Sandy Spring Bancorp Reports Fourth Quarter Earnings of $26.1 Million

Rhea-AI Summary

Sandy Spring Bancorp, Inc. reported net income of $26.1 million for Q4 2023, a decrease from $34.0 million in Q4 2022. Total assets decreased by 1% to $14.0 billion. Total loans increased by $66.7 million, while deposits decreased by $154.5 million. Non-performing loans to total loans were 0.81% at December 31, 2023. Net interest income declined by 4% compared to the previous quarter and 23% compared to Q4 2022. Non-interest expense decreased by 7% compared to the previous quarter. Return on average assets for Q4 2023 was 0.73%, and return on average tangible common equity was 9.26%.

Positive

• Increase in total loans by $66.7 million
• Non-interest expense decreased by $5.3 million or 7% compared to the previous quarter
• Return on average tangible common equity was 9.26%

Negative

• Net income decreased from $34.0 million in Q4 2022 to $26.1 million in Q4 2023
• Total assets decreased by 1% to $14.0 billion

Insights

Financial Analyst

The reported financials of Sandy Spring Bancorp, Inc. demonstrate a nuanced performance in a challenging economic landscape. The increase in net income from the third to the fourth quarter of 2023, despite a year-over-year decline, indicates resilience in the face of market headwinds. The lower provision for credit losses suggests a positive outlook on credit quality, while the reduction in non-interest expense reflects effective cost management. However, the decline in net interest income and non-interest income, coupled with a rise in non-performing loans, signals potential concerns about revenue generation and asset quality.

From an investor's perspective, the bank's strategic moves to improve liquidity and expand its client base, as well as the launch of digital banking platforms, could be seen as efforts to enhance competitiveness and customer experience. The shift from wholesale funding sources to more stable deposit growth is a prudent risk management strategy. Yet, the increase in the non-GAAP efficiency ratio points to decreased operational efficiency, which requires monitoring.

The net interest margin compression, a critical indicator of profitability for banks, reflects the challenges of managing interest rate risk in a volatile rate environment. The 10 basis point decrease quarter-over-quarter and a more significant year-over-year decline of 81 basis points underscore the impact of aggressive rate hikes and deposit competition. Investors will need to consider whether these margin pressures are cyclical or indicative of structural shifts within the banking sector.

Market Research Analyst

Analyzing the competitive landscape, Sandy Spring Bancorp's focus on digital banking initiatives aligns with broader industry trends towards technology-driven financial services. This move is likely to enhance customer retention and attract a tech-savvy demographic, which could be a growth driver in the long term. However, the reported decrease in deposits, particularly from small business and title company commercial checking accounts, may reflect a broader trend of liquidity tightening among clients, which could impact the bank's business banking segment.

The bank's loan portfolio management, particularly the reduction in investor commercial real estate concentration and growth in AD&C and commercial business loans, suggests a strategic recalibration towards diversification. This rebalancing may mitigate sector-specific risks but introduces new variables that require close scrutiny, such as the performance of the AD&C sector in a changing economic climate.

While the rise in non-performing loans is a concern, the bank's capital ratios remain well above regulatory requirements, providing a buffer against potential credit losses. The increase in the tangible common equity ratio is a positive signal for financial stability, which may reassure stakeholders about the bank's capital adequacy.

Economist

Macro-economic factors, such as the rate environment and economic uncertainty, have direct implications on Sandy Spring Bancorp's financial performance. The Federal Reserve's rate hikes have influenced both the yield on interest-earning assets and the rates paid on interest-bearing liabilities, leading to a tighter net interest margin. An economist's perspective would highlight the importance of the bank's ability to navigate this environment, as it directly affects profitability.

The provision for credit losses and the bank's commentary on a declining probability of an economic recession suggest an optimistic economic outlook from the bank's risk assessment team. However, the increase in non-performing loans, especially in the investor commercial real estate segment, may indicate sector-specific challenges or potential economic softening that could affect loan performance moving forward.

The interplay between the bank's financial metrics and broader economic conditions will continue to be a critical factor for stakeholders. The bank's liquidity management strategies, such as the reported high contingent liquidity, provide a cushion against economic shocks but may also reflect a defensive stance in anticipation of uncertain market conditions.

OLNEY, Md., Jan. 23, 2024 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc. (Nasdaq-SASR), the parent company of Sandy Spring Bank, reported net income of $26.1 million ($0.58 per diluted common share) for the quarter ended December 31, 2023, compared to net income of $20.7 million ($0.46 per diluted common share) for the third quarter of 2023 and $34.0 million ($0.76 per diluted common share) for the fourth quarter of 2022. The increase in the current quarter's net income compared to the linked quarter was a product of a lower provision for credit losses coupled with lower non-interest expense, partially offset by lower net interest income and non-interest income.

Current quarter's core earnings were $27.1 million ($0.60 per diluted common share), compared to $27.8 million ($0.62 per diluted common share) for the quarter ended September 30, 2023 and $35.3 million ($0.79 per diluted common share) for the quarter ended December 31, 2022. Core earnings exclude the after-tax impact of amortization of intangibles, investment securities gains or losses and other non-recurring or extraordinary items. The current quarter’s core earnings were positively affected by a lower provision for credit losses, which was offset by lower revenues and an increase in non-interest expense, after excluding the pension settlement expense from the prior quarter.

“Over the past year, we successfully grew core funding, improved liquidity and expanded our client base," said Daniel J. Schrider, Chairman, President and CEO of Sandy Spring Bank. "We also launched improved digital banking and online account opening platforms that give our clients more control in how they bank with us."

“While it was a challenging year given the rate environment and economic uncertainty, we are focused on building on this positive momentum in 2024 and continuing to stay close to our clients,” Schrider added.

Fourth Quarter Highlights

• Total assets at December 31, 2023 decreased by 1% to $14.0 billion compared to $14.1 billion at September 30, 2023.
  
  
• Total loans increased by $66.7 million or 1% to $11.4 billion at December 31, 2023 compared to $11.3 billion at September 30, 2023. During the current quarter, the Company reduced its concentration in the investor commercial real estate segment by $33.3 million, while AD&C and commercial business loans and lines increased $50.3 million and $50.2 million, respectively. The total mortgage loan portfolio remained relatively unchanged during this period.
  
  
• Deposits decreased $154.5 million or 1% to $11.0 billion at December 31, 2023 compared to $11.2 billion at September 30, 2023, as noninterest-bearing and interest-bearing deposits declined $99.7 million and $54.7 million, respectively. Decline within noninterest-bearing deposit categories was driven by lower balances in small business and title company commercial checking accounts. The decrease in interest-bearing deposits was due to a $253.1 million reduction in brokered time deposits, as the Company continued to reduce its reliance on wholesale funding sources, in addition to the $111.9 million decrease in money market accounts. These declines were partially offset by the $265.9 million growth in savings accounts.
  
  
• The ratio of non-performing loans to total loans was 0.81% at December 31, 2023 compared to 0.46% at September 30, 2023 and 0.35% at December 31, 2022. The current quarter's increase in non-performing loans was related to two large investor commercial real estate relationships within the custodial care and multifamily residential property industries. Net charge-off activity during the current quarter was insignificant.
  
  
• Total borrowings were unchanged across all categories at December 31, 2023 compared to the previous quarter.
  
  
• Net interest income for the fourth quarter of 2023 declined $3.4 million or 4% compared to the previous quarter and $24.9 million or 23% compared to the fourth quarter of 2022. During the recent quarter, the $3.2 million growth in interest income was more than offset by the $6.6 million increase in interest expense, a result of the competitive rates offered on deposits.
  
  
• The net interest margin was 2.45% for the fourth quarter of 2023 compared to 2.55% for the third quarter of 2023 and 3.26% for the fourth quarter of 2022. This decline in the net interest margin was the result of higher rates paid on interest-bearing liabilities, driven by higher market rates, competition for deposits, and customers' movement of excess funds out of noninterest-bearing into interest-bearing accounts, which outpaced the increase in the yield on interest-earning assets. Compared to the linked quarter, the rate paid on interest-bearing liabilities rose 25 basis points, while the yield on interest-earning assets increased 9 basis points, resulting in the quarterly margin compression of 10 basis points.
  
  
• Provision for credit losses directly attributable to the funded loan portfolio for the current quarter was a credit of $2.6 million compared to a charge of $3.2 million in the previous quarter and $7.9 million in the prior year quarter. The reduction in the provision during the current quarter was attributable to a change in the composition of the loan portfolio, a decline in the probability of an economic recession and updates to other qualitative adjustments used within the reserve calculation. These factors were partially offset by an individual reserve established on an investor commercial real estate loan designated as non-accrual during the current quarter coupled with a slight deterioration in other relevant economic factors in the most recent economic forecast. In addition, during the current quarter the Company reduced its reserve for unfunded commitments by $0.9 million, a result of higher utilization rates on lines of credit.
  
  
• Non-interest income for the fourth quarter of 2023 decreased by 5% or $0.8 million compared to the linked quarter and grew by 16% or $2.3 million compared to the prior year quarter. The quarter-over-quarter decrease was mainly driven by lower income from mortgage banking activities, due to lower sales volume, partially offset by greater BOLI income.
  
  
• Non-interest expense for the fourth quarter of 2023 decreased $5.3 million or 7% compared to the third quarter of 2023 and $2.8 million or 4% compared to the prior year quarter. The previous quarter included an $8.2 million in pension settlement expense related to the termination of the Company's pension plan. Excluding this item from the previous quarter, total non-interest expense increased by $2.8 million or 4% due to higher professional and consulting fees, marketing expense and other operating expenses.
  
  
• Return on average assets (“ROA”) for the quarter ended December 31, 2023 was 0.73% and return on average tangible common equity (“ROTCE”) was 9.26% compared to 0.58% and 7.42%, respectively, for the third quarter of 2023 and 0.98% and 12.91%, respectively, for the fourth quarter of 2022. On a non-GAAP basis, the current quarter's core ROA was 0.76% and core ROTCE was 9.26% compared to 0.78% and 9.51%, respectively, for the previous quarter and 1.02% and 13.02%, respectively, for the fourth quarter of 2022.
  
  
• The GAAP efficiency ratio was 68.33% for the fourth quarter of 2023, compared to 70.72% for the third quarter of 2023 and 53.23% for the fourth quarter of 2022. The non-GAAP efficiency ratio was 66.16% for the fourth quarter of 2023 compared to 60.91% for the third quarter of 2023 and 51.46% for the prior year quarter. The increase in non-GAAP efficiency ratio (reflecting a decrease in efficiency) in the current quarter compared to the previous quarter and the fourth quarter of the prior year was the result of declines in net revenue from the prior periods coupled with the growth in non-interest expense.
  

Balance Sheet and Credit Quality

Total assets were $14.0 billion at December 31, 2023, as compared to $14.1 billion at September 30, 2023. At December 31, 2023 total loans increased by $66.7 million or 1% to $11.4 billion compared to $11.3 billion at September 30, 2023. Commercial real estate and business loans increased $62.0 million quarter-over-quarter due to the $50.3 million and $50.2 million growth in the AD&C and commercial business loan and lines portfolios, respectively, partially offset by a $33.3 million decline in the investor commercial real estate loan portfolio. Quarter-over-quarter the total mortgage loan portfolio remained relatively unchanged.

Deposits decreased $154.5 million or 1% to $11.0 billion at December 31, 2023 compared to $11.2 billion at September 30, 2023. During this period noninterest-bearing and interest-bearing deposits declined $99.7 million and $54.7 million, respectively. The decline within noninterest-bearing deposit categories was primarily driven by $64.7 million and $54.4 million decrease in small business and title company commercial checking accounts, respectively. The decrease in interest-bearing deposits was due to a $253.1 million reduction in brokered time deposits, as the Company continued to reduce its reliance on wholesale funding sources during the current quarter, in addition to the $111.9 million decrease in money market accounts. These declines were partially offset by $265.9 million growth in savings accounts. Total deposits, excluding brokered deposits, increased by $85.5 million or 1% quarter-over-quarter and represented 92% of the total deposits as of December 31, 2023 compared to 90% at September 30, 2023, reflecting continued stability of the core deposit base. Due to the deposit decline experienced during the current quarter the loan to deposit ratio increased to 103% at December 31, 2023 from 101% at September 30, 2023. Total uninsured deposits at December 31, 2023 were approximately 34% of the total deposits.

At December 31, 2023, contingent liquidity, which consists of available FHLB borrowings, fed funds, funds through the Federal Reserve Bank's discount window and the Bank Term Funding Program, as well as excess cash and unpledged investment securities totaled $6.0 billion or 162% of uninsured deposits.

The tangible common equity ratio increased to 8.77% of tangible assets at December 31, 2023, compared to 8.42% at September 30, 2023. This increase reflected the impact of higher tangible common equity, a product of $10.8 million increase in net retained earnings and a $38.2 million decrease in unrealized losses on available-for-sale investment securities during the current quarter, while tangible assets decreased by $119.2 million.

At December 31, 2023, the Company had a total risk-based capital ratio of 14.92%, a common equity tier 1 risk-based capital ratio of 10.90%, a tier 1 risk-based capital ratio of 10.90%, and a tier 1 leverage ratio of 9.51%. All of these ratios remain well in excess of the mandated minimum regulatory requirements.

Non-performing loans include non-accrual loans and accruing loans 90 days or more past due. At December 31, 2023, non-performing loans totaled $91.8 million, compared to $51.8 million at September 30, 2023 and $39.4 million at December 31, 2022. Non-performing loans to total loans was 0.81% compared to 0.46%. These levels of non-performing loans compare to 0.35% at December 31, 2022. The current quarter's increase in non-performing loans was related to two large investor commercial real estate relationships within the custodial care and multifamily residential property industries. These two relationships accounted for $42.4 million of the total $47.9 million of loans placed on non-accrual during the quarter. Only the custodial care relationship required an individual reserve during the current quarter. An individual reserve was recorded earlier in the year on the multifamily residential property relationship. Total net recoveries for the current quarter amounted to $0.1 million compared to net charge-offs of $0.1 million for the third quarter of 2023 and $0.1 million of net recoveries for the fourth quarter of 2022.

At December 31, 2023, the allowance for credit losses was $120.9 million or 1.06% of outstanding loans and 132% of non-performing loans, compared to $123.4 million or 1.09% of outstanding loans and 238% of non-performing loans at the end of the previous quarter and $136.2 million or 1.20% of outstanding loans and 346% of non-performing loans at the end of the fourth quarter of 2022. The decrease in the allowance for the current quarter compared to the previous quarter mainly reflects a change in the composition of the loan portfolio, a decline in the probability of an economic recession and updates to other qualitative adjustments, partially offset by an individual reserve established on the previously discussed investor commercial real estate loan designated as non-accrual during the current quarter coupled with a slight deterioration in other relevant economic factors in the most recent economic forecast.

Income Statement Review

Quarterly Results

Net income was $26.1 million ($0.58 per diluted common share) for the three months ended December 31, 2023 compared to $20.7 million ($0.46 per diluted common share) for the three months ended September 30, 2023 and $34.0 million ($0.76 per diluted common share) for the prior year quarter. The current quarter's core earnings were $27.1 million ($0.60 per diluted common share), compared to $27.8 million ($0.62 per diluted common share) for the previous quarter and $35.3 million ($0.79 per diluted common share) for the quarter ended December 31, 2022. The increase in the current quarter's net income compared to the previous quarter, which included a one-time pension settlement expense of $8.2 million, was a result of lower provision for credit losses partially offset by declines in both net interest income and non-interest income.

Net interest income for the fourth quarter of 2023 decreased $3.4 million or 4% compared to the previous quarter and $24.9 million or 23% compared to the fourth quarter of 2022. Both quarterly and year-over-year decreases in net interest income were driven by higher interest expense, a result of higher funding costs, which outpaced growth in interest income. The rising interest rate environment was primarily responsible for a $20.3 million year-over-year increase in interest income. This growth in interest income was more than offset by the $45.3 million year-over-year growth in interest expense as funding costs have also risen in response to the rising rate environment and significant competition for deposits. Interest income growth occurred in all categories of commercial loans and, to a lesser degree, in residential mortgage loans, and consumer loans.

The net interest margin was 2.45% for the fourth quarter of 2023 compared to 2.55% for the third quarter of 2023 and 3.26% for the fourth quarter of 2022. The contraction of the net interest margin for the current quarter reflects the higher rate paid on interest-bearing liabilities, which outpaced the increase in the yield on interest-earning assets. The overall rate and yield increases were driven by the multiple federal funds rate increases that occurred over the preceding twelve months, competition for deposits in the market, and customer movement of excess funds out of noninterest-bearing accounts into higher yielding products. As compared to the prior year quarter, the yield on interest-earning assets increased 49 basis points while the rate paid on interest-bearing liabilities rose 169 basis points, resulting in net interest margin compression of 81 basis points.

The total provision for credit losses was a credit of $3.4 million for the fourth quarter of 2023 compared to a charge of $2.4 million for the previous quarter and $10.8 million for the fourth quarter of 2022. The provision for credit losses directly attributable to the funded loan portfolio was a credit of $2.6 million for the current quarter compared to a charge of $3.2 million for the third quarter of 2023 and the prior year quarter’s provision of $7.9 million. The current quarter's provision is mainly a reflection of change in the composition of the loan portfolio, a decline in the probability of an economic recession and updates to other qualitative adjustments, partially offset by an increase in individual reserves driven by one large investor commercial real estate relationship along with a slight deterioration in other relevant economic factors.

Non-interest income for the fourth quarter of 2023 decreased by 5% or $0.8 million compared to the linked quarter and grew by 16% or $2.3 million compared to the prior year quarter. The current quarter's decrease in non-interest income as compared to the previous quarter was mainly driven by lower income from mortgage banking activities, due to lower sales volume, partially offset by an increase in BOLI income.

Non-interest expense for the fourth quarter of 2023 decreased $5.3 million or 7% compared to the third quarter of 2023 and increased $2.8 million or 4% compared to the fourth quarter of 2022. The previous quarter included $8.2 million of pension settlement expense related to the termination of the Company's pension plan. Excluding this item from the previous quarter, total non-interest expense increased by $2.8 million or 4% driven by a cumulative effect of higher professional and consulting fees, marketing expense and other operating expenses, partially offset by lower salaries and employee benefits.

For the fourth quarter of 2023, the GAAP efficiency ratio was 68.33% compared to 70.72% for the third quarter of 2023 and 53.23% for the fourth quarter of 2022. The GAAP efficiency ratio rose from the prior year quarter primarily as a result of the 19% decrease in GAAP revenue in combination with the 4% increase in GAAP non-interest expense. The non-GAAP efficiency ratio was 66.16% for the current quarter as compared to 60.91% for the third quarter of 2023 and 51.46% for the fourth quarter of 2022. The increase in the non-GAAP efficiency ratio (reflecting a decrease in efficiency) from the fourth quarter of the prior year to the current year quarter was primarily the result of the 19% decline in non-GAAP revenue, while non-GAAP expenses increased 4%.

ROA for the quarter ended December 31, 2023 was 0.73% and ROTCE was 9.26% compared to 0.58% and 7.42%, respectively, for the third quarter of 2023 and 0.98% and 12.91%, respectively, for the fourth quarter of 2022. On a non-GAAP basis, the current quarter's core ROA was 0.76% and core ROTCE was 9.26% compared to 0.78% and 9.51% for the third quarter of 2023 and 1.02% and 13.02%, respectively, for the fourth quarter of 2022.

Year-to-Date Results

The Company recorded net income of $122.8 million for the year ended December 31, 2023 compared to net income of $166.3 million for the same period in the prior year. Core earnings were $134.3 million for the year ended December 31, 2023 compared to $160.3 million for the same period in the prior year. Year-to-date net income declined as a result of the gain recognized on the sale of the Company's insurance segment during the prior year in combination with the decrease in net interest income and higher non-interest expense, partially offset by lower provision for credit losses.

For the year ended December 31, 2023, net interest income decreased $72.5 million compared to the prior year as a result of the $214.3 million increase in interest expense, partially offset by the $141.9 million increase in interest income. The increase in interest expense was driven by the interest expense on deposits, primarily associated with money market and time deposit accounts and, to a lesser degree, FHLB and Federal Reserve Bank borrowings. The net interest margin declined to 2.67% for the year ended December 31, 2023, compared to 3.44% for the prior year, primarily as a result of higher funding costs due to the rising interest rate environment and market competition for deposits during the period.

The provision for credit losses for the year ended December 31, 2023 amounted to a credit of $17.6 million as compared to a charge of $34.4 million for 2022. The credit to the provision for the year ended December 31, 2023 was a reflection of the improving regional forecasted unemployment rate, observed during the first half of the current year, and the declining probability of economic recession, partially offset by higher individual reserves on our non-accrual loans during the year.

For the year ended December 31, 2023, non-interest income decreased 23% to $67.1 million compared to $87.0 million for 2022. During the prior year, the Company realized a $16.5 million gain on the sale of its insurance segment. Excluding the gain, non-interest income decreased 5% or $3.4 million, driven by a $2.9 million decrease in insurance commissions, a $2.6 million decrease in bank card fees and a $0.6 million decrease in income from mortgage banking activities. Insurance commission income declined due to the disposition of the Company's insurance business during the second quarter of the prior year. Fees from bank cards declined as a result of regulatory restrictions on transaction fees effective in the second half of the prior year. The decline in income from mortgage banking activities is the result of the rising interest rate environment, which continues to dampen home sales and refinancing activity. These decreases in non-interest income year-over-year were partially offset by a $1.1 million increase in BOLI mortality-related income and the $0.9 million increase in wealth management income.

Non-interest expense increased 7% to $275.1 million for the year ended December 31, 2023, compared to $257.3 million for 2022. Current year expense included pension settlement expense of $8.2 million and severance expense of $1.9 million, while the prior year included contingent earn-out expense associated with the 2020 acquisition of Rembert Pendleton Jackson of $1.2 million and merger, acquisition and disposal expense of $1.1 million. Excluding these items, non-interest expense increased by $10.0 million or 4% in the current year over the prior year. The drivers of the increase in non-interest expense were a $8.8 million increase in professional fees, a $4.7 million increase in FDIC expense, and a $1.7 million increase in software amortization expense. Excluding the pension settlement expense, total salaries and benefits expense declined by $6.5 million from the prior year period, predominantly due to a reduction in performance-based compensation. Year-over-year increases in both professional fees and software amortization expense were mainly associated with the Company's investments in technology and software projects. The increase in FDIC insurance expense was a result of an increase in the assessment rate for all banks that became effective in 2023.

For the year ended December 31, 2023, the GAAP efficiency ratio was 65.24% compared to 50.05% for the same period in 2022. The non-GAAP efficiency ratio for the current year was 60.99% compared to the 49.66% for the prior year. The growth in the current year’s GAAP and non-GAAP efficiency ratios compared to the prior year, indicating a decline in efficiency, was the result of the declines in GAAP and non-GAAP revenues combined with the growth in GAAP and non-GAAP non-interest expenses.

Explanation of Non-GAAP Financial Measures

This news release contains financial information and performance measures determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. Non-GAAP measures used in this release consist of the following:

• Tangible common equity and related measures are non-GAAP measures that exclude the impact of goodwill and other intangible assets.
• The non-GAAP efficiency ratio excludes amortization of intangible assets, investment securities gains/(losses), merger, acquisition and disposal expense, gain on disposal of assets, pension settlement expense, severance expense and contingent payment expense, and includes tax-equivalent income.
• Core earnings and the related measures of core earnings per diluted common share, core return on average assets and core return on average tangible common equity reflect net income exclusive of amortization of intangible assets, pension settlement expense, investment securities gains/(losses) and other non-recurring or extraordinary items, on a net of tax basis.
• Pre-tax pre-provision net income excludes income tax expense and the provision (credit) for credit losses.

These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Please refer to the non-GAAP Reconciliation tables included with this release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

Conference Call

The Company’s management will host a conference call to discuss its fourth quarter results today at 2:00 p.m. (ET). A live Webcast of the conference call is available through the Investor Relations section of the Sandy Spring Website at www.sandyspringbank.com. Participants may call 1-833-470-1428. Please use the following access code: 125369. 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 February 6, 2024. A replay of the teleconference will be available through the same time period by calling 1-866-813-9403 under conference call number 801362.

About Sandy Spring Bancorp, Inc.

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank, a premier community bank in the Greater Washington, D.C. region. With over 50 locations, the bank offers a broad range of commercial and retail banking, mortgage, private banking, and trust services throughout Maryland, Virginia, and Washington, D.C. Through its subsidiaries, Rembert Pendleton Jackson and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of wealth management services.

Category: Webcast
Source: Sandy Spring Bancorp, Inc.
Code: SASR-E

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

Website: www.sandyspringbank.com
Media Contact:
Jen Schell, Senior Vice President
301-570-8331
jschell@sandyspringbank.com

Forward-Looking Statements

Sandy Spring Bancorp’s forward-looking statements are subject to significant risks and uncertainties that may cause actual results to differ materially from those in such statements. These risks and uncertainties include, but are not limited to, the risks identified in our quarterly and annual reports and the following: changes in general business and economic conditions nationally or in the markets that we serve; changes in consumer and business confidence, investor sentiment, or consumer spending or savings behavior; changes in the level of inflation; changes in the demand for loans, deposits and other financial services that we provide; the possibility that future credit losses may be higher than currently expected; the impact of the interest rate environment on our business, financial condition and results of operations; the impact of compliance with changes in laws, regulations and regulatory interpretations, including changes in income taxes; changes in credit ratings assigned to us or our subsidiaries; the ability to realize benefits and cost savings from, and limit any unexpected liabilities associated with, any business combinations; competitive pressures among financial services companies; the ability to attract, develop and retain qualified employees; our ability to maintain the security of our data processing and information technology systems; the impact of changes in accounting policies, including the introduction of new accounting standards; the impact of judicial or regulatory proceedings; the impact of fiscal and governmental policies of the United States federal government; the impact of health emergencies, epidemics or pandemics; the effects of climate change; and the impact of natural disasters, extreme weather events, military conflict, terrorism or other geopolitical events. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2022 and its Form 10-Q for the quarter ended September 30, 2023, including in the Risk Factors section of those reports, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov.

Sandy Spring Bancorp, Inc. and Subsidiaries FINANCIAL HIGHLIGHTS - UNAUDITED
		Three Months Ended December 31,								% Change			Year Ended December 31,								% Change
(Dollars in thousands, except per share data)		2023				2022							2023				2022
Results of operations:
Net interest income		$	81,696			$	106,643			(23	)%		$	354,550			$	427,004			(17	)%
Provision/ (credit) for credit losses			(3,445	)			10,801			N/M				(17,561	)			34,372			N/M
Non-interest income			16,560				14,297			16				67,078				87,019			(23	)
Non-interest expense			67,142				64,375			4				275,054				257,293			7
Income before income tax expense			34,559				45,764			(24	)			164,135				222,358			(26	)
Net income			26,100				33,980			(23	)			122,844				166,299			(26	)
Net income attributable to common shareholders		$	26,066			$	33,866			(23	)		$	122,621			$	165,618			(26	)
Pre-tax pre-provision net income(1)		$	31,114			$	56,565			(45	)		$	146,574			$	256,730			(43	)
Return on average assets			0.73	%			0.98	%						0.87	%			1.26	%
Return on average common equity			6.70	%			9.23	%						8.04	%			11.23	%
Return on average tangible common equity(1)			9.26	%			12.91	%						11.06	%			15.64	%
Net interest margin			2.45	%			3.26	%						2.67	%			3.44	%
Efficiency ratio - GAAP basis(2)			68.33	%			53.23	%						65.24	%			50.05	%
Efficiency ratio - Non-GAAP basis(2)			66.16	%			51.46	%						60.99	%			49.66	%
Per share data:
Basic net income per common share		$	0.58			$	0.76			(24	)%		$	2.74			$	3.69			(26	)%
Diluted net income per common share		$	0.58			$	0.76			(23	)		$	2.73			$	3.68			(26	)
Weighted average diluted common shares			45,009,574				44,828,827			—				44,947,263				45,039,022			—
Dividends declared per share		$	0.34			$	0.34			—			$	1.36			$	1.36			—
Book value per common share		$	35.36			$	33.23			6			$	35.36			$	33.23			6
Tangible book value per common share(1)		$	26.64			$	24.64			8			$	26.64			$	24.64			8
Outstanding common shares			44,913,561				44,657,054			1				44,913,561				44,657,054			1
Financial condition at period-end:
Investment securities		$	1,414,453			$	1,543,208			(8	)%		$	1,414,453			$	1,543,208			(8	)%
Loans			11,366,989				11,396,706			—				11,366,989				11,396,706			—
Assets			14,028,172				13,833,119			1				14,028,172				13,833,119			1
Deposits			10,996,538				10,953,421			—				10,996,538				10,953,421			—
Stockholders' equity			1,588,142				1,483,768			7				1,588,142				1,483,768			7
Capital ratios:
Tier 1 leverage(3)			9.51	%			9.33	%						9.51	%			9.33	%
Common equity tier 1 capital to risk-weighted assets(3)			10.90	%			10.23	%						10.90	%			10.23	%
Tier 1 capital to risk-weighted assets(3)			10.90	%			10.23	%						10.90	%			10.23	%
Total regulatory capital to risk-weighted assets(3)			14.92	%			14.20	%						14.92	%			14.20	%
Tangible common equity to tangible assets(4)			8.77	%			8.18	%						8.77	%			8.18	%
Average equity to average assets			10.97	%			10.61	%						10.87	%			11.20	%
Credit quality ratios:
Allowance for credit losses to loans			1.06	%			1.20	%						1.06	%			1.20	%
Non-performing loans to total loans			0.81	%			0.35	%						0.81	%			0.35	%
Non-performing assets to total assets			0.65	%			0.29	%						0.65	%			0.29	%
Allowance for credit losses to non-performing loans			131.59	%			346.15	%						131.59	%			346.15	%
Annualized net charge-offs/ (recoveries) to average loans(5)			—	%			—	%						0.01	%			—	%

N/M - not meaningful
(1)		Represents a non-GAAP measure.
(2)		The efficiency ratio - GAAP basis is non-interest expense divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income. The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization, merger, acquisition and disposal expense, severance expense, pension settlement expense and contingent payment expense from non-interest expense; and investment securities gains/ (losses) and gain on disposal of assets from non-interest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
(3)		Estimated ratio at December 31, 2023.
(4)		The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding goodwill and other intangible assets into stockholders' equity after deducting goodwill and other intangible assets. See the Reconciliation Table included with these Financial Highlights.
(5)		Calculation utilizes average loans, excluding residential mortgage loans held-for-sale.

Sandy Spring Bancorp, Inc. and Subsidiaries RECONCILIATION TABLE - UNAUDITED (CONTINUED) OPERATING EARNINGS - METRICS
		Three Months Ended December 31,								Year Ended December 31,
(Dollars in thousands)		2023				2022				2023				2022
Core earnings (non-GAAP):
Net income (GAAP)		$	26,100			$	33,980			$	122,844			$	166,299
Plus/ (less) non-GAAP adjustments (net of tax)(1):
Merger, acquisition and disposal expense			—				—				—				796
Amortization of intangible assets			1,047				1,049				3,898				4,333
Severance expense			—				—				1,445				—
Pension settlement expense			—				—				6,088				—
Gain on disposal of assets			—				—				—				(12,309	)
Investment securities losses			—				293				—				257
Contingent payment expense			—				—				27				929
Core earnings (Non-GAAP)		$	27,147			$	35,322			$	134,302			$	160,305
Core earnings per diluted common share (non-GAAP):
Weighted average common shares outstanding - diluted (GAAP)			45,009,574				44,828,827				44,947,263				45,039,022
Earnings per diluted common share (GAAP)		$	0.58			$	0.76			$	2.73			$	3.68
Core earnings per diluted common share (non-GAAP)		$	0.60			$	0.79			$	2.99			$	3.56
Core return on average assets (non-GAAP):
Average assets (GAAP)		$	14,090,423			$	13,769,472			$	14,055,645			$	13,218,824
Return on average assets (GAAP)			0.73	%			0.98	%			0.87	%			1.26	%
Core return on average assets (non-GAAP)			0.76	%			1.02	%			0.96	%			1.21	%
Return/ Core return on average tangible common equity (non-GAAP):
Net Income (GAAP)		$	26,100			$	33,980			$	122,844			$	166,299
Plus: Amortization of intangible assets (net of tax)			1,047				1,049				3,898				4,333
Net income before amortization of intangible assets		$	27,147			$	35,029			$	126,742			$	170,632
Average total stockholders' equity (GAAP)		$	1,546,312			$	1,460,254			$	1,528,242			$	1,480,198
Average goodwill			(363,436	)			(363,436	)			(363,436	)			(366,244	)
Average other intangible assets, net			(20,162	)			(20,739	)			(18,596	)			(23,009	)
Average tangible common equity (non-GAAP)		$	1,162,714			$	1,076,079			$	1,146,210			$	1,090,945
Return on average tangible common equity (non-GAAP)			9.26	%			12.91	%			11.06	%			15.64	%
Core return on average tangible common equity (non-GAAP)			9.26	%			13.02	%			11.72	%			14.69	%

(1)		Tax adjustments have been determined using the combined marginal federal and state rate of 25.37% and 25.47% for 2023 and 2022, respectively.

Sandy Spring Bancorp, Inc. and Subsidiaries RECONCILIATION TABLE - UNAUDITED
		Three Months Ended December 31,								Year Ended December 31,
(Dollars in thousands)		2023				2022				2023				2022
Pre-tax pre-provision net income:
Net income (GAAP)		$	26,100			$	33,980			$	122,844			$	166,299
Plus/ (less) non-GAAP adjustments:
Income tax expense			8,459				11,784				41,291				56,059
Provision/ (credit) for credit losses			(3,445	)			10,801				(17,561	)			34,372
Pre-tax pre-provision net income (non-GAAP)		$	31,114			$	56,565			$	146,574			$	256,730
Efficiency ratio (GAAP):
Non-interest expense		$	67,142			$	64,375			$	275,054			$	257,293
Net interest income plus non-interest income		$	98,256			$	120,940			$	421,628			$	514,023
Efficiency ratio (GAAP)			68.33	%			53.23	%			65.24	%			50.05	%
Efficiency ratio (Non-GAAP):
Non-interest expense		$	67,142			$	64,375			$	275,054			$	257,293
Less non-GAAP adjustments:
Amortization of intangible assets			1,403				1,408				5,223				5,814
Merger, acquisition and disposal expense			—				—				—				1,068
Severance expense			—				—				1,939				—
Pension settlement expense			—				—				8,157				—
Contingent payment expense			—				—				36				1,247
Non-interest expense - as adjusted		$	65,739			$	62,967			$	259,699			$	249,164
Net interest income plus non-interest income		$	98,256			$	120,940			$	421,628			$	514,023
Plus non-GAAP adjustment:
Tax-equivalent income			1,113				1,032				4,157				3,841
Less/ (plus) non-GAAP adjustment:
Investment securities gains/ (losses)			—				(393	)			—				(345	)
Gain on disposal of assets			—				—				—				16,516
Net interest income plus non-interest income - as adjusted		$	99,369			$	122,365			$	425,785			$	501,693
Efficiency ratio (Non-GAAP)			66.16	%			51.46	%			60.99	%			49.66	%
Tangible common equity ratio:
Total stockholders' equity		$	1,588,142			$	1,483,768			$	1,588,142			$	1,483,768
Goodwill			(363,436	)			(363,436	)			(363,436	)			(363,436	)
Other intangible assets, net			(28,301	)			(19,855	)			(28,301	)			(19,855	)
Tangible common equity		$	1,196,405			$	1,100,477			$	1,196,405			$	1,100,477
Total assets		$	14,028,172			$	13,833,119			$	14,028,172			$	13,833,119
Goodwill			(363,436	)			(363,436	)			(363,436	)			(363,436	)
Other intangible assets, net			(28,301	)			(19,855	)			(28,301	)			(19,855	)
Tangible assets		$	13,636,435			$	13,449,828			$	13,636,435			$	13,449,828
Tangible common equity ratio			8.77	%			8.18	%			8.77	%			8.18	%
Outstanding common shares			44,913,561				44,657,054				44,913,561				44,657,054
Tangible book value per common share		$	26.64			$	24.64			$	26.64			$	24.64

Sandy Spring Bancorp, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
(Dollars in thousands)		December 31, 2023				December 31, 2022
Assets
Cash and due from banks		$	82,257			$	88,152
Federal funds sold			245				193
Interest-bearing deposits with banks			463,396				103,887
Cash and cash equivalents			545,898				192,232
Residential mortgage loans held for sale (at fair value)			10,836				11,706
Investments held-to-maturity (fair values of $200,411 and $220,123 at December 31, 2023 and December 31, 2022, respectively)			236,165				259,452
Investments available-for-sale (at fair value)			1,102,681				1,214,538
Other investments, at cost			75,607				69,218
Total loans			11,366,989				11,396,706
Less: allowance for credit losses - loans			(120,865	)			(136,242	)
Net loans			11,246,124				11,260,464
Premises and equipment, net			59,490				67,070
Other real estate owned			—				645
Accrued interest receivable			46,583				41,172
Goodwill			363,436				363,436
Other intangible assets, net			28,301				19,855
Other assets			313,051				333,331
Total assets		$	14,028,172			$	13,833,119
Liabilities
Noninterest-bearing deposits		$	2,914,161			$	3,673,300
Interest-bearing deposits			8,082,377				7,280,121
Total deposits			10,996,538				10,953,421
Securities sold under retail repurchase agreements			75,032				61,967
Federal funds purchased			—				260,000
Federal Reserve Bank borrowings			300,000				—
Advances from FHLB			550,000				550,000
Subordinated debt			370,803				370,205
Total borrowings			1,295,835				1,242,172
Accrued interest payable and other liabilities			147,657				153,758
Total liabilities			12,440,030				12,349,351
Stockholders' equity
Common stock -- par value $1.00; shares authorized 100,000,000; shares issued and outstanding 44,913,561 and 44,657,054 at December 31, 2023 and December 31, 2022, respectively			44,914				44,657
Additional paid in capital			742,243				734,273
Retained earnings			898,316				836,789
Accumulated other comprehensive loss			(97,331	)			(131,951	)
Total stockholders' equity			1,588,142				1,483,768
Total liabilities and stockholders' equity		$	14,028,172			$	13,833,119

Sandy Spring Bancorp, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
		Three Months Ended December 31,								Year Ended December 31,
(Dollars in thousands, except per share data)		2023				2022				2023				2022
Interest income:
Interest and fees on loans		$	148,655			$	135,079			$	579,960			$	462,121
Interest on loans held for sale			199				234				896				738
Interest on deposits with banks			8,456				1,427				22,435				2,672
Interest and dividend income on investment securities:
Taxable			6,454				6,047				26,992				20,519
Tax-advantaged			1,848				2,509				7,224				9,609
Interest on federal funds sold			4				4				17				8
Total interest income			165,616				145,300				637,524				495,667
Interest expense:
Interest on deposits			69,813				28,276				225,028				43,854
Interest on retail repurchase agreements and federal funds purchased			4,075				1,697				14,452				2,929
Interest on advances from FHLB			6,086				4,759				27,709				7,825
Interest on subordinated debt			3,946				3,925				15,785				14,055
Total interest expense			83,920				38,657				282,974				68,663
Net interest income			81,696				106,643				354,550				427,004
Provision/ (credit) for credit losses			(3,445	)			10,801				(17,561	)			34,372
Net interest income after provision/ (credit) for credit losses			85,141				95,842				372,111				392,632
Non-interest income:
Investment securities gains/ (losses)			—				(393	)			—				(345	)
Gain on disposal of assets			—				—				—				16,516
Service charges on deposit accounts			2,749				2,419				10,447				9,803
Mortgage banking activities			792				783				5,536				6,130
Wealth management income			9,219				8,472				36,633				35,774
Insurance agency commissions			—				—				—				2,927
Income from bank owned life insurance			1,207				950				4,210				3,141
Bank card fees			454				463				1,769				4,379
Other income			2,139				1,603				8,483				8,694
Total non-interest income			16,560				14,297				67,078				87,019
Non-interest expense:
Salaries and employee benefits			35,482				39,455				160,192				158,504
Occupancy expense of premises			4,558				4,728				18,778				19,255
Equipment expenses			3,987				3,859				15,675				14,779
Marketing			1,242				1,354				5,103				5,197
Outside data services			3,000				2,707				11,186				10,199
FDIC insurance			2,615				1,462				9,461				4,792
Amortization of intangible assets			1,403				1,408				5,223				5,814
Merger, acquisition and disposal expense			—				—				—				1,068
Professional fees and services			5,628				2,573				17,982				9,169
Other expenses			9,227				6,829				31,454				28,516
Total non-interest expense			67,142				64,375				275,054				257,293
Income before income tax expense			34,559				45,764				164,135				222,358
Income tax expense			8,459				11,784				41,291				56,059
Net income		$	26,100			$	33,980			$	122,844			$	166,299
Net income per share amounts:
Basic net income per common share		$	0.58			$	0.76			$	2.74			$	3.69
Diluted net income per common share		$	0.58			$	0.76			$	2.73			$	3.68
Dividends declared per share		$	0.34			$	0.34			$	1.36			$	1.36

Sandy Spring Bancorp, Inc. and Subsidiaries HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
		2023																2022
(Dollars in thousands, except per share data)		Q4				Q3				Q2				Q1				Q4				Q3				Q2				Q1
Profitability for the quarter:
Tax-equivalent interest income		$	166,729			$	163,479			$	159,156			$	152,317			$	146,332			$	131,373			$	114,901			$	106,902
Interest expense			83,920				77,330				67,679				54,045				38,657				17,462				7,959				4,585
Tax-equivalent net interest income			82,809				86,149				91,477				98,272				107,675				113,911				106,942				102,317
Tax-equivalent adjustment			1,113				1,068				1,006				970				1,032				951				992				866
Provision/ (credit) for credit losses			(3,445	)			2,365				5,055				(21,536	)			10,801				18,890				3,046				1,635
Non-interest income			16,560				17,391				17,176				15,951				14,297				16,882				35,245				20,595
Non-interest expense			67,142				72,471				69,136				66,305				64,375				65,780				64,991				62,147
Income before income tax expense			34,559				27,636				33,456				68,484				45,764				45,172				73,158				58,264
Income tax expense			8,459				6,890				8,711				17,231				11,784				11,588				18,358				14,329
Net income		$	26,100			$	20,746			$	24,745			$	51,253			$	33,980			$	33,584			$	54,800			$	43,935
GAAP financial performance:
Return on average assets			0.73	%			0.58	%			0.70	%			1.49	%			0.98	%			0.99	%			1.69	%			1.42	%
Return on average common equity			6.70	%			5.35	%			6.46	%			13.93	%			9.23	%			8.96	%			14.97	%			11.83	%
Return on average tangible common equity			9.26	%			7.42	%			8.93	%			19.10	%			12.91	%			12.49	%			20.83	%			16.45	%
Net interest margin			2.45	%			2.55	%			2.73	%			2.99	%			3.26	%			3.53	%			3.49	%			3.49	%
Efficiency ratio - GAAP basis			68.33	%			70.72	%			64.22	%			58.55	%			53.23	%			50.66	%			46.03	%			50.92	%
Non-GAAP financial performance:
Pre-tax pre-provision net income		$	31,114			$	30,001			$	38,511			$	46,948			$	56,565			$	64,062			$	76,204			$	59,899
Core after-tax earnings		$	27,147			$	27,766			$	27,136			$	52,253			$	35,322			$	35,695			$	44,238			$	45,050
Core return on average assets			0.76	%			0.78	%			0.77	%			1.52	%			1.02	%			1.05	%			1.37	%			1.45	%
Core return on average common equity			6.97	%			7.16	%			7.09	%			14.20	%			9.60	%			9.53	%			12.09	%			12.13	%
Core return on average tangible common equity			9.26	%			9.51	%			9.43	%			19.11	%			13.02	%			12.86	%			16.49	%			16.45	%
Core earnings per diluted common share		$	0.60			$	0.62			$	0.60			$	1.16			$	0.79			$	0.80			$	0.98			$	0.99
Efficiency ratio - Non-GAAP basis			66.16	%			60.91	%			60.68	%			56.87	%			51.46	%			48.18	%			49.79	%			49.34	%
Per share data:
Net income attributable to common shareholders		$	26,066			$	20,719			$	24,712			$	51,084			$	33,866			$	33,470			$	54,606			$	43,667
Basic net income per common share		$	0.58			$	0.46			$	0.55			$	1.14			$	0.76			$	0.75			$	1.21			$	0.97
Diluted net income per common share		$	0.58			$	0.46			$	0.55			$	1.14			$	0.76			$	0.75			$	1.21			$	0.96
Weighted average diluted common shares			45,009,574				44,960,455				44,888,759				44,872,582				44,828,827				44,780,560				45,111,693				45,333,292
Dividends declared per share		$	0.34			$	0.34			$	0.34			$	0.34			$	0.34			$	0.34			$	0.34			$	0.34
Non-interest income:
Securities gains/ (losses)		$	—			$	—			$	—			$	—			$	(393	)		$	2			$	38			$	8
Gain/ (loss) on disposal of assets			—				—				—				—				—				(183	)			16,699				—
Service charges on deposit accounts			2,749				2,704				2,606				2,388				2,419				2,591				2,467				2,326
Mortgage banking activities			792				1,682				1,817				1,245				783				1,566				1,483				2,298
Wealth management income			9,219				9,391				9,031				8,992				8,472				8,867				9,098				9,337
Insurance agency commissions			—				—				—				—				—				—				812				2,115
Income from bank owned life insurance			1,207				845				1,251				907				950				693				703				795
Bank card fees			454				450				447				418				463				438				1,810				1,668
Other income			2,139				2,319				2,024				2,001				1,603				2,908				2,135				2,048
Total non-interest income		$	16,560			$	17,391			$	17,176			$	15,951			$	14,297			$	16,882			$	35,245			$	20,595
Non-interest expense:
Salaries and employee benefits		$	35,482			$	44,853			$	40,931			$	38,926			$	39,455			$	40,126			$	39,550			$	39,373
Occupancy expense of premises			4,558				4,609				4,764				4,847				4,728				4,759				4,734				5,034
Equipment expenses			3,987				3,811				3,760				4,117				3,859				3,825				3,559				3,536
Marketing			1,242				729				1,589				1,543				1,354				1,370				1,280				1,193
Outside data services			3,000				2,819				2,853				2,514				2,707				2,509				2,564				2,419
FDIC insurance			2,615				2,333				2,375				2,138				1,462				1,268				1,078				984
Amortization of intangible assets			1,403				1,245				1,269				1,306				1,408				1,432				1,466				1,508
Merger, acquisition and disposal			—				—				—				—				—				1				1,067				—
Professional fees and services			5,628				4,509				4,161				3,684				2,573				2,207				2,372				2,017
Other expenses			9,227				7,563				7,434				7,230				6,829				8,283				7,321				6,083
Total non-interest expense		$	67,142			$	72,471			$	69,136			$	66,305			$	64,375			$	65,780			$	64,991			$	62,147

Sandy Spring Bancorp, Inc. and Subsidiaries HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
		2023																2022
(Dollars in thousands, except per share data)		Q4				Q3				Q2				Q1				Q4				Q3				Q2				Q1
Balance sheets at quarter end:
Commercial investor real estate loans		$	5,104,425			$	5,137,694			$	5,131,210			$	5,167,456			$	5,130,094			$	5,066,843			$	4,761,658			$	4,388,275
Commercial owner-occupied real estate loans			1,755,235				1,760,384				1,770,135				1,769,928				1,775,037				1,743,724				1,767,326				1,692,253
Commercial AD&C loans			988,967				938,673				1,045,742				1,046,665				1,090,028				1,143,783				1,094,528				1,089,331
Commercial business loans			1,504,880				1,454,709				1,423,614				1,437,478				1,455,885				1,393,634				1,353,380				1,349,602
Residential mortgage loans			1,474,521				1,432,051				1,385,743				1,328,524				1,287,933				1,218,552				1,147,577				1,000,697
Residential construction loans			121,419				160,345				190,690				223,456				224,772				229,243				235,486				204,259
Consumer loans			417,542				416,436				422,505				421,734				432,957				423,034				426,335				419,911
Total loans			11,366,989				11,300,292				11,369,639				11,395,241				11,396,706				11,218,813				10,786,290				10,144,328
Allowance for credit losses - loans			(120,865	)			(123,360	)			(120,287	)			(117,613	)			(136,242	)			(128,268	)			(113,670	)			(110,588	)
Loans held for sale			10,836				19,235				21,476				16,262				11,706				11,469				23,610				17,537
Investment securities			1,414,453				1,392,078				1,463,554				1,528,336				1,543,208				1,587,279				1,595,424				1,586,441
Total assets			14,028,172				14,135,085				13,994,545				14,129,007				13,833,119				13,765,597				13,303,009				12,967,416
Noninterest-bearing demand deposits			2,914,161				3,013,905				3,079,896				3,228,678				3,673,300				3,993,480				4,129,440				4,039,797
Total deposits			10,996,538				11,151,012				10,958,922				11,075,991				10,953,421				10,749,486				10,969,461				10,852,794
Customer repurchase agreements			75,032				66,581				74,510				47,627				61,967				91,287				110,744				130,784
Total stockholders' equity			1,588,142				1,537,914				1,539,032				1,536,865				1,483,768				1,451,862				1,477,169				1,488,910
Quarterly average balance sheets:
Commercial investor real estate loans		$	5,125,028			$	5,125,459			$	5,146,632			$	5,136,204			$	5,082,697			$	4,898,683			$	4,512,937			$	4,220,246
Commercial owner-occupied real estate loans			1,755,048				1,769,717				1,773,039				1,769,680				1,753,351				1,755,891				1,727,325				1,683,557
Commercial AD&C loans			960,646				995,682				1,057,205				1,082,791				1,136,780				1,115,531				1,096,369				1,102,660
Commercial business loans			1,433,035				1,442,518				1,441,489				1,444,588				1,373,565				1,327,218				1,334,350				1,372,755
Residential mortgage loans			1,451,614				1,406,929				1,353,809				1,307,761				1,251,829				1,177,664				1,070,836				964,056
Residential construction loans			142,325				174,204				211,590				223,313				231,318				235,123				221,031				197,366
Consumer loans			419,299				421,189				423,306				424,122				426,134				422,963				421,022				424,859
Total loans			11,286,995				11,335,698				11,407,070				11,388,459				11,255,674				10,933,073				10,383,870				9,965,499
Loans held for sale			10,132				13,714				17,480				8,324				10,901				15,211				12,744				17,594
Investment securities			1,544,173				1,589,342				1,639,324				1,679,593				1,717,455				1,734,036				1,686,181				1,617,615
Interest-earning assets			13,462,583				13,444,117				13,423,589				13,316,165				13,134,234				12,833,758				12,283,834				11,859,803
Total assets			14,090,423				14,086,342				14,094,653				13,949,276				13,769,472				13,521,595				12,991,692				12,576,089
Noninterest-bearing demand deposits			2,958,254				3,041,101				3,137,971				3,480,433				3,833,275				3,995,702				4,001,762				3,758,732
Total deposits			11,089,587				11,076,724				10,928,038				11,049,991				11,025,843				10,740,999				10,829,221				10,542,029
Customer repurchase agreements			66,622				67,298				58,382				60,626				74,797				104,742				122,728				131,487
Total interest-bearing liabilities			9,418,666				9,332,617				9,257,652				8,806,720				8,310,278				7,892,230				7,377,045				7,163,641
Total stockholders' equity			1,546,312				1,538,553				1,535,465				1,491,929				1,460,254				1,486,427				1,468,036				1,506,516
Financial measures:
Average equity to average assets			10.97	%			10.92	%			10.89	%			10.70	%			10.61	%			10.99	%			11.30	%			11.98	%
Average investment securities to average earning assets			11.47	%			11.82	%			12.21	%			12.61	%			13.08	%			13.51	%			13.73	%			13.64	%
Average loans to average earning assets			83.84	%			84.32	%			84.98	%			85.52	%			85.70	%			85.19	%			84.53	%			84.03	%
Loans to assets			81.03	%			79.94	%			81.24	%			80.65	%			82.39	%			81.50	%			81.08	%			78.23	%
Loans to deposits			103.37	%			101.34	%			103.75	%			102.88	%			104.05	%			104.37	%			98.33	%			93.47	%
Assets under management		$	5,999,520			$	5,536,499			$	5,742,888			$	5,477,560			$	5,255,306			$	4,969,092			$	5,171,321			$	5,793,787
Capital measures:
Tier 1 leverage(1)			9.51	%			9.50	%			9.42	%			9.44	%			9.33	%			9.33	%			9.53	%			9.66	%
Common equity tier 1 capital to risk-weighted assets(1)			10.90	%			10.83	%			10.65	%			10.53	%			10.23	%			10.18	%			10.42	%			10.78	%
Tier 1 capital to risk-weighted assets(1)			10.90	%			10.83	%			10.65	%			10.53	%			10.23	%			10.18	%			10.42	%			10.78	%
Total regulatory capital to risk-weighted assets(1)			14.92	%			14.85	%			14.60	%			14.43	%			14.20	%			14.15	%			14.46	%			15.02	%
Book value per common share		$	35.36			$	34.26			$	34.31			$	34.37			$	33.23			$	32.52			$	33.10			$	32.97
Outstanding common shares			44,913,561				44,895,158				44,862,369				44,712,497				44,657,054				44,644,269				44,629,697				45,162,908

(1)		Estimated ratio at December 31, 2023.

Sandy Spring Bancorp, Inc. and Subsidiaries LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
		2023																2022
(Dollars in thousands)		December 31,				September 30,				June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
Non-performing assets:
Loans 90 days past due:
Commercial real estate:
Commercial investor real estate		$	—			$	—			$	—			$	215			$	—			$	—			$	—			$	—
Commercial owner-occupied real estate			—				—				—				—				—				—				—				—
Commercial AD&C			—				—				—				—				—				—				—				—
Commercial business			20				415				29				3,002				1,002				1,966				—				—
Residential real estate:
Residential mortgage			342				—				692				352				—				167				353				296
Residential construction			—				—				—				—				—				—				—				—
Consumer			—				—				—				—				—				34				—				—
Total loans 90 days past due			362				415				721				3,569				1,002				2,167				353				296
Non-accrual loans:
Commercial real estate:
Commercial investor real estate			58,658				20,108				20,381				15,451				9,943				14,038				11,245				11,743
Commercial owner-occupied real estate			4,640				4,744				4,846				4,949				5,019				6,294				7,869				8,083
Commercial AD&C			1,259				1,422				569				—				—				—				1,353				1,081
Commercial business			10,051				9,671				9,393				9,443				7,322				7,198				7,542				8,357
Residential real estate:
Residential mortgage			12,332				10,766				10,153				8,935				7,439				7,514				7,305				8,148
Residential construction			443				449				—				—				—				—				1				51
Consumer			4,102				4,187				3,396				4,900				5,059				5,173				5,692				6,406
Total non-accrual loans			91,485				51,347				48,738				43,678				34,782				40,217				41,007				43,869
Total restructured loans - accruing(1)			—				—				—				—				3,575				2,077				2,119				2,161
Total non-performing loans			91,847				51,762				49,459				47,247				39,359				44,461				43,479				46,326
Other assets and other real estate owned (OREO)			—				261				611				645				645				739				739				1,034
Total non-performing assets		$	91,847			$	52,023			$	50,070			$	47,892			$	40,004			$	45,200			$	44,218			$	47,360

		For the Quarter Ended,
(Dollars in thousands)		December 31, 2023				September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022
Analysis of non-accrual loan activity:
Balance at beginning of period		$	51,347			$	48,738			$	43,678			$	34,782			$	40,217			$	41,007			$	43,869			$	46,086
Non-accrual balances transferred to OREO			—				—				—				—				—				—				—				—
Non-accrual balances charged-off			—				(183	)			(2,049	)			(126	)			(22	)			(197	)			(376	)			(265	)
Net payments or draws			(7,619	)			(1,545	)			(1,654	)			(10,212	)			(9,535	)			(3,509	)			(3,234	)			(2,787	)
Loans placed on non-accrual			47,920				4,967				9,276				19,714				5,467				4,212				948				1,503
Non-accrual loans brought current			(163	)			(630	)			(513	)			(480	)			(1,345	)			(1,296	)			(200	)			(668	)
Balance at end of period		$	91,485			$	51,347			$	48,738			$	43,678			$	34,782			$	40,217			$	41,007			$	43,869
Analysis of allowance for credit losses - loans:
Balance at beginning of period		$	123,360			$	120,287			$	117,613			$	136,242			$	128,268			$	113,670			$	110,588			$	109,145
Provision/ (credit) for credit losses - loans			(2,574	)			3,171				4,454				(18,945	)			7,907				14,092				3,046				1,635
Less loans charged-off, net of recoveries:
Commercial real estate:
Commercial investor real estate			(3	)			(3	)			(14	)			(5	)			(1	)			—				(300	)			(19	)
Commercial owner-occupied real estate			(27	)			(25	)			(27	)			(26	)			(27	)			(10	)			(12	)			—
Commercial AD&C			—				—				—				—				—				—				—				—
Commercial business			(105	)			15				363				(127	)			(13	)			(512	)			331				111
Residential real estate:
Residential mortgage			(6	)			(4	)			35				21				(50	)			(8	)			(9	)			120
Residential construction			—				—				—				—				—				(3	)			(5	)			—
Consumer			62				115				1,423				(179	)			24				27				(41	)			(20	)
Net charge-offs/ (recoveries)			(79	)			98				1,780				(316	)			(67	)			(506	)			(36	)			192
Balance at the end of period		$	120,865			$	123,360			$	120,287			$	117,613			$	136,242			$	128,268			$	113,670			$	110,588
Asset quality ratios:
Non-performing loans to total loans			0.81	%			0.46	%			0.44	%			0.41	%			0.35	%			0.40	%			0.40	%			0.46	%
Non-performing assets to total assets			0.65	%			0.37	%			0.36	%			0.34	%			0.29	%			0.33	%			0.33	%			0.37	%
Allowance for credit losses to loans			1.06	%			1.09	%			1.06	%			1.03	%			1.20	%			1.14	%			1.05	%			1.09	%
Allowance for credit losses to non-performing loans			131.59	%			238.32	%			243.21	%			248.93	%			346.15	%			288.50	%			261.44	%			238.72	%
Annualized net charge-offs/ (recoveries) to average loans			—	%			—	%			0.06	%		(0.01		)%			—	%		(0.02		)%			—	%			0.01	%

(1)		Effective January 1, 2023, the Company adopted ASU 2022-02, which eliminated the accounting and recognition of troubled debt restructurings ("TDRs").

Sandy Spring Bancorp, Inc. and Subsidiaries CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
		Three Months Ended December 31,
		2023											2022
(Dollars in thousands and tax-equivalent)		Average Balances				Interest(1)				Annualized Average Yield/Rate			Average Balances				Interest(1)				Annualized Average Yield/Rate
Assets
Commercial investor real estate loans		$	5,125,028			$	60,909			4.72	%		$	5,082,697			$	56,353			4.40	%
Commercial owner-occupied real estate loans			1,755,048				21,011			4.75				1,753,351				20,433			4.62
Commercial AD&C loans			960,646				20,510			8.47				1,136,780				18,868			6.59
Commercial business loans			1,433,035				23,822			6.60				1,373,565				20,395			5.89
Total commercial loans			9,273,757				126,252			5.40				9,346,393				116,049			4.93
Residential mortgage loans			1,451,614				12,984			3.58				1,251,829				10,919			3.49
Residential construction loans			142,325				1,515			4.22				231,318				1,851			3.17
Consumer loans			419,299				8,543			8.08				426,134				6,775			6.31
Total residential and consumer loans			2,013,238				23,042			4.56				1,909,281				19,545			4.08
Total loans(2)			11,286,995				149,294			5.25				11,255,674				135,594			4.78
Loans held for sale			10,132				199			7.86				10,901				234			8.58
Taxable securities			1,193,408				6,454			2.16				1,243,089				6,047			1.95
Tax-advantaged securities			350,765				2,322			2.64				474,366				3,026			2.55
Total investment securities(3)			1,544,173				8,776			2.27				1,717,455				9,073			2.11
Interest-bearing deposits with banks			621,007				8,456			5.40				149,651				1,427			3.78
Federal funds sold			276				4			5.43				553				4			2.97
Total interest-earning assets			13,462,583				166,729			4.92				13,134,234				146,332			4.43
Less: allowance for credit losses - loans			(121,851	)										(127,404	)
Cash and due from banks			89,143											94,840
Premises and equipment, net			69,162											65,958
Other assets			591,386											601,844
Total assets		$	14,090,423										$	13,769,472
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	1,474,748			$	5,612			1.51	%		$	1,398,120			$	1,664			0.47	%
Regular savings deposits			1,153,610				9,715			3.34				528,306				232			0.17
Money market savings deposits			2,697,930				24,456			3.60				3,231,952				16,480			2.02
Time deposits			2,805,045				30,030			4.25				2,034,190				9,900			1.93
Total interest-bearing deposits			8,131,333				69,813			3.41				7,192,568				28,276			1.56
Repurchase agreements			66,622				354			2.11				74,797				20			0.11
Federal funds purchased and Federal Reserve Bank borrowings			300,000				3,721			4.92				172,478				1,677			3.86
Advances from FHLB			550,000				6,086			4.39				500,326				4,759			3.77
Subordinated debt			370,711				3,946			4.26				370,109				3,925			4.24
Total borrowings			1,287,333				14,107			4.35				1,117,710				10,381			3.68
Total interest-bearing liabilities			9,418,666				83,920			3.54				8,310,278				38,657			1.85
Noninterest-bearing demand deposits			2,958,254											3,833,275
Other liabilities			167,191											165,665
Stockholders' equity			1,546,312											1,460,254
Total liabilities and stockholders' equity		$	14,090,423										$	13,769,472
Tax-equivalent net interest income and spread						$	82,809			1.38	%						$	107,675			2.58	%
Less: tax-equivalent adjustment							1,113											1,032
Net interest income						$	81,696										$	106,643
Interest income/earning assets										4.92	%										4.43	%
Interest expense/earning assets										2.47											1.17
Net interest margin										2.45	%										3.26	%

(1)		Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.37% and 25.47% for 2023 and 2022, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.1 million and $1.0 million in 2023 and 2022, respectively.
(2)		Non-accrual loans are included in the average balances.
(3)		Available-for-sale investments are presented at amortized cost.

Sandy Spring Bancorp, Inc. and Subsidiaries CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
		Year Ended December 31,
		2023											2022
(Dollars in thousands and tax-equivalent)		Average Balances				Interest(1)				Annualized Average Yield/Rate			Average Balances				Interest(1)				Annualized Average Yield/Rate
Assets
Commercial investor real estate loans		$	5,133,279			$	237,976			4.64	%		$	4,681,607			$	194,598			4.16	%
Commercial owner-occupied real estate loans			1,766,839				82,049			4.64				1,730,293				78,559			4.54
Commercial AD&C loans			1,023,669				81,515			7.96				1,112,936				56,689			5.09
Commercial business loans			1,440,382				92,080			6.39				1,351,906				69,765			5.16
Total commercial loans			9,364,169				493,620			5.27				8,876,742				399,611			4.50
Residential mortgage loans			1,380,496				48,909			3.54				1,117,053				37,551			3.36
Residential construction loans			187,599				6,817			3.63				221,341				6,963			3.15
Consumer loans			421,963				32,946			7.81				423,746				19,887			4.69
Total residential and consumer loans			1,990,058				88,672			4.46				1,762,140				64,401			3.65
Total loans(2)			11,354,227				582,292			5.13				10,638,882				464,012			4.36
Loans held for sale			12,421				896			7.21				14,097				738			5.24
Taxable securities			1,254,739				26,992			2.15				1,214,032				20,519			1.69
Tax-advantaged securities			357,933				9,049			2.53				475,187				11,559			2.43
Total investment securities(3)			1,612,672				36,041			2.23				1,689,219				32,078			1.90
Interest-bearing deposits with banks			432,392				22,435			5.19				189,465				2,672			1.41
Federal funds sold			393				17			4.26				574				8			1.41
Total interest-earning assets			13,412,105				641,681			4.78				12,532,237				499,508			3.99
Less: allowance for credit losses - loans			(124,624	)										(116,170	)
Cash and due from banks			93,494											84,992
Premises and equipment, net			69,886											63,379
Other assets			604,784											654,386
Total assets		$	14,055,645										$	13,218,824
Liabilities and Stockholders' Equity
Interest-bearing demand deposits		$	1,429,219			$	16,077			1.12	%		$	1,457,833			$	3,177			0.22	%
Regular savings deposits			784,575				17,546			2.24				547,510				294			0.05
Money market savings deposits			2,974,580				93,432			3.14				3,308,678				23,883			0.72
Time deposits			2,695,232				97,973			3.64				1,573,868				16,500			1.05
Total interest-bearing deposits			7,883,606				225,028			2.85				6,887,889				43,854			0.64
Repurchase agreements			63,259				915			1.45				108,273				124			0.11
Federal funds purchased and Federal Reserve Bank borrowings			273,508				13,537			4.95				107,785				2,805			2.60
Advances from FHLB			615,082				27,709			4.50				256,621				7,825			3.05
Subordinated debt			370,487				15,785			4.26				328,939				14,055			4.27
Total borrowings			1,322,336				57,946			4.38				801,618				24,809			3.09
Total interest-bearing liabilities			9,205,942				282,974			3.07				7,689,507				68,663			0.89
Noninterest-bearing demand deposits			3,152,699											3,897,842
Other liabilities			168,762											151,277
Stockholders' equity			1,528,242											1,480,198
Total liabilities and stockholders' equity		$	14,055,645										$	13,218,824
Tax-equivalent net interest income and spread						$	358,707			1.71	%						$	430,845			3.10	%
Less: tax-equivalent adjustment							4,157											3,841
Net interest income						$	354,550										$	427,004
Interest income/earning assets										4.78	%										3.99	%
Interest expense/earning assets										2.11											0.55
Net interest margin										2.67	%										3.44	%

(1)		Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 25.37% and 25.47% for 2023 and 2022, respectively. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $4.2 million and $3.8 million in 2023 and 2022, respectively.
(2)		Non-accrual loans are included in the average balances.
(3)		Available-for-sale investments are presented at amortized cost.

FAQ

What was Sandy Spring Bancorp, Inc.'s net income for Q4 2023?

Sandy Spring Bancorp, Inc. reported a net income of $26.1 million for Q4 2023.

Did the total assets increase or decrease in Q4 2023?

Total assets decreased by 1% to $14.0 billion.

What was the change in total loans in Q4 2023?

Total loans increased by $66.7 million.

What was the change in deposits in Q4 2023?

Deposits decreased by $154.5 million.

What was the non-performing loans to total loans ratio at December 31, 2023?

Non-performing loans to total loans were 0.81% at December 31, 2023.

How did net interest income change in Q4 2023 compared to the previous quarter?

Net interest income declined by 4% compared to the previous quarter.

How did non-interest expense change in Q4 2023 compared to the previous quarter?

Non-interest expense decreased by 7% compared to the previous quarter.

What was the return on average tangible common equity for Q4 2023?

Return on average tangible common equity was 9.26%.