Shore Bancshares Reports 2013 Results

                    Shore Bancshares Reports 2013 Results

PR Newswire

EASTON, Md., Jan. 23, 2014

EASTON, Md., Jan. 23, 2014 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ -
SHBI) today reported net income of $1.2 million or $0.14 per diluted common
share for the fourth quarter of 2013, compared to a net loss of $11.4 million
or $(1.35) per diluted common share for the third quarter of 2013, and a net
loss of $5.1 million or $(0.60) per diluted common share for the fourth
quarter of 2012. The Company reported a net loss of $9.6 million or $(1.14)
per diluted common share for both fiscal year 2013 and fiscal year 2012.

When comparing the fourth quarter of 2013 to the third quarter of 2013, the
primary reason for the improved results was a decline in the provision for
credit losses which was impacted during the third quarter of 2013 by 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"). Charge-offs of $19.6 million were taken on the loans subject
to the Asset Sale to reflect the value to be realized upon sale.
Subsequently, the provision for credit losses was increased $19.6 million to
replenish the allowance for credit losses while other real estate owned
subject to the Asset Sale was written down $182 thousand for a total pretax
loss of $19.8 million. When comparing the fourth quarter of 2013 to the
fourth quarter of 2012, the primary reasons for the improved results were a
decline in the provision for credit losses due to lower charge-offs and
nonaccrual loans, and a $1.3 million loss incurred during the fourth quarter
of 2012 to terminate a portion of an interest rate cap instrument. Results
were flat when comparing fiscal year 2013 to fiscal year 2012, with higher
noninterest income offset by higher noninterest expenses and lower net
interest income.

"We were pleased to report fourth quarter net income which was ahead of
consensus estimates. The completion of the Asset Sale in the third quarter
resulted in a much lower provision for credit losses in the fourth quarter and
was the principal driver of our results. We are still focused on reducing
charge-offs and nonaccrual loans. However, with a substantial portion of our
credit problems behind us we can now turn our attention to revenue
generation. Despite the significant strategic initiatives undertaken during
the last year, total stockholders' equity to total assets at December 31, 2013
was 9.80%," said Lloyd L. "Scott" Beatty, Jr., president and chief executive
officer. "The economy across our footprint is showing some signs of
improvement in the retail, small business and commercial middle-market
sectors. However, real estate development and construction remains anemic
compared to the pre-recession levels."

Balance Sheet Review

Total assets were $1.054 billion at December 31, 2013, a $131.7 million, or
11.1%, 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 loans ($73.2
million) and interest-bearing deposits with other banks ($55.5 million). The
decline in loans was mainly due to the Asset Sale and charge-offs while the
decline in interest-bearing deposits reflected a reduction in excess
liquidity.

Total deposits decreased $115.8 million, or 11.0%, to $933.5 million at
December 31, 2013, mainly due to a decline in money market deposit accounts
($67.9 million) and time deposits ($56.0 million), partially offset by an
increase in noninterest-bearing demand deposits ($18.8 million). The decrease
in money market deposit accounts was 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 to decrease its excess liquidity and, in June 2013, the Company fully
exited the IND Program. The decrease in time deposits also reduced the
Company's excess liquidity. Total stockholders' equity declined $10.7
million, or 9.4%, to $103.3 million at December 31, 2013. For fiscal year
2013, the ratio of average equity to average assets was 10.31% and the ratio
of average tangible equity to average tangible assets was 8.95%.

Review of Quarterly Financial Results

Net interest income was $8.6 million for the fourth quarter of 2013, compared
to $8.8 million for the third quarter of 2013 and $8.4 million for the fourth
quarter of 2012. The decrease in net interest income when compared to the
third quarter of 2013 was due to a greater decline in interest income than the
decline in interest expense. The decrease in interest income was primarily
due to a decline in average loan balances while the decrease in interest
expense was primarily due to lower average balances of and rates paid on time
deposits. The higher net interest income for the fourth quarter of 2013 when
compared to the fourth 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 3.47% for the fourth quarter of 2013, 3.54% for the third
quarter of 2013 and 3.02% for the fourth quarter of 2012.

The provision for credit losses was $474 thousand for the fourth quarter of
2013, $22.5 million for the third quarter of 2013 and $9.7 million for the
fourth quarter of 2012. The provision for credit losses for the third quarter
of 2013 included $19.6 million to replenish the allowance for credit losses
for the charge-off of loans associated with the Asset Sale. The lower
provision for credit losses for the fourth quarter of 2013 when compared to
the third quarter of 2013 and the fourth quarter of 2012 was due to lower
charge-offs and nonaccrual loans. Net charge-offs were $1.1 million for the
fourth quarter of 2013, $26.9 million for the third quarter of 2013 ($19.6
million related to the Asset Sale) and $6.6 million for the fourth quarter of
2012. The charge offs in all three quarters were mainly real estate related
loans. The ratio of annualized net charge-offs to average loans was 0.58% for
the fourth quarter of 2013, 13.81% for the third quarter of 2013 and 3.29% for
the fourth quarter of 2012. The ratio of the allowance for credit losses to
period-end loans was 1.51% at December 31, 2013, 1.57% at September 30, 2013
and 2.04% at December 31, 2012.

At December 31, 2013, nonperforming assets excluding nonaccrual loans held for
sale were $18.7 million, a decrease of $4.6 million, or 19.8%, when compared
to September 30, 2013 and a decrease of $25.9 million, or 58.1%, when compared
to December 31, 2012. Similarly, accruing troubled debt
restructurings("TDRs") excluding TDRs held for sale were $26.1 million at
December 31, 2013, a decrease of $3.4 million, or 11.4%, when compared to
September 30, 2013 and $26.3 million, or 50.2%, when compared to December 31,
2012. At December 31, 2013, the ratio of nonaccrual loans excluding
nonaccrual loans held for sale to total assets was 1.39%, lower than the 1.66%
and 3.08% at September 30, 2013 and December 31, 2012, respectively.
Likewise, the ratio of accruing TDRs excluding TDRs held for sale to total
assets at December 31, 2013 was 2.47%, decreasing from 2.80% at September 30,
2013 and 4.41% at December 31, 2012. When comparing December 31, 2013 to
September 30, 2013, the positive trend in nonperforming assets and TDRs, as
well as the corresponding asset quality ratios, was primarily due to the
Company's continued focus on the resolution of its nonperforming assets and
TDRs. When comparing December 31, 2013 to December 31, 2012, the positive
trend in nonperforming assets and TDRs was mainly accomplished with the Asset
Sale. See pages 4 and 9 of this release for additional detail.

Total noninterest income for the fourth quarter of 2013 decreased $577
thousand, or 12.0%, when compared to the third quarter of 2013. The decrease
was primarily due to $265 thousand less in income from an insurance investment
included in other noninterest income and $247 thousand less in insurance
agency commissions. Total noninterest income for the fourth quarter of 2013
increased $1.6 million, or 61.7%, when compared to the fourth quarter of
2012. Included in other noninterest income for the fourth quarter of 2012 was
a $1.3 million loss incurred to terminate a portion of the previously
mentioned interest rate caps.

Total noninterest expense for the fourth quarter of 2013 increased $500
thousand, or 5.0%, when compared to the third quarter of 2013 primarily due to
higher write-downs of other real estate owned ($152 thousand) and FDIC
insurance premiums ($146 thousand). When compared to the fourth quarter of
2012, total noninterest expense for the fourth quarter of 2013 increased $783
thousand, or 8.1%, primarily due to higher FDIC insurance premiums ($226
thousand), salaries and benefits ($156 thousand) and write-downs of other real
estate owned ($120 thousand). 

Review of 2013 Financial Results

Net interest income for 2013 was $34.9 million, a decrease of $463 thousand,
or 1.3%, when compared to 2012 due to a greater decline in interest income
than the decline in interest expense. The decrease in interest income was
primarily due to lower average balances of and yields earned on loans while
the decrease in interest expense was primarily due to lower balances of and
rates paid on money market and time deposits. However, the net interest
margin improved to 3.48% for 2013 when compared to 3.23% for 2012.

The provisions for credit losses for 2013 and 2012 were $27.8 million and
$27.7 million, respectively, while net charge-offs were $33.1 million and
$26.0 million for 2013 and 2012, respectively. The ratio of annualized net
charge-offs to average loans was 4.32% for 2013 and 3.20% for 2012.

Total noninterest income for 2013increased $1.7 million, or 10.8%, when
compared to 2012. The increase was primarily due to higher insurance agency
commissions ($833 thousand) and gains on sales of investment securities ($635
thousand), and fewer losses on sales of other real estate owned ($452
thousand), partially offset by lower service charges on deposit accounts ($180
thousand).

Total noninterest expense for 2013 increased $1.1 million, or 2.9%, when
compared to 2012. The increase was primarily due to higher marketing expenses
($510 thousand) included in other noninterest expenses, FDIC insurance
premiums ($433 thousand) and insurance agency commissions expense ($407
thousand). The increased marketing costs were mainly related to a branding
project for the Company and its subsidiaries.

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.shorebancshares.com.

Forward-Looking Statements

The statements contained herein that are not historical facts are
forward-looking statements (as defined by the Private Securities Litigation
Reform Act of 1995) based on management's current expectations and beliefs
concerning future developments and their potential effects on the Company.
Such statements involve inherent risks and uncertainties, many of which are
difficult to predict and are generally beyond the control of the Company.
There can be no assurance that future developments affecting the Company will
be the same as those anticipated by management. These statements are
evidenced by terms such as "anticipate," "estimate," "should," "expect,"
"believe," "intend," and similar expressions. Although these statements
reflect management's good faith beliefs and projections, they are not
guarantees of future performance and they may not prove true. These
projections involve risks 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                                                                    Page 4 of
Bancshares,                                                              13
Inc.
Financial
Highlights
(Dollars in
thousands,
except per
share data)
               For the Three Months Ended        For the Twelve Months Ended
               December 31,                      December 31,
               2013        2012      Change      2013        2012      Change
PROFITABILITY
FOR THE PERIOD
 Net
interest       $ 8,570     $ 8,381     2.3    %  $ 34,876    $ 35,339    (1.3)   %
income
 Provision
for credit     474         9,650       (95.1)    27,784      27,745      0.1
losses
 Noninterest 4,215       2,606       61.7      17,459      15,758      10.8
income
 Noninterest 10,468      9,685       8.1       40,686      39,555      2.9
expense
 Income
(loss) before  1,843       (8,348)     122.1     (16,135)    (16,203)    0.4
income taxes
 Income tax
expense        668         (3,274)     120.4     (6,501)     (6,565)     1.0
(benefit)
 Net income  $ 1,175     $ (5,074)   123.2     $ (9,634)   $ (9,638)   -
(loss)
 Return on   0.44      % (1.71)    % 215    bp (0.89)    % (0.82)    % (7)     bp
average assets
 Return on   4.50        (17.15)     2,165     (8.64)      (8.07)      (57)
average equity
 Return on
average        5.53        (19.73)     2,526     (9.92)      (9.14)      (78)
tangible
equity (1)
 Net
interest       3.47        3.02        45        3.48        3.23        25
margin
 Efficiency  81.72       87.89       (617)     77.59       77.17       42
ratio - GAAP
 Efficiency
ratio -        81.14       77.77       337       77.43       75.16       227
Non-GAAP (1)
PER SHARE DATA
 Basic net
income (loss)  $ 0.14      $ (0.60)    123.3  %  $ (1.14)    $ (1.14)    -       %
per common
share
 Diluted net
income (loss)  0.14        (0.60)      123.3     (1.14)      (1.14)      -
per common
share
 Dividends
paid per       -           -           -         -           0.01        (100.0)
common share
 Book value
per common     12.19       13.48       (9.6)
share at
period end
 Tangible
book value per
common share   10.31       11.56       (10.8)
at period end
(1)
 Market
value at       9.22        5.39        71.1
period end
 Market
range:
 High      9.45        6.98        35.4      9.45        7.45        26.8
 Low       8.50        4.65        82.8      5.20        4.65        11.8
AVERAGE
BALANCE SHEET
DATA
 Loans       $ 718,070   $ 799,512   (10.2) %  $ 764,659   $ 814,167   (6.1)   %
 Securities  145,181     144,459     0.5       139,241     137,686     1.1
 Earning     982,519     1,108,585   (11.4)    1,006,311   1,097,851   (8.3)
assets
 Assets      1,060,315   1,183,135   (10.4)    1,081,127   1,172,452   (7.8)
 Deposits    938,293     1,042,842   (10.0)    950,332     1,028,809   (7.6)

Stockholders'  103,507     117,700     (12.1)    111,445     119,359     (6.6)
equity
CREDIT QUALITY
DATA AT PERIOD
END
 Net         $ 1,050     $ 6,614     (84.1) %  $ 33,050    $ 26,042    26.9    %
charge-offs
 Nonaccrual
loans
excluding      $ 14,626    $ 36,474    (59.9)
nonaccrual
loans held for
sale (hfs)
 Loans 90
days past due  270         460         (41.3)
and still
accruing
 Other real  3,779       7,659       (50.7)
estate owned
 Total
nonperforming
assets         18,675      44,593      (58.1)
excluding
nonaccrual
loans hfs
 Nonaccrual  3,521       -           -
loans hfs
 Total
nonperforming
assets         $ 22,196    $ 44,593    (50.2)
including
nonaccrual
loans hfs
 Accruing
troubled debt  $ 26,088    $ 52,353    (50.2)
restructurings
(TDRs)
 Total
nonperforming
assets and
accruing TDRs  $ 44,763    $ 96,946    (53.8)
excluding
nonaccrual
loans hfs
 Nonaccrual  3,521       -           -
loans hfs
 Total
nonperforming
assets and
accruing TDRs  $ 48,284    $ 96,946    (50.2)
including
nonaccrual
loans hfs
(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 Ended    For the Twelve Months
                                                      Ended
                        December 31,                  December 31,
                        2013      2012   Change       2013     2012  Change
CAPITAL AND CREDIT
QUALITY RATIOS
 Average equity to    9.76   %  9.95   %  (19)   bp 10.31  % 10.18 %  13  bp
average assets
 Average tangible
equity to average       8.38      8.69      (31)      8.95     8.90     5
tangible assets (1)
 Annualized net
charge-offs to average  0.58      3.29      (271)     4.32     3.20     112
loans
 Allowance for credit
losses as a percent of:
 Period-end loans     1.51      2.04      (53)
 Nonaccrual loans
excluding nonaccrual    73.33     43.84     2,949
loans hfs
 Nonaccrual loans
including nonaccrual    59.10     43.84     1,526
loans hfs
 Nonperforming assets
excluding nonaccrual    57.43     35.86     2,157
loans hfs
 Nonperforming assets
including nonaccrual    48.32     35.86     1,246
loans hfs
 Accruing TDRs        41.11     30.54     1,057
 Nonperforming assets
and accruing TDRs       23.96     16.49     747
excluding nonaccrual
loans hfs
 Nonperforming assets
and accruing TDRs       22.21     16.49     572
including nonaccrual
loans hfs
 As a percent of
total loans:
 Nonaccrual loans
excluding nonaccrual    2.05      4.65      (260)
loans hfs
 Accruing TDRs        3.66      6.67      (301)
 Nonaccrual loans and
accruing TDRs excluding 5.71      11.32     (561)
nonaccrual loans hfs
 As a percent of
total loans+other real
estate owned:
 Nonperforming assets
excluding nonaccrual    2.61      5.63      (302)
loans hfs
 Nonperforming assets
and accruing TDRs       6.25      12.23     (598)
excluding nonaccrual
loans hfs
 As a percent of
total assets:
 Nonaccrual loans
excluding nonaccrual    1.39      3.08      (169)
loans hfs
 Nonaccrual loans
including nonaccrual    1.72      3.08      (136)
loans hfs
 Nonperforming assets
excluding nonaccrual    1.77      3.76      (199)
loans hfs
 Nonperforming assets
including nonaccrual    2.11      3.76      (165)
loans hfs
 Accruing TDRs        2.47      4.41      (194)
 Nonperforming
assets and accruing     4.25      8.18      (393)
TDRs excluding
nonaccrual loans hfs
 Nonperforming assets
and accruing TDRs       4.58      8.18      (360)
including nonaccrual
loans hfs
(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)
                                                                December 31,
                                                                2013
                                   December 31,  December 31,   compared to
                                   2013          2012           December 31,
                                                                2012
ASSETS
 Cash and due from banks         $ 21,238      $ 26,579       (20.1)       %
 Interest-bearing deposits with  109,384       164,864        (33.7)
other banks
 Federal funds sold              468           8,750          (94.7)
 Investments available for sale  147,101       145,508        1.1
(at fair value)
 Investments held to maturity    5,185         2,657          95.1
 Loans held for sale             3,521         -              -
 Loans                           711,919       785,082        (9.3)
 Less: allowance for credit      (10,725)      (15,991)       (32.9)
losses
 Loans, net                      701,194       769,091        (8.8)
 Premises and equipment, net     15,198        15,593         (2.5)
 Goodwill                        12,454        12,454         -
 Other intangible assets, net    3,520         3,816          (7.8)
 Other real estate owned, net    3,779         7,659          (50.7)
 Other assets                    31,082        28,836         7.8
 Total assets           $ 1,054,124   $ 1,185,807    (11.1)
LIABILITIES
 Noninterest-bearing deposits    $ 172,797     $ 153,992      12.2
 Interest-bearing deposits       760,671       895,281        (15.0)
 Total deposits            933,468       1,049,273      (11.0)
 Short-term borrowings           10,140        13,761         (26.3)
 Accrued expenses and other      7,217         8,747          (17.5)
liabilities
 Total liabilities      950,825       1,071,781      (11.3)
STOCKHOLDERS' EQUITY
 Common stock, par value $0.01;
authorized
 35,000,000 shares              85            85             -
 Additional paid in capital      32,207        32,155         0.2
 Retained earnings               71,444        81,078         (11.9)
 Accumulated other comprehensive (437)         708            (161.7)
(loss) income
 Total stockholders'    103,299       114,026        (9.4)
equity
 Total liabilities and  $ 1,054,124   $ 1,185,807    (11.1)
stockholders' equity
Period-end common shares           8,471         8,457          0.2
outstanding
Book value per common share        $ 12.19       $ 13.48        (9.6)

Shore Bancshares,                                                   Page 7 of
Inc.                                                                13
Consolidated
Statements of
Operations
(In thousands,
except per share
data)
                  For the Three Months Ended   For the Twelve Months Ended
                  December 31,                 December 31,
                  2013      2012      %        2013       2012      % Change
                                      Change
INTEREST INCOME
 Interest and   $ 9,242   $ 10,193  (9.3)  % $ 39,058   $ 42,698  (8.5)    %
fees on loans
 Interest and
dividends on
investment
securities:
 Taxable     504       666       (24.3)   2,072      2,815     (26.4)
 Tax-exempt  3         12        (75.0)   17         104       (83.7)
 Interest on
federal funds     1         3         (66.7)   4          10        (60.0)
sold
 Interest on
deposits with     57        86        (33.7)   200        274       (27.0)
other banks
 Total 9,807     10,960    (10.5)   41,351     45,901    (9.9)
interest income
INTEREST EXPENSE
 Interest on    1,230     2,570     (52.1)   6,448      10,501    (38.6)
deposits
 Interest on
short-term        7         9         (22.2)   27         45        (40.0)
borrowings
 Interest on    -         -         -        -          16        (100.0)
long-term debt
 Total 1,237     2,579     (52.0)   6,475      10,562    (38.7)
interest expense
NET INTEREST      8,570     8,381     2.3      34,876     35,339    (1.3)
INCOME
Provision for     474       9,650     (95.1)   27,784     27,745    0.1
credit losses
NET INTEREST
INCOME (LOSS)
AFTER PROVISION
FOR CREDIT       8,096     (1,269)   738.0    7,092      7,594     (6.6)
LOSSES
NONINTEREST
INCOME
 Service
charges on        599       653       (8.3)    2,371      2,551     (7.1)
deposit accounts
 Trust and
investment fee    429       365       17.5     1,613      1,644     (1.9)
income
 Investment     -         -         -        913        278       228.4
securities gains
 Insurance
agency            2,477     2,292     8.1      10,647     9,814     8.5
commissions
 Loss on
termination of    -         (1,339)   100.0    (1,306)    (1,339)   2.5
cash flow hedge
 Other
noninterest       710       635       11.8     3,221      2,810     14.6
income
 Total
noninterest       4,215     2,606     61.7     17,459     15,758    10.8
income
NONINTEREST
EXPENSE
 Salaries and   4,336     4,240     2.3      17,346     17,418    (0.4)
wages
 Employee       983       923       6.5      4,094      3,994     2.5
benefits
 Occupancy      569       609       (6.6)    2,344      2,559     (8.4)
expense
 Furniture and  252       235       7.2      1,020      963       5.9
equipment expense
 Data           773       654       18.2     2,900      2,717     6.7
processing
 Directors'     92        107       (14.0)   354        474       (25.3)
fees
 Amortization
of intangible     74        74        -        296        392       (24.5)
assets
 Insurance
agency            470       387       21.4     1,798      1,391     29.3
commissions
expense
 FDIC insurance 613       387       58.4     1,813      1,380     31.4
premium expense
 Write-downs of
other real estate 371       251       47.8     1,318      1,328     (0.8)
owned
 Other
noninterest       1,935     1,818     6.4      7,403      6,939     6.7
expenses
 Total
noninterest       10,468    9,685     8.1      40,686     39,555    2.9
expense
Income (loss)
before income     1,843     (8,348)   122.1    (16,135)   (16,203)  0.4
taxes
Income tax        668       (3,274)   120.4    (6,501)    (6,565)   1.0
expense (benefit)
NET INCOME (LOSS) $ 1,175   $ (5,074) 123.2    $ (9,634)  $ (9,638) -
Weighted average
shares            8,463     8,457     0.1      8,461      8,457     -
outstanding -
basic
Weighted average
shares            8,474     8,457     0.2      8,461      8,457     -
outstanding -
diluted
Basic net income
(loss) per common $ 0.14    $ (0.60)  123.3    $ (1.14)   $ (1.14)  -
share
Diluted net
income (loss) per 0.14      (0.60)    123.3    (1.14)     (1.14)    -
common share
Dividends paid    -         -         -        -          0.01      (100.0)
per common share

Shore Bancshares,                                                                          Page 8
Inc.                                                                                       of 13
Consolidated
Average Balance
Sheets
(Dollars in
thousands)
                    For the Three Months Ended              For the Twelve Months Ended
                    December 31,                            December 31,
                    2013                2012                2013                2012
                    Average    Yield/   Average    Yield/   Average    Yield/   Average    Yield/
                    balance    rate     balance    rate     balance    rate     balance    rate
Earning assets
 Loans            $ 718,070  5.07   % $ 799,512  5.09   % $ 764,659  5.11   % $ 814,167  5.26   %
 Loans held for   15,047     2.38     -          -        3,857      2.34     -          -
sale
 Investment
securities
 Taxable        144,699    1.38     143,137    1.85     138,701    1.49     134,697    2.09
 Tax-exempt     482        4.39     1,322      5.05     540        4.84     2,989      5.25
 Federal funds    2,692      0.06     7,782      0.12     3,850      0.10     10,185     0.10
sold
 Interest-bearing 101,529    0.22     156,832    0.22     94,704     0.21     135,813    0.20
deposits
 Total earning  982,519    3.97   % 1,108,585  3.94   % 1,006,311  4.12   % 1,097,851  4.20   %
assets
Cash and due from   20,900              21,258              22,603              20,256
banks
Other assets        70,048              67,596              67,724              68,813
Allowance for       (13,152)            (14,304)            (15,511)            (14,468)
credit losses
Total assets        $                   $                   $                   $
                    1,060,315           1,183,135           1,081,127           1,172,452
Interest-bearing
liabilities
 Demand deposits  $ 176,492  0.15   % $ 169,398  0.18   % $ 171,244  0.16   % $ 160,741  0.18   %
 Money market and
savings deposits    211,294    0.12     281,593    1.21     221,808    0.49     279,126    1.17
(1)
 Certificates of
deposit $100,000    190,117    1.16     231,232    1.40     202,053    1.28     238,241    1.44
or more
 Other time       188,645    1.14     204,213    1.59     195,045    1.29     204,644    1.70
deposits

Interest-bearing    766,548    0.64     886,436    1.15     790,150    0.82     882,752    1.19
deposits
 Short-term       10,505     0.23     13,573     0.27     10,980     0.24     14,976     0.30
borrowings
 Long-term debt   -          -        -          -        -          -        341        4.61
 Total
interest-bearing    777,053    0.63   % 900,009    1.14   % 801,130    0.81   % 898,069    1.18   %
liabilities
Noninterest-bearing 171,745             156,406             160,182             146,057
deposits
Accrued expenses
and other           8,010               9,020               8,370               8,967
liabilities
Stockholders'       103,507             117,700             111,445             119,359
equity
Total liabilities   $                   $                   $                   $
and stockholders'   1,060,315           1,183,135           1,081,127           1,172,452
equity
Net interest spread            3.34   %            2.80   %            3.31   %            3.02   %
Net interest margin            3.47   %            3.02   %            3.48   %            3.23   %

    Interest on money market and savings deposits includes an adjustment to
    expense related to interest rate caps and the hedged deposits associated
    with them. Interest expense for the fourth quarter of 2013 does not
(1) reflect this adjustment because the interest rate caps were terminated in
    June of 2013. However, this adjustment increased interest expense $552
    thousand for the fourth quarter of 2012, $695 thousand for fiscal year
    2013 and $2.0 million for fiscal year 2012.

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

Taxable-equivalent $ 8,595     $ 8,852     $ 9,028     $ 8,504     $ 8,413     (2.9)    %  2.2      %
net interest
income
 Less:
Taxable-equivalent 25          24          27          27          32          4.2         (21.9)
adjustment
 Net interest    8,570       8,828       9,001       8,477       8,381       (2.9)       2.3
income
 Provision for   474         22,460      2,700       2,150       9,650       (97.9)      (95.1)
credit losses
 Noninterest     4,215       4,792       3,962       4,490       2,606       (12.0)      61.7
income
 Noninterest     10,468      9,968       9,759       10,491      9,685       5.0         8.1
expense
 Income (loss)
before income      1,843       (18,808)    504         326         (8,348)     109.8       122.1
taxes
 Income tax      668         (7,416)     143         104         (3,274)     109.0       120.4
expense (benefit)
 Net income      $ 1,175     $           $ 361       $ 222       $ (5,074)   110.3       123.2
(loss)                         (11,392)
 Return on       0.44      % (4.24)    % 0.13      % 0.08      % (1.71)    % 468      bp 215      bp
average assets
 Return on       4.50        (39.68)     1.27        0.79        (17.15)     4,418       2,165
average equity
 Return on
average tangible   5.53        (46.03)     1.66        1.11        (19.73)     5,156       2,526
equity (1)
 Net interest    3.47        3.54        3.60        3.30        3.02        (7)         45
margin
 Efficiency      81.72       73.06       75.13       80.74       87.89       866         (617)
ratio - GAAP
 Efficiency
ratio - Non-GAAP   81.14       74.13       74.45       80.17       77.77       701         337
(1)
PER SHARE DATA
 Basic net
income (loss) per  $ 0.14      $ (1.35)    $ 0.04      $ 0.03      $ (0.60)    110.4    %  123.3    %
common share
 Diluted net
income (loss) per  0.14        (1.35)      0.04        0.03        (0.60)      110.4       123.3
common share
 Dividends paid  -           -           -           -           -           -           -
per common share
 Book value per
common share at    12.19       12.06       13.43       13.51       13.48       1.1         (9.6)
period end
 Tangible book
value per common   10.31       10.16       11.52       11.60       11.56       1.5         (10.8)
share at period
end (1)
 Market value at 9.22        8.80        7.36        6.79        5.39        4.8         71.1
period end
 Market range:
 High          9.45        9.06        7.75        6.91        6.98        4.3         35.4
 Low           8.50        7.06        5.97        5.20        4.65        20.4        82.8
AVERAGE BALANCE
SHEET DATA
 Loans           $ 718,070   $ 772,008   $ 785,442   $ 783,757   $ 799,512   (7.0)    %  (10.2)   %
 Securities      145,181     124,020     141,193     146,756     144,459     17.1        0.5
 Earning assets  982,519     993,068     1,005,474   1,044,755   1,108,585   (1.1)       (11.4)
 Assets          1,060,315   1,064,919   1,077,852   1,122,310   1,183,135   (0.4)       (10.4)
 Deposits        938,293     932,867     943,577     987,325     1,042,842   0.6         (10.0)
 Stockholders'   103,507     113,904     114,208     114,250     117,700     (9.1)       (12.1)
equity
CREDIT QUALITY
DATA AT PERIOD END
 Net charge-offs $ 1,050     $ 26,882    $ 2,712     $ 2,406     $ 6,614     (96.1)   %  (84.1)   %
 Nonaccrual
loans excluding
nonaccrual loans   $ 14,626    $ 17,501    $ 34,818    $ 31,813    $ 36,474    (16.4)      (59.9)
held for sale
(hfs)
 Loans 90 days
past due and still 270         9           3           22          460         2,900.0     (41.3)
accruing
 Other real      3,779       5,776       6,408       8,366       7,659       (34.6)      (50.7)
estate owned
 Total
nonperforming
assets excluding   18,675      23,286      41,229      40,201      44,593      (19.8)      (58.1)
nonaccrual loans
hfs
 Nonaccrual      3,521       7,265       -           -           -           (51.5)      -
loans hfs
 Total
nonperforming
assets including   $ 22,196    $ 30,551    $ 41,229    $ 40,201    $ 44,593    (27.3)      (50.2)
nonaccrual loans
hfs
 Accruing
troubled debt
restructurings     $ 26,088    $ 29,439    $ 50,278    $ 52,545    $ 52,353    (11.4)      (50.2)
(TDRs) excluding
TDRs hfs
 Accruing TDRs   -           14,842      -           -           -           (100.0)     -
hfs
 Total accruing
TDRs including     $ 26,088    $ 44,281    $ 50,278    $ 52,545    $ 52,353    (41.1)      (50.2)
TDRs hfs
 Total
nonperforming
assets and
accruing TDRs      $ 44,763    $ 52,725    $ 91,507    $ 92,746    $ 96,946    (15.1)      (53.8)
excluding
nonaccrual loans
and TDRs hfs
 Nonaccrual      3,521       22,107      -           -           -           (84.1)      -
loans and TDRs hfs
 Total
nonperforming
assets and
accruing TDRs      $ 48,284    $ 74,832    $ 91,507    $ 92,746    $ 96,946    (35.5)      (50.2)
including
nonaccrual loans
and TDRs hfs
(1) See the
reconciliation
table on page 13
of 13.

Shore                                                              Page 10 of
Bancshares,                                                        13
Inc.
Financial
Highlights By
Quarter
(Dollars in
thousands,
except per
share data)
                                                       4Q 13       4Q 13
                                                       compared    compared
                                                       to          to
               4Q 13   3Q 13   2Q 13   1Q 13   4Q 12   3Q 13       4Q 12
CAPITAL AND
CREDIT QUALITY
RATIOS
 Average
equity to      9.76  % 10.70 % 10.60 % 10.18 % 9.95  % (94)     bp (19)     bp
average assets
 Average
tangible
equity to      8.38    9.33    9.23    8.86    8.69    (95)        (31)
average
tangible
assets (1)
 Annualized
net            0.58    13.81   1.38    1.25    3.29    (1,323)     (271)
charge-offs to
average loans
 Allowance
for credit
losses as a
percent of:
 Period-end  1.51    1.57    2.01    2.00    2.04    (6)         (53)
loans
 Nonaccrual
loans
excluding      73.33   64.57   45.16   49.46   43.84   876         2,949
nonaccrual
loans hfs
 Nonaccrual
loans
including      59.10   45.63   45.16   49.46   43.84   1,347       1,526
nonaccrual
loans hfs

Nonperforming
assets         57.43   48.53   38.14   39.14   35.86   890         2,157
excluding
nonaccrual
loans hfs

Nonperforming
assets         48.32   36.99   38.14   39.14   35.86   1,133       1,246
including
nonaccrual
loans hfs
 Accruing
TDRs excluding 41.11   38.39   31.27   29.95   30.54   272         1,057
TDRs hfs
 Accruing
TDRs including 41.11   25.52   31.27   29.95   30.54   1,559       1,057
TDRs hfs

Nonperforming
assets and
accruing TDRs  23.96   21.43   17.18   16.97   16.49   253         747
excluding
nonaccrual
loans and TDRs
hfs

Nonperforming
assets and
accruing TDRs  22.21   15.10   17.18   16.97   16.49   711         572
including
nonaccrual
loans and TDRs
hfs
 As a
percent of
total loans:
 Nonaccrual
loans
excluding      2.05    2.44    4.45    4.05    4.65    (39)        (260)
nonaccrual
loans hfs
 Accruing
TDRs excluding 3.66    4.10    6.43    6.69    6.67    (44)        (301)
TDRs hfs
 Nonaccrual
loans and
accruing TDRs
excluding      5.71    6.54    10.88   10.74   11.32   (83)        (561)
nonaccrual
loans and TDRs
hfs
 As a
percent of
total
loans+other
real estate
owned:

Nonperforming
assets         2.61    3.21    5.23    5.06    5.63    (60)        (302)
excluding
nonaccrual
loans hfs

Nonperforming
assets and
accruing TDRs  6.25    7.28    11.60   11.68   12.23   (103)       (598)
excluding
nonaccrual
loans and
TDRs hfs
 As a
percent of
total assets:
 Nonaccrual
loans
excluding      1.39    1.66    3.30    2.88    3.08    (27)        (169)
nonaccrual
loans hfs
 Nonaccrual
loans
including      1.72    2.36    3.30    2.88    3.08    (64)        (136)
nonaccrual
loans hfs

Nonperforming
assets         1.77    2.21    3.91    3.64    3.76    (44)        (199)
excluding
nonaccrual
loans hfs

Nonperforming
assets         2.11    2.91    3.91    3.64    3.76    (80)        (165)
including
nonaccrual
loans hfs
 Accruing
TDRs excluding 2.47    2.80    4.77    4.76    4.41    (33)        (194)
TDRs hfs
 Accruing
TDRs including 2.47    4.21    4.77    4.76    4.41    (174)       (194)
TDRs hfs

Nonperforming
assets and
accruing TDRs  4.25    5.01    8.68    8.40    8.18    (76)        (393)
excluding
nonaccrual
loans and TDRs
hfs

Nonperforming
assets and
accruing TDRs  4.58    7.12    8.68    8.40    8.18    (254)       (360)
including
nonaccrual
loans and TDRs
hfs
(1) See the
reconciliation
table on page
13 of 13.

Shore                                                                Page 11 of
Bancshares,                                                          13
Inc.
Consolidated
Statements
of
Operations
By Quarter
(In
thousands,
except per
share data)
                                                          4Q 13      4Q 13
                                                          compared   compared
                                                          to         to
              4Q 13   3Q 13     2Q 13    1Q 13   4Q 12    3Q 13      4Q 12
INTEREST
INCOME
 Interest   $                 $        $       $
and fees on   9,242   $ 9,767   10,142   9,907   10,193   (5.4)    % (9.3)    %
loans
 Interest
and dividends
on investment
securities:
 Taxable 504     357       568      643     666      41.2       (24.3)
         3       5         4        5       12       (40.0)     (75.0)
Tax-exempt
 Interest
on federal    1       -         1        2       3        -          (66.7)
funds sold
 Interest
on deposits   57      53        40       50      86       7.5        (33.7)
with other
banks

Total         9,807   10,182    10,755   10,607  10,960   (3.7)      (10.5)
interest
income
INTEREST
EXPENSE
 Interest   1,230   1,348     1,748    2,122   2,570    (8.8)      (52.1)
on deposits
 Interest
on short-term 7       6         6        8       9        16.7       (22.2)
borrowings

Total         1,237   1,354     1,754    2,130   2,579    (8.6)      (52.0)
interest
expense
NET INTEREST  8,570   8,828     9,001    8,477   8,381    (2.9)      2.3
INCOME
Provision for 474     22,460    2,700    2,150   9,650    (97.9)     (95.1)
credit losses
NET INTEREST
INCOME (LOSS)
AFTER
PROVISION
FOR CREDIT   8,096   (13,632)  6,301    6,327   (1,269)  159.4      738.0
LOSSES
NONINTEREST
INCOME
 Service
charges on    599     600       600      572     653      (0.2)      (8.3)
deposit
accounts
 Trust and
investment    429     401       393      390     365      7.0        17.5
fee income
 Investment
securities    -       -         913      -       -        -          -
gains
 Insurance
agency        2,477   2,724     2,633    2,813   2,292    (9.1)      8.1
commissions
 Loss on
termination   -       -         (1,306)  -       (1,339)  -          100.0
of cash flow
hedge
 Other
noninterest   710     1,067     729      715     635      (33.5)     11.8
income

Total         4,215   4,792     3,962    4,490   2,606    (12.0)     61.7
noninterest
income
NONINTEREST
EXPENSE
 Salaries   4,336   4,420     4,307    4,283   4,240    (1.9)      2.3
and wages
 Employee   983     971       1,006    1,134   923      1.2        6.5
benefits
 Occupancy  569     566       612      597     609      0.5        (6.6)
expense
 Furniture
and equipment 252     275       243      250     235      (8.4)      7.2
expense
 Data       773     718       706      703     654      7.7        18.2
processing
 Directors' 92      86        55       121     107      7.0        (14.0)
fees

Amortization  74      74        74       74      74       -          -
of intangible
assets
 Insurance
agency        470     409       458      461     387      14.9       21.4
commissions
expense
 FDIC
insurance     613     467       367      366     387      31.3       58.4
premium
expense

Write-downs   371     219       56       672     251      69.4       47.8
of other real
estate owned
 Other
noninterest   1,935   1,763     1,875    1,830   1,818    9.8        6.4
expenses

Total         10,468  9,968     9,759    10,491  9,685    5.0        8.1
noninterest
expense
Income (loss)
before income 1,843   (18,808)  504      326     (8,348)  109.8      122.1
taxes
Income tax
expense       668     (7,416)   143      104     (3,274)  109.0      120.4
(benefit)
NET INCOME    $       $         $ 361    $ 222   $        110.3      123.2
(LOSS)        1,175   (11,392)                   (5,074)
Weighted
average
shares        8,463   8,461     8,461    8,458   8,457    -          0.1
outstanding -
basic
Weighted
average
shares        8,474   8,461     8,465    8,458   8,457    0.2        0.2
outstanding -
diluted
Basic net
income (loss) $ 0.14  $ (1.35)  $ 0.04   $ 0.03  $        110.4      123.3
per common                                       (0.60)
share
Diluted net
income (loss) 0.14    (1.35)    0.04     0.03    (0.60)   110.4      123.3
per common
share
Dividends
paid per      -       -         -        -       -        -          -
common share

Shore Bancshares,                                                                                                                  Page 12 of
Inc.                                                                                                                               13
Consolidated Average Balance
Sheets By Quarter
(Dollars in
thousands)
                                                                                                                        Average balance
                                                                                                                        4Q 13      4Q 13
                                                                                                                        compared   compared
                                                                                                                        to         to
                    4Q 13               3Q 13               2Q 13               1Q 13               4Q 12               3Q 13      4Q 12
                    Average    Yield/   Average    Yield/   Average    Yield/   Average    Yield/   Average    Yield/
                    balance    rate     balance    rate     balance    rate     balance    rate     balance    rate
Earning assets
 Loans            $ 718,070  5.07   % $ 772,008  5.03   % $ 785,442  5.19   % $ 783,757  5.14   % $ 799,512  5.09   % (7.0)    % (10.2)   %
 Loans held for   15,047     2.38     -          -        -          -        -          -        -          -        -          -
sale
 Investment
securities
 Taxable        144,699    1.38     123,499    1.15     140,614    1.62     146,176    1.78     143,137    1.85     17.2       1.1
 Tax-exempt     482        4.39     521        5.27     579        4.81     580        4.85     1,322      5.05     (7.5)      (63.5)
 Federal funds    2,692      0.06     1,618      0.07     2,992      0.10     8,184      0.11     7,782      0.12     66.4       (65.4)
sold
 Interest-bearing 101,529    0.22     95,422     0.22     75,847     0.21     106,058    0.19     156,832    0.22     6.4        (35.3)
deposits
 Total earning  982,519    3.97   % 993,068    4.08   % 1,005,474  4.30   % 1,044,755  4.13   % 1,108,585  3.94   % (1.1)      (11.4)
assets
Cash and due from   20,900              22,088              22,510              24,966              21,258              (5.4)      (1.7)
banks
Other assets        70,048              65,001              66,967              69,185              67,596              7.8        3.6
Allowance for       (13,152)            (15,238)            (17,099)            (16,596)            (14,304)            (13.7)     (8.1)
credit losses
Total assets        $                   $                   $                   $                   $                   (0.4)      (10.4)
                    1,060,315           1,064,919           1,077,852           1,122,310           1,183,135
Interest-bearing
liabilities
 Demand deposits  $ 176,492  0.15   % $ 172,143  0.16   % $ 162,589  0.15   % $ 173,714  0.17   % $ 169,398  0.18   % 2.5        4.2
 Money market and
savings deposits    211,294    0.12     207,162    0.12     225,117    0.67     244,182    0.97     281,593    1.21     2.0        (25.0)
(1)
 Certificates of
deposit $100,000    190,117    1.16     198,495    1.23     203,641    1.32     216,288    1.39     231,232    1.40     (4.2)      (17.8)
or more
 Other time       188,645    1.14     192,878    1.24     197,644    1.30     201,171    1.47     204,213    1.59     (2.2)      (7.6)
deposits

Interest-bearing    766,548    0.64     770,678    0.69     788,991    0.89     835,355    1.03     886,436    1.15     (0.5)      (13.5)
deposits
 Short-term       10,505     0.23     10,695     0.23     10,752     0.24     11,987     0.27     13,573     0.27     (1.8)      (22.6)
borrowings
 Total
interest-bearing    777,053    0.63   % 781,373    0.69   % 799,743    0.88   % 847,342    1.02   % 900,009    1.14   % (0.6)      (13.7)
liabilities
Noninterest-bearing 171,745             162,189             154,586             151,970             156,406             5.9        9.8
deposits
Accrued expenses
and other           8,010               7,453               9,315               8,748               9,020               7.5        (11.2)
liabilities
Stockholders'       103,507             113,904             114,208             114,250             117,700             (9.1)      (12.1)
equity
Total liabilities   $                   $                   $                   $                   $
and stockholders'   1,060,315           1,064,919           1,077,852           1,122,310           1,183,135           (0.4)      (10.4)
equity
Net interest spread            3.34   %            3.39   %            3.42   %            3.11   %            2.80   %
Net interest margin            3.47   %            3.54   %            3.60   %            3.30   %            3.02   %

    Interest on money market and savings deposits includes an adjustment to
    expense related to interest rate caps and the hedged deposits associated
    with them. Interest expense for the fourth and third quarters of 2013 does
(1) not reflect this adjustment because the interest rate caps were terminated
    in June of 2013. However, this adjustment increased interest expense $279
    thousand for the second quarter of 2013, $416 thousand for the first
    quarter of 2013 and $552 thousand for the fourth quarter of 2012.

Shore Bancshares,                                                                            Page 13 of
Inc.                                                                                         13
Reconciliation of
Generally Accepted
Accounting
Principles (GAAP)
and Non-GAAP
Measures
(In thousands,
except per share
data)
                                                                                YTD          YTD
                    4Q 13       3Q 13       2Q 13       1Q 13       4Q 12       12/31/2013   12/31/2012
The following
reconciles return
on average equity
and return on
average tangible
equity (Note 1):
Net income (loss)   $ 1,175     $           $ 361       $ 222       $ (5,074)   $ (9,634)    $ (9,638)
                                (11,392)
Net income (loss) - $ 4,662     $           $ 1,448     $ 900       $           $ (9,634)    $ (9,638)
annualized (A)                  (45,197)                            (20,186)
Net income (loss),
excluding net       $ 1,220     $           $ 406       $ 267       $ (5,029)   $ (9,455)    $ (9,401)
amortization of                 (11,347)
intangible assets
Net income (loss),
excluding net
amortization of
intangible
assets -           $ 4,840     $           $ 1,628     $ 1,083     $           $ (9,455)    $ (9,401)
annualized (B)                  (45,018)                            (20,007)
Average
stockholders'       $ 103,507   $ 113,904   $ 114,208   $ 114,250   $ 117,700   $ 111,445    $ 119,359
equity (C)
Less: Average
goodwill and other  (16,018)    (16,092)    (16,166)    (16,242)    (16,313)    (16,129)     (16,454)
intangible assets
Average tangible    $ 87,489    $ 97,812    $ 98,042    $ 98,008    $ 101,387   $ 95,316     $ 102,905
equity (D)
Return on average
equity (GAAP)       4.50      % (39.68)   % 1.27      % 0.79      % (17.15)   % (8.64)     % (8.07)     %
(A)/(C)
Return on average
tangible equity     5.53      % (46.03)   % 1.66      % 1.11      % (19.73)   % (9.92)     % (9.14)     %
(Non-GAAP) (B)/(D)
The following
reconciles GAAP
efficiency ratio
and non-GAAP
efficiency ratio
(Note 2):
Noninterest expense $ 10,468    $ 9,968     $ 9,759     $ 10,491    $ 9,685     $ 40,686     $ 39,555
(E)
Less: Amortization
of intangible       (74)        (74)        (74)        (74)        (74)        (296)        (392)
assets
 Other
nonrecurring        -           -           49          -           -           49           -
adjustments
Adjusted
noninterest expense $ 10,394    $ 9,894     $ 9,734     $ 10,417    $ 9,611     $ 40,439     $ 39,163
(F)
Taxable-equivalent
net interest income $ 8,595     $ 8,852     $ 9,028     $ 8,504     $ 8,413     $ 34,979     $ 35,502
(G)
Nonrecurring        -           -           (308)       -           -           (308)        -
adjustment
Taxable-equivalent
net interest
income excluding    $ 8,595     $ 8,852     $ 8,720     $ 8,504     $ 8,413     $ 34,671     $ 35,502
nonrecurring
adjustment (H)
Noninterest income  $ 4,215     $ 4,792     $ 3,962     $ 4,490     $ 2,606     $ 17,459     $ 15,758
(I)
Less: Investment
securities          -           -           (913)       -           -           (913)        (278)
(gains)/losses
 Other
nonrecurring        -           (297)       1,306       -           1,339       1,009        1,122
(gains)/losses
Adjusted
noninterest income  $ 4,215     $ 4,495     $ 4,355     $ 4,490     $ 3,945     $ 17,555     $ 16,602
(J)
Efficiency ratio    81.72     % 73.06     % 75.13     % 80.74     % 87.89     % 77.59      % 77.17      %
(GAAP) (E)/(G)+(I)
Efficiency ratio
(Non-GAAP)          81.14     % 74.13     % 74.45     % 80.17     % 77.77     % 77.43      % 75.16      %
(F)/(H)+(J)
The following
reconciles book
value per common
share and tangible
book value per
common share (Note
1):
Stockholders'       $ 103,299   $ 102,001   $ 113,594   $ 114,348   $ 114,026
equity (K)
Less: Goodwill and
other intangible    (15,974)    (16,048)    (16,122)    (16,196)    (16,270)
assets
Tangible equity (L) $ 87,325    $ 85,953    $ 97,472    $ 98,152    $ 97,756
Shares outstanding  8,471       8,461       8,461       8,461       8,457
(M)
Book value per
common share (GAAP) $ 12.19     $ 12.06     $ 13.43     $ 13.51     $ 13.48
(K)/(M)
Tangible book value
per common share    $ 10.31     $ 10.16     $ 11.52     $ 11.60     $ 11.56
(Non-GAAP) (L)/(M)
The following
reconciles average
equity to average
assets and
average tangible
equity to average
tangible assets
(Note 1):
Average
stockholders'       $ 103,507   $ 113,904   $ 114,208   $ 114,250   $ 117,700   $ 111,445    $ 119,359
equity (N)
Less: Average
goodwill and other  (16,018)    (16,092)    (16,166)    (16,242)    (16,313)    (16,129)     (16,454)
intangible assets
Average tangible    $ 87,489    $ 97,812    $ 98,042    $ 98,008    $ 101,387   $ 95,316     $ 102,905
equity (O)
Average assets (P)  $           $           $           $           $           $            $
                    1,060,315   1,064,919   1,077,852   1,122,310   1,183,135   1,081,127    1,172,452
Less: Average
goodwill and other  (16,018)    (16,092)    (16,166)    (16,242)    (16,313)    (16,129)     (16,454)
intangible assets
Average tangible    $           $           $           $           $           $            $
assets (Q)          1,044,297   1,048,827   1,061,686   1,106,068   1,166,822   1,064,998    1,155,998
Average
equity/average      9.76      % 10.70     % 10.60     % 10.18     % 9.95      % 10.31      % 10.18      %
assets (GAAP)
(N)/(P)
Average tangible
equity/average      8.38      % 9.33      % 9.23      % 8.86      % 8.69      % 8.95       % 8.90       %
tangible assets
(Non-GAAP) (O)/(Q)
Note 1: Management believes that reporting tangible equity and
tangible assets more closely approximates the adequacy of 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.shorebancshares.com
Contact: George Rapp, Chief Financial Officer, 410-763-7800
 
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