Sandy Spring Bancorp (SASR) 8-K Results of Operations and Financial Condition

EXHIBIT 99

NEWS RELEASE

FOR IMMEDIATE RELEASE

SANDY SPRING BANCORP REPORTS
THIRD QUARTER RESULTS HIGHLIGHTED BY
CONTINUED LOAN GROWTH

OLNEY, MARYLAND, October 17, 2006 – Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the third quarter of 2006 of $8.1 million ($.55 per diluted share) compared to $9.5 million ($.64 per diluted share) for the third quarter of 2005 and $8.1 million ($.54 per diluted share) for the linked second quarter of 2006. Net income for the nine-month period ending September 30, 2006 totaled $24.6 million ($1.65 per diluted share) compared to $25.1 million ($1.70 per diluted share) for the prior year period, a 2% decrease.

“The interest rate environment is the dominant force affecting our performance for the quarter,” said Hunter R. Hollar, President and Chief Executive Officer. “Loan growth continued at a consistent 15% rate as a result of ongoing solid demand from our small business and middle-market commercial customers. With customer funding sources growing at a level of 6%, our major challenges are the same as the industry-wide challenges of funding the growth of our loan portfolios, and expanding our stream of noninterest revenue.”

“Even in this difficult operating environment, during the quarter we were able to add a significant number of profitable new relationships with the introduction of our new demand deposit product line, announce our first bank acquisition since 1996, and continue to grow noninterest income at a healthy rate with our fee-based business lines.”

“Excluding the favorable impact of securities gains in the third quarter of 2005, noninterest income was up 15% for the comparable quarter of this year. This reflects the acquisition of West Financial Services, growth in trust assets under management, higher insurance agency commissions and improved fees on the sales of investment products.“

“We are very enthusiastic about continuing to build and expand our business lines in northern Virginia, with the acquisition of Potomac Bank. We believe the combined organization can rapidly deliver expanded capabilities and value to Potomac’s customer base – particularly in terms of our higher lending limits and the addition of our scope of fee-based offerings, such as investment products, insurance and, in particular, asset management through West Financial, our existing McLean, Virginia based company” said Hollar.

Sandy Spring Bancorp’s return on average stockholders’ equity was 14.06% for the third quarter of 2006, compared to 18.31% for the same period in the prior year. Return on average assets for the third quarter of 2006 was 1.24%, compared to 1.58% for the third quarter of 2005.

For the first nine months of 2006, return on average stockholders’ equity was 14.64% compared to 16.74% for the first nine months of 2005. Return on average assets for the first nine months of 2006 was 1.29%, compared to 1.44% for the first nine months of 2005.

Comparing September 30, 2006 balances to September 30, 2005, total assets increased 9% to $2.6 billion due mainly to growth in the loan portfolio. Total loans and leases increased 15% to $1.8 billion compared to the prior year. Customer funding sources, which include deposits plus other short-term borrowings from core customers, increased 6% to $2.1 billion at September 30, 2006. Stockholders’ equity totaled $233.7 million at quarter end, and represented 9.0% of total assets, compared to 8.7% at September 30, 2005.

Due primarily to growth in the loan portfolio, the provision for loan and lease losses totaled $0.6 million for both the third quarter of 2006 and the third quarter of 2005. The provision for loan and lease losses totaled $2.5 million for the first nine months of 2006 compared to $1.6 million in the same period in 2005. The allowance for loan and lease losses represented 1.07% of outstanding loans at September 30, 2006.

The Company’s management will host a conference call to discuss its third quarter results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations’ section of the Sandy Spring Web site at www.sandyspringbank.com.

DETAILED REVIEW OF FINANCIAL RESULTS

Comparing the third quarter of 2006 and 2005, net interest income increased by $1.6 million, or 7%, due primarily to continued growth in the loan portfolio which was partially offset by a lower net interest margin. The net interest margin decreased to 4.25% in 2006 from 4.39% in 2005 due primarily to a decrease in noninterest bearing deposits and increased short-term borrowings within a flat yield curve environment.

Noninterest income decreased 5% in the third quarter of 2006 as compared to 2005 due primarily to securities gains recognized in the third quarter of 2005. Excluding securities gains, noninterest income increased 15% in the third quarter as compared to 2005. Trust and investment management feesincreased 94% due to growth in trust assets under management and the acquisition of West Financial Services, Inc. in the fourth quarter of 2005. Insurance agency commissions also increased 26% over 2005 due to higher premiums from commercial property and casualty lines and the acquisition of Neff & Associates in the first quarter of 2006. Fees on sales of investment products increased 66% over the prior year due to increased sales volumes while Visa® check fees increased 9% reflecting a growing volume of electronic banking transactions. These increases were partially offset by a decline of 40% in gains on sales of mortgage loans reflecting lower mortgage loan origination volumes.

Noninterest expenses were $21.7 million in the third quarter of 2006 compared to $18.7 million in 2005, an increase of $3.0 million or 16%. This increase was primarily the result of increases in salaries and benefits due to the acquisition of West Financial Services, Inc. and Neff & Associates, a larger staff and higher marketing expenses. Outside data services grew during the quarter by 21% while the increase in marketing expenses over the second quarter of 2005 represented long term investments under the Company’s strategic plan. Intangibles amortization increased $0.2 million or 48% as a result of the above acquisitions.

Stock-based compensation expense of $0.1 million, net of income taxes ($.01 per diluted share) was recorded in the third quarter of 2006 as required under a new accounting standard (SFAS 123R). The Company estimates the full year effect of this new accounting rule to total $0.5 million, net of income taxes ($.03 per diluted share).

Comparing the first nine months of 2006 and 2005, net interest income increased by $5.9 million, or 9%, due primarily to continued growth in the loan portfolio which was somewhat offset by a lower net interest margin. The net interest margin decreased to 4.30% in 2006 from 4.39% in 2005 due largely to a decrease in noninterest bearing deposits and increased short-term borrowings as a result of the flat yield curve environment.

Noninterest income increased 7% in the first nine months of 2006 as compared to 2005 due to increases in virtually every business line. Excluding securities gains, noninterest income increased 18% in the first nine months of the year over the prior year period. Trust and investment management feesincreased 121% due to growth in trust assets under management and the acquisition of West Financial Services, Inc. in the fourth quarter of 2005. Insurance agency commissions also increased 24% over 2005 due to higher premiums from commercial property and casualty lines and the acquisition of Neff & Associates in the first quarter of 2006. Fees on sales of investment products also increased 45% over the prior year due to increased sales volumes while Visa® check fees increased 10%. Gains on sales of mortgage loans decreased 27% reflecting market conditions.

Noninterest expenses were $62.9 million in the first nine months of 2006 compared to $56.3 million in 2005, an increase of $6.6 million or 12%. This increase was primarily the result of increases in salaries and benefits due to the acquisition of West Financial Services, Inc. and Neff & Associates, a larger staff and higher marketing expenses which increased by 108% over the prior year period in accord with the Company’s strategic plan as mentioned above. Intangibles amortization increased $0.7 million or 48% as a result of the above acquisitions.

Stock-based compensation expense of $0.3 million, net of income taxes ($.02 per diluted share) was recorded in the first nine months of 2006 as required under a new accounting standard (SFAS 123R).

About Sandy Spring Bancorp/Sandy Spring Bank

With $2.6 billion in assets, Sandy Spring Bancorp is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation, The Equipment Leasing Company and West Financial Services, Inc. Sandy Spring Bancorp is the third largest publicly traded banking company headquartered in Maryland. Sandy Spring is a community banking organization that focuses its lending and other services on businesses and consumers in the local market area. Independent and community-oriented, Sandy Spring Bank was founded in 1868 and offers a broad range of commercial banking, retail banking and trust services through 32 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George’s counties in Maryland. Through its subsidiaries, the Bank also offers a comprehensive menu of leasing, insurance and investment management services. Visit www.sandyspringbank.com to locate an ATM near you or for more information about Sandy Spring Bank.

For additional information or questions, please contact:

Hunter R. Hollar, President & Chief Executive Officer, or
Philip J. Mantua, Executive V.P. & Chief Financial Officer
Sandy Spring Bancorp
17801 Georgia Avenue
Olney, Maryland 20832
1-800-399-5919
E-mail:	HHollar@sandyspringbank.com
	PMantua@sandyspringbank.com
Web site:	www.sandyspringbank.com

Forward-Looking Statements: Sandy Spring Bancorp makes forward-looking statements in this News Release that are subject to risks and uncertainties. These forward-looking statements include: statements of goals, intentions, earnings expectations, and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals. These forward-looking statements are subject to significant uncertainties because they are based upon or are affected by: management’s estimates and projections of future interest rates, market behavior, and other economic conditions; future laws and regulations; and a variety of other matters which, by their nature, are subject to significant uncertainties. Because of these uncertainties, Sandy Spring Bancorp’s actual future results may differ materially from those indicated. In addition, the Company’s past results of operations do not necessarily indicate its future results.

Sandy Spring Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2006			2005		% Change		2006			2005		% Change
Profitability for the period:
Net interest income	$	24,122		$	22,526		7		$	71,151		$	65,253		9
Provision for loan and lease losses		550			600		(8	)		2,545			1,600		59
Noninterest income		9,590			10,112		(5	)		28,831			27,005		7
Noninterest expenses		21,694			18,744		16			62,878			56,334		12
Income before income taxes		11,468			13,294		(14	)		34,559			34,324		1
Net income		8,122			9,467		(14	)		24,557			25,120		(2	)
Return on average assets		1.24	%		1.58	%				1.29	%		1.44	%
Return on average equity		14.06	%		18.31	%				14.64	%		16.74	%
Net interest margin		4.25	%		4.39	%				4.30	%		4.39	%
Efficiency ratio – GAAP based *		64.35	%		57.43	%				62.89	%		61.06	%
Efficiency ratio – traditional *		59.20	%		55.74	%				57.98	%		57.73	%
Per share data:
Basic net income	$	0.55		$	0.65		(15	)	$	1.66		$	1.72		(3	)
Diluted net income		0.55			0.64		(14	)		1.65			1.70		(3	)
Dividends declared		0.22			0.21		5			0.66			0.62		6
Book value		15.78			14.23		11			15.78			14.23		11
Tangible book value		14.15			13.07		8			14.15			13.07		8
Average fully diluted shares		14,915,454			14,735,318					14,920,255			14,738,845
At period-end:
Assets	$	2,598,458		$	2,383,360		9		$	2,598,458		$	2,383,360		9
Deposits		1,947,850			1,804,888		8			1,947,850			1,804,888		8
Loans and leases		1,815,490			1,579,135		15			1,815,490			1,579,135		15
Securities		551,138			584,316		(6	)		551,138			584,316		(6	)
Stockholders' equity		233,693			208,090		12			233,693			208,090		12
Capital and credit quality ratios:
Average equity to average assets		8.82	%		8.60	%				8.81	%		8.62	%
Allowance for loan and lease losses to loans and leases		1.07	%		1.03	%				1.07	%		1.03	%
Nonperforming assets to total assets		0.15	%		0.14	%				0.15	%		0.14	%
Annualized net charge-offs to average loans and leases		0.00	%		0.00	%				0.00	%		0.00	%

 * The GAAP based efficiency ratio is noninterest expenses divided by net interest income plus noninterest income from the Consolidated Statements of Income.
The traditional, non-GAAP efficiency ratio excludes intangible asset amortization from noninterest expenses; excludes securities gains from noninterest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.

Certain reclassifications and restatements of information previously reported have been made to conform with current presentation.

Sandy Spring Bancorp, Inc. and Subsidiaries
Reconciliation of GAAP-based and Traditional Efficiency Ratios
(In thousands, except per share data)

		Three Months Ended September 30,						Nine Months Ended September 30,
		2006			2005			2006			2005
Noninterest expenses–GAAP based		21,694		$	18,744			62,878		$	56,334
Net interest income plus noninterest income–
GAAP based		33,712			32,638			99,982			92,258
Efficiency ratio–GAAP based		64.35	%		57.43	%		62.89	%		61.06	%
Noninterest expenses–GAAP based	$	21,694		$	18,744		$	62,878		$	56,334
Less non-GAAP adjustment:
Amortization of intangible assets		743			501			2,227			1,502
Noninterest expenses–traditional ratio		20,951			18,243			60,651			54,832
Net interest income plus noninterest income–
GAAP based		33,712			32,638			99,982			92,258
Plus non-GAAP adjustment:
Tax-equivalency		1,677			1,853			4,618			5,328
Less non-GAAP adjustments:
Securities gains		0			1,761			1			2,601
Net interest income plus noninterest
income – traditional ratio		35,389			32,730			104,599			94,985
Efficiency ratio – traditional		59.20	%		55.74	%		57.98	%		57.73	%

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

	September 30						December 31
		2006			2005			2005
Assets
Cash and due from banks	$	42,558		$	48,412		$	47,294
Federal funds sold		25,129			12,639			6,149
Cash and cash equivalents		67,687			61,051			53,443
Interest-bearing deposits with banks		317			802			751
Residential mortgage loans held for sale (at fair value)		21,111			25,826			10,439
Investments available-for-sale (at fair value)		261,645			271,022			256,571
Investments held-to-maturity – fair value of $278,415
$310,673 and $302,966, respectively		272,143			301,227			295,648
Other equity securities		17,350			12,067			15,213
Total loans and leases		1,815,490			1,579,135			1,684,379
Less: allowance for loan and lease losses		(19,433	)		(16,268	)		(16,886	)
Net loans and leases		1,796,057			1,562,867			1,667,493
Premises and equipment, net		45,831			45,414			45,385
Accrued interest receivable		15,399			11,685			13,144
Goodwill		12,606			8,554			12,042
Other intangible assets, net		11,431			8,364			12,218
Other assets		76,881			74,481			77,269
Total assets	$	2,598,458		$	2,383,360		$	2,459,616
Liabilities
Noninterest-bearing deposits	$	416,712		$	467,957		$	439,277
Interest-bearing deposits		1,531,138			1,336,931			1,363,933
Total deposits		1,947,850			1,804,888			1,803,210
Short-term borrowings		356,563			279,427			380,220
Other long-term borrowings		1,896			29,246			2,158
Subordinated debentures		35,000			35,000			35,000
Accrued interest payable and other liabilities		23,456			26,709			21,145
Total liabilities		2,364,765			2,175,270			2,241,733
Stockholders' Equity
Common stock – par value $1.00; shares authorized
50,000,000; shares issued and outstanding 14,811,974,
14,623,696 and 14,793,987, respectively		14,812			14,624			14,794
Additional paid in capital		27,349			21,019			26,599
Retained earnings		191,884			172,369			177,084
Accumulated other comprehensive income(loss)		(352	)		78			(594	)
Total stockholders' equity		233,693			208,090			217,883
Total liabilities and stockholders' equity	$	2,598,458		$	2,383,360		$	2,459,616

Certain reclassifications and restatements of information previously reported have been made to conform with current presentation.

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2006		2005		2006		2005
Interest income:
Interest and fees on loans and leases	$	32,686	$	24,423	$	92,831	$	67,875
Interest on loans held for sale		222		422		514		812
Interest on deposits with banks		4		32		18		58
Interest and dividends on securities:
Taxable		4,090		2,925		10,490		9,210
Exempt from federal income taxes		2,839		3,275		8,783		10,284
Interest on federal funds sold		177		314		432		571
Total interest income		40,018		31,391		113,068		88,810
Interest expense:
Interest on deposits		10,378		5,700		26,846		14,743
Interest on short-term borrowings		4,943		2,413		13,342		6,530
Interest on long-term borrowings		575		752		1,729		2,284
Total interest expense		15,896		8,865		41,917		23,557
Net interest income		24,122		22,526		71,151		65,253
Provision for loan and lease losses		550		600		2,545		1,600
Net interest income after provision for loan and lease losses		23,572		21,926		68,606		63,653
Noninterest income:
Securities gains		0		1,761		1		2,601
Service charges on deposit accounts		1,904		2,050		5,702		5,705
Gains on sales of mortgage loans		718		1,205		2,049		2,825
Fees on sales of investment products		783		473		2,264		1,558
Trust and investment management fees		2,164		1,116		6,476		2,932
Insurance agency commissions		1,406		1,114		5,132		4,149
Income from bank owned life insurance		591		570		1,711		1,684
Visa check fees		603		556		1,750		1,597
Other income		1,421		1,267		3,746		3,954
Total noninterest income		9,590		10,112		28,831		27,005
Noninterest expenses:
Salaries and employee benefits		12,622		11,373		37,823		34,116
Occupancy expense of premises		2,175		2,099		6,340		5,987
Equipment expenses		1,384		1,415		4,112		4,031
Marketing		1,160		253		1,973		947
Outside data services		872		718		2,486		2,159
Amortization of intangible assets		743		501		2,227		1,502
Other expenses		2,738		2,385		7,917		7,592
Total noninterest expenses		21,694		18,744		62,878		56,334
Income before income taxes		11,468		13,294		34,559		34,324
Income tax expense		3,346		3,827		10,002		9,204
Net income	$	8,122	$	9,467	$	24,557	$	25,120
Basic net income per share	$	0.55	$	0.65	$	1.66	$	1.72
Diluted net income per share		0.55		0.64		1.65		1.70
Dividends declared per share		0.22		0.21		0.66		0.62

Certain reclassifications and restatements of information previously reported have been made to conform with current presentation.

Sandy Spring Bancorp, Inc. and Subsidiaries
Historical Trends in Quarterly Financial Data	2006									2005
(Dollars in thousands, except per share data)		Q3			Q2			Q1			Q4			Q3			Q2			Q1
Profitability for the quarter:
Tax-equivalent interest income	$	41,695		$	39,372		$	36,619		$	35,150		$	33,244		$	30,998		$	29,896
Interest expense		15,896			14,021			12,000			10,425			8,865			7,705			6,987
Tax-equivalent net interest income		25,799			25,351			24,619			24,725			24,379			23,293			22,909
Tax-equivalent adjustment		1,677			1,499			1,442			1,800			1,853			1,766			1,709
Provision for loan and lease losses		550			1,045			950			1,000			600			900			100
Noninterest income		9,590			9,395			9,846			9,904			10,112			9,053			7,840
Noninterest expenses		21,694			20,828			20,356			20,860			18,744			19,153			18,437
Income before income taxes		11,468			11,374			11,717			10,969			13,294			10,527			10,503
Income tax expense		3,346			3,279			3,377			2,991			3,827			2,730			2,647
Net Income		8,122			8,095			8,340			7,978			9,467			7,797			7,856
Financial ratios:
Return on average assets		1.24	%		1.27	%		1.36	%		1.31	%		1.58	%		1.36	%		1.39	%
Return on average equity		14.06	%		14.48	%		15.41	%		14.76	%		18.31	%		15.63	%		16.20	%
Net interest margin		4.25	%		4.30	%		4.35	%		4.38	%		4.39	%		4.39	%		4.39	%
Efficiency ratio – GAAP based *		64.35	%		62.65	%		61.64	%		63.54	%		57.43	%		62.63	%		63.49	%
Efficiency ratio – traditional *		59.20	%		57.81	%		56.91	%		59.36	%		55.74	%		59.16	%		58.38	%
Per share data:
Basic net income	$	0.55		$	0.55		$	0.56		$	0.54		$	0.65		$	0.53		$	0.54
Diluted net income	$	0.55		$	0.54		$	0.56		$	0.54		$	0.64		$	0.53		$	0.53
Dividends declared	$	0.22		$	0.22		$	0.22		$	0.22		$	0.21		$	0.21		$	0.20
Book value	$	15.78		$	15.33		$	15.06		$	14.73		$	14.23		$	13.91		$	13.57
Tangible book value	$	14.15		$	13.66		$	13.34		$	13.09		$	13.07		$	12.72		$	12.35
Average fully diluted shares		14,915,454			14,884,677			14,924,571			14,886,046			14,735,318			14,719,742			14,760,551
Noninterest income breakdown:
Securities gains	$	0		$	1		$	0		$	661		$	1,761		$	825		$	15
Service charges on deposit accounts		1,904			1,950			1,848			1,983			2,050			1,984			1,671
Gains on sales of mortgage loans		718			549			782			932			1,205			889			731
Fees on sales of investment products		783			763			718			551			473			640			445
Trust and investment management fees		2,164			2,196			2,116			2,074			1,116			944			872
Insurance agency commissions		1,406			1,618			2,108			1,160			1,114			1,224			1,811
Income from bank owned life insurance		591			567			553			575			570			559			555
Visa check fees		603			612			535			570			556			550			491
Other income		1,421			1,139			1,186			1,398			1,267			1,438			1,249
Total		9,590			9,395			9,846			9,904			10,112			9,053			7,840
Noninterest expense breakdown:
Salaries and employee benefits	$	12,622		$	12,730		$	12,471		$	12,897		$	11,373		$	11,454		$	11,289
Occupancy expense of premises		2,175			2,039			2,126			2,066			2,099			1,964			1,924
Equipment expenses		1,384			1,412			1,316			1,379			1,415			1,294			1,322
Marketing		1,160			472			341			278			253			406			288
Outside data services		872			833			781			781			718			701			740
Amortization of intangible assets		743			742			742			696			501			505			496
Other expenses		2,738			2,600			2,579			2,763			2,385			2,829			2,378
Total		21,694			20,828			20,356			20,860			18,744			19,153			18,437

* The GAAP based efficiency ratio is noninterest expenses divided by net interest income plus noninterest income from the Consolidated Statements of Income.
The traditional, non-GAAP efficiency ratio excludes intangible asset amortization expenses from noninterest expenses; excludes security gains from noninterest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Historical Trends in Quarterly Financial Data.

Sandy Spring Bancorp, Inc. and Subsidiaries
Historical Trends in Quarterly Financial Data		2006									2005
(Dollars in thousands, except per share data)		Q3			Q2			Q1			Q4			Q3			Q2			Q1
Balance sheets at quarter end:
Residential mortgage loans	$	396,811		$	386,805		$	428,698		$	413,324		$	400,657		$	393,961		$	375,746
Residential construction loans		175,067			169,564			166,767			155,379			143,691			136,733			139,964
Commercial mortgage loans		505,181			461,708			425,392			415,983			410,409			390,306			395,528
Commercial construction loans		185,615			214,628			188,477			178,764			136,606			119,006			94,708
Commercial loans and leases		204,023			200,712			193,524			185,680			160,379			154,237			150,143
Consumer loans		348,793			348,547			341,490			335,249			327,393			323,537			312,725
Total loans and leases		1,815,490			1,781,964			1,744,348			1,684,379			1,579,135			1,517,780			1,468,814
Less: allowance for loan and lease losses		(19,433	)		(18,910	)		(17,860	)		(16,886	)		(16,268	)		(15,673	)		(14,738	)
Net loans and leases		1,796,057			1,763,054			1,726,488			1,667,493			1,562,867			1,502,107			1,454,076
Goodwill		12,606			12,606			12,596			12,042			8,554			8,554			8,554
Other intangible assets, net		11,431			12,173			12,916			12,218			8,364			8,865			9,370
Total assets		2,598,458			2,586,353			2,499,577			2,459,616			2,383,360			2,348,305			2,284,198
Total deposits		1,947,850			1,818,347			1,839,355			1,803,210			1,804,888			1,781,622			1,745,675
Customer repurchase agreements		129,213			235,853			181,520			170,769			158,977			143,873			121,791
Total stockholders' equity		233,693			226,738			222,962			217,883			208,090			203,294			198,709
Quarterly average balance sheets:
Residential mortgage loans	$	405,430		$	449,482		$	427,609		$	423,805		$	423,420		$	401,148		$	384,504
Residential construction loans		172,873			167,632			161,649			150,099			141,197			137,720			137,897
Commercial mortgage loans		465,989			436,036			424,467			407,459			394,862			393,291			389,215
Commercial construction loans		218,798			206,419			186,606			158,076			128,010			103,584			91,733
Commercial loans and leases		199,968			196,093			188,747			161,478			154,920			151,766			149,783
Consumer loans		346,639			345,194			339,299			333,671			327,495			320,276			310,421
Total loans and leases		1,809,697			1,800,856			1,728,377			1,634,588			1,569,904			1,507,785			1,463,553
Securities		583,156			554,157			555,061			589,552			593,102			591,610			641,960
Total earning assets		2,407,185			2,367,100			2,294,665			2,239,438			2,203,251			2,130,469			2,115,369
Total assets		2,597,917			2,558,458			2,482,512			2,421,725			2,384,327			2,307,888			2,286,209
Total interest-bearing liabilities		1,950,720			1,895,652			1,821,530			1,733,626			1,696,691			1,647,365			1,660,839
Noninterest-bearing demand deposits		417,756			419,454			418,214			452,738			458,131			440,945			415,824
Total deposits		1,873,994			1,819,255			1,799,213			1,809,237			1,800,171			1,751,192			1,723,667
Customer repurchase agreements		212,123			196,359			167,620			172,826			155,417			135,009			123,663
Stockholders' equity		229,189			224,265			219,424			214,489			205,138			200,047			196,659
Capital and credit quality measures:
Average equity to average assets		8.82	%		8.77	%		8.84	%		8.86	%		8.60	%		8.67	%		8.60	%
Loan and lease loss allowance to loans and leases		1.07	%		1.06	%		1.02	%		1.00	%		1.03	%		1.03	%		1.00	%
Nonperforming assets to total assets		0.15	%		0.10	%		0.12	%		0.06	%		0.14	%		0.15	%		0.10	%
Annualized net (charge-offs) recoveries to
average loans and leases		0.00	%		0.00	%		0.01	%		(0.09	)%		0.00	%		0.01	%		0.00	%
Miscellaneous data:
Net (charge-offs) recoveries		($27)		$	5		$	24			($382)			($5)		$	35			($16)
Nonperforming assets:
Non-accrual loans and leases		1,495			1,691			585			437			1,032			661			672
Loans and leases 90 days past due		2,346			988			2,473			958			2,289			2,757			1,531
Restructured loans and leases		0			0			0			0			0			0			0
Other real estate owned, net		0			0			0			0			0			0			73
Total nonperforming assets		3,841			2,679			3,058			1,395			3,321			3,418			2,276

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
(Dollars in thousands and tax-equivalent)

		Three Months Ended September 30,
		2006							2005
		Average Balances			Interest	Annualized Average Yield/Rate			Average Balances			Interest	Annualized Average Yield/Rate
Assets
Residential mortgage loans	$	405,430		$	5,936	5.86	%	$	423,420		$	5,921	5.59	%
Residential construction loans		172,873			3,273	7.51			141,197			2,326	6.54
Commercial mortgage loans		465,989			8,495	7.26			394,862			6,726	6.76
Commercial construction loans		218,798			4,964	8.94			128,010			2,372	7.35
Commercial loans and leases		199,968			4,101	8.15			154,920			2,802	7.18
Consumer loans		346,639			6,140	7.03			327,495			4,697	5.69
Total loans and leases		1,809,697			32,909	7.23			1,569,904			24,844	6.29
Securities		583,156			8,606	5.82			593,102			8,054	5.34
Interest-bearing deposits with banks		493			4	3.45			3,953			32	3.19
Federal funds sold		13,839			176	5.07			36,292			314	3.46
TOTAL EARNING ASSETS		2,407,185			41,695	6.87	%		2,203,251			33,244	5.98	%
Less: allowance for loan and lease losses		(19,192	)						(15,775	)
Cash and due from banks		46,499							48,513
Premises and equipment, net		46,034							45,953
Other assets		117,391							102,385
Total assets	$	2,597,917						$	2,384,327
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	219,350		$	169	0.31	%	$	237,273		$	164	0.27	%
Regular savings deposits		177,759			153	0.34			216,787			212	0.39
Money market savings deposits		390,757			3,196	3.24			379,524			1,680	1.76
Time deposits		652,320			6,859	4.17			508,456			3,645	2.84
Total interest-bearing deposits		1,440,186			10,377	2.86			1,342,040			5,701	1.69
Borrowings		494,482			5,519	4.43			354,651			3,164	3.52
TOTAL INTEREST-BEARING LIABILITIES		1,934,668			15,896	3.26			1,696,691			8,865	2.07
Noninterest-bearing demand deposits		410,912							458,131
Other liabilities		23,148							24,367
Stockholder's equity		229,189							205,138
Total liabilities and stockholders' equity	$	2,597,917						$	2,384,327
Net interest income and spread					25,799	3.61	%					24,379	3.91	%
Less: tax equivalent adjustment					1,677							1,853
Net interest income					24,122							22,526
Interest income/earning assets						6.87	%						5.98	%
Interest expense/earning assets						2.62							1.59
Net interest margin						4.25	%						4.39	%

* Interest income includes the effects of annualized taxable-equivalent adjustments (reduced by the nondeductible portion of interest expense) using the appropriate marginal federal income tax rate of 35.00% and, where applicable, the marginal state income tax rate of 7.00% (or a combined marginal federal and state rate of 39.55%), to increase tax-exempt interest income to a taxable-equivalent basis. The annualized taxable-equivalent adjustment amounts utilized in the above table to compute yields aggregated to $6.7 million in 2006 and $7.4 million in 2005.

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
(Dollars in thousands and tax-equivalent)

		Nine Months Ended September 30,
		2006							2005
		Average Balances			Interest	Annualized Average Yield/Rate			Average Balances			Interest	Annualized Average Yield/Rate
Assets
Residential mortgage loans	$	427,426		$	18,527	5.78	%	$	403,167		$	16,647	5.51	%
Residential construction loans		167,426			9,153	7.31			138,950			6,466	6.22
Commercial mortgage loans		442,316			23,695	7.16			392,477			19,263	6.56
Commercial construction loans		204,059			13,239	8.67			107,909			5,599	6.94
Commercial loans and leases		194,977			11,648	7.98			152,175			7,906	6.94
Consumer loans		343,737			17,083	6.64			320,118			12,806	5.35
Total loans and leases		1,779,941			93,345	7.01			1,514,796			68,687	6.06
Securities		564,228			23,891	5.67			608,712			24,822	5.45
Interest-bearing deposits with banks		642			18	3.81			2,603			58	2.96
Federal funds sold		11,918			432	4.85			24,566			571	3.10
TOTAL EARNING ASSETS		2,356,729			117,686	6.68	%		2,150,677			94,138	5.85	%
Less: allowance for loan and lease losses		(18,325	)						(15,163	)
Cash and due from banks		46,261							46,104
Premises and equipment, net		45,788							44,688
Other assets		116,217							102,279
Total assets	$	2,546,670						$	2,328,585
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	229,629			497	0.29	%	$	238,118			471	0.26	%
Regular savings deposits		189,042			556	0.39			220,055			572	0.35
Money market savings deposits		375,259			8,102	2.89			376,951			4,195	1.49
Time deposits		613,283			17,691	3.86			485,045			9,506	2.62
Total interest-bearing deposits		1,407,213			26,846	2.55			1,320,169			14,744	1.49
Borrowings		477,152			15,071	4.22			348,261			8,813	3.36
TOTAL INTEREST-BEARING LIABILITIES		1,884,365			41,917	2.97			1,668,430			23,557	1.88
Noninterest-bearing demand deposits		416,167							438,455
Other liabilities		21,810							21,044
Stockholder's equity		224,328							200,656
Total liabilities and stockholders' equity	$	2,546,670						$	2,328,585
Net interest income and spread					75,769	3.71	%					70,581	3.97	%
Less: tax equivalent adjustment					4,618							5,328
Net interest income					71,151							65,253
Interest income/earning assets						6.68	%						5.85	%
Interest expense/earning assets						2.38							1.46
Net interest margin						4.30	%						4.39	%

 * Interest income includes the effects of annualized taxable-equivalent adjustments (reduced by the nondeductible portion of interest expense) using the appropriate marginal federal income tax rate of 35.00% and, where applicable, the marginal state income tax rate of 7.00% (or a combined marginal federal and state rate of 39.55%), to increase tax-exempt interest income to a taxable-equivalent basis. The annualized taxable-equivalent adjustment amounts utilized in the above table to compute yields aggregated to $6.2 million in 2006 and $7.1 million in 2005.