ANNUAL REPORT
2017
S������� F�������� D���
(Dollars in thousands, except per share data.)
Years Ended December 31
R������ O� O���������:
Interest income
Interest expense
Net interest income
Provision for credit losses
Net interest income a�er provision for credit losses
Noninterest income
Noninterest expense
Income (loss) before income taxes
Income tax expense (benefit)
Net income (loss)
P�� C����� S���� D���:
Net income (loss) - basic
Net income (loss) - diluted
Dividends paid
Book value (at year end)
Tangible book value (at year end)1
F�������� C�������� (at year end):
Loans
Assets
Deposits
Stockholders’ equity
P���������� R����� (for the year):
Return on average total assets
Return on average stockholders’ equity
Net interest margin
Efficiency ra�o2
Dividend payout ra�o
Average stockholders’ equity to average total assets
A���� Q������ R����� (for the year):
Nonperforming assets to total assets
Nonperforming assets and accruing TDRs to total assets
Allowance for credit losses to loans
Allowance for credit losses to nonaccrual loans
Allowance for credit losses to nonaccrual loans and TDRs
2017
2016
2015
$
$
$
47,801
2,273
45,528
2,291
43,237
17,750
41,202
19,785
8,523
11,262
0.89
0.89
0.22
12.91
10.31
$
$
$
40,652
2,403
38,249
1,848
36,401
16,645
37,147
15,899
6,261
9,638
0.76
0.76
0.14
12.18
11.16
$
$
$
38,871
3,346
35,525
2,075
33,450
15,416
37,350
11,516
4,408
7,108
0.56
0.56
0.04
11.64
10.59
$ 1,093,514
1,393,860
1,202,781
163,736
$
871,525
1,160,271
997,489
154,299
$
795,114
1,135,143
975,464
146,967
%
0.87
7.05
3.76
65.11
24.72
12.40
%
0.53
1.49
0.89
196.76
53.46
%
0.84
6.32
3.56
67.67
18.42
13.36
%
0.99
2.11
1.00
97.26
39.71
%
0.64
4.93
3.43
73.32
7.14
13.04
%
1.44
2.81
1.05
68.77
30.14
1Total Stockholders’ equity, net of goodwill and other intangible assets, divided by the number of shares of common stock outstanding at year end.
2Noninterest expense as a percentage of total revenue (net interest income plus total noninterest income). Lower ratios indicate improved productivity.
2 SHORE BANCSHARES | ANNUAL REPORT 2017
Annual Report
2017
Dear Shareholders:
2017 was a stellar year for Shore Bancshares in terms of growth and core
earnings. Our market area expanded west with the successful acquisition of
three branches in the Greater Baltimore Metropolitan area from Northwest
Bank and south with two new office locations. In addition, the Bank
experienced an increase in organic loan growth that outpaced the industry.
First a note about the branch acquisition, the expansion into the Greater Baltimore Metro area provides
geographic diversification for our organization and supports future growth. The transaction resulted in Shore
United Bank receiving $212.5 million in assets from Northwest Bank, the bank subsidiary of Northwest
Bancshares, Inc. Employees of both organizations worked tirelessly to ensure the former Northwest Bank
customers had minimal impact through the transition.
It’s important to note that in addition to expanding our market area west into Baltimore, the Company also
expanded south into Ocean City, Maryland and Onley, Virginia. The new loan production office in Ocean City
was a directional move to expand our footprint to the lower eastern shore of Maryland. The new full-service
branch in Onley, Virginia further supports our strategic point south to offer our community banking model to
businesses and consumers in these market areas.
We believe that the companies of tomorrow will be those that are able to look forward and embrace change.
The Company is committed to investing in new technology, its employees, and processes so that our customers
will have the same positive experiences when they visit a traditional branch or use one of our convenient services
online. We look forward to introducing a new online loan application giving customers the option to apply for a
loan online while keeping our lending decisions local with our experienced team of lending professionals.
Whether we introduce a new technology or execute an acquisition, planning is key to handle expansion and
prepare for the future. In June, our insurance division, Avon-Dixon Agency relocated to a new modern building
in Easton, Maryland. In conjunction with the move, our entire insurance division went through a re-brand
adopting the corporate logo and brand standards launched in 2016 when our two banks merged to form Shore
United Bank. By adding one common brand to all of our companies our clients and communities can further
see the depth and breadth of the services we offer.
Turning to the Company’s financial performance, we’re pleased with the continued momentum in 2017. Absent
the branch acquisition, total loans increased $114 million or 13% and total deposits increased $18 million or 1.8%.
Stockholders’ equity increased $9.5 million or 6% over the previous year.
Overall the Company ended 2017 with positive results with increases to our net interest income, positive loan
growth, and improvements to our net interest margin. Our financial success is attributable to the 352
employees throughout our community of companies who are committed to living the vision and values we
represent. We are also fortunate to have a board of directors who are reliable and committed to our vision of
the future. We share their commitment to delivering outstanding results to our clients, employees,
communities, and shareholders. Thank you for your continued support and investment in Shore Bancshares.
Lloyd L. “Scott” Beatty, Jr.
Frank E. Mason, lll
SHORE BANCSHARES | ANNUAL REPORT 2017 3
CLIENTS
Client’s now have access to over 55,000 surcharge-free ATMs worldwide through the Allpoint Network. As our footprint expands so
does the need for our clients to have access to their money anytime from anywhere. In May, Shore United Bank became a member
of the Allpoint Network giving clients access to a surcharge-free network of ATMs with over 55,000 locations throughout the
United States, Canada, Mexico, Puerto Rico, United Kingdom and Australia.
Allpoint Network ATMs are located in retail locations around the world, with 43,000 in the United States, which includes these
retailers: Target, CVS Pharmacy, Walgreens, Costco, Safeway, Sunoco, Kangaroo Express, Speedway and Winn Dixie. The Allpoint
Network allows our clients to enjoy surcharge-free ATMs where our traditional branches are not available. This service helps to
increase the value of our client relationships and loyalty to our customers.
Client experience rated Best of by What’s Up Eastern Shore Magazine in 2017. Shore United Bank, Wye Financial & Trust and
Avon-Dixon were voted as the 2017 “Best of Eastern Shore” winners of the What’s Up Eastern Shore Magazine’s reader’s poll. The
awards were announced to the public on June 1, 2017. The winning categories were: Best Bank- Shore United Bank, Best Financial
Advisor/Firm- Wye Financial & Trust, Best Life & Auto Insurance Advisor/Firm - Avon-Dixon Insurance Agency.
The recognition of this local honor speaks volumes about our employees and their commitment to our clients and the communities
in which we serve.
Enhancements to consumer and business checking products to meet the needs of our clients. With a strategic goal to grow core
deposits, we completed a thorough review of our bank products and services to understand how our clients use their accounts and
how we measure up against our competitors. The review resulted in positive enhancements to our checking products and services
putting us ahead of most competitors in the markets we serve. As a result, in January of 2018, we announced a new consumer
E-Checking product with no minimum balance, no monthly service fee and access to over 55,000 surcharge-free ATMs worldwide
through the Allpoint Network. Additional product enhancements include reductions to the transaction limits of our business
checking accounts and more. With the introduction of a new consumer checking product, enhancements to existing products and
services and the combination of an experienced team of leaders, our direction is on course for another successful year.
EMPLOYEES
Providing training and development opportunities to employees helps them succeed. This past year was not unlike any other year in
that we continue to dedicate internal training resources for employees to enhance their working knowledge and job skills. We also
invest in outside development programs like those offered by the Maryland Bankers Association.
Two programs offered by Maryland Bankers Association that we actively participate in are the Maryland Banking School and the
Emerging Leaders Program. Both programs help leaders prepare for the changes ahead in the financial industry. Over the years,
28 employees graduated from the Maryland Banking School. Our most recent graduates are Chad Cronshaw and Ron Cannon,
Branch Managers at Shore United Bank.
To help prepare our next generation of leaders for the financial industry changes ahead, we’ve selected three employees to
participate in MBA’s new Emerging Leaders Program: Philip “Phil” O’Neil, Financial Reporting Officer and Danielle Griffith,
Enterprise Risk & Special Projects Officer both at Shore Bancshares and Matthew Marino, Branch Manager at Shore United Bank.
The Emerging Leaders Program proactively supports a diverse group of leaders who will be able to make better decisions through
engagement and understanding of the Maryland banking industry and those it serves.
Measuring employee satisfaction is important to us, the results are instrumental in guiding the future of our organization. In
December of 2017, we launched our second employee satisfaction survey. The survey was conducted by a third-party vendor with
all responses kept entirely confidential. The intention of the survey is to identify trends where we can drive improvement. The
results from the survey conducted in 2014 were invaluable in helping us build a strong team that was connected to the
organizations vision and mission. We look forward to the 2017 survey results as shared by our employees to help us make positive,
measurable changes for the future success of our companies.
4 SHORE BANCSHARES | ANNUAL REPORT 2017
COMMUNITY
Annual Report
2017
Giving back to the communities in which we serve is not something new at Shore Bancshares. Last year, we united with local
community leaders to help students and parents with the fight against substance abuse through the Talbot Goes Purple and the
THP Project Purple program. Opioid addiction is the fastest growing epidemic in our communities to date and overdoses are the
number one cause of death in people under 50. These hard-hitting statistics are reasons why the organization came together to
support both programs in the communities we serve.
Employees at Avon-Dixon Insurance Agency, Shore United Bank and Wye Financial & Trust, showed their support for the
programs by participating in employee education sessions and taking part in ‘purple Fridays’ throughout the month of September.
Each location brought awareness to the initiative by decorating their office in purple and offering information about the severity of
this substance abuse to their customers.
Our employees remain connected to our communities by voluntarily donating their time and talents to over one hundred organizations
in multiple states and counties. As a community-based organization, volunteering is another way that makes us different from
large corporations. By staying connected, we build lasting relationships and stay engaged with other community leaders working
towards a common goal. Our service to our communities benefited groups in many categories including community development,
youth and education, environment, and agriculture as well as health and human services.
SHAREHOLDERS
Growth through acquisition reflects our intention to expand into new market areas. The acquisition of three former Northwest Bank
branches on May 22, 2017 expanded Shore United Bank’s footprint in Maryland. Our branch network now extends across the Bay
Bridge to the Greater Baltimore Metropolitan communities of Elkridge, Owings Mills, and Arbutus. The transaction reflects our
announced intention to expand our footprint through accretive acquisition opportunities. The acquisition provides us with the
liquidity to support future growth as well as strengthen our franchise value and provide geographical diversification to our
organization.
Our expansion did not stop in Baltimore. In April, Shore United Bank opened a new Loan Production Office in West Ocean City,
Maryland. And, with a new full-service branch in Onley, Virginia that opened in November our market encompasses the entire
Delmarva Peninsula.
Successful companies utilize strategic planning to prepare for expansion. Our insurance division, Avon-Dixon Agency, now has its
entire team under one roof. In June, the Avon-Dixon Agency made their move to a new building in Easton, Maryland to
accommodate their growth and efficiency needs. The new location provides a professional appearance, ample parking, and
conference room space for employees and clients.
In connection with the move, the corporate logo and brand standards were adopted throughout the insurance division to further
unite our companies with one common brand.
Having the right leaders is important for the future growth and success of our organization. Last year we announced three new
market leaders at Shore United Bank. W. Thomas “Tom” Mears, is responsible for business development in the Lower Eastern
Shore which includes Worcester, Wicomico, Somerset counties of Maryland and Accomack county of Virginia; William “Bill”
Hudson leads the Greater Baltimore Metropolitan market that includes Baltimore and Howard counties; and Heather Bacher who
is responsible for leading our Maryland north region of Queen Anne’s and Kent counties.
At Wye Financial & Trust we added three new advisors to our team; Colin Pryor, Christopher Parks, and Neil Zurowski who have
combined experiences in wealth management, trust administration, retirement planning, investment and annuity strategies and
portfolio management. By adding experienced professionals to our team, we expand our client services to the lower eastern shore
of Maryland and Virginia, the Greater Baltimore Metropolitan area, and Delaware to help preserve and grow wealth for our clients.
SHORE BANCSHARES | ANNUAL REPORT 2017 5
BOARD OF DIRECTORS
SHORE BANCSHARES & SHORE UNITED BANK
CHAIRMAN OF THE BOARD
Frank E. Mason, III
President & Chief Executive Officer, JASCO
VICE CHAIRMAN OF THE BOARD
David J. Bates
Investor
PRESIDENT & CHIEF EXECUTIVE OFFICER
Lloyd L. “Scott” Beatty, Jr.
President & Chief Executive Officer, Shore Bancshares, Inc.
OFFICERS | SHORE BANCSHARES
PRESIDENT & CHIEF EXECUTIVE OFFICER
Lloyd L. “Scott” Beatty, Jr.
SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Edward C. Allen
SENIOR VICE PRESIDENT & CHIEF OPERATING OFFICER
Donna J. Stevens
SECRETARY & GENERAL COUNSEL
W. David Morse
Blenda W. Armistead
Investor
VICE PRESIDENT & CHIEF INFORMATION OFFICER
Timothy J. Berrigan
Christopher E. Spurry
Executive Vice President, Spurry-Curren and Associates, Inc.
VICE PRESIDENT & CHIEF MARKETING & PROJECT OFFICER
Debra H. Rich
Michael R. Clemmer, Jr.
President, Salisbury, Inc.
VICE PRESIDENT & CHIEF HUMAN RESOURCES OFFICER
Marie DiDaniels
David A. Fike
President & Publisher, APG Media of Chesapeake
James A. Judge
Certified Public Accountant, Anthony Judge & Ware, LLC
Clyde V. Kelly, III
President & General Manager, Kelly Distributors
David W. Moore
President & Chief Executive Officer
Milford Housing Development Corporation
Jeffrey E. Thompson
Managing Partner, Thompson & Richard, LLP
John H. Wilson
President & Chief Executive Officer
Coastal South of Maryland, Inc.
BOARD OF DIRECTORS | AVON-DIXON AGENCY
CHAIRMAN OF THE BOARD
John H. Wilson
President & Chief Executive Officer
Coastal South of Maryland, Inc.
PRESIDENT & CHIEF EXECUTIVE OFFICER
Richard C. Trippe, Jr.
President & Chief Executive Officer, Avon-Dixon Agency
Lloyd L. “Scott” Beatty, Jr.
President & Chief Executive Officer, Shore Bancshares, Inc.
Clyde V. Kelly, III
President & General Manager, Kelly Distributors
David A. Fike
President & Publisher, APG Media of Chesapeake
OFFICERS | SHORE UNITED BANK
PRESIDENT & CHIEF EXECUTIVE OFFICER
Patrick M. Bilbrough
SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Edward C. Allen
SENIOR VICE PRESIDENT & CHIEF OPERATING OFFICER
Donna J. Stevens
SENIOR VICE PRESIDENT & CHIEF CREDIT OFFICER
Charles E. Ruch, Jr.
SENIOR VICE PRESIDENT & CHIEF LENDING OFFICER
Michael T. Cavey
SENIOR VICE PRESIDENT & CHIEF RETAIL BANKING OFFICER
Jennifer Joseph
SENIOR VICE PRESIDENT/LEGAL COUNSEL CORPORATE SECRETARY
W. David Morse
OFFICERS | AVON-DIXON AGENCY
PRESIDENT & CHIEF EXECUTIVE OFFICER
Richard C. Trippe Jr.
SECRETARY
W. David Morse
TREASURER
Edward C. Allen
SHORE BANCSHARES
HEADQUARTERS
28969 Information Lane
Easton, MD 21601
410.763.7800
ShoreBancshares.com
NASDAQ: SHBI
BANKING
SHORE UNITED BANK
18 E. Dover Street
Easton, MD 21601
410.822.1400
877.758.1600
ShoreUnitedBank.com
SHORE UNITED BANK
LOAN PRODUCTION OFFICES
9748 Stephen Decatur Hwy., Unit 104
Ocean City, MD 21842
443.856.2100
ShoreUnitedBank.com
651 N. Broad Street, Suite 201
Middletown, DE 19709
302.449.6320
ShoreUnitedBank.com
INSURANCE
AVON-DIXON AGENCY, LLC
28640 Marys Court
Stuite 100
410.822.0506
800.242.8758
AvonDixon.com
INVESTMENTS
WYE FINANCIAL & TRUST
16 N. Washington Street
Easton, MD 21601
410.763.8543
800.309.8124
WyeFinancialandTrust.com
Annual Report
2017
2017
OWINGS MILLS
MIDDLETOWN
ARBUTUS
CHESTERTOWN
DOVER
ELKRIDGE
CENTREVILLE
CAMDEN
ANNAPOLIS
GRASONVILLE
HILLSBORO
CHESTER
Anne
Arundel
County
STEVENSVILLE
DENTON
FELTON
MILFORD
ST. MICHAELS
EASTON
Talbot
County
CAMBRIDGE
Wicomico
County
OCEAN
CITY
ONLEY
INVESTOR RELATIONS CONTACT:
Edward C. Allen
Edward.Allen@shbi.com
443.262.9319
TRANSFER AGENT:
Broadridge Corporate Issuer Solutions
28969 Information Lane
Easton, MD 21601
866.232.0392
720.358.3588
SHORE BANCSHARES | ANNUAL REPORT 2017 #
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