Sandy Spring Bancorp 8K Reports Third Quarter | SASR 23 Oct 07

NEWS RELEASE

FOR IMMEDIATE RELEASE

SANDY SPRING BANCORP REPORTS THIRD QUARTER

AND NINE-MONTH EARNINGS

OLNEY, MARYLAND, October 23, 2007 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the third quarter of 2007 of $8.2 million ($.50 per diluted share) compared to $8.1 million ($.55 per diluted share) for the third quarter of 2006 and $8.2 million ($.51 per diluted share) for the linked quarter of 2007. Net income for the quarter includes after-tax merger costs of $0.2 million ($.01 per diluted share) for the acquisitions of Potomac Bank of Virginia (“Potomac”) and CN Bancorp, Inc. (“County”), which were completed in the first and second quarters of 2007, respectively.

Net income for the nine-month period ending September 30, 2007 totaled $23.9 million ($1.50 per diluted share) compared to $24.6 million ($1.65 per diluted share) for the prior year period. Net income for the year-to-date includes after-tax merger costs of $0.9 million ($.05 per diluted share) for the acquisitions mentioned above.

Third Quarter Highlights:

·	Net interest income increased 13% for the quarter and 9% for the year to date over the prior year periods.

·	Noninterest income increased 16% for the quarter and 14% for the year to date over the prior year periods.

·	Loans and deposits increased 21% and 17% respectively, compared to September 30, 2006.

·	Net interest margin improved to 4.16% on a linked quarter basis.

·	Net income essentially equal to second quarter 2007 and third quarter 2006.

·	Integration of Potomac and County acquisitions completed.

·	Repurchased approximately 55,000 shares of company stock at average cost of $27.46 per share.

“Despite the upheaval in the mortgage market during the third quarter and the related uncertainty regarding the economic environment, Sandy Spring Bancorp had a solid quarter,” said Hunter R. Hollar, President and Chief Executive Officer of Sandy Spring Bancorp. “Both net interest income and non-interest income showed meaningful improvement over the prior year. Our net interest margin improved to 4.16% for the third quarter (4.23% for the month of September), compared to 4.08% for the linked second quarter of 2007.”

“Although non-performing assets ticked up slightly from the second quarter, we believe that credit quality continues to be a strength of Sandy Spring Bank.”

“During the third quarter we completed the integration and systems conversions associated with our two recent bank acquisitions. With these efforts successfully behind us, our focus through yearend and into 2008 will now intensify on improving operating efficiencies and generating organic growth within our core bank divisions. In this regard, we began the initial stage of our strategic business improvement. Internal communications for this effort, named L.I.F.T. (Looking Inward for Tomorrow), are currently underway and we anticipate including more details and progress updates in future releases”, said Hollar.

“We were able to take advantage of market conditions to repurchase approximately 55,000 shares of our common stock. We hope to continue our repurchase program as market conditions permit.”

Sandy Spring Bancorp’s return on average stockholders’ equity was 10.55% for the third quarter of 2007, compared to 14.06% for the same period in the prior year. Return on average assets for the third quarter of 2007 was 1.08%, compared to 1.24% for the third quarter of 2006.

For the first nine months of 2007, return on average stockholders’ equity was 11.28%, compared to 14.64% for the first nine months of 2006. Return on average assets for the first nine months of 2007 was 1.10%, compared to 1.29% for the first nine months of 2006.

Review of Balance Sheet and Credit Quality

Comparing September 30, 2007 balances to September 30, 2006, total assets increased 14% to $3.0 billion due mainly to the County and Potomac acquisitions together with steady growth in the commercial loan portfolio. Total loans and leases increased 21% to $2.2 billion compared to the prior year. The two acquisitions accounted for approximately 74% of the year-over-year loan growth. Excluding these acquisitions, the loan portfolio increased 6% over the third quarter of the prior year. This increase was comprised mainly of a 13% increase in commercial loans. Customer funding sources, which include deposits plus other short-term borrowings from core customers, increased 16% to $2.4 billion at September 30, 2007 compared to the prior year. Again, most of the growth in such funding sources was due to the two acquisitions. On a linked quarter basis, such customer funding sources decreased 8% compared to the second quarter of 2007. This decline was due primarily to intense market competition for deposits coupled with the Company’s plan to use conservative deposit pricing to manage its liquidity position and net interest margin together with some expected deposit runoff from the acquisitions.

Stockholders’ equity totaled $310.6 million at quarter-end, and represented 10.5% of total assets, compared to 9.0% at September 30, 2006. During the quarter, the Company repurchased 54,838 shares at an average cost of $27.46 per share. At September 30, 2007, 731,407 shares remained available for repurchase under the current authorization.

The provision for loan and lease losses totaled $0.8 million for the third quarter of 2007 compared to $0.6 million for the third quarter of 2006 and $0.8 million for the linked quarter of 2007. The provision for loan and lease losses totaled $2.4 million for the first nine months of 2007 compared to $2.5 million for the same period in 2006. The allowance for loan and lease losses represented 1.07% of outstanding loans at September 30, 2007.

Non-performing assets totaled $25.8 million at September 30, 2007 compared to $22.2 million at June 30, 2007 and $3.8 million at September 30, 2006. The increase over the linked prior quarter of 2007 was due mainly to one commercial loan totaling $2 million on which no loss is expected. The increase over the prior year also reflects one loan totaling $13.6 million that was put on non-accrual status in the second quarter of 2007. Management does not expect a loss on this loan, which is well secured.

Income Statement Review

Comparing the third quarter of 2007 and 2006, net interest income increased by $3.1 million, or 13%, due primarily to continued growth in the loan portfolio and higher loan yields, which were largely offset by increased rates on interest-bearing deposits and an increased use of time deposits to fund loan growth. These factors produced a net interest margin decrease to 4.16% in 2007 from 4.25% in 2006.

Noninterest income increased to $11.1 million in the third quarter of 2007 as compared to $9.6 million in 2006, an increase of 16%. Service charges on deposit accounts increased 58% due primarily to higher overdraft fees while Visa® check fees increased 21% reflecting continued growth in electronic transactions. Trust and investment management fees increased 9% due primarily to higher assets under management.

Noninterest expenses were $25.9 million in the third quarter of 2007 compared to $21.7 million in 2006, an increase of $4.2 million or 19%. This increase was driven mainly by operating expenses of Potomac and County together with an additional 28% increase in occupancy costs and a 34% increase in other expenses due to higher professional and consulting fees. Intangibles amortization increased $0.4 million or 51% as a result of the two acquisitions.

Comparing the first nine months of 2007 and 2006, net interest income increased by $6.3 million, or 9%, due primarily to continued growth in the loan portfolio and increased loan yields, which was offset in part by increased rates on interest bearing deposits and increased use of time deposits to fund loans. The net interest margin decreased to 4.10% in 2007 from 4.30% in 2006.

Noninterest income increased 14% for the first nine months of 2007 compared to 2006. Service charges on deposit accounts increased 39% due mainly to higher overdraft fees mentioned above while income from bank owned life insurance grew by 23% due to higher rates and insurance policies added from the two acquisitions. Visa® check fees increased 16% due to an increased volume of electronic transactions while fees on sales of investment products increased 9% over the prior year due to higher sales of mutual funds and growth in assets under management. Insurance agency commissions also increased 6% for the year-to-date over 2006 due to higher contingency fees and increased premium volume in the area of physicians’ liability insurance.

Noninterest expenses were $74.5 million in 2007 compared to $62.9 million in 2006, an increase of $11.6 million or 18%. This increase was primarily the result of operating expenses of Potomac and County. Excluding the acquisitions, occupancy costs increased 19% and other expenses increased 29% due primarily to higher professional and consulting fees as mentioned above. Intangibles amortization increased $0.7 million or 33% as a result of the two acquisitions.

Conference Call

The Company’s management will host a conference call to discuss its third quarter and year-to-date 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. Participants may call 877-407-8031; a password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 11:59 p.m. October 24, 2007. A telephone voice replay will also be available during that same time period at 877-660-6853. Please use pass code #286 and conference ID #246998 to access.

About Sandy Spring Bancorp/Sandy Spring Bank

With $3.0 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 second 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 42 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George’s counties in Maryland, and Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring 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 and in the conference call regarding this news release. These forward-looking statements may include: statements of goals, intentions, earnings expectations, and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals.

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Sandy Spring Bancorp does not assume any duty and does not undertake to update its forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that Sandy Spring Bancorp anticipated in its forward-looking statements, and future results could differ materially from historical performance.

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; 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, 2006, 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

(Dollars in thousands, except per share data)

		Three Months Ended								Nine Months Ended
		September 30,					%			September 30,					%
		2007			2006		Change			2007			2006		Change
Profitability for the period:
Net interest income	$	27,212		$	24,122		13		$	77,426		$	71,151		9
Provision for loan and lease losses		750			550		36			2,369			2,545		(7	)
Noninterest income		11,130			9,590		16			32,909			28,831		14
Noninterest expenses		25,899			21,694		19			74,472			62,878		18
Income before income taxes		11,693			11,468		2			33,494			34,559		(3	)
Net income		8,181			8,122		1			23,895			24,557		(3	)

Return on average assets		1.08	%		1.24	%				1.10	%		1.29	%
Return on average equity		10.55	%		14.06	%				11.28	%		14.64	%
Net interest margin		4.16	%		4.25	%				4.10	%		4.30	%
Efficiency ratio - GAAP based *		67.55	%		64.35	%				67.50	%		62.89	%
Efficiency ratio - traditional *		62.30	%		59.20	%				62.51	%		57.98	%

Per share data:
Basic net income	$	0.50		$	0.55		(9	)	$	1.50		$	1.66		(10	)
Diluted net income		0.50			0.55		(9	)		1.50			1.65		(9	)
Dividends declared		0.23			0.22		5			0.69			0.66		5
Book value		18.92			15.78		20			18.92			15.78		20
Tangible book value		13.17			14.15		(7	)		13.17			14.15		(7	)
Average fully diluted shares		16,508,922			14,915,454					15,980,035			14,920,255

At period-end:
Assets	$	2,965,492		$	2,598,458		14		$	2,965,492		$	2,598,458		14
Deposits		2,280,102			1,947,850		17			2,280,102			1,947,850		17
Loans and leases		2,201,599			1,815,490		21			2,201,599			1,815,490		21
Securities		452,195			551,138		(18	)		452,195			551,138		(18	)
Stockholders' equity		310,624			233,693		33			310,624			233,693		33

Capital and credit quality ratios:
Average equity to average assets		10.19	%		8.90	%				9.72	%		8.89	%
Allowance for loan and lease losses to loans
and leases		1.07	%		1.07	%				1.07	%		1.07	%
Nonperforming assets to total assets		0.87	%		0.15	%				0.87	%		0.15	%
Annualized net charge-offs to average
loans and leases		0.16	%		0.00	%				0.07	%		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						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Noninterest expenses-GAAP based	$	25,899		$	21,694		$	74,472		$	62,878
Net interest income plus noninterest income-
GAAP based		38,342			33,712			110,335			99,982

Efficiency ratio-GAAP based		67.55	%		64.35	%		67.50	%		62.89	%

Noninterest expenses-GAAP based	$	25,899		$	21,694		$	74,472		$	62,878
Less non-GAAP adjustment:
Amortization of intangible assets		1,123			743			2,956			2,227
Noninterest expenses-traditional ratio		24,776			20,951			71,516			60,651

Net interest income plus noninterest income-
GAAP based		38,342			33,712			110,335			99,982
Plus non-GAAP adjustment:
Tax-equivalency		1,447			1,677			4,096			4,618
Less non-GAAP adjustments:
Securities gains		22			0			28			1
Net interest income plus noninterest
income - traditional ratio	$	39,767		$	35,389		$	114,403		$	104,599

Efficiency ratio - traditional		62.30	%		59.20	%		62.51	%		57.98	%

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
	September 30						December 31
	2007			2006			2006
Assets
Cash and due from banks	$	58,698		$	42,558		$	54,945
Federal funds sold		13,375			25,129			48,978
Cash and cash equivalents		72,073			67,687			103,923

Interest-bearing deposits with banks		483			317			2,974
Residential mortgage loans held for sale (at fair value)		6,099			21,111			10,595
Investments available-for-sale (at fair value)		196,138			261,645			256,845
Investments held-to-maturity - fair value of $241,984
$278,415 and $273,206, respectively		237,231			272,143			267,344
Other equity securities		18,826			17,350			16,719

Total loans and leases		2,201,599			1,815,490			1,805,579
Less: allowance for loan and lease losses		(23,567	)		(19,433	)		(19,492	)
Net loans and leases		2,178,032			1,796,057			1,786,087

Premises and equipment, net		55,016			45,831			47,756
Accrued interest receivable		16,008			15,399			15,200
Goodwill		76,625			12,606			12,494
Other intangible assets, net		17,754			11,431			10,653
Other assets		91,207			76,881			79,867
Total assets	$	2,965,492		$	2,598,458		$	2,610,457

Liabilities
Noninterest-bearing deposits	$	453,536		$	416,712		$	394,662
Interest-bearing deposits		1,826,566			1,531,138			1,599,561
Total deposits		2,280,102			1,947,850			1,994,223

Short-term borrowings		298,083			356,563			314,732
Other long-term borrowings		7,793			1,896			1,808
Subordinated debentures		35,000			35,000			35,000
Accrued interest payable and other liabilities		33,890			23,456			26,917
Total liabilities		2,654,868			2,364,765			2,372,680

Stockholders' Equity
Common stock -- par value $1.00; shares authorized
50,000,000; shares issued and outstanding 16,420,911
14,811,974 and 14,826,805, respectively		16,421			14,812			14,827
Additional paid in capital		85,982			27,349			27,869
Retained earnings		211,787			191,884			199,102
Accumulated other comprehensive income(loss)		(3,566	)		(352	)		(4,021	)
Total stockholders' equity		310,624			233,693			237,777
Total liabilities and stockholders' equity	$	2,965,492		$	2,598,458		$	2,610,457

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				Nine Months Ended
	September 30,				September 30,
	2007		2006		2007		2006
Interest income:
Interest and fees on loans and leases	$	39,789	$	32,686	$	112,756	$	92,831
Interest on loans held for sale		234		222		701		514
Interest on deposits with banks		590		4		1,081		18
Interest and dividends on securities:
Taxable		3,211		4,090		10,832		10,490
Exempt from federal income taxes		2,468		2,839		7,776		8,783
Interest on federal funds sold		666		177		1,720		432
Total interest income		46,958		40,018		134,866		113,068
Interest expense:
Interest on deposits		15,898		10,378		45,263		26,846
Interest on short-term borrowings		3,198		4,943		10,265		13,342
Interest on long-term borrowings		650		575		1,912		1,729
Total interest expense		19,746		15,896		57,440		41,917
Net interest income		27,212		24,122		77,426		71,151
Provision for loan and lease losses		750		550		2,369		2,545
Net interest income after provision for loan and lease losses		26,462		23,572		75,057		68,606
Noninterest income:
Securities gains		22		0		28		1
Service charges on deposit accounts		2,999		1,904		7,937		5,702
Gains on sales of mortgage loans		738		718		2,149		2,049
Fees on sales of investment products		765		783		2,471		2,264
Trust and investment management fees		2,365		2,164		7,007		6,476
Insurance agency commissions		1,294		1,406		5,422		5,132
Income from bank owned life insurance		720		591		2,097		1,711
Visa check fees		730		603		2,037		1,750
Other income		1,497		1,421		3,761		3,746
Total noninterest income		11,130		9,590		32,909		28,831
Noninterest expenses:
Salaries and employee benefits		14,654		12,622		41,864		37,823
Occupancy expense of premises		2,946		2,175		8,072		6,340
Equipment expenses		1,631		1,384		4,734		4,112
Marketing		359		1,160		1,563		1,973
Outside data services		870		872		2,873		2,486
Amortization of intangible assets		1,123		743		2,956		2,227
Other expenses		4,316		2,738		12,410		7,917
Total noninterest expenses		25,899		21,694		74,472		62,878
Income before income taxes		11,693		11,468		33,494		34,559
Income tax expense		3,512		3,346		9,599		10,002
Net income	$	8,181	$	8,122	$	23,895	$	24,557
Basic net income per share	$	0.50	$	0.55	$	1.50	$	1.66
Diluted net income per share		0.50		0.55		1.50		1.65
Dividends declared per share		0.23		0.22		0.69		0.66

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

2007

2006

(Dollars in thousands, except per share data)

Profitability for the quarter:

Tax-equivalent interest income

48,405

47,378

43,179

42,000

41,695

39,372

36,619

Interest expense

19,746

19,815

17,879

16,770

15,896

14,021

12,000

Tax-equivalent net interest income

28,659

27,563

25,300

25,230

25,799

25,351

24,619

Tax-equivalent adjustment

1,447

1,364

1,285

1,625

1,677

1,499

1,442

Provision for loan and lease losses

750

780

839

250

550

1,045

950

Noninterest income

11,130

10,873

10,906

10,064

9,590

9,395

9,846

Noninterest expenses

25,899

24,959

23,614

22,218

21,694

20,828

20,356

Income before income taxes

11,693

11,333

10,468

11,201

11,468

11,374

11,717

Income tax expense

3,512

3,164

2,923

2,887

3,346

3,279

3,377

Net Income

8,181

8,169

7,545

8,314

8,122

8,095

8,340

Financial ratios:

Return on average assets

1.08

1.10

1.12

1.26

1.24

1.27

1.36

Return on average equity

10.55

11.45

11.96

13.75

13.93

14.34

15.26

Net interest margin

4.16

4.08

4.07

4.14

4.25

4.30

4.35

Efficiency ratio - GAAP based *

67.55

67.33

67.62

65.99

64.35

62.65

61.64

Efficiency ratio - traditional *

62.30

62.26

63.01

60.85

59.20

57.81

56.91

Per share data:

Basic net income

0.50

0.51

0.49

0.56

0.55

0.56

Diluted net income

0.50

0.51

0.49

0.55

0.54

0.56

Dividends declared

0.23

0.22

Book value

18.92

18.62

17.51

16.04

15.92

15.48

15.21

Tangible book value

13.17

12.76

13.11

14.48

14.30

13.81

13.61

Average fully diluted shares

16,508,922

16,069,771

15,400,865

14,940,873

14,915,454

14,884,677

14,924,571

Noninterest income breakdown:

Securities gains

Service charges on deposit accounts

2,999

2,630

2,308

2,201

1,904

1,950

1,848

Gains on sales of mortgage loans

738

773

638

929

718

549

782

Fees on sales of investment products

765

906

800

696

783

763

718

Trust and investment management fees

2,365

2,361

2,281

2,286

2,164

2,196

2,116

Insurance agency commissions

1,294

1,438

2,690

1,345

1,406

1,618

2,108

Income from bank owned life insurance

720

693

684

639

591

567

553

Visa check fees

730

717

590

631

603

612

535

Other income

1,497

1,351

913

1,337

1,421

1,139

1,186

Total

11,130

10,873

10,906

10,064

9,590

9,395

9,846

Noninterest expense breakdown:

Salaries and employee benefits

14,654

13,776

13,434

12,695

12,622

12,730

12,471

Occupancy expense of premises

2,946

2,709

2,417

2,153

2,175

2,039

2,126

Equipment expenses

1,631

1,501

1,602

1,364

1,384

1,412

1,316

Marketing

359

675

529

610

1,160

472

341

Outside data services

870

1,077

926

717

872

833

781

Amortization of intangible assets

1,123

1,031

802

740

743

742

Other expenses

4,316

4,190

3,904

3,939

2,738

2,600

2,579

Total

25,899

24,959

23,614

22,218

21,694

20,828

20,356

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

2007

2006

(Dollars in thousands, except per share data)

Balance sheets at quarter end:

Residential mortgage loans

439,091

427,252

404,177

390,852

396,811

386,805

428,698

Residential construction loans

154,908

154,444

144,744

151,399

175,067

169,564

166,767

Commercial mortgage loans

645,790

660,004

621,692

509,726

505,181

461,708

425,392

Commercial construction loans

246,569

236,278

225,108

192,547

185,615

214,628

188,477

Commercial loans and leases

343,653

316,409

282,854

216,238

204,023

200,712

193,524

Consumer loans

371,588

370,621

357,607

344,817

348,793

348,547

341,490

Total loans and leases

2,201,599

2,165,008

2,036,182

1,805,579

1,815,490

1,781,964

1,744,348

Less: allowance for loan and lease losses

(23,567

)

(23,661

)

(22,186

)

(19,492

)

(19,433

)

(18,910

)

(17,860

)

Net loans and leases

2,178,032

2,141,347

2,013,996

1,786,087

1,796,057

1,763,054

1,726,488

Goodwill

76,625

77,457

53,913

12,494

12,606

12,596

Other intangible assets, net

17,754

18,878

15,244

10,653

11,431

12,173

12,916

Total assets

2,965,492

3,101,409

2,945,477

2,610,457

2,600,633

2,588,528

2,501,752

Total deposits

2,280,102

2,386,226

2,274,322

1,994,223

1,947,850

1,818,347

1,839,355

Customer repurchase agreements

122,130

113,622

114,712

99,382

129,213

235,853

181,520

Total stockholders' equity

310,624

306,255

275,319

237,777

235,868

228,913

225,137

Quarterly average balance sheets:

Residential mortgage loans

441,190

426,496

406,886

407,277

405,430

449,482

427,609

Residential construction loans

151,306

151,785

151,194

162,084

172,873

167,632

161,649

Commercial mortgage loans

647,659

630,335

565,277

504,698

465,989

436,036

424,467

Commercial construction loans

244,975

239,299

203,371

189,027

218,798

206,419

186,606

Commercial loans and leases

323,439

300,325

246,218

205,582

199,968

196,093

188,747

Consumer loans

370,585

362,221

353,668

346,030

346,639

345,194

339,299

Total loans and leases

2,179,154

2,110,461

1,926,614

1,814,698

1,809,697

1,800,856

1,728,377

Securities

458,984

523,507

551,566

544,877

583,156

554,157

555,061

Total earning assets

2,733,572

2,711,225

2,518,797

2,416,120

2,407,185

2,367,100

2,294,665

Total assets

3,019,065

2,979,820

2,743,890

2,610,023

2,600,092

2,560,633

2,484,687

Total interest-bearing liabilities

2,214,606

2,212,376

2,048,323

1,937,685

1,934,668

1,895,652

1,821,530

Noninterest-bearing demand deposits

463,018

450,887

408,954

407,659

410,912

419,454

418,214

Total deposits

2,340,004

2,290,413

2,099,409

1,970,953

1,851,098

1,819,255

1,799,213

Customer repurchase agreements

113,425

109,187

101,805

120,597

212,123

196,359

167,620

Stockholders' equity

307,564

286,040

255,781

239,921

231,364

226,440

221,599

Capital and credit quality measures:

Average equity to average assets

10.19

9.60

9.32

9.19

8.90

8.84

8.92

Loan and lease loss allowance to loans and leases

1.07

1.09

1.08

1.07

1.06

1.02

Nonperforming assets to total assets

0.87

0.71

0.24

0.15

0.10

0.12

Annualized net (charge-offs) recoveries to

average loans and leases

0.16

0.05

0.00

(0.01

0.00

0.01

Miscellaneous data:

Net (charge-offs) recoveries

($844

)

($265

)

($191

)

($27

)

Nonperforming assets:

Non-accrual loans and leases

17,362

18,818

1,982

1,910

1,495

1,691

585

Loans and leases 90 days past due

8,009

3,347

5,084

1,823

2,346

988

2,473

Restructured loans and leases

Other real estate owned, net

431

182

Total nonperforming assets

25,802

22,165

7,066

3,915

3,841

2,679

3,058

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

	Three Months Ended September 30,
	2007								2006
						Annualized								Annualized
	Average					Average			Average					Average
	Balances			Interest		Yield/Rate			Balances			Interest		Yield/Rate
Assets
Residential mortgage loans	$	441,190		$	6,773		6.14	%	$	405,430		$	5,936		5.86	%
Residential construction loans		151,306			2,754		7.22			172,873			3,273		7.51
Commercial mortgage loans		647,659			11,499		7.04			465,989			8,495		7.26
Commercial construction loans		244,975			5,593		9.06			218,798			4,964		8.94
Commercial loans and leases		323,439			6,828		8.38			199,968			4,101		8.15
Consumer loans		370,585			6,576		7.07			346,639			6,140		7.03
Total loans and leases		2,179,154			40,023		7.30			1,809,697			32,909		7.23
Securities		458,984			7,126		6.11			583,156			8,606		5.82
Interest-bearing deposits with banks		44,986			590		5.20			493			4		3.45
Federal funds sold		50,448			666		5.24			13,839			176		5.07
TOTAL EARNING ASSETS		2,733,572			48,405		7.03	%		2,407,185			41,695		6.87	%

Less: allowance for loan and lease losses		(23,964	)							(19,192	)
Cash and due from banks		53,935								46,499
Premises and equipment, net		54,546								46,034
Other assets		200,976								119,566
Total assets	$	3,019,065							$	2,600,092

Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	239,683		$	223		0.37	%	$	218,350		$	169		0.31	%
Regular savings deposits		170,548			128		0.30			177,759			153		0.34
Money market savings deposits		683,909			6,614		3.84			390,757			3,196		3.24
Time deposits		782,846			8,933		4.53			652,320			6,859		4.17
Total interest-bearing deposits		1,876,986			15,898		3.36			1,440,186			10,377		2.86
Borrowings		337,620			3,848		4.53			494,482			5,519		4.43
TOTAL INTEREST-BEARING LIABILITIES		2,214,606			19,746		3.54			1,934,668			15,896		3.26

Noninterest-bearing demand deposits		463,018								410,912
Other liabilities		33,877								23,148
Stockholder's equity		307,564								231,364
Total liabilities and stockholders' equity	$	3,019,065							$	2,600,092

Net interest income and spread				$	28,659		3.49	%				$	25,799		3.61	%
Less: tax equivalent adjustment					1,447								1,677
Net interest income					27,212								24,122

Interest income/earning assets							7.03	%							6.87	%
Interest expense/earning assets							2.87								2.62
Net interest margin							4.16	%							4.25	%

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 a marginal state income tax rate of 6.55% (or a combined marginal federal and state rate of 39.26%) for 2007 and a marginal state income tax rate of 7.00% (or a combined marginal federal and state rate of 39.55%) for 2006, 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 $5.7 million in 2007 and $6.7 million in 2006.

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

	Nine Months Ended September 30,
	2007								2006
						Annualized								Annualized
	Average					Average			Average					Average
	Balances			Interest		Yield/Rate			Balances			Interest		Yield/Rate
Assets
Residential mortgage loans	$	424,147		$	19,264		6.06	%	$	427,426		$	18,527		5.78	%
Residential construction loans		151,429			8,230		7.27			167,426			9,153		7.31
Commercial mortgage loans		615,648			33,350		7.24			442,316			23,695		7.16
Commercial construction loans		229,368			15,602		9.09			204,059			13,239		8.67
Commercial loans and leases		290,190			18,018		8.30			194,977			11,648		7.98
Consumer loans		362,220			18,993		7.04			343,737			17,083		6.64
Total loans and leases		2,073,002			113,457		7.31			1,779,941			93,345		7.01
Securities		511,013			22,704		5.95			564,228			23,891		5.67
Interest-bearing deposits with banks		27,681			1,081		5.22			642			18		3.81
Federal funds sold		43,936			1,720		5.24			11,918			432		4.85
TOTAL EARNING ASSETS		2,655,632			138,962		7.00	%		2,356,729			117,686		6.68	%

Less: allowance for loan and lease losses		(22,439	)							(18,325	)
Cash and due from banks		54,448								46,261
Premises and equipment, net		51,786								45,788
Other assets		175,021								118,392
Total assets	$	2,914,448							$	2,548,845

Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	237,173			626		0.35	%	$	229,629			497		0.29	%
Regular savings deposits		168,957			421		0.33			189,042			556		0.39
Money market savings deposits		611,881			17,349		3.79			375,259			8,102		2.89
Time deposits		784,995			26,867		4.58			613,283			17,691		3.86
Total interest-bearing deposits		1,803,006			45,263		3.36			1,407,213			26,846		2.55
Borrowings		356,039			12,177		4.57			477,152			15,071		4.22
TOTAL INTEREST-BEARING LIABILITIES		2,159,045			57,440		3.56			1,884,365			41,917		2.97


Noninterest-bearing demand deposits		441,151								416,167
Other liabilities		30,916								21,810
Stockholder's equity		283,336								226,503
Total liabilities and stockholders' equity	$	2,914,448							$	2,548,845

Net interest income and spread				$	81,522		3.44	%				$	75,769		3.71	%
Less: tax equivalent adjustment					4,096								4,618
Net interest income					77,426								71,151

Interest income/earning assets							7.00	%							6.68	%
Interest expense/earning assets							2.90								2.38
Net interest margin							4.10	%							4.30	%

Sandy Spring Bancorp (SASR) 8-KSandy Spring Bancorp Reports Third Quarter