Sandy Spring Bancorp Reports Net Income of $11.0 Million for the Third Quarter

OLNEY, Md., Oct. 22, 2015 (GLOBE NEWSWIRE) — Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the third quarter of 2015 of $11.0 million ($0.45 per diluted share) compared to net income of $11.1 million ($0.44 per diluted share) for the third quarter of 2014 and net income of $10.3 million ($0.42 per diluted share) for the second quarter of 2015.

For the nine months ended September 30, 2015, net income was $32.6 million ($1.31 per diluted share) compared to net income of $29.1 million ($1.16 per diluted share) for the same period of the prior year.

“Our core financial results for the third quarter were solid, as loan growth continued to fuel higher net interest income. Our growth in all three major loan portfolios has been significant given the level of competition in the marketplace and the state of the economy,” said Daniel J. Schrider, President and Chief Executive Officer.

“A stable net interest margin, our strong capital position, diverse revenue stream, and consistent credit quality were key drivers of our financial performance. These results provide evidence of our continuing dedication to provide a consistent and valuable client experience in all facets of our franchise,” said Schrider.

Third Quarter Highlights: 

  • Total loans increased 15% compared to the third quarter of 2014 and were up 4% compared to the second quarter of 2015. This increase was driven primarily by year-over-year growth of 19% in the commercial loan portfolio.   
     
  • Combined noninterest-bearing and interest-bearing transaction account balances increased 9% to $1.6 billion at September 30, 2015 as compared to $1.5 billion at September 30, 2014.
     
  • The provision for loan and lease losses for the third quarter of 2015 was a charge of $1.7 million compared to a credit of $0.2 million for the third quarter of 2014 and a charge of $1.2 million for the second quarter of 2015.  
     
  • The net interest margin was 3.43% for the third quarter of 2015, compared to 3.42% for both the third quarter of 2014 and the second quarter of 2015.
     
  • The non-GAAP efficiency ratio improved to 59.73% for the current quarter from 61.09% for the prior year quarter due to stable expense levels and higher net interest income resulting from strong loan growth over the prior year quarter.
     
  • During the third quarter of 2015, the Company repurchased 153,460 shares of its common stock at an average price of $25.76 per share as part of its existing share repurchase program. For the year-to-date, the Company has repurchased 728,932 shares at an average price of $25.88 per share. 

             
Review of Balance Sheet and Credit Quality

Total assets grew 9% to $4.6 billion at September 30, 2015 compared to $4.2 billion at September 30, 2014.  This growth was driven by a 15% increase in the loan portfolio as total loans and leases ended the period at $3.4 billion. 

At September 30, 2015, combined noninterest-bearing and interest-bearing checking account balances, a primary driver of multiple-product banking relationships with clients, increased 9% compared to balances at September 30, 2014. Total deposits and certain other short-term borrowings that comprise the funding sources derived from customers increased 10% compared to September 30, 2014.

Tangible common equity totaled $437 million at September 30, 2015 compared to $434 million at September 30, 2014. The ratio of tangible common equity to tangible assets decreased to 9.66% at September 30, 2015 from 10.42% at September 30, 2014 due primarily to the growth in assets and continued share repurchases. Dividends per common share were $0.66 per share for the first nine months of 2015 compared to $0.56 per common share for the first nine months of 2014, an 18% increase.  At September 30, 2015, the Company had a total risk-based capital ratio of 14.27%, a common equity tier 1 risk-based capital ratio of 12.20%, a tier 1 risk-based capital ratio of 13.17% and a tier 1 leverage ratio of 10.65%.

Non-performing loans totaled $36.9 million at September 30, 2015 compared to $43.7 million at September 30, 2014 and $37.3 million at June 30, 2015. The level of non-performing loans to total loans decreased to 1.08% at September 30, 2015 compared to 1.47% at September 30, 2014 due to growth in the overall loan portfolio. The decrease in non-performing loans at September 30, 2015 compared to June 30, 2015 was driven primarily by payoffs and charge-offs on several such loans that exceeded loans added to non-performing status during the quarter.

Loan charge-offs, net of recoveries, totaled $0.8 million for the third quarter of 2015, compared to net loan charge-offs of $0.2 million for the third quarter of 2014. The allowance for loan and lease losses represented 1.16% of outstanding loans and leases and 107% of non-performing loans at September 30, 2015 compared to 1.26% of outstanding loans and leases and 86% of non-performing loans at September 30, 2014. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the third quarter of 2015 increased 8% compared to the third quarter of 2014. The net interest margin was 3.43% for the third quarter of 2015 compared to 3.42% for the third quarter of 2014. 

The provision for loan and lease losses was a charge of $1.7 million for the third quarter of 2015 compared to a credit of $0.2 million for the third quarter of 2014 and a charge of $1.2 million for the second quarter of 2015. The majority of the current quarter’s charge reflects the growth in the loan portfolio.

Non-interest income decreased 2% to $12.4 million for the third quarter of 2015 compared to $12.6 million for the third quarter of 2014.  The decrease in non-interest income for the quarter compared to the prior year quarter was due primarily to decreases in service charges on deposit accounts and other non-interest income, which were somewhat offset by an increase in insurance agency commissions.

Non-interest expenses increased to $29.6 million for the third quarter of 2015 compared to $28.6 million in the third quarter of 2014. The current quarter included increases in salaries and benefits. The non-GAAP efficiency ratio was 59.73% for the third quarter of 2015 compared to 61.09% for the third quarter of 2014.

Net interest income for the first nine months of 2015 increased 6% compared to the first nine months of 2014 due primarily to an increase in average loans. The net interest margin was 3.43% for the first nine months of 2015 compared to 3.46% for the first nine months of 2014. 

The provision for loan and lease losses was a charge of $3.5 million for the first nine months of 2015 compared to a credit of $1.0 million for the first nine months of 2014. The change in the provision for the current year-to-date period is primarily due to the growth in the loan portfolio over the prior year period.

Non-interest income increased 6% to $37.7 million for the first nine months of 2015 compared to $35.5 million for the first nine months of 2014.  This increase was driven by increases in income from wealth management and mortgage banking due primarily to higher mortgage origination volumes. Other non-interest income increased due to higher gains on sales of SBA loans.

Non-interest expenses decreased 2% to $88.4 million for the first nine months of 2015 compared to $90.3 million for the first nine months of 2014. Excluding accrued litigation expenses, non-interest expenses increased 5% over the prior year period. The current year-to-date included increases in salaries, pension costs and health benefits and other non-interest expenses.  The non-GAAP efficiency ratio was 60.41% for the first nine months of 2015 compared to 61.32% for the first nine months of 2014.

Conference Call

The Company’s management will host a conference call to discuss its third quarter results today at 2:00 P.M. (ET).  A live Web cast of the conference call is available through the Investor Relations’ section of the Sandy Spring Web site at www.sandyspringbank.com.  Participants may call 1-866-235-9910. A password is not necessary.  Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call.  An internet-based replay will be available at the Web site until 9:00 am (ET) November 6, 2015.  A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10072996.

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 $4.6 billion in assets, the bank operates 44 community offices and six financial centers across the region. Visit www.sandyspringbank.com for more information.

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 and lease 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, 2014, 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 Web site 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)     2015       2014     Change       2015       2014     Change  
Results of Operations:                            
  Net interest income   $    35,116     $   32,420       8   %   $    102,422     $   96,321       6   %
  Provision (credit) for loan and lease losses       1,706       (192 )   n.m           3,521       (1,016 )   n.m    
  Non-interest income       12,390         12,590       (2 )         37,658         35,533       6    
  Non-interest expenses       29,630         28,632       3           88,351         90,322       (2 )  
  Income before income taxes       16,170         16,570       (2 )         48,208         42,548       13    
  Net income        10,995         11,142       (1 )         32,553         29,052       12    
                             
  Pre-tax pre-provision income    $    18,031     $   16,614       9       $    52,246     $   47,896       9    
                             
  Return on average assets       0.96   %     1.05   %           0.98   %     0.93   %    
  Return on average common equity       8.41   %     8.54   %           8.39   %     7.60   %    
  Net interest margin       3.43   %     3.42   %           3.43   %     3.46   %    
  Efficiency ratio – GAAP basis  (1)       62.37   %     63.61   %           63.07   %     68.50   %    
  Efficiency ratio – Non-GAAP basis  (1)       59.73   %     61.09   %           60.41   %     61.32   %    
                             
Per share data:                            
  Basic net income   $    0.45     $   0.44       2   %   $    1.32     $   1.16       14   %
  Diluted net income   $    0.45     $   0.44       2       $    1.31     $   1.16       13    
  Average fully diluted shares      24,602,817         25,151,582       (2 )        24,779,010        25,135,078       (1 )  
  Dividends declared per share   $    0.22     $   0.20       10       $    0.66     $   0.56       18    
  Book value per share       21.44       20.83       3           21.44         20.83       3    
  Tangible book value per share       17.91       17.31       3           17.91         17.31       3    
  Outstanding shares      24,424,944         25,076,794       (3 )        24,424,944        25,076,794       (3 )  
                             
Financial Condition at period-end:                            
  Investment securities   $    862,409     $   950,869       (9 ) %   $    862,409     $   950,869       (9 ) %
  Loans and leases       3,412,439         2,975,912       15           3,412,439         2,975,912       15    
  Interest-earning assets       4,339,375         3,976,731       9           4,339,375         3,976,731       9    
  Assets       4,611,034         4,248,731       9           4,611,034         4,248,731       9    
  Deposits       3,275,668         3,028,788       8           3,275,668         3,028,788       8    
  Interest-bearing liabilities       2,973,747         2,706,623       10           2,973,747         2,706,623       10    
  Stockholders’ equity       523,594         522,404        –            523,594         522,404        –     
                             
Capital ratios:                            
  Tier 1 leverage  (4)       10.65   %   11.36   %           10.65   %     11.36   %    
  Tier 1 capital to risk-weighted assets  (4)       13.17   %   14.52   %           13.17   %     14.52   %    
  Total regulatory capital to risk-weighted assets  (4)       14.27   %   15.68   %           14.27   %     15.68   %    
  Common equity tier 1 capital to risk-weighted assets  (4)       12.20   % n.a.   %           12.20   %  n.a.     %    
  Tangible common equity to tangible assets  (2)       9.66   %   10.42   %           9.66   %     10.42   %    
  Average equity to average assets       11.43   %   12.26   %           11.66   %     12.28   %    
                             
Credit quality ratios:                            
  Allowance for loan and lease losses to loans and leases       1.16   %     1.26   %           1.16   %     1.26   %    
  Non-performing loans to total loans       1.08   %     1.47   %           1.08   %     1.47   %    
  Non-performing assets to total assets       0.86   %     1.07   %           0.86   %     1.07   %    
  Allowance for loan and lease losses to non-performing loans     107.44   %     86.03   %           107.44   %     86.03   %    
  Annualized net charge-offs to average loans and leases  (3)     0.09   %     0.03   %           0.07   %     0.01   %    
                             
(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 and leases, excluding residential mortgage loans held-for-sale. 
(4) Estimated ratio at September 30, 2015 
                             

 

Sandy Spring Bancorp, Inc. and Subsidiaries                  
RECONCILIATION TABLE – UNAUDITED                  
                   
    Three Months Ended   Nine Months Ended  
    September 30,   September 30,  
(Dollars in thousands)     2015       2014       2015       2014    
Pre-tax pre-provision income:                  
Net income   $    10,995     $   11,142     $    32,553     $   29,052    
Plus non-GAAP adjustment:                  
Litigation expenses       155         236         517         6,364    
Income taxes       5,175         5,428         15,655         13,496    
Provision (credit) for loan and lease losses       1,706         (192 )       3,521         (1,016 )  
Pre-tax pre-provision income   $    18,031     $   16,614     $    52,246     $   47,896    
                   
Efficiency ratio – GAAP basis:                  
Non-interest expenses    $    29,630     $   28,632     $    88,351     $   90,322    
                   
Net interest income plus non-interest income   $    47,506     $   45,010     $    140,080     $   131,854    
                   
Efficiency ratio – GAAP basis     62.37 %     63.61 %     63.07 %     68.50 %  
                   
                   
Efficiency ratio – Non-GAAP basis:                  
Non-interest expenses    $    29,630     $   28,632     $    88,351     $   90,322    
Less non-GAAP adjustment:                  
Amortization of intangible assets       107         115         320         709    
Litigation expenses       155         236         517         6,364    
Non-interest expenses –  as adjusted   $    29,368     $   28,281     $    87,514     $   83,249    
                   
Net interest income plus non-interest income    $    47,506     $ 45,010     $    140,080     $   131,854    
Plus non-GAAP adjustment:                  
Tax-equivalent income       1,663         1,296         4,816         3,909    
Less non-GAAP adjustments:                  
Securities gains       1         8         20         8    
Net interest income plus non-interest income – as adjusted   $    49,168     $   46,298     $    144,876     $   135,755    
                   
Efficiency ratio – Non-GAAP basis     59.73 %     61.09 %     60.41 %     61.32 %  
                   
Tangible common equity ratio:                  
Total stockholders’ equity   $    523,594     $   522,404     $    523,594     $   522,404    
Accumulated other comprehensive income       (1,801 )       (3,632 )       (1,801 )       (3,632 )  
Goodwill       (84,171 )       (84,171 )       (84,171 )       (84,171 )  
Other intangible assets, net       (190 )     (622 )       (190 )     (622 )  
Tangible common equity   $    437,432     $   433,979     $    437,432     $   433,979    
                   
Total assets   $   4,611,034     $   4,248,731     $    4,611,034     $   4,248,731    
Goodwill       (84,171 )       (84,171 )       (84,171 )       (84,171 )  
Other intangible assets, net       (190 )       (622 )       (190 )       (622 )  
Tangible assets   $   4,526,673     $   4,163,938     $    4,526,673     $   4,163,938    
                   
Tangible common equity ratio     9.66 %     10.42 %     9.66 %     10.42 %  
                   
Outstanding common shares       24,424,944         25,076,794         24,424,944         25,076,794    
Tangible book value per common share   $    17.91     $ 17.31     $    17.91     $ 17.31    
                   

 

Sandy Spring Bancorp, Inc. and Subsidiaries              
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  – UNAUDITED              
               
    September 30,   December 31,   September 30,  
(Dollars in thousands)     2015       2014       2014    
Assets              
Cash and due from banks   $    42,322     $   52,804     $   48,665    
Federal funds sold       472         473         474    
Interest-bearing deposits with banks       53,637         42,940         42,820    
Cash and cash equivalents       96,431         96,217         91,959    
                           
Residential mortgage loans held for sale (at fair value)        10,418         10,512         6,656    
Investments available-for-sale (at fair value)       607,619         672,209         692,107    
Investments held-to-maturity — fair value of $220,223, $222,260 and $223,130 at September 30, 2015, December 31, 2014 and September 30, 2014, respectively       216,642         219,973         221,690    
Other equity securities       38,148         41,437         37,072    
Total loans and leases       3,412,439         3,127,392         2,975,912    
Less: allowance for loan and lease losses       (39,661 )       (37,802 )       (37,574 )  
Net loans and leases     3,372,778        3,089,590        2,938,338    
                           
Premises and equipment, net       52,573         49,402         45,841    
Other real estate owned       2,619         3,195         1,762    
Accrued interest receivable       13,102         12,634         12,277    
Goodwill       84,171         84,171         84,171    
Other intangible assets, net        190         510         622    
Other assets       116,343         117,282         116,236    
Total assets   $    4,611,034     $   4,397,132     $   4,248,731    
               
Liabilities              
Noninterest-bearing deposits   $ 1,068,299     $   993,737     $   986,549    
Interest-bearing deposits     2,207,369       2,072,772       2,042,239    
Total deposits     3,275,668       3,066,509       3,028,788    
                           
Securities sold under retail repurchase agreements and federal funds purchased       121,378         74,432         71,384    
Advances from FHLB       610,000         655,000         558,000    
Subordinated debentures       35,000         35,000         35,000    
Accrued interest payable and other liabilities       45,394         44,440         33,155    
Total liabilities     4,087,440       3,875,381        3,726,327    
               
Stockholders’ Equity              
Common stock — par value $1.00; shares authorized 50,000,000; shares issued and outstanding 24,424,944, 25,044,877 and 25,076,794 at September 30, 2015, December 31, 2014 and September 30, 2014, respectively       24,425         25,045         25,077    
Additional paid in capital       178,429         194,647         194,899    
Retained earnings       318,939         302,882         298,796    
Accumulated other comprehensive income (loss)       1,801         (823 )       3,632    
Total stockholders’ equity       523,594         521,751         522,404    
Total liabilities and stockholders’ equity   $    4,611,034     $   4,397,132     $   4,248,731    
               

 

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)     2015       2014       2015       2014      
Interest Income:                    
Interest and fees on loans and leases   $    34,484     $   31,030     $    99,654     $   91,470      
Interest on loans held for sale       214         81         422         211      
Interest on deposits with banks       25         24         69         66      
Interest and dividends on investment securities:                    
Taxable       3,597         3,712         11,024         11,704      
Exempt from federal income taxes       1,996         2,303         6,068         6,940      
Interest on federal funds sold       1         –         1         –      
Total interest income       40,317         37,150         117,238         110,391      
Interest Expense:                    
Interest on deposits       1,632         1,208         4,193         3,585      
Interest on retail repurchase agreements and federal funds purchased       69         42         179         117      
Interest on advances from FHLB       3,272         3,258         9,774         9,709      
Interest on subordinated debt       228         222         670         659      
Total interest expense       5,201         4,730         14,816         14,070      
Net interest income       35,116         32,420         102,422         96,321      
Provision (credit) for loan and lease losses       1,706         (192 )       3,521         (1,016 )    
Net interest income after provision (credit) for loan and lease losses       33,410         32,612         98,901         97,337      
Non-interest Income:                    
Investment securities gains       1         8         20         8      
Service charges on deposit accounts       1,936         2,226         5,657         6,287      
Mortgage banking activities       566         596         2,566         1,482      
Wealth management income       4,963         4,974         15,040         14,181      
Insurance agency commissions       1,648         1,410         4,147         4,011      
Income from bank owned life insurance       618         611         1,937         1,817      
Bank card fees       1,198         1,148         3,475         3,295      
Other income       1,460         1,617         4,816         4,452      
Total non-interest income       12,390         12,590         37,658         35,533      
Non-interest Expenses:                    
Salaries and employee benefits       17,733         16,765         52,566         49,594      
Occupancy expense of premises       3,086         3,032         9,748         9,778      
Equipment expenses       1,600         1,337         4,463         3,855      
Marketing       688         744         2,161         2,088      
Outside data services       1,329         1,231         3,692         3,663      
FDIC insurance       565         594         1,850         1,687      
Amortization of intangible assets       107         115         320         709      
Litigation expenses       155         236         517         6,364      
Other expenses       4,367         4,578         13,034         12,584      
Total non-interest expenses       29,630         28,632         88,351         90,322      
Income before income taxes       16,170         16,570         48,208         42,548      
Income tax expense       5,175         5,428         15,655         13,496      
Net income   $    10,995     $   11,142     $    32,553     $   29,052      
                     
Net Income Per Share Amounts:                    
Basic net income per share   $    0.45     $   0.44     $    1.32     $   1.16      
Diluted net income per share   $    0.45     $   0.44     $    1.31     $   1.16      
Dividends declared per share   $    0.22     $   0.20     $    0.66     $   0.56      
                     

 

Sandy Spring Bancorp, Inc. and Subsidiaries                  
HISTORICAL TRENDS – QUARTERLY FINANCIAL DATA – UNAUDITED              
                   
      2015       2014  
(Dollars in thousands, except per share data)   Q3 Q2 Q1   Q4 Q3 Q2 Q1
Profitability for the Quarter:                  
Tax-equivalent interest income   $    41,980   $ 40,438   $   39,343     $   39,258   $   38,446   $   38,322   $   37,532  
Interest expense       5,201       4,916       4,699         4,748       4,730       4,682       4,658  
Tax-equivalent net interest income       36,779       35,522       34,644         34,510       33,716       33,640       32,874  
Tax-equivalent adjustment       1,663       1,589       1,271         1,283       1,296       1,331       1,282  
Provision for loan and lease losses       1,706       1,218       597         853       (192 )     158       (982 )
Non-interest income       12,390       12,109       13,159         11,338       12,590       11,694       11,249  
Non-interest expenses       29,630       29,477       29,244         30,478       28,632       34,141       27,549  
Income before income taxes       16,170       15,347       16,691         13,234       16,570       9,704       16,274  
Income tax expense        5,175       5,014       5,466         4,086       5,428       2,722       5,346  
Net income    $    10,995   $   10,333   $   11,225     $   9,148   $   11,142   $   6,982   $   10,928  
Financial Performance:                  
Pre-tax pre-provision income   $    18,031   $   16,727   $   17,488     $   14,242   $   16,614   $   15,990   $   15,292  
Return on average assets     0.96 %   0.93 %   1.04 %     0.85 %   1.05 %   0.67 %   1.08 %
Return on average common equity     8.41 %   8.02 %   8.73 %     6.93 %   8.54 %   5.47 %   8.80 %
Net interest margin     3.43 %   3.42 %   3.44 %     3.44 %   3.42 %   3.48 %   3.47 %
Efficiency ratio – GAAP basis (1)     62.37 %   64.02 %   62.85 %     68.39 %   63.61 %   77.59 %   64.31 %
Efficiency ratio – Non-GAAP basis (1)     59.73 %   61.35 %   60.53 %     65.89 %   61.09 %   61.30 %   61.60 %
Per Share Data:                  
Basic net income per share   $    0.45   $ 0.42   $   0.45     $   0.37   $   0.44   $   0.28   $   0.44  
Diluted net income per share   $    0.45   $ 0.42   $   0.45     $   0.36   $   0.44   $   0.28   $   0.43  
Average fully diluted shares     24,602,817     24,689,762     25,048,576       25,151,831     25,151,582     25,127,036     25,124,206  
Dividends declared per common share   $    0.22   $ 0.22   $   0.22     $   0.20   $   0.20   $   0.18   $   0.18  
Non-interest Income:                  
Securities gains (losses)   $    1   $ 19   $     –      $   (3 ) $   8   $   –   $   –  
Service charges on deposit accounts       1,936       1,839       1,882         2,135       2,226       2,089       1,972  
Mortgage banking activities       566       822       1,178         512       596       570       316  
Wealth management income       4,963       5,161       4,916         4,905       4,974       4,741       4,466  
Insurance agency commissions       1,648       881       1,618         985       1,410       961       1,640  
Income from bank owned life insurance       618       606       713         627       611       608       598  
Bank card fees       1,198       1,220       1,057         1,144       1,148       1,169       978  
Other income       1,460       1,561       1,795         1,033       1,617       1,556       1,279  
Total Non-interest Income   $    12,390   $ 12,109   $   13,159     $   11,338   $   12,590   $   11,694   $   11,249  
Non-interest Expense:                  
Salaries and employee benefits   $    17,733   $ 17,534   $   17,299     $   16,793   $   16,765   $   16,474   $   16,355  
Occupancy expense of premises       3,086       3,173       3,489         3,914       3,032       3,274       3,472  
Equipment expenses       1,600       1,490       1,373         1,333       1,337       1,262       1,256  
Marketing       688       942       531         838       744       802       542  
Outside data services       1,329       1,102       1,261         1,284       1,231       1,216       1,216  
FDIC insurance       565       654       631         615       594       573       520  
Amortization of intangible assets       107       106       107         112       115       224       370  
Litigation expenses       155       162       200         155       236       6,128       –  
Professional fees       1,089       1,199       1,209         1,246       1,092       1,292       914  
Other real estate owned expenses       48       4       10         2       40       9       –  
Other expenses       3,230       3,111       3,134         4,186       3,446       2,887       2,904  
Total Non-interest Expense   $    29,630   $ 29,477   $   29,244     $   30,478   $   28,632   $   34,141   $   27,549  
                   
(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. 
                   

 

Sandy Spring Bancorp, Inc. and Subsidiaries                    
HISTORICAL TRENDS – QUARTERLY FINANCIAL DATA – UNAUDITED                
                     
      2015       2014    
(Dollars in thousands)   Q3 Q2 Q1   Q4 Q3 Q2 Q1  
Balance Sheets at Quarter End:                    
Residential mortgage loans   $    773,889   $   744,195   $   728,858     $   717,886   $   698,925   $   668,536   $   640,939    
Residential construction loans       139,492       137,134     130,321       136,741     141,883     149,321     143,109    
Commercial ADC loans       239,160       223,103     203,731       205,124     194,666     178,972     163,343    
Commercial investor real estate loans       710,694       694,179     668,931       640,193     575,984     577,813     573,634    
Commercial owner occupied real estate loans       680,601       643,973     618,846       611,061     584,964     581,795     582,472    
Commercial business loans       423,855       409,795     385,452       390,781     368,611     357,472     348,180    
Leasing       19       21     36       54     156     260     439    
Consumer loans       444,729       436,465     428,531       425,552     410,723     396,775     380,697    
Total loans and leases     3,412,439     3,288,865     3,164,706       3,127,392     2,975,912     2,910,944     2,832,813    
Allowance for loan and lease losses     (39,661 )   (38,713 )   (37,475 )     (37,802 )   (37,574 )   (37,959 )   (38,026 )  
Loans held for sale       10,418       19,445     13,899       10,512     6,656     9,042     3,079    
Investment securities     862,409     878,284     912,565       933,619     950,869     980,530     997,584    
Interest-earning assets     4,339,375     4,222,667     4,125,549       4,114,936     3,976,731     3,945,643     3,891,223    
Total assets     4,611,034     4,507,367     4,401,380       4,397,132     4,248,731     4,234,342     4,168,998    
Noninterest-bearing demand deposits     1,068,299     1,092,413     1,017,566       993,737     986,549     984,700     882,169    
Total deposits     3,275,668     3,247,346     3,109,892       3,066,509     3,028,788     3,038,670     2,959,195    
Customer repurchase agreements       121,378       111,817     101,640       74,432     71,384     72,917     67,038    
Total interest-bearing liabilities     2,973,747     2,851,750     2,818,966       2,837,204     2,706,623     2,698,887     2,748,064    
Total stockholders’ equity     523,594     518,873     521,768       521,751     522,404     517,269     510,386    
Quarterly Average Balance Sheets:                    
Residential mortgage loans   $    754,007   $   734,382   $   724,248     $   707,719   $   682,013   $   652,232   $   627,944    
Residential construction loans       134,448       137,216       132,456         141,890       147,750       145,968       134,261    
Commercial ADC loans       227,545       218,341       206,105         201,020       180,293       168,063       162,544    
Commercial investor real estate loans       704,068       668,883       645,163         607,050       577,851       575,283       557,168    
Commercial owner occupied real estate loans       656,337       624,407       611,722         594,634       585,014       579,953       584,155    
Commercial business loans       413,300       398,510       383,111         367,872       367,203       348,597       349,734    
Leasing       19       28       44         114       206       352       567    
Consumer loans       441,740       434,011       425,434         417,910       404,062       390,076       377,822    
Total loans and leases       3,331,464       3,215,778       3,128,283         3,038,209       2,944,392       2,860,524       2,794,195    
Loans held for sale       21,070       14,075     7,053       9,952     7,518     6,940     5,216    
Investment securities     869,461     898,237     925,683       942,782     965,206     991,135     1,012,701    
Interest-earning assets     4,261,939     4,162,963     4,097,648       4,022,051     3,954,858     3,893,843     3,845,513    
Total assets     4,537,142     4,438,670     4,372,988       4,292,237     4,220,084     4,157,559     4,105,225    
Noninterest-bearing demand deposits     1,063,500     1,023,042     986,688       1,000,285     956,830     899,287     825,968    
Total deposits     3,263,993     3,128,562     3,056,186       3,063,591     3,036,686     2,965,329     2,876,641    
Customer repurchase agreements       121,127       106,179       90,020         78,746       73,046       68,880       62,864    
Total interest-bearing liabilities     2,906,348     2,852,414     2,817,575       2,731,791     2,711,206     2,716,537     2,749,459    
Total stockholders’ equity     518,619     516,940     521,346       524,063     517,534     511,738     503,851    
Financial Measures:                    
Average equity to average assets     11.43 %   11.65 %   11.92 %     12.21 %   12.26 %   12.31 %   12.27 %  
Investment securities to earning assets     19.87 %   20.80 %   22.12 %     22.69 %   23.91 %   24.85 %   25.64 %  
Loans to earning assets     78.64 %   77.89 %   76.71 %     76.00 %   74.83 %   73.78 %   72.80 %  
Loans to assets     74.01 %   72.97 %   71.90 %     71.12 %   70.04 %   68.75 %   67.95 %  
Loans to deposits     104.18 %   101.28 %   101.76 %     101.99 %   98.25 %   95.80 %   95.73 %  
Capital Measures:                    
Tier 1 leverage  (1)     10.65 %   10.83 %   11.00 %     11.26 %   11.36 %   11.37 %   11.43 %  
Tier 1 capital to risk-weighted assets  (1)     13.17 %   13.54 %   14.01 %     13.95 %   14.52 %   14.48 %   14.64 %  
Total regulatory capital to risk-weighted assets  (1)     14.27 %   14.65 %   15.12 %     15.06 %   15.68 %   15.66 %   15.85 %  
Common equity tier 1 capital to risk-weighted assets  (1)     12.20 %   12.53 %   14.01 %   n.a.   n.a.   n.a.   n.a.    
Book value per share   $    21.44   $   21.12   $   21.10     $   20.83   $   20.83   $   20.63   $   20.38    
Outstanding shares       24,424,944       24,562,471       24,733,868         25,044,877       25,076,794       25,069,700       25,043,482    
(1) Estimated ratio at September 30, 2015                    
                     

 

Sandy Spring Bancorp, Inc. and Subsidiaries                              
LOAN PORTFOLIO QUALITY DETAIL – UNAUDITED                          
                               
      2015       2014    
(Dollars in thousands)   September 30,   June 30,   March 31,   December 31,   September 30,   June 30,    March 31,  
Non-Performing Assets:                              
Loans and leases 90 days past due:                              
Commercial business   $   –     $   –     $     –      $   –     $   –     $   1     $   –    
Commercial real estate:                              
Commercial AD&C       –         –         –          –         –         –         –    
Commercial investor real estate       –         –         –          –         –         –         –    
Commercial owner occupied real estate       –         –         –          –         649         –         –    
Leasing       1         2         –          –         –         –         –    
Consumer       –         7         –          –         6         3         –    
Residential real estate:                              
Residential mortgage       –         –         –          –         –         –         –    
Residential construction       –         –         –          –         –         –         –    
Total loans and leases 90 days past due       1         9         –         –         655         4         –    
Non-accrual loans and leases:                              
Commercial business       3,881         3,285         4,166         3,184         4,151         4,309         3,272    
Commercial real estate:                              
Commercial AD&C       194         194         1,363         2,464         3,792         3,739         4,133    
Commercial investor real estate       8,609         10,023         10,083         8,156         8,210         6,731         7,284    
Commercial owner occupied real estate       7,932         8,423         8,974         8,941         10,742         10,868         7,150    
Leasing                 –         –          –         –         –         –    
Consumer       1,621         1,214         1,962         1,668         1,830         2,058         2,115    
Residential real estate:                              
Residential mortgage       7,488         7,780         3,235         3,012         4,417         4,501         5,025    
Residential construction       770         780         788         1,105         2,497         2,143         2,304    
Total non-accrual loans and leases       30,495         31,699         30,571         28,530         35,639         34,349         31,283    
Total restructured loans – accruing       6,419         5,620         5,446         5,497         7,382         7,364         7,411    
Total non-performing loans and leases       36,915         37,328         36,017         34,027         43,676         41,717         38,694    
Other assets and real estate owned (OREO)       2,619         4,514         3,227         3,195         1,762         1,967         1,619    
Total non-performing assets   $    39,534     $   41,842     $   39,244     $   37,222     $   45,438     $   43,684     $   40,313    
                               
     For the quarter ended,   
    September 30,   June 30,   March 31,    December 31,     September 30,    June 30,   March 31,  
(Dollars in thousands)     2015       2015       2015       2014       2014       2014       2014    
Analysis of Non-accrual Loan and Lease Activity:                              
Balance at beginning of period   $    31,699     $   30,571     $   28,530     $   35,639     $   34,349     $   31,283     $   30,574    
Non-accrual balances transferred to OREO       (180 )       (1,309 )       (32 )       (1,475 )       (300 )       (390 )       (281 )  
Non-accrual balances charged-off       (752 )       (549 )       (1,077 )       (1,033 )       (216 )       (357 )       (513 )  
Net payments or draws       (1,846 )       (2,970 )       (1,067 )       (4,139 )       (590 )       (1,580 )       (1,073 )  
Loans placed on non-accrual       1,574         5,956         4,217         779         2,396         5,393         2,576    
Non-accrual loans brought current               –          –          (1,241 )       –         –         –    
Balance at end of period   $    30,495     $   31,699     $   30,571     $   28,530     $   35,639     $   34,349     $   31,283    
                               
Analysis of Allowance for Loan Losses:                              
Balance at beginning of period   $    38,713     $ 37,475     $   37,802     $   37,574     $   37,959     $   38,026     $   38,766    
Provision (credit) for loan and lease losses       1,706         1,218         597         853         (192 )       158         (982 )  
Less loans charged-off, net of recoveries:                              
Commercial business       (25 )       73         (89 )       50         (58 )       28         (768 )  
Commercial real estate:                              
Commercial AD&C               (547 )       706         529         –         –         –    
Commercial investor real estate       (5 )       85         (5 )       (5 )       (2 )       (23 )       (5 )  
Commercial owner occupied real estate       104         (1 )       212         (6 )       –         265         –    
Leasing               –          –          –         –         –         –    
Consumer       348         395         43         83         244         11         331    
Residential real estate:                              
Residential mortgage       342         (18 )       65         (17 )       43         (27 )       203    
Residential construction       (6 )       (7 )       (8 )       (9 )       (34 )       (29 )       (3 )  
 Net charge-offs       758         (20 )       924         625         193         225         (242 )  
Balance at end of period   $    39,661     $   38,713     $   37,475     $   37,802     $   37,574     $   37,959     $   38,026    
                               
Asset Quality Ratios:                              
Non-performing loans to total loans     1.08 %     1.13 %     1.14 %     1.09 %     1.47 %     1.43 %     1.37 %  
Non-performing assets to total assets     0.86 %     0.93 %     0.89 %     0.85 %     1.07 %     1.03 %     0.97 %  
Allowance for loan losses to loans     1.16 %     1.18 %     1.18 %     1.21 %     1.26 %     1.30 %     1.34 %  
Allowance for loan losses to non-performing loans     107.44 %     103.71 %     104.05 %     111.09 %     86.03 %     90.99 %     98.27 %  
Annualized net charge-offs to average loans     0.09 %     0.00 %     0.12 %     0.08 %     0.03 %     0.03 %     (0.04 )%  
                               

 

Sandy Spring Bancorp, Inc. and Subsidiaries                          
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES – UNAUDITED                
                             
    Three Months Ended September 30,  
                  2015                                 2014                
              Annualized               Annualized   
    Average                           Average     Average                           Average  
(Dollars in thousands and tax-equivalent)   Balances   (1) Interest   Yield/Rate     Balances   (1) Interest   Yield/Rate  
Assets                            
Residential mortgage loans   $    754,007     $            6,346             3.37 % $   682,013     $           5,813             3.41 %
Residential construction loans     134,448               1,240             3.66       147,750               1,376             3.69  
Commercial ADC loans     227,545               2,602             4.54       180,293               2,196             4.83  
Commercial investor real estate loans     704,068               8,353             4.71       577,851               7,009             4.81  
Commercial owner occupied real estate loans     656,337               8,065             4.88       585,014               7,091             4.98  
Commercial business loans     413,300               4,600             4.42       367,203               4,177             4.53  
Leasing     19                                    206               4             6.91  
Consumer loans     441,740               3,701             3.35       404,062               3,364             3.32  
Total loans and leases (2)     3,331,464               34,907             4.16       2,944,392               31,030             4.22  
Loans held for sale     21,070               214             4.05       7,518               81             4.30  
Taxable securities     581,832               3,742             2.57       663,550               4,071             2.43  
Tax-exempt securities (3)     287,629               3,091             4.30       301,656               3,240             4.26  
Interest-bearing deposits with banks     39,472               25             0.25       37,268               24             0.25  
Federal funds sold     472                 1             0.22       474                 –              0.22  
Total interest-earning assets     4,261,939               41,980             3.92       3,954,858               38,446             3.89  
                             
Less:  allowance for loan and lease losses     (39,090 )               (38,213 )          
Cash and due from banks     44,893                 45,600            
Premises and equipment, net     52,233                 45,959            
Other assets     217,167                 211,880            
Total assets   $    4,537,142               $  4,220,084            
                             
Liabilities and Stockholders’ Equity                            
Interest-bearing demand deposits   $    534,568               105             0.08 % $   488,800                 112             0.09 %
Regular savings deposits     277,819                 37             0.05       263,255                 34             0.05  
Money market savings deposits     882,755               393             0.18       871,271               293             0.13  
Time deposits     505,351               1,097             0.86       456,530               769             0.67  
Total interest-bearing deposits     2,200,493               1,632             0.29       2,079,856               1,208             0.23  
Other borrowings     121,127                 69             0.23       73,046               42             0.23  
Advances from FHLB     549,728                 3,272             2.36       523,304               3,258             2.47  
Subordinated debentures     35,000                 228             2.60       35,000               222             2.54  
Total interest-bearing liabilities     2,906,348               5,201             0.71       2,711,206               4,730             0.69  
                             
Noninterest-bearing demand deposits     1,063,500                 956,830            
Other liabilities     48,675                 34,514            
Stockholders’ equity     518,619                 517,534            
Total liabilities and stockholders’ equity   $    4,537,142               $  4,220,084            
                             
Net interest income and spread       $            36,779             3.21 %     $           33,716             3.20 %
Less: tax-equivalent adjustment                   1,663                                   1,296                
Net interest income       $            35,116                       $           32,420                
                             
Interest income/earning assets           3.92 %         3.89 %
Interest expense/earning assets             0.49               0.47  
Net interest margin           3.43 %         3.42 %
                             
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2015 and  2014. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.7 million and $1.3 million in 2015 and 2014, 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,  
                  2015                                 2014                
              Annualized               Annualized   
    Average                           Average     Average                           Average  
(Dollars in thousands and tax-equivalent)   Balances   (1) Interest   Yield/Rate     Balances   (1) Interest   Yield/Rate  
Assets                            
Residential mortgage loans   $    737,655     $            18,625             3.37 % $   654,261     $           16,874             3.44 %
Residential construction loans     134,714               3,729             3.70       142,709               3,988             3.74  
Commercial ADC loans     217,409               7,464             4.59       170,365               6,450