Sandy Spring Bancorp Reports Fourth Quarter and Full Year Results
OLNEY, Md., Jan. 29, 2009 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today announced a net loss available to common shareholders for the fourth quarter of 2008 of $3.8 million ($.23 per diluted share) compared to net income of $8.4 million ($.51 per diluted share) for the fourth quarter of 2007 and net income of $5.4 million ($.33 per diluted share) for the third quarter of 2008. The fourth quarter of 2008 includes a pre-tax impairment charge of $1.9 million to write down the remaining value of goodwill in the Company's leasing subsidiary, The Equipment Leasing Company, and a provision for loan and lease losses of $17.8 million, related primarily to the residential real estate development portfolio.
Net income available to common shareholders for the year ending December 31, 2008 totaled $15.4 million ($.94 per diluted share) compared to net income of $32.3 million ($2.01 per diluted share) for the prior year. The results for the current year include a total goodwill impairment charge of $4.2 million relating to The Equipment Leasing Company and a provision for loan and lease losses for the year of $33.2 million.
"This increased provision reflects our recognition of the continuing decline in economic conditions both nationwide and across our markets. This increase to the reserve is due to internal risk rating downgrades to existing credits, charge-offs and additional specific reserves primarily associated with loans in our residential real estate development portfolio," said Daniel J. Schrider, president and chief executive officer. "We have put into place additional staffing and reporting tools to enhance our ability to monitor our credit quality and to identify and expeditiously deal with problem credits as they arise.
"While our non-performing assets increased from the third quarter, we continue to believe that our conservative loan underwriting standards and our comprehensive methodology for risk-rating our loans will serve us well for the long term as we manage through this tough economic cycle. Concurrently, we are working hard to maintain control over operating expenses.
"We continue to focus on sustaining our position as a long-term independent competitor in the Mid-Atlantic community banking landscape. Pursuant to this goal, we applied for and received in the fourth quarter $83 million in new capital through the sale of preferred stock to the U. S. Treasury. We believe this will help us to remain well-capitalized as we work out existing problem credits and continue to originate new loans to qualifying customers," said Schrider. "We are committed to retaining and supporting our existing customers through the highest level of customer service and the delivery of quality products."
Fourth Quarter and Full Year Highlights:
* The provision for loan and lease losses totaled $17.8 million for
the quarter compared to $1.7 million for the fourth quarter of 2007
and $6.5 million for the third quarter of 2008. For the year, the
provision for loan and lease losses totaled $33.2 million compared
to $4.1 million in 2007. These increases were in response to
internal risk rating downgrades, charge-offs and additional specific
reserves primarily related to loans in the residential real estate
development portfolio.
* As previously disclosed, the Company recognized a pre-tax
impairment charge of $1.9 million in the fourth quarter of 2008
and $4.2 million for the full year relating to the write down of
the remaining value of goodwill in our leasing subsidiary, The
Equipment Leasing Company, based on completion of Phase II of its
impairment analysis.
* During the fourth quarter of 2008 the company completed the sale
of 83,094 shares of preferred stock under the U. S. Treasury's
Capital Purchase Program for $83 million. The preferred stock
carries a 5% annual dividend yield for five years, and a 9%
annual dividend yield thereafter. In addition, the U.S. Treasury
also received a warrant to purchase up to 651,547 shares of Sandy
Spring Bancorp common stock at an exercise price of $19.13.
* The net interest margin declined to 3.73% for the fourth quarter
compared to 4.19% for the fourth quarter of 2007 and 4.02% for
the third quarter of 2008. For the year, the net interest margin
declined to 3.92% compared to 4.13% for 2007.
* Noninterest expenses increased 8% for the quarter compared to the
fourth quarter of 2007 and increased 8% versus the third quarter
of 2008. Excluding the goodwill impairment charge in the fourth
quarter of 2008, noninterest expenses remained even compared to
the fourth quarter of 2007 and declined 4% compared to the third
quarter of 2008. For the full year of 2008, noninterest expenses
increased 2% compared to 2007. Excluding the goodwill impairment
charges and a pre-tax pension credit of $1.5 million recognized
in the third quarter of 2008, noninterest expenses were virtually
even versus the prior year. These results are consistent with the
Company's expectations for project LIFT, the Company's previously
disclosed initiative for managing operating expenses.
* The Company as of December 31, 2008 had a total risk-based
capital ratio of 13.82%, a tier 1 risk-based capital ratio of
12.56% and a capital leverage ratio of 11.00%. Capital adequacy,
as measured by these ratios, was above the "well-capitalized"
regulatory requirement levels for the Company.
Review of Balance Sheet and Credit Quality
Comparing December 31, 2008 balances to December 31, 2007, total assets increased 9% to $3.3 billion due mainly to growth in the commercial loan portfolio. Total loans and leases increased 9% to $2.5 billion compared to the prior year. This increase in loans was comprised mainly of a 13% increase in commercial loans. Total loans remained virtually the same compared to the third quarter of 2008.
Customer funding sources, which include deposits plus other short-term borrowings from core customers, increased 3% to $2.4 billion at December 31, 2008 compared to the prior year. Such customer funding sources increased 5% compared to the third quarter of 2008. These increases were due primarily to growth resulting from higher rates offered on selected certificate of deposit products and the Company's new Premier money market account. Borrowings from the Federal Home Loan Bank of Atlanta increased 41% to $413 million compared to the prior year. Compared to the third quarter of 2008, such borrowings decreased 15%. The increase over the prior year was necessary to fund loan growth. The decrease compared to the third quarter of 2008 was due primarily to growth in interest bearing deposits.
Stockholders' equity totaled $391.9 million at December 31, 2008, and represented 12.0% of total assets, compared to 10.4% at December 31, 2007. The Company at December 31, 2008 recorded a total risk-based capital ratio of 13.82%, a tier 1 risk-based capital ratio of 12.56% and a capital leverage ratio of 11.00% which were all above "well capitalized" regulatory requirement levels. These ratios reflect the effect of the sale of $83 million in preferred stock under the U. S. Treasury's Capital Purchase Program.
The provision for loan and lease losses totaled $17.8 million for the fourth quarter of 2008 compared to $1.7 million for the fourth quarter of 2007 and $6.5 million for the third quarter of 2008. As discussed above, these increases were primarily due to internal risk rating downgrades, charge-offs and additional specific reserves primarily related to loans in the residential real estate development portfolio. For the year, the provision for loan and lease losses totaled $33.2 million compared to $4.1 million in 2007. This increase was also due to internal risk rating downgrades, charge-offs and additional specific reserves particularly with respect to loans in the residential real estate portfolio.
Loan charge-offs, net of recoveries totaled $5.5 million for the fourth quarter of 2008 compared to $0.2 million for the fourth quarter of 2007 and $1.7 million for the third quarter of 2008. For the year, loan charge-offs, net of recoveries were $7.8 million compared to $1.3 million for 2007. The allowance for loan and lease losses represented 2.03% of outstanding loans and leases and 70% of non-performing assets at December 31, 2008 compared to 1.10% of outstanding loans and leases and 72% of non-performing assets at December 31, 2007.
Non-performing assets totaled $72.2 million at December 31, 2008 compared to $68.4 million at September 30, 2008 and $34.9 million at December 31, 2007. The increase over the third quarter of 2008 was due primarily to three commercial loans and one commercial residential real estate loan together totaling $5.2 million. The increase over the prior year also reflects six residential real estate development loans, in addition to the four loans mentioned above, totaling $22.6 million.
Income Statement Review
Comparing the fourth quarter of 2008 and 2007, net interest income decreased by $0.7 million, or 3%, due primarily to the growth in nonperforming assets and the decline in market interest rates due to the effect of interest rate cuts by the Federal Reserve throughout 2008. Such activity caused loan yields to decline faster than rates paid on deposits. These factors produced a net interest margin decrease to 3.73% in 2008 from 4.19% in 2007.
Noninterest income decreased to $11.0 million in the fourth quarter of 2008 as compared to $11.4 million in the fourth quarter of 2007, a decrease of 4%. Service charges on deposit accounts increased 3% due primarily to higher overdraft fees while fees on sales of investment products increased 79% due to higher sales of annuities. These increases were offset by decreases in gains on sales of mortgage loans of 13% due to lower mortgage volumes reflecting market conditions and 15% in trust and investment management fees also reflecting market conditions. Other noninterest income also decreased 19% compared to the fourth quarter of 2007.
Noninterest expenses were $27.2 million in the fourth quarter of 2008 compared to $25.3 million in the fourth quarter of 2007, an increase of $1.9 million or 8%. Excluding the goodwill impairment charge mentioned above, noninterest expenses remained even compared to the prior year. Salaries and benefits expenses increased 1%, while occupancy and equipment expenses increased 3%. These increases were largely offset by decreases in marketing, outside data services and other noninterest expenses. The overall noninterest expense performance reflects the effect of stringent expense controls implemented as part of project LIFT.
Comparing the year ended December 31, 2008 and 2007, net interest income increased by $3.6 million, or 3%, due primarily to growth in the loan portfolio. The effect of such loan growth was offset to a great extent by a higher level of nonperforming assets, the decline in market interest rates and to higher rates offered to attract deposits. These factors produced a net interest margin decrease to 3.92% in 2008 from 4.13% in 2007.
Noninterest income increased to $46.2 million for the year ended December 31, 2008 compared to $44.3 million in 2007, an increase of 4%. Service charges on deposit accounts increased 15% due primarily to higher overdraft fees while fees on sales of investment products increased 16% due to higher sales of annuities. These increases were somewhat offset by decreases of 16% in gains on sales of mortgage loans due to lower mortgage volumes reflecting market conditions and 11% in insurance agency commissions due to lower fees on commercial lines and reduced contingency fees.
Noninterest expenses were $102.1 million in 2008 compared to $99.8 million in 2007, an increase of $2.3 million or 2%. Excluding the goodwill impairment charges and the pre-tax pension credit in the third quarter of 2008, noninterest expenses remained virtually level compared to the prior year. While FDIC insurance premiums increased $1.3 million over 2007, this increase was offset by a decrease of $1.5 million in merger expenses recognized in 2007. Intangibles amortization increased $0.4 million as a result of two bank acquisitions completed in 2007.
Conference Call
The Company's management will host a conference call to discuss its fourth quarter and full year results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations' section of the Sandy Spring Web site at www.sandyspringbank.com. Participants may call 877-795-3604; a password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 12:00 midnight (ET) February 28, 2009. A telephone voice replay will also be available during that same time period at 888-203-1112. Please use pass code #1250457 to access.
About Sandy Spring Bancorp/Sandy Spring Bank
With $3.3 billion in assets, Sandy Spring Bancorp is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation, The Equipment Leasing Company and West Financial Services, Inc. Sandy Spring Bancorp is the second largest publicly traded banking company headquartered in Maryland. Sandy Spring is a community banking organization that focuses its lending and other services on businesses and consumers in the local market area. Independent and community-oriented, Sandy Spring Bank was founded in 1868 and offers a broad range of commercial banking, retail banking and trust services through 42 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George's counties in Maryland, and Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of leasing, insurance and investment management services. Visit www.sandyspringbank.com to locate an ATM near you or for more information about Sandy Spring Bank.
The Sandy Spring Bancorp, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4138
Forward-Looking Statements
Sandy Spring Bancorp makes forward-looking statements in this news release and in the conference call regarding this news release. These forward-looking statements may include: statements of goals, intentions, earnings expectations, and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals.
Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project" and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Sandy Spring Bancorp does not assume any duty and does not undertake to update its forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that Sandy Spring Bancorp anticipated in its forward-looking statements, and future results could differ materially from historical performance.
Sandy Spring Bancorp's forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company's loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company's ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2007, 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)
(Dollars in thousands, except per share data)
Three Months Ended
December 31,
------------------ %
2008 2007 Change
---------------------------------------------------------------------
Profitability for the period:
Net interest income $26,674 $27,400 (3) %
Provision for loan and lease losses 17,791 1,725 931
Noninterest income 10,973 11,380 (4)
Noninterest expenses 27,233 25,316 8
Income (loss) before income taxes (7,377) 11,739 (163)
Net income (loss) ($3,436) $8,367 (141)
Net income (loss) available to
common shareholders ($3,770) $8,367 (145)
Return on average assets (1) (0.46)% 1.10%
Return on average common
equity (1) (4.70)% 10.69%
Net interest margin 3.73% 4.19%
Efficiency ratio - GAAP * 72.34% 65.28%
Efficiency ratio - Non-GAAP * 62.41% 60.22%
Per share data:
Basic net income (loss) per share ($0.21) $0.51 (141) %
Basic net income (loss) per common
share (0.23) 0.51 (145)
Diluted net income (loss) per share (0.21) $0.51 (141) %
Diluted net income (loss) per common
share (0.23) 0.51 (145)
Dividends declared per common share 0.24 0.23 4
Book value per common share 19.05 19.31 (1)
Average fully diluted shares 16,434,214 16,422,161
At period-end:
Assets $3,313,638 $3,043,953 9 %
Deposits 2,365,257 2,273,868 4
Total loans and leases 2,490,646 2,277,031 9
Securities 492,491 445,273 11
Stockholders' equity 391,862 315,640 24
Capital and credit quality ratios:
Average equity to average assets 10.59% 10.33%
Allowance for loan and lease
losses to loans and leases 2.03% 1.10%
Nonperforming assets to total assets 2.18% 1.15%
Annualized net charge-offs to
average loans and leases 0.88% 0.01%
Twelve Months Ended
December 31,
------------------ %
2008 2007 Change
---------------------------------------------------------------------
Profitability for the period:
Net interest income $108,459 $104,826 3 %
Provision for loan and lease losses 33,192 4,094 711
Noninterest income 46,243 44,289 4
Noninterest expenses 102,089 99,788 2
Income (loss) before income taxes 19,421 45,233 (57)
Net income (loss) $15,779 $32,262 (51)
Net income (loss) available to
common shareholders $15,445 $32,262 (52)
Return on average assets (1) 0.49% 1.10%
Return on average common equity (1) 4.84% 11.12%
Net interest margin 3.92% 4.13%
Efficiency ratio - GAAP * 65.99% 66.92%
Efficiency ratio - Non-GAAP * 59.88% 61.92%
Per share data:
Basic net income (loss) per share $0.96 $2.01 (52) %
Basic net income (loss) per common
share 0.94 2.01 (53)
Diluted net income (loss) per share 0.96 $2.01 (52) %
Diluted net income (loss) per common
share 0.94 2.01 (53)
Dividends declared per common share 0.96 0.92 4
Book value per common share 19.05 19.31 (1)
Average fully diluted shares 16,429,471 16,087,310
At period-end:
Assets $3,313,638 $3,043,953 9 %
Deposits 2,365,257 2,273,868 4
Total loans and leases 2,490,646 2,277,031 9
Securities 492,491 445,273 11
Stockholders' equity 391,862 315,640 24
Capital and credit quality ratios:
Average equity to average assets 10.31% 9.89%
Allowance for loan and lease
losses to loans and leases 2.03% 1.10%
Nonperforming assets to total assets 2.18% 1.15%
Annualized net charge-offs to
average loans and leases 0.32% 0.06%
(1) Calculation utilizes net income available to common shareholders
* The GAAP efficiency ratio is noninterest expenses divided by net
interest income plus noninterest income from the Consolidated
Statements of Income. The non-GAAP efficiency ratio excludes
intangible asset amortization, the goodwill impairment loss and the
pension prior service credit from noninterest expenses; excludes
securities gains from noninterest 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
Reconciliation of GAAP-based and Traditional Efficiency Ratios
(Unaudited)
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Noninterest expenses-GAAP $ 27,233 $ 25,316 $102,089 $ 99,788
Net interest income plus
noninterest income-GAAP 37,647 38,780 154,702 149,115
Efficiency ratio-GAAP 72.34% 65.28% 65.99% 66.92%
======== ======== ======== ========
Noninterest expenses-GAAP $ 27,233 $ 25,316 $102,089 $ 99,788
Less non-GAAP adjustment:
Goodwill Impairment Loss 1,909 0 4,159 0
Amortization of intangible
assets 1,103 1,124 4,447 4,080
Plus non-GAAP adjustment:
Pension prior service
credit 0 0 1,473 0
-------- -------- -------- --------
Noninterest expenses-
Non-GAAP 24,221 24,192 94,956 95,708
Net interest income plus
noninterest income-GAAP 37,647 38,780 154,702 149,115
Plus non-GAAP adjustment:
Tax-equivalency 1,164 1,410 4,545 5,506
Less non-GAAP adjustments:
Securities gains 1 15 663 43
-------- -------- -------- --------
Net interest income plus
noninterest income -
traditional ratio 38,810 40,175 158,584 154,578
Efficiency ratio - Non-GAAP 62.41% 60.22% 59.88% 61.92%
======== ======== ======== ========
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
December 31,
----------------------
2008 2007
--------------------------------------------------------------------
Assets
Cash and due from banks $ 44,738 $ 63,432
Federal funds sold 60,027 22,055
Interest-bearing deposits with banks 464 365
---------- ----------
Cash and cash equivalents 105,229 85,852
Residential mortgage loans held for
sale (at fair value) 11,391 7,089
Investments available-for-sale
(at fair value) 291,727 186,801
Investments held-to-maturity - fair
value of $175,908 and $240,995,
respectively 171,618 234,706
Other equity securities 29,146 23,766
Total loans and leases 2,490,646 2,277,031
Less: allowance for loan and lease
losses (50,526) (25,092)
---------- ----------
Net loans and leases 2,440,120 2,251,939
Premises and equipment, net 51,410 54,457
Other real estate owned 2,860 461
Accrued interest receivable 11,810 14,955
Goodwill 76,248 76,585
Other intangible assets, net 12,183 16,630
Other assets 109,896 90,712
---------- ----------
Total assets $3,313,638 $3,043,953
========== ==========
Liabilities
Noninterest-bearing deposits $ 461,517 $ 434,053
Interest-bearing deposits 1,903,740 1,839,815
---------- ----------
Total deposits 2,365,257 2,273,868
Short-term borrowings 421,074 373,972
Long-term borrowings 66,584 17,553
Subordinated debentures 35,000 35,000
Accrued interest payable and other
liabilities 33,861 27,920
---------- ----------
Total liabilities 2,921,776 2,728,313
Stockholders' Equity
Preferred stock -- par value $1.00
(liquidation preference of $1,000
per share ) shares authorized 83,094
and 0, respectively; shares issued
and outstanding 83,094 and 0,
respectively (discount of
$3,654,000 and 0, respectively) 79,440 0
Common stock -- par value $1.00;
shares authorized 49,916,906
and 50,000,000, respectively;
shares issued and outstanding
16,398,523 and 16,349,317,
respectively 16,399 16,349
Warrants 3,699 0
Additional paid in capital 85,486 83,970
Retained earnings 214,410 216,376
Accumulated other comprehensive loss (7,572) (1,055)
---------- ----------
Total stockholders' equity 391,862 315,640
---------- ----------
Total liabilities and
stockholders' equity $3,313,638 $3,043,953
========== ==========
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
2008 2007 2008 2007
------- ------- -------- --------
Interest income:
Interest and fees on
loans and leases $36,337 $39,967 $148,765 $152,723
Interest on loans held
for sale 118 114 436 815
Interest on deposits
with banks 3 42 82 1,123
Interest and dividends
on securities:
Taxable 2,428 3,157 10,177 13,989
Exempt from federal
income taxes 2,088 2,392 8,800 10,168
Interest on federal
funds sold 56 437 585 2,157
------- ------- -------- --------
Total interest income 41,030 46,109 168,845 180,975
Interest expense:
Interest on deposits 9,886 14,653 42,816 59,916
Interest on short-term
borrowings 3,326 3,408 13,212 13,673
Interest on long-term
borrowings 1,144 648 4,358 2,560
------- ------- -------- --------
Total interest
expense 14,356 18,709 60,386 76,149
------- ------- -------- --------
Net interest
income 26,674 27,400 108,459 104,826
Provision for loan and
lease losses 17,791 1,725 33,192 4,094
------- ------- -------- --------
Net interest income
after provision
for loan and lease
losses 8,883 25,675 75,267 100,732
Noninterest income:
Securities gains 1 15 663 43
Service charges on
deposit accounts 3,297 3,211 12,778 11,148
Gains on sales of
mortgage loans 516 590 2,288 2,739
Fees on sales of
investment products 928 518 3,475 2,989
Trust and investment
management fees 2,201 2,581 9,483 9,588
Insurance agency
commissions 1,183 1,203 5,908 6,625
Income from bank owned
life insurance 719 732 2,902 2,829
Visa check fees 691 747 2,875 2,784
Other income 1,437 1,783 5,871 5,544
------- ------- -------- --------
Total noninterest
income 10,973 11,380 46,243 44,289
Noninterest expenses:
Salaries and employee
benefits 13,441 13,343 53,015 55,207
Occupancy expense of
premises 2,612 2,288 10,762 10,360
Equipment expenses 1,642 1,829 6,156 6,563
Marketing 652 674 2,163 2,237
Outside data services 1,054 1,094 4,373 3,967
Amortization of
intangible assets 1,103 1,124 4,447 4,080
Goodwill impairment
loss 1,909 0 4,159 0
Other expenses 4,820 4,964 17,014 17,374
------- ------- -------- --------
Total noninterest
expenses 27,233 25,316 102,089 99,788
------- ------- -------- --------
Income (loss) before
income taxes (7,377) 11,739 19,421 45,233
Income tax expense
(benefit) (3,941) 3,372 3,642 12,971
------- ------- -------- --------
Net income (loss) (3,436) $8,367 $15,779 $32,262
Preferred stock
dividends and discount
accretion 334 0 334 0
------- ------- -------- --------
Net income (loss)
available to common
shareholders $(3,770) $8,367 $15,445 $32,262
======= ======= ======== ========
Basic net income (loss)
per share $(0.21) $0.51 $0.96 $2.01
Basic net income (loss)
per common share (0.23) 0.51 0.94 2.01
Diluted net income
(loss) per share (0.21) 0.51 0.96 2.01
Diluted net income
(loss) per common
share (0.23) 0.51 0.94 2.01
Dividends declared per
common share 0.24 0.23 0.96 0.92
Sandy Spring Bancorp, Inc. and Subsidiaries
Historical Trends
in Quarterly Financial
Data (Unaudited) 2008
(Dollars in thousands, ---------------------------------------------
except per share data) Q4 Q3 Q2 Q1
---------------------------------------------------------------------
Profitability for
the quarter:
Tax-equivalent
interest income $42,194 $43,228 $42,906 $45,062
Interest expense 14,356 13,961 14,726 17,343
Tax-equivalent net
interest income 27,838 29,267 28,180 27,719
Tax-equivalent
adjustment 1,164 1,180 1,061 1,140
Provision for loan
and lease losses 17,791 6,545 6,189 2,667
Noninterest income 10,973 10,879 11,695 12,696
Noninterest expenses 27,233 25,267 24,886 24,703
Income (loss) before
income taxes (7,377) 7,154 7,739 11,905
Income tax expense
(benefit) (3,941) 1,795 2,088 3,700
Net Income (loss) (3,436) 5,359 5,651 8,205
Net Income (loss)
available to common
shareholders (3,770) 5,359 5,651 8,205
=====================================================================
Financial ratios:
Return on average
assets (0.42)% 0.67% 0.73% 1.07%
Return on average
common equity (4.70)% 6.64% 7.09% 10.45%
Net interest margin 3.73% 4.02% 3.96% 3.99%
Efficiency ratio -
GAAP* 72.34% 64.84% 64.11% 62.90%
Efficiency ratio -
Non-GAAP * 62.41% 58.27% 59.73% 59.18%
=====================================================================
Per share data:
Basic net income
(loss) per share $(0.21) $0.33 $0.35 $0.50
Basic net income
(loss) per common
share $(0.23) $0.33 $0.35 $0.50
Diluted net income
(loss) per share $(0.21) $0.33 $0.34 $0.50
Diluted net income
(loss) per common
share $(0.23) $0.33 $0.34 $0.50
Dividends declared
per common share $0.24 $0.24 $0.24 $0.24
Book value per
common share $19.05 $19.51 $19.56 $19.50
Average fully
diluted shares 16,434,214 16,418,588 16,427,213 16,407,778
=====================================================================
Noninterest income
breakdown:
Securities gains $1 $9 $79 $574
Service charges on
deposit accounts 3,297 3,249 3,202 3,030
Gains on sales of
mortgage loans 516 397 653 722
Fees on sales of
investment products 928 820 905 822
Trust and investment
management fees 2,201 2,380 2,505 2,397
Insurance agency
commissions 1,183 1,282 1,357 2,086
Income from bank
owned life
insurance 719 742 727 714
Visa check fees 691 727 761 696
Other income 1,437 1,273 1,506 1,655
Total 10,973 10,879 11,695 12,696
=====================================================================
Noninterest expense
breakdown:
Salaries and
employee benefits $13,441 $11,949 $13,862 $13,763
Occupancy expense of
premises 2,612 2,732 2,619 2,799
Equipment expenses 1,642 1,515 1,560 1,439
Marketing 652 526 488 497
Outside data
services 1,054 1,116 1,081 1,122
Amortization of
intangible assets 1,103 1,103 1,117 1,124
Goodwill impairment
loss 1,909 2,250 0 0
Other expenses 4,820 4,076 4,159 3,959
Total 27,233 25,267 24,886 24,703
2007
(Dollars in thousands, ---------------------------------------------
except per share data) Q4 Q3 Q2 Q1
---------------------------------------------------------------------
Profitability for
the quarter:
Tax-equivalent
interest income $47,519 $48,405 $47,378 $43,179
Interest expense 18,709 19,746 19,815 17,879
Tax-equivalent net
interest income 28,810 28,659 27,563 25,300
Tax-equivalent
adjustment 1,410 1,447 1,364 1,285
Provision for loan
and lease losses 1,725 750 780 839
Noninterest income 11,380 11,130 10,873 10,906
Noninterest expenses 25,316 25,899 24,959 23,614
Income (loss) before
income taxes 11,739 11,693 11,333 10,468
Income tax expense
(benefit) 3,372 3,512 3,164 2,923
Net Income (loss) 8,367 8,181 8,169 7,545
Net Income (loss)
available to common
shareholders 8,367 8,181 8,169 7,545
=====================================================================
Financial ratios:
Return on average
assets 1.10% 1.08% 1.10% 1.12%
Return on average
common equity 10.69% 10.55% 11.45% 11.96%
Net interest margin 4.19% 4.16% 4.08% 4.07%
Efficiency ratio -
GAAP* 65.28% 67.55% 67.33% 67.62%
Efficiency ratio -
Non-GAAP * 60.22% 62.30% 62.26% 63.01%
=====================================================================
Per share data:
Basic net income
(loss) per share $0.51 $0.50 $0.51 $0.49
Basic net income
(loss) per common
share $0.51 $0.50 $0.51 $0.49
Diluted net income
(loss) per share $0.51 $0.50 $0.51 $0.49
Diluted net income
(loss) per common
share $0.51 $0.50 $0.51 $0.49
Dividends declared
per common share $0.23 $0.23 $0.23 $0.23
Book value per
common share $19.31 $18.92 $18.62 $17.51
Average fully
diluted shares 16,422,161 16,508,922 16,069,771 15,400,865
=====================================================================
Noninterest income
breakdown:
Securities gains $15 $22 $4 $2
Service charges on
deposit accounts 3,211 2,999 2,630 2,308
Gains on sales of
mortgage loans 590 738 773 638
Fees on sales of
investment products 518 765 906 800
Trust and investment
management fees 2,581 2,365 2,361 2,281
Insurance agency
commissions 1,203 1,294 1,438 2,690
Income from bank
owned life
insurance 732 720 693 684
Visa check fees 747 730 717 590
Other income 1,783 1,497 1,351 913
Total 11,380 11,130 10,873 10,906
=====================================================================
Noninterest expense
breakdown:
Salaries and
employee benefits $13,343 $14,654 $13,776 $13,434
Occupancy expense of
premises 2,288 2,946 2,709 2,417
Equipment expenses 1,829 1,631 1,501 1,602
Marketing 674 359 675 529
Outside data
services 1,094 870 1,077 926
Amortization of
intangible assets 1,124 1,123 1,031 802
Goodwill impairment
loss 0 0 0 0
Other expenses 4,964 4,316 4,190 3,904
Total 25,316 25,899 24,959 23,614
* The GAAP efficiency ratio is noninterest expenses divided by net
interest income plus noninterest income from the Consolidated
Statements of Income. The non-GAAP efficiency ratio excludes
intangible asset amortization expenses from noninterest expenses;
excludes security gains from noninterest income; and adds the
tax-equivalent adjustment to net interest income. See the
Reconciliation Table included with these Historical Trends in
Quarterly Financial Data.
Sandy Spring Bancorp, Inc. and Subsidiaries
Historical Trends in
Quarterly Financial Data
(Unaudited) 2008
(Dollars in thousands, --------------------------------------------
except per share data) Q4 Q3 Q2 Q1
---------------------------------------------------------------------
Balance sheets at
quarter end:
Residential mortgage loans $457,571 $452,815 $ 461,000 $459,768
Residential construction
loans 189,249 221,630 199,602 183,690
Commercial mortgage loans 847,452 804,728 752,905 732,692
Commercial construction
loans 223,169 247,930 273,059 256,714
Commercial loans and
leases 366,978 358,097 356,256 354,509
Consumer loans 406,227 397,218 386,126 376,650
Total loans and leases 2,490,646 2,482,418 2,428,948 2,364,023
Less: allowance for loan
and lease losses (50,526) (38,266) (33,435) (27,887)
Net loans and leases 2,440,120 2,444,152 2,395,513 2,336,136
Goodwill 76,248 75,701 78,376 78,111
Other intangible
assets, net 12,183 13,286 14,390 15,507
Total assets 3,313,638 3,195,117 3,164,123 3,160,896
Total deposits 2,365,257 2,248,812 2,294,791 2,340,568
Customer repurchase
agreements 75,106 77,630 93,919 101,666
Total stockholders' equity 391,862 319,700 320,218 318,967
=====================================================================
Quarterly average
balance sheets:
Residential mortgage loans $457,956 $463,778 $462,858 $463,597
Residential construction
loans 208,616 210,363 193,822 174,626
Commercial mortgage loans 833,752 779,652 733,905 690,289
Commercial construction
loans 236,176 253,806 261,360 266,098
Commercial loans and leases 361,731 356,327 359,287 351,862
Consumer loans 400,937 391,640 380,911 378,261
Total loans and leases 2,499,168 2,455,566 2,392,143 2,324,733
Securities 431,858 423,082 431,182 427,819
Total earning assets 2,972,173 2,898,968 2,862,012 2,795,453
Total assets 3,235,432 3,167,145 3,134,440 3,072,428
Total interest-bearing
liabilities 2,405,890 2,363,299 2,344,266 2,311,629
Noninterest-bearing
demand deposits 458,538 453,281 441,330 412,369
Total deposits 2,305,880 2,264,990 2,306,867 2,260,837
Customer repurchase
agreements 84,012 81,158 92,968 94,841
Stockholders' equity 342,639 321,028 320,409 315,755
======================================================================
Capital and credit
quality measures:
Average equity to average
assets 10.59% 10.14% 10.22% 10.28%
Allowance for loan and
lease losses to loan
and leases 2.03% 1.54% 1.38% 1.18%
Nonperforming assets to
total assets 2.18% 2.14% 2.05% 1.48%
Annualized net charge-offs
(recoveries) to
average loans and leases 0.88% 0.28% 0.11% (0.02)%
=====================================================================
Miscellaneous data:
Net charge-offs
(recoveries) $5,531 $1,714 $642 ($129)
Nonperforming assets:
Non-accrual loans and
leases 67,950 64,246 60,373 37,353
Loans and leases 90 days
past due 1,038 2,074 2,538 8,244
Restructured loans
and leases 395 395 655 655
Other real estate owned,
net 2,860 1,698 1,352 661
Total nonperforming
assets 72,243 68,413 64,918 46,913
======================================================================
2007
(Dollars in thousands, ---------------------------------------------
except per share data) Q4 Q3 Q2 Q1
----------------------------------------------------------------------
Balance sheets at
quarter end:
Residential mortgage loans $456,305 $439,091 $427,252 $404,177
Residential construction
loans 166,981 154,908 154,444 144,744
Commercial mortgage loans 662,837 645,790 660,004 621,692
Commercial construction
loans 262,840 246,569 236,278 225,108
Commercial loans and leases 351,773 343,653 316,409 282,854
Consumer loans 376,295 371,588 370,621 357,607
Total loans and leases 2,277,031 2,201,599 2,165,008 2,036,182
Less: allowance for loan
and lease losses (25,092) (23,567) (23,661) (22,186)
Net loans and leases 2,251,939 2,178,032 2,121,347 2,013,996
Goodwill 76,585 76,625 77,457 53,913
Other intangible
assets, net 16,630 17,754 18,878 15,244
Total assets 3,043,953 2,965,492 3,101,409 2,945,477
Total deposits 2,273,868 2,280,102 2,386,226 2,274,322
Customer repurchase
agreements 98,015 122,130 113,622 114,712
Total stockholders' equity 315,640 310,624 306,255 275,319
=====================================================================
Quarterly average balance
sheets:
Residential mortgage loans $453,568 $441,190 $426,496 $406,886
Residential construction
loans 163,922 151,306 151,785 151,194
Commercial mortgage loans 649,101 647,659 630,335 565,277
Commercial construction
loans 252,705 244,975 239,299 203,371
Commercial loans and leases 339,744 323,439 300,325 246,218
Consumer loans 374,572 370,585 362,221 353,668
Total loans and leases 2,233,612 2,179,154 2,110,461 1,926,614
Securities 451,168 458,984 523,507 551,566
Total earning assets 2,725,801 2,733,572 2,711,225 2,518,797
Total assets 3,006,086 3,019,065 2,979,820 2,743,890
Total interest-bearing
liabilities 2,222,387 2,214,606 2,212,376 2,048,323
Noninterest-bearing demand
deposits 439,967 463,018 450,887 408,954
Total deposits 2,283,122 2,340,004 2,290,413 2,099,409
Customer repurchase
agreements 112,828 113,425 109,187 101,805
Stockholders' equity 310,605 307,564 286,040 255,781
=====================================================================
Capital and credit
quality measures:
Average equity to average
assets 10.33% 10.19% 9.60% 9.32%
Allowance for loan and
lease losses to loan
and leases 1.10% 1.07% 1.09% 1.09%
Nonperforming assets
to total assets 1.15% 0.87% 0.71% 0.24%
Annualized net charge-offs
(recoveries) to average
loans and leases 0.04% 0.16% 0.05% 0.00%
=====================================================================
Miscellaneous data:
Net charge-offs
(recoveries) $200 $844 $265 ($17)
Nonperforming assets:
Non-accrual loans and
leases 23,040 17,362 18,818 1,982
Loans and leases 90 days
past due 11,362 8,009 3,347 5,084
Restructured loans and
leases 0 0 0 0
Other real estate
owned, net 461 431 0 0
Total nonperforming
assets 34,863 25,802 22,165 7,066
======================================================================
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)
(Dollars in thousands and tax-equivalent)
Three Months Ended December
----------------------------------
2008
----------------------------------
Annualized
Average Average
Balances Interest Yield/Rate
--------- -------- ----------
Assets
Residential mortgage loans $457,956 $ 6,976 6.09 %
Residential construction loans 208,616 2,857 5.45
Commercial mortgage loans 833,752 13,494 6.44
Commercial construction loans 236,176 2,718 4.58
Commercial loans and leases 361,731 5,638 6.21
Consumer loans 400,937 4,771 4.73
--------- --------
Total loans and leases 2,499,168 36,454 5.81
Securities* 431,858 5,680 5.19
Interest-bearing deposits with banks 515 3 2.71
Federal funds sold 40,632 56 0.54
--------- --------
TOTAL EARNING ASSETS 2,972,173 42,193 5.65 %
Less: allowance for loan and
lease losses (41,204)
Cash and due from banks 50,963
Premises and equipment, net 52,092
Other assets 201,408
----------
Total assets $3,235,432
==========
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $236,609 $143 0.24 %
Regular savings deposits 144,275 90 0.25
Money market savings deposits 636,628 2,487 1.55
Time deposits 829,830 7,166 3.44
--------- --------
Total interest-bearing deposits 1,847,342 9,886 2.13
Borrowings 558,548 4,470 3.19
--------- --------
TOTAL INTEREST-BEARING LIABILITIES 2,405,890 14,356 2.38
-------- --------
Noninterest-bearing demand deposits 458,538
Other liabilities 28,365
Stockholder's equity 342,639
---------
Total liabilities and
stockholders' equity $3,235,432
=========
Net interest income and spread on
a fully tax equivalent basis 27,837 3.27 %
========
Less: tax equivalent adjustment 1,164
--------
Net interest income 26,673
========
Interest income/earning assets 5.65 %
Interest expense/earning assets 1.92
--------
Net interest margin 3.73 %
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)
(Dollars in thousands and tax-equivalent)
Three Months Ended December
------------------------------------
2007
------------------------------------
Annualized
Average Average
Balances Interest Yield/Rate
-------- -------- -----------
Assets
Residential mortgage loans $453,568 $ 7,130 6.29 %
Residential construction loans 163,922 2,817 6.82
Commercial mortgage loans 649,101 11,642 7.12
Commercial construction loans 252,705 5,226 8.20
Commercial loans and leases 339,744 6,892 8.06
Consumer loans 374,572 6,374 6.75
-------- --------
Total loans and leases 2,233,612 40,081 7.13
Securities* 451,168 6,959 6.07
Interest-bearing deposits with
banks 3,557 42 4.64
Federal funds sold 37,464 437 4.62
-------- --------
TOTAL EARNING ASSETS 2,725,801 47,519 6.92 %
Less: allowance for loan and
lease losses (23,791)
Cash and due from banks 53,839
Premises and equipment, net 55,033
Other assets 195,204
--------
Total assets $3,006,086
==========
Liabilities and Stockholders'
Equity
Interest-bearing demand deposits $236,251 $182 0.31 %
Regular savings deposits 153,791 114 0.29
Money market savings deposits 735,526 6,460 3.48
Time deposits 717,587 7,897 4.37
--------- --------
Total interest-bearing
deposits 1,843,155 14,653 3.15
Borrowings 379,232 4,056 4.25
--------- --------
TOTAL INTEREST-BEARING
LIABILITIES 2,222,387 18,709 3.34
--------
Noninterest-bearing demand
deposits 439,967
Other liabilities 33,127
Stockholder's equity 310,605
--------
Total liabilities and
stockholders' equity $ 3,006,086
===========
Net interest income and spread on
a fully tax equivalent basis 28,810 3.58 %
=========
Less: tax equivalent adjustment 1,410
--------
Net interest income 27,400
========
Interest income/earning assets 6.92 %
Interest expense/earning assets 2.73
---------
Net interest margin 4.19 %
=========
*Interest income includes the effects of annualized taxable-
equivalent adjustments (reduced by the nondeductible portion of
interest expense) using the appropriate marginal federal income tax
rate of 35.00% and, where applicable, the marginal state income tax
rate of 7.51% (or a combined marginal federal and state rate of
39.88%) for 2008 and a marginal state income tax rate of 6.55% (or
a combined marginal federal and state rate of 39.26%) for 2007, to
increase tax-exempt interest income to a taxable-equivalent basis.
The annualized taxable-equivalent adjustment amounts utilized in
the above table to compute yields aggregated to $4.6 million in
2008 and $5.6 million in 2007
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)
(Dollars in thousands and tax-equivalent)
Twelve Months Ended December 31,
--------------------------------
2008
--------------------------------
Annualized
Average Average
Balances Interest Yield/Rate
-------------------------------
Assets
Residential mortgage loans $463,853 $28,547 6.15 %
Residential construction loans 196,926 11,585 5.88
Commercial mortgage loans 759,658 50,699 6.67
Commercial construction loans 254,309 13,859 5.45
Commercial loans and leases 357,311 24,007 6.72
Consumer loans 387,983 20,503 5.28
---------- --------
Total loans and leases 2,420,040 149,200 6.17
Securities* 428,479 23,522 5.49
Interest-bearing deposits with banks 3,213 82 2.55
Federal funds sold 30,711 585 1.90
--------- --------
TOTAL EARNING ASSETS 2,882,443 173,389 6.02 %
Less: allowance for loan and
lease losses (32,629)
Cash and due from banks 49,981
Premises and equipment, net 53,207
Other assets 199,584
----------
Total assets $3,152,586
==========
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $242,848 $671 0.28 %
Regular savings deposits 153,123 455 0.30
Money market savings deposits 669,239 12,247 1.83
Time deposits 777,979 29,443 3.78
--------- --------
Total interest-bearing deposits 1,843,189 42,816 2.32
Borrowings 513,237 17,570 3.42
--------- --------
TOTAL INTEREST-BEARING LIABILITIES 2,356,426 60,386 2.56
-------- ----------
Noninterest-bearing demand deposits 441,459
Other liabilities 29,706
Stockholder's equity 324,995
---------
Total liabilities and
stockholders' equity $3,152,586
==========
Net interest income and spread on
a fully tax equivalent basis 113,003 3.46 %
========
Less: tax equivalent adjustment 4,545
--------
Net interest income 108,458
========
Interest income/earning assets 6.02 %
Interest expense/earning assets 2.10
--------
Net interest margin 3.92 %
========
Twelve Months Ended December 31,
------------------------------------
2007
------------------------------------
Annualized
Average Average
Balances Interest Yield/Rate
--------- -------- ----------
Assets
Residential mortgage loans $431,563 $26,394 6.12 %
Residential construction loans 154,578 11,047 7.15
Commercial mortgage loans 624,080 44,992 7.21
Commercial construction loans 235,250 20,828 8.85
Commercial loans and leases 302,671 24,910 8.23
Consumer loans 365,334 25,367 6.94
--------- --------
Total loans and leases 2,113,476 153,538 7.26
Securities* 495,928 29,663 5.98
Interest-bearing deposits
with banks 21,600 1,123 5.20
Federal funds sold 42,305 2,157 5.10
--------- --------
TOTAL EARNING ASSETS 2,673,309 186,481 6.98 %
Less: allowance for loan and
lease losses (22,771)
Cash and due from banks 54,294
Premises and equipment, net 52,604
Other assets 178,015
----------
Total assets $2,935,451
==========
Liabilities and Stockholders'
Equity
Interest-bearing demand deposits $236,940 $808 0.34 %
Regular savings deposits 165,134 535 0.32
Money market savings deposits 643,047 23,809 3.70
Time deposits 768,005 34,764 4.53
--------- --------
Total interest-bearing
deposits 1,813,126 59,916 3.30
Borrowings 361,884 16,233 4.49
----------- -------
TOTAL INTEREST-BEARING
LIABILITIES 2,175,010 76,149 3.50
-------- --------
Noninterest-bearing demand
deposits 440,853
Other liabilities 29,364
Stockholder's equity 290,224
---------
Total liabilities and
stockholders' equity $2,935,451
==========
Net interest income and spread
on a fully tax equivalent basis 110,332 3.48 %
========
Less: tax equivalent adjustment 5,506
--------
Net interest income 104,826
========
Interest income/earning assets 6.98 %
Interest expense/earning assets 2.85
--------
Net interest margin 4.13 %
========
*Interest income includes the effects of annualized taxable-equivalent
adjustments (reduced by the nondeductible portion of interest expense)
using the appropriate marginal federal income tax rate of 35.00% and,
where applicable, the marginal state income tax rate of 7.51% (or a
combined marginal federal and state rate of 39.88%) for 2008 and a
marginal state income tax rate of 6.55% (or a combined marginal
federal and state rate of 39.26%) for 2007, to increase tax-exempt
interest income to a taxable-equivalent basis. The annualized
taxable-equivalent adjustment amounts utilized in the above table to
compute yields aggregated to $4.5 million in 2008 and $5.5 million in
2007
CONTACT: Sandy Spring Bancorp, Inc.
Daniel J. Schrider, President & Chief Executive Officer
DSchrider@sandyspringbank.com
Philip J. Mantua, Executive V.P. & Chief Financial Officer
PMantua@sandyspringbank.com
1-800-399-5919
www.sandyspringbank.com
17801 Georgia Avenue
Olney, Maryland 20832
