-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RSyJRKNTvpjSlGZUOcfnJey1yIdiJjg0EIakqR0owlpPqxBvzbwUtI6VUZbUP4R5 GRFlUDlVdkwJODLQcMuD6g== 0001125282-05-000196.txt : 20050120 0001125282-05-000196.hdr.sgml : 20050120 20050120091134 ACCESSION NUMBER: 0001125282-05-000196 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050120 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050120 DATE AS OF CHANGE: 20050120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SANDY SPRING BANCORP INC CENTRAL INDEX KEY: 0000824410 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 520312970 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19065 FILM NUMBER: 05537685 BUSINESS ADDRESS: STREET 1: 17801 GEORGIA AVE CITY: OLNEY STATE: MD ZIP: 20832 BUSINESS PHONE: 3017746400 MAIL ADDRESS: STREET 1: 17801 GEORGIA AVENUE CITY: OLNEY STATE: MD ZIP: 20832 8-K 1 b404081_8k.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): January 20, 2005 ---------------- Sandy Spring Bancorp, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 0-19065 52-1532952 - ----------------------------- ---------------------- ------------------------ (State or other jurisdiction (Commission file (IRS Employer of incorporation) number) Identification Number) 17801 Georgia Avenue, Olney, Maryland 20832 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (301) 774-6400 -------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. Item 7.01 Regulation FD Disclosure. The following information is furnished to the Securities and Exchange Commission under both Item 2.02 and Item 7.01 of this Form 8-K. Non-GAAP Financial Measure. Exhibit 99 includes disclosure and discussion of a traditional efficiency ratio that is a non-GAAP financial measure as defined in Commission Regulation G and Item 10 of Commission Regulation S-K. The issuer has for many years used this traditional efficiency ratio as a measure of operating expense control and efficiency of operations. Management believes that this traditional ratio better focuses attention on the operating performance of the issuer over time than does a GAAP based 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 noninterest expenses. However this measure is supplemental, and is not a substitute for an analysis of performance measures based on GAAP. Exhibit 99 also includes disclosure and discussion of the GAAP-based efficiency ratio and the differences between the two ratios. The traditional efficiency ratio used by the issuer may not be comparable to GAAP or non-GAAP efficiency ratios reported by other financial institutions. Item 9.01 Financial Statements and Exhibits. (a) Financial statements of businesses acquired. Not applicable. (b) Pro forma financial information. Not applicable. (c) Exhibits Exhibit 99. News Release dated January 20, 2005 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SANDY SPRING BANCORP, INC. By: Hunter R. Hollar ---------------------------- Hunter R. Hollar President and Chief Executive Officer Dated: January 20, 2005 EX-99 2 b404081ex_99.txt PRESS RELEASE Exhibit 99 [LOGO] NEWS RELEASE FOR IMMEDIATE RELEASE SANDY SPRING BANCORP REPORTS FOURTH QUARTER AND FULL YEAR RESULTS OLNEY, MARYLAND, January 20, 2005 -- Sandy Spring Bancorp, (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the year ended December 31, 2004 of $14.4 million ($0.98 per diluted share) compared to $32.1 million ($2.18 per diluted share) for the prior year. The Company recognized a net loss for the fourth quarter of 2004 of $5.7 million ($0.39 per diluted share) compared to net income of $6.8 million ($0.46 per diluted share) for the fourth quarter of 2003. "Earnings were primarily affected by the prepayment penalties related to the payoff of $195 million in FHLB advances and the concurrent sale of the same amount of securities which together resulted in an $18.4 million reduction in pretax income," according to Hunter R. Hollar, President and Chief Executive Officer. "As we announced in mid-November, we made this decision after careful analysis of both recent interest rate trends and our overall risk position. This is consistent with our focus on managing our core banking business to provide longer-term earnings growth and increased shareholder value." In addition, the Company recognized in the fourth quarter of 2004 a pretax charge of $1.3 million relating to the write down of goodwill associated with its investment in its leasing subsidiary, The Equipment Leasing Company. "The fundamentals of our balance sheet continue to be strong, loan and deposit growth accelerated during 2004, especially in the fourth quarter as the local economy continued to improve, and demand from our small business customers was robust. Loan quality is excellent and we have been executing well on a variety of initiatives to control costs and boost efficiency in a number of key areas," said Hollar. For the year ended December 31, 2004, return on average stockholders' equity was 7.27% compared to 17.29% for the prior year. Return on average assets for the year ended December 31, 2004 was 0.60% compared to 1.37% for the year ended December 31, 2003. Return on average stockholders' equity was a loss of 11.45% for the fourth quarter of 2004, compared to a return of 14.16% for the fourth quarter of 2003. Return on average assets for the fourth quarter of 2004 was a loss of 0.94%, compared to a return of 1.14% for the fourth quarter of 2003. Comparing December 31, 2004 balances to December 31, 2003, total assets remained virtually the same at $2.3 billion. Total deposits increased 11% to $1.7 billion, while total loans and leases increased 25% to $1.4 billion compared to the prior year. At December 31, 2004, stockholders' equity totaled $195 million, and increased to 8.45% of total assets from 8.29% at December 31, 2003. Due to continuing strong asset quality, there was no provision for credit losses in the fourth quarter of 2004 or 2003 as well as for the years ended December 31, 2004 or 2003. Net credit losses amounted to just $226,000 for the full year 2004 and the allowance for credit losses represented coverage of 8.2 times non-performing loans at December 31, 2004. The Company's management will host a conference call to discuss its fourth quarter and full year results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations' section of the Sandy Spring Web site at www.sandyspringbank.com. DETAILED REVIEW OF FINANCIAL RESULTS Comparing the fourth quarter of 2004 and 2003, net interest income increased by $0.9 million, or 5%, due primarily to an increase in average interest earning assets. The net interest margin increased to 3.83% in 2004 from 3.82% in 2003 due primarily to loan growth and in part to the early payoff of FHLB advances mentioned earlier. Noninterest income increased by $0.4 million, or 5% in the fourth quarter 2004 as compared to 2003. While the rise in interest rates during 2004 has resulted in a significant decline in gain on sale of mortgage loans for the year, such gains increased 21% in the fourth quarter of 2004 versus 2003 due primarily to a slight increase in rates during the fourth quarter of 2003. In addition, fees from the sale of investment products increased 37%, insurance revenues increased 19% and Visa(R) check fees increased 22% reflecting a growing volume of electronic checking transactions. A decline of 7% in service charges on deposit accounts due to lower commercial account fees and return check charges, and a $0.3 million, or 81% decrease in securities gains partially offset the increases in other noninterest income. Noninterest expenses were $39.8 million in the fourth quarter of 2004 compared to $17.7 million in 2003, an increase of $22.1 million or 125%, due primarily to expenses of $18.4 million related to the prepayment of FHLB advances and the write down of $1.3 million of goodwill associated with the Company's investment in its leasing subsidiary during the quarter. Excluding these transactions, noninterest expenses increased $2.4 million or 14%. This increase was the result of increases in salaries and benefits due to a larger staff, severance expenses totaling $0.8 million, and higher incentive compensation; increased equipment expenses, due mainly to higher software costs; and increased other expenses due primarily to out-of-pocket Sarbanes-Oxley Act compliance costs totaling $0.7 million, and amortization of debt issuance costs of $0.5 million. These increases were partially offset by a decrease in marketing costs associated with a significant advertising campaign in 2003. The Company recorded a $6.8 million tax benefit in the fourth quarter of 2004, compared to a $1.5 million tax expense in 2003. The change results mainly from the fourth quarter 2004 net pre-tax loss of $12.5 million. Comparing the year ended December 31, 2004 and 2003, net interest income decreased by $0.4 million, or 1%, due primarily to a decline in the net interest margin to 3.69% for the year 2004 from 3.80% for the year 2003. Noninterest income was $30.8 million for the year ended December 31, 2004 versus $33.7 million for the year ended December 31, 2003, a decrease of $2.9 million, or 9%. Excluding $1.1 million in income from the early termination of a sublease in 2003, noninterest income decreased $1.8 million, or 6%. This decrease was due primarily to decreases of 43% in mortgage banking revenues and 7% in service charges on deposits which were somewhat offset by increases of 13% in income from trust operations, 11% in insurance agency revenues and 12% in fees from sales of investment products. Noninterest expenses were $92.7 million in 2004 compared to $67.2 million in 2003, a 38% percent increase. This increase was primarily due to expenses of $18.4 million related to the prepayment of FHLB advances and the write down of $1.3 million of goodwill associated with the Company's investment in its leasing subsidiary. Excluding these transactions, noninterest expenses increased $5.8 million or 9%. This increase was due primarily to increases in salaries and benefits, which include the one-time severance costs, equipment expenses and other expenses, which include Sarbanes-Oxley Act compliance costs and the amortization of debt issuance costs, which were partially offset by a decrease in marketing expenses. Pre-tax income for the year decreased by $28.9 million, or 69%, from 2003. After a net tax benefit for the year of $1.7 million, compared to income tax expense of $9.5 million for 2003, 2004 net income declined $17.7 million, or 55%, to $14.4 million. ABOUT SANDY SPRING BANCORP/SANDY SPRING BANK With $2.3 billion in assets, Sandy Spring Bancorp is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation and The Equipment Leasing Company. Sandy Spring Bancorp is the third largest publicly traded banking company headquartered in Maryland. Sandy Spring is a community banking organization that focuses its lending and other services on businesses and consumers in the local market area. Independent and community-oriented, Sandy Spring Bank was founded in 1868 and offers a broad range of commercial banking, retail banking and trust services through 29 community offices and 44 ATMs located in Anne Arundel, Frederick, Howard, Montgomery, and Prince George's counties in Maryland. Visit www.sandyspringbank.com for more information. For additional information or questions, please contact: Hunter R. Hollar, President & Chief Executive Officer or Philip J. Mantua, Executive V.P. & Chief Financial Officer Sandy Spring Bancorp 17801 Georgia Avenue Olney, Maryland 20832 1-800-399-5919 E-mail: HHollar@sandyspringbank.com PMantua@sandyspringbank.com Web site: www.sandyspringbank.com FORWARD-LOOKING STATEMENTS: Sandy Spring Bancorp makes forward-looking statements in this News Release that are subject to risks and uncertainties. These forward-looking statements include: statements of goals, intentions, earnings expectations, and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals. These forward-looking statements are subject to significant uncertainties because they are based upon or are affected by: management's estimates and projections of future interest rates, market behavior, and other economic conditions; future laws and regulations; and a variety of other matters which, by their nature, are subject to significant uncertainties. Because of these uncertainties, Sandy Spring Bancorp's actual future results may differ materially from those indicated. In addition, the Company's past results of operations do not necessarily indicate its future results. Sandy Spring Bancorp, Inc. and Subsidiaries FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended December 31, December 31, ----------------------------- % ------------------------------ % 2004 2003 Change 2004 2003 Change - --------------------------------------------------------------------------------------------------------------------- ---------- PROFITABILITY FOR THE PERIOD: Net interest income $19,765 $18,850 5 $74,622 $75,035 (1) Provision for credit losses 0 0 0 0 0 0 Noninterest income 7,549 7,178 5 30,769 33,736 (9) Noninterest expenses 39,837 17,742 125 92,703 67,226 38 Income before income taxes (12,523) 8,286 (251) 12,688 41,545 (69) Net income (5,744) 6,784 (185) 14,367 32,066 (55) Return on average assets (0.94)% 1.14% 0.60% 1.37% Return on average equity (11.45)% 14.16% 7.27% 17.29% Net interest margin 3.83% 3.82% 3.69% 3.80% Efficiency ratio - GAAP based * 145.85% 68.17% 87.96% 61.81% Efficiency ratio - traditional * 67.19% 61.80% 62.94% 56.33% PER SHARE DATA: Basic net income ($0.40) $0.46 (187) $0.99 $2.21 (55) Diluted net income (0.39) 0.46 (185) 0.98 2.18 (55) Dividends declared 0.20 0.19 5 0.78 0.74 5 Book value 13.34 13.35 0 13.34 13.35 0 Tangible book value 12.16 12.03 1 12.16 12.03 1 Average fully diluted shares 14,720,013 14,729,513 14,709,440 14,708,269 AT PERIOD-END: Assets $2,309,343 $2,334,424 (1) $2,309,343 $2,334,424 (1) Deposits 1,732,501 1,561,830 11 1,732,501 1,561,830 11 Loans and leases 1,445,525 1,153,428 25 1,445,525 1,153,428 25 Securities 666,108 998,205 (33) 666,108 998,205 (33) Stockholders' equity 195,083 193,449 1 195,083 193,449 1 CAPITAL AND CREDIT QUALITY RATIOS: Average equity to average assets 8.18% 8.06% 8.21% 7.91% Allowance for credit losses to loans and leases 1.01% 1.29% 1.01% 1.29% Nonperforming assets to total assets 0.08% 0.13% 0.08% 0.13% Annualized net charge-offs to average loans and leases 0.04% 0.06% 0.02% 0.01%
* The GAAP based efficiency ratio is noninterest expenses divided by net interest income plus noninterest income from the Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization, goodwill impairment loss and FHLB prepayment penalties (resulting from the elimation of the company's leverage program in 2004) from noninterest expenses; excludes income from an early termination of a sublease in 2003 and securities gains from noninterest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights. Certain reclassifications and restatements of information previously reported have been made to conform with current presentation. Sandy Spring Bancorp, Inc. and Subsidiaries RECONCILIATION OF GAAP-BASED AND TRADITIONAL EFFICIENCY RATIOS (In thousands, except per share data)
Three Months Ended Twelve Months Ended December 31, December 31, ------------------------------------------ -------------------------------- 2004 2003 2004 2003 -------------------- -------------------- --------------- --------------- Noninterest expenses-GAAP based $39,837 $17,742 $92,703 $67,226 Net interest income plus noninterest income- GAAP based 27,314 26,028 105,391 108,771 Efficiency ratio-GAAP based 145.85% 68.17% 87.96% 61.81% ==================== ==================== =============== =============== Noninterest expenses-GAAP based $39,837 $17,742 $92,703 $67,226 Less non-GAAP adjustment: FHLB prepayment penalties 18,363 0 18,363 0 Goodwill impairment loss 1,265 0 1,265 0 Amortization of intangible assets 491 486 1,950 2,480 -------------------- -------------------- --------------- --------------- Noninterest expenses-traditional ratio 19,718 17,256 71,125 64,746 Net interest income plus noninterest income- GAAP based 27,314 26,028 105,391 108,771 Plus non-GAAP adjustment: Tax-equivalency 2,097 2,234 8,156 8,237 Less non-GAAP adjustments: Securities gains 65 339 540 996 Income from an early termination of a sublease 0 0 0 1,077 -------------------- -------------------- --------------- --------------- Net interest income plus noninterest income - traditional ratio 29,346 27,923 113,007 114,935 Efficiency ratio - traditional 67.19% 61.80% 62.94% 56.33% ==================== ==================== =============== ===============
Certain reclassifications and restatements of information previously reported have been made to conform with current presentation. Sandy Spring Bancorp, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data)
December 31 ------------------------------------------ 2004 2003 - ---------------------------------------------------------------------------------------------------------------------------- ASSETS Cash and due from banks $43,728 $38,397 Federal funds sold 5,467 10,670 Interest-bearing deposits with banks 610 724 Residential mortgage loans held for sale 16,211 12,209 Investments available-for-sale (at fair value) 346,903 639,460 Investments held-to-maturity - fair value of $312,661 (2004) and $344,814 (2003) 305,293 337,634 Other equity securities 13,912 21,111 Total loans and leases 1,445,525 1,153,428 Less: allowance for credit losses (14,654) (14,880) -------------------- -------------------- Net loans and leases 1,430,871 1,138,548 Premises and equipment, net 42,054 37,679 Accrued interest receivable 11,674 13,661 Goodwill 7,335 7,642 Other intangible assets, net 9,866 11,446 Other assets 75,419 65,243 -------------------- -------------------- Total assets $2,309,343 $2,334,424 ==================== ==================== LIABILITIES Noninterest-bearing deposits $423,868 $368,319 Interest-bearing deposits 1,308,633 1,193,511 -------------------- -------------------- Total deposits 1,732,501 1,561,830 Short-term borrowings 231,927 413,223 Guaranteed preferred beneficial interests in the Company's subordinated debentures 35,000 35,000 Other long-term borrowings 94,608 115,158 Accrued interest payable and other liabilities 20,224 15,764 -------------------- -------------------- Total liabilities 2,114,260 2,140,975 STOCKHOLDERS' EQUITY Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 14,628,511 (2004) and 14,495,613 (2003) 14,629 14,496 Additional paid in capital 21,522 18,970 Retained earnings 156,315 153,280 Accumulated other comprehensive income 2,617 6,703 -------------------- -------------------- Total stockholders' equity 195,083 193,449 -------------------- -------------------- Total liabilities and stockholders' equity $2,309,343 $2,334,424 ==================== ====================
Certain reclassifications and restatements of information previously reported have been made to conform with current presentation. Sandy Spring Bancorp, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data)
Three Months Ended Twelve Months Ended December 31, December 31, ------------------------------------------ -------------------------------- 2004 2003 2004 2003 -------------------- -------------------- --------------- --------------- Interest income: Interest and fees on loans and leases $20,137 $15,995 $71,745 $64,749 Interest on loans held for sale 183 120 705 1,113 Interest on deposits with banks 23 4 31 13 Interest and dividends on securities: Taxable 4,390 7,466 21,927 32,076 Exempt from federal income taxes 3,653 3,705 14,433 14,214 Interest on federal funds sold 269 38 549 302 -------------------- -------------------- --------------- --------------- Total interest income 28,655 27,328 109,390 112,467 Interest expense: Interest on deposits 3,923 2,784 13,059 13,675 Interest on short-term borrowings 3,642 4,015 15,809 17,531 Interest on long-term borrowings 1,325 1,679 5,900 6,226 -------------------- -------------------- --------------- --------------- Total interest expense 8,890 8,478 34,768 37,432 -------------------- -------------------- --------------- --------------- Net interest income 19,765 18,850 74,622 75,035 Provision for credit losses 0 0 0 0 -------------------- -------------------- --------------- --------------- Net interest income after provision for credit losses 19,765 18,850 74,622 75,035 Noninterest income: Securities gains 65 339 540 996 Service charges on deposit accounts 1,846 1,984 7,481 8,032 Gains on sales of mortgage loans 772 639 3,283 5,723 Fees on sales of investment products 702 512 2,472 2,211 Trust department income 801 721 3,352 2,955 Insurance agency commissions 1,040 876 4,135 3,741 Income from bank owned life insurance 619 561 2,476 2,746 Income from an early termination of a sublease 0 0 0 1,077 Visa check fees 537 439 1,956 1,792 Other income 1,167 1,107 5,074 4,463 -------------------- -------------------- --------------- --------------- Total noninterest income 7,549 7,178 30,769 33,736 Noninterest expenses: Salaries and employee benefits 11,192 9,188 41,763 38,084 Occupancy expense of premises 1,925 2,105 7,229 7,061 Equipment expenses 1,534 1,179 5,428 4,420 Marketing 337 1,060 1,717 2,500 Outside data services 722 671 2,906 2,619 Amortization of intangible assets 491 486 1,950 2,480 Goodwill impairment loss 1,265 0 1,265 0 Other expenses 22,371 3,053 30,445 10,062 -------------------- -------------------- --------------- --------------- Total noninterest expenses 39,837 17,742 92,703 67,226 -------------------- -------------------- --------------- --------------- Income (loss) before income taxes (12,523) 8,286 12,688 41,545 Income tax expense (benefit) (6,779) 1,502 (1,679) 9,479 -------------------- -------------------- --------------- --------------- -------------------- -------------------- --------------- --------------- Net income (loss) ($5,744) $6,784 $14,367 $32,066 ==================== ==================== =============== =============== Basic net income (loss) per share ($0.40) $0.46 $0.99 $2.21 Diluted net income (loss) per share (0.39) 0.46 0.98 2.18 Dividends declared per share 0.20 0.19 0.78 0.74
Certain reclassifications and restatements of information previously reported have been made to conform with current presentation. Sandy Spring Bancorp, Inc. and Subsidiaries Historical Trends in Quarterly Financial Data (Dollars in thousands, except per share data)
2004 2003 ------------------------------------------- --------------------------------------------- Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 - ------------------------------------------------------------------------------------ --------------------------------------------- Profitability for the quarter: Tax-equivalent interest income $30,752 $29,866 $28,164 $28,764 $29,562 $30,060 $29,800 $31,282 Interest expense 8,890 9,322 8,383 8,173 8,478 9,137 9,744 10,073 Tax-equivalent net interest income 21,862 20,544 19,781 20,591 21,084 20,923 20,056 21,209 Tax-equivalent adjustment 2,097 2,175 1,919 1,965 2,234 2,148 1,809 2,046 Provision for credit losses 0 0 0 0 0 0 0 0 Noninterest income 7,549 7,420 8,241 7,559 7,178 8,751 10,050 7,757 Noninterest expenses 39,837 17,941 18,155 16,770 17,742 16,904 16,623 15,957 Income before income taxes (12,523) 7,848 7,948 9,415 8,286 10,622 11,674 10,963 Income tax expense (6,779) 1,431 1,555 2,114 1,502 2,404 2,938 2,635 Net Income (5,744) 6,417 6,393 7,301 6,784 8,218 8,736 8,328 =================================================================================================================================== inancial ratios: Return on average assets (0.94)% 1.03% 1.08% 1.26% 1.14% 1.37% 1.50% 1.46% Return on average equity (11.45)% 12.89% 13.07% 15.00% 14.16% 17.35% 19.04% 18.76% Net interest margin 3.83% 3.55% 3.58% 3.82% 3.82% 3.71% 3.74% 3.95% Efficiency ratio - GAAP based * 145.85% 69.57% 69.55% 64.04% 68.17% 61.41% 58.74% 59.28% Efficiency ratio - traditional * 67.19% 62.73% 63.30% 58.32% 61.80% 54.92% 56.02% 52.81% =================================================================================================================================== Per share data: Basic net income ($0.40) $0.44 $0.44 $0.51 $0.46 $0.57 $0.61 $0.57 Diluted net income ($0.39) $0.44 $0.43 $0.50 $0.46 $0.56 $0.60 $0.56 Dividends declared $0.20 $0.20 $0.19 $0.19 $0.19 $0.19 $0.18 $0.18 Book value $13.34 $13.92 $13.51 $13.76 $13.35 $13.10 $13.04 $12.54 Tangible book value $12.16 $12.70 $12.26 $12.48 $12.03 $11.75 $11.64 $11.10 Average fully diluted shares 14,720,013 14,673,756 14,726,117 14,725,261 14,729,513 14,677,257 14,676,404 14,743,976 =================================================================================================================================== Noninterest income breakdown: Securities gains (losses) $65 $138 $109 $228 $339 $106 $543 $8 Service charges on deposit accounts 1,846 1,886 1,881 1,868 1,984 2,027 2,037 1,984 Gains on sales of mortgage loans 772 714 1,028 769 639 1,906 1,603 1,575 Fees on sales of investment products 702 475 666 629 512 512 666 521 Trust department income 801 813 984 754 721 756 758 720 Insurance agency commissions 1,040 944 1,030 1,121 876 924 922 1,019 Income from bank owned life insurance 619 614 613 630 561 866 710 609 Income from early termination of a sublease 0 0 0 0 0 0 1,077 0 Visa Check Fees 537 498 497 424 439 434 494 425 Other income 1,167 1,338 1,433 1,136 1,107 1,220 1,240 896 Total 7,549 7,420 8,241 7,559 7,178 8,751 10,050 7,757 =================================================================================================================================== Noninterest expense breakdown: Salaries and employee benefits $11,192 $10,353 $10,285 $9,933 $9,188 $9,932 $9,514 $9,450 Occupancy expense of premises 1,925 1,861 1,815 1,628 2,105 1,839 1,533 1,584 Equipment expenses 1,534 1,380 1,324 1,190 1,179 1,101 1,099 1,041 Marketing 337 385 482 513 1,060 477 509 454 Outside data services 722 697 766 721 671 643 660 645
* The GAAP based efficiency ratio is noninterest expenses divided by net interest income plus noninterest income from the Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization, goodwill impairment loss and FHLB prepayment penalties (resulting from the elimation of the company's leverage program in 2004) from noninterest expenses; excludes income from an early termination of a sublease in 2003 and securities gains from noninterest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights. Sandy Spring Bancorp, Inc. and Subsidiaries Historical Trends in Quarterly Financial Data (Dollars in thousands, except per share data)
2004 2003 ---------------------------------------- ------------------------------------------- Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Noninterest expense breakdown (continued): -------------------------------------------------------------------------------------- Amortization of intangible assets 491 486 $487 $486 486 665 $664 $665 Gooodwill impairment loss 1,265 0 0 0 0 0 0 0 Other expenses 22,371 2,779 2,996 2,299 3,053 2,247 2,644 2,118 Total 39,837 17,941 18,155 16,770 17,742 16,904 16,623 15,957 =================================================================================================================================== Balance sheets at quarter end: Residential mortgage loans $371,924 $365,352 $343,176 $337,850 $331,129 $313,873 $292,415 $276,001 Residential construction loans 137,880 126,338 113,382 103,292 88,500 74,889 71,016 66,937 Commercial mortgage loans 386,911 372,790 329,894 322,754 323,099 310,502 299,621 297,428 Commercial construction loans 88,974 62,436 55,563 52,162 51,518 55,337 53,626 61,434 Commercial loans and leases 150,734 138,741 140,560 125,527 116,322 112,563 119,145 116,157 Consumer loans 309,102 299,826 284,771 260,644 242,860 232,377 233,865 232,359 Total loans and leases 1,445,525 1,365,483 1,267,346 1,202,229 1,153,428 1,099,541 1,069,688 1,050,316 Less: allowance for credit losses (14,654) (14,792) (14,743) (14,875) (14,880) (15,049) (15,033) (15,023) Net loans and leases 1,430,871 1,350,691 1,252,603 1,187,354 1,138,548 1,084,492 1,054,655 1,035,293 Goodwill 7,335 7,642 7,642 7,642 7,642 7,642 7,642 7,642 Other intangible assets, net 9,866 9,987 10,473 10,959 11,446 11,932 12,597 13,262 Total assets 2,309,343 2,506,302 2,424,199 2,371,572 2,334,424 2,383,669 2,368,446 2,372,602 Total deposits 1,732,501 1,709,642 1,681,552 1,618,591 1,561,830 1,558,220 1,590,144 1,555,513 Total stockholders' equity 195,083 201,737 196,090 199,615 193,449 189,623 188,625 181,854 =================================================================================================================================== Quarterly average balance sheets: Residential mortgage loans $378,347 $362,170 $355,676 $346,545 $331,024 $342,648 $302,344 $304,494 Residential construction loans 135,322 119,989 108,118 93,722 81,046 77,466 68,296 72,031 Commercial mortgage loans 379,857 347,451 327,441 316,768 315,603 298,359 300,309 295,728 Commercial construction loans 71,930 61,771 55,234 51,519 53,403 54,942 59,561 56,568 Commercial loans and leases 139,165 137,321 134,627 127,327 109,037 116,985 118,742 122,597 Consumer loans 303,639 293,025 268,861 251,411 237,478 232,891 229,085 231,770 Total loans and leases 1,408,260 1,321,727 1,249,957 1,187,292 1,127,591 1,123,291 1,078,337 1,083,188 Securities 801,871 938,448 933,253 954,822 1,055,558 1,084,348 1,058,878 1,039,112 Total earning assets 2,272,437 2,299,895 2,220,656 2,167,641 2,201,368 2,229,467 2,177,451 2,158,817 Total assets 2,441,129 2,466,535 2,384,929 2,328,985 2,357,816 2,383,783 2,330,589 2,305,834 Total interest-bearing liabilities 1,805,091 1,844,996 1,775,867 1,751,225 1,797,037 1,812,412 1,801,472 1,799,132 Noninterest-bearing demand deposits 419,723 405,647 392,387 360,341 351,761 355,119 322,431 299,638 Total deposits 1,727,800 1,684,328 1,634,340 1,561,666 1,556,965 1,581,873 1,537,111 1,488,023 Stockholders' equity 199,626 198,030 196,719 195,730 190,063 187,183 183,992 180,044 =================================================================================================================================== Capital and credit quality measures: Average equity to average assets 8.18% 8.03% 8.25% 8.40% 8.06% 7.88% 7.89% 7.81% Credit loss allowance to loans and leases 1.01% 1.08% 1.16% 1.24% 1.29% 1.37% 1.41% 1.43% Nonperforming assets to total assets 0.08% 0.09% 0.12% 0.14% 0.13% 0.14% 0.07% 0.08% Annualized net charge-offs (recoveries) to average loans and leases 0.04% (0.01)% 0.04% 0.00% 0.06% 0.00% 0.00% 0.00% =================================================================================================================================== Miscellaneous data: Net charge-offs (recoveries) $138 ($48) $131 $5 $169 ($16) ($10) $13 Nonperforming assets: Non-accrual loans and leases 746 848 674 802 522 564 479 567 Loans and leases 90 days past due 1,043 1,340 2,316 2,492 2,333 2,612 900 1,381 Restructured loans and leases 0 0 0 0 0 0 0 0 Other real estate owned, net 0 0 0 77 77 125 187 0 Total nonperforming assets 1,789 2,188 2,990 3,371 2,932 3,301 1,566 1,948 ===================================================================================================================================
Sandy Spring Bancorp, Inc. and Subsidiaries CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Dollars in thousands and tax-equivalent)
Three Months Ended December 31, --------------------------------------------------------------------------------- 2004 2003 -------------------------------------- ---------------------------------------- AVERAGE ANNUALIZED YIELD/ Average Annualized Yield/ BALANCES INTEREST RATE Balance Interest Rate --------------- ------------ -------- ---------------- ------------- --------- ASSETS Residential mortgage loans $378,347 $20,684 5.47 % $331,024 $18,308 5.53 % Residential construction loans 135,322 7,373 5.45 81,046 3,721 4.59 Commercial mortgage loans 379,857 24,584 6.47 315,603 20,936 6.63 Commercial construction loans 71,930 4,416 6.14 53,403 2,797 5.24 Commercial loans and leases 139,165 9,168 6.59 109,037 7,362 6.75 Consumer loans 303,639 14,737 4.85 237,478 10,975 4.62 --------------- ------------ ---------------- ------------- Total loans and leases 1,408,260 80,962 5.75 1,127,591 64,099 5.68 Securities 801,871 39,989 4.99 1,055,558 53,170 5.04 Interest-bearing deposits with banks 4,664 90 1.93 2,160 17 0.79 Federal funds sold 57,642 1,073 1.86 16,059 151 0.94 --------------- ------------ ---------------- ------------- TOTAL EARNING ASSETS 2,272,437 122,114 5.38 % 2,201,368 117,437 5.33 % Less: allowance for credit losses (14,812) (15,011) Cash and due from banks 44,235 35,986 Premises and equipment, net 41,544 37,787 Other assets 97,725 97,686 --------------- ---------------- Total assets $2,441,129 $2,357,816 =============== ================ LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing demand deposits $238,771 $614 0.26 % $211,449 $411 0.19 % Regular savings deposits 231,196 764 0.33 186,046 496 0.27 Money market savings deposits 371,382 3,439 0.93 394,355 1,872 0.47 Time deposits 466,728 10,790 2.31 413,354 8,267 2.00 --------------- ------------ ---------------- ------------- Total interest-bearing deposits 1,308,077 15,607 1.19 1,205,204 11,046 0.92 Borrowings 497,014 19,576 3.94 591,833 22,306 3.77 --------------- ------------ ---------------- ------------- TOTAL INTEREST-BEARING LIABILITIES 1,805,091 35,183 1.95 1,797,037 33,352 1.86 ------------ -------- ------------- --------- Net interest income and spread $86,931 3.43 % $84,085 3.47 % ============ ======== ============= ========= Noninterest-bearing demand deposits 419,723 351,761 Other liabilities 16,689 18,955 Stockholder's equity 199,626 190,063 --------------- ---------------- Total liabilities and stockholders' equity $2,441,129 $2,357,816 =============== ================ Interest income/earning assets 5.38 % 5.33 % Interest expense/earning assets 1.55 1.51 -------- --------- Net interest margin 3.83 % 3.82 % ======== =========
*Interest income includes the effects of annualized taxable-equivalent adjustments (reduced by the nondeductible portion of interest expense) using the appropriate marginal federal income tax rate of 35.00% and, where applicable, the marginal state income tax rate of 7.00% (or a combined marginal federal and state rate of 39.55%), to increase tax-exempt interest income to a taxable-equivalent basis. The annualized taxable-equivalent adjustment amounts utilized in the above table to compute yields aggregated to $8,300,000 in 2004 and $9,300,000 in 2003. Sandy Spring Bancorp, Inc. and Subsidiaries CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Dollars in thousands and tax-equivalent)
Twelve Months Ended December 31, ---------------------------------------------------------------------------------- 2004 2003 -------------------------------------- --------------------------------------- AVERAGE ANNUALIZED YIELD/ Average Annualized Yield/ BALANCES INTEREST RATE Balance Interest Rate --------------- ------------ -------- ---------------- ------------- -------- ASSETS Residential mortgage loans $360,737 $19,559 5.42 % $320,262 $18,491 5.77 % Residential construction loans 114,361 5,603 4.90 74,742 3,675 4.92 Commercial mortgage loans 342,992 22,185 6.47 302,540 20,924 6.92 Commercial construction loans 60,151 3,533 5.87 57,011 3,307 5.80 Commercial loans and leases 134,630 8,685 6.45 115,902 8,107 6.99 Consumer loans 279,338 12,885 4.61 232,822 11,358 4.88 --------------- ------------ ---------------- ------------- Total loans and leases 1,292,209 72,450 5.61 1,103,279 65,862 5.97 Securities 906,901 44,516 4.91 1,059,583 54,527 5.15 Interest-bearing deposits with banks 1,817 31 1.71 1,538 13 0.85 Federal funds sold 39,456 549 1.39 27,565 302 1.10 --------------- ------------ ---------------- ------------- TOTAL EARNING ASSETS 2,240,383 117,546 5.24 % 2,191,965 120,704 5.51 % Less: allowance for credit losses (14,823) (15,020) Cash and due from banks 42,133 34,929 Premises and equipment, net 40,407 37,207 Other assets 98,218 95,662 --------------- ---------------- Total assets $2,406,318 $2,344,743 =============== ================ LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing demand deposits $232,652 $657 0.28 % $200,855 $465 0.23 % Regular savings deposits 216,257 762 0.35 173,078 512 0.30 Money market savings deposits 369,046 2,469 0.67 401,716 2,436 0.61 Time deposits 439,729 9,171 2.09 433,244 10,262 2.37 --------------- ------------ ---------------- ------------- Total interest-bearing deposits 1,257,684 13,059 1.04 1,208,893 13,675 1.13 Borrowings 536,758 21,709 4.04 593,684 23,757 4.00 --------------- ------------ ---------------- ------------- TOTAL INTEREST-BEARING LIABILITIES 1,794,442 34,768 1.94 1,802,577 37,432 2.08 ------------ -------- ------------- -------- Net interest income and spread $82,778 3.30 % $83,272 3.43 % ============ ======== ============= ======== Noninterest-bearing demand deposits 394,622 332,443 Other liabilities 19,698 24,305 Stockholder's equity 197,556 185,418 --------------- ---------------- Total liabilities and stockholders' equity $2,406,318 $2,344,743 =============== ================ Interest income/earning assets 5.24 % 5.51 % Interest expense/earning assets 1.55 1.71 -------- -------- Net interest margin 3.69 % 3.80 % ======== ========
*Interest income includes the effects of taxable-equivalent adjustments (reduced by the nondeductible portion of interest expense) using the appropriate marginal federal income tax rate of 35.00% and, where applicable, the marginal state income tax rate of 7.00% (or a combined marginal federal and state rate of 39.55%), to increase tax-exempt interest income to a taxable-equivalent basis. The taxable-equivalent adjustment amounts utilized in the above table to compute yields aggregated to $8,156,000 in 2004 and $8,237,000 in 2003. -----END PRIVACY-ENHANCED MESSAGE-----