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Sandy Spring Bancorp Reports Record Annual Earnings

January 23, 2020 7:00 AM

OLNEY, Md., Jan. 23, 2020 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, today reported net income for the fourth quarter of 2019 of $28.5 million ($0.80 per diluted share) compared to net income of $25.6 million ($0.72 per diluted share) for the fourth quarter of 2018 and net income of $29.4 million ($0.82 per diluted share) for the third quarter of 2019.

Net earnings for 2019 were $116.4 million ($3.25 per diluted share) compared to $100.9 million ($2.82 per diluted share) for 2018. The results from 2019 and 2018 included recovered interest income from previously acquired impaired loans of $1.8 million and $2.4 million, respectively. The results for 2018 also included the effect of merger expenses associated with the acquisition of WashingtonFirst Bankshares (“WashingtonFirst”) totaling $11.8 million (an after tax impact of $0.19 per share) compared to $1.3 million for 2019, which are associated with the pending acquisition of Revere Bank that is expected close in the beginning of the second quarter of 2020. Revere Bank has 11 banking offices and more than $2.8 billion in assets (as of September 30, 2019).

“We delivered a strong financial performance in 2019, which was our first full year following the successful integration of WashingtonFirst Bank. We rose to the occasion with record results and announced another wave of strategic expansion through the acquisitions of Revere Bank and Rembert Pendleton Jackson, a registered investment advisor headquartered in Falls Church, Virginia,” said Daniel J. Schrider, President and Chief Executive Officer.

“Throughout the year we adjusted our strategies in response to the competitive market and interest rate environment, while consistently growing deposits, delivering impressive fee-income growth, and staying laser focused on providing exceptional experiences for the individuals and businesses we serve,” added Schrider. “We finished the year on a high note and the momentum from our fourth quarter performance will serve us well in 2020.”

Fourth Quarter Highlights:

Review of Balance Sheet and Credit Quality

At December 31, 2019, total assets amounted to $8.6 billion compared to $8.2 billion at December 31, 2018. Total loans were $6.7 billion at December 31, 2019 compared to $6.6 billion at the end of 2018. During this period, the composition of the portfolio shifted as total commercial loans grew 7% while mortgage loans have declined 8% due to the refinance activity and the strategic decision to sell the majority of new mortgage loan production. Consumer loans experienced a 10% decline related to recent mortgage refinancing activity. During this period, total funded commercial loan production was a record $884 million. Commercial loans originated during the current year had total unfunded commitments of $479 million as of December 31, 2019.

Total deposits at December 31, 2019 were $6.4 billion compared to $5.9 billion at December 31, 2018, a 9% increase during the period. The increase from year-end 2018 was driven by increases in non-interest bearing demand, interest-bearing demand and money market deposit categories. The impact of the increase in rates associated with these additional deposits during 2019 was partially offset by the benefit realized from an increase in noninterest-bearing deposits and a reduction in wholesale deposits. During the current quarter, the Company issued $175 million in subordinated debt. The proceeds from the debt provides capital for future growth in the real estate lending portfolio, in addition to providing funds to reduce higher priced funding sources.

Tangible common equity totaled $782 million at December 31, 2019, compared to $727 million at December 31, 2018 as the ratio of tangible common equity to tangible assets grew to 9.46% at December 31, 2019, as compared to 9.21% at December 31, 2018. The decline in the tangible common equity ratio from 9.74% at the end of the prior quarter was the result of the impact on stockholder’s equity of stock repurchases in the current quarter. The Company had a total risk-based capital ratio of 14.85%, a common equity tier 1 risk-based capital ratio of 11.06%, a tier 1 risk-based capital ratio of 11.21% and a tier 1 leverage ratio of 9.70% at December 31, 2019.

The ratio of non-performing loans to total loans increased to 0.62% at December 31, 2019, compared to 0.55% at December 31, 2018. Non-performing loans totaled $41.3 million at December 31, 2019, compared to $36.0 million at December 31, 2018, and $40.1 million at September 30, 2019. The modest growth in non-performing loans over the prior periods occurred primarily as a result of increases in segments of the loan portfolio secured by real estate. Non-performing loans include accruing loans 90 days or more past due and restructured loans, but exclude purchased credit impaired loans acquired in the prior year’s acquisition of WashingtonFirst.

Loan charge-offs, net of recoveries, for the fourth quarter of 2019 totaled $0.5 million as compared to $0.3 million for the fourth quarter of 2018. The allowance for loan losses represented 0.84% of outstanding loans and 136% of non-performing loans at December 31, 2019, compared to 0.81% of outstanding loans and 149% of non-performing loans at December 31, 2018. While non-performing loans increased from the prior year-end to December 31, 2019, the related reserves for those loans remained stable due to adequate collateral values.

Income Statement Review

For the fourth quarter of 2019, net interest income decreased 1% to $65.6 million compared to $66.1 million for the fourth quarter of 2018. Interest income remained level while interest expense increased 2% driven by deposit growth. The rise in interest expense was partially offset by the decline in the cost of borrowings from the prior year quarter to the current quarter.

The net interest margin for the current quarter was 3.38%, compared to the net interest margin for the fourth quarter of 2018 of 3.57%. The current quarter’s margin benefited from the decrease in average borrowed funds and their associated rates as this decrease offset the increase in the average rate paid on deposits. The average rate on interest-bearing liabilities remained at 1.48% for the quarter ended December 31, 2019 compared to the same quarter of the prior year. During this same period, the yield on interest-earning assets declined from 4.60% for the quarter ended December 31, 2018 to 4.38% for the quarter ended December 31, 2019 due to the interest rate environment, resulting in margin compression. The 9% increase in average noninterest-bearing deposits compared to the prior year quarter provided an interest free funding source that benefited the current quarter’s net interest margin. Amortization of the fair value adjustments to both interest-earning assets and interest-bearing liabilities directly attributable to the WashingtonFirst acquisition had a 4 basis point positive effect on the net interest margin for the current period, compared to 12 basis points for the same period of the prior year. The resulting adjusted net interest margin for the current quarter was 3.34% as compared to 3.45% for the prior year quarter.

The provision for loan losses was $1.7 million for the fourth quarter of 2019, compared to $3.4 million for the fourth quarter of 2018. The decline in the loan loss provision for the current quarter compared to the prior year quarter reflects the impact of the decline in the amount of loans subject to the allowance for loan losses.

Non-interest income increased 37% to $19.2 million for the fourth quarter of 2019, compared to $14.0 million for the fourth quarter of 2018. The increase in non-interest income was due primarily to the 269% increase in income from mortgage banking activities, as the volume of residential mortgages sold increased. In addition, wealth management income increased 17% and other income rose 58% due to fees from customer level commercial loan swaps during this period.

Non-interest expense increased 8% to $46.1 million for the fourth quarter of 2019, compared to $42.7 million in the fourth quarter of 2018. The current year quarter included $0.9 million in merger expenses. Excluding merger expenses, non-interest expense increased 6% compared to the prior year, driven by higher compensation costs associated with incentive-based sales programs and professional fees and services. A portion of these increases were offset by the decrease in FDIC insurance as a result of the application of the remaining assessment credit during the current quarter. The non-GAAP efficiency ratio was 51.98% for the fourth quarter of 2019, compared to 51.78% for the fourth quarter of 2018.

Net interest income for the full year of 2019 increased 2% compared to 2018 due principally to loan growth. The net interest margin for 2019 was 3.51% compared to 3.60% for the prior year. The year ended December 31, 2019 included $1.8 million in recovered interest income on acquired credit impaired loans compared to $2.4 million for the same period of the prior year. Excluding the recovered interest income from both periods, the interest margin would have been 3.48% for the current year versus 3.58% for the prior year. Amortization of the fair value adjustments had a 5 basis point positive impact on the net interest margin for 2019, compared to 13 basis point positive impact for the prior year.

The provision for loan losses was $4.7 million for the year ended December 31, 2019, compared to $9.0 million for 2018. The decrease in the provision for the current period compared to the prior year was primarily the result of the overall improvement in the qualitative credit metrics of the loan portfolio during the previous twelve months in addition to lower loan growth than experienced in the prior year.

Non-interest income increased 17% to $71.3 million for 2019, compared to $61.1 million for 2018. Excluding life insurance mortality proceeds of $0.6 million and $1.6 million in 2019 and 2018, respectively, non-interest income increased 19%. This increase was driven by income from mortgage banking activities, which increased 108% from the prior year, to $14.7 million for the year ended December 31, 2019, as a result of the rise in mortgage lending activity during the year. Sales of originated mortgage loans rose 74% during 2019 compared to 2018. Excluding income from bank owned life insurance, increases occurred in the majority of the other categories of non-interest income.

Non-interest expense decreased $0.7 million to $179.1 million for 2019, compared to $179.8 million for the prior year. The prior year included $11.8 million in merger expenses compared to $1.3 million for the current year. Excluding merger expenses, non-interest expense rose 6%, driven primarily by increases in salaries and benefits. Increases in non-interest expense also occurred in occupancy and equipment costs, software and outside data services, professional fees and marketing. A portion of the increases in non-interest expense was offset by the decrease in FDIC insurance during the year. The non-GAAP efficiency ratio was 51.52% for 2019 compared to 50.87% for 2018.

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:

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 table included with this release for details on the earnings impact of these items.

Conference Call

The Company’s management will host a conference call to discuss its fourth quarter results today at 2:00 P.M. (ET). A live 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 9:00 am (ET) February 6, 2020. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10137689.

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 50 locations, the bank offers a broad range of commercial and retail banking, mortgage, private banking, and trust services throughout central Maryland, Northern Virginia, and Washington, D.C. 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. 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:[email protected]
[email protected]
Website:www.sandyspringbank.com
Media Contact:Jen Schell301-570-8331[email protected]

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 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; risks, uncertainties and other factors relating to the acquisition of Revere Bank by Sandy Spring Bancorp, including the ability to obtain regulatory and shareholder approvals and meet other closing conditions to the transaction, and delay in closing the merger; 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, 2018, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov.

Sandy Spring Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS - UNAUDITED
Three Months Ended Twelve Months Ended
December 31, % December 31, %
(Dollars in thousands, except per share data) 2019 2018 Change 2019 2018 Change
Results of Operations:
Net interest income $ 65,583 $66,145 (1)% $ 265,308 $260,445 2 %
Provision for loan losses 1,655 3,403 (51) 4,684 9,023 (48)
Non-interest income 19,224 14,030 37 71,322 61,049 17
Non-interest expense 46,081 42,667 8 179,085 179,783 -
Income before income taxes 37,071 34,105 9 152,861 132,688 15
Net income 28,457 25,566 11 116,433 100,864 15
Pre-tax pre-provision pre-merger income (1) $ 39,674 $37,508 6 $ 158,857 $153,477 4
Return on average assets 1.32% 1.25% 1.39% 1.27%
Return on average common equity 9.93% 9.70% 10.51% 9.84%
Net interest margin 3.38% 3.57% 3.51% 3.60%
Efficiency ratio - GAAP basis (2) 54.34% 53.22% 53.20% 55.92%
Efficiency ratio - Non-GAAP basis (2) 51.98% 51.78% 51.52% 50.87%
Per share data:
Basic net income $ 0.80 $0.72 11 % $ 3.25 $2.82 15 %
Diluted net income $ 0.80 $0.72 11 $ 3.25 $2.82 15
Average fully diluted shares 35,773,246 35,747,478 - 35,852,846 35,728,146 -
Dividends declared per share $ 0.30 $0.28 7 $ 1.18 $1.10 7
Book value per share 32.40 30.06 8 32.40 30.06 8
Tangible book value per share (1) 22.37 20.45 9 22.37 20.45 9
Outstanding shares 34,970,370 35,530,734 (2) 34,970,370 35,530,734 (2)
Financial Condition at period-end:
Investment securities $ 1,125,136 $1,010,724 11 % $ 1,125,136 $1,010,724 11 %
Loans 6,705,232 6,573,014 2 6,705,232 6,573,014 2
Interest-earning assets 7,947,703 7,640,978 4 7,947,703 7,640,978 4
Assets 8,629,002 8,243,272 5 8,629,002 8,243,272 5
Deposits 6,440,319 5,914,880 9 6,440,319 5,914,880 9
Interest-bearing liabilities 5,485,055 5,378,026 2 5,485,055 5,378,026 2
Stockholders' equity 1,132,974 1,067,903 6 1,132,974 1,067,903 6
Capital ratios:
Tier 1 leverage (3) 9.70% 9.50% 9.70% 9.50%
Tier 1 capital to risk-weighted assets (3) 11.21% 11.06% 11.21% 11.06%
Total regulatory capital to risk-weighted assets (3) 14.85% 12.26% 14.85% 12.26%
Common equity tier 1 capital to risk-weighted assets (3) 11.06% 10.90% 11.06% 10.90%
Tangible common equity to tangible assets (4) 9.46% 9.21% 9.46% 9.21%
Average equity to average assets 13.31% 12.90% 13.25% 12.87%
Credit quality ratios:
Allowance for loan losses to loans 0.84% 0.81% 0.84% 0.81%
Non-performing loans to total loans 0.62% 0.55% 0.62% 0.55%
Non-performing assets to total assets 0.50% 0.46% 0.50% 0.46%
Allowance for loan losses to non-performing loans 136.02% 148.51% 136.02% 148.51%
Annualized net charge-offs to average loans (5) 0.03% 0.02% 0.03% 0.01%
(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 Condensed Consolidated Statements of Income.
The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization and merger expenses 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 December 31, 2019
(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
and other comprehensive gains (losses). 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 Subsidiaries
RECONCILIATION TABLE - UNAUDITED
Three Months Ended Twelve Months Ended
December 31, December 31,
(Dollars in thousands) 2019 2018 2019 2018
Pre-tax pre-provision pre-merger income:
Net income $ 28,457 $25,566 $ 116,433 $100,864
Plus non-GAAP adjustments:
Merger expenses 948 - 1,312 11,766
Income taxes 8,614 8,539 36,428 31,824
Provision for loan losses 1,655 3,403 4,684 9,023
Pre-tax pre-provision pre-merger income $ 39,674 $37,508 $ 158,857 $153,477
Efficiency ratio - GAAP basis:
Non-interest expense $ 46,081 $42,667 $ 179,085 $179,783
Net interest income plus non-interest income $ 84,807 $80,175 $ 336,630 $321,494
Efficiency ratio - GAAP basis 54.34% 53.22% 53.20% 55.92%
Efficiency ratio - Non-GAAP basis:
Non-interest expense $ 46,081 $42,667 $ 179,085 $179,783
Less non-GAAP adjustments:
Amortization of intangible assets 481 540 1,946 2,162
Merger expenses 948 - 1,312 11,766
Non-interest expense - as adjusted $ 44,652 $42,127 $ 175,827 $165,855
Net interest income plus non-interest income $ 84,807 $80,175 $ 336,630 $321,494
Plus non-GAAP adjustment:
Tax-equivalent income 1,149 1,232 4,746 4,715
Less non-GAAP adjustment:
Securities gains 57 45 77 190
Net interest income plus non-interest income - as adjusted $ 85,899 $81,362 $ 341,299 $326,019
Efficiency ratio - Non-GAAP basis 51.98% 51.78% 51.52% 50.87%
Tangible common equity ratio:
Total stockholders' equity $ 1,132,974 $1,067,903 $ 1,132,974 $1,067,903
Accumulated other comprehensive loss 4,332 15,754 4,332 15,754
Goodwill (347,149) (347,149) (347,149) (347,149)
Other intangible assets, net (7,841) (9,788) (7,841) (9,788)
Tangible common equity $ 782,316 $726,720 $ 782,316 $726,720
Total assets $ 8,629,002 $8,243,272 $ 8,629,002 $8,243,272
Goodwill (347,149) (347,149) (347,149) (347,149)
Other intangible assets, net (7,841) (9,788) (7,841) (9,788)
Tangible assets $ 8,274,012 $7,886,335 $ 8,274,012 $7,886,335
Tangible common equity ratio 9.46% 9.21% 9.46% 9.21%
Outstanding common shares 34,970,370 35,530,734 34,970,370 35,530,734
Tangible book value per common share $ 22.37 $20.45 $ 22.37 $20.45

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
December 31, December 31,
(Dollars in thousands) 2019 2018
Assets
Cash and due from banks $ 82,469 $67,014
Federal funds sold 208 609
Interest-bearing deposits with banks 63,426 33,858
Cash and cash equivalents 146,103 101,481
Residential mortgage loans held for sale (at fair value) 53,701 22,773
Investments available-for-sale (at fair value) 1,073,333 937,335
Other equity securities 51,803 73,389
Total loans 6,705,232 6,571,634
Less: allowance for loan losses (56,132) (53,486)
Net loans 6,649,100 6,518,148
Premises and equipment, net 58,615 61,942
Other real estate owned 1,482 1,584
Accrued interest receivable 23,282 24,609
Goodwill 347,149 347,149
Other intangible assets, net 7,841 9,788
Other assets 216,593 145,074
Total assets $ 8,629,002 $8,243,272
Liabilities
Noninterest-bearing deposits $ 1,892,052 $1,750,319
Interest-bearing deposits 4,548,267 4,164,561
Total deposits 6,440,319 5,914,880
Securities sold under retail repurchase agreements and federal funds purchased 213,605 327,429
Advances from FHLB 513,777 848,611
Subordinated debentures 209,406 37,425
Accrued interest payable and other liabilities 118,921 47,024
Total liabilities 7,496,028 7,175,369
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 34,970,370 and
35,530,734 at December 31, 2019 and December 31, 2018, respectively 34,970 35,531
Additional paid in capital 586,622 606,573
Retained earnings 515,714 441,553
Accumulated other comprehensive loss (4,332) (15,754)
Total stockholders' equity 1,132,974 1,067,903
Total liabilities and stockholders' equity $ 8,629,002 $8,243,272

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three Months Ended Twelve Months Ended
December 31,December 31,
(Dollars in thousands, except per share data) 2019 2018 2019 2018
Interest Income:
Interest and fees on loans $ 77,522 $78,081 $ 316,550 $293,131
Interest on loans held for sale 462 262 1,607 1,245
Interest on deposits with banks 724 222 2,129 1,304
Interest and dividends on investment securities:
Taxable 5,437 5,219 21,739 20,516
Exempt from federal income taxes 1,243 1,820 5,834 7,855
Interest on federal funds sold 2 3 10 31
Total interest income 85,390 85,607 347,869 324,082
Interest Expense:
Interest on deposits 14,723 12,556 61,681 39,139
Interest on retail repurchase agreements and federal funds purchased 216 570 1,161 1,169
Interest on advances from FHLB 3,189 5,851 16,578 21,408
Interest on subordinated debt 1,679 485 3,141 1,921
Total interest expense 19,807 19,462 82,561 63,637
Net interest income 65,583 66,145 265,308 260,445
Provision for loan losses 1,655 3,403 4,684 9,023
Net interest income after provision for loan losses 63,928 62,742 260,624 251,422
Non-interest Income:
Investment securities gains 57 45 77 190
Service charges on deposit accounts 2,427 2,459 9,692 9,324
Mortgage banking activities 4,170 1,130 14,711 7,073
Wealth management income 6,401 5,492 22,669 21,284
Insurance agency commissions 1,331 1,138 6,612 6,158
Income from bank owned life insurance 660 663 3,165 4,327
Bank card fees 1,435 1,368 5,616 5,567
Other income 2,743 1,735 8,780 7,126
Total non-interest income 19,224 14,030 71,322 61,049
Non-interest Expense:
Salaries and employee benefits 26,251 23,934 103,950 96,998
Occupancy expense of premises 4,663 4,413 19,470 18,352
Equipment expenses 2,791 2,426 10,720 9,335
Marketing 1,085 1,061 4,456 3,924
Outside data services 1,854 1,763 7,567 6,603
FDIC insurance 123 1,255 2,260 5,095
Amortization of intangible assets 481 540 1,946 2,162
Merger expenses 948 - 1,312 11,766
Professional fees and services 2,553 1,966 6,978 6,056
Other expenses 5,332 5,309 20,426 19,492
Total non-interest expense 46,081 42,667 179,085 179,783
Income before income taxes 37,071 34,105 152,861 132,688
Income tax expense 8,614 8,539 36,428 31,824
Net income $ 28,457 $25,566 $ 116,433 $100,864
Net Income Per Share Amounts:
Basic net income per share $ 0.80 $0.72 $ 3.25 $2.82
Diluted net income per share $ 0.80 $0.72 $ 3.25 $2.82
Dividends declared per share $ 0.30 $0.28 $ 1.18 $1.10

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2019 2018
(Dollars in thousands, except per share data) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Profitability for the Quarter:
Tax-equivalent interest income $ 86,539 $88,229 $88,423 $89,424 $86,839 $85,595 $79,774 $76,589
Interest expense 19,807 20,292 21,029 21,433 19,462 16,783 14,779 12,613
Tax-equivalent net interest income 66,732 67,937 67,394 67,991 67,377 68,812 64,995 63,976
Tax-equivalent adjustment 1,149 1,147 1,209 1,241 1,232 1,221 1,177 1,085
Provision (credit) for loan losses 1,655 1,524 1,633 (128) 3,403 1,890 1,733 1,997
Non-interest income 19,224 18,573 16,556 16,969 14,030 15,033 14,868 17,118
Non-interest expense 46,081 44,925 43,887 44,192 42,667 42,393 45,082 49,641
Income before income taxes 37,071 38,914 37,221 39,655 34,105 38,341 31,871 28,371
Income tax expense 8,614 9,531 8,945 9,338 8,539 9,107 7,472 6,706
Net income $ 28,457 $29,383 $28,276 $30,317 $25,566 $29,234 $24,399 $21,665
Financial Performance:
Pre-tax pre-provision pre-merger income $ 39,674 $40,802 $38,854 $39,527 $37,508 $40,811 $35,832 $39,326
Return on average assets 1.32% 1.39% 1.37% 1.49% 1.25% 1.45% 1.23% 1.12%
Return on average common equity 9.93% 10.38% 10.32% 11.46% 9.70% 11.26% 9.66% 8.70%
Net interest margin 3.38% 3.51% 3.54% 3.60% 3.57% 3.71% 3.56% 3.58%
Efficiency ratio - GAAP basis (1) 54.34% 52.63% 53.04% 52.79% 53.22% 51.31% 57.29% 62.04%
Efficiency ratio - Non-GAAP basis (1) 51.98% 50.95% 51.71% 51.44% 51.78% 49.27% 52.98% 49.54%
Per Share Data:
Basic net income per share $ 0.80 $0.82 $0.79 $0.85 $0.72 $0.82 $0.68 $0.61
Diluted net income per share $ 0.80 $0.82 $0.79 $0.85 $0.72 $0.82 $0.68 $0.61
Average fully diluted shares 35,773,246 35,900,102 35,890,437 35,806,459 35,747,478 35,744,085 35,743,927 35,683,542
Dividends declared per common share $ 0.30 $0.30 $0.30 $0.28 $0.28 $0.28 $0.28 $0.26
Non-interest Income:
Securities gains $ 57 $15 $5 $- $45 $82 $- $63
Service charges on deposit accounts 2,427 2,516 2,442 2,307 2,459 2,316 2,290 2,259
Mortgage banking activities 4,170 4,408 3,270 2,863 1,130 1,672 2,064 2,207
Wealth management income 6,401 5,493 5,539 5,236 5,492 5,344 5,387 5,061
Insurance agency commissions 1,331 2,116 1,265 1,900 1,138 2,016 1,180 1,824
Income from bank owned life insurance 660 662 654 1,189 663 663 670 2,331
Bank card fees 1,435 1,462 1,467 1,252 1,368 1,436 1,393 1,370
Other income 2,743 1,901 1,914 2,222 1,735 1,504 1,884 2,003
Total Non-interest Income $ 19,224 $18,573 $16,556 $16,969 $14,030 $15,033 $14,868 $17,118
Non-interest Expense:
Salaries and employee benefits $ 26,251 $26,234 $25,489 $25,976 $23,934 $24,488 $24,664 $23,912
Occupancy expense of premises 4,663 4,816 4,760 5,231 4,413 4,355 4,642 4,942
Equipment expenses 2,791 2,641 2,712 2,576 2,426 2,441 2,243 2,225
Marketing 1,085 1,541 887 943 1,061 770 945 1,148
Outside data services 1,854 1,973 1,962 1,778 1,763 1,736 1,707 1,397
FDIC insurance 123 (83) 1,084 1,136 1,255 1,257 1,390 1,193
Amortization of intangible assets 481 491 483 491 540 540 541 541
Merger expenses 948 364 - - - 580 2,228 8,958
Professional fees and services 2,553 1,546 1,634 1,245 1,966 1,351 1,699 1,040
Other expenses 5,332 5,402 4,876 4,816 5,309 4,875 5,023 4,285
Total Non-interest Expense $ 46,081 $44,925 $43,887 $44,192 $42,667 $42,393 $45,082 $49,641
(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 and merger expenses 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.

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2019 2018
(Dollars in thousands) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Balance Sheets at Quarter End:
Residential mortgage loans $ 1,149,327 $1,199,275 $1,241,081 $1,249,968 $1,228,247 $1,181,427 $1,106,674 $992,287
Residential construction loans 146,279 150,692 171,106 176,388 186,785 188,779 197,372 215,445
Commercial AD&C loans 684,010 678,906 658,709 688,939 681,201 631,589 609,266 564,871
Commercial investor real estate loans 2,169,156 2,036,021 1,994,027 1,962,879 1,958,395 1,924,397 1,923,827 1,928,439
Commercial owner occupied real estate loans 1,288,677 1,278,505 1,224,986 1,216,713 1,202,903 1,201,673 1,184,421 1,174,739
Commercial business loans 801,019 772,619 772,158 769,660 796,264 738,083 702,939 652,797
Consumer loans 466,764 480,530 489,176 505,443 517,839 523,011 525,574 532,973
Total loans 6,705,232 6,596,548 6,551,243 6,569,990 6,571,634 6,388,959 6,250,073 6,061,551
Allowance for loan losses (56,132) (54,992) (54,024) (53,089) (53,486) (50,409) (48,493) (46,931)
Loans held for sale 53,701 78,821 50,511 24,998 22,773 31,581 40,000 28,486
Investment securities 1,125,136 946,210 955,715 987,299 1,010,724 992,797 1,017,274 1,040,339
Interest-earning assets 7,947,703 7,742,138 7,713,364 7,648,654 7,639,598 7,428,534 7,532,664 7,285,731
Total assets 8,629,002 8,437,538 8,398,519 8,327,900 8,243,272 8,034,565 8,152,600 7,894,918
Noninterest-bearing demand deposits 1,892,052 2,081,435 2,023,614 1,813,708 1,750,319 1,902,537 1,910,690 1,767,523
Total deposits 6,440,319 6,493,899 6,389,749 6,224,523 5,914,880 5,898,394 5,837,826 5,627,206
Customer repurchase agreements 138,605 126,008 150,604 122,626 137,429 142,669 139,647 149,323
Total interest-bearing liabilities 5,485,055 5,093,265 5,136,860 5,297,108 5,378,026 5,042,431 5,168,055 5,057,645
Total stockholders' equity 1,132,974 1,140,041 1,119,445 1,095,848 1,067,903 1,042,716 1,026,349 1,014,608
Quarterly Average Balance Sheets:
Residential mortgage loans $ 1,169,623 $1,215,132 $1,244,086 $1,230,319 $1,188,135 $1,122,946 $1,034,062 $1,117,478
Residential construction loans 149,690 162,196 174,095 189,720 202,710 215,578 223,171 193,327
Commercial AD&C loans 695,817 651,905 686,282 676,205 647,115 632,354 576,076 582,876
Commercial investor real estate loans 2,092,478 1,982,979 1,960,919 1,964,699 1,936,936 1,905,427 1,924,759 1,988,340
Commercial owner occupied real estate loans 1,274,782 1,258,000 1,215,632 1,207,799 1,196,506 1,190,865 1,184,409 940,065
Commercial business loans 765,159 786,150 756,594 780,318 751,754 700,791 666,280 657,372
Consumer loans 477,572 486,865 505,235 515,644 522,453 524,605 531,965 538,198
Total loans 6,625,121 6,543,227 6,542,843 6,564,704 6,445,609 6,292,566 6,140,722 6,017,656
Loans held for sale 50,208 61,870 37,121 17,846 21,923 29,939 25,403 35,768
Investment securities 1,002,692 941,048 964,863 1,010,940 986,146 996,365 1,028,306 1,062,325
Interest-earning assets 7,859,836 7,690,629 7,619,240 7,627,187 7,495,338 7,372,536 7,311,272 7,212,878
Total assets 8,542,837 8,370,789 8,294,883 8,258,116 8,104,916 7,986,525 7,926,735 7,841,611
Noninterest-bearing demand deposits 1,927,063 1,909,884 1,796,802 1,682,720 1,766,672 1,822,931 1,796,644 1,651,258
Total deposits 6,459,551 6,405,762 6,247,409 5,952,942 5,822,580 5,783,992 5,657,420 5,489,715
Customer repurchase agreements 126,596 138,736 141,865 129,059 146,637 139,809 148,539 136,694
Total interest-bearing liabilities 5,326,303 5,202,876 5,269,209 5,403,946 5,230,254 5,076,717 5,058,016 5,116,904
Total stockholders' equity 1,136,824 1,123,185 1,099,078 1,073,291 1,045,378 1,030,167 1,013,081 1,010,106
Financial Measures:
Average equity to average assets 13.31% 13.42% 13.25% 13.00% 12.90% 12.90% 12.78% 12.88%
Investment securities to earning assets 14.16% 12.22% 12.39% 12.91% 13.23% 13.36% 13.50% 14.28%
Loans to earning assets 84.37% 85.20% 84.93% 85.90% 86.02% 86.01% 82.97% 83.20%
Loans to assets 77.71% 78.18% 78.00% 78.89% 79.72% 79.52% 76.66% 76.78%
Loans to deposits 104.11% 101.58% 102.53% 105.55% 111.10% 108.32% 107.06% 107.72%
Capital Measures:
Tier 1 leverage (1) 9.70% 9.96% 9.80% 9.61% 9.50% 9.46% 9.27% 9.21%
Tier 1 capital to risk-weighted assets (1) 11.21% 11.52% 11.59% 11.35% 11.06% 11.18% 11.01% 11.08%
Total regulatory capital to risk-weighted assets (1) 14.85% 12.70% 12.79% 12.54% 12.26% 12.38% 12.19% 12.27%
Common equity tier 1 capital to risk-weighted assets (1) 11.06% 11.37% 11.43% 11.19% 10.90% 11.02% 10.85% 10.92%
Book value per share $ 32.40 $32.00 $31.43 $30.82 $30.06 $29.35 $28.90 $28.61
Outstanding shares 34,970,370 35,625,822 35,614,953 35,557,110 35,530,734 35,521,541 35,511,943 35,463,269
(1) Estimated ratio at December 31, 2019

Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2019 2018
(Dollars in thousands) December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31,
Non-Performing Assets:
Loans 90 days past due:
Commercial business $ - $17 $- $- $49 $150 $6 $-
Commercial real estate:
Commercial AD&C - - - - - 1,261 - -
Commercial investor real estate - 1,201 1,248 - - - - -
Commercial owner occupied real estate - - - 90 - 13 112 -
Consumer - - - - 219 563 - 126
Residential real estate:
Residential mortgage - - - 221 221 - - -
Residential construction - - - - - - - -
Total loans 90 days past due - 1,218 1,248 311 489 1,987 118 126
Non-accrual loans:
Commercial business 8,450 6,393 7,083 8,013 7,086 6,352 6,883 6,634
Commercial real estate:
Commercial AD&C 829 829 1,990 3,306 3,306 136 136 136
Commercial investor real estate 8,437 8,454 6,409 6,071 5,355 5,861 5,878 5,813
Commercial owner occupied real estate 4,148 3,810 3,766 5,992 4,234 3,352 3,440 3,524
Consumer 4,107 4,561 4,439 4,081 4,107 4,098 4,298 3,244
Residential real estate:
Residential mortgage 12,661 12,574 10,625 9,704 9,336 9,134 6,251 7,063
Residential construction - - - 156 159 163 168 174
Total non-accrual loans 38,632 36,621 34,312 37,323 33,583 29,096 27,054 26,588
Total restructured loans - accruing 2,636 2,287 2,133 2,479 1,942 2,224 1,663 2,678
Total non-performing loans 41,268 40,126 37,693 40,113 36,014 33,307 28,835 29,392
Other assets and real estate owned (OREO) 1,482 1,482 1,486 1,410 1,584 2,118 2,361 2,761
Total non-performing assets $ 42,750 $41,608 $39,179 $41,523 $37,598 $35,425 $31,196 $32,153
For the Quarter Ended,
December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2019 2019 2019 2019 2018 2018 2018 2018
Analysis of Non-accrual Loan Activity:
Balance at beginning of period $ 36,621 $34,312 $37,323 $33,583 $29,096 $27,054 $26,588 $26,336
Non-accrual balances transferred to OREO - - (195) - - - - (289)
Non-accrual balances charged-off (454) (705) (604) (227) (360) (91) (144) (411)
Net payments or draws (2,916) (2,903) (5,517) (1,786) (1,126) (1,777) (1,635) (357)
Loans placed on non-accrual 5,381 6,015 3,396 6,202 5,973 4,193 2,245 1,309
Non-accrual loans brought current - (98) (91) (449) - (283) - -
Balance at end of period $ 38,632 $36,621 $34,312 $37,323 $33,583 $29,096 $27,054 $26,588
Analysis of Allowance for Loan Losses:
Balance at beginning of period $ 54,992 $54,024 $53,089 $53,486 $50,409 $48,493 $46,931 $45,257
Provision (credit) for loan losses 1,655 1,524 1,633 (128) 3,403 1,890 1,733 1,997
Less loans charged-off, net of recoveries:
Commercial business 15 389 735 7 (9) (49) (73) 322
Commercial real estate:
Commercial AD&C - (224) (4) - - - - (62)
Commercial investor real estate (3) (3) (3) (7) 109 (49) (8) (8)
Commercial owner occupied real estate - - - - - - - -
Consumer 241 187 (18) 182 45 85 244 99
Residential real estate:
Residential mortgage 264 209 (10) 89 183 (11) 13 (22)
Residential construction (2) (2) (2) (2) (2) (2) (5) (6)
Net charge-offs 515 556 698 269 326 (26) 171 323
Balance at end of period $ 56,132 $54,992 $54,024 $53,089 $53,486 $50,409 $48,493 $46,931
Asset Quality Ratios:
Non-performing loans to total loans 0.62% 0.61% 0.58% 0.61% 0.55% 0.52% 0.46% 0.48%
Non-performing assets to total assets 0.50% 0.49% 0.47% 0.50% 0.46% 0.44% 0.38% 0.41%
Allowance for loan losses to loans 0.84% 0.83% 0.82% 0.81% 0.81% 0.79% 0.78% 0.77%
Allowance for loan losses to non-performing loans 136.02% 137.05% 143.33% 132.35% 148.51% 151.35% 168.17% 159.67%
Annualized net charge-offs to average loans 0.03% 0.03% 0.04% 0.02% 0.02% 0.00% 0.01% 0.02%

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Three Months Ended December 31,
2019 2018
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 $ 1,169,623 $ 11,030 3.77%$1,188,135 $11,348 3.82%
Residential construction loans 149,690 1,650 4.37 202,710 2,086 4.08
Total mortgage loans 1,319,313 12,680 3.84 1,390,845 13,434 3.86
Commercial AD&C loans 695,817 9,388 5.35 647,115 9,466 5.80
Commercial investor real estate loans 2,092,478 24,982 4.74 1,936,936 24,301 4.98
Commercial owner occupied real estate loans 1,274,782 15,606 4.86 1,196,506 14,661 4.86
Commercial business loans 765,159 9,821 5.09 751,769 10,447 5.51
Total commercial loans 4,828,236 59,797 4.91 4,532,326 58,875 5.15
Consumer loans 477,572 5,594 4.65 522,453 6,258 4.75
Total loans (2) 6,625,121 78,071 4.68 6,445,624 78,567 4.84
Loans held for sale 50,208 462 3.68 21,923 262 4.78
Taxable securities 816,008 5,704 2.79 728,560 5,471 3.00
Tax-exempt securities (3) 186,684 1,576 3.38 257,586 2,314 3.59
Total investment securities (4) 1,002,692 7,280 2.90 986,146 7,785 3.16
Interest-bearing deposits with banks 181,394 724 1.58 40,864 222 2.16
Federal funds sold 421 2 1.66 796 3 1.51
Total interest-earning assets 7,859,836 86,539 4.38 7,495,353 86,839 4.60
Less: allowance for loan losses (54,653) (51,302)
Cash and due from banks 68,011 64,866
Premises and equipment, net 59,277 62,219
Other assets 610,366 534,356
Total assets $ 8,542,837 $8,105,492
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 800,263 685 0.34%$695,762 226 0.13%
Regular savings deposits 325,540 94 0.11 334,593 82 0.10
Money market savings deposits 1,875,045 5,820 1.23 1,601,050 5,691 1.41
Time deposits 1,531,640 8,124 2.10 1,424,503 6,557 1.83
Total interest-bearing deposits 4,532,488 14,723 1.29 4,055,908 12,556 1.23
Other borrowings 133,716 216 0.64 214,278 570 1.06
Advances from FHLB 516,101 3,189 2.45 922,620 5,851 2.52
Subordinated debentures 143,998 1,679 4.66 37,448 485 5.18
Total interest-bearing liabilities 5,326,303 19,807 1.48 5,230,254 19,462 1.48
Noninterest-bearing demand deposits 1,927,063 1,766,672
Other liabilities 152,647 63,188
Stockholders' equity 1,136,824 1,045,378
Total liabilities and stockholders' equity$ 8,542,837 $8,105,492
Net interest income and spread $ 66,732 2.90% $67,377 3.12%
Less: tax-equivalent adjustment 1,149 1,232
Net interest income $ 65,583 $66,145
Interest income/earning assets 4.38% 4.60%
Interest expense/earning assets 1.00 1.03
Net interest margin 3.38% 3.57%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 26.13% for 2019 and 2018. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.1 million and $1.2 million in 2019 and 2018, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.
(4) Available for sale investments are presented at amortized cost.

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Twelve Months Ended December 31,
2019 2018
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 $ 1,214,625 $ 46,438 3.82%$1,115,869 $41,628 3.73%
Residential construction loans 168,797 7,232 4.28 208,741 8,289 3.97
Total mortgage loans 1,383,422 53,670 3.88 1,324,610 49,917 3.77
Commercial AD&C loans 677,536 39,241 5.79 609,844 35,058 5.75
Commercial investor real estate loans 2,000,571 99,410 4.97 1,938,633 96,125 4.96
Commercial owner occupied real estate loans 1,239,289 60,581 4.89 1,128,836 53,712 4.76
Commercial business loans 772,052 41,300 5.35 694,326 36,499 5.26
Total commercial loans 4,689,448 240,532 5.13 4,371,639 221,394 5.06
Consumer loans 496,199 24,391 4.92 529,249 23,568 4.45
Total loans (2) 6,569,069 318,593 4.85 6,225,498 294,879 4.74
Loans held for sale 41,905 1,607 3.84 28,225 1,245 4.41
Taxable securities 768,521 22,873 2.98 736,054 21,362 2.90
Tax-exempt securities (3) 211,236 7,403 3.50 281,962 9,976 3.54
Total investment securities (4) 979,757 30,276 3.09 1,018,016 31,338 3.08
Interest-bearing deposits with banks 108,534 2,129 1.96 74,956 1,304 1.74
Federal funds sold 572 10 1.76 2,151 31 1.42
Total interest-earning assets 7,699,837 352,615 4.58 7,348,846 328,797 4.47
Less: allowance for loan losses (53,746) (48,483)
Cash and due from banks 65,181 68,183
Premises and equipment, net 60,595 61,686
Other assets 595,272 535,282
Total assets $ 8,367,139 $7,965,514
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 750,606 1,990 0.27%$721,759 883 0.12%
Regular savings deposits 329,158 415 0.13 376,207 570 0.15
Money market savings deposits 1,751,989 25,437 1.45 1,541,142 18,719 1.21
Time deposits 1,604,996 33,839 2.11 1,290,626 18,967 1.47
Total interest-bearing deposits 4,436,749 61,681 1.39 3,929,734 39,139 1.00
Other borrowings 152,088 1,161 0.76 172,888 1,169 0.68
Advances from FHLB 645,587 16,578 2.57 980,541 21,408 2.18
Subordinated debentures 64,251 3,141 4.89 37,501 1,921 5.13
Total interest-bearing liabilities 5,298,675 82,561 1.56 5,120,664 63,637 1.24
Noninterest-bearing demand deposits 1,830,008 1,759,867
Other liabilities 130,146 60,188
Stockholders' equity 1,108,310 1,024,795
Total liabilities and stockholders' equity$ 8,367,139 $7,965,514
Net interest income and spread $ 270,054 3.02% $265,160 3.23%
Less: tax-equivalent adjustment 4,746 4,715
Net interest income $ 265,308 $260,445
Interest income/earning assets 4.58% 4.47%
Interest expense/earning assets 1.07 0.87
Net interest margin 3.51% 3.60%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 26.13% for 2019 and 2018. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $4.7 million and $4.7 million in 2019 and 2018, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.
(4) Available for sale investments are presented at amortized cost.

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Source: Sandy Spring Bancorp, Inc.

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