Credit card fraud lowers 1st quarter earnings For Shore Bankshares


Shore Bancshares, Inc., the holding company for Shore United Bank, reported lower first quarter earnings, due to the expenses arising from a credit card fraud case that did not affect customers.

Shore is based in Easton, MD, and has branches in Kent and Sussex counties, along with a commercial loan office in Middletown. Shore has been active in acquisitions and last year acquired a bank holding company based in Waldorf, MD.

Shore reported a net income of $8.2 million for the first quarter of 2024, compared to $10.5 million for the fourth quarter of 2023 and $6.5 million for the first quarter of 2023.

In early April,  the bank found it had been the victim of fraudulent credit card account openings during the first quarter of 2024.

Fraudsters used stolen personal information to open bank-issued credit cards through Shore’s online credit card activation system. The personal information used had been stolen from individuals who were not customers of the bank. No existing bank customers were impacted by and the bank’s core processing system was not compromised.


Shore Bank immediately closed all fraudulently opened credit card accounts and suspended all credit card activations. The bank will not open new credit card accounts until its investigation is complete. The bank is implementing enhanced activity monitoring on all existing cards and recorded $4.3 million in fraud-related expenses in the first quarter of 2024. No additional losses are expected.

Bank’s credit card processor, management is evaluating the root causes of the fraud event and the preventative and monitoring controls that would have mitigated the fraud loss. Management will also consider whether the credit card product can attain the size and scale needed in the near term for the bank to continue as an issuer, a release stated. The bank is working with law enforcement to recover a portion of the fraud losses.

The bank reported no deterioration in loan quality, and the net interest rate margin on loans to deposits remained relatively stable, officials said.

“While the first quarter’s credit card fraud was disappointing, I am pleased with the response of our team after the incident was identified to contain the problem, and that no customers were impacted,” stated James (“Jimmy”) M. Burke, CEO of Shore Bancshares, Inc. “We are undertaking a comprehensive review of the incident to recover as much of the fraudulent charges as possible and are evaluating our options regarding the future of an in-house credit card program.”

Burke continued, “Active balance sheet management in the first quarter resulted in stabilizing margins and net interest income while continued focus on reducing expenses is expected to enhance future operating leverage. Credit remains stable and we believe we are well positioned to deliver improving profitability in future quarters.”

Total assets were $5.8 billion at March 31, 2024, a decrease of $185 million or 3.1%, when compared to $6 billion at December 31, 2023.

Management continues to pursue opportunities to increase efficiencies and decrease expenses as a percentage of operating revenues. Subject to regulatory approval, management decided to close two branches by the end of the third quarter. The Onley, VA branch on the Eastern Shore should close on or about July 17, and the Westgate branch located in Annapolis, MD, should close on or about September 30.

Additionally, the company plans to reduce its office space in Easton, MD. By the end of the third quarter, a newly renovated office building is expected to be put into service eliminating the need for the two currently-occupied office buildings.