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Sandy Spring Bancorp Reports First Quarter Net Income of $10.6 Million, an Increase of 25%

Sandy Spring Bancorp, Inc. Logo

OLNEY, Md., April 18, 2013 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today announced net income for the first quarter of 2013 of $10.6 million ($.42 per diluted share) compared to net income of $8.5 million ($0.35 per diluted share) for the first quarter of 2012 and net income of $9.9 million ($0.40 per diluted share) for the fourth quarter of 2012.

"We are off to a strong start for 2013 as the combination of organic loan and deposit growth together with disciplined management of funding costs has offset declining earning asset yields in this low interest rate environment," said Daniel J. Schrider, President and Chief Executive Officer. "Maintaining our net interest margin in the face of such a challenging economic environment has been one of our primary goals."

"Our results for the quarter also benefited from improved credit quality due to a continuing decrease in non-performing loans as well as strong mortgage banking revenues driven by historically high mortgage origination volumes," said Schrider.

First Quarter Highlights:

  • Pre-tax pre-provision income, a non-GAAP measure, was $15.9 million for the first quarter of 2013, a 19% increase over the first quarter of 2012 and a 1% increase compared to the fourth quarter of 2012.
  • The net interest margin was 3.59% for the first quarter of 2013, compared to 3.56% for the first quarter of 2012 and 3.53% for the fourth quarter of 2012. The increase compared to the prior quarter was due primarily to a lower cost of deposits and borrowings which more than offset the decline in the yield on earning assets.
  • Non-interest income increased 13% for the quarter compared to the prior year quarter and 1% compared to the fourth quarter of 2012. The increase over the prior year quarter was due primarily to growth in income from mortgage banking activities, miscellaneous loan sales and a non-recurring legal settlement.
  • Non-performing loans totaled $49.5 million at March 31, 2013 compared to $72.2 million at March 31, 2012 and $57.9 million at December 31, 2012. The coverage ratio of the allowance for loan and lease losses to non-performing loans increased to 83% at March 31, 2013 compared to a coverage ratio of 62% at March 31, 2012 and 74% at December 31, 2012.
  • Total loans increased 13% over the first quarter of 2012 due primarily to organic loan growth and loans acquired in the CommerceFirst acquisition. Total loans increased 1% compared to the fourth quarter of 2012 due to growth in commercial investor real estate and residential mortgage loans.

Review of Balance Sheet and Credit Quality

Total assets increased 7% to $3.9 billion at March 31, 2013 as compared to March 31, 2012. Total loans and leases increased 13% to $2.6 billion compared to the prior year. This increase was due to loans added in the CommerceFirst acquisition and growth in commercial investor real estate, commercial owner occupied real estate, commercial business and residential mortgage loans.

Customer funding sources, which include deposits and other short-term borrowings from customers, increased 8% compared to March 31, 2012. This increase was due primarily to a 20% increase in noninterest-bearing and interest-bearing checking accounts. The Company considers the growth in checking accounts to be an especially valuable metric as such accounts typically are the primary drivers of growth in multiple product banking relationships with clients. Certificates of deposit declined 11% at March 31, 2013 compared to balances at March 31, 2012, as the Company managed its deposit mix to maintain the net interest margin.

Tangible common equity totaled $391.7 million at March 31, 2013 compared to $358.0 million at March 31, 2012 resulting in an increase in the ratio of tangible common equity to tangible assets from 9.98% at March 31, 2012 to 10.19% at March 31, 2013. This increase was due primarily to net income earned during the period which more than offset the effect of the goodwill from the prior year's acquisition. At March 31, 2013, the Company had a total risk-based capital ratio of 15.48%, a tier 1 risk-based capital ratio of 14.23% and a tier 1 leverage ratio of 11.07%.

Non-performing loans totaled $49.5 million at March 31, 2013 compared to $72.2 million at March 31, 2012 and $57.9 million at December 31, 2012. Overall credit quality continued to improve due to the resolution of existing problem credits and limited migration of new credits to non-performing status.

Loan charge-offs, net of recoveries, totaled $1.8 million for the first quarter of 2013 compared to net charge-offs of $5.0 million for the first quarter of 2012 and net charge-offs of $0.8 million for the fourth quarter of 2012. The decrease in net charge-offs for the first quarter of 2013 compared to the prior year quarter was due primarily to charge-offs taken on commercial real estate and AD&C credits in the first quarter of 2012. The allowance for loan and lease losses represented 1.61% of outstanding loans and leases and 83% of non-performing loans at March 31, 2013 compared to 1.98% of outstanding loans and leases and 62% of non-performing loans at March 31, 2012 and 1.70% of outstanding loans and leases and 74% of non-performing loans at December 31, 2012. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the first quarter of 2013 increased 9% compared to the first quarter of 2012 due to an increase in average interest-earning assets and lower funding costs. The Company's funding costs declined due to a lower cost deposit mix and the restructuring of $160 million in Federal Home Loan Bank advances during the fourth quarter of 2012 and the first quarter of 2013. These factors were the primary drivers of the increase in the net interest margin to 3.59% for the first quarter of 2013 compared to 3.56% for the first quarter of 2012.

The provision for loan and lease losses was $0.1 million for the first quarter of 2013 compared to $0.7 million for the first quarter of 2012 and $1.2 million for the fourth quarter of 2012. The decrease in the provision for the first quarter of 2013 compared to both the first quarter of 2012 and the fourth quarter of 2012 was due primarily to a decline in historical losses and the impact of a lower level of non-performing loans at March 31, 2013.

Non-interest income increased 13% to $12.4 million for the first quarter of 2013 compared to $11.0 million for the first quarter of 2012. This increase was driven by a 49% increase in income from mortgage banking activities due to higher loan origination volumes and higher average gains on sales, both due to historically low interest rates during the quarter. In addition, other noninterest income increased over the prior year period due to a non-recurring legal settlement and miscellaneous gains on sales of loans.

Non-interest expenses increased 4% to $27.8 million for the first quarter of 2013 compared to $26.7 million in the first quarter of 2012. This increase was driven primarily by increases in salaries, incentive compensation and occupancy expenses, due in part to the CommerceFirst acquisition. The non-GAAP efficiency ratio improved to 60.80% for the first quarter of 2013 compared to 63.97% for the first quarter of 2012.

Conference Call

The Company's management will host a conference call to discuss its first 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 1-888-317-6016. 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) May 20, 2013. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10027381.

About Sandy Spring Bancorp/Sandy Spring Bank

With $3.9 billion in assets, Sandy Spring Bancorp is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Sandy Spring Bancorp is the largest publicly traded banking company headquartered and operating in Maryland. Sandy Spring is a community banking organization that focuses its lending and other services on businesses and consumers in the local market area. Independent and community-oriented, Sandy Spring Bank was founded in 1868 and offers a broad range of commercial banking, retail banking and trust services through 49 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George's counties in Maryland, and Arlington, Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of insurance and investment management services. Visit www.sandyspringbank.com for more information about Sandy Spring Bank.

Forward-Looking Statements

Sandy Spring Bancorp makes forward-looking statements in this news release and in the conference call regarding this news release. These forward-looking statements may include: statements of goals, intentions, earnings expectations, and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals.

Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project" and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Sandy Spring Bancorp does not assume any duty and does not undertake to update its forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that Sandy Spring Bancorp anticipated in its forward-looking statements and future results could differ materially from historical performance.

Sandy Spring Bancorp's forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company's loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company's ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2012, 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
March 31, %
(Dollars in thousands, except per share data) 2013 2012 Change
Results of Operations:
Net interest income $ 31,326 $ 28,705 9 %
Provision for loan and lease losses 78 664 (88)
Non-interest income 12,419 10,974 13
Non-interest expenses 27,823 26,683 4
Income before income taxes 15,844 12,332 28
Net income 10,558 8,476 25
Pre-tax pre-provision pre-merger expense income $ 15,922 $ 13,370 19
Return on average assets 1.08 % 0.94 %
Return on average common equity 8.85 % 7.60 %
Net interest margin 3.59 % 3.56 %
Efficiency ratio - GAAP basis (1) 63.60 % 67.25 %
Efficiency ratio - Non-GAAP basis (1) 60.80 % 62.97 %
Per share data:
Basic net income $ 0.42 $ 0.35 20 %
Diluted net income $ 0.42 $ 0.35 20
Average fully diluted shares 25,002,612 24,180,501 3
Dividends declared per share $ 0.14 $ 0.10 40
Book value per share 19.59 18.72 5
Tangible book value per share 15.70 14.83 6
Outstanding shares 24,954,892 24,143,985 3
Financial Condition at period-end:
Investment securities $ 1,008,693 $ 1,067,462 (6) %
Loans and leases 2,565,069 2,271,392 13
Interest-earning assets 3,660,809 3,416,136 7
Assets 3,932,026 3,668,273 7
Deposits 2,919,208 2,681,075 9
Interest-bearing liabilities 2,576,831 2,508,756 3
Stockholders' equity 488,946 451,917 8
Capital ratios:
Tier 1 leverage 11.07 % 11.05 %
Tier 1 capital to risk-weighted assets 14.23 % 14.89 %
Total regulatory capital to risk-weighted assets 15.48 % 16.14 %
Tangible common equity to tangible assets (2) 10.19 % 9.98 %
Average equity to average assets 12.26 % 12.33 %
Credit quality ratios:
Allowance for loan and lease losses to loans and leases 1.61 % 1.98 %
Non-performing loans to total loans 1.93 % 3.18 %
Non-performing assets to total assets 1.39 % 2.10 %
Allowance for loan and lease losses to non-performing loans 83.38 % 62.43 %
Annualized net charge-offs to average loans and leases (3) 0.28 % 0.89 %
(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 and merger expenses from non-interest expense; securities gains (losses) from non-interest income; OTTI; and the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
(2) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets and other comprehensive gains (losses). See the Reconciliation Table included with these Financial Highlights.
(3) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.
Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
Three Months Ended
March 31,
(Dollars in thousands) 2013 2012
Pre-tax pre-provision pre-merger expense income:
Net income $ 10,558 $ 8,476
Plus non-GAAP adjustment:
Merger expenses -- 374
Income taxes 5,286 3,856
Provision for loan and lease losses 78 664
Pre-tax pre-provision pre-merger expense income $ 15,922 $ 13,370
Efficiency ratio - GAAP basis:
Non-interest expenses $ 27,823 $ 26,683
Net interest income plus non-interest income $ 43,745 $ 39,679
Efficiency ratio - GAAP basis 63.60% 67.25%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses $ 27,823 $ 26,683
Less non-GAAP adjustment:
Amortization of intangible assets 461 461
Merger expenses -- 374
Non-interest expenses -- as adjusted $ 27,362 $ 25,848
Net interest income plus non-interest income $ 43,745 $ 39,679
Plus non-GAAP adjustment:
Tax-equivalent income 1,311 1,376
Less non-GAAP adjustments:
Securities gains 56 73
OTTI recognized in earnings -- (64)
Net interest income plus non-interest income - as adjusted $ 45,000 $ 41,046
Efficiency ratio - Non-GAAP basis 60.80% 62.97%
Tangible common equity ratio:
Total stockholders' equity $ 488,947 $ 451,917
Accumulated other comprehensive loss (9,732) (12,838)
Goodwill (84,808) (76,816)
Other intangible assets, net (2,702) (4,272)
Tangible common equity $ 391,705 $ 357,991
Total assets $ 3,932,026 $ 3,668,273
Goodwill (84,808) (76,816)
Other intangible assets, net (2,702) (4,272)
Tangible assets $ 3,844,516 $ 3,587,185
Tangible common equity ratio 10.19% 9.98%
Outstanding common shares 24,954,892 24,143,985
Tangible book value per common share $ 15.70 $ 14.83
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
March 31, December 31, March 31,
(Dollars in thousands) 2013 2012 2012
Assets
Cash and due from banks $ 45,922 $ 59,540 $ 43,149
Federal funds sold 476 466 1,012
Interest-bearing deposits with banks 38,188 26,400 58,144
Cash and cash equivalents 84,586 86,406 102,305
Residential mortgage loans held for sale (at fair value) 48,383 36,149 18,126
Investments available-for-sale (at fair value) 766,080 825,582 878,365
Investments held-to-maturity --- fair value of $216,420, $222,024 and $157,745 at March 31, 2013, December 31, 2012 and March 31, 2012, respectively 211,376 215,814 153,544
Other equity securities 31,237 33,636 35,553
Total loans and leases 2,565,069 2,531,128 2,271,392
Less: allowance for loan and lease losses (41,246) (42,957) (45,061)
Net loans and leases 2,523,823 2,488,171 2,226,331
Premises and equipment, net 47,701 48,326 48,748
Other real estate owned 5,250 5,926 4,834
Accrued interest receivable 12,926 12,392 12,424
Goodwill 84,808 84,808 76,816
Other intangible assets, net 2,702 3,163 4,272
Other assets 113,154 114,833 106,955
Total assets $ 3,932,026 $ 3,955,206 $ 3,668,273
Liabilities
Noninterest-bearing deposits $ 832,679 $ 847,415 $ 685,770
Interest-bearing deposits 2,086,529 2,065,619 1,995,305
Total deposits 2,919,208 2,913,034 2,681,075
Securities sold under retail repurchase agreements and federal funds purchased 50,302 86,929 73,130
Advances from FHLB 405,000 405,058 405,321
Subordinated debentures 35,000 35,000 35,000
Accrued interest payable and other liabilities 33,569 31,673 21,830
Total liabilities 3,443,079 3,471,694 3,216,356
Stockholders' Equity
Common stock --- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 24,954,892, 24,905,392 and 24,143,985 at March 31, 2013, December 31, 2012 and March 31, 2012, respectively 24,955 24,905 24,144
Additional paid in capital 191,615 191,689 177,949
Retained earnings 262,645 255,606 236,986
Accumulated other comprehensive income 9,732 11,312 12,838
Total stockholders' equity 488,947 483,512 451,917
Total liabilities and stockholders' equity $ 3,932,026 $ 3,955,206 $ 3,668,273
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three Months Ended
March 31,
(Dollars in thousands, except per share data) 2013 2012
Interest Income:
Interest and fees on loans and leases $ 29,646 $ 27,129
Interest on loans held for sale 353 149
Interest on deposits with banks 19 21
Interest and dividends on investment securities:
Taxable 3,934 4,943
Exempt from federal income taxes 2,327 2,373
Interest on federal funds sold -- --
Total interest income 36,279 34,615
Interest Expense:
Interest on deposits 1,455 2,013
Interest on retail repurchase agreements and federal funds purchased 49 61
Interest on advances from FHLB 3,223 3,587
Interest on subordinated debt 226 249
Total interest expense 4,953 5,910
Net interest income 31,326 28,705
Provision for loan and lease losses 78 664
Net interest income after provision for loan and lease losses 31,248 28,041
Non-interest Income:
Investment securities gains 56 73
Total other-than-temporary impairment ("OTTI") losses -- (64)
Portion of OTTI losses recognized in other comprehensive income, before taxes -- --
Net OTTI recognized in earnings -- (64)
Service charges on deposit accounts 2,069 2,200
Mortgage banking activities 1,527 1,025
Wealth management income 4,042 4,057
Insurance agency commissions 1,349 1,202
Income from bank owned life insurance 612 634
Visa check fees 957 898
Other income 1,807 949
Total non-interest income 12,419 10,974
Non-interest Expenses:
Salaries and employee benefits 16,346 15,701
Occupancy expense of premises 3,182 2,846
Equipment expenses 1,249 1,190
Marketing 515 495
Outside data services 1,152 1,279
FDIC insurance 596 652
Amortization of intangible assets 461 461
Other expenses 4,322 4,059
Total non-interest expenses 27,823 26,683
Income before income taxes 15,844 12,332
Income tax expense 5,286 3,856
Net income $ 10,558 $ 8,476
Net Income Per Share Amounts:
Basic net income per share $ 0.42 $ 0.35
Diluted net income per share $ 0.42 $ 0.35
Dividends declared per share $ 0.14 $ 0.10
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2013 2012
(Dollars in thousands, except per share data) Q1 Q4 Q3 Q2 Q1
Profitability for the quarter:
Tax-equivalent interest income $ 37,590 $ 37,536 $ 38,819 $ 36,898 $ 35,991
Interest expense 4,953 5,282 5,710 5,749 5,910
Tax-equivalent net interest income 32,637 32,254 33,109 31,149 30,081
Tax-equivalent adjustment 1,311 1,334 1,324 1,340 1,376
Provision for loan and lease losses 78 1,168 232 1,585 664
Non-interest income 12,419 12,247 12,242 11,493 10,974
Non-interest expenses 27,823 27,219 27,167 28,858 26,683
Income before income taxes 15,844 14,780 16,628 10,859 12,332
Income tax expense 5,286 4,899 5,638 3,652 3,856
Net income $ 10,558 $ 9,881 $ 10,990 $ 7,207 $ 8,476
Financial performance:
Pre-tax pre-provision pre-merger expense income $ 15,922 $ 15,740 $ 16,996 $ 14,642 $ 13,370
Return on average assets 1.08% 1.01% 1.13% 0.78% 0.94%
Return on average common equity 8.85% 8.14% 9.22% 6.34% 7.60%
Net interest margin 3.59% 3.53% 3.67% 3.62% 3.56%
Efficiency ratio - GAAP basis (1) 63.60% 63.06% 61.70% 69.87% 67.25%
Efficiency ratio - Non-GAAP basis (1) 60.80% 60.54% 58.91% 61.54% 62.97%
Per share data:
Basic net income per share $ 0.42 $ 0.40 $ 0.44 $ 0.30 $ 0.35
Diluted net income per share $ 0.42 $ 0.40 $ 0.44 $ 0.30 $ 0.35
Average fully diluted shares 25,002,612 24,971,249 24,949,205 24,423,236 24,180,501
Dividends declared per common share $ 0.14 $ 0.14 $ 0.12 $ 0.12 $ 0.10
Non-interest income:
Securities gains $ 56 $ -- $ 296 $ 90 $ 73
Net OTTI recognized in earnings -- (14) (23) (8) (64)
Service charges on deposit accounts 2,069 2,197 2,230 2,283 2,200
Mortgage banking activities 1,527 1,738 1,981 1,288 1,025
Wealth management income 4,042 4,000 3,858 4,034 4,057
Insurance agency commissions 1,349 1,334 1,020 934 1,202
Income from bank owned life insurance 612 662 660 660 634
Visa check fees 957 1,043 984 962 898
Other income 1,807 1,287 1,236 1,250 949
Total non-interest income $ 12,419 $ 12,247 $ 12,242 $ 11,493 $ 10,974
Non-interest expense:
Salaries and employee benefits $ 16,346 $ 15,405 $ 15,476 $ 15,927 $ 15,701
Occupancy expense of premises 3,182 3,115 3,106 2,943 2,846
Equipment expenses 1,249 1,189 1,237 1,255 1,190
Marketing 515 827 764 565 495
Outside data services 1,152 836 1,076 1,828 1,279
FDIC insurance 596 601 667 653 652
Amortization of intangible assets 461 478 476 466 461
Professional fees 1,287 1,584 1,282 2,156 1,287
Other real estate owned expenses 37 316 174 351 64
Other expenses 2,998 2,868 2,909 2,714 2,708
Total non-interest expense $ 27,823 $ 27,219 $ 27,167 $ 28,858 $ 26,683
(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 and merger expenses 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
2013 2012
(Dollars in thousands) Q1 Q4 Q3 Q2 Q1
Balance sheets at quarter end:
Residential mortgage loans $ 538,346 $ 523,364 $ 499,806 $ 472,426 $ 465,204
Residential construction loans 122,698 120,314 128,606 130,791 122,841
Commercial ADC loans 150,599 151,933 133,007 151,620 149,814
Commercial investor real estate loans 487,802 456,888 447,536 443,237 392,626
Commercial owner occupied real estate loans 565,820 571,510 579,711 579,812 525,022
Commercial business loans 344,489 346,708 322,087 334,040 253,827
Leasing 1,974 3,421 4,233 5,618 5,843
Consumer loans 353,341 356,990 353,999 357,534 356,215
Total loans and leases 2,565,069 2,531,128 2,468,985 2,475,078 2,271,392
Allowance for loan and lease losses (41,246) (42,957) (42,618) (45,265) (45,061)
Investment securities 1,008,693 1,075,032 1,074,918 1,006,743 1,067,462
Interest-earning assets 3,660,809 3,669,175 3,614,310 3,584,480 3,416,136
Total assets 3,932,026 3,955,206 3,887,427 3,855,177 3,668,273
Noninterest-bearing demand deposits 832,679 847,415 818,674 763,566 685,770
Total deposits 2,919,208 2,913,034 2,880,262 2,852,055 2,681,075
Customer repurchase agreements 50,302 51,929 58,306 64,779 73,130
Total interest-bearing liabilities 2,576,831 2,592,606 2,560,040 2,593,501 2,508,756
Total stockholders' equity 488,947 483,512 481,810 471,464 451,917
Quarterly average balance sheets:
Residential mortgage loans $ 575,889 $ 542,095 $ 510,475 $ 488,644 $ 474,149
Residential construction loans 120,283 125,640 133,236 125,582 116,630
Commercial ADC loans 148,749 137,679 142,870 151,374 159,769
Commercial investor real estate loans 474,062 453,074 445,012 410,258 377,072
Commercial owner occupied real estate loans 567,723 577,693 580,994 539,590 518,763
Commercial business loans 347,569 322,501 332,364 284,271 258,099
Leasing 2,510 3,773 4,858 5,528 6,325
Consumer loans 357,366 356,452 357,135 359,008 358,783
Total loans and leases 2,594,151 2,518,907 2,506,945 2,364,255 2,269,590
Investment securities 1,051,769 1,072,278 1,038,586 1,052,502 1,086,295
Interest-earning assets 3,677,444 3,639,605 3,599,715 3,453,590 3,389,843
Total assets 3,946,578 3,908,479 3,863,951 3,708,622 3,637,674
Noninterest-bearing demand deposits 797,926 824,188 774,215 699,638 641,477
Total deposits 2,860,451 2,891,120 2,857,523 2,714,980 2,642,634
Customer repurchase agreements 52,622 60,941 62,693 66,674 65,195
Total interest-bearing liabilities 2,631,198 2,571,937 2,587,815 2,526,541 2,523,394
Total stockholders' equity 483,664 482,621 474,231 457,338 448,406
Financial Measures
Average equity to average assets 12.26% 12.35% 12.27% 12.33% 12.33%
Investment securities to earning assets 27.55% 29.30% 29.74% 28.09% 31.25%
Loans to earnings assets 70.07% 68.98% 68.31% 69.05% 66.49%
Loans to assets 65.24% 63.99% 63.51% 64.20% 61.92%
Loans to deposits 87.87% 86.89% 85.72% 86.78% 84.72%
Capital measures:
Tier 1 leverage 11.07% 10.98% 10.99% 11.21% 11.05%
Tier 1 capital to risk-weighted assets 14.23% 14.15% 14.31% 14.12% 14.89%
Total regulatory capital to risk-weighted assets 15.48% 15.40% 15.56% 15.36% 16.14%
Book value per share $ 19.59 $ 19.41 $ 19.35 $ 18.94 $ 18.72
Outstanding shares 24,954,892 24,905,392 24,896,136 24,886,724 24,143,985
Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2013 2012
(Dollars in thousands) March 31, December 31, September 30, June 30, March 31,
Non-Performing Assets:
Loans and leases 90 days past due:
Commercial business $ -- $ 24 $ 44 $ 70 $ 40
Commercial real estate:
Commercial AD&C -- -- -- 342 --
Commercial investor real estate -- -- -- -- --
Commercial owner occupied real estate -- 209 -- -- --
Leasing -- -- 127 96 --
Consumer 54 14 18 5 89
Residential real estate:
Residential mortgage -- -- 116 91 167
Residential construction -- -- -- -- --
Total loans and leases 90 days past due 54 247 305 604 296
Non-accrual loans and leases:
Commercial business 4,012 4,611 4,919 4,583 6,542
Commercial real estate:
Commercial AD&C 5,826 6,332 8,957 13,055 14,303
Commercial investor real estate 12,353 11,843 12,345 13,327 13,893
Commercial owner occupied real estate 5,346 13,681 13,742 15,146 16,295
Leasing -- 865 834 872 858
Consumer 2,388 2,410 1,607 1,651 1,700
Residential real estate:
Residential mortgage 5,393 4,681 3,644 2,600 4,818
Residential construction 3,258 3,125 3,236 4,333 4,929
Total non-accrual loans and lease 38,576 47,548 49,284 55,567 63,338
Total restructured loans - accruing 10,839 10,110 9,277 8,285 8,547
Total non-performing loans and leases 49,469 57,905 58,866 64,456 72,181
Other assets and real estate owned (OREO) 5,250 5,926 9,291 9,553 4,834
Total non-performing assets $ 54,719 $ 63,831 $ 68,157 $ 74,009 $ 77,015
For the quarter ended,
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2013 2012 2012 2012 2012
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period $ 47,548 $ 49,284 $ 55,567 $ 63,338 $ 71,680
Non-accrual balances transferred to OREO (92) (400) (232) (2,131) --
Non-accrual balances charged-off (2,175) (979) (3,697) (1,663) (4,965)
Net payments or draws (11,768) (3,852) (6,342) (4,149) (5,061)
Loans placed on non-accrual 5,493 5,023 3,988 1,261 1,809
Non-accrual loans brought current (430) (1,528) -- (1,089) (125)
Balance at end of period $ 38,576 $ 47,548 $ 49,284 $ 55,567 $ 63,338
Analysis of Allowance for Loan Losses:
Balance at beginning of period $ 42,957 $ 42,618 $ 45,265 $ 45,061 $ 49,426
Provision for loan and lease losses 78 1,168 232 1,585 664
Less loans charged-off, net of recoveries:
Commercial business 1,744 (76) (225) (185) (39)
Commercial real estate:
Commercial AD&C (1,020) (248) 1,983 (59) 1,076
Commercial investor real estate 31 110 123 140 3,219
Commercial owner occupied real estate 81 -- 653 484 --
Leasing -- -- (17) (3) 5
Consumer 508 384 111 228 348
Residential real estate:
Residential mortgage 447 508 253 713 420
Residential construction (2) 151 (2) 63 --
Net charge-offs 1,789 829 2,879 1,381 5,029
Balance at end of period $ 41,246 $ 42,957 $ 42,618 $ 45,265 $ 45,061
Asset Quality Ratios:
Non-performing loans to total loans 1.93% 2.29% 2.38% 2.60% 3.18%
Non-performing assets to total assets 1.39% 1.61% 1.75% 1.92% 2.10%
Allowance for loan losses to loans 1.61% 1.70% 1.73% 1.83% 1.98%
Allowance for loan losses to non-performing loans 83.38% 74.18% 72.40% 70.23% 62.43%
Net charge-offs in quarter to average loans 0.28% 0.13% 0.46% 0.23% 0.89%
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Three Months Ended March 31,
2013 2012
Annualized Annualized
Average (1) Average Average (1) Average
(Dollars in thousands and tax-equivalent) Balances Interest Yield/Rate Balances Interest Yield/Rate
Assets
Residential mortgage loans (2) $ 575,889 $ 5,376 3.73 % $ 474,149 $ 5,360 4.55 %
Residential construction loans 120,283 1,004 3.38 116,630 1,101 3.80
Commercial ADC loans 148,749 1,996 5.44 159,769 1,968 4.96
Commercial investor real estate loans 474,062 6,135 5.25 377,072 5,148 5.49
Commercial owner occupied real estate loans 567,723 7,801 5.71 518,763 7,260 5.69
Commercial business loans 347,569 4,586 5.21 258,099 3,151 4.80
Leasing 2,510 38 6.07 6,325 103 6.52
Consumer loans 357,366 3,063 3.51 358,783 3,187 3.60
Total loans and leases (3) 2,594,151 29,999 4.71 2,269,590 27,278 4.84
Taxable securities 754,112 4,305 2.28 809,939 5,273 2.60
Tax-exempt securities (4) 297,657 3,267 4.39 276,356 3,419 4.95
Interest-bearing deposits with banks 31,050 19 0.25 32,871 21 0.25
Federal funds sold 474 -- 0.22 1,087 -- 0.14
Total interest-earning assets 3,677,444 37,590 4.13 3,389,843 35,991 4.26
Less: allowance for loan and lease losses (43,705) (49,567)
Cash and due from banks 46,888 45,058
Premises and equipment, net 48,167 48,554
Other assets 217,784 203,786
Total assets $ 3,946,578 $ 3,637,674
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 423,485 92 0.09 % $ 362,730 87 0.10 %
Regular savings deposits 234,492 48 0.08 200,604 46 0.09
Money market savings deposits 892,343 411 0.19 859,121 512 0.24
Time deposits 512,205 904 0.72 578,702 1,368 0.95
Total interest-bearing deposits 2,062,525 1,455 0.29 2,001,157 2,013 0.40
Other borrowings 65,601 49 0.30 81,878 61 0.30
Advances from FHLB 468,072 3,223 2.79 405,359 3,587 3.56
Subordinated debentures 35,000 226 2.58 35,000 249 2.85
Total interest-bearing liabilities 2,631,198 4,953 0.76 2,523,394 5,910 0.94
Noninterest-bearing demand deposits 797,926 641,477
Other liabilities 33,790 24,397
Stockholders' equity 483,664 448,406
Total liabilities and stockholders' equity $ 3,946,578 $ 3,637,674
Net interest income and spread $ 32,637 3.37 % $ 30,081 3.32 %
Less: tax-equivalent adjustment 1,311 1,376
Net interest income $ 31,326 $ 28,705
Interest income/earning assets 4.13 % 4.26 %
Interest expense/earning assets 0.54 0.70
Net interest margin 3.59 % 3.56 %
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2013 and 2012. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.3 million and $1.4 million in 2013 and 2012, respectively.
(2) Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.
(3) Non-accrual loans are included in the average balances.
(4) Includes only investments that are exempt from federal taxes.

CONTACT: Daniel J. Schrider, President & Chief Executive Officer, or Philip J. Mantua, E.V.P. & Chief Financial Officer Sandy Spring Bancorp 17801 Georgia Avenue Olney, Maryland 20832 1-800-399-5919 Email: DSchrider@sandyspringbank.com PMantua@sandyspringbank.com Web site: www.sandyspringbank.com

Source:Sandy Spring Bancorp, Inc.