FOR IMMEDIATE RELEASE
SANDY SPRING BANCORP REPORTS FIRST QUARTER PROFIT OF $7.3 MILLION
OLNEY, MARYLAND, April 21, 2011 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today announced net income for the first quarter of 2011 of $7.3 million ($.30 per diluted share) compared to net income of $0.5 million ($0.03 per diluted share) for the first quarter of 2010 and net income of $8.3 million ($0.34 per diluted share) for the fourth quarter of 2010. The first quarter of 2011 included a provision for loan and lease losses of $1.5 million compared to $15.0 million for the first quarter of 2010 and $2.3 million for the fourth quarter of 2010.
“The repurchase of the TARP warrant from the Treasury concludes our participation in that program and has allowed us to concentrate more resources on funding and organically growing the fundamental core elements of our business,” said Daniel J. Schrider, President and Chief Executive Officer. “We are beginning to see increasing commercial loan balances, combined with solid growth in core deposits. These are indicators that we have, in fact, turned the corner. We are confident that the inherent strength of our community banking franchise and the ability of our client service team to develop customer relationships provides us with the necessary vehicle to drive us towards consistent ongoing profitability and sustainable growth as the economy recovers.
“We continue to be committed to meeting our clients’ banking needs and expectations as we navigate this challenging economic environment. Our ultimate goal is and remains to provide our clients with a quality banking experience. Our team is looking forward to meeting the challenges that lie ahead of us and continuing to build on our solid foundation of customer relationships.”
First Quarter Highlights:
| | · | The Company redeemed the warrant issued to the Treasury in connection with the Company’s participation in the TARP Capital Purchase Program for $4.5 million. This redemption completed the last remaining facet of the Company’s involvement in this program. |
| | · | Commercial loans reversed a prior downward trend and increased 1% for the quarter over the prior year end due to new organic production in commercial real estate loans. |
| | · | Deposits increased 2% compared to the year-end 2010 due to significant growth of noninterest-bearing demand deposits, which grew 9% during this period. |
| | · | The net interest margin increased to 3.65% in the first quarter of 2011 from 3.56% for the first quarter of 2010 and 3.61% for the fourth quarter of 2010. |
| | · | The provision for loan and lease losses totaled $1.5 million for the quarter compared to $15.0 million for the first quarter of 2010 and $2.3 million for the fourth quarter of 2010 as credit quality continues to improve. |
| | · | Non-performing loans declined to $88.3 million compared to $136.5 million at March 31, 2010. This decrease also resulted in a coverage ratio of the allowance for loan and lease losses to non-performing loans of 67% at March 31, 2011 compared to a ratio of 51% at March 31, 2010. |
| | · | Assets under management in our trust and wealth management services grew to over $2 billion during the current quarter. |
Review of Balance Sheet and Credit Quality
Comparing March 31, 2011 balances to March 31, 2010, total assets decreased 3% to $3.5 billion from $3.7 billion. Total loans and leases decreased 5% to $2.2 billion compared to the prior year. The decrease in loans was attributable to declines in all major categories of the loan portfolio due to a general lack of loan demand as a combined result of the soft economy in addition to charge-offs and pay-downs on non-performing loans over the past twelve months. During the current quarter the commercial loan portfolio experienced growth of $12 million as compared to end of year 2010 balances. Total loans at quarter end remained relatively level as compared to total loans at December 31, 2010.
Customer funding sources, which include deposits and other short-term borrowings from core customers, decreased 2% compared to the first quarter of 2010. This decrease was due largely to a $144 million or 19% decline in certificates of deposit as a result of a reduction in rates as the Company implemented its net interest margin strategy. Non-interest-bearing and interest-bearing checking accounts increased $102 million or 12%, significantly offsetting the decline in certificates of deposit. The growth in checking accounts was the main driver in the growth in core deposits due to our client’s emphasis on safety and liquidity. During the quarter, money market accounts experienced a 3% decline due mainly to clients’ redeployment of funds in the face of low rates and rising equity markets.
Stockholders’ equity totaled $409.1 million at March 31, 2011, and represented 12% of total assets, compared to $471.9 million or 13% at March 31, 2010. The decline in equity was the direct result of the repayment of $84.0 million of preferred stock and the related warrant previously issued in 2008 as part of the Company’s participation in the TARP Capital Purchase Program. At March 31, 2011, the Company had a total risk-based capital ratio of 15.48%, a tier 1 risk-based capital ratio of 14.21% and a tier 1 leverage ratio of 10.63%.
Non-performing assets totaled $96.3 million at March 31, 2011 compared to $143.3 million at March 31, 2010 and $97.7 million at December 31, 2010. The decrease compared to the prior year was due primarily to a decrease in non-accrual loans, particularly in the commercial real estate mortgage and construction portfolios as a result of charge-offs and pay-downs on existing problem credits and a significant reduction in the migration of new credits to non-performing status.
The provision for loan and lease losses totaled $1.5 million for the first quarter of 2011 compared to $15.0 million for the first quarter of 2010 and $2.3 million for the fourth quarter of 2010. The decrease from the prior year quarter was the result of a lower level of non-performing loans at March 31, 2011 compared to March 31, 2010. The decrease in non-performing loans was the direct result of early identification of problem credits, and the aggressive work out strategies or charge-offs for these problem credits.
Loan charge-offs, net of recoveries, totaled $4.7 million for the first quarter of 2011 compared to net charge-offs of $10.0 million for the first quarter of 2010 and net charge-offs of $7.5 million for the fourth quarter of 2010. The allowance for loan and lease losses represented 2.74% of outstanding loans and leases and 67% of non-performing loans at March 31, 2011 compared to 3.08% of outstanding loans and leases and 51% of non-performing loans at March 31, 2010 and 2.88% of outstanding loans and leases and 78% of non-performing loans at December 31, 2010. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.
Income Statement Review
Net interest income for the first quarter of 2011 decreased by $0.1 million from the same quarter of the prior year as a result of the decline in interest income due to lower loan balances during this period. The impact of the $2.6 million decline in interest income was substantially mitigated by the $2.5 million decline in interest expense as average rates paid on deposit products decreased. The combined result of the reduction in average interest-bearing liabilities, due to planned run-off, exceeded the decline in average earning assets and resulted in a higher net interest margin for the first quarter of 2011 of 3.65% compared to 3.56% for first quarter of 2010.
Non-interest income decreased $0.9 million or 8% to $10.0 million for the first quarter of 2011 compared to $10.8 million for the first quarter of 2010. This decline was primarily the result of an $0.8 million decrease in insurance agency commission revenue due to the timing of the recognition of renewal premiums that was implemented in the first quarter of 2010. Deposit service charges declined $0.4 million as a result of the impact of recently enacted legislation on overdraft fees. Trust and investment management fees increased $0.3 million or 14% primarily due to an increase in assets under management. Fees on sales of investment products increased $0.1 million or 16% due to an increase in managed assets and increased sales of financial products. The increases in asset management fee income mitigated the erosion experienced in deposit service fee income. Visa check fees increased $0.1 million or 13% due to increased volume of electronic transactions. Net security gains declined $0.2 million in the first quarter of 2011 as compared to 2010. The gains realized in 2010 were the result of sales of securities whose proceeds were applied to reduce wholesale borrowings. Income from mortgage banking activities and other non-interest income remained relatively flat compared to the prior year.
Non-interest expenses were $26.1 million in the first quarter of 2011 compared to $24.8 million in the first quarter of 2010, an increase of $1.3 million or 5%. Salaries and benefits expense increased $1.3 million or 9% due primarily to higher salary expenses, increased incentive and commission compensation, health care benefits and taxes. Other non-interest expenses increased $0.3 million or 8% due largely to losses on sales of other real estate owned and loan work out expenses. These increases were partially offset by a reduction in outside data services expense and lower FDIC insurance premiums.
Conference Call
The Company’s management will host a conference call to discuss its first quarter results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations’ section of the Sandy Spring Web site at www.sandyspringbank.com. Participants may call 877-380-5664. 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) May 21, 2011. A telephone voice replay will also be available during that same time period at 800-642-1687. Please use pass code #59024691 to access.
About Sandy Spring Bancorp/Sandy Spring Bank
With $3.5 billion in assets, Sandy Spring Bancorp is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Sandy Spring Bancorp is the largest publicly traded banking company headquartered and operating 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 43 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, 2010, 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) | | | |
| | | | | | | |
| | | | | | | |
| | | Three Months Ended | | | | |
| | | March 31, | | | % | |
| (Dollars in thousands, except per share data) | | 2011 | | | 2010 | | | Change | |
| Results of Operations: | | | | | | | | | |
| Net interest income | | $ | 28,010 | | | $ | 28,159 | | | | (1 | ) |
| Provision for loan and lease losses | | | 1,515 | | | | 15,025 | | | | (90 | ) |
| Non-interest income | | | 9,992 | | | | 10,847 | | | | (8 | ) |
| Non-interest expenses | | | 26,062 | | | | 24,813 | | | | 5 | |
| Income (loss) before income taxes | | | 10,425 | | | | (832 | ) | | | - | |
| Net income | | | 7,291 | | | | 501 | | | | - | |
| Net income (loss) available to common stockholders | | $ | 7,291 | | | $ | (699 | ) | | | - | |
| | | | | | | | | | | | | |
Return on average assets (1) | | | 0.84 | % | | | (0.08 | ) % | | | | |
Return on average common equity (1) | | | 7.26 | % | | | (0.92 | ) % | | | | |
| Net interest margin | | | 3.65 | % | | | 3.56 | % | | | | |
Efficiency ratio - GAAP (3) | | | 68.58 | % | | | 63.61 | % | | | | |
Efficiency ratio - Non-GAAP (3) | | | 65.09 | % | | | 61.08 | % | | | | |
| | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | |
| Basic net income | | $ | 0.30 | | | $ | 0.03 | | | | - | |
| Basic net income (loss) per common share | | | 0.30 | | | | (0.04 | ) | | | - | |
| Diluted net income | | | 0.30 | | | | 0.03 | | | | - | |
| Diluted net income (loss) per common share | | | 0.30 | | | | (0.04 | ) | | | - | |
| Dividends declared per common share | | | 0.08 | | | | 0.01 | | | | - | |
| Book value per common share | | | 16.99 | | | | 16.33 | | | | 4 | |
| Average fully diluted shares | | | 24,115,906 | | | | 17,243,415 | | | | | |
| | | | | | | | | | | | | |
| Financial Condition at period-end: | | | | | | | | | | | | |
| Assets | | $ | 3,549,533 | | | $ | 3,673,246 | | | | (3 | ) |
| Total loans and leases | | | 2,150,049 | | | | 2,256,657 | | | | (5 | ) |
| Investment securities | | | 1,087,620 | | | | 985,966 | | | | 10 | |
| Deposits | | | 2,599,634 | | | | 2,653,448 | | | | (2 | ) |
| Stockholders' equity | | | 409,076 | | | | 471,857 | | | | (13 | ) |
| | | | | | | | | | | | | |
| Capital ratios: | | | | | | | | | | | | |
| Tier 1 leverage | | | 10.63 | % | | | 12.01 | % | | | | |
| Tier 1 capital to risk-weighted assets | | | 14.21 | % | | | 15.77 | % | | | | |
| Total regulatory capital to risk-weighted assets | | | 15.48 | % | | | 17.04 | % | | | | |
Tangible common equity to tangible assets (4) | | | 9.47 | % | | | 8.53 | % | | | | |
| Average equity to average assets | | | 11.63 | % | | | 10.78 | % | | | | |
| | | | | | | | | | | | | |
| Credit quality ratios: | | | | | | | | | | | | |
| Allowance for loan and lease losses to loans and leases | | | 2.74 | % | | | 3.08 | % | | | | |
| Nonperforming loans to total loans | | | 4.11 | % | | | 6.05 | % | | | | |
| Nonperforming assets to total assets | | | 2.71 | % | | | 3.90 | % | | | | |
| Annualized net charge-offs to average | | | | | | | | | | | | |
loans and leases (2) | | | 0.89 | % | | | 1.78 | % | | | | |
| | | | | | | | | | | | | |
| (1) Calculation utilizes net income available to common stockholders. |
| (2) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale. |
| (3) The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights. |
(4) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets, other comprehensive losses and preferred stock. See the Reconciliation Table included with these Financial Highlights. |
| Sandy Spring Bancorp, Inc. and Subsidiaries | | | | |
| RECONCILIATION TABLE | | | | |
| | | | | |
| | | Three Months Ended | |
| | | March 31, | |
| (Dollars in thousands) | | 2011 | | | 2010 | |
| GAAP efficiency ratio: | | | | | | |
| Non-interest expenses | | $ | 26,062 | | | $ | 24,813 | |
| Net interest income plus non-interest income | | $ | 38,002 | | | $ | 39,006 | |
| | | | | | | | | |
| Efficiency ratio–GAAP | | | 68.58 | % | | | 63.61 | % |
| | | | | | | | | |
| Non-GAAP efficiency ratio: | | | | | | | | |
| Non-interest expenses | | $ | 26,062 | | | $ | 24,813 | |
| Less non-GAAP adjustment: | | | | | | | | |
| Amortization of intangible assets | | | 461 | | | | 496 | |
| Non-interest expenses as adjusted | | $ | 25,601 | | | $ | 24,317 | |
| | | | | | | | | |
| Net interest income plus non-interest income | | $ | 38,002 | | | $ | 39,006 | |
| Plus non-GAAP adjustment: | | | | | | | | |
| Tax-equivalent income | | | 1,307 | | | | 1,008 | |
| Less non-GAAP adjustments: | | | | | | | | |
| Securities gains | | | 20 | | | | 203 | |
| OTTI recognized in earnings | | | (41 | ) | | | - | |
| Net interest income plus non-interest income - as adjusted | | $ | 39,330 | | | $ | 39,811 | |
| | | | | | | | | |
| Efficiency ratio–Non-GAAP | | | 65.09 | % | | | 61.08 | % |
| | | | | | | | | |
| Tangible common equity ratio: | | | | | | | | |
| Total stockholders' equity | | $ | 409,076 | | | $ | 471,857 | |
| Accumulated other comprehensive (income) loss | | | 2,260 | | | | (477 | ) |
| Goodwill | | | (76,816 | ) | | | (76,816 | ) |
| Other intangible assets, net | | | (6,118 | ) | | | (8,042 | ) |
| Preferred stock | | | - | | | | (80,257 | ) |
| Tangible common equity | | $ | 328,402 | | | $ | 306,265 | |
| | | | | | | | | |
| Total assets | | $ | 3,549,533 | | | $ | 3,673,246 | |
| Goodwill | | | (76,816 | ) | | | (76,816 | ) |
| Other intangible assets, net | | | (6,118 | ) | | | (8,042 | ) |
| Tangible assets | | $ | 3,466,599 | | | $ | 3,588,388 | |
| | | | | | | | | |
| Tangible common equity ratio | | | 9.47 | % | | | 8.53 | % |
| Sandy Spring Bancorp, Inc. and Subsidiaries |
| CONDENSED CONSOLIDATED STATEMENTS OF CONDITION |
| | | | | | | |
| | | March 31, | | | December 31, | | | March 31, | |
| (Dollars in thousands) | | 2011 | | | 2010 | | | 2010 | |
| Assets | | (Unaudited) | | | | | | (Unaudited) | |
| Cash and due from banks | | $ | 43,738 | | | $ | 44,696 | | | $ | 39,405 | |
| Federal funds sold | | | 1,564 | | | | 1,813 | | | | 1,543 | |
| Interest-bearing deposits with banks | | | 33,694 | | | | 16,608 | | | | 148,059 | |
| Cash and cash equivalents | | | 78,996 | | | | 63,117 | | | | 189,007 | |
| Residential mortgage loans held for sale (at fair value) | | | 10,892 | | | | 22,717 | | | | 8,937 | |
| Investments available-for-sale (at fair value) | | | 964,692 | | | | 907,283 | | | | 832,259 | |
| Investments held-to-maturity -- fair value of $91,084, $104,124 and $124,265 at | | | | | | | | | | | | |
| March 31, 2011, December 31, 2010 and March 31, 2010, respectively | | | 88,858 | | | | 101,590 | | | | 119,376 | |
| Other equity securities | | | 34,070 | | | | 34,070 | | | | 34,331 | |
| Total loans and leases | | | 2,150,049 | | | | 2,156,232 | | | | 2,256,657 | |
| Less: allowance for loan and lease losses | | | (58,918 | ) | | | (62,135 | ) | | | (69,575 | ) |
| Net loans and leases | | | 2,091,131 | | | | 2,094,097 | | | | 2,187,082 | |
| Premises and equipment, net | | | 48,873 | | | | 49,004 | | | | 48,780 | |
| Other real estate owned | | | 7,960 | | | | 9,493 | | | | 6,796 | |
| Accrued interest receivable | | | 12,893 | | | | 12,570 | | | | 13,220 | |
| Goodwill | | | 76,816 | | | | 76,816 | | | | 76,816 | |
| Other intangible assets, net | | | 6,118 | | | | 6,578 | | | | 8,042 | |
| Other assets | | | 128,234 | | | | 142,053 | | | | 148,600 | |
| Total assets | | $ | 3,549,533 | | | $ | 3,519,388 | | | $ | 3,673,246 | |
| | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | |
| Noninterest-bearing deposits | | $ | 619,905 | | | $ | 566,812 | | | $ | 560,027 | |
| Interest-bearing deposits | | | 1,979,729 | | | | 1,983,060 | | | | 2,093,421 | |
| Total deposits | | | 2,599,634 | | | | 2,549,872 | | | | 2,653,448 | |
| Securites sold under retail repurchase agreements and federal funds purchased | | | 75,516 | | | | 96,243 | | | | 78,416 | |
| Advances from FHLB | | | 405,671 | | | | 405,758 | | | | 411,341 | |
| Subordinated debentures | | | 35,000 | | | | 35,000 | | | | 35,000 | |
| Accrued interest payable and other liabilities | | | 24,636 | | | | 24,946 | | | | 23,184 | |
| Total liabilities | | | 3,140,457 | | | | 3,111,819 | | | | 3,201,389 | |
| | | | | | | | | | | | | |
| Stockholders' Equity | | | | | | | | | | | | |
| Preferred stock—par value $1.00 (liquidation preference of $1,000 per share) shares authorized, | | | | | | | | | | | | |
| issued and outstanding 83,094, net of discount of $2,837 at March 31, 2010 | | | - | | | | - | | | | 80,257 | |
| Common stock -- par value $1.00; shares authorized 49,916,906; shares issued and | | | | | | | | | | | | |
| outstanding 24,084,423, 24,046,627 and 23,985,149 at March 31, 2011, | | | | | | | | | | | | |
| December 31, 2010 and March 31, 2010, respectively | | | 24,085 | | | | 24,047 | | | | 23,985 | |
| Warrants | | | - | | | | 3,699 | | | | 3,699 | |
| Additional paid in capital | | | 176,799 | | | | 177,344 | | | | 175,684 | |
| Retained earnings | | | 210,452 | | | | 205,099 | | | | 187,755 | |
| Accumulated other comprehensive income (loss) | | | (2,260 | ) | | | (2,620 | ) | | | 477 | |
| Total stockholders' equity | | | 409,076 | | | | 407,569 | | | | 471,857 | |
| Total liabilities and stockholders' equity | | $ | 3,549,533 | | | $ | 3,519,388 | | | $ | 3,673,246 | |
| Sandy Spring Bancorp, Inc. and Subsidiaries | | | | |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME/LOSS (Unaudited) |
| | | | | | | |
| | | Three Months Ended | |
| | | March 31, | |
| (Dollars in thousands, except per share data) | | 2011 | | | 2010 | |
| Interest Income: | | | | | | |
| Interest and fees on loans and leases | | $ | 26,990 | | | $ | 29,374 | |
| Interest on loans held for sale | | | 122 | | | | 81 | |
| Interest on deposits with banks | | | 18 | | | | 34 | |
| Interest and dividends on investment securities: | | | | | | | | |
| Taxable | | | 5,440 | | | | 6,006 | |
| Exempt from federal income taxes | | | 2,179 | | | | 1,864 | |
| Interest on federal funds sold | | | 1 | | | | 1 | |
| Total interest income | | | 34,750 | | | | 37,360 | |
| Interest Expense: | | | | | | | | |
| Interest on deposits | | | 2,913 | | | | 5,290 | |
| Interest on retail repurchase agreements and federal funds purchased | | | 53 | | | | 72 | |
| Interest on advances from FHLB | | | 3,551 | | | | 3,620 | |
| Interest on subordinated debt | | | 223 | | | | 219 | |
| Total interest expense | | | 6,740 | | | | 9,201 | |
| Net interest income | | | 28,010 | | | | 28,159 | |
| Provision for loan and lease losses | | | 1,515 | | | | 15,025 | |
| Net interest income after provision for loan and lease losses | | | 26,495 | | | | 13,134 | |
| Non-interest Income: | | | | | | | | |
| Investment securities gains | | | 20 | | | | 203 | |
| Total other-than-temporary impairment ("OTTI") losses | | | (100 | ) | | | - | |
| Portion of OTTI losses recognized in other comprehensive income, before taxes | | | 59 | | | | - | |
| Net OTTI recognized in earnings | | | (41 | ) | | | - | |
| Service charges on deposit accounts | | | 2,252 | | | | 2,626 | |
| Mortgage banking activities | | | 455 | | | | 428 | |
| Fees on sales of investment products | | | 858 | | | | 741 | |
| Trust and investment management fees | | | 2,787 | | | | 2,449 | |
| Insurance agency commissions | | | 1,180 | | | | 1,989 | |
| Income from bank owned life insurance | | | 646 | | | | 693 | |
| Visa check fees | | | 834 | | | | 740 | |
| Other income | | | 1,001 | | | | 978 | |
| Total non-interest income | | | 9,992 | | | | 10,847 | |
| Non-interest Expenses: | | | | | | | | |
| Salaries and employee benefits | | | 14,624 | | | | 13,371 | |
| Occupancy expense of premises | | | 3,143 | | | | 3,090 | |
| Equipment expenses | | | 1,142 | | | | 1,214 | |
| Marketing | | | 485 | | | | 516 | |
| Outside data services | | | 995 | | | | 1,123 | |
| FDIC insurance | | | 1,044 | | | | 1,141 | |
| Amortization of intangible assets | | | 461 | | | | 496 | |
| Other expenses | | | 4,168 | | | | 3,862 | |
| Total non-interest expenses | | | 26,062 | | | | 24,813 | |
| Income (loss) before income taxes | | | 10,425 | | | | (832 | ) |
| Income tax expense (benefit) | | | 3,134 | | | | (1,333 | ) |
| Net income | | $ | 7,291 | | | $ | 501 | |
| Preferred stock dividends and discount accretion | | | - | | | | 1,200 | |
| Net income (loss) available to common stockholders | | $ | 7,291 | | | $ | (699 | ) |
| | | | | | | | | |
| Net Income Per Share Amounts: | | | | | | | | |
| Basic net income per share | | $ | 0.30 | | | $ | 0.03 | |
| Basic net income (loss) per common share | | | 0.30 | | | | (0.04 | ) |
| Diluted net income per share | | $ | 0.30 | | | $ | 0.03 | |
| Diluted net income (loss) per common share | | | 0.30 | | | | (0.04 | ) |
| Dividends declared per common share | | $ | 0.08 | | | $ | 0.01 | |
| Sandy Spring Bancorp, Inc. and Subsidiaries |
| HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA (Unaudited) |
| | | 2011 | | | 2010 | |
| (Dollars in thousands, except per share data) | | | Q1 | | | | Q4 | | | | Q3 | | | | Q2 | | | | Q1 | |
| Profitability for the quarter: | | | | | | | | | | | | | | | | | | | | |
| Tax-equivalent interest income | | $ | 36,057 | | | $ | 37,466 | | | $ | 38,688 | | | $ | 38,663 | | | $ | 38,368 | |
| Interest expense | | | 6,740 | | | | 7,161 | | | | 7,868 | | | | 8,512 | | | | 9,201 | |
| Tax-equivalent net interest income | | | 29,317 | | | | 30,305 | | | | 30,820 | | | | 30,151 | | | | 29,167 | |
| Tax-equivalent adjustment | | | 1,307 | | | | 1,352 | | | | 1,321 | | | | 1,155 | | | | 1,008 | |
| Provision for loan and lease losses | | | 1,515 | | | | 2,323 | | | | 2,453 | | | | 6,107 | | | | 15,025 | |
| Non-interest income | | | 9,992 | | | | 11,722 | | | | 10,539 | | | | 10,674 | | | | 10,847 | |
| Non-interest expenses | | | 26,062 | | | | 26,201 | | | | 25,140 | | | | 24,758 | | | | 24,813 | |
| Income (loss) before income taxes | | | 10,425 | | | | 12,151 | | | | 12,445 | | | | 8,805 | | | | (832 | ) |
| Income tax expense (benefit) | | | 3,134 | | | | 3,875 | | | | 3,961 | | | | 2,546 | | | | (1,333 | ) |
| Net Income | | | 7,291 | | | | 8,276 | | | | 8,484 | | | | 6,259 | | | | 501 | |
| Net Income (loss) available to common stockholders | | $ | 7,291 | | | $ | 6,604 | | | $ | 6,410 | | | $ | 5,056 | | | $ | (699 | ) |
| Financial ratios: | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.84 | % | | | 0.73 | % | | | 0.70 | % | | | 0.56 | % | | | (0.08 | )% |
| Return on average common equity | | | 7.26 | % | | | 6.34 | % | | | 6.26 | % | | | 5.13 | % | | | (0.92 | )% |
| Net interest margin | | | 3.65 | % | | | 3.61 | % | | | 3.64 | % | | | 3.58 | % | | | 3.56 | % |
| Efficiency ratio - GAAP (1) | | | 68.58 | % | | | 64.42 | % | | | 62.79 | % | | | 62.41 | % | | | 63.61 | % |
| Efficiency ratio - Non-GAAP (1) | | | 65.09 | % | | | 61.85 | % | | | 59.08 | % | | | 59.44 | % | | | 61.08 | % |
| Per share data: | | | | | | | | | | | | | | | | | | | | |
| Basic net income per share | | $ | 0.30 | | | $ | 0.34 | | | $ | 0.35 | | | $ | 0.26 | | | $ | 0.03 | |
| Basic net income (loss) per common share | | | 0.30 | | | | 0.27 | | | | 0.27 | | | | 0.21 | | | | (0.04 | ) |
| Diluted net income per share | | | 0.30 | | | | 0.34 | | | | 0.35 | | | | 0.26 | | | | 0.03 | |
| Diluted net income (loss) per common share | | | 0.30 | | | | 0.27 | | | | 0.27 | | | | 0.21 | | | | (0.04 | ) |
| Dividends declared per common share | | | 0.08 | | | | 0.01 | | | | 0.01 | | | | 0.01 | | | | 0.01 | |
| Book value per common share | | | 16.99 | | | | 16.95 | | | | 17.14 | | | | 16.80 | | | | 16.33 | |
| Average fully diluted shares | | | 24,115,906 | | | | 24,087,482 | | | | 24,102,497 | | | | 24,033,158 | | | | 17,243,415 | |
| Non-interest income: | | | | | | | | | | | | | | | | | | | | |
| Securities gains | | $ | 20 | | | $ | 473 | | | $ | 25 | | | $ | 95 | | | $ | 203 | |
| Net OTTI recognized in earnings | | | (41 | ) | | | (43 | ) | | | (380 | ) | | | (89 | ) | | | - | |
| Service charges on deposit accounts | | | 2,252 | | | | 2,342 | | | | 2,567 | | | | 2,791 | | | | 2,626 | |
| Mortgage banking activities | | | 455 | | | | 914 | | | | 1,516 | | | | 806 | | | | 428 | |
| Fees on sales of investment products | | | 858 | | | | 974 | | | | 782 | | | | 941 | | | | 741 | |
| Trust and investment management fees | | | 2,787 | | | | 2,799 | | | | 2,505 | | | | 2,534 | | | | 2,449 | |
| Insurance agency commissions | | | 1,180 | | | | 1,334 | | | | 978 | | | | 928 | | | | 1,989 | |
| Income from bank owned life insurance | | | 646 | | | | 695 | | | | 709 | | | | 703 | | | | 693 | |
| Visa check fees | | | 834 | | | | 887 | | | | 843 | | | | 855 | | | | 740 | |
| Other income | | | 1,001 | | | | 1,347 | | | | 994 | | | | 1,110 | | | | 978 | |
| Total non-interest income | | $ | 9,992 | | | $ | 11,722 | | | $ | 10,539 | | | $ | 10,674 | | | $ | 10,847 | |
| Non-interest expense: | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | $ | 14,624 | | | $ | 14,077 | | | $ | 13,841 | | | $ | 14,181 | | | $ | 13,371 | |
| Occupancy expense of premises | | | 3,143 | | | | 2,852 | | | | 2,826 | | | | 2,709 | | | | 3,090 | |
| Equipment expenses | | | 1,142 | | | | 1,153 | | | | 1,137 | | | | 1,304 | | | | 1,214 | |
| Marketing | | | 485 | | | | 681 | | | | 589 | | | | 573 | | | | 516 | |
| Outside data services | | | 995 | | | | 985 | | | | 966 | | | | 918 | | | | 1,123 | |
| FDIC insurance | | | 1,044 | | | | 1,114 | | | | 1,056 | | | | 1,186 | | | | 1,141 | |
| Amortization of intangible assets | | | 461 | | | | 472 | | | | 495 | | | | 496 | | | | 496 | |
| Other expenses | | | 4,168 | | | | 4,867 | | | | 4,230 | | | | 3,391 | | | | 3,862 | |
| Total non-interest expense | | $ | 26,062 | | | $ | 26,201 | | | $ | 25,140 | | | $ | 24,758 | | | $ | 24,813 | |
(1) The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization and the goodwill impairment loss; excludes securities gains; OTTI losses from non-interest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these |
| Sandy Spring Bancorp, Inc. and Subsidiaries |
| HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA (Unaudited) |
| | | 2011 | | | 2010 | |
| (Dollars in thousands) | | | Q1 | | | | Q4 | | | | Q3 | | | | Q2 | | | | Q1 | |
| Balance sheets at quarter end: | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage loans | | $ | 444,519 | | | $ | 436,534 | | | $ | 442,723 | | | $ | 458,502 | | | $ | 460,129 | |
| Residential construction loans | | | 84,939 | | | | 91,273 | | | | 92,485 | | | | 86,393 | | | | 83,902 | |
| Commercial ADC loans | | | 151,135 | | | | 151,061 | | | | 153,139 | | | | 155,751 | | | | 177,498 | |
| Commercial investor real estate loans | | | 355,967 | | | | 327,782 | | | | 335,426 | | | | 328,244 | | | | 316,336 | |
| Commercial owner occupied real estate loans | | | 509,215 | | | | 503,286 | | | | 511,453 | | | | 511,673 | | | | 518,271 | |
| Commercial business loans | | | 231,448 | | | | 250,255 | | | | 240,671 | | | | 263,886 | | | | 279,520 | |
| Leasing | | | 12,477 | | | | 15,551 | | | | 17,895 | | | | 20,823 | | | | 23,474 | |
| Consumer loans | | | 360,349 | | | | 380,490 | | | | 391,415 | | | | 393,560 | | | | 397,527 | |
| Total loans and leases | | | 2,150,049 | | | | 2,156,232 | | | | 2,185,207 | | | | 2,218,832 | | | | 2,256,657 | |
| Less: allowance for loan and lease losses | | | (58,918 | ) | | | (62,135 | ) | | | (67,282 | ) | | | (71,377 | ) | | | (69,575 | ) |
| Net loans and leases | | | 2,091,131 | | | | 2,094,097 | | | | 2,117,925 | | | | 2,147,455 | | | | 2,187,082 | |
| Goodwill | | | 76,816 | | | | 76,816 | | | | 76,816 | | | | 76,816 | | | | 76,816 | |
| Other intangible assets, net | | | 6,118 | | | | 6,578 | | | | 7,050 | | | | 7,546 | | | | 8,042 | |
| Total assets | | | 3,549,533 | | | | 3,519,388 | | | | 3,606,617 | | | | 3,701,150 | | | | 3,673,246 | |
| Total deposits | | | 2,599,634 | | | | 2,549,872 | | | | 2,585,496 | | | | 2,659,956 | | | | 2,653,448 | |
| Customer repurchase agreements | | | 75,516 | | | | 86,243 | | | | 97,884 | | | | 86,062 | | | | 78,416 | |
| Total stockholders' equity | | | 409,076 | | | | 407,569 | | | | 451,717 | | | | 483,681 | | | | 471,857 | |
| Quarterly average balance sheets: | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage loans | | $ | 458,329 | | | $ | 461,700 | | | $ | 466,437 | | | $ | 467,970 | | | $ | 462,803 | |
| Residential construction loans | | | 85,891 | | | | 92,033 | | | | 87,522 | | | | 85,617 | | | | 89,732 | |
| Commercial ADC loans | | | 149,071 | | | | 155,795 | | | | 154,863 | | | | 165,510 | | | | 182,918 | |
| Commercial investor real estate loans | | | 340,008 | | | | 330,717 | | | | 335,279 | | | | 324,717 | | | | 317,671 | |
| Commercial owner occupied real estate loans | | | 500,875 | | | | 505,248 | | | | 512,370 | | | | 512,997 | | | | 522,398 | |
| Commercial business loans | | | 236,949 | | | | 240,083 | | | | 253,058 | | | | 271,839 | | | | 292,844 | |
| Leasing | | | 14,009 | | | | 16,562 | | | | 19,295 | | | | 22,329 | | | | 24,648 | |
| Consumer loans | | | 367,261 | | | | 387,375 | | | | 393,491 | | | | 395,833 | | | | 398,233 | |
| Total loans and leases | | | 2,152,393 | | | | 2,189,513 | | | | 2,222,315 | | | | 2,246,812 | | | | 2,291,247 | |
| Securities | | | 1,054,740 | | | | 1,112,128 | | | | 1,058,175 | | | | 1,013,756 | | | | 970,681 | |
| Total earning assets | | | 3,237,556 | | | | 3,332,705 | | | | 3,360,758 | | | | 3,379,388 | | | | 3,318,070 | |
| Total assets | | | 3,500,807 | | | | 3,594,812 | | | | 3,620,881 | | | | 3,645,090 | | | | 3,591,786 | |
| Total interest-bearing liabilities | | | 2,485,451 | | | | 2,534,716 | | | | 2,571,000 | | | | 2,596,353 | | | | 2,653,187 | |
| Noninterest-bearing demand deposits | | | 582,441 | | | | 587,570 | | | | 568,835 | | | | 547,245 | | | | 524,313 | |
| Total deposits | | | 2,548,117 | | | | 2,584,025 | | | | 2,607,190 | | | | 2,612,633 | | | | 2,640,853 | |
| Customer repurchase agreements | | | 79,067 | | | | 92,049 | | | | 87,927 | | | | 85,178 | | | | 81,622 | |
| Total stockholders' equity | | | 407,007 | | | | 446,256 | | | | 455,101 | | | | 475,521 | | | | 387,099 | |
| Capital and credit quality measures: | | | | | | | | | | | | | | | | | | | | |
| Average equity to average assets | | | 11.63 | % | | | 12.41 | % | | | 12.57 | % | | | 13.05 | % | | | 10.78 | % |
| Allowance for loan and lease losses to loans and leases | | | 2.74 | % | | | 2.88 | % | | | 3.08 | % | | | 3.22 | % | | | 3.08 | % |
| Non-performing loans to total loans | | | 4.11 | % | | | 4.08 | % | | | 4.27 | % | | | 4.93 | % | | | 6.05 | % |
| Non-performing assets to total assets | | | 2.71 | % | | | 2.78 | % | | | 2.87 | % | | | 3.19 | % | | | 3.90 | % |
Annualized net charge-offs to average loans and leases (1) | | | 0.89 | % | | | 1.37 | % | | | 1.18 | % | | | 0.77 | % | | | 1.78 | % |
| Allowance for loan and lease losses to non-performing loans | | | 66.69 | % | | | 70.57 | % | | | 72.08 | % | | | 65.30 | % | | | 50.98 | % |
| Net charge-offs | | $ | 4,732 | | | $ | 7,470 | | | $ | 6,548 | | | $ | 4,305 | | | $ | 10,009 | |
| Non-performing assets: | | | | | | | | | | | | | | | | | | | | |
| Non-accrual loans and leases | | $ | 66,905 | | | $ | 63,327 | | | $ | 73,876 | | | $ | 83,887 | | | $ | 110,719 | |
| Loans and leases 90 days past due | | | 7,176 | | | | 14,154 | | | | 18,268 | | | | 24,226 | | | | 25,085 | |
| Restructured loans and leases | | | 14,266 | | | | 10,571 | | | | 1,199 | | | | 1,199 | | | | 682 | |
| Total non-performing loans | | | 88,347 | | | | 88,052 | | | | 93,343 | | | | 109,312 | | | | 136,486 | |
| Other real estate owned, net | | | 7,960 | | | | 9,493 | | | | 10,011 | | | | 8,730 | | | | 6,796 | |
| Other assets owned | | | - | | | | 200 | | | | 200 | | | | - | | | | - | |
| Total non-performing assets | | $ | 96,307 | | | $ | 97,745 | | | $ | 103,554 | | | $ | 118,042 | | | $ | 143,282 | |
| (1) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale. |
| Sandy Spring Bancorp, Inc. and Subsidiaries |
| CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited) |
| | | Three Months Ended March 31, | |
| | | 2011 | | | 2010 | |
| | | | | | | | | Annualized | | | | | | | | | Annualized | |
| | | Average | | | | (1 | ) | | Average | | | Average | | | | (1 | ) | | Average | |
| (Dollars in thousands and tax-equivalent) | | Balances | | | Interest | | | Yield/Rate | | | Balances | | | Interest | | | Yield/Rate | |
| Assets | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans (3) | | $ | 458,329 | | | $ | 5,743 | | | | 5.01 | % | | $ | 462,803 | | | $ | 6,479 | | | | 5.61 | % |
| Residential construction loans | | | 85,891 | | | | 908 | | | | 4.29 | | | | 89,732 | | | | 1,094 | | | | 4.94 | |
| Commercial ADC loans | | | 149,071 | | | | 1,535 | | | | 4.18 | | | | 182,918 | | | | 1,589 | | | | 3.52 | |
| Commercial investor real estate loans | | | 340,008 | | | | 5,079 | | | | 6.00 | | | | 317,671 | | | | 4,714 | | | | 6.02 | |
| Commercial owner occupied real estate loans | | | 500,875 | | | | 7,429 | | | | 6.05 | | | | 522,398 | | | | 7,750 | | | | 6.02 | |
| Commercial business loans | | | 236,949 | | | | 2,843 | | | | 4.87 | | | | 292,844 | | | | 3,562 | | | | 4.93 | |
| Leasing | | | 14,009 | | | | 229 | | | | 6.53 | | | | 24,648 | | | | 440 | | | | 7.14 | |
| Consumer loans | | | 367,261 | | | | 3,346 | | | | 3.72 | | | | 398,233 | | | | 3,827 | | | | 3.90 | |
Total loans and leases (2) | | | 2,152,393 | | | | 27,112 | | | | 5.09 | | | | 2,291,247 | | | | 29,455 | | | | 5.20 | |
| Taxable securities | | | 846,877 | | | | 5,783 | | | | 2.73 | | | | 802,150 | | | | 6,221 | | | | 3.10 | |
Tax-exempt securities (4) | | | 207,863 | | | | 3,143 | | | | 6.05 | | | | 168,531 | | | | 2,657 | | | | 6.82 | |
| Interest-bearing deposits with banks | | | 28,839 | | | | 18 | | | | 0.25 | | | | 54,416 | | | | 34 | | | | 0.26 | |
| Federal funds sold | | | 1,584 | | | | 1 | | | | 0.16 | | | | 1,726 | | | | 1 | | | | 0.14 | |
| Total interest-earning assets | | | 3,237,556 | | | | 36,057 | | | | 4.49 | | | | 3,318,070 | | | | 38,368 | | | | 4.69 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Less: allowance for loan and lease losses | | | (61,592 | ) | | | | | | | | | | | (67,195 | ) | | | | | | | | |
| Cash and due from banks | | | 42,948 | | | | | | | | | | | | 45,036 | | | | | | | | | |
| Premises and equipment, net | | | 49,189 | | | | | | | | | | | | 49,344 | | | | | | | | | |
| Other assets | | | 232,706 | | | | | | | | | | | | 246,531 | | | | | | | | | |
| Total assets | | $ | 3,500,807 | | | | | | | | | | | $ | 3,591,786 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | $ | 317,739 | | | | 72 | | | | 0.09 | % | | $ | 274,122 | | | | 84 | | | | 0.12 | % |
| Regular savings deposits | | | 175,395 | | | | 42 | | | | 0.10 | | | | 157,997 | | | | 36 | | | | 0.09 | |
| Money market savings deposits | | | 846,674 | | | | 934 | | | | 0.45 | | | | 909,597 | | | | 1,573 | | | | 0.70 | |
| Time deposits | | | 625,868 | | | | 1,865 | | | | 1.21 | | | | 774,824 | | | | 3,597 | | | | 1.88 | |
| Total interest-bearing deposits | | | 1,965,676 | | | | 2,913 | | | | 0.60 | | | | 2,116,540 | | | | 5,290 | | | | 1.01 | |
| Other borrowings | | | 79,067 | | | | 53 | | | | 0.27 | | | | 90,179 | | | | 72 | | | | 0.33 | |
| Advances from FHLB | | | 405,709 | | | | 3,551 | | | | 3.55 | | | | 411,468 | | | | 3,620 | | | | 3.57 | |
| Subordinated debentures | | | 35,000 | | | | 223 | | | | 2.55 | | | | 35,000 | | | | 219 | | | | 2.50 | |
| Total interest-bearing liabilities | | | 2,485,452 | | | | 6,740 | | | | 1.10 | | | | 2,653,187 | | | | 9,201 | | | | 1.41 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing demand deposits | | | 582,441 | | | | | | | | | | | | 524,313 | | | | | | | | | |
| Other liabilities | | | 25,907 | | | | | | | | | | | | 27,187 | | | | | | | | | |
| Stockholders' equity | | | 407,007 | | | | | | | | | | | | 387,099 | | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 3,500,807 | | | | | | | | | | | $ | 3,591,786 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income and spread | | | | | | $ | 29,317 | | | | 3.39 | % | | | | | | $ | 29,167 | | | | 3.28 | % |
| Less: tax-equivalent adjustment | | | | | | | 1,307 | | | | | | | | | | | | 1,008 | | | | | |
| Net interest income | | | | | | $ | 28,010 | | | | | | | | | | | $ | 28,159 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest income/earning assets | | | | | | | | | | | 4.49 | % | | | | | | | | | | | 4.69 | % |
| Interest expense/earning assets | | | | | | | | | | | 0.84 | | | | | | | | | | | | 1.13 | |
| Net interest margin | | | | | | | | | | | 3.65 | % | | | | | | | | | | | 3.56 | % |
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2011 and 2010. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.3 million and $1.0 million in 2011 and 2010, respectively. |
| (2) Non-accrual loans are included in the average balances. |
| (3) Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans. |
| (4) Includes only investments that are exempt from federal taxes. |
