Sandy Spring Bancorp Reports First Quarter Earnings of $43.9 Million

April 21, 2022
Company Reports Strong Deposit and Loan Growth

OLNEY, Md., April 21, 2022 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, reported net income of $43.9 million ($0.96 per diluted common share) for the quarter ended March 31, 2022, compared to net income of $75.5 million ($1.58 per diluted common share) for the first quarter of 2021 and $45.4 million ($0.99 per diluted common share) for the fourth quarter of 2021.

Current quarter core earnings were $45.1 million ($0.99 per diluted common share), compared to $83.5 million ($1.76 per diluted common share) for the quarter ended March 31, 2021 and $46.6 million ($1.02 per diluted common share) for the quarter ended December 31, 2021. Core earnings are determined by excluding the after-tax impact of merger and acquisition expense, the loss on FHLB redemptions, amortization of intangibles and investment securities gains.

The provision for credit losses for the current quarter was $1.6 million compared to a credit of $34.7 million for the first quarter of 2021 and a charge of $1.6 million for the fourth quarter of 2021.

“As a result of our steady deposit growth throughout 2021 and record commercial loan production in the fourth quarter, we entered 2022 with significant momentum. We capitalized on our position of strength and opportunities in our market, and we continued to deliver solid deposit and loan growth in the first quarter,” said Daniel J. Schrider, President and Chief Executive Officer.

“We are confident in our ability to successfully manage through the challenges associated with the volatile world events,” added Schrider. "We have a long-term view of our company, so we will lean on our 154 years of experience and focus on meeting the needs of our community - one client at a time.”

First Quarter Highlights:

  • Core earnings for the first quarter of 2022 were $45.1 million compared to $83.5 million for the prior year quarter. The decline in core earnings was primarily the product of the impact associated with the provision for credit losses as the prior year's results contained a significant credit to the allowance versus the current year's charge to the allowance. Compared to the first quarter of the prior year, exclusive of the impact of the provision for credit losses, the current quarter reflected a decline in both net interest income and non-interest income, which exceeded the reduction in non-interest expense.

  • At March 31, 2022, total assets were $13.0 billion, a 1% increase compared to $12.9 billion at March 31, 2021. During the previous twelve months, liquidity resulting from deposit growth and PPP loan forgiveness was utilized to fund the growth in the loan and investment securities portfolio, which occurred primarily in the previous two quarters.

  • Total loans, excluding PPP loans, increased 10% to $10.1 billion at March 31, 2022 compared to $9.1 billion at March 31, 2021. Excluding the impact of the PPP loan forgiveness, total commercial loans grew by $983.2 million or 13% during the previous twelve months. During this period, the Company generated new commercial gross loan production of $3.8 billion, of which $2.5 billion was funded, more than offsetting $1.5 billion in non-PPP commercial loan run-off. Funded commercial loan production increased 90% to $545.4 million during the first quarter of the current year compared to $287.7 million for the same quarter of the prior year.

  • Year-over-year deposits grew 2%, driven by 7% growth in noninterest-bearing deposits, reflecting the impact of the PPP program forgiveness and the growth in transaction relationships, while interest-bearing deposits declined 1% as a result of the attrition of time deposits.

  • During the current quarter, an offering of $200 million aggregate principal amount fixed-to-floating rate subordinated notes due in 2032 was completed. The entire amount of the debt is considered Tier 2 capital under current regulatory guidelines.

  • For the first quarter of 2022, the net interest margin was 3.49%, compared to 3.56% for the same quarter of 2021, and 3.51% for the fourth quarter of 2021. Excluding the amortization of the fair value marks derived from the previous acquisitions, the current quarter’s net interest margin was 3.49%, compared to 3.46% for first quarter of 2021, and 3.52% for the fourth quarter of 2021.

  • The provision for credit losses was $1.6 million for the current quarter compared to the prior year quarter’s credit to the provision of $34.7 million. The provision for the current quarter is a reflection of the growth in the loan portfolio, coupled with the management's consideration of the potential impact of recessionary pressures which exceeded the benefit to the provision derived from continuing improvement in forecasted macroeconomic indicators.

  • Non-interest income for the current quarter decreased by 29% or $8.3 million compared to the prior year quarter. Income from mortgage banking activities declined 77% and other non-interest income decreased 45% compared to the first quarter of 2021. These decreases were partially offset by 7% growth in wealth management income, 26% growth in service charges on deposit accounts and a 10% increase in bank card fees.

  • Non-interest expense for the current quarter decreased $6.0 million or 9% compared to the prior year quarter. The prior year's non-interest expense included a $9.1 million loss from the redemption of FHLB borrowings and was the main driver of the quarter over quarter decline. Excluding the loss on the redemption, non-interest expense increased 5% compared to the prior year quarter driven by an increase in compensation cost, predominantly benefit costs.

  • Return on average assets (“ROA”) for the quarter ended March 31, 2022 was 1.42% and return on average tangible common equity (“ROTCE”) was 16.04% compared to 1.41% and 16.07%, respectively, for the fourth quarter of 2021. On a non-GAAP basis, the current quarter's core ROA was 1.45% and core ROTCE was 16.45% compared to core ROA of 1.44% and core ROTCE of 16.49% for the fourth quarter of 2021.

  • For the first quarter of 2022, the GAAP efficiency ratio was 50.92% compared to 51.08% for the first quarter of 2021, and 51.75% for the fourth quarter of 2021. The non-GAAP efficiency ratio for the first quarter of 2022 was 49.34% compared to 42.65% for the prior year quarter, and 50.17% for the fourth quarter of 2021. The combination of a decline in non-interest income and an increase in non-interest expense drove the erosion of the non-GAAP efficiency ratio compared to prior year quarter.

  • On March 30, 2022, the Company's board of directors authorized a stock repurchase plan that permits the repurchase of up to $50.0 million in shares of common stock. No shares of common stock have been repurchased under this plan.

Balance Sheet and Credit Quality

Total assets grew 1% to $13.0 billion at March 31, 2022, as compared to $12.9 billion at March 31, 2021. During this period, total loans declined by 3% to $10.1 billion at March 31, 2022, compared to $10.4 billion at March 31, 2021 driven by the $1.2 billion year-over-year reduction in PPP loans. Excluding the impact of the PPP loan forgiveness, total commercial loans grew by $983.2 million or 13% during the past twelve months. During this period, the Company generated commercial gross loan production of $3.8 billion, of which $2.5 billion was funded, offsetting $1.5 billion in commercial loan run-off. During the first quarter of 2022, funded commercial loan production was $545.4 million, an increase of 90% compared to $287.7 million for the same quarter of the prior year. The growth in the commercial portfolio, excluding PPP loans, occurred in all commercial portfolios led by the $735.9 million or 20% growth in the investor owned commercial portfolio. Year-over-year the consumer loan portfolio declined 15%, due to the run-off of home equity loan and line products, a result of the refinancing activity in the residential mortgage markets.

During the past twelve months, deposits increased 2%, driven by 7% growth in noninterest-bearing deposits reflecting the impact of the PPP program forgiveness and the growth in transaction relationships, while interest-bearing deposits declined 1% as a result of the attrition of rate advantaged time deposits. Savings and money market categories experienced year-over-year growth in excess of 3%.

The tangible common equity ratio decreased to 8.70% of tangible assets at March 31, 2022, compared to 8.90% at March 31, 2021 as a result of the $107.3 million repurchase of common shares during 2021 and the $66.6 million increase in the accumulated other comprehensive loss coupled with the increase in tangible assets during the past year. At March 31, 2022, the Company had a total risk-based capital ratio of 16.77%, a common equity tier 1 risk-based capital ratio of 12.03%, a tier 1 risk-based capital ratio of 12.03%, and a tier 1 leverage ratio of 9.66%.

Non-performing loans include non-accrual loans, accruing loans 90 days or more past due and restructured loans. At March 31, 2022, the level of non-performing loans to total loans was 0.46% compared to 0.94% at March 31, 2021, and 0.49% at December 31, 2021. At March 31, 2022, non-performing loans totaled $46.3 million, compared to $98.7 million at March 31, 2021, and $48.8 million at December 31, 2021. Loans placed on non-accrual during the current quarter amounted to $1.5 million compared to $0.4 million for the prior year quarter and $0.5 million for the fourth quarter of 2021. Non-accrual loans at quarter end declined from the prior quarter due primarily to payoff activity. Loans greater than 90 days or more past due decreased from the prior quarter as a result of the extension of existing performing portfolio loans that were in process of being extended at the end of the prior quarter end.

The Company recorded net charge-offs of $0.2 million for the first quarter of 2022, as compared to net charge-offs of $0.3 million for the first quarter of 2021 and net charge-offs of $0.4 million for the fourth quarter of 2021.

At March 31, 2022, the allowance for credit losses was $110.6 million or 1.09% of outstanding loans and 239% of non-performing loans, compared to $109.1 million or 1.10% of outstanding loans and 224% of non-performing loans at the end of the previous quarter. Excluding PPP loans, the allowance for credit losses to outstanding loans was 1.10% at March 31, 2022. The increase in the allowance during the current quarter compared to the previous quarter was the result of the growth in the loan portfolio during the quarter, net of the impact of continued improvement in forecasted economic metrics, in addition to the update to various metrics applied in the determination of the allowance for credit losses, which included management's consideration of the potential impact of recessionary pressures.

Income Statement Review

Quarterly Results

The Company recorded net income of $43.9 million for the three months ended March 31, 2022, compared to net income of $75.5 million for the prior year quarter.   The primary driver of the decline in earnings was the activity associated with the provision for credit losses as the prior year's results contained a significant credit to the allowance versus the current year's charge to the allowance. Exclusive of the impact of the provision for credit losses, compared to the first quarter of the prior year, the current quarter reflected a decline in both net interest income and non-interest income, which exceeded the reduction in non-interest expense. The decline in net interest income was driven by the net impact of lower PPP and mortgage loan income that exceeded the reduction in interest expense. Non-interest income declined as a result of lower mortgage banking income, the result of rising mortgage interest rates during the previous twelve months. Non-interest expense decreased as a result of the prior year's inclusion of the $9.1 million loss on the redemption of FHLB borrowings that more than offset the increase in compensation expense in the current quarter compared to the prior year quarter.

For the first quarter of 2022, net interest income decreased $3.1 million or 3% compared to the first quarter of 2021, due to the combined impact of the $8.2 million reduction in interest income being partially offset by a $5.1 million reduction in interest expense during the preceding twelve months. The decline in interest income was driven by a $7.7 million decline in interest and fees on PPP loans and a $1.8 million decline in interest income on residential mortgage loans during the previous twelve months. The decrease in interest expense was the result of the prior year's liquidation of FHLB borrowings, in addition to the run-off of time deposits and lower interest expense associated with money market deposits. The net interest margin for the first quarter of 2022 was 3.49% as compared to 3.56% for the same quarter of the prior year, as the 23 basis point decline in yield on interest-earning assets was only partially offset by the 24 basis point decline in the rate paid on interest-bearing liabilities. Net interest margin excluding the effects of amortization of the fair value marks derived from acquisitions remained at 3.49% for the current quarter compared to 3.46% for first quarter of 2021.

The provision for credit losses was $1.6 million for the first quarter of 2022 compared to a credit of $34.7 million for the first quarter of 2021. The provision for credit losses for the fourth quarter of 2021 was a charge of $1.6 million. The current quarter's provision reflects the continued improvement in the forecasted macroeconomic indicators which resulted in credits for the provision for credit losses during the current quarter, that were offset by the impact of potential recessionary pressures and the growth in the loan portfolio that occurred during the quarter.

Non-interest income decreased $8.3 million or 29% for the first quarter of 2022, compared to the prior year quarter. This decrease is the result of a $7.9 million or 77% decline in income from mortgage banking activities, which exceeded the 7% growth in wealth management income, 26% growth in service charges on deposit accounts and 10% growth in bank card fees. In addition, other non-interest income declined 45% compared to the prior year primarily as a result of a decrease in credit related fees.

Non-interest expense decreased $6.0 million or 9% for the first quarter of 2022, compared to the prior year quarter. The prior year's non-interest expense included a $9.1 million loss from the redemption of FHLB borrowings and was the major cause of the quarter over quarter decline. Excluding the loss on the redemption, non-interest expense increased 5% compared to the prior year quarter driven by an increase in compensation expense, predominantly benefit costs. Overall, the increase reflects the net impact of the 7% increase in compensation and benefit costs and a 17% increase in professional fees, partially offset by an 8% decrease in occupancy expense and a 34% reduction in FDIC insurance expense.

For the first quarter of 2022, the GAAP efficiency ratio was 50.92% compared to 51.08% for the first quarter of 2021, and 51.75% for the fourth quarter of 2021. The non-GAAP efficiency ratio was 49.34% for the current quarter as compared to 42.65% for the first quarter of 2021, and 50.17% for the fourth quarter of 2021. The increase in the non-GAAP efficiency ratio (reflecting a decrease in efficiency) from the first quarter of the prior year to the current year quarter was primarily the result of the 9% decline in non-GAAP revenue, driven chiefly by the decrease in income from mortgage banking activities. ROA for the first quarter ended March 31, 2022 was 1.42% and ROTCE was 16.04% compared to 1.41% and 16.07%, respectively, for the fourth quarter of 2021. On a non-GAAP basis, the current quarter's core ROA was 1.45% and core ROTCE was 16.45% compared to core ROA of 1.44% and core ROTCE of 16.49% for the fourth quarter of 2021.

Explanation of Non-GAAP Financial Measures

This news release contains financial information and performance measures determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. Non-GAAP measures used in this release consist of the following:

  • Tangible common equity and related measures are non-GAAP measures that exclude the impact of goodwill and other intangible assets.
  • The non-GAAP efficiency ratio excludes amortization of intangible assets, loss on FHLB redemption, merger and acquisition expense and investment securities gains and includes tax-equivalent income.
  • Core earnings and the related measures of core earnings per diluted common share, core return on average assets and core return on average tangible common equity reflect net income exclusive of merger and acquisition expense, amortization of intangible assets, loss on FHLB redemption, and investment securities gains, on a net of tax basis.

These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Please refer to the non-GAAP Reconciliation tables included with this release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

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 Webcast of the conference call is available through the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com. Participants may call 1-844-200-6205. Please use the following access code: 263081. 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 on the website until May 5, 2022. A replay of the teleconference will be available through the same time period by calling 1-866-813-9403 under conference call number 793380.

About Sandy Spring Bancorp, Inc.

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank, a premier community bank in the Greater Washington, D.C. region. With over 50 locations, the bank offers a broad range of commercial and retail banking, mortgage, private banking, and trust services throughout Maryland, Northern Virginia, and Washington, D.C. Through its subsidiaries, Rembert Pendleton Jackson, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services.

Category: Webcast
Source: Sandy Spring Bancorp, Inc.
Code: SASR-E

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’s forward-looking statements are subject to the following principal risks and uncertainties: risks, uncertainties and other factors relating to the COVID-19 pandemic, including the effect of the pandemic on our borrowers and their ability to make payments on their obligations, the effectiveness of vaccination programs, and the effect of remedial actions and stimulus measures adopted by federal, state and local governments; 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; the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period; 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, 2021, 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,
  %
Change
(Dollars in thousands, except per share data)     2022       2021    
Results of operations:            
Net interest income   $ 101,451     $ 104,600     (3 )%
Provision/ (credit) for credit losses     1,635       (34,708 )   (105 )
Non-interest income     20,595       28,866     (29 )
Non-interest expense     62,147       68,173     (9 )
Income before income tax expense     58,264       100,001     (42 )
Net income     43,935       75,464     (42 )
             
Net income attributable to common shareholders   $ 43,667     $ 74,824     (42 )
Pre-tax pre-provision net income (1)   $ 59,899     $ 65,293     (8 )
             
Return on average assets     1.42 %     2.39 %    
Return on average common equity     11.83 %     20.72 %    
Return on average tangible common equity (1)     16.04 %     28.47 %    
Net interest margin     3.49 %     3.56 %    
Efficiency ratio - GAAP basis (2)     50.92 %     51.08 %    
Efficiency ratio - Non-GAAP basis (2)     49.34 %     42.65 %    
             
Per share data:            
Basic net income per common share   $ 0.97     $ 1.59     (39 )%
Diluted net income per common share   $ 0.96     $ 1.58     (39 )
Weighted average diluted common shares     45,333,292       47,415,060     (4 )
Dividends declared per share   $ 0.34     $ 0.32     6  
Book value per common share   $ 32.97     $ 32.04     3  
Tangible book value per common share (1)   $ 24.23     $ 23.54     3  
Outstanding common shares     45,162,908       47,187,389     (4 )
             
Financial condition at period-end:            
Investment securities   $ 1,586,441     $ 1,472,727     8 %
Loans     10,144,328       10,446,866     (3 )
Interest-earning assets     12,205,058       12,132,405     1  
Assets     12,967,416       12,873,366     1  
Deposits     10,852,794       10,677,752     2  
Interest-bearing liabilities     7,313,783       7,423,262     (1 )
Stockholders' equity     1,488,910       1,511,694     (2 )
             
Capital ratios:            
Tier 1 leverage (3)     9.66 %     9.14 %    
Common equity tier 1 capital to risk-weighted assets (3)     12.03 %     12.11 %    
Tier 1 capital to risk-weighted assets (3)     12.03 %     12.11 %    
Total regulatory capital to risk-weighted assets (3)     16.77 %     15.52 %    
Tangible common equity to tangible assets (4)     8.70 %     8.90 %    
Average equity to average assets     11.98 %     11.54 %    
             
Credit quality ratios:            
Allowance for credit losses to loans     1.09 %     1.25 %    
Non-performing loans to total loans     0.46 %     0.94 %    
Non-performing assets to total assets     0.37 %     0.78 %    
Allowance for credit losses to non-performing loans     238.72 %     132.08 %    
Annualized net charge-offs to average loans (5)     0.01 %     0.01 %    

(1)  Represents a non-GAAP measure.
(2)  The efficiency ratio - GAAP basis is non-interest expense divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, loss on FHLB redemption, and merger and acquisition expense from non-interest expense; securities gains from non-interest income and adds the tax- equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
(3)  Estimated ratio at March 31, 2022.
(4)  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. See the Reconciliation Table included with these Financial Highlights.
(5)  Calculation utilizes average loans, excluding residential mortgage loans held-for-sale.


Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED (CONTINUED)
OPERATING EARNINGS - METRICS

    Three Months Ended
March 31,
(Dollars in thousands)     2022       2021  
Core earnings (non-GAAP):        
Net income (GAAP)   $ 43,935     $ 75,464  
Plus/ (less) non-GAAP adjustments (net of tax):        
Merger and acquisition expense           34  
Amortization of intangible assets     1,121       1,264  
Loss on FHLB redemption           6,792  
Investment securities gains     (6 )     (43 )
Core earnings (Non-GAAP)   $ 45,050     $ 83,511  
         
Core earnings per diluted common share (non-GAAP):        
Weighted average common shares outstanding - diluted (GAAP)     45,333,292       47,415,060  
         
Earnings per diluted common share (GAAP)   $ 0.96     $ 1.58  
Core earnings per diluted common share (non-GAAP)   $ 0.99     $ 1.76  
         
Core return on average assets (non-GAAP):        
Average assets (GAAP)   $ 12,576,089     $ 12,801,539  
         
Return on average assets (GAAP)     1.42 %     2.39 %
Core return on average assets (non-GAAP)     1.45 %     2.65 %
         
Core return on average tangible common equity (non-GAAP):        
Average total stockholders' equity (GAAP)   $ 1,506,516     $ 1,477,150  
Average goodwill     (370,223 )     (370,223 )
Average other intangible assets, net     (25,368 )     (31,896 )
Average tangible common equity (non-GAAP)   $ 1,110,925     $ 1,075,031  
         
Return on average tangible common equity (non-GAAP)     16.04 %     28.47 %
Core return on average tangible common equity (non-GAAP)     16.45 %     31.50 %
                 


Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED

    Three Months Ended
March 31,
(Dollars in thousands)     2022       2021  
Pre-tax pre-provision net income:        
Net income (GAAP)   $ 43,935     $ 75,464  
Plus/ (less) non-GAAP adjustments:        
Income tax expense     14,329       24,537  
Provision/ (credit) for credit losses     1,635       (34,708 )
Pre-tax pre-provision net income (non-GAAP)   $ 59,899     $ 65,293  
         
Efficiency ratio (GAAP):        
Non-interest expense   $ 62,147     $ 68,173  
         
Net interest income plus non-interest income   $ 122,046     $ 133,466  
         
Efficiency ratio (GAAP)     50.92 %     51.08 %
         
Efficiency ratio (Non-GAAP):        
Non-interest expense   $ 62,147     $ 68,173  
Less non-GAAP adjustments:        
Amortization of intangible assets     1,508       1,697  
Loss on FHLB redemption           9,117  
Merger and acquisition expense           45  
Non-interest expense - as adjusted   $ 60,639     $ 57,314  
         
Net interest income plus non-interest income   $ 122,046     $ 133,466  
Plus non-GAAP adjustment:        
Tax-equivalent income     866       980  
Less non-GAAP adjustment:        
Investment securities gains     8       58  
Net interest income plus non-interest income - as adjusted   $ 122,904     $ 134,388  
         
Efficiency ratio (Non-GAAP)     49.34 %     42.65 %
         
Tangible common equity ratio:        
Total stockholders' equity   $ 1,488,910     $ 1,511,694  
Goodwill     (370,223 )     (370,223 )
Other intangible assets, net     (24,412 )     (30,824 )
Tangible common equity   $ 1,094,275     $ 1,110,647  
         
Total assets   $ 12,967,416     $ 12,873,366  
Goodwill     (370,223 )     (370,223 )
Other intangible assets, net     (24,412 )     (30,824 )
Tangible assets   $ 12,572,781     $ 12,472,319  
         
Tangible common equity ratio     8.70 %     8.90 %
         
Outstanding common shares     45,162,908       47,187,389  
Tangible book value per common share   $ 24.23     $ 23.54  
                 


Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED

(Dollars in thousands)   March 31,
2022
  December 31,
2021
  March 31,
2021
Assets            
Cash and due from banks   $ 96,074     $ 65,630     $ 100,739  
Federal funds sold     370       312       285  
Interest-bearing deposits with banks     456,382       354,078       127,597  
Cash and cash equivalents     552,826       420,020       228,621  
Residential mortgage loans held for sale (at fair value)     17,537       39,409       84,930  
Investments held-to-maturity (fair value of $275,834)     285,339              
Investments available-for-sale (at fair value)     1,259,945       1,465,896       1,427,880  
Other equity securities     41,157       41,166       44,847  
Total loans     10,144,328       9,967,091       10,446,866  
Less: allowance for credit losses     (110,588 )     (109,145 )     (130,361 )
Net loans     10,033,740       9,857,946       10,316,505  
Premises and equipment, net     61,434       59,685       55,361  
Other real estate owned     1,034       1,034       1,354  
Accrued interest receivable     33,528       34,349       44,559  
Goodwill     370,223       370,223       370,223  
Other intangible assets, net     24,412       25,920       30,824  
Other assets     286,241       275,078       268,262  
Total assets   $ 12,967,416     $ 12,590,726     $ 12,873,366  
             
Liabilities            
Noninterest-bearing deposits   $ 4,039,797     $ 3,779,630     $ 3,770,852  
Interest-bearing deposits     6,812,997       6,845,101       6,906,900  
Total deposits     10,852,794       10,624,731       10,677,752  
Securities sold under retail repurchase agreements and federal funds purchased     130,784       141,086       189,318  
Advances from FHLB                 100,000  
Subordinated debt     370,002       172,712       227,044  
Total borrowings     500,786       313,798       516,362  
Accrued interest payable and other liabilities     124,926       132,518       167,558  
Total liabilities     11,478,506       11,071,047       11,361,672  
             
Stockholders' equity            
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 45,162,908, 45,118,930 and 47,187,389 at March 31, 2022, December 31, 2021 and March 31, 2021, respectively     45,163       45,119       47,187  
Additional paid in capital     752,671       751,072       849,606  
Retained earnings     760,347       732,027       617,553  
Accumulated other comprehensive loss     (69,271 )     (8,539 )     (2,652 )
Total stockholders' equity     1,488,910       1,519,679       1,511,694  
Total liabilities and stockholders' equity   $ 12,967,416     $ 12,590,726     $ 12,873,366  
                         


Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

    Three Months Ended
March 31,
(Dollars in thousands, except per share data)     2022       2021  
Interest income:        
Interest and fees on loans   $ 99,494     $ 107,428  
Interest on loans held for sale     198       537  
Interest on deposits with banks     113       46  
Interest and dividends on investment securities:        
Taxable     4,107       3,899  
Tax-advantaged     2,124       2,351  
Interest on federal funds sold            
Total interest income     106,036       114,261  
Interest Expense:        
Interest on deposits     2,293       4,830  
Interest on retail repurchase agreements and federal funds purchased     54       53  
Interest on advances from FHLB           2,276  
Interest on subordinated debt     2,238       2,502  
Total interest expense     4,585       9,661  
Net interest income     101,451       104,600  
Provision/ (credit) for credit losses     1,635       (34,708 )
Net interest income after provision/ (credit) for credit losses     99,816       139,308  
Non-interest income:        
Investment securities gains     8       58  
Service charges on deposit accounts     2,326       1,852  
Mortgage banking activities     2,298       10,169  
Wealth management income     9,337       8,730  
Insurance agency commissions     2,115       2,153  
Income from bank owned life insurance     795       680  
Bank card fees     1,668       1,518  
Other income     2,048       3,706  
Total non-interest income     20,595       28,866  
Non-interest expense:        
Salaries and employee benefits     39,373       36,652  
Occupancy expense of premises     5,034       5,487  
Equipment expenses     3,536       3,222  
Marketing     1,193       1,212  
Outside data services     2,419       2,283  
FDIC insurance     984       1,492  
Amortization of intangible assets     1,508       1,697  
Merger and acquisition expense           45  
Professional fees and services     2,017       1,731  
Other expenses     6,083       14,352  
Total non-interest expense     62,147       68,173  
Income before income tax expense     58,264       100,001  
Income tax expense     14,329       24,537  
Net income   $ 43,935     $ 75,464  
         
Net income per share amounts:        
Basic net income per common share   $ 0.97     $ 1.59  
Diluted net income per common share   $ 0.96     $ 1.58  
Dividends declared per share   $ 0.34     $ 0.32  
                 


Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED

      2022       2021  
(Dollars in thousands, except per share data)   Q1   Q4   Q3   Q2   Q1
Profitability for the quarter:                    
Tax-equivalent interest income   $ 106,902     $ 110,933     $ 112,060     $ 115,753     $ 115,241  
Interest expense     4,585       4,803       4,525       6,777       9,661  
Tax-equivalent net interest income     102,317       106,130       107,535       108,976       105,580  
Tax-equivalent adjustment     866       862       931       930       980  
Provision/ (credit) for credit losses     1,635       1,585       (8,229 )     (4,204 )     (34,708 )
Non-interest income     20,595       22,536       24,394       26,259       28,866  
Non-interest expense     62,147       66,141       63,181       62,975       68,173  
Income before income tax expense     58,264       60,078       76,046       75,534       100,001  
Income tax expense     14,329       14,674       19,070       18,271       24,537  
Net income   $ 43,935     $ 45,404     $ 56,976     $ 57,263     $ 75,464  
GAAP financial performance:                    
Return on average assets     1.42 %     1.41 %     1.75 %     1.79 %     2.39 %
Return on average common equity     11.83 %     11.87 %     14.54 %     15.07 %     20.72 %
Return on average tangible common equity     16.04 %     16.07 %     19.56 %     20.44 %     28.47 %
Net interest margin     3.49 %     3.51 %     3.52 %     3.63 %     3.56 %
Efficiency ratio - GAAP basis (1)     50.92 %     51.75 %     48.23 %     46.89 %     51.08 %
Non-GAAP financial performance:                    
Pre-tax pre-provision net income   $ 59,899     $ 61,663     $ 67,817     $ 71,330     $ 65,293  
Core after-tax earnings   $ 45,050     $ 46,575     $ 58,151     $ 58,446     $ 83,511  
Core return on average assets     1.45 %     1.44 %     1.79 %     1.83 %     2.65 %
Core return on average common equity     12.13 %     12.17 %     14.84 %     15.38 %     22.93 %
Core return on average tangible common equity     16.45 %     16.49 %     19.96 %     20.87 %     31.50 %
Core earnings per diluted common share   $ 0.99     $ 1.02     $ 1.23     $ 1.23     $ 1.76  
Efficiency ratio - Non-GAAP basis (1)     49.34 %     50.17 %     46.67 %     45.36 %     42.65 %
Per share data:                  
Net income attributable to common shareholders   $ 43,667     $ 45,114     $ 56,622     $ 56,782     $ 74,824  
Basic net income per common share   $ 0.97     $ 0.99     $ 1.21     $ 1.20     $ 1.59  
Diluted net income per common share   $ 0.96     $ 0.99     $ 1.20     $ 1.19     $ 1.58  
Weighted average diluted common shares     45,333,292       45,655,924       47,086,824       47,523,198       47,415,060  
Dividends declared per share   $ 0.34     $ 0.32     $ 0.32     $ 0.32     $ 0.32  
Non-interest income:                    
Securities gains   $ 8     $ 34     $ 49     $ 71     $ 58  
Service charges on deposit accounts     2,326       2,305       2,108       1,976       1,852  
Mortgage banking activities     2,298       3,622       4,942       5,776       10,169  
Wealth management income     9,337       9,598       9,392       9,121       8,730  
Insurance agency commissions     2,115       1,332       2,285       1,247       2,153  
Income from bank owned life insurance     795       819       818       705       680  
Bank card fees     1,668       1,818       1,775       1,785       1,518  
Other income     2,048       3,008       3,025       5,578       3,706  
Total non-interest income   $ 20,595     $ 22,536     $ 24,394     $ 26,259     $ 28,866  
Non-interest expense:                    
Salaries and employee benefits   $ 39,373     $ 41,535     $ 38,653     $ 38,990     $ 36,652  
Occupancy expense of premises     5,034       5,693       5,728       5,497       5,487  
Equipment expenses     3,536       3,427       3,214       3,020       3,222  
Marketing     1,193       1,090       1,376       1,052       1,212  
Outside data services     2,419       2,123       2,317       2,260       2,283  
FDIC insurance     984       991       361       1,450       1,492  
Amortization of intangible assets     1,508       1,609       1,635       1,659       1,697  
Merger and acquisition expense                             45  
Professional fees and services     2,017       2,381       3,031       3,165       1,731  
Other expenses     6,083       7,292       6,866       5,882       14,352  
Total non-interest expense   $ 62,147     $ 66,141     $ 63,181     $ 62,975     $ 68,173  

(1)  The efficiency ratio - GAAP basis is non-interest expense 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, loss on FHLB redemption, and merger and acquisition expense from non-interest expense; investment securities gains 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

      2022       2021  
(Dollars in thousands, except per share data)   Q1   Q4   Q3   Q2   Q1
Balance sheets at quarter end:                
Commercial investor real estate loans   $ 4,388,275     $ 4,141,346     $ 3,743,698     $ 3,712,374     $ 3,652,418  
Commercial owner-occupied real estate loans     1,692,253       1,690,881       1,661,092       1,687,843       1,644,848  
Commercial AD&C loans     1,089,331       1,088,094       1,177,949       1,126,960       1,051,013  
Commercial business loans     1,349,602       1,481,834       1,594,528       1,974,366       2,411,109  
Residential mortgage loans     1,000,697       937,570       911,997       960,527       1,022,546  
Residential construction loans     204,259       197,652       181,319       172,869       171,028  
Consumer loans     419,911       429,714       450,765       457,576       493,904  
Total loans     10,144,328       9,967,091       9,721,348       10,092,515       10,446,866  
Allowance for credit losses     (110,588 )     (109,145 )     (107,920 )     (123,961 )     (130,361 )
Loans held for sale     17,537       39,409       44,678       71,082       84,930  
Investment securities     1,586,441       1,507,062       1,470,652       1,482,123       1,472,727  
Interest-earning assets     12,205,058       11,867,952       12,245,374       12,167,067       12,132,405  
Total assets     12,967,416       12,590,726       13,017,464       12,925,577       12,873,366  
Noninterest-bearing demand deposits     4,039,797       3,779,630       3,987,411       4,000,636       3,770,852  
Total deposits     10,852,794       10,624,731       10,987,400       10,866,466       10,677,752  
Customer repurchase agreements     130,784       141,086       147,504       140,708       129,318  
Total interest-bearing liabilities     7,313,783       7,158,899       7,320,132       7,233,536       7,423,262  
Total stockholders' equity     1,488,910       1,519,679       1,546,060       1,562,280       1,511,694  
Quarterly average balance sheets:                
Commercial investor real estate loans   $ 4,220,246     $ 3,769,529     $ 3,678,886     $ 3,675,119     $ 3,634,174  
Commercial owner-occupied real estate loans     1,683,557       1,669,737       1,671,442       1,663,543       1,638,885  
Commercial AD&C loans     1,102,660       1,140,059       1,161,183       1,089,287       1,049,597  
Commercial business loans     1,372,755       1,482,901       1,820,598       2,225,885       2,291,097  
Residential mortgage loans     964,056       925,093       934,365       994,899       1,066,714  
Residential construction loans     197,366       186,129       170,511       176,135       179,925  
Consumer loans     424,859       436,030       452,289       468,686       496,578  
Total loans     9,965,499       9,609,478       9,889,274       10,293,554       10,356,970  
Loans held for sale     17,594       29,426       50,075       66,958       82,263  
Investment securities     1,617,615       1,535,265       1,403,496       1,482,905       1,407,455  
Interest-earning assets     11,859,803       12,012,576       12,121,048       12,037,701       12,029,424  
Total assets     12,576,089       12,791,526       12,886,460       12,798,355       12,801,539  
Noninterest-bearing demand deposits     3,758,732       3,879,572       3,869,293       3,763,135       3,394,110  
Total deposits     10,542,029       10,809,665       10,832,115       10,663,346       10,343,190  
Customer repurchase agreements     131,487       144,988       145,483       136,286       148,195  
Total interest-bearing liabilities     7,163,641       7,247,756       7,315,021       7,356,656       7,742,987  
Total stockholders' equity     1,506,516       1,517,793       1,554,765       1,523,875       1,477,150  
Financial measures:                    
Average equity to average assets     11.98 %     11.87 %     12.07 %     11.91 %     11.54 %
Investment securities to earning assets     13.00 %     12.70 %     12.01 %     12.18 %     12.14 %
Loans to earning assets     83.12 %     83.98 %     79.39 %     82.95 %     86.11 %
Loans to assets     78.23 %     79.16 %     74.68 %     78.08 %     81.15 %
Loans to deposits     93.47 %     93.81 %     88.48 %     92.88 %     97.84 %
Assets under management   $ 5,793,787     $ 6,078,204     $ 5,733,311     $ 5,676,141     $ 5,401,158  
Capital measures:                    
Tier 1 leverage (1)     9.66 %     9.26 %     9.33 %     9.49 %     9.14 %
Common equity tier 1 capital to risk-weighted assets (1)     12.03 %     11.91 %     12.53 %     12.49 %     12.11 %
Tier 1 capital to risk-weighted assets (1)     12.03 %     11.91 %     12.53 %     12.49 %     12.11 %
Total regulatory capital to risk-weighted assets (1)     16.77 %     14.59 %     15.30 %     15.85 %     15.52 %
Book value per common share   $ 32.97     $ 33.68     $ 33.52     $ 33.02     $ 32.04  
Outstanding common shares     45,162,908       45,118,930       46,119,074       47,312,982       47,187,389  

(1) Estimated ratio at March 31, 2022.


Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED

    2022   2021
(Dollars in thousands)   March 31,   December 31,   September 30,   June 30,   March 31,
Non-performing assets:                    
Loans 90 days past due:                    
Commercial real estate:                    
Commercial investor real estate   $     $     $ 14,830     $     $  
Commercial owner-occupied real estate                              
Commercial AD&C                 7,344              
Commercial business                             31  
Residential real estate:                    
Residential mortgage     296       557       679       680       398  
Residential construction                              
Consumer                              
Total loans 90 days past due     296       557       22,853       680       429  
Non-accrual loans:                    
Commercial real estate:                    
Commercial investor real estate     11,743       12,489       15,386       42,072       42,776  
Commercial owner-occupied real estate     8,083       9,306       9,854       8,183       8,316  
Commercial AD&C     1,081       650       1,022       14,489       14,975  
Commercial business     8,357       8,420       9,454       9,435       13,147  
Residential real estate:                    
Residential mortgage     8,148       8,441       9,511       9,440       9,593  
Residential construction     51       55       62       62        
Consumer     6,406       6,725       7,826       7,718       7,193  
Total non-accrual loans     43,869       46,086       53,115       91,399       96,000  
Total restructured loans - accruing     2,161       2,167       2,199       2,228       2,271  
Total non-performing loans     46,326       48,810       78,167       94,307       98,700  
Other assets and other real estate owned (OREO)     1,034       1,034       1,105       1,234       1,354  
Total non-performing assets   $ 47,360     $ 49,844     $ 79,272     $ 95,541     $ 100,054  

 

    For the Quarter Ended,
(Dollars in thousands)   March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
Analysis of non-accrual loan activity:                    
Balance at beginning of period   $ 46,086     $ 53,115     $ 91,399     $ 96,000     $ 112,361  
Non-accrual balances transferred to OREO                       (257 )      
Non-accrual balances charged-off     (265 )     (754 )     (7,171 )     (2,166 )     (699 )
Net payments or draws     (2,787 )     (5,786 )     (36,526 )     (3,693 )     (16,028 )
Loans placed on non-accrual     1,503       511       5,699       1,515       421  
Non-accrual loans brought current     (668 )     (1,000 )     (286 )           (55 )
Balance at end of period   $ 43,869     $ 46,086     $ 53,115     $ 91,399     $ 96,000  
                     
Analysis of allowance for credit losses:                    
Balance at beginning of period   $ 109,145     $ 107,920     $ 123,961     $ 130,361     $ 165,367  
Provision/ (credit) for credit losses     1,635       1,585       (8,229 )     (4,204 )     (34,708 )
Less loans charged-off, net of recoveries:                    
Commercial real estate:                    
Commercial investor real estate     (19 )     (109 )     5,797       (144 )     (27 )
Commercial owner-occupied real estate                 136              
Commercial AD&C                 2,007              
Commercial business     111       564       (53 )     2,359       634  
Residential real estate:                    
Residential mortgage     120       (80 )     (49 )     (11 )     (270 )
Residential construction           (2 )     (2 )     (1 )      
Consumer     (20 )     (13 )     (24 )     (7 )     (39 )
Net charge-offs     192       360       7,812       2,196       298  
Balance at the end of period   $ 110,588     $ 109,145     $ 107,920     $ 123,961     $ 130,361  
                     
Asset quality ratios:                    
Non-performing loans to total loans     0.46 %     0.49 %     0.80 %     0.93 %     0.94 %
Non-performing assets to total assets     0.37 %     0.40 %     0.61 %     0.74 %     0.78 %
Allowance for credit losses to loans     1.09 %     1.10 %     1.11 %     1.23 %     1.25 %
Allowance for credit losses to non-performing loans     238.72 %     223.61 %     138.06 %     131.44 %     132.08 %
Annualized net charge-offs/ (recoveries) to average loans     0.01 %     0.01 %     0.31 %     0.09 %     0.01 %
                                         


Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED

    Three Months Ended March 31,
    2022   2021
(Dollars in thousands and tax-equivalent)   Average
Balances
  Interest (1)   Annualized
Average
Yield/Rate
  Average
Balances
  Interest (1)   Annualized
Average
Yield/Rate
Assets                        
Commercial investor real estate loans   $ 4,220,246     $ 41,634     4.00 %   $ 3,634,174     $ 38,354     4.28 %
Commercial owner-occupied real estate loans     1,683,557       18,432     4.44       1,638,885       18,680     4.62  
Commercial AD&C loans     1,102,660       10,593     3.90       1,049,597       10,396     4.02  
Commercial business loans     1,372,755       16,354     4.83       2,291,097       24,794     4.39  
Total commercial loans     8,379,218       87,013     4.21       8,613,753       92,224     4.34  
Residential mortgage loans     964,056       7,774     3.23       1,066,714       9,544     3.58  
Residential construction loans     197,366       1,557     3.20       179,925       1,606     3.62  
Consumer loans     424,859       3,589     3.43       496,578       4,545     3.71  
Total residential and consumer loans     1,586,281       12,920     3.28       1,743,217       15,695     3.62  
Total loans (2)     9,965,499       99,933     4.06       10,356,970       107,919     4.22  
Loans held for sale     17,594       198     4.50       82,263       537     2.61  
Taxable securities     1,165,041       4,107     1.41       915,625       3,899     1.70  
Tax-advantaged securities     452,574       2,551     2.26       491,830       2,840     2.31  
Total investment securities (3)     1,617,615       6,658     1.65       1,407,455       6,739     1.92  
Interest-bearing deposits with banks     258,273       113     0.18       182,095       46     0.10  
Federal funds sold     822           0.21       641           0.09  
Total interest-earning assets     11,859,803       106,902     3.65       12,029,424       115,241     3.88  
                         
Less: allowance for credit losses     (109,933 )             (163,229 )        
Cash and due from banks     66,466               106,259          
Premises and equipment, net     61,036               56,369          
Other assets     698,717               772,716          
Total assets   $ 12,576,089             $ 12,801,539          
                         
Liabilities and Stockholders' Equity                        
Interest-bearing demand deposits   $ 1,501,658     $ 158     0.04 %   $ 1,365,652     $ 236     0.07 %
Regular savings deposits     546,893       19     0.01       444,296       56     0.05  
Money market savings deposits     3,426,817       625     0.07       3,410,589       1,463     0.17  
Time deposits     1,307,929       1,491     0.46       1,728,543       3,075     0.72  
Total interest-bearing deposits     6,783,297       2,293     0.14       6,949,080       4,830     0.28  
Federal funds purchased     45,444       15     0.13       41,656       10     0.10  
Repurchase agreements     131,487       39     0.12       148,195       43     0.12  
Advances from FHLB                     376,984       2,276     2.45  
Subordinated debt     203,413       2,238     4.40       227,072       2,502     4.41  
Total borrowings     380,344       2,292     2.44       793,907       4,831     2.47  
Total interest-bearing liabilities     7,163,641       4,585     0.26       7,742,987       9,661     0.50  
                         
Noninterest-bearing demand deposits     3,758,732               3,394,110          
Other liabilities     147,200               187,292          
Stockholders' equity     1,506,516               1,477,150          
Total liabilities and stockholders' equity   $ 12,576,089             $ 12,801,539          
                         
Tax-equivalent net interest income and spread       $ 102,317     3.39 %       $ 105,580     3.38 %
Less: tax-equivalent adjustment         866               980      
Net interest income       $ 101,451             $ 104,600      
                         
Interest income/earning assets           3.65 %           3.88 %
Interest expense/earning assets           0.16             0.32  
Net interest margin           3.49 %           3.56 %

(1)  Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.64% and 25.50% for 2022 and 2021, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $0.9 million and $1.0 million in 2022 and 2021, respectively.
(2)  Non-accrual loans are included in the average balances.
(3)  Available for sale investments are presented at amortized cost.

 


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Source: Sandy Spring Bancorp, Inc.