News release

FOR IMMEDIATE RELEASE

SANDY SPRING BANCORP REPORTS NET INCOME OF $10.9 MILLION FOR THE FIRST QUARTER

OLNEY, MARYLAND, April 17, 2014 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today reported net income for the first quarter of 2014 of $10.9 million ($0.43 per diluted share). This compares to net income of $10.6 million ($0.42 per diluted share) for the first quarter of 2013 and net income of $9.6 million ($0.38 per diluted share) for the fourth quarter of 2013.

“Our proven capability to produce consistent financial results and returns to our investors demonstrates the strength of our institution. In the past year our share price has increased over 25%. We believe that we offer a level of quality customer service that is recognized in our marketplace and that this will translate into continued growth and increased profitability,” said Daniel J. Schrider, President and Chief Executive Officer.

“Our performance in the first quarter was driven by the management of our funding costs, loan growth and the increase in wealth management and insurance revenues which combined to offset the decline in mortgage banking revenues as origination volumes declined significantly from the prior year,” said Schrider.

First Quarter Highlights:

· Total loans increased 10% compared to the first quarter of 2013 and 2% compared to the fourth quarter of 2013 due to significant loan growth in the residential mortgage and commercial investor real estate portfolios.

· The provision for loan and lease losses for the first quarter of 2014 was a credit of $1.0 million compared to a charge of $0.1 million for the first quarter of 2013 and a charge of $0.6 million for the fourth quarter of 2013. The current quarter’s credit was the result of lower historical charge-offs and improved credit metrics over the preceding twelve months, which more than offset the impact of loan growth during the same period.

· The net interest margin was 3.47% for the first quarter of 2014, compared to 3.59% for the first quarter of 2013 and 3.53% for the fourth quarter of 2013. The decline was the result of declining rates during the period, primarily impacting the commercial loan portfolio.

· Non-interest income decreased 9% for the quarter compared to the prior year quarter due primarily to the decline in income from mortgage banking caused by a significantly lower volume of saleable mortgage loan originations. The prior year quarter also included income as a result of a legal settlement. During this same period wealth management income increased 10% and insurance agency commissions increased 22%. Non-interest income decreased 3% as compared to the fourth quarter of 2013, which included gains from the sales of fixed assets and SBA loans.

· Non-performing loans totaled $38.7 million at March 31, 2014 compared to $49.5 million at March 31, 2013 and $40.0 million at December 31, 2013. The coverage ratio of the allowance for loan and lease losses to non-performing loans was 98% at March 31, 2014 compared to a coverage ratio of 83% at March 31, 2013 and 97% at December 31, 2013.

Review of Balance Sheet and Credit Quality

At March 31, 2014, total assets grew to $4.2 billion, an increase of 6% as compared to March 31, 2013 driven by the increase in the loan portfolio. At March 31, 2014 total loans and leases were $2.8 billion, a 10% increase over the prior year. Increases occurred in every major loan category with notable increases in the residential mortgage and commercial investor real estate portfolios.

Customer funding sources, which include deposits and other short-term borrowings from customers, increased 2% compared to March 31, 2013. Checking accounts are considered to be an important performance metric as such accounts typically are the primary drivers of growth in multiple product banking relationships with clients. At March 31, 2014, the combined noninterest-bearing and interest-bearing checking account balances had increased 7% compared to the balances at March 31, 2013.

Tangible common equity totaled $423.9 million at March 31, 2014 compared to $391.7 million at March 31, 2013, resulting in an increase in the ratio of tangible common equity to tangible assets to 10.38% at March 31, 2014 from 10.19% at March 31, 2013. This increase in tangible common equity occurred during the period that dividends per common share were increased from $0.14 per share to $0.18 per common share, a 29% increase. At March 31, 2014, the Company had a total risk-based capital ratio of 15.85%, a tier 1 risk-based capital ratio of 14.64% and a tier 1 leverage ratio of 11.43%.

Non-performing loans totaled $38.7 million at March 31, 2014 compared to $49.5 million at March 31, 2013 and $40.0 million at December 31, 2013. The level of non-performing loans to total loans has decreased from 1.93% at March 31, 2013 to 1.37% at March 31, 2014. This relative improvement reflects management’s proactive focus on credit quality and the efforts to effectively resolve problem credits.

Net loan recoveries totaled $0.2 million for the first quarter of 2014 compared to net charge-offs of $1.8 million for the first quarter of 2013 and net charge-offs of $1.2 million for the fourth quarter of 2013. The allowance for loan and lease losses represented 1.34% of outstanding loans and leases and 98% of non-performing loans at March 31, 2014 compared to 1.61% of outstanding loans and leases and 83% of non-performing loans at March 31, 2013. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the first quarter of 2014 increased 1% compared to the first quarter of 2013. This modest increase was due to the impact of the increase in average interest-earning assets and a reduction in funding costs of time deposits partially offset by a decline in asset yields. This activity resulted in a net interest margin of 3.47% for the first quarter of 2014 compared to 3.59% for the first quarter of 2013.

The provision for loan and lease losses was a credit of $1.0 million for the first quarter of 2014 compared to a charge of $0.1 million for the first quarter of 2013 and a charge of $0.6 million for the fourth quarter of 2013. This decrease in the provision compared to the first quarter of 2013 and the fourth quarter of 2013 was due primarily to lower historical losses and improved credit metrics that more than offset the effect of loan growth during the quarter.

Non-interest income decreased 9% to $11.2 million for the first quarter of 2014 compared to $12.4 million for the first quarter of 2013. This decrease was driven by a reduction in mortgage banking income due primarily to lower mortgage origination volumes and a decline in client refinancing activity. This decrease was partially offset by a 10% increase in wealth management income due to higher assets under management and a 22% increase in insurance agency commissions.

Non-interest expenses decreased 1% to $27.5 million for the first quarter of 2014 compared to $27.8 million in the first quarter of 2013. This decrease was driven primarily by improved credit quality as legal fees associated with loan workouts declined significantly during this period. The non-GAAP efficiency ratio was 61.60% for the first quarter of 2014 compared to 60.80% for the first quarter of 2013.

Conference Call

The Company’s management will host a conference call to discuss its fourth 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 1-888-317-6016. 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 9:00 am (ET) May 19, 2014. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10043570.

About Sandy Spring Bancorp, Inc.

With $4.2 billion in assets, Sandy Spring Bancorp, Inc. is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation 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 46 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George’s counties in Maryland, and Arlington, Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of insurance and investment management services. Visit www.sandyspringbank.com 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, 2013, 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
	March 31,						%
(Dollars in thousands, except per share data)	2014			2013			Change
Results of Operations:
Net interest income	$	31,592		$	31,326			1	%
Provision for loan and lease losses		(982	)		78			-
Non-interest income		11,249			12,419			(9	)
Non-interest expenses		27,549			27,823			(1	)
Income before income taxes		16,274			15,844			3
Net income		10,928			10,558			4
Pre-tax pre-provision income	$	15,292		$	15,922			(4	)
Return on average assets		1.08	%		1.08	%
Return on average common equity		8.80	%		8.85	%
Net interest margin		3.47	%		3.59	%
Efficiency ratio - GAAP basis   (1)		64.31	%		63.60	%
Efficiency ratio - Non-GAAP basis   (1)		61.60	%		60.80	%
Per share data:
Basic net income	$	0.44		$	0.42			5	%
Diluted net income	$	0.43		$	0.42			2
Average fully diluted shares		25,124,206			25,002,612			-
Dividends declared per share	$	0.18		$	0.14			29
Book value per share		20.38			19.59			4
Tangible book value per share		16.93			15.70			8
Outstanding shares		25,043,482			24,954,892			-
Financial Condition at period-end:
Investment securities	$	997,584		$	1,008,693			(1	)%
Loans and leases		2,832,813			2,565,069			10
Interest-earning assets		3,891,223			3,660,809			6
Assets		4,168,998			3,932,026			6
Deposits		2,959,195			2,919,208			1
Interest-bearing liabilities		2,748,064			2,576,831			7
Stockholders' equity		510,386			488,947			4
Capital ratios:
Tier 1 leverage		11.43	%		11.07	%
Tier 1 capital to risk-weighted assets		14.64	%		14.23	%
Total regulatory capital to risk-weighted assets		15.85	%		15.48	%
Tangible common equity to tangible assets   (2)		10.38	%		10.19	%
Average equity to average assets		12.27	%		12.26	%
Credit quality ratios:
Allowance for loan and lease losses to loans and leases		1.34	%		1.61	%
Non-performing loans to total loans		1.37	%		1.93	%
Non-performing assets to total assets		0.97	%		1.39	%
Allowance for loan and lease losses to non-performing loans		98.27	%		83.38	%
Annualized net charge-offs to average loans and leases    (3)		(0.04	)%		0.28	%

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

(2) 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 and other comprehensive gains (losses). See the Reconciliation Table included with these Financial Highlights.

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

Sandy Spring Bancorp, Inc. and Subsidiaries

RECONCILIATION TABLE - UNAUDITED

	Three Months Ended
	March 31,
(Dollars in thousands)	2014			2013
Pre-tax pre-provision income:
Net income	$	10,928		$	10,558
Plus non-GAAP adjustment:
Income taxes		5,346			5,286
Provision for loan and lease losses		(982	)		78
Pre-tax pre-provision income	$	15,292		$	15,922
Efficiency ratio - GAAP basis:
Non-interest expenses	$	27,549		$	27,823
Net interest income plus non-interest income	$	42,841		$	43,745
Efficiency ratio - GAAP basis		64.31	%		63.60	%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses	$	27,549		$	27,823
Less non-GAAP adjustment:
Amortization of intangible assets		370			461
Non-interest expenses -  as adjusted	$	27,179		$	27,362
Net interest income plus non-interest income	$	42,841		$	43,745
Plus non-GAAP adjustment:
Tax-equivalent income		1,282			1,311
Less non-GAAP adjustments:
Securities gains		-			56
OTTI recognized in earnings		-			-
Net interest income plus non-interest income - as adjusted	$	44,123		$	45,000
Efficiency ratio - Non-GAAP basis		61.60	%		60.80	%
Tangible common equity ratio:
Total stockholders' equity	$	510,386		$	488,947
Accumulated other comprehensive (income) loss		(1,350	)		(9,732	)
Goodwill		(84,171	)		(84,808	)
Other intangible assets, net		(960	)		(2,702	)
Tangible common equity	$	423,905		$	391,705
Total assets	$	4,168,998		$	3,932,026
Goodwill		(84,171	)		(84,808	)
Other intangible assets, net		(960	)		(2,702	)
Tangible assets	$	4,083,867		$	3,844,516
Tangible common equity ratio		10.38	%		10.19	%
Outstanding common shares		25,043,482			24,954,892
Tangible book value per common share	$	16.93		$	15.70

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED

	March 31,			December 31,			March 31,
(Dollars in thousands)	2014			2013			2013
Assets
Cash and due from banks	$	58,448		$	46,755		$	45,922
Federal funds sold		474			475			476
Interest-bearing deposits with banks		57,273			27,197			38,188
Cash and cash equivalents		116,195			74,427			84,586
Residential mortgage loans held for sale (at fair value)		3,079			8,365			48,383
Investments available-for-sale (at fair value)		736,270			751,284			766,080
Investments held-to-maturity — fair value of $220,693, $216,007 and 216,420 at March 31, 2014, December 31, 2013 and March 31, 2013, respectively		223,747			224,638			211,376
Other equity securities		37,567			40,687			31,237
Total loans and leases		2,832,813			2,784,266			2,565,069
Less: allowance for loan and lease losses		(38,026	)		(38,766	)		(41,246	)
Net loans and leases		2,794,787			2,745,500			2,523,823
Premises and equipment, net		45,644			45,916			47,701
Other real estate owned		1,619			1,338			5,250
Accrued interest receivable		12,288			12,532			12,926
Goodwill		84,171			84,171			84,808
Other intangible assets, net		960			1,330			2,702
Other assets		112,671			115,912			113,154
Total assets	$	4,168,998		$	4,106,100		$	3,932,026
Liabilities
Noninterest-bearing deposits	$	882,169		$	836,198		$	832,679
Interest-bearing deposits		2,077,026			2,041,027			2,086,529
Total deposits		2,959,195			2,877,225			2,919,208
Securities sold under retail repurchase agreements and federal funds purchased		67,038			53,842			50,302
Advances from FHLB		569,000			615,000			405,000
Subordinated debentures		35,000			35,000			35,000
Accrued interest payable and other liabilities		28,379			25,670			33,569
Total liabilities		3,658,612			3,606,737			3,443,079
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 25,043,482, 24,990,021 and 24,954,892 at March 31, 2014, December 31, 2013 and March 31, 2013, respectively		25,043			24,990			24,955
Additional paid in capital		193,708			193,445			191,615
Retained earnings		290,285			283,898			262,645
Accumulated other comprehensive income (loss)		1,350			(2,970	)		9,732
Total stockholders' equity		510,386			499,363			488,947
Total liabilities and stockholders' equity	$	4,168,998		$	4,106,100		$	3,932,026

Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

	Three Months Ended
	March 31,
(Dollars in thousands, except per share data)	2014			2013
Interest Income:
Interest and fees on loans and leases	$	29,734		$	29,646
Interest on loans held for sale		59			353
Interest on deposits with banks		20			19
Interest and dividends on investment securities:
Taxable		4,116			3,934
Exempt from federal income taxes		2,321			2,327
Total interest income		36,250			36,279
Interest Expense:
Interest on deposits		1,184			1,455
Interest on retail repurchase agreements and federal funds purchased		38			49
Interest on advances from FHLB		3,218			3,223
Interest on subordinated debt		218			226
Total interest expense		4,658			4,953
Net interest income		31,592			31,326
Provision (credit) for loan and lease losses		(982	)		78
Net interest income after provision (credit) for loan and lease losses		32,574			31,248
Non-interest Income:
Investment securities gains		-			56
Total other-than-temporary impairment ("OTTI") losses		-			-
Portion of OTTI losses recognized in other comprehensive income, before taxes		-			-
Net OTTI recognized in earnings		-			-
Service charges on deposit accounts		1,972			2,069
Mortgage banking activities		316			1,527
Wealth management income		4,466			4,042
Insurance agency commissions		1,640			1,349
Income from bank owned life insurance		598			612
Visa check fees		978			957
Other income		1,279			1,807
Total non-interest income		11,249			12,419
Non-interest Expenses:
Salaries and employee benefits		16,355			16,346
Occupancy expense of premises		3,472			3,182
Equipment expenses		1,256			1,249
Marketing		542			515
Outside data services		1,216			1,152
FDIC insurance		520			596
Amortization of intangible assets		370			461
Other expenses		3,818			4,322
Total non-interest expenses		27,549			27,823
Income before income taxes		16,274			15,844
Income tax expense		5,346			5,286
Net income	$	10,928		$	10,558
Net Income Per Share Amounts:
Basic net income per share	$	0.44		$	0.42
Diluted net income per share	$	0.43		$	0.42
Dividends declared per share	$	0.18		$	0.14

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

	2014			2013
(Dollars in thousands, except per share data)	Q1			Q4			Q3			Q2			Q1
Profitability for the quarter:
Tax-equivalent interest income	$	37,532		$	38,434		$	41,524		$	37,091		$	37,590
Interest expense		4,658			4,759			4,874			4,847			4,953
Tax-equivalent net interest income		32,874			33,675			36,650			32,244			32,637
Tax-equivalent adjustment		1,282			1,325			1,344			1,312			1,311
Provision for loan and lease losses		(982	)		586			1,128			(2,876	)		78
Non-interest income		11,249			11,654			11,223			12,215			12,419
Non-interest expenses		27,549			29,300			26,893			27,508			27,823
Income before income taxes		16,274			14,118			18,508			18,515			15,844
Income tax expense		5,346			4,505			6,419			6,353			5,286
Net income	$	10,928		$	9,613		$	12,089		$	12,162		$	10,558
Financial performance:
Pre-tax pre-provision pre-merger expense income	$	15,292		$	14,704		$	19,636		$	15,639		$	15,922
Return on average assets		1.08	%		0.93	%		1.19	%		1.23	%		1.08	%
Return on average common equity		8.80	%		7.71	%		9.91	%		9.98	%		8.85	%
Net interest margin		3.47	%		3.53	%		3.88	%		3.51	%		3.59	%
Efficiency ratio - GAAP basis (1)		64.31	%		66.59	%		57.80	%		63.75	%		63.60	%
Efficiency ratio - Non-GAAP basis (1)		61.60	%		63.62	%		55.21	%		60.92	%		60.80	%
Per share data:
Basic net income per share	$	0.44		$	0.38		$	0.48		$	0.49		$	0.42
Diluted net income per share	$	0.43		$	0.38		$	0.48		$	0.49		$	0.42
Average fully diluted shares		25,124,206			25,108,109			25,070,506			25,009,092			25,002,612
Dividends declared per common share	$	0.18		$	0.18		$	0.16		$	0.16		$	0.14
Non-interest income:
Securities gains (losses)	$	-		$	(3	)	$	-		$	62		$	56
Service charges on deposit accounts		1,972			2,143			2,171			2,150			2,069
Mortgage banking activities		316			356			(26	)		1,237			1,527
Wealth management income		4,466			4,508			4,503			4,532			4,042
Insurance agency commissions		1,640			1,243			1,193			1,036			1,349
Income from bank owned life insurance		598			635			629			623			612
Visa check fees		978			1,052			1,077			1,079			957
Other income		1,279			1,720			1,676			1,496			1,807
Total non-interest income	$	11,249		$	11,654		$	11,223		$	12,215		$	12,419
Non-interest expense:
Salaries and employee benefits	$	16,355		$	16,707		$	16,382		$	16,163		$	16,346
Occupancy expense of premises		3,472			3,844			3,149			2,996			3,182
Equipment expenses		1,256			1,264			1,200			1,227			1,249
Marketing		542			897			713			755			515
Outside data services		1,216			1,162			1,152			1,114			1,152
FDIC insurance		520			445			678			581			596
Amortization of intangible assets		370			461			462			461			461
Professional fees		914			1,386			511			1,332			1,250
Other real estate owned expenses		-			91			(150	)		(281	)		37
Other expenses		2,904			3,043			2,796			3,160			3,035
Total non-interest expense	$	27,549		$	29,300		$	26,893		$	27,508		$	27,823

(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional, efficiency ratio - non-GAAP basis excludes intangible asset amortization from non-interest expense; excludes securities gains; OTTI losses 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

	2014			2013
(Dollars in thousands)	Q1			Q4			Q3			Q2			Q1
Balance sheets at quarter end:
Residential mortgage loans	$	640,939		$	618,381		$	595,180		$	565,282		$	538,346
Residential construction loans		143,109			129,177			118,316			116,736			122,698
Commercial ADC loans		163,343			160,696			158,739			163,309			150,599
Commercial investor real estate loans		573,634			552,178			518,029			497,365			487,802
Commercial owner occupied real estate loans		582,472			592,823			569,350			563,258			565,820
Commercial business loans		348,180			356,651			332,670			334,979			344,489
Leasing		439			703			962			1,415			1,974
Consumer loans		380,697			373,657			368,764			363,114			353,341
Total loans and leases		2,832,813			2,784,266			2,662,010			2,605,458			2,565,069
Allowance for loan and lease losses		(38,026	)		(38,766	)		(39,422	)		(39,015	)		(41,246	)
Investment securities		997,584			1,016,609			1,077,951			1,102,209			1,008,693
Interest-earning assets		3,891,223			3,836,912			3,771,825			3,802,682			3,660,809
Total assets		4,168,998			4,106,100			4,052,969			4,072,617			3,932,026
Noninterest-bearing demand deposits		882,169			836,198			890,319			877,891			832,679
Total deposits		2,959,195			2,877,225			2,916,466			2,926,650			2,919,208
Customer repurchase agreements		67,038			53,842			53,177			54,731			50,302
Total interest-bearing liabilities		2,748,064			2,744,869			2,634,324			2,678,490			2,576,831
Total stockholders' equity		510,386			499,363			493,882			485,643			488,947
Quarterly average balance sheets:
Residential mortgage loans	$	633,160		$	614,698		$	593,335		$	579,899		$	575,889
Residential construction loans		134,261			125,744			120,676			119,197			120,283
Commercial ADC loans		162,544			156,558			158,557			160,483			148,749
Commercial investor real estate loans		557,168			522,085			499,896			485,630			474,062
Commercial owner occupied real estate loans		584,155			580,808			566,366			561,249			567,723
Commercial business loans		349,734			357,455			331,374			337,843			347,569
Leasing		567			817			1,152			1,644			2,510
Consumer loans		377,822			373,017			366,562			360,842			357,366
Total loans and leases		2,799,411			2,731,182			2,637,918			2,606,787			2,594,151
Investment securities		1,012,701			1,055,432			1,097,643			1,047,726			1,051,769
Interest-earning assets		3,845,513			3,817,033			3,770,855			3,692,215			3,677,444
Total assets		4,105,214			4,082,839			4,039,069			3,959,907			3,946,578
Noninterest-bearing demand deposits		825,968			872,532			862,046			838,502			797,926
Total deposits		2,876,641			2,901,814			2,903,926			2,892,704			2,860,451
Customer repurchase agreements		62,864			57,682			56,766			55,941			52,622
Total interest-bearing liabilities		2,749,459			2,679,812			2,659,406			2,599,704			2,631,198
Total stockholders' equity		503,851			494,779			483,811			489,014			483,664
Financial Measures
Average equity to average assets		12.27	%		12.12	%		11.98	%		12.35	%		12.26	%
Investment securities to earning assets		25.64	%		26.50	%		28.58	%		28.99	%		27.55	%
Loans to earning assets		72.80	%		72.57	%		70.58	%		68.52	%		70.07	%
Loans to assets		67.95	%		67.81	%		65.68	%		63.98	%		65.24	%
Loans to deposits		95.73	%		96.77	%		91.28	%		89.03	%		87.87	%
Capital measures:
Tier 1 leverage		11.43	%		11.32	%		11.29	%		11.28	%		11.07	%
Tier 1 capital to risk-weighted assets		14.64	%		14.42	%		14.45	%		14.30	%		14.23	%
Total regulatory capital to risk-weighted assets		15.85	%		15.65	%		15.70	%		15.55	%		15.48	%
Book value per share	$	20.38		$	19.98		$	19.77		$	19.45		$	19.59
Outstanding shares		25,043,482			24,990,021			24,985,146			24,967,558			24,954,892

Sandy Spring Bancorp, Inc. and Subsidiaries

LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

	2014		2013
(Dollars in thousands)	March 31,		December 31,		September 30,		June 30,		March 31,
Non-Performing Assets:
Loans and leases 90 days past due:
Commercial business	$	-	$	-	$	-	$	15	$	-
Commercial real estate:
Commercial AD&C		-		-		-		-		-
Commercial investor real estate		-		-		-		-		-
Commercial owner occupied real estate		-		-		-		-		-
Leasing		-		-		-		-		-
Consumer		-		1		10		-		54
Residential real estate:
Residential mortgage		-		-		-		-		-
Residential construction		-		-		-		-		-
Total loans and leases 90 days past due		-		1		10		15		54
Non-accrual loans and leases:
Commercial business		3,272		3,400		4,050		4,483		4,012
Commercial real estate:
Commercial AD&C		4,133		4,127		5,086		5,885		5,826
Commercial investor real estate		7,284		6,802		6,877		11,741		12,353
Commercial owner occupied real estate		7,150		5,936		4,202		5,413		5,346
Leasing		-		-		-		-		-
Consumer		2,115		2,259		2,004		2,305		2,388
Residential real estate:
Residential mortgage		5,025		5,735		5,643		5,581		5,393
Residential construction		2,304		2,315		2,327		2,558		3,258
Total non-accrual loans and leases		31,283		30,574		30,189		37,966		38,576
Total restructured loans - accruing		7,411		9,459		8,054		8,213		10,839
Total non-performing loans and leases		38,694		40,034		38,253		46,194		49,469
Other assets and real estate owned (OREO)		1,619		1,338		1,662		4,831		5,250
Total non-performing assets	$	40,313	$	41,372	$	39,915	$	51,025	$	54,719

	For the quarter ended,
	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in thousands)	2014			2013			2013			2013			2013
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period	$	30,574		$	30,189		$	37,966		$	38,576		$	47,548
Non-accrual balances transferred to OREO		(281	)		(365	)		(723	)		(1,426	)		(92	)
Non-accrual balances charged-off		(513	)		(922	)		(4,995	)		(668	)		(2,175	)
Net payments or draws		(1,073	)		(971	)		(13,547	)		(3,560	)		(11,768	)
Loans placed on non-accrual		2,576			3,546			11,488			5,044			5,493
Non-accrual loans brought current		-			(903	)		-			-			(430	)
Balance at end of period	$	31,283		$	30,574		$	30,189		$	37,966		$	38,576
Analysis of Allowance for Loan Losses:
Balance at beginning of period	$	38,766		$	39,422		$	39,015		$	41,246		$	42,957
Provision (credit) for loan and lease losses		(982	)		586			1,128			(2,876	)		78
Less loans charged-off, net of recoveries:
Commercial business		(768	)		384			1			(32	)		1,744
Commercial real estate:
Commercial AD&C		-			85			(616	)		(1,444	)		(1,020	)
Commercial investor real estate		(5	)		23			1,243			123			31
Commercial owner occupied real estate		-			(82	)		(284	)		100			81
Leasing		-			-			(6	)		(4	)		-
Consumer		331			488			169			490			508
Residential real estate:
Residential mortgage		203			347			216			22			447
Residential construction		(3	)		(3	)		(2	)		100			(2	)
Net charge-offs		(242	)		1,242			721			(645	)		1,789
Balance at end of period	$	38,026		$	38,766		$	39,422		$	39,015		$	41,246
Asset Quality Ratios:
Non-performing loans to total loans		1.37	%		1.44	%		1.44	%		1.77	%		1.93	%
Non-performing assets to total assets		0.97	%		1.01	%		0.98	%		1.25	%		1.39	%
Allowance for loan losses to loans		1.34	%		1.39	%		1.48	%		1.50	%		1.61	%
Allowance for loan losses to non-performing loans		98.27	%		96.83	%		103.06	%		84.46	%		83.38	%
Net charge-offs in quarter to average loans		(0.04	)%		0.18	%		0.11	%		(0.10	)%		0.28	%

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

	Three Months Ended March 31,
	2014								2013
						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 (2)	$	633,160		$	5,506		3.48	%	$	575,889		$	5,376		3.73	%
Residential construction loans		134,261			1,254		3.79			120,283			1,004		3.38
Commercial ADC loans		162,544			2,073		5.17			148,749			1,996		5.44
Commercial investor real estate loans		557,168			6,733		4.90			474,062			6,135		5.25
Commercial owner occupied real estate loans		584,155			7,067		5.08			567,723			7,801		5.71
Commercial business loans		349,734			4,037		4.64			347,569			4,586		5.21
Leasing		567			6		4.53			2,510			38		6.07
Consumer loans		377,822			3,117		3.37			357,366			3,063		3.51
Total loans and leases (3)		2,799,411			29,793		4.34			2,594,151			29,999		4.71
Taxable securities		710,246			4,452		2.51			754,112			4,305		2.28
Tax-exempt securities (4)		302,455			3,267		4.32			297,657			3,267		4.39
Interest-bearing deposits with banks		32,925			20		0.25			31,050			19		0.25
Federal funds sold		476			-		0.22			474			-		0.22
Total interest-earning assets		3,845,513			37,532		3.96			3,677,444			37,590		4.13
Less:  allowance for loan and lease losses		(39,393	)							(43,705	)
Cash and due from banks		45,553								46,888
Premises and equipment, net		45,879								48,167
Other assets		207,662								217,784
Total assets	$	4,105,214							$	3,946,578
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	460,245			92		0.08	%	$	423,485			92		0.09	%
Regular savings deposits		249,185			48		0.08			234,492			48		0.08
Money market savings deposits		877,864			273		0.13			892,343			411		0.19
Time deposits		463,379			771		0.67			512,205			904		0.72
Total interest-bearing deposits		2,050,673			1,184		0.23			2,062,525			1,455		0.29
Other borrowings		62,864			38		0.24			65,601			49		0.30
Advances from FHLB		600,922			3,218		2.17			468,072			3,223		2.79
Subordinated debentures		35,000			218		2.49			35,000			226		2.58
Total interest-bearing liabilities		2,749,459			4,658		0.69			2,631,198			4,953		0.76
Noninterest-bearing demand deposits		825,968								797,926
Other liabilities		25,936								33,790
Stockholders' equity		503,851								483,664
Total liabilities and stockholders' equity	$	4,105,214							$	3,946,578
Net interest income and spread				$	32,874		3.27	%				$	32,637		3.37	%
Less: tax-equivalent adjustment					1,282								1,311
Net interest income				$	31,592							$	31,326
Interest income/earning assets							3.96	%							4.13	%
Interest expense/earning assets							0.49								0.54
Net interest margin							3.47	%							3.59	%

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2014 and 2013. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.3 million and $1.3 million in 2014 and 2013, respectively.

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

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

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