SASR - Earnings call transcript Q2 2022 | Sandy Spring Bancorp, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. Thank you for attending the Sandy Spring Bancorp Earnings Conference Call and Webcast for the Second Quarter of 2022. My name is Matt and I will be the moderator for today's call. [Operator Instructions] I would now like to pass the conference over to our host, Dan Schrider, President and CEO of Sandy Spring Bancorp. Dan, please go ahead.

Daniel Schrider

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

replay As today's and the live Aaron I'm be General our Counsel analysts speaking will Phil Dan and Administrative media. our open Kaslow, mentioned, webcast Officer. to website Chief call by investors, And Mantua, Officer; a here and is on of colleagues, and today. Financial Chief and this is call There's a joined available today's later Schrider all

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

Aaron Kaslow

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

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

Daniel Schrider

Aaron. you, Thank

We're announced in quarter, a loan our release, story. to press the them growth out solid the serving And remain reaping in And and line any in our now. to to the after and our this there's marketplace our But uncertainty benefits success reputation be of another of prior clients with. in our it and grow the This a results, we're pleased be all on in quarter. for desirable premier growing we discuss growth significant morning, right bank presence market market. the be today some on are We quarter we highly our as But businesses continues call continue quarter our to second acquisitions, performance. focused bank ready we want environment. Obviously, competitive helping to our you loan they grow and with as based on clients to signifies a sizes. grow our

results. Let other positive me from our quickly on some indicators touch

we Obviously, tremendously, where While The future growth. margin of continues growth could continued quarters, pipeline our deposits to the are hold and fund we've now economic where very pipeline we're really that remains right there and our pleased with on growing the loan strategically quarter to in we're grown focused end at impact strong. the factors stand up, is.

noninterest environment. income up to quarter, asset assets. as HUB this sale completed we're as current quality established to quality will organic insurance continue And transaction, We business. with continuing exceptionally we achieve offerings our And but client gains. and digit double to our insurance this the serve the our in strong, scale During International asset monitor Through the successfully we delivered we growth enhanced also to partnership well finally, remains and a closely base. of we provide

reflects share XXXX share net $X.XX million ended highlights, right or but for we'll compared quarter $XX.X few decline details. $XX.X million million or and June per of year’s $X $XX.X the losses growth the quarter were the result and significant for and per provision core credit for of The income slightly in decline charge for we net for the quarter $X.X recession. to these jump as $X million million just substantial into diluted income. is the of to prior are assessment reported XX, earnings the interest common of primarily quarter. as quarter the well Core $X.XX for mortgage second the $XX.X linked compared losses and Today million, income quarter. million portfolio for common banking of in the given in XXXX. a probability year million loan prior provision net a to million credit So $X.XX $XX.X for the The the compared the diluted credit XXXX lower income $XX.X growth, first and of diluted our of the expected share per for provision was The linked management's the of common million $X.X earnings or sustained

inflationary research Reserve studies environment, macroeconomic several the reports Fed, of survey, Federal Moody's perception Analytics the pressures and Bloomberg actions research of Journal, These Street surveys economic and recession. the near-term index. determine Given Recession to sources rate the by considered and management risk Wall expected included economists’ interest the

So for balance Compared median based increased as were quarter, X% probability the $XX.X its quarter. June to Shifting the credit qualitative on $XX total year into for these to linked XX. compared assets of estimate studies through sheet, of from a $XX.X adjustment billion losses billion prior the to of billion. management recession allowance incorporated a assets

assets as mentioned double total PPP opening year-over-year. is this up. my and as I scale remarks, grew in assets we in growth continue Excluding to balances, help us XX% digit important will Scale

growth securities in as XXXX. XX% to Total PPP used excluding increased During at billion the XX, loan June loans, portfolios. the $XX.X to previous $X.X XX-month, billion compared loan was investment liquidity from the as well fund PPP forgiveness to

XX-month. commercial total during PPP, XX% Excluding or billion grew by loans $X.X the previous

gross During $X which funded. Company new this was $X.X of commercial production, period, loan billion the billion generated of

XX% to more year. prior million same million runoff. And $XXX increased of production production this In linked million, billion $XXX quarter. $X.X the in quarter in the commercial compared commercial so the $XXX funded to non-PPP quarter, the offset loan the And second than for loan

If in composition. released see we you our the XX loan page look supplemental today, at can information you

end these year-over-year to quarterly and see growth portfolio respective X%. billion, We've is the C&I the growth quarters comparable the materialize. end portfolio. loans XX% in $XXX our growth $X.X commercial in C&I in quarter, the prior down to portfolio XX% by break $X.X led robust our billion commercial of the the as the quarter. linked pipeline our At in commented or to pipeline and I the increase investor which nice also commercial the million owned PPP momentum excluding portfolio, or We it's Year-over-year, occurred decreased the at consumer growth lending, mentioned, The work in portfolios and on of all portfolios. in remained at

half year, there focus transactions of a that latter going So commercial on into real will profitability thresholds meet estate versus continued commercial the be the transactions. and the balance

we million in prior year the earned of of totaled and and to the in quarter, linked fees excess quarter. interest the quarter. income only PPP in outstanding quarter to million, the Remaining the as fees $XXX $XXX,XXX. of PPP $XX.X of at quarter are earned end $X.X million compared the just $XX.X in be $X.X Looking year to had million compared in loans prior million second

behind clients assisting almost the a us. done forgiveness we're great that PPP and process, through pleased our job Our has completely team is

rate driven reflects side On hold things, noninterest-bearing X%. This growth linked year-over-year movements. general, greater some relatively and line in competitive in in we need on or in to client remain growth more deposits higher area until by deposits $X.X core rate of we've transaction deposit products the was Today, to CDs and relationships. deposits rates private increased introduced growth deposit stance aggressive drive strategy relationships. the unchanged billion. X% a of is market to to targeted money the Fed at specials In deposit pressures Interest-bearing priced the our continue response

react believe we market additional increased it's and directly to Fed the our in more to broader With products. next deposit will promotion offerings start we changes of rate likely core week,

to prior they a compared detail comment XX% the which XX% market of beta model million the of or income year from increase costs more this the business, sale funding later. quarter. assumption is in occur. changes I'll Noninterest insurance increased result our deposit million a direct future gain the on little to We $XX.X And as our $X might applying of of rate continue

anticipated gain, Excluding this XX% was reduced and noninterest driven This disposal environment the rate income banking. reduction by declined rising within quarter. prior mortgage the compared activity year to refinance

conventional to As X-X grew And insurance a in from and second that business. mortgage to these to result, than Other during total loan. quarter the income the noninterest the quarter. primarily million million XXXX. activities linked the the $X.X the by sale more are should year compared decreased compared income noted be It $X.X prior quarter compared loans decreased offset $XXX,XXX the of $XXX mortgage million decreases mortgage family quarter, banking of

on percentage so to hold grew our to We asset a on by to production the also class, continued strategy successfully to quarter in larger this XX%. portfolio of linked balance loans compared the regrowth sheet held mortgage mortgage execute

our move simply to of Through last in the down we've as second given quarter relationship $X.X market the strategic interest X.XX% decision similar quarter. this continue business, will the levels of retraction, the XXXX we compared compared this we future completed the not quarter million slightly of profitability to gain referral the benefit said made net X.XX% because quarter established the each insurance to I expect declines. our quarter revenue a to is the this of We ongoing next previously, requirements. due first with levels around the into sale of That decrease finished to mortgage meet XXXX. with million HUB to exit it clients in And of for be mentioned did we a X.XX% at first for income quarter and $X year. business quarter, that to and wealth income quarters the our second transaction, Wealth The our mark. margin we International quarter same the company. year per expect generated to two

to last in rate we to quality, prior margin included acquisitions compared margin for and compared accumulated efficiency year. which XXXX $XXX.X of PPP compared the and linked the at comprehensive marks XX, XX X.XX% X.XX% rising to as from year XX-month million the tier credit amounted quarter to costs XXXX shares consistent at quarter. the environment basis success stable, remain of of in the losses $X.X increase amount the wholesale net company to in for insignificant second On sale common current deposits total XX loans of for nonperforming intangible have to management's X% risk with based another to portfolio would Noninterest business. consideration XX coupled one fund for Other or prior June at pressures. impact loans $XXX,XXX million by or the past June first quarter during equity market for to in due again XXXX. million or ended of net was quarter quarter for versus assets of net potential company second strategy basis common ratio or previous remain related and other of amortization XX.XX% various charge-offs for non-accrual investment gathering quarter, to ratio of of driven the margin at of as of and borrowings The but June all portfolio, the been basis, The was decrease the expense the the the the points margin expansion the equity some net compared for with for one Excluding and of ratio potential quarter the allowance of XXX% recoveries quarter basis metrics and first compared with year. XXXX. XXXX. points increase only second impact of for the $X.X the XX.XX% utilizing result result ratio the leverage level of in This a charge-offs the $X.X the XXXX a year depending the on to and of one during to of XX growth The of outstanding compared million future the expect strong. and X.XX% $XX.X the the on the of interest Shifting recessionary transaction the core tangible of XXXX and $X of month credit the expense the fairly tangible to at $X.X The fees placed quarter. value the of the slight The XX.XX% $XXX.X in insurance tier driven capital March fair risk for first in capital loss forward loans, are ratio tier increased on interest the $XXX,XXX quarter, increase X.XX% XXXX. noninterest decreased during derived for of growth. the quarter of of second to assets of credit operating net realized common points The and million quarter quarter to would and of Loans million risk the go compared nonperformers nonperformers million to quarter by mid-XXX securities, based for $X.X XX.XX%, prior the X.XX% the capital for June million our XX.XX% in repurchase of continue the of the XX.XX%, the of X.XX% year, quarter more X.XX%. a allowance the for XX range, X.XX% the and quarter had prior for of a compared needed other end loans XXX% The loan XX based increased associated the impact non-GAAP other in ratio the moment of million a of outstanding our deposits $XXX.X value of from of during interest expenses. an

performance. grow In promoted move your take Before was I'd are general counsel, questions, second briefly there Aaron other as Kaslow serve a company continues once ranks Aaron Administrative share. updates Sandy top a a results especially fourth Bank, again important named our recognitions. Washington the like few workplace client solid employee to Chief the year. and to were great number bank to We quarter, the to we experience. also to Officer. Maryland are has earn recognitions continues to These include the Forbes Washington providing lastly, expertise industry but complex human greater His financial that one in us by work, workplace to will place areas It's more of larger, organization now the a the into and certified as our to duties help region. continue of top deliver that consecutive and context in for remarkable a information resources, our Spring services. our and company serving while Post, important company, we the expanded And operations

move our that can concludes general to So Matt, comments. questions. now, And we

Operator

is Instructions] [Operator first line the with The of Catherine Mealor question from KBW.

Catherine Mealor

for your this back a projects also of Thanks. half is And outlook start of what's you if the was kind want and the Is great growth? line what's of been driving is bit the which loan around so new couple could year? then paint just color more everyone. I what quarters, wanted of growth, for a past the it's growth Good kind little on afternoon, just it picture driving see to it, utilization? and to just give the of just

Daniel Schrider

is Yes, Thanks question. Catherine, Dan. for the this

successful think also increased some on by and of lack I local primary driven is to, is fully be came by issues. some The regard might with And disruption in other in yet. local team, we're seeing street larger, business. not moved Revere of not they impacted growth the driving as growth hitting I'd line dealing the move while activity of that or with with our of market, driver new a And focused players from utilization, acquisition loan through result the say our probably engaged PPP. broader having having our that some

great to number based seeing our a our continue way, just to reputation opportunities clients of come ability and the we're serve that that on generated. So we

level future of in As see that's if at pipeline quarter, nothing third. into had the continue be that And production. in outlook opportunity. type Are signals kind that But rates would of behind but will the know there's quarter-over-quarter to second far And into I recessionary kind activity of horizon. quite question, of as at end driven is the it X% the And can that driving. great say going the probably so growth. year really the and competitively quarter quarter, yet. that are in my on couple this funding here going But in no the end terms of maintain solid to I impact last really probably kind to demand. to our that's the solid our the But I maintain at mentioned same would ability I held we well. environment comments, even the a where was then of, true drive we we the that to doesn't demand, XX% don't continues quarters, up might there's as we've drives think is any answers out healthy, the of hold it that third quarter as you current of have but apart production? in by on frankly, level. into look what's be of that And indicates, ultimately, if from your that a there's we doing went about

Catherine Mealor

does. It Yes.

Daniel Schrider

C&I with pipeline CRE outpacing growth the, reiterate I going side, still our activity, versus comment quarter important that's really in forward balanced And well. well to its made success C&I for move we third is comments the into I as we as that want our in in see And on book, want to my CRE. us the opportunities the start in

Catherine Mealor

quarter to great you see think -- significantly growth? pick imagine And point, in That or rates it my your How competitors it the is certainly, deposit to deposit next second kind what relates at quarter beta of about And question funding. your deposit of do you up this And last was we've market. are growth probably will a your too. I your mean, was, lot comment of your how some will for some for seen quarter high as peers. on I

deposit are then also you the growth, as So year? the how about move of costs thinking and deposit we half into back

Phil Mantua

Catherine, Yes, Phil. is this

growth, need with back from deposit it your as really this growth question, would to position to loan a we Dan to, growth. want, forward alluded I well, in the as point as ties relates think to this expected be to prior match we

most And get so what are regard we're, that in terms establishing as regard. the I going in to market comments aggressive pricing that or more in think in likely opening mentioned the we of we to want

So wholesale, that of opposed effective will then it therefore I way we can as the any as specific betas once still as case makes be to model I end in higher. as But although be the again, beta as with think well, their required that's that next to the possible market price XX% week. be And mentioned, coming and that may beta Fed but core come competitors if drive the think points way will the with where going we I well. there form as we'll other we've right, you're to mean, that continue deposits, may the as situations that be in get the applies, out. will move

Catherine Mealor

it? a costs third Or more of deposit that see of your move what yet? started to is quarter? Or have that Have you really is you were Do June? as

Phil Mantua

I can tell is. that do. I We what have, And you yes,

did a exception that it to to been full a have mention of have but of bit the We things do move. we pricing. also certain of bit fair seen kind with requests the doing protect of that the we based of is book, clients Because deal one

else and there hold yet continue it. within particular everything that be of behind can deposits levels that's to So repricing certain not out relationships we

points. June deposit cost was about basis total Our interest-bearing XX in

so has earlier still was not terribly from year. And in high. not, the certainly that But moved that's it where

Catherine Mealor

Yes, as great. but so imagined. but yes, certainly That's high as have that, not would not I

Okay.

Phil Mantua

say No. not I would --

Catherine Mealor

about how then And --

Phil Mantua

yes. others, To

Catherine Mealor

sure. for Yes,

that’s line bottom you the so be the then and gave for relatively guidance flat. margin Okay, to

sense. that makes So

year, let moving, about, half back view me to light how growth the move so of expense of Any the inflationary just in in pressures? on expenses. And

Phil Mantua

in to done I continuing is expenses, the difference base the those and will that would touched that upon will here. add in folks this things costs, would expense last of as that some and other I two basis quarter, talked even levels, to only looking significant and we've we The employee about drive And to that been benefit biggest because to think any that said biggest thing which don't that we of a quarter-over- things on our thing strategic of the into be our And normal employees a drive forecast would greater this growth. plan vacancy know roster as potentially in more for initiatives to salary we have along and goes us at we're the are for current But the additional we're adding welcome is to data one here. amount continuation with new the high replenishing see spend and success a experience our fairly digital we attracting quarter rate be or is successful you're company, that, then going in running world. the thing that having

think quarters. haven't now probably folks before that between growth. just the we bringing year year-over-year look be by expense X% couple to wanted I the said back going first in on I of of then we quite spend that the not look successful the overall to, had X% because if But we up. types that'll end to pick It's we're of think at, and might I

Operator

the question with The next D.A. is of Russell Gunther from line Davidson.

Russell Gunther

you number just back for beta remaining afternoon, deposit about near-term XX% guys. to hikes? that as talking we are understand fully thinking Could guys is are good just more those better as cycle, And the through the about? a digested? get expectation? switch try Hey, So that Are that and second conversation you I a Fed the to

Phil Mantua

as I it probably, look probably it's at Yes, both.

moves from other far on in to, able terms be have catch an competitive ourselves thing change that to pressure, the try of that Fed we're that to that just been points if to to have incremental rate up even going to would some I significant we of so basis to relative time that we've at could the in result, the think the time. Fed essentially move that looking odd kind move move price every first market you here having any know of to XXX we've the able at to, the through really Because year. been might not not be lag rates as where the and first as general half what from beta

So the question as move forward. here from will be rates

there any rate element at Now, make the up way ultimately that of changes that might beta those than is that have to looking have we're would at actual already and greater occurred we catch that XX%. the it with

Russell Gunther

the Okay, portfolio, type flows you of sticking cash then sort no, clarification. update And monthly for of of yields you're in that's the very on are? getting? you're Where helpful. just terms an the margin what with What just reinvesting? Thank securities the

Phil Mantua

that what the in of regard, monthly Yes, try flows. and we cash think in about terms have

the portfolio last We have the throughout here quarter. to added

type handles securities. type predominantly again, as the been some to flowing of into finally in in to portfolio acquisitions are of mostly sub past. cash three see backed and opposed with and two a half of product, the on it's them, two We So kind mortgage the starting

everything we it to to where again, what's of portfolio. kind grow looking are really to relative the in been that's We're of terms So not added else. really

flows kind replenishing Just move come they forward ahead. and the of as cash

Russell Gunther

hear expectations. I near term. growth Okay. follow just on Very loan on helpful. the you And the then a up

you this XXXX? are you're the picture. So single that digit there, in, But materialize that may feel this high more markets sustainable, results XX% little the some do macro of the in like a X% that in guys of type more you commercial and out that that to headwinds is have is bigger even with people

Daniel Schrider

Dan. is would it Short be Russell, answer yes.

that's think our in in here team what scale, growth I work market. bank small of the clients market market. terms We've with from we that for those sustainable. local and depth that got and found with position become to business we're built business we've rates to it the got and to of outlooks in, that -- that we're go coupled the capacity And middle the quality are

Russell Gunther

on very funding me. given outlook, challenge that's to And you Last pace. the Okay, growth one keep organic mentioned the helpful. that for commentary Dan

So there near given, there's terms help just that's would then your thoughts M&A some of that you. be that. visibility, for great. term the again, thoughts objective fund to it just until headwinds, or And is that a me. macro utilizing Is you better on Thank in of your pause

Daniel Schrider

question, no, also with think the very continue to and fee focused in the been and coupled acquirer side. banking space will always being disposal always is good Yes, opportunistic business, that Russell, I We've an we've that organically with done in well. be of insurance the also the

not So those building of our at build relationships, look activity when core do, from pause a we taking and deposit relationships, discussion. really solid we targets and bases are important that in

hesitate the opportunity along. right if to came not move we would forward So

Russell Gunther

guys. you, Thank good. Very great. Okay,

Phil Mantua

period the on quick of left got a confirmation. million And between Yes, to for range. more things round rates about buys bit, I the we the portfolio. that had of the picked XXX. remaining of got Overall year kind in as was a real couple XXX average flows over next in years roll during little $XXX before little the XXXX. investment of projected in three detail yield the a little that the up about the course follow portfolio. of up of a little the in cash We've question mentioned to XXX throughout million your $XXX And With course month. we've flows that more course Russell, the we last probably Hey, couple about a then cash somewhere

Operator

Lafayette Mark of is Investments. the The Hughes from next question with line

Mark Hughes

and growth, situation. pre- adjusting me hi. levels, to nonperformers Good in you for afternoon, it's COVID it's back like Question to Could the actually with basically looks now loan for better levels bit here how you from to and half managed current nonperformers were a the the to get year they ago and a about levels? just talk those year you've little down

Daniel Schrider

we Yes, Mark. that think time, I had throughout course the of

throughout the I sizable significant a while that additions, pandemic. think also had category in not relationships of handful nonperforming of resolving a been combination it's more having the

testing, say nothing, So, thing industry. pandemic to have of a look the might but in of during on we unique been interest for clearly we've bit In picture, income our just big deal a bit estate that of unique dispose stress producing or what re-underwriting, a banking, hospitality And is of we little to done broader little far activity anticipating the unique have inflationary for of we'll this which the drive, been. And portfolio, good we as that hard I process, through continue cap stressing in area rate great everything the of potential the work us, I is but portfolio think I did from a rates, might workout recession portfolio a reviews, we so not spend the really time are and notes things environment the related think real to sale of adjusting only continue relationships, area. else strong of, all rates, bit but kind as particularly a been couple really has normal unique good.

Mark Hughes

in deal the with bigger recent interest what it increments past. a been in sort There's like in incremental. questions of the deposits? you with has just on rates, recent but this been you're couple of the It Fed paying that years, raising around seems done. nicely do Well, point, has and How all done rates your, growth so

even raise on? most have about you What on they of pressure basis you today. bill we're XX, hearing a treasury Do your than doing? XX, you people the can, jumping you XXX your they, are from on maybe how, pushback been get X% putting your can points. are they They more Now rates even them get to quickly depositors from know

Phil Mantua

is This Phil. Hey, Mark.

greater of so as experience your to one by what kind they say clearly cross going we'll or to think is to to on one need them section they But And as price, to we've exception continue happen my come basis in large month were degree that drives we from size as such pace. we've next have Fed relationships when to meeting. would of view, successfully, even some as far and we harder, Fed what's Because week, the with I next in of probably a deal maybe not then now. regard. do clients what it forward. keep come we chosen those changes large core in to a individual the to it referred the I in following kind question, anticipate chunk and think for as they to expectation so a with deal our heard to And

So way. and little think bit a it us in it has certainly about different make it's does it harder,

which maybe I we try most cycles? than overall our without done liquidity I Now, competitors rate long having all point of think most circumstance said from us different to that, to today, starting this we're standpoint other think possible. as have of other is were as from lag an Because as in have all a

Mark Hughes

it the can't you as for wish to I all. line be so I had luck, Well, hold done That's you all easy you have far. as well Thanks.

Operator

next The question a Gunther. follow is Russell from up

Russell Gunther

could. this going fee zero you if should Just impacts insurance a reflected in, out the that, sale P&L rate? Thanks we just that there for may Hey, and expense question, jump back Is with forward? we modeling let revenue going in around of a the then attached come trying Any about the how expenses clarity quarter? to Thanks. and about think me think the forward, guys. that any not that in run is associated of

Phil Mantua

Phil. This Russell. Yes, is

revenue $X at, expenses line So was insurance $X provided little around if it us, it look back you if what agency million, of million. an at were ’XX as under related was top the a looked to we to indication about,

an the less on so after bottom contribution $X million. was line tax than And basis,

and a last move will to referred and I them of And that forward. year -- revenue, in. the may There could but into remove left time relationship or out like from so probably try it some eliminate your be items items quarters those lot two with model. the of amounts what to be would you're HUB those there suggesting wouldn't just with of take factor those line I line those to expected take you run would as eliminate a

Operator

your at questions this Thank additional There no you are question. time. for waiting

So back closing I Schrider to for Dan remarks. will any pass the conference

Daniel Schrider

great everyone our the call. Mark for a afternoon. call and afternoon. thanks else engagement Thank have hope That this Catherine, Russell your you joining we you. And Thanks, concludes and for

Operator

Sandy XXXX. the your webcast Bancorp concludes Spring Thank call That for second conference participation. you quarter and earnings for of the

disconnect now may your You lines.

Sandy Spring Bancorp (SASR) 22 Jul 222022 Q2 Earnings call transcript