 | News release |
FOR IMMEDIATE RELEASE
SANDY SPRING BANCORP REPORTS NET INCOME OF $10.9 MILLION FOR THE FIRST QUARTER
OLNEY, MARYLAND, April 17, 2014 — Sandy Spring Bancorp, Inc., (Nasdaq-SASR) the parent company of Sandy Spring Bank, today reported net income for the first quarter of 2014 of $10.9 million ($0.43 per diluted share). This compares to net income of $10.6 million ($0.42 per diluted share) for the first quarter of 2013 and net income of $9.6 million ($0.38 per diluted share) for the fourth quarter of 2013.
“Our proven capability to produce consistent financial results and returns to our investors demonstrates the strength of our institution. In the past year our share price has increased over 25%. We believe that we offer a level of quality customer service that is recognized in our marketplace and that this will translate into continued growth and increased profitability,” said Daniel J. Schrider, President and Chief Executive Officer.
“Our performance in the first quarter was driven by the management of our funding costs, loan growth and the increase in wealth management and insurance revenues which combined to offset the decline in mortgage banking revenues as origination volumes declined significantly from the prior year,” said Schrider.
First Quarter Highlights:
| · | Total loans increased 10% compared to the first quarter of 2013 and 2% compared to the fourth quarter of 2013 due to significant loan growth in the residential mortgage and commercial investor real estate portfolios. |
| · | The provision for loan and lease losses for the first quarter of 2014 was a credit of $1.0 million compared to a charge of $0.1 million for the first quarter of 2013 and a charge of $0.6 million for the fourth quarter of 2013. The current quarter’s credit was the result of lower historical charge-offs and improved credit metrics over the preceding twelve months, which more than offset the impact of loan growth during the same period. |
| · | The net interest margin was 3.47% for the first quarter of 2014, compared to 3.59% for the first quarter of 2013 and 3.53% for the fourth quarter of 2013. The decline was the result of declining rates during the period, primarily impacting the commercial loan portfolio. |
| · | Non-interest income decreased 9% for the quarter compared to the prior year quarter due primarily to the decline in income from mortgage banking caused by a significantly lower volume of saleable mortgage loan originations. The prior year quarter also included income as a result of a legal settlement. During this same period wealth management income increased 10% and insurance agency commissions increased 22%. Non-interest income decreased 3% as compared to the fourth quarter of 2013, which included gains from the sales of fixed assets and SBA loans. |
| · | Non-performing loans totaled $38.7 million at March 31, 2014 compared to $49.5 million at March 31, 2013 and $40.0 million at December 31, 2013. The coverage ratio of the allowance for loan and lease losses to non-performing loans was 98% at March 31, 2014 compared to a coverage ratio of 83% at March 31, 2013 and 97% at December 31, 2013. |
Review of Balance Sheet and Credit Quality
At March 31, 2014, total assets grew to $4.2 billion, an increase of 6% as compared to March 31, 2013 driven by the increase in the loan portfolio. At March 31, 2014 total loans and leases were $2.8 billion, a 10% increase over the prior year. Increases occurred in every major loan category with notable increases in the residential mortgage and commercial investor real estate portfolios.
Customer funding sources, which include deposits and other short-term borrowings from customers, increased 2% compared to March 31, 2013. Checking accounts are considered to be an important performance metric as such accounts typically are the primary drivers of growth in multiple product banking relationships with clients. At March 31, 2014, the combined noninterest-bearing and interest-bearing checking account balances had increased 7% compared to the balances at March 31, 2013.
Tangible common equity totaled $423.9 million at March 31, 2014 compared to $391.7 million at March 31, 2013, resulting in an increase in the ratio of tangible common equity to tangible assets to 10.38% at March 31, 2014 from 10.19% at March 31, 2013. This increase in tangible common equity occurred during the period that dividends per common share were increased from $0.14 per share to $0.18 per common share, a 29% increase. At March 31, 2014, the Company had a total risk-based capital ratio of 15.85%, a tier 1 risk-based capital ratio of 14.64% and a tier 1 leverage ratio of 11.43%.
Non-performing loans totaled $38.7 million at March 31, 2014 compared to $49.5 million at March 31, 2013 and $40.0 million at December 31, 2013. The level of non-performing loans to total loans has decreased from 1.93% at March 31, 2013 to 1.37% at March 31, 2014. This relative improvement reflects management’s proactive focus on credit quality and the efforts to effectively resolve problem credits.
Net loan recoveries totaled $0.2 million for the first quarter of 2014 compared to net charge-offs of $1.8 million for the first quarter of 2013 and net charge-offs of $1.2 million for the fourth quarter of 2013. The allowance for loan and lease losses represented 1.34% of outstanding loans and leases and 98% of non-performing loans at March 31, 2014 compared to 1.61% of outstanding loans and leases and 83% of non-performing loans at March 31, 2013. 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 2014 increased 1% compared to the first quarter of 2013. This modest increase was due to the impact of the increase in average interest-earning assets and a reduction in funding costs of time deposits partially offset by a decline in asset yields. This activity resulted in a net interest margin of 3.47% for the first quarter of 2014 compared to 3.59% for the first quarter of 2013.
The provision for loan and lease losses was a credit of $1.0 million for the first quarter of 2014 compared to a charge of $0.1 million for the first quarter of 2013 and a charge of $0.6 million for the fourth quarter of 2013. This decrease in the provision compared to the first quarter of 2013 and the fourth quarter of 2013 was due primarily to lower historical losses and improved credit metrics that more than offset the effect of loan growth during the quarter.
Non-interest income decreased 9% to $11.2 million for the first quarter of 2014 compared to $12.4 million for the first quarter of 2013. This decrease was driven by a reduction in mortgage banking income due primarily to lower mortgage origination volumes and a decline in client refinancing activity. This decrease was partially offset by a 10% increase in wealth management income due to higher assets under management and a 22% increase in insurance agency commissions.
Non-interest expenses decreased 1% to $27.5 million for the first quarter of 2014 compared to $27.8 million in the first quarter of 2013. This decrease was driven primarily by improved credit quality as legal fees associated with loan workouts declined significantly during this period. The non-GAAP efficiency ratio was 61.60% for the first quarter of 2014 compared to 60.80% for the first quarter of 2013.
Conference Call
The Company’s management will host a conference call to discuss its fourth 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 1-888-317-6016. A password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 9:00 am (ET) May 19, 2014. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10043570.
About Sandy Spring Bancorp, Inc.
With $4.2 billion in assets, Sandy Spring Bancorp, Inc. 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 46 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George’s counties in Maryland, and Arlington, Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of insurance and investment management services. Visit www.sandyspringbank.com 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, 2013, 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) | 2014 | 2013 | Change | |||||||||
| Results of Operations: | ||||||||||||
| Net interest income | $ | 31,592 | $ | 31,326 | 1 | % | ||||||
| Provision for loan and lease losses | (982 | ) | 78 | - | ||||||||
| Non-interest income | 11,249 | 12,419 | (9 | ) | ||||||||
| Non-interest expenses | 27,549 | 27,823 | (1 | ) | ||||||||
| Income before income taxes | 16,274 | 15,844 | 3 | |||||||||
| Net income | 10,928 | 10,558 | 4 | |||||||||
| Pre-tax pre-provision income | $ | 15,292 | $ | 15,922 | (4 | ) | ||||||
| Return on average assets | 1.08 | % | 1.08 | % | ||||||||
| Return on average common equity | 8.80 | % | 8.85 | % | ||||||||
| Net interest margin | 3.47 | % | 3.59 | % | ||||||||
| Efficiency ratio - GAAP basis (1) | 64.31 | % | 63.60 | % | ||||||||
| Efficiency ratio - Non-GAAP basis (1) | 61.60 | % | 60.80 | % | ||||||||
| Per share data: | ||||||||||||
| Basic net income | $ | 0.44 | $ | 0.42 | 5 | % | ||||||
| Diluted net income | $ | 0.43 | $ | 0.42 | 2 | |||||||
| Average fully diluted shares | 25,124,206 | 25,002,612 | - | |||||||||
| Dividends declared per share | $ | 0.18 | $ | 0.14 | 29 | |||||||
| Book value per share | 20.38 | 19.59 | 4 | |||||||||
| Tangible book value per share | 16.93 | 15.70 | 8 | |||||||||
| Outstanding shares | 25,043,482 | 24,954,892 | - | |||||||||
| Financial Condition at period-end: | ||||||||||||
| Investment securities | $ | 997,584 | $ | 1,008,693 | (1 | )% | ||||||
| Loans and leases | 2,832,813 | 2,565,069 | 10 | |||||||||
| Interest-earning assets | 3,891,223 | 3,660,809 | 6 | |||||||||
| Assets | 4,168,998 | 3,932,026 | 6 | |||||||||
| Deposits | 2,959,195 | 2,919,208 | 1 | |||||||||
| Interest-bearing liabilities | 2,748,064 | 2,576,831 | 7 | |||||||||
| Stockholders' equity | 510,386 | 488,947 | 4 | |||||||||
| Capital ratios: | ||||||||||||
| Tier 1 leverage | 11.43 | % | 11.07 | % | ||||||||
| Tier 1 capital to risk-weighted assets | 14.64 | % | 14.23 | % | ||||||||
| Total regulatory capital to risk-weighted assets | 15.85 | % | 15.48 | % | ||||||||
| Tangible common equity to tangible assets (2) | 10.38 | % | 10.19 | % | ||||||||
| Average equity to average assets | 12.27 | % | 12.26 | % | ||||||||
| Credit quality ratios: | ||||||||||||
| Allowance for loan and lease losses to loans and leases | 1.34 | % | 1.61 | % | ||||||||
| Non-performing loans to total loans | 1.37 | % | 1.93 | % | ||||||||
| Non-performing assets to total assets | 0.97 | % | 1.39 | % | ||||||||
| Allowance for loan and lease losses to non-performing loans | 98.27 | % | 83.38 | % | ||||||||
| Annualized net charge-offs to average loans and leases (3) | (0.04 | )% | 0.28 | % | ||||||||
| (1) | The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional eficiency ratio - non-GAAP basis excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI; and the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights. |
| (2) | 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 and other comprehensive gains (losses). See the Reconciliation Table included with these Financial Highlights. |
| (3) | Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale. |
Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (Dollars in thousands) | 2014 | 2013 | ||||||
| Pre-tax pre-provision income: | ||||||||
| Net income | $ | 10,928 | $ | 10,558 | ||||
| Plus non-GAAP adjustment: | ||||||||
| Income taxes | 5,346 | 5,286 | ||||||
| Provision for loan and lease losses | (982 | ) | 78 | |||||
| Pre-tax pre-provision income | $ | 15,292 | $ | 15,922 | ||||
| Efficiency ratio - GAAP basis: | ||||||||
| Non-interest expenses | $ | 27,549 | $ | 27,823 | ||||
| Net interest income plus non-interest income | $ | 42,841 | $ | 43,745 | ||||
| Efficiency ratio - GAAP basis | 64.31 | % | 63.60 | % | ||||
| Efficiency ratio - Non-GAAP basis: | ||||||||
| Non-interest expenses | $ | 27,549 | $ | 27,823 | ||||
| Less non-GAAP adjustment: | ||||||||
| Amortization of intangible assets | 370 | 461 | ||||||
| Non-interest expenses - as adjusted | $ | 27,179 | $ | 27,362 | ||||
| Net interest income plus non-interest income | $ | 42,841 | $ | 43,745 | ||||
| Plus non-GAAP adjustment: | ||||||||
| Tax-equivalent income | 1,282 | 1,311 | ||||||
| Less non-GAAP adjustments: | ||||||||
| Securities gains | - | 56 | ||||||
| OTTI recognized in earnings | - | - | ||||||
| Net interest income plus non-interest income - as adjusted | $ | 44,123 | $ | 45,000 | ||||
| Efficiency ratio - Non-GAAP basis | 61.60 | % | 60.80 | % | ||||
| Tangible common equity ratio: | ||||||||
| Total stockholders' equity | $ | 510,386 | $ | 488,947 | ||||
| Accumulated other comprehensive (income) loss | (1,350 | ) | (9,732 | ) | ||||
| Goodwill | (84,171 | ) | (84,808 | ) | ||||
| Other intangible assets, net | (960 | ) | (2,702 | ) | ||||
| Tangible common equity | $ | 423,905 | $ | 391,705 | ||||
| Total assets | $ | 4,168,998 | $ | 3,932,026 | ||||
| Goodwill | (84,171 | ) | (84,808 | ) | ||||
| Other intangible assets, net | (960 | ) | (2,702 | ) | ||||
| Tangible assets | $ | 4,083,867 | $ | 3,844,516 | ||||
| Tangible common equity ratio | 10.38 | % | 10.19 | % | ||||
| Outstanding common shares | 25,043,482 | 24,954,892 | ||||||
| Tangible book value per common share | $ | 16.93 | $ | 15.70 | ||||
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
| March 31, | December 31, | March 31, | ||||||||||
| (Dollars in thousands) | 2014 | 2013 | 2013 | |||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 58,448 | $ | 46,755 | $ | 45,922 | ||||||
| Federal funds sold | 474 | 475 | 476 | |||||||||
| Interest-bearing deposits with banks | 57,273 | 27,197 | 38,188 | |||||||||
| Cash and cash equivalents | 116,195 | 74,427 | 84,586 | |||||||||
| Residential mortgage loans held for sale (at fair value) | 3,079 | 8,365 | 48,383 | |||||||||
| Investments available-for-sale (at fair value) | 736,270 | 751,284 | 766,080 | |||||||||
| Investments held-to-maturity — fair value of $220,693, $216,007 and 216,420 at March 31, 2014, December 31, 2013 and March 31, 2013, respectively | 223,747 | 224,638 | 211,376 | |||||||||
| Other equity securities | 37,567 | 40,687 | 31,237 | |||||||||
| Total loans and leases | 2,832,813 | 2,784,266 | 2,565,069 | |||||||||
| Less: allowance for loan and lease losses | (38,026 | ) | (38,766 | ) | (41,246 | ) | ||||||
| Net loans and leases | 2,794,787 | 2,745,500 | 2,523,823 | |||||||||
| Premises and equipment, net | 45,644 | 45,916 | 47,701 | |||||||||
| Other real estate owned | 1,619 | 1,338 | 5,250 | |||||||||
| Accrued interest receivable | 12,288 | 12,532 | 12,926 | |||||||||
| Goodwill | 84,171 | 84,171 | 84,808 | |||||||||
| Other intangible assets, net | 960 | 1,330 | 2,702 | |||||||||
| Other assets | 112,671 | 115,912 | 113,154 | |||||||||
| Total assets | $ | 4,168,998 | $ | 4,106,100 | $ | 3,932,026 | ||||||
| Liabilities | ||||||||||||
| Noninterest-bearing deposits | $ | 882,169 | $ | 836,198 | $ | 832,679 | ||||||
| Interest-bearing deposits | 2,077,026 | 2,041,027 | 2,086,529 | |||||||||
| Total deposits | 2,959,195 | 2,877,225 | 2,919,208 | |||||||||
| Securities sold under retail repurchase agreements and federal funds purchased | 67,038 | 53,842 | 50,302 | |||||||||
| Advances from FHLB | 569,000 | 615,000 | 405,000 | |||||||||
| Subordinated debentures | 35,000 | 35,000 | 35,000 | |||||||||
| Accrued interest payable and other liabilities | 28,379 | 25,670 | 33,569 | |||||||||
| Total liabilities | 3,658,612 | 3,606,737 | 3,443,079 | |||||||||
| Stockholders' Equity | ||||||||||||
| Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 25,043,482, 24,990,021 and 24,954,892 at March 31, 2014, December 31, 2013 and March 31, 2013, respectively | 25,043 | 24,990 | 24,955 | |||||||||
| Additional paid in capital | 193,708 | 193,445 | 191,615 | |||||||||
| Retained earnings | 290,285 | 283,898 | 262,645 | |||||||||
| Accumulated other comprehensive income (loss) | 1,350 | (2,970 | ) | 9,732 | ||||||||
| Total stockholders' equity | 510,386 | 499,363 | 488,947 | |||||||||
| Total liabilities and stockholders' equity | $ | 4,168,998 | $ | 4,106,100 | $ | 3,932,026 | ||||||
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (Dollars in thousands, except per share data) | 2014 | 2013 | ||||||
| Interest Income: | ||||||||
| Interest and fees on loans and leases | $ | 29,734 | $ | 29,646 | ||||
| Interest on loans held for sale | 59 | 353 | ||||||
| Interest on deposits with banks | 20 | 19 | ||||||
| Interest and dividends on investment securities: | ||||||||
| Taxable | 4,116 | 3,934 | ||||||
| Exempt from federal income taxes | 2,321 | 2,327 | ||||||
| Total interest income | 36,250 | 36,279 | ||||||
| Interest Expense: | ||||||||
| Interest on deposits | 1,184 | 1,455 | ||||||
| Interest on retail repurchase agreements and federal funds purchased | 38 | 49 | ||||||
| Interest on advances from FHLB | 3,218 | 3,223 | ||||||
| Interest on subordinated debt | 218 | 226 | ||||||
| Total interest expense | 4,658 | 4,953 | ||||||
| Net interest income | 31,592 | 31,326 | ||||||
| Provision (credit) for loan and lease losses | (982 | ) | 78 | |||||
| Net interest income after provision (credit) for loan and lease losses | 32,574 | 31,248 | ||||||
| Non-interest Income: | ||||||||
| Investment securities gains | - | 56 | ||||||
| Total other-than-temporary impairment ("OTTI") losses | - | - | ||||||
| Portion of OTTI losses recognized in other comprehensive income, before taxes | - | - | ||||||
| Net OTTI recognized in earnings | - | - | ||||||
| Service charges on deposit accounts | 1,972 | 2,069 | ||||||
| Mortgage banking activities | 316 | 1,527 | ||||||
| Wealth management income | 4,466 | 4,042 | ||||||
| Insurance agency commissions | 1,640 | 1,349 | ||||||
| Income from bank owned life insurance | 598 | 612 | ||||||
| Visa check fees | 978 | 957 | ||||||
| Other income | 1,279 | 1,807 | ||||||
| Total non-interest income | 11,249 | 12,419 | ||||||
| Non-interest Expenses: | ||||||||
| Salaries and employee benefits | 16,355 | 16,346 | ||||||
| Occupancy expense of premises | 3,472 | 3,182 | ||||||
| Equipment expenses | 1,256 | 1,249 | ||||||
| Marketing | 542 | 515 | ||||||
| Outside data services | 1,216 | 1,152 | ||||||
| FDIC insurance | 520 | 596 | ||||||
| Amortization of intangible assets | 370 | 461 | ||||||
| Other expenses | 3,818 | 4,322 | ||||||
| Total non-interest expenses | 27,549 | 27,823 | ||||||
| Income before income taxes | 16,274 | 15,844 | ||||||
| Income tax expense | 5,346 | 5,286 | ||||||
| Net income | $ | 10,928 | $ | 10,558 | ||||
| Net Income Per Share Amounts: | ||||||||
| Basic net income per share | $ | 0.44 | $ | 0.42 | ||||
| Diluted net income per share | $ | 0.43 | $ | 0.42 | ||||
| Dividends declared per share | $ | 0.18 | $ | 0.14 | ||||
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
| 2014 | 2013 | |||||||||||||||||||
| (Dollars in thousands, except per share data) | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
| Profitability for the quarter: | ||||||||||||||||||||
| Tax-equivalent interest income | $ | 37,532 | $ | 38,434 | $ | 41,524 | $ | 37,091 | $ | 37,590 | ||||||||||
| Interest expense | 4,658 | 4,759 | 4,874 | 4,847 | 4,953 | |||||||||||||||
| Tax-equivalent net interest income | 32,874 | 33,675 | 36,650 | 32,244 | 32,637 | |||||||||||||||
| Tax-equivalent adjustment | 1,282 | 1,325 | 1,344 | 1,312 | 1,311 | |||||||||||||||
| Provision for loan and lease losses | (982 | ) | 586 | 1,128 | (2,876 | ) | 78 | |||||||||||||
| Non-interest income | 11,249 | 11,654 | 11,223 | 12,215 | 12,419 | |||||||||||||||
| Non-interest expenses | 27,549 | 29,300 | 26,893 | 27,508 | 27,823 | |||||||||||||||
| Income before income taxes | 16,274 | 14,118 | 18,508 | 18,515 | 15,844 | |||||||||||||||
| Income tax expense | 5,346 | 4,505 | 6,419 | 6,353 | 5,286 | |||||||||||||||
| Net income | $ | 10,928 | $ | 9,613 | $ | 12,089 | $ | 12,162 | $ | 10,558 | ||||||||||
| Financial performance: | ||||||||||||||||||||
| Pre-tax pre-provision pre-merger expense income | $ | 15,292 | $ | 14,704 | $ | 19,636 | $ | 15,639 | $ | 15,922 | ||||||||||
| Return on average assets | 1.08 | % | 0.93 | % | 1.19 | % | 1.23 | % | 1.08 | % | ||||||||||
| Return on average common equity | 8.80 | % | 7.71 | % | 9.91 | % | 9.98 | % | 8.85 | % | ||||||||||
| Net interest margin | 3.47 | % | 3.53 | % | 3.88 | % | 3.51 | % | 3.59 | % | ||||||||||
| Efficiency ratio - GAAP basis (1) | 64.31 | % | 66.59 | % | 57.80 | % | 63.75 | % | 63.60 | % | ||||||||||
| Efficiency ratio - Non-GAAP basis (1) | 61.60 | % | 63.62 | % | 55.21 | % | 60.92 | % | 60.80 | % | ||||||||||
| Per share data: | ||||||||||||||||||||
| Basic net income per share | $ | 0.44 | $ | 0.38 | $ | 0.48 | $ | 0.49 | $ | 0.42 | ||||||||||
| Diluted net income per share | $ | 0.43 | $ | 0.38 | $ | 0.48 | $ | 0.49 | $ | 0.42 | ||||||||||
| Average fully diluted shares | 25,124,206 | 25,108,109 | 25,070,506 | 25,009,092 | 25,002,612 | |||||||||||||||
| Dividends declared per common share | $ | 0.18 | $ | 0.18 | $ | 0.16 | $ | 0.16 | $ | 0.14 | ||||||||||
| Non-interest income: | ||||||||||||||||||||
| Securities gains (losses) | $ | - | $ | (3 | ) | $ | - | $ | 62 | $ | 56 | |||||||||
| Service charges on deposit accounts | 1,972 | 2,143 | 2,171 | 2,150 | 2,069 | |||||||||||||||
| Mortgage banking activities | 316 | 356 | (26 | ) | 1,237 | 1,527 | ||||||||||||||
| Wealth management income | 4,466 | 4,508 | 4,503 | 4,532 | 4,042 | |||||||||||||||
| Insurance agency commissions | 1,640 | 1,243 | 1,193 | 1,036 | 1,349 | |||||||||||||||
| Income from bank owned life insurance | 598 | 635 | 629 | 623 | 612 | |||||||||||||||
| Visa check fees | 978 | 1,052 | 1,077 | 1,079 | 957 | |||||||||||||||
| Other income | 1,279 | 1,720 | 1,676 | 1,496 | 1,807 | |||||||||||||||
| Total non-interest income | $ | 11,249 | $ | 11,654 | $ | 11,223 | $ | 12,215 | $ | 12,419 | ||||||||||
| Non-interest expense: | ||||||||||||||||||||
| Salaries and employee benefits | $ | 16,355 | $ | 16,707 | $ | 16,382 | $ | 16,163 | $ | 16,346 | ||||||||||
| Occupancy expense of premises | 3,472 | 3,844 | 3,149 | 2,996 | 3,182 | |||||||||||||||
| Equipment expenses | 1,256 | 1,264 | 1,200 | 1,227 | 1,249 | |||||||||||||||
| Marketing | 542 | 897 | 713 | 755 | 515 | |||||||||||||||
| Outside data services | 1,216 | 1,162 | 1,152 | 1,114 | 1,152 | |||||||||||||||
| FDIC insurance | 520 | 445 | 678 | 581 | 596 | |||||||||||||||
| Amortization of intangible assets | 370 | 461 | 462 | 461 | 461 | |||||||||||||||
| Professional fees | 914 | 1,386 | 511 | 1,332 | 1,250 | |||||||||||||||
| Other real estate owned expenses | - | 91 | (150 | ) | (281 | ) | 37 | |||||||||||||
| Other expenses | 2,904 | 3,043 | 2,796 | 3,160 | 3,035 | |||||||||||||||
| Total non-interest expense | $ | 27,549 | $ | 29,300 | $ | 26,893 | $ | 27,508 | $ | 27,823 | ||||||||||
| (1) | The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional, efficiency ratio - non-GAAP basis excludes intangible asset amortization from non-interest expense; 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 Financial Highlights. |
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
| 2014 | 2013 | |||||||||||||||||||
| (Dollars in thousands) | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
| Balance sheets at quarter end: | ||||||||||||||||||||
| Residential mortgage loans | $ | 640,939 | $ | 618,381 | $ | 595,180 | $ | 565,282 | $ | 538,346 | ||||||||||
| Residential construction loans | 143,109 | 129,177 | 118,316 | 116,736 | 122,698 | |||||||||||||||
| Commercial ADC loans | 163,343 | 160,696 | 158,739 | 163,309 | 150,599 | |||||||||||||||
| Commercial investor real estate loans | 573,634 | 552,178 | 518,029 | 497,365 | 487,802 | |||||||||||||||
| Commercial owner occupied real estate loans | 582,472 | 592,823 | 569,350 | 563,258 | 565,820 | |||||||||||||||
| Commercial business loans | 348,180 | 356,651 | 332,670 | 334,979 | 344,489 | |||||||||||||||
| Leasing | 439 | 703 | 962 | 1,415 | 1,974 | |||||||||||||||
| Consumer loans | 380,697 | 373,657 | 368,764 | 363,114 | 353,341 | |||||||||||||||
| Total loans and leases | 2,832,813 | 2,784,266 | 2,662,010 | 2,605,458 | 2,565,069 | |||||||||||||||
| Allowance for loan and lease losses | (38,026 | ) | (38,766 | ) | (39,422 | ) | (39,015 | ) | (41,246 | ) | ||||||||||
| Investment securities | 997,584 | 1,016,609 | 1,077,951 | 1,102,209 | 1,008,693 | |||||||||||||||
| Interest-earning assets | 3,891,223 | 3,836,912 | 3,771,825 | 3,802,682 | 3,660,809 | |||||||||||||||
| Total assets | 4,168,998 | 4,106,100 | 4,052,969 | 4,072,617 | 3,932,026 | |||||||||||||||
| Noninterest-bearing demand deposits | 882,169 | 836,198 | 890,319 | 877,891 | 832,679 | |||||||||||||||
| Total deposits | 2,959,195 | 2,877,225 | 2,916,466 | 2,926,650 | 2,919,208 | |||||||||||||||
| Customer repurchase agreements | 67,038 | 53,842 | 53,177 | 54,731 | 50,302 | |||||||||||||||
| Total interest-bearing liabilities | 2,748,064 | 2,744,869 | 2,634,324 | 2,678,490 | 2,576,831 | |||||||||||||||
| Total stockholders' equity | 510,386 | 499,363 | 493,882 | 485,643 | 488,947 | |||||||||||||||
| Quarterly average balance sheets: | ||||||||||||||||||||
| Residential mortgage loans | $ | 633,160 | $ | 614,698 | $ | 593,335 | $ | 579,899 | $ | 575,889 | ||||||||||
| Residential construction loans | 134,261 | 125,744 | 120,676 | 119,197 | 120,283 | |||||||||||||||
| Commercial ADC loans | 162,544 | 156,558 | 158,557 | 160,483 | 148,749 | |||||||||||||||
| Commercial investor real estate loans | 557,168 | 522,085 | 499,896 | 485,630 | 474,062 | |||||||||||||||
| Commercial owner occupied real estate loans | 584,155 | 580,808 | 566,366 | 561,249 | 567,723 | |||||||||||||||
| Commercial business loans | 349,734 | 357,455 | 331,374 | 337,843 | 347,569 | |||||||||||||||
| Leasing | 567 | 817 | 1,152 | 1,644 | 2,510 | |||||||||||||||
| Consumer loans | 377,822 | 373,017 | 366,562 | 360,842 | 357,366 | |||||||||||||||
| Total loans and leases | 2,799,411 | 2,731,182 | 2,637,918 | 2,606,787 | 2,594,151 | |||||||||||||||
| Investment securities | 1,012,701 | 1,055,432 | 1,097,643 | 1,047,726 | 1,051,769 | |||||||||||||||
| Interest-earning assets | 3,845,513 | 3,817,033 | 3,770,855 | 3,692,215 | 3,677,444 | |||||||||||||||
| Total assets | 4,105,214 | 4,082,839 | 4,039,069 | 3,959,907 | 3,946,578 | |||||||||||||||
| Noninterest-bearing demand deposits | 825,968 | 872,532 | 862,046 | 838,502 | 797,926 | |||||||||||||||
| Total deposits | 2,876,641 | 2,901,814 | 2,903,926 | 2,892,704 | 2,860,451 | |||||||||||||||
| Customer repurchase agreements | 62,864 | 57,682 | 56,766 | 55,941 | 52,622 | |||||||||||||||
| Total interest-bearing liabilities | 2,749,459 | 2,679,812 | 2,659,406 | 2,599,704 | 2,631,198 | |||||||||||||||
| Total stockholders' equity | 503,851 | 494,779 | 483,811 | 489,014 | 483,664 | |||||||||||||||
| Financial Measures | ||||||||||||||||||||
| Average equity to average assets | 12.27 | % | 12.12 | % | 11.98 | % | 12.35 | % | 12.26 | % | ||||||||||
| Investment securities to earning assets | 25.64 | % | 26.50 | % | 28.58 | % | 28.99 | % | 27.55 | % | ||||||||||
| Loans to earning assets | 72.80 | % | 72.57 | % | 70.58 | % | 68.52 | % | 70.07 | % | ||||||||||
| Loans to assets | 67.95 | % | 67.81 | % | 65.68 | % | 63.98 | % | 65.24 | % | ||||||||||
| Loans to deposits | 95.73 | % | 96.77 | % | 91.28 | % | 89.03 | % | 87.87 | % | ||||||||||
| Capital measures: | ||||||||||||||||||||
| Tier 1 leverage | 11.43 | % | 11.32 | % | 11.29 | % | 11.28 | % | 11.07 | % | ||||||||||
| Tier 1 capital to risk-weighted assets | 14.64 | % | 14.42 | % | 14.45 | % | 14.30 | % | 14.23 | % | ||||||||||
| Total regulatory capital to risk-weighted assets | 15.85 | % | 15.65 | % | 15.70 | % | 15.55 | % | 15.48 | % | ||||||||||
| Book value per share | $ | 20.38 | $ | 19.98 | $ | 19.77 | $ | 19.45 | $ | 19.59 | ||||||||||
| Outstanding shares | 25,043,482 | 24,990,021 | 24,985,146 | 24,967,558 | 24,954,892 | |||||||||||||||
Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
| 2014 | 2013 | |||||||||||||||||||
| (Dollars in thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| Non-Performing Assets: | ||||||||||||||||||||
| Loans and leases 90 days past due: | ||||||||||||||||||||
| Commercial business | $ | - | $ | - | $ | - | $ | 15 | $ | - | ||||||||||
| Commercial real estate: | ||||||||||||||||||||
| Commercial AD&C | - | - | - | - | - | |||||||||||||||
| Commercial investor real estate | - | - | - | - | - | |||||||||||||||
| Commercial owner occupied real estate | - | - | - | - | - | |||||||||||||||
| Leasing | - | - | - | - | - | |||||||||||||||
| Consumer | - | 1 | 10 | - | 54 | |||||||||||||||
| Residential real estate: | ||||||||||||||||||||
| Residential mortgage | - | - | - | - | - | |||||||||||||||
| Residential construction | - | - | - | - | - | |||||||||||||||
| Total loans and leases 90 days past due | - | 1 | 10 | 15 | 54 | |||||||||||||||
| Non-accrual loans and leases: | ||||||||||||||||||||
| Commercial business | 3,272 | 3,400 | 4,050 | 4,483 | 4,012 | |||||||||||||||
| Commercial real estate: | ||||||||||||||||||||
| Commercial AD&C | 4,133 | 4,127 | 5,086 | 5,885 | 5,826 | |||||||||||||||
| Commercial investor real estate | 7,284 | 6,802 | 6,877 | 11,741 | 12,353 | |||||||||||||||
| Commercial owner occupied real estate | 7,150 | 5,936 | 4,202 | 5,413 | 5,346 | |||||||||||||||
| Leasing | - | - | - | - | - | |||||||||||||||
| Consumer | 2,115 | 2,259 | 2,004 | 2,305 | 2,388 | |||||||||||||||
| Residential real estate: | ||||||||||||||||||||
| Residential mortgage | 5,025 | 5,735 | 5,643 | 5,581 | 5,393 | |||||||||||||||
| Residential construction | 2,304 | 2,315 | 2,327 | 2,558 | 3,258 | |||||||||||||||
| Total non-accrual loans and leases | 31,283 | 30,574 | 30,189 | 37,966 | 38,576 | |||||||||||||||
| Total restructured loans - accruing | 7,411 | 9,459 | 8,054 | 8,213 | 10,839 | |||||||||||||||
| Total non-performing loans and leases | 38,694 | 40,034 | 38,253 | 46,194 | 49,469 | |||||||||||||||
| Other assets and real estate owned (OREO) | 1,619 | 1,338 | 1,662 | 4,831 | 5,250 | |||||||||||||||
| Total non-performing assets | $ | 40,313 | $ | 41,372 | $ | 39,915 | $ | 51,025 | $ | 54,719 | ||||||||||
| For the quarter ended, | ||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (Dollars in thousands) | 2014 | 2013 | 2013 | 2013 | 2013 | |||||||||||||||
| Analysis of Non-accrual Loan and Lease Activity: | ||||||||||||||||||||
| Balance at beginning of period | $ | 30,574 | $ | 30,189 | $ | 37,966 | $ | 38,576 | $ | 47,548 | ||||||||||
| Non-accrual balances transferred to OREO | (281 | ) | (365 | ) | (723 | ) | (1,426 | ) | (92 | ) | ||||||||||
| Non-accrual balances charged-off | (513 | ) | (922 | ) | (4,995 | ) | (668 | ) | (2,175 | ) | ||||||||||
| Net payments or draws | (1,073 | ) | (971 | ) | (13,547 | ) | (3,560 | ) | (11,768 | ) | ||||||||||
| Loans placed on non-accrual | 2,576 | 3,546 | 11,488 | 5,044 | 5,493 | |||||||||||||||
| Non-accrual loans brought current | - | (903 | ) | - | - | (430 | ) | |||||||||||||
| Balance at end of period | $ | 31,283 | $ | 30,574 | $ | 30,189 | $ | 37,966 | $ | 38,576 | ||||||||||
| Analysis of Allowance for Loan Losses: | ||||||||||||||||||||
| Balance at beginning of period | $ | 38,766 | $ | 39,422 | $ | 39,015 | $ | 41,246 | $ | 42,957 | ||||||||||
| Provision (credit) for loan and lease losses | (982 | ) | 586 | 1,128 | (2,876 | ) | 78 | |||||||||||||
| Less loans charged-off, net of recoveries: | ||||||||||||||||||||
| Commercial business | (768 | ) | 384 | 1 | (32 | ) | 1,744 | |||||||||||||
| Commercial real estate: | ||||||||||||||||||||
| Commercial AD&C | - | 85 | (616 | ) | (1,444 | ) | (1,020 | ) | ||||||||||||
| Commercial investor real estate | (5 | ) | 23 | 1,243 | 123 | 31 | ||||||||||||||
| Commercial owner occupied real estate | - | (82 | ) | (284 | ) | 100 | 81 | |||||||||||||
| Leasing | - | - | (6 | ) | (4 | ) | - | |||||||||||||
| Consumer | 331 | 488 | 169 | 490 | 508 | �� | ||||||||||||||
| Residential real estate: | ||||||||||||||||||||
| Residential mortgage | 203 | 347 | 216 | 22 | 447 | |||||||||||||||
| Residential construction | (3 | ) | (3 | ) | (2 | ) | 100 | (2 | ) | |||||||||||
| Net charge-offs | (242 | ) | 1,242 | 721 | (645 | ) | 1,789 | |||||||||||||
| Balance at end of period | $ | 38,026 | $ | 38,766 | $ | 39,422 | $ | 39,015 | $ | 41,246 | ||||||||||
| Asset Quality Ratios: | ||||||||||||||||||||
| Non-performing loans to total loans | 1.37 | % | 1.44 | % | 1.44 | % | 1.77 | % | 1.93 | % | ||||||||||
| Non-performing assets to total assets | 0.97 | % | 1.01 | % | 0.98 | % | 1.25 | % | 1.39 | % | ||||||||||
| Allowance for loan losses to loans | 1.34 | % | 1.39 | % | 1.48 | % | 1.50 | % | 1.61 | % | ||||||||||
| Allowance for loan losses to non-performing loans | 98.27 | % | 96.83 | % | 103.06 | % | 84.46 | % | 83.38 | % | ||||||||||
| Net charge-offs in quarter to average loans | (0.04 | )% | 0.18 | % | 0.11 | % | (0.10 | )% | 0.28 | % | ||||||||||
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
| Three Months Ended March 31, | ||||||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||||||
| 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 (2) | $ | 633,160 | $ | 5,506 | 3.48 | % | $ | 575,889 | $ | 5,376 | 3.73 | % | ||||||||||||
| Residential construction loans | 134,261 | 1,254 | 3.79 | 120,283 | 1,004 | 3.38 | ||||||||||||||||||
| Commercial ADC loans | 162,544 | 2,073 | 5.17 | 148,749 | 1,996 | 5.44 | ||||||||||||||||||
| Commercial investor real estate loans | 557,168 | 6,733 | 4.90 | 474,062 | 6,135 | 5.25 | ||||||||||||||||||
| Commercial owner occupied real estate loans | 584,155 | 7,067 | 5.08 | 567,723 | 7,801 | 5.71 | ||||||||||||||||||
| Commercial business loans | 349,734 | 4,037 | 4.64 | 347,569 | 4,586 | 5.21 | ||||||||||||||||||
| Leasing | 567 | 6 | 4.53 | 2,510 | 38 | 6.07 | ||||||||||||||||||
| Consumer loans | 377,822 | 3,117 | 3.37 | 357,366 | 3,063 | 3.51 | ||||||||||||||||||
| Total loans and leases (3) | 2,799,411 | 29,793 | 4.34 | 2,594,151 | 29,999 | 4.71 | ||||||||||||||||||
| Taxable securities | 710,246 | 4,452 | 2.51 | 754,112 | 4,305 | 2.28 | ||||||||||||||||||
| Tax-exempt securities (4) | 302,455 | 3,267 | 4.32 | 297,657 | 3,267 | 4.39 | ||||||||||||||||||
| Interest-bearing deposits with banks | 32,925 | 20 | 0.25 | 31,050 | 19 | 0.25 | ||||||||||||||||||
| Federal funds sold | 476 | - | 0.22 | 474 | - | 0.22 | ||||||||||||||||||
| Total interest-earning assets | 3,845,513 | 37,532 | 3.96 | 3,677,444 | 37,590 | 4.13 | ||||||||||||||||||
| Less: allowance for loan and lease losses | (39,393 | ) | (43,705 | ) | ||||||||||||||||||||
| Cash and due from banks | 45,553 | 46,888 | ||||||||||||||||||||||
| Premises and equipment, net | 45,879 | 48,167 | ||||||||||||||||||||||
| Other assets | 207,662 | 217,784 | ||||||||||||||||||||||
| Total assets | $ | 4,105,214 | $ | 3,946,578 | ||||||||||||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 460,245 | 92 | 0.08 | % | $ | 423,485 | 92 | 0.09 | % | ||||||||||||||
| Regular savings deposits | 249,185 | 48 | 0.08 | 234,492 | 48 | 0.08 | ||||||||||||||||||
| Money market savings deposits | 877,864 | 273 | 0.13 | 892,343 | 411 | 0.19 | ||||||||||||||||||
| Time deposits | 463,379 | 771 | 0.67 | 512,205 | 904 | 0.72 | ||||||||||||||||||
| Total interest-bearing deposits | 2,050,673 | 1,184 | 0.23 | 2,062,525 | 1,455 | 0.29 | ||||||||||||||||||
| Other borrowings | 62,864 | 38 | 0.24 | 65,601 | 49 | 0.30 | ||||||||||||||||||
| Advances from FHLB | 600,922 | 3,218 | 2.17 | 468,072 | 3,223 | 2.79 | ||||||||||||||||||
| Subordinated debentures | 35,000 | 218 | 2.49 | 35,000 | 226 | 2.58 | ||||||||||||||||||
| Total interest-bearing liabilities | 2,749,459 | 4,658 | 0.69 | 2,631,198 | 4,953 | 0.76 | ||||||||||||||||||
| Noninterest-bearing demand deposits | 825,968 | 797,926 | ||||||||||||||||||||||
| Other liabilities | 25,936 | 33,790 | ||||||||||||||||||||||
| Stockholders' equity | 503,851 | 483,664 | ||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 4,105,214 | $ | 3,946,578 | ||||||||||||||||||||
| Net interest income and spread | $ | 32,874 | 3.27 | % | $ | 32,637 | 3.37 | % | ||||||||||||||||
| Less: tax-equivalent adjustment | 1,282 | 1,311 | ||||||||||||||||||||||
| Net interest income | $ | 31,592 | $ | 31,326 | ||||||||||||||||||||
| Interest income/earning assets | 3.96 | % | 4.13 | % | ||||||||||||||||||||
| Interest expense/earning assets | 0.49 | 0.54 | ||||||||||||||||||||||
| Net interest margin | 3.47 | % | 3.59 | % | ||||||||||||||||||||
| (1) | Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2014 and 2013. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.3 million and $1.3 million in 2014 and 2013, respectively. |
| (2) | Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans. |
| (3) | Non-accrual loans are included in the average balances. |
| (4) | Includes only investments that are exempt from federal taxes. |