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Sandy Spring Bancorp Reports Third Quarter Earnings of $20.7 Million

October 24, 2023 7:00 AM

OLNEY, Md., Oct. 24, 2023 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc. (Nasdaq-SASR), the parent company of Sandy Spring Bank, reported net income of $20.7 million ($0.46 per diluted common share) for the quarter ended September 30, 2023, compared to net income of $24.7 million ($0.55 per diluted common share) for the second quarter of 2023 and $33.6 million ($0.75 per diluted common share) for the third quarter of 2022. The decline in the current quarter's net income compared to the linked quarter was the result of the one-time pension settlement expense associated with the previously disclosed termination of the Company's pension plan, coupled with lower net interest income. These negative factors were partially offset by lower provision for credit losses and a decline in salaries and employee benefits expense after excluding the impact of the pension settlement expense.

Current quarter core earnings were $27.8 million ($0.62 per diluted common share), compared to $27.1 million ($0.60 per diluted common share) for the quarter ended June 30, 2023 and $35.7 million ($0.80 per diluted common share) for the quarter ended September 30, 2022. Core earnings exclude the after-tax impact of amortization of intangibles, investment securities gains or losses and non-recurring or extraordinary items. The increase in core earnings during the current quarter as compared to the previous quarter was a result of lower provision for credit losses, lower salaries and employee benefits expense, and lower marketing expense, offset by reduced net interest income.

“This quarter we demonstrated the effectiveness of our core funding strategies and ability to expand our reach in the Greater Washington region. We added over 1,500 clients in the quarter, which reflects over 1% growth in our client base,” said Daniel J. Schrider, Chairman, President and CEO of Sandy Spring Bank. "Additionally, we grew the Commercial & Industrial portfolio, reduced our Commercial Real Estate concentration, and maintained our credit quality."

“We are focused on capitalizing on this momentum to deepen existing client relationships and welcome new clients to Sandy Spring Bank,” Schrider added.

Third Quarter Highlights

Balance Sheet and Credit Quality

Total assets were $14.1 billion at September 30, 2023, as compared to $14.0 billion at June 30, 2023. Total loans declined by $69.3 million or 1% to $11.3 billion at September 30, 2023 compared to $11.4 billion at June 30, 2023. Total commercial real estate and business loans declined $79.2 million quarter-over-quarter due to a $107.1 million or 10% decline in the AD&C loan portfolio, while investor and owner-occupied commercial real estate loan portfolios were relatively unchanged. Commercial business loans and lines increased $31.1 million or 2%. Total residential mortgage loans grew $16.0 million or 1% mainly due to the migration of construction loans into the residential mortgage portfolio. Overall, the loan portfolio mix remained relatively unchanged compared to the previous quarter.

Deposits increased $192.1 million or 2% to $11.2 billion at September 30, 2023 compared to $11.0 billion at June 30, 2023. During this period total interest-bearing deposits increased $258.1 million or 3%, while noninterest-bearing deposits declined $66.0 million or 2%. Growth within interest-bearing deposit categories was driven by savings accounts and core time deposits, which increased by $277.4 million and $263.7 million, respectively. These increases were partially offset by the $155.8 million decrease in brokered time deposits, as the Company reduced its reliance on wholesale funding sources, and the $177.5 million decrease in money market accounts. Total deposits, excluding brokered deposits, increased by $349.5 million or 4% quarter-over-quarter and represented 90% of the total deposits as of September 30, 2023 compared to 88% at June 30, 2023, reflecting the continued stability of the core deposit base. The deposit growth experienced during the current quarter resulted in the loan to deposit ratio declining to 101% at September 30, 2023 from 104% at June 30, 2023. Total uninsured deposits at September 30, 2023 were approximately 33% of the total deposits. The Company offers its customers reciprocal deposit arrangements, which provide FDIC deposit insurance for accounts that would otherwise exceed deposit insurance limits. During the quarter ended September 30, 2023, balances in the Company's reciprocal deposit accounts increased by $131.6 million.

Total borrowings declined by $57.8 million or 4% at September 30, 2023 as compared to the previous quarter, driven by a $50.0 million reduction in FHLB advances. The outstanding balance of borrowings through the Federal Reserve Bank's Bank Term Funding Program remained unchanged at $300.0 million at September 30, 2023. At September 30, 2023, contingent liquidity, which consists of available FHLB borrowings, fed funds, funds through the Federal Reserve Bank's discount window and the Bank Term Funding Program, as well as excess cash and unpledged investment securities totaled $6.1 billion or 168% of uninsured deposits. At September 30, 2023, total cash and cash equivalents were $717.6 million, an increase of $287.5 million or 67% compared to the linked quarter, primarily a result of strong deposit growth.

The tangible common equity ratio decreased to 8.42% of tangible assets at September 30, 2023, compared to 8.51% at June 30, 2023. This decrease reflected the impact of higher tangible assets while tangible common equity remained relatively unchanged quarter-over-quarter, as net retained earnings were offset by an increase in unrealized losses on available-for-sale investment securities.

At September 30, 2023, the Company had a total risk-based capital ratio of 14.85%, a common equity tier 1 risk-based capital ratio of 10.83%, a tier 1 risk-based capital ratio of 10.83%, and a tier 1 leverage ratio of 9.50%. All of these ratios remain well in excess of the mandated minimum regulatory requirements.

Non-performing loans include non-accrual loans and accruing loans 90 days or more past due. Overall credit quality remained stable at September 30, 2023 compared to June 30, 2023, as the ratio of non-performing loans to total loans was 0.46% compared to 0.44%. These levels of non-performing loans compare to 0.40% at September 30, 2022 and continue to indicate stable credit quality during a period of economic uncertainty. At September 30, 2023, non-performing loans totaled $51.8 million, compared to $49.5 million at June 30, 2023 and $44.5 million at September 30, 2022. Total net charge-offs for the current quarter amounted to $0.1 million compared to $1.8 million for the second quarter of 2023 and $0.5 million of net recoveries for the third quarter of 2022.

At September 30, 2023, the allowance for credit losses was $123.4 million or 1.09% of outstanding loans and 238% of non-performing loans, compared to $120.3 million or 1.06% of outstanding loans and 243% of non-performing loans at the end of the previous quarter and $128.3 million or 1.14% of outstanding loans and 289% of non-performing loans at the end of the third quarter of 2022. The increase in the allowance for the current quarter compared to the previous quarter mainly reflects increases in individual reserves recorded on a few commercial real estate relationships, partially offset by the reduction of the qualitative adjustment related to the probability of an economic recession.

Income Statement Review

Quarterly Results

Net income was $20.7 million ($0.46 per diluted common share) for the three months ended September 30, 2023 compared to $24.7 million ($0.55 per diluted common share) for the three months ended June 30, 2023 and $33.6 million ($0.75 per diluted common share) for the prior year quarter. The current quarter's core earnings were $27.8 million ($0.62 per diluted common share), compared to $27.1 million ($0.60 per diluted common share) for the previous quarter and $35.7 million ($0.80 per diluted common share) for the quarter ended September 30, 2022. The decline in the current quarter's net income compared to the previous quarter was the result of one-time pension settlement expense of $8.2 million, as the Company completed the termination of its pension plan, coupled with lower net interest income, partially offset by lower provision for credit losses and lower salaries expense. The increase in core earnings during the current quarter as compared to the previous quarter was a result of lower provision for credit losses, lower salaries and employee benefits expense, and lower marketing expense, offset by reduced net interest income.

Net interest income for the third quarter of 2023 decreased $5.4 million or 6% compared to the previous quarter and $27.9 million or 25% compared to the third quarter of 2022. Both quarterly and year-over-year decreases in net interest income were driven by higher interest expense, a result of higher funding costs, which outpaced growth in interest income. The rising interest rate environment was primarily responsible for a $32.0 million year-over-year increase in interest income. This growth in interest income was more than offset by the $59.9 million year-over-year growth in interest expense as funding costs have also risen in response to the rising rate environment and significant competition for deposits. Interest income growth occurred in all categories of commercial loans and, to a lesser degree, in residential mortgage loans, consumer loans and investment securities income.

The net interest margin was 2.55% for the third quarter of 2023 compared to 2.73% for the second quarter of 2023 and 3.53% for the third quarter of 2022. The contraction of the net interest margin for the current quarter reflects the higher rate paid on interest-bearing liabilities, which outpaced the increase in the yield on interest-earning assets. The overall rate and yield increases were driven by the multiple federal funds rate increases that occurred over the preceding twelve months coupled with competition for deposits in the market, and customer movement of excess funds out of noninterest-bearing accounts into higher yielding products. As compared to the prior year quarter, the yield on interest-earning assets increased 76 basis points while the rate paid on interest-bearing liabilities rose 241 basis points, resulting in the margin compression of 98 basis points.

The total provision for credit losses was $2.4 million for the third quarter of 2023 compared to $5.1 million for the previous quarter and $18.9 million for the third quarter of 2022. The provision for credit losses directly attributable to the funded loan portfolio was $3.2 million for the current quarter compared to $4.5 million for the second quarter of 2023 and the prior year quarter’s provision of $14.1 million. The current quarter's provision mainly reflects an increase in individual reserves established on a few commercial real estate relationships.

Non-interest income for the third quarter of 2023 increased by 1% or $0.2 million compared to the linked quarter and grew by 3% or $0.5 million compared to the prior year quarter. The current quarter's increase in non-interest income as compared to the previous quarter was mainly driven by higher wealth management income coupled with higher lending-related fees, partially offset by lower BOLI income due to mortality proceeds received in the prior quarter.

Non-interest expense for the third quarter of 2023 increased $3.3 million or 5% compared to the second quarter of 2023 and $6.7 million or 10% compared to the third quarter of 2022. The current quarter included $8.2 million of pension settlement expense related to the termination of the Company's pension plan, while the previous quarter included $1.9 million of severance related expense associated with staffing adjustments. Excluding these items from the current and previous quarters, total non-interest expense declined by $2.9 million or 4% driven by lower salaries and employee benefits and lower marketing expense. Excluding pension settlement expense from the current quarter, non-interest expense declined by $1.5 million or 2% year-over-year. This decline is primarily attributable to lower compensation expense, partially offset by higher professional fees related to the Company's investments in technology projects, and higher FDIC insurance expense, due to an increase in the assessment rate for all banks that became effective in 2023.

For the third quarter of 2023, the GAAP efficiency ratio was 70.72% compared to 64.22% for the second quarter of 2023 and 50.66% for the third quarter of 2022. The GAAP efficiency ratio rose from the prior year quarter primarily as a result of the 21% decrease in GAAP revenue in combination with the 10% increase in GAAP non-interest expense. The non-GAAP efficiency ratio was 60.91% for the current quarter as compared to 60.68% for the second quarter of 2023 and 48.18% for the third quarter of 2022. The increase in the non-GAAP efficiency ratio (reflecting a decrease in efficiency) from the third quarter of the prior year to the current year quarter was primarily the result of the 21% decline in non-GAAP revenue, while non-GAAP expenses were relatively unchanged.

ROA for the quarter ended September 30, 2023 was 0.58% and ROTCE was 7.42% compared to 0.70% and 8.93%, respectively, for the second quarter of 2023 and 0.99% and 12.49%, respectively, for the third quarter of 2022. On a non-GAAP basis, the current quarter's core ROA was 0.78% and core ROTCE was 9.51% compared to 0.77% and 9.43% for the second quarter of 2023 and 1.05% and 12.86%, respectively, for the third quarter of 2022.

Year-to-Date Results

The Company recorded net income of $96.7 million for the nine months ended September 30, 2023 compared to net income of $132.3 million for the same period in the prior year. Core earnings were $107.2 million for the nine months ended September 30, 2023 compared to $125.0 million for the same period in the prior year. Year-to-date net income declined as a result of the gain recognized on the sale of the Company's insurance segment during the prior year in combination with lower net interest income and higher non-interest expense, partially offset by lower provision for credit losses as a result of significant credit recorded during the first quarter of the current year.

For the nine months ended September 30, 2023, net interest income decreased $47.5 million compared to the prior year as a result of the $169.0 million increase in interest expense, partially offset by the $121.5 million increase in interest income. The increase in interest expense was driven by the interest expense on deposits, primarily associated with money market and time deposit accounts and, to a lesser degree, FHLB and Federal Reserve Bank borrowings. The net interest margin declined to 2.75% for the nine months ended September 30, 2023, compared to 3.50% for the prior year, primarily as a result of higher funding cost due to the rising interest rate environment and market competition for deposits during the period.

The provision for credit losses for the nine months ended September 30, 2023 amounted to a credit of $14.1 million as compared to a charge of $23.6 million for 2022. Credit to the provision for the nine months ended September 30, 2023 was a reflection of the improving regional forecasted unemployment rate, observed during the early part of the current year, coupled with the continued strong credit quality performance of the loan portfolio.

For the nine months ended September 30, 2023, non-interest income decreased 31% to $50.5 million compared to $72.7 million for 2022. During the prior year, the Company realized a $16.5 million gain on the sale of its insurance segment. Excluding the gain, non-interest income decreased 10% or $5.7 million, driven by a $2.9 million decrease in insurance commissions, a $2.6 million decrease in bank card fees and a $0.6 million decrease in income from mortgage banking activities. Insurance commission income declined due to the disposition of the Company's insurance business during the second quarter of the prior year. Fees from bank cards declined as a result of regulatory restrictions on transaction fees effective in the second half of the prior year. The decline in income from mortgage banking activities is the result of the rising interest rate environment, which continues to dampen home sales and refinancing activity. These decreases in non-interest income year-over-year were partially offset by a $0.8 million increase in BOLI mortality-related income.

Non-interest expense increased 8% to $207.9 million for the nine months ended September 30, 2023, compared to $192.9 million for 2022. Current year expense included pension settlement expense of $8.2 million and severance expense of $1.9 million, while the prior year included contingent earn-out expense associated with the 2020 acquisition of Rembert Pendleton Jackson of $1.2 million and merger, acquisition and disposal expense of $1.1 million. Excluding these items, non-interest expense increased by $7.2 million or 4% in the current year over the prior year. The drivers of the increase in non-interest expense were a $5.8 million increase in professional fees, a $3.5 million increase in FDIC expense, and a $1.4 million increase in software amortization expense. Excluding the pension settlement expense, total salaries and benefits expense declined by $3.5 million from the prior year period. Year-over-year increases in both professional fees and software amortization expense were mainly associated with the Company's investments in technology and software projects. The increase in FDIC insurance expense was a result of the two basis points increase in the assessment rate for all banks that became effective in 2023.

For the nine months ended September 30, 2023, the GAAP efficiency ratio was 64.29% compared to 49.08% for the same period in 2022. The non-GAAP efficiency ratio for the current year was 59.42% compared to the 49.09% for the prior year. The growth in the current year’s non-GAAP efficiency ratio compared to the prior year, indicating a decline in efficiency, was the result of the 14% decrease in non-GAAP revenue combined with the 4% 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:

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 that 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 third 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 1-833-470-1428. Please use the following access code: 724249. 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 November 7, 2023. A replay of the teleconference will be available through the same time period by calling 1-866-813-9403 under conference call number 896518.

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 Maryland, Virginia, and Washington, D.C. Through its subsidiaries, Rembert Pendleton Jackson and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of wealth management services.

Category: WebcastSource: Sandy Spring Bancorp, Inc.Code: SASR-E

For additional information or questions, please contact:Daniel J. Schrider, Chair, 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.com Media Contact:Jen Schell, Senior Vice President 301-570-8331[email protected]

Forward-Looking Statements

Sandy Spring Bancorp’s forward-looking statements are subject to significant risks and uncertainties that may cause actual results to differ materially from those in such statements. These risks and uncertainties include, but are not limited to, the risks identified in our quarterly and annual reports and the following: changes in general business and economic conditions nationally or in the markets that we serve; changes in consumer and business confidence, investor sentiment, or consumer spending or savings behavior; changes in the level of inflation; changes in the demand for loans, deposits and other financial services that we provide; the possibility that future credit losses may be higher than currently expected; the impact of the interest rate environment on our business, financial condition and results of operations; the impact of compliance with changes in laws, regulations and regulatory interpretations, including changes in income taxes; changes in credit ratings assigned to us or our subsidiaries; the ability to realize benefits and cost savings from, and limit any unexpected liabilities associated with, any business combinations; competitive pressures among financial services companies; the ability to attract, develop and retain qualified employees; our ability to maintain the security of our data processing and information technology systems; the impact of changes in accounting policies, including the introduction of new accounting standards; the impact of judicial or regulatory proceedings; the impact of fiscal and governmental policies of the United States federal government; the impact of health emergencies, epidemics or pandemics; the effects of climate change; and the impact of natural disasters, extreme weather events, military conflict, terrorism or other geopolitical events. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2022 and its Form 10-Q for the quarter ended June 30, 2023, including in the Risk Factors section of those reports, 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 EndedSeptember 30, %Change Nine Months EndedSeptember 30, %Change
(Dollars in thousands, except per share data) 2023 2022 2023 2022
Results of operations:
Net interest income $85,081 $112,960 (25)% $272,854 $320,361 (15)%
Provision/ (credit) for credit losses 2,365 18,890 (87) (14,116) 23,571 N/M
Non-interest income 17,391 16,882 3 50,518 72,722 (31)
Non-interest expense 72,471 65,780 10 207,912 192,918 8
Income before income tax expense 27,636 45,172 (39) 129,576 176,594 (27)
Net income 20,746 33,584 (38) 96,744 132,319 (27)
Net income attributable to common shareholders $20,719 $33,470 (38) $96,552 $131,744 (27)
Pre-tax pre-provision net income (1) $30,001 $64,062 (53) $115,460 $200,165 (42)
Return on average assets 0.58% 0.99% 0.92% 1.36%
Return on average common equity 5.35% 8.96% 8.50% 11.90%
Return on average tangible common equity (1) 7.42% 12.49% 11.67% 16.54%
Net interest margin 2.55% 3.53% 2.75% 3.50%
Efficiency ratio - GAAP basis (2) 70.72% 50.66% 64.29% 49.08%
Efficiency ratio - Non-GAAP basis (2) 60.91% 48.18% 59.42% 49.09%
Per share data:
Basic net income per common share $0.46 $0.75 (39)% $2.16 $2.93 (26)%
Diluted net income per common share $0.46 $0.75 (38) $2.15 $2.92 (26)
Weighted average diluted common shares 44,960,455 44,780,560 — 44,912,803 45,098,073 —
Dividends declared per share $0.34 $0.34 — $1.02 $1.02 —
Book value per common share $34.26 $32.52 5 $34.26 $32.52 5
Tangible book value per common share (1) $25.80 $23.90 8 $25.80 $23.90 8
Outstanding common shares 44,895,158 44,644,269 1 44,895,158 44,644,269 1
Financial condition at period-end:
Investment securities $1,392,078 $1,587,279 (12)% $1,392,078 $1,587,279 (12)%
Loans 11,300,292 11,218,813 1 11,300,292 11,218,813 1
Assets 14,135,085 13,765,597 3 14,135,085 13,765,597 3
Deposits 11,151,012 10,749,486 4 11,151,012 10,749,486 4
Stockholders' equity 1,537,914 1,451,862 6 1,537,914 1,451,862 6
Capital ratios:
Tier 1 leverage (3) 9.50% 9.33% 9.50% 9.33%
Common equity tier 1 capital to risk-weighted assets (3) 10.83% 10.18% 10.83% 10.18%
Tier 1 capital to risk-weighted assets (3) 10.83% 10.18% 10.83% 10.18%
Total regulatory capital to risk-weighted assets (3) 14.85% 14.15% 14.85% 14.15%
Tangible common equity to tangible assets (4) 8.42% 7.98% 8.42% 7.98%
Average equity to average assets 10.92% 10.99% 10.84% 11.41%
Credit quality ratios:
Allowance for credit losses to loans 1.09% 1.14% 1.09% 1.14%
Non-performing loans to total loans 0.46% 0.40% 0.46% 0.40%
Non-performing assets to total assets 0.37% 0.33% 0.37% 0.33%
Allowance for credit losses to non-performing loans 238.32% 288.50% 238.32% 288.50%
Annualized net charge-offs/ (recoveries) to average loans (5) —% (0.02)% 0.02% —%

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 Condensed Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, merger, acquisition and disposal expense, severance expense, pension settlement expense and contingent payment expense from non-interest expense; and investment securities gains/ (losses) and gain on disposal of assets 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 September 30, 2023.
(4) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding goodwill and other intangible assets into stockholders' equity after deducting goodwill and other 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 Subsidiaries RECONCILIATION TABLE - UNAUDITED (CONTINUED)OPERATING EARNINGS - METRICS
Three Months EndedSeptember 30, Nine Months EndedSeptember 30,
(Dollars in thousands) 2023 2022 2023 2022
Core earnings (non-GAAP):
Net income (GAAP) $20,746 $33,584 $96,744 $132,319
Plus/ (less) non-GAAP adjustments (net of tax)(1):
Merger, acquisition and disposal expense — — — 796
Amortization of intangible assets 932 1,076 2,851 3,284
Severance expense — — 1,445 —
Pension settlement expense 6,088 — 6,088 —
Gain on disposal of assets — 108 — (12,309)
Investment securities gains — (2) — (36)
Contingent payment expense — 929 27 929
Core earnings (Non-GAAP) $27,766 $35,695 $107,155 $124,983
Core earnings per diluted common share (non-GAAP):
Weighted average common shares outstanding - diluted (GAAP) 44,960,455 44,780,560 44,912,803 45,098,073
Earnings per diluted common share (GAAP) $0.46 $0.75 $2.15 $2.92
Core earnings per diluted common share (non-GAAP) $0.62 $0.80 $2.39 $2.77
Core return on average assets (non-GAAP):
Average assets (GAAP) $14,086,342 $13,521,595 $14,043,925 $13,033,256
Return on average assets (GAAP) 0.58% 0.99% 0.92% 1.36%
Core return on average assets (non-GAAP) 0.78% 1.05% 1.02% 1.28%
Return/ Core return on average tangible common equity (non-
Net Income (GAAP) $20,746 $33,584 $96,744 $132,319
Plus: Amortization of intangible assets (net of tax) 932 1,076 2,851 3,284
Net income before amortization of intangible assets $21,678 $34,660 $99,595 $135,603
Average total stockholders' equity (GAAP) $1,538,553 $1,486,427 $1,522,153 $1,486,920
Average goodwill (363,436) (363,436) (363,436) (367,190)
Average other intangible assets, net (16,777) (22,187) (18,068) (23,774)
Average tangible common equity (non-GAAP) $1,158,340 $1,100,804 $1,140,649 $1,095,956
Return on average tangible common equity (non-GAAP) 7.42% 12.49% 11.67% 16.54%
Core return on average tangible common equity (non-GAAP) 9.51% 12.86% 12.56% 15.25%

(1) Tax adjustments have been determined using the combined marginal federal and state rate of 25.37% and 25.47% for 2023 and 2022, respectively.

Sandy Spring Bancorp, Inc. and Subsidiaries RECONCILIATION TABLE - UNAUDITED
Three Months EndedSeptember 30, Nine Months EndedSeptember 30,
(Dollars in thousands) 2023 2022 2023 2022
Pre-tax pre-provision net income:
Net income (GAAP) $20,746 $33,584 $96,744 $132,319
Plus/ (less) non-GAAP adjustments:
Income tax expense 6,890 11,588 32,832 44,275
Provision/ (credit) for credit losses 2,365 18,890 (14,116) 23,571
Pre-tax pre-provision net income (non-GAAP) $30,001 $64,062 $115,460 $200,165
Efficiency ratio (GAAP):
Non-interest expense $72,471 $65,780 $207,912 $192,918
Net interest income plus non-interest income $102,472 $129,842 $323,372 $393,083
Efficiency ratio (GAAP) 70.72% 50.66% 64.29% 49.08%
Efficiency ratio (Non-GAAP):
Non-interest expense $72,471 $65,780 $207,912 $192,918
Less non-GAAP adjustments:
Amortization of intangible assets 1,245 1,432 3,820 4,406
Merger, acquisition and disposal expense — 1 — 1,068
Severance expense — — 1,939 —
Pension settlement expense 8,157 — 8,157 —
Contingent payment expense — 1,247 36 1,247
Non-interest expense - as adjusted $63,069 $63,100 $193,960 $186,197
Net interest income plus non-interest income $102,472 $129,842 $323,372 $393,083
Plus non-GAAP adjustment:
Tax-equivalent income 1,068 951 3,044 2,809
Less/ (plus) non-GAAP adjustment:
Investment securities gains — 2 — 48
Gain on disposal of assets — (183) — 16,516
Net interest income plus non-interest income - as adjusted $103,540 $130,974 $326,416 $379,328
Efficiency ratio (Non-GAAP) 60.91% 48.18% 59.42% 49.09%
Tangible common equity ratio:
Total stockholders' equity $1,537,914 $1,451,862 $1,537,914 $1,451,862
Goodwill (363,436) (363,436) (363,436) (363,436)
Other intangible assets, net (16,035) (21,262) (16,035) (21,262)
Tangible common equity $1,158,443 $1,067,164 $1,158,443 $1,067,164
Total assets $14,135,085 $13,765,597 $14,135,085 $13,765,597
Goodwill (363,436) (363,436) (363,436) (363,436)
Other intangible assets, net (16,035) (21,262) (16,035) (21,262)
Tangible assets $13,755,614 $13,380,899 $13,755,614 $13,380,899
Tangible common equity ratio 8.42% 7.98% 8.42% 7.98%
Outstanding common shares 44,895,158 44,644,269 44,895,158 44,644,269
Tangible book value per common share $25.80 $23.90 $25.80 $23.90

Sandy Spring Bancorp, Inc. and SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
(Dollars in thousands) September 30,2023 December 31,2022 September 30,2022
Assets
Cash and due from banks $80,314 $88,152 $88,780
Federal funds sold 251 193 213
Interest-bearing deposits with banks 637,026 103,887 169,815
Cash and cash equivalents 717,591 192,232 258,808
Residential mortgage loans held for sale (at fair value) 19,235 11,706 11,469
Investments held-to-maturity (fair values of $194,411, $220,123 and $226,030 at September 30, 2023, December 31, 2022 and September 30, 2022, respectively) 241,464 259,452 265,648
Investments available-for-sale (at fair value) 1,075,089 1,214,538 1,244,335
Other investments, at cost 75,525 69,218 77,296
Total loans 11,300,292 11,396,706 11,218,813
Less: allowance for credit losses - loans (123,360) (136,242) (128,268)
Net loans 11,176,932 11,260,464 11,090,545
Premises and equipment, net 72,312 67,070 64,703
Other real estate owned 261 645 739
Accrued interest receivable 45,100 41,172 37,074
Goodwill 363,436 363,436 363,436
Other intangible assets, net 16,035 19,855 21,262
Other assets 332,105 333,331 330,282
Total assets $14,135,085 $13,833,119 $13,765,597
Liabilities
Noninterest-bearing deposits $3,013,905 $3,673,300 $3,993,480
Interest-bearing deposits 8,137,107 7,280,121 6,756,006
Total deposits 11,151,012 10,953,421 10,749,486
Securities sold under retail repurchase agreements 66,581 61,967 91,287
Federal funds purchased — 260,000 115,000
Federal Reserve Bank borrowings 300,000 — —
Advances from FHLB 550,000 550,000 840,000
Subordinated debt 370,653 370,205 370,056
Total borrowings 1,287,234 1,242,172 1,416,343
Accrued interest payable and other liabilities 158,925 153,758 147,906
Total liabilities 12,597,171 12,349,351 12,313,735
Stockholders' equity
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 44,895,158, 44,657,054 and 44,644,269 at September 30, 2023, December 31, 2022 and September 30, 2022, respectively 44,895 44,657 44,644
Additional paid in capital 740,999 734,273 732,239
Retained earnings 887,512 836,789 818,049
Accumulated other comprehensive loss (135,492) (131,951) (143,070)
Total stockholders' equity 1,537,914 1,483,768 1,451,862
Total liabilities and stockholders' equity $14,135,085 $13,833,119 $13,765,597

Sandy Spring Bancorp, Inc. and SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three Months EndedSeptember 30, Nine Months EndedSeptember 30,
(Dollars in thousands, except per share data) 2023 2022 2023 2022
Interest income:
Interest and fees on loans $147,304 $121,327 $431,305 $327,042
Interest on loans held for sale 238 161 697 504
Interest on deposits with banks 6,371 774 13,979 1,245
Interest and dividend income on investment securities:
Taxable 6,682 5,735 20,538 14,472
Tax-advantaged 1,811 2,422 5,376 7,100
Interest on federal funds sold 5 3 13 4
Total interest income 162,411 130,422 471,908 350,367
Interest expense:
Interest on deposits 63,102 9,490 155,215 15,578
Interest on retail repurchase agreements and federal funds purchased 4,082 977 10,377 1,232
Interest on advances from FHLB 6,200 3,049 21,623 3,066
Interest on subordinated debt 3,946 3,946 11,839 10,130
Total interest expense 77,330 17,462 199,054 30,006
Net interest income 85,081 112,960 272,854 320,361
Provision/ (credit) for credit losses 2,365 18,890 (14,116) 23,571
Net interest income after provision/ (credit) for credit losses 82,716 94,070 286,970 296,790
Non-interest income:
Investment securities gains — 2 — 48
Gain on disposal of assets — (183) — 16,516
Service charges on deposit accounts 2,704 2,591 7,698 7,384
Mortgage banking activities 1,682 1,566 4,744 5,347
Wealth management income 9,391 8,867 27,414 27,302
Insurance agency commissions — — — 2,927
Income from bank owned life insurance 845 693 3,003 2,191
Bank card fees 450 438 1,315 3,916
Other income 2,319 2,908 6,344 7,091
Total non-interest income 17,391 16,882 50,518 72,722
Non-interest expense:
Salaries and employee benefits 44,853 40,126 124,710 119,049
Occupancy expense of premises 4,609 4,759 14,220 14,527
Equipment expenses 3,811 3,825 11,688 10,920
Marketing 729 1,370 3,861 3,843
Outside data services 2,819 2,509 8,186 7,492
FDIC insurance 2,333 1,268 6,846 3,330
Amortization of intangible assets 1,245 1,432 3,820 4,406
Merger, acquisition and disposal expense — 1 — 1,068
Professional fees and services 4,509 2,207 12,354 6,596
Other expenses 7,563 8,283 22,227 21,687
Total non-interest expense 72,471 65,780 207,912 192,918
Income before income tax expense 27,636 45,172 129,576 176,594
Income tax expense 6,890 11,588 32,832 44,275
Net income $20,746 $33,584 $96,744 $132,319
Net income per share amounts:
Basic net income per common share $0.46 $0.75 $2.16 $2.93
Diluted net income per common share $0.46 $0.75 $2.15 $2.92
Dividends declared per share $0.34 $0.34 $1.02 $1.02

Sandy Spring Bancorp, Inc. and SubsidiariesHISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2023 2022
(Dollars in thousands, except per share data) Q3 Q2 Q1 Q4 Q3 Q2 Q1
Profitability for the quarter:
Tax-equivalent interest income $163,479 $159,156 $152,317 $146,332 $131,373 $114,901 $106,902
Interest expense 77,330 67,679 54,045 38,657 17,462 7,959 4,585
Tax-equivalent net interest income 86,149 91,477 98,272 107,675 113,911 106,942 102,317
Tax-equivalent adjustment 1,068 1,006 970 1,032 951 992 866
Provision/ (credit) for credit losses 2,365 5,055 (21,536) 10,801 18,890 3,046 1,635
Non-interest income 17,391 17,176 15,951 14,297 16,882 35,245 20,595
Non-interest expense 72,471 69,136 66,305 64,375 65,780 64,991 62,147
Income before income tax expense 27,636 33,456 68,484 45,764 45,172 73,158 58,264
Income tax expense 6,890 8,711 17,231 11,784 11,588 18,358 14,329
Net income $20,746 $24,745 $51,253 $33,980 $33,584 $54,800 $43,935
GAAP financial performance:
Return on average assets 0.58% 0.70% 1.49% 0.98% 0.99% 1.69% 1.42%
Return on average common equity 5.35% 6.46% 13.93% 9.23% 8.96% 14.97% 11.83%
Return on average tangible common equity 7.42% 8.93% 19.10% 12.91% 12.49% 20.83% 16.45%
Net interest margin 2.55% 2.73% 2.99% 3.26% 3.53% 3.49% 3.49%
Efficiency ratio - GAAP basis 70.72% 64.22% 58.55% 53.23% 50.66% 46.03% 50.92%
Non-GAAP financial performance:
Pre-tax pre-provision net income $30,001 $38,511 $46,948 $56,565 $64,062 $76,204 $59,899
Core after-tax earnings $27,766 $27,136 $52,253 $35,322 $35,695 $44,238 $45,050
Core return on average assets 0.78% 0.77% 1.52% 1.02% 1.05% 1.37% 1.45%
Core return on average common equity 7.16% 7.09% 14.20% 9.60% 9.53% 12.09% 12.13%
Core return on average tangible common equity 9.51% 9.43% 19.11% 13.02% 12.86% 16.49% 16.45%
Core earnings per diluted common share $0.62 $0.60 $1.16 $0.79 $0.80 $0.98 $0.99
Efficiency ratio - Non-GAAP basis 60.91% 60.68% 56.87% 51.46% 48.18% 49.79% 49.34%
Per share data:
Net income attributable to common shareholders $20,719 $24,712 $51,084 $33,866 $33,470 $54,606 $43,667
Basic net income per common share $0.46 $0.55 $1.14 $0.76 $0.75 $1.21 $0.97
Diluted net income per common share $0.46 $0.55 $1.14 $0.76 $0.75 $1.21 $0.96
Weighted average diluted common shares 44,960,455 44,888,759 44,872,582 44,828,827 44,780,560 45,111,693 45,333,292
Dividends declared per share $0.34 $0.34 $0.34 $0.34 $0.34 $0.34 $0.34
Non-interest income:
Securities gains/ (losses) $— $— $— $(393) $2 $38 $8
Gain/ (loss) on disposal of assets — — — — (183) 16,699 —
Service charges on deposit accounts 2,704 2,606 2,388 2,419 2,591 2,467 2,326
Mortgage banking activities 1,682 1,817 1,245 783 1,566 1,483 2,298
Wealth management income 9,391 9,031 8,992 8,472 8,867 9,098 9,337
Insurance agency commissions — — — — — 812 2,115
Income from bank owned life insurance 845 1,251 907 950 693 703 795
Bank card fees 450 447 418 463 438 1,810 1,668
Other income 2,319 2,024 2,001 1,603 2,908 2,135 2,048
Total non-interest income $17,391 $17,176 $15,951 $14,297 $16,882 $35,245 $20,595
Non-interest expense:
Salaries and employee benefits $44,853 $40,931 $38,926 $39,455 $40,126 $39,550 $39,373
Occupancy expense of premises 4,609 4,764 4,847 4,728 4,759 4,734 5,034
Equipment expenses 3,811 3,760 4,117 3,859 3,825 3,559 3,536
Marketing 729 1,589 1,543 1,354 1,370 1,280 1,193
Outside data services 2,819 2,853 2,514 2,707 2,509 2,564 2,419
FDIC insurance 2,333 2,375 2,138 1,462 1,268 1,078 984
Amortization of intangible assets 1,245 1,269 1,306 1,408 1,432 1,466 1,508
Merger, acquisition and disposal expense — — — — 1 1,067 —
Professional fees and services 4,509 4,161 3,684 2,573 2,207 2,372 2,017
Other expenses 7,563 7,434 7,230 6,829 8,283 7,321 6,083
Total non-interest expense $72,471 $69,136 $66,305 $64,375 $65,780 $64,991 $62,147

Sandy Spring Bancorp, Inc. and SubsidiariesHISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2023 2022
(Dollars in thousands, except per share data) Q3 Q2 Q1 Q4 Q3 Q2 Q1
Balance sheets at quarter end:
Commercial investor real estate loans $5,137,694 $5,131,210 $5,167,456 $5,130,094 $5,066,843 $4,761,658 $4,388,275
Commercial owner-occupied real estate loans 1,760,384 1,770,135 1,769,928 1,775,037 1,743,724 1,767,326 1,692,253
Commercial AD&C loans 938,673 1,045,742 1,046,665 1,090,028 1,143,783 1,094,528 1,089,331
Commercial business loans 1,454,709 1,423,614 1,437,478 1,455,885 1,393,634 1,353,380 1,349,602
Residential mortgage loans 1,432,051 1,385,743 1,328,524 1,287,933 1,218,552 1,147,577 1,000,697
Residential construction loans 160,345 190,690 223,456 224,772 229,243 235,486 204,259
Consumer loans 416,436 422,505 421,734 432,957 423,034 426,335 419,911
Total loans 11,300,292 11,369,639 11,395,241 11,396,706 11,218,813 10,786,290 10,144,328
Allowance for credit losses - loans (123,360) (120,287) (117,613) (136,242) (128,268) (113,670) (110,588)
Loans held for sale 19,235 21,476 16,262 11,706 11,469 23,610 17,537
Investment securities 1,392,078 1,463,554 1,528,336 1,543,208 1,587,279 1,595,424 1,586,441
Total assets 14,135,085 13,994,545 14,129,007 13,833,119 13,765,597 13,303,009 12,967,416
Noninterest-bearing demand deposits 3,013,905 3,079,896 3,228,678 3,673,300 3,993,480 4,129,440 4,039,797
Total deposits 11,151,012 10,958,922 11,075,991 10,953,421 10,749,486 10,969,461 10,852,794
Customer repurchase agreements 66,581 74,510 47,627 61,967 91,287 110,744 130,784
Total stockholders' equity 1,537,914 1,539,032 1,536,865 1,483,768 1,451,862 1,477,169 1,488,910
Quarterly average balance sheets:
Commercial investor real estate loans $5,125,459 $5,146,632 $5,136,204 $5,082,697 $4,898,683 $4,512,937 $4,220,246
Commercial owner-occupied real estate loans 1,769,717 1,773,039 1,769,680 1,753,351 1,755,891 1,727,325 1,683,557
Commercial AD&C loans 995,682 1,057,205 1,082,791 1,136,780 1,115,531 1,096,369 1,102,660
Commercial business loans 1,442,518 1,441,489 1,444,588 1,373,565 1,327,218 1,334,350 1,372,755
Residential mortgage loans 1,406,929 1,353,809 1,307,761 1,251,829 1,177,664 1,070,836 964,056
Residential construction loans 174,204 211,590 223,313 231,318 235,123 221,031 197,366
Consumer loans 421,189 423,306 424,122 426,134 422,963 421,022 424,859
Total loans 11,335,698 11,407,070 11,388,459 11,255,674 10,933,073 10,383,870 9,965,499
Loans held for sale 13,714 17,480 8,324 10,901 15,211 12,744 17,594
Investment securities 1,589,342 1,639,324 1,679,593 1,717,455 1,734,036 1,686,181 1,617,615
Interest-earning assets 13,444,117 13,423,589 13,316,165 13,134,234 12,833,758 12,283,834 11,859,803
Total assets 14,086,342 14,094,653 13,949,276 13,769,472 13,521,595 12,991,692 12,576,089
Noninterest-bearing demand deposits 3,041,101 3,137,971 3,480,433 3,833,275 3,995,702 4,001,762 3,758,732
Total deposits 11,076,724 10,928,038 11,049,991 11,025,843 10,740,999 10,829,221 10,542,029
Customer repurchase agreements 67,298 58,382 60,626 74,797 104,742 122,728 131,487
Total interest-bearing liabilities 9,332,617 9,257,652 8,806,720 8,310,278 7,892,230 7,377,045 7,163,641
Total stockholders' equity 1,538,553 1,535,465 1,491,929 1,460,254 1,486,427 1,468,036 1,506,516
Financial measures:
Average equity to average assets 10.92% 10.89% 10.70% 10.61% 10.99% 11.30% 11.98%
Average investment securities to average earning assets 11.82% 12.21% 12.61% 13.08% 13.51% 13.73% 13.64%
Average loans to average earning assets 84.32% 84.98% 85.52% 85.70% 85.19% 84.53% 84.03%
Loans to assets 79.94% 81.24% 80.65% 82.39% 81.50% 81.08% 78.23%
Loans to deposits 101.34% 103.75% 102.88% 104.05% 104.37% 98.33% 93.47%
Assets under management $5,536,499 $5,742,888 $5,477,560 $5,255,306 $4,969,092 $5,171,321 $5,793,787
Capital measures:
Tier 1 leverage (1) 9.50% 9.42% 9.44% 9.33% 9.33% 9.53% 9.66%
Common equity tier 1 capital to risk-weighted assets (1) 10.83% 10.65% 10.53% 10.23% 10.18% 10.42% 10.78%
Tier 1 capital to risk-weighted assets (1) 10.83% 10.65% 10.53% 10.23% 10.18% 10.42% 10.78%
Total regulatory capital to risk-weighted assets (1) 14.85% 14.60% 14.43% 14.20% 14.15% 14.46% 15.02%
Book value per common share $34.26 $34.31 $34.37 $33.23 $32.52 $33.10 $32.97
Outstanding common shares 44,895,158 44,862,369 44,712,497 44,657,054 44,644,269 44,629,697 45,162,908

(1) Estimated ratio at September 30, 2023.

Sandy Spring Bancorp, Inc. and SubsidiariesLOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2023 2022
(Dollars in thousands) September 30, June 30, 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 $— $— $215 $— $— $— $—
Commercial owner-occupied real estate — — — — — — —
Commercial AD&C — — — — — — —
Commercial business 415 29 3,002 1,002 1,966 — —
Residential real estate:
Residential mortgage — 692 352 — 167 353 296
Residential construction — — — — — — —
Consumer — — — — 34 — —
Total loans 90 days past due 415 721 3,569 1,002 2,167 353 296
Non-accrual loans:
Commercial real estate:
Commercial investor real estate 20,108 20,381 15,451 9,943 14,038 11,245 11,743
Commercial owner-occupied real estate 4,744 4,846 4,949 5,019 6,294 7,869 8,083
Commercial AD&C 1,422 569 — — — 1,353 1,081
Commercial business 9,671 9,393 9,443 7,322 7,198 7,542 8,357
Residential real estate:
Residential mortgage 10,766 10,153 8,935 7,439 7,514 7,305 8,148
Residential construction 449 — — — — 1 51
Consumer 4,187 3,396 4,900 5,059 5,173 5,692 6,406
Total non-accrual loans 51,347 48,738 43,678 34,782 40,217 41,007 43,869
Total restructured loans - accruing (1) — — — 3,575 2,077 2,119 2,161
Total non-performing loans 51,762 49,459 47,247 39,359 44,461 43,479 46,326
Other assets and other real estate owned (OREO) 261 611 645 645 739 739 1,034
Total non-performing assets $52,023 $50,070 $47,892 $40,004 $45,200 $44,218 $47,360

For the Quarter Ended,
(Dollars in thousands) September 30,2023 June 30,2023 March 31,2023 December 31,2022 September 30,2022 June 30,2022 March 31,2022
Analysis of non-accrual loan activity:
Balance at beginning of period $48,738 $43,678 $34,782 $40,217 $41,007 $43,869 $46,086
Non-accrual balances transferred to OREO — — — — — — —
Non-accrual balances charged-off (183) (2,049) (126) (22) (197) (376) (265)
Net payments or draws (1,545) (1,654) (10,212) (9,535) (3,509) (3,234) (2,787)
Loans placed on non-accrual 4,967 9,276 19,714 5,467 4,212 948 1,503
Non-accrual loans brought current (630) (513) (480) (1,345) (1,296) (200) (668)
Balance at end of period $51,347 $48,738 $43,678 $34,782 $40,217 $41,007 $43,869
Analysis of allowance for credit losses - loans:
Balance at beginning of period $120,287 $117,613 $136,242 $128,268 $113,670 $110,588 $109,145
Provision/ (credit) for credit losses - loans 3,171 4,454 (18,945) 7,907 14,092 3,046 1,635
Less loans charged-off, net of recoveries:
Commercial real estate:
Commercial investor real estate (3) (14) (5) (1) — (300) (19)
Commercial owner-occupied real estate (25) (27) (26) (27) (10) (12) —
Commercial AD&C — — — — — — —
Commercial business 15 363 (127) (13) (512) 331 111
Residential real estate:
Residential mortgage (4) 35 21 (50) (8) (9) 120
Residential construction — — — — (3) (5) —
Consumer 115 1,423 (179) 24 27 (41) (20)
Net charge-offs/ (recoveries) 98 1,780 (316) (67) (506) (36) 192
Balance at the end of period $123,360 $120,287 $117,613 $136,242 $128,268 $113,670 $110,588
Asset quality ratios:
Non-performing loans to total loans 0.46% 0.44% 0.41% 0.35% 0.40% 0.40% 0.46%
Non-performing assets to total assets 0.37% 0.36% 0.34% 0.29% 0.33% 0.33% 0.37%
Allowance for credit losses to loans 1.09% 1.06% 1.03% 1.20% 1.14% 1.05% 1.09%
Allowance for credit losses to non-performing loans 238.32% 243.21% 248.93% 346.15% 288.50% 261.44% 238.72%
Annualized net charge-offs/ (recoveries) to average loans —% 0.06% (0.01)% —% (0.02)% —% 0.01%

(1) Effective January 1, 2023, the Company adopted ASU 2022-02, which eliminated the accounting and recognition of troubled debt restructurings ("TDRs").

Sandy Spring Bancorp, Inc. and SubsidiariesCONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Three Months Ended September 30,
2023 2022
(Dollars in thousands and tax-equivalent) AverageBalances Interest (1) AnnualizedAverageYield/Rate AverageBalances Interest (1) AnnualizedAverageYield/Rate
Assets
Commercial investor real estate loans $5,125,459 $60,482 4.68% $4,898,683 $51,463 4.17%
Commercial owner-occupied real estate loans 1,769,717 20,865 4.68 1,755,891 20,284 4.58
Commercial AD&C loans 995,682 20,503 8.17 1,115,531 15,501 5.51
Commercial business loans 1,442,518 23,343 6.42 1,327,218 17,196 5.14
Total commercial loans 9,333,376 125,193 5.32 9,097,323 104,444 4.55
Residential mortgage loans 1,406,929 12,550 3.57 1,177,664 9,980 3.39
Residential construction loans 174,204 1,680 3.83 235,123 1,845 3.11
Consumer loans 421,189 8,491 8.00 422,963 5,531 5.19
Total residential and consumer loans 2,002,322 22,721 4.52 1,835,750 17,356 3.77
Total loans (2) 11,335,698 147,914 5.18 10,933,073 121,800 4.42
Loans held for sale 13,714 238 6.93 15,211 161 4.24
Taxable securities 1,239,564 6,682 2.16 1,251,599 5,735 1.83
Tax-advantaged securities 349,778 2,269 2.59 482,437 2,900 2.40
Total investment securities (3) 1,589,342 8,951 2.25 1,734,036 8,635 1.99
Interest-bearing deposits with banks 505,017 6,371 5.00 150,992 774 2.03
Federal funds sold 346 5 5.38 446 3 2.30
Total interest-earning assets 13,444,117 163,479 4.83 12,833,758 131,373 4.07
Less: allowance for credit losses - loans (122,348) (114,512)
Cash and due from banks 93,354 93,327
Premises and equipment, net 71,956 64,039
Other assets 599,263 644,983
Total assets $14,086,342 $13,521,595
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $1,419,934 $4,229 1.18% $1,444,801 $941 0.26%
Regular savings deposits 861,634 5,571 2.57 555,057 21 0.02
Money market savings deposits 2,866,744 25,122 3.48 3,202,507 5,281 0.65
Time deposits 2,887,311 28,180 3.87 1,542,932 3,247 0.83
Total interest-bearing deposits 8,035,623 63,102 3.12 6,745,297 9,490 0.56
Repurchase agreements 67,298 356 2.10 104,742 30 0.11
Federal funds purchased and Federal Reserve Bank borrowings 300,435 3,726 4.92 158,211 947 2.37
Advances from FHLB 558,696 6,200 4.40 514,022 3,049 2.35
Subordinated debt 370,565 3,946 4.26 369,958 3,946 4.27
Total borrowings 1,296,994 14,228 4.35 1,146,933 7,972 2.76
Total interest-bearing liabilities 9,332,617 77,330 3.29 7,892,230 17,462 0.88
Noninterest-bearing demand deposits 3,041,101 3,995,702
Other liabilities 174,071 147,236
Stockholders' equity 1,538,553 1,486,427
Total liabilities and stockholders' equity $14,086,342 $13,521,595
Tax-equivalent net interest income and spread $86,149 1.54% $113,911 3.19%
Less: tax-equivalent adjustment 1,068 951
Net interest income $85,081 $112,960
Interest income/earning assets 4.83% 4.07%
Interest expense/earning assets 2.28 0.54
Net interest margin 2.55% 3.53%

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.37% and 25.47% for 2023 and 2022, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.1 million and $1.0 million in 2023 and 2022, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Available-for-sale investments are presented at amortized cost.

Sandy Spring Bancorp, Inc. and SubsidiariesCONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Nine Months Ended September 30,
2023 2022
(Dollars in thousands and tax-equivalent) AverageBalances Interest (1) AnnualizedAverageYield/Rate AverageBalances Interest (1) AnnualizedAverageYield/Rate
Assets
Commercial investor real estate loans $5,136,059 $177,067 4.61% $4,546,440 $138,245 4.07%
Commercial owner-occupied real estate loans 1,770,812 61,038 4.61 1,722,522 58,126 4.51
Commercial AD&C loans 1,044,907 61,005 7.81 1,104,901 37,821 4.58
Commercial business loans 1,442,858 68,258 6.33 1,344,608 49,370 4.91
Total commercial loans 9,394,636 367,368 5.23 8,718,471 283,562 4.35
Residential mortgage loans 1,356,530 35,925 3.53 1,071,634 26,632 3.31
Residential construction loans 202,856 5,302 3.49 217,978 5,112 3.14
Consumer loans 422,861 24,403 7.72 422,941 13,112 4.14
Total residential and consumer loans 1,982,247 65,630 4.42 1,712,553 44,856 3.50
Total loans (2) 11,376,883 432,998 5.09 10,431,024 328,418 4.21
Loans held for sale 13,192 697 7.04 15,174 504 4.43
Taxable securities 1,275,407 20,538 2.15 1,204,240 14,472 1.60
Tax-advantaged securities 360,348 6,727 2.49 475,463 8,533 2.39
Total investment securities (3) 1,635,755 27,265 2.22 1,679,703 23,005 1.83
Interest-bearing deposits with banks 368,829 13,979 5.07 202,882 1,245 0.82
Federal funds sold 433 13 4.00 581 4 0.91
Total interest-earning assets 13,395,092 474,952 4.74 12,329,364 353,176 3.83
Less: allowance for credit losses - loans (125,558) (112,384)
Cash and due from banks 94,960 81,673
Premises and equipment, net 70,130 62,510
Other assets 609,301 672,093
Total assets $14,043,925 $13,033,256
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $1,413,876 $10,465 0.99% $1,477,956 $1,513 0.14%
Regular savings deposits 660,211 7,831 1.59 553,982 62 0.02
Money market savings deposits 3,067,810 68,976 3.01 3,334,534 7,403 0.30
Time deposits 2,658,225 67,943 3.42 1,418,740 6,600 0.62
Total interest-bearing deposits 7,800,122 155,215 2.66 6,785,212 15,578 0.31
Repurchase agreements 62,126 561 1.21 119,554 104 0.12
Federal funds purchased and Federal Reserve Bank borrowings 264,580 9,816 4.96 85,983 1,128 1.75
Advances from FHLB 637,015 21,623 4.54 174,493 3,066 2.35
Subordinated debt 370,412 11,839 4.26 315,065 10,130 4.29
Total borrowings 1,334,133 43,839 4.39 695,095 14,428 2.78
Total interest-bearing liabilities 9,134,255 199,054 2.91 7,480,307 30,006 0.54
Noninterest-bearing demand deposits 3,218,226 3,919,600
Other liabilities 169,291 146,429
Stockholders' equity 1,522,153 1,486,920
Total liabilities and stockholders' equity $14,043,925 $13,033,256
Tax-equivalent net interest income and spread $275,898 1.83% $323,170 3.29%
Less: tax-equivalent adjustment 3,044 2,809
Net interest income $272,854 $320,361
Interest income/earning assets 4.74% 3.83%
Interest expense/earning assets 1.99 0.33
Net interest margin 2.75% 3.50%

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.37% and 25.47% for 2023 and 2022, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $3.0 million and $2.8 million in 2023 and 2022, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Available-for-sale investments are presented at amortized cost.

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Source: Sandy Spring Bancorp, Inc.

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