Sandy Spring Bancorp Reports Net Income of $15.1 Million for the Third Quarter

Bank Demonstrates Solid Performance in Advance of Acquisition of WashingtonFirst


OLNEY, Md., Oct. 19, 2017 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR), the parent company of Sandy Spring Bank, today reported net income for the third quarter of 2017 of $15.1 million ($0.62 per diluted share) compared to net income of $13.5 million ($0.56 per diluted share) for the third quarter of 2016 and net income of $14.7 million ($0.61 per diluted share) for the second quarter of 2017.

“Our solid core performance this quarter was once again driven by the loan and deposit growth that we’ve achieved over the past year. We continue to focus on building relationships with our clients and within the communities we serve to grow the company. We look forward to completing the acquisition of WashingtonFirst Bankshares, Inc. This acquisition will create the largest, locally headquartered community bank in the Greater Washington, D.C. region. It will expand access to the bank’s expertise and services, and ultimately benefit our clients and shareholders,” said Daniel J. Schrider, President and Chief Executive Officer. 

Third Quarter Highlights: 

  • Total loans increased 11% compared to the third quarter of 2016 and 1% compared to the second quarter of 2017. The year-over-year increase was driven primarily by year-over-year growth of 15% in the commercial loan portfolio.
     
  • Total deposits grew 12% from the prior year quarter and 2% from the prior quarter.
     
  • The net interest margin was 3.54% for the third quarter of 2017, compared to 3.50% for the third quarter of 2016 and 3.60% for the second quarter of 2017.  Net interest income from the second quarter of 2017 included $0.7 million from the full payoff of a previously acquired credit impaired loan.  Exclusive of this non-core item, the previous quarter’s margin would have been 3.54%.
     
  • Return on average common equity was 10.74% as compared to 10.11% from the prior year.

  • The Non-GAAP efficiency ratio was 53.76% for the current quarter as compared to 56.33% for the third quarter of 2016 and 54.10% for the second quarter of 2017.
     
  • Pre-tax, pre-provision income increased 17% compared with the third quarter of 2016.

Review of Balance Sheet and Credit Quality

At September 30, 2017, total assets were $5.3 billion, an 11% increase compared to $4.8 billion at September 30, 2016.  Loan growth continues to be the driver of asset growth as total loans ended the period at $4.2 billion compared to $3.8 billion at September 30, 2016. The growth in the loan portfolio was funded primarily by a 12% increase in total deposits from September 30, 2016, to September 30, 2017.

Combined noninterest-bearing and interest-bearing checking account balances at September 30, 2017, an important performance driver of multiple-product banking relationships with clients, increased by 11% compared to balances at September 30, 2016.

Tangible common equity totaled $482 million at September 30, 2017, compared to $446 million at September 30, 2016. As a result of asset growth over the preceding 12 months, the ratio of tangible common equity to tangible assets decreased to 9.18% at September 30, 2017, from 9.43% at September 30, 2016. Dividends at $0.26 per common share were 8% higher in the third quarter of 2017 compared to the $0.24 per common share of third quarter of 2016.  At September 30, 2017, the Company had a total risk-based capital ratio of 12.01%, a common equity tier 1 risk-based capital ratio of 10.99%, a tier 1 risk-based capital ratio of 10.99% and a tier 1 leverage ratio of 9.28%.

The level of non-performing loans to total loans decreased to 0.72% at September 30, 2017, compared to 0.85% at September 30, 2016, as a result of the growth in the loan portfolio and a reduction in non-performing loans.  At September 30, 2017, non-performing loans totaled $30.2 million compared to $32.0 million at September 30, 2016, and $32.2 million at June 30, 2017. Non-performing loans include accruing loans 90 days or more past due and restructured loans.

Loan charge-offs, net of recoveries, totaled $1.1 million for the third quarter of 2017 compared to $0.2 million for the third quarter of 2016. The increase in charge-offs was the result of a commercial loan charge-off taken during the current quarter.  The allowance for loan losses represented 1.07% of outstanding loans and 149% of non-performing loans at September 30, 2017, compared to 1.16% of outstanding loans and 137% of non-performing loans at September 30, 2016. The decline in the allowance to outstanding loans ratio is a reflection of improved credit quality and growth of the loan portfolio over the past year.

Income Statement Review

Net interest income for the third quarter of 2017 increased 13% compared to the third quarter of 2016 as average loans from quarter to quarter increased 12%. The net interest margin improved to 3.54% for the third quarter of 2017 compared to 3.50% for the third quarter of 2016.  The margin improvement reflects the impact of loan growth, the cumulative benefits associated with the execution of funding strategies and higher yields associated with the investment portfolio.

The provision for loan losses was $0.9 million for the third quarter of 2017 compared to $0.8 million for the third quarter of 2016 and $1.3 million for the second quarter of 2017. The current quarter’s provision increase as compared to the prior year quarter was the result of qualitative adjustments related to composition and concentration of loan credits which offset the impact of lower quarterly loan growth in 2017 versus 2016.

Non-interest income increased to $12.7 million for the third quarter of 2017 compared to $12.6 million for the third quarter of 2016.  Wealth management income for the third quarter of 2017 increased to $4.9 million or 12% as compared to $4.3 million for the third quarter of 2016.  Insurance agency commissions increased 9% for the third quarter compared to same period of the prior year as a result last year’s agency acquisition.  These results were offset by the $0.5 million decline in mortgage banking income from the prior year’s results as mortgage loan originations declined in the current quarter compared to the prior year.  

Non-interest expenses increased 6% to $31.2 million for the third quarter of 2017 compared to $29.3 million in the third quarter of 2016.  The increase in the current quarter compared to the prior year quarter was driven primarily by a $0.6 million increase in salary costs related to performance incentives and volume driven compensation costs, $0.3 million in merger related expenses and $0.6 million in other expenses.  The non-GAAP efficiency ratio was 53.76% for the third quarter of 2017 compared to 56.33% for the third quarter of 2016 as a result of the growth in net interest income. 

Net interest income for the first nine months of 2017 increased 13% compared to the first nine months of 2016 due primarily to an increase in average loans, which was funded primarily by an 11% increase in average deposits. As a result, the net interest margin was 3.55% for the first nine months of 2017 compared to 3.49% for the prior year period. Net interest income for the first nine months of 2017 included $0.7 million from the full payoff of a previously acquired credit impaired loan.  Exclusive of this recovery the net interest margin would have been 3.54%.   

The provision for loan losses was $2.5 million for the first nine months of 2017 compared to $5.0 million for the first nine months of 2016 primarily reflecting the growth in the loan portfolio over the prior year period offset by the effects of improved credit quality of the loan portfolio.

Non-interest income was $38.9 million for the first nine months of 2017 compared to $38.7 million for the first nine months of 2016.  The first nine months of 2017 included gains of $1.3 million on sales of investment securities. The same prior year period included a $1.2 million gain on the extinguishment of subordinated debentures and $1.9 million in gains on the sales of investment securities.  Excluding these gains, non-interest income increased 6% compared to the prior year period primarily due to increases in wealth management income, insurance agency commissions and other non-interest income.

Non-interest expenses increased 2% to $94.0 million for the first nine months of 2017 compared to $92.5 million for the prior year period. The nine months ended September 30, 2017, included increases from the prior year of $1.2 million in salaries and benefits, $0.5 million in FDIC insurance as a result of asset growth, and $1.3 million in merger expenses.  These increases were partially offset by the decrease in prepayment penalties of $1.9 million for the early payoff of high-rate FHLB advances as compared to the nine months ended September 30, 2016.  The non-GAAP efficiency ratio decreased to 54.21% for the first nine months of 2017 compared to 59.05% for the first nine months of 2016 as a direct result of the growth in net interest income.

Conference Call

The Company’s management will host a conference call to discuss its second quarter results today at 2:00 P.M. (ET).  A live Webcast of the conference call is available through the Investor Relations’ section of the Sandy Spring Website at www.sandyspringbank.com.  Participants may call 1-866-235-9910. A password is not necessary.  Visitors to the Website are advised to log on 10 minutes ahead of the scheduled start of the call.  An internet-based replay will be available at the Website until 9:00 am (ET) November 2, 2017.  A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10112289.

About Sandy Spring Bancorp, Inc.

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank. Independent and community-oriented, Sandy Spring Bank offers a broad range of commercial banking, retail banking, mortgage and trust services throughout central Maryland, Northern Virginia, and the greater Washington, D.C. market. Through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services. With $5.3 billion in assets, the bank operates 44 community offices and six financial centers across the region. Visit www.sandyspringbank.com for more information.

For additional information or questions, please contact:
Daniel J. Schrider, President & Chief Executive Officer, or
Philip J. Mantua, E.V.P. & Chief Financial Officer 
Sandy Spring Bancorp
17801 Georgia Avenue
Olney, Maryland 20832
1-800-399-5919 
Email:  DSchrider@sandyspringbank.com
PMantua@sandyspringbank.com
Website: www.sandyspringbank.com

Media Contact:
Jen Schell
301-570-8331
jschell@sandyspringbank.com

Forward-Looking Statements

Sandy Spring Bancorp makes forward-looking statements in this news release and in the conference call regarding this news release.  These forward-looking statements may include: statements of goals, intentions, earnings expectations, and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan losses; assessments of market risk; and statements of the ability to achieve financial and other goals.

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions.  Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time.  Forward-looking statements speak only as of the date they are made.  Sandy Spring Bancorp does not assume any duty and does not undertake to update its forward-looking statements.  Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that Sandy Spring Bancorp anticipated in its forward-looking statements and future results could differ materially from historical performance.

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties.  Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2016, including in the Risk Factors section of that report, and in its other SEC reports.  Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Website at www.sec.gov.


 
Sandy Spring Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS - UNAUDITED
              
  Three Months Ended    Nine Months Ended  
  September 30, %
 September 30, %
(Dollars in thousands, except per share data) 2017 2016 Change
 2017 2016 Change
Results of Operations:             
Net interest income $  42,697  $37,731 13% $  125,276  $110,585 13%
Provision for loan losses    934   781 20     2,450   4,974 (51)
Non-interest income    12,746   12,584 1     38,949   38,698 1 
Non-interest expenses    31,191   29,326 6     94,040   92,514 2 
Income before income taxes    23,318   20,208 15     67,735   51,795 31 
Net income    15,089   13,474 12     44,942   34,934 29 
              
Pre-tax pre-provision income $  24,597  $20,989 17  $  71,517  $56,769 26 
              
Return on average assets    1.13 % 1.13%      1.15 % 0.99% 
Return on average common equity    10.74 % 10.11%      10.99 % 8.88% 
Net interest margin    3.54 % 3.50%      3.55 % 3.49% 
Efficiency ratio - GAAP basis  (1)    56.26 % 58.28%      57.26 % 61.97% 
Efficiency ratio - Non-GAAP basis  (1)    53.76 % 56.33%      54.21 % 59.05% 
              
Per share data:             
Basic net income $  0.62  $0.56 11% $  1.86  $1.45 28%
Diluted net income $  0.62  $0.56 11  $  1.86  $1.45 28 
Average fully diluted shares   24,223,004   24,122,923 -    24,201,448   24,151,622 - 
Dividends declared per share $  0.26  $0.24 8  $  0.78  $0.72 8 
Book value per share    23.53   22.47 5     23.53   22.47 5 
Tangible book value per share    20.07   18.66 8     20.07   18.66 8 
Outstanding shares   23,990,370   23,886,651 -    23,990,370   23,886,651 - 
              
Financial Condition at period-end:             
Investment securities $  795,922  $691,471 15% $  795,922  $691,471 15%
Loans    4,194,118   3,780,507 11     4,194,118   3,780,507 11 
Interest-earning assets    5,049,229   4,537,331 11     5,049,229   4,537,331 11 
Assets    5,334,788   4,810,611 11     5,334,788   4,810,611 11 
Deposits    3,955,792   3,537,157 12     3,955,792   3,537,157 12 
Interest-bearing liabilities    3,422,568   3,087,135 11     3,422,568   3,087,135 11 
Stockholders' equity    564,480   536,655 5     564,480   536,655 5 
              
Capital ratios:             
Tier 1 leverage  (4)    9.28 % 10.25%      9.28 % 10.25% 
Tier 1 capital to risk-weighted assets  (4)    10.99 % 12.17%      10.99 % 12.17% 
Total regulatory capital to risk-weighted assets  (4)    12.01 % 13.29%      12.01 % 13.29% 
Common equity tier 1 capital to risk-weighted assets  (4)    10.99 % 11.41%      10.99 % 11.41% 
Tangible common equity to tangible assets  (2)    9.18 % 9.43%      9.18 % 9.43% 
Average equity to average assets    10.52 % 11.17%      10.50 % 11.18% 
              
Credit quality ratios:             
Allowance for loan losses to loans    1.07 % 1.16%      1.07 % 1.16% 
Non-performing loans to total loans    0.72 % 0.85%      0.72 % 0.85% 
Non-performing assets to total assets    0.59 % 0.69%      0.59 % 0.69% 
Allowance for loan losses to non-performing loans    148.73 % 137.41%      148.73 % 137.41% 
Annualized net charge-offs to average loans  (3)    0.10 % 0.02%      0.05 % 0.07% 
              
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income.
The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI;
and the tax-equivalent adjustment to net interest income.  See the Reconciliation Table included with these Financial Highlights.
(2) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets
and other comprehensive gains (losses).  See the Reconciliation Table included with these Financial Highlights.
(3) Calculation utilizes average loans, excluding residential mortgage loans held-for-sale.
(4) Estimated ratio at September 30, 2017
 


 
Sandy Spring Bancorp, Inc. and Subsidiaries        
RECONCILIATION TABLE - UNAUDITED        
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
(Dollars in thousands) 2017
 2016
 2017
 2016
Pre-tax pre-provision income:        
Net income $  15,089   $13,474  $  44,942   $34,934 
Plus non-GAAP adjustment:        
Merger expenses    345    -     1,332    - 
Income taxes    8,229    6,734     22,793    16,861 
Provision for loan losses    934    781     2,450    4,974 
Pre-tax pre-provision income $  24,597   $20,989  $  71,517   $56,769 
         
Efficiency ratio - GAAP basis:        
Non-interest expenses $  31,191   $29,326  $  94,040   $92,514 
         
Net interest income plus non-interest income $  55,443   $50,315  $  164,225   $149,283 
         
Efficiency ratio - GAAP basis  56.26%  58.28%  57.26%  61.97%
         
           
Efficiency ratio - Non-GAAP basis:        
Non-interest expenses $  31,191   $29,326  $  94,040   $92,514 
Less non-GAAP adjustment:        
Amortization of intangible assets    25    34     76    94 
Loss on FHLB Redemption    -    -     1,275    3,167 
Merger expenses    345    -     1,332    - 
Non-interest expenses -  as adjusted $  30,821   $29,292  $  91,357   $89,253 
           
Net interest income plus non-interest income $  55,443   $50,315  $  164,225   $149,283 
Plus non-GAAP adjustment:        
Tax-equivalent income    1,888    1,688     5,585    4,993 
Less non-GAAP adjustments:        
Securities gains    -    -     1,275    1,919 
Gain on redemption of subordinated debentures    -    -     -    1,200 
Net interest income plus non-interest income - as adjusted $  57,331   $52,003  $  168,535   $151,157 
         
Efficiency ratio - Non-GAAP basis  53.76%  56.33%  54.21%  59.05%
         
Tangible common equity ratio:        
Total stockholders' equity $  564,480   $536,655  $  564,480   $536,655 
Accumulated other comprehensive income    3,477    (4,465)    3,477    (4,465)
Goodwill    (85,768)  (85,768)    (85,768)  (85,768)
Other intangible assets, net    (604)  (716)    (604)  (716)
Tangible common equity $  481,585   $445,706  $  481,585   $445,706 
         
Total assets $  5,334,788   $4,810,611  $  5,334,788   $4,810,611 
Goodwill    (85,768)  (85,768)    (85,768)  (85,768)
Other intangible assets, net    (604)  (716)    (604)  (716)
Tangible assets $  5,248,416   $4,724,127  $  5,248,416   $4,724,127 
         
Tangible common equity ratio  9.18%  9.43%  9.18%  9.43%
         
Outstanding common shares    23,990,370    23,886,651     23,990,370    23,886,651 
Tangible book value per common share $  20.07   $18.66  $  20.07   $18.66 
 


 
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED
       
  September 30, December 31, September 30,
(Dollars in thousands) 2017
 2016
 2016
Assets      
Cash and due from banks $  50,076   $53,190  $48,666 
Federal funds sold    2,838    1,953   1,106 
Interest-bearing deposits with banks    49,267    78,982   48,425 
Cash and cash equivalents    102,181    134,125   98,197 
Residential mortgage loans held for sale (at fair value)    7,084    13,222   15,822 
Investments available-for-sale (at fair value)    756,069    733,554   655,642 
Other equity securities    39,853    46,094   35,829 
Total loans    4,194,118    3,927,808   3,780,507 
Less: allowance for loan losses    (44,924)  (44,067)  (43,942)
Net loans    4,149,194    3,883,741   3,736,565 
Premises and equipment, net    54,108    53,562   53,356 
Other real estate owned    1,448    1,911   1,274 
Accrued interest receivable    16,045    14,589   13,123 
Goodwill    85,768    85,768   85,768 
Other intangible assets, net    604    680   716 
Other assets    122,434    124,137   114,319 
Total assets $  5,334,788   $5,091,383  $4,810,611 
       
Liabilities      
Noninterest-bearing deposits $  1,312,710   $1,138,139  $1,154,227 
Interest-bearing deposits    2,643,082    2,439,405   2,382,930 
Total deposits    3,955,792    3,577,544   3,537,157 
Securities sold under retail repurchase agreements and federal funds purchased    146,569    125,119   124,205 
Advances from FHLB    632,917    790,000   550,000 
Subordinated debentures    -    30,000   30,000 
Accrued interest payable and other liabilities    35,030    35,148   32,594 
Total liabilities    4,770,308    4,557,811   4,273,956 
       
Stockholders' Equity      
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,990,370,      
23,901,084 and 23,886,651 at September 30, 2017, December 31, 2016 and September 30, 2016, respectively    23,990    23,901   23,887 
Additional paid in capital    167,455    165,871   164,937 
Retained earnings    376,512    350,414   343,366 
Accumulated other comprehensive loss    (3,477)  (6,614)  4,465 
Total stockholders' equity    564,480    533,572   536,655 
Total liabilities and stockholders' equity $  5,334,788   $5,091,383  $4,810,611 
       


 
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
         
  Three Months Ended Nine Months Ended
 September 30,September 30,
(Dollars in thousands, except per share data) 2017 2016 2017 2016
Interest Income:        
Interest and fees on loans $  43,891  $38,224 $  126,861  $111,358
Interest on loans held for sale    119   96    273   294
Interest on deposits with banks    108   49    289   156
Interest and dividends on investment securities:        
Taxable    3,410   2,623    10,572   8,749
Exempt from federal income taxes    2,053   1,864    6,110   5,753
Interest on federal funds sold    8   1    18   3
Total interest income    49,589   42,857    144,123   126,313
Interest Expense:        
Interest on deposits    3,701   2,128    9,212   6,006
Interest on retail repurchase agreements and federal funds purchased    83   74    238   212
Interest on advances from FHLB    3,108   2,699    9,385   8,812
Interest on subordinated debt    -   225    12   698
Total interest expense    6,892   5,126    18,847   15,728
Net interest income    42,697   37,731    125,276   110,585
Provision for loan losses    934   781    2,450   4,974
Net interest income after provision for loan losses    41,763   36,950    122,826   105,611
Non-interest Income:        
Investment securities gains  -    -     1,275   1,919
Service charges on deposit accounts    2,140   2,035    6,121   5,894
Mortgage banking activities    632   1,129    2,080   2,770
Wealth management income    4,864   4,347    14,092   13,200
Insurance agency commissions    1,950   1,786    4,924   4,180
Income from bank owned life insurance    609   616    1,808   1,846
Bank card fees    1,211   1,189    3,609   3,498
Other income    1,340   1,482    5,040   5,391
Total non-interest income    12,746   12,584    38,949   38,698
Non-interest Expenses:        
Salaries and employee benefits    18,442   17,848    54,525   53,299
Occupancy expense of premises    3,294   3,130    9,907   9,765
Equipment expenses    1,722   1,745    5,213   5,102
Marketing    784   628    2,223   1,971
Outside data services    1,286   1,349    4,045   4,067
FDIC insurance    850   726    2,478   2,012
Amortization of intangible assets    25   34    76   94
Merger expenses    345   -    1,332   -
Other expenses    4,443   3,866    14,241   16,204
Total non-interest expenses    31,191   29,326    94,040   92,514
Income before income taxes    23,318   20,208    67,735   51,795
Income tax expense    8,229   6,734    22,793   16,861
Net income $  15,089  $13,474 $  44,942  $34,934
         
Net Income Per Share Amounts:        
Basic net income per share $  0.62  $0.56 $  1.86  $1.45
Diluted net income per share $  0.62  $0.56 $  1.86  $1.45
Dividends declared per share $  0.26  $0.24 $  0.78  $0.72
 


Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
               
  2017 2016
(Dollars in thousands, except per share data) Q3 Q2 Q1 Q4 Q3 Q2 Q1
Profitability for the Quarter:              
Tax-equivalent interest income $  51,477   $50,477  $47,754  $45,961  $44,545  $43,443  $43,317 
Interest expense    6,892    6,250   5,705   5,276   5,126   5,071   5,531 
Tax-equivalent net interest income    44,585    44,227   42,049   40,685   39,419   38,372   37,786 
Tax-equivalent adjustment    1,888    1,901   1,796   1,718   1,688   1,640   1,664 
Provision for loan losses    934    1,322   194   572   781   2,957   1,236 
Non-interest income    12,746    13,571   12,632   12,344   12,584   12,751   13,363 
Non-interest expenses    31,191    32,868   29,981   30,544   29,326   30,871   32,317 
Income before income taxes    23,318    21,707   22,710   20,195   20,208   15,655   15,932 
Income tax expense    8,229    6,966   7,598   6,879   6,734   5,008   5,119 
Net income $  15,089   $14,741  $15,112  $13,316  $13,474  $10,647  $10,813 
Financial Performance:              
Pre-tax pre-provision income (2) $  24,597   $24,016  $22,904  $20,767  $20,989  $18,612  $17,168 
Return on average assets  1.13%  1.14%  1.20%  1.09%  1.13%  0.92%  0.93%
Return on average common equity  10.74%  10.80%  11.45%  9.92%  10.11%  8.21%  8.29%
Net interest margin  3.54%  3.60%  3.51%  3.52%  3.50%  3.51%  3.44%
Efficiency ratio - GAAP basis (1)  56.26%  58.80%  56.69%  59.53%  58.28%  62.39%  65.31%
Efficiency ratio - Non-GAAP basis (1)  53.76%  54.10%  54.78%  57.54%  56.33%  59.12%  61.84%
Per Share Data:              
Basic net income per share $  0.62   $0.61  $0.63  $0.55  $0.56  $0.45  $0.45 
Diluted net income per share $   0.62   $0.61  $0.63  $0.55  $0.56  $0.44  $0.45 
Average fully diluted shares  24,223,004    24,262,745   24,158,566   24,140,534   24,122,923   24,108,668   24,222,940 
Dividends declared per common share $  0.26   $0.26  $0.26  $0.26  $0.24  $0.24  $0.24 
Non-interest Income:              
Securities gains $  -   $1,273  $2  $13  $-  $150  $1,769 
Service charges on deposit accounts    2,140    2,017   1,964   2,059   2,035   1,956   1,903 
Mortgage banking activities     632    840   608   1,279   1,129   1,106   535 
Wealth management income    4,864    4,744   4,484   4,605   4,347   4,448   4,405 
Insurance agency commissions    1,950    1,222   1,752   1,228   1,786   949   1,445 
Income from bank owned life insurance    609    605   594   616   616   615   615 
Bank card fees    1,211    1,253   1,145   1,176   1,189   1,220   1,089 
Other income    1,340    1,617   2,083   1,368   1,482   2,307   1,602 
Total Non-interest Income $  12,746   $13,571  $12,632  $12,344  $12,584  $12,751  $13,363 
Non-interest Expense:              
Salaries and employee benefits $  18,442   $18,282  $17,801  $18,055  $17,848  $17,221  $18,230 
Occupancy expense of premises     3,294    3,211   3,402   3,195   3,130   3,162   3,473 
Equipment expenses    1,722    1,767   1,724   1,781   1,745   1,693   1,664 
Marketing    784    776   663   880   628   662   681 
Outside data services     1,286    1,367   1,392   1,310   1,349   1,355   1,363 
FDIC insurance    850    823   805   729   726   649   637 
Amortization of intangible assets    25    25   26   36   34   28   32 
Merger expenses    345    987     -      -      -      -      -  
Professional fees    1,053    1,045   955   1,268   987   1,447   1,138 
Other real estate owned expenses    4    (6)  5   2   5   (5)  17 
Other expenses    3,386    4,591   3,208   3,288   2,874   4,659   5,082 
Total Non-interest Expense $  31,191   $32,868  $29,981  $30,544  $29,326  $30,871  $32,317 
               
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of
Income. The traditional, efficiency ratio - non-GAAP basis excludes intangible asset amortization from non-interest expense; excludes securities gains;
OTTI losses from non-interest income; and adds the tax-equivalent adjustment to net interest income.  See the Reconciliation Table included with these
Financial Highlights.
               
(2) Pre-tax pre-provision income includes an adjustment to exclude the impact of merger expenses.
               


 
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
               
  2017 2016
(Dollars in thousands) Q3 Q2 Q1 Q4 Q3 Q2 Q1
Balance Sheets at Quarter End:              
Residential mortgage loans $  882,890   $871,766  $848,814  $841,692  $854,055  $820,618  $804,105 
Residential construction loans    171,814    169,901   170,285   150,229   144,998   142,710   138,221 
Commercial AD&C loans     295,222    314,259   309,350   308,279   302,522   285,585   261,204 
Commercial investor real estate loans    1,104,669    1,069,988   979,410   928,113   847,946   824,252   783,161 
Commercial owner occupied real estate loans    831,461    797,629   772,443   775,552   736,744   700,599   675,560 
Commercial business loans     451,667    451,570   457,216   467,286   444,129   451,711   451,239 
Consumer loans  456,395    458,058   455,478   456,657   450,113   447,149   447,198 
Total loans  4,194,118    4,133,171   3,992,996   3,927,808   3,780,507   3,672,624   3,560,688 
Allowance for loan losses  (44,924)  (45,079)  (43,861)  (44,067)  (43,942)  (43,384)  (41,766)
Loans held for sale  7,084    5,743   17,717   13,222   15,822   13,490   27,806 
Investment securities  795,922    821,491   855,707   779,648   691,471   734,828   742,401 
Interest-earning assets  5,049,229    4,988,704   4,919,927   4,801,613   4,537,331   4,461,180   4,447,063 
Total assets  5,334,788    5,270,521   5,201,164   5,091,383   4,810,611   4,739,449   4,716,608 
Noninterest-bearing demand deposits  1,312,710    1,302,536   1,234,505   1,138,139   1,154,227   1,176,135   1,084,746 
Total deposits  3,955,792    3,885,445   3,799,198   3,577,544   3,537,157   3,510,141   3,412,308 
Customer repurchase agreements    146,569    127,312   141,244   125,119   124,205   117,887   121,043 
Total interest-bearing liabilities  3,422,568    3,380,221   3,380,937   3,384,524   3,087,135   2,996,893   3,073,605 
Total stockholders' equity  564,480    554,683   544,261   533,572   536,655   529,479   522,392 
Quarterly Average Balance Sheets:              
Residential mortgage loans $  880,782   $860,081  $847,896  $848,399  $836,452  $811,705  $807,443 
Residential construction loans    172,921    169,130   157,152   148,248   147,602   142,854   134,708 
Commercial AD&C loans     291,569    302,924   310,325   310,110   287,836   272,090   261,687 
Commercial investor real estate loans    1,090,641    1,010,389   945,080   878,511   832,529   788,785   750,821 
Commercial owner occupied real estate loans    808,802    776,279   774,964   750,679   717,371   684,907   677,786 
Commercial business loans     459,779    454,724   462,444   452,195   446,123   453,459   460,903 
Consumer loans    457,526    461,672   458,162   454,349   450,171   449,594   451,075 
Total loans    4,162,020    4,035,199   3,956,023   3,842,491   3,718,084   3,603,394   3,544,423 
Loans held for sale    7,093    7,077   7,402   12,454   10,207   8,326   14,036 
Investment securities  813,179    842,837   818,287   703,574   709,527   739,132   810,593 
Interest-earning assets  5,019,133    4,922,389   4,829,208   4,599,426   4,477,438   4,394,879   4,411,796 
Total assets  5,297,368    5,202,398   5,111,698   4,878,660   4,747,020   4,664,343   4,685,747 
Noninterest-bearing demand deposits  1,293,470    1,251,396   1,159,715   1,167,379   1,131,739   1,082,762   1,021,471 
Total deposits  3,916,657    3,810,180   3,673,731   3,582,437   3,528,665   3,429,897   3,300,131 
Customer repurchase agreements    133,145    132,552   128,485   128,471   120,702   122,597   110,862 
Total interest-bearing liabilities  3,407,279    3,360,128   3,375,002   3,138,420   3,045,998   3,020,505   3,103,710 
Total stockholders' equity  557,282    547,229   535,308   534,057   530,241   521,387   524,309 
Financial Measures:              
Average equity to average assets  10.52%  10.52%  10.47%  10.95%  11.17%  11.18%  11.19%
Investment securities to earning assets  15.76%  16.47%  17.39%  16.24%  15.24%  16.47%  16.69%
Loans to earning assets  83.06%  82.85%  81.16%  81.80%  83.32%  82.32%  80.07%
Loans to assets  78.62%  78.42%  76.77%  77.15%  78.59%  77.49%  75.49%
Loans to deposits  106.02%  106.38%  105.10%  109.79%  106.88%  104.63%  104.35%
Capital Measures:              
Tier 1 leverage  (1)  9.28%  9.26%  9.26%  10.14%  10.25%  10.29%  10.23%
Tier 1 capital to risk-weighted assets  (1)  10.99%  10.96%  11.02%  11.74%  12.17%  12.42%  12.74%
Total regulatory capital to risk-weighted assets  (1)  12.01%  12.00%  12.06%  12.80%  13.29%  13.57%  13.86%
Common equity tier 1 capital to risk-weighted assets   (1)  10.99%  10.96%  11.02%  11.01%  11.41%  11.63%  11.79%
Book value per share $   23.53   $23.13  $22.74  $22.32  $22.47  $22.18  $21.92 
Outstanding shares    23,990,370    23,983,997   23,930,165   23,901,084   23,886,651   23,874,650   23,827,305 
(1) Estimated ratio at September 30, 2017              
 


 
Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
 
  2017 2016
(Dollars in thousands) September 30, June 30, March 31, December 31, September 30, June 30, March 31,
Non-Performing Assets:              
Loans 90 days past due:              
Commercial business $  -   $-  $-  $-  $163  $-  $- 
Commercial real estate:              
Commercial AD&C    -    -   -   -   -   -   - 
Commercial investor real estate    -    -   -   -   -   -   - 
Commercial owner occupied real estate    -    424   -   -   -   -   - 
Consumer    1    4   -   -   -   2   1 
Residential real estate:              
Residential mortgage    225    -   232   232   -   -   - 
Residential construction    -    -   -   -   -   -   - 
Total loans 90 days past due    226    428   232   232   163   2   1 
Non-accrual loans:              
Commercial business    6,091    6,807   4,849   5,833   4,140   4,263   3,741 
Commercial real estate:              
Commercial AD&C    137    137   137   137   137   137   147 
Commercial investor real estate    5,589    6,934   7,970   8,107   9,189   8,868   7,885 
Commercial owner occupied real estate    5,012    4,926   5,106   4,823   5,591   5,678   7,149 
Consumer    3,152    3,111   3,058   2,859   2,726   2,600   2,715 
Residential real estate:              
Residential mortgage    7,345    7,101   6,908   7,257   7,321   6,186   9,329 
Residential construction    182    187   189   195   199   202   412 
Total non-accrual loans    27,508    29,203   28,217   29,211   29,303   27,934   31,378 
Total restructured loans - accruing    2,471    2,569   2,409   2,489   2,512   3,420   4,716 
Total non-performing loans    30,205    32,200   30,858   31,932   31,978   31,356   36,095 
Other assets and real estate owned (OREO)    1,448    1,460   1,294   1,911   1,274   1,311   2,414 
Total non-performing assets $  31,653   $33,660  $32,152  $33,843  $33,252  $32,667  $38,509 
               
  For the Quarter Ended,
  September 30, June 30, March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2017
 2017
 2017
 2016
 2016
 2016
 2016
Analysis of Non-accrual Loan Activity:              
Balance at beginning of period $  29,203   $28,217  $29,211  $29,303  $27,934  $31,378  $30,031 
Non-accrual balances transferred to OREO    (411)  (175)  (113)  (637)  (38)  -   - 
Non-accrual balances charged-off    (1,127)  (179)  (391)  (390)  (245)  (1,305)  (274)
Net payments or draws    (1,869)  (1,804)  (1,382)  (1,547)  (525)  (4,810)  (914)
Loans placed on non-accrual    1,712    3,144   1,461   2,482   2,486   2,671   2,535 
Non-accrual loans brought current    -    -   (569)  -   (309)  -   - 
Balance at end of period $  27,508   $29,203  $28,217  $29,211  $29,303  $27,934  $31,378 
               
Analysis of Allowance for Loan Losses:              
Balance at beginning of period $  45,079   $43,861  $44,067  $43,942  $43,384  $41,766  $40,895 
Provision for loan losses    934    1,322   194   572   781   2,957   1,236 
Less loans charged-off, net of recoveries:              
Commercial business    1,029    107   260   285   95   106   67 
Commercial real estate:              
Commercial AD&C    -    (103)  -   (18)  (22)  -   48 
Commercial investor real estate    (10)  (78)  (5)  (9)  (12)  (107)  192 
Commercial owner occupied real estate    5    -   -   -   (1)  (1)  (3)
Consumer    103    189   167   177   145   364   54 
Residential real estate:              
Residential mortgage    (32)  (3)  (16)  18   24   989   15 
Residential construction    (6)  (8)  (6)  (6)  (6)  (12)  (8)
Net charge-offs    1,089    104   400   447   223   1,339   365 
Balance at end of period $   44,924   $45,079  $43,861  $44,067  $43,942  $43,384  $41,766 
               
Asset Quality Ratios:              
Non-performing loans to total loans  0.72%  0.78%  0.77%  0.81%  0.85%  0.85%  1.01%
Non-performing assets to total assets  0.59%  0.64%  0.62%  0.66%  0.69%  0.69%  0.82%
Allowance for loan losses to loans  1.07%  1.09%  1.10%  1.12%  1.16%  1.18%  1.17%
Allowance for loan losses to non-performing loans  148.73%  140.00%  142.14%  138.00%  137.41%  138.36%  115.72%
Annualized net charge-offs to average loans  0.10%  0.01%  0.04%  0.05%  0.02%  0.15%  0.04%
 


 
Sandy Spring Bancorp, Inc. and Subsidiaries 
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
 
  Three Months Ended September 30,
  2017 2016
      Annualized     Annualized
  Average (1)
 Average Average (1)
 Average
(Dollars in thousands and tax-equivalent) Balances Interest Yield/Rate Balances Interest Yield/Rate
Assets              
Residential mortgage loans $  880,782   $  7,772   3.53% $836,452  $7,208  3.45%
Residential construction loans  172,921    1,641   3.77   147,602   1,341  3.62 
Total mortgage loans  1,053,703    9,413   3.57   984,054   8,549  3.47 
Commercial AD&C loans  291,569    3,705   5.04   287,836   3,398  4.70 
Commercial investor real estate loans  1,090,641    12,279   4.47   832,529   9,487  4.53 
Commercial owner occupied real estate loans  808,802    9,492   4.66   717,371   8,581  4.76 
Commercial business loans  459,779    5,252   4.53   446,123   4,863  4.34 
Total commercial loans  2,650,791    30,728   4.60   2,283,859   26,329  4.59 
Consumer loans  457,526    4,395   3.84   450,171   3,916  3.48 
Total loans (2)  4,162,020    44,536   4.25   3,718,084   38,794  4.16 
Loans held for sale  7,093    119   6.69   10,207   96  3.75 
Taxable securities  512,420    3,531   2.76   432,706   2,717  2.51 
Tax-exempt securities (3)  300,759    3,175   4.22   276,821   2,888  4.17 
Total investment securities  813,179    6,706   3.30   709,527   5,605  3.16 
Interest-bearing deposits with banks  34,007    108   1.26   38,773   49  0.51 
Federal funds sold  2,834      8   1.16   847   1  0.49 
Total interest-earning assets  5,019,133    51,477   4.08   4,477,438   44,545  3.96 
               
Less:  allowance for loan losses  (45,546)       (43,498)     
Cash and due from banks  48,221         45,210      
Premises and equipment, net  53,938         53,162      
Other assets  221,622         214,708      
  Total assets $  5,297,368        $4,747,020      
               
Liabilities and Stockholders' Equity              
Interest-bearing demand deposits $  615,250    135   0.09%$579,863   112  0.08%
Regular savings deposits  326,827      57   0.07   305,077   48  0.06 
Money market savings deposits  1,002,779    1,479   0.59   938,528   514  0.22 
Time deposits  678,331    2,030   1.19   573,458   1,454  1.01 
Total interest-bearing deposits  2,623,187    3,701   0.56   2,396,926   2,128  0.35 
Other borrowings  133,145      83   0.25   120,702   74  0.24 
Advances from FHLB  650,947      3,108   1.89   498,370   2,699  2.15 
Subordinated debentures    -      -     -    30,000   225  3.00 
Total interest-bearing liabilities  3,407,279    6,892   0.80   3,045,998   5,126  0.67 
               
Noninterest-bearing demand deposits  1,293,470         1,131,739      
Other liabilities  39,337         39,042      
Stockholders' equity  557,282         530,241      
  Total liabilities and stockholders' equity $  5,297,368        $4,747,020      
               
Net interest income and spread   $  44,585   3.28 %  $39,419  3.29%
Less: tax-equivalent adjustment      1,888         1,688    
Net interest income   $  42,697        $37,731    
               
Interest income/earning assets     4.08 %    3.96%
Interest expense/earning assets       0.54       0.46 
Net interest margin     3.54 %    3.50%
               
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and 2016. The annualized taxable-equivalent adjustments utilized in
the above table to compute yields aggregated to $1.9 million and $1.7 million in 2017 and 2016, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes. 
 


 
Sandy Spring Bancorp, Inc. and Subsidiaries 
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
 
  Nine Months Ended September 30,
  2017  2016
      Annualized      Annualized
  Average (1) Average  Average (1) Average
(Dollars in thousands and tax-equivalent) Balances Interest Yield/Rate  Balances Interest Yield/Rate
Assets              
Residential mortgage loans $  863,040   $  22,651  3.50%$818,599  $21,010 3.42%
Residential construction loans  166,459    4,656  3.74   141,743   3,804 3.59 
Total mortgage loans  1,029,499    27,307  3.54   960,342   24,814 3.45 
Commercial AD&C loans  301,537    11,126  4.93   273,922   9,511 4.64 
Commercial investor real estate loans  1,015,903    33,978  4.47   790,864   27,087 4.57 
Commercial owner occupied real estate loans  786,805    28,501  4.84   693,442   24,946 4.81 
Commercial business loans  458,973    15,321  4.46   453,468   14,819 4.37 
Total commercial loans  2,563,218    88,926  4.64   2,211,696   76,363 4.61 
Consumer loans  459,118    12,496  3.67   450,280   11,691 3.49 
Total loans (2)  4,051,835    128,729  4.25   3,622,318   112,868 4.16 
Loans held for sale  7,189    273  5.06   10,854   294 3.61 
Taxable securities  526,931    10,944  2.77   470,987   9,073 2.57 
Tax-exempt securities (3)  297,818    9,455  4.23   281,938   8,912 4.21 
Total investment securities  824,749    20,399  3.30   752,925   17,985 3.19 
Interest-bearing deposits with banks  38,006    289  1.02   41,433   156 0.50 
Federal funds sold  2,493      18  0.97   688   3 0.48 
Total interest-earning assets  4,924,272    149,708  4.06   4,428,218   131,306 3.96 
               
Less:  allowance for loan losses  (44,324)       (42,215)     
Cash and due from banks  48,184         46,255      
Premises and equipment, net  53,680         53,318      
Other assets  222,682         214,284      
Total assets $  5,204,494        $4,699,860      
               
Liabilities and Stockholders' Equity              
Interest-bearing demand deposits $  613,498    372  0.08%$578,473   335 0.08%
Regular savings deposits  322,683      163  0.07   297,944   137 0.06 
Money market savings deposits  992,069    3,333  0.45   914,499   1,446 0.21 
Time deposits  637,478    5,344  1.12   550,195   4,088 0.99 
Total interest-bearing deposits  2,565,728    9,212  0.48   2,341,111   6,006 0.34 
Other borrowings  131,412      238  0.24   118,105   212 0.24 
Advances from FHLB  683,231      9,385  1.84   565,493   8,812 2.08 
Subordinated debentures  549      12  2.93   31,989   698 2.91 
Total interest-bearing liabilities  3,380,920    18,847  0.75   3,056,698   15,728 0.69 
               
Noninterest-bearing demand deposits  1,235,350         1,078,851      
Other liabilities  41,537         38,981      
Stockholders' equity  546,687         525,330      
Total liabilities and stockholders' equity $  5,204,494        $4,699,860      
               
Net interest income and spread   $  130,861  3.31 %  $115,578 3.27%
Less: tax-equivalent adjustment      5,585        4,993   
Net interest income   $  125,276       $110,585   
               
Interest income/earning assets     4.06 %    3.96%
Interest expense/earning assets     0.51       0.47 
Net interest margin     3.55 %    3.49%
               
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and 2016. The annualized taxable-equivalent adjustments utilized in
the above table to compute yields aggregated to $5.6 million and $5.0 million in 2017 and 2016, respectively.
(2) Non-accrual loans are included in the average balances.              
(3) Includes only investments that are exempt from federal taxes.