SEGMENT REPORTING

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Segment Reporting

Note 24 - Segment Reporting

Currently, the Company conducts business in three operating segments—Community Banking, Insurance and Investment Management. Each of the operating segments is a strategic business unit that offers different products and services. The Insurance and Investment Management segments were businesses that were acquired in separate transactions where management of acquisition was retained. The accounting policies of the segments are the same as those of the Company. However, the segment data reflect inter-segment transactions and balances.

The Community Banking segment is conducted through Sandy Spring Bank and involves delivering a broad range of financial products and services, including various loan and deposit products to both individuals and businesses. Parent company income is included in the Community Banking segment, as the majority of effort of these functions is related to this segment. Major revenue sources include net interest income, gains on sales of mortgage loans, trust income, fees on sales of investment products and service charges on deposit accounts. Expenses include personnel, occupancy, marketing, equipment and other expenses. Non-cash charges associated with amortization of intangibles related to the acquired entities for the years ended December 31, 2012, 2011 and 2010, amounted to $1.4 million, $1.4 million and $1.4 million, respectively.

The Insurance segment is conducted through Sandy Spring Insurance Corporation, a subsidiary of the Bank, and offers annuities as an alternative to traditional deposit accounts. Sandy Spring Insurance Corporation operates Sandy Spring Insurance, a general insurance agency located in Annapolis, Maryland, and Neff and Associates, located in Ocean City, Maryland. Major sources of revenue are insurance commissions from commercial lines, personal lines, and medical liability lines. Expenses include personnel and support charges. Non-cash charges associated with amortization of intangibles related to the acquired entities was not significant for the years ended December 31, 2012, 2011 and 2010, respectively.

The Investment Management segment is conducted through West Financial Services, Inc., a subsidiary of the Bank. This asset management and financial planning firm, located in McLean, Virginia, provides comprehensive investment management and financial planning to individuals, families, small businesses and associations including cash flow analysis, investment review, tax planning, retirement planning, insurance analysis and estate planning. West Financial currently has approximately $822 million in assets under management. Major revenue sources include non-interest income earned on the above services. Expenses include personnel and support charges. Non-cash charges associated with amortization of intangibles related to the acquired entities was not significant for the years ended December 31, 2012, 2011 and 2010, respectively.

Information for the operating segments and reconciliation of the information to the consolidated financial statements for the years ended December 31 is presented in the following tables:

	2012
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination			Total
Interest income	$	143,870	$	8	$	12	$	(20	)	$	143,870
Interest expense		22,671		-		-		(20	)		22,651
Provision for loan and lease losses		3,649		-		-		-			3,649
Noninterest income		42,312		4,837		5,620		(5,813	)		46,956
Noninterest expenses		108,421		4,190		3,129		(5,813	)		109,927
Income before income taxes		51,441		655		2,503		-			54,599
Income tax expense		16,807		266		972		-			18,045
Net income	$	34,634	$	389	$	1,531	$	-		$	36,554
Assets	$	3,964,926	$	13,452	$	16,341	$	(39,513	)	$	3,955,206

	2011
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination			Total
Interest income	$	139,531	$	5	$	8	$	(74	)	$	139,470
Interest expense		26,598		-		-		(74	)		26,524
Provision (credit) for loan and lease losses		1,428		-		-		-			1,428
Noninterest income		33,768		5,142		5,400		(810	)		43,500
Noninterest expenses		98,320		4,450		3,111		(810	)		105,071
Income before income taxes		46,953		697		2,297		-			49,947
Income tax expense		14,667		283		895		-			15,845
Net income	$	32,286	$	414	$	1,402	$	-		$	34,102
Assets	$	3,742,916	$	13,067	$	14,806	$	(59,419	)	$	3,711,370

	2010
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination			Total
Interest income	$	148,731	$	7	$	5	$	(394	)	$	148,349
Interest expense		33,136		-		-		(394	)		32,742
Provision for loan and lease losses		25,908		-		-		-			25,908
Noninterest income		33,720		5,807		5,065		(810	)		43,782
Noninterest expenses		94,001		4,556		3,165		(810	)		100,912
Income before income taxes		29,406		1,258		1,905		-			32,569
Income tax expense		7,798		509		742		-			9,049
Net income	$	21,608	$	749	$	1,163	$	-		$	23,520
Assets	$	3,527,889	$	12,671	$	13,409	$	(34,581	)	$	3,519,388