SASR - Earnings call transcript Q1 2018 | 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 first quarter of 2018. 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 that 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

Bancorp. Thank for good to Chief Mantua, Cole, of am us Kuykendall, Bancorp's you, joined and Ron for Financial XXXX. for Sandy for thank performance General my Schrider our our Officer, joining This you here is and conference and first by our call the discuss Spring Dan Spring afternoon Sandy Counsel quarter everyone I and Phil colleagues,

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

Ronald E. Kuykendall

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

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

Daniel J. Schrider

Ron. Thank you,

$X.X access and and District in were billion the banking, retail quarter such us of for their strong Through billion here The to the more billion significant integration Washington our to insurance, into potential future Company new the our of record-breaking presence and terms we wealth clients, competencies first come both bank in and On XXXX the breadth ones we commercial product has in our with of enthusiastic our our Virginia, the our Columbia. quarter this as could and offerings, brought premier a in clients a leverage serving more in on Maryland, to approach balance to to $X.X and and We about deposits given region, added and channels and locations terms. multiple talent sheet, market, additional for performance Greater XX,XXX partner clients. diverse the WashingtonFirst clients thrilled depth accounts nearly with connecting existing in and acquisition where first with the $X.X right in create compatible in of relationships is assets, the in a even brand year of largest heels company. XXXX, community of loans,

savings We while and region, offices, now achieving of banking also are XX our operating coverage greater providing community efficiencies. cost significant

to we our a expect. a integration everything and the deliver and our for create the as significant XXXth senior Spring welcome clients personal come Company, and from frustrated, managers talented not a a have remarkable is we that remarkable tellers because marks leaders faces Sandy employees have relationship familiar did influential milestone bankers. anniversary. these added acquisition unhappy transition, Bank to could employee that know employees of to Completion We likely experience we to celebrate XXX and We our to of

taking within needs growth We legacy profitable of communities. of care live our the work our and continue of are and clients, to well-positioned while those employees, that shareholders,

So, the of first cover some of from highlights quarter now the let me XXXX.

discuss questions, performance financial and As the respond items our of merger-related effect apart we we the pull attempt performance. to will your to provide accurate view most of core to our

return main compared income was rundown just of core for So or quarter and and expenses here release. diluted $XX.X $X.XX a of merger-related EPS of XXXX, the of taking this; $X.XX; expense per income non-GAAP EPS quarter of and a for XXXX This fourth share linked average for first first million On looked core is of common an million share, XXXX, income return Net tax today's of the purposes of and or of comparative quarter quick the in first per of quarter XX.XX%. million XXXX assets to additional the after a the of $X.XX of XXXX a net highlights yields basis, the fourth non-GAAP on the for XXXX, quarter $X.XX. $XX.X average $X.XX $X.X or XXXX. quarter equity first consideration results like of income EPS fourth net $X.XX; is from X.XX% of on quarter into diluted of

would compared the linked in of quarter, the first XXXX in the fourth X.XX% of $XX.X can Pre-tax after for have of first an at and quarter million X.XX% the was see, very adjusting first income for to companies. quarter margin to the a the net year-over-year come $XX.X recovery the quarter. combined million quarter But of compares for pre-provision interest you a increase. X.XX%. interest XXXX, fourth The quarter, quarter for for XX% As for margin first solid X.XX% the

accounting we quarter as into the pull effects consideration tax and the when for purposes. on linked of take margin apart the following. me reform purchase you Let the Overall, basically flat margin comparative view

FTE purchase yields points, quarter for of basis margin with which growth further to was less comparison expectations. is on fourth fourth yields reform the X.XX%. basis X.XX%, is about adjusting was margin the points, after Average have quarter X [indiscernible] for loan impacted The adjustment accounting and reported interest X of of and line first mentioned, the margin purposes impact for basis solid an in negative quarter in XXXX a tax As the of would Therefore, X worth quarter points. the X.XX%, X.XX%. recovery

outlook If both quarters, you X.X%, assume loan growth both XXXX. portfolios combined with average was a loan in linked-quarter our on basis organic a X% were year-over-year prior and basis on overall for consistent approximately

The lines. remained first $XXX,XXX impact provision is build will charge XXXX. multiple lease environment. to Overall, Pricing quarter win and was of charge disciplined into strong lag the fair for continue the loan continue be and to continues for new of expense in growth the our business Washington quarter. exceptional. a Greater reflects opportunities. market Our been of a $X our coverage of pipelines The to relationships in business power always and reserve rates move the our the this and teams selling continue losses full all to banking competitive organic we quarter to lending strong of credit of for extremely metrics provision market million loans The compared of in first has teams share during non-performing

in both the anticipated balance of from both our as linked-quarter with average deposits deposits same retail did prior periods combined impact merger the to in with DDA relationships. basis, average average growth. decreased on deposits sheet the and as On deposits assumption by core X.X%, was a loans, I the growing led deemphasize of that strategy acquisition. X%, continue broker came was and approximately commercial growth We banking Using year-over-year

while the at within deposit of our specifically over actually was time. increased WashingtonFirst base moves in quarter, Looking first in runoff the deposit base the most strategy reposition time brokered all and the the significant transaction to deposits, balances former acquired part

to growth a new core of core deposits through Our our fund Company ability asset continued in strategy. key strength and expansion is

coverage and deposit to importance well-positioned growth end, of our be gathering. To placing focused through have the share. we take more reward Washington incentive are to continue and as Greater XXXX. excited the deposit we opportunity all We about that for on opportunity modified, move in to market, been deposit generating plans and value presence our market are growth continue the legacy core With of

deposits and transaction interest-bearing business their our new key core price account relationships. in top the in of products, driving market to sales on win focus we continue the continue as teams deposit our We third

premier We improve our first leverage XX.XX% the from business and XXXX. a insurance reached have market existing continued quarter, products approximately In The where fourth the the relationships. nearing resulting efficiency we deposit lines money ratio in for for further wealth to are to XX% operating to XXX% and point penetrate the to client quarter and are in non-interest area, of new betas XX.XX% drive and non-GAAP of acquisition the the are compared the to time base mortgage, rate cycle deposits. well-positioned in income our in

We have all assumed of the yet absorb to acquisition. from synergies the

offices consolidated community were this six have that For example, month forward. a going positive impact branch will

Our X tangible Tier ratio of equity of capital asset a leverage remained and ratio strong X XX.XX%, a capital a support common tangible position ratio with XX.XX%, total risk-based ratio growth, risk-based to of of X.XX%, a Tier to X.XX%.

success to and access for look a premier performance comments future for our consistently and that of our for the invest advantage In channels; client us enhance be closing, Salesforce.com in utilizing provide and and position to cost one-of-a-kind shareholders people, will our your we the satisfy that opportunities and experience through we our bank Spring successful right Sandy continue that greater that's integration people, us will of and systems, now person, the and prepare our right employees and in the people to questions. saves; clients to them; engagement that right about That of forward, also, concludes financial one responsiveness our all for general will the by continue strategic of technology in clients priorities for to levels and former technology, continued today continue product, take the future, As move to to my culture high returns of markets sales to delivery will leverage enhance the solution of the generations. and clients, being for XXXX nation. realization the to of for our achieving the WashingtonFirst we Bank our best the our and connect projected all ensure the

Operator

ahead. question go Stephens. Instructions] Austin from comes The first Please [Operator Nicholas from

Austin Nicholas

growth Sandy still single your we high XXXX, Spring you maybe layer thinking at on should both loan and look digits we be the as outlook somewhere As in WashingtonFirst? for legacy

Daniel J. Schrider

for is singles. is That expect would to this how high Yes, Dan. be. Austin, we XXXX

Austin Nicholas

weeks Okay, or great. update maybe talent on you couple the the a given of And in then how purchase maybe the could ago, reported in maybe I acquisition, retention margin, just the guess maybe give going? and accretion assumptions changes is any on on an conversion accounting then

Philip J. Mantua

is this Austin, Phil.

purchase the points it that remarks for his that adjustments, is to relates see opening accounting amount we XXXX. effect of I X the it to think the in as really entire Dan annualized referred basis as

kind sheet get duration, year, adjustment WashingtonFirst the the the in assets of deposit out accounting that represents on transaction, as the purchase of based beyond point XX% you and Now the life that the total related with of liabilities. loan areas this those especially over and X the on sides basis of both shorter time came in balance to about amount adjustments

next are adjustments. much purchase this going loaded those lesser to then relative here degree accounting year, or and front-end to to impact after the year of – that we year the to So, loaded having more be a and

as the and on that part And next was this obviously impact we beyond. year question, sorry? less have so, the What NIM years related into go and year I'm to to will other the less, your certainly we therefore through

Daniel J. Schrider

team revenue critical whole that. of the – obviously that were going folks Talent be that. we producing of to closing have aspects retention, most process Austin, planning into one the going areas of and the part the retention of integration I to speak process can was towards the the and

one by We continue what to have being folks a organization, we of put one the they, accustomed the some that allow to effort them closed those And that we retained or in to of a can well a transaction and Day early extremely from which occur employees, I would $X the that opportunity is see the that Legal our think we Day our had new and One, have reflective done I been of at the clients. talent. hopefully at announced it in are the that's but culture, end of dealing key One, was Customer certainly March, at them do like day engaging and our relationship may with since we, I tremendous couple day billion had Legal Day part that in large market of say think in and One to welcoming clients. we managers day our speaks we great expectation to We retaining us bank for to nearly in leave in their

been has strong. really retention So,

Austin Nicholas

Understood. the a maybe back look X.XX% I of forward one, or quarter, on there. last core deposit just kind one given NIM, that bit little is good NIM for going maybe should number call comments Thanks as down color And to then this use we it the at betas? to the a your bias that the

Philip J. Mantua

again. kind going likely that, of outlook general on up was everybody I the follow Austin, for this some given to is looking that margin. on Phil is

overall rest that with the continue we rest by short-term way in place the the to stable basis has to of fairly loan that course as of now. us started will forecast the to two as flat are year. continue forward as we year, relates as try the we growth to curve should safe assume additional core the There but couple I type will that's think of over using move of and be our good may probably the we through that the that continue the the required more it this to in Fed that think through a some land to be compression rate to And to of with, point that conversation yield increases year. go I general also say fund continuing move it's at least it to

example far this spread as rate to we year by of this but I more basis think for rate longer the got narrowing year. a XX projections the is have, to our in interim end scheme, points have XX as X

points your compression a having question, we maybe that, as couple I of through. stable but back said basis getting to go all So think fairly of

Austin Nicholas

Understood. was Thanks. That's really That helpful. I all got.

Operator

Rowe Bryce from comes from Baird. ahead. question Please go next Our

Bryce Rowe

be a of question, points margin around how yields there get might understand nitpicky a way Is then from maybe was this accounting. hoping might how to were that have Phil, deposit too but loan basis affected clarity much and a been to little cost impact of X purchase affected?

Philip J. Mantua

that. do Yes, we can

calculated let So, of a both picture amount kind the sides. on give of me big that the terms of in overall perspective you accounting we purchase

liabilities is whether over to to remainder the or Loan it and both related is $XX number the the or that the $X.X on be So, would sub-debt portfolio of million had life over about to The is CDs, sheet. advances that and a the overall the and of loan took trust so our marks WashingtonFirst preferreds borrowings that it of assets course of million. the little was roughly we on about the and million Home related Bank balance $X

in So, clearly of would expect. the you the large is majority book, it loan as

marks WashingtonFirst we far credit pretty till rate much how even about those at year. the interest – think back our think the we pretty would be probably time the rate if this, of as we loans interest the the held relative estimated the the on marks loan up might as north ended at last must rates rates portion actually of being credit market that as you by And that migrated as a loans to think marks offset did anything, originally of loan little acquired expected diligence. the bit marks held up as from the less I time end on marks they much up that kind we what I of beginning

on the the much again, CD portfolio, hit of on of couple the together the years gone. the Again, on fairly pretty be can of terms of in sheet. maturities they loan you percentage parts because overall virtually numbers next did those especially run year, off different after the And balance are just quickly and take short. within side, of side, the will fairly the them marks hopefully the what this liability kind put those on marks So,

Bryce Rowe

side helpful, kind things. I more the it. is of of expense That question had Phil. on Great. I Then appreciate one

completed for then we curious helpful. rough you expenses a Just of into out move third Thanks. March, offices, conversion early good consolidation might what be was something community quarter? would and as the second in mentioned I rate of six the and With Dan, kind be run

Philip J. Mantua

mentioned, a again. suggest, of Phil be eliminate come would probably is would branches the by some think things the the other the I or the M&A I maybe are there the way of good savings this Bryce, it, growth there that are to add well. run quarter conservative that themselves as the because take throughout rate the levels, the first amount rest will to to Dan of manifest addition year, through look at expense of year the that will and still synergy X% virtue again in rest X%

I be would at rate quarter to overall our would that kind basis run quarter So, of think on a expenses. I the look of net-net way

Bryce Rowe

Thank Great. you.

Operator

from question KBW. Please Catherine comes next Our Mealor go ahead. from

Catherine Mealor

is from another to higher-cost to interest-bearing question, way WashingtonFirst by how follow-up of cost margin, more higher in yield XX how deposit even deposit just it just bps onboard? had Spring a down a and just it accretive a increase but think One piece, way just base to impacted so cost, just to way of the deposit there there of came yield, that core much funding the I the about was much break book, accretive Sandy coming of and mean outside cost is outside ask so WashingtonFirst

Philip J. Mantua

a question. that's good real Catherine,

the increase, overall could standalone cost necessarily what about of might with I of and that a kind was. before here funds of think try a kind I and as because right their to to view what that of my we up don't to in head. it off call know their can when little me the insight off terms top that better me bring contribution get former I probably second Let of tell on that, you for we give bit follow you I find didn't

Catherine Mealor

I all guess you coming trying premier the deposit and that's calculate Okay, more coming know time XXX% is on was to in I that just at the mentioned I is whole. XX%. right. your to trying mean at organic in of I beta

your the what want kind some we I organic beta deposit if quarter. on because think about And of don't just this entire trying think I of about WashingtonFirst was number. kind to over-calculate it deposit So know to base, going into that impact like had

Philip J. Mantua

about marketplace. right run, by from are let's You relates deposit on that it I in pricing large to say re-price are their we the book, in out up the that, wholesale again, include and some short think to that time although just even when you I their money of rates happened still what's of here think what as will based

And through a deposit think that overall applicable I it's as we our pretty bet so, betas the still to safe year. base those are move

to I calculated we because think suggest would that looked I his helpful. answer that's way suggested that's the that's when it what in best the Dan we that, at way probably if remarks,

I that think that it. So, of reality the is

we parts more success rate-sensitive of other all we had this interest the and remain in at growing still savings in funding of point to the very deposits, no time very, moving those of the products have and have to type have the in base. more addition at checking same to sources continued and inexpensive intention other they Now, yet traditional not

on So, roughly till we XX-day to thing tell term we convert rates advance to continue base lockstep a know where some you with shorter-term can I point funding at get LIBOR the type and have move period we of points, borrowing better short currently that XXX I of is time, ours, basis basis how other the that home here. those use kind rates in we we're and WashingtonFirst to fairly we we transitionary this of other kind through move as type mean loan can the

in gap. So, that I of think component of that's the filling other kind

Catherine Mealor

what way Okay, think is one, that's layered base is variable to forward you with of immediately, balance other of there your maybe, two, asset a then And book how loan helpful. percentage the about as repricing yields, side in? moving loan and then with think WashingtonFirst the and forma pro about sheet

Philip J. Mantua

the running kind We the portfolio now said expect this quarter-end quarter, XX% past, that of our anything commercial fixed. is fixed. variable And rate would of to the product the some more I XX% and and were basis. this commercial think just probably portfolio a XX% combined are in risk the we were portfolio I variable We else in process they as interest variable, have type in of analysis. more were And I've about WashingtonFirst we in actually about throughout XX% variable and added about the way, probably than on first about predominantly by in XX% rate

two we combined been expecting would degree am WashingtonFirst back [X.XX] would the thinking maybe over asset-sensitive percentage base, [X.XX] that the variable part probably less have fourth what fairly about neutral time. other together being the to to their profile the the I given related of fixed deposit portfolios, at so, interest-bearing would deposit to and overall to But that of our about reflect could [ph]. [ph] change cost that will And the will minimum slightly quarter nature going maybe again, stitch and and question, in just deposit you I total been a And and time think your have be. it as of liability-sensitive

perspective our our coming some from core was on comparison what to And so, get could theirs sheet you balance in to rates.

Catherine Mealor

[X.XX] Great. again? [ph] the What was

Philip J. Mantua

X.XX interest-bearing deposits. was total

Catherine Mealor

And was okay. then Total, deposit time X.XX?

Philip J. Mantua

yes. for fourth the quarter, average X.XX

Catherine Mealor

the Okay, thanks All right, [for that's [ph], query] appreciate great. it.

Operator

next from Company. go ahead. from question Our Comery comes Gabelli & Please Steve

Steven Comery

some give could expense guys going expectations guidance your I for me provision XXXX. was through wondering forward the on if you

Daniel J. Schrider

this Dan. Steve, Yes, is

the that would be provision on quarter as quarter, growth portfolios, growth based would of and spoke basis that first driven to is going all in of expect far is expect expense I the by quarter too on the quarter a I think forward, true. think experience rates first of our off growth, by I probably what hold in our outlook the we case assuming of we not

Philip J. Mantua

is, those – is are have I add this the cases been we legacy we adjustments to and of modified some that based are that compelled portfolio, they to The if the where when this regard, in are would loans start back the then renew that marks. or that WashingtonFirst through accounting, them, and on way Phil. Steve, covered then particular what to accounting would in only some in works the we into are the the way, other brought thing credit against purchase did was reserve provide compelled obviously were made on as

So, you of Dan remainder what throughout will that goes suggested, to, year. those growth impact have of the on in addition the loans as

Steven Comery

very an a for that's basis under on then, on this really have XX%, And a either a sort quarter. kind guys helpful. ticked guys obviously forward. efficiency wondering or I Okay, was just that's the quarterly of of you wondering just ratio, basis annual print goal if good kind going good, you of

Daniel J. Schrider

on for chuckling, up that of very sub-XX pleased to of we basis. out would a Steve, time where on we what going under organic on getting about XX% think that's ended you we obviously saw a where and be kind quarter, and basis, long keeping are with We an this I level forward goal expect because that is a focusing had

Steven Comery

Okay, to be rest about year? sustainable for roughly of so you that expect the the

Daniel J. Schrider

Yes.

Steven Comery

significantly, just is What's on kind me, the going going WashingtonFirst business? wondering, like looks banking for one on in the integrating up anything there mortgage of then was there quarter, one or And just there? final are it you Okay.

Daniel J. Schrider

of really the the mortgage of integration Steve, shops effect one the two division. into

in grow obviously expertise our to obviously some significantly, up really construction us to where of of a and gives then niche production sale their heavier. is products driving gain originators potential the was on it opening So, origination our which their

it's really together. of both companies coming the effect So,

Steven Comery

Okay. much. you very Thank

Operator

And the over question-and-answer session. Mr. the this remarks. to conference to now would I like for Daniel Schrider closing concludes any turn

Daniel J. Schrider

today. participate Thank to with on line you you, time Cole, for thank us everybody taking the and

to to any to our love evaluate always, a we'd As feedback the your again. you e-mail us you ir@sandyspringbank.com. you effectiveness have receive call help afternoon. Have Thank comments can great and of

Operator

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

disconnect. may now You

Sandy Spring Bancorp (SASR) 19 Apr 182018 Q1 Earnings call transcript