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CORRESP
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      Shore
        Bancshares, Inc.

Via
      EDGAR

    October
      12, 2007

    Ms.
      Rebekah Blakely Moore

    Senior
      Accountant

    United
      States Securities and Exchange Commission

    Division
      of Corporation Finance

    Mail
      Stop
      4561

    Washington,
      DC 20549

              Re:

              Shore
                Bancshares, Inc.

              Form
                10-K for Fiscal Year Ended December 31, 2006

              File
                No. 000-22345

    Dear
      Ms.
      Moore,

    This
      letter responds to the comments of the Staff (the “Staff”) of the Division of
      Corporation Finance of the Securities and Exchange Commission (the “Commission”)
      dated September 18, 2007 in respect of the Annual Report of Shore Bancshares,
      Inc. (the “Company”) on Form 10-K for the year ended December 31, 2006 (the
“2006 Form 10-K”) and the Quarterly Report of the Company on Form 10-Q for the
      period ended March 31, 2007 (the “March 10-Q”). We have reviewed the Staff’s
      comments and agree to incorporate changes in future filings to address the
      issues noted in the Staff’s comments. We understand that the Staff is not at
      this time requiring any amendments to the 2006 Form 10-K or the March 10-Q.

    Responses
      to the Staff’s comments are set forth below.

    SEC
      Comment #1:
      (Selected Financial Data, page 17.) Please revise to disclose the balance of
      long-term debt as required by Item 301(2) of Regulation S-K.

    Response:
      In
      future
      filings, the Selected Financial Data table will be revised to disclose the
      balance of long-term debt. Using the 2006 Form 10-K as an example, our proposed
      revised Selected Financial Data table is as follows:

          18
            E.
            Dover Street • Easton, Maryland 21601-3013

          Phone:
            410-822-1400 • Fax: 410-820-4238

          Shore
            Bancshares, Inc.

Item
      6. Selected
      Financial Data.

    The
      following table sets forth certain selected financial data for the five years
      ended December 31, 2006 and is qualified in its entirety by the detailed
      statistical and other information contained in this report, including
“Management’s Discussion and Analysis of Financial Condition and Results of
      Operations” appearing in Item 7 of Part II of this report and the financial
      statements and notes thereto appearing in Item 8 of Part II of this report.

              Years
                Ended December 31,

              (Dollars
                in thousands, except per shares data)

              2006

              2005

              2004

              2003

              2002

              RESULTS
                OF OPERATIONS:

              Interest
                income

              $

              57,971

              $

              47,384

              $

              38,291

              $

              34,339

              $

              36,306

              Interest
                expense

              19,075

              11,899

              9,010

              9,743

              12,438

              Net
                interest income

              38,896

              35,485

              29,281

              24,596

              23,868

              Provision
                for credit losses

              1,493

              810

              931

              335

              356

              Net
                interest income after provision for credit losses

              37,403

              34,675

              28,350

              24,261

              23,512

              Noninterest
                income

              12,839

              11,498

              10,224

              9,845

              5,968

              Noninterest
                expenses

              28,534

              25,431

              22,535

              19,344

              15,960

              Income
                before taxes

              21,708

              20,742

              16,039

              14,762

              13,520

              Income
                taxes

              8,154

              7,854

              5,841

              5,266

              4,730

              NET
                INCOME

              $

              13,554

              $

              12,888

              $

              10,198

              $

              9,496

              $

              8,790

              PER
                SHARE DATA: (1)

              Net
                income - basic

              $

              1.62

              $

              1.55

              $

              1.24

              $

              1.18

              $

              1.09

              Net
                income - diluted

              1.61

              1.55

              1.23

              1.16

              1.08

              Dividends
                paid

              .59

              .54

              .48

              .44

              .40

              Book
                value (at year end)

              13.28

              12.17

              11.24

              10.31

              9.68

              Tangible
                book value (at year end) (2)

              11.67

              10.51

              9.53

              9.37

              8.72

              FINANCIAL
                CONDITION (at year end):

              Assets

              $

              945,649

              $

              851,638

              $

              790,598

              $

              705,379

              $

              654,066

              Deposits

              774,182

              704,958

              658,672

              592,409

              545,192

              Long
                term debt

              25,000

              4,000

              5,000

              5,000

              5,000

              Total
                loans, net of unearned income

              and
                allowance for credit losses

              693,419

              622,227

              590,766

              470,895

              435,422

              Stockholders’
                equity

              111,327

              101,448

              92,976

              83,527

              78,028

              PERFORMANCE
                RATIOS (for the year):

              Return
                on average assets

              1.52

              %

              1.51

              %

              1.32

              %

              1.40

              %

              1.42

              %

              Return
                on average stockholders’ equity

              12.66

              %

              13.20

              %

              11.17

              %

              11.70

              %

              11.79

              %

              Net
                interest margin

              4.70

              %

              4.69

              %

              4.10

              %

              3.91

              %

              4.12

              %

              Efficiency
                ratio(3)

              55.15

              %

              54.13

              %

              57.04

              %

              56.17

              %

              53.49

              %

              Dividend
                payout ratio

              36.42

              %

              34.33

              %

              38.71

              %

              37.29

              %

              36.59

              %

              Average
                stockholders’ equity to average total assets

              11.98

              %

              11.86

              %

              11.79

              %

              11.96

              %

              12.00

              %

            (1)

              Per
                share data is adjusted to give retroactive effect to a 3 for 2 stock
                split
                in the form of a stock dividend declared on May 4, 2006.

            (2)

              Total
                stockholders’ equity, net of goodwill and other intangible assets, divided
                by the number of shares of common stock outstanding at
                year-end.

            (3)

              Noninterest
                expenses as a percentage of total revenue (net interest income plus
                total
                noninterest income). Lower ratios indicate improved productivity.

          2

            18
              E.
              Dover Street • Easton, Maryland 21601-3013

            Phone:
              410-822-1400 • Fax: 410-820-4238

            Shore
              Bancshares, Inc.

    Staff
      Comment #2:
      (Note
      5, Loans and Allowance for Credit Losses, Page 46.) Please revise to disclose
      the interest income that would have been recognized had your nonaccrual loans
      been performing according to their original terms. Refer to Instruction 2 to
      Item III.C.1 of Industry Guide 3.

    Response:
      In
      future filings, Note 5 will be revised to include a disclosure of the amount
      of
      interest income that would have been recognized if the loans had been performing
      in accordance with their original terms in accordance with Instruction 2 to
      Item
      III.C.1 of Industry Guide 3. Using the 2006 Form 10-K as an example, our
      proposed revised disclosure is to add a sentence after the third table contained
      in Note 5 as follows:

    Gross
      interest income that would have been recorded in 2006 if non-accrual loans
      and
      leases had been current and, in accordance with their original terms, was
      $139,999, while interest actually recorded on such loans was $0.

    Staff
      Comment #3:
      (Note 6.
      Premise and Equipment, page 46.) Please revise Note 1 to disclose your method
      of
      accounting used to record the sale-leaseback transaction. Additionally, please
      disclose the terms and conditions of the sale, to include the sales price and
      loan terms, if applicable. Refer to paragraphs 7-8 and 17 of SFAS
      98.

    Response:
      In
      future filings requiring such disclosure, Note 1 will be revised to disclose
      the
      method of accounting used to record the referenced sale-leaseback transaction.
      Using the 2006 Form 10-K as an example, our proposed revision to Note 6 is
      to
      replace the existing disclosure regarding the sale-leaseback transaction with
      the following:

    Sale
      leaseback transaction

    On
      June
      14, 2005, the Company entered into a sale-leaseback agreement with First Oxford
      Corporation. Pursuant to the agreement, the Company conveyed title to the land,
      including buildings, structures and other improvements of its banking facility
      in Felton, Delaware on September 23, 2005 for $950,000. The Company has leased
      back the facility for a period of 20 years. The gain on the transaction was
      $175,993. In accordance with the provisions of sale-leaseback accounting, the
      transaction was considered a normal leaseback and the realized gain was deferred
      and will be amortized to other income on a straight-line basis over the initial
      lease term.

    Rental
      expense under the agreement was $75,725 and $30,253 for 2006 and 2005,
      respectively.

          3

            18
              E.
              Dover Street • Easton, Maryland 21601-3013

            Phone:
              410-822-1400 • Fax: 410-820-4238

            Shore
              Bancshares, Inc.

Staff
        Comment #4:
        (Note
        13, Stock Option Plans, page 49.) Please revise to disclose the total intrinsic
        value of options exercised during 2004 and total fair value of shares vested
        during each of the three years ended December 31, 2006, 2005, 2004. Refer
        to
        paragraph A240(c)(2) of SFAS 123(R).

    Response:
      In
      future filings, Note 13 will be revised to include the total fair value of
      shares vested for each of the three years covered by the report in accordance
      with paragraph A240(c)(2) of SFAS 123(R). We note that future filings will
      not
      require the disclosure of total intrinsic value of options exercised during
      2004, but we will include intrinsic value information for all relevant periods
      in future reports. Using the 2006 Form 10-K as an example, our proposed revision
      to Note 13 is to:

    (i)
      replace the original intrinsic value discussion with: "The total intrinsic
      value of stock options exercised during the years ended December 31, 2006,
      2005
      and 2004 was $813,882, $352,826 and $676,560, respectively."; and

    (ii)
      add:
      "The total fair value of shares vested during the years ended December 31,
      2006,
      2005 and 2004 was approximately $29,500, $39,000, and $53,000,
      respectively."

    Staff
      Comment #5:
      (Note 23
      Quarterly Financial Results, page 57.) The quarterly data presented for basic
      earnings per common share and diluted earnings per common share varies from
      the
      quarterly amounts previously reported in Forms 10-Q for each quarterly period
      in
      2005, and for the quarter ended March 31, 2006. Please revise to provide the
      disclosures required by Item 302(a)(2) of Regulation S-K for differences not
      attributable to your stock split.

    Response:
      In
      future filings, Note 23 will be revised to reconcile differences in basic and
      diluted earnings per share disclosed in previous Quarterly Reports to account
      for our stock dividend in the form of a stock split. We note that, for the
      periods reported in the 2006 Form 10-K, there are no differences between basic
      earnings per common share and diluted earnings per common share that are not
      attributable to the stock split. Using the 2006 Form 10-K as an example, our
      proposed revised Note 23 is as follows:

        4

          18
            E.
            Dover Street • Easton, Maryland 21601-3013

          Phone:
            410-822-1400 • Fax: 410-820-4238

          Shore
            Bancshares, Inc.

    NOTE
      23. QUARTERLY FINANCIAL RESULTS (unaudited)

    A
      summary
      of selected consolidated quarterly financial data for the two years ended
      December 31, 2006 is reported as follows:

              First

              Second

              Third

              Fourth

              (In
                thousands, except per share data)

                Quarter

              Quarter

              Quarter

              Quarter

              2006

              Interest
                income

              $

              13,065

              $

              13,943

              $

              15,368

              $

              15,595

              Net
                interest income

              9,414

              9,909

              9,902

              9,671

              Provision
                for credit losses

              311

              240

              416

              526

              Income
                before income taxes

              5,718

              5,941

              5,167

              4,882

              Net
                Income

              $

              3,551

              $

              3,751

              $

              3,199

              $

              3,053

              Basic
                earnings per common share

              $

              0.43

              $