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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 24, 2023
SANDY SPRING BANCORP, INC.
(Exact name of registrant as specified in its charter)
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Maryland | 000-19065 | 52-1532952 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
17801 Georgia Avenue, Olney, Maryland 20832
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (301) 774-6400
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | Trading Symbol(s) | Name of exchange on which registered |
Common Stock, par value $1.00 per share | SASR | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
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Item 2.02 | Results of Operations and Financial Condition |
On October 24, 2023, Sandy Spring Bancorp, Inc. (the “Company”) issued a news release announcing its results of operations and financial condition for the quarter ended September 30, 2023. A copy of the news release is included as Exhibit 99.1 to this report.
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Item 7.01 | Regulation FD Disclosure |
The Company is providing supplemental information regarding its quarterly results and related matters. A copy of the supplemental information is included as Exhibit 99.2 to this report and will be posted on the Company’s website at www.sandyspringbank.com. The supplemental information is being furnished pursuant to Item 7.01 and, in accordance with General Instruction B.2 of Form 8-K, the information contained therein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities under that Section. Furthermore, the information contained in Exhibit 99.2 shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933.
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Item 9.01 | Financial Statements and Exhibits |
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Exhibits. |
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Exhibit No. | Description |
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| Press release dated October 24, 2023 |
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| Supplemental Information dated October 24, 2023 |
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104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| SANDY SPRING BANCORP, INC. |
| (Registrant) |
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Date: October 24, 2023 | By: | /s/ Daniel J. Schrider |
| | Daniel J. Schrider |
| | President and Chief Executive Officer |
FOR IMMEDIATE RELEASE
SANDY SPRING BANCORP REPORTS THIRD QUARTER EARNINGS OF $20.7 MILLION
OLNEY, MARYLAND, October 24, 2023 — Sandy Spring Bancorp, Inc. (Nasdaq-SASR), the parent company of Sandy Spring Bank, reported net income of $20.7 million ($0.46 per diluted common share) for the quarter ended September 30, 2023, compared to net income of $24.7 million ($0.55 per diluted common share) for the second quarter of 2023 and $33.6 million ($0.75 per diluted common share) for the third quarter of 2022. The decline in the current quarter's net income compared to the linked quarter was the result of the one-time pension settlement expense associated with the previously disclosed termination of the Company's pension plan, coupled with lower net interest income. These negative factors were partially offset by lower provision for credit losses and a decline in salaries and employee benefits expense after excluding the impact of the pension settlement expense.
Current quarter core earnings were $27.8 million ($0.62 per diluted common share), compared to $27.1 million ($0.60 per diluted common share) for the quarter ended June 30, 2023 and $35.7 million ($0.80 per diluted common share) for the quarter ended September 30, 2022. Core earnings exclude the after-tax impact of amortization of intangibles, investment securities gains or losses and non-recurring or extraordinary items. The increase in core earnings during the current quarter as compared to the previous quarter was a result of lower provision for credit losses, lower salaries and employee benefits expense, and lower marketing expense, offset by reduced net interest income.
“This quarter we demonstrated the effectiveness of our core funding strategies and ability to expand our reach in the Greater Washington region. We added over 1,500 clients in the quarter, which reflects over 1% growth in our client base,” said Daniel J. Schrider, Chairman, President and CEO of Sandy Spring Bank. "Additionally, we grew the Commercial & Industrial portfolio, reduced our Commercial Real Estate concentration, and maintained our credit quality."
“We are focused on capitalizing on this momentum to deepen existing client relationships and welcome new clients to Sandy Spring Bank,” Schrider added.
Third Quarter Highlights
•Total assets at September 30, 2023 increased by 1% to $14.1 billion compared to $14.0 billion at June 30, 2023.
•Total loans declined by $69.3 million or 1% to $11.3 billion at September 30, 2023 compared to $11.4 billion at June 30, 2023. During the current quarter, the Company reduced its concentration in the commercial real estate segments by $110.3 million, while commercial business loans and lines increased $31.1 million. The total residential mortgage loan portfolio grew $16.0 million mainly due to the migration of construction loans into the portfolio.
•Deposits increased $192.1 million or 2% to $11.2 billion at September 30, 2023 compared to $11.0 billion at June 30, 2023, as interest-bearing deposits increased $258.1 million or 3%, while noninterest-bearing deposits declined $66.0 million or 2%. Growth within interest-bearing deposit categories was driven by savings accounts and core time deposits, which increased by $277.4 million and $263.7 million, respectively. These increases were partially offset by the $155.8 million decrease in brokered time deposits, as the Company reduced its reliance on wholesale funding sources, and the $177.5 million decrease in money market accounts.
•Credit quality metrics remained at low levels during the current quarter. The ratio of non-performing loans to total loans was 0.46% at September 30, 2023 compared to 0.44% at June 30, 2023 and 0.40% at September 30, 2022. Net charge-off activity during the current quarter was insignificant.
•Total borrowings declined in the current quarter by $57.8 million or 4% over the amounts at June 30, 2023, mainly as a result of a $50.0 million reduction in FHLB advances.
•Net interest income for the third quarter of 2023 declined $5.4 million or 6% compared to the previous quarter and $27.9 million or 25% compared to the third quarter of 2022. During the recent quarter, the $4.3 million growth in
interest income was more than offset by the $9.7 million increase in interest expense, a result of the increased rates paid on deposits.
•The net interest margin was 2.55% for the third quarter of 2023 compared to 2.73% for the second quarter of 2023 and 3.53% for the third quarter of 2022. The decline in the net interest margin was the result of higher rates paid on interest-bearing liabilities, driven by higher market rates, competition for deposits, and customer movement of excess funds out of noninterest-bearing accounts, outpacing the increase in the yield on interest-earning assets. Compared to the linked quarter, the rate paid on interest-bearing liabilities rose 36 basis points, while the yield on interest-earning assets increased 8 basis points, resulting in the quarterly margin compression of 18 basis points.
•Provision for credit losses directly attributable to the funded loan portfolio for the current quarter was $3.2 million compared to $4.5 million in the previous quarter and $14.1 million in the prior year quarter. The provision for the current quarter was the product of increases in individual reserves on a few commercial lending relationships, which were partially offset by a qualitative adjustment related to reduced probability of an economic recession. In addition, during the current quarter the Company reduced its reserve for unfunded commitments by $0.8 million as a result of higher utilization of lines of credit.
•Non-interest income for the third quarter of 2023 increased by 1% or $0.2 million compared to the linked quarter and grew by 3% or $0.5 million compared to the prior year quarter. The quarter-over-quarter increase was mainly driven by higher wealth management income and higher lending-related fees, offset by lower BOLI income.
•Non-interest expense for the third quarter of 2023 increased $3.3 million or 5% compared to the second quarter of 2023 and $6.7 million or 10% compared to the prior year quarter. The current quarter included $8.2 million of pension settlement expense related to the termination of the Company's pension plan, while the previous quarter included $1.9 million of severance related expense associated with staffing adjustments. Excluding these items from the current and previous quarters, total non-interest expense declined by $2.9 million or 4% driven by lower salaries and employee benefits expense and lower marketing expense.
•Return on average assets (“ROA”) for the quarter ended September 30, 2023 was 0.58% and return on average tangible common equity (“ROTCE”) was 7.42% compared to 0.70% and 8.93%, respectively, for the second quarter of 2023 and 0.99% and 12.49%, respectively, for the third quarter of 2022. On a non-GAAP basis, the current quarter's core ROA was 0.78% and core ROTCE was 9.51% compared to 0.77% and 9.43%, respectively, for the previous quarter and 1.05% and 12.86%, respectively, for the third quarter of 2022.
•The GAAP efficiency ratio was 70.72% for the third quarter of 2023, compared to 64.22% for the second quarter of 2023 and 50.66% for the third quarter of 2022. The non-GAAP efficiency ratio was 60.91% for the third quarter of 2023 compared to 60.68% for the second quarter of 2023 and 48.18% for the prior year quarter. The increase in both the GAAP and non-GAAP efficiency ratios (reflecting a decrease in efficiency) in the current quarter compared to the previous quarter and the third quarter of the prior year was the result of declines in net revenue from the prior periods coupled with the growth in non-interest expense.
Balance Sheet and Credit Quality
Total assets were $14.1 billion at September 30, 2023, as compared to $14.0 billion at June 30, 2023. Total loans declined by $69.3 million or 1% to $11.3 billion at September 30, 2023 compared to $11.4 billion at June 30, 2023. Total commercial real estate and business loans declined $79.2 million quarter-over-quarter due to a $107.1 million or 10% decline in the AD&C loan portfolio, while investor and owner-occupied commercial real estate loan portfolios were relatively unchanged. Commercial business loans and lines increased $31.1 million or 2%. Total residential mortgage loans grew $16.0 million or 1% mainly due to the migration of construction loans into the residential mortgage portfolio. Overall, the loan portfolio mix remained relatively unchanged compared to the previous quarter.
Deposits increased $192.1 million or 2% to $11.2 billion at September 30, 2023 compared to $11.0 billion at June 30, 2023. During this period total interest-bearing deposits increased $258.1 million or 3%, while noninterest-bearing deposits declined $66.0 million or 2%. Growth within interest-bearing deposit categories was driven by savings accounts and core time deposits, which increased by $277.4 million and $263.7 million, respectively. These increases were partially offset by the $155.8 million decrease in brokered time deposits, as the Company reduced its reliance on wholesale funding sources, and the $177.5 million decrease in money market accounts. Total deposits, excluding brokered deposits, increased by $349.5 million or 4% quarter-over-quarter and represented 90% of the total deposits as of September 30, 2023 compared to 88% at June 30, 2023, reflecting the continued stability of the core deposit base. The deposit growth experienced during the current quarter resulted in the loan to deposit ratio declining to 101% at September 30, 2023 from 104% at June 30, 2023. Total uninsured deposits at September 30,
2023 were approximately 33% of the total deposits. The Company offers its customers reciprocal deposit arrangements, which provide FDIC deposit insurance for accounts that would otherwise exceed deposit insurance limits. During the quarter ended September 30, 2023, balances in the Company's reciprocal deposit accounts increased by $131.6 million.
Total borrowings declined by $57.8 million or 4% at September 30, 2023 as compared to the previous quarter, driven by a $50.0 million reduction in FHLB advances. The outstanding balance of borrowings through the Federal Reserve Bank's Bank Term Funding Program remained unchanged at $300.0 million at September 30, 2023. At September 30, 2023, contingent liquidity, which consists of available FHLB borrowings, fed funds, funds through the Federal Reserve Bank's discount window and the Bank Term Funding Program, as well as excess cash and unpledged investment securities totaled $6.1 billion or 168% of uninsured deposits. At September 30, 2023, total cash and cash equivalents were $717.6 million, an increase of $287.5 million or 67% compared to the linked quarter, primarily a result of strong deposit growth.
The tangible common equity ratio decreased to 8.42% of tangible assets at September 30, 2023, compared to 8.51% at June 30, 2023. This decrease reflected the impact of higher tangible assets while tangible common equity remained relatively unchanged quarter-over-quarter, as net retained earnings were offset by an increase in unrealized losses on available-for-sale investment securities.
At September 30, 2023, the Company had a total risk-based capital ratio of 14.85%, a common equity tier 1 risk-based capital ratio of 10.83%, a tier 1 risk-based capital ratio of 10.83%, and a tier 1 leverage ratio of 9.50%. All of these ratios remain well in excess of the mandated minimum regulatory requirements.
Non-performing loans include non-accrual loans and accruing loans 90 days or more past due. Overall credit quality remained stable at September 30, 2023 compared to June 30, 2023, as the ratio of non-performing loans to total loans was 0.46% compared to 0.44%. These levels of non-performing loans compare to 0.40% at September 30, 2022 and continue to indicate stable credit quality during a period of economic uncertainty. At September 30, 2023, non-performing loans totaled $51.8 million, compared to $49.5 million at June 30, 2023 and $44.5 million at September 30, 2022. Total net charge-offs for the current quarter amounted to $0.1 million compared to $1.8 million for the second quarter of 2023 and $0.5 million of net recoveries for the third quarter of 2022.
At September 30, 2023, the allowance for credit losses was $123.4 million or 1.09% of outstanding loans and 238% of non-performing loans, compared to $120.3 million or 1.06% of outstanding loans and 243% of non-performing loans at the end of the previous quarter and $128.3 million or 1.14% of outstanding loans and 289% of non-performing loans at the end of the third quarter of 2022. The increase in the allowance for the current quarter compared to the previous quarter mainly reflects increases in individual reserves recorded on a few commercial real estate relationships, partially offset by the reduction of the qualitative adjustment related to the probability of an economic recession.
Income Statement Review
Quarterly Results
Net income was $20.7 million ($0.46 per diluted common share) for the three months ended September 30, 2023 compared to $24.7 million ($0.55 per diluted common share) for the three months ended June 30, 2023 and $33.6 million ($0.75 per diluted common share) for the prior year quarter. The current quarter's core earnings were $27.8 million ($0.62 per diluted common share), compared to $27.1 million ($0.60 per diluted common share) for the previous quarter and $35.7 million ($0.80 per diluted common share) for the quarter ended September 30, 2022. The decline in the current quarter's net income compared to the previous quarter was the result of one-time pension settlement expense of $8.2 million, as the Company completed the termination of its pension plan, coupled with lower net interest income, partially offset by lower provision for credit losses and lower salaries expense. The increase in core earnings during the current quarter as compared to the previous quarter was a result of lower provision for credit losses, lower salaries and employee benefits expense, and lower marketing expense, offset by reduced net interest income.
Net interest income for the third quarter of 2023 decreased $5.4 million or 6% compared to the previous quarter and $27.9 million or 25% compared to the third quarter of 2022. Both quarterly and year-over-year decreases in net interest income were driven by higher interest expense, a result of higher funding costs, which outpaced growth in interest income. The rising interest rate environment was primarily responsible for a $32.0 million year-over-year increase in interest income. This growth in interest income was more than offset by the $59.9 million year-over-year growth in interest expense as funding costs have also risen in
response to the rising rate environment and significant competition for deposits. Interest income growth occurred in all categories of commercial loans and, to a lesser degree, in residential mortgage loans, consumer loans and investment securities income.
The net interest margin was 2.55% for the third quarter of 2023 compared to 2.73% for the second quarter of 2023 and 3.53% for the third quarter of 2022. The contraction of the net interest margin for the current quarter reflects the higher rate paid on interest-bearing liabilities, which outpaced the increase in the yield on interest-earning assets. The overall rate and yield increases were driven by the multiple federal funds rate increases that occurred over the preceding twelve months coupled with competition for deposits in the market, and customer movement of excess funds out of noninterest-bearing accounts into higher yielding products. As compared to the prior year quarter, the yield on interest-earning assets increased 76 basis points while the rate paid on interest-bearing liabilities rose 241 basis points, resulting in the margin compression of 98 basis points.
The total provision for credit losses was $2.4 million for the third quarter of 2023 compared to $5.1 million for the previous quarter and $18.9 million for the third quarter of 2022. The provision for credit losses directly attributable to the funded loan portfolio was $3.2 million for the current quarter compared to $4.5 million for the second quarter of 2023 and the prior year quarter’s provision of $14.1 million. The current quarter's provision mainly reflects an increase in individual reserves established on a few commercial real estate relationships.
Non-interest income for the third quarter of 2023 increased by 1% or $0.2 million compared to the linked quarter and grew by 3% or $0.5 million compared to the prior year quarter. The current quarter's increase in non-interest income as compared to the previous quarter was mainly driven by higher wealth management income coupled with higher lending-related fees, partially offset by lower BOLI income due to mortality proceeds received in the prior quarter.
Non-interest expense for the third quarter of 2023 increased $3.3 million or 5% compared to the second quarter of 2023 and $6.7 million or 10% compared to the third quarter of 2022. The current quarter included $8.2 million of pension settlement expense related to the termination of the Company's pension plan, while the previous quarter included $1.9 million of severance related expense associated with staffing adjustments. Excluding these items from the current and previous quarters, total non-interest expense declined by $2.9 million or 4% driven by lower salaries and employee benefits and lower marketing expense. Excluding pension settlement expense from the current quarter, non-interest expense declined by $1.5 million or 2% year-over-year. This decline is primarily attributable to lower compensation expense, partially offset by higher professional fees related to the Company's investments in technology projects, and higher FDIC insurance expense, due to an increase in the assessment rate for all banks that became effective in 2023.
For the third quarter of 2023, the GAAP efficiency ratio was 70.72% compared to 64.22% for the second quarter of 2023 and 50.66% for the third quarter of 2022. The GAAP efficiency ratio rose from the prior year quarter primarily as a result of the 21% decrease in GAAP revenue in combination with the 10% increase in GAAP non-interest expense. The non-GAAP efficiency ratio was 60.91% for the current quarter as compared to 60.68% for the second quarter of 2023 and 48.18% for the third quarter of 2022. The increase in the non-GAAP efficiency ratio (reflecting a decrease in efficiency) from the third quarter of the prior year to the current year quarter was primarily the result of the 21% decline in non-GAAP revenue, while non-GAAP expenses were relatively unchanged.
ROA for the quarter ended September 30, 2023 was 0.58% and ROTCE was 7.42% compared to 0.70% and 8.93%, respectively, for the second quarter of 2023 and 0.99% and 12.49%, respectively, for the third quarter of 2022. On a non-GAAP basis, the current quarter's core ROA was 0.78% and core ROTCE was 9.51% compared to 0.77% and 9.43% for the second quarter of 2023 and 1.05% and 12.86%, respectively, for the third quarter of 2022.
Year-to-Date Results
The Company recorded net income of $96.7 million for the nine months ended September 30, 2023 compared to net income of $132.3 million for the same period in the prior year. Core earnings were $107.2 million for the nine months ended September 30, 2023 compared to $125.0 million for the same period in the prior year. Year-to-date net income declined as a result of the gain recognized on the sale of the Company's insurance segment during the prior year in combination with lower net interest income and higher non-interest expense, partially offset by lower provision for credit losses as a result of significant credit recorded during the first quarter of the current year.
For the nine months ended September 30, 2023, net interest income decreased $47.5 million compared to the prior year as a result of the $169.0 million increase in interest expense, partially offset by the $121.5 million increase in interest income. The increase in interest expense was driven by the interest expense on deposits, primarily associated with money market and time deposit accounts and, to a lesser degree, FHLB and Federal Reserve Bank borrowings. The net interest margin declined to 2.75% for the nine months ended September 30, 2023, compared to 3.50% for the prior year, primarily as a result of higher funding cost due to the rising interest rate environment and market competition for deposits during the period.
The provision for credit losses for the nine months ended September 30, 2023 amounted to a credit of $14.1 million as compared to a charge of $23.6 million for 2022. Credit to the provision for the nine months ended September 30, 2023 was a reflection of the improving regional forecasted unemployment rate, observed during the early part of the current year, coupled with the continued strong credit quality performance of the loan portfolio.
For the nine months ended September 30, 2023, non-interest income decreased 31% to $50.5 million compared to $72.7 million for 2022. During the prior year, the Company realized a $16.5 million gain on the sale of its insurance segment. Excluding the gain, non-interest income decreased 10% or $5.7 million, driven by a $2.9 million decrease in insurance commissions, a $2.6 million decrease in bank card fees and a $0.6 million decrease in income from mortgage banking activities. Insurance commission income declined due to the disposition of the Company's insurance business during the second quarter of the prior year. Fees from bank cards declined as a result of regulatory restrictions on transaction fees effective in the second half of the prior year. The decline in income from mortgage banking activities is the result of the rising interest rate environment, which continues to dampen home sales and refinancing activity. These decreases in non-interest income year-over-year were partially offset by a $0.8 million increase in BOLI mortality-related income.
Non-interest expense increased 8% to $207.9 million for the nine months ended September 30, 2023, compared to $192.9 million for 2022. Current year expense included pension settlement expense of $8.2 million and severance expense of $1.9 million, while the prior year included contingent earn-out expense associated with the 2020 acquisition of Rembert Pendleton Jackson of $1.2 million and merger, acquisition and disposal expense of $1.1 million. Excluding these items, non-interest expense increased by $7.2 million or 4% in the current year over the prior year. The drivers of the increase in non-interest expense were a $5.8 million increase in professional fees, a $3.5 million increase in FDIC expense, and a $1.4 million increase in software amortization expense. Excluding the pension settlement expense, total salaries and benefits expense declined by $3.5 million from the prior year period. Year-over-year increases in both professional fees and software amortization expense were mainly associated with the Company's investments in technology and software projects. The increase in FDIC insurance expense was a result of the two basis points increase in the assessment rate for all banks that became effective in 2023.
For the nine months ended September 30, 2023, the GAAP efficiency ratio was 64.29% compared to 49.08% for the same period in 2022. The non-GAAP efficiency ratio for the current year was 59.42% compared to the 49.09% for the 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 14% 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, investment securities gains/(losses), merger, acquisition and disposal expense, gain on disposal of assets, pension settlement expense, severance expense and contingent payment expense, 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 amortization of intangible assets, pension settlement expense, investment securities gains/(losses) and other non-recurring or extraordinary items, on a net of tax basis.
•Pre-tax pre-provision net income excludes income tax expense and the provision (credit) for credit losses.
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 third 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 1-833-470-1428. Please use the following access code: 724249. 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 November 7, 2023. A replay of the teleconference will be available through the same time period by calling 1-866-813-9403 under conference call number 896518.
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, Chair, 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, Senior Vice President
301-570-8331
jschell@sandyspringbank.com
Forward-Looking Statements
Sandy Spring Bancorp’s forward-looking statements are subject to significant risks and uncertainties that may cause actual results to differ materially from those in such statements. These risks and uncertainties include, but are not limited to, the risks identified in our quarterly and annual reports and the following: changes in general business and economic conditions nationally or in the markets that we serve; changes in consumer and business confidence, investor sentiment, or consumer spending or savings behavior; changes in the level of inflation; changes in the demand for loans, deposits and other financial services that we provide; the possibility that future credit losses may be higher than currently expected; the impact of the interest rate environment on our business, financial condition and results of operations; the impact of compliance with changes in laws, regulations and regulatory interpretations, including changes in income taxes; changes in credit ratings assigned to us or our subsidiaries; the ability to realize benefits and cost savings from, and limit any unexpected liabilities associated with, any business combinations; competitive pressures among financial services companies; the ability to attract, develop and retain qualified employees; our ability to maintain the security of our data processing and information technology systems; the impact of changes in accounting policies, including the introduction of new accounting standards; the impact of judicial or regulatory proceedings; the impact of fiscal and governmental policies of the United States federal government; the impact of health emergencies, epidemics or pandemics; the effects of climate change; and the impact of natural disasters, extreme weather events, military conflict, terrorism or other geopolitical events. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2022 and its Form 10-Q for the quarter ended June 30, 2023, including in the Risk Factors section of those reports, 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
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| | Three Months Ended September 30, | | % Change | | Nine Months Ended September 30, | | % Change |
(Dollars in thousands, except per share data) | | 2023 | | 2022 | | | 2023 | | 2022 | |
Results of operations: | | | | | | | | | | | | |
Net interest income | | $ | 85,081 | | $ | 112,960 | | (25) | % | | $ | 272,854 | | $ | 320,361 | | (15) | % |
Provision/ (credit) for credit losses | | 2,365 | | 18,890 | | (87) | | | (14,116) | | 23,571 | | N/M |
Non-interest income | | 17,391 | | 16,882 | | 3 | | | 50,518 | | 72,722 | | (31) | |
Non-interest expense | | 72,471 | | 65,780 | | 10 | | | 207,912 | | 192,918 | | 8 | |
Income before income tax expense | | 27,636 | | 45,172 | | (39) | | | 129,576 | | 176,594 | | (27) | |
Net income | | 20,746 | | 33,584 | | (38) | | | 96,744 | | 132,319 | | (27) | |
| | | | | | | | | | | | |
Net income attributable to common shareholders | | $ | 20,719 | | $ | 33,470 | | (38) | | | $ | 96,552 | | $ | 131,744 | | (27) | |
Pre-tax pre-provision net income (1) | | $ | 30,001 | | $ | 64,062 | | (53) | | | $ | 115,460 | | $ | 200,165 | | (42) | |
| | | | | | | | | | | | |
Return on average assets | | 0.58 | % | | 0.99 | % | | | | 0.92 | % | | 1.36 | % | | |
Return on average common equity | | 5.35 | % | | 8.96 | % | | | | 8.50 | % | | 11.90 | % | | |
Return on average tangible common equity (1) | | 7.42 | % | | 12.49 | % | | | | 11.67 | % | | 16.54 | % | | |
Net interest margin | | 2.55 | % | | 3.53 | % | | | | 2.75 | % | | 3.50 | % | | |
Efficiency ratio - GAAP basis (2) | | 70.72 | % | | 50.66 | % | | | | 64.29 | % | | 49.08 | % | | |
Efficiency ratio - Non-GAAP basis (2) | | 60.91 | % | | 48.18 | % | | | | 59.42 | % | | 49.09 | % | | |
| | | | | | | | | | | | |
Per share data: | | | | | | | | | | | | |
Basic net income per common share | | $ | 0.46 | | $ | 0.75 | | (39) | % | | $ | 2.16 | | $ | 2.93 | | (26) | % |
Diluted net income per common share | | $ | 0.46 | | $ | 0.75 | | (38) | | | $ | 2.15 | | $ | 2.92 | | (26) | |
Weighted average diluted common shares | | 44,960,455 | | 44,780,560 | | — | | | 44,912,803 | | 45,098,073 | | — | |
Dividends declared per share | | $ | 0.34 | | $ | 0.34 | | — | | | $ | 1.02 | | $ | 1.02 | | — | |
Book value per common share | | $ | 34.26 | | $ | 32.52 | | 5 | | | $ | 34.26 | | $ | 32.52 | | 5 | |
Tangible book value per common share (1) | | $ | 25.80 | | $ | 23.90 | | 8 | | | $ | 25.80 | | $ | 23.90 | | 8 | |
Outstanding common shares | | 44,895,158 | | 44,644,269 | | 1 | | | 44,895,158 | | 44,644,269 | | 1 | |
| | | | | | | | | | | | |
Financial condition at period-end: | | | | | | | | | | | | |
Investment securities | | $ | 1,392,078 | | $ | 1,587,279 | | (12) | % | | $ | 1,392,078 | | $ | 1,587,279 | | (12) | % |
Loans | | 11,300,292 | | 11,218,813 | | 1 | | | 11,300,292 | | 11,218,813 | | 1 | |
| | | | | | | | | | | | |
Assets | | 14,135,085 | | 13,765,597 | | 3 | | | 14,135,085 | | 13,765,597 | | 3 | |
Deposits | | 11,151,012 | | 10,749,486 | | 4 | | | 11,151,012 | | 10,749,486 | | 4 | |
| | | | | | | | | | | | |
Stockholders' equity | | 1,537,914 | | 1,451,862 | | 6 | | | 1,537,914 | | 1,451,862 | | 6 | |
| | | | | | | | | | | | |
Capital ratios: | | | | | | | | | | | | |
Tier 1 leverage (3) | | 9.50 | % | | 9.33 | % | | | | 9.50 | % | | 9.33 | % | | |
Common equity tier 1 capital to risk-weighted assets (3) | | 10.83 | % | | 10.18 | % | | | | 10.83 | % | | 10.18 | % | | |
Tier 1 capital to risk-weighted assets (3) | | 10.83 | % | | 10.18 | % | | | | 10.83 | % | | 10.18 | % | | |
Total regulatory capital to risk-weighted assets (3) | | 14.85 | % | | 14.15 | % | | | | 14.85 | % | | 14.15 | % | | |
Tangible common equity to tangible assets (4) | | 8.42 | % | | 7.98 | % | | | | 8.42 | % | | 7.98 | % | | |
Average equity to average assets | | 10.92 | % | | 10.99 | % | | | | 10.84 | % | | 11.41 | % | | |
| | | | | | | | | | | | |
Credit quality ratios: | | | | | | | | | | | | |
Allowance for credit losses to loans | | 1.09 | % | | 1.14 | % | | | | 1.09 | % | | 1.14 | % | | |
Non-performing loans to total loans | | 0.46 | % | | 0.40 | % | | | | 0.46 | % | | 0.40 | % | | |
Non-performing assets to total assets | | 0.37 | % | | 0.33 | % | | | | 0.37 | % | | 0.33 | % | | |
Allowance for credit losses to non-performing loans | | 238.32 | % | | 288.50 | % | | | | 238.32 | % | | 288.50 | % | | |
Annualized net charge-offs/ (recoveries) to average loans (5) | | — | % | | (0.02) | % | | | | 0.02 | % | | — | % | | |
N/M - not meaningful
(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, merger, acquisition and disposal expense, severance expense, pension settlement expense and contingent payment expense from non-interest expense; and investment securities gains/ (losses) and gain on disposal of assets 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 September 30, 2023.
(4)The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding goodwill and other intangible assets into stockholders' equity after deducting goodwill and other 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 September 30, | | Nine Months Ended September 30, |
(Dollars in thousands) | | 2023 | | 2022 | | 2023 | | 2022 |
Core earnings (non-GAAP): | | | | | | | | |
Net income (GAAP) | | $ | 20,746 | | $ | 33,584 | | $ | 96,744 | | $ | 132,319 |
Plus/ (less) non-GAAP adjustments (net of tax)(1): | | | | | | | | |
Merger, acquisition and disposal expense | | — | | — | | — | | 796 |
Amortization of intangible assets | | 932 | | 1,076 | | 2,851 | | 3,284 |
| | | | | | | | |
Severance expense | | — | | — | | 1,445 | | — |
Pension settlement expense | | 6,088 | | — | | 6,088 | | — |
Gain on disposal of assets | | — | | 108 | | — | | (12,309) |
Investment securities gains | | — | | (2) | | — | | (36) |
Contingent payment expense | | — | | 929 | | 27 | | 929 |
Core earnings (Non-GAAP) | | $ | 27,766 | | $ | 35,695 | | $ | 107,155 | | $ | 124,983 |
| | | | | | | | |
Core earnings per diluted common share (non-GAAP): | | | | | | | | |
Weighted average common shares outstanding - diluted (GAAP) | | 44,960,455 | | 44,780,560 | | 44,912,803 | | 45,098,073 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Earnings per diluted common share (GAAP) | | $ | 0.46 | | $ | 0.75 | | $ | 2.15 | | $ | 2.92 |
Core earnings per diluted common share (non-GAAP) | | $ | 0.62 | | $ | 0.80 | | $ | 2.39 | | $ | 2.77 |
| | | | | | | | |
Core return on average assets (non-GAAP): | | | | | | | | |
Average assets (GAAP) | | $ | 14,086,342 | | $ | 13,521,595 | | $ | 14,043,925 | | $ | 13,033,256 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Return on average assets (GAAP) | | 0.58 | % | | 0.99 | % | | 0.92 | % | | 1.36 | % |
Core return on average assets (non-GAAP) | | 0.78 | % | | 1.05 | % | | 1.02 | % | | 1.28 | % |
| | | | | | | | |
Return/ Core return on average tangible common equity (non-GAAP): | | | | | | | | |
Net Income (GAAP) | | $ | 20,746 | | $ | 33,584 | | $ | 96,744 | | $ | 132,319 |
Plus: Amortization of intangible assets (net of tax) | | 932 | | 1,076 | | 2,851 | | 3,284 |
Net income before amortization of intangible assets | | $ | 21,678 | | $ | 34,660 | | $ | 99,595 | | $ | 135,603 |
| | | | | | | | |
Average total stockholders' equity (GAAP) | | $ | 1,538,553 | | $ | 1,486,427 | | $ | 1,522,153 | | $ | 1,486,920 |
Average goodwill | | (363,436) | | (363,436) | | (363,436) | | (367,190) |
Average other intangible assets, net | | (16,777) | | (22,187) | | (18,068) | | (23,774) |
Average tangible common equity (non-GAAP) | | $ | 1,158,340 | | $ | 1,100,804 | | $ | 1,140,649 | | $ | 1,095,956 |
| | | | | | | | |
Return on average tangible common equity (non-GAAP) | | 7.42 | % | | 12.49 | % | | 11.67 | % | | 16.54 | % |
Core return on average tangible common equity (non-GAAP) | | 9.51 | % | | 12.86 | % | | 12.56 | % | | 15.25 | % |
(1) Tax adjustments have been determined using the combined marginal federal and state rate of 25.37% and 25.47% for 2023 and 2022, respectively.
Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
(Dollars in thousands) | | 2023 | | 2022 | | 2023 | | 2022 |
Pre-tax pre-provision net income: | | | | | | | | |
Net income (GAAP) | | $ | 20,746 | | $ | 33,584 | | $ | 96,744 | | $ | 132,319 |
Plus/ (less) non-GAAP adjustments: | | | | | | | | |
Income tax expense | | 6,890 | | 11,588 | | 32,832 | | 44,275 |
Provision/ (credit) for credit losses | | 2,365 | | 18,890 | | (14,116) | | 23,571 |
Pre-tax pre-provision net income (non-GAAP) | | $ | 30,001 | | $ | 64,062 | | $ | 115,460 | | $ | 200,165 |
| | | | | | | | |
Efficiency ratio (GAAP): | | | | | | | | |
Non-interest expense | | $ | 72,471 | | $ | 65,780 | | $ | 207,912 | | $ | 192,918 |
| | | | | | | | |
Net interest income plus non-interest income | | $ | 102,472 | | $ | 129,842 | | $ | 323,372 | | $ | 393,083 |
| | | | | | | | |
Efficiency ratio (GAAP) | | 70.72% | | 50.66 | % | | 64.29 | % | | 49.08 | % |
| | | | | | | | |
Efficiency ratio (Non-GAAP): | | | | | | | | |
Non-interest expense | | $ | 72,471 | | $ | 65,780 | | $ | 207,912 | | $ | 192,918 |
Less non-GAAP adjustments: | | | | | | | | |
Amortization of intangible assets | | 1,245 | | 1,432 | | 3,820 | | 4,406 |
| | | | | | | | |
Merger, acquisition and disposal expense | | — | | 1 | | — | | 1,068 |
Severance expense | | — | | — | | 1,939 | | — |
Pension settlement expense | | 8,157 | | — | | 8,157 | | — |
Contingent payment expense | | — | | 1,247 | | 36 | | 1,247 |
Non-interest expense - as adjusted | | $ | 63,069 | | $ | 63,100 | | $ | 193,960 | | $ | 186,197 |
| | | | | | | | |
Net interest income plus non-interest income | | $ | 102,472 | | $ | 129,842 | | $ | 323,372 | | $ | 393,083 |
Plus non-GAAP adjustment: | | | | | | | | |
Tax-equivalent income | | 1,068 | | 951 | | 3,044 | | 2,809 |
Less/ (plus) non-GAAP adjustment: | | | | | | | | |
Investment securities gains | | — | | 2 | | — | | 48 |
Gain on disposal of assets | | — | | (183) | | — | | 16,516 |
Net interest income plus non-interest income - as adjusted | | $ | 103,540 | | $ | 130,974 | | $ | 326,416 | | $ | 379,328 |
| | | | | | | | |
Efficiency ratio (Non-GAAP) | | 60.91% | | 48.18 | % | | 59.42 | % | | 49.09 | % |
| | | | | | | | |
Tangible common equity ratio: | | | | | | | | |
Total stockholders' equity | | $ | 1,537,914 | | $ | 1,451,862 | | $ | 1,537,914 | | $ | 1,451,862 |
Goodwill | | (363,436) | | (363,436) | | (363,436) | | (363,436) |
Other intangible assets, net | | (16,035) | | (21,262) | | (16,035) | | (21,262) |
Tangible common equity | | $ | 1,158,443 | | $ | 1,067,164 | | $ | 1,158,443 | | $ | 1,067,164 |
| | | | | | | | |
Total assets | | $ | 14,135,085 | | $ | 13,765,597 | | $ | 14,135,085 | | $ | 13,765,597 |
Goodwill | | (363,436) | | (363,436) | | (363,436) | | (363,436) |
Other intangible assets, net | | (16,035) | | (21,262) | | (16,035) | | (21,262) |
Tangible assets | | $ | 13,755,614 | | $ | 13,380,899 | | $ | 13,755,614 | | $ | 13,380,899 |
| | | | | | | | |
Tangible common equity ratio | | 8.42% | | 7.98 | % | | 8.42 | % | | 7.98 | % |
| | | | | | | | |
Outstanding common shares | | 44,895,158 | | 44,644,269 | | 44,895,158 | | 44,644,269 |
Tangible book value per common share | | $ | 25.80 | | $ | 23.90 | | $ | 25.80 | | $ | 23.90 |
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
| | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | September 30, 2023 | | December 31, 2022 | | September 30, 2022 |
Assets | | | | | | |
Cash and due from banks | | $ | 80,314 | | | $ | 88,152 | | | $ | 88,780 | |
Federal funds sold | | 251 | | | 193 | | | 213 | |
Interest-bearing deposits with banks | | 637,026 | | | 103,887 | | | 169,815 | |
Cash and cash equivalents | | 717,591 | | | 192,232 | | | 258,808 | |
Residential mortgage loans held for sale (at fair value) | | 19,235 | | | 11,706 | | | 11,469 | |
Investments held-to-maturity (fair values of $194,411, $220,123 and $226,030 at September 30, 2023, December 31, 2022 and September 30, 2022, respectively) | | 241,464 | | | 259,452 | | | 265,648 | |
Investments available-for-sale (at fair value) | | 1,075,089 | | | 1,214,538 | | | 1,244,335 | |
Other investments, at cost | | 75,525 | | | 69,218 | | | 77,296 | |
Total loans | | 11,300,292 | | | 11,396,706 | | | 11,218,813 | |
Less: allowance for credit losses - loans | | (123,360) | | | (136,242) | | | (128,268) | |
Net loans | | 11,176,932 | | | 11,260,464 | | | 11,090,545 | |
Premises and equipment, net | | 72,312 | | | 67,070 | | | 64,703 | |
Other real estate owned | | 261 | | | 645 | | | 739 | |
Accrued interest receivable | | 45,100 | | | 41,172 | | | 37,074 | |
Goodwill | | 363,436 | | | 363,436 | | | 363,436 | |
Other intangible assets, net | | 16,035 | | | 19,855 | | | 21,262 | |
Other assets | | 332,105 | | | 333,331 | | | 330,282 | |
Total assets | | $ | 14,135,085 | | | $ | 13,833,119 | | | $ | 13,765,597 | |
| | | | | | |
Liabilities | | | | | | |
Noninterest-bearing deposits | | $ | 3,013,905 | | | $ | 3,673,300 | | | $ | 3,993,480 | |
Interest-bearing deposits | | 8,137,107 | | | 7,280,121 | | | 6,756,006 | |
Total deposits | | 11,151,012 | | | 10,953,421 | | | 10,749,486 | |
Securities sold under retail repurchase agreements | | 66,581 | | | 61,967 | | | 91,287 | |
Federal funds purchased | | — | | | 260,000 | | | 115,000 | |
Federal Reserve Bank borrowings | | 300,000 | | | — | | | — | |
Advances from FHLB | | 550,000 | | | 550,000 | | | 840,000 | |
Subordinated debt | | 370,653 | | | 370,205 | | | 370,056 | |
Total borrowings | | 1,287,234 | | | 1,242,172 | | | 1,416,343 | |
Accrued interest payable and other liabilities | | 158,925 | | | 153,758 | | | 147,906 | |
Total liabilities | | 12,597,171 | | | 12,349,351 | | | 12,313,735 | |
| | | | | | |
Stockholders' equity | | | | | | |
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 44,895,158, 44,657,054 and 44,644,269 at September 30, 2023, December 31, 2022 and September 30, 2022, respectively | | 44,895 | | | 44,657 | | | 44,644 | |
Additional paid in capital | | 740,999 | | | 734,273 | | | 732,239 | |
Retained earnings | | 887,512 | | | 836,789 | | | 818,049 | |
Accumulated other comprehensive loss | | (135,492) | | | (131,951) | | | (143,070) | |
Total stockholders' equity | | 1,537,914 | | | 1,483,768 | | | 1,451,862 | |
Total liabilities and stockholders' equity | | $ | 14,135,085 | | | $ | 13,833,119 | | | $ | 13,765,597 | |
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
(Dollars in thousands, except per share data) | | 2023 | | 2022 | | 2023 | | 2022 |
Interest income: | | | | | | | | |
Interest and fees on loans | | $ | 147,304 | | | $ | 121,327 | | | $ | 431,305 | | | $ | 327,042 | |
Interest on loans held for sale | | 238 | | | 161 | | | 697 | | | 504 | |
Interest on deposits with banks | | 6,371 | | | 774 | | | 13,979 | | | 1,245 | |
Interest and dividend income on investment securities: | | | | | | | | |
Taxable | | 6,682 | | | 5,735 | | | 20,538 | | | 14,472 | |
Tax-advantaged | | 1,811 | | | 2,422 | | | 5,376 | | | 7,100 | |
Interest on federal funds sold | | 5 | | | 3 | | | 13 | | | 4 | |
Total interest income | | 162,411 | | | 130,422 | | | 471,908 | | | 350,367 | |
Interest expense: | | | | | | | | |
Interest on deposits | | 63,102 | | | 9,490 | | | 155,215 | | | 15,578 | |
Interest on retail repurchase agreements and federal funds purchased | | 4,082 | | | 977 | | | 10,377 | | | 1,232 | |
Interest on advances from FHLB | | 6,200 | | | 3,049 | | | 21,623 | | | 3,066 | |
Interest on subordinated debt | | 3,946 | | | 3,946 | | | 11,839 | | | 10,130 | |
Total interest expense | | 77,330 | | | 17,462 | | | 199,054 | | | 30,006 | |
Net interest income | | 85,081 | | | 112,960 | | | 272,854 | | | 320,361 | |
Provision/ (credit) for credit losses | | 2,365 | | | 18,890 | | | (14,116) | | | 23,571 | |
Net interest income after provision/ (credit) for credit losses | | 82,716 | | | 94,070 | | | 286,970 | | | 296,790 | |
Non-interest income: | | | | | | | | |
Investment securities gains | | — | | | 2 | | | — | | | 48 | |
Gain on disposal of assets | | — | | | (183) | | | — | | | 16,516 | |
Service charges on deposit accounts | | 2,704 | | | 2,591 | | | 7,698 | | | 7,384 | |
Mortgage banking activities | | 1,682 | | | 1,566 | | | 4,744 | | | 5,347 | |
Wealth management income | | 9,391 | | | 8,867 | | | 27,414 | | | 27,302 | |
Insurance agency commissions | | — | | | — | | | — | | | 2,927 | |
Income from bank owned life insurance | | 845 | | | 693 | | | 3,003 | | | 2,191 | |
Bank card fees | | 450 | | | 438 | | | 1,315 | | | 3,916 | |
Other income | | 2,319 | | | 2,908 | | | 6,344 | | | 7,091 | |
Total non-interest income | | 17,391 | | | 16,882 | | | 50,518 | | | 72,722 | |
Non-interest expense: | | | | | | | | |
Salaries and employee benefits | | 44,853 | | | 40,126 | | | 124,710 | | | 119,049 | |
Occupancy expense of premises | | 4,609 | | | 4,759 | | | 14,220 | | | 14,527 | |
Equipment expenses | | 3,811 | | | 3,825 | | | 11,688 | | | 10,920 | |
Marketing | | 729 | | | 1,370 | | | 3,861 | | | 3,843 | |
Outside data services | | 2,819 | | | 2,509 | | | 8,186 | | | 7,492 | |
FDIC insurance | | 2,333 | | | 1,268 | | | 6,846 | | | 3,330 | |
Amortization of intangible assets | | 1,245 | | | 1,432 | | | 3,820 | | | 4,406 | |
Merger, acquisition and disposal expense | | — | | | 1 | | | — | | | 1,068 | |
Professional fees and services | | 4,509 | | | 2,207 | | | 12,354 | | | 6,596 | |
Other expenses | | 7,563 | | | 8,283 | | | 22,227 | | | 21,687 | |
Total non-interest expense | | 72,471 | | | 65,780 | | | 207,912 | | | 192,918 | |
Income before income tax expense | | 27,636 | | | 45,172 | | | 129,576 | | | 176,594 | |
Income tax expense | | 6,890 | | | 11,588 | | | 32,832 | | | 44,275 | |
Net income | | $ | 20,746 | | | $ | 33,584 | | | $ | 96,744 | | | $ | 132,319 | |
| | | | | | | | |
Net income per share amounts: | | | | | | | | |
Basic net income per common share | | $ | 0.46 | | | $ | 0.75 | | | $ | 2.16 | | | $ | 2.93 | |
Diluted net income per common share | | $ | 0.46 | | | $ | 0.75 | | | $ | 2.15 | | | $ | 2.92 | |
Dividends declared per share | | $ | 0.34 | | | $ | 0.34 | | | $ | 1.02 | | | $ | 1.02 | |
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2023 | | 2022 | | |
(Dollars in thousands, except per share data) | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | | |
Profitability for the quarter: | | | | | | | | | | | | | | | | |
Tax-equivalent interest income | | $ | 163,479 | | $ | 159,156 | | $ | 152,317 | | $ | 146,332 | | $ | 131,373 | | $ | 114,901 | | $ | 106,902 | | |
Interest expense | | 77,330 | | 67,679 | | 54,045 | | 38,657 | | 17,462 | | 7,959 | | 4,585 | | |
Tax-equivalent net interest income | | 86,149 | | 91,477 | | 98,272 | | 107,675 | | 113,911 | | 106,942 | | 102,317 | | |
Tax-equivalent adjustment | | 1,068 | | 1,006 | | 970 | | 1,032 | | 951 | | 992 | | 866 | | |
Provision/ (credit) for credit losses | | 2,365 | | 5,055 | | (21,536) | | 10,801 | | 18,890 | | 3,046 | | 1,635 | | |
Non-interest income | | 17,391 | | 17,176 | | 15,951 | | 14,297 | | 16,882 | | 35,245 | | 20,595 | | |
Non-interest expense | | 72,471 | | 69,136 | | 66,305 | | 64,375 | | 65,780 | | 64,991 | | 62,147 | | |
Income before income tax expense | | 27,636 | | 33,456 | | 68,484 | | 45,764 | | 45,172 | | 73,158 | | 58,264 | | |
Income tax expense | | 6,890 | | 8,711 | | 17,231 | | 11,784 | | 11,588 | | 18,358 | | 14,329 | | |
Net income | | $ | 20,746 | | $ | 24,745 | | $ | 51,253 | | $ | 33,980 | | $ | 33,584 | | $ | 54,800 | | $ | 43,935 | | |
GAAP financial performance: | | | | | | | | | | | | | | | | |
Return on average assets | | 0.58 | % | | 0.70 | % | | 1.49 | % | | 0.98 | % | | 0.99 | % | | 1.69 | % | | 1.42 | % | | |
Return on average common equity | | 5.35 | % | | 6.46 | % | | 13.93 | % | | 9.23 | % | | 8.96 | % | | 14.97 | % | | 11.83 | % | | |
Return on average tangible common equity | | 7.42 | % | | 8.93 | % | | 19.10 | % | | 12.91 | % | | 12.49 | % | | 20.83 | % | | 16.45 | % | | |
Net interest margin | | 2.55 | % | | 2.73 | % | | 2.99 | % | | 3.26 | % | | 3.53 | % | | 3.49 | % | | 3.49 | % | | |
Efficiency ratio - GAAP basis | | 70.72 | % | | 64.22 | % | | 58.55 | % | | 53.23 | % | | 50.66 | % | | 46.03 | % | | 50.92 | % | | |
Non-GAAP financial performance: | | | | | | | | | | | | | | | | |
Pre-tax pre-provision net income | | $ | 30,001 | | $ | 38,511 | | $ | 46,948 | | $ | 56,565 | | $ | 64,062 | | $ | 76,204 | | $ | 59,899 | | |
Core after-tax earnings | | $ | 27,766 | | $ | 27,136 | | $ | 52,253 | | $ | 35,322 | | $ | 35,695 | | $ | 44,238 | | $ | 45,050 | | |
Core return on average assets | | 0.78 | % | | 0.77 | % | | 1.52 | % | | 1.02 | % | | 1.05 | % | | 1.37 | % | | 1.45 | % | | |
Core return on average common equity | | 7.16 | % | | 7.09 | % | | 14.20 | % | | 9.60 | % | | 9.53 | % | | 12.09 | % | | 12.13 | % | | |
Core return on average tangible common equity | | 9.51 | % | | 9.43 | % | | 19.11 | % | | 13.02 | % | | 12.86 | % | | 16.49 | % | | 16.45 | % | | |
Core earnings per diluted common share | | $ | 0.62 | | $ | 0.60 | | $ | 1.16 | | $ | 0.79 | | $ | 0.80 | | $ | 0.98 | | $ | 0.99 | | |
Efficiency ratio - Non-GAAP basis | | 60.91 | % | | 60.68 | % | | 56.87 | % | | 51.46 | % | | 48.18 | % | | 49.79 | % | | 49.34 | % | | |
Per share data: | | | | | | | | | | | | |
Net income attributable to common shareholders | | $ | 20,719 | | $ | 24,712 | | $ | 51,084 | | $ | 33,866 | | $ | 33,470 | | $ | 54,606 | | $ | 43,667 | | |
Basic net income per common share | | $ | 0.46 | | $ | 0.55 | | $ | 1.14 | | $ | 0.76 | | $ | 0.75 | | $ | 1.21 | | $ | 0.97 | | |
Diluted net income per common share | | $ | 0.46 | | $ | 0.55 | | $ | 1.14 | | $ | 0.76 | | $ | 0.75 | | $ | 1.21 | | $ | 0.96 | | |
Weighted average diluted common shares | | 44,960,455 | | 44,888,759 | | 44,872,582 | | 44,828,827 | | 44,780,560 | | 45,111,693 | | 45,333,292 | | |
Dividends declared per share | | $ | 0.34 | | $ | 0.34 | | $ | 0.34 | | $ | 0.34 | | $ | 0.34 | | $ | 0.34 | | $ | 0.34 | | |
Non-interest income: | | | | | | | | | | | | | | | | |
Securities gains/ (losses) | | $ | — | | $ | — | | $ | — | | $ | (393) | | $ | 2 | | $ | 38 | | $ | 8 | | |
Gain/ (loss) on disposal of assets | | — | | — | | — | | — | | (183) | | 16,699 | | — | | |
Service charges on deposit accounts | | 2,704 | | 2,606 | | 2,388 | | 2,419 | | 2,591 | | 2,467 | | 2,326 | | |
Mortgage banking activities | | 1,682 | | 1,817 | | 1,245 | | 783 | | 1,566 | | 1,483 | | 2,298 | | |
Wealth management income | | 9,391 | | 9,031 | | 8,992 | | 8,472 | | 8,867 | | 9,098 | | 9,337 | | |
Insurance agency commissions | | — | | — | | — | | — | | — | | 812 | | 2,115 | | |
Income from bank owned life insurance | | 845 | | 1,251 | | 907 | | 950 | | 693 | | 703 | | 795 | | |
Bank card fees | | 450 | | 447 | | 418 | | 463 | | 438 | | 1,810 | | 1,668 | | |
Other income | | 2,319 | | 2,024 | | 2,001 | | 1,603 | | 2,908 | | 2,135 | | 2,048 | | |
Total non-interest income | | $ | 17,391 | | $ | 17,176 | | $ | 15,951 | | $ | 14,297 | | $ | 16,882 | | $ | 35,245 | | $ | 20,595 | | |
Non-interest expense: | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 44,853 | | $ | 40,931 | | $ | 38,926 | | $ | 39,455 | | $ | 40,126 | | $ | 39,550 | | $ | 39,373 | | |
Occupancy expense of premises | | 4,609 | | 4,764 | | 4,847 | | 4,728 | | 4,759 | | 4,734 | | 5,034 | | |
Equipment expenses | | 3,811 | | 3,760 | | 4,117 | | 3,859 | | 3,825 | | 3,559 | | 3,536 | | |
Marketing | | 729 | | 1,589 | | 1,543 | | 1,354 | | 1,370 | | 1,280 | | 1,193 | | |
Outside data services | | 2,819 | | 2,853 | | 2,514 | | 2,707 | | 2,509 | | 2,564 | | 2,419 | | |
FDIC insurance | | 2,333 | | 2,375 | | 2,138 | | 1,462 | | 1,268 | | 1,078 | | 984 | | |
Amortization of intangible assets | | 1,245 | | 1,269 | | 1,306 | | 1,408 | | 1,432 | | 1,466 | | 1,508 | | |
Merger, acquisition and disposal expense | | — | | — | | — | | — | | 1 | | 1,067 | | — | | |
Professional fees and services | | 4,509 | | 4,161 | | 3,684 | | 2,573 | | 2,207 | | 2,372 | | 2,017 | | |
Other expenses | | 7,563 | | 7,434 | | 7,230 | | 6,829 | | 8,283 | | 7,321 | | 6,083 | | |
Total non-interest expense | | $ | 72,471 | | $ | 69,136 | | $ | 66,305 | | $ | 64,375 | | $ | 65,780 | | $ | 64,991 | | $ | 62,147 | | |
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2023 | | 2022 | | |
(Dollars in thousands, except per share data) | | Q3 | | Q2 | | Q1 | | Q4 | | Q3 | | Q2 | | Q1 | | |
Balance sheets at quarter end: | | | | | | | | | | | | | | |
Commercial investor real estate loans | | $ | 5,137,694 | | $ | 5,131,210 | | $ | 5,167,456 | | $ | 5,130,094 | | $ | 5,066,843 | | $ | 4,761,658 | | $ | 4,388,275 | | |
Commercial owner-occupied real estate loans | | 1,760,384 | | 1,770,135 | | 1,769,928 | | 1,775,037 | | 1,743,724 | | 1,767,326 | | 1,692,253 | | |
Commercial AD&C loans | | 938,673 | | 1,045,742 | | 1,046,665 | | 1,090,028 | | 1,143,783 | | 1,094,528 | | 1,089,331 | | |
Commercial business loans | | 1,454,709 | | 1,423,614 | | 1,437,478 | | 1,455,885 | | 1,393,634 | | 1,353,380 | | 1,349,602 | | |
Residential mortgage loans | | 1,432,051 | | 1,385,743 | | 1,328,524 | | 1,287,933 | | 1,218,552 | | 1,147,577 | | 1,000,697 | | |
Residential construction loans | | 160,345 | | 190,690 | | 223,456 | | 224,772 | | 229,243 | | 235,486 | | 204,259 | | |
Consumer loans | | 416,436 | | 422,505 | | 421,734 | | 432,957 | | 423,034 | | 426,335 | | 419,911 | | |
Total loans | | 11,300,292 | | 11,369,639 | | 11,395,241 | | 11,396,706 | | 11,218,813 | | 10,786,290 | | 10,144,328 | | |
Allowance for credit losses - loans | | (123,360) | | (120,287) | | (117,613) | | (136,242) | | (128,268) | | (113,670) | | (110,588) | | |
Loans held for sale | | 19,235 | | 21,476 | | 16,262 | | 11,706 | | 11,469 | | 23,610 | | 17,537 | | |
Investment securities | | 1,392,078 | | 1,463,554 | | 1,528,336 | | 1,543,208 | | 1,587,279 | | 1,595,424 | | 1,586,441 | | |
| | | | | | | | | | | | | | | | |
Total assets | | 14,135,085 | | 13,994,545 | | 14,129,007 | | 13,833,119 | | 13,765,597 | | 13,303,009 | | 12,967,416 | | |
Noninterest-bearing demand deposits | | 3,013,905 | | 3,079,896 | | 3,228,678 | | 3,673,300 | | 3,993,480 | | 4,129,440 | | 4,039,797 | | |
Total deposits | | 11,151,012 | | 10,958,922 | | 11,075,991 | | 10,953,421 | | 10,749,486 | | 10,969,461 | | 10,852,794 | | |
Customer repurchase agreements | | 66,581 | | 74,510 | | 47,627 | | 61,967 | | 91,287 | | 110,744 | | 130,784 | | |
| | | | | | | | | | | | | | | | |
Total stockholders' equity | | 1,537,914 | | 1,539,032 | | 1,536,865 | | 1,483,768 | | 1,451,862 | | 1,477,169 | | 1,488,910 | | |
Quarterly average balance sheets: | | | | | | | | | | | | | | |
Commercial investor real estate loans | | $ | 5,125,459 | | $ | 5,146,632 | | $ | 5,136,204 | | $ | 5,082,697 | | $ | 4,898,683 | | $ | 4,512,937 | | $ | 4,220,246 | | |
Commercial owner-occupied real estate loans | | 1,769,717 | | 1,773,039 | | 1,769,680 | | 1,753,351 | | 1,755,891 | | 1,727,325 | | 1,683,557 | | |
Commercial AD&C loans | | 995,682 | | 1,057,205 | | 1,082,791 | | 1,136,780 | | 1,115,531 | | 1,096,369 | | 1,102,660 | | |
Commercial business loans | | 1,442,518 | | 1,441,489 | | 1,444,588 | | 1,373,565 | | 1,327,218 | | 1,334,350 | | 1,372,755 | | |
Residential mortgage loans | | 1,406,929 | | 1,353,809 | | 1,307,761 | | 1,251,829 | | 1,177,664 | | 1,070,836 | | 964,056 | | |
Residential construction loans | | 174,204 | | 211,590 | | 223,313 | | 231,318 | | 235,123 | | 221,031 | | 197,366 | | |
Consumer loans | | 421,189 | | 423,306 | | 424,122 | | 426,134 | | 422,963 | | 421,022 | | 424,859 | | |
Total loans | | 11,335,698 | | 11,407,070 | | 11,388,459 | | 11,255,674 | | 10,933,073 | | 10,383,870 | | 9,965,499 | | |
Loans held for sale | | 13,714 | | 17,480 | | 8,324 | | 10,901 | | 15,211 | | 12,744 | | 17,594 | | |
Investment securities | | 1,589,342 | | 1,639,324 | | 1,679,593 | | 1,717,455 | | 1,734,036 | | 1,686,181 | | 1,617,615 | | |
Interest-earning assets | | 13,444,117 | | 13,423,589 | | 13,316,165 | | 13,134,234 | | 12,833,758 | | 12,283,834 | | 11,859,803 | | |
Total assets | | 14,086,342 | | 14,094,653 | | 13,949,276 | | 13,769,472 | | 13,521,595 | | 12,991,692 | | 12,576,089 | | |
Noninterest-bearing demand deposits | | 3,041,101 | | 3,137,971 | | 3,480,433 | | 3,833,275 | | 3,995,702 | | 4,001,762 | | 3,758,732 | | |
Total deposits | | 11,076,724 | | 10,928,038 | | 11,049,991 | | 11,025,843 | | 10,740,999 | | 10,829,221 | | 10,542,029 | | |
Customer repurchase agreements | | 67,298 | | 58,382 | | 60,626 | | 74,797 | | 104,742 | | 122,728 | | 131,487 | | |
Total interest-bearing liabilities | | 9,332,617 | | 9,257,652 | | 8,806,720 | | 8,310,278 | | 7,892,230 | | 7,377,045 | | 7,163,641 | | |
Total stockholders' equity | | 1,538,553 | | 1,535,465 | | 1,491,929 | | 1,460,254 | | 1,486,427 | | 1,468,036 | | 1,506,516 | | |
Financial measures: | | | | | | | | | | | | | | | | |
Average equity to average assets | | 10.92 | % | | 10.89 | % | | 10.70 | % | | 10.61 | % | | 10.99 | % | | 11.30 | % | | 11.98 | % | | |
Average investment securities to average earning assets | | 11.82 | % | | 12.21 | % | | 12.61 | % | | 13.08 | % | | 13.51 | % | | 13.73 | % | | 13.64 | % | | |
Average loans to average earning assets | | 84.32 | % | | 84.98 | % | | 85.52 | % | | 85.70 | % | | 85.19 | % | | 84.53 | % | | 84.03 | % | | |
Loans to assets | | 79.94 | % | | 81.24 | % | | 80.65 | % | | 82.39 | % | | 81.50 | % | | 81.08 | % | | 78.23 | % | | |
Loans to deposits | | 101.34 | % | | 103.75 | % | | 102.88 | % | | 104.05 | % | | 104.37 | % | | 98.33 | % | | 93.47 | % | | |
Assets under management | | $ | 5,536,499 | | $ | 5,742,888 | | $ | 5,477,560 | | $ | 5,255,306 | | $ | 4,969,092 | | $ | 5,171,321 | | $ | 5,793,787 | | |
Capital measures: | | | | | | | | | | | | | | | | |
Tier 1 leverage (1) | | 9.50 | % | | 9.42 | % | | 9.44 | % | | 9.33 | % | | 9.33 | % | | 9.53 | % | | 9.66 | % | | |
Common equity tier 1 capital to risk-weighted assets (1) | | 10.83 | % | | 10.65 | % | | 10.53 | % | | 10.23 | % | | 10.18 | % | | 10.42 | % | | 10.78 | % | | |
Tier 1 capital to risk-weighted assets (1) | | 10.83 | % | | 10.65 | % | | 10.53 | % | | 10.23 | % | | 10.18 | % | | 10.42 | % | | 10.78 | % | | |
Total regulatory capital to risk-weighted assets (1) | | 14.85 | % | | 14.60 | % | | 14.43 | % | | 14.20 | % | | 14.15 | % | | 14.46 | % | | 15.02 | % | | |
Book value per common share | | $ | 34.26 | | $ | 34.31 | | $ | 34.37 | | $ | 33.23 | | $ | 32.52 | | $ | 33.10 | | $ | 32.97 | | |
Outstanding common shares | | 44,895,158 | | 44,862,369 | | 44,712,497 | | 44,657,054 | | 44,644,269 | | 44,629,697 | | 45,162,908 | | |
(1) Estimated ratio at September 30, 2023.
Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2023 | | 2022 | | |
(Dollars in thousands) | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, | | |
Non-performing assets: | | | | | | | | | | | | | | | | |
Loans 90 days past due: | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | |
Commercial investor real estate | | $ | — | | | $ | — | | | $ | 215 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | |
Commercial owner-occupied real estate | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | |
Commercial AD&C | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | |
Commercial business | | 415 | | | 29 | | | 3,002 | | | 1,002 | | | 1,966 | | | — | | | — | | | |
Residential real estate: | | | | | | | | | | | | | | | | |
Residential mortgage | | — | | | 692 | | | 352 | | | — | | | 167 | | | 353 | | | 296 | | | |
Residential construction | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | |
Consumer | | — | | | — | | | — | | | — | | | 34 | | | — | | | — | | | |
Total loans 90 days past due | | 415 | | | 721 | | | 3,569 | | | 1,002 | | | 2,167 | | | 353 | | | 296 | | | |
Non-accrual loans: | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | |
Commercial investor real estate | | 20,108 | | | 20,381 | | | 15,451 | | | 9,943 | | | 14,038 | | | 11,245 | | | 11,743 | | | |
Commercial owner-occupied real estate | | 4,744 | | | 4,846 | | | 4,949 | | | 5,019 | | | 6,294 | | | 7,869 | | | 8,083 | | | |
Commercial AD&C | | 1,422 | | | 569 | | | — | | | — | | | — | | | 1,353 | | | 1,081 | | | |
Commercial business | | 9,671 | | | 9,393 | | | 9,443 | | | 7,322 | | | 7,198 | | | 7,542 | | | 8,357 | | | |
Residential real estate: | | | | | | | | | | | | | | | | |
Residential mortgage | | 10,766 | | | 10,153 | | | 8,935 | | | 7,439 | | | 7,514 | | | 7,305 | | | 8,148 | | | |
Residential construction | | 449 | | | — | | | — | | | — | | | — | | | 1 | | | 51 | | | |
Consumer | | 4,187 | | | 3,396 | | | 4,900 | | | 5,059 | | | 5,173 | | | 5,692 | | | 6,406 | | | |
Total non-accrual loans | | 51,347 | | | 48,738 | | | 43,678 | | | 34,782 | | | 40,217 | | | 41,007 | | | 43,869 | | | |
Total restructured loans - accruing (1) | | — | | | — | | | — | | | 3,575 | | | 2,077 | | | 2,119 | | | 2,161 | | | |
Total non-performing loans | | 51,762 | | | 49,459 | | | 47,247 | | | 39,359 | | | 44,461 | | | 43,479 | | | 46,326 | | | |
Other assets and other real estate owned (OREO) | | 261 | | | 611 | | | 645 | | | 645 | | | 739 | | | 739 | | | 1,034 | | | |
Total non-performing assets | | $ | 52,023 | | | $ | 50,070 | | | $ | 47,892 | | | $ | 40,004 | | | $ | 45,200 | | | $ | 44,218 | | | $ | 47,360 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended, |
(Dollars in thousands) | | September 30, 2023 | | June 30, 2023 | | March 31, 2023 | | December 31, 2022 | | September 30, 2022 | | June 30, 2022 | | March 31, 2022 | | |
Analysis of non-accrual loan activity: | | | | | | | | | | | | | | | | |
Balance at beginning of period | | $ | 48,738 | | $ | 43,678 | | $ | 34,782 | | $ | 40,217 | | $ | 41,007 | | $ | 43,869 | | $ | 46,086 | | |
| | | | | | | | | | | | | | | | |
Non-accrual balances transferred to OREO | | — | | — | | — | | — | | — | | — | | — | | |
Non-accrual balances charged-off | | (183) | | (2,049) | | (126) | | (22) | | (197) | | (376) | | (265) | | |
Net payments or draws | | (1,545) | | (1,654) | | (10,212) | | (9,535) | | (3,509) | | (3,234) | | (2,787) | | |
Loans placed on non-accrual | | 4,967 | | 9,276 | | 19,714 | | 5,467 | | 4,212 | | 948 | | 1,503 | | |
Non-accrual loans brought current | | (630) | | (513) | | (480) | | (1,345) | | (1,296) | | (200) | | (668) | | |
Balance at end of period | | $ | 51,347 | | $ | 48,738 | | $ | 43,678 | | $ | 34,782 | | $ | 40,217 | | $ | 41,007 | | $ | 43,869 | | |
| | | | | | | | | | | | | | | | |
Analysis of allowance for credit losses - loans: | | | | | | | | | | | | | | | | |
Balance at beginning of period | | $ | 120,287 | | $ | 117,613 | | $ | 136,242 | | $ | 128,268 | | $ | 113,670 | | $ | 110,588 | | $ | 109,145 | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Provision/ (credit) for credit losses - loans | | 3,171 | | 4,454 | | (18,945) | | 7,907 | | 14,092 | | 3,046 | | 1,635 | | |
Less loans charged-off, net of recoveries: | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | |
Commercial investor real estate | | (3) | | (14) | | (5) | | (1) | | — | | (300) | | (19) | | |
Commercial owner-occupied real estate | | (25) | | (27) | | (26) | | (27) | | (10) | | (12) | | — | | |
Commercial AD&C | | — | | — | | — | | — | | — | | — | | — | | |
Commercial business | | 15 | | 363 | | (127) | | (13) | | (512) | | 331 | | 111 | | |
Residential real estate: | | | | | | | | | | | | | | | | |
Residential mortgage | | (4) | | 35 | | 21 | | (50) | | (8) | | (9) | | 120 | | |
Residential construction | | — | | — | | — | | — | | (3) | | (5) | | — | | |
Consumer | | 115 | | 1,423 | | (179) | | 24 | | 27 | | (41) | | (20) | | |
Net charge-offs/ (recoveries) | | 98 | | 1,780 | | (316) | | (67) | | (506) | | (36) | | 192 | | |
Balance at the end of period | | $ | 123,360 | | $ | 120,287 | | $ | 117,613 | | $ | 136,242 | | $ | 128,268 | | $ | 113,670 | | $ | 110,588 | | |
| | | | | | | | | | | | | | | | |
Asset quality ratios: | | | | | | | | | | | | | | | | |
Non-performing loans to total loans | | 0.46 | % | | 0.44 | % | | 0.41 | % | | 0.35 | % | | 0.40 | % | | 0.40 | % | | 0.46 | % | | |
Non-performing assets to total assets | | 0.37 | % | | 0.36 | % | | 0.34 | % | | 0.29 | % | | 0.33 | % | | 0.33 | % | | 0.37 | % | | |
Allowance for credit losses to loans | | 1.09 | % | | 1.06 | % | | 1.03 | % | | 1.20 | % | | 1.14 | % | | 1.05 | % | | 1.09 | % | | |
Allowance for credit losses to non-performing loans | | 238.32 | % | | 243.21 | % | | 248.93 | % | | 346.15 | % | | 288.50 | % | | 261.44 | % | | 238.72 | % | | |
Annualized net charge-offs/ (recoveries) to average loans | | — | % | | 0.06 | % | | (0.01) | % | | — | % | | (0.02) | % | | — | % | | 0.01 | % | | |
(1) Effective January 1, 2023, the Company adopted ASU 2022-02, which eliminated the accounting and recognition of troubled debt restructurings ("TDRs").
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, |
| | 2023 | | 2022 |
(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 | | $ | 5,125,459 | | | $ | 60,482 | | | 4.68 | % | | $ | 4,898,683 | | | $ | 51,463 | | | 4.17 | % |
Commercial owner-occupied real estate loans | | 1,769,717 | | | 20,865 | | | 4.68 | | | 1,755,891 | | | 20,284 | | | 4.58 | |
Commercial AD&C loans | | 995,682 | | | 20,503 | | | 8.17 | | | 1,115,531 | | | 15,501 | | | 5.51 | |
Commercial business loans | | 1,442,518 | | | 23,343 | | | 6.42 | | | 1,327,218 | | | 17,196 | | | 5.14 | |
Total commercial loans | | 9,333,376 | | | 125,193 | | | 5.32 | | | 9,097,323 | | | 104,444 | | | 4.55 | |
Residential mortgage loans | | 1,406,929 | | | 12,550 | | | 3.57 | | | 1,177,664 | | | 9,980 | | | 3.39 | |
Residential construction loans | | 174,204 | | | 1,680 | | | 3.83 | | | 235,123 | | | 1,845 | | | 3.11 | |
Consumer loans | | 421,189 | | | 8,491 | | | 8.00 | | | 422,963 | | | 5,531 | | | 5.19 | |
Total residential and consumer loans | | 2,002,322 | | | 22,721 | | | 4.52 | | | 1,835,750 | | | 17,356 | | | 3.77 | |
Total loans (2) | | 11,335,698 | | | 147,914 | | | 5.18 | | | 10,933,073 | | | 121,800 | | | 4.42 | |
Loans held for sale | | 13,714 | | | 238 | | | 6.93 | | | 15,211 | | | 161 | | | 4.24 | |
Taxable securities | | 1,239,564 | | | 6,682 | | | 2.16 | | | 1,251,599 | | | 5,735 | | | 1.83 | |
Tax-advantaged securities | | 349,778 | | | 2,269 | | | 2.59 | | | 482,437 | | | 2,900 | | | 2.40 | |
Total investment securities (3) | | 1,589,342 | | | 8,951 | | | 2.25 | | | 1,734,036 | | | 8,635 | | | 1.99 | |
Interest-bearing deposits with banks | | 505,017 | | | 6,371 | | | 5.00 | | | 150,992 | | | 774 | | | 2.03 | |
Federal funds sold | | 346 | | | 5 | | | 5.38 | | | 446 | | | 3 | | | 2.30 | |
Total interest-earning assets | | 13,444,117 | | | 163,479 | | | 4.83 | | | 12,833,758 | | | 131,373 | | | 4.07 | |
| | | | | | | | | | | | |
Less: allowance for credit losses - loans | | (122,348) | | | | | | | (114,512) | | | | | |
Cash and due from banks | | 93,354 | | | | | | | 93,327 | | | | | |
Premises and equipment, net | | 71,956 | | | | | | | 64,039 | | | | | |
Other assets | | 599,263 | | | | | | | 644,983 | | | | | |
Total assets | | $ | 14,086,342 | | | | | | | $ | 13,521,595 | | | | | |
| | | | | | | | | | | | |
Liabilities and Stockholders' Equity | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 1,419,934 | | | $ | 4,229 | | | 1.18 | % | | $ | 1,444,801 | | | $ | 941 | | | 0.26 | % |
Regular savings deposits | | 861,634 | | | 5,571 | | | 2.57 | | | 555,057 | | | 21 | | | 0.02 | |
Money market savings deposits | | 2,866,744 | | | 25,122 | | | 3.48 | | | 3,202,507 | | | 5,281 | | | 0.65 | |
Time deposits | | 2,887,311 | | | 28,180 | | | 3.87 | | | 1,542,932 | | | 3,247 | | | 0.83 | |
Total interest-bearing deposits | | 8,035,623 | | | 63,102 | | | 3.12 | | | 6,745,297 | | | 9,490 | | | 0.56 | |
Repurchase agreements | | 67,298 | | | 356 | | | 2.10 | | | 104,742 | | | 30 | | | 0.11 | |
Federal funds purchased and Federal Reserve Bank borrowings | | 300,435 | | | 3,726 | | | 4.92 | | | 158,211 | | | 947 | | | 2.37 | |
Advances from FHLB | | 558,696 | | | 6,200 | | | 4.40 | | | 514,022 | | | 3,049 | | | 2.35 | |
Subordinated debt | | 370,565 | | | 3,946 | | | 4.26 | | | 369,958 | | | 3,946 | | | 4.27 | |
Total borrowings | | 1,296,994 | | | 14,228 | | | 4.35 | | | 1,146,933 | | | 7,972 | | | 2.76 | |
Total interest-bearing liabilities | | 9,332,617 | | | 77,330 | | | 3.29 | | | 7,892,230 | | | 17,462 | | | 0.88 | |
| | | | | | | | | | | | |
Noninterest-bearing demand deposits | | 3,041,101 | | | | | | | 3,995,702 | | | | | |
Other liabilities | | 174,071 | | | | | | | 147,236 | | | | | |
Stockholders' equity | | 1,538,553 | | | | | | | 1,486,427 | | | | | |
Total liabilities and stockholders' equity | | $ | 14,086,342 | | | | | | | $ | 13,521,595 | | | | | |
| | | | | | | | | | | | |
Tax-equivalent net interest income and spread | | | | $ | 86,149 | | | 1.54 | % | | | | $ | 113,911 | | | 3.19 | % |
Less: tax-equivalent adjustment | | | | 1,068 | | | | | | | 951 | | | |
Net interest income | | | | $ | 85,081 | | | | | | | $ | 112,960 | | | |
| | | | | | | | | | | | |
Interest income/earning assets | | | | | | 4.83 | % | | | | | | 4.07 | % |
Interest expense/earning assets | | | | | | 2.28 | | | | | | | 0.54 | |
Net interest margin | | | | | | 2.55 | % | | | | | | 3.53 | % |
(1)Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.37% and 25.47% for 2023 and 2022, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.1 million and $1.0 million in 2023 and 2022, 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
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2023 | | 2022 |
(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 | | $ | 5,136,059 | | | $ | 177,067 | | | 4.61 | % | | $ | 4,546,440 | | | $ | 138,245 | | | 4.07 | % |
Commercial owner-occupied real estate loans | | 1,770,812 | | | 61,038 | | | 4.61 | | | 1,722,522 | | | 58,126 | | | 4.51 | |
Commercial AD&C loans | | 1,044,907 | | | 61,005 | | | 7.81 | | | 1,104,901 | | | 37,821 | | | 4.58 | |
Commercial business loans | | 1,442,858 | | | 68,258 | | | 6.33 | | | 1,344,608 | | | 49,370 | | | 4.91 | |
Total commercial loans | | 9,394,636 | | | 367,368 | | | 5.23 | | | 8,718,471 | | | 283,562 | | | 4.35 | |
Residential mortgage loans | | 1,356,530 | | | 35,925 | | | 3.53 | | | 1,071,634 | | | 26,632 | | | 3.31 | |
Residential construction loans | | 202,856 | | | 5,302 | | | 3.49 | | | 217,978 | | | 5,112 | | | 3.14 | |
Consumer loans | | 422,861 | | | 24,403 | | | 7.72 | | | 422,941 | | | 13,112 | | | 4.14 | |
Total residential and consumer loans | | 1,982,247 | | | 65,630 | | | 4.42 | | | 1,712,553 | | | 44,856 | | | 3.50 | |
Total loans (2) | | 11,376,883 | | | 432,998 | | | 5.09 | | | 10,431,024 | | | 328,418 | | | 4.21 | |
Loans held for sale | | 13,192 | | | 697 | | | 7.04 | | | 15,174 | | | 504 | | | 4.43 | |
Taxable securities | | 1,275,407 | | | 20,538 | | | 2.15 | | | 1,204,240 | | | 14,472 | | | 1.60 | |
Tax-advantaged securities | | 360,348 | | | 6,727 | | | 2.49 | | | 475,463 | | | 8,533 | | | 2.39 | |
Total investment securities (3) | | 1,635,755 | | | 27,265 | | | 2.22 | | | 1,679,703 | | | 23,005 | | | 1.83 | |
Interest-bearing deposits with banks | | 368,829 | | | 13,979 | | | 5.07 | | | 202,882 | | | 1,245 | | | 0.82 | |
Federal funds sold | | 433 | | | 13 | | | 4.00 | | | 581 | | | 4 | | | 0.91 | |
Total interest-earning assets | | 13,395,092 | | | 474,952 | | | 4.74 | | | 12,329,364 | | | 353,176 | | | 3.83 | |
| | | | | | | | | | | | |
Less: allowance for credit losses - loans | | (125,558) | | | | | | | (112,384) | | | | | |
Cash and due from banks | | 94,960 | | | | | | | 81,673 | | | | | |
Premises and equipment, net | | 70,130 | | | | | | | 62,510 | | | | | |
Other assets | | 609,301 | | | | | | | 672,093 | | | | | |
Total assets | | $ | 14,043,925 | | | | | | | $ | 13,033,256 | | | | | |
| | | | | | | | | | | | |
Liabilities and Stockholders' Equity | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 1,413,876 | | | $ | 10,465 | | | 0.99 | % | | $ | 1,477,956 | | | $ | 1,513 | | | 0.14 | % |
Regular savings deposits | | 660,211 | | | 7,831 | | | 1.59 | | | 553,982 | | | 62 | | | 0.02 | |
Money market savings deposits | | 3,067,810 | | | 68,976 | | | 3.01 | | | 3,334,534 | | | 7,403 | | | 0.30 | |
Time deposits | | 2,658,225 | | | 67,943 | | | 3.42 | | | 1,418,740 | | | 6,600 | | | 0.62 | |
Total interest-bearing deposits | | 7,800,122 | | | 155,215 | | | 2.66 | | | 6,785,212 | | | 15,578 | | | 0.31 | |
Repurchase agreements | | 62,126 | | | 561 | | | 1.21 | | | 119,554 | | | 104 | | | 0.12 | |
Federal funds purchased and Federal Reserve Bank borrowings | | 264,580 | | | 9,816 | | | 4.96 | | | 85,983 | | | 1,128 | | | 1.75 | |
Advances from FHLB | | 637,015 | | | 21,623 | | | 4.54 | | | 174,493 | | | 3,066 | | | 2.35 | |
Subordinated debt | | 370,412 | | | 11,839 | | | 4.26 | | | 315,065 | | | 10,130 | | | 4.29 | |
Total borrowings | | 1,334,133 | | | 43,839 | | | 4.39 | | | 695,095 | | | 14,428 | | | 2.78 | |
Total interest-bearing liabilities | | 9,134,255 | | | 199,054 | | | 2.91 | | | 7,480,307 | | | 30,006 | | | 0.54 | |
| | | | | | | | | | | | |
Noninterest-bearing demand deposits | | 3,218,226 | | | | | | | 3,919,600 | | | | | |
Other liabilities | | 169,291 | | | | | | | 146,429 | | | | | |
Stockholders' equity | | 1,522,153 | | | | | | | 1,486,920 | | | | | |
Total liabilities and stockholders' equity | | $ | 14,043,925 | | | | | | | $ | 13,033,256 | | | | | |
| | | | | | | | | | | | |
Tax-equivalent net interest income and spread | | | | $ | 275,898 | | | 1.83 | % | | | | $ | 323,170 | | | 3.29 | % |
Less: tax-equivalent adjustment | | | | 3,044 | | | | | | | 2,809 | | | |
Net interest income | | | | $ | 272,854 | | | | | | | $ | 320,361 | | | |
| | | | | | | | | | | | |
Interest income/earning assets | | | | | | 4.74 | % | | | | | | 3.83 | % |
Interest expense/earning assets | | | | | | 1.99 | | | | | | | 0.33 | |
Net interest margin | | | | | | 2.75 | % | | | | | | 3.50 | % |
(1)Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.37% and 25.47% for 2023 and 2022, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $3.0 million and $2.8 million in 2023 and 2022, respectively.
(2)Non-accrual loans are included in the average balances.
(3)Available-for-sale investments are presented at amortized cost.
3rd Quarter 2023 Earnings Presentation October 24, 2023 1
2 Subtitle Copy Sandy Spring Bancorp’s forward-looking statements are subject to significant risks and uncertainties that may cause actual results to differ materially from those in such statements. These risks and uncertainties include, but are not limited to, the risks identified in our quarterly and annual reports and the following: changes in general business and economic conditions nationally or in the markets that we serve; changes in consumer and business confidence, investor sentiment, or consumer spending or savings behavior; changes in the level of inflation; changes in the demand for loans, deposits and other financial services that we provide; the possibility that future credit losses may be higher than currently expected; the impact of the interest rate environment on our business, financial condition and results of operations; the impact of compliance with changes in laws, regulations and regulatory interpretations, including changes in income taxes; changes in credit ratings assigned to us or our subsidiaries; the ability to realize benefits and cost savings from, and limit any unexpected liabilities associated with, any business combinations; competitive pressures among financial services companies; the ability to attract, develop and retain qualified employees; our ability to maintain the security of our data processing and information technology systems; the impact of changes in accounting policies, including the introduction of new accounting standards; the impact of judicial or regulatory proceedings; the impact of fiscal and governmental policies of the United States federal government; the impact of health emergencies, epidemics or pandemics; the effects of climate change; and the impact of natural disasters, extreme weather events, military conflict, terrorism or other geopolitical events. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2022, 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 its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov. Forward Looking Statements 2
3 Subtitle Copy 3 Quarterly Highlights Source: Company documents 1) Non-GAAP financial measure; see reconciliation to most directly comparable GAAP measure in “Appendix – Reconciliation of non-GAAP Financial Measures” 2) Excludes merger, acquisition and disposal expense, amortization of intangible assets, severance expense, pension settlement expense, contingent payment expense, gain on disposal of assets and investment securities gains (losses) Profitability • Net income of $20.7 million ($0.46 per diluted common share) compared to $33.6 million ($0.75 per diluted common share) for the prior year quarter, and $24.7 million ($0.55 per diluted common share) for the previous quarter. • Core earnings(1)(2) of $27.8 million ($0.62 per diluted common share) compared to $35.7 million ($0.80 per diluted common share) for the prior year quarter, and $27.1 million ($0.60 per diluted common share) for the previous quarter. • GAAP efficiency ratio was 70.72% compared to 50.66% for the prior year quarter, and 64.22% for the previous quarter . The non- GAAP efficiency ratio(1)(2) was 60.91% compared to 48.18% for the prior year quarter, and 60.68% for the previous quarter. Income Statement • Net interest margin of 2.55%, compared to 3.53% for the same quarter of 2022, and 2.73% for the previous quarter. • Pre-tax pre-provision net income(1) was $30.0 million compared to $38.5 million the previous quarter and $64.1 million for the prior year quarter. • Provision for credit losses was $2.4 million as compared to $5.1 million for the previous quarter and $18.9 million for the prior year quarter. • Non-interest income was level compared to the previous quarter and up 3% from the prior year quarter. • Non-interest expense increased 5% and 10% from the linked quarter and the prior year quarter, respectively. After excluding $8.2 million pension settlement expense incurred during the current quarter, non-interest expense declined 7% and 2% from the previous quarter and the prior year quarter, respectively. Balance Sheet • Total assets of $14.1 billion, up 1% from the previous quarter. Total assets up 3% year-over-year. • Total loans declined 1% to $11.3 billion compared to the previous quarter and grew 1% from the prior year quarter. Total commercial real estate and business loans were unchanged quarter-over-quarter, while residential mortgage loans grew 3%. • Deposits up 2% from the previous quarter. Noninterest-bearing deposits down 2% and interest-bearing deposits were up 3%. Asset Quality • Non-performing loans to total loans remained at low levels at 0.46% compared to 0.44% for the previous quarter and 0.40% for the prior year quarter. Capital • Risk-based capital ratio of 14.85%, common equity tier 1 risk-based capital ratio of 10.83%, tier 1 risk-based capital ratio of 10.83%, and tier 1 leverage ratio of 9.50%.
4 Subtitle Copy 3rd Quarter 2023 Financial Performance 4
5 Subtitle Copy Profitability 5
6 Subtitle Copy Profitability Trends Diluted Earnings Per Share f Source: Company documents 1) Non-GAAP financial measure; see reconciliation to most directly comparable GAAP measure in “Appendix – Reconciliation of non-GAAP Financial Measures” 6 Return on Average Assets Return on Average Common Equity Diluted Core Earnings Per Share(1) $0.75 $0.76 $1.14 $0.55 $0.46 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 $0.80 $0.79 $1.16 $0.60 $0.62 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 0.99% 0.98% 1.49% 0.70% 0.58% 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 8.96% 9.23% 13.93% 6.46% 5.35% 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023
7 Subtitle Copy Profitability Trends Net Income Provision (Credit) for Credit Losses Pre-Tax Pre-Provision Net Income(1) 7 Source: Company documents 1) Non-GAAP financial measure; see reconciliation to most directly comparable GAAP measure in “Appendix – Reconciliation of non-GAAP Financial Measures” • Lower net interest income coupled with the one-time pension settlement expense of $8.2 million drove the decline in net income. These factors were partially offset by lower provision for credit losses and a decline in salaries and employee benefits expense (after excluding the impact of the pension settlement expense). (Do lla rs in m illio n s ) $33.6 $34.0 $51.3 $24.7 $20.7 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 (Do lla rs in m illio n s ) $64.1 $56.6 $46.9 $38.5 $30.0 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 (Do lla rs in m illio n s ) $18.9 $10.8 $ (21.5) $5.1 $2.4 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 Core Earnings(1) (Do lla rs in m illio n s ) $35.7 $35.3 $52.3 $27.1 $27.8 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023
8 Subtitle Copy Income Statement 8
Net Interest Income Net Interest Income & Net Interest Margin Source: Company documents 9 • The net interest margin was 2.55% for the current quarter compared to 2.73% for Q2 2023. • Higher rates paid on interest-bearing liabilities, driven by higher market rates, competition for deposits, and customer movement of excess funds out of noninterest-bearing accounts, outpaced the increase in yield on interest-earning assets. • Compared to the prior year quarter, the yield on interest- earning assets increased 76 bps and the rate paid on interest- bearing liabilities rose 241 bps resulting in margin compression of 98 basis points. (Do lla rs in th o u s a n d s ) $11 2,960 $1 06,643 $97,302 $90,471 $85,0813.53% 3.26% 2.99% 2.73% 2.55% Ne t Inte re s t Income Ne t Inte re s t Ma rg in 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023
Average Balance Sheet Source: Company documents 10 Average Loans Average Deposits Average Investments Average Borrowings (Do lla rs in m illio n s ) $1 0,933 $11 ,256 $11 ,388 $11 ,407 $11 ,336 4.42% 4.78% 4.99% 5.09% 5.1 8% Ave ra ge Loa ns Yie ld on Ave ra ge Loa ns (Gros s ) 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 (Do lla rs in m illio n s ) $1 ,734 $1 ,71 7 $1 ,680 $1 ,639 $1 ,589 1 .99% 2.11 % 2.20% 2.22% 2.25% Ave ra ge Inve s tme nts Yie ld on Ave ra ge Inve s tme nts 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 (Do lla rs in m illio n s ) $1 0,741 $11 ,026 $11 ,050 $1 0,928 $11 ,077 0.35% 1 .02% 1 .50% 1 .88% 2.26% Ave ra ge De pos its Yie ld on Ave ra ge De pos its 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 (Do lla rs in m illio n s ) $1 ,1 47 $1 ,11 8 $1 ,237 $1 ,468 $1 ,297 2.76% 3.68% 4.35% 4.47% 4.35% Ave ra ge Borrowings Yie ld on Ave ra ge Borrowings 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023
Source: Company documents 1) QTD as of September 30, 2023 Revenue Composition Revenue Composition (1) Non-interest Income 11 • Interchange fee limitation effective 7/1/2022 (Durbin Amendment) • BOLI income decreased due to mortality proceeds received in prior quarter • Wealth management income increase compared to the prior quarter due to stronger market conditions in Q3 2023 Wealth Management 54%Mortgage Banking 1 0% S ervices Charges on Deposits 1 5% Other 1 3% Bank Card Revenue 3% BOLI Income 5% (Dollars in thousands) $ Change vs 3Q 2023 2Q 2023 3Q 2022 Investment Securities Gains/ Losses $ — $ — $ (2) Gain on Disposal of Assets — — 183 Service Charges on Deposits 2,704 98 113 Mortgage Banking 1,682 (135) 116 Wealth Management 9,391 360 524 BOLI Income 845 (406) 152 Bank Card Revenue 450 3 12 Other Income 2,319 295 (589) Total non-interest income $ 17,391 $ 215 $ 509 Total: $17.4 Million
Non-interest Expense Non-interest Expense 12 • Higher salaries and benefits expense due to pension settlement expense of $8.2 million during the current quarter associated with the termination of the pension plan • FDIC assessment increased due to an increase in the assessment rate imposed by the FDIC on all banks effective Q1 2023 • Professional fees increased primarily due to the Company's investments in technology projects Efficiency Ratio (%) Source: Company documents 1) Non-GAAP financial measure; see reconciliation to most directly comparable GAAP measure in “Appendix – Reconciliation of non-GAAP Financial Measures” (Dollars in thousands) $ Change vs 3Q 2023 2Q 2023 3Q 2022 Salaries and Employee Benefits $ 44,853 $ 3,922 $ 4,727 Occupancy 4,609 (155) (150) Equipment 3,811 51 (14) Marketing 729 (860) (641) Outside Data Services 2,819 (34) 310 FDIC Insurance 2,333 (42) 1,065 Amortization of Intangible Assets 1,245 (24) (187) Merger, Aquisition and Disposal — — (1) Professional Fees and Services 4,509 348 2,302 Other Expense 7,563 129 (720) Total non-interest expense $ 72,471 $ 3,335 $ 6,691 48.18% 51.46% 56.87% 60.68% 60.91% 50.66% 53.23% 58.55% 64.22% 70.72% Efficie ncy Ra tio - Non-GAAP ba s is (1) Efficie ncy Ra tio - GAAP ba s is 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023
Balance Sheet 13
Balance Sheet Trends Total Assets Loans Held for Investment Total Deposits 14 Source: Company documents (Do lla rs in m illio n s ) $13,766 $13,833 $14,129 $13,995 $14,135 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 (Do lla rs in m illio n s ) $10,749 $10,953 $11,076 $10,959 $11,151 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 (Do lla rs in m illio n s ) $11,219 $11,397 $11,395 $11,370 $11,300 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023
Deposit Portfolio Deposit Composition (1) 15 Deposit Growth • The Company reduced its brokered deposits by $155.8 million during the current quarter. Total deposits, excluding brokered deposits, increased by $349.5 million or 4% quarter-over-quarter and represented 90% of the total deposits as of September 30, 2023 compared to 88% at June 30, 2023, reflecting the continued stability of the core deposit base. • #1 deposit market share for community banks in combined Washington, D.C. & Baltimore MSAs. Source: Company documents and S&P Global Market Intelligence 1) As of September 30, 2023 Noninterest- Bearing Deposits, 27% MMDA & Other S avings, 34% Interest Bearing Demand, 1 3% Time Deposits, 26% $11.2 Billion (Dollars in millions) $ Change vs 3Q 2023 2Q 2023 3Q 2022 Noninterest-Bearing Deposits $ 3,014 $ (66) $ (980) MMDA & Other Savings 3,750 100 40 Interest-Bearing Demand 1,456 43 94 Time Deposits 2,931 115 1,248 Total Deposits $ 11,151 192 $ 402
Insured vs Uninsured Deposits Deposit Breakdown (1) 16 Uninsured Deposits by Type • 39% of uninsured depositors have a lending relationship with the Company. • 73% of uninsured deposits are Business accounts, 45% of which have a lending relationship; 16% of uninsured deposits are Trust accounts, 26% of which have a lending relationship. , Source: Company documents and S&P Global Market Intelligence 1) As of September 30, 2023 $3.7, 33% $7.5, 67% Uninsured Insured $2.7, 73% $1.0, 27% Commercial Retail Dollars in Billions Dollars in Billions
Commercial Customers Core Deposit Mix(1) Source: Company documents 1) As of September 30, 2023 17 • 58% of total core deposits are business accounts • Average length of relationship is 9.5 years • 78% of uninsured deposits were commercial as of 3Q 2023 • No commercial client > 2% of total deposits • Well-diversified portfolio; no significant concentration in one industry or with any single client Time Deposits, 6% Non-interest Bearing Checking, 46% Money Market, 32% Interest Checking, 12% Savings, 4% Total: $5.8 Billion
Source: Company documents 1) As of September 30, 2023 2) Data by NAICS code only available on $4.7 billion of the $5.8 billion total commercial deposits Business Deposit Portfolio by NAICS Business Deposits By Industry (1)(2) 18 Real Estate 1 6% S ervices 1 0% Trade Contractors 6% Engineering & Management 6% Professional S ervices 6% Building Contractors 5% Organizational S ervices 5% Insurance 5% Wholesale 4% Nonresidential Lessors 4% Churches 3% Health S ervices 3% Other 27% Total: $4.7 Billion
Retail Customers Core Deposit Mix(1) Source: Company documents 1) As of September 30, 2023 19 • 42% of total core deposits are retail accounts • Average length of retail relationship is 11.5 years • 22% of uninsured deposits were retail as of 3Q 2023 • No retail client > 2% of total deposits Time Deposits, 35% Noninterest- Bearing Demand, 8%Money Market, 20% Interest- Bearing Demand, 17% Savings, 20% Total: $4.0 Billion
• Core deposits equaled 90.0% of total interest-earning assets at September 30, 2023 • Stress testing is performed quarterly and includes both systemic and idiosyncratic scenarios • Testing completed at the end of the third quarter demonstrates a strong liquidity position with sufficient liquidity in the most severe scenarios Source: Company documents Contingent Liquidity to Uninsured Deposits 20 Liquidity Position
Loan Portfolio, Asset Quality & Reserves (CECL) 21
Source: Company documents 1) As of September 30, 2023; Amounts include PPP loans and net deferred fees/costs in C&I Loan Portfolio Loan Composition(1) 22 Net Loan Change (1) Investor Real Estate 45% Owner- Occupied Real Estate 1 6% AD&C 8% C&I 1 3% Residential Mortgage 1 3% Residential Construction 1 % Consumer 4%Total: $11.3 Billion (Dollars in millions) $ Change vs 3Q 2023 2Q 2023 3Q 2022 Investor Real Estate $ 5,138 $ 6 $ 71 Owner-Occupied Real Estate 1,760 $ (10) $ 17 AD&C 939 $ (107) $ (205) C&I 1,455 $ 31 $ 61 Residential Mortgage 1,432 $ 46 $ 213 Residential Construction 160 $ (30) $ (69) Consumer 416 $ (5) $ (7) Total Loans $ 11,300 $ (69) $ 81 • New commercial loan production of $1.1 billion in 2023, of which $411.8 million was funded (39% utilization) • Residential mortgage loan portfolio grew mainly due to the migration of construction loans into the residential mortgage portfolio. A greater number of conventional 1-4 family mortgages and ARM loans were retained to grow the mortgage portfolio which resulted in 18% growth year-over-year • Commercial business lines and loans increased 2% from 2Q 2023 while the concentration in commercial real estate segments declined
Source: Company documents 1) As of September 30, 2023 Commercial Loans by Type (1) CRE by Collateral Type Business Loans & Owner Occupied R/E 23 Retail 30% Office 1 4% Residential 1 2% Apartment Building (5+ units) 1 4% Hotel 6% Warehouse S pace 7% Residential Lot 2% Mixed Use (res. & comm.) 3% Flex (office/warehouse) 3% Industrial S pace 2% Automotive Facilities 1 % Unimproved Commercial Property 1 % Other Misc 5% Construction 1 4% Other S ervices 11 % Real Estate Rental & Leasing 9% Professional, S cientific & Technical S ervices 9% Health Care & S ocial Assistance 8% Educational S ervices 11 % Retail 8% Accommodation & Food S ervices 5% Wholesale 6% Arts, Entertainment & Recreation 6% Manufacturing 4% Administrative & S upport 3% Other Misc 6% Total: $6.1 Billion Total: $3.2 Billion (1)
Source: Company documents 1) As of September 30, 2023 CRE Concentrations (1) Washington DC Baltimore City 24 Apartment Building (5+ units) 34% Retail S pace 1 6% Office Building 1 0% Condo S tructure 8% Mixed Use (res. & comm.) 5% Townhouse S tructure 5% Warehouse S pace 4% S ingle Family S tructure 4% Hotel 4% Other Misc 1 0% Apartment Building (5+ units) 1 9% Townhouse S tructure 1 6% Retail S pace 1 4% Mixed Use (res. & comm.) 1 3% Office Building 1 4% Industrial S pace 7% S ingle Family S tructure 4% Warehouse S pace 5% Automotive Facilities 3% Other Misc 5% Total: $989.4 Million Total: $391.4 Million (1)
Current Expected Credit Losses – Loans 25 ACL/Total Loans • ACL of $123.4 million or 1.09% of outstanding loans equals 238% of non-performing loans at September 30, 2023 • Provision for credit losses directly attributable to the funded loan portfolio for the current quarter was $3.2 million compared to $4.5 million in the previous quarter and $14.1 million in the prior year quarter. The provision for the current quarter was the product of increases in individual reserves on a few commercial lending relationships, which were partially offset by a qualitative adjustment related to reduced probability of an economic recession. • Utilized September 2023 Moody’s baseline forecast in quantitative model ACL by Loan Type Source: Company documents (Do lla rs in th o u s a n d s ) $1 28,268 $1 36,242 $11 7,61 3 $1 20,287 $1 23,360 1 .1 4% 1 .20% 1 .03% 1 .06% 1 .09% Total ACL ACL/Total Loans 3Q 2022 4Q 2022 1 Q 2023 2Q 2023 3Q 2023 (Dollars in thousands) 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 Investor Real Estate $ 64,169 $ 64,737 $ 56,962 $ 61,087 $ 63,192 Owner-Occupied Real Estate 11,099 11,646 9,876 9,230 8,961 Commercial AD&C 16,847 18,646 11,953 10,200 9,100 Commercial Business 24,826 28,027 25,900 27,914 30,720 Total Commercial 116,941 123,056 104,691 108,431 111,973 Residential Mortgage 8,063 9,424 9,753 9,161 8,499 Residential Construction 1,226 1,337 1,104 850 672 Consumer 2,038 2,425 2,065 1,845 2,216 Total Residential and Consumer 11,327 13,186 12,922 11,856 11,387 Allowance for Credit Losses $ 128,268 $ 136,242 $ 117,613 $ 120,287 $ 123,360
Allowance for Credit Losses - Loans: 3Q 2023 26Source: Company documents (Do lla rs in m illio n s ) $120.3 $(1.5) $(3.4) $1.5 $4.3 $2.2 $123.4 ACL Change in portfolio balances and mix Change in qualitative adjustments- economy Change in qualitative adjustments - concentrations/credit Individual reserves Other, net ACL 9/30/236/30/23
Source: Company documents . Strong Credit Culture and Performance Non-performing Assets / Assets Annualized Net Charge-Offs (Recoveries) / Average Loans Non-performing Loans / Loans Reserves / Loans HFI 27 0.33% 0.29% 0.34% 0.36% 0.37% 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 (0.02)% —% (0.01)% 0.06% —% 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 0.40% 0.35% 0.41% 0.44% 0.46% 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 1.14% 1.20% 1.03% 1.06% 1.09% 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023
Capital 28
Capital Ratios Tier 1 Common Equity Ratio 29 Tier 1 Capital Ratio Tangible Common Equity Ratio (1)Total Capital Ratio Source: Company documents 1) Non-GAAP financial measure; see reconciliation to most directly comparable GAAP measure in “Appendix – Reconciliation of non-GAAP Financial Measures” 10.18% 10.23% 10.53% 10.65% 10.83% 7.00% 7.00% 7.00% 7.00% 7.00% Tie r 1 Common We ll Ca pita lize d 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 10.18% 10.23% 10.53% 10.65% 10.83% 8.50% 8.50% 8.50% 8.50% 8.50% Tie r 1 Common We ll Ca pita lize d 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 14.15% 14.20% 14.43% 14.60% 14.85% 10.50% 10.50% 10.50% 10.50% 10.50% Tota l Ca pita l We ll Ca pita lize d 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 7.98% 8.18% 8.40% 8.51% 8.42% 2.00% 2.00% 2.00% 2.00% 2.00% TCE We ll Ca pita lize d 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023
Source: Company documents 1) Based on September 30, 2023 SASR closing share price of $21.43 2) Non-GAAP financial measure; see reconciliation to most directly comparable GAAP measure in “Appendix – Reconciliation of non-GAAP Financial Measures” Capital Strategy Tangible Book Value Per Share (2) 30 • Quarterly dividend currently $0.34 per share. 6.35% (1) annualized dividend yield • 74% of 3Q 2023 earnings returned to shareholders through common dividends $23.90 $24.64 $25.83 $25.82 $25.80 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023
Appendix 31
Non-GAAP Reconciliation This presentation contains financial information and performance measures determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). Sandy Spring Bancorp’s management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, Sandy Spring Bancorp 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 presentation consist of the following: • efficiency ratio • tangible common equity • core earnings Efficiency Ratio. Management views the GAAP efficiency ratio as an important financial measure of expense performance and cost management. The ratio expresses the level of non-interest expenses as a percentage of total revenue (net interest income plus total non-interest income). Lower ratios indicate improved productivity. In general, the efficiency ratio is non-interest expenses as a percentage of net interest income plus non-interest income. Non- interest expenses used in the calculation of the non-GAAP efficiency ratio excludes intangible asset amortization, loss on FHLB redemption, contingent payment expense, severance expense, merger, acquisition, and disposal expense, and pension settlement expense from non-interest expense, and securities gains and gain on asset sales from non-interest income and adds the tax- equivalent adjustment to net interest income. The measure is different from the GAAP efficiency ratio, which also is presented in this document. The GAAP measure is calculated using non-interest expense and income amounts as shown on the face of the Consolidated Statements of Income. The GAAP and non-GAAP efficiency ratios are reconciled and provided in the following table. Tangible Common Equity. Tangible equity, tangible assets and tangible book value per share are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity and tangible assets exclude the balances of goodwill and other intangible assets from stockholder’s equity and total assets, respectively. Management believes that this non-GAAP financial measure provides information to investors that may be useful in understanding our financial condition. Because not all companies use the same calculation of tangible equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. Core Earnings. Core earnings is a non-GAAP financial measure calculated using GAAP amounts. Core earnings reflect net income for the period exclusive of merger, acquisition and disposal expense, amortization of intangible assets, loss on FHLB redemption, contingent payment expense, severance expense, pension settlement expense, investment securities gains, and gain on asset sales, in each case net of tax. Management believes that this non- GAAP financial measure provides helpful information to investors in understanding the Company’s core operating earnings and provides a better comparison of period-to-period operating performance of the Company. 32
Reconciliation of Non-GAAP Financial Measures - QTD Source: Company documents 33 (Dollars in thousands) 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 Pre-tax pre-provision income (Non-GAAP) . Pre-tax pre-provision income: $ 33,584 $ 33,980 $ 51,253 $ 24,745 $ 20,746 Net income Plus/(less) non-GAAP adjustments: Income taxes 11,588 11,784 17,231 8,711 6,890 Provision/(credit) for credit losses 18,890 10,801 (21,536) 5,055 2,365 Pre-tax pre-provision net income $ 64,062 $ 56,565 $ 46,948 $ 38,511 $ 30,001 Efficiency ratio - GAAP basis . Non-interest expenses $ 65,780 $ 64,375 $ 66,305 $ 69,136 $ 72,471 Net interest income plus non-interest income 129,842 120,940 113,253 107,647 102,472 Efficiency ratio - GAAP basis 50.66 % 53.23 % 58.55 % 64.22 % 70.72 % Efficiency ratio - Non-GAAP basis Non-interest expenses $ 65,780 $ 64,375 $ 66,305 $ 69,136 $ 72,471 Less non-GAAP adjustments: Amortization of intangible assets 1,432 1,408 1,306 1,269 1,245 Merger, acquisition and disposal expense 1 — — — — Severance expense — — — 1,939 — Pension settlement expense — — — — 8,157 Contingent payment expense 1,247 — 36 — — Non-interest expenses - as adjusted $ 63,100 $ 62,967 $ 64,963 $ 65,928 $ 63,069 Net interest income plus non-interest income $ 129,842 $ 120,940 $ 113,253 $ 107,647 $ 102,472 Plus non-GAAP adjustment: Tax-equivalent income 951 1,032 970 1,006 1,068 Less non-GAAP adjustments: Investment securities gains/(losses) 2 (393) — — — Gain/(loss) on disposal of assets (183) — — — — Net interest income plus non-interest income - as adjusted $ 130,974 $ 122,365 $ 114,223 $ 108,653 $ 103,540 Efficiency ratio - Non-GAAP basis 48.18 % 51.46 % 56.87 % 60.68 % 60.91 %
Tangible Common Equity-QTD Source: Company documents 34 (Dollars in thousands except per share data) 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 Tangible common equity ratio: Total stockholders' equity $ 1,451,862 $ 1,483,768 $ 1,536,865 $ 1,539,032 $ 1,537,914 Goodwill (363,436) (363,436) (363,436) (363,436) (363,436) Other intangible assets, net (21,262) (19,855) (18,549) (17,280) (16,035) Tangible common equity $ 1,067,164 $ 1,100,477 $ 1,154,880 $ 1,158,316 $ 1,158,443 Total assets $ 13,765,597 $ 13,833,119 $ 14,129,007 $ 13,994,545 $ 14,135,085 Goodwill (363,436) (363,436) (363,436) (363,436) (363,436) Other intangible assets, net (21,262) (19,855) (18,549) (17,280) (16,035) Tangible assets $ 13,380,899 $ 13,449,828 $ 13,747,022 $ 13,613,829 $ 13,755,614 Common shares outstanding 44,644,269 44,657,054 44,712,497 44,862,369 44,895,158 Tangible common equity ratio 7.98 % 8.18 % 8.40 % 8.51 % 8.42 % Book value per common share $ 32.52 $ 33.23 $ 34.37 $ 34.31 $ 34.26 Tangible book value per common share $ 23.90 $ 24.64 $ 25.83 $ 25.82 $ 25.80
Core Earnings - QTD Source Company documents 35 (Dollars in thousands except per share data) 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 Core Earnings: Net income(GAAP) $ 33,584 $ 33,980 $ 51,253 $ 24,745 $ 20,746 Plus/(less) non-GAAP adjustments (net of tax): Amortization of intangible assets 1,076 1,049 973 946 932 (Gain)/loss on disposal of assets 108 — — — — Investment securities gains/(losses) (2) 293 — — — Severance Expense — — — 1,445 — Pension settlement expense — — — — 6,088 Contingent payment expense 929 — 27 — — Core earnings (non-GAAP) $ 35,695 $ 35,322 $ 52,253 $ 27,136 $ 27,766 Core return on average assets (non-GAAP) Average assets (GAAP) $13,521,595 $13,769,472 $13,949,276 $14,094,653 $14,086,342 Return on average assets (GAAP) 0.99 % 0.98 % 1.49 % 0.70 % 0.58 % Core return on average assets (non-GAAP) 1.05 % 1.02 % 1.52 % 0.77 % 0.78 % Weighted average common shares outstanding - diluted (GAAP) 44,780,560 44,828,827 44,872,582 44,888,759 44,960,455 Earning per diluted common share (GAAP) $ 0.75 $ 0.76 $ 1.14 $ 0.55 $ 0.46 Core earnings per diluted common share (non-GAAP) $ 0.80 $ 0.79 $ 1.16 $ 0.60 $ 0.62
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Sandy Spring Bancorp (NASDAQ:SASR)
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