8-K

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):  November 16, 2011

SHORE BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Maryland	0-22345	52-1974638
(State or other jurisdiction of	(Commission file number)	(IRS Employer
incorporation or organization)		Identification No.)

18 East Dover Street, Easton, Maryland 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 obligations of the registrant under any of the following provisions:

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

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

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e-4(c))

Item 1.01.       Entry into a Material Definitive Agreement.

On November 16, 2011, Shore Bancshares, Inc. (the “Company”) entered into a letter agreement (the “Warrant Repurchase Agreement”) with the United States Department of the Treasury( the “Treasury”).  Pursuant to the Warrant Repurchase Agreement, the Company repurchased from the Treasury a common stock purchase warrant (the “Warrant”) that was issued in connection with the Company’s January 9, 2009 participation in the Treasury’s Troubled Asset Relief Program Capital Purchase Program (the “TARP CPP”).  Under the Warrant, the Treasury had the right, exercisable at any time on or before January 9, 2019, to purchase 172,970 shares of the common stock of the Company, par value $.01 per share, at an exercise price of $21.68 per share.  The Company paid $25,000 to repurchase the Warrant from the Treasury, which has been canceled.  The repurchase price was based on the fair market value of the Warrant as agreed upon by the Company and the Treasury.  With the repurchase of the Warrant, the Company concluded its participation in the TARP CPP.  The above discussion is only a summary of, and is qualified in its entirety by, the terms of the Warrant Repurchase Agreement, a copy of which is filed herewith as Exhibit 10.1.

Item 9.01.       Financial Statements and Exhibits.

(d)    Exhibits.

10.1 Letter Agreement, dated as of November 16, 2011, between the United States Department of the Treasury and Shore Bancshares, Inc. (filed herewith).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SHORE BANCSHARES, INC.
Dated:  November 16, 2011	By:      /s/ W. Moorhead Vermilye
	W. Moorhead Vermilye Chief Executive Officer (Principal Executive Officer)

EXHIBIT INDEX

Exhibit

Number                  Description

10.1 Letter Agreement, dated as of November 16, 2011, between the United States Department of the Treasury and Shore Bancshares, Inc. (filed herewith).

EX-10.1

Exhibit 10.1

UNITED STATES DEPARTMENT OF THE TREASURY

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

November 16, 2011

Ladies and Gentlemen:

Reference is made to that certain letter agreement (the “Repurchase Letter Agreement”),dated as of the date set forth on Schedule A hereto, between the United States Department of the Treasury (the “Investor”)and the company set forth on Schedule A hereto (the “Company”).  Capitalized terms used but not defined herein shall have the meanings assigned to them in the Repurchase Letter Agreement.

As documented by the Repurchase Letter Agreement, the Company has completed the repurchase from the Investor of all of the Preferred Shares issued to the Investor pursuant to the Securities Purchase Agreement.  Following such time, the Company delivered a Warrant Repurchase Notice dated as of the date set forth on Schedule A hereto to the Investor.  In connection with the consummation, on the date hereof, of the repurchase of the Warrant by the Company from the Investor, as contemplated by the Warrant Repurchase Notice and Section 4.9 of the Securities Purchase Agreement:

(a)The Company hereby acknowledges receipt from the Investor of the Warrant; and

(b)The Investor hereby acknowledges receipt from the Company of a wire transfer to the account of the Investor set forth on Schedule A hereto in immediately available funds of the aggregate purchase price set forth on Schedule A hereto, representing payment in full for the Warrant, determined in accordance with Section 4.9 of the Securities Purchase Agreement.

This letter agreement will be governed by and construed in accordance with the federal law of the United States if and to the extent such law is applicable, and otherwise in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.

This letter agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.  Executed signature pages to this letter agreement may be delivered by facsimile and such facsimiles will be deemed sufficient as if actual signature pages had been delivered.

In witness whereof, the parties have duly executed this letter agreement as of the date first written above.

UNITED STATES DEPARTMENT OF

THE TREASURY

By:  /s/ Timothy G. Massad                            

Name:   Timothy G. Massad

Title:     Assistant Secretary for FinancialStability

COMPANY:  SHORE BANCSHARES, INC.

By:  /s/ Lloyd L. Beatty, Jr.                   

Name:   Lloyd L. Beatty, Jr.

Title:     President

SCHEDULE A

Company Information:

Name of the Company:	Shore Bancshares, Inc.
Corporate or other organizational form of the Company:	Corporation
Jurisdiction of organization of the Company:	Maryland
Information related to the Preferred Share Repurchase:
Date of Repurchase Letter Agreement for the repurchase of 25,000 of the Preferred Shares:	April 15, 2009
Terms of the Warrant Repurchase:
Date of Warrant Repurchase Notice:	November 1, 2011
Aggregate purchase price for the Warrant:	$25,000.00
Investor wire information for payment of purchase price for the Warrant:	ABA Number: Bank: The Bank of New York Mellon Account Name: Account Number: