2019
ANNUAL REPORT
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
Income from con�nuing opera�ons
R������ O� D����������� O���������:
Noninterest income
Noninterest expense
(Loss) income before income taxes
Income tax expense (benefit)
(Loss) income from discon�nued opera�ons
P�� C����� S���� D���:
Income from con�nuing opera�ons - basic
Income (loss) from discon�nued opera�ons - basic
Net income
Income from con�nuing opera�ons - diluted
Income (loss) 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,
2019
2018
$
$
$
$
$
$
$
$
59,767
9,636
50,131
700
49,431
10,020
37,557
21,894
5,610
16,284
15
128
(113)
(27)
(86)
1.28
(0.01 )
1.27
1.28
(0.01 )
1.27
0.42
15.42
13.84
$
$
$
$
$
$
$
$
55,907
5,272
50,635
1,674
48,961
9,013
36,831
21,143
5,380
15,763
20,077
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
$ 1,248,654
1,559,235
1,341,334
192,802
$ 1,195,355
1,483,076
1,212,341
183,185
1.08 %
8.52
3.54
62.64
33.07
12.69
0.77 %
1.25
0.84
99.22
58.08
1.74 %
14.81
3.74
54.76
16.33
11.75
1.21 %
1.80
0.87
62.10
40.85
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 2019
Dear Shareholders:
Shore Bancshares (“the Company’s”) balance sheet experienced significant growth during 2019 allowing us to
eclipse the $1.5 billion asset mark. This was in a large part due to deposit growth, which experienced an increase of
$129.0 million, or 10.6%. Stockholders’ equity also increased in 2019 over 2018 by $9.6 million or 5.2%. The
increase in stockholders’ equity was enhanced by a positive trend in unrealized gains on our security portfolio and
current year earnings. In addition, our earnings per share improved in part due to the execution of a stock buyback
program initiated in the third quarter of 2019.
The buyback program was authorized by the Board of Directors in April of 2019 permitting 5% of the
Company’s common stock to be repurchased with a maximum amount of $10 million. The first repurchase of the
Company’s shares occurred in August and at December 31, 2019, the Company had repurchased 278,700 shares
of its common stock. Additionally, the Company also increased its dividend to shareholders by 31.3%.
Although 2019 was a modest year for net income, our profitability was challenged as we experienced a
flattening yield curve and three interest rate cuts during the year which negatively impacted our net interest
margin. Despite these obstacles, we managed to grow net income by $521 thousand and increase earnings per
share from continuing operations from $1.24 in 2018 to $1.28 for 2019.
During 2019 our focus was on loan growth, increasing noninterest income, managing our noninterest expenses
and significantly decreasing our borrowings. Loan originations remained strong throughout 2019 but was offset by
some unexpected large payoffs and one large loan that closed 3 days after year-end. Noninterest income from
continuing operations grew by $1 million year-over-year and our noninterest expense costs only increased by 2%.
Our dependency on alternative funding sources, i.e. short-term FHLB borrowings decreased by $59.6 million. By
reducing our borrowings, we helped stabilize our cost of funds and minimize compression to our net interest
margin.
In 2020 we continue to be innovative and opportunistic. In March of 2020, we opened a new de-novo
branch in West Ocean City, Maryland to complement our Loan Production Office that opened in April of 2017.
Our new branch will operate in a much smaller space, with new technology and a sleek new design much different
than our existing branches.
Giving back to the communities we serve continues to be a high priority to our employees and our Company.
In 2019, our employees volunteered 6,759 hours to local organizations. In return, the Company invested over
$298 thousand to help support non-profit organizations throughout our footprint.
In closing, we thank our board of directors, shareholders, employees and customers for your support and
investment in Shore Bancshares.
Sincerely,
Lloyd L. “Scott” Beatty, Jr.
President & CEO, Shore United Bank & Shore Bancshares, Inc.
Frank E. Mason, lll
Board Chairman
SHORE BANCSHARES | ANNUAL REPORT 2019
WEBSITE VISITS
2019
1,350,792
We strive to keep our
website as current, useful
and accessible as
possible. We are
consistently updating
information and
improving the user
experience on our site
throughout the year.
MOBILE BANKING
USERS
10,768
With the ability to do just about anything right from your
phone, banking with us is no exception. We spend ample time
making sure our mobile services are comparable to those of
mega banks. Our mobile banking users grew 23% over 2018
and we anticipate that number to continue to grow.
PAY SOMEONE
TRANSACTIONS
3,033
This past year we rolled out Pay Someone, a new person-to-person payment
system. Our customers have quickly adopted this convenient online and
mobile service and have successfully incorporated it into their financial routine.
SHORE BANCSHARES | ANNUAL REPORT 2019
3,231
SOCIAL MEDIA
AUDIENCE
Facebook page likes grew to 2,622 - a 23% increase over 2018.
Instagram followers increased by 475%, to an accumulated 316
followers. Our LinkedIn follower count totaled at 277 and we
have received 237 5-star reviews on Google, which equates to an
average star rating of 4.7.
18,125
ONLINE BANKING
USERS
Each year, the number of customers who are
utilizing our digital services grows and 2019 was
no different. Our online banking customers
increased by 13% over 2018.
948 ACCOUNTS USING
DIGITAL WALLETS
We began offering digital wallets in April giving our
customers the ability to enroll their Shore United Bank
debit card(s), which allows them to use their mobile
device to make purchases at participating merchants.
30,560 MOBILE CHECK
DEPOSITS
Supporting our initiative to offer innovative digital services, our mobile check
deposits increased by 16% over 2018. This allows customers to bank with us
anytime no matter where they are!
SHORE BANCSHARES | ANNUAL REPORT 2019
COMMUNITY COMMITMENT
GIVINGTUESDAY
SHORE UNITED BANK BRANCH MANAGERS WITH CHECKS IN HAND TO
DONATE TO LOCAL NON-PROFIT ORGANIZATIONS
At Shore United Bank, we stand for something beyond
our products and services. We invest in organizations
that are impactful and help support the communities
we serve.
Last year, our employees were actively involved in
creating and selling Shore United Bank cookbooks to
raise money to donate in honor of GivingTuesday.
GivingTuesday is a global giving movement, where
companies come together to give back to their local
communities. Collectively, we donated over $7,000 to
23 different non-profit organizations. Each of our
locations chose a non-profit organization to donate
their cookbook proceeds to. Non-profit organizations
benefiting from this initiative included health and
human service organizations, such as homeless shelters
and food banks; youth and education organizations,
such as schools and youth sports teams; and animal
rescue organizations, such as shelters and clinics.
6,579
VOLUNTEER HOURS
GIVING BACK
1,572-hours
645-hours
700-hours
353-hours
2,636-hours
44-hours
463-hours
166-hours
24%
10%
11%
5%
Youth
&
Education
Environmental
&
Agriculture
Community
Development
Arts, Culture
&
Humanities
39%
Faith
&
Public
Service
1%
Active Duty
&
Veterans
7%
Health
&
Human
Service
3%
Animal
&
Humane
Societies
DOLLARS INVESTED BACK INTO THE COMMUNITY
COMMUNITY
$298,040
SHORE BANCSHARES | ANNUAL REPORT 2019
QUALIFIED
REFERRALS
WYE FINANCIAL & TRUST
4% increase over last year
A qualified referral occurs when an employee identifies a
customer’s need and the customer accepts the invitation
to meet with a financial advisor of Wye Financial & Trust.
FINANCIAL LITERACY PROGRAM
MONEY MANAGEMENT 101
We believe it is important to help local
schools, senior centers, and other
organizations by providing financial
education through on-site programs
and presentations. Year after year, our
employees volunteer countless hours
to provide credit counseling and
financial literacy training to people of
all ages. In 2016, Shore United Bank
began a partnership with His Hope
Ministries, a local homeless shelter in
Denton, Maryland to teach a
six-week course on financial literacy.
This partnership, along with our
involvement in other organizations,
has inspired us to launch Money
Management 101. This online program
makes the financial information that
our employees review with many
organizations accessible to everyone -
to help us all make wiser financial
decisions with less stress and more
confidence!
5-STAR RATING FROM BAUERFINANCIAL, INC.
For fourteen consecutive quarters, Shore United Bank
has achieved a 5-Star Rating from BauerFinancial, Inc.
for financial strength and stability. 5-Star rated
financial institutions are considered superior and are
listed on BauerFinancial’s “recommended” report.
BauerFinancial star ratings classify each institution
based upon a complex formula factoring in current and
historical data. We not only excel in areas of capital
adequacy, profitability, asset quality but help our
neighbors and local businesses grow our communities
with prudent lending and innovative solutions, all
without compromising our financial health.
BEST OF EASTERN SHORE
WHAT’S UP? EASTERN SHORE MAGAZINE
Our local lifestyle magazine, What’s Up Eastern Shore,
sponsors an annual ‘Best of Eastern Shore’ reader’s poll.
The ‘Best of’ title is an annual award recognizing the
best businesses and services that Maryland’s Eastern
Shore has to offer as voted by the magazine’s readers.
Shore United Bank has won the title of Best Bank for
four consecutive years along with titles for Best
Customer Service and Best Mortgage Lender. Wye
Financial & Trust has also won titles in the Best of
Eastern Shore reader’s poll for Best Financial Advisor
for the past four consecutive years.
SHORE BANCSHARES | ANNUAL REPORT 2019
NEW INNOVATIVE BRANCH
WITH SLEEK DESIGN
Our newest branch to open Spring 2020!
12905-B OCEAN GATEWAY
OCEAN CITY, MD 21842
For decades, banks have been
wrestling with the question - what
role will brick and mortar branches
have in the future? Will digital
banking services take over and
customers no longer want or need
to come into a branch?
We determined that we need to
continue to have a physical
presence with less square footage,
offering more technological
advancements and a modern
design. While some banks have
opted to turn their branch space
into cafes and lounges or eliminate
transactions, we chose to create a
welcoming space with technology,
simplicity and style to showcase
our full-service suite of products
and services delivered by a team
of experienced professionals.
Our new branch in West Ocean
City not only offers a more
modern look in comparison to our
existing branches, but it also
includes technologies to create
operational efficiencies. Cash
recyclers will be used at this
location providing a more secure
place to store money and keep
accurate accounting of cash.
The new branch was strategically
selected to meet the needs of
local consumers and businesses
and to complement our already
established Loan Production office
that opened in April of 2017.
Ocean City, MD is in Worcester
County and is one of the largest
vacation spots on the East Coast
bringing a large number of tourists
and businesses to the area from
Washington, D.C., Baltimore,
Philadelphia and Delaware. This
area of the lower Eastern Shore
offers growth and new
opportunities for the bank.
Branch Remodel To Begin Q2 2020 - 212 Marlboro Avenue, Easton, Maryland
SHORE BANCSHARES | ANNUAL REPORT 2019
BOARD OF DIRECTORS
SHORE BANCSHARES & SHORE UNITED BANK
CHAIRMAN OF THE BOARD
Frank E. Mason, III
President & Chief Executive Officer, JASCO
OFFICERS | SHORE BANCSHARES
PRESIDENT & CHIEF EXECUTIVE OFFICER
Lloyd L. “Scott” Beatty, Jr.
PRESIDENT & CHIEF EXECUTIVE OFFICER
Lloyd L. “Scott” Beatty, Jr.
EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Edward C. Allen
David J. Bates
Investor
Blenda W. Armistead
Investor
EXECUTIVE VICE PRESIDENT & CHIEF OPERATING OFFICER
Donna J. Stevens
EXECUTIVE VICE PRESIDENT & GENERAL COUNSEL
W. David Morse
R. Michael Clemmer, Jr.
President, Salisbury, Inc.
OFFICERS | SHORE UNITED BANK
David A. Fike
Investor
PRESIDENT & CHIEF EXECUTIVE OFFICER
Lloyd L. “Scott” Beatty, Jr.
James A. Judge
Certified Public Accountant, Anthony Judge & Ware, LLC
EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Edward C. Allen
Clyde V. Kelly, III
President & General Manager, Kelly Distributors
EXECUTIVE VICE PRESIDENT & CHIEF OPERATING OFFICER
Donna J. Stevens
David W. Moore
President & Chief Executive Officer
Milford Housing Development Corporation
Jeffrey E. Thompson
Managing Partner, Thompson & Richard, LLP
EXECUTIVE VICE PRESIDENT/LEGAL COUNSEL CORPORATE SECRETARY
W. David Morse
EXECUTIVE VICE PRESIDENT & CHIEF CREDIT OFFICER
Charles E. Ruch, Jr.
EXECUTIVE VICE PRESIDENT & CHIEF LENDING OFFICER
Michael T. Cavey
EXECUTIVE VICE PRESIDENT & CHIEF RETAIL BANKING OFFICER
Jennifer Joseph
SENIOR VICE PRESIDENT & CHIEF INFORMATION OFFICER
Timothy J. Berrigan
SENIOR VICE PRESIDENT & CHIEF MARKETING & PROJECT OFFICER
Debra H. Rich
SENIOR VICE PRESIDENT & CHIEF HUMAN RESOURCES OFFICER
Marie DiDaniels
SHORE BANCSHARES | ANNUAL REPORT 2019
SHORE BANCSHARES
HEADQUARTERS
18 E. Dover Street
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
DOVER
CAMDEN
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
51 Mercedes Way
Edgewood, NY 11717
866.232.0392
720.358.3588
SHORE BANCSHARES | ANNUAL REPORT 2019
Kent CountyKent CountySussex CountyCarolineCountyQueen Anne’sCountyDorchesterCounty SHOREBANCSHARES.COM | 410.763.7800
NASDAQ: SHBI