SANDY SPRING BANCORP : REPORTS QUARTERLY EARNINGS OF $57.3 MILLION (Form 8-K)
July 22, 2021 at 09:08 am EDT
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SANDY SPRING BANCORP REPORTS QUARTERLY EARNINGS OF $57.3 MILLION
Core Earnings Increase One Year After Acquisitions
OLNEY, MARYLAND, July 22, 2021 - Sandy Spring Bancorp, Inc., (Nasdaq-SASR), the parent company of Sandy Spring Bank, today reported net income of $57.3 million ($1.19 per diluted common share)for the quarter ended June 30, 2021. The current quarter's result compares to net loss of $14.3 million ($0.31 per diluted common share) for the second quarter of 2020 and net income of $75.5 million ($1.58 per diluted common share) for the first quarter of 2021. The results from the second quarter of the prior year reflected the combined impact of merger and acquisition expense associated with the acquisition of Revere Bank ('Revere') in that quarter, the impact of the Covid-19 pandemic on the economic forecast used in the determination of the allowance for credit losses, and the provision for credit losses associated with the Revere acquisition.
For the current quarter, core earnings, which exclude the impact of the provision for credit losses and provision on unfunded loan commitments, merger and acquisition expense, loss on FHLB redemptions, amortization of intangibles and investment securities gains, each on an after-tax basis, were $55.1 million ($1.16 per diluted common share), compared to $51.9 million ($1.10 per diluted common share) for the quarter ended June 30, 2020 and $56.9 million ($1.20 per diluted common share) for the quarter ended March 31, 2021.
The current quarter's provision for credit losses was a credit of $4.2 million as compared to a credit of $34.7 million for the first quarter of 2021. The current and prior quarter's credits for the provision for credit losses were principally the result of the decline in the forecasted unemployment rate and, to a lesser degree, improvements in other forecasted macroeconomic indicators.
'Our acquisitions of Revere Bank and Rembert Pendleton Jackson continue to contribute to our strong financial performance,' said Daniel J. Schrider, President and CEO. 'This quarter marks one year since Revere Bank became part of Sandy Spring Bank. Our increased size and scale, and our unwavering commitment to personalized service, continue to deliver results for our company and our clients. Our wealth group, which includes Rembert Pendleton Jackson, West Financial Services and Sandy Spring Trust, has also achieved significant year over year growth.'
Second Quarter Highlights:
•Core operating earnings increased 6% to $55.1 million for the second quarter of 2021, compared to $51.9 million for the prior year quarter.
•Total assets at June 30, 2021, declined 3% to $12.9 billion compared to $13.3 billion at June 30, 2020. The decline in total assets, year-over-year was primarily the result of the $179.2 million net reduction in loans originated under the Paycheck Protection Program ('PPP' or 'PPP Program') and the $251.5 million decline in the residential mortgage loan portfolio. While the total loan portfolio, excluding PPP loans, decreased 1% due to the combined run-off of residential mortgage and consumer loans, year-over-year organic commercial real estate loan growth was 6%.
•Excluding PPP loans, total loan growth during the current quarter compared to the first quarter of 2021 was 1%, with organic commercial loan growth during the quarter of 2%. Deposits increased 2% during the linked quarter, driven by 6% growth in noninterest-bearing deposits.
•The net interest margin was 3.63% for the second quarter of 2021, compared to 3.47% for the same quarter of 2020, and 3.56% for the first quarter of 2021. Excluding the impact of the amortization of the fair value marks derived from acquisitions, the current quarter's net interest margin would have been 3.60%, compared to 3.19% for second quarter of 2020, and 3.46% for the first quarter of 2021.
•The provision for credit losses was a credit of $4.2 million for the current quarter compared to the prior quarter's credit to the provision of $34.7 million. The credits to the provision continue to be the result of improvements in forecasted economic metrics. The overall credit to the provision for the quarter was partially mitigated by increases
in non-PPP loan balances, individual reserves assessed on a few non-accrual loans in the hospitality industry and adjustments to qualitative factors.
•Non-interest income for the current quarter increased by 15% or $3.3 million compared to the prior year quarter, as wealth management income grew 20% and service charges on deposit accounts increased 62%. Bank card fees grew 42% compared to the prior year quarter as a result of transaction volume. Other non-interest income also grew significantly compared to the prior year as a result of the combination of the full payoff of a purchased credit deteriorated loan and activity-based contractual vendor incentives.
•Non-interest expense decreased $22.5 million or 26% for the second quarter of 2021, compared to the prior year quarter. The prior year's quarter included $22.5 million in merger and acquisition expense, in addition to $5.9 million in prepayment penalties from the liquidation of acquired FHLB borrowings. These reductions from the prior year more than offset the increase in salary and benefit expense in the current year quarter as a result of staffing increases associated with strategic business initiatives.
•Return on average assets ('ROA') for the quarter ended June 30, 2021 was 1.79% and return on average tangible common equity ('ROTCE') was 20.44% compared, to 2.39% and 28.47%, respectively, for the first quarter of 2021. On a non-GAAP basis, the current quarter's core ROA was 1.73% and core ROTCE was 19.68% compared to core ROA of 1.80% and core ROTCE of 21.48% for the prior quarter of 2021. The non-GAAP efficiency ratio for the second quarter of 2021 was 45.36% compared to 42.65% for the first quarter of 2021. The change in the efficiency ratio reflects the impact of the decrease in mortgage banking income and the increase in costs related to various strategic initiatives during the current quarter.
Balance Sheet and Credit Quality
Total assets declined 3% to $12.9 billion at June 30, 2021, as compared to $13.3 billion at June 30, 2020. During this period, total loans declined by 2% to $10.1 billion at June 30, 2021, compared to $10.3 billion at June 30, 2020. Excluding PPP loans, total loans declined 1% to $9.2 billion at June 30, 2021 as compared to the prior year quarter. The year-over-year decline in the total loan portfolio was primarily the result of the $179.2 million net reduction of loans originated under the PPP Program and the $251.5 million decline in the residential mortgage loan portfolio, which was partially offset by year-over-year non-PPP commercial loan growth of $276.9 million or 4%. The year-over-year decline in the mortgage loan portfolio resulted from mortgage loan refinance activity driven by the low interest rate environment and the strategic decision to sell the majority of new mortgage loan production.
Compared to March 31, 2021, total loans, excluding PPP, increased 1% or $69.1 million at June 30, 2021. During this same period, commercial real estate loans increased $178.9 million or 3% and non-PPP commercial business loans declined $13.3 million or 1%.
Deposit growth was 8% during the past twelve months, as noninterest-bearing deposits experienced growth of 16% and interest-bearing deposits grew 3%. This growth was driven primarily by the impact of the PPP program and, to a lesser extent, growth in core deposit relationships.
At June 30, 2021 the remaining outstanding principal balance of PPP loans was $897.2 million. As of July 9, 2021, 4,126 PPP loans totaling $651.2 million have been forgiven and an additional $49.1 million have been repaid by borrowers. At the end of the current quarter, loans with an aggregate balance of $124.2 million remain in deferral status, of which non-accrual loans comprised $56.0 million. Currently, the 93% of loans that had been granted modifications/deferrals due to pandemic-related financial stress have returned to their original payment plans.
Tangible common equity increased to $1.2 billion or 9.28% of tangible assets at June 30, 2021, compared to $983.4 million or 7.63% at June 30, 2020 as a result of accumulated earnings over the preceding twelve months. Excluding the impact of the PPP program from tangible assets at June 30, 2021, the tangible common equity ratio would be 9.98%.At June 30, 2021, the Company had a total risk-based capital ratio of 15.82%, a common equity tier 1 risk-based capital ratio of 12.47%, a tier 1 risk-based capital ratio of 12.47%, and a tier 1 leverage ratio of 9.49%.
The level of non-performing loans to total loans was 0.93% at June 30, 2021, compared to 0.77% at June 30, 2020, and 0.94% at March 31, 2021. At June 30, 2021, non-performing loans totaled $94.3 million, compared to $79.9 million at June 30, 2020, and $98.7 million at March 31, 2021. Non-performing loans include non-accrual loans, accruing loans 90 days or more past due and restructured loans. Loans placed on non-accrual during the current quarter amounted to $1.5 million compared to $27.3 million for the prior year quarter and $0.4 million for the first quarter of 2021. Loans in non-accrual status at quarter end included a few
large borrowings within the hospitality sector with an aggregate balance of $40.9 million. These large loans, which are collateral dependent, had individual reserves amounting to $5.7 million at June 30, 2021.
The Company recorded net charge-offs of $2.2 million for the second quarter of 2021, as compared to net recoveries of $0.4 million for the second quarter of 2020 and net charge-offs of $0.3 million for the first quarter of 2021. The increase in charge-offs in the current quarter compared to the prior quarter and the prior year quarter was primarily the result of the charge-off of an acquired pre-pandemic problem credit.
At June 30, 2021, the allowance for credit losses was $124.0 million or 1.23% of outstanding loans and 131% of non-performing loans, compared to $130.4 million or 1.25% of outstanding loans and 132% of non-performing loans at March 31, 2021. Excluding PPP loans, the allowance for credit losses to outstanding loans was 1.34% and 1.43%, at June 30, 2021 and March 31, 2021, respectively.
Income Statement Review
Quarterly Results
The Company recorded net income of $57.3 million for the three months ended June 30, 2021, compared to a net loss of $14.3 million for the prior year quarter. The current quarter's results include a credit to the provision for credit losses, the continued positive impact of reduced funding cost, and a 15% increase in non-interest income. The second quarter of the prior year's results reflected the combined impact of merger and acquisition expense associated with the Revere acquisition, the impact of the Covid-19 pandemic on the economic forecast used in the determination of the allowance for credit losses, and the additional provision for credit losses associated with the Revere acquisition. Pre-tax, pre-provision, pre-merger income was $71.3 million for the three months ended June 30, 2021 compared to $61.5 million for the prior year quarter.
Net interest income increased $6.5 million or 6% for the second quarter of 2021 compared to the second quarter of 2020, as a result of the significant reduction in interest expense during the preceding twelve months. During this period, as general market interest rates declined significantly, interest income remained stable while interest expense on deposits, notably money market and time deposits, declined, resulting in a $6.6 million decrease in interest expense. Interest expense on interest-bearing deposits declined $8.4 million, which was partially offset by the $1.8 million increase in interest expense on borrowings. The increase in borrowing costs occurred due to the prior year's inclusion of $5.8 million for accelerated amortization of the purchase premium on FHLB advances due to the prepayment of those borrowings. Excluding the accelerated amortization, borrowing cost would have been lower by $4.0 million in the second quarter of 2021. The PPP program contributed $13.2 million to net interest income for the quarter, of which $10.4 million represented origination fees. The net interest margin for the second quarter of 2021 was 3.63% as compared to 3.47% for the same quarter of the prior year as a result of the decreased funding cost during the period. Excluding the net $0.8 million impact of the amortization of the fair value marks derived from acquisitions, the net interest margin for the current quarter would have been 3.60% compared to the adjusted net interest margin of 3.19% for the second quarter of 2020.
The provision for credit losses was a credit of $4.2 million for the second quarter of 2021 compared to a charge of $58.7 million for the second quarter of 2020. The provision for credit losses for the first quarter of 2021 was a credit of $34.7 million. The credits to the provision during 2021 continue to be the result of the improvement in forecasted economic metrics, predominantly the projected unemployment and business bankruptcies rates. The overall credit to the provision for the second quarter of 2021 was partially mitigated by increases in non-PPP loan balances, individual reserves assessed on a few non-accrual loans in the hospitality industry and adjustments to various qualitative factors.
Non-interest income increased $3.3 million or 15% during the current quarter compared to the same quarter of the prior year, as wealth management income grew 20% and service charges on deposit accounts increased 62%. The growth in wealth management income reflects the continued positive impact of the Rembert Pendleton Jackson ('RPJ') acquisition in 2020 in addition to the performance in the financial markets and the expansion of the wealth management client base. The growth in service charge income reflects the impact of the prior year's temporary suspension of certain service fees as well as lower transaction volume, both a resulting reaction to the Covid-19 pandemic. Bank card fees grew 42% compared to the prior year quarter as a result of transaction volume. Other non-interest income also grew significantly compared to the prior year as a result of the combination of the full payoff of a purchased credit deteriorated loan and activity-based contractual vendor incentives.
Non-interest expense decreased $22.5 million or 26% for the second quarter of 2021, compared to the prior year quarter. The prior year's non-interest expense included $22.5 million in merger and acquisition expense, as well as $5.9 million in prepayment penalties from the liquidation of acquired FHLB borrowings. Salary and benefit expense increased $4.7 million as a result of staffing increases associated with strategic business initiatives and the $1.3 million increase in professional fees and services,
primarily consulting fees. Occupancy and equipment expense decreased 8% compared to the prior year due to decreased depreciation and rental expense due to the post-acquisition reduction of banking locations. The cost savings from the post-acquisition location rationalization was offset by increases in advertising costs, outside data services and FDIC insurance.
The non-GAAP efficiency ratio was 45.36% for the current quarter as compared to 43.85% for the second quarter of 2020, and 42.65% for the first quarter of 2021. The modest increase in the efficiency ratio (reflecting an decrease in efficiency) from the second quarter of the prior year to the current year quarter was the result of the 11% growth in non-GAAP expense outpacing the 8% growth in non-GAAP revenue. ROA for the quarter ended June 30, 2021 was 1.79% and ROTCE was 20.44% compared, respectively, to 2.39% and 28.47% for the first quarter of 2021. On a non-GAAP basis, the current quarter's core ROA was 1.73% and core ROTCE was 19.68% compared to core ROA of 1.80% and core ROTCE of 21.48% for the prior quarter of 2021.
Year to Date Results
The Company recorded net income of $132.7 million for the six months ended June 30, 2021 compared to net loss of $4.4 million for the same period in the prior year. Pre-tax, pre-provision, pre-merger income was $136.7 million for the six months ended June 30, 2021 compared to $97.7 million for the prior year. The second quarter of the current year benefited from post-acquisition increased net interest income, a $38.9 million credit to the provision for credit losses, and a 34% increase in non-interest income driven primarily by mortgage banking and wealth management income. The prior year's results reflected the combined impact of merger and acquisition expense associated with the Revere acquisition, the impact of the Covid-19 pandemic on economic forecast used in the determination of the allowance for credit losses and the additional provision for credit losses associated with the acquisition of Revere during that period.
Net interest income for the six months ended June 30, 2021 increased 28% or $46.8 million compared to the prior year. This increase was driven primarily by the acquisition of Revere in the second quarter of 2020 as interest income grew $30.3 million and, to a lesser extent, reduced funding costs as interest expense declined $16.5 million. Contributing to the growth in net interest income, the PPP program generated $18.6 million, net of its associated funding costs, year-over-year. The net interest margin improved to 3.60% for the six months ended June 30, 2021, compared to 3.39% for the prior year. Excluding the net $3.8 million impact of the amortization of the fair value marks derived from acquisitions, the net interest margin for the current year would have been 3.53%. The net interest margin for 2020, excluding the amortization of fair value marks, would have been 3.23%.
The provision for credit losses for the six months ended June 30, 2021 amounted to a credit of $38.9 million as compared to a charge of $83.2 million for the same period in 2020. For the six months ended June 30, 2021, the credit for the provision for credit losses, compared to the prior year's charge to the provision, reflects the impact of the improvement in the most recent forecasted economic metrics, most notably the rate of unemployment and anticipated business bankruptcies.Other economic metrics and factors also contributed to growth in the current period's credit to the provision, which were partially offset by qualitative factors applied in the determination of the allowance. The charge to the provision for credit losses for the same period in 2020 predominantly reflected the combined results of the impact of the deteriorated economic forecasts during the first six months of 2020 and the initial allowance on acquired Revere non-purchased credit deteriorated loans.
Non-interest income increased 34% to $55.1 million for the six months ended June 30, 2021, compared to $41.1 million for 2020. During the current year, income from mortgage banking activities increased $4.5 million as a result of the high levels of new mortgage and refinancing activity resulting from historically low mortgage lending rates. Additionally, wealth management income increased $3.3 million year over year as a result of the first quarter 2020 acquisition of RPJ, in addition to the $818 million growth in assets under management during the past twelve months. Service charge income also increased 10% as customer activity increased. As a result of increased transaction volume, bank card fees grew 28% compared to the prior year period. Other non-interest income also grew significantly compared to the prior year as a result of the combination of the full payoff of a purchased credit deteriorated loan and activity-based contractual vendor incentives.
Non-interest expense decreased 2% to $131.1 million for the six months ended June 30, 2021, compared to $133.2 million for 2020. The current year included $9.1 million in prepayment penalties on FHLB borrowings compared to $5.9 million in prepayment penalties in the prior year. The prior year also included $23.9 million in merger and acquisition expense. Excluding the impact of these items results in a year-over-year growth rate in non-interest expense of 18%. This growth rate was driven by operational and compensation costs associated with the 2020 acquisitions and staffing increases associated with certain strategic initiatives, increased incentive expense associated with mortgage lending and other volume based activities, increased intangible asset amortization, higher FDIC insurance premiums and a rise in professional fees and services.
The effective tax rate for the six months ended June 30, 2021 was 24.39%, compared to a tax benefit rate of 53.71% for the same period in 2020. The current year's effective tax rate reflects a more normalized rate while the prior year's rate reflected the
favorable result of the changes to tax laws in 2020 that expanded the time permitted to utilize previous net operating losses. The Company applied this change to the 2018 acquisition of WashingtonFirst Bankshares, Inc. to realize a tax benefit of $1.8 million for 2020, resulting in a greater proportional benefit from the operating loss in the first six months of 2020.
The non-GAAP efficiency ratio for the first half of the current year was 44.01% compared to 48.21% for the same period in the prior year. The improvement in the current year's efficiency ratio compared to the prior year was the result of the 29% growth in non-GAAP revenue, which outpaced the 18% growth in non-GAAP non-interest expense.
Explanation of Non-GAAP Financial Measures
This news release contains financial information and performance measures determined by methods other than in accordance with generally accepted accounting principles in the United States ('GAAP'). The Company's management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. Non-GAAP measures used in this release consist of the following:
•Tangible common equity and related measures are non-GAAP measures that exclude the impact of goodwill and other intangible assets.
•The non-GAAP efficiency ratio excludes amortization of intangible assets, loss on FHLB redemption, merger and acquisition expense and investment securities gains and includes tax-equivalent income.
•Core earnings and the related measures of core earnings per share, core return on average assets and core return on average tangible common equity reflect net income exclusive of the provision/(credit) for credit losses, provision/(credit) for credit losses on unfunded loan commitments, merger and acquisition expense, amortization of intangible assets, loss on FHLB redemption, and investment securities gains, on a net of tax basis.
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 the non-GAAP Reconciliation tables included with this release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.
Conference Call
The Company's management will host a conference call to discuss its second 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 1-866-235-9910. 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 August 5, 2021. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10157804.
About Sandy Spring Bancorp, Inc.
Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank, a premier community bank in the Greater Washington, D.C. region. With over 60 locations, the bank offers a broad range of commercial and retail banking, mortgage, private banking, and trust services throughout Maryland, Northern Virginia, and Washington, D.C. Through its subsidiaries, Rembert Pendleton Jackson, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services.
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's forward-looking statements are subject to the following principal risks and uncertainties: risks, uncertainties and other factors relating to the COVID-19 pandemic, including the effect of the pandemic on our borrowers and their ability to make payments on their obligations, the effectiveness of vaccination programs, and the effect of remedial actions and stimulus measures adopted by federal, state and local governments; 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, 2020, 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
June 30,
%
Change
Six Months Ended
June 30,
%
Change
(Dollars in thousands, except per share data)
2021
2020
2021
2020
Results of operations:
Net interest income
$
108,046
$
101,514
6
%
$
212,646
$
165,848
28
%
Provision/ (credit) for credit losses
(4,204)
58,686
n/m
(38,912)
83,155
n/m
Non-interest income
26,259
22,924
15
55,125
41,092
34
Non-interest expense
62,975
85,438
(26)
131,148
133,184
(2)
Income/ (loss) before income tax expense/ (benefit)
75,534
(19,686)
n/m
175,535
(9,399)
n/m
Net income/ (loss)
57,263
(14,338)
n/m
132,727
(4,351)
n/m
Net income/ (loss) attributable to common shareholders
$
56,782
$
(14,458)
n/m
$
131,606
$
(4,539)
n/m
Pre-tax pre-provision pre-merger income (1)
$
71,330
$
61,454
16
$
136,668
$
97,664
40
Return on average assets
1.79
%
(0.45)
%
2.09
%
(0.08)
%
Return on average common equity
15.07
%
(4.15)
%
17.84
%
(0.69)
%
Return on average tangible common equity
20.44
%
(5.80)
%
24.35
%
(1.00)
%
Net interest margin
3.63
%
3.47
%
3.60
%
3.39
%
Efficiency ratio - GAAP basis (2)
46.89
%
68.66
%
48.98
%
64.36
%
Efficiency ratio - Non-GAAP basis (2)
45.36
%
43.85
%
44.01
%
48.21
%
Per share data:
Basic net income/ (loss) per common share
$
1.20
$
(0.31)
n/m
$
2.79
$
(0.11)
n/m
Diluted net income/ (loss) per common share
$
1.19
$
(0.31)
n/m
$
2.77
$
(0.11)
n/m
Weighted average diluted common shares
47,523,198
46,988,351
1
%
47,469,470
40,826,748
16
%
Dividends declared per share
$
0.32
$
0.30
7
$
0.64
$
0.60
7
Book value per common share
$
33.02
$
29.58
12
$
33.02
$
29.58
12
Tangible book value per common share (1)
$
24.58
$
20.92
17
$
24.58
$
20.92
17
Outstanding common shares
47,312,982
47,001,022
1
47,312,982
47,001,022
1
Financial condition at period-end:
Investment securities
$
1,482,123
$
1,424,652
4
%
$
1,482,123
$
1,424,652
4
%
Loans
10,092,515
10,343,043
(2)
10,092,515
10,343,043
(2)
Interest-earning assets
12,167,067
12,447,146
(2)
12,167,067
12,447,146
(2)
Assets
12,925,577
13,290,447
(3)
12,925,577
13,290,447
(3)
Deposits
10,866,466
10,076,834
8
10,866,466
10,076,834
8
Interest-bearing liabilities
7,233,536
8,313,546
(13)
7,233,536
8,313,546
(13)
Stockholders' equity
1,562,280
1,390,093
12
1,562,280
1,390,093
12
Capital ratios:
Tier 1 leverage (3)
9.49
%
8.35
%
9.49
%
8.35
%
Common equity tier 1 capital to risk-weighted assets (3)
12.47
%
10.23
%
12.47
%
10.23
%
Tier 1 capital to risk-weighted assets (3)
12.47
%
10.23
%
12.47
%
10.23
%
Total regulatory capital to risk-weighted assets (3)
15.82
%
13.79
%
15.82
%
13.79
%
Tangible common equity to tangible assets (4)
9.28
%
7.63
%
9.28
%
7.63
%
Average equity to average assets
11.91
%
10.78
%
11.73
%
11.67
%
Credit quality ratios:
Allowance for credit losses to loans
1.23
%
1.58
%
1.23
%
1.58
%
Non-performing loans to total loans
0.93
%
0.77
%
0.93
%
0.77
%
Non-performing assets to total assets
0.74
%
0.61
%
0.74
%
0.61
%
Allowance for credit losses to non-performing loans
131.44
%
204.56
%
131.44
%
204.56
%
Annualized net charge-offs to average loans (5)
0.09
%
(0.01)
%
0.05
%
-
%
n/m - not meaningful
(1)Represents a non-GAAP measure.
(2)The efficiency ratio - GAAP basis is non-interest expense divided by net interest income plus non-interest income from the Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, loss on FHLB redemption, and merger and acquisition expense from non-interest expense; securities gains from non-interest income and adds the tax- equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
(3)Estimated ratio at June 30, 2021.
(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. See the Reconciliation Table included with these Financial Highlights.
(5)Calculation utilizes average loans, excluding residential mortgage loans held-for-sale.
Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in thousands)
2021
2020
2021
2020
Pre-tax pre-provision pre-merger income:
Net income/ (loss)
$
57,263
$
(14,338)
$
132,727
$
(4,351)
Plus/ (less) non-GAAP adjustments:
Merger and acquisition expense
-
22,454
45
23,908
Income tax expense/ (benefit)
18,271
(5,348)
42,808
(5,048)
Provision/ (credit) for credit losses
(4,204)
58,686
(38,912)
83,155
Pre-tax pre-provision pre-merger income
$
71,330
$
61,454
$
136,668
$
97,664
Efficiency ratio (GAAP):
Non-interest expense
$
62,975
$
85,438
$
131,148
$
133,184
Net interest income plus non-interest income
$
134,305
$
124,438
$
267,771
$
206,940
Efficiency ratio (GAAP)
46.89
%
68.66
%
48.98
%
64.36
%
Efficiency ratio (Non-GAAP):
Non-interest expense
$
62,975
$
85,438
$
131,148
$
133,184
Less non-GAAP adjustments:
Amortization of intangible assets
1,659
1,998
3,356
2,598
Loss on FHLB redemption
-
5,928
9,117
5,928
Merger and acquisition expense
-
22,454
45
23,908
Non-interest expense - as adjusted
$
61,316
$
55,058
$
118,630
$
100,750
Net interest income plus non-interest income
$
134,305
$
124,438
$
267,771
$
206,940
Plus non-GAAP adjustment:
Tax-equivalent income
930
1,325
1,910
2,433
Less non-GAAP adjustment:
Investment securities gains
71
212
129
381
Net interest income plus non-interest income - as adjusted
$
135,164
$
125,551
$
269,552
$
208,992
Efficiency ratio (Non-GAAP)
45.36
%
43.85
%
44.01
%
48.21
%
Tangible common equity ratio:
Total stockholders' equity
$
1,562,280
$
1,390,093
$
1,562,280
$
1,390,093
Goodwill
(370,223)
(370,547)
(370,223)
(370,547)
Other intangible assets, net
(29,165)
(36,143)
(29,165)
(36,143)
Tangible common equity
$
1,162,892
$
983,403
$
1,162,892
$
983,403
Total assets
$
12,925,577
$
13,290,447
$
12,925,577
$
13,290,447
Goodwill
(370,223)
(370,547)
(370,223)
(370,547)
Other intangible assets, net
(29,165)
(36,143)
(29,165)
(36,143)
Tangible assets
$
12,526,189
$
12,883,757
$
12,526,189
$
12,883,757
Tangible common equity ratio
9.28
%
7.63
%
9.28
%
7.63
%
Outstanding common shares
47,312,982
47,001,022
47,312,982
47,001,022
Tangible book value per common share
$
24.58
$
20.92
$
24.58
$
20.92
Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED (CONTINUED)
OPERATING EARNINGS - METRICS
Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in thousands)
2021
2020
2021
2020
Core earnings (non-GAAP):
Net income/ (loss)
$
57,263
$
(14,338)
$
132,727
$
(4,351)
Plus/ (less) non-GAAP adjustments (net of tax):
Provision/ (credit) for credit losses
(3,132)
43,750
(28,989)
61,992
Provision/ (credit) for credit losses on unfunded loan commitments
(181)
-
(886)
-
Merger and acquisition expense
-
16,739
34
17,823
Amortization of intangible assets
1,236
1,490
2,500
1,937
Loss on FHLB redemption
-
4,419
6,792
4,419
Investment securities gains
(53)
(158)
(96)
(284)
Core earnings (Non-GAAP)
$
55,133
$
51,902
$
112,082
$
81,536
Core earnings per common share (non-GAAP):
Weighted average common shares outstanding - diluted (GAAP)
47,523,198
46,988,351
47,469,470
40,826,748
Earnings per diluted common share (GAAP)
$
1.19
$
(0.31)
$
2.77
$
(0.11)
Core earnings per diluted common share (non-GAAP)
$
1.16
$
1.10
$
2.36
$
2.00
Core return on average assets (non-GAAP):
Average assets (GAAP)
$
12,798,355
$
12,903,156
$
12,797,068
$
10,799,840
Return on average assets (GAAP)
1.79
%
(0.45)
%
2.09
%
(0.08)
%
Core return on average assets (non-GAAP)
1.73
%
1.62
%
1.77
%
1.52
%
Core return on average tangible common equity (non-GAAP):
Average total stockholders' equity (GAAP)
$
1,523,875
$
1,390,544
$
1,500,642
$
1,260,298
Average goodwill
(370,223)
(355,054)
(370,223)
(360,549)
Average other intangible assets, net
(30,224)
(32,337)
(31,056)
(22,074)
Average tangible common equity (non-GAAP)
$
1,123,428
$
1,003,153
$
1,099,363
$
877,675
Return on average tangible common equity (GAAP)
20.44
%
(5.80)
%
24.35
%
(1.00)
%
Core return on average tangible common equity (non-GAAP)
19.68
%
20.81
%
20.56
%
18.68
%
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
(Dollars in thousands)
June 30,
2021
December 31,
2020
June 30,
2020
Assets
Cash and due from banks
$
109,147
$
93,651
$
224,037
Federal funds sold
358
291
401
Interest-bearing deposits with banks
520,989
203,061
610,285
Cash and cash equivalents
630,494
297,003
834,723
Residential mortgage loans held for sale (at fair value)
71,082
78,294
68,765
Investments available-for-sale (at fair value)
1,441,026
1,348,021
1,355,799
Other equity securities
41,097
65,760
68,853
Total loans
10,092,515
10,400,509
10,343,043
Less: allowance for credit losses
(123,961)
(165,367)
(163,481)
Net loans
9,968,554
10,235,142
10,179,562
Premises and equipment, net
55,592
57,720
59,391
Other real estate owned
1,234
1,455
1,389
Accrued interest receivable
40,630
46,431
48,109
Goodwill
370,223
370,223
370,547
Other intangible assets, net
29,165
32,521
36,143
Other assets
276,480
265,859
267,166
Total assets
$
12,925,577
$
12,798,429
$
13,290,447
Liabilities
Noninterest-bearing deposits
$
4,000,636
$
3,325,547
$
3,434,038
Interest-bearing deposits
6,865,830
6,707,522
6,642,796
Total deposits
10,866,466
10,033,069
10,076,834
Securities sold under retail repurchase agreements and federal funds purchased
140,708
543,157
988,605
Advances from FHLB
-
379,075
451,844
Subordinated debt
226,998
227,088
230,301
Total borrowings
367,706
1,149,320
1,670,750
Accrued interest payable and other liabilities
129,125
146,085
152,770
Total liabilities
11,363,297
11,328,474
11,900,354
Stockholders' equity
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 47,312,982, 47,056,777 and 47,001,022 at June 30, 2021, December 31, 2020 and June 30, 2020, respectively
47,313
47,057
47,001
Additional paid in capital
850,555
846,922
843,876
Retained earnings
659,578
557,271
484,392
Accumulated other comprehensive income
4,834
18,705
14,824
Total stockholders' equity
1,562,280
1,469,955
1,390,093
Total liabilities and stockholders' equity
$
12,925,577
$
12,798,429
$
13,290,447
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME/ (LOSS) - UNAUDITED
Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in thousands, except per share data)
2021
2020
2021
2020
Interest income:
Interest and fees on loans
$
107,751
$
106,279
$
215,179
$
182,161
Interest on loans held for sale
549
405
1,086
696
Interest on deposits with banks
47
155
93
335
Interest and dividends on investment securities:
Taxable
4,373
6,650
8,272
12,782
Tax-advantaged
2,103
1,438
4,454
2,810
Interest on federal funds sold
-
-
-
1
Total interest income
114,823
114,927
229,084
198,785
Interest Expense:
Interest on deposits
3,851
12,284
8,681
25,802
Interest on retail repurchase agreements and federal funds purchased
43
600
96
1,180
Interest on advances from FHLB
373
(2,123)
2,649
1,022
Interest on subordinated debt
2,510
2,652
5,012
4,933
Total interest expense
6,777
13,413
16,438
32,937
Net interest income
108,046
101,514
212,646
165,848
Provision/ (credit) for credit losses
(4,204)
58,686
(38,912)
83,155
Net interest income after provision/ (credit) for credit losses
112,250
42,828
251,558
82,693
Non-interest income:
Investment securities gains
71
212
129
381
Service charges on deposit accounts
1,976
1,223
3,828
3,476
Mortgage banking activities
5,776
8,426
15,945
11,459
Wealth management income
9,121
7,604
17,851
14,570
Insurance agency commissions
1,247
1,188
3,400
3,317
Income from bank owned life insurance
705
809
1,385
1,454
Bank card fees
1,785
1,257
3,303
2,577
Other income
5,578
2,205
9,284
3,858
Total non-interest income
26,259
22,924
55,125
41,092
Non-interest expense:
Salaries and employee benefits
38,990
34,297
75,642
62,350
Occupancy expense of premises
5,497
5,991
10,984
10,572
Equipment expenses
3,020
3,219
6,242
5,970
Marketing
1,052
729
2,264
1,918
Outside data services
2,260
2,169
4,543
3,751
FDIC insurance
1,450
1,378
2,942
1,860
Amortization of intangible assets
1,659
1,998
3,356
2,598
Merger and acquisition expense
-
22,454
45
23,908
Professional fees and services
3,165
1,840
4,896
3,666
Other expenses
5,882
11,363
20,234
16,591
Total non-interest expense
62,975
85,438
131,148
133,184
Income/ (loss) before income tax expense/ (benefit)
75,534
(19,686)
175,535
(9,399)
Income tax expense/ (benefit)
18,271
(5,348)
42,808
(5,048)
Net income/ (loss)
$
57,263
$
(14,338)
$
132,727
$
(4,351)
Net income per share amounts:
Basic net income/ (loss) per common share
$
1.20
$
(0.31)
$
2.79
$
(0.11)
Diluted net income/ (loss) per common share
$
1.19
$
(0.31)
$
2.77
$
(0.11)
Dividends declared per share
$
0.32
$
0.30
$
0.64
$
0.60
Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2021
2020
(Dollars in thousands, except per share data)
Q2
Q1
Q4
Q3
Q2
Q1
Profitability for the quarter:
Tax-equivalent interest income
$
115,753
$
115,241
$
112,843
$
113,627
$
116,252
$
84,966
Interest expense
6,777
9,661
11,964
15,500
13,413
19,524
Tax-equivalent net interest income
108,976
105,580
100,879
98,127
102,839
65,442
Tax-equivalent adjustment
930
980
1,052
643
1,325
1,108
Provision/ (credit) for credit losses
(4,204)
(34,708)
(4,489)
7,003
58,686
24,469
Non-interest income
26,259
28,866
32,234
29,390
22,924
18,168
Non-interest expense
62,975
68,173
61,661
60,937
85,438
47,746
Income/ (loss) before income tax expense/ (benefit)
75,534
100,001
74,889
58,934
(19,686)
10,287
Income tax expense/ (benefit)
18,271
24,537
18,227
14,292
(5,348)
300
Net income/ (loss)
$
57,263
$
75,464
$
56,662
$
44,642
$
(14,338)
$
9,987
Financial performance:
Pre-tax pre-provision pre-merger income
$
71,330
$
65,338
$
70,403
$
67,200
$
61,454
$
36,210
Return on average assets
1.79
%
2.39
%
1.78
%
1.38
%
(0.45)
%
0.46
%
Return on average common equity
15.07
%
20.72
%
15.72
%
12.67
%
(4.15)
%
3.55
%
Return on average tangible common equity
20.44
%
28.47
%
21.89
%
17.84
%
(5.80)
%
5.34
%
Net interest margin
3.63
%
3.56
%
3.38
%
3.24
%
3.47
%
3.29
%
Efficiency ratio - GAAP basis (1)
46.89
%
51.08
%
46.69
%
48.03
%
68.66
%
57.87
%
Efficiency ratio - Non-GAAP basis (1)
45.36
%
42.65
%
45.09
%
45.27
%
43.85
%
54.76
%
Per share data:
Net income/ (loss) attributable to common shareholders
$
56,782
$
74,824
$
56,194
$
44,268
$
(14,458)
$
9,919
Basic net income/ (loss) per common share
$
1.20
$
1.59
$
1.19
$
0.94
$
(0.31)
$
0.29
Diluted net income/ (loss) per common share
$
1.19
$
1.58
$
1.19
$
0.94
$
(0.31)
$
0.28
Weighted average diluted common shares
47,523,198
47,415,060
47,284,808
47,175,071
46,988,351
34,743,623
Dividends declared per share
$
0.32
$
0.32
$
0.30
$
0.30
$
0.30
$
0.30
Non-interest income:
Securities gains
$
71
$
58
$
35
$
51
$
212
$
169
Service charges on deposit accounts
1,976
1,852
1,917
1,673
1,223
2,253
Mortgage banking activities
5,776
10,169
14,491
14,108
8,426
3,033
Wealth management income
9,121
8,730
8,215
7,785
7,604
6,966
Insurance agency commissions
1,247
2,153
1,356
2,122
1,188
2,129
Income from bank owned life insurance
705
680
705
708
809
645
Bank card fees
1,785
1,518
1,570
1,525
1,257
1,320
Other income
5,578
3,706
3,945
1,418
2,205
1,653
Total non-interest income
$
26,259
$
28,866
$
32,234
$
29,390
$
22,924
$
18,168
Non-interest expense:
Salaries and employee benefits
$
38,990
$
36,652
$
36,080
$
36,041
$
34,297
$
28,053
Occupancy expense of premises
5,497
5,487
5,236
5,575
5,991
4,581
Equipment expenses
3,020
3,222
3,121
3,133
3,219
2,751
Marketing
1,052
1,212
1,058
1,305
729
1,189
Outside data services
2,260
2,283
2,394
2,614
2,169
1,582
FDIC insurance
1,450
1,492
1,527
1,340
1,378
482
Amortization of intangible assets
1,659
1,697
1,655
1,968
1,998
600
Merger and acquisition expense
-
45
3
1,263
22,454
1,454
Professional fees and services
3,165
1,731
2,473
1,800
1,840
1,826
Other expenses
5,882
14,352
8,114
5,898
11,363
5,228
Total non-interest expense
$
62,975
$
68,173
$
61,661
$
60,937
$
85,438
$
47,746
(1) The efficiency ratio - GAAP basis is non-interest expense divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, loss on FHLB redemption, and merger and acquisition expense from non-interest expense; investment securities gains 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
2021
2020
(Dollars in thousands, except per share data)
Q2
Q1
Q4
Q3
Q2
Q1
Balance sheets at quarter end:
Commercial investor real estate loans
$
3,712,374
$
3,652,418
$
3,634,720
$
3,588,702
$
3,581,778
$
2,241,240
Commercial owner-occupied real estate loans
1,687,843
1,644,848
1,642,216
1,652,208
1,601,803
1,305,682
Commercial AD&C loans
1,126,960
1,051,013
1,050,973
994,800
997,423
643,114
Commercial business loans
1,974,366
2,411,109
2,267,548
2,227,246
2,222,810
813,525
Residential mortgage loans
960,527
1,022,546
1,105,179
1,173,857
1,211,745
1,116,512
Residential construction loans
172,869
171,028
182,619
175,123
169,050
149,573
Consumer loans
457,576
493,904
517,254
521,999
558,434
453,346
Total loans
10,092,515
10,446,866
10,400,509
10,333,935
10,343,043
6,722,992
Allowance for credit losses
(123,961)
(130,361)
(165,367)
(170,314)
(163,481)
(85,800)
Loans held for sale
71,082
84,930
78,294
88,728
68,765
67,114
Investment securities
1,482,123
1,472,727
1,413,781
1,425,733
1,424,652
1,250,560
Interest-earning assets
12,167,067
12,132,405
12,095,936
11,965,915
12,447,146
8,222,589
Total assets
12,925,577
12,873,366
12,798,429
12,678,131
13,290,447
8,929,602
Noninterest-bearing demand deposits
4,000,636
3,770,852
3,325,547
3,458,804
3,434,038
1,939,937
Total deposits
10,866,466
10,677,752
10,033,069
9,964,969
10,076,834
6,593,874
Customer repurchase agreements
140,708
129,318
153,157
142,287
143,579
125,305
Total interest-bearing liabilities
7,233,536
7,423,262
7,856,842
7,643,381
8,313,546
5,732,349
Total stockholders' equity
1,562,280
1,511,694
1,469,955
1,424,749
1,390,093
1,116,334
Quarterly average balance sheets:
Commercial investor real estate loans
$
3,675,119
$
3,634,174
$
3,599,648
$
3,582,751
$
3,448,882
$
2,202,461
Commercial owner-occupied real estate loans
1,663,543
1,638,885
1,643,817
1,628,474
1,681,674
1,285,257
Commercial AD&C loans
1,089,287
1,049,597
1,017,304
977,607
969,251
659,494
Commercial business loans
2,225,885
2,291,097
2,189,828
2,207,388
1,899,264
819,133
Residential mortgage loans
994,899
1,066,714
1,136,989
1,189,452
1,208,566
1,139,786
Residential construction loans
176,135
179,925
180,494
173,280
162,978
145,266
Consumer loans
468,686
496,578
515,202
543,242
575,734
465,314
Total loans
10,293,554
10,356,970
10,283,282
10,302,194
9,946,349
6,716,711
Loans held for sale
66,958
82,263
68,255
54,784
53,312
35,030
Investment securities
1,482,905
1,407,455
1,418,683
1,404,238
1,398,586
1,179,084
Interest-earning assets
12,037,701
12,029,424
11,882,542
12,049,463
11,921,132
7,994,618
Total assets
12,798,355
12,801,539
12,645,329
12,835,893
12,903,156
8,699,342
Noninterest-bearing demand deposits
3,763,135
3,394,110
3,424,729
3,281,607
3,007,222
1,797,227
Total deposits
10,663,346
10,343,190
9,999,144
9,862,639
9,614,176
6,433,694
Customer repurchase agreements
136,286
148,195
146,685
142,694
144,050
135,652
Total interest-bearing liabilities
7,356,656
7,742,987
7,609,829
7,969,487
8,326,909
5,612,056
Total stockholders' equity
1,523,875
1,477,150
1,433,900
1,401,746
1,390,544
1,130,051
Financial measures:
Average equity to average assets
11.91
%
11.54
%
11.34
%
10.92
%
10.78
%
12.99
%
Investment securities to earning assets
12.18
%
12.14
%
11.69
%
11.91
%
11.45
%
15.21
%
Loans to earning assets
82.95
%
86.11
%
85.98
%
86.36
%
83.10
%
81.76
%
Loans to assets
78.08
%
81.15
%
81.26
%
81.51
%
77.82
%
75.29
%
Loans to deposits
92.88
%
97.84
%
103.66
%
103.70
%
102.64
%
101.96
%
Capital measures:
Tier 1 leverage (1)
9.49
%
9.14
%
8.92
%
8.65
%
8.35
%
8.78
%
Common equity tier 1 capital to risk-weighted assets (1)
12.47
%
12.09
%
10.58
%
10.45
%
10.23
%
10.23
%
Tier 1 capital to risk-weighted assets (1)
12.47
%
12.09
%
10.58
%
10.45
%
10.23
%
10.23
%
Total regulatory capital to risk-weighted assets (1)
15.82
%
15.49
%
13.93
%
14.02
%
13.79
%
14.09
%
Book value per common share
$
33.02
$
32.04
$
31.24
$
30.30
$
29.58
$
32.68
Outstanding common shares
47,312,982
47,187,389
47,056,777
47,025,779
47,001,022
34,164,672
(1) Estimated ratio at June 30, 2021.
Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2021
2020
(Dollars in thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
March 31,
Non-performing assets:
Loans 90 days past due:
Commercial real estate:
Commercial investor real estate
$
-
$
-
$
133
$
-
$
775
$
-
Commercial owner-occupied real estate
-
-
-
-
515
-
Commercial AD&C
-
-
-
-
-
-
Commercial business
-
31
161
93
-
-
Residential real estate:
Residential mortgage
680
398
480
320
138
8
Residential construction
-
-
-
-
-
-
Consumer
-
-
-
1
-
-
Total loans 90 days past due
680
429
774
414
1,428
8
Non-accrual loans:
Commercial real estate:
Commercial investor real estate
42,072
42,776
45,227
26,784
26,482
17,770
Commercial owner-occupied real estate
8,183
8,316
11,561
6,511
6,729
4,074
Commercial AD&C
14,489
14,975
15,044
1,678
2,957
829
Commercial business
9,435
13,147
22,933
17,659
20,246
10,834
Residential real estate:
Residential mortgage
9,440
9,593
10,212
11,296
11,724
12,271
Residential construction
62
-
-
-
-
-
Consumer
7,718
7,193
7,384
7,493
7,800
5,596
Total non-accrual loans
91,399
96,000
112,361
71,421
75,938
51,374
Total restructured loans - accruing
2,228
2,271
2,317
2,854
2,553
2,575
Total non-performing loans
94,307
98,700
115,452
74,689
79,919
53,957
Other assets and other real estate owned (OREO)
1,234
1,354
1,455
1,389
1,389
1,416
Total non-performing assets
$
95,541
$
100,054
$
116,907
$
76,078
$
81,308
$
55,373
For the Quarter Ended,
(Dollars in thousands)
June 30,
2021
March 31,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Analysis of non-accrual loan activity:
Balance at beginning of period
$
96,000
$
112,361
$
71,421
$
75,938
$
51,374
$
38,632
Purchased credit deteriorated loans designated as non-accrual
-
-
-
-
-
13,084
Non-accrual balances transferred to OREO
(257)
-
(70)
-
-
-
Non-accrual balances charged-off
(2,166)
(699)
(513)
(144)
(162)
(575)
Net payments or draws
(3,693)
(16,028)
(13,212)
(4,248)
(1,881)
(1,860)
Loans placed on non-accrual
1,515
421
54,735
893
27,289
2,369
Non-accrual loans brought current
-
(55)
-
(1,018)
(682)
(276)
Balance at end of period
$
91,399
$
96,000
$
112,361
$
71,421
$
75,938
$
51,374
Analysis of allowance for credit losses:
Balance at beginning of period
$
130,361
$
165,367
$
170,314
$
163,481
$
85,800
$
56,132
Transition impact of adopting ASC 326
-
-
-
-
-
2,983
Initial allowance on purchased credit deteriorated loans
-
-
-
-
-
2,762
Initial allowance on acquired PCD loans
-
-
-
-
18,628
-
Provision/ (credit) for credit losses
(4,204)
(34,708)
(4,489)
7,003
58,686
24,469
Less loans charged-off, net of recoveries:
Commercial real estate:
Commercial investor real estate
(144)
(27)
379
21
(4)
-
Commercial owner-occupied real estate
-
-
-
-
-
-
Commercial AD&C
-
-
-
-
-
-
Commercial business
2,359
634
56
88
(463)
108
Residential real estate:
Residential mortgage
(11)
(270)
37
(6)
15
333
Residential construction
(1)
-
(1)
(2)
(1)
(2)
Consumer
(7)
(39)
(13)
69
86
107
Net charge-offs/ (recoveries)
2,196
298
458
170
(367)
546
Balance at the end of period
$
123,961
$
130,361
$
165,367
$
170,314
$
163,481
$
85,800
Asset quality ratios:
Non-performing loans to total loans
0.93
%
0.94
%
1.11
%
0.72
%
0.77
%
0.80
%
Non-performing assets to total assets
0.74
%
0.78
%
0.91
%
0.60
%
0.61
%
0.62
%
Allowance for credit losses to loans
1.23
%
1.25
%
1.59
%
1.65
%
1.58
%
1.28
%
Allowance for credit losses to non-performing loans
131.44
%
132.08
%
143.23
%
228.03
%
204.56
%
159.02
%
Annualized net charge-offs/ (recoveries) to average loans
0.09
%
0.01
%
0.02
%
0.01
%
(0.01)
%
0.03
%
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Three Months Ended June 30,
2021
2020
(Dollars in thousands and tax-equivalent)
Average
Balances
Interest (1)
Annualized
Average
Yield/Rate
Average
Balances
Interest (1)
Annualized
Average
Yield/Rate
Assets
Commercial investor real estate loans
$
3,675,119
$
38,411
4.19
%
$
3,448,882
$
38,426
4.48
%
Commercial owner-occupied real estate loans
1,663,543
19,360
4.67
1,681,674
19,794
4.73
Commercial AD&C loans
1,089,287
10,819
3.98
969,251
10,886
4.52
Commercial business loans
2,225,885
25,248
4.55
1,899,264
19,426
4.11
Total commercial loans
8,653,834
93,838
4.35
7,999,071
88,532
4.45
Residential mortgage loans
994,899
8,634
3.47
1,208,566
11,259
3.73
Residential construction loans
176,135
1,562
3.56
162,978
1,691
4.17
Consumer loans
468,686
4,183
3.58
575,734
5,341
3.73
Total residential and consumer loans
1,639,720
14,379
3.51
1,947,278
18,291
3.78
Total loans (2)
10,293,554
108,217
4.22
9,946,349
106,823
4.32
Loans held for sale
66,958
549
3.28
53,312
405
3.04
Taxable securities
1,052,229
4,373
1.66
1,164,490
7,045
2.42
Tax-advantaged securities
430,676
2,567
2.38
234,096
1,824
3.12
Total investment securities (3)
1,482,905
6,940
1.87
1,398,586
8,869
2.54
Interest-bearing deposits with banks
193,749
47
0.10
522,469
155
0.12
Federal funds sold
535
-
0.10
416
-
0.10
Total interest-earning assets
12,037,701
115,753
3.86
11,921,132
116,252
3.92
Less: allowance for credit losses
(130,734)
(118,863)
Cash and due from banks
97,813
181,991
Premises and equipment, net
55,718
60,545
Other assets
737,857
858,351
Total assets
$
12,798,355
$
12,903,156
Liabilities and Stockholders' Equity
Interest-bearing demand deposits
$
1,400,661
$
226
0.06
%
$
1,067,487
$
457
0.17
%
Regular savings deposits
476,999
66
0.06
367,191
73
0.08
Money market savings deposits
3,364,348
1,254
0.15
2,890,842
3,396
0.47
Time deposits
1,658,203
2,305
0.56
2,281,434
8,358
1.47
Total interest-bearing deposits
6,900,211
3,851
0.22
6,606,954
12,284
0.75
Other borrowings
155,792
43
0.11
713,965
600
0.34
Advances from FHLB
73,626
373
2.03
775,767
(2,123)
(1.08)
Subordinated debt
227,027
2,510
4.42
230,223
2,652
4.61
Total borrowings
456,445
2,926
2.57
1,719,955
1,129
0.27
Total interest-bearing liabilities
7,356,656
6,777
0.37
8,326,909
13,413
0.65
Noninterest-bearing demand deposits
3,763,135
3,007,222
Other liabilities
154,689
178,481
Stockholders' equity
1,523,875
1,390,544
Total liabilities and stockholders' equity
$
12,798,355
$
12,903,156
Tax-equivalent net interest income and spread
$
108,976
3.49
%
$
102,839
3.27
%
Less: tax-equivalent adjustment
930
1,325
Net interest income
$
108,046
$
101,514
Interest income/earning assets
3.86
%
3.92
%
Interest expense/earning assets
0.23
0.45
Net interest margin
3.63
%
3.47
%
(1)Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.50% and 25.45% for 2021 and 2020, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $0.9 million and $1.3 million in 2021 and 2020, respectively.
(2)Non-accrual loans are included in the average balances.
(3)Available for sale investments are presented at amortized cost.
Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Six Months Ended June 30,
2021
2020
(Dollars in thousands and tax-equivalent)
Average
Balances
Interest (1)
Annualized
Average
Yield/Rate
Average
Balances
Interest (1)
Annualized
Average
Yield/Rate
Assets
Commercial investor real estate loans
$
3,654,760
$
76,765
4.24
%
$
2,825,672
$
63,691
4.53
%
Commercial owner-occupied real estate loans
1,651,282
38,040
4.65
1,483,465
35,000
4.74
Commercial AD&C loans
1,069,552
21,215
4.00
814,372
19,215
4.74
Commercial business loans
2,258,311
50,042
4.47
1,359,199
29,603
4.38
Total commercial loans
8,633,905
186,062
4.35
6,482,708
147,509
4.58
Residential mortgage loans
1,030,608
18,178
3.53
1,174,176
22,000
3.75
Residential construction loans
178,020
3,168
3.59
154,122
3,252
4.24
Consumer loans
482,555
8,728
3.65
520,524
10,497
4.06
Total residential and consumer loans
1,691,183
30,074
3.57
1,848,822
35,749
3.89
Total loans (2)
10,325,088
216,136
4.22
8,331,530
183,258
4.42
Loans held for sale
74,568
1,086
2.91
44,171
696
3.15
Taxable securities
984,305
8,272
1.68
1,068,549
13,367
2.50
Tax-advantaged securities
461,084
5,407
2.35
220,286
3,561
3.23
Total investment securities (3)
1,445,389
13,679
1.89
1,288,835
16,928
2.63
Interest-bearing deposits with banks
187,954
93
0.10
293,001
335
0.23
Federal funds sold
588
-
0.09
338
1
0.53
Total interest-earning assets
12,033,587
230,994
3.87
9,957,875
201,218
4.06
Less: allowance for credit losses
(146,892)
(90,412)
Cash and due from banks
102,013
125,805
Premises and equipment, net
56,042
59,445
Other assets
752,318
747,127
Total assets
$
12,797,068
$
10,799,840
Liabilities and Stockholders' Equity
Interest-bearing demand deposits
$
1,383,253
$
462
0.07
%
$
953,951
$
1,154
0.24
%
Regular savings deposits
460,738
122
0.05
349,155
146
0.08
Money market savings deposits
3,387,341
2,717
0.16
2,369,566
8,046
0.68
Time deposits
1,693,179
5,380
0.64
1,949,039
16,456
1.70
Total interest-bearing deposits
6,924,511
8,681
0.25
5,621,711
25,802
0.92
Other borrowings
172,727
96
0.11
475,386
1,180
0.50
Advances from FHLB
224,467
2,649
2.38
653,878
1,022
0.32
Subordinated debt
227,050
5,012
4.41
218,508
4,933
4.52
Total borrowings
624,244
7,757
2.51
1,347,772
7,135
1.07
Total interest-bearing liabilities
7,548,755
16,438
0.44
6,969,483
32,937
0.95
Noninterest-bearing demand deposits
3,579,642
2,402,225
Other liabilities
168,029
167,834
Stockholders' equity
1,500,642
1,260,298
Total liabilities and stockholders' equity
$
12,797,068
$
10,799,840
Tax-equivalent net interest income and spread
$
214,556
3.43
%
$
168,281
3.11
%
Less: tax-equivalent adjustment
1,910
2,433
Net interest income
$
212,646
$
165,848
Interest income/earning assets
3.87
%
4.06
%
Interest expense/earning assets
0.27
0.67
Net interest margin
3.60
%
3.39
%
(1)Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.50% and 25.45% for 2021 and 2020, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.9 million and $2.4 million in 2021 and 2020, respectively.
(2)Non-accrual loans are included in the average balances.
(3)Available-for-sale investments are presented at amortized cost.
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Sandy Spring Bancorp Inc. published this content on 22 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 July 2021 13:07:05 UTC.
Sandy Spring Bancorp, Inc. is the bank holding company for Sandy Spring Bank (the Bank). The Company offers a range of commercial and retail banking, mortgage, private banking and trust services at approximately 50 locations throughout central Maryland, northern Virginia, and Washington D.C. It offers a menu of loan products, which include commercial loans, residential real estate loans, and consumer loans. Its commercial loans consist of commercial real estate loans, commercial construction loans and commercial business loans. Its consumer loans include primarily home equity loans and lines, installment loans and personal lines of credit. Its consumer loans include installment loans used by customers to purchase automobiles, boats and recreational vehicles. Through its subsidiaries, SSB Wealth Management, Inc. (d/b/a Rembert Pendleton Jackson) and West Financial Services, Inc., Sandy Spring Bank, offers a comprehensive menu of wealth management services.