FOR IMMEDIATE RELEASE
SANDY SPRING BANCORP REPORTS THIRD QUARTER RESULTS
OLNEY, MARYLAND, October 23, 2008 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the third quarter of 2008 of $5.4 million ($.33 per diluted share) compared to $8.2 million ($.50 per diluted share) for the third quarter of 2007 and $5.7 million ($.34 per diluted share) for the linked second quarter of 2008. The third quarter of 2008 includes an estimated pre-tax impairment charge of $2.3 million to write down the value of goodwill in the Company’s leasing subsidiary, The Equipment Leasing Company, and a pre-tax pension credit of $1.5 million relating to the Company’s defined benefit pension plan which was frozen in 2007.
Net income for the nine-month period ending September 30, 2008 totaled $19.2 million ($1.17 per diluted share) compared to $23.9 million ($1.50 per diluted share) for the prior year period. The results for the current year-to-date include the goodwill impairment charge and pension credit mentioned above.
“Our company is a good old fashioned profitable community bank that has been conservatively managed for 140 years. We are locally run, well capitalized, locally headquartered, our employees live in the same neighborhoods where they work – and we are continuing to safely support the daily needs and growth plans of our local customers through this economic cycle,” said Hunter R. Hollar, Chairman and Chief Executive Officer. “These attributes have enabled us to grow into the second largest independent banking franchise headquartered in Maryland, with a high-value footprint that covers great demographics in the best markets between Washington, Baltimore, and Northern Virginia.”
“We think it is important to not lose sight of these facts, despite the daily reports of huge losses and ongoing major problems at many of the nation’s largest and best-known financial companies. The extraordinary events of the past month have served to reshape the entire U. S. financial system, yet we believe the well-managed better-performing community banks such as ours should have solid prospects now and in the future.”
“Sandy Spring Bancorp is not totally immune from the impact of recent economic events, including the slump in housing. We are recognizing the problem loans whose repayment is dependent on home sales and we are working hard to manage through these loans in order to minimize the impact on Sandy Spring Bank and on the borrower. Further, we are continuing to focus on controlling operating expenses and on high quality customer service and retention.”
Third Quarter and Year-to-Date Highlights:
| | · | The net interest margin declined to 4.02% for the third quarter compared to 4.16% for the third quarter of 2007 and increased compared to 3.96% for the linked second quarter of 2008. For the year-to-date, the net interest margin declined to 3.99% compared to 4.10% for 2007. |
| | · | As mentioned above and in a prior press release dated October 7, 2008, the Company recognized an estimated pre-tax impairment charge of $2.3 million relating to the write down of the value of goodwill in its leasing subsidiary, The Equipment Leasing Company, based on completion of Phase I of the impairment analysis. Phase II is expected to be completed during the next reporting period, which may require an additional adjustment. Total goodwill allocated to The Equipment Leasing Company after this quarter’s write down is $1.9 million. |
| | · | During the third quarter the Company recognized a credit of $1.5 million for prior service costs relating to its defined benefit pension plan. This plan was frozen during the fourth quarter of 2007 with the intention of terminating the plan at a still to be determined future date. |
| | · | Noninterest expenses decreased 2% for the quarter compared to the third quarter of 2007 and increased 2% versus the linked second quarter of 2008. Excluding the goodwill impairment charge and the pre-tax pension credit in the third quarter of 2008, noninterest expenses decreased 5% compared to the third quarter of 2007. For the first nine months of 2008, noninterest expenses increased 1% compared to the first nine months of 2007. Excluding the goodwill impairment charge and the pre-tax pension credit, noninterest expenses decreased 1% versus the prior year-to-date. These decreases are consistent with the Company’s expectations for project LIFT, the Company’s previously disclosed initiative for managing operating expenses. |
| | · | The provision for loan and lease losses totaled $6.5 million for the quarter compared to $0.8 million for the third quarter of 2007 and $6.2 million for the linked second quarter of 2008. For the year-to-date, the provision for loan and lease losses totaled $15.4 million compared to $2.4 million in 2007. These increases were in response to internal risk rating downgrades primarily in the residential real estate development portfolio. |
| | · | The Company as of September 30, 2008 recorded a total risk-based capital ratio of 10.98%, a tier 1 risk-based capital ratio of 9.73% and a capital leverage ratio of 8.76%. Capital adequacy, as measured by these ratios, was above the “well-capitalized” regulatory requirement levels for the Company. |
“Non-performing assets increased from the second quarter due to the volatile condition of the financial markets and, in particular, their effect on local residential real estate developers with whom we have long-standing relationships. Our foremost priority is to aggressively monitor credit quality and we have been extremely proactive in identifying and dealing with the problem credits which gave rise to the higher provision for loan and lease losses discussed above,” said Daniel J. Schrider, President 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 for the long term as we manage through this most difficult economic environment."
Review of Balance Sheet and Credit Quality
Comparing September 30, 2008 balances to September 30, 2007, total assets increased 8% to $3.2 billion due mainly to continued growth in the commercial loan portfolio. Total loans and leases increased 13% to $2.5 billion compared to the same period for the prior year. This increase in loans was comprised mainly of a 14% increase in commercial loans. Compared to the linked second quarter of 2008, total loans increased 2%.
Customer funding sources, which include deposits plus other short-term borrowings from core customers, decreased 3% to $2.3 billion at September 30, 2008 compared to the same period for the prior year. On a linked quarter basis, such customer funding sources decreased 3% compared to the second quarter of 2008. This decrease was due primarily to continued intense competition for deposits in the Company’s market area. Borrowings from the Federal Home Loan Bank of Atlanta increased 163% to $484 million compared to the same period for the prior year. Compared to the linked second quarter of 2008, such borrowings increased 22%. These increases were necessary to fund loan growth due to the lack of growth in customer funding sources mentioned above.
Stockholders’ equity totaled $319.7 million at September 30, 2008, and represented 10.0% of total assets, compared to 10.5% at September 30, 2007. The Company at September 30, 2008 recorded a total risk-based capital ratio of 10.98%, a tier 1 risk-based capital ratio of 9.73% and a capital leverage ratio of 8.76% which were all above “well capitalized” regulatory requirement levels.
The provision for loan and lease losses totaled $6.5 million for the third quarter of 2008 compared to $0.8 million for the third quarter of 2007 and $6.2 million for the linked second 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. Loan charge-offs, net of recoveries totaled $1.7 million for the third quarter of 2008 compared to $0.8 million for the third quarter of 2007. The allowance for loan and lease losses represented 1.54% of outstanding loans and leases and 56% of non-performing assets at September 30, 2008 compared to 1.07% of outstanding loans and leases and 91% of non-performing assets at September 30, 2007.
Non-performing assets totaled $68.4 million at September 30, 2008 compared to $64.9 million at June 30, 2008 and $25.8 million at September 30, 2007. The increase over the linked second quarter of 2008 was due primarily to two residential real estate development loans totaling $3.9 million, which management believes are adequately reserved or well secured. The increase over the same period for the prior year also reflects five residential real estate development loans, in addition to the two mentioned above, totaling $26.3 million, which management believes are also adequately reserved or well secured.
Income Statement Review
Comparing the third quarter of 2008 and 2007, net interest income increased by $0.9 million, or 3%, due primarily to continued growth in the loan portfolio which was largely offset by the decline in market interest rates due to the effect of previous interest rate cuts by the Federal Reserve during the first quarter of 2008 and increases in deposit rates during the third quarter. 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 4.02% in 2008 from 4.16% in 2007.
Noninterest income decreased to $10.9 million in the third quarter of 2008 as compared to $11.1 million in the third quarter of 2007, a decrease of 2%. Service charges on deposit accounts increased 8% due primarily to higher overdraft fees while fees on sales of investment products increased 7%. These increases were offset by a decrease in gains on sales of mortgage loans of 46% due to lower mortgage volumes reflecting market conditions and a decrease of 15% in other noninterest income.
Noninterest expenses were $25.3 million in the third quarter of 2008 compared to $25.9 million in the third quarter of 2007, a decrease of $0.6 million or 2%. Excluding the goodwill impairment charge and pre-tax pension credit in the third quarter of 2008, noninterest expenses decreased $1.4 million or 5% compared to the same period for the prior year. Salaries and benefits expenses decreased 18%, while occupancy and equipment expenses decreased 7%. These decreases were somewhat offset by a 47% increase in marketing expenses due to costs to promote new deposit initiatives and an increase of 28% in outside data services due mainly to overall growth in customer accounts and branches acquired from the acquisition of CN Bancorp, Inc. and Potomac Bank in 2007. Other expenses decreased 6% due largely to the effect of project LIFT.
Comparing the first nine months of 2008 and 2007, net interest income increased by $4.4 million, or 6%, due primarily to continued growth in the loan portfolio which was offset to some extent by the decline in market interest rates and to higher rates offered to attract deposits. These factors produced a net interest margin decrease to 3.99% in 2008 from 4.10% in 2007.
Noninterest income increased to $35.3 million for the first nine months of 2008 as compared to $32.9 million for the first nine months of 2007, an increase of 7%. Service charges on deposit accounts increased 19% due primarily to higher overdraft fees while Visa® check fees increased 7% reflecting continued growth in electronic transactions. Other noninterest income increased 18% due primarily to higher accrued gains on mortgage commitments resulting from the 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 decreases of 18% in gains on sales of mortgage loans due to lower mortgage volumes reflecting market conditions and 13% in insurance agency commissions due to lower fees on commercial lines and reduced contingency fees.
Noninterest expenses were $74.9 million for the first nine months of 2008 compared to $74.5 million for the first nine months of 2007, an increase of $0.4 million or 1%. Excluding the goodwill impairment charge and the pre-tax pension credit in the third quarter of 2008, noninterest expenses decreased $0.4 million or 1% compared to the same period for the prior year. Salaries and benefits expenses decreased 5% due largely to project LIFT. This decrease was somewhat offset by an increase of 16% in outside data services due mainly to the overall growth in the loan and deposit portfolios and the branches added from the two acquisitions mentioned above. Intangibles amortization increased 13% as a result of the two acquisitions.
Conference Call
The Company’s management will host a conference call to discuss its third quarter results today at 2:00 P.M. (ET). A live 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 877-795-3638; 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 12:00 midnight (ET) November 23, 2008. A telephone voice replay will also be available during that same time period at 888-203-1112. Please use pass code #7448665 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, E.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 | | | | Nine Months Ended | | | |
| | September 30, | | % | | September 30, | | | |
| | | 2008 | | 2007 | | Change | | 2008 | | 2007 | | Change | |
Profitability for the period: | | | | | | | | | | | | | |
| Net interest income | | $ | 28,087 | | $ | 27,212 | | | 3 | % | $ | 81,785 | | $ | 77,426 | | | 6 | % |
| Provision for loan and lease losses | | | 6,545 | | | 750 | | | 773 | | | 15,401 | | | 2,369 | | | 550 | |
| Noninterest income | | | 10,879 | | | 11,130 | | | (2 | ) | | 35,270 | | | 32,909 | | | 7 | |
| Noninterest expenses | | | 25,267 | | | 25,899 | | | (2 | ) | | 74,856 | | | 74,472 | | | 1 | |
| Income before income taxes | | | 7,154 | | | 11,693 | | | (39 | ) | | 26,798 | | | 33,494 | | | (20 | ) |
| Net income | | $ | 5,359 | | $ | 8,181 | | | (34 | ) | $ | 19,215 | | $ | 23,895 | | | (20 | ) |
| | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.67 | % | | 1.08 | % | | | | | 0.82 | % | | 1.10 | % | | | |
| Return on average equity | | | 6.64 | % | | 10.55 | % | | | | | 8.04 | % | | 11.28 | % | | | |
| Net interest margin | | | 4.02 | % | | 4.16 | % | | | | | 3.99 | % | | 4.10 | % | | | |
| Efficiency ratio - GAAP based * | | | 64.84 | % | | 67.55 | % | | | | | 63.95 | % | | 67.50 | % | | | |
| Efficiency ratio - traditional * | | | 58.27 | % | | 62.30 | % | | | | | 59.06 | % | | 62.51 | % | | | |
| | | | | | | | | | | | | | | | | | | | |
Per share data: | | | | | | | | | | | | | | | | | | | |
| Basic net income | | $ | 0.33 | | $ | 0.50 | | | (34) | % | $ | 1.18 | | $ | 1.50 | | | (21) | % |
| Diluted net income | | | 0.33 | | | 0.50 | | | (34 | ) | | 1.17 | | | 1.50 | | | (22 | ) |
| Dividends declared | | | 0.24 | | | 0.23 | | | 4 | | | 0.72 | | | 0.69 | | | 4 | |
| Book value | | | 19.51 | | | 18.92 | | | 3 | | | 19.51 | | | 18.92 | | | 3 | |
| Tangible book value | | | 14.08 | | | 13.17 | | | 7 | | | 14.08 | | | 13.17 | | | 7 | |
| Average fully diluted shares | | | 16,418,588 | | | 16,508,922 | | | | | | 16,419,180 | | | 15,980,035 | | | | |
| | | | | | | | | | | | | | | | | | | | |
At period-end: | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 3,195,117 | | $ | 2,965,492 | | | 8 | % | $ | 3,195,117 | | $ | 2,965,492 | | | 8 | % |
| Deposits | | | 2,248,812 | | | 2,280,102 | | | (1 | ) | | 2,248,812 | | | 2,280,102 | | | (1 | ) |
| Total Loans and leases | | | 2,482,418 | | | 2,201,599 | | | 13 | | | 2,482,418 | | | 2,201,599 | | | 13 | |
| Securities | | | 417,935 | | | 452,195 | | | (8 | ) | | 417,935 | | | 452,195 | | | (8 | ) |
| Stockholders' equity | | | 319,700 | | | 310,624 | | | 3 | | | 319,700 | | | 310,624 | | | 3 | |
| | | | | | | | | | | | | | | | | | | | |
Capital and credit quality ratios: | | | | | | | | | | | | | | | | | | | |
| Average equity to average assets | | | 10.14 | % | | 10.19 | % | | | | | 10.21 | % | | 9.72 | % | | | |
| Allowance for loan and lease losses to loans and leases | | | 1.54 | % | | 1.07 | % | | | | | 1.54 | % | | 1.07 | % | | | |
| Nonperforming assets to total assets | | | 2.14 | % | | 0.87 | % | | | | | 2.14 | % | | 0.87 | % | | | |
| Annualized net charge-offs to average loans and leases | | | 0.28 | % | | 0.16 | % | | | | | 0.12 | % | | 0.07 | % | | | |
* 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, the goodwill impairment loss and the pension prior service credit 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 | | Nine Months Ended | |
| | | September 30, | | September 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| Noninterest expenses-GAAP based | | $ | 25,267 | | $ | 25,899 | | $ | 74,856 | | $ | 74,472 | |
| Net interest income plus noninterest income-GAAP based | | | 38,966 | | | 38,342 | | | 117,055 | | | 110,335 | |
| | | | | | | | | | | | | | |
| Efficiency ratio-GAAP based | | | 64.84 | % | | 67.55 | % | | 63.95 | % | | 67.50 | % |
| | | | | | | | | | | | | | |
| Noninterest expenses-GAAP based | | $ | 25,267 | | $ | 25,899 | | $ | 74,856 | | $ | 74,472 | |
| Less non-GAAP adjustment: | | | | | | | | | | | | | |
| Goodwill Impairment Loss | | | 2,250 | | | 0 | | | 2,250 | | | 0 | |
| Amortization of intangible assets | | | 1,103 | | | 1,123 | | | 3,344 | | | 2,956 | |
| Plus non-GAAP adjustment: | | | | | | | | | | | | | |
| Pension prior service credit | | | 1,473 | | | 0 | | | 1,473 | | | 0 | |
| Noninterest expenses-traditional ratio | | | 23,387 | | | 24,776 | | | 70,735 | | | 71,516 | |
| | | | | | | | | | | | | | |
| Net interest income plus noninterest income-GAAP based | | | 38,966 | | | 38,342 | | | 117,055 | | | 110,335 | |
| Plus non-GAAP adjustment: | | | | | | | | | | | | | |
| Tax-equivalency | | | 1,180 | | | 1,447 | | | 3,381 | | | 4,096 | |
| Less non-GAAP adjustments: | | | | | | | | | | | | | |
| Securities gains | | | 9 | | | 22 | | | 662 | | | 28 | |
| Net interest income plus noninterest income - traditional ratio | | | 40,137 | | | 39,767 | | | 119,774 | | | 114,403 | |
| | | | | | | | | | | | | | |
| Efficiency ratio - traditional | | | 58.27 | % | | 62.30 | % | | 59.06 | % | | 62.51 | % |
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
| | | September 30 (Unaudited) | | December 31 | |
| | | 2008 | | 2007 | | 2007 | |
Assets | | | | | | | |
| Cash and due from banks | | $ | 55,321 | | $ | 58,698 | | $ | 63,432 | |
| Federal funds sold | | | 19,712 | | | 13,375 | | | 22,055 | |
| Interest-bearing deposits with banks | | | 483 | | | 483 | | | 365 | |
| Cash and cash equivalents | | | 75,516 | | | 72,556 | | | 85,852 | |
| | | | | | | | | | | |
| Residential mortgage loans held for sale (at fair value) | | | 4,541 | | | 6,099 | | | 7,089 | |
| Investments available-for-sale (at fair value) | | | 206,898 | | | 196,138 | | | 186,801 | |
| Investments held-to-maturity - fair value of $181,734 $241,984 and $240,995, respectively | | | 178,690 | | | 237,231 | | | 234,706 | |
| Other equity securities | | | 32,347 | | | 18,826 | | | 23,766 | |
| | | | | | | | | | | |
| Total loans and leases | | | 2,482,418 | | | 2,201,599 | | | 2,277,031 | |
| Less: allowance for loan and lease losses | | | (38,266 | ) | | (23,567 | ) | | (25,092 | ) |
| Net loans and leases | | | 2,444,152 | | | 2,178,032 | | | 2,251,939 | |
| | | | | | | | | | | |
| Premises and equipment, net | | | 52,441 | | | 55,016 | | | 54,457 | |
| Other real estate owned | | | 1,698 | | | 431 | | | 461 | |
| Accrued interest receivable | | | 12,491 | | | 16,008 | | | 14,955 | |
| Goodwill | | | 75,701 | | | 76,625 | | | 76,585 | |
| Other intangible assets, net | | | 13,286 | | | 17,754 | | | 16,630 | |
| Other assets | | | 97,356 | | | 90,776 | | | 90,712 | |
| Total assets | | $ | 3,195,117 | | $ | 2,965,492 | | $ | 3,043,953 | |
| | | | | | | | | | | |
Liabilities | | | | | | | | | | |
| Noninterest-bearing deposits | | $ | 468,101 | | $ | 453,536 | | $ | 434,053 | |
| Interest-bearing deposits | | | 1,780,711 | | | 1,826,566 | | | 1,839,815 | |
| Total deposits | | | 2,248,812 | | | 2,280,102 | | | 2,273,868 | |
| | | | | | | | | | | |
| Short-term borrowings | | | 484,595 | | | 298,083 | | | 373,972 | |
| Other long-term borrowings | | | 76,828 | | | 7,793 | | | 17,553 | |
| Subordinated debentures | | | 35,000 | | | 35,000 | | | 35,000 | |
| Accrued interest payable and other liabilities | | | 30,182 | | | 33,890 | | | 27,920 | |
| Total liabilities | | | 2,875,417 | | | 2,654,868 | | | 2,728,313 | |
| | | | | | | | | | | |
Stockholders' Equity | | | | | | | | | | |
| Common stock — par value $1.00; shares authorized 50,000,000; shares issued and outstanding 16,383,671 16,420,911 and 16,349,317, respectively | | | 16,384 | | | 16,421 | | | 16,349 | |
| Additional paid in capital | | | 85,065 | | | 85,982 | | | 83,970 | |
| Retained earnings | | | 222,126 | | | 211,787 | | | 216,376 | |
| Accumulated other comprehensive loss | | | (3,875 | ) | | (3,566 | ) | | (1,055 | ) |
| Total stockholders' equity | | | 319,700 | | | 310,624 | | | 315,640 | |
| Total liabilities and stockholders' equity | | $ | 3,195,117 | | $ | 2,965,492 | | $ | 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 | | Nine Months Ended | |
| | | September 30, | | September 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| Interest income: | | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 37,263 | | $ | 39,789 | | $ | 112,428 | | $ | 112,756 | |
| Interest on loans held for sale | | | 100 | | | 234 | | | 318 | | | 701 | |
| Interest on deposits with banks | | | 6 | | | 590 | | | 79 | | | 1,081 | |
| Interest and dividends on securities: | | | | | | | | | | | | | |
| Taxable | | | 3,171 | | | 3,211 | | | 7,749 | | | 10,832 | |
| Exempt from federal income taxes | | | 1,409 | | | 2,468 | | | 6,712 | | | 7,776 | |
| Interest on federal funds sold | | | 99 | | | 666 | | | 529 | | | 1,720 | |
| Total interest income | | | 42,048 | | | 46,958 | | | 127,815 | | | 134,866 | |
| Interest expense: | | | | | | | | | | | | | |
| Interest on deposits | | | 9,325 | | | 15,898 | | | 32,930 | | | 45,263 | |
| Interest on short-term borrowings | | | 3,544 | | | 3,198 | | | 9,886 | | | 10,265 | |
| Interest on long-term borrowings | | | 1,092 | | | 650 | | | 3,214 | | | 1,912 | |
| Total interest expense | | | 13,961 | | | 19,746 | | | 46,030 | | | 57,440 | |
| Net interest income | | | 28,087 | | | 27,212 | | | 81,785 | | | 77,426 | |
| Provision for loan and lease losses | | | 6,545 | | | 750 | | | 15,401 | | | 2,369 | |
| Net interest income after provision for loan and lease losses | | | 21,542 | | | 26,462 | | | 66,384 | | | 75,057 | |
| Noninterest income: | | | | | | | | | | | | | |
| Securities gains | | | 9 | | | 22 | | | 662 | | | 28 | |
| Service charges on deposit accounts | | | 3,249 | | | 2,999 | | | 9,481 | | | 7,937 | |
| Gains on sales of mortgage loans | | | 397 | | | 738 | | | 1,772 | | | 2,149 | |
| Fees on sales of investment products | | | 820 | | | 765 | | | 2,547 | | | 2,471 | |
| Trust and investment management fees | | | 2,380 | | | 2,365 | | | 7,282 | | | 7,007 | |
| Insurance agency commissions | | | 1,282 | | | 1,294 | | | 4,725 | | | 5,422 | |
| Income from bank owned life insurance | | | 742 | | | 720 | | | 2,183 | | | 2,097 | |
| Visa check fees | | | 727 | | | 730 | | | 2,184 | | | 2,037 | |
| Other income | | | 1,273 | | | 1,497 | | | 4,434 | | | 3,761 | |
| Total noninterest income | | | 10,879 | | | 11,130 | | | 35,270 | | | 32,909 | |
| Noninterest expenses: | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 11,949 | | | 14,654 | | | 39,574 | | | 41,864 | |
| Occupancy expense of premises | | | 2,732 | | | 2,946 | | | 8,150 | | | 8,072 | |
| Equipment expenses | | | 1,515 | | | 1,631 | | | 4,514 | | | 4,734 | |
| Marketing | | | 526 | | | 359 | | | 1,511 | | | 1,563 | |
| Outside data services | | | 1,116 | | | 870 | | | 3,319 | | | 2,873 | |
| Amortization of intangible assets | | | 1,103 | | | 1,123 | | | 3,344 | | | 2,956 | |
| Goodwill impairment loss | | | 2,250 | | | 0 | | | 2,250 | | | 0 | |
| Other expenses | | | 4,076 | | | 4,316 | | | 12,194 | | | 12,410 | |
| Total noninterest expenses | | | 25,267 | | | 25,899 | | | 74,856 | | | 74,472 | |
| Income before income taxes | | | 7,154 | | | 11,693 | | | 26,798 | | | 33,494 | |
| Income tax expense | | | 1,795 | | | 3,512 | | | 7,583 | | | 9,599 | |
| Net income | | $ | 5,359 | | $ | 8,181 | | $ | 19,215 | | $ | 23,895 | |
| Basic net income per share | | $ | 0.33 | | $ | 0.50 | | $ | 1.18 | | $ | 1.50 | |
| Diluted net income per share | | | 0.33 | | | 0.50 | | | 1.17 | | | 1.50 | |
| Dividends declared per share | | | 0.24 | | | 0.23 | | | 0.72 | | | 0.69 | |
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)
(Dollars in thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | 2008 | | 2007 | |
| | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | |
Profitability for the quarter: | | | | | | | | | | | | | | | | | | | | | | |
| Tax-equivalent interest income | | $ | 43,228 | | $ | 42,903 | | $ | 45,062 | | $ | 47,519 | | $ | 48,405 | | $ | 47,378 | | $ | 43,179 | |
| Interest expense | | | 13,961 | | | 14,723 | | | 17,343 | | | 18,709 | | | 19,746 | | | 19,815 | | | 17,879 | |
| Tax-equivalent net interest income | | | 29,267 | | | 28,180 | | | 27,719 | | | 28,810 | | | 28,659 | | | 27,563 | | | 25,300 | |
| Tax-equivalent adjustment | | | 1,180 | | | 1,061 | | | 1,140 | | | 1,410 | | | 1,447 | | | 1,364 | | | 1,285 | |
| Provision for loan and lease losses | | | 6,545 | | | 6,189 | | | 2,667 | | | 1,725 | | | 750 | | | 780 | | | 839 | |
| Noninterest income | | | 10,879 | | | 11,695 | | | 12,696 | | | 11,380 | | | 11,130 | | | 10,873 | | | 10,906 | |
| Noninterest expenses | | | 25,267 | | | 24,886 | | | 24,703 | | | 25,316 | | | 25,899 | | | 24,959 | | | 23,614 | |
| Income before income taxes | | | 7,154 | | | 7,739 | | | 11,905 | | | 11,739 | | | 11,693 | | | 11,333 | | | 10,468 | |
| Income tax expense | | | 1,795 | | | 2,088 | | | 3,700 | | | 3,372 | | | 3,512 | | | 3,164 | | | 2,923 | |
| Net Income | | | 5,359 | | | 5,651 | | | 8,205 | | | 8,367 | | | 8,181 | | | 8,169 | | | 7,545 | |
Financial ratios: | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.67 | % | | 0.73 | % | | 1.07 | % | | 1.10 | % | | 1.08 | % | | 1.10 | % | | 1.12 | % |
| Return on average equity | | | 6.64 | % | | 7.09 | % | | 10.45 | % | | 10.69 | % | | 10.55 | % | | 11.45 | % | | 11.96 | % |
| Net interest margin | | | 4.02 | % | | 3.96 | % | | 3.99 | % | | 4.19 | % | | 4.16 | % | | 4.08 | % | | 4.07 | % |
| Efficiency ratio - GAAP based * | | | 64.84 | % | | 64.11 | % | | 62.90 | % | | 65.28 | % | | 67.55 | % | | 67.33 | % | | 67.62 | % |
| Efficiency ratio - traditional * | | | 58.27 | % | | 59.73 | % | | 59.18 | % | | 60.22 | % | | 62.30 | % | | 62.26 | % | | 63.01 | % |
Per share data: | | | | | | | | | | | | | | | | | | | | | | |
| Basic net income | | $ | 0.33 | | $ | 0.35 | | $ | 0.50 | | $ | 0.51 | | $ | 0.50 | | $ | 0.51 | | $ | 0.49 | |
| Diluted net income | | $ | 0.33 | | $ | 0.34 | | $ | 0.50 | | $ | 0.51 | | $ | 0.50 | | $ | 0.51 | | $ | 0.49 | |
| Dividends declared | | $ | 0.24 | | $ | 0.24 | | $ | 0.24 | | $ | 0.23 | | $ | 0.23 | | $ | 0.23 | | $ | 0.23 | |
| Book value | | $ | 19.51 | | $ | 19.56 | | $ | 19.50 | | $ | 19.31 | | $ | 18.92 | | $ | 18.62 | | $ | 17.51 | |
| Tangible book value | | $ | 14.08 | | $ | 13.89 | | $ | 13.77 | | $ | 13.60 | | $ | 13.17 | | $ | 12.76 | | $ | 13.11 | |
| Average fully diluted shares | | | 16,418,588 | | | 16,427,213 | | | 16,407,778 | | | 16,422,161 | | | 16,508,922 | | | 16,069,771 | | | 15,400,865 | |
Noninterest income breakdown: | | | | | | | | | | | | | | | | | | | | | | |
| Securities gains | | $ | 9 | | $ | 79 | | $ | 574 | | $ | 15 | | $ | 22 | | $ | 4 | | $ | 2 | |
| Service charges on deposit accounts | | | 3,249 | | | 3,202 | | | 3,030 | | | 3,211 | | | 2,999 | | | 2,630 | | | 2,308 | |
| Gains on sales of mortgage loans | | | 397 | | | 653 | | | 722 | | | 590 | | | 738 | | | 773 | | | 638 | |
| Fees on sales of investment products | | | 820 | | | 905 | | | 822 | | | 518 | | | 765 | | | 906 | | | 800 | |
| Trust and investment management fees | | | 2,380 | | | 2,505 | | | 2,397 | | | 2,581 | | | 2,365 | | | 2,361 | | | 2,281 | |
| Insurance agency commissions | | | 1,282 | | | 1,357 | | | 2,086 | | | 1,203 | | | 1,294 | | | 1,438 | | | 2,690 | |
| Income from bank owned life insurance | | | 742 | | | 727 | | | 714 | | | 732 | | | 720 | | | 693 | | | 684 | |
| Visa check fees | | | 727 | | | 761 | | | 696 | | | 747 | | | 730 | | | 717 | | | 590 | |
| Other income | | | 1,273 | | | 1,506 | | | 1,655 | | | 1,783 | | | 1,497 | | | 1,351 | | | 913 | |
| Total | | | 10,879 | | | 11,695 | | | 12,696 | | | 11,380 | | | 11,130 | | | 10,873 | | | 10,906 | |
Noninterest expense breakdown: | | | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | $ | 11,949 | | $ | 13,862 | | $ | 13,763 | | $ | 13,343 | | $ | 14,654 | | $ | 13,776 | | $ | 13,434 | |
| Occupancy expense of premises | | | 2,732 | | | 2,619 | | | 2,799 | | | 2,288 | | | 2,946 | | | 2,709 | | | 2,417 | |
| Equipment expenses | | | 1,515 | | | 1,560 | | | 1,439 | | | 1,829 | | | 1,631 | | | 1,501 | | | 1,602 | |
| Marketing | | | 526 | | | 488 | | | 497 | | | 674 | | | 359 | | | 675 | | | 529 | |
| Outside data services | | | 1,116 | | | 1,081 | | | 1,122 | | | 1,094 | | | 870 | | | 1,077 | | | 926 | |
| Amortization of intangible assets | | | 1,103 | | | 1,117 | | | 1,124 | | | 1,124 | | | 1,123 | | | 1,031 | | | 802 | |
| Goodwill impairment loss | | | 2,250 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Other expenses | | | 4,076 | | | 4,159 | | | 3,959 | | | 4,964 | | | 4,316 | | | 4,190 | | | 3,904 | |
| Total | | | 25,267 | | | 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)
(Dollars in thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | 2008 | | 2007 | |
| | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | |
Balance sheets at quarter end: | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage loans | | $ | 452,815 | | $ | 461,000 | | $ | 459,768 | | $ | 456,305 | | $ | 439,091 | | $ | 427,252 | | $ | 404,177 | |
| Residential construction loans | | | 221,630 | | | 199,602 | | | 183,690 | | | 166,981 | | | 154,908 | | | 154,444 | | | 144,744 | |
| Commercial mortgage loans | | | 804,728 | | | 752,905 | | | 732,692 | | | 662,837 | | | 645,790 | | | 660,004 | | | 621,692 | |
| Commercial construction loans | | | 247,930 | | | 273,059 | | | 256,714 | | | 262,840 | | | 246,569 | | | 236,278 | | | 225,108 | |
| Commercial loans and leases | | | 358,097 | | | 356,256 | | | 354,509 | | | 351,773 | | | 343,653 | | | 316,409 | | | 282,854 | |
| Consumer loans | | | 397,218 | | | 386,126 | | | 376,650 | | | 376,295 | | | 371,588 | | | 370,621 | | | 357,607 | |
| Total loans and leases | | | 2,482,418 | | | 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 | | | (38,266 | ) | | (33,435 | ) | | (27,887 | ) | | (25,092 | ) | | (23,567 | ) | | (23,661 | ) | | (22,186 | ) |
| Net loans and leases | | | 2,444,152 | | | 2,395,513 | | | 2,336,136 | | | 2,251,939 | | | 2,178,032 | | | 2,121,347 | | | 2,013,996 | |
| Goodwill | | | 75,701 | | | 78,376 | | | 78,111 | | | 76,585 | | | 76,625 | | | 77,457 | | | 53,913 | |
| Other intangible assets, net | | | 13,286 | | | 14,390 | | | 15,507 | | | 16,630 | | | 17,754 | | | 18,878 | | | 15,244 | |
| Total assets | | | 3,195,117 | | | 3,164,123 | | | 3,160,896 | | | 3,043,953 | | | 2,965,492 | | | 3,101,409 | | | 2,945,477 | |
| Total deposits | | | 2,248,812 | | | 2,294,791 | | | 2,340,568 | | | 2,273,868 | | | 2,280,102 | | | 2,386,226 | | | 2,274,322 | |
| Customer repurchase agreements | | | 77,630 | | | 93,919 | | | 101,666 | | | 98,015 | | | 122,130 | | | 113,622 | | | 114,712 | |
| Total stockholders' equity | | | 319,700 | | | 320,218 | | | 318,967 | | | 315,640 | | | 310,624 | | | 306,255 | | | 275,319 | |
Quarterly average balance sheets: | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage loans | | $ | 463,778 | | $ | 462,858 | | $ | 463,597 | | $ | 453,568 | | $ | 441,190 | | $ | 426,496 | | $ | 406,886 | |
| Residential construction loans | | | 210,363 | | | 193,822 | | | 174,626 | | | 163,922 | | | 151,306 | | | 151,785 | | | 151,194 | |
| Commercial mortgage loans | | | 779,652 | | | 733,905 | | | 690,289 | | | 649,101 | | | 647,659 | | | 630,335 | | | 565,277 | |
| Commercial construction loans | | | 253,806 | | | 261,360 | | | 266,098 | | | 252,705 | | | 244,975 | | | 239,299 | | | 203,371 | |
| Commercial loans and leases | | | 356,327 | | | 359,287 | | | 351,862 | | | 339,744 | | | 323,439 | | | 300,325 | | | 246,218 | |
| Consumer loans | | | 391,640 | | | 380,911 | | | 378,261 | | | 374,572 | | | 370,585 | �� | | 362,221 | | | 353,668 | |
| Total loans and leases | | | 2,455,566 | | | 2,392,143 | | | 2,324,733 | | | 2,233,612 | | | 2,179,154 | | | 2,110,461 | | | 1,926,614 | |
| Securities | | | 423,082 | | | 431,182 | | | 427,819 | | | 451,168 | | | 458,984 | | | 523,507 | | | 551,566 | |
| Total earning assets | | | 2,898,968 | | | 2,862,012 | | | 2,795,453 | | | 2,725,801 | | | 2,733,572 | | | 2,711,225 | | | 2,518,797 | |
| Total assets | | | 3,167,145 | | | 3,134,440 | | | 3,072,428 | | | 3,006,086 | | | 3,019,065 | | | 2,979,820 | | | 2,743,890 | |
| Total interest-bearing liabilities | | | 2,363,299 | | | 2,344,266 | | | 2,311,629 | | | 2,222,387 | | | 2,214,606 | | | 2,212,376 | | | 2,048,323 | |
| Noninterest-bearing demand deposits | | | 453,281 | | | 441,330 | | | 412,369 | | | 439,967 | | | 463,018 | | | 450,887 | | | 408,954 | |
| Total deposits | | | 2,264,990 | | | 2,306,867 | | | 2,260,837 | | | 2,283,122 | | | 2,340,004 | | | 2,290,413 | | | 2,099,409 | |
| Customer repurchase agreements | | | 81,158 | | | 92,968 | | | 94,841 | | | 112,828 | | | 113,425 | | | 109,187 | | | 101,805 | |
| Stockholders' equity | | | 321,028 | | | 320,409 | | | 315,755 | | | 310,605 | | | 307,564 | | | 286,040 | | | 255,781 | |
Capital and credit quality measures: | | | | | | | | | | | | | | | | | | | | | | |
| Average equity to average assets | | | 10.14 | % | | 10.22 | % | | 10.28 | % | | 10.33 | % | | 10.19 | % | | 9.60 | % | | 9.32 | % |
| Allowance for loan and lease losses to loan and leases | | | 1.54 | % | | 1.38 | % | | 1.18 | % | | 1.10 | % | | 1.07 | % | | 1.09 | % | | 1.09 | % |
| Nonperforming assets to total assets | | | 2.14 | % | | 2.05 | % | | 1.48 | % | | 1.15 | % | | 0.87 | % | | 0.71 | % | | 0.24 | % |
Annualized net charge-offs (recoveries) to average loans and leases | | | 0.28 | % | | 0.11 | % | | (0.02 | )% | | 0.04 | % | | 0.16 | % | | 0.05 | % | | 0.00 | % |
Miscellaneous data: | | | | | | | | | | | | | | | | | | | | | | |
| Net charge-offs (recoveries) | | $ | 1,714 | | $ | 642 | | | ($129 | ) | $ | 200 | | $ | 844 | | $ | 265 | | | ($17 | ) |
| Nonperforming assets: | | | | | | | | | | | | | | | | | | | | | | |
| Non-accrual loans and leases | | | 64,246 | | | 60,373 | | | 37,353 | | | 23,040 | | | 17,362 | | | 18,818 | | | 1,982 | |
| Loans and leases 90 days past due | | | 2,074 | | | 2,538 | | | 8,244 | | | 11,362 | | | 8,009 | | | 3,347 | | | 5,084 | |
| Restructured loans and leases | | | 395 | | | 655 | | | 655 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Other real estate owned, net | | | 1,698 | | | 1,352 | | | 661 | | | 461 | | | 431 | | | 0 | | | 0 | |
| Total nonperforming assets | | | 68,413 | | | 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 September | |
| | | 2008 | | 2007 | |
| | | | | | | Annualized | | | | | | Annualized | |
| | | Average | | | | Average | | Average | | | | Average | |
| | | Balances | | Interest | | Yield/Rate | | Balances | | Interest | | Yield/Rate | |
Assets | | | | | | | | | | | | | | | | | | | |
| Residential mortgage loans | | $ | 463,778 | | $ | 7,150 | | | 6.17 | % | $ | 441,190 | | $ | 6,773 | | | 6.14 | % |
| Residential construction loans | | | 210,363 | | | 3,132 | | | 5.92 | | | 151,306 | | | 2,754 | | | 7.22 | |
| Commercial mortgage loans | | | 779,652 | | | 12,936 | | | 6.60 | | | 647,659 | | | 11,499 | | | 7.04 | |
| Commercial construction loans | | | 253,806 | | | 3,260 | | | 5.11 | | | 244,975 | | | 5,593 | | | 9.06 | |
| Commercial loans and leases | | | 356,327 | | | 5,822 | | | 6.51 | | | 323,439 | | | 6,828 | | | 8.38 | |
| Consumer loans | | | 391,640 | | | 5,063 | | | 5.14 | | | 370,585 | | | 6,576 | | | 7.07 | |
| Total loans and leases | | | 2,455,566 | | | 37,363 | | | 6.16 | | | 2,179,154 | | | 40,023 | | | 7.30 | |
| Securities* | | | 423,082 | | | 5,760 | | | 5.38 | | | 458,984 | | | 7,126 | | | 6.11 | |
| Interest-bearing deposits with banks | | | 1,311 | | | 6 | | | 1.91 | | | 44,986 | | | 590 | | | 5.20 | |
| Federal funds sold | | | 19,009 | | | 99 | | | 2.07 | | | 50,448 | | | 666 | | | 5.24 | |
| TOTAL EARNING ASSETS | | | 2,898,968 | | | 43,228 | | | 5.93 | % | | 2,733,572 | | | 48,405 | | | 7.03 | % |
| | | | | | | | | | | | | | | | | | | | |
| Less: allowance for loan and lease losses | | | (34,897 | ) | | | | | | | | (23,964 | ) | | | | | | |
| Cash and due from banks | | | 49,860 | | | | | | | | | 53,935 | | | | | | | |
| Premises and equipment, net | | | 52,912 | | | | | | | | | 54,546 | | | | | | | |
| Other assets | | | 200,302 | | | | | | | | | 200,976 | | | | | | | |
| Total assets | | $ | 3,167,145 | | | | | | | | $ | 3,019,065 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders' Equity | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | $ | 242,488 | | $ | 177 | | | 0.29 | % | $ | 239,683 | | $ | 223 | | | 0.37 | % |
| Regular savings deposits | | | 155,039 | | | 118 | | | 0.30 | | | 170,548 | | | 128 | | | 0.30 | |
| Money market savings deposits | | | 647,258 | | | 2,410 | | | 1.48 | | | 683,909 | | | 6,614 | | | 3.84 | |
| Time deposits | | | 766,924 | | | 6,620 | | | 3.43 | | | 782,846 | | | 8,933 | | | 4.53 | |
| Total interest-bearing deposits | | | 1,811,709 | | | 9,325 | | | 2.05 | | | 1,876,986 | | | 15,898 | | | 3.36 | |
| Borrowings | | | 551,590 | | | 4,636 | | | 3.35 | | | 337,620 | | | 3,848 | | | 4.53 | |
| TOTAL INTEREST-BEARING LIABILITIES | | | 2,363,299 | | | 13,961 | | | 2.35 | | | 2,214,606 | | | 19,746 | | | 3.54 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing demand deposits | | | 453,281 | | | | | | | | | 463,018 | | | | | | | |
| Other liabilities | | | 29,537 | | | | | | | | | 33,877 | | | | | | | |
| Stockholder's equity | | | 321,028 | | | | | | | | | 307,564 | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 3,167,145 | | | | | | | | $ | 3,019,065 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Net interest income and spread on a fully tax equivalent basis | | | | | | 29,267 | | | 3.58 | % | | | | | 28,659 | | | 3.49 | % |
| Less: tax equivalent adjustment | | | | | | 1,180 | | | | | | | | | 1,447 | | | | |
| Net interest income | | | | | | 28,087 | | | | | | | | | 27,212 | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Interest income/earning assets | | | | | | | | | 5.93 | % | | | | | | | | 7.03 | % |
| Interest expense/earning assets | | | | | | | | | 1.91 | | | | | | | | | 2.87 | |
| Net interest margin | | | | | | | | | 4.02 | % | | | | | | | | 4.16 | % |
* 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 $4.5 million in 2008 and $5.5 million in 2007.
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)
(Dollars in thousands and tax-equivalent)
| | | Nine Months Ended September 30, | |
| | | 2008 | | 2007 | |
| | | | | | | Annualized | | | | | | Annualized | |
| | | Average | | | | Average | | Average | | | | Average | |
| | | Balances | | Interest | | Yield/Rate | | Balances | | Interest | | Yield/Rate | |
Assets | | | | | | | | | | | | | | | | | | | |
| Residential mortgage loans | | $ | 465,832 | | $ | 21,571 | | | 6.17 | % | $ | 424,147 | | $ | 19,264 | | | 6.06 | % |
| Residential construction loans | | | 193,001 | | | 8,728 | | | 6.04 | | | 151,429 | | | 8,230 | | | 7.27 | |
| Commercial mortgage loans | | | 734,780 | | | 37,205 | | | 6.76 | | | 615,648 | | | 33,350 | | | 7.24 | |
| Commercial construction loans | | | 260,397 | | | 11,141 | | | 5.72 | | | 229,368 | | | 15,602 | | | 9.09 | |
| Commercial loans and leases | | | 355,827 | | | 18,369 | | | 6.89 | | | 290,190 | | | 18,018 | | | 8.30 | |
| Consumer loans | | | 383,633 | | | 15,732 | | | 5.48 | | | 362,220 | | | 18,993 | | | 7.04 | |
| Total loans and leases | | | 2,393,470 | | | 112,746 | | | 6.29 | | | 2,073,002 | | | 113,457 | | | 7.31 | |
| Securities* | | | 427,345 | | | 17,842 | | | 5.59 | | | 511,013 | | | 22,704 | | | 5.95 | |
| Interest-bearing deposits with banks | | | 4,119 | | | 79 | | | 2.56 | | | 27,681 | | | 1,081 | | | 5.22 | |
| Federal funds sold | | | 27,381 | | | 529 | | | 2.58 | | | 43,936 | | | 1,720 | | | 5.24 | |
| TOTAL EARNING ASSETS | | | 2,852,315 | | | 131,196 | | | 6.14 | % | | 2,655,632 | | | 138,962 | | | 7.00 | % |
| | | | | | | | | | | | | | | | | | | | |
| Less: allowance for loan and lease losses | | | (29,750 | ) | | | | | | | | (22,439 | ) | | | | | | |
| Cash and due from banks | | | 49,651 | | | | | | | | | 54,448 | | | | | | | |
| Premises and equipment, net | | | 53,582 | | | | | | | | | 51,786 | | | | | | | |
| Other assets | | | 198,930 | | | | | | | | | 175,021 | | | | | | | |
| Total assets | | $ | 3,124,728 | | | | | | | | $ | 2,914,448 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders' Equity | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | $ | 244,943 | | $ | 528 | | | 0.29 | % | $ | 237,173 | | $ | 626 | | | 0.35 | % |
| Regular savings deposits | | | 156,093 | | | 365 | | | 0.31 | | | 168,957 | | | 421 | | | 0.33 | |
| Money market savings deposits | | | 680,189 | | | 9,760 | | | 1.92 | | | 611,881 | | | 17,349 | | | 3.79 | |
| Time deposits | | | 760,569 | | | 22,277 | | | 3.91 | | | 784,995 | | | 26,867 | | | 4.58 | |
| Total interest-bearing deposits | | | 1,841,794 | | | 32,930 | | | 2.39 | | | 1,803,006 | | | 45,263 | | | 3.36 | |
| Borrowings | | | 498,023 | | | 13,100 | | | 3.51 | | | 356,039 | | | 12,177 | | | 4.57 | |
| TOTAL INTEREST-BEARING LIABILITIES | | | 2,339,817 | | | 46,030 | | | 2.63 | | | 2,159,045 | | | 57,440 | | | 3.56 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing demand deposits | | | 435,725 | | | | | | | | | 441,151 | | | | | | | |
| Other liabilities | | | 30,115 | | | | | | | | | 30,916 | | | | | | | |
| Stockholder's equity | | | 319,071 | | | | | | | | | 283,336 | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 3,124,728 | | | | | | | | $ | 2,914,448 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Net interest income and spread on a fully tax equivalent basis | | | | | | 85,166 | | | 3.51 | % | | | | | 81,522 | | | 3.44 | % |
| Less: tax equivalent adjustment | | | | | | 3,381 | | | | | | | | | 4,096 | | | | |
| Net interest income | | | | | | 81,785 | | | | | | | | | 77,426 | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Interest income/earning assets | | | | | | | | | 6.14 | % | | | | | | | | 7.00 | % |
| Interest expense/earning assets | | | | | | | | | 2.15 | | | | | | | | | 2.90 | |
| Net interest margin | | | | | | | | | 3.99 | % | | | | | | | | 4.10 | % |
*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 $4.7 million in 2008 and $5.7 million in 2007.
