on tax-exempt investment securities 6 6 6 6 6 – – 18 18 -Interest on deposits with other banks 1,215 1,588 3,409 4,137 564 (23.5) 115.4 6,212 2,102 195.5Total interest income 77,187 76,620 76,063 76,404 74,689 0.7 3.3 229,871 218,934 5.0INTEREST EXPENSEInterest on deposits 26,474 27,369 28,070 30,363 28,856 (3.3) (8.3) 81,914 84,938 (3.6)Interest on short-term borrowings 640 605 598 – 491 5.8 30.3 1,843 2,131 (13.5)Interest on long-term borrowings 1,418 1,394 1,366 2,030 2,079 1.7 (31.8) 4,178 5,327 (21.6)Total interest expense 28,532 29,368 30,034 32,393 31,426 (2.8) (9.2) 87,935 92,396 (4.8)NET INTEREST INCOME 48,655 47,252 46,029 44,011 43,263 3.0 12.5 141,936 126,538 12.2Provision for credit losses 2,992 1,528 1,028 780 1,470 95.8 103.5 5,548 3,958 40.2NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 45,663 45,724 45,001 43,231 41,793 (0.1) 9.3 136,388 122,580 11.3NONINTEREST INCOMEService charges on deposit accounts 1,599 1,519 1,514 1,606 1,543 5.3 3.6 4,632 4,543 2.0Trust and investment fee income 898 942 823 857 880 (4.7) 2.0 2,663 2,510 6.1Mortgage-banking revenue 1,278 2,379 1,240 2,026 1,177 (46.3) 8.6 4,897 3,961 23.6Interchange credits 1,858 1,788 1,577 1,726 1,711 3.9 8.6 5,223 5,015 4.1Other noninterest income 2,068 2,690 1,849 2,638 1,976 (23.1) 4.7 6,606 6,265 5.4Total noninterest income $ 7,701 $ 9,318 $ 7,003 $ 8,853 $ 7,287 (17.4) 5.7 $ 24,021 $ 22,294 7.7
Shore Bancshares, Inc.Consolidated Statements of Income By Quarter (Unaudited) – Continued Q3 2025 vs. Q3 2025 vs. Nine Months Ended September 30,($ in thousands, except per share data) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2025 Q3 2024 2025 2024 % ChangeNONINTEREST EXPENSESalaries and employee benefits $ 18,642 $ 17,742 $ 16,440 $ 17,209 $ 16,523 5.1% 12.8% $ 52,824 $ 49,370 7.0%Occupancy expense 2,406 2,472 2,538 2,474 2,384 (2.7) 0.9 7,416 7,232 2.5Furniture and equipment expense 892 796 853 760 876 12.1 1.8 2,542 2,681 (5.2)Software and data processing 5,155 4,819 4,691 4,512 4,419 7.0 16.7 14,665 12,658 15.9Directors' fees 318 219 348 460 443 45.2 (28.2) 885 1,097 (19.3)Amortization of other intangible assets 2,039 2,272 2,278 2,298 2,336 (10.3) (12.7) 6,589 7,482 (11.9)FDIC insurance premium expense 794 1,023 1,091 1,013 1,160 (22.4) (31.6) 2,908 3,400 (14.5)Legal and professional fees 989 1,225 1,613 1,521 1,362 (19.3) (27.4) 3,827 4,315 (11.3)Fraud losses 45 83 105 98 673 (45.8) (93.3) 233 5,237 (95.6)Other noninterest expense 3,099 3,759 3,790 3,598 3,938 (17.6) (21.3) 10,647 10,839 (1.8)Total noninterest expense 34,379 34,410 33,747 33,943 34,114 (0.1) 0.8 102,536 104,311 (1.7)Income before income taxes 18,985 20,632 18,257 18,141 14,966 (8.0) 26.9 57,873 40,563 42.7Income tax expense 4,637 5,125 4,493 4,859 3,777 (9.5) 22.8 14,254 9,956 43.2NET INCOME $ 14,348 $ 15,507 $ 13,764 $ 13,282 $ 11,189 (7.5) 28.2 $ 43,619 $ 30,607 42.5Weighted average shares outstanding – basic 33,419,291 33,374,265 33,350,869 33,327,243 33,317,739 0.1% 0.3% 33,381,568 33,247,210 0.4%Weighted average shares outstanding – diluted 33,435,862 33,388,013 33,375,318 33,363,612 33,339,005 0.1% 0.3% 33,392,298 33,254,706 0.4%Basic net income per common share $ 0.43 $ 0.46 $ 0.41 $ 0.40 $ 0.34 (6.5)% 26.5% $ 1.31 $ 0.92 42.4%Diluted net income per common share $ 0.43 $ 0.46 $ 0.41 $ 0.40 $ 0.34 (6.5)% 26.5% $ 1.31 $ 0.92 42.4%Dividends paid per common share $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12 -% -% $ 0.36 $ 0.36 -%
Shore Bancshares, Inc.Consolidated Average Balance Sheets (Unaudited) Three Months Ended September 30, 2025 June 30, 2025 September 30, 2024($ in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/RateEarning assetsLoans(1), (2), (3)Commercial real estate $ 2,615,409 $ 38,077 5.78% $ 2,572,931 $ 37,276 5.81% $ 2,522,170 $ 36,376 5.74%Residential real estate 1,407,076 19,711 5.56 1,378,940 18,986 5.52 1,332,891 19,315 5.76Construction 347,574 5,848 6.68 352,803 5,697 6.48 336,209 5,307 6.28Commercial 219,002 3,380 6.12 224,218 3,658 6.54 212,611 3,763 7.04Consumer 289,729 3,877 5.31 298,544 4,036 5.42 322,988 4,306 5.30Credit cards 5,213 118 8.98 6,122 121 7.93 7,132 170 9.48Total loans 4,884,003 71,011 5.77 4,833,558 69,774 5.79 4,734,001 69,237 5.82Investment securitiesTaxable 663,884 5,036 3.03 683,028 5,331 3.12 655,718 4,962 3.03Tax-exempt(1) 651 8 4.92 652 8 4.91 657 8 4.87Interest-bearing deposits 110,443 1,215 4.36 143,171 1,588 4.45 44,935 564 4.99Total earning assets 5,658,981 77,270 5.42 5,660,409 76,701 5.44 5,435,311 74,771 5.47Cash and due from banks 49,405 46,620 46,996Other assets 370,952 372,725 386,700Allowance for credit losses (58,764) (58,369) (58,515)Total assets $ 6,020,574 $ 6,021,385 $ 5,810,492
Shore Bancshares, Inc.Consolidated Average Balance Sheets (Unaudited) – Continued Three Months Ended September 30, 2025 June 30, 2025 September 30, 2024($ in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/RateInterest-bearing liabilitiesInterest-bearing checking $ 689,906 $ 5,157 2.97% $ 720,967 $ 5,697 3.17% $ 581,517 $ 5,472 3.74%Money market and savings deposits 1,714,161 9,277 2.15 1,747,854 9,580 2.20 1,670,210 10,420 2.48Time deposits 1,277,403 11,935 3.71 1,258,802 12,000 3.82 1,229,273 12,742 4.12Brokered deposits 10,891 105 3.82 9,720 92 3.80 25,829 222 3.42Interest-bearing deposits(4) 3,692,361 26,474 2.84 3,737,343 27,369 2.94 3,506,829 28,856 3.27FHLB advances 52,391 640 4.85 50,000 605 4.85 83,500 1,116 5.32Subordinated debt and guaranteed preferred beneficial interest in junior subordinated debentures (“TRUPS”)(4) 74,363 1,418 7.57 74,102 1,394 7.55 72,946 1,454 7.93Total interest-bearing liabilities 3,819,115 28,532 2.96 3,861,445 29,368 3.05 3,663,275 31,426 3.41Noninterest-bearing deposits 1,587,891 1,560,224 1,579,519Accrued expenses and other liabilities 42,321 40,764 38,543Stockholders' equity 571,247 558,952 529,155Total liabilities and stockholders' equity $ 6,020,574 $ 6,021,385 $ 5,810,492Net interest spread 2.46% 2.39% 2.06%Net interest margin 3.42 3.35 3.17Net interest margin excluding accretion(3) 3.22 3.10 2.84Cost of funds 2.09 2.17 2.38Cost of deposits 1.99 2.07 2.26Cost of debt 6.44 6.46 6.54
____________________________________(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 $3.3 million, $4.2 million and $5.0 million of accretion interest on loans for the three months ended September30, 2025, June30, 2025 and September30, 2024, respectively.(4) Interest expense on deposits and borrowings includes amortization of deposit discounts and amortization of borrowing fair value adjustments. There were $280 thousand, $435 thousand and $287 thousand of amortization of deposit discounts and $232 thousand, $232 thousand, and $232 thousand of amortization of borrowing fair value adjustments for the three months ended September30, 2025, June30, 2025 and September30, 2024, respectively.
Shore Bancshares, Inc.Consolidated Average Balance Sheets (Unaudited) – Continued Nine Months Ended September 30, 2025 2024($ in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/RateEarning assetsLoans(1), (2), (3)Commercial real estate $ 2,576,893 $ 111,244 5.77% $ 2,521,258 $ 108,118 5.73%Residential real estate 1,377,904 57,160 5.55 1,305,215 54,494 5.58Construction 350,883 17,069 6.50 318,574 14,613 6.13Commercial 225,322 10,743 6.37 217,684 11,833 7.26Consumer 297,543 11,971 5.38 328,309 12,843 5.23Credit cards 6,002 325 7.24 7,654 539 9.41Total loans 4,834,547 208,512 5.77 4,698,694 202,440 5.76Investment securitiesTaxable 670,304 15,368 3.06 671,875 14,611 2.90Tax-exempt(1) 652 23 4.70 658 23 4.66Interest-bearing deposits 188,707 6,212 4.40 56,486 2,102 4.97Total earning assets 5,694,210 230,115 5.40 5,427,713 219,176 5.39Cash and due from banks 47,752 47,211Other assets 373,398 391,106Allowance for credit losses (58,477) (57,877)Total assets $ 6,056,883 $ 5,808,153
Shore Bancshares, Inc.Consolidated Average Balance Sheets (Unaudited) – Continued Nine Months Ended September 30, 2025 2024($ in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/RateInterest-bearing liabilitiesInterest-bearing checking $ 756,235 $ 17,879 3.16% $ 800,258 $ 17,384 2.90%Money market and savings deposits 1,753,594 28,872 2.20 1,676,457 30,871 2.46Time deposits 1,248,405 34,966 3.74 1,196,324 36,116 4.03Brokered deposits 6,911 197 3.81 16,642 567 4.55Interest-bearing deposits(4) 3,765,145 81,914 2.91 3,689,681 84,938 3.07FHLB advances 50,806 1,843 4.85 77,113 3,102 5.37Subordinated debt and Guaranteed preferred beneficial interest in junior subordinated debentures (“TRUPS”)(4) 74,103 4,178 7.54 72,682 4,356 8.01Total interest-bearing liabilities 3,890,054 87,935 3.02 3,839,476 92,396 3.21Noninterest-bearing deposits 1,566,353 1,408,270Accrued expenses and other liabilities 41,175 38,843Stockholders' equity 559,301 521,564Total liabilities and stockholders' equity $ 6,056,883 $ 5,808,153Net interest spread 2.38% 2.18%Net interest margin 3.34 3.12Net interest margin excluding accretion(3) 3.11 2.83Cost of funds 2.15 2.35Cost of deposits 2.05 2.23Cost of debt 6.44 6.65
____________________________________(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 $11.3 million and $13.7 million of accretion interest on loans for the nine months ended September 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 $1.0 millionand $1.1 million of amortization of deposit discounts and $695 thousand and $695 thousand of amortization of borrowing fair value adjustments for the nine months ended September 30, 2025 and 2024, respectively.
Shore Bancshares, Inc.Reconciliation of GAAP and Non-GAAP Measures (Unaudited) YTD YTD($ in thousands, except per share data) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 9/30/2025 9/30/2024The following reconciles return on average assets, average equity and return on average tangible common equity(1):Net income $ 14,348 $ 15,507 $ 13,764 $ 13,282 $ 11,189 $ 43,619 $ 30,607Annualized net income (A) $ 56,924 $ 62,198 $ 55,821 $ 52,839 $ 44,513 $ 58,318 $ 40,884Net income $ 14,348 $ 15,507 $ 13,764 $ 13,282 $ 11,189 $ 43,619 $ 30,607Add: Amortization of other intangible assets, net of tax 1,541 1,708 1,717 1,683 1,746 4,966 5,646Add: Credit card fraud losses, net of tax – – – – 252 – 3,516Less: Sale and fair value of held for sale assets, net of tax – – – (329) – – -Adjusted net income – non-GAAP 15,889 17,215 15,481 14,636 13,187 48,585 39,769Annualized adjusted net income – non-GAAP (B) $ 63,038 $ 69,049 $ 62,784 $ 58,226 $ 52,461 $ 64,958 $ 53,122Net income $ 14,348 $ 15,507 $ 13,764 $ 13,282 $ 11,189 $ 43,619 $ 30,607Less: income tax expense 4,637 5,125 4,493 4,859 3,777 14,254 9,956Less: provision for credit losses 2,992 1,528 1,028 780 1,470 5,548 3,958Pre-tax pre-provision net income – non GAAP $ 21,977 $ 22,160 $ 19,285 $ 18,921 $ 16,436 $ 63,421 $ 44,521Return on average assets – GAAP 0.95% 1.03% 0.91% 0.86% 0.77% 0.96% 0.70%Adjusted return on average assets – non-GAAP 1.05% 1.15% 1.02% 0.94% 0.90% 1.07% 0.91%Average assets $ 6,020,574 $ 6,021,385 $ 6,129,241 $ 6,163,497 $ 5,810,492 $ 6,056,883 $ 5,808,153Average stockholders' equity (C) $ 571,247 $ 558,952 $ 547,443 $ 538,184 $ 529,155 $ 559,301 $ 521,564Less: Average goodwill and core deposit intangible (96,074) (98,241) (100,514) (102,794) (105,136) (98,260) (107,623)Average tangible common equity (D) $ 475,173 $ 460,711 $ 446,929 $ 435,390 $ 424,019 $ 461,041 $ 413,941Return on average common equity – GAAP (A)/(C) 9.96% 11.13% 10.20% 9.82% 8.41% 10.43% 7.84%Return on average tangible common equity – non-GAAP (A)/(D) 11.98% 13.50% 12.49% 12.14% 10.50% 12.65% 9.88%Adjusted return on average tangible common equity – non-GAAP (B)/(D) 13.27% 14.99% 14.05% 13.37% 12.37% 14.09% 12.83%
Shore Bancshares, Inc.Reconciliation of GAAP and Non-GAAP Measures (Unaudited) – Continued YTD YTD($ in thousands, except per share data) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 9/30/2025 9/30/2024The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio(2):Noninterest expense (E) $ 34,379 $ 34,410 $ 33,747 $ 33,943 $ 34,114 $ 102,536 $ 104,311Less: Amortization of other intangible assets (2,039) (2,272) (2,278) (2,298) (2,336) (6,589) (7,482)Less: Credit card fraud losses – – – – (337) – (4,660)Adjusted noninterest expense (F) $ 32,340 $ 32,138 $ 31,469 $ 31,645 $ 31,441 $ 95,947 $ 92,169Net interest income (G) $ 48,655 $ 47,252 $ 46,029 $ 44,011 $ 43,263 $ 141,936 $ 126,538Add: Taxable-equivalent adjustment 83 81 81 82 82 244 242Taxable-equivalent net interest income (H) $ 48,738 $ 47,333 $ 46,110 $ 44,093 $ 43,345 $ 142,180 $ 126,780Noninterest income (I) $ 7,701 $ 9,318 $ 7,003 $ 8,853 $ 7,287 $ 24,021 $ 22,294Less: Sale and fair value of held for sale assets – – – (450) – – -Adjusted noninterest income (J) $ 7,701 $ 9,318 $ 7,003 $ 8,403 $ 7,287 $ 24,021 $ 22,294Efficiency ratio – GAAP (E)/(G)+(I) 61.00% 60.83% 63.64% 64.21% 67.49% 61.78% 70.09%Efficiency ratio – non-GAAP (F)/(H)+(J) 57.30% 56.73% 59.25% 60.28% 62.10% 57.73% 61.83%Net operating expense to average assets – GAAP 1.76% 1.67% 1.77% 1.62% 1.84% 1.73% 1.89%Net operating expense to average assets – non-GAAP 1.62% 1.52% 1.62% 1.50% 1.65% 1.59% 1.61%
Shore Bancshares, Inc.Reconciliation of GAAP and Non-GAAP Measures (Unaudited) – Continued($ in thousands, except per share data) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024The following reconciles book value per common share and tangible book value per common share(1):Stockholders' equity (K) $ 577,207 $ 565,194 $ 552,470 $ 541,066 $ 533,271Less: Goodwill and core deposit intangible (94,988) (97,027) (99,299) (101,577) (103,875)Tangible common equity (L) $ 482,219 $ 468,167 $ 453,171 $ 439,489 $ 429,396Shares of common stock outstanding (M) 33,421,672 33,374,265 33,374,265 33,332,177 33,326,772Book value per common share – GAAP (K)/(M) $ 17.27 $ 16.94 $ 16.55 $ 16.23 $ 16.00Tangible book value per common share – non-GAAP (L)/(M) $ 14.43 $ 14.03 $ 13.58 $ 13.19 $ 12.88The following reconciles equity to assets and tangible common equity to tangible assets(1):Stockholders' equity (N) $ 577,207 $ 565,194 $ 552,470 $ 541,066 $ 533,271Less: Goodwill and core deposit intangible (94,988) (97,027) (99,299) (101,577) (103,875)Tangible common equity (O) $ 482,219 $ 468,167 $ 453,171 $ 439,489 $ 429,396Assets (P) $ 6,278,479 $ 6,037,874 $ 6,176,563 $ 6,230,763 $ 5,917,704Less: Goodwill and core deposit intangible (94,988) (97,027) (99,299) (101,577) (103,875)Tangible assets (Q) $ 6,183,491 $ 5,940,847 $ 6,077,264 $ 6,129,186 $ 5,813,829Period-end equity to assets – GAAP (N)/(P) 9.19% 9.36% 8.94% 8.68% 9.01%Period-end tangible common equity to tangible assets – non-GAAP (O)/(Q) 7.80% 7.88% 7.46% 7.17% 7.39%
____________________________________(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 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) – ContinuedRegulatory Capital and Ratios for the Company($ in thousands) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024Common equity $ 577,207 $ 565,194 $ 552,470 $ 541,066 $ 533,271Goodwill(1) (61,176) (61,238) (61,300) (61,362) (61,397)Core deposit intangible(2) (24,041) (25,573) (27,280) (28,991) (30,572)DTAs that arise from net operating loss and tax credit carryforwards (40) (39) – – (426)Accumulated other comprehensive loss 4,759 5,603 6,333 7,545 5,526Common Equity Tier 1 Capital 496,709 483,947 470,223 458,258 446,402TRUPS 30,085 30,005 29,926 29,847 29,768Tier 1 Capital 526,794 513,952 500,149 488,105 476,170Allowable reserve for credit losses and other Tier 2 adjustments 60,852 60,605 59,726 59,253 59,806Subordinated debt 39,409 44,236 44,053 43,870 43,688Total Capital $ 627,055 $ 618,793 $ 603,928 $ 591,228 $ 579,664Risk-Weighted Assets (“RWA”) $ 4,867,237 $ 4,890,679 $ 4,823,833 $ 4,852,564 $ 4,816,165Average Assets (“AA”) 5,942,911 5,943,124 6,050,310 6,083,760 5,729,576Common Equity Tier 1 Capital to RWA 10.21% 9.90% 9.75% 9.44% 9.27%Tier 1 Capital to RWA 10.82 10.51 10.37 10.06 9.89Total Capital to RWA 12.88 12.65 12.52 12.18 12.04Tier 1 Capital to AA (Leverage) 8.86 8.65 8.27 8.02 8.31
Shore Bancshares, Inc.Reconciliation of GAAP and Non-GAAP Measures (Unaudited) – ContinuedRegulatory Capital and Ratios for the Bank($ in thousands) Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024Common equity $ 639,670 $ 627,838 $ 617,071 $ 604,261 $ 595,954Goodwill(1) (61,176) (61,238) (61,300) (61,362) (61,397)Core deposit intangible(2) (24,041) (25,573) (27,280) (28,991) (30,572)Accumulated other comprehensive loss 4,759 5,603 6,333 7,545 5,526Common Equity Tier 1 Capital 559,212 546,630 534,824 521,453 509,511Tier 1 Capital 559,212 546,630 534,824 521,453 509,511Allowable reserve for credit losses and other Tier 2 adjustments 60,822 60,605 59,726 59,253 59,806Total Capital $ 620,034 $ 607,235 $ 594,550 $ 580,706 $ 569,317Risk-Weighted Assets (“RWA”) $ 4,864,871 $ 4,888,558 $ 4,821,975 $ 4,851,903 $ 4,808,058Average Assets (“AA”) 5,939,890 5,940,411 6,050,130 6,077,540 5,721,995
___________________________________(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) September 30, % of Total June 30, 2025 % of Total March 31, 2025 % of Total December 31, 2024 % of Total September 30, 2024 % of Total 2025 Loans Loans Loans Loans LoansCommercial real estate $ 2,642,601 54.1% $ 2,603,974 54.0% $ 2,544,107 53.3% $ 2,557,806 53.6% $ 2,535,004 53.6%Residential real estate 1,383,348 28.3 1,349,010 27.9 1,325,858 27.8 1,329,406 27.9 1,312,375 27.7Construction 352,116 7.2 350,053 7.3 366,218 7.7 335,999 7.0 337,113 7.1Commercial 221,598 4.5 224,092 4.6 234,499 4.9 237,932 5.0 225,083 4.8Consumer 278,242 5.7 294,239 6.1 300,007 6.3 303,746 6.4 317,149 6.7Credit cards 5,064 0.1 6,260 0.1 6,800 0.1 7,099 0.2 7,185 0.2Total loans 4,882,969 100.0% 4,827,628 100.0% 4,777,489 100.0% 4,771,988 100.0% 4,733,909 100.0%Less: allowance for credit losses (59,554) (58,483) (58,042) (57,910) (58,669)Total loans, net $ 4,823,415 $ 4,769,145 $ 4,719,447 $ 4,714,078 $ 4,675,240
Shore Bancshares, Inc.Classified Assets and Nonperforming Assets (Unaudited)Classified assets and nonperforming assets are summarized as follows:($ in thousands) September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024Classified loansSubstandard $ 48,470 $ 19,930 $ 19,434 $ 24,679 $ 22,798Total classified loans 48,470 19,930 19,434 24,679 22,798Special mention loans 70,997 65,564 33,456 33,519 14,385Total classified and special mention loans $ 119,467 $ 85,494 $ 52,890 $ 58,198 $ 37,183Classified loans $ 48,470 $ 19,930 $ 19,434 $ 24,679 $ 22,798Other real estate owned 120 179 179 179 179Repossessed assets 3,432 2,457 2,429 3,315 306Total classified assets $ 52,022 $ 22,566 $ 22,042 $ 28,173 $ 23,283Classified assets to total assets 0.83% 0.37% 0.36% 0.45% 0.39%Nonaccrual loans $ 24,378 $ 16,782 $ 15,402 $ 21,008 $ 14,84490+ days delinquent accruing 153 215 894 294 454Other real estate owned (“OREO”) 120 179 179 179 179Repossessed property 3,432 2,457 2,429 3,315 306Total nonperforming assets $ 28,083 $ 19,633 $ 18,904 $ 24,796 $ 15,783Accruing borrowers experiencing financial difficulty loans (“BEFD”) 6,704 6,709 1,356 1,662 -Total nonperforming assets and BEFDs modifications $ 34,787 $ 26,342 $ 20,260 $ 26,458 $ 15,783Nonperforming assets to total assets 0.45% 0.33% 0.31% 0.40% 0.27%Total assets $ 6,278,479 $ 6,037,874 $ 6,176,563 $ 6,230,763 $ 5,917,704
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