Exhibit 99.1

 

News release

 

FOR IMMEDIATE RELEASE

 

SANDY SPRING BANCORP REPORTS NET INCOME OF $9.1 MILLION FOR THE FOURTH QUARTER AND $38.2 MILLION FOR THE FULL YEAR

 

OLNEY, MARYLAND, January 22, 2015 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today reported net income for the fourth quarter of 2014 of $9.1 million ($0.36 per diluted share) compared to net income of $9.6 million ($0.38 per diluted share) for the fourth quarter of 2013 and net income of $11.1 million ($0.44 per diluted share) for the third quarter of 2014.

 

Net income for the year ended December 31, 2014 was $38.2 million ($1.52 per diluted share) compared to net income of $44.4 million ($1.77 per diluted share) for the prior year. For comparison purposes, the current year includes $6.5 million in litigation expenses associated with a particular legal action while the prior year’s results includes a benefit of $4.5 million in interest income and professional fees associated with the resolution of a non-performing loan relationship.

 

“Considering the impact on operating results of the items mentioned above, the Company produced solid core results in 2014 driven by notable growth in its loan and deposit portfolios and the strong performance of its wealth management business. We are proud of our accomplishments considering the market volatility and extremely competitive environment that existed throughout the year,” said Daniel J. Schrider, President and Chief Executive Officer.

 

“Looking to the future, we are making appropriate investments in our client-facing facilities and systems as we adapt our delivery channels to the preferences of our clients. We anticipate this will provide the opportunity for further growth in our franchise while we continue to render outstanding service to our clients,” said Schrider.

 

Fourth Quarter Highlights:

 

·

Total loans increased 12% compared to the fourth quarter of 2013 and 5% compared to the third quarter of 2014. Growth over the prior year exceeded 10% in each of the three major portfolio segments. Overall the entire portfolio grew $343 million from the prior year.

 

·

Combined noninterest-bearing and interest-bearing transaction account balances increased 18% to $1.5 billion at December 31, 2014 as compared to $1.3 billion at December 31, 2013.

 

 

·

The provision for loan and lease losses for the fourth quarter of 2014 was a charge of $0.9 million compared to a charge of $0.6 million for the fourth quarter of 2013 and a credit of $0.2 million for the third quarter of 2014. The credit quality of the loan portfolio continues to exhibit stability while outstanding loans increased significantly over the prior year.

 

·

The net interest margin was 3.44% for the fourth quarter of 2014, compared to 3.53% for the fourth quarter of 2013 and 3.42% for the third quarter of 2014.

 

·

Non-interest income decreased 3% for the quarter compared to the prior year quarter primarily due to a decrease in other non-interest income. This decrease was somewhat offset by a 9% increase in income from wealth management activities.

 

·

Non-interest expense for the quarter increased 4% over the prior year quarter due mainly to $1.1 million in non-recurring expenses in the quarter for bankcard losses and an adjustment to insurance receivables.

 

Review of Balance Sheet and Credit Quality

 

Total assets grew 7% to $4.4 billion at December 31, 2014 compared to $4.1 billion at December 31, 2013. This growth was driven by a 12% increase in the loan portfolio as total loans and leases ended the period at $3.1 billion.

 

Deposits and certain other short-term borrowings that comprise all the funding sources derived from customers, increased 7% compared to the prior year end. At December 31, 2014, combined noninterest-bearing and interest-bearing checking account balances, an important performance driver of multiple-product banking relationships with clients, increased 18% compared to balances at December 31, 2013.

 

Tangible common equity totaled $438 million at December 31, 2014 compared to $417 million at December 31, 2013, resulting in a decrease in the ratio of tangible common equity to tangible assets to 10.15% at December 31, 2014 from 10.37% at December 31, 2013. Dividends per common share were $0.76 per share for the year compared to $0.64 per common share for 2013, a 19% increase. At December 31, 2014, the Company had a total risk-based capital ratio of 15.06%, a tier 1 risk-based capital ratio of 13.95% and a tier 1 leverage ratio of 11.26%.

 

Non-performing loans totaled $34.0 million at December 31, 2014 compared to $40.0 million at December 31, 2013 and $43.7 million at September 30, 2014. The level of non-performing loans to total loans decreased to 1.09% at December 31, 2014 compared to 1.44% at December 31, 2013. The year-over-year decrease was driven primarily by loan pay-offs and a reduction in restructured loans as such loans have performed to allow them to no longer be classified as non-performing.

 

Loan charge-offs, net of recoveries, totaled $0.6 million for the fourth quarter of 2014 compared to net loan charge-offs of $1.2 million for the fourth quarter of 2013 and net loan charge-offs of $0.2 million for the third quarter of 2014. The allowance for loan and lease losses represented 1.21% of outstanding loans and leases and 111% of non-performing loans at December 31, 2014 compared to 1.39% of outstanding loans and leases and 97% of non-performing loans at December 31, 2013. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

 

 

Income Statement Review

 

Net interest income for the fourth quarter of 2014 increased 3% compared to the fourth quarter of 2013. The net interest margin was 3.44% for the fourth quarter of 2014 compared to 3.53% for the fourth quarter of 2013.

 

The provision for loan and lease losses was a charge of $0.9 million for the fourth quarter of 2014 compared to a charge of $0.6 million for the fourth quarter of 2013 and a credit of $0.2 million for the third quarter of 2014. The current quarter’s charge reflects the growth in the loan portfolio over the prior quarters. This growth in the loan portfolio produced an effect that more than offset the lower charge-offs and reduced problem loan migration into non-performing status during the past twelve months.

 

Non-interest income decreased 3% to $11.3 million for the fourth quarter of 2014 compared to $11.7 million for the fourth quarter of 2013. The decrease in non-interest income for the quarter compared to the prior year quarter was due primarily to lower other non-interest income from sales and dispositions of loans and fixed assets which occurred in the prior year quarter.

 

Non-interest expenses increased 4% to $30.5 million for the fourth quarter of 2014 compared to $29.3 million in the fourth quarter of 2013. The current quarter included increases in other non-interest expenses for bankcard losses and an adjustment to uncollectible insurance receivables. The non-GAAP efficiency ratio was 65.89% for the fourth quarter of 2014 compared to 63.62% for the fourth quarter of 2013.

 

Net interest income for the year ended December 31, 2014 was relatively level compared to the prior year. Excluding interest recoveries of $3.7 million in the prior year, net interest income would have increased 3%. The net interest margin decreased to 3.45% in 2014 compared to 3.63% in 2013. The prior year’s margin was positively impacted by loan recoveries on commercial loans. Exclusive of those recoveries the net interest margin for 2013 would have been 3.53%

 

The provision for loan and lease losses was a credit of $0.2 million for the year ended December 31, 2014 compared to a credit of $1.1 million for the year ended December 31, 2013. The credits in the provision for each year were driven by a decline in historical losses, improvement in the overall credit quality of the loan portfolio and problem loan resolutions and recoveries whose impact more than offset the effect of loan growth.

 

Non-interest income decreased 1% to $46.9 million for 2014 compared to $47.5 million for 2013. This decrease was driven primarily by the decrease in income from mortgage banking activities as loan origination volumes declined. Other non-interest income also decreased due to sales and dispositions of loans and fixed assets and a non-recurring legal settlement, all of which occurred in the prior year. The impact of these decreases was somewhat mitigated by an increase in wealth management income of 9% due to higher assets under management.

 

 

Non-interest expenses increased to $120.8 million for 2014 compared to $111.5 million for 2013 due primarily to the impact of $6.5 million in litigation expenses. Excluding the impact of the litigation expenses related to an adverse jury verdict, non-interest expense for the year ended December 31, 2014 was $114.3 million. This increase was driven mainly by higher bankcard losses and an adjustment to uncollectible insurance receivables. The non-GAAP efficiency ratio was 62.48% for 2014 compared to 60.06% for 2013. Excluding the loan interest recoveries in 2013, the non-GAAP efficiency ratio was 61.71%.

 

Conference Call

 

The Company’s management will host a conference call to discuss its fourth quarter results today at 2:00 P.M. (ET). A live 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) February 2, 2015. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10058497.

 

About Sandy Spring Bancorp, Inc.

 

With $4.4 billion in assets, Sandy Spring Bancorp, Inc. is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Sandy Spring Bank traces its origin to 1868, making it among the oldest banking institutions in the region. 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 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 insurance and investment management services. Visit www.sandyspringbank.com 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, 2013, 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												Twelve Months Ended
		December 31,								%				December 31,								%
(Dollars in thousands, except per share data)		2014				2013				Change				2014				2013				Change
Results of Operations:
Net interest income		$	33,227			$	32,350				3	%		$	129,548			$	129,914				-	%
Provision (credit) for loan and lease losses			853				586				46				(163	)			(1,084	)			(85	)
Non-interest income			11,338				11,654				(3	)			46,871				47,511				(1	)
Non-interest expenses			30,478				29,300				4				120,800				111,524				8
Income before income taxes			13,234				14,118				(6	)			55,782				66,985				(17	)
Net income			9,148				9,613				(5	)			38,200				44,422				(14	)
Pre-tax pre-provision income		$	14,242			$	14,704				(3	)		$	62,138			$	65,901				(6	)
Return on average assets			0.85	%			0.93	%							0.91	%			1.11	%
Return on average common equity			6.93	%			7.71	%							7.43	%			9.11	%
Net interest margin			3.44	%			3.53	%							3.45	%			3.63	%
Efficiency ratio - GAAP basis   (1)			68.39	%			66.59	%							68.47	%			62.86	%
Efficiency ratio - Non-GAAP basis   (1)			65.89	%			63.62	%							62.48	%			60.06	%
Per share data:
Basic net income		$	0.37			$	0.38				(3	)%		$	1.53			$	1.78				(14	)%
Diluted net income		$	0.36			$	0.38				(5	)		$	1.52			$	1.77				(14	)
Average fully diluted shares			25,151,831				25,108,109				-				25,139,370				25,075,014				-
Dividends declared per share		$	0.20			$	0.18				11			$	0.76			$	0.64				19
Book value per share			20.83				19.98				4				20.83				19.98				4
Tangible book value per share			17.48				16.68				5				17.48				16.68				5
Outstanding shares			25,044,877				24,990,021				-				25,044,877				24,990,021				-
Financial Condition at period-end:
Investment securities		$	933,619			$	1,016,609				(8	)%		$	933,619			$	1,016,609				(8	)%
Loans and leases			3,127,392				2,784,266				12				3,127,392				2,784,266				12
Interest-earning assets			4,114,936				3,836,912				7				4,114,936				3,836,912				7
Assets			4,397,132				4,106,100				7				4,397,132				4,106,100				7
Deposits			3,066,509				2,877,225				7				3,066,509				2,877,225				7
Interest-bearing liabilities			2,837,204				2,744,869				3				2,837,204				2,744,869				3
Stockholders' equity			521,751				499,363				4				521,751				499,363				4
Capital ratios:
Tier 1 leverage   (4)			11.26	%			11.32	%							11.26	%			11.32	%
Tier 1 capital to risk-weighted assets   (4)			13.95	%			14.42	%							13.95	%			14.42	%
Total regulatory capital to risk-weighted assets   (4)			15.06	%			15.65	%							15.06	%			15.65	%
Tangible common equity to tangible assets   (2)			10.15	%			10.37	%							10.15	%			10.37	%
Average equity to average assets			12.21	%			12.12	%							12.26	%			12.17	%
Credit quality ratios:
Allowance for loan and lease losses to loans and leases			1.21	%			1.39	%							1.21	%			1.39	%
Non-performing loans to total loans			1.09	%			1.44	%							1.09	%			1.44	%
Non-performing assets to total assets			0.85	%			1.01	%							0.85	%			1.01	%
Allowance for loan and lease losses to non-performing loans			111.09	%			96.83	%							111.09	%			96.83	%
Annualized net charge-offs to average loans and leases    (3)			0.08	%			0.18	%							0.03	%			0.12	%

 

(1)

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

(2)

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

(3)

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

(4)

Estimated ratio at December 31, 2014

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

RECONCILIATION TABLE - UNAUDITED

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
(Dollars in thousands)		2014				2013				2014				2013
Pre-tax pre-provision income:
Net income		$	9,148			$	9,613			$	38,200			$	44,422
Plus non-GAAP adjustment:
Litigation expenses			155				-				6,519				-
Income taxes			4,086				4,505				17,582				22,563
Provision (credit) for loan and lease losses			853				586				(163	)			(1,084	)
Pre-tax pre-provision income		$	14,242			$	14,704			$	62,138			$	65,901
Efficiency ratio - GAAP basis:
Non-interest expenses		$	30,478			$	29,300			$	120,800			$	111,524
Net interest income plus non-interest income		$	44,565			$	44,004			$	176,419			$	177,425
Efficiency ratio - GAAP basis			68.39	%			66.59	%			68.47	%			62.86	%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses		$	30,478			$	29,300			$	120,800			$	111,524
Less non-GAAP adjustment:
Amortization of intangible assets			112				461				821				1,845
Litigation expenses			155				-				6,519				-
Non-interest expenses -  as adjusted		$	30,211			$	28,839			$	113,460			$	109,679
Net interest income plus non-interest income		$	44,565			$	44,004			$	176,419			$	177,425
Plus non-GAAP adjustment:
Tax-equivalent income			1,283				1,325				5,192				5,292
Less non-GAAP adjustments:
Securities gains (losses)			(3	)			(3	)			5				115
Net interest income plus non-interest income - as adjusted		$	45,851			$	45,332			$	181,606			$	182,602
Efficiency ratio - Non-GAAP basis			65.89	%			63.62	%			62.48	%			60.06	%
Tangible common equity ratio:
Total stockholders' equity		$	521,751			$	499,363			$	521,751			$	499,363
Accumulated other comprehensive income			823				2,970				823				2,970
Goodwill			(84,171	)			(84,171	)			(84,171	)			(84,171	)
Other intangible assets, net			(510	)			(1,330	)			(510	)			(1,330	)
Tangible common equity		$	437,893			$	416,832			$	437,893			$	416,832
Total assets		$	4,397,132			$	4,106,100			$	4,397,132			$	4,106,100
Goodwill			(84,171	)			(84,171	)			(84,171	)			(84,171	)
Other intangible assets, net			(510	)			(1,330	)			(510	)			(1,330	)
Tangible assets		$	4,312,451			$	4,020,599			$	4,312,451			$	4,020,599
Tangible common equity ratio			10.15	%			10.37	%			10.15	%			10.37	%
Outstanding common shares			25,044,877				24,990,021				25,044,877				24,990,021
Tangible book value per common share		$	17.48			$	16.68			$	17.48			$	16.68

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED

 

		December 31,				December 31,
(Dollars in thousands)		2014				2013
Assets
Cash and due from banks		$	52,804			$	46,755
Federal funds sold			473				475
Interest-bearing deposits with banks			42,940				27,197
Cash and cash equivalents			96,217				74,427
Residential mortgage loans held for sale (at fair value)			10,512				8,365
Investments available-for-sale (at fair value)			672,209				751,284
Investments held-to-maturity — fair value of $222,260 and $216,007 at December 31, 2014 and 2013, respectively			219,973				224,638
Other equity securities			41,437				40,687
Total loans and leases			3,127,392				2,784,266
Less: allowance for loan and lease losses			(37,802	)			(38,766	)
Net loans and leases			3,089,590				2,745,500
Premises and equipment, net			49,402				45,916
Other real estate owned			3,195				1,338
Accrued interest receivable			12,634				12,532
Goodwill			84,171				84,171
Other intangible assets, net			510				1,330
Other assets			117,282				115,912
Total assets		$	4,397,132			$	4,106,100
Liabilities
Noninterest-bearing deposits		$	993,737			$	836,198
Interest-bearing deposits			2,072,772				2,041,027
Total deposits			3,066,509				2,877,225
Securities sold under retail repurchase agreements and federal funds purchased			74,432				53,842
Advances from FHLB			655,000				615,000
Subordinated debentures			35,000				35,000
Accrued interest payable and other liabilities			44,440				25,670
Total liabilities			3,875,381				3,606,737
Stockholders' Equity
Common stock — par value $1.00; shares authorized 50,000,000; shares issued and outstanding 25,044,877 and
24,990,021 at December 31, 2014 and 2013, respectively			25,045				24,990
Additional paid in capital			194,647				193,445
Retained earnings			302,882				283,898
Accumulated other comprehensive loss			(823	)			(2,970	)
Total stockholders' equity			521,751				499,363
Total liabilities and stockholders' equity		$	4,397,132			$	4,106,100

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
(Dollars in thousands, except per share data)		2014				2013				2014				2013
Interest Income:
Interest and fees on loans and leases		$	31,899			$	30,443			$	123,369			$	122,380
Interest on loans held for sale			101				91				312				929
Interest on deposits with banks			19				19				85				84
Interest and dividends on investment securities:
Taxable			3,673				4,224				15,377				16,635
Exempt from federal income taxes			2,282				2,331				9,222				9,318
Interest on fed funds sold			1				1				1				1
Total interest income			37,975				37,109				148,366				149,347
Interest Expense:
Interest on deposits			1,206				1,230				4,791				5,439
Interest on retail repurchase agreements and federal funds purchased			47				37				164				163
Interest on advances from FHLB			3,273				3,269				12,982				12,936
Interest on subordinated debt			222				223				881				895
Total interest expense			4,748				4,759				18,818				19,433
Net interest income			33,227				32,350				129,548				129,914
Provision (credit) for loan and lease losses			853				586				(163	)			(1,084	)
Net interest income after provision (credit) for loan and lease losses			32,374				31,764				129,711				130,998
Non-interest Income:
Investment securities gains (losses)			(3	)			(3	)			5				115
Service charges on deposit accounts			2,135				2,143				8,422				8,533
Mortgage banking activities			512				356				1,994				3,094
Wealth management income			4,905				4,508				19,086				17,585
Insurance agency commissions			985				1,243				4,996				4,821
Income from bank owned life insurance			627				635				2,444				2,499
Bank card fees			1,144				1,052				4,439				4,165
Other income			1,033				1,720				5,485				6,699
Total non-interest income			11,338				11,654				46,871				47,511
Non-interest Expenses:
Salaries and employee benefits			16,793				16,707				66,387				65,598
Occupancy expense of premises			3,914				3,844				13,692				13,171
Equipment expenses			1,333				1,264				5,188				4,940
Marketing			838				897				2,926				2,880
Outside data services			1,284				1,162				4,947				4,580
FDIC insurance			615				445				2,302				2,300
Amortization of intangible assets			112				461				821				1,845
Litigation expenses			155				-				6,519				-
Other expenses			5,434				4,520				18,018				16,210
Total non-interest expenses			30,478				29,300				120,800				111,524
Income before income taxes			13,234				14,118				55,782				66,985
Income tax expense			4,086				4,505				17,582				22,563
Net income		$	9,148			$	9,613			$	38,200			$	44,422
Net Income Per Share Amounts:
Basic net income per share		$	0.37			$	0.38			$	1.53			$	1.78
Diluted net income per share		$	0.36			$	0.38			$	1.52			$	1.77
Dividends declared per share		$	0.20			$	0.18			$	0.76			$	0.64

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

 

		2014																2013
(Dollars in thousands, except per share data)		Q4				Q3				Q2				Q1				Q4				Q3				Q2				Q1
Profitability for the Quarter:
Tax-equivalent interest income		$	39,258			$	38,446			$	38,322			$	37,532			$	38,434			$	41,524			$	37,091			$	37,590
Interest expense			4,748				4,730				4,682				4,658				4,759				4,874				4,847				4,953
Tax-equivalent net interest income			34,510				33,716				33,640				32,874				33,675				36,650				32,244				32,637
Tax-equivalent adjustment			1,283				1,296				1,331				1,282				1,325				1,344				1,312				1,311
Provision for loan and lease losses			853				(192	)			158				(982	)			586				1,128				(2,876	)			78
Non-interest income			11,338				12,590				11,694				11,249				11,654				11,223				12,215				12,419
Non-interest expenses			30,478				28,632				34,141				27,549				29,300				26,893				27,508				27,823
Income before income taxes			13,234				16,570				9,704				16,274				14,118				18,508				18,515				15,844
Income tax expense			4,086				5,428				2,722				5,346				4,505				6,419				6,353				5,286
Net income		$	9,148			$	11,142			$	6,982			$	10,928			$	9,613			$	12,089			$	12,162			$	10,558
Financial Performance:
Pre-tax pre-provision income		$	14,242			$	16,614			$	15,990			$	15,292			$	14,704			$	19,636			$	15,639			$	15,922
Return on average assets			0.85	%			1.05	%			0.67	%			1.08	%			0.93	%			1.19	%			1.23	%			1.08	%
Return on average common equity			6.93	%			8.54	%			5.47	%			8.80	%			7.71	%			9.91	%			9.98	%			8.85	%
Net interest margin			3.44	%			3.42	%			3.48	%			3.47	%			3.53	%			3.88	%			3.51	%			3.59	%
Efficiency ratio - GAAP basis (1)			68.39	%			63.61	%			77.59	%			64.31	%			66.59	%			57.80	%			63.75	%			63.60	%
Efficiency ratio - Non-GAAP basis (1)			65.89	%			61.09	%			61.30	%			61.60	%			63.62	%			55.21	%			60.92	%			60.80	%
Per Share Data:
Basic net income per share		$	0.37			$	0.44			$	0.28			$	0.44			$	0.38			$	0.48			$	0.49			$	0.42
Diluted net income per share		$	0.36			$	0.44			$	0.28			$	0.43			$	0.38			$	0.48			$	0.49			$	0.42
Average fully diluted shares			25,151,831				25,151,582				25,127,036				25,124,206				25,108,109				25,070,506				25,009,092				25,002,612
Dividends declared per common share		$	0.20			$	0.20			$	0.18			$	0.18			$	0.18			$	0.16			$	0.16			$	0.14
Non-interest Income:
Securities gains (losses)		$	(3	)		$	8			$	-			$	-			$	(3	)		$	-			$	62			$	56
Service charges on deposit accounts			2,135				2,226				2,089				1,972				2,143				2,171				2,150				2,069
Mortgage banking activities			512				596				570				316				356				(26	)			1,237				1,527
Wealth management income			4,905				4,974				4,741				4,466				4,508				4,503				4,532				4,042
Insurance agency commissions			985				1,410				961				1,640				1,243				1,193				1,036				1,349
Income from bank owned life insurance			627				611				608				598				635				629				623				612
Bank card fees			1,144				1,148				1,169				978				1,052				1,077				1,079				957
Other income			1,033				1,617				1,556				1,279				1,720				1,676				1,496				1,807
Total Non-interest Income		$	11,338			$	12,590			$	11,694			$	11,249			$	11,654			$	11,223			$	12,215			$	12,419
Non-interest Expense:
Salaries and employee benefits		$	16,793			$	16,765			$	16,474			$	16,355			$	16,707			$	16,382			$	16,163			$	16,346
Occupancy expense of premises			3,914				3,032				3,274				3,472				3,844				3,149				2,996				3,182
Equipment expenses			1,333				1,337				1,262				1,256				1,264				1,200				1,227				1,249
Marketing			838				744				802				542				897				713				755				515
Outside data services			1,284				1,231				1,216				1,216				1,162				1,152				1,114				1,152
FDIC insurance			615				594				573				520				445				678				581				596
Amortization of intangible assets			112				115				224				370				461				462				461				461
Litigation expenses			155				236				6,128				-				-				-				-				-
Professional fees			1,246				1,092				1,292				914				1,386				511				1,332				1,250
Other real estate owned expenses			2				40				9				-				91				(150	)			(281	)			37
Other expenses			4,186				3,446				2,887				2,904				3,043				2,796				3,160				3,035
Total Non-interest Expense		$	30,478			$	28,632			$	34,141			$	27,549			$	29,300			$	26,893			$	27,508			$	27,823

 

(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

 

		2014																2013
(Dollars in thousands)		Q4				Q3				Q2				Q1				Q4				Q3				Q2				Q1
Balance Sheets at Quarter End:
Residential mortgage loans		$	717,886			$	698,925			$	668,536			$	640,939			$	618,381			$	595,180			$	565,282			$	538,346
Residential construction loans			136,741				141,883				149,321				143,109				129,177				118,316				116,736				122,698
Commercial ADC loans			205,124				194,666				178,972				163,343				160,696				158,739				163,309				150,599
Commercial investor real estate loans			640,193				575,984				577,813				573,634				552,178				518,029				497,365				487,802
Commercial owner occupied real estate loans			611,061				584,964				581,795				582,472				592,823				569,350				563,258				565,820
Commercial business loans			390,781				368,611				357,472				348,180				356,651				332,670				334,979				344,489
Leasing			54				156				260				439				703				962				1,415				1,974
Consumer loans			425,552				410,723				396,775				380,697				373,657				368,764				363,114				353,341
Total loans and leases			3,127,392				2,975,912				2,910,944				2,832,813				2,784,266				2,662,010				2,605,458				2,565,069
Allowance for loan and lease losses			(37,802	)			(37,574	)			(37,959	)			(38,026	)			(38,766	)			(39,422	)			(39,015	)			(41,246	)
Investment securities			933,619				950,869				980,530				997,584				1,016,609				1,077,951				1,102,209				1,008,693
Interest-earning assets			4,114,936				3,976,731				3,945,643				3,891,223				3,836,912				3,771,825				3,802,682				3,660,809
Total assets			4,397,132				4,248,731				4,234,342				4,168,998				4,106,100				4,052,969				4,072,617				3,932,026
Noninterest-bearing demand deposits			993,737				986,549				984,700				882,169				836,198				890,319				877,891				832,679
Total deposits			3,066,509				3,028,788				3,038,670				2,959,195				2,877,225				2,916,466				2,926,650				2,919,208
Customer repurchase agreements			74,432				71,384				72,917				67,038				53,842				53,177				54,731				50,302
Total interest-bearing liabilities			2,837,204				2,706,623				2,698,887				2,748,064				2,744,869				2,634,324				2,678,490				2,576,831
Total stockholders' equity			521,751				522,404				517,269				510,386				499,363				493,882				485,643				488,947
Quarterly Average Balance Sheets:
Residential mortgage loans		$	717,671			$	689,531			$	659,172			$	633,160			$	614,698			$	593,335			$	579,899			$	575,889
Residential construction loans			141,890				147,750				145,968				134,261				125,744				120,676				119,197				120,283
Commercial ADC loans			201,020				180,293				168,063				162,544				156,558				158,557				160,483				148,749
Commercial investor real estate loans			607,050				577,851				575,283				557,168				522,085				499,896				485,630				474,062
Commercial owner occupied real estate loans			594,634				585,014				579,953				584,155				580,808				566,366				561,249				567,723
Commercial business loans			367,872				367,203				348,597				349,734				357,455				331,374				337,843				347,569
Leasing			114				206				352				567				817				1,152				1,644				2,510
Consumer loans			417,910				404,062				390,076				377,822				373,017				366,562				360,842				357,366
Total loans and leases			3,048,161				2,951,910				2,867,464				2,799,411				2,731,182				2,637,918				2,606,787				2,594,151
Investment securities			942,782				965,206				991,135				1,012,701				1,055,432				1,097,643				1,047,726				1,051,769
Interest-earning assets			4,022,051				3,954,858				3,893,843				3,845,513				3,817,033				3,770,855				3,692,215				3,677,444
Total assets			4,292,237				4,220,084				4,157,559				4,105,225				4,082,839				4,039,069				3,959,907				3,946,578
Noninterest-bearing demand deposits			1,000,285				956,830				899,287				825,968				872,532				862,046				838,502				797,926
Total deposits			3,063,591				3,036,686				2,965,329				2,876,641				2,901,814				2,903,926				2,892,704				2,860,451
Customer repurchase agreements			78,746				73,046				68,880				62,864				57,682				56,766				55,941				52,622
Total interest-bearing liabilities			2,731,791				2,711,206				2,716,537				2,749,459				2,679,812				2,659,406				2,599,704				2,631,198
Total stockholders' equity			524,063				517,534				511,738				503,851				494,779				483,811				489,014				483,664
Financial Measures:
Average equity to average assets			12.21	%			12.26	%			12.31	%			12.27	%			12.12	%			11.98	%			12.35	%			12.26	%
Investment securities to earning assets			22.69	%			23.91	%			24.85	%			25.64	%			26.50	%			28.58	%			28.99	%			27.55	%
Loans to earning assets			76.00	%			74.83	%			73.78	%			72.80	%			72.57	%			70.58	%			68.52	%			70.07	%
Loans to assets			71.12	%			70.04	%			68.75	%			67.95	%			67.81	%			65.68	%			63.98	%			65.24	%
Loans to deposits			101.99	%			98.25	%			95.80	%			95.73	%			96.77	%			91.28	%			89.03	%			87.87	%
Capital Measures:
Tier 1 leverage  (1)			11.26	%			11.26	%			11.37	%			11.43	%			11.32	%			11.29	%			11.28	%			11.07	%
Tier 1 capital to risk-weighted assets  (1)			13.95	%			13.95	%			14.48	%			14.64	%			14.42	%			14.45	%			14.30	%			14.23	%
Total regulatory capital to risk-weighted assets  (1)			15.06	%			15.06	%			15.66	%			15.85	%			15.65	%			15.70	%			15.55	%			15.48	%
Book value per share		$	20.83			$	20.83			$	20.63			$	20.38			$	19.98			$	19.77			$	19.45			$	19.59
Outstanding shares			25,044,877				25,076,794				25,069,700				25,043,482				24,990,021				24,985,146				24,967,558				24,954,892

 

(1)

Estimated ratio at December 31, 2014

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

 

		2014																2013
(Dollars in thousands)		December 31,				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		$	-			$	-			$	1			$	-			$	-			$	-			$	15			$	-
Commercial real estate:
Commercial AD&C			-				-				-				-				-				-				-				-
Commercial investor real estate			-				-				-				-				-				-				-				-
Commercial owner occupied real estate			-				649				-				-				-				-				-				-
Leasing			-				-				-				-				-				-				-				-
Consumer			-				6				3				-				1				10				-				54
Residential real estate:
Residential mortgage			-				-				-				-				-				-				-				-
Residential construction			-				-				-				-				-				-				-				-
Total loans and leases 90 days past due			-				655				4				-				1				10				15				54
Non-accrual loans and leases:
Commercial business			3,184				4,151				4,309				3,272				3,400				4,050				4,483				4,012
Commercial real estate:
Commercial AD&C			2,464				3,792				3,739				4,133				4,127				5,086				5,885				5,826
Commercial investor real estate			8,156				8,210				6,731				7,284				6,802				6,877				11,741				12,353
Commercial owner occupied real estate			8,941				10,742				10,868				7,150				5,936				4,202				5,413				5,346
Leasing			-				-				-				-				-				-				-				-
Consumer			1,668				1,830				2,058				2,115				2,259				2,004				2,305				2,388
Residential real estate:
Residential mortgage			3,012				4,417				4,501				5,025				5,735				5,643				5,581				5,393
Residential construction			1,105				2,497				2,143				2,304				2,315				2,327				2,558				3,258
Total non-accrual loans and leases			28,530				35,639				34,349				31,283				30,574				30,189				37,966				38,576
Total restructured loans - accruing			5,497				7,382				7,364				7,411				9,459				8,054				8,213				10,839
Total non-performing loans and leases			34,027				43,676				41,717				38,694				40,034				38,253				46,194				49,469
Other assets and real estate owned (OREO)			3,195				1,762				1,967				1,619				1,338				1,662				4,831				5,250
Total non-performing assets		$	37,222			$	45,438			$	43,684			$	40,313			$	41,372			$	39,915			$	51,025			$	54,719

 

		For the quarter ended,
		December 31,				September 30,				June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2014				2014				2014				2014				2013				2013				2013				2013
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period		$	35,639			$	34,349			$	31,283			$	30,574			$	30,189			$	37,966			$	38,576			$	47,548
Non-accrual balances transferred to OREO			(1,475	)			(300	)			(390	)			(281	)			(365	)			(723	)			(1,426	)			(92	)
Non-accrual balances charged-off			(1,033	)			(216	)			(357	)			(513	)			(922	)			(4,995	)			(668	)			(2,175	)
Net payments or draws			(4,139	)			(590	)			(1,580	)			(1,073	)			(971	)			(13,547	)			(3,560	)			(11,768	)
Loans placed on non-accrual			779				2,396				5,393				2,576				3,546				11,488				5,044				5,493
Non-accrual loans brought current			(1,241	)			-				-				-				(903	)			-				-				(430	)
Balance at end of period		$	28,530			$	35,639			$	34,349			$	31,283			$	30,574			$	30,189			$	37,966			$	38,576
Analysis of Allowance for Loan Losses:
Balance at beginning of period		$	37,574			$	37,959			$	38,026			$	38,766			$	39,422			$	39,015			$	41,246			$	42,957
Provision (credit) for loan and lease losses			853				(192	)			158				(982	)			586				1,128				(2,876	)			78
Less loans charged-off, net of recoveries:
Commercial business			50				(58	)			28				(768	)			384				1				(32	)			1,744
Commercial real estate:
Commercial AD&C			529				-				-				-				85				(616	)			(1,444	)			(1,020	)
Commercial investor real estate			(5	)			(2	)			(23	)			(5	)			23				1,243				123				31
Commercial owner occupied real estate			(6	)			-				265				-				(82	)			(284	)			100				81
Leasing			-				-				-				-				-				(6	)			(4	)			-
Consumer			83				244				11				331				488				169				490				508
Residential real estate:
Residential mortgage			(17	)			43				(27	)			203				347				216				22				447
Residential construction			(9	)			(34	)			(29	)			(3	)			(3	)			(2	)			100				(2	)
Net charge-offs			625				193				225				(242	)			1,242				721				(645	)			1,789
Balance at end of period		$	37,802			$	37,574			$	37,959			$	38,026			$	38,766			$	39,422			$	39,015			$	41,246
Asset Quality Ratios:
Non-performing loans to total loans			1.09	%			1.47	%			1.43	%			1.37	%			1.44	%			1.44	%			1.77	%			1.93	%
Non-performing assets to total assets			0.85	%			1.07	%			1.03	%			0.97	%			1.01	%			0.98	%			1.25	%			1.39	%
Allowance for loan losses to loans			1.21	%			1.26	%			1.30	%			1.34	%			1.39	%			1.48	%			1.50	%			1.61	%
Allowance for loan losses to non-performing loans			111.09	%			86.03	%			90.99	%			98.27	%			96.83	%			103.06	%			84.46	%			83.38	%
Annualized net charge-offs to average loans			0.08	%			0.03	%			0.03	%			(0.04	)%			0.18	%			0.11	%			(0.10	)%			0.28	%

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

		Three Months Ended December 31,
		2014												2013
										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)		$	717,671			$	6,086				3.42	%		$	614,698			$	5,384				3.49	%
Residential construction loans			141,890				1,328				3.71				125,744				1,189				3.75
Commercial ADC loans			201,020				2,364				4.67				156,558				2,057				5.21
Commercial investor real estate loans			607,050				7,320				4.78				522,085				6,974				5.30
Commercial owner occupied real estate loans			594,634				7,282				5.02				580,808				7,230				5.10
Commercial business loans			367,872				4,132				4.48				357,455				4,520				4.97
Leasing			114				1				6.56				817				14				6.81
Consumer loans			417,910				3,487				3.33				373,017				3,166				3.39
Total loans and leases (3)			3,048,161				32,000				4.21				2,731,182				30,534				4.47
Taxable securities			643,233				4,031				2.49				751,796				4,597				2.43
Tax-exempt securities (4)			299,549				3,207				4.25				303,636				3,283				4.29
Interest-bearing deposits with banks			30,635				19				0.25				29,944				19				0.25
Federal funds sold			473				1				0.22				475				1				0.22
Total interest-earning assets			4,022,051				39,258				3.91				3,817,033				38,434				4.03
Less:  allowance for loan and lease losses			(38,291	)											(39,775	)
Cash and due from banks			48,729												45,549
Premises and equipment, net			47,552												46,545
Other assets			212,196												213,487
Total assets		$	4,292,237											$	4,082,839
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	510,025				119				0.09	%		$	443,959				93				0.08	%
Regular savings deposits			261,564				34				0.05				239,382				45				0.08
Money market savings deposits			842,158				277				0.13				876,014				283				0.13
Time deposits			449,559				776				0.68				469,927				809				0.68
Total interest-bearing deposits			2,063,306				1,206				0.23				2,029,282				1,230				0.24
Other borrowings			78,746				47				0.23				61,780				37				0.24
Advances from FHLB			554,739				3,273				2.34				553,750				3,269				2.34
Subordinated debentures			35,000				222				2.54				35,000				223				2.55
Total interest-bearing liabilities			2,731,791				4,748				0.69				2,679,812				4,759				0.70
Noninterest-bearing demand deposits			1,000,285												872,532
Other liabilities			36,098												35,716
Stockholders' equity			524,063												494,779
Total liabilities and stockholders' equity		$	4,292,237											$	4,082,839
Net interest income and spread						$	34,510				3.22	%						$	33,675				3.33	%
Less: tax-equivalent adjustment							1,283												1,325
Net interest income						$	33,227											$	32,350
Interest income/earning assets											3.91	%											4.03	%
Interest expense/earning assets											0.47												0.50
Net interest margin											3.44	%											3.53	%

 

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2014 and 2013. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.3 million and $1.3 million in 2014 and 2013, 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

 

		Twelve Months Ended December 31,
		2014												2013
										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)		$	675,155			$	23,171				3.43	%		$	591,068			$	21,385				3.62	%
Residential construction loans			142,503				5,316				3.73				121,488				4,331				3.57
Commercial ADC loans			178,092				8,814				4.95				156,115				9,596				6.15
Commercial investor real estate loans			579,471				28,201				4.87				495,562				27,901				5.63
Commercial owner occupied real estate loans			585,965				28,586				5.04				569,065				29,696				5.36
Commercial business loans			358,425				16,400				4.59				343,554				17,807				5.07
Leasing			308				17				5.64				1,525				102				6.70
Consumer loans			397,595				13,176				3.34				364,495				12,491				3.45
Total loans and leases (3)			2,917,514				123,681				4.27				2,642,872				123,309				4.69
Taxable securities			676,237				16,817				2.49				761,713				18,133				2.38
Tax-exempt securities (4)			301,493				12,974				4.30				301,534				13,112				4.35
Interest-bearing deposits with banks			33,902				85				0.25				33,261				84				0.25
Federal funds sold			474				1				0.22				475				1				0.22
Total interest-earning assets			3,929,620				153,558				3.93				3,739,855				154,639				4.15
Less:  allowance for loan and lease losses			(38,556	)											(41,606	)
Cash and due from banks			46,224												45,836
Premises and equipment, net			46,275												47,244
Other assets			210,643												216,082
Total assets		$	4,194,206											$	4,007,411
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	484,171				425				0.09	%		$	438,183				373				0.09	%
Regular savings deposits			259,066				165				0.06				238,818				204				0.09
Money market savings deposits			864,029				1,116				0.13				879,588				1,414				0.16
Time deposits			457,778				3,085				0.67				490,278				3,448				0.70
Total interest-bearing deposits			2,065,044				4,791				0.23				2,046,867				5,439				0.27
Other borrowings			70,933				164				0.23				60,249				163				0.27
Advances from FHLB			556,178				12,982				2.33				500,593				12,936				2.58
Subordinated debentures			35,000				881				2.52				35,000				895				2.56
Total interest-bearing liabilities			2,727,155				18,818				0.69				2,642,709				19,433				0.74
Noninterest-bearing demand deposits			921,169												843,008
Other liabilities			31,675												33,858
Stockholders' equity			514,207												487,836
Total liabilities and stockholders' equity		$	4,194,206											$	4,007,411
Net interest income and spread						$	134,740				3.24	%						$	135,206				3.41	%
Less: tax-equivalent adjustment							5,192												5,292
Net interest income						$	129,548											$	129,914
Interest income/earning assets											3.93	%											4.15	%
Interest expense/earning assets											0.48												0.52
Net interest margin											3.45	%											3.63	%

 

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2014 and 2013. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $5.2 million and $5.3 million in 2014 and 2013, 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.