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Shore Bancshares, Inc. Reports 2025 First Quarter Results

1. SHBI reported $13.8M in net income for Q1 2025. 2. Return on average assets increased to 0.91% from 0.86%. 3. Net interest income grew by $2 million to $46 million. 4. Nonperforming assets decreased to 0.31% of total assets. 5. Efficiency ratio improved to 63.64% from 64.21% last quarter.

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$13.1404/29 08:35 AM EDTEvent Start
$13.9504/30 03:08 PM EDTLatest Updated
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FAQ

Why Bullish?

Strong financial growth and improved metrics such as ROAA and NIM suggest profitability may rise, as seen previously with SHBI's steady income increases.

How important is it?

Financial results indicating growth and reduced nonperforming assets can boost SHBI's attractiveness to investors, reflecting strong management and financial health.

Why Short Term?

Positive quarterly reports typically influence stock prices within short periods; operational improvements can enhance investor sentiment quickly.

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, /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 first quarter of 2025 of $13.8 million, or $0.41 per diluted common share, compared to net income of $13.3 million, or $0.40 per diluted common share, for the fourth quarter of 2024, and net income of $8.2 million, or $0.25 per diluted common share, for the first quarter of 2024. First Quarter 2025 Highlights Improved Return on Average Assets ("ROAA") – The Company reported ROAA of 0.91% for the first quarter of 2025, compared to 0.86% for the fourth quarter of 2024 and 0.57% for the first quarter of 2024. Non-U.S. generally accepted accounting principles ("GAAP") ROAA(1) was 1.00% for the first quarter of 2025, compared to 0.94% for the fourth quarter of 2024 and first quarter of 2024. Increased Net Interest Income ("NII") and Net Interest Margin ("NIM") – NII for the first quarter of 2025 increased $2.0 million to $46.0 million from $44.0 million for the fourth quarter of 2024. NIM increased 21 basis points ("bps") to 3.24% during the first quarter of 2025 from 3.03% in the fourth quarter of 2024. Core NIM increased for the comparable periods from 2.85% to 3.02%. Excluding accretion interest, loan yields increased 17 bps and funding costs decreased 10 bps, for the comparable periods. Interest expense for the first quarter of 2025 decreased $2.4 million when compared to the fourth quarter of 2024. All products repriced at favorable rates, and were partially offset by the seasonal run off of municipal deposits. NII and NIM were $41.1 million and 3.08%, respectively, for the first quarter of 2024. Net Income growth – Net income for the first quarter of 2025 increased $482 thousand to $13.8 million from $13.3 million in the fourth quarter of 2024. Net income increased due primarily to higher net interest income, which was partially offset by lower non-interest income due to lower mortgage banking activity and the absence of the one-time gain on sale of other assets in the fourth quarter of 2024. Net income for the first quarter of 2024 was $8.2 million. Stable Asset Quality – Nonperforming assets to total assets were 0.31% for the first quarter of 2025, a decrease from 0.40% for the fourth quarter of 2024 and an increase from 0.28% for the first quarter of 2024. Classified assets to total assets were 0.36% in the first quarter of 2025, a decrease when compared to 0.45% for the fourth quarter of 2024 and an increase when compared to 0.26% for the first quarter of 2024. The allowance for credit losses ("ACL") was $58.0 million at March 31, 2025 compared to $57.9 million at December 31, 2024 and $57.3 million at March 31, 2024. The ACL as a percentage of loans remained flat at 1.21% at March 31, 2025, compared to December 31 and decreased compared to 1.23% at March 31, 2024. Improved Operating Leverage – The efficiency ratio for the first quarter of 2025 was 63.64% when compared to 64.21% in the fourth quarter of 2024 and 76.93% for the first quarter of 2024. The non-GAAP efficiency ratio(1), which excludes amortization, was 59.76% for the first quarter of 2025, compared to 60.28% for the fourth quarter of 2024 and 62.37% for the first quarter of 2024. "Shore Bank had a good start to 2025 with record net interest income and stable expenses driving improvements in our net interest margin, return on assets and operating leverage," stated James ("Jimmy") M. Burke, President and Chief Executive Officer of Shore Bancshares. "Funding costs have trended lower and are expected to decline further as higher-cost seasonal municipal deposits roll off. Asset yields are expected to continue to increase as loans and securities reprice higher. We remain committed to disciplined expense management to drive sustained improvements in operating efficiency. "We are also pleased to welcome Charlie Cullum to our executive leadership team as Chief Financial Officer," continued Mr. Burke. "His extensive experience and financial expertise will be a valuable asset to our organization. We also extend our sincere appreciation to Todd Capitani for his outstanding service, exceptional leadership, and unwavering commitment over the years. We wish him the best in his well-earned retirement and future pursuits." _____________________ (1) See the Reconciliation of GAAP and non-GAAP Measures tables. Balance Sheet Review Total assets were $6.18 billion at March 31, 2025, a decrease of $54.2 million, or 0.9%, when compared to $6.23 billion at December 31, 2024. The aggregate decrease was primarily due to the decrease of cash and cash equivalents of $70.8 million and investments held to maturity of $11.5 million, partially offset by an increase of investment securities available for sale of $29.9 million.  The Company's tangible common equity ratio at March 31, 2025 was 7.46%, compared to 7.17% at December 31, 2024. The Company's Tier 1 and Total Risk-Based Capital Ratios at March 31, 2025 were 10.37% and 12.52%, respectively. The Bank's Tier 1 and Total Risk-Based Capital Ratios at March 31, 2025 were 11.09% and 12.33%, respectively. Non-owner occupied commercial real estate ("CRE") loans as a percentage of the Bank's Tier 1 Capital + ACL at March 31, 2025 and December 31, 2024 were $2.12 billion or 357.37%, and $2.08 billion or 359.52%, respectively. Non-owner occupied construction loans as a percentage of the Bank's Tier 1 Capital + ACL at March 31, 2025 and December 31, 2024 were $365.7 million or 61.69%, and $336.0 million or 57.99%, respectively. CRE loans at March 31, 2025 were $2.54 billion compared to $2.56 billion at December 31, 2024. The following table provides the stratification of the classes of CRE loans at March 31, 2025. March 31, 2025 Owner Occupied Non-Owner Occupied  ($ in thousands) Average LTV(1) Average Loan Size LoanBalance(2) Average LTV(1) AverageLoan Size LoanBalance(2) Office, medical 44.65 % $                598 $          32,316 51.79 % $             1,900 $        104,520 Office, govt. or govt. contractor 50.74 627 5,015 56.58 2,919 49,622 Office, other 49.13 496 96,259 48.37 1,296 213,758 Office, total 48.27 522 133,590 49.00 1,017 367,900 Retail 50.23 605 62,905 49.60 2,413 456,056 Multi-family (5+ units) — — — 55.69 2,303 271,812 Motel/hotel — — — 44.11 4,092 196,400 Industrial/warehouse 48.54 655 97,645 48.56 1,502 208,714 Marine/boat slips 29.66 1,470 44,109 39.71 2,222 15,553 Restaurant 49.03 1,017 60,018 47.97 1,033 46,470 Church 34.81 894 63,500 13.48 2,408 2,408 Other 41.69 1,006 244,340 54.00 609 553,407 Total CRE loans, gross(3) 44.36 774 $        706,107 51.28 1,251 $     2,118,720 (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 $501.5 million, or 10.5% of total loans at March 31, 2025. The Bank's office CRE loan portfolio included medical tenants of $136.8 million, or 27.3% of the total office CRE loan portfolio, at March 31, 2025. The Bank's office CRE loan portfolio also included government or government contractor tenants of $54.6 million, or 10.9% of the total office CRE loan portfolio for the same period. At March 31, 2025, the average loan debt-service coverage ratio was 1.8x and the average LTV was 49.00%. There were 493 loans in the office CRE portfolio with an average loan size of $1.0 million and median loan size of $388 thousand. LTV estimates for the office CRE portfolio at March 31, 2025 are summarized below and LTV collateral values are based on the most recent appraisal, which may vary from the appraised value at loan origination. LTV Range ($ in thousands) Loan Count  Loan Balance % of Office CRE Less than or equal to 50% 244 $                    180,087 35.9 % 50%-60% 74 114,897 22.9 60%-70% 92 120,333 24.0 70%-80% 70 75,618 15.1 Greater than 80% 13 10,555 2.1 Grand Total 493 $                    501,490 100.0 % The Bank had 18 office CRE loans with balances greater than $5.0 million, totaling $163.6 million at March 31, 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. Of the office CRE portfolio balance, 74.3% was secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 97.1% was secured by properties with five stories or less. Of the office CRE loans, $2.2 million were classified as special mention or substandard at March 31, 2025. The Bank did not have any charge-offs related to the office CRE portfolio during 2025. At March 31, 2025 and December 31, 2024, nonperforming assets were $18.9 million, or 0.3% of total assets, and $24.8 million, or 0.4% of total assets, respectively. The balance of nonperforming assets decreased $5.9 million, primarily due to a commercial real estate nonaccrual loan and a decrease in repossessed marine assets of $886 thousand. When comparing March 31, 2025 to March 31, 2024, nonperforming assets increased $2.5 million, primarily due to an increase in nonaccrual loans of $2.6 million and an increase in repossessed marine loans of $584 thousand. Total deposits decreased $68.0 million, or 1.2%, to $5.46 billion at March 31, 2025 when compared to December 31, 2024. The decrease in total deposits was primarily due to a decrease in interest-bearing checking deposits of $125.6 million, partially offset by an increase in time deposits of $60.8 million. The decrease in interest-bearing deposits was primarily driven by seasonal municipal run-offs of deposits. The yield on interest-bearing deposits was 2.94% at March 31, 2025 compared to 3.12% at December 31, 2024. Total funding, which includes customer deposits, Federal Home Loan Bank ("FHLB") advances and brokered deposits was $5.51 billion at March 31, 2025, compared to $5.58 billion at December 31, 2024. The Bank had a $50.0 million FHLB advance at March 31, 2025 and December 31, 2024. The advance consisted of an 18-month Bermuda Convertible note of $50.0 million. The Bank had zero brokered deposits at March 31, 2025 and December 31, 2024. Total reciprocal deposits were $1.46 billion at March 31, 2025 and $1.65 billion at December 31, 2024.  The Bank's uninsured deposits were $940.6 million, or 17.2% of total deposits, at March 31, 2025. The Bank's uninsured deposits, excluding deposits secured with pledged collateral, were $775.6 million, or 14.2%, for same period. At March 31, 2025, the Bank had approximately $1.35 billion of available liquidity, including $389.0 million in cash and cash equivalents, $959.5 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 $11.4 million, or 2.1%, 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 March 31, 2025, the ratio of total equity to total assets was 8.94% and the ratio of total tangible equity to total tangible assets(2) was 7.46%, compared to 8.68% and 7.17%, respectively, at December 31, 2024. Review of Quarterly Financial Results  Net interest income was $46.0 million for the first quarter of 2025, compared to $44.0 million for the fourth quarter of 2024 and $41.1 million for the first quarter of 2024. The increase in net interest income when compared to the fourth quarter of 2024 was primarily due to an increase in interest income on loans of $219 thousand, an increase in interest on investment securities of $168 thousand and a decrease in interest expense on deposits of $2.3 million, partially offset by a decrease in interest on deposits at other banks of $728 thousand. The increase in net interest income of $4.9 million when compared to the first quarter of 2024 was primarily due to an increase in interest on deposits at other banks of $2.4 million, an increase in interest and fees on loans of $1.9 million and an increase in interest on investment securities of $582 thousand. The Company's NIM increased to 3.24% for the first quarter of 2025 from 3.03% for the fourth quarter of 2024, primarily due to higher core interest income. Core NIM increased for the comparable periods from 2.85% to 3.02%. Excluding accretion interest, loan yields increased 17 bps and funding costs decreased 10 bps, for the comparable periods. Interest expense for the first quarter of 2025 decreased $2.4 million when compared to the fourth quarter of 2024. All products repriced at favorable rates, and were partially offset by the seasonal run off of municipal deposits. The Company's NIM increased to 3.24% for the first quarter of 2025 from 3.08% for the first quarter of 2024. The Company's interest-earning asset yields increased to 5.35% for the first quarter of 2025 from 5.32% for the first quarter of 2024, while the cost of funds decreased 11 bps to 2.20% from 2.31% for the same periods. The provision for credit losses was $1.0 million for the three months ended March 31, 2025. The comparable amounts were $780 thousand for the three months ended December 31, 2024 and $407 thousand for the three months ended March 31, 2024. The increase in the provision for credit losses for the first quarter of 2025 compared to the fourth quarter of 2024 was due higher reserves related to growth in the construction to permanent loan portfolio partially offset by improved economic outlook. Coverage ratios remained flat at 1.21% at March 31, 2025 from December 31, 2024, and decreased from 1.23% at March 31, 2024. Net charge-offs decreased to $554 thousand for the first quarter of 2025 compared $1.3 million for the fourth quarter of 2024 and $565 thousand for the first quarter of 2024. Total noninterest income for the first quarter of 2025 was $7.0 million, a decrease of $1.9 million from $8.9 million for the fourth quarter of 2024, and an increase of $436 thousand from $6.6 million for the first quarter of 2024. When comparing the first quarter of 2025 to the fourth quarter of 2024, the decrease in noninterest income was primarily due to lower other noninterest income of $847 thousand resulting from the absence of the gain on sale of other assets held for sale recognized in the fourth quarter of 2024 and a decrease in mortgage banking revenue of $531 thousand, driven by decreased mortgage servicing activity primarily related to prepayments. When comparing the first quarter of 2025 to the first quarter of 2024, the increase in noninterest income was primarily due to an increase in mortgage banking activity, driven by increased mortgage servicing activity and lower prepayment rates. Total noninterest expense of $33.7 million for the first quarter of 2025 decreased $196 thousand compared to the fourth quarter of 2024 expense of $33.9 million, and decreased $3.0 million compared to the first quarter of 2024 expense of $36.7 million. The decrease from the fourth quarter of 2024 was primarily due to lower salaries and employee benefit expenses. The decrease from the first quarter of 2024 was primarily due to the absence of the losses related to the credit card fraud incident in the first quarter of 2024, partially offset by higher salaries and benefits expense and software and data processing costs. The efficiency ratio for the first quarter of 2025 when compared to the fourth quarter of 2024 and the first quarter of 2024 was 63.64%, 64.21% and 76.93%, respectively. Non-GAAP efficiency ratios(3) for the same periods were 59.76%, 60.28% and 62.37%, respectively. The net operating expense ratio, which is noninterest expense less noninterest income divided by average assets, for the first quarter of 2025 was 1.77%, compared to 1.62% and 2.10% for the fourth quarter of 2024 and the first quarter of 2024, respectively. The non-GAAP net operating expense ratio(1), which excludes core deposit intangible amortization and non-recurring activity, was 1.65% for the first quarter of 2025, compared to 1.50% and 1.62% for the fourth quarter of 2024 and the first quarter of 2024, respectively. 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: 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; adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments; 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; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget; 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; he 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) Q1 2025 vs. Q1 2025 vs. ($ in thousands, except per share data) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2024 Q1 2024 PROFITABILITY FOR THE PERIOD Taxable-equivalent net interest income $         46,110 $         44,093 $         43,345 $         42,222 $         41,214 4.6 % 11.9 % Less: Taxable-equivalent adjustment 81 82 82 82 79 (1.2) 2.5 Net interest income 46,029 44,011 43,263 42,140 41,135 4.6 11.9 Provision for credit losses 1,028 780 1,470 2,081 407 31.8 152.6 Noninterest income 7,003 8,853 7,287 8,440 6,567 (20.9) 6.6 Noninterest expense 33,747 33,943 34,114 33,499 36,698 (0.6) (8.0) Income before income taxes 18,257 18,141 14,966 15,000 10,597 0.6 72.3 Income tax expense 4,493 4,859 3,777 3,766 2,413 (7.5) 86.2 Net income $         13,764 $         13,282 $         11,189 $         11,234 $           8,184 3.6 68.2 Return on average assets 0.91 % 0.86 % 0.77 % 0.77 % 0.57 %               5 bp              34 bp Return on average assets excluding amortization ofintangibles and fraud losses – non-GAAP(1) 1.00 0.94 0.90 0.91 0.94 6 6 Return on average equity 10.20 9.82 8.41 8.70 6.38 38 382 Return on average tangible equity – non-GAAP(1) 13.74 13.37 12.37 12.85 13.39 37 35 Interest rate spread 2.30 2.02 2.06 2.11 2.34 28 (4) Net interest margin 3.24 3.03 3.17 3.11 3.08 21 16 Efficiency ratio - GAAP 63.64 64.21 67.49 66.23 76.93 (57) (1,329) Efficiency ratio - non-GAAP(1) 59.76 60.28 62.10 61.05 62.37 (52) (261) Noninterest income to average assets 0.46 0.57 0.50 0.58 0.46 (11) — Noninterest expense to average assets 2.23 2.19 2.34 2.31 2.56 4 (33) Net operating expense to average assets – GAAP 1.77 1.62 1.84 1.73 2.10 15 (33) Net operating expense to average assets – non-GAAP(1) 1.65 1.50 1.65 1.55 1.62 15 3 PER SHARE DATA Basic net income per common share $             0.41 $             0.40 $             0.34 $             0.34 $             0.25 2.5 % 64.0 % Diluted net income per common share 0.41 0.40 0.34 0.34 0.25 2.5 64.0 Dividends paid per common share 0.12 0.12 0.12 0.12 0.12 — — Book value per common share at period end 16.55 16.23 16.00 15.74 15.51 2.0 6.7 Tangible book value per common share at period end - non-GAAP(1) 13.58 13.19 12.88 12.54 12.24 3.0 11.0 Common share market value at period end 13.54 15.85 13.99 11.45 11.50 (14.6) 17.7 Common share intraday price: High $           17.24 $           17.61 $           14.99 $           11.90 $           14.38 (2.1) % 19.9 % Low 13.15 13.21 11.03 10.06 10.56 (0.5) 24.5 ____________________________________ (1) See the Reconciliation of GAAP and non-GAAP Measures tables. Shore Bancshares, Inc. Financial Highlights By Quarter and Year (Unaudited) - Continued Q1 2025 vs. Q1 2025 vs. ($ in thousands, except per share data) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2024 Q1 2024 AVERAGE BALANCE SHEET DATA Loans $     4,784,991 $     4,796,245 $     4,734,001 $     4,706,510 $     4,655,183 (0.2) % 2.8 % Investment securities 664,655 655,610 656,375 706,079 655,323 1.4 1.4 Earning assets 5,768,080 5,798,454 5,435,311 5,459,961 5,387,782 (0.5) 7.1 Assets 6,129,241 6,163,497 5,810,492 5,839,328 5,774,824 (0.6) 6.1 Deposits 5,417,514 5,461,583 5,086,348 5,064,974 5,142,658 (0.8) 5.3 FHLB advances 50,000 50,000 83,500 143,769 4,000 — 1150.0 Subordinated debt & TRUPS 73,840 73,578 72,946 72,680 72,418 0.4 2.0 Stockholders' equity 547,443 538,184 529,155 519,478 515,976 1.7 6.1 CREDIT QUALITY DATA Net charge-offs $              554 $           1,333 $           1,379 $              886 $              565 (58.4) % (2.0) % Nonaccrual loans $         15,402 $         21,008 $         14,844 $         14,837 $         12,776 (26.7) % 20.6 % Loans 90 days past due and still accruing 894 294 454 414 1,560 204.1 (42.7) Other real estate owned and repossessed property 2,608 3,494 485 1,739 2,024 (25.4) 28.9 Total nonperforming assets $         18,904 $         24,796 $         15,783 $         16,990 $         16,360 (23.8) 15.6 Shore Bancshares, Inc. Financial Highlights By Quarter and Year (Unaudited) - Continued Q1 2025 vs. Q1 2025 vs. ($ in thousands, except per share data) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2024 Q1 2024 CAPITAL AND CREDIT QUALITY RATIOS Period-end equity to assets 8.94 % 8.68 % 9.01 % 8.92 % 8.84 % 26 bp  10 bp Period-end tangible equity to tangible assets - non-GAAP(1) 7.46 7.17 7.39 7.23 7.11 29 35 Annualized net charge-offs to average loans 0.05 % 0.11 % 0.12 % 0.08 % 0.05 %            (6) bp  — bp Allowance for credit losses as a percent of: Period-end loans 1.21 % 1.21 % 1.24 % 1.24 % 1.23 % — bp (2) bp Nonaccrual loans 376.85 275.66 395.24 394.14 448.78 10,119 (7,193) Nonperforming assets 307.04 233.55 371.72 344.19 350.46 7,349 (4,342) As a percent of total loans: Nonaccrual loans 0.32 % 0.44 % 0.31 % 0.32 % 0.27 % (12) bp 5 bp As a percent of total loans, other real estate owned and repossessed property: Nonperforming assets 0.40 % 0.52 % 0.33 % 0.36 % 0.35 % (12) bp 5 bp As a percent of total assets: Nonaccrual loans 0.25 % 0.34 % 0.25 % 0.25 % 0.22 % (9) bp 3 bp Nonperforming assets 0.31 0.40 0.27 0.29 0.28 (9) 3 ____________________________________ (1) See the Reconciliation of GAAP and non-GAAP Measures tables. Shore Bancshares, Inc. Financial Highlights By Quarter and Year (Unaudited) - Continued Q1 2025 vs. Q1 2025 vs. ($ in thousands) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2024 Q1 2024 The Company Amounts Common Tier 1 Capital $   470,223 $   458,258 $   446,402 $   435,238 $     421,670 2.61 % 11.51 % Tier 1 Capital 500,149 488,105 476,170 464,554 450,907 2.47 10.92 Total Capital 603,928 591,228 579,664 567,680 552,657 2.15 9.28 Risk Weighted Assets 4,823,833 4,852,564 4,816,165 4,803,230 4,729,930 (0.59) 1.99 The Company Ratios Common Tier 1 Capital to RWA 9.75 % 9.44 % 9.27 % 9.06 % 8.91 %              31 bp              84 bp Tier 1 Capital to RWA 10.37 10.06 9.89 9.67 9.53 31 84 Total Capital to RWA 12.52 12.18 12.04 11.82 11.68 34 84 Tier 1 Capital to AA (Leverage) 8.27 8.02 8.31 8.07 7.93 25 34 The Bank Amounts Common Tier 1 Capital $   534,824 $   521,453 $   509,511 $   501,003 $   487,494 2.56 % 9.71 % Tier 1 Capital 534,824 521,453 509,511 501,003 487,494 2.56 9.71 Total Capital 594,550 580,706 569,317 560,625 545,922 2.38 8.91 Risk Weighted Assets 4,821,975 4,851,903 4,808,058 4,796,512 4,723,872 (0.62) 2.08 The Bank Ratios Common Tier 1 Capital to RWA 11.09 % 10.75 % 10.60 % 10.45 % 10.32 %              34 bp              77 bp Tier 1 Capital to RWA 11.09 10.75 10.60 10.45 10.32 34 77 Total Capital to RWA 12.33 11.97 11.84 11.69 11.56 36 77 Tier 1 Capital to AA (Leverage) 8.84 8.58 8.90 8.71 8.58 26 26 Shore Bancshares, Inc. Consolidated Balance Sheets (Unaudited) March 31, 2025 compared to ($ in thousands, except per share data) March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2024 ASSETS Cash and due from banks $                  46,886 $                  44,008 $                  52,363 $                  50,090 $                  43,079 6.5 % Interest-bearing deposits with other banks 342,120 415,843 131,258 88,793 71,481 (17.7) Cash and cash equivalents 389,006 459,851 183,621 138,883 114,560 (15.4) Investment securities: Available for sale, at fair value 179,148 149,212 133,339 131,594 179,496 20.1 Held to maturity, net of allowance for credit losses 469,572 481,077 484,583 499,431 503,822 (2.4) Equity securities, at fair value 5,945 5,814 5,950 5,699 5,681 2.3 Restricted securities, at cost 20,411 20,253 20,253 21,725 17,863 0.8 Loans held for sale, at fair value 15,717 19,606 26,877 27,829 13,767 (19.8) Loans held for investment 4,777,489 4,771,988 4,733,909 4,705,737 4,648,725 0.1 Less: allowance for credit losses (58,042) (57,910) (58,669) (58,478) (57,336) (0.2) Loans, net 4,719,447 4,714,078 4,675,240 4,647,259 4,591,389 0.1 Premises and equipment, net 81,692 81,806 81,663 82,176 83,084 (0.1) Goodwill 63,266 63,266 63,266 63,266 63,266 — Other intangible assets, net 36,033 38,311 40,609 42,945 45,515 (5.9) Mortgage servicing rights, at fair value 5,535 5,874 5,309 5,995 5,821 (5.8) Right-of-use assets 11,709 11,385 11,384 11,762 12,153 2.8 Cash surrender value on life insurance 105,040 104,421 103,729 102,969 102,321 0.6 Accrued interest receivable 20,555 19,570 19,992 19,641 19,541 5.0 Deferred income taxes 31,428 31,857 32,191 36,078 38,978 (1.3) Other assets 22,059 24,382 29,698 26,765 28,447 (9.5) TOTAL ASSETS $             6,176,563 $             6,230,763 $             5,917,704 $             5,864,017 $             5,825,704 (0.9) Shore Bancshares, Inc. Consolidated Balance Sheets (Unaudited) - Continued March 31, 2025 compared to ($ in thousands, except per share data) March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2024 LIABILITIES Deposits: Noninterest-bearing $             1,565,017 $             1,562,815 $             1,571,393 $             1,587,252 $             1,200,680 0.1 % Interest-bearing checking 852,480 978,076 751,533 658,512 1,101,954 (12.8) Money market and savings 1,800,529 1,805,884 1,634,140 1,689,343 1,712,303 (0.3) Time deposits 1,242,319 1,181,561 1,268,657 1,213,778 1,169,342 5.1 Total deposits 5,460,345 5,528,336 5,225,723 5,148,885 5,184,279 (1.2) FHLB advances 50,000 50,000 50,000 81,000 — — Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS") 29,926 29,847 29,768 29,316 29,237 0.3 Subordinated debt 44,053 43,870 43,688 43,504 43,322 0.4 Total borrowings 123,979 123,717 123,456 153,820 72,559 0.2 Lease liabilities 12,183 11,844 11,816 12,189 12,552 2.9 Other liabilities 27,586 25,800 23,438 26,340 41,086 6.9 TOTAL LIABILITIES 5,624,093 5,689,697 5,384,433 5,341,234 5,310,476 (1.2) STOCKHOLDERS' EQUITY Common stock, par value $0.01 per share 333 333 333 333 332 — Additional paid in capital 358,572 358,112 357,580 356,994 356,464 0.1 Retained earnings 199,898 190,166 180,884 173,716 166,490 5.1 Accumulated other comprehensive loss (6,333) (7,545) (5,526) (8,260) (8,058) 16.1 TOTAL STOCKHOLDERS' EQUITY 552,470 541,066 533,271 522,783 515,228 2.1 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $             6,176,563 $             6,230,763 $             5,917,704 $             5,864,017 $             5,825,704 (0.9) Period-end common shares outstanding 33,374,265 33,332,177 33,326,772 33,214,522 33,210,522 0.1 Book value per common share $                    16.55 $                    16.23 $                    16.00 $                    15.74 $                    15.51 2.0 Shore Bancshares, Inc. Consolidated Statements of Income By Quarter (Unaudited) Q1 2025 vs. Q1 2025 vs. compared to compared to ($ in thousands, except share and per share data) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2024 Q1 2024 INTEREST INCOME Interest and fees on loans $       67,647 $       67,428 $       69,157 $       67,292 $       65,754 0.3 % 2.9 % Interest on investment securities: Taxable 5,001 4,833 4,962 5,230 4,419 3.5 13.2 Tax-exempt 6 6 6 6 6 — — Interest on deposits with other banks 3,409 4,137 564 578 960 (17.6) 255.1 Total interest income 76,063 76,404 74,689 73,106 71,139 (0.5) 6.9 INTEREST EXPENSE Interest on deposits 28,070 30,363 28,856 27,585 28,497 (7.6) (1.5) Interest on short-term borrowings — — 491 1,584 56 — (100.0) Interest on long-term borrowings 1,964 2,030 2,079 1,797 1,451 (3.3) 35.4 Total interest expense 30,034 32,393 31,426 30,966 30,004 (7.3) 0.1 NET INTEREST INCOME 46,029 44,011 43,263 42,140 41,135 4.6 11.9 Provision for credit losses 1,028 780 1,470 2,081 407 31.8 152.6 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 45,001 43,231 41,793 40,059 40,728 4.1 10.5 NONINTEREST INCOME Service charges on deposit accounts 1,514 1,606 1,543 1,493 1,507 (5.7) 0.5 Trust and investment fee income 823 857 880 896 734 (4.0) 12.1 Gain on sale of loans held for sale 966 1,221 1,961 1,131 708 (20.9) 36.4 Interchange credits 1,577 1,726 1,711 1,717 1,587 (8.6) (0.6) Mortgage banking revenue 274 805 (784) 852 93 (66.0) 194.6 Title Company revenue 117 59 100 165 78 98.3 50.0 Other noninterest income 1,732 2,579 1,876 2,186 1,860 (32.8) (6.9) Total noninterest income $         7,003 $         8,853 $         7,287 $         8,440 $         6,567 (20.9) 6.6 Shore Bancshares, Inc. Consolidated Statements of Income By Quarter (Unaudited) - Continued Q1 2025 vs. Q1 2025 vs. compared to compared to ($ in thousands, except share and per share data) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2024 Q1 2024 NONINTEREST EXPENSE Salaries and employee benefits $      16,440 $      17,209 $      16,523 $      16,900 $      15,949 (4.5) % 3.1 % Occupancy expense 2,538 2,474 2,384 2,432 2,416 2.6 5.1 Furniture and equipment expense 853 760 876 900 904 12.2 (5.6) Software and data processing 4,691 4,512 4,419 4,219 4,021 4.0 16.7 Directors' fees 348 460 443 359 295 (24.4) 18.0 Amortization of other intangible assets 2,278 2,298 2,336 2,569 2,576 (0.9) (11.6) FDIC insurance premium expense 1,091 1,013 1,160 1,089 1,150 7.7 (5.1) Legal and professional fees 1,613 1,521 1,362 1,354 1,599 6.1 0.9 Fraud losses(1) 105 98 673 62 4,502 7.1 (97.7) Other noninterest expense 3,790 3,598 3,938 3,615 3,286 5.3 15.3 Total noninterest expense 33,747 33,943 34,114 33,499 36,698 (0.6) (8.0) Income before income taxes 18,257 18,141 14,966 15,000 10,597 0.6 72.3 Income tax expense 4,493 4,859 3,777 3,766 2,413 (7.5) 86.2 NET INCOME $      13,764 $      13,282 $      11,189 $      11,234 $        8,184 3.6 68.2 Weighted average shares outstanding - basic 33,351 33,327 33,318 33,234 33,189 0.1 % 0.5 % Weighted average shares outstanding - diluted 33,375 33,364 33,339 33,234 33,191 — % 0.6 % Basic net income per common share $          0.41 $          0.40 $          0.34 $          0.34 $          0.25 2.5 % 64.0 % Diluted net income per common share $          0.41 $          0.40 $          0.34 $          0.34 $          0.25 2.5 % 64.0 % Dividends paid per common share $          0.12 $          0.12 $          0.12 $          0.12 $          0.12 — % — % ____________________________________ (1) Fraud losses for the third quarter of 2024 and first quarter of 2024 include $337 thousand and $4.3 million in losses related to the one-time online credit card account opening event. The third quarter of 2024 expense of $337 thousand was related to non-recurring data processing charges to close the fraudulent accounts. Shore Bancshares, Inc. Consolidated Average Balance Sheets (Unaudited) Three Months Ended March 31, 2025 March 31, 2024 December 31, 2024 ($ 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 $          2,541,527 $              35,889 5.73 % $          2,518,884 $              35,633 5.69 % $          2,551,903 $              36,036 5.62 %   Residential real estate 1,347,035 18,462 5.56 1,276,191 17,241 5.43 1,358,066 18,142 5.31   Construction 352,323 5,526 6.36 300,117 4,404 5.90 336,094 5,304 6.28   Commercial 232,900 3,705 6.45 221,356 4,114 7.48 229,676 3,792 6.57   Consumer 304,520 4,058 5.40 331,178 4,272 5.19 313,686 4,080 5.17   Credit cards 6,686 86 5.22 7,457 167 9.01 6,820 154 8.98 Total loans 4,784,991 67,726 5.74 4,655,183 65,831 5.69 4,796,245 67,508 5.60 Investment securities Taxable 664,002 5,001 3.01 654,663 4,419 2.70 654,955 4,833 2.95 Tax-exempt(1) 653 8 4.90 660 8 4.85 655 8 4.89 Interest-bearing deposits 318,434 3,409 4.34 77,276 960 5.00 346,599 4,137 4.75 Total earning assets 5,768,080 76,144 5.35 5,387,782 71,218 5.32 5,798,454 76,486 5.25 Cash and due from banks 43,526 49,499 43,444 Other assets 375,929 395,023 380,321 Allowance for credit losses (58,294) (57,480) (58,722) Total assets $          6,129,241 $          5,774,824 $          6,163,497 Shore Bancshares, Inc. Consolidated Average Balance Sheets (Unaudited) - Continued Three Months Ended March 31, 2025 March 31, 2024 December 31, 2024 ($ in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Interest-bearing liabilities Interest-bearing checking $            859,698 $                7,025 3.31 % $          1,110,524 $                6,362 2.30 % $            901,764 $                7,898 3.48 % Money market and savings deposits 1,799,707 10,015 2.26 1,669,074 10,160 2.45 1,733,934 10,331 2.37 Time deposits 1,208,250 11,030 3.70 1,179,572 11,724 4.00 1,232,480 12,134 3.92 Brokered deposits — — — 20,465 251 4.93 — — — Interest-bearing deposits(4) 3,867,655 28,070 2.94 3,979,635 28,497 2.88 3,868,178 30,363 3.12 FHLB advances 50,000 598 4.85 4,000 56 5.63 50,000 618 4.92 Subordinated debt and Guaranteedpreferred beneficial interest in junior subordinated debentures ("TRUPS") (4) 73,840 1,366 7.50 72,418 1,451 8.06 73,578 1,412 7.63 Total interest-bearing liabilities 3,991,495 30,034 3.05 4,056,053 30,004 2.98 3,991,756 32,393 3.23 Noninterest-bearing deposits 1,549,859 1,163,023 1,593,405 Accrued expenses and other liabilities 40,444 39,772 40,152 Stockholders' equity 547,443 515,976 538,184 Total liabilities and stockholders' equity $          6,129,241 $          5,774,824 $          6,163,497 Net interest income $              46,110 $              41,214 $              44,093 Net interest spread 2.30 % 2.34 % 2.02 % Net interest margin 3.24 3.08 3.03 Cost of funds 2.20 2.31 2.31 Cost of deposits 2.10 2.23 2.21 Cost of debt 6.43 7.93 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 $3.7 million, $4.2 million and $3.2 million of accretion interest on loans for the three months ended March 31, 2025 and 2024, and December 31, 2024, respectively. (4) Interest expense on deposits and borrowing includes amortization of deposit discount and amortization of borrowing fair value adjustments. There were $334 thousand, $367 thousand and $412 thousand of amortization of deposits premium, and $232 thousand, $220 thousand, and $232 thousand of amortization of borrowing fair value adjustments for the three months ended March 31, 2025, March 31, 2024 and December 31, 2024, respectively. Shore Bancshares, Inc. Reconciliation of GAAP and Non-GAAP Measures (Unaudited) ($ in thousands, except per share data) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 The following reconciles return on average assets, average equity and return on average tangible equity(1): Net income $         13,764 $         13,282 $         11,189 $         11,234 $            8,184 Net income - annualized (A) $         55,821 $         52,839 $         44,513 $         45,183 $         32,916 Net income $         13,764 $         13,282 $         11,189 $         11,234 $            8,184 Add: Amortization of other intangible assets, net of tax 1,717 1,683 1,746 1,924 1,989 Add: Credit card fraud losses, net of tax — — 252 — 3,339 Less: Sale and fair value of held for sale assets, net of tax (339) (329) — — — Net income, excluding net amortization of other intangible assets, credit card fraud lossesand held for sale assets 15,142 14,636 13,187 13,158 13,512 Net income, excluding net amortization of other intangible assets, credit card fraud lossesand held for sale assets - annualized (B) $         61,409 $         58,226 $         52,461 $         52,921 $         54,345 Return on average assets (GAAP) 0.91 % 0.86 % 0.77 % 0.77 % 0.57 % Return on average assets excluding net amortization of other intangible assets, credit cardfraud losses and held for sale assets - (non-GAAP) 1.00 % 0.94 % 0.90 % 0.91 % 0.94 % Average assets $   6,129,241 $    6,163,497 $    5,810,492 $    5,839,328 $    5,774,824 Average stockholders' equity (C) $      547,443 $       538,184 $       529,155 $       519,478 $       515,976 Less: Average goodwill and core deposit intangible (100,514) (102,794) (105,136) (107,594) (110,167) Average tangible equity (D) $      446,929 $       435,390 $       424,019 $       411,884 $       405,809 Return on average equity (GAAP) (A)/(C) 10.20 % 9.82 % 8.41 % 8.70 % 6.38 % Return on average tangible equity (non-GAAP) (A)/(D) 12.49 % 12.14 % 10.50 % 10.97 % 8.11 % Return on average tangible equity (non-GAAP) (B)/(D) 13.74 % 13.37 % 12.37 % 12.85 % 13.39 % Shore Bancshares, Inc. Reconciliation of GAAP and Non-GAAP Measures (Unaudited) - Continued ($ in thousands, except per share data) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio(2): Noninterest expense (E) $         33,747 $         33,943 $         34,114 $         33,499 $         36,698 Less: Amortization of other intangible assets (2,278) (2,298) (2,336) (2,569) (2,576) Less: Credit card fraud losses — — (337) — (4,323) Adjusted noninterest expense (F) $         31,469 $         31,645 $         31,441 $         30,930 $         29,799 Net interest income (G) $         46,029 $         44,011 $         43,263 $         42,140 $         41,135 Add: Taxable-equivalent adjustment 81 82 82 82 79 Taxable-equivalent net interest income (H) $         46,110 $         44,093 $         43,345 $         42,222 $         41,214 Noninterest income (I) $           7,003 $            8,853 $            7,287 $            8,440 $            6,567 Investment securities losses (gains) — — — — — Less: Sale and fair value of held for sale assets (450) (450) — — — Adjusted noninterest income (J) $           6,553 $            8,403 $            7,287 $            8,440 $            6,567 Efficiency ratio (GAAP) (E)/(G)+(I) 63.64 % 64.21 % 67.49 % 66.23 % 76.93 % Efficiency ratio (Non-GAAP) (F)/(H)+(J) 59.76 % 60.28 % 62.10 % 61.05 % 62.37 % Net operating expense to average assets (GAAP) 1.77 % 1.62 % 1.84 % 1.73 % 2.10 % Net operating expense to average assets (Non-GAAP) 1.65 % 1.50 % 1.65 % 1.55 % 1.62 % Shore Bancshares, Inc. Reconciliation of GAAP and Non-GAAP Measures (Unaudited) - Continued ($ in thousands, except per share data) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 The following reconciles book value per common share and tangible book value per common share(1): Stockholders' equity (K) $            552,470 $            541,066 $            533,271 $            522,783 $            515,228 Less: Goodwill and core deposit intangible (99,299) (101,577) (103,875) (106,211) (108,781) Tangible equity (L) $            453,171 $            439,489 $            429,396 $            416,572 $            406,447 Shares outstanding (M) 33,374 33,332 33,327 33,272 33,211 Book value per common share (GAAP) (K)/(M) $                 16.55 $                 16.23 $                 16.00 $                 15.71 $                 15.51 Tangible book value per common share (non-GAAP) (L)/(M) $                 13.58 $                 13.19 $                 12.88 $                 12.52 $                 12.24 The following reconciles equity to assets and tangible equity to tangible assets(1): Stockholders' equity (N) $            552,470 $            541,066 $            533,271 $            522,783 $            515,228 Less: Goodwill and core deposit intangible (99,299) (101,577) (103,875) (106,211) (108,781) Tangible equity (O) $            453,171 $            439,489 $            429,396 $            416,572 $            406,447 Assets (P) $         6,176,563 $         6,230,763 $         5,917,704 $         5,864,017 $         5,825,704 Less: Goodwill and core deposit intangible (99,299) (101,577) (103,875) (106,211) (108,781) Tangible assets (Q) $         6,077,264 $         6,129,186 $         5,813,829 $         5,757,806 $         5,716,923 Period-end equity/assets (GAAP) (N)/(P) 8.94 % 8.68 % 9.01 % 8.92 % 8.84 % Period-end tangible equity/tangible assets (Non-GAAP) (O)/(Q) 7.46 % 7.17 % 7.39 % 7.23 % 7.11 % ____________________________________ (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) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Common equity $            552,470 $             541,066 $             533,271 $             522,783 $             515,228 Goodwill(1) (61,300) (61,362) (61,397) (61,460) (61,523) Core deposit intangible(2) (27,280) (28,991) (30,572) (32,313) (34,235) DTAs that arise from net operating loss and tax credit carry forwards — — (426) (2,032) (5,858) Accumulated other comprehensive loss 6,333 7,545 5,526 8,260 8,058 Common Equity Tier 1 Capital 470,223 458,258 446,402 435,238 421,670 TRUPS 29,926 29,847 29,768 29,316 29,237 Tier 1 Capital 500,149 488,105 476,170 464,554 450,907 Allowable reserve for credit losses and other Tier 2 adjustments 59,726 59,253 59,806 59,622 58,428 Subordinated notes 44,053 43,870 43,688 43,504 43,322 Total Capital $            603,928 $             591,228 $             579,664 $             567,680 $             552,657 Risk-Weighted Assets ("RWA") $        4,823,833 $         4,852,564 $         4,816,165 $         4,803,230 $         4,729,930 Average Assets ("AA") 6,050,310 6,083,760 5,729,576 5,756,260 5,684,150 Common Tier 1 Capital to RWA 9.75 % 9.44 % 9.27 % 9.06 % 8.91 % Tier 1 Capital to RWA 10.37 10.06 9.89 9.67 9.53 Total Capital to RWA 12.52 12.18 12.04 11.82 11.68 Tier 1 Capital to AA (Leverage)(3) 8.27 8.02 8.31 8.07 7.93 Shore Bancshares, Inc. Reconciliation of GAAP and Non-GAAP Measures (Unaudited) - Continued Regulatory Capital and Ratios for the Bank ($ in thousands) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Common equity $            617,071 $             604,261 $             595,954 $             587,283 $             579,520 Goodwill(1) (61,300) (61,362) (61,397) (61,460) (61,523) Core deposit intangible(2) (27,280) (28,991) (30,572) (32,313) (34,235) DTAs that arise from net operating loss and tax credit carry forwards — — — (767) (4,326) Accumulated other comprehensive loss 6,333 7,545 5,526 8,260 8,058 Common Equity Tier 1 Capital 534,824 521,453 509,511 501,003 487,494 Tier 1 Capital 534,824 521,453 509,511 501,003 487,494 Allowable reserve for credit losses and other Tier 2 adjustments 59,726 59,253 59,806 59,622 58,428 Total Capital $            594,550 $             580,706 $             569,317 $             560,625 $             545,922 Risk-Weighted Assets ("RWA") $        4,821,975 $         4,851,903 $         4,808,058 $         4,796,512 $         4,723,872 Average Assets ("AA") 6,050,130 6,077,540 5,721,995 5,750,604 5,679,282 ___________________________________ (1) Goodwill is net of deferred tax liability. (2) Core deposit intangible is net of deferred tax liability. Shore Bancshares, Inc. Summary of Loan Portfolio (Unaudited) Portfolio loans are summarized by loan type as follows: ($ in thousands) March 31, 2025 % December 31, 2024 % September 30, 2024 % June 30, 2024 % March 31, 2024 % Portfolio Loans by Loan Type Commercial real estate $             2,544,107 53.2 % $             2,557,806 53.6 % $             2,535,004 53.5 % $             2,546,114 54.1 % $             2,531,076 54.5 % Residential real estate 1,325,858 27.8 1,329,406 27.9 1,312,375 27.7 1,280,973 27.2 1,256,925 27.0 Construction 366,218 7.7 335,999 7.0 337,113 7.1 327,875 7.0 299,133 6.4 Commercial 234,499 4.9 237,932 5.0 225,083 4.8 218,987 4.6 229,594 4.9 Consumer 300,007 6.3 303,746 6.4 317,149 6.7 324,480 6.9 325,076 7.0 Credit cards 6,800 0.1 7,099 0.1 7,185 0.2 7,308 0.2 6,921 0.2 Total loans 4,777,489 100.0 % 4,771,988 100.0 % 4,733,909 100.0 % 4,705,737 100.0 % 4,648,725 100.0 % Less: Allowance for credit losses (58,042) (57,910) (58,669) (58,478) (57,336) Total loans, net $             4,719,447 $             4,714,078 $             4,675,240 $             4,647,259 $             4,591,389 Shore Bancshares, Inc. Classified Assets and Nonperforming Assets (Unaudited) Classified assets and nonperforming assets are summarized as follows: ($ in thousands) March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 Classified loans Substandard $                   19,434 $                   24,675 $                   22,798 $                   17,409 $                   13,403 Total classified loans 19,434 24,675 22,798 17,409 13,403 Special mention loans 33,456 33,519 14,385 25,549 27,192 Total classified and special mention loans $                   52,890 $                   58,194 $                   37,183 $                   42,958 $                   40,595 Classified loans $                   19,434 $                   24,675 $                   22,798 $                   17,409 $                   13,403 Other real estate owned 179 179 179 179 179 Repossessed assets 2,429 3,315 306 1,560 1,845 Total classified assets $                   22,042 $                   28,169 $                   23,283 $                   19,148 $                   15,427 Classified assets to total assets 0.36 % 0.45 % 0.39 % 0.33 % 0.26 % Nonaccrual loans $                   15,402 $                   21,008 $                   14,844 $                   14,837 $                   12,776 90+ days delinquent accruing 894 294 454 414 1,560 Other real estate owned ("OREO") 179 179 179 179 179 Repossessed property 2,429 3,315 306 1,560 1,845 Total nonperforming assets $                   18,904 $                   24,796 $                   15,783 $                   16,990 $                   16,360 Accruing borrowers experiencing financial difficulty loans ("BEFD") 1,642 1,662 — — — Total nonperforming assets and BEFDs modifications $                   20,546 $                   26,458 $                   15,783 $                   16,990 $                   16,360 Nonperforming assets to total assets 0.31 % 0.40 % 0.27 % 0.29 % 0.28 % Total assets $             6,176,563 $             6,230,763 $             5,917,704 $             5,864,017 $             5,825,704 SOURCE Shore Bancshares, Inc. 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