Exhibit 99.1

 

News release

 

 

FOR IMMEDIATE RELEASE

 

SANDY SPRING BANCORP REPORTS NET INCOME OF $15.1 MILLION FOR THE THIRD QUARTER

 

Bank Demonstrates Solid Performance in Advance of Acquisition of WashingtonFirst

 

OLNEY, MARYLAND, October 19, 2017 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, today reported net income for the third quarter of 2017 of $15.1 million ($0.62 per diluted share) compared to net income of $13.5 million ($0.56 per diluted share) for the third quarter of 2016 and net income of $14.7 million ($0.61 per diluted share) for the second quarter of 2017.

 

“Our solid core performance this quarter was once again driven by the loan and deposit growth that we’ve achieved over the past year. We continue to focus on building relationships with our clients and within the communities we serve to grow the company. We look forward to completing the acquisition of WashingtonFirst Bankshares, Inc. This acquisition will create the largest, locally headquartered community bank in the Greater Washington, D.C. region. It will expand access to the bank’s expertise and services, and ultimately benefit our clients and shareholders,” said Daniel J. Schrider, President and Chief Executive Officer.

 

Third Quarter Highlights:

 

·

Total loans increased 11% compared to the third quarter of 2016 and 1% compared to the second quarter of 2017. The year-over-year increase was driven primarily by year-over-year growth of 15% in the commercial loan portfolio.

 

·

Total deposits grew 12% from the prior year quarter and 2% from the prior quarter.

 

·

The net interest margin was 3.54% for the third quarter of 2017, compared to 3.50% for the third quarter of 2016 and 3.60% for the second quarter of 2017. Net interest income from the second quarter of 2017 included $0.7 million from the full payoff of a previously acquired credit impaired loan. Exclusive of this non-core item, the previous quarter’s margin would have been 3.54%.

 

·

Return on average common equity was 10.74% as compared to 10.11% from the prior year.

 

 

·

The Non-GAAP efficiency ratio was 53.76% for the current quarter as compared to 56.33% for the third quarter of 2016 and 54.10% for the second quarter of 2017.

 

·

Pre-tax, pre-provision income increased 17% compared with the third quarter of 2016.

 

 

Review of Balance Sheet and Credit Quality

 

At September 30, 2017, total assets were $5.3 billion, an 11% increase compared to $4.8 billion at September 30, 2016. Loan growth continues to be the driver of asset growth as total loans ended the period at $4.2 billion compared to $3.8 billion at September 30, 2016. The growth in the loan portfolio was funded primarily by a 12% increase in total deposits from September 30, 2016, to September 30, 2017.

 

Combined noninterest-bearing and interest-bearing checking account balances at September 30, 2017, an important performance driver of multiple-product banking relationships with clients, increased by 11% compared to balances at September 30, 2016.

 

Tangible common equity totaled $482 million at September 30, 2017, compared to $446 million at September 30, 2016. As a result of asset growth over the preceding 12 months, the ratio of tangible common equity to tangible assets decreased to 9.18% at September 30, 2017, from 9.43% at September 30, 2016. Dividends at $0.26 per common share were 8% higher in the third quarter of 2017 compared to the $0.24 per common share of third quarter of 2016. At September 30, 2017, the Company had a total risk-based capital ratio of 12.01%, a common equity tier 1 risk-based capital ratio of 10.99%, a tier 1 risk-based capital ratio of 10.99% and a tier 1 leverage ratio of 9.28%.

 

The level of non-performing loans to total loans decreased to 0.72% at September 30, 2017, compared to 0.85% at September 30, 2016, as a result of the growth in the loan portfolio and a reduction in non-performing loans. At September 30, 2017, non-performing loans totaled $30.2 million compared to $32.0 million at September 30, 2016, and $32.2 million at June 30, 2017. Non-performing loans include accruing loans 90 days or more past due and restructured loans.

 

Loan charge-offs, net of recoveries, totaled $1.1 million for the third quarter of 2017 compared to $0.2 million for the third quarter of 2016. The increase in charge-offs was the result of a commercial loan charge-off taken during the current quarter. The allowance for loan losses represented 1.07% of outstanding loans and 149% of non-performing loans at September 30, 2017, compared to 1.16% of outstanding loans and 137% of non-performing loans at September 30, 2016. The decline in the allowance to outstanding loans ratio is a reflection of improved credit quality and growth of the loan portfolio over the past year.

 

Income Statement Review

 

Net interest income for the third quarter of 2017 increased 13% compared to the third quarter of 2016 as average loans from quarter to quarter increased 12%. The net interest margin improved to 3.54% for the third quarter of 2017 compared to 3.50% for the third quarter of 2016. The margin improvement reflects the impact of loan growth, the cumulative benefits associated with the execution of funding strategies and higher yields associated with the investment portfolio.

 

 

The provision for loan losses was $0.9 million for the third quarter of 2017 compared to $0.8 million for the third quarter of 2016 and $1.3 million for the second quarter of 2017. The current quarter’s provision increase as compared to the prior year quarter was the result of qualitative adjustments related to composition and concentration of loan credits which offset the impact of lower quarterly loan growth in 2017 versus 2016.

 

Non-interest income increased to $12.7 million for the third quarter of 2017 compared to $12.6 million for the third quarter of 2016. Wealth management income for the third quarter of 2017 increased to $4.9 million or 12% as compared to $4.3 million for the third quarter of 2016. Insurance agency commissions increased 9% for the third quarter compared to same period of the prior year as a result last year’s agency acquisition. These results were offset by the $0.5 million decline in mortgage banking income from the prior year’s results as mortgage loan originations declined in the current quarter compared to the prior year.

 

Non-interest expenses increased 6% to $31.2 million for the third quarter of 2017 compared to $29.3 million in the third quarter of 2016. The increase in the current quarter compared to the prior year quarter was driven primarily by a $0.6 million increase in salary costs related to performance incentives and volume driven compensation costs, $0.3 million in merger related expenses and $0.6 million in other expenses. The non-GAAP efficiency ratio was 53.76% for the third quarter of 2017 compared to 56.33% for the third quarter of 2016 as a result of the growth in net interest income.

 

Net interest income for the first nine months of 2017 increased 13% compared to the first nine months of 2016 due primarily to an increase in average loans, which was funded primarily by an 11% increase in average deposits. As a result, the net interest margin was 3.55% for the first nine months of 2017 compared to 3.49% for the prior year period. Net interest income for the first nine months of 2017 included $0.7 million from the full payoff of a previously acquired credit impaired loan. Exclusive of this recovery the net interest margin would have been 3.54%.

 

The provision for loan losses was $2.5 million for the first nine months of 2017 compared to $5.0 million for the first nine months of 2016 primarily reflecting the growth in the loan portfolio over the prior year period offset by the effects of improved credit quality of the loan portfolio.

 

Non-interest income was $38.9 million for the first nine months of 2017 compared to $38.7 million for the first nine months of 2016. The first nine months of 2017 included gains of $1.3 million on sales of investment securities. The same prior year period included a $1.2 million gain on the extinguishment of subordinated debentures and $1.9 million in gains on the sales of investment securities. Excluding these gains, non-interest income increased 6% compared to the prior year period primarily due to increases in wealth management income, insurance agency commissions and other non-interest income.

 

Non-interest expenses increased 2% to $94.0 million for the first nine months of 2017 compared to $92.5 million for the prior year period. The nine months ended September 30, 2017, included increases from the prior year of $1.2 million in salaries and benefits, $0.5 million in FDIC insurance as a result of asset growth, and $1.3 million in merger expenses. These increases were partially offset by the decrease in prepayment penalties of $1.9 million for the early payoff of high-rate FHLB advances as compared to the nine months ended September 30, 2016. The non-GAAP efficiency ratio decreased to 54.21% for the first nine months of 2017 compared to 59.05% for the first nine months of 2016 as a direct result of the growth in net interest income.

 

 

Conference Call

 

The Company’s management will host a conference call to discuss its second quarter results today at 2:00 P.M. (ET). A live Webcast of the conference call is available through the Investor Relations’ section of the Sandy Spring Website at www.sandyspringbank.com. Participants may call 1-866-235-9910. A password is not necessary. Visitors to the Website are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Website until 9:00 am (ET) November 2, 2017. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10112289.

 

About Sandy Spring Bancorp, Inc.

 

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

 

For additional information or questions, please contact:

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

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

Sandy Spring Bancorp

17801 Georgia Avenue

Olney, Maryland 20832

1-800-399-5919

Email:

DSchrider@sandyspringbank.com

PMantua@sandyspringbank.com

Website: www.sandyspringbank.com

 

Media Contact:

Jen Schell

301-570-8331

jschell@sandyspringbank.com

 

 

Forward-Looking Statements

 

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

 

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

 

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2016, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Website 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)		2017				2016				Change				2017				2016				Change
Results of Operations:
Net interest income		$	42,697			$	37,731				13	%		$	125,276			$	110,585				13	%
Provision for loan losses			934				781				20				2,450				4,974				(51	)
Non-interest income			12,746				12,584				1				38,949				38,698				1
Non-interest expenses			31,191				29,326				6				94,040				92,514				2
Income before income taxes			23,318				20,208				15				67,735				51,795				31
Net income			15,089				13,474				12				44,942				34,934				29
Pre-tax pre-provision income		$	24,597			$	20,989				17			$	71,517			$	56,769				26
Return on average assets			1.13	%			1.13	%							1.15	%			0.99	%
Return on average common equity			10.74	%			10.11	%							10.99	%			8.88	%
Net interest margin			3.54	%			3.50	%							3.55	%			3.49	%
Efficiency ratio - GAAP basis (1)			56.26	%			58.28	%							57.26	%			61.97	%
Efficiency ratio - Non-GAAP basis (1)			53.76	%			56.33	%							54.21	%			59.05	%
Per share data:
Basic net income		$	0.62			$	0.56				11	%		$	1.86			$	1.45				28	%
Diluted net income		$	0.62			$	0.56				11			$	1.86			$	1.45				28
Average fully diluted shares			24,223,004				24,122,923				-				24,201,448				24,151,622				-
Dividends declared per share		$	0.26			$	0.24				8			$	0.78			$	0.72				8
Book value per share			23.53				22.47				5				23.53				22.47				5
Tangible book value per share			20.07				18.66				8				20.07				18.66				8
Outstanding shares			23,990,370				23,886,651				-				23,990,370				23,886,651				-
Financial Condition at period-end:
Investment securities		$	795,922			$	691,471				15	%		$	795,922			$	691,471				15	%
Loans			4,194,118				3,780,507				11				4,194,118				3,780,507				11
Interest-earning assets			5,049,229				4,537,331				11				5,049,229				4,537,331				11
Assets			5,334,788				4,810,611				11				5,334,788				4,810,611				11
Deposits			3,955,792				3,537,157				12				3,955,792				3,537,157				12
Interest-bearing liabilities			3,422,568				3,087,135				11				3,422,568				3,087,135				11
Stockholders' equity			564,480				536,655				5				564,480				536,655				5
Capital ratios:
Tier 1 leverage (4)			9.28	%			10.25	%							9.28	%			10.25	%
Tier 1 capital to risk-weighted assets (4)			10.99	%			12.17	%							10.99	%			12.17	%
Total regulatory capital to risk-weighted assets (4)			12.01	%			13.29	%							12.01	%			13.29	%
Common equity tier 1 capital to risk-weighted assets (4)			10.99	%			11.41	%							10.99	%			11.41	%
Tangible common equity to tangible assets (2)			9.18	%			9.43	%							9.18	%			9.43	%
Average equity to average assets			10.52	%			11.17	%							10.50	%			11.18	%
Credit quality ratios:
Allowance for loan losses to loans			1.07	%			1.16	%							1.07	%			1.16	%
Non-performing loans to total loans			0.72	%			0.85	%							0.72	%			0.85	%
Non-performing assets to total assets			0.59	%			0.69	%							0.59	%			0.69	%
Allowance for loan losses to non-performing loans			148.73	%			137.41	%							148.73	%			137.41	%
Annualized net charge-offs to average loans (3)			0.10	%			0.02	%							0.05	%			0.07	%

 

(1)

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

(2)

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

(3)

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

(4)

Estimated ratio at September 30, 2017

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

RECONCILIATION TABLE - UNAUDITED

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(Dollars in thousands)		2017				2016				2017				2016
Pre-tax pre-provision income:
Net income		$	15,089			$	13,474			$	44,942			$	34,934
Plus non-GAAP adjustment:
Merger expenses			345				-				1,332				-
Income taxes			8,229				6,734				22,793				16,861
Provision for loan losses			934				781				2,450				4,974
Pre-tax pre-provision income		$	24,597			$	20,989			$	71,517			$	56,769
Efficiency ratio - GAAP basis:
Non-interest expenses		$	31,191			$	29,326			$	94,040			$	92,514
Net interest income plus non-interest income		$	55,443			$	50,315			$	164,225			$	149,283
Efficiency ratio - GAAP basis			56.26	%			58.28	%			57.26	%			61.97	%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses		$	31,191			$	29,326			$	94,040			$	92,514
Less non-GAAP adjustment:
Amortization of intangible assets			25				34				76				94
Loss on FHLB Redemption			-				-				1,275				3,167
Merger expenses			345				-				1,332				-
Non-interest expenses -  as adjusted		$	30,821			$	29,292			$	91,357			$	89,253
Net interest income plus non-interest income		$	55,443			$	50,315			$	164,225			$	149,283
Plus non-GAAP adjustment:
Tax-equivalent income			1,888				1,688				5,585				4,993
Less non-GAAP adjustments:
Securities gains			-				-				1,275				1,919
Gain on redemption of subordinated debentures			-				-				-				1,200
Net interest income plus non-interest income - as adjusted		$	57,331			$	52,003			$	168,535			$	151,157
Efficiency ratio - Non-GAAP basis			53.76	%			56.33	%			54.21	%			59.05	%
Tangible common equity ratio:
Total stockholders' equity		$	564,480			$	536,655			$	564,480			$	536,655
Accumulated other comprehensive income			3,477				(4,465	)			3,477				(4,465	)
Goodwill			(85,768	)			(85,768	)			(85,768	)			(85,768	)
Other intangible assets, net			(604	)			(716	)			(604	)			(716	)
Tangible common equity		$	481,585			$	445,706			$	481,585			$	445,706
Total assets		$	5,334,788			$	4,810,611			$	5,334,788			$	4,810,611
Goodwill			(85,768	)			(85,768	)			(85,768	)			(85,768	)
Other intangible assets, net			(604	)			(716	)			(604	)			(716	)
Tangible assets		$	5,248,416			$	4,724,127			$	5,248,416			$	4,724,127
Tangible common equity ratio			9.18	%			9.43	%			9.18	%			9.43	%
Outstanding common shares			23,990,370				23,886,651				23,990,370				23,886,651
Tangible book value per common share		$	20.07			$	18.66			$	20.07			$	18.66

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED

 

		September 30,				December 31,				September 30,
(Dollars in thousands)		2017				2016				2016
Assets
Cash and due from banks		$	50,076			$	53,190			$	48,666
Federal funds sold			2,838				1,953				1,106
Interest-bearing deposits with banks			49,267				78,982				48,425
Cash and cash equivalents			102,181				134,125				98,197
Residential mortgage loans held for sale (at fair value)			7,084				13,222				15,822
Investments available-for-sale (at fair value)			756,069				733,554				655,642
Other equity securities			39,853				46,094				35,829
Total loans			4,194,118				3,927,808				3,780,507
Less: allowance for loan losses			(44,924	)			(44,067	)			(43,942	)
Net loans			4,149,194				3,883,741				3,736,565
Premises and equipment, net			54,108				53,562				53,356
Other real estate owned			1,448				1,911				1,274
Accrued interest receivable			16,045				14,589				13,123
Goodwill			85,768				85,768				85,768
Other intangible assets, net			604				680				716
Other assets			122,434				124,137				114,319
Total assets		$	5,334,788			$	5,091,383			$	4,810,611
Liabilities
Noninterest-bearing deposits		$	1,312,710			$	1,138,139			$	1,154,227
Interest-bearing deposits			2,643,082				2,439,405				2,382,930
Total deposits			3,955,792				3,577,544				3,537,157
Securities sold under retail repurchase agreements and federal funds purchased			146,569				125,119				124,205
Advances from FHLB			632,917				790,000				550,000
Subordinated debentures			-				30,000				30,000
Accrued interest payable and other liabilities			35,030				35,148				32,594
Total liabilities			4,770,308				4,557,811				4,273,956
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,990,370,
23,901,084 and 23,886,651 at September 30, 2017, December 31, 2016 and September 30, 2016, respectively			23,990				23,901				23,887
Additional paid in capital			167,455				165,871				164,937
Retained earnings			376,512				350,414				343,366
Accumulated other comprehensive loss			(3,477	)			(6,614	)			4,465
Total stockholders' equity			564,480				533,572				536,655
Total liabilities and stockholders' equity		$	5,334,788			$	5,091,383			$	4,810,611

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(Dollars in thousands, except per share data)		2017				2016				2017				2016
Interest Income:
Interest and fees on loans		$	43,891			$	38,224			$	126,861			$	111,358
Interest on loans held for sale			119				96				273				294
Interest on deposits with banks			108				49				289				156
Interest and dividends on investment securities:
Taxable			3,410				2,623				10,572				8,749
Exempt from federal income taxes			2,053				1,864				6,110				5,753
Interest on federal funds sold			8				1				18				3
Total interest income			49,589				42,857				144,123				126,313
Interest Expense:
Interest on deposits			3,701				2,128				9,212				6,006
Interest on retail repurchase agreements and federal funds purchased			83				74				238				212
Interest on advances from FHLB			3,108				2,699				9,385				8,812
Interest on subordinated debt			-				225				12				698
Total interest expense			6,892				5,126				18,847				15,728
Net interest income			42,697				37,731				125,276				110,585
Provision for loan losses			934				781				2,450				4,974
Net interest income after provision for loan losses			41,763				36,950				122,826				105,611
Non-interest Income:
Investment securities gains			-				-				1,275				1,919
Service charges on deposit accounts			2,140				2,035				6,121				5,894
Mortgage banking activities			632				1,129				2,080				2,770
Wealth management income			4,864				4,347				14,092				13,200
Insurance agency commissions			1,950				1,786				4,924				4,180
Income from bank owned life insurance			609				616				1,808				1,846
Bank card fees			1,211				1,189				3,609				3,498
Other income			1,340				1,482				5,040				5,391
Total non-interest income			12,746				12,584				38,949				38,698
Non-interest Expenses:
Salaries and employee benefits			18,442				17,848				54,525				53,299
Occupancy expense of premises			3,294				3,130				9,907				9,765
Equipment expenses			1,722				1,745				5,213				5,102
Marketing			784				628				2,223				1,971
Outside data services			1,286				1,349				4,045				4,067
FDIC insurance			850				726				2,478				2,012
Amortization of intangible assets			25				34				76				94
Merger expenses			345				-				1,332				-
Other expenses			4,443				3,866				14,241				16,204
Total non-interest expenses			31,191				29,326				94,040				92,514
Income before income taxes			23,318				20,208				67,735				51,795
Income tax expense			8,229				6,734				22,793				16,861
Net income		$	15,089			$	13,474			$	44,942			$	34,934
Net Income Per Share Amounts:
Basic net income per share		$	0.62			$	0.56			$	1.86			$	1.45
Diluted net income per share		$	0.62			$	0.56			$	1.86			$	1.45
Dividends declared per share		$	0.26			$	0.24			$	0.78			$	0.72

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED                             

 

		2017												2016
(Dollars in thousands, except per share data)		Q3				Q2				Q1				Q4				Q3				Q2				Q1
Profitability for the Quarter:
Tax-equivalent interest income		$	51,477			$	50,477			$	47,754			$	45,961			$	44,545			$	43,443			$	43,317
Interest expense			6,892				6,250				5,705				5,276				5,126				5,071				5,531
Tax-equivalent net interest income			44,585				44,227				42,049				40,685				39,419				38,372				37,786
Tax-equivalent adjustment			1,888				1,901				1,796				1,718				1,688				1,640				1,664
Provision for loan losses			934				1,322				194				572				781				2,957				1,236
Non-interest income			12,746				13,571				12,632				12,344				12,584				12,751				13,363
Non-interest expenses			31,191				32,868				29,981				30,544				29,326				30,871				32,317
Income before income taxes			23,318				21,707				22,710				20,195				20,208				15,655				15,932
Income tax expense			8,229				6,966				7,598				6,879				6,734				5,008				5,119
Net income		$	15,089			$	14,741			$	15,112			$	13,316			$	13,474			$	10,647			$	10,813
Financial Performance:
Pre-tax pre-provision income (2)		$	24,597			$	24,016			$	22,904			$	20,767			$	20,989			$	18,612			$	17,168
Return on average assets			1.13	%			1.14	%			1.20	%			1.09	%			1.13	%			0.92	%			0.93	%
Return on average common equity			10.74	%			10.80	%			11.45	%			9.92	%			10.11	%			8.21	%			8.29	%
Net interest margin			3.54	%			3.60	%			3.51	%			3.52	%			3.50	%			3.51	%			3.44	%
Efficiency ratio - GAAP basis (1)			56.26	%			58.80	%			56.69	%			59.53	%			58.28	%			62.39	%			65.31	%
Efficiency ratio - Non-GAAP basis (1)			53.76	%			54.10	%			54.78	%			57.54	%			56.33	%			59.12	%			61.84	%
Per Share Data:
Basic net income per share		$	0.62			$	0.61			$	0.63			$	0.55			$	0.56			$	0.45			$	0.45
Diluted net income per share		$	0.62			$	0.61			$	0.63			$	0.55			$	0.56			$	0.44			$	0.45
Average fully diluted shares			24,223,004				24,262,745				24,158,566				24,140,534				24,122,923				24,108,668				24,222,940
Dividends declared per common share		$	0.26			$	0.26			$	0.26			$	0.26			$	0.24			$	0.24			$	0.24
Non-interest Income:
Securities gains		$	-			$	1,273			$	2			$	13			$	-			$	150			$	1,769
Service charges on deposit accounts			2,140				2,017				1,964				2,059				2,035				1,956				1,903
Mortgage banking activities			632				840				608				1,279				1,129				1,106				535
Wealth management income			4,864				4,744				4,484				4,605				4,347				4,448				4,405
Insurance agency commissions			1,950				1,222				1,752				1,228				1,786				949				1,445
Income from bank owned life insurance			609				605				594				616				616				615				615
Bank card fees			1,211				1,253				1,145				1,176				1,189				1,220				1,089
Other income			1,340				1,617				2,083				1,368				1,482				2,307				1,602
Total Non-interest Income		$	12,746			$	13,571			$	12,632			$	12,344			$	12,584			$	12,751			$	13,363
Non-interest Expense:
Salaries and employee benefits		$	18,442			$	18,282			$	17,801			$	18,055			$	17,848			$	17,221			$	18,230
Occupancy expense of premises			3,294				3,211				3,402				3,195				3,130				3,162				3,473
Equipment expenses			1,722				1,767				1,724				1,781				1,745				1,693				1,664
Marketing			784				776				663				880				628				662				681
Outside data services			1,286				1,367				1,392				1,310				1,349				1,355				1,363
FDIC insurance			850				823				805				729				726				649				637
Amortization of intangible assets			25				25				26				36				34				28				32
Merger expenses			345				987				-				-				-				-				-
Professional fees			1,053				1,045				955				1,268				987				1,447				1,138
Other real estate owned expenses			4				(6	)			5				2				5				(5	)			17
Other expenses			3,386				4,591				3,208				3,288				2,874				4,659				5,082
Total Non-interest Expense		$	31,191			$	32,868			$	29,981			$	30,544			$	29,326			$	30,871			$	32,317

 

(1)

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

(2)

Pre-tax pre-provision income includes an adjustment to exclude the impact of merger expenses.

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

                              

		2017												2016
(Dollars in thousands)		Q3				Q2				Q1				Q4				Q3				Q2				Q1
Balance Sheets at Quarter End:
Residential mortgage loans		$	882,890			$	871,766			$	848,814			$	841,692			$	854,055			$	820,618			$	804,105
Residential construction loans			171,814				169,901				170,285				150,229				144,998				142,710				138,221
Commercial AD&C loans			295,222				314,259				309,350				308,279				302,522				285,585				261,204
Commercial investor real estate loans			1,104,669				1,069,988				979,410				928,113				847,946				824,252				783,161
Commercial owner occupied real estate loans			831,461				797,629				772,443				775,552				736,744				700,599				675,560
Commercial business loans			451,667				451,570				457,216				467,286				444,129				451,711				451,239
Consumer loans			456,395				458,058				455,478				456,657				450,113				447,149				447,198
Total loans			4,194,118				4,133,171				3,992,996				3,927,808				3,780,507				3,672,624				3,560,688
Allowance for loan losses			(44,924	)			(45,079	)			(43,861	)			(44,067	)			(43,942	)			(43,384	)			(41,766	)
Loans held for sale			7,084				5,743				17,717				13,222				15,822				13,490				27,806
Investment securities			795,922				821,491				855,707				779,648				691,471				734,828				742,401
Interest-earning assets			5,049,229				4,988,704				4,919,927				4,801,613				4,537,331				4,461,180				4,447,063
Total assets			5,334,788				5,270,521				5,201,164				5,091,383				4,810,611				4,739,449				4,716,608
Noninterest-bearing demand deposits			1,312,710				1,302,536				1,234,505				1,138,139				1,154,227				1,176,135				1,084,746
Total deposits			3,955,792				3,885,445				3,799,198				3,577,544				3,537,157				3,510,141				3,412,308
Customer repurchase agreements			146,569				127,312				141,244				125,119				124,205				117,887				121,043
Total interest-bearing liabilities			3,422,568				3,380,221				3,380,937				3,384,524				3,087,135				2,996,893				3,073,605
Total stockholders' equity			564,480				554,683				544,261				533,572				536,655				529,479				522,392
Quarterly Average Balance Sheets:
Residential mortgage loans		$	880,782			$	860,081			$	847,896			$	848,399			$	836,452			$	811,705			$	807,443
Residential construction loans			172,921				169,130				157,152				148,248				147,602				142,854				134,708
Commercial AD&C loans			291,569				302,924				310,325				310,110				287,836				272,090				261,687
Commercial investor real estate loans			1,090,641				1,010,389				945,080				878,511				832,529				788,785				750,821
Commercial owner occupied real estate loans			808,802				776,279				774,964				750,679				717,371				684,907				677,786
Commercial business loans			459,779				454,724				462,444				452,195				446,123				453,459				460,903
Consumer loans			457,526				461,672				458,162				454,349				450,171				449,594				451,075
Total loans			4,162,020				4,035,199				3,956,023				3,842,491				3,718,084				3,603,394				3,544,423
Loans held for sale			7,093				7,077				7,402				12,454				10,207				8,326				14,036
Investment securities			813,179				842,837				818,287				703,574				709,527				739,132				810,593
Interest-earning assets			5,019,133				4,922,389				4,829,208				4,599,426				4,477,438				4,394,879				4,411,796
Total assets			5,297,368				5,202,398				5,111,698				4,878,660				4,747,020				4,664,343				4,685,747
Noninterest-bearing demand deposits			1,293,470				1,251,396				1,159,715				1,167,379				1,131,739				1,082,762				1,021,471
Total deposits			3,916,657				3,810,180				3,673,731				3,582,437				3,528,665				3,429,897				3,300,131
Customer repurchase agreements			133,145				132,552				128,485				128,471				120,702				122,597				110,862
Total interest-bearing liabilities			3,407,279				3,360,128				3,375,002				3,138,420				3,045,998				3,020,505				3,103,710
Total stockholders' equity			557,282				547,229				535,308				534,057				530,241				521,387				524,309
Financial Measures:
Average equity to average assets			10.52	%			10.52	%			10.47	%			10.95	%			11.17	%			11.18	%			11.19	%
Investment securities to earning assets			15.76	%			16.47	%			17.39	%			16.24	%			15.24	%			16.47	%			16.69	%
Loans to earning assets			83.06	%			82.85	%			81.16	%			81.80	%			83.32	%			82.32	%			80.07	%
Loans to assets			78.62	%			78.42	%			76.77	%			77.15	%			78.59	%			77.49	%			75.49	%
Loans to deposits			106.02	%			106.38	%			105.10	%			109.79	%			106.88	%			104.63	%			104.35	%
Capital Measures:
Tier 1 leverage  (1)			9.28	%			9.26	%			9.26	%			10.14	%			10.25	%			10.29	%			10.23	%
Tier 1 capital to risk-weighted assets (1)			10.99	%			10.96	%			11.02	%			11.74	%			12.17	%			12.42	%			12.74	%
Total regulatory capital to risk-weighted assets  (1)			12.01	%			12.00	%			12.06	%			12.80	%			13.29	%			13.57	%			13.86	%
Common equity tier 1 capital to risk-weighted assets (1)			10.99	%			10.96	%			11.02	%			11.01	%			11.41	%			11.63	%			11.79	%
Book value per share		$	23.53			$	23.13			$	22.74			$	22.32			$	22.47			$	22.18			$	21.92
Outstanding shares			23,990,370				23,983,997				23,930,165				23,901,084				23,886,651				23,874,650				23,827,305

 

(1)

Estimated ratio at September 30, 2017

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

 

		2017												2016
(Dollars in thousands)		September 30,				June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
Non-Performing Assets:
Loans 90 days past due:
Commercial business		$	-			$	-			$	-			$	-			$	163			$	-			$	-
Commercial real estate:
Commercial AD&C			-				-				-				-				-				-				-
Commercial investor real estate			-				-				-				-				-				-				-
Commercial owner occupied real estate			-				424				-				-				-				-				-
Consumer			1				4				-				-				-				2				1
Residential real estate:
Residential mortgage			225				-				232				232				-				-				-
Residential construction			-				-				-				-				-				-				-
Total loans 90 days past due			226				428				232				232				163				2				1
Non-accrual loans:
Commercial business			6,091				6,807				4,849				5,833				4,140				4,263				3,741
Commercial real estate:
Commercial AD&C			137				137				137				137				137				137				147
Commercial investor real estate			5,589				6,934				7,970				8,107				9,189				8,868				7,885
Commercial owner occupied real estate			5,012				4,926				5,106				4,823				5,591				5,678				7,149
Consumer			3,152				3,111				3,058				2,859				2,726				2,600				2,715
Residential real estate:
Residential mortgage			7,345				7,101				6,908				7,257				7,321				6,186				9,329
Residential construction			182				187				189				195				199				202				412
Total non-accrual loans			27,508				29,203				28,217				29,211				29,303				27,934				31,378
Total restructured loans - accruing			2,471				2,569				2,409				2,489				2,512				3,420				4,716
Total non-performing loans			30,205				32,200				30,858				31,932				31,978				31,356				36,095
Other assets and real estate owned (OREO)			1,448				1,460				1,294				1,911				1,274				1,311				2,414
Total non-performing assets		$	31,653			$	33,660			$	32,152			$	33,843			$	33,252			$	32,667			$	38,509
		For the Quarter Ended,
		September 30,				June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2017				2017				2017				2016				2016				2016				2016
Analysis of Non-accrual Loan Activity:
Balance at beginning of period		$	29,203			$	28,217			$	29,211			$	29,303			$	27,934			$	31,378			$	30,031
Non-accrual balances transferred to OREO			(411	)			(175	)			(113	)			(637	)			(38	)			-				-
Non-accrual balances charged-off			(1,127	)			(179	)			(391	)			(390	)			(245	)			(1,305	)			(274	)
Net payments or draws			(1,869	)			(1,804	)			(1,382	)			(1,547	)			(525	)			(4,810	)			(914	)
Loans placed on non-accrual			1,712				3,144				1,461				2,482				2,486				2,671				2,535
Non-accrual loans brought current			-				-				(569	)			-				(309	)			-				-
Balance at end of period		$	27,508			$	29,203			$	28,217			$	29,211			$	29,303			$	27,934			$	31,378
Analysis of Allowance for Loan Losses:
Balance at beginning of period		$	45,079			$	43,861			$	44,067			$	43,942			$	43,384			$	41,766			$	40,895
Provision for loan losses			934				1,322				194				572				781				2,957				1,236
Less loans charged-off, net of recoveries:
Commercial business			1,029				107				260				285				95				106				67
Commercial real estate:
Commercial AD&C			-				(103	)			-				(18	)			(22	)			-				48
Commercial investor real estate			(10	)			(78	)			(5	)			(9	)			(12	)			(107	)			192
Commercial owner occupied real estate			5				-				-				-				(1	)			(1	)			(3	)
Consumer			103				189				167				177				145				364				54
Residential real estate:
Residential mortgage			(32	)			(3	)			(16	)			18				24				989				15
Residential construction			(6	)			(8	)			(6	)			(6	)			(6	)			(12	)			(8	)
Net charge-offs			1,089				104				400				447				223				1,339				365
Balance at end of period		$	44,924			$	45,079			$	43,861			$	44,067			$	43,942			$	43,384			$	41,766
Asset Quality Ratios:
Non-performing loans to total loans			0.72	%			0.78	%			0.77	%			0.81	%			0.85	%			0.85	%			1.01	%
Non-performing assets to total assets			0.59	%			0.64	%			0.62	%			0.66	%			0.69	%			0.69	%			0.82	%
Allowance for loan losses to loans			1.07	%			1.09	%			1.10	%			1.12	%			1.16	%			1.18	%			1.17	%
Allowance for loan losses to non-performing loans			148.73	%			140.00	%			142.14	%			138.00	%			137.41	%			138.36	%			115.72	%
Annualized net charge-offs to average loans			0.10	%			0.01	%			0.04	%			0.05	%			0.02	%			0.15	%			0.04	%

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

		Three Months Ended September 30,
						2017												2016
										Annualized												Annualized
		Average				(1)				Average				Average				(1)				Average
(Dollars in thousands and tax-equivalent)		Balances				Interest				Yield/Rate				Balances				Interest				Yield/Rate
Assets
Residential mortgage loans		$	880,782			$	7,772				3.53	%		$	836,452			$	7,208				3.45	%
Residential construction loans			172,921				1,641				3.77				147,602				1,341				3.62
Total mortgage loans			1,053,703				9,413				3.57				984,054				8,549				3.47
Commercial AD&C loans			291,569				3,705				5.04				287,836				3,398				4.70
Commercial investor real estate loans			1,090,641				12,279				4.47				832,529				9,487				4.53
Commercial owner occupied real estate loans			808,802				9,492				4.66				717,371				8,581				4.76
Commercial business loans			459,779				5,252				4.53				446,123				4,863				4.34
Total commercial loans			2,650,791				30,728				4.60				2,283,859				26,329				4.59
Consumer loans			457,526				4,395				3.84				450,171				3,916				3.48
Total loans (2)			4,162,020				44,536				4.25				3,718,084				38,794				4.16
Loans held for sale			7,093				119				6.69				10,207				96				3.75
Taxable securities			512,420				3,531				2.76				432,706				2,717				2.51
Tax-exempt securities (3)			300,759				3,175				4.22				276,821				2,888				4.17
Total investment securities			813,179				6,706				3.30				709,527				5,605				3.16
Interest-bearing deposits with banks			34,007				108				1.26				38,773				49				0.51
Federal funds sold			2,834				8				1.16				847				1				0.49
Total interest-earning assets			5,019,133				51,477				4.08				4,477,438				44,545				3.96
Less:  allowance for loan losses			(45,546	)											(43,498	)
Cash and due from banks			48,221												45,210
Premises and equipment, net			53,938												53,162
Other assets			221,622												214,708
Total assets		$	5,297,368											$	4,747,020
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	615,250				135				0.09	%		$	579,863				112				0.08	%
Regular savings deposits			326,827				57				0.07				305,077				48				0.06
Money market savings deposits			1,002,779				1,479				0.59				938,528				514				0.22
Time deposits			678,331				2,030				1.19				573,458				1,454				1.01
Total interest-bearing deposits			2,623,187				3,701				0.56				2,396,926				2,128				0.35
Other borrowings			133,145				83				0.25				120,702				74				0.24
Advances from FHLB			650,947				3,108				1.89				498,370				2,699				2.15
Subordinated debentures			-				-				-				30,000				225				3.00
Total interest-bearing liabilities			3,407,279				6,892				0.80				3,045,998				5,126				0.67
Noninterest-bearing demand deposits			1,293,470												1,131,739
Other liabilities			39,337												39,042
Stockholders' equity			557,282												530,241
Total liabilities and stockholders' equity		$	5,297,368											$	4,747,020
Net interest income and spread						$	44,585				3.28	%						$	39,419				3.29	%
Less: tax-equivalent adjustment							1,888												1,688
Net interest income						$	42,697											$	37,731
Interest income/earning assets											4.08	%											3.96	%
Interest expense/earning assets											0.54												0.46
Net interest margin											3.54	%											3.50	%

 

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and 2016. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.9 million and $1.7 million in 2017 and 2016, respectively.

(2)

Non-accrual loans are included in the average balances.

(3)

Includes only investments that are exempt from federal taxes.

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

		Nine Months Ended September 30,
						2017												2016
										Annualized												Annualized
		Average				(1)				Average				Average				(1)				Average
(Dollars in thousands and tax-equivalent)		Balances				Interest				Yield/Rate				Balances				Interest				Yield/Rate
Assets
Residential mortgage loans		$	863,040			$	22,651				3.50	%		$	818,599			$	21,010				3.42	%
Residential construction loans			166,459				4,656				3.74				141,743				3,804				3.59
Total mortgage loans			1,029,499				27,307				3.54				960,342				24,814				3.45
Commercial AD&C loans			301,537				11,126				4.93				273,922				9,511				4.64
Commercial investor real estate loans			1,015,903				33,978				4.47				790,864				27,087				4.57
Commercial owner occupied real estate loans			786,805				28,501				4.84				693,442				24,946				4.81
Commercial business loans			458,973				15,321				4.46				453,468				14,819				4.37
Total commercial loans			2,563,218				88,926				4.64				2,211,696				76,363				4.61
Consumer loans			459,118				12,496				3.67				450,280				11,691				3.49
Total loans (2)			4,051,835				128,729				4.25				3,622,318				112,868				4.16
Loans held for sale			7,189				273				5.06				10,854				294				3.61
Taxable securities			526,931				10,944				2.77				470,987				9,073				2.57
Tax-exempt securities (3)			297,818				9,455				4.23				281,938				8,912				4.21
Total investment securities			824,749				20,399				3.30				752,925				17,985				3.19
Interest-bearing deposits with banks			38,006				289				1.02				41,433				156				0.50
Federal funds sold			2,493				18				0.97				688				3				0.48
Total interest-earning assets			4,924,272				149,708				4.06				4,428,218				131,306				3.96
Less:  allowance for loan losses			(44,324	)											(42,215	)
Cash and due from banks			48,184												46,255
Premises and equipment, net			53,680												53,318
Other assets			222,682												214,284
Total assets		$	5,204,494											$	4,699,860
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	613,498				372				0.08	%		$	578,473				335				0.08	%
Regular savings deposits			322,683				163				0.07				297,944				137				0.06
Money market savings deposits			992,069				3,333				0.45				914,499				1,446				0.21
Time deposits			637,478				5,344				1.12				550,195				4,088				0.99
Total interest-bearing deposits			2,565,728				9,212				0.48				2,341,111				6,006				0.34
Other borrowings			131,412				238				0.24				118,105				212				0.24
Advances from FHLB			683,231				9,385				1.84				565,493				8,812				2.08
Subordinated debentures			549				12				2.93				31,989				698				2.91
Total interest-bearing liabilities			3,380,920				18,847				0.75				3,056,698				15,728				0.69
Noninterest-bearing demand deposits			1,235,350												1,078,851
Other liabilities			41,537												38,981
Stockholders' equity			546,687												525,330
Total liabilities and stockholders' equity		$	5,204,494											$	4,699,860
Net interest income and spread						$	130,861				3.31	%						$	115,578				3.27	%
Less: tax-equivalent adjustment							5,585												4,993
Net interest income						$	125,276											$	110,585
Interest income/earning assets											4.06	%											3.96	%
Interest expense/earning assets											0.51												0.47
Net interest margin											3.55	%											3.49	%

 

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and 2016. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $5.6 million and $5.0 million in 2017 and 2016, respectively.

(2)

Non-accrual loans are included in the average balances.

(3)

Includes only investments that are exempt from federal taxes.