SASR - Earnings call transcript Q4 2017 | Sandy Spring Bancorp, Inc.

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Operator

Good afternoon and welcome to the Sandy Spring Bancorp, Inc. earnings conference call and Webcast for the fourth quarter 2017. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to conference like J. to now would turn over the Daniel I President CEO. Schrider, and ahead. Please go

Daniel J. Schrider

Thank Ron afternoon discuss Phil Financial and year-end I for for performance you am good Counsel the Mantua, XXXX. our Kuykendall. joining you for Spring with Schrider Sandy conference and us This for joined is General call speaking quarter here Officer, to fourth Sandy Dan Bancorp's everyone Spring Bancorp, and and and thank Chief our

Bank all investors, But there Web-site to of take quarter key the the on Harbor and the live Our we our of and before and open call on as later Xst, fourth recently of Ron? we Safe started, the your analysts news media, customary covering a on give will will Ron of Webcast statement. our is After call will available questions. highlights replay a be today. commenting January well get today's call WashingtonFirst as closed transaction

Ronald E. Kuykendall

risks uncertainties. probable earnings statements Bancorp's of are assessments estimates matters costs those laws results significant which expectations; other differ are and actual these you, interest subject Thank of uncertainties statements materially behavior, that subject assessments and intentions, ability statements to variety by uncertainties, of based of to the rates, future to their afternoon they Webcast future of future goals, by statements estimates and and market Spring and economic or forward-looking of benefits; management's risk; subject other loan other Sandy conditions; other very These a and gentlemen. projections indicated. goals. may from affected because future Sandy uncertainties. upon nature losses; this and in lease make and are Because are the significant market Bancorp regulations; of ladies and will risks forward-looking Spring statements forward-looking and and These include and to of Dan, and achieve good financial

In Company's results operations past do indicate of not the necessarily results. addition, its future

Daniel J. Schrider

you everyone joining thank you, again for and us. Thank Ron,

this solid enacted we also expenses. income demonstrated As press legislation impact during recently the and for release quarter issued earlier record our merger-related the morning net of XXXX, tax while recognizing and indicates, the performance

team excellent core merger on operating integration job, an is Our performance, efficiency. doing executing strong focusing operating generating and the on

We continue that we our results are and greater generate for the to very be in pleased with consistent performance balance D.C. known Washington, growth region.

rundown release. quick a just of from Here's highlights main the the

related diluted income for a was the per quarter Net Our $XX.X for quarter of of per full income the of was of compared to the per record $X.XX net income third XXXX $X.XX million and linked million diluted core EPS. their XXXX share for per net of to or the share $XX.X fourth for deferred assets, merger-related the back effect the full tax additional expenses, or quarter year for our share, understand performance expense peel But revaluation diluted branch $X.XX per detail the XXXX. to closure you million net XXXX and income quarter for diluted better compared help the share, $XX.X on full-year, fourth year expenses, effects or to $X.XX of XXXX. tax the and of fourth or I'll $X.X and $X million share of diluted

be core increase. of and year, basis, share. share per between EPS per were on full and expenses were $X.XX And Fourth For of deferred increase related $X.XX in per to XXXX, per per branch $X.XX share, $X.XX and merger-related an an expenses, share for in assets diluted for $X that's Pre-tax, full adjusted for these fourth tax closure expenses to of XXXX, year-over-year for per the $X.XX increase a share compared and year. quarter After EPS the XXXX, share the quarter XXXX. the for the million share fourth diluted $X.XX quarter and would fourth full pre-provision at revaluation diluted of compared year for was full quarter income a compared the of adjusting a fourth the fourth XX%. of per over expense quarter quarter, was for XX.X%; tax the to XX.X% $X.XX the to $XX.X $XX the year, million, $X.XX quarter

fourth continued quarter the was quarter higher net compared which to in XX% interest driven performance by core same of of Our strong XXXX. income, increased XXXX the

year linked compared our losses a the provision fourth to of charge segments for a within interest as the recovery for compared growth to impact reflects XX% strong. the The and loan XX% adjusting loan the for led total of together management credit our for fourth of of linked for to solid after pipeline with was third and X% the quarter commercial in charge quarter fourth last and X.XX% and allowance The of this during net quality prior XXXX the of come stability with the and quarter. and our demonstrates rate growth year-over-year an heading expectations, in of for to X.XX% in portfolio. quarter, continuation year's improved margin expense the margin fourth would was quarter the of Total compared the remain provision loan XXXX. fourth up margin The increased XXXX compared past Growth for in proactive growth $XXX,XXX the to Our have interest our during improvement execution level for to of the and And into at third investment the year lease the quarter, the of and loans growing the line quarter compared the strategies. increases quarter $XXX,XXX quarter, funding portfolio X.XX%. $XXX,XXX of quarter.

account balances ago. and deposits increased to continue from XX% year combined core transaction balances the Total grow compared from quarter At relationships. interest-bearing commercial and to retail XXXX. banking end, deposits of We quarter fourth XX% both increased non-interest-bearing a

footprint in fund strength to key Bank expansion newly in with WashingtonFirst new that through core Our we growth on a is expand our deposits branches. continued combined will of a strength Company, our asset ability

focused be on of to was the despite the from quarter generating quarter XXXX. for XXXX. million of Non-interest decline we as deposit of growth fourth $XX.X with move through banking and quarter stable the XX% or continue importance income same at a income XXXX, mortgage We level the in $XXX,XXX fourth

for for the On the service for last and to XXXX, positive agency to the side, charges compared quarter quarter year. compared fourth XXXX fourth deposit the XX% of fourth period quarter of expenses Non-interest each insurance increased the increased compared wealth to commissions quarter management for the same income XX% and fourth the X% by increased XXXX. for year in of fourth to merger-related salary The quarter benefit expenses the non-GAAP ratio the driven was costs. income. fourth by for XX.XX% primarily was fourth driven compared at increase of XX.XX% our full and efficiency and interest quarter net XX.XX% XXXX, growth XXXX, ended quarter the $XXX,XXX in and The

acquired Overall, and with to capital risk-based producing total tangible XX.XX%, risk-based X position teams X treasury XX.XX%, Our ratio Tier we momentum X.XX%. revenue enhanced wealth organic with commercial management continues capital to and X.XX%, newly tangible of in Tier banking, talents. be assets of capital solid our strong remained throughout common ratio leverage ratio growth management a and of equity of have XXXX a ratio

build the employee client journey focused work together continues employees the delivering company, possible experience. and banking on a clients career solutions to as we best a consistently for best for unique experience remarkable and possible our Our our through

integration Bank of January are planning We of and acquisition X. off The are months finally WashingtonFirst thrilled to on have we are completed company. our paying one

in business to clients. year talented our team unmatched to greater April, celebrate combined have and As the this are enhanced provide capabilities access, thrilled Spring Bank retail XXXth commitment we group added to our this and commercial we Sandy and

new Our integration by level day our train full is community clients and continues in will The March. assimilate banking. to day. system Work occur of conversion as rebranding premier employees, introduce progressing and we early and a

new We full on your we will also existing questions. in to execute for to organic our XXXX today of that tax to comments invest Tax providing working Jobs delivery on to the general improve will strategies Act and capital That my Cuts while and provide and employees, growth, The move additional the now fuel resources performance. and clients. savings are communities, innovation attract to our will also impact concludes determine

it So speaking. we so we can you would and company appreciate your take state on, if are affiliation name the the and would whom we first we come question, you know as with

Operator

go [Operator Mealor KBW. ahead. comes from with Please first Instructions] Our question Catherine

Catherine Mealor

can first rate tax the shake where is rate, some out next year? you are on on to thoughts the you give tax Maybe thinking should us

Philip J. Mantua

an talking about what it is look Phil. rate you this effective like standpoint? Catherine, Are from might

Catherine Mealor

Yes.

Philip J. Mantua

range. are we are, estimates preliminary my think probably XX% I XX%, Yes,

range. XX% the Our rate has in current been XX% to effective

our not still my what where as addition of of impact might just It's element will to adjustment get bit the of WashingtonFirst. the head rate relates other just with components The be. is But that, once kind a of other than what knowing what we're tax like. that blending little Theirs higher quantify formerly some the was now, of was right trying effective that's in it to bill the ours. look we of the to

Catherine Mealor

they impairment then the any was a in the initial changed three been and may I And since then tangible any move dilution? X%. on just given have months rates WashingtonFirst, around give helpful. they on in that was that's on acquisition think that you it's [indiscernible] update, originally can Okay, DTA the announced, book Fed, us it thoughts

any making sure change that higher Just that make wasn't kind initially. there of could

Philip J. Mantua

Phil is again, This Catherine. Sure.

think marks done week be what through we But away the we than looking deposits days We I XX seen work so a would to a of all they like. portfolios, expected are that's as far, the as are to where look still different idea marks Probably in have otherwise. what terms on going of dramatically the that through from don't say that's individual the we will working at I about having anything or speak. we loan, to have better

that their was relates recollect as assets, to I be there terribly on took So, we from from tax probably looking I impact regard. material, what it based on adjustment the of to obviously I quarter. in could in think what WashingtonFirst still deferred their But think And some that. fairly fourth it don't are track at terms

Catherine Mealor

in early any cost right? And Is said there? savings Okay. March. that will you conversion happen I that for Dan, the think, update

Daniel J. Schrider

happen conversion. weekend Yes, will system's around X, is March conversion the

our working obviously, on. obviously day the is So that's team one focus is customer that integration

in In coming-in projected terms say, I portion cost line with front-end, would those coming yet of are what we XXXX good of majority in saves, with a and the XXXX. directionally still of the in we kind on

Catherine Mealor

very Thank you All that's Okay. right, much. helpful.

Operator

go with Please next Our Stephens Austin ahead. question comes Inc. from Nicholas

Austin Nicholas

marks the in on on of going the WashingtonFirst come the a to there, just will and affected outlook clarity looking but portfolio here movement basis maybe over margin and Maybe the is that those, could your be some what line core from top from could be on on for call accretion it next you the couple the give quarters? by we clearly

Philip J. Mantua

This is Phil.

that that up fourth essentially an that I marks, in viewpoint are would mid balance end the in the the reported the interest the opinion think we into when of the and especially pretty and be and of margin quarter here the loan place we range. you X.XX% we to rate and comparable terms take both consideration combine overall net that probably portfolio, marks, same interest on of what much sheets that credit the the in would two kind in of

that, tax see some said are portfolio, with which time. course we couple, well. And diminution effect basis muni or of going our to have shave four that probably of the a that having that my the at change we on that's tax Now, of three of part through over points, point off as probably the law, it best would kind this in estimate of

thing that just end the On to times is move of is offing going the many is the other in the the other clearly hand, how short the Fed curve.

us put only additional there. plan had increase I think I our think we together, one thinking rate about we when XXXX with in

of might change we be have think that X%. little got – a now opinion that bearing I

there, So, all it's I of am thinking still said all that between kind done. in and X.XX%, and we're X.XX% bake when overall

Austin Nicholas

Got it.

higher about still you strategy, talking just there? kind deposit maybe of that's you Okay, are remind maybe CD seeing are rates so deposit margin, and us quarter through, the then are bigger given helpful. we growth can that anything we of And in first then maybe when of you saw fourth the continuing if in coming in And just quarter? promotional your hike rate terms far the picture, [indiscernible] the

Philip J. Mantua

Sure.

or strategy there. I has as to an think overall changed relates to approach it really the that market, nothing

end way, top on is in still kind market the aggressive has relates [ph], I ourselves here offering are this we of of of it and premier [X.XX] quarter, relative of think play really time our to to been quarter, the especially almost you I about period continue fourth it is think if and [indiscernible] move [X.XX] are time that's that in as current accounts. fourth three-month consideration that. on premier fairly guarantee, deposits money providers, third would the taking pretty attractive. positioning in into market The to we in at that at as account, the as a the current offering some And high and be for environment looked date, this to [ph]

lengthen X. mid-maturity And would items years speak. the so next deposit Those it up, to promotional a we the probably are have maturing time example, to here of while at to block X.XX be side, point we XX two, we to got to some relates now, that for couple out rates some as between we three On deposit [ph], CDs there trying – that month got months. [data] the mostly duration pay are XX out, so specials and in have of have of

probably at rolling we're X.XX. So off

you to of what X.XX that as a and coming looks on to gives [data] X.XX X kind So, like. rolling off back [ph] sense

Austin Nicholas

all very I That's had. the Okay. helpful. questions That's

Operator

comes Sandler with next question go ahead. from Our Whitman O'Neill. Please Casey

Casey Whitman

towards so of XX this Can were tax quarter? from non-interest-bearing curious color the that? I if driving behavior you as us to the question million. saw deposits about give Just any continuing And maybe some on down what was the saw just then deposits, about also quarter you end on impact customers'

Philip J. Mantua

different DTA year. this is Casey, at the fourth I anything on normally occurs in the than of the don't is that Phil. what think drop-off here the end the quarter

we plans at bounces we of the I together, going a of are And then think months the have following relationships. predominantly when year, first put of that that almost to commercial our make always couple year. of runoff we over end in our the lot an assumption the checking back

January back make February, onto So, way seem those balance as we go through balances their our to and sheet.

fourth think there it alarming quarter. there don't of anything there as I our So, is at occurred to from relates what perspective the end the

Daniel J. Schrider

from speaks regard we second think the activity me your comment of question as had have I what at reform part our you don't that a loan quarter, anything it that, on type the the hopeful, probably solid, that base client but angled I activity let of saw you anecdotal than more Casey, look the of announced been. in more couple diversity the at towards were tax result quarter production least of was any will your I guess tell is things we a our that for which when with to C&I but to more that are really seeing production specifically the I probably of question was,

So another owner-occupied out production was C&I the in XX% coming book. XX% of quarter to quarter about book, the the of in loan our a

that the our that in is the And indication. the a delinquency indication And really rates a XX hitting bit of lines an while past which advance be so, mark as more business little utilization Then well. lowest that's really portfolios couple our nice that's rate the of all rates an with near a are activity, you would overall on nice up, robust tick or saw years. that in fact

story is as to the we this and what's borrowers seeing really solid some XXXX. and quality we obviously diversity from into and buzz economy is So, The more client in a for coming so that within for move good local in hopefully is base well, more as C&I. households really new are come the credit on

Casey Whitman

attribute also group? C&I Got in it, helpful. that book to in And new you the expansion hires would the

Daniel J. Schrider

the Yes, in in probably fourth that XXXX brought quarter. we running fully in and up folks some were

production. of diversity that in aided that definitely So,

Casey Whitman

Okay. while still loan pace digits talking double year growth or And growth, to as institution? your outlook Is good loan can for low we a you an give say? the update, combined should are for I organic next year, about us this

Daniel J. Schrider

going I of kind Sandy think you that within might growth, Spring don't but same client we loan bit given I a that through thoughts time at anything XXXX significant that about into a the little retention. and see are core fact temper our would the change moving integration

we outlook. but would better So, economic over years. of how much nothing I from think would than in an We probably to past couple more could say, differently the that more of are range our that drive how standpoint than about thinking is X% that's have we us perform that to XX% performed –

Casey Whitman

last what the mentioned amount actual mentioned you this, that question. dollar those and already of increase branch I expenses Okay, was in quarter? but apologize the you drove other if what costs closure was this

Philip J. Mantua

Phil. It is This $XXX,XXX in quarter. the hit was about a fourth

I there during to solely of earned X%. year. most of areas we other And then during payment think think related the bonuses was some away year-end to around is Almost quarter was the closure the expenses the growth was branch that couple of incentive where that the stripping as quarter ultimate is one. fourth well compensation quarter The expenses. that purposes period, a significant paid all the some M&A were for had accruals cover additional as corporate-wide I

So, lion's the share increase. together those things up really to make X%

Casey Whitman

taking questions. for Thanks Great. my

Operator

from question with Our Gabelli. next ahead. Steven go Comery comes Please

Steven Comery

ask I out Was to you you in the sure. the wanted owner-occupied? guys that to make called press about wanted release. just recovery Just loan an

Daniel J. Schrider

trying that not find front I'm in right recovery. It's detail me. on Dan. is the This of to

Steven Comery

up yields the most. saw was It's the that just that category

be that. just So to I verify figured but that wanted it, would

Daniel J. Schrider

believe I is Steve, that Actually, correct.

Steven Comery

good. Okay,

Daniel J. Schrider

was recovery correct. I $XXX,XXX It that from about some believe is loan. interest that

Steven Comery

I then question. other have good. very one And Okay, only

merger charges wondering of this I about million and of charge guys of sort kind timing amount an XXXX had total a guys the $X was quarter. if You merger took the as you update in just of those? to

Philip J. Mantua

Steve, this is Phil.

put that I tells will companies, think be a when original two it we it's $XX I we estimate It amount less the the anything million was range. may that dramatically merger and different. little be actual done. the together bit don't between the when combined us the have that said cost of all in think actually

and $XX.X it reported we think and million I around actually about million. $XX I when to somewhere WashingtonFirst said $X.X million last costs incurred year in all probably was think done

back if what's to already million which spent, the be $XX is $XX you second million out been about timing and that first predominantly million. about of probably it what's between as $XX So, you $X would to and expect And I gives million, somewhere quarter. left

Steven Comery

very you, Thank Okay, good. guys.

Operator

This concludes to turn for remarks. conference I Schrider any closing like to the our would Daniel session. question-and-answer back over

Daniel J. Schrider

did everyone thank with and again your for you Thank and can we to comments how appreciate your call our feedback you ir@sandyspringbank.com. you to We afternoon. would participating as this e-mail

a So, again afternoon. you have and all thank great

Operator

for The now today's conference attending is concluded. Thank you presentation.

now may disconnect. You

Sandy Spring Bancorp (SASR) 18 Jan 182017 Q4 Earnings call transcript