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):  July 23, 2009

SANDY SPRING BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	000-19065	52-1532952
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

17801 Georgia Avenue, Olney, Maryland  20832

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:  (301) 774-6400

Not Applicable

(Former name or former address, if changed since last report)

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

On July 23, 2009, Sandy Spring Bancorp, Inc. issued a news release announcing its results of operations and financial condition for the quarter ended June 30, 2009.  A copy of the news release is included as Exhibit 99.1 to this report.

Item 9.01   Financial Statements and Exhibits

Exhibits

Number	Description
99.1	Press Release dated July 23, 2009

2

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.
	(Registrant)
Date: July 23, 2009	By:	/s/ Daniel J. Schrider
		Daniel J. Schrider
		President and Chief Executive Officer

3

EX-99.1

        NEWS RELEASE

FOR IMMEDIATE RELEASE                                                                                                           

SANDY SPRING BANCORP REPORTS SECOND QUARTER RESULTS

OLNEY, MARYLAND, July 23, 2009 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced a net loss available to common shareholders for the second quarter of 2009 of $1.5 million (($.09) per diluted share) compared to net income of $5.7 million ($.34 per diluted share) for the second quarter of 2008 and net income available to common shareholders of $1.0 million ($.06 per diluted share) for the first quarter of 2009. The second quarter of 2009 included an FDIC special assessment charge of $1.7 million and a provision for loan and lease losses of $10.6 million related primarily to the residential real estate development portfolio.

Net loss available to common shareholders for the six-month period ending June 30, 2009 totaled $465,000 (($.03) per diluted share) compared to net income of $13.9 million ($.84 per diluted share) for the prior year period. The results for the year-to-date include a provision for loan and lease losses totaling $21.2 million for the first six months of 2009 and the FDIC special assessment charge mentioned previously.

“Our second quarter and year-to-date earnings were reduced primarily by the higher level of the provision for loan losses and the special assessment by the FDIC when compared to 2008. As a result of the local and regional economies’ negative impact on our clients, we have continued to build reserves mainly in the residential real estate portfolio,” said Daniel J. Schrider, president and chief executive officer.

“However, on the deposit side of the balance sheet we continued to experience strong deposit growth in the second quarter as our customer funding sources increased 15% over the prior year. This growth is being driven largely by our strategy to capitalize on opportunities resulting from several recent local acquisitions and related efforts to develop new multi-product customer relationships that we can rely upon for the long term to grow our market share in the Mid-Atlantic region.”

“Total loan balances declined for the first six months of 2009 compared to 2008 as overall demand continued to be soft. However, residential mortgage lending was a bright spot as we closed over $250 million in residential mortgage loans during the first six months of the year compared to $146 million in the first six months of last year,” said Schrider. “We view the growth in both residential mortgage activity and deposits as evidence of our success in growing the number of area households that are expanding their use of our full menu of financial services.”

Second Quarter Highlights:

·  The provision for loan and lease losses totaled $10.6 million for the quarter compared to $6.2 million for the second quarter of 2008 and $10.6 million for the first quarter of 2009.  The provision was due to continued internal risk rating downgrades, charge-offs and additional specific reserves primarily related to loans in the residential real estate development portfolio.

·  The net interest margin was 3.11% for the second quarter compared to 3.96% for the second quarter of 2008 and 3.39% for the first quarter of 2009.

·  Noninterest expenses increased 8% for the quarter compared to the second quarter of 2008 and increased 11% versus the first quarter of 2009. Excluding the FDIC special assessment charge in the second quarter, noninterest expenses increased 1% compared to the second quarter of 2008.These results reflect a continuing emphasis on expense control which originated with project LIFT, a previously disclosed initiative for improved management of operating expenses.

·  Customer funding sources, comprised of deposits and other short-term borrowings from core customers, increased 15% compared to the balance at June 30, 2008, and also increased 4% over the balance at March 31, 2009. These increases were due primarily to growth in the Company’s new Premier money market savings product and growth in noninterest-bearing deposits.

Review of Balance Sheet and Credit Quality

Comparing June 30, 2009 balances to June 30, 2008, total assets increased 14% to $3.6 billion. Asset growth was reflected primarily in increases of 105% in investments and 64% in cash and cash equivalents.  This growth was due mainly to a 16% increase in deposits. Total loans and leases decreased 2% to $2.4 billion compared to the prior year. This decrease in loans was due mainly to a net 11% decrease in residential mortgage loans which was somewhat offset by a 5% increase in consumer loans.  Total loans decreased 3% compared to the first quarter of 2009.

Customer funding sources, which include deposits plus other short-term borrowings from core customers, increased 15% to $2.7 billion at June 30, 2009 compared to the prior year.  Such customer funding sources also increased 4% compared to the first quarter of 2009. These increases were due primarily to growth resulting from the Company’s new Premier money market account as well as growth in noninterest-bearing deposits.

Stockholders’ equity totaled $391.3 million at June 30, 2009, and represented 10.8% of total assets, compared to 10.1% at June 30, 2008.   At June 30, 2009 the Company had a total risk-based capital ratio of 13.86%, a tier 1 risk-based capital ratio of 12.60% and a tier 1 leverage ratio of 9.95% which were all above amounts needed in order to be categorized as “well capitalized” for regulatory purposes.

The provision for loan and lease losses totaled $10.6 million for the second quarter of 2009 compared to $6.2 million for the second quarter of 2008 and $10.6 million for the first quarter of 2009. As discussed above, these increases were primarily due to internal risk rating downgrades, charge-offs and additional specific reserves primarily related to loans in the residential real estate development portfolio.

Loan charge-offs, net of recoveries totaled $12.1 million for the second quarter of 2009 compared to net charge-offs of $0.6 million for the second quarter of 2008 and net charge-offs of $1.3 million for the first quarter of 2009. The allowance for loan and lease losses represented 2.44% of outstanding loans and leases and 42% of non-performing loans at June 30, 2009 compared to 2.43% of outstanding loans and leases and 50% of non-performing loans at March 31, 2009 and 1.38% of outstanding loans and leases and 53% of non-performing loans at June 30, 2008.

Non-performing assets totaled $146.3 million at June 30, 2009 compared to $64.9 million at June 30, 2008 and $125.8 million at March 31, 2009. The increase over the prior year was due primarily to $60.5 million in real estate development loans, $6.2 million in residential mortgage loans and $3.2 million in commercial loans that together totaled $69.9 million. The increase over the first quarter of 2009 was due primarily to $23.4 million in residential real estate development loans and $6.2 million in residential mortgage loans.

Income Statement Review

Comparing the second quarter of 2009 and 2008, net interest income decreased by $2.7 million, or 10%, due primarily to the decline in loan demand caused by the current state of the economy. This required the Company to invest the funds generated from deposit growth in investment securities with lower comparative yields thus exerting downward pressure on the net interest margin. Net interest income for the quarter was also negatively affected by the growth in nonperforming loans discussed above. These factors produced a net interest margin decrease to 3.11% in 2009 from 3.96% in 2008.

Noninterest income decreased 6% to $11.0 million in the second quarter of 2009 as compared to $11.7 million in the second quarter of 2008. Service charges on deposit accounts decreased $0.4 million or 11% due primarily to lower overdraft fees. Fees on sales of investment products decreased $0.3 million or 31% compared to the second quarter of 2008 and trust and investment management fees declined $0.1 million or 5%, both of which were due primarily to a decline in assets under management. In addition, insurance agency commissions decreased $0.3 million or 23% due to the overall effect of the current economy. These decreases were somewhat offset by an increase in gains on sales of mortgage loans of $0.1 million or 20% due largely to higher mortgage refinancing volumes reflecting market conditions. Other noninterest income also increased $0.4 million or 23% compared to the second quarter of 2008.

Noninterest expenses were $26.9 million in the second quarter of 2009 compared to $24.9 million in the second quarter of 2008, an increase of $2.0 million or 8%. This increase was due in large part to an increase of $2.4 million in FDIC insurance expense resulting primarily from a one time special assessment by the FDIC which totaled $1.7 million. Salaries and benefits expenses decreased $0.2 million or 1%, while occupancy and equipment expenses decreased $0.3 million or 6% compared to the second quarter of 2008. The overall noninterest expense performance continues to reflect the effect of stringent expense controls implemented as part of project LIFT.

Comparing the first six months of 2009 and 2008, net interest income decreased by $4.2 million, or 8% due primarily to the downward pressure on the net interest margin resulting from the lack of loan demand which caused the Company to invest the funds generated by the growth in deposits into investment securities which carry a lower yield as mentioned above. Net interest income for the year-to-date was also negatively affected by the growth in nonperforming loans mentioned above. These factors produced a net interest margin decrease to 3.24% in 2009 from 3.97% in 2008.

Noninterest income decreased 6% to $23.0 million for the first six months of 2009 as compared to $24.4 million in 2008.  Service charges on deposit accounts decreased $0.5 million or 8% due primarily to lower overdraft fees while insurance agency commissions decreased $0.4 million or 10%. Fees on sales of investment products decreased $0.4 million or 23% and trust and investment management fees declined $0.2 million or 5%, both of which were due primarily to a decline in assets under management. These decreases were somewhat offset by an increase in gains on sales of mortgage loans of $0.4 million or 31% due largely to higher mortgage refinancing volumes reflecting market conditions. Other noninterest income also increased $0.2 million or 8% compared to 2008.

Noninterest expenses were $51.1 million for the first six months of 2009 compared to $49.6 million in 2008, an increase of $1.5 million or 3%. This increase was due primarily to an increase of $2.9 million in FDIC insurance expense which includes a one time special assessment in the second quarter by the FDIC of $1.7 million. Salaries and benefits expenses decreased $0.7 million or 3%, while marketing expenses decreased $0.1 million or 8% and expenses for outside data services decreased $0.4 million or 20% compared to the first six months of 2008.

Conference Call

The Company’s management will host a conference call to discuss its second quarter results today at 2:00 P.M. (ET).   A live Web cast of the conference call is available through the Investor Relations’ section of the Sandy Spring Web site at www.sandyspringbank.com.  Participants may call 888-569-5033. 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) August 23, 2009.  A telephone voice replay will also be available during that same time period at 888-203-1112.  Please use pass code #7314001 to access.

About Sandy Spring Bancorp/Sandy Spring Bank

With $3.6 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 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:

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

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

Sandy Spring Bancorp

17801 Georgia Avenue

Olney, Maryland 20832

1-800-399-5919

Email:     DSchrider@sandyspringbank.com

 PMantua@sandyspringbank.com

Web site:  www.sandyspringbank.com

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, 2008, 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									Six Months Ended
	June 30,						%			June 30,						%
	2009			2008			Change			2009			2008			Change
Profitability for the period:
Net interest income	$	24,448		$	27,119			(10	)%	$	49,473		$	53,698			(8	)%
Provision for loan and lease losses		10,615			6,189			72			21,228			8,856			140
Noninterest income		11,030			11,695			(6	)		23,004			24,391			(6	)
Noninterest expenses		26,858			24,886			8			51,108			49,589			3
Income (loss) before income taxes		(1,995	)		7,739			(126	)		141			19,644			(99	)
Net income (loss)	$	(280	)	$	5,651			(105	)	$	1,937		$	13,856			(86	)
Net income (loss) available to common shareholders	$	(1,482	)	$	5,651			(126	)	$	(465	)	$	13,856			(103	)
Return on average assets (1)		(0.17	)%		0.73	%					(0.03	)%		0.90	%
Return on average common equity (1)		(1.90	)%		7.09	%					(0.30	)%		8.76	%
Net interest margin		3.11	%		3.96	%					3.24	%		3.97	%
Efficiency ratio - GAAP *		75.70	%		64.11	%					70.52	%		63.50	%
Efficiency ratio - Non-GAAP *		70.58	%		59.73	%					65.85	%		59.45	%
Per share data:
Basic net income (loss)	$	(0.02	)	$	0.35			(106	)%	$	0.12		$	0.85			(86	)%
Basic net income (loss) per common share		(0.09	)		0.35			(126	)		(0.03	)		0.85			(104	)
Diluted net income (loss)		(0.02	)		0.34			(106	)		0.12			0.84			(86	)
Diluted net income (loss) per common share		(0.09	)		0.34			(126	)		(0.03	)		0.84			(104	)
Dividends declared per common share		0.12			0.24			(50	)		0.24			0.48			(50	)
Book value		18.92			19.56			(3	)		18.92			19.56			(3	)
Average fully diluted shares		16,444,252			16,427,213						16,424,490			16,417,511
At period-end:
Assets	$	3,617,497		$	3,164,123			14	%	$	3,617,497		$	3,164,123			14	%
Deposits		2,650,485			2,294,791			16			2,650,485			2,294,791			16
Total loans and leases		2,389,389			2,428,948			(2	)		2,389,389			2,428,948			(2	)
Securities		875,374			427,232			105			875,374			427,232			105
Stockholders' equity		391,262			320,218			22			391,262			320,218			22
Capital and credit quality ratios:
Average equity to average assets		11.08	%		10.22	%					11.33	%		10.25	%
Allowance for loan and lease losses to loans and leases		2.44	%		1.38	%					2.44	%		1.38	%
Nonperforming assets to total assets		4.05	%		2.05	%					4.05	%		2.05	%
Annualized net charge-offs to average loans and leases		1.97	%		0.11	%					1.09	%		0.04	%

(1) Calculation utilizes net income available to common shareholders

* The GAAP 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.

Sandy Spring Bancorp, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Efficiency Ratios (Unaudited)

(In thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
GAAP efficiency ratio:
Noninterest expenses–GAAP	$	26,858		$	24,886		$	51,108		$	49,589
Net interest income plus noninterest income		35,478			38,814			72,477			78,089
Efficiency ratio–GAAP		75.70	%		64.12	%		70.52	%		63.50	%
Non-GAAP efficiency ratio:
Noninterest expenses	$	26,858		$	24,886		$	51,108		$	49,589
Less non-GAAP adjustment:
Amortization of intangible assets		1,047			1,117			2,102			2,241
Noninterest expenses–as adjusted		25,811			23,769			49,006			47,348
Net interest income plus noninterest income		35,478			38,814			72,477			78,089
Plus non-GAAP adjustment:
Tax-equivalency		1,123			1,061			2,132			2,201
Less non-GAAP adjustments:
Securities gains		30			79			192			653
Net interest income plus noninterest income – as adjusted		36,571			39,796			74,417			79,637
Efficiency ratio – Non-GAAP		70.58	%		59.73	%		65.85	%		59.45	%

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

	June 30 (Unaudited)						December 31
	2009			2008			2008
Assets
Cash and due from banks	$	43,360		$	62,630		$	44,738
Federal funds sold		2,034			11,678			1,110
Interest-bearing deposits with banks		77,090			462			59,381
Cash and cash equivalents		122,484			74,770			105,229
Residential mortgage loans held for sale (at fair value)		14,494			12,087			11,391
Investments available-for-sale (at fair value)		697,314			218,323			291,727
Investments held-to-maturity - fair value of $150,109 $184,540 and $175,908, respectively		145,937			180,556			171,618
Other equity securities		32,123			28,353			29,146
Total loans and leases		2,389,389			2,428,948			2,490,646
Less: allowance for loan and lease losses		(58,317	)		(33,435	)		(50,526	)
Net loans and leases		2,331,072			2,395,513			2,440,120
Premises and equipment, net		50,460			52,928			51,410
Other real estate owned		6,829			1,352			2,860
Accrued interest receivable		13,007			12,658			11,810
Goodwill		76,816			78,376			76,248
Other intangible assets, net		10,080			14,390			12,183
Other assets		116,881			94,817			109,896
Total assets	$	3,617,497		$	3,164,123		$	3,313,638
Liabilities
Noninterest-bearing deposits	$	553,604		$	480,861		$	461,517
Interest-bearing deposits		2,096,881			1,813,930			1,903,740
Total deposits		2,650,485			2,294,791			2,365,257
Short-term borrowings		496,463			421,881			421,074
Long-term borrowings		14,434			67,070			66,584
Subordinated debentures		35,000			35,000			35,000
Accrued interest payable and other liabilities		29,853			25,163			33,861
Total liabilities		3,226,235			2,843,905			2,921,776
Stockholders' Equity
Preferred stock— par value $1.00 (liquidation preference of $1,000 per share) shares authorized 83,094, 0 and 83,094, respectively;shares issued and outstanding 83,094, 0 and 83,094, respectively (discount of $3,329, 0 and $3,654, respectively)		79,765			-			79,440
Common stock — par value $1.00; shares authorized 49,916,906 50,000,000 and 49,916,906. respectively; shares issued and outstanding 16,460,921, 16,373,681, and 16,398,523, respectively		16,461			16,374			16,399
Warrants		3,699			-			3,699
Additional paid in capital		86,883			84,759			85,486
Retained earnings		209,980			220,712			214,410
Accumulated other comprehensive loss		(5,526	)		(1,627	)		(7,572	)
Total stockholders' equity		391,262			320,218			391,862
Total liabilities and stockholders' equity	$	3,617,497		$	3,164,123		$	3,313,638

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					Six Months Ended
	June 30,					June 30,
	2009			2008		2009			2008
Interest income:
Interest and fees on loans and leases	$	32,066		$	36,696	$	65,299		$	75,165
Interest on loans held for sale		253			122		533			218
Interest on deposits with banks		43			24		89			73
Interest and dividends on securities:
Taxable		4,531			1,880		7,726			4,578
Exempt from federal income taxes		1,774			2,972		3,746			5,303
Interest on federal funds sold		1			151		3			430
Total interest income		38,668			41,845		77,396			85,767
Interest expense:
Interest on deposits		9,921			10,583		19,375			23,605
Interest on short-term borrowings		3,614			3,063		7,060			6,342
Interest on long-term borrowings		685			1,080		1,488			2,122
Total interest expense		14,220			14,726		27,923			32,069
Net interest income		24,448			27,119		49,473			53,698
Provision for loan and lease losses		10,615			6,189		21,228			8,856
Net interest income after provision for loan and lease losses		13,833			20,930		28,245			44,842
Noninterest income:
Securities gains		30			79		192			653
Service charges on deposit accounts		2,851			3,202		5,714			6,232
Gains on sales of mortgage loans		786			653		1,808			1,375
Fees on sales of investment products		622			905		1,322			1,727
Trust and investment management fees		2,370			2,505		4,657			4,902
Insurance agency commissions		1,040			1,357		3,090			3,443
Income from bank owned life insurance		725			727		1,436			1,441
Visa check fees		748			761		1,386			1,457
Other income		1,858			1,506		3,399			3,161
Total noninterest income		11,030			11,695		23,004			24,391
Noninterest expenses:
Salaries and employee benefits		13,704			13,862		26,908			27,625
Occupancy expense of premises		2,548			2,619		5,323			5,418
Equipment expenses		1,374			1,560		2,888			2,999
Marketing		485			488		905			985
Outside data services		961			1,081		1,767			2,203
FDIC insurance		2,790			421		3,749			813
Amortization of intangible assets		1,047			1,117		2,102			2,241
Other expenses		3,949			3,738		7,466			7,305
Total noninterest expenses		26,858			24,886		51,108			49,589
Income (loss) before income taxes		(1,995	)		7,739		141			19,644
Income tax expense (benefit)		(1,715	)		2,088		(1,796	)		5,788
Net income(loss)	$	(280	)	$	5,651	$	1,937		$	13,856
Preferred stock dividends and discount accretion		1,202		$	0		2,402		$	0
Net income (loss) available to common shareholders	$	(1,482	)	$	5,651	$	(465	)	$	13,856
Basic net income (loss) per share	$	(0.02	)	$	0.35	$	0.12		$	0.85
Basic net income (loss) per common share		(0.09	)		0.35		(0.03	)		0.85
Diluted net income (loss) per share		(0.02	)		0.34		0.12			0.84
Diluted net income (loss) per common share		(0.09	)		0.34		(0.03	)		0.84
Dividends declared per share		0.12			0.24		0.24			0.48

Sandy Spring Bancorp, Inc. and Subsidiaries

Historical Trends in Quarterly Financial Data (Unaudited)

(Dollars in thousands, except per share data)

	2009						2008
		Q2			Q1			Q4			Q3			Q2			Q1
Profitability for the quarter:
Tax-equivalent interest income	$	39,791		$	39,737		$	42,194		$	43,228		$	42,906		$	45,062
Interest expense		14,220			13,703			14,356			13,961			14,726			17,343
Tax-equivalent net interest income		25,571			26,034			27,838			29,267			28,180			27,719
Tax-equivalent adjustment		1,123			1,009			1,164			1,180			1,061			1,140
Provision for loan and lease losses		10,615			10,613			17,791			6,545			6,189			2,667
Noninterest income		11,030			11,974			10,973			10,879			11,695			12,696
Noninterest expenses		26,858			24,250			27,233			25,267			24,886			24,703
Income (loss) before income taxes		(1,995	)		2,136			(7,377	)		7,154			7,739			11,905
Income tax expense (benefit)		(1,715	)		(81	)		(3,941	)		1,795			2,088			3,700
Net Income (loss)		(280	)		2,217			(3,436	)		5,359			5,651			8,205
Net Income (loss) available to common shareholders		(1,482	)		1,017			(3,770	)		5,359			5,651			8,205
Financial ratios:
Return on average assets		-0.17	%		0.12	%		-0.42	%		0.67	%		0.73	%		1.07	%
Return on average common equity		-1.90	%		1.32	%		-4.70	%		6.64	%		7.09	%		10.45	%
Net interest margin		3.11	%		3.39	%		3.73	%		4.02	%		3.96	%		3.99	%
Efficiency ratio - GAAP *		75.70	%		65.54	%		72.34	%		64.84	%		64.11	%		62.90	%
Efficiency ratio - Non-GAAP *		70.58	%		61.29	%		62.41	%		58.27	%		59.73	%		59.18	%
Per share data:
Basic net income (loss) per share	$	(0.02	)	$	0.14		$	(0.21	)	$	0.33		$	0.35		$	0.50
Basic net income (loss) per common share	$	(0.09	)	$	0.06		$	(0.23	)	$	0.33		$	0.35		$	0.50
Diluted net income (loss) per share	$	(0.02	)	$	0.13		$	(0.21	)	$	0.33		$	0.34		$	0.50
Diluted net income (loss) per common share	$	(0.09	)	$	0.06		$	(0.23	)	$	0.33		$	0.34		$	0.50
Dividends declared per common share	$	0.12		$	0.12		$	0.24		$	0.24		$	0.24		$	0.24
Book value per common share	$	18.92		$	19.06		$	19.05		$	19.51		$	19.56		$	19.50
Average fully diluted shares		16,444,252			16,433,788			16,434,214			16,418,588			16,427,213			16,407,778
Noninterest income breakdown:
Securities gains	$	30		$	162		$	1		$	9		$	79		$	574
Service charges on deposit accounts		2,851			2,863			3,297			3,249			3,202			3,030
Gains on sales of mortgage loans		786			1,022			516			397			653			722
Fees on sales of investment products		622			700			928			820			905			822
Trust and investment management fees		2,370			2,287			2,201			2,380			2,505			2,397
Insurance agency commissions		1,040			2,050			1,183			1,282			1,357			2,086
Income from bank owned life insurance		725			711			719			742			727			714
Visa check fees		748			638			691			727			761			696
Other income		1,858			1,541			1,437			1,273			1,506			1,655
Total		11,030			11,974			10,973			10,879			11,695			12,696
Noninterest expense breakdown:
Salaries and employee benefits	$	13,704		$	13,204		$	13,441		$	11,949		$	13,862		$	13,763
Occupancy expense of premises		2,548			2,775			2,612			2,732			2,619			2,799
Equipment expenses		1,374			1,514			1,642			1,515			1,560			1,439
Marketing		485			420			652			526			488			497
Outside data services		961			806			1,054			1,116			1,081			1,122
FDIC insurance		2,790			959			458			480			421			392
Amortization of intangible assets		1,047			1,055			1,103			1,103			1,117			1,124
Goodwill impairment loss		0			0			1,909			2,250			0			0
Other expenses		3,949			3,517			4,362			3,596			3,738			3,567
Total		26,858			24,250			27,233			25,267			24,886			24,703

* 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)

	2009						2008
		Q2			Q1			Q4			Q3			Q2			Q1
Balance sheets at quarter end:
Residential mortgage loans	$	450,500		$	461,359		$	457,571		$	452,815		$	461,000		$	459,768
Residential construction loans		138,923			163,861			189,249			221,630			199,602			183,690
Commercial mortgage loans		862,315			859,882			847,452			804,728			752,905			732,692
Commercial construction loans		199,278			222,805			223,169			247,930			273,059			256,714
Commercial loans and leases		333,025			342,870			366,978			358,097			356,256			354,509
Consumer loans		405,348			411,068			406,227			397,218			386,126			376,650
Total loans and leases		2,389,389			2,461,845			2,490,646			2,482,418			2,428,948			2,364,023
Less: allowance for loan and lease losses		(58,317	)		(59,798	)		(50,526	)		(38,266	)		(33,435	)		(27,887	)
Net loans and leases		2,331,072			2,402,047			2,440,120			2,444,152			2,395,513			2,336,136
Goodwill		76,816			76,816			76,248			75,701			78,376			78,111
Other intangible assets, net		10,080			11,128			12,183			13,286			14,390			15,507
Total assets		3,617,497			3,519,432			3,313,638			3,195,117			3,164,123			3,160,896
Total deposits		2,650,845			2,553,912			2,365,257			2,248,812			2,294,791			2,340,568
Customer repurchase agreements		98,827			91,928			75,106			77,630			93,919			101,666
Total stockholders' equity		391,262			392,522			391,862			319,700			320,218			318,967
Quarterly average balance sheets:
Residential mortgage loans	$	477,955		$	481,721		$	457,956		$	463,778		$	470,144		$	463,597
Residential construction loans		150,914			176,811			208,616			210,363			193,822			174,626
Commercial mortgage loans		862,658			854,402			833,752			779,652			733,905			690,289
Commercial construction loans		216,897			224,229			236,176			253,806			261,360			266,098
Commercial loans and leases		341,039			359,820			361,731			356,327			359,287			351,862
Consumer loans		408,200			408,843			400,937			391,640			380,911			378,261
Total loans and leases		2,457,663			2,505,826			2,499,168			2,455,566			2,399,429			2,324,733
Securities		772,878			536,981			431,858			423,082			431,182			427,819
Total earning assets		3,298,923			3,117,590			2,972,173			2,898,968			2,862,012			2,795,453
Total assets		3,549,185			3,375,715			3,235,432			3,167,145			3,134,440			3,072,428
Total interest-bearing liabilities		2,595,303			2,471,762			2,405,890			2,363,299			2,344,266			2,311,629
Noninterest-bearing demand deposits		527,713			476,361			458,538			453,281			441,330			412,369
Total deposits		2,581,837			2,431,471			2,305,880			2,264,990			2,306,867			2,260,837
Customer repurchase agreements		93,980			69,212			84,012			81,158			92,968			94,841
Stockholders' equity		393,201			391,673			342,639			321,028			320,409			315,755
Capital and credit quality measures:
Average equity to average assets		11.08	%		11.60	%		10.59	%		10.14	%		10.22	%		10.28	%
Loan and lease loss allowance to loans and leases		2.44	%		2.43	%		2.03	%		1.54	%		1.38	%		1.18	%
Nonperforming assets to total assets		4.05	%		3.57	%		2.18	%		2.14	%		2.05	%		1.48	%
Annualized net charge-offs (recoveries) toaverage loans and leases		1.97	%		0.22	%		0.88	%		0.28	%		0.11	%		(0.02	)%
Miscellaneous data:
Net charge-offs (recoveries)	$	12,095		$	1,341		$	5,531		$	1,714		$	641		$	(129	)
Nonperforming assets:
Non-accrual loans and leases		123,117			110,761			67,950			64,246			60,373			37,353
Loans and leases 90 days past due		16,004			9,545			1,038			2,074			2,538			8,244
Restructured loans and leases		395			395			395			395			655			655
Other real estate owned, net		6,829			5,094			2,860			1,698			1,352			661
Total nonperforming assets		146,345			125,795			72,243			68,413			64,918			46,913

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)

(Dollars in thousands and tax-equivalent)

	Three Months Ended June 30,
	2009							2008
						Annualized							Annualized
	Average					Average		Average					Average
	Balances			Interest		Yield/Rate		Balances			Interest		Yield/Rate
Assets
Residential mortgage loans	$	477,955		$	7,040	5.89	%	$	470,144		$	7,127		6.06	%
Residential construction loans		150,914			1,878	4.99			193,822			2,826		5.86
Commercial mortgage loans		862,658			13,224	6.15			733,905			12,421		6.81
Commercial construction loans		216,897			1,561	2.89			261,360			3,455		5.32
Commercial loans and leases		341,039			4,593	5.40			359,287			6,000		6.71
Consumer loans		408,200			4,023	3.95			380,911			4,989		5.27
Total loans and leases		2,457,663			32,319	5.27			2,399,429			36,818		6.16
Securities		772,878			7,428	3.87			431,182			5,913		5.55
Interest-bearing deposits with banks		66,533			43	0.26			4,128			24		2.33
Federal funds sold		1,849			1	0.18			27,273			151		2.23
TOTAL EARNING ASSETS		3,298,923			39,791	4.84	%		2,862,012			42,906		6.03	%
Less:  allowance for loan and lease losses		(60,859	)						(28,450	)
Cash and due from banks		44,015							48,929
Premises and equipment, net		50,910							53,476
Other assets		216,196							198,473
Total assets	$	3,549,185						$	3,134,440
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	254,392		$	106	0.17	%	$	251,190		$	180		0.29	%
Regular savings deposits		154,314			66	0.17			159,888			127		0.32
Money market savings deposits		813,972			3,406	1.68			684,663			2,683		1.58
Time deposits		831,446			6,342	3.06			769,796			7,593		3.97
Total interest-bearing deposits		2,054,124			9,920	1.94			1,865,537			10,583		2.28
Borrowings		541,179			4,300	3.19			478,729			4,143		3.48
TOTAL INTEREST-BEARING LIABILITIES		2,595,303			14,220	2.20			2,344,266			14,726		2.53
Noninterest-bearing demand deposits		527,713							441,330
Other liabilities		32,968							28,435
Stockholder's equity		393,201							320,409
Total liabilities and stockholders' equity	$	3,549,185						$	3,134,440
Net interest income and spread					25,571	2.64	%					28,180		3.50	%
Less: tax equivalent adjustment					1,123							1,061
Net interest income					24,448							27,119
Interest income/earning assets						4.84	%							6.03	%
Interest expense/earning assets						1.73								2.07
Net interest margin						3.11	%							3.96	%

* Interest income includes the effects of annualized taxable-equivalent adjustments (reduced by the nondeductible portion ofinterest expense) using the appropriate marginal federal income tax rate of 35.00% and, where applicable, the marginal state income tax rate of 7.50% (or a combined marginal federal and state rate of 39.88%) for 2009 and 2008, to increase tax-exempt interest income to a taxable-equivalent basis.  The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $4,524,000 in 2009 and $4,267,000 in 2008.

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)

(Dollars in thousands and tax-equivalent)

	Six Months Ended June 30,
	2009								2008
						Annualized								Annualized
	Average					Average			Average					Average
	Balances			Interest		Yield/Rate			Balances			Interest		Yield/Rate
Assets
Residential mortgage loans	$	479,828		$	14,225		5.93	%	$	466,870		$	14,422		6.18	%
Residential construction loans		163,791			4,250		5.23			184,224			5,596		6.11
Commercial mortgage loans		858,553			26,490		6.22			712,097			24,269		6.85
Commercial construction loans		220,542			3,382		3.09			263,729			7,881		6.01
Commercial loans and leases		350,377			9,438		5.43			355,575			12,546		7.09
Consumer loans		408,520			8,047		3.97			379,586			10,669		5.65
Total loans and leases		2,481,611			65,832		5.34			2,362,081			75,383		6.41
Securities		655,581			13,604		4.22			429,500			12,082		5.70
Interest-bearing deposits with banks		69,038			89		0.26			5,538			73		2.63
Federal funds sold		2,527			3		0.22			31,613			430		2.74
TOTAL EARNING ASSETS		3,208,757			79,528		5.00	%		2,828,732			87,968		6.25	%
Less: allowance for loan and lease losses		(57,158	)							(27,147	)
Cash and due from banks		45,511								49,545
Premises and equipment, net		51,158								53,920
Other assets		214,663								198,384
Total assets	$	3,462,931							$	3,103,434
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	248,627		$	227		0.18	%	$	246,184		$	351		0.29	%
Regular savings deposits		150,945			121		0.16			156,626			247		0.32
Money market savings deposits		763,912			5,822		1.54			696,836			7,350		2.12
Time deposits		841,407			13,205		3.16			757,356			15,657		4.16
Total interest-bearing deposits		2,004,891			19,375		1.95			1,857,002			23,605		2.56
Borrowings		528,983			8,548		3.26			470,945			8,464		3.61
TOTAL INTEREST-BEARING LIABILITIES		2,533,874			27,923		2.22			2,327,947			32,069		2.77
Noninterest-bearing demand deposits		502,179								426,850
Other liabilities		34,436								30,555
Stockholder's equity		392,442								318,082
Total liabilities and stockholders' equity	$	3,462,931							$	3,103,434
Net interest income and spread					51,605		2.78	%					55,899		3.48	%
Less: tax equivalent adjustment					2,132								2,201
Net interest income					49,473								53,698
Interest income/earning assets							5.00	%							6.25	%
Interest expense/earning assets							1.76								2.28
Net interest margin							3.24	%							3.97	%

* Interest income includes the effects of annualized taxable-equivalent adjustments (reduced by the nondeductible portion ofinterest expense) using the appropriate marginal federal income tax rate of 35.00% and, where applicable, the marginal state income tax rate of 7.50% (or a combined marginal federal and state rate of 39.88%) for 2009 and 2008, to increase tax-exempt interest income to a taxable-equivalent basis.  The annualized taxable-equivalent  adjustments utilized in the above table to compute yields aggregated to $4,299,000 in 2009 and $4,431,000 in 2008.