My name is Frank Mason, Chairman. It is 11:00 A.M., and it is my pleasure to welcome you to the annual meeting of stockholders of Shore Bancshares, Inc. Our meeting is now officially called to order. I will begin by introducing your board, Blenda W. Armistead; David J. Bates, Chairman of our executive committee; Lloyd L. "Scott" Beatty, Jr., President and CEO; R. Michael Clemmer, Jr., Chairman of our ERM and ALCO committees; William E. Esham III; James A. Judge, Chairman of our audit committee; Clyde V. Kelly III, Chairman of our governance committee; David W. Moore, Chairman of our compensation committee; Jeffrey E. Thompson, Chairman of our trust committee; and Dawn M. Willey. Also joining this morning from Shore Bancshares, we have Edward Allen, our Chief Financial Officer; Donna Stevens, our Chief Operating Officer; David Morse, Corporate Secretary and General Counsel; and Tina Connolly, the Secretary of Election.
In addition, we have Brandon Driver, partner at Yount, Hyde & Barbour, PC, our independent auditor, and Mr. Kevin Houlihan, partner at Holland & Knight and Corporate Counsel for the company. Now my remarks. Last year during this meeting, we were in the beginning stages of the global COVID-19 pandemic, and as such, we held our 2020 annual meeting virtually. Our anticipation for this year's meeting was that we could all, once again, as in years past, gather in person. That obviously was not to be, though we believe we are in the latter stages of a national and regional recovery. Hope springs eternal that next year we can once again gather in person during this annual meeting. I thank everyone for joining today via teleconference.
Before I begin my remarks, I would like to officially welcome our two newest directors who have joined the Shore Bancshares board since our last annual meeting, Will Esham and Dawn Willey. Both Mr. Esham and Ms. Willey bring a tremendous amount of energy, intellect, and experience to our board, and they have already made a significant impact. They have hit the proverbial ground running, and we are grateful to have them in our organization. The pandemic has touched all of our lives in one form or another over the past 12 months or so, and it has certainly impacted our organization. Our CEO, Scott Beatty, in his remarks today, will offer some particulars on how our organization has managed through the pandemic, all the while keeping focused on improving shareholder return. We are all aware of how the pandemic has negatively affected our daily lives.
However, your board of directors and I are exceedingly proud of our organization's management team, and frankly all of its employees, and how they have significantly minimized the negative aspects to our customers of the COVID-19 shutdown. In fact, created opportunities for growth and improved customer service out of an otherwise difficult set of circumstances. Your board of directors and I are particularly proud of how our bank managed the funding of the Payroll Protection Program in our region. With this program and our management of it, many of our commercial customers were able to remain afloat while the storm was weathered. In addition, we funded many companies and organizations which previously were not Shore United Bank customers. What a fabulous example of turning an otherwise negative situation for a potential customer into a win-win situation for not only the new customer, but also to Shore United Bank.
In years past, during this message, I have stressed the vital importance for a community bank to have the, quote, "best in class customer service." In my opinion, it is one of the main differentiators among community banks. Over the past year, I've had no less than two handfuls of people go out of their way to tell me of their experience with Shore United Bank in having their PPP loans funded. In every case, the customer was truly overwhelmed with the diligence and speed with which our staff managed the transaction. Most inspiring were the people who shared their experiences with me while not aware of my affiliation with our organization.
I would like to also mention how our wealth management entity, Wye Financial, led by Talli Oxnam, were able to allay any potential fears the pandemic may have created among our investors, and in fact, grew its customer base and improved its net income over the previous years. As always, growth and improved shareholder return remain at the forefront of your board's overarching agenda. Our deposit base has certainly grown over the past year as well as our reach in communities on the western shore of Maryland as well as in the beach region in Maryland. As a board, we are constantly aware of the requirement for steady growth and ultimately improved shareholder return. While we continue to grow our branch and customer base organically, we diligently remain on the M&A hunt, which once successful, will hopefully result in a significant step change in our share price.
Thank you to all of our shareholders for your continued support. Now for our procedural matters. While I act as chairman of the meeting, Tina Connolly, Executive Assistant of Shore Bancshares, will act as Secretary of Election. The two judges of the meeting are Clyde V. Kelly III and Blenda W. Armistead. Persons owning shares of common stock of Shore Bancshares, Incorporated, which are of record on March 15th, 2021, are entitled to vote. Will the secretary please report on whether a quorum is present?
Mr. Chairman, 11,751,859 shares of common stock were outstanding on the record date. At least a majority of the outstanding shares are represented by proxy, and a quorum is present for the transaction of business.
The report indicates a quorum is present. Please file the report with the minutes. Madam Secretary, do you have the minutes of the last meeting of stockholders?
Yes, Mr. Chairman, I do.
I suggest that the reading of the minutes be dispensed. Do I hear a motion?
Moved.
Second.
Madam Secretary, do you have copies of the notice of meeting, proxy statement, form of proxy, and certificate of mailing?
Yes, I do.
Please incorporate them into the minutes of the meeting. Do you have the list of stockholders?
Yes, I do. The list includes all holders of common stock of Shore Bancshares as of the record date. Registered shareholders can submit votes, questions, and access the registered shareholder list via the virtual platform.
The first item of business to be considered at this meeting, as described in the proxy statement, is the election of directors. Our board of directors has approved the nomination of David J. Bates, Lloyd L. Beatty Jr., James A. Judge, and R. Michael Clemmer Jr. for re-election as Class 3 directors. The second item of business on the agenda is the ratification of the audit committee's appointment of Yount, Hyde & Barbour, PC as the company's independent registered public accounting firm for 2021. The third item of business on the agenda is the adoption of the non-binding advisory resolution approving the compensation of the company's named executive officers. The fourth item of business on the agenda is the approval of the Shore Bancshares, Inc 2021 Employee Stock Purchase Plan. Madam Secretary, please report the results of the vote.
With regard to proxy item number one, a plurality of the shares voted were voted for each of the Class 3 directors. Therefore, I'm pleased to announce the election of David J. Bates, Lloyd L. Beatty Jr., James A. Judge, and R. Michael Clemmer Jr. as Class 3 directors to serve as directors of Shore Bancshares until 2024. With regard to proxy item number two, 94.02% of the shares voted were voted for proxy item number two. Therefore, I am pleased to announce the ratification of the appointment of Yount, Hyde & Barbour, PC as the company's independent registered accounting firm for 2021. With regard to proxy item number three, 92.30% of the shares voted were voted for proxy item number three. Therefore, I'm pleased to announce the non-binding advisory resolution approving the compensation of the named executive officers was adopted.
With regard to proxy item number four, 91.24% of the shares voted were voted for proxy item number four, and therefore, I am pleased to announce the approval of the Shore Bancshares, Inc 2021 Employee Stock Purchase Plan.
Now we will hear from our President and CEO, Scott Beatty.
Thank you, Frank, and welcome everyone. I'll start with the pandemic and operations update. Our customers continue to have full access to all of our branches. For a short period this summer, our lobbies were only open by appointment. However, since July 1st, our lobbies have generally been open. Occasionally, we have to close a lobby here and there and go to drive-through only. This is primarily due to staffing issues. Staff's either out quarantining as a result of an exposure, or we have other PTO issues. The PPP program, as everyone knows, round two is now closed. In round one, we processed 1,495 loans totaling $129 million. In round two, we processed 944 loans totaling $80 million.
To date, we've received about $70 million in forgiveness, and with a current PPP outstanding balance of about $123 million. We expect to have a significant amount of forgiveness in the second quarter. We didn't receive the kind of forgiveness we anticipated in the first quarter, largely due, I think, to the fact that there was a second round of PPP. On the deferral front, currently, we only have 12 loans on deferral totaling $16 million. These are all principal deferrals only. Only one loan of $13 million is not COVID related. It's a principal deferral that was granted for a rehab of a retail center, and we're going to take this off our COVID deferral list.
We're down to about $3 million in total on deferrals, related to COVID. Credit is the best we've ever seen it, with our past dues non-accrual TDRs and OREO at 0.9% of total loans excluding PPP. As far as lending goes, our loan pipeline is about the highest we've ever seen it. It's been strong across all of our markets, but especially in the Baltimore suburban market. We've hired three new lenders in our Central Eastern Shore market, and all are doing quite well. However, we are seeing a lot of payoffs. This is coming primarily from residential refinancing, an abundance of customer cash, and some very aggressive commercial lenders. Given all that, we still expect to see about 6% loan growth this year excluding PPP. Regarding the stock market generally, our current daily average share volume is about 71,000 shares.
Institutional ownership is now up to about 76%. We will be coming out of the Russell in June. As everyone knows, the market cap for the Russell this year is somewhere between $246 million and $279 million from what we hear. Last year, as just a point of interest, it was $98 million. We'll be coming out. We fully expect some initial pricing pressure on the stock, but with the pending merger with Severn, it's likely that we'll go back into the Russell next year, and there may be very little impact. We continue to focus on our growth initiatives. We recently signed a lease on a vacant PNC branch on 34th Street in Ocean City, Maryland. We think this is a great opportunity for us for several reasons. One, it solidifies our commitment to that market. Two, it's a wonderful marketing opportunity.
It's a high visibility, high traffic counts on the Coastal Highway where that building's located. We can also consolidate our LPO office in Ocean City in that branch location, so that will save us some additional money. We have approvals, and the branch should be open in the first quarter of 2022. In turn, we've been able to take advantage locally of some market disruption in the mid-shore market. PNC closed a branch in St. Michaels, Maryland, which serviced a significant portion of Talbot County. We are now the only bank with a branch in that area. Additionally, there was a merger of a bank in the mid-shore market with a bank on the western shore, and frankly, the customer conversion was quite a disaster. As a result of these two events, we were able to onboard a significant number of new customers.
In March alone, we opened 900 new accounts bank-wide. Obviously, the big news is the pending merger with Severn. This will fill a significant gap in our footprint and should push us over $3 billion in assets. It also gives us a very good residential mortgage platform, which we can expand our current geography. In addition, it increases our legal lending limit to well over $40 million. We hope to have the legal merger complete in the third quarter and the systems conversion complete mid fourth quarter. Our merger teams have come together and are working through the consolidation process now. In closing, I would just like to acknowledge the outstanding performance of the staff of Shore United Bank. As management, we asked them to go over and above normal in a time that was very stressful for both them and their families. They performed beyond anyone's expectation.
As a result, we have meaningfully enhanced the reputation of the bank in all of our communities. I'm constantly getting verbal and written expressions of gratitude and appreciation for all the bank and our staff have done for businesses and people throughout this trying time. With that, I will turn it over to Edward Allen, our CFO, for financial highlights.
Thank you, Scott. Good morning, everyone. Pleased to bring you the recap of the financial performance of Shore Bancshares for the year 2020. We saw tremendous growth in assets. We ended the year at $1.933 billion in assets, a growth of 24% for the year, primarily fueled by deposit growth. Deposit growth was 27%. There were a lot of factors involved in that, including federal stimulus money, both in the form of direct payments to individuals, PPP loans to small businesses, a new branch, and about 30% growth in municipal deposits. Loans grew 16% for the year and excluding PPP loans, the growth was 6.7%. One of the best news that we saw was non-performing assets declining from 2.12% of loans at the end of 2018 to 0.86 at the end of 2020.
Those non-performing assets, which include non-accrual loans, accruing TDRs, 90 days past due, and other real estate owned, went from $26.6 million to $13.2 million, a 50% decrease during that time frame. Looking at the income statement, earnings have been very consistent for the last three years. Earnings per share of $1.24, $1.28, and $1.27. In 2020, net interest income was up 5%. Non-interest income was up 7%. Expenses were only up 2.2% from the previous year. The reason that we had slightly less net income for the year was that we added to the loan loss reserve using qualitative factors related to the pandemic as an abundance of caution due to the unknown throughout the year extent of the effect of COVID. Our provision for the year 2020 was $3.9 million compared to $700,000 the previous year.
I would say that to date, we have not experienced any COVID related losses. That's my report. Thank you.
Thank you, Scott and Ed. There appear to be no questions posted to the portal. There being no further business, a motion to adjourn will be heard.
Make a motion we adjourn.
Second.
Ladies and gentlemen, thank you for your individual participation and attendance at your company's meeting. The motion is carried and the meeting is adjourned. Thank you.