EX-99.1 2 v444567_99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

 

 

 News release

  

 

FOR IMMEDIATE RELEASE

 

SANDY SPRING BANCORP REPORTS NET INCOME OF $10.6 MILLION FOR THE SECOND QUARTER

 

OLNEY, MARYLAND, July 21, 2016 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today reported net income for the second quarter of 2016 of $10.6 million ($0.44 per diluted share) compared to net income of $10.3 million ($0.42 per diluted share) for the second quarter of 2015 and net income of $10.8 million ($0.45 per diluted share) for the first quarter of 2016.

 

For the six months ended June 30, 2016, net income was $21.5 million ($0.89 per diluted share) compared to net income of $21.6 million ($0.87 per diluted share) for the first six months of 2015.

 

“During the second quarter, pre-tax, pre-provision income climbed to its highest level since the third quarter of 2013, a quarter which included the effect of significant loan related recoveries. This quarter’s pre-tax, pre-provision income was driven by significant loan and deposit growth. This growth enabled us to shift assets from the investment portfolio to higher yielding loans during the quarter,” said Dan Schrider, President and Chief Executive Officer.

 

“These core activities coupled with the restructuring of borrowings with lower rates and a reduced reliance on borrowed funds during the quarter should make a positive contribution to our prospective earnings run rate,” said Schrider.

 

Second Quarter Highlights:

 

·Pre-tax, pre-provision income increased 11% compared with the second quarter of 2015 and 8% compared to the first quarter of 2016.

 

·Total loans increased 12% compared to the second quarter of 2015 and 3% compared to the first quarter of 2016. Commercial loans increased 15% and residential loans increased 9% over the prior year.

 

·Total deposits grew 8% from the prior year and 3% from the prior quarter.

 

·The net interest margin was 3.51% for the second quarter of 2016, compared to 3.42% for the second quarter of 2015 and 3.44% for the first quarter of 2016.

 

·During the second quarter, the Company prepaid $35 million in FHLB advances and extinguished $5 million in subordinated debentures. These transactions were essentially neutral with respect to net income for the quarter; however, they will have a positive impact on future interest expense.

 

  

 

 

Review of Balance Sheet and Credit Quality

 

Total assets grew 5% to $4.7 billion at June 30, 2016 compared to $4.5 billion at June 30, 2015. This growth was driven by a 12% increase in the loan portfolio as total loans ended the period at $3.7 billion.

 

At June 30, 2016, combined noninterest-bearing and interest-bearing checking account balances, an important performance driver of multiple-product banking relationships with clients, increased 8% compared to balances at June 30, 2015. Total deposits and certain other short-term borrowings that comprise the funding sources derived from customers, increased 8% compared to June 30, 2015.

 

Tangible common equity totaled $439 million at June 30, 2016 compared to $435 million at June 30, 2015. The ratio of tangible common equity to tangible assets decreased to 9.44% at June 30, 2016 from 9.84% at June 30, 2015 due primarily to the growth in assets and share repurchases over the preceding 12 months. Dividends per common share were $0.48 per share for the first six months of 2016 compared to $0.44 per common share for the first six months of 2015, a 9% increase. At June 30, 2016, the Company had a total risk-based capital ratio of 13.57%, a common equity tier 1 risk-based capital ratio of 11.63%, a tier 1 risk-based capital ratio of 12.42% and a tier 1 leverage ratio of 10.29%.

 

Non-performing loans totaled $31.4 million at June 30, 2016 compared to $37.3 million at June 30, 2015 and $34.5 million at December 31, 2015. The level of non-performing loans to total loans decreased to 0.85% at June 30, 2016 compared to 1.13% at June 30, 2015 primarily due to the growth in the overall loan portfolio.

 

Loan charge-offs, net of recoveries, totaled $1.3 million for the second quarter of 2016 compared to negligible net recoveries for the second quarter of 2015 and $0.4 million in charge-offs for the first quarter of 2016. The allowance for loan and lease losses represented 1.18% of outstanding loans and leases and 138% of non-performing loans at June 30, 2016 compared to 1.18% of outstanding loans and leases and 104% of non-performing loans at June 30, 2015. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

 

Income Statement Review

 

Net interest income for the second quarter of 2016 increased 8% compared to the second quarter of 2015. The net interest margin was 3.51% for the second quarter of 2016 compared to 3.42% for the second quarter of 2015 due primarily to a combination of loan growth and the previously mentioned prepayment of FHLB advances and subordinated debentures.

 

The provision for loan and lease losses was $3.0 million for the second quarter of 2016 compared to a charge of $1.2 million for the second quarter of 2015 and $1.2 million for the first quarter of 2016. The increase in the current quarter’s charge versus the prior year’s quarter reflects the growth in the loan portfolio.

 

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Non-interest income increased to $12.8 million for the second quarter of 2016 compared to $12.1 million for the second quarter of 2015. The increase in non-interest income for the quarter compared to the prior year quarter was due primarily to a $1.2 million gain on the extinguishment of $5 million in subordinated debentures. Excluding this transaction, non-interest income decreased 5% as income from wealth management decreased due to the sale of a portion of the assets under management which occurred in the first quarter of 2016.

 

Non-interest expenses increased 5% to $30.9 million for the second quarter of 2016 compared to $29.5 million in the second quarter of 2015. This increase was driven by the prepayment penalties of $1.4 million for the early payoff of $35 million in high-rate FHLB advances during the second quarter. Excluding the prepayment penalties, non-interest expenses remained level compared to the prior year quarter. The non-GAAP efficiency ratio was 59.12% for the second quarter of 2016 compared to 61.35% for the second quarter of 2015.

 

Net interest income for the first six months of 2016 increased 8% compared to the first six months of 2015 due primarily to an increase in average loans, which was funded, in part, by a decrease in lower-yielding investment securities. As a result, net interest margin was 3.47% for the first six months of 2016 compared to 3.43% for the first six months of 2015.

 

The provision for loan and lease losses was a charge of $4.2 million for the first six months of 2016 compared to a charge of $1.8 million for the first six months of 2015 reflecting the growth in the loan portfolio over the prior year period.

 

Non-interest income increased 3% to $26.1 million for the first six months of 2016 compared to $25.3 million for the first six months of 2015. This increase was driven by $1.9 million in gains on securities sales and the extinguishment of subordinated debentures discussed previously. Excluding these transactions, non-interest income decreased 9% due to a decrease in income from wealth management resulting from the sale of a portion of the assets under management and a decrease in income from mortgage banking as mortgage sales volumes declined.

 

Non-interest expenses increased 8% to $63.2 million for the first six months of 2016 compared to $58.7 million for the first six months of 2015. This increase was due largely to prepayment penalties of $3.2 million for the early payoff of $75 million in high-rate FHLB advances. Excluding the prepayment penalties, non-interest expenses increased 2% over the prior year period. The current year-to-date period included increases in salaries and benefits and equipment expenses. The non-GAAP efficiency ratio was 60.47% for the first six months of 2016 compared to 60.75% for the first six months of 2015.

 

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 1-866-235-9910. 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) August 4, 2016. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10088183.

 

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About Sandy Spring Bancorp, Inc.

 

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank. Independent and community-oriented, Sandy Spring Bank offers a broad range of commercial banking, retail banking, mortgage and trust services throughout central Maryland, Northern Virginia, and the greater Washington, D.C. market. Through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services. With $4.7 billion in assets, the bank operates 45 community offices and six financial centers across the region. Visit www.sandyspringbank.com for more information.

 

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, 2015, 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.

 

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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)  2016   2015   Change   2016   2015   Change 
Results of Operations:                              
  Net interest income  $36,732   $33,933    8%  $72,854   $67,306    8%
  Provision for loan and lease losses   2,957    1,218    143    4,193    1,815    131 
  Non-interest income   12,751    12,109    5    26,114    25,268    3 
  Non-interest expenses   30,871    29,477    5    63,188    58,721    8 
  Income before income taxes   15,655    15,347    2    31,587    32,038    (1)
  Net income   10,647    10,333    3    21,460    21,558    - 
                               
  Pre-tax pre-provision income  $18,612   $16,727    11   $35,780   $34,215    5 
                               
  Return on average assets   0.92%   0.93%        0.92%   0.99%     
  Return on average common equity   8.21%   8.02%        8.25%   8.37%     
  Net interest margin   3.51%   3.42%        3.47%   3.43%     
  Efficiency ratio - GAAP basis (1)   62.39%   64.02%        63.85%   63.43%     
  Efficiency ratio - Non-GAAP basis (1)   59.12%   61.35%        60.47%   60.75%     
                               
Per share data:                              
  Basic net income  $0.45   $0.42    7%  $0.90   $0.87    3%
  Diluted net income  $0.44   $0.42    5   $0.89   $0.87    2 
  Average fully diluted shares   24,108,668    24,689,762    (2)   24,165,675    24,867,988    (3)
  Dividends declared per share  $0.24   $0.22    9   $0.48   $0.44    9 
  Book value per share   22.18    21.12    5    22.18    21.12    5 
  Tangible book value per share   18.40    17.71    4    18.40    17.71    4 
  Outstanding shares   23,874,650    24,562,471    (3)   23,874,650    24,562,471    (3)
                               
Financial Condition at period-end:                              
  Investment securities  $734,828   $878,284    (16)%  $734,828   $878,284    (16)%
  Loans and leases   3,672,624    3,288,865    12    3,672,624    3,288,865    12 
  Interest-earning assets   4,461,180    4,222,667    6    4,461,180    4,222,667    6 
  Assets   4,739,449    4,507,367    5    4,739,449    4,507,367    5 
  Deposits   3,510,141    3,247,346    8    3,510,141    3,247,346    8 
  Interest-bearing liabilities   2,996,893    2,851,750    5    2,996,893    2,851,750    5 
  Stockholders' equity   529,479    518,873    2    529,479    518,873    2 
                               
Capital ratios:                              
  Tier 1 leverage (4)   10.29%   10.83%        10.29%   10.83%     
  Tier 1 capital to risk-weighted assets (4)   12.42%   13.54%        12.42%   13.54%     
  Total regulatory capital to risk-weighted assets (4)   13.57%   14.65%        13.57%   14.65%     
  Common equity tier 1 capital to risk-weighted assets (4)   11.63%   12.53%        11.63%   12.53%     
  Tangible common equity to tangible assets (2)   9.44%   9.84%        9.44%   9.84%     
  Average equity to average assets   11.18%   11.65%        11.18%   11.78%     
                               
Credit quality ratios:                              
  Allowance for loan and lease losses to loans and leases   1.18%   1.18%        1.18%   1.18%     
  Non-performing loans to total loans   0.85%   1.13%        0.85%   1.13%     
  Non-performing assets to total assets   0.69%   0.93%        0.69%   0.93%     
  Allowance for loan and lease losses to non-performing loans   138.36%   103.71%        138.36%   103.71%     
  Annualized net charge-offs to average loans and leases (3)   0.15%   -%        0.10%   0.06%     

 

(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; 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.
(4) Estimated ratio at June 30, 2016                          

  

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Sandy Spring Bancorp, Inc. and Subsidiaries

RECONCILIATION TABLE - UNAUDITED

                  

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
(Dollars in thousands)  2016   2015   2016   2015 
Pre-tax pre-provision income:                
Net income  $10,647   $10,333   $21,460   $21,558 
  Plus non-GAAP adjustment:                    
     Litigation expenses   -    162    -    362 
     Income taxes   5,008    5,014    10,127    10,480 
     Provision (credit) for loan and lease losses   2,957    1,218    4,193    1,815 
Pre-tax pre-provision income  $18,612   $16,727   $35,780   $34,215 
                     
Efficiency ratio - GAAP basis:                    
Non-interest expenses  $30,871   $29,477   $63,188   $58,721 
                     
Net interest income plus non-interest income  $49,483   $46,042   $98,968   $92,574 
                     
Efficiency ratio - GAAP basis   62.39%   64.02%   63.85%   63.43%
                     
                     
Efficiency ratio - Non-GAAP basis:                    
Non-interest expenses  $30,871   $29,477   $63,188   $58,721 
  Less non-GAAP adjustment:                    
     Amortization of intangible assets   28    106    60    213 
     Loss on FHLB Redemption   1,416         3,167      
     Litigation expenses   -    162    -    362 
Non-interest expenses -  as adjusted  $29,427   $29,209   $59,961   $58,146 
                     
Net interest income plus non-interest income  $49,483   $46,042   $98,968   $92,574 
  Plus non-GAAP adjustment:                    
     Tax-equivalent income   1,640    1,589    3,304    3,153 
  Less non-GAAP adjustments:                    
     Securities gains   150    19    1,919    19 
     Gain on redemption of subordinated debentures   1,200    -    1,200    - 
Net interest income plus non-interest income - as adjusted  $49,773   $47,612   $99,153   $95,708 
                     
Efficiency ratio - Non-GAAP basis   59.12%   61.35%   60.47%   60.75%
                     
Tangible common equity ratio:                    
Total stockholders' equity  $529,479   $518,873   $529,479   $518,873 
Accumulated other comprehensive income   (5,886)   592    (5,886)   592 
Goodwill   (84,171)   (84,171)   (84,171)   (84,171)
Other intangible assets, net   (77)   (296)   (77)   (296)
Tangible common equity  $439,345   $434,998   $439,345   $434,998 
                     
Total assets  $4,739,449   $4,507,367   $4,739,449   $4,507,367 
Goodwill   (84,171)   (84,171)   (84,171)   (84,171)
Other intangible assets, net   (77)   (296)   (77)   (296)
Tangible assets  $4,655,201   $4,422,900   $4,655,201   $4,422,900 
                     
Tangible common equity ratio   9.44%   9.84%   9.44%   9.84%
                     
Outstanding common shares   23,874,650    24,562,471    23,874,650    24,562,471 
Tangible book value per common share  $18.40   $17.71   $18.40   $17.71 

 

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Sandy Spring Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED             

 

   June 30,   December 31,   June 30, 
(Dollars in thousands)  2016   2015   2015 
Assets               
  Cash and due from banks  $53,334   $46,956   $53,569 
  Federal funds sold   832    472    472 
  Interest-bearing deposits with banks   39,406    25,454    35,601 
     Cash and cash equivalents   93,572    72,882    89,642 
  Residential mortgage loans held for sale (at fair value)   13,490    15,457    19,445 
  Investments available-for-sale (at fair value)   700,486    592,049    625,819 
  Investments held-to-maturity -- fair value of $211,704 and $217,880 at December 31, 2015               
     and June 30, 2015, respectively   -    208,265    216,866 
  Other equity securities   34,342    41,336    35,599 
  Total loans and leases   3,672,624    3,495,370    3,288,865 
     Less: allowance for loan and lease losses   (43,384)   (40,895)   (38,713)
  Net loans and leases   3,629,240    3,454,475    3,250,152 
  Premises and equipment, net   53,055    53,214    51,609 
  Other real estate owned   1,311    2,742    4,514 
  Accrued interest receivable   13,399    13,443    13,144 
  Goodwill   84,171    84,171    84,171 
  Other intangible assets, net   77    138    296 
  Other assets   116,306    117,208    116,110 
Total assets  $4,739,449   $4,655,380   $4,507,367 
                
Liabilities               
  Noninterest-bearing deposits  $1,176,135   $1,001,841   $1,092,413 
  Interest-bearing deposits   2,334,006    2,261,889    2,154,933 
     Total deposits   3,510,141    3,263,730    3,247,346 
  Securities sold under retail repurchase agreements and federal funds purchased   117,887    109,145    111,817 
  Advances from FHLB   515,000    685,000    550,000 
  Subordinated debentures   30,000    35,000    35,000 
  Accrued interest payable and other liabilities   36,942    38,078    44,331 
     Total liabilities   4,209,970    4,130,953    3,988,494 
                
Stockholders' Equity               
                 
     Common stock -- par value $1.00; shares authorized 50,000,000; shares issued
        and outstanding 23,874,650, 24,295,971 and 24,562,471 at June 30, 2016,
        December 31, 2015 and June 30, 2015, respectively		   23,875    24,296    24,562 
  Additional paid in capital   164,040    175,588    181,504 
  Retained earnings   335,678    325,840    313,399 
  Accumulated other comprehensive income (loss)   5,886    (1,297)   (592)
     Total stockholders' equity   529,479    524,427    518,873 
Total liabilities and stockholders' equity  $4,739,449   $4,655,380   $4,507,367 

 

 

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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)  2016   2015   2016   2015 
Interest Income:                    
 Interest and fees on loans and leases  $36,928   $33,031   $73,134   $65,170 
 Interest on loans held for sale   64    132    198    208 
 Interest on deposits with banks   54    22    107    44 
 Interest and dividends on investment securities:                    
    Taxable   2,840    3,850    6,126    7,427 
    Exempt from federal income taxes   1,916    1,814    3,889    4,072 
 Interest on federal funds sold   1    -    2    - 
     Total interest income   41,803    38,849    83,456    76,921 
Interest Expense:                    
Interest on deposits   2,041    1,367    3,878    2,561 
Interest on retail repurchase agreements and federal funds purchased   72    60    138    110 
Interest on advances from FHLB   2,739    3,266    6,113    6,502 
Interest on subordinated debt   219    223    473    442 
     Total interest expense   5,071    4,916    10,602    9,615 
Net interest income   36,732    33,933    72,854    67,306 
Provision for loan and lease losses   2,957    1,218    4,193    1,815 
     Net interest income after provision for loan and lease losses   33,775    32,715    68,661    65,491 
Non-interest Income:                    
 Investment securities gains   150    19    1,919    19 
 Service charges on deposit accounts   1,956    1,839    3,859    3,721 
 Mortgage banking activities   1,106    822    1,641    2,000 
 Wealth management income   4,448    5,161    8,853    10,077 
 Insurance agency commissions   949    881    2,394    2,499 
 Income from bank owned life insurance   615    606    1,230    1,319 
 Bank card fees   1,220    1,220    2,309    2,277 
 Other income   2,307    1,561    3,909    3,356 
     Total non-interest income   12,751    12,109    26,114    25,268 
Non-interest Expenses:                    
 Salaries and employee benefits   17,221    17,534    35,451    34,833 
 Occupancy expense of premises   3,162    3,173    6,635    6,662 
 Equipment expenses   1,693    1,490    3,357    2,863 
 Marketing   662    942    1,343    1,473 
 Outside data services   1,355    1,102    2,718    2,363 
 FDIC insurance   649    654    1,286    1,285 
 Amortization of intangible assets   28    106    60    213 
 Litigation expenses   -    162    -    362 
 Other expenses   6,101    4,314    12,338    8,667 
     Total non-interest expenses   30,871    29,477    63,188    58,721 
Income before income taxes   15,655    15,347    31,587    32,038 
Income tax expense   5,008    5,014    10,127    10,480 
     Net income  $10,647   $10,333   $21,460   $21,558 
                     
Net Income Per Share Amounts:                    
Basic net income per share  $0.45   $0.42   $0.90   $0.87 
Diluted net income per share  $0.44   $0.42   $0.89   $0.87 
Dividends declared per share  $0.24   $0.22   $0.48   $0.44 

 

 

8 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

 

   2016   2015 
(Dollars in thousands, except per share data)  Q2   Q1   Q4   Q3   Q2   Q1 
Profitability for the Quarter:                              
Tax-equivalent interest income  $43,443   $43,317   $42,736   $41,980   $40,438   $39,343 
Interest expense   5,071    5,531    5,297    5,201    4,916    4,699 
Tax-equivalent net interest income   38,372    37,786    37,439    36,779    35,522    34,644 
  Tax-equivalent adjustment   1,640    1,664    1,662    1,663    1,589    1,271 
Provision for loan and lease losses   2,957    1,236    1,850    1,706    1,218    597 
Non-interest income   12,751    13,363    12,243    12,390    12,109    13,159 
Non-interest expenses   30,871    32,317    26,996    29,630    29,477    29,244 
Income before income taxes   15,655    15,932    19,174    16,170    15,347    16,691 
Income tax expense   5,008    5,119    6,372    5,175    5,014    5,466 
Net income  $10,647   $10,813   $12,802   $10,995   $10,333   $11,225 
Financial Performance:                              
Pre-tax pre-provision income  $18,612   $17,168   $16,638   $18,031   $16,727   $17,488 
Return on average assets   0.92%   0.93%   1.11%   0.96%   0.93%   1.04%
Return on average common equity   8.21%   8.29%   9.73%   8.41%   8.02%   8.73%
Net interest margin   3.51%   3.44%   3.45%   3.43%   3.42%   3.44%
Efficiency ratio - GAAP basis (1)   62.39%   65.31%   56.22%   62.37%   64.02%   62.85%
Efficiency ratio - Non-GAAP basis (1)   59.12%   61.84%   63.08%   59.73%   61.35%   60.53%
Per Share Data:                              
Basic net income per share  $0.45   $0.45   $0.53   $0.45   $0.42   $0.45 
Diluted net income per share  $0.44   $0.45   $0.52   $0.45   $0.42   $0.45 
Average fully diluted shares   24,108,668    24,222,940    24,455,847    24,602,817    24,689,762    25,048,576 
Dividends declared per common share  $0.24   $0.24   $0.24   $0.22   $0.22   $0.22 
Non-interest Income:                              
Securities gains  $150   $1,769   $16   $1   $19   $- 
Service charges on deposit accounts   1,956    1,903    1,950    1,936    1,839    1,882 
Mortgage banking activities   1,106    535    548    566    822    1,178 
Wealth management income   4,448    4,405    4,891    4,963    5,161    4,916 
Insurance agency commissions   949    1,445    1,029    1,648    881    1,618 
Income from bank owned life insurance   615    615    634    618    606    713 
Bank card fees   1,220    1,089    1,177    1,198    1,220    1,057 
Other income   2,307    1,602    1,998    1,460    1,561    1,795 
  Total Non-interest Income  $12,751   $13,363   $12,243   $12,390   $12,109   $13,159 
Non-interest Expense:                              
Salaries and employee benefits  $17,221   $18,230   $18,437   $17,733   $17,534   $17,299 
Occupancy expense of premises   3,162    3,473    3,061    3,086    3,173    3,489 
Equipment expenses   1,693    1,664    1,608    1,600    1,490    1,373 
Marketing   662    681    735    688    942    531 
Outside data services   1,355    1,363    1,331    1,329    1,102    1,261 
FDIC insurance   649    637    641    565    654    631 
Amortization of intangible assets   28    32    52    107    106    107 
Litigation expenses   -    -    (4,386)   155    162    200 
Professional fees   1,447    1,138    1,322    1,089    1,199    1,209 
Other real estate owned expenses   (5)   17    14    48    4    10 
Other expenses   4,659    5,082    4,181    3,230    3,111    3,134 
  Total Non-interest Expense  $30,871   $32,317   $26,996   $29,630   $29,477   $29,244 

 

(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.        

  

9 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED                 

 

   2016   2015 
(Dollars in thousands)  Q2   Q1   Q4   Q3   Q2   Q1 
Balance Sheets at Quarter End:                              
Residential mortgage loans  $820,618   $804,105   $796,358   $773,889   $744,195   $728,858 
Residential construction loans   142,710    138,221    129,281    139,492    137,134    130,321 
Commercial ADC loans   285,585    261,204    255,980    239,160    223,103    203,731 
Commercial investor real estate loans   824,252    783,161    719,084    710,694    694,179    668,931 
Commercial owner occupied real estate loans   700,599    675,560    678,027    680,601    643,973    618,846 
Commercial business loans   451,711    451,239    465,765    423,855    409,795    385,452 
Leasing   -    -    -    19    21    36 
Consumer loans   447,149    447,198    450,875    444,729    436,465    428,531 
  Total loans and leases   3,672,624    3,560,688    3,495,370    3,412,439    3,288,865    3,164,706 
Allowance for loan and lease losses   (43,384)   (41,766)   (40,895)   (39,661)   (38,713)   (37,475)
Loans held for sale   13,490    27,806    15,457    10,418    19,445    13,899 
Investment securities   734,828    742,401    841,650    862,409    878,284    912,565 
Interest-earning assets   4,461,180    4,447,063    4,378,403    4,339,375    4,222,667    4,125,549 
Total assets   4,739,449    4,716,608    4,655,380    4,611,034    4,507,367    4,401,380 
Noninterest-bearing demand deposits   1,176,135    1,084,746    1,001,841    1,068,299    1,092,413    1,017,566 
Total deposits   3,510,141    3,412,308    3,263,730    3,275,668    3,247,346    3,109,892 
Customer repurchase agreements   117,887    121,043    109,145    121,378    111,817    101,640 
Total interest-bearing liabilities   2,996,893    3,073,605    3,091,034    2,973,747    2,851,750    2,818,966 
Total stockholders' equity   529,479    522,392    524,427    523,594    518,873    521,768 
Quarterly Average Balance Sheets:                              
Residential mortgage loans  $811,705   $807,443   $781,015   $754,007   $734,382   $724,248 
Residential construction loans   142,854    134,708    133,812    134,448    137,216    132,456 
Commercial ADC loans   272,090    261,687    247,612    227,545    218,341    206,105 
Commercial investor real estate loans   788,785    750,821    717,742    704,068    668,883    645,163 
Commercial owner occupied real estate loans   684,907    677,786    673,883    656,337    624,407    611,722 
Commercial business loans   453,459    460,903    424,510    413,300    398,510    383,111 
Leasing   -    -    17    19    28    44 
Consumer loans   449,594    451,075    448,439    441,740    434,011    425,434 
  Total loans and leases   3,603,394    3,544,423    3,427,030    3,331,464    3,215,778    3,128,283 
Loans held for sale   8,326    14,036    11,951    21,070    14,075    7,053 
Investment securities   739,132    810,593    840,276    869,461    898,237    925,683 
Interest-earning assets   4,394,879    4,411,796    4,320,674    4,261,939    4,162,963    4,097,648 
Total assets   4,664,343    4,685,747    4,594,025    4,537,142    4,438,670    4,372,988 
Noninterest-bearing demand deposits   1,082,762    1,021,471    1,058,215    1,063,500    1,023,042    986,688 
Total deposits   3,429,897    3,300,131    3,285,299    3,263,993    3,128,562    3,056,186 
Customer repurchase agreements   122,597    110,862    125,275    121,127    106,179    90,020 
Total interest-bearing liabilities   3,020,505    3,103,710    2,968,555    2,906,348    2,852,414    2,817,575 
Total stockholders' equity   521,387    524,309    521,786    518,619    516,940    521,346 
Financial Measures:                              
Average equity to average assets   11.18%   11.19%   11.36%   11.43%   11.65%   11.92%
Investment securities to earning assets   16.47%   16.69%   19.22%   19.87%   20.80%   22.12%
Loans to earning assets   82.32%   80.07%   79.83%   78.64%   77.89%   76.71%
Loans to assets   77.49%   75.49%   75.08%   74.01%   72.97%   71.90%
Loans to deposits   104.63%   104.35%   107.10%   104.18%   101.28%   101.76%
Capital Measures:                              
Tier 1 leverage  (1)   10.29%   10.23%   10.60%   10.65%   10.83%   11.00%
Tier 1 capital to risk-weighted assets  (1)   12.42%   12.74%   13.13%   13.17%   13.54%   14.03%
Total regulatory capital to risk-weighted assets  (1)   13.57%   13.86%   14.25%   14.27%   14.65%   15.14%
Common equity tier 1 capital to risk-weighted assets   (1)   11.63%   11.79%   12.17%   12.20%   12.53%   12.99%
Book value per share  $22.18   $21.92   $21.58   $21.44   $21.12   $21.10 
Outstanding shares   23,874,650    23,827,305    24,295,971    24,424,944    24,562,471    24,733,868 

 

(1) Estimated ratio at June 30, 2016

  

10 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

                          

   2016   2015 
(Dollars in thousands)  June 30,   March 31,   December 31,   September 30,   June 30,   March 31, 
Non-Performing Assets:                              
Loans and leases 90 days past due:                              
   Commercial business  $-   $-   $-   $-   $-   $- 
   Commercial real estate:                              
     Commercial AD&C   -    -    -    -    -    - 
     Commercial investor real estate   -    -    -    -    -    - 
     Commercial owner occupied real estate   -    -    -    -    -    - 
   Leasing   -    -    -    1    2    - 
   Consumer   2    1    -    -    7    - 
   Residential real estate:                              
     Residential mortgage   -    -    -    -    -    - 
     Residential construction   -    -    -    -    -    - 
Total loans and leases 90 days past due   2    1    -    1    9    - 
Non-accrual loans and leases:                              
   Commercial business   4,263    3,741    3,696    3,881    3,285    4,166 
   Commercial real estate:                              
     Commercial AD&C   137    147    194    194    194    1,363 
     Commercial investor real estate   8,868    7,885    8,368    8,609    10,023    10,083 
     Commercial owner occupied real estate   5,678    7,149    6,340    7,932    8,423    8,974 
   Leasing   -    -    -    -    -    - 
   Consumer   2,600    2,715    2,193    1,621    1,214    1,962 
   Residential real estate:                              
     Residential mortgage   6,186    9,329    8,822    7,488    7,780    3,235 
     Residential construction   202    412    418    770    780    788 
Total non-accrual loans and leases   27,934    31,378    30,031    30,495    31,699    30,571 
Total restructured loans - accruing   3,420    4,716    4,467    6,419    5,620    5,446 
Total non-performing loans and leases   31,356    36,095    34,498    36,915    37,328    36,017 
Other assets and real estate owned (OREO)   1,311    2,414    2,742    2,619    4,514    3,227 
Total non-performing assets  $32,667   $38,509   $37,240   $39,534   $41,842   $39,244 

 

 

   For the quarter ended, 
   June 30,   March 31,   December 31,   September 30,   June 30,   March 31, 
(Dollars in thousands)  2016   2016   2015   2015   2015   2015 
Analysis of Non-accrual Loan and Lease Activity:                              
Balance at beginning of period  $31,378   $30,031   $30,495   $31,699   $30,571   $28,530 
   Non-accrual balances transferred to OREO   -    -    (423)   (180)   (1,309)   (32)
   Non-accrual balances charged-off   (1,305)   (274)   (869)   (752)   (549)   (1,077)
   Net payments or draws   (4,810)   (914)   (3,084)   (1,846)   (2,970)   (1,067)
   Loans placed on non-accrual   2,671    2,535    3,912    1,574    5,956    4,217 
   Non-accrual loans brought current   -    -    -    -    -    - 
Balance at end of period  $27,934   $31,378   $30,031   $30,495   $31,699   $30,571 
                               
Analysis of Allowance for Loan Losses:                              
Balance at beginning of period  $41,766   $40,895   $39,661   $38,713   $37,475   $37,802 
Provision for loan and lease losses   2,957    1,236    1,850    1,706    1,218    597 
Less loans charged-off, net of recoveries:                              
   Commercial business   106    67    (128)   (25)   73    (89)
   Commercial real estate:                              
     Commercial AD&C   -    48    -    -    (547)   706 
     Commercial investor real estate   (107)   192    (4)   (5)   85    (5)
     Commercial owner occupied real estate   (1)   (3)   725    104    (1)   212 
   Leasing   -    -    4    -    -    - 
   Consumer   364    54    (31)   348    395    43 
   Residential real estate:                              
     Residential mortgage   989    15    80    342    (18)   65 
     Residential construction   (12)   (8)   (30)   (6)   (7)   (8)
Net charge-offs   1,339    365    616    758    (20)   924 
Balance at end of period  $43,384   $41,766   $40,895   $39,661   $38,713   $37,475 
                               
Asset Quality Ratios:                              
Non-performing loans to total loans   0.85%   1.01%   0.99%   1.08%   1.13%   1.14%
Non-performing assets to total assets   0.69%   0.82%   0.80%   0.86%   0.93%   0.89%
Allowance for loan losses to loans   1.18%   1.17%   1.17%   1.16%   1.18%   1.18%
Allowance for loan losses to non-performing loans   138.36%   115.72%   118.54%   107.44%   103.71%   104.05%
Annualized net charge-offs to average loans   0.15%   0.04%   0.07%   0.09%   0.00%   0.12%

  

11 

 

Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

                             

 

   Three Months Ended June 30, 
   2016   2015 
           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  $811,705   $6,934    3.42%  $734,382   $6,155    3.35%
Residential construction loans   142,854    1,268    3.57    137,216    1,268    3.71 
Total mortgage loans   954,559    8,202    3.44    871,598    7,423    3.41 
Commercial ADC loans   272,090    3,115    4.60    218,341    2,525    4.64 
Commercial investor real estate loans   788,785    8,988    4.58    668,883    7,771    4.66 
Commercial owner occupied real estate loans   684,907    8,280    4.86    624,407    7,669    4.93 
Commercial business loans   453,459    4,943    4.38    398,510    4,369    4.40 
Leasing   -    -    -    28    -    1.49 
Total commercial loans and leases   2,199,241    25,326    4.63    1,910,169    22,334    4.69 
Consumer loans   449,594    3,885    3.50    434,011    3,606    3.35 
  Total loans and leases (2)   3,603,394    37,413    4.17    3,215,778    33,363    4.16 
Loans held for sale   8,326    64    3.08    14,075    132    3.76 
Taxable securities   456,803    2,943    2.58    606,581    3,786    2.50 
Tax-exempt securities (3)   282,329    2,968    4.21    291,656    3,135    4.30 
Total investment securities   739,132    5,911    3.20    898,237    6,921    3.08 
Interest-bearing deposits with banks   43,300    54    0.50    34,400    22    0.25 
Federal funds sold   727    1    0.49    473    -    0.22 
  Total interest-earning assets   4,394,879    43,443    3.97    4,162,963    40,438    3.89 
                               
Less:  allowance for loan and lease losses   (42,064)             (38,217)          
Cash and due from banks   46,527              46,894           
Premises and equipment, net   53,218              51,591           
Other assets   211,783              215,439           
   Total assets  $4,664,343             $4,438,670           
                               
Liabilities and Stockholders' Equity                              
Interest-bearing demand deposits  $586,323    115    0.08%  $527,307    101    0.08%
Regular savings deposits   298,435    47    0.06    278,199    37    0.05 
Money market savings deposits   907,670    495    0.22    833,382    317    0.15 
Time deposits   554,707    1,384    1.00    466,632    912    0.78 
   Total interest-bearing deposits   2,347,135    2,041    0.35    2,105,520    1,367    0.26 
Other borrowings   122,601    72    0.24    106,180    60    0.23 
Advances from FHLB   519,780    2,739    2.12    605,714    3,266    2.16 
Subordinated debentures   30,989    219    2.83    35,000    223    2.55 
  Total interest-bearing liabilities   3,020,505    5,071    0.68    2,852,414    4,916    0.69 
                               
Noninterest-bearing demand deposits   1,082,762              1,023,042           
Other liabilities   39,689              46,274           
Stockholders' equity   521,387              516,940           
  Total liabilities and stockholders' equity  $4,664,343             $4,438,670           
                               
Net interest income and spread       $38,372    3.29%       $35,522    3.20%
  Less: tax-equivalent adjustment        1,640              1,589      
Net interest income       $36,732             $33,933      
                               
Interest income/earning assets             3.97%             3.89%
Interest expense/earning assets             0.46              0.47 
  Net interest margin             3.51%             3.42%

 

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2016 and 2015. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.6 million and $1.6 million in 2016 and 2015, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.                        

  

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Sandy Spring Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

                              

   Six Months Ended June 30, 
   2016   2015 
           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  $809,574   $13,802    3.41%  $729,343   $12,279    3.37%
Residential construction loans   138,781    2,463    3.57    134,849    2,489    3.72 
Total mortgage loans   948,355    16,265    3.43    864,192    14,768    3.42 
Commercial ADC loans   266,888    6,113    4.61    212,257    4,862    4.62 
Commercial investor real estate loans   769,803    17,600    4.60    657,088    15,350    4.71 
Commercial owner occupied real estate loans   681,347    16,365    4.83    618,100    15,200    4.96 
Commercial business loans   457,181    9,956    4.38    390,853    8,507    4.39 
Leasing   -    -    -    36    1    3.76 
Total commercial loans and leases   2,175,219    50,034    4.63    1,878,334    43,920    4.72 
Consumer loans   450,335    7,774    3.49    429,746    7,106    3.35 
  Total loans and leases (2)   3,573,909    74,073    4.16    3,172,272    65,794    4.18 
Loans held for sale   11,181    198    3.54    10,583    208    3.94 
Taxable securities   490,338    6,356    2.59    617,861    7,722    2.50 
Tax-exempt securities (3)   284,524    6,024    4.23    294,024    6,305    4.29 
Total investment securities   774,862    12,380    3.20    911,885    14,027    3.08 
Interest-bearing deposits with banks   42,777    107    0.50    35,273    44    0.25 
Federal funds sold   608    2    0.48    473    1    0.22 
  Total interest-earning assets   4,403,337    86,760    3.96    4,130,486    80,074    3.90 
                               
Less:  allowance for loan and lease losses   (41,567)             (37,833)          
Cash and due from banks   46,783              46,663           
Premises and equipment, net   53,396              51,127           
Other assets   212,915              215,567           
   Total assets  $4,674,864             $4,406,010           
                               
Liabilities and Stockholders' Equity                              
Interest-bearing demand deposits  $577,771    223    0.08%  $525,692    207    0.08%
Regular savings deposits   294,339    89    0.06    274,220    71    0.05 
Money market savings deposits   902,352    932    0.21    832,549    590    0.14 
Time deposits   538,435    2,634    0.98    455,147    1,693    0.75 
   Total interest-bearing deposits   2,312,897    3,878    0.34    2,087,608    2,561    0.25 
Other borrowings   116,792    138    0.24    98,228    110    0.23 
Advances from FHLB   599,423    6,113    2.05    614,254    6,502    2.13 
Subordinated debentures   32,995    473    2.87    35,000    442    2.53 
  Total interest-bearing liabilities   3,062,107    10,602    0.70    2,835,090    9,615    0.68 
                               
Noninterest-bearing demand deposits   1,052,116              1,004,965           
Other liabilities   37,793              46,824           
Stockholders' equity   522,848              519,131           
  Total liabilities and stockholders' equity  $4,674,864             $4,406,010           
                               
Net interest income and spread       $76,158    3.26%       $70,459    3.22%
  Less: tax-equivalent adjustment        3,304              3,153      
Net interest income       $72,854             $67,306      
                               
Interest income/earning assets             3.96%             3.90%
Interest expense/earning assets             0.49              0.47 
  Net interest margin             3.47%             3.43%

 

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2016 and 2015. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $3.3 million and $3.2 million in 2016 and 2015, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.                        

 

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