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Sandy Spring Bancorp Reports Record Quarterly Earnings

Company Demonstrates Strong Performance and Momentum Across the Organization

OLNEY, Md., Oct. 18, 2018 (GLOBE NEWSWIRE) -- Today, Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, reported net income for the third quarter of 2018 of $29.2 million ($0.82 per diluted share) compared to net income of $15.1 million ($0.62 per diluted share) for the third quarter of 2017 and net income of $24.4 million ($0.68 per diluted share) for the second quarter of 2018.  The current quarter’s results included $2.0 million of recovered interest income from a previously acquired credit impaired loan and $0.6 million in merger expenses.  Excluding the after-tax impact of these items, the net income for the third quarter would have been $28.2 million or $0.79 per diluted share.

The results of operations from the January 1, 2018, acquisition of WashingtonFirst Bankshares (“WashingtonFirst”) are included in the Company’s consolidated results of operations for the first nine months of 2018.  The current period results reflect increased levels of average and period end balances, income and expense, versus comparable periods in 2017.  At the acquisition date, WashingtonFirst had assets of $2.1 billion, loans of $1.7 billion and deposits of $1.6 billion.  The growth in interest income and expense from the prior year is the result of the growth in the balance sheet.  The cost savings initiatives as a result of the synergies from the combination of the two institutions will continue to be realized into the first half of 2019.

“As the largest locally-headquartered community bank, our success is evident in our record quarterly earnings and growth momentum,” said Daniel J. Schrider, President and Chief Executive Officer. “We are thriving in a highly competitive market and among our peer group. To continue to be a high-performing company, we will remain grounded in our core strengths: effectively funding the bank by deepening our client relationships and enhancing our funding strategies, driving robust loan growth, and managing expenses. All of these performance drivers have been key to this quarter’s strong results.”

Third Quarter Highlights: 

  • Total loans increased 52% compared to the third quarter of 2017, primarily as a result of the WashingtonFirst acquisition. Post-acquisition loan growth momentum remained strong during the quarter.  Compared to the post-acquisition combined portfolio at the beginning of 2018, the loan portfolio has experienced 6% growth.
     
  • Total deposits have experienced post-acquisition growth of 6%, primarily in noninterest-bearing demand deposit accounts, which have grown 13% subsequent to the acquisition. 
     
  • The net interest margin for the third quarter of 2018 was 3.71% compared to 3.54% for the third quarter of 2017 and 3.56% for the second quarter of 2018.  The current quarter’s margin was positively impacted by an interest income recovery of $2.0 million.  The net interest margin for the current quarter was 3.60% after excluding the interest income recovery.
     
  • Third quarter results reflected an annualized return on average assets of 1.45% and annualized return on average equity of 11.26% as compared to 1.13% and 10.74% respectively for the third quarter of 2017.  Exclusive of merger costs and the interest income recovery on an after-tax basis, the return on average assets and return on average equity for the current quarter would have been 1.40% and 10.85%, respectively.

  • Pre-tax merger expenses recognized in the current quarter declined to $0.6 million compared to $2.2 million in the prior quarter.
     
  • The Non-GAAP efficiency ratio was 49.27% for the current quarter compared to 53.76% for the third quarter of 2017 and 52.98% for the second quarter of 2018.  Excluding the previously mentioned interest recovery, the Non-GAAP efficiency ratio for the current quarter was 50.48%.

Review of Balance Sheet and Credit Quality

At September 30, 2018, total assets amounted to $8.0 billion compared to $5.3 billion at September 30, 2017. This increase was primarily the result of the acquisition of WashingtonFirst’s $2.1 billion of assets. Total loans at September 30, 2018, were $6.4 billion compared to $4.2 billion at September 30, 2017.  Post-acquisition asset growth has been primarily the result of net loan growth in the first nine months of 2018.

Tangible common equity totaled $711 million at September 30, 2018, compared to $482 million at September 30, 2017. At September 30, 2018, the ratio of tangible common equity to tangible assets has increased to 9.26% compared to 9.18% at September 30, 2017.  The initial impact on tangible common equity of the growth in intangible assets associated with the WashingtonFirst acquisition has been substantially offset during 2018 by increased net earnings.   The Company had a total risk-based capital ratio of 12.38%, a common equity tier 1 risk-based capital ratio of 11.02%, a tier 1 risk-based capital ratio of 11.18% and a tier 1 leverage ratio of 9.46% at September 30, 2018.

The ratio of non-performing loans to total loans decreased to 0.52% at September 30, 2018, compared to 0.72% at September 30, 2017, as a result of the growth in the loan portfolio.  Non-performing loans totaled $33.3 million at September 30, 2018, compared to $30.2 million at September 30, 2017, and $28.8 million at June 30, 2018. Non-performing loans include accruing loans 90 days or more past due and restructured loans, but exclude non-performing loans acquired in the WashingtonFirst acquisition.

Net loan charge-offs/recoveries were not significant for the third quarter of 2018 compared to $1.1 million for the third quarter of 2017.  The allowance for loan losses represented 0.79% of outstanding loans and 151% of non-performing loans at September 30, 2018, compared to 1.07% of outstanding loans and 149% of non-performing loans at September 30, 2017. The decline in the ratio of the allowance for loan losses to outstanding loans ratio is the result of the accounting for credit losses on the loans acquired in the WashingtonFirst acquisition as any incurred credit losses have been embedded in the determination of the fair values of those loans.

Income Statement Review

For the third quarter of 2018 net interest income increased 58% to $67.6 million compared to $42.7 million for the third quarter of 2017 as average loans from quarter to quarter increased 51% primarily as a result of the WashingtonFirst acquisition and, to a lesser extent, the Company’s organic loan growth. The net interest margin for the current quarter was 3.71% compared to the net interest margin for the third quarter of 2017 of 3.54%.  The current quarter’s margin included $2.0 million in recovered interest income from a previously acquired credit impaired loan compared to $0.7 million in recovered interest for the prior year’s quarter.  Excluding these amounts, the net interest margin for the current quarter was 3.60% compared to the prior year’s 3.54%.  Amortization of the fair value adjustments to both interest-earning assets and interest-bearing liabilities directly attributable to the acquisition had an 18 basis point positive effect on net interest margin for the current period. This favorable margin impact was offset by approximately 5 basis points as a result of the impact that the recent reduction in the tax rate had on tax-advantaged investments.

The provision for loan losses was $1.9 million for the third quarter of 2018, compared to $0.9 million for the third quarter of 2017 and $1.7 million for the second quarter of 2018. The increase in the provision reflects the impact of organic loan production and the impact of acquired loans being refinanced as they matured under the original lending arrangements during the third quarter of 2018.  

Non-interest income increased to $15.0 million or 18% for the third quarter of 2018, compared to $12.7 million for the third quarter of 2017.  The increase in non-interest income was due primarily to the impact of increased mortgage banking activities and, to a lesser extent, income from wealth management activities and bank card fees.

Non-interest expenses increased 36% to $42.4 million for the third quarter of 2018, compared to $31.2 million in the third quarter of 2017. The current quarter included $0.6 million in merger expenses compared to $0.3 million for the third quarter of 2017.  Excluding these expenses, non-interest expenses increased 36% compared to the third quarter of 2017 due to increased compensation and benefit costs and facility and other operational expenses as a result of the acquisition.  The non-GAAP efficiency ratio improved to 49.27% for the third quarter of 2018, compared to 53.76% for the third quarter of 2017, as a result of the growth in net interest income.  The Non-GAAP efficiency ratio for the current quarter was 50.48% after excluding the interest income recovery.

Net interest income for the first nine months of 2018 increased 55%, compared to the first nine months of 2017, due to the combination of the acquisition and organic loan growth. During the first nine months of 2018, the net interest margin was 3.62% compared to 3.55% for the prior year period. Net interest income for the first nine months of 2018 includes the previously mentioned $2.0 million of recovered interest income.  This compares to the interest recovery of $0.7 million for the same period of 2017.   Excluding these recoveries, the net interest margin would have been 3.59% compared to 3.54% for the nine months ended 2018 and 2017, respectively.  The amortization of the fair value adjustments is estimated to be 14 basis points on an annual basis.  This favorable margin effect was partially offset by the impact that the recently enacted tax rate reduction had on the tax-advantaged securities in the investment portfolio which adversely affected the margin by 5 basis points.  

The provision for loan losses was $5.6 million for the first nine months of 2018, compared to $2.5 million for the first nine months of 2017.   The increase in the provision reflects the organic growth in the loan portfolio year over year in addition to the impact of acquired loans being refinanced as they reach maturity under the original lending arrangements and cease to be accounted for as acquired loans. 

Non-interest income was $47.0 million for the first nine months of 2018, compared to $38.9 million for the first nine months of 2017.  The first nine months of 2018 included gains of $0.1 million on sales of investment securities compared to $1.3 million in 2017.  Excluding these gains, non-interest income increased 24% compared to the prior year period primarily due to increases in mortgage banking activities, wealth management income and BOLI insurance mortality proceeds. Mortgage lending operations acquired as part of the WashingtonFirst transaction has resulted in significant growth in mortgage banking income for the first nine months of 2018. 

Non-interest expenses increased 46% to $137.1 million for the first nine months of 2018, compared to $94.0 million for the prior year period.  Excluding merger expense from both years in addition to the prior year’s loss on the FHLB redemption, the year-over-year increase in non-interest expense was 37%.  The majority of the increase was in compensation, facility costs and other operational expenses as a result of the acquisition of WashingtonFirst.  The non-GAAP efficiency ratio improved to 50.57% for the first nine months of 2018 compared to 54.21% for the first nine months of 2017 as a direct result of the growth in net interest income.  The Non-GAAP efficiency ratio for the current year-to-date was 50.99% excluding the interest income recovery.

/EIN News/ -- Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s management uses supplemental non-GAAP financial measures in its analysis of the Company’s performance. These non-GAAP financial measures include: reported net income excluding intangible asset amortization, merger related expenses and the loss on the FHLB redemption from non-interest expense; non-interest income excluding securities gains (losses); and tax-equivalent net interest income, which adjusts the interest earned on tax-advantaged loans and tax-exempt investment securities to an amount comparable to interest subject to normal income taxes. Because the adjustments made to derive non-GAAP financial measures can vary from period to period, the Company’s management believes that the non-GAAP financial measures are useful in comparing period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Please refer to Non-GAAP Reconciliation table included with this release.

Conference Call

The Company’s management will host a conference call to discuss its third quarter results today at 2:00 P.M. (ET).  A live 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 on the website until 9:00 am (ET) November 1, 2018.  A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10124406.

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. 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 
Web site: 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; the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period; 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, 2017, including in the Risk Factors section of that report, and in its other SEC reports.  Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov.

                             
Sandy Spring Bancorp, Inc. and Subsidiaries                            
FINANCIAL HIGHLIGHTS - UNAUDITED                            
                             
    Three Months Ended         Nine Months Ended      
    September 30,     September 30,   %  
(Dollars in thousands, except per share data)     2018     2017   Change      2018     2017   Change  
Results of Operations:                            
Net interest income   $    67,591   $ 42,697   58 %   $    194,300   $ 125,276   55 %
Provision for loan losses       1,890     934   102         5,620     2,450   129  
Non-interest income       15,033     12,746   18         47,019     38,949   21  
Non-interest expenses       42,393     31,191   36         137,116     94,040   46  
Income before income taxes       38,341     23,318   64         98,583     67,735   46  
Net income       29,234     15,089   94         75,298     44,942   68  
                             
Pre-tax pre-provision income   $    40,811   $ 24,597   66     $    115,969   $ 71,517   62  
                             
Return on average assets       1.45 %   1.13 %           1.27 %   1.15 %    
Return on average common equity       11.26 %   10.74 %           9.89 %   10.99 %    
Net interest margin       3.71 %   3.54 %           3.62 %   3.55 %    
Efficiency ratio - GAAP basis  (1)       51.31 %   56.26 %           56.82 %   57.26 %    
Efficiency ratio - Non-GAAP basis  (1)       49.27 %   53.76 %           50.57 %   54.21 %    
                             
Per share data:                            
Basic net income   $    0.82   $ 0.62   32 %   $    2.11   $ 1.86   13 %
Diluted net income   $    0.82   $ 0.62   32     $    2.11   $ 1.86   13  
Average fully diluted shares      35,744,085     24,223,004   48        35,721,702     24,201,448   48  
Dividends declared per share   $    0.28   $ 0.26   8     $    0.82   $ 0.78   5  
Book value per share       29.35     23.53   25         29.35     23.53   25  
Tangible book value per share       20.03     20.07   -         20.03     20.07   -  
Outstanding shares      35,521,541     23,990,370   48        35,521,541     23,990,370   48  
                             
Financial Condition at period-end:                            
Investment securities   $    992,797   $ 795,922   25 %   $    992,797   $ 795,922   25 %
Loans       6,388,959     4,194,118   52         6,388,959     4,194,118   52  
Interest-earning assets       7,428,534     5,049,229   47         7,428,534     5,049,229   47  
Assets       8,034,565     5,334,788   51         8,034,565     5,334,788   51  
Deposits       5,898,394     3,955,792   49         5,898,394     3,955,792   49  
Interest-bearing liabilities       5,042,431     3,422,568   47         5,042,431     3,422,568   47  
Stockholders' equity       1,042,716     564,480   85         1,042,716     564,480   85  
                             
Capital ratios:                            
Tier 1 leverage  (4)       9.46 %   9.28 %           9.46 %   9.28 %    
Tier 1 capital to risk-weighted assets  (4)       11.18 %   10.99 %           11.18 %   10.99 %    
Total regulatory capital to risk-weighted assets  (4)       12.38 %   12.01 %           12.38 %   12.01 %    
Common equity tier 1 capital to risk-weighted assets  (4)       11.02 %   10.99 %           11.02 %   10.99 %    
Tangible common equity to tangible assets  (2)       9.26 %   9.18 %           9.26 %   9.18 %    
Average equity to average assets       12.90 %   10.52 %           12.85 %   10.50 %    
                             
Credit quality ratios:                            
Allowance for loan losses to loans       0.79 %   1.07 %           0.79 %   1.07 %    
Non-performing loans to total loans       0.52 %   0.72 %           0.52 %   0.72 %    
Non-performing assets to total assets       0.44 %   0.59 %           0.44 %   0.59 %    
Allowance for loan losses to non-performing loans       151.35 %   148.73 %           151.35 %   148.73 %    
Annualized net charge-offs to average loans  (3)       0.00 %   0.10 %           0.01 %   0.05 %    
                             
(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, merger expenses and loss on FHLB redemption from non-interest expense;
securities gains (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) 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, 2018
                             

 

                 
Sandy Spring Bancorp, Inc. and Subsidiaries                
RECONCILIATION TABLE - UNAUDITED                
                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
(Dollars in thousands)     2018       2017       2018       2017  
Pre-tax pre-provision income:                
Net income   $    29,234     $ 15,089     $    75,298     $ 44,942  
Plus non-GAAP adjustment:                
Merger expenses       580       345         11,766       1,332  
Income taxes       9,107       8,229         23,285       22,793  
Provision for loan losses       1,890       934         5,620       2,450  
Pre-tax pre-provision income   $    40,811     $ 24,597     $    115,969     $ 71,517  
                 
Efficiency ratio - GAAP basis:                
Non-interest expenses   $    42,393     $ 31,191     $    137,116     $ 94,040  
                 
Net interest income plus non-interest income   $    82,624     $ 55,443     $    241,319     $ 164,225  
                 
Efficiency ratio - GAAP basis     51.31 %     56.26 %     56.82 %     57.26 %
                 
                 
Efficiency ratio - Non-GAAP basis:                
Non-interest expenses   $    42,393     $ 31,191     $    137,116     $ 94,040  
Less non-GAAP adjustment:                
Amortization of intangible assets       540       25         1,622       76  
Loss on FHLB Redemption     -       -       -       1,275  
Merger expenses       580       345         11,766       1,332  
Non-interest expenses -  as adjusted   $    41,273     $ 30,821     $    123,728     $ 91,357  
                 
Net interest income plus non-interest income   $    82,624     $ 55,443     $    241,319     $ 164,225  
Plus non-GAAP adjustment:                
Tax-equivalent income       1,221       1,888         3,483       5,585  
Less non-GAAP adjustments:                
Securities gains       82       -         145       1,275  
Net interest income plus non-interest income - as adjusted   $    83,763     $ 57,331     $    244,657     $ 168,535  
                 
Efficiency ratio - Non-GAAP basis     49.27 %     53.76 %     50.57 %     54.21 %
                 
Supplemental Non-GAAP Performance Measurements:                
Net income - GAAP   $    29,234     $ 15,089     $    75,298     $ 44,942  
Merger expenses - net of tax       428       207         8,692       801  
Acquisition fair value marks - net of tax       2,499       17         5,777       65  
Net income - Non-GAAP   $    27,163     $ 15,279     $    78,213     $ 45,678  
                 
Diluted net income per share - Non-GAAP   $    0.76     $ 0.63     $    2.19     $ 1.89  
Return on average assets - Non-GAAP     1.35 %     1.14 %     1.32 %     1.17 %
Return on average common equity - Non-GAAP     10.46 %     10.88 %     10.27 %     11.17 %
                 
Tangible common equity ratio:                
Total stockholders' equity   $    1,042,716     $ 564,480     $    1,042,716     $ 564,480  
Accumulated other comprehensive income       24,420       3,477         24,420       3,477  
Goodwill       (345,422 )     (85,768 )       (345,422 )     (85,768 )
Other intangible assets, net       (10,327 )     (604 )       (10,327 )     (604 )
Tangible common equity   $    711,387     $ 481,585     $    711,387     $ 481,585  
                 
Total assets   $    8,034,565     $ 5,334,788     $    8,034,565     $ 5,334,788  
Goodwill       (345,422 )     (85,768 )       (345,422 )     (85,768 )
Other intangible assets, net       (10,327 )     (604 )       (10,327 )     (604 )
Tangible assets   $    7,678,816     $ 5,248,416     $    7,678,816     $ 5,248,416  
                 
Tangible common equity ratio     9.26 %     9.18 %     9.26 %     9.18 %
                 
Outstanding common shares       35,521,541       23,990,370         35,521,541       23,990,370  
Tangible book value per common share   $    20.03     $ 20.07     $    20.03     $ 20.07  
                 

 

             
Sandy Spring Bancorp, Inc. and Subsidiaries            
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED            
             
    September 30,   December 31,   September 30,
(Dollars in thousands)   2018     2017     2017  
Assets            
Cash and due from banks   $    63,380     $ 55,693     $ 50,076  
Federal funds sold       2,055       2,845       2,838  
Interest-bearing deposits with banks       13,142       53,962       49,267  
Cash and cash equivalents       78,577       112,500       102,181  
Residential mortgage loans held for sale (at fair value)       31,581       9,848       7,084  
Investments available-for-sale (at fair value)       926,723       729,507       756,069  
Other equity securities       66,074       45,518       39,853  
Total loans       6,388,959       4,314,248       4,194,118  
Less: allowance for loan losses       (50,409 )     (45,257 )     (44,924 )
Net loans       6,338,550       4,268,991       4,149,194  
Premises and equipment, net       62,098       54,761       54,108  
Other real estate owned       2,118       2,253       1,448  
Accrued interest receivable       24,058       15,480       16,045  
Goodwill       345,422       85,768       85,768  
Other intangible assets, net       10,327       580       604  
Other assets       149,037       121,469       122,434  
Total assets   $    8,034,565     $ 5,446,675     $ 5,334,788  
             
Liabilities            
Noninterest-bearing deposits   $    1,902,537     $ 1,264,392     $ 1,312,710  
Interest-bearing deposits       3,995,857       2,699,270       2,643,082  
Total deposits       5,898,394       3,963,662       3,955,792  
Securities sold under retail repurchase agreements and federal funds purchased       142,669       119,359       146,569  
Advances from FHLB       866,445       765,833       632,917  
Subordinated debentures       37,460       -       -  
Accrued interest payable and other liabilities       46,881       34,005       35,030  
Total liabilities       6,991,849       4,882,859       4,770,308  
             
Stockholders' Equity            
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 35,521,541,            
23,996,293 and 23,990,370 at September 30, 2018, December 31, 2017 and September 30, 2017, respectively       35,522       23,996       23,990  
Additional paid in capital       605,623       168,188       167,455  
Retained earnings       425,991       378,489       376,512  
Accumulated other comprehensive loss       (24,420 )     (6,857 )     (3,477 )
Total stockholders' equity       1,042,716       563,816       564,480  
Total liabilities and stockholders' equity   $    8,034,565     $ 5,446,675     $ 5,334,788  
             

 

                 
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)   2018   2017   2018   2017
Interest Income:                
Interest and fees on loans   $    76,786   $ 43,891   $    215,050   $ 126,861
Interest on loans held for sale       336     119       983     273
Interest on deposits with banks       211     108       1,082     289
Interest and dividends on investment securities:                
Taxable       5,112     3,410       15,297     10,572
Exempt from federal income taxes       1,921     2,053       6,035     6,110
Interest on federal funds sold       8     8       28     18
Total interest income       84,374     49,589       238,475     144,123
Interest Expense:                
Interest on deposits       10,773     3,701       26,583     9,212
Interest on retail repurchase agreements and federal funds purchased       383     83       599     238
Interest on advances from FHLB       5,141     3,108       15,557     9,385
Interest on subordinated debt       486     -       1,436     12
Total interest expense       16,783     6,892       44,175     18,847
Net interest income       67,591     42,697       194,300     125,276
Provision for loan losses       1,890     934       5,620     2,450
Net interest income after provision for loan losses       65,701     41,763       188,680     122,826
Non-interest Income:                
Investment securities gains       82     -       145     1,275
Service charges on deposit accounts       2,316     2,140       6,865     6,121
Mortgage banking activities       1,672     632       5,943     2,080
Wealth management income       5,344     4,864       15,792     14,092
Insurance agency commissions       2,016     1,950       5,020     4,924
Income from bank owned life insurance       663     609       3,664     1,808
Bank card fees       1,436     1,211       4,199     3,609
Other income       1,504     1,340       5,391     5,040
Total non-interest income       15,033     12,746       47,019     38,949
Non-interest Expenses:                
Salaries and employee benefits       24,488     18,442       73,064     54,525
Occupancy expense of premises       4,355     3,294       13,939     9,907
Equipment expenses       2,441     1,722       6,909     5,213
Marketing       770     784       2,863     2,223
Outside data services       1,736     1,286       4,840     4,045
FDIC insurance       1,257     850       3,840     2,478
Amortization of intangible assets       540     25       1,622     76
Merger expenses       580     345       11,766     1,332
Other expenses       6,226     4,443       18,273     14,241
Total non-interest expenses       42,393     31,191       137,116     94,040
Income before income taxes       38,341     23,318       98,583     67,735
Income tax expense       9,107     8,229       23,285     22,793
Net income   $    29,234   $ 15,089   $    75,298   $ 44,942
                 
Net Income Per Share Amounts:                
Basic net income per share   $    0.82   $ 0.62   $    2.11   $ 1.86
Diluted net income per share   $    0.82   $ 0.62   $    2.11   $ 1.86
Dividends declared per share   $    0.28   $ 0.26   $    0.82   $ 0.78
                 

 

                             
Sandy Spring Bancorp, Inc. and Subsidiaries                            
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED                        
                             
      2018       2017  
(Dollars in thousands, except per share data)   Q3   Q2   Q1   Q4   Q3   Q2   Q1
Profitability for the Quarter:                            
Tax-equivalent interest income   $    85,595     $ 79,774     $ 76,589     $ 52,550     $ 51,477     $ 50,477     $ 47,754  
Interest expense       16,783       14,779       12,613       7,184       6,892       6,250       5,705  
Tax-equivalent net interest income       68,812       64,995       63,976       45,366       44,585       44,227       42,049  
Tax-equivalent adjustment       1,221       1,177       1,085       1,874       1,888       1,901       1,796  
Provision for loan losses       1,890       1,733       1,997       527       934       1,322       194  
Non-interest income       15,033       14,868       17,118       12,294       12,746       13,571       12,632  
Non-interest expenses       42,393       45,082       49,641       35,059       31,191       32,868       29,981  
Income before income taxes       38,341       31,871       28,371       20,200       23,318       21,707       22,710  
Income tax expense       9,107       7,472       6,706       11,933       8,229       6,966       7,598  
Net income   $    29,234     $ 24,399     $ 21,665     $ 8,267     $ 15,089     $ 14,741     $ 15,112  
Financial Performance:                            
Pre-tax pre-provision income   $    40,811     $ 35,832     $ 39,326     $ 23,647     $ 24,597     $ 24,016     $ 22,904  
Return on average assets     1.45 %     1.23 %     1.12 %     0.61 %     1.13 %     1.14 %     1.20 %
Return on average common equity     11.26 %     9.66 %     8.70 %     5.82 %     10.74 %     10.80 %     11.45 %
Net interest margin     3.71 %     3.56 %     3.58 %     3.57 %     3.54 %     3.60 %     3.51 %
Efficiency ratio - GAAP basis (1)     51.31 %     57.29 %     62.04 %     62.85 %     56.26 %     58.80 %     56.69 %
Efficiency ratio - Non-GAAP basis (1)     49.27 %     52.98 %     49.54 %     55.69 %     53.76 %     54.10 %     54.78 %
Per Share Data:                            
Basic net income per share   $    0.82     $ 0.68     $ 0.61     $ 0.34     $ 0.62     $ 0.61     $ 0.63  
Diluted net income per share   $    0.82     $ 0.68     $ 0.61     $ 0.34     $ 0.62     $ 0.61     $ 0.63  
Average fully diluted shares     35,744,085       35,743,927       35,683,542       24,228,471       24,223,004       24,262,745       24,158,566  
Dividends declared per common share   $    0.28     $ 0.28     $ 0.26     $ 0.26     $ 0.26     $ 0.26     $ 0.26  
Non-interest Income:                            
Securities gains (losses)   $    82     $ -     $ 63     $ (2 )   $ -     $ 1,273     $ 2  
Service charges on deposit accounts       2,316       2,290       2,259       2,177       2,140       2,017       1,964  
Mortgage banking activities       1,672       2,064       2,207       654       632       840       608  
Wealth management income       5,344       5,387       5,061       5,054       4,864       4,744       4,484  
Insurance agency commissions       2,016       1,180       1,824       1,307       1,950       1,222       1,752  
Income from bank owned life insurance       663       670       2,331       595       609       605       594  
Bank card fees       1,436       1,393       1,370       1,218       1,211       1,253       1,145  
Other income       1,504       1,884       2,003       1,291       1,340       1,617       2,083  
Total Non-interest Income   $    15,033     $ 14,868     $ 17,118     $ 12,294     $ 12,746     $ 13,571     $ 12,632  
Non-interest Expense:                            
Salaries and employee benefits   $    24,488     $ 24,664     $ 23,912     $ 18,607     $ 18,442     $ 18,282     $ 17,801  
Occupancy expense of premises       4,355       4,642       4,942       3,146       3,294       3,211       3,402  
Equipment expenses       2,441       2,243       2,225       1,802       1,722       1,767       1,724  
Marketing       770       945       1,148       896       784       776       663  
Outside data services       1,736       1,707       1,397       1,441       1,286       1,367       1,392  
FDIC insurance       1,257       1,390       1,193       827       850       823       805  
Amortization of intangible assets       540       541       541       25       25       25       26  
Merger expenses       580       2,228       8,958       2,920       345       987       -  
Professional fees       1,351       1,699       1,040       1,439       1,053       1,045       955  
Other real estate owned expenses       36       41       38       14       4       (6 )     5  
Other expenses       4,839       4,982       4,247       3,942       3,386       4,591       3,208  
Total Non-interest Expense   $    42,393     $ 45,082     $ 49,641     $ 35,059     $ 31,191     $ 32,868     $ 29,981  
                             
(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, merger expenses and loss on FHLB redemption from non-interest expense;
securities gains (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                        
                             
      2018       2017  
(Dollars in thousands)   Q3   Q2   Q1   Q4   Q3   Q2   Q1
Balance Sheets at Quarter End:                            
Residential mortgage loans   $    1,181,427     $ 1,106,674     $ 992,287     $ 921,435     $ 882,890     $ 871,766     $ 848,814  
Residential construction loans       188,779       197,372       215,445       176,687       171,814       169,901       170,285  
Commercial AD&C loans       631,589       609,266       564,871       292,443       295,222       314,259       309,350  
Commercial investor real estate loans       1,924,397       1,923,827       1,928,439       1,112,710       1,104,669       1,069,988       979,410  
Commercial owner occupied real estate loans       1,201,673       1,184,421       1,174,739       857,196       831,461       797,629       772,443  
Commercial business loans       738,083       702,939       652,797       497,948       451,667       451,570       457,216  
Consumer loans     523,011       525,574       532,973       455,829       456,395       458,058       455,478  
Total loans     6,388,959       6,250,073       6,061,551       4,314,248       4,194,118       4,133,171       3,992,996  
Allowance for loan losses     (50,409 )     (48,493 )     (46,931 )     (45,257 )     (44,924 )     (45,079 )     (43,861 )
Loans held for sale     31,581       40,000       28,486       9,848       7,084       5,743       17,717  
Investment securities     992,797       1,017,274       1,040,339       775,025       795,922       821,491       855,707  
Interest-earning assets     7,428,534       7,532,664       7,285,731       5,155,928       5,049,229       4,988,704       4,919,927  
Total assets     8,034,565       8,152,600       7,894,918       5,446,675       5,334,788       5,270,521       5,201,164  
Noninterest-bearing demand deposits     1,902,537       1,910,690       1,767,523       1,264,392       1,312,710       1,302,536       1,234,505  
Total deposits     5,898,394       5,837,826       5,627,206       3,963,662       3,955,792       3,885,445       3,799,198  
Customer repurchase agreements       142,669       139,647       149,323       119,359       146,569       127,312       141,244  
Total interest-bearing liabilities     5,042,431       5,168,055       5,057,645       3,584,462       3,422,568       3,380,221       3,380,937  
Total stockholders' equity     1,042,716       1,026,349       1,014,608       563,816       564,480       554,683       544,261  
Quarterly Average Balance Sheets:                            
Residential mortgage loans   $    1,122,946     $ 1,034,062     $ 1,117,478     $ 903,660     $ 880,782     $ 860,081     $ 847,896  
Residential construction loans       215,578       223,171       193,327       171,239       172,921       169,130       157,152  
Commercial AD&C loans       632,354       576,076