Exhibit 99.1

 

News release

 

 

 

 

FOR IMMEDIATE RELEASE

 

SANDY SPRING BANCORP REPORTS NET INCOME OF $14.7 MILLION FOR THE SECOND QUARTER

 

OLNEY, MARYLAND, July 20, 2017 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, today reported net income for the second quarter of 2017 of $14.7 million ($0.61 per diluted share) compared to net income of $10.6 million ($0.44 per diluted share) for the second quarter of 2016 and net income of $15.1 million ($0.63 per diluted share) for the first quarter of 2017.

 

“The current quarter reflects strong core performance driven by loan and deposit growth. We continue our efforts to create new and deepen existing client relationships to improve the financial performance of the Company. As part of those efforts, during the current quarter we were extremely pleased to announce a definitive agreement for the acquisition of WashingtonFirst Bankshares, Inc. and its banking unit, WashingtonFirst Bank, a well-regarded bank in northern Virginia. We believe that the creation of the region’s largest locally headquartered community bank will offer complementary products and the best possible experience for our combined clients and greater value to our shareholders,” said Daniel J. Schrider, President and Chief Executive Officer.

  

Second Quarter Highlights:

 

·

Total loans increased 13% compared to the second quarter of 2016 and 4% compared to the first quarter of 2017. These increases were driven primarily by year-over-year growth of 16% in the commercial loan portfolio.

 

·

Total deposits grew 11% from the prior year quarter and 2% from the prior quarter.

 

·

The net interest margin was 3.60% for the second quarter of 2017, compared to 3.51% for the second quarter of 2016 and 3.51% for the first quarter of 2017. The quarter’s margin was positively impacted by an interest income recovery of $0.7 million. Exclusive of this non-core item, the margin would have been 3.54%.

 

·

Return on average common equity increased 32% to 10.80% as compared to 8.21% from the prior year.

 

 

·

On May 16, 2017, the Company announced it had entered into a definitive agreement and plan of merger pursuant to which WashingtonFirst Bankshares, Inc., the parent company for WashingtonFirst Bank, will merge with and into the Company in a transaction valued at approximately $498 million. WashingtonFirst, headquartered in Reston, Virginia, has 19 community banking offices and more than $2.1 billion in assets (as of March 31, 2017).

 

·

The Non-GAAP efficiency ratio was 54.10% for the current quarter as compared to 59.12% for the second quarter of 2016 and 54.78% for the first quarter of 2017.

 

·

Pre-tax, pre-provision income increased 29% compared with the second quarter of 2016.

  

Review of Balance Sheet and Credit Quality

 

At June 30, 2017, total assets were $5.3 billion, an 11% increase compared to $4.7 billion at June 30, 2016. Loan growth continues to be the driver of asset growth as total loans ended the period at $4.1 billion compared to $3.7 billion at June 30, 2016. The growth in the loan portfolio was funded primarily by an 11% increase in total deposits from June 30, 2016 to June 30, 2017.

 

Combined noninterest-bearing and interest-bearing checking account balances at June 30, 2017, an important performance driver of multiple-product banking relationships with clients, increased by 9% compared to balances at June 30, 2016.

 

Tangible common equity totaled $472 million at June 30, 2017, compared to $439 million at June 30, 2016. The ratio of tangible common equity to tangible assets decreased to 9.10% at June 30, 2017, from 9.44% at June 30, 2016, as a result of asset growth over the preceding 12 months. Dividends per common share were $0.26 per share for the second quarter of 2017 compared to $0.24 per share for the second quarter of 2016, an 8% increase. At June 30, 2017, the Company had a total risk-based capital ratio of 12.00%, a common equity tier 1 risk-based capital ratio of 10.96%, a tier 1 risk-based capital ratio of 10.96% and a tier 1 leverage ratio of 9.26%.

 

The level of non-performing loans to total loans decreased to 0.78% at June 30, 2017, compared to 0.85% at June 30, 2016, as a result of the growth in the loan portfolio. Non-performing loans totaled $32.2 million at June 30, 2017, compared to $31.4 million at June 30, 2016, and $30.9 million at March 31, 2017. Non-performing loans include accruing loans 90 days or more past due and restructured loans.

 

Loan charge-offs, net of recoveries, totaled $0.1 million for the second quarter of 2017 compared to $1.3 million for the second quarter of 2016. Charge-offs for the second quarter of 2016 were affected by a single large charge-off related to a residential mortgage loan. The allowance for loan losses represented 1.09% of outstanding loans and 140% of non-performing loans at June 30, 2017, compared to 1.18% of outstanding loans and 138% of non-performing loans at June 30, 2016. The decline in the allowance to outstanding loans ratio is a reflection of improved credit quality and growth of the loan portfolio over the past year.

 

 

Income Statement Review

 

Net interest income for the second quarter of 2017 increased 15% compared to the second quarter of 2016 as average loans from quarter to quarter increased 12%. The net interest margin improved to 3.60% for the second quarter of 2017 compared to 3.51% for the second quarter of 2016. Net interest income for the second quarter of 2017 included $0.7 million from the full payoff during the quarter of a previously acquired credit impaired loan. Exclusive of the recovered interest income, the net interest margin would have been 3.54% based on an adjusted net interest income of $41.6 million. The margin improvement reflects the impact of loan growth, the cumulative benefits associated with the execution of funding strategies and the shift from lower yielding investments to the higher yielding loan portfolio during the past 12 months.

 

The provision for loan losses was $1.3 million for the second quarter of 2017 compared to $3.0 million for the second quarter of 2016 and $0.2 million for the first quarter of 2017. The decrease in the current quarter’s charge versus the prior year’s quarter reflects improved loan portfolio credit quality, which partially offset the effects of loan growth on the provision over the past year.

 

Non-interest income increased to $13.6 million for the second quarter of 2017 compared to $12.8 million for the second quarter of 2016. The second quarter of 2017 included gains of $1.3 million on sales of investment securities. The second quarter of 2016 included a $1.2 million gain on the extinguishment of subordinated debentures and $0.2 million in gains on the sales of investment securities. Excluding these gains, non-interest income increased 8% compared to the prior year quarter due to increases in insurance agency commissions and other non-interest income.

 

Non-interest expenses increased 6% to $32.9 million for the second quarter of 2017 compared to $30.9 million in the second quarter of 2016. The second quarter of 2017 included $1.3 million in penalties on the early payoff of high-rate FHLB advances and $1.0 million in merger expenses. The comparable period for 2016 included $1.4 million in prepayment penalties. Excluding these transactions, non-interest expenses increased 4% compared to the second quarter of 2016 due to merit increases, performance incentives and volume driven compensation costs. The non-GAAP efficiency ratio was 54.10% for the second quarter of 2017 compared to 59.12% for the second quarter of 2016 as a result of the growth in net interest income.

 

Net interest income for the first six months of 2017 increased 13% compared to the first six months of 2016 due primarily to an increase in average loans, which was funded primarily by an 11% increase in average deposits. As a result, the net interest margin was 3.56% for the first six months of 2017 compared to 3.47% for the prior year period. The first six months net interest income included the previously mentioned $0.7 million recovery of interest income. Exclusive of this recovery the net interest margin would have been 3.54%.

 

The provision for loan losses was $1.5 million for the first six months of 2017 compared to $4.2 million for the first six months of 2016 primarily reflecting the growth in the loan portfolio over the prior year period offset by the effects of improved credit quality of the loan portfolio.

  

 

Non-interest income was $26.2 million for the first six months of 2017 compared to $26.1 million for the first six months of 2016. The first six months of 2017 included gains of $1.3 million on sales of investment securities. The same prior year period included a $1.2 million gain on the extinguishment of subordinated debentures and $2.0 million in gains on the sales of investment securities. Excluding these gains, non-interest income increased 8% compared to the prior year period primarily due to increases in insurance agency commissions and other non-interest income.

 

Non-interest expenses decreased 1% to $62.8 million for the first six months of 2017 compared to $63.2 million for the prior year period. For the six months ended June 30, 2017, the decrease in prepayment penalties of $1.9 million for the early payoff of high-rate FHLB advances as compared to the six months ended June 30, 2016, offset increases in salaries and benefits, FDIC insurance due to asset growth and $1.0 million in merger expenses. Excluding the impact of prepayment penalties and merger expenses, non-interest expenses increased 1% over the prior year period. The non-GAAP efficiency ratio decreased to 54.44% for the first six months of 2017 compared to 60.47% for the first six months of 2016 as a direct result of the growth in net interest income.

 

Conference Call

 

The Company’s management will host a conference call to discuss its second quarter results today at 2:00 P.M. (ET). A live 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 1-866-235-9910. 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 3, 2017. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10109345.

 

About Sandy Spring Bancorp, Inc.

 

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

 

For additional information or questions, please contact:

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

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

Sandy Spring Bancorp

17801 Georgia Avenue

Olney, Maryland 20832

1-800-399-5919 

 

 

	Email:	DSchrider@sandyspringbank.com
		PMantua@sandyspringbank.com

Web site: www.sandyspringbank.com

 

Media Contact:

Jen Schell

301-570-8331

jschell@sandyspringbank.com

  

Forward-Looking Statements

 

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

 

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

 

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2016, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s 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)		2017				2016				Change				2017				2016				Change
Results of Operations:
Net interest income		$	42,326			$	36,732				15	%		$	82,579			$	72,854				13	%
Provision for loan losses			1,322				2,957				(55	)			1,516				4,193				(64	)
Non-interest income			13,571				12,751				6				26,203				26,114				-
Non-interest expenses			32,868				30,871				6				62,849				63,188				(1	)
Income before income taxes			21,707				15,655				39				44,417				31,587				41
Net income			14,741				10,647				38				29,853				21,460				39
Pre-tax pre-provision income		$	24,016			$	18,612				29			$	46,920			$	35,780				31
Return on average assets			1.14	%			0.92	%							1.17	%			0.92	%
Return on average common equity			10.80	%			8.21	%							11.12	%			8.25	%
Net interest margin			3.60	%			3.51	%							3.56	%			3.47	%
Efficiency ratio - GAAP basis   (1)			58.80	%			62.39	%							57.78	%			63.85	%
Efficiency ratio - Non-GAAP basis   (1)			54.10	%			59.12	%							54.44	%			60.47	%
Per share data:
Basic net income		$	0.61			$	0.45				36	%		$	1.24			$	0.90				38	%
Diluted net income		$	0.61			$	0.44				39			$	1.23			$	0.89				38
Average fully diluted shares			24,262,745				24,108,668				1				24,258,791				24,165,675				-
Dividends declared per share		$	0.26			$	0.24				8			$	0.52			$	0.48				8
Book value per share			23.13				22.18				4				23.13				22.18				4
Tangible book value per share			19.68				18.40				7				19.68				18.40				7
Outstanding shares			23,983,997				23,874,650				-				23,983,997				23,874,650				-
Financial Condition at period-end:
Investment securities		$	821,491			$	734,828				12	%		$	821,491			$	734,828				12	%
Loans			4,133,171				3,672,624				13				4,133,171				3,672,624				13
Interest-earning assets			4,988,704				4,461,180				12				4,988,704				4,461,180				12
Assets			5,270,521				4,739,449				11				5,270,521				4,739,449				11
Deposits			3,885,445				3,510,141				11				3,885,445				3,510,141				11
Interest-bearing liabilities			3,380,221				2,996,893				13				3,380,221				2,996,893				13
Stockholders' equity			554,683				529,479				5				554,683				529,479				5
Capital ratios:
Tier 1 leverage   (4)			9.26	%			10.29	%							9.26	%			10.29	%
Tier 1 capital to risk-weighted assets   (4)			10.96	%			12.42	%							10.96	%			12.42	%
Total regulatory capital to risk-weighted assets   (4)			12.00	%			13.57	%							12.00	%			13.57	%
Common equity tier 1 capital to risk-weighted assets   (4)			10.96	%			11.63	%							10.96	%			11.63	%
Tangible common equity to tangible assets   (2)			9.10	%			9.44	%							9.10	%			9.44	%
Average equity to average assets			10.52	%			11.18	%							10.50	%			11.18	%
Credit quality ratios:
Allowance for loan losses to loans			1.09	%			1.18	%							1.09	%			1.18	%
Non-performing loans to total loans			0.78	%			0.85	%							0.78	%			0.85	%
Non-performing assets to total assets			0.64	%			0.69	%							0.64	%			0.69	%
Allowance for loan losses to non-performing loans			140.00	%			138.36	%							140.00	%			138.36	%
Annualized net charge-offs to average loans    (3)			0.01	%			0.15	%							0.03	%			0.10	%

 

(1)

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

(2)

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

(3)

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

(4)

Estimated ratio at June 30, 2017

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries                

RECONCILIATION TABLE - UNAUDITED       

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
(Dollars in thousands)		2017				2016				2017				2016
Pre-tax pre-provision income:
Net income		$	14,741			$	10,647			$	29,853			$	21,460
Plus non-GAAP adjustment:
Merger expenses			987				-				987				-
Income taxes			6,966				5,008				14,564				10,127
Provision for loan losses			1,322				2,957				1,516				4,193
Pre-tax pre-provision income		$	24,016			$	18,612			$	46,920			$	35,780
Efficiency ratio - GAAP basis:
Non-interest expenses		$	32,868			$	30,871			$	62,849			$	63,188
Net interest income plus non-interest income		$	55,897			$	49,483			$	108,782			$	98,968
Efficiency ratio - GAAP basis			58.80	%			62.39	%			57.78	%			63.85	%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses		$	32,868			$	30,871			$	62,849			$	63,188
Less non-GAAP adjustment:
Amortization of intangible assets			25				28				51				60
Loss on FHLB Redemption			1,275				1,416				1,275				3,167
Merger expenses			987				-				987				-
Non-interest expenses -  as adjusted		$	30,581			$	29,427			$	60,536			$	59,961
Net interest income plus non-interest income		$	55,897			$	49,483			$	108,782			$	98,968
Plus non-GAAP adjustment:
Tax-equivalent income			1,901				1,640				3,697				3,304
Less non-GAAP adjustments:
Securities gains			1,273				150				1,275				1,919
Gain on redemption of subordinated debentures			-				1,200				-				1,200
Net interest income plus non-interest income - as adjusted		$	56,525			$	49,773			$	111,204			$	99,153
Efficiency ratio - Non-GAAP basis			54.10	%			59.12	%			54.44	%			60.47	%
Tangible common equity ratio:
Total stockholders' equity		$	554,683			$	529,479			$	554,683			$	529,479
Accumulated other comprehensive loss (income)			3,712				(5,886	)			3,712				(5,886	)
Goodwill			(85,768	)			(84,171	)			(85,768	)			(84,171	)
Other intangible assets, net			(629	)			(77	)			(629	)			(77	)
Tangible common equity		$	471,998			$	439,345			$	471,998			$	439,345
Total assets		$	5,270,521			$	4,739,449			$	5,270,521			$	4,739,449
Goodwill			(85,768	)			(84,171	)			(85,768	)			(84,171	)
Other intangible assets, net			(629	)			(77	)			(629	)			(77	)
Tangible assets		$	5,184,124			$	4,655,201			$	5,184,124			$	4,655,201
Tangible common equity ratio			9.10	%			9.44	%			9.10	%			9.44	%
Outstanding common shares			23,983,997				23,874,650				23,983,997				23,874,650
Tangible book value per common share		$	19.68			$	18.40			$	19.68			$	18.40

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries            

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED            

           

		June 30,				December 31,				June 30,
(Dollars in thousands)		2017				2016				2016
Assets
Cash and due from banks		$	48,637			$	53,190			$	53,334
Federal funds sold			2,831				1,953				832
Interest-bearing deposits with banks			25,468				78,982				39,406
Cash and cash equivalents			76,936				134,125				93,572
Residential mortgage loans held for sale (at fair value)			5,743				13,222				13,490
Investments available-for-sale (at fair value)			780,078				733,554				700,486
Other equity securities			41,413				46,094				34,342
Total loans			4,133,171				3,927,808				3,672,624
Less: allowance for loan losses			(45,079	)			(44,067	)			(43,384	)
Net loans			4,088,092				3,883,741				3,629,240
Premises and equipment, net			53,235				53,562				53,055
Other real estate owned			1,460				1,911				1,311
Accrued interest receivable			14,910				14,589				13,399
Goodwill			85,768				85,768				84,171
Other intangible assets, net			629				680				77
Other assets			122,257				124,137				116,306
Total assets		$	5,270,521			$	5,091,383			$	4,739,449
Liabilities
Noninterest-bearing deposits		$	1,302,536			$	1,138,139			$	1,176,135
Interest-bearing deposits			2,582,909				2,439,405				2,334,006
Total deposits			3,885,445				3,577,544				3,510,141
Securities sold under retail repurchase agreements and federal funds purchased			127,312				125,119				117,887
Advances from FHLB			670,000				790,000				515,000
Subordinated debentures			-				30,000				30,000
Accrued interest payable and other liabilities			33,081				35,148				36,942
Total liabilities			4,715,838				4,557,811				4,209,970
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,983,997,
23,901,084 and 23,874,650 at June 30, 2017, December 31, 2016 and June 30, 2016, respectively			23,984				23,901				23,875
Additional paid in capital			166,705				165,871				164,040
Retained earnings			367,706				350,414				335,678
Accumulated other comprehensive income (loss)			(3,712	)			(6,614	)			5,886
Total stockholders' equity			554,683				533,572				529,479
Total liabilities and stockholders' equity		$	5,270,521			$	5,091,383			$	4,739,449

 

 

 

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)		2017				2016				2017				2016
Interest Income:
Interest and fees on loans		$	42,747			$	36,928			$	82,970			$	73,134
Interest on loans held for sale			72				64				154				198
Interest on deposits with banks			91				54				181				107
Interest and dividends on investment securities:
Taxable			3,554				2,840				7,162				6,126
Exempt from federal income taxes			2,106				1,916				4,057				3,889
Interest on federal funds sold			6				1				10				2
Total interest income			48,576				41,803				94,534				83,456
Interest Expense:
Interest on deposits			3,023				2,041				5,511				3,878
Interest on retail repurchase agreements and federal funds purchased			79				72				155				138
Interest on advances from FHLB			3,148				2,739				6,277				6,113
Interest on subordinated debt			-				219				12				473
Total interest expense			6,250				5,071				11,955				10,602
Net interest income			42,326				36,732				82,579				72,854
Provision for loan losses			1,322				2,957				1,516				4,193
Net interest income after provision for loan losses			41,004				33,775				81,063				68,661
Non-interest Income:
Investment securities gains			1,273				150				1,275				1,919
Service charges on deposit accounts			2,017				1,956				3,981				3,859
Mortgage banking activities			840				1,106				1,448				1,641
Wealth management income			4,744				4,448				9,228				8,853
Insurance agency commissions			1,222				949				2,974				2,394
Income from bank owned life insurance			605				615				1,199				1,230
Bank card fees			1,253				1,220				2,398				2,309
Other income			1,617				2,307				3,700				3,909
Total non-interest income			13,571				12,751				26,203				26,114
Non-interest Expenses:
Salaries and employee benefits			18,282				17,221				36,083				35,451
Occupancy expense of premises			3,211				3,162				6,613				6,635
Equipment expenses			1,767				1,693				3,491				3,357
Marketing			776				662				1,439				1,343
Outside data services			1,367				1,355				2,759				2,718
FDIC insurance			823				649				1,628				1,286
Amortization of intangible assets			25				28				51				60
Merger expenses			987				-				987				-
Other expenses			5,630				6,101				9,798				12,338
Total non-interest expenses			32,868				30,871				62,849				63,188
Income before income taxes			21,707				15,655				44,417				31,587
Income tax expense			6,966				5,008				14,564				10,127
Net income		$	14,741			$	10,647			$	29,853			$	21,460
Net Income Per Share Amounts:
Basic net income per share		$	0.61			$	0.45			$	1.24			$	0.90
Diluted net income per share		$	0.61			$	0.44			$	1.23			$	0.89
Dividends declared per share		$	0.26			$	0.24			$	0.52			$	0.48

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries                        

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED                    

    

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

 

(1)

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

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

 

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

 

(1)

Estimated ratio at June 30, 2017

 

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

 

		2017								2016
(Dollars in thousands)		June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
Non-Performing Assets:
Loans 90 days past due:
Commercial business		$	-			$	-			$	-			$	163			$	-			$	-
Commercial real estate:
Commercial AD&C			-				-				-				-				-				-
Commercial investor real estate			-				-				-				-				-				-
Commercial owner occupied real estate			424				-				-				-				-				-
Consumer			4				-				-				-				2				1
Residential real estate:
Residential mortgage			-				232				232				-				-				-
Residential construction			-				-				-				-				-				-
Total loans 90 days past due			428				232				232				163				2				1
Non-accrual loans:
Commercial business			6,807				4,849				5,833				4,140				4,263				3,741
Commercial real estate:
Commercial AD&C			137				137				137				137				137				147
Commercial investor real estate			6,934				7,970				8,107				9,189				8,868				7,885
Commercial owner occupied real estate			4,926				5,106				4,823				5,591				5,678				7,149
Consumer			3,111				3,058				2,859				2,726				2,600				2,715
Residential real estate:
Residential mortgage			7,101				6,908				7,257				7,321				6,186				9,329
Residential construction			187				189				195				199				202				412
Total non-accrual loans			29,203				28,217				29,211				29,303				27,934				31,378
Total restructured loans - accruing			2,569				2,409				2,489				2,512				3,420				4,716
Total non-performing loans			32,200				30,858				31,932				31,978				31,356				36,095
Other assets and real estate owned (OREO)			1,460				1,294				1,911				1,274				1,311				2,414
Total non-performing assets		$	33,660			$	32,152			$	33,843			$	33,252			$	32,667			$	38,509

 

			For the Quarter Ended,
			June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)			2017				2017				2016				2016				2016				2016
Analysis of Non-accrual Loan Activity:
Balance at beginning of period		$	28,217			$	29,211			$	29,303			$	27,934			$	31,378			$	30,031
Non-accrual balances transferred to OREO			(175	)			(113	)			(637	)			(38	)			-				-
Non-accrual balances charged-off			(179	)			(391	)			(390	)			(245	)			(1,305	)			(274	)
Net payments or draws			(1,804	)			(1,382	)			(1,547	)			(525	)			(4,810	)			(914	)
Loans placed on non-accrual			3,144				1,461				2,482				2,486				2,671				2,535
Non-accrual loans brought current			-				(569	)			-				(309	)			-				-
Balance at end of period		$	29,203			$	28,217			$	29,211			$	29,303			$	27,934			$	31,378
Analysis of Allowance for Loan Losses:
Balance at beginning of period		$	43,861			$	44,067			$	43,942			$	43,384			$	41,766			$	40,895
Provision for loan losses			1,322				194				572				781				2,957				1,236
Less loans charged-off, net of recoveries:
Commercial business			107				260				285				95				106				67
Commercial real estate:
Commercial AD&C			(103	)			-				(18	)			(22	)			-				48
Commercial investor real estate			(78	)			(5	)			(9	)			(12	)			(107	)			192
Commercial owner occupied real estate			-				-				-				(1	)			(1	)			(3	)
Consumer			189				167				177				145				364				54
Residential real estate:
Residential mortgage			(3	)			(16	)			18				24				989				15
Residential construction			(8	)			(6	)			(6	)			(6	)			(12	)			(8	)
Net charge-offs			104				400				447				223				1,339				365
Balance at end of period		$	45,079			$	43,861			$	44,067			$	43,942			$	43,384			$	41,766
Asset Quality Ratios:
Non-performing loans to total loans			0.78	%			0.77	%			0.81	%			0.85	%			0.85	%			1.01	%
Non-performing assets to total assets			0.64	%			0.62	%			0.66	%			0.69	%			0.69	%			0.82	%
Allowance for loan losses to loans			1.09	%			1.10	%			1.12	%			1.16	%			1.18	%			1.17	%
Allowance for loan losses to non-performing loans			140.00	%			142.14	%			138.00	%			137.41	%			138.36	%			115.72	%
Annualized net charge-offs to average loans			0.01	%			0.04	%			0.05	%			0.02	%			0.15	%			0.04	%

 

 

  

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

		Three Months Ended June 30,
		2017												2016
										Annualized												Annualized
			Average				(1)				Average				Average				(1)				Average
(Dollars in thousands and tax-equivalent)			Balances				Interest				Yield/Rate				Balances				Interest				Yield/Rate
Assets
Residential mortgage loans		$	860,081			$	7,531				3.50	%		$	811,705			$	6,934				3.42	%
Residential construction loans			169,130				1,579				3.74				142,854				1,268				3.57
Total mortgage loans			1,029,211				9,110				3.54				954,559				8,202				3.44
Commercial AD&C loans			302,924				3,767				4.99				272,090				3,115				4.60
Commercial investor real estate loans			1,010,389				11,280				4.48				788,785				8,988				4.58
Commercial owner occupied real estate loans			776,279				9,981				5.16				684,907				8,280				4.86
Commercial business loans			454,724				5,062				4.46				453,459				4,943				4.38
Total commercial loans			2,544,316				30,090				4.74				2,199,241				25,326				4.63
Consumer loans			461,672				4,171				3.66				449,594				3,885				3.50
Total loans (2)			4,035,199				43,371				4.31				3,603,394				37,413				4.17
Loans held for sale			7,077				72				4.09				8,326				64				3.08
Taxable securities			535,028				3,678				2.75				456,803				2,943				2.58
Tax-exempt securities (3)			307,809				3,259				4.23				282,329				2,968				4.21
Total investment securities			842,837				6,937				3.29				739,132				5,911				3.20
Interest-bearing deposits with banks			34,738				91				1.06				43,300				54				0.50
Federal funds sold			2,538				6				0.96				727				1				0.49
Total interest-earning assets			4,922,389				50,477				4.11				4,394,879				43,443				3.97
Less:  allowance for loan losses			(43,679	)											(42,064	)
Cash and due from banks			47,517												46,527
Premises and equipment, net			53,449												53,218
Other assets			222,722												211,783
Total assets		$	5,202,398											$	4,664,343
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	615,141				123				0.08	%		$	586,323				115				0.08	%
Regular savings deposits			325,634				57				0.07				298,435				47				0.06
Money market savings deposits			983,185				1,076				0.44				907,670				495				0.22
Time deposits			634,824				1,767				1.12				554,707				1,384				1.00
Total interest-bearing deposits			2,558,784				3,023				0.47				2,347,135				2,041				0.35
Other borrowings			132,553				79				0.24				122,601				72				0.24
Advances from FHLB			668,791				3,148				1.89				519,780				2,739				2.12
Subordinated debentures			-				-				-				30,989				219				2.83
Total interest-bearing liabilities			3,360,128				6,250				0.75				3,020,505				5,071				0.68
Noninterest-bearing demand deposits			1,251,396												1,082,762
Other liabilities			43,645												39,689
Stockholders' equity			547,229												521,387
Total liabilities and stockholders' equity		$	5,202,398											$	4,664,343
Net interest income and spread						$	44,227				3.36	%						$	38,372				3.29	%
Less: tax-equivalent adjustment							1,901												1,640
Net interest income						$	42,326											$	36,732
Interest income/earning assets											4.11	%											3.97	%
Interest expense/earning assets											0.51												0.46
Net interest margin											3.60	%											3.51	%

 

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and 2016. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.9 million and $1.6 million in 2017 and 2016, respectively.

(2)

Non-accrual loans are included in the average balances.

(3)

Includes only investments that are exempt from federal taxes.

 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

 

		Six Months Ended June 30,
		2017												2016
										Annualized												Annualized
			Average				(1)				Average				Average				(1)				Average
(Dollars in thousands and tax-equivalent)			Balances				Interest				Yield/Rate				Balances				Interest				Yield/Rate
Assets
Residential mortgage loans		$	854,022			$	14,879				3.48	%		$	809,574			$	13,802				3.41	%
Residential construction loans			163,174				3,015				3.73				138,781				2,463				3.57
Total mortgage loans			1,017,196				17,894				3.52				948,355				16,265				3.43
Commercial AD&C loans			306,604				7,421				4.88				266,888				6,113				4.61
Commercial investor real estate loans			977,915				21,699				4.47				769,803				17,600				4.60
Commercial owner occupied real estate loans			775,625				19,009				4.94				681,347				16,365				4.83
Commercial business loans			458,563				10,069				4.43				457,181				9,956				4.38
Total commercial loans			2,518,707				58,198				4.66				2,175,219				50,034				4.63
Consumer loans			459,927				8,101				3.58				450,335				7,774				3.49
Total loans (2)			3,995,830				84,193				4.24				3,573,909				74,073				4.16
Loans held for sale			7,238				154				4.27				11,181				198				3.54
Taxable securities			534,306				7,413				2.78				490,338				6,356				2.59
Tax-exempt securities (3)			296,323				6,280				4.24				284,524				6,024				4.23
Total investment securities			830,629				13,693				3.30				774,862				12,380				3.20
Interest-bearing deposits with banks			40,038				181				0.91				42,777				107				0.50
Federal funds sold			2,320				10				0.84				608				2				0.48
Total interest-earning assets			4,876,055				98,231				4.05				4,403,337				86,760				3.96
Less:  allowance for loan losses			(43,703	)											(41,567	)
Cash and due from banks			48,165												46,783
Premises and equipment, net			53,548												53,396
Other assets			223,228												212,915
Total assets		$	5,157,293											$	4,674,864
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	612,608				237				0.08	%		$	577,771				223				0.08	%
Regular savings deposits			320,577				106				0.07				294,339				89				0.06
Money market savings deposits			986,625				1,854				0.38				902,352				932				0.21
Time deposits			616,713				3,314				1.08				538,435				2,634				0.98
Total interest-bearing deposits			2,536,523				5,511				0.44				2,312,897				3,878				0.34
Other borrowings			130,531				155				0.24				116,792				138				0.24
Advances from FHLB			699,641				6,277				1.81				599,423				6,113				2.05
Subordinated debentures			829				12				2.91				32,995				473				2.87
Total interest-bearing liabilities			3,367,524				11,955				0.72				3,062,107				10,602				0.70
Noninterest-bearing demand deposits			1,205,809												1,052,116
Other liabilities			42,659												37,793
Stockholders' equity			541,301												522,848
Total liabilities and stockholders' equity		$	5,157,293											$	4,674,864
Net interest income and spread						$	86,276				3.33	%						$	76,158				3.26	%
Less: tax-equivalent adjustment							3,697												3,304
Net interest income						$	82,579											$	72,854
Interest income/earning assets											4.05	%											3.96	%
Interest expense/earning assets											0.49												0.49
Net interest margin											3.56	%											3.47	%

 

(1)

Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and 2016. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $3.7 million and $3.3 million in 2017 and 2016, respectively.

(2)

Non-accrual loans are included in the average balances.

(3)

Includes only investments that are exempt from federal taxes.