# EDGAR Filing Document

**Accession Number:** 0001035092
**File Stem:** 0001104659-23-007028
**Filing Date:** 2023-1
**Character Count:** 64224
**Document Hash:** d61c9ef8a4e148a9e9467bc054aed643
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-007028.hdr.sgml**: 20230126

**ACCESSION NUMBER**: 0001104659-23-007028

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230126

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230126

**DATE AS OF CHANGE**: 20230126

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SHORE BANCSHARES INC
- **CENTRAL INDEX KEY:** 0001035092
- **STANDARD INDUSTRIAL CLASSIFICATION:** NATIONAL COMMERCIAL BANKS [6021]
- **IRS NUMBER:** 521974638
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-22345
- **FILM NUMBER:** 23558048

**BUSINESS ADDRESS:**
- **STREET 1:** 18 EAST DOVER STREET
- **CITY:** EASTON
- **STATE:** MD
- **ZIP:** 21601-3013
- **BUSINESS PHONE:** 4108221400

**MAIL ADDRESS:**
- **STREET 1:** 18 EAST DOVER STREET
- **CITY:** EASTON
- **STATE:** MD
- **ZIP:** 21601-3013

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K**

**CURRENT REPORT**

**PURSUANT TO SECTION 13 OR 15(d) OF THE** 

**SECURITIES EXCHANGE ACT OF 1934**

Date of Report (Date of earliest event reported): January 26, 2023

**<u>SHORE BANCSHARES, INC.</u>**

(Exact name of registrant as specified in its charter)

<u>Maryland</u> <u>000-22345</u> <u>52-1974638</u> <br> (State or other jurisdiction of (Commission file number) (IRS Employer <br> incorporation or organization) Identification No.)

<u>18 E. Dover St., Easton, Maryland 21601</u>

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: <u>(410) 763-7800</u>

<u>N/A</u>

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

◻ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

◻ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

◻ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

◻ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;Title of Each Class | &nbsp;&nbsp;Trading Symbol | &nbsp;&nbsp;Name of Each Exchange on Which <br> Registered |
| &nbsp;&nbsp;Common stock, par value $.01 per share | &nbsp;&nbsp;SHBI | &nbsp;&nbsp;Nasdaq Global Select Market |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

**Item 2.02. Result of Operation and Financial Condition.**

On January 26, 2023, Shore Bancshares, Inc. (the "Company") issued a press release setting forth the Company's fourth quarter and year-to-date 2022 financial results. A copy of the Company's press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference

The information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Company under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.

**Item 9.01 Financial Statements and Exhibits.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Exhibits.

The exhibits that are filed or furnished with this report are listed in the Exhibit Index that immediately follows the signatures hereto, which list is incorporated herein by reference.

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| Exhibit |  |
| Number | Description |
| [99.1](tm234508d1_ex99-1.htm) | [Press Release, dated January 26, 2023 (filed herewith)](tm234508d1_ex99-1.htm) |
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document) |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | SHORE BANCSHARES, INC. | SHORE BANCSHARES, INC. |
| Dated: January 26, 2023 | By: | /s/ Lloyd L. Beatty, Jr. |
|  |  | Lloyd L. Beatty, Jr. |
|  |  | President and Chief Executive Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

![](tm234508d1_ex99-1img01.jpg)

**18 E. Dover Street**

**Easton** **, Maryland 21601**

**Phone 410-763-7800**

PRESS RELEASE

<u>Shore Bancshares Reports 2022 Financial Results</u>

Easton, Maryland (01/26/2023) - Shore Bancshares, Inc. (NASDAQ - SHBI) (the "Company") reported net income of $8.407 million or $0.42 per diluted common share for the fourth quarter of 2022, compared to net income of $9.658 million or $0.49 per diluted common share for the third quarter of 2022, and net income of $2.723 million or $0.16 per diluted common share for the fourth quarter of 2021. Net income for the fiscal year of 2022 was $31.177 million or $1.57 per diluted common share, compared to net income for the fiscal year of 2021 of $15.368 million or $1.17 per diluted common share. Net income, excluding merger related expenses, for the fourth quarter of 2022 was $9.123 million or $0.46 per diluted common share, compared to net income, excluding merger related expenses, of $9.774 million or $0.49 per diluted common share for the third quarter of 2022 and net income, excluding merger related expenses, of $7.914 million or $0.46 per diluted common share for the fourth quarter 2021. Net income, excluding merger related expenses, for the fiscal year of 2022 was $32.728 million or $1.65 per diluted common share compared to net income for the fiscal year of 2021 of $21.237 million or $1.62 per diluted common share. On December 14, 2022, the Company and The Community Financial Corporation ("TCFC") announced that they had entered into a merger agreement pursuant to which TCFC will be merged with and into the Company. The Company anticipates additional merger-related expenses due to the pending TCFC acquisition.

When comparing net income, excluding merger related expenses, for the fourth quarter of 2022 to the third quarter of 2022, net income decreased $651 thousand due to a decrease in net interest income of $372 thousand and an increase in noninterest expense of $1.3 million partially offset by an increase in noninterest income of $518 thousand and a decrease in provision for credit losses of $225 thousand. When comparing net income, excluding merger related expenses, for the fourth quarter of 2022 to the fourth quarter of 2021, net income increased $1.2 million primarily due to increases in net interest income of $6.3 million and noninterest income of $733 thousand offset by increases in noninterest expense of $4.2 million due to the acquisition of Severn Bank ("Severn") in November of 2021.

"We are pleased to report our fourth quarter earnings and fiscal year 2022 financial results" said Lloyd L. "Scott" Beatty, Jr., President and Chief Executive Officer. "In 2022, we experienced significant loan growth of just over 20% and successful integration of Severn. With the recent announcement of our pending merger with TCFC, we expect the future of the combined organizations to be very promising given our ability to help customers with higher loan limits, make greater investments in technology and increased career opportunities for employees."

**Balance Sheet Review**

Total assets were $3.477 billion at December 31, 2022, a $17.1 million, or less than 1.0%, increase when compared to $3.460 billion at the end of 2021. During 2022, the Company shifted its asset mix by deploying cash and cash equivalents into higher yielding assets which consisted of loans and investment securities. As of December 31, 2022, the Company had 4 Paycheck Protection Program ("PPP') loans totaling $187 thousand that were outstanding.

Total deposits decreased $16.5 million, or less than 1%, when compared to December 31, 2021. The decrease in total deposits was due to decreases in money market and savings accounts of $85.7 million, noninterest-bearing deposits of $65.5 million and time deposits of $35.2 million, partially offset by an increase in interest bearing checking accounts of $170.0 million.

Page 2 of 15

Total stockholders' equity increased $13.6 million, or 3.9%, when compared to December 31, 2021, primarily due to current year earnings, partially offset by an increase in unrealized losses on available for sale securities of $9.1 million. At December 31, 2022, the ratio of total equity to total assets was 10.48% and the ratio of total tangible equity to total tangible assets was 8.67% compared to 10.14% and 8.25% at the end of 2021, respectively.

**Review of Quarterly Financial Results** 

Net interest income was $26.9 million for the fourth quarter of 2022, compared to $27.3 million for the third quarter of 2022 and $20.6 million for the fourth quarter of 2021. The decrease in net interest income when compared to the third quarter of 2022 was primarily due to increases in interest expense on interest-bearing deposits of $2.0 million. In addition, the decrease in the average balance on deposits with other banks of $187.3 million resulted in a decrease in interest income of $802 thousand, partially offset by an increase in interest and fees on loans of $1.7 million and interest on investment securities of $759 thousand. The improvement in interest and fees on loans was due to an increase in the average balance of loans of $140.0 million, or 6.0%. The decrease in interest on deposits at other banks was due to the utilization of cash to fund loan growth with higher yields. The increase in interest on taxable investment securities was driven by an increase in the rates of 33bps and an increase in the average balance within these securities of $43.1 million, or 7.0%.

The increase in net interest income when compared to the fourth quarter of 2021 was primarily due to increases in interest and fees on loans of $7.1 million, interest on taxable investment securities of $2.3 million and interest on deposits with other banks of $495 thousand, partially offset by expense increases in interest-bearing deposits of $3.3 million, short term borrowings of $69 thousand and long-term borrowings of $228 thousand.

The Company's net interest margin decreased to 3.35% for the fourth quarter of 2022 from 3.38% for the third quarter of 2022 and increased compared to 2.87% for the fourth quarter of 2021. The decrease in net interest margin when compared to the third quarter of 2022 was primarily due to higher rates paid on interest bearing deposits and borrowings partially offset by higher yields on earning assets. The increase in net interest margin compared to the fourth quarter of 2021 was due to significantly higher volume as well as improved yields on all earning assets.

The provision for credit losses was $450 thousand for the three months ended December 31, 2022. The comparable amounts were $675 thousand and $(1.7) million for the three months ended September 30, 2022, and December 31, 2021, respectively. The decrease in the provision for credit losses during the fourth quarter of 2022 as compared to the prior quarters was primarily a result of eliminating pandemic related qualitative reserves in the fourth quarter of 2022. Net charge offs for the fourth quarter of 2022 were $84 thousand, compared to net recoveries of $119 thousand for the third quarter of 2022 and net recoveries of $142 thousand for the fourth quarter of 2021. The ratio of the allowance for credit losses to period-end loans, excluding PPP loans and acquired loans, was 0.78% at December 31, 2022, compared to 0.84% at September 30, 2022, and 0.96% at December 31, 2021. The decline in the percentage of the allowance from the third quarter of 2022 was primarily due to eliminating pandemic related qualitative reserves. The decline in the percentage of the allowance from the fourth quarter of 2021 was primarily the result of lower historical loss experience as well as eliminating pandemic related qualitative reserves.

At December 31, 2022 and September 30, 2022, nonperforming assets were $4.0 million and $2.8 million, respectively. The balance of nonperforming assets increased primarily due to an increase in loans 90 days past due still accruing of $1.2 million at December 31, 2022 compared to September 30, 2022. When comparing the fourth quarter of 2022 to the fourth quarter of 2021, nonperforming assets increased $902 thousand, or 29.6%, primarily due to increases in loans 90 days past due and still accruing of $1.3 million, or 262.4% which was a result of growth and timing of matured loans. Accruing TDRs decreased $1.3 million, or 22.3%, compared to the fourth quarter of 2021. The ratio of nonperforming assets and accruing TDRs to total assets at December 31, 2022, and September 30, 2022 was 0.24% and 0.21% respectively, and was 0.25% at December 31, 2021. In addition, the ratio of accruing TDRs to total loans at December 31, 2022 was 0.17% compared to 0.19% at September 30, 2022 and 0.27% at December 31, 2021.

Total noninterest income for the fourth quarter of 2022 increased $518 thousand, or 9.7%, when compared to the third quarter of 2022 and increased $733 thousand, or 14.3%, when compared to the fourth quarter of 2021. The increase compared to the third quarter of 2022 was primarily due to increases in revenue associated with the mortgage division of $887 thousand, or 130.4%, partially offset by decreases in other banking fees of $206 thousand, or 6.5% and service charges on deposit accounts of $163 thousand, or 10.8%. The increase in noninterest income when compared to the fourth quarter of 2021 was primarily due to increases in revenue associated with the mortgage division of $619 thousand, or 65.3% and, service charges on deposit accounts of $112 thousand, or 9.1%.

Page 3 of 15

Total noninterest expense, excluding merger related expenses, for the fourth quarter of 2022 increased $1.3 million or 6.9%, when compared to the third quarter of 2022 and increased $4.2 million, or 26.1%, when compared to the fourth quarter of 2021. The increase in noninterest expense when compared to the third quarter of 2022 was primarily due to an increase in accruals on bonuses and group insurance in the fourth quarter. The increase from the fourth quarter of 2021 was primarily due to increases in salaries and wages, employee related benefits, occupancy expense, data processing, amortization of intangible assets and legal and professional fees, which were all significantly impacted by adding Severn and its operations and the addition of two new branches in 2022.

**Review of 2022 Financial Results**

Net interest income for 2022 was $101.3 million, an increase of $37.2 million, or 58.0%, when compared to 2021. The increase in net interest income was primarily due to an increase in total interest income of $43.7 million, or 62.2%, specifically interest and fees on loans of $34.3 million, or 53.0%. The improvement in interest and fees on loans was primarily due to the increase in the average balance of $725.2 million, or 46.2%, coupled with accretion income from acquired loans of $3.0 million for 2022. Taxable investment securities and interest on deposits with other banks increased $6.5 million and $2.8 million, respectively, partially offset by an increase in total interest expense of $6.5 million, or 107.7%. The increase in interest expense was primarily the result of an increase in the average balance of interest-bearing deposits of $684.5 million, or 47.5%. Interest on short term and long-term borrowings increased by $988 thousand due to short and long-term advances with the FHLB and junior subordinated debt acquired as part of the Severn acquisition. The long-term advances with the FHLB matured in October of 2022.

The provision for credit losses for 2022 and 2021 was $1.9 million and $(358) thousand, respectively. The increase in provision for credit losses was the result of an increase in loans held for investment in 2022 of $436.9 million. The ratio of the allowance to total loans decreased from 0.66% at December 31, 2021, to 0.65% at December 31, 2022. Excluding PPP loans and acquired loans, the ratio of the allowance for credit losses to period-end loans was 0.78% at December 31, 2022, lower than the 0.96% at December 31, 2021, primarily due to lower historical loss experience and the elimination of pandemic related qualitative factors.

Total noninterest income for 2022 increased $9.6 million, or 71.0%, when compared to the same period in 2021. The increase in noninterest income primarily consisted of revenue associated with the mortgage division of $4.3 million, service charges on deposit accounts of $2.3 million, revenue from Mid-Maryland Title of $1.1 million and other noninterest income of $1.2 million. The increase in other noninterest income was primarily due to increases in rental fee income of $1.3 million.

Total noninterest expense, excluding merger related expenses, for 2022 increased $29.9 million, or 62.0%, when compared to the same period in 2021. The increase was primarily the result of higher salaries, employee benefits, occupancy expense, other intangibles, data processing costs, other noninterest expenses, and FDIC insurance premiums due to significant increases in new and existing customers and the acquisition of Severn and its operations and the addition of two new branches in 2022. In addition, during 2022 the Company recorded merger-related expenses of $1.2 million due to the acquisition of Severn and $935 thousand due to the pending merger with TCFC.

**Shore Bancshares Information**

Shore Bancshares 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. Shore Bancshares engages in trust and wealth management services through Wye Financial Partners, a division of Shore United Bank. Additional information is available at www.shorebancshares.com.

Page 4 of 15

**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. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing war in Ukraine; the potential resurgence of the COVID-19 pandemic and related variants and mutations and their impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; the transition away from USD LIBOR and uncertainty regarding potential alternative reference rates, including SOFR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; and other factors that may affect our future results. 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.

**For further information contact: Vance Adkins, Executive Vice President, and Chief Financial Officer, 410-763-7800**

Page 5 of 15

**Shore Bancshares, Inc.**

Financial Highlights (Unaudited)

(Dollars in thousands, except per share data)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | For the Three Months Ended | For the Three Months Ended | For the Three Months Ended | For the Year Ended | For the Year Ended | For the Year Ended |
|  | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, |
|  | **2022** | 2021 | Change | **2022** | 2021 | Change |
| PROFITABILITY FOR THE PERIOD |  |  |  |  |  |  |
| &nbsp;&nbsp;Net interest income | $**26943** | $20639 | 30.5 | $**101302** | $64130 | 58 |
| &nbsp;&nbsp;Provision for credit losses | **450** | (1723) | 126.1 | **1925** | (358) | 637.7 |
| &nbsp;&nbsp;Noninterest income | **5862** | 5129 | 14.3 | **23086** | 13498 | 71 |
| &nbsp;&nbsp;Noninterest expense | **21000** | 23497 | (10.6) | **80322** | 56806 | 41.4 |
| &nbsp;&nbsp;Income before income taxes | **11355** | 3994 | 184.3 | **42141** | 21180 | 99 |
| &nbsp;&nbsp;Income tax expense | **2948** | 1271 | 131.9 | **10964** | 5812 | 88.6 |
| Net income | $**8407** | $2723 | 208.7 | $**31177** | $15368 | 102.9 |
| &nbsp;&nbsp;Return on average assets | **0.97%** | 0.36% | 61 | **0.90%** | 0.66% | 24 |
| &nbsp;&nbsp;Return on average assets excluding amortization of intangibles and merger related expenses - Non-GAAP (2) | **1.09** | 1.07 | 2 | **0.99** | 0.95 | 4 |
| &nbsp;&nbsp;Return on average equity | **9.22** | 3.59 | 563 | **8.76** | 6.86 | 190 |
| &nbsp;&nbsp;Return on average tangible equity - Non-GAAP (1), (2) | **12.83** | 13.06 | (23) | **11.96** | 11.34 | 62 |
| &nbsp;&nbsp;Net interest margin | **3.35** | 2.87 | 48 | **3.15** | 2.94 | 21 |
| &nbsp;&nbsp;Efficiency ratio - GAAP | **64.01** | 91.19 | (2718) | **64.57** | 73.18 | (861) |
| &nbsp;&nbsp;Efficiency ratio - Non-GAAP (1), (2) | **59.59** | 60.13 | (54) | **61.21** | 61.15 | 6 |
| PER SHARE DATA |  |  |  |  |  |  |
| &nbsp;&nbsp;Basic and diluted net income per common share | $**0.42** | $0.16 | 167.1 | $**1.57** | $1.17 | 34.1 |
| &nbsp;&nbsp;Dividends paid per common share | $**0.12** | $0.12 |  | $**0.48** | $0.48 |  |
| &nbsp;&nbsp;Book value per common share at period end | **18.34** | 17.71 | 3.6 |  |  |  |
| &nbsp;&nbsp;Tangible book value per common share at period end - Non-GAAP (1) | **14.87** | 14.12 | 5.3 |  |  |  |
| &nbsp;&nbsp;Market value at period end | **17.43** | 20.85 | (16.4) |  |  |  |
| &nbsp;&nbsp;Market range: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;High | **20.85** | 23.19 | (10.1) | **21.41** | 23.19 | (7.7) |
| &nbsp;&nbsp;&nbsp;&nbsp;Low | **17.04** | 17.50 | (2.6) | **17.04** | 12.99 | 31.2 |
| AVERAGE BALANCE SHEET DATA |  |  |  |  |  |  |
| &nbsp;&nbsp;Loans | $**2467324** | $1887126 | 30.7 | $**2293627** | $1568468 | 46.2 |
| &nbsp;&nbsp;Investment securities | **661968** | 468724 | 41.2 | **589842** | 329890 | 78.8 |
| &nbsp;&nbsp;Earning assets | **3206591** | 2842097 | 12.8 | **3220672** | 2185123 | 47.4 |
| &nbsp;&nbsp;Assets | **3441079** | 3037262 | 13.3 | **3444981** | 2317597 | 48.6 |
| &nbsp;&nbsp;Deposits | **3006734** | 2547151 | 18 | **3014109** | 2015624 | 49.5 |
| &nbsp;&nbsp;Stockholders' equity | **361623** | 301095 | 20.1 | **355850** | 224055 | 58.8 |

---

Page 6 of 15

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| CREDIT QUALITY DATA |  |  |  |  |  |  |
| &nbsp;&nbsp;Net (recoveries) /chargeoffs | $**84** | $(142) | 159.2 | $**(774)** | $(414) | (87.0) |
| &nbsp;&nbsp;Nonaccrual loans | $**1908** | $2004 | (4.8) |  |  |  |
| &nbsp;&nbsp;Loans 90 days past due and still accruing | **1841** | 508 | 262.4 |  |  |  |
| &nbsp;&nbsp;Other real estate owned | **197** | 532 | (63.0) |  |  |  |
| &nbsp;&nbsp;Total nonperforming assets | **3946** | 3044 | 29.6 |  |  |  |
| &nbsp;&nbsp;Accruing troubled debt restructurings (TDRs) | **4405** | 5667 | (22.3) |  |  |  |
| &nbsp;&nbsp;Total nonperforming assets and accruing TDRs | $**8351** | $8711 | (4.1) |  |  |  |
| CAPITAL AND CREDIT QUALITY RATIOS |  |  |  |  |  |  |
| &nbsp;&nbsp;Period-end equity to assets | **10.48%** | 10.14% | 34 |  |  |  |
| &nbsp;&nbsp;Period-end tangible equity to tangible assets - Non-GAAP (1) | **8.67** | 8.25 | 42 |  |  |  |
| &nbsp;&nbsp;Annualized net (recoveries) to average loans | **0.01** | (0.03) | 4 | **(0.03)%** | (0.03)% |  |
| &nbsp;&nbsp;Allowance for credit losses as a percent of: |  |  |  |  |  |  |
| &nbsp;&nbsp;Period-end loans (3) | **0.65** | 0.66 | (1) |  |  |  |
| &nbsp;&nbsp;Period-end loans (4) | **0.78** | 0.96 | (18) |  |  |  |
| &nbsp;&nbsp;Nonaccrual loans | **872.27** | 695.81 | 17646 |  |  |  |
| &nbsp;&nbsp;Nonperforming assets | **421.77** | 458.08 | (3631) |  |  |  |
| &nbsp;&nbsp;Accruing TDRs | **377.82** | 246.06 | 13176 |  |  |  |
| &nbsp;&nbsp;Nonperforming assets and accruing TDRs | **199.29** | 160.07 | 3922 |  |  |  |
| &nbsp;&nbsp;As a percent of total loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;Nonaccrual loans | **0.07** | 0.09 | (2) |  |  |  |
| &nbsp;&nbsp;Accruing TDRs | **0.17** | 0.27 | (10) |  |  |  |
| &nbsp;&nbsp;Nonaccrual loans and accruing TDRs | **0.25** | 0.36 | (11) |  |  |  |
| &nbsp;&nbsp;As a percent of total loans+other real estate owned: |  |  |  |  |  |  |
| &nbsp;&nbsp;Nonperforming assets | **0.15** | 0.14 | 1 |  |  |  |
| &nbsp;&nbsp;Nonperforming assets and accruing TDRs | **0.33** | 0.41 | (8) |  |  |  |
| &nbsp;&nbsp;As a percent of total assets: |  |  |  |  |  |  |
| &nbsp;&nbsp;Nonaccrual loans | **0.05** | 0.06 | (1) |  |  |  |
| &nbsp;&nbsp;Nonperforming assets | **0.11** | 0.09 | 2 |  |  |  |
| &nbsp;&nbsp;Accruing TDRs | **0.13** | 0.16 | (3) |  |  |  |
| &nbsp;&nbsp;Nonperforming assets and accruing TDRs | **0.24** | 0.25 | (1) |  |  |  |

---

(1) See the reconciliation table that begins on page 14 of 15.

(2) This ratio excludes merger related expenses (Non-GAAP) on page 5.

(3) As of December 31, 2022 and December 31, 2021, these ratios include all loans held for investment, including PPP loans of $187 thousand
and $27.6 million, respectively.

(4) As of December 31, 2022 and December 31, 2021, these ratios exclude PPP loans, acquired loans, and the associated purchase discount
mark on the acquired loans from both Severn and Northwest.

Page 7 of 15

**Shore Bancshares, Inc.**

Consolidated Balance Sheets (Unaudited)

(In thousands, except per share data)

---

| | | | |
|:---|:---|:---|:---|
|  |<br>**December 31,**<br>**2022** |<br>December 31,<br>2021 | December 31, 2022<br>compared to<br>December 31, 2021 |
| ASSETS |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and due from banks | $**37661** | $16919 | 122.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing deposits with other banks | **17838** | 566694 | (96.9) |
| &nbsp;&nbsp;Cash and cash equivalents | **55499** | 583613 | (90.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment securities available for sale (at fair value) | **83587** | 116982 | (28.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment securities held to maturity (at amortized cost) | **559455** | 404594 | 38.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity securities, at fair value | **1233** | 1372 | (10.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted securities | **11169** | 4159 | 168.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans held for sale, at fair value | **4248** | 37749 | (88.7) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans held for investment | **2556107** | 2119175 | 20.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: allowance for credit losses | **(16643)** | (13944) | 19.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans, net | **2539464** | 2105231 | 20.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Premises and equipment, net | **51488** | 51624 | (0.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill | **63266** | 63421 | (0.2) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other intangible assets, net | **5547** | 7535 | (26.4) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other real estate owned, net | **197** | 532 | (63.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage servicing rights, at fair value | **5275** | 4087 | 29.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Right of use assets, net | **9629** | 11370 | (15.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash surrender value on life insurance | **59218** | 47935 | 23.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | **28001** | 19932 | 40.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $**3477276** | $3460136 | 0.5 |
| LIABILITIES |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noninterest-bearing deposits | $**862015** | $927497 | (7.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing deposits | **2147769** | 2098739 | 2.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | **3009784** | 3026236 | (0.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Securities sold under retail repurchase agreements | **—** | 4143 | (100.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advances from FHLB - short-term | **40000** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advances from FHLB - long-term | **—** | 10135 | (100.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subordinated debt | **43072** | 42762 | 0.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total borrowings | **83072** | 57040 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | **9908** | 11567 | (14.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities | **10227** | 14600 | (30.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | **3112991** | 3109443 | 0.1 |
| COMMITMENTS AND CONTINGENCIES |  |  |  |
| STOCKHOLDERS' EQUITY |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, par value $0.01; authorized 35,000,000 shares | **199** | 198 | 0.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid in capital | **201494** | 200473 | 0.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | **171613** | 149966 | 14.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss) income | **(9021)** | 56 | (16208.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | **364285** | 350693 | 3.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $**3477276** | $3460136 | 0.5 |
| Period-end common shares outstanding | **19865** | 19808 | 0.3 |
| Book value per common share | $**18.34** | $17.71 | 3.6 |

---

Page 8 of 15

**Shore Bancshares, Inc.**

Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | For the Three Months Ended | For the Three Months Ended | For the Three Months Ended | For the Year Ended | For the Year Ended | For the Year Ended |
|  | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, |
|  | **2022** | 2021 | % Change | **2022** | 2021 | % Change |
| INTEREST INCOME |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest and fees on loans | $**27664** | $20564 | 34.5% | $**99122** | $64795 | 53.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on investment securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxable | **3945** | 1663 | 137.2 | **11507** | 5006 | 129.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax-exempt | **6** |  | 100.0 | **6** |  | 100.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on deposits with other banks | **664** | 169 | 292.9 | **3210** | 368 | 772.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income | **32279** | 22396 | 44.1 | **113845** | 70169 | 62.2 |
| INTEREST EXPENSE |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on deposits | **4554** | 1272 | 258.0 | **9983** | 4461 | 123.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on short-term borrowings | **72** | 3 | 2300.0 | **74** | 8 | 825.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on long-term borrowings | **710** | 482 | 47.3 | **2486** | 1570 | 58.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest expense | **5336** | 1757 | 203.7 | **12543** | 6039 | 107.7 |
| NET INTEREST INCOME | **26943** | 20639 | 30.5 | **101302** | 64130 | 58.0 |
| Provision for credit losses | **450** | (1723) | 126.1 | **1925** | (358) | 637.7 |
| NET INTEREST INCOME AFTER PROVISION |  |  |  |  |  |  |
| &nbsp;&nbsp;FOR CREDIT LOSSES | **26493** | 22362 | 18.5 | **99377** | 64488 | 54.1 |
| NONINTEREST INCOME |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Service charges on deposit accounts | **1346** | 1234 | 9.1 | **5652** | 3396 | 66.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Trust and investment fee income | **401** | 522 | (23.2) | **1784** | 1881 | (5.2) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gains on sales and calls of investment securities | **—** |  |  | **—** | 2 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interchange credits | **1280** | 1043 | 22.7 | **4812** | 3964 | 21.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage-banking revenue | **1567** | 948 | 65.3 | **5210** | 948 | 449.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Title Company revenue | **194** | 247 | (21.5) | **1340** | 247 | 442.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other noninterest income | **1074** | 1135 | (5.4) | **4288** | 3060 | 40.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest income | **5862** | 5129 | 14.3 | **23086** | 13498 | 71.0 |
| NONINTEREST EXPENSE |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Salaries and wages | **8909** | 7727 | 15.3 | **35931** | 21222 | 69.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Employee benefits | **2786** | 2271 | 22.7 | **9908** | 7262 | 36.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Occupancy expense | **1694** | 1263 | 34.1 | **6242** | 3690 | 69.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Furniture and equipment expense | **648** | 385 | 68.3 | **2018** | 1553 | 29.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;Data processing | **1856** | 1487 | 24.8 | **6890** | 5001 | 37.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Directors' fees | **222** | 170 | 30.6 | **839** | 620 | 35.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangible assets | **460** | 381 | 20.7 | **1988** | 734 | 170.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;FDIC insurance premium expense | **315** | 362 | (13.0) | **1426** | 1015 | 40.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other real estate owned, net | **13** | (2) | 750.0 | **65** | 4 | 1525.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Legal and professional fees | **636** | 150 | 324.0 | **2840** | 1742 | 63.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Merger related expenses | **967** | 7615 | (87.3) | **2098** | 8530 | (75.4) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other noninterest expenses | **2494** | 1688 | 47.7 | **10077** | 5433 | 85.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest expense | **21000** | 23497 | (10.6) | **80322** | 56806 | 41.4 |
| Income before income taxes | **11355** | 3994 | 184.3 | **42141** | 21180 | 99.0 |
| Income tax expense | **2948** | 1271 | 131.9 | **10964** | 5812 | 88.6 |
| NET INCOME | $**8407** | $2723 | 208.7 | $**31177** | $15368 | 102.9 |
| Weighted average shares outstanding - basic | **19862** | 17180 | 15.6 | **19847** | 13119 | 51.3 |
| Weighted average shares outstanding - diluted | **19862** | 17180 | 15.6 | **19847** | 13119 | 51.3 |
| Basic and diluted net income per common share | $**0.42** | $**0.16** | 167.1 | $**1.57** | $**1.17** | 34.1 |
| Dividends paid per common share | **0.12** | 0.12 |  | **0.48** | 0.48 |  |

---

Page 9 of 15

**Shore Bancshares, Inc.**

Consolidated Average Balance Sheets (Unaudited)

(Dollars in thousands)

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | For the Three Months Ended | For the Three Months Ended | For the Three Months Ended | For the Three Months Ended | For the Year Ended | For the Year Ended | For the Year Ended | For the Year Ended |
|  | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, |
|  | **2022** | **2022** | 2021 | 2021 | **2022** | **2022** | 2021 | 2021 |
|  | Average<br>balance | Yield/<br>rate | Average<br>balance | Yield/<br>rate | Average<br>balance | Yield/<br>rate | Average<br>balance | Yield/<br>rate |
| Earning assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Loans (1), (2), (3) | $**2467324** | **4.45%** | $1887126 | 4.33% | $**2293627** | **4.33%** | $1568468 | 4.14% |
| &nbsp;&nbsp;Investment securities |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxable | **661519** | **2.39** | 468724 | 1.42 | **589729** | **1.95** | 329890 | 1.52 |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax-exempt (1) | **449** | **6.24** |  |  | **113** | **6.19** |  |  |
| &nbsp;&nbsp;Interest-bearing deposits | **77299** | **3.40** | 486247 | 0.14 | **337203** | **0.95** | 286765 | 0.13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total earning assets | **3206591** | **4.00%** | 2842097 | 3.11% | **3220672** | **3.54%** | 2185123 | 3.21% |
| Cash and due from banks | **29358** |  | 22625 |  | **18158** |  | 19838 |  |
| Other assets | **221599** |  | 188399 |  | **221592** |  | 127704 |  |
| Allowance for credit losses | **(16469)** |  | (15859) |  | **(15441)** |  | (15068) |  |
| Total assets | $**3441079** |  | $3037262 |  | $**3444981** |  | $2317597 |  |
| Interest-bearing liabilities |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Demand deposits | $**670424** | **1.31%** | $494081 | 0.14% | $**638105** | **0.61%** | $450399 | 0.14% |
| &nbsp;&nbsp;Money market and savings deposits | **1043076** | **0.60** | 1001115 | 0.26 | **1043032** | **0.35** | 695056 | 0.21 |
| &nbsp;&nbsp;Certificates of deposit $100,000 or more | **217051** | **0.79** | 174268 | 0.49 | **239927** | **0.57** | 144209 | 0.84 |
| &nbsp;&nbsp;Other time deposits | **205293** | **0.62** | 173975 | 0.50 | **204536** | **0.56** | 151429 | 0.78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing deposits | **2135844** | **0.85** | 1843439 | 0.27 | **2125600** | **0.47** | 1441093 | 0.31 |
| &nbsp;&nbsp;Securities sold under retail repurchase |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp; agreements and federal funds purchased | **—** | **—** | 3972 | 0.30 | **683** | **0.29** | 3017 | 0.27 |
| &nbsp;&nbsp;Advances from FHLB - short-term | **7391** | **3.86** |  |  | **1863** | **3.86** |  |  |
| &nbsp;&nbsp;Advances from FHLB - long-term | **653** | **(6.08)** | 6630 | 2.21 | **7701** | **0.45** | 1671 | 0.60 |
| &nbsp;&nbsp;Subordinated debt | **43031** | **6.64** | 36589 | 5.12 | **42917** | **5.71** | 27528 | 5.67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | **2186919** | **0.96%** | 1890630 | 0.37% | **2178764** | **0.57%** | 1473309 | 0.41% |
| Noninterest-bearing deposits | **870890** |  | 703712 |  | **888509** |  | 574531 |  |
| Accrued expenses and other liabilities | **21647** |  | 141825 |  | **21858** |  | 45702 |  |
| Stockholders' equity | **361623** |  | 301095 |  | **355850** |  | 224055 |  |
| Total liabilities and stockholders' equity | $**3441079** |  | $3037262 |  | $**3444981** |  | $2317597 |  |
| Net interest spread |  | **3.04%** |  | 2.74% |  | **2.97%** |  | 2.80% |
| Net interest margin |  | **3.35%** |  | 2.87% |  | **3.15%** |  | 2.94% |

---

(1) All amounts are reported on a tax-equivalent basis computed
using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense.

(2) Average loan balances include nonaccrual loans.

(3) Interest income on loans includes accreted loan fees, net of
costs and accretion of discounts on acquired loans, which are included in the yield calculations.

Page 10 of 15

**Shore Bancshares, Inc.**

Financial Highlights By Quarter (Unaudited)

(Dollars in thousands, except per share data)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **4th Quarter**<br>**2022**<br>**Q4 2022** | 3rd Quarter<br>2022<br>Q3 2022 | 2nd Quarter<br>2022<br>Q2 2022 | 1st Quarter<br>2022<br>Q1 2022 | 4th Quarter<br>2021<br>Q4 2021 | Q4 2022<br>compared to<br>Q3 2022 | Q4 2022<br>compared to<br>Q4 2021 |
| PROFITABILITY FOR THE PERIOD |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxable-equivalent net interest income | $**26981** | $27350 | $24656 | $22469 | $20652 | (1.3)% | 30.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Taxable-equivalent adjustment | **40** | 35 | 38 | 39 | 13 | 14.3 | 207.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net interest income | **26943** | 27315 | 24618 | 22430 | 20639 | (1.4) | 30.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for credit losses | **450** | 675 | 200 | 600 | (1723) | (33.3) | 126.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest income | **5862** | 5344 | 5833 | 6046 | 5129 | 9.7 | 14.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest expense | **21000** | 18899 | 20094 | 20332 | 23497 | 11.1 | (10.6) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income before income taxes | **11355** | 13085 | 10157 | 7544 | 3994 | (13.2) | 184.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax expense | **2948** | 3427 | 2658 | 1931 | 1271 | (14.0) | 131.9 |
| Net income | $**8407** | $9658 | $7499 | $5613 | $2723 | (13.0) | 208.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Return on average assets | **0.97%** | 1.11% | 0.88% | 0.65% | 0.36% | (14)bp | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;Return on average assets excluding amortization of intangibles and merger related expenses - Non-GAAP (2) | **1.09** | 1.17 | 0.94 | 0.76 | 1.07 | (8) | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Return on average equity | **9.22** | 10.72 | 8.52 | 6.45 | 3.59 | (150) | 563 |
| &nbsp;&nbsp;&nbsp;&nbsp;Return on average tangible equity - Non-GAAP (1) | **12.83** | 13.98 | 11.41 | 9.40 | 13.06 | (115) | (23) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net interest margin | **3.35** | 3.38 | 3.10 | 2.78 | 2.87 | (3) | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;Efficiency ratio - GAAP | **64.01** | 57.87 | 65.99 | 71.40 | 91.19 | 614 | (2718) |
| &nbsp;&nbsp;&nbsp;&nbsp;Efficiency ratio - Non-GAAP (1), (2) | **59.59** | 55.79 | 63.44 | 66.93 | 60.13 | 380 | (54) |
| PER SHARE DATA |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted net income per common share | $**0.42** | $0.49 | $0.38 | $0.28 | $0.16 | (13.6)% | 164.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends paid per common share | **0.12** | 0.12 | 0.12 | 0.12 | 0.12 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Book value per common share at period end | **18.34** | 17.99 | 17.77 | 17.73 | 17.71 | 1.9 | 3.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Tangible book value per common share at period end - Non-GAAP (1) | **14.87** | 14.50 | 14.26 | 14.19 | 14.12 | 2.6 | 5.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Market value at period end | **17.43** | 17.32 | 18.50 | 20.48 | 20.85 | 0.6 | (16.4) |
| &nbsp;&nbsp;&nbsp;&nbsp;Market range: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;High | **20.85** | 20.50 | 21.21 | 21.41 | 23.19 | 1.7 | (10.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Low | **17.04** | 17.29 | 17.91 | 19.34 | 17.50 | (1.4) | (2.6) |

---

Page 11 of 15

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| AVERAGE BALANCE SHEET DATA |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans | $**2467324** | $2327279 | $2217139 | $2135734 | $1887126 | 6.0 | 30.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment securities | **661968** | 618378 | 546252 | 531017 | 468724 | 7.0 | 41.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Earning assets | **3206591** | 3210233 | 3189926 | 3253549 | 2842097 | (0.1) | 12.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Assets | **3441079** | 3444365 | 3419168 | 3477481 | 3037262 | (0.1) | 13.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits | **3006734** | 3012658 | 2993098 | 3044213 | 2547151 | (0.2) | 18.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stockholders' equity | **361623** | 357383 | 353192 | 353011 | 301095 | 1.2 | 20.1 |
| CREDIT QUALITY DATA |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net (recoveries) / chargeoffs | $**84** | $(119) | $(573) | $(166) | $(142) | 170.6 | 159.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nonaccrual loans | $**1908** | $1949 | $2693 | $2848 | $2004 | (2.1) | (4.8) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans 90 days past due and still accruing | **1841** | 644 | 803 | 459 | 508 | 185.9 | 262.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other real estate owned | **197** | 197 | 197 | 561 | 532 |  | (63.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total nonperforming assets | $**3946** | $2790 | $3693 | $3868 | $3044 | 41.4 | 29.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accruing troubled debt restructurings (TDRs) | $**4405** | $4458 | $4894 | $5004 | $5667 | (1.2) | (22.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total nonperforming assets and accruing TDRs | $**8351** | $7248 | $8587 | $8872 | $8711 | 15.2 | (4.1) |
| CAPITAL AND CREDIT QUALITY RATIOS |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Period-end equity to assets | **10.48%** | 10.36% | 10.25% | 10.07% | 10.14% | 12 | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;Period-end tangible equity to tangible assets - Non-GAAP (1) | **8.67** | 8.52 | 8.39 | 8.22 | 8.25 | 15 | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;Annualized net (recoveries) to average loans | **0.01** | (0.02) | (0.10) | (0.03) | (0.03) | 3 | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Allowance for credit losses as a percent of: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Period-end loans (3) | **0.65** | 0.68 | 0.68 | 0.67 | 0.66 | (3) | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Period-end loans (4) | **0.78** | 0.84 | 0.89 | 0.92 | 0.96 | (6) | (18) |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonaccrual loans | **872.27** | 835.15 | 574.94 | 516.50 | 695.81 | 3712 | 17646 |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonperforming assets | **421.77** | 583.41 | 419.25 | 380.30 | 458.08 | (16164) | (3631) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accruing TDRs | **377.82** | 365.12 | 316.37 | 293.96 | 246.06 | 1270 | 13176 |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonperforming assets and accruing TDRs | **199.29** | 224.57 | 180.31 | 165.80 | 160.07 | (2528) | 3922 |
| &nbsp;&nbsp;&nbsp;&nbsp;As a percent of total loans: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonaccrual loans | **0.07** | 0.08 | 0.12 | 0.13 | 0.09 | (1) | (2) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accruing TDRs | **0.17** | 0.19 | 0.22 | 0.23 | 0.27 | (2) | (10) |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonaccrual loans and accruing TDRs | **0.25** | 0.27 | 0.34 | 0.36 | 0.36 | (2) | (11) |
| &nbsp;&nbsp;&nbsp;&nbsp;As a percent of total loans+other real estate owned: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonperforming assets | **0.15** | 0.12 | 0.16 | 0.18 | 0.14 | 3 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonperforming assets and accruing TDRs | **0.33** | 0.30 | 0.38 | 0.41 | 0.41 | 3 | (8) |
| &nbsp;&nbsp;&nbsp;&nbsp;As a percent of total assets: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonaccrual loans | **0.05** | 0.06 | 0.08 | 0.08 | 0.06 | (1) | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonperforming assets | **0.11** | 0.08 | 0.11 | 0.11 | 0.09 | 3 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accruing TDRs | **0.13** | 0.13 | 0.14 | 0.14 | 0.16 |  | (3) |
| &nbsp;&nbsp;&nbsp;&nbsp;Nonperforming assets and accruing TDRs | **0.24** | 0.21 | 0.25 | 0.25 | 0.25 | 3 | (1) |

---

(1) See the reconciliation table that begins on page 14.

(2) This ratio excludes merger related expenses (Non-GAAP) on page
10. (3) Includes all loans held for investment,
including PPP loan balances for all periods shown .

(4) For all periods shown, these ratios exclude PPP loans, acquired
loans, and the associated purchase discount mark on the acquired loans from both Severn and Northwest.

Page 12 of 15

**Shore Bancshares, Inc.**

Consolidated Statements of Income By Quarter (Unaudited)

(In thousands, except per share data)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |<br>**Q4 2022** |<br>Q3 2022 |<br>Q2 2022 |<br>Q1 2022 |<br>Q4 2021 | Q4 2022<br>compared to<br>Q3 2022 | Q4 2022<br>compared to<br>Q4 2021 |
| INTEREST INCOME |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest and fees on loans | $**27664** | $25924 | $23452 | $22085 | $20564 | 6.7% | 34.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on investment securities: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxable | **3945** | 3186 | 2392 | 1985 | 1663 | 23.8 | 137.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax-exempt | **6** |  |  |  |  | 100.0 | 100.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on deposits with other banks | **664** | 1466 | 826 | 254 | 169 | (54.7) | 292.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income | **32279** | 30576 | 26670 | 24324 | 22396 | 5.6 | 44.1 |
| INTEREST EXPENSE |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on deposits | **4554** | 2561 | 1511 | 1358 | 1272 | 77.8 | 258.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on short-term borrowings | **72** |  |  | 2 | 3 | 100.0 | 2300.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest on long-term borrowings | **710** | 700 | 541 | 534 | 482 | 1.4 | 47.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest expense | **5336** | 3261 | 2052 | 1894 | 1757 | 63.6 | 203.7 |
| NET INTEREST INCOME | **26943** | 27315 | 24618 | 22430 | 20639 | (1.4) | 30.5 |
| Provision for credit losses | **450** | 675 | 200 | 600 | (1723) | (33.3) | 126.1 |
| NET INTEREST INCOME AFTER PROVISION |  |  |  |  |  |  |  |
| &nbsp;&nbsp;FOR CREDIT LOSSES | **26493** | 26640 | 24418 | 21830 | 22362 | (0.6) | 18.5 |
| NONINTEREST INCOME |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Service charges on deposit accounts | **1346** | 1509 | 1438 | 1359 | 1234 | (10.8) | 9.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Trust and investment fee income | **401** | 421 | 447 | 514 | 522 | (4.8) | (23.2) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interchange credits | **1280** | 1241 | 1253 | 1038 | 1043 | 3.1 | 22.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage-banking revenue | **1567** | 680 | 1096 | 1867 | 948 | 130.4 | 65.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Title Company revenue | **194** | 397 | 426 | 323 | 247 | (51.1) | (21.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other noninterest income | **1074** | 1096 | 1173 | 945 | 1135 | (2.0) | (5.4) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest income | **5862** | 5344 | 5833 | 6046 | 5129 | 9.7 | 14.3 |
| NONINTEREST EXPENSE |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Salaries and wages | **8909** | 8562 | 8898 | 9562 | 7727 | 4.1 | 15.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Employee benefits | **2786** | 2191 | 2269 | 2662 | 2271 | 27.2 | 22.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Occupancy expense | **1694** | 1496 | 1485 | 1567 | 1263 | 13.2 | 34.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Furniture and equipment expense | **648** | 533 | 411 | 429 | 385 | 21.6 | 68.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Data processing | **1856** | 1759 | 1668 | 1607 | 1487 | 5.5 | 24.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Directors' fees | **222** | 217 | 210 | 190 | 170 | 2.3 | 30.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangible assets | **460** | 499 | 511 | 517 | 381 | (7.8) | 20.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;FDIC insurance premium expense | **315** | 339 | 429 | 343 | 362 | (7.1) | (13.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other real estate owned expenses, net | **13** | 1 | 57 | (6) | (2) | 1200.0 | 750.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Legal and professional fees | **636** | 756 | 811 | 637 | 150 | (15.9) | 324.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Merger related expenses | **967** | 159 | 241 | 730 | 7615 | 508.2 | (87.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other noninterest expenses | **2494** | 2387 | 3104 | 2094 | 1688 | 4.5 | 47.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest expense | **21000** | 18899 | 20094 | 20332 | 23497 | 11.1 | (10.6) |
| Income before income taxes | **11355** | 13085 | 10157 | 7544 | 3994 | (13.2) | 184.3 |
| Income tax expense | **2948** | 3427 | 2658 | 1931 | 1271 | (14.0) | 131.9 |
| NET INCOME | $**8407** | $9658 | $7499 | $5613 | $2723 | (13.0) | 208.7 |
| Weighted average shares outstanding - basic | **19862** | 19852 | 19847 | 19828 | 17180 | 0.1 | 15.6 |
| Weighted average shares outstanding - diluted | **19862** | 19852 | 19847 | 19828 | 17180 | 0.1 | 15.6 |
| Basic and diluted net income per common share | $**0.42** | $0.49 | $0.38 | $0.28 | $0.16 | (13.6) | 164.5 |
| Dividends paid per common share | **0.12** | 0.12 | 0.12 | 0.12 | 0.12 |  |  |

---

Page 13 of 15

**Shore Bancshares, Inc.**

Consolidated Average Balance Sheets By Quarter (Unaudited)

(Dollars in thousands)

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | | | | | | | | | Average balance | Average balance |
|  | **Q4 2022** | **Q4 2022** | Q3 2022 | Q3 2022 | Q2 2022 | Q2 2022 | Q1 2022 | Q1 2022 | Q4 2021 | Q4 2021 | Q4 2022<br>compared to<br>Q3 2022 | Q4 2022<br>compared to<br>Q4 2021 |
|  | Average<br>balance | Yield/<br>rate | Average<br>balance | Yield/<br>rate | Average<br>balance | Yield/<br>rate | Average<br>balance | Yield/<br>rate | Average<br>balance | Yield/<br>rate | | |
| Earning assets |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Loans (1), (2), (3) | $**2467324** | **4.45%** | $2327279 | 4.43% | $2217139 | 4.25% | $2135734 | 4.20% | $1887126 | 4.33% | 6.0% | 30.7% |
| &nbsp;&nbsp;Investment securities |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxable | **661519** | **2.39** | 618378 | 2.06 | 546252 | 1.75 | 531017 | 1.49 | 468724 | 1.42 | 7.0 | 41.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax-exempt (1) | **449** | **6.24** |  |  |  |  |  |  |  |  | 100.0 | 100.0 |
| &nbsp;&nbsp;Interest-bearing deposits | **77299** | **3.40** | 264576 | 2.20 | 426535 | 0.78 | 586798 | 0.18 | 486247 | 0.14 | (70.8) | (84.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total earning assets | **3206591** | **4.00%** | 3210233 | 3.78% | 3189926 | 3.36% | 3253549 | 3.01% | 2842097 | 3.11% | (0.1) | 12.8 |
| Cash and due from banks | **29358** |  | 31724 |  | 26162 |  | (15253) |  | 22625 |  | (7.5) | 29.8 |
| Other assets | **221599** |  | 218163 |  | 218353 |  | 253424 |  | 188399 |  | 1.6 | 17.6 |
| Allowance for credit losses | **(16469)** |  | (15755) |  | (15273) |  | (14239) |  | (15859) |  | 4.5 | 3.8 |
| Total assets | $**3441079** |  | $3444365 |  | $3419168 |  | $3477481 |  | $3037262 |  | (0.1) | 13.3 |
| Interest-bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Demand deposits | $**670424** | **1.31%** | $646399 | 0.66% | $644881 | 0.22% | $589737 | 0.16% | $494081 | 0.14% | 3.7 | 35.7 |
| &nbsp;&nbsp;Money market and savings deposits | **1043076** | **0.60** | 1034580 | 0.35 | 1019295 | 0.21 | 1075791 | 0.23 | 1001115 | 0.26 | 0.8 | 4.2 |
| &nbsp;&nbsp;Certificates of deposit $100,000 or more | **217051** | **0.79** | 222697 | 0.55 | 234325 | 0.58 | 286587 | 0.40 | 174268 | 0.49 | (2.5) | 24.6 |
| &nbsp;&nbsp;Other time deposits | **205293** | **0.62** | 215014 | 0.51 | 221714 | 0.54 | 175683 | 0.57 | 173975 | 0.50 | (4.5) | 18.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing deposits | **2135844** | **0.85** | 2118690 | 0.48 | 2120215 | 0.29 | 2127798 | 0.26 | 1843439 | 0.27 | 0.8 | 15.9 |
| &nbsp;&nbsp;Securities sold under retail repurchase agreements |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp; and federal funds purchased | **—** | **—** |  |  |  |  | 2770 | 0.29 | 3972 | 0.30 |  | (100.0) |
| &nbsp;&nbsp;Advances from FHLB - short-term | **7391** | **3.86** |  |  |  |  |  |  |  |  | 100.0 | 100.0 |
| &nbsp;&nbsp;Advances from FHLB - long-term | **653** | **(6.08)** | 10035 | 0.63 | 10075 | 0.60 | 10116 | 0.57 | 6630 | 2.21 | (93.5) | (90.2) |
| &nbsp;&nbsp;Subordinated debt | **43031** | **6.64** | 42953 | 6.33 | 42876 | 4.93 | 42804 | 4.93 | 36589 | 5.12 | 0.2 | 17.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | **2186919** | **0.96%** | 2171678 | 0.60% | 2173166 | 0.38% | 2183488 | 0.35% | 1890630 | 0.37% | 0.7 | 15.7 |
| Noninterest-bearing deposits | **870890** |  | 893968 |  | 872883 |  | 916415 |  | 703712 |  | (2.6) | 23.8 |
| Accrued expenses and other liabilities | **21647** |  | 21336 |  | 19927 |  | 24567 |  | 141825 |  | 1.5 | (84.7) |
| Stockholders' equity | **361623** |  | 357383 |  | 353192 |  | 353011 |  | 301095 |  | 1.2 | 20.1 |
| Total liabilities and stockholders' equity | $**3441079** |  | $3444365 |  | $3419168 |  | $3477481 |  | $3037262 |  | (0.1) | 13.3 |
| Net interest spread |  | **3.04%** |  | 3.18% |  | 2.98% |  | 2.66% |  | 2.74% |  |  |
| Net interest margin |  | **3.35%** |  | 3.38% |  | 3.10% |  | 2.78% |  | 2.87% |  |  |

---

(1) All
 amounts are reported on a tax-equivalent basis computed using the statutory federal income
 tax rate of 21.0%, exclusive of nondeductible interest expense.

(2) Average
 loan balances include nonaccrual loans.

(3) Interest
 income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired
 loans, which are included in the yield calculations.

Page 14 of 15

**Shore Bancshares, Inc.**

Reconciliation of Generally Accepted Accounting Principles (GAAP)

and Non-GAAP Measures (Unaudited)

(In thousands, except per share data)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |<br>**Q4 2022** |<br>Q3 2022 |<br>Q2 2022 |<br>Q1 2022 |<br>Q4 2021 | **YTD**<br>**12/31/2022** | YTD<br>12/31/2021 |
| The following reconciles return on average equity and return on average tangible equity (Note 1): |  |  |  |  |  |  |  |
| Net Income | $**8407** | $9658 | $7499 | $5613 | $2723 | $**31177** | $15368 |
| Net Income - annualized (A) | $**33354** | $38317 | $30078 | $22764 | $10803 | $**31177** | $15368 |
| Net income, excluding net amortization of intangible assets and merger related expenses | $**9463** | $10144 | $8054 | $6541 | $8176 | $**34201** | $22279 |
| Net income, excluding net amortization of intangible assets and merger related expenses - annualized (B) | $**37543** | $40245 | $32305 | $26527 | $32437 | $**34201** | $22279 |
| Return on average assets excluding net amortization of intangible assets and merger related expenses - Non-GAAP | **1.09%** | 1.17% | 0.94% | 0.76% | 1.07% | **0.99%** | 0.95% |
| Average stockholders' equity (C) | $**361623** | $357383 | $353192 | $353011 | $301095 | $**355850** | $224055 |
| Less: Average goodwill and other intangible assets | **(69077)** | (69558) | (70057) | (70711) | (52692) | **(69845)** | (27535) |
| Average tangible equity (D) | $**292546** | $287825 | $283135 | $282300 | $248403 | $**286005** | $196520 |
| Return on average equity (GAAP) (A)/(C) | **9.22%** | 10.72% | 8.52% | 6.45% | 3.59% | **8.76%** | 6.86% |
| Return on average tangible equity (Non-GAAP) (B)/(D) | **12.83%** | 13.98% | 11.41% | 9.40% | 13.06% | **11.96%** | 11.34% |
| The following reconciles GAAP efficiency ratio and non-GAAP efficiency ratio (Note 2): |  |  |  |  |  |  |  |
| Noninterest expense (E) | $**21000** | $18899 | $20094 | $20332 | $23497 | $**80322** | $56806 |
| Less: Amortization of intangible assets | **(460)** | (499) | (511) | (517) | (381) | **(1988)** | (734) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merger Expenses | **(967)** | (159) | (241) | (730) | (7615) | **(2098)** | (8530) |
| Adjusted noninterest expense (F) | $**19573** | $18241 | $19342 | $19085 | $15501 | $**76236** | $47542 |
| Net interest income (G) | **26943** | 27315 | 24618 | 22430 | 20639 | **101302** | 64130 |
| Add: Taxable-equivalent adjustment | **40** | 35 | 38 | 39 | 13 | **155** | 121 |
| Taxable-equivalent net interest income (H) | $**26983** | $27350 | $24656 | $22469 | $20652 | $**101457** | $64251 |
| Noninterest income (I) | $**5862** | $5344 | $5833 | $6046 | $5129 | $**23086** | 13498 |
| Less: Investment securities (gains) | **—** |  |  |  |  | **—** | (2) |
| Adjusted noninterest income (J) | $**5862** | $5344 | $5833 | $6046 | $5129 | $**23086** | $13496 |
| Efficiency ratio (GAAP) (E)/(G)+(I) | **64.01%** | 57.87% | 65.99% | 71.40% | 91.19% | **64.57%** | 73.18% |
| Efficiency ratio (Non-GAAP) (F)/(H)+(J) | **59.59%** | 55.79% | 63.44% | 66.93% | 60.13% | **61.21%** | 61.15% |

---

Page 15 of 15

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| The following reconciles book value per common share and tangible book value per common share (Note 1): |  |  |  |  |  |
| Stockholders' equity (L) | $**364285** | $357221 | $352777 | $351864 | $350693 |
| Less: Goodwill and other intangible assets | **(68813)** | (69288) | (69787) | (70299) | (70956) |
| Tangible equity (M) | $**295472** | $287933 | $282990 | $281565 | $279737 |
| Shares outstanding (N) | **19865** | 19858 | 19850 | 19843 | 19808 |
| Book value per common share (GAAP) (L)/(N) | $**18.34** | $17.99 | $17.77 | $17.73 | $17.71 |
| Tangible book value per common share (Non-GAAP) (M)/(N) | $**14.87** | $14.50 | $14.26 | $14.19 | $14.12 |
| The following reconciles equity to assets and tangible equity to tangible assets (Note 1): |  |  |  |  |  |
| Stockholders' equity (O) | $**364285** | $357221 | $352777 | $351864 | $350693 |
| Less: Goodwill and other intangible assets | **(68813)** | (69288) | (69787) | (70299) | (70956) |
| Tangible equity (P) | $**295472** | $287933 | $282990 | $281565 | $279737 |
| Assets (Q) | $**3477276** | $3446804 | $3442550 | $3494497 | $3460136 |
| Less: Goodwill and other intangible assets | **(68813)** | (69288) | (69787) | (70299) | (70956) |
| Tangible assets (R) | $**3408463** | $3377516 | $3372763 | $3424198 | $3389180 |
| Period-end equity/assets (GAAP) (O)/(Q) | **10.48%** | 10.36% | 10.25% | 10.07% | 10.14% |
| Period-end tangible equity/tangible assets (Non-GAAP) (P)/(R) | **8.67%** | 8.52% | 8.39% | 8.22% | 8.25% |

---

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.