Shore Bancshares, Inc. (NasdaqGS:SHBI) entered into a definitive agreement to acquire The Community Financial Corporation (NasdaqCM:TCFC) for approximately $250 million in a merger of equals transaction on December 14, 2022. As per the terms of the transaction, holders of TCFC common stock will have the right to receive 2.3287 shares of Shore common stock. Existing Shore shareholders will own approximately 60% of the outstanding shares of the combined company and TCFC shareholders are expected to own approximately 40%. The combined company will trade under the Shore ticker symbol "SHBI" on the Nasdaq Global Select Market, will operate under the "Shore Bancshares, Inc." name, and the combined bank will operate under the "Shore United Bank, N.A." name. The administrative headquarters of the combined company will be located in Easton, Maryland. The combined company's board of directors will have twenty directors, consisting of twelve directors from Shore (which will include four representatives from the former Severn Bancorp, Inc. previously acquired by Shore) and eight directors from TCFC. Alan J. Hyatt, Shore's current Chairman, will continue to serve as Chairman of the combined company board of directors and Austin J. Slater, Jr., TCFC's current Chairman, will serve as Vice Chairman of the combined company board of directors. The combined company will be led by a well-respected management team that is comprised of individuals with significant financial services experience. James M. Burke, TCFC's current President and Chief Executive Officer, will serve as President and Chief Executive Officer of the combined company, Donna J. Stevens, Shore's current Chief Operating Officer, will continue to serve as Chief Operating Officer of the combined company, Todd L. Capitani, TCFC's current Chief Financial Officer, will serve as Chief Financial Officer of the combined company, Andrea Colender, Shore's current Chief Legal Officer, will continue to serve as Chief Legal Officer of the combined company, B. Scot Ebron, TCFC's current Chief Banking Officer, will serve as Chief Banking Officer of the combined company and Charles "Charlie" Ruch, Shore's current Chief Credit Officer, will continue to serve as Chief Credit Officer of the combined company. The remainder of the executive team will draw from both Shore and TCFC. A termination fee in the amount of $10.5 million will be payable by either TCFC or SHBI.

The deal is subject to satisfaction of customary closing conditions, including regulatory approvals, the effective registration of the shares of SHBI Common Stock with the Securities and Exchange Commission, the approval of such shares for listing on the Nasdaq Global Market and shareholder approval from Shore and TCFC shareholders. The boards of directors of both companies unanimously approved the transaction. As of March 7, 2023, the Office of the Comptroller of the Currency and the Maryland Office of the Commissioner of Financial Regulation has both approved the deal. TCFC and SHBI further announced that the Board of Governors of the Federal Reserve System had granted the parties a waiver of its merger application requirements in connection with the previously announced merger agreement. Shore and TCFC have received all required regulatory approvals and waivers. The TCFC board determined to form an independent merger committee comprised solely of independent directors, with respect to, and making a recommendation to the TCFC board regarding, the proposed business combination. As of June 20, 2023, the transaction has been approved by the shareholders of the Shore Bancshares. The transaction is expected to close late in the second quarter or early in the third quarter of 2023. The deal is expected to close on or about July 1, 2023. The transaction is expected to be over 40% accretive to Shore’s EPS in 2024.

Piper Sandler & Co. acted as financial advisor to TCFC and delivered a fairness opinion to the Board of Directors of TCFC. Gary R. Bronstein and Edward G. Olifer of Kilpatrick Townsend & Stockton LLP served as legal counsel to TCFC. Keefe, Bruyette & Woods, A Stifel Company acted as financial advisor to Shore in the transaction and delivered a fairness opinion to the Board of Directors. Kevin Houlihan, Kerry Halpern and William Levay of Holland & Knight LLP served as legal counsel to Shore. RP Financial, LC. acted as financial advisor to TCFC Independent Merger Committee. Keefe, Bruyette & Woods, Inc. and Holland & Knight LLP acted as due diligence providers to SHBI. Kilpatrick Townsend & Stockton LLP, RP Financial, LC. and Piper Sandler & Co. acted as due diligence providers to TCFC. The transfer agent and registrar for SHBI common stock is Broadridge Corporate Issuer Solutions. SHBI has engaged Alliance Advisors as its proxy solicitation firm for a fee of $25,000 and out of pocket expenses. TCFC has engaged Alliance Advisors as its proxy solicitation firm for a fee of $15,000. Pursuant to the KBW engagement agreement, SHBI has agreed to pay KBW a cash fee equal to 1.00% of the aggregate merger consideration, $400,000 of which became payable to KBW with the rendering of KBW’s opinion and the balance of which is contingent upon the consummation of the merger. Piper Sandler will receive a fee in an amount equal to approximately 1.36% of the aggregate purchase price. At the time of announcement of the merger Piper Sandler’s fee was approximately $3.51 million. Piper Sandler also received a $250,000 fee from TCFC upon rendering its opinion, which opinion fee will be credited in full towards the transaction fee which will become payable to Piper Sandler upon closing of the merger.

Shore Bancshares, Inc. (NasdaqGS:SHBI) completed the acquisition of The Community Financial Corporation (NasdaqCM:TCFC) in a merger of equals transaction on July 1, 2023. Lloyd L. Beatty, Jr. and Jeffrey E. Thompson tendered their resignations as a member of the SHBI Board and Shore United Board and from all committees of the Shore Bancshares, Inc. (SHBI) Board and Shore United Board. The eight directors designated by TCFC pursuant to the merger agreement, each of whom previously served as a member of the board of directors of TCFC and CBC, and were appointed by the SHBI Board and the Shore United Board. Austin J. Slater, Jr., the former chairman of the TCFC board of directors, was appointed as the Vice Chairman of the SHBI Board and the Shore United Board. James M. Burke, the former President and Chief Executive Officer of TCFC, was appointed as President and Chief Executive Officer of SHBI and Shore United and Todd L. Capitani, the former Chief Financial Officer of TCFC, was appointed as the Chief Financial Officer of SHBI and Shore United. Vance W. Adkins, SHBI’s and Shore United’s Chief Financial Officer, terminated his employment with SHBI. SHBI’s and Shore United’s corporate headquarters remain in Easton, Maryland. The combined company will trade under SHBI’s ticker symbol (SHBI) on the Nasdaq Global Select Stock Market.