Sandy Spring Bancorp Reports Quarterly Earnings of $54.8 Million

July 21, 2022
Company Generates 17% Year over Year Organic Loan Growth

OLNEY, Md., July 21, 2022 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc. (Nasdaq-SASR), the parent company of Sandy Spring Bank, reported net income of $54.8 million ($1.21 per diluted common share) for the quarter ended June 30, 2022, compared to net income of $57.3 million ($1.19 per diluted common share) for the second quarter of 2021 and $43.9 million ($0.96 per diluted common share) for the first quarter of 2022.

Current quarter core earnings were $44.2 million ($0.98 per diluted common share), compared to $58.4 million ($1.23 per diluted common share) for the quarter ended June 30, 2021 and $45.1 million ($0.99 per diluted common share) for the quarter ended March 31, 2022. Core earnings are determined by excluding the after-tax impact of merger, acquisition and disposal expense, the loss on FHLB redemptions, amortization of intangibles, gain on disposal of assets and investment securities gains. Core earnings for the current period when compared to the prior year quarter were reduced primarily as a result of the activity associated with provisioning for credit losses, a decline in mortgage banking income, lower other non-interest income from isolated events that occurred in 2021 and a decline in net interest income. The provision for credit losses for the current quarter was a charge of $3.0 million compared to a credit of $4.2 million for the second quarter of 2021 and a charge of $1.6 million for the first quarter of 2022.

“We have sustained robust commercial loan production for three consecutive quarters. Our teams are focused and strategic, our products and services are competitive, and we are maximizing our in-market presence to win new relationships,” said Daniel J. Schrider, President and CEO of Sandy Spring Bank. “Despite the economic concerns in the marketplace, the businesses we bank continue to grow and our pipeline remains strong. We are committed to supporting local businesses of all sizes and helping the Greater Washington region thrive.”

Second Quarter Highlights:

  • At June 30, 2022, total assets were $13.3 billion, a 3% increase compared to $12.9 billion at June 30, 2021. During the previous twelve months, liquidity generated by PPP loan forgiveness was utilized to fund the growth in the loan and investment securities portfolios. Excluding the PPP balances, total assets grew 10% year-over-year.

  • Total loans, excluding PPP loans, increased 17% to $10.8 billion at June 30, 2022 compared to $9.2 billion at June 30, 2021. Excluding PPP loans, total commercial loans grew by $1.3 billion or 17% during the previous twelve months. During this period, the Company generated new commercial gross loan production of $4.4 billion, of which $3.0 billion was funded, more than offsetting $1.6 billion in non-PPP commercial loan run-off. Funded commercial loan production increased 60% to $804.6 million during the second quarter of the current year compared to $502.5 million for the same quarter of the prior year. Total mortgage loans grew $249.7 million, primarily in conventional 1-4 family mortgage loans, during the same period.

  • Net interest income for the second quarter of 2022 declined $2.1 million or 2% compared to the second quarter of 2021. Excluding PPP interest and fees, net interest income increased $9.9 million or 10% for the current quarter compared to the prior year quarter driven by the growth of the commercial loan portfolio.

  • For the second quarter of 2022, the net interest margin was 3.49%, compared to 3.63% for the second quarter of 2021, and 3.49% for the first quarter of 2022. Excluding the amortization of the fair value marks derived from the previous acquisitions and interest and fees from PPP loans, the current quarter’s net interest margin was 3.45% compared to 3.49% for second quarter of 2021, and 3.41% for the first quarter of 2022.

  • The provision for credit losses was a charge of $3.0 million for the current quarter compared to the prior year quarter’s credit to the provision of $4.2 million. The provision for the current quarter is a reflection of the growth in the loan portfolio and an increase in the qualitative reserve to consider the potential impact of future recessionary pressures. These factors were partially offset by the benefit to the provision derived from continuing improvement in forecasted macroeconomic indicators in the quantitative model.

  • Non-interest income for the current quarter increased by 34% or $9.0 million compared to the prior year quarter as a result of the $16.7 million gain from the disposition of the Company's insurance business. Excluding the disposition gain, non-interest income declined 29% compared to the prior year quarter as a result of the $4.3 million decline in income from mortgage banking activities and the $3.4 million decline in other non-interest income compared to the second quarter of 2021.

  • Non-interest expense for the current quarter increased $2.0 million or 3% compared to the prior year quarter with a significant component of the increase consisting of $1.1 million in merger, acquisition and disposal expense. Other non-interest expense increased $1.4 million driven by the combination of various operating expenses.

  • Return on average assets (“ROA”) for the quarter ended June 30, 2022 was 1.69% and return on average tangible common equity (“ROTCE”) was 20.42% compared to 1.79% and 20.44%, respectively, for the second quarter of 2021. On a non-GAAP basis, the current quarter's core ROA was 1.37% and core ROTCE was 16.49% compared to core ROA of 1.83% and core ROTCE of 20.87% for the second quarter of 2021.

  • For the second quarter of 2022, the GAAP efficiency ratio was 46.03% compared to 46.89% for the second quarter of 2021, and 50.92% for the first quarter of 2022. The non-GAAP efficiency ratio for the second quarter of 2022 was 49.79% compared to 45.36% for the prior year quarter, and 49.34% for the first quarter of 2022.

  • During the quarter, the Company repurchased 625,710 shares of its common stock for $25.0 million at an average price of $39.93 per share. The repurchase plan that was authorized on March 30, 2022 permits the repurchase of up to $50.0 million in shares of common stock.

Balance Sheet and Credit Quality

Total assets grew 3% to $13.3 billion at June 30, 2022, as compared to $12.9 billion at June 30, 2021. During this period, total loans grew by 7% to $10.8 billion at June 30, 2022, compared to $10.1 billion at June 30, 2021. At June 30, 2022, excluding PPP loans, total assets grew 10% and total loans grew 17% compared to June 30, 2021. Total commercial loans, excluding PPP loan, grew by $1.3 billion or 17% during the past twelve months. During this period, the Company generated commercial gross loan production of $4.4 billion, of which $3.0 billion was funded, offsetting $1.6 billion in commercial loan run-off. During the second quarter of 2022, funded commercial loan production was $804.6 million, an increase of 60% compared to $502.5 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 $1.0 billion or 28% growth in the investor owned commercial portfolio. Year-over-year the total mortgage loan portfolio grew 22%, as a greater number of conventional 1-4 family mortgages were retained to grow the portfolio.

During the past twelve months, deposits increased 1%. Noninterest-bearing deposits grew 3% reflecting the impact of the PPP forgiveness and growth in transaction relationships, while interest-bearing deposits remained essentially unchanged. During the period, time deposits decreased 9% and money market accounts decreased 4%, while savings and interest bearing demand categories experienced year-over-year growth of 15% and 12%, respectively.

The tangible common equity ratio decreased to 8.45% of tangible assets at June 30, 2022, compared to 9.28% at June 30, 2021 as a result of the $132.3 million repurchase of common shares during the previous twelve months and the $88.9 million increase in the accumulated other comprehensive loss in the investment portfolio due to the impact of the rising rate environment on the value of securities coupled with the increase in tangible assets during the past year. At June 30, 2022, the Company had a total risk-based capital ratio of 16.07%, a common equity tier 1 risk-based capital ratio of 11.58%, a tier 1 risk-based capital ratio of 11.58%, and a tier 1 leverage ratio of 9.53%.

Non-performing loans include non-accrual loans, accruing loans 90 days or more past due and restructured loans. At June 30, 2022, the level of non-performing loans to total loans was 0.40% compared to 0.93% at June 30, 2021, and 0.46% at March 31, 2022. At June 30, 2022, non-performing loans totaled $43.5 million, compared to $94.3 million at June 30, 2021, and $46.3 million at March 31, 2022. Loans placed on non-accrual during the current quarter amounted to $0.9 million compared to $1.5 million for the prior year quarter and $1.5 million for the first quarter of 2022.

The company realized an insignificant amount of net recoveries for the second quarter of 2022, as compared to net charge-offs of $2.2 million for the second quarter of 2021 and net charge-offs of $0.2 million for the first quarter of 2022.

At June 30, 2022, the allowance for credit losses was $113.7 million or 1.05% of outstanding loans and 261% of non-performing loans, compared to $110.6 million or 1.09% of outstanding loans and 239% of non-performing loans at the end of the previous quarter. The increase in the allowance during the current quarter compared to the previous quarter resulted from the growth in the loan portfolio and the effect of management's consideration of the potential impact of recessionary pressures. The impact from these metrics applied in the determination of the allowance continue to be partially mitigated by forecasted improvement in certain economic metrics, notably the projected improvement in the unemployment rate in future periods.

Income Statement Review

Quarterly Results

Net income for the three months ended June 30, 2022 was $54.8 million compared to net income of $57.3 million for the prior year quarter. The decline in earnings was the result of lower net interest income, the current quarter's provision for credit losses compared to the prior year's credit to the allowance, and an increase in non-interest expense, which were partially offset by the increase in non-interest income. The decline in net interest income was the product of lower PPP fees and interest partially offset by interest income from loan growth, and an increase in interest expense. Non-interest income increased as a result of the sale of the Company's insurance business, offsetting lower mortgage banking income. Non-interest expense increased primarily as a result of the transaction costs associated with the asset sale and increases in various categories of operational costs in the current quarter compared to the prior year quarter. Current quarter core earnings were $44.2 million ($0.98 per diluted common share), compared to $58.4 million ($1.23 per diluted common share) for the quarter ended June 30, 2021 and $45.1 million ($0.99 per diluted common share) for the quarter ended March 31, 2022.

Net interest income for the second quarter of 2022 decreased $2.1 million or 2% compared to the second quarter of 2021, due to the combined impact of the $0.9 million reduction in interest income and the increase of $1.2 million in interest expense. The decline in interest income was driven by a $12.0 million decline in interest and fees on PPP loans, which was substantially offset by interest income from the remaining categories of commercial loans and, to a lesser degree, an increase in investment securities income. The increase in interest expense was primarily the result of the interest expense associated with issuance of subordinated debt late in the first quarter of the current year. The net interest margin for the second quarter of 2022 was 3.49% as compared to 3.63% for the same quarter of the prior year, as the yield on interest-earning assets declined eleven basis points and the rate paid on interest-bearing liabilities increased six basis points. Excluding the effects of amortization of the fair value marks derived from acquisitions and interest and fees from PPP loans, the net interest margin was 3.45% for the current quarter compared to 3.49% for second quarter of 2021.

The provision for credit losses was a charge of $3.0 million for the second quarter of 2022 compared to a credit of $4.2 million for the second quarter of 2021. The provision for credit losses for the first quarter of 2022 was a charge of $1.6 million. The provision for the current quarter reflects the growth in the loan portfolio during the quarter and management's consideration of the increased potential of an economic recession. These factors exceeded the impact derived from continuing improvement in forecasted macroeconomic indicators.

Non-interest income increased $9.0 million or 34% for the second quarter of 2022, compared to the prior year quarter as a direct result of the gain on the sale of the Company's insurance business. Excluding the disposal gain, non-interest income declined 29% compared to the prior year quarter. The gain was partially offset by a $4.3 million decline in income from mortgage banking activities and the $3.4 million decline in other non-interest income compared to the second quarter of 2021. Wealth management income remained stable and service charges on deposit accounts grew 25%. Other non-interest income declined 62% compared to the prior year, which included the full payoff of a purchased credit deteriorated loan and activity-based vendor incentives.

Non-interest expense increased $2.0 million or 3% for the second quarter of 2022, compared to the prior year quarter. The majority of the increase was the result of $1.1 million merger, acquisition and disposal expense associated with the sale of the Company's insurance business during the quarter. Other expenses increased $1.4 million as a result of the combination of the provision for lines of credit, franchise taxes and other operating costs. The remaining categories of non-interest expense experienced modest increases or decreases with professional fees declining $0.8 million during the current quarter compared to the prior year quarter as a result of lower consulting fees.

For the second quarter of 2022, the GAAP efficiency ratio was 46.03% compared to 46.89% for the second quarter of 2021, and 50.92% for the first quarter of 2022. The non-GAAP efficiency ratio was 49.79% for the current quarter as compared to 45.36% for the second quarter of 2021, and 49.34% for the first quarter of 2022. The increase in the non-GAAP efficiency ratio (reflecting a decrease in efficiency) from the second quarter of the prior year to the current year quarter was primarily the result of the 7% decline in non-GAAP revenue, driven chiefly by the decrease in the non-GAAP non-interest income. ROA for the second quarter ended June 30, 2022 was 1.69% and ROTCE was 20.42% compared to 1.42% and 16.04%, respectively, for the first quarter of 2022. On a non-GAAP basis, the current quarter's core ROA was 1.37% and core ROTCE was 16.49% compared to core ROA of 1.45% and core ROTCE of 16.45% for the first quarter of 2022.

Year-to-Date Results

The Company recorded net income of $98.7 million for the six months ended June 30, 2022 compared to net income of $132.7 million for the same period of the prior year. The decline in year-to-date earnings for the current year primarily reflects the impact of the decline in PPP fees and interest, partially offset by the impact on interest income from the growth in the commercial loan portfolio, and the activity in the provision for loan losses, which shifted from the significant credit in the prior year to the charge for the current year. Core earnings were $89.3 million for the six months ended June 30, 2022 compared to $142.0 million for the prior year. Core earnings for the current period compared to the prior year period were reduced primarily as a result of the activity associated with the provision for credit losses, a decline in mortgage banking income and lower other non-interest income from isolated events that occurred in 2021. Core earnings for the current period exclude the gain from the disposal of the Company's insurance business.

For the six months ended June 30, 2022, net interest income decreased 2% or $5.2 million compared to the prior year as a result of the $19.7 million reduction in PPP interest and fees, partially offset by the positive impact on interest income from the year-over-year loan growth and the decrease in interest expense. Excluding the impact of interest and fees on PPP loans, tax-equivalent interest and fees on loans, driven by commercial loans, increased 5% compared to the prior year period. The decrease in interest expense was primarily the result of the decline in interest expense associated with money market and time deposits and total borrowings. The net interest margin declined to 3.49% for the six months ended June 30, 2022, compared to 3.60% for the prior year. Excluding the impact of the amortization of the fair value marks derived from acquisitions and PPP interest and fees, the net interest margin for the current year would have been 3.43% compared to 3.46% for the prior year.

The provision for credit losses for the six months ended June 30, 2022 amounted to a charge of $4.7 million as compared to a credit of $38.9 million for 2021. For the six months ended June 30, 2022, provision for credit losses 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. The prior year's credit to the provision for credit losses was a reflection of the net impact of forecasted economic metrics and other factors applied in the determination of the allowance.

For the six months ended June 30, 2022, non-interest income which included a $16.7 million gain on the disposal of assets, increased 1% to $55.8 million compared to $55.1 million for 2021. Excluding the gain, non-interest income decreased 29% driven by a 76% decline in income from mortgage banking activities and a 55% decline in other income. The decline in income from mortgage banking activities is the result of the rising interest rate environment, which has dampened new mortgage and refinancing activity. Other income declined from the prior year which included the full payoff of a purchased credit deteriorated loan and activity-based vendor incentives. These declines exceeded the 3% growth in wealth management income, 25% growth in service charges on deposit accounts and 5% growth in bank card fees. Wealth management income grew, despite the erosion of assets under management due to the marketplace volatility, as a result of increased asset management fees. Service charge and bank card income growth occurred as a result of increased customer activity.

Non-interest expense decreased 3% to $127.1 million for the six months ended June 30, 2022, compared to $131.1 million for 2021. Excluding merger, acquisition and disposal expense from the current and prior year periods and the $9.1 million in prepayment penalties on FHLB borrowings that occurred in the prior year, non-interest expense increased 3% year-over-year. The drivers of the increase in non-interest expense were a 4% increase in salaries and benefits and a 20% increase other expense, excluding the FHLB prepayment penalties. The year-over-year increase in salaries and benefits was the result of staffing increases, salary adjustments and increased benefit costs. The principal component of the increase in other expense was the increase in the provision for credit losses provided on lines of credit compared to the prior year period. Marketing and outside data services costs increased 9% and 10%, respectively, while FDIC insurance premiums and professional fee and service costs decreased 30% and 10%, respectively, for the period.

For the six months ended June 30, 2022, the GAAP efficiency ratio was 48.30% compared to 48.98% for the same period in 2021. The non-GAAP efficiency ratio the current year was 49.57% compared to 44.01% for to prior year. The growth in the current year’s non-GAAP efficiency ratio compared to the prior year, indicating a decline in efficiency, was the result of the 8% decrease in non-GAAP revenue combined with the 4% growth in non-GAAP non-interest expense.

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, gain on disposal of assets, merger, acquisition and disposal 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, acquisition and disposal expense, amortization of intangible assets, loss on FHLB redemption, gain on disposal of assets 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 that 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 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 1-844-200-6205. Please use the following access code: 532489. 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 August 4, 2022. A replay of the teleconference will be available through the same time period by calling 1-866-813-9403 under conference call number 378796.

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, Virginia, and Washington, D.C. Through its subsidiaries, Rembert Pendleton Jackson and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of 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
June 30,
  %
Change

  Six Months Ended
June 30,
  %
Change

(Dollars in thousands, except per share data)   2022   2021     2022   2021  
Results of operations:                        
Net interest income   $ 105,950     $ 108,046     (2 )%   $ 207,401     $ 212,646     (2 )%
Provision/ (credit) for credit losses     3,046       (4,204 )   (172 )     4,681       (38,912 )   (112 )
Non-interest income     35,245       26,259     34       55,840       55,125     1  
Non-interest expense     64,991       62,975     3       127,138       131,148     (3 )
Income before income tax expense     73,158       75,534     (3 )     131,422       175,535     (25 )
Net income     54,800       57,263     (4 )     98,735       132,727     (26 )
                         
Net income attributable to common shareholders   $ 54,606     $ 56,782     (4 )   $ 98,259     $ 131,606     (25 )
Pre-tax pre-provision net income(1)   $ 76,204     $ 71,330     7     $ 136,103     $ 136,623      
                         
Return on average assets     1.69 %     1.79 %         1.56 %     2.09 %    
Return on average common equity     14.97 %     15.07 %         13.39 %     17.84 %    
Return on average tangible common equity(1)     20.42 %     20.44 %         18.21 %     24.35 %    
Net interest margin     3.49 %     3.63 %         3.49 %     3.60 %    
Efficiency ratio - GAAP basis(2)     46.03 %     46.89 %         48.30 %     48.98 %    
Efficiency ratio - Non-GAAP basis(2)     49.79 %     45.36 %         49.57 %     44.01 %    
                         
Per share data:                        
Basic net income per common share   $ 1.21     $ 1.20     1 %   $ 2.18     $ 2.79     (22 )%
Diluted net income per common share   $ 1.21     $ 1.19     2     $ 2.17     $ 2.77     (22 )
Weighted average diluted common shares     45,111,693       47,523,198     (5 )     45,223,086       47,469,470     (5 )
Dividends declared per share   $ 0.34     $ 0.32     6     $ 0.68     $ 0.64     6  
Book value per common share   $ 33.10     $ 33.02         $ 33.10     $ 33.02      
Tangible book value per common share(1)   $ 24.45     $ 24.58     (1 )   $ 24.45     $ 24.58     (1 )
Outstanding common shares     44,629,697       47,312,982     (6 )     44,629,697       47,312,982     (6 )
                         
Financial condition at period-end:                        
Investment securities   $ 1,595,424     $ 1,482,123     8 %   $ 1,595,424     $ 1,482,123     8 %
Loans     10,786,290       10,092,515     7       10,786,290       10,092,515     7  
Interest-earning assets     12,542,388       12,167,067     3       12,542,388       12,167,067     3  
Assets     13,303,009       12,925,577     3       13,303,009       12,925,577     3  
Deposits     10,969,461       10,866,466     1       10,969,461       10,866,466     1  
Interest-bearing liabilities     7,570,671       7,233,536     5       7,570,671       7,233,536     5  
Stockholders' equity     1,477,169       1,562,280     (5 )     1,477,169       1,562,280     (5 )
                         
Capital ratios:                        
Tier 1 leverage(3)     9.53 %     9.49 %         9.53 %     9.49 %    
Common equity tier 1 capital to risk-weighted assets(3)     11.58 %     12.49 %         11.58 %     12.49 %    
Tier 1 capital to risk-weighted assets(3)     11.58 %     12.49 %         11.58 %     12.49 %    
Total regulatory capital to risk-weighted assets(3)     16.07 %     15.85 %         16.07 %     15.85 %    
Tangible common equity to tangible assets(4)     8.45 %     9.28 %         8.45 %     9.28 %    
Average equity to average assets     11.30 %     11.91 %         11.63 %     11.73 %    
                         
Credit quality ratios:                        
Allowance for credit losses to loans     1.05 %     1.23 %         1.05 %     1.23 %    
Non-performing loans to total loans     0.40 %     0.93 %         0.40 %     0.93 %    
Non-performing assets to total assets     0.33 %     0.74 %         0.33 %     0.74 %    
Allowance for credit losses to non-performing loans     261.44 %     131.44 %         261.44 %     131.44 %    
Annualized net charge-offs to average loans(5)     %     0.09 %         %     0.05 %    

(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 Condensed Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, loss on FHLB redemption, and merger, acquisition and disposal expense from non-interest expense; gain on disposal of assets and 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.
(3)  Estimated ratio at June 30, 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
June 30,
  Six Months Ended
June 30,
(Dollars in thousands)   2022   2021   2022   2021
Core earnings (non-GAAP):                
Net income (GAAP)   $ 54,800     $ 57,263     $ 98,735     $ 132,727  
Plus/ (less) non-GAAP adjustments (net of tax):                
Merger, acquisition and disposal expense     793             793       34  
Amortization of intangible assets     1,090       1,236       2,211       2,500  
Loss on FHLB redemption                       6,792  
Gain on disposal of assets     (12,417 )           (12,417 )      
Investment securities gains     (28 )     (53 )     (34 )     (96 )
Core earnings (Non-GAAP)   $ 44,238     $ 58,446     $ 89,288     $ 141,957  
                 
Core earnings per diluted common share (non-GAAP):                
Weighted average common shares outstanding - diluted (GAAP)     45,111,693       47,523,198       45,223,086       47,469,470  
                 
Earnings per diluted common share (GAAP)   $ 1.21     $ 1.19     $ 2.17     $ 2.77  
Core earnings per diluted common share (non-GAAP)   $ 0.98     $ 1.23     $ 1.97     $ 2.99  
                 
Core return on average assets (non-GAAP):                
Average assets (GAAP)   $ 12,991,692     $ 12,798,355     $ 12,785,040     $ 12,797,068  
                 
Return on average assets (GAAP)     1.69 %     1.79 %     1.56 %     2.09 %
Core return on average assets (non-GAAP)     1.37 %     1.83 %     1.41 %     2.24 %
                 
Core return on average tangible common equity (non-GAAP):                
Average total stockholders' equity (GAAP)   $ 1,468,036     $ 1,523,875     $ 1,487,170     $ 1,500,642  
Average goodwill     (367,986 )     (370,223 )     (369,098 )     (370,223 )
Average other intangible assets, net     (23,801 )     (30,224 )     (24,580 )     (31,056 )
Average tangible common equity (non-GAAP)   $ 1,076,249     $ 1,123,428     $ 1,093,492     $ 1,099,363  
                 
Return on average tangible common equity (non-GAAP)     20.42 %     20.44 %     18.21 %     24.35 %
Core return on average tangible common equity (non-GAAP)     16.49 %     20.87 %     16.47 %     26.04 %


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

    Three Months Ended
June 30,
  Six Months Ended
June 30,
(Dollars in thousands)   2022   2021   2022   2021
Pre-tax pre-provision net income:                
Net income (GAAP)   $ 54,800     $ 57,263     $ 98,735     $ 132,727  
Plus/ (less) non-GAAP adjustments:                
Income tax expense     18,358       18,271       32,687       42,808  
Provision/ (credit) for credit losses     3,046       (4,204 )     4,681       (38,912 )
Pre-tax pre-provision net income (non-GAAP)   $ 76,204     $ 71,330     $ 136,103     $ 136,623  
                 
Efficiency ratio (GAAP):                
Non-interest expense   $ 64,991     $ 62,975     $ 127,138     $ 131,148  
                 
Net interest income plus non-interest income   $ 141,195     $ 134,305     $ 263,241     $ 267,771  
                 
Efficiency ratio (GAAP)     46.03 %     46.89 %     48.30 %     48.98 %
                 
Efficiency ratio (Non-GAAP):                
Non-interest expense   $ 64,991     $ 62,975     $ 127,138     $ 131,148  
Less non-GAAP adjustments:                
Amortization of intangible assets     1,466       1,659       2,974       3,356  
Loss on FHLB redemption                       9,117  
Merger, acquisition and disposal expense     1,067             1,067       45  
Non-interest expense - as adjusted   $ 62,458     $ 61,316     $ 123,097     $ 118,630  
                 
Net interest income plus non-interest income   $ 141,195     $ 134,305     $ 263,241     $ 267,771  
Plus non-GAAP adjustment:                
Tax-equivalent income     992       930       1,858       1,910  
Less non-GAAP adjustment:                
Investment securities gains     38       71       46       129  
Gain on disposal of assets     16,699             16,699        
Net interest income plus non-interest income - as adjusted   $ 125,450     $ 135,164     $ 248,354     $ 269,552  
                 
Efficiency ratio (Non-GAAP)     49.79 %     45.36 %     49.57 %     44.01 %
                 
Tangible common equity ratio:                
Total stockholders' equity   $ 1,477,169     $ 1,562,280     $ 1,477,169     $ 1,562,280  
Goodwill     (363,436 )     (370,223 )     (363,436 )     (370,223 )
Other intangible assets, net     (22,694 )     (29,165 )     (22,694 )     (29,165 )
Tangible common equity   $ 1,091,039     $ 1,162,892     $ 1,091,039     $ 1,162,892  
                 
Total assets   $ 13,303,009     $ 12,925,577     $ 13,303,009     $ 12,925,577  
Goodwill     (363,436 )     (370,223 )     (363,436 )     (370,223 )
Other intangible assets, net     (22,694 )     (29,165 )     (22,694 )     (29,165 )
Tangible assets   $ 12,916,879     $ 12,526,189     $ 12,916,879     $ 12,526,189  
                 
Tangible common equity ratio     8.45 %     9.28 %     8.45 %     9.28 %
                 
Outstanding common shares     44,629,697       47,312,982       44,629,697       47,312,982  
Tangible book value per common share   $ 24.45     $ 24.58     $ 24.45     $ 24.58  


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

(Dollars in thousands)   June 30,
2022
  December 31,
2021
  June 30,
2021
Assets            
Cash and due from banks   $ 84,215     $ 65,630     $ 109,147  
Federal funds sold     291       312       358  
Interest-bearing deposits with banks     136,773       354,078       520,989  
Cash and cash equivalents     221,279       420,020       630,494  
Residential mortgage loans held for sale (at fair value)     23,610       39,409       71,082  
Investments held-to-maturity (fair value of $250,915)     274,337              
Investments available-for-sale (at fair value)     1,268,823       1,465,896       1,441,026  
Other equity securities     52,264       41,166       41,097  
Total loans     10,786,290       9,967,091       10,092,515  
Less: allowance for credit losses     (113,670 )     (109,145 )     (123,961 )
Net loans     10,672,620       9,857,946       9,968,554  
Premises and equipment, net     63,243       59,685       55,592  
Other real estate owned     739       1,034       1,234  
Accrued interest receivable     33,459       34,349       40,630  
Goodwill     363,436       370,223       370,223  
Other intangible assets, net     22,694       25,920       29,165  
Other assets     306,505       275,078       276,480  
Total assets   $ 13,303,009     $ 12,590,726     $ 12,925,577  
             
Liabilities            
Noninterest-bearing deposits   $ 4,129,440     $ 3,779,630     $ 4,000,636  
Interest-bearing deposits     6,840,021       6,845,101       6,865,830  
Total deposits     10,969,461       10,624,731       10,866,466  
Securities sold under retail repurchase agreements and federal funds purchased     185,744       141,086       140,708  
Advances from FHLB     175,000              
Subordinated debt     369,906       172,712       226,998  
Total borrowings     730,650       313,798       367,706  
Accrued interest payable and other liabilities     125,729       132,518       129,125  
Total liabilities     11,825,840       11,071,047       11,363,297  
             
Stockholders' equity            
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 44,629,697, 45,118,930 and 47,312,982 at June 30, 2022, December 31, 2021 and June 30, 2021, respectively     44,630       45,119       47,313  
Additional paid in capital     730,285       751,072       850,555  
Retained earnings     799,707       732,027       659,578  
Accumulated other comprehensive loss     (97,453 )     (8,539 )     4,834  
Total stockholders' equity     1,477,169       1,519,679       1,562,280  
Total liabilities and stockholders' equity   $ 13,303,009     $ 12,590,726     $ 12,925,577  


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

    Three Months Ended
June 30,
  Six Months Ended
June 30,
(Dollars in thousands, except per share data)   2022   2021   2022   2021
Interest income:                
Interest and fees on loans   $ 106,221   $ 107,751     $ 205,715   $ 215,179  
Interest on loans held for sale     145     549       343     1,086  
Interest on deposits with banks     358     47       471     93  
Interest and dividends on investment securities:                
Taxable     4,630     4,373       8,737     8,272  
Tax-advantaged     2,554     2,103       4,678     4,454  
Interest on federal funds sold     1           1      
Total interest income     113,909     114,823       219,945     229,084  
Interest Expense:                
Interest on deposits     3,795     3,851       6,088     8,681  
Interest on retail repurchase agreements and federal funds purchased     201     43       255     96  
Interest on advances from FHLB     17     373       17     2,649  
Interest on subordinated debt     3,946     2,510       6,184     5,012  
Total interest expense     7,959     6,777       12,544     16,438  
Net interest income     105,950     108,046       207,401     212,646  
Provision/ (credit) for credit losses     3,046     (4,204 )     4,681     (38,912 )
Net interest income after provision/ (credit) for credit losses     102,904     112,250       202,720     251,558  
Non-interest income:                
Investment securities gains     38     71       46     129  
Gain on disposal of assets     16,699           16,699      
Service charges on deposit accounts     2,467     1,976       4,793     3,828  
Mortgage banking activities     1,483     5,776       3,781     15,945  
Wealth management income     9,098     9,121       18,435     17,851  
Insurance agency commissions     812     1,247       2,927     3,400  
Income from bank owned life insurance     703     705       1,498     1,385  
Bank card fees     1,810     1,785       3,478     3,303  
Other income     2,135     5,578       4,183     9,284  
Total non-interest income     35,245     26,259       55,840     55,125  
Non-interest expense:                
Salaries and employee benefits     39,550     38,990       78,923     75,642  
Occupancy expense of premises     4,734     5,497       9,768     10,984  
Equipment expenses     3,559     3,020       7,095     6,242  
Marketing     1,280     1,052       2,473     2,264  
Outside data services     2,564     2,260       4,983     4,543  
FDIC insurance     1,078     1,450       2,062     2,942  
Amortization of intangible assets     1,466     1,659       2,974     3,356  
Merger, acquisition and disposal expense     1,067           1,067     45  
Professional fees and services     2,372     3,165       4,389     4,896  
Other expenses     7,321     5,882       13,404     20,234  
Total non-interest expense     64,991     62,975       127,138     131,148  
Income before income tax expense     73,158     75,534       131,422     175,535  
Income tax expense     18,358     18,271       32,687     42,808  
Net income   $ 54,800   $ 57,263     $ 98,735   $ 132,727  
                 
Net income per share amounts:                
Basic net income per common share   $ 1.21   $ 1.20     $ 2.18   $ 2.79  
Diluted net income per common share   $ 1.21   $ 1.19     $ 2.17   $ 2.77  
Dividends declared per share   $ 0.34   $ 0.32     $ 0.68   $ 0.64  


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

    2022   2021
(Dollars in thousands, except per share data)   Q2   Q1   Q4   Q3   Q2   Q1
Profitability for the quarter:                        
Tax-equivalent interest income   $ 114,901     $ 106,902     $ 110,933     $ 112,060     $ 115,753     $ 115,241  
Interest expense     7,959       4,585       4,803       4,525       6,777       9,661  
Tax-equivalent net interest income     106,942       102,317       106,130       107,535       108,976       105,580  
Tax-equivalent adjustment     992       866       862       931       930       980  
Provision/ (credit) for credit losses     3,046       1,635       1,585       (8,229 )     (4,204 )     (34,708 )
Non-interest income     35,245       20,595       22,536       24,394       26,259       28,866  
Non-interest expense     64,991       62,147       66,141       63,181       62,975       68,173  
Income before income tax expense     73,158       58,264       60,078       76,046       75,534       100,001  
Income tax expense     18,358       14,329       14,674       19,070       18,271       24,537  
Net income   $ 54,800     $ 43,935     $ 45,404     $ 56,976     $ 57,263     $ 75,464  
GAAP financial performance:                        
Return on average assets     1.69 %     1.42 %     1.41 %     1.75 %     1.79 %     2.39 %
Return on average common equity     14.97 %     11.83 %     11.87 %     14.54 %     15.07 %     20.72 %
Return on average tangible common equity     20.42 %     16.04 %     16.07 %     19.56 %     20.44 %     28.47 %
Net interest margin     3.49 %     3.49 %     3.51 %     3.52 %     3.63 %     3.56 %
Efficiency ratio - GAAP basis     46.03 %     50.92 %     51.75 %     48.23 %     46.89 %     51.08 %
Non-GAAP financial performance:                        
Pre-tax pre-provision net income   $ 76,204     $ 59,899     $ 61,663     $ 67,817     $ 71,330     $ 65,293  
Core after-tax earnings   $ 44,238     $ 45,050     $ 46,575     $ 58,151     $ 58,446     $ 83,511  
Core return on average assets     1.37 %     1.45 %     1.44 %     1.79 %     1.83 %     2.65 %
Core return on average common equity     12.09 %     12.13 %     12.17 %     14.84 %     15.38 %     22.93 %
Core return on average tangible common equity     16.49 %     16.45 %     16.49 %     19.96 %     20.87 %     31.50 %
Core earnings per diluted common share   $ 0.98     $ 0.99     $ 1.02     $ 1.23     $ 1.23     $ 1.76  
Efficiency ratio - Non-GAAP basis     49.79 %     49.34 %     50.17 %     46.67 %     45.36 %     42.65 %
Per share data:                    
Net income attributable to common shareholders   $ 54,606     $ 43,667     $ 45,114     $ 56,622     $ 56,782     $ 74,824  
Basic net income per common share   $ 1.21     $ 0.97     $ 0.99     $ 1.21     $ 1.20     $ 1.59  
Diluted net income per common share   $ 1.21     $ 0.96     $ 0.99     $ 1.20     $ 1.19     $ 1.58  
Weighted average diluted common shares     45,111,693       45,333,292       45,655,924       47,086,824       47,523,198       47,415,060  
Dividends declared per share   $ 0.34     $ 0.34     $ 0.32     $ 0.32     $ 0.32     $ 0.32  
Non-interest income:                        
Securities gains   $ 38     $ 8     $ 34     $ 49     $ 71     $ 58  
Gain on disposal of assets     16,699                                
Service charges on deposit accounts     2,467       2,326       2,305       2,108       1,976       1,852  
Mortgage banking activities     1,483       2,298       3,622       4,942       5,776       10,169  
Wealth management income     9,098       9,337       9,598       9,392       9,121       8,730  
Insurance agency commissions     812       2,115       1,332       2,285       1,247       2,153  
Income from bank owned life insurance     703       795       819       818       705       680  
Bank card fees     1,810       1,668       1,818       1,775       1,785       1,518  
Other income     2,135       2,048       3,008       3,025       5,578       3,706  
Total non-interest income   $ 35,245     $ 20,595     $ 22,536     $ 24,394     $ 26,259     $ 28,866  
Non-interest expense:                        
Salaries and employee benefits   $ 39,550     $ 39,373     $ 41,535     $ 38,653     $ 38,990     $ 36,652  
Occupancy expense of premises     4,734       5,034       5,693       5,728       5,497       5,487  
Equipment expenses     3,559       3,536       3,427       3,214       3,020       3,222  
Marketing     1,280       1,193       1,090       1,376       1,052       1,212  
Outside data services     2,564       2,419       2,123       2,317       2,260       2,283  
FDIC insurance     1,078       984       991       361       1,450       1,492  
Amortization of intangible assets     1,466       1,508       1,609       1,635       1,659       1,697  
Merger, acquisition and disposal expense     1,067                               45  
Professional fees and services     2,372       2,017       2,381       3,031       3,165       1,731  
Other expenses     7,321       6,083       7,292       6,866       5,882       14,352  
Total non-interest expense   $ 64,991     $ 62,147     $ 66,141     $ 63,181     $ 62,975     $ 68,173  


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

    2022   2021
(Dollars in thousands, except per share data)   Q2   Q1   Q4   Q3   Q2   Q1
Balance sheets at quarter end:                    
Commercial investor real estate loans   $ 4,761,658     $ 4,388,275     $ 4,141,346     $ 3,743,698     $ 3,712,374     $ 3,652,418  
Commercial owner-occupied real estate loans     1,767,326       1,692,253       1,690,881       1,661,092       1,687,843       1,644,848  
Commercial AD&C loans     1,094,528       1,089,331       1,088,094       1,177,949       1,126,960       1,051,013  
Commercial business loans     1,353,380       1,349,602       1,481,834       1,594,528       1,974,366       2,411,109  
Residential mortgage loans     1,147,577       1,000,697       937,570       911,997       960,527       1,022,546  
Residential construction loans     235,486       204,259       197,652       181,319       172,869       171,028  
Consumer loans     426,335       419,911       429,714       450,765       457,576       493,904  
Total loans     10,786,290       10,144,328       9,967,091       9,721,348       10,092,515       10,446,866  
Allowance for credit losses     (113,670 )     (110,588 )     (109,145 )     (107,920 )     (123,961 )     (130,361 )
Loans held for sale     23,610       17,537       39,409       44,678       71,082       84,930  
Investment securities     1,595,424       1,586,441       1,507,062       1,470,652       1,482,123       1,472,727  
Interest-earning assets     12,542,388       12,205,058       11,867,952       12,245,374       12,167,067       12,132,405  
Total assets     13,303,009       12,967,416       12,590,726       13,017,464       12,925,577       12,873,366  
Noninterest-bearing demand deposits     4,129,440       4,039,797       3,779,630       3,987,411       4,000,636       3,770,852  
Total deposits     10,969,461       10,852,794       10,624,731       10,987,400       10,866,466       10,677,752  
Customer repurchase agreements     110,744       130,784       141,086       147,504       140,708       129,318  
Total interest-bearing liabilities     7,570,671       7,313,783       7,158,899       7,320,132       7,233,536       7,423,262  
Total stockholders' equity     1,477,169       1,488,910       1,519,679       1,546,060       1,562,280       1,511,694  
Quarterly average balance sheets:                    
Commercial investor real estate loans   $ 4,512,937     $ 4,220,246     $ 3,769,529     $ 3,678,886     $ 3,675,119     $ 3,634,174  
Commercial owner-occupied real estate loans     1,727,325       1,683,557       1,669,737       1,671,442       1,663,543       1,638,885  
Commercial AD&C loans     1,096,369       1,102,660       1,140,059       1,161,183       1,089,287       1,049,597  
Commercial business loans     1,334,350       1,372,755       1,482,901       1,820,598       2,225,885       2,291,097  
Residential mortgage loans     1,070,836       964,056       925,093       934,365       994,899       1,066,714  
Residential construction loans     221,031       197,366       186,129       170,511       176,135       179,925  
Consumer loans     421,022       424,859       436,030       452,289       468,686       496,578  
Total loans     10,383,870       9,965,499       9,609,478       9,889,274       10,293,554       10,356,970  
Loans held for sale     12,744       17,594       29,426       50,075       66,958       82,263  
Investment securities     1,686,181       1,617,615       1,535,265       1,403,496       1,482,905       1,407,455  
Interest-earning assets     12,283,834       11,859,803       12,012,576       12,121,048       12,037,701       12,029,424  
Total assets     12,991,692       12,576,089       12,791,526       12,886,460       12,798,355       12,801,539  
Noninterest-bearing demand deposits     4,001,762       3,758,732       3,879,572       3,869,293       3,763,135       3,394,110  
Total deposits     10,829,221       10,542,029       10,809,665       10,832,115       10,663,346       10,343,190  
Customer repurchase agreements     122,728       131,487       144,988       145,483       136,286       148,195  
Total interest-bearing liabilities     7,377,045       7,163,641       7,247,756       7,315,021       7,356,656       7,742,987  
Total stockholders' equity     1,468,036       1,506,516       1,517,793       1,554,765       1,523,875       1,477,150  
Financial measures:                        
Average equity to average assets     11.30 %     11.98 %     11.87 %     12.07 %     11.91 %     11.54 %
Investment securities to earning assets     12.72 %     13.00 %     12.70 %     12.01 %     12.18 %     12.14 %
Loans to earning assets     86.00 %     83.12 %     83.98 %     79.39 %     82.95 %     86.11 %
Loans to assets     81.08 %     78.23 %     79.16 %     74.68 %     78.08 %     81.15 %
Loans to deposits     98.33 %     93.47 %     93.81 %     88.48 %     92.88 %     97.84 %
Assets under management   $ 5,171,321     $ 5,793,787     $ 6,078,204     $ 5,733,311     $ 5,676,141     $ 5,401,158  
Capital measures:                        
Tier 1 leverage(1)     9.53 %     9.66 %     9.26 %     9.33 %     9.49 %     9.14 %
Common equity tier 1 capital to risk-weighted assets(1)     11.58 %     12.03 %     11.91 %     12.53 %     12.49 %     12.11 %
Tier 1 capital to risk-weighted assets(1)     11.58 %     12.03 %     11.91 %     12.53 %     12.49 %     12.11 %
Total regulatory capital to risk-weighted assets(1)     16.07 %     16.77 %     14.59 %     15.30 %     15.85 %     15.52 %
Book value per common share   $ 33.10     $ 32.97     $ 33.68     $ 33.52     $ 33.02     $ 32.04  
Outstanding common shares     44,629,697       45,162,908       45,118,930       46,119,074       47,312,982       47,187,389  

(1) Estimated ratio at June 30, 2022.

 

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

    2022   2021
(Dollars in thousands)   June 30,   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     353     296     557     679     680     398
Residential construction                        
Consumer                        
Total loans 90 days past due     353     296     557     22,853     680     429
Non-accrual loans:                        
Commercial real estate:                        
Commercial investor real estate     11,245     11,743     12,489     15,386     42,072     42,776
Commercial owner-occupied real estate     7,869     8,083     9,306     9,854     8,183     8,316
Commercial AD&C     1,353     1,081     650     1,022     14,489     14,975
Commercial business     7,542     8,357     8,420     9,454     9,435     13,147
Residential real estate:                        
Residential mortgage     7,305     8,148     8,441     9,511     9,440     9,593
Residential construction     1     51     55     62     62    
Consumer     5,692     6,406     6,725     7,826     7,718     7,193
Total non-accrual loans     41,007     43,869     46,086     53,115     91,399     96,000
Total restructured loans - accruing     2,119     2,161     2,167     2,199     2,228     2,271
Total non-performing loans     43,479     46,326     48,810     78,167     94,307     98,700
Other assets and other real estate owned (OREO)     739     1,034     1,034     1,105     1,234     1,354
Total non-performing assets   $ 44,218   $ 47,360   $ 49,844   $ 79,272   $ 95,541   $ 100,054

 

    For the Quarter Ended,
(Dollars in thousands)   June 30,
2022
  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   $ 43,869     $ 46,086     $ 53,115     $ 91,399     $ 96,000     $ 112,361  
Non-accrual balances transferred to OREO                             (257 )      
Non-accrual balances charged-off     (376 )     (265 )     (754 )     (7,171 )     (2,166 )     (699 )
Net payments or draws     (3,234 )     (2,787 )     (5,786 )     (36,526 )     (3,693 )     (16,028 )
Loans placed on non-accrual     948       1,503       511       5,699       1,515       421  
Non-accrual loans brought current     (200 )     (668 )     (1,000 )     (286 )           (55 )
Balance at end of period   $ 41,007     $ 43,869     $ 46,086     $ 53,115     $ 91,399     $ 96,000  
                         
Analysis of allowance for credit losses:                        
Balance at beginning of period   $ 110,588     $ 109,145     $ 107,920     $ 123,961     $ 130,361     $ 165,367  
Provision/ (credit) for credit losses     3,046       1,635       1,585       (8,229 )     (4,204 )     (34,708 )
Less loans charged-off, net of recoveries:                        
Commercial real estate:                        
Commercial investor real estate     (300 )     (19 )     (109 )     5,797       (144 )     (27 )
Commercial owner-occupied real estate     (12 )                 136              
Commercial AD&C                       2,007              
Commercial business     331       111       564       (53 )     2,359       634  
Residential real estate:                        
Residential mortgage     (9 )     120       (80 )     (49 )     (11 )     (270 )
Residential construction     (5 )           (2 )     (2 )     (1 )      
Consumer     (41 )     (20 )     (13 )     (24 )     (7 )     (39 )
Net charge-offs     (36 )     192       360       7,812       2,196       298  
Balance at the end of period   $ 113,670     $ 110,588     $ 109,145     $ 107,920     $ 123,961     $ 130,361  
                         
Asset quality ratios:                        
Non-performing loans to total loans     0.40 %     0.46 %     0.49 %     0.80 %     0.93 %     0.94 %
Non-performing assets to total assets     0.33 %     0.37 %     0.40 %     0.61 %     0.74 %     0.78 %
Allowance for credit losses to loans     1.05 %     1.09 %     1.10 %     1.11 %     1.23 %     1.25 %
Allowance for credit losses to non-performing loans     261.44 %     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 June 30,
    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   $ 4,512,937     $ 45,148   4.01 %   $ 3,675,119     $ 38,411   4.19 %
Commercial owner-occupied real estate loans     1,727,325       19,410   4.51       1,663,543       19,360   4.67  
Commercial AD&C loans     1,096,369       11,727   4.29       1,089,287       10,819   3.98  
Commercial business loans     1,334,350       15,820   4.76       2,225,885       25,248   4.55  
Total commercial loans     8,670,981       92,105   4.26       8,653,834       93,838   4.35  
Residential mortgage loans     1,070,836       8,878   3.32       994,899       8,634   3.47  
Residential construction loans     221,031       1,710   3.10       176,135       1,562   3.56  
Consumer loans     421,022       3,992   3.80       468,686       4,183   3.58  
Total residential and consumer loans     1,712,889       14,580   3.41       1,639,720       14,379   3.51  
Total loans(2)     10,383,870       106,685   4.12       10,293,554       108,217   4.22  
Loans held for sale     12,744       145   4.56       66,958       549   3.28  
Taxable securities     1,195,129       4,630   1.55       1,052,229       4,373   1.66  
Tax-advantaged securities     491,052       3,082   2.51       430,676       2,567   2.38  
Total investment securities(3)     1,686,181       7,712   1.83       1,482,905       6,940   1.87  
Interest-bearing deposits with banks     200,560       358   0.72       193,749       47   0.10  
Federal funds sold     479       1   0.81       535         0.10  
Total interest-earning assets     12,283,834       114,901   3.75       12,037,701       115,753   3.86  
                         
Less: allowance for credit losses     (112,656 )             (130,734 )        
Cash and due from banks     84,931               97,813          
Premises and equipment, net     62,422               55,718          
Other assets     673,161               737,857          
Total assets   $ 12,991,692             $ 12,798,355          
                         
Liabilities and Stockholders' Equity                        
Interest-bearing demand deposits   $ 1,488,034     $ 414   0.11 %   $ 1,400,661     $ 226   0.06 %
Regular savings deposits     559,906       22   0.02       476,999       66   0.06  
Money market savings deposits     3,376,742       1,497   0.18       3,364,348       1,254   0.15  
Time deposits     1,402,777       1,862   0.53       1,658,203       2,305   0.56  
Total interest-bearing deposits     6,827,459       3,795   0.22       6,900,211       3,851   0.22  
Federal funds purchased     53,055       166   1.26       19,506       3   0.06  
Repurchase agreements     122,728       35   0.11       136,286       40   0.12  
Advances from FHLB     3,809       17   1.74       73,626       373   2.03  
Subordinated debt     369,994       3,946   4.27       227,027       2,510   4.42  
Total borrowings     549,586       4,164   3.04       456,445       2,926   2.57  
Total interest-bearing liabilities     7,377,045       7,959   0.43       7,356,656       6,777   0.37  
                         
Noninterest-bearing demand deposits     4,001,762               3,763,135          
Other liabilities     144,849               154,689          
Stockholders' equity     1,468,036               1,523,875          
Total liabilities and stockholders' equity   $ 12,991,692             $ 12,798,355          
                         
Tax-equivalent net interest income and spread       $ 106,942   3.32 %       $ 108,976   3.49 %
Less: tax-equivalent adjustment         992             930    
Net interest income       $ 105,950           $ 108,046    
                         
Interest income/earning assets           3.75 %           3.86 %
Interest expense/earning assets           0.26             0.23  
Net interest margin           3.49 %           3.63 %

(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 $1.0 million and $0.9 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.

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

    Six Months Ended June 30,
    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   $ 4,367,400     $ 86,782   4.01 %   $ 3,654,760     $ 76,765   4.24 %
Commercial owner-occupied real estate loans     1,705,562       37,842   4.47       1,651,282       38,040   4.65  
Commercial AD&C loans     1,099,498       22,320   4.09       1,069,552       21,215   4.00  
Commercial business loans     1,353,446       32,174   4.79       2,258,311       50,042   4.47  
Total commercial loans     8,525,906       179,118   4.24       8,633,905       186,062   4.35  
Residential mortgage loans     1,017,741       16,652   3.27       1,030,608       18,178   3.53  
Residential construction loans     209,264       3,267   3.15       178,020       3,168   3.59  
Consumer loans     422,929       7,581   3.61       482,555       8,728   3.65  
Total residential and consumer loans     1,649,934       27,500   3.34       1,691,183       30,074   3.57  
Total loans(2)     10,175,840       206,618   4.09       10,325,088       216,136   4.22  
Loans held for sale     15,155       343   4.53       74,568       1,086   2.91  
Taxable securities     1,180,168       8,737   1.48       984,305       8,272   1.68  
Tax-advantaged securities     471,919       5,633   2.39       461,084       5,407   2.35  
Total investment securities(3)     1,652,087       14,370   1.74       1,445,389       13,679   1.89  
Interest-bearing deposits with banks     229,257       471   0.41       187,954       93   0.10  
Federal funds sold     650       1   0.43       588         0.09  
Total interest-earning assets     12,072,989       221,803   3.70       12,033,587       230,994   3.87  
                         
Less: allowance for credit losses     (111,302 )             (146,892 )        
Cash and due from banks     75,750               102,013          
Premises and equipment, net     61,733               56,042          
Other assets     685,870               752,318          
Total assets   $ 12,785,040             $ 12,797,068          
                         
Liabilities and Stockholders' Equity                        
Interest-bearing demand deposits   $ 1,494,809     $ 572   0.08 %   $ 1,383,253     $ 462   0.07 %
Regular savings deposits     553,435       41   0.01       460,738       122   0.05  
Money market savings deposits     3,401,641       2,122   0.13       3,387,341       2,717   0.16  
Time deposits     1,355,615       3,353   0.50       1,693,179       5,380   0.64  
Total interest-bearing deposits     6,805,500       6,088   0.18       6,924,511       8,681   0.25  
Federal funds purchased     49,271       181   0.74       30,519       13   0.09  
Repurchase agreements     127,083       74   0.12       142,208       83   0.12  
Advances from FHLB     1,915       17   1.74       224,467       2,649   2.38  
Subordinated debt     287,164       6,184   4.31       227,050       5,012   4.41  
Total borrowings     465,433       6,456   2.80       624,244       7,757   2.51  
Total interest-bearing liabilities     7,270,933       12,544   0.35       7,548,755       16,438   0.44  
                         
Noninterest-bearing demand deposits     3,880,919               3,579,642          
Other liabilities     146,018               168,029          
Stockholders' equity     1,487,170               1,500,642          
Total liabilities and stockholders' equity   $ 12,785,040             $ 12,797,068          
                         
Tax-equivalent net interest income and spread       $ 209,259   3.35 %       $ 214,556   3.43 %
Less: tax-equivalent adjustment         1,858             1,910    
Net interest income       $ 207,401           $ 212,646    
                         
Interest income/earning assets           3.70 %           3.87 %
Interest expense/earning assets           0.21             0.27  
Net interest margin           3.49 %           3.60 %

(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 $1.9 million and $1.9 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.