News release

 

FOR IMMEDIATE RELEASE

SANDY SPRING BANCORP REPORTS THIRD QUARTER PROFIT OF

$11.0 MILLION

 

OLNEY, MARYLAND, October 18, 2012 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the third quarter of 2012 of $11.0 million ($.44 per diluted share) compared to net income of $11.3 million ($0.47 per diluted share) for the third quarter of 2011 and net income of $7.2 million ($0.30 per diluted share) for the second quarter of 2012.

 

Net income for the nine-month period ended September 30, 2012 totaled $26.7 million ($1.09 per diluted share) compared to net income of $26.8 million ($1.11 per diluted share) for the prior year period.

 

“Our strong third quarter results were driven by the accretive effect on the net interest margin from the CommerceFirst acquisition, completed in the prior quarter,” said Daniel J. Schrider, President and Chief Executive Officer. “Together with continued improvement to our deposit mix, these factors produced a 12% increase in net interest income over the prior year quarter.”

 

“While the struggling economy and intense competition in our markets limited our loan growth during the quarter, non-interest income benefited from an increased volume of mortgage originations, most of which were sold in the secondary market,” said Schrider.

 

Third Quarter Highlights:

 

·

Pre-tax pre-provision income, a non-GAAP measure, was $17.0 million for the third quarter of 2012, a 23% increase over the third quarter of 2011 and a 16% increase over the second quarter of 2012.

 

·

The net interest margin was 3.67% for the third quarter of 2012, compared to 3.53% for the third quarter of 2011 and 3.62% for the second quarter of 2012.

 

·

Non-interest income increased 8% for the quarter compared to the prior year quarter due primarily to higher income from mortgage banking activities.

 

·

Non-performing loans decreased to $59.9 million at September 30, 2012 compared to $82.8 million at September 30, 2011 and $64.5 million at June 30, 2012. The decrease in the third quarter was due to a lower level of non-accrual loans.

 

  

Review of Balance Sheet and Credit Quality

 

Total assets increased 7% to $3.9 billion at September 30, 2012 compared to balances at September 30, 2011. Total loans and leases increased 15% to $2.5 billion compared to the prior year. This increase consisted of $157.2 million in loans from the acquisition of CommerceFirst and $166.4 million of internally-generated loan growth, primarily in the commercial loan portfolio. Total loans increased 10% compared to balances at December 31, 2011. Excluding the loans acquired in the CommerceFirst acquisition, total loans increased 8% compared to September 30, 2011 and 3% compared to December 31, 2011.

 

Customer funding sources, which include deposits and other short-term borrowings from customers, increased 8% compared to September 30, 2011. This increase was due primarily to a 22% increase in noninterest-bearing and interest-bearing checking accounts. The Company views the growth in checking accounts as an especially valuable metric as it provides additional opportunities to grow multiple product banking relationships with clients. Excluding the deposits acquired in the CommerceFirst acquisition, total customer funding sources increased 4% while certificates of deposit declined 17% at September 30, 2012 compared to balances at September 30, 2011, as the Company managed its deposit mix to maintain the net interest margin.

 

Tangible common equity, a non-GAAP metric, totaled $379.8 million at September 30, 2012 compared to $345.6 million at September 30, 2011 resulting in an increase in the ratio of tangible common equity to tangible assets from 9.75% at September 30, 2011 to 9.99% at September 30, 2012. This increase was due primarily to stock issued in connection with the CommerceFirst acquisition and net income earned during the period. At September 30, 2012, the Company had a total risk-based capital ratio of 15.56%, a tier 1 risk-based capital ratio of 14.31% and a tier 1 leverage ratio of 10.99%.

 

Non-performing loans decreased to $59.9 million at September 30, 2012 compared to $82.8 million at September 30, 2011 and $64.5 million at June 30, 2012. The Company’s credit quality metrics showed continued improvement due to resolution of existing problem credits and limited migration of new credits to non-performing status.

 

The provision for loan and lease losses was a charge of $0.2 million for the third quarter of 2012 compared to a credit of $3.5 million for the third quarter of 2011 and a charge of $1.6 million for the second quarter of 2012. The increase in the provision for the third quarter of 2012 compared to the third quarter of 2011 was due primarily to a decline in historical losses at September 30, 2011 which caused a credit balance in the provision for the third quarter of 2011. The decrease in the provision for the third quarter of 2012 compared to the second quarter of 2012 was largely due to a decline in total non-performing loans and related specific reserves.

 

Loan charge-offs, net of recoveries, totaled $2.9 million for the third quarter of 2012 compared to net charge-offs of $2.0 million for the third quarter of 2011 and $1.4 million for the second quarter of 2012. The allowance for loan and lease losses represented 1.73% of outstanding loans and leases and 71% of non-performing loans at September 30, 2012 compared to 2.32% of outstanding loans and leases and 60% of non-performing loans at September 30, 2011 and 1.83% of outstanding loans and leases and 70% of non-performing loans at June 30, 2012. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

 

 

Income Statement Review

 

Net interest income for the third quarter of 2012 increased by $3.5 million or 12% compared to the third quarter of 2011 due to an increase in average interest-earning assets resulting from the CommerceFirst transaction and organic growth. Combined with a lower cost deposit mix, these factors resulted in an increase in the net interest margin to 3.67% for the third quarter of 2012 compared to 3.53% for the third quarter of 2011.

 

Non-interest income increased $0.9 million or 8% to $12.2 million for the third quarter of 2012 compared to $11.3 million for the third quarter of 2011. This increase was due primarily to growth in income from mortgage banking activities of $0.8 million due to higher loan origination volumes and higher average gains on sales, both due to increased refinancing activity during the quarter. In addition, Visa check fees increased 6% over the prior year quarter due to a higher volume of electronic transactions.

 

Non-interest expenses were $27.2 million for the third quarter of 2012 compared to $25.8 million in the third quarter of 2011, an increase of $1.4 million or 5%. This increase was driven by higher salaries and benefits, occupancy and marketing expenses. The non-GAAP efficiency ratio improved to 58.9% for the third quarter of 2012 compared to 62.0% for the third quarter of 2011.

 

Net interest income for the first nine months of 2012 increased by $5.8 million or 7% compared to the first nine months of 2011 due to an increase in average earning assets resulting from organic loan growth, loans acquired in the CommerceFirst acquisition and an increased level of noninterest-bearing deposits, which more than offset lower earning asset yields. These factors, together with a decline in the cost of funds, resulted in an increase in the net interest margin to 3.62% for the first nine months of 2012 compared to 3.59% for the first nine months of 2011.

 

Non-interest income increased $2.6 million or 8% to $34.7 million for the first nine months of 2012 as compared to $32.1 million for 2011. This increase was due primarily to an increase of $1.9 million or 79% in income from mortgage banking activities due to higher volumes and increased average gains from refinancing activity. Revenue from wealth management services increased $0.3 million or 3% due primarily to higher assets under management.

 

Non-interest expenses were $82.7 million for the first nine months of 2012 compared to $77.7 million for the first nine months of 2011, an increase of $5.0 million or 6%. This increase was driven by a 7% increase in salaries and benefits expense due to merit salary increases, a larger staff and higher cost of health benefits. These expenses were partially offset by a 21% decrease in FDIC insurance premiums due to a change in calculation of such premiums effective in the third quarter of 2011. Excluding one-time merger expenses of $2.7 million in the first nine months of 2012, non-interest expenses increased only 3% over the prior year period. The non-GAAP efficiency ratio was 61.1% for the first nine months of 2012 compared to 63.3% for the first nine months of 2011.

  

Conference Call

 

The Company’s management will host a conference call to discuss its third quarter results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations’ section of the Sandy Spring Web site at www.sandyspringbank.com. Participants may call 1-877-317-6789. A password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 9:00 am (ET) November 19, 2012. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10018787.

 

 

 

About Sandy Spring Bancorp/Sandy Spring Bank

 

With $3.9 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 49 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 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, 2011, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov.

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

FINANCIAL HIGHLIGHTS - UNAUDITED

 

		Three Months Ended												Nine Months Ended
		September 30,								%				September 30,								%
(Dollars in thousands, except per share data)		2012				2011				Change				2012				2011				Change
Results of Operations:
Net interest income		$	31,785			$	28,330				12	%		$	90,299			$	84,494				7	%
Provision for loan and lease losses			232				(3,520	)			(107	)			2,481				(854	)			-
Non-interest income			12,242				11,336				8				34,709				32,130				8
Non-interest expenses			27,167				25,848				5				82,708				77,748				6
Income before income taxes			16,628				17,338				(4	)			39,819				39,730				-
Net income			10,990				11,257				(2	)			26,673				26,844				(1	)
Pre-tax pre-provision pre-merger expense income		$	16,996			$	13,818				23			$	45,008			$	38,876				16
Return on average assets			1.13	%			1.24	%							0.95	%			1.01	%
Return on average common equity			9.22	%			10.42	%							7.74	%			8.61	%
Net interest margin			3.67	%			3.53	%							3.62	%			3.59	%
Efficiency ratio - GAAP (1)			61.70	%			65.16	%							66.16	%			66.67	%
Efficiency ratio - Non-GAAP (1)			58.91	%			62.02	%							61.08	%			63.29	%
Per share data:
Basic net income		$	0.44			$	0.47				(6	)%		$	1.09			$	1.11				(2	)%
Diluted net income			0.44				0.47				(6	)			1.09				1.11				(2	)
Average fully diluted shares			24,949,205				24,142,137				3				24,535,439				24,127,814				2
Dividends declared per share			0.12				0.08				50				0.34				0.24				42
Book value per share			19.35				18.31				6				19.35				18.31				6
Tangible book value per share			15.26				14.35				6				15.26				14.35				6
Outstanding shares			24,896,136				24,079,204				3				24,896,136				24,079,204				3
Financial Condition at period-end:
Investment securities		$	1,074,918			$	1,174,180				(8	)%		$	1,074,918			$	1,174,180				(8	)%
Loans and leases			2,468,985				2,145,403				15				2,468,985				2,145,403				15
Interest-earning assets			3,614,310				3,370,360				7				3,614,310				3,370,360				7
Assets			3,887,427				3,626,043				7				3,887,427				3,626,043				7
Deposits			2,880,262				2,640,324				9				2,880,262				2,640,324				9
Interest-bearing liabilities			2,560,040				2,517,180				2				2,560,040				2,517,180				2
Stockholders' equity			481,810				440,791				9				481,810				440,791				9
Capital ratios:
Tier 1 leverage			10.99	%			10.79	%							10.99	%			10.79	%
Tier 1 capital to risk-weighted assets			14.31	%			14.96	%							14.31	%			14.96	%
Total regulatory capital to risk-weighted assets			15.56	%			16.21	%							15.56	%			16.21	%
Tangible common equity to tangible assets (2)			9.99	%			9.75	%							9.99	%			9.75	%
Average equity to average assets			12.27	%			11.87	%							12.31	%			11.71	%
Credit quality ratios:
Allowance for loan and lease losses to loans and leases			1.73	%			2.32	%							1.73	%			2.32	%
Non-performing loans to total loans			2.42	%			3.86	%							2.42	%			3.86	%
Non-performing assets to total assets			1.78	%			2.50	%							1.78	%			2.50	%
Allowance for loan and lease losses to non-performing loans			71.18	%			60.01	%							71.18	%			60.01	%
Annualized net charge-offs to average loans and leases (3)			0.46	%			0.37	%							0.53	%			0.72	%

 

(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 merger expenses from non-interest expense; securities gains (losses) from non-interest income; OTTI; and the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.

(2)

The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets and other comprehensive gains (losses). See the Reconciliation Table included with these Financial Highlights.

(3)

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

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(Dollars in thousands)		2012				2011				2012				2011
Pre-tax pre-provision pre-merger expense income:
Net income		$	10,990			$	11,257			$	26,673			$	26,844
Plus non-GAAP adjustment:
Merger expenses			136				-				2,708				-
Income taxes			5,638				6,081				13,146				12,886
Provision (credit) for loan and lease losses			232				(3,520	)			2,481				(854	)
Pre-tax pre-provision pre-merger expense income		$	16,996			$	13,818			$	45,008			$	38,876
GAAP efficiency ratio:
Non-interest expenses		$	27,167			$	25,848			$	82,708			$	77,748
Net interest income plus non-interest income		$	44,027			$	39,666			$	125,008			$	116,624
GAAP Efficiency ratio			61.70	%			65.16	%			66.16	%			66.67	%
Non-GAAP efficiency ratio:
Non-interest expenses		$	27,167			$	25,848			$	82,708			$	77,748
Less non-GAAP adjustment:
Amortization of intangible assets			476				461				1,403				1,384
Merger expenses			136				-				2,708				-
Non-interest expenses -  as adjusted		$	26,555			$	25,387			$	78,597			$	76,364
Net interest income plus non-interest income		$	44,027			$	39,666			$	125,008			$	116,624
Plus non-GAAP adjustment:
Tax-equivalent income			1,324				1,420				4,040				4,154
Less non-GAAP adjustments:
Securities gains			296				231				459				283
OTTI recognized in earnings			(23	)			(76	)			(95	)			(160	)
Net interest income plus non-interest income - as adjusted		$	45,078			$	40,931			$	128,684			$	120,655
Non-GAAP Efficiency ratio			58.91	%			62.02	%			61.08	%			63.29	%
Tangible common equity ratio:
Total stockholders' equity		$	481,810			$	440,791			$	481,810			$	440,791
Accumulated other comprehensive income (loss)			(16,433	)			(13,147	)			(16,433	)			(13,147	)
Goodwill			(81,892	)			(76,816	)			(81,892	)			(76,816	)
Other intangible assets, net			(3,641	)			(5,195	)			(3,641	)			(5,195	)
Tangible common equity		$	379,844			$	345,633			$	379,844			$	345,633
Total assets		$	3,887,427			$	3,626,043			$	3,887,427			$	3,626,043
Goodwill			(81,892	)			(76,816	)			(81,892	)			(76,816	)
Other intangible assets, net			(3,641	)			(5,195	)			(3,641	)			(5,195	)
Tangible assets		$	3,801,894			$	3,544,032			$	3,801,894			$	3,544,032
Tangible common equity ratio			9.99	%			9.75	%			9.99	%			9.75	%
Outstanding common shares			24,896,136				24,079,204				24,896,136				24,079,204
Tangible book value per common share		$	15.26			$	14.35			$	15.26			$	14.35

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED

 

		September 30,				December 31,				September 30,
(Dollars in thousands)		2012				2011				2011
Assets
Cash and due from banks		$	48,744			$	49,832			$	43,132
Federal funds sold			466				1,006				1,146
Interest-bearing deposits with banks			30,057				21,476				26,535
Cash and cash equivalents			79,267				72,314				70,813
Residential mortgage loans held for sale (at fair value)			39,884				25,341				23,096
Investments available-for-sale (at fair value)			834,665				951,301				952,074
Investments held-to-maturity -- fair value of $213,235, $184,167 and $193,432
at September 30, 2012, December 31, 2011 and September 30, 2011, respectively			206,613				178,465				189,520
Other equity securities			33,640				34,933				32,586
Total loans and leases			2,468,985				2,239,692				2,145,403
Less: allowance for loan and lease losses			(42,618	)			(49,426	)			(49,720	)
Net loans and leases			2,426,367				2,190,266				2,095,683
Premises and equipment, net			48,784				48,483				48,750
Other real estate owned			9,291				4,431				7,938
Accrued interest receivable			12,813				12,898				12,382
Goodwill			81,892				76,816				76,816
Other intangible assets, net			3,641				4,734				5,195
Other assets			110,570				111,388				111,190
Total assets		$	3,887,427			$	3,711,370			$	3,626,043
Liabilities
Noninterest-bearing deposits		$	818,674			$	650,377			$	643,169
Interest-bearing deposits			2,061,588				2,006,143				1,997,155
Total deposits			2,880,262				2,656,520				2,640,324
Securities sold under retail repurchase agreements and federal funds purchased			58,306				143,613				79,529
Advances from FHLB			405,146				405,408				405,496
Subordinated debentures			35,000				35,000				35,000
Accrued interest payable and other liabilities			26,903				24,720				24,903
Total liabilities			3,405,617				3,265,261				3,185,252
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued
and outstanding 24,896,136, 24,091,042 and 24,079,204 at September 30, 2012,
December 31, 2011 and September 30, 2011, respectively			24,896				24,091				24,079
Additional paid in capital			191,237				177,828				177,451
Retained earnings			249,244				230,942				226,114
Accumulated other comprehensive income			16,433				13,248				13,147
Total stockholders' equity			481,810				446,109				440,791
Total liabilities and stockholders' equity		$	3,887,427			$	3,711,370			$	3,626,043

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

 

		Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in thousands, except per share data)		2012				2011				2012				2011
Interest Income:
Interest and fees on loans and leases		$	30,697			$	26,791			$	86,164			$	80,597
Interest on loans held for sale			248				142				587				388
Interest on deposits with banks			38				23				83				62
Interest and dividends on investment securities:
Taxable			4,204				5,693				13,809				16,782
Exempt from federal income taxes			2,308				2,355				7,024				6,932
Interest on federal funds sold			-				-				1				1
Total interest income			37,495				35,004				107,668				104,762
Interest Expense:
Interest on deposits			1,823				2,773				5,707				8,673
Interest on retail repurchase agreements and federal funds purchased			46				49				158				155
Interest on advances from FHLB			3,599				3,628				10,772				10,769
Interest on subordinated debt			242				224				732				671
Total interest expense			5,710				6,674				17,369				20,268
Net interest income			31,785				28,330				90,299				84,494
Provision (credit) for loan and lease losses			232				(3,520	)			2,481				(854	)
Net interest income after provision (credit) for loan and lease losses			31,553				31,850				87,818				85,348
Non-interest Income:
Investment securities gains			296				231				459				283
Total other-than-temporary impairment ("OTTI") losses			(23	)			(76	)			(95	)			(178	)
Portion of OTTI losses recognized in other comprehensive income, before taxes			-				-				-				18
Net OTTI recognized in earnings			(23	)			(76	)			(95	)			(160	)
Service charges on deposit accounts			2,230				2,444				6,713				7,133
Mortgage banking activities			1,981				1,141				4,294				2,404
Wealth management income			3,858				3,937				11,949				11,605
Insurance agency commissions			1,020				1,044				3,156				3,177
Income from bank owned life insurance			660				662				1,954				1,962
Visa check fees			984				927				2,844				2,710
Other income			1,236				1,026				3,435				3,016
Total non-interest income			12,242				11,336				34,709				32,130
Non-interest Expenses:
Salaries and employee benefits			15,476				14,892				47,104				44,192
Occupancy expense of premises			3,106				2,784				8,895				8,717
Equipment expenses			1,237				1,143				3,682				3,413
Marketing			764				468				1,824				1,662
Outside data services			1,076				1,073				4,183				3,067
FDIC insurance			667				709				1,972				2,489
Amortization of intangible assets			476				461				1,403				1,384
Other expenses			4,365				4,318				13,645				12,824
Total non-interest expenses			27,167				25,848				82,708				77,748
Income before income taxes			16,628				17,338				39,819				39,730
Income tax expense			5,638				6,081				13,146				12,886
Net income		$	10,990			$	11,257			$	26,673			$	26,844
Net Income Per Share Amounts:
Basic net income per share		$	0.44			$	0.47			$	1.09			$	1.11
Diluted net income per share		$	0.44			$	0.47			$	1.09			$	1.11
Dividends declared per share		$	0.12			$	0.08			$	0.34			$	0.24

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

 

		2012												2011
(Dollars in thousands, except per share data)		Q3				Q2				Q1				Q4				Q3				Q2				Q1
Profitability for the quarter:
Tax-equivalent interest income		$	38,819			$	36,898			$	35,991			$	36,156			$	36,424			$	36,435			$	36,057
Interest expense			5,710				5,749				5,910				6,256				6,674				6,854				6,740
Tax-equivalent net interest income			33,109				31,149				30,081				29,900				29,750				29,581				29,317
Tax-equivalent adjustment			1,324				1,340				1,376				1,448				1,420				1,427				1,307
Provision for loan and lease losses			232				1,585				664				2,282				(3,520	)			1,151				1,515
Non-interest income			12,242				11,493				10,974				11,370				11,336				10,802				9,992
Non-interest expenses			27,167				28,858				26,683				27,323				25,848				25,838				26,062
Income before income taxes			16,628				10,859				12,332				10,217				17,338				11,967				10,425
Income tax expense			5,638				3,652				3,856				2,959				6,081				3,671				3,134
Net income		$	10,990			$	7,207			$	8,476			$	7,258			$	11,257			$	8,296			$	7,291
Financial performance:
Pre-tax pre-provision pre-merger expense income		$	16,996			$	14,642			$	13,370			$	12,499			$	13,818			$	13,118			$	11,940
Return on average assets			1.13	%			0.78	%			0.94	%			0.79	%			1.24	%			0.93	%			0.84	%
Return on average common equity			9.22	%			6.34	%			7.60	%			6.54	%			10.42	%			8.03	%			7.26	%
Net interest margin			3.67	%			3.62	%			3.56	%			3.51	%			3.53	%			3.58	%			3.65	%
Efficiency ratio - GAAP (1)			61.70	%			69.87	%			67.25	%			68.61	%			65.16	%			66.33	%			68.58	%
Efficiency ratio - Non-GAAP (1)			58.91	%			61.54	%			63.88	%			65.10	%			62.02	%			62.82	%			65.09	%
Per share data:
Basic net income per share		$	0.44			$	0.30			$	0.35			$	0.30			$	0.47			$	0.34			$	0.30
Diluted net income per share		$	0.44			$	0.30			$	0.35			$	0.30			$	0.47			$	0.34			$	0.30
Average fully diluted shares			24,949,205				24,423,236				24,180,501				24,141,084				24,142,137				24,130,357				24,115,906
Dividends declared per common share		$	0.12			$	0.12			$	0.10			$	0.10			$	0.08			$	0.08			$	0.08
Non-interest income:
Securities gains		$	296			$	90			$	73			$	9			$	231			$	32			$	20
Net OTTI recognized in earnings			(23	)			(8	)			(64	)			-				(76	)			(43	)			(41	)
Service charges on deposit accounts			2,230				2,283				2,200				2,394				2,444				2,437				2,252
Mortgage banking activities			1,981				1,288				1,025				824				1,141				808				455
Wealth management income			3,858				4,034				4,057				4,041				3,937				4,023				3,645
Insurance agency commissions			1,020				934				1,202				1,473				1,044				953				1,180
Income from bank owned life insurance			660				660				634				674				662				654				646
Visa check fees			984				962				898				927				927				949				834
Other income			1,236				1,250				949				1,028				1,026				989				1,001
Total non-interest income		$	12,242			$	11,493			$	10,974			$	11,370			$	11,336			$	10,802			$	9,992
Non-interest expense:
Salaries and employee benefits		$	15,476			$	15,927			$	15,701			$	15,433			$	14,892			$	14,676			$	14,624
Occupancy expense of premises			3,106				2,943				2,846				2,802				2,784				2,790				3,143
Equipment expenses			1,237				1,255				1,190				1,292				1,143				1,128				1,142
Marketing			764				565				495				727				468				709				485
Outside data services			1,076				1,828				1,279				1,092				1,073				999				995
FDIC insurance			667				653				652				698				709				736				1,044
Amortization of intangible assets			476				466				461				461				461				462				461
Professional fees			1,282				2,156				1,287				1,414				1,314				1,088				1,126
Other real estate owned expenses			174				351				64				604				383				726				699
Other expenses			2,909				2,714				2,708				2,800				2,621				2,524				2,343
Total non-interest expense		$	27,167			$	28,858			$	26,683			$	27,323			$	25,848			$	25,838			$	26,062

 

(1)

The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization and merger expenses 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

 

		2012												2011
(Dollars in thousands)		Q3				Q2				Q1				Q4				Q3				Q2				Q1
Balance sheets at quarter end:
Residential mortgage loans		$	499,806			$	472,426			$	465,204			$	448,662			$	440,606			$	445,605			$	444,519
Residential construction loans			128,606				130,791				122,841				108,699				90,727				81,425				84,939
Commercial ADC loans			133,007				151,620				149,814				160,946				141,576				149,215				151,135
Commercial investor real estate loans			447,536				443,237				392,626				371,948				357,358				353,749				355,967
Commercial owner occupied real estate loans			579,711				579,812				525,022				522,076				519,837				511,271				509,215
Commercial business loans			322,087				334,040				253,827				260,327				226,528				225,624				231,448
Leasing			4,233				5,618				5,843				6,954				8,484				10,200				12,477
Consumer loans			353,999				357,534				356,215				360,080				360,287				360,831				360,349
Total loans and leases			2,468,985				2,475,078				2,271,392				2,239,692				2,145,403				2,137,920				2,150,049
Allowance for loan and lease losses			(42,618	)			(45,265	)			(45,061	)			(49,426	)			(49,720	)			(55,246	)			(58,918	)
Investment securities			1,074,918				1,006,743				1,067,462				1,164,699				1,174,180				1,128,589				1,087,620
Interest-earning assets			3,614,310				3,584,480				3,416,136				3,452,214				3,370,360				3,322,317				3,283,819
Total assets			3,887,427				3,855,177				3,668,273				3,711,370				3,626,043				3,612,016				3,549,533
Noninterest-bearing demand deposits			818,674				763,566				685,770				650,377				643,169				648,605				619,905
Total deposits			2,880,262				2,852,055				2,681,075				2,656,520				2,640,324				2,657,861				2,599,634
Customer repurchase agreements			58,306				64,779				73,130				63,613				79,529				65,214				75,516
Total interest-bearing liabilities			2,560,040				2,593,501				2,508,756				2,590,164				2,517,180				2,515,053				2,495,916
Total stockholders' equity			481,810				471,464				451,917				446,109				440,791				423,684				409,076
Quarterly average balance sheets:
Residential mortgage loans		$	510,475			$	488,644			$	474,149			$	463,754			$	453,645			$	455,803			$	458,329
Residential construction loans			133,236				125,582				116,630				99,983				89,128				84,144				85,891
Commercial ADC loans			142,870				151,374				159,769				153,598				145,835				149,773				149,071
Commercial investor real estate loans			445,012				410,258				377,072				353,975				350,925				352,668				340,008
Commercial owner occupied real estate loans			580,994				539,590				518,763				521,212				515,185				509,273				500,875
Commercial business loans			332,364				284,271				258,099				231,773				225,041				225,646				236,949
Leasing			4,858				5,528				6,325				7,671				9,269				11,154				14,009
Consumer loans			357,135				359,008				358,783				361,888				360,875				362,098				367,261
Total loans and leases			2,506,945				2,364,255				2,269,590				2,193,854				2,149,903				2,150,559				2,152,393
Investment securities			1,038,586				1,052,502				1,086,295				1,173,418				1,168,712				1,121,325				1,054,740
Interest-earning assets			3,599,715				3,453,590				3,389,843				3,392,773				3,355,937				3,305,059				3,237,556
Total assets			3,863,951				3,708,622				3,637,674				3,647,291				3,610,219				3,566,278				3,500,807
Noninterest-bearing demand deposits			774,215				699,638				641,477				655,381				631,192				607,092				582,441
Total deposits			2,857,523				2,714,980				2,642,634				2,658,676				2,640,729				2,607,854				2,548,117
Customer repurchase agreements			62,693				66,674				65,195				74,267				72,646				70,313				79,067
Total interest-bearing liabilities			2,587,815				2,526,541				2,523,394				2,525,128				2,524,728				2,519,114				2,485,451
Total stockholders' equity			474,231				457,338				448,406				440,154				428,511				414,624				407,007
Financial Measures
Average equity to average assets			12.27	%			12.33	%			12.33	%			12.07	%			11.87	%			11.63	%			11.63	%
Investment securities to earning assets			29.74	%			28.09	%			31.25	%			33.74	%			34.84	%			33.97	%			33.12	%
Loans to earnings assets			68.31	%			69.05	%			66.49	%			64.88	%			63.66	%			64.35	%			65.47	%
Loans to assets			63.51	%			64.20	%			61.92	%			60.35	%			59.17	%			59.19	%			60.57	%
Loans to deposits			85.72	%			86.78	%			84.72	%			84.31	%			81.26	%			80.44	%			82.71	%
Capital measures:
Tier 1 leverage			10.99	%			11.21	%			11.05	%			10.84	%			10.79	%			10.64	%			10.63	%
Tier 1 capital to risk-weighted assets			14.31	%			14.12	%			14.89	%			14.57	%			14.96	%			14.75	%			14.21	%
Total regulatory capital to risk-weighted assets			15.56	%			15.36	%			16.14	%			15.83	%			16.21	%			16.01	%			15.48	%
Book value per share		$	19.35			$	18.94			$	18.72			$	18.52			$	18.31			$	17.58			$	16.99
Outstanding shares			24,896,136				24,886,724				24,143,985				24,091,042				24,079,204				24,095,123				24,084,423

  

 

Sandy Spring Bancorp, Inc. and Subsidiaries

LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

 

		2012												2011
(Dollars in thousands)		September 30,				June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
Non-Performing Assets:
Loans and leases 90 days past due:
Commercial business		$	44			$	70			$	40			$	-			$	-			$	-			$	-
Commercial real estate:
Commercial AD&C			-				342				-				-				-				-				-
Commercial investor real estate			-				-				-				-				-				-				-
Commercial owner occupied real estate			-				-				-				-				-				-				-
Leasing			127				96				-				2				63				20				24
Consumer			18				5				89				165				373				337				169
Residential real estate:
Residential mortgage			116				91				167				167				2,291				3,820				4,616
Residential construction			-				-				-				243				-				-				2,367
Total loans and leases 90 days past due			305				604				296				577				2,727				4,177				7,176
Non-accrual loans and leases:
Commercial business			4,919				4,583				6,542				7,226				8,038				8,288				9,649
Commercial real estate:
Commercial AD&C			8,957				13,055				14,303				18,702				24,481				26,133				28,310
Commercial investor real estate			12,345				13,327				13,893				16,963				16,118				2,975				2,519
Commercial owner occupied real estate			13,742				15,146				16,295				14,709				11,847				13,019				12,304
Leasing			834				872				858				853				956				1,017				1,529
Consumer			1,607				1,651				1,700				1,786				1,478				590				720
Residential real estate:
Residential mortgage			3,644				2,600				4,818				5,722				6,081				6,295				6,652
Residential construction			3,236				4,333				4,929				5,719				5,034				5,701				5,222
Total non-accrual loans and lease			49,284				55,567				63,338				71,680				74,033				64,018				66,905
Total restructured loans - accruing			10,283				8,285				8,547				6,881				6,088				8,299				14,266
Total non-performing loans and leases			59,872				64,456				72,181				79,138				82,848				76,494				88,347
Other assets and real estate owned (OREO)			9,291				9,553				4,834				4,431				7,938				6,951				7,960
Total non-performing assets		$	69,163			$	74,009			$	77,015			$	83,569			$	90,786			$	83,445			$	96,307

 

		For the quarter ended,
		September 30,				June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2012				2012				2012				2011				2011				2011				2011
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period		$	55,567			$	63,338			$	71,680			$	74,033			$	64,018			$	66,905			$	63,327
Non-accrual balances transferred to OREO			(232	)			(2,131	)			-				(511	)			(142	)			(791	)			(535	)
Non-accrual balances charged-off			(3,697	)			(1,663	)			(4,965	)			(2,758	)			(1,375	)			(2,112	)			(2,701	)
Net payments or draws			(6,342	)			(4,149	)			(5,061	)			(6,724	)			(4,839	)			(8,016	)			(2,531	)
Loans placed on non-accrual			3,988				1,261				1,809				8,640				17,226				8,032				9,526
Non-accrual loans brought current			-				(1,089	)			(125	)			(1,000	)			(855	)			-				(181	)
Balance at end of period		$	49,284			$	55,567			$	63,338			$	71,680			$	74,033			$	64,018			$	66,905
Analysis of Allowance for Loan Losses:
Balance at beginning of period		$	45,265			$	45,061			$	49,426			$	49,720			$	55,246			$	58,918			$	62,135
Provision for loan and lease losses			232				1,585				664				2,282				(3,520	)			1,151				1,515
Less loans charged-off, net of recoveries:
Commercial business			(225	)			(185	)			(39	)			(65	)			397				769				790
Commercial real estate:
Commercial AD&C			1,983				(59	)			1,076				275				151				253				(137	)
Commercial investor real estate			123				140				3,219				335				30				504				(4	)
Commercial owner occupied real estate			653				484				-				329				45				113				-
Leasing			(17	)			(3	)			5				181				85				455				333
Consumer			111				228				348				352				375				713				1,091
Residential real estate:
Residential mortgage			253				713				420				792				751				1,319				2,095
Residential construction			(2	)			63				-				377				172				697				564
Net charge-offs			2,879				1,381				5,029				2,576				2,006				4,823				4,732
Balance at end of period		$	42,618			$	45,265			$	45,061			$	49,426			$	49,720			$	55,246			$	58,918
Asset Quality Ratios:
Non-performing loans to total loans			2.42	%			2.60	%			3.18	%			3.53	%			3.86	%			3.58	%			4.11	%
Non-performing assets to total assets			1.78	%			1.92	%			2.10	%			2.25	%			2.50	%			2.31	%			2.71	%
Allowance for loan losses to loans			1.73	%			1.83	%			1.98	%			2.21	%			2.32	%			2.58	%			2.74	%
Allowance for loan losses to non-performing loans			71.18	%			70.23	%			62.43	%			62.46	%			60.01	%			72.22	%			66.69	%
Net charge-offs in quarter to average loans			0.46	%			0.23	%			0.89	%			0.47	%			0.37	%			0.90	%			0.89	%

  

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

		Three Months Ended September 30,
		2012												2011
										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 (2)		$	510,475			$	5,262				4.15	%		$	453,645			$	5,373				4.74	%
Residential construction loans			133,236				1,214				3.63				89,128				899				4.00
Commercial ADC loans			142,870				1,965				5.47				145,835				1,688				4.59
Commercial investor real estate loans			445,012				6,161				5.51				350,925				4,908				5.49
Commercial owner occupied real estate loans			580,994				7,938				5.56				515,185				7,760				6.01
Commercial business loans			332,364				5,172				5.97				225,041				2,845				5.01
Leasing			4,858				79				6.51				9,269				157				6.79
Consumer loans			357,135				3,154				3.54				360,875				3,303				3.63
Total loans and leases (3)			2,506,945				30,945				4.93				2,149,903				26,933				4.98
Taxable securities			745,475				4,508				2.42				916,982				6,044				2.64
Tax-exempt securities (4)			293,111				3,328				4.54				251,730				3,424				5.44
Interest-bearing deposits with banks			53,717				38				0.29				35,992				23				0.25
Federal funds sold			466				-				0.22				1,330				-				0.13
Total interest-earning assets			3,599,715				38,819				4.30				3,355,937				36,424				4.32
Less:  allowance for loan and lease losses			(45,467	)											(55,980	)
Cash and due from banks			46,583												47,421
Premises and equipment, net			49,234												49,037
Other assets			213,887												213,804
Total assets		$	3,863,951											$	3,610,219
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	392,117				85				0.09	%		$	346,941				102				0.12	%
Regular savings deposits			216,249				51				0.09				187,060				47				0.10
Money market savings deposits			894,708				488				0.22				865,492				909				0.42
Time deposits			580,234				1,199				0.82				610,044				1,715				1.12
Total interest-bearing deposits			2,083,308				1,823				0.35				2,009,537				2,773				0.55
Other borrowings			64,324				46				0.29				74,657				49				0.26
Advances from FHLB			405,184				3,599				3.53				405,534				3,628				3.55
Subordinated debentures			35,000				242				2.77				35,000				224				2.55
Total interest-bearing liabilities			2,587,815				5,710				0.88				2,524,728				6,674				1.05
Noninterest-bearing demand deposits			774,215												631,192
Other liabilities			27,689												25,788
Stockholders' equity			474,231												428,511
Total liabilities and stockholders' equity		$	3,863,951											$	3,610,219
Net interest income and spread						$	33,109				3.42	%						$	29,750				3.27	%
Less: tax-equivalent adjustment							1,324												1,420
Net interest income						$	31,785											$	28,330
Interest income/earning assets											4.30	%											4.32	%
Interest expense/earning assets											0.63												0.79
Net interest margin											3.67	%											3.53	%

 

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2012 and 2011. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.3 million and $1.4 million in 2012 and 2011, respectively.

(2)

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

(3)

Non-accrual loans are included in the average balances.

(4)

Includes only investments that are exempt from federal taxes.

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

		Nine Months Ended September 30,
						2012												2011
										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 (2)		$	491,160			$	16,003				4.37	%		$	455,909			$	16,747				4.89	%
Residential construction loans			125,179				3,505				3.74				86,399				2,448				3.79
Commercial ADC loans			151,307				5,855				5.17				148,215				4,813				4.34
Commercial investor real estate loans			410,905				16,925				5.50				347,926				15,236				5.94
Commercial owner occupied real estate loans			546,575				22,722				5.64				508,478				22,686				6.05
Commercial business loans			291,727				11,988				5.33				229,168				8,493				4.95
Leasing			5,568				272				6.52				11,460				576				6.70
Consumer loans			358,304				9,481				3.56				363,388				9,986				3.70
Total loans and leases (3)			2,380,725				86,751				4.88				2,150,943				80,985				5.03
Taxable securities			775,916				14,761				2.54				879,230				17,810				2.70
Tax-exempt securities (4)			283,137				10,112				4.76				236,113				10,058				5.68
Interest-bearing deposits with banks			40,892				83				0.27				32,257				62				0.25
Federal funds sold			811				1				0.17				1,408				1				0.14
Total interest-earning assets			3,481,481				111,708				4.28				3,299,951				108,916				4.41
Less:  allowance for loan and lease losses			(47,442	)											(58,672	)
Cash and due from banks			45,844												45,587
Premises and equipment, net			48,959												49,130
Other assets			208,371												223,506
Total assets		$	3,737,213											$	3,559,502
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	379,910				256				0.09	%		$	336,020				278				0.11	%
Regular savings deposits			209,920				155				0.10				182,424				142				0.10
Money market savings deposits			869,675				1,471				0.23				855,458				2,865				0.45
Time deposits			573,946				3,825				0.89				618,250				5,388				1.17
Total interest-bearing deposits			2,033,451				5,707				0.37				1,992,152				8,673				0.58
Other borrowings			72,347				158				0.29				77,135				155				0.27
Advances from FHLB			405,271				10,772				3.55				405,621				10,769				3.55
Subordinated debentures			35,000				732				2.79				35,000				671				2.55
Total interest-bearing liabilities			2,546,069				17,369				0.91				2,509,908				20,268				1.08
Noninterest-bearing demand deposits			705,362												607,087
Other liabilities			25,738												25,714
Stockholders' equity			460,044												416,793
Total liabilities and stockholders' equity		$	3,737,213											$	3,559,502
Net interest income and spread						$	94,339				3.37	%						$	88,648				3.33	%
Less: tax-equivalent adjustment							4,040												4,154
Net interest income						$	90,299											$	84,494
Interest income/earning assets											4.28	%											4.41	%
Interest expense/earning assets											0.66												0.82
Net interest margin											3.62	%											3.59	%

  

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2012 and 2011. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $4.0 million and $4.2 million in 2012 and 2011, respectively.

(2)

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

(3)

Non-accrual loans are included in the average balances.

(4)

Includes only investments that are exempt from federal taxes.