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Sandy Spring Bancorp Reports Net Income of $13.3 Million for the Fourth Quarter and Record Annual Earnings of $48.3 Million

OLNEY, Md., Jan. 19, 2017 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the fourth quarter of 2016 of $13.3 million ($0.55 per diluted share) compared to net income of $12.8 million ($0.52 per diluted share) for the fourth quarter of 2015 and net income of $13.5 million ($0.56 per diluted share) for the third quarter of 2016.

Net income for the year ended December 31, 2016, was $48.3 million ($2.00 per diluted share) compared to net income of $45.4 million ($1.84 per diluted share) for the prior year.

“Our continued ability to meet the needs of our clients is reflected in our record performance this year. Strong loan growth, combined with an improved net interest margin, were the primary drivers to our profitability for both the fourth quarter and full year. This record performance enabled us to increase our dividend to its highest level ever and supported our repurchase of $13.3 million of the Company’s shares during the year. Shareholders also benefited from a 48% increase in our stock price over the year,” said Daniel J. Schrider, President and Chief Executive Officer.

Fourth Quarter Highlights:

  • Total loans increased 12% compared to the fourth quarter of 2015 and 4% compared to the third quarter of 2016. These increases were driven primarily by year-over-year growth of 17% in the commercial loan portfolio.
  • The net interest margin improved to 3.52% for the fourth quarter of 2016, compared to 3.45% for the fourth quarter of 2015 and 3.50% for the third quarter of 2016.
  • Pre-tax, pre-provision income increased 25% compared with the fourth quarter of 2015.
  • The Non-GAAP efficiency ratio was 57.54% for the current quarter as compared to 63.08% for the fourth quarter of 2015 and 56.33% for the third quarter of 2016.
  • Return on equity increased to 9.92% for the fourth quarter of 2016 compared to 9.73% for the fourth quarter of 2015 and decreased compared to 10.11% for the third quarter of 2016.

Review of Balance Sheet and Credit Quality

Total assets grew 9% to $5.1 billion at December 31, 2016 compared to $4.7 billion at December 31, 2015. This growth was driven by the increase in the loan portfolio as total loans ended the year at $3.9 billion.

At December 31, 2016, combined noninterest-bearing and interest-bearing checking account balances, an important performance driver of multiple-product banking relationships with clients, increased 12% compared to balances at December 31, 2015. Total deposits and certain other short-term borrowings that comprise the funding sources derived from clients, increased 10% compared to December 31, 2015.

Tangible common equity totaled $454 million at December 31, 2016 compared to $441 million at December 31, 2015. The ratio of tangible common equity to tangible assets decreased to 9.07% at December 31, 2016 from 9.66% at December 31, 2015 due to the combined impact of the growth in assets and share repurchases over the preceding 12 months. Dividends per common share increased to $0.26 per share in the fourth quarter and totaled $0.98 per share for the year compared to $0.90 per share for 2015, a 9% increase.

At December 31, 2016, the Company had a total risk-based capital ratio of 12.80%, a common equity tier 1 risk-based capital ratio of 11.01%, a tier 1 risk-based capital ratio of 11.74% and a tier 1 leverage ratio of 10.14%. On January 6, 2017 the Company repurchased all of its remaining $30 million in subordinated debentures at par value. The Company estimates that this will reduce the above capital ratios by approximately 75 basis points and that the Company will remain well-capitalized for regulatory purposes. This strategy was executed to improve the Company’s future net interest margin.

Non-performing loans totaled $31.9 million at December 31, 2016 compared to $34.5 million at December 31, 2015 and $32.0 million at September 30, 2016. The level of non-performing loans to total loans decreased to 0.81% at December 31, 2016 compared to 0.99% at December 31, 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 $0.4 million for the fourth quarter of 2016 compared to $0.6 million for the fourth quarter of 2015. The allowance for loan losses represented 1.12% of outstanding loans and 138% of non-performing loans at December 31, 2016 compared to 1.17% of outstanding loans and 119% of non-performing loans at December 31, 2015. As the ratio of the allowance to outstanding loans decreased due to loan growth during the year, the coverage ratio improved due to the decline in non-performing loans, a reflection of improved credit quality in the loan portfolio. 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 2016 increased 9% compared to the fourth quarter of 2015. The net interest margin improved to 3.52% for the fourth quarter of 2016 compared to 3.45% for the fourth quarter of 2015. This improvement reflects the impact of loan growth over the preceding year combined with the cumulative benefits associated with the prepayment of FHLB advances and the early call of subordinated debentures, and the shift from lower yielding investments to the higher yielding loan portfolio during 2016.

The provision for loan losses was $0.6 million for the fourth quarter of 2016 compared to $1.9 million for the fourth quarter of 2015 and $0.8 million for the third 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 continued improvement in loan quality which partially offset the effects of loan growth on the provision.

Non-interest income increased to $12.3 million for the fourth quarter of 2016 compared to $12.2 million for the fourth 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.

Non-interest expenses increased 13% to $30.5 million for the fourth quarter of 2016 compared to $27.0 million in the fourth quarter of 2015. The prior year quarter included a $4.5 million recapture of previously accrued litigation expenses and a $1.0 million charitable contribution. Excluding these transactions, total non-interest expenses remained virtually level compared to 2015. The non-GAAP efficiency ratio was 57.54% for the fourth quarter of 2016 compared to 63.08% for the fourth 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 year ended December 31, 2016 increased 8% compared to 2015 due primarily to an increase in average loans, which was funded, in part, by a decrease in lower-yielding investment securities.

The provision for loan losses was a charge of $5.5 million for the year ended December 31, 2016 compared to a charge of $5.4 million for 2015. The provision for the current year is primarily due to growth in the loan portfolio that was offset by the decrease in nonperforming loans and improvement in loan quality.

Non-interest income increased 2% to $51.0 million for 2016 compared to $49.9 million for 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 4% due to a decrease in income from wealth management resulting from the sale of a portion of the assets under management in the first quarter of 2016.

Non-interest expenses increased 7% to $123.1 million for 2016 compared to $115.3 million for the prior year. This increase was due largely to prepayment penalties of $3.2 million for the early payoff of $75 million in high-rate FHLB advances in 2016, combined with the impact of the recapture of previously accrued litigation expenses and the charitable contribution that occurred in late 2015. Excluding these transactions, non-interest expenses increased 1% over the prior year. This increase was due primarily to higher software and outside data services expenses. The non-GAAP efficiency ratio was 58.66% for 2016 compared to 61.09% for 2015.

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, 2017. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10098228.

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 $5.1 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 Twelve Months Ended
December 31, % December 31, %
(Dollars in thousands, except per share data) 2016 2015 Change 2016 2015 Change
Results of Operations:
Net interest income $ 38,967 $35,777 9 % $ 149,552 $138,199 8 %
Provision for loan losses 572 1,850 (69) 5,546 5,371 3
Non-interest income 12,344 12,243 1 51,042 49,901 2
Non-interest expenses 30,544 26,996 13 123,058 115,347 7
Income before income taxes 20,195 19,174 5 71,990 67,382 7
Net income 13,316 12,802 4 48,250 45,355 6
Pre-tax pre-provision income $ 20,767 $16,638 25 $ 77,536 $68,884 13
Return on average assets 1.09 % 1.11% 1.02 % 1.01%
Return on average common equity 9.92 % 9.73% 9.15 % 8.73%
Net interest margin 3.52 % 3.45% 3.49 % 3.44%
Efficiency ratio - GAAP basis (1) 59.53 % 56.22% 61.35 % 61.32%
Efficiency ratio - Non-GAAP basis (1) 57.54 % 63.08% 58.66 % 61.09%
Per share data:
Basic net income $ 0.55 $0.53 4 % $ 2.00 $1.84 9 %
Diluted net income $ 0.55 $0.52 6 $ 2.00 $1.84 9
Average fully diluted shares 24,140,534 24,455,847 (1) 24,149,121 24,697,908 (2)
Dividends declared per share $ 0.26 $0.24 8 $ 0.98 $0.90 9
Book value per share 22.32 21.58 3 22.32 21.58 3
Tangible book value per share 18.98 18.17 4 18.98 18.17 4
Outstanding shares 23,901,084 24,295,971 (2) 23,901,084 24,295,971 (2)
Financial Condition at period-end:
Investment securities $ 779,648 $841,650 (7)% $ 779,648 $841,650 (7)%
Loans 3,927,808 3,495,370 12 3,927,808 3,495,370 12
Interest-earning assets 4,801,613 4,378,403 10 4,801,613 4,378,403 10
Assets 5,091,383 4,655,380 9 5,091,383 4,655,380 9
Deposits 3,577,544 3,263,730 10 3,577,544 3,263,730 10
Interest-bearing liabilities 3,384,524 3,091,034 9 3,384,524 3,091,034 9
Stockholders' equity 533,572 524,427 2 533,572 524,427 2
Capital ratios:
Tier 1 leverage (4) 10.14 % 10.60% 10.14 % 10.60%
Tier 1 capital to risk-weighted assets (4) 11.74 % 13.13% 11.74 % 13.13%
Total regulatory capital to risk-weighted assets (4) 12.80 % 14.25% 12.80 % 14.25%
Common equity tier 1 capital to risk-weighted assets (4) 11.01 % 12.17% 11.01 % 12.17%
Tangible common equity to tangible assets (2) 9.07 % 9.66% 9.07 % 9.66%
Average equity to average assets 10.95 % 11.36% 11.12 % 11.58%
Credit quality ratios:
Allowance for loan losses to loans 1.12 % 1.17% 1.12 % 1.17%
Non-performing loans to total loans 0.81 % 0.99% 0.81 % 0.99%
Non-performing assets to total assets 0.66 % 0.80% 0.66 % 0.80%
Allowance for loan losses to non-performing loans 138.00 % 118.54% 138.00 % 118.54%
Annualized net charge-offs to average loans (3) 0.05 % 0.07% 0.06 % 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 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, excluding residential mortgage loans held-for-sale.
(4) Estimated ratio at December 31, 2016

Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
Three Months Ended Twelve Months Ended
December 31, December 31,
(Dollars in thousands) 2016 2015 2016 2015
Pre-tax pre-provision income:
Net income $ 13,316 $12,802 $ 48,250 $45,355
Plus non-GAAP adjustment:
Litigation expenses - (4,386) - (3,869)
Income taxes 6,879 6,372 23,740 22,027
Provision for loan losses 572 1,850 5,546 5,371
Pre-tax pre-provision income $ 20,767 $16,638 $ 77,536 $68,884
Efficiency ratio - GAAP basis:
Non-interest expenses $ 30,544 $26,996 $ 123,058 $115,347
Net interest income plus non-interest income $ 51,311 $48,020 $ 200,594 $188,100
Efficiency ratio - GAAP basis 59.53% 56.22% 61.35% 61.32%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses $ 30,544 $26,996 $ 123,058 $115,347
Less non-GAAP adjustment:
Amortization of intangible assets 36 52 130 372
Loss on FHLB Redemption - - 3,167 -
Litigation expenses - (4,386) - (3,869)
Non-interest expenses - as adjusted $ 30,508 $31,330 $ 119,761 $118,844
Net interest income plus non-interest income $ 51,311 $48,020 $ 200,594 $188,100
Plus non-GAAP adjustment:
Tax-equivalent income 1,718 1,662 6,711 6,478
Less non-GAAP adjustments:
Securities gains 13 16 1,932 36
Gain on redemption of subordinated debentures - - 1,200 -
Net interest income plus non-interest income - as adjusted $ 53,016 $49,666 $ 204,173 $194,542
Efficiency ratio - Non-GAAP basis 57.54% 63.08% 58.66% 61.09%
Tangible common equity ratio:
Total stockholders' equity $ 533,572 $524,427 $ 533,572 $524,427
Accumulated other comprehensive income 6,614 1,297 6,614 1,297
Goodwill (85,768) (84,171) (85,768) (84,171)
Other intangible assets, net (680) (138) (680) (138)
Tangible common equity $ 453,738 $441,415 $ 453,738 $441,415
Total assets $ 5,091,383 $4,655,380 $ 5,091,383 $4,655,380
Goodwill (85,768) (84,171) (85,768) (84,171)
Other intangible assets, net (680) (138) (680) (138)
Tangible assets $ 5,004,935 $4,571,071 $ 5,004,935 $4,571,071
Tangible common equity ratio 9.07% 9.66% 9.07% 9.66%
Outstanding common shares 23,901,084 24,295,971 23,901,084 24,295,971
Tangible book value per common share $ 18.98 $18.17 $ 18.98 $18.17

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
December 31, December 31,
(Dollars in thousands) 2016 2015
Assets
Cash and due from banks $ 53,190 $46,956
Federal funds sold 1,953 472
Interest-bearing deposits with banks 78,982 25,454
Cash and cash equivalents 134,125 72,882
Residential mortgage loans held for sale (at fair value) 13,222 15,457
Investments available-for-sale (at fair value) 733,554 592,049
Investments held-to-maturity -- fair value of $211,704 at December 31, 2015 - 208,265
Other equity securities 46,094 41,336
Total loans 3,927,808 3,495,370
Less: allowance for loan losses (44,067) (40,895)
Net loans 3,883,741 3,454,475
Premises and equipment, net 53,562 53,214
Other real estate owned 1,911 2,742
Accrued interest receivable 14,589 13,443
Goodwill 85,768 84,171
Other intangible assets, net 680 138
Other assets 124,137 117,208
Total assets $ 5,091,383 $4,655,380
Liabilities
Noninterest-bearing deposits $ 1,138,139 $1,001,841
Interest-bearing deposits 2,439,405 2,261,889
Total deposits 3,577,544 3,263,730
Securities sold under retail repurchase agreements and federal funds purchased 125,119 109,145
Advances from FHLB 790,000 685,000
Subordinated debentures 30,000 35,000
Accrued interest payable and other liabilities 35,148 38,078
Total liabilities 4,557,811 4,130,953
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding
23,901,084 and 24,295,971 at December 31, 2016 and December 31, 2015, respectively 23,901 24,296
Additional paid in capital 165,871 175,588
Retained earnings 350,414 325,840
Accumulated other comprehensive loss (6,614) (1,297)
Total stockholders' equity 533,572 524,427
Total liabilities and stockholders' equity $ 5,091,383 $4,655,380

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) 2016 2015 2016 2015
Interest Income:
Interest and fees on loans $ 39,510 $35,516 $ 150,868 $135,170
Interest on loans held for sale 93 122 387 544
Interest on deposits with banks 57 29 213 98
Interest and dividends on investment securities:
Taxable 2,751 3,416 11,500 14,440
Exempt from federal income taxes 1,830 1,991 7,583 8,059
Interest on federal funds sold 2 - 5 1
Total interest income 44,243 41,074 170,556 158,312
Interest Expense:
Interest on deposits 2,155 1,685 8,161 5,878
Interest on retail repurchase agreements and federal funds purchased 78 76 290 255
Interest on advances from FHLB 2,798 3,307 11,610 13,081
Interest on subordinated debt 245 229 943 899
Total interest expense 5,276 5,297 21,004 20,113
Net interest income 38,967 35,777 149,552 138,199
Provision for loan losses 572 1,850 5,546 5,371
Net interest income after provision for loan losses 38,395 33,927 144,006 132,828
Non-interest Income:
Investment securities gains 13 16 1,932 36
Service charges on deposit accounts 2,059 1,950 7,953 7,607
Mortgage banking activities 1,279 548 4,049 3,114
Wealth management income 4,605 4,891 17,805 19,931
Insurance agency commissions 1,228 1,029 5,408 5,176
Income from bank owned life insurance 616 634 2,462 2,571
Bank card fees 1,176 1,177 4,674 4,652
Other income 1,368 1,998 6,759 6,814
Total non-interest income 12,344 12,243 51,042 49,901
Non-interest Expenses:
Salaries and employee benefits 18,055 18,437 71,354 71,003
Occupancy expense of premises 3,195 3,061 12,960 12,809
Equipment expenses 1,781 1,608 6,883 6,071
Marketing 880 735 2,851 2,896
Outside data services 1,310 1,331 5,377 5,023
FDIC insurance 729 641 2,741 2,491
Amortization of intangible assets 36 52 130 372
Litigation expenses - (4,386) - (3,869)
Other expenses 4,558 5,517 20,762 18,551
Total non-interest expenses 30,544 26,996 123,058 115,347
Income before income taxes 20,195 19,174 71,990 67,382
Income tax expense 6,879 6,372 23,740 22,027
Net income $ 13,316 $12,802 $ 48,250 $45,355
Net Income Per Share Amounts:
Basic net income per share $ 0.55 $0.53 $ 2.00 $1.84
Diluted net income per share $ 0.55 $0.52 $ 2.00 $1.84
Dividends declared per share $ 0.26 $0.24 $ 0.98 $0.90

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2016 2015
(Dollars in thousands, except per share data) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Profitability for the Quarter:
Tax-equivalent interest income $ 45,961 $44,545 $43,443 $43,317 $42,736 $41,980 $40,438 $39,343
Interest expense 5,276 5,126 5,071 5,531 5,297 5,201 4,916 4,699
Tax-equivalent net interest income 40,685 39,419 38,372 37,786 37,439 36,779 35,522 34,644
Tax-equivalent adjustment 1,718 1,688 1,640 1,664 1,662 1,663 1,589 1,271
Provision for loan losses 572 781 2,957 1,236 1,850 1,706 1,218 597
Non-interest income 12,344 12,584 12,751 13,363 12,243 12,390 12,109 13,159
Non-interest expenses 30,544 29,326 30,871 32,317 26,996 29,630 29,477 29,244
Income before income taxes 20,195 20,208 15,655 15,932 19,174 16,170 15,347 16,691
Income tax expense 6,879 6,734 5,008 5,119 6,372 5,175 5,014 5,466
Net income $ 13,316 $13,474 $10,647 $10,813 $12,802 $10,995 $10,333 $11,225
Financial Performance:
Pre-tax pre-provision income $ 20,767 $20,989 $18,612 $17,168 $16,638 $18,031 $16,727 $17,488
Return on average assets 1.09% 1.13% 0.92% 0.93% 1.11% 0.96% 0.93% 1.04%
Return on average common equity 9.92% 10.11% 8.21% 8.29% 9.73% 8.41% 8.02% 8.73%
Net interest margin 3.52% 3.50% 3.51% 3.44% 3.45% 3.43% 3.42% 3.44%
Efficiency ratio - GAAP basis (1) 59.53% 58.28% 62.39% 65.31% 56.22% 62.37% 64.02% 62.85%
Efficiency ratio - Non-GAAP basis (1) 57.54% 56.33% 59.12% 61.84% 63.08% 59.73% 61.35% 60.53%
Per Share Data:
Basic net income per share $ 0.55 $0.56 $0.45 $0.45 $0.53 $0.45 $0.42 $0.45
Diluted net income per share $ 0.55 $0.56 $0.44 $0.45 $0.52 $0.45 $0.42 $0.45
Average fully diluted shares 24,140,534 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 $ 0.26 $0.24 $0.24 $0.24 $0.24 $0.22 $0.22 $0.22
Non-interest Income:
Securities gains $ 13 $- $150 $1,769 $16 $1 $19 $-
Service charges on deposit accounts 2,059 2,035 1,956 1,903 1,950 1,936 1,839 1,882
Mortgage banking activities 1,279 1,129 1,106 535 548 566 822 1,178
Wealth management income 4,605 4,347 4,448 4,405 4,891 4,963 5,161 4,916
Insurance agency commissions 1,228 1,786 949 1,445 1,029 1,648 881 1,618
Income from bank owned life insurance 616 616 615 615 634 618 606 713
Bank card fees 1,176 1,189 1,220 1,089 1,177 1,198 1,220 1,057
Other income 1,368 1,482 2,307 1,602 1,998 1,460 1,561 1,795
Total Non-interest Income $ 12,344 $12,584 $12,751 $13,363 $12,243 $12,390 $12,109 $13,159
Non-interest Expense:
Salaries and employee benefits $ 18,055 $17,848 $17,221 $18,230 $18,437 $17,733 $17,534 $17,299
Occupancy expense of premises 3,195 3,130 3,162 3,473 3,061 3,086 3,173 3,489
Equipment expenses 1,781 1,745 1,693 1,664 1,608 1,600 1,490 1,373
Marketing 880 628 662 681 735 688 942 531
Outside data services 1,310 1,349 1,355 1,363 1,331 1,329 1,102 1,261
FDIC insurance 729 726 649 637 641 565 654 631
Amortization of intangible assets 36 34 28 32 52 107 106 107
Litigation expenses - - - - (4,386) 155 162 200
Professional fees 1,268 987 1,447 1,138 1,322 1,089 1,199 1,209
Other real estate owned expenses 2 5 (5) 17 14 48 4 10
Other expenses 3,288 2,874 4,659 5,082 4,181 3,230 3,111 3,134
Total Non-interest Expense $ 30,544 $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) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Balance Sheets at Quarter End:
Residential mortgage loans $ 841,692 $854,055 $820,618 $804,105 $796,358 $773,889 $744,195 $728,858
Residential construction loans 150,229 144,998 142,710 138,221 129,281 139,492 137,134 130,321
Commercial AD&C loans 308,279 302,522 285,585 261,204 255,980 239,160 223,103 203,731
Commercial investor real estate loans 928,113 847,946 824,252 783,161 719,084 710,694 694,179 668,931
Commercial owner occupied real estate loans 775,552 736,744 700,599 675,560 678,027 680,601 643,973 618,846
Commercial business loans 467,286 444,129 451,711 451,239 465,765 423,855 409,795 385,452
Leasing - - - - - 19 21 36
Consumer loans 456,657 450,113 447,149 447,198 450,875 444,729 436,465 428,531
Total loans 3,927,808 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 (44,067) (43,942) (43,384) (41,766) (40,895) (39,661) (38,713) (37,475)
Loans held for sale 13,222 15,822 13,490 27,806 15,457 10,418 19,445 13,899
Investment securities 779,648 691,471 734,828 742,401 841,650 862,409 878,284 912,565
Interest-earning assets 4,801,613 4,537,331 4,461,180 4,447,063 4,378,403 4,339,375 4,222,667 4,125,549
Total assets 5,091,383 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 1,138,139 1,154,227 1,176,135 1,084,746 1,001,841 1,068,299 1,092,413 1,017,566
Total deposits 3,577,544 3,537,157 3,510,141 3,412,308 3,263,730 3,275,668 3,247,346 3,109,892
Customer repurchase agreements 125,119 124,205 117,887 121,043 109,145 121,378 111,817 101,640
Total interest-bearing liabilities 3,384,524 3,087,135 2,996,893 3,073,605 3,091,034 2,973,747 2,851,750 2,818,966
Total stockholders' equity 533,572 536,655 529,479 522,392 524,427 523,594 518,873 521,768
Quarterly Average Balance Sheets:
Residential mortgage loans $ 848,399 $836,452 $811,705 $807,443 $781,015 $754,007 $734,382 $724,248
Residential construction loans 148,248 147,602 142,854 134,708 133,812 134,448 137,216 132,456
Commercial AD&C loans 310,110 287,836 272,090 261,687 247,612 227,545 218,341 206,105
Commercial investor real estate loans 878,511 832,529 788,785 750,821 717,742 704,068 668,883 645,163
Commercial owner occupied real estate loans 750,679 717,371 684,907 677,786 673,883 656,337 624,407 611,722
Commercial business loans 452,195 446,123 453,459 460,903 424,510 413,300 398,510 383,111
Leasing - - - - 17 19 28 44
Consumer loans 454,349 450,171 449,594 451,075 448,439 441,740 434,011 425,434
Total loans 3,842,491 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 12,454 10,207 8,326 14,036 11,951 21,070 14,075 7,053
Investment securities 703,574 709,527 739,132 810,593 840,276 869,461 898,237 925,683
Interest-earning assets 4,599,426 4,477,438 4,394,879 4,411,796 4,320,674 4,261,939 4,162,963 4,097,648
Total assets 4,878,660 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 1,167,379 1,131,739 1,082,762 1,021,471 1,058,215 1,063,500 1,023,042 986,688
Total deposits 3,582,437 3,528,665 3,429,897 3,300,131 3,285,299 3,263,993 3,128,562 3,056,186
Customer repurchase agreements 128,471 120,702 122,597 110,862 125,275 121,127 106,179 90,020
Total interest-bearing liabilities 3,138,420 3,045,998 3,020,505 3,103,710 2,968,555 2,906,348 2,852,414 2,817,575
Total stockholders' equity 534,057 530,241 521,387 524,309 521,786 518,619 516,940 521,346
Financial Measures:
Average equity to average assets 10.95% 11.17% 11.18% 11.19% 11.36% 11.43% 11.65% 11.92%
Investment securities to earning assets 16.24% 15.24% 16.47% 16.69% 19.22% 19.87% 20.80% 22.12%
Loans to earning assets 81.80% 83.32% 82.32% 80.07% 79.83% 78.64% 77.89% 76.71%
Loans to assets 77.15% 78.59% 77.49% 75.49% 75.08% 74.01% 72.97% 71.90%
Loans to deposits 109.79% 106.88% 104.63% 104.35% 107.10% 104.18% 101.28% 101.76%
Capital Measures:
Tier 1 leverage (1) 10.14% 10.25% 10.29% 10.23% 10.60% 10.65% 10.83% 11.00%
Tier 1 capital to risk-weighted assets (1) 11.74% 12.17% 12.42% 12.74% 13.13% 13.17% 13.54% 14.01%
Total regulatory capital to risk-weighted assets (1) 12.80% 13.29% 13.57% 13.86% 14.25% 14.27% 14.65% 15.12%
Common equity tier 1 capital to risk-weighted assets (1) 11.01% 11.41% 11.63% 11.79% 12.17% 12.20% 12.53% 14.01%
Book value per share $ 22.32 $22.47 $22.18 $21.92 $21.58 $21.44 $21.12 $21.10
Outstanding shares 23,901,084 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 December 31, 2016

Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2016 2015
(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 $ - $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 232 - - - - - - -
Residential construction - - - - - - - -
Total loans and leases 90 days past due 232 163 2 1 - 1 9 -
Non-accrual loans and leases:
Commercial business 5,833 4,140 4,263 3,741 3,696 3,881 3,285 4,166
Commercial real estate:
Commercial AD&C 137 137 137 147 194 194 194 1,363
Commercial investor real estate 8,107 9,189 8,868 7,885 8,368 8,609 10,023 10,083
Commercial owner occupied real estate 4,823 5,591 5,678 7,149 6,340 7,932 8,423 8,974
Leasing - - - - - - - -
Consumer 2,859 2,726 2,600 2,715 2,193 1,621 1,214 1,962
Residential real estate:
Residential mortgage 7,257 7,321 6,186 9,329 8,822 7,488 7,780 3,235
Residential construction 195 199 202 412 418 770 780 788
Total non-accrual loans and leases 29,211 29,303 27,934 31,378 30,031 30,495 31,699 30,571
Total restructured loans - accruing 2,489 2,512 3,420 4,716 4,467 6,419 5,620 5,446
Total non-performing loans and leases 31,932 31,978 31,356 36,095 34,498 36,915 37,328 36,017
Other assets and real estate owned (OREO) 1,911 1,274 1,311 2,414 2,742 2,619 4,514 3,227
Total non-performing assets $ 33,843 $33,252 $32,667 $38,509 $37,240 $39,534 $41,842 $39,244
For the Quarter Ended,
December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2016 2016 2016 2016 2015 2015 2015 2015
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period $ 29,303 $27,934 $31,378 $30,031 $30,495 $31,699 $30,571 $28,530
Non-accrual balances transferred to OREO (637) (38) - - (423) (180) (1,309) (32)
Non-accrual balances charged-off (390) (245) (1,305) (274) (869) (752) (549) (1,077)
Net payments or draws (1,547) (525) (4,810) (914) (3,084) (1,846) (2,970) (1,067)
Loans placed on non-accrual 2,482 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 $ 29,211 $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 $ 43,942 $43,384 $41,766 $40,895 $39,661 $38,713 $37,475 $37,802
Provision for loan losses 572 781 2,957 1,236 1,850 1,706 1,218 597
Less loans charged-off, net of recoveries:
Commercial business 285 95 106 67 (128) (25) 73 (89)
Commercial real estate:
Commercial AD&C (18) (22) - 48 - - (547) 706
Commercial investor real estate (9) (12) (107) 192 (4) (5) 85 (5)
Commercial owner occupied real estate - (1) (1) (3) 725 104 (1) 212
Leasing - - - - 4 - - -
Consumer 177 145 364 54 (31) 348 395 43
Residential real estate:
Residential mortgage 18 24 989 15 80 342 (18) 65
Residential construction (6) (6) (12) (8) (30) (6) (7) (8)
Net charge-offs 447 223 1,339 365 616 758 (20) 924
Balance at end of period $ 44,067 $43,942 $43,384 $41,766 $40,895 $39,661 $38,713 $37,475
Asset Quality Ratios:
Non-performing loans to total loans 0.81% 0.85% 0.85% 1.01% 0.99% 1.08% 1.13% 1.14%
Non-performing assets to total assets 0.66% 0.69% 0.69% 0.82% 0.80% 0.86% 0.93% 0.89%
Allowance for loan losses to loans 1.12% 1.16% 1.18% 1.17% 1.17% 1.16% 1.18% 1.18%
Allowance for loan losses to non-performing loans 138.00% 137.41% 138.36% 115.72% 118.54% 107.44% 103.71% 104.05%
Annualized net charge-offs to average loans 0.05% 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 December 31,
2016 2015
(Dollars in thousands and tax-equivalent) Average
Balances
(1)
Interest
Annualized
Average
Yield/Rate
Average
Balances
(1)
Interest
Annualized
Average
Yield/Rate
Assets
Residential mortgage loans $ 848,399 $ 7,321 3.45% $781,015 $6,626 3.39%
Residential construction loans 148,248 1,365 3.66 133,812 1,241 3.68
Total mortgage loans 996,647 8,686 3.48 914,827 7,867 3.44
Commercial AD&C loans 310,110 3,688 4.73 247,612 2,835 4.54
Commercial investor real estate loans 878,511 10,023 4.54 717,742 8,370 4.63
Commercial owner occupied real estate loans 750,679 8,891 4.71 673,883 8,242 4.85
Commercial business loans 452,195 4,931 4.34 424,510 4,819 4.50
Leasing - - - 17 - -
Total commercial loans 2,391,495 27,533 4.58 2,063,764 24,266 4.66
Consumer loans 454,349 3,905 3.45 448,439 3,817 3.40
Total loans (2) 3,842,491 40,124 4.16 3,427,030 35,950 4.17
Loans held for sale 12,454 93 2.98 11,951 122 4.12
Taxable securities 435,129 2,850 2.62 551,894 3,552 2.57
Tax-exempt securities (3) 268,445 2,835 4.22 288,382 3,083 4.28
Total investment securities 703,574 5,685 3.23 840,276 6,635 3.16
Interest-bearing deposits with banks 39,471 57 0.57 40,945 29 0.28
Federal funds sold 1,436 2 0.53 472 - 0.26
Total interest-earning assets 4,599,426 45,961 3.98 4,320,674 42,736 3.93
Less: allowance for loan losses (43,298) (40,143)
Cash and due from banks 50,090 48,655
Premises and equipment, net 53,588 52,707
Other assets 218,854 212,132
Total assets $ 4,878,660 $4,594,025
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 589,259 111 0.08% $544,133 106 0.08%
Regular savings deposits 306,261 45 0.06 281,146 38 0.05
Money market savings deposits 936,880 505 0.21 892,833 381 0.17
Time deposits 582,658 1,494 1.02 508,972 1,160 0.90
Total interest-bearing deposits 2,415,058 2,155 0.36 2,227,084 1,685 0.30
Other borrowings 128,471 78 0.24 125,601 76 0.24
Advances from FHLB 564,891 2,798 1.97 580,870 3,307 2.26
Subordinated debentures 30,000 245 3.27 35,000 229 2.63
Total interest-bearing liabilities 3,138,420 5,276 0.67 2,968,555 5,297 0.71
Noninterest-bearing demand deposits 1,167,379 1,058,215
Other liabilities 38,804 45,469
Stockholders' equity 534,057 521,786
Total liabilities and stockholders' equity $ 4,878,660 $4,594,025
Net interest income and spread $ 40,685 3.31 % $37,439 3.22%
Less: tax-equivalent adjustment 1,718 1,662
Net interest income $ 38,967 $35,777
Interest income/earning assets 3.98 % 3.93%
Interest expense/earning assets 0.46 0.48
Net interest margin 3.52 % 3.45%
(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
Twelve Months Ended December 31,
2016
2015
(Dollars in thousands and tax-equivalent) Average
Balances
(1)
Interest
Annualized
Average
Yield/Rate
Average
Balances
(1)
Interest
Annualized
Average
Yield/Rate
Assets
Residential mortgage loans $ 826,089 $ 28,331 3.43% $748,584 $25,251 3.37%
Residential construction loans 143,378 5,169 3.61 134,486 4,970 3.70
Total mortgage loans 969,467 33,500 3.46 883,070 30,221 3.42
Commercial AD&C loans 283,018 13,199 4.66 225,022 10,299 4.58
Commercial investor real estate loans 812,896 37,110 4.57 684,218 32,073 4.69
Commercial owner occupied real estate loans 707,830 33,837 4.78 641,798 31,508 4.91
Commercial business loans 453,148 19,750 4.36 404,994 17,926 4.43
Leasing - - - 27 1 2.50
Total commercial loans 2,256,892 103,896 4.60 1,956,059 91,807 4.69
Consumer loans 451,303 15,596 3.48 437,481 14,624 3.37
Total loans (2) 3,677,662 152,992 4.16 3,276,610 136,652 4.17
Loans held for sale 11,256 387 3.44 13,571 544 4.01
Taxable securities 461,973 11,923 2.58 592,153 15,016 2.54
Tax-exempt securities (3) 278,546 11,747 4.22 290,990 12,479 4.29
Total investment securities 740,519 23,670 3.20 883,143 27,495 3.11
Interest-bearing deposits with banks 40,940 213 0.52 37,761 98 0.26
Federal funds sold 876 5 0.50 473 1 0.23
Total interest-earning assets 4,471,253 177,267 3.96 4,211,558 164,790 3.91
Less: allowance for loan losses (42,487) (38,732)
Cash and due from banks 47,219 46,719
Premises and equipment, net 53,386 51,804
Other assets 214,004 215,104
Total assets $ 4,743,375 $4,486,453
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 581,185 446 0.08% $532,578 418 0.08%
Regular savings deposits 300,035 182 0.06 276,873 146 0.05
Money market savings deposits 920,125 1,951 0.21 860,399 1,364 0.16
Time deposits 558,355 5,582 1.00 481,368 3,950 0.82
Total interest-bearing deposits 2,359,700 8,161 0.35 2,151,218 5,878 0.27
Other borrowings 120,711 290 0.24 110,899 255 0.23
Advances from FHLB 565,342 11,610 2.05 589,575 13,081 2.22
Subordinated debentures 31,489 943 3.00 35,000 899 2.57
Total interest-bearing liabilities 3,077,242 21,004 0.68 2,886,692 20,113 0.70
Noninterest-bearing demand deposits 1,101,104 1,033,141
Other liabilities 37,505 46,949
Stockholders' equity 527,524 519,671
Total liabilities and stockholders' equity $ 4,743,375 $4,486,453
Net interest income and spread $ 156,263 3.28 % $144,677 3.21%
Less: tax-equivalent adjustment 6,711 6,478
Net interest income $ 149,552 $138,199
Interest income/earning assets 3.96 % 3.91%
Interest expense/earning assets 0.47 0.47
Net interest margin 3.49 % 3.44%
(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 $6.7 million and $6.5 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.