Core Points - Sandy Spring Bank has been certified as a Great Place To Work for the fourth consecutive year, reflecting its commitment to a positive workplace culture [1][4] - 78% of Sandy Spring Bank employees believe it is a Great Place To Work, significantly higher than the 57% average for typical U.S.-based companies [2] - The bank's employees reported high levels of satisfaction, with 90% feeling good about the bank's community contributions and 91% feeling welcomed upon joining [3] Employee Feedback - 91% of employees felt they could take necessary time off from work [3] - 86% believe management is honest and ethical in its business practices [3] - 86% express pride in the bank's accomplishments [3] Company Overview - Sandy Spring Bank is a wholly owned subsidiary of Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, and operates over 50 locations [5] - The bank offers a wide range of financial services, including commercial and retail banking, mortgage, private banking, and trust services across Maryland, Virginia, and Washington, D.C. [5]

Financial Performance - For the quarter ended June 30, 2024, the company reported net income of $22.8 million ($0.51 per diluted common share), an increase from $20.4 million ($0.45 per diluted common share) in the previous quarter and a decrease from $24.7 million ($0.55 per diluted common share) in the same quarter last year [146]. - Net income for the three months ended June 30, 2024, was $22.8 million ($0.51 per diluted common share), down from $24.7 million ($0.55 per diluted common share) in the prior year quarter [162]. - For the six months ended June 30, 2024, net income was $43.2 million, a decline from $76.0 million in the same period of the prior year, primarily due to increased provision for credit losses [165]. - Core earnings for the six months ended June 30, 2024, were $46.3 million ($1.03 per diluted share), down from $79.4 million ($1.77 per diluted share) in 2023 [188]. - Core earnings for the current quarter were $24.4 million, down from $27.1 million in the same quarter last year, with core earnings per diluted share decreasing to $0.54 from $0.60 [209]. Asset and Loan Growth - Total assets at June 30, 2024, increased by 1% to $14.0 billion compared to $13.9 billion at March 31, 2024 [147]. - Total loans increased by $119.6 million or 1% to $11.5 billion as of June 30, 2024, with a reduction in commercial investor real estate loans by $64.5 million [147]. - Total loans increased by $116.9 million or 1% to $11.5 billion at June 30, 2024, compared to $11.4 billion at December 31, 2023 [215]. - The commercial AD&C portfolio increased by 20% mainly due to draws on existing loans, while commercial business loans increased by 6% [215]. Deposits and Funding - Deposits increased by $113.0 million or 1% to $11.3 billion at June 30, 2024, with noninterest-bearing deposits rising by $113.5 million [148]. - Total deposits grew by $381.3 million or 3% to $11.3 billion at June 30, 2024, compared to $11.0 billion at June 30, 2023 [156]. - Deposit balances increased to $11.3 billion, a rise from $11.0 billion at the end of 2023, driven by a 4% increase in interest-bearing deposits [214]. - Interest-bearing deposits grew by $326.4 million or 4%, with savings accounts increasing by $402.8 million during the current year [222]. Interest Income and Expense - Net interest income for the second quarter of 2024 grew by $0.9 million or 1% compared to the previous quarter but declined by $10.2 million or 11% compared to the second quarter of 2023 [149]. - Net interest income decreased by $10.2 million or 11% for the second quarter of 2024 compared to the same quarter in 2023, driven by a $17.1 million increase in interest expense [163]. - Interest expense increased by $49.8 million for the first six months of 2024, primarily due to a $55.7 million increase in interest-bearing deposits interest expense [176]. - Interest expense rose by $17.1 million in Q2 2024, influenced by higher market interest rates and increased average balances in interest-bearing deposits [202]. Non-Interest Income - Non-interest income for the second quarter of 2024 increased by 7% or $1.2 million compared to the linked quarter and grew by 14% or $2.4 million compared to the prior year quarter [151]. - Non-interest income increased by 14% or $2.4 million compared to the prior year quarter, attributed to higher wealth management income and service charges on deposits [163]. - Non-interest income rose by 15% to $38.0 million for the six months ended June 30, 2024, compared to $33.1 million for the same period in 2023, mainly driven by higher wealth management income and increased service fees on deposit accounts [177]. Credit Quality and Allowance for Losses - The ratio of non-performing loans to total loans was 0.81% at June 30, 2024, up from 0.74% at March 31, 2024 [149]. - The allowance for credit losses increased to $125.9 million, representing 1.10% of outstanding loans and 135% of non-performing loans, compared to 1.08% and 146% respectively at the end of the previous quarter [161]. - The allowance for credit losses covered 135% of non-performing loans at June 30, 2024, compared to 132% at December 31, 2023 [251]. - The annualized net charge-offs to average loans was 0.02% for the six months ended June 30, 2024, compared to 0.01% for the year ended December 31, 2023 [260]. Capital Ratios - The tangible common equity ratio increased to 8.85% of tangible assets at June 30, 2024, compared to 8.51% at June 30, 2023 [158]. - The company had a total risk-based capital ratio of 15.49% at June 30, 2024, compared to 14.60% at June 30, 2023 [159]. - The Common Equity Tier 1 capital ratio rose to 11.28% as of June 30, 2024, compared to 10.90% at the end of 2023 [228]. - Total capital to risk-weighted assets improved to 15.49% at June 30, 2024, from 14.92% at December 31, 2023 [228]. Efficiency and Expenses - The GAAP efficiency ratio for the first six months of 2024 was 68.89%, up from 61.31% in the same period of 2023 [186]. - Total non-interest expense slightly increased to $136.1 million for the six months ended June 30, 2024, compared to $135.4 million for the same period in 2023 [180]. - The average rate paid on interest-bearing liabilities increased by 68 basis points from 2.93% in Q2 2023 to 3.61% in Q2 2024 [198]. - Salaries and employee benefits decreased by 7% or $5.3 million due to prior year severance payments [181]. Interest Rate Risk Management - The company’s interest rate risk management goals include increasing net interest income at a growth rate consistent with total assets and minimizing fluctuations in net interest income [262]. - The Board of Directors has established a comprehensive interest rate risk management policy, which is administered by the Asset Liability Management Committee [263]. - The company conducts quarterly simulations of interest rate shocks, testing eight alternative scenarios with shocks of +/- 100 to 400 basis points [265]. - As of June 30, 2024, the estimated changes in net interest income indicate a decrease of (1.73%) under a +400 bp scenario, compared to (2.42%) as of December 31, 2023 [266].

Financial Data and Key Metrics Changes - Core earnings for Q2 2024 were $24.4 million, or $0.54 per diluted common share, compared to $21.9 million, or $0.49 per diluted common share in the previous quarter, and $27.1 million, or $0.60 per diluted common share in Q2 2023 [5] - Net income for Q2 2024 was $22.8 million, or $0.51 per diluted common share, compared to $20.4 million, or $0.45 per diluted common share in Q1 2024, and $24.7 million, or $0.55 per diluted common share in Q2 2023 [17] - The provision for credit losses was $3 million for Q2 2024, down from $3.3 million in the previous quarter [6] Business Line Data and Key Metrics Changes - Total loans increased by $119.6 million, or 1%, to $11.5 billion compared to the previous quarter, with commercial business loans growing by $91.9 million, or 6% [19] - Wealth management income accounted for approximately 54% of total non-interest income, with an 18% increase in income from mortgage banking activities on a linked-quarter basis [10] - Non-interest expenses remained flat at $68.1 million compared to the previous quarter [23] Market Data and Key Metrics Changes - Total deposits increased by $113 million, or 1%, to $11.3 billion at the end of Q2 2024, with non-interest-bearing deposits increasing by $113.5 million, or 4% [21] - The loan-to-deposit ratio was 101% at June 30, 2024, with total uninsured deposits at approximately 36% of total deposits [9] Company Strategy and Development Direction - The company is focused on improving profitability, bolstering core funding, managing expenses, and enhancing credit portfolio management while reducing commercial real estate exposure [25] - The company continues to expand capabilities and offerings to increase market share, exemplified by the new SBA lending program [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Greater Washington, D.C. metro area, highlighting positive growth trends and ample opportunities [13] - The company anticipates continued loan production in the range of $200 million to $250 million per quarter for the remainder of 2024 [19] - Management expects net interest margin to expand by two to four basis points per quarter throughout 2024, with potential acceleration following Federal Reserve interest rate cuts [45][62] Other Important Information - The allowance for credit losses was $125.9 million, or 1.1% of outstanding loans, reflecting higher individual reserves on collateral-dependent nonaccrual loans [46] - The company’s total risk-based capital ratio was 15.49%, well above minimum regulatory requirements [24] Q&A Session Summary Question: Can you discuss the assumptions regarding deposit costs and margin improvement? - Management indicated that deposit costs are nearing a peak, with expectations for slight increases in total deposit costs over the next couple of quarters [26] Question: What is the fixed rate repricing opportunity for the back half of the year? - The company expects around $500 million in total commercial loans to reprice in Q3 and Q4 2024, with rates moving from mid- to upper 6s [27] Question: How does the rate outlook affect credit quality and reserves? - Management clarified that the rate outlook was not a primary factor in credit classification decisions, emphasizing strong sponsor support for the loans [28][30] Question: Can you provide details on risk-weighted asset optimization? - The company reported a $360 million reduction in risk-weighted assets due to reclassification of home equity lines of credit [54] Question: What is the outlook for non-interest income? - Management anticipates high single-digit to low double-digit growth in non-interest income, driven by strong market performance and potential SBA gains [66]

This quarterly report represents an earnings surprise of 20%. A quarter ago, it was expected that this holding company for Sandy Spring Bank would post earnings of $0.46 per share when it actually produced earnings of $0.49, delivering a surprise of 6.52%. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. While Sandy Spring Bancorp has underperformed the market ...

NEWS RELEASE Current quarter's core earnings were $24.4 million ($0.54 per diluted common share), compared to $21.9 million ($0.49 per diluted common share) for the quarter ended March 31, 2024 and $27.1 million ($0.60 per diluted common share) for the quarter ended June 30, 2023. 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 increase in net income and core earnings as com ...

| --- | --- | --- | --- | --- | --- | --- | --- | --- | |-----------------------------------------------------------------|--------------------------|-------------|-------|-------|------------------------|-------------|-------|-------| | | | | | | | | | | | Total loans(2) | 11,384,077 | 303,268 | 5.35 | | 11,397,815 | 285,084 | 5.04 | | | Loans held for sale | 11,320 | 437 | 7.72 | | 12,927 | 459 | 7.10 | | | Taxable securities | 1,194,561 | 13,879 | 2.32 | | 1,293,626 | 13,856 | 2.14 | | | Tax-advantaged s ...

What do the Analysts Think? Looking to Trade Options? What is Implied Volatility? Clearly, options traders are pricing in a big move for Sandy Spring Bancorp shares, but what is the fundamental picture for the company? Currently, Sandy Spring Bancorp is a Zacks Rank #3 (Hold) in the Banks - Northeast industry that ranks in the Bottom 40% of our Zacks Industry Rank. Over the last 60 days, no analyst has increased the earnings estimates for the current quarter, while none dropped the estimates. The net effect ...

McDowell worked closely with MBA leadership to reorganize the association and create Mid-Atlantic Bankers Association, the holding company that consolidates MBA operations with the Virginia Bankers Association and allows the two organizations to combine forces, share resources, and more effectively serve membership. The operating efficiencies achieved with this merger will also enable the associations to divert a greater proportion of their resources to promotion and advocacy, forming a more powerful, unite ...

Sandy Spring Bancorp (SASR) shares ended the last trading session 8.7% higher at $27. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 8.7% gain over the past four weeks. For Sandy Spring Bancorp, the consensus EPS estimate for the quarter has been revised 1% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure ...

"Since I joined Sandy Spring Bank 18 years ago, we have grown from a $3 billion operation to a $14 billion financial services company serving the Greater Washington region," said Charles S. Cullum, Chief Financial Officer. "It has been a pleasure to advance my career with this outstanding organization, and I look forward to working with the rest of the executive leadership team to continue to grow the Company by providing superior client service and shareholder value." A photo accompanying this announcement ...