News release

 

FOR IMMEDIATE RELEASE

SANDY SPRING BANCORP REPORTS SECOND QUARTER NET INCOME OF

$12.1 MILLION, AN INCREASE OF 69% OVER PRIOR YEAR

 

OLNEY, MARYLAND, July 18, 2013 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the second quarter of 2013 of $12.1 million ($0.49 per diluted share) compared to net income of $7.2 million ($0.30 per diluted share) for the second quarter of 2012 and net income of $10.6 million ($0.42 per diluted share) for the first quarter of 2013.

 

Net income for the six-month period ended June 30, 2013 totaled $22.7 million ($0.91 per diluted share) compared to net income of $15.7 million ($0.65 per diluted share) for the prior year period, an increase of 45%.

 

“We are pleased to report that we maintained our strong earnings momentum during the second quarter. The primary drivers of these results were continued improvement in credit quality metrics due to loan recoveries combined with growth in non-interest income, primarily from our wealth management and insurance operations, and lower non-interest expenses,” said Daniel J. Schrider, President and Chief Executive Officer.

 

“The credit to our provision for loan and lease losses for the quarter reflects recoveries from loan workouts and is a product of our aggressive efforts to address problem loans early in the current credit cycle.

 

“While loan growth has been especially challenging due to the state of the economy and uncertainty over the timing of reductions in the Federal Reserve’s monthly securities purchases, we have worked to limit the decline in our net interest margin through disciplined management of our funding costs,” said Schrider.

  

Second Quarter Highlights:

·

Pre-tax pre-provision income, a non-GAAP measure, was $15.6 million for the second quarter of 2013, a 7% increase over the second quarter of 2012 and a 2% decrease compared to the first quarter of 2013.

 

·

The provision for loan and lease losses for the second quarter of 2013 was a credit of $2.9 million compared to a charge of $1.6 million for the second quarter of 2012 and a charge of $0.1 million for the first quarter of 2013. This improvement in the provision was due to a decline in historical net charge-offs, a lower migration of new problem loans into non-performing status, and loan recoveries during the quarter.

 

 

·

Non-performing loans decreased to $46.2 million at June 30, 2013 compared to $64.5 million at June 30, 2012 and $49.5 million at March 31, 2013. The coverage ratio of the allowance for loan and lease losses to non-performing loans was 84% at June 30, 2013 compared to a coverage ratio of 70% at June 30, 2012 and 83% at March 31, 2013.

 

·

The net interest margin was 3.51% for the second quarter of 2013, compared to 3.62% for the second quarter of 2012 and 3.59% for the first quarter of 2013. The decrease in the margin was due primarily to the decline in the yield on a higher level of earning assets which more than offset the lower cost of deposits and borrowings.

 

·

Non-interest income increased 6% for the quarter compared to the prior year quarter and decreased 2% compared to the first quarter of 2013. The increase over the prior year quarter was due primarily to growth in income from wealth management, insurance agency commissions and other non-interest income. The decrease compared to the first quarter of 2013 was due primarily to a decline in income from mortgage banking and other non-interest income.

 

·

Total loans increased 5% compared to the second quarter of 2012 and 2% compared to the first quarter of 2013 due primarily to organic loan growth in the commercial investor real estate and residential mortgage portfolios.

 

Review of Balance Sheet and Credit Quality

 

Total assets increased 6% to $4.1 billion at June 30, 2013 as compared to June 30, 2012. Total loans and leases increased 5% to $2.6 billion compared to the prior year due primarily to the growth in the specific loan portfolios mentioned above.

 

Customer funding sources, which include deposits and other short-term borrowings from customers, increased 2% compared to June 30, 2012. This increase was due primarily to a 15% increase in noninterest-bearing and interest-bearing checking account balances. The Company considers the growth in checking accounts to be an important performance metric as such accounts typically are the primary drivers of growth in multiple product banking relationships with clients. Certificates of deposit declined 19% and FHLB advances increased 33% at June 30, 2013 compared to balances at June 30, 2012, as the Company managed its funding mix to take advantage of current low interest rates to maintain the net interest margin.

 

Tangible common equity totaled $401.7 million at June 30, 2013 compared to $371.0 million at June 30, 2012 resulting in an increase in the ratio of tangible common equity to tangible assets from 9.84% at June 30, 2012 to 10.08% at June 30, 2013. This increase was due primarily to net income earned during the period. At June 30, 2013, the Company had a total risk-based capital ratio of 15.55%, a tier 1 risk-based capital ratio of 14.30% and a tier 1 leverage ratio of 11.28%.

 

Non-performing loans totaled $46.2 million at June 30, 2013 compared to $64.5 million at June 30, 2012 and $49.5 million at March 31, 2013. Overall credit quality continued to improve due to the resolution of existing problem credits and limited migration of new credits to non-performing status.

 

 

Loan charge-offs, net of recoveries, totaled $0.6 million in net recoveries for the second quarter of 2013 compared to net charge-offs of $1.4 million for the second quarter of 2012 and net charge-offs of $1.8 million for the first quarter of 2013. This improvement for the second quarter of 2013 compared to the prior year quarter was due primarily to recoveries on existing problem credits and reduced charge-offs in the current quarter due to lower non-performing loans. The allowance for loan and lease losses represented 1.50% of outstanding loans and leases and 84% of non-performing loans at June 30, 2013 compared to 1.83% of outstanding loans and leases and 70% of non-performing loans at June 30, 2012 and 1.61% of outstanding loans and leases and 83% of non-performing loans at March 31, 2013. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

 

Income Statement Review

 

Net interest income for the second quarter of 2013 increased 4% compared to the second quarter of 2012 due to an increase in average interest-earning assets and lower funding costs which more than offset the decline in asset yields. The Company’s funding costs declined due to a lower cost deposit mix and the restructuring of $170 million in Federal Home Loan Bank advances during the fourth quarter of 2012 and the first six months of 2013. The net interest margin decreased to 3.51% for the second quarter of 2013 compared to 3.62% for the second quarter of 2012 due to lower yields on a higher amount of interest-earning assets.

 

The provision for loan and lease losses was a credit of $2.9 million for the second quarter of 2013 compared to a charge of $1.6 million for the second quarter of 2012 and a charge of $0.1 million for the first quarter of 2013. The decrease in the provision for the second quarter of 2013 compared to both the second quarter of 2012 and the first quarter of 2013 was due primarily to a decline in historical losses, recoveries during the period and a lower migration of new problem loans into non-performing status.

 

Non-interest income increased 6% to $12.2 million for the second quarter of 2013 compared to $11.5 million for the second quarter of 2012. This increase was driven by a 12% increase in wealth management income due to higher assets under management. In addition, other non-interest income increased 20% due to gains on sales and dispositions of loans.

 

Non-interest expenses decreased 5% to $27.5 million for the second quarter of 2013 compared to $28.9 million in the second quarter of 2012. This decrease was driven primarily by declines in outside data services and other non-interest expenses due to merger expenses recorded in the second quarter of 2012 relating to the CommerceFirst acquisition. The non-GAAP efficiency ratio improved to 60.92% for the second quarter of 2013 compared to 61.55% for the second quarter of 2012.

 

Net interest income for the first six months of 2013 increased 6% compared to the second quarter of 2012 due to an increase in average interest-earning assets and lower funding costs. The net interest margin decreased to 3.55% for the first six months of 2013 compared to 3.59% for the first six months of 2012 due largely to the factors cited previously with respect to the second quarter of 2013.

 

 

The provision for loan and lease losses was a credit of $2.8 million for the first six months of 2013 compared to a charge of $2.2 million for first six months of 2012. The decrease in the provision for the period was due primarily to a decline in historical losses, a lower migration of new problem loans into non-performing status, and loan recoveries during the period.

 

Non-interest income increased 10% to $24.6 million for the first six months of 2013 compared to $22.5 million for the first six months of 2012. This increase was driven by a 19% increase in income from mortgage banking activities due to higher loan origination volumes. In addition, wealth management income increased 6% due to higher assets under management while insurance agency commissions increased 12% due to higher revenues on commercial and physicians liability lines. Other non-interest income increased 50% due to gains on sales and dispositions of loans and a non-recurring legal settlement.

 

Non-interest expenses decreased to $55.3 million for the first six months of 2013 compared to $55.5 million in the first six months of 2012. This decrease was driven primarily by declines in outside data services and other noninterest expenses which were due to merger expenses from the CommerceFirst acquisition recorded in the second quarter of 2012. These decreases were somewhat offset by an increase in salaries and benefits expenses due to additional staff and higher incentive compensation. The non-GAAP efficiency ratio improved to 60.86% for the first six months of 2013 compared to 62.25% for the first six months of 2012.

 

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 1-888-317-6016. 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 19, 2013. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10030473.

 

About Sandy Spring Bancorp/Sandy Spring Bank

 

With $4.1 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, 2012, 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)		2013				2012				Change				2013				2012				Change
Results of Operations:
Net interest income		$	30,932			$	29,809				4	%		$	62,258			$	58,514				6	%
Provision for loan and lease losses			(2,876	)			1,585				-				(2,798	)			2,249				-
Non-interest income			12,215				11,493				6				24,634				22,467				10
Non-interest expenses			27,508				28,858				(5	)			55,331				55,541				-
Income before income taxes			18,515				10,859				71				34,359				23,191				48
Net income			12,162				7,207				69				22,720				15,683				45
Pre-tax pre-provision pre-merger expense income		$	15,639			$	14,642				7			$	31,561			$	28,012				13
Return on average assets			1.23	%			0.78	%							1.16	%			0.86	%
Return on average common equity			9.98	%			6.34	%							9.42	%			6.96	%
Net interest margin			3.51	%			3.62	%							3.55	%			3.59	%
Efficiency ratio - GAAP basis (1)			63.75	%			69.87	%							63.68	%			68.59	%
Efficiency ratio - Non-GAAP basis (1)			60.92	%			61.55	%							60.86	%			62.25	%
Per share data:
Basic net income		$	0.49			$	0.30				63	%		$	0.91			$	0.65				40	%
Diluted net income		$	0.49			$	0.30				63			$	0.91			$	0.65				40
Average fully diluted shares			25,009,092				24,423,236				2				25,006,161				24,303,095				3
Dividends declared per share		$	0.16			$	0.12				33			$	0.30			$	0.22				36
Book value per share			19.45				18.94				3				19.45				18.94				3
Tangible book value per share			16.09				14.91				8				16.09				14.91				8
Outstanding shares			24,967,558				24,886,724				-				24,967,558				24,886,724				-
Financial Condition at period-end:
Investment securities		$	1,102,209			$	1,006,743				9	%		$	1,102,209			$	1,006,743				9	%
Loans and leases			2,605,458				2,475,078				5				2,605,458				2,475,078				5
Interest-earning assets			3,802,682				3,584,480				6				3,802,682				3,584,480				6
Assets			4,072,617				3,855,177				6				4,072,617				3,855,177				6
Deposits			2,926,650				2,852,055				3				2,926,650				2,852,055				3
Interest-bearing liabilities			2,678,490				2,593,501				3				2,678,490				2,593,501				3
Stockholders' equity			485,643				471,464				3				485,643				471,464				3
Capital ratios:
Tier 1 leverage			11.28	%			11.21	%							11.28	%			11.21	%
Tier 1 capital to risk-weighted assets			14.30	%			14.12	%							14.30	%			14.12	%
Total regulatory capital to risk-weighted assets			15.55	%			15.37	%							15.55	%			15.37	%
Tangible common equity to tangible assets (2)			10.08	%			9.84	%							10.08	%			9.84	%
Average equity to average assets			12.35	%			12.33	%							12.30	%			12.33	%
Credit quality ratios:
Allowance for loan and lease losses to loans and leases			1.50	%			1.83	%							1.50	%			1.83	%
Non-performing loans to total loans			1.77	%			2.60	%							1.77	%			2.60	%
Non-performing assets to total assets			1.25	%			1.92	%							1.25	%			1.92	%
Allowance for loan and lease losses to non-performing loans			84.46	%			70.23	%							84.46	%			70.23	%
Annualized net charge-offs to average loans and leases (3)			(0.10	)%			0.23	%							0.09	%			0.89	%

 

(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 eficiency ratio - non-GAAP basis excludes intangible asset amortization and merger expenses from non-interest expense; securities gains (losses) from non-interest income; OTTI; and the tax-equivalent adjustment to net interest income.  See the Reconciliation Table included with these Financial Highlights.

(2)

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

(3)

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

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

RECONCILIATION TABLE - UNAUDITED

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
(Dollars in thousands)		2013				2012				2013				2012
Pre-tax pre-provision pre-merger expense income:
Net income		$	12,162			$	7,207			$	22,720			$	15,683
Plus non-GAAP adjustment:
Merger expenses			-				2,198				-				2,572
Income taxes			6,353				3,652				11,639				7,508
Provision for loan and lease losses			(2,876	)			1,585				(2,798	)			2,249
Pre-tax pre-provision pre-merger expense income		$	15,639			$	14,642			$	31,561			$	28,012
Efficiency ratio - GAAP basis:
Non-interest expenses		$	27,508			$	28,858			$	55,331			$	55,541
Net interest income plus non-interest income		$	43,147			$	41,302			$	86,892			$	80,981
Efficiency ratio - GAAP basis			63.75	%			69.87	%			63.68	%			68.59	%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses		$	27,508			$	28,858			$	55,331			$	55,541
Less non-GAAP adjustment:
Amortization of intangible assets			461				466				922				927
Merger expenses			-				2,198				-				2,572
Non-interest expenses -  as adjusted		$	27,047			$	26,194			$	54,409			$	52,042
Net interest income plus non-interest income		$	43,147			$	41,302			$	86,892			$	80,981
Plus non-GAAP adjustment:
Tax-equivalent income			1,312				1,340				2,623				2,716
Less non-GAAP adjustments:
Securities gains			62				90				118				163
OTTI recognized in earnings			-				(8	)			-				(72	)
Net interest income plus non-interest income - as adjusted		$	44,397			$	42,560			$	89,397			$	83,606
Efficiency ratio - Non-GAAP basis			60.92	%			61.55	%			60.86	%			62.25	%
Tangible common equity ratio:
Total stockholders' equity		$	485,643			$	471,464			$	485,643			$	471,464
Accumulated other comprehensive loss			2,425				(14,577	)			2,425				(14,577	)
Goodwill			(84,171	)			(81,892	)			(84,171	)			(81,892	)
Other intangible assets, net			(2,241	)			(4,017	)			(2,241	)			(4,017	)
Tangible common equity		$	401,656			$	370,978			$	401,656			$	370,978
Total assets		$	4,072,617			$	3,855,177			$	4,072,617			$	3,855,177
Goodwill			(84,171	)			(81,892	)			(84,171	)			(81,892	)
Other intangible assets, net			(2,241	)			(4,017	)			(2,241	)			(4,017	)
Tangible assets		$	3,986,205			$	3,769,268			$	3,986,205			$	3,769,268
Tangible common equity ratio			10.08	%			9.84	%			10.08	%			9.84	%
Outstanding common shares			24,967,558				24,886,724				24,967,558				24,886,724
Tangible book value per common share		$	16.09			$	14.91			$	16.09			$	14.91

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED

 

		June 30,				December 31,				June 30,
(Dollars in thousands)		2013				2012				2012
Assets
Cash and due from banks		$	41,525			$	59,540			$	46,002
Federal funds sold			475				466				467
Interest-bearing deposits with banks			65,507				26,400				76,365
Cash and cash equivalents			107,507				86,406				122,834
Residential mortgage loans held for sale (at fair value)			29,033				36,149				25,827
Investments available-for-sale (at fair value)			838,440				825,582				808,881
Investments held-to-maturity -- fair value of $220,838, $222,024 and $169,396
at June 30, 2013, December 31, 2012 and June 30, 2012, respectively			226,457				215,814				164,846
Other equity securities			37,312				33,636				33,016
Total loans and leases			2,605,458				2,531,128				2,475,078
Less: allowance for loan and lease losses			(39,015	)			(42,957	)			(45,265	)
Net loans and leases			2,566,443				2,488,171				2,429,813
Premises and equipment, net			46,901				48,326				49,240
Other real estate owned			4,831				5,926				9,553
Accrued interest receivable			13,071				12,392				13,456
Goodwill			84,171				84,808				81,892
Other intangible assets, net			2,241				3,163				4,017
Other assets			116,210				114,833				111,802
Total assets		$	4,072,617			$	3,955,206			$	3,855,177
Liabilities
Noninterest-bearing deposits		$	877,891			$	847,415			$	763,566
Interest-bearing deposits			2,048,759				2,065,619				2,088,489
Total deposits			2,926,650				2,913,034				2,852,055
Securities sold under retail repurchase agreements and federal funds purchased			54,731				86,929				64,779
Advances from FHLB			540,000				405,058				405,233
Subordinated debentures			35,000				35,000				35,000
Accrued interest payable and other liabilities			30,593				31,673				26,646
Total liabilities			3,586,974				3,471,694				3,383,713
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued
and outstanding 24,967,558, 24,905,392 and 24,886,724 at June 30, 2013,
December 31, 2012 and June 30, 2012, respectively			24,968				24,905				24,887
Additional paid in capital			192,327				191,689				190,733
Retained earnings			270,773				255,606				241,267
Accumulated other comprehensive income (loss)			(2,425	)			11,312				14,577
Total stockholders' equity			485,643				483,512				471,464
Total liabilities and stockholders' equity		$	4,072,617			$	3,955,206			$	3,855,177

 

 

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)		2013				2012				2013				2012
Interest Income:
Interest and fees on loans and leases		$	29,212			$	28,338			$	58,858			$	55,467
Interest on loans held for sale			309				190				662				339
Interest on deposits with banks			24				24				43				45
Interest and dividends on investment securities:
Taxable			3,919				4,662				7,853				9,605
Exempt from federal income taxes			2,315				2,343				4,642				4,716
Interest on federal funds sold			-				1				-				1
Total interest income			35,779				35,558				72,058				70,173
Interest Expense:
Interest on deposits			1,396				1,871				2,851				3,884
Interest on retail repurchase agreements and federal funds purchased			38				51				87				112
Interest on advances from FHLB			3,189				3,586				6,412				7,173
Interest on subordinated debt			224				241				450				490
Total interest expense			4,847				5,749				9,800				11,659
Net interest income			30,932				29,809				62,258				58,514
Provision for loan and lease losses			(2,876	)			1,585				(2,798	)			2,249
Net interest income after provision for loan and lease losses			33,808				28,224				65,056				56,265
Non-interest Income:
Investment securities gains			62				90				118				163
Total other-than-temporary impairment ("OTTI") losses			-				(8	)			-				(72	)
Portion of OTTI losses recognized in other comprehensive income, before taxes			-				-				-				-
Net OTTI recognized in earnings			-				(8	)			-				(72	)
Service charges on deposit accounts			2,150				2,283				4,219				4,483
Mortgage banking activities			1,237				1,288				2,764				2,313
Wealth management income			4,532				4,034				8,574				8,091
Insurance agency commissions			1,036				934				2,385				2,136
Income from bank owned life insurance			623				660				1,235				1,294
Visa check fees			1,079				962				2,036				1,860
Other income			1,496				1,250				3,303				2,199
Total non-interest income			12,215				11,493				24,634				22,467
Non-interest Expenses:
Salaries and employee benefits			16,163				15,927				32,509				31,628
Occupancy expense of premises			2,996				2,943				6,178				5,789
Equipment expenses			1,227				1,255				2,476				2,445
Marketing			755				565				1,270				1,060
Outside data services			1,114				1,828				2,266				3,107
FDIC insurance			581				653				1,177				1,305
Amortization of intangible assets			461				466				922				927
Other expenses			4,211				5,221				8,533				9,280
Total non-interest expenses			27,508				28,858				55,331				55,541
Income before income taxes			18,515				10,859				34,359				23,191
Income tax expense			6,353				3,652				11,639				7,508
Net income		$	12,162			$	7,207			$	22,720			$	15,683
Net Income Per Share Amounts:
Basic net income per share		$	0.49			$	0.30			$	0.91			$	0.65
Diluted net income per share		$	0.49			$	0.30			$	0.91			$	0.65
Dividends declared per share		$	0.16			$	0.12			$	0.30			$	0.22

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED    

 

		2013								2012
(Dollars in thousands, except per share data)		Q2				Q1				Q4				Q3				Q2				Q1
Profitability for the quarter:
Tax-equivalent interest income		$	37,091			$	37,590			$	37,536			$	38,819			$	36,898			$	35,991
Interest expense			4,847				4,953				5,282				5,710				5,749				5,910
Tax-equivalent net interest income			32,244				32,637				32,254				33,109				31,149				30,081
Tax-equivalent adjustment			1,312				1,311				1,334				1,324				1,340				1,376
Provision for loan and lease losses			(2,876	)			78				1,168				232				1,585				664
Non-interest income			12,215				12,419				12,247				12,242				11,493				10,974
Non-interest expenses			27,508				27,823				27,219				27,167				28,858				26,683
Income before income taxes			18,515				15,844				14,780				16,628				10,859				12,332
Income tax expense			6,353				5,286				4,899				5,638				3,652				3,856
Net income		$	12,162			$	10,558			$	9,881			$	10,990			$	7,207			$	8,476
Financial performance:
Pre-tax pre-provision pre-merger expense income		$	15,639			$	15,922			$	15,740			$	16,996			$	14,642			$	13,370
Return on average assets			1.23	%			1.08	%			1.01	%			1.13	%			0.78	%			0.94	%
Return on average common equity			9.98	%			8.85	%			8.14	%			9.22	%			6.34	%			7.60	%
Net interest margin			3.51	%			3.59	%			3.53	%			3.67	%			3.62	%			3.56	%
Efficiency ratio - GAAP basis (1)			63.75	%			63.60	%			63.06	%			61.70	%			69.87	%			67.25	%
Efficiency ratio - Non-GAAP basis (1)			60.92	%			60.80	%			60.54	%			58.91	%			61.54	%			62.97	%
Per share data:
Basic net income per share		$	0.49			$	0.42			$	0.40			$	0.44			$	0.30			$	0.35
Diluted net income per share		$	0.49			$	0.42			$	0.40			$	0.44			$	0.30			$	0.35
Average fully diluted shares			25,009,092				25,002,612				24,971,249				24,949,205				24,423,236				24,180,501
Dividends declared per common share		$	0.16			$	0.14			$	0.14			$	0.12			$	0.12			$	0.10
Non-interest income:
Securities gains		$	62			$	56			$	-			$	296			$	90			$	73
Net OTTI recognized in earnings			-				-				(14	)			(23	)			(8	)			(64	)
Service charges on deposit accounts			2,150				2,069				2,197				2,230				2,283				2,200
Mortgage banking activities			1,237				1,527				1,738				1,981				1,288				1,025
Wealth management income			4,532				4,042				4,000				3,858				4,034				4,057
Insurance agency commissions			1,036				1,349				1,334				1,020				934				1,202
Income from bank owned life insurance			623				612				662				660				660				634
Visa check fees			1,079				957				1,043				984				962				898
Other income			1,496				1,807				1,287				1,236				1,250				949
Total non-interest income		$	12,215			$	12,419			$	12,247			$	12,242			$	11,493			$	10,974
Non-interest expense:
Salaries and employee benefits		$	16,163			$	16,346			$	15,405			$	15,476			$	15,927			$	15,701
Occupancy expense of premises			2,996				3,182				3,115				3,106				2,943				2,846
Equipment expenses			1,227				1,249				1,189				1,237				1,255				1,190
Marketing			755				515				827				764				565				495
Outside data services			1,114				1,152				836				1,076				1,828				1,279
FDIC insurance			581				596				601				667				653				652
Amortization of intangible assets			461				461				478				476				466				461
Professional fees			1,332				1,250				1,584				1,282				2,156				1,287
Other real estate owned expenses			(281	)			37				316				174				351				64
Other expenses			3,160				3,035				2,868				2,909				2,714				2,708
Total non-interest expense		$	27,508			$	27,823			$	27,219			$	27,167			$	28,858			$	26,683

 

(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; 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

 

		2013								2012
(Dollars in thousands)		Q2				Q1				Q4				Q3				Q2				Q1
Balance sheets at quarter end:
Residential mortgage loans		$	565,282			$	538,346			$	523,364			$	499,806			$	472,426			$	465,204
Residential construction loans			116,736				122,698				120,314				128,606				130,791				122,841
Commercial ADC loans			163,309				150,599				151,933				133,007				151,620				149,814
Commercial investor real estate loans			497,365				487,802				456,888				447,536				443,237				392,626
Commercial owner occupied real estate loans			563,258				565,820				571,510				579,711				579,812				525,022
Commercial business loans			334,979				344,489				346,708				322,087				334,040				253,827
Leasing			1,415				1,974				3,421				4,233				5,618				5,843
Consumer loans			363,114				353,341				356,990				353,999				357,534				356,215
Total loans and leases			2,605,458				2,565,069				2,531,128				2,468,985				2,475,078				2,271,392
Allowance for loan and lease losses			(39,015	)			(41,246	)			(42,957	)			(42,618	)			(45,265	)			(45,061	)
Investment securities			1,102,209				1,008,693				1,075,032				1,074,918				1,006,743				1,067,462
Interest-earning assets			3,802,682				3,660,809				3,669,175				3,614,310				3,584,480				3,416,136
Total assets			4,072,617				3,932,026				3,955,206				3,887,427				3,855,177				3,668,273
Noninterest-bearing demand deposits			877,891				832,679				847,415				818,674				763,566				685,770
Total deposits			2,926,650				2,919,208				2,913,034				2,880,262				2,852,055				2,681,075
Customer repurchase agreements			54,731				50,302				51,929				58,306				64,779				73,130
Total interest-bearing liabilities			2,678,490				2,576,831				2,592,606				2,560,040				2,593,501				2,508,756
Total stockholders' equity			485,643				488,947				483,512				481,810				471,464				451,917
Quarterly average balance sheets:
Residential mortgage loans		$	579,899			$	575,889			$	542,095			$	510,475			$	488,644			$	474,149
Residential construction loans			119,197				120,283				125,640				133,236				125,582				116,630
Commercial ADC loans			160,483				148,749				137,679				142,870				151,374				159,769
Commercial investor real estate loans			485,630				474,062				453,074				445,012				410,258				377,072
Commercial owner occupied real estate loans			561,249				567,723				577,693				580,994				539,590				518,763
Commercial business loans			337,843				347,569				322,501				332,364				284,271				258,099
Leasing			1,644				2,510				3,773				4,858				5,528				6,325
Consumer loans			360,842				357,366				356,452				357,135				359,008				358,783
Total loans and leases			2,606,787				2,594,151				2,518,907				2,506,945				2,364,255				2,269,590
Investment securities			1,047,726				1,051,769				1,072,278				1,038,586				1,052,502				1,086,295
Interest-earning assets			3,692,215				3,677,444				3,639,605				3,599,715				3,453,590				3,389,843
Total assets			3,959,907				3,946,578				3,908,479				3,863,951				3,708,622				3,637,674
Noninterest-bearing demand deposits			838,502				797,926				824,188				774,215				699,638				641,477
Total deposits			2,892,704				2,860,451				2,891,120				2,857,523				2,714,980				2,642,634
Customer repurchase agreements			55,941				52,622				60,941				62,693				66,674				65,195
Total interest-bearing liabilities			2,599,704				2,631,198				2,571,937				2,587,815				2,526,541				2,523,394
Total stockholders' equity			489,014				483,664				482,621				474,231				457,338				448,406
Financial Measures
Average equity to average assets			12.35	%			12.26	%			12.35	%			12.27	%			12.33	%			12.33	%
Investment securities to earning assets			28.99	%			27.55	%			29.30	%			29.74	%			28.09	%			31.25	%
Loans to earnings assets			68.52	%			70.07	%			68.98	%			68.31	%			69.05	%			66.49	%
Loans to assets			63.98	%			65.24	%			63.99	%			63.51	%			64.20	%			61.92	%
Loans to deposits			89.03	%			87.87	%			86.89	%			85.72	%			86.78	%			84.72	%
Capital measures:
Tier 1 leverage			11.28	%			11.07	%			10.98	%			10.99	%			11.21	%			11.05	%
Tier 1 capital to risk-weighted assets			14.30	%			14.23	%			14.15	%			14.31	%			14.12	%			14.89	%
Total regulatory capital to risk-weighted assets			15.55	%			15.48	%			15.40	%			15.56	%			15.36	%			16.14	%
Book value per share		$	19.45			$	19.59			$	19.41			$	19.35			$	18.94			$	18.72
Outstanding shares			24,967,558				24,954,892				24,905,392				24,896,136				24,886,724				24,143,985

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED    

 

		2013								2012
(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		$	15			$	-			$	24			$	44			$	70			$	40
Commercial real estate:
Commercial AD&C			-				-				-				-				342				-
Commercial investor real estate			-				-				-				-				-				-
Commercial owner occupied real estate			-				-				209				-				-				-
Leasing			-				-				-				127				96				-
Consumer			-				54				14				18				5				89
Residential real estate:
Residential mortgage			-				-				-				116				91				167
Residential construction			-				-				-				-				-				-
Total loans and leases 90 days past due			15				54				247				305				604				296
Non-accrual loans and leases:
Commercial business			4,483				4,012				4,611				4,919				4,583				6,542
Commercial real estate:
Commercial AD&C			5,885				5,826				6,332				8,957				13,055				14,303
Commercial investor real estate			11,741				12,353				11,843				12,345				13,327				13,893
Commercial owner occupied real estate			5,413				5,346				13,681				13,742				15,146				16,295
Leasing			-				-				865				834				872				858
Consumer			2,305				2,388				2,410				1,607				1,651				1,700
Residential real estate:
Residential mortgage			5,581				5,393				4,681				3,644				2,600				4,818
Residential construction			2,558				3,258				3,125				3,236				4,333				4,929
Total non-accrual loans and lease			37,966				38,576				47,548				49,284				55,567				63,338
Total restructured loans - accruing			8,213				10,839				10,110				9,277				8,285				8,547
Total non-performing loans and leases			46,194				49,469				57,905				58,866				64,456				72,181
Other assets and real estate owned (OREO)			4,831				5,250				5,926				9,291				9,553				4,834
Total non-performing assets		$	51,025			$	54,719			$	63,831			$	68,157			$	74,009			$	77,015
			For the quarter ended,
			June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)			2013				2013				2012				2012				2012				2012
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period		$	38,576			$	47,548			$	49,284			$	55,567			$	63,338			$	71,680
Non-accrual balances transferred to OREO			(1,426	)			(92	)			(400	)			(232	)			(2,131	)			-
Non-accrual balances charged-off			(668	)			(2,175	)			(979	)			(3,697	)			(1,663	)			(4,965	)
Net payments or draws			(3,560	)			(11,768	)			(3,852	)			(6,342	)			(4,149	)			(5,061	)
Loans placed on non-accrual			5,044				5,493				5,023				3,988				1,261				1,809
Non-accrual loans brought current			-				(430	)			(1,528	)			-				(1,089	)			(125	)
Balance at end of period		$	37,966			$	38,576			$	47,548			$	49,284			$	55,567			$	63,338
Analysis of Allowance for Loan Losses:
Balance at beginning of period		$	41,246			$	42,957			$	42,618			$	45,265			$	45,061			$	49,426
Provision for loan and lease losses			(2,876	)			78				1,168				232				1,585				664
Less loans charged-off, net of recoveries:
Commercial business			(32	)			1,744				(76	)			(225	)			(185	)			(39	)
Commercial real estate:
Commercial AD&C			(1,444	)			(1,020	)			(248	)			1,983				(59	)			1,076
Commercial investor real estate			123				31				110				123				140				3,219
Commercial owner occupied real estate			100				81				-				653				484				-
Leasing			(4	)			-				-				(17	)			(3	)			5
Consumer			490				508				384				111				228				348
Residential real estate:
Residential mortgage			22				447				508				253				713				420
Residential construction			100				(2	)			151				(2	)			63				-
Net charge-offs			(645	)			1,789				829				2,879				1,381				5,029
Balance at end of period		$	39,015			$	41,246			$	42,957			$	42,618			$	45,265			$	45,061
Asset Quality Ratios:
Non-performing loans to total loans			1.77	%			1.93	%			2.29	%			2.38	%			2.60	%			3.18	%
Non-performing assets to total assets			1.25	%			1.39	%			1.61	%			1.75	%			1.92	%			2.10	%
Allowance for loan losses to loans			1.50	%			1.61	%			1.70	%			1.73	%			1.83	%			1.98	%
Allowance for loan losses to non-performing loans			84.46	%			83.38	%			74.18	%			72.40	%			70.23	%			62.43	%
Net charge-offs in quarter to average loans			(0.10	)%			0.28	%			0.13	%			0.46	%			0.23	%			0.89	%

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

		Six Months Ended June 30,
		2013												2012
										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)		$	577,905			$	10,686				3.70	%		$	481,396			$	10,741				4.49	%
Residential construction loans			119,737				2,036				3.43				121,106				2,291				3.80
Commercial ADC loans			154,648				4,102				5.35				155,571				3,890				5.03
Commercial investor real estate loans			479,878				12,319				5.18				393,665				10,764				5.50
Commercial owner occupied real estate loans			564,468				15,103				5.53				529,176				14,784				5.68
Commercial business loans			342,679				9,042				5.18				271,185				6,816				4.93
Leasing			2,075				68				6.53				5,927				193				6.53
Consumer loans			359,114				6,164				3.49				358,896				6,327				3.57
Total loans and leases (3)			2,600,504				59,520				4.64				2,316,922				55,806				4.85
Taxable securities			750,167				8,594				2.29				791,303				10,253				2.59
Tax-exempt securities (4)			299,569				6,524				4.36				278,095				6,784				4.88
Interest-bearing deposits with banks			34,156				43				0.25				34,410				45				0.26
Federal funds sold			475				-				0.22				985				1				0.16
Total interest-earning assets			3,684,871				74,681				4.08				3,421,715				72,889				4.27
Less:  allowance for loan and lease losses			(42,650	)											(48,439	)
Cash and due from banks			46,242												45,470
Premises and equipment, net			47,832												48,820
Other assets			216,984												205,582
Total assets		$	3,953,279											$	3,673,148
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	433,200				183				0.09	%		$	373,741				171				0.09	%
Regular savings deposits			237,467				106				0.09				206,721				104				0.10
Money market savings deposits			883,765				789				0.18				857,020				983				0.23
Time deposits			503,908				1,773				0.71				570,768				2,626				0.93
Total interest-bearing deposits			2,058,340				2,851				0.28				2,008,250				3,884				0.39
Other borrowings			61,132				87				0.29				76,403				112				0.29
Advances from FHLB			460,892				6,412				2.81				405,315				7,173				3.56
Subordinated debentures			35,000				450				2.57				35,000				490				2.80
Total interest-bearing liabilities			2,615,364				9,800				0.76				2,524,968				11,659				0.93
Noninterest-bearing demand deposits			818,326												670,557
Other liabilities			33,235												24,752
Stockholders' equity			486,354												452,871
Total liabilities and stockholders' equity		$	3,953,279											$	3,673,148
Net interest income and spread						$	64,881				3.32	%						$	61,230				3.34	%
Less: tax-equivalent adjustment							2,623												2,716
Net interest income						$	62,258											$	58,514
Interest income/earning assets											4.08	%											4.27	%
Interest expense/earning assets											0.53												0.68
Net interest margin											3.55	%											3.59	%

 

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2013 and  2012. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $2.6 million and $2.7 million in 2013 and 2012, 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          

 

		Three Months Ended June 30,
		2013												2012
										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)		$	579,899			$	5,310				3.68	%		$	488,644			$	5,381				4.43	%
Residential construction loans			119,197				1,032				3.47				125,582				1,190				3.81
Commercial ADC loans			160,483				2,106				5.26				151,374				1,922				5.11
Commercial investor real estate loans			485,630				6,184				5.11				410,258				5,616				5.51
Commercial owner occupied real estate loans			561,249				7,302				5.34				539,590				7,524				5.68
Commercial business loans			337,843				4,456				5.15				284,271				3,665				5.04
Leasing			1,644				30				7.22				5,528				90				6.53
Consumer loans			360,842				3,101				3.47				359,008				3,140				3.54
Total loans and leases (3)			2,606,787				29,521				4.57				2,364,255				28,528				4.86
Taxable securities			746,266				4,289				2.30				772,668				4,980				2.58
Tax-exempt securities (4)			301,460				3,257				4.32				279,834				3,365				4.81
Interest-bearing deposits with banks			37,227				24				0.25				35,949				24				0.27
Federal funds sold			475				-				0.22				884				1				0.18
Total interest-earning assets			3,692,215				37,091				4.03				3,453,590				36,898				4.29
Less:  allowance for loan and lease losses			(41,605	)											(47,312	)
Cash and due from banks			45,603												45,883
Premises and equipment, net			47,501												49,085
Other assets			216,193												207,376
Total assets		$	3,959,907											$	3,708,622
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	442,808				91				0.08	%		$	384,750				84				0.09	%
Regular savings deposits			240,410				58				0.10				212,839				58				0.11
Money market savings deposits			875,282				378				0.17				854,920				471				0.22
Time deposits			495,702				869				0.70				562,833				1,258				0.90
Total interest-bearing deposits			2,054,202				1,396				0.27				2,015,342				1,871				0.37
Other borrowings			56,711				38				0.27				70,928				51				0.29
Advances from FHLB			453,791				3,189				2.82				405,271				3,586				3.56
Subordinated debentures			35,000				224				2.56				35,000				241				2.75
Total interest-bearing liabilities			2,599,704				4,847				0.75				2,526,541				5,749				0.91
Noninterest-bearing demand deposits			838,502												699,638
Other liabilities			32,686												25,105
Stockholders' equity			489,014												457,338
Total liabilities and stockholders' equity		$	3,959,906											$	3,708,622
Net interest income and spread						$	32,244				3.28	%						$	31,149				3.38	%
Less: tax-equivalent adjustment							1,312												1,340
Net interest income						$	30,932											$	29,809
Interest income/earning assets											4.03	%											4.29	%
Interest expense/earning assets											0.52												0.67
Net interest margin											3.51	%											3.62	%

 

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2013 and  2012. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.3 million and $1.3 million in 2013 and 2012, 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.