updated 4/21/2011 8:46:53 AM ET 2011-04-21T12:46:53

OLNEY, Md., April 21, 2011 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today announced net income for the first quarter of 2011 of $7.3 million ($.30 per diluted share) compared to net income of $0.5 million ($0.03 per diluted share) for the first quarter of 2010 and net income of $8.3 million ($0.34 per diluted share) for the fourth quarter of 2010. The first quarter of 2011 included a provision for loan and lease losses of $1.5 million compared to $15.0 million for the first quarter of 2010 and $2.3 million for the fourth quarter of 2010.

"The repurchase of the TARP warrant from the Treasury concludes our participation in that program and has allowed us to concentrate more resources on funding and organically growing the fundamental core elements of our business," said Daniel J. Schrider, President and Chief Executive Officer.  "We are beginning to see increasing commercial loan balances, combined with solid growth in core deposits. These are indicators that we have, in fact, turned the corner. We are confident that the inherent strength of our community banking franchise and the ability of our client service team to develop customer relationships provides us with the necessary vehicle to drive us towards consistent ongoing profitability and sustainable growth as the economy recovers.

"We continue to be committed to meeting our clients' banking needs and expectations as we navigate this challenging economic environment. Our ultimate goal is and remains to provide our clients with a quality banking experience. Our team is looking forward to meeting the challenges that lie ahead of us and continuing to build on our solid foundation of customer relationships."

First Quarter Highlights:

  • The Company redeemed the warrant issued to the Treasury in connection with the Company's participation in the TARP Capital Purchase Program for $4.5 million. This redemption completed the last remaining facet of the Company's involvement in this program.
  • Commercial loans reversed a prior downward trend and increased 1% for the quarter over the prior year end due to new organic production in commercial real estate loans.
  • Deposits increased 2% compared to the year-end 2010 due to significant growth of noninterest-bearing demand deposits, which grew 9% during this period.
  • The net interest margin increased to 3.65% in the first quarter of 2011 from 3.56% for the first quarter of 2010 and 3.61% for the fourth quarter of 2010.
  • The provision for loan and lease losses totaled $1.5 million for the quarter compared to $15.0 million for the first quarter of 2010 and $2.3 million for the fourth quarter of 2010 as credit quality continues to improve.
  • Non-performing loans declined to $88.3 million compared to $136.5 million at March 31, 2010. This decrease also resulted in a coverage ratio of the allowance for loan and lease losses to non-performing loans of 67% at March 31, 2011 compared to a ratio of 51% at March 31, 2010.
  • Assets under management in our trust and wealth management services grew to over $2 billion during the current quarter.

Review of Balance Sheet and Credit Quality

Comparing March 31, 2011 balances to March 31, 2010, total assets decreased 3% to $3.5 billion from $3.7 billion. Total loans and leases decreased 5% to $2.2 billion compared to the prior year. The decrease in loans was attributable to declines in all major categories of the loan portfolio due to a general lack of loan demand as a combined result of the soft economy in addition to charge-offs and pay-downs on non-performing loans over the past twelve months. During the current quarter the commercial loan portfolio experienced growth of $12 million as compared to end of year 2010 balances. Total loans at quarter end remained relatively level as compared to total loans at December 31, 2010.

Customer funding sources, which include deposits and other short-term borrowings from core customers, decreased 2% compared to the first quarter of 2010. This decrease was due largely to a $144 million or 19% decline in certificates of deposit as a result of a reduction in rates as the Company implemented its net interest margin strategy. Non-interest-bearing and interest-bearing checking accounts increased $102 million or 12%, significantly offsetting the decline in certificates of deposit. The growth in checking accounts was the main driver in the growth in core deposits due to our client's emphasis on safety and liquidity. During the quarter, money market accounts experienced a 3% decline due mainly to clients' redeployment of funds in the face of low rates and rising equity markets. 

Stockholders' equity totaled $409.1 million at March 31, 2011, and represented 12% of total assets, compared to $471.9 million or 13% at March 31, 2010. The decline in equity was the direct result of the repayment of $84.0 million of preferred stock and the related warrant previously issued in 2008 as part of the Company's participation in the TARP Capital Purchase Program. At March 31, 2011, the Company had a total risk-based capital ratio of 15.48%, a tier 1 risk-based capital ratio of 14.21% and a tier 1 leverage ratio of 10.63%.

Non-performing assets totaled $96.3 million at March 31, 2011 compared to $143.3 million at March 31, 2010 and $97.7 million at December 31, 2010. The decrease compared to the prior year was due primarily to a decrease in non-accrual loans, particularly in the commercial real estate mortgage and construction portfolios as a result of charge-offs and pay-downs on existing problem credits and a significant reduction in the migration of new credits to non-performing status.

The provision for loan and lease losses totaled $1.5 million for the first quarter of 2011 compared to $15.0 million for the first quarter of 2010 and $2.3 million for the fourth quarter of 2010. The decrease from the prior year quarter was the result of a lower level of non-performing loans at March 31, 2011 compared to March 31, 2010. The decrease in non-performing loans was the direct result of early identification of problem credits, and the aggressive work out strategies or charge-offs for these problem credits.

Loan charge-offs, net of recoveries, totaled $4.7 million for the first quarter of 2011 compared to net charge-offs of $10.0 million for the first quarter of 2010 and net charge-offs of $7.5 million for the fourth quarter of 2010. The allowance for loan and lease losses represented 2.74% of outstanding loans and leases and 67% of non-performing loans at March 31, 2011 compared to 3.08% of outstanding loans and leases and 51% of non-performing loans at March 31, 2010 and 2.88% of outstanding loans and leases and 78% of non-performing loans at December 31, 2010. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the first quarter of 2011 decreased by $0.1 million from the same quarter of the prior year as a result of the decline in interest income due to lower loan balances during this period. The impact of the $2.6 million decline in interest income was substantially mitigated by the $2.5 million decline in interest expense as average rates paid on deposit products decreased. The combined result of the reduction in average interest-bearing liabilities, due to planned run-off, exceeded the decline in average earning assets and resulted in a higher net interest margin for the first quarter of 2011 of 3.65% compared to 3.56% for first quarter of 2010.

Non-interest income decreased $0.9 million or 8% to $10.0 million for the first quarter of 2011 compared to $10.8 million for the first quarter of 2010. This decline was primarily the result of an $0.8 million decrease in insurance agency commission revenue due to the timing of the recognition of renewal premiums that was implemented in the first quarter of 2010. Deposit service charges declined $0.4 million as a result of the impact of recently enacted legislation on overdraft fees. Trust and investment management fees increased $0.3 million or 14% primarily due to an increase in assets under management. Fees on sales of investment products increased $0.1 million or 16% due to an increase in managed assets and increased sales of financial products. The increases in asset management fee income mitigated the erosion experienced in deposit service fee income. Visa check fees increased $0.1 million or 13% due to increased volume of electronic transactions. Net security gains declined $0.2 million in the first quarter of 2011 as compared to 2010. The gains realized in 2010 were the result of sales of securities whose proceeds were applied to reduce wholesale borrowings. Income from mortgage banking activities and other non-interest income remained relatively flat compared to the prior year.

Non-interest expenses were $26.1 million in the first quarter of 2011 compared to $24.8 million in the first quarter of 2010, an increase of $1.3 million or 5%. Salaries and benefits expense increased $1.3 million or 9% due primarily to higher salary expenses, increased incentive and commission compensation, health care benefits and taxes.  Other non-interest expenses increased $0.3 million or 8% due largely to losses on sales of other real estate owned and loan work out expenses. These increases were partially offset by a reduction in outside data services expense and lower FDIC insurance premiums.

Conference Call

The Company's management will host a conference call to discuss its first quarter results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations' section of the Sandy Spring Web site at www.sandyspringbank.com .  Participants may call 877-380-5664. A password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 12:00 midnight (ET) May 21, 2011. A telephone voice replay will also be available during that same time period at 800-642-1687. Please use pass code #59024691 to access.

About Sandy Spring Bancorp/Sandy Spring Bank

With $3.5 billion in assets, Sandy Spring Bancorp 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 43 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George's counties in Maryland, and Fairfax and Loudoun counties in Virginia. Through its subsidiaries, Sandy Spring Bank also offers a comprehensive menu of leasing, insurance and investment management services. Visit www.sandyspringbank.com to locate an ATM near you or for more information about Sandy Spring Bank.

The Sandy Spring Bancorp, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4138

Forward-Looking Statements

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

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

Sandy Spring Bancorp's forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company's loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company's ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2010, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp's forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC's Web site at www.sec.gov .

Sandy Spring Bancorp, Inc. and Subsidiaries      
FINANCIAL HIGHLIGHTS (Unaudited)      
       
       
  Three Months Ended  
  March 31, %
(Dollars in thousands, except per share data) 2011 2010 Change
Results of Operations:      
 Net interest income  $ 28,010  $ 28,159  (1)%
 Provision for loan and lease losses 1,515 15,025 (90)
 Non-interest income  9,992  10,847 (8)
 Non-interest expenses  26,062  24,813 5
 Income (loss) before income taxes  10,425  (832) --
 Net income   7,291  501 --
 Net income (loss) available to common stockholders  $ 7,291  $ (699) --
       
 Return on average assets (1)  0.84  (0.08)%  
 Return on average common equity (1)  7.26  (0.92)%  
 Net interest margin  3.65  3.56%  
 Efficiency ratio - GAAP (3)  68.58  63.61%  
 Efficiency ratio - Non-GAAP (3)  65.09  61.08%  
       
Per share data:      
 Basic net income  $ 0.30  $ 0.03 --%
 Basic net income (loss) per common share  0.30  (0.04) --
 Diluted net income  0.30  0.03 --
 Diluted net income (loss) per common share  0.30  (0.04) --
 Dividends declared per common share  0.08  0.01 --
 Book value per common share 16.99 16.33 4
 Average fully diluted shares  24,115,906  17,243,415  
       
Financial Condition at period-end:      
 Assets  $3,549,533  $ 3,673,246 (3)%
 Total loans and leases 2,150,049 2,256,657 (5)
 Investment securities 1,087,620 985,966 10
 Deposits 2,599,634 2,653,448 (2)
 Stockholders' equity 409,076 471,857 (13)
       
Capital ratios:      
 Tier 1 leverage   10.63% 12.01%  
 Tier 1 capital to risk-weighted assets  14.21% 15.77%  
 Total regulatory capital to risk-weighted assets  15.48% 17.04%  
 Tangible common equity to tangible assets (4)  9.47% 8.53%  
 Average equity to average assets  11.63% 10.78%  
       
Credit quality ratios:      
 Allowance for loan and lease losses to loans and leases  2.74%  3.08%  
 Nonperforming loans to total loans  4.11%  6.05%  
 Nonperforming assets to total assets  2.71%  3.90%  
 Annualized net charge-offs to average loans and leases (2)  0.89%  1.78%  
       
(1) Calculation utilizes net income available to common stockholders.      
(2) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.  
(3) The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income.
 The traditional, non-GAAP efficiency ratio excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI;
 and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
(4) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting
 intangible assets, other comprehensive losses and preferred stock. See the Reconciliation Table included with these Financial Highlights.
     
Sandy Spring Bancorp, Inc. and Subsidiaries    
RECONCILIATION TABLE    
     
  Three Months Ended
  March 31,
(Dollars in thousands) 2011 2010
GAAP efficiency ratio:    
Non-interest expenses   $ 26,062  $ 24,813
Net interest income plus non-interest income  $ 38,002  $ 39,006
     
Efficiency ratio–GAAP  68.58% 63.61%
     
Non-GAAP efficiency ratio:    
Non-interest expenses   $ 26,062  $ 24,813
 Less non-GAAP adjustment:    
 Amortization of intangible assets  461  496
Non-interest expenses as adjusted  $ 25,601  $ 24,317
     
Net interest income plus non-interest income   $ 38,002  $ 39,006
 Plus non-GAAP adjustment:    
 Tax-equivalent income  1,307  1,008
 Less non-GAAP adjustments:    
 Securities gains  20  203
 OTTI recognized in earnings  (41)  --
Net interest income plus non-interest income - as adjusted  $ 39,330  $ 39,811
     
Efficiency ratio–Non-GAAP 65.09% 61.08%
     
Tangible common equity ratio:    
Total stockholders' equity  $ 409,076  $ 471,857
Accumulated other comprehensive (income) loss  2,260  (477)
Goodwill  (76,816)  (76,816)
Other intangible assets, net  (6,118)  (8,042)
Preferred stock  --  (80,257)
Tangible common equity  $ 328,402  $ 306,265
     
Total assets  $ 3,549,533  $ 3,673,246
Goodwill  (76,816)  (76,816)
Other intangible assets, net  (6,118)  (8,042)
Tangible assets  $ 3,466,599  $ 3,588,388
     
Tangible common equity ratio 9.47% 8.53%
       
Sandy Spring Bancorp, Inc. and Subsidiaries      
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION       
       
  March 31, December 31, March 31,
(Dollars in thousands) 2011 2010 2010
Assets (Unaudited)   (Unaudited)
 Cash and due from banks  $ 43,738  $ 44,696  $ 39,405
 Federal funds sold  1,564  1,813  1,543
 Interest-bearing deposits with banks  33,694  16,608  148,059
 Cash and cash equivalents  78,996  63,117  189,007
 Residential mortgage loans held for sale (at fair value)   10,892  22,717  8,937
 Investments available-for-sale (at fair value)  964,692  907,283  832,259
 Investments held-to-maturity --- fair value of $91,084, $104,124 and $124,265 at      
 March 31, 2011, December 31, 2010 and March 31, 2010, respectively  88,858  101,590  119,376
 Other equity securities  34,070  34,070  34,331
 Total loans and leases  2,150,049  2,156,232  2,256,657
 Less: allowance for loan and lease losses  (58,918)  (62,135)  (69,575)
 Net loans and leases  2,091,131  2,094,097  2,187,082
 Premises and equipment, net  48,873  49,004  48,780
 Other real estate owned  7,960  9,493  6,796
 Accrued interest receivable  12,893  12,570  13,220
 Goodwill  76,816  76,816  76,816
 Other intangible assets, net   6,118  6,578  8,042
 Other assets  128,234  142,053  148,600
Total assets  $ 3,549,533  $ 3,519,388  $ 3,673,246
       
Liabilities      
 Noninterest-bearing deposits  $ 619,905  $ 566,812  $ 560,027
 Interest-bearing deposits  1,979,729  1,983,060  2,093,421
 Total deposits  2,599,634  2,549,872  2,653,448
 Securites sold under retail repurchase agreements and federal funds purchased  75,516  96,243  78,416
 Advances from FHLB  405,671  405,758  411,341
 Subordinated debentures  35,000  35,000  35,000
 Accrued interest payable and other liabilities  24,636  24,946  23,184
 Total liabilities  3,140,457  3,111,819  3,201,389
       
Stockholders' Equity      
 Preferred stock—par value $1.00 (liquidation preference of $1,000 per share) shares authorized,      
 issued and outstanding 83,094, net of discount of $2,837 at March 31, 2010  --  --  80,257
 Common stock --- par value $1.00; shares authorized 49,916,906; shares issued and      
 outstanding 24,084,423, 24,046,627 and 23,985,149 at March 31, 2011,      
 December 31, 2010 and March 31, 2010, respectively  24,085  24,047  23,985
 Warrants  --  3,699  3,699
 Additional paid in capital  176,799  177,344  175,684
 Retained earnings  210,452  205,099  187,755
 Accumulated other comprehensive income (loss)   (2,260)  (2,620)  477
 Total stockholders' equity  409,076  407,569  471,857
Total liabilities and stockholders' equity  $ 3,549,533  $ 3,519,388  $ 3,673,246
     
Sandy Spring Bancorp, Inc. and Subsidiaries    
CONDENSED CONSOLIDATED STATEMENTS OF INCOME/LOSS (Unaudited)
     
  Three Months Ended
  March 31,  
(Dollars in thousands, except per share data) 2011 2010
Interest Income:    
 Interest and fees on loans and leases  $ 26,990  $ 29,374
 Interest on loans held for sale  122  81
 Interest on deposits with banks  18  34
 Interest and dividends on investment securities:    
 Taxable  5,440  6,006
 Exempt from federal income taxes  2,179  1,864
 Interest on federal funds sold  1  1
 Total interest income  34,750  37,360
Interest Expense:    
Interest on deposits  2,913  5,290
Interest on retail repurchase agreements and federal funds purchased  53  72
Interest on advances from FHLB  3,551  3,620
Interest on subordinated debt  223  219
 Total interest expense  6,740  9,201
Net interest income  28,010  28,159
Provision for loan and lease losses  1,515  15,025
 Net interest income after provision for loan and lease losses  26,495  13,134
Non-interest Income:    
 Investment securities gains  20  203
 Total other-than-temporary impairment ("OTTI") losses  (100)  --
 Portion of OTTI losses recognized in other comprehensive income, before taxes  59  --
 Net OTTI recognized in earnings  (41)  --
 Service charges on deposit accounts  2,252  2,626
 Mortgage banking activities  455  428
 Fees on sales of investment products  858  741
 Trust and investment management fees  2,787  2,449
 Insurance agency commissions  1,180  1,989
 Income from bank owned life insurance  646  693
 Visa check fees  834  740
 Other income  1,001  978
 Total non-interest income  9,992  10,847
Non-interest Expenses:    
 Salaries and employee benefits  14,624  13,371
 Occupancy expense of premises  3,143  3,090
 Equipment expenses  1,142  1,214
 Marketing  485  516
 Outside data services  995  1,123
 FDIC insurance  1,044  1,141
 Amortization of intangible assets  461  496
 Other expenses  4,168  3,862
 Total non-interest expenses  26,062  24,813
Income (loss) before income taxes  10,425  (832)
Income tax expense (benefit)  3,134  (1,333)
 Net income  $ 7,291  $ 501
Preferred stock dividends and discount accretion  --   1,200
 Net income (loss) available to common stockholders  $ 7,291  $ (699)
     
Net Income Per Share Amounts:    
Basic net income per share  $ 0.30  $ 0.03
Basic net income (loss) per common share  0.30  (0.04)
Diluted net income per share  $ 0.30  $ 0.03
Diluted net income (loss) per common share  0.30  (0.04)
Dividends declared per common share  $ 0.08  $ 0.01
           
Sandy Spring Bancorp, Inc. and Subsidiaries          
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA (Unaudited)    
           
  2011 2010
(Dollars in thousands, except per share data) Q1 Q4 Q3 Q2 Q1
Profitability for the quarter:          
Tax-equivalent interest income  $ 36,057  $ 37,466  $ 38,688  $ 38,663  $ 38,368
Interest expense 6,740 7,161 7,868 8,512 9,201
Tax-equivalent net interest income 29,317 30,305 30,820 30,151 29,167
 Tax-equivalent adjustment 1,307 1,352 1,321 1,155 1,008
Provision for loan and lease losses 1,515  2,323 2,453 6,107 15,025
Non-interest income 9,992  11,722 10,539 10,674 10,847
Non-interest expenses 26,062  26,201 25,140 24,758 24,813
Income (loss) before income taxes 10,425  12,151 12,445 8,805 (832)
Income tax expense (benefit) 3,134  3,875 3,961 2,546 (1,333)
Net Income  7,291  8,276 8,484 6,259 501
Net Income (loss) available to common stockholders  $ 7,291  $ 6,604  $ 6,410  $ 5,056  $ (699)
Financial ratios:          
Return on average assets 0.84% 0.73% 0.70% 0.56% (0.08)%
Return on average common equity 7.26% 6.34% 6.26% 5.13% (0.92)%
Net interest margin 3.65% 3.61% 3.64% 3.58% 3.56%
Efficiency ratio - GAAP (1) 68.58% 64.42% 62.79% 62.41% 63.61%
Efficiency ratio - Non-GAAP (1) 65.09% 61.85% 59.08% 59.44% 61.08%
Per share data:          
Basic net income per share  $ 0.30  $ 0.34  $ 0.35  $ 0.26  $ 0.03
Basic net income (loss) per common share  0.30  0.27  0.27  0.21  (0.04)
Diluted net income per share  0.30  0.34  0.35  0.26  0.03
Diluted net income (loss) per common share  0.30  0.27  0.27  0.21  (0.04)
Dividends declared per common share  0.08  0.01  0.01  0.01  0.01
Book value per common share  16.99  16.95  17.14  16.80  16.33
Average fully diluted shares 24,115,906  24,087,482 24,102,497 24,033,158 17,243,415
Non-interest income:          
Securities gains  $ 20  $ 473  $ 25  $ 95  $ 203
Net OTTI recognized in earnings  (41)  (43)  (380)  (89)  --
Service charges on deposit accounts  2,252  2,342  2,567  2,791  2,626
Mortgage banking activities  455  914  1,516  806  428
Fees on sales of investment products  858  974  782  941  741
Trust and investment management fees  2,787  2,799  2,505  2,534  2,449
Insurance agency commissions  1,180  1,334  978  928  1,989
Income from bank owned life insurance  646  695  709  703  693
Visa check fees  834  887  843  855  740
Other income  1,001  1,347  994  1,110  978
 Total non-interest income  $ 9,992  $ 11,722  $ 10,539  $ 10,674  $ 10,847
Non-interest expense:          
Salaries and employee benefits  $ 14,624  $ 14,077  $ 13,841  $ 14,181  $ 13,371
Occupancy expense of premises 3,143  2,852 2,826 2,709 3,090
Equipment expenses 1,142  1,153 1,137 1,304 1,214
Marketing 485  681 589 573 516
Outside data services 995  985 966 918 1,123
FDIC insurance 1,044  1,114 1,056 1,186 1,141
Amortization of intangible assets 461  472 495 496 496
Other expenses 4,168  4,867 4,230 3,391 3,862
 Total non-interest expense  $ 26,062  $ 26,201  $ 25,140  $ 24,758  $ 24,813
           
(1) The GAAP efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of
Income. The traditional, non-GAAP efficiency ratio excludes intangible asset amortization and the goodwill impairment loss; 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)      
           
  2011 2010
(Dollars in thousands) Q1 Q4 Q3 Q2 Q1
Balance sheets at quarter end:          
Residential mortgage loans  $ 444,519  $ 436,534  $ 442,723  $ 458,502  $ 460,129
Residential construction loans 84,939 91,273 92,485 86,393 83,902
Commercial ADC loans 151,135 151,061 153,139 155,751 177,498
Commercial investor real estate loans 355,967 327,782 335,426 328,244 316,336
Commercial owner occupied real estate loans 509,215 503,286 511,453 511,673 518,271
Commercial business loans 231,448 250,255 240,671 263,886 279,520
Leasing 12,477 15,551 17,895 20,823 23,474
Consumer loans 360,349 380,490 391,415 393,560 397,527
 Total loans and leases 2,150,049 2,156,232 2,185,207 2,218,832 2,256,657
 Less: allowance for loan and lease losses (58,918) (62,135) (67,282) (71,377) (69,575)
 Net loans and leases 2,091,131 2,094,097 2,117,925 2,147,455 2,187,082
Goodwill 76,816 76,816 76,816 76,816 76,816
Other intangible assets, net 6,118 6,578 7,050 7,546 8,042
Total assets 3,549,533 3,519,388 3,606,617 3,701,150 3,673,246
Total deposits 2,599,634 2,549,872 2,585,496 2,659,956 2,653,448
Customer repurchase agreements 75,516 86,243 97,884 86,062 78,416
Total stockholders' equity 409,076 407,569 451,717 483,681 471,857
Quarterly average balance sheets:          
Residential mortgage loans  $ 458,329  $ 461,700  $ 466,437  $ 467,970  $ 462,803
Residential construction loans 85,891 92,033 87,522 85,617 89,732
Commercial ADC loans 149,071 155,795 154,863 165,510 182,918
Commercial investor real estate loans 340,008 330,717 335,279 324,717 317,671
Commercial owner occupied real estate loans 500,875 505,248 512,370 512,997 522,398
Commercial business loans 236,949 240,083 253,058 271,839 292,844
Leasing 14,009 16,562 19,295 22,329 24,648
Consumer loans 367,261 387,375 393,491 395,833 398,233
 Total loans and leases 2,152,393 2,189,513 2,222,315 2,246,812 2,291,247
Securities 1,054,740 1,112,128 1,058,175 1,013,756 970,681
Total earning assets 3,237,556 3,332,705 3,360,758 3,379,388 3,318,070
Total assets 3,500,807 3,594,812 3,620,881 3,645,090 3,591,786
Total interest-bearing liabilities 2,485,451 2,534,716 2,571,000 2,596,353 2,653,187
Noninterest-bearing demand deposits 582,441 587,570 568,835 547,245 524,313
Total deposits 2,548,117 2,584,025 2,607,190 2,612,633 2,640,853
Customer repurchase agreements 79,067 92,049 87,927 85,178 81,622
Total stockholders' equity 407,007 446,256 455,101 475,521 387,099
Capital and credit quality measures:          
Average equity to average assets 11.63% 12.41% 12.57% 13.05% 10.78%
Allowance for loan and lease losses to loans and leases 2.74% 2.88% 3.08% 3.22% 3.08%
Non-performing loans to total loans 4.11% 4.08% 4.27% 4.93% 6.05%
Non-performing assets to total assets 2.71% 2.78% 2.87% 3.19% 3.90%
Annualized net charge-offs to average loans and leases (1) 0.89% 1.37% 1.18% 0.77% 1.78%
Allowance for loan and lease losses to non-performing loans 66.69% 70.57% 72.08% 65.30% 50.98%
Net charge-offs   $ 4,732  $ 7,470  $ 6,548  $ 4,305  $ 10,009
Non-performing assets:          
 Non-accrual loans and leases  $ 66,905  $ 63,327  $ 73,876  $ 83,887  $ 110,719
 Loans and leases 90 days past due  7,176  14,154  18,268  24,226  25,085
 Restructured loans and leases  14,266  10,571  1,199  1,199  682
 Total non-performing loans  88,347  88,052  93,343  109,312  136,486
 Other real estate owned, net  7,960  9,493  10,011  8,730  6,796
 Other assets owned  --   200  200  --   -- 
Total non-performing assets  $ 96,307  $ 97,745  $ 103,554  $ 118,042  $ 143,282
(1) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.        
           
Sandy Spring Bancorp, Inc. and Subsidiaries          
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (Unaudited)      
             
  Three Months Ended March 31,
    2011     2010  
       Annualized      Annualized 
  Average  (1)  Average Average  (1)  Average
(Dollars in thousands and tax-equivalent) Balances Interest Yield/Rate Balances Interest Yield/Rate
Assets            
Residential mortgage loans (3)  $ 458,329  $ 5,743 5.01%  $ 462,803  $ 6,479 5.61%
Residential construction loans 85,891 908 4.29 89,732 1,094 4.94
Commercial ADC loans 149,071 1,535 4.18 182,918 1,589 3.52
Commercial investor real estate loans 340,008 5,079 6.00 317,671 4,714 6.02
Commercial owner occupied real estate loans 500,875 7,429 6.05 522,398 7,750 6.02
Commercial business loans 236,949 2,843 4.87 292,844 3,562 4.93
Leasing 14,009 229 6.53 24,648 440 7.14
Consumer loans 367,261 3,346 3.72 398,233 3,827 3.90
 Total loans and leases (2) 2,152,393 27,112 5.09 2,291,247 29,455 5.20
Taxable securities 846,877 5,783 2.73 802,150 6,221 3.10
Tax-exempt securities (4) 207,863 3,143 6.05 168,531 2,657 6.82
Interest-bearing deposits with banks 28,839 18 0.25 54,416 34 0.26
Federal funds sold 1,584  1 0.16 1,726  1 0.14
 Total interest-earning assets 3,237,556 36,057 4.49 3,318,070 38,368 4.69
             
Less: allowance for loan and lease losses (61,592)     (67,195)    
Cash and due from banks 42,948     45,036    
Premises and equipment, net 49,189     49,344    
Other assets 232,706     246,531    
 Total assets  $3,500,807      $3,591,786    
             
Liabilities and Stockholders' Equity            
Interest-bearing demand deposits  $ 317,739  72 0.09%  $ 274,122  84 0.12%
Regular savings deposits 175,395 42 0.10 157,997 36 0.09
Money market savings deposits 846,674 934 0.45 909,597 1,573 0.70
Time deposits 625,868 1,865 1.21 774,824 3,597 1.88
 Total interest-bearing deposits 1,965,676 2,913 0.60 2,116,540 5,290 1.01
Other borrowings 79,067 53 0.27 90,179 72 0.33
Advances from FHLB 405,709 3,551 3.55 411,468 3,620 3.57
Subordinated debentures 35,000 223 2.55 35,000 219 2.50
 Total interest-bearing liabilities 2,485,452 6,740 1.10 2,653,187 9,201 1.41
             
Noninterest-bearing demand deposits 582,441     524,313    
Other liabilities 25,907     27,187    
Stockholders' equity 407,007     387,099    
 Total liabilities and stockholders' equity  $3,500,807      $3,591,786    
             
Net interest income and spread    $ 29,317 3.39%    $ 29,167 3.28%
 Less: tax-equivalent adjustment    1,307      1,008  
Net interest income    $ 28,010      $ 28,159  
             
Interest income/earning assets     4.49%     4.69%
Interest expense/earning assets     0.84     1.13
 Net interest margin     3.65%     3.56%
             
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2011 and 2010. The annualized taxable-equivalent adjustments utilized in
 the above table to compute yields aggregated to $1.3 million and $1.0 million in 2011 and 2010, respectively.      
(2) Non-accrual loans are included in the average balances.            
(3) Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.      
(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

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