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Sandy Spring Bancorp Reports Record Net Income of $13.5 Million for the Third Quarter

OLNEY, Md., Oct. 20, 2016 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the third quarter of 2016 of $13.5 million ($0.56 per diluted share) compared to net income of $11.0 million ($0.45 per diluted share) for the third quarter of 2015 and net income of $10.6 million ($0.44 per diluted share) for the second quarter of 2016.

For the nine months ended September 30, 2016, net income was $34.9 million ($1.45 per diluted share) compared to net income of $32.6 million ($1.31 per diluted share) for the same period of the prior year.

“The record earnings for the current quarter were the direct result of strong core operating performance from multiple business lines. Balanced loan and deposit growth continue to be a fundamental strength and the margin increase reflects the redeployment of earning assets from the investment portfolio into higher yielding loans,” said Daniel J. Schrider, President and Chief Executive Officer.

Third Quarter Highlights:

  • Pre-tax, pre-provision income increased 16% compared with the third quarter of 2015 and 13% compared to the second quarter of 2016.

  • The net interest margin was 3.50% for the third quarter of 2016, compared to 3.43% for the third quarter of 2015 and 3.51% for the second quarter of 2016.

  • The Non-GAAP efficiency ratio was 56.33% for the current quarter as compared to 59.73% for the third quarter of 2015 and 59.12% for the second quarter of 2016.

  • Total loans increased 11% compared to the third quarter of 2015 and 3% compared to the second quarter of 2016. Commercial loans increased 13% and residential loans increased 9% over the prior year.

  • Total deposits grew 8% from the prior year and 1% from the prior quarter.

Review of Balance Sheet and Credit Quality

Total assets grew 4% to $4.8 billion at September 30, 2016 compared to $4.6 billion at September 30, 2015. This growth was driven by the 11% increase in the loan portfolio as total loans ended the period at $3.8 billion.

At September 30, 2016, combined noninterest-bearing and interest-bearing checking account balances, an important performance driver of multiple-product banking relationships with clients, increased 8% compared to balances at September 30, 2015. Total deposits and certain other short-term borrowings that comprise the funding sources derived from customers, increased 8% compared to September 30, 2015.

Tangible common equity totaled $446 million at September 30, 2016 compared to $437 million at September 30, 2015. The ratio of tangible common equity to tangible assets decreased to 9.43% at September 30, 2016 from 9.66% at September 30, 2015 due to the combined impact of the growth in assets and share repurchases over the preceding 12 months. Dividends per common share were $0.72 per share for the first nine months of 2016 compared to $0.66 per common share for the first nine months of 2015, a 9% increase. At September 30, 2016, the Company had a total risk-based capital ratio of 13.29%, a common equity tier 1 risk-based capital ratio of 11.41%, a tier 1 risk-based capital ratio of 12.17% and a tier 1 leverage ratio of 10.25%.

Non-performing loans totaled $32.0 million at September 30, 2016 compared to $36.9 million at September 30, 2015 and $31.4 million at June 30, 2016. The level of non-performing loans to total loans decreased to 0.85% at September 30, 2016 compared to 1.08% at September 30, 2015 as a result of the growth in the loan portfolio and a concurrent decrease in the level of non-performing loans.

Loan charge-offs, net of recoveries, totaled $0.2 million for the third quarter of 2016 compared to $0.8 million for the third quarter of 2015 and $1.3 million in charge-offs for the second quarter of 2016. The allowance for loan losses represented 1.16% of outstanding loans and 137% of non-performing loans at September 30, 2016 compared to 1.16% of outstanding loans and 107% of non-performing loans at September 30, 2015. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the third quarter of 2016 increased 7% compared to the third quarter of 2015. The net interest margin improved to 3.50% for the third quarter of 2016 compared to 3.43% for the third quarter of 2015. This improvement reflects the impact of loan growth over the preceding year combined with the positive benefits associated with the prepayment of FHLB advances and subordinated debentures, and the shift from lower yielding investments to the higher yielding loan portfolio in the first nine months of 2016.

The provision for loan losses was $0.8 million for the third quarter of 2016 compared to a charge of $1.7 million for the third quarter of 2015 and $3.0 million for the second quarter of 2016. The decrease in the current quarter’s charge versus the prior year’s quarter reflects lower net-charge offs during the quarter and the reduced level of non-performing assets.

Non-interest income increased to $12.6 million for the third quarter of 2016 compared to $12.4 million for the third quarter of 2015 due to higher mortgage banking income from increased loan sales volume that more than offset the decrease in income from wealth management due to the sale of a portion of the assets under management which occurred in the first quarter of 2016.

Non-interest expenses decreased 1% to $29.3 million for the third quarter of 2016 compared to $29.6 million in the third quarter of 2015 due to lower other non-interest expenses. The non-GAAP efficiency ratio was 56.33% for the third quarter of 2016 compared to 59.73% for the third quarter of 2015 as a result of the combined growth in the net interest income and the effects of expense control discipline.

Net interest income for the first nine months of 2016 increased 8% compared to the first nine months of 2015 due primarily to an increase in average loans, which was funded, in part, by a decrease in lower-yielding investment securities. As a result, the net interest margin was 3.49% for the first nine months of 2016 compared to 3.43% for the prior year period.

The provision for loan losses was a charge of $5.0 million for the first nine months of 2016 compared to a charge of $3.5 million for the first nine months of 2015 primarily reflecting the growth in the loan portfolio over the prior year period.

Non-interest income increased 3% to $38.7 million for the first nine months of 2016 compared to $37.7 million for the first nine months of 2015. This increase was driven by $1.9 million in gains on securities sales and a gain of $1.2 million due to the extinguishment of subordinated debentures during the first half of 2016. Excluding these transactions, non-interest income decreased 6% due to a decrease in income from wealth management resulting from the sale of a portion of the assets under management.

Non-interest expenses increased 5% to $92.5 million for the first nine months of 2016 compared to $88.4 million for the prior year period. This increase was due largely to prepayment penalties of $3.2 million for the early payoff of $75 million in high-rate FHLB advances. Excluding the prepayment penalties, non-interest expenses increased 1% over the prior year period. The current year-to-date period included increases in salaries and benefits and equipment expenses. The non-GAAP efficiency ratio was 59.05% for the first nine months of 2016 compared to 60.41% for the first nine months of 2015.

Conference Call

The Company’s management will host a conference call to discuss its third 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) November 3, 2016. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10093850.

About Sandy Spring Bancorp, Inc.

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank. Independent and community-oriented, Sandy Spring Bank offers a broad range of commercial banking, retail banking, mortgage and trust services throughout central Maryland, Northern Virginia, and the greater Washington, D.C. market. Through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services. With $4.8 billion in assets, the bank operates 44 community offices and six financial centers across the region. Visit www.sandyspringbank.com for more information.

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 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, 2015, 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 Nine Months Ended
September 30, % September 30, %
(Dollars in thousands, except per share data) 2016 2015 Change 2016 2015 Change
Results of Operations:
Net interest income $ 37,731 $35,116 7 % $ 110,585 $102,422 8 %
Provision for loan losses 781 1,706 (54) 4,974 3,521 41
Non-interest income 12,584 12,390 2 38,698 37,658 3
Non-interest expense 29,326 29,630 (1) 92,514 88,351 5
Income before income taxes 20,208 16,170 25 51,795 48,208 7
Net income 13,474 10,995 23 34,934 32,553 7
Pre-tax pre-provision income $ 20,989 $18,031 16 $ 56,769 $52,246 9
Return on average assets 1.13 % 0.96 % 0.99 % 0.98 %
Return on average common equity 10.11 % 8.41 % 8.88 % 8.39 %
Net interest margin 3.50 % 3.43 % 3.49 % 3.43 %
Efficiency ratio - GAAP basis (1) 58.28 % 62.37 % 61.97 % 63.07 %
Efficiency ratio - Non-GAAP basis (1) 56.33 % 59.73 % 59.05 % 60.41 %
Per share data:
Basic net income $ 0.56 $0.45 24 % $ 1.45 $1.32 10 %
Diluted net income $ 0.56 $0.45 24 $ 1.45 $1.31 11
Average fully diluted shares 24,122,923 24,602,817 (2) 24,151,622 24,779,010 (3)
Dividends declared per share $ 0.24 $0.22 9 $ 0.72 $0.66 9
Book value per share 22.47 21.44 5 22.47 21.44 5
Tangible book value per share 18.66 17.91 4 18.66 17.91 4
Outstanding shares 23,886,651 24,424,944 (2) 23,886,651 24,424,944 (2)
Financial Condition at period-end:
Investment securities $ 691,471 $862,409 (20)% $ 691,471 $862,409 (20)%
Loans 3,780,507 3,412,439 11 3,780,507 3,412,439 11
Interest-earning assets 4,537,331 4,339,375 5 4,537,331 4,339,375 5
Assets 4,810,611 4,611,034 4 4,810,611 4,611,034 4
Deposits 3,537,157 3,275,668 8 3,537,157 3,275,668 8
Interest-bearing liabilities 3,087,135 2,973,747 4 3,087,135 2,973,747 4
Stockholders' equity 536,655 523,594 2 536,655 523,594 2
Capital ratios:
Tier 1 leverage (4) 10.25 % 10.65 % 10.25 % 10.65 %
Tier 1 capital to risk-weighted assets (4) 12.17 % 13.17 % 12.17 % 13.17 %
Total regulatory capital to risk-weighted assets (4) 13.29 % 14.27 % 13.29 % 14.27 %
Common equity tier 1 capital to risk-weighted assets (4) 11.41 % 12.20 % 11.41 % 12.20 %
Tangible common equity to tangible assets (2) 9.43 % 9.66 % 9.43 % 9.66 %
Average equity to average assets 11.17 % 11.43 % 11.18 % 11.66 %
Credit quality ratios:
Allowance for loan losses to loans 1.16 % 1.16 % 1.16 % 1.16 %
Non-performing loans to total loans 0.85 % 1.08 % 0.85 % 1.08 %
Non-performing assets to total assets 0.69 % 0.86 % 0.69 % 0.86 %
Allowance for loan losses to non-performing loans 137.41 % 107.44 % 137.41 % 107.44 %
Annualized net charge-offs to average loans (3) 0.02 % 0.09 % 0.07 % 0.07 %
(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 September 30, 2016

Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2016 2015 2016 2015
Pre-tax pre-provision income:
Net income $ 13,474 $10,995 $ 34,934 $32,553
Plus non-GAAP adjustment:
Litigation expenses - 155 - 517
Income taxes 6,734 5,175 16,861 15,655
Provision for loan losses 781 1,706 4,974 3,521
Pre-tax pre-provision income $ 20,989 $18,031 $ 56,769 $52,246
Efficiency ratio - GAAP basis:
Non-interest expenses $ 29,326 $29,630 $ 92,514 $88,351
Net interest income plus non-interest income $ 50,315 $47,506 $ 149,283 $140,080
Efficiency ratio - GAAP basis 58.28% 62.37% 61.97% 63.07%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses $ 29,326 $29,630 $ 92,514 $88,351
Less non-GAAP adjustment:
Amortization of intangible assets 34 107 94 320
Loss on FHLB Redemption - - 3,167 -
Litigation expenses - 155 - 517
Non-interest expenses - as adjusted $ 29,292 $29,368 $ 89,253 $87,514
Net interest income plus non-interest income $ 50,315 $47,506 $ 149,283 $140,080
Plus non-GAAP adjustment:
Tax-equivalent income 1,688 1,663 4,993 4,816
Less non-GAAP adjustments:
Securities gains - 1 1,919 20
Gain on redemption of subordinated debentures - - 1,200 -
Net interest income plus non-interest income - as adjusted $ 52,003 $49,168 $ 151,157 $144,876
Efficiency ratio - Non-GAAP basis 56.33% 59.73% 59.05% 60.41%
Tangible common equity ratio:
Total stockholders' equity $ 536,655 $523,594 $ 536,655 $523,594
Accumulated other comprehensive income (4,465) (1,801) (4,465) (1,801)
Goodwill (85,768) (84,171) (85,768) (84,171)
Other intangible assets, net (716) (190) (716) (190)
Tangible common equity $ 445,706 $437,432 $ 445,706 $437,432
Total assets $ 4,810,611 $4,611,034 $ 4,810,611 $4,611,034
Goodwill (85,768) (84,171) (85,768) (84,171)
Other intangible assets, net (716) (190) (716) (190)
Tangible assets $ 4,724,127 $4,526,673 $ 4,724,127 $4,526,673
Tangible common equity ratio 9.43% 9.66% 9.43% 9.66%
Outstanding common shares 23,886,651 24,424,944 23,886,651 24,424,944
Tangible book value per common share $ 18.66 $17.91 $ 18.66 $17.91

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
September 30, December 31, September 30,
(Dollars in thousands) 2016 2015 2015
Assets
Cash and due from banks $ 48,666 $46,956 $42,322
Federal funds sold 1,106 472 472
Interest-bearing deposits with banks 48,425 25,454 53,637
Cash and cash equivalents 98,197 72,882 96,431
Residential mortgage loans held for sale (at fair value) 15,822 15,457 10,418
Investments available-for-sale (at fair value) 655,642 592,049 607,619
Investments held-to-maturity -- fair value of $211,704 and $220,223 at December 31, 2015
and September 30, 2015, respectively - 208,265 216,642
Other equity securities 35,829 41,336 38,148
Total loans 3,780,507 3,495,370 3,412,439
Less: allowance for loan losses (43,942) (40,895) (39,661)
Net loans 3,736,565 3,454,475 3,372,778
Premises and equipment, net 53,356 53,214 52,573
Other real estate owned 1,274 2,742 2,619
Accrued interest receivable 13,123 13,443 13,102
Goodwill 85,768 84,171 84,171
Other intangible assets, net 716 138 190
Other assets 114,319 117,208 116,343
Total assets $ 4,810,611 $4,655,380 $4,611,034
Liabilities
Noninterest-bearing deposits $ 1,154,227 $1,001,841 $1,068,299
Interest-bearing deposits 2,382,930 2,261,889 2,207,369
Total deposits 3,537,157 3,263,730 3,275,668
Securities sold under retail repurchase agreements and federal funds purchased 124,205 109,145 121,378
Advances from FHLB 550,000 685,000 610,000
Subordinated debentures 30,000 35,000 35,000
Accrued interest payable and other liabilities 32,594 38,078 45,394
Total liabilities 4,273,956 4,130,953 4,087,440
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,886,651,
24,295,971 and 24,424,944 at September 30, 2016, December 31, 2015 and September 30, 2015, respectively 23,887 24,296 24,425
Additional paid in capital 164,937 175,588 178,429
Retained earnings 343,366 325,840 318,939
Accumulated other comprehensive income (loss) 4,465 (1,297) 1,801
Total stockholders' equity 536,655 524,427 523,594
Total liabilities and stockholders' equity $ 4,810,611 $4,655,380 $4,611,034

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands, except per share data) 2016 2015 2016 2015
Interest Income:
Interest and fees on loans $ 38,224 $34,484 $ 111,358 $99,654
Interest on loans held for sale 96 214 294 422
Interest on deposits with banks 49 25 156 69
Interest and dividends on investment securities:
Taxable 2,623 3,597 8,749 11,024
Exempt from federal income taxes 1,864 1,996 5,753 6,068
Interest on federal funds sold 1 1 3 1
Total interest income 42,857 40,317 126,313 117,238
Interest Expense:
Interest on deposits 2,128 1,632 6,006 4,193
Interest on retail repurchase agreements and federal funds purchased 74 69 212 179
Interest on advances from FHLB 2,699 3,272 8,812 9,774
Interest on subordinated debt 225 228 698 670
Total interest expense 5,126 5,201 15,728 14,816
Net interest income 37,731 35,116 110,585 102,422
Provision for loan losses 781 1,706 4,974 3,521
Net interest income after provision for loan losses 36,950 33,410 105,611 98,901
Non-interest Income:
Investment securities gains - 1 1,919 20
Service charges on deposit accounts 2,035 1,936 5,894 5,657
Mortgage banking activities 1,129 566 2,770 2,566
Wealth management income 4,347 4,963 13,200 15,040
Insurance agency commissions 1,786 1,648 4,180 4,147
Income from bank owned life insurance 616 618 1,846 1,937
Bank card fees 1,189 1,198 3,498 3,475
Other income 1,482 1,460 5,391 4,816
Total non-interest income 12,584 12,390 38,698 37,658
Non-interest Expenses:
Salaries and employee benefits 17,848 17,733 53,299 52,566
Occupancy expense of premises 3,130 3,086 9,765 9,748
Equipment expenses 1,745 1,600 5,102 4,463
Marketing 628 688 1,971 2,161
Outside data services 1,349 1,329 4,067 3,692
FDIC insurance 726 565 2,012 1,850
Amortization of intangible assets 34 107 94 320
Litigation expenses - 155 - 517
Other expenses 3,866 4,367 16,204 13,034
Total non-interest expenses 29,326 29,630 92,514 88,351
Income before income taxes 20,208 16,170 51,795 48,208
Income tax expense 6,734 5,175 16,861 15,655
Net income $ 13,474 $10,995 $ 34,934 $32,553
Net Income Per Share Amounts:
Basic net income per share $ 0.56 $0.45 $ 1.45 $1.32
Diluted net income per share $ 0.56 $0.45 $ 1.45 $1.31
Dividends declared per share $ 0.24 $0.22 $ 0.72 $0.66

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2016 2015
(Dollars in thousands, except per share data) Q3Q2Q1 Q4Q3Q2Q1
Profitability for the Quarter:
Tax-equivalent interest income $ 44,545 $43,443 $43,317 $42,736 $41,980 $40,438 $39,343
Interest expense 5,126 5,071 5,531 5,297 5,201 4,916 4,699
Tax-equivalent net interest income 39,419 38,372 37,786 37,439 36,779 35,522 34,644
Tax-equivalent adjustment 1,688 1,640 1,664 1,662 1,663 1,589 1,271
Provision for loan losses 781 2,957 1,236 1,850 1,706 1,218 597
Non-interest income 12,584 12,751 13,363 12,243 12,390 12,109 13,159
Non-interest expense 29,326 30,871 32,317 26,996 29,630 29,477 29,244
Income before income taxes 20,208 15,655 15,932 19,174 16,170 15,347 16,691
Income tax expense 6,734 5,008 5,119 6,372 5,175 5,014 5,466
Net income $ 13,474 $10,647 $10,813 $12,802 $10,995 $10,333 $11,225
Financial Performance:
Pre-tax pre-provision income $ 20,989 $18,612 $17,168 $16,638 $18,031 $16,727 $17,488
Return on average assets 1.13% 0.92% 0.93% 1.11% 0.96% 0.93% 1.04%
Return on average common equity 10.11% 8.21% 8.29% 9.73% 8.41% 8.02% 8.73%
Net interest margin 3.50% 3.51% 3.44% 3.45% 3.43% 3.42% 3.44%
Efficiency ratio - GAAP basis (1) 58.28% 62.39% 65.31% 56.22% 62.37% 64.02% 62.85%
Efficiency ratio - Non-GAAP basis (1) 56.33% 59.12% 61.84% 63.08% 59.73% 61.35% 60.53%
Per Share Data:
Basic net income per share $ 0.56 $0.45 $0.45 $0.53 $0.45 $0.42 $0.45
Diluted net income per share $ 0.56 $0.44 $0.45 $0.52 $0.45 $0.42 $0.45
Average fully diluted shares 24,122,923 24,108,668 24,222,940 24,455,847 24,602,817 24,689,762 25,048,576
Dividends declared per common share $ 0.24 $0.24 $0.24 $0.24 $0.22 $0.22 $0.22
Non-interest Income:
Securities gains $ - $150 $1,769 $16 $1 $19 $-
Service charges on deposit accounts 2,035 1,956 1,903 1,950 1,936 1,839 1,882
Mortgage banking activities 1,129 1,106 535 548 566 822 1,178
Wealth management income 4,347 4,448 4,405 4,891 4,963 5,161 4,916
Insurance agency commissions 1,786 949 1,445 1,029 1,648 881 1,618
Income from bank owned life insurance 616 615 615 634 618 606 713
Bank card fees 1,189 1,220 1,089 1,177 1,198 1,220 1,057
Other income 1,482 2,307 1,602 1,998 1,460 1,561 1,795
Total Non-interest Income $ 12,584 $12,751 $13,363 $12,243 $12,390 $12,109 $13,159
Non-interest Expense:
Salaries and employee benefits $ 17,848 $17,221 $18,230 $18,437 $17,733 $17,534 $17,299
Occupancy expense of premises 3,130 3,162 3,473 3,061 3,086 3,173 3,489
Equipment expenses 1,745 1,693 1,664 1,608 1,600 1,490 1,373
Marketing 628 662 681 735 688 942 531
Outside data services 1,349 1,355 1,363 1,331 1,329 1,102 1,261
FDIC insurance 726 649 637 641 565 654 631
Amortization of intangible assets 34 28 32 52 107 106 107
Litigation expenses - - - (4,386) 155 162 200
Professional fees 987 1,447 1,138 1,322 1,089 1,199 1,209
Other real estate owned expenses 5 (5) 17 14 48 4 10
Other expenses 2,874 4,659 5,082 4,181 3,230 3,111 3,134
Total Non-interest Expense $ 29,326 $30,871 $32,317 $26,996 $29,630 $29,477 $29,244
(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
2016 2015
(Dollars in thousands) Q3Q2Q1 Q4Q3Q2Q1
Balance Sheets at Quarter End:
Residential mortgage loans $ 854,055 $820,618 $804,105 $796,358 $773,889 $744,195 $728,858
Residential construction loans 144,998 142,710 138,221 129,281 139,492 137,134 130,321
Commercial AD&C loans 302,522 285,585 261,204 255,980 239,160 223,103 203,731
Commercial investor real estate loans 847,946 824,252 783,161 719,084 710,694 694,179 668,931
Commercial owner occupied real estate loans 736,744 700,599 675,560 678,027 680,601 643,973 618,846
Commercial business loans 444,129 451,711 451,239 465,765 423,855 409,795 385,452
Leasing - - - - 19 21 36
Consumer loans 450,113 447,149 447,198 450,875 444,729 436,465 428,531
Total loans 3,780,507 3,672,624 3,560,688 3,495,370 3,412,439 3,288,865 3,164,706
Allowance for loan losses (43,942) (43,384) (41,766) (40,895) (39,661) (38,713) (37,475)
Loans held for sale 15,822 13,490 27,806 15,457 10,418 19,445 13,899
Investment securities 691,471 734,828 742,401 841,650 862,409 878,284 912,565
Interest-earning assets 4,537,331 4,461,180 4,447,063 4,378,403 4,339,375 4,222,667 4,125,549
Total assets 4,810,611 4,739,449 4,716,608 4,655,380 4,611,034 4,507,367 4,401,380
Noninterest-bearing demand deposits 1,154,227 1,176,135 1,084,746 1,001,841 1,068,299 1,092,413 1,017,566
Total deposits 3,537,157 3,510,141 3,412,308 3,263,730 3,275,668 3,247,346 3,109,892
Customer repurchase agreements 124,205 117,887 121,043 109,145 121,378 111,817 101,640
Total interest-bearing liabilities 3,087,135 2,996,893 3,073,605 3,091,034 2,973,747 2,851,750 2,818,966
Total stockholders' equity 536,655 529,479 522,392 524,427 523,594 518,873 521,768
Quarterly Average Balance Sheets:
Residential mortgage loans $ 836,452 $811,705 $807,443 $781,015 $754,007 $734,382 $724,248
Residential construction loans 147,602 142,854 134,708 133,812 134,448 137,216 132,456
Commercial AD&C loans 287,836 272,090 261,687 247,612 227,545 218,341 206,105
Commercial investor real estate loans 832,529 788,785 750,821 717,742 704,068 668,883 645,163
Commercial owner occupied real estate loans 717,371 684,907 677,786 673,883 656,337 624,407 611,722
Commercial business loans 446,123 453,459 460,903 424,510 413,300 398,510 383,111
Leasing - - - 17 19 28 44
Consumer loans 450,171 449,594 451,075 448,439 441,740 434,011 425,434
Total loans 3,718,084 3,603,394 3,544,423 3,427,030 3,331,464 3,215,778 3,128,283
Loans held for sale 10,207 8,326 14,036 11,951 21,070 14,075 7,053
Investment securities 709,527 739,132 810,593 840,276 869,461 898,237 925,683
Interest-earning assets 4,477,438 4,394,879 4,411,796 4,320,674 4,261,939 4,162,963 4,097,648
Total assets 4,747,020 4,664,343 4,685,747 4,594,025 4,537,142 4,438,670 4,372,988
Noninterest-bearing demand deposits 1,131,739 1,082,762 1,021,471 1,058,215 1,063,500 1,023,042 986,688
Total deposits 3,528,665 3,429,897 3,300,131 3,285,299 3,263,993 3,128,562 3,056,186
Customer repurchase agreements 120,702 122,597 110,862 125,275 121,127 106,179 90,020
Total interest-bearing liabilities 3,045,998 3,020,505 3,103,710 2,968,555 2,906,348 2,852,414 2,817,575
Total stockholders' equity 530,241 521,387 524,309 521,786 518,619 516,940 521,346
Financial Measures:
Average equity to average assets 11.17% 11.18% 11.19% 11.36% 11.43% 11.65% 11.92%
Investment securities to earning assets 15.24% 16.47% 16.69% 19.22% 19.87% 20.80% 22.12%
Loans to earning assets 83.32% 82.32% 80.07% 79.83% 78.64% 77.89% 76.71%
Loans to assets 78.59% 77.49% 75.49% 75.08% 74.01% 72.97% 71.90%
Loans to deposits 106.88% 104.63% 104.35% 107.10% 104.18% 101.28% 101.76%
Capital Measures:
Tier 1 leverage (1) 10.25% 10.29% 10.23% 10.60% 10.65% 10.83% 11.00%
Tier 1 capital to risk-weighted assets (1) 12.17% 12.42% 12.74% 13.13% 13.17% 13.54% 14.03%
Total regulatory capital to risk-weighted assets (1) 13.29% 13.57% 13.86% 14.25% 14.27% 14.65% 15.14%
Common equity tier 1 capital to risk-weighted assets (1) 11.41% 11.63% 11.79% 12.17% 12.20% 12.53% 12.99%
Book value per share $ 22.47 $22.18 $21.92 $21.58 $21.44 $21.12 $21.10
Outstanding shares 23,886,651 23,874,650 23,827,305 24,295,971 24,424,944 24,562,471 24,733,868
(1) Estimated ratio at September 30, 2016

Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2016 2015
(Dollars in thousands) September 30, June 30, March 31, December 31, September 30, June 30, March 31,
Non-Performing Assets:
Loans 90 days past due:
Commercial business $163 $- $- $- $- $- $-
Commercial real estate:
Commercial AD&C - - - - - - -
Commercial investor real estate - - - - - - -
Commercial owner occupied real estate - - - - - - -
Leasing - - - - 1 2 -
Consumer - 2 1 - - 7 -
Residential real estate:
Residential mortgage - - - - - - -
Residential construction - - - - - - -
Total loans 90 days past due 163 2 1 - 1 9 -
Non-accrual loans:
Commercial business 4,140 4,263 3,741 3,696 3,881 3,285 4,166
Commercial real estate:
Commercial AD&C 137 137 147 194 194 194 1,363
Commercial investor real estate 9,189 8,868 7,885 8,368 8,609 10,023 10,083
Commercial owner occupied real estate 5,591 5,678 7,149 6,340 7,932 8,423 8,974
Leasing - - - - - - -
Consumer 2,726 2,600 2,715 2,193 1,621 1,214 1,962
Residential real estate:
Residential mortgage 7,321 6,186 9,329 8,822 7,488 7,780 3,235
Residential construction 199 202 412 418 770 780 788
Total non-accrual loans 29,303 27,934 31,378 30,031 30,495 31,699 30,571
Total restructured loans - accruing 2,512 3,420 4,716 4,467 6,419 5,620 5,446
Total non-performing loans 31,978 31,356 36,095 34,498 36,915 37,328 36,017
Other assets and real estate owned (OREO) 1,274 1,311 2,414 2,742 2,619 4,514 3,227
Total non-performing assets $ 33,252 $32,667 $38,509 $37,240 $39,534 $41,842 $39,244
For the quarter ended,
September 30, June 30, March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2016 2016 2016 2015 2015 2015 2015
Analysis of Non-accrual Loan Activity:
Balance at beginning of period $ 27,934 $31,378 $30,031 $30,495 $31,699 $30,571 $28,530
Non-accrual balances transferred to OREO (38) - - (423) (180) (1,309) (32)
Non-accrual balances charged-off (245) (1,305) (274) (869) (752) (549) (1,077)
Net payments or draws (525) (4,810) (914) (3,084) (1,846) (2,970) (1,067)
Loans placed on non-accrual 2,486 2,671 2,535 3,912 1,574 5,956 4,217
Non-accrual loans brought current (309) - - - - - -
Balance at end of period $ 29,303 $27,934 $31,378 $30,031 $30,495 $31,699 $30,571
Analysis of Allowance for Loan Losses:
Balance at beginning of period $ 43,384 $41,766 $40,895 $39,661 $38,713 $37,475 $37,802
Provision for loan losses 781 2,957 1,236 1,850 1,706 1,218 597
Less loans charged-off, net of recoveries:
Commercial business 95 106 67 (128) (25) 73 (89)
Commercial real estate:
Commercial AD&C (22) - 48 - - (547) 706
Commercial investor real estate (12) (107) 192 (4) (5) 85 (5)
Commercial owner occupied real estate (1) (1) (3) 725 104 (1) 212
Leasing - - - 4 - - -
Consumer 145 364 54 (31) 348 395 43
Residential real estate:
Residential mortgage 24 989 15 80 342 (18) 65
Residential construction (6) (12) (8) (30) (6) (7) (8)
Net charge-offs 223 1,339 365 616 758 (20) 924
Balance at end of period $ 43,942 $43,384 $41,766 $40,895 $39,661 $38,713 $37,475
Asset Quality Ratios:
Non-performing loans to total loans 0.85% 0.85% 1.01% 0.99% 1.08% 1.13% 1.14%
Non-performing assets to total assets 0.69% 0.69% 0.82% 0.80% 0.86% 0.93% 0.89%
Allowance for loan losses to loans 1.16% 1.18% 1.17% 1.17% 1.16% 1.18% 1.18%
Allowance for loan losses to non-performing loans 137.41% 138.36% 115.72% 118.54% 107.44% 103.71% 104.05%
Annualized net charge-offs to average loans 0.02% 0.15% 0.04% 0.07% 0.09% 0.00% 0.12%

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Three Months Ended September 30,
2016
2015
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 $ 836,452 $ 7,208 3.45 % $754,007 $6,346 3.37 %
Residential construction loans 147,602 1,341 3.62 134,448 1,240 3.66
Total mortgage loans 984,054 8,549 3.47 888,455 7,586 3.41
Commercial AD&C loans 287,836 3,398 4.70 227,545 2,602 4.54
Commercial investor real estate loans 832,529 9,487 4.53 704,068 8,353 4.71
Commercial owner occupied real estate loans 717,371 8,581 4.76 656,337 8,065 4.88
Commercial business loans 446,123 4,863 4.34 413,300 4,600 4.42
Leasing - - - 19 - -
Total commercial loans 2,283,859 26,329 4.59 2,001,269 23,620 4.68
Consumer loans 450,171 3,916 3.48 441,740 3,701 3.35
Total loans (2) 3,718,084 38,794 4.16 3,331,464 34,907 4.16
Loans held for sale 10,207 96 3.75 21,070 214 4.05
Taxable securities 432,706 2,717 2.51 581,832 3,742 2.57
Tax-exempt securities (3) 276,821 2,888 4.17 287,629 3,091 4.30
Total investment securities 709,527 5,605 3.16 869,461 6,833 3.14
Interest-bearing deposits with banks 38,773 49 0.51 39,472 25 0.25
Federal funds sold 847 1 0.49 472 1 0.22
Total interest-earning assets 4,477,438 44,545 3.96 4,261,939 41,980 3.92
Less: allowance for loan losses (43,498) (39,090)
Cash and due from banks 45,210 44,893
Premises and equipment, net 53,162 52,233
Other assets 214,708 217,167
Total assets $ 4,747,020 $4,537,142
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 579,863 112 0.08%$534,568 105 0.08 %
Regular savings deposits 305,077 48 0.06 277,819 37 0.05
Money market savings deposits 938,528 514 0.22 882,755 393 0.18
Time deposits 573,458 1,454 1.01 505,351 1,097 0.86
Total interest-bearing deposits 2,396,926 2,128 0.35 2,200,493 1,632 0.29
Other borrowings 120,702 74 0.24 121,127 69 0.23
Advances from FHLB 498,370 2,699 2.15 549,728 3,272 2.36
Subordinated debentures 30,000 225 3.00 35,000 228 2.60
Total interest-bearing liabilities 3,045,998 5,126 0.67 2,906,348 5,201 0.71
Noninterest-bearing demand deposits 1,131,739 1,063,500
Other liabilities 39,042 48,675
Stockholders' equity 530,241 518,619
Total liabilities and stockholders' equity $ 4,747,020 $4,537,142
Net interest income and spread $ 39,419 3.29 % $36,779 3.21 %
Less: tax-equivalent adjustment 1,688 1,663
Net interest income $ 37,731 $35,116
Interest income/earning assets 3.96 % 3.92 %
Interest expense/earning assets 0.46 0.49
Net interest margin 3.50 % 3.43 %
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2016 and 2015. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.7 million and $1.7 million in 2016 and 2015, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Nine Months Ended September 30,
2016
2015
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 $ 818,599 $ 21,010 3.42 % $737,655 $18,625 3.37 %
Residential construction loans 141,743 3,804 3.59 134,714 3,729 3.70
Total mortgage loans 960,342 24,814 3.45 872,369 22,354 3.42
Commercial AD&C loans 273,922 9,511 4.64 217,409 7,464 4.59
Commercial investor real estate loans 790,864 27,087 4.57 672,920 23,703 4.71
Commercial owner occupied real estate loans 693,442 24,946 4.81 630,985 23,266 4.93
Commercial business loans 453,468 14,819 4.37 398,418 13,107 4.40
Leasing - - - 30 1 2.97
Total commercial loans 2,211,696 76,363 4.61 1,919,762 67,541 4.70
Consumer loans 450,280 11,691 3.49 433,788 10,807 3.35
Total loans (2) 3,622,318 112,868 4.16 3,225,919 100,702 4.17
Loans held for sale 10,854 294 3.61 14,118 422 3.98
Taxable securities 470,987 9,073 2.57 605,719 11,464 2.52
Tax-exempt securities (3) 281,938 8,912 4.21 291,868 9,396 4.29
Total investment securities 752,925 17,985 3.19 897,587 20,860 3.10
Interest-bearing deposits with banks 41,433 156 0.50 36,688 69 0.25
Federal funds sold 688 3 0.48 473 1 0.22
Total interest-earning assets 4,428,218 131,306 3.96 4,174,785 122,054 3.91
Less: allowance for loan losses (42,215) (38,256)
Cash and due from banks 46,255 46,067
Premises and equipment, net 53,318 51,500
Other assets 214,284 216,105
Total assets $ 4,699,860 $4,450,201
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 578,473 335 0.08 % $528,683 312 0.08 %
Regular savings deposits 297,944 137 0.06 275,433 108 0.05
Money market savings deposits 914,499 1,446 0.21 849,469 983 0.15
Time deposits 550,195 4,088 0.99 472,065 2,790 0.79
Total interest-bearing deposits 2,341,111 6,006 0.34 2,125,650 4,193 0.26
Other borrowings 118,105 212 0.24 105,945 179 0.23
Advances from FHLB 565,493 8,812 2.08 592,509 9,774 2.21
Subordinated debentures 31,989 698 2.91 35,000 670 2.55
Total interest-bearing liabilities 3,056,698 15,728 0.69 2,859,104 14,816 0.69
Noninterest-bearing demand deposits 1,078,851 1,024,692
Other liabilities 38,981 47,447
Stockholders' equity 525,330 518,958
Total liabilities and stockholders' equity $ 4,699,860 $4,450,201
Net interest income and spread $ 115,578 3.27 % $107,238 3.22 %
Less: tax-equivalent adjustment 4,993 4,816
Net interest income $ 110,585 $102,422
Interest income/earning assets 3.96 % 3.91 %
Interest expense/earning assets 0.47 0.48
Net interest margin 3.49 % 3.43 %
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2016 and 2015. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $5.0 million and $4.8 million in 2016 and 2015, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.

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 Media Contact: Jen Schell 301-570-8331 jschell@sandyspringbank.com

Source:Sandy Spring Bancorp, Inc.