8-K

UNITED STATES
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 19, 2006

SANDY SPRING BANCORP, INC.
(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction
of incorporation) 000-19065
(Commission file
number) 52-1532952
(IRS Employer
Identification No)

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.

On January 19, 2006, Sandy Spring Bancorp, Inc. issued a news release regarding its results of operations and financial condition for the quarter and year ended December 31, 2005. The text of the press release is included as Exhibit 99 to this report. The Company will include final financial statements and additional analyses as part of its Form 10-K for the year ended December 31, 2005.

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 19, 2006.

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: /s/ Hunter R. Hollar
             Hunter R. Hollar
             President and
             Chief Executive Officer

Dated: January 19, 2006

EX-99

	Exhibit 99
	NEWS RELEASE

FOR IMMEDIATE RELEASE      

SANDY SPRING BANCORP REPORTS
INCREASE IN 2005 NET INCOME AND AGREES TO ACQUIRE NEFF & ASSOCIATES

OLNEY, MARYLAND, January 19, 2006 – Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the year ended December 31, 2005 of $33.1 million ($2.24 per diluted share) compared to $14.4 million ($.98 per diluted share) for the prior year. Net income for the fourth quarter of 2005 totaled $8.0 million ($.54 per diluted share) compared to a net loss of $5.7 million ($.39 per diluted share) for the prior year period. The results for the year include gains on the sale of investment securities which increased $2.8 million on a pre-tax basis over the prior year.

“We are pleased to report a fourth consecutive quarter of strong fundamental performance, which included record earnings, robust loan growth and a substantial increase in fee income,” said Hunter R. Hollar, President and Chief Executive Officer of Sandy Spring Bancorp. “The company ended 2005 well positioned to continue to perform on a consistent basis during 2006. Asset quality trends remain quite favorable and the commercial loan pipeline is solid. Returns on stockholders’ equity and assets are clearly moving us into the high-performance quartile nationally among community banking companies.”

Sandy Spring Bancorp also announced that it has reached an agreement to acquire specific assets and liabilities of Neff & Associates, an independent insurance agency located in Ocean City, Maryland.

“It has been our goal to broaden our insurance agency business and this acquisition gives us the opportunity to further serve the small business community and complement the products and services we already offer through Chesapeake Insurance Group,” said Hollar, who further noted that Neff has an outstanding reputation for superior client service within the medical community which makes this an excellent fit for both firms.

Neff & Associates specializes in physician liability insurance with approximately $1.2 million in annual revenues. Principal Keith Neff will continue in a sales and servicing capacity. “We look forward to becoming a part of the continuing success of both Chesapeake Insurance Group and Sandy Spring Bank,” states Keith Neff.

The transaction is expected to close in the first quarter of 2006.

For the year ended December 31, 2005, return on average stockholders’ equity was 16.21% compared to 7.27% for the prior year. Return on average assets for the year ended December 31, 2005 was 1.41% compared to .60% for the year ended December 31, 2004.

Return on average stockholders’ equity was 14.76% for the fourth quarter of 2005, compared to a loss of 11.45% for the fourth quarter of 2004. Return on average assets for the fourth quarter of 2005 was 1.31%, compared to a loss of .94% for the fourth quarter of 2004.

Comparing December 31, 2005 balances to December 31, 2004, total assets increased 7% to $2.5 billion due mainly to strong loan growth. Total loans and leases increased 17% to $1.7 billion compared to the prior year. Customer funding sources, which include deposits plus other short-term borrowings from core customers, increased 6% to $2.0 billion at December 31, 2005. During the same period, stockholders’ equity increased 12% to $218 million or 9% of total assets.

Due to continued growth in the loan portfolio, the provision for loan and lease losses totaled $1.0 million for the fourth quarter of 2005 compared to no provision in the fourth quarter of 2004. The provision for loan and lease losses totaled $2.6 million for the year ended December 31, 2005 compared to no provision for the prior year. The allowance for loan and lease losses represented 1.00% of outstanding loans at December 31, 2005.

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 2005 and 2004, net interest income increased by $3.3 million, or 17%, due primarily to an improved net interest margin. The net interest margin increased to 4.38% in 2005 from 3.83% in 2004 due primarily to increased loan growth and active management of deposit rates together with the early payoff of FHLB advances in the fourth quarter of 2004.

Noninterest income increased $2.3 million or 30% in the fourth quarter of 2005 as compared to 2004. On a non-GAAP basis, noninterest income, excluding the effect of securities gains of $.7 million in 2005 and $.1 million in 2004, increased $1.7 million or 22%. This increase was due primarily to an increase of $1.3 million in trust and investment management fees reflecting an increase of $.9 million from the acquisition of West Financial Services early in the fourth quarter of 2005 and an increase of $.4 million in fees from trust services. In addition, insurance agency commissions increased 12% compared to 2004 due primarily to the acquisition of the Wolfe & Reichelt Insurance Agency in December 2004.

Noninterest expenses were $20.9 million in the fourth quarter of 2005 compared to $39.8 million in 2004, a decrease of $18.9 million or 48%. This decrease was 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, both of which occurred in the fourth quarter of 2004. The remaining $.8 million change in noninterest expenses resulted mainly from a $1.8 million or 16% increase in salaries and benefits, due largely to higher incentive compensation and benefits expense, increased occupancy expenses, due mainly to the acquisition of West Financial Services early in the fourth quarter of 2005, new branches opened in 2005, and an increase in intangibles amortization due primarily to the above-mentioned acquisition. These increases were offset in part by a $1.2 million or 31% decrease in other expenses, due mainly to a write off of issuance costs in 2004 relating to a redemption of subordinated debentures, and a decrease in marketing costs due mainly to advertising initiatives conducted in 2004 that were not continued in 2005.

Comparing the year ended December 31, 2005 and 2004, net interest income increased by $14.0 million or 19%, due primarily to increased loan growth and the early payoff of FHLB advances in 2004 mentioned above. These factors resulted in an increase in the net interest margin to 4.39% for the year 2005 compared to 3.68% for the year 2004.

Noninterest income was $36.9 million for year ended December 31, 2005 versus $31.0 million for the year ended December 31, 2004, an increase of $5.9 million or 19%. On a non-GAAP basis, noninterest income, excluding the effect of net securities gains of $3.3 million in 2005 and $.5 million in 2004, increased $3.1 million or 10%. This increase was due primarily to an increase of $1.7 million in trust and investment management fees reflecting an increase of $.9 million from the acquisition of West Financial Services and an increase of $.8 million in fees from trust services. In addition, insurance agency commissions increased 28% due largely to the acquisition of the Wolfe & Reichelt Insurance Agency in December 2004 together with higher contingent commissions. Visa® check fees increased 11% due to higher volumes of electronic transactions while gains on sales of mortgage loans increased 14% due to higher loan volumes. These increases were somewhat offset by a decline of 15% in fees on sales of investment products.

Noninterest expenses were $77.2 million in 2005 compared to $92.5 million in 2004, a decrease of $15.3 million or 17%. This decrease 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, both of which occurred in 2004. The remaining change in noninterest expenses of $4.4 million was due mainly to increases in salaries and benefits resulting from higher incentive compensation and benefits expenses and a larger staff, and increases in occupancy expense and intangibles amortization, offset in part by declines in other expenses.

About Sandy Spring Bancorp/Sandy Spring Bank

With $2.5 billion in assets, Sandy Spring Bancorp is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation, The Equipment Leasing Company and, effective October 3, 2005, West Financial Services, Inc. Sandy Spring Bancorp is the third largest publicly traded banking company headquartered in Maryland and the oldest independent banking institution in the state. 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 31 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George’s counties in Maryland and 67 ATMs located throughout Maryland. Through its subsidiaries, the Bank also offers a comprehensive menu of leasing, insurance and investment management services. 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)

							% Change								% Change
	Three Months Ended December 31,								Twelve Months Ended December 31,
		2005			2004					2005			2004
Profitability for the period:
Net interest income	$	22,925		$	19,627		17		$	88,178		$	74,213		19
Provision for loan and lease losses		1,000			—		N/A			2,600			—		N/A
Noninterest income		9,904			7,627		30			36,909			30,949		19
Noninterest expenses		20,860			39,777		(48	)		77,194			92,474		(17	)
Income before income taxes		10,969			(12,523	)	188			45,293			12,688		257
Net income		7,978			(5,744	)	239		$	33,098		$	14,367		130
Return on average assets		1.31	%		(0.94	)				1.41	%		0.60	%
Return on average equity		14.76	%		(11.45	)				16.21	%		7.27	%
Net interest margin		4.38	%		3.83	%				4.39	%		3.68	%
Efficiency ratio – GAAP based *		63.54	%		145.95	%				61.71	%		87.93	%
Efficiency ratio – traditional *		59.36	%		67.12	%				58.16	%		62.86	%
Per share data:
Basic net income	$	0.54			($0.40)		235		$	2.26		$	0.99		128
Diluted net income		0.54			(0.39	)	239			2.24			0.98		129
Dividends declared		0.22			0.20		10			0.84			0.78		8
Book value		14.73			13.34		10			14.73			13.34		10
Tangible book value		13.21			12.16		9			13.21			12.16		9
Average fully diluted shares		14,886,046			14,720,013					14,767,291			14,709,440
At period-end:
Assets	$	2,459,616		$	2,309,343		7		$	2,459,616		$	2,309,343		7
Deposits		1,803,210			1,732,501		4			1,803,210			1,732,501		4
Loans and leases		1,684,379			1,445,525		17			1,684,379			1,445,525		17
Securities		567,432			666,108		(15	)		567,432			666,108		(15	)
Stockholders' equity		217,883			195,083		12			217,883			195,083		12
Capital and credit quality ratios:
Average equity to average assets		8.86	%		8.18	%				8.68	%		8.21	%
Allowance for loan and lease losses to loans
and leases		1.00	%		1.01	%				1.00	%		1.01	%
Nonperforming assets to total assets		0.06	%		0.08	%				0.06	%		0.08	%
Annualized net (charge-offs) recoveries
to average loans and leases		(0.09	)%		0.04	%				(0.02	)%		0.02	%

 * 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 from noninterest expenses; excludes 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 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 December 31,						Twelve Months Ended December 31,
		2005			2004			2005			2004
Noninterest expenses–GAAP based	$	20,860		$	39,777		$	77,194		$	92,474
Net interest income plus noninterest income–
GAAP based		32,829			27,254			125,087			105,162
Efficiency ratio–GAAP based		63.54	%		145.95	%		61.71	%		87.93	%
Noninterest expenses–GAAP based	$	20,860		$	39,777		$	77,194		$	92,474
Less non-GAAP adjustment:
FHLB prepayment penalties		0			18,363			0			18,363
Goodwill impairment loss		0			1,265			0			1,265
Amortization of intangible assets		696			491			2,198			1,950
Noninterest expenses–traditional ratio		20,164			19,658			74,996			70,896
Net interest income plus noninterest income–
GAAP based		32,829			27,254			125,087			105,162
Plus non-GAAP adjustment:
Tax-equivalency		1,800			2,097			7,128			8,156
Less non-GAAP adjustments:
Securities gains		661			65			3,262			540
Net interest income plus noninterest
income – traditional ratio		33,968			29,286			128,953			112,778
Efficiency ratio – traditional		59.36	%		67.12	%		58.16	%		62.86	%

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

	December 31,
	2005			2004
Assets
Cash and due from banks	$	47,294		$	43,728
Federal funds sold		6,149			5,467
Interest-bearing deposits with banks		751			610
Residential mortgage loans held for sale (at fair value)		10,439			16,211
Investments available-for-sale (at fair value)		256,571			346,903
Investments held-to-maturity – fair value of $302,966
and $312,661, respectively		295,648			305,293
Other equity securities		15,213			13,912
Total loans and leases		1,684,379			1,445,525
Less: allowance for loan and lease losses		(16,886	)		(14,654	)
Net loans and leases		1,667,493			1,430,871
Premises and equipment, net		45,385			42,054
Accrued interest receivable		13,144			11,674
Goodwill		10,272			7,335
Other intangible assets, net		12,218			9,866
Other assets		79,039			75,419
Total assets	$	2,459,616		$	2,309,343
Liabilities
Noninterest-bearing deposits	$	439,277		$	423,868
Interest-bearing deposits		1,363,933			1,308,633
Total deposits		1,803,210			1,732,501
Short-term borrowings		380,220			231,927
Subordinated debentures		35,000			35,000
Other long-term borrowings		2,158			94,608
Accrued interest payable and other liabilities		21,145			20,224
Total liabilities		2,241,733			2,114,260
Stockholders' Equity
Common stock – par value $1.00; shares authorized
50,000,000; shares issued and outstanding 14,793,987
and 14,628,511, respectively		14,794			14,629
Additional paid in capital		26,599			21,522
Retained earnings		177,084			156,315
Accumulated other comprehensive income		(594	)		2,617
Total stockholders' equity		217,883			195,083
Total liabilities and stockholders' equity	$	2,459,616		$	2,309,343

Certain reclassifications 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 December 31,						Twelve Months Ended December 31,
	2005		2004			2005		2004
Interest income:
Interest and fees on loans and leases	$	26,687	$	19,999		$	94,562	$	71,336
Interest on loans held for sale		261		183			1,073		705
Interest on deposits with banks		5		23			63		31
Interest and dividends on securities:
Taxable		3,117		4,390			12,327		21,927
Exempt from federal income taxes		3,132		3,653			13,416		14,433
Interest on federal funds sold		148		269			719		549
Total interest income		33,350		28,517			122,160		108,981
Interest expense:
Interest on deposits		6,739		3,923			21,482		13,059
Interest on short-term borrowings		3,108		3,642			9,638		15,809
Interest on long-term borrowings		578		1,325			2,862		5,900
Total interest expense		10,425		8,890			33,982		34,768
Net interest income		22,925		19,627			88,178		74,213
Provision for loan and lease losses		1,000		0			2,600		0
Net interest income after provision for loan
and lease losses		21,925		19,627			85,578		74,213
Noninterest income:
Securities gains (losses)		661		65			3,262		540
Service charges on deposit accounts		1,983		1,846			7,688		7,481
Gains on sales of mortgage loans		932		772			3,757		3,283
Fees on sales of investment products		551		702			2,109		2,472
Trust and investment management fees		2,074		801			5,006		3,352
Insurance agency commissions		1,160		1,040			5,309		4,135
Income from bank owned life insurance		575		559			2,259		2,247
Visa Check Fees		570		537			2,167		1,956
Other income		1,398		1,305			5,352		5,483
Total noninterest income		9,904		7,627			36,909		30,949
Noninterest expenses:
Salaries and employee benefits		12,897		11,132			47,013		41,534
Occupancy expense of premises		2,066		1,925			8,053		7,229
Equipment expenses		1,379		1,534			5,410		5,428
Marketing		278		337			1,225		1,717
Outside data services		781		722			2,940		2,906
Amortization of intangible assets		696		491			2,198		1,950
Goodwill impairment loss		0		1,265			0		1,265
Debt retirement expense		0		18,363			0		18,363
Other expenses		2,763		4,008			10,355		12,082
Total noninterest expenses		20,860		39,777			77,194		92,474
Income before income taxes		10,969		(12,523	)		45,293		12,688
Income tax expense		2,991		(6,779	)		12,195		(1,679	)
Net income	$	7,978		($5,744)		$	33,098	$	14,367
Basic net income per share	$	0.54		($0.40)		$	2.26	$	0.99
Diluted net income per share	$	0.54		($0.39)		$	2.24		0.98
Dividends declared per share	$	0.22	$	0.20			0.84		0.78

Certain reclassifications of information previously reported have been made to conform with current presentation.

Sandy Spring Bancorp, Inc. and Subsidiaries	2005												2004
Historical Trends in Quarterly Financial Data
(Dollars in thousands, except per share data)		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Profitability for the quarter:
Tax-equivalent interest income	$	35,150		$	33,244		$	30,998		$	29,896		$	30,614		$	29,776		$	28,070		$	28,677
Interest expense		10,425			8,865			7,705			6,987			8,890			9,322			8,383			8,173
Tax-equivalent net interest income		24,725			24,379			23,293			22,909			21,724			20,454			19,687			20,504
Tax-equivalent adjustment		1,800			1,853			1,766			1,709			2,097			2,175			1,919			1,965
Provision for credit losses		1,000			600			900			100			0			0			0			0
Noninterest income		9,904			10,112			9,053			7,840			7,628			7,452			8,279			7,590
Noninterest expenses		20,860			18,744			19,153			18,437			39,778			17,883			18,099			16,714
Income before income taxes		10,969			13,294			10,527			10,503			(12,523	)		7,848			7,948			9,415
Income tax expense		2,991			3,827			2,730			2,647			(6,779	)		1,431			1,555			2,114
Net Income		7,978			9,467			7,797			7,856			(5,744	)		6,417			6,393			7,301
Financial ratios:
Return on average assets		1.31	%		1.58	%		1.36	%		1.39	%		-0.94	%		1.03	%		1.08	%		1.26	%
Return on average equity		14.76	%		18.31	%		15.63	%		16.20	%		-11.45	%		12.89	%		13.07	%		15.00	%
Net interest margin		4.38	%		4.39	%		4.39	%		4.39	%		3.80	%		3.54	%		3.56	%		3.81	%
Efficiency ratio – GAAP based *		63.54	%		57.43	%		62.63	%		63.49	%		145.95	%		69.50	%		69.49	%		63.97	%
Efficiency ratio – traditional *		59.36	%		55.74	%		59.16	%		58.38	%		67.12	%		62.65	%		63.22	%		58.24	%
Per share data:
Basic net income	$	0.54		$	0.65		$	0.53		$	0.54			($0.40)		$	0.44		$	0.44		$	0.51
Diluted net income	$	0.54		$	0.64		$	0.53		$	0.53			($0.39)		$	0.44		$	0.43		$	0.50
Dividends declared	$	0.22		$	0.21		$	0.21		$	0.20		$	0.20		$	0.20		$	0.19		$	0.19
Book value	$	14.73		$	14.23		$	13.91		$	13.57		$	13.34		$	13.92		$	13.51		$	13.76
Tangible book value	$	13.21		$	13.07		$	12.72		$	12.35		$	12.16		$	12.70		$	12.26		$	12.48
Average fully diluted shares		14,886,046			14,735,318			14,719,742			14,760,551			14,720,013			14,673,756			14,726,117			14,725,261
Noninterest income breakdown:
Securities gains (losses)	$	661		$	1,761		$	825		$	15		$	65		$	138		$	109		$	228
Service charges on deposit accounts		1,983			2,050			1,984			1,671			1,846			1,886			1,881			1,868
Gains on sales of mortgage loans		932			1,205			889			731			772			714			1,028			769
Fees on sales of investment products		551			473			640			445			702			475			666			629
Trust department income		2,074			1,116			944			872			801			813			984			754
Insurance agency commissions		1,160			1,114			1,224			1,811			1,040			944			1,030			1,121
Income from bank owned life insurance		575			570			559			555			560			556			557			574
Visa Check Fees		570			556			550			491			537			498			497			424
Other income		1,398			1,267			1,438			1,249			1,305			1,428			1,527			1,223
Total		9,904			10,112			9,053			7,840			7,628			7,452			8,279			7,590
Noninterest expense breakdown:
Salaries and employee benefits	$	12,897		$	11,373		$	11,454		$	11,289		$	11,133		$	10,295		$	10,229		$	9,877
Occupancy expense of premises		2,066			2,099			1,964			1,924			1,925			1,861			1,815			1,628
Equipment expenses		1,379			1,415			1,294			1,322			1,534			1,380			1,324			1,190
Marketing		278			253			406			288			337			385			482			513
Outside data services		781			718			701			740			722			697			766			721

* 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 from noninterest expenses; securities gains from noninterest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Historical Trends in Quarterly Financial Data.

Sandy Spring Bancorp, Inc. and Subsidiaries	2005												2004
Historical Trends in Quarterly Financial Data
(Dollars in thousands, except per share data)		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Noninterest expense breakdown (continued):
Amortization of intangible assets	$	696		$	501		$	505		$	496			491			486			487		$	486
Goodwill impairment loss	$	0			0			0			0			1,265			0			0		$	0
Other expenses		2,763			2,385			2,829			2,378			22,371			2,779			2,996			2,299
Total		20,860			18,744			19,153			18,437			39,778			17,883			18,099			16,714
Balance sheets at quarter end:
Residential mortgage loans	$	413,324		$	400,657		$	393,961		$	375,746		$	371,924		$	365,352		$	343,176		$	337,850
Residential construction loans		155,379			143,691			136,733			139,964			137,880			126,338			113,382			103,292
Commercial mortgage loans		415,983			410,409			390,306			395,528			386,911			372,790			329,894			322,754
Commercial construction loans		178,764			136,606			119,006			94,708			88,974			62,436			55,563			52,162
Commercial loans and leases		185,680			160,379			154,237			150,143			150,734			138,741			140,560			125,527
Consumer loans		335,249			327,393			323,537			312,725			309,102			299,826			284,771			260,644
Total loans and leases		1,684,379			1,579,135			1,517,780			1,468,814			1,445,525			1,365,483			1,267,346			1,202,229
Less: allowance for credit losses		(16,886	)		(16,268	)		(15,673	)		(14,738	)		(14,654	)		(14,792	)		(14,743	)		(14,875	)
Net loans and leases		1,667,493			1,562,867			1,502,107			1,454,076			1,430,871			1,350,691			1,252,603			1,187,354
Goodwill		10,272			8,554			8,554			8,554			7,335			7,642			7,642			7,642
Other intangible assets, net		12,218			8,364			8,865			9,370			9,866			9,987			10,473			10,959
Total assets		2,459,616			2,383,360			2,348,305			2,284,198			2,309,343			2,506,302			2,424,199			2,371,572
Total deposits		1,803,210			1,804,888			1,781,622			1,745,675			1,732,501			1,709,642			1,681,552			1,618,591
Total stockholders' equity		217,883			208,090			203,294			198,709			195,083			201,737			196,090			199,615
Quarterly average balance sheets:
Residential mortgage loans	$	423,805		$	423,420		$	401,148		$	384,504		$	378,347		$	362,170		$	355,676		$	346,545
Residential construction loans		150,099			141,197			137,720			137,897			135,322			119,989			108,118			93,722
Commercial mortgage loans		407,459			394,862			393,291			389,215			379,857			347,451			327,441			316,768
Commercial construction loans		158,076			128,010			103,584			91,733			71,930			61,771			55,234			51,519
Commercial loans and leases		161,478			154,920			151,766			149,783			139,165			137,321			134,627			127,327
Consumer loans		333,671			327,495			320,276			310,421			303,639			293,025			268,861			251,411
Total loans and leases		1,634,588			1,569,904			1,507,785			1,463,553			1,408,260			1,321,727			1,249,957			1,187,292
Securities		589,552			593,102			591,610			641,960			801,871			938,448			933,253			954,822
Total earning assets		2,239,438			2,203,251			2,130,469			2,115,369			2,272,437			2,299,895			2,220,656			2,167,641
Total assets		2,421,725			2,384,327			2,307,888			2,286,209			2,441,129			2,466,535			2,384,929			2,329,107
Total interest-bearing liabilities		1,733,626			1,696,691			1,647,365			1,660,839			1,805,091			1,844,996			1,775,867			1,751,225
Noninterest-bearing demand deposits		452,738			458,131			440,945			415,824			419,723			405,647			392,387			360,341
Total deposits		1,809,237			1,800,171			1,751,192			1,723,667			1,727,800			1,684,328			1,634,340			1,561,666
Stockholders' equity		214,489			205,138			200,047			196,659			199,626			198,030			196,719			195,730
Capital and credit quality measures:
Average equity to average assets		8.86	%		8.60	%		8.67	%		8.60	%		8.18	%		8.03	%		8.25	%		8.40	%
Credit loss allowance to loans and leases		1.00	%		1.03	%		1.03	%		1.00	%		1.01	%		1.08	%		1.16	%		1.24	%
Nonperforming assets to total assets		0.06	%		0.14	%		0.15	%		0.10	%		0.08	%		0.09	%		0.12	%		0.14	%
Annualized net (charge-offs) recoveries to
average loans and leases		-0.09	%		0.00	%		0.01	%		0.00	%		0.04	%		(0.01	)%		0.04	%		0.00	%
Miscellaneous data:
Net recoveries (charge-offs)		($382)			($5)		$	35			($16)		$	138			($48)		$	131		$	5
Nonperforming assets:
Non-accrual loans and leases		437			1,032			661			672			746			848			674			802
Loans and leases 90 days past due		958			2,289			2,757			1,531			1,043			1,340			2,316			2,492
Restructured loans and leases		0			0			0			0			0			0			0			0
Other real estate owned, net		0			0			73			0			0			77
Total nonperforming assets		1,395			3,321			3,418			2,276			1,789			2,188			2,990			3,371

 Certain reclassifications of information currently reported have been made to conform to current presentation.

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
(Dollars in thousands and tax-equivalent)                         

	Three Months Ended December 31,
	2005								2004
	Average Balances			Annualized Interest		Yield/ Rate			Average Balance			Annualized Interest		Yield/ Rate
Assets
Residential mortgage loans	$	423,805		$	23,668		5.58	%	$	378,347		$	20,670		5.46	%
Residential construction loans		150,099			10,312		6.87			135,322			7,373		5.45
Commercial mortgage loans		407,459			28,366		6.96			379,857			24,530		6.46
Commercial construction loans		158,076			12,531		7.93			71,930			4,416		6.14
Commercial loans and leases		161,478			12,215		7.56			139,165			9,143		6.57
Consumer loans		333,671			20,034		6.00			303,639			14,727		4.85
Total loans and leases		1,634,588			107,126		6.55			1,408,260			80,859		5.74
Securities		589,552			31,644		5.37			801,871			39,989		4.99
Interest-bearing deposits with banks		588			18		3.06			4,664			90		1.93
Federal funds sold		14,710			591		4.02			57,642			1,073		1.86
TOTAL EARNING ASSETS		2,239,438			139,379		6.22	%		2,272,437			122,011		5.38	%
Less: allowance for credit losses		(16,470	)							(14,812	)
Cash and due from banks		48,396								44,235
Premises and equipment, net		45,708								41,544
Other assets		104,653								97,725
Total assets	$	2,421,725							$	2,441,129
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	235,711		$	667		0.28	%	$	238,771		$	614		0.26	%
Regular savings deposits		207,740			909		0.44			231,196			764		0.33
Money market savings deposits		373,535			8,226		2.20			371,382			3,439		0.93
Time deposits		539,513			16,930		3.14			466,728			10,790		2.31
Total interest-bearing deposits		1,356,499			26,732		1.97			1,308,077			15,607		1.19
Borrowings		377,127			14,554		3.86			497,014			19,576		3.94
TOTAL INTEREST-BEARING LIABILITIES		1,733,626			41,286		2.38			1,805,091			35,183		1.95
Net interest income and spread*				$	98,093		3.84	%				$	86,828		3.43	%
Noninterest-bearing demand deposits		452,738								419,723
Other liabilities		20,872								16,689
Stockholder's equity		214,489								199,626
Total liabilities and stockholders' equity	$	2,421,725							$	2,441,129
Interest income/earning assets							6.22	%							5.38	%
Interest expense/earning assets							1.84								1.55
Net interest margin							4.38	%							3.83	%

* 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 $7.1 million for the three months ended December 31, 2005 and $8.3 million for the three months ended December 31, 2004.                              

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
(Dollars in thousands and tax-equivalent)                                                                 

	Twelve Months Ended December 31,
	2005								2004
	Average Balances			Annualized Interest		Yield/ Rate			Average Balance			Annualized Interest		Yield/ Rate
Assets
Residential mortgage loans	$	408,369		$	22,563		5.53	%	$	360,737		$	19,503		5.41	%
Residential construction loans		141,760			9,065		6.39			114,361			5,603		4.90
Commercial mortgage loans		396,253			26,413		6.67			342,992			21,971		6.41
Commercial construction loans		120,554			8,757		7.26			60,151			3,533		5.87
Commercial loans and leases		154,520			10,981		7.11			134,630			8,584		6.38
Consumer loans		323,534			17,856		5.52			279,338			12,847		4.60
Total loans and leases		1,544,990			95,635		6.19			1,292,209			72,041		5.58
Securities		603,882			32,783		5.43			906,901			44,516		4.91
Interest-bearing deposits with banks		2,095			62		2.96			1,817			31		1.71
Federal funds sold		22,082			719		3.26			39,456			549		1.39
TOTAL EARNING ASSETS		2,173,049			129,199		5.95	%		2,240,383			117,137		5.23	%
Less: allowance for credit losses		(15,492	)							(14,823	)
Cash and due from banks		46,682								42,133
Premises and equipment, net		44,945								40,407
Other assets		102,877								98,218
Total assets	$	2,352,061							$	2,406,318
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	237,511		$	639		0.27	%	$	232,652		$	657		0.28	%
Regular savings deposits		216,951			801		0.37			216,257			762		0.35
Money market savings deposits		376,090			6,268		1.67			369,046			2,469		0.67
Time deposits		498,774			13,773		2.76			439,729			9,171		2.09
Total interest-bearing deposits		1,329,326			21,481		1.62			1,257,684			13,059		1.04
Borrowings		355,537			12,412		3.49			536,758			21,709		4.04
TOTAL INTEREST-BEARING LIABILITIES		1,684,863			33,893		2.01			1,794,442			34,768		1.94
Net interest income and spread*				$	95,306		3.94	%				$	82,369		3.29	%
Noninterest-bearing demand deposits		442,055								394,622
Other liabilities		21,001								19,698
Stockholder's equity		204,142								197,556
Total liabilities and stockholders' equity	$	2,352,061							$	2,406,318
Interest income/earning assets							5.95	%							5.23	%
Interest expense/earning assets							1.56								1.55
Net interest margin							4.39	%							3.68	%

 * 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 $7.1 million for the twelve months ended December 31, 2005 and $8.2 million for the twelve months ended December 31, 2004.