Sandy Spring Bancorp Reports Net Income of $14.7 Million for the Second Quarter


OLNEY, Md., July 20, 2017 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR), the parent company of Sandy Spring Bank, today reported net income for the second quarter of 2017 of $14.7 million ($0.61 per diluted share) compared to net income of $10.6 million ($0.44 per diluted share) for the second quarter of 2016 and net income of $15.1 million ($0.63 per diluted share) for the first quarter of 2017.

“The current quarter reflects strong core performance driven by loan and deposit growth.  We continue our efforts to create new and deepen existing client relationships to improve the financial performance of the Company.  As part of those efforts, during the current quarter we were extremely pleased to announce a definitive agreement for the acquisition of WashingtonFirst Bankshares, Inc. and its banking unit, WashingtonFirst Bank, a well-regarded bank in northern Virginia.  We believe that the creation of the region’s largest locally headquartered community bank will offer complementary products and the best possible experience for our combined clients and greater value to our shareholders,” said Daniel J. Schrider, President and Chief Executive Officer. 

Second Quarter Highlights: 

  • Total loans increased 13% compared to the second quarter of 2016 and 4% compared to the first quarter of 2017. These increases were driven primarily by year-over-year growth of 16% in the commercial loan portfolio.
  • Total deposits grew 11% from the prior year quarter and 2% from the prior quarter.
  • The net interest margin was 3.60% for the second quarter of 2017, compared to 3.51% for the second quarter of 2016 and 3.51% for the first quarter of 2017.  The quarter’s margin was positively impacted by an interest income recovery of $0.7 million.  Exclusive of this non-core item, the margin would have been 3.54%.
  • Return on average common equity increased 32% to 10.80% as compared to 8.21% from the prior year.
  • On May 16, 2017, the Company announced it had entered into a definitive agreement and plan of merger pursuant to which WashingtonFirst Bankshares, Inc., the parent company for WashingtonFirst Bank, will merge with and into the Company in a transaction valued at approximately $498 million. WashingtonFirst, headquartered in Reston, Virginia, has 19 community banking offices and more than $2.1 billion in assets (as of March 31, 2017).
  • The Non-GAAP efficiency ratio was 54.10% for the current quarter as compared to 59.12% for the second quarter of 2016 and 54.78% for the first quarter of 2017.
  • Pre-tax, pre-provision income increased 29% compared with the second quarter of 2016.

Review of Balance Sheet and Credit Quality

At June 30, 2017, total assets were $5.3 billion, an 11% increase compared to $4.7 billion at June 30, 2016.  Loan growth continues to be the driver of asset growth as total loans ended the period at $4.1 billion compared to $3.7 billion at June 30, 2016. The growth in the loan portfolio was funded primarily by an 11% increase in total deposits from June 30, 2016 to June 30, 2017.

Combined noninterest-bearing and interest-bearing checking account balances at June 30, 2017, an important performance driver of multiple-product banking relationships with clients, increased by 9% compared to balances at June 30, 2016.

Tangible common equity totaled $472 million at June 30, 2017, compared to $439 million at June 30, 2016. The ratio of tangible common equity to tangible assets decreased to 9.10% at June 30, 2017, from 9.44% at June 30, 2016, as a result of asset growth over the preceding 12 months. Dividends per common share were $0.26 per share for the second quarter of 2017 compared to $0.24 per share for the second quarter of 2016, an 8% increase.  At June 30, 2017, the Company had a total risk-based capital ratio of 12.00%, a common equity tier 1 risk-based capital ratio of 10.96%, a tier 1 risk-based capital ratio of 10.96% and a tier 1 leverage ratio of 9.26%.

The level of non-performing loans to total loans decreased to 0.78% at June 30, 2017, compared to 0.85% at June 30, 2016, as a result of the growth in the loan portfolio.  Non-performing loans totaled $32.2 million at June 30, 2017, compared to $31.4 million at June 30, 2016, and $30.9 million at March 31, 2017. Non-performing loans include accruing loans 90 days or more past due and restructured loans.

Loan charge-offs, net of recoveries, totaled $0.1 million for the second quarter of 2017 compared to $1.3 million for the second quarter of 2016.  Charge-offs for the second quarter of 2016 were affected by a single large charge-off related to a residential mortgage loan. The allowance for loan losses represented 1.09% of outstanding loans and 140% of non-performing loans at June 30, 2017, compared to 1.18% of outstanding loans and 138% of non-performing loans at June 30, 2016. The decline in the allowance to outstanding loans ratio is a reflection of improved credit quality and growth of the loan portfolio over the past year.

Income Statement Review

Net interest income for the second quarter of 2017 increased 15% compared to the second quarter of 2016 as average loans from quarter to quarter increased 12%. The net interest margin improved to 3.60% for the second quarter of 2017 compared to 3.51% for the second quarter of 2016.  Net interest income for the second quarter of 2017 included $0.7 million from the full payoff during the quarter of a previously acquired credit impaired loan.  Exclusive of the recovered interest income, the net interest margin would have been 3.54% based on an adjusted net interest income of $41.6 million.  The margin improvement reflects the impact of loan growth, the cumulative benefits associated with the execution of funding strategies and the shift from lower yielding investments to the higher yielding loan portfolio during the past 12 months.

The provision for loan losses was $1.3 million for the second quarter of 2017 compared to $3.0 million for the second quarter of 2016 and $0.2 million for the first quarter of 2017. The decrease in the current quarter’s charge versus the prior year’s quarter reflects improved loan portfolio credit quality, which partially offset the effects of loan growth on the provision over the past year.

Non-interest income increased to $13.6 million for the second quarter of 2017 compared to $12.8 million for the second quarter of 2016.  The second quarter of 2017 included gains of $1.3 million on sales of investment securities. The second quarter of 2016 included a $1.2 million gain on the extinguishment of subordinated debentures and $0.2 million in gains on the sales of investment securities.  Excluding these gains, non-interest income increased 8% compared to the prior year quarter due to increases in insurance agency commissions and other non-interest income.

Non-interest expenses increased 6% to $32.9 million for the second quarter of 2017 compared to $30.9 million in the second quarter of 2016. The second quarter of 2017 included $1.3 million in penalties on the early payoff of high-rate FHLB advances and $1.0 million in merger expenses. The comparable period for 2016 included $1.4 million in prepayment penalties.  Excluding these transactions, non-interest expenses increased 4% compared to the second quarter of 2016 due to merit increases, performance incentives and volume driven compensation costs.  The non-GAAP efficiency ratio was 54.10% for the second quarter of 2017 compared to 59.12% for the second quarter of 2016 as a result of the growth in net interest income. 

Net interest income for the first six months of 2017 increased 13% compared to the first six months of 2016 due primarily to an increase in average loans, which was funded primarily by an 11% increase in average deposits. As a result, the net interest margin was 3.56% for the first six months of 2017 compared to 3.47% for the prior year period. The first six months net interest income included the previously mentioned $0.7 million recovery of interest income.  Exclusive of this recovery the net interest margin would have been 3.54%.    

The provision for loan losses was $1.5 million for the first six months of 2017 compared to $4.2 million for the first six months of 2016 primarily reflecting the growth in the loan portfolio over the prior year period offset by the effects of improved credit quality of the loan portfolio.

Non-interest income was $26.2 million for the first six months of 2017 compared to $26.1 million for the first six months of 2016.  The first six months of 2017 included gains of $1.3 million on sales of investment securities. The same prior year period included a $1.2 million gain on the extinguishment of subordinated debentures and $2.0 million in gains on the sales of investment securities.  Excluding these gains, non-interest income increased 8% compared to the prior year period primarily due to increases in insurance agency commissions and other non-interest income.

Non-interest expenses decreased 1% to $62.8 million for the first six months of 2017 compared to $63.2 million for the prior year period. For the six months ended June 30, 2017, the decrease in prepayment penalties of $1.9 million for the early payoff of high-rate FHLB advances as compared to the six months ended June 30, 2016, offset increases in salaries and benefits, FDIC insurance due to asset growth and $1.0 million in merger expenses. Excluding the impact of prepayment penalties and merger expenses, non-interest expenses increased 1% over the prior year period. The non-GAAP efficiency ratio decreased to 54.44% for the first six months of 2017 compared to 60.47% for the first six months of 2016 as a direct result of the growth in net interest income.

Conference Call

The Company’s management will host a conference call to discuss its second quarter results today at 2:00 P.M. (ET).  A live Web cast of the conference call is available through the Investor Relations’ section of the Sandy Spring Web site at www.sandyspringbank.com.  Participants may call 1-866-235-9910. A password is not necessary.  Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call.  An internet-based replay will be available at the Web site until 9:00 am (ET) August 3, 2017.  A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10109345.

About Sandy Spring Bancorp, Inc.

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

Forward-Looking Statements

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

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

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

               
Sandy Spring Bancorp, Inc. and Subsidiaries      
FINANCIAL HIGHLIGHTS - UNAUDITED      
               
  Three Months Ended    Six Months Ended   
  June 30,  June 30, 
(Dollars in thousands, except per share data)  2017  2016 Change   2017  2016 Change 
Results of Operations:              
  Net interest income $   42,326  $36,732 15 % $   82,579  $72,854 13 %
  Provision for loan losses    1,322   2,957 (55)     1,516   4,193 (64) 
  Non-interest income    13,571   12,751 6      26,203   26,114 -  
  Non-interest expenses    32,868   30,871 6      62,849   63,188 (1) 
  Income before income taxes    21,707   15,655 39      44,417   31,587 41  
  Net income     14,741   10,647 38      29,853   21,460 39  
               
  Pre-tax pre-provision income  $   24,016  $18,612 29   $   46,920  $35,780 31  
               
  Return on average assets    1.14 % 0.92%      1.17 % 0.92%  
  Return on average common equity    10.80 % 8.21%      11.12 % 8.25%  
  Net interest margin    3.60 % 3.51%      3.56 % 3.47%  
  Efficiency ratio - GAAP basis  (1)    58.80 % 62.39%      57.78 % 63.85%  
  Efficiency ratio - Non-GAAP basis  (1)    54.10 % 59.12%      54.44 % 60.47%  
               
Per share data:              
  Basic net income $   0.61  $0.45 36 % $   1.24  $0.90 38 %
  Diluted net income $   0.61  $0.44 39   $   1.23  $0.89 38  
  Average fully diluted shares   24,262,745   24,108,668 1     24,258,791   24,165,675 -  
  Dividends declared per share $   0.26  $0.24 8   $   0.52  $0.48 8  
  Book value per share    23.13   22.18 4      23.13   22.18 4  
  Tangible book value per share    19.68   18.40 7      19.68   18.40 7  
  Outstanding shares   23,983,997   23,874,650 -     23,983,997   23,874,650 -  
               
Financial Condition at period-end:              
  Investment securities $   821,491  $734,828 12 % $   821,491  $734,828 12 %
  Loans    4,133,171   3,672,624 13      4,133,171   3,672,624 13  
  Interest-earning assets    4,988,704   4,461,180 12      4,988,704   4,461,180 12  
  Assets    5,270,521   4,739,449 11      5,270,521   4,739,449 11  
  Deposits    3,885,445   3,510,141 11      3,885,445   3,510,141 11  
  Interest-bearing liabilities    3,380,221   2,996,893 13      3,380,221   2,996,893 13  
  Stockholders' equity    554,683   529,479 5      554,683   529,479 5  
               
Capital ratios:              
  Tier 1 leverage  (4)    9.26 % 10.29%      9.26 % 10.29%  
  Tier 1 capital to risk-weighted assets  (4)    10.96 % 12.42%      10.96 % 12.42%  
  Total regulatory capital to risk-weighted assets  (4)    12.00 % 13.57%      12.00 % 13.57%  
  Common equity tier 1 capital to risk-weighted assets  (4)    10.96 % 11.63%      10.96 % 11.63%  
  Tangible common equity to tangible assets  (2)    9.10 % 9.44%      9.10 % 9.44%  
  Average equity to average assets    10.52 % 11.18%      10.50 % 11.18%  
               
Credit quality ratios:              
  Allowance for loan losses to loans    1.09 % 1.18%      1.09 % 1.18%  
  Non-performing loans to total loans    0.78 % 0.85%      0.78 % 0.85%  
  Non-performing assets to total assets    0.64 % 0.69%      0.64 % 0.69%  
  Allowance for loan losses to non-performing loans    140.00 % 138.36%      140.00 % 138.36%  
  Annualized net charge-offs to average loans  (3)    0.01 %   0.15%      0.03 %   0.10%  
               
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI; and the tax-equivalent adjustment to net interest income.  See the Reconciliation Table included with these Financial Highlights.  
(2) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets and other comprehensive gains (losses).  See the Reconciliation Table included with these Financial Highlights.  
(3) Calculation utilizes average loans, excluding residential mortgage loans held-for-sale.  
(4) Estimated ratio at June 30, 2017    
               


Sandy Spring Bancorp, Inc. and Subsidiaries        
RECONCILIATION TABLE - UNAUDITED        
         
  Three Months Ended Six Months Ended
  June 30, June 30,
(Dollars in thousands)  2017   2016   2017   2016 
Pre-tax pre-provision income:        
Net income $   14,741   $10,647  $   29,853   $21,460 
  Plus non-GAAP adjustment:        
    Merger expenses    987    -     987    - 
    Income taxes    6,966    5,008     14,564    10,127 
    Provision for loan losses    1,322    2,957     1,516    4,193 
Pre-tax pre-provision income $   24,016   $18,612  $   46,920   $35,780 
         
Efficiency ratio - GAAP basis:        
Non-interest expenses  $   32,868   $30,871  $   62,849   $63,188 
         
Net interest income plus non-interest income $   55,897   $49,483  $   108,782   $98,968 
         
Efficiency ratio - GAAP basis  58.80%  62.39%  57.78%  63.85%
         
         
Efficiency ratio - Non-GAAP basis:        
Non-interest expenses  $   32,868   $30,871  $   62,849   $63,188 
  Less non-GAAP adjustment:        
    Amortization of intangible assets    25    28     51    60 
    Loss on FHLB Redemption    1,275    1,416     1,275    3,167 
    Merger expenses    987    -     987    - 
Non-interest expenses -  as adjusted $   30,581   $29,427  $   60,536   $59,961 
         
Net interest income plus non-interest income  $   55,897   $49,483  $   108,782   $98,968 
  Plus non-GAAP adjustment:        
    Tax-equivalent income    1,901    1,640     3,697    3,304 
  Less non-GAAP adjustments:        
    Securities gains    1,273    150     1,275    1,919 
    Gain on redemption of subordinated debentures    -    1,200     -    1,200 
Net interest income plus non-interest income - as adjusted $   56,525   $49,773  $   111,204   $99,153 
         
Efficiency ratio - Non-GAAP basis  54.10%  59.12%  54.44%  60.47%
         
Tangible common equity ratio:        
Total stockholders' equity $   554,683   $529,479  $   554,683   $529,479 
  Accumulated other comprehensive loss (income)    3,712    (5,886)    3,712    (5,886)
  Goodwill    (85,768)  (84,171)    (85,768)  (84,171)
  Other intangible assets, net    (629)  (77)    (629)  (77)
Tangible common equity $   471,998   $439,345  $   471,998   $439,345 
         
Total assets $   5,270,521   $4,739,449  $   5,270,521   $4,739,449 
  Goodwill    (85,768)  (84,171)    (85,768)  (84,171)
  Other intangible assets, net    (629)  (77)    (629)  (77)
Tangible assets $   5,184,124   $4,655,201  $   5,184,124   $4,655,201 
         
Tangible common equity ratio  9.10%  9.44%  9.10%  9.44%
         
Outstanding common shares    23,983,997    23,874,650     23,983,997    23,874,650 
Tangible book value per common share $   19.68   $18.40  $   19.68   $18.40 
         


Sandy Spring Bancorp, Inc. and Subsidiaries      
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED      
       
  June 30, December 31, June 30,
(Dollars in thousands)  2017   2016   2016 
Assets      
  Cash and due from banks $   48,637   $53,190  $53,334 
  Federal funds sold    2,831    1,953   832 
  Interest-bearing deposits with banks    25,468    78,982   39,406 
     Cash and cash equivalents    76,936    134,125   93,572 
  Residential mortgage loans held for sale (at fair value)     5,743    13,222   13,490 
  Investments available-for-sale (at fair value)    780,078    733,554   700,486 
  Other equity securities    41,413    46,094   34,342 
  Total loans  4,133,171    3,927,808   3,672,624 
     Less: allowance for loan losses    (45,079)  (44,067)  (43,384)
  Net loans  4,088,092    3,883,741   3,629,240 
  Premises and equipment, net    53,235    53,562   53,055 
  Other real estate owned    1,460    1,911   1,311 
  Accrued interest receivable    14,910    14,589   13,399 
  Goodwill    85,768    85,768   84,171 
  Other intangible assets, net     629    680   77 
  Other assets    122,257    124,137   116,306 
Total assets $5,270,521   $5,091,383  $4,739,449 
       
Liabilities      
  Noninterest-bearing deposits $1,302,536   $1,138,139  $1,176,135 
  Interest-bearing deposits  2,582,909    2,439,405   2,334,006 
     Total deposits  3,885,445    3,577,544   3,510,141 
  Securities sold under retail repurchase agreements and federal funds purchased    127,312    125,119   117,887 
  Advances from FHLB    670,000    790,000   515,000 
  Subordinated debentures    -    30,000   30,000 
  Accrued interest payable and other liabilities    33,081    35,148   36,942 
     Total liabilities  4,715,838    4,557,811   4,209,970 
       
Stockholders' Equity      
  Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,983,997, 23,901,084 and 23,874,650 at June 30, 2017, December 31, 2016 and June 30, 2016, respectively    23,984    23,901   23,875 
  Additional paid in capital    166,705    165,871   164,040 
  Retained earnings    367,706    350,414   335,678 
  Accumulated other comprehensive income (loss)    (3,712)  (6,614)  5,886 
     Total stockholders' equity    554,683    533,572   529,479 
Total liabilities and stockholders' equity $5,270,521   $5,091,383  $4,739,449 
       

 

Sandy Spring Bancorp, Inc. and Subsidiaries        
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED      
         
  Three Months Ended Six Months Ended
 June 30,June 30,
(Dollars in thousands, except per share data)  2017  2016  2017  2016
Interest Income:        
 Interest and fees on loans $   42,747  $  36,928 $   82,970  $  73,134
 Interest on loans held for sale    72     64    154     198
 Interest on deposits with banks    91     54    181     107
 Interest and dividends on investment securities:        
  Taxable    3,554     2,840    7,162     6,126
  Exempt from federal income taxes    2,106     1,916    4,057     3,889
 Interest on federal funds sold    6     1    10     2
  Total interest income    48,576     41,803    94,534     83,456
Interest Expense:        
Interest on deposits    3,023     2,041    5,511     3,878
Interest on retail repurchase agreements and federal funds purchased    79     72    155     138
Interest on advances from FHLB    3,148     2,739    6,277     6,113
Interest on subordinated debt    -     219    12     473
  Total interest expense    6,250     5,071    11,955     10,602
Net interest income    42,326     36,732    82,579     72,854
Provision for loan losses    1,322     2,957    1,516     4,193
  Net interest income after provision for loan losses    41,004     33,775    81,063     68,661
Non-interest Income:        
 Investment securities gains    1,273     150    1,275     1,919
 Service charges on deposit accounts    2,017     1,956    3,981     3,859
 Mortgage banking activities    840     1,106    1,448     1,641
 Wealth management income    4,744     4,448    9,228     8,853
 Insurance agency commissions    1,222     949    2,974     2,394
 Income from bank owned life insurance    605     615    1,199     1,230
 Bank card fees    1,253     1,220    2,398     2,309
 Other income    1,617     2,307    3,700     3,909
  Total non-interest income    13,571     12,751    26,203     26,114
Non-interest Expenses:        
 Salaries and employee benefits    18,282     17,221    36,083     35,451
 Occupancy expense of premises    3,211     3,162    6,613     6,635
 Equipment expenses    1,767     1,693    3,491     3,357
 Marketing    776     662    1,439     1,343
 Outside data services    1,367     1,355    2,759     2,718
 FDIC insurance    823     649    1,628     1,286
 Amortization of intangible assets    25     28    51     60
 Merger expenses    987     -    987     -
 Other expenses    5,630     6,101    9,798     12,338
  Total non-interest expenses    32,868     30,871    62,849     63,188
Income before income taxes    21,707     15,655    44,417     31,587
Income tax expense    6,966     5,008    14,564     10,127
  Net income $   14,741  $  10,647 $   29,853  $  21,460
         
Net Income Per Share Amounts:        
Basic net income per share $   0.61  $  0.45 $   1.24  $  0.90
Diluted net income per share $   0.61  $  0.44 $   1.23  $  0.89
Dividends declared per share $   0.26  $  0.24 $   0.52  $  0.48
         

 

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


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

 

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

 

Sandy Spring Bancorp, Inc. and Subsidiaries              
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED          
               
  Three Months Ended June 30, 
     2017        2016    
        Annualized        Annualized  
  Average (1) Average  Average (1) Average 
(Dollars in thousands and tax-equivalent) Balances Interest Yield/Rate  Balances Interest Yield/Rate 
Assets              
Residential mortgage loans $   860,081   $   7,531   3.50%$  811,705  $  6,934  3.42%
Residential construction loans  169,130    1,579   3.74   142,854   1,268  3.57 
Total mortgage loans  1,029,211    9,110   3.54   954,559   8,202  3.44 
Commercial AD&C loans  302,924    3,767   4.99   272,090   3,115  4.60 
Commercial investor real estate loans  1,010,389    11,280   4.48   788,785   8,988  4.58 
Commercial owner occupied real estate loans  776,279    9,981   5.16   684,907   8,280  4.86 
Commercial business loans  454,724    5,062   4.46   453,459   4,943  4.38 
Total commercial loans  2,544,316    30,090   4.74   2,199,241   25,326  4.63 
Consumer loans  461,672    4,171   3.66   449,594   3,885  3.50 
  Total loans (2)  4,035,199    43,371   4.31   3,603,394   37,413  4.17 
Loans held for sale  7,077    72   4.09   8,326   64  3.08 
Taxable securities  535,028    3,678   2.75   456,803   2,943  2.58 
Tax-exempt securities (3)  307,809    3,259   4.23   282,329   2,968  4.21 
Total investment securities  842,837    6,937   3.29   739,132   5,911  3.20 
Interest-bearing deposits with banks  34,738    91   1.06   43,300   54  0.50 
Federal funds sold  2,538      6   0.96   727     1  0.49 
  Total interest-earning assets  4,922,389    50,477   4.11   4,394,879   43,443  3.97 
               
Less:  allowance for loan losses  (43,679)       (42,064)     
Cash and due from banks  47,517         46,527      
Premises and equipment, net  53,449         53,218      
Other assets  222,722         211,783      
  Total assets $   5,202,398        $  4,664,343      
               
Liabilities and Stockholders' Equity              
Interest-bearing demand deposits $   615,141    123   0.08%$  586,323     115  0.08%
Regular savings deposits  325,634      57   0.07   298,435     47  0.06 
Money market savings deposits  983,185    1,076   0.44   907,670   495  0.22 
Time deposits  634,824    1,767   1.12   554,707   1,384  1.00 
  Total interest-bearing deposits  2,558,784    3,023   0.47   2,347,135   2,041  0.35 
Other borrowings  132,553      79   0.24   122,601   72  0.24 
Advances from FHLB  668,791      3,148   1.89   519,780   2,739  2.12 
Subordinated debentures    -      -     -    30,989   219  2.83 
  Total interest-bearing liabilities  3,360,128    6,250   0.75   3,020,505   5,071  0.68 
               
Noninterest-bearing demand deposits  1,251,396         1,082,762      
Other liabilities  43,645         39,689      
Stockholders' equity  547,229         521,387      
  Total liabilities and stockholders' equity $   5,202,398        $  4,664,343      
               
Net interest income and spread   $   44,227   3.36 %  $  38,372  3.29%
  Less: tax-equivalent adjustment      1,901           1,640    
Net interest income   $   42,326        $  36,732    
               
Interest income/earning assets     4.11 %    3.97%
Interest expense/earning assets       0.51         0.46 
  Net interest margin     3.60 %    3.51%
               
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and 2016. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.9 million and $1.6 million in 2017 and 2016, respectively.  
(2) Non-accrual loans are included in the average balances.  
(3) Includes only investments that are exempt from federal taxes.  
               

 

Sandy Spring Bancorp, Inc. and Subsidiaries      
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
     
               
  Six Months Ended June 30, 
     2017        2016    
        Annualized        Annualized  
  Average (1) Average  Average (1) Average 
(Dollars in thousands and tax-equivalent) Balances Interest Yield/Rate  Balances Interest Yield/Rate 
Assets              
Residential mortgage loans $   854,022   $   14,879   3.48%$809,574  $13,802  3.41%
Residential construction loans  163,174    3,015   3.73   138,781   2,463  3.57 
Total mortgage loans  1,017,196    17,894   3.52   948,355   16,265  3.43 
Commercial AD&C loans  306,604    7,421   4.88   266,888   6,113  4.61 
Commercial investor real estate loans  977,915    21,699   4.47   769,803   17,600  4.60 
Commercial owner occupied real estate loans  775,625    19,009   4.94   681,347   16,365  4.83 
Commercial business loans  458,563    10,069   4.43   457,181   9,956  4.38 
Total commercial loans  2,518,707    58,198   4.66   2,175,219   50,034  4.63 
Consumer loans  459,927    8,101   3.58   450,335   7,774  3.49 
  Total loans (2)  3,995,830    84,193   4.24   3,573,909   74,073  4.16 
Loans held for sale  7,238    154   4.27   11,181   198  3.54 
Taxable securities  534,306    7,413   2.78   490,338   6,356  2.59 
Tax-exempt securities (3)  296,323    6,280   4.24   284,524   6,024  4.23 
Total investment securities  830,629    13,693   3.30   774,862   12,380  3.20 
Interest-bearing deposits with banks  40,038    181   0.91   42,777   107  0.50 
Federal funds sold  2,320      10   0.84   608   2  0.48 
  Total interest-earning assets  4,876,055    98,231   4.05   4,403,337   86,760  3.96 
               
Less:  allowance for loan losses  (43,703)       (41,567)     
Cash and due from banks  48,165         46,783      
Premises and equipment, net  53,548         53,396      
Other assets  223,228         212,915      
  Total assets $   5,157,293        $4,674,864      
               
Liabilities and Stockholders' Equity              
Interest-bearing demand deposits $   612,608    237   0.08%$577,771   223  0.08%
Regular savings deposits  320,577      106   0.07   294,339   89  0.06 
Money market savings deposits  986,625    1,854   0.38   902,352   932  0.21 
Time deposits  616,713    3,314   1.08   538,435   2,634  0.98 
  Total interest-bearing deposits  2,536,523    5,511   0.44   2,312,897   3,878  0.34 
Other borrowings  130,531      155   0.24   116,792   138  0.24 
Advances from FHLB  699,641      6,277   1.81   599,423   6,113  2.05 
Subordinated debentures  829      12   2.91   32,995   473  2.87 
  Total interest-bearing liabilities  3,367,524    11,955   0.72   3,062,107   10,602  0.70 
               
Noninterest-bearing demand deposits  1,205,809         1,052,116      
Other liabilities  42,659         37,793      
Stockholders' equity  541,301         522,848      
  Total liabilities and stockholders' equity $   5,157,293        $4,674,864      
               
Net interest income and spread   $   86,276   3.33 %  $76,158  3.26%
  Less: tax-equivalent adjustment      3,697         3,304    
Net interest income   $   82,579        $72,854    
               
Interest income/earning assets     4.05 %    3.96%
Interest expense/earning assets       0.49       0.49 
  Net interest margin     3.56 %    3.47%
               
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and 2016. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $3.7 million and $3.3 million in 2017 and 2016, respectively.  
(2) Non-accrual loans are included in the average balances.  
(3) Includes only investments that are exempt from federal taxes.  
               

            

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