NEWS RELEASE

FOR IMMEDIATE RELEASE

SANDY SPRING BANCORP REPORTS THIRD QUARTER RESULTS

OLNEY, MARYLAND, October 23, 2008 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the third quarter of 2008 of $5.4 million ($.33 per diluted share) compared to $8.2 million ($.50 per diluted share) for the third quarter of 2007 and $5.7 million ($.34 per diluted share) for the linked second quarter of 2008. The third quarter of 2008 includes an estimated pre-tax impairment charge of $2.3 million to write down the value of goodwill in the Company’s leasing subsidiary, The Equipment Leasing Company, and a pre-tax pension credit of $1.5 million relating to the Company’s defined benefit pension plan which was frozen in 2007.

Net income for the nine-month period ending September 30, 2008 totaled $19.2 million ($1.17 per diluted share) compared to $23.9 million ($1.50 per diluted share) for the prior year period. The results for the current year-to-date include the goodwill impairment charge and pension credit mentioned above.

“Our company is a good old fashioned profitable community bank that has been conservatively managed for 140 years. We are locally run, well capitalized, locally headquartered, our employees live in the same neighborhoods where they work – and we are continuing to safely support the daily needs and growth plans of our local customers through this economic cycle,” said Hunter R. Hollar, Chairman and Chief Executive Officer. “These attributes have enabled us to grow into the second largest independent banking franchise headquartered in Maryland, with a high-value footprint that covers great demographics in the best markets between Washington, Baltimore, and Northern Virginia.”

“We think it is important to not lose sight of these facts, despite the daily reports of huge losses and ongoing major problems at many of the nation’s largest and best-known financial companies. The extraordinary events of the past month have served to reshape the entire U. S. financial system, yet we believe the well-managed better-performing community banks such as ours should have solid prospects now and in the future.”

“Sandy Spring Bancorp is not totally immune from the impact of recent economic events, including the slump in housing. We are recognizing the problem loans whose repayment is dependent on home sales and we are working hard to manage through these loans in order to minimize the impact on Sandy Spring Bank and on the borrower. Further, we are continuing to focus on controlling operating expenses and on high quality customer service and retention.”

Third Quarter and Year-to-Date Highlights:

The net interest margin declined to 4.02% for the third quarter compared to 4.16% for the third quarter of 2007 and increased compared to 3.96% for the linked second quarter of 2008. For the year-to-date, the net interest margin declined to 3.99% compared to 4.10% for 2007.

As mentioned above and in a prior press release dated October 7, 2008, the Company recognized an estimated pre-tax impairment charge of $2.3 million relating to the write down of the value of goodwill in its leasing subsidiary, The Equipment Leasing Company, based on completion of Phase I of the impairment analysis. Phase II is expected to be completed during the next reporting period, which may require an additional adjustment. Total goodwill allocated to The Equipment Leasing Company after this quarter’s write down is $1.9 million.

During the third quarter the Company recognized a credit of $1.5 million for prior service costs relating to its defined benefit pension plan. This plan was frozen during the fourth quarter of 2007 with the intention of terminating the plan at a still to be determined future date.

Noninterest expenses decreased 2% for the quarter compared to the third quarter of 2007 and increased 2% versus the linked second quarter of 2008. Excluding the goodwill impairment charge and the pre-tax pension credit in the third quarter of 2008, noninterest expenses decreased 5% compared to the third quarter of 2007. For the first nine months of 2008, noninterest expenses increased 1% compared to the first nine months of 2007. Excluding the goodwill impairment charge and the pre-tax pension credit, noninterest expenses decreased 1% versus the prior year-to-date. These decreases are consistent with the Company’s expectations for project LIFT, the Company’s previously disclosed initiative for managing operating expenses.

The provision for loan and lease losses totaled $6.5 million for the quarter compared to $0.8 million for the third quarter of 2007 and $6.2 million for the linked second quarter of 2008. For the year-to-date, the provision for loan and lease losses totaled $15.4 million compared to $2.4 million in 2007. These increases were in response to internal risk rating downgrades primarily in the residential real estate development portfolio.

The Company as of September 30, 2008 recorded a total risk-based capital ratio of 10.98%, a tier 1 risk-based capital ratio of 9.73% and a capital leverage ratio of 8.76%. Capital adequacy, as measured by these ratios, was above the “well-capitalized” regulatory requirement levels for the Company.

“Non-performing assets increased from the second quarter due to the volatile condition of the financial markets and, in particular, their effect on local residential real estate developers with whom we have long-standing relationships. Our foremost priority is to aggressively monitor credit quality and we have been extremely proactive in identifying and dealing with the problem credits which gave rise to the higher provision for loan and lease losses discussed above,” said Daniel J. Schrider, President of Sandy Spring Bancorp. "We continue to believe that our conservative loan underwriting standards and our comprehensive methodology for risk-rating our loans will serve us well for the long term as we manage through this most difficult economic environment."

Review of Balance Sheet and Credit Quality

Comparing September 30, 2008 balances to September 30, 2007, total assets increased 8% to $3.2 billion due mainly to continued growth in the commercial loan portfolio. Total loans and leases increased 13% to $2.5 billion compared to the same period for the prior year. This increase in loans was comprised mainly of a 14% increase in commercial loans. Compared to the linked second quarter of 2008, total loans increased 2%.

Customer funding sources, which include deposits plus other short-term borrowings from core customers, decreased 3% to $2.3 billion at September 30, 2008 compared to the same period for the prior year. On a linked quarter basis, such customer funding sources decreased 3% compared to the second quarter of 2008. This decrease was due primarily to continued intense competition for deposits in the Company’s market area. Borrowings from the Federal Home Loan Bank of Atlanta increased 163% to $484 million compared to the same period for the prior year. Compared to the linked second quarter of 2008, such borrowings increased 22%. These increases were necessary to fund loan growth due to the lack of growth in customer funding sources mentioned above.

Stockholders’ equity totaled $319.7 million at September 30, 2008, and represented 10.0% of total assets, compared to 10.5% at September 30, 2007. The Company at September 30, 2008 recorded a total risk-based capital ratio of 10.98%, a tier 1 risk-based capital ratio of 9.73% and a capital leverage ratio of 8.76% which were all above “well capitalized” regulatory requirement levels.

The provision for loan and lease losses totaled $6.5 million for the third quarter of 2008 compared to $0.8 million for the third quarter of 2007 and $6.2 million for the linked second quarter of 2008. As discussed above, these increases were primarily due to a higher level of nonperforming loans, specifically in the residential real estate development portfolio. Loan charge-offs, net of recoveries totaled $1.7 million for the third quarter of 2008 compared to $0.8 million for the third quarter of 2007. The allowance for loan and lease losses represented 1.54% of outstanding loans and leases and 56% of non-performing assets at September 30, 2008 compared to 1.07% of outstanding loans and leases and 91% of non-performing assets at September 30, 2007.

Non-performing assets totaled $68.4 million at September 30, 2008 compared to $64.9 million at June 30, 2008 and $25.8 million at September 30, 2007. The increase over the linked second quarter of 2008 was due primarily to two residential real estate development loans totaling $3.9 million, which management believes are adequately reserved or well secured. The increase over the same period for the prior year also reflects five residential real estate development loans, in addition to the two mentioned above, totaling $26.3 million, which management believes are also adequately reserved or well secured.

Income Statement Review

Comparing the third quarter of 2008 and 2007, net interest income increased by $0.9 million, or 3%, due primarily to continued growth in the loan portfolio which was largely offset by the decline in market interest rates due to the effect of previous interest rate cuts by the Federal Reserve during the first quarter of 2008 and increases in deposit rates during the third quarter. Such activity caused loan yields to decline faster than yields on deposits due to the Company’s asset sensitive position and produced a net interest margin decrease to 4.02% in 2008 from 4.16% in 2007.

Noninterest income decreased to $10.9 million in the third quarter of 2008 as compared to $11.1 million in the third quarter of 2007, a decrease of 2%. Service charges on deposit accounts increased 8% due primarily to higher overdraft fees while fees on sales of investment products increased 7%. These increases were offset by a decrease in gains on sales of mortgage loans of 46% due to lower mortgage volumes reflecting market conditions and a decrease of 15% in other noninterest income.

Noninterest expenses were $25.3 million in the third quarter of 2008 compared to $25.9 million in the third quarter of 2007, a decrease of $0.6 million or 2%. Excluding the goodwill impairment charge and pre-tax pension credit in the third quarter of 2008, noninterest expenses decreased $1.4 million or 5% compared to the same period for the prior year. Salaries and benefits expenses decreased 18%, while occupancy and equipment expenses decreased 7%. These decreases were somewhat offset by a 47% increase in marketing expenses due to costs to promote new deposit initiatives and an increase of 28% in outside data services due mainly to overall growth in customer accounts and branches acquired from the acquisition of CN Bancorp, Inc. and Potomac Bank in 2007. Other expenses decreased 6% due largely to the effect of project LIFT.

Comparing the first nine months of 2008 and 2007, net interest income increased by $4.4 million, or 6%, due primarily to continued growth in the loan portfolio which was offset to some extent by the decline in market interest rates and to higher rates offered to attract deposits. These factors produced a net interest margin decrease to 3.99% in 2008 from 4.10% in 2007.

Noninterest income increased to $35.3 million for the first nine months of 2008 as compared to $32.9 million for the first nine months of 2007, an increase of 7%. Service charges on deposit accounts increased 19% due primarily to higher overdraft fees while Visa® check fees increased 7% reflecting continued growth in electronic transactions. Other noninterest income increased 18% due primarily to higher accrued gains on mortgage commitments resulting from the adoption of a new accounting principle in the first quarter and due to valuation adjustments on matched commercial loan swaps. These increases were somewhat offset by decreases of 18% in gains on sales of mortgage loans due to lower mortgage volumes reflecting market conditions and 13% in insurance agency commissions due to lower fees on commercial lines and reduced contingency fees.

Noninterest expenses were $74.9 million for the first nine months of 2008 compared to $74.5 million for the first nine months of 2007, an increase of $0.4 million or 1%. Excluding the goodwill impairment charge and the pre-tax pension credit in the third quarter of 2008, noninterest expenses decreased $0.4 million or 1% compared to the same period for the prior year. Salaries and benefits expenses decreased 5% due largely to project LIFT. This decrease was somewhat offset by an increase of 16% in outside data services due mainly to the overall growth in the loan and deposit portfolios and the branches added from the two acquisitions mentioned above. Intangibles amortization increased 13% as a result of the two acquisitions.

Conference Call

The Company’s management will host a conference call to discuss its third quarter results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations’ section of the Sandy Spring Web site at www.sandyspringbank.com. Participants may call 877-795-3638; a password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 12:00 midnight (ET) November 23, 2008. A telephone voice replay will also be available during that same time period at 888-203-1112. Please use pass code #7448665 to access.

About Sandy Spring Bancorp/Sandy Spring Bank

With $3.2 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 West Financial Services, Inc. Sandy Spring Bancorp is the second 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 42 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George’s counties in Maryland, and Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of leasing, insurance and investment management services. Visit www.sandyspringbank.com to locate an ATM near you or for more information about Sandy Spring Bank.

For additional information or questions, please contact:

Hunter R. Hollar, Chief Executive Officer, or

Daniel J. Schrider, President, or

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

Sandy Spring Bancorp

17801 Georgia Avenue

Olney, Maryland 20832

1-800-399-5919

E-mail: HHollar@sandyspringbank.com

DSchrider@sandyspringbank.com

PMantua@sandyspringbank.com

Web site: www.sandyspringbank.com

Forward-Looking Statements

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

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

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2007, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov.

Sandy Spring Bancorp, Inc. and Subsidiaries

FINANCIAL HIGHLIGHTS (Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended									Nine Months Ended
	September 30,						%			September 30,						%
	2008			2007			Change			2008			2007			Change
Profitability for the period:
Net interest income	$	28,087		$	27,212			3	%	$	81,785		$	77,426			6	%
Provision for loan and lease losses		6,545			750			773			15,401			2,369			550
Noninterest income		10,879			11,130			(2	)		35,270			32,909			7
Noninterest expenses		25,267			25,899			(2	)		74,856			74,472			1
Income before income taxes		7,154			11,693			(39	)		26,798			33,494			(20	)
Net income	$	5,359		$	8,181			(34	)	$	19,215		$	23,895			(20	)

Return on average assets		0.67	%		1.08	%					0.82	%		1.10	%
Return on average equity		6.64	%		10.55	%					8.04	%		11.28	%
Net interest margin		4.02	%		4.16	%					3.99	%		4.10	%
Efficiency ratio - GAAP based *		64.84	%		67.55	%					63.95	%		67.50	%
Efficiency ratio - traditional *		58.27	%		62.30	%					59.06	%		62.51	%

Per share data:
Basic net income	$	0.33		$	0.50			(34)	%	$	1.18		$	1.50			(21)	%
Diluted net income		0.33			0.50			(34	)		1.17			1.50			(22	)
Dividends declared		0.24			0.23			4			0.72			0.69			4
Book value		19.51			18.92			3			19.51			18.92			3
Tangible book value		14.08			13.17			7			14.08			13.17			7
Average fully diluted shares		16,418,588			16,508,922						16,419,180			15,980,035

At period-end:
Assets	$	3,195,117		$	2,965,492			8	%	$	3,195,117		$	2,965,492			8	%
Deposits		2,248,812			2,280,102			(1	)		2,248,812			2,280,102			(1	)
Total Loans and leases		2,482,418			2,201,599			13			2,482,418			2,201,599			13
Securities		417,935			452,195			(8	)		417,935			452,195			(8	)
Stockholders' equity		319,700			310,624			3			319,700			310,624			3

Capital and credit quality ratios:
Average equity to average assets		10.14	%		10.19	%					10.21	%		9.72	%
Allowance for loan and lease losses to loans and leases		1.54	%		1.07	%					1.54	%		1.07	%
Nonperforming assets to total assets		2.14	%		0.87	%					2.14	%		0.87	%
Annualized net charge-offs to average loans and leases		0.28	%		0.16	%					0.12	%		0.07	%

* 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, the goodwill impairment loss and the pension prior service credit 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 (Unaudited)

(In thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Noninterest expenses-GAAP based	$	25,267		$	25,899		$	74,856		$	74,472
Net interest income plus noninterest income-GAAP based		38,966			38,342			117,055			110,335

Efficiency ratio-GAAP based		64.84	%		67.55	%		63.95	%		67.50	%

Noninterest expenses-GAAP based	$	25,267		$	25,899		$	74,856		$	74,472
Less non-GAAP adjustment:
Goodwill Impairment Loss		2,250			0			2,250			0
Amortization of intangible assets		1,103			1,123			3,344			2,956
Plus non-GAAP adjustment:
Pension prior service credit		1,473			0			1,473			0
Noninterest expenses-traditional ratio		23,387			24,776			70,735			71,516

Net interest income plus noninterest income-GAAP based		38,966			38,342			117,055			110,335
Plus non-GAAP adjustment:
Tax-equivalency		1,180			1,447			3,381			4,096
Less non-GAAP adjustments:
Securities gains		9			22			662			28
Net interest income plus noninterest income - traditional ratio		40,137			39,767			119,774			114,403

Efficiency ratio - traditional		58.27	%		62.30	%		59.06	%		62.51	%

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

	September 30 (Unaudited)						December 31
	2008			2007			2007
Assets
Cash and due from banks	$	55,321		$	58,698		$	63,432
Federal funds sold		19,712			13,375			22,055
Interest-bearing deposits with banks		483			483			365
Cash and cash equivalents		75,516			72,556			85,852

Residential mortgage loans held for sale (at fair value)		4,541			6,099			7,089
Investments available-for-sale (at fair value)		206,898			196,138			186,801
Investments held-to-maturity - fair value of $181,734 $241,984 and $240,995, respectively		178,690			237,231			234,706
Other equity securities		32,347			18,826			23,766

Total loans and leases		2,482,418			2,201,599			2,277,031
Less: allowance for loan and lease losses		(38,266	)		(23,567	)		(25,092	)
Net loans and leases		2,444,152			2,178,032			2,251,939

Premises and equipment, net		52,441			55,016			54,457
Other real estate owned		1,698			431			461
Accrued interest receivable		12,491			16,008			14,955
Goodwill		75,701			76,625			76,585
Other intangible assets, net		13,286			17,754			16,630
Other assets		97,356			90,776			90,712
Total assets	$	3,195,117		$	2,965,492		$	3,043,953

Liabilities
Noninterest-bearing deposits	$	468,101		$	453,536		$	434,053
Interest-bearing deposits		1,780,711			1,826,566			1,839,815
Total deposits		2,248,812			2,280,102			2,273,868

Short-term borrowings		484,595			298,083			373,972
Other long-term borrowings		76,828			7,793			17,553
Subordinated debentures		35,000			35,000			35,000
Accrued interest payable and other liabilities		30,182			33,890			27,920
Total liabilities		2,875,417			2,654,868			2,728,313

Stockholders' Equity
Common stock — par value $1.00; shares authorized 50,000,000; shares issued and outstanding 16,383,671 16,420,911 and 16,349,317, respectively		16,384			16,421			16,349
Additional paid in capital		85,065			85,982			83,970
Retained earnings		222,126			211,787			216,376
Accumulated other comprehensive loss		(3,875	)		(3,566	)		(1,055	)
Total stockholders' equity		319,700			310,624			315,640
Total liabilities and stockholders' equity	$	3,195,117		$	2,965,492		$	3,043,953

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

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2008		2007		2008		2007
Interest income:
Interest and fees on loans and leases	$	37,263	$	39,789	$	112,428	$	112,756
Interest on loans held for sale		100		234		318		701
Interest on deposits with banks		6		590		79		1,081
Interest and dividends on securities:
Taxable		3,171		3,211		7,749		10,832
Exempt from federal income taxes		1,409		2,468		6,712		7,776
Interest on federal funds sold		99		666		529		1,720
Total interest income		42,048		46,958		127,815		134,866
Interest expense:
Interest on deposits		9,325		15,898		32,930		45,263
Interest on short-term borrowings		3,544		3,198		9,886		10,265
Interest on long-term borrowings		1,092		650		3,214		1,912
Total interest expense		13,961		19,746		46,030		57,440
Net interest income		28,087		27,212		81,785		77,426
Provision for loan and lease losses		6,545		750		15,401		2,369
Net interest income after provision for loan and lease losses		21,542		26,462		66,384		75,057
Noninterest income:
Securities gains		9		22		662		28
Service charges on deposit accounts		3,249		2,999		9,481		7,937
Gains on sales of mortgage loans		397		738		1,772		2,149
Fees on sales of investment products		820		765		2,547		2,471
Trust and investment management fees		2,380		2,365		7,282		7,007
Insurance agency commissions		1,282		1,294		4,725		5,422
Income from bank owned life insurance		742		720		2,183		2,097
Visa check fees		727		730		2,184		2,037
Other income		1,273		1,497		4,434		3,761
Total noninterest income		10,879		11,130		35,270		32,909
Noninterest expenses:
Salaries and employee benefits		11,949		14,654		39,574		41,864
Occupancy expense of premises		2,732		2,946		8,150		8,072
Equipment expenses		1,515		1,631		4,514		4,734
Marketing		526		359		1,511		1,563
Outside data services		1,116		870		3,319		2,873
Amortization of intangible assets		1,103		1,123		3,344		2,956
Goodwill impairment loss		2,250		0		2,250		0
Other expenses		4,076		4,316		12,194		12,410
Total noninterest expenses		25,267		25,899		74,856		74,472
Income before income taxes		7,154		11,693		26,798		33,494
Income tax expense		1,795		3,512		7,583		9,599
Net income	$	5,359	$	8,181	$	19,215	$	23,895
Basic net income per share	$	0.33	$	0.50	$	1.18	$	1.50
Diluted net income per share		0.33		0.50		1.17		1.50
Dividends declared per share		0.24		0.23		0.72		0.69

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

Sandy Spring Bancorp, Inc. and Subsidiaries

Historical Trends in Quarterly Financial Data (Unaudited)

(Dollars in thousands, except per share data)

2008

2007

Profitability for the quarter:

Tax-equivalent interest income

43,228

42,903

45,062

47,519

48,405

47,378

43,179

Interest expense

13,961

14,723

17,343

18,709

19,746

19,815

17,879

Tax-equivalent net interest income

29,267

28,180

27,719

28,810

28,659

27,563

25,300

Tax-equivalent adjustment

1,180

1,061

1,140

1,410

1,447

1,364

1,285

Provision for loan and lease losses

6,545

6,189

2,667

1,725

750

780

839

Noninterest income

10,879

11,695

12,696

11,380

11,130

10,873

10,906

Noninterest expenses

25,267

24,886

24,703

25,316

25,899

24,959

23,614

Income before income taxes

7,154

7,739

11,905

11,739

11,693

11,333

10,468

Income tax expense

1,795

2,088

3,700

3,372

3,512

3,164

2,923

Net Income

5,359

5,651

8,205

8,367

8,181

8,169

7,545

Financial ratios:

Return on average assets

0.67

0.73

1.07

1.10

1.08

1.10

1.12

Return on average equity

6.64

7.09

10.45

10.69

10.55

11.45

11.96

Net interest margin

4.02

3.96

3.99

4.19

4.16

4.08

4.07

Efficiency ratio - GAAP based *

64.84

64.11

62.90

65.28

67.55

67.33

67.62

Efficiency ratio - traditional *

58.27

59.73

59.18

60.22

62.30

62.26

63.01

Per share data:

Basic net income

0.33

0.35

0.50

0.51

0.50

0.51

0.49

Diluted net income

0.33

0.34

0.50

0.51

0.50

0.51

0.49

Dividends declared

0.24

0.23

Book value

19.51

19.56

19.50

19.31

18.92

18.62

17.51

Tangible book value

14.08

13.89

13.77

13.60

13.17

12.76

13.11

Average fully diluted shares

16,418,588

16,427,213

16,407,778

16,422,161

16,508,922

16,069,771

15,400,865

Noninterest income breakdown:

Securities gains

574

Service charges on deposit accounts

3,249

3,202

3,030

3,211

2,999

2,630

2,308

Gains on sales of mortgage loans

397

653

722

590

738

773

638

Fees on sales of investment products

820

905

822

518

765

906

800

Trust and investment management fees

2,380

2,505

2,397

2,581

2,365

2,361

2,281

Insurance agency commissions

1,282

1,357

2,086

1,203

1,294

1,438

2,690

Income from bank owned life insurance

742

727

714

732

720

693

684

Visa check fees

727

761

696

747

730

717

590

Other income

1,273

1,506

1,655

1,783

1,497

1,351

913

Total

10,879

11,695

12,696

11,380

11,130

10,873

10,906

Noninterest expense breakdown:

Salaries and employee benefits

11,949

13,862

13,763

13,343

14,654

13,776

13,434

Occupancy expense of premises

2,732

2,619

2,799

2,288

2,946

2,709

2,417

Equipment expenses

1,515

1,560

1,439

1,829

1,631

1,501

1,602

Marketing

526

488

497

674

359

675

529

Outside data services

1,116

1,081

1,122

1,094

870

1,077

926

Amortization of intangible assets

1,103

1,117

1,124

1,123

1,031

802

Goodwill impairment loss

2,250

Other expenses

4,076

4,159

3,959

4,964

4,316

4,190

3,904

Total

25,267

24,886

24,703

25,316

25,899

24,959

23,614

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 expenses from noninterest expenses; excludes security 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

Historical Trends in Quarterly Financial Data (Unaudited)

(Dollars in thousands, except per share data)

2008

2007

Balance sheets at quarter end:

Residential mortgage loans

452,815

461,000

459,768

456,305

439,091

427,252

404,177

Residential construction loans

221,630

199,602

183,690

166,981

154,908

154,444

144,744

Commercial mortgage loans

804,728

752,905

732,692

662,837

645,790

660,004

621,692

Commercial construction loans

247,930

273,059

256,714

262,840

246,569

236,278

225,108

Commercial loans and leases

358,097

356,256

354,509

351,773

343,653

316,409

282,854

Consumer loans

397,218

386,126

376,650

376,295

371,588

370,621

357,607

Total loans and leases

2,482,418

2,428,948

2,364,023

2,277,031

2,201,599

2,165,008

2,036,182

Less: allowance for loan and lease losses

(38,266

)

(33,435

)

(27,887

)

(25,092

)

(23,567

)

(23,661

)

(22,186

)

Net loans and leases

2,444,152

2,395,513

2,336,136

2,251,939

2,178,032

2,121,347

2,013,996

Goodwill

75,701

78,376

78,111

76,585

76,625

77,457

53,913

Other intangible assets, net

13,286

14,390

15,507

16,630

17,754

18,878

15,244

Total assets

3,195,117

3,164,123

3,160,896

3,043,953

2,965,492

3,101,409

2,945,477

Total deposits

2,248,812

2,294,791

2,340,568

2,273,868

2,280,102

2,386,226

2,274,322

Customer repurchase agreements

77,630

93,919

101,666

98,015

122,130

113,622

114,712

Total stockholders' equity

319,700

320,218

318,967

315,640

310,624

306,255

275,319

Quarterly average balance sheets:

Residential mortgage loans

463,778

462,858

463,597

453,568

441,190

426,496

406,886

Residential construction loans

210,363

193,822

174,626

163,922

151,306

151,785

151,194

Commercial mortgage loans

779,652

733,905

690,289

649,101

647,659

630,335

565,277

Commercial construction loans

253,806

261,360

266,098

252,705

244,975

239,299

203,371

Commercial loans and leases

356,327

359,287

351,862

339,744

323,439

300,325

246,218

Consumer loans

391,640

380,911

378,261

374,572

370,585

362,221

353,668

Total loans and leases

2,455,566

2,392,143

2,324,733

2,233,612

2,179,154

2,110,461

1,926,614

Securities

423,082

431,182

427,819

451,168

458,984

523,507

551,566

Total earning assets

2,898,968

2,862,012

2,795,453

2,725,801

2,733,572

2,711,225

2,518,797

Total assets

3,167,145

3,134,440

3,072,428

3,006,086

3,019,065

2,979,820

2,743,890

Total interest-bearing liabilities

2,363,299

2,344,266

2,311,629

2,222,387

2,214,606

2,212,376

2,048,323

Noninterest-bearing demand deposits

453,281

441,330

412,369

439,967

463,018

450,887

408,954

Total deposits

2,264,990

2,306,867

2,260,837

2,283,122

2,340,004

2,290,413

2,099,409

Customer repurchase agreements

81,158

92,968

94,841

112,828

113,425

109,187

101,805

Stockholders' equity

321,028

320,409

315,755

310,605

307,564

286,040

255,781

Capital and credit quality measures:

Average equity to average assets

10.14

10.22

10.28

10.33

10.19

9.60

9.32

Allowance for loan and lease losses to loan and leases

1.54

1.38

1.18

1.10

1.07

1.09

Nonperforming assets to total assets

2.14

2.05

1.48

1.15

0.87

0.71

0.24

Annualized net charge-offs (recoveries) to average loans and leases

0.28

0.11

(0.02

0.04

0.16

0.05

0.00

Miscellaneous data:

Net charge-offs (recoveries)

1,714

642

($129

)

200

844

265

($17

)

Nonperforming assets:

Non-accrual loans and leases

64,246

60,373

37,353

23,040

17,362

18,818

1,982

Loans and leases 90 days past due

2,074

2,538

8,244

11,362

8,009

3,347

5,084

Restructured loans and leases

395

655

Other real estate owned, net

1,698

1,352

661

461

431

Total nonperforming assets

68,413

64,918

46,913

34,863

25,802

22,165

7,066

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)

(Dollars in thousands and tax-equivalent)

	Three Months Ended September
	2008								2007
						Annualized								Annualized
	Average					Average			Average					Average
	Balances			Interest		Yield/Rate			Balances			Interest		Yield/Rate
Assets
Residential mortgage loans	$	463,778		$	7,150		6.17	%	$	441,190		$	6,773		6.14	%
Residential construction loans		210,363			3,132		5.92			151,306			2,754		7.22
Commercial mortgage loans		779,652			12,936		6.60			647,659			11,499		7.04
Commercial construction loans		253,806			3,260		5.11			244,975			5,593		9.06
Commercial loans and leases		356,327			5,822		6.51			323,439			6,828		8.38
Consumer loans		391,640			5,063		5.14			370,585			6,576		7.07
Total loans and leases		2,455,566			37,363		6.16			2,179,154			40,023		7.30
Securities*		423,082			5,760		5.38			458,984			7,126		6.11
Interest-bearing deposits with banks		1,311			6		1.91			44,986			590		5.20
Federal funds sold		19,009			99		2.07			50,448			666		5.24
TOTAL EARNING ASSETS		2,898,968			43,228		5.93	%		2,733,572			48,405		7.03	%

Less: allowance for loan and lease losses		(34,897	)							(23,964	)
Cash and due from banks		49,860								53,935
Premises and equipment, net		52,912								54,546
Other assets		200,302								200,976
Total assets	$	3,167,145							$	3,019,065

Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	242,488		$	177		0.29	%	$	239,683		$	223		0.37	%
Regular savings deposits		155,039			118		0.30			170,548			128		0.30
Money market savings deposits		647,258			2,410		1.48			683,909			6,614		3.84
Time deposits		766,924			6,620		3.43			782,846			8,933		4.53
Total interest-bearing deposits		1,811,709			9,325		2.05			1,876,986			15,898		3.36
Borrowings		551,590			4,636		3.35			337,620			3,848		4.53
TOTAL INTEREST-BEARING LIABILITIES		2,363,299			13,961		2.35			2,214,606			19,746		3.54


Noninterest-bearing demand deposits		453,281								463,018
Other liabilities		29,537								33,877
Stockholder's equity		321,028								307,564
Total liabilities and stockholders' equity	$	3,167,145							$	3,019,065

Net interest income and spread on a fully tax equivalent basis					29,267		3.58	%					28,659		3.49	%
Less: tax equivalent adjustment					1,180								1,447
Net interest income					28,087								27,212

Interest income/earning assets							5.93	%							7.03	%
Interest expense/earning assets							1.91								2.87
Net interest margin							4.02	%							4.16	%

* 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 7.51% (or a combined marginal federal and state rate of 39.88%) for 2008 and a marginal state income tax rate of 6.37% (or a combined marginal federal and state rate of 39.14%) for 2007, 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 $4.5 million in 2008 and $5.5 million in 2007.

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)

(Dollars in thousands and tax-equivalent)

	Nine Months Ended September 30,
	2008								2007
						Annualized								Annualized
	Average					Average			Average					Average
	Balances			Interest		Yield/Rate			Balances			Interest		Yield/Rate
Assets
Residential mortgage loans	$	465,832		$	21,571		6.17	%	$	424,147		$	19,264		6.06	%
Residential construction loans		193,001			8,728		6.04			151,429			8,230		7.27
Commercial mortgage loans		734,780			37,205		6.76			615,648			33,350		7.24
Commercial construction loans		260,397			11,141		5.72			229,368			15,602		9.09
Commercial loans and leases		355,827			18,369		6.89			290,190			18,018		8.30
Consumer loans		383,633			15,732		5.48			362,220			18,993		7.04
Total loans and leases		2,393,470			112,746		6.29			2,073,002			113,457		7.31
Securities*		427,345			17,842		5.59			511,013			22,704		5.95
Interest-bearing deposits with banks		4,119			79		2.56			27,681			1,081		5.22
Federal funds sold		27,381			529		2.58			43,936			1,720		5.24
TOTAL EARNING ASSETS		2,852,315			131,196		6.14	%		2,655,632			138,962		7.00	%

Less: allowance for loan and lease losses		(29,750	)							(22,439	)
Cash and due from banks		49,651								54,448
Premises and equipment, net		53,582								51,786
Other assets		198,930								175,021
Total assets	$	3,124,728							$	2,914,448

Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	244,943		$	528		0.29	%	$	237,173		$	626		0.35	%
Regular savings deposits		156,093			365		0.31			168,957			421		0.33
Money market savings deposits		680,189			9,760		1.92			611,881			17,349		3.79
Time deposits		760,569			22,277		3.91			784,995			26,867		4.58
Total interest-bearing deposits		1,841,794			32,930		2.39			1,803,006			45,263		3.36
Borrowings		498,023			13,100		3.51			356,039			12,177		4.57
TOTAL INTEREST-BEARING LIABILITIES		2,339,817			46,030		2.63			2,159,045			57,440		3.56


Noninterest-bearing demand deposits		435,725								441,151
Other liabilities		30,115								30,916
Stockholder's equity		319,071								283,336
Total liabilities and stockholders' equity	$	3,124,728							$	2,914,448

Net interest income and spread on a fully tax equivalent basis					85,166		3.51	%					81,522		3.44	%
Less: tax equivalent adjustment					3,381								4,096
Net interest income					81,785								77,426

Interest income/earning assets							6.14	%							7.00	%
Interest expense/earning assets							2.15								2.90
Net interest margin							3.99	%							4.10	%

*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 7.51% (or a combined marginal federal and state rate of 39.88%) for 2008 and a marginal state income tax rate of 6.37% (or a combined marginal federal and state rate of 39.14%) for 2007, 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 $4.7 million in 2008 and $5.7 million in 2007.