NOTE 24. PARENT COMPANY FINANCIAL INFORMATION

The following tables provide condensed financial information for Shore Bancshares, Inc. (Parent Company Only).

Condensed Balance Sheets

December 31,


(Dollars in thousands)	2019		2018
Assets
Cash	$	7,522	$	26,583
Investment securities available for sale, at fair value		—		918
Investment in subsidiaries		183,183		157,855
Premises and equipment, net		—		3,772
Other assets		2,483		1,593
Total assets	$	193,188	$	190,721

Liabilities
Accrued interest payable	$	—	$	1
Other liabilities		386		6,494
Short-term borrowings		—		1,041
Total liabilities		386		7,536

Stockholders’ equity
Common stock		125		127
Additional paid in capital		61,045		65,434
Retained earnings		131,425		120,574
Accumulated other comprehensive income (loss)		207		(2,950)
Total stockholders’ equity		192,802		183,185

Total liabilities and stockholders’ equity	$	193,188	$	190,721

Condensed Statements of Income

For the Years Ended December 31,


(Dollars in thousands)	2019		2018
Income
Dividends from subsidiaries	$	—	$	4,000
Management and other fees from subsidiaries		498		2,535
Gain on sale of subsidiary		—		12,736
Other operating income		66		30
Total income		564		19,301

Expenses
Interest expense		22		54
Salaries and employee benefits		111		1,626
Occupancy and equipment expense		—		106
Other operating expenses		932		1,274
Total expenses		1,065		3,060

(Loss) income before income tax (benefit) expense and equity in
undistributed net income of subsidiaries		(501)		16,241
Income tax (benefit) expense		(131)		4,298
(Loss) income before equity in undistributed net income of subsidiaries		(370)		11,943

Equity in undistributed net income of subsidiaries		16,568		13,054
Net income	$	16,198	$	24,997

Condensed Statements of Cash Flows

For the Years Ended December 31,


(Dollars in thousands)	2019		2018
Cash flows from operating activities:
Net income	$	16,198	$	24,997
Adjustments to reconcile net income to cash
provided by operating activities:
Equity in undistributed net income of subsidiaries		(16,568)		(13,054)
Depreciation and amortization		—		469
Stock-based compensation expense		149		447
Gain on sale of subsidiary		—		(12,736)
Net (increase) decrease in other assets		(1,093)		1,001
Net (decrease) increase in other liabilities		(6,109)		3,267
Net cash (used in) provided by operating activities		(7,423)		4,391

Cash flows from investing activities:
Proceeds from maturities and principal payments of
investment securities available for sale		—		187
Purchases of premises and equipment		—		(590)
Purchase of bank owned life insurance		(139)		—
Transfer to subsidiary		(571)		—
Cash of subsidiary retained upon disposal		—		726
Proceeds from sale of subsidiary		—		25,159
Net cash (used in) provided by investing activities		(710)		25,482

Cash flows from financing activities:
(Decrease) increase in short-term borrowings		(1,041)		375
Common stock dividends paid		(5,347)		(4,079)
Retirement of common stock		(4,452)		—
Repurchase of shares for tax withholding on exercised options
and vested restricted stock		(88)		(269)
Net cash used in financing activities		(10,928)		(3,973)

Net (decrease) increase in cash and cash equivalents		(19,061)		25,900
Cash and cash equivalents at beginning of year		26,583		683
Cash and cash equivalents at end of year	$	7,522	$	26,583

Supplemental cash flow information:
Transfer of building, available for sale securities and other assets to banking subsidiary	$	5,032	$	—