Unassociated Document

NEWS RELEASE

FOR IMMEDIATE RELEASE

SANDY SPRING BANCORP REPORTS SECOND QUARTER PROFIT AND PARTIAL TARP REPAYMENT

OLNEY, MARYLAND, July 22, 2010 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income available to common stockholders for the second quarter of 2010 of $5.1 million ($0.21 per diluted share) compared to a net loss available to common stockholders of $1.5 million (($0.09) per diluted share) for the second quarter of 2009 and a net loss available to common stockholders of $0.7 million (($0.04) per diluted share) for the first quarter of 2010. The second quarter of 2010 included a provision for loan and lease losses of $6.1 million compared to $10.6 million for the second quarter of 2009 and $15.0 million for the first quarter of 2010.

Net income available to common stockholders for the six-month period ending June 30, 2010 totaled $4.4 million ($.21 per diluted share) compared to a net loss available to common stockholders of $465,000 (($.03) per diluted share) for the prior year period. The results for the year-to-date included a provision for loan and lease losses totaling $21.1 million for the first six months of 2010. The results for the first six months of 2009 included a provision for loan and lease losses of $21.2 million and an FDIC special assessment charge of $1.7 million.

“We are very encouraged by our second quarter results. The hard work and aggressive efforts to deal with and resolve problem credits over the last several quarters has produced a downward trend in our non-performing loans, particularly in the commercial and residential real estate development portfolios. While work still remains to be done in this area, we are optimistic that we have turned the corner,” said Daniel J. Schrider, president and chief executive officer.

“The loan-loss provision declined for the third quarter in a row, largely due to a reduced level of net charge-offs and a declining level of non-performing loans. These favorable developments are due mainly to workouts of existing non-performing loans and a marked decrease in new problem credits.”

“Our fundamentals remain strong drivers of these positive results, reflecting sound expense control and an improving net interest margin. Originating quality loans continues to be our major challenge in the face of a struggling economy and volatile financial markets in which both consumers and small businesses are not yet confident enough to increase spending on new homes or business expansion.”

“I am also pleased to report that we have been granted approval by the Treasury to repay half ($41.5 million) of the preferred stock issued under TARP and will continue to work with the Treasury to secure their approval for repayment of the remaining balance in the coming months. We have considered this a high priority after the completion of our successful common stock offering in the first quarter of 2010,” said Schrider.

Second Quarter Highlights:

The provision for loan and lease losses totaled $6.1 million for the quarter compared to $10.6 million for the second quarter of 2009 and $15.0 million for the first quarter of 2010.

Non-performing assets declined for the third quarter in a row to $118.0 million compared to $146.3 million at June 30, 2009 and $143.3 million at March 31, 2010. This decrease also resulted in a coverage ratio of the allowance for loan and lease losses compared to non-performing loans of 65% compared to a ratio of 42% at June 30, 2009 and 51% at March 31, 2010.

Loan charge-offs, net of recoveries decreased to $4.3 million for the quarter compared to $12.1 million for the second quarter of 2009 and $10.0 million for the first quarter of 2010.

The net interest margin was 3.58% for the second quarter compared to 3.11% for the second quarter of 2009 and 3.56% for the first quarter of 2010.

Non-interest expenses decreased 3% for the quarter compared to the second quarter of 2009 and increased 3% compared to the first quarter of 2010.

Review of Balance Sheet and Credit Quality

Comparing June 30, 2010 balances to June 30, 2009, total assets increased 2% to $3.7 billion. Total loans and leases decreased 7% to $2.2 billion compared to the prior year. This decrease in loans was attributable to declines in all major categories of the loan portfolio due to a lack of loan demand as a result of soft regional economic conditions. Total loans decreased 2% compared to the first quarter of 2010.

Customer funding sources, which include deposits and other short-term borrowings from core customers, remained virtually even at June 30, 2010 compared to both the prior year and the first quarter of 2010.

Stockholders’ equity totaled $483.7 million at June 30, 2010, and represented 13.1% of total assets, compared to 10.8% at June 30, 2009. At June 30, 2010 the Company had a total risk-based capital ratio of 17.60%, a tier 1 risk-based capital ratio of 16.33% and a tier 1 leverage ratio of 12.00% 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 $6.1 million for the second quarter of 2010 compared to $10.6 million for the second quarter of 2009 and $15.0 million for the first quarter of 2010. The decrease compared to both the prior year quarter and the first quarter of 2010 was primarily due to a decline in net charge-offs and a lower level of non-performing loans.

Loan charge-offs, net of recoveries totaled $4.3 million for the second quarter of 2010 compared to net charge-offs of $12.1 million for the second quarter of 2009 and net charge-offs of $10.0 million for the first quarter of 2010. The allowance for loan and lease losses represented 3.22% of outstanding loans and leases and 65% of non-performing loans at June 30, 2010 compared to 2.44% of outstanding loans and leases and 42% of non-performing loans at June 30, 2009 and 3.08% of outstanding loans and leases and 51% of non-performing loans at March 31, 2010. Non-performing loans includes loans 90 days or more past due which are still accruing interest.

Non-performing assets totaled $118.0 million at June 30, 2010 compared to $146.3 million at June 30, 2009 and $143.3 million at March 31, 2010. The decrease compared to the prior year was due primarily to a decrease in non-accrual loans, particularly in the residential real estate development and commercial loan portfolios.

Income Statement Review

Comparing the second quarter of 2010 and 2009, net interest income increased by $4.5 million, or 19%. This increase was due primarily to the decline in rates paid on deposits. This resulted in a higher net interest margin for the second quarter of 2010 of 3.58% compared to 3.11% for second quarter of 2009.

Non-interest income increased 8% to $11.9 million in the second quarter of 2010 as compared to $11.0 million in the second quarter of 2009. This increase was due primarily to gains on sales of mortgage loans which increased $0.2 million or 30% due to higher mortgage loan origination volumes and declining rates. Fees on sales of investments also increased $0.3 million or 51% due to growth in sales of financial products while Visa check charges increased $0.1 million or 14% due to higher volumes of electronic transactions.

Non-interest expenses were $26.0 million in the second quarter of 2010 compared to $26.9 million in the second quarter of 2009, a decrease of $0.9 million or 3%. FDIC insurance expense decreased $1.6 million or 58% due mainly to a $1.7 million one time special assessment by the FDIC in the second quarter of 2009. Intangibles amortization decreased $0.6 million or 53% due to intangibles from branch acquisitions that had fully amortized during the third quarter of 2009. These decreases were somewhat offset by an increase in other noninterest expenses of $0.6 million or 16% due primarily to higher accrued losses on mortgage commitments.

Comparing the first six months of 2010 and 2009, net interest income increased by $7.7 million, or 16%. This increase was due primarily to the decline in rates paid on deposits which more than offset the decrease in the yield on interest earning assets. The net interest margin for the first six months of 2010 increased to 3.57% compared to a net interest margin of 3.24% for the prior year period.

Non-interest income increased 1% to $23.2 million for the first six months of 2010 as compared to $23.0 million in 2009. This increase was due primarily to fees on sales of investments which increased $0.4 million or 27% resulting from growth in sales of financial products. In addition, trust and investment fees increased $0.3 million or 7% due to growth in assets under management. These increases were somewhat offset by a decline of $0.3 million or 5% in service charges on deposits due to lower commercial analysis fees.

Non-interest expenses were $51.3 million for the first six months of 2010 compared to $51.1 million for the first six months of 2009. This slight increase was due primarily to an increase of $1.5 million or 20% in other noninterest expenses due to increases in accrued losses on mortgage commitments and higher mark-to-market adjustments associated with commercial loan swaps. These increases were offset by a decrease in FDIC insurance expense due largely to a $1.7 million one time special assessment by the FDIC in the second quarter of 2009 and a decrease in intangibles amortization of $1.1 million or 53% due to intangibles from branch acquisitions that had fully amortized during the third quarter of 2009.

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 877-380-5664. 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 22, 2010. A telephone voice replay will also be available during that same time period at 800-642-1687. Please use pass code #84620152 to access.

About Sandy Spring Bancorp/Sandy Spring Bank

With $3.7 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 and operating 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 43 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, 2009, 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)

	Three Months Ended										Six Months Ended
	June 30,							%			June 30,							%
(Dollars in thousands, except per share data)	2010			2009				Change			2010			2009				Change
Results of Operations:
Net interest income	$	28,996		$	24,448				19	%	$	57,155		$	49,473				16	%
Provision for loan and lease losses		6,107			10,615				(42	)		21,132			21,228				-
Non-interest income		11,869			11,030				8			23,209			23,004				1
Non-interest expenses		25,953			26,858				(3	)		51,259			51,108				-
Income (loss) before income taxes		8,805			(1,995	)			-			7,973			141				-
Net income (loss)		6,259			(280	)			-			6,760			1,937				-
Net income (loss) available to common stockholders	$	5,056		$	(1,482	)			-		$	4,357		$	(465	)			-

Return on average assets (1)		0.56	%		(0.17	)	%					0.24	%		(0.03	)	%
Return on average common equity (1)		5.13	%		(1.90	)	%					2.50	%		(0.30	)	%
Net interest margin		3.58	%		3.11		%					3.57	%		3.24		%
Efficiency ratio - GAAP (3)		63.51	%		75.70		%					63.78	%		70.52		%
Efficiency ratio - Non-GAAP (3)		60.59	%		70.58		%					61.06	%		65.85		%

Per share data:
Basic net income (loss)	$	0.26		$	(0.02	)			-	%	$	0.33		$	0.12				175	%
Basic net income (loss) per common share		0.21			(0.09	)			-			0.21			(0.03	)			-
Diluted net income (loss)		0.26			(0.02	)			-			0.33			0.12				175
Diluted net income (loss) per common share		0.21			(0.09	)			-			0.21			(0.03	)			-
Dividends declared per common share		0.01			0.12				(92	)		0.02			0.24				(92	)
Book value per common share		16.80			18.92				(11	)		16.80			18.92				(11	)
Average fully diluted shares		24,033,158			16,444,252				46			20,654,797			16,424,490				26

Financial Condition at period-end:
Assets	$	3,701,150		$	3,617,497				2	%	$	3,701,150		$	3,617,497				2	%
Total loans and leases		2,218,832			2,389,389				(7	)		2,218,832			2,389,389				(7	)
Investment securities		1,062,541			875,374				21			1,062,541			875,374				21
Deposits		2,659,956			2,650,485				-			2,659,956			2,650,485				-
Stockholders' equity		483,681			391,262				24			483,681			391,262				24

Capital ratios:
Tier 1 leverage		12.00	%		9.95		%					12.00	%		9.95		%
Tier 1 capital to risk-weighted assets		16.33	%		12.02		%					16.33	%		12.02		%
Total regulatory capital to risk-weighted assets		17.60	%		13.27		%					17.60	%		13.27		%
Tangible common equity to tangible assets (4)		8.63	%		6.52		%					8.63	%		6.52		%
Average equity to average assets		13.05	%		11.08		%					11.93	%		11.33		%

Credit quality ratios:
Allowance for loan and lease losses to total loans and leases		3.22	%		2.44		%					3.22	%		2.44		%
Nonperforming loans to total loans and leases		4.93	%		5.84		%					4.93	%		5.84		%
Nonperforming assets to total assets		3.19	%		4.05		%					3.19	%		4.05		%
Annualized net charge-offs to average loans and leases (2)		0.77	%		1.97		%					1.28	%		1.09		%

(1)	Calculation utilizes net income available to common stockholders.

(2)	Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.

(3)

The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization from non-interest expense; securities gains (losses) and OTTI from non-interest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.

(4)	The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets, other comprehensive losses and preferred stock. See the Reconciliation Table included with these Financial Highlights.

Sandy Spring Bancorp, Inc. and Subsidiaries

RECONCILIATION TABLE

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2010			2009			2010			2009
GAAP efficiency ratio:
Non-interest expenses	$	25,953		$	26,858		$	51,259		$	51,108
Net interest income plus non-interest income	$	40,865		$	35,478		$	80,364		$	72,477

Efficiency ratio–GAAP		63.51	%		75.70	%		63.78	%		70.52	%

Non-GAAP efficiency ratio:
Non-interest expenses	$	25,953		$	26,858		$	51,259		$	51,108
Less non-GAAP adjustment:
Amortization of intangible assets		496			1,047			992			2,102
Non-interest expenses as adjusted	$	25,457		$	25,811		$	50,267		$	49,006

Net interest income plus non-interest income	$	40,865		$	35,478		$	80,364		$	72,477
Plus non-GAAP adjustment:
Tax-equivalent income		1,155			1,123			2,163			2,132
Less non-GAAP adjustments:
Securities gains		95			30			298			192
OTTI recognized in earnings		(89	)		-			(89	)		-
Net interest income plus non-interest income - as adjusted	$	42,014		$	36,571		$	82,318		$	74,417

Efficiency ratio–Non-GAAP		60.59	%		70.58	%		61.06	%		65.85	%

Tangible common equity ratio:
Total stockholders' equity	$	483,681		$	391,262		$	483,681		$	391,262
Accumulated other comprehensive (income) loss		(6,825	)		5,526			(6,825	)		5,526
Goodwill		(76,816	)		(76,816	)		(76,816	)		(76,816	)
Other intangible assets, net		(7,546	)		(10,080	)		(7,546	)		(10,080	)
Preferred stock		(80,420	)		(79,765	)		(80,420	)		(79,765	)
Tangible common equity	$	312,074		$	230,127		$	312,074		$	230,127

Total assets	$	3,701,150		$	3,617,497		$	3,701,150		$	3,617,497
Goodwill		(76,816	)		(76,816	)		(76,816	)		(76,816	)
Other intangible assets, net		(7,546	)		(10,080	)		(7,546	)		(10,080	)
Tangible assets	$	3,616,788		$	3,530,601		$	3,616,788		$	3,530,601

Tangible common equity ratio		8.63	%		6.52	%		8.63	%		6.52	%

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION

	June 30,			December 31,			June 30,
(Dollars in thousands)	2010			2009			2009
Assets	(Unaudited)						(Unaudited)
Cash and due from banks	$	43,208		$	49,430		$	43,360
Federal funds sold		1,602			1,863			2,034
Interest-bearing deposits with banks		139,358			8,503			77,090
Cash and cash equivalents		184,168			59,796			122,484
Residential mortgage loans held for sale (at fair value)		15,398			12,498			14,494
Investments available-for-sale (at fair value)		915,719			858,433			697,314
Investments held-to-maturity -- fair value of $117,342, $137,787 and $150,109 at
June 30, 2010, December 31, 2009 and June 30, 2009, respectively		112,491			132,593			145,937
Other equity securities		34,331			32,773			32,123
Total loans and leases		2,218,832			2,298,010			2,389,389
Less: allowance for loan and lease losses		(71,377	)		(64,559	)		(58,317	)
Net loans and leases		2,147,455			2,233,451			2,331,072
Premises and equipment, net		48,592			49,606			50,460
Other real estate owned		8,730			7,464			6,829
Accrued interest receivable		13,521			13,653			13,007
Goodwill		76,816			76,816			76,816
Other intangible assets, net		7,546			8,537			10,080
Other assets		136,383			144,858			116,881
Total assets	$	3,701,150		$	3,630,478		$	3,617,497

Liabilities
Noninterest-bearing deposits	$	593,007		$	540,578		$	553,604
Interest-bearing deposits		2,066,949			2,156,264			2,096,881
Total deposits		2,659,956			2,696,842			2,650,485
Securites sold under retail repurchase agreements and federal funds purchased		86,062			89,062			98,827
Advances from FHLB		409,434			411,584			412,070
Subordinated debentures		35,000			35,000			35,000
Accrued interest payable and other liabilities		27,017			24,404			29,853
Total liabilities		3,217,469			3,256,892			3,226,235

Stockholders' Equity
Preferred stock—par value $1.00 (liquidation preference of $1,000 per share) shares
authorized, issued and outstanding 83,094, net of discount of $2,674, $2,999 and
$3,329 at June 30, 2010, December 31, 2009 and June 30, 2009, respectively		80,420			80,095			79,765
Common stock -- par value $1.00; shares authorized 49,916,906; shares issues and
outstanding 23,998,950, 16,487,852 and 16,460,921 at June 30, 2010,
December 31, 2009 and June 30, 2009, respectively		23,999			16,488			16,461
Warrants		3,699			3,699			3,699
Additional paid in capital		176,167			87,334			86,883
Retained earnings		192,571			188,622			209,980
Accumulated other comprehensive income (loss)		6,825			(2,652	)		(5,526	)
Total stockholders' equity		483,681			373,586			391,262
Total liabilities and stockholders' equity	$	3,701,150		$	3,630,478		$	3,617,497

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands, except per share data)	2010			2009			2010			2009
Interest Income:
Interest and fees on loans and leases	$	29,284		$	32,066		$	58,658		$	65,299
Interest on loans held for sale		92			253			173			533
Interest on deposits with banks		63			43			97			89
Interest and dividends on securities:
Taxable		6,298			4,531			12,304			7,726
Exempt from federal income taxes		1,771			1,774			3,635			3,746
Interest on federal funds sold		-			1			1			3
Total interest income		37,508			38,668			74,868			77,396
Interest Expense:
Interest on deposits		4,568			9,921			9,858			19,375
Interest on retail repurchase agreements and federal funds purchased		65			76			137			138
Interest on advances from FHLB		3,653			3,668			7,273			7,299
Interest on subordinated debt		226			555			445			1,111
Total interest expense		8,512			14,220			17,713			27,923
Net interest income		28,996			24,448			57,155			49,473
Provision for loan and lease losses		6,107			10,615			21,132			21,228
Net interest income after provision for loan and lease losses		22,889			13,833			36,023			28,245
Non-interest Income:
Investment securities gains		95			30			298			192
Total other-than-temporary impairment ("OTTI") losses		(834	)		-			(834	)		-
Portion of OTTI losses recognized in other comprehensive income, before taxes		745			-			745			-
Net OTTI recognized in earnings		(89	)		-			(89	)		-
Service charges on deposit accounts		2,791			2,851			5,417			5,714
Gains on sales of mortgage loans		1,020			786			1,629			1,808
Fees on sales of investment products		941			622			1,682			1,322
Trust and investment management fees		2,534			2,370			4,983			4,657
Insurance agency commissions		928			1,040			2,917			3,090
Income from bank owned life insurance		703			725			1,396			1,436
Visa check fees		855			748			1,595			1,386
Other income		2,091			1,858			3,381			3,399
Total non-interest income		11,869			11,030			23,209			23,004
Non-interest Expenses:
Salaries and employee benefits		14,181			13,704			27,552			26,908
Occupancy expense of premises		2,709			2,548			5,799			5,323
Equipment expenses		1,304			1,374			2,518			2,888
Marketing		573			485			1,089			905
Outside data services		918			961			2,041			1,767
FDIC insurance		1,186			2,790			2,327			3,749
Amortization of intangible assets		496			1,047			992			2,102
Other expenses		4,586			3,949			8,941			7,466
Total non-interest expenses		25,953			26,858			51,259			51,108
Income (loss) before income taxes		8,805			(1,995	)		7,973			141
Income tax expense (benefit)		2,546			(1,715	)		1,213			(1,796	)
Net income (loss)	$	6,259		$	(280	)	$	6,760		$	1,937
Preferred stock dividends and discount accretion		1,203			1,202			2,403			2,402
Net income (loss) available to common stockholders	$	5,056		$	(1,482	)	$	4,357		$	(465	)

Net Income Per Share Amounts:
Basic net income (loss) per share	$	0.26		$	(0.02	)	$	0.33		$	0.12
Basic net income (loss) per common share		0.21			(0.09	)		0.21			(0.03	)
Diluted net income (loss) per share	$	0.26		$	(0.02	)	$	0.33		$	0.12
Diluted net income (loss) per common share		0.21			(0.09	)		0.21			(0.03	)
Dividends declared per common share	$	0.01		$	0.12		$	0.02		$	0.24

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA (Unaudited)

	2010						2009
(Dollars in thousands, except per share data)		Q2			Q1			Q4			Q3			Q2			Q1
Profitability for the quarter:
Tax-equivalent interest income	$	38,663		$	38,368		$	40,025		$	40,516		$	39,791		$	39,737
Interest expense		8,512			9,201			10,816			12,783			14,220			13,703
Tax-equivalent net interest income		30,151			29,167			29,209			27,733			25,571			26,034
Tax-equivalent adjustment		1,155			1,008			1,376			1,331			1,123			1,009
Provision for loan and lease losses		6,107			15,025			21,084			34,450			10,615			10,613
Non-interest income		11,869			11,340			11,575			10,662			11,030			11,974
Non-interest expenses		25,953			25,306			25,364			26,567			26,858			24,250
Income (loss) before income taxes		8,805			(832	)		(7,040	)		(23,953	)		(1,995	)		2,136
Income tax expense (benefit)		2,546			(1,333	)		(3,822	)		(10,379	)		(1,715	)		(81	)
Net Income (loss)		6,259			501			(3,218	)		(13,574	)		(280	)		2,217
Net Income (loss) available to common stockholders	$	5,056		$	(699	)	$	(4,421	)	$	(14,779	)	$	(1,482	)	$	1,017
Financial ratios:
Return on average assets		0.56	%		(0.08	)%		(0.48	)%		(1.62	)%		(0.17	)%		0.12	%
Return on average common equity		5.13	%		(0.92	)%		(4.66	)%		(19.01	)%		(1.90	)%		1.32	%
Net interest margin		3.58	%		3.56	%		3.40	%		3.27	%		3.11	%		3.39	%
Efficiency ratio - GAAP (1)		63.51	%		64.07	%		64.36	%		71.68	%		75.70	%		65.54	%
Efficiency ratio - Non-GAAP (1)		60.59	%		61.56	%		61.29	%		66.49	%		70.58	%		61.29	%
Per share data:
Basic net income (loss) per share	$	0.26		$	0.03		$	(0.20	)	$	(0.83	)	$	(0.02	)	$	0.14
Basic net income (loss) per common share		0.21			(0.04	)		(0.27	)		(0.90	)		(0.09	)		0.06
Diluted net income (loss) per share		0.26			0.03			(0.20	)		(0.83	)		(0.02	)		0.13
Diluted net income (loss) per common share		0.21			(0.04	)		(0.27	)		(0.90	)		(0.09	)		0.06
Dividends declared per common share		0.01			0.01			0.01			0.12			0.12			0.12
Book value per common share		16.80			16.33			17.80			18.25			18.92			19.06
Average fully diluted shares		24,033,158			17,243,415			16,477,925			16,496,480			16,444,252			16,433,788
Non-interest income:
Securities gains	$	95		$	203		$	211		$	15		$	30		$	162
Net OTTI recognized in earnings		(89	)		-			-			-			-
Service charges on deposit accounts		2,791			2,626			2,896			2,823			2,851			2,863
Gains on sales of mortgage loans		1,020			609			434			1,011			786			1,022
Fees on sales of investment products		941			741			761			740			622			700
Trust and investment management fees		2,534			2,449			2,358			2,406			2,370			2,287
Insurance agency commissions		928			1,989			1,098			1,048			1,040			2,050
Income from bank owned life insurance		703			693			730			740			725			711
Visa check fees		855			740			776			758			748			638
Other income		2,091			1,290			2,311			1,121			1,858			1,541
Total non-interest income	$	11,869		$	11,340		$	11,575		$	10,662		$	11,030		$	11,974
Non-interest expense:
Salaries and employee benefits	$	14,181		$	13,371		$	13,141		$	14,411		$	13,704		$	13,204
Occupancy expense of premises		2,709			3,090			2,702			2,685			2,548			2,775
Equipment expenses		1,304			1,214			1,359			1,444			1,374			1,514
Marketing		573			516			777			484			485			420
Outside data services		918			1,123			967			987			961			806
FDIC insurance		1,186			1,141			1,124			1,219			2,790			959
Amortization of intangible assets		496			496			496			1,048			1,047			1,055
Other expenses		4,586			4,355			4,798			4,289			3,949			3,517
Total non-interest expense	$	25,953		$	25,306		$	25,364		$	26,567		$	26,858		$	24,250

(1)

The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements ofIncome. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization and the goodwill impairment loss; excludes securities gains; (losses) and OTTI from non-interest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA (Unaudited)

	2010						2009
(Dollars in thousands)		Q2			Q1			Q4			Q3			Q2			Q1
Balance sheets at quarter end:
Residential mortgage loans	$	458,502		$	460,129		$	457,414		$	455,312		$	450,500		$	461,359
Residential construction loans		86,393			83,902			92,283			115,258			138,923			163,861
Commercial mortgage loans		900,312			882,040			894,951			873,438			862,315			859,882
Commercial construction loans		95,357			130,064			131,789			174,052			199,278			222,805
Commercial loans and leases		284,708			302,995			321,924			314,599			333,025			342,870
Consumer loans		393,560			397,527			399,649			401,623			405,348			411,068
Total loans and leases		2,218,832			2,256,657			2,298,010			2,334,282			2,389,389			2,461,845
Less: allowance for loan and lease losses		(71,377	)		(69,575	)		(64,559	)		(62,937	)		(58,317	)		(59,798	)
Net loans and leases		2,147,455			2,187,082			2,233,451			2,271,345			2,331,072			2,402,047
Goodwill		76,816			76,816			76,816			76,816			76,816			76,816
Other intangible assets, net		7,546			8,042			8,537			9,033			10,080			11,128
Total assets		3,701,150			3,673,246			3,630,478			3,632,391			3,617,497			3,519,432
Total deposits		2,659,956			2,653,448			2,696,842			2,683,487			2,650,845			2,553,912
Customer repurchase agreements		86,062			78,416			74,062			84,138			98,827			91,928
Total stockholders' equity		483,681			471,857			373,586			380,571			391,262			392,522
Quarterly average balance sheets:
Residential mortgage loans	$	467,970		$	462,803		$	464,737		$	460,772		$	477,955		$	481,721
Residential construction loans		85,617			89,732			106,115			123,892			150,914			176,811
Commercial mortgage loans		887,259			891,722			877,419			871,831			862,658			854,402
Commercial construction loans		115,965			131,265			165,784			191,021			216,897			224,229
Commercial loans and leases		294,168			317,492			312,547			327,569			341,039			359,820
Consumer loans		395,833			398,233			401,164			401,930			408,200			408,843
Total loans and leases		2,246,812			2,291,247			2,327,766			2,377,015			2,457,663			2,505,826
Securities		1,013,756			970,681			1,026,179			956,350			772,878			536,981
Total earning assets		3,379,388			3,318,070			3,409,867			3,370,823			3,298,923			3,117,590
Total assets		3,645,090			3,591,786			3,672,382			3,627,617			3,549,185			3,375,715
Total interest-bearing liabilities		2,596,353			2,653,187			2,709,152			2,671,944			2,595,303			2,471,762
Noninterest-bearing demand deposits		547,245			524,313			549,347			532,462			527,713			476,361
Total deposits		2,612,633			2,640,853			2,718,882			2,661,108			2,581,837			2,431,471
Customer repurchase agreements		85,178			81,622			92,471			95,310			93,980			69,212
Total stockholders' equity		475,521			387,099			380,534			391,571			393,201			391,673
Capital and credit quality measures:
Average equity to average assets		13.05	%		10.78	%		10.36	%		10.79	%		11.08	%		11.60	%
Allowance for loan and lease losses to loans and leases		3.22	%		3.08	%		2.81	%		2.70	%		2.44	%		2.43	%
Non-performing loans to total loans		4.93	%		6.05	%		5.82	%		6.14	%		5.84	%		4.90	%
Non-performing assets to total assets		3.19	%		3.90	%		3.89	%		4.14	%		4.05	%		3.57	%
Annualized net charge-offs to average loans and leases (1)		0.77	%		1.78	%		3.34	%		5.00	%		1.97	%		0.22	%
Net charge-offs	$	4,305		$	10,009		$	19,462		$	29,831		$	12,095		$	1,341
Non-performing assets:
Non-accrual loans and leases	$	83,887		$	110,719		$	111,180		$	127,473		$	123,117		$	110,761
Loans and leases 90 days past due		24,226			25,085			19,001			15,491			16,004			9,545
Restructured loans and leases		1,199			682			3,549			395			395			395
Other real estate owned, net		8,730			6,796			7,464			6,873			6,829			5,094
Total non-performing assets	$	118,042		$	143,282		$	141,194		$	150,232		$	146,345		$	125,795

(1)	Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)

	Three Months Ended June 30,
	2010								2009
						Annualized								Annualized
	Average			(1)		Average			Average			(1)		Average
(Dollars in thousands and tax-equivalent)	Balances			Interest		Yield/Rate			Balances			Interest		Yield/Rate
Assets
Residential mortgage loans (3)	$	467,970		$	6,429		5.50	%	$	477,955		$	7,040		5.89	%
Residential construction loans		85,617			987		4.63			150,914			1,878		4.99
Commercial mortgage loans		887,259			13,460		6.08			862,658			13,224		6.15
Commercial construction loans		115,965			956		3.31			216,897			1,561		2.89
Commercial loans and leases		294,168			3,695		5.04			341,039			4,593		5.40
Consumer loans		395,833			3,849		3.92			408,200			4,023		3.95
Total loans and leases (2)		2,246,812			29,376		5.24			2,457,663			32,319		5.27
Taxable securities		856,205			6,543		3.06			622,203			4,749		3.05
Tax-exempt securities (4)		157,551			2,681		6.92			150,675			2,679		7.23
Interest-bearing deposits with banks		117,019			63		0.21			66,533			43		0.26
Federal funds sold		1,801			-		0.18			1,849			1		0.18
Total interest-earning assets		3,379,388			38,663		4.59			3,298,923			39,791		4.84

Less: allowance for loan and lease losses		(72,137	)							(60,859	)
Cash and due from banks		44,059								44,015
Premises and equipment, net		48,776								50,910
Other assets		245,004								216,196
Total assets	$	3,645,090							$	3,549,185

Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	292,402			91		0.12	%	$	254,392			106		0.17	%
Regular savings deposits		165,977			51		0.12			154,314			66		0.17
Money market savings deposits		882,877			1,308		0.59			813,972			3,406		1.68
Time deposits		724,133			3,118		1.73			831,446			6,343		3.06
Total interest-bearing deposits		2,065,389			4,568		0.89			2,054,124			9,921		1.94
Other borrowings		85,178			65		0.30			93,981			76		0.32
Advances from FHLB		410,786			3,653		3.57			412,198			3,668		3.57
Subordinated debentures		35,000			226		2.58			35,000			555		6.35
Total interest-bearing liabilities		2,596,353			8,512		1.31			2,595,303			14,220		2.20

Noninterest-bearing demand deposits		547,245								527,713
Other liabilities		25,971								32,968
Stockholders' equity		475,521								393,201
Total liabilities and stockholders' equity	$	3,645,090							$	3,549,185

Net interest income and spread				$	30,151		3.28	%				$	25,571		2.64	%
Less: tax-equivalent adjustment					1,155								1,123
Net interest income				$	28,996							$	24,448

Interest income/earning assets							4.59	%							4.84	%
Interest expense/earning assets							1.01								1.73
Net interest margin							3.58	%							3.11	%

(1)	Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2010 and 2009. The annualized taxable-equivalent adjustments utilized inthe above table to compute yields aggregated to $1.2 million and $1.1 million in 2010 and 2009, respectively.

(2)	Non-accrual loans are included in the average balances.

(3)	Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.

(4)	Includes only investments that are exempt from federal taxes.

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)

	Six Months Ended June 30,
	2010								2009
						Annualized								Annualized
	Average			(1)		Average			Average			(1)		Average
(Dollars in thousands and tax-equivalent)	Balances			Interest		Yield/Rate			Balances			Interest		Yield/Rate
Assets
Residential mortgage loans (3)	$	465,401		$	12,908		5.55	%	$	479,828		$	14,225		5.93	%
Residential construction loans		87,663			2,081		4.79			163,791			4,250		5.23
Commercial mortgage loans		889,478			26,692		6.05			858,553			26,490		6.22
Commercial construction loans		123,573			1,777		2.90			220,542			3,382		3.09
Commercial loans and leases		305,765			7,697		5.07			350,377			9,438		5.43
Consumer loans		397,027			7,676		3.91			408,520			8,047		3.97
Total loans and leases (2)		2,268,907			58,831		5.22			2,481,611			65,832		5.34
Taxable securities		829,326			12,764		3.08			496,305			8,084		3.26
Tax-exempt securities (4)		163,011			5,338		6.87			159,276			5,520		7.22
Interest-bearing deposits with banks		85,890			97		0.23			69,038			89		0.26
Federal funds sold		1,764			1		0.16			2,527			3		0.22
Total interest-earning assets		3,348,898			77,031		4.64			3,208,757			79,528		5.00

Less: allowance for loan and lease losses		(69,680	)							(57,158	)
Cash and due from banks		44,545								45,511
Premises and equipment, net		49,058								51,158
Other assets		245,764								214,663
Total assets	$	3,618,585							$	3,462,931

Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	283,313			175		0.12	%	$	248,627			227		0.18	%
Regular savings deposits		162,009			87		0.11			150,945			121		0.16
Money market savings deposits		896,163			2,881		0.65			763,912			5,822		1.54
Time deposits		749,339			6,715		1.81			841,407			13,205		3.16
Total interest-bearing deposits		2,090,824			9,858		0.95			2,004,891			19,375		1.95
Other borrowings		87,665			137		0.32			81,666			138		0.34
Advances from FHLB		411,125			7,273		3.57			412,317			7,299		3.57
Subordinated debentures		35,000			445		2.54			35,000			1,111		6.35
Total interest-bearing liabilities		2,624,614			17,713		1.36			2,533,874			27,923		2.22

Noninterest-bearing demand deposits		535,843								502,179
Other liabilities		26,574								34,436
Stockholders' equity		431,554								392,442
Total liabilities and stockholders' equity	$	3,618,585							$	3,462,931

Net interest income and spread				$	59,318		3.28	%				$	51,605		2.78	%
Less: tax-equivalent adjustment					2,163								2,132
Net interest income				$	57,155							$	49,473

Interest income/earning assets							4.64	%							5.00	%
Interest expense/earning assets							1.07								1.76
Net interest margin							3.57	%							3.24	%

(1)	Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2010 and 2009. The annualized taxable-equivalent adjustments utilized inthe above table to compute yields aggregated to $2.2 million and $2.1 million in 2010 and 2009, respectively.

(2)	Non-accrual loans are included in the average balances.

(3)	Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.

(4)	Includes only investments that are exempt from federal taxes.