Market Overview

Sandy Spring Bancorp Reports Record Net Income of $13.5 Million for the Third Quarter

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OLNEY, Md., Oct. 20, 2016 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq: SASR) the parent company of Sandy Spring Bank, today reported net income for the third quarter of 2016 of $13.5 million ($0.56 per diluted share) compared to net income of $11.0 million ($0.45 per diluted share) for the third quarter of 2015 and net income of $10.6 million ($0.44 per diluted share) for the second quarter of 2016.

For the nine months ended September 30, 2016, net income was $34.9 million ($1.45 per diluted share) compared to net income of $32.6 million ($1.31 per diluted share) for the same period of the prior year.

"The record earnings for the current quarter were the direct result of strong core operating performance from multiple business lines. Balanced loan and deposit growth continue to be a fundamental strength and the margin increase reflects the redeployment of earning assets from the investment portfolio into higher yielding loans," said Daniel J. Schrider, President and Chief Executive Officer.

Third Quarter Highlights: 

  • Pre-tax, pre-provision income increased 16% compared with the third quarter of 2015 and 13% compared to the second quarter of 2016.

  • The net interest margin was 3.50% for the third quarter of 2016, compared to 3.43% for the third quarter of 2015 and 3.51% for the second quarter of 2016.

  • The Non-GAAP efficiency ratio was 56.33% for the current quarter as compared to 59.73% for the third quarter of 2015 and 59.12% for the second quarter of 2016.

  • Total loans increased 11% compared to the third quarter of 2015 and 3% compared to the second quarter of 2016.  Commercial loans increased 13% and residential loans increased 9% over the prior year.

  • Total deposits grew 8% from the prior year and 1% from the prior quarter.

Review of Balance Sheet and Credit Quality

Total assets grew 4% to $4.8 billion at September 30, 2016 compared to $4.6 billion at September 30, 2015.  This growth was driven by the 11% increase in the loan portfolio as total loans ended the period at $3.8 billion. 

At September 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 September 30, 2015. Total deposits and certain other short-term borrowings that comprise the funding sources derived from customers, increased 8% compared to September 30, 2015.

Tangible common equity totaled $446 million at September 30, 2016 compared to $437 million at September 30, 2015. The ratio of tangible common equity to tangible assets decreased to 9.43% at September 30, 2016 from 9.66% at September 30, 2015 due to the combined impact of the growth in assets and share repurchases over the preceding 12 months. Dividends per common share were $0.72 per share for the first nine months of 2016 compared to $0.66 per common share for the first nine months of 2015, a 9% increase.  At September 30, 2016, the Company had a total risk-based capital ratio of 13.29%, a common equity tier 1 risk-based capital ratio of 11.41%, a tier 1 risk-based capital ratio of 12.17% and a tier 1 leverage ratio of 10.25%.

Non-performing loans totaled $32.0 million at September 30, 2016 compared to $36.9 million at September 30, 2015 and $31.4 million at June 30, 2016. The level of non-performing loans to total loans decreased to 0.85% at September 30, 2016 compared to 1.08% at September 30, 2015 as a result of the growth in the loan portfolio and a concurrent decrease in the level of non-performing loans.

Loan charge-offs, net of recoveries, totaled $0.2 million for the third quarter of 2016 compared to $0.8 million for the third quarter of 2015 and $1.3 million in charge-offs for the second quarter of 2016. The allowance for loan losses represented 1.16% of outstanding loans and 137% of non-performing loans at September 30, 2016 compared to 1.16% of outstanding loans and 107% of non-performing loans at September 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 third quarter of 2016 increased 7% compared to the third quarter of 2015. The net interest margin improved to 3.50% for the third quarter of 2016 compared to 3.43% for the third quarter of 2015.  This improvement reflects the impact of loan growth over the preceding year combined with the positive benefits associated with the prepayment of FHLB advances and subordinated debentures, and the shift from lower yielding investments to the higher yielding loan portfolio in the first nine months of 2016.  

The provision for loan losses was $0.8 million for the third quarter of 2016 compared to a charge of $1.7 million for the third quarter of 2015 and $3.0 million for the second quarter of 2016. The decrease in the current quarter's charge versus the prior year's quarter reflects lower net-charge offs during the quarter and the reduced level of non-performing assets.

Non-interest income increased to $12.6 million for the third quarter of 2016 compared to $12.4 million for the third quarter of 2015 due to higher mortgage banking income from increased loan sales volume that more than offset the decrease in income from wealth management due to the sale of a portion of the assets under management which occurred in the first quarter of 2016.

Non-interest expenses decreased 1% to $29.3 million for the third quarter of 2016 compared to $29.6 million in the third quarter of 2015 due to lower other non-interest expenses. The non-GAAP efficiency ratio was 56.33% for the third quarter of 2016 compared to 59.73% for the third quarter of 2015 as a result of the combined growth in the net interest income and the effects of expense control discipline. 

Net interest income for the first nine months of 2016 increased 8% compared to the first nine 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, the net interest margin was 3.49% for the first nine months of 2016 compared to 3.43% for the prior year period. 

The provision for loan losses was a charge of $5.0 million for the first nine months of 2016 compared to a charge of $3.5 million for the first nine months of 2015 primarily reflecting the growth in the loan portfolio over the prior year period.

Non-interest income increased 3% to $38.7 million for the first nine months of 2016 compared to $37.7 million for the first nine months of 2015.  This increase was driven by $1.9 million in gains on securities sales and a gain of $1.2 million due to the extinguishment of subordinated debentures during the first half of 2016. Excluding these transactions, non-interest income decreased 6% due to a decrease in income from wealth management resulting from the sale of a portion of the assets under management. 

Non-interest expenses increased 5% to $92.5 million for the first nine months of 2016 compared to $88.4 million for the prior year period. 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 1% 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 59.05% for the first nine months of 2016 compared to 60.41% for the first nine months of 2015.

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 3, 2016.  A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10093850.

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 $4.8 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 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      Nine Months Ended    
  September 30,  %   September 30,  % 
(Dollars in thousands, except per share data)  2016    2015   Change    2016    2015   Change 
Results of Operations:                   
Net interest income $   37,731    $35,116   7 %  $   110,585    $102,422   8 %
Provision for loan losses    781     1,706   (54)      4,974     3,521   41  
Non-interest income    12,584     12,390   2       38,698     37,658   3  
Non-interest expense    29,326     29,630   (1)      92,514     88,351   5  
Income before income taxes    20,208     16,170   25       51,795     48,208   7  
Net income    13,474     10,995   23       34,934     32,553   7  
                    
Pre-tax pre-provision income $   20,989    $18,031   16    $   56,769    $52,246   9  
                    
Return on average assets    1.13  %  0.96 %        0.99  %  0.98 %   
Return on average common equity    10.11  %  8.41 %        8.88  %  8.39 %   
Net interest margin    3.50  %  3.43 %        3.49  %  3.43 %   
Efficiency ratio - GAAP basis  (1)    58.28  %  62.37 %        61.97  %  63.07 %   
Efficiency ratio - Non-GAAP basis  (1)    56.33  %  59.73 %        59.05  %  60.41 %   
                    
Per share data:                   
Basic net income $   0.56    $0.45   24 %  $   1.45    $1.32   10 %
Diluted net income $   0.56    $0.45   24    $   1.45    $1.31   11  
Average fully diluted shares   24,122,923     24,602,817   (2)     24,151,622     24,779,010   (3) 
Dividends declared per share $   0.24    $0.22   9    $   0.72    $0.66   9  
Book value per share    22.47     21.44   5       22.47     21.44   5  
Tangible book value per share    18.66     17.91   4       18.66     17.91   4  
Outstanding shares   23,886,651     24,424,944   (2)     23,886,651     24,424,944   (2) 
                    
Financial Condition at period-end:                   
Investment securities $   691,471    $862,409   (20)%  $   691,471    $862,409   (20)%
Loans    3,780,507     3,412,439   11       3,780,507     3,412,439   11  
Interest-earning assets    4,537,331     4,339,375   5       4,537,331     4,339,375   5  
Assets    4,810,611     4,611,034   4       4,810,611     4,611,034   4  
Deposits    3,537,157     3,275,668   8       3,537,157     3,275,668   8  
Interest-bearing liabilities    3,087,135     2,973,747   4       3,087,135     2,973,747   4  
Stockholders' equity    536,655     523,594   2       536,655     523,594   2  
                    
Capital ratios:                   
Tier 1 leverage  (4)    10.25  %  10.65 %        10.25  %  10.65 %   
Tier 1 capital to risk-weighted assets  (4)    12.17  %  13.17 %        12.17  %  13.17 %   
Total regulatory capital to risk-weighted assets  (4)    13.29  %  14.27 %        13.29  %  14.27 %   
Common equity tier 1 capital to risk-weighted assets  (4)    11.41  %  12.20 %        11.41  %  12.20 %   
Tangible common equity to tangible assets  (2)    9.43  %  9.66 %        9.43  %  9.66 %   
Average equity to average assets    11.17  %  11.43 %        11.18  %  11.66 %   
                    
Credit quality ratios:                   
Allowance for loan losses to loans    1.16  %  1.16 %        1.16  %  1.16 %   
Non-performing loans to total loans    0.85  %  1.08 %        0.85  %  1.08 %   
Non-performing assets to total assets    0.69  %  0.86 %        0.69  %  0.86 %   
Allowance for loan losses to non-performing loans    137.41  %  107.44 %        137.41  %  107.44 %   
Annualized net charge-offs to average loans  (3)    0.02  %  0.09 %        0.07  %  0.07 %   
                    
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI; and the tax-equivalent adjustment to net interest income.  See the Reconciliation Table included with these Financial Highlights.
(2) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets and other comprehensive gains (losses).  See the Reconciliation Table included with these Financial Highlights.
(3) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.
(4) Estimated ratio at September 30, 2016
                    

 

Sandy Spring Bancorp, Inc. and Subsidiaries            
RECONCILIATION TABLE - UNAUDITED            
             
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
(Dollars in thousands)  2016    2015    2016    2015  
Pre-tax pre-provision income:            
Net income $   13,474    $10,995   $   34,934    $32,553  
Plus non-GAAP adjustment:            
Litigation expenses    -     155      -     517  
Income taxes    6,734     5,175      16,861     15,655  
Provision for loan losses    781     1,706      4,974     3,521  
Pre-tax pre-provision income $   20,989    $18,031   $   56,769    $52,246  
             
Efficiency ratio - GAAP basis:            
Non-interest expenses $   29,326    $29,630   $   92,514    $88,351  
             
Net interest income plus non-interest income $   50,315    $47,506   $   149,283    $140,080  
             
Efficiency ratio - GAAP basis  58.28%   62.37%   61.97%   63.07% 
             
             
Efficiency ratio - Non-GAAP basis:            
Non-interest expenses $   29,326    $29,630   $   92,514    $88,351  
Less non-GAAP adjustment:            
Amortization of intangible assets    34     107      94     320  
Loss on FHLB Redemption   -     -      3,167     -  
Litigation expenses  -     155      -     517  
Non-interest expenses -  as adjusted $   29,292    $29,368   $   89,253    $87,514  
             
Net interest income plus non-interest income $   50,315    $47,506   $   149,283    $140,080  
Plus non-GAAP adjustment:            
Tax-equivalent income    1,688     1,663      4,993     4,816  
Less non-GAAP adjustments:            
Securities gains    -     1      1,919     20  
Gain on redemption of subordinated debentures    -     -      1,200     -  
Net interest income plus non-interest income - as adjusted $   52,003    $49,168   $   151,157    $144,876  
             
Efficiency ratio - Non-GAAP basis  56.33%   59.73%   59.05%   60.41% 
             
Tangible common equity ratio:            
Total stockholders' equity $   536,655    $523,594   $   536,655    $523,594  
Accumulated other comprehensive income    (4,465)   (1,801)     (4,465)   (1,801) 
Goodwill    (85,768)   (84,171)     (85,768)   (84,171) 
Other intangible assets, net    (716)   (190)     (716)   (190) 
Tangible common equity $   445,706    $437,432   $   445,706    $437,432  
             
Total assets $  4,810,611    $4,611,034   $   4,810,611    $4,611,034  
Goodwill    (85,768)   (84,171)     (85,768)   (84,171) 
Other intangible assets, net    (716)   (190)     (716)   (190) 
Tangible assets $  4,724,127    $4,526,673   $   4,724,127    $4,526,673  
             
Tangible common equity ratio  9.43%   9.66%   9.43%   9.66% 
             
Outstanding common shares    23,886,651     24,424,944      23,886,651     24,424,944  
Tangible book value per common share $   18.66    $17.91   $   18.66    $17.91  
             

 

Sandy Spring Bancorp, Inc. and Subsidiaries         
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED         
          
  September 30,  December 31,  September 30, 
(Dollars in thousands)  2016    2015    2015  
Assets         
Cash and due from banks $   48,666    $46,956   $42,322  
Federal funds sold    1,106     472    472  
Interest-bearing deposits with banks    48,425     25,454    53,637  
Cash and cash equivalents    98,197     72,882    96,431  
Residential mortgage loans held for sale (at fair value)    15,822     15,457    10,418  
Investments available-for-sale (at fair value)    655,642     592,049    607,619  
Investments held-to-maturity -- fair value of $211,704 and $220,223 at December 31, 2015         
and September 30, 2015, respectively    -     208,265    216,642  
Other equity securities    35,829     41,336    38,148  
Total loans    3,780,507     3,495,370    3,412,439  
Less: allowance for loan losses    (43,942)   (40,895)   (39,661) 
Net loans    3,736,565     3,454,475    3,372,778  
Premises and equipment, net    53,356     53,214    52,573  
Other real estate owned    1,274     2,742    2,619  
Accrued interest receivable    13,123     13,443    13,102  
Goodwill    85,768     84,171    84,171  
Other intangible assets, net    716     138    190  
Other assets    114,319     117,208    116,343  
Total assets $   4,810,611    $4,655,380   $4,611,034  
          
Liabilities         
Noninterest-bearing deposits $   1,154,227    $1,001,841   $1,068,299  
Interest-bearing deposits    2,382,930     2,261,889    2,207,369  
Total deposits    3,537,157     3,263,730    3,275,668  
Securities sold under retail repurchase agreements and federal funds purchased    124,205     109,145    121,378  
Advances from FHLB    550,000     685,000    610,000  
Subordinated debentures    30,000     35,000    35,000  
Accrued interest payable and other liabilities    32,594     38,078    45,394  
Total liabilities    4,273,956     4,130,953    4,087,440  
          
Stockholders' Equity         
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,886,651,               
24,295,971 and 24,424,944 at September 30, 2016, December 31, 2015 and September 30, 2015, respectively    23,887     24,296    24,425  
Additional paid in capital    164,937     175,588    178,429  
Retained earnings    343,366     325,840    318,939  
Accumulated other comprehensive income (loss)    4,465     (1,297)   1,801  
Total stockholders' equity    536,655     524,427    523,594  
Total liabilities and stockholders' equity $   4,810,611    $4,655,380   $4,611,034  
          

 

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)  2016    2015    2016    2015 
Interest Income:           
Interest and fees on loans $   38,224    $34,484   $  111,358    $99,654 
Interest on loans held for sale    96     214      294     422 
Interest on deposits with banks    49     25      156     69 
Interest and dividends on investment securities:           
Taxable    2,623     3,597      8,749     11,024 
Exempt from federal income taxes    1,864     1,996      5,753     6,068 
Interest on federal funds sold    1     1      3     1 
Total interest income    42,857     40,317      126,313     117,238 
Interest Expense:           
Interest on deposits    2,128     1,632      6,006     4,193 
Interest on retail repurchase agreements and federal funds purchased    74     69      212     179 
Interest on advances from FHLB    2,699     3,272      8,812     9,774 
Interest on subordinated debt    225     228      698     670 
Total interest expense    5,126     5,201      15,728     14,816 
Net interest income    37,731     35,116      110,585     102,422 
Provision for loan losses    781     1,706      4,974     3,521 
Net interest income after provision for loan losses    36,950     33,410      105,611     98,901 
Non-interest Income:           
Investment securities gains    -     1      1,919     20 
Service charges on deposit accounts    2,035     1,936      5,894     5,657 
Mortgage banking activities    1,129     566      2,770     2,566 
Wealth management income    4,347     4,963      13,200     15,040 
Insurance agency commissions    1,786     1,648      4,180     4,147 
Income from bank owned life insurance    616     618      1,846     1,937 
Bank card fees    1,189     1,198      3,498     3,475 
Other income    1,482     1,460      5,391     4,816 
Total non-interest income    12,584     12,390      38,698     37,658 
Non-interest Expenses:           
Salaries and employee benefits    17,848     17,733      53,299     52,566 
Occupancy expense of premises    3,130     3,086      9,765     9,748 
Equipment expenses    1,745     1,600      5,102     4,463 
Marketing    628     688      1,971     2,161 
Outside data services    1,349     1,329      4,067     3,692 
FDIC insurance    726     565      2,012     1,850 
Amortization of intangible assets    34     107      94     320 
Litigation expenses    -     155      -     517 
Other expenses    3,866     4,367      16,204     13,034 
Total non-interest expenses    29,326     29,630      92,514     88,351 
Income before income taxes    20,208     16,170      51,795     48,208 
Income tax expense    6,734     5,175      16,861     15,655 
Net income $   13,474    $10,995   $   34,934    $32,553 
            
Net Income Per Share Amounts:           
Basic net income per share $   0.56    $0.45   $   1.45    $1.32 
Diluted net income per share $   0.56    $0.45   $   1.45    $1.31 
Dividends declared per share $   0.24    $0.22   $   0.72    $0.66 
            

 

Sandy Spring Bancorp, Inc. and Subsidiaries           
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED        
            
    2016    2015 
(Dollars in thousands, except per share data)  Q3Q2Q1  Q4Q3Q2Q1
Profitability for the Quarter:           
Tax-equivalent interest income  $   44,545  $43,443 $43,317   $42,736 $41,980 $40,438 $39,343 
Interest expense     5,126   5,071  5,531    5,297  5,201  4,916  4,699 
Tax-equivalent net interest income     39,419   38,372  37,786    37,439  36,779  35,522  34,644 
Tax-equivalent adjustment     1,688   1,640  1,664    1,662  1,663  1,589  1,271 
Provision for loan losses     781   2,957  1,236    1,850  1,706  1,218  597 
Non-interest income     12,584   12,751  13,363    12,243  12,390  12,109  13,159 
Non-interest expense     29,326   30,871  32,317    26,996  29,630  29,477  29,244 
Income before income taxes     20,208   15,655  15,932    19,174  16,170  15,347  16,691 
Income tax expense     6,734   5,008  5,119    6,372  5,175  5,014  5,466 
Net income  $   13,474  $10,647 $10,813   $12,802 $10,995 $10,333 $11,225 
Financial Performance:           
Pre-tax pre-provision income  $   20,989  $18,612 $17,168   $16,638 $18,031 $16,727 $17,488 
Return on average assets   1.13% 0.92% 0.93%   1.11% 0.96% 0.93% 1.04%
Return on average common equity   10.11% 8.21% 8.29%   9.73% 8.41% 8.02% 8.73%
Net interest margin   3.50% 3.51% 3.44%   3.45% 3.43% 3.42% 3.44%
Efficiency ratio - GAAP basis (1)   58.28% 62.39% 65.31%   56.22% 62.37% 64.02% 62.85%
Efficiency ratio - Non-GAAP basis (1)   56.33% 59.12% 61.84%   63.08% 59.73% 61.35% 60.53%
Per Share Data:           
Basic net income per share  $   0.56  $0.45 $0.45   $0.53 $0.45 $0.42 $0.45 
Diluted net income per share  $   0.56  $0.44 $0.45   $0.52 $0.45 $0.42 $0.45 
Average fully diluted shares   24,122,923   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   $0.24 $0.22 $0.22 $0.22 
Non-interest Income:           
Securities gains  $   -  $150 $1,769   $16 $1 $19 $- 
Service charges on deposit accounts     2,035   1,956  1,903    1,950  1,936  1,839  1,882 
Mortgage banking activities     1,129   1,106  535    548  566  822  1,178 
Wealth management income     4,347   4,448  4,405    4,891  4,963  5,161  4,916 
Insurance agency commissions     1,786   949  1,445    1,029  1,648  881  1,618 
Income from bank owned life insurance     616   615  615    634  618  606  713 
Bank card fees     1,189   1,220  1,089    1,177  1,198  1,220  1,057 
Other income     1,482   2,307  1,602    1,998  1,460  1,561  1,795 
Total Non-interest Income  $   12,584  $12,751 $13,363   $12,243 $12,390 $12,109 $13,159 
Non-interest Expense:           
Salaries and employee benefits  $   17,848  $17,221 $18,230   $18,437 $17,733 $17,534 $17,299 
Occupancy expense of premises     3,130   3,162  3,473    3,061  3,086  3,173  3,489 
Equipment expenses     1,745   1,693  1,664    1,608  1,600  1,490  1,373 
Marketing     628   662  681    735  688  942  531 
Outside data services     1,349   1,355  1,363    1,331  1,329  1,102  1,261 
FDIC insurance     726   649  637    641  565  654  631 
Amortization of intangible assets     34   28  32    52  107  106  107 
Litigation expenses     -   -  -    (4,386) 155  162  200 
Professional fees     987   1,447  1,138    1,322  1,089  1,199  1,209 
Other real estate owned expenses     5   (5) 17    14  48  4  10 
Other expenses     2,874   4,659  5,082    4,181  3,230  3,111  3,134 
Total Non-interest Expense  $   29,326  $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)  Q3Q2Q1  Q4Q3Q2Q1
Balance Sheets at Quarter End:           
Residential mortgage loans  $   854,055  $820,618 $804,105   $796,358 $773,889 $744,195 $728,858 
Residential construction loans     144,998   142,710  138,221    129,281  139,492  137,134  130,321 
Commercial AD&C loans     302,522   285,585  261,204    255,980  239,160  223,103  203,731 
Commercial investor real estate loans     847,946   824,252  783,161    719,084  710,694  694,179  668,931 
Commercial owner occupied real estate loans     736,744   700,599  675,560    678,027  680,601  643,973  618,846 
Commercial business loans     444,129   451,711  451,239    465,765  423,855  409,795  385,452 
Leasing     -   -  -    -  19  21  36 
Consumer loans   450,113   447,149  447,198    450,875  444,729  436,465  428,531 
Total loans   3,780,507   3,672,624  3,560,688    3,495,370  3,412,439  3,288,865  3,164,706 
Allowance for loan losses   (43,942) (43,384) (41,766)   (40,895) (39,661) (38,713) (37,475)
Loans held for sale   15,822   13,490  27,806    15,457  10,418  19,445  13,899 
Investment securities   691,471   734,828  742,401    841,650  862,409  878,284  912,565 
Interest-earning assets   4,537,331   4,461,180  4,447,063    4,378,403  4,339,375  4,222,667  4,125,549 
Total assets   4,810,611   4,739,449  4,716,608    4,655,380  4,611,034  4,507,367  4,401,380 
Noninterest-bearing demand deposits   1,154,227   1,176,135  1,084,746    1,001,841  1,068,299  1,092,413  1,017,566 
Total deposits   3,537,157   3,510,141  3,412,308    3,263,730  3,275,668  3,247,346  3,109,892 
Customer repurchase agreements     124,205   117,887  121,043    109,145  121,378  111,817  101,640 
Total interest-bearing liabilities   3,087,135   2,996,893  3,073,605    3,091,034  2,973,747  2,851,750  2,818,966 
Total stockholders' equity   536,655   529,479  522,392    524,427  523,594  518,873  521,768 
Quarterly Average Balance Sheets:           
Residential mortgage loans  $   836,452  $811,705 $807,443   $781,015 $754,007 $734,382 $724,248 
Residential construction loans     147,602   142,854  134,708    133,812  134,448  137,216  132,456 
Commercial AD&C loans     287,836   272,090  261,687    247,612  227,545  218,341  206,105 
Commercial investor real estate loans     832,529   788,785  750,821    717,742  704,068  668,883  645,163 
Commercial owner occupied real estate loans     717,371   684,907  677,786    673,883  656,337  624,407  611,722 
Commercial business loans     446,123   453,459  460,903    424,510  413,300  398,510  383,111 
Leasing     -    -  -    17  19  28  44 
Consumer loans     450,171   449,594  451,075    448,439  441,740  434,011  425,434 
Total loans     3,718,084   3,603,394  3,544,423    3,427,030  3,331,464  3,215,778  3,128,283 
Loans held for sale     10,207   8,326  14,036    11,951  21,070  14,075  7,053 
Investment securities   709,527   739,132  810,593    840,276  869,461  898,237  925,683 
Interest-earning assets   4,477,438   4,394,879  4,411,796    4,320,674  4,261,939  4,162,963  4,097,648 
Total assets   4,747,020   4,664,343  4,685,747    4,594,025  4,537,142  4,438,670  4,372,988 
Noninterest-bearing demand deposits   1,131,739   1,082,762  1,021,471    1,058,215  1,063,500  1,023,042  986,688 
Total deposits   3,528,665   3,429,897  3,300,131    3,285,299  3,263,993  3,128,562  3,056,186 
Customer repurchase agreements     120,702   122,597  110,862    125,275  121,127  106,179  90,020 
Total interest-bearing liabilities   3,045,998   3,020,505  3,103,710    2,968,555  2,906,348  2,852,414  2,817,575 
Total stockholders' equity   530,241   521,387  524,309    521,786  518,619  516,940  521,346 
Financial Measures:           
Average equity to average assets   11.17% 11.18% 11.19%   11.36% 11.43% 11.65% 11.92%
Investment securities to earning assets   15.24% 16.47% 16.69%   19.22% 19.87% 20.80% 22.12%
Loans to earning assets   83.32% 82.32% 80.07%   79.83% 78.64% 77.89% 76.71%
Loans to assets   78.59% 77.49% 75.49%   75.08% 74.01% 72.97% 71.90%
Loans to deposits   106.88% 104.63% 104.35%   107.10% 104.18% 101.28% 101.76%
Capital Measures:           
Tier 1 leverage  (1)   10.25% 10.29% 10.23%   10.60% 10.65% 10.83% 11.00%
Tier 1 capital to risk-weighted assets  (1)   12.17% 12.42% 12.74%   13.13% 13.17% 13.54% 14.03%
Total regulatory capital to risk-weighted assets  (1)   13.29% 13.57% 13.86%   14.25% 14.27% 14.65% 15.14%
Common equity tier 1 capital to risk-weighted assets  (1)   11.41% 11.63% 11.79%   12.17% 12.20% 12.53% 12.99%
Book value per share  $   22.47  $22.18 $21.92   $21.58 $21.44 $21.12 $21.10 
Outstanding shares     23,886,651   23,874,650  23,827,305    24,295,971  24,424,944  24,562,471  24,733,868 
(1) Estimated ratio at September 30, 2016           
            

 

Sandy Spring Bancorp, Inc. and Subsidiaries               
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED             
                
   2016   2015  
(Dollars in thousands) September 30, June 30, March 31, December 31, September 30, June 30, March 31, 
Non-Performing Assets:               
Loans 90 days past due:               
Commercial business $163  $-  $-  $-  $-  $-  $-  
Commercial real estate:               
Commercial AD&C  -   -   -   -   -   -   -  
Commercial investor real estate  -   -   -   -   -   -   -  
Commercial owner occupied real estate  -   -   -   -   -   -   -  
Leasing  -   -   -   -   1   2   -  
Consumer  -   2   1   -   -   7   -  
Residential real estate:               
Residential mortgage  -   -   -   -   -   -   -  
Residential construction  -   -   -   -   -   -   -  
Total loans 90 days past due    163    2   1   -   1   9   -  
Non-accrual loans:               
Commercial business    4,140    4,263   3,741   3,696   3,881   3,285   4,166  
Commercial real estate:               
Commercial AD&C    137    137   147   194   194   194   1,363  
Commercial investor real estate    9,189    8,868   7,885   8,368   8,609   10,023   10,083  
Commercial owner occupied real estate    5,591    5,678   7,149   6,340   7,932   8,423   8,974  
Leasing    -    -   -   -   -   -   -  
Consumer    2,726    2,600   2,715   2,193   1,621   1,214   1,962  
Residential real estate:               
Residential mortgage    7,321    6,186   9,329   8,822   7,488   7,780   3,235  
Residential construction    199    202   412   418   770   780   788  
Total non-accrual loans    29,303    27,934   31,378   30,031   30,495   31,699   30,571  
Total restructured loans - accruing    2,512    3,420   4,716   4,467   6,419   5,620   5,446  
Total non-performing loans    31,978    31,356   36,095   34,498   36,915   37,328   36,017  
Other assets and real estate owned (OREO)    1,274    1,311   2,414   2,742   2,619   4,514   3,227  
Total non-performing assets $   33,252   $32,667  $38,509  $37,240  $39,534  $41,842  $39,244  
                
  For the quarter ended, 
  September 30, June 30, March 31, December 31, September 30, June 30, March 31, 
(Dollars in thousands)  2016   2016   2016   2015   2015   2015   2015  
Analysis of Non-accrual Loan Activity:               
Balance at beginning of period $   27,934   $31,378  $30,031  $30,495  $31,699  $30,571  $28,530  
Non-accrual balances transferred to OREO    (38)  -   -   (423)  (180)  (1,309)  (32) 
Non-accrual balances charged-off    (245)  (1,305)  (274)  (869)  (752)  (549)  (1,077) 
Net payments or draws    (525)  (4,810)  (914)  (3,084)  (1,846)  (2,970)  (1,067) 
Loans placed on non-accrual    2,486    2,671   2,535   3,912   1,574   5,956   4,217  
Non-accrual loans brought current    (309)  -   -   -   -   -   -  
Balance at end of period $   29,303   $27,934  $31,378  $30,031  $30,495  $31,699  $30,571  
                
Analysis of Allowance for Loan Losses:               
Balance at beginning of period $   43,384   $41,766  $40,895  $39,661  $38,713  $37,475  $37,802  
Provision for loan losses    781    2,957   1,236   1,850   1,706   1,218   597  
Less loans charged-off, net of recoveries:               
Commercial business    95    106   67   (128)  (25)  73   (89) 
Commercial real estate:               
Commercial AD&C    (22)  -   48   -   -   (547)  706  
Commercial investor real estate    (12)  (107)  192   (4)  (5)  85   (5) 
Commercial owner occupied real estate    (1)  (1)  (3)  725   104   (1)  212  
Leasing    -    -   -   4   -   -   -  
Consumer    145    364   54   (31)  348   395   43  
Residential real estate:               
Residential mortgage    24    989   15   80   342   (18)  65  
Residential construction    (6)  (12)  (8)  (30)  (6)  (7)  (8) 
Net charge-offs    223    1,339   365   616   758   (20)  924  
Balance at end of period $   43,942   $43,384  $41,766  $40,895  $39,661  $38,713  $37,475  
                
Asset Quality Ratios:               
Non-performing loans to total loans  0.85%  0.85%  1.01%  0.99%  1.08%  1.13%  1.14% 
Non-performing assets to total assets  0.69%  0.69%  0.82%  0.80%  0.86%  0.93%  0.89% 
Allowance for loan losses to loans  1.16%  1.18%  1.17%  1.17%  1.16%  1.18%  1.18% 
Allowance for loan losses to non-performing loans  137.41%  138.36%  115.72%  118.54%  107.44%  103.71%  104.05% 
Annualized net charge-offs to average loans  0.02%  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 September 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  $   836,452   $   7,208   3.45 %   $754,007  $6,346  3.37 %
Residential construction loans   147,602    1,341   3.62      134,448   1,240  3.66  
Total mortgage loans   984,054    8,549   3.47      888,455   7,586  3.41  
Commercial AD&C loans   287,836    3,398   4.70      227,545   2,602  4.54  
Commercial investor real estate loans   832,529    9,487   4.53      704,068   8,353  4.71  
Commercial owner occupied real estate loans   717,371    8,581   4.76      656,337   8,065  4.88  
Commercial business loans   446,123    4,863   4.34      413,300   4,600  4.42  
Leasing     -      -     -       19   -  -  
Total commercial loans   2,283,859    26,329   4.59      2,001,269   23,620  4.68  
Consumer loans   450,171    3,916   3.48      441,740   3,701  3.35  
Total loans (2)   3,718,084    38,794   4.16      3,331,464   34,907  4.16  
Loans held for sale   10,207    96   3.75      21,070   214  4.05  
Taxable securities   432,706    2,717   2.51      581,832   3,742  2.57  
Tax-exempt securities (3)   276,821    2,888   4.17      287,629   3,091  4.30  
Total investment securities   709,527    5,605   3.16      869,461   6,833  3.14  
Interest-bearing deposits with banks   38,773    49   0.51      39,472   25  0.25  
Federal funds sold   847      1   0.49      472   1  0.22  
Total interest-earning assets   4,477,438    44,545   3.96      4,261,939   41,980  3.92  
                    
Less:  allowance for loan losses   (43,498)          (39,090)      
Cash and due from banks   45,210            44,893       
Premises and equipment, net   53,162            52,233       
Other assets   214,708            217,167       
  Total assets  $   4,747,020           $4,537,142       
                    
Liabilities and Stockholders' Equity                   
Interest-bearing demand deposits  $   579,863    112   0.08%$534,568   105  0.08 %
Regular savings deposits   305,077      48   0.06      277,819   37  0.05  
Money market savings deposits   938,528    514   0.22      882,755   393  0.18  
Time deposits   573,458    1,454   1.01      505,351   1,097  0.86  
Total interest-bearing deposits   2,396,926    2,128   0.35      2,200,493   1,632  0.29  
Other borrowings   120,702      74   0.24      121,127   69  0.23  
Advances from FHLB   498,370      2,699   2.15      549,728   3,272  2.36  
Subordinated debentures   30,000      225   3.00      35,000   228  2.60  
Total interest-bearing liabilities   3,045,998    5,126   0.67      2,906,348   5,201  0.71  
                    
Noninterest-bearing demand deposits   1,131,739            1,063,500       
Other liabilities   39,042            48,675       
Stockholders' equity   530,241            518,619       
  Total liabilities and stockholders' equity  $   4,747,020           $4,537,142       
                    
Net interest income and spread    $   39,419   3.29 %  $36,779  3.21 %
Less: tax-equivalent adjustment       1,688            1,663     
Net interest income    $   37,731           $35,116     
                    
Interest income/earning assets      3.96 %    3.92 %
Interest expense/earning assets        0.46          0.49  
Net interest margin      3.50 %    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 $1.7 million and $1.7 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           
                   
   Nine Months Ended September 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  $   818,599   $   21,010   3.42 %  $737,655  $18,625  3.37 %
Residential construction loans   141,743    3,804   3.59     134,714   3,729  3.70  
Total mortgage loans   960,342    24,814   3.45     872,369   22,354  3.42  
Commercial AD&C loans   273,922    9,511   4.64     217,409   7,464  4.59  
Commercial investor real estate loans   790,864    27,087   4.57     672,920   23,703  4.71  
Commercial owner occupied real estate loans   693,442    24,946   4.81     630,985   23,266  4.93  
Commercial business loans   453,468    14,819   4.37     398,418   13,107  4.40  
Leasing     -      -     -      30   1  2.97  
Total commercial loans   2,211,696    76,363   4.61     1,919,762   67,541  4.70  
Consumer loans   450,280    11,691   3.49     433,788   10,807  3.35  
Total loans (2)   3,622,318    112,868   4.16     3,225,919   100,702  4.17  
Loans held for sale   10,854    294   3.61     14,118   422  3.98  
Taxable securities   470,987    9,073   2.57     605,719   11,464  2.52  
Tax-exempt securities (3)   281,938    8,912   4.21     291,868   9,396  4.29  
Total investment securities   752,925    17,985   3.19     897,587   20,860  3.10  
Interest-bearing deposits with banks   41,433    156   0.50     36,688   69  0.25  
Federal funds sold   688      3   0.48     473   1  0.22  
Total interest-earning assets   4,428,218    131,306   3.96     4,174,785   122,054  3.91  
                   
Less:  allowance for loan losses   (42,215)         (38,256)      
Cash and due from banks   46,255           46,067       
Premises and equipment, net   53,318           51,500       
Other assets   214,284           216,105       
Total assets  $   4,699,860          $4,450,201       
                   
Liabilities and Stockholders' Equity                  
Interest-bearing demand deposits  $   578,473    335   0.08 %  $528,683   312  0.08 %
Regular savings deposits   297,944      137   0.06     275,433   108  0.05  
Money market savings deposits   914,499    1,446   0.21     849,469   983  0.15  
Time deposits   550,195    4,088   0.99     472,065   2,790  0.79  
Total interest-bearing deposits   2,341,111    6,006   0.34     2,125,650   4,193  0.26  
Other borrowings   118,105      212   0.24     105,945   179  0.23  
Advances from FHLB   565,493      8,812   2.08     592,509   9,774  2.21  
Subordinated debentures   31,989      698   2.91     35,000   670  2.55  
Total interest-bearing liabilities   3,056,698    15,728   0.69     2,859,104   14,816  0.69  
                   
Noninterest-bearing demand deposits   1,078,851           1,024,692       
Other liabilities   38,981           47,447       
Stockholders' equity   525,330           518,958       
Total liabilities and stockholders' equity  $   4,699,860          $4,450,201       
                   
Net interest income and spread    $   115,578   3.27  %    $107,238  3.22 %
Less: tax-equivalent adjustment       4,993           4,816     
Net interest income    $   110,585          $102,422     
                   
Interest income/earning assets      3.96  %      3.91 %
Interest expense/earning assets        0.47         0.48  
Net interest margin      3.49  %      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 $5.0 million and $4.8 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.
                   
For additional information or questions, please contact: Daniel J. Schrider, President & Chief Executive Officer, or Philip J. Mantua, E.V.P. & Chief Financial Officer Sandy Spring Bancorp 17801 Georgia Avenue Olney, Maryland 20832 1-800-399-5919  Email:  DSchrider@sandyspringbank.com  PMantua@sandyspringbank.com Web site: www.sandyspringbank.com Media Contact: Jen Schell 301-570-8331 jschell@sandyspringbank.com

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