Sandy Spring Bancorp 8K Reports Second Quarter Results | SASR 24 Jul 08

NEWS RELEASE

FOR IMMEDIATE RELEASE

SANDY SPRING BANCORP REPORTS SECOND QUARTER RESULTS

OLNEY, MARYLAND, July 24, 2008 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the second quarter of 2008 of $5.7 million ($.34 per diluted share) compared to $8.2 million ($.51 per diluted share) for the second quarter of 2007 and $8.2 million ($.50 per diluted share) for the linked first quarter of 2008.

Net income for the six-month period ending June 30, 2008 totaled $13.9 million ($.84 per diluted share) compared to $15.7 million ($1.00 per diluted share) for the prior year period.

Sandy Spring Bancorp’s return on average stockholders’ equity was 7.09% for the second quarter of 2008, compared to 11.45% for the same period in the prior year. Return on average assets for the second quarter of 2008 was 0.73%, compared to 1.10% for the second quarter of 2007.

For the first six months of 2008, return on average stockholders’ equity was 8.76%, compared to 11.69% for the first six months of 2007. Return on average assets for the first six months of 2008 was .90%, compared to 1.11% for the first six months of 2007.

Second Quarter and Year-to-Date Highlights:

·	Net interest income increased 4% for the quarter over the prior year period and increased 2% versus the linked first quarter of 2008. For the year-to-date, net interest income increased 7% in 2008 compared to 2007.

·	Noninterest income increased 8% for the quarter over the prior year period and decreased 8% compared to the linked first quarter of 2008, while noninterest income for the first six months of 2008 increased 12% compared to the first six months of 2007.

·	Loans and deposits increased 7% and 1% respectively for the year-to-date, compared to December 31, 2007.

The provision for loan and lease losses totaled $6.2 million for the quarter compared to $0.8 million for the second quarter of 2007 and $2.7 million for the linked first quarter of 2008. For the year-to-date, the provision for loan and lease losses totaled $8.9 million compared to $1.6 million in 2007. These increases were in response to internal risk rating downgrades primarily in the residential real estate development portfolio.

·	The net interest margin declined to 3.96% for the second quarter compared to 4.08% for the prior year quarter and 3.99% for the linked first quarter of 2008. For the year-to-date, the net interest margin declined to 3.97% compared to 4.08% for 2007.

·	Noninterest expenses remained virtually unchanged for the quarter compared to the prior year period and increased 1% versus the linked first quarter of 2008. For the first six months of 2008, noninterest expenses increased 2% compared to the first six months of 2007.

“Non-performing assets increased from the first quarter as a result of the condition of the real estate market, especially its effect on local residential real estate developers with whom we have relationships. We are aggressively monitoring credit quality and have been proactive in identifying and dealing with the problem credits which gave rise to the higher provision for loan and lease losses discussed above,” said Hunter R. Hollar, Chief Executive Officer of Sandy Spring Bancorp. "We continue to believe that our conservative loan underwriting standards and our comprehensive methodology for risk-rating our loans will serve us well as we manage through the challenges presented by the current economic environment."

LIFT Progress

“Our strategic business improvement program, titled LIFT (Looking Inward for Tomorrow) continues to show positive results,” said Daniel J. Schrider, President of Sandy Spring Bancorp. “Noninterest expenses increased only 1% compared to the linked first quarter as we continued to emphasize control over salary and benefits and other discretionary expenses. This minimal increase in noninterest expenses together with an 8% increase in noninterest income for the quarter produced an efficiency ratio of 59.7% compared to 62.3% for the prior year quarter and 59.2% for the linked first quarter of 2008.”

Noninterest expenses for the quarter remained unchanged compared to the second quarter of 2007 and increased 2% for the first six months of 2008 compared to the prior year period. Salary and benefits expenses increased 1% for the quarter and 2% for the year to date compared to the same periods in 2007. These increases reflected cost savings from corporate benefit plans, particularly pension expense, which were offset by annual merit increases that occurred at the end of the first quarter. Discretionary spending decreased 6% for the second quarter of 2008 compared to 2007 and also decreased 7% compared to the first six months of 2007.

Review of Balance Sheet and Credit Quality

Comparing June 30, 2008 balances to June 30, 2007, total assets increased 2% to $3.2 billion due mainly to continued growth in the commercial loan portfolio. Total loans and leases increased 12% to $2.4 billion compared to the prior year. This increase in loans was comprised mainly of a 14% increase in commercial loans. Compared to the linked first quarter of 2008, total loans increased 3%.

Customer funding sources, which include deposits plus other short-term borrowings from core customers, decreased 4% to $2.4 billion at June 30, 2008 compared to the prior year. On a linked quarter basis, such customer funding sources decreased 2% compared to the first quarter of 2008. This decrease was due primarily to intense competition for deposits in the Company’s market area. Borrowings from the Federal Home Loan Bank of Atlanta increased 73% to $395 million compared to the prior year. Compared to the linked first quarter of 2008, such borrowings increased 17%. These increases were necessary to fund loan growth due to the lack of growth in customer funding sources mentioned above and to take advantage of opportunities to borrow at rates lower than those typically offered on deposits.

Stockholders’ equity totaled $320.2 million at quarter-end, and represented 10.1% of total assets, compared to 9.9% at June 30, 2007.

The provision for loan and lease losses totaled $6.2 million for the second quarter of 2008 compared to $0.8 million for the second quarter of 2007 and $2.7 million for the linked first quarter of 2008. As discussed above, these increases were primarily due to a higher level of nonperforming loans, specifically in the residential real estate development portfolio. The allowance for loan and lease losses represented 1.38% of outstanding loans and leases at June 30, 2008.

Non-performing assets totaled $64.9 million at June 30, 2008 compared to $46.9 million at March 31, 2008 and $22.2 million at June 30, 2007. The increase over the linked first quarter of 2008 was due primarily to two residential real estate development loans totaling $10.6 million which management believes are adequately reserved or well secured. The increase over the prior year also reflects three residential real estate development loans, in addition to the two mentioned above, totaling $15.7 million which management believes are also adequately reserved or well secured.

Income Statement Review

Comparing the second quarter of 2008 and 2007, net interest income increased by $0.9 million, or 4%, due primarily to continued growth in the loan portfolio which was largely offset by the decline in market interest rates due to a full quarter effect of the interest rate cuts by the Federal Reserve during the first quarter of 2008. Such activity caused loan yields to decline faster than yields on deposits due to the Company’s asset sensitive position and produced a net interest margin decrease to 3.96% in 2008 from 4.08% in 2007.

Noninterest income increased to $11.7 million in the second quarter of 2008 as compared to $10.9 million in 2007, an increase of 8%. Service charges on deposit accounts increased 22% due primarily to higher overdraft fees while Visa® check fees increased 6% reflecting continued growth in electronic transactions. Trust and investment management fees increased 6%. These increases were somewhat offset by a decrease in gains on sales of mortgage loans of 16% due to lower mortgage volumes reflecting market conditions.

Noninterest expenses were $24.9 million in the second quarter of 2008 compared to $25.0 million in 2007, a decrease of $.1 million. Salaries and benefits expenses increased 1% which was offset by a 28% decrease in marketing expenses. Other expenses decreased slightly due largely to the effect of project LIFT. Intangibles amortization increased 8% as a result of the acquisition of CN Bancorp, Inc. in the second quarter of 2007.

Comparing the first six months of 2008 and 2007, net interest income increased by $3.5 million, or 7%, due primarily to continued growth in the loan portfolio which was offset to some extent by the decline in market interest rates due to Federal Reserve actions mentioned above. These factors produced a net interest margin decrease to 3.97% in 2008 from 4.08% in 2007.

Noninterest income increased to $24.4 million for the first six months of 2008 as compared to $21.8 million in 2007, an increase of 12%. Service charges on deposit accounts increased 26% due primarily to higher overdraft fees while Visa® check fees increased 11% reflecting continued growth in electronic transactions. Trust and investment management fees increased 6%. Other noninterest income increased 40% due primarily to higher accrued gains on mortgage commitments resulting from adoption of a new accounting principle in the first quarter and due to valuation adjustments on matched commercial loan swaps. These increases were somewhat offset by a decrease of 17% in insurance agency commissions due to lower fees on commercial lines and reduced contingency fees.

Noninterest expenses were $49.6 million for the first six months of 2008 compared to $48.6 million in 2007, an increase of $1.0 million or 2%. Occupancy expenses increased 6% due to higher rent and utility expenses from an expanded branch network. Outside data services increased 10% due mainly to the overall growth in the loan and deposit portfolios and the branches added from the acquisition of CN Bancorp, Inc. and Potomac Bank in 2007. These increases were largely offset by an 18% decrease in marketing expenses while other expenses remained virtually unchanged due to valuation adjustments on the matched commercial loan swaps mentioned above which were offset by expense reductions from project LIFT. Intangibles amortization increased 22% as a result of the two acquisitions.

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 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 800-860-2442; 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 9:00 a.m. (ET) August 22, 2008. A telephone voice replay will also be available during that same time period at 877-344-7529. Please use pass code #421245 to access.

About Sandy Spring Bancorp/Sandy Spring Bank

With $3.2 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, Chief Executive Officer, or

Daniel J. Schrider, President, 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

DSchrider@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, 2007, 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)
(Dollars in thousands, except per share data)

	Three Months Ended									Six Months Ended
	June 30,						%			June 30,						%
	2008			2007			Change			2008			2007			Change
Profitability for the period:
Net interest income	$	27,119		$	26,199			4	%	$	53,698		$	50,214			7	%
Provision for loan and lease losses		6,189			780			693			8,856			1,619			447
Noninterest income		11,695			10,873			8			24,391			21,779			12
Noninterest expenses		24,886			24,959			(0	)		49,589			48,573			2
Income before income taxes		7,739			11,333			(32	)		19,644			21,801			(10	)
Net income	$	5,651		$	8,169			(31	)	$	13,856		$	15,714			(12	)

Return on average assets		0.73	%		1.10	%					0.90	%		1.11	%
Return on average equity		7.09	%		11.45	%					8.76	%		11.69	%
Net interest margin		3.96	%		4.08	%					3.97	%		4.08	%
Efficiency ratio - GAAP based *		64.11	%		67.33	%					63.50	%		67.47	%
Efficiency ratio - traditional *		59.73	%		62.26	%					59.45	%		62.62	%

Per share data:
Basic net income	$	0.35		$	0.51			(31	)%	$	0.85		$	1.00			(15	)%
Diluted net income		0.34			0.51			(33	)		0.84			1.00			(16	)
Dividends declared		0.24			0.23			4			0.48			0.46			4
Book value		19.56			18.62			5			19.56			18.62			5
Tangible book value		13.89			12.76			9			13.89			12.76			9
Average fully diluted shares		16,427,213			16,069,771						16,417,511			15,735,503

At period-end:
Assets	$	3,164,123		$	3,101,409			2	%	$	3,164,123		$	3,101,409			2	%
Deposits		2,294,791			2,386,226			(4	)		2,294,791			2,386,226			(4	)
Total Loans and leases		2,428,948			2,165,008			12			2,428,948			2,165,008			12
Securities		427,232			490,371			(13	)		427,232			490,371			(13	)
Stockholders' equity		320,218			306,255			5			320,218			306,255			5

Capital and credit quality ratios:
Average equity to average assets		10.22	%		9.60	%					10.25	%		9.47	%
Allowance for loan and lease losses to loans and leases		1.38	%		1.09	%					1.38	%		1.09	%
Nonperforming assets to total assets		2.05	%		0.71	%					2.05	%		0.71	%
Annualized net charge-offs (recoveries) to average loans and leases		0.11	%		0.05	%					0.04	%		0.02	%

*	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 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 (Unaudited)
(In thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Noninterest expenses–GAAP based	$	24,886		$	24,959		$	49,589		$	48,573
Net interest income plus noninterest income–
GAAP based		38,815			37,072			78,089			71,993

Efficiency ratio–GAAP based		64.11	%		67.33	%		63.50	%		67.47	%

Noninterest expenses–GAAP based	$	24,886		$	24,959		$	49,589		$	48,573
Less non-GAAP adjustment:
Amortization of intangible assets		1,117			1,031			2,241			1,833
Noninterest expenses–traditional ratio		23,769			23,928			47,348			46,740

Net interest income plus noninterest income–
GAAP based		38,815			37,072			78,089			71,993
Plus non-GAAP adjustment:
Tax-equivalency		1,061			1,364			2,201			2,649
Less non-GAAP adjustments:
Securities gains		79			4			653			6
Net interest income plus noninterest
income – traditional ratio		39,797			38,432			79,637			74,636

Efficiency ratio – traditional		59.73	%		62.26	%		59.45	%		62.62	%

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
	June 30 (Unaudited)						December 31
	2008			2007			2007
Assets
Cash and due from banks	$	62,630		$	60,816		$	63,432
Federal funds sold		11,678			57,083			22,055
Cash and cash equivalents		74,308			117,899			85,487

Interest-bearing deposits with banks		462			74,050			365
Residential mortgage loans held for sale (at fair value)		12,087			17,874			7,089
Investments available-for-sale (at fair value)		218,323			222,123			186,801
Investments held-to-maturity - fair value of $184,540
$251,553 and $240,995, respectively		180,556			248,463			234,706
Other equity securities		28,353			19,785			23,766

Total loans and leases		2,428,948			2,165,008			2,277,031
Less: allowance for loan and lease losses		(33,435	)		(23,661	)		(25,092	)
Net loans and leases		2,395,513			2,141,347			2,251,939

Premises and equipment, net		52,928			54,318			54,457
Accrued interest receivable		12,658			16,850			14,955
Goodwill		78,376			77,457			76,585
Other intangible assets, net		14,390			18,878			16,630
Other assets		96,169			92,365			91,173
Total assets	$	3,164,123		$	3,101,409		$	3,043,953

Liabilities
Noninterest-bearing deposits	$	480,861		$	490,545		$	434,053
Interest-bearing deposits		1,813,930			1,895,681			1,839,815
Total deposits		2,294,791			2,386,226			2,273,868

Short-term borrowings		421,881			334,566			373,972
Other long-term borrowings		67,070			8,038			17,553
Subordinated debentures		35,000			35,000			35,000
Accrued interest payable and other liabilities		25,163			31,324			27,920
Total liabilities		2,843,905			2,795,154			2,728,313

Stockholders' Equity
Common stock -- par value $1.00; shares authorized
50,000,000; shares issued and outstanding 16,373,681
16,451,621 and 16,349,317, respectively		16,374			16,452			16,349
Additional paid in capital		84,759			86,669			83,970
Retained earnings		220,712			207,430			216,376
Accumulated other comprehensive loss		(1,627	)		(4,296	)		(1,055	)
Total stockholders' equity		320,218			306,255			315,640
Total liabilities and stockholders' equity	$	3,164,123		$	3,101,409		$	3,043,953

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

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
Interest income:
Interest and fees on loans and leases	$	36,696	$	38,393	$	75,165	$	72,967
Interest on loans held for sale		122		272		218		467
Interest on deposits with banks		24		401		73		491
Interest and dividends on securities:
Taxable		1,880		3,750		4,578		7,621
Exempt from federal income taxes		2,972		2,581		5,303		5,308
Interest on federal funds sold		151		617		430		1,054
Total interest income		41,845		46,014		85,767		87,908
Interest expense:
Interest on deposits		10,583		15,577		23,605		29,365
Interest on short-term borrowings		3,063		3,586		6,342		7,067
Interest on long-term borrowings		1,080		652		2,122		1,262
Total interest expense		14,726		19,815		32,069		37,694
Net interest income		27,119		26,199		53,698		50,214
Provision for loan and lease losses		6,189		780		8,856		1,619
Net interest income after provision for loan and lease losses		20,930		25,419		44,842		48,595
Noninterest income:
Securities gains		79		4		653		6
Service charges on deposit accounts		3,202		2,630		6,232		4,938
Gains on sales of mortgage loans		653		773		1,375		1,411
Fees on sales of investment products		905		906		1,727		1,706
Trust and investment management fees		2,505		2,361		4,902		4,642
Insurance agency commissions		1,357		1,438		3,443		4,128
Income from bank owned life insurance		727		693		1,441		1,377
Visa check fees		761		717		1,457		1,307
Other income		1,506		1,351		3,161		2,264
Total noninterest income		11,695		10,873		24,391		21,779
Noninterest expenses:
Salaries and employee benefits		13,862		13,776		27,625		27,210
Occupancy expense of premises		2,619		2,709		5,418		5,126
Equipment expenses		1,560		1,501		2,999		3,103
Marketing		488		675		985		1,204
Outside data services		1,081		1,077		2,203		2,003
Amortization of intangible assets		1,117		1,031		2,241		1,833
Other expenses		4,159		4,190		8,118		8,094
Total noninterest expenses		24,886		24,959		49,589		48,573
Income before income taxes		7,739		11,333		19,644		21,801
Income tax expense		2,088		3,164		5,788		6,087
Net income	$	5,651	$	8,169	$	13,856	$	15,714
Basic net income per share	$	0.35	$	0.51	$	0.85	$	1.00
Diluted net income per share		0.34		0.51		0.84		1.00
Dividends declared per share		0.24		0.23		0.48		0.46

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

Sandy Spring Bancorp, Inc. and Subsidiaries

Historical Trends in Quarterly Financial Data (Unaudited)

2008

2007

(Dollars in thousands, except per share data)

Profitability for the quarter:

Tax-equivalent interest income

42,903

45,062

47,519

48,405

47,378

43,179

Interest expense

14,723

17,343

18,709

19,746

19,815

17,879

Tax-equivalent net interest income

28,180

27,719

28,810

28,659

27,563

25,300

Tax-equivalent adjustment

1,061

1,140

1,410

1,447

1,364

1,285

Provision for loan and lease losses

6,189

2,667

1,725

750

780

839

Noninterest income

11,695

12,696

11,380

11,130

10,873

10,906

Noninterest expenses

24,886

24,703

25,316

25,899

24,959

23,614

Income before income taxes

7,739

11,905

11,739

11,693

11,333

10,468

Income tax expense

2,088

3,700

3,372

3,512

3,164

2,923

Net Income

5,651

8,205

8,367

8,181

8,169

7,545

Financial ratios:

Return on average assets

0.73

1.07

1.10

1.08

1.10

1.12

Return on average equity

7.09

10.45

10.69

10.55

11.45

11.96

Net interest margin

3.96

3.99

4.19

4.16

4.08

4.07

Efficiency ratio - GAAP based *

64.11

62.90

65.28

67.55

67.33

67.62

Efficiency ratio - traditional *

59.73

59.18

60.22

62.30

62.26

63.01

Per share data:

Basic net income

0.35

0.50

0.51

0.50

0.51

0.49

Diluted net income

0.34

0.50

0.51

0.50

0.51

0.49

Dividends declared

0.24

0.23

Book value

19.56

19.50

19.31

18.92

18.62

17.51

Tangible book value

13.89

13.77

13.60

13.17

12.76

13.11

Average fully diluted shares

16,427,213

16,407,778

16,422,161

16,508,922

16,069,771

15,400,865

Noninterest income breakdown:

Securities gains

574

Service charges on deposit accounts

3,202

3,030

3,211

2,999

2,630

2,308

Gains on sales of mortgage loans

653

722

590

738

773

638

Fees on sales of investment products

905

822

518

765

906

800

Trust and investment management fees

2,505

2,397

2,581

2,365

2,361

2,281

Insurance agency commissions

1,357

2,086

1,203

1,294

1,438

2,690

Income from bank owned life insurance

727

714

732

720

693

684

Visa check fees

761

696

747

730

717

590

Other income

1,506

1,655

1,783

1,497

1,351

913

Total

11,695

12,696

11,380

11,130

10,873

10,906

Noninterest expense breakdown:

Salaries and employee benefits

13,862

13,763

13,343

14,654

13,776

13,434

Occupancy expense of premises

2,619

2,799

2,288

2,946

2,709

2,417

Equipment expenses

1,560

1,439

1,829

1,631

1,501

1,602

Marketing

488

497

674

359

675

529

Outside data services

1,081

1,122

1,094

870

1,077

926

Amortization of intangible assets

1,117

1,124

1,123

1,031

802

Other expenses

4,159

3,959

4,964

4,316

4,190

3,904

Total

24,886

24,703

25,316

25,899

24,959

23,614

*	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 (Unaudited)

2008

2007

(Dollars in thousands, except per share data)

Balance sheets at quarter end:

Residential mortgage loans

461,000

459,768

456,305

439,091

427,252

404,177

Residential construction loans

199,602

183,690

166,981

154,908

154,444

144,744

Commercial mortgage loans

752,905

732,692

662,837

645,790

660,004

621,692

Commercial construction loans

273,059

256,714

262,840

246,569

236,278

225,108

Commercial loans and leases

356,256

354,509

351,773

343,653

316,409

282,854

Consumer loans

386,126

376,650

376,295

371,588

370,621

357,607

Total loans and leases

2,428,948

2,364,023

2,277,031

2,201,599

2,165,008

2,036,182

Less: allowance for loan and lease losses

(33,435

)

(27,887

)

(25,092

)

(23,567

)

(23,661

)

(22,186

)

Net loans and leases

2,395,513

2,336,136

2,251,939

2,178,032

2,121,347

2,013,996

Goodwill

78,376

78,111

76,585

76,625

77,457

53,913

Other intangible assets, net

14,390

15,507

16,630

17,754

18,878

15,244

Total assets

3,164,123

3,160,896

3,043,953

2,965,492

3,101,409

2,945,477

Total deposits

2,294,791

2,340,568

2,273,868

2,280,102

2,386,226

2,274,322

Customer repurchase agreements

93,919

101,666

98,015

122,130

113,622

114,712

Total stockholders' equity

320,218

318,967

315,640

310,624

306,255

275,319

Quarterly average balance sheets:

Residential mortgage loans

462,858

463,597

453,568

441,190

426,496

406,886

Residential construction loans

193,822

174,626

163,922

151,306

151,785

151,194

Commercial mortgage loans

733,905

690,289

649,101

647,659

630,335

565,277

Commercial construction loans

261,360

266,098

252,705

244,975

239,299

203,371

Commercial loans and leases

359,287

351,862

339,744

323,439

300,325

246,218

Consumer loans

380,911

378,261

374,572

370,585

362,221

353,668

Total loans and leases

2,392,143

2,324,733

2,233,612

2,179,154

2,110,461

1,926,614

Securities

431,182

427,819

451,168

458,984

523,507

551,566

Total earning assets

2,862,012

2,795,453

2,725,801

2,733,572

2,711,225

2,518,797

Total assets

3,134,440

3,072,428

3,006,086

3,019,065

2,979,820

2,743,890

Total interest-bearing liabilities

2,344,266

2,311,629

2,222,387

2,214,606

2,212,376

2,048,323

Noninterest-bearing demand deposits

441,330

412,369

439,967

463,018

450,887

408,954

Total deposits

2,306,867

2,260,837

2,283,122

2,340,004

2,290,413

2,099,409

Customer repurchase agreements

92,968

94,841

112,828

113,425

109,187

101,805

Stockholders' equity

320,409

315,755

310,605

307,564

286,040

255,781

Capital and credit quality measures:

Average equity to average assets

10.22

10.28

10.33

10.19

9.60

9.32

Loan and lease loss allowance to loans and leases

1.38

1.18

1.10

1.07

1.09

Nonperforming assets to total assets

2.05

1.48

1.15

0.87

0.71

0.24

Annualized net charge-offs (recoveries) to

average loans and leases

0.11

(0.02

0.04

0.16

0.05

0.00

Miscellaneous data:

Net charge-offs (recoveries)

641

($129

)

200

844

265

($17

)

Nonperforming assets:

Non-accrual loans and leases

60,373

37,353

23,040

17,362

18,818

1,982

Loans and leases 90 days past due

2,538

8,244

11,362

8,009

3,347

5,084

Restructured loans and leases

655

Other real estate owned, net

1,352

661

461

431

Total nonperforming assets

64,918

46,913

34,863

25,802

22,165

7,066

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

	Three Months Ended June 30,
				2008								2007
						Annualized								Annualized
	Average					Average			Average					Average
	Balances			Interest		Yield/Rate			Balances			Interest		Yield/Rate
Assets
Residential mortgage loans	$	470,144		$	7,127		6.06	%	$	426,496		$	6,413		6.01	%
Residential construction loans		193,822			2,826		5.86			151,785			2,759		7.29
Commercial mortgage loans		733,905			12,421		6.81			630,335			11,602		7.39
Commercial construction loans		261,360			3,455		5.32			239,299			5,428		9.10
Commercial loans and leases		359,287			6,000		6.71			300,325			6,157		8.21
Consumer loans		380,911			4,989		5.27			362,221			6,306		6.98
Total loans and leases		2,399,429			36,818		6.16			2,110,461			38,665		7.34
Securities		431,182			5,913		5.55			523,507			7,695		5.91
Interest-bearing deposits with banks		4,128			24		2.33			30,642			401		5.26
Federal funds sold		27,273			151		2.23			46,615			617		5.31
TOTAL EARNING ASSETS		2,862,012			42,906		6.03	%		2,711,225			47,378		7.01	%

Less: allowance for loan and lease losses		(28,450	)							(22,642	)
Cash and due from banks		48,929								58,076
Premises and equipment, net		53,476								51,509
Other assets		198,473								181,652
Total assets	$	3,134,440							$	2,979,820

Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	251,190		$	180		0.29	%	$	240,590		$	213		0.35	%
Regular savings deposits		159,888			127		0.32			161,066			137		0.34
Money market savings deposits		684,663			2,683		1.58			615,235			5,761		3.76
Time deposits		769,796			7,593		3.97			822,635			9,466		4.62
Total interest-bearing deposits		1,865,537			10,583		2.28			1,839,526			15,577		3.40
Borrowings		478,729			4,143		3.48			372,850			4,238		4.56
TOTAL INTEREST-BEARING LIABILITIES		2,344,266			14,726		2.53			2,212,376			19,815		3.59


Noninterest-bearing demand deposits		441,330								450,887
Other liabilities		28,435								30,517
Stockholder's equity		320,409								286,040
Total liabilities and stockholders' equity	$	3,134,440							$	2,979,820

Net interest income and spread					28,180		3.50	%					27,563		3.42	%
Less: tax equivalent adjustment					1,061								1,364
Net interest income					27,119								26,199

Interest income/earning assets							6.03	%							7.01	%
Interest expense/earning assets							2.07								2.93
Net interest margin							3.96	%							4.08	%

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 7.51% (or a combined marginal federal and state rate of 39.88%) for 2008 and a marginal state income tax rate of 6.37% (or a combined marginal federal and state rate of 39.14%) for 2007, 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 $4,267,000 in 2008 and $5,474,000 in 2007.

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

	Six Months Ended June 30,
	2008								2007
						Annualized								Annualized
	Average					Average			Average					Average
	Balances			Interest		Yield/Rate			Balances			Interest		Yield/Rate
Assets
Residential mortgage loans	$	466,870		$	14,422		6.18	%	$	416,745		$	12,491		5.99	%
Residential construction loans		184,224			5,596		6.11			151,492			5,476		7.29
Commercial mortgage loans		712,097			24,269		6.85			597,986			21,851		7.37
Commercial construction loans		263,729			7,881		6.01			221,434			10,009		9.12
Commercial loans and leases		355,575			12,546		7.09			273,421			11,190		8.24
Consumer loans		379,586			10,669		5.65			357,968			12,417		6.99
Total loans and leases		2,362,081			75,383		6.41			2,019,046			73,434		7.32
Securities		429,500			12,082		5.70			537,458			15,578		5.88
Interest-bearing deposits with banks		5,538			73		2.63			18,885			491		5.25
Federal funds sold		31,613			430		2.74			40,153			1,054		5.29
TOTAL EARNING ASSETS		2,828,732			87,968		6.25	%		2,615,542			90,557		6.98	%

Less: allowance for loan and lease losses		(27,147	)							(21,663	)
Cash and due from banks		49,545								55,182
Premises and equipment, net		53,920								50,383
Other assets		198,384								161,646
Total assets	$	3,103,434							$	2,861,090

Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	246,184		$	351		0.29	%	$	235,897		$	402		0.34	%
Regular savings deposits		156,626			247		0.32			162,046			293		0.36
Money market savings deposits		696,836			7,350		2.12			581,373			10,735		3.72
Time deposits		757,356			15,657		4.16			786,087			17,935		4.60
Total interest-bearing deposits		1,857,002			23,605		2.56			1,765,403			29,365		3.35
Borrowings		470,945			8,464		3.61			365,401			8,329		4.59
TOTAL INTEREST-BEARING LIABILITIES		2,327,947			32,069		2.77			2,130,804			37,694		3.57


Noninterest-bearing demand deposits		426,850								430,036
Other liabilities		30,555								29,241
Stockholder's equity		318,082								271,009
Total liabilities and stockholders' equity	$	3,103,434							$	2,861,090

Net interest income and spread					55,899		3.48	%					52,863		3.41	%
Less: tax equivalent adjustment					2,201								2,649
Net interest income					53,698								50,214

Interest income/earning assets							6.25	%							6.98	%
Interest expense/earning assets							2.28								2.90
Net interest margin							3.97	%							4.08	%

Sandy Spring Bancorp (SASR) 8-KSandy Spring Bancorp Reports Second Quarter Results