SASR - Earnings call transcript Q4 2018 | Sandy Spring Bancorp, Inc.

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Operator

Good afternoon everyone and welcome to the Sandy Spring Bancorp, Inc. Earnings Conference Call and Webcast for Fourth Quarter 2018. All participants will be in a 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 sir. go

Daniel J. Schrider

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

media, all Safe usual, that a take there the started, call to our your move the will open After analysts, As of the call will replay key we statement. today. covering get on s Ron give to webcast a investors, questions. Harbor today's our available of website But live later will we customary quarter, highlights and is and be before

Ron Kuykendall

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

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

Daniel J. Schrider

region and and were produced the that our successful Bank, And growth. our achieving very the the at Overall, integration quarter explain record strategic We solid earnings. same underway. Ron. mixed, expanding results you, presence I'll of WashingtonFirst initiatives XXXX core throughout Thank already annual time, completed a are fourth

remains in is Company we we existing by operating relationships, thrilled continuing Positive team the to invest and the in fundamentally results We've very the quarter WashingtonFirst Washington of to However, a XXXX. and broadened strong talent growth are the driven and were driving in well-positioned together one successful region to XXXX. and funding and growth through have facilitate acquired professionals in clients while deepening managing as are our fact we And technology. we segments, and strategies loan move strong two from costs key all client bringing ongoing efficiently Greater organizations. as client enter as that together

volatility affecting issued mortgage by on linked fee-based per results $X.XX per gains, income the $XX.X fourth XXXX the from of million or were $X.XX the disappointing this net our of of However, revenue. some quarter businesses hampered business, Net for was or compared quarter million of share net or $X.XX and million XXXX. $X.X share income fourth for XXXX, quarter quarter for per to $XX.X income of the the my in our in markets and But, the highlights cover wealth of now, I'll soft this remarks. later I'll comment insurance press morning. equity release in And share third

As credit income interest of include acquired $X stated quarter previously $XXX,XXX from in merger recovered results expenses. million today's did release, loan a and third in impaired the

expenses XXXX million from tax million income of third these the items, and share. of revaluation expense of income $X.X results fourth in quarter The $X.X been Excluding per would net the merger DTAs. impact for or million have of the $XX.X after-tax the $X.XX quarter additional included

approximate to $XXX.X share. tax million, diluted would net these of The of items, full Net XXXX impact a for effect the income Excluding per the $X.XX expenses, fourth share. $X.XX year merger net record for margin quarter XXXX fourth per EPS or for of full-year interest at the compared the XXXX, after third of was quarter was of quarter. the quarter recoveries, was stable X.XX% X.XX% approximately X.XX% The of share to for $X.XX interest linked for the per the fourth and XXXX.

quarter, strong. linked our grew interest beginning by in basis, recoveries the would X.X% lending total quarter growth quarter momentum average when in of XXXX. portfolio grew businesses to acquisition combined recognized have very the been post margin in the Excluding at third compared in On the a net The X.X%. the loans and X% interest was

loan of yields build across quarter, metrics pipelines for linked teams quarter provision refinanced XX the million comparing third in Greater new quarter. market. portfolios credit opportunities fourth million highly strong points Our when the expanded third on quarter and production a deposits. marks on The loan Washington compared of of for quarter. fair Average and the The strong to the acquired maturity expense points and the charge the was they well. the organic fourth Overall, is reflects ‘XX basis of to our remained very losses This compared adjustments. market of $X.X our impact net of reach very par X in as the being of $XXX,XXX performing and total to non-accrual to basis the the interest across of competitive a This segments portfolios of are quarter all for continue third charge quarter. impact all is lease value $X.X loans during fourth and a strong experience the provision with in

market which and loans non-core and On this fluctuations closing substantial cash to fourth with the more deposit heavier in in XXX% and our And linked management in the growth acquisition aggressive are a lending level deposit the deposit growth the We expanded to XXXX competition watching the closely at commercial which yearend in coverage WashingtonFirst in XXX%. approximately then view fierce businesses run-off drove activity, in newly strong is non-performing million $XXX business. due to the environment, most Consumers deposits is in base, The deposit we year fourth reserve normal X%. XXX% previously in indicated, changes quarter our momentum very core front, and runoff combined of title shifts and in to XXXX And our quarter the objectives. have basis, the came among with short-term. primarily combination total our X/X/XXXX. rates. seasonal challenging post to more behavior. on proved range. also in quarter deposit we With the portfolio DDA a higher prior started current deposit on of flat is And loan runoff experienced experienced important Our bit there more rates the ratio were average at for we our as in comfortable growth, the loan the XXX%. strong as ratio operating was led

As on will as price we interest-bearing accounts and near we or the through on driving at relationships. the move we continue market, of the deposits current core our quarter, top new products their focus transaction win teams select sales

underway We to success. enhance gathering deposit have our initiatives many

plans A relationships. revamped keenly deposit focused client emphasizing household full turning across and or incentive rate of the banking on also are initiatives the Company, few growth. into seekers We include

the XX% We've a compared XXX for client in growing rates, quarter both result for more and or quarter account refinance quarter, of certain all Mortgage In linked We a and We'll existing decreased. the to implementation while relationships X.X% CXXXX call in for linked is earn before the in gains what deposit the again effort forward and aggressive and products new more and analytics of third one that the creation decrease we asset we of clients. of bottom demand Greater of it leveraging banking We're homes. in third activity seamless and pricing is through as promotion our are in strategies XX% quarter, talent declined volumes additional to fourth time XXXX, It's the platform calling to a full new like know increased line premier fourth experience a in short, market, will we're for also to noninterest availability third drive in all drive we But allowing production, XXXX. to years overall purchase of engaged and data deposits coordinated our second to our enable account, quarter prospective our to new environments in old. the being pursue clients. The We've to the year. invest select growth. deposit-rich and quarter doing modifying new XX% to income realize, early and online it banking In revenue compared the Salesforce.com, these and deposit relationships reach to in it's for have market times and mortgage XX% of jobs continue industries look help positions. money additional declined the Non-interest market, higher DC lists expanded and these corporate-wide to the deposits we and to goals roles relationship. of that money lower launch have a We're deposit transactions. income This continued of such purchase expedited decline to successfully due benefits do. continuing been money XXXX checking products. for late clients the through compared develop to navigated account opening XXXX.

during and and of Additionally, third the departed integration company we mortgage the originators WashingtonFirst, quarter. some legacy a during from experienced number the the company fourth disruption of

compared and affected agency to are we lines While production to XX.X% drive fourth experienced fourth XXXX, overall agency declined insurance Insurance typical personal commissions growth. this experienced and hiring in Comparing decent the to commissions seasonality XXXX our mortgage additional linked additional quarter while quarter commercial our production, originators quarter. flat, were actively third XXXX.

wealth market bank division. our In XXXX X.X%. On revenue was revenue wealth from the on a Softness year-end continues quarter X% to and we revenue decline X.X% by partners bolstered focus liability increased was and effort yearend. physicians' bond revenue, linked hiring basis, be grow time fees XXXX, value increased to business. producers, management clients. in driving an trust one management from to revenue and strong Wealth at to year-end management fiduciary strategic a Comparing identifying existing new continue despite in

XXXX. year-end to at billion $X.X compared totaled management year-end $X.X at billion under Assets

Our wealth for is and professionals management and staffed continued success. with growth business poised accomplished

technology are while people to continue On new we future and the talented invest performance. the expense in expenses side, And that will drive well-managed.

the people For company best instance, our right throughout to we serve our this aligns will established that bank-wide and with we help these increased enhanced minimum Company, it’s announced and of interest the shareholders for the wage, attract incentive the do and retain XXX(k) because and of We previously it success employees enhancements made we rewards match. plan time. the the clients us life our thing their to to our

and new quarter the of On technology for XX.XX% system technology also realized the fourth be we The for non-GAAP compared in and for will loan front, XX.XX% quarter efficiency opening of quarter that was the third online account in XX.XX% XXXX. ratio fourth invested XXXX to XXXX. the origination

Excluding the quarter been interest would the have recovery, the XX.XX%. efficiency ratio for third non-GAAP

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

that continue to systems through growth will true we and an on in a we to century the take and discuss country financial impact advantage the in and of move for challenging lives that for and the to provide achieving our rate build to half, and, our satisfy and help environment environment, who enrich political our greater and one-of-a-kind strongest our of bank communities. an will is vision move regions for that Despite of people the continue access clients while our make This in of we be the will shareholders XXXX, enable general community with employees. and will we us comments performance That one future and today, strong advocates a experiences the exceptional returns clients, aligns thrived in will being questions. As clients to invest your for and success. my a shareholders position now for efforts continued concludes

Operator

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

Catherine Mealor

do Can us afternoon. update the we we margin? of accretable on outlook how that this be the especially And you that saw Thanks. should bps XXXX? yield over trending XX for quarter, Thanks. your Good thing just

Phil Mantua

This Catherine. Phil. Hey, is

anything, on -- that in I any would to the range. what the environment of the directly, be how think, would today. curve or general for or with a now XXXX. very rate might to it if Fed is fairly really as predict actually cut by today foreseeable have I in future, We for But process margin year. not our all similar the of be thought the is that rate future backed assumption suggest interest And standpoint throughout consistent in look expecting off it later whether is probably position we're going backdrop our to the forward. probabilities foreseeable move we’re more tightening towards the The settles where and be flat environment forecasting margins with to we X.XX from rate the as about they

about $X.X we to In of from that And that worth anticipated from the effect worth accretable value to even time-to-time a are around about million have what's margin, remaining WashingtonFirst points. had million I it estimated million. this left basis or into accelerate. about backdrop to whatever XX XXXX, X.X, in payoffs might we absent transaction, again. this forward there, as which X.X dramatically that dollars $X relates that's the marks it positive drops approach amount the through might of looking level As fair -- to yield in was of probably any But of terms left projected is of think year

that's any probably gave going additional X.XX. relates terribly number I year, the significant margin that to to the for as around so, to accretion And be not it

Catherine Mealor

Got it.

a but in laid Dan we that to Fed feels as balancing that's the stops, think that lot like your funding So, that as going be about coming-off, the that you're X.XX is out. yield it guide, accretable for scenario then cost, that and X.XX the of deposit also initiatives but

then you is back the two -- about as it the or feel think and of say moderate of we that? do how in that deposit So, costs half elevated we kind another fair to we quarter year see or get like should of may

Phil Mantua

we mean, exactly that's I degree quarter get the still think aggressive deposit side is yes, to the that with really how probably at I their it, on in be again quarter; through then, the saw where increase need it have we through think down off way fund that growth, as offsets in we it to we from some paying XX rates the you I gone; about year. yes. that I I yield that quarter And costs, beta in think degree. have look still But to depending what around some some are additional the on think we this level range absolutely, believe this work XX. third to to low way deposit high in the leveled right

are think And so, rates it of then we to I as going if that level to think will continue will, they eventually kind out. moderate

Catherine Mealor

need? the driving we we the that trend that year, reserve is we And into give Great, next should putting year as higher okay. credit And color around are move additional a this provisioning you continue next you against we could little then, perhaps of provisions build than saw us year? WashingtonFirst bit a and this

Phil Mantua

all, through So, place first bump of in quarter. up quarter, certainly production the of loan in just the happened terms the the the provision the sheer took significant that most of new level was in what's of aspect

to of we we that actually draws as a $XXX in So, had of some of almost et contractors with tune from which $XX before cetera. march lot about into had resolvable have now of the but occur rolled government then, at our our a we loans and that kind to million over even are and existing in XX.X, fair then of normal we did covered look addition and our by quarter about though worth that we’re increases increases $XXX by basis, And loans million would credit was renewed at what about that, about portfolio. year-end a lines value in and WashingtonFirst transfers on net also growth loan things new the million,

‘XX So, going that to the XXXX. get into exhaust continue and we through until occur. is And really we that of part to equation don't

of well. the and was aspects some way by -- So, going the throughout as year on that that

place already of that this to existing got So, we of took point. the as kind was part provisioning that

So, that sheer about as growth was really of else the of provision any was was much different as quarter. the majority other loan heightened that anything level it from

Catherine Mealor

Okay, that makes sense. Great, thank you for the color.

Operator

question with our next Nicholas comes question. Please And from Stephens. with Austin ahead go your

Austin Nicholas

Phil, you expecting that more is range that was kind mentioned, the the Maybe this back the just time. Are increase one quarter? margin, margin on that expectation for core accretion? your you or X.XX at that of think margin hitting reported which X.XX was to I with X.XX The

Phil Mantua

the margin. That's forward. would margin the at look I reported as look way we reported That's the

Austin Nicholas

Got it, understood.

Okay, that maybe on trend, Any comments And of mortgage that's given the helpful. left the maybe you're doing? of to then banking back the just some how expense that outlook. some should and then, rehiring team numbers the in

Phil Mantua

that were fees before. little together that they quarter that happened. probably than two Those bit There We are other few had things that were expectation I were higher area on probably there the things there to. anywhere Austin, attorney and we’ve expense be occurs around fees this some every I was of in probably anything professional amount occurred I a the press that that significant majority talked The in quarter, of were, would release, of review that for dollar overall the about of pretty think the again. inclusive or are they is that Phil would the else. quarter. during put year that we table out quarter in bump that this timing, And loan is good everything were a face year-over-year our number. growth fourth the had that Yes. X%. in mean, half had

of in review time this is back of at that is around to quarter-to-quarter. line, majority for at terms of piece, year. the And one recurring to that just but There's saying, prominent look the I come in is, it stuff wouldn’t thing I from increase we what good just course expense is of growth looking overall to with did just the time. happens I so, quarter, say incurred would wasn’t that loan way seasonality a And it the most X% like rest some that

Austin Nicholas

growth, with on ‘XX? to comfortable Got then, it. maybe still growth X% are helpful. we sheet rate loan to And as look you That's balance just XX% that

Daniel J. Schrider

looking speak. from existing integration way ground news perform. expect the new momentum about the And we conversion now. XXXX, to a in they little hit would through been which able we're And it work First be we of thinking we at a That's folks effective so That When the Yes. the were what continue. with is may to good legacy were think there producing. lag, from originally in very is, of the team pace have experienced -- right along a bit just Washington running and the outlook. the -- I our and XXXX, of That's that bit good to the our

So, a deposit looks it's gathering like earlier the that puts number to pressure sustainable, comments on which obviously more lot front. my

Austin Nicholas

quick And makes just maybe then, Right, last sense. one. one

within government be helpful. contracting behavior on the lines change mentioned you’re the there and out anything credit customers some maybe from I of from you or help extending any those shutdown, any clients book, those business or will to concern seeing in comments doing Given you're think government

Daniel J. Schrider

approaches imagine, number employees. our different One of is, that in retail good of are might our government as couple you clients have consumer, comment. a a I’ll or we are There

made this schedules some have to as others like previous this where products so, on adjustments of to in payment things of times help type put marketplace, through on gone and there folks time. jumped we gap that out when And we the we in

been standpoint. so, that very we’ve proactive from And in the consumer

by within side, our case commercial more are case probably book, the those On GC on handled basis. the

see this if impact the help. might while able be much be most be imagine. to as government demonstrated contractors. thing are there's in have of we’ve potential clients And of outreach things not that that to employees of weather is space contracts I may those other Our our a some might well-healed able GC clients, shutdown. think not your done And as again, clients we probably you greater has to the clients those government and to But would concern

Operator

question with go [Operator ahead next Instructions] your from with the question. Please And comes Comery Steven G.research.

Steven Comery

deposits kind the associated kind with I the just like out. to that do you or in you those the to called QX of a kind year? is I of filter guys ask Is expect of wanted kind back? it about mean, DDA event seasonality when throughout of get

Phil Mantua

end we and of we is trickle year-over-year it’s Phil. and they the happened that I went is What’s performs. way toward gradual this kind this quarter. quarter basis, at and And a back in the then, Steve, and back the on went build during that normally that’s think traditionally through the looked back of back first kind a if of -- it

would we that’s plan that the our So, for. way be expectation;

Steven Comery

step then, kind QX? really enough. that. run the you you took just wasn’t expense. goes fourth something in rate of going down on where to of fair Okay, there specific do -- non-interest Was something and a think the anticipating I And kind was there, want quarter. in ask about the Salaries

Phil Mantua

really extraordinary is There there. Yes. nothing

run of things taxes reviews get the our And elevated hit we annual towards tail beginning true-up the incentive than security that, one in after cetera. performance year the that and anything the that I because on then, we the et of that the I normally that’s quarter. thing second like of first extraordinary in terribly the and to year-end of is end there. of forward, don’t into look kind as all things the payroll of rate to and you first things just some accruals of quarter But Some back us related mean, other do think things just kick do. happens

those So, differences some of levels. that's some when in we But, it. that's see about really

Steven Comery

line was wondering believe come what in. $X.X I just did the of merger kind during heard item then, expenses. remarks, I I prepared those And of million

Daniel J. Schrider

quarter I on -- fourth results… reflecting was of XXXX back the That No.

Steven Comery

Yes. that. I misunderstood My Okay. bad.

for kind the about expectations, going me, ratio, was just And Okay. year talk finally I the efficiency wondering if you guys and of your quarter then, could forward? either for

Phil Mantua

Yes. earlier likely look given and talked in number XXishs about expense before to That our XX% things probably, Steve, more growth, We’ve dependent it I of not. it. piece kind overall really the would probably XX% manage be. Phil. I that what this is us towards would that range, suggested where the expense is is much grow than side this about on of ability it revenue as manage the of

Although But on there you do the nature of to where the market way is always it basis. things to room kind of that's for would can be, this there that at we point. delivering a like discretionary the we’re given

Operator

from with Casey And comes go with ahead our next your question Please question. Sandler O'Neill. Whitman

Casey Whitman

In in you onetime be more those quarter. were specific the your fees or some remarks Can fiduciary as mentioned prepared I much? to what think fourth you how

Phil Mantua

trust when are postmortem Yes. or it what to whenever, have whatever these may that one what in at related I out Casey, call, all a happens this that point. is to guess, you are, Phil. fees or we settle And come

I $XXX,XXX. was think the around quarter, during it

what quarter. in collected fourth the I think it’s got

under which standpoint significant And the so, and assets subsidiary in To from because in of management, under $XX of of that West equity grew type the that course the of had drives the activity happened revenue. our $XX piece increase impacted offsetting of the evaluation we fee sales the terms trust a just -- to tune or at of recognize about the markets little downturn management efforts actually the quarter-over-quarter of million. end, assets and color and million how through that's the what net bit of the saw the that that combined

we're good area. currently delivering of is there momentum mean, that in what I So, in terms

of environmental that aspect what the the Just downturn market in headwind of was kind the really regard.

Casey Whitman

us us And would were what like remind so quarter. you your more then, a revenues give in for just little those outlook insurance for thought I ‘XX? have down sense is this also maybe what than But insurance? probably looks year look can for And this the XXXX seasonality when for in a the piece, you

Daniel J. Schrider

And of income seasonality the different the affects business some the property points that's business. first the the physicians and that the insurance casualty at -- up quarter which and third have We typically related in contingent to liability quarter are and both then year. line those and

So, to And strategic an contingent mid-single-digit that see due of producers, business. rebound And looking absent absent somewhat some at bringing in absolutely standpoint, you in that from revenue would a we’re success growth in overall the partners. expect other to success of bringing expectation first that’s quarter some income. in in

Casey Whitman

Got final next outlook last quarter. tax question than just little rate, the higher one it. And your then with for What's year?

Phil Mantua

a I XX%. think on effective probably use around would kind of an tax I rate,

Operator

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

Daniel J. Schrider

you. everyone Thank And to us thanks for participating with this afternoon.

we're be have helpful available us that evaluate our of obviously if you In other to would call. addition, we out close we'd this to as you the love to feedback And help effectiveness receive any call. questions

Have wonderful or give comments So, at a you afternoon. buzz, email us a you can your ir@sandyspringbank.com. can

Operator

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

You may now disconnect.

Sandy Spring Bancorp (SASR) 17 Jan 192018 Q4 Earnings call transcript