OLNEY, Md., Jan. 23, 2014 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the fourth quarter of 2013 of $9.6 million ($0.38 per diluted share) compared to net income of $9.9 million ($0.40 per diluted share) for the fourth quarter of 2012 and net income of $12.1 million ($0.48 per diluted share) for the third quarter of 2013.

Net income for the year ended December 31, 2013 totaled $44.4 million ($1.77 per diluted share) compared to net income of $36.6 million ($1.48 per diluted share) for the prior year, an increase of 22%.

"We are confident in our ability to produce consistent and quality investor returns in this marketplace as demonstrated by our record earnings for the year, which were driven largely by growth in the loan portfolio and our growing wealth management and insurance operations. This is noteworthy considering the effect of historically low interest rates on the net interest margin and the related reduction in both mortgage origination volumes and mortgage banking income from the sales of such loans," said Daniel J. Schrider, President and Chief Executive Officer.

"Our results were also positively benefited by the continued improvement in our credit metrics due to the resolution of previously non-performing loans and lower loan charge-offs, and also by very disciplined control of our funding costs," said Schrider.

Fourth Quarter Highlights:

  • Total loans increased 10% compared to the fourth quarter of 2012 and 5% compared to the third quarter of 2013 due to organic loan growth in the residential mortgage, commercial investor real estate, commercial owner occupied real estate and consumer loan portfolios.
  • The provision for loan and lease losses for the fourth quarter of 2013 was a charge of $0.6 million compared to a charge of $1.2 million for the fourth quarter of 2012 and a charge of $1.1 million for the third quarter of 2013.
  • Non-performing loans totaled $40.0 million at December 31, 2013 compared to $57.9 million at December 31, 2012 and $38.3 million at September 30, 2013. The coverage ratio of the allowance for loan and lease losses to non-performing loans was 97% at December 31, 2013 compared to a coverage ratio of 74% at December 31, 2012 and 103% at September 30, 2013.
  • The net interest margin was 3.53% for the fourth quarter of 2013, compared to 3.53% for the fourth quarter of 2012 and 3.88% for the third quarter of 2013. Excluding the effect of interest recoveries in the third quarter on two previously non-performing loans, the net interest margin would have been 3.49% for the third quarter.
  • Non-interest income decreased 5% for the quarter compared to the prior year quarter due primarily to the decline in income from mortgage banking caused by a significantly lower volume of saleable mortgage loan originations. Compared to the third quarter, non-interest income increased 4% due to an increase in mortgage banking income as volumes stabilized.

Review of Balance Sheet and Credit Quality

Total assets increased 4% to $4.1 billion at December 31, 2013 as compared to December 31, 2012. Total loans and leases increased 10% to $2.8 billion compared to the prior year due primarily to the growth in the residential mortgage, commercial investor real estate, commercial owner occupied real estate and consumer loan portfolios.

Customer funding sources, which include deposits and other short-term borrowings from customers, decreased 1% compared to December 31, 2012. Certificates of deposit declined 11% while combined noninterest-bearing and interest-bearing checking account balances increased 2% compared to the prior year-end. The Company considers the growth in checking accounts to be an important performance metric as such accounts typically are the primary drivers of growth in multiple product banking relationships with clients. FHLB advances increased 52% at December 31, 2013 compared to balances at December 31, 2012, as the Company managed its funding mix to take advantage of current low interest rates to maintain the net interest margin.

Tangible common equity totaled $416.8 million at December 31, 2013 compared to $384.2 million at December 31, 2012, resulting in an increase in the ratio of tangible common equity to tangible assets to 10.37% at December 31, 2013 from 9.94% at December 31, 2012. The increase in tangible common equity was due primarily to net income earned during the period. At December 31, 2013, the Company had a total risk-based capital ratio of 15.65%, a tier 1 risk-based capital ratio of 14.42% and a tier 1 leverage ratio of 11.32%.

Non-performing loans totaled $40.0 million at December 31, 2013 compared to $57.9 million at December 31, 2012 and $38.3 million at September 30, 2013. Overall credit quality was maintained due to the proactive management and resolution of problem credits.

Loan charge-offs, net of recoveries, totaled $1.2 million for the fourth quarter of 2013 compared to net charge-offs of $0.8 million for the fourth quarter of 2012 and net charge-offs of $0.7 million for the third quarter of 2013. The increase in net charge-offs in the quarter was the product of aggressive management of previously existing problem credits. The allowance for loan and lease losses represented 1.39% of outstanding loans and leases and 97% of non-performing loans at December 31, 2013 compared to 1.70% of outstanding loans and leases and 74% of non-performing loans at December 31, 2012. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the fourth quarter of 2013 increased 5% compared to the fourth quarter of 2012. The resulting increase was due to an increase in average interest-earning assets and lower funding costs, that somewhat offset the decline in asset yields. The Company's funding costs declined due to a lower cost deposit mix and the restructuring of $170 million in Federal Home Loan Bank advances during the fourth quarter of 2012 and the first six months of 2013. The net interest margin remained level at 3.53% for the fourth quarter of 2013 compared to 3.53% for the fourth quarter of 2012 as the decline in asset yields was offset by a higher amount of interest-earning assets.

The provision for loan and lease losses was a charge of $0.6 million for the fourth quarter of 2013 compared to a charge of $1.2 million for the fourth quarter of 2012 and a charge of $1.1 million for the third quarter of 2013. This decrease in the provision compared to the fourth quarter of 2012 and the third quarter of 2013 was due primarily to lower historical losses and improved credit metrics, that more than offset the effect of loan growth during the quarter.

Non-interest income decreased 5% to $11.7 million for the fourth quarter of 2013 compared to $12.2 million for the fourth quarter of 2012. This decrease was driven by a reduction in mortgage banking income due primarily to lower mortgage origination volumes and a decline in client refinancing activity. This decrease was somewhat offset by a 13% increase in wealth management income due to higher assets under management. In addition, other non-interest income increased 34% due to gains recognized on sales of SBA loans and fixed assets.

Non-interest expenses increased 8% to $29.3 million for the fourth quarter of 2013 compared to $27.2 million in the fourth quarter of 2012. This increase was driven primarily by higher salaries and benefits expenses and the recognition of $0.8 million in expenses during the quarter for the planned 2014 closing of three branches. The non-GAAP efficiency ratio was 63.62% for the fourth quarter of 2013 compared to 60.54% for the fourth quarter of 2012.

Net interest income for the year ended December 31, 2013 increased 7% compared to the prior year while the net interest margin increased to 3.63% for 2013 compared to 3.60% in 2012. The increase in net interest income and the net interest margin were due primarily to the factors cited previously with respect to the fourth quarter of 2013 together with the recognition in the third quarter of 2013 of $3.7 million in interest recoveries on loans previously charged-off. Excluding the effect of these interest recoveries, the net interest margin would have been 3.53% for 2013.

The provision for loan and lease losses was a credit of $1.1 million for the year ended December 31, 2013 compared to a charge of $3.6 million for the year ended December 31, 2012. The decrease in the provision for the year was due primarily to a decline in historical losses and a lower migration of new problem loans into non-performing status.

Non-interest income increased 1% to $47.5 million for 2013 compared to $47.0 million for 2012. This increase was driven by a 10% increase in wealth management income due to higher assets under management. Insurance agency commissions increased 7% due to higher revenues on whole life insurance and physicians' liability lines. Other non-interest income increased 42% due to sales and dispositions of loans and fixed assets and a non-recurring legal settlement. These increases were partially offset by a 49% decrease in mortgage banking income caused by declining mortgage origination volumes.

Non-interest expenses increased 1% to $111.5 million for 2013 compared to $109.9 million for 2012. This increase was driven by an increase in salaries and benefits expenses due to additional staff and higher sales incentive compensation. Occupancy expenses also increased due to the recognition of expenses in the fourth quarter for the planned 2014 closing of three branches. These increases were somewhat offset by decreases in outside data services due to merger expenses incurred from the CommerceFirst acquisition in 2012. Other non-interest expenses also decreased in 2013 due to the lack of merger expenses and the recovery of expenses from the resolution of problem loan credits. The non-GAAP efficiency ratio improved to 60.06% for 2013 compared to 60.94% for 2012.

Conference Call

The Company's management will host a conference call to discuss its fourth quarter results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations' section of the Sandy Spring Web site at www.sandyspringbank.com. Participants may call 1-888-317-6016. A password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 9:00 am (ET) February 21, 2014. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10038886.

About Sandy Spring Bancorp, Inc.

With $4.1 billion in assets, Sandy Spring Bancorp, Inc. is the holding company for Sandy Spring Bank and its principal subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Sandy Spring Bancorp is the largest publicly traded banking company headquartered and operating in Maryland. Sandy Spring is a community banking organization that focuses its lending and other services on businesses and consumers in the local market area. Independent and community-oriented, Sandy Spring Bank was founded in 1868 and offers a broad range of commercial banking, retail banking and trust services through 49 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George's counties in Maryland, and Arlington, Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of insurance and investment management services. Visit www.sandyspringbank.com for more information about Sandy Spring Bank.

Forward-Looking Statements

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

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

Sandy Spring Bancorp's forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company's loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company's ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2012, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp's forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC's Web site at www.sec.gov.

Sandy Spring Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS - UNAUDITED
             
  Three Months Ended   Twelve Months Ended  
  December 31, % December 31, %
(Dollars in thousands, except per share data)2013 2012 Change2013 2012 Change
Results of Operations:            
Net interest income $ 32,350  $ 30,920 5% $ 129,914  $ 121,219 7%
Provision for loan and lease losses 586 1,168 (50)(1,084) 3,649 (130)
Non-interest income 11,654  12,247 (5) 47,511  46,956 1
Non-interest expenses 29,300  27,219 8 111,524  109,927 1
Income before income taxes 14,118  14,780 (4) 66,985  54,599 23
Net income  9,613  9,881 (3) 44,422  36,554 22
             
Pre-tax pre-provision pre-merger expense income  $ 14,704  $ 15,740 (7) $ 65,901  $ 60,748 8
             
Return on average assets 0.93%  1.01%   1.11%  0.97%  
Return on average common equity 7.71%  8.14%   9.11%  7.85%  
Net interest margin 3.53%  3.53%   3.63%  3.60%  
Efficiency ratio - GAAP basis (1) 66.59%  63.06%   62.86%  65.36%  
Efficiency ratio - Non-GAAP basis (1) 63.62%  60.54%   60.06%  60.94%  
             
Per share data:            
Basic net income $ 0.38  $ 0.40 (5)% $ 1.78  $ 1.49 19%
Diluted net income $ 0.38  $ 0.40 (5) $ 1.77  $ 1.48 20
Average fully diluted shares 25,108,109  24,971,249 1 25,075,014  24,657,149 2
Dividends declared per share $ 0.18  $ 0.14 29 $ 0.64  $ 0.48 33
Book value per share 19.98 19.41 3 19.98 19.41 3
Tangible book value per share 16.68 15.43 8 16.68 15.43 8
Outstanding shares 24,990,021  24,905,392  --  24,990,021  24,905,392  -- 
             
Financial Condition at period-end:            
Investment securities $1,016,609  $ 1,075,032 (5)% $1,016,609  $ 1,075,032 (5)%
Loans and leases 2,784,266  2,531,128 10 2,784,266  2,531,128 10
Interest-earning assets 3,836,912  3,669,175 5 3,836,912  3,669,175 5
Assets 4,106,100  3,955,206 4 4,106,100  3,955,206 4
Deposits 2,877,225  2,913,034 (1) 2,877,225  2,913,034 (1)
Interest-bearing liabilities 2,744,869  2,592,606 6 2,744,869  2,592,606 6
Stockholders' equity 499,363  483,512 3 499,363  483,512 3
             
Capital ratios:            
Tier 1 leverage  11.32% 10.98%   11.32%  10.98%  
Tier 1 capital to risk-weighted assets 14.42% 14.15%   14.42%  14.15%  
Total regulatory capital to risk-weighted assets 15.65% 15.40%   15.65%  15.40%  
Tangible common equity to tangible assets (2) 10.37% 9.94%   10.37%  9.94%  
Average equity to average assets 12.12% 12.35%   12.17%  12.32%  
             
Credit quality ratios:            
Allowance for loan and lease losses to loans and leases 1.39%  1.70%   1.39%  1.70%  
Non-performing loans to total loans 1.44%  2.29%   1.44%  2.29%  
Non-performing assets to total assets 1.01%  1.61%   1.01%  1.61%  
Allowance for loan and lease losses to non-performing loans 96.83%  74.18%   96.83%  74.18%  
Annualized net charge-offs to average loans and leases (3) 0.18%  0.13%   0.12%  0.42%  
             
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional efficiency ratio - non-GAAP basis excludes intangible asset amortization and merger expenses from non-interest expense; securities gains (losses) from non-interest income; OTTI; and the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
(2) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets and other comprehensive gains (losses). See the Reconciliation Table included with these Financial Highlights.
(3) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.
 
Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
 
  Three Months Ended  Twelve Months Ended 
  December 31, December 31,
(Dollars in thousands)2013 20122013 2012
Pre-tax pre-provision pre-merger expense income:        
Net income $ 9,613  $ 9,881 $ 44,422  $ 36,554
Plus non-GAAP adjustment:        
Merger expenses --  (208) --  2,500
Income taxes 4,505  4,899 22,563  18,045
Provision for loan and lease losses 586  1,168 (1,084)  3,649
Pre-tax pre-provision pre-merger expense income $ 14,704  $ 15,740 $ 65,901  $ 60,748
         
Efficiency ratio - GAAP basis:        
Non-interest expenses  $ 29,300  $ 27,219 $ 111,524  $ 109,927
         
Net interest income plus non-interest income $ 44,004  $ 43,167 $ 177,425  $ 168,175
         
Efficiency ratio - GAAP basis66.59% 63.06%62.86% 65.36%
         
        
Efficiency ratio - Non-GAAP basis:        
Non-interest expenses  $ 29,300  $ 27,219 $ 111,524  $ 109,927
Less non-GAAP adjustment:        
Amortization of intangible assets 461  478 1,845  1,881
Merger expenses --  (208) --  2,500
Non-interest expenses -- as adjusted $ 28,839  $ 26,949 $ 109,679  $ 105,546
        
Net interest income plus non-interest income  $ 44,004  $ 43,167 $ 177,425  $ 168,175
Plus non-GAAP adjustment:        
Tax-equivalent income 1,325  1,334 5,292  5,374
Less non-GAAP adjustments:        
Securities gains (3)  -- 115  459
OTTI recognized in earnings --  (14) --  (109)
Net interest income plus non-interest income - as adjusted $ 45,332  $ 44,515 $ 182,602  $ 173,199
         
Efficiency ratio - Non-GAAP basis63.62% 60.54%60.06% 60.94%
         
Tangible common equity ratio:        
Total stockholders' equity $ 499,363  $ 483,512 $ 499,363  $ 483,512
Accumulated other comprehensive (income) loss 2,970  (11,312) 2,970  (11,312)
Goodwill (84,171)  (84,808) (84,171)  (84,808)
Other intangible assets, net (1,330)  (3,163) (1,330)  (3,163)
Tangible common equity $ 416,832  $ 384,229 $ 416,832  $ 384,229
         
Total assets $ 4,106,100  $ 3,955,206 $ 4,106,100  $ 3,955,206
Goodwill (84,171)  (84,808) (84,171)  (84,808)
Other intangible assets, net (1,330)  (3,163) (1,330)  (3,163)
Tangible assets $ 4,020,599  $ 3,867,235 $ 4,020,599  $ 3,867,235
         
Tangible common equity ratio10.37% 9.94%10.37% 9.94%
         
Outstanding common shares 24,990,021  24,905,392 24,990,021  24,905,392
Tangible book value per common share $ 16.68  $ 15.43 $ 16.68  $ 15.43
 
 
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
     
 December 31, December 31,
(Dollars in thousands)2013 2012
Assets    
Cash and due from banks $ 46,755  $ 59,540
Federal funds sold 475  466
Interest-bearing deposits with banks 27,197  26,400
Cash and cash equivalents 74,427  86,406
Residential mortgage loans held for sale (at fair value)  8,365  36,149
Investments available-for-sale (at fair value) 751,284  825,582
Investments held-to-maturity --- fair value of $216,007 and $222,024 at December 31, 2013 and 2012, respectively 224,638  215,814
Other equity securities 40,687  33,636
Total loans and leases 2,784,266  2,531,128
Less: allowance for loan and lease losses (38,766)  (42,957)
Net loans and leases 2,745,500  2,488,171
Premises and equipment, net 45,916  48,326
Other real estate owned 1,338  5,926
Accrued interest receivable 12,532  12,392
Goodwill 84,171  84,808
Other intangible assets, net  1,330  3,163
Other assets 115,912  114,833
Total assets $ 4,106,100  $ 3,955,206
     
Liabilities    
Noninterest-bearing deposits $ 836,198  $ 847,415
Interest-bearing deposits 2,041,027  2,065,619
Total deposits 2,877,225  2,913,034
Securities sold under retail repurchase agreements and federal funds purchased 53,842  86,929
Advances from FHLB 615,000  405,058
Subordinated debentures 35,000  35,000
Accrued interest payable and other liabilities 25,670  31,673
Total liabilities 3,606,737  3,471,694
     
Stockholders' Equity    
Common stock -- par value $1.00; shares authorized 50,000,000;
shares issued and outstanding 24,990,021 and 24,905,392 at December 31, 2013 and 2012, respectively		 24,990  24,905
Additional paid in capital 193,445  191,689
Retained earnings 283,898  255,606
Accumulated other comprehensive income (loss) (2,970)  11,312
Total stockholders' equity 499,363  483,512
Total liabilities and stockholders' equity $ 4,106,100  $ 3,955,206
 
 
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
         
  Three Months Ended Twelve Months Ended
  December 31, December 31,
(Dollars in thousands, except per share data)2013 20122013 2012
Interest Income:        
Interest and fees on loans and leases $ 30,443  $ 29,410 $ 122,380  $ 115,574
Interest on loans held for sale 91  254 929  841
Interest on deposits with banks 19  28 84  111
Interest and dividends on investment securities:        
Taxable 4,224  4,142 16,635  17,951
Exempt from federal income taxes 2,331  2,368 9,318  9,392
Interest on federal funds sold 1  -- 1  1
Total interest income 37,109  36,202 149,347  143,870
Interest Expense:        
Interest on deposits 1,230  1,650 5,439  7,357
Interest on retail repurchase agreements and federal funds purchased 37  46 163  204
Interest on advances from FHLB 3,269  3,359 12,936  14,131
Interest on subordinated debt 223  227 895  959
Total interest expense 4,759  5,282 19,433  22,651
Net interest income 32,350  30,920 129,914  121,219
Provision (credit) for loan and lease losses 586  1,168 (1,084)  3,649
Net interest income after provision for loan and lease losses 31,764  29,752 130,998  117,570
Non-interest Income:        
Investment securities gains (losses) (3)  -- 115  459
Total other-than-temporary impairment ("OTTI") losses --  (14) --  (109)
Portion of OTTI losses recognized in other comprehensive income, before taxes --  -- --  --
Net OTTI recognized in earnings --  (14) --  (109)
Service charges on deposit accounts 2,143  2,197 8,533  8,910
Mortgage banking activities 356  1,738 3,094  6,032
Wealth management income 4,508  4,000 17,585  15,949
Insurance agency commissions 1,243  1,334 4,821  4,490
Income from bank owned life insurance 635  662 2,499  2,616
Visa check fees 1,052  1,043 4,165  3,887
Other income 1,720  1,287 6,699  4,722
Total non-interest income 11,654  12,247 47,511  46,956
Non-interest Expenses:        
Salaries and employee benefits 16,707  15,405 65,598  62,509
Occupancy expense of premises 3,844  3,115 13,171  12,010
Equipment expenses 1,264  1,189 4,940  4,871
Marketing 897  827 2,880  2,651
Outside data services 1,162  836 4,580  5,019
FDIC insurance 445  601 2,300  2,573
Amortization of intangible assets 461  478 1,845  1,881
Other expenses 4,520  4,768 16,210  18,413
Total non-interest expenses 29,300  27,219 111,524  109,927
Income before income taxes 14,118  14,780 66,985  54,599
Income tax expense 4,505  4,899 22,563  18,045
Net income $ 9,613  $ 9,881 $ 44,422  $ 36,554
         
Net Income Per Share Amounts:        
Basic net income per share $ 0.38  $ 0.40 $ 1.78  $ 1.49
Diluted net income per share $ 0.38  $ 0.40 $ 1.77  $ 1.48
Dividends declared per share $ 0.18  $ 0.14 $ 0.64  $ 0.48
 
 
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
                 
 2013 2012
(Dollars in thousands, except per share data)Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Profitability for the quarter:                
Tax-equivalent interest income $ 38,434  $ 41,524  $ 37,091  $ 37,590  $ 37,536  $ 38,819  $ 36,898  $ 35,991
Interest expense 4,759  4,874  4,847  4,953  5,282 5,710 5,749 5,910
Tax-equivalent net interest income 33,675  36,650  32,244  32,637  32,254 33,109 31,149 30,081
Tax-equivalent adjustment 1,325  1,344  1,312  1,311  1,334 1,324 1,340 1,376
Provision for loan and lease losses 586  1,128  (2,876)  78  1,168 232 1,585 664
Non-interest income 11,654  11,223  12,215  12,419  12,247 12,242 11,493 10,974
Non-interest expenses 29,300  26,893  27,508  27,823  27,219 27,167 28,858 26,683
Income before income taxes 14,118  18,508  18,515  15,844  14,780 16,628 10,859 12,332
Income tax expense  4,505  6,419  6,353  5,286  4,899 5,638 3,652 3,856
Net income  $ 9,613  $ 12,089  $ 12,162  $ 10,558  $ 9,881  $ 10,990  $ 7,207  $ 8,476
Financial performance:                
Pre-tax pre-provision pre-merger expense income $ 14,704  $ 19,636  $ 15,639  $ 15,922  $ 15,740  $ 16,996  $ 14,642  $ 13,370
Return on average assets0.93% 1.19% 1.23% 1.08% 1.01% 1.13% 0.78% 0.94%
Return on average common equity7.71% 9.91% 9.98% 8.85% 8.14% 9.22% 6.34% 7.60%
Net interest margin3.53% 3.88% 3.51% 3.59% 3.53% 3.67% 3.62% 3.56%
Efficiency ratio - GAAP basis (1)66.59% 57.80% 63.75% 63.60% 63.06% 61.70% 69.87% 67.25%
Efficiency ratio - Non-GAAP basis (1)63.62% 55.21% 60.92% 60.80% 60.54% 58.91% 61.54% 62.97%
Per share data:                
Basic net income per share $ 0.38  $ 0.48  $ 0.49  $ 0.42  $ 0.40  $ 0.44  $ 0.30  $ 0.35
Diluted net income per share $ 0.38  $ 0.48  $ 0.49  $ 0.42  $ 0.40  $ 0.44  $ 0.30  $ 0.35
Average fully diluted shares25,108,109 25,070,506 25,009,092 25,002,612 24,971,249 24,949,205 24,423,236 24,180,501
Dividends declared per common share $ 0.18  $ 0.16  $ 0.16  $ 0.14  $ 0.14  $ 0.12  $ 0.12  $ 0.10
Non-interest income:                
Securities gains (losses) $ (3)  $ --  $ 62  $ 56  $ --  $ 296  $ 90  $ 73
Net OTTI recognized in earnings --  --  --  --  (14)  (23)  (8)  (64)
Service charges on deposit accounts 2,143  2,171  2,150  2,069  2,197 2,230 2,283 2,200
Mortgage banking activities 356  (26)  1,237  1,527  1,738 1,981 1,288 1,025
Wealth management income 4,508  4,503  4,532  4,042  4,000 3,858 4,034 4,057
Insurance agency commissions 1,243  1,193  1,036  1,349  1,334 1,020 934 1,202
Income from bank owned life insurance 635  629  623  612  662 660 660 634
Visa check fees 1,052  1,077  1,079  957  1,043 984 962 898
Other income 1,720  1,676  1,496  1,807  1,287 1,236 1,250 949
Total non-interest income $ 11,654  $ 11,223  $ 12,215  $ 12,419  $ 12,247  $ 12,242  $ 11,493  $ 10,974
Non-interest expense:                
Salaries and employee benefits $ 16,707  $ 16,382  $ 16,163  $ 16,346  $ 15,405  $ 15,476  $ 15,927  $ 15,701
Occupancy expense of premises 3,844  3,149  2,996  3,182  3,115  3,106  2,943  2,846
Equipment expenses 1,264  1,200  1,227  1,249  1,189  1,237  1,255  1,190
Marketing 897  713  755  515  827  764  565  495
Outside data services 1,162  1,152  1,114  1,152  836  1,076  1,828  1,279
FDIC insurance 445  678  581  596  601  667  653  652
Amortization of intangible assets 461  462  461  461  478  476  466  461
Professional fees 1,386  511 1,332 1,250 1,584 1,282 2,156  1,287
Other real estate owned expenses 91  (150) (281) 37 316 174 351  64
Other expenses 3,043  2,796 3,160 3,035 2,868 2,909 2,714  2,708
Total non-interest expense $ 29,300  $ 26,893  $ 27,508  $ 27,823  $ 27,219  $ 27,167  $ 28,858  $ 26,683
                 
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional, efficiency ratio - non-GAAP basis excludes intangible asset amortization and merger expenses from non-interest expense; excludes securities gains; OTTI losses from non-interest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
   
     
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
                 
 2013 2012
(Dollars in thousands)Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Balance sheets at quarter end:                
Residential mortgage loans $ 618,381  $ 595,180  $ 565,282  $ 538,346  $ 523,364  $ 499,806  $ 472,426  $ 465,204
Residential construction loans129,177 118,316 116,736 122,698 120,314 128,606 130,791 122,841
Commercial ADC loans160,696 158,739 163,309 150,599 151,933 133,007 151,620 149,814
Commercial investor real estate loans552,178 518,029 497,365 487,802 456,888 447,536 443,237 392,626
Commercial owner occupied real estate loans592,823 569,350 563,258 565,820 571,510 579,711 579,812 525,022
Commercial business loans356,651 332,670 334,979 344,489 346,708 322,087 334,040 253,827
Leasing703 962 1,415 1,974 3,421 4,233 5,618 5,843
Consumer loans373,657 368,764 363,114 353,341 356,990 353,999 357,534 356,215
Total loans and leases2,784,266 2,662,010 2,605,458 2,565,069 2,531,128 2,468,985 2,475,078 2,271,392
Allowance for loan and lease losses(38,766) (39,422) (39,015) (41,246) (42,957) (42,618) (45,265) (45,061)
Investment securities1,016,609 1,077,951 1,102,209 1,008,693 1,075,032 1,074,918 1,006,743 1,067,462
Interest-earning assets3,836,912 3,771,825 3,802,682 3,660,809 3,669,175 3,614,310 3,584,480 3,416,136
Total assets4,106,100 4,052,969 4,072,617 3,932,026 3,955,206 3,887,427 3,855,177 3,668,273
Noninterest-bearing demand deposits836,198 890,319 877,891 832,679 847,415 818,674 763,566 685,770
Total deposits2,877,225 2,916,466 2,926,650 2,919,208 2,913,034 2,880,262 2,852,055 2,681,075
Customer repurchase agreements53,842 53,177 54,731 50,302 51,929 58,306 64,779 73,130
Total interest-bearing liabilities2,744,869 2,634,324 2,678,490 2,576,831 2,592,606 2,560,040 2,593,501 2,508,756
Total stockholders' equity499,363 493,882 485,643 488,947 483,512 481,810 471,464 451,917
Quarterly average balance sheets:                
Residential mortgage loans $ 614,698  $ 593,335  $ 579,899  $ 575,889  $ 542,095  $ 510,475  $ 488,644  $ 474,149
Residential construction loans 125,744  120,676  119,197  120,283  125,640  133,236  125,582  116,630
Commercial ADC loans 156,558  158,557  160,483  148,749  137,679  142,870  151,374  159,769
Commercial investor real estate loans 522,085  499,896  485,630  474,062  453,074  445,012  410,258  377,072
Commercial owner occupied real estate loans 580,808  566,366  561,249  567,723  577,693  580,994  539,590  518,763
Commercial business loans 357,455  331,374  337,843  347,569  322,501  332,364  284,271  258,099
Leasing 817  1,152  1,644  2,510  3,773  4,858  5,528  6,325
Consumer loans 373,017  366,562  360,842  357,366  356,452  357,135  359,008  358,783
Total loans and leases 2,731,182  2,637,918  2,606,787  2,594,151  2,518,907  2,506,945  2,364,255  2,269,590
Investment securities1,055,432 1,097,643 1,047,726 1,051,769 1,072,278 1,038,586 1,052,502  1,086,295
Interest-earning assets3,817,033 3,770,855 3,692,215 3,677,444 3,639,605 3,599,715 3,453,590  3,389,843
Total assets4,082,839 4,039,069 3,959,907 3,946,578 3,908,479 3,863,951 3,708,622  3,637,674
Noninterest-bearing demand deposits872,532 862,046 838,502 797,926 824,188 774,215 699,638  641,477
Total deposits2,901,814 2,903,926 2,892,704 2,860,451 2,891,120 2,857,523 2,714,980  2,642,634
Customer repurchase agreements 57,682  56,766  55,941  52,622  60,941  62,693  66,674  65,195
Total interest-bearing liabilities2,679,812 2,659,406 2,599,704 2,631,198 2,571,937 2,587,815 2,526,541  2,523,394
Total stockholders' equity494,779 483,811 489,014 483,664 482,621 474,231 457,338  448,406
Financial Measures                
Average equity to average assets12.12% 11.98% 12.35% 12.26% 12.35% 12.27% 12.33% 12.33%
Investment securities to earning assets26.50% 28.58% 28.99% 27.55% 29.30% 29.74% 28.09% 31.25%
Loans to earning assets72.57% 70.58% 68.52% 70.07% 68.98% 68.31% 69.05% 66.49%
Loans to assets67.81% 65.68% 63.98% 65.24% 63.99% 63.51% 64.20% 61.92%
Loans to deposits96.77% 91.28% 89.03% 87.87% 86.89% 85.72% 86.78% 84.72%
Capital measures:                
Tier 1 leverage 11.32% 11.29% 11.28% 11.07% 10.98% 10.99% 11.21% 11.05%
Tier 1 capital to risk-weighted assets14.42% 14.45% 14.30% 14.23% 14.15% 14.31% 14.12% 14.89%
Total regulatory capital to risk-weighted assets15.65% 15.70% 15.55% 15.48% 15.40% 15.56% 15.36% 16.14%
Book value per share $ 19.98  $ 19.77  $ 19.45  $ 19.59  $ 19.41  $ 19.35  $ 18.94  $ 18.72
Outstanding shares 24,990,021  24,985,146  24,967,558  24,954,892  24,905,392  24,896,136  24,886,724  24,143,985
 
 
Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
                 
 2013 2012
(Dollars in thousands)December 31, September 30, June 30,  March 31, December 31, September 30, June 30,  March 31,
Non-Performing Assets:                
Loans and leases 90 days past due:                
Commercial business  $ --  $ --  $ 15  $ --  $ 24  $ 44  $ 70  $ 40
Commercial real estate:                
Commercial AD&C  --  --  --  --  --  --  342  --
Commercial investor real estate  --  --  --  --  --  --  --  --
Commercial owner occupied real estate  --  --  --  --  209  --  --  --
Leasing  --  --  --  --  --  127  96  --
Consumer  1  10  --  54  14  18  5  89
Residential real estate:                
Residential mortgage  --  --  --  --  --  116  91  167
Residential construction  --  --  --  --  --  --  --  --
Total loans and leases 90 days past due  1  10  15  54  247  305  604  296
Non-accrual loans and leases:                
Commercial business  3,400  4,050  4,483  4,012  4,611  4,919  4,583  6,542
Commercial real estate:                
Commercial AD&C  4,127  5,086  5,885  5,826  6,332  8,957  13,055  14,303
Commercial investor real estate  6,802  6,877  11,741  12,353  11,843  12,345  13,327  13,893
Commercial owner occupied real estate  5,936  4,202  5,413  5,346  13,681  13,742  15,146  16,295
Leasing  --  --  --  --  865  834  872  858
Consumer  2,259  2,004  2,305  2,388  2,410  1,607  1,651  1,700
Residential real estate:                
Residential mortgage  5,735  5,643  5,581  5,393  4,681  3,644  2,600  4,818
Residential construction  2,315  2,327  2,558  3,258  3,125  3,236  4,333  4,929
Total non-accrual loans and leases  30,574  30,189  37,966  38,576  47,548  49,284  55,567  63,338
Total restructured loans - accruing  9,459  8,054  8,213  10,839  10,110  9,277  8,285  8,547
Total non-performing loans and leases  40,034  38,253  46,194  49,469  57,905  58,866  64,456  72,181
Other assets and real estate owned (OREO)  1,338  1,662  4,831  5,250  5,926  9,291  9,553  4,834
Total non-performing assets  $ 41,372  $ 39,915  $ 51,025  $ 54,719  $ 63,831  $ 68,157  $ 74,009  $ 77,015
                 
   For the quarter ended, 
   December 31,   September 30,  June 30, March 31,  December 31,   September 30,   June 30,   March 31, 
(Dollars in thousands) 2013 2013 2013 2013 2012 2012 2012 2012
Analysis of Non-accrual Loan and Lease Activity:              
Balance at beginning of period  $ 30,189  $ 37,966  $ 38,576  $ 47,548  $ 49,284  $ 55,567  $ 63,338  $ 71,680
Non-accrual balances transferred to OREO  (365)  (723)  (1,426)  (92)  (400)  (232)  (2,131)  --
Non-accrual balances charged-off  (922)  (4,995)  (668)  (2,175)  (979)  (3,697)  (1,663)  (4,965)
Net payments or draws  (971)  (13,547)  (3,560)  (11,768)  (3,852)  (6,342)  (4,149)  (5,061)
Loans placed on non-accrual  3,546  11,488  5,044  5,493  5,023  3,988  1,261  1,809
Non-accrual loans brought current  (903)  --  --  (430)  (1,528)  --  (1,089)  (125)
Balance at end of period  $ 30,574  $ 30,189  $ 37,966  $ 38,576  $ 47,548  $ 49,284  $ 55,567  $ 63,338
                 
Analysis of Allowance for Loan Losses:                
Balance at beginning of period  $ 39,422  $ 39,015  $ 41,246  $ 42,957  $ 42,618  $ 45,265  $ 45,061  $ 49,426
Provision (credit) for loan and lease losses  586  1,128  (2,876)  78  1,168  232  1,585  664
Less loans charged-off, net of recoveries:                
Commercial business  384  1  (32)  1,744  (76)  (225)  (185)  (39)
Commercial real estate:                
Commercial AD&C  85  (616)  (1,444)  (1,020)  (248)  1,983  (59)  1,076
Commercial investor real estate  23  1,243  123  31  110  123  140  3,219
Commercial owner occupied real estate  (82)  (284)  100  81  --  653  484  --
Leasing  --  (6)  (4)  --  --  (17)  (3)  5
Consumer  488  169  490  508  384  111  228  348
Residential real estate:                
Residential mortgage  347  216  22  447  508  253  713  420
Residential construction  (3)  (2)  100  (2)  151  (2)  63  --
Net charge-offs  1,242  721  (645)  1,789  829  2,879  1,381  5,029
Balance at end of period  $ 38,766  $ 39,422  $ 39,015  $ 41,246  $ 42,957  $ 42,618  $ 45,265  $ 45,061
                 
Asset Quality Ratios:                
Non-performing loans to total loans 1.44% 1.44% 1.77% 1.93% 2.29% 2.38% 2.60% 3.18%
Non-performing assets to total assets 1.01% 0.98% 1.25% 1.39% 1.61% 1.75% 1.92% 2.10%
Allowance for loan losses to loans 1.39% 1.48% 1.50% 1.61% 1.70% 1.73% 1.83% 1.98%
Allowance for loan losses to non-performing loans 96.83% 103.06% 84.46% 83.38% 74.18% 72.40% 70.23% 62.43%
Net charge-offs in quarter to average loans 0.18% 0.11% (0.10)% 0.28% 0.13% 0.46% 0.23% 0.89%
 
 
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
             
  Three Months Ended December 31,
 2013 2012
      Annualized      Annualized 
 Average  (1) Average Average  (1)  Average
(Dollars in thousands and tax-equivalent)BalancesInterestYield/Rate Balances Interest Yield/Rate
Assets            
Residential mortgage loans (2) $ 614,698  $ 5,384 3.49%  $ 542,095  $ 5,278 3.93%
Residential construction loans125,744 1,189 3.75 125,640 1,076 3.41
Commercial ADC loans156,558 2,057 5.21 137,679 1,866 5.39
Commercial investor real estate loans522,085 6,974 5.30 453,074 6,242 5.48
Commercial owner occupied real estate loans580,808 7,230 5.10 577,693 7,514 5.26
Commercial business loans357,455 4,520 4.97 322,501 4,523 5.43
Leasing817 14 6.81 3,773 54 5.62
Consumer loans373,017 3,166 3.39 356,452 3,111 3.50
Total loans and leases (3)2,731,182 30,534 4.47 2,518,907 29,664 4.71
Taxable securities751,796 4,597 2.43 768,412 4,493 2.34
Tax-exempt securities (4)303,636 3,283 4.29 303,866 3,351 4.41
Interest-bearing deposits with banks29,944 19 0.25 47,954 28 0.22
Federal funds sold475 1 0.22 466  -- 0.22
Total interest-earning assets3,817,033 38,434 4.03 3,639,605 37,536 4.11
             
Less: allowance for loan and lease losses(39,775)     (42,741)    
Cash and due from banks45,549     48,803    
Premises and equipment, net46,545     48,626    
Other assets213,487     214,186    
Total assets $ 4,082,839      $3,908,479    
             
Liabilities and Stockholders' Equity            
Interest-bearing demand deposits $ 443,959  93 0.08%  $ 400,175  88 0.09%
Regular savings deposits239,382  45 0.08 220,814  44 0.08
Money market savings deposits876,014 283 0.13 900,991 472 0.21
Time deposits469,927 809 0.68 544,952 1,046 0.76
Total interest-bearing deposits2,029,282 1,230 0.24 2,066,932 1,650 0.32
Other borrowings61,780 37 0.24 64,908 46 0.28
Advances from FHLB553,750 3,269 2.34 405,097 3,359 3.30
Subordinated debentures35,000 223 2.55 35,000 227 2.59
Total interest-bearing liabilities2,679,812 4,759 0.70 2,571,937 5,282 0.82
             
Noninterest-bearing demand deposits872,532     824,188    
Other liabilities35,716     29,733    
Stockholders' equity494,779     482,621    
Total liabilities and stockholders' equity $ 4,082,839      $3,908,479    
             
Net interest income and spread   $ 33,675 3.33%    $ 32,254 3.29%
Less: tax-equivalent adjustment   1,325      1,334  
Net interest income   $ 32,350      $ 30,920  
             
Interest income/earning assets    4.03%     4.11%
Interest expense/earning assets    0.50     0.58
Net interest margin    3.53%     3.53%
             
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2013 and 2012. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.3 million and $1.3 million in 2013 and 2012, respectively.
(2) Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.
(3) Non-accrual loans are included in the average balances.
(4) Includes only investments that are exempt from federal taxes.
 
 
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
             
  Twelve Months Ended December 31,
 2013 2012
      Annualized      Annualized 
 Average  (1) Average Average  (1)  Average
(Dollars in thousands and tax-equivalent)BalancesInterestYield/Rate Balances Interest Yield/Rate
Assets            
Residential mortgage loans (2) $ 591,068  $ 21,385 3.62%  $ 503,963  $ 21,281 4.22%
Residential construction loans121,488 4,331 3.57 125,295 4,581 3.66
Commercial ADC loans156,115 9,596 6.15 147,881 7,721 5.22
Commercial investor real estate loans495,562 27,901 5.63 421,505 23,167 5.50
Commercial owner occupied real estate loans569,065 29,696 5.36 554,397 30,236 5.45
Commercial business loans343,554 17,807 5.07 299,462 16,511 5.51
Leasing1,525 102 6.70 5,117 326 6.36
Consumer loans364,495 12,491 3.45 357,839 12,592 3.52
Total loans and leases (3)2,642,872 123,309 4.69 2,415,459 116,415 4.82
Taxable securities761,713 18,133 2.38 774,030 19,254 2.49
Tax-exempt securities (4)301,534 13,112 4.35 288,347 13,463 4.67
Interest-bearing deposits with banks33,261 84 0.25 42,668 111 0.26
Federal funds sold475  1 0.22 724  1 0.18
Total interest-earning assets3,739,855 154,639 4.15 3,521,228 149,244 4.24
             
Less: allowance for loan and lease losses(41,606)     (46,260)    
Cash and due from banks45,836     46,588    
Premises and equipment, net47,244     48,875    
Other assets216,082     209,653    
Total assets $4,007,411      $3,780,084    
             
Liabilities and Stockholders' Equity            
Interest-bearing demand deposits $ 438,183  373 0.09%  $ 385,004  344 0.09%
Regular savings deposits238,818  204 0.09 212,659 199 0.09
Money market savings deposits879,588 1,414 0.16 877,546 1,943 0.22
Time deposits490,278 3,448 0.70 566,658 4,871 0.86
Total interest-bearing deposits2,046,867 5,439 0.27 2,041,867 7,357 0.36
Other borrowings60,249 163 0.27 70,477 204 0.29
Advances from FHLB500,593 12,936 2.58 405,227 14,131 3.49
Subordinated debentures35,000 895 2.56 35,000 959 2.74
Total interest-bearing liabilities2,642,709 19,433 0.74 2,552,571 22,651 0.89
             
Noninterest-bearing demand deposits843,008     735,231    
Other liabilities33,858     26,563    
Stockholders' equity487,836     465,719    
Total liabilities and stockholders' equity $4,007,411      $3,780,084    
             
Net interest income and spread   $ 135,206 3.41%    $ 126,593 3.35%
Less: tax-equivalent adjustment   5,292      5,374  
Net interest income   $ 129,914      $ 121,219  
             
Interest income/earning assets    4.15%     4.24%
Interest expense/earning assets    0.52     0.64
Net interest margin    3.63%     3.60%
             
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2013 and 2012. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $5.3 million and $5.4 million in 2013 and 2012, respectively.
(2) Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.
(3) Non-accrual loans are included in the average balances.
(4) Includes only investments that are exempt from federal taxes.
CONTACT: Daniel J. Schrider, President & Chief Executive Officer, or
         Philip J. Mantua, E.V.P. & Chief Financial Officer
         Sandy Spring Bancorp
         17801 Georgia Avenue
         Olney, Maryland 20832
         1-800-399-5919
         Email: DSchrider@sandyspringbank.com
                PMantua@sandyspringbank.com
         Web site: www.sandyspringbank.com

Sandy Spring Bancorp, Inc. Logo