0001104659-23-064702.txt : 20230525 0001104659-23-064702.hdr.sgml : 20230525 20230525170230 ACCESSION NUMBER: 0001104659-23-064702 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20230525 DATE AS OF CHANGE: 20230525 SUBJECT COMPANY: 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: 425 SEC ACT: 1934 Act SEC FILE NUMBER: 000-22345 FILM NUMBER: 23961847 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 FILED BY: 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: 425 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 425 1 tm2316952d1_8k.htm 425

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): May 25, 2023 (May 23, 2023)

SHORE BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

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

18 E. Dover St., Easton, MD 21601

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (410) 763-7800

N/A

(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 obligation of the registrant under any of the following provisions:

x	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:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	SHBI	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 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

As previously disclosed, on December 14, 2022, Shore Bancshares, Inc., a Maryland corporation (“SHBI”), entered into the Agreement and Plan of Merger, dated December 14, 2022 (the “Merger Agreement”) with The Community Financial Corporation, a Maryland corporation (“TCFC”), pursuant to which TCFC will be merged with and into SHBI, with SHBI as the surviving corporation (the “Corporate Merger”). Promptly following the Corporate Merger, TCFC’s wholly-owned bank subsidiary, the Community Bank of the Chesapeake (“CBC”), will be merged with and into Shore United Bank, N.A. (“Shore United”), which is the wholly-owned subsidiary of SHBI, with Shore United as the surviving bank (the “Bank Merger”). The Corporate Merger and the Bank Merger are collectively referred to in this Current Report on Form 8-K as the “Merger.”

The Merger Agreement requires SHBI to take all action necessary, immediately prior to the effective time of the Merger (the “Effective Time”), to cause three of SHBI and Shore United’s existing directors to resign and to appoint or elect eight individuals who are members of the boards of directors of both TCFC and CBC as directors of SHBI and Shore United, with each such resignation and appointment or election to be effective as of the Effective Time and subject to the closing of the Merger. The Merger is currently expected to occur on or about July 1, 2023.

Ms. Blenda Armistead resigned as a member of the SHBI Board of Directors (the “SHBI Board”) and the Shore United Board of Directors (the “Shore United Board”) effective as of the 2023 Annual Meeting of SHBI Shareholders held on May 23, 2023 (the “Annual Meeting”). Prior to her resignation, Ms. Armistead served as a member of the Audit and Nominating Committees of the SHBI Board and Shore United Board. In connection with the Merger, on May 24, 2023, Mr. Jeffrey E. Thompson tendered his resignation and will resign as a member of the SHBI Board and Shore United Board, effective as of the Effective Time and subject to the closing of the Merger. Currently, Mr. Thompson serves as a member of the Compensation Committee of the SHBI Board and Shore United Board. As previously announced, Mr. Lloyd L. Beatty, Jr. will be retiring upon the closing of the Merger including resigning as a member of the SHBI Board and Shore United Board. Mr. Beatty serves as a member of the Executive and Risk Management Committees of the SHBI Board and Shore United Board.

Pursuant to the terms of the Merger Agreement and in accordance with SHBI’s Amended and Restated Articles of Incorporation and Shore United’s Articles of Association, effective as of the Effective Time and subject to the closing of the Merger, the SHBI Board and Shore United Board:

•

increased the size of each of the respective boards from 14 to 20 members;

•

appointed Mary Todd Peterson, Rebecca M. McDonald, Michael B. Adams to Class I, James M. Burke, Austin J. Slater, Louis P. Jenkins, Jr. to Class II and Joseph V. Stone, Jr., E. Lawrence Sanders, III to Class III of the SHBI Board, each of whom currently serve as directors of TCFC and CBC (collectively, the “TCFC Director Nominees”), to serve for a term that will coincide with the remaining term of that class and until his or her successor is elected and qualified; and

•

appointed Austin J. Slater as Vice Chairman of the SHBI Board and Shore United Board.

Each of the SHBI Board and the Shore United Board has not yet determined on which committees of the SHBI Board and the Shore United Board the TCFC Director Nominees will serve. With the exception of Mr. Burke, each of the TCFC Director Nominees will receive the same compensation as currently paid to other SHBI Board and Shore United Board members. A description of SHBI’s standard non-employee director compensation arrangement is contained under the heading “Compensation of Non-Employee Directors” in SHBI’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission (“SEC”) on April 12, 2023 (the “Definitive Proxy Statement”).

Other than as previously described above and in SHBI’s Registration Statement on Form S-4, as amended (File No. 333-271273) initially filed with the SEC on April 14, 2023, there are no arrangements or understandings between any of the TCFC Director Nominees and any other person pursuant to which any of the TCFC Director Nominees have been designated to serve on the SHBI Board and Shore United Board. Additionally, there have been no transactions nor are there any proposed transactions between SHBI and any of the TCFC Director Nominees that would require disclosure pursuant to Item 404(a) of Regulation S-K.

Item 5.03.

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Pursuant to the terms of the Merger Agreement, the SHBI Board is required to amend SHBI’s Amended and Restated By-Laws to accommodate certain governance provisions in the Merger Agreement, including to provide for the position of Vice Chairman of the SHBI Board. On May 24, 2023, the SHBI Board approved the Second Amended and Restated By-Laws of SHBI, to be adopted as the by-laws of SHBI effective as of the Effective Time and subject to the closing of the Merger. The Second Amended and Restated By-Laws amend certain sections to provide for the position of Vice Chairman of the SHBI Board and set forth the duties and responsibilities of the Vice Chairman of the SHBI Board.

Item 5.07.

Submission of Matters to a Vote of Security Holders.

At the Annual Meeting, SHBI’s shareholders voted on: (i) the election of four Class II directors to serve for a three-year term ending at the 2026 annual meeting of shareholders (Proposal 1); (ii) the ratification of the appointment of Yount, Hyde & Barbour, P.C. as SHBI’s independent registered public accounting firm for the fiscal year ending December 31, 2023; (iii) the adoption of a non-binding advisory resolution approving the compensation of SHBI’s named executive officers (“NEOs”) (Proposal 3); and (iv) to recommend, on non-binding advisory basis, the frequency of future shareholder advisory votes on the compensation of SHBI’s NEOs (Proposal 4). These matters were submitted to a vote through the solicitation of proxies. Each of the proposals is described in further detail in SHBI’s Definitive Proxy Statement. Other than the four proposals addressed below and described in the SHBI’s Definitive Proxy Statement filed with the SEC on April 12, 2023, no other proposal was submitted at the Annual Meeting for shareholder action.

On the record date for the Annual Meeting, there were 19,898,388 shares of SHBI common stock issued, outstanding and entitled to vote. Shareholders holding 16,893,505 shares of SHBI common stock were present at the Annual Meeting, in person or represented by proxy.

Each of the four proposals that were voted on at the Annual Meeting were approved by SHBI’s shareholders. The results of the votes are set forth below:

Proposal 1 – To elect four Class II directors to serve for a three-year term ending at the 2026 annual meeting of shareholders.

	For	Against	Abstain	Broker Non-Votes
Clyde V. Kelly, III	11,740,483	3,029,533	78,746	2,044,743
David W. Moore	13,095,893	1,678,870	73,999	2,044,743
Dawn M. Willey	13,128,876	1,684,651	35,235	2,044,743
David S. Jones	13,161,062	1,671,923	15,777	2,044,743

Proposal 2 – To ratify the appointment of Yount, Hyde & Barbour, P.C. as SHBI’s independent registered public accounting firm for the fiscal year ending December 31, 2023.

For		Against		Abstain		Broker Non-Votes
16,802,314		46,847		44,344		―

Proposal 3 – To adopt a non-binding advisory resolution approving the compensation of SHBI’s NEOs.

For		Against		Abstain		Broker Non-Votes
13,120,593		1,685,663		42,504		2,044,745

Proposal 4 – To recommend, on non-binding advisory basis, the frequency of future shareholder advisory votes on the compensation of SHBI’s NEOs.

1 Year		2 Years		3 Years		Abstain		Broker Non-Votes
13,833,134		8,421		960,691		46,514		2,044,745

FORWARD-LOOKING STATEMENTS

This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and the future performance of SHBI and TCFC. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “could,” “may,” “should,” “will” or other similar words and expressions are intended to identify these forward-looking statements. These forward-looking statements are based on SHBI’s and TCFC’s current expectations and assumptions regarding SHBI’s and TCFC’s businesses, the economy, and other future conditions. Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Any number of risks, uncertainties, or other factors could affect SHBI’s or TCFC’s future financial results and performance and could cause actual results or performance to differ materially from anticipated results or performance. Such risks and uncertainties include, among others: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the Merger Agreement; the outcome of any legal proceedings that may be instituted against SHBI or TCFC; delays in completing the Merger; the failure to obtain necessary shareholder approvals, or to satisfy any of the other conditions to the Merger on a timely basis or at all, including the ability of SHBI and TCFC to meet expectations regarding the timing, completion and accounting and tax treatments of the Merger; the possibility that the anticipated benefits of the Merger are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where SHBI and TCFC do business; the possibility that the Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; the possibility that revenues following the Merger may be lower than expected; the impact of certain restrictions during the pendency of the Merger on the parties’ ability to pursue certain business opportunities and strategic transactions; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the Merger; the ability to complete the Merger and integration of SHBI and TCFC successfully; the dilution caused by SHBI’s issuance of additional shares of its capital stock in connection with the Merger; and the potential impact of general economic, political or market factors on the companies or the Merger and other factors that may affect future results of SHBI or TCFC. Except to the extent required by applicable law or regulation, each of SHBI and TCFC disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Further information regarding SHBI, TCFC and factors which could affect the forward-looking statements contained herein can be found in SHBI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, its Quarterly Report on Form 10-Q for the period ended March 31, 2023, and its other filings with the SEC, and in TCFC’s Annual Report on Form 10-K and Amendment No. 1 to TCFC’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2022, TCFC’s Quarterly Report on Form 10-Q for the period ended March 31, 2023 and its other filings with the SEC. SEC filings are available free of charge on the SEC’s website at www.sec.gov.

Additional Information About the Merger and Where to Find It

This Current Report on Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the Merger.

In connection with the Merger, a registration statement on Form S-4 containing a joint proxy statement/prospectus of TCFC and SHBI and a prospectus of SHBI was declared effective by the SEC on May 8, 2023. INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS (AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE INTO THE JOINT PROXY STATEMENT/PROSPECTUS) BECAUSE SUCH DOCUMENTS CONTAIN IMPORTANT INFORMATION REGARDING THE MERGER AND RELATED MATTERS. Investors and security holders may obtain these documents, and any other documents SHBI and TCFC have filed with the SEC, free of charge at the SEC’s website, www.sec.gov, or by accessing SHBI’s website at www.shorebancshares.com under the “Investor Relations” link and then under the heading “Documents,” or by accessing TCFC’s website at https://www.cbtc.com/about/investor-relations/. In addition, documents filed with the SEC by SHBI or TCFC will be available free of charge by (1) writing Shore at 18 East Dover Street, Easton, MD 21601, Attention: Vance W. Adkins, or (2) writing TCFC at 3035 Leonardtown Road, Waldorf, MD 20601, Attention: Todd Capitani.

Participants in the Solicitation

The directors, executive officers and certain other members of management and employees of SHBI may be deemed to be participants in the solicitation of proxies from the shareholders of SHBI in connection with the Merger. Information about SHBI’s directors and executive officers is included in the definitive proxy statement for SHBI’s 2023 annual meeting of shareholders, which was filed with the SEC on April 12, 2023.

The directors, executive officers and certain other members of management and employees of TCFC may also be deemed to be participants in the solicitation of proxies in connection with the Merger from the shareholders of TCFC. Information about the directors and executive officers of TCFC is included in Amendment No. 1 to the Annual Report for the year ended December 31, 2022 on Form 10-K/A, which was filed with the SEC on April 14, 2023.

Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the Merger. Free copies of this document may be obtained as described above.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits

	99.1	Consent of Austin J. Slater, Jr. to be named as a director of Shore Bancshares, Inc. (incorporated by reference from SHBI’s Registration Statement on Form S-4 filed with the SEC on April 14, 2023).
	99.2	Consent of James M. Burke to be named as a director of Shore Bancshares, Inc. (incorporated by reference from SHBI’s Registration Statement on Form S-4 filed with the SEC on April 14, 2023).
	99.3	Consent of Louis P. Jenkins, Jr., to be named as a director of Shore Bancshares, Inc.
	99.4	Consent of Mary Todd Peterson, to be named as a director of Shore Bancshares, Inc.
	99.5	Consent of Rebecca M. McDonald, to be named as a director of Shore Bancshares, Inc.
	99.6	Consent of Michael B. Adams, to be named as a director of Shore Bancshares, Inc.
	99.7	Consent of E. Lawrence Sanders, III, to be named as a director of Shore Bancshares, Inc.
	99.8	Consent of Joseph V. Stone, Jr., to be named as a director of Shore Bancshares, Inc.
	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.

Dated: May 25, 2023	By:	/s/ Lloyd L. Beatty, Jr.
		Lloyd L. Beatty, Jr. President and Chief Executive Officer

EX-99.3 2 tm2316952d1_ex99-3.htm EXHIBIT 99.3

Exhibit 99.3