Sandy Spring Bancorp Reports Earnings For The First Quarter Of 2020

Company Release - 4/23/2020 7:00 AM ET

OLNEY, Md., April 23, 2020 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, today reported net income for the first quarter of 2020 of $10.0 million ($0.28 per diluted share) compared to net income of $30.3 million ($0.85 per diluted share) for the first quarter of 2019 and net income of $28.5 million ($0.80 per diluted share) for the fourth quarter of 2019. Earnings for the current quarter were negatively impacted by a provision for credit losses of $24.5 million. Although the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) would permit the Company to delay the adoption of the accounting standard for current expected credit losses (CECL), the Company has elected to adopt CECL as planned, effective January 1, 2020. The provision for credit losses was significantly impacted by the negative projected impact of COVID-19 on specific economic metrics used in the Company’s CECL model. Excluding the effect of the significant deterioration in the economic outlook late in the first quarter, the provision for credit losses was projected to have been approximately $4.1 million. Additionally, the results for the current quarter were negatively impacted by $1.5 million in merger and acquisition expense associated with the acquisition of the wealth advisory firm, Rembert Pendleton Jackson (“RPJ”), which closed on February 1, 2020, and the acquisition of Revere Bank (“Revere”), which closed on April 1, 2020. The acquisition of Revere resulted in the addition of 11 banking offices and approximately $2.9 billion in assets as of March 31, 2020.

“We entered the year in a position of strength after delivering a record year and preparing to expand our market presence with the acquisitions of Rembert Pendleton Jackson and Revere Bank,” said Daniel J. Schrider, President and Chief Executive Officer of Sandy Spring Bank. “Like individuals, families and businesses everywhere, we too had to quickly respond to the unprecedented public health and economic events that began to unfold late in the first quarter. We seamlessly implemented our contingency plans in order to protect the health of our employees, clients, and business and community partners. And while we have made many changes to how and where we all work, we have maintained the continuity of our client service and critical operations. I am grateful to our dedicated team of bankers for making this happen.”

“Our clients are facing a great deal of uncertainty right now, and we are committed to seeing them through this difficult time,” added Schrider. “From helping clients access federal relief programs, to working with individuals and business owners on a case-by-case basis, we are doing all that we can to connect our clients with the financial help they need.”

“We are pleased that RPJ and Revere Bank are now officially part of Sandy Spring Bank.  As we continue to come together as a company, we are focused on upholding the tradition of community banking, providing remarkable service, and being the advocate that our clients need now more than ever.”

First Quarter Highlights: 

  • Total assets grew by 7%, while loans and deposits grew by 2% and 6%, respectively, compared to the prior year.
     
  • The net interest margin was 3.29% for the first quarter of 2020, compared to 3.60% for the first quarter of 2019 and 3.38% for the fourth quarter of 2019. The net interest margin for the first quarter 2019 was 3.52%, after excluding recovered interest income on acquired credit impaired loans.
     
  • The Company proceeded with the adoption of CECL effective January 1, 2020, resulting in an increase to the allowance for credit losses of $5.7 million.  Exclusive of the $2.8 million reclassification to the allowance for credit losses related to acquired credit impaired loans, the impact to retained earnings at transition date was $2.2 million.
     
  • The provision for credit losses for the first quarter of $24.5 million was significantly impacted by the specific economic metrics used in the modeling of expected credit losses. Excluding the effect of the significant deterioration in the economic outlook late in the first quarter, the provision for credit losses was projected to have been approximately $4.1 million.  
     
  • Non-interest income increased 7% from the prior year quarter driven primarily by the impact from the recent acquisition of Rembert Pendleton Jackson.
     
  • The Company completed its stock repurchase program under which it purchased a total 1.5 million shares for a total of $50.0 million at an average price of $33.58 per share.
     
  • Tangible book value remained stable at $21.09 per share at March 31, 2020 compared to $21.05 at March 31, 2019, after the completion of the stock repurchase program, an increase in the quarterly dividend to $0.30 per share in the second quarter of 2019 and the addition of $34.9 million in goodwill and intangible assets.

Response to COVID-19

The Company has taken significant steps to protect the health and well-being of its employees and clients and to assist clients who have been impacted by the COVID-19 pandemic.

We began implementing our business continuity plan in early March, which led to us taking the following actions to address the health and safety of employees and clients.

  • In mid-March, we suspended all business-related travel, limited in-person meetings with outside parties, requested that employees postpone non-essential personal travel, and began transitioning employees to working remotely.
  • We established an enhanced personal leave benefit that provides additional paid time off to employees who are unable to work for reasons related to COVID-19 – including having to care for children whose school has been closed – and who cannot work from home.
  • We implemented enhanced cleaning and disinfecting procedures for our facilities.
  • On March 18, we closed our branch lobbies to the public, established procedures for clients to schedule appointments in our branches for critical needs, such as safe deposit box access, and enhanced procedures to permit a wider range of transactions to be conducted through our drive-thru facilities.
  • We notified our clients of reduced access to our facilities, promoted the use of online and mobile banking, and increased the staff in our customer service center to assist clients over the telephone.
  • We established regular communications to employees to keep them apprised of the steps we are taking to support employee and client safety and the benefits available to them.
  • We successfully transitioned approximately 85% of our non-branch personnel to working remotely.
  • We developed comprehensive guidance for responding to any COVID-19 diagnoses or exposures in our operations.
  • On March 30, we closed the majority of our branches that do not have drive-thru facilities.
  • We are providing branch personnel and support staff whose responsibilities do not permit them to work remotely with a bonus of up to $1,200.  

With these measures in place, we have continued to effectively serve the needs of our clients.

We have taken several steps to ease the financial burden of the COVID-19 pandemic on our clients:

  • We have waived Sandy Spring Bank fees for clients using an ATM, regardless of location.
  • We are waiving certain penalties for early certificate of deposit withdrawals less than $10,000.
  • We have eliminated fees for remote check deposits by our business clients.
  • We are working with clients who are experiencing financial hardship to provide fee waivers and structure loan payment deferrals or other accommodations.

We are participating in the Small Business Administration’s Paycheck Protection Program, which provides forgivable loans to small businesses to enable them to maintain payroll, hire back employees who have been laid off, and cover applicable overhead. After the program was announced, we quickly mobilized resources to maximize the ability of our clients to access this program.  We have involved over 150 employees in our participation in the program, while simultaneously working with our technology vendors to implement software solutions to speed the intake of client applications and submission to the SBA. As of April 16, 2020, when the SBA announced that all of the funds appropriated for the program had been allocated, we have processed over 2,800 loans for a total of $923.5 million to businesses with more than an estimated 88,000 employees.

As a further relief to our qualified commercial and mortgage/consumer loan customers, the Company has developed guidelines to provide for deferment of certain loan payments up to 90 days.  From March through April 16, the Company (including Revere) had granted approvals for payment modifications/deferrals on nearly 1,000 loans with an aggregate balance of $845.0 million.

For additional information about the Company’s response to the COVID-19 pandemic, segments of the Company’s loan portfolio exposed to industries adversely impacted by the pandemic, and our response to clients who sought loan payment deferral, we have provided supplemental materials available at the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com.

Balance Sheet and Credit Quality

Total assets grew to $8.9 billion at March 31, 2020, as compared to $8.3 billion at March 31, 2019. Total loans grew by 2% to $6.7 billion at March 31, 2020, compared to $6.6 billion at March 31, 2019. During this period commercial loans grew 8%, while the mortgage loan portfolio declined 11%. Continued reduction in the mortgage portfolio has been the result of heavy mortgage loan refinance activity driven by the low interest rate environment and the strategic decision to sell the majority of new mortgage loan production.  Consumer loans also declined as borrowers eliminated their home equity borrowings through the refinancing of their mortgage loans.  Deposit growth was 6% from March 31, 2019, to March 31, 2020, as interest-bearing deposits experienced growth of 6% and noninterest-bearing deposits grew 7%.

Tangible common equity declined to $721 million at March 31, 2020, compared to $748 million at March 31, 2019. The decline in common equity reflects the effects of the repurchase of 1.5 million shares of common stock, the increase in dividends beginning in the second quarter of 2019 and the increase in intangible assets and goodwill during the past twelve months.  At March 31, 2020, the Company had a total risk-based capital ratio of 14.09%, a common equity tier 1 risk-based capital ratio of 10.23%, a tier 1 risk-based capital ratio of 10.23% and a tier 1 leverage ratio of 8.78%.

The level of non-performing loans to total loans increased to 0.80% at March 31, 2020, compared to 0.61% at March 31, 2019.  At March 31, 2020, non-performing loans totaled $54.0 million, compared to $40.1 million at March 31, 2019, and $41.3 million at December 31, 2019. The growth in non-performing loans occurred as a result of the adoption of the accounting standard for expected credit losses as $13.1 million of previously disclosed and accounted for purchased credit impaired loans are now designated as non-accrual loans under the new standard’s guidance.  New loans placed on non-accrual during the current quarter amounted to $2.4 million compared to $6.2 million for the prior year quarter and $5.4 million for the fourth quarter of 2019. Non-performing loans include accruing loans 90 days or more past due and restructured loans.

Loan charge-offs, net of recoveries, totaled $0.5 million for the first quarter of 2020 compared to $0.3 million for the first quarter of 2019.  The allowance for credit losses represented 1.28% of outstanding loans and 159% of non-performing loans at March 31, 2020, compared to 0.81% of outstanding loans and 132% of non-performing loans at March 31, 2019. The growth in these ratios from 2019 to 2020 was the direct result of the impact on the allowance of the increased provision for credit losses required by recent economic developments.

Income Statement Review

Net interest income for the first quarter of 2020 decreased 4% compared to the first quarter of 2019, reflecting the impact of the declining interest rates over the preceding twelve months.  The net interest margin declined to 3.29% for the first quarter of 2020 compared to 3.60% for the first quarter of 2019.  The first quarter of 2019 included $1.8 million in recovered interest income on acquired credit impaired loans. Excluding the recovered interest income, the net interest margin for the first quarter of 2019 would have been 3.52%. 

The provision for credit losses was $24.5 million for the first quarter of 2020, compared to a credit of $0.1 million for the first quarter of 2019 and $1.7 million for the fourth quarter of 2019.  The impact of the negative economic projections on the credit portfolio resulted in a provision for credit losses of $24.5 million for the quarter.

Non-interest income was $18.2 million for the first quarter of 2020, as compared to $17.0 million for the first quarter of 2019.  The current quarter included $0.2 million in securities gains and the prior year quarter included $0.6 million in life insurance mortality proceeds.   Exclusive of these proceeds and securities gains, the growth in non-interest income for the quarter was 10% or $1.6 million compared to the prior year quarter.  This increase was driven by the 33% increase in wealth management income as a result of the acquisition of the wealth advisory firm during the quarter.  While the decline in residential mortgage lending rates during the quarter led to significant increase in loan originations, lower investor demand, in addition to a reduction in pricing, adversely affected the valuations of the forward commitments and loans held for sale, resulting in a significant decline in mortgage banking income for the current quarter compared to recent quarters.

Non-interest expenses increased 8% to $47.7 million for the first quarter of 2020 compared to $44.2 million in the first quarter of 2019.  The current year’s quarter included $1.5 million in merger and acquisition expense.  Exclusive of this expense, non-interest expense for the current quarter increased 5% primarily due to the increase in compensation expense as a result of annual merit increases over the preceding twelve months, commission compensation related to higher levels of residential mortgage loan originations and the additional monthly operating costs as a result of the acquisition of Rembert Pendleton Jackson. 

The effective tax rate for the current quarter was significantly lower than prior periods due to the impact of certain tax provision contained within the recent passage of the CARES Act.  The CARES Act expands the time permitted to utilize previous net operating losses.  The Company was able to apply this change in conjunction with the 2018 acquisition of WashingtonFirst Bankshares, Inc. to realize a tax benefit of $1.8 million for the current quarter. 

The non-GAAP efficiency ratio was 54.76% for the current quarter as compared to 51.44% for the first quarter of 2019 and 51.98% for the fourth quarter of 2019.  The increase in the efficiency ratio (reflecting a reduction in efficiency) from the first quarter of last year to the current year was the result of the rate of growth in non-interest expense outpacing the growth in net revenues as a result of margin compression during the same time period.

Explanation of Non-GAAP Financial Measures

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

  • Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets.
  • The non-GAAP efficiency ratio is non-GAAP in that it excludes amortization of intangible assets, merger expenses and securities gains and includes tax-equivalent income.

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 a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

Conference Call

The Company’s management will host a conference call to discuss its first quarter results today at 2:00 p.m. (ET).  A live Webcast of the conference call is available through the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com.  Participants may call 1-866-235-9910. A password is not necessary.  Visitors to the Website are advised to log on 10 minutes ahead of the scheduled start of the call.  An internet-based replay will be available on the website until 9:00 am (ET)May 7, 2020.  A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10140486.

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 55 locations, the bank offers a broad range of commercial and retail bankingmortgageprivate banking, and trust services throughout Maryland, Northern Virginia, and Washington, D.C. Through its subsidiaries, Rembert Pendleton JacksonSandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services.

For additional information or questions, please contact:

     Daniel J. Schrider, President & Chief Executive Officer, or
Philip J. Mantua, E.V.P. & Chief Financial Officer
Sandy Spring Bancorp, Inc.
17801 Georgia Avenue
Olney, Maryland 20832
1-800-399-5919 
 Email:DSchrider@sandyspringbank.com
PMantua@sandyspringbank.com
   
 Website: www.sandyspringbank.com
Media Contact:
Jen Schell, Vice President
301-570-8331
jschell@sandyspringbank.com

Forward-Looking Statements

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: risks, uncertainties and other factors relating to the COVID-19 pandemic, including the length of time that the pandemic continues, the duration of shelter in place orders and the potential imposition of further restrictions on travel in the future; the effect of the pandemic on the general economy and on the businesses of our borrowers and their ability to make payments on their obligations; the remedial actions and stimulus measures adopted by federal, state and local governments, the inability of employees to work due to illness, quarantine, or government mandates; general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2019, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov.



Sandy Spring Bancorp, Inc. and Subsidiaries        
FINANCIAL HIGHLIGHTS - UNAUDITED        
         
  Three Months Ended    
  March 31, %  
(Dollars in thousands, except per share data)  2020  2019  Change  
Results of Operations:        
Net interest income $ 64,334 $66,750  (4)% 
Provision (credit) for credit losses  24,469  (128) n.m   
Non-interest income  18,168  16,969  7   
Non-interest expense  47,746  44,192  8   
Income before income taxes  10,287  39,655  (74)  
Net income  9,987  30,317  (67)  
         
Pre-tax pre-provision pre-merger income (1) $ 36,210 $39,527  (8)  
         
Return on average assets  0.46% 1.49 %   
Return on average common equity  3.55% 11.46 %   
Net interest margin  3.29% 3.60 %   
Efficiency ratio - GAAP basis (2)  57.87% 52.79 %   
Efficiency ratio - Non-GAAP basis (2)  54.76% 51.44 %   
         
Per share data:        
Basic net income $ 0.29 $0.85  (66)% 
Diluted net income $ 0.28 $0.85  (67)  
Average fully diluted shares  35,057,190  35,806,459  (2)  
Dividends declared per share $ 0.30 $0.28  7   
Book value per share  32.68  30.82  6   
Tangible book value per share (1)  21.09  21.05  -   
Outstanding shares  34,164,672  35,557,110  (4)  
         
Financial Condition at period-end:        
Investment securities $ 1,250,560 $987,299  27 % 
Loans  6,722,992  6,569,990  2   
Interest-earning assets  8,222,589  7,648,654  8   
Assets  8,929,602  8,327,900  7   
Deposits  6,593,874  6,224,523  6   
Interest-bearing liabilities  5,732,349  5,297,108  8   
Stockholders' equity  1,116,334  1,095,848  2   
         
Capital ratios:        
Tier 1 leverage (3)  8.78% 9.61 %   
Common equity tier 1 capital to risk-weighted assets (3)  10.23% 11.19 %   
Tier 1 capital to risk-weighted assets (3)  10.23% 11.35 %   
Total regulatory capital to risk-weighted assets (3)  14.09% 12.54 %   
Tangible common equity to tangible assets (4)  8.44% 9.39 %   
Average equity to average assets  12.99% 13.00 %   
         
Credit quality ratios:        
Allowance for credit losses to loans  1.28% 0.81 %   
Non-performing loans to total loans  0.80% 0.61 %   
Non-performing assets to total assets  0.62% 0.50 %   
Allowance for credit losses to non-performing loans  159.02% 132.35 %   
Annualized net charge-offs to average loans (5)  0.03% 0.02 %   
         
(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 and acquisition 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 March 31, 2020        
(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 
  March 31, 
(Dollars in thousands)  2020   2019  
Pre-tax pre-provision pre-merger income:     
Net income $ 9,987  $30,317  
Plus non-GAAP adjustments:     
Merger and acquisition expense  1,454   -  
Income taxes  300   9,338  
Provision (credit) for credit losses  24,469   (128) 
Pre-tax pre-provision pre-merger income $ 36,210  $39,527  
      
Efficiency ratio - GAAP basis:     
Non-interest expense $ 47,746  $44,192  
      
Net interest income plus non-interest income $ 82,502  $83,719  
      
Efficiency ratio - GAAP basis  57.87%  52.79% 
      
      
Efficiency ratio - Non-GAAP basis:     
Non-interest expense $ 47,746  $44,192  
Less non-GAAP adjustments:     
Amortization of intangible assets  600   491  
Merger and acquisition expense  1,454   -  
Non-interest expense - as adjusted $ 45,692  $43,701  
      
Net interest income plus non-interest income $ 82,502  $83,719  
Plus non-GAAP adjustment:     
Tax-equivalent income  1,108   1,241  
Less non-GAAP adjustment:     
Securities gains  169   -  
Net interest income plus non-interest income - as adjusted $ 83,441  $84,960  
      
Efficiency ratio - Non-GAAP basis  54.76%  51.44% 
      
Tangible common equity ratio:     
Total stockholders' equity $ 1,116,334  $1,095,848  
Accumulated other comprehensive income  (6,344)  9,050  
Goodwill  (369,708)  (347,149) 
Other intangible assets, net  (19,781)  (9,297) 
Tangible common equity $ 720,501  $748,452  
      
Total assets $ 8,929,602  $8,327,900  
Goodwill  (369,708)  (347,149) 
Other intangible assets, net  (19,781)  (9,297) 
Tangible assets $ 8,540,113  $7,971,454  
      
Tangible common equity ratio  8.44%  9.39% 
      
Outstanding common shares  34,164,672   35,557,110  
Tangible book value per common share $ 21.09  $21.05  
      



Sandy Spring Bancorp, Inc. and Subsidiaries       
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED       
        
  March 31, December 31, March 31, 
(Dollars in thousands)  2020   2019   2019  
Assets       
Cash and due from banks $ 79,185  $82,469  $67,282  
Federal funds sold  131   208   481  
Interest-bearing deposits with banks  181,792   63,426   65,886  
Cash and cash equivalents  261,108   146,103   133,649  
Residential mortgage loans held for sale (at fair value)  67,114   53,701   24,998  
Investments available-for-sale (at fair value)  1,187,607   1,073,333   926,530  
Other equity securities  62,953   51,803   60,769  
Total loans  6,722,992   6,705,232   6,569,990  
Less: allowance for credit losses  (85,800)  (56,132)  (53,089) 
Net loans  6,637,192   6,649,100   6,516,901  
Premises and equipment, net  57,617   58,615   61,003  
Other real estate owned  1,416   1,482   1,410  
Accrued interest receivable  23,870   23,282   26,182  
Goodwill  369,708   347,149   347,149  
Other intangible assets, net  19,781   7,841   9,297  
Other assets  241,236   216,593   220,012  
Total assets $ 8,929,602  $8,629,002  $8,327,900  
        
Liabilities       
Noninterest-bearing deposits $ 1,939,937  $1,892,052  $1,813,708  
Interest-bearing deposits  4,653,937   4,548,267   4,410,815  
Total deposits  6,593,874   6,440,319   6,224,523  
Securities sold under retail repurchase agreements and federal funds purchased  125,305   213,605   122,626  
Advances from FHLB  754,061   513,777   726,278  
Subordinated debentures  199,046   209,406   37,389  
Accrued interest payable and other liabilities  140,982   118,921   121,236  
Total liabilities  7,813,268   7,496,028   7,232,052  
        
Stockholders' Equity       
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 34,164,672,       
34,970,370 and 35,557,110 at March 31, 2020, December 31, 2019 and March 31, 2019, respectively  34,165   34,970   35,557  
Additional paid in capital  562,891   586,622   607,479  
Retained earnings  512,934   515,714   461,862  
Accumulated other comprehensive income (loss)  6,344   (4,332)  (9,050) 
Total stockholders' equity  1,116,334   1,132,974   1,095,848  
Total liabilities and stockholders' equity $ 8,929,602  $8,629,002  $8,327,900  
        



Sandy Spring Bancorp, Inc. and Subsidiaries    
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED  
     
  Three Months Ended
 March 31,
(Dollars in thousands, except per share data)  2020  2019 
Interest Income:    
Interest and fees on loans $ 75,882 $80,397 
Interest on loans held for sale  291  192 
Interest on deposits with banks  180  194 
Interest and dividends on investment securities:    
Taxable  6,132  5,685 
Exempt from federal income taxes  1,372  1,710 
Interest on federal funds sold  1  5 
Total interest income  83,858  88,183 
Interest Expense:    
Interest on deposits  13,518  14,480 
Interest on retail repurchase agreements and federal funds purchased  580  398 
Interest on advances from FHLB  3,145  6,064 
Interest on subordinated debt  2,281  491 
Total interest expense  19,524  21,433 
Net interest income  64,334  66,750 
Provision (credit) for credit losses  24,469  (128)
Net interest income after provision for credit losses  39,865  66,878 
Non-interest Income:    
Investment securities gains  169  - 
Service charges on deposit accounts  2,253  2,307 
Mortgage banking activities  3,033  2,863 
Wealth management income  6,966  5,236 
Insurance agency commissions  2,129  1,900 
Income from bank owned life insurance  645  1,189 
Bank card fees  1,320  1,252 
Other income  1,653  2,222 
Total non-interest income  18,168  16,969 
Non-interest Expense:    
Salaries and employee benefits  28,053  25,976 
Occupancy expense of premises  4,581  5,231 
Equipment expenses  2,751  2,576 
Marketing  1,189  943 
Outside data services  1,582  1,778 
FDIC insurance  482  1,136 
Amortization of intangible assets  600  491 
Merger and acquisition expense  1,454  - 
Professional fees and services  1,826  1,245 
Other expenses  5,228  4,816 
Total non-interest expense  47,746  44,192 
Income before income taxes  10,287  39,655 
Income tax expense  300  9,338 
Net income $ 9,987 $30,317 
     
Net Income Per Share Amounts:    
Basic net income per share $ 0.29 $0.85 
Diluted net income per share $ 0.28 $0.85 
Dividends declared per share $ 0.30 $0.28 
     



Sandy Spring Bancorp, Inc. and Subsidiaries          
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED      
           
   2020
  2019 
(Dollars in thousands, except per share data) Q1 Q4 Q3 Q2 Q1
Profitability for the Quarter:          
Tax-equivalent interest income $ 84,966  $86,539  $88,229  $88,423  $89,424 
Interest expense  19,524   19,807   20,292   21,029   21,433 
Tax-equivalent net interest income  65,442   66,732   67,937   67,394   67,991 
  Tax-equivalent adjustment  1,108   1,149   1,147   1,209   1,241 
Provision (credit) for credit losses  24,469   1,655   1,524   1,633   (128)
Non-interest income  18,168   19,224   18,573   16,556   16,969 
Non-interest expense  47,746   46,081   44,925   43,887   44,192 
Income before income taxes  10,287   37,071   38,914   37,221   39,655 
Income tax expense  300   8,614   9,531   8,945   9,338 
Net income $ 9,987  $28,457  $29,383  $28,276  $30,317 
Financial Performance:          
Pre-tax pre-provision pre-merger income $ 36,210  $39,674  $40,802  $38,854  $39,527 
Return on average assets  0.46%  1.32%  1.39%  1.37%  1.49%
Return on average common equity  3.55%  9.93%  10.38%  10.32%  11.46%
Net interest margin  3.29%  3.38%  3.51%  3.54%  3.60%
Efficiency ratio - GAAP basis (1)  57.87%  54.34%  52.63%  53.04%  52.79%
Efficiency ratio - Non-GAAP basis (1)  54.76%  51.98%  50.95%  51.71%  51.44%
Per Share Data:          
Basic net income per share $ 0.29  $0.80  $0.82  $0.79  $0.85 
Diluted net income per share $ 0.28  $0.80  $0.82  $0.79  $0.85 
Average fully diluted shares  35,057,190   35,773,246   35,900,102   35,890,437   35,806,459 
Dividends declared per common share $ 0.30  $0.30  $0.30  $0.30  $0.28 
Non-interest Income:          
Securities gains $ 169  $57  $15  $5  $- 
Service charges on deposit accounts  2,253   2,427   2,516   2,442   2,307 
Mortgage banking activities  3,033   4,170   4,408   3,270   2,863 
Wealth management income  6,966   6,401   5,493   5,539   5,236 
Insurance agency commissions  2,129   1,331   2,116   1,265   1,900 
Income from bank owned life insurance  645   660   662   654   1,189 
Bank card fees  1,320   1,435   1,462   1,467   1,252 
Other income  1,653   2,743   1,901   1,914   2,222 
  Total Non-interest Income $ 18,168  $19,224  $18,573  $16,556  $16,969 
Non-interest Expense:          
Salaries and employee benefits $ 28,053  $26,251  $26,234  $25,489  $25,976 
Occupancy expense of premises  4,581   4,663   4,816   4,760   5,231 
Equipment expenses  2,751   2,791   2,641   2,712   2,576 
Marketing  1,189   1,085   1,541   887   943 
Outside data services  1,582   1,854   1,973   1,962   1,778 
FDIC insurance  482   123   (83)  1,084   1,136 
Amortization of intangible assets  600   481   491   483   491 
Merger and acquisition expense  1,454   948   364   -   - 
Professional fees and services  1,826   2,553   1,546   1,634   1,245 
Other expenses  5,228   5,332   5,402   4,876   4,816 
  Total Non-interest Expense $ 47,746  $46,081  $44,925  $43,887  $44,192 
           
(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 and acquisition 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      
           
   2020   2019 
(Dollars in thousands) Q1 Q4 Q3 Q2 Q1
Balance Sheets at Quarter End:          
Residential mortgage loans $ 1,116,512  $1,149,327  $1,199,275  $1,241,081  $1,249,968 
Residential construction loans  149,573   146,279   150,692   171,106   176,388 
Commercial AD&C loans  643,114   684,010   678,906   658,709   688,939 
Commercial investor real estate loans  2,241,240   2,169,156   2,036,021   1,994,027   1,962,879 
Commercial owner occupied real estate loans  1,305,682   1,288,677   1,278,505   1,224,986   1,216,713 
Commercial business loans  813,525   801,019   772,619   772,158   769,660 
Consumer loans  453,346   466,764   480,530   489,176   505,443 
  Total loans  6,722,992   6,705,232   6,596,548   6,551,243   6,569,990 
Allowance for credit losses  (85,800)  (56,132)  (54,992)  (54,024)  (53,089)
Loans held for sale  67,114   53,701   78,821   50,511   24,998 
Investment securities  1,250,560   1,125,136   946,210   955,715   987,299 
Interest-earning assets  8,222,589   7,947,703   7,742,138   7,713,364   7,648,654 
Total assets  8,929,602   8,629,002   8,437,538   8,398,519   8,327,900 
Noninterest-bearing demand deposits  1,939,937   1,892,052   2,081,435   2,023,614   1,813,708 
Total deposits  6,593,874   6,440,319   6,493,899   6,389,749   6,224,523 
Customer repurchase agreements  125,305   138,605   126,008   150,604   122,626 
Total interest-bearing liabilities  5,732,349   5,485,055   5,093,265   5,136,860   5,297,108 
Total stockholders' equity  1,116,334   1,132,974   1,140,041   1,119,445   1,095,848 
Quarterly Average Balance Sheets:          
Residential mortgage loans $ 1,139,786  $1,169,623  $1,215,132  $1,244,086  $1,230,319 
Residential construction loans  145,266   149,690   162,196   174,095   189,720 
Commercial AD&C loans  659,494   695,817   651,905   686,282   676,205 
Commercial investor real estate loans  2,202,461   2,092,478   1,982,979   1,960,919   1,964,699 
Commercial owner occupied real estate loans  1,285,257   1,274,782   1,258,000   1,215,632   1,207,799 
Commercial business loans  819,133   765,159   786,150   756,594   780,318 
Consumer loans  465,314   477,572   486,865   505,235   515,644 
  Total loans  6,716,711   6,625,121   6,543,227   6,542,843   6,564,704 
Loans held for sale  35,030   50,208   61,870   37,121   17,846 
Investment securities  1,179,084   1,002,692   941,048   964,863   1,010,940 
Interest-earning assets  7,994,618   7,859,836   7,690,629   7,619,240   7,627,187 
Total assets  8,699,342   8,542,837   8,370,789   8,294,883   8,258,116 
Noninterest-bearing demand deposits  1,797,227   1,927,063   1,909,884   1,796,802   1,682,720 
Total deposits  6,433,694   6,459,551   6,405,762   6,247,409   5,952,942 
Customer repurchase agreements  135,652   126,596   138,736   141,865   129,059 
Total interest-bearing liabilities  5,612,056   5,326,303   5,202,876   5,269,209   5,403,946 
Total stockholders' equity  1,130,051   1,136,824   1,123,185   1,099,078   1,073,291 
Financial Measures:          
Average equity to average assets  12.99%  13.31%  13.42%  13.25%  13.00%
Investment securities to earning assets  15.21%  14.16%  12.22%  12.39%  12.91%
Loans to earning assets  81.76%  84.37%  85.20%  84.93%  85.90%
Loans to assets  75.29%  77.71%  78.18%  78.00%  78.89%
Loans to deposits  101.96%  104.11%  101.58%  102.53%  105.55%
Capital Measures:          
Tier 1 leverage (1)  8.78%  9.70%  9.96%  9.80%  9.61%
Common equity tier 1 capital to risk-weighted assets (1)  10.23%  11.06%  11.37%  11.43%  11.19%
Tier 1 capital to risk-weighted assets (1)  10.23%  11.21%  11.52%  11.59%  11.35%
Total regulatory capital to risk-weighted assets (1)  14.09%  14.85%  12.70%  12.79%  12.54%
Book value per share $ 32.68  $32.40  $32.00  $31.43  $30.82 
Outstanding shares  34,164,672   34,970,370   35,625,822   35,614,953   35,557,110 
(1) Estimated ratio at March 31, 2020          
           



Sandy Spring Bancorp, Inc. and Subsidiaries           
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED         
            
   2020   2019  
(Dollars in thousands) March 31, December 31,  September 30,  June 30, March 31, 
Non-Performing Assets:           
Loans 90 days past due:           
Commercial business $ -  $-  $17  $-  $-  
Commercial real estate:           
Commercial AD&C  -   -   -   -   -  
Commercial investor real estate  -   -   1,201   1,248   -  
Commercial owner occupied real estate  -   -   -   -   90  
Consumer  -   -   -   -   -  
Residential real estate:           
Residential mortgage  8   -   -   -   221  
Residential construction  -   -   -   -   -  
Total loans 90 days past due  8   -   1,218   1,248   311  
Non-accrual loans:           
Commercial business  10,834   8,450   6,393   7,083   8,013  
Commercial real estate:           
Commercial AD&C  829   829   829   1,990   3,306  
Commercial investor real estate  17,770   8,437   8,454   6,409   6,071  
Commercial owner occupied real estate  4,074   4,148   3,810   3,766   5,992  
Consumer  5,596   4,107   4,561   4,439   4,081  
Residential real estate:           
Residential mortgage  12,271   12,661   12,574   10,625   9,704  
Residential construction  -   -   -   -   156  
Total non-accrual loans  51,374   38,632   36,621   34,312   37,323  
Total restructured loans - accruing  2,575   2,636   2,287   2,133   2,479  
Total non-performing loans  53,957   41,268   40,126   37,693   40,113  
Other assets and real estate owned (OREO)  1,416   1,482   1,482   1,486   1,410  
Total non-performing assets $ 55,373  $42,750  $41,608  $39,179  $41,523  
            
  For the Quarter Ended, 
  March 31, December 31,  September 30,  June 30, March 31, 
(Dollars in thousands)  2020   2019   2019   2019   2019  
Analysis of Non-accrual Loan Activity:           
Balance at beginning of period $ 38,632  $36,621  $34,312  $37,323  $33,583  
Purchased credit deteriorated loans designated as non-accrual 13,084   -   -   -   -  
Non-accrual balances transferred to OREO  -   -   -   (195)  -  
Non-accrual balances charged-off  (575)  (454)  (705)  (604)  (227) 
Net payments or draws  (1,860)  (2,916)  (2,903)  (5,517)  (1,786) 
Loans placed on non-accrual  2,369   5,381   6,015   3,396   6,202  
Non-accrual loans brought current  (276)  -   (98)  (91)  (449) 
Balance at end of period $ 51,374  $38,632  $36,621  $34,312  $37,323  
            
Analysis of Allowance for Credit Losses:           
Balance at beginning of period $ 56,132  $54,992  $54,024  $53,089  $53,486  
Transition impact of adopting ASC 326  2,983   -   -   -   -  
Initial allowance on purchased credit deteriorated loans  2,762   -   -   -   -  
Provision (credit) for credit losses  24,469   1,655   1,524   1,633   (128) 
Less loans charged-off, net of recoveries:           
Commercial business  108   15   389   735   7  
Commercial real estate:           
Commercial AD&C  -   -   (224)  (4)  -  
Commercial investor real estate  -   (3)  (3)  (3)  (7) 
Commercial owner occupied real estate  -   -   -   -   -  
Consumer  107   241   187   (18)  182  
Residential real estate:           
Residential mortgage  333   264   209   (10)  89  
Residential construction  (2)  (2)  (2)  (2)  (2) 
Net charge-offs  546   515   556   698   269  
Balance at end of period $ 85,800  $56,132  $54,992  $54,024  $53,089  
            
Asset Quality Ratios:           
Non-performing loans to total loans  0.80%  0.62%  0.61%  0.58%  0.61% 
Non-performing assets to total assets  0.62%  0.50%  0.49%  0.47%  0.50% 
Allowance for credit losses to loans  1.28%  0.84%  0.83%  0.82%  0.81% 
Allowance for credit losses to non-performing loans  159.02%  136.02%  137.05%  143.33%  132.35% 
Annualized net charge-offs to average loans  0.03%  0.03%  0.03%  0.04%  0.02% 
            



Sandy Spring Bancorp, Inc. and Subsidiaries            
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED      
               
  Three Months Ended March 31, 
     2020        2019    
        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 $ 1,139,786  $ 10,741  3.77%$1,230,319  $11,788  3.83%
Residential construction loans  145,266   1,561  4.32   189,720   1,963  4.20 
Total mortgage loans  1,285,052   12,302  3.83   1,420,039   13,751  3.88 
Commercial AD&C loans  659,494   8,329  5.08   676,205   9,880  5.93 
Commercial investor real estate loans  2,202,461   25,265  4.61   1,964,699   25,729  5.31 
Commercial owner occupied real estate loans  1,285,257   15,206  4.76   1,207,799   14,386  4.83 
Commercial business loans  819,133   10,177  5.00   780,318   10,808  5.62 
Total commercial loans  4,966,345   58,977  4.78   4,629,021   60,803  5.33 
Consumer loans  465,314   5,156  4.46   515,644   6,330  4.98 
Total loans (2)  6,716,711   76,435  4.57   6,564,704   80,884  4.99 
Loans held for sale  35,030   291  3.32   17,846   192  4.31 
Taxable securities  972,609   6,322  2.60   768,658   5,976  3.11 
Tax-exempt securities (3)  206,475   1,737  3.37   242,282   2,173  3.59 
Total investment securities (4)  1,179,084   8,059  2.73   1,010,940   8,149  3.23 
Interest-bearing deposits with banks  63,533   180  1.14   33,068   194  2.38 
Federal funds sold  260   1  1.23   629   5  3.33 
Total interest-earning assets  7,994,618   84,966  4.27   7,627,187   89,424  4.74 
               
Less: allowance for credit losses  (61,962)       (53,095)     
Cash and due from banks  69,618        62,478      
Premises and equipment, net  58,346        61,722      
Other assets  638,722        559,824      
  Total assets $ 8,699,342       $8,258,116      
               
Liabilities and Stockholders' Equity              
Interest-bearing demand deposits $ 840,415   697  0.33%$709,844   300  0.17%
Regular savings deposits  331,119   73  0.09   331,473   93  0.11 
Money market savings deposits  1,848,290   4,650  1.01   1,658,628   6,307  1.54 
Time deposits  1,616,643   8,098  2.01   1,570,277   7,780  2.01 
Total interest-bearing deposits  4,636,467   13,518  1.17   4,270,222   14,480  1.38 
Other borrowings  236,806   580  0.99   170,660   398  0.95 
Advances from FHLB  531,989   3,145  2.38   925,652   6,064  2.66 
Subordinated debentures  206,794   2,281  4.41   37,412   491  5.25 
Total interest-bearing liabilities  5,612,056   19,524  1.40   5,403,946   21,433  1.61 
               
Noninterest-bearing demand deposits  1,797,227        1,682,720      
Other liabilities  160,008        98,159      
Stockholders' equity  1,130,051        1,073,291      
  Total liabilities and stockholders' equity$ 8,699,342       $8,258,116      
               
Net interest income and spread   $ 65,442  2.87%  $67,991  3.13%
Less: tax-equivalent adjustment    1,108        1,241    
Net interest income   $ 64,334       $66,750    
               
Interest income/earning assets     4.27%    4.74%
Interest expense/earning assets     0.98      1.14 
Net interest margin     3.29%    3.60%
               
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.45% for 2020 and 2019. The annualized taxable-equivalent adjustments utilized in
the above table to compute yields aggregated to $1.1 million and $1.2 million in 2020 and 2019, 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.