SANDY SPRING BANCORP INC - FORM 8-K - EX-99.1

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8-K - SANDY SPRING BANCORP INC	v229185_8k.htm

NEWS RELEASE

FOR IMMEDIATE RELEASE

SANDY SPRING BANCORP REPORTS INCREASED SECOND QUARTER PROFIT OF $8.3 MILLION

OLNEY, MARYLAND, July 21, 2011 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the second quarter of 2011 of $8.3 million ($.34 per diluted share) compared to net income of $6.3 million ($0.26 per diluted share) for the second quarter of 2010 and net income of $7.3 million ($0.30 per diluted share) for the first quarter of 2011. The second quarter of 2011 included a provision for loan and lease losses of $1.2 million compared to $6.1 million for the second quarter of 2010 and $1.5 million for the first quarter of 2011.

Net income for the six-month period ended June 30, 2011 totaled $15.6 million ($0.65 per diluted share) compared to net income of $6.8 million ($0.33 per diluted share) for the prior year period. Results for the year-to-date included a provision for loan and lease losses totaling $2.7 million for the first six months of 2011. Results for the first six months of 2010 included a provision for loan and lease losses of $21.1 million.

“We are pleased with our growth in lower cost core deposits, which form the foundation of many of the banking relationships with our clients. Together with continued growth in our wealth management lines, these provide us with multiple opportunities to deliver an outstanding experience to our clients,” said Daniel J. Schrider, President and Chief Executive Officer. “While most indicators continue to point to a very extended and uneven economic recovery, and as quality loan demand continues to be inconsistent at best, we originated $115 million in commercial loans to new and existing clients during the first half of 2011. We believe our improving credit metrics, strong capital and liquidity levels and our community bank presence position us extremely well for the growth opportunities that should occur, as this challenging economic environment improves over time.”

Second Quarter Highlights:

While loan balances declined slightly compared to the first quarter of 2011, new commercial loan originations totaled $115 million for the first six months of the year compared to $53 million for the prior year period.

Deposits increased 2% for the second quarter of 2011 compared to the first quarter of the year due to significant growth of noninterest-bearing demand deposits, which grew 5% during this period.

The net interest margin was 3.58% for the second quarter of 2011, which was the same as the second quarter of 2010 compared to 3.65% for the first quarter of 2011.

Revenue from wealth management services, which includes fees from trust and investment management and sales of investment products, increased 15% for the second quarter of 2011 compared to the second quarter of 2010 due to growth in assets under management.

The provision for loan and lease losses totaled $1.2 million for the quarter compared to $6.1 million for the second quarter of 2010 and $1.5 million for the first quarter of 2011 as credit quality continues to improve.

Non-performing loans declined to $76.5 million compared to $109.3 million at June 30, 2010 and $88.3 million at March 31, 2011. This decrease also resulted in a coverage ratio of the allowance for loan and lease losses to non-performing loans of 72% at June 30, 2011 compared to a ratio of 65% at June 30, 2010 and 67% at March 31, 2011.

Review of Balance Sheet and Credit Quality

Comparing June 30, 2011 balances to June 30, 2010, total assets decreased 2% to $3.6 billion from $3.7 billion. Total loans and leases decreased 4% to $2.1 billion compared to the prior year. The decrease in loans was due primarily to declines in commercial business and consumer loans which were partially offset by an increase in commercial investor real estate loans. The overall trend was due to a combined general lack of loan demand and increased pay-downs as a result of the soft economy. During the current quarter the commercial loan portfolio declined slightly, while total loans at quarter end decreased 1% as compared to such loan balances at March 31, 2011.

Customer funding sources, which include deposits and other short-term borrowings from core customers, decreased 1% compared to the second quarter of 2010. This decrease was due largely to a $95 million or 13% decline in certificates of deposit as a result of a reduction in rates reflecting the Company’s net interest margin strategy. Noninterest-bearing and interest-bearing checking accounts increased $104 million or 12%, offsetting the decline in certificates of deposit. Growth in checking accounts was the main driver in the growth in core deposits due to our clients’ emphasis on safety and liquidity. Compared to the prior year, money market accounts experienced a 3% decline due mainly to clients’ redeployment of funds into alternative investment products.

Stockholders’ equity totaled $423.7 million at June 30, 2011 compared to $483.7 million at June 30, 2010. The decline in equity was the direct result of the repayment of $84.0 million of preferred stock and the related warrant previously issued in 2008 as part of the Company’s participation in the TARP Capital Purchase Program. However, the ratio of tangible common equity to tangible assets increased significantly from 8.63% at June 30, 2010 to 9.51% at June 30, 2011. At June 30, 2011, the Company had a total risk-based capital ratio of 16.01%, a tier 1 risk-based capital ratio of 14.75% and a tier 1 leverage ratio of 10.64%.

Non-performing assets totaled $83.4 million at June 30, 2011 compared to $118.0 million at June 30, 2010 and $96.3 million at March 31, 2011. The decrease compared to the prior year was due primarily to decreases in both non-accrual loans and loans 90 days or more delinquent, particularly in the commercial real estate mortgage and construction portfolios, as a result of charge-offs and pay-downs on existing problem credits and a significant reduction in the migration of new credits to non-performing status.

The provision for loan and lease losses totaled $1.2 million for the second quarter of 2011 compared to $6.1 million for the second quarter of 2010 and $1.5 million for the first quarter of 2011. The decrease from the prior year quarter was primarily the result of a lower level of non-performing loans at June 30, 2011 compared to June 30, 2010.

Loan charge-offs, net of recoveries, totaled $4.8 million for the second quarter of 2011 compared to net charge-offs of $4.3 million for the second quarter of 2010 and net charge-offs of $4.7 million for the first quarter of 2011. The allowance for loan and lease losses represented 2.58% of outstanding loans and leases and 72% of non-performing loans at June 30, 2011 compared to 3.22% of outstanding loans and leases and 65% of non-performing loans at June 30, 2010 and 2.74% of outstanding loans and leases and 67% of non-performing loans at March 31, 2011. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the second quarter of 2011 decreased by $0.8 million compared to the second quarter of 2010 due primarily to a decrease in interest income resulting from lower loan balances during the quarter. This decline in interest income was somewhat offset by a decrease in interest expense as average rates paid on deposit products decreased together with a planned run-off in average deposits. These factors resulted in a net interest margin that was unchanged for the second quarter of 2011 compared to the second quarter of the prior year.

Non-interest income increased $0.1 million or 1% to $10.8 million for the second quarter of 2011 compared to $10.7 million for the second quarter of 2010. This increase was due primarily to increases in trust and investment management fees of $0.5 million or 19% and fees on sales of investment products, which increased $0.1 million or 7%, both due largely to increased assets under management. These increases were partially offset by lower deposit service charges, which declined $0.4 million or 13% as a result of the impact of recently enacted legislation on overdraft fees.

Non-interest expenses were $25.8 million for the second quarter of 2011 compared to $24.8 million in the second quarter of 2010, an increase of $1.0 million or 4%. This increase was driven by an increase of $0.5 million or 3% in salaries and benefits expense due to higher salary and incentive compensation expenses. Other non-interest expenses increased $0.9 million or 28% due largely to losses on sales of other real estate owned. These increases were partially offset by lower FDIC insurance premiums.

Net interest income for the first six months of 2011 decreased by $1.0 million from the same period of the prior year as a result of the decline in interest income due mainly to lower loan balances and selected loans placed on non-accrual status during this period. The impact of a $5.1 million decline in interest income was substantially mitigated by a $4.1 million decline in interest expense as average rates paid on deposit products decreased, although at a slower pace. This resulted in a net interest margin for the first six months of 2011 of 3.62% compared to 3.57% for first six months of 2010.

Non-interest income decreased $0.7 million or 3% to $20.8 million for the first six months of 2011 as compared to $21.5 million in 2010. Deposit service charges declined $0.7 million as a result of the impact of recently enacted legislation on overdraft fees. Trust and investment management fees increased $0.8 million or 17% primarily due to growth in assets under management. Fees on sales of investment products increased $0.2 million or 11% due to an increase in managed assets and increased sales of financial products. These increases in asset management fee income substantially offset the erosion experienced in deposit service fee income. Visa check fees increased $0.2 million or 12% due to increased volume of electronic transactions. Net security gains declined $0.2 million in the first six months of 2011 as compared to 2010.

Non-interest expenses were $51.9 million in the first six months of 2011 compared to $49.6 million in the same period of 2010, an increase of $2.3 million or 5%. Salaries and benefits expense increased $1.7 million or 6% due primarily to higher salary and incentive compensation expenses. Other non-interest expenses increased $1.3 million or 17% due largely to losses on sales of other real estate owned and loan work out expenses as the Company continued to reduce the level of nonperforming assets. These increases were partially offset by a reduction in outside data services expense and lower FDIC insurance premiums.

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 877-380-5664. 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 12:00 midnight (ET) August 21, 2011. A telephone voice replay will also be available during that same time period at 800-642-1687. Please use pass code #78461587 to access.

About Sandy Spring Bancorp/Sandy Spring Bank

With $3.6 billion in assets, Sandy Spring Bancorp is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Sandy Spring Bancorp is the largest publicly traded banking company headquartered and operating in Maryland. Sandy Spring is a community banking organization that focuses its lending and other services on businesses and consumers in the local market area. Independent and community-oriented, Sandy Spring Bank was founded in 1868 and offers a broad range of commercial banking, retail banking and trust services through 44 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George’s counties in Maryland, and Arlington, Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of leasing, insurance and investment management services. Visit www.sandyspringbank.com to locate an ATM near you or for more information about Sandy Spring Bank.

For additional information or questions, please contact:

Daniel J. Schrider, President & Chief Executive Officer, or

Philip J. Mantua, E.V.P. & Chief Financial Officer

Sandy Spring Bancorp

17801 Georgia Avenue

Olney, Maryland 20832

1-800-399-5919

Email: DSchrider@sandyspringbank.com

PMantua@sandyspringbank.com

Web site: www.sandyspringbank.com

Forward-Looking Statements

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

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

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2010, 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)	2011			2010			Change			2011			2010			Change
Results of Operations:
Net interest income	$	28,154		$	28,996			(3	)%	$	56,164		$	57,155			(2	)%
Provision for loan and lease losses		1,151			6,107			(81	)		2,666			21,132			(87	)
Non-interest income		10,802			10,674			1			20,794			21,521			(3	)
Non-interest expenses		25,838			24,758			4			51,900			49,571			5
Income before income taxes		11,967			8,805			36			22,392			7,973			181
Net income		8,296			6,259			33			15,587			6,760			131
Net income available to common stockholders	$	8,296		$	5,056			64		$	15,587		$	4,357			-

Return on average assets (1)		0.93	%		0.56	%					0.89	%		0.24	%
Return on average common equity (1)		8.03	%		5.13	%					7.65	%		2.50	%
Net interest margin		3.58	%		3.58	%					3.62	%		3.57	%
Efficiency ratio - GAAP (3)		66.33	%		62.41	%					67.44	%		63.01	%
Efficiency ratio - Non-GAAP (3)		62.82	%		59.44	%					63.94	%		60.25	%

Per share data:
Basic net income	$	0.34		$	0.26			31	%	$	0.65		$	0.33			97	%
Basic net income per common share		0.34			0.21			62			0.65			0.21			-
Diluted net income		0.34			0.26			31			0.65			0.33			97
Diluted net income per common share		0.34			0.21			62			0.65			0.21			-
Dividends declared per common share		0.08			0.01			-			0.16			0.02			-
Book value per common share		17.58			16.80			5			17.58			16.80			5
Average fully diluted shares		24,130,357			24,033,158			-			24,123,183			20,654,797			17

Financial Condition at period-end:
Assets	$	3,612,016		$	3,701,150			(2	)%	$	3,612,016		$	3,701,150			(2	)%
Total loans and leases		2,137,920			2,218,832			(4	)		2,137,920			2,218,832			(4	)
Investment securities		1,128,589			1,062,541			6			1,128,589			1,062,541			6
Deposits		2,657,861			2,659,956			-			2,657,861			2,659,956			-
Stockholders' equity		423,684			483,681			(12	)		423,684			483,681			(12	)

Capital ratios:
Tier 1 leverage		10.64	%		12.00	%					10.64	%		12.00	%
Tier 1 capital to risk-weighted assets		14.75	%		16.50	%					14.75	%		16.50	%
Total regulatory capital to risk-weighted assets		16.01	%		17.77	%					16.01	%		17.77	%
Tangible common equity to tangible assets (4)		9.51	%		8.63	%					9.51	%		8.63	%
Average equity to average assets		11.63	%		13.05	%					11.63	%		11.93	%

Credit quality ratios:
Allowance for loan and lease losses to loans and leases		2.58	%		3.22	%					2.58	%		3.22	%
Nonperforming loans to total loans		3.58	%		4.93	%					3.58	%		4.93	%
Nonperforming assets to total assets		2.31	%		3.19	%					2.31	%		3.19	%
Annualized net charge-offs to average loans and leases (2)		0.90	%		0.77	%					0.90	%		1.28	%

(1)	Calculation utilizes net income available to common stockholders.

(2)	Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.

(3)

The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.

(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, other comprehensive losses and preferred stock. See the Reconciliation Table included with these Financial Highlights.

Sandy Spring Bancorp, Inc. and Subsidiaries

RECONCILIATION TABLE - UNAUDITED

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
GAAP efficiency ratio:
Non-interest expenses	$	25,838		$	24,758		$	51,900		$	49,571
Net interest income plus non-interest income	$	38,956		$	39,670		$	76,958		$	78,676

Efficiency ratio–GAAP		66.33	%		62.41	%		67.44	%		63.01	%

Non-GAAP efficiency ratio:
Non-interest expenses	$	25,838		$	24,758		$	51,900		$	49,571
Less non-GAAP adjustment:
Amortization of intangible assets		462			496			923			992
Non-interest expenses as adjusted	$	25,376		$	24,262		$	50,977		$	48,579

Net interest income plus non-interest income	$	38,956		$	39,670		$	76,958		$	78,676
Plus non-GAAP adjustment:
Tax-equivalent income		1,427			1,155			2,734			2,163
Less non-GAAP adjustments:
Securities gains		32			95			52			298
OTTI recognized in earnings		(43	)		(89	)		(84	)		(89	)
Net interest income plus non-interest income - as adjusted	$	40,394		$	40,819		$	79,724		$	80,630

Efficiency ratio–Non-GAAP		62.82	%		59.44	%		63.94	%		60.25	%

Tangible common equity ratio:
Total stockholders' equity	$	423,684		$	483,681		$	423,684		$	483,681
Accumulated other comprehensive income		(5,484	)		(6,825	)		(5,484	)		(6,825	)
Goodwill		(76,816	)		(76,816	)		(76,816	)		(76,816	)
Other intangible assets, net		(5,656	)		(7,546	)		(5,656	)		(7,546	)
Preferred stock		-			(80,420	)		-			(80,420	)
Tangible common equity	$	335,728		$	312,074		$	335,728		$	312,074

Total assets	$	3,612,016		$	3,701,150		$	3,612,016		$	3,701,150
Goodwill		(76,816	)		(76,816	)		(76,816	)		(76,816	)
Other intangible assets, net		(5,656	)		(7,546	)		(5,656	)		(7,546	)
Tangible assets	$	3,529,544		$	3,616,788		$	3,529,544		$	3,616,788

Tangible common equity ratio		9.51	%		8.63	%		9.51	%		8.63	%

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED

	June 30,			December 31,			June 30,
(Dollars in thousands)	2011			2010			2010
Assets
Cash and due from banks	$	76,552		$	44,696		$	43,208
Federal funds sold		1,231			1,813			1,602
Interest-bearing deposits with banks		42,927			16,608			139,358
Cash and cash equivalents		120,710			63,117			184,168
Residential mortgage loans held for sale (at fair value)		11,650			22,717			15,398
Investments available-for-sale (at fair value)		995,496			907,283			915,719
Investments held-to-maturity — fair value of $103,054, $104,124 and $117,342 at June 30, 2011, December 31, 2010 and June 30, 2010, respectively		100,030			101,590			112,491
Other equity securities		33,063			34,070			34,331
Total loans and leases		2,137,920			2,156,232			2,218,832
Less: allowance for loan and lease losses		(55,246	)		(62,135	)		(71,377	)
Net loans and leases		2,082,674			2,094,097			2,147,455
Premises and equipment, net		48,921			49,004			48,592
Other real estate owned		6,951			9,493			8,730
Accrued interest receivable		13,088			12,570			13,521
Goodwill		76,816			76,816			76,816
Other intangible assets, net		5,656			6,578			7,546
Other assets		116,961			142,053			136,383
Total assets	$	3,612,016		$	3,519,388		$	3,701,150

Liabilities
Noninterest-bearing deposits	$	648,605		$	566,812		$	593,007
Interest-bearing deposits		2,009,256			1,983,060			2,066,949
Total deposits		2,657,861			2,549,872			2,659,956
Securites sold under retail repurchase agreements and federal funds purchased		65,214			96,243			86,062
Advances from FHLB		405,583			405,758			409,434
Subordinated debentures		35,000			35,000			35,000
Accrued interest payable and other liabilities		24,674			24,946			27,017
Total liabilities		3,188,332			3,111,819			3,217,469

Stockholders' Equity
Preferred stock—par value $1.00 (liquidation preference of $1,000 per share) shares authorized, issued and outstanding 83,094, net of discount of $2,674 at June 30, 2010		-			-			80,420
Common stock — par value $1.00; shares authorized 50,000,000; shares issued and outstanding 24,095,123, 24,046,627 and 23,998,950 at June 30, 2011, December 31, 2010 and June 30, 2010, respectively		24,095			24,047			23,999
Warrants		-			3,699			3,699
Additional paid in capital		177,303			177,344			176,167
Retained earnings		216,802			205,099			192,571
Accumulated other comprehensive income (loss)		5,484			(2,620	)		6,825
Total stockholders' equity		423,684			407,569			483,681
Total liabilities and stockholders' equity	$	3,612,016		$	3,519,388		$	3,701,150

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)	2011			2010			2011			2010
Interest Income:
Interest and fees on loans and leases	$	26,816		$	29,284		$	53,806		$	58,658
Interest on loans held for sale		124			92			246			173
Interest on deposits with banks		21			63			39			97
Interest and dividends on investment securities:
Taxable		5,649			6,298			11,089			12,304
Exempt from federal income taxes		2,398			1,771			4,577			3,635
Interest on federal funds sold		-			-			1			1
Total interest income		35,008			37,508			69,758			74,868
Interest Expense:
Interest on deposits		2,987			4,568			5,900			9,858
Interest on retail repurchase agreements and federal funds purchased		53			65			106			137
Interest on advances from FHLB		3,590			3,653			7,141			7,273
Interest on subordinated debt		224			226			447			445
Total interest expense		6,854			8,512			13,594			17,713
Net interest income		28,154			28,996			56,164			57,155
Provision for loan and lease losses		1,151			6,107			2,666			21,132
Net interest income after provision for loan and lease losses		27,003			22,889			53,498			36,023
Non-interest Income:
Investment securities gains		32			95			52			298
Total other-than-temporary impairment ("OTTI") losses		(43	)		(834	)		(102	)		(834	)
Portion of OTTI losses recognized in other comprehensive income, before taxes		-			745			18			745
Net OTTI recognized in earnings		(43	)		(89	)		(84	)		(89	)
Service charges on deposit accounts		2,437			2,791			4,689			5,417
Mortgage banking activities		808			806			1,263			1,234
Fees on sales of investment products		1,005			941			1,863			1,682
Trust and investment management fees		3,018			2,534			5,805			4,983
Insurance agency commissions		953			928			2,133			2,917
Income from bank owned life insurance		654			703			1,300			1,396
Visa check fees		949			855			1,783			1,595
Other income		989			1,110			1,990			2,088
Total non-interest income		10,802			10,674			20,794			21,521
Non-interest Expenses:
Salaries and employee benefits		14,676			14,181			29,300			27,552
Occupancy expense of premises		2,790			2,709			5,933			5,799
Equipment expenses		1,128			1,304			2,270			2,518
Marketing		709			573			1,194			1,089
Outside data services		999			918			1,994			2,041
FDIC insurance		736			1,186			1,780			2,327
Amortization of intangible assets		462			496			923			992
Other expenses		4,338			3,391			8,506			7,253
Total non-interest expenses		25,838			24,758			51,900			49,571
Income before income taxes		11,967			8,805			22,392			7,973
Income tax expense		3,671			2,546			6,805			1,213
Net income	$	8,296		$	6,259		$	15,587		$	6,760
Preferred stock dividends and discount accretion		-			1,203			-			2,403
Net income available to common stockholders	$	8,296		$	5,056		$	15,587		$	4,357

Net Income Per Share Amounts:
Basic net income per share	$	0.34		$	0.26		$	0.65		$	0.33
Basic net income per common share		0.34		$	0.21			0.65			0.21
Diluted net income per share	$	0.34		$	0.26		$	0.65		$	0.33
Diluted net income per common share		0.34		$	0.21			0.65			0.21
Dividends declared per common share	$	0.08		$	0.01		$	0.16		$	0.02

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

	2011						2010
(Dollars in thousands, except per share data)	Q2			Q1			Q4			Q3			Q2			Q1
Profitability for the quarter:
Tax-equivalent interest income	$	36,435		$	36,057		$	37,466		$	38,688		$	38,663		$	38,368
Interest expense		6,854			6,740			7,161			7,868			8,512			9,201
Tax-equivalent net interest income		29,581			29,317			30,305			30,820			30,151			29,167
Tax-equivalent adjustment		1,427			1,307			1,352			1,321			1,155			1,008
Provision for loan and lease losses		1,151			1,515			2,323			2,453			6,107			15,025
Non-interest income		10,802			9,992			11,722			10,539			10,674			10,847
Non-interest expenses		25,838			26,062			26,201			25,140			24,758			24,813
Income (loss) before income taxes		11,967			10,425			12,151			12,445			8,805			(832	)
Income tax expense (benefit)		3,671			3,134			3,875			3,961			2,546			(1,333	)
Net Income		8,296			7,291			8,276			8,484			6,259			501
Net Income (loss) available to common stockholders	$	8,296		$	7,291		$	6,604		$	6,410		$	5,056		$	(699	)
Financial ratios:
Return on average assets		0.93	%		0.84	%		0.73	%		0.70	%		0.56	%		(0.08	)%
Return on average common equity		8.03	%		7.26	%		6.34	%		6.26	%		5.13	%		(0.92	)%
Net interest margin		3.58	%		3.65	%		3.61	%		3.64	%		3.58	%		3.56	%
Efficiency ratio - GAAP (1)		66.33	%		68.58	%		64.42	%		62.79	%		62.41	%		63.61	%
Efficiency ratio - Non-GAAP (1)		62.82	%		65.09	%		61.85	%		59.08	%		59.44	%		61.08	%
Per share data:
Basic net income per share	$	0.34		$	0.30		$	0.34		$	0.35		$	0.26		$	0.03
Basic net income (loss) per common share		0.34			0.30			0.27			0.27			0.21			(0.04	)
Diluted net income per share		0.34			0.30			0.34			0.35			0.26			0.03
Diluted net income (loss) per common share		0.34			0.30			0.27			0.27			0.21			(0.04	)
Dividends declared per common share		0.08			0.08			0.01			0.01			0.01			0.01
Book value per common share		17.58			16.99			16.95			17.14			16.80			16.33
Average fully diluted shares		24,130,357			24,115,906			24,087,482			24,102,497			24,033,158			17,243,415
Non-interest income:
Securities gains	$	32		$	20		$	473		$	25		$	95		$	203
Net OTTI recognized in earnings		(43	)		(41	)		(43	)		(380	)		(89	)		-
Service charges on deposit accounts		2,437			2,252			2,342			2,567			2,791			2,626
Mortgage banking activities		808			455			914			1,516			806			428
Fees on sales of investment products		1,005			858			974			782			941			741
Trust and investment management fees		3,018			2,787			2,799			2,505			2,534			2,449
Insurance agency commissions		953			1,180			1,334			978			928			1,989
Income from bank owned life insurance		654			646			695			709			703			693
Visa check fees		949			834			887			843			855			740
Other income		989			1,001			1,347			994			1,110			978
Total non-interest income	$	10,802		$	9,992		$	11,722		$	10,539		$	10,674		$	10,847
Non-interest expense:
Salaries and employee benefits	$	14,676		$	14,624		$	14,077		$	13,841		$	14,181		$	13,371
Occupancy expense of premises		2,790			3,143			2,852			2,826			2,709			3,090
Equipment expenses		1,128			1,142			1,153			1,137			1,304			1,214
Marketing		709			485			681			589			573			516
Outside data services		999			995			985			966			918			1,123
FDIC insurance		736			1,044			1,114			1,056			1,186			1,141
Amortization of intangible assets		462			461			472			495			496			496
Other expenses		4,338			4,168			4,867			4,230			3,391			3,862
Total non-interest expense	$	25,838		$	26,062		$	26,201		$	25,140		$	24,758		$	24,813

(1) The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization and the goodwill impairment loss; 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

	2011						2010
(Dollars in thousands)	Q2			Q1			Q4			Q3			Q2			Q1
Balance sheets at quarter end:
Residential mortgage loans	$	445,605		$	444,519		$	436,534		$	442,723		$	458,502		$	460,129
Residential construction loans		81,425			84,939			91,273			92,485			86,393			83,902
Commercial ADC loans		149,215			151,135			151,061			153,139			155,751			177,498
Commercial investor real estate loans		353,749			355,967			327,782			335,426			328,244			316,336
Commercial owner occupied real estate loans		511,271			509,215			503,286			511,453			511,673			518,271
Commercial business loans		225,624			231,448			250,255			240,671			263,886			279,520
Leasing		10,200			12,477			15,551			17,895			20,823			23,474
Consumer loans		360,831			360,349			380,490			391,415			393,560			397,527
Total loans and leases		2,137,920			2,150,049			2,156,232			2,185,207			2,218,832			2,256,657
Less: allowance for loan and lease losses		(55,246	)		(58,918	)		(62,135	)		(67,282	)		(71,377	)		(69,575	)
Net loans and leases		2,082,674			2,091,131			2,094,097			2,117,925			2,147,455			2,187,082
Goodwill		76,816			76,816			76,816			76,816			76,816			76,816
Other intangible assets, net		5,656			6,118			6,578			7,050			7,546			8,042
Total assets		3,612,016			3,549,533			3,519,388			3,606,617			3,701,150			3,673,246
Total deposits		2,657,861			2,599,634			2,549,872			2,585,496			2,659,956			2,653,448
Customer repurchase agreements		65,214			75,516			86,243			97,884			86,062			78,416
Total stockholders' equity		423,684			409,076			407,569			451,717			483,681			471,857
Quarterly average balance sheets:
Residential mortgage loans	$	455,803		$	458,329		$	461,700		$	466,437		$	467,970		$	462,803
Residential construction loans		84,144			85,891			92,033			87,522			85,617			89,732
Commercial ADC loans		149,773			149,071			155,795			154,863			165,510			182,918
Commercial investor real estate loans		352,668			340,008			330,717			335,279			324,717			317,671
Commercial owner occupied real estate loans		509,273			500,875			505,248			512,370			512,997			522,398
Commercial business loans		225,646			236,949			240,083			253,058			271,839			292,844
Leasing		11,154			14,009			16,562			19,295			22,329			24,648
Consumer loans		362,098			367,261			387,375			393,491			395,833			398,233
Total loans and leases		2,150,559			2,152,393			2,189,513			2,222,315			2,246,812			2,291,247
Securities		1,121,325			1,054,740			1,112,128			1,058,175			1,013,756			970,681
Total earning assets		3,305,059			3,237,556			3,332,705			3,360,758			3,379,388			3,318,070
Total assets		3,566,278			3,500,807			3,594,812			3,620,881			3,645,090			3,591,786
Total interest-bearing liabilities		2,519,114			2,485,451			2,534,716			2,571,000			2,596,353			2,653,187
Noninterest-bearing demand deposits		607,092			582,441			587,570			568,835			547,245			524,313
Total deposits		2,607,854			2,548,117			2,584,025			2,607,190			2,612,633			2,640,853
Customer repurchase agreements		70,313			79,067			92,049			87,927			85,178			81,622
Total stockholders' equity		414,624			407,007			446,256			455,101			475,521			387,099
Capital and credit quality measures:
Average equity to average assets		11.63	%		11.63	%		12.41	%		12.57	%		13.05	%		10.78	%
Allowance for loan and lease losses to loans and leases		2.58	%		2.74	%		2.88	%		3.08	%		3.22	%		3.08	%
Non-performing loans to total loans		3.58	%		4.11	%		4.08	%		4.27	%		4.93	%		6.05	%
Non-performing assets to total assets		2.31	%		2.71	%		2.78	%		2.87	%		3.19	%		3.90	%
Annualized net charge-offs to average loans and leases (1)		0.90	%		0.89	%		1.37	%		1.18	%		0.77	%		1.78	%
Allowance for loan and lease losses to non-performing loans		72.22	%		66.69	%		70.57	%		72.08	%		65.30	%		50.98	%
Net charge-offs	$	4,823		$	4,732		$	7,470		$	6,548		$	4,305		$	10,009
Non-performing assets:
Non-accrual loans and leases	$	64,018		$	66,905		$	63,327		$	73,876		$	83,887		$	110,719
Loans and leases 90 days past due		4,177			7,176			14,154			18,268			24,226			25,085
Restructured loans and leases		8,299			14,266			10,571			1,199			1,199			682
Total non-performing loans		76,494			88,347			88,052			93,343			109,312			136,486
Other real estate owned, net		6,951			7,960			9,493			10,011			8,730			6,796
Other assets owned		-			-			200			200			-			-
Total non-performing assets	$	83,445		$	96,307		$	97,745		$	103,554		$	118,042		$	143,282

(1) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

	Three Months Ended June 30,
	2011								2010
						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 (3)	$	455,803		$	5,631		4.93	%	$	467,970		$	6,429		5.50	%
Residential construction loans		84,144			641		3.06			85,617			987		4.63
Commercial ADC loans		149,773			1,590		4.26			165,510			1,689		4.14
Commercial investor real estate loans		352,668			5,249		5.94			324,717			4,933		6.09
Commercial owner occupied real estate loans		509,273			7,497		5.93			512,997			7,794		6.09
Commercial business loans		225,646			2,805		4.99			271,839			3,290		4.85
Leasing		11,154			190		6.82			22,329			405		7.24
Consumer loans		362,098			3,337		3.72			395,833			3,849		3.92
Total loans and leases (2)		2,150,559			26,940		5.02			2,246,812			29,376		5.24
Taxable securities		873,062			5,983		2.74			856,205			6,543		3.06
Tax-exempt securities (4)		248,263			3,491		5.62			157,551			2,681		6.92
Interest-bearing deposits with banks		31,863			21		0.26			117,019			63		0.21
Federal funds sold		1,312			-		0.13			1,801			-		0.18
Total interest-earning assets		3,305,059			36,435		4.42			3,379,388			38,663		4.59

Less: allowance for loan and lease losses		(58,504	)							(72,137	)
Cash and due from banks		46,341								44,059
Premises and equipment, net		49,167								48,776
Other assets		224,215								245,004
Total assets	$	3,566,278							$	3,645,090

Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	343,060			104		0.12	%	$	292,402			91		0.12	%
Regular savings deposits		184,688			53		0.11			165,977			51		0.12
Money market savings deposits		854,003			1,022		0.48			882,877			1,308		0.59
Time deposits		619,011			1,808		1.17			724,133			3,118		1.73
Total interest-bearing deposits		2,000,762			2,987		0.60			2,065,389			4,568		0.89
Other borrowings		77,731			53		0.28			85,178			65		0.30
Advances from FHLB		405,621			3,590		3.55			410,786			3,653		3.57
Subordinated debentures		35,000			224		2.56			35,000			226		2.58
Total interest-bearing liabilities		2,519,114			6,854		1.09			2,596,353			8,512		1.31

Noninterest-bearing demand deposits		607,092								547,245
Other liabilities		25,448								25,971
Stockholders' equity		414,624								475,521
Total liabilities and stockholders' equity	$	3,566,278							$	3,645,090

Net interest income and spread				$	29,581		3.33	%				$	30,151		3.28	%
Less: tax-equivalent adjustment					1,427								1,155
Net interest income				$	28,154							$	28,996

Interest income/earning assets							4.42	%							4.59	%
Interest expense/earning assets							0.84								1.01
Net interest margin							3.58	%							3.58	%

(1)	Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2011 and 2010. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.4 million and $1.2 million in 2011 and 2010, respectively.

(2)	Non-accrual loans are included in the average balances.

(3)	Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.

(4)	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,
	2011								2010
						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 (3)	$	457,059		$	11,374		4.97	%	$	465,401		$	12,908		5.55	%
Residential construction loans		85,013			1,549		3.68			87,663			2,081		4.79
Commercial ADC loans		149,424			3,125		4.22			160,921			2,898		3.63
Commercial investor real estate loans		346,410			10,328		5.98			334,835			10,048		6.05
Commercial owner occupied real estate loans		505,060			14,926		5.99			517,295			15,523		6.05
Commercial business loans		231,267			5,648		4.93			282,283			6,853		4.89
Leasing		12,574			419		6.66			23,482			844		7.19
Consumer loans		364,665			6,683		3.72			397,027			7,676		3.91
Total loans and leases (2)		2,151,472			54,052		5.06			2,268,907			58,831		5.22
Taxable securities		860,042			11,766		2.74			829,326			12,764		3.08
Tax-exempt securities (4)		228,175			6,634		5.81			163,011			5,338		6.87
Interest-bearing deposits with banks		30,359			39		0.26			85,890			97		0.23
Federal funds sold		1,447			1		0.15			1,764			1		0.16
Total interest-earning assets		3,271,495			72,492		4.45			3,348,898			77,031		4.64

Less: allowance for loan and lease losses		(60,040	)							(69,680	)
Cash and due from banks		44,654								44,545
Premises and equipment, net		49,178								49,058
Other assets		228,437								245,764
Total assets	$	3,533,724							$	3,618,585

Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	330,470			176		0.11	%	$	283,313			175		0.12	%
Regular savings deposits		180,067			95		0.11			162,009			87		0.11
Money market savings deposits		850,359			1,956		0.46			896,163			2,881		0.65
Time deposits		622,420			3,673		1.19			749,339			6,715		1.81
Total interest-bearing deposits		1,983,316			5,900		0.60			2,090,824			9,858		0.95
Other borrowings		78,395			106		0.27			87,665			137		0.32
Advances from FHLB		405,665			7,141		3.55			411,125			7,273		3.57
Subordinated debentures		35,000			447		2.55			35,000			445		2.54
Total interest-bearing liabilities		2,502,376			13,594		1.10			2,624,614			17,713		1.36

Noninterest-bearing demand deposits		594,835								535,843
Other liabilities		25,676								26,574
Stockholders' equity		410,837								431,554
Total liabilities and stockholders' equity	$	3,533,724							$	3,618,585

Net interest income and spread				$	58,898		3.35	%				$	59,318		3.28	%
Less: tax-equivalent adjustment					2,734								2,163
Net interest income				$	56,164							$	57,155

Interest income/earning assets							4.45	%							4.64	%
Interest expense/earning assets							0.83								1.07
Net interest margin							3.62	%							3.57	%

(1)	Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2011 and 2010. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $2.7 million and $2.2 million in 2011 and 2010, respectively.

(2)	Non-accrual loans are included in the average balances.

(3)	Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.

(4)	Includes only investments that are exempt from federal taxes.

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SANDY SPRING BANCORP INC Reports