Shore Bancshares, Inc. (Shore), the holding company of Shore United Bank, N.A. and The Community Financial Corporation (TCFC), the holding company of Community Bank of the Chesapeake, announced they have entered into a definitive agreement under which TCFC will merge with and into Shore in an all-stock transaction valued at approximately $254.4 million based on a closing price for Shore's common stock of $19.20 as of Dec. 13, 2022. The transaction is expected to be over 40 percent accretive to Shore's EPS in 2024. The combined company will have total assets of approximately $6.0 billion on a pro forma basis as of the assumed closing date of June 30, 2023.

Lloyd L. "Scott" Beatty, President and Chief Executive Officer of Shore, commented, "This combination creates a solid and very promising future for the combined organization. We are bringing together two well-known financial services brands that focus on providing remarkable client experiences, helping individuals and businesses reach their financial goals. The combined bank will remain committed to our employees and the relationships that they have developed over decades of serving our communities.  The shareholders of Shore and TCFC should benefit from the pro forma profitability metrics that should continue to drive shareholder value.  An important consideration for this combination was to find a successor for me.  Jimmy Burke is not only a capable banker, but he has also been a banker in Maryland for a long time.  He has proven that he is worthy of taking over as President and CEO of the combined company at closing.  Clearly Jimmy shares the same philosophy and values as we do at Shore United Bank."

James M. ("Jimmy") Burke, President and Chief Executive Officer of TCFC, commented, "Shore and TCFC are both community-focused organizations, with similar cultures and visions for the future. Our combined size and resources will significantly enhance our scale and ability to help customers through higher loan limits, greater investment in technology and increased career opportunities for employees. This will allow the combined bank to continue to deepen its presence in our core markets and will also allow us to expand more effectively in the markets that we wish to serve. I am honored by the trust and confidence that Scott Beatty and the Board of Directors has placed in me by appointing me to be the President and Chief Executive Officer of the combined company. Scott has successfully led Shore through significant organic and strategic growth through his tenure.  I am proud to succeed Scott to lead a talented management team.  We will execute a business strategy with a focus on delivering exceptional customer service and increasing shareholder value while continuing to honor our community values."

Transaction Details
Under the terms of the definitive agreement, which was unanimously approved by the boards of directors of both companies, holders of TCFC common stock will have the right to receive 2.3287 shares of Shore common stock. Existing Shore shareholders will own approximately 60 percent of the outstanding shares of the combined company and TCFC shareholders are expected to own approximately 40 percent.

Name, Branding, Headquarters and Markets
The combined company will trade under the Shore ticker symbol "SHBI" on the Nasdaq Global Select Market, will operate under the "Shore Bancshares, Inc." name, and the combined bank will operate under the "Shore United Bank, N.A." name.  The administrative headquarters of the combined company will be located in Easton, MD.

The combined company will operate a desirable, contiguous footprint throughout the Delmarva Peninsula, Southern Maryland, the Greater Baltimore-Washington area and Central Virginia with plans to expand into attractive neighboring counties such as Prince George's County, Maryland.

Timing and Approvals
The transaction is expected to close late in the second quarter or early in the third quarter of 2023, subject to satisfaction of customary closing conditions, including regulatory approvals and shareholder approval from Shore and TCFC shareholders. TCFC directors and executive officers have entered into agreements with Shore pursuant to which they have committed to vote their shares of TCFC common stock in favor of the merger of TCFC with and into Shore. Shore directors and executive officers have entered into agreements with TCFC pursuant to which they have committed to vote their shares of Shore common stock in favor of the issuance of shares of Shore to TCFC shareholders in the merger. For additional information about the proposed merger of TCFC with and into Shore, shareholders are encouraged to carefully read the definitive agreement that will be filed with the Securities and Exchange Commission ("SEC") today.

Advisors
Piper Sandler & Co. acted as financial advisor to TCFC and delivered a fairness opinion to the Board of Directors of TCFC. Kilpatrick Townsend & Stockton LLP served as legal counsel to TCFC.  Keefe, Bruyette & Woods, A Stifel Company acted as financial advisor to Shore in the transaction and delivered a fairness opinion to the Board of Directors. Holland & Knight LLP served as legal counsel to Shore.