REGULATORY CAPITAL REQUIREMENTS

12 Months Ended

Dec. 31, 2011

Regulatory Capital Requirements [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 18. REGULATORY CAPITAL REQUIREMENTS

Shore Bancshares, Inc. and each of the Banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Banks must meet specific capital guidelines that involve quantitative measures of the Banks’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Banks’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Banks to maintain amounts and ratios (set forth in the table below) of Tier 1 and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (leverage ratio). Management believes, as of December 31, 2011, that Shore Bancshares, Inc. and the Banks met all capital adequacy requirements to which they are subject.

As of December 31, 2011 and 2010, the most recent notification from the Federal Deposit Insurance Corporation categorized the Banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Banks must maintain minimum Tier 1 risk-based and total risk-based capital ratios, and Tier 1 leverage ratios. Management believes that there are no conditions or events since that notification that have changed the well-capitalized category of Shore Bancshares, Inc. or either of the Banks.

The minimum ratios for capital adequacy purposes are 4.00%, 8.00% and 4.00% for the Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively. To be categorized as well capitalized, a bank must maintain minimum ratios of 6.00%, 10.00% and 5.00% for its Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively. Shore Bancshares, Inc., as a financial holding company, is subject to the well-capitalized requirement.

The following tables present the capital amounts and ratios for Shore Bancshares, Inc., Talbot Bank and CNB as of December 31, 2011 and 2010. Also presented below are the capital amounts and ratios for Felton Bank as of December 31, 2010.

December 31, 2011 (Dollars in thousands)	Tier 1 Capital		Total Risk- Based Capital		Net Risk- Weighted Assets		Adjusted Average Total Assets		Tier 1 Risk-Based Capital Ratio			Total Risk-Based Capital Ratio			Tier 1 Leverage Ratio
Company	$	106,276	$	116,917	$	846,936	$	1,143,990		12.55	%		13.80	%		9.29	%
Talbot Bank		63,667		70,604		551,202		706,984		11.55			12.81			9.01
CNB		41,542		45,246		295,232		431,968		14.07			15.33			9.62

December 31, 2010 (Dollars in thousands)	Tier 1 Capital		Total Risk- Based Capital		Net Risk- Weighted Assets		Adjusted Average Total Assets		Tier 1 Risk-Based Capital Ratio			Total Risk-Based Capital Ratio			Tier 1 Leverage Ratio
Company	$	105,808	$	117,057	$	895,581	$	1,109,999		11.81	%		13.07	%		9.53	%
Talbot Bank		65,736		73,133		589,533		682,493		11.15			12.41			9.63
CNB		32,813		35,893		246,056		342,771		13.34			14.59			9.57
Felton Bank		7,683		8,459		61,086		81,621		12.58			13.85			9.41

Federal and state laws and regulations applicable to banks and their holding companies impose certain restrictions on dividend payments by the Banks, as well as restricting extensions of credit and transfers of assets between the Banks and Shore Bancshares, Inc. The Banks paid dividends of $989 thousand to Shore Bancshares, Inc. during 2011. At December 31, 2011, the Banks could have paid dividends to Shore Bancshares, Inc. of approximately $8.9 million without the prior consent and approval of the regulatory agencies. Shore Bancshares, Inc. had no outstanding receivables from subsidiaries at December 31, 2011 or 2010.