Anne
Anne
Arundel
Arundel
County
County
Talbot
County
Wicomico
Wicomico
County
County
OCEAN
OCEAN
CITY
CITY
2018
Annual
Report
Kent CountyKent CountySussex CountyCarolineCountyQueen Anne’sCountyDorchesterCountyKent CountyKent CountySussex CountyCarolineCountyQueen Anne’sCountyDorchesterCounty
S������� F�������� D���
(Dollars in thousands, except per share data)
R������ O� C��������� 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 before income taxes
Income tax expense
Net income
R������ O� D����������� O���������:
Noninterest income
Noninterest expense
Income before income taxes
Income tax expense (benefit)
Net income
P�� C����� S���� D���:
Income from con�nuing opera�ons - basic
Income from discon�nued opera�ons - basic
Net income
Income from con�nuing opera�ons - diluted
Income from discon�nued opera�ons - diluted
Net income
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)2:
Return on average total assets
Return on average stockholders’ equity
Net interest margin
Efficiency ra�o3
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
Years Ended December 31,
2018
2017
$
$
$
$
$
$
$
$
55,907
5,272
50,635
1,674
48,961
9,013
36,831
21,143
5,380
15,763
22,077
7,920
14,157
4,923
9,234
1.24
0.72
1.96
1.24
0.72
1.96
0.32
14.37
12.77
$
$
$
$
$
$
$
$
47,963
2,273
45,690
2,291
43,399
8,200
33,640
17,959
8,734
9,225
9,388
7,562
1,826
(211)
2,037
0.73
0.16
0.89
0.73
0.16
0.89
0.22
12.90
10.36
$ 1,195,355
1,483,076
1,212,341
183,185
$ 1,093,514
1,393,860
1,202,781
163,736
1.74 %
14.81
3.74
54.76
16.33
11.75
1.21 %
1.80
0.87
62.10
40.85
0.87 %
7.05
3.76
65.11
24.72
12.40
0.53 %
1.49
0.89
196.76
53.46
1Total Stockholders’ equity, net of goodwill and other intangible assets, divided by the number of shares of common stock outstanding at year end.
2Reflect the results of both continuing and discontinued operations.
3Noninterest expense as a percentage of total revenue (net interest income plus total noninterest income). Lower ratios indicate improved productivity.
SHORE BANCSHARES | ANNUAL REPORT 2018
Dear Shareholders:
2018 was a significant year for the Company, in terms of loan growth, core earnings and the divestiture of our
retail insurance agency, Avon-Dixon, LLC (“Avon”). Our total loans increased $101.8 million or 9.3% and total
deposits increased $9.6 million or less than 1%. The net proceeds from the sale of Avon amounted to $25.2
million, resulting in a net gain after tax of $8.2 million.
Our decision to sell Avon was not made lightly. Over the last 10 years, insurance premiums stayed relatively
constant while the value of insurance agencies increased dramatically. Because of high acquisition costs, we were
not in a position to expand into new markets through the purchase of new agencies.
After a great deal of thought and analysis, we concluded the sale of Avon would accomplish two goals. First, it
will allow the agency the opportunity to grow, giving them access to many new insurance markets while becoming
an anchor agency for a growing national insurance agency. Secondly, it will also allow our bank to grow. The
proceeds from the sale of the agency provide a substantial increase in regulatory capital which we can now use to
fund loan growth, expand our activities in some of our newer markets and support acquisition opportunities.
We continue to explore new technology and processes to create efficiencies, enhance the banking experience
for our clients, and differentiate ourselves from our competitors. In 2018, much work was completed to prepare
for new digital services that we will be offering in 2019.
Outside of expansion and new technologies, our employees continue to maintain the positive character of our
company through their commitment to serve. In 2018, our employees volunteered over 7,000 hours to various
non-profit organizations and events throughout our markets.
Looking forward, we remain committed to the success of our clients, filling in the gaps of our footprint and
providing you with a favorable return. We thank you, our shareholders, for your continued support as well as our
board of directors for their guidance as we set sail for a new year.
Lloyd L. “Scott” Beatty, Jr.
President & CEO, Shore United Bank & Shore Bancshares, Inc.
Frank E. Mason, lll
Board Chairman
SHORE BANCSHARES | ANNUAL REPORT 2018
WHAT’S ON THE HORIZON?
MOBILE CHANNELS TO HELP MANAGE YOUR LIFE
We strive to meet the financial needs of all demographics in our
market areas which we do by offering traditional products while
introducing new digital products that benefit customers of all
ages. As technology continues to advance, we continuously look
for ways to leverage new developments to create efficiencies,
improve processes, and make banking more convenient for our
customers.
Each year we see a steady increase in the number of customers
performing transactions through our online and mobile banking
services. Many of our customers are using mobile devices to
make deposits, pay bills, transfer money and pay for purchases.
Touch ID, a login
method that only requires your
fingerprint, became available for both
Apple and Android users in 2018. In
December of 2018, nearly 30% of our
mobile banking customers opted to use the
fingerprint method to log into their account
over using their password. As more people
rely on mobile devices to manage their life,
we continue to explore options to enhance
our clients’ banking experience without
compromising account security.
USER
INCREASE
SINCE
JANUARY
2017
Mobile
73%
Online
38%
10000
5000
Number
of Users
0
20000
15000
14,628
12,107
16,699
9,175
7,154
5,304
January 2017
January 2018
January 2019
SHORE BANCSHARES | ANNUAL REPORT 2018
26,336
checks processed in 2018
using Mobile Check Deposit
232,678
bills were paid in 2018
through Online Bill Pay
According to the
January 30, 2019 Globe
Newswire Report1, the global mobile
wallet market accounted for $880.2 billion
in 2017 and is expected to reach $9,352.2
billion by 2026. To meet the demand of digital
commerce, we will introduce Apple, Samsung
and Google Pay in the 2nd quarter of 2019. This
new service will allow customers to store credit
or debit card numbers in the respective app
and pay for purchases through Shore
United Bank using their phone or
wearable device.
1(Jan. 30, 2019). Globe Newswire. Retrieved from:
(https://globenewswire.com/news-release/2019/01
/30/1707681/0/en/Global-Mobile-Wallet-Market-
Report-2017-2018-2026.html).
While our banking services have become increasingly digital,
we still strive to build a personal relationship with each
customer. Our investment division, Wye Financial & Trust
(Wye), has leveraged our internal referral program to match
Shore United Bank clients with one of their financial advisors.
When branch staff listen to our clients and invest the time to
have a deeper conversation, they often learn of additional
financial needs that can be best served by Wye. A referral is
sent to the investment office with details to contact the
customer. Qualified referrals and subsequent sales have
steadily increased over the life of the program. Wye
recognizes a winning branch each month cumulating with a
champion branch of the year. Employees enjoy the friendly
competition and our clients benefit from exceptional
customer service.
TAP. TYPE. SEND!
We are seeing a steady increase in the number of customers who
prefer cashless transactions like debit cards and mobile wallets to
make purchases, and person-to-person payment services that
provide a quick and easy way to exchange money between
friends.
To keep up with customer expectations and the rapid advances in
technology, we are investing in digital services to stand out from
our competitors. In the first quarter of 2019, we introduced a
new person-to-person payment service, Pay Someone. Users
who are enrolled in our mobile or online banking service can send
money to friends and family even if the recipient does not have a
Shore United Bank account. All you need is an email address or
the mobile phone number of the person you want to pay.
BUILDING RELATIONSHIPS
Wye Financial & Trust team presents the winning trophy to
Stevensville Branch Manager, Kerry Nagle
ACCOUNT OPENING ON THE GO
Consumer preferences are ever-changing. To open an account, they no
longer want to make the trip to the bank or wait for a customer service
representative. Instead they often prefer fast, easy and secure
technology when opening an account.
Later this year, we will introduce a new tablet-based deposit platform that
will allow users to open deposit accounts in the branch or on-site at a
customer’s location. The use of tablets will ease the account opening
process for customers and create internal efficiencies.
SHORE BANCSHARES | ANNUAL REPORT 2018
FINANCIAL LITERACY BEYOND THE CLASSROOM
In recent years, financial education has come to a halt in most
schools. According to the 2018 Survey of the States1,
more than half of the states do not require high
school students to take an economics class and
only 17 states require high school students to
take a course in personal finance. Studies
indicate that students without a financial
education are more likely to have
financial problems and low credit scores
later in life.
Economic growth has made it easier for
people of all ages to obtain credit. If
financial education is absent during the
formative years, consumers and banks may
suffer the consequences from a lack of a
sound financial foundation.
As a community bank, we believe it is important to
help our local schools, senior centers and other
organizations by providing financial education through on-site
programs and presentations. In 2018, our employees provided
credit counseling and financial literacy training to numerous
students K-12, young adults, seniors and local homeless shelters.
By providing
financial literacy to our
communities we help
individuals:
Make financial decisions
with confidence
Understand options
when choosing a
mortgage, saving or
paying down debt
Negotiate and establish
goals for investments
Prevent identity theft
and avoid online scams
Differentiate between
financial dreams and
reality and establish a
budget
Stress less and achieve
more, ultimately
improving quality of life
1(Jan. 30, 2019). Council for Economic Education. Retrieved from:
https://www.councilforeconed.org/policy-and-advocacy/survey-of-the-states-2/).
Youth/Education &
Financial Literacy
Community
Development
We feel strongly that helping
others establish a strong financial
foundation is a valuable way to
leverage our talents, skills and
resources to make a positive impact
in the communities we serve.
Over
7,000
Volunteer
Hours
2
0
1
8
30%
43%
21%
6%
Health & Human
Services
Environment &
Agriculture
SHORE BANCSHARES | ANNUAL REPORT 2018
BOARD OF DIRECTORS
SHORE BANCSHARES & SHORE UNITED BANK
CHAIRMAN OF THE BOARD
Frank E. Mason, III
President & Chief Executive Officer, JASCO
PRESIDENT & CHIEF EXECUTIVE OFFICER
Lloyd L. “Scott” Beatty, Jr.
Shore Bancshares, Inc. & Shore United Bank
David J. Bates
Investor
Blenda W. Armistead
Investor
Christopher F. Spurry
Executive Vice President, Spurry-Curren and Associates, 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
VICE PRESIDENT & CHIEF INFORMATION OFFICER
Timothy J. Berrigan
R. Michael Clemmer, Jr.
President, Salisbury, Inc.
David A. Fike
Investor
VICE PRESIDENT & CHIEF MARKETING & PROJECT OFFICER
Debra H. Rich
VICE PRESIDENT & CHIEF HUMAN RESOURCES OFFICER
Marie DiDaniels
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.
OFFICERS | SHORE UNITED BANK
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
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
SHORE BANCSHARES | ANNUAL REPORT 2018
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
LOAN PRODUCTION OFFICES
SHORE UNITED BANK
9748 Stephen Decatur Highway
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
INVESTMENTS
WYE FINANCIAL & TRUST
16 N. Washington Street
Easton, MD 21601
410.763.8543
800.309.8124
WyeFinancialandTrust.com
1101 Maiden Choice Lane
Baltimore, MD 21229
800.309.8124
WyeFinancialandTrust.com
OWINGS MILLS
ARBUTUS
ELKRIDGE
MIDDLETOWN
CHESTERTOWN
CENTREVILLE
CHESTER
GRASONVILLE
HILLSBORO
Anne
Arundel
County
STEVENSVILLE
DENTON
ST. MICHAELS
EASTON
Talbot
County
CAMBRIDGE
DOVER
CAMDEN
FELTON
MILFORD
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 2018
Kent CountyKent CountySussex CountyCarolineCountyQueen Anne’sCountyDorchesterCounty SHOREBANCSHARES.COM | 410.763.7800
NASDAQ: SHBI