Sandy Spring Bancorp Reports Net Income of $10.6 Million for the Second Quarter

OLNEY, Md., July 21, 2016 (GLOBE NEWSWIRE) — Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the second quarter of 2016 of $10.6 million ($0.44 per diluted share) compared to net income of $10.3 million ($0.42 per diluted share) for the second quarter of 2015 and net income of $10.8 million ($0.45 per diluted share) for the first quarter of 2016.

For the six months ended June 30, 2016, net income was $21.5 million ($0.89 per diluted share) compared to net income of $21.6 million ($0.87 per diluted share) for the first six months of 2015.

“During the second quarter, pre-tax, pre-provision income climbed to its highest level since the third quarter of 2013, a quarter which included the effect of significant loan related recoveries. This quarter’s pre-tax, pre-provision income was driven by significant loan and deposit growth.  This growth enabled us to shift assets from the investment portfolio to higher yielding loans during the quarter,” said Dan Schrider, President and Chief Executive Officer.

“These core activities coupled with the restructuring of borrowings with lower rates and a reduced reliance on borrowed funds during the quarter should make a positive contribution to our prospective earnings run rate,” said Schrider.

Second Quarter Highlights: 

• Pre-tax, pre-provision income increased 11% compared with the second quarter of 2015 and 8% compared to the first quarter of 2016.  
   
• Total loans increased 12% compared to the second quarter of 2015 and 3% compared to the first quarter of 2016.  Commercial loans increased 15% and residential loans increased 9% over the prior year. 
   
• Total deposits grew 8% from the prior year and 3% from the prior quarter.
   
• The net interest margin was 3.51% for the second quarter of 2016, compared to 3.42% for the second quarter of 2015 and 3.44% for the first quarter of 2016.
   
• During the second quarter, the Company prepaid $35 million in FHLB advances and extinguished $5 million in subordinated debentures. These transactions were essentially neutral with respect to net income for the quarter; however, they will have a positive impact on future interest expense.

Review of Balance Sheet and Credit Quality

Total assets grew 5% to $4.7 billion at June 30, 2016 compared to $4.5 billion at June 30, 2015.  This growth was driven by a 12% increase in the loan portfolio as total loans ended the period at $3.7 billion. 

At June 30, 2016, combined noninterest-bearing and interest-bearing checking account balances, an important performance driver of multiple-product banking relationships with clients, increased 8% compared to balances at June 30, 2015. Total deposits and certain other short-term borrowings that comprise the funding sources derived from customers, increased 8% compared to June 30, 2015.

Tangible common equity totaled $439 million at June 30, 2016 compared to $435 million at June 30, 2015. The ratio of tangible common equity to tangible assets decreased to 9.44% at June 30, 2016 from 9.84% at June 30, 2015 due primarily to the growth in assets and share repurchases over the preceding 12 months. Dividends per common share were $0.48 per share for the first six months of 2016 compared to $0.44 per common share for the first six months of 2015, a 9% increase.  At June 30, 2016, the Company had a total risk-based capital ratio of 13.57%, a common equity tier 1 risk-based capital ratio of 11.63%, a tier 1 risk-based capital ratio of 12.42% and a tier 1 leverage ratio of 10.29%.

Non-performing loans totaled $31.4 million at June 30, 2016 compared to $37.3 million at June 30, 2015 and $34.5 million at December 31, 2015. The level of non-performing loans to total loans decreased to 0.85% at June 30, 2016 compared to 1.13% at June 30, 2015 primarily due to the growth in the overall loan portfolio.

Loan charge-offs, net of recoveries, totaled $1.3 million for the second quarter of 2016 compared to negligible net recoveries for the second quarter of 2015 and $0.4 million in charge-offs for the first quarter of 2016. The allowance for loan and lease losses represented 1.18% of outstanding loans and leases and 138% of non-performing loans at June 30, 2016 compared to 1.18% of outstanding loans and leases and 104% of non-performing loans at June 30, 2015. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the second quarter of 2016 increased 8% compared to the second quarter of 2015. The net interest margin was 3.51% for the second quarter of 2016 compared to 3.42% for the second quarter of 2015 due primarily to a combination of loan growth and the previously mentioned prepayment of FHLB advances and subordinated debentures.

The provision for loan and lease losses was $3.0 million for the second quarter of 2016 compared to a charge of $1.2 million for the second quarter of 2015 and $1.2 million for the first quarter of 2016. The increase in the current quarter’s charge versus the prior year’s quarter reflects the growth in the loan portfolio.

Non-interest income increased to $12.8 million for the second quarter of 2016 compared to $12.1 million for the second quarter of 2015.  The increase in non-interest income for the quarter compared to the prior year quarter was due primarily to a $1.2 million gain on the extinguishment of $5 million in subordinated debentures. Excluding this transaction, non-interest income decreased 5% as income from wealth management decreased due to the sale of a portion of the assets under management which occurred in the first quarter of 2016.

Non-interest expenses increased 5% to $30.9 million for the second quarter of 2016 compared to $29.5 million in the second quarter of 2015. This increase was driven by the prepayment penalties of $1.4 million for the early payoff of $35 million in high-rate FHLB advances during the second quarter. Excluding the prepayment penalties, non-interest expenses remained level compared to the prior year quarter. The non-GAAP efficiency ratio was 59.12% for the second quarter of 2016 compared to 61.35% for the second quarter of 2015.

Net interest income for the first six months of 2016 increased 8% compared to the first six months of 2015 due primarily to an increase in average loans, which was funded, in part, by a decrease in lower-yielding investment securities. As a result, net interest margin was 3.47% for the first six months of 2016 compared to 3.43% for the first six months of 2015. 

The provision for loan and lease losses was a charge of $4.2 million for the first six months of 2016 compared to a charge of $1.8 million for the first six months of 2015 reflecting the growth in the loan portfolio over the prior year period.

Non-interest income increased 3% to $26.1 million for the first six months of 2016 compared to $25.3 million for the first six months of 2015.  This increase was driven by $1.9 million in gains on securities sales and the extinguishment of subordinated debentures discussed previously. Excluding these transactions, non-interest income decreased 9% due to a decrease in income from wealth management resulting from the sale of a portion of the assets under management and a decrease in income from mortgage banking as mortgage sales volumes declined. 

Non-interest expenses increased 8% to $63.2 million for the first six months of 2016 compared to $58.7 million for the first six months of 2015. This increase was due largely to prepayment penalties of $3.2 million for the early payoff of $75 million in high-rate FHLB advances. Excluding the prepayment penalties, non-interest expenses increased 2% over the prior year period. The current year-to-date period included increases in salaries and benefits and equipment expenses.  The non-GAAP efficiency ratio was 60.47% for the first six months of 2016 compared to 60.75% for the first six months of 2015.

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 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) August 4, 2016.  A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10088183.

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 $4.7 billion in assets, the bank operates 45 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, 2015, 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												Six Months Ended
		June 30,								%				June 30,								%
(Dollars in thousands, except per share data)			2016				2015			Change					2016				2015			Change
Results of Operations:
Net interest income		$	36,732			$	33,933				8		%	$	72,854			$	67,306				8		%
Provision for loan and lease losses			2,957				1,218				143				4,193				1,815				131
Non-interest income			12,751				12,109				5				26,114				25,268				3
Non-interest expenses			30,871				29,477				5				63,188				58,721				8
Income before income taxes			15,655				15,347				2				31,587				32,038				(1	)
Net income			10,647				10,333				3				21,460				21,558				–
Pre-tax pre-provision income		$	18,612			$	16,727				11			$	35,780			$	34,215				5
Return on average assets			0.92		%		0.93		%						0.92		%		0.99		%
Return on average common equity			8.21		%		8.02		%						8.25		%		8.37		%
Net interest margin			3.51		%		3.42		%						3.47		%		3.43		%
Efficiency ratio – GAAP basis  (1)			62.39		%		64.02		%						63.85		%		63.43		%
Efficiency ratio – Non-GAAP basis  (1)			59.12		%		61.35		%						60.47		%		60.75		%
Per share data:
Basic net income		$	0.45			$	0.42				7		%	$	0.90			$	0.87				3		%
Diluted net income		$	0.44			$	0.42				5			$	0.89			$	0.87				2
Average fully diluted shares			24,108,668				24,689,762				(2	)			24,165,675				24,867,988				(3	)
Dividends declared per share		$	0.24			$	0.22				9			$	0.48			$	0.44				9
Book value per share			22.18				21.12				5				22.18				21.12				5
Tangible book value per share			18.40				17.71				4				18.40				17.71				4
Outstanding shares			23,874,650				24,562,471				(3	)			23,874,650				24,562,471				(3	)
Financial Condition at period-end:
Investment securities		$	734,828			$	878,284				(16	)	%	$	734,828			$	878,284				(16	)	%
Loans and leases			3,672,624				3,288,865				12				3,672,624				3,288,865				12
Interest-earning assets			4,461,180				4,222,667				6				4,461,180				4,222,667				6
Assets			4,739,449				4,507,367				5				4,739,449				4,507,367				5
Deposits			3,510,141				3,247,346				8				3,510,141				3,247,346				8
Interest-bearing liabilities			2,996,893				2,851,750				5				2,996,893				2,851,750				5
Stockholders’ equity			529,479				518,873				2				529,479				518,873				2
Capital ratios:
Tier 1 leverage  (4)			10.29		%		10.83		%						10.29		%		10.83		%
Tier 1 capital to risk-weighted assets  (4)			12.42		%		13.54		%						12.42		%		13.54		%
Total regulatory capital to risk-weighted assets  (4)			13.57		%		14.65		%						13.57		%		14.65		%
Common equity tier 1 capital to risk-weighted assets  (4)			11.63		%		12.53		%						11.63		%		12.53		%
Tangible common equity to tangible assets  (2)			9.44		%		9.84		%						9.44		%		9.84		%
Average equity to average assets			11.18		%		11.65		%						11.18		%		11.78		%
Credit quality ratios:
Allowance for loan and lease losses to loans and leases			1.18		%		1.18		%						1.18		%		1.18		%
Non-performing loans to total loans			0.85		%		1.13		%						0.85		%		1.13		%
Non-performing assets to total assets			0.69		%		0.93		%						0.69		%		0.93		%
Allowance for loan and lease losses to non-performing loans			138.36		%		103.71		%						138.36		%		103.71		%
Annualized net charge-offs to average loans and leases  (3)			0.15		%		–		%						0.10		%		0.06		%
(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 June 30, 2016

 

Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE – UNAUDITED
		Three Months Ended								Six Months Ended
		June 30,								June 30,
(Dollars in thousands)			2016				2015				2016				2015
Pre-tax pre-provision income:
Net income		$	10,647			$	10,333			$	21,460			$	21,558
Plus non-GAAP adjustment:
Litigation expenses			–				162				–				362
Income taxes			5,008				5,014				10,127				10,480
Provision (credit) for loan and lease losses			2,957				1,218				4,193				1,815
Pre-tax pre-provision income		$	18,612			$	16,727			$	35,780			$	34,215
Efficiency ratio – GAAP basis:
Non-interest expenses		$	30,871			$	29,477			$	63,188			$	58,721
Net interest income plus non-interest income		$	49,483			$	46,042			$	98,968			$	92,574
Efficiency ratio – GAAP basis			62.39	%			64.02	%			63.85	%			63.43	%
Efficiency ratio – Non-GAAP basis:
Non-interest expenses		$	30,871			$	29,477			$	63,188			$	58,721
Less non-GAAP adjustment:
Amortization of intangible assets			28				106				60				213
Loss on FHLB Redemption			1,416								3,167
Litigation expenses			–				162				–				362
Non-interest expenses –  as adjusted		$	29,427			$	29,209			$	59,961			$	58,146
Net interest income plus non-interest income		$	49,483			$	46,042			$	98,968			$	92,574
Plus non-GAAP adjustment:
Tax-equivalent income			1,640				1,589				3,304				3,153
Less non-GAAP adjustments:
Securities gains			150				19				1,919				19
Gain on redemption of subordinated debentures			1,200				–				1,200				–
Net interest income plus non-interest income – as adjusted		$	49,773			$	47,612			$	99,153			$	95,708
Efficiency ratio – Non-GAAP basis			59.12	%			61.35	%			60.47	%			60.75	%
Tangible common equity ratio:
Total stockholders’ equity		$	529,479			$	518,873			$	529,479			$	518,873
Accumulated other comprehensive income			(5,886	)			592				(5,886	)			592
Goodwill			(84,171	)			(84,171	)			(84,171	)			(84,171	)
Other intangible assets, net			(77	)			(296	)			(77	)			(296	)
Tangible common equity		$	439,345			$	434,998			$	439,345			$	434,998
Total assets		$	4,739,449			$	4,507,367			$	4,739,449			$	4,507,367
Goodwill			(84,171	)			(84,171	)			(84,171	)			(84,171	)
Other intangible assets, net			(77	)			(296	)			(77	)			(296	)
Tangible assets		$	4,655,201			$	4,422,900			$	4,655,201			$	4,422,900
Tangible common equity ratio			9.44	%			9.84	%			9.44	%			9.84	%
Outstanding common shares			23,874,650				24,562,471				23,874,650				24,562,471
Tangible book value per common share		$	18.40			$	17.71			$	18.40			$	17.71

 

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  – UNAUDITED
		June 30,				December 31,				June 30,
(Dollars in thousands)			2016				2015				2015
Assets
Cash and due from banks		$	53,334			$	46,956			$	53,569
Federal funds sold			832				472				472
Interest-bearing deposits with banks			39,406				25,454				35,601
Cash and cash equivalents			93,572				72,882				89,642
Residential mortgage loans held for sale (at fair value)			13,490				15,457				19,445
Investments available-for-sale (at fair value)			700,486				592,049				625,819
Investments held-to-maturity — fair value of $211,704 and $217,880 at December 31, 2015
and June 30, 2015, respectively			–				208,265				216,866
Other equity securities			34,342				41,336				35,599
Total loans and leases			3,672,624				3,495,370				3,288,865
Less: allowance for loan and lease losses			(43,384	)			(40,895	)			(38,713	)
Net loans and leases			3,629,240				3,454,475				3,250,152
Premises and equipment, net			53,055				53,214				51,609
Other real estate owned			1,311				2,742				4,514
Accrued interest receivable			13,399				13,443				13,144
Goodwill			84,171				84,171				84,171
Other intangible assets, net			77				138				296
Other assets			116,306				117,208				116,110
Total assets		$	4,739,449			$	4,655,380			$	4,507,367
Liabilities
Noninterest-bearing deposits		$	1,176,135			$	1,001,841			$	1,092,413
Interest-bearing deposits			2,334,006				2,261,889				2,154,933
Total deposits			3,510,141				3,263,730				3,247,346
Securities sold under retail repurchase agreements and federal funds purchased			117,887				109,145				111,817
Advances from FHLB			515,000				685,000				550,000
Subordinated debentures			30,000				35,000				35,000
Accrued interest payable and other liabilities			36,942				38,078				44,331
Total liabilities			4,209,970				4,130,953				3,988,494
Stockholders’ Equity
Common stock — par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,874,650,
24,295,971 and 24,562,471 at June 30, 2016, December 31, 2015 and June 30, 2015, respectively			23,875				24,296				24,562
Additional paid in capital			164,040				175,588				181,504
Retained earnings			335,678				325,840				313,399
Accumulated other comprehensive income (loss)			5,886				(1,297	)			(592	)
Total stockholders’ equity			529,479				524,427				518,873
Total liabilities and stockholders’ equity		$	4,739,449			$	4,655,380			$	4,507,367

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
		Three Months Ended								Six Months Ended
		June 30,								June 30,
(Dollars in thousands, except per share data)			2016				2015				2016				2015
Interest Income:
Interest and fees on loans and leases		$	36,928			$	33,031			$	73,134			$	65,170
Interest on loans held for sale			64				132				198				208
Interest on deposits with banks			54				22				107				44
Interest and dividends on investment securities:
Taxable			2,840				3,850				6,126				7,427
Exempt from federal income taxes			1,916				1,814				3,889				4,072
Interest on federal funds sold			1				–				2				–
Total interest income			41,803				38,849				83,456				76,921
Interest Expense:
Interest on deposits			2,041				1,367				3,878				2,561
Interest on retail repurchase agreements and federal funds purchased			72				60				138				110
Interest on advances from FHLB			2,739				3,266				6,113				6,502
Interest on subordinated debt			219				223				473				442
Total interest expense			5,071				4,916				10,602				9,615
Net interest income			36,732				33,933				72,854				67,306
Provision for loan and lease losses			2,957				1,218				4,193				1,815
Net interest income after provision for loan and lease losses			33,775				32,715				68,661				65,491
Non-interest Income:
Investment securities gains			150				19				1,919				19
Service charges on deposit accounts			1,956				1,839				3,859				3,721
Mortgage banking activities			1,106				822				1,641				2,000
Wealth management income			4,448				5,161				8,853				10,077
Insurance agency commissions			949				881				2,394				2,499
Income from bank owned life insurance			615				606				1,230				1,319
Bank card fees			1,220				1,220				2,309				2,277
Other income			2,307				1,561				3,909				3,356
Total non-interest income			12,751				12,109				26,114				25,268
Non-interest Expenses:
Salaries and employee benefits			17,221				17,534				35,451				34,833
Occupancy expense of premises			3,162				3,173				6,635				6,662
Equipment expenses			1,693				1,490				3,357				2,863
Marketing			662				942				1,343				1,473
Outside data services			1,355				1,102				2,718				2,363
FDIC insurance			649				654				1,286				1,285
Amortization of intangible assets			28				106				60				213
Litigation expenses			–				162				–				362
Other expenses			6,101				4,314				12,338				8,667
Total non-interest expenses			30,871				29,477				63,188				58,721
Income before income taxes			15,655				15,347				31,587				32,038
Income tax expense			5,008				5,014				10,127				10,480
Net income		$	10,647			$	10,333			$	21,460			$	21,558
Net Income Per Share Amounts:
Basic net income per share		$	0.45			$	0.42			$	0.90			$	0.87
Diluted net income per share		$	0.44			$	0.42			$	0.89			$	0.87
Dividends declared per share		$	0.24			$	0.22			$	0.48			$	0.44

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS – QUARTERLY FINANCIAL DATA – UNAUDITED
			2016							2015
(Dollars in thousands, except per share data)		Q2			Q1				Q4			Q3			Q2			Q1
Profitability for the Quarter:
Tax-equivalent interest income		$	43,443		$	43,317			$	42,736		$	41,980		$	40,438		$	39,343
Interest expense			5,071			5,531				5,297			5,201			4,916			4,699
Tax-equivalent net interest income			38,372			37,786				37,439			36,779			35,522			34,644
Tax-equivalent adjustment			1,640			1,664				1,662			1,663			1,589			1,271
Provision for loan and lease losses			2,957			1,236				1,850			1,706			1,218			597
Non-interest income			12,751			13,363				12,243			12,390			12,109			13,159
Non-interest expenses			30,871			32,317				26,996			29,630			29,477			29,244
Income before income taxes			15,655			15,932				19,174			16,170			15,347			16,691
Income tax expense			5,008			5,119				6,372			5,175			5,014			5,466
Net income		$	10,647		$	10,813			$	12,802		$	10,995		$	10,333		$	11,225
Financial Performance:
Pre-tax pre-provision income		$	18,612		$	17,168			$	16,638		$	18,031		$	16,727		$	17,488
Return on average assets			0.92	%		0.93	%			1.11	%		0.96	%		0.93	%		1.04	%
Return on average common equity			8.21	%		8.29	%			9.73	%		8.41	%		8.02	%		8.73	%
Net interest margin			3.51	%		3.44	%			3.45	%		3.43	%		3.42	%		3.44	%
Efficiency ratio – GAAP basis (1)			62.39	%		65.31	%			56.22	%		62.37	%		64.02	%		62.85	%
Efficiency ratio – Non-GAAP basis (1)			59.12	%		61.84	%			63.08	%		59.73	%		61.35	%		60.53	%
Per Share Data:
Basic net income per share		$	0.45		$	0.45			$	0.53		$	0.45		$	0.42		$	0.45
Diluted net income per share		$	0.44		$	0.45			$	0.52		$	0.45		$	0.42		$	0.45
Average fully diluted shares			24,108,668			24,222,940				24,455,847			24,602,817			24,689,762			25,048,576
Dividends declared per common share		$	0.24		$	0.24			$	0.24		$	0.22		$	0.22		$	0.22
Non-interest Income:
Securities gains		$	150		$	1,769			$	16		$	1		$	19		$	–
Service charges on deposit accounts			1,956			1,903				1,950			1,936			1,839			1,882
Mortgage banking activities			1,106			535				548			566			822			1,178
Wealth management income			4,448			4,405				4,891			4,963			5,161			4,916
Insurance agency commissions			949			1,445				1,029			1,648			881			1,618
Income from bank owned life insurance			615			615				634			618			606			713
Bank card fees			1,220			1,089				1,177			1,198			1,220			1,057
Other income			2,307			1,602				1,998			1,460			1,561			1,795
Total Non-interest Income		$	12,751		$	13,363			$	12,243		$	12,390		$	12,109		$	13,159
Non-interest Expense:
Salaries and employee benefits		$	17,221		$	18,230			$	18,437		$	17,733		$	17,534		$	17,299
Occupancy expense of premises			3,162			3,473				3,061			3,086			3,173			3,489
Equipment expenses			1,693			1,664				1,608			1,600			1,490			1,373
Marketing			662			681				735			688			942			531
Outside data services			1,355			1,363				1,331			1,329			1,102			1,261
FDIC insurance			649			637				641			565			654			631
Amortization of intangible assets			28			32				52			107			106			107
Litigation expenses			–			–				(4,386	)		155			162			200
Professional fees			1,447			1,138				1,322			1,089			1,199			1,209
Other real estate owned expenses			(5	)		17				14			48			4			10
Other expenses			4,659			5,082				4,181			3,230			3,111			3,134
Total Non-interest Expense		$	30,871		$	32,317			$	26,996		$	29,630		$	29,477		$	29,244
(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
			2016							2015
(Dollars in thousands)		Q2			Q1				Q4			Q3			Q2			Q1
Balance Sheets at Quarter End:
Residential mortgage loans		$	820,618		$	804,105			$	796,358		$	773,889		$	744,195		$	728,858
Residential construction loans			142,710			138,221				129,281			139,492			137,134			130,321
Commercial ADC loans			285,585			261,204				255,980			239,160			223,103			203,731
Commercial investor real estate loans			824,252			783,161				719,084			710,694			694,179			668,931
Commercial owner occupied real estate loans			700,599			675,560				678,027			680,601			643,973			618,846
Commercial business loans			451,711			451,239				465,765			423,855			409,795			385,452
Leasing			–			–				–			19			21			36
Consumer loans			447,149			447,198				450,875			444,729			436,465			428,531
Total loans and leases			3,672,624			3,560,688				3,495,370			3,412,439			3,288,865			3,164,706
Allowance for loan and lease losses			(43,384	)		(41,766	)			(40,895	)		(39,661	)		(38,713	)		(37,475	)
Loans held for sale			13,490			27,806				15,457			10,418			19,445			13,899
Investment securities			734,828			742,401				841,650			862,409			878,284			912,565
Interest-earning assets			4,461,180			4,447,063				4,378,403			4,339,375			4,222,667			4,125,549
Total assets			4,739,449			4,716,608				4,655,380			4,611,034			4,507,367			4,401,380
Noninterest-bearing demand deposits			1,176,135			1,084,746				1,001,841			1,068,299			1,092,413			1,017,566
Total deposits			3,510,141			3,412,308				3,263,730			3,275,668			3,247,346			3,109,892
Customer repurchase agreements			117,887			121,043				109,145			121,378			111,817			101,640
Total interest-bearing liabilities			2,996,893			3,073,605				3,091,034			2,973,747			2,851,750			2,818,966
Total stockholders’ equity			529,479			522,392				524,427			523,594			518,873			521,768
Quarterly Average Balance Sheets:
Residential mortgage loans		$	811,705		$	807,443			$	781,015		$	754,007		$	734,382		$	724,248
Residential construction loans			142,854			134,708				133,812			134,448			137,216			132,456
Commercial ADC loans			272,090			261,687				247,612			227,545			218,341			206,105
Commercial investor real estate loans			788,785			750,821				717,742			704,068			668,883			645,163
Commercial owner occupied real estate loans			684,907			677,786				673,883			656,337			624,407			611,722
Commercial business loans			453,459			460,903				424,510			413,300			398,510			383,111
Leasing			–			–				17			19			28			44
Consumer loans			449,594			451,075				448,439			441,740			434,011			425,434
Total loans and leases			3,603,394			3,544,423				3,427,030			3,331,464			3,215,778			3,128,283
Loans held for sale			8,326			14,036				11,951			21,070			14,075			7,053
Investment securities			739,132			810,593				840,276			869,461			898,237			925,683
Interest-earning assets			4,394,879			4,411,796				4,320,674			4,261,939			4,162,963			4,097,648
Total assets			4,664,343			4,685,747				4,594,025			4,537,142			4,438,670			4,372,988
Noninterest-bearing demand deposits			1,082,762			1,021,471				1,058,215			1,063,500			1,023,042			986,688
Total deposits			3,429,897			3,300,131				3,285,299			3,263,993			3,128,562			3,056,186
Customer repurchase agreements			122,597			110,862				125,275			121,127			106,179			90,020
Total interest-bearing liabilities			3,020,505			3,103,710				2,968,555			2,906,348			2,852,414			2,817,575
Total stockholders’ equity			521,387			524,309				521,786			518,619			516,940			521,346
Financial Measures:
Average equity to average assets			11.18	%		11.19	%			11.36	%		11.43	%		11.65	%		11.92	%
Investment securities to earning assets			16.47	%		16.69	%			19.22	%		19.87	%		20.80	%		22.12	%
Loans to earning assets			82.32	%		80.07	%			79.83	%		78.64	%		77.89	%		76.71	%
Loans to assets			77.49	%		75.49	%			75.08	%		74.01	%		72.97	%		71.90	%
Loans to deposits			104.63	%		104.35	%			107.10	%		104.18	%		101.28	%		101.76	%
Capital Measures:
Tier 1 leverage  (1)			10.29	%		10.23	%			10.60	%		10.65	%		10.83	%		11.00	%
Tier 1 capital to risk-weighted assets  (1)			12.42	%		12.74	%			13.13	%		13.17	%		13.54	%		14.03	%
Total regulatory capital to risk-weighted assets  (1)			13.57	%		13.86	%			14.25	%		14.27	%		14.65	%		15.14	%
Common equity tier 1 capital to risk-weighted assets  (1)			11.63	%		11.79	%			12.17	%		12.20	%		12.53	%		12.99	%
Book value per share		$	22.18		$	21.92			$	21.58		$	21.44		$	21.12		$	21.10
Outstanding shares			23,874,650			23,827,305				24,295,971			24,424,944			24,562,471			24,733,868
(1) Estimated ratio at June 30, 2016

Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL – UNAUDITED
			2016								2015
(Dollars in thousands)		June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
Non-Performing Assets:
Loans and leases 90 days past due:
Commercial business		$	–			$	–			$	–			$	–			$	–			$	–
Commercial real estate:
Commercial AD&C			–				–				–				–				–				–
Commercial investor real estate			–				–				–				–				–				–
Commercial owner occupied real estate			–				–				–				–				–				–
Leasing			–				–				–				1				2				–
Consumer			2				1				–				–				7				–
Residential real estate:
Residential mortgage			–				–				–				–				–				–
Residential construction			–				–				–				–				–				–
Total loans and leases 90 days past due			2				1				–				1				9				–
Non-accrual loans and leases:
Commercial business			4,263				3,741				3,696				3,881				3,285				4,166
Commercial real estate:
Commercial AD&C			137				147				194				194				194				1,363
Commercial investor real estate			8,868				7,885				8,368				8,609				10,023				10,083
Commercial owner occupied real estate			5,678				7,149				6,340				7,932				8,423				8,974
Leasing			–				–				–				–				–				–
Consumer			2,600				2,715				2,193				1,621				1,214				1,962
Residential real estate:
Residential mortgage			6,186				9,329				8,822				7,488				7,780				3,235
Residential construction			202				412				418				770				780				788
Total non-accrual loans and leases			27,934				31,378				30,031				30,495				31,699				30,571
Total restructured loans – accruing			3,420				4,716				4,467				6,419				5,620				5,446
Total non-performing loans and leases			31,356				36,095				34,498				36,915				37,328				36,017
Other assets and real estate owned (OREO)			1,311				2,414				2,742				2,619				4,514				3,227
Total non-performing assets		$	32,667			$	38,509			$	37,240			$	39,534			$	41,842			$	39,244
		For the quarter ended,
		June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)			2016				2016				2015				2015				2015				2015
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period		$	31,378			$	30,031			$	30,495			$	31,699			$	30,571			$	28,530
Non-accrual balances transferred to OREO			–				–				(423	)			(180	)			(1,309	)			(32	)
Non-accrual balances charged-off			(1,305	)			(274	)			(869	)			(752	)			(549	)			(1,077	)
Net payments or draws			(4,810	)			(914	)			(3,084	)			(1,846	)			(2,970	)			(1,067	)
Loans placed on non-accrual			2,671				2,535				3,912				1,574				5,956				4,217
Non-accrual loans brought current			–				–				–				–				–				–
Balance at end of period		$	27,934			$	31,378			$	30,031			$	30,495			$	31,699			$	30,571
Analysis of Allowance for Loan Losses:
Balance at beginning of period		$	41,766			$	40,895			$	39,661			$	38,713			$	37,475			$	37,802
Provision for loan and lease losses			2,957				1,236				1,850				1,706				1,218				597
Less loans charged-off, net of recoveries:
Commercial business			106				67				(128	)			(25	)			73				(89	)
Commercial real estate:
Commercial AD&C			–				48				–				–				(547	)			706
Commercial investor real estate			(107	)			192				(4	)			(5	)			85				(5	)
Commercial owner occupied real estate			(1	)			(3	)			725				104				(1	)			212
Leasing			–				–				4				–				–				–
Consumer			364				54				(31	)			348				395				43
Residential real estate:
Residential mortgage			989				15				80				342				(18	)			65
Residential construction			(12	)			(8	)			(30	)			(6	)			(7	)			(8	)
Net charge-offs			1,339				365				616				758				(20	)			924
Balance at end of period		$	43,384			$	41,766			$	40,895			$	39,661			$	38,713			$	37,475
Asset Quality Ratios:
Non-performing loans to total loans			0.85	%			1.01	%			0.99	%			1.08	%			1.13	%			1.14	%
Non-performing assets to total assets			0.69	%			0.82	%			0.80	%			0.86	%			0.93	%			0.89	%
Allowance for loan losses to loans			1.18	%			1.17	%			1.17	%			1.16	%			1.18	%			1.18	%
Allowance for loan losses to non-performing loans			138.36	%			115.72	%			118.54	%			107.44	%			103.71	%			104.05	%
Annualized net charge-offs to average loans			0.15	%			0.04	%			0.07	%			0.09	%			0.00	%			0.12	%

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES – UNAUDITED
		Three Months Ended June 30,
								2016													2015
												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		$	811,705			$		6,934				3.42	%		$	734,382			$		6,155				3.35	%
Residential construction loans			142,854					1,268				3.57				137,216					1,268				3.71
Total mortgage loans			954,559					8,202				3.44				871,598					7,423				3.41
Commercial ADC loans			272,090					3,115				4.60				218,341					2,525				4.64
Commercial investor real estate loans			788,785					8,988				4.58				668,883					7,771				4.66
Commercial owner occupied real estate loans			684,907					8,280				4.86				624,407					7,669				4.93
Commercial business loans			453,459					4,943				4.38				398,510					4,369				4.40
Leasing			–					–				–				28					–				1.49
Total commercial loans and leases			2,199,241					25,326				4.63				1,910,169					22,334				4.69
Consumer loans			449,594					3,885				3.50				434,011					3,606				3.35
Total loans and leases (2)			3,603,394					37,413				4.17				3,215,778					33,363				4.16
Loans held for sale			8,326					64				3.08				14,075					132				3.76
Taxable securities			456,803					2,943				2.58				606,581					3,786				2.50
Tax-exempt securities (3)			282,329					2,968				4.21				291,656					3,135				4.30
Total investment securities			739,132					5,911				3.20				898,237					6,921				3.08
Interest-bearing deposits with banks			43,300					54				0.50				34,400					22				0.25
Federal funds sold			727					1				0.49				473					–				0.22
Total interest-earning assets			4,394,879					43,443				3.97				4,162,963					40,438				3.89
Less:  allowance for loan and lease losses			(42,064	)												(38,217	)
Cash and due from banks			46,527													46,894
Premises and equipment, net			53,218													51,591
Other assets			211,783													215,439
Total assets		$	4,664,343												$	4,438,670
Liabilities and Stockholders’ Equity
Interest-bearing demand deposits		$	586,323					115				0.08	%		$	527,307					101				0.08	%
Regular savings deposits			298,435					47				0.06				278,199					37				0.05
Money market savings deposits			907,670					495				0.22				833,382					317				0.15
Time deposits			554,707					1,384				1.00				466,632					912				0.78
Total interest-bearing deposits			2,347,135					2,041				0.35				2,105,520					1,367				0.26
Other borrowings			122,601					72				0.24				106,180					60				0.23
Advances from FHLB			519,780					2,739				2.12				605,714					3,266				2.16
Subordinated debentures			30,989					219				2.83				35,000					223				2.55
Total interest-bearing liabilities			3,020,505					5,071				0.68				2,852,414					4,916				0.69
Noninterest-bearing demand deposits			1,082,762													1,023,042
Other liabilities			39,689													46,274
Stockholders’ equity			521,387													516,940
Total liabilities and stockholders’ equity		$	4,664,343												$	4,438,670
Net interest income and spread						$		38,372				3.29	%						$		35,522				3.20	%
Less: tax-equivalent adjustment								1,640													1,589
Net interest income						$		36,732											$		33,933
Interest income/earning assets												3.97	%												3.89	%
Interest expense/earning assets												0.46													0.47
Net interest margin												3.51	%												3.42	%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2016 and 2015. The annualized taxable-equivalent adjustments utilized in
the above table to compute yields aggregated to $1.6 million and $1.6 million in 2016 and 2015, 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
		Six Months Ended June 30,
								2016													2015
												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		$	809,574			$		13,802				3.41	%		$	729,343			$		12,279				3.37	%
Residential construction loans			138,781					2,463				3.57				134,849					2,489				3.72
Total mortgage loans			948,355					16,265				3.43				864,192					14,768				3.42
Commercial ADC loans			266,888					6,113				4.61				212,257					4,862				4.62
Commercial investor real estate loans			769,803					17,600				4.60				657,088					15,350				4.71
Commercial owner occupied real estate loans			681,347					16,365				4.83				618,100					15,200				4.96
Commercial business loans			457,181					9,956				4.38				390,853					8,507				4.39
Leasing			–					–				–				36					1				3.76
Total commercial loans and leases			2,175,219					50,034				4.63				1,878,334					43,920				4.72
Consumer loans			450,335					7,774				3.49				429,746					7,106				3.35
Total loans and leases (2)			3,573,909					74,073				4.16				3,172,272					65,794				4.18
Loans held for sale			11,181					198				3.54				10,583					208				3.94
Taxable securities			490,338					6,356				2.59				617,861					7,722				2.50
Tax-exempt securities (3)			284,524					6,024				4.23				294,024					6,305				4.29
Total investment securities			774,862					12,380				3.20				911,885					14,027				3.08
Interest-bearing deposits with banks			42,777					107				0.50				35,273					44				0.25
Federal funds sold			608					2				0.48				473					1				0.22
Total interest-earning assets			4,403,337					86,760				3.96				4,130,486					80,074				3.90
Less:  allowance for loan and lease losses			(41,567	)												(37,833	)
Cash and due from banks			46,783													46,663
Premises and equipment, net			53,396													51,127
Other assets			212,915													215,567
Total assets		$	4,674,864												$	4,406,010
Liabilities and Stockholders’ Equity
Interest-bearing demand deposits		$	577,771					223				0.08	%		$	525,692					207				0.08	%
Regular savings deposits			294,339					89				0.06				274,220					71				0.05
Money market savings deposits			902,352					932				0.21				832,549					590				0.14
Time deposits			538,435					2,634				0.98				455,147					1,693				0.75
Total interest-bearing deposits			2,312,897					3,878				0.34				2,087,608					2,561				0.25
Other borrowings			116,792					138				0.24				98,228					110				0.23
Advances from FHLB			599,423					6,113				2.05				614,254					6,502				2.13
Subordinated debentures			32,995					473				2.87				35,000					442				2.53
Total interest-bearing liabilities			3,062,107					10,602				0.70				2,835,090					9,615				0.68
Noninterest-bearing demand deposits			1,052,116													1,004,965
Other liabilities			37,793													46,824
Stockholders’ equity			522,848													519,131
Total liabilities and stockholders’ equity		$	4,674,864												$	4,406,010
Net interest income and spread						$		76,158				3.26	%						$		70,459				3.22	%
Less: tax-equivalent adjustment								3,304													3,153
Net interest income						$		72,854											$		67,306
Interest income/earning assets												3.96	%												3.90	%
Interest expense/earning assets												0.49													0.47
Net interest margin												3.47	%												3.43	%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2016 and 2015. The annualized taxable-equivalent adjustments utilized in
the above table to compute yields aggregated to $3.3 million and $3.2 million in 2016 and 2015, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.

CONTACT: 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:  [email protected]
[email protected]
Web site: www.sandyspringbank.com