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Sandy Spring Bancorp Reports Net Income of $14.7 Million for the Second Quarter

OLNEY, Md., July 20, 2017 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR), the parent company of Sandy Spring Bank, today reported net income for the second quarter of 2017 of $14.7 million ($0.61 per diluted share) compared to net income of $10.6 million ($0.44 per diluted share) for the second quarter of 2016 and net income of $15.1 million ($0.63 per diluted share) for the first quarter of 2017.

“The current quarter reflects strong core performance driven by loan and deposit growth. We continue our efforts to create new and deepen existing client relationships to improve the financial performance of the Company. As part of those efforts, during the current quarter we were extremely pleased to announce a definitive agreement for the acquisition of WashingtonFirst Bankshares, Inc. and its banking unit, WashingtonFirst Bank, a well-regarded bank in northern Virginia. We believe that the creation of the region’s largest locally headquartered community bank will offer complementary products and the best possible experience for our combined clients and greater value to our shareholders,” said Daniel J. Schrider, President and Chief Executive Officer.

Second Quarter Highlights:

  • Total loans increased 13% compared to the second quarter of 2016 and 4% compared to the first quarter of 2017. These increases were driven primarily by year-over-year growth of 16% in the commercial loan portfolio.
  • Total deposits grew 11% from the prior year quarter and 2% from the prior quarter.
  • The net interest margin was 3.60% for the second quarter of 2017, compared to 3.51% for the second quarter of 2016 and 3.51% for the first quarter of 2017. The quarter’s margin was positively impacted by an interest income recovery of $0.7 million. Exclusive of this non-core item, the margin would have been 3.54%.
  • Return on average common equity increased 32% to 10.80% as compared to 8.21% from the prior year.
  • On May 16, 2017, the Company announced it had entered into a definitive agreement and plan of merger pursuant to which WashingtonFirst Bankshares, Inc., the parent company for WashingtonFirst Bank, will merge with and into the Company in a transaction valued at approximately $498 million. WashingtonFirst, headquartered in Reston, Virginia, has 19 community banking offices and more than $2.1 billion in assets (as of March 31, 2017).
  • The Non-GAAP efficiency ratio was 54.10% for the current quarter as compared to 59.12% for the second quarter of 2016 and 54.78% for the first quarter of 2017.
  • Pre-tax, pre-provision income increased 29% compared with the second quarter of 2016.

Review of Balance Sheet and Credit Quality

At June 30, 2017, total assets were $5.3 billion, an 11% increase compared to $4.7 billion at June 30, 2016. Loan growth continues to be the driver of asset growth as total loans ended the period at $4.1 billion compared to $3.7 billion at June 30, 2016. The growth in the loan portfolio was funded primarily by an 11% increase in total deposits from June 30, 2016 to June 30, 2017.

Combined noninterest-bearing and interest-bearing checking account balances at June 30, 2017, an important performance driver of multiple-product banking relationships with clients, increased by 9% compared to balances at June 30, 2016.

Tangible common equity totaled $472 million at June 30, 2017, compared to $439 million at June 30, 2016. The ratio of tangible common equity to tangible assets decreased to 9.10% at June 30, 2017, from 9.44% at June 30, 2016, as a result of asset growth over the preceding 12 months. Dividends per common share were $0.26 per share for the second quarter of 2017 compared to $0.24 per share for the second quarter of 2016, an 8% increase. At June 30, 2017, the Company had a total risk-based capital ratio of 12.00%, a common equity tier 1 risk-based capital ratio of 10.96%, a tier 1 risk-based capital ratio of 10.96% and a tier 1 leverage ratio of 9.26%.

The level of non-performing loans to total loans decreased to 0.78% at June 30, 2017, compared to 0.85% at June 30, 2016, as a result of the growth in the loan portfolio. Non-performing loans totaled $32.2 million at June 30, 2017, compared to $31.4 million at June 30, 2016, and $30.9 million at March 31, 2017. Non-performing loans include accruing loans 90 days or more past due and restructured loans.

Loan charge-offs, net of recoveries, totaled $0.1 million for the second quarter of 2017 compared to $1.3 million for the second quarter of 2016. Charge-offs for the second quarter of 2016 were affected by a single large charge-off related to a residential mortgage loan. The allowance for loan losses represented 1.09% of outstanding loans and 140% of non-performing loans at June 30, 2017, compared to 1.18% of outstanding loans and 138% of non-performing loans at June 30, 2016. The decline in the allowance to outstanding loans ratio is a reflection of improved credit quality and growth of the loan portfolio over the past year.

Income Statement Review

Net interest income for the second quarter of 2017 increased 15% compared to the second quarter of 2016 as average loans from quarter to quarter increased 12%. The net interest margin improved to 3.60% for the second quarter of 2017 compared to 3.51% for the second quarter of 2016. Net interest income for the second quarter of 2017 included $0.7 million from the full payoff during the quarter of a previously acquired credit impaired loan. Exclusive of the recovered interest income, the net interest margin would have been 3.54% based on an adjusted net interest income of $41.6 million. The margin improvement reflects the impact of loan growth, the cumulative benefits associated with the execution of funding strategies and the shift from lower yielding investments to the higher yielding loan portfolio during the past 12 months.

The provision for loan losses was $1.3 million for the second quarter of 2017 compared to $3.0 million for the second quarter of 2016 and $0.2 million for the first quarter of 2017. The decrease in the current quarter’s charge versus the prior year’s quarter reflects improved loan portfolio credit quality, which partially offset the effects of loan growth on the provision over the past year.

Non-interest income increased to $13.6 million for the second quarter of 2017 compared to $12.8 million for the second quarter of 2016. The second quarter of 2017 included gains of $1.3 million on sales of investment securities. The second quarter of 2016 included a $1.2 million gain on the extinguishment of subordinated debentures and $0.2 million in gains on the sales of investment securities. Excluding these gains, non-interest income increased 8% compared to the prior year quarter due to increases in insurance agency commissions and other non-interest income.

Non-interest expenses increased 6% to $32.9 million for the second quarter of 2017 compared to $30.9 million in the second quarter of 2016. The second quarter of 2017 included $1.3 million in penalties on the early payoff of high-rate FHLB advances and $1.0 million in merger expenses. The comparable period for 2016 included $1.4 million in prepayment penalties. Excluding these transactions, non-interest expenses increased 4% compared to the second quarter of 2016 due to merit increases, performance incentives and volume driven compensation costs. The non-GAAP efficiency ratio was 54.10% for the second quarter of 2017 compared to 59.12% for the second quarter of 2016 as a result of the growth in net interest income.

Net interest income for the first six months of 2017 increased 13% compared to the first six months of 2016 due primarily to an increase in average loans, which was funded primarily by an 11% increase in average deposits. As a result, the net interest margin was 3.56% for the first six months of 2017 compared to 3.47% for the prior year period. The first six months net interest income included the previously mentioned $0.7 million recovery of interest income. Exclusive of this recovery the net interest margin would have been 3.54%.

The provision for loan losses was $1.5 million for the first six months of 2017 compared to $4.2 million for the first six months of 2016 primarily reflecting the growth in the loan portfolio over the prior year period offset by the effects of improved credit quality of the loan portfolio.

Non-interest income was $26.2 million for the first six months of 2017 compared to $26.1 million for the first six months of 2016. The first six months of 2017 included gains of $1.3 million on sales of investment securities. The same prior year period included a $1.2 million gain on the extinguishment of subordinated debentures and $2.0 million in gains on the sales of investment securities. Excluding these gains, non-interest income increased 8% compared to the prior year period primarily due to increases in insurance agency commissions and other non-interest income.

Non-interest expenses decreased 1% to $62.8 million for the first six months of 2017 compared to $63.2 million for the prior year period. For the six months ended June 30, 2017, the decrease in prepayment penalties of $1.9 million for the early payoff of high-rate FHLB advances as compared to the six months ended June 30, 2016, offset increases in salaries and benefits, FDIC insurance due to asset growth and $1.0 million in merger expenses. Excluding the impact of prepayment penalties and merger expenses, non-interest expenses increased 1% over the prior year period. The non-GAAP efficiency ratio decreased to 54.44% for the first six months of 2017 compared to 60.47% for the first six months of 2016 as a direct result of the growth in net interest income.

Conference Call

The Company’s management will host a conference call to discuss its second 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) August 3, 2017. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10109345.

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 $5.3 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, 2016, 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 Six Months Ended
June 30, % June 30, %
(Dollars in thousands, except per share data) 2017 2016 Change 2017 2016 Change
Results of Operations:
Net interest income $ 42,326 $36,732 15 % $ 82,579 $72,854 13 %
Provision for loan losses 1,322 2,957 (55) 1,516 4,193 (64)
Non-interest income 13,571 12,751 6 26,203 26,114 -
Non-interest expenses 32,868 30,871 6 62,849 63,188 (1)
Income before income taxes 21,707 15,655 39 44,417 31,587 41
Net income 14,741 10,647 38 29,853 21,460 39
Pre-tax pre-provision income $ 24,016 $18,612 29 $ 46,920 $35,780 31
Return on average assets 1.14 % 0.92% 1.17 % 0.92%
Return on average common equity 10.80 % 8.21% 11.12 % 8.25%
Net interest margin 3.60 % 3.51% 3.56 % 3.47%
Efficiency ratio - GAAP basis (1) 58.80 % 62.39% 57.78 % 63.85%
Efficiency ratio - Non-GAAP basis (1) 54.10 % 59.12% 54.44 % 60.47%
Per share data:
Basic net income $ 0.61 $0.45 36 % $ 1.24 $0.90 38 %
Diluted net income $ 0.61 $0.44 39 $ 1.23 $0.89 38
Average fully diluted shares 24,262,745 24,108,668 1 24,258,791 24,165,675 -
Dividends declared per share $ 0.26 $0.24 8 $ 0.52 $0.48 8
Book value per share 23.13 22.18 4 23.13 22.18 4
Tangible book value per share 19.68 18.40 7 19.68 18.40 7
Outstanding shares 23,983,997 23,874,650 - 23,983,997 23,874,650 -
Financial Condition at period-end:
Investment securities $ 821,491 $734,828 12 % $ 821,491 $734,828 12 %
Loans 4,133,171 3,672,624 13 4,133,171 3,672,624 13
Interest-earning assets 4,988,704 4,461,180 12 4,988,704 4,461,180 12
Assets 5,270,521 4,739,449 11 5,270,521 4,739,449 11
Deposits 3,885,445 3,510,141 11 3,885,445 3,510,141 11
Interest-bearing liabilities 3,380,221 2,996,893 13 3,380,221 2,996,893 13
Stockholders' equity 554,683 529,479 5 554,683 529,479 5
Capital ratios:
Tier 1 leverage (4) 9.26 % 10.29% 9.26 % 10.29%
Tier 1 capital to risk-weighted assets (4) 10.96 % 12.42% 10.96 % 12.42%
Total regulatory capital to risk-weighted assets (4) 12.00 % 13.57% 12.00 % 13.57%
Common equity tier 1 capital to risk-weighted assets (4) 10.96 % 11.63% 10.96 % 11.63%
Tangible common equity to tangible assets (2) 9.10 % 9.44% 9.10 % 9.44%
Average equity to average assets 10.52 % 11.18% 10.50 % 11.18%
Credit quality ratios:
Allowance for loan losses to loans 1.09 % 1.18% 1.09 % 1.18%
Non-performing loans to total loans 0.78 % 0.85% 0.78 % 0.85%
Non-performing assets to total assets 0.64 % 0.69% 0.64 % 0.69%
Allowance for loan losses to non-performing loans 140.00 % 138.36% 140.00 % 138.36%
Annualized net charge-offs to average loans (3) 0.01 % 0.15% 0.03 % 0.10%
(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, excluding residential mortgage loans held-for-sale.
(4) Estimated ratio at June 30, 2017


Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2017 2016 2017 2016
Pre-tax pre-provision income:
Net income $ 14,741 $10,647 $ 29,853 $21,460
Plus non-GAAP adjustment:
Merger expenses 987 - 987 -
Income taxes 6,966 5,008 14,564 10,127
Provision for loan losses 1,322 2,957 1,516 4,193
Pre-tax pre-provision income $ 24,016 $18,612 $ 46,920 $35,780
Efficiency ratio - GAAP basis:
Non-interest expenses $ 32,868 $30,871 $ 62,849 $63,188
Net interest income plus non-interest income $ 55,897 $49,483 $ 108,782 $98,968
Efficiency ratio - GAAP basis 58.80% 62.39% 57.78% 63.85%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses $ 32,868 $30,871 $ 62,849 $63,188
Less non-GAAP adjustment:
Amortization of intangible assets 25 28 51 60
Loss on FHLB Redemption 1,275 1,416 1,275 3,167
Merger expenses 987 - 987 -
Non-interest expenses - as adjusted $ 30,581 $29,427 $ 60,536 $59,961
Net interest income plus non-interest income $ 55,897 $49,483 $ 108,782 $98,968
Plus non-GAAP adjustment:
Tax-equivalent income 1,901 1,640 3,697 3,304
Less non-GAAP adjustments:
Securities gains 1,273 150 1,275 1,919
Gain on redemption of subordinated debentures - 1,200 - 1,200
Net interest income plus non-interest income - as adjusted $ 56,525 $49,773 $ 111,204 $99,153
Efficiency ratio - Non-GAAP basis 54.10% 59.12% 54.44% 60.47%
Tangible common equity ratio:
Total stockholders' equity $ 554,683 $529,479 $ 554,683 $529,479
Accumulated other comprehensive loss (income) 3,712 (5,886) 3,712 (5,886)
Goodwill (85,768) (84,171) (85,768) (84,171)
Other intangible assets, net (629) (77) (629) (77)
Tangible common equity $ 471,998 $439,345 $ 471,998 $439,345
Total assets $ 5,270,521 $4,739,449 $ 5,270,521 $4,739,449
Goodwill (85,768) (84,171) (85,768) (84,171)
Other intangible assets, net (629) (77) (629) (77)
Tangible assets $ 5,184,124 $4,655,201 $ 5,184,124 $4,655,201
Tangible common equity ratio 9.10% 9.44% 9.10% 9.44%
Outstanding common shares 23,983,997 23,874,650 23,983,997 23,874,650
Tangible book value per common share $ 19.68 $18.40 $ 19.68 $18.40


Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
June 30, December 31, June 30,
(Dollars in thousands) 2017 2016 2016
Assets
Cash and due from banks $ 48,637 $53,190 $53,334
Federal funds sold 2,831 1,953 832
Interest-bearing deposits with banks 25,468 78,982 39,406
Cash and cash equivalents 76,936 134,125 93,572
Residential mortgage loans held for sale (at fair value) 5,743 13,222 13,490
Investments available-for-sale (at fair value) 780,078 733,554 700,486
Other equity securities 41,413 46,094 34,342
Total loans 4,133,171 3,927,808 3,672,624
Less: allowance for loan losses (45,079) (44,067) (43,384)
Net loans 4,088,092 3,883,741 3,629,240
Premises and equipment, net 53,235 53,562 53,055
Other real estate owned 1,460 1,911 1,311
Accrued interest receivable 14,910 14,589 13,399
Goodwill 85,768 85,768 84,171
Other intangible assets, net 629 680 77
Other assets 122,257 124,137 116,306
Total assets $5,270,521 $5,091,383 $4,739,449
Liabilities
Noninterest-bearing deposits $1,302,536 $1,138,139 $1,176,135
Interest-bearing deposits 2,582,909 2,439,405 2,334,006
Total deposits 3,885,445 3,577,544 3,510,141
Securities sold under retail repurchase agreements and federal funds purchased 127,312 125,119 117,887
Advances from FHLB 670,000 790,000 515,000
Subordinated debentures - 30,000 30,000
Accrued interest payable and other liabilities 33,081 35,148 36,942
Total liabilities 4,715,838 4,557,811 4,209,970
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,983,997, 23,901,084 and 23,874,650 at June 30, 2017, December 31, 2016 and June 30, 2016, respectively 23,984 23,901 23,875
Additional paid in capital 166,705 165,871 164,040
Retained earnings 367,706 350,414 335,678
Accumulated other comprehensive income (loss) (3,712) (6,614) 5,886
Total stockholders' equity 554,683 533,572 529,479
Total liabilities and stockholders' equity $5,270,521 $5,091,383 $4,739,449

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three Months Ended Six Months Ended
June 30,June 30,
(Dollars in thousands, except per share data) 2017 2016 2017 2016
Interest Income:
Interest and fees on loans $ 42,747 $ 36,928 $ 82,970 $ 73,134
Interest on loans held for sale 72 64 154 198
Interest on deposits with banks 91 54 181 107
Interest and dividends on investment securities:
Taxable 3,554 2,840 7,162 6,126
Exempt from federal income taxes 2,106 1,916 4,057 3,889
Interest on federal funds sold 6 1 10 2
Total interest income 48,576 41,803 94,534 83,456
Interest Expense:
Interest on deposits 3,023 2,041 5,511 3,878
Interest on retail repurchase agreements and federal funds purchased 79 72 155 138
Interest on advances from FHLB 3,148 2,739 6,277 6,113
Interest on subordinated debt - 219 12 473
Total interest expense 6,250 5,071 11,955 10,602
Net interest income 42,326 36,732 82,579 72,854
Provision for loan losses 1,322 2,957 1,516 4,193
Net interest income after provision for loan losses 41,004 33,775 81,063 68,661
Non-interest Income:
Investment securities gains 1,273 150 1,275 1,919
Service charges on deposit accounts 2,017 1,956 3,981 3,859
Mortgage banking activities 840 1,106 1,448 1,641
Wealth management income 4,744 4,448 9,228 8,853
Insurance agency commissions 1,222 949 2,974 2,394
Income from bank owned life insurance 605 615 1,199 1,230
Bank card fees 1,253 1,220 2,398 2,309
Other income 1,617 2,307 3,700 3,909
Total non-interest income 13,571 12,751 26,203 26,114
Non-interest Expenses:
Salaries and employee benefits 18,282 17,221 36,083 35,451
Occupancy expense of premises 3,211 3,162 6,613 6,635
Equipment expenses 1,767 1,693 3,491 3,357
Marketing 776 662 1,439 1,343
Outside data services 1,367 1,355 2,759 2,718
FDIC insurance 823 649 1,628 1,286
Amortization of intangible assets 25 28 51 60
Merger expenses 987 - 987 -
Other expenses 5,630 6,101 9,798 12,338
Total non-interest expenses 32,868 30,871 62,849 63,188
Income before income taxes 21,707 15,655 44,417 31,587
Income tax expense 6,966 5,008 14,564 10,127
Net income $ 14,741 $ 10,647 $ 29,853 $ 21,460
Net Income Per Share Amounts:
Basic net income per share $ 0.61 $ 0.45 $ 1.24 $ 0.90
Diluted net income per share $ 0.61 $ 0.44 $ 1.23 $ 0.89
Dividends declared per share $ 0.26 $ 0.24 $ 0.52 $ 0.48

Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2017 2016
(Dollars in thousands, except per share data) Q2 Q1 Q4 Q3 Q2 Q1
Profitability for the Quarter:
Tax-equivalent interest income $ 50,477 $ 47,754 $ 45,961 $ 44,545 $ 43,443 $ 43,317
Interest expense 6,250 5,705 5,276 5,126 5,071 5,531
Tax-equivalent net interest income 44,227 42,049 40,685 39,419 38,372 37,786
Tax-equivalent adjustment 1,901 1,796 1,718 1,688 1,640 1,664
Provision for loan losses 1,322 194 572 781 2,957 1,236
Non-interest income 13,571 12,632 12,344 12,584 12,751 13,363
Non-interest expenses 32,868 29,981 30,544 29,326 30,871 32,317
Income before income taxes 21,707 22,710 20,195 20,208 15,655 15,932
Income tax expense 6,966 7,598 6,879 6,734 5,008 5,119
Net income $ 14,741 $ 15,112 $ 13,316 $ 13,474 $ 10,647 $ 10,813
Financial Performance:
Pre-tax pre-provision income $ 24,016 $ 22,904 $ 20,767 $ 20,989 $ 18,612 $ 17,168
Return on average assets 1.14% 1.20% 1.09% 1.13% 0.92% 0.93%
Return on average common equity 10.80% 11.45% 9.92% 10.11% 8.21% 8.29%
Net interest margin 3.60% 3.51% 3.52% 3.50% 3.51% 3.44%
Efficiency ratio - GAAP basis (1) 58.80% 56.69% 59.53% 58.28% 62.39% 65.31%
Efficiency ratio - Non-GAAP basis (1) 54.10% 54.78% 57.54% 56.33% 59.12% 61.84%
Per Share Data:
Basic net income per share $ 0.61 $ 0.63 $ 0.55 $ 0.56 $ 0.45 $ 0.45
Diluted net income per share $ 0.61 $ 0.63 $ 0.55 $ 0.56 $ 0.44 $ 0.45
Average fully diluted shares 24,262,745 24,158,566 24,140,534 24,122,923 24,108,668 24,222,940
Dividends declared per common share $ 0.26 $ 0.26 $ 0.26 $ 0.24 $ 0.24 $ 0.24
Non-interest Income:
Securities gains (losses) $ 1,273 $ 2 $ 13 $ - $ 150 $ 1,769
Service charges on deposit accounts 2,017 1,964 2,059 2,035 1,956 1,903
Mortgage banking activities 840 608 1,279 1,129 1,106 535
Wealth management income 4,744 4,484 4,605 4,347 4,448 4,405
Insurance agency commissions 1,222 1,752 1,228 1,786 949 1,445
Income from bank owned life insurance 605 594 616 616 615 615
Bank card fees 1,253 1,145 1,176 1,189 1,220 1,089
Other income 1,617 2,083 1,368 1,482 2,307 1,602
Total Non-interest Income $ 13,571 $ 12,632 $ 12,344 $ 12,584 $ 12,751 $ 13,363
Non-interest Expense:
Salaries and employee benefits $ 18,282 $ 17,801 $ 18,055 $ 17,848 $ 17,221 $ 18,230
Occupancy expense of premises 3,211 3,402 3,195 3,130 3,162 3,473
Equipment expenses 1,767 1,724 1,781 1,745 1,693 1,664
Marketing 776 663 880 628 662 681
Outside data services 1,367 1,392 1,310 1,349 1,355 1,363
FDIC insurance 823 805 729 726 649 637
Amortization of intangible assets 25 26 36 34 28 32
Merger expenses 987 - - - - -
Professional fees 1,045 955 1,268 987 1,447 1,138
Other real estate owned expenses (6) 5 2 5 (5) 17
Other expenses 4,591 3,208 3,288 2,874 4,659 5,082
Total Non-interest Expense $ 32,868 $ 29,981 $ 30,544 $ 29,326 $ 30,871 $ 32,317
(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
2017 2016
(Dollars in thousands) Q2 Q1 Q4 Q3 Q2 Q1
Balance Sheets at Quarter End:
Residential mortgage loans $ 871,766 $ 848,814 $ 841,692 $ 854,055 $ 820,618 $ 804,105
Residential construction loans 169,901 170,285 150,229 144,998 142,710 138,221
Commercial AD&C loans 314,259 309,350 308,279 302,522 285,585 261,204
Commercial investor real estate loans 1,069,988 979,410 928,113 847,946 824,252 783,161
Commercial owner occupied real estate loans 797,629 772,443 775,552 736,744 700,599 675,560
Commercial business loans 451,570 457,216 467,286 444,129 451,711 451,239
Consumer loans 458,058 455,478 456,657 450,113 447,149 447,198
Total loans 4,133,171 3,992,996 3,927,808 3,780,507 3,672,624 3,560,688
Allowance for loan losses (45,079) (43,861) (44,067) (43,942) (43,384) (41,766)
Loans held for sale 5,743 17,717 13,222 15,822 13,490 27,806
Investment securities 821,491 855,707 779,648 691,471 734,828 742,401
Interest-earning assets 4,988,704 4,919,927 4,801,613 4,537,331 4,461,180 4,447,063
Total assets 5,270,521 5,201,164 5,091,383 4,810,611 4,739,449 4,716,608
Noninterest-bearing demand deposits 1,302,536 1,234,505 1,138,139 1,154,227 1,176,135 1,084,746
Total deposits 3,885,445 3,799,198 3,577,544 3,537,157 3,510,141 3,412,308
Customer repurchase agreements 127,312 141,244 125,119 124,205 117,887 121,043
Total interest-bearing liabilities 3,380,221 3,380,937 3,384,524 3,087,135 2,996,893 3,073,605
Total stockholders' equity 554,683 544,261 533,572 536,655 529,479 522,392
Quarterly Average Balance Sheets:
Residential mortgage loans $ 860,081 $ 847,896 $ 848,399 $ 836,452 $ 811,705 $ 807,443
Residential construction loans 169,130 157,152 148,248 147,602 142,854 134,708
Commercial AD&C loans 302,924 310,325 310,110 287,836 272,090 261,687
Commercial investor real estate loans 1,010,389 945,080 878,511 832,529 788,785 750,821
Commercial owner occupied real estate loans 776,279 774,964 750,679 717,371 684,907 677,786
Commercial business loans 454,724 462,444 452,195 446,123 453,459 460,903
Consumer loans 461,672 458,162 454,349 450,171 449,594 451,075
Total loans 4,035,199 3,956,023 3,842,491 3,718,084 3,603,394 3,544,423
Loans held for sale 7,077 7,402 12,454 10,207 8,326 14,036
Investment securities 842,837 818,287 703,574 709,527 739,132 810,593
Interest-earning assets 4,922,389 4,829,208 4,599,426 4,477,438 4,394,879 4,411,796
Total assets 5,202,398 5,111,698 4,878,660 4,747,020 4,664,343 4,685,747
Noninterest-bearing demand deposits 1,251,396 1,159,715 1,167,379 1,131,739 1,082,762 1,021,471
Total deposits 3,810,180 3,673,731 3,582,437 3,528,665 3,429,897 3,300,131
Customer repurchase agreements 132,552 128,485 128,471 120,702 122,597 110,862
Total interest-bearing liabilities 3,360,128 3,375,002 3,138,420 3,045,998 3,020,505 3,103,710
Total stockholders' equity 547,229 535,308 534,057 530,241 521,387 524,309
Financial Measures:
Average equity to average assets 10.52% 10.47% 10.95% 11.17% 11.18% 11.19%
Investment securities to earning assets 16.47% 17.39% 16.24% 15.24% 16.47% 16.69%
Loans to earning assets 82.85% 81.16% 81.80% 83.32% 82.32% 80.07%
Loans to assets 78.42% 76.77% 77.15% 78.59% 77.49% 75.49%
Loans to deposits 106.38% 105.10% 109.79% 106.88% 104.63% 104.35%
Capital Measures:
Tier 1 leverage (1) 9.26% 9.26% 10.14% 10.25% 10.29% 10.23%
Tier 1 capital to risk-weighted assets (1) 10.96% 11.02% 11.74% 12.17% 12.42% 12.74%
Total regulatory capital to risk-weighted assets (1) 12.00% 12.06% 12.80% 13.29% 13.57% 13.86%
Common equity tier 1 capital to risk-weighted assets (1) 10.96% 11.02% 11.01% 11.41% 11.63% 11.79%
Book value per share $ 23.13 $ 22.74 $ 22.32 $ 22.47 $ 22.18 $ 21.92
Outstanding shares 23,983,997 23,930,165 23,901,084 23,886,651 23,874,650 23,827,305
(1) Estimated ratio at June 30, 2017

Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2017 2016
(Dollars in thousands) 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 424 - - - - -
Consumer 4 - - - 2 1
Residential real estate:
Residential mortgage - 232 232 - - -
Residential construction - - - - - -
Total loans 90 days past due 428 232 232 163 2 1
Non-accrual loans:
Commercial business 6,807 4,849 5,833 4,140 4,263 3,741
Commercial real estate:
Commercial AD&C 137 137 137 137 137 147
Commercial investor real estate 6,934 7,970 8,107 9,189 8,868 7,885
Commercial owner occupied real estate 4,926 5,106 4,823 5,591 5,678 7,149
Consumer 3,111 3,058 2,859 2,726 2,600 2,715
Residential real estate:
Residential mortgage 7,101 6,908 7,257 7,321 6,186 9,329
Residential construction 187 189 195 199 202 412
Total non-accrual loans 29,203 28,217 29,211 29,303 27,934 31,378
Total restructured loans - accruing 2,569 2,409 2,489 2,512 3,420 4,716
Total non-performing loans 32,200 30,858 31,932 31,978 31,356 36,095
Other assets and real estate owned (OREO) 1,460 1,294 1,911 1,274 1,311 2,414
Total non-performing assets $ 33,660 $32,152 $33,843 $33,252 $32,667 $38,509
For the Quarter Ended,
June 30, March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2017 2017 2016 2016 2016 2016
Analysis of Non-accrual Loan Activity:
Balance at beginning of period $ 28,217 $29,211 $29,303 $27,934 $31,378 $30,031
Non-accrual balances transferred to OREO (175) (113) (637) (38) - -
Non-accrual balances charged-off (179) (391) (390) (245) (1,305) (274)
Net payments or draws (1,804) (1,382) (1,547) (525) (4,810) (914)
Loans placed on non-accrual 3,144 1,461 2,482 2,486 2,671 2,535
Non-accrual loans brought current - (569) - (309) - -
Balance at end of period $ 29,203 $28,217 $29,211 $29,303 $27,934 $31,378
Analysis of Allowance for Loan Losses:
Balance at beginning of period $ 43,861 $44,067 $43,942 $43,384 $41,766 $40,895
Provision for loan losses 1,322 194 572 781 2,957 1,236
Less loans charged-off, net of recoveries:
Commercial business 107 260 285 95 106 67
Commercial real estate:
Commercial AD&C (103) - (18) (22) - 48
Commercial investor real estate (78) (5) (9) (12) (107) 192
Commercial owner occupied real estate - - - (1) (1) (3)
Consumer 189 167 177 145 364 54
Residential real estate:
Residential mortgage (3) (16) 18 24 989 15
Residential construction (8) (6) (6) (6) (12) (8)
Net charge-offs 104 400 447 223 1,339 365
Balance at end of period $ 45,079 $43,861 $44,067 $43,942 $43,384 $41,766
Asset Quality Ratios:
Non-performing loans to total loans 0.78% 0.77% 0.81% 0.85% 0.85% 1.01%
Non-performing assets to total assets 0.64% 0.62% 0.66% 0.69% 0.69% 0.82%
Allowance for loan losses to loans 1.09% 1.10% 1.12% 1.16% 1.18% 1.17%
Allowance for loan losses to non-performing loans 140.00% 142.14% 138.00% 137.41% 138.36% 115.72%
Annualized net charge-offs to average loans 0.01% 0.04% 0.05% 0.02% 0.15% 0.04%

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Three Months Ended June 30,
2017 2016
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 $ 860,081 $ 7,531 3.50%$ 811,705 $ 6,934 3.42%
Residential construction loans 169,130 1,579 3.74 142,854 1,268 3.57
Total mortgage loans 1,029,211 9,110 3.54 954,559 8,202 3.44
Commercial AD&C loans 302,924 3,767 4.99 272,090 3,115 4.60
Commercial investor real estate loans 1,010,389 11,280 4.48 788,785 8,988 4.58
Commercial owner occupied real estate loans 776,279 9,981 5.16 684,907 8,280 4.86
Commercial business loans 454,724 5,062 4.46 453,459 4,943 4.38
Total commercial loans 2,544,316 30,090 4.74 2,199,241 25,326 4.63
Consumer loans 461,672 4,171 3.66 449,594 3,885 3.50
Total loans (2) 4,035,199 43,371 4.31 3,603,394 37,413 4.17
Loans held for sale 7,077 72 4.09 8,326 64 3.08
Taxable securities 535,028 3,678 2.75 456,803 2,943 2.58
Tax-exempt securities (3) 307,809 3,259 4.23 282,329 2,968 4.21
Total investment securities 842,837 6,937 3.29 739,132 5,911 3.20
Interest-bearing deposits with banks 34,738 91 1.06 43,300 54 0.50
Federal funds sold 2,538 6 0.96 727 1 0.49
Total interest-earning assets 4,922,389 50,477 4.11 4,394,879 43,443 3.97
Less: allowance for loan losses (43,679) (42,064)
Cash and due from banks 47,517 46,527
Premises and equipment, net 53,449 53,218
Other assets 222,722 211,783
Total assets $ 5,202,398 $ 4,664,343
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 615,141 123 0.08%$ 586,323 115 0.08%
Regular savings deposits 325,634 57 0.07 298,435 47 0.06
Money market savings deposits 983,185 1,076 0.44 907,670 495 0.22
Time deposits 634,824 1,767 1.12 554,707 1,384 1.00
Total interest-bearing deposits 2,558,784 3,023 0.47 2,347,135 2,041 0.35
Other borrowings 132,553 79 0.24 122,601 72 0.24
Advances from FHLB 668,791 3,148 1.89 519,780 2,739 2.12
Subordinated debentures - - - 30,989 219 2.83
Total interest-bearing liabilities 3,360,128 6,250 0.75 3,020,505 5,071 0.68
Noninterest-bearing demand deposits 1,251,396 1,082,762
Other liabilities 43,645 39,689
Stockholders' equity 547,229 521,387
Total liabilities and stockholders' equity $ 5,202,398 $ 4,664,343
Net interest income and spread $ 44,227 3.36 % $ 38,372 3.29%
Less: tax-equivalent adjustment 1,901 1,640
Net interest income $ 42,326 $ 36,732
Interest income/earning assets 4.11 % 3.97%
Interest expense/earning assets 0.51 0.46
Net interest margin 3.60 % 3.51%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and 2016. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.9 million and $1.6 million in 2017 and 2016, 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
Six Months Ended June 30,
2017 2016
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 $ 854,022 $ 14,879 3.48%$809,574 $13,802 3.41%
Residential construction loans 163,174 3,015 3.73 138,781 2,463 3.57
Total mortgage loans 1,017,196 17,894 3.52 948,355 16,265 3.43
Commercial AD&C loans 306,604 7,421 4.88 266,888 6,113 4.61
Commercial investor real estate loans 977,915 21,699 4.47 769,803 17,600 4.60
Commercial owner occupied real estate loans 775,625 19,009 4.94 681,347 16,365 4.83
Commercial business loans 458,563 10,069 4.43 457,181 9,956 4.38
Total commercial loans 2,518,707 58,198 4.66 2,175,219 50,034 4.63
Consumer loans 459,927 8,101 3.58 450,335 7,774 3.49
Total loans (2) 3,995,830 84,193 4.24 3,573,909 74,073 4.16
Loans held for sale 7,238 154 4.27 11,181 198 3.54
Taxable securities 534,306 7,413 2.78 490,338 6,356 2.59
Tax-exempt securities (3) 296,323 6,280 4.24 284,524 6,024 4.23
Total investment securities 830,629 13,693 3.30 774,862 12,380 3.20
Interest-bearing deposits with banks 40,038 181 0.91 42,777 107 0.50
Federal funds sold 2,320 10 0.84 608 2 0.48
Total interest-earning assets 4,876,055 98,231 4.05 4,403,337 86,760 3.96
Less: allowance for loan losses (43,703) (41,567)
Cash and due from banks 48,165 46,783
Premises and equipment, net 53,548 53,396
Other assets 223,228 212,915
Total assets $ 5,157,293 $4,674,864
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 612,608 237 0.08%$577,771 223 0.08%
Regular savings deposits 320,577 106 0.07 294,339 89 0.06
Money market savings deposits 986,625 1,854 0.38 902,352 932 0.21
Time deposits 616,713 3,314 1.08 538,435 2,634 0.98
Total interest-bearing deposits 2,536,523 5,511 0.44 2,312,897 3,878 0.34
Other borrowings 130,531 155 0.24 116,792 138 0.24
Advances from FHLB 699,641 6,277 1.81 599,423 6,113 2.05
Subordinated debentures 829 12 2.91 32,995 473 2.87
Total interest-bearing liabilities 3,367,524 11,955 0.72 3,062,107 10,602 0.70
Noninterest-bearing demand deposits 1,205,809 1,052,116
Other liabilities 42,659 37,793
Stockholders' equity 541,301 522,848
Total liabilities and stockholders' equity $ 5,157,293 $4,674,864
Net interest income and spread $ 86,276 3.33 % $76,158 3.26%
Less: tax-equivalent adjustment 3,697 3,304
Net interest income $ 82,579 $72,854
Interest income/earning assets 4.05 % 3.96%
Interest expense/earning assets 0.49 0.49
Net interest margin 3.56 % 3.47%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and 2016. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $3.7 million and $3.3 million in 2017 and 2016, 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.