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Sandy Spring Bancorp Reports Record Quarterly Earnings of $56.7 Million

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Fourth Quarter Earnings Increase 27% over Prior Quarter and Drive Annual Net Income to $97.0 Million

OLNEY, Md., Jan. 21, 2021 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, today reported record net income of $56.7 million ($1.19 per diluted common share) for the fourth quarter of 2020. The current quarter's result compares to net income of $28.5 million ($0.80 per diluted common share) for the fourth quarter of 2019 and net income of $44.6 million ($0.94 per diluted common share) for the third quarter of 2020.

Operating earnings for the current quarter, which exclude the impact of the provision for credit losses, the effects from the Paycheck Protection Program ("PPP" or "PPP program") and merger and acquisition expense, each on an after-tax basis, were $48.2 million ($1.02 per diluted common share), compared to $30.4 million ($0.85 per diluted common share) for the quarter ended December 31, 2019 and $45.8 million ($0.97 per diluted common share) for the quarter ended September 30, 2020.

The provision for credit losses for the current quarter was a credit of $4.5 million as compared to a charge of $7.0 million for the third quarter of 2020. The decrease in the provision for credit losses compared to the prior quarter is mainly the result of changes in macroeconomic factors, primarily the reduction in projected near term business bankruptcies as indicated in the most recent economic forecast.

"In 2020 we completed a significant integration of Revere Bank while navigating a global pandemic and helping our clients through unprecedented challenges. This was a massive undertaking, especially in a remote work environment, but our newly combined institutions were unified in our efforts to serve our clients and to keep people safe," said Daniel J. Schrider, President and Chief Executive Officer. "Given our strong operating results and the resilience we demonstrated throughout the year, we remain very optimistic about our future."

Fourth Quarter Highlights:

  • Total assets at December 31, 2020, grew 48% to $12.8 billion compared to December 31, 2019, primarily as a result of the Revere Bank ("Revere") acquisition and participation in the PPP. During the past year, loans and deposits grew by 55% and 56%, respectively. On the date of acquisition, Revere's loans and deposits were $2.5 billion and $2.3 billion, respectively. The Company originated $1.1 billion in commercial business loans through its participation in the PPP program.

  • The net interest margin was 3.38% for the fourth quarter of 2020, compared to 3.38% for the same quarter of 2019, and 3.24% for the third quarter of 2020. Excluding the impact of the amortization of the fair value marks derived from acquisitions, the current quarter's net interest margin would have been 3.31%, compared to 3.34% for fourth quarter of 2019, and 3.18% for the third quarter of 2020.

  • The provision for credit losses was a credit of $4.5 million for the current quarter. The credit to the provision for the current quarter as compared to the prior quarter's provision charge of $7.0 million is primarily the result of the reduction in forecasted business bankruptcies impacted by governmental support programs aimed at individuals and small businesses.

  • Non-interest income for the current quarter increased by 68% or $13.0 million compared to the prior year quarter as a result of a 248% increase in income from mortgage banking activities and growth of 28% in wealth management income as a result of the acquisition of Rembert Pendleton Jackson ("RPJ") in the first quarter of the current year.

  • Non-interest expense increased $15.6 million or 34% for the fourth quarter of 2020 compared to the prior year quarter. This increase was driven by the impact of the acquisitions of Revere and RPJ, which increased compensation and operational costs, in addition to intangible asset amortization. FDIC insurance cost increased from the same period of the prior year as a result of the effect of the assessment credit received during the prior year quarter.

  • Return on average assets ("ROA") for the quarter ended December 31, 2020 was 1.78% and return on average tangible common equity ("ROTCE") was 22.24%. This compares to ROA of 1.32% and ROTCE of 14.39% for the prior year. The non-GAAP efficiency ratio for the fourth quarter of 2020 was 45.09% compared to 51.98% for the fourth quarter of 2019.

Branch Rationalization

The Company announced its intention to close three branch locations in 2021. The affected branches are located in Northern Virginia (2) and Montgomery County (1) Maryland. Customer accounts will be consolidated into nearby locations. The changes come into effect as a part of the Company's continuing analysis of its branch network, including usage, proximity to other Sandy Spring Bank offices and the needs of the Company's customers. The branch closures are expected to be completed in the second quarter of 2021.

Response to COVID-19

Protecting the health and well-being of its employees and clients in addition to assisting clients who have been impacted by the pandemic remains the focus of the Company. A significant majority of non-branch employees continue to work remotely and clients are served at branches primarily through drive-thru facilities and limited lobby access. Area jurisdictions continue to monitor and modify their respective guidelines based on the metrics of the pandemic. Currently, the Company is maintaining the first phase of its return to work plan.

During the current quarter, the Company began accepting digital PPP forgiveness applications. The Company has paused extending invitations to its forgiveness application portal pending updates to reflect recent amendments to the PPP program and to focus on accepting loan applications for both first and second draw loans under the restarted program.

During 2020, the Company has granted payment modifications/deferrals on 2,575 loans with and aggregate balance of $2.1 billion of which 203 loans with an aggregate balance of $217 million remain in deferral status. Currently, the vast majority of loans that had been granted modifications/deferrals have returned to their original payment plans without a significant impact on payment delinquencies.

For additional information about the Company's response to the pandemic, segments of the Company's loan portfolio exposed to industries adversely impacted by the pandemic, and our response to clients who sought loan payment deferral, we have provided supplemental materials available at the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com.

Balance Sheet and Credit Quality

Total assets grew to $12.8 billion at December 31, 2020, as compared to $8.6 billion at December 31, 2019. Year-over-year asset growth was primarily the result of the acquisition of Revere during the year, as well as the Company's participation in the PPP program. During this period, total loans grew by 55% to $10.4 billion at December 31, 2020, compared to $6.7 billion at December 31, 2019. Excluding PPP loans, total loans grew 39% to $9.3 billion at December 31, 2020 as compared to the prior year quarter. The acquisition of Revere drove the majority of the increase in commercial loans, which, excluding PPP loans, grew 52% or $2.6 billion. The residential mortgage loan portfolio remained stable year-over-year as the vast majority of loan originations during the past year were sold in the secondary market. Consumer loan growth during the year was 11%, also a result of the acquisition. Deposit growth was 56% during the past twelve months, as noninterest-bearing deposits experienced growth of 76% and interest-bearing deposits grew 47%. This growth was driven primarily by the Revere acquisition and, to a lesser extent, the PPP program.

Tangible common equity increased to $1.0 billion or 8.46% of tangible assets at December 31, 2020 compared to $782.3 million or 9.46% at December 31, 2019, as a result of the equity issuance in the Revere acquisition. The year-over-year change in tangible common equity also reflects the effects of the repurchase of $50 million of common stock and the increase in intangible assets and goodwill associated with the two acquisitions completed during the past twelve months. Excluding the impact of the PPP program from tangible assets at December 31, 2020, the tangible common equity ratio would be 9.25%.   At December 31, 2020, the Company had a total risk-based capital ratio of 13.93%, a common equity tier 1 risk-based capital ratio of 10.58%, a tier 1 risk-based capital ratio of 10.58% and a tier 1 leverage ratio of 8.92%.

The level of non-performing loans to total loans increased to 1.11% at December 31, 2020, compared to 0.62% at December 31, 2019, and 0.72% at September 30, 2020. At December 31, 2020, non-performing loans totaled $115.5 million, compared to $41.3 million at December 31, 2019, and $74.7 million at September 30, 2020. Non-performing loans include non-accrual loans, accruing loans 90 days or more past due and restructured loans. The year-over-year growth in non-performing loans was driven by three major components: loans placed in non-accrual status, acquired Revere non-accrual loans, and loans previously accounted for as purchased credit impaired loans that have been designated as non-accrual loans as a result of the Company's adoption of the accounting standard for expected credit losses at the beginning of the year. Loans placed on non-accrual during the current quarter amounted to $54.7 million compared to $5.4 million for the prior year quarter and $0.9 million for the third quarter of 2020. Loans placed on non-accrual status during the current quarter relate primarily to a limited number of large borrowing relationships within the hospitality sector. These large relationships are collateral dependent and required no individual reserves due to sufficient values of the underlying collateral.

The Company recorded net charge-offs of $0.5 million for the fourth quarter of 2020, as compared to net charge-offs of $0.5 million and $0.2 million for the fourth quarter of 2019 and third quarter of 2020, respectively.

At December 31, 2020, the allowance for credit losses was $165.4 million or 1.59% of outstanding loans and 143% of non-performing loans, compared to $170.3 million or 1.65% of outstanding loans and 228% of non-performing loans at September 30, 2020.

Income Statement Review

Quarterly Results

Net interest income for the fourth quarter of 2020 increased 52% compared to the fourth quarter of 2019, driven primarily by the acquisition of Revere. The PPP program and its associated funding contributed a net of $6.9 million to net interest income for the quarter. The net interest margin remained unchanged at 3.38% for the fourth quarter of 2020 as compared to the same quarter of the prior year. Excluding the net $2.3 million impact of the amortization of the fair value marks derived from acquisitions, the net interest margin for the current quarter would have been 3.31%. This compares to the adjusted net interest margin of 3.34% for the fourth quarter of 2019.

The provision for credit losses was a credit of $4.5 million for the fourth quarter of 2020, compared to a charge of $1.7 million for the fourth quarter of 2019, and $7.0 million for the third quarter of 2020. The credit in the current quarter's provision for credit losses, compared to the provision charge recorded in the prior quarter, is primarily the result of an improvement in the forecasted business bankruptcies indicated in the most recent economic forecast.

Non-interest income increased $13.0 million or 68% during the current quarter compared to the same quarter of the prior year. As a result of the significant decline in lending rates, mortgage origination activity for new and refinanced mortgages resulted in income from mortgage banking activities increasing by $10.3 million during the current quarter compared to the prior year quarter. In addition, wealth management income increased $1.8 million as a result of the first quarter acquisition of RPJ. The growth of these two categories in non-interest income more than compensated for the decline in service fee income compared to the prior year quarter.

Non-interest expense increased 34% or $15.6 million compared to the prior year quarter. Excluding the impact of merger and acquisition expense, non-interest expense grew 37% year-over-year, primarily as a result of the operational costs of the Revere and RPJ acquisitions, increased compensation expense related to staffing increases and incentive compensation, in addition to an increase in FDIC insurance and the amortization of intangible assets.

The non-GAAP efficiency ratio was 45.09% for the current quarter as compared to 51.98% for the fourth quarter of 2019, and 45.27% for the third quarter of 2020. The decrease in the efficiency ratio (reflecting an increase in efficiency) from the fourth quarter of last year to the current year was the result of the $47.2 million growth in non-GAAP revenue outpacing the $15.4 million growth in non-GAAP non-interest expense.

Year to Date Results

The Company recorded net income of $97.0 million for the year ended December 31, 2020 compared to $116.4 million for the prior year, representing a 17% decrease. The net earnings for the current year included the effects of the initial implementation of the accounting standard for current expected credit losses, the impact of the pandemic on the provision for credit losses, which resulted in a significant provision in the second quarter, and the impact of the acquisitions of RPJ and Revere. Pre-tax, pre-provision, pre-merger income was $235.3 million for the year ended December 31, 2020 compared to $158.9 million for the prior year.

Net interest income for the year ended December 31, 2020 increased 37% or $97.9 million compared to the prior year. This increase was driven primarily by the acquisition of Revere in the second quarter of 2020. Additionally, the income generated by the PPP program, net of its associated funding costs, contributed a net of $19.0 million to the growth in net interest income year-over-year. The net interest margin declined to 3.35% for the year ended December 31, 2020, compared to 3.51% for the prior year. Excluding the net $12.7 million impact of the amortization of the fair value marks derived from acquisitions, the net interest margin for the current year would have been 3.23%. The amortization of the fair value marks recognized during the current year included a benefit realized from the accelerated amortization of the $5.9 million purchase premium on acquired FHLB advances as a result of the prepayment of those borrowings. The net interest margin for 2019, excluding the amortization of fair value marks, would have been 3.46%.

The provision for credit losses for the full year of 2020 amounted to $85.7 million as compared to $4.7 million for the same period in 2019. The provision for credit losses under the CECL standard reflects the combined results of the impact of the deteriorated economic forecasts during the year ($44.1 million) and the initial allowance on acquired Revere non-purchased credit deteriorated loans ($17.5 million). The change in the portfolio mix and various qualitative adjustments resulted in the remainder of provision growth for the period.

Non-interest income increased 44% to $102.7 million for 2020 compared to $71.3 million for 2019. During the current year income from mortgage banking activities increased $25.3 million as a result of the high levels of new mortgage and refinancing activity resulting from historically low mortgage lending rates, and wealth management income increased $7.9 million as a result of the first quarter acquisition of RPJ. These increases more than exceeded the declines in deposit service fees and BOLI income.

Non-interest expense increased 43% to $255.8 million for 2020, compared to $179.1 million for 2019. Merger and acquisition expense accounted for $23.9 million of the growth of non-interest expense. The non-interest expense growth also included $5.9 million in prepayment penalties resulting from the liquidation of acquired FHLB borrowings. Excluding the impact of these items results in a year-over-year growth rate of 26%. This growth rate was driven by operational and compensation costs associated with the Revere and RPJ acquisitions, increased incentive expense related to the significant level of mortgage loan originations, increased intangible asset amortization, higher FDIC insurance premiums and annual employee merit increases.

The effective tax rate for the year ended December 31, 2020 was 22.1%, compared to 23.8% for the same period in 2019. This decrease was the result of the recent changes to tax laws that expanded the time permitted to utilize previous net operating losses. The Company applied this change to the 2018 acquisition of WashingtonFirst Bankshares, Inc. to realize a tax benefit of $1.8 million for the current year.

The non-GAAP efficiency ratio for the current year was 46.53% compared to 51.52% for the prior year. The improvement in the current year's efficiency ratio compared to the prior year was the result of the growth in non-GAAP revenue, which outpaced the growth in non-GAAP non-interest expense.

Explanation of Non-GAAP Financial Measures

This news release contains financial information and performance measures determined by methods other than in accordance with generally accepted accounting principles in the United States ("GAAP"). The Company's management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. Non-GAAP measures used in this release consist of the following:

  • Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets.
  • The non-GAAP efficiency ratio is non-GAAP in that it excludes amortization of intangible assets, loss on FHLB redemption, merger and acquisition expense and securities gains and includes tax-equivalent income.
  • Operating earnings - and the related measures of operating earnings per share, operating return on average assets and operating return on average tangible common equity - reflect net income exclusive of the provision for credit losses, merger and acquisition expense and the income and expense associated with the PPP program, in each case net of tax.

These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Please refer to the non-GAAP Reconciliation tables included with this release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

Conference Call

The Company's management will host a conference call to discuss its fourth quarter results today at 2:00 p.m. (ET). A live Webcast of the conference call is available through the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com. Participants may call 1-866-235-9910. A password is not necessary. Visitors to the Website are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available on the website until 9:00 am (ET) February 4, 2021. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10150939.

About Sandy Spring Bancorp, Inc.

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank, a premier community bank in the Greater Washington, D.C. region. With over 60 locations, the bank offers a broad range of commercial and retail banking, mortgage, private banking, and trust  services  throughout  Maryland,  Northern  Virginia,  and  Washington,  D.C.  Through  its  subsidiaries,  Rembert Pendleton  Jackson, Sandy Spring Insurance  Corporation  and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services.

For additional information or questions, please contact:

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

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

Forward-Looking Statements

Sandy Spring Bancorp's forward-looking statements are subject to the following principal risks and uncertainties: risks, uncertainties and other factors relating to the COVID-19 pandemic, including the length of time that the pandemic continues, the imposition or re-imposition of stay-at-home orders and restrictions on business activities or travel; the effect of the pandemic on the general economy and on the businesses of our borrowers and their ability to make payments on their obligations; the remedial actions and stimulus measures adopted by federal, state and local governments; the inability of employees to work due to illness, quarantine, or government mandates; 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; the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period; 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, 2019, 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 December 31,   % Change   Year Ended December 31,   % Change
(Dollars in thousands, except per share data)     2020       2019         2020       2019    
Results of operations:                        
Net interest income   $  99,827     65,583     52 %   $  363,159     265,308     37 %
Provision/ (credit) for credit losses     (4,489 )     1,655     n/m       85,669       4,684     n/m  
Non-interest income     32,234       19,224     68       102,716       71,322     44  
Non-interest expense     61,661       46,081     34       255,782       179,085     43  
Income before income tax expense     74,889       37,071     102       124,424       152,861     (19 )
Net income     56,662       28,457     99       96,953       116,433     (17 )
                         
Net income attributable to common shareholders   $  56,194     28,273     99     $  96,170     115,671     (17 )
Pre-tax pre-provision pre-merger income (1)   $  70,403     39,674     77     $  235,267     158,857     48  
                         
Return on average assets     1.78 %     1.32 %         0.82 %     1.39 %    
Return on average common equity     15.72 %     9.93 %         7.24 %     10.51 %    
Return on average tangible common equity     22.24 %     14.39 %         10.38 %     15.33 %    
Net interest margin     3.38 %     3.38 %         3.35 %     3.51 %    
Efficiency ratio - GAAP basis (2)     46.69 %     54.34 %         54.90 %     53.20 %    
Efficiency ratio - Non-GAAP basis (2)     45.09 %     51.98 %         46.53 %     51.52 %    
                         
Per share data:                        
Basic net income per common share   $ 1.19     $ 0.80     49 %   $ 2.19     $ 3.25     (33 )%
Diluted net income per common share   $ 1.19     $ 0.80     49     $ 2.18     $ 3.25     (33 )
Weighted average diluted common shares     47,284,808       35,543,254     33       44,132,251       35,617,924     24  
Dividends declared per share   $ 0.30     $ 0.30     -     $ 1.20     $ 1.18     2  
Book value per common share   $ 31.24     $ 32.40     (4 )   $ 31.24     $ 32.40     (4 )
Tangible book value per common share (1)   $ 22.28     $ 22.37     -     $ 22.28     $ 22.37     -  
Outstanding common shares     47,056,777       34,970,370     35       47,056,777       34,970,370     35  
                         
Financial condition at period-end:                        
Investment securities   $  1,413,781     1,125,136     26 %   $  1,413,781     1,125,136     26 %
Loans     10,400,509       6,705,232     55       10,400,509       6,705,232     55  
Interest-earning assets     12,095,936       7,947,703     52       12,095,936       7,947,703     52  
Assets     12,798,429       8,629,002     48       12,798,429       8,629,002     48  
Deposits     10,033,069       6,440,319     56       10,033,069       6,440,319     56  
Interest-bearing liabilities     7,856,842       5,485,055     43       7,856,842       5,485,055     43  
Stockholders' equity     1,469,955       1,132,974     30       1,469,955       1,132,974     30  
                         
Capital ratios:                        
Tier 1 leverage (3)     8.92 %     9.70 %         8.92 %     9.70 %    
Common equity tier 1 capital to risk-weighted assets (3)     10.58 %     11.06 %         10.58 %     11.06 %    
Tier 1 capital to risk-weighted assets (3)     10.58 %     11.21 %         10.58 %     11.21 %    
Total regulatory capital to risk-weighted assets (3)     13.93 %     14.85 %         13.93 %     14.85 %    
Tangible common equity to tangible assets (4)     8.46 %     9.46 %         8.46 %     9.46 %    
Average equity to average assets     11.34 %     13.31 %         11.38 %     13.25 %    
                         
Credit quality ratios:                        
Allowance for credit losses to loans     1.59 %     0.84 %         1.59 %     0.84 %    
Non-performing loans to total loans     1.11 %     0.62 %         1.11 %     0.62 %    
Non-performing assets to total assets     0.91 %     0.50 %         0.91 %     0.50 %    
Allowance for credit losses to non-performing loans     143.23 %     136.02 %         143.23 %     136.02 %    
Annualized net charge-offs to average loans (5)     0.02 %     0.03 %         0.01 %     0.03 %    
                         
n/m - not meaningful                        
(1) Represents a Non-GAAP measure.
(2) The efficiency ratio - GAAP basis is non-interest expense divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, loss on FHLB redemption, and merger and acquisition expense from non-interest expense; securities gains from non-interest income and adds the tax- equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
(3) Estimated ratio at December 31, 2020.
(4) 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.
(5) Calculation utilizes average loans, excluding residential mortgage loans held-for-sale.


Sandy Spring Bancorp, Inc. and Subsidiaries                
RECONCILIATION TABLE - UNAUDITED                
                 
    Three Months Ended December 31,   Year Ended December 31,
(Dollars in thousands)     2020       2019       2020       2019  
Pre-tax pre-provision pre-merger income:                
Net income   $ 56,662     $ 28,457     $ 96,953     $ 116,433  
Plus non-GAAP adjustments:                
Merger and acquisition expense     3       948       25,174       1,312  
Income tax expense     18,227       8,614       27,471       36,428  
Provision/ (credit) for credit losses     (4,489 )     1,655       85,669       4,684  
Pre-tax pre-provision pre-merger income   $ 70,403     $ 39,674     $ 235,267     $ 158,857  
                 
Efficiency ratio - GAAP basis:                
Non-interest expense   $ 61,661     $ 46,081     $ 255,782     $ 179,085  
                 
Net interest income plus non-interest income   $ 132,061     $ 84,807     $ 465,875     $ 336,630  
                 
Efficiency ratio - GAAP basis     46.69 %     54.34 %     54.90 %     53.20 %
                 
Efficiency ratio - Non-GAAP basis:                
Non-interest expense   $ 61,661     $ 46,081     $ 255,782     $ 179,085  
Less non-GAAP adjustments:                
Amortization of intangible assets     1,655       481       6,221       1,946  
Loss on FHLB redemption     -       -       5,928       -  
Merger and acquisition expense     3       948       25,174       1,312  
Non-interest expense - as adjusted   $ 60,003     $ 44,652     $ 218,459     $ 175,827  
                 
Net interest income plus non-interest income   $ 132,061     $ 84,807     $ 465,875     $ 336,630  
Plus non-GAAP adjustment:                
Tax-equivalent income     1,052       1,149       4,128       4,746  
Less non-GAAP adjustment:                
Investment securities gains     35       57       467       77  
Net interest income plus non-interest income - as adjusted   $ 133,078     $ 85,899     $ 469,536     $ 341,299  
                 
Efficiency ratio - Non-GAAP basis     45.09 %     51.98 %     46.53 %     51.52 %
                 
Tangible common equity ratio:                
Total stockholders' equity   $ 1,469,955     $ 1,132,974     $ 1,469,955     $ 1,132,974  
Accumulated other comprehensive (income)/ loss     (18,705 )     4,332       (18,705 )     4,332  
Goodwill     (370,223 )     (347,149 )     (370,223 )     (347,149 )
Other intangible assets, net     (32,521 )     (7,841 )     (32,521 )     (7,841 )
Tangible common equity   $ 1,048,506     $ 782,316     $ 1,048,506     $ 782,316  
                 
Total assets   $ 12,798,429     $ 8,629,002     $ 12,798,429     $ 8,629,002  
Goodwill     (370,223 )     (347,149 )     (370,223 )     (347,149 )
Other intangible assets, net     (32,521 )     (7,841 )     (32,521 )     (7,841 )
Tangible assets   $ 12,395,685     $ 8,274,012     $ 12,395,685     $ 8,274,012  
                 
Tangible common equity ratio     8.46 %     9.46 %     8.46 %     9.46 %
                 
Outstanding common shares     47,056,777       34,970,370       47,056,777       34,970,370  
Tangible book value per common share   $ 22.28     $ 22.37     $ 22.28     $ 22.37  



Sandy Spring Bancorp, Inc. and Subsidiaries                
RECONCILIATION TABLE - UNAUDITED (CONTINUED)                
OPERATING EARNINGS - METRICS                
                 
    Three Months Ended December 31,   Year Ended December 31,
(Dollars in thousands)     2020       2019       2020       2019  
Operating earnings (non-GAAP):                
Net income   $  56,662     28,457     $  96,953     116,433  
Plus non-GAAP adjustments:                
Provision/ (credit) for credit losses - net of tax     (3,343 )     1,205       63,789       3,460  
Merger and acquisition expense - net of tax     3       698       18,745       969  
PPPLF funding expense - net of tax     122       -       829       -  
Less non-GAAP adjustment:                
PPP interest income and net deferred fee - net of tax     5,239       -       14,948       -  
Operating earnings (Non-GAAP)    $ 48,205     30,360     $  165,368     120,862  
                 
Operating earnings per common share (non-GAAP):                
Weighted average common shares outstanding - diluted (GAAP)     47,284,808       35,543,254       44,132,251       35,617,924  
                 
Earnings per diluted common share (GAAP)   $ 1.19     $ 0.80     $ 2.18     $ 3.25  
Operating earnings per diluted common share (non-GAAP)   $ 1.02     $ 0.85     $ 3.75     $ 3.39  
                 
Operating return on average assets (non-GAAP):                
Average assets (GAAP)   $  12,645,329     8,542,837     $  11,775,096     8,367,139  
Average PPP loans     (1,060,995 )     -       (710,264 )     -  
Adjusted average assets (non-GAAP)   $  11,584,334     8,542,837     $  11,064,832     8,367,139  
                 
Return on average assets (GAAP)     1.78 %     1.32 %     0.82 %     1.39 %
Operating return on adjusted average assets (non-GAAP)     1.66 %     1.41 %     1.49 %     1.44 %
                 
Operating return on average tangible common equity (non-GAAP):                
Average total stockholders' equity (GAAP)   $  1,433,900     1,136,824     $  1,339,491     1,108,310  
Average accumulated other comprehensive (income)/ loss     (16,398 )     3,005       (11,326 )     7,069  
Average goodwill     (370,419 )     (347,149 )     (365,543 )     (347,149 )
Average other intangible assets, net     (33,675 )     (8,146 )     (28,357 )     (8,873 )
Average tangible common equity (non-GAAP)   $  1,013,408     784,534     $  934,265     759,357  
                 
Return on average tangible common equity (GAAP)     22.24 %     14.39 %     10.38 %     15.33 %
Operating return on average tangible common equity (non-GAAP)     18.92 %     15.35 %     17.70 %     15.92 %


Sandy Spring Bancorp, Inc. and Subsidiaries        
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED        
         
(Dollars in thousands)   December 31, 2020   December 31, 2019
Assets        
Cash and due from banks   $ 93,651     $ 82,469  
Federal funds sold     291       208  
Interest-bearing deposits with banks     203,061       63,426  
Cash and cash equivalents     297,003       146,103  
Residential mortgage loans held for sale (at fair value)     78,294       53,701  
Investments available-for-sale (at fair value)     1,348,021       1,073,333  
Other equity securities     65,760       51,803  
Total loans     10,400,509       6,705,232  
Less: allowance for credit losses     (165,367 )     (56,132 )
Net loans     10,235,142       6,649,100  
Premises and equipment, net     57,720       58,615  
Other real estate owned     1,455       1,482  
Accrued interest receivable     46,431       23,282  
Goodwill     370,223       347,149  
Other intangible assets, net     32,521       7,841  
Other assets     265,859       216,593  
Total assets   $ 12,798,429     $ 8,629,002  
         
Liabilities        
Noninterest-bearing deposits   $ 3,325,547     $ 1,892,052  
Interest-bearing deposits     6,707,522       4,548,267  
Total deposits     10,033,069       6,440,319  
Securities sold under retail repurchase agreements and federal funds purchased     543,157       213,605  
Advances from FHLB     379,075       513,777  
Subordinated debentures     227,088       209,406  
Total borrowings     1,149,320       936,788  
Accrued interest payable and other liabilities     146,085       118,921  
Total liabilities     11,328,474       7,496,028  
         
Stockholders' equity        
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 47,056,777 and 34,970,370 at December 31, 2020 and December 31, 2019, respectively     47,057       34,970  
Additional paid in capital     846,922       586,622  
Retained earnings     557,271       515,714  
Accumulated other comprehensive income/ (loss)     18,705       (4,332 )
Total stockholders' equity     1,469,955       1,132,974  
Total liabilities and stockholders' equity   $ 12,798,429     $ 8,629,002  
         



Sandy Spring Bancorp, Inc. and Subsidiaries        
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED            
                 
    Three Months Ended December 31,   Year Ended December 31,
(Dollars in thousands, except per share data)     2020       2019     2020     2019
Interest income:                
Interest and fees on loans   $ 104,756     $ 77,522   $ 393,477   $ 316,550
Interest on loans held for sale     592       462     1,686     1,607
Interest on deposits with banks     27       724     446     2,129
Interest and dividends on investment securities:                
Taxable for federal income taxes     4,866       5,437     22,136     21,739
Exempt from federal income taxes     1,550       1,243     5,814     5,834
Interest on federal funds sold     -       2     1     10
Total interest income     111,791       85,390     423,560     347,869
Interest Expense:                
Interest on deposits     6,410       14,723     41,651     61,681
Interest on retail repurchase agreements and federal funds purchased     234       216     1,965     1,161
Interest on advances from FHLB     2,730       3,189     6,593     16,578
Interest on subordinated debt     2,590       1,679     10,192     3,141
Total interest expense     11,964       19,807     60,401     82,561
Net interest income     99,827       65,583     363,159     265,308
Provision/ (credit) for credit losses     (4,489 )     1,655     85,669     4,684
Net interest income after provision/ (credit) for credit losses     104,316       63,928     277,490     260,624
Non-interest income:                
Investment securities gains     35       57     467     77
Service charges on deposit accounts     1,917       2,427     7,066     9,692
Mortgage banking activities     14,491       4,170     40,058     14,711
Wealth management income     8,215       6,401     30,570     22,669
Insurance agency commissions     1,356       1,331     6,795     6,612
Income from bank owned life insurance     705       660     2,867     3,165
Bank card fees     1,570       1,435     5,672     5,616
Other income     3,945       2,743     9,221     8,780
Total non-interest income     32,234       19,224     102,716     71,322
Non-interest expense:                
Salaries and employee benefits     36,080       26,251     134,471     103,950
Occupancy expense of premises     5,236       4,663     21,383     19,470
Equipment expenses     3,121       2,791     12,224     10,720
Marketing     1,058       1,085     4,281     4,456
Outside data services     2,394       1,854     8,759     7,567
FDIC insurance     1,527       123     4,727     2,260
Amortization of intangible assets     1,655       481     6,221     1,946
Merger and acquisition expense     3       948     25,174     1,312
Professional fees and services     2,473       2,553     7,939     6,978
Other expenses     8,114       5,332     30,603     20,426
Total non-interest expense     61,661       46,081     255,782     179,085
Income before income tax expense     74,889       37,071     124,424     152,861
Income tax expense     18,227       8,614     27,471     36,428
Net income   $ 56,662     $ 28,457   $ 96,953   $ 116,433
                 
Net income per share amounts:                
Basic net income per common share   $ 1.19     $ 0.80   $ 2.19   $ 3.25
Diluted net income per common share   $ 1.19     $ 0.80   $ 2.18   $ 3.25
Dividends declared per share   $ 0.30     $ 0.30   $ 1.20   $ 1.18



Sandy Spring Bancorp, Inc. and Subsidiaries              
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED                
                                 
      2020       2019  
(Dollars in thousands, except per share data)   Q4   Q3   Q2   Q1   Q4   Q3   Q2   Q1
Profitability for the quarter:                                
Tax-equivalent interest income   $ 112,843     $ 113,627     $ 116,252     $ 84,966     $ 86,539     $ 88,229     $ 88,423     $ 89,424  
Interest expense     11,964       15,500       13,413       19,524       19,807       20,292       21,029       21,433  
Tax-equivalent net interest income     100,879       98,127       102,839       65,442       66,732       67,937       67,394       67,991  
Tax-equivalent adjustment     1,052       643       1,325       1,108       1,149       1,147       1,209       1,241  
Provision/ (credit) for credit losses     (4,489 )     7,003       58,686       24,469       1,655       1,524       1,633       (128 )
Non-interest income     32,234       29,390       22,924       18,168       19,224       18,573       16,556       16,969  
Non-interest expense     61,661       60,937       85,438       47,746       46,081       44,925       43,887       44,192  
Income/ (loss) before income tax expense/ (benefit)     74,889       58,934       (19,686 )     10,287       37,071       38,914       37,221       39,655  
Income tax expense/ (benefit)     18,227       14,292       (5,348 )     300       8,614       9,531       8,945       9,338  
Net income/ (loss)   $ 56,662     $ 44,642     $ (14,338 )   $ 9,987     $ 28,457     $ 29,383     $ 28,276     $ 30,317  
Financial performance:                                
Pre-tax pre-provision pre-merger income   $ 70,403     $ 67,200     $ 61,454     $ 36,210     $ 39,674     $ 40,802     $ 38,854     $ 39,527  
Return on average assets     1.78 %     1.38 %     (0.45 )%     0.46 %     1.32 %     1.39 %     1.37 %     1.49 %
Return on average common equity     15.72 %     12.67 %     (4.15 )%     3.55 %     9.93 %     10.38 %     10.32 %     11.46 %
Return on average tangible common equity     22.24 %     18.16 %     (5.80 )%     5.36 %     14.39 %     15.13 %     15.10 %     16.82 %
Net interest margin     3.38 %     3.24 %     3.47 %     3.29 %     3.38 %     3.51 %     3.54 %     3.60 %
Efficiency ratio - GAAP basis (1)     46.69 %     48.03 %     68.66 %     57.87 %     54.34 %     52.63 %     53.04 %     52.79 %
Efficiency ratio - Non-GAAP basis (1)     45.09 %     45.27 %     43.85 %     54.76 %     51.98 %     50.95 %     51.71 %     51.44 %
Per share data:                        
Net income/ (loss) attributable to common shareholders   $ 56,194     $ 44,268     $ (14,458 )   $ 9,919     $ 28,274     $ 29,196     $ 28,065     $ 30,120  
Basic net income/ (loss) per common share   $ 1.19     $ 0.94     $ (0.31 )   $ 0.29     $ 0.80     $ 0.82     $ 0.79     $ 0.85  
Diluted net income/ (loss) per common share   $ 1.19     $ 0.94     $ (0.31 )   $ 0.28     $ 0.80     $ 0.82     $ 0.79     $ 0.85  
Weighted average diluted common shares     47,284,808       47,175,071       46,988,351       34,743,623       35,543,254       35,671,721       35,634,924       35,618,346  
Dividends declared per share   $ 0.30     $ 0.30     $ 0.30     $ 0.30     $ 0.30     $ 0.30     $ 0.30     $ 0.28  
Non-interest income:                                
Securities gains   $ 35     $ 51     $ 212     $ 169     $ 57     $ 15     $ 5     $ -  
Service charges on deposit accounts     1,917       1,673       1,223       2,253       2,427       2,516       2,442       2,307  
Mortgage banking activities     14,491       14,108       8,426       3,033       4,170       4,408       3,270       2,863  
Wealth management income     8,215       7,785       7,604       6,966       6,401       5,493       5,539       5,236  
Insurance agency commissions     1,356       2,122       1,188       2,129       1,331       2,116       1,265       1,900  
Income from bank owned life insurance     705       708       809       645       660       662       654       1,189  
Bank card fees     1,570       1,525       1,257       1,320       1,435       1,462       1,467       1,252  
Other income     3,945       1,418       2,205       1,653       2,743       1,901       1,914       2,222  
Total non-interest income   $ 32,234     $ 29,390     $ 22,924     $ 18,168     $ 19,224     $ 18,573     $ 16,556     $ 16,969  
Non-interest expense:                                
Salaries and employee benefits   $ 36,080     $ 36,041     $ 34,297     $ 28,053     $ 26,251     $ 26,234     $ 25,489     $ 25,976  
Occupancy expense of premises     5,236       5,575       5,991       4,581       4,663       4,816       4,760       5,231  
Equipment expenses     3,121       3,133       3,219       2,751       2,791       2,641       2,712       2,576  
Marketing     1,058       1,305       729       1,189       1,085       1,541       887       943  
Outside data services     2,394       2,614       2,169       1,582       1,854       1,973       1,962       1,778  
FDIC insurance     1,527       1,340       1,378       482       123       (83 )     1,084       1,136  
Amortization of intangible assets     1,655       1,968       1,998       600       481       491       483       491  
Merger and acquisition expense     3       1,263       22,454       1,454       948       364       -       -  
Professional fees and services     2,473       1,800       1,840       1,826       2,553       1,546       1,634       1,245  
Other expenses     8,114       5,898       11,363       5,228       5,332       5,402       4,876       4,816  
Total non-interest expense   $ 61,661     $ 60,937     $ 85,438     $ 47,746     $ 46,081     $ 44,925     $ 43,887     $ 44,192  
                                 
(1) The efficiency ratio - GAAP basis is non-interest expense 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, loss on FHLB redemption, and merger and acquisition expense from non-interest expense; securities gains 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
                                 
      2020       2019  
(Dollars in thousands, except per share data)   Q4   Q3   Q2   Q1   Q4   Q3   Q2   Q1
Balance sheets at quarter end:                            
Commercial investor real estate loans   $ 3,634,720     $ 3,588,702     $ 3,581,778     $ 2,241,240     $ 2,169,156     $ 2,036,021     $ 1,994,027     $ 1,962,879  
Commercial owner-occupied real estate loans     1,642,216       1,652,208       1,601,803       1,305,682       1,288,677       1,278,505       1,224,986       1,216,713  
Commercial AD&C loans     1,050,973       994,800       997,423       643,114       684,010       678,906       658,709       688,939  
Commercial business loans     2,267,548       2,227,246       2,222,810       813,525       801,019       772,619       772,158       769,660  
Residential mortgage loans     1,105,179       1,173,857       1,211,745       1,116,512       1,149,327       1,199,275       1,241,081       1,249,968  
Residential construction loans     182,619       175,123       169,050       149,573       146,279       150,692       171,106       176,388  
Consumer loans     517,254       521,999       558,434       453,346       466,764       480,530       489,176       505,443  
Total loans     10,400,509       10,333,935       10,343,043       6,722,992       6,705,232       6,596,548       6,551,243       6,569,990  
Allowance for credit losses     (165,367 )     (170,314 )     (163,481 )     (85,800 )     (56,132 )     (54,992 )     (54,024 )     (53,089 )
Loans held for sale     78,294       88,728       68,765       67,114       53,701       78,821       50,511       24,998  
Investment securities     1,413,781       1,425,733       1,424,652       1,250,560       1,125,136       946,210       955,715       987,299  
Interest-earning assets     12,095,936       11,965,915       12,447,146       8,222,589       7,947,703       7,742,138       7,713,364       7,648,654  
Total assets     12,798,429       12,678,131       13,290,447       8,929,602       8,629,002       8,437,538       8,398,519       8,327,900  
Noninterest-bearing demand deposits     3,325,547       3,458,804       3,434,038       1,939,937       1,892,052       2,081,435       2,023,614       1,813,708  
Total deposits     10,033,069       9,964,969       10,076,834       6,593,874       6,440,319       6,493,899       6,389,749       6,224,523  
Customer repurchase agreements     153,157       142,287       143,579       125,305       138,605       126,008       150,604       122,626  
Total interest-bearing liabilities     7,856,842       7,643,381       8,313,546       5,732,349       5,485,055       5,093,265       5,136,860       5,297,108  
Total stockholders' equity     1,469,955       1,424,749       1,390,093       1,116,334       1,132,974       1,140,041       1,119,445       1,095,848  
Quarterly average balance sheets:                            
Commercial investor real estate loans   $ 3,599,648     $ 3,582,751     $ 3,448,882     $ 2,202,461     $ 2,092,478     $ 1,982,979     $ 1,960,919     $ 1,964,699  
Commercial owner-occupied real estate loans     1,643,817       1,628,474       1,681,674       1,285,257       1,274,782       1,258,000       1,215,632       1,207,799  
Commercial AD&C loans     1,017,304       977,607       969,251       659,494       695,817       651,905       686,282       676,205  
Commercial business loans     2,189,828       2,207,388       1,899,264       819,133       765,159       786,150       756,594       780,318  
Residential mortgage loans     1,136,989       1,189,452       1,208,566       1,139,786       1,169,623       1,215,132       1,244,086       1,230,319  
Residential construction loans     180,494       173,280       162,978       145,266       149,690       162,196       174,095       189,720  
Consumer loans     515,202       543,242       575,734       465,314       477,572       486,865       505,235       515,644  
Total loans     10,283,282       10,302,194       9,946,349       6,716,711       6,625,121       6,543,227       6,542,843       6,564,704  
Loans held for sale     68,255       54,784       53,312       35,030       50,208       61,870       37,121       17,846  
Investment securities     1,418,683       1,404,238       1,398,586       1,179,084       1,002,692       941,048       964,863       1,010,940  
Interest-earning assets     11,882,542       12,049,463       11,921,132       7,994,618       7,859,836       7,690,629       7,619,240       7,627,187  
Total assets     12,645,329       12,835,893       12,903,156       8,699,342       8,542,837       8,370,789       8,294,883       8,258,116  
Noninterest-bearing demand deposits     3,424,729       3,281,607       3,007,222       1,797,227       1,927,063       1,909,884       1,796,802       1,682,720  
Total deposits     9,999,144       9,862,639       9,614,176       6,433,694       6,459,551       6,405,762       6,247,409       5,952,942  
Customer repurchase agreements     146,685       142,694       144,050       135,652       126,596       138,736       141,865       129,059  
Total interest-bearing liabilities     7,609,829       7,969,487       8,326,909       5,612,056       5,326,303       5,202,876       5,269,209       5,403,946  
Total stockholders' equity     1,433,900       1,401,746       1,390,544       1,130,051       1,136,824       1,123,185       1,099,078       1,073,291  
Financial measures:                                
Average equity to average assets     11.34 %     10.92 %     10.78 %     12.99 %     13.31 %     13.42 %     13.25 %     13.00 %
Investment securities to earning assets     11.69 %     11.91 %     11.45 %     15.21 %     14.16 %     12.22 %     12.39 %     12.91 %
Loans to earning assets     85.98 %     86.36 %     83.10 %     81.76 %     84.37 %     85.20 %     84.93 %     85.90 %
Loans to assets     81.26 %     81.51 %     77.82 %     75.29 %     77.71 %     78.18 %     78.00 %     78.89 %
Loans to deposits     103.66 %     103.70 %     102.64 %     101.96 %     104.11 %     101.58 %     102.53 %     105.55 %
Capital measures:                                
Tier 1 leverage (1)     8.92 %     8.65 %     8.35 %     8.78 %     9.70 %     9.96 %     9.80 %     9.61 %
Common equity tier 1 capital to risk weighted assets (1)     10.58 %     10.45 %     10.23 %     10.23 %     11.06 %     11.37 %     11.43 %     11.19 %
Tier 1 capital to risk-weighted assets (1)     10.58 %     10.45 %     10.23 %     10.23 %     11.21 %     11.52 %     11.59 %     11.35 %
Total regulatory capital to risk-weighted assets (1)     13.93 %     14.02 %     13.79 %     14.09 %     14.85 %     12.70 %     12.79 %     12.54 %
Book value per common share   $ 31.24     $ 30.30     $ 29.58     $ 32.68     $ 32.40     $ 32.00     $ 31.43     $ 30.82  
Outstanding common shares     47,056,777       47,025,779       47,001,022       34,164,672       34,970,370       35,625,822       35,614,953       35,557,110  
                                 
         (1) Estimated ratio at December 31, 2020.               



Sandy Spring Bancorp, Inc. and Subsidiaries                
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED                
                                 
      2020       2019  
(Dollars in thousands)   December 31,   September 30,   June 30,   March 31,   December 31,   September 30,   June 30,   March 31,
Non-performing assets:                                
Loans 90 days past due:                                
Commercial real estate:                                
Commercial investor real estate   $ 133     $ -     $ 775     $ -     $ -     $ 1,201     $ 1,248     $ -  
Commercial owner-occupied real estate     -       -       515       -       -       -       -       90  
Commercial AD&C     -       -       -       -       -       -       -       -  
Commercial business     161       93       -       -       -       17       -       -  
Residential real estate:                                
Residential mortgage     480       320       138       8       -       -       -       221  
Residential construction     -       -       -       -       -       -       -       -  
Consumer     -       1       -       -       -       -       -       -  
Total loans 90 days past due     774       414       1,428       8       -       1,218       1,248       311  
Non-accrual loans:                                
Commercial real estate:                                
Commercial investor real estate     45,227       26,784       26,482       17,770       8,437       8,454       6,409       6,071  
Commercial owner-occupied real estate     11,561       6,511       6,729       4,074       4,148       3,810       3,766       5,992  
Commercial AD&C     15,044       1,678       2,957       829       829       829       1,990       3,306  
Commercial business     22,933       17,659       20,246       10,834       8,450       6,393       7,083       8,013  
Residential real estate:                                
Residential mortgage     10,212       11,296       11,724       12,271       12,661       12,574       10,625       9,704  
Residential construction     -       -       -       -       -       -       -       156  
Consumer     7,384       7,493       7,800       5,596       4,107       4,561       4,439       4,081  
Total non-accrual loans     112,361       71,421       75,938       51,374       38,632       36,621       34,312       37,323  
Total restructured loans - accruing     2,317       2,854       2,553       2,575       2,636       2,287       2,133       2,479  
Total non-performing loans     115,452       74,689       79,919       53,957       41,268       40,126       37,693       40,113  
Other assets and other real estate owned (OREO)     1,455       1,389       1,389       1,416       1,482       1,482       1,486       1,410  
Total non-performing assets   $ 116,907     $ 76,078     $ 81,308     $ 55,373     $ 42,750     $ 41,608     $ 39,179     $ 41,523  
                                 
    For the Quarter Ended,
(Dollars in thousands)   December 31, 2020   September 30, 2020   June 30, 2020   March 31, 2020   December 31, 2019   September 30, 2019   June 30, 2019   March 31, 2019
Analysis of non-accrual loan activity:                                
Balance at beginning of period   $ 71,421     $ 75,938     $ 51,374     $ 38,632     $ 36,621     $ 34,312     $ 37,323     $ 33,583  
Purchased credit deteriorated loans designated as non-accrual     -       -       -       13,084       -       -       -       -  
Non-accrual balances transferred to OREO     (70 )     -       -       -       -       -       (195 )     -  
Non-accrual balances charged-off     (513 )     (144 )     (162 )     (575 )     (454 )     (705 )     (604 )     (227 )
Net payments or draws     (13,212 )     (4,248 )     (1,881 )     (1,860 )     (2,916 )     (2,903 )     (5,517 )     (1,786 )
Loans placed on non-accrual     54,735       893       27,289       2,369       5,381       6,015       3,396       6,202  
Non-accrual loans brought current     -       (1,018 )     (682 )     (276 )     -       (98 )     (91 )     (449 )
Balance at end of period   $ 112,361     $ 71,421     $ 75,938     $ 51,374     $ 38,632     $ 36,621     $ 34,312     $ 37,323  
                                 
Analysis of allowance for credit losses:                                
Balance at beginning of period   $ 170,314     $ 163,481     $ 85,800     $ 56,132     $ 54,992     $ 54,024     $ 53,089     $ 53,486  
Transition impact of adopting ASC 326     -       -       -       2,983       -       -       -       -  
Initial allowance on purchased credit deteriorated loans     -       -       -       2,762       -       -       -       -  
Initial allowance on acquired PCD loans     -       -       18,628       -       -       -       -       -  
Provision/ (credit) for credit losses     (4,489 )     7,003       58,686       24,469       1,655       1,524       1,633       (128 )
Less loans charged-off, net of recoveries:                                
Commercial real estate:                                
Commercial investor real estate     379       21       (4 )     -       (3 )     (3 )     (3 )     (7 )
Commercial owner-occupied real estate     -       -       -       -       -       -       -       -  
Commercial AD&C     -       -       -       -       -       (224 )     (4 )     -  
Commercial business     56       88       (463 )     108       15       389       735       7  
Residential real estate:                                                                
Residential mortgage     37       (6 )     15       333       264       209       (10 )     89  
Residential construction     (1 )     (2 )     (1 )     (2 )     (2 )     (2 )     (2 )     (2 )
Consumer     (13 )     69       86       107       241       187       (18 )     182  
Net charge-offs/ (recoveries)     458       170       (367 )     546       515       556       698       269  
Balance at the end of period   $ 165,367     $ 170,314     $ 163,481     $ 85,800     $ 56,132     $ 54,992     $ 54,024     $ 53,089  
                                 
Asset quality ratios:                                
Non-performing loans to total loans     1.11 %     0.72 %     0.77 %     0.80 %     0.62 %     0.61 %     0.58 %     0.61 %
Non-performing assets to total assets     0.91 %     0.60 %     0.61 %     0.62 %     0.50 %     0.49 %     0.47 %     0.50 %
Allowance for credit losses to loans     1.59 %     1.65 %     1.58 %     1.28 %     0.84 %     0.83 %     0.82 %     0.81 %
Allowance for credit losses to non-performing loans     143.23 %     228.03 %     204.56 %     159.02 %     136.02 %     137.05 %     143.33 %     132.35 %
Annualized net charge-offs/ (recoveries) to average loans     0.02 %     0.01 %     (0.01 )%     0.03 %     0.03 %     0.03 %     0.04 %     0.02 %
                                 


Sandy Spring Bancorp, Inc. and Subsidiaries            
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
                         
    Three Months Ended December 31,
      2020       2019  
(Dollars in thousands and tax-equivalent)   Average Balances   Interest (1)   Annualized Average Yield/Rate   Average Balances   Interest (1)   Annualized Average Yield/Rate
Assets                        
Commercial investor real estate loans   $ 3,599,648     $ 38,867   4.30 %   $ 2,092,478     $ 24,982   4.74 %
Commercial owner-occupied real estate loans     1,643,817       19,440   4.70       1,274,782       15,606   4.86  
Commercial AD&C loans     1,017,304       10,400   4.07       695,817       9,388   5.35  
Commercial business loans     2,189,828       20,015   3.64       765,159       9,821   5.09  
Total commercial loans     8,450,597       88,722   4.18       4,828,236       59,797   4.91  
Residential mortgage loans     1,136,989       10,102   3.55       1,169,623       11,030   3.77  
Residential construction loans     180,494       1,698   3.74       149,690       1,650   4.37  
Consumer loans     515,202       4,806   3.71       477,572       5,594   4.65  
Total residential and consumer loans     1,832,685       16,606   3.62       1,796,885       18,274   4.05  
Total loans (2)     10,283,282       105,328   4.08       6,625,121       78,071   4.68  
Loans held for sale     68,255       592   3.48       50,208       462   3.68  
Taxable securities     1,138,767       4,925   1.73       816,008       5,704   2.79  
Tax-exempt securities (3)     279,916       1,971   2.81       186,684       1,576   3.38  
Total investment securities (4)     1,418,683       6,896   1.94       1,002,692       7,280   2.90  
Interest-bearing deposits with banks     111,820       27   0.10       181,394       724   1.58  
Federal funds sold     502       -   0.10       421       2   1.66  
Total interest-earning assets     11,882,542       112,843   3.78       7,859,836       86,539   4.38  
                         
Less: allowance for credit losses     (171,026 )             (54,653 )        
Cash and due from banks     111,565               68,011          
Premises and equipment, net     58,060               59,277          
Other assets     764,188               610,366          
Total assets   $ 12,645,329             $ 8,542,837          
                         
Liabilities and Stockholders' Equity                        
Interest-bearing demand deposits   $ 1,195,307     $  293   0.10 %   $ 800,263     685   0.34 %
Regular savings deposits     406,637       57   0.06       325,540       94   0.11  
Money market savings deposits     3,194,999       1,870   0.23       1,875,045       5,820   1.23  
Time deposits     1,777,472       4,190   0.94       1,531,640       8,124   2.10  
Total interest-bearing deposits     6,574,415       6,410   0.39       4,532,488       14,723   1.29  
Other borrowings     377,362       234   0.25       133,716       216   0.64  
Advances from FHLB     428,278       2,730   2.54       516,101       3,189   2.45  
Subordinated debentures     229,774       2,590   4.51       143,998       1,679   4.66  
Total borrowings     1,035,414       5,554   2.13       793,815       5,084   2.55  
Total interest-bearing liabilities     7,609,829       11,964   0.63       5,326,303       19,807   1.48  
                         
Noninterest-bearing demand deposits     3,424,729               1,927,063          
Other liabilities     176,871               152,647          
Stockholders' equity     1,433,900               1,136,824          
Total liabilities and stockholders' equity   $ 12,645,329             $ 8,542,837          
                         
Net interest income and spread       $ 100,879   3.15 %       $ 66,732   2.90 %
Less: tax-equivalent adjustment         1,052             1,149    
Net interest income       $ 99,827           $ 65,583    
                         
Interest income/earning assets           3.78 %           4.38 %
Interest expense/earning assets           0.40             1.00  
Net interest margin           3.38 %           3.38 %
                         
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.54% and 26.13% for 2020 and 2019, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.1 million in both 2020 and 2019.
(2) Non-accrual loans are included in the average balances.           
(3) Includes only investments that are exempt from federal taxes.          
(4) Available for sale investments are presented at amortized cost.          



Sandy Spring Bancorp, Inc. and Subsidiaries            
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED        
                         
    Year Ended December 31,
      2020       2019  
(Dollars in thousands and tax-equivalent)   Average Balances   Interest (1)   Annualized Average Yield/Rate   Average Balances   Interest (1)   Annualized Average Yield/Rate
Assets                        
Commercial investor real estate loans   $ 3,210,527     $ 142,105   4.43 %   $ 2,000,571     $ 99,410   4.97 %
Commercial owner-occupied real estate loans     1,560,223       73,655   4.72       1,239,289       60,581   4.89  
Commercial AD&C loans     906,414       40,262   4.44       677,536       39,241   5.79  
Commercial business loans     1,781,197       69,633   3.91       772,052       41,300   5.35  
Total commercial loans     7,458,361       325,655   4.37       4,689,448       240,532   5.13  
Residential mortgage loans     1,168,668       43,001   3.68       1,214,625       46,438   3.82  
Residential construction loans     165,567       6,683   4.04       168,797       7,232   4.28  
Consumer loans     524,897       20,356   3.88       496,199       24,391   4.92  
Total residential and consumer loans     1,859,132       70,040   3.77       1,879,621       78,061   4.15  
Total loans (2)     9,317,493       395,695   4.25       6,569,069       318,593   4.85  
Loans held for sale     52,893       1,686   3.19       41,905       1,607   3.84  
Taxable securities     1,106,315       22,482   2.03       768,521       22,873   2.98  
Tax-exempt securities (3)     244,168       7,378   3.02       211,236       7,403   3.50  
Total investment securities (4)     1,350,483       29,860   2.21       979,757       30,276   3.09  
Interest-bearing deposits with banks     246,155       446   0.18       108,534       2,129   1.96  
Federal funds sold     403       1   0.28       572       10   1.76  
Total interest-earning assets     10,967,427       427,688   3.90       7,699,837       352,615   4.58  
                         
Less: allowance for credit losses     (128,793 )             (53,746 )        
Cash and due from banks     122,826               65,181          
Premises and equipment, net     59,031               60,595          
Other assets     754,605               595,272          
Total assets   $ 11,775,096             $ 8,367,139          
                         
Liabilities and Stockholders' Equity                        
Interest-bearing demand deposits   $ 1,062,474     $  1,812   0.17 %   $ 750,606     1,990   0.27 %
Regular savings deposits     374,196       269   0.07       329,158       415   0.13  
Money market savings deposits     2,741,230       12,424   0.45       1,751,989       25,437   1.45  
Time deposits     1,924,429       27,146   1.41       1,604,996       33,839   2.11  
Total interest-bearing deposits     6,102,329       41,651   0.68       4,436,749       61,681   1.39  
Other borrowings     509,523       1,965   0.39       152,088       1,161   0.76  
Advances from FHLB     545,652       6,593   1.21       645,587       16,578   2.57  
Subordinated debentures     224,306       10,192   4.54       64,251       3,141   4.89  
Total borrowings     1,279,481       18,750   1.47       861,926       20,880   2.42  
Total interest-bearing liabilities     7,381,810       60,401   0.82       5,298,675       82,561   1.56  
                         
Noninterest-bearing demand deposits     2,880,294               1,830,008          
Other liabilities     173,501               130,146          
Stockholders' equity     1,339,491               1,108,310          
Total liabilities and stockholders' equity   $ 11,775,096             $ 8,367,139          
                         
Net interest income and spread       $ 367,287   3.08 %       $ 270,054   3.02 %
Less: tax-equivalent adjustment         4,128             4,746    
Net interest income       $ 363,159           $ 265,308    
                         
Interest income/earning assets           3.90 %           4.58 %
Interest expense/earning assets           0.55             1.07  
Net interest margin           3.35 %           3.51 %
                         
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.54% and 26.13% for 2020 and 2019, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $4.1 million and $4.7 million 2020 and 2019, respectively.
(2) Non-accrual loans are included in the average balances.           
(3) Includes only investments that are exempt from federal taxes.          
(4) Available for sale investments are presented at amortized cost.          


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