FOR IMMEDIATE RELEASE
SANDY SPRING BANCORP REPORTS FOURTH QUARTER AND
FULL YEAR RESULTS
OLNEY, MARYLAND, January 29, 2009 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced a net loss available to common shareholders for the fourth quarter of 2008 of $3.8 million ($.23 per diluted share) compared to net income of $8.4 million ($.51 per diluted share) for the fourth quarter of 2007 and net income of $5.4 million ($.33 per diluted share) for the third quarter of 2008. The fourth quarter of 2008 includes a pre-tax impairment charge of $1.9 million to write down the remaining value of goodwill in the Company’s leasing subsidiary, The Equipment Leasing Company, and a provision for loan and lease losses of $17.8 million, related primarily to the residential real estate development portfolio.
Net income available to common shareholders for the year ending December 31, 2008 totaled $15.4 million ($.94 per diluted share) compared to net income of $32.3 million ($2.01 per diluted share) for the prior year. The results for the current year include a total goodwill impairment charge of $4.2 million relating to The Equipment Leasing Company and a provision for loan and lease losses for the year of $33.2 million.
“This increased provision reflects our recognition of the continuing decline in economic conditions both nationwide and across our markets. This increase to the reserve is due to internal risk rating downgrades to existing credits, charge-offs and additional specific reserves primarily associated with loans in our residential real estate development portfolio,” said Daniel J. Schrider, president and chief executive officer. “We have put into place additional staffing and reporting tools to enhance our ability to monitor our credit quality and to identify and expeditiously deal with problem credits as they arise.”
“While our non-performing assets increased from the third quarter, 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 tough economic cycle. Concurrently, we are working hard to maintain control over operating expenses.”
“We continue to focus on sustaining our position as a long-term independent competitor in the Mid-Atlantic community banking landscape. Pursuant to this goal, we applied for and received in the fourth quarter $83 million in new capital through the sale of preferred stock to the U. S. Treasury. We believe this will help us to remain well-capitalized as we work out existing problem credits and continue to originate new loans to qualifying customers,” said Schrider. “We are committed to retaining and supporting our existing customers through the highest level of customer service and the delivery of quality products.”
Fourth Quarter and Full Year Highlights:
| · | The provision for loan and lease losses totaled $17.8 million for the quarter compared to $1.7 million for the fourth quarter of 2007 and $6.5 million for the third quarter of 2008. For the year, the provision for loan and lease losses totaled $33.2 million compared to $4.1 million in 2007. These increases were in response to internal risk rating downgrades, charge-offs and additional specific reserves primarily related to loans in the residential real estate development portfolio. |
| · | As previously disclosed, the Company recognized a pre-tax impairment charge of $1.9 million in the fourth quarter of 2008 and $4.2 million for the full year relating to the write down of the remaining value of goodwill in our leasing subsidiary, The Equipment Leasing Company, based on completion of Phase II of its impairment analysis. |
| · | During the fourth quarter of 2008 the company completed the sale of 83,094 shares of preferred stock under the U. S. Treasury’s Capital Purchase Program for $83 million. The preferred stock carries a 5% annual dividend yield for five years, and a 9% annual dividend yield thereafter. In addition, the U.S. Treasury also received a warrant to purchase up to 651,547 shares of Sandy Spring Bancorp common stock at an exercise price of $19.13. |
| · | The net interest margin declined to 3.73% for the fourth quarter compared to 4.19% for the fourth quarter of 2007 and 4.02% for the third quarter of 2008. For the year, the net interest margin declined to 3.92% compared to 4.13% for 2007. |
| · | Noninterest expenses increased 8% for the quarter compared to the fourth quarter of 2007 and increased 8% versus the third quarter of 2008. Excluding the goodwill impairment charge in the fourth quarter of 2008, noninterest expenses remained even compared to the fourth quarter of 2007 and declined 4% compared to the third quarter of 2008. For the full year of 2008, noninterest expenses increased 2% compared to 2007. Excluding the goodwill impairment charges and a pre-tax pension credit of $1.5 million recognized in the third quarter of 2008, noninterest expenses were virtually even versus the prior year. These results are consistent with the Company’s expectations for project LIFT, the Company’s previously disclosed initiative for managing operating expenses. |
| · | The Company as of December 31, 2008 had a total risk-based capital ratio of 13.82%, a tier 1 risk-based capital ratio of 12.56% and a capital leverage ratio of 11.00%. Capital adequacy, as measured by these ratios, was above the “well-capitalized” regulatory requirement levels for the Company. |
Review of Balance Sheet and Credit Quality
Comparing December 31, 2008 balances to December 31, 2007, total assets increased 9% to $3.3 billion due mainly to growth in the commercial loan portfolio. Total loans and leases increased 9% to $2.5 billion compared to the prior year. This increase in loans was comprised mainly of a 13% increase in commercial loans. Total loans remained virtually the same compared to the third quarter of 2008.
Customer funding sources, which include deposits plus other short-term borrowings from core customers, increased 3% to $2.4 billion at December 31, 2008 compared to the prior year. Such customer funding sources increased 5% compared to the third quarter of 2008. These increases were due primarily to growth resulting from higher rates offered on selected certificate of deposit products and the Company’s new Premier money market account. Borrowings from the Federal Home Loan Bank of Atlanta increased 41% to $413 million compared to the prior year. Compared to the third quarter of 2008, such borrowings decreased 15%. The increase over the prior year was necessary to fund loan growth. The decrease compared to the third quarter of 2008 was due primarily to growth in interest bearing deposits.
Stockholders’ equity totaled $391.9 million at December 31, 2008, and represented 12.0% of total assets, compared to 10.4% at December 31, 2007. The Company at December 31, 2008 recorded a total risk-based capital ratio of 13.82%, a tier 1 risk-based capital ratio of 12.56% and a capital leverage ratio of 11.00% which were all above “well capitalized” regulatory requirement levels. These ratios reflect the effect of the sale of $83 million in preferred stock under the U. S. Treasury’s Capital Purchase Program.
The provision for loan and lease losses totaled $17.8 million for the fourth quarter of 2008 compared to $1.7 million for the fourth quarter of 2007 and $6.5 million for the third quarter of 2008. As discussed above, these increases were primarily due to internal risk rating downgrades, charge-offs and additional specific reserves primarily related to loans in the residential real estate development portfolio. For the year, the provision for loan and lease losses totaled $33.2 million compared to $4.1 million in 2007. This increase was also due to internal risk rating downgrades, charge-offs and additional specific reserves particularly with respect to loans in the residential real estate portfolio.
Loan charge-offs, net of recoveries totaled $5.5 million for the fourth quarter of 2008 compared to $0.2 million for the fourth quarter of 2007 and $1.7 million for the third quarter of 2008. For the year, loan charge-offs, net of recoveries were $7.8 million compared to $1.3 million for 2007. The allowance for loan and lease losses represented 2.03% of outstanding loans and leases and 70% of non-performing assets at December 31, 2008 compared to 1.10% of outstanding loans and leases and 72% of non-performing assets at December 31, 2007.
Non-performing assets totaled $72.2 million at December 31, 2008 compared to $68.4 million at September 30, 2008 and $34.9 million at December 31, 2007. The increase over the third quarter of 2008 was due primarily to three commercial loans and one commercial residential real estate loan together totaling $5.2 million. The increase over the prior year also reflects six residential real estate development loans, in addition to the four loans mentioned above, totaling $22.6 million.
Income Statement Review
Comparing the fourth quarter of 2008 and 2007, net interest income decreased by $0.7 million, or 3%, due primarily to the growth in nonperforming assets and the decline in market interest rates due to the effect of interest rate cuts by the Federal Reserve throughout 2008. Such activity caused loan yields to decline faster than rates paid on deposits. These factors produced a net interest margin decrease to 3.73% in 2008 from 4.19% in 2007.
Noninterest income decreased to $11.0 million in the fourth quarter of 2008 as compared to $11.4 million in the fourth quarter of 2007, a decrease of 4%. Service charges on deposit accounts increased 3% due primarily to higher overdraft fees while fees on sales of investment products increased 79% due to higher sales of annuities. These increases were offset by decreases in gains on sales of mortgage loans of 13% due to lower mortgage volumes reflecting market conditions and 15% in trust and investment management fees also reflecting market conditions. Other noninterest income also decreased 19% compared to the fourth quarter of 2007.
Noninterest expenses were $27.2 million in the fourth quarter of 2008 compared to $25.3 million in the fourth quarter of 2007, an increase of $1.9 million or 8%. Excluding the goodwill impairment charge mentioned above, noninterest expenses remained even compared to the prior year. Salaries and benefits expenses increased 1%, while occupancy and equipment expenses increased 3%. These increases were largely offset by decreases in marketing, outside data services and other noninterest expenses. The overall noninterest expense performance reflects the effect of stringent expense controls implemented as part of project LIFT.
Comparing the year ended December 31, 2008 and 2007, net interest income increased by $3.6 million, or 3%, due primarily to growth in the loan portfolio. The effect of such loan growth was offset to a great extent by a higher level of nonperforming assets, the decline in market interest rates and to higher rates offered to attract deposits. These factors produced a net interest margin decrease to 3.92% in 2008 from 4.13% in 2007.
Noninterest income increased to $46.2 million for the year ended December 31, 2008 compared to $44.3 million in 2007, an increase of 4%. Service charges on deposit accounts increased 15% due primarily to higher overdraft fees while fees on sales of investment products increased 16% due to higher sales of annuities. These increases were somewhat offset by decreases of 16% in gains on sales of mortgage loans due to lower mortgage volumes reflecting market conditions and 11% in insurance agency commissions due to lower fees on commercial lines and reduced contingency fees.
Noninterest expenses were $102.1 million in 2008 compared to $99.8 million in 2007, an increase of $2.3 million or 2%. Excluding the goodwill impairment charges and the pre-tax pension credit in the third quarter of 2008, noninterest expenses remained virtually level compared to the prior year. While FDIC insurance premiums increased $1.3 million over 2007, this increase was offset by a decrease of $1.5 million in merger expenses recognized in 2007. Intangibles amortization increased $0.4 million as a result of two bank acquisitions completed in 2007.
Conference Call
The Company’s management will host a conference call to discuss its fourth quarter and full year 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 877-795-3604; 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) February 28, 2009. A telephone voice replay will also be available during that same time period at 888-203-1112. Please use pass code #1250457 to access.
About Sandy Spring Bancorp/Sandy Spring Bank
With $3.3 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:
Daniel J. Schrider, President & Chief Executive Officer, or
Philip J. Mantua, E.V.P. & Chief Financial Officer
Sandy Spring Bancorp
17801 Georgia Avenue
Olney, Maryland 20832
1-800-399-5919
| Email: | 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 | | | | | | Twelve Months Ended | | | | |
| | | December 31, | | | % | | | December 31, | | | % | |
| | | 2008 | | | 2007 | | | Change | | | 2008 | | | 2007 | | | Change | |
| Profitability for the period: | | | | | | | | | | | | | | | | | | |
| Net interest income | | $ | 26,674 | | | $ | 27,400 | | | | (3 | ) % | | $ | 108,459 | | | $ | 104,826 | | | | 3 | % |
| Provision for loan and lease losses | | | 17,791 | | | | 1,725 | | | | 931 | | | | 33,192 | | | | 4,094 | | | | 711 | |
| Noninterest income | | | 10,973 | | | | 11,380 | | | | (4 | ) | | | 46,243 | | | | 44,289 | | | | 4 | |
| Noninterest expenses | | | 27,233 | | | | 25,316 | | | | 8 | | | | 102,089 | | | | 99,788 | | | | 2 | |
| Income (loss) before income taxes | | | (7,377 | ) | | | 11,739 | | | | (163 | ) | | | 19,421 | | | | 45,233 | | | | (57 | ) |
| Net income (loss) | | $ | (3,436 | ) | | $ | 8,367 | | | | (141 | ) | | $ | 15,779 | | | $ | 32,262 | | | | (51 | ) |
| Net income (loss) available to common shareholders | | $ | (3,770 | ) | | $ | 8,367 | | | | (145 | ) | | $ | 15,445 | | | $ | 32,262 | | | | (52 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (1) | | | (0.46 | )% | | | 1.10 | % | | | | | | | 0.49 | % | | | 1.10 | % | | | | |
| Return on average common equity (1) | | | (4.70 | )% | | | 10.69 | % | | | | | | | 4.84 | % | | | 11.12 | % | | | | |
| Net interest margin | | | 3.73 | % | | | 4.19 | % | | | | | | | 3.92 | % | | | 4.13 | % | | | | |
| Efficiency ratio - GAAP * | | | 72.34 | % | | | 65.28 | % | | | | | | | 65.99 | % | | | 66.92 | % | | | | |
| Efficiency ratio - Non-GAAP * | | | 62.41 | % | | | 60.22 | % | | | | | | | 59.88 | % | | | 61.92 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic net income (loss) per share | | $ | (0.21 | ) | | $ | 0.51 | | | | (141 | ) % | | $ | 0.96 | | | $ | 2.01 | | | | (52 | ) % |
| Basic net income (loss) per common share | | | (0.23 | ) | | | 0.51 | | | | (145 | ) | | | 0.94 | | | | 2.01 | | | | (53 | ) |
| Diluted net income (loss) per share | | | (0.21 | ) | | $ | 0.51 | | | | (141 | ) % | | | 0.96 | | | $ | 2.01 | | | | (52 | ) % |
| Diluted net income (loss) per common share | | | (0.23 | ) | | | 0.51 | | | | (145 | ) | | | 0.94 | | | | 2.01 | | | | (53 | ) |
| Dividends declared per common share | | | 0.24 | | | | 0.23 | | | | 4 | | | | 0.96 | | | | 0.92 | | | | 4 | |
| Book value per common share | | | 19.05 | | | | 19.31 | | | | (1 | ) | | | 19.05 | | | | 19.31 | | | | (1 | ) |
| Average fully diluted shares | | | 16,434,214 | | | | 16,422,161 | | | | | | | | 16,429,471 | | | | 16,087,310 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| At period-end: | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 3,313,638 | | | $ | 3,043,953 | | | | 9 | % | | $ | 3,313,638 | | | $ | 3,043,953 | | | | 9 | % |
| Deposits | | | 2,365,257 | | | | 2,273,868 | | | | 4 | | | | 2,365,257 | | | | 2,273,868 | | | | 4 | |
| Total loans and leases | | | 2,490,646 | | | | 2,277,031 | | | | 9 | | | | 2,490,646 | | | | 2,277,031 | | | | 9 | |
| Securities | | | 492,491 | | | | 445,273 | | | | 11 | | | | 492,491 | | | | 445,273 | | | | 11 | |
| Stockholders' equity | | | 391,862 | | | | 315,640 | | | | 24 | | | | 391,862 | | | | 315,640 | | | | 24 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Capital and credit quality ratios: | | | | | | | | | | | | | | | | | | | | | | | | |
| Average equity to average assets | | | 10.59 | % | | | 10.33 | % | | | | | | | 10.31 | % | | | 9.89 | % | | | | |
| Allowance for loan and lease losses to loans and leases | | | 2.03 | % | | | 1.10 | % | | | | | | | 2.03 | % | | | 1.10 | % | | | | |
| Nonperforming assets to total assets | | | 2.18 | % | | | 1.15 | % | | | | | | | 2.18 | % | | | 1.15 | % | | | | |
| Annualized net charge-offs to average loans and leases | | | 0.88 | % | | | 0.01 | % | | | | | | | 0.32 | % | | | 0.06 | % | | | | |
(1) Calculation utilizes net income available to common shareholders
* The GAAP efficiency ratio is noninterest expenses divided by net interest income plus noninterest income from the Consolidated Statements of Income.
The 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.
Sandy Spring Bancorp, Inc. and Subsidiaries
Reconciliation of GAAP-based and Traditional Efficiency Ratios (Unaudited)
(In thousands, except per share data)
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| Noninterest expenses–GAAP | | $ | 27,233 | | | $ | 25,316 | | | $ | 102,089 | | | $ | 99,788 | |
| Net interest income plus noninterest income– | | | | | | | | | | | | | | | | |
| GAAP | | | 37,647 | | | | 38,780 | | | | 154,702 | | | | 149,115 | |
| | | | | | | | | | | | | | | | | |
| Efficiency ratio–GAAP | | | 72.34 | % | | | 65.28 | % | | | 65.99 | % | | | 66.92 | % |
| | | | | | | | | | | | | | | | | |
| Noninterest expenses–GAAP | | $ | 27,233 | | | $ | 25,316 | | | $ | 102,089 | | | $ | 99,788 | |
| Less non-GAAP adjustment: | | | | | | | | | | | | | | | | |
| Goodwill Impairment Loss | | | 1,909 | | | | 0 | | | | 4,159 | | | | 0 | |
| Amortization of intangible assets | | | 1,103 | | | | 1,124 | | | | 4,447 | | | | 4,080 | |
| Plus non-GAAP adjustment: | | | | | | | | | | | | | | | | |
| Pension prior service credit | | | 0 | | | | 0 | | | | 1,473 | | | | 0 | |
| Noninterest expenses– Non-GAAP | | | 24,221 | | | | 24,192 | | | | 94,956 | | | | 95,708 | |
| | | | | | | | | | | | | | | | | |
| Net interest income plus noninterest income– | | | | | | | | | | | | | | | | |
| GAAP | | | 37,647 | | | | 38,780 | | | | 154,702 | | | | 149,115 | |
| Plus non-GAAP adjustment: | | | | | | | | | | | | | | | | |
| Tax-equivalency | | | 1,164 | | | | 1,410 | | | | 4,545 | | | | 5,506 | |
| Less non-GAAP adjustments: | | | | | | | | | | | | | | | | |
| Securities gains | | | 1 | | | | 15 | | | | 663 | | | | 43 | |
| Net interest income plus noninterest | | | | | | | | | | | | | | | | |
| income – traditional ratio | | | 38,810 | | | | 40,175 | | | | 158,584 | | | | 154,578 | |
| | | | | | | | | | | | | | | | | |
| Efficiency ratio – Non-GAAP | | | 62.41 | % | | | 60.22 | % | | | 59.88 | % | | | 61.92 | % |
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
| | | December 31, | |
| | | 2008 | | | 2007 | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 44,738 | | | $ | 63,432 | |
| Federal funds sold | | | 60,027 | | | | 22,055 | |
| Interest-bearing deposits with banks | | | 464 | | | | 365 | |
| Cash and cash equivalents | | | 105,229 | | | | 85,852 | |
| | | | | | | | | |
| Residential mortgage loans held for sale (at fair value) | | | 11,391 | | | | 7,089 | |
| Investments available-for-sale (at fair value) | | | 291,727 | | | | 186,801 | |
| Investments held-to-maturity - fair value of $175,908 | | | | | | | | |
| and $240,995, respectively | | | 171,618 | | | | 234,706 | |
| Other equity securities | | | 29,146 | | | | 23,766 | |
| | | | | | | | | |
| Total loans and leases | | | 2,490,646 | | | | 2,277,031 | |
| Less: allowance for loan and lease losses | | | (50,526 | ) | | | (25,092 | ) |
| Net loans and leases | | | 2,440,120 | | | | 2,251,939 | |
| | | | | | | | | |
| Premises and equipment, net | | | 51,410 | | | | 54,457 | |
| Other real estate owned | | | 2,860 | | | | 461 | |
| Accrued interest receivable | | | 11,810 | | | | 14,955 | |
| Goodwill | | | 76,248 | | | | 76,585 | |
| Other intangible assets, net | | | 12,183 | | | | 16,630 | |
| Other assets | | | 109,896 | | | | 90,712 | |
| Total assets | | $ | 3,313,638 | | | $ | 3,043,953 | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
| Noninterest-bearing deposits | | $ | 461,517 | | | $ | 434,053 | |
| Interest-bearing deposits | | | 1,903,740 | | | | 1,839,815 | |
| Total deposits | | | 2,365,257 | | | | 2,273,868 | |
| | | | | | | | | |
| Short-term borrowings | | | 421,074 | | | | 373,972 | |
| Long-term borrowings | | | 66,584 | | | | 17,553 | |
| Subordinated debentures | | | 35,000 | | | | 35,000 | |
| Accrued interest payable and other liabilities | | | 33,861 | | | | 27,920 | |
| Total liabilities | | | 2,921,776 | | | | 2,728,313 | |
| | | | | | | | | |
| Stockholders' Equity | | | | | | | | |
| Preferred stock -- par value $1.00 (liquidation preference of $1,000 | | | | | |
| per share ) shares authorized 83,094 and 0, respectively; shares | | | | | |
| issued and outstanding 83,094 and 0, respectively (discount of | | | | | |
| $3,654,000 and 0, respectively) | | | 79,440 | | | | 0 | |
| Common stock -- par value $1.00; shares authorized 49,916,906 | | | | | |
| and 50,000,000, respectively; shares issued and outstanding | | | | | |
| 16,398,523 and 16,349,317, respectively | | | 16,399 | | | | 16,349 | |
| Warrants | | | 3,699 | | | | 0 | |
| Additional paid in capital | | | 85,486 | | | | 83,970 | |
| Retained earnings | | | 214,410 | | | | 216,376 | |
| Accumulated other comprehensive loss | | | (7,572 | ) | | | (1,055 | ) |
| Total stockholders' equity | | | 391,862 | | | | 315,640 | |
| Total liabilities and stockholders' equity | | $ | 3,313,638 | | | $ | 3,043,953 | |
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| Interest income: | | | | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 36,337 | | | $ | 39,967 | | | $ | 148,765 | | | $ | 152,723 | |
| Interest on loans held for sale | | | 118 | | | | 114 | | | | 436 | | | | 815 | |
| Interest on deposits with banks | | | 3 | | | | 42 | | | | 82 | | | | 1,123 | |
| Interest and dividends on securities: | | | | | | | | | | | | | | | | |
| Taxable | | | 2,428 | | | | 3,157 | | | | 10,177 | | | | 13,989 | |
| Exempt from federal income taxes | | | 2,088 | | | | 2,392 | | | | 8,800 | | | | 10,168 | |
| Interest on federal funds sold | | | 56 | | | | 437 | | | | 585 | | | | 2,157 | |
| Total interest income | | | 41,030 | | | | 46,109 | | | | 168,845 | | | | 180,975 | |
| Interest expense: | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 9,886 | | | | 14,653 | | | | 42,816 | | | | 59,916 | |
| Interest on short-term borrowings | | | 3,326 | | | | 3,408 | | | | 13,212 | | | | 13,673 | |
| Interest on long-term borrowings | | | 1,144 | | | | 648 | | | | 4,358 | | | | 2,560 | |
| Total interest expense | | | 14,356 | | | | 18,709 | | | | 60,386 | | | | 76,149 | |
| Net interest income | | | 26,674 | | | | 27,400 | | | | 108,459 | | | | 104,826 | |
| Provision for loan and lease losses | | | 17,791 | | | | 1,725 | | | | 33,192 | | | | 4,094 | |
| Net interest income after provision for loan and lease losses | | | 8,883 | | | | 25,675 | | | | 75,267 | | | | 100,732 | |
| Noninterest income: | | | | | | | | | | | | | | | | |
| Securities gains | | | 1 | | | | 15 | | | | 663 | | | | 43 | |
| Service charges on deposit accounts | | | 3,297 | | | | 3,211 | | | | 12,778 | | | | 11,148 | |
| Gains on sales of mortgage loans | | | 516 | | | | 590 | | | | 2,288 | | | | 2,739 | |
| Fees on sales of investment products | | | 928 | | | | 518 | | | | 3,475 | | | | 2,989 | |
| Trust and investment management fees | | | 2,201 | | | | 2,581 | | | | 9,483 | | | | 9,588 | |
| Insurance agency commissions | | | 1,183 | | | | 1,203 | | | | 5,908 | | | | 6,625 | |
| Income from bank owned life insurance | | | 719 | | | | 732 | | | | 2,902 | | | | 2,829 | |
| Visa check fees | | | 691 | | | | 747 | | | | 2,875 | | | | 2,784 | |
| Other income | | | 1,437 | | | | 1,783 | | | | 5,871 | | | | 5,544 | |
| Total noninterest income | | | 10,973 | | | | 11,380 | | | | 46,243 | | | | 44,289 | |
| Noninterest expenses: | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 13,441 | | | | 13,343 | | | | 53,015 | | | | 55,207 | |
| Occupancy expense of premises | | | 2,612 | | | | 2,288 | | | | 10,762 | | | | 10,360 | |
| Equipment expenses | | | 1,642 | | | | 1,829 | | | | 6,156 | | | | 6,563 | |
| Marketing | | | 652 | | | | 674 | | | | 2,163 | | | | 2,237 | |
| Outside data services | | | 1,054 | | | | 1,094 | | | | 4,373 | | | | 3,967 | |
| Amortization of intangible assets | | | 1,103 | | | | 1,124 | | | | 4,447 | | | | 4,080 | |
| Goodwill impairment loss | | | 1,909 | | | | 0 | | | | 4,159 | | | | 0 | |
| Other expenses | | | 4,820 | | | | 4,964 | | | | 17,014 | | | | 17,374 | |
| Total noninterest expenses | | | 27,233 | | | | 25,316 | | | | 102,089 | | | | 99,788 | |
| Income (loss) before income taxes | | | (7,377 | ) | | | 11,739 | | | | 19,421 | | | | 45,233 | |
| Income tax expense (benefit) | | | (3,941 | ) | | | 3,372 | | | | 3,642 | | | | 12,971 | |
| Net income (loss) | | | (3,436 | ) | | $ | 8,367 | | | $ | 15,779 | | | $ | 32,262 | |
| Preferred stock dividends and discount accretion | | | 334 | | | | 0 | | | | 334 | | | | 0 | |
| Net income (loss) available to common shareholders | | $ | (3,770 | ) | | $ | 8,367 | | | $ | 15,445 | | | $ | 32,262 | |
| | | | | | | | | | | | | | | | | |
| Basic net income (loss) per share | | $ | (0.21 | ) | | $ | 0.51 | | | $ | 0.96 | | | $ | 2.01 | |
| Basic net income (loss) per common share | | | (0.23 | ) | | | 0.51 | | | | 0.94 | | | | 2.01 | |
| Diluted net income (loss) per share | | | (0.21 | ) | | | 0.51 | | | | 0.96 | | | | 2.01 | |
| Diluted net income (loss) per common share | | | (0.23 | ) | | | 0.51 | | | | 0.94 | | | | 2.01 | |
| Dividends declared per common share | | | 0.24 | | | | 0.23 | | | | 0.96 | | | | 0.92 | |
Sandy Spring Bancorp, Inc. and Subsidiaries
Historical Trends in Quarterly Financial Data (Unaudited)
(Dollars in thousands, except per share data)
| | | 2008 | | | 2007 | |
| | | | Q4 | | | | Q3 | | | | Q2 | | | | Q1 | | | | Q4 | | | | Q3 | | | | Q2 | | | | Q1 | |
| Profitability for the quarter: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tax-equivalent interest income | | $ | 42,194 | | | $ | 43,228 | | | $ | 42,906 | | | $ | 45,062 | | | $ | 47,519 | | | $ | 48,405 | | | $ | 47,378 | | | $ | 43,179 | |
| Interest expense | | | 14,356 | | | | 13,961 | | | | 14,726 | | | | 17,343 | | | | 18,709 | | | | 19,746 | | | | 19,815 | | | | 17,879 | |
| Tax-equivalent net interest income | | | 27,838 | | | | 29,267 | | | | 28,180 | | | | 27,719 | | | | 28,810 | | | | 28,659 | | | | 27,563 | | | | 25,300 | |
| Tax-equivalent adjustment | | | 1,164 | | | | 1,180 | | | | 1,061 | | | | 1,140 | | | | 1,410 | | | | 1,447 | | | | 1,364 | | | | 1,285 | |
| Provision for loan and lease losses | | | 17,791 | | | | 6,545 | | | | 6,189 | | | | 2,667 | | | | 1,725 | | | | 750 | | | | 780 | | | | 839 | |
| Noninterest income | | | 10,973 | | | | 10,879 | | | | 11,695 | | | | 12,696 | | | | 11,380 | | | | 11,130 | | | | 10,873 | | | | 10,906 | |
| Noninterest expenses | | | 27,233 | | | | 25,267 | | | | 24,886 | | | | 24,703 | | | | 25,316 | | | | 25,899 | | | | 24,959 | | | | 23,614 | |
| Income (loss) before income taxes | | | (7,377 | ) | | | 7,154 | | | | 7,739 | | | | 11,905 | | | | 11,739 | | | | 11,693 | | | | 11,333 | | | | 10,468 | |
| Income tax expense (benefit) | | | (3,941 | ) | | | 1,795 | | | | 2,088 | | | | 3,700 | | | | 3,372 | | | | 3,512 | | | | 3,164 | | | | 2,923 | |
| Net Income (loss) | | | (3,436 | ) | | | 5,359 | | | | 5,651 | | | | 8,205 | | | | 8,367 | | | | 8,181 | | | | 8,169 | | | | 7,545 | |
| Net Income (loss) available to common shareholders | | | (3,770 | ) | | | 5,359 | | | | 5,651 | | | | 8,205 | | | | 8,367 | | | | 8,181 | | | | 8,169 | | | | 7,545 | |
| Financial ratios: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | (0.42 | )% | | | 0.67 | % | | | 0.73 | % | | | 1.07 | % | | | 1.10 | % | | | 1.08 | % | | | 1.10 | % | | | 1.12 | % |
| Return on average common equity | | | (4.70 | )% | | | 6.64 | % | | | 7.09 | % | | | 10.45 | % | | | 10.69 | % | | | 10.55 | % | | | 11.45 | % | | | 11.96 | % |
| Net interest margin | | | 3.73 | % | | | 4.02 | % | | | 3.96 | % | | | 3.99 | % | | | 4.19 | % | | | 4.16 | % | | | 4.08 | % | | | 4.07 | % |
| Efficiency ratio - GAAP* | | | 72.34 | % | | | 64.84 | % | | | 64.11 | % | | | 62.90 | % | | | 65.28 | % | | | 67.55 | % | | | 67.33 | % | | | 67.62 | % |
| Efficiency ratio - Non-GAAP * | | | 62.41 | % | | | 58.27 | % | | | 59.73 | % | | | 59.18 | % | | | 60.22 | % | | | 62.30 | % | | | 62.26 | % | | | 63.01 | % |
| Per share data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic net income (loss) per share | | $ | (0.21 | ) | | $ | 0.33 | | | $ | 0.35 | | | $ | 0.50 | | | $ | 0.51 | | | $ | 0.50 | | | $ | 0.51 | | | $ | 0.49 | |
| Basic net income (loss) per common share | | $ | (0.23 | ) | | $ | 0.33 | | | $ | 0.35 | | | $ | 0.50 | | | $ | 0.51 | | | $ | 0.50 | | | $ | 0.51 | | | $ | 0.49 | |
| Diluted net income (loss) per share | | $ | (0.21 | ) | | $ | 0.33 | | | $ | 0.34 | | | $ | 0.50 | | | $ | 0.51 | | | $ | 0.50 | | | $ | 0.51 | | | $ | 0.49 | |
| Diluted net income (loss) per common share | | $ | (0.23 | ) | | $ | 0.33 | | | $ | 0.34 | | | $ | 0.50 | | | $ | 0.51 | | | $ | 0.50 | | | $ | 0.51 | | | $ | 0.49 | |
| Dividends declared per common share | | $ | 0.24 | | | $ | 0.24 | | | $ | 0.24 | | | $ | 0.24 | | | $ | 0.23 | | | $ | 0.23 | | | $ | 0.23 | | | $ | 0.23 | |
| Book value per common share | | $ | 19.05 | | | $ | 19.51 | | | $ | 19.56 | | | $ | 19.50 | | | $ | 19.31 | | | $ | 18.92 | | | $ | 18.62 | | | $ | 17.51 | |
| Average fully diluted shares | | | 16,434,214 | | | | 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 | | $ | 1 | | | $ | 9 | | | $ | 79 | | | $ | 574 | | | $ | 15 | | | $ | 22 | | | $ | 4 | | | $ | 2 | |
| Service charges on deposit accounts | | | 3,297 | | | | 3,249 | | | | 3,202 | | | | 3,030 | | | | 3,211 | | | | 2,999 | | | | 2,630 | | | | 2,308 | |
| Gains on sales of mortgage loans | | | 516 | | | | 397 | | | | 653 | | | | 722 | | | | 590 | | | | 738 | | | | 773 | | | | 638 | |
| Fees on sales of investment products | | | 928 | | | | 820 | | | | 905 | | | | 822 | | | | 518 | | | | 765 | | | | 906 | | | | 800 | |
| Trust and investment management fees | | | 2,201 | | | | 2,380 | | | | 2,505 | | | | 2,397 | | | | 2,581 | | | | 2,365 | | | | 2,361 | | | | 2,281 | |
| Insurance agency commissions | | | 1,183 | | | | 1,282 | | | | 1,357 | | | | 2,086 | | | | 1,203 | | | | 1,294 | | | | 1,438 | | | | 2,690 | |
| Income from bank owned life insurance | | | 719 | | | | 742 | | | | 727 | | | | 714 | | | | 732 | | | | 720 | | | | 693 | | | | 684 | |
| Visa check fees | | | 691 | | | | 727 | | | | 761 | | | | 696 | | | | 747 | | | | 730 | | | | 717 | | | | 590 | |
| Other income | | | 1,437 | | | | 1,273 | | | | 1,506 | | | | 1,655 | | | | 1,783 | | | | 1,497 | | | | 1,351 | | | | 913 | |
| Total | | | 10,973 | | | | 10,879 | | | | 11,695 | | | | 12,696 | | | | 11,380 | | | | 11,130 | | | | 10,873 | | | | 10,906 | |
| Noninterest expense breakdown: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | $ | 13,441 | | | $ | 11,949 | | | $ | 13,862 | | | $ | 13,763 | | | $ | 13,343 | | | $ | 14,654 | | | $ | 13,776 | | | $ | 13,434 | |
| Occupancy expense of premises | | | 2,612 | | | | 2,732 | | | | 2,619 | | | | 2,799 | | | | 2,288 | | | | 2,946 | | | | 2,709 | | | | 2,417 | |
| Equipment expenses | | | 1,642 | | | | 1,515 | | | | 1,560 | | | | 1,439 | | | | 1,829 | | | | 1,631 | | | | 1,501 | | | | 1,602 | |
| Marketing | | | 652 | | | | 526 | | | | 488 | | | | 497 | | | | 674 | | | | 359 | | | | 675 | | | | 529 | |
| Outside data services | | | 1,054 | | | | 1,116 | | | | 1,081 | | | | 1,122 | | | | 1,094 | | | | 870 | | | | 1,077 | | | | 926 | |
| Amortization of intangible assets | | | 1,103 | | | | 1,103 | | | | 1,117 | | | | 1,124 | | | | 1,124 | | | | 1,123 | | | | 1,031 | | | | 802 | |
| Goodwill impairment loss | | | 1,909 | | | | 2,250 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| Other expenses | | | 4,820 | | | | 4,076 | | | | 4,159 | | | | 3,959 | | | | 4,964 | | | | 4,316 | | | | 4,190 | | | | 3,904 | |
| Total | | | 27,233 | | | | 25,267 | | | | 24,886 | | | | 24,703 | | | | 25,316 | | | | 25,899 | | | | 24,959 | | | | 23,614 | |
* The GAAP efficiency ratio is noninterest expenses divided by net interest income plus noninterest income from the Consolidated Statements of Income.
The 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 | |
| | | | Q4 | | | | Q3 | | | | Q2 | | | | Q1 | | | | Q4 | | | | Q3 | | | | Q2 | | | | Q1 | |
| Balance sheets at quarter end: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage loans | | $ | 457,571 | | | $ | 452,815 | | | $ | 461,000 | | | $ | 459,768 | | | $ | 456,305 | | | $ | 439,091 | | | $ | 427,252 | | | $ | 404,177 | |
| Residential construction loans | | | 189,249 | | | | 221,630 | | | | 199,602 | | | | 183,690 | | | | 166,981 | | | | 154,908 | | | | 154,444 | | | | 144,744 | |
| Commercial mortgage loans | | | 847,452 | | | | 804,728 | | | | 752,905 | | | | 732,692 | | | | 662,837 | | | | 645,790 | | | | 660,004 | | | | 621,692 | |
| Commercial construction loans | | | 223,169 | | | | 247,930 | | | | 273,059 | | | | 256,714 | | | | 262,840 | | | | 246,569 | | | | 236,278 | | | | 225,108 | |
| Commercial loans and leases | | | 366,978 | | | | 358,097 | | | | 356,256 | | | | 354,509 | | | | 351,773 | | | | 343,653 | | | | 316,409 | | | | 282,854 | |
| Consumer loans | | | 406,227 | | | | 397,218 | | | | 386,126 | | | | 376,650 | | | | 376,295 | | | | 371,588 | | | | 370,621 | | | | 357,607 | |
| Total loans and leases | | | 2,490,646 | | | | 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 | | | (50,526 | ) | | | (38,266 | ) | | | (33,435 | ) | | | (27,887 | ) | | | (25,092 | ) | | | (23,567 | ) | | | (23,661 | ) | | | (22,186 | ) |
| Net loans and leases | | | 2,440,120 | | | | 2,444,152 | | | | 2,395,513 | | | | 2,336,136 | | | | 2,251,939 | | | | 2,178,032 | | | | 2,121,347 | | | | 2,013,996 | |
| Goodwill | | | 76,248 | | | | 75,701 | | | | 78,376 | | | | 78,111 | | | | 76,585 | | | | 76,625 | | | | 77,457 | | | | 53,913 | |
| Other intangible assets, net | | | 12,183 | | | | 13,286 | | | | 14,390 | | | | 15,507 | | | | 16,630 | | | | 17,754 | | | | 18,878 | | | | 15,244 | |
| Total assets | | | 3,313,638 | | | | 3,195,117 | | | | 3,164,123 | | | | 3,160,896 | | | | 3,043,953 | | | | 2,965,492 | | | | 3,101,409 | | | | 2,945,477 | |
| Total deposits | | | 2,365,257 | | | | 2,248,812 | | | | 2,294,791 | | | | 2,340,568 | | | | 2,273,868 | | | | 2,280,102 | | | | 2,386,226 | | | | 2,274,322 | |
| Customer repurchase agreements | | | 75,106 | | | | 77,630 | | | | 93,919 | | | | 101,666 | | | | 98,015 | | | | 122,130 | | | | 113,622 | | | | 114,712 | |
| Total stockholders' equity | | | 391,862 | | | | 319,700 | | | | 320,218 | | | | 318,967 | | | | 315,640 | | | | 310,624 | | | | 306,255 | | | | 275,319 | |
| Quarterly average balance sheets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage loans | | $ | 457,956 | | | $ | 463,778 | | | $ | 462,858 | | | $ | 463,597 | | | $ | 453,568 | | | $ | 441,190 | | | $ | 426,496 | | | $ | 406,886 | |
| Residential construction loans | | | 208,616 | | | | 210,363 | | | | 193,822 | | | | 174,626 | | | | 163,922 | | | | 151,306 | | | | 151,785 | | | | 151,194 | |
| Commercial mortgage loans | | | 833,752 | | | | 779,652 | | | | 733,905 | | | | 690,289 | | | | 649,101 | | | | 647,659 | | | | 630,335 | | | | 565,277 | |
| Commercial construction loans | | | 236,176 | | | | 253,806 | | | | 261,360 | | | | 266,098 | | | | 252,705 | | | | 244,975 | | | | 239,299 | | | | 203,371 | |
| Commercial loans and leases | | | 361,731 | | | | 356,327 | | | | 359,287 | | | | 351,862 | | | | 339,744 | | | | 323,439 | | | | 300,325 | | | | 246,218 | |
| Consumer loans | | | 400,937 | | | | 391,640 | | | | 380,911 | | | | 378,261 | | | | 374,572 | | | | 370,585 | | | | 362,221 | | | | 353,668 | |
| Total loans and leases | | | 2,499,168 | | | | 2,455,566 | | | | 2,392,143 | | | | 2,324,733 | | | | 2,233,612 | | | | 2,179,154 | | | | 2,110,461 | | | | 1,926,614 | |
| Securities | | | 431,858 | | | | 423,082 | | | | 431,182 | | | | 427,819 | | | | 451,168 | | | | 458,984 | | | | 523,507 | | | | 551,566 | |
| Total earning assets | | | 2,972,173 | | | | 2,898,968 | | | | 2,862,012 | | | | 2,795,453 | | | | 2,725,801 | | | | 2,733,572 | | | | 2,711,225 | | | | 2,518,797 | |
| Total assets | | | 3,235,432 | | | | 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 | | | 2,405,890 | | | | 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 | | | 458,538 | | | | 453,281 | | | | 441,330 | | | | 412,369 | | | | 439,967 | | | | 463,018 | | | | 450,887 | | | | 408,954 | |
| Total deposits | | | 2,305,880 | | | | 2,264,990 | | | | 2,306,867 | | | | 2,260,837 | | | | 2,283,122 | | | | 2,340,004 | | | | 2,290,413 | | | | 2,099,409 | |
| Customer repurchase agreements | | | 84,012 | | | | 81,158 | | | | 92,968 | | | | 94,841 | | | | 112,828 | | | | 113,425 | | | | 109,187 | | | | 101,805 | |
| Stockholders' equity | | | 342,639 | | | | 321,028 | | | | 320,409 | | | | 315,755 | | | | 310,605 | | | | 307,564 | | | | 286,040 | | | | 255,781 | |
| Capital and credit quality measures: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Average equity to average assets | | | 10.59 | % | | | 10.14 | % | | | 10.22 | % | | | 10.28 | % | | | 10.33 | % | | | 10.19 | % | | | 9.60 | % | | | 9.32 | % |
| Allowance for loan and lease losses to loan and leases | | | 2.03 | % | | | 1.54 | % | | | 1.38 | % | | | 1.18 | % | | | 1.10 | % | | | 1.07 | % | | | 1.09 | % | | | 1.09 | % |
| Nonperforming assets to total assets | | | 2.18 | % | | | 2.14 | % | | | 2.05 | % | | | 1.48 | % | | | 1.15 | % | | | 0.87 | % | | | 0.71 | % | | | 0.24 | % |
| Annualized net charge-offs (recoveries) to | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| average loans and leases | | | 0.88 | % | | | 0.28 | % | | | 0.11 | % | | | (0.02 | )% | | | 0.04 | % | | | 0.16 | % | | | 0.05 | % | | | 0.00 | % |
| Miscellaneous data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net charge-offs (recoveries) | | $ | 5,531 | | | $ | 1,714 | | | $ | 642 | | | $ | (129 | ) | | $ | 200 | | | $ | 844 | | | $ | 265 | | | $ | (17 | ) |
| Nonperforming assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-accrual loans and leases | | | 67,950 | | | | 64,246 | | | | 60,373 | | | | 37,353 | | | | 23,040 | | | | 17,362 | | | | 18,818 | | | | 1,982 | |
| Loans and leases 90 days past due | | | 1,038 | | | | 2,074 | | | | 2,538 | | | | 8,244 | | | | 11,362 | | | | 8,009 | | | | 3,347 | | | | 5,084 | |
| Restructured loans and leases | | | 395 | | | | 395 | | | | 655 | | | | 655 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| Other real estate owned, net | | | 2,860 | | | | 1,698 | | | | 1,352 | | | | 661 | | | | 461 | | | | 431 | | | | 0 | | | | 0 | |
| Total nonperforming assets | | | 72,243 | | | | 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 December | |
| | | 2008 | | | 2007 | |
| | | | | | | | | Annualized | | | | | | | | | Annualized | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balances | | | Interest | | | Yield/Rate | | | Balances | | | Interest | | | Yield/Rate | |
| Assets | | | | | | | | | | | | | | | | | | |
| Residential mortgage loans | | $ | 457,956 | | | $ | 6,976 | | | | 6.09 | % | | $ | 453,568 | | | $ | 7,130 | | | | 6.29 | % |
| Residential construction loans | | | 208,616 | | | | 2,857 | | | | 5.45 | | | | 163,922 | | | | 2,817 | | | | 6.82 | |
| Commercial mortgage loans | | | 833,752 | | | | 13,494 | | | | 6.44 | | | | 649,101 | | | | 11,642 | | | | 7.12 | |
| Commercial construction loans | | | 236,176 | | | | 2,718 | | | | 4.58 | | | | 252,705 | | | | 5,226 | | | | 8.20 | |
| Commercial loans and leases | | | 361,731 | | | | 5,638 | | | | 6.21 | | | | 339,744 | | | | 6,892 | | | | 8.06 | |
| Consumer loans | | | 400,937 | | | | 4,771 | | | | 4.73 | | | | 374,572 | | | | 6,374 | | | | 6.75 | |
| Total loans and leases | | | 2,499,168 | | | | 36,454 | | | | 5.81 | | | | 2,233,612 | | | | 40,081 | | | | 7.13 | |
| Securities* | | | 431,858 | | | | 5,680 | | | | 5.19 | | | | 451,168 | | | | 6,959 | | | | 6.07 | |
| Interest-bearing deposits with banks | | | 515 | | | | 3 | | | | 2.71 | | | | 3,557 | | | | 42 | | | | 4.64 | |
| Federal funds sold | | | 40,632 | | | | 56 | | | | 0.54 | | | | 37,464 | | | | 437 | | | | 4.62 | |
| TOTAL EARNING ASSETS | | | 2,972,173 | | | | 42,193 | | | | 5.65 | % | | | 2,725,801 | | | | 47,519 | | | | 6.92 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Less: allowance for loan and lease losses | | | (41,204 | ) | | | | | | | | | | | (23,791 | ) | | | | | | | | |
| Cash and due from banks | | | 50,963 | | | | | | | | | | | | 53,839 | | | | | | | | | |
| Premises and equipment, net | | | 52,092 | | | | | | | | | | | | 55,033 | | | | | | | | | |
| Other assets | | | 201,408 | | | | | | | | | | | | 195,204 | | | | | | | | | |
| Total assets | | $ | 3,235,432 | | | | | | | | | | | $ | 3,006,086 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | $ | 236,609 | | | $ | 143 | | | | 0.24 | % | | $ | 236,251 | | | $ | 182 | | | | 0.31 | % |
| Regular savings deposits | | | 144,275 | | | | 90 | | | | 0.25 | | | | 153,791 | | | | 114 | | | | 0.29 | |
| Money market savings deposits | | | 636,628 | | | | 2,487 | | | | 1.55 | | | | 735,526 | | | | 6,460 | | | | 3.48 | |
| Time deposits | | | 829,830 | | | | 7,166 | | | | 3.44 | | | | 717,587 | | | | 7,897 | | | | 4.37 | |
| Total interest-bearing deposits | | | 1,847,342 | | | | 9,886 | | | | 2.13 | | | | 1,843,155 | | | | 14,653 | | | | 3.15 | |
| Borrowings | | | 558,548 | | | | 4,470 | | | | 3.19 | | | | 379,232 | | | | 4,056 | | | | 4.25 | |
| TOTAL INTEREST-BEARING LIABILITIES | | | 2,405,890 | | | | 14,356 | | | | 2.38 | | | | 2,222,387 | | | | 18,709 | | | | 3.34 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing demand deposits | | | 458,538 | | | | | | | | | | | | 439,967 | | | | | | | | | |
| Other liabilities | | | 28,365 | | | | | | | | | | | | 33,127 | | | | | | | | | |
| Stockholder's equity | | | 342,639 | | | | | | | | | | | | 310,605 | | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 3,235,432 | | | | | | | | | | | $ | 3,006,086 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income and spread on a fully tax | | | | | | | | | | | | | | | | | | | | | |
| equivalent basis | | | | 27,837 | | | | 3.27 | % | | | | | | | 28,810 | | | | 3.58 | % |
| Less: tax equivalent adjustment | | | | | | | 1,164 | | | | | | | | | | | | 1,410 | | | | | |
| Net interest income | | | | | | | 26,673 | | | | | | | | | | | | 27,400 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest income/earning assets | | | | | | | | | | | 5.65 | % | | | | | | | | | | | 6.92 | % |
| Interest expense/earning assets | | | | | | | | | | | 1.92 | | | | | | | | | | | | 2.73 | |
| Net interest margin | | | | | | | | | | | 3.73 | % | | | | | | | | | | | 4.19 | % |
*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 6.55% (or a combined marginal federal and state rate of 39.26%) 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 $4.6 million in 2008 and $5.6 million in 2007.
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)
(Dollars in thousands and tax-equivalent)
| | | Twelve Months Ended December 31, | |
| | | | | | 2008 | | | | | | | | | 2007 | | | | |
| | | | | | | | | Annualized | | | | | | | | | Annualized | |
| | | Average | | | | | | Average | | | Average | | | | | | Average | |
| | | Balances | | | Interest | | | Yield/Rate | | | Balances | | | Interest | | | Yield/Rate | |
| Assets | | | | | | | | | | | | | | | | | | |
| Residential mortgage loans | | $ | 463,853 | | | $ | 28,547 | | | | 6.15 | % | | $ | 431,563 | | | $ | 26,394 | | | | 6.12 | % |
| Residential construction loans | | | 196,926 | | | | 11,585 | | | | 5.88 | | | | 154,578 | | | | 11,047 | | | | 7.15 | |
| Commercial mortgage loans | | | 759,658 | | | | 50,699 | | | | 6.67 | | | | 624,080 | | | | 44,992 | | | | 7.21 | |
| Commercial construction loans | | | 254,309 | | | | 13,859 | | | | 5.45 | | | | 235,250 | | | | 20,828 | | | | 8.85 | |
| Commercial loans and leases | | | 357,311 | | | | 24,007 | | | | 6.72 | | | | 302,671 | | | | 24,910 | | | | 8.23 | |
| Consumer loans | | | 387,983 | | | | 20,503 | | | | 5.28 | | | | 365,334 | | | | 25,367 | | | | 6.94 | |
| Total loans and leases | | | 2,420,040 | | | | 149,200 | | | | 6.17 | | | | 2,113,476 | | | | 153,538 | | | | 7.26 | |
| Securities* | | | 428,479 | | | | 23,522 | | | | 5.49 | | | | 495,928 | | | | 29,663 | | | | 5.98 | |
| Interest-bearing deposits with banks | | | 3,213 | | | | 82 | | | | 2.55 | | | | 21,600 | | | | 1,123 | | | | 5.20 | |
| Federal funds sold | | | 30,711 | | | | 585 | | | | 1.90 | | | | 42,305 | | | | 2,157 | | | | 5.10 | |
| TOTAL EARNING ASSETS | | | 2,882,443 | | | | 173,389 | | | | 6.02 | % | | | 2,673,309 | | | | 186,481 | | | | 6.98 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Less: allowance for loan and lease losses | | | (32,629 | ) | | | | | | | | | | | (22,771 | ) | | | | | | | | |
| Cash and due from banks | | | 49,981 | | | | | | | | | | | | 54,294 | | | | | | | | | |
| Premises and equipment, net | | | 53,207 | | | | | | | | | | | | 52,604 | | | | | | | | | |
| Other assets | | | 199,584 | | | | | | | | | | | | 178,015 | | | | | | | | | |
| Total assets | | $ | 3,152,586 | | | | | | | | | | | $ | 2,935,451 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | $ | 242,848 | | | $ | 671 | | | | 0.28 | % | | $ | 236,940 | | | $ | 808 | | | | 0.34 | % |
| Regular savings deposits | | | 153,123 | | | | 455 | | | | 0.30 | | | | 165,134 | | | | 535 | | | | 0.32 | |
| Money market savings deposits | | | 669,239 | | | | 12,247 | | | | 1.83 | | | | 643,047 | | | | 23,809 | | | | 3.70 | |
| Time deposits | | | 777,979 | | | | 29,443 | | | | 3.78 | | | | 768,005 | | | | 34,764 | | | | 4.53 | |
| Total interest-bearing deposits | | | 1,843,189 | | | | 42,816 | | | | 2.32 | | | | 1,813,126 | | | | 59,916 | | | | 3.30 | |
| Borrowings | | | 513,237 | | | | 17,570 | | | | 3.42 | | | | 361,884 | | | | 16,233 | | | | 4.49 | |
| TOTAL INTEREST-BEARING LIABILITIES | | | 2,356,426 | | | | 60,386 | | | | 2.56 | | | | 2,175,010 | | | | 76,149 | | | | 3.50 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing demand deposits | | | 441,459 | | | | | | | | | | | | 440,853 | | | | | | | | | |
| Other liabilities | | | 29,706 | | | | | | | | | | | | 29,364 | | | | | | | | | |
| Stockholder's equity | | | 324,995 | | | | | | | | | | | | 290,224 | | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 3,152,586 | | | | | | | | | | | $ | 2,935,451 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income and spread on a fully tax | | | | | | | | | | | | | | | | | | | | | |
| equivalent basis | | | | | | | 113,003 | | | | 3.46 | % | | | | | | | 110,332 | | | | 3.48 | % |
| Less: tax equivalent adjustment | | | | | | | 4,545 | | | | | | | | | | | | 5,506 | | | | | |
| Net interest income | | | | | | | 108,458 | | | | | | | | | | | | 104,826 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest income/earning assets | | | | | | | | | | | 6.02 | % | | | | | | | | | | | 6.98 | % |
| Interest expense/earning assets | | | | | | | | | | | 2.10 | | | | | | | | | | | | 2.85 | |
| Net interest margin | | | | | | | | | | | 3.92 | % | | | | | | | | | | | 4.13 | % |
*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 6.55% (or a combined marginal federal and state rate of 39.26%) 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.
