SHORE BANCSHARES INCSHBI

SHORE BANCSHARES INC Commitments Disclosure

10-KFiled Mar 2, 20262 min read
Commitments and Contingencies
In the normal course of business, to meet the financial needs of its customers, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments include commitments to extend credit and standby letters of credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Letters of credit and other commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the letters of credit and commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Commitments to make loans are generally made for a period of 90 days or less.
The following table provides information on commitments outstanding as of December 31, 2025 and 2024.
($ in thousands)December 31, 2025December 31, 2024
Commitments to extend credit
Fixed$209,737 $261,794 
Variable503,713 497,686 
Total commitments to extend credit$713,450 $759,480 
Letters of credit
Fixed$6,495 $8,980 
Variable17,830 18,981 
Total letters of credit$24,325 $27,961 
Total commitments outstanding$737,775 $787,441 
The Company had a reserve for off-balance sheet credit exposures of $2.0 million and $1.1 million as of December 31, 2025 and 2024, respectively. The reserve was estimated based on current expected credit losses to be experienced by the Company. Losses are charged against the allowance when management believes the required funding of these exposures is uncollectible. While this evaluation is completed on a regular basis, it is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
In the normal course of business, the Company may become involved in litigation arising from banking, financial and other activities. Management, after consultation with legal counsel, does not anticipate that the future liability, if any, arising out of current proceedings will have a material effect on the Company’s financial condition, operating results or liquidity.
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Historical Timeline

Fiscal YearFiled
2025Mar 2, 2026Showing above
2024Mar 10, 2025
2023Mar 15, 2024
2022Mar 30, 2023
2021Mar 31, 2022
2020Mar 26, 2021
2019Mar 13, 2020
2018Mar 15, 2019
2017Mar 16, 2018
2016Mar 16, 2017
2015Mar 11, 2016

About Commitments Disclosures

Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.

Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.

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