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Sandy Spring Bancorp Reports Net Income of $21.7 Million for the First Quarter of 2018

Quarterly Performance Demonstrates Company’s Continued Stability and Strength Following Acquisition

OLNEY, Md., April 19, 2018 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR), the parent company of Sandy Spring Bank, today reported net income for the first quarter of 2018 of $21.7 million ($0.61 per diluted share) compared to net income of $15.1 million ($0.63 per diluted share) for the first quarter of 2017 and net income of $8.3 million ($0.34 per diluted share) for the fourth quarter of 2017. The current quarter’s results included the impact of $9.0 million in merger expenses.  Exclusive of the after-tax impact of these expenses, earnings per diluted share would have been approximately $0.80 per share.  The prior quarter’s results included $5.6 million in additional income tax expense from the revaluation of deferred tax assets as a result of the reduction in the corporate income tax rate under the recently enacted Tax Cuts and Jobs Act, as well as $1.8 million in post-tax merger expenses.  Fourth quarter 2017 earnings per share would have been approximately $0.64 per share excluding the combined impact of these items. (Please refer to the Non-GAAP Reconciliation table included with this release for details on the earnings impact of merger related expenses and additional income tax expense related to the Tax Cuts and Jobs Act).

On January 1, 2018, Sandy Spring Bancorp completed its acquisition of WashingtonFirst Bankshares, Inc. (“WashingtonFirst”) of Reston, Virginia.  The results of operations from this acquisition have been included in the consolidated results of operations from the date of the acquisition.  The first quarter of 2018 reflects increased levels of average and actual balances, income and expense as compared to the first quarter of 2017.  At the acquisition date, WashingtonFirst had assets of $2.1 billion, loans of $1.7 billion and deposits of $1.6 billion.  As a result of the growth in the balance sheet, interest income and expense increased from the prior year.  Cost savings from the synergies resulting from the combination of the institutions will continue to be realized throughout 2018.

“Our strong quarterly performance demonstrates the value of the recently completed acquisition and our ability to effectively execute on a key part of our overall growth strategy,” said Daniel J. Schrider, President and Chief Executive Officer. “As we mark our 150th anniversary this year, we remain true to what has always driven our success.”

“We are focused on building long-lasting client relationships by helping people and businesses reach their financial goals,” added Schrider. “Providing personalized and remarkable service to all of our clients is what will continue to set us apart as a premier bank in the Greater Washington region and what will continue to drive our future growth.”

First Quarter Highlights: 

  • Total assets, loans and deposits grew by 52%, 52% and 48%, respectively compared to the prior year primarily as a result of the acquisition.
     
  • First quarter results reflected an annualized return on average assets of 1.12% and annualized return on average equity of 8.70% as compared to 1.20% and 11.45% respectively for the first quarter of 2017.  Exclusive of merger costs on an after tax basis, the return on average assets and return on average equity would have been 1.47% and 11.40%, respectively.

  • The net interest margin was 3.58% for the first quarter of 2018, compared to 3.51% for the first quarter of 2017 and 3.57% for the fourth quarter of 2017. The fourth quarter’s interest margin would have been 3.53% after excluding the recovery of interest income from a previously charged-off loan.
     
  • Pre-tax merger expenses recognized in the first quarter of 2018 totaled $9.0 million compared to $2.9 million recognized in the fourth quarter of 2017.
     
  • The effective tax rate for the current quarter was 23.6% compared to 33.5% for the same quarter of the prior year.
     
  • Tangible book value declined 5% at the end of the first quarter to $19.12 per share as compared to $20.18 at the end of 2017 as a result of the acquisition.   
     
  • The Non-GAAP efficiency ratio which excludes merger costs was 49.54% for the current quarter as compared to 54.78% for the first quarter of 2017 and 55.69% for the fourth quarter of 2017.

Review of Balance Sheet and Credit Quality

As a result of the WashingtonFirst acquisition, total assets grew to $7.9 billion at March 31, 2018 as compared to $5.2 billion at March 31, 2017. Total loans at March 31, 2018 were $6.1 billion compared to $4.0 billion at March 31, 2017.  Organic loan growth during the first quarter of 2018 was $0.1 billion. This growth is net of $60 million in portfolio sales during the quarter from mortgage loans held for investment.

Combined noninterest-bearing and interest-bearing checking account balances at March 31, 2018, an important performance driver of multiple-product banking relationships with clients, increased by 36% compared to balances at March 31, 2017.

Tangible common equity totaled $678 million at March 31, 2018, compared to $463 million at March 31, 2017. The asset and equity growth from the merger was affected by the growth in intangibles associated with the recent acquisition resulting in a decline in the ratio of tangible common equity to tangible assets to 8.99% at March 31, 2018 as compared to 9.06% at March 31, 2017.  At March 31, 2018, the Company had a total risk-based capital ratio of 12.27%, a common equity tier 1 risk-based capital ratio of 10.92%, a tier 1 risk-based capital ratio of 11.08% and a tier 1 leverage ratio of 9.21%.

The level of non-performing loans to total loans decreased to 0.48% at March 31, 2018, compared to 0.77% at March 31, 2017, as a result of the growth in the loan portfolio.  At March 31, 2018, non-performing loans totaled $29.4 million compared to $30.9 million at March 31, 2017, and $29.3 million at December 31, 2017. Non-performing loans include accruing loans 90 days or more past due and restructured loans, but exclude loans that were considered non-performing from the acquired loan portfolios.

Loan charge-offs, net of recoveries, totaled $0.3 million for the first quarter of 2018 compared to $0.4 million for the first quarter of 2017.  The allowance for loan losses represented 0.77% of outstanding loans and 160% of non-performing loans at March 31, 2018, compared to 1.10% of outstanding loans and 142% of non-performing loans at March 31, 2017. The decline in the allowance to outstanding loans ratio is the result of the accounting for credit losses on the loans acquired in the WashingtonFirst acquisition as any incurred credit losses have been embedded in the determination of the fair values of those loans. 

Income Statement Review

Net interest income for the first quarter of 2018 increased 56% compared to the first quarter of 2017 as a result of the WashingtonFirst acquisition and, to a lesser extent, the Company’s organic loan growth during the period.  The net interest margin improved to 3.58% for the first quarter of 2018 compared to 3.51% for the first quarter of 2017. 

The provision for loan losses was $2.0 million for the first quarter of 2018 compared to $0.2 million for the first quarter of 2017 and $0.5 million for the fourth quarter of 2017. The increase in the provision reflects the impact of organic loan growth during the first quarter of 2018.  

Non-interest income increased 36% for the first quarter of 2018 as compared to the first quarter of 2017.  The current quarter included $1.6 million in BOLI life insurance proceeds.   Exclusive of these proceeds, the growth in non-interest income for the quarter was 23% or $2.8 million compared to the prior year quarter.  The majority of this increase was derived from mortgage banking activities and, to a lesser extent, wealth management income and bank card fees.  The increase in mortgage banking activities is attributable to the increased origination volume associated with the mortgage lending operations acquired as part of the WashingtonFirst acquisition. 

Non-interest expenses increased 66% to $49.6 million for the first quarter of 2018 compared to $30.0 million in the first quarter of 2017.  The increase in non-interest expense excluding merger expenses is 36%, primarily in compensation and facility costs.  The non-GAAP efficiency ratio was 49.54% for the first quarter of 2018 compared to 54.78% for the first quarter of 2017 as a result of the growth in net interest income. 

The recently enacted tax legislation resulted in a significant tax rate reduction. This reduction has provided a net income benefit in the current quarter and this benefit will continue to affect future periods.  The resultant effective tax rate at March 31, 2018 was 23.6% as compared to 33.5% at March 31, 2017.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding merger related expenses and additional income tax expense related to the recently enacted Tax Reform, which can vary from period to period, 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. 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 which may be presented by other companies. Please refer to Non-GAAP Reconciliation table included with this release for details on the earnings impact of these items.

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 Webcast of the conference call is available through the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com.  Participants may call 1-800-860-2442. A password is not necessary.  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 9:00 am (ET) May 3, 2018.  A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10118759.

About Sandy Spring Bancorp, Inc.

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank. Independent and community-oriented, Sandy Spring Bank offers a broad range of commercial banking, retail banking, mortgage and trust services throughout central Maryland, Northern Virginia, and the greater Washington, D.C. market. Through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services. Visit www.sandyspringbank.com for more information.

For additional information or questions, please contact:
Daniel J. Schrider, President & Chief Executive Officer, or
Philip J. Mantua, E.V.P. & Chief Financial Officer
Sandy Spring Bancorp
17801 Georgia Avenue
Olney, Maryland 20832
1-800-399-5919 
Email:  DSchrider@sandyspringbank.com 
PMantua@sandyspringbank.com 
Website: www.sandyspringbank.com 

Media Contact:
Jen Schell
301-570-8331
jschell@sandyspringbank.com 

Forward-Looking Statements

Sandy Spring Bancorp 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 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; the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period; and a variety of other matters which, by their nature, are subject to significant uncertainties.  Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2017, 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)       2018     2017   Change
Results of Operations:              
Net interest income     $    62,891   $ 40,253   56 %
Provision for loan losses         1,997     194   n.m.  
Non-interest income         17,118     12,632   36  
Non-interest expenses         49,641     29,981   66  
Income before income taxes         28,371     22,710   25  
Net income         21,665     15,112   43  
               
Pre-tax pre-provision income (5)     $    39,326   $ 22,904   72  
               
Return on average assets         1.12 %   1.20 %  
Return on average common equity         8.70 %   11.45 %  
Net interest margin         3.58 %   3.51 %  
Efficiency ratio - GAAP basis  (1)         62.04 %   56.69 %  
Efficiency ratio - Non-GAAP basis  (1)         49.54 %   54.78 %  
               
Per share data:              
Basic net income     $    0.61   $ 0.63   (3 )%
Diluted net income     $    0.61   $ 0.63   (3 )
Average fully diluted shares         35,683,542     24,158,566   48  
Dividends declared per share     $    0.26   $ 0.26   -  
Book value per share         28.61     22.74   26  
Tangible book value per share         19.12     19.36   (1 )
Outstanding shares         35,463,269     23,930,165   48  
               
Financial Condition at period-end:              
Investment securities     $    1,040,339   $ 855,707   22 %
Loans         6,061,551     3,992,996   52  
Interest-earning assets         7,285,731     4,919,927   48  
Assets         7,894,918     5,201,164   52  
Deposits         5,627,206     3,799,198   48  
Interest-bearing liabilities         5,057,645     3,380,937   50  
Stockholders' equity         1,014,608     544,261   86  
               
Capital ratios:              
Tier 1 leverage  (4)         9.21 %   9.26 %  
Tier 1 capital to risk-weighted assets  (4)         11.08 %   11.02 %  
Total regulatory capital to risk-weighted assets  (4)         12.27 %   12.06 %  
Common equity tier 1 capital to risk-weighted assets  (4)         10.92 %   11.02 %  
Tangible common equity to tangible assets  (2)         8.99 %   9.06 %  
Average equity to average assets         12.88 %   10.47 %  
               
Credit quality ratios:              
Allowance for loan losses to loans         0.77 %   1.10 %  
Non-performing loans to total loans         0.48 %   0.77 %  
Non-performing assets to total assets         0.41 %   0.62 %  
Allowance for loan losses to non-performing loans         159.67 %   142.14 %  
Annualized net charge-offs to average loans  (3)         0.02 %   0.04 %  
               


(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 from non-interest expense; securities gains (losses) from non-interest income; 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, excluding residential mortgage loans held-for-sale.
(4) Estimated ratio at March 31, 2018.
(5) Excludes merger expenses.


               
Sandy Spring Bancorp, Inc. and Subsidiaries              
RECONCILIATION TABLE - UNAUDITED              
               
       
    Three Months Ended  
    March 31,   December 31,   March 31,  
(Dollars in thousands, except per share data)   2018   2017   2017  
Pre-tax pre-provision income (1):              
Net income   $    21,665     $ 8,267     $ 15,112    
Plus Non-GAAP adjustment:              
Merger expenses       8,958       2,920       -    
Income taxes       6,706       11,933       7,598    
Provision for loan losses       1,997       527       194    
Pre-tax pre-provision income   $    39,326     $ 23,647     $ 22,904    
               
Efficiency ratio - GAAP basis:              
Non-interest expenses   $    49,641     $ 35,059     $ 29,981    
               
Net interest income plus non-interest income   $    80,009     $ 55,786     $ 52,885    
               
Efficiency ratio - GAAP basis     62.04 %     62.85 %     56.69 %  
               
               
Efficiency ratio - Non-GAAP basis:              
Non-interest expenses   $    49,641     $ 35,059     $ 29,981    
Less non-GAAP adjustment:              
Amortization of intangible assets       541       25       26    
Merger expenses       8,958       2,920       -    
Non-interest expenses - as adjusted   $    40,142     $ 32,114     $ 29,955    
               
Net interest income plus non-interest income   $    80,009     $ 55,786     $ 52,885    
Plus non-GAAP adjustment:              
Tax-equivalent income       1,085       1,874       1,796    
Less non-GAAP adjustments:              
Securities gains       63       (2 )     2    
Net interest income plus non-interest income - as adjusted   $    81,031     $ 57,662     $ 54,679    
               
Efficiency ratio - Non-GAAP basis     49.54 %     55.69 %     54.78 %  
               
               
Supplemental Non-GAAP Performance Measurements:              
Net income - GAAP   $    21,665     $ 8,267     $ 15,112    
Merger expenses - net of tax       6,719       1,756         -     
Income taxes - Incremental impact of revaluation of deferred tax assets       -        5,544       -    
Net income - Non-GAAP   $    28,384     $ 15,567     $ 15,112    
               
Diluted net income per share - Non-GAAP   $    0.80     $ 0.64     $ 0.63    
Return on average assets - Non-GAAP     1.47 %     1.16 %     1.20 %  
Return on average common equity - Non-GAAP     11.40 %     10.96 %     11.45 %  
               
               
Tangible common equity ratio:              
Total stockholders' equity   $    1,014,608     $ 563,816     $ 544,261    
Accumulated other comprehensive loss       17,618       6,857       5,534    
Goodwill       (342,907 )     (85,768 )     (85,768 )  
Other intangible assets, net       (11,408 )     (580 )     (654 )  
Tangible common equity   $    677,911     $ 484,325     $ 463,373    
               
Total assets   $    7,894,918     $ 5,446,675     $ 5,201,164    
Goodwill       (342,907 )     (85,768 )     (85,768 )  
Other intangible assets, net       (11,408 )     (580 )     (654 )  
Tangible assets   $    7,540,603     $ 5,360,327     $ 5,114,742    
               
Tangible common equity ratio     8.99 %     9.04 %     9.06 %  
               
Outstanding common shares       35,463,269       23,996,293       23,930,165    
Tangible book value per common share   $    19.12     $ 20.18     $ 19.36    
               
(1) Excludes merger expenses.              
               


               
Sandy Spring Bancorp, Inc. and Subsidiaries              
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION  - UNAUDITED              
               
    March 31,   December 31,   March 31,  
(Dollars in thousands)   2018   2017   2017  
Assets              
Cash and due from banks   $    64,064     $ 55,693     $ 48,362    
Federal funds sold       1,407       2,845       2,336    
Interest-bearing deposits with banks       153,948       53,962       51,171    
Cash and cash equivalents       219,419       112,500       101,869    
Residential mortgage loans held for sale (at fair value)       28,486       9,848       17,717    
Investments available-for-sale (at fair value)       977,224       729,507       814,096    
Other equity securities       63,115       45,518       41,611    
Total loans       6,061,551       4,314,248       3,992,996    
Less: allowance for loan losses       (46,931 )     (45,257 )     (43,861 )  
Net loans       6,014,620       4,268,991       3,949,135    
Premises and equipment, net       60,352       54,761       53,346    
Other real estate owned       2,761       2,253       1,294    
Accrued interest receivable       22,383       15,480       14,532    
Goodwill       342,907       85,768       85,768    
Other intangible assets, net       11,408       580       654    
Other assets       152,243       121,469       121,142    
Total assets   $    7,894,918     $ 5,446,675     $ 5,201,164    
               
Liabilities              
Noninterest-bearing deposits   $    1,767,523     $ 1,264,392     $ 1,234,505    
Interest-bearing deposits       3,859,683       2,699,270       2,564,693    
Total deposits       5,627,206       3,963,662       3,799,198    
Securities sold under retail repurchase agreements and federal funds purchased       149,323       119,359       141,244    
Advances from FHLB       1,011,109       765,833       675,000    
Subordinated debentures       37,530       -       -    
Accrued interest payable and other liabilities       55,142       34,005       41,461    
Total liabilities       6,880,310       4,882,859       4,656,903    
               
Stockholders' Equity              
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 35,463,269,              
23,996,293 and 23,930,165 at March 31, 2018, December 31, 2017 and March 31, 2017, respectively       35,463       23,996       23,930    
Additional paid in capital       604,399       168,188       166,614    
Retained earnings       392,364       378,489       359,251    
Accumulated other comprehensive loss       (17,618 )     (6,857 )     (5,534 )  
Total stockholders' equity       1,014,608       563,816       544,261    
Total liabilities and stockholders' equity   $    7,894,918     $ 5,446,675     $ 5,201,164    
               


Sandy Spring Bancorp, Inc. and Subsidiaries        
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED    
         
    Three Months Ended
  March 31,
(Dollars in thousands, except per share data)   2018   2017
Interest Income:        
Interest and fees on loans   $    67,592   $ 40,223
Interest on loans held for sale       368     82
Interest on deposits with banks       357     90
Interest and dividends on investment securities:        
Taxable       5,102     3,608
Exempt from federal income taxes       2,072     1,951
Interest on federal funds sold       13     4
Total interest income       75,504     45,958
Interest Expense:        
Interest on deposits       6,959     2,488
Interest on retail repurchase agreements and federal funds purchased       108     76
Interest on advances from FHLB       5,078     3,129
Interest on subordinated debt       468     12
Total interest expense       12,613     5,705
Net interest income       62,891     40,253
Provision for loan losses       1,997     194
Net interest income after provision for loan losses       60,894     40,059
Non-interest Income:        
Investment securities gains       63     2
Service charges on deposit accounts       2,259     1,964
Mortgage banking activities       2,207     608
Wealth management income       5,061     4,484
Insurance agency commissions       1,824     1,752
Income from bank owned life insurance       2,331     594
Bank card fees       1,370     1,145
Other income       2,003     2,083
Total non-interest income       17,118     12,632
Non-interest Expenses:        
Salaries and employee benefits       23,912     17,801
Occupancy expense of premises       4,942     3,402
Equipment expenses       2,225     1,724
Marketing       1,148     663
Outside data services       1,397     1,392
FDIC insurance       1,193     805
Amortization of intangible assets       541     26
Merger expenses       8,958     -
Other expenses       5,325     4,168
Total non-interest expenses       49,641     29,981
Income before income taxes       28,371     22,710
Income tax expense       6,706     7,598
  Net income   $    21,665   $ 15,112
         
Net Income Per Share Amounts:        
Basic net income per share   $    0.61   $ 0.63
Diluted net income per share   $    0.61   $ 0.63
Dividends declared per share   $    0.26   $ 0.26
         


                       
Sandy Spring Bancorp, Inc. and Subsidiaries                      
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED                  
                       
    2018   2017  
(Dollars in thousands, except per share data)   Q1   Q4   Q3   Q2   Q1  
Profitability for the Quarter:                      
Tax-equivalent interest income   $    76,589     $ 52,550     $ 51,477     $ 50,477     $ 47,754    
Interest expense       12,613       7,184       6,892       6,250       5,705    
Tax-equivalent net interest income       63,976       45,366       44,585       44,227       42,049    
Tax-equivalent adjustment       1,085       1,874       1,888       1,901       1,796    
Provision for loan losses       1,997       527       934       1,322       194    
Non-interest income       17,118       12,294       12,746       13,571       12,632    
Non-interest expenses       49,641       35,059       31,191       32,868       29,981    
Income before income taxes       28,371       20,200       23,318       21,707       22,710    
Income tax expense       6,706       11,933       8,229       6,966       7,598    
Net income   $    21,665     $ 8,267     $ 15,089     $ 14,741     $ 15,112    
Financial Performance:                      
Pre-tax pre-provision income  (2)   $    39,326     $ 23,647     $ 24,597     $ 24,016     $ 22,904    
Return on average assets     1.12 %     0.61 %     1.13 %     1.14 %     1.20 %  
Return on average common equity     8.70 %     5.82 %     10.74 %     10.80 %     11.45 %  
Net interest margin     3.58 %     3.57 %     3.54 %     3.60 %     3.51 %  
Efficiency ratio - GAAP basis  (1)     62.04 %     62.85 %     56.26 %     58.80 %     56.69 %  
Efficiency ratio - Non-GAAP basis  (1)     49.54 %     55.69 %     53.76 %     54.10 %     54.78 %  
Per Share Data:                      
Basic net income per share   $    0.61     $ 0.34     $ 0.62     $ 0.61     $ 0.63    
Diluted net income per share   $    0.61     $ 0.34     $ 0.62     $ 0.61     $ 0.63    
Average fully diluted shares     35,683,542       24,228,471       24,223,004       24,262,745       24,158,566    
Dividends declared per common share   $    0.26     $ 0.26     $ 0.26     $ 0.26     $ 0.26    
Non-interest Income:                      
Securities gains (losses)   $    63     $ (2 )   $ -     $ 1,273     $ 2    
Service charges on deposit accounts       2,259       2,177       2,140       2,017       1,964    
Mortgage banking activities       2,207       654       632       840       608    
Wealth management income       5,061       5,054       4,864       4,744       4,484    
Insurance agency commissions       1,824       1,307       1,950       1,222       1,752    
Income from bank owned life insurance       2,331       595       609       605       594    
Bank card fees       1,370       1,218       1,211       1,253       1,145    
Other income       2,003       1,291       1,340       1,617       2,083    
Total Non-interest Income   $    17,118     $ 12,294     $ 12,746     $ 13,571     $ 12,632    
Non-interest Expense:                      
Salaries and employee benefits   $    23,912     $ 18,607     $ 18,442     $ 18,282     $ 17,801    
Occupancy expense of premises       4,942       3,146       3,294       3,211       3,402    
Equipment expenses       2,225       1,802       1,722       1,767       1,724    
Marketing       1,148       896       784       776       663    
Outside data services       1,397       1,441       1,286       1,367       1,392    
FDIC insurance       1,193       827       850       823       805    
Amortization of intangible assets       541       25       25       25       26    
Merger expenses       8,958       2,920       345       987       -    
Professional fees       1,040       1,439       1,053       1,045       955    
Other real estate owned expenses       38       14       4       (6 )     5    
Other expenses       4,247       3,942       3,386       4,591       3,208    
Total Non-interest Expense   $    49,641     $ 35,059     $ 31,191     $ 32,868     $ 29,981    
                       


(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 from non-interest expense; excludes securities gains; and adds the tax-equivalent adjustment to net interest income.  See the Reconciliation Table included with these Financial Highlights.
(2)  Excludes merger expenses


                       
Sandy Spring Bancorp, Inc. and Subsidiaries                      
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED                  
                       
    2018   2017  
(Dollars in thousands)   Q1   Q4   Q3   Q2   Q1  
Balance Sheets at Quarter End:                      
Residential mortgage loans   $    992,287     $ 921,435     $ 882,890     $ 871,766     $ 848,814    
Residential construction loans       215,445       176,687       171,814       169,901       170,285    
Commercial AD&C loans       564,871       292,443       295,222       314,259       309,350    
Commercial investor real estate loans       1,928,439       1,112,710       1,104,669       1,069,988       979,410    
Commercial owner occupied real estate loans       1,174,739       857,196       831,461       797,629       772,443    
Commercial business loans       652,797       497,948       451,667       451,570       457,216    
Consumer loans     532,973       455,829       456,395       458,058       455,478    
Total loans     6,061,551       4,314,248       4,194,118       4,133,171       3,992,996    
Allowance for loan losses     (46,931 )     (45,257 )     (44,924 )     (45,079 )     (43,861 )  
Loans held for sale     28,486       9,848       7,084       5,743       17,717    
Investment securities     1,040,339       775,025       795,922       821,491       855,707    
Interest-earning assets     7,285,731       5,155,928       5,049,229       4,988,704       4,919,927    
Total assets     7,894,918       5,446,675       5,334,788       5,270,521       5,201,164    
Noninterest-bearing demand deposits     1,767,523       1,264,392       1,312,710       1,302,536       1,234,505    
Total deposits     5,627,206       3,963,662       3,955,792       3,885,445       3,799,198    
Customer repurchase agreements       149,323       119,359       146,569       127,312       141,244    
Total interest-bearing liabilities     5,057,645       3,584,462       3,422,568       3,380,221       3,380,937    
Total stockholders' equity     1,014,608       563,816       564,480       554,683       544,261    
Quarterly Average Balance Sheets:                      
Residential mortgage loans   $   1,117,478     $ 903,660     $ 880,782     $ 860,081     $ 847,896    
Residential construction loans       193,327       171,239       172,921       169,130       157,152    
Commercial AD&C loans       582,876       289,737       291,569       302,924       310,325    
Commercial investor real estate loans       1,988,340       1,114,960       1,090,641       1,010,389       945,080    
Commercial owner occupied real estate loans       940,065       842,642       808,802       776,279       774,964    
Commercial business loans       657,372       454,330       459,779       454,724       462,444    
Consumer loans       538,198       458,378       457,526       461,672       458,162    
Total loans       6,017,656       4,234,946       4,162,020       4,035,199       3,956,023    
Loans held for sale       35,768       5,862       7,093       7,077       7,402    
Investment securities     1,062,325       780,522       813,179       842,837       818,287    
Interest-earning assets     7,212,878       5,061,075       5,019,133       4,922,389       4,829,208    
Total assets     7,841,611       5,346,625       5,297,368       5,202,398       5,111,698    
Noninterest-bearing demand deposits     1,651,258       1,322,157       1,293,470       1,251,396       1,159,715    
Total deposits     5,489,715       3,991,936       3,916,657       3,810,180       3,673,731    
Customer repurchase agreements       136,694       139,125       133,145       132,552       128,485    
Total interest-bearing liabilities     5,116,904       3,419,669       3,407,279       3,360,128       3,375,002    
Total stockholders' equity     1,010,106       563,506       557,282       547,229       535,308    
Financial Measures:                      
Average equity to average assets     12.88 %     10.54 %     10.52 %     10.52 %     10.47 %  
Investment securities to earning assets     14.28 %     15.03 %     15.76 %     16.47 %     17.39 %  
Loans to earning assets     83.20 %     83.68 %     83.06 %     82.85 %     81.16 %  
Loans to assets     76.78 %     79.21 %     78.62 %     78.42 %     76.77 %  
Loans to deposits     107.72 %     108.85 %     106.02 %     106.38 %     105.10 %  
Capital Measures:                      
Tier 1 leverage  (1)     9.21 %     9.24 %     9.28 %     9.26 %     9.26 %  
Tier 1 capital to risk-weighted assets  (1)     11.08 %     10.84 %     10.99 %     10.96 %     11.02 %  
Total regulatory capital to risk-weighted assets  (1)     12.27 %     11.85 %     12.01 %     12.00 %     12.06 %  
Common equity tier 1 capital to risk-weighted assets  (1)     10.92 %     10.84 %     10.99 %     10.96 %     11.02 %  
Book value per share   $    28.61     $ 23.50     $ 23.53     $ 23.13     $ 22.74    
Outstanding shares       35,463,269       23,996,293       23,990,370       23,983,997       23,930,165    
(1) Estimated ratio at March 31, 2018                      
                       


                     
Sandy Spring Bancorp, Inc. and Subsidiaries                    
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED                
                     
    2018   2017
(Dollars in thousands)   March 31,   December 31,   September 30,   June 30,   March 31,
Non-Performing Assets:                    
Loans 90 days past due:                    
Commercial business   $    -     $ -     $ -     $ -     $ -  
Commercial real estate:                    
Commercial AD&C       -       -       -       -       -  
Commercial investor real estate       -       -       -       -       -  
Commercial owner occupied real estate       -       -       -       424       -  
Consumer       126       -       1       4       -  
Residential real estate:                    
Residential mortgage       -       225       225       -       232  
Residential construction       -       -       -       -       -  
Total loans 90 days past due       126       225       226       428       232  
Non-accrual loans:                    
Commercial business       6,634       6,703       6,091       6,807       4,849  
Commercial real estate:                    
Commercial AD&C       136       136       137       137       137  
Commercial investor real estate       5,813       5,575       5,589       6,934       7,970  
Commercial owner occupied real estate       3,524       3,582       5,012       4,926       5,106  
Consumer       3,244       2,967       3,152       3,111       3,058  
Residential real estate:                    
Residential mortgage       7,063       7,196       7,345       7,101       6,908  
Residential construction       174       177       182       187       189  
Total non-accrual loans       26,588       26,336       27,508       29,203       28,217  
Total restructured loans - accruing       2,678       2,788       2,471       2,569       2,409  
Total non-performing loans       29,392       29,349       30,205       32,200       30,858  
Other assets and real estate owned (OREO)       2,761       2,253       1,448       1,460       1,294  
Total non-performing assets   $    32,153     $ 31,602     $ 31,653     $ 33,660     $ 32,152  
                     
    For the Quarter Ended,
    March 31,   December 31,   September 30,   June 30,   March 31,
(Dollars in thousands)   2018   2017   2017   2017   2017
Analysis of Non-accrual Loan Activity:                    
Balance at beginning of period   $    26,336     $ 27,508     $ 29,203     $ 28,217     $ 29,211  
Non-accrual balances transferred to OREO       (289 )     (888 )     (411 )     (175 )     (113 )
Non-accrual balances charged-off       (411 )     (446 )     (1,127 )     (179 )     (391 )
Net payments or draws       (357 )     (1,707 )     (1,869 )     (1,804 )     (1,382 )
Loans placed on non-accrual       1,309       2,504       1,712       3,144       1,461  
Non-accrual loans brought current       -       (635 )     -       -       (569 )
Balance at end of period   $    26,588     $ 26,336     $ 27,508     $ 29,203     $ 28,217  
                     
Analysis of Allowance for Loan Losses:                    
Balance at beginning of period   $    45,257     $ 44,924     $ 45,079     $ 43,861     $ 44,067  
Provision for loan losses       1,997       527       934       1,322       194  
Less loans charged-off, net of recoveries:                    
Commercial business       322       48       1,029       107       260  
Commercial real estate:                    
Commercial AD&C       (62 )     -       -       (103 )     -  
Commercial investor real estate       (8 )     (8 )     (10 )     (78 )     (5 )
Commercial owner occupied real estate     -       243       5       -       -  
Consumer       99       (71 )     103       189       167  
Residential real estate:                    
Residential mortgage       (22 )     (12 )     (32 )     (3 )     (16 )
Residential construction       (6 )     (6 )     (6 )     (8 )     (6 )
Net charge-offs       323       194       1,089       104       400  
Balance at end of period   $    46,931     $ 45,257     $ 44,924     $ 45,079     $ 43,861  
                     
Asset Quality Ratios:                    
Non-performing loans to total loans     0.48 %     0.68 %     0.72 %     0.78 %     0.77 %
Non-performing assets to total assets     0.41 %     0.58 %     0.59 %     0.64 %     0.62 %
Allowance for loan losses to loans     0.77 %     1.05 %     1.07 %     1.09 %     1.10 %
Allowance for loan losses to non-performing loans     159.67 %     154.20 %     148.73 %     140.00 %     142.14 %
Annualized net charge-offs to average loans     0.02 %     0.02 %     0.10 %     0.01 %     0.04 %
                     


                             
Sandy Spring Bancorp, Inc. and Subsidiaries                            
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED                  
                             
    Three Months Ended March 31,  
    2018     2017  
              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   $    1,117,478     $    10,381     3.72 %   $ 847,896     $ 7,348     3.47 %
Residential construction loans     193,327       1,844     3.87       157,152       1,436     3.71  
Total mortgage loans     1,310,805       12,225     3.74       1,005,048       8,784     3.50  
Commercial AD&C loans     582,876       8,136     5.66       310,325       3,654     4.77  
Commercial investor real estate loans     1,988,340       23,428     4.78       945,080       10,419     4.47  
Commercial owner occupied real estate loans     940,065       10,578     4.56       774,964       9,028     4.72  
Commercial business loans     657,372       8,049     4.97       462,444       5,007     4.39  
Total commercial loans     4,168,653       50,191     4.88       2,492,813       28,108     4.57  
Consumer loans     538,198       5,546     4.24       458,162       3,930     3.50  
Total loans (2)     6,017,656       67,962     4.57       3,956,023       40,822     4.17  
Loans held for sale     35,768       368     4.12       7,402       82     4.44  
Taxable securities     761,392       5,267     2.77       533,577       3,735     2.80  
Tax-exempt securities  (3)     300,933       2,622     3.49       284,710       3,021     4.24  
Total investment securities     1,062,325       7,889     2.97       818,287       6,756     3.30  
Interest-bearing deposits with banks     93,241       357     1.55       45,397       90     0.80  
Federal funds sold     3,888         13     1.32       2,099       4     0.70  
Total interest-earning assets     7,212,878       76,589     4.29       4,829,208       47,754     3.99  
                             
Less:  allowance for loan losses     (45,673 )               (43,728 )          
Cash and due from banks     76,965                 48,820            
Premises and equipment, net     60,143                 53,649            
Other assets     537,298                 223,749            
  Total assets   $    7,841,611               $ 5,111,698            
                             
Liabilities and Stockholders' Equity                            
Interest-bearing demand deposits   $    758,305       204     0.11 %   $ 610,047       114     0.08 %
Regular savings deposits     468,651         301     0.26       315,465       49     0.06  
Money market savings deposits     1,380,380       3,127     0.92       990,103       778     0.32  
Time deposits     1,231,121       3,327     1.10       598,401       1,547     1.05  
Total interest-bearing deposits     3,838,457       6,959     0.74       2,514,016       2,488     0.40  
Other borrowings     139,610         108     0.31       128,486       76     0.24  
Advances from FHLB     1,101,282         5,078     1.87       730,833       3,129     1.74  
Subordinated debentures     37,555         468     4.99       1,667       12     2.90  
Total interest-bearing liabilities     5,116,904       12,613     1.00       3,375,002       5,705     0.69  
                             
Noninterest-bearing demand deposits     1,651,258                 1,159,715            
Other liabilities     63,343                 41,673            
Stockholders' equity     1,010,106                 535,308            
  Total liabilities and stockholders' equity   $    7,841,611               $ 5,111,698            
                             
Net interest income and spread       $    63,976     3.29 %       $ 42,049     3.30 %
Less: tax-equivalent adjustment           1,085                 1,796        
Net interest income       $    62,891               $ 40,253        
                             
Interest income/earning assets           4.29 %           3.99 %
Interest expense/earning assets             0.71             0.48  
Net interest margin           3.58 %           3.51 %
                             


(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 26.13% and 39.88% for 2018 and 2017, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.1 million and $1.8 million in 2018 and 2017, respectively.
(2) Non-accrual loans are included in the average balances.
(3)  Includes only investments that are exempt from federal taxes.

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