SASR - Earnings call transcript Q4 2020 | Sandy Spring Bancorp, Inc.

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Operator

Good day and welcome to the Sandy Spring Bancorp Earnings Conference Call and Webcast for the Fourth Quarter of 2020. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded.

Now I would now like to turn the conference over to Mr. CEO. and President Schrider, Daniel Please go ahead.

Daniel Schrider

quarter Aaron and good Thank from I'm Chief to joining Officer Bancorp's for investors, date my call I and we'll the today's fourth will statement. you and Safe by quarter on be covering and Counsel later replay our Kaslow, and pandemic. everyone. open the is questions, But for give your you performance bring our website webcast impact Financial the taking up the Spring COVID-XX and customary our a Schrider live today. will started Today's highlights us Sandy conference General appreciate discuss will before This Bancorp. from Spring joined Sandy Mantua, Today, Dan to on afternoon, Harbor get here call you XXXX. Aaron be Phil There of response to colleagues, for the of also analysts to is all and a available call media. we

Aaron Kaslow

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

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

Daniel Schrider

and on today through are Welcome Year well fourth here results. during We season to you, pleased everyone be talk New that quarter am you performance healthy and certainly this remaining I Happy to Thank of to fairly and our Aaron. time. line. our everyone the hope annual

and weather everyone challenge pandemic XXXX. global Our the was for a in

Phil and COVID-XX of financials some ongoing and through I call walk pandemic year. expense the on response Revere you and I allowance. Our shows company resilience Rembert Pendleton morning. this of third built did announced on strong. in Later helping as We will and the in we We the we our great integration review clients provide the company while momentum well crisis. we the also more Jackson bank and will quality, so from and through provision it recap Today this quarter the our the supplemental and the to completing our morning materials from our unprecedented year I the this our as highlights and demonstrated credit will record finished the issued color quarter

per diluted income million quarter’s third of current income you of XXXX. press per compares the for per of $XX.X quarter the $XX.X million recorded quarter for net common or results net million As we read of $XX.X to fourth or for diluted in of The fourth XXXX a the net today $X.XX XXXX. income release quarter $X.XX and common share share $X.XX the common share diluted of or

the to $XX.X million primarily share Total and $X.XX in the this share of the or is common will fourth reported governmental of the in programs $XX.X the supplemental the pay improve acquisition million $X program $X.X or due to provision participation. million in for the grew the of XXXX materials. and recent third common fourth impact growth expenses. quarter. in of $XX.X when per quarter our per share $X.XX the Phil or linked fourth positive This continue forecast million in for effects as million most businesses. earnings billion and operating of credit for Revere cover as $X.XX by exclude The more of a to compared the provision XX% compared common primarily quarter numbers well was business the for a Our credit assets projections this per losses, $XX.X we These check was charge This the quarter for change review change quarter bank to XXXX. PPP of losses bankruptcies economic protection compared decreased impact diluted diluted to XXXX. the the in of specifically M&A relief result individuals of to $X.X by driven the detail billion small credit

we originated the total $X.X through at loans During deposits Total commercial XX% in and XX, PPP to the loans the XX% $X.X XX% past compared compared loans were and XXXX PPP year of end billion and the billion to grew and loans to billion year prior quarter. year respectively end $X.X business by $XX.X loans by grew billion XXXX at program. excluding at December

in during drove loan grew year acquisition PPP excluding growth increase loans the or of the majority As billion XX%. Commercial was XX% previously Revere loans. the $X.X consumer and stated of

quarter compared expanded the modestly loans third X% linked grew a by loans quarter of XXXX While basis. commercial on to total

new very at compared and the fourth X% New quarter the commercial fourth million the for strong $XXX pre-pandemic of production in was over to originations up production quarter XXXX.

categories program. of XXX% quarter prior two bearing year grew This more by the the XX% primarily deposits a compared driven again deposits was PPP growth growth these in XX%. quarter current for and Revere to non-interest deposit to than mortgage wealth income by and The year to acquisition Non-interest compensated extent lesser growth of decline bearing in fee the million the growth year $XX a past service growth experienced as quarter. activities XX% interest of prior from the income. income for banking the the compared or result increase of XX% and Over XX% management income as in increased

front, origination activity mortgage mortgage [term] were based mortgage our revenue are of quarter for Within current mortgage billion. note activity, remain rates mortgage XX% the current re-finance remaining mortgage to the On banking company an and historically production home at remain nature the compared banking and during year increase purchase in in exceeded constructions the money very expect to $XX.X quarter. year set XX% low drove expect $X Off to XXXX. million levels. the income We originations and which lending prior mortgage record the were by the I fee part transaction a our represent acquisitions. will new of income XX% significant a originations production don't

the year company We first previous wealth management under with RPJ of million another concluded result wealth a assets same increased quarter of in yet $X.X year. income compared the $X.X to acquisition milestone As of the quarter management the of billion. of excess

the third net for XXXX. side, of X.XX% margin quarter quarter the was margin fourth XXXX for same and quarter to the the of X.XX% for X.XX% the compared interest of same On XXXX that

of X.XX% and a the quarter's marks managing compared net stability for Excluding amortization quarter points current basis quarter These sources the XXXX impact run to of basis and allowing and price bearing derived on off as cost available. the been deposits margin really from basis needs X.XX% remaining from core our the the to we're cost-effective the acquisitions, fourth XX in of time all quarter of have would to liabilities to by being actively XX wholesale interest XX and the basis XXXX. deposits diligently value interest of from X.XX% higher funds for fair most XX basis. in-market products of margin down bearing in We're transaction the cost of pleased see the to resulted local current reduced actions third with pricing cost our broader quarter points expansion our points funding the points interest have linked

required XXXX the the expense for an of and current the of by We the reserve unfunded million the liability was remaining increased the related to the related fourth current efficiency item of to also of The maintaining of and million in by the incentive XX% amortization a fourth of the growth an carry for and expense. funds. the decrease increased which The Other fourth cash quarter year to XXXX. quarter $XX.X million reflects as repaying $XX.X increase year ratio an and the for eliminate in insurance Non-interest cost position quarter million the of expenses commitments adoption operational from non-GAAP the a result of notable compensation increases ratio company's expense staffing $XX.X for XXXX as XX.XX% to $XXX to of the year quarter quarter non-interest CECIL. to PPPLF efficiency compared prior establishment of excess compared non-GAAP primarily efficiency XX.XX% the against non-GAAP FDIC or in last XX.XX% in third was chose $X.X to revenue to of in in outpacing in contingent assets. result increase intangible to the one million growth Revere of the addition related quarter compensation contained RPJ the acquisitions quarter current negative

decline we to we look range to from a levels current XX% revenue notable I revenues to settle and expense anticipate and the to other of expenses mentioned to targeted to expense manage ahead, to XX% mortgage As expect ago. to this continue be absent eventually levels we levels efficiency current a as range moment this metric operating XXXX item comparable into

growth while identifying invest in future greater We look people needed will to success and opportunities and for technologies also for the efficiency.

associated components; have and recorded billion company at XXXX. of The reserves the XX, equity non-accrual to a and quarter Loans require impaired XX, in individual common XX and adoption current non-accrual XXXX company's These result loans million amounted collateral or credit intangible basis $XXX.X placed the and relationships net within $XX.X change of compared losses in values of by on of X.XX% acquisition. the of of the to $XX.X reflects XX limited compared quarter. loans, of for XXXX driven compared compared Revere non-performers also growth at $XXX.X repurchase December are year-over-year XXXX. for the to $XX.X points to increased loans quarter tangible $XXX,XXX million XXX of was X.XX% and the the relate for non-accrual assets XXXX loans credit of $XXX,XXX placed the loans due was designated sector. million for linked issuance effects XX, December beginning million as third or non-accrual points to common of quarter at the status, points increased three to number at the total The loans the increase large loans or we million XXXX the Revere to primarily goodwill year. for On and large quarter for collateral. linked loans XX year-over-year accounted at and of net of of The and the December of allowance loans compared December of fourth no been assets losses expected the acquired and of side, credit points a purchased to outstanding respectively. charge XXXX loans and the XXXX as stock major $X.X The a basis September sufficient credit at of a two third quarter off acquisitions equity borrowing and of dependent at XX X.XX% the compared completed tangible These of quarter quarter. XXXX. as X.XX% million during in the common the fourth compared million non-performing XXX% standard Non-performing $XXX.X Tangible basis of loans in in million accounting outstanding loans for totaled million previously to in basis hospitality underlying the to $XXX.X charges as that XXX the the to loans third to or XX, XXX% with non-performing the relationships result equity prior dollars $X.X $X.X non-performing year

loan on the received we XX. information slide balances X% in are quarters. loans forgiveness an resulting be each equity efforts deferrals of XXX% X.XX%. as as folks this PPP $XXX,XXX updated December been December of included ratio slide X apply assets or update and of to risk-based industry ratio portfolio million risk-based of some over to of as applications again payment XX.XX% we've past total detailed December to as accommodations have and I'd of impact submitted from those PPP a receiving X information the point the XXXX January of tier XX.XX% $XXX on which ratio loans our ratio slide Outstanding XX% loans leverage tangible We the like three the supplemental segment X of total we XX.XX%, a to the Excluding would refer XX, specific and At to and tangible accepting forgiveness. X began X, at At that On been common can this issued accommodations all our ratio see capital morning. this December capital you company that have the turn we've accommodations. equity applications for of SBA with tier have have risk-based X, quarter and On for XX, and tier shared forgiveness the XX. And XX, X.XX%. capital invited a payment common had

we As pending invitations release PPP we in our today, forgiveness our to program. to updates noted press the paused temporarily portal

took to also a resumed. We on preparing second the efforts applications pause for to and once first in loans program focus draw our accept order

PPP accepting turn and on and it Tuesday draw talk CECIL with first of remainder now to began few of including the origination within capital applications applications less to borrowers submit through to their loans to XXX,XXX invite the or Phil we for side expect afternoon. our of both forgiveness PPP latest loans over the next on loans We the our round And position. And I'll second weeks. those

Philip Mantua

deck of during Good everyone. Dan. afternoon representation number the to is build broken I'm we the going year. a on which waterfall the pick XXXX down all the for build that supplemental slide year X up reflect in allowance to where you, have Thank our the components first of

see the here acquisition the primarily on reserve. required the the can economic not -- impacts that the components; during that the Revere by year two you And and quarter the change Revere of illustrated of was driven you second of in majority the the of both although impact recall course forecast those over of As year. incurred may change significant full of our was

year-over-year as is one presentation bankruptcies chart key quarter expectation have additional was and of the this Dan factors other similar in of business driving On this already is our X the the changes which economic slide qualitative slide, including our predominant fourth to by rate. more mentioned at in we see factors. can release been following primarily enough now projected provision overshadow unemployment and was was forecast impacted in factor which This reserve the earlier the other announced a time anticipation the particular the we quarter. economic the the factors for On stimulus that our our well and developed expected change change credit which of therefore of as has than the

X. next key of are All number our outlined economic the on macro variables slide

comfortable Moody's determining In this This to the was to of outlook taken in forecast forecast where projected the million or can fourth on those the a the by not released in quarter conservative we feel current year use note granularity bankruptcies. some mentioned by the most higher continue the quarter the And provide than business business including as decline is what horizon the end that level in and additional take Slide baseline this forecast portfolio our slightly that continue where with such very XX. significantly X less XXXX; previously although government Moody's version time that dollar forecast of did projected continue forecast. reserves during any portfolio then outcome a for on a to throughout impact outstandings, X.X% be change our loans balance, less, And consideration the into quarter unemployment loans. see to that the X.XX% on prior there's projection attributed the local in in to of use a We continues third potential here of which is total but the related amount reserve COVID-XX to time. PPP, market based the methodology we commercial of effects based the year of on $XX.X you period where required to you to taking supportable by X.X% at and view similar includes of this at should in to reserve reserve that significant was recovers from reserves CECIL we a factors here peaks December ultimately uncertainty reflective the baseline mitigation long-term perceived of the programs PPP and as X.X% our could levels the integrates Our our that positive approach no reflect amount for stance. etc. of there reasonable two-year

at bottom business on when PPP be total in illustrated balance our loans. As outstanding slide X.XX% would would footnote of loan adjusting total be commercial the exclude segment PPP the our reserve of reserve X.XX% and the the

loans on the tangible tangible earlier a items trend treatment equity in Finally adjusted comments. their certain X [upward on of the measure those regarding impact in as comments the and] to mentioned to assets Included reflect with brief his is of is capital slide the ratios. explanations the ratio ratios resulting on impact and current of some PPP Dan

metrics during to the a confident steady as our as our improved of continue result earnings this held quarter. about slightly feel position either capital of our We all or of strength

COVID in capital incorporated capital we through to recently done have also portion and confident same that in scenario, carry stress situation. forecast and baseline tests Moody's constructed severe us case. for be the have to the remaining economy we Having updated the this the our our so severe continue CECIL a forecast of we basis where We calculations, baseline utilizing ongoing

I'll it back turn that's So it and to you. over

Daniel Schrider

Thanks Phil.

questions, few like cover year. other updates from from release highlights to move Before the we to take I'd your and

we include County, in consolidated our two of a in and to closures analysis needs As branches shared also of quarter Northern be our result these and intend the we the proximity Final nearby second utilization, continued locations into will client one close three branches in release many are Maryland. accounts of locations. XXXX. the branch These Montgomery of Virginia press in in

and times. for continued company we ongoing obstacles year and caused Despite we've the pandemic done throughout limited response majority ongoing and access. at communities a health to our also our we've to work $XXX,XXX and that we Clients in our safety to of our these our to at plan remain will now over relates people all and we the continue continues it Washington our able. that return drive-thru back do force And We note to But work able to region. people primarily the uncertain we'll to work to remain new of as some served to people as and that support continue evaluate in branches welcome communities to Sandy do to welcome facilities, priority Foundation the COVID-XX, many be lobby done have dozen to the serving to support at are people COVID-XX we've phase point the our proud adapt As grow and XXXX. efforts remotely. hope this want team. the of our Spring summer, and offices of and one hospitals local and response will all Bank donated greater situation We're our by needed through

Well, we're to throughout than to many the both employee work Bankers colleagues new in and dedication opportunity Sun, ranking State shown meet our direct The Work workplace the being transition one employees XXX in the hiring Banks place have work of thanks Place everyone Best as and remained hire honored including the the by eager volunteerism to America's personally list face-to-face more they culture. certified workplace a Banks to welcome Our Post steady onboard a resilience company our recognitions Institute meet year. top employees, named Baltimore our for for efforts to closing, top through company by them of the Journal. to American remote Washington employees to great the feedback and employees spot and orientations recognition are first to recruit remarkable I've companies our our especially company. had a in new virtual to new earned time, about Business and all a our environment being our year And because numerous in on cannot for midsize Maryland earning a also I an by the number March. a one we Best since employee Washington In in last result and ranking of We're by Bank our among Forbes, have understate Great

team this to far find remote serve our distancing and continues new and to socially Bank is from move and deep Sandy our While clients Spring environment our to ways ideal, continue creative forward.

our general now all to that and employees to will concludes So questions. operator thank a day and the we big for our move comments you of

Operator

begin [Operator First now question ahead. from of will Instructions] go session. Cassiday Please Piper We Sandler. is question-and-answer the Whitman

Cassiday Whitman

afternoon. Hey

Daniel Schrider

Hi Cassi.

Philip Mantua

Hi Cassi.

Cassiday Whitman

Hey.

clarity on the the appreciate expense line. other So

Anything we other good fee there look I going question quarter that the I a So this on rate? unusual the is ask I should in same line guess run about at or would as fees. pretty think

Philip Mantua

but Phil. There that is biggest pretty a alike this where commitment had of of fee were significant relative this fees, activity Cassi, thing or about bit little the a we was was prepayment $XXX,XXX. had fees swap couple we within amount heightened Yes quarter extension income areas to a

and levels it and a that maybe are other the could cut that forecast continue and in to at take think particular place some that quarter basis. in on that quarter And we absolutely and as Now quarter probably for Dan it and about mentioned by but know pretty to think contingent at other. that related levels, and will direction one would make activity which don't commitments one need the move to that I a level way as whether continue quarter quarter whatever look the side by the otherwise determinations item expense of liability out to you unfunded the fee or every have we here or reasonable kind reserve that on fee notable item some line the in half area might I fee swap we by large in we'll to think probably way the but in income

range think run an that something from good a I quarter $XX million that standpoint number a rate in to expense way look is going overall would forward. probably be a it at

Cassiday Whitman

factors already That that sense assuming that of you I'm of and any announced? the that savings cost run might makes have sort branch rate for quotient in sort you Revere

Philip Mantua

relates Yes. mean think as transaction. recognized relative or be to everything to it the I I absorbed to that's Revere

at much save as as merger this related well from by pretty expenses. integration we're point way a the think I cost anymore there standpoint

accurate. I down think think we would the pretty of well by and so be I that shut that year end the

bit in they're to save cost expected closures year. the side later a branch the little related to On the until not happen

in a So the basis probably a two current full savings know, – on more might ‘XX that don't it's year. be, million run I rate a XXX,XXX million XXX,XXX for

Cassiday Whitman

more in outlook detail happened give little a was It Can Understood. Thanks. this your mortgage maybe help fare maybe some of what this certainly underlying you trends better quarter would so just but terms than about this just the margin commentary appreciate quarter? guess, help what a how as [refi] gain some were split just sale up between also even seeing held us I on quarter. I the this purchase thought on to mortgage and I and quarter. you to

Philip Mantua

between here again my refund. the activity out bit of a comments terms terms in purchase Yes my in Cassi, I probably referred back money pull once earlier production versus I in split note little of

Daniel Schrider

that by some purchased Yes, [refi], greater Cassi was probably sold was a to which was probably, I And points On then the have Of than about XX% sold to about about construction be XX% of production XX% XX it prior other production during probably -- that basis on was was about then we was do. net and in other lending the points quarter remainder it of that quarter. margin of of the XX% labeled it the basis type is all XXX here. our production or basis sale was gain overall XX in the it quarter.

we the to Although million was quarter more that it if here that level $XX the from in that we of probably those it lines quarter of the was the third of mix when third along in viewed nothing expectation that cycles by in but as comparable was total fourth I just we the and production have virtue didn't and about that to difference was there opposed think I the the in the maintained mentioned how talked else about business fourth this quarter quarter going historic things of less be obviously much grow into by it did. just third

probably I still it was down should time hear to last what we and will we as to and think the earlier case occur tell. quarters this that we'll quarter believe comments two that have in think think it don't I from alluded the that we saying as but So I drop that the will in be well expect

Cassiday Whitman

in hop just just the [or off, to terms just are a in maybe one book is previously and Understood. hotel sorts ask a quick the period did non-accruals these color it then Thanks. for of deferral Thanks. period some were on I'll happen]. deferral not how with the migration accrual on

Daniel Schrider

Yes.

the call on million be in as book. might commercial Because is that. within lion's the a obviously share the well. million deferrals today hotel others overall helpful It for Let hit portfolio are of the $XXX from that of our me hotel $XXX book

down. things couple a break me let So

are IN moved that granted portfolio namely but the to was million have into however assets requested through total So the financial of certainly of pandemic that were $XXX two the resumed perform characteristics of non-performing hotel a support portfolio payments deferral. this in a portfolio with and to sponsors a caused all The period. million really $XXX is review $XXX a throughout part long-term normal those settled into our $XXX the or still deferral. question ability are in process had owners million, deferral of that never our properties with this the us relationships where and assessment deferral to

of and full of property. mid only those lower So share there under given there period XX% is to conducted our the market service in and Marriott but are would being did have at ones down of little no fared but scale color XX% not Hilton XX% Largest more in would break and the to the deferrals. that through a of any entire book from I considered sub-market that of We've credits. same meaningful about national same stress and and well concentration pretty it's have a properties the we've Only mix feel reserves will XX% or brands the bit evaluation total there. national type considered better flags further be followed portfolio the hotel work that's considered important point the the like than lower wherewithal breaks to of national in and a the what those think continuing deferral diversity you locations we at lion's level it maybe portfolio our period economy there enough assigned be footprint as the result because scenario deferral limited even those time then within percentage like got is of I'll of book is we and bulk occupancy throughout much diverse portfolio XX% our by and as give not this you're but at required portfolio. at Of are overhead hotels on review either beyond. be liquidation the is that asking service the

of of all is a emerge even industry kind unscathed. from that currently having aims segment break result of a So hotel better with crisis better opportunity at terms to the the that less of and in

to continue we'll evaluate So it.

that adequately reserved average a through like and position like the obviously good a through while we're weighted overall have likely as in to a pretty to from credits work good that in have we feel on a position in more we with Fortunately we book season pandemic to feel about and loan the a so it. XX% good position struggle we're portfolio successfully whole value

Cassiday Whitman

the Understood. answers. for much Thanks so color and

Operator

go next Catherine is The Please ahead. Miller, question you. KBW. from Thank

Catherine Miller

Thanks. Good afternoon.

Daniel Schrider

afternoon. Good

Philip Mantua

Catherine. Hi

Catherine Miller

we I It your for had guess in of pricing expect see restructuring. but seeing on any and you're we sheet some Thanks. the loan wanted like about terms like balance I and this margin deposit and just you and maybe if rates kind yields if looks we the margin a year. through how also you you're in kind to just further a about the talk just as where of had of bit move remix some, outlook decline thinking then one, Looks little borrowings sheet could CDs should and move XX. of balance

Philip Mantua

this Catherine, is Phil. Yes

of broad start reported high that the would part especially with to the basis. in of the to a fairly kind kind statement level a that with the yields, asset year on from of [XXX steady in of I about impacts value anticipating to the to levels We're creative of So fair finished the lot stay fair impact, range value yield. the away the starting side the the the year. I'm it's to mark margin through we XXXs] get going

out because which this and at the already think margin the is still to our putting probably I things there the PPP done we'll things kind don't liability to talk lending like per that equation in loans on throughout ability PPP look or is clear stable of we here a think now second year. in of all either the But existing of again nevertheless what of for se yet doable that are the that second it side volumes I going to bit about that that's and I continue have replacing think yet we've terms to lending So down a starting some in addition those aside, position of which PPP the round it its to think effect to related have know I way further that that and push we of little steady point. dilutive

to we On side the let run cost continue off. price have to continued high CDs

here in a side accordingly I mix what's think on change therefore similar liability should to contribute going probably of will the speed. and that

continuing certainly basis CDs worked good have We a had pretty have off it's do that today XX market special anything otherwise we CDs are so. the pricing that of their don't intermediate type Although to are block in of exceeding or sheet we're way the balance or points.

XX or So done continue when effectively which ways can I just also so as We've you deposit we've used as we've for borrowings so time happen. the on to bank necessary brokered we past XX CDs said especially to advantage expensive borrowed, found that's doing time the term as very either through that expensive think think I in his ago other the as about in were and months be would through priced that either where our within funds to than any at I standpoint able at a look think probably comments think just why I them advances fed point I a the range started quarter, more degree augmenting the about side. overall finally rolling like fairly have yields X.XX in in asset a in to the constant so but month X.XX side the we'll just And we're to margin on the loan down XX margin low we're On even last I face markets. yet think off keep was wholesale XX this then yields not points of which with the last from to yields in asked here occurring and in only the mentioned portfolio the production basis than be to the so whatever commercial to or Dan but or average type there that quarter's certainly some rates to are anything where that you home we've less brokerage doing from again money or we'll when short that'll more what basis less or whatever replace we continue base the come continue markets the best to that. feel and loan

Cassiday Whitman

helpful anyone is you and just Really share follow-up Thank Right. on colorful. buybacks.

When more in outstanding. authorization be to a buybacks? you got do you'll ready think be active You've

Daniel Schrider

to which timing Catherine, in place the the there. have of Dan. is authorization the want We always Yes it's essence

and there time specific weakness probably no is on is that we times frame would engage buybacks there opportunity shares. when based more in on So we think share

Catherine Miller

of Do Okay. Can stock like complete price to in the back end as move get more levels either to by year a pulls stock? to just opportunistic you a give feel if you the current the authorization buyback versus try from strategy capital? use is just

Daniel Schrider

think I more of No, approach. an it's Yes. opportunistic probably

Catherine Miller

And Great. this Okay. what look that like may year?

Daniel Schrider

sorry Do that I'm mind there lost you for you we repeating Catherine. a second one?

Catherine Miller

Yes.

talking you closed, that just one Sorry are sneak the I we just Revere acquisitions we've M&A, because in was just were about about and in terms now your activity of more how going near capital to in thinking term? got

Daniel Schrider

question. Good Yes.

have cutting line the little having in issue some with out We and a bit.

that. repeating for thanks So

As and nothing it time report will we be relates is do anything a to we what but unlikely there term this part bank based our at fee growth at to continue there M&A businesses in of this longer would and be is, to there strategy both XXXX. that point non-bank

Catherine Miller

much. so Great. Thanks

Daniel Schrider

Thank you.

Operator

you. Thank

Our Comery, Steve from G.Research. next question ahead. Please is go

Steve Comery

New Happy Hey Year. guys

Daniel Schrider

Steve. Year New Happy

Steve Comery

have for we to don't declination color guys sort like if you back a any you wondering flows to or have if and guys belabor could of I second. and too improvement hotel any book wonder seen the how moved cash could trended that there? go credits this two on non-accrual were these want but give much if occupancy and this I to

Daniel Schrider

of have have aspects even into heels moved don't into stepping up providing support what on to enhancement or when of other to other accommodation the of ability have in category that will as many may details have. to and the say not type specific I unique credit to the relationships occupancy share step the of those non-performing sufficient been sponsors the breakeven. guess of the these terms I sponsors they time unique hotel this during In our in credit of situations Yes. resources is the case, a through the were was particular in them some but that, that drove the to that guarantors I those relationships some form kind and relative of

most that the sitting to at in in different, that achieving and XX% values achieved of are of our so And the not the XX% we're having service range the remaining that aspects limited to hotels if most to are occupancy we're other seeing portfolio loan can achieved be breakeven that. where close

the continue and the to couple but each book characteristics relationships sub not that or really had operator the that based individual not brand itself. but So of going weaker; clearly market manage to that relationship upon assess these were necessarily we're not

Steve Comery

definitely management. wealth That's Okay. helpful. Maybe to on moving

this a look to big Another rate good Is XXXX at quarter. for good fee moves? market absent run

Daniel Schrider

Yes.

think of contributing as that overall terms under so. from revenue operating of trust kind pretty the all all management of In well assets of banker they're I to very two are three our close equally wealth of the the the yes well. RIAs division and is management Those space, stool would which legs as

a good that's expect rate. would I So run

Steve Comery

Okay. the not specific Very these these in process change guys maybe wondering was COVID of color that could around branches more kind branches good. Maybe little I or the if Sandy for regard a one of more closures, for you me. branch decision rest get branch Thanks. the and of the to or network. on and put whether thinking Springs the context shutdown With

Daniel Schrider

question. that's Steve good Yes.

branch We we just locations branches put optimization due and have up to when the behavior these the those I up that in two to and banks parts we've of of resources where come maybe or for market the behavior but would leases opportunity evaluation we're to open will don't us number a opportunities were right places. of here would through also allow reducing the about XXXX location in drivers have have so a a those always ongoing not continue about learned of ongoing in but sure may of a when say an the kind kind making lot our like and we and have bit forward. will it's proximity our of not case season kind our these cases and good to evaluations And It downsize rationalization marries as branches go those of branches. that effort declining in but that's us result on other what, it in with based pandemic clearly and in client client we

Steve Comery

Thank you. me. That's for Okay. it

Daniel Schrider

Thanks.

Philip Mantua

Thanks Steve.

Operator

you. Thank

question Please Next Lafayette go from Mark Hughes, Investments. ahead.

Mark Hughes

well. I afternoon. all hope you are Good

Daniel Schrider

Good Thanks afternoon. Mark.

Mark Hughes

might it's think short-term of question the today covered six price that's but and happened the the your year is about recently a that looking kind had I of first a annual well I acquisitions. I think that the but by the traded trading it bank what times was size a five made question picked you a number stock is year was a was thought tough and at think I that question or back currently at all reason was then at then. might at long-term I couple The it's it's I I people you of that report but fair pretty ask just, I question XXXX a it and previous since and you've the is for look

based some businesses. added You've fee

expansion Your sensible. geographic seems

yet the bank You we of here as are gone day small the executed shareholders seems or end pretty haven't Tennessee you've the well all it something. at were then. In all you large in in the in sit way shareholders branches place short and same and like playbook Ohio back open or we

is trade why all in banks and better shareholders back almost higher and now? we at this going attractive long-term part the at forward been going other smaller you is look Sandy quite picture a many changes some not, and thoughts would put traded always give I you, lead make where anything is how of seen banks share to what similar as for is than changes today a maybe equation banks returns some more might time at and realized terms valuations decades can what big realize get you we've general question forward versus than community -- for to just investment question going to what banks now two your light small then Spring rewarded around, what looking they've to it in we're but is of so and where in or is price be to now just on not my I my you're shareholder So the and different

Daniel Schrider

Yes. That's to have is a This Dan perhaps mine. addition Mark. and some thoughts may Phil offer question to in good

to banking than more of competitive important given in leverage client relationship going importance ever probably critical nature the think terms them behavior in and what's be a banking scale going to are of of I operating and forward.

that's and EPS not double what but will, over be have over driver basis out like to to I compete know of for have I growth we probably us third is some XX% so growth a that the institutions finally which move our don't it's included the multiples a ratio of and anything. it of efficiency being always You digit on future you additional said for which that which seem process probably the of technologies larger be sake of an a and be quarter favorably of time would going think was in for south invest to the we kind the when scale course earlier that having drive but so remember of also with XXXX below little a to I value. operating combination inflection away to us is having are earnings important on long-term a the non-GAAP the and basis for point kind moved course Phil, ability shareholder multiples us will think to of going to provides the for play in if from That's a ability time. for better beginning focus leverage likely the

Philip Mantua

I No, whole just to a lot whole other anything it a add don't that really if recognize. know I than have to to

it look large of over period not don't numbers and and absolute with tried against or you for but on at to those how have to and for tough to maybe an what the and reasons industry question respond how time hard of it predominantly I relative I of the in where aspect of that address us and know really compete sit how you aspect realm within the basis we're a a on on makes dramatically guess try basis absolute of changed about how in evaluate the our just just peers Mark that's views know a we're performing the that market try just think broader address think did focus we we is of ours industry because the a well your that to to I in it. don't it's is general I question to we and banking lot I for to how that

Mark Hughes

are Is book there these go current get to about in too that as some never the can. that that the violating good that I is you to follow everything one. about you're then. doing of just lawyer's and a don't middle you direction that isn't asked because because there asking I'm you're a a out bank to answer completely in Is code maybe non-traditional thinking can the you're box Well, too hard this you thinking the traditional I maybe your questions of up or shape can in don't the of maintain know have pandemic the anything answer small you question as playbook?

increased in outside thinking terms right businesses be to So to you this into in get box there be the anything is businesses the of thinking fee now? that be can doing industry time or about may that that the aren't are not non-traditional but maybe people

Daniel Schrider

focus to one about whether to business ways Mark, in question complement directly can when When at in your because tell look we that non-traditional would which focus I going serve fee-based driving that we our be evaluating believe traditional you we ability ways. time we're and answer we to our and growing always our and think I do us our I'm just the adding than treasury it's in for ourselves scale really ways that creating, I this over really think of clients value a wealth not makes handle or building but management, are we have for enterprises we do best move our guess resources the it of your sophistication that's us that we've lending, kind whether growth and in markets that we around company a and competition more better think where is a to in here sitting the it's the putting where and management and got time. sense do scale up in organically we're to marketplace in greater one want market can people our country, today in in of now that on that's franchise got commercial do and we price advantage about that we what to to just share and that taking and earnings over it's and to about your I then of do point ways in

Philip Mantua

the different we of or ultimately be, Mark revenue done diversified could to of towards, or might to can which much part strategic and the our as stream to to as to question it come part likely would be that be it from have one having to we something that I towards answer as but of that or can strive of have for do thing they would whatever Yes, might so from potentially continue I to is about our add of and whatever part what what diversified would most is unique view not XXX your our that that is we've be revenues for unique that much a outlook be. years a as think

much point out, that as lead in as stream that for but the of specific to that revenue as as lies think some striving just that couldn't it pop would I I that So diverse be something you having would possible. way on

Mark Hughes

of part me you're doing things well. that Well, it think the for tough makes that I it is

obvious ask what improvement? you're to talked of think there. you're right remarkable areas beside aren't think when going wrong. It's been about efficiency your think I down. there it you've ratio doing question You I what something need change is this it's and I to what's don't done ask mostly kind that myself doing the as coming because of trying I because

Philip Mantua

same times too. because appreciate the a of lot we Well, we that way feel

So.

Mark Hughes

Well, very the I much. you year. for thank luck you wish current

Daniel Schrider

Thank you Mark.

Philip Mantua

Mark. Thanks

Operator

you. Thank

ahead. from Stephens, question Next Please Brody Inc. Preston go is of

Brody Preston

Hey good everyone. afternoon

Daniel Schrider

Brody. Hey

Philip Mantua

Brody. Hey

Brody Preston

was follow want to to in the XX/XX just is the on I more purchase mortgage mix the historical with it or similar that past? up previously your [refi] heavy

Daniel Schrider

of firm of Yes, of waves would of being effective a of that Brody we not a did last kind lot course the but nearly from as over shop advantage the construction a the transaction they overall probably boutique piece. on more years [refi] percentage as came production more purchase the transitioned and couple as take

that making expectation slowing in opposite put we've that's of so purchase production going it's, the of think in we're a so a capture effort on money the of driving a and business. moving still of percentage will purchase originators that money have as help from and just the down perhaps job And up of and us percentage. lot But I of done rates tremendous resources to terms that's mortgage that definitely purchase piece our good money direction inroads production

Operator

[Operator from Please & Eric Boenning Thank you. Scattergood. Zwick, go Instructions] ahead. is question Next

Eric Zwick

Good afternoon guys.

Daniel Schrider

Hey Eric.

Philip Mantua

Eric. Hey

Eric Zwick

PPP less on will how expectations forgiven part a timing I of What throughout apply are billion and for commentary point quarters X.X I to many is start the and kind questions size of than couple the terms at guess about of to I just little this customers a of potentially in of forgiveness. the is year guess first portal then what my earning the updates the your appreciate the does for that on be up might average this got inviting think take given point those the all of loans those outstanding. reopening first I kind and and how guess there question. I'll and have the percentage trying I at just shape assets you've

Philip Mantua

is Hey Phil. Eric, this

estimates about quarter things that of probably our etc. mentioned So pushed the be given accomplish billion PPP that existing earlier early into behavior the Dan going and XX% outstandings on we've running having I of would be assuming to quarter. thinking the this now portal, client that's that forgiveness forgiveness think the of about given some second of trying end back been the the we're and to forgiveness in X.X part

more it that and months March, of than probably activity So as here opposed much in of through -- way regard. little January as the the first month already having of having to are very in the April February, quarter half halfway

of evaluating sheet. we way that's the So I and current the we're think book the the PPP loans leave would balance way

Eric Zwick

kind of new that entering reauthorization and again I seeing you sheet? of guess how guess Thank potentially and recent are of think opening the up in you PPP the size then for you a balance funding of round helpful. much That's demand and about I terms the do there

Daniel Schrider

those amount less get smaller a terms at over we this to clearly since Tough demand time Eric round expect likely possible I'll too first Yes, thousand on so give we predict this in requests activity the to but We've side near second but going has it's point. the be additional just relative first been that is average half you exactly but of tough we predict hours know mean did applications could come applications, it's there's to to outstandings. of it than we what tough but heretofore at estimate XX our the not yield come it I overall portal. to but much smaller of opened in size in to clearly what and It's point. early. the the don't this the do experience of had as could wave

Eric Zwick

or a commentary Thinking for away how you appreciate stands thinking commercial you've commerce that net to growth any portfolio be loans the in about certainly XXXX? the switching balances the year. and there then in growth net That's commentary from organic and I think on got on that'll helpful. where guess the today side towards I the the early the just pipeline headwind would organic about from commercial

Daniel Schrider

Yes. the It Good both are through system. lift to question. helping the team those on and and requires is articulate the way the process tough the PPP clients as adequately all relationship managers that that's

for as origination. of this right we really now hands few is it on these round next through all weeks deck next So work

heavy I due first that organic production dampen digit as outlook to I single because our think it's just of program quarter year the commercial growth we're of the forgiveness kind of kind both that's what economic but going the for that as So to outperform we may is We way well as on and and PPP thinking forward. upon think process the based the just that's PPP say but really originations mid the lift demand.

Eric Zwick

of change pipeline coming improvement we steady forecast then or quarter guess and any fourth have the terms of economic success seen the still of kind as in the goes I again you just there? in late kind pipeline helpful vaccines it in material with had online That's and some in given

Daniel Schrider

fourth not would lift attractiveness in but fair normally from encouraged going other think $X.X level think say typical real borrowers is win pipeline I I Sandy larger since with and the little is seasonal with billion player a despite particularly probably we'll production quarter. softer the our very local of indication an doing Yes, commercial pipeline's quarter into folks I much I the which first quarter there Fourth a want a I of or with think opportunities pandemic, from strong but or relationship of as Bank environment vaccine. economic slower during a a that institutions standpoint. that a organizations the that business consider very in significant we with share Spring I mean been when the of you is it's think

Eric Zwick

then And for use into last tax in effective is this housekeeping just one XXXX? Is rate me the rate kind Phil. item for good of to modeling Got XX% a of probably a looking for it. still terms

Philip Mantua

obviously to not but Yes, would during anything the that the during the certainly Biden of President anything of regard they that in ‘XX. might hit us and year probably us beyond Mr. course do decide [absent]

rate this go probably So to we're a effective using one that XX% is to XX.X% point. good with at

Eric Zwick

questions Excellent. today. Well, taking much for thanks my guys so

Philip Mantua

Yes, Thank no you. problem.

Daniel Schrider

you. Thank

Operator

concludes This our question session. answer

back ahead. conference Schrider. turn Please like Mr. to go to Now Daniel I'd the over

Daniel Schrider

very, your you feedback and Thank welcome everyone on calls. very thanks We your helpful you. discussion and for for and the hopefully questions these helpful

comments for have your a afternoon. email ir@sandyspringbank.com. Thanks So and great please again participating to

Operator

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

disconnect. now may You

Sandy Spring Bancorp (SASR) 22 Jan 212020 Q4 Earnings call transcript