10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2019

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                         to ____________

Commission File Number: 0-19065

SANDY SPRING BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	52-1532952
(State of incorporation)	(I.R.S. Employer Identification Number)

17801 Georgia Avenue, Olney, Maryland	20832
(Address of principal executive office)	(Zip Code)

301-774-6400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	SASR	The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.

Yes ☑No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ☐No ☑

The number of outstanding shares of common stock outstanding as of August 7, 2019

Common stock, $1.00 par value – 35,618,558 shares

SANDY SPRING BANCORP, INC.
TABLE OF CONTENTS
		Page
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
	Condensed Consolidated Statements of Condition - Unaudited at
	June 30, 2019 and December 31, 2018	4
	Condensed Consolidated Statements of Income - Unaudited for the Three and Six
	Months Ended June 30, 2019 and 2018	5
	Condensed Consolidated Statements of Comprehensive Income – Unaudited for
	the Three and Six Months Ended June 30, 2019 and 2018	6
	Condensed Consolidated Statements of Cash Flows – Unaudited for the Six
	Months Ended June 30, 2019 and 2018	7
	Condensed Consolidated Statements of Changes in Stockholders’ Equity – Unaudited for the
	Three and Six Months Ended June 30, 2019 and 2018	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
	FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
	ABOUT MARKET RISK	62
Item 4. CONTROLS AND PROCEDURES		62
PART II - OTHER INFORMATION
Item 1.    LEGAL PROCEEDINGS		62
Item 1A. RISK FACTORS		62
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		62
Item 3. DEFAULTS UPON SENIOR SECURITIES		62
Item 4. MINE SAFETY DISCLOSURES		62
Item 5. OTHER INFORMATION		62
Item 6. EXHIBITS		63
SIGNATURES		64

2

Forward-Looking Statements

This Quarterly Report on Form 10-Q, as well as other periodic reports filed with the Securities and Exchange Commission, and written or oral communications made from time to time by or on behalf of Sandy Spring Bancorp and its subsidiaries (the “Company”), may contain statements relating to future events or future results of the Company that are considered “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “intend” and “potential,” or words of similar meaning, or future or conditional verbs such as “should,” “could,” or “may.” Forward-looking statements include statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits.

Forward-looking statements reflect our expectation or prediction of future conditions, events or results based on information currently available. These forward-looking statements are subject to significant risks and uncertainties that may cause actual results to differ materially from those in such statements. These risks and uncertainties include, but are not limited to, the risks identified in Item 1A of the Company’s 2018 Annual Report on Form 10-K, Item 1A of Part II of this report and the following:

general business and economic conditions nationally or in the markets that the Company serves could adversely affect, among other things, real estate prices, unemployment levels, and consumer and business confidence, which could lead to decreases in the demand for loans, deposits and other financial services that we provide and increases in loan delinquencies and defaults;

changes or volatility in the capital markets and interest rates may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our balance sheet as well as our liquidity;

our liquidity requirements could be adversely affected by changes in our assets and liabilities;

our investment securities portfolio is subject to credit risk, market risk, and liquidity risk as well as changes in the estimates we use to value certain of the securities in our portfolio;

the effect of legislative or regulatory developments including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial services industry;

acquisition integration risks, including potential deposit attrition, higher than expected costs, customer loss, business disruption and the inability to realize benefits and costs savings from, and limit any unexpected liabilities associated with, any business combinations;

competitive factors among financial services companies, including product and pricing pressures and our ability to attract, develop and retain qualified banking professionals;

the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the Securities and Exchange Commission, the Public Company Accounting Oversight Board and other regulatory agencies; and

the effect of fiscal and governmental policies of the United States federal government.

Forward-looking statements speak only as of the date of this report. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date of this report or to reflect the occurrence of unanticipated events except as required by federal securities laws.

3

Part I

Item 1. FINANCIAL STATEMENTS

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION – UNAUDITED

			June 30,		December 31,
(Dollars in thousands)			2019		2018
Assets
	Cash and due from banks		$	75,781	$	67,014
	Federal funds sold			583		609
	Interest-bearing deposits with banks			155,312		33,858
		Cash and cash equivalents		231,676		101,481
	Residential mortgage loans held for sale (at fair value)			50,511		22,773
	Investments available-for-sale (at fair value)			901,025		937,335
	Other equity securities			54,690		73,389
	Total loans			6,551,243		6,571,634
		Less: allowance for loan losses		(54,024)		(53,486)
	Net loans			6,497,219		6,518,148
	Premises and equipment, net			60,372		61,942
	Other real estate owned			1,486		1,584
	Accrued interest receivable			26,148		24,609
	Goodwill			347,149		347,149
	Other intangible assets, net			8,813		9,788
	Other assets			219,430		145,074
Total assets			$	8,398,519	$	8,243,272
Liabilities
	Noninterest-bearing deposits		$	2,023,614	$	1,750,319
	Interest-bearing deposits			4,366,135		4,164,561
		Total deposits		6,389,749		5,914,880
	Securities sold under retail repurchase agreements and federal funds purchased			150,604		327,429
	Advances from FHLB			582,768		848,611
	Subordinated debentures			37,353		37,425
	Accrued interest payable and other liabilities			118,600		47,024
		Total liabilities		7,279,074		7,175,369
Stockholders' Equity
	Common stock -- par value $ 1.00 ; shares authorized 100,000,000; shares issued and outstanding 35,614,953
	and 35,530,734 at June 30, 2019 and December 31, 2018, respectively			35,615		35,531
	Additional paid in capital			608,006		606,573
	Retained earnings			479,389		441,553
	Accumulated other comprehensive loss			(3,565)		(15,754)
		Total stockholders' equity		1,119,445		1,067,903
Total liabilities and stockholders' equity			$	8,398,519	$	8,243,272
The accompanying notes are an integral part of these statements

4

SANDY SPRING BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED

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

5

SANDY SPRING BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – UNAUDITED

				Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)				2019		2018		2019		2018
Net income				$	28,276	$	24,399	$	58,593	$	46,064
	Other comprehensive income:
	Investments available-for-sale:
		Net change in unrealized gains/(losses) on investments available-for-sale			7,167		(4,230)		15,981		(16,919)
			Related income tax expense/(benefit)		(1,873)		1,107		(4,179)		4,428
		Net investment gains reclassified into earnings			(5)		-		(5)		(63)
			Related income tax expense		1		-		1		16
			Net effect on other comprehensive income/(loss) for the period		5,290		(3,123)		11,798		(12,538)
	Defined benefit pension plan:
		Recognition of unrealized loss			265		250		530		500
			Related income tax benefit		(70)		(65)		(139)		(184)
			Net effect on other comprehensive income for the period		195		185		391		316
	Total other comprehensive income/(loss)				5,485		(2,938)		12,189		(12,222)
Comprehensive income				$	33,761	$	21,461	$	70,782	$	33,842
The accompanying notes are an integral part of these statements

6

SANDY SPRING BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED

			Six Months Ended June 30,
(Dollars in thousands)			2019		2018
Operating activities:
Net income			$	58,593	$	46,064
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			6,724		6,099
	Provision for loan losses			1,505		3,730
	Stock based compensation expense			1,473		1,250
	Tax benefits associated with share based compensation			57		252
	Deferred income tax expense			1,795		2,358
	Origination of loans held for sale			(299,401)		(186,777)
	Proceeds from sales of loans held for sale			278,290		186,211
	Gains on sales of loans held for sale			(6,627)		(3,674)
	Losses on sales of other real estate owned			173		106
	Investment securities gains			(5)		(63)
	Net increase in accrued interest receivable			(1,540)		(1,211)
	Net increase in other assets			(4,880)		(443)
	Net decrease in accrued expenses and other liabilities			(6,126)		(2,239)
	Other – net			1,162		2,712
		Net cash provided by operating activities		31,193		54,375
Investing activities:
	(Purchases of)/proceeds from other equity securities			18,699		(12,027)
	Purchases of investments available-for-sale			(15,919)		(497)
	Proceeds from sales of investment available-for-sale			-		994
	Proceeds from maturities, calls and principal payments of investments available-for-sale			66,887		52,798
	Net (increase)/ decrease in loans			19,979		(315,872)
	Proceeds from the sales of other real estate owned			324		676
	Proceeds from sales of loans previously held for investment			-		59,945
	Acquisition of business activity, net of cash acquired			-		32,552
	Expenditures for premises and equipment			(2,456)		(6,788)
		Net cash provided by/ (used in) investing activities		87,514		(188,219)
Financing activities:
	Net increase in deposits			474,869		263,322
	Net increase/ (decrease) in retail repurchase agreements and federal funds purchased			(176,825)		13,402
	Proceeds from advances from FHLB			2,123,000		3,920,000
	Repayment of advances from FHLB			(2,388,843)		(3,861,413)
	Proceeds from issuance of common stock			746		829
	Stock tendered for payment of withholding taxes			(702)		(760)
	Dividends paid			(20,757)		(19,268)
		Net cash provided by financing activities		11,488		316,112
Net increase in cash and cash equivalents				130,195		182,268
Cash and cash equivalents at beginning of period				101,481		112,500
Cash and cash equivalents at end of period			$	231,676	$	294,768
Supplemental disclosures:
	Interest payments		$	43,348	$	26,587
	Income tax payments			18,629		11,598
	Transfer from loans to residential mortgage loans held for sale			-		60,043
	Transfer from loans to other real estate owned			414		289
The accompanying notes are an integral part of these statements

7

SANDY SPRING BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY – UNAUDITED

								Accumulated
				Additional				Other		Total
		Common		Paid-In		Retained		Comprehensive		Stockholders’
(Dollars in thousands, except per share data)		Stock		Capital		Earnings		Income (Loss)		Equity
Balances at April 1, 2019		$	35,557	$	607,479	$	461,862	$	(9,050)	$	1,095,848
	Net income		-		-		28,276		-		28,276
	Other comprehensive income, net of tax		-		-		-		5,485		5,485
Common stock dividends - $0.30 per share			-		-		(10,749)		-		(10,749)
Stock compensation expense			-		783		-		-		783
Common stock issued pursuant to:
	Directors stock purchase plan - 867 shares		1		29		-		-		30
	Stock option plan - 4,142 shares		4		91		-		-		95
	Employee stock purchase plan - 10,004 shares		10		268		-		-		278
	Restricted stock - 42,830 shares		43		(644)		-		-		(601)
Balances at June 30, 2019		$	35,615	$	608,006	$	479,389	$	(3,565)	$	1,119,445
Balance at April 1, 2018		$	35,463	$	604,399	$	392,364	$	(17,618)	$	1,014,608
	Net income		-		-		24,399		-		24,399
	Other comprehensive income, net of tax		-		-		-		(2,938)		(2,938)
Common stock dividends - $0.28 per share			-		-		(10,001)		-		(10,001)
Stock compensation expense			-		668		-		-		668
Common stock issued pursuant to:
	Stock option plan - 5,574 shares		6		132		-		-		138
	Employee stock purchase plan - 6,909 shares		7		228		-		-		235
	Restricted stock - 36,191 shares		36		(796)		-		-		(760)
Balances at June 30, 2018		$	35,512	$	604,631	$	406,762	$	(20,556)	$	1,026,349
The accompanying notes are an integral part of these statements

8

SANDY SPRING BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY – UNAUDITED

								Accumulated
				Additional				Other		Total
		Common		Paid-In		Retained		Comprehensive		Stockholders’
(Dollars in thousands, except per share data)		Stock		Capital		Earnings		Income (Loss)		Equity
Balances at January 1, 2019		$	35,531	$	606,573	$	441,553	$	(15,754)	$	1,067,903
	Net income		-		-		58,593		-		58,593
	Other comprehensive income, net of tax		-		-		-		12,189		12,189
Common stock dividends - $0.58 per share			-		-		(20,757)		-		(20,757)
Stock compensation expense			-		1,473		-		-		1,473
Common stock issued pursuant to:
	Directors stock purchase plan - 867 shares		1		29		-		-		30
	Stock option plan - 10,897 shares		11		213		-		-		224
	Employee stock purchase plan - 17,666 shares		17		475		-		-		492
	Restricted stock - 54,789 shares		55		(757)		-		-		(702)
Balances at June 30, 2019		$	35,615	$	608,006	$	479,389	$	(3,565)	$	1,119,445
Balance at January 1, 2018		$	23,996	$	168,188	$	378,489	$	(6,857)	$	563,816
	Net income		-		-		46,064		-		46,064
	Other comprehensive income, net of tax		-		-		-		(12,222)		(12,222)
Common stock dividends - $0.54 per share			-		-		(19,268)		-		(19,268)
Stock compensation expense			-		1,250		-		-		1,250
Common stock issued pursuant to:
	Acquisition of WashingtonFirst - 11,446,197 shares		11,446		435,194		-		-		446,640
	Stock option plan - 17,927 shares		18		352		-		-		370
	Employee stock purchase plan - 13,821 shares		14		445		-		-		459
	Restricted stock - 37,705 shares		38		(798)		-		-		(760)
Reclassification of tax effects from other comprehensive income			-		-		1,477		(1,477)		-
Balances at June 30, 2018		$	35,512	$	604,631	$	406,762	$	(20,556)	$	1,026,349
The accompanying notes are an integral part of these statements

9

Sandy Spring Bancorp, Inc. and Subsidiaries

Notes to the CONDENSED Consolidated Financial Statements - UNAUDITED

Note 1 – Significant Accounting Policies

Nature of Operations

Sandy Spring Bancorp (the “Company”), a Maryland corporation, is the bank holding company for Sandy Spring Bank (the “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. Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc.

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the financial services industry for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements and prevailing practices within the banking industry. The following summary of significant accounting policies of the Company is presented to assist the reader in understanding the financial and other data presented in this report. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for any future periods or for the year ending December 31, 2019. In the opinion of management, all adjustments (comprising only normal recurring accruals) necessary for a fair presentation of the results of the interim periods have been included. Certain reclassifications have been made to prior period amounts, as necessary, to conform to the current period presentation. The Company has evaluated subsequent events through the date of the issuance of its financial statements.

These statements should be read in conjunction with the financial statements and accompanying notes included in the Company’s 2018 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2019. There have been no significant changes to the Company’s accounting policies as disclosed in the 2018 Annual Report on Form 10-K.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Sandy Spring Bank and its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Consolidation has resulted in the elimination of all intercompany accounts and transactions.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, in addition to affecting the reported amounts of revenues earned and expenses incurred during the reporting period. Actual results could differ from those estimates. Estimates that could change significantly relate to the provision for loan losses and the related allowance, determination of impaired loans and the related measurement of impairment, potential impairment of goodwill or other intangible assets, valuation of investment securities and the determination of whether impaired securities are other-than-temporarily impaired, valuation of other real estate owned, valuation of share-based compensation, the assessment that a liability should be recognized with respect to any matters under litigation, the calculation of current and deferred income taxes and the actuarial projections related to pension expense and the related liability.

Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, federal funds sold and interest-bearing deposits with banks (items with stated original maturity of three months or less).

Revenue from Contracts with Customers

The Company’s revenue includes net interest income on financial instruments and non-interest income. Specific categories of revenue are presented in the Condensed Consolidated Statements of Income. Most of the Company’s revenue is not within the scope of Accounting Standard Update (ASU) No. 2014-09 – Revenue from Contracts with Customers. For revenue within the scope of ASU 2014-09, the Company provides services to customers and has related performance obligations. The revenue from such services is recognized upon satisfaction of all contractual performance obligations. The following discusses key revenue streams within the scope of revenue recognition guidance.

Wealth Management Income

10

West Financial Services, Inc., a subsidiary of the Bank, provides comprehensive investment management and financial planning services. Wealth management income is comprised of income for providing trust, estate and investment management services. Trust services include acting as a trustee for corporate or personal trusts. Investment management services include investment management, record-keeping and reporting of security portfolios. Fees for these services are recognized based on a contractually-agreed fixed percentage applied to net assets under management at the end of each reporting period. The Company does not charge/recognize any performance based fees.

Insurance Agency Commissions

Sandy Spring Insurance, a subsidiary of the Bank, performs the function of an insurance intermediary by introducing the policyholder and insurer and is compensated by a commission fee for placement of an insurance policy. Sandy Spring Insurance does not provide any captive management services or any claim handling services. Commission fees are set as a percentage of the premium for the insurance policy for which Sandy Spring Insurance is a producer. The Company recognizes revenue when the insurance policy has been contractually agreed to by the insurer and policyholder (at transaction date).

Service Charges on Deposit Accounts

Service charges on deposit accounts are earned on depository accounts for consumer and commercial account holders and include fees for account and overdraft services. Account services include fees for event-driven services and periodic account maintenance activities. The obligation for event-driven services is satisfied at the time of the event when service is delivered and revenue recognized as earned. Obligation for maintenance activities is satisfied over the course of each month and revenue recognized at month end. Obligation for overdraft services is satisfied at the time of the overdraft and revenue recognized as earned.

Loans Acquired with Deteriorated Credit Quality

Acquired loans with evidence of credit deterioration since their origination as of the date of the acquisition are recorded at their initial fair value. Credit deterioration is determined based on the probability of collection of all contractually required principal and interest payments. The historical allowance for loan losses related to the acquired loans is not carried over to the Company’s financial statements. The determination of credit quality deterioration as of the purchase date may include parameters such as past due and non-accrual status, commercial risk ratings, cash flow projections, type of loan and collateral, collateral value and recent loan-to-value ratios or appraised values. For loans acquired with evidence of credit deterioration, the Company determines at the acquisition date the excess of the loan’s contractually required payments over all cash flows expected to be collected as an amount that should not be accreted into interest income (nonaccretable difference). The remaining amount, representing the difference in the expected cash flows of acquired loans and the initial investment in the acquired loans, is accreted into interest income over the remaining life of the loan or pool of loans (accretable yield). Subsequent to the purchase date, increases in expected cash flows over those expected at the purchase date are recognized prospectively as interest income over the remaining life of the loan as an adjustment to the accretable yield. The present value of any decreases in expected cash flows after the purchase date is recognized as impairment through addition to the valuation allowance.

Leases

The Company determines if an arrangement is a lease at inception. All of the Company’s leases are currently classified as operating leases and are included in other assets and other liabilities on the Company’s Condensed Consolidated Statements of Condition.

Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease arrangements. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the expected future lease payments over the remaining lease term. In determining the present value of future lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The operating ROU assets are adjusted for any lease payments made at or before lease commencement date, initial direct costs and any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease expense is recognized on a straight line basis over the expected lease term. Lease agreements that include lease and non-lease components, such as common area maintenance charges, are accounted for separately.

Adopted Accounting Pronouncements

11

The FASB issued Update No. 2016-02, Leases, in February 2016. From the lessee’s perspective, the new standard requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The Company adopted the standard on January 1, 2019 (“adoption date”) using modified retrospective approach. The Company elected the transition option to apply the provisions of the new standard only as of the beginning of the adoption period and did not restate comparative historical periods presented. The Company also elected a package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification of those leases in existence as of the adoption date.

The standard had a material impact on the Company’s Condensed Consolidated Statements of Condition, but did not have a material impact on Condensed Consolidated Statements of Income. The most significant impact at the adoption date was the recognition of ROU assets and lease liabilities for operating leases which totaled $77.7 million and $85.1 million, respectively. Refer to Note 12 – Leases for other required disclosures.

Pending Accounting Pronouncements

The FASB issued Update No. 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, in March 2017. This guidance is intended to eliminate the current diversity in practice with respect to the amortization period for certain purchased callable debt securities held at a premium. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings. The amendments in this update shorten the amortization period for such callable debt securities held at a premium requiring the premium to be amortized to the earliest call date. This guidance is effective for a public business entity that is a U.S. Securities and Exchange Commission (SEC) filer for its fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. The objective of this guidance is to simplify an entity’s required test for impairment of goodwill by eliminating Step 2 from the goodwill impairment test. In Step 2 an entity measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to determine the fair value at the impairment date of its assets and liabilities, including any unrecognized assets and liabilities, following a procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this Update, an entity should perform its annual or quarterly goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and record an impairment charge for the excess of the carrying amount over the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit and the entity must consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for a public business entity that is an SEC filer for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-13, Current Expected Credit Losses (CECL), in June 2016. This guidance changes the impairment model for most financial assets measured at amortized cost and certain other instruments. Entities will be required to use an expected loss model, replacing the incurred loss model that is currently in use. Under the new guidance, an entity will measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This will result in earlier recognition of loss allowances in most instances. Credit losses related to available-for-sale debt securities (regardless of whether the impairment is considered to be other-than-temporary) will be measured in a manner similar to the present, except that such losses will be recorded as allowances rather than as reductions in the amortized cost of the related securities. With respect to trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures, the guidance requires that an entity estimate its lifetime expected credit loss and record an allowance resulting in the net amount expected to be collected to be reflected as the financial asset. Entities will also be required to provide significantly more disclosures, including information used to track credit quality by year of origination for most financing receivables. This guidance is effective for public business entities for the first interim or annual period beginning after December 15, 2019. The standard’s provisions will be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Early adoption by public business entities is permitted for the first interim or annual period beginning after December 15, 2018. The Company assessed the guidance and has identified the available historical loan level information and completed a data gap analysis. The Company is in process of designing calculation methodologies under the new guidance and quantifying the approximate impact on the Company’s financialposition and results of operations.

12

Note 2 – Investments

Investments available-for-sale

The amortized cost and estimated fair values of investments available-for-sale at the dates indicated are presented in the following table:

			June 30, 2019								December 31, 2018
					Gross		Gross		Estimated				Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(In thousands)			Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. treasuries and government agencies			$	314,564	$	1,072	$	(867)	$	314,769	$	300,338	$	370	$	(4,030)	$	296,678
State and municipal				245,086		4,499		(9)		249,576		280,725		2,080		(781)		282,024
Mortgage-backed and asset-backed				324,394		2,930		(978)		326,346		355,267		653		(7,405)		348,515
Corporate debt				9,100		356		-		9,456		9,100		140		-		9,240
Trust preferred				310		-		-		310		310		-		-		310
	Total debt securities			893,454		8,857		(1,854)		900,457		945,740		3,243		(12,216)		936,767
Marketable equity securities				568		-		-		568		568		-		-		568
		Total investments available-for-sale	$	894,022	$	8,857	$	(1,854)	$	901,025	$	946,308	$	3,243	$	(12,216)	$	937,335

Any unrealized losses in the U.S. treasuries and government agencies, state and municipal, mortgage-backed and asset-backed investment securities at June 30, 2019 are not the result of credit related events but due to changes in interest rates. These declines in fair market value are considered temporary in nature and are expected to recover over time as these securities approach maturity.

The mortgage-backed securities portfolio at June 30, 2019 is composed entirely of either the most senior tranches of GNMA, FNMA or FHLMC collateralized mortgage obligations ($114.2 million), GNMA, FNMA or FHLMC mortgage-backed securities ($164.3 million) and SBA asset-backed securities ($47.8 million). The Company does not intend to sell these securities and has sufficient liquidity to hold these securities for an adequate period of time to allow for any anticipated recovery in fair value.

Gross unrealized losses and fair value by length of time that the individual available-for-sale securities have been in an unrealized loss position at the dates indicated are presented in the following table:

13

		June 30, 2019
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. treasuries and government agencies			12	$	134,475	$	667	$	200	$	867
State and municipal			3		6,065		-		9		9
Mortgage-backed and asset-backed			28		120,081		-		978		978
	Total		43	$	260,621	$	667	$	1,187	$	1,854

		December 31, 2018
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. treasuries and government agencies			33	$	194,135	$	452	$	3,578	$	4,030
State and municipal			80		78,232		569		212		781
Mortgage-backed and asset-backed			110		308,254		1,592		5,813		7,405
	Total		223	$	580,621	$	2,613	$	9,603	$	12,216

The amortized cost and estimated fair values of debt securities available-for-sale by contractual maturity at the dates indicated are provided in the following table. The Company has allocated mortgage-backed securities into the four maturity groupings reflected in the following table using the expected average life of the individual securities based on statistics provided by independent third party industry sources. Expected maturities will differ from contractual maturities as borrowers may have the right to prepay obligations with or without prepayment penalties.

		June 30, 2019				December 31, 2018
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less		$	64,147	$	64,455	$	63,482	$	63,747
Due after one year through five years			278,728		281,339		277,297		276,830
Due after five years through ten years			172,732		175,655		212,825		210,386
Due after ten years			377,847		379,008		392,136		385,804
	Total debt securities available for sale	$	893,454	$	900,457	$	945,740	$	936,767

At June 30, 2019 and December 31, 2018, investments available-for-sale with a book value of $467.6 million and $477.3 million, respectively, were pledged as collateral for certain government deposits and for other purposes as required or permitted by law. The outstanding balance of no single issuer, except for U.S. Agencies securities, exceeded ten percent of stockholders' equity at June 30, 2019 and December 31, 2018.

Equity securities

Other equity securities at the dates indicated are presented in the following table:

(In thousands)		June 30, 2019		December 31, 2018
Federal Reserve Bank stock		$	22,515	$	22,456
Federal Home Loan Bank of Atlanta stock			32,175		50,933
	Total equity securities	$	54,690	$	73,389

Note 3 – LOANS

Outstanding loan balances at June 30, 2019 and December 31, 2018 are net of unearned income including net deferred loan fees of $0.6 million and $0.9 million, respectively. The loan portfolio segment balances at the dates indicated are presented in the following table:

14

(In thousands)		June 30, 2019		December 31, 2018
Residential real estate:
	Residential mortgage	$	1,241,081	$	1,228,247
	Residential construction		171,106		186,785
Commercial real estate:
	Commercial owner occupied real estate		1,224,986		1,202,903
	Commercial investor real estate		1,994,027		1,958,395
	Commercial AD&C		658,709		681,201
Commercial business			772,158		796,264
Consumer			489,176		517,839
	Total loans	$	6,551,243	$	6,571,634

The fair value of the financial assets acquired in the Company’s acquisition of WashingtonFirst Bancshares, Inc. (“WashingtonFirst”) on January 1, 2018 included loans receivable with a gross amortized cost basis of $1.7 billion. The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired. Interest and credit fair value adjustments related to loans acquired without evidence of credit quality deterioration are accreted or amortized into interest income over the remaining expected lives of the loans. The specific credit adjustment on acquired credit impaired loans includes accretable and non-accretable components. Of the $14.5 million specific credit mark on acquired credit impaired loans, approximately $4.0 million was estimated to be an accretable adjustment recognized over the remaining expected lives of the loans and $10.5 million was estimated to be non-accretable adjustment.

In conjunction with the WashingtonFirst acquisition, the acquired loan portfolio was accounted for at fair value as follows:

(Dollars in thousands)	January 1, 2018
Gross amortized cost basis at January 1, 2018	$	1,697,760
Interest rate fair value adjustment		15,370
Credit fair value adjustment on pools of homogeneous loans		(22,421)
Credit fair value adjustment on purchased credit impaired loans		(14,518)
Fair value of acquired loan portfolio at January 1, 2018	$	1,676,191

The following table presents the acquired credit impaired loans receivable as of January 1, 2018 (the “Acquisition Date”):

(Dollars in thousands)	January 1, 2018
Contractual principal and interest at acquisition	$	49,412
Contractual cash flows not expected to be collected (Nonaccretable yield)		(17,915)
Expected cash flows at acquisition		31,497
Interest component of expected cash flows (Accretable yield)		(3,988)
Fair value of purchased credit impaired loans	$	27,509

The outstanding balance of purchased credit impaired loans receivable totaled $41.9 million, $26.0 million and $13.2 million at January 1, 2018, December 31, 2018 and June 30, 2019, respectively. The fair value of purchased credit impaired loans was $9.7 million and $15.3 million at June 30, 2019 and December 31, 2018, respectively. The decrease in the outstanding amounts of purchased credit impaired loans receivable from the acquisition date through the current period was driven by the efforts of credit management function to resolve the most material credit deteriorated borrowers. During 2018, liquidation of the collateral resulted in full pay-off of the outstanding principal balances of $12.4 million and the related release of accretable and non-accretable adjustments into interest income in the total amounts of $0.9 million and $1.3 million, respectively. During the current year to date, the Company settled additional purchased credit impaired loans with total outstanding balances of $5.8 million resulting in the related release of accretable and non-accretable adjustments into interest income in the total amounts of $0.2 million and $1.6 million, respectively. During the current quarter, the Company completed the charge-off of a purchased credit impaired loan with a total outstanding balance of $4.1 million. This charge-off did not result in any associated impact to the valuation allowance due to adequacy of non-accretable discount.

Activity for the accretable yield since the Acquisition Date was as follows:

15

	For the Period Ended,
(Dollars in thousands)	June 30, 2019		December 31, 2018
Accretable yield at the beginning of the period	$	1,279	$	-
Addition of accretable yield due to acquisition		-		3,988
Accretion into interest income		(664)		(1,860)
Disposals (including maturities, foreclosures, and charge-offs)		(199)		(849)
Accretable yield at the end of the period.	$	416	$	1,279

Note 4 – CREDIT QUALITY ASSESSMENT

Allowance for Loan Losses

Summary information on the allowance for loan loss activity for the period indicated is provided in the following table:

			Six Months Ended June 30,
(In thousands)			2019		2018
Balance at beginning of year			$	53,486	$	45,257
	Provision for loan losses			1,505		3,730
	Loan charge-offs			(1,197)		(818)
	Loan recoveries			230		324
		Net charge-offs		(967)		(494)
Balance at period end			$	54,024	$	48,493

The following tables provide information on the activity in the allowance for loan losses by the respective loan portfolio segment for the period indicated:

		For the Six Months Ended June 30, 2019
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	11,377	$	5,944	$	17,603	$	6,307	$	2,113	$	8,881	$	1,261	$	53,486
Provision (credit)			(61)		474		1,070		(212)		153		297		(216)		1,505
Charge-offs			(776)		-		-		-		(308)		(113)		-		(1,197)
Recoveries			34		4		10		-		144		34		4		230
	Net recoveries (charge-offs)		(742)		4		10		-		(164)		(79)		4		(967)
Balance at end of period		$	10,574	$	6,422	$	18,683	$	6,095	$	2,102	$	9,099	$	1,049	$	54,024
Total loans		$	772,158	$	658,709	$	1,994,027	$	1,224,986	$	489,176	$	1,241,081	$	171,106	$	6,551,243
Allowance for loans losses to total loans ratio			1.37%		0.97%		0.94%		0.50%		0.43%		0.73%		0.61%		0.82%
Balance of loans specifically evaluated for impairment		$	7,347	$	1,990	$	7,184	$	3,766		na.	$	1,370	$	-	$	21,657
Allowance for loans specifically evaluated for impairment		$	2,945	$	393	$	1,413	$	26		na.	$	-	$	-	$	4,777
Specific allowance to specific loans ratio			40.08%		-		19.67%		0.69%		na.		-		-		22.06%
Balance of loans collectively evaluated		$	762,100	$	656,719	$	1,977,069	$	1,221,220	$	488,068	$	1,239,702	$	171,106	$	6,515,984
Allowance for loans collectively evaluated		$	7,629	$	6,029	$	17,270	$	6,069	$	2,102	$	9,099	$	1,049	$	49,247
Collective allowance to collective loans ratio			1.00%		0.92%		0.87%		0.50%		0.43%		0.73%		0.61%		0.76%
Balance of loans acquired with deteriorated credit quality		$	2,711	$	-	$	9,774	$	-	$	1,108	$	9	$	-	$	13,602
Allowance for loans acquired with deteriorated credit quality		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Allowance to loans acquired with deteriorated credit quality ratio			-		-		-		-		-		-		-		-

16

		For the Year Ended December 31, 2018
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	8,711	$	3,501	$	14,970	$	7,178	$	2,383	$	7,268	$	1,246	$	45,257
Provision (credit)			2,857		2,381		2,677		(871)		203		1,776		-		9,023
Charge-offs			(449)		-		(131)		-		(611)		(225)		-		(1,416)
Recoveries			258		62		87		-		138		62		15		622
	Net recoveries (charge-offs)		(191)		62		(44)		-		(473)		(163)		15		(794)
Balance at end of period		$	11,377	$	5,944	$	17,603	$	6,307	$	2,113	$	8,881	$	1,261	$	53,486
Total loans		$	796,264	$	681,201	$	1,958,395	$	1,202,903	$	517,839	$	1,228,247	$	186,785	$	6,571,634
Allowance for loan losses to total loans ratio			1.43%		0.87%		0.90%		0.52%		0.41%		0.72%		0.68%		0.81%
Balance of loans specifically evaluated for impairment		$	7,586	$	3,306	$	5,355	$	4,234		na.	$	1,729	$	-	$	22,210
Allowance for loans specifically evaluated for impairment		$	3,594	$	-	$	1,207	$	123		na.	$	-	$	-	$	4,924
Specific allowance to specific loans ratio			47.38%		-		22.54%		2.91%		na.		-		-		22.17%
Balance of loans collectively evaluated		$	780,523	$	677,895	$	1,938,712	$	1,196,487	$	516,567	$	1,226,508	$	186,785	$	6,523,477
Allowance for loans collectively evaluated		$	7,783	$	5,944	$	16,396	$	6,184	$	2,113	$	8,881	$	1,261	$	48,562
Collective allowance to collective loans ratio			1.00%		0.88%		0.85%		0.52%		0.41%		0.72%		0.68%		0.74%
Balance of loans acquired with deteriorated credit quality		$	8,155	$	-	$	14,328	$	2,182	$	1,272	$	10	$	-	$	25,947
Allowance for loans acquired with deteriorated credit quality		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Allowance to loan acquired with deteriorated credit quality ratio			-		-		-		-		-		-		-		-

The following table provides summary information regarding impaired loans at the dates indicated and for the periods then ended:

(In thousands)		June 30, 2019		December 31, 2018
Impaired loans with a specific allowance		$	14,498	$	12,876
Impaired loans without a specific allowance			7,159		9,334
	Total impaired loans	$	21,657	$	22,210
Allowance for loan losses related to impaired loans		$	4,777	$	4,924
Allowance for loan losses related to loans collectively evaluated			49,247		48,562
	Total allowance for loan losses	$	54,024	$	53,486
Average impaired loans for the period		$	23,335	$	20,211
Contractual interest income due on impaired loans during the period		$	1,313	$	2,513
Interest income on impaired loans recognized on a cash basis		$	267	$	506
Interest income on impaired loans recognized on an accrual basis		$	78	$	138

The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the principal balance of the impaired loans prior to amounts charged-off at the dates indicated:

17

			June 30, 2019
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	4,034	$	1,261	$	5,468	$	767	$	-	$	11,530
		Restructured accruing		102		-		-		-		-		102
		Restructured non-accruing		1,957		-		782		127		-		2,866
	Balance		$	6,093	$	1,261	$	6,250	$	894	$	-	$	14,498
	Allowance		$	2,945	$	393	$	1,413	$	26	$	-	$	4,777
Impaired loans without a specific allowance
		Non-accruing	$	169	$	729	$	159	$	1,053	$	-	$	2,110
		Restructured accruing		162		-		775		-		1,094		2,031
		Restructured non-accruing		923		-		-		1,819		276		3,018
	Balance		$	1,254	$	729	$	934	$	2,872	$	1,370	$	7,159
Total impaired loans
		Non-accruing	$	4,203	$	1,990	$	5,627	$	1,820	$	-	$	13,640
		Restructured accruing		264		-		775		-		1,094		2,133
		Restructured non-accruing		2,880		-		782		1,946		276		5,884
	Balance		$	7,347	$	1,990	$	7,184	$	3,766	$	1,370	$	21,657
Unpaid principal balance in total impaired loans			$	9,840	$	1,990	$	11,744	$	5,598	$	2,725	$	31,897

	June 30, 2019
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	7,740	$	2,867	$	6,461	$	4,664	$	1,603	$	23,335
Contractual interest income due on impaired loans during the period	$	506	$	240	$	358	$	145	$	64
Interest income on impaired loans recognized on a cash basis	$	154	$	-	$	12	$	94	$	7
Interest income on impaired loans recognized on an accrual basis	$	25	$	-	$	19	$	-	$	34

18

			December 31, 2018
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	4,126	$	-	$	5,117	$	767	$	-	$	10,010
		Restructured accruing		328		-		-		-		-		328
		Restructured non-accruing		1,766		-		-		772		-		2,538
	Balance		$	6,220	$	-	$	5,117	$	1,539	$	-	$	12,876
	Allowance		$	3,594	$	-	$	1,207	$	123	$	-	$	4,924
Impaired loans without a specific allowance
		Non-accruing	$	220	$	3,170	$	238	$	1,216	$	-	$	4,844
		Restructured accruing		172		-		-		-		1,442		1,614
		Restructured non-accruing		974		136		-		1,479		287		2,876
	Balance		$	1,366	$	3,306	$	238	$	2,695	$	1,729	$	9,334
Total impaired loans
		Non-accruing	$	4,346	$	3,170	$	5,355	$	1,983	$	-	$	14,854
		Restructured accruing		500		-		-		-		1,442		1,942
		Restructured non-accruing		2,740		136		-		2,251		287		5,414
	Balance		$	7,586	$	3,306	$	5,355	$	4,234	$	1,729	$	22,210
Unpaid principal balance in total impaired loans			$	11,056	$	4,419	$	9,909	$	6,656	$	3,081	$	35,121

	December 31, 2018
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	7,685	$	770	$	5,696	$	3,823	$	2,237	$	20,211
Contractual interest income due on impaired loans during the period	$	858	$	495	$	610	$	407	$	143
Interest income on impaired loans recognized on a cash basis	$	215	$	-	$	20	$	175	$	96
Interest income on impaired loans recognized on an accrual basis	$	63	$	-	$	-	$	-	$	75

19

Credit Quality

The following tables provide information on the credit quality of the loan portfolio by segment at the dates indicated:

		June 30, 2019
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans (1)	$	7,083	$	1,990	$	6,409	$	3,766	$	4,439	$	10,625	$	-	$	34,312
	Loans 90 days past due		-		-		1,248		-		-		-		-		1,248
	Restructured loans		264		-		775		-		-		1,094		-		2,133
Total non-performing loans			7,347		1,990		8,432		3,766		4,439		11,719		-		37,693
	Other real estate owned		39		665		409		-		64		309		-		1,486
Total non-performing assets		$	7,386	$	2,655	$	8,841	$	3,766	$	4,503	$	12,028	$	-	$	39,179
(1) Includes $4.3 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

		December 31, 2018
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans (1)	$	7,086	$	3,306	$	5,355	$	4,234	$	4,107	$	9,336	$	159	$	33,583
	Loans 90 days past due		49		-		-		-		219		221		-		489
	Restructured loans		500		-		-		-		-		1,442		-		1,942
Total non-performing loans			7,635		3,306		5,355		4,234		4,326		10,999		159		36,014
	Other real estate owned		39		315		409		-		-		821		-		1,584
Total non-performing assets		$	7,674	$	3,621	$	5,764	$	4,234	$	4,326	$	11,820	$	159	$	37,598
(1) Includes $4.8 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

			June 30, 2019
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	2,855	$	3,790	$	2,244	$	385	$	1,513	$	11,009	$	2,386	$	24,182
	61-90 days			2,958		-		169		711		1,200		2,567		477		8,082
	> 90 days			-		-		1,248		-		-		-		-		1,248
		Total past due		5,813		3,790		3,661		1,096		2,713		13,576		2,863		33,512
	Non-accrual loans (1)			7,083		1,990		6,409		3,766		4,439		10,625		-		34,312
	Loans acquired with deteriorated credit quality			2,711		-		9,774		-		1,108		9		-		13,602
	Current loans			756,551		652,929		1,974,183		1,220,124		480,916		1,216,871		168,243		6,469,817
		Total loans	$	772,158	$	658,709	$	1,994,027	$	1,224,986	$	489,176	$	1,241,081	$	171,106	$	6,551,243
(1) Includes $4.3 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

20

			December 31, 2018
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	2,737	$	474	$	3,041	$	433	$	3,871	$	8,181	$	3,226	$	21,963
	61-90 days			-		-		789		-		1,477		2,517		-		4,783
	> 90 days			49		-		-		-		219		221		-		489
		Total past due		2,786		474		3,830		433		5,567		10,919		3,226		27,235
	Non-accrual loans (1)			7,086		3,306		5,355		4,234		4,107		9,336		159		33,583
	Loans acquired with deteriorated credit quality			8,155		-		14,328		2,182		1,272		10		-		25,947
	Current loans			778,237		677,421		1,934,882		1,196,054		506,893		1,207,982		183,400		6,484,869
		Total loans	$	796,264	$	681,201	$	1,958,395	$	1,202,903	$	517,839	$	1,228,247	$	186,785	$	6,571,634
(1) Includes $4.8 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at the dates indicated:

		June 30, 2019
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	752,645	$	656,719	$	1,972,903	$	1,214,105	$	4,596,372
	Special Mention (1)		5,111		-		3,910		3,117		12,138
	Substandard (2)		14,402		1,990		17,214		7,764		41,370
	Doubtful		-		-		-		-		-
Total		$	772,158	$	658,709	$	1,994,027	$	1,224,986	$	4,649,880
(1) Includes $2.0 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.
(2) Includes $12.1 million of purchased credit impaired loans acquired from WashingtonFirst and $8.1 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

		December 31, 2018
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	773,958	$	677,574	$	1,934,886	$	1,189,903	$	4,576,321
	Special Mention (1)		1,942		321		3,826		2,738		8,827
	Substandard (2)		20,364		3,306		19,683		10,262		53,615
	Doubtful		-		-		-		-		-
Total		$	796,264	$	681,201	$	1,958,395	$	1,202,903	$	4,638,763
(1) Includes $4.2 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.
(2) Includes $24.3 million of purchased credit impaired loans acquired from WashingtonFirst and $7.2 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at the dates indicated:

21

			June 30, 2019
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	484,737	$	1,229,362	$	171,106	$	1,885,205
	Non-performing:
		90 days past due		-		-		-		-
		Non-accruing (1)		4,439		10,625		-		15,064
		Restructured loans		-		1,094		-		1,094
Total			$	489,176	$	1,241,081	$	171,106	$	1,901,363
(1) Includes $1.2 million of consumer loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

			December 31, 2018
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	513,513	$	1,217,248	$	186,626	$	1,917,387
	Non-performing:
		90 days past due		219		221		-		440
		Non-accruing (1)		4,107		9,336		159		13,602
		Restructured loans		-		1,442		-		1,442
Total			$	517,839	$	1,228,247	$	186,785	$	1,932,871
(1) Includes $1.3 million of consumer loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

During the six months ended June 30, 2019, the Company restructured $1.8 million in loans that were designated as troubled debt restructurings. No modifications resulted in the reduction of the principal in the associated loan balances. Restructured loans are subject to periodic credit reviews to determine the necessity and adequacy of a specific loan loss allowance based on the collectability of the recorded investment in the restructured loan. Loans restructured during the six months ended June 30, 2019 had specific reserves of $0.4 million. For the year ended December 31, 2018, the Company restructured $1.6 million in loans. Modifications consisted principally of interest rate concessions and no modifications resulted in the reduction of the recorded investment in the associated loan balances. Loans restructured during 2018 had specific reserves of $0.6 million at December 31, 2018. The commitments to lend additional funds on loans that have been restructured at June 30, 2019 and December 31, 2018 were not significant.

The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated:

		For the Six Months Ended June 30, 2019
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	-	$	-	$	775	$	-	$	-	$	775
	Restructured non-accruing		254		-		782		-		-		1,036
Balance		$	254	$	-	$	1,557	$	-	$	-	$	1,811
Specific allowance		$	204	$	-	$	202	$	-	$	-	$	406
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

22

		For the Year Ended December 31, 2018
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	-	$	-	$	-	$	-	$	-	$	-
	Restructured non-accruing		1,464		-		-		158		-		1,622
Balance		$	1,464	$	-	$	-	$	158	$	-	$	1,622
Specific allowance		$	563	$	-	$	-	$	-	$	-	$	563
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

Other Real Estate OwnedOther real estate owned totaled $1.5 million and $1.6 million at June 30, 2019 and December 31, 2018, respectively. There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of June 30, 2019.

Note 5 – Goodwill and Other Intangible Assets

The gross carrying amounts and accumulated amortization of intangible assets and goodwill are presented at the dates indicated in the following table:

		June 30, 2019						Weighted		December 31, 2018						Weighted
		Gross				Net		Average		Gross				Net		Average
		Carrying		Accumulated		Carrying		Remaining		Carrying		Accumulated		Carrying		Remaining
(Dollars in thousands)		Amount		Amortization		Amount		Life		Amount		Amortization		Amount		Life
Amortizing intangible assets:
Core deposit intangibles		$	10,678	$	(2,815)	$	7,863	8.5	years	$	10,678	$	(1,941)	$	8,737	9.0	years
Other identifiable intangibles			1,478		(528)		950	10.2	years		1,478		(427)		1,051	10.6	years
	Total amortizing intangible assets	$	12,156	$	(3,343)	$	8,813			$	12,156	$	(2,368)	$	9,788
Goodwill		$	347,149			$	347,149			$	347,149			$	347,149

The amount of goodwill by reportable segment is presented in the following table:

		Community				Investment
(Dollars in thousands)		Banking		Insurance		Management		Total
Balance December 31, 2018	$	331,173	$	6,788	$	9,188	$	347,149
No Activity		-		-		-		-
Balance June 30, 2019	$	331,173	$	6,788	$	9,188	$	347,149

The following table presents the estimated future amortization expense for amortizing intangible assets within the years ending December 31:

(In thousands)		Amount
2019		$	969
2020			1,720
2021			1,507
2022			1,295
Thereafter			3,322
	Total amortizing intangible assets	$	8,813

Note 6 – Deposits

The following table presents the composition of deposits at the dates indicated:

23

(In thousands)				June 30, 2019		December 31, 2018
Noninterest-bearing deposits				$	2,023,614	$	1,750,319
Interest-bearing deposits:
	Demand				721,389		703,145
	Money market savings				1,705,164		1,605,024
	Regular savings				331,164		330,231
	Time deposits of less than $100,000				456,520		427,421
	Time deposits of $100,000 or more				1,151,898		1,098,740
		Total interest-bearing deposits			4,366,135		4,164,561
			Total deposits	$	6,389,749	$	5,914,880

Note 7 – SUBORDINATED DEBENTURES

In conjunction with the acquisition of WashingtonFirst, the Company assumed $25.0 million in non-callable subordinated debt and $10.3 million in callable junior subordinated debt securities. The associated purchase premiums at acquisition were $2.2 million and $0.1 million, respectively. The premiums are amortized over the contractual life of each obligation.

The subordinated debt has a maturity of ten years, is due in full on October 15, 2025, is non-callable and currently bears a fixed interest rate of 6.00% per annum, payable quarterly, subject to a reset after 5 years (on October 5, 2020) at 3 month LIBOR plus 467 basis points. The entire amount of subordinated debt is considered Tier 2 capital under current regulatory guidelines.

In 2003, Alliance Bankshares Corporation, which was acquired by WashingtonFirst in 2012, issued $10.3 million of junior subordinated debt securities to Alliance Virginia Capital Trust I, of which Alliance Bankshares Corporation owned all of the common securities. The trust used the proceeds from the issuance of its underlying common securities and preferred securities, which were sold to third parties, to purchase the debt securities. These debt securities are the trust’s only assets and the interest payments from the debentures finance the distributions paid on the preferred securities. The obligations under the debt securities were assumed by the Company at the date of acquisition of WashingtonFirst. The debt securities are due on June 30, 2033 and are callable at any time, without penalty. The interest rate associated with the debt securities is three month LIBOR plus 3.15% subject to quarterly interest rate adjustments. The interest rate as of June 30, 2019 was 5.47%. Under the indenture governing the debt securities, the Company has the right to defer payments of interest for up to twenty consecutive quarterly periods. During any such extension period, distributions on the trust’s preferred securities will also be deferred, and the Company’s ability to pay dividends on its common stock will be restricted. The trust’s preferred securities are mandatorily redeemable upon maturity of the debt securities, or upon earlier redemption as provided in the indenture. If the debt securities are redeemed prior to maturity, the redemption price will be the principal amount and any accrued but unpaid interest. The Company unconditionally guarantees payment of accrued and unpaid distributions required to be paid on the trust securities subject to certain exceptions, the redemption price with respect to any trust securities called for redemption and amounts due if the trust is liquidated or terminated. As of June 30, 2019, the Company was current on all interest payments. Under current regulatory guidelines the trust preferred securities are considered to be Tier 1 capital.

The following table provides information on subordinated debentures as the date indicated:

(In thousands)		June 30, 2019		December 31, 2018
Subordinated debentures		$	25,000	$	25,000
	Add: Purchase accounting premium		1,954		2,023
Trust preferred securities			10,310		10,310
	Add: Purchase accounting premium		89		92
Total subordinated debentures		$	37,353	$	37,425

Note 8 – Share Based Compensation

At June 30, 2019, the Company had two share based compensation plans in existence, the 2005 Omnibus Stock Plan (“Omnibus Stock Plan”) and the 2015 Omnibus Incentive Plan (“Omnibus Incentive Plan”). The Omnibus Stock Plan expired during the second quarter of 2015 but has outstanding options that may still be exercised. The Omnibus Incentive Plan is described in the following paragraph.

24

The Company’s Omnibus Incentive Plan was approved on May 6, 2015 and provides for the granting of incentive stock options, non-qualifying stock options, stock appreciation rights, restricted stock grants, restricted stock units and performance awards to selected directors and employees on a periodic basis at the discretion of the board. The Omnibus Incentive Plan authorizes the issuance of up to 1,500,000 shares of common stock, of which 1,153,936 are available for issuance at June 30, 2019, has a term of ten years, and is administered by a committee of at least three directors appointed by the board of directors. Options granted under the plan have an exercise price which may not be less than 100% of the fair market value of the common stock on the date of the grant and must be exercised within seven to ten years from the date of grant. The exercise price of stock options must be paid for in full in cash or shares of common stock, or a combination of both. The board committee has the discretion when making a grant of stock options to impose restrictions on the shares to be purchased upon the exercise of such options. The Company generally issues authorized but previously unissued shares to satisfy option exercises.

The fair values of all of the options granted for the periods indicated have been estimated using a binomial option-pricing moddel. The weighted-average assumptions for the periods shown are presented in the following table:

	Six Months Ended June 30,
	2019		2018
Dividend yield	-	%	2.64	%
Weighted average expected volatility	-	%	39.13	%
Weighted average risk-free interest rate	-	%	2.61	%
Weighted average expected lives (in years)	-		5.61
Weighted average grant-date fair value	-		$11.73

The dividend yield is based on estimated future dividend yields. The risk-free rate for periods within the contractual term of the share option is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatilities are generally based on historical volatilities. The expected term of share options granted is generally derived from historical experience.

Compensation expense is recognized on a straight-line basis over the vesting period of the respective stock option or restricted stock grant. The Company recognized compensation expense of $0.7 million and $0.6 million for the three months ended June 30, 2019 and 2018, respectively, related to the awards of stock options and restricted stock grants. Compensation expense of $1.4 million and $1.1 million was recognized for the six months ended June 30, 2019 and 2018, respectively. The intrinsic value of stock options exercised in the six months ended June 30, 2019 and 2018 was $0.1 million and $0.3 million, respectively. The total of unrecognized compensation cost related to stock options was approximately $0.1 million as of June 30, 2019. That cost is expected to be recognized over a weighted average period of approximately 1.5years. The total of unrecognized compensation cost related to restricted stock was approximately $6.8 million as of June 30, 2019. That cost is expected to be recognized over a weighted average period of approximately 3.1years. The fair value of the options vested during the six months ended June 30, 2019 and 2018, was not significant.

The Company granted 96,191 shares of restricted stock in the first quarter of 2019, of which 21,390 shares are subject to a three year vesting schedule with one third of the shares vesting on April 1^st of each year and 74,801 shares subject to a five year vesting schedule with one fifth of the shares vesting on April 1^st of each year. The

Company did not grant any additional shares of restricted stock during the second quarter of 2019. The Company did not grant any stock options during 2019.

25

A summary of share option activity for the period indicated is reflected in the following table:

				Weighted
	Number	Weighted		Average	Aggregate
	of	Average		Contractual	Intrinsic
	Common	Exercise		Remaining	Value
	Shares	Share Price		Life (Years)	(in thousands)
Balance at January 1, 2019	81,508	$	29.74		$	369
Granted	-	$	-
Exercised	(10,897)	$	20.56		$	145
Forfeited	(1,007)	$	37.11
Expired	(142)	$	42.48
Balance at June 30, 2019	69,462	$	31.05	3.6	$	403
Exercisable at June 30, 2019	55,362	$	28.94	3.1	$	403
Weighted average fair value of options
granted during the year		$	-

A summary of the activity for the Company’s restricted stock for the period indicated is presented in the following table:

	Number	Weighted
	of	Average
	Common	Grant-Date
(In dollars, except share data):	Shares	Fair Value
Restricted stock at January 1, 2019	203,603	$	35.14
Granted	96,191	$	33.27
Vested	(69,842)	$	31.55
Forfeited	(6,673)	$	33.16
Restricted stock at June 30, 2019	223,279	$	35.52

Note 9 – Pension, Profit Sharing, and Other Employee Benefit Plans

Defined Benefit Pension Plan

The Company has a qualified, noncontributory, defined benefit pension plan (the “Plan”). Benefits after January 1, 2005, are based on the benefit earned as of December 31, 2004, plus benefits earned in future years of service based on the employee’s compensation during each such year. All benefit accruals for employees were frozen as of December 31, 2007 based on past service and thus salary increases and additional years of service after such date no longer affect the defined benefit provided by the Plan although additional vesting may continue to occur.

The Company's funding policy is to contribute amounts to the Plan sufficient to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. In addition, the Company contributes additional amounts as it deems appropriate based on benefits attributed to service prior to the date of the Plan freeze. The Plan invests primarily in a diversified portfolio of managed fixed income and equity funds.

The components of net periodic benefit cost for the periods indicated are presented in the following table:

		Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)		2019		2018		2019		2018
Interest cost on projected benefit obligation		$	402	$	385	$	804	$	770
Expected return on plan assets			(412)		(465)		(824)		(930)
Recognized net actuarial loss			265		250		530		500
	Net periodic benefit cost	$	255	$	170	$	510	$	340

Contributions

26

The decision as to whether or not to make a plan contribution and the amount of any such contribution is dependent on a number of factors. Such factors include the investment performance of the plan assets in the current economy and, since the Plan is currently frozen, the remaining investment horizon of the Plan. After consideration of these factors, the Company made a contribution of $0.2 million in 2019. Management continues to monitor the funding level of the Plan and may make additional contributions as necessary during 2019.

Note 10 – Net Income per Common Share

The calculation of net income per common share for the periods indicated is presented in the following table:

			Three Months Ended June 30,				Six Months Ended June 30,
(Dollars and amounts in thousands, except per share data)			2019		2018		2019		2018
Net income			$	28,276	$	24,399	$	58,593	$	46,064
Basic:
Basic weighted average EPS shares				35,862		35,721		35,816		35,686
		Basic net income per share	$	0.79	$	0.68	$	1.64	$	1.29
Diluted:
Basic weighted average EPS shares				35,862		35,721		35,816		35,686
Dilutive common stock equivalents				28		23		50		24
	Dilutive EPS shares			35,890		35,744		35,866		35,710
		Diluted net income per share	$	0.79	$	0.68	$	1.63	$	1.29
Anti-dilutive shares				10		6		11		6

NOTE 11 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income is defined as net income plus transactions and other occurrences that are the result of non-owner changes in equity. For condensed financial statements presented for the Company, non-owner changes in equity are comprised of unrealized gains or losses on available-for-sale debt securities and any minimum pension liability adjustments. The following table presents the activity in net accumulated other comprehensive income (loss) and the components of the activity for the periods indicated:

	Unrealized Gains
	(Losses) on
	Investments		Defined Benefit
(In thousands)	Available-for-Sale		Pension Plan		Total
Balance at January 1, 2019	$	(6,630)	$	(9,124)	$	(15,754)
Other comprehensive income before reclassification, net of tax		11,802		-		11,802
Reclassifications from accumulated other comprehensive income, net of tax		(4)		391		387
Current period change in other comprehensive income, net of tax		11,798		391		12,189
Balance at June 30, 2019	$	5,168	$	(8,733)	$	(3,565)

	Unrealized Gains
	(Losses) on
	Investments		Defined Benefit
(In thousands)	Available-for-Sale		Pension Plan		Total
Balance at January 1, 2018	$	687	$	(7,544)	$	(6,857)
Other comprehensive income before reclassification, net of tax		(12,491)		-		(12,491)
Reclassifications from accumulated other comprehensive income, net of tax		(47)		316		269
Current period change in other comprehensive income, net of tax		(12,538)		316		(12,222)
Reclassification of tax effects from accumulated other comprehensive income		148		(1,625)		(1,477)
Balance at June 30, 2018	$	(11,703)	$	(8,853)	$	(20,556)

27

The following table provides the information on the reclassification adjustments out of accumulated other comprehensive income for the periods indicated:

				Six Months Ended June 30,
(In thousands)				2019		2018
Unrealized gains on investments available-for-sale
	Affected line item in the Statements of Income:
	Investment securities gains			$	5	$	63
	Income before taxes				5		63
	Tax expense				(1)		(16)
	Net income			$	4	$	47
Amortization of defined benefit pension plan items
	Affected line item in the Statements of Income:
		Recognized actuarial loss(1)		$	(530)	$	(500)
			Income before taxes		(530)		(500)
			Tax benefit		139		184
			Net loss	$	(391)	$	(316)
(1) This amount is included in the computation of net periodic benefit cost, see Note 9.

In the first quarter of 2018, the Company elected to make a one-time reclassification from accumulated other comprehensive income to retained earnings for the effects of re-measuring the deferred tax assets and liabilities originally recorded in other comprehensive income as a result of the change in the federal tax rate by the Tax Cuts and Jobs Act.

NOTE 12 – LEASES

The Company leases real estate properties for its network of bank branches, financial centers and corporate offices. All of the Company’s leases are currently classified as operating. Most lease agreements include one or more options to renew, with renewal terms that can extend the original lease term from one to twenty years or more. The Company does not sublease any of its leased real estate properties.

As June 30, 2019, ROU assets and lease liabilities totaled $73.1 million and $80.6 million, respectively. For the three and six months ended June 30, 2019, the Company recognized total operating lease expense in the amount of $2.8 million and $5.7 million, respectively. Cash paid for amounts included in the measurement of lease liabilities for the three and six months ended June 30, 2019 was $2.2 million and $4.3 million, respectively and is included in Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows. There were no new ROU assets obtained in exchange for lease obligations during the six months ended June 30, 2019.

As of June 30, 2019, the maturities of the Company’s operating lease liabilities were as follows:

(In thousands)	Amount
Maturity:
One year	$	11,023
Two years		10,563
Three years		10,002
Four years		10,090
Five years		9,494
Thereafter		46,671
Total undiscounted lease payments		97,843
Less: Present value discount		(17,228)
Lease Liability	$	80,615

As of June 30, 2019, the weighted average remaining lease term was 10.7 years and the weighted average operating discount rate to determine the operating lease liability was 3.31%.

28

The Company had one operating lease for a branch location that had not commenced at June 30, 2019. The Company does not have any lease arrangements with any of its related parties as of June 30, 2019.

Note 13 – Financial Instruments with Off-balance Sheet Risk and Derivatives

The Company has entered into interest rate swaps (“swaps”) to facilitate customer transactions and meet their financing needs. These swaps qualify as derivatives, but are not designated as hedging instruments. Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty or customer owes the Company, and results in credit risk to the Company. When the fair value of a derivative instrument contract is negative, the Company owes the customer or counterparty and therefore, has no credit risk. The notional value of commercial loan swaps outstanding was $106.7 million with a fair value of $1.4 million as of June 30, 2019 compared to $16.6 million with a fair value of $0.4 million as of December 31, 2018. The swap positions are offset to minimize the potential impact on the Company’s financial statements. Fair values of the swaps are carried as both gross assets and gross liabilities in the Condensed Consolidated Statements of Condition. The associated net gains and losses on the swaps are recorded in other non-interest income.

Note 14 – Litigation

The Company and its subsidiaries are subject in the ordinary course of business to various pending or threatened legal proceedings in which claims for monetary damages are asserted. After consultation with legal counsel, management does not anticipate that the ultimate liability, if any, arising out of these legal matters will have a material adverse effect on the Company's financial condition, operating results or liquidity.

Note 15 – Fair Value

Generally accepted accounting principles provide entities the option to measure eligible financial assets, financial liabilities and commitments at fair value (i.e. the fair value option), on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a commitment. Subsequent changes in fair value must be recorded in earnings. The Company applies the fair value option on residential mortgage loans held for sale. The fair value option on residential mortgage loans held for sale allows the recognition of gains on sale of mortgage loans to more accurately reflect the timing and economics of the transaction.

The standard for fair value measurement establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below.

Basis of Fair Value Measurement:

Level 1- Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2- Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3- Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Changes to interest rates may result in changes in the cash flows due to prepayments or extinguishments. Accordingly, this could result in higher or lower measurements of the fair values.

Assets and Liabilities

Mortgage loans held for sale

Mortgage loans held for sale are valued based on quotations from the secondary market for similar instruments and are classified as Level 2 of the fair value hierarchy.

Investments available-for-sale

29

U.S. government agencies, mortgage-backed, and asset-backed securities

Valuations are based on active market data and use of evaluated broker pricing models that vary based by asset class and includes available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, descriptive terms and conditions databases coupled with extensive quality control programs. Multiple quality control evaluation processes review available market, credit and deal level information to support the evaluation of the security. If there is a lack of objectively verifiable information available to support the valuation, the evaluation of the security is discontinued. Additionally, proprietary models and pricing systems, mathematical tools, actual transacted prices, integration of market developments and experienced evaluators are used to determine the value of a security based on a hierarchy of market information regarding a security or securities with similar characteristics. The Company does not adjust the quoted price for such securities. Such instruments are generally classified within Level 2 of the fair value hierarchy.

State and municipal securities

Proprietary valuation matrices are used for valuing all tax-exempt municipals that can incorporate changes in the municipal market as they occur. Market evaluation models include the ability to value bank qualified municipals and general market municipals that can be broken down further according to insurer, credit support, state of issuance and rating to incorporate additional spreads and municipal curves. Taxable municipals are valued using a third party model that incorporates a methodology that captures the trading nuances associated with these bonds. Such instruments are generally classified within Level 2 of the fair value hierarchy.

Interest rate swap agreements

Interest rate swap agreements are measured by alternative pricing sources with reasonable levels of price transparency in markets that are not active. Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as efficient and are less liquid than that of the more mature Level 1 markets. These markets do however have comparable, observable inputs in which an alternative pricing source values these assets in order to arrive at a fair market value. These characteristics classify interest rate swap agreements as Level 2.

Assets Measured at Fair Value on a Recurring Basis

The following tables set forth the Company’s financial assets and liabilities at the dates indicated that were accounted for or disclosed at fair value. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

			June 30, 2019
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	50,511	$	-	$	50,511
	Investments available-for-sale:
		U.S. government agencies		-		314,769		-		314,769
		State and municipal		-		249,576		-		249,576
		Mortgage-backed and asset-backed		-		326,346		-		326,346
		Corporate debt		-		-		9,456		9,456
		Trust preferred		-		-		310		310
		Marketable equity securities		-		568		-		568
	Interest rate swap agreements			-		1,358		-		1,358
Liabilities
	Interest rate swap agreements		$	-	$	(1,358)	$	-	$	(1,358)

30

			December 31, 2018
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	22,773	$	-	$	22,773
	Investments available-for-sale:
		U.S. government agencies		-		296,678		-		296,678
		State and municipal		-		282,024		-		282,024
		Mortgage-backed and asset-backed		-		348,515		-		348,515
		Corporate debt		-		-		9,240		9,240
		Trust preferred		-		-		310		310
		Marketable equity securities		-		568		-		568
	Interest rate swap agreements			-		446		-		446
Liabilities
	Interest rate swap agreements		$	-	$	(446)	$	-	$	(446)

The following table provides unrealized losses included in assets measured in the Condensed Consolidated Statements of Condition at fair value on a recurring basis for the period indicated:

			Significant
			Unobservable
			Inputs
(In thousands)			(Level 3)
Investments available-for-sale:
	Balance at January 1, 2019		$	9,550
		Additions of Level 3 assets		-
		Sales of Level 3 assets		-
		Total unrealized gain included in other comprehensive income		216
	Balance at June 30, 2019		$	9,766

Assets Measured at Fair Value on a Nonrecurring Basis

The following table sets forth the Company’s financial assets subject to fair value adjustments (impairment) on a nonrecurring basis at the date indicated that are valued at the lower of cost or market. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

		June 30, 2019
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	6,653	$	6,653	$	(6,561)
Other real estate owned			-		-		1,486		1,486		(277)
	Total	$	-	$	-	$	8,139	$	8,139	$	(6,838)

		December 31, 2018
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	6,780	$	6,780	$	(10,932)
Other real estate owned			-		-		1,584		1,584		(262)
	Total	$	-	$	-	$	8,364	$	8,364	$	(11,194)

31

At June 30, 2019, impaired loans totaling $21.7 million were written down to fair value of $16.9 million as a result of specific loan loss allowances of $4.8 million associated with the impaired loans which was included in the allowance for loan losses. Impaired loans totaling $22.2 million were written down to fair value of $17.3 million at December 31, 2018 as a result of specific loan loss allowances of $4.9 million associated with the impaired loans.

Loan impairment is measured using the present value of expected cash flows, the loan’s observable market price or the fair value of the collateral (less selling costs) if the loans are collateral dependent. Collateral may be real estate and/or business assets including equipment, inventory and/or accounts receivable. The value of business equipment, inventory and accounts receivable collateral is based on net book value on the business’ financial statements and, if necessary, discounted based on management’s review and analysis. Appraised and reported values may be discounted based on management’s historical experience, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the factors identified above. Valuation techniques are consistent with those techniques applied in prior periods.

Other real estate owned (“OREO”) is adjusted to fair value upon transfer of the loans to OREO. Subsequently, OREO is carried at the lower of carrying value or fair value. The estimated fair value for other real estate owned included in Level 3 is determined by independent market based appraisals and other available market information, less cost to sell, that may be reduced further based on market expectations or an executed sales agreement. If the fair value of the collateral deteriorates subsequent to initial recognition, the Company records the OREO as a non-recurring Level 3 adjustment. Valuation techniques are consistent with those techniques applied in prior periods.

Fair Value of Financial Instruments

The Company discloses fair value information of financial instruments that are not measured at fair value in the financial statements based on the exit price notion. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if one exists.

Quoted market prices, where available, are shown as estimates of fair market values. Because no quoted market prices are available for a significant portion of the Company's financial instruments, the fair value of such instruments has been derived based on the amount and timing of future cash flows and estimated discount rates based on observable inputs (“Level 2”) or unobservable inputs (“Level 3”).

Present value techniques used in estimating the fair value of many of the Company's financial instruments are significantly affected by the assumptions used. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate cash settlement of the instrument. Additionally, the accompanying estimates of fair values are only representative of the fair values of the individual financial assets and liabilities, and should not be considered an indication of the fair value of the Company. Management utilizes internal models used in asset liability management to determine the fair values disclosed below.

The carrying amounts and fair values of the Company’s financial instruments at the dates indicated are presented in the following table:

32

					Fair Value Measurements
	June 30, 2019				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	54,690	$	54,690	$	-	$	54,690	$	-
Loans, net of allowance		6,497,219		6,383,069		-		-		6,383,069
Other assets (1)		111,850		111,850		-		111,850		-
Financial Liabilities
Time deposits	$	1,608,418	$	1,615,849	$	-	$	1,615,849	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		150,604		150,604		-		150,604		-
Advances from FHLB		582,768		590,246		-		590,246		-
Subordinated debentures		37,353		35,435		-		-		35,435
(1) Includes bank owned life insurance products.

					Fair Value Measurements
	December 31, 2018				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	73,389	$	73,389	$	-	$	73,389	$	-
Loans, net of allowance		6,518,148		6,376,307		-		-		6,376,307
Other assets (1)		110,823		110,823		-		110,823		-
Financial Liabilities
Time deposits	$	1,526,161	$	1,536,238	$	-	$	1,536,238	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		327,429		327,429		-		327,429		-
Advances from FHLB		848,611		850,186		-		850,186		-
Subordinated debentures		37,425		33,588		-		-		33,588
(1) Includes bank owned life insurance products.

Note 16 - Segment Reporting

Currently, the Company conducts business in three operating segments—Community Banking, Insurance and Investment Management. Each of the operating segments is a strategic business unit that offers different products and services. The Insurance and Investment Management segments were businesses that were acquired in separate transactions where management of the acquired business was retained. The accounting policies of the segments are the same as those of the Company. However, the segment data reflect inter-segment transactions and balances.

The Community Banking segment is conducted through Sandy Spring Bank and involves delivering a broad range of financial products and services, including various loan and deposit products to both individuals and businesses. Parent company income is included in the Community Banking segment, as the majority of effort of these functions is related to this segment. Major revenue sources include net interest income, gains on sales of mortgage loans, trust income fees and service charges on deposit accounts. Expenses include personnel, occupancy, marketing, equipment and other expenses. Non-cash charges associated with amortization of intangibles were $0.4 million and $0.5 million for the three months ended June 30, 2019 and 2018, respectively. These charges totaled $0.9 million and $1.0 million for the six months ended June 30, 2019 and 2018, respectively.

The Insurance segment is conducted through Sandy Spring Insurance Corporation, a subsidiary of the Bank, and offers annuities as an alternative to traditional deposit accounts. Sandy Spring Insurance Corporation operates Sandy Spring Insurance, a general insurance agency located in Annapolis, Maryland, and Neff and Associates, located in Ocean City, Maryland. Major sources of revenue are insurance commissions from commercial lines, personal lines, and medical liability lines. Expenses include personnel and support charges. Non-cash charges associated with amortization of intangibles were not significant for the three and six months ended June 30, 2019 and 2018, respectively.

33

The Investment Management segment is conducted through West Financial Services, Inc., a subsidiary of the Bank. This asset management and financial planning firm, located in McLean, Virginia, provides comprehensive investment management and financial planning to individuals, families, small businesses and associations including cash flow analysis, investment review, tax planning, retirement planning, insurance analysis and estate planning. West Financial currently has approximately $1.7 billion in assets under management. Major revenue sources include non-interest income earned on the above services. Expenses include personnel and support charges. Non-cash charges associated with amortization of intangibles were not significant for the three and six months ended June 30, 2019 and 2018, respectively.

Information for the operating segments and reconciliation of the information to the condensed consolidated financial statements for the periods indicated is presented in the following tables:

	Three Months Ended June 30, 2019
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	87,214	$	1	$	3	$	(4)	$	87,214
Interest expense		21,033		-		-		(4)		21,029
Provision (credit) for loan losses		1,633		-		-		-		1,633
Noninterest income		12,856		1,269		2,597		(166)		16,556
Noninterest expense		40,859		1,304		1,890		(166)		43,887
Income before income taxes		36,545		(34)		710		-		37,221
Income tax expense		8,769		(8)		184		-		8,945
Net income	$	27,776	$	(26)	$	526	$	-	$	28,276
Assets	$	8,398,263	$	11,552	$	20,253	$	(31,549)	$	8,398,519

	Three Months Ended June 30, 2018
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	78,596	$	1	$	2	$	(2)	$	78,597
Interest expense		14,781		-		-		(2)		14,779
Provision for loan losses		1,733		-		-		-		1,733
Non-interest income		11,252		1,179		2,590		(153)		14,868
Non-interest expense		42,302		1,302		1,631		(153)		45,082
Income before income taxes		31,032		(122)		961		-		31,871
Income tax expense		7,249		(32)		255		-		7,472
Net income	$	23,783	$	(90)	$	706	$	-	$	24,399
Assets	$	8,154,957	$	9,041	$	15,407	$	(26,805)	$	8,152,600

	Six Months Ended June 30, 2019
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	175,397	$	2	$	5	$	(7)	$	175,397
Interest expense		42,469		-		-		(7)		42,462
Provision for loan losses		1,505		-		-		-		1,505
Noninterest income		25,563		3,173		5,122		(333)		33,525
Noninterest expense		82,070		2,724		3,618		(333)		88,079
Income before income taxes		74,916		451		1,509		-		76,876
Income tax expense		17,762		127		394		-		18,283
Net income	$	57,154	$	324	$	1,115	$	-	$	58,593
Assets	$	8,398,263	$	11,552	$	20,253	$	(31,549)	$	8,398,519

34

	Six Months Ended June 30, 2018
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	154,100	$	1	$	3	$	(3)	$	154,101
Interest expense		27,395		-		-		(3)		27,392
Provision for loan losses		3,730		-		-		-		3,730
Non-interest income		24,423		3,001		4,869		(307)		31,986
Non-interest expense		89,333		2,681		3,016		(307)		94,723
Income before income taxes		58,065		321		1,856		-		60,242
Income tax expense		13,602		91		485		-		14,178
Net income	$	44,463	$	230	$	1,371	$	-	$	46,064
Assets	$	8,154,957	$	9,041	$	15,407	$	(26,805)	$	8,152,600

35

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company

Sandy Spring Bancorp, Inc. (the “Company") is the bank holding company for Sandy Spring Bank (the "Bank"). The Company is an $8.4 billion community banking organization that focuses its lending and other services on businesses and consumers in the local market area. The Company, which began operating in 1988, is registered as a bank holding company pursuant to the Bank Holding Company Act of 1956, as amended. As such, the Company is subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the "Federal Reserve").

The Bank traces its origin to 1868, making it among the oldest institutions in the region. 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 variety of comprehensive insurance and wealth management services. The Bank is a state chartered bank subject to supervision and regulation by the Federal Reserve and the State of Maryland. The Bank's deposit accounts are insured by the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation (the "FDIC") to the maximum permitted by law. The Bank is a member of the Federal Reserve System and is an Equal Housing Lender. The Company, the Bank, and its other subsidiaries are Affirmative Action/Equal Opportunity Employers.

The Bank’s subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc., offer a variety of comprehensive insurance and investment management services. During 2018, the Company completed the acquisition of WashingtonFirst Bankshares, Inc., the parent company for WashingtonFirst Bank (collectively referred to as “WashingtonFirst”). At the date of acquisition, WashingtonFirst had 19 community banking offices and more than $2.1 billion in assets. The all-stock transaction resulted in the issuance of 11.4 million common shares and was valued at approximately $447 million.

Overview

Net income for the Company for the second quarter of 2019 totaled $28.3 million ($0.79 per diluted share) as compared to net income of $24.4 million ($0.68 per diluted share) for the second quarter of 2018 and net income of $30.3 million ($0.85 per diluted share) for the first quarter of 2019. The prior year’s earnings for the second quarter contained $2.2 million in merger expenses, while the prior quarter contained a $1.8 million interest recovery from acquired impaired loans, a credit versus a provision for loan losses and $0.6 million in life insurance mortality proceeds. There were no similar items in the current quarter’s earnings.

These results reflect the following events:

Total loans increased 5% compared to the second quarter of 2018. Loans outstanding remained stable compared to the prior quarter, as overall loan production and commitment origination in previously unfunded construction lending was offset by portfolio run-off which was impacted by changes in the interest rate environment and competitive forces in the marketplace. The Bank also successfully executed on a strategy to sell the majority of its mortgage loan production for gains versus retaining them in the loan portfolio.

Total deposits grew 9% from the second quarter of 2018 and 8% from the end of 2018. This deposit growth has reduced the loan to deposit ratio from 111% at year-end 2018 to 103% at the end of the current quarter. The year-to-date deposit growth included a 16% increase in noninterest-bearing deposits and a 20% reduction in wholesale deposits.

Current quarter has a $1.6 million charge for the provision for loan losses compared to the prior quarter’s $0.1 million credit to the provision.

The net interest margin was 3.54% for the second quarter of 2019 compared to 3.56% for the second quarter of 2018 and 3.52% for the first quarter of 2019, after adjusting for recovered interest income of $1.8 million on acquired credit impaired loans. The current quarter’s margin benefited from an increase in average noninterest-bearing deposits from the first quarter of 2019 and the current quareter’s shifting of short-term FHLB borrowings into medium-term lower rate borrowings.

36

Second quarter results reflected an annualized return on average assets of 1.37% and annualized return on average equity of 10.32% as compared to 1.23% and 9.66% respectively for the second quarter of 2018. Exclusive of merger costs on an after-tax basis, the return on average assets and return on average equity for the second quarter of 2018 would have been 1.32% and 10.32%, respectively.

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

The non-GAAP efficiency ratio was 51.71% for the current quarter as compared to 52.98% for the second quarter of 2018 and 51.44% for the first quarter of 2019. The stability of the current quarter’s non-GAAP ratio, as compared to the previous quarter’s, reflects the slight decline in non-interest expense during the second quarter of 2019 compared to the first quarter of the current year.

Dividends paid increased by 7% or $0.02 per share during the current quarter to $0.30 per share. Additionally, as a result of net earnings during the past twelve months, tangible book value per share and tangible common equity have grown 11% from the second quarter of 2018.

The local economy continues to experience low unemployment rate, wage growth and increased housing starts; however, these trends have been tempered by other concerns of deficit growth, domestic political turmoil and geo-political uncertainty. These factors, in concert, impact the pace of economic expansion and create volatility in global economic markets. Additionally, the recent trends in interest rates have caused a degree of concern among individual consumers and small and mid-sized businesses. Management remains confident that the Company remains well positioned for continued growth opportunities as they present themselves, despite the current mixed economic environment.

Total assets at June 30, 2019 increased 3% compared to June 30, 2018. This growth has been driven by organic loan growth as loan balances at June 30, 2019 have increased 5% compared to June 30, 2018. Deposits increased 9% compared to balances at June 30, 2018. The Company’s liquidity position remains strong as a result of its operational cash flows in addition to the available borrowing lines with the Federal Home Loan Bank of Atlanta, the Federal Reserve and other sources, and the size and composition of the available-for-sale investment portfolio. Stockholders’ equity has grown $93.1 million compared to June 30, 2018 due to the retention of earnings from the past twelve months.

Non-performing loans (which excludes purchased credit impaired loans) represented 0.58% of total loans at June 30, 2019 compared to 0.46% at June 30, 2018. The Company’s non-performing loans were $37.7 million at June 30, 2019 compared to $28.8 million at June 30, 2018. The ratio of annualized net charge-offs to average loans for the current quarter was 0.04% compared to 0.01% for the prior year quarter.

Net interest income for the second quarter of 2019 increased 4% compared to the second quarter of 2018. As a result of the Company’s organic loan growth during the period interest income increased by $8.6 million, which more than offset the $6.3 million growth in interest expense which was driven by the increased rates paid on deposits. The net interest margin was 3.54% for the second quarter of 2019 compared to 3.56% for the second quarter of 2018. The provision for loan losses was $1.6 million for the second quarter of 2019 compared to $1.7 million for the second quarter of 2018. Non-interest income increased 11% for the second quarter of 2019 as compared to the second quarter of 2018. This increase in non-interest income was driven by the impact of increased mortgage banking income and, to a lesser extent, income from other major categories of non-interest income. Non-interest expenses decreased 3% to $43.9 million for the second quarter of 2019 compared to $45.1 million in the second quarter of 2018, which included $2.2 million in merger expenses. Excluding these expenses, non-interest expenses increased 2% compared to the second quarter of 2018 due to increased compensation and benefit costs driven by a combination of increases in compensation levels resulting from annual merit increases and an increase in the Company’s contribution to the employee retirement savings plans. The non-GAAP efficiency ratio was 51.71% for the second quarter of 2019, compared to 52.98% for the second quarter of 2018. The decrease in the current quarter compared to the prior period was the result of the growth in the net revenue streams.

37

Results of Operations

For the Six Months Ended June 30, 2019 Compared to the Six Months Ended June 30, 2018

Net income for the Company for the first six months of 2019 totaled $58.6 million ($1.63 per diluted share) compared to net income of $46.1 million ($1.29 per diluted share) for the first six months of 2018.

Net Interest Income

Net interest income for the first six months of 2019 was $132.9 million compared to $126.7 million for the first six months of 2018. On a tax-equivalent basis, net interest income for the first six months of 2019 was $135.4 million compared to $129.0 million for the first six months of 2018, a 5% increase. Net interest income increased as a result of the Company’s organic loan growth during the previous twelve months which more than offset the impact of deposit growth and the corresponding interest expense, as average interest rates rose during that period.

The following tables provide an analysis of net interest income performance that reflects a net interest margin that has increased to 3.58% for the first six months of 2019 compared to 3.57% for the first six months of 2018. Net interest income for the first six months of 2019 included $1.8 million of recovered interest income from previously acquired credit impaired loans. Excluding these recoveries, the net interest margin would have been 3.53%. In addition, after excluding the impact of amortization of the fair value adjustments to both interest-earning assets and interest-bearing liabilities directly attributable to the acquisition, the net interest margin for the first six months of 2019 would have been 3.47%, compared to 3.45% for the first six months of 2018.

The impact of the amortization of the fair value adjustments on net interest income for the first six months of 2019 is presented in the following table:

		For the Six Months Ended June 30, 2019
(In thousands)
Net Interest Income Excluding Purchase Accounting Adjustments:
Net Interest Income		$	132,935
	Accretion of fair value adjustment on pools of homogeneous loans		(567)
	Accretion of loan fair value adjustment on purchased credit impaired loans		(664)
	Settlements of purchased credit impaired loans		(1,799)
	Accretion of fair value adjustment on certificates of deposits		(311)
	Accretion of fair value adjustment on subordinated debentures		(72)
Net Interest Income Excluding Purchase Accounting Adjustments		$	129,522

38

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
		Six Months Ended June 30,
				2019						2018
					Annualized						Annualized
	Average		(1)		Average		Average		(1)		Average
(Dollars in thousands and tax-equivalent)	Balances		Interest		Yield/Rate		Balances		Interest		Yield/Rate
Assets
Residential mortgage loans	$	1,237,241	$	23,759	3.84	%	$	1,075,540	$	19,795	3.68	%
Residential construction loans		181,864		3,836	4.25			208,332		4,043	3.91
Total mortgage loans		1,419,105		27,595	3.89			1,283,872		23,838	3.72
Commercial AD&C loans		681,271		20,148	5.96			579,458		16,407	5.71
Commercial investor real estate loans		1,962,799		50,086	5.15			1,956,374		46,089	4.75
Commercial owner occupied real estate loans		1,211,737		29,226	4.86			1,062,912		24,567	4.66
Commercial business loans		768,390		21,129	5.55			661,851		16,856	5.14
Total commercial loans		4,624,197		120,589	5.26			4,260,595		103,919	4.92
Consumer loans		510,411		12,665	5.00			535,064		11,299	4.32
Total loans (2)		6,553,713		160,849	4.94			6,079,531		139,056	4.61
Loans held for sale		27,537		573	4.17			30,557		647	4.24
Taxable securities		756,613		11,665	3.09			747,862		10,549	2.82
Tax-exempt securities (3)		231,161		4,132	3.57			297,359		5,220	3.51
Total investment securities (4)		987,774		15,797	3.20			1,045,221		15,769	3.02
Interest-bearing deposits with banks		53,543		622	2.34			104,115		871	1.69
Federal funds sold		624		6	1.97			2,925		20	1.36
Total interest-earning assets		7,623,191		177,847	4.70			7,262,349		156,363	4.33
Less: allowance for loan losses		(53,081)						(46,689)
Cash and due from banks		64,264						71,664
Premises and equipment, net		61,294						61,027
Other assets		580,933						535,844
Total assets	$	8,276,601					$	7,884,195
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	725,816		760	0.21	%	$	744,048		426	0.12	%
Regular savings deposits		332,138		211	0.13			412,053		395	0.19
Money market savings deposits		1,674,608		12,896	1.55			1,467,823		7,698	1.06
Time deposits		1,625,469		16,759	2.08			1,225,755		7,291	1.20
Total interest-bearing deposits		4,358,031		30,626	1.42			3,849,679		15,810	0.83
Other borrowings		164,043		688	0.85			144,100		216	0.30
Advances from FHLB		773,856		10,167	2.65			1,055,982		10,416	1.99
Subordinated debentures		37,394		981	5.25			37,536		950	5.07
Total interest-bearing liabilities		5,333,324		42,462	1.61			5,087,297		27,392	1.09
Noninterest-bearing demand deposits		1,740,076						1,724,353
Other liabilities		116,945						60,943
Stockholders' equity		1,086,256						1,011,602
Total liabilities and stockholders' equity	$	8,276,601					$	7,884,195
Net interest income and spread				135,385	3.09	%				128,971	3.24	%
Less: tax-equivalent adjustment				2,450						2,262
Net interest income			$	132,935					$	126,709
Interest income/earning assets					4.70	%					4.33	%
Interest expense/earning assets					1.12						0.76
Net interest margin					3.58	%					3.57	%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 26.13% for both 2019 and 2018. The annualized
taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $2.5 million and $2.3 million in 2019 and 2018, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.
(4) Investments available-for-sale are presented at amortized cost.

39

Effect of Volume and Rate Changes on Net Interest Income

The following table analyzes the reasons for the changes from year-to-year in the principal elements that comprise net interest income:

			2019 vs. 2018							2018 vs. 2017
			Increase						Increase
			Or		Due to Change In Average:*				Or		Due to Change In Average:*
(Dollars in thousands and tax equivalent)			(Decrease)		Volume		Rate		(Decrease)		Volume		Rate
Interest income from earning assets:
	Residential mortgage loans		$	3,964	$	3,075	$	889	$	4,916	$	4,024	$	892
	Residential construction loans			(207)		(540)		333		1,028		875		153
	Commercial AD&C loans			3,741		2,995		746		8,986		7,545		1,441
	Commercial investor real estate loans			3,997		150		3,847		24,390		22,952		1,438
	Commercial owner occupied real estate loans			4,659		3,566		1,093		5,558		6,688		(1,130)
	Commercial business loans			4,273		2,857		1,416		6,787		4,985		1,802
	Consumer loans			1,366		(536)		1,902		3,198		1,438		1,760
	Loans held for sale			(74)		(65)		(9)		493		494		(1)
	Taxable securities			1,116		(66)		1,182		3,136		3,026		110
	Tax exempt securities			(1,088)		(1,131)		43		(1,060)		22		(1,082)
	Interest-bearing deposits with banks			(249)		(514)		265		690		449		241
	Federal funds sold			(14)		(20)		6		10		3		7
Total interest income				21,484		9,771		11,713		58,132		52,501		5,631
Interest expense on funding of earning assets:
	Interest-bearing demand deposits			334		(10)		344		189		57		132
	Regular savings deposits			(184)		(70)		(114)		289		42		247
	Money market savings deposits			5,198		1,214		3,984		5,844		1,252		4,592
	Time deposits			9,468		2,915		6,553		3,977		3,575		402
	Other borrowings			472		33		439		61		18		43
	Advances from FHLB			(249)		(3,195)		2,946		4,139		3,462		677
	Subordinated debentures			31		(4)		35		938		922		16
Total interest expense				15,070		883		14,187		15,437		9,328		6,109
		Net interest income	$	6,414	$	8,888	$	(2,474)	$	42,695	$	43,173	$	(478)
* Variances that are the combined effect of volume and rate, but cannot be separately identified, are allocated to the volume and rate variances based on their respective relative amounts.

40

Interest Income

The Company's total tax-equivalent interest income increased 14% for the first six months of 2019 compared to the prior year period. During this period, the yield on interest-earning assets increased 37 basis points to 4.70%. The previous tables reflect that the increase in interest income has been driven predominantly by the 5% growth in interest-earning assets as well as the rise in the associated interest rates during the past twelve months.

The average balance of the loan portfolio increased 8% for the first six months of 2019 compared to the first six months of 2018. This growth occurred in the majority of segments of the loan portfolio with the most significant growth in the commercial real estate portfolios. The yield on average loans increased 33 basis points compared to the prior year period. Excluding the previously mentioned interest recoveries of $1.8 million, the yield on average loans increased 28 basis points. The average yield on total investment securities increased 18 basis points as the average balance of the portfolio decreased 5% for the first six months of 2019 compared to the first six months of 2018. Composition of the average investment portfolio shifted to a higher percentage of taxable securities (77%) in the current period as compared to 72% for the prior year period. During the same period, the average yield for taxable securities rose 27 basis points versus the average yield on tax-exempt securities, which rose 6 basis points.

Interest Expense

Interest expense increased 55% in the first six months of 2019 compared to the first six months of 2018. The majority of the increase from period to period was due to increased rates on the majority of deposit categories to provide funding for loan growth. The cost of interest-bearing deposits increased due predominantly to the 14% growth in money market and 33% growth in time deposit average balances coupled with a 49 basis point increase in money market deposit rates and an 88 basis point increase in time deposit rates. Additionally, while the amount of average borrowings decreased 21% from period to period, the average rate paid increased 66 basis points. This resulted in the associated interest expense remaining stable. The overall impact to the total rate paid on interest-bearing liabilities was an increase of 52 basis points in the first six months of 2019 compared to the first six months of 2018.

Non-interest Income

Non-interest income amounts and trends are presented in the following table for the periods indicated:

			Six Months Ended June 30,				2019/2018		2019/2018
(Dollars in thousands)			2019		2018		$ Change			% Change
	Securities gains		$	5	$	63	$	(58)		(92.1)	%
	Service charges on deposit accounts			4,749		4,549		200		4.4
	Mortgage banking activities			6,133		4,271		1,862		43.6
	Wealth management income			10,775		10,448		327		3.1
	Insurance agency commissions			3,165		3,004		161		5.4
	Income from bank owned life insurance			1,843		3,001		(1,158)		(38.6)
	Bank card fees			2,719		2,763		(44)		(1.6)
	Other income			4,136		3,887		249		6.4
		Total non-interest income	$	33,525	$	31,986	$	1,539		4.8

41

Total non-interest income was $33.5 million for the first six months of 2019 compared to $32.0 million for the first six months of 2018. Excluding life insurance mortality proceeds of $0.6 million and $1.6 million from the first six months of each year, non-interest income increased 8%. The increase was driven primarily by income from mortgage banking activities, and to a lesser degree, wealth management income, insurance agency commissions and service charges. Further detail by type of non-interest income follows:

Service charges on deposit accounts increased 4% in the first six months of 2019, compared to the first six months of 2018.

Income from mortgage banking activities increased 44% in the first six months of 2019, compared to the first six months of 2018. Origination volume associated with the mortgage lending operations contributed to the significant growth in mortgage banking income for the first six months of 2019. Sales of originated mortgage loans rose 27% during the current period compared to the same period for 2018.

Wealth management income (which is comprised of income from trust and estate services and investment management fees earned by the Company’s investment management subsidiary) increased 3% for the first six months of 2019 compared to the same period of the prior year. Trust services fees increased 5% for the first six months of 2019 compared to the prior year period due to an increase in personal trust services. Investment management fees increased 2% for the first six months of 2019 compared to the same period of 2018, due to an increase in assets under management. Overall total assets under management increased to $3.2 billion at June 30, 2019 compared to $2.9 billion at June 30, 2018 primarily as a result of positive trends occurring in the financial markets and an increase in sales efforts.

Insurance agency commissions increased 5% for the first six months of 2019 as compared to the first six months of 2018 driven by an increase in commissions on physician’s liability policies.

Bank-owned life insurance income decreased for the first six months of 2019 as compared to the first six months of 2018 due to the decline in insurance mortality proceeds from year-to-year of $0.6 million and $1.6 million, respectively.

Bank card fee income remained level during the first six months of 2019, compared to the first six months of 2018.

Non-interest Expense

Non-interest expense amounts and trends are presented in the following table for the periods indicated:

		Six Months Ended June 30,				2019/2018		2019/2018
(Dollars in thousands)		2019		2018		$ Change			% Change
Salaries and employee benefits		$	51,465	$	48,576	$	2,889		5.9	%
Occupancy expense of premises			9,991		9,584		407		4.2
Equipment expenses			5,288		4,468		820		18.4
Marketing			1,830		2,093		(263)		(12.6)
Outside data services			3,740		3,104		636		20.5
FDIC insurance			2,220		2,583		(363)		(14.1)
Amortization of intangible assets			974		1,082		(108)		(10.0)
Merger expenses			-		11,186		(11,186)		N/M
Professional fees and services			2,879		2,739		140		5.1
Other expenses			9,692		9,308		384		4.1
	Total non-interest expense	$	88,079	$	94,723	$	(6,644)		(7.0)

Non-interest expenses decreased 7% to $88.1 million in the first six months of 2019 compared to $94.7 million in the first six months of 2018. The first six months of 2018 included $11.2 million in merger expenses. Excluding merger expenses, non-interest expenses increased 5% over the prior year period. The majority of the increase was in compensation, software costs and other expenses from outside data services. Further detail by category of non-interest expense follows:

Salaries and employee benefits, the largest component of non-interest expenses, increased 6% in the first six months of 2019 as a result of a combination of higher compensation expense from annual merit increases over the preceding twelve months and management’s decision, beginning in the current year, to increase the Company’s contribution to the employee retirement savings plan as a result of the reduction of the corporate tax rate that occurred at the end of 2017. The average number of full-time equivalent employees declined to 911 in the first six months of 2019 compared to 922 in the first six months of 2018.

Combined occupancy and equipment expenses increased 9% compared to the prior year as a result of increases to software cost and, to a lesser extent, increases in rental expense and equipment depreciation.

42

Marketing expense decreased 13% as a result of decreased advertising campaigns associated with the prior year’s WashingtonFirst acquisition.

FDIC insurance experienced a 14% decrease due to an improved assessment-based institutional rating.

Outside data services grew by $0.6 million or 20% primarily due to increased transaction volume.

Professional fees and services grew 5% from the prior year due to increased costs associated with consulting services.

Operating Expense Performance

Management views the GAAP efficiency ratio as an important financial measure of expense performance and cost management. The ratio expresses the level of non-interest expenses as a percentage of total revenue (net interest income plus total non-interest income). Lower ratios indicate improved productivity.

Non-GAAP Financial Measures

The Company also uses a traditional efficiency ratio that is a non-GAAP financial measure of operating expense control and efficiency of operations. Management believes that its traditional efficiency ratio better focuses attention on the operating performance of the Company over time than does a GAAP efficiency ratio, and is highly useful in comparing period-to-period operating performance of the Company’s core business operations. It is used by management as part of its assessment of its performance in managing non-interest expenses. However, this measure is supplemental, and is not a substitute for an analysis of performance based on GAAP measures. The reader is cautioned that the non-GAAP efficiency ratio used by the Company may not be comparable to GAAP or non-GAAP efficiency ratios reported by other financial institutions.

In general, the efficiency ratio is non-interest expenses as a percentage of net interest income plus non-interest income. Non-interest expenses used in the calculation of the non-GAAP efficiency ratio exclude merger expenses, the amortization of intangibles, and other non-recurring expenses. Income for the non-GAAP efficiency ratio includes the favorable effect of tax-exempt income, and excludes securities gains and losses, which vary widely from period to period without appreciably affecting operating expenses, and other non-recurring gains. The measure is different from the GAAP efficiency ratio, which also is presented in this report. The GAAP measure is calculated using non-interest expense and income amounts as shown on the face of the Condensed Consolidated Statements of Income. The GAAP and non-GAAP efficiency ratios are reconciled and provided in the following table. The non-GAAP efficiency ratio remained relatively stable at 51.57% in the first six months of 2019 compared to 51.25% for the first six months of 2018.

In addition, the Company uses pre-tax, pre-provision income adjusted for merger expenses as a measure of the level of recurring income before taxes. Management believes this provides financial statement users with a useful metric of the run-rate of revenues and expenses that is readily comparable to other financial institutions. This measure is calculated by adding the provision for loan losses, merger expenses and the provision for income taxes back to net income. This metric increased in the first six months of 2019 compared to the first six months of 2018 due primarily to the increase in net interest income.

43

			Six Months Ended
			June 30,
(Dollars in thousands)			2019		2018
Pre-tax pre-provision pre-merger income:
Net income			$	58,593	$	46,064
	Plus non-GAAP adjustments:
		Merger expenses		-		11,186
		Income taxes		18,283		14,178
		Provision for loan losses		1,505		3,730
Pre-tax pre-provision pre-merger income			$	78,381	$	75,158
Efficiency ratio - GAAP basis:
Non-interest expense			$	88,079	$	94,723
Net interest income plus non-interest income			$	166,460	$	158,695
Efficiency ratio - GAAP basis				52.91%		59.69%
Efficiency ratio - Non-GAAP basis:
Non-interest expense			$	88,079	$	94,723
	Less non-GAAP adjustments:
		Amortization of intangible assets		974		1,082
		Merger expenses		-		11,186
Non-interest expenses - as adjusted			$	87,105	$	82,455
Net interest income plus non-interest income			$	166,460	$	158,695
	Plus non-GAAP adjustment:
		Tax-equivalent income		2,450		2,262
	Less non-GAAP adjustment:
		Securities gains		5		63
	Net interest income plus non-interest income - as adjusted		$	168,905	$	160,894
	Efficiency ratio - Non-GAAP basis			51.57%		51.25%

Income Taxes

The Company’s income tax expense increased to $18.3 million in the first six months of 2019, compared to income tax expense of $14.2 million in the first six months of 2018 as a result of the increase in pre-tax income. The resulting effective tax rates were 23.8% for the first six months of 2019 and 23.5% for the first six months of 2018. The increase in the effective tax rate was the result of a decline in tax-advantaged income for the first six months of 2019 compared to the same period for 2018.

44

Results of Operations

For the Three Months Ended June 30, 2019 Compared to the Three Months Ended June 30, 2018

Net income for the Company for the second quarter of 2019 totaled $28.3 million ($0.79 per diluted share) compared to net income of $24.4 million ($0.68 per diluted share) for the second quarter of 2018.

Net Interest Income

For the second quarter of 2019, net interest income increased 4% to $66.2 million compared to $63.8 million for the second quarter of 2018. On a tax-equivalent basis, net interest income for the second quarter of 2019 was $67.4 million compared to $65.0 million for the second quarter of 2018, an increase of 4%. The growth in net interest income was the result of the Company’s 7% growth in average loans during the previous twelve months which more than offset the impact of deposit growth as interest rates rose during that period.

Net interest margin was 3.54% for the second quarter of 2019, compared to 3.56% for the second quarter of 2018. Amortization of the fair value adjustments to both interest-earning assets and interest-bearing liabilities directly attributable to the acquisition had a 5 basis point positive effect on net interest margin for the current period. Excluding the amortization of fair value adjustments, the net interest margin for the current quarter would have been 3.49%, compared to 3.44% for the prior year’s second quarter.

The impact of the amortization of the fair value adjustments on net interest income for the current quarter is presented in the following table:

(In thousands)		For the Three Months Ended June 30, 2019
Net Interest Income Excluding Purchase Accounting Adjustments:
Net Interest Income		$	66,185
	Accretion of fair value adjustment on pools of homogeneous loans		(370)
	Accretion of loan fair value adjustment on purchased credit impaired loans		(372)
	Settlements of purchased credit impaired loans		-
	Accretion of fair value adjustment on certificates of deposits		(133)
	Accretion of fair value adjustment on subordinated debentures		(36)
Net Interest Income Excluding Purchase Accounting Adjustments		$	65,274

45

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
		Three Months Ended June 30,
				2019						2018
					Annualized						Annualized
	Average		(1)		Average		Average		(1)		Average
(Dollars in thousands and tax-equivalent)	Balances		Interest		Yield/Rate		Balances		Interest		Yield/Rate
Assets
Residential mortgage loans	$	1,244,086	$	11,971	3.85	%	$	1,034,062	$	9,414	3.64	%
Residential construction loans		174,095		1,873	4.32			223,171		2,199	3.95
Total mortgage loans		1,418,181		13,844	3.91			1,257,233		11,613	3.70
Commercial AD&C loans		686,282		10,268	6.00			576,076		8,271	5.76
Commercial investor real estate loans		1,960,919		24,357	4.98			1,924,759		22,661	4.72
Commercial owner occupied real estate loans		1,215,632		14,840	4.90			1,184,409		13,989	4.74
Commercial business loans		756,594		10,321	5.47			666,280		8,807	5.30
Total commercial loans		4,619,427		59,786	5.19			4,351,524		53,728	4.95
Consumer loans		505,235		6,335	5.03			531,965		5,753	4.40
Total loans (2)		6,542,843		79,965	4.90			6,140,722		71,094	4.64
Loans held for sale		37,121		381	4.11			25,403		279	4.39
Taxable securities		744,701		5,689	3.06			734,482		5,282	2.88
Tax-exempt securities (3)		220,162		1,959	3.56			293,824		2,598	3.54
Total investment securities (4)		964,863		7,648	3.17			1,028,306		7,880	3.06
Interest-bearing deposits with banks		73,793		428	2.32			114,869		514	1.79
Federal funds sold		620		1	0.60			1,972		7	1.44
Total interest-earning assets		7,619,240		88,423	4.65			7,311,272		79,774	4.37
Less: allowance for loan losses		(53,068)						(47,694)
Cash and due from banks		66,031						66,420
Premises and equipment, net		60,871						61,900
Other assets		601,809						534,837
Total assets	$	8,294,883					$	7,926,735
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	747,343		460	0.25	%	$	729,948		222	0.12	%
Regular savings deposits		332,796		118	0.14			356,077		94	0.11
Money market savings deposits		1,690,413		6,589	1.56			1,554,304		4,571	1.18
Time deposits		1,680,055		8,979	2.14			1,220,447		3,964	1.30
Total interest-bearing deposits		4,450,607		16,146	1.46			3,860,776		8,851	0.92
Other borrowings		157,499		290	0.74			148,542		108	0.29
Advances from FHLB		623,727		4,103	2.64			1,011,180		5,338	2.12
Subordinated debentures		37,376		490	5.25			37,518		482	5.14
Total interest-bearing liabilities		5,269,209		21,029	1.60			5,058,016		14,779	1.17
Noninterest-bearing demand deposits		1,796,802						1,796,644
Other liabilities		129,794						58,994
Stockholders' equity		1,099,078						1,013,081
Total liabilities and stockholders' equity	$	8,294,883					$	7,926,735
Net interest income and spread				67,394	3.05	%				64,995	3.20	%
Less: tax-equivalent adjustment				1,209						1,177
Net interest income			$	66,185					$	63,818
Interest income/earning assets					4.65	%					4.37	%
Interest expense/earning assets					1.11						0.81
Net interest margin					3.54	%					3.56	%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 26.13% for both 2019 and 2018. The annualized
taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.2 million in both 2019 and 2018.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.
(4) Investments available-for-sale are presented at amortized cost.

46

Interest Income

The Company's total tax-equivalent interest income increased 11% for the second quarter of 2019 compared to the prior year quarter. The previous table reflects the growth in the various categories of interest-earning assets as loan growth during the previous twelve months more than offset modest declines in other interest-earning assets.

The average balance of the loan portfolio increased 7% for the second quarter of 2019 compared to the prior year period. A significant amount of this growth was concentrated in the commercial real estate loan portfolio. The yield on average loans increased by 26 basis points compared to the prior year quarter. The average yield on total investment securities increased 11 basis points while the average balance of the investment portfolio decreased by 6% for the second quarter of 2019 compared to the second quarter of 2018. The increase in the yield on investments was driven by the yield increase in taxable investments as a result of an increase in yields on U.S. treasuries and government agencies. The increase in the yield on loans and the investment portfolio resulted in the 28 basis point rise in the yield on interest-earning assets from period to period.

Interest Expense

Interest expense increased 42% in the second quarter of 2019 compared to the second quarter of 2018. The majority of the increase from period to period was mainly attributable to the rates that were increased to promote deposit growth. The main drivers in the 82% rise in the cost of interest-bearing deposits were the 9% growth in money market and the 38% growth in time deposit average balances coupled with the significant increases in money market and time deposits rates. The increase in the average interest-bearing deposits directly resulted in the 38% decrease in average FHLB borrowings from period to period as the average rate paid on those borrowings increased 52 basis points. The overall impact was an increase of 43 basis points in the average rate paid on interest-bearing liabilities in the second quarter of 2019 compared to the second quarter of 2018.

Non-interest Income

Non-interest income amounts and trends are presented in the following table for the periods indicated:

			Three Months Ended June 30,				2019/2018		2019/2018
(Dollars in thousands)			2019		2018		$ Change			% Change
	Securities gains		$	5	$	-	$	5		N/M	%
	Service charges on deposit accounts			2,442		2,290		152		6.6
	Mortgage banking activities			3,270		2,064		1,206		58.4
	Wealth management income			5,539		5,387		152		2.8
	Insurance agency commissions			1,265		1,180		85		7.2
	Income from bank owned life insurance			654		670		(16)		(2.4)
	Bank card fees			1,467		1,393		74		5.3
	Other income			1,914		1,884		30		1.6
		Total non-interest income	$	16,556	$	14,868	$	1,688		11.4

Total non-interest income was $16.6 million for the second quarter of 2019 compared to $14.9 million for the second quarter of 2018, an increase of 11%. This increase was driven predominantly by income from mortgage banking activities, and to a lesser extent, modest increases in the majority of sources of non-interest income. Further detail by type of non-interest income follows:

Service charges on deposit accounts increased 7% in the second quarter of 2019, compared to the second quarter of 2018.

Income from mortgage banking activities increased by $1.2 million or 58% in the second quarter of 2019 as compared to the second quarter of 2018. The increased income from mortgage banking activities was attributable to the increased origination volume during the period. The Company sold the majority of its mortgage loan production for gains during the quarter versus retaining them in the loan portfolio.

Wealth management income increased 3% in the second quarter of 2019 as compared to the second quarter of 2018. This increase was driven by a 5% a rise in income from trust and estate services. Overall total assets under management increased to $3.2 billion at June 30, 2019 compared to $2.9 billion at June 30, 2018 due to positive market movements and additions from new and existing clients.

Insurance agency commissions increased 7% in the second quarter of 2019, compared to the second quarter of 2018 driven by increases in commercial insurance and physician’s liability policies.

Bank card income grew 5% in the second quarter of 2019, compared to the second quarter of 2018 as transaction volume increased from the prior year.

47

Non-interest Expense

Non-interest expense amounts and trends are presented in the following table for the periods indicated:

		Three Months Ended June 30,				2019/2018		2019/2018
(Dollars in thousands)		2019		2018		$ Change			% Change
Salaries and employee benefits		$	25,489	$	24,664	$	825		3.3	%
Occupancy expense of premises			4,760		4,642		118		2.5
Equipment expenses			2,712		2,243		469		20.9
Marketing			887		945		(58)		(6.1)
Outside data services			1,962		1,707		255		14.9
FDIC insurance			1,084		1,390		(306)		(22.0)
Amortization of intangible assets			483		541		(58)		(10.7)
Merger expenses			-		2,228		(2,228)		N/M
Professional fees and services			1,634		1,699		(65)		(3.8)
Other expenses			4,876		5,023		(147)		(2.9)
	Total non-interest expense	$	43,887	$	45,082	$	(1,195)		(2.7)

Non-interest expenses totaled $43.9 million in the second quarter of 2019 compared to $45.1 million in the second quarter of 2018, a decrease of 3%. The prior year included $2.2 million in merger costs. Exclusive of these expenses, non-interest expense increased 2%. Further detail by category of non-interest expense follows:

Salaries and employee benefits, the largest component of non-interest expenses, increased 3% in the second quarter of 2019 as a result of a combination of higher compensation expense from annual merit increases over the preceding twelve months and management’s decision, beginning in the current year, to increase the Company’s contribution to the employee retirement savings plan as a result of the reduction of the corporate tax rate that occurred at the end of 2017. The average number of full-time equivalent employees declined to 912 in the second quarter of 2019 compared to 922 in the second quarter of 2018.

Occupancy and equipment expenses for the quarter increased 9% compared to the prior year quarter as a result of increased software cost and, to a lesser extent, increases in rental expense and equipment depreciation.

Marketing expense decreased 6% as a result of decreased advertising campaigns associated with the WashingtonFirst acquisition in the prior year.

FDIC insurance expense decreased 22% due to an improved assessment-based institutional rating.

Outside data service expense has grown 15% driven by transaction-based services offered by the Bank.

Other non-interest expenses decreased 3% in the second quarter of 2019 compared to the second quarter of 2018 primarily due to a decrease in franchise taxes.

Income Taxes

The Company had income tax expense of $8.9 million in the second quarter of 2019, compared to income tax expense of $7.5 million in the second quarter of 2018. The higher tax expense for the second quarter of 2019 was the result of an increase in income before taxes compared to the same period of the prior year. The resultant effective tax rate increased to 24.0% for the second quarter of 2019 compared to 23.4% for the second quarter of 2018 as a result of the lower proportion of tax-advantaged income to income before taxes in the current period versus the prior year period.

Operating Expense Performance

Management views the GAAP efficiency ratio as an important financial measure of expense performance and cost management. The ratio expresses the level of non-interest expenses as a percentage of total revenue (net interest income plus total non-interest income). Lower ratios may indicate improved productivity as the growth rate in revenue streams exceeds the growth in operating expenses.

Non-GAAP Financial Measures

48

The Company also uses a traditional efficiency ratio that is a non-GAAP financial measure of operating expense control and efficiency of operations. Management believes that its traditional efficiency ratio better focuses attention on the operating performance of the Company over time than does a GAAP efficiency ratio, and is highly useful in comparing period-to-period operating performance of the Company’s core business operations. It is used by management as part of its assessment of its performance in managing non-interest expenses. However, this measure is supplemental, and is not a substitute for an analysis of performance based on GAAP measures. The reader is cautioned that the non-GAAP efficiency ratio used by the Company may not be comparable to GAAP or non-GAAP efficiency ratios reported by other financial institutions.

In general, the efficiency ratio is non-interest expenses as a percentage of net interest income plus non-interest income. Non-interest expenses used in the calculation of the non-GAAP efficiency ratio exclude merger expenses, the amortization of intangibles, and other non-recurring expenses. Income for the non-GAAP efficiency ratio includes the favorable effect of tax-exempt income, and excludes securities gains and losses, which vary widely from period to period without appreciably affecting operating expenses, and other non-recurring gains. The measure is different from the GAAP efficiency ratio, which also is presented in this report. The GAAP measure is calculated using non-interest expense and income amounts as shown on the face of the Condensed Consolidated Statements of Income. The GAAP efficiency ratio in the second quarter of 2019 improved compared to the second quarter of 2018, as non-interest expense decreased due to the lack of merger expenses and net interest income increased. The GAAP and non-GAAP efficiency ratios are reconciled and provided in the following table. The non-GAAP efficiency ratio improved to 51.71% in the second quarter of 2019 compared to 52.98% in the second quarter of 2018 as the rate of increase in the non-GAAP income exceeded the rate of increase in the non-GAAP expenses.

In addition to efficiency ratios, the Company uses pre-tax, pre-provision income, excluding merger expenses, as a measure of the level of recurring income before taxes. Management believes this provides financial statement users with a useful metric of the run-rate of revenues and expenses which is readily comparable to other financial institutions. This measure is calculated by adding the provision for loan losses, merger expenses and the provision for income taxes back to net income. This metric increased in the second quarter of 2019 compared to the second quarter of 2018 primarily due to an increase in net interest and non-interest income which offset the decline in merger expenses from the prior year quarter.

49

			Three Months Ended
			June 30,
(Dollars in thousands)			2019		2018
Pre-tax pre-provision pre-merger income:
Net income			$	28,276	$	24,399
	Plus non-GAAP adjustments:
		Merger expenses		-		2,228
		Income taxes		8,945		7,472
		Provision for loan losses		1,633		1,733
Pre-tax pre-provision pre-merger income			$	38,854	$	35,832
Efficiency ratio - GAAP basis:
Non-interest expense			$	43,887	$	45,082
Net interest income plus non-interest income			$	82,741	$	78,686
Efficiency ratio - GAAP basis				53.04%		57.29%
Efficiency ratio - Non-GAAP basis:
Non-interest expense			$	43,887	$	45,082
	Less non-GAAP adjustments:
		Amortization of intangible assets		483		541
		Merger expenses		-		2,228
Non-interest expenses - as adjusted			$	43,404	$	42,313
Net interest income plus non-interest income			$	82,741	$	78,686
	Plus non-GAAP adjustment:
		Tax-equivalent income		1,209		1,177
	Less non-GAAP adjustment:
		Securities gains		5		-
	Net interest income plus non-interest income - as adjusted		$	83,945	$	79,863
	Efficiency ratio - Non-GAAP basis			51.71%		52.98%

50

FINANCIAL CONDITION

The Company’s total assets grew to $8.4 billion at June 30, 2019, as compared to $8.2 billion at December 31, 2018 as a result of an increase in interest-bearing deposits with banks, in addition to an increase in other assets from the newly adopted lease accounting requirements. Total loans remained level at June 30, 2019 compared December 31, 2018 at $6.6 billion despite $389 million in new funded loan production during this period. In addition, commercial loans originated year-to-date had total unfunded commitments of $209 million as of June 30, 2019. The growth of the loan portfolio during the previous six months was limited due to the attrition attributable to the competitive forces in the regional economy and recent shifts that have occurred in interest rates and the sales of the majority of mortgage loan production. Total deposits grew 8% from the end of 2018 resulting in a reduction of the loan to deposit ratio from 111% at year-end 2018 to 103% at the end of the current quarter. The year-to-date deposit growth included a 16% increase in noninterest-bearing deposits and a 20% reduction in wholesale deposits.

Analysis of Loans

A comparison of the loan portfolio at the dates indicated is presented in the following table:

		June 30, 2019				December 31, 2018				Period-to-Period Change
(Dollars in thousands)		Amount		%		Amount		%		Amount		%
Residential real estate:
	Residential mortgage	$	1,241,081	18.9	%	$	1,228,247	18.7	%	$	12,834	1.0	%
	Residential construction		171,106	2.6			186,785	2.8			(15,679)	(8.4)
Commercial real estate:
	Commercial owner occupied real estate		1,224,986	18.7			1,202,903	18.3			22,083	1.8
	Commercial investor real estate		1,994,027	30.4			1,958,395	29.8			35,632	1.8
	Commercial AD&C		658,709	10.1			681,201	10.4			(22,492)	(3.3)
Commercial business			772,158	11.8			796,264	12.1			(24,106)	(3.0)
Consumer			489,176	7.5			517,839	7.9			(28,663)	(5.5)
	Total loans	$	6,551,243	100.0	%	$	6,571,634	100.0	%	$	(20,391)	(0.3)

Analysis of Investment Securities

The composition of investment securities at the periods indicated is presented in the following table:

			June 30, 2019				December 31, 2018				Period-to-Period Change
(Dollars in thousands)			Amount		%		Amount		%		Amount		%
Investments available-for-sale:
	U.S. treasuries and government agencies		$	314,769	33.0	%	$	296,678	29.4	%	$	18,091	6.1	%
	State and municipal			249,576	26.1			282,024	27.9			(32,448)	(11.5)
	Mortgage-backed and asset-backed			326,346	34.1			348,515	34.4			(22,169)	(6.4)
	Corporate debt			9,456	1.0			9,240	0.9			216	2.3
	Trust preferred			310	-			310	-			-	-
	Marketable equity securities			568	0.1			568	0.1			-	-
		Total available-for-sale securities		901,025	94.3			937,335	92.7			(36,310)	(3.9)
Other equity securities:
	Other equity securities			54,690	5.7			73,389	7.3			(18,699)	(25.5)
		Total other equity securities		54,690	5.7			73,389	7.3			(18,699)	(25.5)
Total securities			$	955,715	100.0	%	$	1,010,724	100.0	%	$	(55,009)	(5.4)

51

The investment portfolio consists primarily of U.S. Treasuries, U.S. Agency securities, U.S. Agency mortgage-backed securities, U.S. Agency collateralized mortgage obligations, asset-backed securities and state and municipal securities. The portfolio is monitored on a continuing basis with consideration given to interest rate trends and the structure of the yield curve and with a frequent assessment of economic projections and analysis. At June 30, 2019, 97% of the investment portfolio was invested in Aa/AA or Aaa/AAA-rated securities. The composition and size of the portfolio at June 30, 2019 has remained stable compared to the prior year-end. The duration of the portfolio is monitored to ensure the adequacy and ability to meet liquidity demands. At June 30, 2019 the duration of the portfolio was 3.3 years compared to 3.9 years at December 31, 2018. The decrease in the duration is attributable to the declining interest rate environment during the first half of 2019. These attributes have resulted in a portfolio with low credit risk that would provide the liquidity necessary to meet the loan and operational demands.

Other Earning Assets

Residential mortgage loans held for sale increased to $50 million at June 30, 2019, compared to $23 million at December 31, 2018 as a result of the increased volume in loan originations during the period. The aggregate of interest-bearing deposits with banks and federal funds increased by $131 million at June 30, 2019 compared to December 31, 2018 due to the timing of cash flows.

Deposits

The composition of deposits at the periods indicated is presented in the following table:

			June 30, 2019				December 31, 2018				Period-to-Period Change
(Dollars in thousands)			Amount		%		Amount		%		Amount		%
Noninterest-bearing deposits			$	2,023,614	31.7	%	$	1,750,319	29.6	%	$	273,295	15.6	%
Interest-bearing deposits:
	Demand			721,389	11.3			703,145	11.9			18,244	2.6
	Money market savings			1,705,164	26.7			1,605,024	27.1			100,140	6.2
	Regular savings			331,164	5.2			330,231	5.6			933	0.3
	Time deposits of less than $100,000			456,520	7.1			427,421	7.2			29,099	6.8
	Time deposits of $100,000 or more			1,151,898	18.0			1,098,740	18.6			53,158	4.8
		Total interest-bearing deposits		4,366,135	68.3			4,164,561	70.4			201,574	4.8
Total deposits			$	6,389,749	100.0	%	$	5,914,880	100.0	%	$	474,869	8.0

Deposits and Borrowings

Total deposits increased by 8% from $5.9 billion at December 31, 2018 to $6.4 billion at June 30, 2019. The majority of this increase occurred in noninterest-bearing deposits with other notable increases in money market and time deposit categories. Interest-bearing deposits represented 68% of deposits with the remaining 32% in noninterest-bearing balances at June 30, 2019 compared to 30% and 70%, respectively, at December 31, 2018. As a result of the increase in deposits, total borrowings were reduced by $0.4 billion or 36% at June 30, 2019 compared to December 31, 2018, primarily in advances from the FHLB and overnight funding. During the quarter, the Company shifted short-term FHLB borrowings into medium-term lower rate borrowings. This shift accompanied by the increase in noninterest-bearing deposits benefited the Company’s net interest margin during the current quarter.

Capital Management

Management monitors historical and projected earnings, dividends and asset growth, as well as risks associated with the various types of on and off-balance sheet assets and liabilities, in order to determine appropriate capital levels. Total stockholders' equity was $1.1 billion at June 30, 2019 and December 31, 2018. The ratio of average equity to average assets was 13.12% for the six months ended June 30, 2019, as compared to 12.83% for the first six months of 2018.

Bank holding companies and banks are required to maintain capital ratios in accordance with guidelines adopted by the federal bank regulators. These guidelines are commonly known as Risk-Based Capital guidelines. The actual regulatory ratios and required ratios for capital adequacy are summarized for the Company in the following table.

Risk-Based Capital Ratios

52

			Minimum
	Ratios at		Regulatory
	June 30, 2019	December 31, 2018	Requirements
Total capital to risk-weighted assets	12.79%	12.26%	8.00%
Tier 1 capital to risk-weighted assets	11.59%	11.06%	6.00%
Common equity tier 1 capital	11.43%	10.90%	4.50%
Tier 1 leverage	9.80%	9.50%	4.00%

As of June 30, 2019, the most recent notification from the Bank’s primary regulator categorized the Bank as a "well-capitalized" institution under the prompt corrective action rules of the Federal Deposit Insurance Act. Designation as a well-capitalized institution under these regulations is not a recommendation or endorsement of the Company or the Bank by federal bank regulators.

The minimum capital level requirements applicable to the Company and the Bank are: (1) a common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 capital ratio of 6%; (3) a total capital ratio of 8%; and (4) a Tier 1 leverage ratio of 4%. The rules also establish a “capital conservation buffer” of 2.5% above the regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital. An institution would be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses to executive officers if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.

Tangible Common Equity

Tangible equity, tangible assets and tangible book value per share are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity and tangible assets exclude the balances of goodwill and other intangible assets from stockholder’s equity and total assets, respectively. Management believes that this non-GAAP financial measure provides information to investors that may be useful in understanding our financial condition. Because not all companies use the same calculation of tangible equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies.

Tangible common equity totaled $767 million at June 30, 2019, compared to $727 million at December 31, 2018. At June 30, 2019, the ratio of tangible common equity to tangible assets has increased to 9.54% compared to 9.21% at December 31, 2018. Tangible common equity growth was the result of increased net earnings during the current quarter.

A reconciliation of the non-GAAP ratio of tangible equity to tangible assets and tangible book value per share are provided in the following table:

Tangible Common Equity Ratio – Non-GAAP

(Dollars in thousands, except per share data)		June 30, 2019		December 31, 2018
Tangible common equity ratio:
Total stockholders' equity		$	1,119,445	$	1,067,903
	Accumulated other comprehensive loss		3,565		15,754
	Goodwill		(347,149)		(347,149)
	Other intangible assets, net		(8,813)		(9,788)
Tangible common equity		$	767,048	$	726,720
Total assets		$	8,398,519	$	8,243,272
	Goodwill		(347,149)		(347,149)
	Other intangible assets, net		(8,813)		(9,788)
Tangible assets		$	8,042,557	$	7,886,335
Tangible common equity ratio			9.54%		9.21%
Tangible book value per share			$ 21.54		$ 20.45

53

Credit Risk

The fundamental lending business of the Company is based on understanding, measuring and controlling the credit risk inherent in the loan portfolio. The Company’s loan portfolio is subject to varying degrees of credit risk. Credit risk entails both general risks, which are inherent in the process of lending, and risk specific to individual borrowers. The Company’s credit risk is mitigated through portfolio diversification, which limits exposure to any single customer, industry or collateral type. Typically, each consumer and residential lending product has a generally predictable level of credit losses based on historical loss experience. Residential mortgage and home equity loans and lines generally have the lowest credit loss experience. Loans secured by personal property, such as auto loans, generally experience medium credit losses. Unsecured loan products, such as personal revolving credit, have the highest credit loss experience and for that reason, the Company has chosen not to engage in a significant amount of this type of lending. Credit risk in commercial lending can vary significantly, as losses as a percentage of outstanding loans can shift widely during economic cycles and are particularly sensitive to changing economic conditions. Generally, improving economic conditions result in improved operating results on the part of commercial customers, enhancing their ability to meet their particular debt service requirements. Improvements, if any, in operating cash flows can be offset by the impact of rising interest rates that may occur during improved economic times. Inconsistent economic conditions may have an adverse effect on the operating results of commercial customers, reducing their ability to meet debt service obligations.

Loans acquired with evidence of credit deterioration since their origination as of the date of the acquisition are recorded at their initial fair value. Credit deterioration is determined based on the probability of collection of all contractually required principal and interest payments. These loans are not considered non-performing for reporting purposes but are managed and monitored in the same manner and using the same techniques and strategies as organically generated loans. In accordance with GAAP, the historical allowance for loan losses related to the acquired loans is not carried over to the Company’s financial statements. The following credit related sections should be read in conjunction with the section “Loans Acquired with Deteriorated Credit Quality” in “Note 1 – Significant Accounting Policies” of the Notes to the Condensed Consolidated Financial Statements.

Total non-performing loans increased to $37.7 million or 0.58% of total loans at June 30, 2019 compared to $36.0 million or 0.55% of total loans at December 31, 2018. While the diversification of the lending portfolio among different commercial, residential and consumer product lines along with different market conditions of the D.C. suburbs, Northern Virginia and Baltimore metropolitan area has mitigated some of the risks in the portfolio, local economic conditions and levels of non-performing loans may continue to be influenced by the conditions being experienced in various business sectors of the economy on both a regional and national level.

To control and manage credit risk, management has a credit process in place to reasonably ensure that credit standards are maintained along with an in-house loan administration accompanied by oversight and review procedures. The primary purpose of loan underwriting is the evaluation of specific lending risks and involves the analysis of the borrower’s ability to service the debt as well as the assessment of the value of the underlying collateral. Oversight and review procedures include the monitoring of portfolio credit quality, early identification of potential problem credits and the proactive management of problem credits. As part of the oversight and review process, the Company maintains an allowance for loan losses (the “allowance”).

The allowance represents an estimation of the losses that are inherent in the loan portfolio. The adequacy of the allowance is determined through the ongoing evaluation of the credit portfolio, and involves consideration of a number of factors, as outlined below, to establish an adequate allowance for loan losses. Determination of the allowance is inherently subjective and requires significant estimates, including estimated losses on pools of homogeneous loans based on historical loss experience and consideration of current economic trends, which may be susceptible to significant change. Loans deemed uncollectible are charged against the allowance, while recoveries are credited to the allowance. Management adjusts the level of the allowance through the provision for loan losses, which is recorded as a current period operating expense.

The methodology for assessing the appropriateness of the allowance includes: (1) a general allowance that reflects historical losses supplemented by qualitative factors, as adjusted, by credit category, and (2) a specific allowance for impaired credits on an individual or portfolio basis. The amount of the allowance is reviewed quarterly by the Risk Committee of the board of directors.

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The Company recognizes a collateral dependent lending relationship as non-performing when either the loan becomes 90 days delinquent or as a result of factors (such as bankruptcy, interruption of cash flows, etc.) considered at the monthly credit committee meeting. When a commercial loan is placed on non-accrual status, it is considered to be impaired and all accrued but unpaid interest is reversed. Classification as an impaired loan is based on a determination that the Company may not collect all principal and interest payments according to contractual terms. Impaired loans exclude large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment such as residential real estate and consumer loans. Typically, all payments received on non-accrual loans are first applied to the remaining principal balance of the loans. Any additional recoveries are credited to the allowance. Integral to the assessment of the allowance process is an evaluation that is performed to determine whether a specific allowance on an impaired loan is warranted and, when losses are confirmed, a charge-off is taken to reduce the loan to its net realizable value. Any further collateral deterioration results in either further specific allowances being established or additional charge-offs. When additional deterioration becomes apparent, an action plan is developed for the particular loan and an appraisal will be obtained depending on the time elapsed since the prior appraisal, the loan balance and/or the result of the internal evaluation. A current appraisal on large loans is usually obtained if the appraisal on file is more than 12 months old and there has been a material change in market conditions, zoning, physical use or the adequacy of the collateral based on an internal evaluation. The Company’s policy is to strictly adhere to regulatory appraisal standards. If an appraisal is ordered, no more than a 30 day turnaround is requested from the appraiser, who is selected by Credit Administration from an approved appraiser list. After receipt of the updated appraisal, the assigned credit officer will recommend to the Chief Credit Officer whether a specific allowance or a charge-off should be taken. The Chief Credit Officer has the authority to approve a specific allowance or charge-off between monthly credit committee meetings to ensure that there are no significant time lapses during this process.

The Company’s methodology for evaluating whether a loan is impaired begins with risk-rating credits on an individual basis and includes consideration of the borrower’s overall financial condition, payment record and available cash resources that may include the sufficiency of collateral value and, in a select few cases, verifiable support from financial guarantors. In measuring impairment, the Company looks primarily to the discounted cash flows of the project itself or to the value of the collateral as the primary sources of repayment of the loan. The Company may consider the existence of guarantees and the financial strength and wherewithal of the guarantors involved in any loan relationship. Guarantees may be considered as a source of repayment based on the guarantor’s financial condition and respective payment capacity. Accordingly, absent a verifiable payment capacity, a guarantee alone would not be sufficient to avoid classifying the loan as impaired.

Management has established a credit process that dictates that structured procedures be performed to monitor these loans between the receipt of an original appraisal and the updated appraisal. These procedures include the following:

An internal evaluation is updated periodically to include borrower financial statements and/or cash flow projections.

The borrower may be contacted for a meeting to discuss an updated or revised action plan which may include a request for additional collateral.

Re-verification of the documentation supporting the Company’s position with respect to the collateral securing the loan.

At the monthly credit committee meeting the loan may be downgraded and a specific allowance may be decided upon in advance of the receipt of the appraisal.

Upon receipt of the updated appraisal (or based on an updated internal financial evaluation) the loan balance is compared to the appraisal and a specific allowance is decided upon for the particular loan, typically for the amount of the difference between the appraisal and the loan balance.

The Company will specifically reserve for or charge-off the excess of the loan amount over the amount of the appraisal net of closing costs.

If an updated appraisal is received subsequent to the preliminary determination of a specific allowance or partial charge-off, and it is less than the initial appraisal used in the initial assessment, an additional specific allowance or charge-off is taken on the related credit. Partially charged-off loans are not written back up based on updated appraisals and always remain on non-accrual with any and all subsequent payments first applied to the remaining balance of the loan as principal reductions. No interest income is recognized on loans that have been partially charged-off.

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Loans considered to be troubled debt restructurings (“TDRs”) are loans that have their terms restructured (e.g., interest rates, loan maturity date, payment and amortization period, etc.) in circumstances that provide payment relief to a borrower experiencing financial difficulty. All restructured loans are considered impaired loans and may either be in accruing status or non-accruing status. Non-accruing restructured loans may return to accruing status provided doubt has been removed concerning the collectability of principal and interest as evidenced by a sufficient period of payment performance in accordance with the restructured terms. Loans may be removed from the restructured category if the borrower is no longer experiencing financial difficulty, a re-underwriting event took place and the revised loan terms of the subsequent restructuring agreement are considered to be consistent with terms that can be obtained in the credit market for loans with comparable risk.

The Company may extend the maturity of a performing or current loan that may have some inherent weakness associated with the loan. However, the Company generally follows a policy of not extending maturities on non-performing loans under existing terms. Maturity date extensions only occur under revised terms that clearly place the Company in a position to increase the likelihood of or assure full collection of the loan under the contractual terms and /or terms at the time of the extension that may eliminate or mitigate the inherent weakness in the loan. These terms may incorporate, but are not limited to additional assignment of collateral, significant balance curtailments/liquidations and assignments of additional project cash flows. Guarantees may be a consideration in the extension of loan maturities. As a general matter, the Company does not view extension of a loan to be a satisfactory approach to resolving non-performing credits. On an exception basis, certain performing loans that have displayed some inherent weakness in the underlying collateral values, an inability to comply with certain loan covenants which are not affecting the performance of the credit or other identified weakness may be extended.

Collateral values or estimates of discounted cash flows (inclusive of any potential cash flow from guarantees) are evaluated to estimate the probability and severity of potential losses. The actual occurrence and severity of losses involving impaired credits can differ substantially from estimates.

The determination of the allowance requires significant judgment, and estimates of probable losses in the loan portfolio can vary significantly from the amounts actually observed. While management uses available information to recognize probable losses, future additions to the allowance may be necessary based on changes in the credits comprising the portfolio and changes in the financial condition of borrowers, such as may result from changes in economic conditions. In addition, federal and state regulatory agencies, as an integral part of their examination process, and independent consultants engaged by the Bank, periodically review the loan portfolio and the allowance. Such reviews may result in adjustments to the allowance based upon their analysis of the information available at the time of each examination.

The Company makes provisions for loan losses in amounts necessary to maintain the allowance at an appropriate level, as established by use of the allowance methodology previously discussed. The provision for loan losses was $1.6 million for the second quarter of 2019 compared to $1.7 million for the second quarter of 2018. The current quarter’s provision reflects the impact of organic loan production and the need to establish a loan loss provision for re-underwritten previously acquired loans that had reached their maturity under their original lending arrangements.

The Company typically sells a substantial portion of its fixed-rate residential mortgage originations in the secondary mortgage market. Concurrent with such sales, the Company is required to make customary representations and warranties to the purchasers about the mortgage loans and the manner in which they were originated. The related sale agreements grant the purchasers recourse back to the Company, which could require the Company to repurchase loans or to share in any losses incurred by the purchasers. This recourse exposure typically extends for a period of six to twelve months after the sale of the loan although the time frame for repurchase requests can extend for an indefinite period. Such transactions could be due to a number of causes including borrower fraud or early payment default. The Company has seen a very limited number of repurchase and indemnity demands from purchasers for such events and routinely monitors its exposure in this regard. The Company maintains a liability of $0.7 million for probable losses due to repurchases.

The Company periodically engages in whole loan sale transactions of its residential mortgage loans as a part its interest rate risk management strategy. There were no whole loan sales of mortgage loans from the portfolio during the current quarter.

Mortgage loan servicing rights are accounted for at amortized cost and are monitored for impairment on an ongoing basis. The amortized cost of the Company's mortgage loan servicing rights was $1.0 million and $1.1 million at June 30, 2019 and December 31, 2018, respectively. The Company did not incur any impairment losses during the current period.

Allowance for Loan Losses

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During the second quarter of 2019, there were no changes in the Company’s methodology for assessing the appropriateness of the allowance for loan losses from the prior year. Variations can occur over time in the estimation of the allowance as a result of the credit performance of borrowers.

The allowance for loan losses as a percent of total loans was 0.82% and 0.81% at June 30, 2019 and December 31, 2018, respectively. At June 30, 2019, total non-performing loans, excluding credit deteriorated loans from acquisitions, were $37.7 million, or 0.58% of total loans, compared to $36.0 million, or 0.55% of total loans, at December 31, 2018. The growth in non-performing loans occurred as a result of modest increases in all segments of the loan portfolio, predominantly loans secured by real estate. Non-performing loans include accruing loans 90 days or more past due and restrucutred loans, but exclude acquired non-performing loans. The allowance for loan losses represented 143% of non-performing loans at June 30, 2019 as compared to 149% at December 31, 2018. While non-performing loans increased from December 31, 2018 to the current quarter, the related reserves for those loans remained stable due to adequate collateral values.

Continued analysis of the actual loss history on the problem credits in 2018 and 2019 provided an indication that the coverage of the inherent losses on the problem credits was adequate. The Company continues to monitor the impact of the economic conditions on our commercial customers together with the reduced inflow of non-accruals and criticized loans. The improvement in these credit metrics supports management’s outlook for continued improved credit quality performance.

The balance of impaired loans was $21.7 million, with specific allowances of $4.8 million against those loans at June 30, 2019, as compared to $22.2 million with specific allowances of $4.9 million, at December 31, 2018.

The Company's borrowers are concentrated in nine counties in Maryland, three counties in Virginia and in Washington D.C. Commercial and residential mortgages, including home equity loans and lines, represented 88% of total loans at June 30, 2019 and 87% of total loans at December 31, 2018. Certain loan terms may create concentrations of credit risk and increase the Company’s exposure to loss. These include terms that permit the deferral of principal payments or payments that are smaller than normal interest accruals (negative amortization); loans with high loan-to-value ratios; loans, such as option adjustable-rate mortgages, that may expose the borrower to future increases in repayments that are in excess of increases that would result solely from increases in market interest rates; and interest-only loans. The Company does not make loans that provide for negative amortization or option adjustable-rate mortgages.

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Summary of Loan Loss Experience

The following table presents the activity in the allowance for loan losses for the periods indicated:

			Six Months Ended		Year Ended
(Dollars in thousands)			June 30, 2019		December 31, 2018
Balance, January 1			$	53,486	$	45,257
Provision for loan losses				1,505		9,023
Loan charge-offs:
Residential real estate:
	Residential mortgage			(113)		(225)
	Residential construction			-		-
Commercial real estate:
	Commercial investor			-		(131)
	Commercial owner occupied			-		-
	Commercial AD&C			-		-
Commercial business				(776)		(449)
Consumer				(308)		(611)
	Total charge-offs			(1,197)		(1,416)
Loan recoveries:
Residential real estate:
	Residential mortgage			34		62
	Residential construction			4		15
Commercial real estate:
	Commercial investor			10		87
	Commercial owner occupied			-		-
	Commercial AD&C			4		62
Commercial business				34		258
Consumer				144		138
	Total recoveries			230		622
	Net charge-offs			(967)		(794)
		Balance, period end	$	54,024	$	53,486
Net charge-offs to average loans				0.03%		0.01%
Allowance for loan losses to loans				0.82%		0.81%

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Analysis of Credit Risk

The following table presents information with respect to non-performing assets and 90-day delinquencies for the periods indicated:

(Dollars in thousands)			June 30, 2019		December 31, 2018
Non-accrual loans:
Residential real estate:
	Residential mortgage		$	10,625	$	9,336
	Residential construction			-		159
Commercial real estate:
	Commercial investor			6,409		5,355
	Commercial owner occupied			3,766		4,234
	Commercial AD&C			1,990		3,306
Commercial business				7,083		7,086
Consumer				4,439		4,107
		Total non-accrual loans		34,312		33,583
Loans 90 days past due
Residential real estate:
	Residential mortgage			-		221
	Residential construction			-		-
Commercial real estate:
	Commercial investor			1,248		-
	Commercial owner occupied			-		-
	Commercial AD&C			-		-
Commercial business				-		49
Consumer				-		219
	Total 90 days past due loans			1,248		489
Restructured loans (accruing)				2,133		1,942
	Total non-performing loans			37,693		36,014
Other real estate owned, net				1,486		1,584
	Total non-performing assets		$	39,179	$	37,598
Non-performing loans to total loans				0.58%		0.55%
Non-performing assets to total assets				0.47%		0.46%
Allowance for loan to non-performing loans				143.33%		148.51%

Market Risk Management

The Company's net income is largely dependent on its net interest income. Net interest income is susceptible to interest rate risk to the extent that interest-bearing liabilities mature or re-price on a different basis than interest-earning assets. When interest-bearing liabilities mature or re-price more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when interest-earning assets mature or re-price more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income. Net interest income is also affected by changes in the portion of interest-earning assets that are funded by interest-bearing liabilities rather than by other sources of funds, such as noninterest-bearing deposits and stockholders' equity.

The Company’s interest rate risk management goals are (1) to increase net interest income at a growth rate consistent with the growth rate of total assets, and (2) to minimize fluctuations in net interest margin as a percentage of interest-earning assets. Management attempts to achieve these goals by balancing, within policy limits, the volume of floating-rate liabilities with a similar volume of floating-rate assets; by keeping the average maturity of fixed-rate asset and liability contracts reasonably matched; by maintaining a pool of administered core deposits; and by adjusting pricing rates to market conditions on a continuing basis.

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The Company’s board of directors has established a comprehensive interest rate risk management policy, which is administered by management’s Asset Liability Management Committee (“ALCO”). The policy establishes limits on risk, which are quantitative measures of the percentage change in net interest income (a measure of net interest income at risk) and the fair value of equity capital (a measure of economic value of equity or “EVE” at risk) resulting from a hypothetical change in U.S. Treasury interest rates for maturities from one day to thirty years. The Company measures the potential adverse impacts that changing interest rates may have on its short-term earnings, long-term value, and liquidity by employing simulation analysis through the use of computer modeling. The simulation model captures optionality factors such as call features and interest rate caps and floors embedded in investment and loan portfolio contracts. As with any method of gauging interest rate risk, there are certain shortcomings inherent in the interest rate modeling methodology used by the Company. When interest rates change, actual movements in different categories of interest-earning assets and interest-bearing liabilities, loan prepayments, and withdrawals of time and other deposits, may deviate significantly from assumptions used in the model. As an example, certain types of money market deposit accounts are assumed to reprice at 40 to 100% of the interest rate change in each of the up rate shock scenarios even though this is not a contractual requirement. As a practical matter, management would likely lag the impact of any upward movement in market rates on these accounts as a mechanism to manage the bank’s net interest margin. Finally, the methodology does not measure or reflect the impact that higher rates may have on adjustable-rate loan customers’ ability to service their debts, or the impact of rate changes on demand for loan, lease, and deposit products.

The Company prepares a current base case and eight alternative simulations at least once a quarter and reports the analysis to the board of directors. In addition, more frequent forecasts are produced when interest rates are particularly uncertain or when other business conditions so dictate.

The statement of condition is subject to quarterly testing for eight alternative interest rate shock possibilities to indicate the inherent interest rate risk. Average interest rates are shocked by +/- 100, 200, 300, and 400 basis points (“bp”), although the Company may elect not to use particular scenarios that it determines are impractical in a current rate environment. It is management’s goal to structure the balance sheet so that net interest earnings at risk over a twelve-month period and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels.

The Company augments its quarterly interest rate shock analysis with alternative external interest rate scenarios on a monthly basis. These alternative interest rate scenarios may include non-parallel rate ramps and non-parallel yield curve twists. If a measure of risk produced by the alternative simulations of the entire balance sheet violates policy guidelines, ALCO is required to develop a plan to restore the measure of risk to a level that complies with policy limits within two quarters.

Measures of net interest income at risk produced by simulation analysis are indicators of an institution’s short-term performance in alternative rate environments. These measures are typically based upon a relatively brief period, usually one year. They do not necessarily indicate the long-term prospects or economic value of the institution.

Estimated Changes in Net Interest Income
Change in Interest Rates:	+ 400 bp	+ 300 bp	+ 200 bp	+ 100 bp	- 100 bp	- 200 bp	-300 bp	400 bp
Policy Limit	23.50%	17.50%	15.00%	10.00%	10.00%	15.00%	17.50%	23.50%
June 30, 2019	12.57%	9.69%	6.79%	3.46%	(4.28%)	(7.51%)	N/A	N/A
December 31, 2018	2.74%	2.29%	2.38%	1.15%	(1.74%)	(3.15%)	N/A	N/A

As shown above, the overall net interest income at risk decreased in rising parallel interest rate movements and increased as interest rates declined compared to December 31, 2018. The decrease in the risk position results primarily from the reduction in short-term FHLB borrowing expense and an increase in income from interest-bearing deposits with banks. All measures remained well within prescribed policy limits.

The measures of equity value at risk indicate the ongoing economic value of the Company by considering the effects of changes in interest rates on all of the Company’s cash flows, and by discounting the cash flows to estimate the present value of assets and liabilities. The difference between these discounted values of the assets and liabilities is the economic value of equity, which, in theory, approximates the fair value of the Company’s net assets.

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Estimated Changes in Economic Value of Equity (EVE)
Change in Interest Rates:	+ 400 bp	+ 300 bp	+ 200 bp	+ 100 bp	- 100 bp	- 200 bp	-300 bp	-400 bp
Policy Limit	35.00%	25.00%	20.00%	10.00%	10.00%	20.00%	25.00%	35.00%
June 30, 2019	(0.76%)	0.60%	1.85%	1.43%	(4.21%)	(6.38%)	N/A	N/A
December 31, 2018	(10.23%)	(7.18%)	(3.61%)	(1.70%)	(0.77%)	(2.80%)	N/A	N/A

Overall, the measure of the economic value of equity (“EVE”) at risk decreased from December 31, 2018 to June 30, 2019 in rising interest rate scenarios and increased in decreasing rate scenarios. The primary driver of the improvement in the indicated EVE risk positions if rate rise is the result of the lengthening of the average lives of core deposits, in addition to low rates on borrowings which reflect a premium, in a rising rate environment.

Liquidity Management

Liquidity is measured by a financial institution's ability to raise funds through loan repayments, maturing investments, deposit growth, borrowed funds, capital and the sale of highly marketable assets such as investment securities and residential mortgage loans. In assessing liquidity, management considers operating requirements, the seasonality of deposit flows, investment, loan and deposit maturities and calls, expected funding of loans and deposit withdrawals, and the market values of available-for-sale investments, so that sufficient funds are available on short notice to meet obligations as they arise and to ensure that the Company is able to pursue new business opportunities. The Company's liquidity position, considering both internal and external sources available, exceeded anticipated short-term and long-term needs at June 30, 2019.

Liquidity is measured using an approach designed to take into account core deposits, in addition to factors already discussed above. Management considers core deposits, defined to include all deposits other than time deposits of $100 thousand or more, to be a relatively stable funding source. Core deposits equaled 68% of total interest-earning assets at June 30, 2019. The Company’s growth and mortgage banking activities are also additional considerations when evaluating liquidity requirements. Also considered are changes in the liquidity of the investment portfolio due to fluctuations in interest rates. Under this approach, implemented by the Funds Management Subcommittee of ALCO under formal policy guidelines, the Company’s liquidity position is measured weekly, looking forward at thirty day intervals from thirty (30) to three hundred sixty (360) days. The measurement is based upon the projection of funds sold or purchased position, along with ratios and trends developed to measure dependence on purchased funds and core growth. As of June 30, 2019, the Company projects an excess cash flow over the subsequent 360 days of $93 million. This projected excess liquidity versus requirements provides the Company with flexibility in funding loan demand and other liquidity demands.

The Company also has external sources of funds, which can be drawn upon when required. The main sources of external liquidity are available lines of credit with the Federal Home Loan Bank of Atlanta and the Federal Reserve. The line of credit with the Federal Home Loan Bank of Atlanta totaled $2.3 billion, all of which was available for borrowing based on pledged collateral, with $0.6 billion borrowed against it as of June 30, 2019. The secured lines of credit at the Federal Reserve and correspondent banks totaled $316 million, all of which was available for borrowing based on pledged collateral, with no borrowings against it as of June 30, 2019. In addition, the Company had unsecured lines of credit with correspondent banks of $680 million at June 30, 2019. At June 30, 2019, there were no outstanding borrowings against these lines of credit. Based upon its liquidity analysis, including external sources of liquidity available, management believes the liquidity position was appropriate at June 30, 2019.

The parent company (“Bancorp”) is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, Bancorp is responsible for paying any dividends declared to its common shareholders and interest and principal on outstanding debt. Bancorp’s primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to Bancorp in any calendar year, without the receipt of prior approval from the Federal Reserve, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years. Based on this requirement, as of June 30, 2019, the Bank could have declared a dividend of $129 million to Bancorp. At June 30, 2019, Bancorp had liquid assets of $25 million.

Arrangements to fund credit products or guarantee financing take the form of loan commitments (including lines of credit on revolving credit structures) and letters of credit. Approvals for these arrangements are obtained in the same manner as loans. Generally, cash flows, collateral value and risk assessment are considered when determining the amount and structure of credit arrangements.

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Commitments to extend credit in the form of consumer, commercial real estate and business at the dates indicated were as follows:

			June 30,	December 31,
(In thousands)		2019		2018
Commercial real estate development and construction		$	565,086	$	562,777
Residential real estate-development and construction			95,959		130,251
Real estate-residential mortgage			124,201		31,227
Lines of credit, principally home equity and business lines			1,318,781		1,296,481
Standby letters of credit			60,180		59,826
	Total commitments to extend credit and available credit lines	$	2,164,207	$	2,080,562

Commitments to extend credit are agreements to provide financing to a customer with the provision that there are no violations of any condition established in the agreement. Commitments generally have interest rates determined by current market rates, expirations dates or other termination clauses and may require payment of a fee. Lines of credit typically represent unused portions of lines of credit that were provided and remain available as long as customers comply with the requisite contractual conditions. Commitments to extend credit are evaluated on a case by case basis periodically. Many of the commitments are expected to expire without being drawn upon. It is highly unlikely that all customers would draw on their lines of credit in full at any time and, therefore, the total commitment amount or line of credit amounts do not necessarily represent future cash requirements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Financial Condition - Market Risk and Interest Rate Sensitivity” in Management’s Discussion and Analysis of Financial Condition and Results of Operations, above, which is incorporated herein by reference.

Item 4. CONTROLS AND PROCEDURES

The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated as of the last day of the period covered by this report, the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15 under the Securities Exchange Act of 1934. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective. There were no changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15 under the Securities Act of 1934) during the three months ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of business, the Company becomes involved in litigation arising from the banking, financial and other activities it conducts. Management, after consultation with legal counsel, does not anticipate that the ultimate liability, if any, arising from these matters will have a material effect on the Company’s financial condition, operating results or liquidity.

Item 1A. Risk Factors

There have been no material changes in the risk factors as discussed in the 2018 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In December 2018, the Company’s board of directors authorized the repurchase of up to 1,800,000 shares of common stock. The Company did not repurchase any shares of its common stock in the quarter ended June 30, 2019.

Item 3. Defaults Upon Senior Securities – None

Item 4. Mine Safety Disclosures – Not applicable

Item 5. Other Information - None

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Item 6. Exhibits

Exhibit 31(a) Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)

Exhibit 31(b)Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)

Exhibit 32(a)Certification of Chief Executive Officer pursuant to 18 U.S. Section 1350

Exhibit 32(b)Certification of Chief Financial Officer pursuant to 18 U.S. Section 1350

Exhibit 101.SCHXBRL Taxonomy Extension Schema Document

Exhibit 101.CALXBRL Taxonomy Extension Calculation Linkbase Document

Exhibit 101.DEFXBRL Taxonomy Extension Definition Linkbase Document

Exhibit 101.LABXBRL Taxonomy Extension Label Linkbase Document

Exhibit 101.PREXBRL Taxonomy Extension Presentation Linkbase Document

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Signatures

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized.

SANDY SPRING BANCORP, INC.

(Registrant)

By: /s/ Daniel J. Schrider

Daniel J. Schrider

President and Chief Executive Officer

Date: August 9, 2019

By: /s/ Philip J. Mantua

Philip J. Mantua

Executive Vice President and Chief Financial Officer

Date: August 9, 2019

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EX-31

 

Exhibit 31 (a)

                                                                                                         CERTIFICATION

Rule 13a-14(a) / 15d-14(a) Certifications

I, Daniel J. Schrider, Chief Executive Officer of Sandy Spring Bancorp, Inc. (“Bancorp”), certify that:

1.I have reviewed this quarterly report on Form 10-Q of Sandy Spring Bancorp, Inc.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a    material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d--15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such  disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based upon such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2019                                                                                   /s/Daniel J. Schrider

Daniel J. Schrider

Chief Executive Officer

EX-31

 

Exhibit 31 (b)

                                                                                                         CERTIFICATION

I, Philip J. Mantua, Executive Vice President and Chief Financial Officer of Sandy Spring Bancorp, Inc. (“Bancorp”), certify that:

1.I have reviewed this quarterly report on Form 10-Q of Sandy Spring Bancorp, Inc.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a    material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d--15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such  disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based upon such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2019                                                                                   /s/Philip J. Mantua

Philip J. Mantua

Executive Vice President and

Chief Financial Officer

EX-32

 

Exhibit 32(a)

18 U.S.C. Section 1350 Certification

I hereby certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that the accompanying Form 10-Q of Sandy Spring Bancorp, Inc. (“Bancorp”) for the quarterly period ended June 30, 2019, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934(15 U.S.C. 78m or 78o(d)); and that the information contained in this Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Bancorp.

By:       /s/ Daniel J. Schrider___________ 

             Daniel J. Schrider

             Chief Executive Officer

             Date: August 9, 2019

EX-32

 

Exhibit 32(b)

18 U.S.C. Section 1350 Certification

I hereby certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that the accompanying Form 10-Q of Sandy Spring Bancorp, Inc. (“Bancorp”) for the quarterly period ended June 30, 2019, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934(15 U.S.C. 78m or 78o(d)); and that the information contained in this Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Bancorp.

By:       /s/ Philip J. Mantua___________ 

             Philip J. Mantua

             Executive Vice President and Chief Financial Officer

             Date: August 9, 2019

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 07, 2019
Document and entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Registrant Name	SANDY SPRING BANCORP, INC.
Entity Central Index Key	0000824410
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock Shares Outstanding		35,618,558
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Security 12b Title	Common Stock, par value $1.00 per share
Trading Symbol	SASR
Security Exchange Name	NASDAQ
Entity File Number	0-19065
Entity Incorporation State Country Code	MD
Entity Tax Identification Number	52-1532952
Entity Address Address Line1	17801 Georgia Avenue
Entity Address City Or Town	Olney
Entity Address State Or Province	MD
Entity Address Postal Zip Code	20832
City Area Code	301
Local Phone Number	774-6400
Document Quarterly Report	true
Document Transition Report	false

XML

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets
Cash and due from banks	$ 75,781	$ 67,014
Federal funds sold	583	609
Interest-bearing deposits with banks	155,312	33,858
Cash and cash equivalents	231,676	101,481
Residential mortgage loans held for sale (at fair value)	50,511	22,773
Investments available-for-sale (at fair value)	901,025	937,335
Other equity securities	54,690	73,389
Total loans	6,551,243	6,571,634
Less: allowance for loan losses	(54,024)	(53,486)
Net loans	6,497,219	6,518,148
Premises and equipment, net	60,372	61,942
Other real estate owned	1,486	1,584
Accrued interest receivable	26,148	24,609
Goodwill	347,149	347,149
Other intangible assets, net	8,813	9,788
Other assets	219,430	145,074
Total assets	8,398,519	8,243,272
Liabilities
Noninterest-bearing deposits	2,023,614	1,750,319
Interest-bearing deposits	4,366,135	4,164,561
Total deposits	6,389,749	5,914,880
Securities sold under retail repurchase agreements and federal funds purchased	150,604	327,429
Advances from FHLB	582,768	848,611
Subordinated debentures	37,353	37,425
Accrued interest payable and other liabilities	118,600	47,024
Total liabilities	7,279,074	7,175,369
Stockholders Equity
Common stock -- par value $1; shares authorized 100,000,000; shares issued and outstanding 35,614,953 and 35,530,734 at June 30, 2019 and December 31, 2018, respectively	35,615	35,531
Additional paid in capital	608,006	606,573
Retained earnings	479,389	441,553
Accumulated other comprehensive loss	(3,565)	(15,754)
Total stockholders equity	1,119,445	1,067,903
Total liabilities and stockholders equity	$ 8,398,519	$ 8,243,272

XML

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED - (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Common stock, par value	$ 1.00	$ 1
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	35,614,953	35,530,734
Common stock, shares outstanding	35,614,953	35,530,734

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Interest Income:
Interest and fees on loans	$ 79,464	$ 70,672	$ 159,861	$ 138,264
Interest on loans held for sale	381	279	573	647
Interest on deposits with banks	428	514	622	871
Interest and dividends on investment securities:
Taxable	5,396	5,083	11,081	10,185
Exempt from federal income taxes	1,544	2,042	3,254	4,114
Interest on federal funds sold	1	7	6	20
Total interest income	87,214	78,597	175,397	154,101
Interest Expense:
Interest on deposits	16,146	8,851	30,626	15,810
Interest on retail repurchase agreements and federal funds purchased	290	108	688	216
Interest on advances from FHLB	4,103	5,338	10,167	10,416
Interest on subordinated debt	490	482	981	950
Total interest expense	21,029	14,779	42,462	27,392
Net interest income	66,185	63,818	132,935	126,709
Provision (credit) for loan losses	1,633	1,733	1,505	3,730
Net interest income after provision for loan losses	64,552	62,085	131,430	122,979
Investment securities gains	5	0	5	63
Insurance agency commissions	1,265	1,180	3,165	3,004
Income from bank owned life insurance	654	670	1,843	3,001
Other income	1,914	1,884	4,136	3,887
Total non-interest income	16,556	14,868	33,525	31,986
Non-interest Expenses:
Salaries and employee benefits	25,489	24,664	51,465	48,576
Occupancy expense of premises	4,760	4,642	9,991	9,584
Equipment expenses	2,712	2,243	5,288	4,468
Marketing	887	945	1,830	2,093
Outside data services	1,962	1,707	3,740	3,104
FDIC insurance	1,084	1,390	2,220	2,583
Amortization of intangible assets	483	541	974	1,082
Merger expenses	0	2,228	0	11,186
Professional fees and services	1,634	1,699	2,879	2,739
Other Expense	4,876	5,023	9,692	9,308
Total non-interest expenses	43,887	45,082	88,079	94,723
Income before income taxes	37,221	31,871	76,876	60,242
Income tax expense	8,945	7,472	18,283	14,178
Net income	$ 28,276	$ 24,399	$ 58,593	$ 46,064
Per share information:
Basic net income per share	$ 0.79	$ 0.68	$ 1.64	$ 1.29
Diluted net income per share	0.79	0.68	1.63	1.29
Dividends declared per common share	$ 0.30	$ 0.28	$ 0.58	$ 0.54
Service charges on deposit accounts [Member]
Fees, comminssions and banking services	$ 2,442	$ 2,290	$ 4,749	$ 4,549
Mortgage banking activities [Member]
Fees, comminssions and banking services	3,270	2,064	6,133	4,271
Wealth managment [Member]
Fees, comminssions and banking services	5,539	5,387	10,775	10,448
Bank card fees [member]
Fees, comminssions and banking services	$ 1,467	$ 1,393	$ 2,719	$ 2,763

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 28,276	$ 24,399	$ 58,593	$ 46,064
Investments available-for-sale:
Net change in unrealized gains on investments available-for-sale	7,167	(4,230)	15,981	(16,919)
Related income tax expense	(1,873)	1,107	(4,179)	4,428
Net investment gains reclassified into earnings	(5)	0	(5)	(63)
Related income tax expense	1	0	1	16
Net effect on other comprehensive income (loss) for the period	5,290	(3,123)	11,798	(12,538)
Defined benefit pension plan:
Recognition of unrealized gain (loss)	265	250	530	500
Related income tax (expense) benefit	(70)	(65)	(139)	(184)
Net effect on other comprehensive income for the period	195	185	391	316
Total other comprehensive income	5,485	(2,938)	12,189	(12,222)
Comprehensive income	$ 33,761	$ 21,461	$ 70,782	$ 33,842

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Operating activities:
Net income	$ 28,276	$ 24,399	$ 58,593	$ 46,064
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			6,724	6,099
Provision for loan losses	1,633	1,733	1,505	3,730	$ 9,023
Stock based compensation expense			1,473	1,250
Tax benefits associated with share based compensation			57	252
Deferred Income Tax Expense (Benefit)			1,795	2,358
Origination of loans held for sale			(299,401)	(186,777)
Proceeds from sales of loans held for sale			278,290	186,211
Gains on sales of loans held for sale			(6,627)	(3,674)
Losses on sales of other real estate owned			173	106
Investment securities gains	(5)	0	(5)	(63)
Increase (Decrease) in Operating Capital [Abstract]
Net (increase) decrease in accrued interest receivable			(1,540)	(1,211)
Net decrease (increase) in other assets			(4,880)	(443)
Net increase (decrease) in accrued expenses and other liabilities			(6,126)	(2,239)
Other - net			1,162	2,712
Net cash provided by operating activities			31,193	54,375
Investing activities:
(Purchases) of other equity securities				(12,027)
Proceeds from other equity securities			18,699
Purchases of investments available-for-sale			(15,919)	(497)
Proceeds from sales of investment available-for-sale			0	994
Proceeds from maturities, calls and principal payments of investments available-for-sale			66,887	52,798
Net (increase)/ decrease in loans			19,979	(315,872)
Proceeds from the sales of other real estate owned			324	676
Proceeds from sales of loans previously held for investment			0	59,945
Acquisition of business activity, net of cash paid			0	32,552
Expenditures for premises and equipment			(2,456)	(6,788)
Net cash provided/ (used) by investing activities			87,514	(188,219)
Financing activities:
Net increase in deposits			474,869	263,322
Net increase/(decrease) in retail repurchase agreements and federal funds purchased			(176,825)	13,402
Proceeds from advances from FHLB			2,123,000	3,920,000
Repayment of advances from FHLB			(2,388,843)	(3,861,413)
Proceeds from issuance of common stock			746	829
Stock tendered for payment of withholding taxes			(702)	(760)
Dividends paid			(20,757)	(19,268)
Net cash provided/ (used) by financing activities			11,488	316,112
Net increase (decrease) in cash and cash equivalents			130,195	182,268
Cash and cash equivalents at beginning of period			101,481	112,500	112,500
Cash and cash equivalents at end of period	$ 231,676	$ 294,768	231,676	294,768	$ 101,481
Supplemental Disclosures:
Interest payments			43,348	26,587
Income tax payments			18,629	11,598
Transfer from loans to residential mortgage loans held for sale			0	60,043
Transfers from loans to other real estate owned			$ 414	$ 289

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Balance at at Dec. 31, 2017	$ 563,816	$ 23,996	$ 168,188	$ 378,489	$ (6,857)
Net income	46,064	0	0	46,064	0
Other comprehensive income, net of tax	(12,222)	0	0	0	(12,222)
Common stock dividends - $0.30 and $0.28 per share for the quarter; $0.58 and $0.54 per share for year to date June 30, 2019 and 2018 respectively	(19,268)	0	0	(19,268)	0
Stock compensation expense	1,250	0	1,250	0	0
Common stock issued pursuant to:
Acquisition of WashingtonFirst - 11,446,197 shares	446,640	11,446	435,194	0	0
Stock option plan - 4,142; 5,574 shares for the quarter, and 10, 897; 17,927 shares year to date June 30, 2019 and 2018 respectively	370	18	352	0	0
Employee stock purchase plan - 10,004; 6,909 shares for the quarter and 17,927; 13,821 shares for year to date June 30 2019, 2018 respectively	459	14	445	0	0
Restricted stock - 42,830; 36,191 shares for the quarter and 54,789; 37,705 shares for year to date June 30 2019 and 2018 respectively	(760)	38	(798)	0	0
Reclassfication of tax effects from other comprehensive income	0	0	0	1,477	(1,477)
Balance at at Jun. 30, 2018	1,026,349	35,512	604,631	406,762	(20,556)
Balance at at Mar. 31, 2018	1,014,608	35,463	604,399	392,364	(17,618)
Net income	24,399	0	0	24,399	0
Other comprehensive income, net of tax	(2,938)	0	0	0	(2,938)
Common stock dividends - $0.30 and $0.28 per share for the quarter; $0.58 and $0.54 per share for year to date June 30, 2019 and 2018 respectively	(10,001)	0	0	(10,001)	0
Stock compensation expense	668	0	668	0	0
Common stock issued pursuant to:
Stock option plan - 4,142; 5,574 shares for the quarter, and 10, 897; 17,927 shares year to date June 30, 2019 and 2018 respectively	138	6	132	0	0
Employee stock purchase plan - 10,004; 6,909 shares for the quarter and 17,927; 13,821 shares for year to date June 30 2019, 2018 respectively	235	7	228	0	0
Restricted stock - 42,830; 36,191 shares for the quarter and 54,789; 37,705 shares for year to date June 30 2019 and 2018 respectively	(760)	36	(796)	0	0
Balance at at Jun. 30, 2018	1,026,349	35,512	604,631	406,762	(20,556)
Balance at at Dec. 31, 2018	1,067,903	35,531	606,573	441,553	(15,754)
Net income	58,593	0	0	58,593	0
Other comprehensive income, net of tax	12,189	0	0	0	12,189
Common stock dividends - $0.30 and $0.28 per share for the quarter; $0.58 and $0.54 per share for year to date June 30, 2019 and 2018 respectively	(20,757)	0	0	(20,757)	0
Stock compensation expense	1,473	0	1,473	0	0
Common stock issued pursuant to:
Director's stock purchase plan - 867 shares for quarter to date and year to date June 30 2019	30	1	29	0	0
Stock option plan - 4,142; 5,574 shares for the quarter, and 10, 897; 17,927 shares year to date June 30, 2019 and 2018 respectively	224	11	213	0	0
Employee stock purchase plan - 10,004; 6,909 shares for the quarter and 17,927; 13,821 shares for year to date June 30 2019, 2018 respectively	492	17	475	0	0
Restricted stock - 42,830; 36,191 shares for the quarter and 54,789; 37,705 shares for year to date June 30 2019 and 2018 respectively	(702)	55	(757)	0	0
Balance at at Jun. 30, 2019	1,119,445	35,615	608,006	479,389	(3,565)
Balance at at Mar. 31, 2019	1,095,848	35,557	607,479	461,862	(9,050)
Net income	28,276	0	0	28,276	0
Other comprehensive income, net of tax	5,485	0	0	0	5,485
Common stock dividends - $0.30 and $0.28 per share for the quarter; $0.58 and $0.54 per share for year to date June 30, 2019 and 2018 respectively	(10,749)	0	0	(10,749)	0
Stock compensation expense	783	0	783	0	0
Common stock issued pursuant to:
Director's stock purchase plan - 867 shares for quarter to date and year to date June 30 2019	30	1	29	0	0
Stock option plan - 4,142; 5,574 shares for the quarter, and 10, 897; 17,927 shares year to date June 30, 2019 and 2018 respectively	95	4	91	0	0
Employee stock purchase plan - 10,004; 6,909 shares for the quarter and 17,927; 13,821 shares for year to date June 30 2019, 2018 respectively	278	10	268	0	0
Restricted stock - 42,830; 36,191 shares for the quarter and 54,789; 37,705 shares for year to date June 30 2019 and 2018 respectively	(601)	43	(644)	0	0
Balance at at Jun. 30, 2019	$ 1,119,445	$ 35,615	$ 608,006	$ 479,389	$ (3,565)

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED - (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement Of Stockholders Equity [Abstract]
Common stock dividends, per share	$ 0.30	$ 0.28	$ 0.58	$ 0.54
Stock option plan, shares	4,142	5,574	10,897	17,927
Employee stock purchase plan, shares	10,004	6,909	17,666	13,821
Restricted stock, shares	42,830	36,191	54,789	37,705
Director stock purchase plan, shares	867		867
Number of shares issued by the company, pursuant to WashingtonFirst acquisition		11,446,197		11,446,197

XML

SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2019

Significant Accounting Policies [Abstract]

Significant Accounting Policies

Note 1 – Significant Accounting Policies

Nature of Operations

Sandy Spring Bancorp (the “Company”), a Maryland corporation, is the bank holding company for Sandy Spring Bank (the “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. Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc.

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the financial services industry for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements and prevailing practices within the banking industry. The following summary of significant accounting policies of the Company is presented to assist the reader in understanding the financial and other data presented in this report. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for any future periods or for the year ending December 31, 2019. In the opinion of management, all adjustments (comprising only normal recurring accruals) necessary for a fair presentation of the results of the interim periods have been included. Certain reclassifications have been made to prior period amounts, as necessary, to conform to the current period presentation. The Company has evaluated subsequent events through the date of the issuance of its financial statements.

These statements should be read in conjunction with the financial statements and accompanying notes included in the Company’s 2018 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2019. There have been no significant changes to the Company’s accounting policies as disclosed in the 2018 Annual Report on Form 10-K.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Sandy Spring Bank and its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Consolidation has resulted in the elimination of all intercompany accounts and transactions.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, in addition to affecting the reported amounts of revenues earned and expenses incurred during the reporting period. Actual results could differ from those estimates. Estimates that could change significantly relate to the provision for loan losses and the related allowance, determination of impaired loans and the related measurement of impairment, potential impairment of goodwill or other intangible assets, valuation of investment securities and the determination of whether impaired securities are other-than-temporarily impaired, valuation of other real estate owned, valuation of share-based compensation, the assessment that a liability should be recognized with respect to any matters under litigation, the calculation of current and deferred income taxes and the actuarial projections related to pension expense and the related liability.

Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, federal funds sold and interest-bearing deposits with banks (items with stated original maturity of three months or less).

Revenue from Contracts with Customers

The Company’s revenue includes net interest income on financial instruments and non-interest income. Specific categories of revenue are presented in the Condensed Consolidated Statements of Income. Most of the Company’s revenue is not within the scope of Accounting Standard Update (ASU) No. 2014-09 – Revenue from Contracts with Customers. For revenue within the scope of ASU 2014-09, the Company provides services to customers and has related performance obligations. The revenue from such services is recognized upon satisfaction of all contractual performance obligations. The following discusses key revenue streams within the scope of revenue recognition guidance.

Wealth Management Income

West Financial Services, Inc., a subsidiary of the Bank, provides comprehensive investment management and financial planning services. Wealth management income is comprised of income for providing trust, estate and investment management services. Trust services include acting as a trustee for corporate or personal trusts. Investment management services include investment management, record-keeping and reporting of security portfolios. Fees for these services are recognized based on a contractually-agreed fixed percentage applied to net assets under management at the end of each reporting period. The Company does not charge/recognize any performance based fees.

Insurance Agency Commissions

Sandy Spring Insurance, a subsidiary of the Bank, performs the function of an insurance intermediary by introducing the policyholder and insurer and is compensated by a commission fee for placement of an insurance policy. Sandy Spring Insurance does not provide any captive management services or any claim handling services. Commission fees are set as a percentage of the premium for the insurance policy for which Sandy Spring Insurance is a producer. The Company recognizes revenue when the insurance policy has been contractually agreed to by the insurer and policyholder (at transaction date).

Service Charges on Deposit Accounts

Service charges on deposit accounts are earned on depository accounts for consumer and commercial account holders and include fees for account and overdraft services. Account services include fees for event-driven services and periodic account maintenance activities. The obligation for event-driven services is satisfied at the time of the event when service is delivered and revenue recognized as earned. Obligation for maintenance activities is satisfied over the course of each month and revenue recognized at month end. Obligation for overdraft services is satisfied at the time of the overdraft and revenue recognized as earned.

Loans Acquired with Deteriorated Credit Quality

Acquired loans with evidence of credit deterioration since their origination as of the date of the acquisition are recorded at their initial fair value. Credit deterioration is determined based on the probability of collection of all contractually required principal and interest payments. The historical allowance for loan losses related to the acquired loans is not carried over to the Company’s financial statements. The determination of credit quality deterioration as of the purchase date may include parameters such as past due and non-accrual status, commercial risk ratings, cash flow projections, type of loan and collateral, collateral value and recent loan-to-value ratios or appraised values. For loans acquired with evidence of credit deterioration, the Company determines at the acquisition date the excess of the loan’s contractually required payments over all cash flows expected to be collected as an amount that should not be accreted into interest income (nonaccretable difference). The remaining amount, representing the difference in the expected cash flows of acquired loans and the initial investment in the acquired loans, is accreted into interest income over the remaining life of the loan or pool of loans (accretable yield). Subsequent to the purchase date, increases in expected cash flows over those expected at the purchase date are recognized prospectively as interest income over the remaining life of the loan as an adjustment to the accretable yield. The present value of any decreases in expected cash flows after the purchase date is recognized as impairment through addition to the valuation allowance.

Leases

The Company determines if an arrangement is a lease at inception. All of the Company’s leases are currently classified as operating leases and are included in other assets and other liabilities on the Company’s Condensed Consolidated Statements of Condition.

Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease arrangements. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the expected future lease payments over the remaining lease term. In determining the present value of future lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The operating ROU assets are adjusted for any lease payments made at or before lease commencement date, initial direct costs and any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease expense is recognized on a straight line basis over the expected lease term. Lease agreements that include lease and non-lease components, such as common area maintenance charges, are accounted for separately.

Adopted Accounting Pronouncements

The FASB issued Update No. 2016-02, Leases, in February 2016. From the lessee’s perspective, the new standard requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The Company adopted the standard on January 1, 2019 (“adoption date”) using modified retrospective approach. The Company elected the transition option to apply the provisions of the new standard only as of the beginning of the adoption period and did not restate comparative historical periods presented. The Company also elected a package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification of those leases in existence as of the adoption date.

The standard had a material impact on the Company’s Condensed Consolidated Statements of Condition, but did not have a material impact on Condensed Consolidated Statements of Income. The most significant impact at the adoption date was the recognition of ROU assets and lease liabilities for operating leases which totaled $77.7 million and $85.1 million, respectively. Refer to Note 12 – Leases for other required disclosures.

Pending Accounting Pronouncements

The FASB issued Update No. 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, in March 2017. This guidance is intended to eliminate the current diversity in practice with respect to the amortization period for certain purchased callable debt securities held at a premium. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings. The amendments in this update shorten the amortization period for such callable debt securities held at a premium requiring the premium to be amortized to the earliest call date. This guidance is effective for a public business entity that is a U.S. Securities and Exchange Commission (SEC) filer for its fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. The objective of this guidance is to simplify an entity’s required test for impairment of goodwill by eliminating Step 2 from the goodwill impairment test. In Step 2 an entity measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to determine the fair value at the impairment date of its assets and liabilities, including any unrecognized assets and liabilities, following a procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this Update, an entity should perform its annual or quarterly goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and record an impairment charge for the excess of the carrying amount over the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit and the entity must consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for a public business entity that is an SEC filer for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-13, Current Expected Credit Losses (CECL), in June 2016. This guidance changes the impairment model for most financial assets measured at amortized cost and certain other instruments. Entities will be required to use an expected loss model, replacing the incurred loss model that is currently in use. Under the new guidance, an entity will measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This will result in earlier recognition of loss allowances in most instances. Credit losses related to available-for-sale debt securities (regardless of whether the impairment is considered to be other-than-temporary) will be measured in a manner similar to the present, except that such losses will be recorded as allowances rather than as reductions in the amortized cost of the related securities. With respect to trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures, the guidance requires that an entity estimate its lifetime expected credit loss and record an allowance resulting in the net amount expected to be collected to be reflected as the financial asset. Entities will also be required to provide significantly more disclosures, including information used to track credit quality by year of origination for most financing receivables. This guidance is effective for public business entities for the first interim or annual period beginning after December 15, 2019. The standard’s provisions will be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Early adoption by public business entities is permitted for the first interim or annual period beginning after December 15, 2018. The Company assessed the guidance and has identified the available historical loan level information and completed a data gap analysis. The Company is in process of designing calculation methodologies under the new guidance and quantifying the approximate impact on the Company’s financialposition and results of operations.

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INVESTMENTS

6 Months Ended

Jun. 30, 2019

Investments [Abstract]

INVESTMENTS

Note 2 – Investments

Investments available-for-sale

The amortized cost and estimated fair values of investments available-for-sale at the dates indicated are presented in the following table:

			June 30, 2019								December 31, 2018
					Gross		Gross		Estimated				Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(In thousands)			Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. treasuries and government agencies			$	314,564	$	1,072	$	(867)	$	314,769	$	300,338	$	370	$	(4,030)	$	296,678
State and municipal				245,086		4,499		(9)		249,576		280,725		2,080		(781)		282,024
Mortgage-backed and asset-backed				324,394		2,930		(978)		326,346		355,267		653		(7,405)		348,515
Corporate debt				9,100		356		-		9,456		9,100		140		-		9,240
Trust preferred				310		-		-		310		310		-		-		310
	Total debt securities			893,454		8,857		(1,854)		900,457		945,740		3,243		(12,216)		936,767
Marketable equity securities				568		-		-		568		568		-		-		568
		Total investments available-for-sale	$	894,022	$	8,857	$	(1,854)	$	901,025	$	946,308	$	3,243	$	(12,216)	$	937,335

Any unrealized losses in the U.S. treasuries and government agencies, state and municipal, mortgage-backed and asset-backed investment securities at June 30, 2019 are not the result of credit related events but due to changes in interest rates. These declines in fair market value are considered temporary in nature and are expected to recover over time as these securities approach maturity.

The mortgage-backed securities portfolio at June 30, 2019 is composed entirely of either the most senior tranches of GNMA, FNMA or FHLMC collateralized mortgage obligations ($114.2 million), GNMA, FNMA or FHLMC mortgage-backed securities ($164.3 million) and SBA asset-backed securities ($47.8 million). The Company does not intend to sell these securities and has sufficient liquidity to hold these securities for an adequate period of time to allow for any anticipated recovery in fair value.

Gross unrealized losses and fair value by length of time that the individual available-for-sale securities have been in an unrealized loss position at the dates indicated are presented in the following table:

		June 30, 2019
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. treasuries and government agencies			12	$	134,475	$	667	$	200	$	867
State and municipal			3		6,065		-		9		9
Mortgage-backed and asset-backed			28		120,081		-		978		978
	Total		43	$	260,621	$	667	$	1,187	$	1,854

		December 31, 2018
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. treasuries and government agencies			33	$	194,135	$	452	$	3,578	$	4,030
State and municipal			80		78,232		569		212		781
Mortgage-backed and asset-backed			110		308,254		1,592		5,813		7,405
	Total		223	$	580,621	$	2,613	$	9,603	$	12,216

The amortized cost and estimated fair values of debt securities available-for-sale by contractual maturity at the dates indicated are provided in the following table. The Company has allocated mortgage-backed securities into the four maturity groupings reflected in the following table using the expected average life of the individual securities based on statistics provided by independent third party industry sources. Expected maturities will differ from contractual maturities as borrowers may have the right to prepay obligations with or without prepayment penalties.

		June 30, 2019				December 31, 2018
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less		$	64,147	$	64,455	$	63,482	$	63,747
Due after one year through five years			278,728		281,339		277,297		276,830
Due after five years through ten years			172,732		175,655		212,825		210,386
Due after ten years			377,847		379,008		392,136		385,804
	Total debt securities available for sale	$	893,454	$	900,457	$	945,740	$	936,767

At June 30, 2019 and December 31, 2018, investments available-for-sale with a book value of $467.6 million and $477.3 million, respectively, were pledged as collateral for certain government deposits and for other purposes as required or permitted by law. The outstanding balance of no single issuer, except for U.S. Agencies securities, exceeded ten percent of stockholders' equity at June 30, 2019 and December 31, 2018.

Equity securities

Other equity securities at the dates indicated are presented in the following table:

(In thousands)		June 30, 2019		December 31, 2018
Federal Reserve Bank stock		$	22,515	$	22,456
Federal Home Loan Bank of Atlanta stock			32,175		50,933
	Total equity securities	$	54,690	$	73,389

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LOANS

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

LOANS

Note 3 – LOANS

Outstanding loan balances at June 30, 2019 and December 31, 2018 are net of unearned income including net deferred loan fees of $0.6 million and $0.9 million, respectively. The loan portfolio segment balances at the dates indicated are presented in the following table:

(In thousands)		June 30, 2019		December 31, 2018
Residential real estate:
	Residential mortgage	$	1,241,081	$	1,228,247
	Residential construction		171,106		186,785
Commercial real estate:
	Commercial owner occupied real estate		1,224,986		1,202,903
	Commercial investor real estate		1,994,027		1,958,395
	Commercial AD&C		658,709		681,201
Commercial business			772,158		796,264
Consumer			489,176		517,839
	Total loans	$	6,551,243	$	6,571,634

The fair value of the financial assets acquired in the Company’s acquisition of WashingtonFirst Bancshares, Inc. (“WashingtonFirst”) on January 1, 2018 included loans receivable with a gross amortized cost basis of $1.7 billion. The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired. Interest and credit fair value adjustments related to loans acquired without evidence of credit quality deterioration are accreted or amortized into interest income over the remaining expected lives of the loans. The specific credit adjustment on acquired credit impaired loans includes accretable and non-accretable components. Of the $14.5 million specific credit mark on acquired credit impaired loans, approximately $4.0 million was estimated to be an accretable adjustment recognized over the remaining expected lives of the loans and $10.5 million was estimated to be non-accretable adjustment.

In conjunction with the WashingtonFirst acquisition, the acquired loan portfolio was accounted for at fair value as follows:

(Dollars in thousands)	January 1, 2018
Gross amortized cost basis at January 1, 2018	$	1,697,760
Interest rate fair value adjustment		15,370
Credit fair value adjustment on pools of homogeneous loans		(22,421)
Credit fair value adjustment on purchased credit impaired loans		(14,518)
Fair value of acquired loan portfolio at January 1, 2018	$	1,676,191

The following table presents the acquired credit impaired loans receivable as of January 1, 2018 (the “Acquisition Date”):

(Dollars in thousands)	January 1, 2018
Contractual principal and interest at acquisition	$	49,412
Contractual cash flows not expected to be collected (Nonaccretable yield)		(17,915)
Expected cash flows at acquisition		31,497
Interest component of expected cash flows (Accretable yield)		(3,988)
Fair value of purchased credit impaired loans	$	27,509

The outstanding balance of purchased credit impaired loans receivable totaled $41.9 million, $26.0 million and $13.2 million at January 1, 2018, December 31, 2018 and June 30, 2019, respectively. The fair value of purchased credit impaired loans was $9.7 million and $15.3 million at June 30, 2019 and December 31, 2018, respectively. The decrease in the outstanding amounts of purchased credit impaired loans receivable from the acquisition date through the current period was driven by the efforts of credit management function to resolve the most material credit deteriorated borrowers. During 2018, liquidation of the collateral resulted in full pay-off of the outstanding principal balances of $12.4 million and the related release of accretable and non-accretable adjustments into interest income in the total amounts of $0.9 million and $1.3 million, respectively. During the current year to date, the Company settled additional purchased credit impaired loans with total outstanding balances of $5.8 million resulting in the related release of accretable and non-accretable adjustments into interest income in the total amounts of $0.2 million and $1.6 million, respectively. During the current quarter, the Company completed the charge-off of a purchased credit impaired loan with a total outstanding balance of $4.1 million. This charge-off did not result in any associated impact to the valuation allowance due to adequacy of non-accretable discount.

Activity for the accretable yield since the Acquisition Date was as follows:

	For the Period Ended,
(Dollars in thousands)	June 30, 2019		December 31, 2018
Accretable yield at the beginning of the period	$	1,279	$	-
Addition of accretable yield due to acquisition		-		3,988
Accretion into interest income		(664)		(1,860)
Disposals (including maturities, foreclosures, and charge-offs)		(199)		(849)
Accretable yield at the end of the period.	$	416	$	1,279

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CREDIT QUALITY ASSESSMENT

6 Months Ended

Jun. 30, 2019

Credit Quality Assessment [Abstract]

CREDIT QUALITY ASSESSMENT

Note 4 – CREDIT QUALITY ASSESSMENT

Allowance for Loan Losses

Summary information on the allowance for loan loss activity for the period indicated is provided in the following table:

			Six Months Ended June 30,
(In thousands)			2019		2018
Balance at beginning of year			$	53,486	$	45,257
	Provision for loan losses			1,505		3,730
	Loan charge-offs			(1,197)		(818)
	Loan recoveries			230		324
		Net charge-offs		(967)		(494)
Balance at period end			$	54,024	$	48,493

The following tables provide information on the activity in the allowance for loan losses by the respective loan portfolio segment for the period indicated:

		For the Six Months Ended June 30, 2019
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	11,377	$	5,944	$	17,603	$	6,307	$	2,113	$	8,881	$	1,261	$	53,486
Provision (credit)			(61)		474		1,070		(212)		153		297		(216)		1,505
Charge-offs			(776)		-		-		-		(308)		(113)		-		(1,197)
Recoveries			34		4		10		-		144		34		4		230
	Net recoveries (charge-offs)		(742)		4		10		-		(164)		(79)		4		(967)
Balance at end of period		$	10,574	$	6,422	$	18,683	$	6,095	$	2,102	$	9,099	$	1,049	$	54,024
Total loans		$	772,158	$	658,709	$	1,994,027	$	1,224,986	$	489,176	$	1,241,081	$	171,106	$	6,551,243
Allowance for loans losses to total loans ratio			1.37%		0.97%		0.94%		0.50%		0.43%		0.73%		0.61%		0.82%
Balance of loans specifically evaluated for impairment		$	7,347	$	1,990	$	7,184	$	3,766		na.	$	1,370	$	-	$	21,657
Allowance for loans specifically evaluated for impairment		$	2,945	$	393	$	1,413	$	26		na.	$	-	$	-	$	4,777
Specific allowance to specific loans ratio			40.08%		-		19.67%		0.69%		na.		-		-		22.06%
Balance of loans collectively evaluated		$	762,100	$	656,719	$	1,977,069	$	1,221,220	$	488,068	$	1,239,702	$	171,106	$	6,515,984
Allowance for loans collectively evaluated		$	7,629	$	6,029	$	17,270	$	6,069	$	2,102	$	9,099	$	1,049	$	49,247
Collective allowance to collective loans ratio			1.00%		0.92%		0.87%		0.50%		0.43%		0.73%		0.61%		0.76%
Balance of loans acquired with deteriorated credit quality		$	2,711	$	-	$	9,774	$	-	$	1,108	$	9	$	-	$	13,602
Allowance for loans acquired with deteriorated credit quality		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Allowance to loans acquired with deteriorated credit quality ratio			-		-		-		-		-		-		-		-

		For the Year Ended December 31, 2018
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	8,711	$	3,501	$	14,970	$	7,178	$	2,383	$	7,268	$	1,246	$	45,257
Provision (credit)			2,857		2,381		2,677		(871)		203		1,776		-		9,023
Charge-offs			(449)		-		(131)		-		(611)		(225)		-		(1,416)
Recoveries			258		62		87		-		138		62		15		622
	Net recoveries (charge-offs)		(191)		62		(44)		-		(473)		(163)		15		(794)
Balance at end of period		$	11,377	$	5,944	$	17,603	$	6,307	$	2,113	$	8,881	$	1,261	$	53,486
Total loans		$	796,264	$	681,201	$	1,958,395	$	1,202,903	$	517,839	$	1,228,247	$	186,785	$	6,571,634
Allowance for loan losses to total loans ratio			1.43%		0.87%		0.90%		0.52%		0.41%		0.72%		0.68%		0.81%
Balance of loans specifically evaluated for impairment		$	7,586	$	3,306	$	5,355	$	4,234		na.	$	1,729	$	-	$	22,210
Allowance for loans specifically evaluated for impairment		$	3,594	$	-	$	1,207	$	123		na.	$	-	$	-	$	4,924
Specific allowance to specific loans ratio			47.38%		-		22.54%		2.91%		na.		-		-		22.17%
Balance of loans collectively evaluated		$	780,523	$	677,895	$	1,938,712	$	1,196,487	$	516,567	$	1,226,508	$	186,785	$	6,523,477
Allowance for loans collectively evaluated		$	7,783	$	5,944	$	16,396	$	6,184	$	2,113	$	8,881	$	1,261	$	48,562
Collective allowance to collective loans ratio			1.00%		0.88%		0.85%		0.52%		0.41%		0.72%		0.68%		0.74%
Balance of loans acquired with deteriorated credit quality		$	8,155	$	-	$	14,328	$	2,182	$	1,272	$	10	$	-	$	25,947
Allowance for loans acquired with deteriorated credit quality		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Allowance to loan acquired with deteriorated credit quality ratio			-		-		-		-		-		-		-		-

The following table provides summary information regarding impaired loans at the dates indicated and for the periods then ended:

(In thousands)		June 30, 2019		December 31, 2018
Impaired loans with a specific allowance		$	14,498	$	12,876
Impaired loans without a specific allowance			7,159		9,334
	Total impaired loans	$	21,657	$	22,210
Allowance for loan losses related to impaired loans		$	4,777	$	4,924
Allowance for loan losses related to loans collectively evaluated			49,247		48,562
	Total allowance for loan losses	$	54,024	$	53,486
Average impaired loans for the period		$	23,335	$	20,211
Contractual interest income due on impaired loans during the period		$	1,313	$	2,513
Interest income on impaired loans recognized on a cash basis		$	267	$	506
Interest income on impaired loans recognized on an accrual basis		$	78	$	138

The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the principal balance of the impaired loans prior to amounts charged-off at the dates indicated:

			June 30, 2019
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	4,034	$	1,261	$	5,468	$	767	$	-	$	11,530
		Restructured accruing		102		-		-		-		-		102
		Restructured non-accruing		1,957		-		782		127		-		2,866
	Balance		$	6,093	$	1,261	$	6,250	$	894	$	-	$	14,498
	Allowance		$	2,945	$	393	$	1,413	$	26	$	-	$	4,777
Impaired loans without a specific allowance
		Non-accruing	$	169	$	729	$	159	$	1,053	$	-	$	2,110
		Restructured accruing		162		-		775		-		1,094		2,031
		Restructured non-accruing		923		-		-		1,819		276		3,018
	Balance		$	1,254	$	729	$	934	$	2,872	$	1,370	$	7,159
Total impaired loans
		Non-accruing	$	4,203	$	1,990	$	5,627	$	1,820	$	-	$	13,640
		Restructured accruing		264		-		775		-		1,094		2,133
		Restructured non-accruing		2,880		-		782		1,946		276		5,884
	Balance		$	7,347	$	1,990	$	7,184	$	3,766	$	1,370	$	21,657
Unpaid principal balance in total impaired loans			$	9,840	$	1,990	$	11,744	$	5,598	$	2,725	$	31,897

	June 30, 2019
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	7,740	$	2,867	$	6,461	$	4,664	$	1,603	$	23,335
Contractual interest income due on impaired loans during the period	$	506	$	240	$	358	$	145	$	64
Interest income on impaired loans recognized on a cash basis	$	154	$	-	$	12	$	94	$	7
Interest income on impaired loans recognized on an accrual basis	$	25	$	-	$	19	$	-	$	34

			December 31, 2018
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	4,126	$	-	$	5,117	$	767	$	-	$	10,010
		Restructured accruing		328		-		-		-		-		328
		Restructured non-accruing		1,766		-		-		772		-		2,538
	Balance		$	6,220	$	-	$	5,117	$	1,539	$	-	$	12,876
	Allowance		$	3,594	$	-	$	1,207	$	123	$	-	$	4,924
Impaired loans without a specific allowance
		Non-accruing	$	220	$	3,170	$	238	$	1,216	$	-	$	4,844
		Restructured accruing		172		-		-		-		1,442		1,614
		Restructured non-accruing		974		136		-		1,479		287		2,876
	Balance		$	1,366	$	3,306	$	238	$	2,695	$	1,729	$	9,334
Total impaired loans
		Non-accruing	$	4,346	$	3,170	$	5,355	$	1,983	$	-	$	14,854
		Restructured accruing		500		-		-		-		1,442		1,942
		Restructured non-accruing		2,740		136		-		2,251		287		5,414
	Balance		$	7,586	$	3,306	$	5,355	$	4,234	$	1,729	$	22,210
Unpaid principal balance in total impaired loans			$	11,056	$	4,419	$	9,909	$	6,656	$	3,081	$	35,121

	December 31, 2018
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	7,685	$	770	$	5,696	$	3,823	$	2,237	$	20,211
Contractual interest income due on impaired loans during the period	$	858	$	495	$	610	$	407	$	143
Interest income on impaired loans recognized on a cash basis	$	215	$	-	$	20	$	175	$	96
Interest income on impaired loans recognized on an accrual basis	$	63	$	-	$	-	$	-	$	75

Credit Quality

The following tables provide information on the credit quality of the loan portfolio by segment at the dates indicated:

		June 30, 2019
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans (1)	$	7,083	$	1,990	$	6,409	$	3,766	$	4,439	$	10,625	$	-	$	34,312
	Loans 90 days past due		-		-		1,248		-		-		-		-		1,248
	Restructured loans		264		-		775		-		-		1,094		-		2,133
Total non-performing loans			7,347		1,990		8,432		3,766		4,439		11,719		-		37,693
	Other real estate owned		39		665		409		-		64		309		-		1,486
Total non-performing assets		$	7,386	$	2,655	$	8,841	$	3,766	$	4,503	$	12,028	$	-	$	39,179
(1) Includes $4.3 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

		December 31, 2018
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans (1)	$	7,086	$	3,306	$	5,355	$	4,234	$	4,107	$	9,336	$	159	$	33,583
	Loans 90 days past due		49		-		-		-		219		221		-		489
	Restructured loans		500		-		-		-		-		1,442		-		1,942
Total non-performing loans			7,635		3,306		5,355		4,234		4,326		10,999		159		36,014
	Other real estate owned		39		315		409		-		-		821		-		1,584
Total non-performing assets		$	7,674	$	3,621	$	5,764	$	4,234	$	4,326	$	11,820	$	159	$	37,598
(1) Includes $4.8 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

			June 30, 2019
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	2,855	$	3,790	$	2,244	$	385	$	1,513	$	11,009	$	2,386	$	24,182
	61-90 days			2,958		-		169		711		1,200		2,567		477		8,082
	> 90 days			-		-		1,248		-		-		-		-		1,248
		Total past due		5,813		3,790		3,661		1,096		2,713		13,576		2,863		33,512
	Non-accrual loans (1)			7,083		1,990		6,409		3,766		4,439		10,625		-		34,312
	Loans acquired with deteriorated credit quality			2,711		-		9,774		-		1,108		9		-		13,602
	Current loans			756,551		652,929		1,974,183		1,220,124		480,916		1,216,871		168,243		6,469,817
		Total loans	$	772,158	$	658,709	$	1,994,027	$	1,224,986	$	489,176	$	1,241,081	$	171,106	$	6,551,243
(1) Includes $4.3 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

			December 31, 2018
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	2,737	$	474	$	3,041	$	433	$	3,871	$	8,181	$	3,226	$	21,963
	61-90 days			-		-		789		-		1,477		2,517		-		4,783
	> 90 days			49		-		-		-		219		221		-		489
		Total past due		2,786		474		3,830		433		5,567		10,919		3,226		27,235
	Non-accrual loans (1)			7,086		3,306		5,355		4,234		4,107		9,336		159		33,583
	Loans acquired with deteriorated credit quality			8,155		-		14,328		2,182		1,272		10		-		25,947
	Current loans			778,237		677,421		1,934,882		1,196,054		506,893		1,207,982		183,400		6,484,869
		Total loans	$	796,264	$	681,201	$	1,958,395	$	1,202,903	$	517,839	$	1,228,247	$	186,785	$	6,571,634
(1) Includes $4.8 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at the dates indicated:

		June 30, 2019
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	752,645	$	656,719	$	1,972,903	$	1,214,105	$	4,596,372
	Special Mention (1)		5,111		-		3,910		3,117		12,138
	Substandard (2)		14,402		1,990		17,214		7,764		41,370
	Doubtful		-		-		-		-		-
Total		$	772,158	$	658,709	$	1,994,027	$	1,224,986	$	4,649,880
(1) Includes $2.0 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.
(2) Includes $12.1 million of purchased credit impaired loans acquired from WashingtonFirst and $8.1 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

		December 31, 2018
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	773,958	$	677,574	$	1,934,886	$	1,189,903	$	4,576,321
	Special Mention (1)		1,942		321		3,826		2,738		8,827
	Substandard (2)		20,364		3,306		19,683		10,262		53,615
	Doubtful		-		-		-		-		-
Total		$	796,264	$	681,201	$	1,958,395	$	1,202,903	$	4,638,763
(1) Includes $4.2 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.
(2) Includes $24.3 million of purchased credit impaired loans acquired from WashingtonFirst and $7.2 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at the dates indicated:

			June 30, 2019
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	484,737	$	1,229,362	$	171,106	$	1,885,205
	Non-performing:
		90 days past due		-		-		-		-
		Non-accruing (1)		4,439		10,625		-		15,064
		Restructured loans		-		1,094		-		1,094
Total			$	489,176	$	1,241,081	$	171,106	$	1,901,363
(1) Includes $1.2 million of consumer loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

			December 31, 2018
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	513,513	$	1,217,248	$	186,626	$	1,917,387
	Non-performing:
		90 days past due		219		221		-		440
		Non-accruing (1)		4,107		9,336		159		13,602
		Restructured loans		-		1,442		-		1,442
Total			$	517,839	$	1,228,247	$	186,785	$	1,932,871
(1) Includes $1.3 million of consumer loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

During the six months ended June 30, 2019, the Company restructured $1.8 million in loans that were designated as troubled debt restructurings. No modifications resulted in the reduction of the principal in the associated loan balances. Restructured loans are subject to periodic credit reviews to determine the necessity and adequacy of a specific loan loss allowance based on the collectability of the recorded investment in the restructured loan. Loans restructured during the six months ended June 30, 2019 had specific reserves of $0.4 million. For the year ended December 31, 2018, the Company restructured $1.6 million in loans. Modifications consisted principally of interest rate concessions and no modifications resulted in the reduction of the recorded investment in the associated loan balances. Loans restructured during 2018 had specific reserves of $0.6 million at December 31, 2018. The commitments to lend additional funds on loans that have been restructured at June 30, 2019 and December 31, 2018 were not significant.The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated:

		For the Six Months Ended June 30, 2019
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	-	$	-	$	775	$	-	$	-	$	775
	Restructured non-accruing		254		-		782		-		-		1,036
Balance		$	254	$	-	$	1,557	$	-	$	-	$	1,811
Specific allowance		$	204	$	-	$	202	$	-	$	-	$	406
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

		For the Year Ended December 31, 2018
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	-	$	-	$	-	$	-	$	-	$	-
	Restructured non-accruing		1,464		-		-		158		-		1,622
Balance		$	1,464	$	-	$	-	$	158	$	-	$	1,622
Specific allowance		$	563	$	-	$	-	$	-	$	-	$	563
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

Other Real Estate OwnedOther real estate owned totaled $1.5 million and $1.6 million at June 30, 2019 and December 31, 2018, respectively. There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of June 30, 2019.

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GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

Note 5 – Goodwill and Other Intangible Assets

The gross carrying amounts and accumulated amortization of intangible assets and goodwill are presented at the dates indicated in the following table:

		June 30, 2019						Weighted		December 31, 2018						Weighted
		Gross				Net		Average		Gross				Net		Average
		Carrying		Accumulated		Carrying		Remaining		Carrying		Accumulated		Carrying		Remaining
(Dollars in thousands)		Amount		Amortization		Amount		Life		Amount		Amortization		Amount		Life
Amortizing intangible assets:
Core deposit intangibles		$	10,678	$	(2,815)	$	7,863	8.5	years	$	10,678	$	(1,941)	$	8,737	9.0	years
Other identifiable intangibles			1,478		(528)		950	10.2	years		1,478		(427)		1,051	10.6	years
	Total amortizing intangible assets	$	12,156	$	(3,343)	$	8,813			$	12,156	$	(2,368)	$	9,788
Goodwill		$	347,149			$	347,149			$	347,149			$	347,149

The amount of goodwill by reportable segment is presented in the following table:

		Community				Investment
(Dollars in thousands)		Banking		Insurance		Management		Total
Balance December 31, 2018	$	331,173	$	6,788	$	9,188	$	347,149
No Activity		-		-		-		-
Balance June 30, 2019	$	331,173	$	6,788	$	9,188	$	347,149

The following table presents the estimated future amortization expense for amortizing intangible assets within the years ending December 31:

(In thousands)		Amount
2019		$	969
2020			1,720
2021			1,507
2022			1,295
Thereafter			3,322
	Total amortizing intangible assets	$	8,813

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DEPOSITS

6 Months Ended

Jun. 30, 2019

Deposits [Abstract]

DEPOSITS

Note 6 – Deposits

The following table presents the composition of deposits at the dates indicated:

(In thousands)				June 30, 2019		December 31, 2018
Noninterest-bearing deposits				$	2,023,614	$	1,750,319
Interest-bearing deposits:
	Demand				721,389		703,145
	Money market savings				1,705,164		1,605,024
	Regular savings				331,164		330,231
	Time deposits of less than $100,000				456,520		427,421
	Time deposits of $100,000 or more				1,151,898		1,098,740
		Total interest-bearing deposits			4,366,135		4,164,561
			Total deposits	$	6,389,749	$	5,914,880

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SUBORDINATED DEBENTURES

6 Months Ended

Jun. 30, 2019

Brokers and Dealers [Abstract]

SUBORDINATED DEBENTURES

Note 7 – SUBORDINATED DEBENTURES

In conjunction with the acquisition of WashingtonFirst, the Company assumed $25.0 million in non-callable subordinated debt and $10.3 million in callable junior subordinated debt securities. The associated purchase premiums at acquisition were $2.2 million and $0.1 million, respectively. The premiums are amortized over the contractual life of each obligation.

The subordinated debt has a maturity of ten years, is due in full on October 15, 2025, is non-callable and currently bears a fixed interest rate of 6.00% per annum, payable quarterly, subject to a reset after 5 years (on October 5, 2020) at 3 month LIBOR plus 467 basis points. The entire amount of subordinated debt is considered Tier 2 capital under current regulatory guidelines.

In 2003, Alliance Bankshares Corporation, which was acquired by WashingtonFirst in 2012, issued $10.3 million of junior subordinated debt securities to Alliance Virginia Capital Trust I, of which Alliance Bankshares Corporation owned all of the common securities. The trust used the proceeds from the issuance of its underlying common securities and preferred securities, which were sold to third parties, to purchase the debt securities. These debt securities are the trust’s only assets and the interest payments from the debentures finance the distributions paid on the preferred securities. The obligations under the debt securities were assumed by the Company at the date of acquisition of WashingtonFirst. The debt securities are due on June 30, 2033 and are callable at any time, without penalty. The interest rate associated with the debt securities is three month LIBOR plus 3.15% subject to quarterly interest rate adjustments. The interest rate as of June 30, 2019 was 5.47%. Under the indenture governing the debt securities, the Company has the right to defer payments of interest for up to twenty consecutive quarterly periods. During any such extension period, distributions on the trust’s preferred securities will also be deferred, and the Company’s ability to pay dividends on its common stock will be restricted. The trust’s preferred securities are mandatorily redeemable upon maturity of the debt securities, or upon earlier redemption as provided in the indenture. If the debt securities are redeemed prior to maturity, the redemption price will be the principal amount and any accrued but unpaid interest. The Company unconditionally guarantees payment of accrued and unpaid distributions required to be paid on the trust securities subject to certain exceptions, the redemption price with respect to any trust securities called for redemption and amounts due if the trust is liquidated or terminated. As of June 30, 2019, the Company was current on all interest payments. Under current regulatory guidelines the trust preferred securities are considered to be Tier 1 capital.

The following table provides information on subordinated debentures as the date indicated:

(In thousands)		June 30, 2019		December 31, 2018
Subordinated debentures		$	25,000	$	25,000
	Add: Purchase accounting premium		1,954		2,023
Trust preferred securities			10,310		10,310
	Add: Purchase accounting premium		89		92
Total subordinated debentures		$	37,353	$	37,425

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SHARE BASED COMPENSATION

6 Months Ended

Jun. 30, 2019

Share Based Compensation [Abstract]

SHARE BASED COMPENSATION

Note 8 – Share Based Compensation

At June 30, 2019, the Company had two share based compensation plans in existence, the 2005 Omnibus Stock Plan (“Omnibus Stock Plan”) and the 2015 Omnibus Incentive Plan (“Omnibus Incentive Plan”). The Omnibus Stock Plan expired during the second quarter of 2015 but has outstanding options that may still be exercised. The Omnibus Incentive Plan is described in the following paragraph.

The Company’s Omnibus Incentive Plan was approved on May 6, 2015 and provides for the granting of incentive stock options, non-qualifying stock options, stock appreciation rights, restricted stock grants, restricted stock units and performance awards to selected directors and employees on a periodic basis at the discretion of the board. The Omnibus Incentive Plan authorizes the issuance of up to 1,500,000 shares of common stock, of which 1,153,936 are available for issuance at June 30, 2019, has a term of ten years, and is administered by a committee of at least three directors appointed by the board of directors. Options granted under the plan have an exercise price which may not be less than 100% of the fair market value of the common stock on the date of the grant and must be exercised within seven to ten years from the date of grant. The exercise price of stock options must be paid for in full in cash or shares of common stock, or a combination of both. The board committee has the discretion when making a grant of stock options to impose restrictions on the shares to be purchased upon the exercise of such options. The Company generally issues authorized but previously unissued shares to satisfy option exercises.

The fair values of all of the options granted for the periods indicated have been estimated using a binomial option-pricing moddel. The weighted-average assumptions for the periods shown are presented in the following table:

	Six Months Ended June 30,
	2019		2018
Dividend yield	-	%	2.64	%
Weighted average expected volatility	-	%	39.13	%
Weighted average risk-free interest rate	-	%	2.61	%
Weighted average expected lives (in years)	-		5.61
Weighted average grant-date fair value	-		$11.73

The dividend yield is based on estimated future dividend yields. The risk-free rate for periods within the contractual term of the share option is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatilities are generally based on historical volatilities. The expected term of share options granted is generally derived from historical experience.

Compensation expense is recognized on a straight-line basis over the vesting period of the respective stock option or restricted stock grant. The Company recognized compensation expense of $0.7 million and $0.6 million for the three months ended June 30, 2019 and 2018, respectively, related to the awards of stock options and restricted stock grants. Compensation expense of $1.4 million and $1.1 million was recognized for the six months ended June 30, 2019 and 2018, respectively. The intrinsic value of stock options exercised in the six months ended June 30, 2019 and 2018 was $0.1 million and $0.3 million, respectively. The total of unrecognized compensation cost related to stock options was approximately $0.1 million as of June 30, 2019. That cost is expected to be recognized over a weighted average period of approximately 1.5years. The total of unrecognized compensation cost related to restricted stock was approximately $6.8 million as of June 30, 2019. That cost is expected to be recognized over a weighted average period of approximately 3.1years. The fair value of the options vested during the six months ended June 30, 2019 and 2018, was not significant.

The Company granted 96,191 shares of restricted stock in the first quarter of 2019, of which 21,390 shares are subject to a three year vesting schedule with one third of the shares vesting on April 1^st of each year and 74,801 shares subject to a five year vesting schedule with one fifth of the shares vesting on April 1^st of each year. The

Company did not grant any additional shares of restricted stock during the second quarter of 2019. The Company did not grant any stock options during 2019.

A summary of share option activity for the period indicated is reflected in the following table:

				Weighted
	Number	Weighted		Average	Aggregate
	of	Average		Contractual	Intrinsic
	Common	Exercise		Remaining	Value
	Shares	Share Price		Life (Years)	(in thousands)
Balance at January 1, 2019	81,508	$	29.74		$	369
Granted	-	$	-
Exercised	(10,897)	$	20.56		$	145
Forfeited	(1,007)	$	37.11
Expired	(142)	$	42.48
Balance at June 30, 2019	69,462	$	31.05	3.6	$	403
Exercisable at June 30, 2019	55,362	$	28.94	3.1	$	403
Weighted average fair value of options
granted during the year		$	-

A summary of the activity for the Company’s restricted stock for the period indicated is presented in the following table:

	Number	Weighted
	of	Average
	Common	Grant-Date
(In dollars, except share data):	Shares	Fair Value
Restricted stock at January 1, 2019	203,603	$	35.14
Granted	96,191	$	33.27
Vested	(69,842)	$	31.55
Forfeited	(6,673)	$	33.16
Restricted stock at June 30, 2019	223,279	$	35.52

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PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 30, 2019

Pension, Profit Sharing, and Other Employee Benefit Plans [Abstract]

PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS

Note 9 – Pension, Profit Sharing, and Other Employee Benefit Plans

Defined Benefit Pension Plan

The Company has a qualified, noncontributory, defined benefit pension plan (the “Plan”). Benefits after January 1, 2005, are based on the benefit earned as of December 31, 2004, plus benefits earned in future years of service based on the employee’s compensation during each such year. All benefit accruals for employees were frozen as of December 31, 2007 based on past service and thus salary increases and additional years of service after such date no longer affect the defined benefit provided by the Plan although additional vesting may continue to occur.

The Company's funding policy is to contribute amounts to the Plan sufficient to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. In addition, the Company contributes additional amounts as it deems appropriate based on benefits attributed to service prior to the date of the Plan freeze. The Plan invests primarily in a diversified portfolio of managed fixed income and equity funds.

The components of net periodic benefit cost for the periods indicated are presented in the following table:

		Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)		2019		2018		2019		2018
Interest cost on projected benefit obligation		$	402	$	385	$	804	$	770
Expected return on plan assets			(412)		(465)		(824)		(930)
Recognized net actuarial loss			265		250		530		500
	Net periodic benefit cost	$	255	$	170	$	510	$	340

Contributions

The decision as to whether or not to make a plan contribution and the amount of any such contribution is dependent on a number of factors. Such factors include the investment performance of the plan assets in the current economy and, since the Plan is currently frozen, the remaining investment horizon of the Plan. After consideration of these factors, the Company made a contribution of $0.2 million in 2019. Management continues to monitor the funding level of the Plan and may make additional contributions as necessary during 2019.

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NET INCOME PER COMMON SHARE

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

NET INCOME PER COMMON SHARE

Note 10 – Net Income per Common Share

The calculation of net income per common share for the periods indicated is presented in the following table:

			Three Months Ended June 30,				Six Months Ended June 30,
(Dollars and amounts in thousands, except per share data)			2019		2018		2019		2018
Net income			$	28,276	$	24,399	$	58,593	$	46,064
Basic:
Basic weighted average EPS shares				35,862		35,721		35,816		35,686
		Basic net income per share	$	0.79	$	0.68	$	1.64	$	1.29
Diluted:
Basic weighted average EPS shares				35,862		35,721		35,816		35,686
Dilutive common stock equivalents				28		23		50		24
	Dilutive EPS shares			35,890		35,744		35,866		35,710
		Diluted net income per share	$	0.79	$	0.68	$	1.63	$	1.29
Anti-dilutive shares				10		6		11		6

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2019

Other Comprehensive Income Loss [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 11 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income is defined as net income plus transactions and other occurrences that are the result of non-owner changes in equity. For condensed financial statements presented for the Company, non-owner changes in equity are comprised of unrealized gains or losses on available-for-sale debt securities and any minimum pension liability adjustments. The following table presents the activity in net accumulated other comprehensive income (loss) and the components of the activity for the periods indicated:

	Unrealized Gains
	(Losses) on
	Investments		Defined Benefit
(In thousands)	Available-for-Sale		Pension Plan		Total
Balance at January 1, 2019	$	(6,630)	$	(9,124)	$	(15,754)
Other comprehensive income before reclassification, net of tax		11,802		-		11,802
Reclassifications from accumulated other comprehensive income, net of tax		(4)		391		387
Current period change in other comprehensive income, net of tax		11,798		391		12,189
Balance at June 30, 2019	$	5,168	$	(8,733)	$	(3,565)

	Unrealized Gains
	(Losses) on
	Investments		Defined Benefit
(In thousands)	Available-for-Sale		Pension Plan		Total
Balance at January 1, 2018	$	687	$	(7,544)	$	(6,857)
Other comprehensive income before reclassification, net of tax		(12,491)		-		(12,491)
Reclassifications from accumulated other comprehensive income, net of tax		(47)		316		269
Current period change in other comprehensive income, net of tax		(12,538)		316		(12,222)
Reclassification of tax effects from accumulated other comprehensive income		148		(1,625)		(1,477)
Balance at June 30, 2018	$	(11,703)	$	(8,853)	$	(20,556)

The following table provides the information on the reclassification adjustments out of accumulated other comprehensive income for the periods indicated:

				Six Months Ended June 30,
(In thousands)				2019		2018
Unrealized gains on investments available-for-sale
	Affected line item in the Statements of Income:
	Investment securities gains			$	5	$	63
	Income before taxes				5		63
	Tax expense				(1)		(16)
	Net income			$	4	$	47
Amortization of defined benefit pension plan items
	Affected line item in the Statements of Income:
		Recognized actuarial loss(1)		$	(530)	$	(500)
			Income before taxes		(530)		(500)
			Tax benefit		139		184
			Net loss	$	(391)	$	(316)
(1) This amount is included in the computation of net periodic benefit cost, see Note 9.

In the first quarter of 2018, the Company elected to make a one-time reclassification from accumulated other comprehensive income to retained earnings for the effects of re-measuring the deferred tax assets and liabilities originally recorded in other comprehensive income as a result of the change in the federal tax rate by the Tax Cuts and Jobs Act.

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LEASES

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

LEASES

NOTE 12 – LEASES

The Company leases real estate properties for its network of bank branches, financial centers and corporate offices. All of the Company’s leases are currently classified as operating. Most lease agreements include one or more options to renew, with renewal terms that can extend the original lease term from one to twenty years or more. The Company does not sublease any of its leased real estate properties.

As June 30, 2019, ROU assets and lease liabilities totaled $73.1 million and $80.6 million, respectively. For the three and six months ended June 30, 2019, the Company recognized total operating lease expense in the amount of $2.8 million and $5.7 million, respectively. Cash paid for amounts included in the measurement of lease liabilities for the three and six months ended June 30, 2019 was $2.2 million and $4.3 million, respectively and is included in Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows. There were no new ROU assets obtained in exchange for lease obligations during the six months ended June 30, 2019.

As of June 30, 2019, the maturities of the Company’s operating lease liabilities were as follows:

(In thousands)	Amount
Maturity:
One year	$	11,023
Two years		10,563
Three years		10,002
Four years		10,090
Five years		9,494
Thereafter		46,671
Total undiscounted lease payments		97,843
Less: Present value discount		(17,228)
Lease Liability	$	80,615

As of June 30, 2019, the weighted average remaining lease term was 10.7 years and the weighted average operating discount rate to determine the operating lease liability was 3.31%.

The Company had one operating lease for a branch location that had not commenced at June 30, 2019. The Company does not have any lease arrangements with any of its related parties as of June 30, 2019.

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND DERIVATIVES

6 Months Ended

Jun. 30, 2019

Financial Instruments With Off- Balance Sheet Risk and Derivatives [Abstract]

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND DERIVATIVES

Note 13 – Financial Instruments with Off-balance Sheet Risk and Derivatives

The Company has entered into interest rate swaps (“swaps”) to facilitate customer transactions and meet their financing needs. These swaps qualify as derivatives, but are not designated as hedging instruments. Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty or customer owes the Company, and results in credit risk to the Company. When the fair value of a derivative instrument contract is negative, the Company owes the customer or counterparty and therefore, has no credit risk. The notional value of commercial loan swaps outstanding was $106.7 million with a fair value of $1.4 million as of June 30, 2019 compared to $16.6 million with a fair value of $0.4 million as of December 31, 2018. The swap positions are offset to minimize the potential impact on the Company’s financial statements. Fair values of the swaps are carried as both gross assets and gross liabilities in the Condensed Consolidated Statements of Condition. The associated net gains and losses on the swaps are recorded in other non-interest income.

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LITIGATION

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

LITIGATION

Note 14 – Litigation

The Company and its subsidiaries are subject in the ordinary course of business to various pending or threatened legal proceedings in which claims for monetary damages are asserted. After consultation with legal counsel, management does not anticipate that the ultimate liability, if any, arising out of these legal matters will have a material adverse effect on the Company's financial condition, operating results or liquidity.

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FAIR VALUE

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE

Note 15 – Fair Value

Generally accepted accounting principles provide entities the option to measure eligible financial assets, financial liabilities and commitments at fair value (i.e. the fair value option), on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a commitment. Subsequent changes in fair value must be recorded in earnings. The Company applies the fair value option on residential mortgage loans held for sale. The fair value option on residential mortgage loans held for sale allows the recognition of gains on sale of mortgage loans to more accurately reflect the timing and economics of the transaction.

The standard for fair value measurement establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below.

Basis of Fair Value Measurement:

Level 1- Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2- Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3- Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Changes to interest rates may result in changes in the cash flows due to prepayments or extinguishments. Accordingly, this could result in higher or lower measurements of the fair values.

Assets and Liabilities

Mortgage loans held for sale

Mortgage loans held for sale are valued based on quotations from the secondary market for similar instruments and are classified as Level 2 of the fair value hierarchy.

Investments available-for-sale

U.S. government agencies, mortgage-backed, and asset-backed securities

Valuations are based on active market data and use of evaluated broker pricing models that vary based by asset class and includes available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, descriptive terms and conditions databases coupled with extensive quality control programs. Multiple quality control evaluation processes review available market, credit and deal level information to support the evaluation of the security. If there is a lack of objectively verifiable information available to support the valuation, the evaluation of the security is discontinued. Additionally, proprietary models and pricing systems, mathematical tools, actual transacted prices, integration of market developments and experienced evaluators are used to determine the value of a security based on a hierarchy of market information regarding a security or securities with similar characteristics. The Company does not adjust the quoted price for such securities. Such instruments are generally classified within Level 2 of the fair value hierarchy.

State and municipal securities

Proprietary valuation matrices are used for valuing all tax-exempt municipals that can incorporate changes in the municipal market as they occur. Market evaluation models include the ability to value bank qualified municipals and general market municipals that can be broken down further according to insurer, credit support, state of issuance and rating to incorporate additional spreads and municipal curves. Taxable municipals are valued using a third party model that incorporates a methodology that captures the trading nuances associated with these bonds. Such instruments are generally classified within Level 2 of the fair value hierarchy.

Interest rate swap agreements

Interest rate swap agreements are measured by alternative pricing sources with reasonable levels of price transparency in markets that are not active. Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as efficient and are less liquid than that of the more mature Level 1 markets. These markets do however have comparable, observable inputs in which an alternative pricing source values these assets in order to arrive at a fair market value. These characteristics classify interest rate swap agreements as Level 2.

Assets Measured at Fair Value on a Recurring Basis

The following tables set forth the Company’s financial assets and liabilities at the dates indicated that were accounted for or disclosed at fair value. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

			June 30, 2019
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	50,511	$	-	$	50,511
	Investments available-for-sale:
		U.S. government agencies		-		314,769		-		314,769
		State and municipal		-		249,576		-		249,576
		Mortgage-backed and asset-backed		-		326,346		-		326,346
		Corporate debt		-		-		9,456		9,456
		Trust preferred		-		-		310		310
		Marketable equity securities		-		568		-		568
	Interest rate swap agreements			-		1,358		-		1,358
Liabilities
	Interest rate swap agreements		$	-	$	(1,358)	$	-	$	(1,358)

			December 31, 2018
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	22,773	$	-	$	22,773
	Investments available-for-sale:
		U.S. government agencies		-		296,678		-		296,678
		State and municipal		-		282,024		-		282,024
		Mortgage-backed and asset-backed		-		348,515		-		348,515
		Corporate debt		-		-		9,240		9,240
		Trust preferred		-		-		310		310
		Marketable equity securities		-		568		-		568
	Interest rate swap agreements			-		446		-		446
Liabilities
	Interest rate swap agreements		$	-	$	(446)	$	-	$	(446)

The following table provides unrealized losses included in assets measured in the Condensed Consolidated Statements of Condition at fair value on a recurring basis for the period indicated:

			Significant
			Unobservable
			Inputs
(In thousands)			(Level 3)
Investments available-for-sale:
	Balance at January 1, 2019		$	9,550
		Additions of Level 3 assets		-
		Sales of Level 3 assets		-
		Total unrealized gain included in other comprehensive income		216
	Balance at June 30, 2019		$	9,766

Assets Measured at Fair Value on a Nonrecurring Basis

The following table sets forth the Company’s financial assets subject to fair value adjustments (impairment) on a nonrecurring basis at the date indicated that are valued at the lower of cost or market. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

		June 30, 2019
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	6,653	$	6,653	$	(6,561)
Other real estate owned			-		-		1,486		1,486		(277)
	Total	$	-	$	-	$	8,139	$	8,139	$	(6,838)

		December 31, 2018
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	6,780	$	6,780	$	(10,932)
Other real estate owned			-		-		1,584		1,584		(262)
	Total	$	-	$	-	$	8,364	$	8,364	$	(11,194)

At June 30, 2019, impaired loans totaling $21.7 million were written down to fair value of $16.9 million as a result of specific loan loss allowances of $4.8 million associated with the impaired loans which was included in the allowance for loan losses. Impaired loans totaling $22.2 million were written down to fair value of $17.3 million at December 31, 2018 as a result of specific loan loss allowances of $4.9 million associated with the impaired loans.

Loan impairment is measured using the present value of expected cash flows, the loan’s observable market price or the fair value of the collateral (less selling costs) if the loans are collateral dependent. Collateral may be real estate and/or business assets including equipment, inventory and/or accounts receivable. The value of business equipment, inventory and accounts receivable collateral is based on net book value on the business’ financial statements and, if necessary, discounted based on management’s review and analysis. Appraised and reported values may be discounted based on management’s historical experience, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the factors identified above. Valuation techniques are consistent with those techniques applied in prior periods.

Other real estate owned (“OREO”) is adjusted to fair value upon transfer of the loans to OREO. Subsequently, OREO is carried at the lower of carrying value or fair value. The estimated fair value for other real estate owned included in Level 3 is determined by independent market based appraisals and other available market information, less cost to sell, that may be reduced further based on market expectations or an executed sales agreement. If the fair value of the collateral deteriorates subsequent to initial recognition, the Company records the OREO as a non-recurring Level 3 adjustment. Valuation techniques are consistent with those techniques applied in prior periods.

Fair Value of Financial Instruments

The Company discloses fair value information of financial instruments that are not measured at fair value in the financial statements based on the exit price notion. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if one exists.

Quoted market prices, where available, are shown as estimates of fair market values. Because no quoted market prices are available for a significant portion of the Company's financial instruments, the fair value of such instruments has been derived based on the amount and timing of future cash flows and estimated discount rates based on observable inputs (“Level 2”) or unobservable inputs (“Level 3”).

Present value techniques used in estimating the fair value of many of the Company's financial instruments are significantly affected by the assumptions used. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate cash settlement of the instrument. Additionally, the accompanying estimates of fair values are only representative of the fair values of the individual financial assets and liabilities, and should not be considered an indication of the fair value of the Company. Management utilizes internal models used in asset liability management to determine the fair values disclosed below.

The carrying amounts and fair values of the Company’s financial instruments at the dates indicated are presented in the following table:

					Fair Value Measurements
	June 30, 2019				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	54,690	$	54,690	$	-	$	54,690	$	-
Loans, net of allowance		6,497,219		6,383,069		-		-		6,383,069
Other assets (1)		111,850		111,850		-		111,850		-
Financial Liabilities
Time deposits	$	1,608,418	$	1,615,849	$	-	$	1,615,849	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		150,604		150,604		-		150,604		-
Advances from FHLB		582,768		590,246		-		590,246		-
Subordinated debentures		37,353		35,435		-		-		35,435
(1) Includes bank owned life insurance products.

					Fair Value Measurements
	December 31, 2018				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	73,389	$	73,389	$	-	$	73,389	$	-
Loans, net of allowance		6,518,148		6,376,307		-		-		6,376,307
Other assets (1)		110,823		110,823		-		110,823		-
Financial Liabilities
Time deposits	$	1,526,161	$	1,536,238	$	-	$	1,536,238	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		327,429		327,429		-		327,429		-
Advances from FHLB		848,611		850,186		-		850,186		-
Subordinated debentures		37,425		33,588		-		-		33,588
(1) Includes bank owned life insurance products.

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SEGMENT REPORTING

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

SEGMENT REPORTING

Note 16 - Segment Reporting

Currently, the Company conducts business in three operating segments—Community Banking, Insurance and Investment Management. Each of the operating segments is a strategic business unit that offers different products and services. The Insurance and Investment Management segments were businesses that were acquired in separate transactions where management of the acquired business was retained. The accounting policies of the segments are the same as those of the Company. However, the segment data reflect inter-segment transactions and balances.

The Community Banking segment is conducted through Sandy Spring Bank and involves delivering a broad range of financial products and services, including various loan and deposit products to both individuals and businesses. Parent company income is included in the Community Banking segment, as the majority of effort of these functions is related to this segment. Major revenue sources include net interest income, gains on sales of mortgage loans, trust income fees and service charges on deposit accounts. Expenses include personnel, occupancy, marketing, equipment and other expenses. Non-cash charges associated with amortization of intangibles were $0.4 million and $0.5 million for the three months ended June 30, 2019 and 2018, respectively. These charges totaled $0.9 million and $1.0 million for the six months ended June 30, 2019 and 2018, respectively.

The Insurance segment is conducted through Sandy Spring Insurance Corporation, a subsidiary of the Bank, and offers annuities as an alternative to traditional deposit accounts. Sandy Spring Insurance Corporation operates Sandy Spring Insurance, a general insurance agency located in Annapolis, Maryland, and Neff and Associates, located in Ocean City, Maryland. Major sources of revenue are insurance commissions from commercial lines, personal lines, and medical liability lines. Expenses include personnel and support charges. Non-cash charges associated with amortization of intangibles were not significant for the three and six months ended June 30, 2019 and 2018, respectively.

The Investment Management segment is conducted through West Financial Services, Inc., a subsidiary of the Bank. This asset management and financial planning firm, located in McLean, Virginia, provides comprehensive investment management and financial planning to individuals, families, small businesses and associations including cash flow analysis, investment review, tax planning, retirement planning, insurance analysis and estate planning. West Financial currently has approximately $1.7 billion in assets under management. Major revenue sources include non-interest income earned on the above services. Expenses include personnel and support charges. Non-cash charges associated with amortization of intangibles were not significant for the three and six months ended June 30, 2019 and 2018, respectively.

Information for the operating segments and reconciliation of the information to the condensed consolidated financial statements for the periods indicated is presented in the following tables:

	Three Months Ended June 30, 2019
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	87,214	$	1	$	3	$	(4)	$	87,214
Interest expense		21,033		-		-		(4)		21,029
Provision (credit) for loan losses		1,633		-		-		-		1,633
Noninterest income		12,856		1,269		2,597		(166)		16,556
Noninterest expense		40,859		1,304		1,890		(166)		43,887
Income before income taxes		36,545		(34)		710		-		37,221
Income tax expense		8,769		(8)		184		-		8,945
Net income	$	27,776	$	(26)	$	526	$	-	$	28,276
Assets	$	8,398,263	$	11,552	$	20,253	$	(31,549)	$	8,398,519

	Three Months Ended June 30, 2018
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	78,596	$	1	$	2	$	(2)	$	78,597
Interest expense		14,781		-		-		(2)		14,779
Provision for loan losses		1,733		-		-		-		1,733
Non-interest income		11,252		1,179		2,590		(153)		14,868
Non-interest expense		42,302		1,302		1,631		(153)		45,082
Income before income taxes		31,032		(122)		961		-		31,871
Income tax expense		7,249		(32)		255		-		7,472
Net income	$	23,783	$	(90)	$	706	$	-	$	24,399
Assets	$	8,154,957	$	9,041	$	15,407	$	(26,805)	$	8,152,600

	Six Months Ended June 30, 2019
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	175,397	$	2	$	5	$	(7)	$	175,397
Interest expense		42,469		-		-		(7)		42,462
Provision for loan losses		1,505		-		-		-		1,505
Noninterest income		25,563		3,173		5,122		(333)		33,525
Noninterest expense		82,070		2,724		3,618		(333)		88,079
Income before income taxes		74,916		451		1,509		-		76,876
Income tax expense		17,762		127		394		-		18,283
Net income	$	57,154	$	324	$	1,115	$	-	$	58,593
Assets	$	8,398,263	$	11,552	$	20,253	$	(31,549)	$	8,398,519

	Six Months Ended June 30, 2018
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	154,100	$	1	$	3	$	(3)	$	154,101
Interest expense		27,395		-		-		(3)		27,392
Provision for loan losses		3,730		-		-		-		3,730
Non-interest income		24,423		3,001		4,869		(307)		31,986
Non-interest expense		89,333		2,681		3,016		(307)		94,723
Income before income taxes		58,065		321		1,856		-		60,242
Income tax expense		13,602		91		485		-		14,178
Net income	$	44,463	$	230	$	1,371	$	-	$	46,064
Assets	$	8,154,957	$	9,041	$	15,407	$	(26,805)	$	8,152,600

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2019

Significant Accounting Policies [Abstract]

Nature of Operations

Nature of Operations

Sandy Spring Bancorp (the “Company”), a Maryland corporation, is the bank holding company for Sandy Spring Bank (the “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. Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc.

Basis of Presentation

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the financial services industry for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements and prevailing practices within the banking industry. The following summary of significant accounting policies of the Company is presented to assist the reader in understanding the financial and other data presented in this report. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for any future periods or for the year ending December 31, 2019. In the opinion of management, all adjustments (comprising only normal recurring accruals) necessary for a fair presentation of the results of the interim periods have been included. Certain reclassifications have been made to prior period amounts, as necessary, to conform to the current period presentation. The Company has evaluated subsequent events through the date of the issuance of its financial statements.

These statements should be read in conjunction with the financial statements and accompanying notes included in the Company’s 2018 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2019. There have been no significant changes to the Company’s accounting policies as disclosed in the 2018 Annual Report on Form 10-K.

Principles of Consolidation

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Sandy Spring Bank and its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Consolidation has resulted in the elimination of all intercompany accounts and transactions.

Use of Estimates

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, in addition to affecting the reported amounts of revenues earned and expenses incurred during the reporting period. Actual results could differ from those estimates. Estimates that could change significantly relate to the provision for loan losses and the related allowance, determination of impaired loans and the related measurement of impairment, potential impairment of goodwill or other intangible assets, valuation of investment securities and the determination of whether impaired securities are other-than-temporarily impaired, valuation of other real estate owned, valuation of share-based compensation, the assessment that a liability should be recognized with respect to any matters under litigation, the calculation of current and deferred income taxes and the actuarial projections related to pension expense and the related liability.

Cash Flows

Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, federal funds sold and interest-bearing deposits with banks (items with stated original maturity of three months or less).

Revenue from Contract with Customers

Revenue from Contracts with Customers

The Company’s revenue includes net interest income on financial instruments and non-interest income. Specific categories of revenue are presented in the Condensed Consolidated Statements of Income. Most of the Company’s revenue is not within the scope of Accounting Standard Update (ASU) No. 2014-09 – Revenue from Contracts with Customers. For revenue within the scope of ASU 2014-09, the Company provides services to customers and has related performance obligations. The revenue from such services is recognized upon satisfaction of all contractual performance obligations. The following discusses key revenue streams within the scope of revenue recognition guidance.

Wealth Management Income

West Financial Services, Inc., a subsidiary of the Bank, provides comprehensive investment management and financial planning services. Wealth management income is comprised of income for providing trust, estate and investment management services. Trust services include acting as a trustee for corporate or personal trusts. Investment management services include investment management, record-keeping and reporting of security portfolios. Fees for these services are recognized based on a contractually-agreed fixed percentage applied to net assets under management at the end of each reporting period. The Company does not charge/recognize any performance based fees.

Insurance Agency Commissions

Sandy Spring Insurance, a subsidiary of the Bank, performs the function of an insurance intermediary by introducing the policyholder and insurer and is compensated by a commission fee for placement of an insurance policy. Sandy Spring Insurance does not provide any captive management services or any claim handling services. Commission fees are set as a percentage of the premium for the insurance policy for which Sandy Spring Insurance is a producer. The Company recognizes revenue when the insurance policy has been contractually agreed to by the insurer and policyholder (at transaction date).

Service Charges on Deposit Accounts

Service charges on deposit accounts are earned on depository accounts for consumer and commercial account holders and include fees for account and overdraft services. Account services include fees for event-driven services and periodic account maintenance activities. The obligation for event-driven services is satisfied at the time of the event when service is delivered and revenue recognized as earned. Obligation for maintenance activities is satisfied over the course of each month and revenue recognized at month end. Obligation for overdraft services is satisfied at the time of the overdraft and revenue recognized as earned.

Loans Acquired with Deteriorated Credit Quality

Loans Acquired with Deteriorated Credit Quality

Acquired loans with evidence of credit deterioration since their origination as of the date of the acquisition are recorded at their initial fair value. Credit deterioration is determined based on the probability of collection of all contractually required principal and interest payments. The historical allowance for loan losses related to the acquired loans is not carried over to the Company’s financial statements. The determination of credit quality deterioration as of the purchase date may include parameters such as past due and non-accrual status, commercial risk ratings, cash flow projections, type of loan and collateral, collateral value and recent loan-to-value ratios or appraised values. For loans acquired with evidence of credit deterioration, the Company determines at the acquisition date the excess of the loan’s contractually required payments over all cash flows expected to be collected as an amount that should not be accreted into interest income (nonaccretable difference). The remaining amount, representing the difference in the expected cash flows of acquired loans and the initial investment in the acquired loans, is accreted into interest income over the remaining life of the loan or pool of loans (accretable yield). Subsequent to the purchase date, increases in expected cash flows over those expected at the purchase date are recognized prospectively as interest income over the remaining life of the loan as an adjustment to the accretable yield. The present value of any decreases in expected cash flows after the purchase date is recognized as impairment through addition to the valuation allowance.

Leases

Leases

The Company determines if an arrangement is a lease at inception. All of the Company’s leases are currently classified as operating leases and are included in other assets and other liabilities on the Company’s Condensed Consolidated Statements of Condition.

Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease arrangements. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the expected future lease payments over the remaining lease term. In determining the present value of future lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The operating ROU assets are adjusted for any lease payments made at or before lease commencement date, initial direct costs and any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease expense is recognized on a straight line basis over the expected lease term. Lease agreements that include lease and non-lease components, such as common area maintenance charges, are accounted for separately.

Adopted Accounting Pronouncements

Adopted Accounting Pronouncements

The FASB issued Update No. 2016-02, Leases, in February 2016. From the lessee’s perspective, the new standard requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The Company adopted the standard on January 1, 2019 (“adoption date”) using modified retrospective approach. The Company elected the transition option to apply the provisions of the new standard only as of the beginning of the adoption period and did not restate comparative historical periods presented. The Company also elected a package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification of those leases in existence as of the adoption date.

The standard had a material impact on the Company’s Condensed Consolidated Statements of Condition, but did not have a material impact on Condensed Consolidated Statements of Income. The most significant impact at the adoption date was the recognition of ROU assets and lease liabilities for operating leases which totaled $77.7 million and $85.1 million, respectively. Refer to Note 12 – Leases for other required disclosures.

Pending accounting pronouncements

Pending Accounting Pronouncements

The FASB issued Update No. 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, in March 2017. This guidance is intended to eliminate the current diversity in practice with respect to the amortization period for certain purchased callable debt securities held at a premium. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings. The amendments in this update shorten the amortization period for such callable debt securities held at a premium requiring the premium to be amortized to the earliest call date. This guidance is effective for a public business entity that is a U.S. Securities and Exchange Commission (SEC) filer for its fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. The objective of this guidance is to simplify an entity’s required test for impairment of goodwill by eliminating Step 2 from the goodwill impairment test. In Step 2 an entity measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to determine the fair value at the impairment date of its assets and liabilities, including any unrecognized assets and liabilities, following a procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this Update, an entity should perform its annual or quarterly goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and record an impairment charge for the excess of the carrying amount over the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit and the entity must consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for a public business entity that is an SEC filer for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-13, Current Expected Credit Losses (CECL), in June 2016. This guidance changes the impairment model for most financial assets measured at amortized cost and certain other instruments. Entities will be required to use an expected loss model, replacing the incurred loss model that is currently in use. Under the new guidance, an entity will measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This will result in earlier recognition of loss allowances in most instances. Credit losses related to available-for-sale debt securities (regardless of whether the impairment is considered to be other-than-temporary) will be measured in a manner similar to the present, except that such losses will be recorded as allowances rather than as reductions in the amortized cost of the related securities. With respect to trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures, the guidance requires that an entity estimate its lifetime expected credit loss and record an allowance resulting in the net amount expected to be collected to be reflected as the financial asset. Entities will also be required to provide significantly more disclosures, including information used to track credit quality by year of origination for most financing receivables. This guidance is effective for public business entities for the first interim or annual period beginning after December 15, 2019. The standard’s provisions will be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Early adoption by public business entities is permitted for the first interim or annual period beginning after December 15, 2018. The Company assessed the guidance and has identified the available historical loan level information and completed a data gap analysis. The Company is in process of designing calculation methodologies under the new guidance and quantifying the approximate impact on the Company’s financial

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INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2019

Amortized cost and Estimated fair values of Investments Available-for-sale

			June 30, 2019								December 31, 2018
					Gross		Gross		Estimated				Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(In thousands)			Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. treasuries and government agencies			$	314,564	$	1,072	$	(867)	$	314,769	$	300,338	$	370	$	(4,030)	$	296,678
State and municipal				245,086		4,499		(9)		249,576		280,725		2,080		(781)		282,024
Mortgage-backed and asset-backed				324,394		2,930		(978)		326,346		355,267		653		(7,405)		348,515
Corporate debt				9,100		356		-		9,456		9,100		140		-		9,240
Trust preferred				310		-		-		310		310		-		-		310
	Total debt securities			893,454		8,857		(1,854)		900,457		945,740		3,243		(12,216)		936,767
Marketable equity securities				568		-		-		568		568		-		-		568
		Total investments available-for-sale	$	894,022	$	8,857	$	(1,854)	$	901,025	$	946,308	$	3,243	$	(12,216)	$	937,335

Other Equity Securities

(In thousands)		June 30, 2019		December 31, 2018
Federal Reserve Bank stock		$	22,515	$	22,456
Federal Home Loan Bank of Atlanta stock			32,175		50,933
	Total equity securities	$	54,690	$	73,389

Available-for-Sale Securities

Gross Unrealized Losses and Fair Value by Length of Time

		June 30, 2019
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. treasuries and government agencies			12	$	134,475	$	667	$	200	$	867
State and municipal			3		6,065		-		9		9
Mortgage-backed and asset-backed			28		120,081		-		978		978
	Total		43	$	260,621	$	667	$	1,187	$	1,854

		December 31, 2018
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. treasuries and government agencies			33	$	194,135	$	452	$	3,578	$	4,030
State and municipal			80		78,232		569		212		781
Mortgage-backed and asset-backed			110		308,254		1,592		5,813		7,405
	Total		223	$	580,621	$	2,613	$	9,603	$	12,216

Amortized Cost and Estimated Fair Values of Investment Securities

		June 30, 2019				December 31, 2018
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less		$	64,147	$	64,455	$	63,482	$	63,747
Due after one year through five years			278,728		281,339		277,297		276,830
Due after five years through ten years			172,732		175,655		212,825		210,386
Due after ten years			377,847		379,008		392,136		385,804
	Total debt securities available for sale	$	893,454	$	900,457	$	945,740	$	936,767

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LOANS (Tables)

6 Months Ended

Jun. 30, 2019

Loans [Abstract]

Loan Portfolio Segment Balances

(In thousands)		June 30, 2019		December 31, 2018
Residential real estate:
	Residential mortgage	$	1,241,081	$	1,228,247
	Residential construction		171,106		186,785
Commercial real estate:
	Commercial owner occupied real estate		1,224,986		1,202,903
	Commercial investor real estate		1,994,027		1,958,395
	Commercial AD&C		658,709		681,201
Commercial business			772,158		796,264
Consumer			489,176		517,839
	Total loans	$	6,551,243	$	6,571,634

Loans acquired accounted for at fair value

(Dollars in thousands)	January 1, 2018
Gross amortized cost basis at January 1, 2018	$	1,697,760
Interest rate fair value adjustment		15,370
Credit fair value adjustment on pools of homogeneous loans		(22,421)
Credit fair value adjustment on purchased credit impaired loans		(14,518)
Fair value of acquired loan portfolio at January 1, 2018	$	1,676,191

Acquired credit impaired loans receivable

(Dollars in thousands)	January 1, 2018
Contractual principal and interest at acquisition	$	49,412
Contractual cash flows not expected to be collected (Nonaccretable yield)		(17,915)
Expected cash flows at acquisition		31,497
Interest component of expected cash flows (Accretable yield)		(3,988)
Fair value of purchased credit impaired loans	$	27,509

Accretable yield activity since acquisition date

	For the Period Ended,
(Dollars in thousands)	June 30, 2019		December 31, 2018
Accretable yield at the beginning of the period	$	1,279	$	-
Addition of accretable yield due to acquisition		-		3,988
Accretion into interest income		(664)		(1,860)
Disposals (including maturities, foreclosures, and charge-offs)		(199)		(849)
Accretable yield at the end of the period.	$	416	$	1,279

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CREDIT QUALITY ASSESSMENT (Tables)

6 Months Ended

Jun. 30, 2019

Accounts, Notes, Loans and Financing Receivable [Line Items]

Summary Information on Allowance for Loan and Lease Loss Activity

			Six Months Ended June 30,
(In thousands)			2019		2018
Balance at beginning of year			$	53,486	$	45,257
	Provision for loan losses			1,505		3,730
	Loan charge-offs			(1,197)		(818)
	Loan recoveries			230		324
		Net charge-offs		(967)		(494)
Balance at period end			$	54,024	$	48,493

Activity in Allowance for Loan and Lease Losses by Respective Loan Portfolio Segment

The following tables provide information on the activity in the allowance for loan losses by the respective loan portfolio segment for the period indicated:

		For the Six Months Ended June 30, 2019
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	11,377	$	5,944	$	17,603	$	6,307	$	2,113	$	8,881	$	1,261	$	53,486
Provision (credit)			(61)		474		1,070		(212)		153		297		(216)		1,505
Charge-offs			(776)		-		-		-		(308)		(113)		-		(1,197)
Recoveries			34		4		10		-		144		34		4		230
	Net recoveries (charge-offs)		(742)		4		10		-		(164)		(79)		4		(967)
Balance at end of period		$	10,574	$	6,422	$	18,683	$	6,095	$	2,102	$	9,099	$	1,049	$	54,024
Total loans		$	772,158	$	658,709	$	1,994,027	$	1,224,986	$	489,176	$	1,241,081	$	171,106	$	6,551,243
Allowance for loans losses to total loans ratio			1.37%		0.97%		0.94%		0.50%		0.43%		0.73%		0.61%		0.82%
Balance of loans specifically evaluated for impairment		$	7,347	$	1,990	$	7,184	$	3,766		na.	$	1,370	$	-	$	21,657
Allowance for loans specifically evaluated for impairment		$	2,945	$	393	$	1,413	$	26		na.	$	-	$	-	$	4,777
Specific allowance to specific loans ratio			40.08%		-		19.67%		0.69%		na.		-		-		22.06%
Balance of loans collectively evaluated		$	762,100	$	656,719	$	1,977,069	$	1,221,220	$	488,068	$	1,239,702	$	171,106	$	6,515,984
Allowance for loans collectively evaluated		$	7,629	$	6,029	$	17,270	$	6,069	$	2,102	$	9,099	$	1,049	$	49,247
Collective allowance to collective loans ratio			1.00%		0.92%		0.87%		0.50%		0.43%		0.73%		0.61%		0.76%
Balance of loans acquired with deteriorated credit quality		$	2,711	$	-	$	9,774	$	-	$	1,108	$	9	$	-	$	13,602
Allowance for loans acquired with deteriorated credit quality		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Allowance to loans acquired with deteriorated credit quality ratio			-		-		-		-		-		-		-		-

		For the Year Ended December 31, 2018
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	8,711	$	3,501	$	14,970	$	7,178	$	2,383	$	7,268	$	1,246	$	45,257
Provision (credit)			2,857		2,381		2,677		(871)		203		1,776		-		9,023
Charge-offs			(449)		-		(131)		-		(611)		(225)		-		(1,416)
Recoveries			258		62		87		-		138		62		15		622
	Net recoveries (charge-offs)		(191)		62		(44)		-		(473)		(163)		15		(794)
Balance at end of period		$	11,377	$	5,944	$	17,603	$	6,307	$	2,113	$	8,881	$	1,261	$	53,486
Total loans		$	796,264	$	681,201	$	1,958,395	$	1,202,903	$	517,839	$	1,228,247	$	186,785	$	6,571,634
Allowance for loan losses to total loans ratio			1.43%		0.87%		0.90%		0.52%		0.41%		0.72%		0.68%		0.81%
Balance of loans specifically evaluated for impairment		$	7,586	$	3,306	$	5,355	$	4,234		na.	$	1,729	$	-	$	22,210
Allowance for loans specifically evaluated for impairment		$	3,594	$	-	$	1,207	$	123		na.	$	-	$	-	$	4,924
Specific allowance to specific loans ratio			47.38%		-		22.54%		2.91%		na.		-		-		22.17%
Balance of loans collectively evaluated		$	780,523	$	677,895	$	1,938,712	$	1,196,487	$	516,567	$	1,226,508	$	186,785	$	6,523,477
Allowance for loans collectively evaluated		$	7,783	$	5,944	$	16,396	$	6,184	$	2,113	$	8,881	$	1,261	$	48,562
Collective allowance to collective loans ratio			1.00%		0.88%		0.85%		0.52%		0.41%		0.72%		0.68%		0.74%
Balance of loans acquired with deteriorated credit quality		$	8,155	$	-	$	14,328	$	2,182	$	1,272	$	10	$	-	$	25,947
Allowance for loans acquired with deteriorated credit quality		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Allowance to loan acquired with deteriorated credit quality ratio			-		-		-		-		-		-		-		-

Summary of Impaired Loans

(In thousands)		June 30, 2019		December 31, 2018
Impaired loans with a specific allowance		$	14,498	$	12,876
Impaired loans without a specific allowance			7,159		9,334
	Total impaired loans	$	21,657	$	22,210
Allowance for loan losses related to impaired loans		$	4,777	$	4,924
Allowance for loan losses related to loans collectively evaluated			49,247		48,562
	Total allowance for loan losses	$	54,024	$	53,486
Average impaired loans for the period		$	23,335	$	20,211
Contractual interest income due on impaired loans during the period		$	1,313	$	2,513
Interest income on impaired loans recognized on a cash basis		$	267	$	506
Interest income on impaired loans recognized on an accrual basis		$	78	$	138

			June 30, 2019
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	4,034	$	1,261	$	5,468	$	767	$	-	$	11,530
		Restructured accruing		102		-		-		-		-		102
		Restructured non-accruing		1,957		-		782		127		-		2,866
	Balance		$	6,093	$	1,261	$	6,250	$	894	$	-	$	14,498
	Allowance		$	2,945	$	393	$	1,413	$	26	$	-	$	4,777
Impaired loans without a specific allowance
		Non-accruing	$	169	$	729	$	159	$	1,053	$	-	$	2,110
		Restructured accruing		162		-		775		-		1,094		2,031
		Restructured non-accruing		923		-		-		1,819		276		3,018
	Balance		$	1,254	$	729	$	934	$	2,872	$	1,370	$	7,159
Total impaired loans
		Non-accruing	$	4,203	$	1,990	$	5,627	$	1,820	$	-	$	13,640
		Restructured accruing		264		-		775		-		1,094		2,133
		Restructured non-accruing		2,880		-		782		1,946		276		5,884
	Balance		$	7,347	$	1,990	$	7,184	$	3,766	$	1,370	$	21,657
Unpaid principal balance in total impaired loans			$	9,840	$	1,990	$	11,744	$	5,598	$	2,725	$	31,897

	June 30, 2019
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	7,740	$	2,867	$	6,461	$	4,664	$	1,603	$	23,335
Contractual interest income due on impaired loans during the period	$	506	$	240	$	358	$	145	$	64
Interest income on impaired loans recognized on a cash basis	$	154	$	-	$	12	$	94	$	7
Interest income on impaired loans recognized on an accrual basis	$	25	$	-	$	19	$	-	$	34

			December 31, 2018
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	4,126	$	-	$	5,117	$	767	$	-	$	10,010
		Restructured accruing		328		-		-		-		-		328
		Restructured non-accruing		1,766		-		-		772		-		2,538
	Balance		$	6,220	$	-	$	5,117	$	1,539	$	-	$	12,876
	Allowance		$	3,594	$	-	$	1,207	$	123	$	-	$	4,924
Impaired loans without a specific allowance
		Non-accruing	$	220	$	3,170	$	238	$	1,216	$	-	$	4,844
		Restructured accruing		172		-		-		-		1,442		1,614
		Restructured non-accruing		974		136		-		1,479		287		2,876
	Balance		$	1,366	$	3,306	$	238	$	2,695	$	1,729	$	9,334
Total impaired loans
		Non-accruing	$	4,346	$	3,170	$	5,355	$	1,983	$	-	$	14,854
		Restructured accruing		500		-		-		-		1,442		1,942
		Restructured non-accruing		2,740		136		-		2,251		287		5,414
	Balance		$	7,586	$	3,306	$	5,355	$	4,234	$	1,729	$	22,210
Unpaid principal balance in total impaired loans			$	11,056	$	4,419	$	9,909	$	6,656	$	3,081	$	35,121

	December 31, 2018
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	7,685	$	770	$	5,696	$	3,823	$	2,237	$	20,211
Contractual interest income due on impaired loans during the period	$	858	$	495	$	610	$	407	$	143
Interest income on impaired loans recognized on a cash basis	$	215	$	-	$	20	$	175	$	96
Interest income on impaired loans recognized on an accrual basis	$	63	$	-	$	-	$	-	$	75

Credit Quality of Loan Portfolio by Segment

		June 30, 2019
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans (1)	$	7,083	$	1,990	$	6,409	$	3,766	$	4,439	$	10,625	$	-	$	34,312
	Loans 90 days past due		-		-		1,248		-		-		-		-		1,248
	Restructured loans		264		-		775		-		-		1,094		-		2,133
Total non-performing loans			7,347		1,990		8,432		3,766		4,439		11,719		-		37,693
	Other real estate owned		39		665		409		-		64		309		-		1,486
Total non-performing assets		$	7,386	$	2,655	$	8,841	$	3,766	$	4,503	$	12,028	$	-	$	39,179
(1) Includes $4.3 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

		December 31, 2018
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans (1)	$	7,086	$	3,306	$	5,355	$	4,234	$	4,107	$	9,336	$	159	$	33,583
	Loans 90 days past due		49		-		-		-		219		221		-		489
	Restructured loans		500		-		-		-		-		1,442		-		1,942
Total non-performing loans			7,635		3,306		5,355		4,234		4,326		10,999		159		36,014
	Other real estate owned		39		315		409		-		-		821		-		1,584
Total non-performing assets		$	7,674	$	3,621	$	5,764	$	4,234	$	4,326	$	11,820	$	159	$	37,598
(1) Includes $4.8 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

			June 30, 2019
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	2,855	$	3,790	$	2,244	$	385	$	1,513	$	11,009	$	2,386	$	24,182
	61-90 days			2,958		-		169		711		1,200		2,567		477		8,082
	> 90 days			-		-		1,248		-		-		-		-		1,248
		Total past due		5,813		3,790		3,661		1,096		2,713		13,576		2,863		33,512
	Non-accrual loans (1)			7,083		1,990		6,409		3,766		4,439		10,625		-		34,312
	Loans acquired with deteriorated credit quality			2,711		-		9,774		-		1,108		9		-		13,602
	Current loans			756,551		652,929		1,974,183		1,220,124		480,916		1,216,871		168,243		6,469,817
		Total loans	$	772,158	$	658,709	$	1,994,027	$	1,224,986	$	489,176	$	1,241,081	$	171,106	$	6,551,243
(1) Includes $4.3 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

			December 31, 2018
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	2,737	$	474	$	3,041	$	433	$	3,871	$	8,181	$	3,226	$	21,963
	61-90 days			-		-		789		-		1,477		2,517		-		4,783
	> 90 days			49		-		-		-		219		221		-		489
		Total past due		2,786		474		3,830		433		5,567		10,919		3,226		27,235
	Non-accrual loans (1)			7,086		3,306		5,355		4,234		4,107		9,336		159		33,583
	Loans acquired with deteriorated credit quality			8,155		-		14,328		2,182		1,272		10		-		25,947
	Current loans			778,237		677,421		1,934,882		1,196,054		506,893		1,207,982		183,400		6,484,869
		Total loans	$	796,264	$	681,201	$	1,958,395	$	1,202,903	$	517,839	$	1,228,247	$	186,785	$	6,571,634
(1) Includes $4.8 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

Restructured Loans for Specific Segments of Loan Portfolio

		For the Six Months Ended June 30, 2019
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	-	$	-	$	775	$	-	$	-	$	775
	Restructured non-accruing		254		-		782		-		-		1,036
Balance		$	254	$	-	$	1,557	$	-	$	-	$	1,811
Specific allowance		$	204	$	-	$	202	$	-	$	-	$	406
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

		For the Year Ended December 31, 2018
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	-	$	-	$	-	$	-	$	-	$	-
	Restructured non-accruing		1,464		-		-		158		-		1,622
Balance		$	1,464	$	-	$	-	$	158	$	-	$	1,622
Specific allowance		$	563	$	-	$	-	$	-	$	-	$	563
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

Commercial

Accounts, Notes, Loans and Financing Receivable [Line Items]

Credit Risk Rating Indicators

The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at the dates indicated:

		June 30, 2019
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	752,645	$	656,719	$	1,972,903	$	1,214,105	$	4,596,372
	Special Mention (1)		5,111		-		3,910		3,117		12,138
	Substandard (2)		14,402		1,990		17,214		7,764		41,370
	Doubtful		-		-		-		-		-
Total		$	772,158	$	658,709	$	1,994,027	$	1,224,986	$	4,649,880
(1) Includes $2.0 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.
(2) Includes $12.1 million of purchased credit impaired loans acquired from WashingtonFirst and $8.1 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

		December 31, 2018
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	773,958	$	677,574	$	1,934,886	$	1,189,903	$	4,576,321
	Special Mention (1)		1,942		321		3,826		2,738		8,827
	Substandard (2)		20,364		3,306		19,683		10,262		53,615
	Doubtful		-		-		-		-		-
Total		$	796,264	$	681,201	$	1,958,395	$	1,202,903	$	4,638,763
(1) Includes $4.2 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.
(2) Includes $24.3 million of purchased credit impaired loans acquired from WashingtonFirst and $7.2 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

Non Commercial Loan

Accounts, Notes, Loans and Financing Receivable [Line Items]

Credit Risk Rating Indicators

Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at the dates indicated:

			June 30, 2019
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	484,737	$	1,229,362	$	171,106	$	1,885,205
	Non-performing:
		90 days past due		-		-		-		-
		Non-accruing (1)		4,439		10,625		-		15,064
		Restructured loans		-		1,094		-		1,094
Total			$	489,176	$	1,241,081	$	171,106	$	1,901,363
(1) Includes $1.2 million of consumer loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

			December 31, 2018
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	513,513	$	1,217,248	$	186,626	$	1,917,387
	Non-performing:
		90 days past due		219		221		-		440
		Non-accruing (1)		4,107		9,336		159		13,602
		Restructured loans		-		1,442		-		1,442
Total			$	517,839	$	1,228,247	$	186,785	$	1,932,871
(1) Includes $1.3 million of consumer loans acquired from WashingtonFirst and considered performing at the Acquisition Date.

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Gross Carrying Amounts and Accumulated Amortization of Intangible Assets and Goodwill

		June 30, 2019						Weighted		December 31, 2018						Weighted
		Gross				Net		Average		Gross				Net		Average
		Carrying		Accumulated		Carrying		Remaining		Carrying		Accumulated		Carrying		Remaining
(Dollars in thousands)		Amount		Amortization		Amount		Life		Amount		Amortization		Amount		Life
Amortizing intangible assets:
Core deposit intangibles		$	10,678	$	(2,815)	$	7,863	8.5	years	$	10,678	$	(1,941)	$	8,737	9.0	years
Other identifiable intangibles			1,478		(528)		950	10.2	years		1,478		(427)		1,051	10.6	years
	Total amortizing intangible assets	$	12,156	$	(3,343)	$	8,813			$	12,156	$	(2,368)	$	9,788
Goodwill		$	347,149			$	347,149			$	347,149			$	347,149

Net carrying amount of goodwill by segment

		Community				Investment
(Dollars in thousands)		Banking		Insurance		Management		Total
Balance December 31, 2018	$	331,173	$	6,788	$	9,188	$	347,149
No Activity		-		-		-		-
Balance June 30, 2019	$	331,173	$	6,788	$	9,188	$	347,149

Estimated Future Amortization Expense for Amortizing Intangibles

(In thousands)		Amount
2019		$	969
2020			1,720
2021			1,507
2022			1,295
Thereafter			3,322
	Total amortizing intangible assets	$	8,813

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DEPOSITS (Tables)

6 Months Ended

Jun. 30, 2019

Deposits [Abstract]

Composition of Deposits

(In thousands)				June 30, 2019		December 31, 2018
Noninterest-bearing deposits				$	2,023,614	$	1,750,319
Interest-bearing deposits:
	Demand				721,389		703,145
	Money market savings				1,705,164		1,605,024
	Regular savings				331,164		330,231
	Time deposits of less than $100,000				456,520		427,421
	Time deposits of $100,000 or more				1,151,898		1,098,740
		Total interest-bearing deposits			4,366,135		4,164,561
			Total deposits	$	6,389,749	$	5,914,880

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SUBORDINATED DEBENTURES (Tables)

6 Months Ended

Jun. 30, 2019

Brokers and Dealers [Abstract]

Schedule of subordinated debentures

(In thousands)		June 30, 2019		December 31, 2018
Subordinated debentures		$	25,000	$	25,000
	Add: Purchase accounting premium		1,954		2,023
Trust preferred securities			10,310		10,310
	Add: Purchase accounting premium		89		92
Total subordinated debentures		$	37,353	$	37,425

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SHARE BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2019

Share Based Compensation [Abstract]

Fair Values of all Options Granted Estimated Using Binomial Option-Pricing Model with Weighted-average Assumptions

	Six Months Ended June 30,
	2019		2018
Dividend yield	-	%	2.64	%
Weighted average expected volatility	-	%	39.13	%
Weighted average risk-free interest rate	-	%	2.61	%
Weighted average expected lives (in years)	-		5.61
Weighted average grant-date fair value	-		$11.73

Summary of Share Option Activity

				Weighted
	Number	Weighted		Average	Aggregate
	of	Average		Contractual	Intrinsic
	Common	Exercise		Remaining	Value
	Shares	Share Price		Life (Years)	(in thousands)
Balance at January 1, 2019	81,508	$	29.74		$	369
Granted	-	$	-
Exercised	(10,897)	$	20.56		$	145
Forfeited	(1,007)	$	37.11
Expired	(142)	$	42.48
Balance at June 30, 2019	69,462	$	31.05	3.6	$	403
Exercisable at June 30, 2019	55,362	$	28.94	3.1	$	403
Weighted average fair value of options
granted during the year		$	-

Summary of Activity for Company's Restricted Stock

	Number	Weighted
	of	Average
	Common	Grant-Date
(In dollars, except share data):	Shares	Fair Value
Restricted stock at January 1, 2019	203,603	$	35.14
Granted	96,191	$	33.27
Vested	(69,842)	$	31.55
Forfeited	(6,673)	$	33.16
Restricted stock at June 30, 2019	223,279	$	35.52

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PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS (Tables)

6 Months Ended

Jun. 30, 2019

Pension, Profit Sharing, and Other Employee Benefit Plans [Abstract]

Net Periodic Benefit Cost

		Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)		2019		2018		2019		2018
Interest cost on projected benefit obligation		$	402	$	385	$	804	$	770
Expected return on plan assets			(412)		(465)		(824)		(930)
Recognized net actuarial loss			265		250		530		500
	Net periodic benefit cost	$	255	$	170	$	510	$	340

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NET INCOME PER COMMON SHARE (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Calculation of Net Income Per Common Share

			Three Months Ended June 30,				Six Months Ended June 30,
(Dollars and amounts in thousands, except per share data)			2019		2018		2019		2018
Net income			$	28,276	$	24,399	$	58,593	$	46,064
Basic:
Basic weighted average EPS shares				35,862		35,721		35,816		35,686
		Basic net income per share	$	0.79	$	0.68	$	1.64	$	1.29
Diluted:
Basic weighted average EPS shares				35,862		35,721		35,816		35,686
Dilutive common stock equivalents				28		23		50		24
	Dilutive EPS shares			35,890		35,744		35,866		35,710
		Diluted net income per share	$	0.79	$	0.68	$	1.63	$	1.29
Anti-dilutive shares				10		6		11		6

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2019

Other Comprehensive Income Loss [Abstract]

Net Accumulated Other Comprehensive Income (Loss)

	Unrealized Gains
	(Losses) on
	Investments		Defined Benefit
(In thousands)	Available-for-Sale		Pension Plan		Total
Balance at January 1, 2019	$	(6,630)	$	(9,124)	$	(15,754)
Other comprehensive income before reclassification, net of tax		11,802		-		11,802
Reclassifications from accumulated other comprehensive income, net of tax		(4)		391		387
Current period change in other comprehensive income, net of tax		11,798		391		12,189
Balance at June 30, 2019	$	5,168	$	(8,733)	$	(3,565)

	Unrealized Gains
	(Losses) on
	Investments		Defined Benefit
(In thousands)	Available-for-Sale		Pension Plan		Total
Balance at January 1, 2018	$	687	$	(7,544)	$	(6,857)
Other comprehensive income before reclassification, net of tax		(12,491)		-		(12,491)
Reclassifications from accumulated other comprehensive income, net of tax		(47)		316		269
Current period change in other comprehensive income, net of tax		(12,538)		316		(12,222)
Reclassification of tax effects from accumulated other comprehensive income		148		(1,625)		(1,477)
Balance at June 30, 2018	$	(11,703)	$	(8,853)	$	(20,556)

Schedule of Amounts Recognized in Other Comprehensive Income (Loss)

				Six Months Ended June 30,
(In thousands)				2019		2018
Unrealized gains on investments available-for-sale
	Affected line item in the Statements of Income:
	Investment securities gains			$	5	$	63
	Income before taxes				5		63
	Tax expense				(1)		(16)
	Net income			$	4	$	47
Amortization of defined benefit pension plan items
	Affected line item in the Statements of Income:
		Recognized actuarial loss(1)		$	(530)	$	(500)
			Income before taxes		(530)		(500)
			Tax benefit		139		184
			Net loss	$	(391)	$	(316)
(1) This amount is included in the computation of net periodic benefit cost, see Note 9.

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LEASES (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Schedule of maturities of operating lease liabilities

(In thousands)	Amount
Maturity:
One year	$	11,023
Two years		10,563
Three years		10,002
Four years		10,090
Five years		9,494
Thereafter		46,671
Total undiscounted lease payments		97,843
Less: Present value discount		(17,228)
Lease Liability	$	80,615

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FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Financial assets and Liabilities at Dates Indicated that were Accounted for at Fair Value

			June 30, 2019
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	50,511	$	-	$	50,511
	Investments available-for-sale:
		U.S. government agencies		-		314,769		-		314,769
		State and municipal		-		249,576		-		249,576
		Mortgage-backed and asset-backed		-		326,346		-		326,346
		Corporate debt		-		-		9,456		9,456
		Trust preferred		-		-		310		310
		Marketable equity securities		-		568		-		568
	Interest rate swap agreements			-		1,358		-		1,358
Liabilities
	Interest rate swap agreements		$	-	$	(1,358)	$	-	$	(1,358)

			December 31, 2018
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	22,773	$	-	$	22,773
	Investments available-for-sale:
		U.S. government agencies		-		296,678		-		296,678
		State and municipal		-		282,024		-		282,024
		Mortgage-backed and asset-backed		-		348,515		-		348,515
		Corporate debt		-		-		9,240		9,240
		Trust preferred		-		-		310		310
		Marketable equity securities		-		568		-		568
	Interest rate swap agreements			-		446		-		446
Liabilities
	Interest rate swap agreements		$	-	$	(446)	$	-	$	(446)

Unrealized Losses Included in Assets Measured in Condensed Consolidated Statements of Condition at Fair Value on a Recurring Basis

			Significant
			Unobservable
			Inputs
(In thousands)			(Level 3)
Investments available-for-sale:
	Balance at January 1, 2019		$	9,550
		Additions of Level 3 assets		-
		Sales of Level 3 assets		-
		Total unrealized gain included in other comprehensive income		216
	Balance at June 30, 2019		$	9,766

Assets Measured at Fair Value on Nonrecurring Basis

		June 30, 2019
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	6,653	$	6,653	$	(6,561)
Other real estate owned			-		-		1,486		1,486		(277)
	Total	$	-	$	-	$	8,139	$	8,139	$	(6,838)

		December 31, 2018
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	6,780	$	6,780	$	(10,932)
Other real estate owned			-		-		1,584		1,584		(262)
	Total	$	-	$	-	$	8,364	$	8,364	$	(11,194)

Carrying Amounts And Fair Values of Company's Financial Instruments

					Fair Value Measurements
	June 30, 2019				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	54,690	$	54,690	$	-	$	54,690	$	-
Loans, net of allowance		6,497,219		6,383,069		-		-		6,383,069
Other assets (1)		111,850		111,850		-		111,850		-
Financial Liabilities
Time deposits	$	1,608,418	$	1,615,849	$	-	$	1,615,849	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		150,604		150,604		-		150,604		-
Advances from FHLB		582,768		590,246		-		590,246		-
Subordinated debentures		37,353		35,435		-		-		35,435
(1) Includes bank owned life insurance products.

					Fair Value Measurements
	December 31, 2018				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	73,389	$	73,389	$	-	$	73,389	$	-
Loans, net of allowance		6,518,148		6,376,307		-		-		6,376,307
Other assets (1)		110,823		110,823		-		110,823		-
Financial Liabilities
Time deposits	$	1,526,161	$	1,536,238	$	-	$	1,536,238	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		327,429		327,429		-		327,429		-
Advances from FHLB		848,611		850,186		-		850,186		-
Subordinated debentures		37,425		33,588		-		-		33,588
(1) Includes bank owned life insurance products.

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SEGMENT REPORTING (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Operating Segments and Reconciliation of Information to Consolidated Financial Statements

Information for the operating segments and reconciliation of the information to the condensed consolidated financial statements for the periods indicated is presented in the following tables:

	Three Months Ended June 30, 2019
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	87,214	$	1	$	3	$	(4)	$	87,214
Interest expense		21,033		-		-		(4)		21,029
Provision (credit) for loan losses		1,633		-		-		-		1,633
Noninterest income		12,856		1,269		2,597		(166)		16,556
Noninterest expense		40,859		1,304		1,890		(166)		43,887
Income before income taxes		36,545		(34)		710		-		37,221
Income tax expense		8,769		(8)		184		-		8,945
Net income	$	27,776	$	(26)	$	526	$	-	$	28,276
Assets	$	8,398,263	$	11,552	$	20,253	$	(31,549)	$	8,398,519

	Three Months Ended June 30, 2018
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	78,596	$	1	$	2	$	(2)	$	78,597
Interest expense		14,781		-		-		(2)		14,779
Provision for loan losses		1,733		-		-		-		1,733
Non-interest income		11,252		1,179		2,590		(153)		14,868
Non-interest expense		42,302		1,302		1,631		(153)		45,082
Income before income taxes		31,032		(122)		961		-		31,871
Income tax expense		7,249		(32)		255		-		7,472
Net income	$	23,783	$	(90)	$	706	$	-	$	24,399
Assets	$	8,154,957	$	9,041	$	15,407	$	(26,805)	$	8,152,600

	Six Months Ended June 30, 2019
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	175,397	$	2	$	5	$	(7)	$	175,397
Interest expense		42,469		-		-		(7)		42,462
Provision for loan losses		1,505		-		-		-		1,505
Noninterest income		25,563		3,173		5,122		(333)		33,525
Noninterest expense		82,070		2,724		3,618		(333)		88,079
Income before income taxes		74,916		451		1,509		-		76,876
Income tax expense		17,762		127		394		-		18,283
Net income	$	57,154	$	324	$	1,115	$	-	$	58,593
Assets	$	8,398,263	$	11,552	$	20,253	$	(31,549)	$	8,398,519

	Six Months Ended June 30, 2018
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	154,100	$	1	$	3	$	(3)	$	154,101
Interest expense		27,395		-		-		(3)		27,392
Provision for loan losses		3,730		-		-		-		3,730
Non-interest income		24,423		3,001		4,869		(307)		31,986
Non-interest expense		89,333		2,681		3,016		(307)		94,723
Income before income taxes		58,065		321		1,856		-		60,242
Income tax expense		13,602		91		485		-		14,178
Net income	$	44,463	$	230	$	1,371	$	-	$	46,064
Assets	$	8,154,957	$	9,041	$	15,407	$	(26,805)	$	8,152,600

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SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
Leases [Abstract]
Operating Lease, Right-of-Use Asset	$ 73,100	$ 77,700
Operating Lease Liability	$ 80,615	$ 85,100

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INVESTMENTS (Additional Information) (Detail) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Investment [Line Items]
Investments available-for-sale book value	$ 467.6	$ 477.3
Government National Mortgage Association Certificates And Obligations Federal National Mortgage Association Certificates And Obligations And Federal Home Loan Mortgage Corporation Certificates And Obligations [Member] | Collateralized Mortgage Obligations [Member]
Investment [Line Items]
Financial Instruments, Owned, Mortgages, Mortgage-backed and Asset-backed Securities, at Fair Value	114.2
Government National Mortgage Association Certificates And Obligations Federal National Mortgage Association Certificates And Obligations And Federal Home Loan Mortgage Corporation Certificates And Obligations [Member] | Mortgage Backed Securities [Member]
Investment [Line Items]
Financial Instruments, Owned, Mortgages, Mortgage-backed and Asset-backed Securities, at Fair Value	164.3
Government National Mortgage Association Certificates And Obligations Federal National Mortgage Association Certificates And Obligations And Federal Home Loan Mortgage Corporation Certificates And Obligations [Member] | SBA asset backed securities [Member]
Investment [Line Items]
Financial Instruments, Owned, Mortgages, Mortgage-backed and Asset-backed Securities, at Fair Value	$ 47.8

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INVESTMENTS (Amortized Cost and Estimated Fair Values of Investments Available-for-sale) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	$ 894,022	$ 946,308
Gross Unrealized Gains	8,857	3,243
Gross Unrealized Losses	(1,854)	(12,216)
Estimated Fair Value	901,025	937,335
U.S. treasuries and government agencies
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	314,564	300,338
Gross Unrealized Gains	1,072	370
Gross Unrealized Losses	(867)	(4,030)
Estimated Fair Value	314,769	296,678
State and municipal
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	245,086	280,725
Gross Unrealized Gains	4,499	2,080
Gross Unrealized Losses	(9)	(781)
Estimated Fair Value	249,576	282,024
Mortgage-Backed and asset-backed
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	324,394	355,267
Gross Unrealized Gains	2,930	653
Gross Unrealized Losses	(978)	(7,405)
Estimated Fair Value	326,346	348,515
Corporate Debt
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	9,100	9,100
Gross Unrealized Gains	356	140
Gross Unrealized Losses	0	0
Estimated Fair Value	9,456	9,240
Trust Preferred
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	310	310
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	310	310
Debt Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	893,454	945,740
Gross Unrealized Gains	8,857	3,243
Gross Unrealized Losses	(1,854)	(12,216)
Estimated Fair Value	900,457	936,767
Marketable Equity Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	568	568
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 568	$ 568

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INVESTMENTS (Gross Unrealized Losses and Fair Value by Length of Time of Available-For-Sale Securities) (Detail) $ in Thousands	Jun. 30, 2019 USD ($) Securities	Dec. 31, 2018 USD ($) Securities
Schedule Of Available For Sale Securities [Line Items]
Number of Securities | Securities	43	223
Fair Value	$ 260,621	$ 580,621
Less than 12 months	667	2,613
More than 12 months	1,187	9,603
Total Unrealized Losses	$ 1,854	$ 12,216
U.S. treasuries and government agencies
Schedule Of Available For Sale Securities [Line Items]
Number of Securities | Securities	12	33
Fair Value	$ 134,475	$ 194,135
Less than 12 months	667	452
More than 12 months	200	3,578
Total Unrealized Losses	$ 867	$ 4,030
State and municipal
Schedule Of Available For Sale Securities [Line Items]
Number of Securities | Securities	3	80
Fair Value	$ 6,065	$ 78,232
Less than 12 months	0	569
More than 12 months	9	212
Total Unrealized Losses	$ 9	$ 781
Mortgage-Backed and asset-backed
Schedule Of Available For Sale Securities [Line Items]
Number of Securities | Securities	28	110
Fair Value	$ 120,081	$ 308,254
Less than 12 months	0	1,592
More than 12 months	978	5,813
Total Unrealized Losses	$ 978	$ 7,405

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INVESTMENTS (Amortized Cost and Estimated Fair Values of investment securities Available-For-Sale by Contractual Maturity) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Amortized Cost
Due in one year or less	$ 64,147	$ 63,482
Due after one year through five years	278,728	277,297
Due after five years through ten years	172,732	212,825
Due after ten years	377,847	392,136
Total debt securities available for sale	893,454	945,740
Estimated Fair Value
Due in one year or less	64,455	63,747
Due after one year through five years	281,339	276,830
Due after five years through ten years	175,655	210,386
Due after ten years	379,008	385,804
Estimated Fair Value	$ 900,457	$ 936,767

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INVESTMENTS (Other Equity Securities) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Federal Home Loan Bank Stock and Federal Reserve Bank Stock [Abstract]
Federal Reserve Bank stock	$ 22,515	$ 22,456
Federal Home Loan Bank of Atlanta stock	32,175	50,933
Total equity securities	$ 54,690	$ 73,389

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INVESTMENTS (Gross Realized Gains and Losses on All Investments) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Investments [Abstract]
Net securities gains	$ 5	$ 0	$ 5	$ 63

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LOANS (Additional Information) (Detail) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended	12 Months Ended
	Jan. 01, 2018	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Loans [Abstract]
Unearned income and deferred fees		$ 600	$ 600	$ 900
Loans receivable with a gross amortized cost basis	$ 1,697,760
Credit fair value adjustment on purchased credit impaired loans	14,518
Credit Impaired Loans Acquired In Transfer Nonaccretable Difference	10,500
Fair value of purchase credit impaired loans	27,509	9,700	9,700	15,300
Proceeds from credit impaired loans			5,800	12,400
Accretable adjustments			199	849
Charge-off purchased credit impaired loan, outstanding balance		4,100	4,100
Non-accretable adjustments		1,600		1,300
Addition of accretable yield due to acquisitions	4,000		0	3,988
Loans [Line Items]
Outstanding balance of purchased credit impaired loans receivable		13,602	13,602	25,947
WashingtonFirst Bankshares Inc [Member]
Loans [Line Items]
Outstanding balance of purchased credit impaired loans receivable	$ 41,900	$ 13,200	$ 13,200	$ 26,000

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LOANS (Loan Portfolio Segment Balances) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 6,551,243	$ 6,571,634
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	772,158	796,264
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	489,176	517,839
Commercial Real Estate Portfolio Segment [Member] | Commercial Owner Occupied Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,224,986	1,202,903
Commercial Real Estate Portfolio Segment [Member] | Commercial Investor Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,994,027	1,958,395
Commercial Real Estate Portfolio Segment [Member] | Commercial Acquisition, Development and Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	658,709	681,201
Residential Portfolio Segment [Member] | Residential Mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,241,081	1,228,247
Residential Portfolio Segment [Member] | Residential Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 171,106	$ 186,785

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LOANS (Acquired loan portfolio) (Detail) $ in Thousands	Jan. 01, 2018 USD ($)
Loans [Abstract]
Gross amortized cost basis at January 1, 2018	$ 1,697,760
Interest rate fair value adjustment	15,370
Credit fair value adjustment on pools of homogeneous loans	(22,421)
Credit fair value adjustment on purchased credit impaired loans	(14,518)
Fair value of acquired loan portfolio	$ 1,676,191

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LOANS (Acquired credit impaired loans receivable) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jan. 01, 2018
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Acquired During Period [Abstract]
Contractual principal and interest at acquisition			$ 49,412
Contractual cash flows not expected to be collected (Nonaccretable yield)			(17,915)
Expected cash flows at acquisition			31,497
Interest component of expected cash flows (Accretable yield)			(3,988)
Fair value of purchase credit impaired loans	$ 9,700	$ 15,300	$ 27,509

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LOANS (Accretable yield activity) (Detail) - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
	Jan. 01, 2018	Jun. 30, 2019	Dec. 31, 2018
Activity for the accretable yield since the Acquisition Date:
Accretable yield at the beginning of the period	$ 0	$ 1,279	$ 0
Addition of accretable yield due to acquisitions	$ 4,000	0	3,988
Accretion into interest income		(664)	(1,860)
Disposals (including maturities, foreclosures, and charge-offs)		(199)	(849)
Accretable yield at the end of the period		$ 416	$ 1,279

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CREDIT QUALITY ASSESSMENT (Additional Information) (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable Troubled Debt Restructurings Specific Allowance	$ 406	$ 563
Other real estate owned	1,486	1,584
Non-accrual loans	34,312	33,583
Loans and Leases Receivable, Net of Deferred Income, Total	6,551,243	6,571,634
Homogeneous Loan Pools
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Net of Deferred Income, Total	1,901,363	1,932,871
Performing Financing Receivable [Member] | Homogeneous Loan Pools
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Net of Deferred Income, Total	1,885,205	1,917,387
WashingtonFirst Bankshares Inc [Member] | Performing Financing Receivable [Member] | Homogeneous Loan Pools
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	1,200	1,300
WashingtonFirst Bankshares Inc [Member] | Special Mention [Member] | Performing Financing Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Net of Deferred Income, Total	2,000	4,200
WashingtonFirst Bankshares Inc [Member] | Substandard | Credit impaired loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Net of Deferred Income, Total	12,100	24,300
WashingtonFirst Bankshares Inc [Member] | Substandard | Performing Financing Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Net of Deferred Income, Total	8,100	7,200
Restructured Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable Troubled Debt Restructurings Specific Allowance	400	600
Other real estate owned	1,500	1,600
Additional Financing Receivable Troubled Debt Restructurings Restructured	1,800	1,600
Restructured Loans | WashingtonFirst Bankshares Inc [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	$ 4,300	$ 4,800

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CREDIT QUALITY ASSESSMENT (Summary Information on Allowance for Loan and Lease Loss Activity) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Credit Quality Assessment [Abstract]
Balance at beginning of year			$ 53,486	$ 45,257	$ 45,257
Provision (credit) for loan losses	$ 1,633	$ 1,733	1,505	3,730	9,023
Loan charge-offs			(1,197)	(818)	(1,416)
Loan recoveries			230	324	622
Net charge-offs			(967)	(494)	(794)
Balance at period end	$ 54,024	$ 48,493	$ 54,024	$ 48,493	$ 53,486

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CREDIT QUALITY ASSESSMENT (Activity in Allowance for Loan and Lease Losses by Respective Loan Portfolio Segment) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 53,486	$ 45,257	$ 45,257
Provision (credit) for loan losses	$ 1,633	$ 1,733	1,505	3,730	9,023
Charge-offs			(1,197)	(818)	(1,416)
Recoveries			230	324	622
Net charge-offs			(967)	(494)	(794)
Balance at period end	54,024	$ 48,493	54,024	48,493	53,486
Total loans and leases	$ 6,551,243		$ 6,551,243		$ 6,571,634
Allowance for loans and leases to total loans and leases ratio	0.82%		0.82%		0.81%
Balance of loans specifically evaluated for impairment	$ 21,657		$ 21,657		$ 22,210
Allowance for loans specifically evaluated for impairment	$ 4,777		$ 4,777		$ 4,924
Specific allowance to specific loans ratio	22.06%		22.06%		22.17%
Balance of loans collectively evaluated	$ 6,515,984		$ 6,515,984		$ 6,523,477
Allowance for loans collectively evaluated	49,247		$ 49,247		$ 48,562
Collective allowance to collective loans ratio			0.76%		0.74%
Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Balance of loans acquired			$ 13,602		$ 25,947
Allowance for loans acquired			$ 0		$ 0
Allowance to loans acquired with deteriorated credity quality ratio			0.00%		0.00%
Commercial
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 11,377	8,711	$ 8,711
Provision (credit) for loan losses			(61)		2,857
Charge-offs			(776)		(449)
Recoveries			34		258
Net charge-offs			(742)		(191)
Balance at period end	10,574		10,574		11,377
Total loans and leases	$ 772,158		$ 772,158		$ 796,264
Allowance for loans and leases to total loans and leases ratio	1.37%		1.37%		1.43%
Balance of loans specifically evaluated for impairment	$ 7,347		$ 7,347		$ 7,586
Allowance for loans specifically evaluated for impairment	$ 2,945		$ 2,945		$ 3,594
Specific allowance to specific loans ratio	40.08%		40.08%		47.38%
Balance of loans collectively evaluated	$ 762,100		$ 762,100		$ 780,523
Allowance for loans collectively evaluated	7,629		$ 7,629		$ 7,783
Collective allowance to collective loans ratio			1.00%		1.00%
Commercial | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Balance of loans acquired			$ 2,711		$ 8,155
Allowance for loans acquired			$ 0		$ 0
Allowance to loans acquired with deteriorated credity quality ratio			0.00%		0.00%
Consumer
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 2,113	2,383	$ 2,383
Provision (credit) for loan losses			153		203
Charge-offs			(308)		(611)
Recoveries			144		138
Net charge-offs			(164)		(473)
Balance at period end	2,102		2,102		2,113
Total loans and leases	$ 489,176		$ 489,176		$ 517,839
Allowance for loans and leases to total loans and leases ratio	0.43%		0.43%		0.41%
Balance of loans collectively evaluated	$ 488,068		$ 488,068		$ 516,567
Allowance for loans collectively evaluated	2,102		$ 2,102		$ 2,113
Collective allowance to collective loans ratio			0.43%		0.41%
Consumer | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Balance of loans acquired			$ 1,108		$ 1,272
Allowance for loans acquired			$ 0		$ 0
Allowance to loans acquired with deteriorated credity quality ratio			0.00%		0.00%
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 5,944	3,501	$ 3,501
Provision (credit) for loan losses			474		2,381
Charge-offs			0		0
Recoveries			4		62
Net charge-offs			4		62
Balance at period end	6,422		6,422		5,944
Total loans and leases	$ 658,709		$ 658,709		$ 681,201
Allowance for loans and leases to total loans and leases ratio	0.97%		0.97%		0.87%
Balance of loans specifically evaluated for impairment	$ 1,990		$ 1,990		$ 3,306
Allowance for loans specifically evaluated for impairment	$ 393		$ 393		$ 0
Specific allowance to specific loans ratio	0.00%		0.00%		0.00%
Balance of loans collectively evaluated	$ 656,719		$ 656,719		$ 677,895
Allowance for loans collectively evaluated	6,029		$ 6,029		$ 5,944
Collective allowance to collective loans ratio			0.92%		0.88%
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Balance of loans acquired			$ 0		$ 0
Allowance for loans acquired			$ 0		$ 0
Allowance to loans acquired with deteriorated credity quality ratio			0.00%		0.00%
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 17,603	14,970	$ 14,970
Provision (credit) for loan losses			1,070		2,677
Charge-offs			0		(131)
Recoveries			10		87
Net charge-offs			10		(44)
Balance at period end	18,683		18,683		17,603
Total loans and leases	$ 1,994,027		$ 1,994,027		$ 1,958,395
Allowance for loans and leases to total loans and leases ratio	0.94%		0.94%		0.90%
Balance of loans specifically evaluated for impairment	$ 7,184		$ 7,184		$ 5,355
Allowance for loans specifically evaluated for impairment	$ 1,413		$ 1,413		$ 1,207
Specific allowance to specific loans ratio	19.67%		19.67%		22.54%
Balance of loans collectively evaluated	$ 1,977,069		$ 1,977,069		$ 1,938,712
Allowance for loans collectively evaluated	17,270		$ 17,270		$ 16,396
Collective allowance to collective loans ratio			0.87%		0.85%
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Balance of loans acquired			$ 9,774		$ 14,328
Allowance for loans acquired			$ 0		$ 0
Allowance to loans acquired with deteriorated credity quality ratio			0.00%		0.00%
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 6,307	7,178	$ 7,178
Provision (credit) for loan losses			(212)		(871)
Charge-offs			0		0
Recoveries			0		0
Net charge-offs			0		0
Balance at period end	6,095		6,095		6,307
Total loans and leases	$ 1,224,986		$ 1,224,986		$ 1,202,903
Allowance for loans and leases to total loans and leases ratio	0.50%		0.50%		0.52%
Balance of loans specifically evaluated for impairment	$ 3,766		$ 3,766		$ 4,234
Allowance for loans specifically evaluated for impairment	$ 26		$ 26		$ 123
Specific allowance to specific loans ratio	0.69%		0.69%		2.91%
Balance of loans collectively evaluated	$ 1,221,220		$ 1,221,220		$ 1,196,487
Allowance for loans collectively evaluated	6,069		$ 6,069		$ 6,184
Collective allowance to collective loans ratio			0.50%		0.52%
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Balance of loans acquired			$ 0		$ 2,182
Allowance for loans acquired			$ 0		$ 0
Allowance to loans acquired with deteriorated credity quality ratio			0.00%		0.00%
Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 8,881	7,268	$ 7,268
Provision (credit) for loan losses			297		1,776
Charge-offs			(113)		(225)
Recoveries			34		62
Net charge-offs			(79)		(163)
Balance at period end	9,099		9,099		8,881
Total loans and leases	$ 1,241,081		$ 1,241,081		$ 1,228,247
Allowance for loans and leases to total loans and leases ratio	0.73%		0.73%		0.72%
Balance of loans specifically evaluated for impairment	$ 1,370		$ 1,370		$ 1,729
Allowance for loans specifically evaluated for impairment	0		0		0
Balance of loans collectively evaluated	1,239,702		1,239,702		1,226,508
Allowance for loans collectively evaluated	9,099		$ 9,099		$ 8,881
Collective allowance to collective loans ratio			0.73%		0.72%
Residential Real Estate Portfolio Segment | Residential Mortgage | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Balance of loans acquired			$ 9		$ 10
Allowance for loans acquired			$ 0		$ 0
Allowance to loans acquired with deteriorated credity quality ratio			0.00%		0.00%
Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 1,261	$ 1,246	$ 1,246
Provision (credit) for loan losses			(216)		0
Charge-offs			0		0
Recoveries			4		15
Net charge-offs			4		15
Balance at period end	1,049		1,049		1,261
Total loans and leases	$ 171,106		$ 171,106		$ 186,785
Allowance for loans and leases to total loans and leases ratio	0.61%		0.61%		0.68%
Balance of loans specifically evaluated for impairment	$ 0		$ 0		$ 0
Allowance for loans specifically evaluated for impairment	0		0		0
Balance of loans collectively evaluated	171,106		171,106		186,785
Allowance for loans collectively evaluated	$ 1,049		$ 1,049		$ 1,261
Collective allowance to collective loans ratio			0.61%		0.68%
Residential Real Estate Portfolio Segment | Residential Construction | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Balance of loans acquired			$ 0		$ 0
Allowance for loans acquired			$ 0		$ 0
Allowance to loans acquired with deteriorated credity quality ratio			0.00%		0.00%

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CREDIT QUALITY ASSESSMENT (Summary of Impaired Loans) (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Credit Quality Assessment [Abstract]
Impaired loans with a specific allowance	$ 14,498	$ 12,876
Impaired loans without a specific allowance	7,159	9,334
Total impaired loans	21,657	22,210
Allowance for loan and lease losses related to impaired loans	4,777	4,924
Allowance for loan and lease losses related to loans collectively evaluated	49,247	48,562
Total allowance for loan and lease losses	54,024	53,486
Average impaired loans for the period	23,335	20,211
Contractual interest income due on impaired loans during the period	1,313	2,513
Interest income on impaired loans recognized on a cash basis	267	506
Interest income on impaired loans recognized on an accrual basis	$ 78	$ 138

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CREDIT QUALITY ASSESSMENT (Recorded Investment with Respect to Impaired loans, Associated Allowance by Applicable Portfolio Segment and Principal Balance of Impaired Loans prior to Amounts Charged-off) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	$ 14,498	$ 12,876
Allowance	4,777	4,924
Impaired loans without a specific allowance	7,159	9,334
Impaired loans	21,657	22,210
Unpaid principal balance in total impaired loans	31,897	35,121
Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	11,530	10,010
Impaired loans without a specific allowance	2,110	4,844
Impaired loans	13,640	14,854
Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	102	328
Impaired loans without a specific allowance	2,031	1,614
Impaired loans	2,133	1,942
Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	2,866	2,538
Impaired loans without a specific allowance	3,018	2,876
Impaired loans	5,884	5,414
Commercial
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	6,093	6,220
Allowance	2,945	3,594
Impaired loans without a specific allowance	1,254	1,366
Impaired loans	7,347	7,586
Unpaid principal balance in total impaired loans	9,840	11,056
Commercial | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	4,034	4,126
Impaired loans without a specific allowance	169	220
Impaired loans	4,203	4,346
Commercial | Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	102	328
Impaired loans without a specific allowance	162	172
Impaired loans	264	500
Commercial | Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	1,957	1,766
Impaired loans without a specific allowance	923	974
Impaired loans	2,880	2,740
All Other
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Allowance	0	0
Impaired loans without a specific allowance	1,370	1,729
Impaired loans	1,370	1,729
Unpaid principal balance in total impaired loans	2,725	3,081
All Other | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans without a specific allowance	0	0
Impaired loans	0	0
All Other | Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	1,094	1,442
Impaired loans	1,094	1,442
All Other | Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	276	287
Impaired loans	276	287
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	1,261	0
Allowance	393	0
Impaired loans without a specific allowance	729	3,306
Impaired loans	1,990	3,306
Unpaid principal balance in total impaired loans	1,990	4,419
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	1,261	0
Impaired loans without a specific allowance	729	3,170
Impaired loans	1,990	3,170
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction | Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	0	0
Impaired loans	0	0
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction | Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	0	136
Impaired loans	0	136
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	6,250	5,117
Allowance	1,413	1,207
Impaired loans without a specific allowance	934	238
Impaired loans	7,184	5,355
Unpaid principal balance in total impaired loans	11,744	9,909
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	5,468	5,117
Impaired loans without a specific allowance	159	238
Impaired loans	5,627	5,355
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate | Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	775	0
Impaired loans	775	0
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate | Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	782	0
Impaired loans without a specific allowance	0	0
Impaired loans	782	0
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	894	1,539
Allowance	26	123
Impaired loans without a specific allowance	2,872	2,695
Impaired loans	3,766	4,234
Unpaid principal balance in total impaired loans	5,598	6,656
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	767	767
Impaired loans without a specific allowance	1,053	1,216
Impaired loans	1,820	1,983
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate | Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	0	0
Impaired loans	0	0
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate | Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	127	772
Impaired loans without a specific allowance	1,819	1,479
Impaired loans	$ 1,946	$ 2,251

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CREDIT QUALITY ASSESSMENT (Impaired Loans by Portfolio) (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	$ 23,335	$ 20,211
Contractual interest income due on impaired loans during the period	1,313	2,513
Interest income on impaired loans recognized on a cash basis	267	506
Interest income on impaired loans recognized on an accrual basis	78	138
Commercial
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	7,740	7,685
Contractual interest income due on impaired loans during the period	506	858
Interest income on impaired loans recognized on a cash basis	154	215
Interest income on impaired loans recognized on an accrual basis	25	63
All Other
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	1,603	2,237
Contractual interest income due on impaired loans during the period	64	143
Interest income on impaired loans recognized on a cash basis	7	96
Interest income on impaired loans recognized on an accrual basis	34	75
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	2,867	770
Contractual interest income due on impaired loans during the period	240	495
Interest income on impaired loans recognized on a cash basis	0	0
Interest income on impaired loans recognized on an accrual basis	0	0
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	6,461	5,696
Contractual interest income due on impaired loans during the period	358	610
Interest income on impaired loans recognized on a cash basis	12	20
Interest income on impaired loans recognized on an accrual basis	19	0
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	4,664	3,823
Contractual interest income due on impaired loans during the period	145	407
Interest income on impaired loans recognized on a cash basis	94	175
Interest income on impaired loans recognized on an accrual basis	$ 0	$ 0

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CREDIT QUALITY ASSESSMENT (Credit Quality of Loan Portfolio by Segment) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	$ 34,312	$ 33,583
Loans 90 days past due	1,248	489
Restructured loans	2,133	1,942
Total non-performing loans	37,693	36,014
Other real estate owned	1,486	1,584
Total non-performing assets	39,179	37,598
Commercial
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	7,083	7,086
Loans 90 days past due	0	49
Restructured loans	264	500
Total non-performing loans	7,347	7,635
Other real estate owned	39	39
Total non-performing assets	7,386	7,674
Consumer
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	4,439	4,107
Loans 90 days past due	0	219
Restructured loans	0	0
Total non-performing loans	4,439	4,326
Other real estate owned	64	0
Total non-performing assets	4,503	4,326
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	1,990	3,306
Loans 90 days past due	0	0
Restructured loans	0	0
Total non-performing loans	1,990	3,306
Other real estate owned	665	315
Total non-performing assets	2,655	3,621
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	6,409	5,355
Loans 90 days past due	1,248	0
Restructured loans	775	0
Total non-performing loans	8,432	5,355
Other real estate owned	409	409
Total non-performing assets	8,841	5,764
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	3,766	4,234
Loans 90 days past due	0	0
Restructured loans	0	0
Total non-performing loans	3,766	4,234
Other real estate owned	0	0
Total non-performing assets	3,766	4,234
Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	10,625	9,336
Loans 90 days past due	0	221
Restructured loans	1,094	1,442
Total non-performing loans	11,719	10,999
Other real estate owned	309	821
Total non-performing assets	12,028	11,820
Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	0	159
Loans 90 days past due	0	0
Restructured loans	0	0
Total non-performing loans	0	159
Other real estate owned	0	0
Total non-performing assets	$ 0	$ 159

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CREDIT QUALITY ASSESSMENT (Credit Quality of Loan Portfolio) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	$ 33,512	$ 27,235
Non-accrual loans	34,312	33,583
Loans aquired with deteriorated credit quality	13,602	25,947
Current loans	6,469,817	6,484,869
Total loans	6,551,243	6,571,634
Commercial
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	5,813	2,786
Non-accrual loans	7,083	7,086
Loans aquired with deteriorated credit quality	2,711	8,155
Current loans	756,551	778,237
Total loans	772,158	796,264
Consumer
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	2,713	5,567
Non-accrual loans	4,439	4,107
Loans aquired with deteriorated credit quality	1,108	1,272
Current loans	480,916	506,893
Total loans	489,176	517,839
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	3,790	474
Non-accrual loans	1,990	3,306
Loans aquired with deteriorated credit quality	0	0
Current loans	652,929	677,421
Total loans	658,709	681,201
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	3,661	3,830
Non-accrual loans	6,409	5,355
Loans aquired with deteriorated credit quality	9,774	14,328
Current loans	1,974,183	1,934,882
Total loans	1,994,027	1,958,395
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	1,096	433
Non-accrual loans	3,766	4,234
Loans aquired with deteriorated credit quality	0	2,182
Current loans	1,220,124	1,196,054
Total loans	1,224,986	1,202,903
Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	13,576	10,919
Non-accrual loans	10,625	9,336
Loans aquired with deteriorated credit quality	9	10
Current loans	1,216,871	1,207,982
Total loans	1,241,081	1,228,247
Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	2,863	3,226
Non-accrual loans	0	159
Loans aquired with deteriorated credit quality	0	0
Current loans	168,243	183,400
Total loans	171,106	186,785
31-60 days
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	24,182	21,963
31-60 days | Commercial
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	2,855	2,737
31-60 days | Consumer
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	1,513	3,871
31-60 days | Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	3,790	474
31-60 days | Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	2,244	3,041
31-60 days | Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	385	433
31-60 days | Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	11,009	8,181
31-60 days | Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	2,386	3,226
61-90 days
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	8,082	4,783
61-90 days | Commercial
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	2,958	0
61-90 days | Consumer
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	1,200	1,477
61-90 days | Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
61-90 days | Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	169	789
61-90 days | Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	711	0
61-90 days | Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	2,567	2,517
61-90 days | Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	477	0
> 90 days
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	1,248	489
> 90 days | Commercial
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	49
> 90 days | Consumer
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	219
> 90 days | Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
> 90 days | Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	1,248	0
> 90 days | Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
> 90 days | Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	221
> 90 days | Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	$ 0	$ 0

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CREDIT QUALITY ASSESSMENT (Credit Risk Rating Indicators for Each Segment of Commercial Loan Portfolio) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financing Receivable Recorded Investment [Line Items]
Total loans	$ 6,551,243	$ 6,571,634
Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	772,158	796,264
Commercial Portfolio Segment [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	4,649,880	4,638,763
Commercial Portfolio Segment [Member] | Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	772,158	796,264
Commercial Portfolio Segment [Member] | Pass
Financing Receivable Recorded Investment [Line Items]
Total loans	4,596,372	4,576,321
Commercial Portfolio Segment [Member] | Pass | Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	752,645	773,958
Commercial Portfolio Segment [Member] | Special Mention
Financing Receivable Recorded Investment [Line Items]
Total loans	12,138	8,827
Commercial Portfolio Segment [Member] | Special Mention | Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	5,111	1,942
Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	41,370	53,615
Commercial Portfolio Segment [Member] | Substandard [Member] | Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	14,402	20,364
Commercial Portfolio Segment [Member] | Doubtful
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Portfolio Segment [Member] | Doubtful | Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	658,709	681,201
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	1,994,027	1,958,395
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	1,224,986	1,202,903
Commercial Real Estate Portfolio Segment | Pass | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	656,719	677,574
Commercial Real Estate Portfolio Segment | Pass | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	1,972,903	1,934,886
Commercial Real Estate Portfolio Segment | Pass | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	1,214,105	1,189,903
Commercial Real Estate Portfolio Segment | Special Mention | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	0	321
Commercial Real Estate Portfolio Segment | Special Mention | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	3,910	3,826
Commercial Real Estate Portfolio Segment | Special Mention | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	3,117	2,738
Commercial Real Estate Portfolio Segment | Substandard [Member] | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	1,990	3,306
Commercial Real Estate Portfolio Segment | Substandard [Member] | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	17,214	19,683
Commercial Real Estate Portfolio Segment | Substandard [Member] | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	7,764	10,262
Commercial Real Estate Portfolio Segment | Doubtful | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Real Estate Portfolio Segment | Doubtful | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Real Estate Portfolio Segment | Doubtful | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	$ 0	$ 0

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CREDIT QUALITY ASSESSMENT (Information by Credit Risk Rating Indicators for Those Remaining Segments of Loan Portfolio) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	$ 6,551,243	$ 6,571,634
Consumer
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	489,176	517,839
Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	1,241,081	1,228,247
Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	171,106	186,785
Homogeneous Loan Pools
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	1,901,363	1,932,871
Homogeneous Loan Pools | Consumer
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	489,176	517,839
Homogeneous Loan Pools | Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	1,241,081	1,228,247
Homogeneous Loan Pools | Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	171,106	186,785
Homogeneous Loan Pools | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	1,885,205	1,917,387
Homogeneous Loan Pools | Performing Financing Receivable | Consumer
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	484,737	513,513
Homogeneous Loan Pools | Performing Financing Receivable | Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	1,229,362	1,217,248
Homogeneous Loan Pools | Performing Financing Receivable | Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	171,106	186,626
Homogeneous Loan Pools | Nonperforming Financing Receivable | Loans 90 Days Or More Past Due
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	0	440
Homogeneous Loan Pools | Nonperforming Financing Receivable | Non Accrual Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	15,064	13,602
Homogeneous Loan Pools | Nonperforming Financing Receivable | Restructured Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	1,094	1,442
Homogeneous Loan Pools | Nonperforming Financing Receivable | Consumer | Loans 90 Days Or More Past Due
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	0	219
Homogeneous Loan Pools | Nonperforming Financing Receivable | Consumer | Non Accrual Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	4,439	4,107
Homogeneous Loan Pools | Nonperforming Financing Receivable | Consumer | Restructured Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	0	0
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Mortgage | Loans 90 Days Or More Past Due
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	0	221
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Mortgage | Non Accrual Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	10,625	9,336
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Mortgage | Restructured Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	1,094	1,442
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Construction | Loans 90 Days Or More Past Due
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	0	0
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Construction | Non Accrual Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	0	159
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Construction | Restructured Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	$ 0	$ 0

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CREDIT QUALITY ASSESSMENT (Troubled Debt Restructured Loans for Specific Segments of the Loan Portfolio) (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Financing Receivable Modifications [Line Items]
Restructured accruing	$ 775	$ 0
Restructured non-accruing	1,036	1,622
Balance	1,811	1,622
Specific allowance	406	563
Restructured and subsequently defaulted	0	0
Commercial
Financing Receivable Modifications [Line Items]
Restructured accruing	0	0
Restructured non-accruing	254	1,464
Balance	254	1,464
Specific allowance	204	563
Restructured and subsequently defaulted	0	0
All Other
Financing Receivable Modifications [Line Items]
Restructured accruing	0	0
Restructured non-accruing	0	0
Balance	0	0
Specific allowance	0	0
Restructured and subsequently defaulted	0	0
Commercial Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Modifications [Line Items]
Restructured accruing	0	0
Restructured non-accruing	0	0
Balance	0	0
Specific allowance	0	0
Restructured and subsequently defaulted	0	0
Commercial Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Modifications [Line Items]
Restructured accruing	775	0
Restructured non-accruing	782	0
Balance	1,557	0
Specific allowance	202	0
Restructured and subsequently defaulted	0	0
Commercial Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Modifications [Line Items]
Restructured accruing	0	0
Restructured non-accruing	0	158
Balance	0	158
Specific allowance	0	0
Restructured and subsequently defaulted	$ 0	$ 0

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GOODWILL AND OTHER INTANGIBLE ASSETS (Gross Carrying Amouns and Accumulated Amortization of Intangible Assets and Goodwill) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 12,156	$ 12,156
Accumulated Amortization	(3,343)	(2,368)
Net Carrying Amount	8,813	9,788
Goodwill	347,149	347,149
Core deposits [Member]
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	10,678	10,678
Accumulated Amortization	(2,815)	(1,941)
Net Carrying Amount	$ 7,863	$ 8,737
Finite-Lived Intangible Asset, Useful Life	8 years 6 months	9 years
Other Identifiable Intangible Assets
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,478	$ 1,478
Accumulated Amortization	(528)	(427)
Net Carrying Amount	$ 950	$ 1,051
Finite-Lived Intangible Asset, Useful Life	10 years 2 months 12 days	10 years 7 months 6 days

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GOODWILL AND OTHER INTANGIBLE ASSETS (Net Carrying Amount of Goodwill By Segment) (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Goodwill [Line Items]
Beginning balance	$ 347,149
No Activity	0
Ending balance	347,149
Community Banking
Goodwill [Line Items]
Beginning balance	331,173
No Activity	0
Ending balance	331,173
Insurance
Goodwill [Line Items]
Beginning balance	6,788
No Activity	0
Ending balance	6,788
Investment Management
Goodwill [Line Items]
Beginning balance	9,188
No Activity	0
Ending balance	$ 9,188

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GOODWILL AND OTHER INTANGIBLE ASSETS (Estimated Future Amortization Expense for Amortizing Intangibles) (Detail) $ in Thousands	Jun. 30, 2019 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2019	$ 969
2020	1,720
2021	1,507
2022	1,295
Thereafter	3,322
Total amortizing intangible assets	$ 8,813

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DEPOSITS (Composition of Deposits) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Disclosure Composition Of Deposits [Abstract]
Noninterest-bearing deposits	$ 2,023,614	$ 1,750,319
Interest-bearing deposits:
Demand	721,389	703,145
Money market savings	1,705,164	1,605,024
Regular savings	331,164	330,231
Time deposits of less than $100,000	456,520	427,421
Time deposits of $100,000 or more	1,151,898	1,098,740
Total interest-bearing deposits	4,366,135	4,164,561
Total deposits	$ 6,389,749	$ 5,914,880

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SUBORDINATED DEBENTURES (Additional Information) (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Subordinated Borrowing [Line Items]
Subordinated Debt	$ 37,353	$ 37,425
Subordinated Debt [Member]
Subordinated Borrowing [Line Items]
Subordinated Debt	25,000	25,000
Purchase accounting premium	$ 1,954	2,023
Maturity period	10 years
Subordinated debt maturity date	Oct. 15, 2025
Subordinated debt fixed interest rate	6.00%
Description of Variable Rate Basis	LIBOR plus 467 basis points
Trust preferred capital notes [Member]
Subordinated Borrowing [Line Items]
Subordinated Debt	$ 10,310	10,310
Purchase accounting premium	$ 89	$ 92
Subordinated debt maturity date	Jun. 30, 2033
Description of Variable Rate Basis	LIBOR plus 3.15%
Subordinated debt variable interest rate	5.47%

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SUBORDINATED DEBENTURES (Detailed information) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Borrowings [Line Items]
Subordinated Debt	$ 37,353	$ 37,425
Subordinated Debt [Member]
Borrowings [Line Items]
Subordinated Debt	25,000	25,000
Purchase accounting premium	1,954	2,023
Trust preferred capital notes [Member]
Borrowings [Line Items]
Subordinated Debt	10,310	10,310
Purchase accounting premium	$ 89	$ 92

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SHARE BASED COMPENSATION (Additional Information) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	May 06, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise period				5 years 7 months 9 days
Options exercised intrinsic value			$ 145
Options Granted			0
Stock Options and Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Recognized Compensation expense	$ 700	$ 600	$ 1,400	$ 1,100
2015 Omnibus Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock, shares authorizes					1,500,000
Common stock, shares available for issuance	1,153,936		1,153,936
Term of share based compensation plan			10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			100.00%
Restricted stock award	96,191
2015 Omnibus Incentive Plan | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise period			7 years
2015 Omnibus Incentive Plan | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise period			10 years
2015 Omnibus Incentive Plan | 3 Year Vesting Period
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock award	21,390
2015 Omnibus Incentive Plan | 5 Year Vesting Period
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock award	74,801
2015 Omnibus Incentive Plan | Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized Compensation expense	$ 100		$ 100
Expected cost recognition weighted average period			1 year 6 months
Options exercised intrinsic value			$ 100	$ 300
Options Granted			0
2015 Omnibus Incentive Plan | Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized Compensation expense	$ 6,800		$ 6,800
Expected cost recognition weighted average period			3 years 1 month 6 days
Options Granted	0

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SHARE BASED COMPENSATION (Fair Values of all Options Granted Estimated Using Binomial Option-Pricing Model with Weighted-average Assumptions) (Detail) - $ / shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Share Based Compensation [Abstract]
Dividend yield	0.00%	2.64%
Weighted average expected volatility	0.00%	39.13%
Weighted average risk-free interest rate	0.00%	2.61%
Weighted average expected lives (in years)		5 years 7 months 9 days
Weighted average grant-date fair value	$ 0	$ 11.73

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SHARE BASED COMPENSATION (Summary of Share Option Activity) (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Number of Common Shares
Beginning balance			81,508
Granted			0
Exercised	(4,142)	(5,574)	(10,897)	(17,927)
Forfeited			(1,007)
Expired			(142)
Ending balance	69,462		69,462
Exercisable, Common Shares	55,362		55,362
Weighted Average Exercise Share Price
Beginning balance			$ 29.74
Granted			0
Exercised			20.56
Forfeited			37.11
Expired			42.48
Ending balance	$ 31.05		31.05
Exercisable Weighted Average Exercise Price	$ 28.94		28.94
Weighted average fair value of options granted during the year			$ 0	$ 11.73
Weighted Average Contractual Remaining Life(Years)
Balance at end of period			3 years 7 months 6 days
Exercisable at end of period			3 years 1 month 6 days
Beginning balance			$ 369
Exercised			145
Ending balance	$ 403		403
Exercisable, Intrinsic Value	$ 403		$ 403

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SHARE BASED COMPENSATION (Summary of Activity for Company's Restricted Stock) (Detail) - $ / shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Weighted Average Grant-Date Fair Value
Granted	$ 0	$ 11.73
Restricted Stock
Number of Shares
Restricted stock beginning balance	203,603
Granted	96,191
Vested	(69,842)
Forfeited	(6,673)
Restricted stock ending balance	223,279
Weighted Average Grant-Date Fair Value
Restricted stock beginning balance	$ 35.14
Granted	33.27
Vested	31.55
Forfeited	33.16
Restricted stock ending balance	$ 35.52

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PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS (Net Periodic Benefit Cost) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Pension, Profit Sharing, and Other Employee Benefit Plans [Abstract]
Interest cost on projected benefit obligation	$ 402	$ 385	$ 804	$ 770
Expected return on plan assets	(412)	(465)	(824)	(930)
Recognized net actuarial loss	265	250	530	500
Net periodic benefit cost	$ 255	$ 170	$ 510	$ 340

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NET INCOME PER SHARE (Calculation of Net Income per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Net income	$ 28,276	$ 24,399	$ 58,593	$ 46,064
Basic:
Basic weighted average EPS shares	35,862	35,721	35,816	35,686
Basic net income per share	$ 0.79	$ 0.68	$ 1.64	$ 1.29
Diluted:
Basic weighted average EPS shares	35,862	35,721	35,816	35,686
Dilutive common stock equivalents	28	23	50	24
Dilutive EPS shares	35,890	35,744	35,866	35,710
Diluted net income per share	$ 0.79	$ 0.68	$ 1.63	$ 1.29
Anti-dilutive shares	10	6	11	6

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Net Accumulated Other Comprehensive Income (Loss)) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			$ (15,754)	$ (6,857)
Other comprehensive income before reclassification, net of tax			11,802	(12,491)
Reclassifications from accumulated other comprehensive income, net of tax			387	269
Current period change in other comprehensive income, net of tax	$ 5,485	$ (2,938)	12,189	(12,222)
Reclassfication of tax effects from accumulated other comprehensive income				(1,477)
Ending Balance	(3,565)	(20,556)	(3,565)	(20,556)
Unrealized Gains (Losses) on Investments Available-for-Sale
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(6,630)	687
Other comprehensive income before reclassification, net of tax			11,802	(12,491)
Reclassifications from accumulated other comprehensive income, net of tax			(4)	(47)
Current period change in other comprehensive income, net of tax			11,798	(12,538)
Reclassfication of tax effects from accumulated other comprehensive income				148
Ending Balance	5,168	(11,703)	5,168	(11,703)
Defined Benefit Pension Plan
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(9,124)	(7,544)
Other comprehensive income before reclassification, net of tax			0	0
Reclassifications from accumulated other comprehensive income, net of tax			391	316
Current period change in other comprehensive income, net of tax			391	316
Reclassfication of tax effects from accumulated other comprehensive income				(1,625)
Ending Balance	$ (8,733)	$ (8,853)	$ (8,733)	$ (8,853)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Reclassification Adjustments Out of Accumulated Other Comprehensive Income) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Unrealized gains/(losses) on investments available-for-sale Affected line item in the Statements of Income:
Investment securities gains	$ 5	$ 0	$ 5	$ 63
Income before taxes	5	0	5	63
Tax expense	$ (1)	$ 0	(1)	(16)
Net income			4	47
Amortization of defined benefit pension plan items Affected line item in the Statements of Income:
Recognized actuarial loss			(530)	(500)
Income before taxes			(530)	(500)
Tax expense			139	184
Net income/ (Loss)			$ (391)	$ (316)

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LEASES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Jan. 01, 2019
Leases [Abstract]
Lessee, Operating Lease, Description		The Company leases real estate properties for its network of bank branches, financial centers and corporate offices.
Lessee, Operating Lease, Option to Extend		Most lease agreements include one or more options to renew, with renewal terms that can extend the original lease term from one to twenty years or more.
Operating Lease, Right-of-Use Asset	$ 73,100	$ 73,100	$ 77,700
Operating Lease Liability	80,615	80,615	$ 85,100
Operating Lease, Expense	2,800	5,700
Cash paid for amounts included in the measurement of lease liabilities	$ 2,200	$ 4,300
Weighted average remaining lease term	10 years 8 months 12 days	10 years 8 months 12 days
Weighted average discount rate	3.31%	3.31%

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LEASES - Maturities of operating lease liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
Operating Lease Liabilities, Payments Due [Abstract]
One year	$ 11,023
Two years	10,563
Three years	10,002
Four years	10,090
Five years	9,494
Thereafter	46,671
Total undiscounted lease payments	97,843
Less: Present value discount	(17,228)
Lease Liability	$ 80,615	$ 85,100

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND DERIVATIVES (Company's Interest Rate Swaps) (Detail) - Swap - Commercial Loan [Member] - Not Designated as Hedging Instrument [Member] - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Derivative [Line Items]
Notional Amount	$ 106.7	$ 16.6
Estimated Fair Value	$ 1.4	$ 0.4

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FAIR VALUE - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Impaired loans	$ 21,657	$ 22,210
Impaired loans fair value	16,900	17,300
Specific loan loss reserves	$ 4,800	$ 4,900

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FAIR VALUE (Financial Assets and Liabilities at Dates Indicated that Were Accounted for or Disclosed at Fair Value) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	$ 50,511	$ 22,773
Investments available-for-sale (at fair value)	901,025	937,335
U.S. treasuries and government agencies
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	314,769	296,678
State and municipal
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	249,576	282,024
Mortgage-Backed and asset-backed
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	326,346	348,515
Corporate Debt
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	9,456	9,240
Trust Preferred
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	310	310
Marketable Equity Securities
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	568	568
Fair Value, Measurements, Recurring | Residential Mortgage Loans Held For Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	50,511	22,773
Fair Value, Measurements, Recurring | U.S. treasuries and government agencies
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	314,769	296,678
Fair Value, Measurements, Recurring | State and municipal
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	249,576	282,024
Fair Value, Measurements, Recurring | Mortgage-Backed and asset-backed
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	326,346	348,515
Fair Value, Measurements, Recurring | Corporate Debt
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	9,456	9,240
Fair Value, Measurements, Recurring | Trust Preferred
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	310	310
Fair Value, Measurements, Recurring | Marketable Equity Securities
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	568	568
Fair Value, Measurements, Recurring | Interest Rate Swap Agreements
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Other assets	1,358	446
Other liabilities	(1,358)	(446)
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Residential Mortgage Loans Held For Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. treasuries and government agencies
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | State and municipal
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Mortgage-Backed and asset-backed
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate Debt
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Trust Preferred
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Marketable Equity Securities
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest Rate Swap Agreements
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Other assets	0	0
Other liabilities	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Residential Mortgage Loans Held For Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	50,511	22,773
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. treasuries and government agencies
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	314,769	296,678
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | State and municipal
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	249,576	282,024
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Mortgage-Backed and asset-backed
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	326,346	348,515
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Corporate Debt
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Trust Preferred
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Marketable Equity Securities
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	568	568
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Interest Rate Swap Agreements
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Other assets	1,358	446
Other liabilities	(1,358)	(446)
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Residential Mortgage Loans Held For Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | U.S. treasuries and government agencies
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | State and municipal
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Mortgage-Backed and asset-backed
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Corporate Debt
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	9,456	9,240
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Trust Preferred
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	310	310
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Marketable Equity Securities
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Interest Rate Swap Agreements
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Other assets	0	0
Other liabilities	$ 0	$ 0

XML

FAIR VALUE (Unrealized Losses Included in Assets Measured in Consolidated Statements of Condition at Fair Value on Recurring Basis) (Detail) - Fair Value, Inputs, Level 3 - Available-for-sale Securities [Member] $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 9,550
Additions of level 3 assets	0
Sales of level 3 assets	0
Total unrealized gains (losses) included in other comprehensive income (loss)	216
Ending balance	$ 9,766

XML

FAIR VALUE (Assets Measured at Fair Value on Nonrecurring Basis) (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	$ 8,139	$ 8,364
Fair value measured on nonrecurring basis losses	(6,838)	(11,194)
Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	6,653	6,780
Fair value measured on nonrecurring basis losses	(6,561)	(10,932)
Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	1,486	1,584
Fair value measured on nonrecurring basis losses	(277)	(262)
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Significant Other Observable Inputs (Level 2) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Significant Other Observable Inputs (Level 2) | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	8,139	8,364
Significant Unobservable Inputs (Level 3) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	6,653	6,780
Significant Unobservable Inputs (Level 3) | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	$ 1,486	$ 1,584

XML

FAIR VALUE (Carrying Amounts and Fair Values of Company's Financial Instruments) (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financial Liabilities
Securities sold under retail repurchase agreements and federal funds purchased	$ 150,604	$ 327,429
Advances from FHLB	582,768	848,611
Subordinated debentures	37,353	37,425
Carying amount [member]
Financial Assets
Other equity securities	54,690	73,389
Loans, net of allowance	6,497,219	6,518,148
Other assets	111,850	110,823
Financial Liabilities
Time Deposits	1,608,418	1,526,161
Securities sold under retail repurchase agreements and federal funds purchased	150,604	327,429
Advances from FHLB	582,768	848,611
Subordinated debentures	37,353	37,425
Estimated fair value [member]
Financial Assets
Other equity securities	54,690	73,389
Loans, net of allowance	6,383,069	6,376,307
Other assets	111,850	110,823
Financial Liabilities
Time Deposits	1,615,849	1,536,238
Securities sold under retail repurchase agreements and federal funds purchased	150,604	327,429
Advances from FHLB	590,246	850,186
Subordinated debentures	35,435	33,588
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Assets
Other equity securities	0	0
Loans, net of allowance	0	0
Other assets	0	0
Financial Liabilities
Time Deposits	0	0
Securities sold under retail repurchase agreements and federal funds purchased	0	0
Advances from FHLB	0	0
Subordinated debentures	0	0
Significant Other Observable Inputs (Level 2)
Financial Assets
Other equity securities	54,690	73,389
Loans, net of allowance	0	0
Other assets	111,850	110,823
Financial Liabilities
Time Deposits	1,615,849	1,536,238
Securities sold under retail repurchase agreements and federal funds purchased	150,604	327,429
Advances from FHLB	590,246	850,186
Subordinated debentures	0	0
Significant Unobservable Inputs (Level 3)
Financial Assets
Other equity securities	0	0
Loans, net of allowance	6,383,069	6,376,307
Other assets	0	0
Financial Liabilities
Time Deposits	0	0
Securities sold under retail repurchase agreements and federal funds purchased	0	0
Advances from FHLB	0	0
Subordinated debentures	$ 35,435	$ 33,588

XML

SEGMENT REPORTING (Additional Information) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Segment Reporting Information [Line Items]
Assets under management	$ 1,700,000		$ 1,700,000
Amortization Of Intangible Assets	483	$ 541	974	$ 1,082
Community Banking
Segment Reporting Information [Line Items]
Amortization Of Intangible Assets	$ 400	$ 500	$ 900	$ 1,000

XML

SEGMENT REPORTING (Operating Segments and Reconciliation of Information to Condensed Consolidated Financial Statements) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Interest income	$ 87,214	$ 78,597	$ 175,397	$ 154,101
Interest expense	21,029	14,779	42,462	27,392
Provision (credit) for loan losses	1,633	1,733	1,505	3,730	$ 9,023
Non-interest income	16,556	14,868	33,525	31,986
Non-interest Expense	43,887	45,082	88,079	94,723
Income before income taxes	37,221	31,871	76,876	60,242
Income tax expense	8,945	7,472	18,283	14,178
Net income	28,276	24,399	58,593	46,064
Assets	8,398,519	8,152,600	8,398,519	8,152,600	$ 8,243,272
Intersegment Elimination
Segment Reporting Information [Line Items]
Interest income	(4)	(2)	(7)	(3)
Interest expense	(4)	(2)	(7)	(3)
Provision (credit) for loan losses	0	0	0	0
Non-interest income	(166)	(153)	(333)	(307)
Non-interest Expense	(166)	(153)	(333)	(307)
Income before income taxes	0	0	0	0
Income tax expense	0	0	0	0
Net income	0	0	0	0
Assets	(31,549)	(26,805)	(31,549)	(26,805)
Community Banking
Segment Reporting Information [Line Items]
Interest income	87,214	78,596	175,397	154,100
Interest expense	21,033	14,781	42,469	27,395
Provision (credit) for loan losses	1,633	1,733	1,505	3,730
Non-interest income	12,856	11,252	25,563	24,423
Non-interest Expense	40,859	42,302	82,070	89,333
Income before income taxes	36,545	31,032	74,916	58,065
Income tax expense	8,769	7,249	17,762	13,602
Net income	27,776	23,783	57,154	44,463
Assets	8,398,263	8,154,957	8,398,263	8,154,957
Insurance
Segment Reporting Information [Line Items]
Interest income	1	1	2	1
Interest expense	0	0	0	0
Provision (credit) for loan losses	0	0	0	0
Non-interest income	1,269	1,179	3,173	3,001
Non-interest Expense	1,304	1,302	2,724	2,681
Income before income taxes	(34)	(122)	451	321
Income tax expense	(8)	(32)	127	91
Net income	(26)	(90)	324	230
Assets	11,552	9,041	11,552	9,041
Investment Management
Segment Reporting Information [Line Items]
Interest income	3	2	5	3
Interest expense	0	0	0	0
Provision (credit) for loan losses	0	0	0	0
Non-interest income	2,597	2,590	5,122	4,869
Non-interest Expense	1,890	1,631	3,618	3,016
Income before income taxes	710	961	1,509	1,856
Income tax expense	184	255	394	485
Net income	526	706	1,115	1,371
Assets	$ 20,253	$ 15,407	$ 20,253	$ 15,407