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Sandy Spring Bancorp Reports Net Income of $10.9 Million for the First Quarter

Sandy Spring Bancorp, Inc. logo
Sandy Spring Bancorp, Inc. Logo

OLNEY, Md., April 17, 2014 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the first quarter of 2014 of $10.9 million ($0.43 per diluted share). This compares to net income of $10.6 million ($0.42 per diluted share) for the first quarter of 2013 and net income of $9.6 million ($0.38 per diluted share) for the fourth quarter of 2013.



"Our proven capability to produce consistent financial results and returns to our investors demonstrates the strength of our institution. In the past year our share price has increased over 25%. We believe that we offer a level of quality customer service that is recognized in our marketplace and that this will translate into continued growth and increased profitability," said Daniel J. Schrider, President and Chief Executive Officer.

"Our performance in the first quarter was driven by the management of our funding costs, loan growth and the increase in wealth management and insurance revenues which combined to offset the decline in mortgage banking revenues as origination volumes declined significantly from the prior year," said Schrider.

First Quarter Highlights:

  • Total loans increased 10% compared to the first quarter of 2013 and 2% compared to the fourth quarter of 2013 due to significant loan growth in the residential mortgage and commercial investor real estate portfolios.
  • The provision for loan and lease losses for the first quarter of 2014 was a credit of $1.0 million compared to a charge of $0.1 million for the first quarter of 2013 and a charge of $0.6 million for the fourth quarter of 2013. The current quarter's credit was the result of lower historical charge-offs and improved credit metrics over the preceding twelve months, which more than offset the impact of loan growth during the same period.
  • The net interest margin was 3.47% for the first quarter of 2014, compared to 3.59% for the first quarter of 2013 and 3.53% for the fourth quarter of 2013. The decline was the result of declining rates during the period, primarily impacting the commercial loan portfolio.
  • Non-interest income decreased 9% for the quarter compared to the prior year quarter due primarily to the decline in income from mortgage banking caused by a significantly lower volume of saleable mortgage loan originations. The prior year quarter also included income as a result of a legal settlement. During this same period wealth management income increased 10% and insurance agency commissions increased 22%. Non-interest income decreased 3% as compared to the fourth quarter of 2013, which included gains from the sales of fixed assets and SBA loans.
  • Non-performing loans totaled $38.7 million at March 31, 2014 compared to $49.5 million at March 31, 2013 and $40.0 million at December 31, 2013. The coverage ratio of the allowance for loan and lease losses to non-performing loans was 98% at March 31, 2014 compared to a coverage ratio of 83% at March 31, 2013 and 97% at December 31, 2013.

Review of Balance Sheet and Credit Quality

At March 31, 2014, total assets grew to $4.2 billion, an increase of 6% as compared to March 31, 2013 driven by the increase in the loan portfolio. At March 31, 2014 total loans and leases were $2.8 billion, a 10% increase over the prior year. Increases occurred in every major loan category with notable increases in the residential mortgage and commercial investor real estate portfolios.

Customer funding sources, which include deposits and other short-term borrowings from customers, increased 2% compared to March 31, 2013. Checking accounts are considered to be an important performance metric as such accounts typically are the primary drivers of growth in multiple product banking relationships with clients. At March 31, 2014, the combined noninterest-bearing and interest-bearing checking account balances had increased 7% compared to the balances at March 31, 2013.

Tangible common equity totaled $423.9 million at March 31, 2014 compared to $391.7 million at March 31, 2013, resulting in an increase in the ratio of tangible common equity to tangible assets to 10.38% at March 31, 2014 from 10.19% at March 31, 2013. This increase in tangible common equity occurred during the period that dividends per common share were increased from $0.14 per share to $0.18 per common share, a 29% increase. At March 31, 2014, the Company had a total risk-based capital ratio of 15.85%, a tier 1 risk-based capital ratio of 14.64% and a tier 1 leverage ratio of 11.43%.

Non-performing loans totaled $38.7 million at March 31, 2014 compared to $49.5 million at March 31, 2013 and $40.0 million at December 31, 2013. The level of non-performing loans to total loans has decreased from 1.93% at March 31, 2013 to 1.37% at March 31, 2014. This relative improvement reflects management's proactive focus on credit quality and the efforts to effectively resolve problem credits.

Net loan recoveries totaled $0.2 million for the first quarter of 2014 compared to net charge-offs of $1.8 million for the first quarter of 2013 and net charge-offs of $1.2 million for the fourth quarter of 2013. The allowance for loan and lease losses represented 1.34% of outstanding loans and leases and 98% of non-performing loans at March 31, 2014 compared to 1.61% of outstanding loans and leases and 83% of non-performing loans at March 31, 2013. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the first quarter of 2014 increased 1% compared to the first quarter of 2013. This modest increase was due to the impact of the increase in average interest-earning assets and a reduction in funding costs of time deposits partially offset by a decline in asset yields. This activity resulted in a net interest margin of 3.47% for the first quarter of 2014 compared to 3.59% for the first quarter of 2013.

The provision for loan and lease losses was a credit of $1.0 million for the first quarter of 2014 compared to a charge of $0.1 million for the first quarter of 2013 and a charge of $0.6 million for the fourth quarter of 2013. This decrease in the provision compared to the first quarter of 2013 and the fourth quarter of 2013 was due primarily to lower historical losses and improved credit metrics that more than offset the effect of loan growth during the quarter.

Non-interest income decreased 9% to $11.2 million for the first quarter of 2014 compared to $12.4 million for the first quarter of 2013. This decrease was driven by a reduction in mortgage banking income due primarily to lower mortgage origination volumes and a decline in client refinancing activity. This decrease was partially offset by a 10% increase in wealth management income due to higher assets under management and a 22% increase in insurance agency commissions.

Non-interest expenses decreased 1% to $27.5 million for the first quarter of 2014 compared to $27.8 million in the first quarter of 2013. This decrease was driven primarily by improved credit quality as legal fees associated with loan workouts declined significantly during this period. The non-GAAP efficiency ratio was 61.60% for the first quarter of 2014 compared to 60.80% for the first quarter of 2013.

Conference Call

The Company's management will host a conference call to discuss its first quarter results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations' section of the Sandy Spring Web site at www.sandyspringbank.com. Participants may call 1-888-317-6016. A password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 9:00 am (ET) May 19, 2014. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10043570.

About Sandy Spring Bancorp, Inc.

With $4.2 billion in assets, Sandy Spring Bancorp, Inc. is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Sandy Spring Bancorp is the largest publicly traded banking company headquartered and operating in Maryland. Sandy Spring is a community banking organization that focuses its lending and other services on businesses and consumers in the local market area. Independent and community-oriented, Sandy Spring Bank was founded in 1868 and offers a broad range of commercial banking, retail banking and trust services through 46 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George's counties in Maryland, and Arlington, Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of insurance and investment management services. Visit www.sandyspringbank.com for more information about Sandy Spring Bank.

Forward-Looking Statements

Sandy Spring Bancorp makes forward-looking statements in this news release and in the conference call regarding this news release. These forward-looking statements may include: statements of goals, intentions, earnings expectations, and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals.

Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project" and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Sandy Spring Bancorp does not assume any duty and does not undertake to update its forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that Sandy Spring Bancorp anticipated in its forward-looking statements and future results could differ materially from historical performance.

Sandy Spring Bancorp's forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company's loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company's ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2013, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp's forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC's Web site at www.sec.gov.

Sandy Spring Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS - UNAUDITED
Three Months Ended
March 31, %
(Dollars in thousands, except per share data) 2014 2013 Change
Results of Operations:
Net interest income $ 31,592 $ 31,326 1%
Provision for loan and lease losses (982) 78 --
Non-interest income 11,249 12,419 (9)
Non-interest expenses 27,549 27,823 (1)
Income before income taxes 16,274 15,844 3
Net income 10,928 10,558 4
Pre-tax pre-provision income $ 15,292 $ 15,922 (4)
Return on average assets 1.08% 1.08%
Return on average common equity 8.80% 8.85%
Net interest margin 3.47% 3.59%
Efficiency ratio - GAAP basis (1) 64.31% 63.60%
Efficiency ratio - Non-GAAP basis (1) 61.60% 60.80%
Per share data:
Basic net income $ 0.44 $ 0.42 5%
Diluted net income $ 0.43 $ 0.42 2
Average fully diluted shares 25,124,206 25,002,612 --
Dividends declared per share $ 0.18 $ 0.14 29
Book value per share 20.38 19.59 4
Tangible book value per share 16.93 15.70 8
Outstanding shares 25,043,482 24,954,892 --
Financial Condition at period-end:
Investment securities $ 997,584 $ 1,008,693 (1)%
Loans and leases 2,832,813 2,565,069 10
Interest-earning assets 3,891,223 3,660,809 6
Assets 4,168,998 3,932,026 6
Deposits 2,959,195 2,919,208 1
Interest-bearing liabilities 2,748,064 2,576,831 7
Stockholders' equity 510,386 488,947 4
Capital ratios:
Tier 1 leverage 11.43% 11.07%
Tier 1 capital to risk-weighted assets 14.64% 14.23%
Total regulatory capital to risk-weighted assets 15.85% 15.48%
Tangible common equity to tangible assets (2) 10.38% 10.19%
Average equity to average assets 12.27% 12.26%
Credit quality ratios:
Allowance for loan and lease losses to loans and leases 1.34% 1.61%
Non-performing loans to total loans 1.37% 1.93%
Non-performing assets to total assets 0.97% 1.39%
Allowance for loan and lease losses to non-performing loans 98.27% 83.38%
Annualized net charge-offs to average loans and leases (3) (0.04)% 0.28%
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional efficiency ratio - non-GAAP basis excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI; and the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
(2) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets and other comprehensive gains (losses). See the Reconciliation Table included with these Financial Highlights.
(3) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.
Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
Three Months Ended
March 31,
(Dollars in thousands) 2014 2013
Pre-tax pre-provision income:
Net income $ 10,928 $ 10,558
Plus non-GAAP adjustment:
Income taxes 5,346 5,286
Provision for loan and lease losses (982) 78
Pre-tax pre-provision income $ 15,292 $ 15,922
Efficiency ratio - GAAP basis:
Non-interest expenses $ 27,549 $ 27,823
Net interest income plus non-interest income $ 42,841 $ 43,745
Efficiency ratio - GAAP basis 64.31% 63.60%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses $ 27,549 $ 27,823
Less non-GAAP adjustment:
Amortization of intangible assets 370 461
Non-interest expenses -- as adjusted $ 27,179 $ 27,362
Net interest income plus non-interest income $ 42,841 $ 43,745
Plus non-GAAP adjustment:
Tax-equivalent income 1,282 1,311
Less non-GAAP adjustments:
Securities gains -- 56
Net interest income plus non-interest income - as adjusted $ 44,123 $ 45,000
Efficiency ratio - Non-GAAP basis 61.60% 60.80%
Tangible common equity ratio:
Total stockholders' equity $ 510,386 $ 488,947
Accumulated other comprehensive (income) loss (1,350) (9,732)
Goodwill (84,171) (84,808)
Other intangible assets, net (960) (2,702)
Tangible common equity $ 423,905 $ 391,705
Total assets $ 4,168,998 $ 3,932,026
Goodwill (84,171) (84,808)
Other intangible assets, net (960) (2,702)
Tangible assets $ 4,083,867 $ 3,844,516
Tangible common equity ratio 10.38% 10.19%
Outstanding common shares 25,043,482 24,954,892
Tangible book value per common share $ 16.93 $ 15.70
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
March 31, December 31, March 31,
(Dollars in thousands) 2014 2013 2013
Assets
Cash and due from banks $ 58,448 $ 46,755 $ 45,922
Federal funds sold 474 475 476
Interest-bearing deposits with banks 57,273 27,197 38,188
Cash and cash equivalents 116,195 74,427 84,586
Residential mortgage loans held for sale (at fair value) 3,079 8,365 48,383
Investments available-for-sale (at fair value) 736,270 751,284 766,080
Investments held-to-maturity -- fair value of $220,693, $216,007 and 216,420 at March 31, 2014, December 31, 2013 and March 31, 2013, respectively 223,747 224,638 211,376
Other equity securities 37,567 40,687 31,237
Total loans and leases 2,832,813 2,784,266 2,565,069
Less: allowance for loan and lease losses (38,026) (38,766) (41,246)
Net loans and leases 2,794,787 2,745,500 2,523,823
Premises and equipment, net 45,644 45,916 47,701
Other real estate owned 1,619 1,338 5,250
Accrued interest receivable 12,288 12,532 12,926
Goodwill 84,171 84,171 84,808
Other intangible assets, net 960 1,330 2,702
Other assets 112,671 115,912 113,154
Total assets $ 4,168,998 $ 4,106,100 $ 3,932,026
Liabilities
Noninterest-bearing deposits $ 882,169 $ 836,198 $ 832,679
Interest-bearing deposits 2,077,026 2,041,027 2,086,529
Total deposits 2,959,195 2,877,225 2,919,208
Securities sold under retail repurchase agreements and federal funds purchased 67,038 53,842 50,302
Advances from FHLB 569,000 615,000 405,000
Subordinated debentures 35,000 35,000 35,000
Accrued interest payable and other liabilities 28,379 25,670 33,569
Total liabilities 3,658,612 3,606,737 3,443,079
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 25,043,482, 24,990,021 and 24,954,892 at March 31, 2014, December 31, 2013 and March 31, 2013, respectively 25,043 24,990 24,955
Additional paid in capital 193,708 193,445 191,615
Retained earnings 290,285 283,898 262,645
Accumulated other comprehensive income (loss) 1,350 (2,970) 9,732
Total stockholders' equity 510,386 499,363 488,947
Total liabilities and stockholders' equity $ 4,168,998 $ 4,106,100 $ 3,932,026
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three Months Ended
March 31,
(Dollars in thousands, except per share data) 2014 2013
Interest Income:
Interest and fees on loans and leases $ 29,734 $ 29,646
Interest on loans held for sale 59 353
Interest on deposits with banks 20 19
Interest and dividends on investment securities:
Taxable 4,116 3,934
Exempt from federal income taxes 2,321 2,327
Total interest income 36,250 36,279
Interest Expense:
Interest on deposits 1,184 1,455
Interest on retail repurchase agreements and federal funds purchased 38 49
Interest on advances from FHLB 3,218 3,223
Interest on subordinated debt 218 226
Total interest expense 4,658 4,953
Net interest income 31,592 31,326
Provision (credit) for loan and lease losses (982) 78
Net interest income after provision (credit) for loan and lease losses 32,574 31,248
Non-interest Income:
Investment securities gains -- 56
Service charges on deposit accounts 1,972 2,069
Mortgage banking activities 316 1,527
Wealth management income 4,466 4,042
Insurance agency commissions 1,640 1,349
Income from bank owned life insurance 598 612
Visa check fees 978 957
Other income 1,279 1,807
Total non-interest income 11,249 12,419
Non-interest Expenses:
Salaries and employee benefits 16,355 16,346
Occupancy expense of premises 3,472 3,182
Equipment expenses 1,256 1,249
Marketing 542 515
Outside data services 1,216 1,152
FDIC insurance 520 596
Amortization of intangible assets 370 461
Other expenses 3,818 4,322
Total non-interest expenses 27,549 27,823
Income before income taxes 16,274 15,844
Income tax expense 5,346 5,286
Net income $ 10,928 $ 10,558
Net Income Per Share Amounts:
Basic net income per share $ 0.44 $ 0.42
Diluted net income per share $ 0.43 $ 0.42
Dividends declared per share $ 0.18 $ 0.14
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2014 2013
(Dollars in thousands, except per share data) Q1 Q4 Q3 Q2 Q1
Profitability for the quarter:
Tax-equivalent interest income $ 37,532 $ 38,434 $ 41,524 $ 37,091 $ 37,590
Interest expense 4,658 4,759 4,874 4,847 4,953
Tax-equivalent net interest income 32,874 33,675 36,650 32,244 32,637
Tax-equivalent adjustment 1,282 1,325 1,344 1,312 1,311
Provision for loan and lease losses (982) 586 1,128 (2,876) 78
Non-interest income 11,249 11,654 11,223 12,215 12,419
Non-interest expenses 27,549 29,300 26,893 27,508 27,823
Income before income taxes 16,274 14,118 18,508 18,515 15,844
Income tax expense 5,346 4,505 6,419 6,353 5,286
Net income $ 10,928 $ 9,613 $ 12,089 $ 12,162 $ 10,558
Financial performance:
Pre-tax pre-provision pre-merger expense income $ 15,292 $ 14,704 $ 19,636 $ 15,639 $ 15,922
Return on average assets 1.08% 0.93% 1.19% 1.23% 1.08%
Return on average common equity 8.80% 7.71% 9.91% 9.98% 8.85%
Net interest margin 3.47% 3.53% 3.88% 3.51% 3.59%
Efficiency ratio - GAAP basis (1) 64.31% 66.59% 57.80% 63.75% 63.60%
Efficiency ratio - Non-GAAP basis (1) 61.60% 63.62% 55.21% 60.92% 60.80%
Per share data:
Basic net income per share $ 0.44 $ 0.38 $ 0.48 $ 0.49 $ 0.42
Diluted net income per share $ 0.43 $ 0.38 $ 0.48 $ 0.49 $ 0.42
Average fully diluted shares 25,124,206 25,108,109 25,070,506 25,009,092 25,002,612
Dividends declared per common share $ 0.18 $ 0.18 $ 0.16 $ 0.16 $ 0.14
Non-interest income:
Securities gains (losses) $ -- $ (3) $ -- $ 62 $ 56
Service charges on deposit accounts 1,972 2,143 2,171 2,150 2,069
Mortgage banking activities 316 356 (26) 1,237 1,527
Wealth management income 4,466 4,508 4,503 4,532 4,042
Insurance agency commissions 1,640 1,243 1,193 1,036 1,349
Income from bank owned life insurance 598 635 629 623 612
Visa check fees 978 1,052 1,077 1,079 957
Other income 1,279 1,720 1,676 1,496 1,807
Total non-interest income $ 11,249 $ 11,654 $ 11,223 $ 12,215 $ 12,419
Non-interest expense:
Salaries and employee benefits $ 16,355 $ 16,707 $ 16,382 $ 16,163 $ 16,346
Occupancy expense of premises 3,472 3,844 3,149 2,996 3,182
Equipment expenses 1,256 1,264 1,200 1,227 1,249
Marketing 542 897 713 755 515
Outside data services 1,216 1,162 1,152 1,114 1,152
FDIC insurance 520 445 678 581 596
Amortization of intangible assets 370 461 462 461 461
Professional fees 914 1,386 511 1,332 1,250
Other real estate owned expenses -- 91 (150) (281) 37
Other expenses 2,904 3,043 2,796 3,160 3,035
Total non-interest expense $ 27,549 $ 29,300 $ 26,893 $ 27,508 $ 27,823
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional, efficiency ratio - non-GAAP basis excludes intangible asset amortization from non-interest expense; excludes securities gains; OTTI losses from non-interest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2014 2013
(Dollars in thousands) Q1 Q4 Q3 Q2 Q1
Balance sheets at quarter end:
Residential mortgage loans $ 640,939 $ 618,381 $ 595,180 $ 565,282 $ 538,346
Residential construction loans 143,109 129,177 118,316 116,736 122,698
Commercial ADC loans 163,343 160,696 158,739 163,309 150,599
Commercial investor real estate loans 573,634 552,178 518,029 497,365 487,802
Commercial owner occupied real estate loans 582,472 592,823 569,350 563,258 565,820
Commercial business loans 348,180 356,651 332,670 334,979 344,489
Leasing 439 703 962 1,415 1,974
Consumer loans 380,697 373,657 368,764 363,114 353,341
Total loans and leases 2,832,813 2,784,266 2,662,010 2,605,458 2,565,069
Allowance for loan and lease losses (38,026) (38,766) (39,422) (39,015) (41,246)
Investment securities 997,584 1,016,609 1,077,951 1,102,209 1,008,693
Interest-earning assets 3,891,223 3,836,912 3,771,825 3,802,682 3,660,809
Total assets 4,168,998 4,106,100 4,052,969 4,072,617 3,932,026
Noninterest-bearing demand deposits 882,169 836,198 890,319 877,891 832,679
Total deposits 2,959,195 2,877,225 2,916,466 2,926,650 2,919,208
Customer repurchase agreements 67,038 53,842 53,177 54,731 50,302
Total interest-bearing liabilities 2,748,064 2,744,869 2,634,324 2,678,490 2,576,831
Total stockholders' equity 510,386 499,363 493,882 485,643 488,947
Quarterly average balance sheets:
Residential mortgage loans $ 633,160 $ 614,698 $ 593,335 $ 579,899 $ 575,889
Residential construction loans 134,261 125,744 120,676 119,197 120,283
Commercial ADC loans 162,544 156,558 158,557 160,483 148,749
Commercial investor real estate loans 557,168 522,085 499,896 485,630 474,062
Commercial owner occupied real estate loans 584,155 580,808 566,366 561,249 567,723
Commercial business loans 349,734 357,455 331,374 337,843 347,569
Leasing 567 817 1,152 1,644 2,510
Consumer loans 377,822 373,017 366,562 360,842 357,366
Total loans and leases 2,799,411 2,731,182 2,637,918 2,606,787 2,594,151
Investment securities 1,012,701 1,055,432 1,097,643 1,047,726 1,051,769
Interest-earning assets 3,845,513 3,817,033 3,770,855 3,692,215 3,677,444
Total assets 4,105,214 4,082,839 4,039,069 3,959,907 3,946,578
Noninterest-bearing demand deposits 825,968 872,532 862,046 838,502 797,926
Total deposits 2,876,641 2,901,814 2,903,926 2,892,704 2,860,451
Customer repurchase agreements 62,864 57,682 56,766 55,941 52,622
Total interest-bearing liabilities 2,749,459 2,679,812 2,659,406 2,599,704 2,631,198
Total stockholders' equity 503,851 494,779 483,811 489,014 483,664
Financial Measures
Average equity to average assets 12.27% 12.12% 11.98% 12.35% 12.26%
Investment securities to earning assets 25.64% 26.50% 28.58% 28.99% 27.55%
Loans to earning assets 72.80% 72.57% 70.58% 68.52% 70.07%
Loans to assets 67.95% 67.81% 65.68% 63.98% 65.24%
Loans to deposits 95.73% 96.77% 91.28% 89.03% 87.87%
Capital measures:
Tier 1 leverage 11.43% 11.32% 11.29% 11.28% 11.07%
Tier 1 capital to risk-weighted assets 14.64% 14.42% 14.45% 14.30% 14.23%
Total regulatory capital to risk-weighted assets 15.85% 15.65% 15.70% 15.55% 15.48%
Book value per share $ 20.38 $ 19.98 $ 19.77 $ 19.45 $ 19.59
Outstanding shares 25,043,482 24,990,021 24,985,146 24,967,558 24,954,892
Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2014 2013
(Dollars in thousands) March 31, December 31, September 30, June 30, March 31,
Non-Performing Assets:
Loans and leases 90 days past due:
Commercial business $ -- $ -- $ -- $ 15 $ --
Commercial real estate:
Commercial AD&C -- -- -- -- --
Commercial investor real estate -- -- -- -- --
Commercial owner occupied real estate -- -- -- -- --
Leasing -- -- -- -- --
Consumer -- 1 10 -- 54
Residential real estate:
Residential mortgage -- -- -- -- --
Residential construction -- -- -- -- --
Total loans and leases 90 days past due -- 1 10 15 54
Non-accrual loans and leases:
Commercial business 3,272 3,400 4,050 4,483 4,012
Commercial real estate:
Commercial AD&C 4,133 4,127 5,086 5,885 5,826
Commercial investor real estate 7,284 6,802 6,877 11,741 12,353
Commercial owner occupied real estate 7,150 5,936 4,202 5,413 5,346
Leasing -- -- -- -- --
Consumer 2,115 2,259 2,004 2,305 2,388
Residential real estate:
Residential mortgage 5,025 5,735 5,643 5,581 5,393
Residential construction 2,304 2,315 2,327 2,558 3,258
Total non-accrual loans and leases 31,283 30,574 30,189 37,966 38,576
Total restructured loans - accruing 7,411 9,459 8,054 8,213 10,839
Total non-performing loans and leases 38,694 40,034 38,253 46,194 49,469
Other assets and real estate owned (OREO) 1,619 1,338 1,662 4,831 5,250
Total non-performing assets $ 40,313 $ 41,372 $ 39,915 $ 51,025 $ 54,719
For the quarter ended,
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2014 2013 2013 2013 2013
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period $ 30,574 $ 30,189 $ 37,966 $ 38,576 $ 47,548
Non-accrual balances transferred to OREO (281) (365) (723) (1,426) (92)
Non-accrual balances charged-off (513) (922) (4,995) (668) (2,175)
Net payments or draws (1,073) (971) (13,547) (3,560) (11,768)
Loans placed on non-accrual 2,576 3,546 11,488 5,044 5,493
Non-accrual loans brought current -- (903) -- -- (430)
Balance at end of period $ 31,283 $ 30,574 $ 30,189 $ 37,966 $ 38,576
Analysis of Allowance for Loan Losses:
Balance at beginning of period $ 38,766 $ 39,422 $ 39,015 $ 41,246 $ 42,957
Provision (credit) for loan and lease losses (982) 586 1,128 (2,876) 78
Less loans charged-off, net of recoveries:
Commercial business (768) 384 1 (32) 1,744
Commercial real estate:
Commercial AD&C -- 85 (616) (1,444) (1,020)
Commercial investor real estate (5) 23 1,243 123 31
Commercial owner occupied real estate -- (82) (284) 100 81
Leasing -- -- (6) (4) --
Consumer 331 488 169 490 508
Residential real estate:
Residential mortgage 203 347 216 22 447
Residential construction (3) (3) (2) 100 (2)
Net charge-offs (242) 1,242 721 (645) 1,789
Balance at end of period $ 38,026 $ 38,766 $ 39,422 $ 39,015 $ 41,246
Asset Quality Ratios:
Non-performing loans to total loans 1.37% 1.44% 1.44% 1.77% 1.93%
Non-performing assets to total assets 0.97% 1.01% 0.98% 1.25% 1.39%
Allowance for loan losses to loans 1.34% 1.39% 1.48% 1.50% 1.61%
Allowance for loan losses to non-performing loans 98.27% 96.83% 103.06% 84.46% 83.38%
Net charge-offs in quarter to average loans (0.04)% 0.18% 0.11% (0.10)% 0.28%
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Three Months Ended March 31,
2014 2013
Annualized Annualized
Average (1) Average Average (1) Average
(Dollars in thousands and tax-equivalent) Balances Interest Yield/Rate Balances Interest Yield/Rate
Assets
Residential mortgage loans (2) $ 633,160 $ 5,506 3.48% $ 575,889 $ 5,376 3.73%
Residential construction loans 134,261 1,254 3.79 120,283 1,004 3.38
Commercial ADC loans 162,544 2,073 5.17 148,749 1,996 5.44
Commercial investor real estate loans 557,168 6,733 4.90 474,062 6,135 5.25
Commercial owner occupied real estate loans 584,155 7,067 5.08 567,723 7,801 5.71
Commercial business loans 349,734 4,037 4.64 347,569 4,586 5.21
Leasing 567 6 4.53 2,510 38 6.07
Consumer loans 377,822 3,117 3.37 357,366 3,063 3.51
Total loans and leases (3) 2,799,411 29,793 4.34 2,594,151 29,999 4.71
Taxable securities 710,246 4,452 2.51 754,112 4,305 2.28
Tax-exempt securities (4) 302,455 3,267 4.32 297,657 3,267 4.39
Interest-bearing deposits with banks 32,925 20 0.25 31,050 19 0.25
Federal funds sold 476 -- 0.22 474 -- 0.22
Total interest-earning assets 3,845,513 37,532 3.96 3,677,444 37,590 4.13
Less: allowance for loan and lease losses (39,393) (43,705)
Cash and due from banks 45,553 46,888
Premises and equipment, net 45,879 48,167
Other assets 207,662 217,784
Total assets $4,105,214 $3,946,578
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 460,245 92 0.08% $ 423,485 92 0.09%
Regular savings deposits 249,185 48 0.08 234,492 48 0.08
Money market savings deposits 877,864 273 0.13 892,343 411 0.19
Time deposits 463,379 771 0.67 512,205 904 0.72
Total interest-bearing deposits 2,050,673 1,184 0.23 2,062,525 1,455 0.29
Other borrowings 62,864 38 0.24 65,601 49 0.30
Advances from FHLB 600,922 3,218 2.17 468,072 3,223 2.79
Subordinated debentures 35,000 218 2.49 35,000 226 2.58
Total interest-bearing liabilities 2,749,459 4,658 0.69 2,631,198 4,953 0.76
Noninterest-bearing demand deposits 825,968 797,926
Other liabilities 25,936 33,790
Stockholders' equity 503,851 483,664
Total liabilities and stockholders' equity $4,105,214 $3,946,578
Net interest income and spread $ 32,874 3.27% $ 32,637 3.37%
Less: tax-equivalent adjustment 1,282 1,311
Net interest income $ 31,592 $ 31,326
Interest income/earning assets 3.96% 4.13%
Interest expense/earning assets 0.49 0.54
Net interest margin 3.47% 3.59%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2014 and 2013. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.3 million and $1.3 million in 2014 and 2013, respectively.
(2) Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.
(3) Non-accrual loans are included in the average balances.
(4) Includes only investments that are exempt from federal taxes.

CONTACT: For additional information or questions, please contact: Daniel J. Schrider, President & Chief Executive Officer, or Philip J. Mantua, E.V.P. & Chief Financial Officer Sandy Spring Bancorp 17801 Georgia Avenue Olney, Maryland 20832 1-800-399-5919 Email: DSchrider@sandyspringbank.com PMantua@sandyspringbank.com Web site: www.sandyspringbank.com

Source:Sandy Spring Bancorp, Inc.