8-K - SHBI - Equibles

UNITED STATES

SECURITIES ANDEXCHANGE COMMISSION

Washington, D.C.20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION13 OR 15(d) OF THE

SECURITIES EXCHANGEACT OF 1934

Date of Report (Date of

earliest event reported): November 8, 2022

SHORE BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Maryland	000-22345	52-1974638
(State or other jurisdiction of	(Commission file number)	(IRS Employer
incorporation or organization)		Identification No.)

18 E. Dover Street, Easton, MD 21601

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (410) 763-7800

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common<br> stock, par value $.01 per share	SHBI	Nasdaq<br> Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 7.01. Regulation FD Disclosure.

Shore Bancshares, Inc. (the “Company”) is filing an investor presentation (the “Presentation”), to be presented by Lloyd L. Beatty, Jr., the Company’s President and Chief Executive Officer, Edward C. Allen, the Company’s Executive Vice President and Chief Financial Officer, Donna J. Stevens, the Company’s Executive Vice President and Chief Operations Officer and Vance Adkins, the Company’s Executive Vice President and Treasurer, for presentations to investors and others at the November 2022 Piper Sandler East Coast Financial Services Conference, November 8 - 9, 2022. The Presentation replaces and supersedes investor presentation materials previously furnished as an exhibit to the Company’s Current Reports on Form 8-K.

Information contained herein, including Exhibit 99.1, shall not be deemed filed for the purposes of the Securities Exchange Act of 1934, as amended, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1 Shore Bancshares Inc. Investor Presentation

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

The exhibits that are filed or furnished with this report are listed in the Exhibit Index that immediately follows the signatures hereto, which list is incorporated herein by reference.

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Shore Bancshares Inc. Investor Presentation (filed herewith).
104	Cover Page Interactive<br>Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SHORE BANCSHARES, INC.
Dated: November 8, 2022	By:	/s/ Lloyd L. Beatty, Jr.
		Lloyd L. Beatty, Jr.
		President and Chief Executive Officer

Exhibit 99.1

1<br>Investor<br>Presentation<br>November 2022
2<br>This investor presentation contains future oral and written statements of Shore Bancshares, Inc. (the “Company” or “SHBI”) an<br>d i<br>ts wholly<br>-<br>owned banking subsidiary, Shore United Bank, N.A. (the<br> “Bank”), and its management, which may contain statements about future events that constitute forward<br>-<br>looking statements within<br>the meaning of the Private Securities Litigation Reform Act of<br>1995. Forward<br>-<br>looking statements may be identified by references to a future period or periods or by the use of the words "be<br>lieve," "expect," "anticipate," "intend," "estimate," "assume," "will,"<br>should," "plan," and other similar terms or expressions. Forward<br>-<br>looking statements include but are not limited to: (i) projec<br>tions and estimates of revenues, expenses, income or loss, earnings or<br>loss per share, and other financial items, including our financial results for the third quarter of 2022, (ii) statements of<br>pla<br>ns, objectives and expectations of the Company or its management, (iii)<br>statements of future economic performance, and (iv) statements of assumptions underlying such statements. Forward<br>-<br>looking state<br>ments should not be relied on because they involve known and<br>unknown risks, uncertainties and other factors, some of which are beyond the control of the Company and the Bank. These ris<br>ks,<br>uncertainties and other factors may cause the actual results,<br>performance, and achievements of the Company and the Bank to be materially different from the anticipated future results, per<br>for<br>mance or achievements expressed in, or implied by, the forward<br>-<br>looking statements. Factors that could cause such differences include, but are not limited to, local, regional, national and<br>in<br>ternational economic conditions, the extent of the impact of the COVID<br>-<br>19 pandemic, including the impact of actions taken by governmental and regulatory authorities in response to such pandemic, s<br>uch<br>as the CARES Act and the programs established thereunder,<br>and our participation in such programs, volatility of the financial markets, changes in interest rates, regulatory considerat<br>ion<br>s, competition and market expansion opportunities, changes in non<br>-<br>interest expenditures or in the anticipated benefits of such expenditures, the receipt of required regulatory approvals, cha<br>nge<br>s in non<br>-<br>performing assets and charge<br>-<br>offs, changes in tax laws,<br>current or future litigation, regulatory examinations or other legal and/or regulatory actions, the impact of any tariffs, te<br>rro<br>rist threats and attacks, acts of war or threats thereof or other pandemics.<br>Therefore, the Company can give no assurance that the results contemplated in the forward<br>-<br>looking statements will be realized. F<br>or more information about these factors, please see our reports<br>filed with or furnished to the Securities and Exchange Commission (the “SEC”), including the Company’s most recent Annual Rep<br>ort<br>on Form 10<br>-<br>K and Quarterly Report on Form 10<br>-<br>Q on file with<br>the SEC, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and<br>Res<br>ults of Operations." Any forward<br>-<br>looking statements contained in<br>this investor presentation are made as of the date hereof, and the Company undertakes no duty, and specifically disclaims any<br>du<br>ty, to update or revise any such statements, whether as a result of<br>new information, future events or otherwise, except as required by applicable law. This investor presentation has been prepa<br>red<br>by the Company solely for informational purposes based on its own<br>information, as well as information from public sources. Certain of the information contained herein may be derived from info<br>rma<br>tion provided by industry sources. The Company believes such<br>information is accurate and that the sources from which it has been obtained are reliable. However, the Company has not inde<br>pen<br>dently verified such information and cannot guarantee the<br>accuracy of such information. This investor presentation has been prepared to assist interested parties in making their own<br>eva<br>luation of the Company and does not purport to contain all of the<br>information that may be relevant. In all cases, interested parties should conduct their own investigation and analysis of th<br>e C<br>ompany and the data set forth in the investor presentation and other<br>information provided by or on behalf of the Company. This investor presentation is not an offer to sell securities and it is<br>no<br>t soliciting an offer to buy securities in any state where the offer or sale is<br>not permitted. Neither the SEC nor any other regulatory body has approved or disapproved of the securities of the Company or<br>pas<br>sed upon the accuracy or adequacy of this presentation. Any<br>representation to the contrary is a criminal offense.<br>Non<br>-<br>GAAP Financials<br>This investor presentation includes certain non<br>-<br>GAAP financial measures intended to supplement, not substitute for, comparable G<br>AAP measures and the Company’s reported results prepared in<br>accordance with GAAP. Numbers in this presentation may not sum due to rounding.<br>Disclaimer
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3<br>Management Team<br>* Reference Appendix section for biographies<br>Name<br>Title/Function<br>Entity<br>Years in<br>Banking<br>Years with<br>Company<br>Lloyd L. “Scott” Beatty, Jr.<br>President and Chief Executive Officer<br>SHBI, Bank<br>31<br>18<br>Edward C. Allen<br>EVP and Chief<br>Financial Officer<br>SHBI,<br>Bank<br>45<br>11<br>Donna J. Stevens<br>EVP and Chief Operating<br>Officer<br>SHBI, Bank<br>42<br>24<br>Charles E. Ruch, Jr.<br>EVP and Chief<br>Credit Officer<br>Bank<br>45<br>16<br>Michael T. Cavey<br>EVP and Chief Lending<br>Officer<br>Bank<br>37<br>7<br>Jennifer M. Joseph<br>EVP and Chief Retail Officer<br>Bank<br>36<br>6<br>Christa J. Heron<br>EVP and Chief Risk Officer<br>SHBI, Bank<br>35<br>1<br>Vance W. Adkins<br>EVP and Treasurer<br>SHBI, Bank<br>18<br>1<br>Totals<br>289<br>84
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4<br>Financial Summary and Key Ratios<br>Financial<br>Ratio<br>12/31/21<br>YTD Ann.<br>9/30/22<br>Return on Average Assets<br>(1)<br>0.95%<br>0.96%<br>Return on Average Equity<br>(1)<br>9.94%<br>9.33%<br>Net Interest<br>Margin<br>2.94%<br>3.09%<br>Non<br>-<br>interest<br>Income/Average Assets<br>(2)<br>0.58%<br>0.67%<br>Non<br>-<br>interest<br>Expense/Average Assets<br>(1),(2)<br>2.08%<br>2.26%<br>Efficiency Ratio (Non<br>-<br>GAAP)<br>(1),(3)<br>61.15%<br>61.80%<br>Nonperforming<br>Assets/Assets Excluding TDRs<br>(4)<br>0.27%<br>0.26%<br>Tangible Common Equity/Tangible Assets<br>8.25%<br>8.52%<br>Return on Average Tangible Common Equity<br>(1)<br>11.34%<br>11.63%<br> ◼<br>Total Assets:<br>$ 3.4 billion<br> ◼<br>Gross Loans:<br>$ 2.4 billion<br> ◼<br>Total Deposits:<br>$ 3.0 billion<br> ◼<br>Total Shareholders’ Equity:<br>$ 357.2 million<br> ◼<br>Tangible Common Equity:<br>$ 287.9 million<br> ◼<br>Shares Outstanding<br>(9/30/22)<br>19,857,774<br> ◼<br>Headquarters:<br>Easton, Maryland<br>(1)<br>Excludes merger<br>-<br>related expenses and amortization of intangibles<br>(2)<br>Non<br>-<br>interest income and expense are annualized for comparative purposes<br>(3)<br>Non<br>-<br>interest expense (excluding merger<br>-<br>related expenses and amortizations of intangible assets) as a percentage of fully taxable<br>net interest income and noninterest income<br>(4)<br>Nonperforming assets (NPAs) include nonaccrual and 90 days past due and still accruing loans, accruing troubled debt restruct<br>uri<br>ngs and net other real estate and other assets owned<br>Note: Financial information as of September 30, 2022<br>As of September 30, 2022
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5<br>Locations<br>SHORE BANCSHARES<br>Headquarters<br>18 E. Dover St.<br>Easton, MD 21601<br>BANKING<br>Shore United Bank<br>18 E. Dover St.<br>Easton, MD 21601<br>877.758.1600<br>ShoreUnitedBank.com<br>LOAN PRODUCTION OFFICES<br>Shore United Bank<br> ◼<br>102 Sleepy Hollow Drive, Suite 204<br>Middletown, DE 19709<br> ◼<br>5291 Corporate Drive, Suite 202<br>Frederick, MD 21703<br> ◼<br>6411 Ivy Lane, Suite 505<br>Greenbelt, MD 20770<br> ◼<br>19716 Sea Air Ave #3<br>Rehoboth Beach, DE 19971<br>INVESTMENTS<br>WYE Financial Partners<br> ◼<br>16 N. Washington Street Easton, MD 21601<br> ◼<br>1101 Maiden Choice Ln, Baltimore, MD 21229<br>410.763.8543<br>WyeFinancialPartners.com<br>37 Locations<br>30 Branches<br>4 Loan Production Offices<br>2 Investment Offices<br>1 Headquarters
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6<br>Strategic Direction<br> ◼<br>Market Expansion<br> ⚫<br>LPO’s and Strategic Branching<br> –<br>New Ocean City branch open & new Rehoboth branch announced<br> ⚫<br>Acquire Banks in or Contiguous to our Existing Markets<br> ◼<br>Operating Strategy<br> ⚫<br>Drive Profitability<br> ⚫<br>Emphasis on Core Deposits & Cost of Funds<br> ⚫<br>Capitalize on New Market Opportunities & current market disruption<br> ⚫<br>Increase Referrals<br> ⚫<br>Diversify Loan Portfolio<br> –<br>Focus on consumer loan portfolio
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7<br>Maryland<br>Rank<br>Share<br>Branches<br>Talbot<br>1<br>46.69%<br>4<br>Queen Anne’s<br>2<br>29.26%<br>5<br>Caroline<br>3<br>20.28%<br>2<br>Kent<br>4<br>10.71%<br>1<br>Anne Arundel<br>7<br>5.03%<br>7<br>Dorchester<br>7<br>5.78%<br>1<br>Worcester<br>11<br>1.76%<br>2<br>Howard<br>12<br>0.52%<br>1<br>Baltimore<br>14<br>0.83%<br>2<br>Delaware<br>Rank<br>Share<br>Branches<br>Kent<br>6<br>6.68%<br>4<br>Virginia<br>Accomack<br>6<br>2.16%<br>1<br>Selected SHBI Market Highlights<br> ◼<br>2022 Median Household income for entire franchise is $94,082 in MD, $76,376 in DE, $84,251 in VA,<br>vs. $72,465 for the US.<br> ◼<br>Projected HH income increase (2022<br>-<br>2027) is 8.72% for MD, 12.56% for DE, and<br>10.00% for VA.<br> ◼<br>Projected 5<br>-<br>year population growth rate (2022<br>-<br>2027) in overall market = 4.24% for<br>MD, 5.10% for DE, and 3.51% for VA<br> ◼<br>SHBI deposit market rank/share by county (2022):
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8<br>Deposit Market Share: SHBI Markets<br>NOTE: SHBI Market defined as Maryland Counties of Kent, Anne Arundel, Queen Anne's, Talbot, Caroline, Dorchester, Baltimore,<br>Ho<br>ward, Worcester, Kent County, Delaware; and Accomack County, VA.<br>SOURCE: SNL Analysis as of October 31, 2022<br>Market<br>Rank<br>Local<br>Rank<br>Ticker<br>Company Name<br>City (HQ)<br>HQ<br>State<br>Branches<br>2022<br>Total<br>Deposits<br>2022<br>($000)<br> ’22 Market<br>Share<br>(%)<br>1<br> –<br>BAC<br>Bank of America Corp.<br>Charlotte<br>NC<br>48<br>12,913,241<br>19.5%<br>2<br> –<br>MTB<br>M&T Bank Corp.<br>Buffalo<br>NY<br>71<br>10,166,059<br>15.3%<br>3<br> –<br>TFC<br>Truist<br>Financial Corp.<br>Charlotte<br>NC<br>45<br>6,967,239<br>10.5%<br>4<br> –<br>PNC<br>PNC Financial Services Group Inc.<br>Pittsburgh<br>PA<br>68<br>6,952,798<br>10.5%<br>5<br> –<br>WFC<br>Wells Fargo & Co.<br>San Francisco<br>CA<br>30<br>5,360,770<br>8.1%<br>6<br>1<br>SHBI<br>Shore Bancshares, Inc.<br>Easton<br>MD<br>30<br>3,025,617<br>4.6%<br>7<br> –<br>FNB<br>F.N.B. Corp<br>Pittsburgh<br>PA<br>19<br>2,761,075<br>4.2%<br>8<br>2<br> –<br>Capital Funding Bancorp Inc.<br>Baltimore<br>MD<br>1<br>2,708,210<br>4.1%<br>9<br> –<br>COF<br>Capital One Financial<br>McLean<br>VA<br>6<br>2,139,292<br>3.2%<br>10<br>3<br>SASR<br>Sandy Spring Bancorp Inc.<br>Olney<br>MD<br>10<br>2,082,192<br>3.1%<br>11<br> –<br>FULT<br>Fulton Financial Corp.<br>Lancaster<br>PA<br>8<br>1,096,358<br>1.7%<br>12<br> –<br>WSFS<br>WSFS Financial Corp.<br>Wilmington<br>DE<br>6<br>939,862<br>1.4%<br>13<br>4<br> –<br>Rosedale Federal Savings & Loan Assoc.<br>Baltimore<br>MD<br>11<br>834,465<br>1.3%<br>14<br>5<br> –<br>Calvin B. Taylor<br>Bankshares<br>Inc.<br>Berlin<br>MD<br>12<br>769,857<br>1.2%<br>15<br>6<br> –<br>Queenstown Bancorp of Maryland Inc.<br>Queenstown<br>MD<br>8<br>605,665<br>0.9%<br>16<br> –<br> –<br>The Toronto<br>-<br>Dominion Bank<br>Toronto<br> –<br>5<br>601,221<br>0.9%<br>17<br>7<br>BVFL<br>BV Financial Inc.<br>Baltimore<br>MD<br>11<br>600,115<br>0.9%<br>18<br> –<br>WSBC<br>WesBanco<br>Inc.<br>Wheeling<br>WV<br>9<br>535,731<br>0.8%<br>19<br>8<br> –<br>Bank of Ocean City<br>Ocean City<br>MD<br>4<br>515,176<br>0.8%<br>20<br>9<br> –<br>PSB Holding Corp.<br>Preston<br>MD<br>8<br>472,831<br>0.7%<br>Other Market Participants (27)<br>87<br>4,300,767<br>6.3%<br>Total<br>497<br>66,348,541<br>100.00%
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9<br>Total Deposits ($M)<br>Total Assets ($M)<br>Total Gross Loans Held for Investment ($M)<br>NCOs / Avg. Loans<br>Targeted, Organic Balance Sheet Growth<br>Source: S&P Global Market Intelligence; Company documents<br>$1,341<br>$1,701<br>$3,026<br>$3,015<br>Core<br>(Net recoveries)<br>$1,249<br>$1,454<br>$2,119<br>$2,402<br>Cannabis industry
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10<br>Income Statement (Quarterly)<br>Dollar<br>Value in Thousands<br>12/31/2021<br>3/31/2022<br>6/30/2022<br>9/30/2022<br>Interest and Fees on Loans<br>$20,564<br>$22,085<br>$23,452<br>$25,924<br>Other Interest Income<br>1,832<br>2,239<br>3,218<br>4,652<br>Interest Income<br>22,396<br>24,324<br>26,670<br>30,576<br>Interest on Deposits<br>1,272<br>1,358<br>1,511<br>2,561<br>Interest on Borrowings<br>485<br>536<br>541<br>700<br>Interest Expense<br>1,757<br>1,894<br>2,052<br>3,261<br>Net Interest Income<br>20,639<br>22,430<br>24,618<br>27,315<br>Provision for Loan Losses<br>(1,723)<br>600<br>200<br>675<br>Service Charges on Deposits<br>1,234<br>1,359<br>1,438<br>1,509<br>Trust and Investment Fee Income<br>522<br>514<br>447<br>421<br>Other Noninterest Income<br>3,373<br>4,173<br>3,948<br>3,414<br>Total Noninterest Income<br>5,129<br>6,046<br>5,833<br>5,344<br>Salaries, and Wages<br>7,727<br>9,562<br>8,898<br>8,562<br>Employee Benefits<br>2,271<br>2,662<br>2,269<br>2,191<br>Occupancy, Furniture and Equipment<br>1,648<br>1,996<br>1,896<br>2,029<br>Data Processing<br>1,487<br>1,607<br>1,668<br>1,759<br>Legal and Professional<br>150<br>637<br>811<br>756<br>Other Expenses<br>10,214<br>3,868<br>4,552<br>3,602<br>Total Noninterest Expense<br>23,497<br>20,332<br>20,094<br>18,899<br>Net Income Before Taxes<br>3,994<br>7,544<br>10,157<br>13,085<br>Provisions for Taxes<br>1,271<br>1,931<br>2,658<br>3,427<br>Net Income (GAAP)<br>$2,723<br>(2)<br>$5,613<br>(3)<br>$7,499<br>(4)<br>$9,658<br>(5)<br>(1)<br>Includes merger related expense of $538 thousand. Net income excluding these expenses would’ve been $5,014 for the third quar<br>ter<br>of 2021.<br>(2)<br>Includes merger related expense of $7.6 million. Net income excluding these expenses would’ve been $7,915 for the fourth quar<br>ter<br>of 2021.<br>(3)<br>Includes merger related expense of $730 thousand. Net income excluding these expenses would’ve been $6,156 for the first quar<br>ter<br>of 2022.<br>(4)<br>Includes merger related expense of $241 thousand. Net income excluding these expenses would’ve been $7,674 for the second qua<br>rte<br>r of 2022.<br>(5)<br>Includes merger related expense of $159 thousand. Net income excluding these expenses would’ve been $9,775 for the third quar<br>ter<br>of 2022.<br>Source: S&P Global Market Intelligence; Company documents
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11<br>(Dollar Value in Thousands)<br>As of September 30, 2022<br>Loan<br>Type<br>Balance<br>% of Total<br>Construction<br>$230,119<br>9.6%<br>1<br>-<br>4 family residential<br>87,924<br>CRE Lot Loans<br>26,774<br>Land Development<br>37,373<br>Commercial Const Non 1<br>-<br>4 Family<br>59,758<br>Consumer RE Lot Loans<br>18,290<br>Residential Real Estate<br>758,063<br>31.5%<br>Secured by 1<br>-<br>4 family<br>-<br>revolving<br>66,561<br>Secured by 1<br>-<br>4 family<br>-<br>closed end<br>447,870<br>Secured by multifamily<br>residential<br>76,797<br>Mortgage division<br>166,835<br>Commercial Real Estate<br>1,023,253<br>42.6%<br>Secured<br>by farmland<br>27,952<br>Secured by owner<br>-<br>occupied<br>321,466<br>Secured by other<br>673,835<br>Commercial<br>160,430<br>6.7%<br>Commercial and industrial loans<br>160,139<br>PPP Loans (SBA)<br>291<br>Consumer<br>230,018<br>9.6%<br>Classic Auto<br>70,937<br>Boats<br>146,800<br>Other<br>12,281<br>Total<br>$2,401,883<br>100.0%<br>Concentrations as a percentage of total capital as of<br>September 30, 2022<br>:<br> ◼<br>CRE Concentration Ratio = 288.8%<br> ◼<br>Construction Concentration Ratio = 67.3%<br>Commercial<br>6.7%<br>Consumer<br>9.6%<br>Construction<br>9.6%<br>Residential<br>Real Estate<br>31.5%<br>Commercial<br>Real Estate<br>42.6%<br>Loan Portfolio<br>$2,401.9 mm
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12<br>Dollar<br>Values in Thousands<br>12/31/2020<br>12/31/2021<br>9/30/2022<br>Non<br>-<br>performing Assets<br>Nonaccrual Loans<br>$5,455<br>$2,004<br>$1,952<br>90+ or More Days Past Due<br>804<br>508<br>831<br>Other Real Estate Owned<br>--<br>532<br>197<br>Total Non<br>-<br>Performing Assets<br>$6,259<br>$3,044<br>$2,980<br>Performing TDRs<br>$6,997<br>$5,667<br>$4,458<br>Total NPAs + TDRs<br>$13,256<br>$8,711<br>$7,438<br>NPAs / Assets (%)<br>0.32<br>0.09<br>0.09<br>NPAs + TDRS / Assets (%)<br>0.68<br>0.25<br>0.22<br>Average rate on performing TDRs<br>4.34<br>4.35<br>4.24<br>Reserves<br>Loan<br>Loss Reserve<br>$13,888<br>$13,944<br>$16,277<br>Reserves / Gross Loans (%)<br>0.95<br>(1)<br>0.66<br>(1)<br>0.68<br>(1)<br>Reserves / Gross Loans (%)<br>1.09<br>(2)<br>0.93<br>(2)<br>0.84<br>(2)<br>Reserves / NPLs (%)<br>254.59<br>695.81<br>833.86<br>Reserves / NPLs+TDRs (%)<br>104.77<br>160.07<br>218.84<br>Net Charge<br>-<br>offs<br>Net Charge<br>-<br>Offs (Recoveries)<br>$519<br>$(414)<br>$(858)<br>Credit Quality Statistics<br>1)<br>Includes purchased loans from Northwest and Severn and includes PPP loans<br>2)<br>Excludes PPP loans and purchased loans from Northwest and Severn
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13<br>(Dollars in thousands)<br>Amortized Cost<br>Gross<br>Unrealized<br>Gains/(Losses)<br>Estimated<br>Fair<br>Value<br>September 30, 2022<br>Available<br>-<br>for<br>-<br>sale securities:<br>U.S.<br>Government Agencies<br>$22,066<br>$(3,752)<br>$18,314<br>Mortgage<br>-<br>backed<br>75,719<br>(9,563)<br>66,156<br>Other Debt Securities<br>2,020<br>(143)<br>1,877<br>Total<br>$99,805<br>$(13,458)<br>$86,347<br>Held<br>-<br>to<br>-<br>maturity<br>securities:<br>U.S Government Agencies<br>$148,207<br>$(13,861)<br>$134,346<br>Mortgage<br>-<br>backed<br>410,705<br>(55,042)<br>355,663<br>States and Political<br>Subdivisions<br>807<br>(24)<br>783<br>Other Debt Securities<br>11,000<br>(647)<br>10,353<br>Total<br>$570,719<br>$(69,574)<br>$501,145<br>Equity Securities<br>1,367<br>(145)<br>1,222<br>Total Securities<br>$671,891<br>$588,714<br>Average Yield<br>1.79%<br>Average Duration<br>6.1 Years<br>Securities Portfolio
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14<br>(Dollar<br>Value in<br>Thousands)<br>September 30, 2022<br>Deposit<br>Type<br>Balance<br>% of<br>Total<br>Average<br>Rate (%)<br>Noninterest<br>Bearing<br>Demand<br>893,808<br>29.6<br>0.00<br>Interest Bearing<br>Demand<br>649,930<br>21.6<br>0.35<br>Money Market &<br>Savings<br>1,042,176<br>34.6<br>0.26<br>CDs<br>$100,000 or more<br>218,731<br>7.2<br>0.50<br>Other<br>Time<br>210,667<br>7.0<br>0.54<br>Total Deposits<br>3,015,312<br>100.0<br>0.24<br>Total Cost of Interest<br>-<br>Bearing Deposits<br>0.34<br>Total Cost of Funds (Including Borrowings)<br>(1)<br>0.31<br>Noninterest<br>Bearing<br>Demand<br>29.6%<br>Interest<br>Bearing<br>Demand<br>21.6%<br>Money<br>Market &<br>Savings<br>34.6%<br>CDs $100k<br>or more<br>7.2%<br>Other Time<br>7.0%<br>$3.015 mm<br>Attractive Deposit Base (Bank Only)<br>Deposit Type<br>(1) Includes Non<br>-<br>interest bearing deposits
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15<br>Capital Ratios (Bank Only)<br>9.73%<br>9.48%<br>9.59%<br>13.21%<br>13.90%<br>13.05%<br>13.21%<br>13.90%<br>13.05%<br>14.25%<br>14.55%<br>13.71%<br>0.00%<br>2.00%<br>4.00%<br>6.00%<br>8.00%<br>10.00%<br>12.00%<br>14.00%<br>16.00%<br>YE 2020<br>YE 2021<br>9/30/2022<br>Tier 1 Leverage Ratio<br>Common Equity Tier 1<br>Tier 1 Risk-Based Capital Ratio2<br>Total Risk-Based Capital Ratio
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16<br>Compelling Investment Considerations<br> ◼<br>Excellent Cost of Funds<br> ◼<br>Strategic plan positioned for organic growth and<br>acquisitions<br> ◼<br>Focused on creating sustainable competitive<br>advantages<br> ◼<br>Strengthened noninterest revenue sources<br> ◼<br>Driving a sales culture with both a commercial and<br>retail<br>focus while maintaining our credit discipline
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17<br>APPENDIX<br>Appendix
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18<br>SHBI Management Team<br>Talent, depth, unique skills<br> ◼<br>Lloyd L. “Scott” Beatty, Jr<br>..,<br>70<br>, CPA, President & CEO of Shore Bancshares, Inc. since June 2013, Director of SHBI since December 2000,<br>Director of Shore United Bank (formerly the Talbot Bank and CNB) since 1992. COO from 2006 until 2012 and named President and<br>CO<br>O in<br>2012. Formerly COO, private equity firm Darby Overseas Investments. Formerly Managing Partner of public accounting firm.<br> ◼<br>Edward C. Allen<br>, 74, Executive Vice President<br> &<br>Chief Financial Officer Shore Bancshares, Inc. and of Shore United Bank since June 2016.<br>Prior to that he was President & CEO of CNB, a Shore Bancshares affiliate for two years. Mr. Allen is a career banker with<br>45<br>years<br>experience in community banks.<br> ◼<br>Donna J. Stevens<br>,<br>60<br>, Executive Vice President & Chief Operating Officer of Shore Bancshares, Inc. since July 2015 and Shore United Bank<br>since July 2016. She has been employed by the Company in various officer capacities since 1997, including<br>Senior<br>Vice President, and Senior<br>Operations and Compliance Officer of CNB. Ms. Stevens is a graduate of Maryland Banking School and ABA Stonier Graduate Scho<br>ol<br>of<br>Banking.<br> ◼<br>Charles E. Ruch Jr.<br>,<br>63<br>,<br>Executive<br>Vice President and Chief Credit Officer of Shore United Bank (formerly CNB) since 2010 and joined CNB in<br>2006. Entered banking in 1977, holding various retail positions from teller to core manager through the 1980s with Equitable<br>Ban<br>k. Joined<br>AB&T as a commercial lender in 1987 and was AB&T’s Senior Commercial Lender for 10 years. Graduated from the University of Ma<br>ryl<br>and in<br>1983.<br> ◼<br>Michael T. Cavey<br>,<br>65<br>,<br>Executive<br>Vice President and Chief Lending Officer of Shore United Bank (formerly the Talbot Bank) joined the bank in<br>2014 as a Senior Vice President and Commercial Sales Manager. Prior to his employment in 2014 with The Talbot Bank, Mr. Cavey<br>wo<br>rked for<br>Howard Bank as a Senior Vice President and Regional Executive for Howard and Anne Arundel Counties for five years. Prior to<br>his<br>position at<br>Howard Bank, Mr. Cavey held a Senior Vice President and Commercial Team Leader positions at Sandy Spring Bank and M& T Bank.<br>Mr.<br>Cavey received his Bachelor of Science degree from Duke University.<br> ◼<br>Jennifer M. Joseph<br>,<br>54<br>,<br>Executive<br>Vice President and Chief Retail Officer of Shore United Bank since November 2016.<br>Prior to her<br>employment, Mrs. Joseph served as the Market Executive of PNC Bank, N.A. from 2011 to 2015.<br>Mrs. Joseph entered into banking in<br>1986,<br>holding various retail and lending positions, including Business Banking Sales Manager. She is a graduate of ABA Stonier Grad<br>uat<br>e School of<br>Banking and CBA Graduate School of Retail Bank Management.<br> ◼<br>W. David Morse<br>, 61,<br>Executive<br>Vice President,<br>General<br>Counsel & Assistant Secretary of Shore Bancshares, Inc. and Shore United Bank<br>(formerly the Talbot Bank) has served as Secretary and General Counsel for the Company since 2008. He began employment with T<br>alb<br>ot<br>Bank in 1991. He received his Juris Doctorate from the University of Baltimore and his Bachelor of Arts degree from High Poi<br>nt<br>College, NC.
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19<br>SHBI Management Team (continued)<br>Talent, depth, unique skills<br> ◼<br>Vance W. Adkins,<br>42, CPA, CGMA, Executive Vice President & Treasurer since November 1, 2021, after the merger of the Company and<br>Severn Bancorp, Inc. He has over 15 years of experience in the financial services industry. Previously, he was Chief Financia<br>l O<br>fficer with<br>Severn Bank in Annapolis, Maryland from 2019 to 2021. Prior to joining Severn Bank, he worked with various commercial banks i<br>ncl<br>uding<br>American National Bank & Trust Company and<br>HomeTown<br>Bank. Mr. Adkins received both his Bachelor of Science in Accounting and his<br>Masters of Science, Accounting & Information Systems from Virginia Polytechnic Institute and State University.<br> ◼<br>Andrea E.<br>Colender<br>,<br>58, Executive Vice President, Chief Legal Officer & Secretary since November 1, 2021, after the merger of the Company<br>and Severn Bancorp, Inc. Prior to joining the Company, Ms.<br>Colender<br>served as General Counsel to Severn Bancorp and Severn Bank<br>beginning in March 2009. She was later appointed to act as Corporate Secretary. Ms.<br>Colender<br>graduated from the University of Maryland<br>School of Law with honors in 1988. Ms.<br>Colender<br>received her B.A. from New College, University of South Florida, in 1985.<br> ◼<br>Christa J. Heron,<br>55, Executive Vice President & Chief Risk Officer since November 1, 2021, after the merger of the Company and Severn<br>Bancorp, Inc. Prior to joining the Company, Ms. Heron served in several capacities at Severn Bank including Chief Risk Office<br>r f<br>rom 2019 to<br>2021. Her career has spanned over thirty<br>-<br>five years where she started as a Teller and progressed through a variety of department<br>s and<br>leadership positions. She obtained an Associate of Arts Degree from Anne Arundel Community College in 1989 and Certified Regu<br>lat<br>ory<br>Compliance Manager (CRCM) designation from the Institute of Certified Bankers in 2016.
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20<br>Dollar Values in Thousands<br>2019<br>2020<br>2021<br>9/30/2022<br>Assets<br>Cash and Cash Equivalents<br>$94,971<br>$186,917<br>$583,613<br>$163,306<br>Available for Sale Securities<br>122,791<br>139,568<br>116,982<br>86,347<br>Other Securities<br>14,318<br>70,727<br>410,125<br>581,835<br>Total Cash & Securities<br>232,080<br>397,212<br>1,110,720<br>831,488<br>Loans<br>Held for Sale<br> –<br> –<br>37,749<br>8,342<br>Total Loans Held for Investment<br>1,248,654<br>1,454,256<br>2,119,175<br>2,401,883<br>Loan Loss Reserve<br>(10,507)<br>(13,888)<br>(13,944)<br>(16,277)<br>Total Net Loans Held<br>for Investment<br>1,238,147<br>1,440,368<br>2,105,231<br>2,385,606<br>Goodwill<br>and Other Intangibles<br>19,770<br>19,237<br>70,956<br>69,288<br>Total Other Assets<br>69,238<br>76,498<br>135,480<br>152,080<br>Total Assets<br>$1,559,235<br>$1,933,315<br>$3,460,136<br>$3,446,804<br>Liabilities<br>Deposits<br>$1,341,334<br>$1,700,705<br>$3,026,236<br>$3,015,312<br>FHLB Borrowings<br>15,000<br>--<br>10,135<br>10,013<br>Senior Debt<br>6,018<br>1,050<br>4,143<br>--<br>Subordinated Debt<br> –<br>24,429<br>42,762<br>42,995<br>Other Liabilities<br>4,081<br>12,112<br>26,167<br>21,263<br>Total<br>Liabilities<br>$1,366,433<br>$1,738,296<br>$3,109,443<br>$3,089,583<br>Equity<br>Total Equity<br>$192,802<br>$195,019<br>$350,693<br>$357,221<br>Total Liabilities & Shareholder's Equity<br>$1,559,235<br>$1,933,315<br>$3,460,136<br>$3,446,804<br>Consolidated Historical Balance Sheet<br>Source: S&P Global Market Intelligence and Company documents
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21<br>Consolidated Historical Income Statement<br>(1)<br>Includes merger related expenses of $8.5 million. Net income excluding these expenses would’ve been $21,557 for 2021.<br>(2)<br>Includes merger related expenses of $1.1 million. Net income excluding these expenses would’ve been $23,617 for the first nin<br>e m<br>onths of 2022.<br>Dollar Values in Thousands<br>2019<br>2020<br>2021<br>9/30/2022 YTD<br>Interest and Fees on Loans<br>$55,391<br>$56,420<br>$64,795<br>$71,458<br>Other Interest Income<br>4,376<br>3,257<br>5,374<br>10,108<br>Interest Income<br>$59,767<br>$59,677<br>$70,169<br>$81,566<br>Interest on<br>Deposits<br>$8,726<br>$6,440<br>$4,461<br>$5,429<br>Interest on Borrowings<br>910<br>640<br>1,578<br>1,778<br>Interest<br>Expense<br>$9,636<br>$7,080<br>$6,039<br>$7,207<br>Net Interest Income<br>$50,131<br>$52,597<br>$64,130<br>$74,359<br>Provision for<br>Loan Losses<br>700<br>3,900<br>(358)<br>$1,475<br>Service Charges on Deposits<br>3,910<br>2,839<br>3,396<br>4,306<br>Trust and Investment Fee Income<br>1,522<br>1,558<br>1,881<br>1,383<br>Other noninterest income<br>4,588<br>6,352<br>8,221<br>11,535<br>Total Noninterest<br>Income<br>$10,020<br>$10,749<br>$13,498<br>$17,224<br>Salaries and Wages<br>$15,413<br>$14,935<br>$21,222<br>$27,022<br>Employee Benefits<br>5,283<br>6,461<br>7,262<br>7,122<br>Occupancy, Furniture and Equipment<br>3,865<br>4,143<br>5,243<br>5,918<br>Data Processing<br>3,790<br>4,288<br>5,001<br>5,034<br>Legal<br>and Professional<br>2,223<br>2,296<br>1,742<br>2,204<br>Other Expenses<br>6,983<br>6,276<br>16,336<br>12,023<br>Total Noninterest Expense<br>$37,557<br>$38,399<br>$56,806<br>$59,323<br>Net Income Before<br>Taxes<br>$21,894<br>$21,047<br>$21,180<br>$30,785<br>Provision for Taxes<br>5,610<br>5,317<br>5,812<br>8,016<br>Net Income<br>from Continuing Operations<br>$16,284<br>$15,730<br>$15,368<br>$22,769<br>(Loss) Income from Discontinued Operations<br>$(113)<br>--<br>--<br> –<br>Gain on Sale of Insurance Agency<br>--<br> –<br> –<br> –<br>Income (Tax)<br>on Benefit Expense<br>27<br>--<br>--<br> –<br>Net Income (GAAP)<br>$16,198<br>$15,730<br>$15,368<br>(1)<br>$22,769<br>(2)
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