EASTON, Md., Oct. 19, 2017 /PRNewswire/ -- Shore Bancshares, Inc. (NASDAQ: SHBI) reported net income of $3.412 million or $0.27 per diluted common share for the third quarter of 2017, compared to net income of $2.352 million or $0.19 per diluted common share for the second quarter of 2017, and net income of $2.411 million or $0.19 per diluted common share for the third quarter of 2016. The Company reported net income of $8.6 million or $0.68 per diluted common share for the first nine months of 2017, compared to net income of $7.1 million or $0.56 per diluted common share for the first nine months of 2016.

When comparing the third quarter of 2017 to the second quarter of 2017, the primary reasons for the improved results were increases in net interest income of $1.4 million, noninterest income of $246 thousand and a reduction in provision for credit losses of $629 thousand. These improvements to income were partially offset by an increase in noninterest expenses of $521 thousand. The increases in both net interest income and noninterest expenses were mainly attributed to a full quarter of operating the three branches acquired from Northwest Bank during the second quarter of 2017. When comparing the third quarter of 2017 to the third quarter of 2016, improved results were due to increases in net interest income of $2.7 million, noninterest income of $418 thousand and a reduction in provision for credit losses of $260 thousand, respectively, offset by an increase in noninterest expenses of $1.5 million. When comparing the first nine months of 2017 to the first nine months of 2016, improved earnings were due to increases in net interest income of $4.9 million and noninterest income of $822 thousand. Noninterest expenses increased $2.6 million, of which $977 thousand related to merger and acquisition costs from the branch purchase.

"We are pleased to report improved earnings for the quarter, which reflected the accretion to earnings from the branch acquisition in the second quarter," said Lloyd L. "Scott" Beatty, Jr., President and Chief Executive Officer. "During the quarter we opened a new branch in Onley, Virginia providing the opportunity to increase loans and deposits while expanding our market presence."

Balance Sheet Review
Total assets were $1.376 billion at September 30, 2017, a $215.9 million, or 18.6%, increase when compared to $1.160 billion at the end of 2016. The primary reason for the increase was the acquisition of three branches in the second quarter of 2017 which consisted of assets which had a balance of $200.3 million at September 30, 2017. Absent the branch acquisition, total assets have increased $15.6 million since December 31, 2016 which include increases in both gross loans of $59.2 million and investment securities of $49.6 million. These increases were funded by a decrease in interest-bearing deposits with other banks of $96.2 million.

Total deposits at September 30, 2017 increased $208.7 million, or 20.9%, when compared to December 31, 2016. The increase was the direct result of the deposits acquired in the recent branch purchase which had a balance of $199.9 million at September 30, 2017. Excluding the acquisition, deposits increased $8.8 million, the result of increases in noninterest bearing deposits of $50.6 million and checking deposits of $21.6 million, which were partially offset by decreases in money market and savings deposits of $22.6 million and time deposits of $40.8 million.

Total stockholders' equity increased $8.3 million, or 5.4%, when compared to the end of 2016. At September 30, 2017, the ratio of total equity to total assets was 11.82% and the ratio of total tangible equity to total tangible assets was 9.67%, lower than the 13.30% and 12.32%, respectively, at December 31, 2016 primarily due to the branch acquisition which significantly increased both tangible and intangible assets.

Review of Quarterly Financial Results
Net interest income was $12.3 million for the third quarter of 2017, compared to $10.9 million for the second quarter of 2017 and $9.7 million for the third quarter of 2016. The increase in net interest income when compared to the second quarter of 2017 and the third quarter of 2016 was primarily due a full quarter of earnings from the loans acquired from the branch purchase in the second quarter of 2017. Total interest income on loans increased $1.3 million, or 12.7% during the third quarter of 2017, which was the direct result of the loans acquired from the branch purchase which carried higher yields than the Company's legacy portfolio, resulting in an increase in yields on average loans of 12 basis points ("bps"). In addition, the yields on total earning assets increased 6bps, while interest-bearing liabilities decreased 1bp, due to utilizing cash received from the purchase to reduce short-term borrowings. These positive variances resulted in a net interest margin of 3.79% for the third quarter of 2017, compared to 3.73% for the second quarter of 2017. The net interest margin improved for the third quarter of 2017 compared to the third quarter of 2016, primarily due to an increase in average loans of $197.6 million and investment securities of $28.2 million, coupled with lower rates paid on interest-bearing deposits and improved credit quality.

The provision for credit losses was $345 thousand for the three months ended September 30, 2017. The comparable amounts were $974 thousand and $605 thousand for the three months ended June 30, 2017 and September 30, 2016, respectively. The decreased level of provision for credit losses when comparing the third quarter of 2017 to the second quarter of 2017 was due to a partial charge-off of a negotiated restructured commercial loan in the second quarter of 2017. The decreased level of provision for credit losses when comparing the third quarter of 2016 was due to lower charge-offs and improved credit quality. Net charge-offs were $182 thousand for the third quarter of 2017, $769 thousand for the second quarter of 2017 and $349 thousand for the third quarter of 2016. The ratio of annualized net charge-offs to average loans was 0.07% for the third quarter of 2017, 0.32% for the second quarter of 2017 and 0.17% for the third quarter of 2016. The ratio of the allowance for credit losses to period-end loans was 0.89% at September 30, 2017, 0.88% at June 30, 2017 and 1.00% at September 30, 2016. The decrease at September 30, 2017 and June 30, 2017 relative to September 30, 2016 primarily reflects the performing loans acquired in the recent branch acquisition.

At September 30, 2017, nonperforming assets were $8.1 million, a decrease of $1.7 million, or 17.1%, when compared to June 30, 2017. Nonaccrual loans declined $868 thousand, or 12.1% which was due to two loans transitioning from nonaccrual troubled debt restructurings ("TDRs") to accruing TDRs which reflected an increase of $1.4 million, or 11.3% compared to June 30, 2017. When comparing September 30, 2017 to September 30, 2016, nonperforming assets decreased $5.6 million, or 41.1%, and accruing TDRs increased $220 thousand, or 1.7%. The positive trend in nonperforming assets when comparing September 30, 2017 to September 30, 2016 resulted from the Company's continued workout efforts. The ratio of nonperforming assets to total assets was 0.59%, 0.72% and 1.19% at September 30, 2017, June 30, 2017 and September 30, 2016, respectively. In addition, the ratio of accruing TDRs to total assets at September 30, 2017 was 0.98%, compared to 0.89% at June 30, 2017 and 1.15% at September 30, 2016.

Total noninterest income for the third quarter of 2017 increased $246 thousand, or 5.9%, when compared to the second quarter of 2017 and increased $418 thousand, or 10.4%, when compared to the third quarter of 2016. The increase from the second quarter of 2017 was primarily due to service charges on deposit accounts for a full quarter on the deposits acquired in the branch purchase, higher insurance agency commissions and an increase on an insurance agency investment included in other noninterest income. The increase from the third quarter of 2016 was due to higher service charges and fees on deposit accounts, higher trust and investment income, higher insurance agency commissions and a positive result on an insurance agency investment, partially offset by higher recognized gains on investment securities in the third quarter of 2016.

Total noninterest expense for the third quarter of 2017 increased $521 thousand, or 5.1%, when compared to the second quarter of 2017 and increased $1.5 million, or 16.3%, when compared to the third quarter of 2016. The increase in noninterest expenses from the second quarter of 2017 was primarily due to a full quarter of operating three additional branches acquired in the second quarter of 2017. The branch purchase resulted in increases in salary and wages, employee benefits, and FDIC insurance premium expense, which were partially offset by lower legal and professional fees which also related to the acquisition. The increases in noninterest expenses for the third quarter of 2017 compared to the third quarter of 2016 were primarily due to operating three additional branches, acquisition costs and increases in employee benefits due to the higher insurance premiums paid for group insurance and higher salaries and wages due to pay increases implemented in the first quarter of 2017.

Review of Nine-Month Financial Results
Net interest income for the first nine months of 2017 was $33.2 million, an increase of $4.9 million, or 17.2% when compared to the first nine months of 2016. The increase was primarily due an increase in average loans of approximately $144.9 million and a decline in rates paid on interest-bearing deposits of 6bps. The increase in volume on loans was the direct result of loans acquired from the branch purchase in the second quarter of 2017 and the organic growth of loans which were funded by lower yielding assets and core deposits acquired from the purchase. These factors resulted in an increase in the yield on total earning assets of 16bps over the first nine months of 2016. This, coupled with higher yields earned on investment securities and two rate increases by the Federal Reserve which impacted interest-bearing deposits with other banks, resulted in a net interest margin of 3.75% for the first nine months of 2017 compared to 3.54% for the first nine months of 2016.

The provisions for credit losses for the nine months ended September 30, 2017 and 2016 were $1.7 million and $1.4 million, respectively, while net charge-offs were $1.2 million and $1.1 million, respectively. The ratio of year-to-date annualized net charge-offs to average loans was 0.16% for the first nine months of 2017 and 0.19% for the first nine months of 2016.

Total noninterest income for the nine months ended September 30, 2017 increased $822 thousand, or 6.5%, when compared to the same period in 2016, primarily due to increases in insurance agency commissions of $185 thousand and other noninterest income of $538 thousand which included higher fees on bank services of $241 thousand and positive earnings from an insurance investment of $274 thousand.

Total noninterest expense for the nine months ended September 30, 2017 increased $2.6 million, or 9.5%, when compared to the same period in 2016. The increase was primarily due to the branch purchase in the second quarter of 2017 which resulted in merger and acquisition costs of $977 thousand and the cost of operating those branches for four months. In addition, higher salaries/wages and employee benefits resulted in increased non-interest expenses which were partially offset by a decrease in FDIC insurance premiums.

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 Shore United Bank; one retail insurance producer firm, The Avon-Dixon Agency, LLC ("Avon-Dixon"), with two specialty lines, Elliott Wilson Insurance (Trucking) and Jack Martin Associates (Marine); and an insurance premium finance company, Mubell Finance, LLC ("Mubell"). Shore Bancshares Inc. engages in trust and wealth management services through Wye Financial & Trust, a division of Shore United Bank. Additional information is available at www.shorebancshares.com.

Forward-Looking Statements
The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. 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.

    Financial Highlights

    (Dollars in thousands, except per share data)



                                                                For the Three Months Ended   For the Nine Months Ended

                                                                     September 30,                 September 30,
                                                                     -------------                 -------------

                                                                                        2017                         2016  Change             2017           2016 Change
                                                                                        ----                         ---- ------              ----           ---- ------

         Net interest income                                                         $12,326                       $9,658           27.6%           $33,159               $28,284  17.2%

         Provision for credit losses                                                     345                          605          (43.0)             1,746                 1,430   22.1

         Noninterest income                                                            4,425                        4,007            10.4             13,411                12,589    6.5

         Noninterest expense                                                          10,720                        9,217            16.3             30,570                27,921    9.5
                                                                                      ------                        -----                            ------                ------

         Income before income taxes                                                    5,686                        3,843            48.0             14,254                11,522   23.7

         Income tax expense                                                            2,274                        1,432            58.8              5,690                 4,379   29.9

         Net income                                                                   $3,412                       $2,411            41.5             $8,564                $7,143   19.9
                                                                                      ======                       ======                            ======                ======



         Return on average assets                                                      0.98%                       0.83%             15    bp        0.91%                0.84%     7    bp

         Return on average equity                                                       8.48                         6.23             225               7.23                  6.30     93

         Return on average tangible equity (1)                                         10.84                         6.86             398               8.36                  6.96    140

         Net interest margin                                                            3.79                         3.54              25               3.75                  3.54     21

         Efficiency ratio - GAAP                                                       64.00                        67.45           (345)             65.64                 68.31  (267)

         Efficiency ratio - Non-GAAP (1)                                               63.11                        67.00           (389)             64.96                 67.90  (294)



    PER SHARE DATA

         Basic net income per common share                                             $0.27                        $0.19           42.1%             $0.68                 $0.56  21.4%

         Diluted net income per common share                                            0.27                         0.19            42.1               0.68                  0.56   21.4

         Dividends paid per common share                                                0.05                         0.03            66.7               0.15                  0.09   66.7

         Book value per common share at period end                                     12.82                        12.23             4.8

         Tangible book value per common share at period end (1)                        10.24                        11.20           (8.6)

         Market value at period end                                                    16.65                        11.78            41.3

         Market range:

           High                                                                        17.34                        12.17            42.5              17.92                 12.59   42.3

           Low                                                                         15.97                        11.07            44.3              14.64                 10.23   43.1



    AVERAGE BALANCE SHEET DATA

         Loans                                                                    $1,034,553                     $836,955           23.6%          $956,694              $811,747  17.9%

         Investment securities                                                       218,675                      190,475            14.8            198,499               203,226  (2.3)

         Earning assets                                                            1,295,432                    1,092,105            18.6          1,189,699             1,073,157   10.9

         Assets                                                                    1,377,975                    1,152,309            19.6          1,257,152             1,135,102   10.8

         Deposits                                                                  1,210,894                      984,940            22.9          1,089,704               971,161   12.2

         Stockholders' equity                                                        159,551                      153,985             3.6            158,342               151,438    4.6



    CREDIT QUALITY DATA

         Net charge-offs                                                                $182                         $349         (47.9)%            $1,177                $1,132   4.0%


         Nonaccrual loans                                                             $6,289                      $11,490          (45.3)

         Loans 90 days past due and still accruing                                         5                           64          (92.2)

         Other real estate owned                                                       1,809                        2,197          (17.7)
                                                                                       -----                        -----

         Total nonperforming assets                                                    8,103                       13,751          (41.1)

         Accruing troubled debt restructurings (TDRs)                                 13,493                       13,273             1.7

         Total nonperforming assets and accruing TDRs                                $21,596                      $27,024          (20.1)
                                                                                     =======                      =======



    CAPITAL AND CREDIT QUALITY RATIOS

         Period-end equity to assets                                                  11.82%                      13.37%          (155)   bp

         Period-end tangible equity to tangible assets (1)                              9.67                        12.39           (272)


         Annualized net charge-offs to average loans                                    0.07                         0.17            (10)             0.16%                0.19%   (3)   bp


         Allowance for credit losses as a percent of:

         Period-end loans                                                               0.89                         1.00            (11)

         Nonaccrual loans                                                             147.80                        74.97           7,283

         Nonperforming assets                                                         114.71                        62.64           5,207

         Accruing TDRs                                                                 68.89                        64.90             399

         Nonperforming assets and accruing TDRs                                        43.04                        31.88           1,116


         As a percent of total loans:

         Nonaccrual loans                                                               0.60                         1.34            (74)

         Accruing TDRs                                                                  1.29                         1.54            (25)

         Nonaccrual loans and accruing TDRs                                             1.89                         2.88            (99)


         As a percent of total loans+other real estate owned:

         Nonperforming assets                                                           0.77                         1.59            (82)

         Nonperforming assets and accruing TDRs                                         2.06                         3.13           (107)


         As a percent of total assets:

         Nonaccrual loans                                                               0.46                         0.99            (53)

         Nonperforming assets                                                           0.59                         1.19            (60)

         Accruing TDRs                                                                  0.98                         1.15            (17)

         Nonperforming assets and accruing TDRs                                         1.57                         2.34            (77)


    (1)  See the reconciliation table on page 12 of 12.

    Shore Bancshares, Inc.

    Consolidated Balance Sheets

    (In thousands, except per share data)



                                                                                                                                                   September 30, 2017           September 30, 2017

                                                                         September 30,            December 31,            September 30,                compared to                 compared to

                                                                                             2017                    2016                     2016     December 31, 2016           September 30, 2016
                                                                                             ----                    ----                     ----     -----------------           ------------------

    ASSETS

        Cash and due from banks                                                           $22,315                 $14,596                  $17,896                        52.9%                           24.7%

        Interest-bearing deposits with other banks                                         21,601                  61,342                   57,203                       (64.8)                          (62.2)

        Federal funds sold                                                                      -                      -                      26                            -                         (100.0)
                                                                                              ---                    ---                     ---

        Cash and cash equivalents                                                          43,916                  75,938                   75,125                       (42.2)                          (41.5)


        Investment securities available for sale (at fair value)                          213,390                 163,798                  174,788                         30.3                             22.1

        Investment securities held to maturity                                              6,241                   6,808                    3,809                        (8.3)                            63.8


        Loans                                                                           1,047,247                 871,525                  860,553                         20.2                             21.7

        Less: allowance for credit losses                                                 (9,295)                (8,726)                 (8,614)                         6.5                              7.9
                                                                                                                  ------                   ------

        Loans, net                                                                      1,037,952                 862,799                  851,939                         20.3                             21.8
                                                                                        ---------                 -------                  -------


        Premises and equipment, net                                                        23,124                  16,558                   16,680                         39.7                             38.6

        Goodwill                                                                           27,909                  11,931                   11,931                        133.9                            133.9

        Other intangible assets, net                                                        4,831                   1,079                    1,112                        347.7                            334.4

        Other real estate owned, net                                                        1,809                   2,477                    2,197                       (27.0)                          (17.7)

        Other assets                                                                       16,955                  18,883                   20,285                       (10.2)                          (16.4)
                                                                                           ------                  ------                   ------


                             Total assets                                              $1,376,127              $1,160,271               $1,157,866                         18.6                             18.9
                                                                                       ==========              ==========               ==========


    LIABILITIES

        Noninterest-bearing deposits                                                     $326,020                $261,575                 $256,559                         24.6                             27.1

        Interest-bearing deposits                                                         880,175                 735,914                  735,736                         19.6                             19.6
                                                                                          -------                 -------                  -------

                    Total deposits                                                      1,206,195                 997,489                  992,295                         20.9                             21.6


        Short-term borrowings                                                               1,469                   3,203                    5,000                       (54.1)                          (70.6)

        Accrued expenses and other liabilities                                              5,815                   5,280                    5,736                         10.1                              1.4
                                                                                            -----                   -----                    -----

                              Total liabilities                                         1,213,479               1,005,972                1,003,031                         20.6                             21.0
                                                                                        ---------               ---------                ---------


    STOCKHOLDERS' EQUITY

        Common stock, par value $0.01; authorized

           35,000,000 shares                                                                  127                     127                      127                            -                               -

        Additional paid in capital                                                         64,949                  64,201                   64,129                          1.2                              1.3

        Retained earnings                                                                  97,626                  90,964                   89,102                          7.3                              9.6

        Accumulated other comprehensive income (loss)                                        (54)                  (993)                   1,477                         94.6                          (103.7)
                                                                                              ---                    ----                    -----

                              Total stockholders' equity                                  162,648                 154,299                  154,835                          5.4                              5.0
                                                                                          -------                 -------                  -------


                              Total liabilities and stockholders' equity               $1,376,127              $1,160,271               $1,157,866                         18.6                             18.9
                                                                                       ==========              ==========               ==========


    Period-end common shares outstanding                                                   12,687                  12,665                   12,663                          0.2                              0.2

    Book value per common share                                                            $12.82                  $12.18                   $12.23                          5.3                              4.8

    Shore Bancshares, Inc.

    Consolidated Statements of Income

    (In thousands, except per share data)



                                                         For the Three Months Ended        For the Nine Months Ended

                                                              September 30,                   September 30,
                                                              -------------                   -------------

                                                                        2017          2016          % Change              2017     2016  % Change
                                                                        ----          ----          --------              ----     ----  --------

    INTEREST INCOME

        Interest and fees on loans                                   $11,771        $9,398                       25.3% $31,762  $27,476               15.6%

        Interest and dividends on investment securities:

            Taxable                                                    1,035           754                        37.3    2,799    2,448                14.3

            Tax-exempt                                                     -            2                     (100.0)       3        6              (50.0)

        Interest on federal funds sold                                     -            1                     (100.0)       -       6             (100.0)

        Interest on deposits with other banks                            131            81                        61.7      269      211                27.5
                                                                                      ---

                       Total interest income                          12,937        10,236                        26.4   34,833   30,147                15.5
                                                                      ------                                           ------   ------


    INTEREST EXPENSE

        Interest on deposits                                             607           574                         5.7    1,656    1,852              (10.6)

        Interest on short-term borrowings                                  4             4                           -      18       11                63.6
                                                                         ---           ---

                       Total interest expense                            611           578                         5.7    1,674    1,863              (10.1)
                                                                         ---           ---                               -----    -----


    NET INTEREST INCOME                                               12,326         9,658                        27.6   33,159   28,284                17.2

    Provision for credit losses                                          345           605                      (43.0)   1,746    1,430                22.1
                                                                         ---           ---                               -----    -----


    NET INTEREST INCOME AFTER PROVISION

      FOR CREDIT LOSSES                                               11,981         9,053                        32.3   31,413   26,854                17.0
                                                                      ------                                           ------   ------


    NONINTEREST INCOME

        Service charges on deposit accounts                              945           899                         5.1    2,657    2,582                 2.9

        Trust and investment fee income                                  389           358                         8.7    1,122    1,073                 4.6

        Gains on sales of investment securities                            5            30                      (83.3)       5       30              (83.3)

        Insurance agency commissions                                   2,088         2,054                         1.7    6,939    6,754                 2.7

        Other noninterest income                                         998           666                        49.8    2,688    2,150                25.0
                                                                         ---           ---                               -----    -----

                          Total noninterest income                     4,425         4,007                        10.4   13,411   12,589                 6.5
                                                                       -----         -----                              ------   ------


    NONINTEREST EXPENSE

        Salaries and wages                                             5,203         4,346                        19.7   14,508   13,245                 9.5

        Employee benefits                                              1,197         1,009                        18.6    3,564    3,087                15.5

        Occupancy expense                                                696           643                         8.2    1,950    1,839                 6.0

        Furniture and equipment expense                                  286           245                        16.7      803      728                10.3

        Data processing                                                  922           976                       (5.5)   2,809    2,639                 6.4

        Directors' fees                                                   99           120                      (17.5)     281      355              (20.8)

        Amortization of intangible assets                                115            33                       248.5      203       99               105.1

        FDIC insurance premium expense                                   189           104                        81.7      398      654              (39.1)

        Other real estate owned expenses, net                            136             2                     6,700.0      299       75               298.7

        Legal and professional fees                                      493           440                        12.0    1,855    1,434                29.4

        Other noninterest expenses                                     1,384         1,299                         6.5    3,900    3,766                 3.6

                          Total noninterest expense                   10,720         9,217                        16.3   30,570   27,921                 9.5
                                                                      ------         -----                              ------   ------


    Income before income taxes                                         5,686         3,843                        48.0   14,254   11,522                23.7

    Income tax expense                                                 2,274         1,432                        58.8    5,690    4,379                29.9
                                                                       -----         -----                               -----    -----


    NET INCOME                                                        $3,412        $2,411                        41.5   $8,564   $7,143                19.9
                                                                      ======        ======                              ======   ======


    Weighted average shares outstanding - basic                       12,687        12,661                         0.2   12,679   12,648                 0.2

    Weighted average shares outstanding - diluted                     12,718        12,676                         0.3   12,736   12,663                 0.6


    Basic net income per common share                                  $0.27         $0.19                        42.1    $0.68    $0.56                21.4

    Diluted net income per common share                                 0.27          0.19                        42.1     0.68     0.56                21.4

    Dividends paid per common share                                     0.05          0.03                        66.7     0.15     0.09                66.7

    Shore Bancshares, Inc.

    Consolidated Average Balance Sheets

    (Dollars in thousands)



                                                                                                           For the Three Months Ended                                             For the Nine Months Ended

                                                                                                               September 30,                                            September 30,
                                                                                                               -------------                                            -------------

                                                                                                                              2017                            2016                                2017                2016
                                                                                                                              ----                            ----                                ----                ----

                                                                                                               Average                               Yield/                      Average                    Yield/         Average              Yield/            Average               Yield/

                                                                                                               balance                                rate                       balance                     rate          balance               rate             balance                rate
                                                                                                               -------                                ----                       -------                     ----

    Earning assets

      Loans (1), (2), (3)                                                                                               $1,034,553                           4.54%                           $836,955               4.50%            $956,694             4.46%             $811,747              4.54%

      Investment securities (1)

       Taxable                                                                                                             218,675                            1.89                             190,265                1.59              198,383              1.88               203,016               1.61

       Tax-exempt                                                                                                                -                              -                                210                5.30                  116              5.41                   210               5.30

      Federal funds sold                                                                                                         -                              -                                511                0.37                    -                -                2,347               0.34

      Interest-bearing deposits                                                                                             42,204                            1.23                              64,164                0.50               34,506              1.04                55,837               0.50
                                                                                                                            ------                                                             ------                                  ------                                 ------

        Total earning assets                                                                                             1,295,432                           3.98%                          1,092,105               3.75%           1,189,699             3.93%            1,073,157              3.77%

    Cash and due from banks                                                                                                 16,232                                                             15,678                                  14,988                                 15,554

    Other assets                                                                                                            75,611                                                             52,836                                  61,537                                 54,850

    Allowance for credit losses                                                                                            (9,300)                                                           (8,310)                                (9,072)                               (8,459)

    Total assets                                                                                                        $1,377,975                                                         $1,152,309                              $1,257,152                             $1,135,102
                                                                                                                        ==========                                                         ==========                              ==========                             ==========



    Interest-bearing liabilities

      Demand deposits                                                                                                     $224,180                           0.23%                           $199,116               0.12%            $206,033             0.18%             $192,803              0.12%

      Money market and savings deposits                                                                                    378,711                            0.12                             268,183                0.13              325,660              0.12               262,818               0.13

      Certificates of deposit $100,000 or more                                                                             123,538                            0.50                             125,265                0.61              121,508              0.51               129,060               0.67

      Other time deposits                                                                                                  164,459                            0.50                             147,780                0.64              151,179              0.54               151,032               0.68
                                                                                                                           -------                                                            -------                                 -------                                -------

        Interest-bearing deposits                                                                                          890,888                            0.27                             740,344                0.31              804,380              0.28               735,713               0.34

      Short-term borrowings                                                                                                  2,274                            0.62                               7,075                0.25                3,997              0.59                 6,372               0.24
                                                                                                                             -----                                                              -----                                   -----                                  -----

        Total interest-bearing liabilities                                                                                 893,162                           0.27%                            747,419               0.31%             808,377             0.28%              742,085              0.34%

    Noninterest-bearing deposits                                                                                           320,006                                                            244,596                                 285,324                                235,448

    Accrued expenses and other liabilities                                                                                   5,256                                                              6,309                                   5,109                                  6,131

    Stockholders' equity                                                                                                   159,551                                                            153,985                                 158,342                                151,438

    Total liabilities and stockholders' equity                                                                          $1,377,975                                                         $1,152,309                              $1,257,152                             $1,135,102
                                                                                                                        ==========                                                         ==========                              ==========                             ==========


    Net interest spread                                                                                                                                   3.71%                                                 3.44%                                3.65%                                  3.43%

    Net interest margin                                                                                                                                   3.79%                                                 3.54%                                3.75%                                  3.54%


    (1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 35.0%, exclusive of the alternative minimum tax rate

          and nondeductible interest expense.

    (2) Average loan balances include nonaccrual loans.

    (3) Interest income on loans includes amortized loan fees, net of costs, and all are included in the yield calculations.

    Shore Bancshares, Inc.

    Financial Highlights By Quarter

    (Dollars in thousands, except per share data)



                                                                3rd quarter            2nd quarter           1st quarter           4th quarter           3rd quarter            3Q 17                     3Q 17

                                                                                  2017                  2017                  2017                  2016                   2016   compared to               compared to

                                                                  (3Q 17)                (2Q 17)               (1Q 17)               (4Q 16)               (3Q 16)              2Q 17                     3Q 16
                                                                   ------                ------                 ------                ------                ------              -----                     -----

    PROFITABILITY FOR THE PERIOD

         Taxable-equivalent net interest income                                $12,384               $10,961                $9,994               $10,029                 $9,730                 13.0%                       27.3%

         Less:  Taxable-equivalent adjustment                                       58                    61                    61                    64                     72                 (4.9)                      (19.4)
                                                                                   ---                   ---                   ---                   ---                    ---

         Net interest income                                                    12,326                10,900                 9,933                 9,965                  9,658                  13.1                         27.6

         Provision for credit losses                                               345                   974                   427                   418                    605                (64.6)                      (43.0)

         Noninterest income                                                      4,425                 4,179                 4,807                 4,056                  4,007                   5.9                         10.4

         Noninterest expense                                                    10,720                10,199                 9,651                 9,226                  9,217                   5.1                         16.3
                                                                                ------                ------                 -----                 -----                  -----

         Income before income taxes                                              5,686                 3,906                 4,662                 4,377                  3,843                  45.6                         48.0

         Income tax expense                                                      2,274                 1,554                 1,862                 1,882                  1,432                  46.3                         58.8
                                                                                 -----                 -----                 -----                 -----                  -----

         Net income                                                             $3,412                $2,352                $2,800                $2,495                 $2,411                  45.1                         41.5
                                                                                ======                ======                ======                ======                 ======



         Return on average assets                                                0.98%                0.76%                0.99%                0.86%                 0.83%                   22    bp                     15    bp

         Return on average equity                                                 8.48                  5.93                  7.27                  6.39                   6.23                   255                          225

         Return on average tangible equity (1)                                   10.84                  6.55                  7.98                  7.03                   6.86                   429                          398

         Net interest margin                                                      3.79                  3.73                  3.71                  3.63                   3.54                     6                           25

         Efficiency ratio - GAAP                                                 64.00                 67.64                 65.47                 65.80                  67.45                 (364)                       (345)

         Efficiency ratio - Non-GAAP (1)                                         63.11                 67.00                 64.98                 65.28                  67.00                 (389)                       (389)



    PER SHARE DATA

         Basic net income per common share                                       $0.27                 $0.19                 $0.22                 $0.20                  $0.19                 42.1%                       42.1%

         Diluted net income per common share                                      0.27                  0.19                  0.22                  0.20                   0.19                  42.1                         42.1

         Dividends paid per common share                                          0.05                  0.05                  0.05                  0.05                   0.03                     -                        66.7

         Book value per common share at period end                               12.82                 12.61                 12.44                 12.18                  12.23                   1.7                          4.8

         Tangible book value per common share at period end (1)                  10.24                 10.07                 11.41                 11.16                  11.20                   1.7                        (8.6)

         Market value at period end                                              16.65                 16.45                 16.71                 15.25                  11.78                   1.2                         41.3

         Market range:

            High                                                                 17.34                 17.53                 17.92                 16.90                  12.17                 (1.1)                        42.5

            Low                                                                  15.97                 15.17                 14.64                 11.49                  11.07                   5.3                         44.3



    AVERAGE BALANCE SHEET DATA

         Loans                                                              $1,034,553              $953,049              $880,791              $866,360               $836,955                  8.6%                       23.6%

         Investment securities                                                 218,675               198,302               178,074               175,417                190,475                  10.3                         14.8

         Earning assets                                                      1,295,432             1,178,507             1,092,934             1,100,197              1,092,105                   9.9                         18.6

         Assets                                                              1,377,975             1,242,933             1,148,757             1,159,131              1,152,309                  10.9                         19.6

         Deposits                                                            1,210,894             1,072,758               982,956               993,918                984,940                  12.9                         22.9

         Stockholders' equity                                                  159,551               159,165               156,274               155,367                153,985                   0.2                          3.6



    CREDIT QUALITY DATA

         Net charge-offs                                                          $182                  $769                  $226                  $306                   $349               (76.3)%                     (47.9)%


         Nonaccrual loans                                                       $6,289                $7,157                $8,729                $8,972                $11,490                (12.1)                      (45.3)

         Loans 90 days past due and still accruing                                   5                   314                   118                    20                     64                (98.4)                      (92.2)

         Other real estate owned                                                 1,809                 2,302                 2,354                 2,477                  2,197                (21.4)                      (17.7)
                                                                                 -----                 -----                 -----                 -----                  -----

         Total nonperforming assets                                             $8,103                $9,773               $11,201               $11,469                $13,751                (17.1)                      (41.1)
                                                                                ======                ======               =======               =======                =======


         Accruing troubled debt restructurings (TDRs)                          $13,493               $12,124               $12,782               $13,001                $13,273                  11.3                          1.7
                                                                               =======               =======               =======               =======                =======


         Total nonperforming assets and accruing TDRs

                                                                               $21,596               $21,897               $23,983               $24,470                $27,024                 (1.4)                      (20.1)
                                                                               =======               =======               =======               =======                =======


    CAPITAL AND CREDIT QUALITY RATIOS

         Period-end equity to assets                                            11.82%               11.74%               13.51%               13.30%                13.37%                    8       bp               (155)       bp

         Period-end tangible equity to tangible assets (1)                        9.67                  9.60                 12.54                 12.32                  12.39                     7                        (272)


         Annualized net charge-offs to average loans                              0.07                  0.32                  0.10                  0.14                   0.17                  (25)                        (10)


         Allowance for credit losses as a percent of:

         Period-end loans                                                         0.89                  0.88                  1.00                  1.00                   1.00                     1                         (11)

         Nonaccrual loans                                                       147.80                127.60                102.27                 97.26                  74.97                 2,020                        7,283

         Nonperforming assets                                                   114.71                 93.44                 79.70                 76.08                  62.64                 2,127                        5,207

         Accruing TDRs                                                           68.89                 75.32                 69.84                 67.12                  64.90                 (643)                         399

         Nonperforming assets and accruing TDRs                                  43.04                 41.70                 37.22                 35.66                  31.88                   134                        1,116


        As a percent of total loans:

        Nonaccrual loans                                                          0.60                  0.69                  0.98                  1.03                   1.34                   (9)                        (74)

        Accruing TDRs                                                             1.29                  1.17                  1.43                  1.49                   1.54                    12                         (25)

        Nonaccrual loans and accruing TDRs                                        1.89                  1.86                  2.41                  2.52                   2.88                     3                         (99)


        As a percent of total loans+other real estate owned:

        Nonperforming assets                                                      0.77                  0.94                  1.25                  1.31                   1.59                  (17)                        (82)

        Nonperforming assets and accruing TDRs                                    2.06                  2.11                  2.68                  2.80                   3.13                   (5)                       (107)



        As a percent of total assets:

        Nonaccrual loans                                                          0.46                  0.53                  0.75                  0.77                   0.99                   (7)                        (53)

        Nonperforming assets                                                      0.59                  0.72                  0.96                  0.99                   1.19                  (13)                        (60)

        Accruing TDRs                                                             0.98                  0.89                  1.10                  1.12                   1.15                     9                         (17)

        Nonperforming assets and accruing TDRs                                    1.57                  1.61                  2.06                  2.11                   2.34                   (4)                        (77)


    (1)  See the reconciliation table on page 12 of 12.

    Shore Bancshares, Inc.

    Consolidated Statements of Income By Quarter

    (In thousands, except per share data)



                                                                                                                               3Q 17                3Q 17

                                                                                                                            compared to          compared to

                                                         3Q 17         2Q 17         1Q 17        4Q 16        3Q 16           2Q 17                3Q 16
                                                         -----         -----         -----        -----        -----           -----                -----

    INTEREST INCOME

        Interest and fees on loans                             $11,771       $10,441       $9,550       $9,679       $9,398                12.7%                   25.3%

        Interest and dividends on investment securities:

            Taxable                                              1,035           937          827          747          754                 10.5                     37.3

            Tax-exempt                                               -            1            2            1            2              (100.0)                 (100.0)

        Interest on federal funds sold                               -            -           -           -           1                    -                 (100.0)

        Interest on deposits with other banks                      131            70           68           78           81                 87.1                     61.7
                                                                   ---           ---          ---          ---          ---

                       Total interest income                    12,937        11,449       10,447       10,505       10,236                 13.0                     26.4


    INTEREST EXPENSE

        Interest on deposits                                       607           538          511          537          574                 12.8                      5.7

        Interest on short-term borrowings                            4            11            3            3            4               (63.6)                       -
                                                                   ---           ---          ---          ---          ---

                       Total interest expense                      611           549          514          540          578                 11.3                      5.7
                                                                   ---           ---          ---          ---          ---


    NET INTEREST INCOME                                         12,326        10,900        9,933        9,965        9,658                 13.1                     27.6

    Provision for credit losses                                    345           974          427          418          605               (64.6)                  (43.0)
                                                                   ---           ---          ---          ---          ---


    NET INTEREST INCOME AFTER PROVISION

      FOR CREDIT LOSSES                                         11,981         9,926        9,506        9,547        9,053                 20.7                     32.3


    NONINTEREST INCOME

        Service charges on deposit accounts                        945           878          834          883          899                  7.6                      5.1

        Trust and investment fee income                            389           372          361          369          358                  4.6                      8.7

        Gains on sales of investment securities                      5             -           -           -          30                    -                  (83.3)

        Insurance agency commissions                             2,088         2,032        2,819        1,797        2,054                  2.8                      1.7

        Other noninterest income                                   998           897          793        1,007          666                 11.3                     49.8
                                                                   ---           ---          ---        -----          ---

                          Total noninterest income               4,425         4,179        4,807        4,056        4,007                  5.9                     10.4
                                                                 -----         -----        -----        -----        -----


    NONINTEREST EXPENSE

        Salaries and wages                                       5,203         4,803        4,502        4,381        4,346                  8.3                     19.7

        Employee benefits                                        1,197         1,127        1,240          906        1,009                  6.2                     18.6

        Occupancy expense                                          696           629          625          613          643                 10.7                      8.2

        Furniture and equipment expense                            286           284          233          235          245                  0.7                     16.7

        Data processing                                            922         1,015          872          857          976                (9.2)                   (5.5)

        Directors' fees                                             99           102           80          156          120                (2.9)                  (17.5)

        Amortization of intangible assets                          115            55           33           32           33                109.1                    248.5

        FDIC insurance premium expense                             189            45          164           42          104                320.0                     81.7

        Other real estate owned expenses, net                      136           108           55          167            2                 25.9                  6,700.0

        Legal and professional fees                                493           702          660          441          440               (29.8)                    12.0

        Other noninterest expenses                               1,384         1,329        1,187        1,396        1,299                  4.1                      6.5
                                                                 -----         -----        -----        -----        -----

                          Total noninterest expense             10,720        10,199        9,651        9,226        9,217                  5.1                     16.3
                                                                ------        ------        -----        -----        -----


    Income before income taxes                                   5,686         3,906        4,662        4,377        3,843                 45.6                     48.0

    Income tax expense                                           2,274         1,554        1,862        1,882        1,432                 46.3                     58.8
                                                                 -----         -----        -----        -----        -----


    NET INCOME                                                  $3,412        $2,352       $2,800       $2,495       $2,411                 45.1                     41.5
                                                                ======        ======       ======       ======       ======


    Weighted average shares outstanding - basic                 12,687        12,681       12,670       12,665       12,661                  0.0                      0.2

    Weighted average shares outstanding - diluted               12,718        12,732       12,707       12,686       12,676                (0.1)                     0.3


    Basic net income per common share                            $0.27         $0.19        $0.22        $0.20        $0.19                 42.1                     42.1

    Diluted net income per common share                           0.27          0.19         0.22         0.20         0.19                 42.1                     42.1

    Dividends paid per common share                               0.05          0.05         0.05         0.05         0.03                    -                    66.7

    Shore Bancshares, Inc.

    Consolidated Average Balance Sheets By Quarter

    (Dollars in thousands)



                                                                                                                                                                                                                                                                                                                                                                              Average balance
                                                                                                                                                                                                                                                                                                                                                                              ---------------

                                                                                                                                                                                                                                                                                                                                                                                3Q 17                          3Q 17

                                                                                                                                                                                                                                                                                                                                                                             compared to                    compared to

                                                                                                                3Q 17                                 2Q 17                                    1Q 17                     4Q 16                                          3Q 16                                      2Q 17                         3Q 16
                                                                                                                -----                                 -----                                    -----                     -----                                          -----                                      -----                         -----

                                                                                                               Average                               Yield/                                   Average               Yield/         Average              Yield/                Average               Yield/               Average                       Yield/

                                                                                                               balance                                rate                                    balance                rate          balance               rate                 balance                rate                balance                        rate
                                                                                                               -------                                ----                                    -------                ----          -------               ----                 -------                ----                -------                        ----

    Earning assets

      Loans (1), (2), (3)                                                                                               $1,034,553                           4.54%                                        $953,049          4.42%            $880,791             4.43%                 $866,360              4.47%                 $836,955                       4.50%                          8.6%                     23.6%

      Investment securities (1)

       Taxable                                                                                                             218,675                            1.89                                          198,161           1.89              177,864              1.86                   175,207               1.70                   190,265                        1.59                           10.4                       14.9

       Tax-exempt                                                                                                                -                              -                                             141           5.36                  210              5.38                       210               5.30                       210                        5.30                        (100.0)                   (100.0)

      Federal funds sold                                                                                                         -                              -                                               -             -                   -                -                       27               0.38                       511                        0.37                              -                   (100.0)

      Interest-bearing deposits                                                                                             42,204                            1.23                                           27,156           1.05               34,069              0.80                    58,393               0.54                    64,164                        0.50                           55.4                     (34.2)
                                                                                                                            ------                                                                          ------                             ------                                     ------                                      ------

        Total earning assets                                                                                             1,295,432                           3.98%                                       1,178,507          3.92%           1,092,934             3.90%                1,100,197              3.82%                1,092,105                       3.75%                           9.9                       18.6

    Cash and due from banks                                                                                                 16,232                                                                          14,798                             13,907                                     16,707                                      15,678                                                       9.7                        3.5

    Other assets                                                                                                            75,611                                                                          58,692                             50,763                                     51,065                                      52,836                                                      28.8                       43.1

    Allowance for credit losses                                                                                            (9,300)                                                                        (9,064)                           (8,847)                                   (8,838)                                    (8,310)                                                      2.6                       11.9

    Total assets                                                                                                        $1,377,975                                                                      $1,242,933                         $1,148,757                                 $1,159,131                                  $1,152,309                                                      10.9                       19.6
                                                                                                                        ==========                                                                      ==========                         ==========                                 ==========                                  ==========



    Interest-bearing liabilities

      Demand deposits                                                                                                     $224,180                           0.23%                                        $198,593          0.16%            $195,005             0.14%                 $197,810              0.12%                 $199,116                       0.12%                          12.9                       12.6

      Money market and savings deposits                                                                                    378,711                            0.12                                          320,967           0.12              276,175              0.13                   272,786               0.13                   268,183                        0.13                           18.0                       41.2

      Certificates of deposit $100,000 or more                                                                             123,538                            0.50                                          121,967           0.51              118,970              0.54                   122,725               0.56                   125,265                        0.61                            1.3                      (1.4)

      Other time deposits                                                                                                  164,459                            0.50                                          150,953           0.55              137,832              0.58                   141,641               0.60                   147,780                        0.64                            8.9                       11.3
                                                                                                                           -------                                                                         -------                            -------                                    -------                                     -------

        Interest-bearing deposits                                                                                          890,888                            0.27                                          792,480           0.27              727,982              0.28                   734,962               0.29                   740,344                        0.31                           12.4                       20.3

      Short-term borrowings                                                                                                  2,274                            0.62                                            5,589           0.82                4,150              0.27                     3,908               0.25                     7,075                        0.25                         (59.3)                    (67.9)
                                                                                                                             -----                                                                           -----                              -----                                      -----                                       -----

        Total interest-bearing liabilities                                                                                 893,162                           0.27%                                         798,069          0.28%             732,132             0.28%                  738,870              0.29%                  747,419                       0.31%                          11.9                       19.5

    Noninterest-bearing deposits                                                                                           320,006                                                                         280,278                            254,974                                    258,956                                     244,596                                                      14.2                       30.8

    Accrued expenses and other liabilities                                                                                   5,256                                                                           5,421                              5,377                                      5,938                                       6,309                                                     (3.0)                    (16.7)

    Stockholders' equity                                                                                                   159,551                                                                         159,165                            156,274                                    155,367                                     153,985                                                       0.2                        3.6

    Total liabilities and stockholders' equity                                                                          $1,377,975                                                                      $1,242,933                         $1,148,757                                 $1,159,131                                  $1,152,309                                                      10.9                       19.6
                                                                                                                        ==========                                                                      ==========                         ==========                                 ==========                                  ==========


    Net interest spread                                                                                                                                   3.71%                                                         3.64%                                3.62%                                      3.53%                                               3.44%

    Net interest margin                                                                                                                                   3.79%                                                         3.73%                                3.71%                                      3.63%                                               3.54%


    (1) All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 35.0%, exclusive of the alternative minimum tax rate and nondeductible interest expense.

    (2) Average loan balances include nonaccrual loans.

    (3) Interest income on loans includes amortized loan fees, net of costs, and all are included in the yield calculations.

    Shore Bancshares, Inc.

    Reconciliation of Generally Accepted Accounting Principles (GAAP)

      and Non-GAAP Measures

    (In thousands, except per share data)

                                                                                                                                                                                                                                                              YTD                YTD

                                                                                                                                                                      3Q 17            2Q 17            1Q 17            4Q 16             3Q 16                  9/30/2017          9/30/2016
                                                                                                                                                                      -----            -----            -----            -----             -----                  ---------          ---------


    The following reconciles return on average equity and return on

      average tangible equity (Note 1):


    Net income                                                                                                                                                                  $3,412           $2,352           $2,800            $2,495             $2,411             $8,564              $7,143
                                                                                                                                                                                ======           ======           ======            ======             ======             ======              ======

    Net income - annualized (A)                                                                                                                                                $13,537           $9,434          $11,356            $9,926             $9,592            $11,450              $9,541
                                                                                                                                                                               =======           ======          =======            ======             ======            =======              ======


    Net income, excluding net amortization of intangible assets                                                                                                                 $3,482           $2,385           $2,820            $2,514             $2,431             $8,687              $7,203
                                                                                                                                                                                ======           ======           ======            ======             ======             ======              ======


    Net income, excluding net amortization of intangible

      assets - annualized (B)                                                                                                                                                  $13,814           $9,566          $11,437           $10,001             $9,671            $11,614              $9,622
                                                                                                                                                                               =======           ======          =======           =======             ======            =======              ======


    Average stockholders' equity (C)                                                                                                                                          $159,551         $159,165         $156,274          $155,367           $153,985           $158,342            $151,438

    Less:  Average goodwill and other intangible assets                                                                                                                       (32,097)        (13,173)        (12,997)         (13,030)          (13,063)          (19,493)           (13,096)
                                                                                                                                                                               -------          -------          -------           -------            -------

    Average tangible equity (D)                                                                                                                                               $127,454         $145,992         $143,277          $142,337           $140,922           $138,849            $138,342
                                                                                                                                                                              ========         ========         ========          ========           ========           ========            ========


    Return on average equity (GAAP)  (A)/(C)                                                                                                                                     8.48%           5.47%           7.27%            6.39%             6.23%             7.23%              6.30%
                                                                                                                                                                                  ====             ====             ====              ====               ====               ====                ====

    Return on average tangible equity (Non-GAAP)  (B)/(D)                                                                                                                       10.84%           6.01%           7.98%            7.03%             6.86%             8.36%              6.96%
                                                                                                                                                                                 =====             ====             ====              ====               ====               ====                ====



    The following reconciles GAAP efficiency ratio and non-GAAP

      efficiency ratio (Note 2):


    Noninterest expense (E)                                                                                                                                                    $10,720          $10,199           $9,651            $9,226             $9,217            $30,570             $27,921

    Less:  Amortization of intangible assets                                                                                                                                     (115)            (55)            (33)             (32)              (33)             (203)               (99)
                                                                                                                                                                                  ----              ---              ---               ---                ---               ----                 ---

    Adjusted noninterest expense (F)                                                                                                                                           $10,605          $10,144           $9,618            $9,194             $9,184            $30,367             $27,822
                                                                                                                                                                               =======          =======           ======            ======             ======            =======             =======


    Net interest income (G)                                                                                                                                                     12,326           10,900            9,933             9,965              9,658             33,159              28,284

    Add:  Taxable-equivalent adjustment                                                                                                                                             58               61               61                64                 72                180                 134
                                                                                                                                                                                   ---              ---              ---               ---                ---                ---                 ---

    Taxable-equivalent net interest income (H)                                                                                                                                 $12,384          $10,961           $9,994           $10,029             $9,730            $33,339             $28,418

    Taxable-equivalent net interest income excluding nonrecurring adjustment (I)                                                                                               $12,384          $10,961           $9,994           $10,029             $9,730            $33,339             $28,418
                                                                                                                                                                               =======          =======           ======           =======             ======            =======             =======


    Noninterest income (J)                                                                                                                                                      $4,425           $4,179           $4,807            $4,056             $4,007            $13,411             $12,589

    Less:  Investment securities (gains)                                                                                                                                           (5)               -               -                -              (30)               (5)               (30)

    Adjusted noninterest income (K)                                                                                                                                             $4,420           $4,179           $4,807            $4,056             $3,977            $13,406             $12,559
                                                                                                                                                                                ======           ======           ======            ======             ======            =======             =======


    Efficiency ratio (GAAP)  (E)/(G)+(J)                                                                                                                                        64.00%          67.64%          65.47%           65.80%            67.45%            65.64%             68.31%
                                                                                                                                                                                 =====            =====            =====             =====              =====              =====               =====

    Efficiency ratio (Non-GAAP)  (F)/(I)+(K)                                                                                                                                    63.11%          67.00%          64.98%           65.28%            67.00%            64.96%             67.90%
                                                                                                                                                                                 =====            =====            =====             =====              =====              =====               =====



    The following reconciles book value per common share and tangible

      book value per common share (Note 1):


    Stockholders' equity (L)                                                                                                                                                  $162,648         $159,940         $157,626          $154,299           $154,835

    Less:  Goodwill and other intangible assets                                                                                                                               (32,740)        (32,153)        (12,978)         (13,010)          (13,043)
                                                                                                                                                                               -------          -------          -------           -------            -------

    Tangible equity (M)                                                                                                                                                       $129,908         $127,787         $144,648          $141,289           $141,792


    Shares outstanding (N)                                                                                                                                                      12,687           12,685           12,673            12,665             12,663
                                                                                                                                                                                ======           ======           ======            ======             ======


    Book value per common share (GAAP)  (L)/(N)                                                                                                                                 $12.82           $12.61           $12.44            $12.18             $12.23
                                                                                                                                                                                ======           ======           ======            ======             ======

    Tangible book value per common share (Non-GAAP)  (M)/(N)                                                                                                                    $10.24           $10.07           $11.41            $11.16             $11.20
                                                                                                                                                                                ======           ======           ======            ======             ======



    The following reconciles equity to assets and

      tangible equity to tangible assets (Note 1):


    Stockholders' equity (O)                                                                                                                                                  $162,648         $159,940         $157,626          $154,299           $154,835

    Less:  Goodwill and other intangible assets                                                                                                                               (32,740)        (32,153)        (12,978)         (13,010)          (13,043)

    Tangible equity (P)                                                                                                                                                       $129,908         $127,787         $144,648          $141,289           $141,792
                                                                                                                                                                              ========         ========         ========          ========           ========


    Assets (Q)                                                                                                                                                              $1,376,127       $1,362,798       $1,166,896        $1,160,271         $1,157,866

    Less:  Goodwill and other intangible assets                                                                                                                               (32,740)        (32,153)        (12,978)         (13,010)          (13,043)

    Tangible assets (R)                                                                                                                                                     $1,343,387       $1,330,645       $1,153,918        $1,147,261         $1,144,823
                                                                                                                                                                            ==========       ==========       ==========        ==========         ==========


    Period-end equity/assets (GAAP)  (O)/(Q)                                                                                                                                    11.82%          11.74%          13.51%           13.30%            13.37%
                                                                                                                                                                                 =====            =====            =====             =====              =====

    Period-end tangible equity/tangible assets (Non-GAAP)  (P)/(R)                                                                                                               9.67%           9.60%          12.54%           12.32%            12.39%
                                                                                                                                                                                  ====             ====            =====             =====              =====


    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.

View original content:http://www.prnewswire.com/news-releases/shore-bancshares-reports-third-quarter-and-nine-month-results-300539745.html

SOURCE Shore Bancshares, Inc.