SHBI · Shore Bancshares, Inc.

Shore Bancshares reported record Q1 2026 net income of $17.1 million, up 7.6% from Q4 2025, with diluted EPS rising to $0.51 from $0.48, driven by higher net interest income of $52.6 million (up 4.7%) and a 21 bps expansion in net interest margin to 3.64%. This improvement stemmed from modestly higher average loan yields (5.86% vs. 5.85%) and a significant 18 bps drop in cost of deposits to 1.81%, alongside lower rates on interest-bearing liabilities (2.64% vs. 2.97%). Pre-tax pre-provision income dipped slightly to $22.7 million due to expense pressures, but adjusted efficiency ratio improved 198 bps to 58.57%. Balance sheet showed modest contraction with loans at $4.85 billion (-1.1%) and deposits at $5.46 billion (-1.3%), attributed to seasonal municipal deposit runoff, though core deposits grew $25.3 million. Noninterest deposits remained strong at 28.70%. Credit quality was robust with provision for credit losses at $85 thousand, NCOs/average loans annualized at 0.07%, and ACL/loans at 1.21%. The $2.60 billion CRE portfolio, 53.6% of loans, had a 2.02% nonaccrual rate and high guaranty coverage (84% by dollar). Investment portfolio of $664.9 million book value featured conservative duration of 3.60 years and positive convexity. Profitability metrics advanced with ROAA at 1.22% (non-GAAP), ROATCE at 14.83%, and CET1 at 10.97%. Management emphasized five priorities: capital and risk management, automation investments, core deposit growth, credit rigor, and expense control to enhance operating leverage in attractive markets.