SASR - Earnings call transcript Q1 2019 | Sandy Spring Bancorp, Inc.

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Operator

Good day and welcome to the Sandy Spring Bancorp, Inc. Earnings Conference Call and Webcast for First Quarter 2019. 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 CEO. conference like Schrider, to now and President would turn over the Dan I ahead go Please sir.

Daniel Schrider

to Bancorp's Cole media. Mantua, Kuykendall, Thank Today's investors, will of Ron website I'm us call and joined you and you, XXXX. for General Sandy Thank will and the call analysts Schrider with open Officer; Sandy joining call for Bancorp. today. Counsel good This later live is here our speaking, Financial first Spring today for Chief be a the performance afternoon, Dan everyone. discuss quarter Spring all and is conference Phil to and today's our webcast There be for available of on replay colleagues a

the from quarter customary highlights covering and give your Ron started get Harbor we Safe questions, the will statement. taking Before

Ron Kuykendall

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

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

Daniel Schrider

Thank you, Ron.

multiple delivered very from reflect Our and we results was the across meaningful business performance for lines. the contributions strong first quarter

Our deepen win terrific working job to bankers a together clients new are and relationships. doing existing

enable line greater new client-centered develop clients. competitive Our support in front This to continue to to provide ways us distinguishes at highly success the a approach functions market. access for coordinated our and

our our our in is As clients it rooted and and organization's employees, we culture strategies drives and commitment to previously, communities, our shared I've do business. how our

value us, For how we we how us. that as with ourselves are for concepts as how people, These is conduct this engage what we people, means we important achieve. equally inseparable and

business an will long-term continue our both success people retain relationships do to Our more us. employees. emphasis and openness leads culture on with result and This attract help us to and and trust and in to will builds and clients sustainable and

of you we intense challenging to for economic new and a services, in nation's one in to and capital. so all our And this new competition, a know, competitive successfully rate very great entrants most financial do us. of As region. in the the environment, from a deal consolidation nothing But noise is continued market, stable we strong midst within the of environments banking operate continue

of here is success thrive. focus we from from couple it and noting of are are quarter. a We worth where this continued areas There and

Washington a in of expanding without presence Bank Our was region. hitch, the throughout executed strategically WashingtonFirst our integration Greater XXXX

people with mortgage continue from sales WashingtonFirst. in As After with successfully team rebuilt result of where we we acquisition, acquired experiencing some high-quality we business mortgage embrace quarter the attrition third from as move the through our thrilled approach our client who bankers XXXX, of pleased to who the relationships. have a the to with be us today joined stand we XXXX, we are and

funding we and optimize growth funding costs. quarter, last I As broadened to ongoing mentioned strategies our have facilitate

and facilitate and technologies business and employee us. experience, the to people even client Sandy as family. our origination to opening culture. continue and our will for easier they system the professionals online The to to vision as This who've a in do team and -- our ultimately, well better to know senior And consolidation individuals recruit our continue market and welcome With Spring share the pending we well, Bank making it that with help salesforce.com includes market, we the exceptional invest account and enhancements loan new existing our joined portal. in and portable in

issued diluted highlights $XX.X from for of XXXX income Now, quarter of $X.XX share of me quarter of morning. fourth first some for million cover or linked for $X.XX and $XX.X per to of let XXXX. the release or per compared share this income Net XXXX net our per transition the quarter was or share the of press $XX.X the million net first diluted $X.XX income and diluted million

As in results million of $X of impact expenses. the of stated include the today's first quarter release, XXXX did merger-related

for X%, the $X.XX loans, prior approximately over The the respectively, margin interest improved been net Excluding expenses, first of a same net share. X% at X.X% the for would the the first quarter X% -- quarter of the of driving assets, interest XXXX. compared in and X.XX% the after-tax period. to and deposits per grew total impact year income to for XXXX, the increase these XX% interest quarter Comparing income balance net sheet have the net diluted quarter

income corresponding quarter a production income. interest the the is The quarter first which at without the especially would expense interest after XXXX fourth a strong margin very loan late a the net uncommon not in year-end production quarter, loan in resulted recovered was current in a basis, interest the provision lift XXXX. fourth linked-quarter recognized flat, quarter, net X.XX%. for Excluding been growth have in On significant

significant in fourth growth but the loan quality our flat and we since Credit year expect are production the quarter, end. experienced benefit Most when terms or remain broad Modest interest quarter strong relatively no we concern. to segments list high of portfolio our expense pipelines represent well do trend. Watch reserve current with first importantly, XXX%. in stable. the of peppered the strong to very of compared However, provision market All loans income portfolios, remains very and very in in are and balances nonperforming were creating coverage are portfolios in that portfolios performing lending trends in all any range. at single-digit multiple very increases our loans of are continue no remains annual non-performing not trends strong across

in continue activity, ability providing to on at On Given ending XXX% our the loan-to-deposit growth, of ratio focus a our newly reduce we in bank-wide results. market resulting basis, FHLB quarter advances, have coordinated momentum a expanded we're the up and and seeing deposit X%, end. linked-quarter lending were deposits to a and

price our also Insurance specific after to an at/or conditions, grow identifying increasing transaction mortality as security be we acquisition, focus adjusting plan was gains X% up account pricing and commented we we over the first strategic -- compared our continue quarter, production, I management grew our last continues quarter clients. basis result linked linked-quarter efforts to quarter hiring in and production, the origination XXXX. on revenue incentive core significantly will lift to back on for salable market today year on as of strategies, when income when new driving Wealth a revenue quarter from increased realignment, our existing access full commissions interest-bearing after just to the for underway for and to spring many including continue bounced partners, win to agency We teams on quarter, increased bank to effort will continue for initiatives market seekers of XXXX I first near relationships. the the on deposits basis. million to revenue and on linked-quarter X% These sales better we the opening new Last compared adjusting focus the in up the continue Non-interest necessary fourth on success, market. to XXXX enhance accounts products producers, driving the strong relationships. top and X.X% of benefit improvement with and see remain deposit-gathering first the despite talent quarter gains banking into XX% $XX same efforts compared and and clients. and revenue, mortality of from focused seasonal BOLI Mortgage turning focus overall to proceeds compared In BOLI the on the the an rate of keenly proceeds. greater staff,

poised Assets for success. technology business invest billion continued year while wealth under and future $X.X the and at $X.X with we at and people management totaled quarter compared to billion end growth our end well performance. that and the professionals continue drive in accomplished talented new staffed managed will are Expenses is to XXXX management

incentive performance-based XXX(k) an to our increase benefit several in long-term Board. planning. enhancements made wage, As And throughout we a minimum previously we to the match increasing reported, XXXX, above-average with programs including company-wide our employee retirement employees enhanced our XXXX, and our merit across beginning assist we program,

of affecting been for very enhancements strong at the XX.XX% ratio for fourth quarter The entire XX.XX% expense the compared quarter to first this these fully remains for quarter our All implemented have non-GAAP linked efficiency of base. first XXXX.

to the total with tangible X.XX%, a of continues loan strong leverage of to common and a for growth, total grow ratio support XX.XX%, XX.XX%, equity Our capital risk-based ratio very continued ratio -- Tier X to X.XX%. of capital and and -- X positioned risk-based base asset ratio capital Tier of tangible

have we what in first results the that accomplished quarter with strong pleased the extremely are we We and delivered.

solid that coordinated take our we to reflects the serving approach across Our performance the Board clients.

company. picture, effectively to Our while financial locations clients' across complete geographic and teams our results address disciplines delivering consistent work for our

in questions. help drive effort true as in for people shareholders, This whom with we and uphold our growth local now This systems would will clients your aligns We enable with concludes for today will culture will affiliation Operator, company general and first that the invest on, question. an if and we're sustainable appreciated we will move for access who my be know clients and and the who are for company our greater your communities. speaking. continue our we state us now comments name as a help so you We'd purposeful and our to take to will come clients, that strengthen we'll and will advocates you employees.

Operator

question. begin And your KBW. We question Instructions] ahead comes [Operator session. with go the question-and-answer first from Mealor Catherine will with today Please our now

Catherine Mealor

afternoon. Good Thanks.

Daniel Schrider

afternoon Cathy. Good

Phil Mantua

Hi Catherine.

Catherine Mealor

start Thanks. to Wanted with looking the margin that this -- year? you now margin could outlook your so us if update in flat see just at on rates we're and for given Hi. the

Phil Mantua

Yes. No problem.

stay inversion a area. short-to-intermediate we're there just curve we in and with you here, yield will So, the believe the kind the camp rate environment flat across fairly of, slight of kind in stagnant same overall as a, suggested where

yield accretable adjustments year. margin release, the that. about estimate was backing reported probably here, There the to throughout points. We still going after probably off in the was basis talked So, before, continue as in six stated But X.XX%. diminish, some the that that's recovery to were we've interest

there think that going quarter. of roughly of through $X come the million for worth XXXX, adjustment forward for only it part fair-value of is margin marks -- for including the the about that through all I this should came

all-in, a maybe couple of would have range. stay margin reported or do quarter. that low throughout point the So, it basis should that points, basis X.XX% year, We suggest expanding one two I per in the

kind XXXX. so by might that into we the of it And end range the time get mid-X.XX%

Catherine Mealor

this down -- on as Do come what side FHLB that balance like you changes expect we of that liability outlook, the continue expecting? sheet what will you're saw look to And at quarter? you the

Phil Mantua

brokered will do overall actually, as of in was quarter, core hold good. in we differential, add and the deposits continues much the so anything differential what growth It rate to this CD that portfolio can up. didn't market brokered in last the as between long because to We pricing

range. the account was Money Premier market promotion promotional probably end A area. been brokered. we $XX we've in Money from million I into gathered a of million then We X% we think the $X came at it in discontinued and portion nice a million maybe Premier are some that that so. or to in Everything Market continue DDA came X.XX% sources. ran in today, and to We in that end we grew good $XX specials the that the -- $XXX point run. that for the of Overall added some a that. deposits from about in odd Market continuing else period. X.XX% And at million. in-market then our CD, pretty had month, other level. strong We'll CD had do where we of run-up a around quarter averaging million Probably XX-day $XXX

probably of market need through kind won't deposits, in we the at that performance all. we position, So, get as terms long advance of to as be adding hardly

Catherine Mealor

you. Really helpful. Thank

Phil Mantua

Sure.

Daniel Schrider

Thanks Catherine.

Operator

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

Casey Whitman

Good afternoon.

Daniel Schrider

Casey. Hi

Phil Mantua

Casey. Hi

Casey Whitman

your mortgage the talked about in rebuild your prepared You of team remarks.

that in idea can a to quarterly give and Can to where do is an process? So, think that base? expect us mortgages you in revenues million area of grow? we revenues $X-or-so are of you good you continue pretty Or continued hires the in

Phil Mantua

Casey, this so -- sorry. go I'm is Dan, ahead.

Daniel Schrider

No, go ahead, Phil.

Phil Mantua

part the the the gains. of only that related expectation The to to on last answer question

no there's million $X.X think benefited end to curve mark-to-market for in yield overall happened whatever I question quarter of that adjustments what rates. in refinancing relative some the this was increases by based to or on applications and

using and a it think off are generate to minute, that look $X.X maybe some would for $X.X of direction as that, Dan's on about rate though, a million and forward to going sale gain as continued $X side probably use on on area. quarter here even I you to at a give being to in per as area, probably folks So, who that number much comment run comes million I in going type personnel just our million able the adept activities

Daniel Schrider

But we're in organization folks I that kind coverage to, the there. that and continuing interested look our back terms Casey, rebuild I do be geographic the market prior continue force, to we're will of, the thing think is for expand Yes. our other in sales we're think -- to joining in. of the of probably

invest have just folks allowed is George's market but move important where to mortgage, specifically, attract bring for we Prince the broadly commercial of the more in continue which an banking as in us to market business lot and to and we've well. a on in looking able been So, are and in us, not that small County, to

on sales the to is where we'll numbers think forward. out bring mortgage able that sustainable going group. our we've and get gain attract sale with folks continue and kind back So, of to on happy grow Really been to our we

Casey Whitman

pretty helpful. is was the of That your quarter And seasonal, loan sounded then just lack remarks. from like growth this prepared

assume for So, so growth for your at XX% loan changed still the or can all? we to has or outlook X% year growth

Daniel Schrider

in bit I that there Pipelines of this of terms think do really a in given production, going Casey, particularly Yes, very Yes, done XXXX at Dan. good was it's seasonality of good what so great first was we a look see a record, point. quarter, forward. end deal that

The if number single-digit So, is think, is, that caveat are we we but the high what portfolio seen, more of single-digit, and pushing I If side. customarily maybe available -- the to remainder how that is business, we gain upon unattainable to but nature at still, some high is looking dependent of originate. only still all we opposed the mortgage double-digit, then in mortgage we the we've the that year. as the growth that's think it's upon not on what's depending originate

Casey Whitman

quarter? the government just an there impact shutdown from in curious, is And the first

Daniel Schrider

standpoint. -- might pent-up gone believe or mean there's didn't from probably either when We we've government-related didn't feel see -- might as think quarter. that bit. always, we postponed demand first I We the demand really a a shutdowns it loan in some that, I investment that, shutdowns, see threatening don't some -- that through

Casey Whitman

All taking right. my questions. you for Thank

Daniel Schrider

Sure. Thanks Casey.

Operator

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

Austin Nicholas

afternoon. Good guys. Hey

Daniel Schrider

Austin. Hi

Phil Mantua

Austin. Hi

Austin Nicholas

seasonal flow was more what Maybe end-of-quarter you kind that that? the or any on accounts there just deposit. there you on large at a all inflow? Can any of, comments give the DDA into drove if And Appreciate on that us driving color saw the, if maybe bank. was little

Phil Mantua

straightforward. this I think mean -- Phil. answer's the pretty it's pretty Austin, I Yes, is

title sheet relatively look a the was any the exclusively company part at balance the title have It of and again, business. all almost in the going significant really to related during DDA it the almost business is of line because what was in and to end that that quarter. at the increase unusual not wasn't driven the in business that's if really it growth at there particular all of quarter, on And of that thing end We you a was was in it, whole averages quarter. that that lot drove but

Austin Nicholas

it. Got

on security any in how you're of changes And what off? then of asset and you're that the about just base, the maybe investing what's rolling side in Okay. earning kind book thinking versus

Phil Mantua

No, I don't in think strategy there's any the real fundamental there. change

has size of needs, I kind the think in portfolio hold it's other our terms the there position relative kind necessarily there balance portfolio point And the to for XX% liquidity out to to some purposes. is challenge liquidity see XX%, but I of the change it what I pledging determining sheet, just keep balance our -- overall within this objective either. trying whether or of to at of investment for while just lot of whole security a been mean strategic a of assets. don't

Austin Nicholas

last maybe on Okay. one base. And then the just expense one

the think know came maybe some and I I of you looking a I for, hires, expense little I kind then was higher in number mentioned guess.

As million in weren't-- of base your kind in, that kind the that one-time remainder out of a base good of point there items hiring that from? we expense out look the you'd maybe level the is or year, changes any to Or of, is $XX any build through

Phil Mantua

question get that from level fluctuate some to related of to of some one-time large, quarter and But last this again. Austin, stuff and directions expenses expense things related would your -- I last the bit stuff on there. M&A range. reasonable I our mean $XX both taxes is I assume a that's kind Yes, I think by is Phil And and seasonal course, overall cost think overall quarter-to-quarter. that's around can that, be similar quarter. is the work answer this that time-to-time million in might there think excluding They'll I certainly is XXXX, the to probably the to for a year, of that to both with. X%, little XXXX of speaking, mean a probably like level view generally over in for payroll kind growth that. X.X% you I suggest But

Austin Nicholas

Understood.

guys. Okay, great. Thanks for taking my questions

Phil Mantua

You're welcome.

Daniel Schrider

Austin. Thanks

Operator

[Operator Research. with your Steven ahead comes next Instructions] G. Comery with go question. question Please Our from

Steven Comery

wondering just for sheet was kind of could I on help guys. growth Hey balance you a second. me if

was it So, and sort kind wondering average period the a C&I, flat average numbers, there on mentioned, at between But the of end there the there. basically you like basis. I on loans, anything the going big as difference period end. delta like looks looking in was if a of specific was

Daniel Schrider

this Dan. we C&I focus as -- where driving The really we quarter throughout it's function is growth. Steven, move I first XXXX some even both think resources the through and around a of of put

first end-to-period necessarily first average, area the go our the So, quarter, a end production, was kind even large And largest blocking break you doesn't but period specific to of of or question and really, the on of credit function in it's more quarter, C&I in production individual being our up which C&I despite credit, flat on side. a your the area. not tackling if in

So, we're seeing some success see would forward. to that there from our sales force expect and going

Steven Comery

Okay.

seasonality? pay that number pushing anything So, of or focus in and end, sort quarter it's it just difference wasn't downs at

Daniel Schrider

That's correct.

Steven Comery

on is it of the of attributable acquired pretty makeshift of And that they're looks right. And substantially how and of All roll-on, Thanks that. impaired, was then is the sort a to purchase just acquired basis. book, sort loan how much I like much wondering, up linked-quarter roll-off? on for yields, accounting?

Phil Mantua

is Phil. this Steven,

in thing recovery. $X.X I was interest through well, of yields, biggest loan came one think that course, million the that reported -- that

points some down I So, pull the yields. marks. six of core to about that other you'd mentioned away before fair value get more have to below basis of

think the those lot I is on more that was the portfolios to portfolio year, and being I almost in compared the during last side So, X% asset way whole fourth there spread shorter like a -- side, low first of off to for production But that really ran majority different all on the X.XX%. in left in X% there's certain was to think deposit the because our quarter, we the the a don't the we duration. X.XX% range in average periods commercial quarter across

we what though -- substantial some So, based just yields I prior the than did think also even we more on quarters. in volumes lower we were book just got

Steven Comery

was I what that's thinking. Yes, Okay.

thinking this to Okay, that's me helpful. for definitely basis? period the not very end for just are that of finally And just on increasing of attributable rest Is sort quarter. kind maybe on provisioning guys then about provisioning, And the of XXXX? loans how provision a release you

Phil Mantua

Steven, Phil again. this Yes, is

at to But answering credit. has probably it question quarter, if little of view in that as forward, made is of regard period. an point million a per given I Dan into we've in loan adjustment I move factors for as a levels beginning I by way given that predominantly of $X -- slight or kind loan growth levels take two forward, account that mean -- are loan now we suggested think or all the you growth we have being growth probably this we really going from we took talked ahead. I soft while provisioning a there in -- -- the think driven and to provisioning about the way think couple entered might more that as made it we that more in least the here the other of year a

Steven Comery

with single-digit high that's And loan so-called Okay. growth? the

Phil Mantua

Yes, yes. I'm By yes, that's what exactly saying. reference,

Steven Comery

helpful. very Thanks that's guys. Okay,

Phil Mantua

Sure.

Daniel Schrider

you, Thank Steve.

Operator

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

Daniel Schrider

the Cole this you, and your evaluate Thank of really to us receiving call. participating our feedback appreciate with everyone would effectiveness for us thanks We to help afternoon.

you So, e-mail to afternoon. ir@sandyspringbank.com. and again a can have comments your Thanks great

Operator

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

lines. now disconnect may You your

Sandy Spring Bancorp (SASR) 18 Apr 192019 Q1 Earnings call transcript