分组1 - Sandy Spring Bancorp reported quarterly earnings of $0.40 per share, missing the Zacks Consensus Estimate of $0.48 per share, and down from $0.62 per share a year ago, representing an earnings surprise of -16.67% [1] - The company posted revenues of $101.13 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.47%, and down from $102.47 million year-over-year [1] - Over the last four quarters, Sandy Spring Bancorp has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [1] 分组2 - The stock has added about 19.7% since the beginning of the year, compared to the S&P 500's gain of 23% [2] - The current consensus EPS estimate for the coming quarter is $0.48 on revenues of $104.8 million, and for the current fiscal year, it is $1.91 on revenues of $404 million [4] - The Zacks Industry Rank for Banks - Northeast is currently in the top 23% of over 250 Zacks industries, indicating a favorable outlook for the industry [5]

Financial Performance - Net income for the third quarter of 2024 was $16.2 million ($0.36 per diluted common share), down from $22.8 million ($0.51 per diluted common share) in the previous quarter and $20.7 million ($0.46 per diluted common share) in the same quarter last year[1][18] - Core earnings for the current quarter were $17.9 million ($0.40 per diluted common share), compared to $24.4 million ($0.54 per diluted common share) in the previous quarter and $27.8 million ($0.62 per diluted common share) in the third quarter of 2023[2][18] - Year-to-date net income for the nine months ended September 30, 2024, was $59.4 million, a decline from $96.7 million for the same period in the prior year[26] - Net income attributable to common shareholders decreased by 22% to $16,205,000 for the three months ended September 2024, compared to $20,719,000 for the same period in 2023[38] - Net income (GAAP) for Q3 2024 was $16,209,000, a decrease of 22.4% from $20,746,000 in Q3 2023[40] - Core earnings (non-GAAP) for Q3 2024 were $17,936,000, down 35.4% from $27,766,000 in Q3 2023[40] Asset and Loan Growth - Total assets increased by 3% to $14.4 billion at September 30, 2024, compared to $14.0 billion at June 30, 2024[3][12] - Total assets as of September 30, 2024, were $14,383,073,000, an increase from $14,135,085,000 in the previous year[41] - Total loans remained stable at $11.5 billion as of September 30, 2024, with increases in AD&C and commercial business loans of $71.3 million (6%) and $19.4 million (1%), respectively[4][12] - Total loans for Q3 2024 reached $11,491,921, a slight increase from $11,483,921 in Q2 2024[45] - Net loans rose to $11,360,493 thousand, compared to $11,246,124 thousand at the end of 2023, reflecting an increase of 1.0%[42] Deposit Trends - Deposits increased by $397.5 million or 4% to $11.7 billion at September 30, 2024, with interest-bearing deposits growing by $425.8 million (5%)[5][13] - Total deposits increased to $11,737,694 in Q3 2024, up from $11,340,228 in Q2 2024, representing a growth of about 3.5%[45] - Total deposits reached $11,737,694 thousand, an increase of 6.7% from $10,996,538 thousand at December 31, 2023[42] Credit Quality and Loss Provisions - The ratio of non-performing loans to total loans was 1.09% at September 30, 2024, up from 0.81% at June 30, 2024 and 0.46% at September 30, 2023[6][16] - The total provision for credit losses was $6.3 million for the third quarter of 2024, significantly higher than $1.0 million in the previous quarter and $2.4 million in the same quarter last year[8][21] - Provision for credit losses increased significantly by 167% to $6,316,000 for the three months ended September 2024, compared to $2,365,000 for the same period in 2023[38] - The allowance for credit losses on loans increased to $131,428 thousand as of September 30, 2024, compared to $120,865 thousand at December 31, 2023, indicating a rise of 8.7%[42] Income and Expense Analysis - Net interest income for the third quarter of 2024 grew by $1.1 million (1%) compared to the previous quarter but decreased by $3.7 million (4%) compared to the third quarter of 2023[6][19] - Non-interest income increased by 1% ($0.1 million) compared to the linked quarter and grew by 13% ($2.3 million) compared to the prior year quarter[9][22] - Non-interest expense for Q3 2024 increased by $4.8 million or 7% compared to Q2 2024, and by $0.5 million or 1% compared to Q3 2023, primarily due to a $3.2 million increase in salaries and benefits[23] - The GAAP efficiency ratio for Q3 2024 was 72.12%, up from 68.19% in Q2 2024 and 70.72% in Q3 2023, reflecting a 1% decline in GAAP revenue[24] - Non-interest expense for the nine months ended September 30, 2024, was $209.0 million, slightly up from $207.9 million in 2023, with significant increases in professional fees and services[30] Return Metrics - Return on Assets (ROA) for Q3 2024 was 0.46%, down from 0.66% in Q2 2024 and 0.58% in Q3 2023[25] - Return on average assets declined to 0.46% for the three months ended September 2024, down from 0.58% for the same period in 2023[38] - Core return on average tangible common equity (non-GAAP) was 5.88% in Q3 2024, compared to 9.51% in Q3 2023, a decrease of 38.5%[40] Capital and Equity - Book value per common share increased by 5% to $36.10 as of September 30, 2024, compared to $34.26 as of September 30, 2023[38] - Total stockholders' equity increased to $1,628,837 thousand as of September 30, 2024, from $1,588,142 thousand at December 31, 2023, reflecting a growth of 2.6%[42] - Tangible common equity ratio improved to 8.83% in Q3 2024 from 8.42% in Q3 2023[41] Mergers and Acquisitions - The company has entered into a merger agreement with Atlantic Union Bankshares Corporation, leading to the cancellation of the scheduled conference call[34]

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]

Financial Performance - Core earnings for the second quarter of 2024 were $24.4 million ($0.54 per diluted common share), up from $21.9 million ($0.49 per diluted common share) in the previous quarter and down from $27.1 million ($0.60 per diluted common share) in the same quarter last year[1]. - The net income for the quarter was $22.8 million, or $0.51 per diluted common share, compared to $20.4 million, or $0.45 per diluted common share in the previous quarter[37]. - Net income (GAAP) for Q2 2024 was $22,807,000, a decrease of 7.8% from $24,745,000 in Q2 2023[51]. - The company recorded a decline in year-to-date net income to $43.2 million for the six months ended June 30, 2024, down from $76.0 million for the same period in the prior year[42]. - Core earnings (non-GAAP) for the three months ended June 30, 2024, were $24,400,000, a decrease of 10.1% from $27,136,000 in the same period of 2023[62]. - Net income (GAAP) for the six months ended June 30, 2024, was $43,179,000, down 43.1% from $75,998,000 in the same period of 2023[62]. Asset and Deposit Growth - Total assets increased by 1% to $14.0 billion as of June 30, 2024, compared to $13.9 billion at March 31, 2024[4]. - Total deposits rose by $113.0 million or 1% to $11.3 billion at June 30, 2024, driven entirely by noninterest-bearing deposits, which increased by $113.5 million[5]. - Total assets as of June 30, 2024, were $14,008,343,000, slightly down from $14,028,172,000 at the end of 2023[52]. - Total deposits rose to $11,340,228,000 in Q2 2024, up from $10,996,538,000 in December 2023, marking an increase of 3.1%[52]. - Total stockholders' equity reached $1,599,004,000 as of June 30, 2024, up from $1,588,142,000 at the end of 2023[52]. Loan Performance - Total loans increased by $119.6 million or 1% to $11.5 billion as of June 30, 2024, with significant growth in AD&C and commercial business loans[27]. - The ratio of non-performing loans to total loans was 0.81% at June 30, 2024, compared to 0.74% at March 31, 2024[28]. - Total loans increased to $11,483,921 thousand in Q2 2024, up from $11,364,284 thousand in Q1 2024, representing a growth of 1.05%[70]. - Total commercial loans reached $9,383,816 thousand with an annualized average yield of 5.51%, up from $9,418,365 thousand at 5.23% in 2023[75]. - Total residential mortgage loans increased to $1,518,748 thousand with an annualized average yield of 3.67%, compared to $1,353,809 thousand at 3.53% in 2023[75]. Income and Expense Analysis - Net interest income for the second quarter of 2024 grew by $0.9 million or 1% compared to the previous quarter but decreased by $10.2 million or 11% compared to the second quarter of 2023[6]. - Non-interest income increased by 7% or $1.2 million compared to the previous quarter and grew by 14% or $2.4 million compared to the prior year quarter[8]. - Non-interest expense (GAAP) was $68,104,000 in Q2 2024, a slight decrease from $69,136,000 in Q2 2023[51]. - Interest expense increased significantly to $84,828 thousand in Q2 2024, up 25.4% from $67,679 thousand in Q2 2023[53]. - The GAAP efficiency ratio was 68.19% for the second quarter of 2024, compared to 69.60% for the first quarter of 2024 and 64.22% for the second quarter of 2023[32]. Credit Quality and Provisions - The provision for credit losses was $1,020 thousand in Q2 2024, a decrease from $5,055 thousand in Q2 2023[53]. - The provision for credit losses for the six months ended June 30, 2024, was $3.4 million, a significant decrease from a credit of $16.5 million in the same period of 2023[55]. - Non-accrual loans increased to $92,650,000 as of June 30, 2024, up from $84,081,000 in the previous quarter, representing a 1.8% increase[72]. - The balance of the allowance for credit losses at the end of the period was $125,863,000, up from $123,096,000 in the previous quarter, an increase of 2.2%[72]. - Net charge-offs for the quarter were $194,000, a significant decrease from $1,100,000 in the previous quarter, showing improved asset quality[72].

Company Overview - Sandy Spring Bancorp (SASR) shares increased by 8.7% to $27 in the last trading session, with a notable trading volume [1] - The stock has shown an 8.7% gain over the past four weeks, indicating a positive trend [1] Earnings Estimates - The consensus EPS estimate for Sandy Spring Bancorp has been revised 1% higher in the last 30 days, suggesting potential price appreciation [2] - The upcoming quarterly earnings are expected to be $0.45 per share, reflecting a year-over-year decline of 25% [3] - Revenue for the upcoming report is projected at $99.6 million, down 7.5% from the previous year [3] Market Context - The stock has rallied for four consecutive trading sessions, driven by market expectations of interest rate cuts by the Federal Reserve [5] - Lower interest rates are anticipated to reduce banks' funding costs, positively impacting the banking sector [5] - The current Zacks Rank for Sandy Spring Bancorp is 3 (Hold), indicating a neutral outlook [4] Industry Comparison - Sandy Spring Bancorp is part of the Zacks Banks - Northeast industry, which includes CB Financial Services [7] - CB Financial Services closed 2.2% higher at $22.64, but has returned -2.4% over the past month [7]

Core Points - Sandy Spring Bancorp, Inc. has appointed Charles S. Cullum as Chief Financial Officer, promoting him from Deputy Chief Financial Officer and Treasurer [1] - The outgoing CFO, Philip J. Mantua, will assist in the leadership transition until the end of the year [1] - Cullum has been with Sandy Spring Bank for 18 years, contributing to its growth from a $3 billion operation to a $14 billion financial services company [3] Company Overview - Sandy Spring Bancorp, Inc. is headquartered in Olney, Maryland, and serves as the holding company for Sandy Spring Bank, a community bank in the Greater Washington, D.C. region [4] - The bank operates over 50 locations and offers a wide range of services including commercial and retail banking, mortgage, private banking, and trust services across Maryland, Virginia, and Washington, D.C. [4] - Through its subsidiaries, the bank provides a comprehensive array of wealth management services [4]

Financial Performance - For Q1 2024, Sandy Spring Bancorp reported net income of $20.4 million ($0.45 per diluted share), a decrease of 60.3% year-over-year from $51.3 million ($1.14 per diluted share) in Q1 2023[135]. - Net income for the three months ended March 31, 2024, was $20.4 million ($0.45 per diluted common share), down from $51.3 million ($1.14 per diluted common share) in the same period last year, primarily due to a decline in net interest income[144]. - Core earnings for the three months ended March 31, 2024, were $21.9 million, down from $52.3 million in the same period last year, reflecting the impact of increased provisions for credit losses and lower net interest income[147]. - Core earnings for Q1 2024 were $21.9 million ($0.49 per diluted share), down from $52.3 million ($1.16 per diluted share) in Q1 2023, reflecting a significant decrease in net income[169]. Asset and Loan Management - Total assets decreased by 1% to $13.9 billion as of March 31, 2024, compared to $14.0 billion at December 31, 2023[136]. - Total loans remained stable at $11.4 billion, with a reduction of $106.5 million in investor commercial real estate loans and an increase of $101.3 million in the AD&C portfolio[136]. - Total loan balances remained relatively unchanged at $11.4 billion, with a 10% increase in the AD&C portfolio, while commercial real estate loans decreased by 2%[176]. - The loan to deposit ratio declined to 101% at March 31, 2024, from 103% at December 31, 2023, reflecting stable loan balances and increased deposits[175]. Deposits and Funding - Deposits increased by $230.7 million or 2% to $11.2 billion, driven by a $326.9 million increase in interest-bearing deposits[136]. - Deposit balances increased to $11.2 billion at March 31, 2024, up from $11.0 billion at December 31, 2023, driven by higher yielding savings accounts[175]. - Core deposits represented 93% of total deposits at the end of the current quarter, up from 92% at December 31, 2023[182]. - Approximately $3.7 billion or 33% of total deposits exceeded the $250,000 insured limit provided by the FDIC at March 31, 2024[183]. Interest Income and Expense - Net interest income declined by $2.4 million or 3% quarter-over-quarter and by $18.0 million or 18% year-over-year[136]. - The net interest margin was 2.41% for Q1 2024, down from 2.99% in Q1 2023[136]. - Net interest income decreased by $18.0 million or 18% year-over-year, with interest income growing by $14.7 million but offset by a $32.6 million increase in interest expense[145]. - The average rate paid on interest-bearing liabilities increased by 115 basis points, from 2.49% in Q1 2023 to 3.64% in Q1 2024, driven by rising rates across all deposit categories[151]. Credit Losses and Non-Performing Loans - Provision for credit losses was $3.3 million, a significant increase from a credit of $18.9 million in the prior year quarter[136]. - The ratio of non-performing loans to total loans improved to 0.74% from 0.81% at December 31, 2023, but increased from 0.41% at March 31, 2023[142]. - The allowance for credit losses was $123.1 million at March 31, 2024, representing 1.08% of total loans, an increase from 1.06% at December 31, 2023[210]. - The allowance for credit losses represented 146% of non-performing loans at March 31, 2024, compared to 132% at December 31, 2023[210]. Non-Interest Income and Expenses - Non-interest income increased by 11% or $1.8 million compared to the previous quarter and by 15% or $2.4 million year-over-year[140]. - Non-interest income increased by 15% or $2.4 million compared to the prior year quarter, driven by higher wealth management income and increased service charges[145]. - Total non-interest expense increased by 3% to $68.0 million for Q1 2024, with significant increases in professional fees and other operating expenses[162]. - Service charges on deposit accounts grew by 18%, with a 26% increase in service charge income on commercial demand deposit accounts[161]. Tax and Efficiency Ratios - The company reported an income tax expense of $6.9 million in Q1 2024, down from $17.2 million in Q1 2023, reflecting a decrease in pre-tax earnings[163]. - The effective tax rate for Q1 2024 was 25.4%, slightly up from 25.2% in the same period of 2023[163]. - For the three months ended March 31, 2024, GAAP efficiency ratio increased to 69.60% from 58.55% in the same period of 2023, attributed to a decline in revenues and a rise in non-interest expenses[171]. - The non-GAAP efficiency ratio for the current year was 66.73%, compared to 56.87% for the prior year, indicating a decline in operational efficiency[171]. Liquidity and Capital Position - The company’s liquidity position was deemed appropriate based on its liquidity analysis as of March 31, 2024[234]. - Contingent liquidity totaled $6.3 billion, representing 170% of uninsured deposits as of March 31, 2024[233]. - The company had liquid assets of $129.4 million as of March 31, 2024[235]. - The company maintains a liability of $0.5 million for probable losses due to repurchases related to fixed-rate residential mortgage originations[203].

Financial Data and Key Metrics Changes - The company reported net income of $20.4 million or $0.45 per diluted common share for Q1 2024, down from $26.1 million or $0.58 per diluted common share in Q4 2023 and $51.3 million or $1.14 per diluted common share in Q1 2023 [48] - Core earnings for the current quarter were $21.9 million or $0.49 per diluted common share, compared to $27.1 million or $0.60 per diluted common share in the previous quarter and $52.3 million or $1.16 per diluted common share in the same quarter last year [49] - Total provision for credit losses was $2.4 million, with a provision directly attributable to the funded loan portfolio of $3.3 million, compared to a credit of $2.6 million in the previous quarter [50][51] Business Line Data and Key Metrics Changes - Total assets decreased by 1% to $13.9 billion, while total loans remained stable at $11.4 billion [52] - Investment in commercial real estate loans decreased by $106.5 million or 2%, while the AD&C portfolio grew by $101.3 million or 10% [52] - Commercial loan production totaled $241 million, yielding $168 million in funded production, compared to $245 million and $153 million in the previous quarter [54] Market Data and Key Metrics Changes - Deposits increased by $230.7 million or 2% to $11.2 billion, with interest-bearing deposits increasing by $326.9 million [57] - Non-interest income increased by 11% to $18.3 million compared to the linked quarter, primarily due to wealth management income [65] - The level of non-performing loans to total loans improved to 74 basis points from 81 basis points in the previous quarter [69] Company Strategy and Development Direction - The company is focused on improving profitability, managing expenses, and reducing commercial real estate exposure while diversifying growth in other loan categories [46] - There is a strategic shift towards activities driving core deposits, with a focus on deepening relationships to bring in low-cost deposits [61] - The company plans to maintain a disciplined approach to pricing to improve margins over time, with expectations of margin expansion in the future [67][73] Management's Comments on Operating Environment and Future Outlook - Management noted the challenges posed by shifting economic forecasts, uncertain interest rates, and external geopolitical factors, but emphasized solid fundamentals [47] - The company anticipates that the Fed will cut rates once late in the year, with further cuts expected in 2025, which should accelerate margin expansion [68] - Management expressed confidence in overall credit quality and the ability to navigate the current operating environment [57] Other Important Information - The company reduced total brokered deposits by $55.8 million during the quarter, with core deposits representing 93% of total deposits [60] - Non-interest expense increased by $900,000 or 1% compared to the linked quarter, with a non-GAAP efficiency ratio of 66.73% [74] - The company introduced a new DDA product aimed at clients in the high-yield savings segment to deepen relationships [62] Q&A Session Summary Question: What drives the increase in net charge-offs? - Management indicated that the increase in net charge-offs is difficult to predict, but they typically expect around five basis points of annualized net charge-offs [13][14] Question: Can you provide an update on the health of the D.C. market? - Management noted that a potential reduction in government office space could have a material impact on office properties in D.C. and surrounding areas [38] Question: How is the company managing loan growth expectations? - Management stated that they expect commercial loan growth in the range of 3% for the second quarter, with a focus on C&I lending [25][54] Question: What is the outlook for deposit costs? - Management mentioned that deposit costs have stabilized and they do not expect significant increases moving forward [84] Question: What is the company's view on share buybacks? - Management expressed that while repurchasing shares makes sense, preserving capital is the priority given current uncertainties [94]