Shore Bancshares Reports Third Quarter and Nine-Month Results

        Shore Bancshares Reports Third Quarter and Nine-Month Results

PR Newswire

EASTON, Md., Oct. 28, 2013

EASTON, Md., Oct. 28, 2013 /PRNewswire/ --Shore Bancshares, Inc. (NASDAQ -
SHBI) reported a net loss of $11.4 million or $(1.35) per diluted common share
for the third quarter of 2013, compared to net income of $361 thousand or
$0.04 per diluted common share for the second quarter of 2013, and a net loss
of $1.8 million or $(0.22) per diluted common share for the third quarter of
2012. The Company reported a net loss of $10.8 million or $(1.28) per diluted
common share for the first nine months of 2013, compared to a net loss of $4.6
million or $(0.54) per diluted common share for the first nine months of
2012.

The losses for the three and nine months ended September 30, 2013 were due to
pretax losses of $19.8 million recognized in connection with the execution of
agreements by the Company's wholly owned subsidiary, The Talbot Bank of Easton
(the "Bank") to sell loans and other real estate owned (the "Asset Sale"). On
October 28, 2013, the Bank entered into agreements to sell assets with an
aggregate book value of $45.0 million for a price of $25.2 million. The assets
consisted of $11.1 million of nonaccrual loans, $30.4 million of accruing
troubled debt restructurings ("TDRs"), $1.8 million of adversely classified
performing loans and $1.7 million of other real estate owned. As a result, as
of September 30, 2013, the $43.3 million of loans subject to the Asset Sale
were transferred to loans held for sale and written down $19.6 million to
reflect the value to be realized upon sale. Other real estate owned
associated with the Asset Sale was written down $182 thousand. The Asset Sale
is currently expected to be consummated in the fourth quarter of 2013, subject
to certain closing conditions.

"In order to accelerate the disposition of our nonperforming assets and
decrease our overall risk profile, we have made the difficult but prudent
decision to sell approximately 50% of problem loans in our portfolio," said
Lloyd L. "Scott" Beatty, Jr., president and chief executive officer.
"Disposing these loans will provide us with the opportunity to focus more on
growing healthy new business, improving and sustaining earnings, and
positioning the Company for future success. We were able to pursue this
strategy because of our strong capital position and we continue to maintain
solid underlying capital ratios. We believe that the economy in our region
has shown some improvement as real estate pricing stabilizes. We hope to
continue to work out of the remaining problem loans, many of which are
troubled debt restructurings which are performing."

Balance Sheet Review

Total assets were $1.051 billion at September 30, 2013, a $134.4 million, or
11.3%, decrease when compared to the $1.186 billion at the end of 2012. The
decline in total assets was primarily due to a decrease in interest-bearing
deposits with other banks ($85.7 million), loans ($66.5 million) and
investment securities ($9.9 million). Loans held for sale associated with the
pending Asset Sale were $23.6 million at the end of September 2013. Total
deposits decreased $118.9 million, or 11.3%, to $930.4 million mainly due to a
decline in money market deposit accounts associated with the Company's
participation in the Promontory Insured Network Deposits Program ("IND
Program"). In December 2012, the Company decided to partially exit the IND
Program as a way to decrease its excess liquidity and, in June 2013, the
Company fully exited the IND Program. Total stockholders' equity declined
$12.0 million, or 10.5%, from the end of 2012. For the first nine months of
2013, the ratio of average equity to average assets was 10.49% and the ratio
of average tangible equity to average tangible assets was 9.14%.

Review of Quarterly Financial Results

Net interest income was $8.8 million for the third quarter of 2013, compared
to $9.0 million for the second quarter of 2013 and $8.7 million for the third
quarter of 2012. The decrease in net interest income when compared to the
second quarter of 2013 was due to a greater decline in interest income than
the decline in interest expense. The decrease in interest income was
partially the result of a $308 thousand nonrecurring adjustment to loan income
related to a TDR in the second quarter of 2013. The decrease in interest
expense was mainly the result of lower balances of and rates paid on money
market and savings deposits due to exiting the remainder of the IND Program
and terminating the interest rate caps associated with these deposits in June
of 2013. The slightly higher net interest income for the third quarter of
2013 when compared to the third quarter of 2012 was due to a greater decline
in interest expense than the decline in interest income. The decrease in
interest expense was mainly due to exiting the IND Program and terminating the
interest rate caps associated with the IND Program. The Company's net
interest margin was 3.54% for the third quarter of 2013, 3.60% for the second
quarter of 2013 and 3.15% for the third quarter of 2012.

The provision for credit losses was $2.9 million for the three months ended
September 30, 2013. The comparable amounts were $2.7 million and $6.2 million
for the three months ended June 30, 2013 and September 30, 2012,
respectively. The higher level of provision for credit losses when comparing
the third quarter of 2013 to the second quarter of 2013 was primarily due to
increases in loan charge-offs while the lower level when comparing to the
third quarter of 2012 was mainly due to declines in nonaccrual loans. Net
charge-offs were $7.3 million for the third quarter of 2013, $2.7 million for
the second quarter of 2013 and $6.2 million for the third quarter of 2012.
The charge offs in all three quarters were mainly real estate related loans.
Net charge-offs for the third quarter of 2013 included $2.4 million associated
with loans in the Asset Sale. The ratio of quarter-to-date annualized net
charge-offs to average loans was 3.74% for the third quarter of 2013, 1.38%
for the second quarter of 2013 and 3.07% for the third quarter of 2012. The
ratio of the allowance for credit losses to period-end loans was 1.57% at
September 30, 2013, compared to 2.01% at June 30, 2013 and 1.60% at September
30, 2012.

At September 30, 2013, nonperforming assets excluding nonaccrual loans held
for sale were $23.3 million, a decrease of $17.9 million, or 43.5%, when
compared to June 30, 2013 and a decrease of $29.2 million, or 55.7%, when
compared to September 30, 2012. Similarly, accruing TDRs excluding TDRs held
for sale were $29.4 million at September 30, 2013, a decrease of $20.8
million, or 41.4%, when compared to June 30, 2013 and $21.3 million, or 42.0%,
when compared to September 30, 2012. Partially offsetting the decline in
accruing TDRs was the addition of a $9.6 million credit from one loan
relationship. At September 30, 2013, the ratio of nonaccrual loans excluding
nonaccrual loans held for sale to total assets was 1.66%, improving from 3.30%
and 3.35% at June 30, 2013 and September 30, 2012, respectively. Likewise,
the ratio of accruing TDRs excluding TDRs held for sale to total assets at
September 30, 2013 was 2.80%, decreasing from 4.77% at June 30, 2013 and 4.31%
at September 30, 2012. The positive trend in nonperforming assets and TDRs,
as well as the corresponding asset quality ratios, was due primarily to the
impact of the Asset Sale. See pages 4 and 9 of this release for additional
detail.

Total noninterest income for the third quarter of 2013 decreased $19.0 million
when compared to both the second quarter of 2013 and third quarter of 2012
mainly due to the $19.8 million write-downs of loans held for sale and other
real estate owned to the value to be realized upon sale in connection with the
Asset Sale. Included in noninterest income for the second quarter of 2013 was
a $1.3 million loss incurred to recognize the remaining ineffective portion of
the previously mentioned interest rate caps related to the IND Program which
was substantially offset by $913 thousand in gains on sales of investment
securities. These transactions in the prior quarter, along with a $297
thousand nonrecurring adjustment included in other noninterest income from an
insurance investment, slightly offset the decline in noninterest income when
compared to the second quarter of 2013. Slightly offsetting the decline in
noninterest income when compared to the third quarter of 2012 were fewer
losses on sales of other real estate owned ($524 thousand), the income from
the insurance investment, and higher insurance agency commissions ($297
thousand).

Total noninterest expense remained fairly flat for the third quarter of 2013
when compared to both the second quarter of 2013 and the third quarter of
2012, increasing less than 1.0% for each comparative period.

Review of Nine-Month Financial Results

Net interest income for the first nine months of 2013 was $26.3 million, a
decrease of $652 thousand, or 2.4%, when compared to the first nine months of
2012. The decrease was mainly due to lower yields earned on average earning
assets and a decline in higher-yielding average loan balances. The decrease
was partially offset by lower rates paid on and a decline in average balances
of money market and savings deposits, and time deposits. However, the net
interest margin improved to 3.48% for the first nine months of 2013 when
compared to 3.31% for the first nine months of 2012.

The provisions for credit losses for the nine months ended September 30, 2013
and 2012 were $7.7 million and $18.1 million, respectively, while net
charge-offs were $12.4 million and $19.4 million, respectively. The ratio of
year-to-date annualized net charge-offs to average loans was 2.12% for the
first nine months of 2013 and 3.17% for the first nine months of 2012.

Total noninterest income for the nine months ended September 30, 2013
decreased $19.7 million when compared to the same period in 2012. As with the
quarterly results, this decline was mainly due to the $19.8 million write-down
of assets associated with the Asset Sale. Also included in total noninterest
income for the first nine months of 2013 was the $1.3 million loss incurred to
terminate the interest rate caps associated with the IND Program. Slightly
offsetting the asset write-down and the loss on the termination of the
interest rate caps were higher insurance agency commissions ($648 thousand),
larger gains on sales of investment securities ($635 thousand), and the income
from the insurance investment ($297 thousand).

Similar to the quarterly results, total noninterest expense for the first nine
months of 2013 remained somewhat flat, increasing $166 thousand, or less than
1.0%, when compared to the same period in 2012.

Shore Bancshares Information

Shore Bancshares, Inc. is a financial holding company headquartered in Easton,
Maryland and is the largest independent bank holding company located on
Maryland's Eastern Shore. It is the parent company of two banks, The Talbot
Bank of Easton, Maryland, and CNB; three insurance producer firms, The
Avon-Dixon Agency, LLC, Elliott Wilson Insurance, LLC and Jack Martin and
Associates, Inc; a wholesale insurance company, TSGIA, Inc; and an insurance
premium finance company, Mubell Finance, LLC. Shore Bancshares, Inc. engages
in the trust services business through the trust department at CNB under the
name "Wye Financial & Trust". Additional information is available at
www.shbi.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. For
a discussion of these risks and uncertainties, see the section of the periodic
reports filed by Shore Bancshares, Inc. with the Securities and Exchange
Commission entitled "Risk Factors".

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.                                                   Page 4 of 13
Financial Highlights
(Dollars in thousands, except per share data)
                For the Three Months Ended       For the Nine Months Ended
               September 30,                       September 30,
               2013        2012      Change       2013        2012      Change
PROFITABILITY
FOR THE PERIOD
 Net       $        $                   $          $ 
interest       8,828       8,730       1.1      %  26,306      26,958      (2.4)   %
income
 Provision
for credit     2,850       6,200       (54.0)      7,700       18,095      (57.4)
losses

Noninterest    (15,000)    4,001       (474.9)     (6,548)     13,152      (149.8)
income

Noninterest    9,786       9,709       0.8         30,036      29,870      0.6
expense
 Loss
before income  (18,808)    (3,178)     (491.8)     (17,978)    (7,855)     (128.9)
tax benefit
 Income    (7,416)     (1,357)     (446.5)     (7,169)     (3,291)     (117.8)
tax benefit
 Net loss $          $        (525.6)     $           $          (136.8)
               (11,392)   (1,821)                (10,809)   (4,564)
 Return on
average        (4.24)    % (0.61)    % (363)    bp (1.33)    % (0.52)    % (81)    bp
assets
 Return on
average        (39.68)     (6.07)      (3,361)     (12.66)     (5.08)      (758)
equity
 Return on
average        (46.03)     (6.82)      (3,921)     (14.57)     (5.65)      (892)
tangible
equity (1)
 Net
interest       3.54        3.15        39          3.48        3.31        17
margin

Efficiency     (159.17)    76.03       (23,520)    151.42      74.23       7,719
ratio - GAAP

Efficiency     71.18       76.95       (577)       75.20       74.35       85
ratio -
Non-GAAP (1)
PER SHARE DATA
 Basic net $        $                   $         $  
loss per       (1.35)      (0.22)     (513.6)  %  (1.28)      (0.54)      (137.0) %
common share
 Diluted
net loss per   (1.35)      (0.22)      (513.6)     (1.28)      (0.54)      (137.0)
common share
 Dividends
paid per       -           -           -           -           0.01        (100.0)
common share
 Book
value per      12.06       13.97       (13.7)
common share
at period end
 Tangible
book value per
common share   10.16       12.04       (15.6)
at period end
(1)
 Market
value at       8.80        6.02        46.2
period end
 Market
range:
 High    9.06        6.33        43.1        9.06        7.45        21.6
 Low     7.06        4.98        41.8        5.20        4.91        5.9
AVERAGE
BALANCE SHEET
DATA
 Loans     $          $         (4.5)    %  $ 780,359   $ 819,088   (4.7)   %
               772,008     808,244
           124,020     137,871     (10.0)      137,240     135,411     1.4
Securities
 Earning   993,068     1,108,256   (10.4)      1,014,243   1,094,247   (7.3)
assets
 Assets    1,064,919   1,184,146   (10.1)      1,088,150   1,169,158   (6.9)
 Deposits  932,867     1,040,693   (10.4)      954,390     1,024,390   (6.8)

Stockholders'  113,904     119,321     (4.5)       114,120     119,916     (4.8)
equity
CREDIT QUALITY
DATA AT PERIOD
END
 Net       $        $       16.6     %  $          $          (36.2)  %
charge-offs    7,272       6,235                   12,390      19,428

Nonaccrual
loans          $         $   
excluding      17,501      39,442     (55.6)
nonaccrual
loans held for
sale
 Loans 90
days past due  9           4,675       (99.8)
and still
accruing
 Other
real estate    5,776       8,418       (31.4)
owned
 Total
nonperforming
assets
excluding      23,286      52,535      (55.7)
nonaccrual
loans held for
sale

Nonaccrual     7,265       -           -
loans held for
sale
 Total
nonperforming
assets         $         $   
including      30,551      52,535     (41.8)
nonaccrual
loans held for
sale
 Accruing
troubled debt
restructurings $         $        (42.0)
(TDRs)         29,439      50,785
excluding TDRs
held for sale
 Accruing
TDRs held for  14,842      -           -
sale
 Total
accruing TDRs  $         $        (12.8)
including TDRs 44,281      50,785
held for sale
 Total
nonperforming
assets and
accruing TDRs
excluding
nonaccrual
 loans  $         $  
and TDRs held  52,725      103,320    (49.0)
for sale

Nonaccrual     22,107      -           -
loans and TDRs
held for sale
 Total
nonperforming
assets and
accruing TDRs
including
nonaccrual
 loans  $         $  
and TDRs held  74,832      103,320    (27.6)
for sale
(1) See the
reconciliation
table on page
13 of 13.



Shore Bancshares, Inc.                                            Page 5 of 13
Financial Highlights
(Dollars in thousands, except per share data)
                        For the Three Months    For the Nine Months Ended
                       Ended
                       September 30,              September 30,
                       2013      2012  Change    2013      2012  Change
CAPITAL AND CREDIT
QUALITY RATIOS
 Average equity to 10.70  %  10.08 % 62    bp 10.49  %  10.26 %  23     bp
average assets
 Average tangible
equity to average      9.33      8.81    52       9.14      8.97     17
tangible assets (1)
 Annualized net
charge-offs to average 3.74      3.07    67       2.12      3.17     (105)
loans
 Allowance for
credit losses as a
percent of:
 Period-end loans  1.57      1.60    (3)
 Nonaccrual loans
excluding nonaccrual   64.57     32.85   3,172
loans held for sale
 Nonaccrual loans
including nonaccrual   45.63     32.85   1,278
loans held for sale
 Nonperforming
assets excluding       48.53     24.66   2,387
nonaccrual loans held
for sale
 Nonperforming
assets including       36.99     24.66   1,233
nonaccrual loans held
for sale
 Accruing TDRs
excluding TDRs held    38.39     25.51   1,288
for sale
 Accruing TDRs
including TDRs held    25.52     25.51   1
for sale
 Nonperforming
assets and accruing
TDRs excluding
nonaccrual loans and
 TDRs held for 21.43     12.54   889
sale
 Nonperforming
assets and accruing
TDRs including
nonaccrual loans and
 TDRs held for 15.10     12.54   256
sale
 As a percent of
total loans:
 Nonaccrual loans
excluding nonaccrual   2.44      4.88    (244)
loans held for sale
 Accruing TDRs
excluding TDRs held    4.10      6.29    (219)
for sale
 Nonaccrual loans
and accruing TDRs
excluding nonaccrual
loans and
 TDRs held for   6.53      11.17   (464)
sale
 As a percent of
total loans+other real
estate owned:
 Nonperforming
assets excluding       3.21      6.43    (322)
nonaccrual loans held
for sale
 Nonperforming
assets and accruing
TDRs excluding
nonaccrual loans and
 TDRs held for 7.28      12.65   (537)
sale
 As a percent of
total assets:
 Nonaccrual loans
excluding nonaccrual   1.66      3.35    (169)
loans held for sale
 Nonaccrual loans
including nonaccrual   2.36      3.35    (99)
loans held for sale
 Nonperforming
assets excluding       2.21      4.46    (225)
nonaccrual loans held
for sale
 Nonperforming
assets including       2.91      4.46    (155)
nonaccrual loans held
for sale
 Accruing TDRs
excluding TDRs held    2.80      4.31    (151)
for sale
 Accruing TDRs
including TDRs held    4.21      4.31    (10)
for sale
 Nonperforming
assets and accruing
TDRs excluding
nonaccrual loans and
 TDRs held for 5.01      8.77    (376)
sale
 Nonperforming
assets and accruing
TDRs including
nonaccrual loans and
 TDRs held for 7.12      8.77    (165)
sale
(1) See the
reconciliation table
on page 13 of 13.



Shore Bancshares, Inc.                                                    Page 6 of
                                                                          13
Consolidated Balance Sheets
(In thousands, except per share data)
                                                              September   September
                                                              30,         30,
                                                              2013
                                                                          2013
                          September   December    September   compared    compared
                          30,         31,         30,         to          to
                          2013        2012        2012        December    September
                                                              31, 2012    30, 2012
ASSETS
 Cash and due from     $       $       $       (1.7)     % 18.8      %
banks                      26,133   26,579      22,005
 Interest-bearing      79,165      164,864     138,422     (52.0)      (42.8)
deposits with other banks
 Federal funds sold    1,624       8,750       23,021      (81.4)      (92.9)
 Investments available 135,862     145,508     126,372     (6.6)       7.5
for sale (at fair value)
 Investments held to   2,357       2,657       4,075       (11.3)      (42.2)
maturity
 Loans held for sale   23,635      -           -           -           -
 Loans                 718,627     785,082     808,030     (8.5)       (11.1)
 Less: allowance for   (11,301)    (15,991)    (12,955)    (29.3)      (12.8)
credit losses
 Loans, net            707,326     769,091     795,075     (8.0)       (11.0)
 Premises and          15,175      15,593      15,537      (2.7)       (2.3)
equipment, net
 Goodwill              12,454      12,454      12,454      -           -
 Other intangible      3,594       3,816       3,890       (5.8)       (7.6)
assets, net
 Other real estate     5,776       7,659       8,418       (24.6)      (31.4)
owned, net
 Other assets          38,283      28,836      29,364      32.8        30.4
  $         $          $         (11.3)      (10.8)
Total assets              1,051,384  1,185,807  1,178,633
LIABILITIES
 Noninterest-bearing   $       $        $       7.9         6.2
deposits                  166,225    153,992    156,579
 Interest-bearing      764,188     895,281     881,935     (14.6)      (13.4)
deposits
 Total     930,413     1,049,273   1,038,514   (11.3)      (10.4)
deposits
 Short-term borrowings 11,468      13,761      13,079      (16.7)      (12.3)
 Accrued expenses and  7,502       8,747       8,422       (14.2)      (10.9)
other liabilities
 Long-term debt        -           -           455         -           (100.0)
 949,383     1,071,781   1,060,470   (11.4)      (10.5)
Total liabilities
STOCKHOLDERS' EQUITY
 Common stock, par
value $0.01; authorized
 35,000,000 shares  85          85          85          -           -
 Additional paid in    32,187      32,155      32,120      0.1         0.2
capital
 Retained earnings     70,269      81,078      86,152      (13.3)      (18.4)
 Accumulated other
comprehensive (loss)      (540)       708         (194)       (176.3)     (178.4)
income

Total stockholders'       102,001     114,026     118,163     (10.5)      (13.7)
equity
 $         $          $  
Total liabilities and     1,051,384  1,185,807  1,178,633  (11.3)      (10.8)
stockholders' equity
Period-end common shares  8,461       8,457       8,457       -           -
outstanding
Book value per common     $       $       $       (10.5)      (13.7)
share                       12.06   13.48      13.97



Shore Bancshares, Inc.                                                  Page 7 of
                                                                        13
Consolidated Statements of Operations
(In thousands, except per share data)
                      For the Three Months Ended    For the Nine Months Ended
                      September 30,                 September 30,
                      2013       2012     %         2013       2012     %
                                          Change                        Change
INTEREST INCOME
 Interest and fees $        $       (7.9)   % $         $       (8.3)   %
on loans             9,767     10,604            29,816    32,505
 Interest and
dividends on
investment
securities:
 Taxable       357        685      (47.9)    1,568      2,149    (27.0)
 Tax-exempt   5          22       (77.3)    14         92       (84.8)
 Interest on       -          3        (100.0)   3          7        (57.1)
federal funds sold
 Interest on
deposits with other   53         79       (32.9)    143        188      (23.9)
banks
    10,182     11,393   (10.6)    31,544     34,941   (9.7)
Total interest income
INTEREST EXPENSE
 Interest on       1,348      2,647    (49.1)    5,218      7,931    (34.2)
deposits
 Interest on       6          10       (40.0)    20         36       (44.4)
short-term borrowings
 Interest on       -          6        (100.0)   -          16       (100.0)
long-term debt

Total interest        1,354      2,663    (49.2)    5,238      7,983    (34.4)
expense
NET INTEREST INCOME   8,828      8,730    1.1       26,306     26,958   (2.4)
Provision for credit  2,850      6,200    (54.0)    7,700      18,095   (57.4)
losses
NET INTEREST INCOME
AFTER PROVISION
 FOR CREDIT LOSSES   5,978      2,530    136.3     18,606     8,863    109.9
NONINTEREST INCOME
 Service charges   600        628      (4.5)     1,772      1,898    (6.6)
on deposit accounts
 Trust and         401        410      (2.2)     1,184      1,279    (7.4)
investment fee income
 Investment        -          278      (100.0)   913        278      228.4
securities gains
 Insurance agency  2,724      2,427    12.2      8,170      7,522    8.6
commissions
 Loss on
termination of cash   -          -        -         (1,306)    -        -
flow hedge
 Loss on asset     (19,792)   -        -         (19,792)   -        -
sale
 Other noninterest 1,067      258      313.6     2,511      2,175    15.4
income

Total noninterest     (15,000)   4,001    (474.9)   (6,548)    13,152   (149.8)
income
NONINTEREST EXPENSE
 Salaries and      4,420      4,386    0.8       13,010     13,178   (1.3)
wages
 Employee benefits 971        945      2.8       3,111      3,071    1.3
 Occupancy         566        625      (9.4)     1,775      1,950    (9.0)
expense
 Furniture and     275        265      3.8       768        728      5.5
equipment expense
 Data processing   718        703      2.1       2,127      2,063    3.1
 Directors' fees   86         131      (34.4)    262        367      (28.6)
 Amortization of   74         96       (22.9)    222        318      (30.2)
intangible assets
 Insurance agency  409        275      48.7      1,328      1,004    32.3
commissions expense
 FDIC insurance    467        376      24.2      1,200      993      20.8
premium expense
 Write-downs of
other real estate     37         224      (83.5)    765        1,077    (29.0)
owned
 Other noninterest 1,763      1,683    4.8       5,468      5,121    6.8
expenses

Total noninterest     9,786      9,709    0.8       30,036     29,870   0.6
expense
Loss before income    (18,808)   (3,178)  (491.8)   (17,978)   (7,855)  (128.9)
tax benefit
Income tax benefit   (7,416)    (1,357)  (446.5)   (7,169)    (3,291)  (117.8)
NET LOSS            $          $       (525.6)   $          $       (136.8)
                      (11,392)  (1,821)           (10,809)  (4,564)
Weighted average
shares outstanding -  8,461      8,457    -         8,460      8,457    -
basic
Weighted average
shares outstanding -  8,472      8,457    0.2       8,463      8,457    0.1
diluted
Basic net loss per    $       $     (513.6)   $       $     (137.0)
common share          (1.35)     (0.22)             (1.28)     (0.54)
Diluted net loss per  (1.35)     (0.22)   (513.6)   (1.28)     (0.54)   (137.0)
common share
Dividends paid per    -          -        -         -          0.01     (100.0)
common share





Shore Bancshares, Inc.                                                                    Page 8 of
                                                                                          13
Consolidated Average Balance Sheets
(Dollars in thousands)
                    For the Three Months Ended              For the Nine Months Ended
                    September 30,                           September 30,
                    2013                2012                2013                2012
                    Average   Yield/   Average   Yield/   Average   Yield/   Average   Yield/
                    balance    rate    balance    rate    balance    rate     balance    rate
Earning assets
 Loans            $        5.03   % $        5.23   % $        5.12   % $        5.31   %
                    772,008             808,244             780,359             819,088
 Investment
securities
 Taxable          123,499    1.15     135,257    2.01     136,680    1.53     131,863    2.18
 Tax-exempt       521        5.27     2,614      5.07     560        4.97     3,548      5.27
 Federal funds     1,618      0.07     11,971     0.11     4,241      0.10     10,992     0.09
sold
 Interest-bearing  95,422     0.22     150,170    0.21     92,403     0.21     128,756    0.19
deposits
 Total earning   993,068    4.08   % 1,108,256  4.10   % 1,014,243  4.17   % 1,094,247  4.28   %
assets
Cash and due from   22,088              20,158              23,177              19,920
banks
Other assets        65,001              69,921              67,036              69,514
Allowance for       (15,238)            (14,189)            (16,306)            (14,523)
credit losses
Total assets        $                   $                   $                   $
                    1,064,919           1,184,146           1,088,150           1,169,158
Interest-bearing
liabilities
 Demand deposits   $        0.16   % $        0.18   % $        0.16   % $        0.18   %
                    172,143             167,423             169,476             157,835
 Money market and
savings deposits    207,162    0.12     279,003    1.19     225,351    0.61     278,297    1.16
(1)
 Certificates of
deposit $100,000 or 198,495    1.23     238,624    1.46     206,076    1.31     240,595    1.46
more
 Other time        192,878    1.24     207,547    1.66     197,201    1.34     204,789    1.74
deposits

Interest-bearing    770,678    0.69     892,597    1.18     798,104    0.87     881,516    1.20
deposits
 Short-term        10,695     0.23     14,909     0.27     11,140     0.25     15,448     0.31
borrowings
 Long-term debt    -          -        455        4.58     -          -        455        4.61
 Total
interest-bearing    781,373    0.69   % 907,961    1.17   % 809,244    0.87   % 897,419    1.19   %
liabilities
Noninterest-bearing 162,189             148,096             156,286             142,874
deposits
Accrued expenses
and other           7,453               8,768               8,500               8,949
liabilities
Stockholders'       113,904             119,321             114,120             119,916
equity
Total liabilities   $                   $                   $                   $
and stockholders'   1,064,919           1,184,146           1,088,150           1,169,158
equity
Net interest spread            3.39   %            2.93   %            3.30   %            3.09   %
Net interest margin            3.54   %            3.15   %            3.48   %            3.31   %
(1) Interest on money market and savings deposits includes an
adjustment to expense related to interest rate caps and the hedged
 deposits associated with them. This adjustment increased
interest expense $0 and $524 thousand for the third quarter of 2013
 and 2012, respectively, and $695 thousand and $1.5 million for
the first nine months of 2013 and 2012, respectively. The interest
  rate caps were terminated in June of 2013.



Shore Bancshares, Inc.                                                                      Page 9 of
                                                                                            13
Financial Highlights By Quarter
(Dollars in thousands, except per share data)
                   3rd         2nd         1st         4th         3rd         3Q 13        3Q 13
                   quarter     quarter     quarter     quarter     quarter
                   2013        2013        2013        2012        2012        compared     compared
                                                                               to           to
                   (3Q 13)     (2Q 13)     (1Q 13)     (4Q 12)     (3Q 12)     2Q 13        3Q 12
PROFITABILITY FOR
THE PERIOD

Taxable-equivalent $       $       $       $       $       (1.9)     %  0.9      %
net interest         8,852   9,028       8,504       8,413       8,769
income
 Less:
Taxable-equivalent 24          27          27          32          39          (11.1)       (38.5)
adjustment
 Net interest  8,828       9,001       8,477       8,381       8,730       (1.9)        1.1
income
 Provision for 2,850       2,700       2,150       9,650       6,200       5.6          (54.0)
credit losses
 Noninterest   (15,000)    3,962       4,490       2,606       4,001       (478.6)      (474.9)
income
 Noninterest   9,786       9,759       10,491      9,685       9,709       0.3          0.8
expense
 (Loss) income
before income      (18,808)    504         326         (8,348)     (3,178)     (3,831.7)    (491.8)
taxes
 Income tax    (7,416)     143         104         (3,274)     (1,357)     (5,286.0)    (446.5)
(benefit) expense
 Net (loss)    $       $       $       $        $        (3,255.7)    (525.6)
income           (11,392)     361       222      (5,074)     (1,821)
 Return on     (4.24)    % 0.13      % 0.08      % (1.71)    % (0.61)    % (437)     bp (363)    bp
average assets
 Return on     (39.68)     1.27        0.79        (17.15)     (6.07)      (4,095)      (3,361)
average equity
 Return on
average tangible   (46.03)     1.66        1.11        (19.73)     (6.82)      (4,769)      (3,921)
equity (1)
 Net interest  3.54        3.60        3.30        3.02        3.15        (6)          39
margin
 Efficiency    (159.17)    75.13       80.74       87.89       76.03       (23,430)     (23,520)
ratio - GAAP
 Efficiency
ratio - Non-GAAP   71.18       74.45       80.17       77.77       76.95       (327)        (577)
(1)
PER SHARE DATA
 Basic net     $       $       $       $       $    
(loss) income per             0.04       0.03      (0.60)     (0.22)     (3,475.0) %  (513.6)  %
common share       (1.35)
 Diluted net
(loss) income per  (1.35)      0.04        0.03        (0.60)      (0.22)      (3,475.0)    (513.6)
common share
 Dividends
paid per common    -           -           -           -           -           -            -
share
 Book value
per common share   12.06       13.43       13.51       13.48       13.97       (10.2)       (13.7)
at period end
 Tangible book
value per common   10.16       11.52       11.60       11.56       12.04       (11.8)       (15.6)
share at period
end (1)
 Market value  8.80        7.36        6.79        5.39        6.02        19.6         46.2
at period end
 Market range:
 High       9.06        7.75        6.91        6.98        6.33        16.9         43.1
 Low        7.06        5.97        5.20        4.65        4.98        18.3         41.8
AVERAGE BALANCE
SHEET DATA
 Loans         $        $          $          $          $          (1.7)     %  (4.5)    %
                   772,008    785,442    783,757    799,512    808,244
 Securities    124,020     141,193     146,756     144,459     137,871     (12.2)       (10.0)
 Earning       993,068     1,005,474   1,044,755   1,108,585   1,108,256   (1.2)        (10.4)
assets
 Assets        1,064,919   1,077,852   1,122,310   1,183,135   1,184,146   (1.2)        (10.1)
 Deposits      932,867     943,577     987,325     1,042,842   1,040,693   (1.1)        (10.4)
 Stockholders' 113,904     114,208     114,250     117,700     119,321     (0.3)        (4.5)
equity
CREDIT QUALITY
DATA AT PERIOD END
 Net           $       $       $       $       $       168.1     %  16.6     %
charge-offs         7,272    2,712       2,406       6,614       6,235
 Nonaccrual
loans excluding    $       $        $        $        $        (49.7)       (55.6)
nonaccrual loans   17,501     34,818      31,813      36,474      39,442
held for sale
 Loans 90 days
past due and still 9           3           22          460         4,675       200.0        (99.8)
accruing
 Other real    5,776       6,408       8,366       7,659       8,418       (9.9)        (31.4)
estate owned
 Total
nonperforming
assets excluding   23,286      41,229      40,201      44,593      52,535      (43.5)       (55.7)
nonaccrual loans
held for sale
 Nonaccrual
loans held for     7,265       -           -           -           -           -            -
sale
 Total
nonperforming      $       $        $        $        $   
assets including   30,551     41,229      40,201      44,593      52,535      (25.9)       (41.8)
nonaccrual loans
held for sale
 Accruing
troubled debt      $       $        $        $        $   
restructurings     29,439     50,278      52,545      52,353      50,785      (41.4)       (42.0)
(TDRs) excluding
TDRs held for sale
 Accruing TDRs 14,842      -           -           -           -           -            -
held for sale
 Total
accruing TDRs      $       $        $        $        $        (11.9)       (12.8)
including TDRs     44,281     50,278      52,545      52,353      50,785
held for sale
 Total
nonperforming
assets and
accruing TDRs
excluding
nonaccrual
 loans and  $       $        $        $        $          (42.4)       (49.0)
TDRs held for sale 52,725     91,507      92,746      96,946      103,320
 Nonaccrual
loans and TDRs     22,107      -           -           -           -           -            -
held for sale
 Total
nonperforming
assets and
accruing TDRs
including
nonaccrual
 loans and  $       $        $        $        $          (18.2)       (27.6)
TDRs held for sale 74,832     91,507      92,746      96,946      103,320
(1) See the
reconciliation
table on page 13
of 13.



Shore Bancshares, Inc.                                                    Page 10 of 13
Financial Highlights By Quarter
(Dollars in thousands, except per
share data)
               3rd       2nd       1st       4th       3rd       3Q 13       3Q 13
               quarter   quarter   quarter   quarter   quarter
               2013      2013      2013      2012      2012      compared    compared
                                                                 to          to
               (3Q 13)   (2Q 13)   (1Q 13)   (4Q 12)   (3Q 12)   2Q 13       3Q 12
CAPITAL AND
CREDIT QUALITY
RATIOS
 Average
equity to      10.70   % 10.60   % 10.18   % 9.95    % 10.08   % 10       bp 62       bp
average assets
 Average
tangible
equity to      9.33      9.23      8.86      8.69      8.81      10          52
average
tangible
assets (1)

Annualized net 3.74      1.38      1.25      3.29      3.07      236         67
charge-offs to
average loans
 Allowance
for credit
losses as a
percent of:

Period-end     1.57      2.01      2.00      2.04      1.60      (44)        (3)
loans

Nonaccrual
loans
excluding      64.57     45.16     49.46     43.84     32.85     1,941       3,172
nonaccrual
loans held for
sale

Nonaccrual
loans
including      45.63     45.16     49.46     43.84     32.85     47          1,278
nonaccrual
loans held for
sale

Nonperforming
assets
excluding      48.53     38.14     39.14     35.86     24.66     1,039       2,387
nonaccrual
loans held for
sale

Nonperforming
assets
including      36.99     38.14     39.14     35.86     24.66     (115)       1,233
nonaccrual
loans held for
sale
 Accruing
TDRs excluding 38.39     31.27     29.95     30.54     25.51     712         1,288
TDRs held for
sale
 Accruing
TDRs including 25.52     31.27     29.95     30.54     25.51     (575)       1
TDRs held for
sale

Nonperforming
assets and
accruing TDRs
excluding
nonaccrual
loans and
 TDRs  21.43     17.18     16.97     16.49     12.54     425         889
held for sale

Nonperforming
assets and
accruing TDRs
including
nonaccrual
loans and
 TDRs  15.10     17.18     16.97     16.49     12.54     (208)       256
held for sale
 As a
percent of
total loans:
 Nonaccrual
loans
excluding      2.44      4.45      4.05      4.65      4.88      (201)       (244)
nonaccrual
loans held for
sale
 Accruing
TDRs excluding 4.10      6.43      6.69      6.67      6.29      (233)       (219)
TDRs held for
sale

Nonaccrual
loans and
accruing TDRs
excluding
nonaccrual
loans and
 TDRs    6.53      10.88     10.74     11.31     11.17     (435)       (464)
held for sale
 As a
percent of
total
loans+other
real estate
owned:

Nonperforming
assets
excluding      3.21      5.23      5.06      5.63      6.43      (202)       (322)
nonaccrual
loans held for
sale

Nonperforming
assets and
accruing TDRs
excluding
nonaccrual
loans and
 TDRs  7.28      11.60     11.68     12.23     12.65     (432)       (537)
held for sale
 As a
percent of
total assets:

Nonaccrual
loans
excluding      1.66      3.30      2.88      3.08      3.35      (164)       (169)
nonaccrual
loans held for
sale

Nonaccrual
loans
including      2.36      3.30      2.88      3.08      3.35      (94)        (99)
nonaccrual
loans held for
sale

Nonperforming
assets
excluding      2.21      3.91      3.64      3.76      4.46      (170)       (225)
nonaccrual
loans held for
sale

Nonperforming
assets
including      2.91      3.91      3.64      3.76      4.46      (100)       (155)
nonaccrual
loans held for
sale
 Accruing
TDRs excluding 2.80      4.77      4.76      4.41      4.31      (197)       (151)
TDRs held for
sale
 Accruing
TDRs including 4.21      4.77      4.76      4.41      4.31      (56)        (10)
TDRs held for
sale

Nonperforming
assets and
accruing TDRs
excluding
nonaccrual
loans and
 TDRs  5.01      8.68      8.40      8.18      8.77      (367)       (376)
held for sale

Nonperforming
assets and
accruing TDRs
including
nonaccrual
loans and
 TDRs  7.12      8.68      8.40      8.18      8.77      (156)       (165)
held for sale
(1) See the
reconciliation
table on page
13 of 13.



Shore Bancshares, Inc.                                                            Page 11 of
                                                                                  13
Consolidated Statements of Operations By Quarter
(In thousands, except per share data)
                                                                      3Q 13       3Q 13
                                                                      compared    compared
                                                                      to          to
                      3Q 13      2Q 13    1Q 13   4Q 12     3Q 12     2Q 13       3Q 12
INTEREST INCOME
 Interest and fees $      $     $     $      $   
on loans             9,767      10,142         10,193    10,604    (3.7)     % (7.9)    %
                                          9,907
 Interest and
dividends on
investment
securities:
 Taxable       357        568      643     666       685       (37.1)      (47.9)
 Tax-exempt    5          4        5       12        22        25.0        (77.3)
 Interest on       -          1        2       3         3         (100.0)     (100.0)
federal funds sold
 Interest on
deposits with other   53         40       50      86        79        32.5        (32.9)
banks
    10,182     10,755   10,607  10,960    11,393    (5.3)       (10.6)
Total interest income
INTEREST EXPENSE
 Interest on       1,348      1,748    2,122   2,570     2,647     (22.9)      (49.1)
deposits
 Interest on       6          6        8       9         10        -           (40.0)
short-term borrowings
 Interest on       -          -        -       -         6         -           (100.0)
long-term debt

Total interest        1,354      1,754    2,130   2,579     2,663     (22.8)      (49.2)
expense
NET INTEREST INCOME   8,828      9,001    8,477   8,381     8,730     (1.9)       1.1
Provision for credit  2,850      2,700    2,150   9,650     6,200     5.6         (54.0)
losses
NET INTEREST INCOME
AFTER PROVISION
 FOR CREDIT LOSSES   5,978      6,301    6,327   (1,269)   2,530     (5.1)       136.3
NONINTEREST INCOME
 Service charges   600        600      572     653       628       -           (4.5)
on deposit accounts
 Trust and         401        393      390     365       410       2.0         (2.2)
investment fee income
 Investment        -          913      -       -         278       (100.0)     (100.0)
securities gains
 Insurance agency  2,724      2,633    2,813   2,292     2,427     3.5         12.2
commissions
 Loss on
termination of cash   -          (1,306)  -       (1,339)   -         (100.0)     -
flow hedge
 Loss on asset     (19,792)   -        -       -         -         -           -
sale
 Other noninterest 1,067      729      715     635       258       46.4        313.6
income

Total noninterest     (15,000)   3,962    4,490   2,606     4,001     (478.6)     (474.9)
income
NONINTEREST EXPENSE
 Salaries and      4,420      4,307    4,283   4,240     4,386     2.6         0.8
wages
 Employee benefits 971        1,006    1,134   923       945       (3.5)       2.8
 Occupancy         566        612      597     609       625       (7.5)       (9.4)
expense
 Furniture and     275        243      250     235       265       13.2        3.8
equipment expense
 Data processing   718        706      703     654       703       1.7         2.1
 Directors' fees   86         55       121     107       131       56.4        (34.4)
 Amortization of   74         74       74      74        96        -           (22.9)
intangible assets
 Insurance agency  409        458      461     387       275       (10.7)      48.7
commissions expense
 FDIC insurance    467        367      366     387       376       27.2        24.2
premium expense
 Write-downs of
other real estate     37         56       672     251       224       (33.9)      (83.5)
owned
 Other noninterest 1,763      1,875    1,830   1,818     1,683     (6.0)       4.8
expenses

Total noninterest     9,786      9,759    10,491  9,685     9,709     0.3         0.8
expense
(Loss) income before  (18,808)   504      326     (8,348)   (3,178)   (3,831.7)   (491.8)
income taxes
Income tax (benefit)  (7,416)    143      104     (3,274)   (1,357)   (5,286.0)   (446.5)
expense
                      $        $     $     $      $   
NET (LOSS) INCOME   (11,392)             (5,074)  (1,821)  (3,255.7)   (525.6)
                                 361       222
Weighted average
shares outstanding -  8,461      8,461    8,458   8,457     8,457     -           -
basic
Weighted average
shares outstanding -  8,472      8,465    8,458   8,457     8,457     0.1         0.2
diluted
Basic net (loss)      $      $     $     $      $   
income per common     (1.35)                                  (3,475.0)   (513.6)
share                            0.04    0.03   (0.60)   (0.22)
Diluted net (loss)
income per common     (1.35)     0.04     0.03    (0.60)    (0.22)    (3,475.0)   (513.6)
share
Dividends paid per    -          -        -       -         -         -           -
common share



Shore Bancshares, Inc.                                                                                                                Page 12 of
                                                                                                                                      13
Consolidated Average Balance Sheets By Quarter
(Dollars in thousands)
                                                                                                                             Average balance
                                                                                                                             3Q 13      3Q 13
                                                                                                                             compared   compared
                                                                                                                             to         to
                    3Q 13                2Q 13                1Q 13                4Q 12                3Q 12                2Q 13      3Q 12
                    Average    Yield/   Average    Yield/   Average    Yield/   Average    Yield/   Average    Yield/
                    balance     rate     balance     rate     balance     rate     balance     rate     balance     rate
Earning assets
 Loans            $         5.03   % $         5.19   % $         5.14   % $         5.09   % $         5.23   % (1.7)    % (4.5)    %
                    772,008              785,442              783,757              799,512              808,244
 Investment
securities
 Taxable          123,499     1.15     140,614     1.62     146,176     1.78     143,137     1.85     135,257     2.01     (12.2)     (8.7)
 Tax-exempt       521         5.27     579         4.81     580         4.85     1,322       5.05     2,614       5.07     (10.0)     (80.1)
 Federal funds     1,618       0.07     2,992       0.10     8,184       0.11     7,782       0.12     11,971      0.11     (45.9)     (86.5)
sold
 Interest-bearing  95,422      0.22     75,847      0.21     106,058     0.19     156,832     0.22     150,170     0.21     25.8       (36.5)
deposits
 Total earning   993,068     4.08   % 1,005,474   4.30   % 1,044,755   4.13   % 1,108,585   3.94   % 1,108,256   4.10   % (1.2)      (10.4)
assets
Cash and due from   22,088               22,510               24,966               21,258               20,158               (1.9)      9.6
banks
Other assets        65,001               66,967               69,185               67,596               69,921               (2.9)      (7.0)
Allowance for       (15,238)             (17,099)             (16,596)             (14,304)             (14,189)             (10.9)     7.4
credit losses
Total assets        $                    $                    $                    $                    $                    (1.2)      (10.1)
                    1,064,919           1,077,852           1,122,310           1,183,135           1,184,146
Interest-bearing
liabilities
 Demand deposits   $         0.16   % $         0.15   % $         0.17   % $         0.18   % $         0.18   % 5.9        2.8
                    172,143              162,589              173,714              169,398              167,423
 Money market and
savings deposits    207,162     0.12     225,117     0.67     244,182     0.97     281,593     1.21     279,003     1.19     (8.0)      (25.7)
(1)
 Certificates of
deposit $100,000 or 198,495     1.23     203,641     1.32     216,288     1.39     231,232     1.40     238,624     1.46     (2.5)      (16.8)
more
 Other time        192,878     1.24     197,644     1.30     201,171     1.47     204,213     1.59     207,547     1.66     (2.4)      (7.1)
deposits

Interest-bearing    770,678     0.69     788,991     0.89     835,355     1.03     886,436     1.15     892,597     1.18     (2.3)      (13.7)
deposits
 Short-term        10,695      0.23     10,752      0.24     11,987      0.27     13,573      0.27     14,909      0.27     (0.5)      (28.3)
borrowings
 Long-term debt    -           -        -           -        -           -        -           -        455         4.58     -          (100.0)
 Total
interest-bearing    781,373     0.69   % 799,743     0.88   % 847,342     1.02   % 900,009     1.14   % 907,961     1.17   % (2.3)      (13.9)
liabilities
Noninterest-bearing 162,189              154,586              151,970              156,406              148,096              4.9        9.5
deposits
Accrued expenses
and other           7,453                9,315                8,748                9,020                8,768                (20.0)     (15.0)
liabilities
Stockholders'       113,904              114,208              114,250              117,700              119,321              (0.3)      (4.5)
equity
Total liabilities   $                    $                    $                    $                    $
and stockholders'   1,064,919           1,077,852           1,122,310           1,183,135           1,184,146           (1.2)      (10.1)
equity
Net interest spread             3.39   %             3.42   %             3.11   %             2.80   %             2.93   %
Net interest margin             3.54   %             3.60   %             3.30   %             3.02   %             3.15   %
(1) Interest on money market and savings deposits includes an adjustment to expense related to
interest rate caps and the hedged deposits associated with them.
 This adjustment increased interest expense $0 for the third quarter of 2013, $279 thousand for the second
quarter of 2013, $416 thousand for the first quarter of 2013,
 $552 thousand for the fourth quarter of 2012 and $524 thousand for the third quarter of
2012. The interest rate caps were terminated in June of 2013.



Shore Bancshares, Inc.                                                                      Page 13 of 13
Reconciliation of Generally Accepted Accounting Principles
(GAAP)
 and Non-GAAP Measures
(In thousands, except per share data)
                                                                                 YTD          YTD
                   3Q 13        2Q 13       1Q 13       4Q 12       3Q 12        09/30/2013   09/30/2012
The following
reconciles return
on average equity
and return on
 average tangible
equity (Note 1):
Net (loss) income $         $       $       $         $         $           $   
                   (11,392)     361        222        (5,074)    (1,821)      (10,809)    (4,564)
Net (loss) income  $         $        $       $          $         $           $   
- annualized (A)   (45,197)     1,448      900        (20,186)   (7,244)      (14,452)    (6,096)
Net (loss) income,
excluding net      $         $       $       $         $         $           $   
amortization of    (11,347)     406        267        (5,029)    (1,763)      (10,675)    (4,371)
intangible assets
Net (loss) income,
excluding net
amortization of
intangible
 assets -         $         $        $        $          $         $           $   
annualized (B)     (45,018)     1,628      1,083      (20,007)   (7,014)      (14,272)    (5,839)
Average            $         $          $          $          $          $           $ 
stockholders'      113,904      114,208    114,250    117,700    119,321      114,120      119,916
equity (C)
Less: Average
goodwill and other (16,092)     (16,166)    (16,242)    (16,313)    (16,401)     (16,166)     (16,501)
intangible assets
Average tangible   $        $         $         $          $          $          $ 
equity (D)         97,812       98,042     98,008     101,387    102,920      97,954       103,415
Return on average
equity (GAAP)     (39.68)    % 1.27      % 0.79      % (17.15)   % (6.07)     % (12.66)    % (5.08)     %
(A)/(C)
Return on average
tangible equity    (46.03)    % 1.66      % 1.11      % (19.73)   % (6.82)     % (14.57)    % (5.65)     %
(Non-GAAP)
(B)/(D)
The following
reconciles GAAP
efficiency ratio
and non-GAAP
 efficiency ratio
(Note 2):
Noninterest        $        $        $         $        $        $          $  
expense (E)        9,786       9,759      10,491     9,685      9,709        30,036       29,870
Less:
Amortization of    (74)         (74)        (74)        (74)        (96)         (222)        (318)
intangible assets
 Other
nonrecurring       -            49          -           -           -            49           -
adjustments
Adjusted           $        $        $         $        $        $          $  
noninterest        9,712       9,734      10,417     9,611      9,613        29,863       29,552
expense (F)
Taxable-equivalent $        $        $        $        $        $          $  
net interest       8,852       9,028      8,504      8,413      8,769        26,384       27,089
income (G)
Nonrecurring       -            (308)       -           -           -            (308)        -
adjustment
Taxable-equivalent
net interest       $        $        $        $        $        $          $  
income excluding   8,852       8,720      8,504      8,413      8,769        26,076       27,089
nonrecurring
adjustment (H)
Noninterest income $         $        $        $        $        $          $  
(I)                (15,000)     3,962      4,490      2,606      4,001        (6,548)     13,152
Less: Investment
securities         -            (913)       -           -           (278)        (913)        (278)
(gains)/losses
 Other
nonrecurring       19,792       1,306       -           1,339       -            21,098       (217)
(gains)/losses
Adjusted           $        $        $        $        $        $          $  
noninterest income 4,792       4,355      4,490      3,945      3,723        13,637       12,657
(J)
Efficiency ratio
(GAAP)            (159.17)   % 75.13     % 80.74     % 87.89     % 76.03      % 151.42     % 74.23      %
(E)/(G)+(I)
Efficiency ratio
(Non-GAAP)        71.18      % 74.45     % 80.17     % 77.77     % 76.95      % 75.20      % 74.35      %
(F)/(H)+(J)
The following
reconciles book
value per common
share and
tangible
 book value per
common share (Note
1):
Stockholders'      $         $          $          $          $  
equity (K)         102,001      113,594    114,348    114,026    118,163
Less: Goodwill
and other          (16,048)     (16,122)    (16,196)    (16,270)    (16,344)
intangible assets
Tangible equity    $        $         $         $         $  
(L)                85,953       97,472     98,152     97,756     101,819
Shares outstanding 8,461        8,461       8,461       8,457       8,457
(M)
Book value per     $        $        $        $        $    
common share       12.06       13.43      13.51      13.48      13.97
(GAAP) (K)/(M)
Tangible book
value per common   $        $        $        $        $    
share (Non-GAAP)  10.16       11.52      11.60      11.56      12.04
(L)/(M)
The following
reconciles average
equity to average
assets and
 average tangible
equity to average
tangible assets
(Note 1):
Average            $         $          $          $          $          $           $ 
stockholders'      113,904      114,208    114,250    117,700    119,321      114,120      119,916
equity (N)
Less: Average
goodwill and other (16,092)     (16,166)    (16,242)    (16,313)    (16,401)     (16,166)     (16,501)
intangible assets
Average tangible   $        $         $         $          $          $          $ 
equity (O)         97,812       98,042     98,008     101,387    102,920      97,954       103,415
Average assets (P) $           $           $           $           $            $            $
                   1,064,919   1,077,852   1,122,310   1,183,135   1,184,146   1,088,150    1,169,158
Less: Average
goodwill and other (16,092)     (16,166)    (16,242)    (16,313)    (16,401)     (16,166)     (16,501)
intangible assets
Average tangible   $           $           $           $           $            $            $
assets (Q)         1,048,827   1,061,686   1,106,068   1,166,822   1,167,745   1,071,984    1,152,657
Average
equity/average     10.70      % 10.60     % 10.18     % 9.95      % 10.08      % 10.49      % 10.26      %
assets (GAAP)
(N)/(P)
Average tangible
equity/average
tangible assets    9.33       % 9.23      % 8.86      % 8.69      % 8.81       % 9.14       % 8.97       %
(Non-GAAP)
(O)/(Q)
Note 1: Management believes that reporting tangible equity and tangible
assets approximates capital for regulatory purposes.
Note 2: Management believes that reporting the non-GAAP efficiency ratio more
closely measures its effectiveness of controlling cash-based operating
activities.





SOURCE Shore Bancshares, Inc.

Website: http://www.shbi.com
Contact: George Rapp, Chief Financial Officer, 410-763-7800
 
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