Profile: Shore Bancshares, Inc. (SHBI.O)

Shore Bancshares, Inc., incorporated on March 15, 1996, is a financial holding company. The Company's primary business is acting as the parent company to financial institution and insurance entities. The Company engages in the banking business through The Centreville National Bank of Maryland (Centreville National Bank), The Talbot Bank of Easton, Maryland (Talbot Bank) and The Felton Bank (Felton Bank) (collectively the Banks). The Company operates in two business segments: community banking, and insurance products and services. The Banks operate 18 full-service branches and 22 automated teller machines (ATMs), and provide a range of commercial and consumer banking products and services to individuals, businesses, and other organizations in the Kent County, Queen Anne’s County, Caroline County, Talbot County and Dorchester County in Maryland, and in Kent County, Delaware.

On March 1, 2008, the Company established a mortgage broker subsidiary, Wye Mortgage Group, LLC (the Mortgage Group).The Company engages in the insurance business through two general insurance producer firms, The Avon-Dixon Agency, LLC and Elliott Wilson Insurance, LLC; one marine insurance producer firm, Jack Martin & Associates, Inc.; three wholesale insurance firms, Tri-State General Insurance Agency, LTD, Tri-State General Insurance Agency of New Jersey, Inc. and Tri-State General Insurance Agency of Virginia, Inc., and two insurance premium finance companies, Mubell Finance, LLC and ESFS, Inc. (collectively referred to as the Insurance Subsidiaries).

The Banks are independent community banks and serve businesses and individuals in their respective market areas. Services provided to businesses include commercial checking, savings, certificate of deposit and overnight investment sweep accounts. The Banks offer all forms of commercial lending, including secured and unsecured loans, working capital loans, lines of credit, term loans, accounts receivable financing, real estate acquisition development, construction loans and letters of credit. Merchant credit card clearing services are available, as well as direct deposit of payroll, Internet banking and telephone banking services.

Services to individuals include checking accounts, various savings programs, mortgage loans, home improvement loans, installment and other personal loans, credit cards, personal lines of credit, automobile and other consumer financing, safe deposit boxes, debit cards, around-the-clock telephone banking, Internet banking, and around-the-clock automatic teller machine services. The Banks also offer non-deposit products, such as mutual funds and annuities, and discount brokerage services to their customers.

Lending Activities

The Banks originate secured and unsecured loans for business purposes. Commercial loans are secured by real estate, accounts receivable, inventory equipment and/or other assets of the business. Commercial real estate loans are secured by land for residential and commercial development, agricultural purpose properties, service industry buildings, such as restaurants and motels, retail buildings and general purpose business space.

The Bank's provide residential real estate construction loans to builders and individuals for single-family dwellings. Residential construction loans are usually granted based upon as completed appraisals and are secured by the property under construction. These loans have maturities of 6 to 12 months and may have fixed or variable rate features. The Banks originate fixed and variable rate residential mortgage loans. A variety of consumer loans are offered to customers, including home equity loans, credit cards and other secured and unsecured lines of credit and term loans.

Investment Activities

As of December 31, 2008, 89% of the portfolio was classified as available for sale and 11% as held to maturity. Investment securities held to maturity, consisting primarily of tax-exempt municipal bonds, totaled $10.3 million as of December 31, 2008.

Deposit Activities

The Banks offer a range of deposit products, including checking, savings and money market accounts, regular and individual retirement account (IRA) certificates of deposit, and Christmas Savings accounts. The Banks also offer the certificate of deposit account registry service (CDARS) program. In addition, it offers its commercial customers packages, which include cash management services and various checking opportunities.

Trust Services

Centreville National Bank has a trust department. It markets trust, asset management and financial planning services to customers within its market areas.

Insurance Activities

The Avon-Dixon Agency, LLC, Elliott Wilson Insurance, LLC and Mubell Finance, LLC were formed as a result of the Company’s acquisition of the assets of The Avon-Dixon Agency, Inc., Elliott Wilson Insurance, Inc., Avon-Dixon Financial Services, Inc., Joseph M. George & Son, Inc. and 59th Street Finance Company. The Insurance Subsidiaries offer a range of insurance products and services to customers, including insurance premium financing.