Sandy Spring Bancorp Reports First Quarter Earnings of $75.5 Million

OLNEY, Md., April 22, 2021 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, today reported net income of $75.5 million ($1.58 per diluted common share) for the first quarter of 2021. The current quarter’s result compares to net income of $10.0 million ($0.28 per diluted common share) for the first quarter of 2020 and net income of $56.7 million ($1.19 per diluted common share) for the fourth quarter of 2020. 

Core earnings for the current quarter, which exclude the impact of the provision for credit losses and provision on unfunded loan commitments, merger and acquisition expense, loss on FHLB redemptions, amortization of intangibles and investment securities gains, each on an after-tax basis, were $56.9 million ($1.20 per diluted common share), compared to $29.6 million ($0.85 per diluted common share) for the quarter ended March 31, 2020 and $55.7 million ($1.18 per diluted common share) for the quarter ended December 31, 2020.

The current quarter's provision for credit losses was a credit of $34.7 million as compared to a credit of $4.5 million for the fourth quarter of 2020. The current quarter's large credit for the provision for credit losses compared to the prior quarter is principally the result of a decline in the forecasted unemployment rate and, to a lesser degree, improvements in other forecasted macroeconomic indicators. 

“We delivered a solid first quarter. We are pleased with the stability in the margin, the contributions of our fee-based lines of business, the improved economic forecast and the resiliency of our loan portfolio’s credit quality. Our credit outlook is strong, and we are ready to help our clients reopen, recover and emerge stronger than ever,” said Daniel J. Schrider, President and CEO.

“We also look forward to entering the next phase of our return-to-work plan. We will apply the lessons we have learned about remote work and how we can use technology to do our jobs more effectively, but it is our goal to welcome our employees back to our offices in the months ahead. As a company that prioritizes people and relationships, we believe that in-person collaboration is what is best for our culture and how we do business.”

First Quarter Highlights:

• Total assets at March 31, 2021, grew 44% to $12.9 billion compared to March 31, 2020, primarily due to the Revere Bank (“Revere”) acquisition in the second quarter of 2020. During this period, the participation in the Paycheck Protection Program ("PPP" or "PPP Program") resulted in the addition of $1.3 billion in outstanding commercial business loans. As a result of these strategic initiatives, loans and deposits grew by 55% and 62%, respectively.   
• The net interest margin was 3.56% for the first quarter of 2021, compared to 3.29% for the same quarter of 2020, and 3.38% for the fourth quarter of 2020. Excluding the impact of the amortization of the fair value marks derived from acquisitions, the current quarter’s net interest margin would have been 3.46%, compared to 3.27% for first quarter of 2020, and 3.31% for the fourth quarter of 2020. 
• The provision for credit losses was a credit of $34.7 million for the current quarter compared to the prior quarter’s credit to the provision of $4.5 million. The significant credit to the provision was primarily the result of the improvement in the forecasted unemployment rate. 
• Non-interest income for the current quarter increased by 59% or $10.7 million compared to the prior year quarter, as a result of a 235% increase in income from mortgage banking activities and 25% growth in wealth management income as a result of the acquisition of Rembert Pendleton Jackson (“RPJ”) in the first quarter of the prior year.  
• Non-interest expense increased $20.4 million or 43% for the first quarter of 2021, compared to the prior year quarter. This increase was driven primarily by two factors: the impact of the acquisitions of Revere and RPJ, which increased compensation and operational costs, in addition to intangible asset amortization, and $9.1 million in prepayment penalties incurred on the early redemption of FHLB advances in the first quarter of the current year. 
• Return on average assets (“ROA”) for the quarter ended March 31, 2021 was 2.39% and return on average tangible common equity (“ROTCE”) was 28.47%. This compares to ROA of 1.78% and ROTCE of 21.89% for the prior quarter. The non-GAAP efficiency ratio for the first quarter of 2021 was 42.65% compared to 45.09% for the fourth quarter of 2020. 
• During the quarter, the dividend was increased to $0.32 from $0.30 per common share.

Balance Sheet and Credit Quality

Total assets grew to $12.9 billion at March 31, 2021, as compared to $8.9 billion at March 31, 2020. Year-over-year asset growth was primarily the result of the acquisition of Revere in April 2020, in addition to the Company’s participation in the PPP program. During this period, total loans grew by 55% to $10.4 billion at March 31, 2021, compared to $6.7 billion at March 31, 2020. Excluding PPP loans, total loans grew 36% to $9.1 billion at March 31, 2021 as compared to the prior year quarter. The 2020 acquisition of Revere drove the majority of the increase in commercial loans, which, excluding PPP loans, grew 49% or $2.5 billion. The residential mortgage loan portfolio decreased 8% year-over-year as the majority of loan originations during the past year were sold in the secondary market. Consumer loan growth during the year was 9%, also a result of the acquisition. Deposit growth was 62% during the past twelve months, as noninterest-bearing deposits experienced growth of 94% and interest-bearing deposits grew 48%. This growth was driven primarily by the Revere acquisition and, to a lesser extent, the PPP program.

During the current quarter the Company originated $446.0 million in first and second draw loans under the reinitiated PPP program. During the quarter, the Company recognized $7.9 million of fees into interest income from the total fees received under the program. In addition to processing applications for new loans under the reinitiated PPP program, the Company began accepting digital PPP forgiveness applications. As of April 9, 2021, $218.2 million of the Company's PPP loans have been granted forgiveness by the SBA. 

During the first quarter of 2021, total loans, excluding PPP, declined $194.7 million as compared to December 31, 2020. This decline was a reflection of the high level of early pay-offs coupled with lower seasonally affected loan production. It is believed that this trend is temporary, and that due to the current credit resiliency of the portfolio and significant availability of liquidity, that the Company is well positioned for future loan growth.

At the end of the current quarter, 176 loans with an aggregate balance of $233.0 million remain in deferral status, of which non-accrual loans comprised $56.7 million. Currently, the vast majority of loans that had been granted modifications/deferrals due to pandemic related financial stress have returned to their original payment plans.

Tangible common equity increased to $1.1 billion or 8.90% of tangible assets at March 31, 2021, compared to $726.8 million or 8.51% at March 31, 2020, as a result of the equity issuance in the Revere acquisition. The year-over-year change in tangible common equity also reflects the increase in intangible assets and goodwill associated with the Revere acquisition. Excluding the impact of the PPP program from tangible assets at March 31, 2021, the tangible common equity ratio would be 9.94%. At March 31, 2021, the Company had a total risk-based capital ratio of 15.49%, a common equity tier 1 risk-based capital ratio of 12.09%, a tier 1 risk-based capital ratio of 12.09%, and a tier 1 leverage ratio of 9.14%.

The level of non-performing loans to total loans was 0.94% at March 31, 2021, compared to 0.80% at March 31, 2020, and 1.11% at December 31, 2020. At March 31, 2021, non-performing loans totaled $98.7 million, compared to $54.0 million at March 31, 2020, and $115.5 million at December 31, 2020. During the current quarter, the Company realized the full settlement of $16.0 million in non-accrual loans and recognized $1.3 million in interest income. Non-performing loans include non-accrual loans, accruing loans 90 days or more past due and restructured loans. The year-over-year growth in non-performing loans was driven by two major components: loans placed on non-accrual status and acquired Revere non-accrual loans. Loans placed on non-accrual during the current quarter amounted to $0.4 million compared to $2.4 million for the prior year quarter and $54.7 million for the fourth quarter of 2020. Loans in non-accrual status at quarter end included a small number of large borrowing relationships within the hospitality sector with an aggregate balance of $43.8 million. These large relationships are collateral dependent and required no individual reserves due to sufficient values of the underlying collateral.

The Company recorded net charge-offs of $0.3 million for the first quarter of 2021, as compared to net charge-offs of $0.5 million for both the first quarter of 2020 and fourth quarter of 2020.

At March 31, 2021, the allowance for credit losses was $130.4 million or 1.25% of outstanding loans and 132% of non-performing loans, compared to $165.4 million or 1.59% of outstanding loans and 143% of non-performing loans at December 31, 2020. Excluding PPP loans, the allowance for credit losses to outstanding loans was 1.43% and 1.77%, at March 31, 2021 and December 31, 2020, respectively.

Income Statement Review

Quarterly Results

Net interest income for the first quarter of 2021 increased 63% compared to the first quarter of 2020, driven primarily by the acquisition of Revere. The PPP program contributed $10.9 million to net interest income for the quarter, of which $7.9 million represented PPP fees. The net interest margin for the first quarter of 2021 was 3.56% as compared to 3.29% for the same quarter of the prior year. Excluding the net $2.9 million impact of the amortization of the fair value marks derived from acquisitions, the net interest margin for the current quarter would have been 3.46% compared to the adjusted net interest margin of 3.27% for the first quarter of 2020.

The provision for credit losses was a credit of $34.7 million for the first quarter of 2021, compared to a charge of $24.5 million for the first quarter of 2020, and a credit of $4.5 million for the fourth quarter of 2020. The significant credit in the current quarter’s provision for credit losses, compared to the prior quarter's credit to the provision, reflects the impact of the improvement in the most recent forecasted unemployment rate. Other economic metrics and factors also contributed to benefit the current quarter's credit to the provision, which were partially offset by qualitative factors applied in the determination of the allowance.

Non-interest income increased $10.7 million or 59% during the current quarter compared to the same quarter of the prior year. Income from mortgage banking activities increased by $7.1 million during the current quarter compared to the prior year quarter. Mortgage banking income declined to $10.2 million for the three months ended March 31, 2021 compared to $14.5 million for the previous quarter as a result of decreasing margins on mortgages sold during the quarter. Additionally, wealth management income increased $1.8 million as a result of the first quarter 2020 acquisition of RPJ. During the quarter, other non-interest income increased $2.1 million compared to the same quarter of last year due to income from loan pay-off activity. The growth of these three categories of non-interest income more than compensated for the decline in service fee income from the prior year quarter.

Non-interest expense increased 43% or $20.4 million compared to the prior year quarter. The current quarter's results contained prepayment penalties of $9.1 million from the early redemption of $279.0 million of FHLB advances with an average rate of 2.63%. Excluding the impact of the prepayment penalties and merger and acquisition expense, non-interest expense grew 27% year-over-year primarily as a result of the compensation and operational costs relating to the 2020 Revere and RPJ acquisitions, in addition to an increase in FDIC insurance and the amortization of intangible assets.

The effective tax rate for the current quarter was significantly higher compared to the prior year quarter. The first quarter of 2020 included the impact of a tax provision contained in the Coronavirus Aid, Relief, and Economic Security Act that expanded the time permitted to utilize previous net operating losses. The Company applied this change in conjunction with 2018 acquisition of WashingtonFirst Bankshares, Inc. to realize a tax benefit of $1.8 million in the prior year quarter.

The non-GAAP efficiency ratio was 42.65% for the current quarter as compared to 54.76% for the first quarter of 2020, and 45.09% for the fourth quarter of 2020. The decrease in the efficiency ratio (reflecting an increase in efficiency) from the first quarter of last year to the current year quarter was the result of the $50.9 million growth in non-GAAP revenue outpacing the $11.6 million growth in non-GAAP non-interest expense.

Explanation of Non-GAAP Financial Measures

This news release contains financial information and performance measures determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. Non-GAAP measures used in this release consist of the following:

• Tangible common equity and related measures are non-GAAP measures that exclude the impact of goodwill and other intangible assets.
• The non-GAAP efficiency ratio is non-GAAP in that it excludes amortization of intangible assets, loss on FHLB redemption, merger and acquisition expense and investment securities gains and includes tax-equivalent income.
• Core earnings and the related measures of core earnings per share, core return on average assets and core return on average tangible common equity reflect net income exclusive of the provision/(credit) for credit losses, provision/(credit) for credit losses on unfunded loan commitments, merger and acquisition expense, amortization of intangible assets, loss on FHLB redemption, and investment securities gains, in each case net of tax. 

These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Please refer to the non-GAAP Reconciliation tables included with this release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

Conference Call

The Company’s management will host a conference call to discuss its first quarter results today at 2:00 p.m. (ET). A live Webcast of the conference call is available through the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com. Participants may call 1-866-235-9910. A password is not necessary. Visitors to the Website are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available on the website until May 6, 2021. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10153566.

About Sandy Spring Bancorp, Inc.

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank, a premier community bank in the Greater Washington, D.C. region. With over 60 locations, the bank offers a broad range of commercial and retail banking, mortgage, private banking, and trust services throughout Maryland, Northern Virginia, and Washington, D.C. Through its subsidiaries, Rembert Pendleton Jackson, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services.

For additional information or questions, please contact:
	Daniel J. Schrider, President & Chief Executive Officer, or Philip J. Mantua, E.V.P. & Chief Financial OfficerSandy Spring Bancorp 17801 Georgia AvenueOlney, Maryland 208321-800-399-5919Email: [email protected]
	[email protected]
	Website: www.sandyspringbank.comMedia Contact:Jen Schell 301-570-8331[email protected]

Forward-Looking Statements

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: risks, uncertainties and other factors relating to the COVID-19 pandemic, including the length of time that the pandemic continues, the imposition or re-imposition of stay-at-home orders and restrictions on business activities or travel; the effect of the pandemic on the general economy and on the businesses of our borrowers and their ability to make payments on their obligations; the remedial actions and stimulus measures adopted by federal, state and local governments; the inability of employees to work due to illness, quarantine, or government mandates; 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; the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period; 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, 2020, 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 EndedMarch 31,									%
(Dollars in thousands, except per share data)		2021					2020				Change
Results of operations:
Net interest income		$	104,600				$	64,334			63	%
Provision/ (credit) for credit losses		(34,708			)		24,469				n/m
Non-interest income		28,866					18,168				59
Non-interest expense		68,173					47,746				43
Income before income tax expense		100,001					10,287				872
Net income		75,464					9,987				656
Net income attributable to common shareholders		$	74,824				$	9,919			654
Pre-tax pre-provision pre-merger income (1)		$	65,338				$	36,210			80
Return on average assets		2.39			%		0.46			%
Return on average common equity		20.72			%		3.55			%
Return on average tangible common equity		28.47			%		5.34			%
Net interest margin		3.56			%		3.29			%
Efficiency ratio - GAAP basis (2)		51.08			%		57.87			%
Efficiency ratio - Non-GAAP basis (2)		42.65			%		54.76			%
Per share data:
Basic net income per common share		$	1.59				$	0.29			448	%
Diluted net income per common share		$	1.58				$	0.28			464
Weighted average diluted common shares		47,415,060					34,743,623				36
Dividends declared per share		$	0.32				$	0.30			7
Book value per common share		$	32.04				$	32.68			(2	)
Tangible book value per common share (1)		$	23.54				$	21.27			11
Outstanding common shares		47,187,389					34,164,672				38
Financial condition at period-end:
Investment securities		$	1,472,727				$	1,250,560			18	%
Loans		10,446,866					6,722,992				55
Interest-earning assets		12,132,405					8,222,589				48
Assets		12,873,366					8,929,602				44
Deposits		10,677,752					6,593,874				62
Interest-bearing liabilities		7,423,262					5,732,349				29
Stockholders' equity		1,511,694					1,116,334				35
Capital ratios:
Tier 1 leverage (3)		9.14			%		8.78			%
Common equity tier 1 capital to risk-weighted assets (3)		12.09			%		10.23			%
Tier 1 capital to risk-weighted assets (3)		12.09			%		10.23			%
Total regulatory capital to risk-weighted assets (3)		15.49			%		14.09			%
Tangible common equity to tangible assets (4)		8.90			%		8.51			%
Average equity to average assets		11.54			%		12.99			%
Credit quality ratios:
Allowance for credit losses to loans		1.25			%		1.28			%
Non-performing loans to total loans		0.94			%		0.80			%
Non-performing assets to total assets		0.78			%		0.62			%
Allowance for credit losses to non-performing loans		132.08			%		159.02			%
Annualized net charge-offs to average loans (5)		0.01			%		0.03			%

	n/m - not meaningful
	(1)		Represents a non-GAAP measure.
	(2)		The efficiency ratio - GAAP basis is non-interest expense divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, loss on FHLB redemption, and merger and acquisition expense from non-interest expense; securities gains from non-interest income and adds the tax- equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
	(3)		Estimated ratio at March 31, 2021.
	(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. See the Reconciliation Table included with these Financial Highlights.
	(5)		Calculation utilizes average loans, excluding residential mortgage loans held-for-sale.

Sandy Spring Bancorp, Inc. and SubsidiariesRECONCILIATION TABLE - UNAUDITED

		Three Months EndedMarch 31,
(Dollars in thousands)		2021					2020
Pre-tax pre-provision pre-merger income:
Net income		$	75,464				$	9,987
Plus/ (less)  non-GAAP adjustments:
Merger and acquisition expense		45					1,454
Income tax expense		24,537					300
Provision/ (credit) for credit losses		(34,708			)		24,469
Pre-tax pre-provision pre-merger income		$	65,338				$	36,210
Efficiency ratio (GAAP):
Non-interest expense		$	68,173				$	47,746
Net interest income plus non-interest income		$	133,466				$	82,502
Efficiency ratio (GAAP)		51.08			%		57.87			%
Efficiency ratio (Non-GAAP):
Non-interest expense		$	68,173				$	47,746
Less non-GAAP adjustments:
Amortization of intangible assets		1,697					600
Loss on FHLB redemption		9,117					—
Merger and acquisition expense		45					1,454
Non-interest expense - as adjusted		$	57,314				$	45,692
Net interest income plus non-interest income		$	133,466				$	82,502
Plus non-GAAP adjustment:
Tax-equivalent income		980					1,108
Less non-GAAP adjustment:
Investment securities gains		58					169
Net interest income plus non-interest income - as adjusted		$	134,388				$	83,441
Efficiency ratio (Non-GAAP)		42.65			%		54.76			%
Tangible common equity ratio:
Total stockholders' equity		$	1,511,694				$	1,116,334
Goodwill		(370,223			)		(369,708			)
Other intangible assets, net		(30,824			)		(19,781			)
Tangible common equity		$	1,110,647				$	726,845
Total assets		$	12,873,366				$	8,929,602
Goodwill		(370,223			)		(369,708			)
Other intangible assets, net		(30,824			)		(19,781			)
Tangible assets		$	12,472,319				$	8,540,113
Tangible common equity ratio		8.90			%		8.51			%
Outstanding common shares		47,187,389					34,164,672
Tangible book value per common share		$	23.54				$	21.27

Sandy Spring Bancorp, Inc. and Subsidiaries RECONCILIATION TABLE - UNAUDITED (CONTINUED)OPERATING EARNINGS - METRICS

		Three Months EndedMarch 31,
(Dollars in thousands)		2021					2020
Core earnings (non-GAAP):
Net income		$	75,464				$	9,987
Plus/ (less)  non-GAAP adjustments (net of tax):
Provision/ (credit) for credit losses		(25,857			)		18,242
Provision/ (credit) for credit losses on unfunded loan commitments		(705			)		—
Merger and acquisition expense		34					1,084
Amortization of intangible assets		1,264					447
Loss on FHLB redemption		6,792					—
Investment securities gains		(43			)		(126			)
Core earnings (Non-GAAP)		$	56,949				$	29,634
Core earnings per common share (non-GAAP):
Weighted average common shares outstanding - diluted (GAAP)		47,415,060					34,743,623
Earnings per diluted common share (GAAP)		$	1.58				$	0.28
Core earnings per diluted common share (non-GAAP)		$	1.20				$	0.85
Core return on average assets (non-GAAP):
Average assets (GAAP)		$	12,801,539				$	8,699,342
Return on average assets (GAAP)		2.39			%		0.46			%
Core return on average assets (non-GAAP)		1.80			%		1.37			%
Core return on average tangible common equity (non-GAAP):
Average total stockholders' equity (GAAP)		$	1,477,150				$	1,130,051
Average goodwill		(370,223			)		(366,044			)
Average other intangible assets, net		(31,896			)		(11,810			)
Average tangible common equity (non-GAAP)		$	1,075,031				$	752,197
Return on average tangible common equity (GAAP)		28.47			%		5.34			%
Core return on average tangible common equity (non-GAAP)		21.48			%		15.85			%

Sandy Spring Bancorp, Inc. and SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED

(Dollars in thousands)		March 31, 2021				December 31, 2020				March 31, 2020
Assets
Cash and due from banks		$	100,739			$	93,651			$	79,185
Federal funds sold		285				291				131
Interest-bearing deposits with banks		127,597				203,061				181,792
Cash and cash equivalents		228,621				297,003				261,108
Residential mortgage loans held for sale (at fair value)		84,930				78,294				67,114
Investments available-for-sale (at fair value)		1,427,880				1,348,021				1,187,607
Other equity securities		44,847				65,760				62,953
Total loans		10,446,866				10,400,509				6,722,992
Less: allowance for credit losses		(130,361		)		(165,367		)		(85,800		)
Net loans		10,316,505				10,235,142				6,637,192
Premises and equipment, net		55,361				57,720				57,617
Other real estate owned		1,354				1,455				1,416
Accrued interest receivable		44,559				46,431				23,870
Goodwill		370,223				370,223				369,708
Other intangible assets, net		30,824				32,521				19,781
Other assets		268,262				265,859				241,236
Total assets		$	12,873,366			$	12,798,429			$	8,929,602
Liabilities
Noninterest-bearing deposits		$	3,770,852			$	3,325,547			$	1,939,937
Interest-bearing deposits		6,906,900				6,707,522				4,653,937
Total deposits		10,677,752				10,033,069				6,593,874
Securities sold under retail repurchase agreements and federal funds purchased		189,318				543,157				125,305
Advances from FHLB		100,000				379,075				754,061
Subordinated debt		227,044				227,088				199,046
Total borrowings		516,362				1,149,320				1,078,412
Accrued interest payable and other liabilities		167,558				146,085				140,982
Total liabilities		11,361,672				11,328,474				7,813,268
Stockholders' equity
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 47,187,389, 47,056,777 and 34,164,672 at March 31, 2021, December 31, 2020 and March 31, 2020, respectively		47,187				47,057				34,165
Additional paid in capital		849,606				846,922				562,891
Retained earnings		617,553				557,271				512,934
Accumulated other comprehensive income/ (loss)		(2,652		)		18,705				6,344
Total stockholders' equity		1,511,694				1,469,955				1,116,334
Total liabilities and stockholders' equity		$	12,873,366			$	12,798,429			$	8,929,602

Sandy Spring Bancorp, Inc. and SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

		Three Months EndedMarch 31,
(Dollars in thousands, except per share data)		2021				2020
Interest income:
Interest and fees on loans		$	107,428			$	75,882
Interest on loans held for sale		537				291
Interest on deposits with banks		46				180
Interest and dividends on investment securities:
Taxable		3,899				6,132
Tax-advantaged		2,351				1,372
Interest on federal funds sold		—				1
Total interest income		114,261				83,858
Interest Expense:
Interest on deposits		4,830				13,518
Interest on retail repurchase agreements and federal funds purchased		53				580
Interest on advances from FHLB		2,276				3,145
Interest on subordinated debt		2,502				2,281
Total interest expense		9,661				19,524
Net interest income		104,600				64,334
Provision/ (credit) for credit losses		(34,708		)		24,469
Net interest income after provision/ (credit) for credit losses		139,308				39,865
Non-interest income:
Investment securities gains		58				169
Service charges on deposit accounts		1,852				2,253
Mortgage banking activities		10,169				3,033
Wealth management income		8,730				6,966
Insurance agency commissions		2,153				2,129
Income from bank owned life insurance		680				645
Bank card fees		1,518				1,320
Other income		3,706				1,653
Total non-interest income		28,866				18,168
Non-interest expense:
Salaries and employee benefits		36,652				28,053
Occupancy expense of premises		5,487				4,581
Equipment expenses		3,222				2,751
Marketing		1,212				1,189
Outside data services		2,283				1,582
FDIC insurance		1,492				482
Amortization of intangible assets		1,697				600
Merger and acquisition expense		45				1,454
Professional fees and services		1,731				1,826
Other expenses		14,352				5,228
Total non-interest expense		68,173				47,746
Income before income tax expense		100,001				10,287
Income tax expense		24,537				300
Net income		$	75,464			$	9,987
Net income per share amounts:
Basic net income per common share		$	1.59			$	0.29
Diluted net income per common share		$	1.58			$	0.28
Dividends declared per share		$	0.32			$	0.30

Sandy Spring Bancorp, Inc. and SubsidiariesHISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

		2021					2020
(Dollars in thousands, except per share data)		Q1					Q4				Q3				Q2				Q1
Profitability for the quarter:
Tax-equivalent interest income		$	115,241				$	112,843			$	113,627			$	116,252			$	84,966
Interest expense		9,661						11,964				15,500				13,413				19,524
Tax-equivalent net interest income		105,580						100,879				98,127				102,839				65,442
Tax-equivalent adjustment		980						1,052				643				1,325				1,108
Provision/ (credit) for credit losses		(34,708			)			(4,489	)			7,003				58,686				24,469
Non-interest income		28,866						32,234				29,390				22,924				18,168
Non-interest expense		68,173						61,661				60,937				85,438				47,746
Income/ (loss) before income tax expense/ (benefit)		100,001						74,889				58,934				(19,686	)			10,287
Income tax expense/ (benefit)		24,537						18,227				14,292				(5,348	)			300
Net income/ (loss)		$	75,464				$	56,662			$	44,642			$	(14,338	)		$	9,987
Financial performance:
Pre-tax pre-provision pre-merger income		$	65,338				$	70,403			$	67,200			$	61,454			$	36,210
Return on average assets		2.39			%			1.78	%			1.38	%			(0.45	)%			0.46	%
Return on average common equity		20.72			%			15.72	%			12.67	%			(4.15	)%			3.55	%
Return on average tangible common equity		28.47			%			21.89	%			17.84	%			(5.80	)%			5.34	%
Net interest margin		3.56			%			3.38	%			3.24	%			3.47	%			3.29	%
Efficiency ratio - GAAP basis (1)		51.08			%			46.69	%			48.03	%			68.66	%			57.87	%
Efficiency ratio - Non-GAAP basis (1)		42.65			%			45.09	%			45.27	%			43.85	%			54.76	%
Per share data:
Net income/ (loss) attributable to common shareholders		$	74,824				$	56,194			$	44,268			$	(14,458	)		$	9,919
Basic net income/ (loss) per common share		$	1.59				$	1.19			$	0.94			$	(0.31	)		$	0.29
Diluted net income/ (loss) per common share		$	1.58				$	1.19			$	0.94			$	(0.31	)		$	0.28
Weighted average diluted common shares		47,415,060						47,284,808				47,175,071				46,988,351				34,743,623
Dividends declared per share		$	0.32				$	0.30			$	0.30			$	0.30			$	0.30
Non-interest income:
Securities gains		$	58				$	35			$	51			$	212			$	169
Service charges on deposit accounts		1,852						1,917				1,673				1,223				2,253
Mortgage banking activities		10,169						14,491				14,108				8,426				3,033
Wealth management income		8,730						8,215				7,785				7,604				6,966
Insurance agency commissions		2,153						1,356				2,122				1,188				2,129
Income from bank owned life insurance		680						705				708				809				645
Bank card fees		1,518						1,570				1,525				1,257				1,320
Other income		3,706						3,945				1,418				2,205				1,653
Total non-interest income		$	28,866				$	32,234			$	29,390			$	22,924			$	18,168
Non-interest expense:
Salaries and employee benefits		$	36,652				$	36,080			$	36,041			$	34,297			$	28,053
Occupancy expense of premises		5,487						5,236				5,575				5,991				4,581
Equipment expenses		3,222						3,121				3,133				3,219				2,751
Marketing		1,212						1,058				1,305				729				1,189
Outside data services		2,283						2,394				2,614				2,169				1,582
FDIC insurance		1,492						1,527				1,340				1,378				482
Amortization of intangible assets		1,697						1,655				1,968				1,998				600
Merger and acquisition expense		45						3				1,263				22,454				1,454
Professional fees and services		1,731						2,473				1,800				1,840				1,826
Other expenses		14,352						8,114				5,898				11,363				5,228
Total non-interest expense		$	68,173				$	61,661			$	60,937			$	85,438			$	47,746

(1) The efficiency ratio - GAAP basis is non-interest expense 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, loss on FHLB redemption, and merger and acquisition expense from non-interest expense; investment securities gains 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 SubsidiariesHISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

		2021					2020
(Dollars in thousands, except per share data)		Q1					Q4					Q3					Q2					Q1
Balance sheets at quarter end:
Commercial investor real estate loans		$	3,652,418				$	3,634,720				$	3,588,702				$	3,581,778				$	2,241,240
Commercial owner-occupied real estate loans		1,644,848					1,642,216					1,652,208					1,601,803					1,305,682
Commercial AD&C loans		1,051,013					1,050,973					994,800					997,423					643,114
Commercial business loans		2,411,109					2,267,548					2,227,246					2,222,810					813,525
Residential mortgage loans		1,022,546					1,105,179					1,173,857					1,211,745					1,116,512
Residential construction loans		171,028					182,619					175,123					169,050					149,573
Consumer loans		493,904					517,254					521,999					558,434					453,346
Total loans		10,446,866					10,400,509					10,333,935					10,343,043					6,722,992
Allowance for credit losses		(130,361			)		(165,367			)		(170,314			)		(163,481			)		(85,800			)
Loans held for sale		84,930					78,294					88,728					68,765					67,114
Investment securities		1,472,727					1,413,781					1,425,733					1,424,652					1,250,560
Interest-earning assets		12,132,405					12,095,936					11,965,915					12,447,146					8,222,589
Total assets		12,873,366					12,798,429					12,678,131					13,290,447					8,929,602
Noninterest-bearing demand deposits		3,770,852					3,325,547					3,458,804					3,434,038					1,939,937
Total deposits		10,677,752					10,033,069					9,964,969					10,076,834					6,593,874
Customer repurchase agreements		129,318					153,157					142,287					143,579					125,305
Total interest-bearing liabilities		7,423,262					7,856,842					7,643,381					8,313,546					5,732,349
Total stockholders' equity		1,511,694					1,469,955					1,424,749					1,390,093					1,116,334
Quarterly average balance sheets:
Commercial investor real estate loans		$	3,634,174				$	3,599,648				$	3,582,751				$	3,448,882				$	2,202,461
Commercial owner-occupied real estate loans		1,638,885					1,643,817					1,628,474					1,681,674					1,285,257
Commercial AD&C loans		1,049,597					1,017,304					977,607					969,251					659,494
Commercial business loans		2,291,097					2,189,828					2,207,388					1,899,264					819,133
Residential mortgage loans		1,066,714					1,136,989					1,189,452					1,208,566					1,139,786
Residential construction loans		179,925					180,494					173,280					162,978					145,266
Consumer loans		496,578					515,202					543,242					575,734					465,314
Total loans		10,356,970					10,283,282					10,302,194					9,946,349					6,716,711
Loans held for sale		82,263					68,255					54,784					53,312					35,030
Investment securities		1,407,455					1,418,683					1,404,238					1,398,586					1,179,084
Interest-earning assets		12,029,424					11,882,542					12,049,463					11,921,132					7,994,618
Total assets		12,801,539					12,645,329					12,835,893					12,903,156					8,699,342
Noninterest-bearing demand deposits		3,394,110					3,424,729					3,281,607					3,007,222					1,797,227
Total deposits		10,343,190					9,999,144					9,862,639					9,614,176					6,433,694
Customer repurchase agreements		148,195					146,685					142,694					144,050					135,652
Total interest-bearing liabilities		7,742,987					7,609,829					7,969,487					8,326,909					5,612,056
Total stockholders' equity		1,477,150					1,433,900					1,401,746					1,390,544					1,130,051
Financial measures:
Average equity to average assets		11.54			%		11.34			%		10.92			%		10.78			%		12.99%
Investment securities to earning assets		12.14			%		11.69			%		11.91			%		11.45			%		15.21%
Loans to earning assets		86.11			%		85.98			%		86.36			%		83.10			%		81.76%
Loans to assets		81.15			%		81.26			%		81.51			%		77.82			%		75.29%
Loans to deposits		97.84			%		103.66			%		103.70			%		102.64			%		101.96%
Capital measures:
Tier 1 leverage (1)		9.14			%		8.92			%		8.65			%		8.35			%		8.78%
Common equity tier 1 capital to risk-weighted assets (1)		12.09			%		10.58			%		10.45			%		10.23			%		10.23%
Tier 1 capital to risk-weighted assets (1)		12.09			%		10.58			%		10.45			%		10.23			%		10.23%
Total regulatory capital to risk-weighted assets (1)		15.49			%		13.93			%		14.02			%		13.79			%		14.09%
Book value per common share		$	32.04				$	31.24				$	30.30				$	29.58				$	32.68
Outstanding common shares		47,187,389					47,056,777					47,025,779					47,001,022					34,164,672

(1) Estimated ratio at March 31, 2021.

Sandy Spring Bancorp, Inc. and SubsidiariesLOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

		2021				2020
(Dollars in thousands)		March 31,				December 31,				September 30,				June 30,				March 31,
Non-performing  assets:
Loans 90 days past due:
Commercial real estate:
Commercial investor real estate		$	—			$	133			$	—			$	775			$	—
Commercial owner-occupied real estate		—				—				—				515				—
Commercial AD&C		—				—				—				—				—
Commercial business		31				161				93				—				—
Residential real estate:
Residential mortgage		398				480				320				138				8
Residential construction		—				—				—				—				—
Consumer		—				—				1				—				—
Total loans 90 days past due		429				774				414				1,428				8
Non-accrual loans:
Commercial real estate:
Commercial investor real estate		42,776				45,227				26,784				26,482				17,770
Commercial owner-occupied real estate		8,316				11,561				6,511				6,729				4,074
Commercial AD&C		14,975				15,044				1,678				2,957				829
Commercial business		13,147				22,933				17,659				20,246				10,834
Residential real estate:
Residential mortgage		9,593				10,212				11,296				11,724				12,271
Residential construction		—				—				—				—				—
Consumer		7,193				7,384				7,493				7,800				5,596
Total non-accrual loans		96,000				112,361				71,421				75,938				51,374
Total restructured loans - accruing		2,271				2,317				2,854				2,553				2,575
Total non-performing loans		98,700				115,452				74,689				79,919				53,957
Other assets and other real estate owned (OREO)		1,354				1,455				1,389				1,389				1,416
Total non-performing assets		$	100,054			$	116,907			$	76,078			$	81,308			$	55,373

		For the Quarter Ended,
(Dollars in thousands)		March 31, 2021					December 31, 2020					September 30, 2020					June 30, 2020						March 31, 2020
Analysis of non-accrual loan activity:
Balance at beginning of period		$	112,361				$	71,421				$	75,938				$	51,374					$	38,632
Purchased credit deteriorated loans designated as non-accrual		—					—					—					—						13,084
Non-accrual balances transferred to OREO		—					(70			)		—					—						—
Non-accrual balances charged-off		(699			)		(513			)		(144			)		(162				)		(575			)
Net payments or draws		(16,028			)		(13,212			)		(4,248			)		(1,881				)		(1,860			)
Loans placed on non-accrual		421					54,735					893					27,289						2,369
Non-accrual loans brought current		(55			)		—					(1,018			)		(682				)		(276			)
Balance at end of period		$	96,000				$	112,361				$	71,421				$	75,938					$	51,374
Analysis of allowance for credit losses:
Balance at beginning of period		$	165,367				$	170,314				$	163,481				$	85,800					$	56,132
Transition impact of adopting ASC 326		—					—					—					—						2,983
Initial allowance on purchased credit deteriorated loans		—					—					—					—						2,762
Initial allowance on acquired PCD loans		—					—					—					18,628						—
Provision/ (credit) for credit losses		(34,708			)		(4,489			)		7,003					58,686						24,469
Less loans charged-off, net of recoveries:
Commercial real estate:
Commercial investor real estate		(27			)		379					21					(4				)		—
Commercial owner-occupied real estate		—					—					—					—						—
Commercial AD&C		—					—					—					—						—
Commercial business		634					56					88					(463				)		108
Residential real estate:
Residential mortgage		(270			)		37					(6			)		15						333
Residential construction		—					(1			)		(2			)		(1				)		(2			)
Consumer		(39			)		(13			)		69					86						107
Net charge-offs/ (recoveries)		298					458					170					(367				)		546
Balance at the end of period		$	130,361				$	165,367				$	170,314				$	163,481					$	85,800
Asset quality ratios:
Non-performing loans to total loans		0.94			%		1.11			%		0.72			%		0.77				%		0.80			%
Non-performing assets to total assets		0.78			%		0.91			%		0.60			%		0.61				%		0.62			%
Allowance for credit losses to loans		1.25			%		1.59			%		1.65			%		1.58				%		1.28			%
Allowance for credit losses to non-performing loans		132.08			%		143.23			%		228.03			%		204.56				%		159.02			%
Annualized net charge-offs/ (recoveries) to average loans		0.01			%		0.02			%		0.01			%		(0.01				)%		0.03			%

Sandy Spring Bancorp, Inc. and SubsidiariesCONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

		Three Months Ended March 31,
		2021												2020
(Dollars in thousands and tax-equivalent)		AverageBalances					Interest (1)				AnnualizedAverageYield/Rate			AverageBalances					Interest (1)				AnnualizedAverageYield/Rate
Assets
Commercial investor real estate loans		$	3,634,174				$	38,354			4.28	%		$	2,202,461				$	25,265			4.61	%
Commercial owner-occupied real estate loans		1,638,885					18,680				4.62			1,285,257					15,206				4.76
Commercial AD&C loans		1,049,597					10,396				4.02			659,494					8,329				5.08
Commercial business loans		2,291,097					24,794				4.39			819,133					10,177				5.00
Total commercial loans		8,613,753					92,224				4.34			4,966,345					58,977				4.78
Residential mortgage loans		1,066,714					9,544				3.58			1,139,786					10,741				3.77
Residential construction loans		179,925					1,606				3.62			145,266					1,561				4.32
Consumer loans		496,578					4,545				3.71			465,314					5,156				4.46
Total residential and consumer loans		1,743,217					15,695				3.62			1,750,366					17,458				4.01
Total loans (2)		10,356,970					107,919				4.22			6,716,711					76,435				4.57
Loans held for sale		82,263					537				2.61			35,030					291				3.32
Taxable securities		915,625					3,899				1.70			972,609					6,322				2.60
Tax-advantaged securities		491,830					2,840				2.31			206,475					1,737				3.37
Total investment securities (3)		1,407,455					6,739				1.92			1,179,084					8,059				2.73
Interest-bearing deposits with banks		182,095					46				0.10			63,533					180				1.14
Federal funds sold		641					—				0.09			260					1				1.23
Total interest-earning assets		12,029,424					115,241				3.88			7,994,618					84,966				4.27
Less: allowance for credit losses		(163,229		)										(61,962		)
Cash and due from banks		106,259												69,618
Premises and equipment, net		56,369												58,346
Other assets		772,716												638,722
Total assets		$	12,801,539											$	8,699,342
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	1,365,652				$	236			0.07	%		$	840,415				$	697			0.33	%
Regular savings deposits		444,296					56				0.05			331,119					73				0.09
Money market savings deposits		3,410,589					1,463				0.17			1,848,290					4,650				1.01
Time deposits		1,728,543					3,075				0.72			1,616,643					8,098				2.01
Total interest-bearing deposits		6,949,080					4,830				0.28			4,636,467					13,518				1.17
Other borrowings		189,851					53				0.11			236,806					580				0.99
Advances from FHLB		376,984					2,276				2.45			531,989					3,145				2.38
Subordinated debt		227,072					2,502				4.41			206,794					2,281				4.41
Total borrowings		793,907					4,831				2.47			975,589					6,006				2.48
Total interest-bearing liabilities		7,742,987					9,661				0.50			5,612,056					19,524				1.40
Noninterest-bearing demand deposits		3,394,110												1,797,227
Other liabilities		187,292												160,008
Stockholders' equity		1,477,150												1,130,051
Total liabilities and stockholders' equity		$	12,801,539											$	8,699,342
Tax-equivalent net interest income and spread							$	105,580			3.38	%							$	65,442			2.87	%
Less: tax-equivalent adjustment							980												1,108
Net interest income							$	104,600											$	64,334
Interest income/earning assets											3.88	%											4.27	%
Interest expense/earning assets											0.32												0.98
Net interest margin											3.56	%											3.29	%

	(1)		Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.50% and 25.45% for 2021 and 2020, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.0 million and $1.1 million in 2021 and 2020, respectively.
	(2)		Non-accrual loans are included in the average balances.
	(3)		Available for sale investments are presented at amortized cost.

Source: Sandy Spring Bancorp, Inc.

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