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Sandy Spring Bancorp Reports Net Income of $28.3 Million for the Second Quarter

Company’s Earnings Demonstrate Sustained Success

/EIN News/ -- OLNEY, Md., July 18, 2019 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, reported net income for the second quarter of 2019 of $28.3 million ($0.79 per diluted share) compared to net income of $24.4 million ($0.68 per diluted share) for the second quarter of 2018 and net income of $30.3 million ($0.85 per diluted share) for the first quarter of 2019.  The prior year’s earnings for the second quarter contained $2.2 million in merger expenses, while the prior quarter contained a $1.8 million interest recovery from acquired impaired loans, a credit versus a provision for loan losses and $0.6 million in life insurance mortality proceeds. There were no similar items in the current quarter’s earnings.

“We continue to deliver a consistent performance and steady year-over-year earnings, allowing us to once again increase dividends in the second quarter,” said Daniel J. Schrider, President and Chief Executive Officer. “We grew deposits in meaningful ways and our Mortgage, Wealth and Insurance divisions achieved solid results.”

“We also demonstrated a nimble response to a challenging interest rate environment and maintained our strong credit quality,” added Schrider. “Overall, we are well positioned for continued growth and success.”

Second Quarter Highlights: 

  • Total loans increased 5% compared to the second quarter of 2018. Loans outstanding remained stable compared to the prior quarter, as overall loan production and commitment origination in previously unfunded construction lending was offset by portfolio run-off, which was impacted by changes in the interest rate environment and competitive forces in the marketplace. The bank also successfully executed on a strategy to sell the majority of its mortgage loan production for gains versus retaining them in the loan portfolio. 
     
  • Total deposits grew 9% from the second quarter of 2018 and 8% from the end of 2018.  This deposit growth has reduced the loan to deposit ratio from 111% at year-end 2018 to 103% at the end of the current quarter.  The year-to-date deposit growth included a 16% increase in noninterest-bearing deposits and a 20% reduction in wholesale deposits.
     
  • Current quarter has a $1.6 million charge for the provision for loan losses compared to the prior quarter’s $0.1 million credit to the provision.
  • The net interest margin was 3.54% for the second quarter of 2019 compared to 3.56% for the second quarter of 2018 and 3.52% for the first quarter of 2019, after adjusting for recovered interest income of $1.8 million on acquired credit impaired loans.  The current quarter’s margin benefited from an increase in average noninterest-bearing deposits and a shifting of short-term FHLB borrowings into medium-term lower rate borrowings.
     
  • Second quarter results reflected an annualized return on average assets of 1.37% and annualized return on average equity of 10.32% as compared to 1.23% and 9.66% respectively for the second quarter of 2018.  Exclusive of merger costs on an after-tax basis, the return on average assets and return on average equity for the second quarter of 2018 would have been 1.32% and 10.32%, respectively.

  • Non-interest income increased 11% from the prior year quarter driven by income from mortgage banking activities that grew 58% during the same period.  Growth was experienced in almost every other major category of non-interest income. 

  • The non-GAAP efficiency ratio was 51.71% for the current quarter as compared to 52.98% for the second quarter of 2018 and 51.44% for the first quarter of 2019.  The stability of the current quarter’s non-GAAP ratio, as compared to the previous quarter’s, reflects the slight decline in non-interest expense during the second quarter of 2019 compared to the first quarter of the current year.
     
  • Dividends paid increased by 7%, or $0.02 per share, during the current quarter to $0.30 per share.  Additionally, as a result of net earnings during the past twelve months, tangible book value per share and tangible common equity have grown 11% from the second quarter of 2018.

Review of Balance Sheet and Credit Quality

At June 30, 2019, total assets amounted to $8.4 billion compared to $8.2 billion at June 30, 2018. Total loans at June 30, 2019, were $6.6 billion compared to $6.3 billion at June 30, 2018 and $6.6 billion at December 31, 2018.  The loan portfolio has remained level from December 31, 2018 through June 30, 2019 despite $389 million in new funded loan production during this period. In addition, commercial loans originated year-to-date had total unfunded commitments of $209 million as of June 30, 2019.  Growth of the loan portfolio during the previous six months was limited due to the attrition attributable to the competitive forces in the regional economy and recent shifts that have occurred in interest rates and the sales of the majority of mortgage loan production.

Tangible common equity totaled $767 million at June 30, 2019 compared to $690 million at June 30, 2018, as the ratio of tangible common equity to tangible assets grew to 9.54% at June 30, 2019 as compared to 8.85% at June 30, 2018.  The Company had a total risk-based capital ratio of 12.79%, a common equity tier 1 risk-based capital ratio of 11.43%, a tier 1 risk-based capital ratio of 11.59% and a tier 1 leverage ratio of 9.80% at June 30, 2019.

The ratio of non-performing loans to total loans increased to 0.58% at June 30, 2019 compared to 0.46% at June 30, 2018.  Non-performing loans totaled $37.7 million at June 30, 2019 compared to $28.8 million at June 30, 2018, and $40.1 million at March 31, 2019. The growth in non-performing loans over the prior period occurred as a result of modest increases in all segments of the loan portfolio, predominantly loans secured by real estate.  Non-performing loans include accruing loans 90 days or more past due and restructured loans, but exclude purchased credit impaired loans acquired in the prior year’s acquisition of WashingtonFirst Bankshares, Inc. (“WashingtonFirst”).

Loan charge-offs, net of recoveries, totaled $0.7 million for the second quarter of 2019 compared to $0.2 million for the second quarter of 2018.  The allowance for loan losses represented 0.82% of outstanding loans and 143% of non-performing loans at June 30, 2019 compared to 0.78% of outstanding loans and 168% of non-performing loans at June 30, 2018. While non-performing loans increased from June 30, 2018 to the current quarter, the related reserves for those loans remained stable due to adequate collateral values. 

Income Statement Review

For the second quarter of 2019, net interest income increased 4% to $66.2 million compared to $63.8 million for the second quarter of 2018 as average loans from quarter to quarter increased 7%, primarily as a result of the Company’s organic loan growth during the period. The net interest margin for the current quarter was 3.54% compared to the net interest margin for the second quarter of 2018 of 3.56%.  Amortization of the fair value adjustments to both interest-earning assets and interest-bearing liabilities directly attributable to the WashingtonFirst acquisition had a 5 basis point positive effect on the net interest margin for the current period compared to 12 basis points for the same period of the prior year. 

The provision for loan losses was $1.6 million for the second quarter of 2019 compared to $1.7 million for the second quarter of 2018. The current quarter’s provision reflects the impact of organic loan production and the need to establish a loan loss provision for re-underwritten previously acquired loans that had reached their maturity under their original lending arrangements.   

Non-interest income increased to $16.6 million, or 11%, for the second quarter of 2019 compared to $14.9 million for the second quarter of 2018.  The increase in non-interest income was due primarily to the 58% increase in income from mortgage banking activities due to increased residential lending volumes.  Increases occurred in all non-interest income sources during the current quarter with the exception of income from bank-owned life insurance which remained level as compared to the second quarter of 2018.

Non-interest expenses decreased 3% to $43.9 million for the second quarter of 2019 compared to $45.1 million in the second quarter of 2018. The prior year quarter included $2.2 million in merger expenses.  Excluding the merger expenses from the prior year, non-interest expense increased 2% compared to the prior year, driven by higher compensation costs and an increase in equipment expenses from software costs.  The non-GAAP efficiency ratio improved to 51.71% for the second quarter of 2019 compared to 52.98% for the second quarter of 2018, as a result of the growth in net revenue streams.

Net interest income for the first six months of 2019 increased 5% compared to the first six months of 2018 due principally to loan growth. During the first six months of 2019, the net interest margin was 3.58% compared to 3.57% for the prior year period. The first six months of 2019 included $1.8 million in recovered interest income on acquired credit impaired loans.  Excluding the recovered interest income, the interest margin would have been 3.53%.  Additionally, year-to-date 2019, the amortization of the fair value adjustments attributable to the WashingtonFirst acquisition had a 6 basis point positive impact on the net interest margin compared to 12 basis points for the prior year period. 

The provision for loan losses was $1.5 million for the first six months of 2019, compared to $3.7 million for the first six months of 2018.   The decrease in the provision for the current period compared to the prior year was primarily the result of the overall improvement in the qualitative credit metrics of the loan portfolio during the previous twelve months.

Non-interest income was $33.5 million for the first six months of 2019 compared to $32.0 million for the first six months of 2018.  Excluding life insurance mortality proceeds of $0.6 million and $1.6 million from the first six months of each year, non-interest income increased 8%. This increase was driven by income from mortgage banking activities,  which increased 44% from the prior year-to-date to $6.1 million for the six months ended June 30, 2019 as a result of the rise in mortgage lending activity during the second quarter of 2019. Sales of originated mortgage loans rose 27% during the current period compared to the same period for 2018.

Non-interest expenses decreased 7% to $88.1 million for the first six months of 2019 compared to $94.7 million for the prior year period.  The prior year period included $11.2 million in merger expenses.  Excluding merger expenses, non-interest expense rose 5%, driven by increases in salaries and benefits, software costs and expenses from outside data services.  The non-GAAP efficiency ratio remained relatively stable at 51.57% for the first six months of 2019 compared to 51.25% for the first six months of 2018.

Explanation of Non-GAAP Financial Measures

This news release contains financial information and performance measures determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s management believes that the supplemental non-GAAP information provides a better comparison of 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.  Non-GAAP measures used in this release consist of the following:

  • Adjusted diluted earnings per share is non-GAAP in that it excludes merger expenses and other selected items, net of tax.
  • Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets.
  • The non-GAAP efficiency ratio is non-GAAP in that it excludes amortization of intangible assets, merger expenses and securities gains and includes tax-equivalent income.

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 which may be presented by other companies. Please refer to the Non-GAAP Reconciliation table included with this release for details on the earnings impact of these items.

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 on the website until 9:00 am (ET) August 1, 2019.  A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10132793.

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
            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; 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, 2018, including in the Risk Factors section of that report, and in its other SEC reports.  Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov.


Sandy Spring Bancorp, Inc. and Subsidiaries  
FINANCIAL HIGHLIGHTS - UNAUDITED  
                             
    Three Months Ended         Six Months Ended      
    June 30,   %     June 30,   %  
(Dollars in thousands, except per share data)    2019    2018   Change      2019    2018   Change  
Results of Operations:                            
Net interest income   $    66,185   $ 63,818   4   %   $    132,935   $ 126,709   5   %
Provision for loan losses       1,633     1,733   (6 )         1,505     3,730   (60 )  
Non-interest income       16,556     14,868   11           33,525     31,986   5    
Non-interest expenses       43,887     45,082   (3 )         88,079     94,723   (7 )  
Income before income taxes       37,221     31,871   17           76,876     60,242   28    
Net income       28,276     24,399   16           58,593     46,064   27    
                             
Pre-tax pre-provision pre-merger income  (5)   $    38,854   $ 35,832   8       $    78,381   $ 75,158   4    
                             
Return on average assets       1.37 %   1.23 %           1.43 %   1.18 %    
Return on average common equity       10.32 %   9.66 %           10.88 %   9.18 %    
Net interest margin       3.54 %   3.56 %           3.58 %   3.57 %    
Efficiency ratio - GAAP basis  (1)       53.04 %   57.29 %           52.91 %   59.69 %    
Efficiency ratio - Non-GAAP basis  (1)       51.71 %   52.98 %           51.57 %   51.25 %    
                             
Per share data:                            
Basic net income   $    0.79   $ 0.68   16   %   $    1.64   $ 1.29   27   %
Diluted net income   $    0.79   $ 0.68   16       $    1.63   $ 1.29   26    
Average fully diluted shares      35,890,437     35,743,927   -          35,865,518     35,710,323   -    
Dividends declared per share   $    0.30   $ 0.28   7       $    0.58   $ 0.54   7    
Book value per share       31.43     28.90   9           31.43     28.90   9    
Tangible book value per share  (5)       21.54     19.42   11           21.54     19.42   11    
Outstanding shares      35,614,953     35,511,943   -          35,614,953     35,511,943   -    
                             
Financial Condition at period-end:                            
Investment securities   $    955,715   $ 1,017,274   (6 ) %   $    955,715   $ 1,017,274   (6 ) %
Loans       6,551,243     6,250,073   5           6,551,243     6,250,073   5    
Interest-earning assets       7,713,364     7,532,664   2           7,713,364     7,532,664   2    
Assets       8,398,519     8,152,600   3           8,398,519     8,152,600   3    
Deposits       6,389,749     5,837,826   9           6,389,749     5,837,826   9    
Interest-bearing liabilities       5,136,860     5,168,055   (1 )         5,136,860     5,168,055   (1 )  
Stockholders' equity       1,119,445     1,026,349   9           1,119,445     1,026,349   9    
                             
Capital ratios:                            
Tier 1 leverage  (4)       9.80 %   9.27 %           9.80 %   9.27 %    
Tier 1 capital to risk-weighted assets  (4)       11.59 %   11.01 %           11.59 %   11.01 %    
Total regulatory capital to risk-weighted assets  (4)       12.79 %   12.19 %           12.79 %   12.19 %    
Common equity tier 1 capital to risk-weighted assets  (4)       11.43 %   10.85 %           11.43 %   10.85 %    
Tangible common equity to tangible assets  (2)       9.54 %   8.85 %           9.54 %   8.85 %    
Average equity to average assets       13.25 %   12.78 %           13.12 %   12.83 %    
                             
Credit quality ratios:                            
Allowance for loan losses to loans       0.82 %   0.78 %           0.82 %   0.78 %    
Non-performing loans to total loans       0.58 %   0.46 %           0.58 %   0.46 %    
Non-performing assets to total assets       0.47 %   0.38 %           0.47 %   0.38 %    
Allowance for loan losses to non-performing loans       143.33 %   168.17 %           143.33 %   168.17 %    
Annualized net charge-offs to average loans  (3)       0.04 %   0.01 %           0.03 %   0.02 %    
                             
(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 and merger expenses from non-interest expense; 
securities gains 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 June 30, 2019 
(5) Represents a Non-GAAP measure. 
 

 

Sandy Spring Bancorp, Inc. and Subsidiaries 
RECONCILIATION TABLE - UNAUDITED 
                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
(Dollars in thousands)    2019     2018     2019     2018 
Pre-tax pre-provision pre-merger income:                
Net income   $    28,276     $ 24,399     $    58,593     $ 46,064  
Plus non-GAAP adjustments:                
Merger expenses       -       2,228         -       11,186  
Income taxes       8,945       7,472         18,283       14,178  
Provision for loan losses       1,633       1,733         1,505       3,730  
Pre-tax pre-provision pre-merger income   $    38,854     $ 35,832     $    78,381     $ 75,158  
                 
Efficiency ratio - GAAP basis:                
Non-interest expenses   $    43,887     $ 45,082     $    88,079     $ 94,723  
                 
Net interest income plus non-interest income   $    82,741     $ 78,686     $    166,460     $ 158,695  
                 
Efficiency ratio - GAAP basis     53.04 %     57.29 %     52.91 %     59.69 %
                 
                 
Efficiency ratio - Non-GAAP basis:                
Non-interest expenses   $    43,887     $ 45,082     $    88,079     $ 94,723  
Less non-GAAP adjustments:                
Amortization of intangible assets       483       541         974       1,082  
Merger expenses       -       2,228         -       11,186  
Non-interest expenses -  as adjusted   $    43,404     $ 42,313     $    87,105     $ 82,455  
                 
Net interest income plus non-interest income   $    82,741     $ 78,686     $    166,460     $ 158,695  
Plus non-GAAP adjustment:                
Tax-equivalent income       1,209       1,177         2,450       2,262  
Less non-GAAP adjustment:                
Securities gains       5       -         5       63  
Net interest income plus non-interest income - as adjusted   $    83,945     $ 79,863     $    168,905     $ 160,894  
                 
Efficiency ratio - Non-GAAP basis     51.71 %     52.98 %     51.57 %     51.25 %
                 
Tangible common equity ratio:                
Total stockholders' equity   $   1,119,445     $ 1,026,349     $    1,119,445     $ 1,026,349  
Accumulated other comprehensive loss       3,565       20,556         3,565       20,556  
Goodwill       (347,149 )     (346,312 )       (347,149 )     (346,312 )
Other intangible assets, net       (8,813 )     (10,868 )       (8,813 )     (10,868 )
Tangible common equity   $    767,048     $ 689,725     $    767,048     $ 689,725  
                 
Total assets   $   8,398,519     $ 8,152,600     $    8,398,519     $ 8,152,600  
Goodwill       (347,149 )     (346,312 )       (347,149 )     (346,312 )
Other intangible assets, net       (8,813 )     (10,868 )       (8,813 )     (10,868 )
Tangible assets   $   8,042,557     $ 7,795,420     $    8,042,557     $ 7,795,420  
                 
Tangible common equity ratio     9.54 %     8.85 %     9.54 %     8.85 %
                 
Outstanding common shares       35,614,953       35,511,943         35,614,953       35,511,943  
Tangible book value per common share   $    21.54     $ 19.42     $    21.54     $ 19.42  
                 

 

Sandy Spring Bancorp, Inc. and Subsidiaries            
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED            
             
    June 30,   December 31,   June 30,
(Dollars in thousands)    2019     2018     2018 
Assets            
Cash and due from banks   $    75,781     $ 67,014     $ 69,451  
Federal funds sold       583       609       1,434  
Interest-bearing deposits with banks       155,312       33,858       223,883  
Cash and cash equivalents       231,676       101,481       294,768  
Residential mortgage loans held for sale (at fair value)       50,511       22,773       40,000  
Investments available-for-sale (at fair value)       901,025       937,335       942,832  
Other equity securities       54,690       73,389       74,442  
Total loans       6,551,243       6,571,634       6,250,073  
Less: allowance for loan losses       (54,024 )     (53,486 )     (48,493 )
Net loans       6,497,219       6,518,148       6,201,580  
Premises and equipment, net       60,372       61,942       62,275  
Other real estate owned       1,486       1,584       2,361  
Accrued interest receivable       26,148       24,609       23,197  
Goodwill       347,149       347,149       346,312  
Other intangible assets, net       8,813       9,788       10,868  
Other assets       219,430       145,074       153,965  
Total assets   $    8,398,519     $ 8,243,272     $ 8,152,600  
             
Liabilities            
Noninterest-bearing deposits   $    2,023,614     $ 1,750,319     $ 1,910,690  
Interest-bearing deposits       4,366,135       4,164,561       3,927,136  
Total deposits       6,389,749       5,914,880       5,837,826  
Securities sold under retail repurchase agreements and federal funds purchased       150,604       327,429       139,647  
Advances from FHLB       582,768       848,611       1,063,777  
Subordinated debentures       37,353       37,425       37,495  
Accrued interest payable and other liabilities       118,600       47,024       47,506  
Total liabilities       7,279,074       7,175,369       7,126,251  
             
Stockholders' Equity            
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 35,614,953,            
35,530,734 and 35,511,943 at June 30, 2019, December 31, 2018 and June 30, 2018, respectively       35,615       35,531       35,512  
Additional paid in capital       608,006       606,573       604,631  
Retained earnings       479,389       441,553       406,762  
Accumulated other comprehensive loss       (3,565 )     (15,754 )     (20,556 )
Total stockholders' equity       1,119,445       1,067,903       1,026,349  
Total liabilities and stockholders' equity   $    8,398,519     $ 8,243,272     $ 8,152,600  
             

 

Sandy Spring Bancorp, Inc. and Subsidiaries                
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED            
                 
    Three Months Ended   Six Months Ended
  June 30, June 30,
(Dollars in thousands, except per share data)    2019    2018    2019    2018
Interest Income:                
Interest and fees on loans   $    79,464   $ 70,672   $   159,861   $ 138,264
Interest on loans held for sale       381     279       573     647
Interest on deposits with banks       428     514       622     871
Interest and dividends on investment securities:                
Taxable       5,396     5,083       11,081     10,185
Exempt from federal income taxes       1,544     2,042       3,254     4,114
Interest on federal funds sold       1     7       6     20
Total interest income       87,214     78,597       175,397     154,101
Interest Expense:                
Interest on deposits       16,146     8,851       30,626     15,810
Interest on retail repurchase agreements and federal funds purchased       290     108       688     216
Interest on advances from FHLB       4,103     5,338       10,167     10,416
Interest on subordinated debt       490     482       981     950
Total interest expense       21,029     14,779       42,462     27,392
Net interest income       66,185     63,818       132,935     126,709
Provision for loan losses       1,633     1,733       1,505     3,730
Net interest income after provision for loan losses       64,552     62,085       131,430     122,979
Non-interest Income:                
Investment securities gains       5     -       5     63
Service charges on deposit accounts       2,442     2,290       4,749     4,549
Mortgage banking activities       3,270     2,064       6,133     4,271
Wealth management income       5,539     5,387       10,775     10,448
Insurance agency commissions       1,265     1,180       3,165     3,004
Income from bank owned life insurance       654     670       1,843     3,001
Bank card fees       1,467     1,393       2,719     2,763
Other income       1,914     1,884       4,136     3,887
Total non-interest income       16,556     14,868       33,525     31,986
Non-interest Expenses:                
Salaries and employee benefits       25,489     24,664       51,465     48,576
Occupancy expense of premises       4,760     4,642       9,991     9,584
Equipment expenses       2,712     2,243       5,288     4,468
Marketing       887     945       1,830     2,093
Outside data services       1,962     1,707       3,740     3,104
FDIC insurance       1,084     1,390       2,220     2,583
Amortization of intangible assets       483     541       974     1,082
Merger expenses       -     2,228       -     11,186
Professional fees and services       1,634     1,699       2,879     2,739
Other expenses       4,876     5,023       9,692     9,308
Total non-interest expenses       43,887     45,082       88,079     94,723
Income before income taxes       37,221     31,871       76,876     60,242
Income tax expense       8,945     7,472       18,283     14,178
  Net income   $    28,276   $ 24,399   $    58,593   $ 46,064
                 
Net Income Per Share Amounts:                
Basic net income per share   $    0.79   $ 0.68   $    1.64   $ 1.29
Diluted net income per share   $    0.79   $ 0.68   $    1.63   $ 1.29
Dividends declared per share   $    0.30   $ 0.28   $    0.58   $ 0.54
                 

 

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
                         
     2019    2018
(Dollars in thousands, except per share data)   Q2   Q1   Q4   Q3   Q2   Q1
Profitability for the Quarter:                        
Tax-equivalent interest income   $    88,423     $ 89,424     $ 86,839     $ 85,595     $ 79,774     $ 76,589  
Interest expense       21,029       21,433       19,462       16,783       14,779       12,613  
Tax-equivalent net interest income       67,394       67,991       67,377       68,812       64,995       63,976  
Tax-equivalent adjustment       1,209       1,241       1,232       1,221       1,177       1,085  
Provision (credit) for loan losses       1,633       (128 )     3,403       1,890       1,733       1,997  
Non-interest income       16,556       16,969       14,030       15,033       14,868       17,118  
Non-interest expenses       43,887       44,192       42,667       42,393       45,082       49,641  
Income before income taxes       37,221       39,655       34,105       38,341       31,871       28,371  
Income tax expense       8,945       9,338       8,539       9,107       7,472       6,706  
Net income   $    28,276     $ 30,317     $ 25,566     $ 29,234     $ 24,399     $ 21,665  
Financial Performance:                        
Pre-tax pre-provision pre-merger income   $    38,854     $ 39,527     $ 37,508     $ 40,811     $ 35,832     $ 39,326  
Return on average assets     1.37 %     1.49 %     1.25 %     1.45 %     1.23 %     1.12 %
Return on average common equity     10.32 %     11.46 %     9.70 %     11.26 %     9.66 %     8.70 %
Net interest margin     3.54 %     3.60 %     3.57 %     3.71 %     3.56 %     3.58 %
Efficiency ratio - GAAP basis (1)     53.04 %     52.79 %     53.22 %     51.31 %     57.29 %     62.04 %
Efficiency ratio - Non-GAAP basis (1)     51.71 %     51.44 %     51.78 %     49.27 %     52.98 %     49.54 %
Per Share Data:                        
Basic net income per share   $    0.79     $ 0.85     $ 0.72     $ 0.82     $ 0.68     $ 0.61  
Diluted net income per share   $    0.79     $ 0.85     $ 0.72     $ 0.82     $ 0.68     $ 0.61  
Average fully diluted shares     35,890,437       35,806,459       35,747,478       35,744,085       35,743,927       35,683,542  
Dividends declared per common share   $    0.30     $ 0.28     $ 0.28     $ 0.28     $ 0.28     $ 0.26  
Non-interest Income:                        
Securities gains   $    5     $ -     $ 45     $ 82     $ -     $ 63  
Service charges on deposit accounts       2,442       2,307       2,459       2,316       2,290       2,259  
Mortgage banking activities       3,270       2,863       1,130       1,672       2,064       2,207  
Wealth management income       5,539       5,236       5,492       5,344       5,387       5,061  
Insurance agency commissions       1,265       1,900       1,138       2,016       1,180       1,824  
Income from bank owned life insurance       654       1,189       663       663       670       2,331  
Bank card fees       1,467       1,252       1,368       1,436       1,393       1,370  
Other income       1,914       2,222       1,735       1,504       1,884       2,003  
Total Non-interest Income   $    16,556     $ 16,969     $ 14,030     $ 15,033     $ 14,868     $ 17,118  
Non-interest Expense:                        
Salaries and employee benefits   $    25,489     $ 25,976     $ 23,934     $ 24,488     $ 24,664     $ 23,912  
Occupancy expense of premises       4,760       5,231       4,413       4,355       4,642       4,942  
Equipment expenses       2,712       2,576       2,426       2,441       2,243       2,225  
Marketing       887       943       1,061       770       945       1,148  
Outside data services       1,962       1,778       1,763       1,736       1,707       1,397  
FDIC insurance       1,084       1,136       1,255       1,257       1,390       1,193  
Amortization of intangible assets       483       491       540       540       541       541  
Merger expenses       -       -       -       580       2,228       8,958  
Professional fees and services       1,634       1,245       1,966       1,351       1,699       1,040  
Other expenses       4,876       4,816       5,309       4,875       5,023       4,285  
Total Non-interest Expense   $    43,887     $ 44,192     $ 42,667     $ 42,393     $ 45,082     $ 49,641  
                         
(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 and merger expenses from non-interest expense; 
securities gains 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 
                         
     2019     2018
(Dollars in thousands)   Q2   Q1   Q4   Q3   Q2   Q1
Balance Sheets at Quarter End:                        
Residential mortgage loans   $   1,241,081     $ 1,249,968     $ 1,228,247     $ 1,181,427     $ 1,106,674     $ 992,287  
Residential construction loans       171,106       176,388       186,785       188,779       197,372       215,445  
Commercial AD&C loans       658,709       688,939       681,201       631,589       609,266       564,871  
Commercial investor real estate loans       1,994,027       1,962,879       1,958,395       1,924,397       1,923,827       1,928,439  
Commercial owner occupied real estate loans       1,224,986       1,216,713       1,202,903       1,201,673       1,184,421       1,174,739  
Commercial business loans       772,158       769,660       796,264       738,083       702,939       652,797  
Consumer loans     489,176       505,443       517,839       523,011       525,574       532,973  
Total loans     6,551,243       6,569,990       6,571,634       6,388,959       6,250,073       6,061,551  
Allowance for loan losses     (54,024 )     (53,089 )     (53,486 )     (50,409 )     (48,493 )     (46,931 )
Loans held for sale     50,511       24,998       22,773       31,581       40,000       28,486  
Investment securities     955,715       987,299       1,010,724       992,797       1,017,274       1,040,339  
Interest-earning assets     7,713,364       7,648,654       7,639,598       7,428,534       7,532,664       7,285,731  
Total assets     8,398,519       8,327,900       8,243,272       8,034,565       8,152,600       7,894,918  
Noninterest-bearing demand deposits     2,023,614       1,813,708       1,750,319       1,902,537       1,910,690       1,767,523  
Total deposits     6,389,749       6,224,523       5,914,880       5,898,394       5,837,826       5,627,206  
Customer repurchase agreements       150,604       122,626       137,429       142,669       139,647       149,323  
Total interest-bearing liabilities     5,136,860       5,297,108       5,378,026       5,042,431       5,168,055       5,057,645  
Total stockholders' equity     1,119,445       1,095,848       1,067,903       1,042,716       1,026,349       1,014,608  
Quarterly Average Balance Sheets:                        
Residential mortgage loans   $   1,244,086     $ 1,230,319     $ 1,188,135     $ 1,122,946     $ 1,034,062     $ 1,117,478  
Residential construction loans       174,095       189,720       202,710       215,578       223,171       193,327  
Commercial AD&C loans       686,282       676,205       647,115       632,354       576,076       582,876  
Commercial investor real estate loans       1,960,919       1,964,699       1,936,936       1,905,427       1,924,759       1,988,340  
Commercial owner occupied real estate loans       1,215,632       1,207,799       1,196,506       1,190,865       1,184,409       940,065  
Commercial business loans       756,594       780,318       751,754       700,791       666,280       657,372  
Consumer loans       505,235       515,644       522,453       524,605       531,965       538,198  
Total loans       6,542,843       6,564,704       6,445,609       6,292,566       6,140,722       6,017,656  
Loans held for sale       37,121       17,846       21,923       29,939       25,403       35,768  
Investment securities     964,863       1,010,940       986,146       996,365       1,028,306       1,062,325  
Interest-earning assets     7,619,240       7,627,187       7,495,338       7,372,536       7,311,272       7,212,878  
Total assets     8,294,883       8,258,116       8,104,916       7,986,525       7,926,735       7,841,611  
Noninterest-bearing demand deposits     1,796,802       1,682,720       1,766,672       1,822,931       1,796,644       1,651,258  
Total deposits     6,247,409       5,952,942       5,822,580       5,783,992       5,657,420       5,489,715  
Customer repurchase agreements       141,865       129,059       146,637       139,809       148,539       136,694  
Total interest-bearing liabilities     5,269,209       5,403,946       5,230,254       5,076,717       5,058,016       5,116,904  
Total stockholders' equity     1,099,078       1,073,291       1,045,378       1,030,167       1,013,081       1,010,106  
Financial Measures:                        
Average equity to average assets     13.25 %     13.00 %     12.90 %     12.90 %     12.78 %     12.88 %
Investment securities to earning assets     12.39 %     12.91 %     13.23 %     13.36 %     13.50 %     14.28 %
Loans to earning assets     84.93 %     85.90 %     86.02 %     86.01 %     82.97 %     83.20 %
Loans to assets     78.00 %     78.89 %     79.72 %     79.52 %     76.66 %     76.78 %
Loans to deposits     102.53 %     105.55 %     111.10 %     108.32 %     107.06 %     107.72 %
Capital Measures:                        
Tier 1 leverage  (1)     9.80 %     9.61 %     9.50 %     9.46 %     9.27 %     9.21 %
Tier 1 capital to risk-weighted assets  (1)     11.59 %     11.35 %     11.06 %     11.18 %     11.01 %     11.08 %
Total regulatory capital to risk-weighted assets  (1)     12.79 %     12.54 %     12.26 %     12.38 %     12.19 %     12.27 %
Common equity tier 1 capital to risk-weighted assets  (1)     11.43 %     11.19 %     10.90 %     11.02 %     10.85 %     10.92 %
Book value per share   $    31.43     $ 30.82     $ 30.06     $ 29.35     $ 28.90     $ 28.61  
Outstanding shares     35,614,953       35,557,110       35,530,734       35,521,541       35,511,943       35,463,269  
(1) Estimated ratio at June 30, 2019                        
                         

 

Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
                         
    2019   2018
(Dollars in thousands)   June 30,   March 31,   December 31,   September 30,   June 30,   March 31,
Non-Performing Assets:                        
Loans 90 days past due:                        
Commercial business   $    -     $ -     $ 49     $ 150     $ 6     $ -  
Commercial real estate:                        
Commercial AD&C       -       -       -       1,261       -       -  
Commercial investor real estate       1,248       -       -       -       -       -  
Commercial owner occupied real estate       -       90       -       13       112       -  
Consumer       -       -       219       563       -       126  
Residential real estate:                        
Residential construction       -       221       221       -       -       -  
Residential construction       -       -       -       -       -       -  
Total loans 90 days past due       1,248       311       489       1,987       118       126  
Non-accrual loans:                        
Commercial business       7,083       8,013       7,086       6,352       6,883       6,634  
Commercial real estate:                        
Commercial AD&C       1,990       3,306       3,306       136       136       136  
Commercial investor real estate       6,409       6,071       5,355       5,861       5,878       5,813  
Commercial owner occupied real estate       3,766       5,992       4,234       3,352       3,440       3,524  
Consumer       4,439       4,081       4,107       4,098       4,298       3,244  
Residential real estate:                        
Residential mortgage       10,625       9,704       9,336       9,134       6,251       7,063  
Residential construction       -       156       159       163       168       174  
Total non-accrual loans       34,312       37,323       33,583       29,096       27,054       26,588  
Total restructured loans - accruing       2,133       2,479       1,942       2,224       1,663       2,678  
Total non-performing loans       37,693       40,113       36,014       33,307       28,835       29,392  
Other assets and real estate owned (OREO)       1,486       1,410       1,584       2,118       2,361       2,761  
Total non-performing assets   $    39,179     $ 41,523     $ 37,598     $ 35,425     $ 31,196     $ 32,153  
                         
    For the Quarter Ended,
    June 30,   March 31,   December 31,   September 30,   June 30,   March 31,
(Dollars in thousands)   2019
  2019
  2018
  2018
  2018
  2018
Analysis of Non-accrual Loan Activity:                        
Balance at beginning of period   $    37,323     $ 33,583     $ 29,096     $ 27,054     $ 26,588     $ 26,336  
Non-accrual balances transferred to OREO       (195 )     -       -       -       -       (289 )
Non-accrual balances charged-off       (604 )     (227 )     (360 )     (91 )     (144 )     (411 )
Net payments or draws       (5,517 )     (1,786 )     (1,126 )     (1,777 )     (1,635 )     (357 )
Loans placed on non-accrual       3,396       6,202       5,973       4,193       2,245       1,309  
Non-accrual loans brought current       (91 )     (449 )     -       (283 )     -       -  
Balance at end of period   $    34,312     $ 37,323     $ 33,583     $ 29,096     $ 27,054     $ 26,588  
                         
Analysis of Allowance for Loan Losses:                        
Balance at beginning of period   $    53,089     $ 53,486     $ 50,409     $ 48,493     $ 46,931     $ 45,257  
Provision (credit) for loan losses       1,633       (128 )     3,403       1,890       1,733       1,997  
Less loans charged-off, net of recoveries:                        
Commercial business       735       7       (9 )     (49 )     (73 )     322  
Commercial real estate:                        
Commercial AD&C       (4 )     -       -       -       -       (62 )
Commercial investor real estate       (3 )     (7 )     109       (49 )     (8 )     (8 )
Commercial owner occupied real estate       -       -       -       -       -       -  
Consumer       (18 )     182       45       85       244       99  
Residential real estate:                        
Residential mortgage       (10 )     89       183       (11 )     13       (22 )
Residential construction       (2 )     (2 )     (2 )     (2 )     (5 )     (6 )
Net charge-offs       698       269       326       (26 )     171       323  
Balance at end of period   $    54,024     $ 53,089     $ 53,486     $ 50,409     $ 48,493     $ 46,931  
                         
Asset Quality Ratios:                        
Non-performing loans to total loans     0.58 %     0.61 %     0.55 %     0.52 %     0.46 %     0.48 %
Non-performing assets to total assets     0.47 %     0.50 %     0.46 %     0.44 %     0.38 %     0.41 %
Allowance for loan losses to loans     0.82 %     0.81 %     0.81 %     0.79 %     0.78 %     0.77 %
Allowance for loan losses to non-performing loans     143.33 %     132.35 %     148.51 %     151.35 %     168.17 %     159.67 %
Annualized net charge-offs to average loans     0.04 %     0.02 %     0.02 %     0.00 %     0.01 %     0.02 %
                         

 

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
                             
    Three Months Ended June 30,  
    2019
    2018
 
              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   $ 1,244,086     $ 11,971     3.85 % $ 1,034,062     $ 9,414     3.64 %
Residential construction loans     174,095       1,873     4.32       223,171       2,199     3.95  
Total mortgage loans     1,418,181       13,844     3.91       1,257,233       11,613     3.70  
Commercial AD&C loans     686,282       10,268     6.00       576,076       8,271     5.76  
Commercial investor real estate loans     1,960,919       24,357     4.98       1,924,759       22,661     4.72  
Commercial owner occupied real estate loans     1,215,632       14,840     4.90       1,184,409       13,989     4.74  
Commercial business loans     756,594       10,321     5.47       666,280       8,807     5.30  
Total commercial loans     4,619,427       59,786     5.19       4,351,524       53,728     4.95  
Consumer loans     505,235       6,335     5.03       531,965       5,753     4.40  
Total loans (2)     6,542,843       79,965     4.90       6,140,722       71,094     4.64  
Loans held for sale     37,121       381     4.11       25,403       279     4.39  
Taxable securities     744,701       5,689     3.06       734,482       5,282     2.88  
Tax-exempt securities (3)     220,162       1,959     3.56       293,824       2,598     3.54  
Total investment securities (4)     964,863       7,648     3.17       1,028,306       7,880     3.06  
Interest-bearing deposits with banks     73,793       428     2.32       114,869       514     1.79  
Federal funds sold     620         1     0.60       1,972       7     1.44  
Total interest-earning assets     7,619,240       88,423     4.65       7,311,272       79,774     4.37  
                             
Less:  allowance for loan losses     (53,068 )               (47,694 )          
Cash and due from banks     66,031                 66,420            
Premises and equipment, net     60,871                 61,900            
Other assets     601,809                 534,837            
Total assets   $ 8,294,883               $ 7,926,735            
                             
Liabilities and Stockholders' Equity                            
Interest-bearing demand deposits   $    747,343       460     0.25 % $ 729,948       222     0.12 %
Regular savings deposits     332,796         118     0.14       356,077       94     0.11  
Money market savings deposits     1,690,413       6,589     1.56       1,554,304       4,571     1.18  
Time deposits     1,680,055       8,979     2.14       1,220,447       3,964     1.30  
Total interest-bearing deposits     4,450,607       16,146     1.46       3,860,776       8,851     0.92  
Other borrowings     157,499         290     0.74       148,542       108     0.29  
Advances from FHLB     623,727         4,103     2.64       1,011,180       5,338     2.12  
Subordinated debentures     37,376         490     5.25       37,518       482     5.14  
Total interest-bearing liabilities     5,269,209       21,029     1.60       5,058,016       14,779     1.17  
                             
Noninterest-bearing demand deposits     1,796,802