SASR - Earnings call transcript Q2 2024 | Sandy Spring Bancorp, Inc.

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Operator

Hello, and welcome to the Sandy Spring Bancorp, Incorporated Earnings Conference Call and Webcast for the Second Quarter. My name is Elliot, and I'll be coordinating the call today. [Operator Instructions] I would now like to hand over to Aaron Kaslow, General Counsel and Chief Administrative Officer. Please go ahead.

Aaron Kaslow

Thank you, Elliot. welcome Spring and earnings second everyone, call. conference afternoon, to Bancorp's Sandy quarter Good joined Schrider, by CEO; am I Today, Dan Cullum, Financial and Chair, Chief Officer. Charlie and President today's are subject risks remind remarks listeners I'd to include like which made and to during statements, forward-looking call that uncertainties. may to very by ability a and conditions, statements and assessments significant uncertainties costs achieve forward-looking are assessments and subject nature, because future to earnings interest goals, they of statements of of of economic of are significant goals. These estimates expected regulations their based and are variety upon subject of to statements expectations, These of management's or losses, market benefits, and and risk risks the rates, include credit affected other laws statements and other other intentions, estimates market other matters, and financial uncertainties. behavior, future by future projections which forward-looking uncertainties, from results Sandy future Spring actual Because indicated. of those these Bancorp's materially differ may

of addition, future over company's In the the Dan. to operations past now do turn results. I'll indicate call its necessarily not results

Daniel J. Schrider

for I Aaron, for us then you, it and the everyone, Charlie, our call joining some thanks, and today's quarter today. I'll results to over turn will by discussing Thank and begin of the open interest follow successfully the improving second for margin. loans, grew C&I up with quarter, core and net some your commentary subsequently also while we call the questions. In deposits and

net second the net or million $X.XX per income we or quarter compared diluted second year. Core $XX.X $X.XX common for $XX.X of the and $X.XX were was $XX.X XXXX reported common common addition, and share last diluted and common quarters. share the expenses. for quarter the compared core $X.XX first for diluted or diluted previous quarter quarter share current the diluted previous for the per $XX.X non-interest second higher share or income million interest increase income for of several diluted in for to earnings net compared which million time per share margin We earnings improved per last or the quarter and $X.XX common of the common in per million first million year. of The In $X.XX interest quarter for to income, quarter $XX.X to prudently managed per the or share driven by million $XX.X net

Additionally, attributable growth this quarter $X.X a quarter from first I lower losses, or for loan linked the declined the million for XXXX of was from results for benefited funded to provision year. The $X.X funded credit loan compared quarter say, the of quarter. second which million $X to million for directly losses portfolio, to provision the second credit for million $X should

portfolio to quarter. utilization second The of unfunded reserve overall loan a million, due higher on reduction higher by The individual loans, rates the $X.X collateral-dependent credit lower mainly in adjustments of for growth commitments real on result commercial the qualitative quarter reserves provision of reflects lines during and the estate loans. declined

XX, end at of total attention second compared to $XX billion the balance $XX.X to assets at the Turning our XXXX. increased quarter sheet; March the to billion

million As increased and of $XX.X to or quarter. previous Commercial or lines loans June compared to billion business XX, by $XXX.X grew total million the X% loans $XX.X X%.

second loan million to of remainder pipelines, unchanged based declined real quarter in this by to investor quarter be estate XXXX. funded X% in X% expect portfolios relatively the mortgage the or as compared to segment commercial strategy, And commercial quarter. per range $XX.X growth of on million continue compared expect the million the For X% with year. Total of the consumer first our the quarter and remained first XXXX, to quarter. of to to Consistent production we per loan we loan $XXX $XXX of

cash specific D.C. supplemental estate an commercial information reassessed deck As issued specific the composition these and markets portfolio. to you Slide the as morning, and multifamily, credits satisfactory reclassification And repayment real a reserves. minimal In portfolios, urban $XXX and sponsors X delinquencies the in overview review, of and data loans There by each specific composition despite or in be has the through related no criticized fell to year XX require guidance as $XXX,XXX continued the to on million the within portfolio also our to of continued estate through credits XX a our flex/warehouse based estate $XX.X in loans short will Baltimore. detail million commercial and losses, loan special to portfolio and commercial due more where you real office, types mention are flow had of response for to covenants of review performance. but of impact detailed this on loan you our this we hotel for on commercial portfolios. And substandard. retail, data we supported last in strong the slides, we provide notice these an X regulatory on refer supplemental property having on management, provide Pages recategorized our released allowance to real increase focus guarantors payment

lending slides, know our As well. we market we these we in primary also noted in that are

appropriately a referenced the We have and deck credits five portfolios subject loans identification been five early and only in delinquent of nonperforming supplemental reserved. have handful the to among accruing that

the specific credits deterioration. including close to assessing throughout need other subject We portfolio monitoring continue our clients, on should focus staying our the for further and year, reserves show closely management, to repricing that credit are to portfolios evaluating

of will financial it through our who aspects turn Charlie, to other results. walk I'll Now

Charlie Cullum

good today. Dan. Thanks, be you It's to with

or broker million Interest-bearing were XXXX. offset X% $XXX.X business X% by quarter, $XX.X deposits to by in or the Market first the grew $XX $XXX $XXX.X first June deposits commercial million deposits, and the unchanged. deposits we to deposits. XX increases core quarter. These and compared million $XX.X Money the quarter time X% grow at compared increased during at million deposits; continue to to funding reduced reduction Non-interest-bearing billion $XXX.X Moving deposits of a X% reduction end million savings or billion during of relatively the the to accounts. were second time quarter. Total driven increased $XXX.X or second time or in broker was and X% million which by grew accounts small of checking

XXX% deposits due Excluding quarter during million resulted as increase the deposits banking income end XX% by of prior core main XX% the non-interest wealth $XXX.X X% deposits. to uninsured compared the quarter. uninsured mortgage the compared $XX.X a prior increase linked in total total receipt Total management prior increased income. This linked-quarter and broker the liquidity, unpledged the compared income the Non-interest quarter quarter of as relatively twofold, to or of at June income. at $XXX,XXX grew increased consists FHLB excess a XXXX. second or XX, Income of during activities loan-to-deposit million a and due of accounts in quarter. XX% to unchanged XX% deposits, were XX% June The and on in management compared by well June, the X% assets the to non-interest of Total funds, the the quarter quarter to in deposit increase increase or debt deposits represented of XX from quarter. were or deposits deposits. of was the wealth the to year growth approximately the of for $XXX,XXX quarter Fed bank's approximately compared $X.X in XXX% in growth Through borrowings, The a total funds quarter. XX% at Core by management million or X% previous proceeds available under discount cash income end drivers of the totaled BOLI as quarter. Contingent borrowings linked to billion million at ratio $X.X through income window $X.X investment the Federal Bank's for of which were securities basis. increased XXXX Reserve as

the assets, yield revenue The in X for XXXX. Delinquent of decline in on of million X of Our quarter was of the quarter are compared the XXXX interest $X.X margin X.XX% point third paid for of for basis mortgage banking was in XXXX first X.XX% result expectations point the interest-earning a net rate the margin interest-bearing second liabilities. quarter with million. increase range the the a to improvement $X to coupled in on a basis for

expanding We margin flat basis accelerate during by points next interest quarter. net throughout our will for quarter later XXXX to to in be employ continue remainder the year margins. the XXXX the Absent pricing the We to compared basis Fed, per cut a we the approach four anticipate end the low points disciplined to linked towards that the quarter of million. a X% will X our which X by in were rates XXXX. Non-interest will Reserve margin improve year, of by rate to expansion believe that current action margin should expenses Federal interest the cuts at $XX.X with order

year, You million may to manage second in quarter. communicated in building to building on infrastructure. in talent We're for in we million expenses per the $XX a and of see increase in the of This slight half look is the in increase expenses range anticipated which both out Dan last with new necessary program team, ahead SBA of investments the schedule recent and our the our to this call due part hiring quarter. $XX

that in the XX, during program at linked segment within of latter slightly level period. of to nonperforming quarter owner-occupied contribute points of the real non-interest status year, March due XXXX the commercial XX by end were to the contribute on compared the placed will anticipate that will of few points basis quarter income basis credit total this a year-end. Shifting This was estate expenses half While increase XXXX. to our we loans current the nonaccrual higher the to second quality; to loans at was XX loans to the

collateral-dependent higher at individual previous quarter. The previous second quarter XXXX. At increasing charge-offs X.XX% are well-secured. million Nonperforming of these were $XX quarter XXX% totaled XX, XXXX. of reduced million loans the have million reserves nonperforming of the for million for the and from or on estate overall the loans. loans March loans growth the to losses was These of June are credit $XX.X levels end to at reflects qualitative of first the outstanding compared adjustments of and net somewhat loan portfolio X.X% All the compared quarter second loans for nonperforming $XXX.X loans real the allowance outstanding of of during to $XXX,XXX XXXX Total of million of lower offset commercial to quarter nonaccrual by loans for of $X.X resulted XXX% XXXX, that end compared quarter. allowance the $XXX.X and XX, the at compared quarter the loans or

June lines horizon. our a previous and position At XX, on ratio ] ratios [ the ratio X that, we a improvements Tier assets equity common consistent capital Our during will well quarter quarter. end XXX% talk our XX.XX%, over about our and to of the CRE of X in of The company capital unfunded in Dan guidelines. With declined management Tier is had I consumer to risk-based in of XXX% XXXX, These requirements. ratio to was the capital risk-weighted result credit XX. due back ratios decline X risk-based capital a of at of of were X.X%. as risk-based a ratio some of regulatory turn a from This with to total the quarter a minimum Tier things to leverage the excess remain it regulatory a review capital of see XX.XX% ratio March the XX.XX%,

Daniel J. Schrider

expenses area the to continuing Thanks, credit We're Washington, estate vibrant growth profitability, our to Charlie. exposure. enhancing real organization portfolio by prepared our our management and to Greater also market challenging remain innovation bolster a priorities. our are wrap reiterating the on focused and trends and status characterized I'd metro reducing better serve Teams is core opportunity. like We focusing on managing comments our funding, ample across improving clients. The by performance positive quo. D.C. commercial up while key

building we our new and So both on accomplishments. expand to that. on market with lending offerings program, those share. positive increase company's to mentioned example I'm and one SBA of continue momentum, earlier And capabilities I look is just and we the our our pleased to forward stability

your So time, so we'll turn take over you it can Elliot, at to we questions. this

Operator

Catherine Keefe, First question Mealor Bruyette Woods. comes from & with [Operator Instructions]

Catherine Mealor

see some for costs Thanks. of year, It's was bit that. within The margin deposit you to Can trend? I you us how do feel feels the deposit Good back on assumptions about peak actually decline and in we a the helpful. that, -- a about are get half to near in rate costs commentary little some just on costs talk funding or thought like to how like afternoon. kind of of side? you're particularly good your cuts the the deposit could expansion you It in thinking a see before will

Charlie Cullum

Hi Charlie. Catherine, it's

have a peak how really to are a -- in to gotten peak we you close close costs. we've So come and certainly deposit

month the $X.XX $X.XX Our -- to were month the deposit sorry, for for wrong compared of $X.XX quarter. June to cost number cost compared our in deposit June -- the of were

were they But So asset to a expand. continue up overall, yields little bit. earning

So costs. be wholesale our a which Fed improvement in leveling costs basis we're to those the couple to basis funding next advances cut some X that's our close here point at rates, really should or we that other over see until begins that through purchased offset in the least see margin funds and increase projection in total decreases of but of would they come we interest point And from. may off, deposit where some getting Fed should corresponding quarters,

basis few basis overall improvement couple points a yields few margin of a pretty of and interest-bearing to points So the expansion. points total of us stable basis cost in getting a earning liabilities on asset to the

Catherine Mealor

Okay.

great. repricing year, the then as fixed you can quantify in us of rate maybe well? And remind 'XX back we've the and in got Okay, the half opportunity

Charlie Cullum

Yeah.

repricing we're quarter mid- those total and third from got if we've next So the quarter upper And of rates looking million total commercial in the right fourth have each $XXX are Xs. loans, repricing. two quarter to the the around of quarters, at XXXX

the a low the XXXX, repricing rate to half falls So significant XXXX, the and early as going of second improvement Xs repricing the the result But you're then repricing rate the year. to into see into loan yields then as Xs. in the in by head not falls mid-Xs of on into upper we

loan over period improvement of So we'll gradual time see as that loans a those in yields reprice.

Catherine Mealor

just I could Okay, [indiscernible] one credit. great. more on And if

the there's be longer moved needed special reserve or why if a loss. scenario, do some a potentially on of in believe of content just about outlook not we higher to projects? Is rate the gives of And a substandard. that and talked lot risk credits. were lost in of Is for you kind comfort part piece kind there's a You credits mention in of additional Just there of in stress that that? commentary the more rate assumption there's you not these what would you those low

Daniel J. Schrider

wouldn't is catalyst Yeah. moves. was Catherine, a this Dan. outlook I say that the those rate for

level. I are our more now, covenant the In on portfolio think projects on on the because quarters, construction the was could aspect that that it for had come relief here so. it higher, and recently that next in in -- rate there I stabilize of one some isn't or it waiting think that will some use driver. we was those that -- below a few and cases, might would turnover what fall project we're market longer do we come of those -- we're stayed some floating have a out credits here have quarters the impact and the in generally be not of of created that if rates decisions. the drive That Fed a could those lease are it's cuts. an not to certainly it that covering But seeing assets the of and those some short-term sponsors ground guarantors and or

management have credits from should looking the underlying a they're that's be that below appraisals But of not we something the it guidance assessing of to with a of customary not Fed out they a to line is like. direction. be we'll I how us and close standpoint those our of kind change stand number overall it's we and practices those going concerned ago And about valuations think about we're things loans portfolio if to and of stay today. laid causing would then reserve seeing then covenant. It's at in do toward where overall that if collateral recognizing -- us terms And year project, the a assessment that collateral-dependent continue kind in the loan.

Catherine Mealor

to updated move them? to Great. And on when get have you the you appraisals did credits

Daniel J. Schrider

do We'll [Technical we not. Yeah. Difficulty]. No. No, do selectively

Operator

Our Gunther question Stephens. next Russell with comes from

Russell Elliott Gunther

whether to on that, follow then the to and Just the forward? that loan the quarter. with comments there's or up wanted actions you regard made not to going Could provide in the you of pool opportunity RWA applied for similar with size guys optimization us

Charlie Cullum

during within is and assignments. project Charlie. our a assets classes various Russ, how look started classifying risk-weighted risk-weighted this we're Hi at the asset to quarter We that asset

the quarter they credits And the cancelable, lines those during credit, loans, commitment as was far, carried them related had carried equity that this one specifically conditionally so XX% item -- we so portion we risk classified home weighting. consumer changed where to of unfunded a of

and of line law, at of However, X% you as pulled determined million. review, for weighting, that our population as credit $XXX FDIC a Z did carry unconditionally little [ a should That as them cancelable cancelable over long they up as risk equity be ]. We our to are credits. auditors which guidelines internal with and is to allow federal classify classified those majority the least unconditionally worked cancelable Reg legal an

other during it if are $XXX continue We'll the during quarter. through about any risk-weighted a classes in changes other determine asset was at those work So effect to sometime look reduction of third project a risk-weighted changes taking to the to with million quarter. assets the variety needed

Russell Elliott Gunther

in a the of the fixed Is rate the opportunity. terms repricing quarter amount follow in That's I'm of question of wanted similar of in repricing the back the 'XX I you year? to helpful. fixed then And in wondering in circle Catherine's of the 'XX. color gave terms it a half up helpful guys really lot earlier if of Okay. this $XXX terms million and we could to to back

Charlie Cullum

That's a question. good

XXXX, and we into million amount As quarter. $XXX million of the repricing $XXX per head between is

bubble of certainly in million quarters then to We've on a two falls a commercial bit the range $XXX will here bit. a loan of $XXX million quarter the it but total occur little somewhere So next the portfolio. that per got in repricing

Russell Elliott Gunther

Okay. for the guys me ahead. sorry, point is And go then next --

Charlie Cullum

fixed the additional I related was be that There adjustable related just say to going credits. and to to will specifically is rate. floating repricing

Russell Elliott Gunther

the think for me outlook, you've year, digits. The is high the on which last I one it fee single for got

Anything You XQ. mentioned to closer outlook it digits, thoughts. looks you to expect to low could appreciate maybe potentially the Would for down? maybe something mortgage else double step being conservative or that be just missing. any would I'm me Otherwise, like

Charlie Cullum

I think on mean I it's highly Certainly possible. are market, wealth No, the certainly the market-dependent. side, double digits

Here well. recently, market the is performing really

start we'll the during those So fourth well. we a Obviously, that during see quarter. some the fourth onetime We're they're income the first income this time. to well some confident we perform areas received was or at that no of just be with to quarter quarter could a And recur. expectation SBA not event if will occur anticipation BOLI that, going gains those have then event quarter as do

double around to is that digit high So likely. single your I somewhere think improvement in range low comments digits

Russell Elliott Gunther

Okay. thoughts. I appreciate your

Operator

[Operator now Navas to Instructions] turn D.A. Manuel We Davidson. with

Manuel Navas

that the seeing kind little better update strong success? growth are some Where are this initiatives and most you of guidance, deposit bit a on driving the last? quarter of you Could

Daniel J. Schrider

Hi is Manuel, Dan. this

through growth hasn't digital about the network had deposits. And continuing driving driving account. and their client thing success mind are our relationships. there's our savings that last expected. digital were initiatives time hit through the seeing through clients board for segment having talked branch believe, there ground client bankers Commercial our we some to are We're folks client out with platform. our in We're products relationships I and And our in fulfillment we the not together, we attracted across success marketing well new reaching was new -- one we deposit had as our high-yield into specific really some We we are as online developed as one we area. that

the turning success our that's well banking to as So the driving success. as we're more full get products one not tweaking initiative promotion those underway into there's relationships. in But

it's I through really think teams driving engaged on through relationships fully both means. are board. across branches digital the new The and

Manuel Navas

better And for year. and outlook -- in a little positive that's increase showing better bit pipelines a of the kind

Daniel J. Schrider

yes. I think overall,

I business think a to came us second the one back DDAs. the in thing the good was quarter small that bit and commercial

So inter-quarter, in seasonality retail there's driving the and space. both but some in small new business relationships, we're -- that

Manuel Navas

then growth, can the X% C&I going loan about to that on mix to talk the growth, X% it's you be And of side? primarily

Daniel J. Schrider

range. the a of say, I yeah, in give you quarter to quarter, last pipeline out mid-$XXX just pipeline -- first coming would was sense, the million

we is wrap in quarter, range. million as $XXX the This up low

the build, which So we're real is and closely some pipeline it seeing relationships. owner-occupied is C&I predominantly estate, C&I to and tied

still will multifamily we'll book some AD&C and we've fund. will res continue see other in some AD&C the opportunities of owner-occupied pipeline to We real have estate. predominantly the that on we books growth of construction But portfolio our by as still new that the is as already well what in C&I homebuilding that fund virtue have in

Manuel Navas

improvement pace rate you and of speak cuts. with pace the to Could of just acceleration NIM

it -- you end get based about to could of that for I your rate on talked the assumption. next in your comments plus you think year by X%

builds that of little improvement. that in those Is represented So still a of an NIM acceleration comments? bit in

Charlie Cullum

Yes.

related be aggressive cut interest we'll we're see deposit benefit within as the rates, that expect be the to cut, is the we've second, more We'll the to across that we'd yield in as do improvement. the do like changes our curve. to to and rate Fed the seen that our early on But from portfolios. Quite down little or will third higher the begins expect shape on. whether much betas so be see about those once we board once cut of Fed historically some cautious pricing marketplace we enough of going betas makes we say bit us for in the the first come to Fed movements to than is expect to our So a a

by repricing the cautious with be but end costs the benefit us overall a portfolio the pretty yields difficult it are the be XXXX. But of loan little what the great more one certainly, won't similar we're and to for that's achieve slightly falling yield the with so thing allow to long then our end where that comes down short Fed continued as the rate comes lower as even today bit curve to cut. of would deposit end, that So down, or right X% would to projecting at close as to the without they margin to expand twice be

in X X can quarterly the So somewhere deposit XX point basis movement basis those you'd basis improvement to points improvement points be start range we projecting down X pulling we're costs once looking to of that basis benefit. absent the quarterly versus point maybe of

Operator

further questions. no gentlemen, Ladies have we and

participation. call. Q&A So like conference our this for today's your and to concludes We'd you thank

your may You disconnect now lines.

Sandy Spring Bancorp (SASR) 23 Jul 242024 Q2 Earnings call transcript