SASR - Earnings call transcript Q4 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 Fourth Quarter 2019. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Daniel Schrider. ahead. go Please

Daniel Schrider

good for and Bancorp’s Thank for you for Thank conference afternoon, call us XXXX. of our fourth Spring to joining the you, quarter everyone. discuss performance Sandy

our I'm Dan is by Phil and Sandy Counsel Schrider Kaslow, And Spring Chief This joined Bancorp. Officer; Financial speaking. my here colleagues General for Aaron Mantua,

replay available Today's open to call media, our a is there of today. call all today's the be is live well as that website later a as and on investors, analysts will webcast and

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

Aaron Kaslow

you, estimates Thank include goals, intentions, that afternoon, webcast are of market Bancorp Spring assessments subject losses; earnings to assessments and to achieve statements other future will and of costs financial uncertainties. of ability and Sandy of statements make Dan. loan probable risks the and risks and of statements forward-looking this Good other benefits; forward-looking in lease risk; and everyone. These statements and expectations; goals.

their variety significant nature, of a Sandy from indicated. and which, future are by subject affected they based economic materially because are those by to other behavior, Because results matters subject future future actual uncertainties and to of Bancorp's are very rates, uncertainties. significant or Spring other conditions, uncertainties, laws statements projections these market estimates upon may interest and management's forward-looking of regulations These differ

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

Daniel Schrider

results announced morning. that get though, take contributed about factors line back performance to year. you It's I Thanks. a I today areas other pleasure the we into highlight to a of talk this year-end great and want and Thanks, some the our our with before and to financials briefly to this focus on be step And quarterly Aaron. that

us committed this we in than a big more a organization, come for and long-term focus XXX-year-old was generations for our to to are XXXX. ensuring As success

As made bank to of corporate We $XX to XXXX, our in is I've one important a XXXX. objectives through announcements two up grow in shared acquisitions. become us company billion strategic non-bank acquisition before, and setting

have through that benchmark cross a to this billion in are move significant We we’ll preparing the threshold, and with pleased way. such we been long $XX

Our on the subordinated the opportunities these Revere time. some also and Bank offering, announcement the trajectory, executing our year. strategies to for for complete we paved at a and acquisition to throughout business we plan And debt to are way while opportunity advantageous acquisition an we successfully and long-term which respond challenges our immediate more the help grow to ensure continue have of

but For rate environment Fed example, most did, we course. a rising changed the as expected abruptly

but XXXX So deposit the adjusted succeed. consistent remained market, we our to gatherer. year proved strategies we to also and deposit and competitive in fiercely a too strong a be continued

can throughout success focus hiring clearly you of professionals across be revenue personal impact increased on and see insurance, Part talented banking. board brought our total, banking, results. our In And mortgage, and year commercial this and new wealth this employees on can XX attributed financial of we business producing to the our capacity our staff. growing

XXXX. and net diluted of quarter million net $X.XX or of to million quarter $XX.X for or annual the And XXXX fourth of diluted a of $XX.X for share $X.XX $XX.X details pleased compared income that share XXXX Net the the I'm the was share or third income million to like so I'd quarter and performance. delivered $X.XX diluted we performance the in report with per with share fourth strong that, our to record today per in per fourth for of you quarter. earnings of income XXXX

all for This million $XXX.X XXXX Bank. $X.XX critical following share year diluted diluted per WashingtonFirst million integration or $XXX.X for to earnings share full-year of the compared was marking the for us, XXXX. first or of $X.XX a totaled Net per

year results of strategic Revere Jackson, And registered for acquisitions, speak success otherwise advisor Bank Falls through and Our known headquartered these expansion the RPJ, up Rembert to wave that also the for a another acquisition. of in sets our us Church, Virginia. Pendleton that's performance as investment

in Later way. compared that provide the I'll acquisitions of XXXX. the grew an currently update integration X% those on the is to under deposits end call, work and Total

at XXXX. deposit reduced this time relationships. loan as growth, enhance that to our you gathering way And compared might some year the XXX% of our XXX% ratio the last I and of deposit deposit Our under to initiatives with would deposit you to recall, end new shared drive

one later, interest-bearing core deposits, bearing deposits. reduction an XX% in a XX% increase X% achieved deposits increase we year wholesale Now, in a in and non-interest

success our out acknowledge like a to moment set we this Our and testament to would take people, and approach extremely coordinated we do. is to our to can deposits talented our in that team, fact proud of the our I accomplish what people. growing I'm

in consistent deposit relates it our core deposits. the deposits and non-interest grow XX% ability As accounted composition to total a year-over-year XXXX of XXXX, on both deposits roughly speaking again basis, for bearing to to our

fourth business we a checking, account in portfolio small checking DDA with is at the of business, saw and across million and year-end companies the note, of balanced At commercial quarter. growth the the end title personal and $XXX small largest

to which in heading XXXX of the environment loans lending. far XXXX, rate year. competitive and due X% pricing was we interest the residential compared into increased to than the the was mortgage less combination This in expected Total

investor and and XX% real this period, by estate real growth the in grew loans respectively. During experienced loans X% loans, X% company owner-occupied commercial total estate as

and strong $X.X production year. totaled the in fourth loan mortgage production billion was $X.X with quarter. the billion for gross record over for a both commercial throughout the And ended Total production year, momentum

the made million overall loan importantly of consumer decision production $XXX of sell the production, to loan and Despite loan great to and was majority growth in impact strategic mortgage refinance mortgage generate new success only activity, loan gain. to a due we

by XXXX. increase largely results income an to increase compared quarter This for impressive $XX.X with non-interest of quarter for XXXX our million fueled banking increase XX% well from the to remarkable loan income mortgage was in period of as commercial a during management in were activities fourth increase customer a a level as XX% this million fees the swaps. income of and fourth XX% $XX increase from wealth And XXX%

debt. fourth we $XXX also quarter, the In successfully subordinated million in issued

Our intent to announcement. pursue with conjunction our Bank this offering disclosed in was Revere

our in conditions, market of fuel will insight source late compression interest our some to the quarter. debt provides offering favorable at help move helped and a the cost the end, we Given into growth. experienced this To a October long-term and forward secure made future effort this some very attractive we decision margin funding subordinated that that

for Our was the quarter. net interest compared to linked X.XX% quarter margin X.XX% for the

Excluding been subordinated X.XX%. debt, would have it

linked saw basis the decreasing on the points both also for portfolio by with We side the asset yield compression investment XX the total on and quarter. loans

ahead, be Looking quarter first we for the fairly expect the in similar to range mid margin. X.XX%

the shifts, was big get noted deposits. to One ability we broker away earlier our from as of

and average third of basis was deposits time by The driven cost savings points. by basis seven overall points fourth in the interest XX reduction market XX a being bearing of deposits by to money basis cost the went points which quarter, down from

at management we move $XX year-end Non-interest disciplined and Non-performing to in linked-quarter $XXX to we a year-end million prior totaled and expenses stability $XX.X believe for strong into the continue $XXX.X to million XXXX XXXX at decreased portfolio compared $XX.X to million on million compared million basis. remains quality further XXXX. credit our in XXXX loans as be We practices. that Our see we'll year.

noted, previously million included XXXX As in $X.X $XX.X expenses merger-related compared million to XXXX. in

year. X%, rose and driven FDIC compensation Excluding the benefit was non-interest by also primarily during those decrease merger in offset by but expenses it costs, expenses, higher the insurance

XXXX to non-GAAP XX.XX% for So XX.XX% was for as a XXXX. compared ratio result, the efficiency

The and of XX.XX%, X Company common ratio risk-based Tier X.XX%. ratio ratio Tier a ratio of leverage of had risk-based total XX.XX%, equity X risk-based a XX.XX% Tier X capital of capital

the one also capital part the is average will CECL of per a you existing industry the repurchased During the that over of XXXX. as whole at And share $XX.XX of repurchase share price implementation shares in our and common management XXX,XXX change as of as an know, quarter, stock program. impact Company

it we as Phil? turn explanation to over Phil to further provide what little like from implementation. a I'd this to expect And to

Phil Mantua

Good Thank everyone. you, afternoon Dan.

discussions, related earnings in retained As estimate our today, of reclassification testing amounts third-party. stress day date finalizing million. after exclusive intense validation This of one our many credit the and transition release acquired the impaired audit to team our by expected we to methodology press independent $X our firm disclosed overall this many, is to external in impact the both estimated of months approximately calculated our is the loans, and result of our be

calculations, produce individual required actually there from period different loan of methodology, our the And using Within few seven in decrease the portfolio this segments to estimate. we performing a levels. the segments reserve which prior are are

quarterly expectations that recorded we As that difference to in look for comparison using there will provisions provision CECL significant current be former basically our the under no we expense forward, initial methodology. or is

given though, forecast, our key estimate that period, there any Having said our the rates rate. the in Two, of in number in one, must the including impact future rate expense the particular assumptions varying recognize unemployment impact under a change reporting that containment significantly economic scenarios. or prepayment of interest that are we could provision any in and changes

your I'll more certainly and be in questions detailed on prepared the at changes conclusion this finally, of happy mix. to the three, And of size any remarks. overall our topic take And portfolio

Dan, And to back turn I'll over it you. with that,

Daniel Schrider

you, Thank Phil.

a success put and Thanks into we part XXXX, further look we XXXX. As we're large in continued the in for and strong position fourth growth. to quarter results the throughout forth great in

advocates life. are competitive often a to we distinguishes us succeed and committed our every lifelong industry. market and focused clients at and stage them people highly and for in of As seeing dedicated share, This be

forward and from folks XXXX Spring in to Revere new the welcoming We Bank Bank look to Sandy family some RPJ.

with work and Client third and partnership One and on We're collaboration second will sides underway we've integration quarter in to the transaction early Revere deal. exceptional this take both on the track the close is seen our well place Day quarter. of Our Bank in

strong of Spring discussed, fronts. a between Sandy number alignment we've As and on Revere there are

like region. Revere alignment also both the in overlap and and are committed the to as communities their clients, we relationships Spring from locations. this throughout helping remarkable is serve And and geographic reach Bank businesses market building core We goals. Sandy exceptional our some Revere well to as us, lasting for is financial There Bank our dedicated and providing individuals experiences

as consider and to continue we client or closures. We savings and evaluate carefully cost locations physical our access consolidations possible

under acquisition the also the in transaction RPJ. on quarter, has with In strong the client culture is announced operate their will Sandy assets and name closing company Rembert our core in quarter, that RPJ this management the fourth have aligns under focused Spring’s and of billion wealth Charles management. current $X.X lead values non-bank Upon President. to first as we a service. combined will RPJ will arms a continue

to senior advisors firm's will directly. The investment and continue serve clients their also leadership

close both deepening As serve to we and becoming of these our expanding work our core look acquisitions, company, capacity to our presence in clients. billion forward we our market $XX to

we be a we tremendous Mark we Division As also of solutions. new and and sophisticated and XX than Mark and grow more years Treasurer asset announced DuHamel. as a to last will banking welcomed experience continue brings provide Executive, competitive financial month, he

to Mid-sized community among We Once serve by once in Baltimore so ranking in hours to build our the another The again communities this more the last the for Sun. Washington recognized Workplace XX,XXX service Journal throughout Top year, way. Post, We recognized employees again, it's a Washington and Workplace in also need. were the We Top year strong Business than were Top by be our and XX earned earlier both volunteering as busy the neighbors for giving. special efforts, Companies our from accolade month recognized really hours were help

based we of recognitions though, the on feedback are of employees. our all Best in these

validates we grow, named the all are Workplace are right continue staying together. on we be As to a committed true certainly track. we're that unique created to and Top To we the culture who to we've that

relationships. really what matters. inspires However, people stay and us it That's to on also focused

work mentioned I dedication. banking. RPJ a community upholding position Revere hard from in employees. together that’s deal great for in accomplished and very true this As and of excited We of and clients are in strength their XXXX tradition earlier, year, XXXX. of about new welcoming and store us I'm employees and in we Thanks proud a our both to all the including

concludes will comments questions. for move general today now That to your my and we

Operator

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

Catherine Mealor

Thanks. Good afternoon

Phil Mantua

Catherine. afternoon, Good

Daniel Schrider

Catherine. Hi

Catherine Mealor

layer impact the for you on But you we quarter once into remind quarter deal guidance second the us closes? first margin Revere, any start to your mid-XXX can once Revere appreciated as to give margin Dan, move the the going and first and We're or to guidance we on that how be range. expect forward – us in

Phil Mantua

Phil. Revere’s quarter to Hey this the margin first is as we look than anticipate Dan has like. We an which think would have Catherine, traditionally ours higher positive to is mentioned, – would impact what margin going that the from been incremental

Now in rate calculations interest we've under exactly layered environment cost I purchase mid-XXX what into than that know announced bit What will when implications initially terms yet that giving sub-debt when now. maybe when up as around the a did that those to of the range the we we now we back of be don't transaction. in companies should you we bit put expect the of is different the XXX, two do would a probably them an the be pop accounting estimate together, of I just

Catherine Mealor

That sense. enough. Fair makes

And talk in great. then your how Okay, be talk expectations you'll a we quarter XXXX? – about also the little activity, this for buyback can pickup and to saw us bit active you

Phil Mantua

of trying available some the again. million sub-debt Catherine, which that we're the to of in would into you we additional share to-date, that of amount when was time issue over us favorable the given we through on this that in by means is January, is I of November as the tell we driven had the which decided roughly that $XX what for to early doing anticipated bit halfway about that amount And to absorbing at dilution to by have lot bled executing on shares. little a that to based buyback, that was did Phil the Yes, transaction. about pricing earnings offset a is actually total worth we've our a targeting activity per

Catherine Mealor

Got it.

You one last one last helpful. can thinking for stable more question, growth? your then Okay, a you solid environment. are about you really this growth had little year maybe year? about expectations maybe And a talk thought rate income this income Thanks. or How that bit fee – fee

Phil Mantua

going If is Yes, I we fourth we forward. of think going to if if think again. – Catherine, this come kind level Phil and quarter think I then off where set happen

post-mortem of probably wealth continue about all, certainly fees of couple First that to in the space to this consistent a quarter of the we've $XXX,XXX tune had wouldn't fairly one-time that basis. significant related expect on a

think probably So first that's gains to think would be the that probably a We I one would little would the as moving back forward also add think things bit well. generated of mortgage about. that

$X to quarter-over-quarter range $X.X little We that the quarter. just fourth were range. probably in basis estimate in are a million We in million here more consistent on to be $X.X the a the more million

we quarter. had in certainly what of the see from size would a the first little in you so the bit pullback quarter, a significant of And fourth

for as pick of that time, with income case back-to-back with even we increase quarter year. we've clients agreements in that of in a would that expect is I generated the about up. the XXXX. ability a the and contingent this continue to same our first type through quarter continue some the We into strong insurance also usually to $X that will we activity us be that to program maybe terms suggest the million year. We And swap At would do overall created go

Catherine Mealor

quarter. for Thanks a great color. Congrats the Great. on all

Phil Mantua

you. Thank

Operator

Zwick Erik Please Our ahead. Scattergood. go next question from Boenning with & comes

Erik Zwick

Hey, good afternoon everyone.

Phil Mantua

Good afternoon.

Daniel Schrider

Hi Erik.

Erik Zwick

mentioned maybe start your that to in didn't kind can the expectations XXXX. the comments your you out growth of I loans. play in if net Maybe with And

curious XXXX, thoughts to do of to more of of curious we continuing kind about think commercial what with just you plan As portfolio the to your kind are, there? there I’m outlook sell continue residential kind production, the remix most of your and loans

Daniel Schrider

Dan. is Thanks Erik. This

purchase-money and as XXXX of tends slow. as which I we've to change success through up tremendous is relates amount business. what in typically the we experienced balance mortgage continue so driven we hold would And mortgages, approach we move rates had will the even volume refinances the how off that has by think to increasing I both in it sheet think strategy team the that and

as overall see continue will we expect and selling. portfolio refinance continue slight to So a decrease we mortgage activity in to strategy around our

nice the at the in in all At portfolios. an merger, we same we see are how expect with time, commercial to on both really and space, looking organic basis the combination increases Revere across

loan business. would to single-digit expect mortgage upper expect the side all-in-all, happen of to the we we in So what growth, net that's mid of

Erik Zwick

Great. that's basis? kind that's Revere, of excluding upper And single-digit, on organic that an mid to

Daniel Schrider

I is that's on Day One Revere, isn't an a on would basis That accurate quarter. would well. transition our realizing combined probably say organic until and that basis. the it's third with year Client And I as that a pretty say

Erik Zwick

had Great. color place, side that growth match new you the Thanks XXXX of an looking year then balance other basis? see of sheet maybe kind continue potentially there. the have you a for on that that would great with and the deposits And loan strategies at in in that expect organic the to given

Daniel Schrider

of a we that's hand But non-interest mapping is a heavier bearing of rate growth would the safe the those it. two growth transaction side at look yes, assumption hand business. in say I think the I would way rates with that continued in kind

Erik Zwick

kind And client us for the specific you any on And update initiatives you've last optimization? it. efforts and Got able your Could for that channel one got to there's the of XXXX? me. if experience then just to one planned enhance

Daniel Schrider

what of there's – one say would adjusting of make will more in clients variety that swing learning a always experience from to in I biggest the in technology we their terms that really Yes, what XXXX. that two great effective. related initiatives would question. full be things There we're of is are

client-facing a is, technology. the which commercial will And as implementation that technology, Probably most delivery of client consumer lending. a cover is significant not Loan as all categories Origination, well but nCino of

real is opportunity smoother. technology our is CRM and responsiveness on there create So system. more our much top really a clients, us responsiveness, existing that that improve lays nCino And just of make force a for to there process sales greater that capacity for to

is rolled us. second the branches The first then enhanced which online that platform whether to client-facing the out in here much bankers, will And online for clients a be that serve and opening quarter, technology are employees technology, just – which converting also is in an GRO, traditional way whether business broader to access clients a is to it's underlying providing G-R-O The offerings account it's promotion, a focus, called to provide. it's to our teller able way in and than or us. digital a want with they do greater universal about in the really much or

think So both GRO I nCino for investments are us. key and

Erik Zwick

the I Thanks commentary taking Great. appreciate for there. questions. my

Daniel Schrider

Erik. Thanks,

Operator

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

Steve Comery

afternoon. guys, good Hey

Daniel Schrider

Steve. Hi

PhilMantua

Hey, Steve.

Steve Comery

ask slightly to merger there wanted about little mean ratio. NII lower thoughts it bit have guys any ex in I with ticked if the QX, a costs sort obviously XXXX? for of the Just general up you efficiency though, maybe

Phil Mantua

in try when been range, to kind two to that leverage with Ex to Sandy is place. merger throughout of Revere, this which quarter the on are it Spring late dip sheet to keep were et suggest, basis the on in XX% From we companies here from based Steve, additional the the just would as that we we of that see the going prior especially a below we XX% some Phil. under Yes a with balance would has of Revere, here based we going at ability that stay point target already expenses just XX%, accomplish prescribed, our expect infrastructure XX%. stand-alone forward leverage in to the we year, combined you could perspective number bulk cetera that sheer on this have

Steve Comery

would – likely you that would or And just event event? Okay. a NDA... the How be or QX QX

PhilMantua

through as of work do. the we're And to year, it's we happen going people given that likely, sure that we probably most in QX to to some the as point Yes, of is late part system make need therefore latter that going until get that conversion quarter. probably the need of third all most to the retain the to not

anticipate in to latter to we get would probably those I if the levels, be So going that year. – part it of would the we're

Steve Comery

AUM close. of then, close sort management sort the billion there? fees, And being like one sense. I you appreciate what of commentary fees about of on the can on wealth other makes $X.X combined like Okay, sort the kind thing us RPJ. tell what of after Anything look about the would after

PhilMantua

again. Steve, Yes. is Phil this

in quite being that of related – we mean going a didn't close, of anything et RPJ, be that how related million fee-based the really Although the year, to timing million It that's on $X we're under generated just the forward. basis, would of estimate total, be us going first that the what at. gets to in this maybe the terms probably shy quarter specific general, $X.X – about that out we But quarterly we're to out, somewhere arm have to we're report probably revenue initially cetera. wealth management total to look probably first probably I going about probably by them other may of look at for in assets than acquired year overall not given in contribute revenues, would moving business. in so that or

Steve Comery

Okay. Very good. Thank you.

Phil Mantua

welcome. are You

Operator

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

Daniel Schrider

for your Thank your email for questions. for ir@sandyspringbank.com. always great Again, you, a and We everyone today your participation feedback have afternoon. and comments so and calls, welcome thanks on your to these thanks please participating

Operator

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

now may disconnect. You

Sandy Spring Bancorp (SASR) 23 Jan 202019 Q4 Earnings call transcript