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Sandy Spring Bancorp Reports Net Income of $15.1 Million for the Third Quarter

OLNEY, Md., Oct. 19, 2017 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR), the parent company of Sandy Spring Bank, today reported net income for the third quarter of 2017 of $15.1 million ($0.62 per diluted share) compared to net income of $13.5 million ($0.56 per diluted share) for the third quarter of 2016 and net income of $14.7 million ($0.61 per diluted share) for the second quarter of 2017.

“Our solid core performance this quarter was once again driven by the loan and deposit growth that we’ve achieved over the past year. We continue to focus on building relationships with our clients and within the communities we serve to grow the company. We look forward to completing the acquisition of WashingtonFirst Bankshares, Inc. This acquisition will create the largest, locally headquartered community bank in the Greater Washington, D.C. region. It will expand access to the bank’s expertise and services, and ultimately benefit our clients and shareholders,” said Daniel J. Schrider, President and Chief Executive Officer.

Third Quarter Highlights:

  • Total loans increased 11% compared to the third quarter of 2016 and 1% compared to the second quarter of 2017. The year-over-year increase was driven primarily by year-over-year growth of 15% in the commercial loan portfolio.
  • Total deposits grew 12% from the prior year quarter and 2% from the prior quarter.
  • The net interest margin was 3.54% for the third quarter of 2017, compared to 3.50% for the third quarter of 2016 and 3.60% for the second quarter of 2017. Net interest income from the second quarter of 2017 included $0.7 million from the full payoff of a previously acquired credit impaired loan. Exclusive of this non-core item, the previous quarter’s margin would have been 3.54%.
  • Return on average common equity was 10.74% as compared to 10.11% from the prior year.

  • The Non-GAAP efficiency ratio was 53.76% for the current quarter as compared to 56.33% for the third quarter of 2016 and 54.10% for the second quarter of 2017.
  • Pre-tax, pre-provision income increased 17% compared with the third quarter of 2016.

Review of Balance Sheet and Credit Quality

At September 30, 2017, total assets were $5.3 billion, an 11% increase compared to $4.8 billion at September 30, 2016. Loan growth continues to be the driver of asset growth as total loans ended the period at $4.2 billion compared to $3.8 billion at September 30, 2016. The growth in the loan portfolio was funded primarily by a 12% increase in total deposits from September 30, 2016, to September 30, 2017.

Combined noninterest-bearing and interest-bearing checking account balances at September 30, 2017, an important performance driver of multiple-product banking relationships with clients, increased by 11% compared to balances at September 30, 2016.

Tangible common equity totaled $482 million at September 30, 2017, compared to $446 million at September 30, 2016. As a result of asset growth over the preceding 12 months, the ratio of tangible common equity to tangible assets decreased to 9.18% at September 30, 2017, from 9.43% at September 30, 2016. Dividends at $0.26 per common share were 8% higher in the third quarter of 2017 compared to the $0.24 per common share of third quarter of 2016. At September 30, 2017, the Company had a total risk-based capital ratio of 12.01%, a common equity tier 1 risk-based capital ratio of 10.99%, a tier 1 risk-based capital ratio of 10.99% and a tier 1 leverage ratio of 9.28%.

The level of non-performing loans to total loans decreased to 0.72% at September 30, 2017, compared to 0.85% at September 30, 2016, as a result of the growth in the loan portfolio and a reduction in non-performing loans. At September 30, 2017, non-performing loans totaled $30.2 million compared to $32.0 million at September 30, 2016, and $32.2 million at June 30, 2017. Non-performing loans include accruing loans 90 days or more past due and restructured loans.

Loan charge-offs, net of recoveries, totaled $1.1 million for the third quarter of 2017 compared to $0.2 million for the third quarter of 2016. The increase in charge-offs was the result of a commercial loan charge-off taken during the current quarter. The allowance for loan losses represented 1.07% of outstanding loans and 149% of non-performing loans at September 30, 2017, compared to 1.16% of outstanding loans and 137% of non-performing loans at September 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 third quarter of 2017 increased 13% compared to the third quarter of 2016 as average loans from quarter to quarter increased 12%. The net interest margin improved to 3.54% for the third quarter of 2017 compared to 3.50% for the third quarter of 2016. The margin improvement reflects the impact of loan growth, the cumulative benefits associated with the execution of funding strategies and higher yields associated with the investment portfolio.

The provision for loan losses was $0.9 million for the third quarter of 2017 compared to $0.8 million for the third quarter of 2016 and $1.3 million for the second quarter of 2017. The current quarter’s provision increase as compared to the prior year quarter was the result of qualitative adjustments related to composition and concentration of loan credits which offset the impact of lower quarterly loan growth in 2017 versus 2016.

Non-interest income increased to $12.7 million for the third quarter of 2017 compared to $12.6 million for the third quarter of 2016. Wealth management income for the third quarter of 2017 increased to $4.9 million or 12% as compared to $4.3 million for the third quarter of 2016. Insurance agency commissions increased 9% for the third quarter compared to same period of the prior year as a result last year’s agency acquisition. These results were offset by the $0.5 million decline in mortgage banking income from the prior year’s results as mortgage loan originations declined in the current quarter compared to the prior year.

Non-interest expenses increased 6% to $31.2 million for the third quarter of 2017 compared to $29.3 million in the third quarter of 2016. The increase in the current quarter compared to the prior year quarter was driven primarily by a $0.6 million increase in salary costs related to performance incentives and volume driven compensation costs, $0.3 million in merger related expenses and $0.6 million in other expenses. The non-GAAP efficiency ratio was 53.76% for the third quarter of 2017 compared to 56.33% for the third quarter of 2016 as a result of the growth in net interest income.

Net interest income for the first nine months of 2017 increased 13% compared to the first nine 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 3.55% for the first nine months of 2017 compared to 3.49% for the prior year period. Net interest income for the first nine months of 2017 included $0.7 million from the full payoff of a previously acquired credit impaired loan. Exclusive of this recovery the net interest margin would have been 3.54%.

The provision for loan losses was $2.5 million for the first nine months of 2017 compared to $5.0 million for the first nine 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 $38.9 million for the first nine months of 2017 compared to $38.7 million for the first nine months of 2016. The first nine 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 $1.9 million in gains on the sales of investment securities. Excluding these gains, non-interest income increased 6% compared to the prior year period primarily due to increases in wealth management income, insurance agency commissions and other non-interest income.

Non-interest expenses increased 2% to $94.0 million for the first nine months of 2017 compared to $92.5 million for the prior year period. The nine months ended September 30, 2017, included increases from the prior year of $1.2 million in salaries and benefits, $0.5 million in FDIC insurance as a result of asset growth, and $1.3 million in merger expenses. These increases were partially offset by the decrease in prepayment penalties of $1.9 million for the early payoff of high-rate FHLB advances as compared to the nine months ended September 30, 2016. The non-GAAP efficiency ratio decreased to 54.21% for the first nine months of 2017 compared to 59.05% for the first nine 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 Webcast of the conference call is available through the Investor Relations’ section of the Sandy Spring Website at www.sandyspringbank.com. Participants may call 1-866-235-9910. A password is not necessary. Visitors to the Website are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Website until 9:00 am (ET) November 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 10112289.

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.

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
Website: www.sandyspringbank.com

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

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 Website 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) 2017 2016 Change
2017 2016 Change
Results of Operations:
Net interest income $ 42,697 $37,731 13% $ 125,276 $110,585 13%
Provision for loan losses 934 781 20 2,450 4,974 (51)
Non-interest income 12,746 12,584 1 38,949 38,698 1
Non-interest expenses 31,191 29,326 6 94,040 92,514 2
Income before income taxes 23,318 20,208 15 67,735 51,795 31
Net income 15,089 13,474 12 44,942 34,934 29
Pre-tax pre-provision income $ 24,597 $20,989 17 $ 71,517 $56,769 26
Return on average assets 1.13 % 1.13% 1.15 % 0.99%
Return on average common equity 10.74 % 10.11% 10.99 % 8.88%
Net interest margin 3.54 % 3.50% 3.55 % 3.49%
Efficiency ratio - GAAP basis (1) 56.26 % 58.28% 57.26 % 61.97%
Efficiency ratio - Non-GAAP basis (1) 53.76 % 56.33% 54.21 % 59.05%
Per share data:
Basic net income $ 0.62 $0.56 11% $ 1.86 $1.45 28%
Diluted net income $ 0.62 $0.56 11 $ 1.86 $1.45 28
Average fully diluted shares 24,223,004 24,122,923 - 24,201,448 24,151,622 -
Dividends declared per share $ 0.26 $0.24 8 $ 0.78 $0.72 8
Book value per share 23.53 22.47 5 23.53 22.47 5
Tangible book value per share 20.07 18.66 8 20.07 18.66 8
Outstanding shares 23,990,370 23,886,651 - 23,990,370 23,886,651 -
Financial Condition at period-end:
Investment securities $ 795,922 $691,471 15% $ 795,922 $691,471 15%
Loans 4,194,118 3,780,507 11 4,194,118 3,780,507 11
Interest-earning assets 5,049,229 4,537,331 11 5,049,229 4,537,331 11
Assets 5,334,788 4,810,611 11 5,334,788 4,810,611 11
Deposits 3,955,792 3,537,157 12 3,955,792 3,537,157 12
Interest-bearing liabilities 3,422,568 3,087,135 11 3,422,568 3,087,135 11
Stockholders' equity 564,480 536,655 5 564,480 536,655 5
Capital ratios:
Tier 1 leverage (4) 9.28 % 10.25% 9.28 % 10.25%
Tier 1 capital to risk-weighted assets (4) 10.99 % 12.17% 10.99 % 12.17%
Total regulatory capital to risk-weighted assets (4) 12.01 % 13.29% 12.01 % 13.29%
Common equity tier 1 capital to risk-weighted assets (4) 10.99 % 11.41% 10.99 % 11.41%
Tangible common equity to tangible assets (2) 9.18 % 9.43% 9.18 % 9.43%
Average equity to average assets 10.52 % 11.17% 10.50 % 11.18%
Credit quality ratios:
Allowance for loan losses to loans 1.07 % 1.16% 1.07 % 1.16%
Non-performing loans to total loans 0.72 % 0.85% 0.72 % 0.85%
Non-performing assets to total assets 0.59 % 0.69% 0.59 % 0.69%
Allowance for loan losses to non-performing loans 148.73 % 137.41% 148.73 % 137.41%
Annualized net charge-offs to average loans (3) 0.10 % 0.02% 0.05 % 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, excluding residential mortgage loans held-for-sale.
(4) Estimated ratio at September 30, 2017


Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands) 2017
2016
2017
2016
Pre-tax pre-provision income:
Net income $ 15,089 $13,474 $ 44,942 $34,934
Plus non-GAAP adjustment:
Merger expenses 345 - 1,332 -
Income taxes 8,229 6,734 22,793 16,861
Provision for loan losses 934 781 2,450 4,974
Pre-tax pre-provision income $ 24,597 $20,989 $ 71,517 $56,769
Efficiency ratio - GAAP basis:
Non-interest expenses $ 31,191 $29,326 $ 94,040 $92,514
Net interest income plus non-interest income $ 55,443 $50,315 $ 164,225 $149,283
Efficiency ratio - GAAP basis 56.26% 58.28% 57.26% 61.97%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses $ 31,191 $29,326 $ 94,040 $92,514
Less non-GAAP adjustment:
Amortization of intangible assets 25 34 76 94
Loss on FHLB Redemption - - 1,275 3,167
Merger expenses 345 - 1,332 -
Non-interest expenses - as adjusted $ 30,821 $29,292 $ 91,357 $89,253
Net interest income plus non-interest income $ 55,443 $50,315 $ 164,225 $149,283
Plus non-GAAP adjustment:
Tax-equivalent income 1,888 1,688 5,585 4,993
Less non-GAAP adjustments:
Securities gains - - 1,275 1,919
Gain on redemption of subordinated debentures - - - 1,200
Net interest income plus non-interest income - as adjusted $ 57,331 $52,003 $ 168,535 $151,157
Efficiency ratio - Non-GAAP basis 53.76% 56.33% 54.21% 59.05%
Tangible common equity ratio:
Total stockholders' equity $ 564,480 $536,655 $ 564,480 $536,655
Accumulated other comprehensive income 3,477 (4,465) 3,477 (4,465)
Goodwill (85,768) (85,768) (85,768) (85,768)
Other intangible assets, net (604) (716) (604) (716)
Tangible common equity $ 481,585 $445,706 $ 481,585 $445,706
Total assets $ 5,334,788 $4,810,611 $ 5,334,788 $4,810,611
Goodwill (85,768) (85,768) (85,768) (85,768)
Other intangible assets, net (604) (716) (604) (716)
Tangible assets $ 5,248,416 $4,724,127 $ 5,248,416 $4,724,127
Tangible common equity ratio 9.18% 9.43% 9.18% 9.43%
Outstanding common shares 23,990,370 23,886,651 23,990,370 23,886,651
Tangible book value per common share $ 20.07 $18.66 $ 20.07 $18.66


Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
September 30, December 31, September 30,
(Dollars in thousands) 2017
2016
2016
Assets
Cash and due from banks $ 50,076 $53,190 $48,666
Federal funds sold 2,838 1,953 1,106
Interest-bearing deposits with banks 49,267 78,982 48,425
Cash and cash equivalents 102,181 134,125 98,197
Residential mortgage loans held for sale (at fair value) 7,084 13,222 15,822
Investments available-for-sale (at fair value) 756,069 733,554 655,642
Other equity securities 39,853 46,094 35,829
Total loans 4,194,118 3,927,808 3,780,507
Less: allowance for loan losses (44,924) (44,067) (43,942)
Net loans 4,149,194 3,883,741 3,736,565
Premises and equipment, net 54,108 53,562 53,356
Other real estate owned 1,448 1,911 1,274
Accrued interest receivable 16,045 14,589 13,123
Goodwill 85,768 85,768 85,768
Other intangible assets, net 604 680 716
Other assets 122,434 124,137 114,319
Total assets $ 5,334,788 $5,091,383 $4,810,611
Liabilities
Noninterest-bearing deposits $ 1,312,710 $1,138,139 $1,154,227
Interest-bearing deposits 2,643,082 2,439,405 2,382,930
Total deposits 3,955,792 3,577,544 3,537,157
Securities sold under retail repurchase agreements and federal funds purchased 146,569 125,119 124,205
Advances from FHLB 632,917 790,000 550,000
Subordinated debentures - 30,000 30,000
Accrued interest payable and other liabilities 35,030 35,148 32,594
Total liabilities 4,770,308 4,557,811 4,273,956
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,990,370,
23,901,084 and 23,886,651 at September 30, 2017, December 31, 2016 and September 30, 2016, respectively 23,990 23,901 23,887
Additional paid in capital 167,455 165,871 164,937
Retained earnings 376,512 350,414 343,366
Accumulated other comprehensive loss (3,477) (6,614) 4,465
Total stockholders' equity 564,480 533,572 536,655
Total liabilities and stockholders' equity $ 5,334,788 $5,091,383 $4,810,611


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) 2017 2016 2017 2016
Interest Income:
Interest and fees on loans $ 43,891 $38,224 $ 126,861 $111,358
Interest on loans held for sale 119 96 273 294
Interest on deposits with banks 108 49 289 156
Interest and dividends on investment securities:
Taxable 3,410 2,623 10,572 8,749
Exempt from federal income taxes 2,053 1,864 6,110 5,753
Interest on federal funds sold 8 1 18 3
Total interest income 49,589 42,857 144,123 126,313
Interest Expense:
Interest on deposits 3,701 2,128 9,212 6,006
Interest on retail repurchase agreements and federal funds purchased 83 74 238 212
Interest on advances from FHLB 3,108 2,699 9,385 8,812
Interest on subordinated debt - 225 12 698
Total interest expense 6,892 5,126 18,847 15,728
Net interest income 42,697 37,731 125,276 110,585
Provision for loan losses 934 781 2,450 4,974
Net interest income after provision for loan losses 41,763 36,950 122,826 105,611
Non-interest Income:
Investment securities gains - - 1,275 1,919
Service charges on deposit accounts 2,140 2,035 6,121 5,894
Mortgage banking activities 632 1,129 2,080 2,770
Wealth management income 4,864 4,347 14,092 13,200
Insurance agency commissions 1,950 1,786 4,924 4,180
Income from bank owned life insurance 609 616 1,808 1,846
Bank card fees 1,211 1,189 3,609 3,498
Other income 1,340 1,482 5,040 5,391
Total non-interest income 12,746 12,584 38,949 38,698
Non-interest Expenses:
Salaries and employee benefits 18,442 17,848 54,525 53,299
Occupancy expense of premises 3,294 3,130 9,907 9,765
Equipment expenses 1,722 1,745 5,213 5,102
Marketing 784 628 2,223 1,971
Outside data services 1,286 1,349 4,045 4,067
FDIC insurance 850 726 2,478 2,012
Amortization of intangible assets 25 34 76 94
Merger expenses 345 - 1,332 -
Other expenses 4,443 3,866 14,241 16,204
Total non-interest expenses 31,191 29,326 94,040 92,514
Income before income taxes 23,318 20,208 67,735 51,795
Income tax expense 8,229 6,734 22,793 16,861
Net income $ 15,089 $13,474 $ 44,942 $34,934
Net Income Per Share Amounts:
Basic net income per share $ 0.62 $0.56 $ 1.86 $1.45
Diluted net income per share $ 0.62 $0.56 $ 1.86 $1.45
Dividends declared per share $ 0.26 $0.24 $ 0.78 $0.72


Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2017 2016
(Dollars in thousands, except per share data) Q3 Q2 Q1 Q4 Q3 Q2 Q1
Profitability for the Quarter:
Tax-equivalent interest income $ 51,477 $50,477 $47,754 $45,961 $44,545 $43,443 $43,317
Interest expense 6,892 6,250 5,705 5,276 5,126 5,071 5,531
Tax-equivalent net interest income 44,585 44,227 42,049 40,685 39,419 38,372 37,786
Tax-equivalent adjustment 1,888 1,901 1,796 1,718 1,688 1,640 1,664
Provision for loan losses 934 1,322 194 572 781 2,957 1,236
Non-interest income 12,746 13,571 12,632 12,344 12,584 12,751 13,363
Non-interest expenses 31,191 32,868 29,981 30,544 29,326 30,871 32,317
Income before income taxes 23,318 21,707 22,710 20,195 20,208 15,655 15,932
Income tax expense 8,229 6,966 7,598 6,879 6,734 5,008 5,119
Net income $ 15,089 $14,741 $15,112 $13,316 $13,474 $10,647 $10,813
Financial Performance:
Pre-tax pre-provision income (2) $ 24,597 $24,016 $22,904 $20,767 $20,989 $18,612 $17,168
Return on average assets 1.13% 1.14% 1.20% 1.09% 1.13% 0.92% 0.93%
Return on average common equity 10.74% 10.80% 11.45% 9.92% 10.11% 8.21% 8.29%
Net interest margin 3.54% 3.60% 3.51% 3.52% 3.50% 3.51% 3.44%
Efficiency ratio - GAAP basis (1) 56.26% 58.80% 56.69% 59.53% 58.28% 62.39% 65.31%
Efficiency ratio - Non-GAAP basis (1) 53.76% 54.10% 54.78% 57.54% 56.33% 59.12% 61.84%
Per Share Data:
Basic net income per share $ 0.62 $0.61 $0.63 $0.55 $0.56 $0.45 $0.45
Diluted net income per share $ 0.62 $0.61 $0.63 $0.55 $0.56 $0.44 $0.45
Average fully diluted shares 24,223,004 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 $0.26 $0.24 $0.24 $0.24
Non-interest Income:
Securities gains $ - $1,273 $2 $13 $- $150 $1,769
Service charges on deposit accounts 2,140 2,017 1,964 2,059 2,035 1,956 1,903
Mortgage banking activities 632 840 608 1,279 1,129 1,106 535
Wealth management income 4,864 4,744 4,484 4,605 4,347 4,448 4,405
Insurance agency commissions 1,950 1,222 1,752 1,228 1,786 949 1,445
Income from bank owned life insurance 609 605 594 616 616 615 615
Bank card fees 1,211 1,253 1,145 1,176 1,189 1,220 1,089
Other income 1,340 1,617 2,083 1,368 1,482 2,307 1,602
Total Non-interest Income $ 12,746 $13,571 $12,632 $12,344 $12,584 $12,751 $13,363
Non-interest Expense:
Salaries and employee benefits $ 18,442 $18,282 $17,801 $18,055 $17,848 $17,221 $18,230
Occupancy expense of premises 3,294 3,211 3,402 3,195 3,130 3,162 3,473
Equipment expenses 1,722 1,767 1,724 1,781 1,745 1,693 1,664
Marketing 784 776 663 880 628 662 681
Outside data services 1,286 1,367 1,392 1,310 1,349 1,355 1,363
FDIC insurance 850 823 805 729 726 649 637
Amortization of intangible assets 25 25 26 36 34 28 32
Merger expenses 345 987 - - - - -
Professional fees 1,053 1,045 955 1,268 987 1,447 1,138
Other real estate owned expenses 4 (6) 5 2 5 (5) 17
Other expenses 3,386 4,591 3,208 3,288 2,874 4,659 5,082
Total Non-interest Expense $ 31,191 $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.
(2) Pre-tax pre-provision income includes an adjustment to exclude the impact of merger expenses.


Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2017 2016
(Dollars in thousands) Q3 Q2 Q1 Q4 Q3 Q2 Q1
Balance Sheets at Quarter End:
Residential mortgage loans $ 882,890 $871,766 $848,814 $841,692 $854,055 $820,618 $804,105
Residential construction loans 171,814 169,901 170,285 150,229 144,998 142,710 138,221
Commercial AD&C loans 295,222 314,259 309,350 308,279 302,522 285,585 261,204
Commercial investor real estate loans 1,104,669 1,069,988 979,410 928,113 847,946 824,252 783,161
Commercial owner occupied real estate loans 831,461 797,629 772,443 775,552 736,744 700,599 675,560
Commercial business loans 451,667 451,570 457,216 467,286 444,129 451,711 451,239
Consumer loans 456,395 458,058 455,478 456,657 450,113 447,149 447,198
Total loans 4,194,118 4,133,171 3,992,996 3,927,808 3,780,507 3,672,624 3,560,688
Allowance for loan losses (44,924) (45,079) (43,861) (44,067) (43,942) (43,384) (41,766)
Loans held for sale 7,084 5,743 17,717 13,222 15,822 13,490 27,806
Investment securities 795,922 821,491 855,707 779,648 691,471 734,828 742,401
Interest-earning assets 5,049,229 4,988,704 4,919,927 4,801,613 4,537,331 4,461,180 4,447,063
Total assets 5,334,788 5,270,521 5,201,164 5,091,383 4,810,611 4,739,449 4,716,608
Noninterest-bearing demand deposits 1,312,710 1,302,536 1,234,505 1,138,139 1,154,227 1,176,135 1,084,746
Total deposits 3,955,792 3,885,445 3,799,198 3,577,544 3,537,157 3,510,141 3,412,308
Customer repurchase agreements 146,569 127,312 141,244 125,119 124,205 117,887 121,043
Total interest-bearing liabilities 3,422,568 3,380,221 3,380,937 3,384,524 3,087,135 2,996,893 3,073,605
Total stockholders' equity 564,480 554,683 544,261 533,572 536,655 529,479 522,392
Quarterly Average Balance Sheets:
Residential mortgage loans $ 880,782 $860,081 $847,896 $848,399 $836,452 $811,705 $807,443
Residential construction loans 172,921 169,130 157,152 148,248 147,602 142,854 134,708
Commercial AD&C loans 291,569 302,924 310,325 310,110 287,836 272,090 261,687
Commercial investor real estate loans 1,090,641 1,010,389 945,080 878,511 832,529 788,785 750,821
Commercial owner occupied real estate loans 808,802 776,279 774,964 750,679 717,371 684,907 677,786
Commercial business loans 459,779 454,724 462,444 452,195 446,123 453,459 460,903
Consumer loans 457,526 461,672 458,162 454,349 450,171 449,594 451,075
Total loans 4,162,020 4,035,199 3,956,023 3,842,491 3,718,084 3,603,394 3,544,423
Loans held for sale 7,093 7,077 7,402 12,454 10,207 8,326 14,036
Investment securities 813,179 842,837 818,287 703,574 709,527 739,132 810,593
Interest-earning assets 5,019,133 4,922,389 4,829,208 4,599,426 4,477,438 4,394,879 4,411,796
Total assets 5,297,368 5,202,398 5,111,698 4,878,660 4,747,020 4,664,343 4,685,747
Noninterest-bearing demand deposits 1,293,470 1,251,396 1,159,715 1,167,379 1,131,739 1,082,762 1,021,471
Total deposits 3,916,657 3,810,180 3,673,731 3,582,437 3,528,665 3,429,897 3,300,131
Customer repurchase agreements 133,145 132,552 128,485 128,471 120,702 122,597 110,862
Total interest-bearing liabilities 3,407,279 3,360,128 3,375,002 3,138,420 3,045,998 3,020,505 3,103,710
Total stockholders' equity 557,282 547,229 535,308 534,057 530,241 521,387 524,309
Financial Measures:
Average equity to average assets 10.52% 10.52% 10.47% 10.95% 11.17% 11.18% 11.19%
Investment securities to earning assets 15.76% 16.47% 17.39% 16.24% 15.24% 16.47% 16.69%
Loans to earning assets 83.06% 82.85% 81.16% 81.80% 83.32% 82.32% 80.07%
Loans to assets 78.62% 78.42% 76.77% 77.15% 78.59% 77.49% 75.49%
Loans to deposits 106.02% 106.38% 105.10% 109.79% 106.88% 104.63% 104.35%
Capital Measures:
Tier 1 leverage (1) 9.28% 9.26% 9.26% 10.14% 10.25% 10.29% 10.23%
Tier 1 capital to risk-weighted assets (1) 10.99% 10.96% 11.02% 11.74% 12.17% 12.42% 12.74%
Total regulatory capital to risk-weighted assets (1) 12.01% 12.00% 12.06% 12.80% 13.29% 13.57% 13.86%
Common equity tier 1 capital to risk-weighted assets (1) 10.99% 10.96% 11.02% 11.01% 11.41% 11.63% 11.79%
Book value per share $ 23.53 $23.13 $22.74 $22.32 $22.47 $22.18 $21.92
Outstanding shares 23,990,370 23,983,997 23,930,165 23,901,084 23,886,651 23,874,650 23,827,305
(1) Estimated ratio at September 30, 2017


Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2017 2016
(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 - 424 - - - - -
Consumer 1 4 - - - 2 1
Residential real estate:
Residential mortgage 225 - 232 232 - - -
Residential construction - - - - - - -
Total loans 90 days past due 226 428 232 232 163 2 1
Non-accrual loans:
Commercial business 6,091 6,807 4,849 5,833 4,140 4,263 3,741
Commercial real estate:
Commercial AD&C 137 137 137 137 137 137 147
Commercial investor real estate 5,589 6,934 7,970 8,107 9,189 8,868 7,885
Commercial owner occupied real estate 5,012 4,926 5,106 4,823 5,591 5,678 7,149
Consumer 3,152 3,111 3,058 2,859 2,726 2,600 2,715
Residential real estate:
Residential mortgage 7,345 7,101 6,908 7,257 7,321 6,186 9,329
Residential construction 182 187 189 195 199 202 412
Total non-accrual loans 27,508 29,203 28,217 29,211 29,303 27,934 31,378
Total restructured loans - accruing 2,471 2,569 2,409 2,489 2,512 3,420 4,716
Total non-performing loans 30,205 32,200 30,858 31,932 31,978 31,356 36,095
Other assets and real estate owned (OREO) 1,448 1,460 1,294 1,911 1,274 1,311 2,414
Total non-performing assets $ 31,653 $33,660 $32,152 $33,843 $33,252 $32,667 $38,509
For the Quarter Ended,
September 30, June 30, March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2017
2017
2017
2016
2016
2016
2016
Analysis of Non-accrual Loan Activity:
Balance at beginning of period $ 29,203 $28,217 $29,211 $29,303 $27,934 $31,378 $30,031
Non-accrual balances transferred to OREO (411) (175) (113) (637) (38) - -
Non-accrual balances charged-off (1,127) (179) (391) (390) (245) (1,305) (274)
Net payments or draws (1,869) (1,804) (1,382) (1,547) (525) (4,810) (914)
Loans placed on non-accrual 1,712 3,144 1,461 2,482 2,486 2,671 2,535
Non-accrual loans brought current - - (569) - (309) - -
Balance at end of period $ 27,508 $29,203 $28,217 $29,211 $29,303 $27,934 $31,378
Analysis of Allowance for Loan Losses:
Balance at beginning of period $ 45,079 $43,861 $44,067 $43,942 $43,384 $41,766 $40,895
Provision for loan losses 934 1,322 194 572 781 2,957 1,236
Less loans charged-off, net of recoveries:
Commercial business 1,029 107 260 285 95 106 67
Commercial real estate:
Commercial AD&C - (103) - (18) (22) - 48
Commercial investor real estate (10) (78) (5) (9) (12) (107) 192
Commercial owner occupied real estate 5 - - - (1) (1) (3)
Consumer 103 189 167 177 145 364 54
Residential real estate:
Residential mortgage (32) (3) (16) 18 24 989 15
Residential construction (6) (8) (6) (6) (6) (12) (8)
Net charge-offs 1,089 104 400 447 223 1,339 365
Balance at end of period $ 44,924 $45,079 $43,861 $44,067 $43,942 $43,384 $41,766
Asset Quality Ratios:
Non-performing loans to total loans 0.72% 0.78% 0.77% 0.81% 0.85% 0.85% 1.01%
Non-performing assets to total assets 0.59% 0.64% 0.62% 0.66% 0.69% 0.69% 0.82%
Allowance for loan losses to loans 1.07% 1.09% 1.10% 1.12% 1.16% 1.18% 1.17%
Allowance for loan losses to non-performing loans 148.73% 140.00% 142.14% 138.00% 137.41% 138.36% 115.72%
Annualized net charge-offs to average loans 0.10% 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 September 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 $ 880,782 $ 7,772 3.53% $836,452 $7,208 3.45%
Residential construction loans 172,921 1,641 3.77 147,602 1,341 3.62
Total mortgage loans 1,053,703 9,413 3.57 984,054 8,549 3.47
Commercial AD&C loans 291,569 3,705 5.04 287,836 3,398 4.70
Commercial investor real estate loans 1,090,641 12,279 4.47 832,529 9,487 4.53
Commercial owner occupied real estate loans 808,802 9,492 4.66 717,371 8,581 4.76
Commercial business loans 459,779 5,252 4.53 446,123 4,863 4.34
Total commercial loans 2,650,791 30,728 4.60 2,283,859 26,329 4.59
Consumer loans 457,526 4,395 3.84 450,171 3,916 3.48
Total loans (2) 4,162,020 44,536 4.25 3,718,084 38,794 4.16
Loans held for sale 7,093 119 6.69 10,207 96 3.75
Taxable securities 512,420 3,531 2.76 432,706 2,717 2.51
Tax-exempt securities (3) 300,759 3,175 4.22 276,821 2,888 4.17
Total investment securities 813,179 6,706 3.30 709,527 5,605 3.16
Interest-bearing deposits with banks 34,007 108 1.26 38,773 49 0.51
Federal funds sold 2,834 8 1.16 847 1 0.49
Total interest-earning assets 5,019,133 51,477 4.08 4,477,438 44,545 3.96
Less: allowance for loan losses (45,546) (43,498)
Cash and due from banks 48,221 45,210
Premises and equipment, net 53,938 53,162
Other assets 221,622 214,708
Total assets $ 5,297,368 $4,747,020
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 615,250 135 0.09%$579,863 112 0.08%
Regular savings deposits 326,827 57 0.07 305,077 48 0.06
Money market savings deposits 1,002,779 1,479 0.59 938,528 514 0.22
Time deposits 678,331 2,030 1.19 573,458 1,454 1.01
Total interest-bearing deposits 2,623,187 3,701 0.56 2,396,926 2,128 0.35
Other borrowings 133,145 83 0.25 120,702 74 0.24
Advances from FHLB 650,947 3,108 1.89 498,370 2,699 2.15
Subordinated debentures - - - 30,000 225 3.00
Total interest-bearing liabilities 3,407,279 6,892 0.80 3,045,998 5,126 0.67
Noninterest-bearing demand deposits 1,293,470 1,131,739
Other liabilities 39,337 39,042
Stockholders' equity 557,282 530,241
Total liabilities and stockholders' equity $ 5,297,368 $4,747,020
Net interest income and spread $ 44,585 3.28 % $39,419 3.29%
Less: tax-equivalent adjustment 1,888 1,688
Net interest income $ 42,697 $37,731
Interest income/earning assets 4.08 % 3.96%
Interest expense/earning assets 0.54 0.46
Net interest margin 3.54 % 3.50%
(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 $1.7 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
Nine Months Ended September 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 $ 863,040 $ 22,651 3.50%$818,599 $21,010 3.42%
Residential construction loans 166,459 4,656 3.74 141,743 3,804 3.59
Total mortgage loans 1,029,499 27,307 3.54 960,342 24,814 3.45
Commercial AD&C loans 301,537 11,126 4.93 273,922 9,511 4.64
Commercial investor real estate loans 1,015,903 33,978 4.47 790,864 27,087 4.57
Commercial owner occupied real estate loans 786,805 28,501 4.84 693,442 24,946 4.81
Commercial business loans 458,973 15,321 4.46 453,468 14,819 4.37
Total commercial loans 2,563,218 88,926 4.64 2,211,696 76,363 4.61
Consumer loans 459,118 12,496 3.67 450,280 11,691 3.49
Total loans (2) 4,051,835 128,729 4.25 3,622,318 112,868 4.16
Loans held for sale 7,189 273 5.06 10,854 294 3.61
Taxable securities 526,931 10,944 2.77 470,987 9,073 2.57
Tax-exempt securities (3) 297,818 9,455 4.23 281,938 8,912 4.21
Total investment securities 824,749 20,399 3.30 752,925 17,985 3.19
Interest-bearing deposits with banks 38,006 289 1.02 41,433 156 0.50
Federal funds sold 2,493 18 0.97 688 3 0.48
Total interest-earning assets 4,924,272 149,708 4.06 4,428,218 131,306 3.96
Less: allowance for loan losses (44,324) (42,215)
Cash and due from banks 48,184 46,255
Premises and equipment, net 53,680 53,318
Other assets 222,682 214,284
Total assets $ 5,204,494 $4,699,860
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 613,498 372 0.08%$578,473 335 0.08%
Regular savings deposits 322,683 163 0.07 297,944 137 0.06
Money market savings deposits 992,069 3,333 0.45 914,499 1,446 0.21
Time deposits 637,478 5,344 1.12 550,195 4,088 0.99
Total interest-bearing deposits 2,565,728 9,212 0.48 2,341,111 6,006 0.34
Other borrowings 131,412 238 0.24 118,105 212 0.24
Advances from FHLB 683,231 9,385 1.84 565,493 8,812 2.08
Subordinated debentures 549 12 2.93 31,989 698 2.91
Total interest-bearing liabilities 3,380,920 18,847 0.75 3,056,698 15,728 0.69
Noninterest-bearing demand deposits 1,235,350 1,078,851
Other liabilities 41,537 38,981
Stockholders' equity 546,687 525,330
Total liabilities and stockholders' equity $ 5,204,494 $4,699,860
Net interest income and spread $ 130,861 3.31 % $115,578 3.27%
Less: tax-equivalent adjustment 5,585 4,993
Net interest income $ 125,276 $110,585
Interest income/earning assets 4.06 % 3.96%
Interest expense/earning assets 0.51 0.47
Net interest margin 3.55 % 3.49%
(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 $5.6 million and $5.0 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.

Source:Sandy Spring Bancorp, Inc.