Shore Bancshares, Inc. Reports 2025 Second Quarter Results

, /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) (the "Company" or "Shore Bancshares"), the holding company for Shore United Bank, N.A. (the "Bank") reported net income for the second quarter of 2025 of $15.5 million, or $0.46 per diluted common share, compared to net income of $13.8 million, or $0.41 per diluted common share for the first quarter of 2025, and net income of $11.2 million, or $0.34 per diluted common share, for the second quarter of 2024. Second Quarter 2025 Highlights Net Income Growth – Net income for the second quarter of 2025 increased $1.7 million to $15.5 million from $13.8 million in the first quarter of 2025. Net income increased primarily due to higher net interest income and noninterest income driven by higher mortgage banking activity, partially offset by higher noninterest expense. Net income for the first half of 2025 was $29.3 million, compared to $19.4 million for the first half of 2024. Improved Return on Average Assets ("ROAA") – The Company reported ROAA of 1.03% for the second quarter of 2025, compared to 0.91% for the first quarter of 2025 and 0.77% for the second quarter of 2024. Non-U.S. generally accepted accounting principles ("GAAP") ROAA(1) was 1.15% for the second quarter of 2025, compared to 1.02% for the first quarter of 2025 and 0.91% for the second quarter of 2024. Net Interest Margin ("NIM") Expansion – Net interest income for the second quarter of 2025 increased $1.2 million to $47.3 million from $46.0 million for the first quarter of 2025. NIM increased 11 basis points ("bps") to 3.35% during the second quarter of 2025 from 3.24% in the first quarter of 2025. NIM excluding accretion(1) increased for the comparable periods from 3.02% to 3.10%. Excluding accretion interest, loan yields increased 2 bps and funding costs decreased 4 bps for the comparable periods. Net interest income increased due to modest loan growth, slightly higher accelerated accretion income, and loan and securities repricing, coupled with lower cost of deposits during the period. Book Value per Share Growth - Book value per share increased to $16.94 at June 30, 2025 from $16.55 at March 31, 2025 and $15.74 at June 30, 2024. Stable Asset Quality – Nonperforming assets to total assets were 0.33% for the second quarter of 2025, an increase from 0.31% for the first quarter of 2025 and 0.29% for the second quarter of 2024. Classified assets to total assets were 0.37% in the second quarter of 2025, an increase when compared to 0.36% for the first quarter of 2025 and 0.33% for the second quarter of 2024. The allowance for credit losses ("ACL") was $58.5 million at June 30, 2025, compared to $57.9 million at December 31, 2024 and $58.5 million at June 30, 2024. The ACL as a percentage of loans remained flat at 1.21% at June 30, 2025 compared to December 31, 2024, and decreased compared to 1.24% at June 30, 2024. Improved Operating Leverage – The efficiency ratio for the second quarter of 2025 was 60.83% compared to 63.64% in the first quarter of 2025 and 66.23% for the second quarter of 2024. The non-GAAP efficiency ratio(1), which excludes amortization, was 56.73% for the second quarter of 2025, compared to 59.25% for the first quarter of 2025 and 61.05% for the second quarter of 2024. Management anticipates ongoing expense management and technology investments will result in continued improvements in operating leverage over time. "We continued to see steady improvement in our performance in the second quarter," stated James ("Jimmy") M. Burke, President and Chief Executive Officer of Shore Bancshares. "Net income and margins continue to expand as our efficiency improves and capital builds. Loan growth remains constrained but asset yield increases are expected to support margins for the remainder of 2025. Continued investments in our infrastructure and personnel position us well for growth." (1) See the Reconciliation of GAAP and non-GAAP Measures tables. Balance Sheet Review Total assets were $6.04 billion at June 30, 2025, a decrease of $192.9 million, or 3.1%, when compared to $6.23 billion at December 31, 2024. The aggregate decrease was primarily due to the decrease of interest-bearing deposits at other banks of $285.4 million, partially offset by an increase in our loan portfolio of $55.6 million and an increase in our investment securities portfolio of $16.8 million. The decrease in interest-bearing deposits was primarily driven by seasonal municipal run-offs of deposits. Total assets increased $173.9 million, or 3.0%, from $5.86 billion when compared to June 30, 2024. The Company's tangible common equity ratio at June 30, 2025 was 7.88% compared to 7.17% at December 31, 2024. The Company's Tier 1 and Total Risk-Based Capital Ratios at June 30, 2025 were 10.51% and 12.65%, respectively. Non-owner occupied commercial real estate ("CRE") loans were $2.14 billion and $2.08 billion, and as a percentage of the Bank's Tier 1 Capital + ACL were 354.15% and 359.52% at June 30, 2025 and December 31, 2024, respectively. CRE loans (excluding land and construction) at June 30, 2025 were $2.60 billion compared to $2.56 billion at December 31, 2024. The following table provides the stratification of the classes of CRE loans at June 30, 2025. June 30, 2025 Owner Occupied Non-Owner Occupied ($ in thousands) Average LTV(1) Average Loan Size Loan Balance(2) Average LTV(1) Average Loan Size Loan Balance(2) Office, medical 42.72 % $ 578 $ 31,769 50.59 % $ 1,852 $ 103,718 Office, govt. or govt. contractor 50.00 617 4,939 56.93 2,907 49,424 Office, other 49.10 482 91,486 47.71 1,223 202,962 Office, total 47.80 507 128,194 49.06 1,490 356,104 Retail 49.43 609 65,214 49.40 2,454 466,209 Multi-family (5+ units) — — — 55.73 2,302 276,222 Hotel/motel — — — 43.76 3,976 194,811 Industrial/warehouse 48.30 662 95,292 48.27 1,532 212,915 Commercial-improved 41.76 1,164 199,122 48.95 1,254 160,552 Marine/boat slips 29.53 1,408 39,419 39.41 2,208 15,459 Restaurant 48.99 1,008 60,476 46.47 1,000 47,000 Church 33.76 815 57,081 13.41 2,395 2,395 Other 39.62 1,085 84,652 60.67 515 411,315 Total CRE loans, gross(3) 43.87 801 $ 729,450 53.00 1,247 $ 2,142,982 (1) Loan-to-value ("LTV") is determined based on latest available appraisal against current bank owned principal. Loans without an updated appraisal utilized the original transaction value. (2) Loan balance includes deferred fees and costs. (3) CRE loans include land and construction. The Bank's office CRE loan portfolio, which includes owner occupied and non-owner occupied CRE loans, was $484.3 million, or 10.0% of total loans at June 30, 2025. The Bank's office CRE loan portfolio included medical tenants of $135.5 million, or 28.0% of the total office CRE loan portfolio, at June 30, 2025. The Bank's office CRE loan portfolio also included government or government contractor tenants of $54.4 million, or 11.2% of the total office CRE loan portfolio for the same period. At June 30, 2025, the average loan debt-service coverage ratio was 1.8x and the average LTV was 48.41%. There were 492 loans in the office CRE portfolio, which had an average loan size of $1.0 million and a median loan size of $369 thousand. LTV estimates for the office CRE portfolio at June 30, 2025 are summarized below and LTV collateral values are based on the most recent appraisal, which may vary from the appraised value at loan origination. LTV Range ($ in thousands) Loan Count Loan Balance % of Office CRE Less than or equal to 50% 245 $ 168,874 34.9 % 50%-60% 74 111,092 22.9 60%-70% 94 130,718 27.0 70%-80% 65 62,601 12.9 Greater than 80% 14 11,013 2.3 Total 492 $ 484,298 100.0 % The Bank had 17 office CRE loans with balances greater than $5.0 million, totaling $150.9 million at June 30, 2025, compared to 18 office CRE loans totaling $164.5 million at December 31, 2024. The decrease in this portfolio segment was the result of normal amortization and the change in purpose of collateral of an $11.0 million loan from office to school. Of the office CRE portfolio balance, 80.5% was secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 97.0% was secured by properties with five stories or less. Of the office CRE loans, $2.5 million were classified as special mention or substandard at June 30, 2025. The Bank did not have any charge-offs related to the office CRE portfolio during 2025. At June 30, 2025 and March 31, 2025, nonperforming assets were $19.6 million, or 0.33% of total assets, and $18.9 million, or 0.31% of total assets, respectively. The balance of nonperforming assets increased $729 thousand, primarily due to commercial real estate and consumer loans. When comparing June 30, 2025 to June 30, 2024, nonperforming assets increased $2.6 million, primarily due to an increase in nonaccrual loans of $1.9 million and an increase in repossessed marine loans of $897 thousand. Total deposits decreased $214.4 million, or 3.9%, to $5.31 billion at June 30, 2025 when compared to December 31, 2024. The decrease in total deposits was primarily due to a decrease in interest-bearing checking deposits of $214.8 million and a decrease in money market and savings of $114.4 million, partially offset by an increase in time deposits of $91.7 million. The decrease in interest-bearing deposits was primarily driven by seasonal municipal run-offs of deposits. The rate on interest-bearing deposits remained flat at 2.94% at June 30, 2025 compared to March 31, 2025. Total funding, which includes customer deposits, Federal Home Loan Bank ("FHLB") advances and brokered deposits was $5.36 billion at June 30, 2025, compared to $5.51 billion at March 31, 2025. The Bank had a $50.0 million FHLB advance at June 30, 2025 and March 31, 2025. The advance consisted of an 18-month Bermuda Convertible note of $50.0 million. The Bank had $10.8 million of brokered deposits at June 30, 2025 and zero at March 31, 2025. Total reciprocal deposits were $1.31 billion at June 30, 2025 and $1.46 billion at March 31, 2025.  The Bank's uninsured deposits were $886.8 million, or 16.7% of total deposits, at June 30, 2025. The Bank's uninsured deposits, excluding deposits secured with pledged collateral, were $768.7 million, or 14.5% of total deposits, at June 30, 2025. At June 30, 2025, the Bank had approximately $1.16 billion of available liquidity, including $185.0 million in cash and cash equivalents, $974.1 million in secured borrowing capacity at the FHLB and other correspondent banks and $95.0 million in unsecured lines of credit. Total stockholders' equity increased $24.1 million, or 4.5%, when compared to December 31, 2024, primarily due to current year earnings and a decrease in accumulated other comprehensive losses, partially offset by cash dividends paid. As of June 30, 2025, the ratio of total equity to total assets was 9.36% and the ratio of total tangible equity to total tangible assets(1) was 7.88% compared to 8.68% and 7.17%, respectively, at December 31, 2024. (1) See the Reconciliation of GAAP and non-GAAP Measures tables. Review of Quarterly Financial Results Net interest income was $47.3 million for the second quarter of 2025, compared to $46.0 million for the first quarter of 2025 and $42.1 million for the second quarter of 2024. The increase in net interest income when compared to the first quarter of 2025 was primarily due to an increase in interest income on loans of $2.0 million, an increase in interest income on investment securities of $330 thousand and a decrease in interest expense on deposits of $701 thousand, partially offset by a decrease in interest income on deposits at other banks of $1.8 million. The increase in net interest income was $5.1 million when compared to the second quarter of 2024, and was primarily due to an increase in interest and fees on loans of $2.4 million, an increase in interest on deposits at other banks of $1.0 million and a decrease in interest expense on short-term borrowings of 1.6 million. The Company's NIM increased to 3.35% for the second quarter of 2025 from 3.24% for the first quarter of 2025, primarily due to higher core interest income. NIM excluding accretion increased for the comparable periods from 3.02% to 3.10%. Excluding accretion interest, loan yields increased 2 bps and funding costs decreased 4 bps, for the comparable periods. Interest expense for the second quarter of 2025 decreased $666 thousand when compared to the first quarter of 2025. All products repriced at favorable rates, and were partially offset by the seasonal run off of municipal deposits. The Company's NIM increased to 3.35% for the second quarter of 2025 from 3.11% for the second quarter of 2024. The Company's average interest-earning asset yield increased to 5.44% for the second quarter of 2025 from 5.39% for the second quarter of 2024, while the average cost of funds decreased 19 bps to 2.17% from 2.36% for the same periods. The provision for credit losses was $1.5 million for the three months ended June 30, 2025. The comparable amounts were $1.0 million for the three months ended March 31, 2025 and $2.1 million for the three months ended June 30, 2024. The increase in the provision for credit losses for the second quarter of 2025 compared to the first quarter of 2025 was due to higher reserves related to growth in the loan portfolio, partially offset by higher charge-offs. Coverage ratios remained flat at 1.21% at June 30, 2025 from March 31, 2025, and decreased from 1.24% at June 30, 2024. Net charge-offs increased to $649 thousand for the second quarter of 2025 compared to $554 thousand for the first quarter of 2025, and decreased compared to $886 thousand for the second quarter of 2024. Total noninterest income for the second quarter of 2025 was $9.3 million, an increase of $2.3 million from $7.0 million for the first quarter of 2025, and an increase of $878 thousand from $8.4 million for the second quarter of 2024. When comparing the second quarter of 2025 to the first quarter of 2025, the increase in noninterest income was primarily due to an increase in mortgage banking revenue of $780 thousand, an increase in gain on loans held for sale of $359 thousand and an one-time credit card incentive. Comparing the second quarter of 2025 to the second quarter of 2024, the increase in noninterest income was primarily due to an increase in mortgage banking and related activity driven by increased mortgage servicing activity and lower prepayment rates. Total noninterest expense of $34.4 million for the second quarter of 2025 increased $663 thousand compared to the first quarter of 2025 expense of $33.7 million, and increased $911 thousand compared to the second quarter of 2024 expense of $33.5 million. The increase from the first quarter of 2025 was primarily due to higher salaries and employee benefit expenses of $1.3 million, partially offset by lower professional service fees of $388 thousand. The increase from the second quarter of 2024 was primarily due to higher salaries and benefits expense of $842 thousand and higher software and data processing costs of $600 thousand, partially offset by lower amortization of other intangible assets of $297 thousand. The efficiency ratio for the second quarter of 2025 when compared to the first quarter of 2025 and the second quarter of 2024 was 60.83%, 63.64% and 66.23%, respectively. Non-GAAP efficiency ratios(1) for the same periods were 56.73%, 59.25% and 61.05%, respectively. The net operating expense ratio, which is noninterest expense less noninterest income divided by average assets, for the second quarter of 2025 was 1.67%, compared to 1.77% and 1.73% for the first quarter of 2025 and the second quarter of 2024, respectively. The non-GAAP net operating expense ratio(1), which excludes core deposit intangible amortization and non-recurring activity, was 1.52% for the second quarter of 2025, compared to 1.62% and 1.55% for the first quarter of 2025 and the second quarter of 2024, respectively. (1) See the Reconciliation of GAAP and Non-GAAP Measures tables. Review of Six Month Financial Results Net interest income for the six months ended June 30, 2025 was $93.3 million, an increase of $10.0 million, or 12.0%, when compared to the six months ended June 30, 2024. The increase in net interest income was primarily due to an increase in total interest income of $8.4 million, or 5.9%, which included an increase in interest and fees on loans of $4.3 million, or 3.2%, and an increase in interest on deposits with other banks of $3.5 million, or 224.9%. The increase in interest and fees on loans was primarily due to the increase in the average balance of loans of $128.6 million, or 2.7% and a decrease in total interest expense, primarily due to a decrease in interest paid on short-term borrowings of $1.6 million and a decrease in interest on deposits of $641 thousand. These decreases were partially offset by an increase in interest expenses on long-term borrowings of $715 thousand due to the 18-month Bermuda Convertible note. The Company's NIM increased from 3.09% for the six months ended June 30, 2024 to 3.30% for the six months ended June 30, 2025. Margins were higher due to a $288.2 million increase in interest-earning asset balances and a 5 basis point increase in interest-earning asset yields. These positive movements were coupled with lower cost interest-bearing deposits. The increase in the average balances of interest-bearing deposits of $20.0 million was offset by a 4 basis point decrease in the associated rates paid, as well as a $23.9 million decrease in the average balance of FHLB advances and a 56 basis point decrease in the associated rates paid. Net accretion income impacted net interest margin by 24 basis points and 27 basis points for the six months ended June 30, 2025 and 2024, respectively, which resulted in NIMs excluding accretion of 3.06% and 2.82% for the same periods. The provision for credit losses for the six months ended June 30, 2025 and 2024 was $2.6 million and $2.5 million, respectively. The increase in the provision for credit losses during 2025 was due to higher reserves related to growth in the loan portfolio, partially offset by an improved economic outlook. Net charge-offs for the six months ended June 30, 2025 were $1.2 million compared to $1.5 million for the six months ended June 30, 2024. Total noninterest income for the six months ended June 30, 2025 increased $1.3 million, or 8.8%, when compared to the same period in 2024. The increase was primarily due to a $453 thousand gain on sales of loans held for sale, $383 thousand of mortgage banking revenue and $249 thousand of other noninterest income. Total noninterest expense for the six months ended June 30, 2025 decreased $2.0 million, or 2.9%, when compared to the same period in 2024. Noninterest expense line items decreased primarily due to the absence of the $4.3 million credit card fraud event during the six months ended June 30, 2024, which was partially offset by higher salaries and employee benefit expenses of $1.3 million and an increase of $1.3 million of software and data processing expense in the six months ended June 30, 2025. The efficiency ratio for the six months ended June 30, 2025 was 62.19% compared to 71.42% for the six months ended June 30, 2024. Non-GAAP efficiency ratios for the same periods were 57.95% and 61.69%, respectively. The net operating expense ratio, which is noninterest expense less noninterest income divided by average assets, for the six months ended June 30, 2025 was 1.72% compared to 1.91% for the six months ended June 30, 2024. The non-GAAP net operating expense ratio(1), which excludes core deposit intangible amortization and non-recurring activity, was 1.57% for the six months ended June 30, 2025, compared to 1.58% for the six months ended June 30, 2024. (1) See the Reconciliation of GAAP and non-GAAP Measures tables. Shore Bancshares Information Shore Bancshares is a financial holding company headquartered in Easton, Maryland and is the parent company of Shore United Bank, N.A. Shore Bancshares engages in trust and wealth management services through Wye Financial Partners, a division of Shore United Bank, N.A. Additional information is available at www.shorebancshares.com. Forward-Looking Statements The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: the strength of the United States ("U.S.") economy and general economic conditions, (including the interest rate environment, government economic and monetary policies, the strength of global financial markets and inflation/deflation and supply chain issues), whether national or regional, and conditions in the lending markets in which we participate that may have an adverse effect on the demand for our loans and other products, our credit quality and related levels of nonperforming assets and loan losses, and the value and salability of the real estate that we own or that is the collateral for our loans; the ability to effectively manage the information technology systems, including third-party vendors, cyber or data privacy incidents or other failures, disruptions or security breaches, and risk related to the development and use of artificial intelligence; the ability to develop and use technologies to provide products and services that will satisfy customer demands; results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our reserve for loan losses or to write-down assets; changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, which could lead to restrictions on activities of banks generally, or our subsidiary bank in particular, more restrictive regulatory capital requirements, increased costs, including deposit insurance premiums, regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products; changes in market rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our balance sheet; our liquidity requirements could be adversely affected by changes in our assets and liabilities; our ability to prudently manage our growth and execute our strategy; impairment of our goodwill and intangible assets; competitive factors among financial services organizations, including product and pricing pressures and our ability to attract, develop and retain qualified banking professionals; the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; the growth and profitability of noninterest or fee income being less than expected; the effect of legislative or regulatory developments, including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial services industry; the effect of any change in federal government enforcement of federal laws affecting the cannabis industry; the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the U.S. Securities and Exchange Commission (the "SEC"), the Public Company Accounting Oversight Board and other regulatory agencies; changes in U.S. trade policies, including the implementation of tariffs and other protectionist trade policies; the impact of governmental efforts to restructure or adjust the U.S. financial regulatory system; the impact of recent or future changes in Federal Deposit Insurance Corporation (the "FDIC") insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount, including any special assessments; the effect of fiscal and governmental policies of the U.S. federal government; climate change and other catastrophic events or disasters; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts of terrorism, and/or military conflicts, which could impact business and economic conditions in the United States and abroad; and other factors that may affect our future results. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's 2024 Annual Report on Form 10-K filed with the SEC and available at the SEC's Internet site (https://www.sec.gov). The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments. Shore Bancshares, Inc. Financial Highlights By Quarter and Year (Unaudited) Q2 2025 vs. Q2 2025 vs. Six Months Ended June 30, ($ in thousands, except per share data) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2025 Q2 2024 2025 2024 2025 vs. 2024 PROFITABILITY FOR THE PERIOD Taxable-equivalent net interest income $ 47,333 $ 46,110 $ 44,093 $ 43,345 $ 42,222 2.7 % 12.1 % $ 93,442 $ 83,436 11.99 % Less: Taxable-equivalent adjustment 81 81 82 82 82 — (1.2) 161 161 — Net interest income 47,252 46,029 44,011 43,263 42,140 2.7 12.1 93,281 83,275 12.02 Provision for credit losses 1,528 1,028 780 1,470 2,081 48.6 (26.6) 2,556 2,488 2.73 Noninterest income 9,318 7,003 8,853 7,287 8,440 33.1 10.4 16,320 15,007 8.75 Noninterest expense 34,410 33,747 33,943 34,114 33,499 2.0 2.7 68,157 70,197 (2.91) Income before income taxes 20,632 18,257 18,141 14,966 15,000 13.0 37.6 38,888 25,597 51.92 Income tax expense 5,125 4,493 4,859 3,777 3,766 14.1 36.1 9,617 6,179 55.64 Net income $ 15,507 $ 13,764 $ 13,282 $ 11,189 $ 11,234 12.7 38.0 $ 29,271 $ 19,418 50.74 Return on average assets 1.03 % 0.91 % 0.86 % 0.77 % 0.77 % 12 bp 26 bp 0.97 % 0.67 % 30 bp Return on average assets excluding net amortization of other intangible assets, credit card fraud losses and assets held for sale – non-GAAP(1) 1.15 1.02 0.94 0.90 0.91 13 24 1.09 0.92 17 Return on average common equity 11.13 10.20 9.82 8.41 8.70 93 243 10.67 7.54 313 Return on average tangible common equity – non-GAAP(1) 14.99 14.05 13.37 12.37 12.85 94 214 14.53 13.08 145 Interest rate spread 2.39 2.30 2.02 2.06 2.11 9 28 2.35 2.23 12 Net interest margin 3.35 3.24 3.03 3.17 3.11 11 24 3.30 3.09 21 Efficiency ratio – GAAP 60.83 63.64 64.21 67.49 66.23 (281) (540) 62.19 71.42 (923) Efficiency ratio – non-GAAP(1) 56.73 59.25 60.28 62.10 61.05 (252) (432) 57.95 61.69 (374) Noninterest income to average assets 0.62 0.46 0.57 0.50 0.58 16 4 0.54 0.52 2 Noninterest expense to average assets 2.29 2.23 2.19 2.34 2.31 6 (2) 2.26 2.43 (17) Net operating expense to average assets – GAAP 1.67 1.77 1.62 1.84 1.73 (10) (6) 1.72 1.91 (19) Net operating expense to average assets – non-GAAP(1) 1.52 1.62 1.50 1.65 1.55 (10) (3) 1.57 1.58 (1) PER SHARE DATA Basic net income per common share $ 0.46 $ 0.41 $ 0.40 $ 0.34 $ 0.34 12.2 % 35.3 % $ 0.88 $ 0.58 51.72 % Diluted net income per common share 0.46 0.41 0.40 0.34 0.34 12.2 35.3 0.88 0.58 51.72 Dividends paid per common share 0.12 0.12 0.12 0.12 0.12 — — 0.24 0.24 — Book value per common share at period end 16.94 16.55 16.23 16.00 15.74 2.4 7.6 16.94 15.74 7.62 Tangible book value per common share at period end – non-GAAP(1) 14.03 13.58 13.19 12.88 12.54 3.3 11.9 14.03 12.54 11.88 Common share market value at period end 15.72 13.54 15.85 13.99 11.45 16.1 37.3 15.72 11.45 37.29 Common share intraday price: High $ 15.88 $ 17.24 $ 17.61 $ 14.99 $ 11.90 (7.9) % 33.5 % 17.24 14.38 19.89 Low 11.47 13.15 13.21 11.03 10.06 (12.8) 14.0 11.47 10.06 14.02 (1) See the Reconciliation of GAAP and non-GAAP Measures tables. Shore Bancshares, Inc. Financial Highlights By Quarter and Year (Unaudited) - Continued Q2 2025 vs. Q2 2025 vs. Six Months Ended June 30, ($ in thousands, except per share data) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2025 Q2 2024 2025 2024 2025 vs. 2024 AVERAGE BALANCE SHEET DATA Loans $ 4,833,558 $ 4,784,991 $ 4,796,245 $ 4,734,001 $ 4,706,510 1.0 % 2.7 % $ 4,809,409 $ 4,680,846 2.75 % Investment securities 683,680 664,655 655,610 656,375 706,079 2.9 (3.2) 674,220 680,701 (0.95) Earning assets 5,660,409 5,768,080 5,798,454 5,435,311 5,459,961 (1.9) 3.7 5,712,117 5,423,871 5.31 Assets 6,021,385 6,129,241 6,163,497 5,810,492 5,839,328 (1.8) 3.1 6,075,339 5,807,076 4.62 Deposits 5,297,567 5,417,514 5,461,583 5,086,348 5,064,974 (2.2) 4.6 5,357,545 5,103,815 4.97 FHLB advances 50,000 50,000 50,000 83,500 143,769 — (65.2) 50,000 73,885 (32.33) Subordinated debt & TRUPS 74,102 73,840 73,578 72,946 72,680 0.4 2.0 73,971 72,549 1.96 Stockholders' equity 558,952 547,443 538,184 529,155 519,478 2.1 7.6 553,229 517,727 6.86 CREDIT QUALITY DATA Net charge-offs (recoveries) $ 649 $ 554 $ 1,333 $ 1,288 $ 886 17.2 % (26.8) % 1,203 1,451 (17.09) % Nonaccrual loans $ 16,782 $ 15,402 $ 21,008 $ 14,844 $ 14,837 9.0 % 13.1 % Loans 90 days past due and still accruing 215 894 294 454 414 (76.0) (48.1) Other real estate owned and repossessed property 2,636 2,608 3,494 485 1,739 1.1 51.6 Total nonperforming assets $ 19,633 $ 18,904 $ 24,796 $ 15,783 $ 16,990 3.9 15.6 Shore Bancshares, Inc. Financial Highlights By Quarter and Year (Unaudited) - Continued Q2 2025 vs. Q2 2025 vs. Six Months Ended June 30, ($ in thousands, except per share data) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2025 Q2 2024 2025 2024 2025 vs. 2024 CAPITAL AND CREDIT QUALITY RATIOS Period-end equity to assets – GAAP 9.36 % 8.94 % 8.68 % 9.01 % 8.92 % 42 bp 44 bp Period-end tangible equity to tangible assets – non-GAAP(1) 7.88 7.46 7.17 7.39 7.23 42 65 Annualized net charge-offs to average loans 0.05 % 0.05 % 0.11 % 0.11 % 0.08 % — bp (3) bp 0.05 % 0.06 % (1) bp Allowance for credit losses as a percent of: Period-end loans 1.21 % 1.21 % 1.21 % 1.24 % 1.24 % — bp (3) bp Nonaccrual loans 348.49 376.85 275.66 395.24 394.14 (2,836) (4,565) Nonperforming assets 297.88 307.04 233.55 371.72 344.19 (916) (4,631) As a percent of total loans: Nonaccrual loans 0.35 % 0.32 % 0.44 % 0.31 % 0.32 % 3 bp 3 bp As a percent of total loans, other real estate owned and repossessed property: Nonperforming assets 0.41 % 0.40 % 0.52 % 0.33 % 0.36 % 1 bp 5 bp As a percent of total assets: Nonaccrual loans 0.28 % 0.25 % 0.34 % 0.25 % 0.25 % 3 bp 3 bp Nonperforming assets 0.33 0.31 0.40 0.27 0.29 2 4 (1) See the Reconciliation of GAAP and non-GAAP Measures tables. Shore Bancshares, Inc. Financial Highlights By Quarter and Year (Unaudited) - Continued Q2 2025 vs. Q2 2025 vs. ($ in thousands) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2025 Q2 2024 The Company Amounts Common Equity Tier 1 Capital $ 483,947 $ 470,223 $ 458,258 $ 446,402 $ 435,238 2.92 % 11.19 % Tier 1 Capital 513,952 500,149 488,105 476,170 464,554 2.76 10.63 Total Capital 618,793 603,928 591,228 579,664 567,680 2.46 9.00 Risk-Weighted Assets 4,890,679 4,823,833 4,852,564 4,816,165 4,803,230 1.39 1.82 The Company Ratios Common Equity Tier 1 Capital to RWA 9.90 % 9.75 % 9.44 % 9.27 % 9.06 % 15 bp 83 bp Tier 1 Capital to RWA 10.51 10.37 10.06 9.89 9.67 14 84 Total Capital to RWA 12.65 12.52 12.18 12.04 11.82 13 83 Tier 1 Capital to AA (Leverage) 8.65 8.27 8.02 8.31 8.07 38 58 The Bank Amounts Common Equity Tier 1 Capital $ 546,630 $ 534,824 $ 521,453 $ 509,511 $ 501,003 2.21 % 9.11 % Tier 1 Capital 546,630 534,824 521,453 509,511 501,003 2.21 9.11 Total Capital 607,235 594,550 580,706 569,317 560,625 2.13 8.31 Risk-Weighted Assets 4,888,558 4,821,975 4,851,903 4,808,058 4,796,512 1.38 1.92 The Bank Ratios Common Equity Tier 1 Capital to RWA 11.18 % 11.09 % 10.75 % 10.60 % 10.45 % 9 bp 74 bp Tier 1 Capital to RWA 11.18 11.09 10.75 10.60 10.45 9 74 Total Capital to RWA 12.42 12.33 11.97 11.84 11.69 9 73 Tier 1 Capital to AA (Leverage) 9.20 8.84 8.58 8.90 8.71 36 49 Shore Bancshares, Inc. Consolidated Balance Sheets (Unaudited) June 30, 2025 June 30, 2025 compared to compared to ($ in thousands, except per share data) June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 December 31, 2024 June 30, 2024 ASSETS Cash and due from banks $ 54,512 $ 46,886 $ 44,008 $ 52,363 $ 50,090 23.9 % 8.8 % Interest-bearing deposits with other banks 130,472 342,120 415,843 131,258 88,793 (68.6) 46.9 Cash and cash equivalents 184,984 389,006 459,851 183,621 138,883 (59.8) 33.2 Investment securities: Available for sale, at fair value 187,679 179,148 149,212 133,339 131,594 25.8 42.6 Held to maturity, net of allowance for credit losses 459,246 469,572 481,077 484,583 499,431 (4.5) (8.0) Equity securities, at fair value 6,010 5,945 5,814 5,950 5,699 3.4 5.5 Restricted securities, at cost 20,412 20,411 20,253 20,253 21,725 0.8 (6.0) Loans held for sale, at fair value 34,319 15,717 19,606 26,877 27,829 75.0 23.3 Loans held for investment 4,827,628 4,777,489 4,771,988 4,733,909 4,705,737 1.2 2.6 Less: allowance for credit losses (58,483) (58,042) (57,910) (58,669) (58,478) 1.0 — Loans, net 4,769,145 4,719,447 4,714,078 4,675,240 4,647,259 1.2 2.6 Premises and equipment, net 81,426 81,692 81,806 81,663 82,176 (0.5) (0.9) Goodwill 63,266 63,266 63,266 63,266 63,266 — — Other intangible assets, net 33,761 36,033 38,311 40,609 42,945 (11.9) (21.4) Mortgage servicing rights 5,396 5,535 5,874 5,309 5,995 (8.1) (10.0) Right-of-use assets 11,052 11,709 11,385 11,384 11,762 (2.9) (6.0) Cash surrender value on life insurance 105,860 105,040 104,421 103,729 102,969 1.4 2.8 Accrued interest receivable 19,821 20,555 19,570 19,992 19,641 1.3 0.9 Deferred income taxes 30,972 31,428 31,857 32,191 36,078 (2.8) (14.2) Other assets 24,525 22,059 24,382 29,698 26,765 0.6 (8.4) TOTAL ASSETS $ 6,037,874 $ 6,176,563 $ 6,230,763 $ 5,917,704 $ 5,864,017 (3.1) 3.0 Shore Bancshares, Inc. Consolidated Balance Sheets (Unaudited) - Continued June 30, 2025 compared to ($ in thousands, except per share data) June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 December 31, 2024 LIABILITIES Deposits: Noninterest-bearing $ 1,575,120 $ 1,565,017 $ 1,562,815 $ 1,571,393 $ 1,587,252 0.8 % Interest-bearing checking 763,309 852,480 978,076 751,533 658,512 (22.0) Money market and savings 1,691,438 1,800,529 1,805,884 1,634,140 1,689,343 (6.3) Time deposits 1,273,285 1,242,319 1,181,561 1,268,657 1,213,778 7.8 Brokered deposits 10,806 — — — — — Total deposits 5,313,958 5,460,345 5,528,336 5,225,723 5,148,885 (3.9) FHLB advances 50,000 50,000 50,000 50,000 81,000 — Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS"), net 30,005 29,926 29,847 29,768 29,316 0.5 Subordinated debt, net 44,236 44,053 43,870 43,688 43,504 0.8 Total borrowings 124,241 123,979 123,717 123,456 153,820 0.4 Lease liabilities 11,541 12,183 11,844 11,816 12,189 (2.6) Other liabilities 22,940 27,586 25,800 23,438 26,340 (11.1) TOTAL LIABILITIES 5,472,680 5,624,093 5,689,697 5,384,433 5,341,234 (3.8) STOCKHOLDERS' EQUITY Common stock, $0.01 par value per share 334 333 333 333 333 0.3 Additional paid in capital 359,063 358,572 358,112 357,580 356,994 0.3 Retained earnings 211,400 199,898 190,166 180,884 173,716 11.2 Accumulated other comprehensive loss (5,603) (6,333) (7,545) (5,526) (8,260) (25.7) TOTAL STOCKHOLDERS' EQUITY 565,194 552,470 541,066 533,271 522,783 4.5 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,037,874 $ 6,176,563 $ 6,230,763 $ 5,917,704 $ 5,864,017 (3.1) Shares of common stock issued and outstanding 33,374,265 33,374,265 33,332,177 33,326,772 33,214,522 0.1 Book value per common share $ 16.94 $ 16.55 $ 16.23 $ 16.00 $ 15.74 4.4 Shore Bancshares, Inc. Consolidated Statements of Income By Quarter (Unaudited) Q2 2025 vs. Q2 2025 vs. Six Months Ended June 30, ($ in thousands, except per share data) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2025 Q2 2024 2025 2024 % Change INTEREST INCOME Interest and fees on loans $ 69,695 $ 67,647 $ 67,428 $ 69,157 $ 67,292 3.0 % 3.6 % $ 137,343 $ 133,045 3.2 % Interest and dividends on taxable investment securities 5,331 5,001 4,833 4,962 5,230 6.6 1.9 10,332 9,650 7.1 Interest and dividends on tax-exempt investment securities 6 6 6 6 6 — — 12 12 — Interest on deposits with other banks 1,588 3,409 4,137 564 578 (53.4) 174.7 4,997 1,538 224.9 Total interest income 76,620 76,063 76,404 74,689 73,106 0.7 4.8 152,684 144,245 5.9 INTEREST EXPENSE Interest on deposits 27,369 28,070 30,363 28,856 27,585 (2.5) (0.8) 55,440 56,081 (1.1) Interest on short-term borrowings — — — 491 1,584 — (100.0) — 1,641 (100.0) Interest on long-term borrowings 1,999 1,964 2,030 2,079 1,797 1.8 11.2 3,963 3,248 22.0 Total interest expense 29,368 30,034 32,393 31,426 30,966 (2.2) (5.2) 59,403 60,970 (2.6) NET INTEREST INCOME 47,252 46,029 44,011 43,263 42,140 2.7 12.1 93,281 83,275 12.0 Provision for credit losses 1,528 1,028 780 1,470 2,081 48.6 (26.6) 2,556 2,488 2.7 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 45,724 45,001 43,231 41,793 40,059 1.6 14.1 90,725 80,787 12.3 NONINTEREST INCOME Service charges on deposit accounts 1,519 1,514 1,606 1,543 1,493 0.3 1.7 3,033 3,001 1.1 Trust and investment fee income 942 823 857 880 896 14.5 5.1 1,765 1,630 8.3 Gain on sale of loans held for sale 1,325 966 1,221 1,961 1,131 37.2 17.2 2,291 1,838 24.7 Mortgage-banking revenue 1,054 274 805 (784) 852 284.7 23.7 1,328 945 40.5 Interchange credits 1,788 1,577 1,726 1,711 1,717 13.4 4.1 3,365 3,304 1.9 Other noninterest income 2,690 1,849 2,638 1,976 2,351 45.5 14.4 4,538 4,289 5.8 Total noninterest income $ 9,318 $ 7,003 $ 8,853 $ 7,287 $ 8,440 33.1 10.4 $ 16,320 $ 15,007 8.8 Shore Bancshares, Inc. Consolidated Statements of Income By Quarter (Unaudited) - Continued Q2 2025 vs. Q2 2025 vs. ($ in thousands, except per share data) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2025 Q2 2024 2025 2024 % Change NONINTEREST EXPENSE Salaries and employee benefits $ 17,742 $ 16,440 $ 17,209 $ 16,523 $ 16,900 7.9 % 5.0 % $ 34,182 $ 32,847 4.1 % Occupancy expense 2,472 2,538 2,474 2,384 2,432 (2.6) 1.6 5,010 4,848 3.3 Furniture and equipment expense 796 853 760 876 900 (6.7) (11.6) 1,650 1,804 (8.5) Software and data processing 4,819 4,691 4,512 4,419 4,219 2.7 14.2 9,510 8,240 15.4 Directors' fees 219 348 460 443 359 (37.1) (39.0) 567 654 (13.3) Amortization of other intangible assets 2,272 2,278 2,298 2,336 2,569 (0.3) (11.6) 4,550 5,145 (11.6) FDIC insurance premium expense 1,023 1,091 1,013 1,160 1,089 (6.2) (6.1) 2,114 2,240 (5.6) Legal and professional fees 1,225 1,613 1,521 1,362 1,354 (24.1) (9.5) 2,838 2,954 (3.9) Fraud losses 83 105 98 673 62 (21.0) 33.9 188 4,564 (95.9) Other noninterest expense 3,759 3,790 3,598 3,938 3,615 (0.8) 4.0 7,548 6,901 9.4 Total noninterest expense 34,410 33,747 33,943 34,114 33,499 2.0 2.7 68,157 70,197 (2.9) Income before income taxes 20,632 18,257 18,141 14,966 15,000 13.0 37.6 38,888 25,597 51.9 Income tax expense 5,125 4,493 4,859 3,777 3,766 14.1 36.1 9,617 6,179 55.6 NET INCOME $ 15,507 $ 13,764 $ 13,282 $ 11,189 $ 11,234 12.7 38.0 $ 29,271 $ 19,418 50.7 Weighted average shares outstanding - basic 33,374,265 33,350,869 33,327,243 33,317,739 33,233,870 0.1 % 0.4 % 33,362,632 33,211,558 0.5 % Weighted average shares outstanding - diluted 33,388,013 33,375,318 33,363,612 33,339,005 33,233,870 0.0 % 0.5 % 33,377,165 33,211,558 0.5 % Basic net income per common share $ 0.46 $ 0.41 $ 0.40 $ 0.34 $ 0.34 12.2 % 35.3 % $ 0.88 $ 0.58 51.7 % Diluted net income per common share $ 0.46 $ 0.41 $ 0.40 $ 0.34 $ 0.34 12.2 % 35.3 % $ 0.88 $ 0.58 51.7 % Dividends paid per common share $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12 — % — % $ 0.24 $ 0.24 — % Shore Bancshares, Inc. Consolidated Average Balance Sheets (Unaudited) Three Months Ended June 30, 2025 June 30, 2024 March 31, 2025 ($ in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Earning assets Loans(1), (2), (3) Commercial real estate $ 2,572,931 $ 37,276 5.81 % $ 2,522,708 $ 36,110 5.76 % $ 2,541,527 $ 35,889 5.73 % Residential real estate 1,378,940 18,986 5.52 1,306,260 17,938 5.52 1,347,035 18,462 5.56 Construction 352,803 5,697 6.48 319,205 4,902 6.18 352,323 5,526 6.36 Commercial 224,218 3,658 6.54 219,140 3,956 7.26 232,900 3,705 6.45 Consumer 298,544 4,036 5.42 330,819 4,265 5.19 304,520 4,058 5.40 Credit card 6,122 121 7.93 8,378 201 9.65 6,686 86 5.22 Total loans 4,833,558 69,774 5.79 4,706,510 67,372 5.76 4,784,991 67,726 5.74 Investment securities Taxable 683,028 5,331 3.12 705,421 5,230 2.97 664,002 5,001 3.01 Tax-exempt(1) 652 8 4.91 658 8 4.86 653 8 4.90 Interest-bearing deposits 143,171 1,588 4.45 47,372 578 4.91 318,434 3,409 4.34 Total earning assets 5,660,409 76,701 5.44 5,459,961 73,188 5.39 5,768,080 76,144 5.35 Cash and due from banks 46,620 45,141 43,526 Other assets 372,725 391,854 375,929 Allowance for credit losses (58,369) (57,628) (58,294) Total assets $ 6,021,385 $ 5,839,328 $ 6,129,241 Shore Bancshares, Inc. Consolidated Average Balance Sheets (Unaudited) - Continued Three Months Ended June 30, 2025 June 30, 2024 March 31, 2025 ($ in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Interest-bearing liabilities Interest-bearing checking $ 720,967 $ 5,697 3.17 % $ 711,138 $ 5,550 3.14 % $ 859,698 $ 7,025 3.31 % Money market and savings deposits 1,747,854 9,580 2.20 1,690,157 10,291 2.45 1,799,707 10,015 2.26 Time deposits 1,258,802 12,000 3.82 1,175,542 11,650 3.99 1,208,250 11,030 3.70 Brokered deposits 9,720 92 3.80 7,753 94 4.88 — — — Interest-bearing deposits(4) 3,737,343 27,369 2.94 3,584,590 27,585 3.10 3,867,655 28,070 2.94 Securities sold under retail repurchase agreements and federal funds purchased — — — — — — — — — FHLB advances 50,000 605 4.85 143,769 1,930 5.40 50,000 598 4.85 Subordinated debt and guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS")(4) 74,102 1,394 7.55 72,680 1,451 8.03 73,840 1,366 7.50 Total interest-bearing liabilities 3,861,445 29,368 3.05 3,801,039 30,966 3.28 3,991,495 30,034 3.05 Noninterest-bearing deposits 1,560,224 1,480,384 1,549,859 Accrued expenses and other liabilities 40,764 38,427 40,444 Stockholders' equity 558,952 519,478 547,443 Total liabilities and stockholders' equity $ 6,021,385 $ 5,839,328 $ 6,129,241 Net interest spread 2.39 % 2.11 % 2.30 % Net interest margin 3.35 3.11 3.24 Net interest margin excluding accretion 3.10 2.83 3.02 Cost of funds 2.17 2.36 2.20 Cost of deposits 2.07 2.19 2.10 Cost of debt 6.46 6.28 6.43 (1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense. (2) Average loan balances include nonaccrual loans. (3) Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $4.2 million, $4.5 million and $3.7 million of accretion interest on loans for the three months ended June 30, 2025, June 30, 2024 and March 31, 2025, respectively. (4) Interest expense on deposits and borrowings includes amortization of deposit discounts and amortization of borrowing fair value adjustments. There were $435 thousand, $421 thousand and $334 thousand of amortization of deposit discounts, and $232 thousand, $243 thousand, and $232 thousand of amortization of borrowing fair value adjustments for the three months ended June 30, 2025, June 30, 2024 and March 31, 2025, respectively. Shore Bancshares, Inc. Consolidated Average Balance Sheets (Unaudited) - Continued Six Months Ended June 30, 2025 2024 ($ in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Earning assets Loans(1), (2), (3) Commercial real estate $ 2,557,316 $ 73,167 5.77 % $ 2,520,796 $ 71,743 5.72 % Residential real estate 1,363,076 37,448 5.54 1,291,225 35,179 5.48 Construction 352,564 11,222 6.42 309,661 9,306 6.04 Commercial 228,535 7,363 6.50 220,248 8,070 7.37 Consumer 301,515 8,094 5.41 330,998 8,537 5.19 Credit card 6,403 207 6.52 7,918 368 9.35 Total loans 4,809,409 137,501 5.77 4,680,846 133,203 5.72 Investment securities Taxable 673,567 10,332 3.07 680,042 9,650 2.84 Tax-exempt(1) 653 15 4.59 659 15 4.55 Interest-bearing deposits 228,488 4,997 4.41 62,324 1,538 4.96 Total earning assets 5,712,117 152,845 5.40 5,423,871 144,406 5.35 Cash and due from banks 46,912 47,320 Other assets 374,641 393,439 Allowance for credit losses (58,331) (57,554) Total assets $ 6,075,339 $ 5,807,076 Shore Bancshares, Inc. Consolidated Average Balance Sheets (Unaudited) - Continued Six Months Ended June 30, 2025 2024 ($ in thousands) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Interest-bearing liabilities Interest-bearing checking $ 789,949 $ 12,722 3.25 % $ 910,831 $ 11,911 2.63 % Money market and savings deposits 1,773,637 19,595 2.23 1,679,615 20,451 2.45 Time deposits 1,233,666 23,031 3.76 1,177,557 23,374 3.99 Brokered deposits 4,888 92 3.80 14,107 345 4.92 Interest-bearing deposits(4) 3,802,140 55,440 2.94 3,782,110 56,081 2.98 Securities sold under retail repurchase agreements and federal funds purchased — — — — — — FHLB advances 50,000 1,203 4.85 73,885 1,987 5.41 Subordinated debt and Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPS")(4) 73,971 2,760 7.52 72,549 2,902 8.04 Total interest-bearing liabilities 3,926,111 59,403 3.05 3,928,544 60,970 3.12 Noninterest-bearing deposits 1,555,405 1,321,705 Accrued expenses and other liabilities 40,594 39,100 Stockholders' equity 553,229 517,727 Total liabilities and stockholders' equity $ 6,075,339 $ 5,807,076 Net interest spread 2.35 % 2.23 % Net interest margin 3.30 3.09 Net interest margin excluding accretion 3.06 2.82 Cost of funds 2.19 2.34 Cost of deposits 2.09 2.21 Cost of debt 6.45 6.71 (1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense. (2) Average loan balances include nonaccrual loans. (3) Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $8.0 million and $8.7 million of accretion interest on loans for the six months ended June 30, 2025 and 2024, respectively. (4) Interest expense on deposits and borrowings includes amortization of deposit discounts and amortization of borrowing fair value adjustments. There were $769 thousand and $788 thousand of amortization of deposit discounts, and $463 thousand and $463 thousand of amortization of borrowing fair value adjustments for the six months ended June 30, 2025 and 2024, respectively. Shore Bancshares, Inc. Reconciliation of GAAP and Non-GAAP Measures (Unaudited) ($ in thousands, except per share data) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 The following reconciles return on average assets, average equity and return on average tangible equity(1): Net income $ 15,507 $ 13,764 $ 13,282 $ 11,189 $ 11,234 Net income - annualized (A) $ 62,198 $ 55,821 $ 52,839 $ 44,513 $ 45,183 Net income $ 15,507 $ 13,764 $ 13,282 $ 11,189 $ 11,234 Add: Amortization of other intangible assets, net of tax 1,708 1,717 1,683 1,746 1,924 Add: Merger expenses, net of tax — — — — — Add: Credit card fraud losses, net of tax — — — 252 — Less: Sale and fair value of held for sale assets, net of tax — — (329) — — Net income, excluding net amortization of other intangible assets, credit card fraud losses and held for sale assets 17,215 15,481 14,636 13,187 13,158 Net income, excluding net amortization of other intangible assets, credit card fraud losses and held for sale assets - annualized (B) $ 69,049 $ 62,784 $ 58,226 $ 52,461 $ 52,921 Return on average assets – GAAP 1.03 % 0.91 % 0.86 % 0.77 % 0.77 % Return on average assets excluding net amortization of other intangible assets, credit card fraud losses and held for sale assets – non-GAAP 1.15 % 1.02 % 0.94 % 0.90 % 0.91 % Average assets $ 6,021,385 $ 6,129,241 $ 6,163,497 $ 5,810,492 $ 5,839,328 Average stockholders' equity (C) $ 558,952 $ 547,443 $ 538,184 $ 529,155 $ 519,478 Less: Average goodwill and core deposit intangible (98,241) (100,514) (102,794) (105,136) (107,594) Average tangible common equity (D) $ 460,711 $ 446,929 $ 435,390 $ 424,019 $ 411,884 Return on average equity – GAAP (A)/(C) 11.13 % 10.20 % 9.82 % 8.41 % 8.70 % Return on average tangible equity – non-GAAP (A)/(D) 13.50 % 12.49 % 12.14 % 10.50 % 10.97 % Return on average tangible equity – non-GAAP (B)/(D) 14.99 % 14.05 % 13.37 % 12.37 % 12.85 % Shore Bancshares, Inc. Reconciliation of GAAP and Non-GAAP Measures (Unaudited) - Continued ($ in thousands, except per share data) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio(2): Noninterest expense (E) $ 34,410 $ 33,747 $ 33,943 $ 34,114 $ 33,499 Less: Amortization of other intangible assets (2,272) (2,278) (2,298) (2,336) (2,569) Less: Credit card fraud losses — — — (337) — Adjusted noninterest expense (F) $ 32,138 $ 31,469 $ 31,645 $ 31,441 $ 30,930 Net interest income (G) $ 47,252 $ 46,029 $ 44,011 $ 43,263 $ 42,140 Add: Taxable-equivalent adjustment 81 81 82 82 82 Taxable-equivalent net interest income (H) $ 47,333 $ 46,110 $ 44,093 $ 43,345 $ 42,222 Noninterest income (I) $ 9,318 $ 7,003 $ 8,853 $ 7,287 $ 8,440 Less: Sale and fair value of held for sale assets — — (450) — — Adjusted noninterest income (J) $ 9,318 $ 7,003 $ 8,403 $ 7,287 $ 8,440 Efficiency ratio – GAAP (E)/(G)+(I) 60.83 % 63.64 % 64.21 % 67.49 % 66.23 % Efficiency ratio – non-GAAP (F)/(H)+(J) 56.73 % 59.25 % 60.28 % 62.10 % 61.05 % Net operating expense to average assets – GAAP 1.67 % 1.77 % 1.62 % 1.84 % 1.73 % Net operating expense to average assets – non-GAAP 1.52 % 1.62 % 1.50 % 1.65 % 1.55 % Shore Bancshares, Inc. Reconciliation of GAAP and Non-GAAP Measures (Unaudited) - Continued ($ in thousands, except per share data) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 The following reconciles book value per common share and tangible book value per common share(1): Stockholders' equity (K) $ 565,194 $ 552,470 $ 541,066 $ 533,271 $ 522,783 Less: Goodwill and core deposit intangible (97,027) (99,299) (101,577) (103,875) (106,211) Tangible equity (L) $ 468,167 $ 453,171 $ 439,489 $ 429,396 $ 416,572 Shares outstanding (M) 33,374 33,374 33,332 33,327 33,215 Book value per common share – GAAP (K)/(M) $ 16.94 $ 16.55 $ 16.23 $ 16.00 $ 15.74 Tangible book value per common share – non-GAAP (L)/(M) $ 14.03 $ 13.58 $ 13.19 $ 12.88 $ 12.54 The following reconciles equity to assets and tangible equity to tangible assets(1): Stockholders' equity (N) $ 565,194 $ 552,470 $ 541,066 $ 533,271 $ 522,783 Less: Goodwill and core deposit intangible (97,027) (99,299) (101,577) (103,875) (106,211) Tangible equity (O) $ 468,167 $ 453,171 $ 439,489 $ 429,396 $ 416,572 Assets (P) $ 6,037,874 $ 6,176,563 $ 6,230,763 $ 5,917,704 $ 5,864,017 Less: Goodwill and core deposit intangible (97,027) (99,299) (101,577) (103,875) (106,211) Tangible assets (Q) $ 5,940,847 $ 6,077,264 $ 6,129,186 $ 5,813,829 $ 5,757,806 Period-end equity to assets – GAAP (N)/(P) 9.36 % 8.94 % 8.68 % 9.01 % 8.92 % Period-end tangible equity to tangible assets – non-GAAP (O)/(Q) 7.88 % 7.46 % 7.17 % 7.39 % 7.23 % (1) Management believes that reporting tangible equity and tangible assets more closely approximates the adequacy of capital for regulatory purposes. (2) Management believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling cash-based operating activities. Shore Bancshares, Inc. Reconciliation of GAAP and Non-GAAP Measures (Unaudited) - Continued Regulatory Capital and Ratios for the Company ($ in thousands) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 Common equity $ 565,194 $ 552,470 $ 541,066 $ 533,271 $ 522,783 Goodwill(1) (61,238) (61,300) (61,362) (61,397) (61,460) Core deposit intangible(2) (25,573) (27,280) (28,991) (30,572) (32,313) DTAs that arise from net operating loss and tax credit carryforwards (39) — — (426) (2,032) Accumulated other comprehensive loss 5,603 6,333 7,545 5,526 8,260 Common Equity Tier 1 Capital 483,947 470,223 458,258 446,402 435,238 TRUPS 30,005 29,926 29,847 29,768 29,316 Tier 1 Capital 513,952 500,149 488,105 476,170 464,554 Allowable reserve for credit losses and other Tier 2 adjustments 60,605 59,726 59,253 59,806 59,622 Subordinated debt 44,236 44,053 43,870 43,688 43,504 Total Capital $ 618,793 $ 603,928 $ 591,228 $ 579,664 $ 567,680 Risk-Weighted Assets ("RWA") $ 4,890,679 $ 4,823,833 $ 4,852,564 $ 4,816,165 $ 4,803,230 Average Assets ("AA") 5,943,124 6,050,310 6,083,760 5,729,576 5,756,260 Common Equity Tier 1 Capital to RWA 9.90 % 9.75 % 9.44 % 9.27 % 9.06 % Tier 1 Capital to RWA 10.51 10.37 10.06 9.89 9.67 Total Capital to RWA 12.65 12.52 12.18 12.04 11.82 Tier 1 Capital to AA (Leverage) 8.65 8.27 8.02 8.31 8.07 Shore Bancshares, Inc. Reconciliation of GAAP and Non-GAAP Measures (Unaudited) - Continued Regulatory Capital and Ratios for the Bank ($ in thousands) Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 Common equity $ 627,838 $ 617,071 $ 604,261 $ 595,954 $ 587,283 Goodwill(1) (61,238) (61,300) (61,362) (61,397) (61,460) Core deposit intangible(2) (25,573) (27,280) (28,991) (30,572) (32,313) DTAs that arise from net operating loss and tax credit carryforwards — — — — (767) Accumulated other comprehensive loss 5,603 6,333 7,545 5,526 8,260 Common Equity Tier 1 Capital 546,630 534,824 521,453 509,511 501,003 Tier 1 Capital 546,630 534,824 521,453 509,511 501,003 Allowable reserve for credit losses and other Tier 2 adjustments 60,605 59,726 59,253 59,806 59,622 Total Capital $ 607,235 $ 594,550 $ 580,706 $ 569,317 $ 560,625 Risk-Weighted Assets ("RWA") $ 4,888,558 $ 4,821,975 $ 4,851,903 $ 4,808,058 $ 4,796,512 Average Assets ("AA") 5,940,411 6,050,130 6,077,540 5,721,995 5,750,604 (1) Goodwill is net of deferred tax liability. (2) Core deposit intangible is net of deferred tax liability. Shore Bancshares, Inc. Summary of Loan Portfolio (Unaudited) Portfolio loans are summarized by loan type as follows: ($ in thousands) June 30, 2025 % of Total Loans March 31, 2025 % of Total Loans December 31, 2024 % of Total Loans September 30, 2024 % of Total Loans June 30, 2024 % of Total Loans Commercial real estate $ 2,603,974 54.0 % $ 2,544,107 53.3 % $ 2,557,806 53.6 % $ 2,535,004 53.6 % $ 2,546,114 54.1 % Residential real estate 1,349,010 27.9 1,325,858 27.8 1,329,406 27.9 1,312,375 27.7 1,280,973 27.2 Construction 350,053 7.3 366,218 7.7 335,999 7.0 337,113 7.1 327,875 7.0 Commercial 224,092 4.6 234,499 4.9 237,932 5.0 225,083 4.8 218,987 4.7 Consumer 294,239 6.1 300,007 6.3 303,746 6.4 317,149 6.7 324,480 6.9 Credit cards 6,260 0.1 6,800 0.1 7,099 0.2 7,185 0.2 7,308 0.2 Total loans 4,827,628 100.0 % 4,777,489 100.0 % 4,771,988 100.0 % 4,733,909 100.0 % 4,705,737 100.0 % Less: allowance for credit losses (58,483) (58,042) (57,910) (58,669) (58,478) Total loans, net $ 4,769,145 $ 4,719,447 $ 4,714,078 $ 4,675,240 $ 4,647,259 Shore Bancshares, Inc. Classified Assets and Nonperforming Assets (Unaudited) Classified assets and nonperforming assets are summarized as follows: ($ in thousands) June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 Classified loans Substandard $ 19,930 $ 19,434 $ 24,679 $ 22,798 $ 17,409 Total classified loans 19,930 19,434 24,679 22,798 17,409 Special mention loans 65,564 33,456 33,519 14,385 25,549 Total classified and special mention loans $ 85,494 $ 52,890 $ 58,198 $ 37,183 $ 42,958 Classified loans $ 19,930 $ 19,434 $ 24,679 $ 22,798 $ 17,409 Other real estate owned 179 179 179 179 179 Repossessed assets 2,457 2,429 3,315 306 1,560 Total classified assets $ 22,566 $ 22,042 $ 28,173 $ 23,283 $ 19,148 Classified assets to total assets 0.37 % 0.36 % 0.45 % 0.39 % 0.33 % Nonaccrual loans $ 16,782 $ 15,402 $ 21,008 $ 14,844 $ 14,837 90+ days delinquent accruing 215 894 294 454 414 Other real estate owned ("OREO") 179 179 179 179 179 Repossessed property 2,457 2,429 3,315 306 1,560 Total nonperforming assets $ 19,633 $ 18,904 $ 24,796 $ 15,783 $ 16,990 Accruing borrowers experiencing financial difficulty loans ("BEFD") 6,709 1,356 1,662 — — Total nonperforming assets and BEFDs modifications $ 26,342 $ 20,260 $ 26,458 $ 15,783 $ 16,990 Nonperforming assets to total assets 0.33 % 0.31 % 0.40 % 0.27 % 0.29 % Total assets $ 6,037,874 $ 6,176,563 $ 6,230,763 $ 5,917,704 $ 5,864,017 SOURCE Shore Bancshares, Inc. 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Shore Bancshares, Inc. Reports 2025 Second Quarter Results

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