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Sandy Spring Bancorp Reports Net Income of $9.1 Million for the Fourth Quarter and $38.2 Million for the Full Year

OLNEY, Md., Jan. 22, 2015 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the fourth quarter of 2014 of $9.1 million ($0.36 per diluted share) compared to net income of $9.6 million ($0.38 per diluted share) for the fourth quarter of 2013 and net income of $11.1 million ($0.44 per diluted share) for the third quarter of 2014.

Net income for the year ended December 31, 2014 was $38.2 million ($1.52 per diluted share) compared to net income of $44.4 million ($1.77 per diluted share) for the prior year. For comparison purposes, the current year includes $6.5 million in litigation expenses associated with a particular legal action while the prior year's results includes a benefit of $4.5 million in interest income and professional fees associated with the resolution of a non-performing loan relationship.

"Considering the impact on operating results of the items mentioned above, the Company produced solid core results in 2014 driven by notable growth in its loan and deposit portfolios and the strong performance of its wealth management business. We are proud of our accomplishments considering the market volatility and extremely competitive environment that existed throughout the year," said Daniel J. Schrider, President and Chief Executive Officer.

"Looking to the future, we are making appropriate investments in our client-facing facilities and systems as we adapt our delivery channels to the preferences of our clients. We anticipate this will provide the opportunity for further growth in our franchise while we continue to render outstanding service to our clients," said Schrider.

Fourth Quarter Highlights:

  • Total loans increased 12% compared to the fourth quarter of 2013 and 5% compared to the third quarter of 2014. Growth over the prior year exceeded 10% in each of the three major portfolio segments. Overall the entire portfolio grew $343 million from the prior year.
  • Combined noninterest-bearing and interest-bearing transaction account balances increased 18% to $1.5 billion at December 31, 2014 as compared to $1.3 billion at December 31, 2013.
  • The provision for loan and lease losses for the fourth quarter of 2014 was a charge of $0.9 million compared to a charge of $0.6 million for the fourth quarter of 2013 and a credit of $0.2 million for the third quarter of 2014. The credit quality of the loan portfolio continues to exhibit stability while outstanding loans increased significantly over the prior year.
  • The net interest margin was 3.44% for the fourth quarter of 2014, compared to 3.53% for the fourth quarter of 2013 and 3.42% for the third quarter of 2014.
  • Non-interest income decreased 3% for the quarter compared to the prior year quarter primarily due to a decrease in other non-interest income. This decrease was somewhat offset by a 9% increase in income from wealth management activities.
  • Non-interest expense for the quarter increased 4% over the prior year quarter due mainly to $1.1 million in non-recurring expenses in the quarter for bankcard losses and an adjustment to insurance receivables.

Review of Balance Sheet and Credit Quality

Total assets grew 7% to $4.4 billion at December 31, 2014 compared to $4.1 billion at December 31, 2013. This growth was driven by a 12% increase in the loan portfolio as total loans and leases ended the period at $3.1 billion.

Deposits and certain other short-term borrowings that comprise all the funding sources derived from customers, increased 7% compared to the prior year end. At December 31, 2014, combined noninterest-bearing and interest-bearing checking account balances, an important performance driver of multiple-product banking relationships with clients, increased 18% compared to balances at December 31, 2013.

Tangible common equity totaled $438 million at December 31, 2014 compared to $417 million at December 31, 2013, resulting in a decrease in the ratio of tangible common equity to tangible assets to 10.15% at December 31, 2014 from 10.37% at December 31, 2013. Dividends per common share were $0.76 per share for the year compared to $0.64 per common share for 2013, a 19% increase. At December 31, 2014, the Company had a total risk-based capital ratio of 15.06%, a tier 1 risk-based capital ratio of 13.95% and a tier 1 leverage ratio of 11.26%.

Non-performing loans totaled $34.0 million at December 31, 2014 compared to $40.0 million at December 31, 2013 and $43.7 million at September 30, 2014. The level of non-performing loans to total loans decreased to 1.09% at December 31, 2014 compared to 1.44% at December 31, 2013. The year-over-year decrease was driven primarily by loan pay-offs and a reduction in restructured loans as such loans have performed to allow them to no longer be classified as non-performing.

Loan charge-offs, net of recoveries, totaled $0.6 million for the fourth quarter of 2014 compared to net loan charge-offs of $1.2 million for the fourth quarter of 2013 and net loan charge-offs of $0.2 million for the third quarter of 2014. The allowance for loan and lease losses represented 1.21% of outstanding loans and leases and 111% of non-performing loans at December 31, 2014 compared to 1.39% of outstanding loans and leases and 97% of non-performing loans at December 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 fourth quarter of 2014 increased 3% compared to the fourth quarter of 2013. The net interest margin was 3.44% for the fourth quarter of 2014 compared to 3.53% for the fourth quarter of 2013.

The provision for loan and lease losses was a charge of $0.9 million for the fourth quarter of 2014 compared to a charge of $0.6 million for the fourth quarter of 2013 and a credit of $0.2 million for the third quarter of 2014. The current quarter's charge reflects the growth in the loan portfolio over the prior quarters. This growth in the loan portfolio produced an effect that more than offset the lower charge-offs and reduced problem loan migration into non-performing status during the past twelve months.

Non-interest income decreased 3% to $11.3 million for the fourth quarter of 2014 compared to $11.7 million for the fourth quarter of 2013. The decrease in non-interest income for the quarter compared to the prior year quarter was due primarily to lower other non-interest income from sales and dispositions of loans and fixed assets which occurred in the prior year quarter.

Non-interest expenses increased 4% to $30.5 million for the fourth quarter of 2014 compared to $29.3 million in the fourth quarter of 2013. The current quarter included increases in other non-interest expenses for bankcard losses and an adjustment to uncollectible insurance receivables. The non-GAAP efficiency ratio was 65.89% for the fourth quarter of 2014 compared to 63.62% for the fourth quarter of 2013.

Net interest income for the year ended December 31, 2014 was relatively level compared to the prior year. Excluding interest recoveries of $3.7 million in the prior year, net interest income would have increased 3%. The net interest margin decreased to 3.45% in 2014 compared to 3.63% in 2013. The prior year's margin was positively impacted by loan recoveries on commercial loans. Exclusive of those recoveries the net interest margin for 2013 would have been 3.53%

The provision for loan and lease losses was a credit of $0.2 million for the year ended December 31, 2014 compared to a credit of $1.1 million for the year ended December 31, 2013. The credits in the provision for each year were driven by a decline in historical losses, improvement in the overall credit quality of the loan portfolio and problem loan resolutions and recoveries whose impact more than offset the effect of loan growth.

Non-interest income decreased 1% to $46.9 million for 2014 compared to $47.5 million for 2013. This decrease was driven primarily by the decrease in income from mortgage banking activities as loan origination volumes declined. Other non-interest income also decreased due to sales and dispositions of loans and fixed assets and a non-recurring legal settlement, all of which occurred in the prior year. The impact of these decreases was somewhat mitigated by an increase in wealth management income of 9% due to higher assets under management.

Non-interest expenses increased to $120.8 million for 2014 compared to $111.5 million for 2013 due primarily to the impact of $6.5 million in litigation expenses. Excluding the impact of the litigation expenses related to an adverse jury verdict, non-interest expense for the year ended December 31, 2014 was $114.3 million. This increase was driven mainly by higher bankcard losses and an adjustment to uncollectible insurance receivables. The non-GAAP efficiency ratio was 62.48% for 2014 compared to 60.06% for 2013. Excluding the loan interest recoveries in 2013, the non-GAAP efficiency ratio was 61.71%.

Conference Call

The Company's management will host a conference call to discuss its fourth 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 1-866-235-9910. 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) February 2, 2015. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10058497.

About Sandy Spring Bancorp, Inc.

With $4.4 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 Bank traces its origin to 1868, making it among the oldest banking institutions in the region. 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 offers a broad range of commercial banking, retail banking and trust services through 44 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 Twelve Months Ended
December 31, % December 31, %
(Dollars in thousands, except per share data) 2014 2013 Change 2014 2013 Change
Results of Operations:
Net interest income $ 33,227 $ 32,350 3% $ 129,548 $ 129,914 --%
Provision (credit) for loan and lease losses 853 586 46 (163) (1,084) (85)
Non-interest income 11,338 11,654 (3) 46,871 47,511 (1)
Non-interest expenses 30,478 29,300 4 120,800 111,524 8
Income before income taxes 13,234 14,118 (6) 55,782 66,985 (17)
Net income 9,148 9,613 (5) 38,200 44,422 (14)
Pre-tax pre-provision income $ 14,242 $ 14,704 (3) $ 62,138 $ 65,901 (6)
Return on average assets 0.85% 0.93% 0.91% 1.11%
Return on average common equity 6.93% 7.71% 7.43% 9.11%
Net interest margin 3.44% 3.53% 3.45% 3.63%
Efficiency ratio - GAAP basis (1) 68.39% 66.59% 68.47% 62.86%
Efficiency ratio - Non-GAAP basis (1) 65.89% 63.62% 62.48% 60.06%
Per share data:
Basic net income $ 0.37 $ 0.38 (3)% $ 1.53 $ 1.78 (14)%
Diluted net income $ 0.36 $ 0.38 (5) $ 1.52 $ 1.77 (14)
Average fully diluted shares 25,151,831 25,108,109 -- 25,139,370 25,075,014 --
Dividends declared per share $ 0.20 $ 0.18 11 $ 0.76 $ 0.64 19
Book value per share 20.83 19.98 4 20.83 19.98 4
Tangible book value per share 17.48 16.68 5 17.48 16.68 5
Outstanding shares 25,044,877 24,990,021 -- 25,044,877 24,990,021 --
Financial Condition at period-end:
Investment securities $ 933,619 $ 1,016,609 (8)% $ 933,619 $ 1,016,609 (8)%
Loans and leases 3,127,392 2,784,266 12 3,127,392 2,784,266 12
Interest-earning assets 4,114,936 3,836,912 7 4,114,936 3,836,912 7
Assets 4,397,132 4,106,100 7 4,397,132 4,106,100 7
Deposits 3,066,509 2,877,225 7 3,066,509 2,877,225 7
Interest-bearing liabilities 2,837,204 2,744,869 3 2,837,204 2,744,869 3
Stockholders' equity 521,751 499,363 4 521,751 499,363 4
Capital ratios:
Tier 1 leverage (4) 11.26% 11.32% 11.26% 11.32%
Tier 1 capital to risk-weighted assets (4) 13.95% 14.42% 13.95% 14.42%
Total regulatory capital to risk-weighted assets (4) 15.06% 15.65% 15.06% 15.65%
Tangible common equity to tangible assets (2) 10.15% 10.37% 10.15% 10.37%
Average equity to average assets 12.21% 12.12% 12.26% 12.17%
Credit quality ratios:
Allowance for loan and lease losses to loans and leases 1.21% 1.39% 1.21% 1.39%
Non-performing loans to total loans 1.09% 1.44% 1.09% 1.44%
Non-performing assets to total assets 0.85% 1.01% 0.85% 1.01%
Allowance for loan and lease losses to non-performing loans 111.09% 96.83% 111.09% 96.83%
Annualized net charge-offs to average loans and leases (3) 0.08% 0.18% 0.03% 0.12%
(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.
(4) Estimated ratio at December 31, 2014
Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
Three Months Ended Twelve Months Ended
December 31, December 31,
(Dollars in thousands) 2014 2013 2014 2013
Pre-tax pre-provision income:
Net income $ 9,148 $ 9,613 $ 38,200 $ 44,422
Plus non-GAAP adjustment:
Litigation expenses 155 -- 6,519 --
Income taxes 4,086 4,505 17,582 22,563
Provision (credit) for loan and lease losses 853 586 (163) (1,084)
Pre-tax pre-provision income $ 14,242 $ 14,704 $ 62,138 $ 65,901
Efficiency ratio - GAAP basis:
Non-interest expenses $ 30,478 $ 29,300 $ 120,800 $ 111,524
Net interest income plus non-interest income $ 44,565 $ 44,004 $ 176,419 $ 177,425
Efficiency ratio - GAAP basis 68.39% 66.59% 68.47% 62.86%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses $ 30,478 $ 29,300 $ 120,800 $ 111,524
Less non-GAAP adjustment:
Amortization of intangible assets 112 461 821 1,845
Litigation expenses 155 -- 6,519 --
Non-interest expenses -- as adjusted $ 30,211 $ 28,839 $ 113,460 $ 109,679
Net interest income plus non-interest income $ 44,565 $ 44,004 $ 176,419 $ 177,425
Plus non-GAAP adjustment:
Tax-equivalent income 1,283 1,325 5,192 5,292
Less non-GAAP adjustments:
Securities gains (losses) (3) (3) 5 115
Net interest income plus non-interest income - as adjusted $ 45,851 $ 45,332 $ 181,606 $ 182,602
Efficiency ratio - Non-GAAP basis 65.89% 63.62% 62.48% 60.06%
Tangible common equity ratio:
Total stockholders' equity $ 521,751 $ 499,363 $ 521,751 $ 499,363
Accumulated other comprehensive income 823 2,970 823 2,970
Goodwill (84,171) (84,171) (84,171) (84,171)
Other intangible assets, net (510) (1,330) (510) (1,330)
Tangible common equity $ 437,893 $ 416,832 $ 437,893 $ 416,832
Total assets $ 4,397,132 $ 4,106,100 $ 4,397,132 $ 4,106,100
Goodwill (84,171) (84,171) (84,171) (84,171)
Other intangible assets, net (510) (1,330) (510) (1,330)
Tangible assets $ 4,312,451 $ 4,020,599 $ 4,312,451 $ 4,020,599
Tangible common equity ratio 10.15% 10.37% 10.15% 10.37%
Outstanding common shares 25,044,877 24,990,021 25,044,877 24,990,021
Tangible book value per common share $ 17.48 $ 16.68 $ 17.48 $ 16.68
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
December 31, December 31,
(Dollars in thousands) 2014 2013
Assets
Cash and due from banks $ 52,804 $ 46,755
Federal funds sold 473 475
Interest-bearing deposits with banks 42,940 27,197
Cash and cash equivalents 96,217 74,427
Residential mortgage loans held for sale (at fair value) 10,512 8,365
Investments available-for-sale (at fair value) 672,209 751,284
Investments held-to-maturity -- fair value of $222,260 and $216,007 at December 31, 2014 and 2013, respectively 219,973 224,638
Other equity securities 41,437 40,687
Total loans and leases 3,127,392 2,784,266
Less: allowance for loan and lease losses (37,802) (38,766)
Net loans and leases 3,089,590 2,745,500
Premises and equipment, net 49,402 45,916
Other real estate owned 3,195 1,338
Accrued interest receivable 12,634 12,532
Goodwill 84,171 84,171
Other intangible assets, net 510 1,330
Other assets 117,282 115,912
Total assets $ 4,397,132 $ 4,106,100
Liabilities
Noninterest-bearing deposits $ 993,737 $ 836,198
Interest-bearing deposits 2,072,772 2,041,027
Total deposits 3,066,509 2,877,225
Securities sold under retail repurchase agreements and federal funds purchased 74,432 53,842
Advances from FHLB 655,000 615,000
Subordinated debentures 35,000 35,000
Accrued interest payable and other liabilities 44,440 25,670
Total liabilities 3,875,381 3,606,737
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 25,044,877 and 24,990,021 at December 31, 2014 and 2013, respectively 25,045 24,990
Additional paid in capital 194,647 193,445
Retained earnings 302,882 283,898
Accumulated other comprehensive loss (823) (2,970)
Total stockholders' equity 521,751 499,363
Total liabilities and stockholders' equity $ 4,397,132 $ 4,106,100
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three Months Ended Twelve Months Ended
December 31, December 31,
(Dollars in thousands, except per share data) 2014 2013 2014 2013
Interest Income:
Interest and fees on loans and leases $ 31,899 $ 30,443 $ 123,369 $ 122,380
Interest on loans held for sale 101 91 312 929
Interest on deposits with banks 19 19 85 84
Interest and dividends on investment securities:
Taxable 3,673 4,224 15,377 16,635
Exempt from federal income taxes 2,282 2,331 9,222 9,318
Interest on fed funds sold 1 1 1 1
Total interest income 37,975 37,109 148,366 149,347
Interest Expense:
Interest on deposits 1,206 1,230 4,791 5,439
Interest on retail repurchase agreements and federal funds purchased 47 37 164 163
Interest on advances from FHLB 3,273 3,269 12,982 12,936
Interest on subordinated debt 222 223 881 895
Total interest expense 4,748 4,759 18,818 19,433
Net interest income 33,227 32,350 129,548 129,914
Provision (credit) for loan and lease losses 853 586 (163) (1,084)
Net interest income after provision (credit) for loan and lease losses 32,374 31,764 129,711 130,998
Non-interest Income:
Investment securities gains (losses) (3) (3) 5 115
Service charges on deposit accounts 2,135 2,143 8,422 8,533
Mortgage banking activities 512 356 1,994 3,094
Wealth management income 4,905 4,508 19,086 17,585
Insurance agency commissions 985 1,243 4,996 4,821
Income from bank owned life insurance 627 635 2,444 2,499
Bank card fees 1,144 1,052 4,439 4,165
Other income 1,033 1,720 5,485 6,699
Total non-interest income 11,338 11,654 46,871 47,511
Non-interest Expenses:
Salaries and employee benefits 16,793 16,707 66,387 65,598
Occupancy expense of premises 3,914 3,844 13,692 13,171
Equipment expenses 1,333 1,264 5,188 4,940
Marketing 838 897 2,926 2,880
Outside data services 1,284 1,162 4,947 4,580
FDIC insurance 615 445 2,302 2,300
Amortization of intangible assets 112 461 821 1,845
Litigation expenses 155 -- 6,519 --
Other expenses 5,434 4,520 18,018 16,210
Total non-interest expenses 30,478 29,300 120,800 111,524
Income before income taxes 13,234 14,118 55,782 66,985
Income tax expense 4,086 4,505 17,582 22,563
Net income $ 9,148 $ 9,613 $ 38,200 $ 44,422
Net Income Per Share Amounts:
Basic net income per share $ 0.37 $ 0.38 $ 1.53 $ 1.78
Diluted net income per share $ 0.36 $ 0.38 $ 1.52 $ 1.77
Dividends declared per share $ 0.20 $ 0.18 $ 0.76 $ 0.64
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2014 2013
(Dollars in thousands, except per share data) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Profitability for the Quarter:
Tax-equivalent interest income $ 39,258 $ 38,446 $ 38,322 $ 37,532 $ 38,434 $ 41,524 $ 37,091 $ 37,590
Interest expense 4,748 4,730 4,682 4,658 4,759 4,874 4,847 4,953
Tax-equivalent net interest income 34,510 33,716 33,640 32,874 33,675 36,650 32,244 32,637
Tax-equivalent adjustment 1,283 1,296 1,331 1,282 1,325 1,344 1,312 1,311
Provision for loan and lease losses 853 (192) 158 (982) 586 1,128 (2,876) 78
Non-interest income 11,338 12,590 11,694 11,249 11,654 11,223 12,215 12,419
Non-interest expenses 30,478 28,632 34,141 27,549 29,300 26,893 27,508 27,823
Income before income taxes 13,234 16,570 9,704 16,274 14,118 18,508 18,515 15,844
Income tax expense 4,086 5,428 2,722 5,346 4,505 6,419 6,353 5,286
Net income $ 9,148 $ 11,142 $ 6,982 $ 10,928 $ 9,613 $ 12,089 $ 12,162 $ 10,558
Financial Performance:
Pre-tax pre-provision income $ 14,242 $ 16,614 $ 15,990 $ 15,292 $ 14,704 $ 19,636 $ 15,639 $ 15,922
Return on average assets 0.85% 1.05% 0.67% 1.08% 0.93% 1.19% 1.23% 1.08%
Return on average common equity 6.93% 8.54% 5.47% 8.80% 7.71% 9.91% 9.98% 8.85%
Net interest margin 3.44% 3.42% 3.48% 3.47% 3.53% 3.88% 3.51% 3.59%
Efficiency ratio - GAAP basis (1) 68.39% 63.61% 77.59% 64.31% 66.59% 57.80% 63.75% 63.60%
Efficiency ratio - Non-GAAP basis (1) 65.89% 61.09% 61.30% 61.60% 63.62% 55.21% 60.92% 60.80%
Per Share Data:
Basic net income per share $ 0.37 $ 0.44 $ 0.28 $ 0.44 $ 0.38 $ 0.48 $ 0.49 $ 0.42
Diluted net income per share $ 0.36 $ 0.44 $ 0.28 $ 0.43 $ 0.38 $ 0.48 $ 0.49 $ 0.42
Average fully diluted shares 25,151,831 25,151,582 25,127,036 25,124,206 25,108,109 25,070,506 25,009,092 25,002,612
Dividends declared per common share $ 0.20 $ 0.20 $ 0.18 $ 0.18 $ 0.18 $ 0.16 $ 0.16 $ 0.14
Non-interest Income:
Securities gains (losses) $ (3) $ 8 $ -- $ -- $ (3) $ -- $ 62 $ 56
Service charges on deposit accounts 2,135 2,226 2,089 1,972 2,143 2,171 2,150 2,069
Mortgage banking activities 512 596 570 316 356 (26) 1,237 1,527
Wealth management income 4,905 4,974 4,741 4,466 4,508 4,503 4,532 4,042
Insurance agency commissions 985 1,410 961 1,640 1,243 1,193 1,036 1,349
Income from bank owned life insurance 627 611 608 598 635 629 623 612
Bank card fees 1,144 1,148 1,169 978 1,052 1,077 1,079 957
Other income 1,033 1,617 1,556 1,279 1,720 1,676 1,496 1,807
Total Non-interest Income $ 11,338 $ 12,590 $ 11,694 $ 11,249 $ 11,654 $ 11,223 $ 12,215 $ 12,419
Non-interest Expense:
Salaries and employee benefits $ 16,793 $ 16,765 $ 16,474 $ 16,355 $ 16,707 $ 16,382 $ 16,163 $ 16,346
Occupancy expense of premises 3,914 3,032 3,274 3,472 3,844 3,149 2,996 3,182
Equipment expenses 1,333 1,337 1,262 1,256 1,264 1,200 1,227 1,249
Marketing 838 744 802 542 897 713 755 515
Outside data services 1,284 1,231 1,216 1,216 1,162 1,152 1,114 1,152
FDIC insurance 615 594 573 520 445 678 581 596
Amortization of intangible assets 112 115 224 370 461 462 461 461
Litigation expenses 155 236 6,128 -- -- -- -- --
Professional fees 1,246 1,092 1,292 914 1,386 511 1,332 1,250
Other real estate owned expenses 2 40 9 -- 91 (150) (281) 37
Other expenses 4,186 3,446 2,887 2,904 3,043 2,796 3,160 3,035
Total Non-interest Expense $ 30,478 $ 28,632 $ 34,141 $ 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) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Balance Sheets at Quarter End:
Residential mortgage loans $ 717,886 $ 698,925 $ 668,536 $ 640,939 $ 618,381 $ 595,180 $ 565,282 $ 538,346
Residential construction loans 136,741 141,883 149,321 143,109 129,177 118,316 116,736 122,698
Commercial ADC loans 205,124 194,666 178,972 163,343 160,696 158,739 163,309 150,599
Commercial investor real estate loans 640,193 575,984 577,813 573,634 552,178 518,029 497,365 487,802
Commercial owner occupied real estate loans 611,061 584,964 581,795 582,472 592,823 569,350 563,258 565,820
Commercial business loans 390,781 368,611 357,472 348,180 356,651 332,670 334,979 344,489
Leasing 54 156 260 439 703 962 1,415 1,974
Consumer loans 425,552 410,723 396,775 380,697 373,657 368,764 363,114 353,341
Total loans and leases 3,127,392 2,975,912 2,910,944 2,832,813 2,784,266 2,662,010 2,605,458 2,565,069
Allowance for loan and lease losses (37,802) (37,574) (37,959) (38,026) (38,766) (39,422) (39,015) (41,246)
Investment securities 933,619 950,869 980,530 997,584 1,016,609 1,077,951 1,102,209 1,008,693
Interest-earning assets 4,114,936 3,976,731 3,945,643 3,891,223 3,836,912 3,771,825 3,802,682 3,660,809
Total assets 4,397,132 4,248,731 4,234,342 4,168,998 4,106,100 4,052,969 4,072,617 3,932,026
Noninterest-bearing demand deposits 993,737 986,549 984,700 882,169 836,198 890,319 877,891 832,679
Total deposits 3,066,509 3,028,788 3,038,670 2,959,195 2,877,225 2,916,466 2,926,650 2,919,208
Customer repurchase agreements 74,432 71,384 72,917 67,038 53,842 53,177 54,731 50,302
Total interest-bearing liabilities 2,837,204 2,706,623 2,698,887 2,748,064 2,744,869 2,634,324 2,678,490 2,576,831
Total stockholders' equity 521,751 522,404 517,269 510,386 499,363 493,882 485,643 488,947
Quarterly Average Balance Sheets:
Residential mortgage loans $ 717,671 $ 689,531 $ 659,172 $ 633,160 $ 614,698 $ 593,335 $ 579,899 $ 575,889
Residential construction loans 141,890 147,750 145,968 134,261 125,744 120,676 119,197 120,283
Commercial ADC loans 201,020 180,293 168,063 162,544 156,558 158,557 160,483 148,749
Commercial investor real estate loans 607,050 577,851 575,283 557,168 522,085 499,896 485,630 474,062
Commercial owner occupied real estate loans 594,634 585,014 579,953 584,155 580,808 566,366 561,249 567,723
Commercial business loans 367,872 367,203 348,597 349,734 357,455 331,374 337,843 347,569
Leasing 114 206 352 567 817 1,152 1,644 2,510
Consumer loans 417,910 404,062 390,076 377,822 373,017 366,562 360,842 357,366
Total loans and leases 3,048,161 2,951,910 2,867,464 2,799,411 2,731,182 2,637,918 2,606,787 2,594,151
Investment securities 942,782 965,206 991,135 1,012,701 1,055,432 1,097,643 1,047,726 1,051,769
Interest-earning assets 4,022,051 3,954,858 3,893,843 3,845,513 3,817,033 3,770,855 3,692,215 3,677,444
Total assets 4,292,237 4,220,084 4,157,559 4,105,225 4,082,839 4,039,069 3,959,907 3,946,578
Noninterest-bearing demand deposits 1,000,285 956,830 899,287 825,968 872,532 862,046 838,502 797,926
Total deposits 3,063,591 3,036,686 2,965,329 2,876,641 2,901,814 2,903,926 2,892,704 2,860,451
Customer repurchase agreements 78,746 73,046 68,880 62,864 57,682 56,766 55,941 52,622
Total interest-bearing liabilities 2,731,791 2,711,206 2,716,537 2,749,459 2,679,812 2,659,406 2,599,704 2,631,198
Total stockholders' equity 524,063 517,534 511,738 503,851 494,779 483,811 489,014 483,664
Financial Measures:
Average equity to average assets 12.21% 12.26% 12.31% 12.27% 12.12% 11.98% 12.35% 12.26%
Investment securities to earning assets 22.69% 23.91% 24.85% 25.64% 26.50% 28.58% 28.99% 27.55%
Loans to earning assets 76.00% 74.83% 73.78% 72.80% 72.57% 70.58% 68.52% 70.07%
Loans to assets 71.12% 70.04% 68.75% 67.95% 67.81% 65.68% 63.98% 65.24%
Loans to deposits 101.99% 98.25% 95.80% 95.73% 96.77% 91.28% 89.03% 87.87%
Capital Measures:
Tier 1 leverage (1) 11.26% 11.26% 11.37% 11.43% 11.32% 11.29% 11.28% 11.07%
Tier 1 capital to risk-weighted assets (1) 13.95% 13.95% 14.48% 14.64% 14.42% 14.45% 14.30% 14.23%
Total regulatory capital to risk-weighted assets (1) 15.06% 15.06% 15.66% 15.85% 15.65% 15.70% 15.55% 15.48%
Book value per share $ 20.83 $ 20.83 $ 20.63 $ 20.38 $ 19.98 $ 19.77 $ 19.45 $ 19.59
Outstanding shares 25,044,877 25,076,794 25,069,700 25,043,482 24,990,021 24,985,146 24,967,558 24,954,892
(1) Estimated ratio at December 31, 2014
Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2014 2013
(Dollars in thousands) December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31,
Non-Performing Assets:
Loans and leases 90 days past due:
Commercial business $ -- $ -- $ 1 $ -- $ -- $ -- $ 15 $ --
Commercial real estate:
Commercial AD&C -- -- -- -- -- -- -- --
Commercial investor real estate -- -- -- -- -- -- -- --
Commercial owner occupied real estate -- 649 -- -- -- -- -- --
Leasing -- -- -- -- -- -- -- --
Consumer -- 6 3 -- 1 10 -- 54
Residential real estate:
Residential mortgage -- -- -- -- -- -- -- --
Residential construction -- -- -- -- -- -- -- --
Total loans and leases 90 days past due -- 655 4 -- 1 10 15 54
Non-accrual loans and leases:
Commercial business 3,184 4,151 4,309 3,272 3,400 4,050 4,483 4,012
Commercial real estate:
Commercial AD&C 2,464 3,792 3,739 4,133 4,127 5,086 5,885 5,826
Commercial investor real estate 8,156 8,210 6,731 7,284 6,802 6,877 11,741 12,353
Commercial owner occupied real estate 8,941 10,742 10,868 7,150 5,936 4,202 5,413 5,346
Leasing -- -- -- -- -- -- -- --
Consumer 1,668 1,830 2,058 2,115 2,259 2,004 2,305 2,388
Residential real estate:
Residential mortgage 3,012 4,417 4,501 5,025 5,735 5,643 5,581 5,393
Residential construction 1,105 2,497 2,143 2,304 2,315 2,327 2,558 3,258
Total non-accrual loans and leases 28,530 35,639 34,349 31,283 30,574 30,189 37,966 38,576
Total restructured loans - accruing 5,497 7,382 7,364 7,411 9,459 8,054 8,213 10,839
Total non-performing loans and leases 34,027 43,676 41,717 38,694 40,034 38,253 46,194 49,469
Other assets and real estate owned (OREO) 3,195 1,762 1,967 1,619 1,338 1,662 4,831 5,250
Total non-performing assets $ 37,222 $ 45,438 $ 43,684 $ 40,313 $ 41,372 $ 39,915 $ 51,025 $ 54,719
For the quarter ended,
December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2014 2014 2014 2014 2013 2013 2013 2013
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period $ 35,639 $ 34,349 $ 31,283 $ 30,574 $ 30,189 $ 37,966 $ 38,576 $ 47,548
Non-accrual balances transferred to OREO (1,475) (300) (390) (281) (365) (723) (1,426) (92)
Non-accrual balances charged-off (1,033) (216) (357) (513) (922) (4,995) (668) (2,175)
Net payments or draws (4,139) (590) (1,580) (1,073) (971) (13,547) (3,560) (11,768)
Loans placed on non-accrual 779 2,396 5,393 2,576 3,546 11,488 5,044 5,493
Non-accrual loans brought current (1,241) -- -- -- (903) -- -- (430)
Balance at end of period $ 28,530 $ 35,639 $ 34,349 $ 31,283 $ 30,574 $ 30,189 $ 37,966 $ 38,576
Analysis of Allowance for Loan Losses:
Balance at beginning of period $ 37,574 $ 37,959 $ 38,026 $ 38,766 $ 39,422 $ 39,015 $ 41,246 $ 42,957
Provision (credit) for loan and lease losses 853 (192) 158 (982) 586 1,128 (2,876) 78
Less loans charged-off, net of recoveries:
Commercial business 50 (58) 28 (768) 384 1 (32) 1,744
Commercial real estate:
Commercial AD&C 529 -- -- -- 85 (616) (1,444) (1,020)
Commercial investor real estate (5) (2) (23) (5) 23 1,243 123 31
Commercial owner occupied real estate (6) -- 265 -- (82) (284) 100 81
Leasing -- -- -- -- -- (6) (4) --
Consumer 83 244 11 331 488 169 490 508
Residential real estate:
Residential mortgage (17) 43 (27) 203 347 216 22 447
Residential construction (9) (34) (29) (3) (3) (2) 100 (2)
Net charge-offs 625 193 225 (242) 1,242 721 (645) 1,789
Balance at end of period $ 37,802 $ 37,574 $ 37,959 $ 38,026 $ 38,766 $ 39,422 $ 39,015 $ 41,246
Asset Quality Ratios:
Non-performing loans to total loans 1.09% 1.47% 1.43% 1.37% 1.44% 1.44% 1.77% 1.93%
Non-performing assets to total assets 0.85% 1.07% 1.03% 0.97% 1.01% 0.98% 1.25% 1.39%
Allowance for loan losses to loans 1.21% 1.26% 1.30% 1.34% 1.39% 1.48% 1.50% 1.61%
Allowance for loan losses to non-performing loans 111.09% 86.03% 90.99% 98.27% 96.83% 103.06% 84.46% 83.38%
Annualized net charge-offs to average loans 0.08% 0.03% 0.03% (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 December 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) $ 717,671 $ 6,086 3.42% $ 614,698 $ 5,384 3.49%
Residential construction loans 141,890 1,328 3.71 125,744 1,189 3.75
Commercial ADC loans 201,020 2,364 4.67 156,558 2,057 5.21
Commercial investor real estate loans 607,050 7,320 4.78 522,085 6,974 5.30
Commercial owner occupied real estate loans 594,634 7,282 5.02 580,808 7,230 5.10
Commercial business loans 367,872 4,132 4.48 357,455 4,520 4.97
Leasing 114 1 6.56 817 14 6.81
Consumer loans 417,910 3,487 3.33 373,017 3,166 3.39
Total loans and leases (3) 3,048,161 32,000 4.21 2,731,182 30,534 4.47
Taxable securities 643,233 4,031 2.49 751,796 4,597 2.43
Tax-exempt securities (4) 299,549 3,207 4.25 303,636 3,283 4.29
Interest-bearing deposits with banks 30,635 19 0.25 29,944 19 0.25
Federal funds sold 473 1 0.22 475 1 0.22
Total interest-earning assets 4,022,051 39,258 3.91 3,817,033 38,434 4.03
Less: allowance for loan and lease losses (38,291) (39,775)
Cash and due from banks 48,729 45,549
Premises and equipment, net 47,552 46,545
Other assets 212,196 213,487
Total assets $ 4,292,237 $4,082,839
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 510,025 119 0.09% $ 443,959 93 0.08%
Regular savings deposits 261,564 34 0.05 239,382 45 0.08
Money market savings deposits 842,158 277 0.13 876,014 283 0.13
Time deposits 449,559 776 0.68 469,927 809 0.68
Total interest-bearing deposits 2,063,306 1,206 0.23 2,029,282 1,230 0.24
Other borrowings 78,746 47 0.23 61,780 37 0.24
Advances from FHLB 554,739 3,273 2.34 553,750 3,269 2.34
Subordinated debentures 35,000 222 2.54 35,000 223 2.55
Total interest-bearing liabilities 2,731,791 4,748 0.69 2,679,812 4,759 0.70
Noninterest-bearing demand deposits 1,000,285 872,532
Other liabilities 36,098 35,716
Stockholders' equity 524,063 494,779
Total liabilities and stockholders' equity $ 4,292,237 $4,082,839
Net interest income and spread $ 34,510 3.22% $ 33,675 3.33%
Less: tax-equivalent adjustment 1,283 1,325
Net interest income $ 33,227 $ 32,350
Interest income/earning assets 3.91% 4.03%
Interest expense/earning assets 0.47 0.50
Net interest margin 3.44% 3.53%
(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.
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Twelve Months Ended December 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) $ 675,155 $ 23,171 3.43% $ 591,068 $ 21,385 3.62%
Residential construction loans 142,503 5,316 3.73 121,488 4,331 3.57
Commercial ADC loans 178,092 8,814 4.95 156,115 9,596 6.15
Commercial investor real estate loans 579,471 28,201 4.87 495,562 27,901 5.63
Commercial owner occupied real estate loans 585,965 28,586 5.04 569,065 29,696 5.36
Commercial business loans 358,425 16,400 4.59 343,554 17,807 5.07
Leasing 308 17 5.64 1,525 102 6.70
Consumer loans 397,595 13,176 3.34 364,495 12,491 3.45
Total loans and leases (3) 2,917,514 123,681 4.27 2,642,872 123,309 4.69
Taxable securities 676,237 16,817 2.49 761,713 18,133 2.38
Tax-exempt securities (4) 301,493 12,974 4.30 301,534 13,112 4.35
Interest-bearing deposits with banks 33,902 85 0.25 33,261 84 0.25
Federal funds sold 474 1 0.22 475 1 0.22
Total interest-earning assets 3,929,620 153,558 3.93 3,739,855 154,639 4.15
Less: allowance for loan and lease losses (38,556) (41,606)
Cash and due from banks 46,224 45,836
Premises and equipment, net 46,275 47,244
Other assets 210,643 216,082
Total assets $4,194,206 $4,007,411
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 484,171 425 0.09% $ 438,183 373 0.09%
Regular savings deposits 259,066 165 0.06 238,818 204 0.09
Money market savings deposits 864,029 1,116 0.13 879,588 1,414 0.16
Time deposits 457,778 3,085 0.67 490,278 3,448 0.70
Total interest-bearing deposits 2,065,044 4,791 0.23 2,046,867 5,439 0.27
Other borrowings 70,933 164 0.23 60,249 163 0.27
Advances from FHLB 556,178 12,982 2.33 500,593 12,936 2.58
Subordinated debentures 35,000 881 2.52 35,000 895 2.56
Total interest-bearing liabilities 2,727,155 18,818 0.69 2,642,709 19,433 0.74
Noninterest-bearing demand deposits 921,169 843,008
Other liabilities 31,675 33,858
Stockholders' equity 514,207 487,836
Total liabilities and stockholders' equity $4,194,206 $4,007,411
Net interest income and spread $ 134,740 3.24% $ 135,206 3.41%
Less: tax-equivalent adjustment 5,192 5,292
Net interest income $ 129,548 $ 129,914
Interest income/earning assets 3.93% 4.15%
Interest expense/earning assets 0.48 0.52
Net interest margin 3.45% 3.63%
(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 $5.2 million and $5.3 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.