News release

 

 

 

FOR IMMEDIATE RELEASE

 

SANDY SPRING BANCORP REPORTS SECOND QUARTER PROFIT OF $7.2 MILLION

AND COMPLETES COMMERCEFIRST ACQUISITION

 

OLNEY, MARYLAND, July 19, 2012 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the second quarter of 2012 of $7.2 million ($.30 per diluted share) compared to net income of $8.3 million ($0.34 per diluted share) for the second quarter of 2011 and net income of $8.5 million ($0.35 per diluted share) for the first quarter of 2012.

 

Net income for the six-month period ended June 30, 2012 totaled $15.7 million ($0.65 per diluted share) compared to net income of $15.6 million ($0.65 per diluted share) for the prior year period.

 

Merger costs relating to the acquisition of CommerceFirst Bancorp Inc. (“CommerceFirst”) were $2.2 million and $2.6 million for the second quarter and the first six months of 2012, respectively. Consolidated results of operations for CommerceFirst are included subsequent to the close of business on May 31, 2012. On the date of purchase, CommerceFirst had total loans of $169 million and total deposits of $170 million.

 

“We continued to show positive results during the second quarter which reflected solid core deposit growth as well as our fourth consecutive quarter of new organic loan growth,” said Daniel J. Schrider, President and Chief Executive Officer. “We have maintained our momentum despite a struggling economy and intense competition in the markets we serve, due in large part, to our improving credit metrics and deposit mix.”

 

“During the quarter we completed the acquisition of CommerceFirst Bank, headquartered in Anne Arundel County, MD and expect this acquisition to be accretive to income in the current year. We are excited by the opportunities to grow our small business lending portfolio in this contiguous natural market,” said Schrider.

 

Second Quarter Highlights:

 

·

Pre-tax pre-provision income, a non-GAAP measure, was $14.6 million for the second quarter of 2012, a 12% increase over the second quarter of 2011 and a 13% increase over the first quarter of 2012.

 

·

Total loans increased 16% or $337.2 million at June 30, 2012 compared to June 30, 2011. Excluding $165.7 million in loans acquired in the CommerceFirst acquisition, this was the Company’s fourth straight quarterly organic increase due primarily to growth in the commercial loan portfolio.

 

 

·

Non-performing loans decreased to $67.0 million at June 30, 2012 compared to $76.5 million at June 30, 2011 and $72.2 million at March 31, 2012. The decrease in the second quarter was due to a lower level of non-accrual loans.

 

·

The net interest margin was 3.62% for the second quarter of 2012, compared to 3.58% for the second quarter of 2011 and 3.56% for the first quarter of 2012.

 

Review of Balance Sheet and Credit Quality

 

Total assets increased 7% to $3.9 billion at June 30, 2012 compared to balances at June 30, 2011. Total loans and leases increased 16% to $2.5 billion compared to the prior year. This increase consisted of $165.7 million in loans from the acquisition of CommerceFirst and $171.5 million of internally-generated loan growth, primarily in the commercial loan portfolio. Total loans increased 11% compared to balances at December 31, 2011. Excluding the loans acquired in the CommerceFirst acquisition, total loans increased 8% and 3% compared to June 30, 2011 and December 31, 2011, respectively.

 

Customer funding sources, which include deposits and other short-term borrowings from customers, increased 7% compared to June 30, 2011. This increase was due primarily to a 16% increase in noninterest-bearing and interest-bearing checking accounts. The Company views the growth in checking accounts as an especially valuable metric as it provides additional opportunities to grow multiple product banking relationships with clients. Excluding the deposits acquired in the CommerceFirst acquisition, total customer funding sources increased 2% while certificates of deposit declined 15% at June 30, 2012 compared to balances at June 30, 2011, as the Company managed its deposit mix to maintain the net interest margin.

 

Tangible common equity, a non-GAAP metric, totaled $371.0 million at June 30, 2012 compared to $335.7 million at June 30, 2011 resulting in an increase in the ratio of tangible common equity to tangible assets from 9.51% at June 30, 2011 to 9.84% at June 30, 2012. This increase was due primarily to stock issued in connection with the CommerceFirst acquisition and net income earned during the period. At June 30, 2012, the Company had a total risk-based capital ratio of 15.37%, a tier 1 risk-based capital ratio of 14.12% and a tier 1 leverage ratio of 11.21%.

 

Non-performing loans decreased to $67.0 million at June 30, 2012 compared to $76.5 million at June 30, 2011 and $72.2 million at March 31, 2012. Included in the June 30, 2012 balances are $2.5 million of non-performing loans acquired from CommerceFirst. Excluding the acquired non-performing loans mentioned previously, the Company’s credit quality metrics showed continued improvement due to resolution of existing problem credits and limited migration of new credits to non-performing status.

 

The provision for loan and lease losses was $1.6 million for the second quarter of 2012 compared to $1.2 million for the second quarter of 2011 and $0.7 million for the first quarter of 2012. The increase in the provision for the second quarter of 2012 compared to both the prior quarter and the second quarter of 2011 was due primarily to an increase in specific reserves on non-performing loans.

 

 

Loan charge-offs, net of recoveries, totaled $1.4 million for the second quarter of 2012 compared to net charge-offs of $4.8 million for the second quarter of 2011 and $5.0 million for the first quarter of 2012. The allowance for loan and lease losses represented 1.83% of outstanding loans and leases and 68% of non-performing loans at June 30, 2012 compared to 2.58% of outstanding loans and leases and 72% of non-performing loans at June 30, 2011 and 1.98% of outstanding loans and leases and 62% of non-performing loans at March 31, 2012. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

 

Income Statement Review

 

Net interest income for the second quarter of 2012 increased by $1.7 million or 6% compared to the second quarter of 2011 due to an increase in average interest-earning assets resulting from increased loan balances from the addition of higher yielding loans from the CommerceFirst transaction and organic growth. Combined with a lower cost deposit mix, these factors resulted in an increase in the net interest margin to 3.62% for the second quarter of 2012 compared to 3.58% for the second quarter of 2011.

 

Non-interest income increased $0.7 million or 6% to $11.5 million for the second quarter of 2012 compared to $10.8 million for the second quarter of 2011. This increase was due primarily to growth in income from mortgage banking activities of $0.5 million due to higher loan origination volumes and higher average gains on sales, both due to increased refinancing activity during the quarter. In addition, other non-interest income increased 26% over the prior year quarter due mainly to higher fees from loan prepayments and other fees.

 

Non-interest expenses were $28.9 million for the second quarter of 2012 compared to $25.8 million in the second quarter of 2011, an increase of $3.1 million or 12%. This increase was driven by higher salaries and benefits expenses, outside data services costs and professional fees primarily resulting from the CommerceFirst acquisition. These expenses were partially offset by lower FDIC insurance premiums resulting from improved financial ratios compared to the prior year period. Excluding merger expenses of $2.2 million, non-interest expenses increased 3% over the prior year quarter.

 

The non-GAAP efficiency ratio improved to 61.5% for the second quarter of 2012 compared to 62.8% for the second quarter of 2011.

 

Net interest income for the first six months of 2012 increased by $2.4 million or 4% compared to the first six months of 2011 due to an increase in average earning assets resulting from organic loan growth, loans acquired in the CommerceFirst acquisition and an increased level of noninterest-bearing deposits, which more than offset lower earning asset yields. Lower yields, together with a reduced rate of decline in the cost of funds, resulted in a decrease in the net interest margin to 3.59% for the first six months of 2012 compared to 3.62% for the first six months of 2011.

 

Non-interest income increased $1.7 million or 8% to $22.5 million for the first six months of 2012 as compared to $20.8 million for 2011. This increase was due primarily to an increase of $1.1 million or 83% in income from mortgage banking activities due to higher volumes and increased average gains from refinancing activity. In addition, revenue from wealth management services increased $0.4 million or 6% due primarily to higher average assets under management.

 

 

Non-interest expenses were $55.5 million for the first six months of 2012 compared to $51.9 million for the first six months of 2011, an increase of $3.6 million or 7%. This increase was driven by an 8% in salaries and benefits expense due to merit salary increases, a larger staff and higher cost of health benefits. These expenses were partially offset by a 27% decrease in FDIC insurance premiums due to a change in calculation of such premiums effective in the second quarter of 2011. Excluding one-time merger expenses of $2.6 million in the first six months of 2012, non-interest expenses increased only 2% over the prior year period.

 

The non-GAAP efficiency ratio was 62.3% for the first six months of 2012 compared to 63.9% for the first six months of 2011.

 

 

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 Web cast of the conference call is available through the Investor Relations’ section of the Sandy Spring Web site at www.sandyspringbank.com. Participants may call 1-877-317-6789. A password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 9:00 am (ET) August 20, 2012. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10015482

 

About Sandy Spring Bancorp/Sandy Spring Bank

 

With $3.9 billion in assets, Sandy Spring Bancorp is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Sandy Spring Bancorp is the largest publicly traded banking company headquartered and operating in Maryland. Sandy Spring is a community banking organization that focuses its lending and other services on businesses and consumers in the local market area. Independent and community-oriented, Sandy Spring Bank was founded in 1868 and offers a broad range of commercial banking, retail banking and trust services through 49 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George’s counties in Maryland, and Arlington, Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of insurance and investment management services. Visit www.sandyspringbank.com to locate an ATM near you or for more information about Sandy Spring Bank.

 

For additional information or questions, please contact:

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

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

Sandy Spring Bancorp

17801 Georgia Avenue

Olney, Maryland 20832

1-800-399-5919

Email:

DSchrider@sandyspringbank.com

PMantua@sandyspringbank.com

Web site:

www.sandyspringbank.com

 

 

Forward-Looking Statements

 

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

 

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

 

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2011, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov.

 

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

FINANCIAL HIGHLIGHTS - UNAUDITED

 

		Three Months Ended												Six Months Ended
		June 30,								%				June 30,								%
(Dollars in thousands, except per share data)		2012				2011				Change				2012				2011				Change
Results of Operations:
Net interest income		$	29,809			$	28,154				6	%		$	58,514			$	56,164				4	%
Provision for loan and lease losses			1,585				1,151				38				2,249				2,666				(16	)
Non-interest income			11,493				10,802				6				22,467				20,794				8
Non-interest expenses			28,858				25,838				12				55,541				51,900				7
Income before income taxes			10,859				11,967				(9	)			23,191				22,392				4
Net income			7,207				8,296				(13	)			15,683				15,587				1
Pre-tax pre-provision pre-merger expense income		$	14,642			$	13,118				12			$	28,012			$	25,058				12
Return on average assets			0.78	%			0.93	%							0.86	%			0.89	%
Return on average common equity			6.34	%			8.03	%							6.96	%			7.65	%
Net interest margin			3.62	%			3.58	%							3.59	%			3.62	%
Efficiency ratio - GAAP (1)			69.87	%			66.33	%							68.59	%			67.44	%
Efficiency ratio - Non-GAAP (1)			61.54	%			62.82	%							62.25	%			63.94	%
Per share data:
Basic net income		$	0.30			$	0.34				(12	)%		$	0.65			$	0.65				-	%
Diluted net income			0.30				0.34				(12	)			0.65				0.65				-
Average fully diluted shares			24,423,236				24,130,357				1				24,303,095				24,123,183				1
Dividends declared per share			0.12				0.08				50				0.22				0.16				38
Book value per share			18.94				17.58				8				18.94				17.58				8
Tangible book value per share			14.91				13.93				7				14.91				13.93				7
Outstanding shares			24,886,724				24,095,123				3				24,886,724				24,095,123				3
Financial Condition at period-end:
Investment securities		$	1,006,743			$	1,128,589				(11	)%		$	1,006,743			$	1,128,589				(11	)%
Loans and leases			2,475,078				2,137,920				16				2,475,078				2,137,920				16
Interest-earning assets			3,584,480				3,322,317				8				3,584,480				3,322,317				8
Assets			3,855,177				3,612,016				7				3,855,177				3,612,016				7
Deposits			2,852,055				2,657,861				7				2,852,055				2,657,861				7
Interest-bearing liabilities			2,593,501				2,515,053				3				2,593,501				2,515,053				3
Stockholders' equity			471,464				423,684				11				471,464				423,684				11
Capital ratios:
Tier 1 leverage			11.21	%			10.64	%							11.21	%			10.64	%
Tier 1 capital to risk-weighted assets			14.12	%			14.75	%							14.12	%			14.75	%
Total regulatory capital to risk-weighted assets			15.37	%			16.01	%							15.37	%			16.01	%
Tangible common equity to tangible assets (2)			9.84	%			9.51	%							9.84	%			9.51	%
Average equity to average assets			12.33	%			11.63	%							12.33	%			11.63	%
Credit quality ratios:
Allowance for loan and lease losses to loans and leases			1.83	%			2.58	%							1.83	%			2.58	%
Non-performing loans to total loans			2.71	%			3.58	%							2.71	%			3.58	%
Non-performing assets to total assets			1.98	%			2.31	%							1.98	%			2.31	%
Allowance for loan and lease losses to non-performing loans			67.61	%			72.22	%							67.61	%			72.22	%
Annualized net charge-offs to average loans and leases (3)			0.23	%			0.90	%%							0.56	%			0.90	%

 

 

(1)

The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI; 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 and leases, excluding residential mortgage loans held-for-sale.

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
(Dollars in thousands)		2012				2011				2012				2011
Pre-tax pre-provision pre-merger expense income:
Net income		$	7,207			$	8,296			$	15,683			$	15,587
Plus non-GAAP adjustment:
Merger expenses			2,198				-				2,572				-
Income taxes			3,652				3,671				7,508				6,805
Provision for loan and lease losses			1,585				1,151				2,249				2,666
Pre-tax pre-provision pre-merger expense income		$	14,642			$	13,118			$	28,012			$	25,058
GAAP efficiency ratio:
Non-interest expenses		$	28,858			$	25,838			$	55,541			$	51,900
Net interest income plus non-interest income		$	41,302			$	38,956			$	80,981			$	76,958
GAAP Efficiency ratio			69.87	%			66.33	%			68.59	%			67.44	%
Non-GAAP efficiency ratio:
Non-interest expenses		$	28,858			$	25,838			$	55,541			$	51,900
Less non-GAAP adjustment:
Amortization of intangible assets			466				462				927				923
Merger expenses			2,198				-				2,572				-
Non-interest expenses -  as adjusted		$	26,194			$	25,376			$	52,042			$	50,977
Net interest income plus non-interest income		$	41,302			$	38,956			$	80,981			$	76,958
Plus non-GAAP adjustment:
Tax-equivalent income			1,340				1,427				2,716				2,734
Less non-GAAP adjustments:
Securities gains			90				32				163				52
OTTI recognized in earnings			(8	)			(43	)			(72	)			(84	)
Net interest income plus non-interest income - as adjusted		$	42,560			$	40,394			$	83,606			$	79,724
Non-GAAP Efficiency ratio			61.54	%			62.82	%			62.25	%			63.94	%
Tangible common equity ratio:
Total stockholders' equity		$	471,464			$	423,684			$	471,464			$	423,684
Accumulated other comprehensive income (loss)			(14,577	)			(5,484	)			(14,577	)			(5,484	)
Goodwill			(81,892	)			(76,816	)			(81,892	)			(76,816	)
Other intangible assets, net			(4,017	)			(5,656	)			(4,017	)			(5,656	)
Tangible common equity		$	370,978			$	335,728			$	370,978			$	335,728
Total assets		$	3,855,177			$	3,612,016			$	3,855,177			$	3,612,016
Goodwill			(81,892	)			(76,816	)			(81,892	)			(76,816	)
Other intangible assets, net			(4,017	)			(5,656	)			(4,017	)			(5,656	)
Tangible assets		$	3,769,268			$	3,529,544			$	3,769,268			$	3,529,544
Tangible common equity ratio			9.84	%			9.51	%			9.84	%			9.51	%
Outstanding common shares			24,886,724				24,095,123				24,886,724				24,095,123
Tangible book value per common share		$	14.91			$	13.93			$	14.91			$	13.93

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED

 

		June 30,				December 31,				June 30,
(Dollars in thousands)		2012				2011				2011
Assets
Cash and due from banks		$	46,002			$	49,832			$	76,552
Federal funds sold			467				1,006				1,231
Interest-bearing deposits with banks			76,365				21,476				42,927
Cash and cash equivalents			122,834				72,314				120,710
Residential mortgage loans held for sale (at fair value)			25,827				25,341				11,650
Investments available-for-sale (at fair value)			808,881				951,301				995,496
Investments held-to-maturity -- fair value of $169,396, $184,167 and $103,054
at June 30, 2012, December 31, 2011 and June 30, 2011, respectively			164,846				178,465				100,030
Other equity securities			33,016				34,933				33,063
Total loans and leases			2,475,078				2,239,692				2,137,920
Less: allowance for loan and lease losses			(45,265	)			(49,426	)			(55,246	)
Net loans and leases			2,429,813				2,190,266				2,082,674
Premises and equipment, net			49,240				48,483				48,921
Other real estate owned			9,553				4,431				6,951
Accrued interest receivable			13,456				12,898				13,088
Goodwill			81,892				76,816				76,816
Other intangible assets, net			4,017				4,734				5,656
Other assets			111,802				111,388				116,961
Total assets		$	3,855,177			$	3,711,370			$	3,612,016
Liabilities
Noninterest-bearing deposits		$	763,566			$	650,377			$	648,605
Interest-bearing deposits			2,088,489				2,006,143				2,009,256
Total deposits			2,852,055				2,656,520				2,657,861
Securities sold under retail repurchase agreements and federal funds purchased			64,779				143,613				65,214
Advances from FHLB			405,233				405,408				405,583
Subordinated debentures			35,000				35,000				35,000
Accrued interest payable and other liabilities			26,646				24,720				24,674
Total liabilities			3,383,713				3,265,261				3,188,332
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued
and outstanding 24,886,724, 24,091,042 and 24,095,123 at June 30, 2012,
December 31, 2011 and June 30, 2011, respectively			24,887				24,091				24,095
Additional paid in capital			190,733				177,828				177,303
Retained earnings			241,267				230,942				216,802
Accumulated other comprehensive income			14,577				13,248				5,484
Total stockholders' equity			471,464				446,109				423,684
Total liabilities and stockholders' equity		$	3,855,177			$	3,711,370			$	3,612,016

 

 

 

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)		2012				2011				2012				2011
Interest Income:
Interest and fees on loans and leases		$	28,338			$	26,816			$	55,467			$	53,806
Interest on loans held for sale			190				124				339				246
Interest on deposits with banks			24				21				45				39
Interest and dividends on investment securities:
Taxable			4,662				5,649				9,605				11,089
Exempt from federal income taxes			2,343				2,398				4,716				4,577
Interest on federal funds sold			1				-				1				1
Total interest income			35,558				35,008				70,173				69,758
Interest Expense:
Interest on deposits			1,871				2,987				3,884				5,900
Interest on retail repurchase agreements and federal funds purchased			51				53				112				106
Interest on advances from FHLB			3,586				3,590				7,173				7,141
Interest on subordinated debt			241				224				490				447
Total interest expense			5,749				6,854				11,659				13,594
Net interest income			29,809				28,154				58,514				56,164
Provision for loan and lease losses			1,585				1,151				2,249				2,666
Net interest income after provision for loan and     lease losses			28,224				27,003				56,265				53,498
Non-interest Income:
Investment securities gains			90				32				163				52
Total other-than-temporary impairment ("OTTI") losses			(8	)			(43	)			(72	)			(102	)
Portion of OTTI losses recognized in other comprehensive income, before taxes			-				-				-				18
Net OTTI recognized in earnings			(8	)			(43	)			(72	)			(84	)
Service charges on deposit accounts			2,283				2,437				4,483				4,689
Mortgage banking activities			1,288				808				2,313				1,263
Wealth management income			4,034				4,023				8,091				7,668
Insurance agency commissions			934				953				2,136				2,133
Income from bank owned life insurance			660				654				1,294				1,300
Visa check fees			962				949				1,860				1,783
Other income			1,250				989				2,199				1,990
Total non-interest income			11,493				10,802				22,467				20,794
Non-interest Expenses:
Salaries and employee benefits			15,927				14,676				31,628				29,300
Occupancy expense of premises			2,943				2,790				5,789				5,933
Equipment expenses			1,255				1,128				2,445				2,270
Marketing			565				709				1,060				1,194
Outside data services			1,828				999				3,107				1,994
FDIC insurance			653				736				1,305				1,780
Amortization of intangible assets			466				462				927				923
Other expenses			5,221				4,338				9,280				8,506
Total non-interest expenses			28,858				25,838				55,541				51,900
Income before income taxes			10,859				11,967				23,191				22,392
Income tax expense			3,652				3,671				7,508				6,805
Net income		$	7,207			$	8,296			$	15,683			$	15,587
Net Income Per Share Amounts:
Basic net income per share		$	0.30			$	0.34			$	0.65			$	0.65
Diluted net income per share		$	0.30			$	0.34			$	0.65			$	0.65
Dividends declared per share		$	0.12			$	0.08			$	0.22			$	0.16

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

 

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

 

(1)

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

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

 

		2012								2011
(Dollars in thousands)		Q2				Q1				Q4				Q3				Q2				Q1
Balance sheets at quarter end:
Residential mortgage loans		$	472,426			$	465,204			$	448,662			$	440,606			$	445,605			$	444,519
Residential construction loans			130,791				122,841				108,699				90,727				81,425				84,939
Commercial ADC loans			151,620				149,814				160,946				141,576				149,215				151,135
Commercial investor real estate loans			443,237				392,626				371,948				357,358				353,749				355,967
Commercial owner occupied real estate loans			579,812				525,022				522,076				519,837				511,271				509,215
Commercial business loans			334,040				253,827				260,327				226,528				225,624				231,448
Leasing			5,618				5,843				6,954				8,484				10,200				12,477
Consumer loans			357,534				356,215				360,080				360,287				360,831				360,349
Total loans and leases			2,475,078				2,271,392				2,239,692				2,145,403				2,137,920				2,150,049
Allowance for loan and lease losses			(45,265	)			(45,061	)			(49,426	)			(49,720	)			(55,246	)			(58,918	)
Investment securities			1,006,743				1,067,462				1,164,699				1,174,180				1,128,589				1,087,620
Interest-earning assets			3,584,480				3,416,136				3,452,214				3,370,360				3,322,317				3,283,819
Total assets			3,855,177				3,668,273				3,711,370				3,626,043				3,612,016				3,549,533
Noninterest-bearing demand deposits			763,566				685,770				650,377				643,169				648,605				619,905
Total deposits			2,852,055				2,681,075				2,656,520				2,640,324				2,657,861				2,599,634
Customer repurchase agreements			64,779				73,130				63,613				79,529				65,214				75,516
Total interest-bearing liabilities			2,593,501				2,508,756				2,590,164				2,517,180				2,515,053				2,495,916
Total stockholders' equity			471,464				451,917				446,109				440,791				423,684				409,076
Quarterly average balance sheets:
Residential mortgage loans		$	488,644			$	474,149			$	463,754			$	453,645			$	455,803			$	458,329
Residential construction loans			125,582				116,630				99,983				89,128				84,144				85,891
Commercial ADC loans			151,374				159,769				153,598				145,835				149,773				149,071
Commercial investor real estate loans			410,258				377,072				353,975				350,925				352,668				340,008
Commercial owner occupied real estate loans			539,590				518,763				521,212				515,185				509,273				500,875
Commercial business loans			284,271				258,099				231,773				225,041				225,646				236,949
Leasing			5,528				6,325				7,671				9,269				11,154				14,009
Consumer loans			359,008				358,783				361,888				360,875				362,098				367,261
Total loans and leases			2,364,255				2,269,590				2,193,854				2,149,903				2,150,559				2,152,393
Investment securities			1,052,502				1,086,295				1,173,418				1,168,712				1,121,325				1,054,740
Interest-earning assets			3,453,590				3,389,843				3,392,773				3,355,937				3,305,059				3,237,556
Total assets			3,708,622				3,637,674				3,647,291				3,610,219				3,566,278				3,500,807
Noninterest-bearing demand deposits			699,638				641,477				655,381				631,192				607,092				582,441
Total deposits			2,714,980				2,642,634				2,658,676				2,640,729				2,607,854				2,548,117
Customer repurchase agreements			66,674				65,195				74,267				72,646				70,313				79,067
Total interest-bearing liabilities			2,526,541				2,523,394				2,525,128				2,524,728				2,519,114				2,485,451
Total stockholders' equity			457,338				448,406				440,154				428,511				414,624				407,007
Financial Measures
Average equity to average assets			12.33	%			12.33	%			12.07	%			11.87	%			11.63	%			11.63	%
Investment securities to earning assets			28.09	%			31.25	%			33.74	%			34.84	%			33.97	%			33.12	%
Loans to earnings assets			69.05	%			66.49	%			64.88	%			63.66	%			64.35	%			65.47	%
Loans to assets			64.20	%			61.92	%			60.35	%			59.17	%			59.19	%			60.57	%
Loans to deposits			86.78	%			84.72	%			84.31	%			81.26	%			80.44	%			82.71	%
Capital measures:
Tier 1 leverage			11.21	%			11.05	%			10.84	%			10.79	%			10.64	%			10.63	%
Tier 1 capital to risk-weighted assets			14.12	%			14.89	%			14.57	%			14.96	%			14.75	%			14.21	%
Total regulatory capital to risk-weighted assets			15.37	%			16.14	%			15.83	%			16.21	%			16.01	%			15.48	%
Book value per share		$	18.94			$	18.72			$	18.52			$	18.31			$	17.58			$	16.99
Outstanding shares			24,886,724				24,143,985				24,091,042				24,079,204				24,095,123				24,084,423

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

 

		2012								2011
(Dollars in thousands)		June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
Non-Performing Assets:
Loans and leases 90 days past due:
Commercial business		$	777			$	40			$	-			$	-			$	-			$	-
Commercial real estate:
Commercial AD&C			342				-				-				-				-				-
Commercial investor real estate			-				-				-				-				-				-
Commercial owner occupied real estate			-				-				-				-				-				-
Leasing			96				-				2				63				20				24
Consumer			5				89				165				373				337				169
Residential real estate:
Residential mortgage			91				167				167				2,291				3,820				4,616
Residential construction			-				-				243				-				-				2,367
Total loans and leases 90 days past due			1,311				296				577				2,727				4,177				7,176
Non-accrual loans and leases:
Commercial business			5,264				6,542				7,226				8,038				8,288				9,649
Commercial real estate:
Commercial AD&C			13,055				14,303				18,702				24,481				26,133				28,310
Commercial investor real estate			14,143				13,893				16,963				16,118				2,975				2,519
Commercial owner occupied real estate			15,437				16,295				14,709				11,847				13,019				12,304
Leasing			872				858				853				956				1,017				1,529
Consumer			1,651				1,700				1,786				1,478				590				720
Residential real estate:
Residential mortgage			2,600				4,818				5,722				6,081				6,295				6,652
Residential construction			4,333				4,929				5,719				5,034				5,701				5,222
Total non-accrual loans and lease			57,355				63,338				71,680				74,033				64,018				66,905
Total restructured loans - accruing			8,285				8,547				6,881				6,088				8,299				14,266
Total non-performing loans and leases			66,951				72,181				79,138				82,848				76,494				88,347
Other assets and real estate owned (OREO)			9,553				4,834				4,431				7,938				6,951				7,960
Total non-performing assets		$	76,504			$	77,015			$	83,569			$	90,786			$	83,445			$	96,307
		June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2012				2012				2011				2011				2011				2011
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period		$	63,338			$	71,680			$	74,033			$	64,018			$	66,905			$	63,327
Non-accrual balances transferred to OREO			(2,131	)			-				(511	)			(142	)			(791	)			(535	)
Non-accrual balances charged-off			(1,663	)			(4,965	)			(2,758	)			(1,375	)			(2,112	)			(2,701	)
Net payments or draws			(4,149	)			(5,061	)			(6,724	)			(4,839	)			(8,016	)			(2,531	)
Loans placed on non-accrual			3,049				1,809				8,640				17,226				8,032				9,526
Non-accrual loans brought current			(1,089	)			(125	)			(1,000	)			(855	)			-				(181	)
Balance at end of period		$	57,355			$	63,338			$	71,680			$	74,033			$	64,018			$	66,905
Analysis of Allowance for Loan Losses:
Balance at beginning of period		$	45,061			$	49,426			$	49,720			$	55,246			$	58,918			$	62,135
Provision for loan and lease losses			1,585				664				2,282				(3,520	)			1,151				1,515
Less loans charged-off, net of recoveries:
Commercial business			(185	)			(39	)			(65	)			397				769				790
Commercial real estate:
Commercial AD&C			(59	)			1,076				275				151				253				(137	)
Commercial investor real estate			140				3,219				335				30				504				(4	)
Commercial owner occupied real estate			484				-				329				45				113				-
Leasing			(3	)			5				181				85				455				333
Consumer			228				348				352				375				713				1,091
Residential real estate:
Residential mortgage			713				420				792				751				1,319				2,095
Residential construction			63				-				377				172				697				564
Net charge-offs			1,381				5,029				2,576				2,006				4,823				4,732
Balance at end of period		$	45,265			$	45,061			$	49,426			$	49,720			$	55,246			$	58,918
Asset Quality Ratios:
Non-performing loans to total loans			2.71	%			3.18	%			3.53	%			3.86	%			3.58	%			4.11	%
Non-performing assets to total assets			1.98	%			2.10	%			2.25	%			2.50	%			2.31	%			2.71	%
Allowance for loan losses to loans			1.83	%			1.98	%			2.21	%			2.32	%			2.58	%			2.74	%
Allowance for loan losses to non-performing loans			67.61	%			62.43	%			62.46	%			60.01	%			72.22	%			66.69	%
Net charge-offs in quarter to average loans			0.23	%			0.89	%			0.47	%			0.37	%			0.90	%			0.89	%

 

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

		Three Months Ended June 30,
						2012												2011
										Annualized												Annualized
		Average				(1)				Average				Average				(1)				Average
(Dollars in thousands and tax-equivalent)		Balances				Interest				Yield/Rate				Balances				Interest				Yield/Rate
Assets
Residential mortgage loans (2)		$	488,644			$	5,381				4.43	%		$	455,803			$	5,631				4.93	%
Residential construction loans			125,582				1,190				3.81				84,144				641				3.06
Commercial ADC loans			151,374				1,922				5.11				149,773				1,590				4.26
Commercial investor real estate loans			410,258				5,616				5.51				352,668				5,249				5.94
Commercial owner occupied real estate loans			539,590				7,524				5.68				509,273				7,497				5.93
Commercial business loans			284,271				3,665				5.04				225,646				2,805				4.99
Leasing			5,528				90				6.53				11,154				190				6.82
Consumer loans			359,008				3,140				3.54				362,098				3,337				3.72
Total loans and leases (3)			2,364,255				28,528				4.86				2,150,559				26,940				5.02
Taxable securities			772,668				4,980				2.58				873,062				5,983				2.74
Tax-exempt securities (4)			279,834				3,365				4.81				248,263				3,491				5.62
Interest-bearing deposits with banks			35,949				24				0.27				31,863				21				0.26
Federal funds sold			884				1				0.18				1,312				-				0.13
Total interest-earning assets			3,453,590				36,898				4.29				3,305,059				36,435				4.42
Less:  allowance for loan and lease losses			(47,312	)											(58,504	)
Cash and due from banks			45,883												46,341
Premises and equipment, net			49,085												49,167
Other assets			207,376												224,215
Total assets		$	3,708,622											$	3,566,278
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	384,750				84				0.09	%		$	343,060				104				0.12	%
Regular savings deposits			212,839				58				0.11				184,688				53				0.11
Money market savings deposits			854,920				471				0.22				854,003				1,022				0.48
Time deposits			562,833				1,258				0.90				619,011				1,808				1.17
Total interest-bearing deposits			2,015,342				1,871				0.37				2,000,762				2,987				0.60
Other borrowings			70,928				51				0.29				77,731				53				0.28
Advances from FHLB			405,271				3,586				3.56				405,621				3,590				3.55
Subordinated debentures			35,000				241				2.75				35,000				224				2.56
Total interest-bearing liabilities			2,526,541				5,749				0.91				2,519,114				6,854				1.09
Noninterest-bearing demand deposits			699,638												607,092
Other liabilities			25,105												25,448
Stockholders' equity			457,338												414,624
Total liabilities and stockholders' equity		$	3,708,622											$	3,566,278
Net interest income and spread						$	31,149				3.38	%						$	29,581				3.33	%
Less: tax-equivalent adjustment							1,340												1,427
Net interest income						$	29,809											$	28,154
Interest income/earning assets											4.29	%											4.42	%
Interest expense/earning assets											0.67												0.84
Net interest margin											3.62	%											3.58	%

 

(1)

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

 

(2)

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

 

(3)

Non-accrual loans are included in the average balances.

 

(4)

Includes only investments that are exempt from federal taxes.

 

  

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

		Six Months Ended June 30,
						2012												2011
										Annualized												Annualized
		Average				(1)				Average				Average				(1)				Average
(Dollars in thousands and tax-equivalent)		Balances				Interest				Yield/Rate				Balances				Interest				Yield/Rate
Assets
Residential mortgage loans (2)		$	481,396			$	10,741				4.49	%		$	457,059			$	11,374				4.97	%
Residential construction loans			121,106				2,291				3.80				85,013				1,549				3.68
Commercial ADC loans			155,571				3,890				5.03				149,424				3,125				4.22
Commercial investor real estate loans			393,665				10,764				5.50				346,410				10,328				5.98
Commercial owner occupied real estate loans			529,176				14,784				5.68				505,060				14,926				5.99
Commercial business loans			271,185				6,816				4.93				231,267				5,648				4.93
Leasing			5,927				193				6.53				12,574				419				6.66
Consumer loans			358,896				6,327				3.57				364,665				6,683				3.72
Total loans and leases (3)			2,316,922				55,806				4.85				2,151,472				54,052				5.06
Taxable securities			791,303				10,253				2.59				860,042				11,766				2.74
Tax-exempt securities (4)			278,095				6,784				4.88				228,175				6,634				5.81
Interest-bearing deposits with banks			34,410				45				0.26				30,359				39				0.26
Federal funds sold			985				1				0.16				1,447				1				0.15
Total interest-earning assets			3,421,715				72,889				4.27				3,271,495				72,492				4.45
Less:  allowance for loan and lease losses			(48,439	)											(60,040	)
Cash and due from banks			45,470												44,654
Premises and equipment, net			48,820												49,178
Other assets			205,582												228,437
Total assets		$	3,673,148											$	3,533,724
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	373,740				171				0.09	%		$	330,470				176				0.11	%
Regular savings deposits			206,721				104				0.10				180,067				95				0.11
Money market savings deposits			857,020				983				0.23				850,359				1,956				0.46
Time deposits			570,768				2,626				0.93				622,420				3,673				1.19
Total interest-bearing deposits			2,008,250				3,884				0.39				1,983,316				5,900				0.60
Other borrowings			76,403				112				0.29				78,395				106				0.27
Advances from FHLB			405,315				7,173				3.56				405,665				7,141				3.55
Subordinated debentures			35,000				490				2.80				35,000				447				2.55
Total interest-bearing liabilities			2,524,968				11,659				0.93				2,502,376				13,594				1.10
Noninterest-bearing demand deposits			670,557												594,835
Other liabilities			24,752												25,676
Stockholders' equity			452,871												410,837
Total liabilities and stockholders' equity		$	3,673,148											$	3,533,724
Net interest income and spread						$	61,230				3.34	%						$	58,898				3.35	%
Less: tax-equivalent adjustment							2,716												2,734
Net interest income						$	58,514											$	56,164
Interest income/earning assets											4.27	%											4.45	%
Interest expense/earning assets											0.68												0.83
Net interest margin											3.59	%											3.62	%

 

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2012 and  2011. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $2.7 million and $2.7 million in 2012 and 2011, respectively.

 

(2)

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

 

(3)

Non-accrual loans are included in the average balances.

 

(4)

Includes only investments that are exempt from federal taxes.